March 5, 2008

Economic Outlook Sound for Delaware Despite Slower National Picture

Students and local business people gain insight into the current economic picture at Ohio Wesleyan’s Economic Outlook Conference. Pictured: OWU economics professor Bob Gitter.

“Delaware County is the 13th fastest-growing county in the entire U.S.,” said Bill LaFayette, vice president of economic analysis for the Columbus Chamber of Commerce, noting it is also second-fastest-growing in the Midwest. “Since 1990, Delaware County’s labor force has increased 136 percent. Consistently, Delaware County has the lowest or second-lowest unemployment in the state of Ohio.”

The area’s finance and insurance sector has recently doubled with the influx of JP Morgan Chase to Polaris, which now houses that company’s second-largest concentration of employees in the world, he noted. Other strengths are the thriving retail sector in Polaris and a strong growth in area professional services.

In contrast to Delaware, the central Ohio economy (the eight-county area surrounding Columbus) underperformed the national average in 2007 for the fourth year, LaFayette said, also citing statistics on job loss in Ohio.

Owen Humpage, senior economic advisor for the Federal Reserve Bank of Cleveland, also painted a mixed economic picture on the national level. “There are three things the Fed is worried about:  meltdown in the financial system, recession, and rise in inflation rate,” he said.

Humpage outlined the forces behind the credit crunch as banks restrict lending to other banks, high-risk borrowers find it difficult to secure loans, and better-qualified borrowers may soon face similar challenges. “There’s increased risk of recession and the stories we hear are pretty disconcerting,” he said.  Conversely, he noted, a well-known economic forecast based on the average forecasts of 50 economists predicts that the economy will pick up by the second half of this year.

On the global level, despite the falling dollar and declining economy, “Recession is good for U.S. trade,” said Dale Larson, principal of Larson Global Consulting, Inc., pointing out that the U.S. trade balance improved during the 1991 recession. The recent fall of the dollar has improved U.S. price competitiveness, he said. He expects the result to be increased demand for U.S. exports, not only in Europe, but also in other markets such as China.

While much of this year’s conference discussion revolved around the housing market meltdown and the resulting credit crunch, a year can provide eye-opening perspective. “Last year, students asked why they should care about the housing market,” recalled Bob Gitter, professor of economics, who served as program moderator. “Some years, something you didn’t know before has impact, as a bellwether of things to come.”

Stay tuned to see how it all plays out by next year’s conference.

– Kathy Baird