Our partners include:
Greater Cleveland Partnership
Greater Akron Chamber
Stark Development Board
Team Lorain County
Youngstown-Warren Regional Chamber
Medina County Economic Development Corporation
Growth Partnership of Ashtabula County
Cleveland
Plus
Economic
Review
®
December 2009
Volume 3, Issue 4
Diversifying Industries
Positively Impacting
Cleveland Plus Economy:
A Northeast Ohio View of the Global Recesssion
www.clevelandplusbusiness.com
December 2009 | Volume 3, Issue 4
The Cleveland Plus Economy
Through Two Recessions
®
The U.S. has experienced two major recessions in
the last 30 years: one beginning in 1981, and the
current recession, which began in 2007. In the 1981
recession, the Cleveland Plus region saw declines
in employment and Gross Regional Product (GRP)
much greater than for the U.S. as a whole.
An indicator of regional
economic strength is the
comparison of employment
and GRP indexes. During the
1981 recession, Cleveland Plus
employment and GRP rate
dropped more sharply than the
U.S. During the current recession,
NEO vs U.S.
Employment and GRP are only
employment
1981 vs. 2007 Recession
now approaching the decline
experienced in 1981. And, the
change in Cleveland Plus
employment and GRP is
tracking much closer to the U.S.‘81
U.S.‘07
changes for the U.S. In this
NEO ‘07
recession, Northeast Ohio
is performing more in
NEO ‘81
line
with the
U.S. average.
Q1 in ‘82 vs.
Q2 in ‘82 vs.
Q3 in ‘82 vs.
Q4 in ‘82 vs.
Q3 in ‘82 vs.
Q2 in ’08
NEO in ‘81
Q3 in ’08
Q4 in ’08
U.S. in ‘07
Q1 in ’09
Q2 in ’09
NEO in ‘07
All data are for seven quarters of each respective
recession and does not project future performance.
www.clevelandplusbusiness.com
NEO vs U.S. Employment
1981 vs. 2007 Recession
+2%
+
% Change
-2%
U.S. ‘81
U.S.‘07
-4%
NEO ‘07
-6%
-8%
% Change
0
-
-
-
NEO ‘81
-10%
Q3 in ‘81 vs.
Q4 in ’07
Q4 in ‘81 vs.
Q1 in ’08
U.S. in ‘81
Q1 in ‘82 vs.
Q2 in ’08
Q2 in ‘82 vs.
Q3 in ’08
NEO in ‘81
Q3 in ‘82 vs.
Q4 in ’08
U.S. in ‘07
> From 1981 to 2007,
Employment has increased
by nearly 100,000 individuals
Q4 in ‘82 vs.
Q1 in ’09
Q3 in ‘82 vs.
Q2 in ’09
NEO in ‘07
Source : Economy.com and Ohio LMI
NEO vs U.S. GRP
1981 vs. 2007 Recession
+2%
0
% Change
Current
Recession
Trending
Closer to U.S.
Therefore, today it is important to know how
we are doing in comparison – both to the 1981
recession and to the nation. To evaluate this,
the following report evaluates the Cleveland
Plus region’s performance through the first
seven quarters of each recession.
U.S.‘81
-2%
U.S. ‘07
-4%
-6%
NEO ’07
-8%
-10%
NEO ‘81
Q3 in ‘81 vs.
Q4 in ’07
Q4 in ‘81 vs.
Q1 in ’08
U.S. in ‘81
Q1 in ‘82 vs.
Q2 in ’08
Q2 in ‘82 vs.
Q3 in ’08
NEO in ‘81
> From 1981 to 2007,
GRP has increased by almost $65 billion
Q3 in ‘82 vs.
Q4 in ’08
U.S. in ‘07
Q4 in ‘82 vs.
Q1 in ’09
Q3 in ‘82 vs.
Q2 in ’09
NEO in ‘07
Source : Economy.com
-1
Industry Mix Impacts GRP and Employment
Because GRP represents the economic activity
of Northeast Ohio’s industries, changes in industry
mix will affect total GRP and employment trends.
In reviewing GRP and employment during both
recessions, Manufacturing accounted for a significantly higher percentage of GRP and employment
in 1981 than today. Meanwhile, higher growth
industries such as Finance, Insurance and Real
Estate (FIRE), Healthcare, and Professional, Scientific
& Technical Services have become larger segments
of NEO’s industrial mix. This more diversified NEO
industry mix may account for NEO’s closer alignment
with U.S. employment and GRP rate trends during
the current recession.
For example, in the current recession, U.S.
Manufacturing employment has declined
nearly 14%, while Professional, Scientific and
Technical Services is essentially unchanged.
Finance, Insurance and Real Estate, while suffering,
is down only half as much as Manufacturing.
Healthcare employment is actually up almost 5%.
The shift in the Northeast Ohio economy to these
more stable industries is having a beneficial effect
in this recession.
