Ohio Leading in Leveraging Opportunity Zones for Economic Development

This report is a summary of third-party economic research and perspectives to foster communication with business and economic development stakeholders during the COVID-19 crisis.

Key Economic Insights

• Global: U.S. and China Trade officials met to discuss a roll back U.S. tariffs on Chinese products amid tensions. Ford expects 40% of its sales globally to be electric vehicles by the end of this decade.
• U.S.: IHS Markit Flash U.S. Composite PMI for May 2021 is at a record high.
• Ohio: Ohio is about to see a hiring boom. First Vax-a-Million winners were announced. Ohio embraced Opportunity Zones early and is seeing benefits. Record new businesses were created in April 2021.

Global Insights

U.S. and China Trade officials met to discuss a roll back U.S. tariffs on Chinese products amid tensions. Chinese ride-hailing giant Didi Chuxing and automaker GAC Motor Co. are collaborating to develop a self-driving electric vehicle for mass production. Changan Automobile Co. will develop intelligent EVs with Huawei Technologies and CATL. Ford expects 40% of its sales globally to be electric vehicles by the end of this decade under a new plan to increase investment in EVs to $30 billion through 2025.

Uneven recovery will continue to impact global supply chains. A shortage of epoxy, polyester and vinyl ester resins, caused by U.S. winter storms and a variety of factors, continue to affect the composites industry. The International Grains Council reduced its inventory estimate for the 2021-2022 year to its lowest projection in seven years. The International Energy Agency raised its growth forecast for wind and solar power by 25% between 2021-2022. The mayor of a rural town in the Philippines has come up with a bovine solution for COVID-19 vaccine hesitancy in his farming community — a cow raffle.

U.S. Insights

Worker filings for jobless benefits fell again to a fresh pandemic low, extending a steady downward trend and adding to signs of a healing labor market and a broader, though uneven, economic recovery. U.S. warehouses are taking advantage of robotics to compensate for low employment levels and sustain rising consumer demand. The SBA plans to expand eligibility for its $25 billion cash grant programs to significantly more businesses. IHS Markit Flash U.S. Composite PMI for May 2021 is at a series record high for the Composite Output Index at 68.1 (63.5 in April), Services Business Activity Index at 70.1 (64.7 in April), and Manufacturing PMI at 61.5 (60.5 in April). The Manufacturing Output Index is at a 4-month high at 58.1 (57.2 in April). Financial markets have eased following initial inflationary concerns among investors. Gasoline prices are expected to rise to their highest levels in seven years to $3.04 over Memorial Day weekend.

National Covid-19 cases are down more than 50% in May as the U.S. administers nearly 1.7 million daily vaccinations. Immunity to the coronavirus lasts at least a year, possibly a lifetime, improving over time especially after vaccination, according to two new studies. A few states are giving people who have been vaccinated against COVID the opportunity to score anywhere from millions of dollars to tens of thousands in cash, a model popularized by Ohio. Vaccinated consumers were less likely to go out to restaurants, salons and entertainment venues than those who don’t plan to get the vaccine, April spending and survey data from market-research firm Cardify.ai show.

A new batch of $1,400 stimulus checks has been sent, bringing the total number of payments to almost 167 million, for a total amount of approximately $391 billion. The Conference Board Consumer Confidence Index held steady in May, following a gain in April. The Index now stands at 117.2 (1985=100), down marginally from 117.5 in April. United Airlines saw domestic leisure fares surpass 2019 levels. The trend is expected to continue through the summer, yet weak business travel continues to bring down overall yields. Weekly mortgage applications fell 4.4% last week from the previous week as a slight increase in interest rates dissuaded overall demand. Refinance demand is 9% lower than a year ago and mortgage applications are 4% lower than a year ago.

Ohio Employment & Economic Insights

The first winners of Ohio’s Vax-a-Million drawing were announced among 2.7 million entrants. The publicity the lottery has generated is worth over $23 million of free ad equivalency about vaccinations. According to one estimate, preventing just 40 severe Covid-19 cases requiring hospitalization would pay for the entire program.

A record 22,176 new businesses were created in Ohio in April 2021, 93.7% higher than in April 2020. Ohio is about to see a hiring boom. The state has enticed several global companies to invest more than $606 million and create more than 3,000 new jobs. The Greater Cincinnati and Northern Kentucky African American Chamber of Commerce is launching a program called “PIVOT”, designed to provide recovery strategies and technical assistance to businesses emerging from the pandemic. Greater Cleveland Partnership and Wright Brothers Institute have agreed to work to connect local businesses with the institute’s connections at the Air Force Research Laboratory in Dayton.

Ohio embraced Opportunity Zones early to become one of the first states to pair a complementary tax credit with the federal incentive to encourage Ohio-based investors to invest locally. At minimum, 22.5% of Ohio’s OZs have received investments taking advantage of both the federal and state incentives. Together, the two incentives have moved at least $453.4 million in OZ equity capital over the course of the state’s 2020 and 2021 budget years thus far. The average OZ receiving investment had a 35% poverty rate and a more diverse population than the state as a whole.  In total, over 350 entities invested in at least 215 distinct developments or businesses across 72 census tracts and 18 counties, with the median investor contributing $201,460.

Resources

• Ohio Department of Health’s COVID-19 Website: coronavirus.ohio.gov
• JobsOhio’s resource portal and information about Open, Secure Supply Chains in Ohio.