Ohio Faring Better than U.S. in ‘Back-to-Normal’ Index

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 Takeaways

• Global: Both WTO and IMF updated their 2020 forecasts with an upward revision due to improved economic condition in Q2 and Q3.
• U.S.: Latest genetic, epidemiological and computational research suggests COVID-19 was spreading inside the U.S. in January. Federal Reserve Chair Jay Powell called for continued aggressive fiscal and monetary stimulus for an economic recovery.  Federal budget deficit was $3.1T in FY2020, the Congressional Budget Office estimated.
• Ohio: Cleveland, Columbus and Akron listed in the Top 25 Most Resilient U.S. Cities of 2020. In conjunction with its summit, Cleveland Clinic announced the Top 10 Medical Innovations for 2021.

Global

The World Health Organization believes 10% of the world’s population may have been infected with the novel coronavirus.  The World Trade Organization now forecasts a 9.2% decline in the volume of world merchandise trade for 2020, followed by a 7.2% rise in 2021. This is more optimistic than that the 12.9% drop that the organization was expecting in an April trade forecast but still far from the 21.3% growth that was forecast prior to the pandemic. The IMF indicated that global economy will not contract this year as severely as projected in June.  New forecast figures will appear in IMF’s world economic outlook, to be released October 13.  Brexit negotiations are at risk of breaking down after the U.K. government warned it will pull out of trade talks with the European Union if there is no clear deal in sight next week.  London’s standing as the one-stop shop for American banks doing business in Europe is slipping, as lenders speed up movement of people and assets from the U.K. to the continent before a Brexit transition period ends December 31.

U.S.

Relative to the size of the economy, the U.S. budget deficit – at an estimated 15.2% of GDP – was the largest since 1945.  Weekly jobless claims are down sharply from a peak of near 7M in March but have clocked in between 800,000 and 900,000 for more than a month.  The unemployment rate fell to 7.9% in September as nearly 1.1M workers dropped out of the labor force, 865,000 of whom were women.  The U.S. trade deficit rose to $67B in August, the widest in 14 years.  Imports rose 3.2% while exports increased 2.2% and trade in services is suffering far worse than trade in goods.  Federal Reserve Chairman Powell called for continued aggressive fiscal and monetary stimulus for a sustained economic recovery.  The Department of Energy announced $122M for regional initiative to produce rare earth elements and critical minerals.

The Federal Reserve capped dividends and banned share buybacks by big U.S. banks as its analysis showing the COVID-19 crisis could trigger $700B of loan losses.  Bank of America completed equity investments in seven minority depository institutions and CDFIs, out of the $1B four-year commitment it made for racial equality and economic inclusion in June.  Bank of America also announced to roll out a digital budgeting tool.  JPMorgan Chase & Co. could have up to 30% of its staff working from home permanently.

According to PwC’s survey of 578 CFOs, 70% of respondents believe business tax rates will rise to pay for COVID-19 relief and 63% agree that trade restrictions between the U.S. and China will continue, regardless of the election results.  A Wall Street Journal survey of compliance professionals found coronavirus elevates compliance risks for most companies as 90% of companies saying they have experienced new risks or that existing risks have been exacerbated.  Commercial Chapter 11 bankruptcy filings increased 78% in September from the previous year.  However, overall filings decreased 35%, with consumer filings decreasing 41%.

Cold storage is becoming one of the hottest real-estate investments during the pandemic, partially because it can readily adapt to new customers and environments.  Lineage Logistics and Americold Realty Trust together have 59% of the cold-storage market share in the U.S.  The 2020 Boeing Market Outlook (BMO) projects that the commercial aviation and services markets will continue to face significant challenges due to the pandemic, while global defense and government services markets remain more stable.  The U.S. oil, natural gas and chemicals (OG&C) industry slashed 107,000 jobs from March to August 2020, the fastest rate of layoffs in the industry’s history, according to a Deloitte study.  The monthly CompTIA Technology Employment report shows a mix of good news in IT sector employment gains and disappointing news in IT occupation job losses.

Ohio

Three Ohio cities – Cleveland, Columbus and Akron – were listed in the Top 25 Most Resilient U.S. Cities of 2020 by Worth. Government and economic development leaders across Ohio attended the Ohio Defense & Aerospace Forum on Tuesday as military installations continue to grow and new opportunities arise.  Cincinnati will host top aviation executives for one of the industry’s most prestigious events next week, the 25th Annual Boyd Group International Aviation Forecast Summit (IAFS).  Growth in e-commerce is driving industrial real estate demand in Ohio.

The Foundation for Appalachian Ohio, Facebook, and T-Mobile will each contribute to libraries and schools in the region to help support their work to address gaps in high-speed internet connectivity throughout Appalachian Ohio’s communities.  AT&T adds new towers boosting coverage and speeds throughout Clermont County.

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.