Ohio’s GDP Grew by 6.4% in Q1 2021

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: New restrictions across Australia; WHO warning on transmissions and variables.
• U.S.: The recovery of the U.S. economy is expected to attract extraordinary foreign investment. S&P raised its real GDP growth forecast for 2021 to 6.7% from 6.5%.
• Ohio: Ohio’s real GDP grew by 6.4% in Q1 2021.

Global Insights

Pfizer’s COVID-19 vaccine is proving largely effective at preventing severe illness from the highly-contagious delta variant of the virus. OPEC and its allies are considering boosting the group’s collective output by 500,000 barrels a day. The Bank of England reported inflation broke above its 2% target and is expected to climb as Britain’s economy recovers. This comes as Europe’s private-sector economy rebounds from the pandemic growing at the fastest pace in 15 years. The UK began discussion to join the Asia-Pacific free trade pact to provide Britain with access to 11 nations including Australia, Canada, and Japan. Japan’s manufacturing activity expanded for a fifth month in June while consumer services in the country contracted. Argentina’s economy grew at the fastest pace since 2018 at the start of the year as higher agricultural prices boosted exports.

The UN Conference on Trade and Development reported total global foreign direct investment dropped by one-third to $1T in 2020. The level was last seen in 2005 and threatens sustainable development for countries still recovering from the pandemic. Another recent analysis by the UN revealed famine is threatening 41M people in 43 countries, which is up from an estimated 27M people two years ago.

U.S. Insights

S&P Global raised its real GDP growth forecasts for 2021 and 2022 to 6.7% and 3.7%, respectively, from 6.5% and 3.1% in its March report. Personal income fell 2% in May from April and household spending was flat last month. U.S. home prices had their biggest annual increase in more than two decades. The median existing-home sales price in May topped $350,000 for the first time, nearly 24% higher than a year ago. The University of Michigan’s consumer sentiment index increased to 85.5 in June from 82.9 in May.

The recovery of the U.S. economy is expected to attract extraordinary foreign investment. The U.S. will ship 3M doses of the Johnson & Johnson vaccine to Brazil, as part of Washington’s pledge to donate 80M vaccines globally. Treasury Secretary Yellen urged Congress to raise or suspend the debt ceiling before its August recess in order to ensure the federal government meets its financial obligations, such as was done in 2019.

Wage gains at U.S. factories have grown so slowly that many manufacturers are having trouble competing with fast-food restaurants. The flash U.S. manufacturing PMI from IHS Markit rose to a reading of 62.6 this month, the highest since the survey was expanded to cover all manufacturing industries in October 2009. Online grocery market sales were down 16% from one year ago, yet total online sales were 3.5x higher than pre-pandemic levels.

The Federal Aviation Administration will award $8M in grants to sustain airlines as they recover from the Pandemic. The funding will provide economic relief to eligible commercial service, reliever, and general aviation airports. This comes as American Airlines canceled hundreds of flights due to staffing shortages and maintenance issues, which accounted for nearly 6% of the airline’s mainline schedule. Many tech giants are seeking efforts to buy renewable energy amid efforts to power data centers. For example, Amazon committed to buy 1.5 gigawatts of production capacity from 14 global solar plants. The Shell ethane cracker near Pittsburgh began its “first fire” activities.

Ohio Employment & Economic Insights

Ohio’s real GDP grew by 6.4% in Q1 2021, equal to the U.S average. AT&T invested nearly $1.7B over three-year period to connect local customers in Ohio. Starry, a fixed wireless internet service provider, announced that it is expanding to Columbus and will begin offering services this summer.

The Ohio legislature passed a 2-year state budget, which includes significant investment to expand internet access and an income tax cut. The Ohio Tax Credit Authority approved project incentives for Amgen, Bold Penguin, Candle-lite, Findlay Machine and Tool, Midwest Molding, Nexus Engineering Group, Path Robotics, Protiviti, and Winesburg Chair.

The State of Ohio can expect more than $13B in economic activity over the next 25 years if it takes targeted steps now to support the growth of an advanced autonomous aircraft (AAM) sector, according to a new report. Cleveland-based JumpStart launched its $50M JumpStart Next II Fund, which targets software applications for businesses, as well as health care and medical tech ventures. Explore the tech that went into turning Columbus, into a Smart City. The Columbus Crew celebrated its new stadium opening with ribbon-cutting ceremony.

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.