MANSFIELD – Ohio’s future is bright, according to the senior policy economist who spoke Friday morning at the Richland Area Chamber of Commerce’s fourth annual economic forecast breakfast.
Dr. Rubén Hernández-Murillo, a senior policy economist in the External Outreach and Regional Analytics Group at the Federal Reserve Bank of Cleveland, detailed declines in unemployment rates and increases in employment growth on both national and regional levels.
“I want to leave you with a positive and optimistic message about the economy. (There’s) solid growth in the nation, a little more modest in our region, continuing improvements in labor markets and even in inflation,” he said.
The unemployment rate, on a national and regional level has been on the decline. While Hernández-Murillo says this trend isn’t sustainable, he doesn’t see any significant increases in the near future or the long-run.
The information he presented predicted the national rate will drop below 4 percent in 2018, then work its way up to 4.5 percent.
In Mansfield, the unemployment rate was notably higher than other cities in the region from 2009 to 2014, but in more recent years it’s dropped to be more in line with the region. Most recent numbers show Cleveland’s unemployment rate is higher than Mansfield’s.
Regionally, Hernández-Murillo expects employment growth to increase. While Mansfield has seen some decreases, he noted an overall positive trend.
Later, he showed a map with red and blue dots symbolizing jobs lost and gained, respectively, from the second quarter of 2016 to the second quarter of 2017. The red dots outnumbered the blues ones in only a few areas in Ohio. Richland County showed a modest number of jobs gained in comparison to other counties. The most jobs were added to metro areas.
“Last year, I showed this picture, and I had more red all over the place,” Hernández-Murillo said. “So, the thing I like to point out is there’s more blue this time.”
Also important to Richland County, where manufacturing remains a leading employer, the manufacturing industry is expanding. Hernández-Murillo presented a chart that showed national increases, recovering from earlier lows.
Non-manufacturing is also expanding overall but dropped recently. Hernández-Murillo expressed interest in seeing where it goes next.
On a national scale, he discussed how wages are growing slowly, but with inflation staying low, even the small increases make a large difference.
“Even though we’ve seen growth in wages of only 2, 2.5 percent, 3 percent in some cases, real incomes have been increasing because inflation has been very low by historical standards,” Hernández-Murillo said.
Most recent data shows inflation rates at 1.7 percent, but ideally, the economist explained, that number should fluctuate over the 2 percent mark. It’s hit that mark rarely recently.
Hernández-Murillo also looked at GDP, a noteworthy indicator of economic activity. It was at 2 percent growth in 2016 and looked to be the same in 2017.
But the first quarter of 2018 is forecasted to reach 5.4 percent growth.
“Obviously if things were to continue at this pace, 2018 would be a great year, but we’ll probably see something a little more modest than that,” Hernández-Murillo said.
One factor that impacts GDP is the labor productivity rate. This spiked in the 2000’s with the introduction of computers, but without another significant improvement, the rate is now low comparatively.
“Ultimately, what would make GDP grow is productivity, and unless something changes radically in the economy over the foreseeable future, these are the numbers we expect to see,” Hernández-Murillo said.
Tax reform, immigration and trade policy will also impact the economy.
“All of those have the potential to improve productivity and also the potential to reverse productivity,” he said.
He anticipated positive impacts from tax reform, but expressed concern about the potential effects of more restrictive immigration and trade policies.
Hernández-Murillo joined the Federal Reserve Bank of St. Louis in 2000 as an economist. He was appointed senior economist in 2005. In 2015, he joined the Cleveland Reserve Bank and assumed his current position. His primary research interests include public economics, regional and urban economics, and real estate economics.
His research has appeared in the Journal of Banking and Finance, the Journal of Money, Credit and Banking, the International Economic Review, and the International Journal of Industrial Organization, among others.
