Economist predicts economic growth for Ohio in 2018
12/28/2017The United States should see the gross domestic product grow at about 2 percent next year, with Ohio keeping pace with the national trends, a Ball State University economist said in his 2018 economic forecast.
Michael Hicks, the director of the Center for Business and Economic Research at Ball State, said Ohio’s more diverse economy and strong cities are carrying the state’s economy, which he projects will see 2 percent growth in its GDP in 2018, compared with 2.2 percent for the nation as a whole.
“A big proportion is clustered in cities that are doing quite well,” Mr. Hicks said, adding that Ohio has Akron, Canton, and Columbus all performing above the average GDP growth rate for U.S. cities.
On the other hand, Mr. Hicks expects Michigan will only see 1.6 percent growth in 2018, lagging behind the nation as a whole and behind all other Great Lakes states, save for Illinois.
“Michigan has a very heavy residual reliance on manufacturing,” Mr. Hicks said. Since many of the remaining legacy factories are quite large, adjusting to new methods and demands is harder than smaller, nimbler manufacturers.
Growth can be slowed by a lack of workers, something the nation is close to approaching, he said. The country experienced GDP growth above 3 percent in the second and third quarters of 2017, but without more workers that pace will be hard to meet.
“We’re coming close to running out of workers,” Mr. Hicks said. “We will not see more growth without more workers ... everybody that really wants a job has one.”
There are between 6 million and 9 million workers who left the workforce as a result of the Great Recession, but after 100 consecutive months of economic growth, if they aren’t back in now, they likely never will return to work. Even if they did, he said, they likely would not be too productive.
Long term, Ohio expects about 300,000 jobs to be added between 2014 and 2024, although the population growth is expected to fall short of the national projection, according to an Ohio Job and Family Services report released in June, an older version of which was cited by Mr. Hicks in his analysis.
The Ohio report expects manufacturing jobs, already a minority in the state, will continue to decline in the years to come, with about 960,000 goods-producing jobs expected in the state by 2024, compared to about 4.7 million service jobs.
Despite the high demand for workers, Mr. Hicks does not predict average wages will grow significantly. Wages for the top 25 percent of wage earners have and will continue to increase, he said, while the bottom 25 to 40 percent of wage workers will likely continue to see stagnant or declining income. More people falling into that lower tier will continue to keep the average bogged down.
“Most workers are going down in skill level,” he said. “That leaves a significant challenge to wage growth overall.”
Contact Zack Lemon at zlemon@theblade.com, 419-724-6282 or on Twitter @zack_lemon.