Employment as Percent of NEO Economy by Industry
1980 vs. 2007 Recession
Health Care & Social Assistance
Management of Companies & Enterprises
Professional, Scientific,
& Technical Services
Finance, Insurance and Real Estate
Trade
Manufacturing
All Other
0%
5%
10%
15%
■ 1980
20%
25%
30%
35%
40%
45%
■ 2007
Source : Economy.com
“The growing correspondence of Northeast Ohio’s economic performance
measured by both employment and GRP with that of the national economy in
the recession offers a glimmer of the promise of the ongoing industrial restructuring
of the region’s economy. The trend toward higher levels of education in the
Northeast Ohio workforce is an encouraging reflection of the changing
industrial composition and a foundation for future growth.”
Dr. Larry Ledebur,
Cleveland State University Economist and Professor
NEO Workforce with
Higher Education Doubles
In line with the structural changes in the economy, Northeast Ohio’s workforce, ages 25 and older, has
also transitioned to accommodate higher skilled industries. Individuals with some college education have
increased about 120%, while individuals with a bachelor's or an advanced degree have increased by nearly 75%.
The increasing share of workforce with higher education is fueling Cleveland Plus region’s economic transformation.
NEO Composition in Educational Attainment
1980 vs. 2008
Bachelors or higher
4%
Some College/Associates
High School Grad
Less than 12th grade
0%
5%
10%
15%
20%
■ 1980
25%
30%
35%
40%
45%
■ 2008
Source : US Census Bureau
Industry Diversification
Benefits Economy
Professional, Scientific and Technical Services :
Similarly, 79% growth in the Professional, Scientific
and Technical Services sector from 1992-2007, with
Scientific Research and Development doubling U.S.
growth, has further diversified the region’s economy.
Cleveland Plus Economic Reviews provide an
aggregate view of long-term trends in Northeast
Ohio’s economy. In 2009, we reported growth of
specific sectors - Biomedical, Professional, Scientific
and Technical services, and Aerospace-Related –
and how they are diversifying the region’s economy.
In this final report of 2009, we see that the diversification of industries has led to closer tracking to the
U.S. during this recession as compared to the
1981 recession.
Aerospace-Related : Moreover, strength in the $8
billion Aerospace-Related sector continues to play an
important role in diversifying Northeast Ohio’s economy.
With 59% GRP growth in the last 15 years, more
sophisticated products are being manufactured
in Cleveland Plus.
BIOMEDICAL : With billions of dollars in private and
public investment, world-renowned healthcare
institutions and clinical trial leadership, Northeast
Ohio’s Biomedical industry has outpaced U.S.
growth. In particular, our region’s strength in Imaging,
Orthopedics and Cardiovascular, plus our transitioning
manufacturing workforce have led to growth in the
Medical Device manufacturing sector.
Headquarters : Finally, Northeast Ohio remains in
the nation’s top 4 regions for Headquarters employment share, ensuring a strong management base for
our region’s growing companies and industries.
With the Cleveland Plus region’s strong heritage
of invention, a strong base of significant research
institutions and a growing entrepreneurial sector,
Northeast Ohio has diversified our economy, and
employment and therefore, remains relatively strong
through this recession. All of this adds up for business.
NEO Employment
Up Slightly in Q3
NEO Total Employment ( Not Seasonally Adjusted )
2.10
2.05
2.00
(Millions)
This chart shows total employment year over
year for comparison of seasonal patterns.
There is typically incremental job growth
between Q2 and Q3, and Northeast Ohio
saw employment increase by approximately
3,000 jobs in the third quarter. Employment
is down approximately 5% from Q3 2008.
1.95
1.90
1.85
Q1
2003
2004
2005
2006
2007
2008
2009
2003
2004
2005
2006
2007
2008
2003
2004
2005
2006
2007
2008
2009
2003
2004
2005
2006
2007
2008
2009
1.80
Q2
Q3
Q4
Source : Ohio Labor Market Information (LAUS Data)
NEO Unemployment
Rate Declines Slightly
NEO Quarterly Unemployment Rate
2003
2004
2005
NEO 16 counties
2006
Ohio
2007
2008
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q1
The Northeast Ohio unadjusted
unemployment rate declined slightly
in the 3rd quarter, following the trend of
the overall U.S. economy. The rate dipped
to 10.3% in Q3 2009, with the U.S. at
9.6% and the state of Ohio is at 10.5%.
This decline is a result of both an increase
in total employment, as well as a drop in
the overall size of the workforce.
Q2
12.0%
11.5%
11.0%
10.5%
10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
2009
U.S.
Source : Ohio Labor Market Information (LAUS Data)
GRP Estimates Continue to
be Adjusted for Recession
NEO Real GRP Billions (2008 Dollars)
$190
2.4%
$180
2.6%
$170
0.3%
(-1.9)% 1.2%
0.7% (-1.5%) (-.4%) (-1%)
1.8%
(-5.1%)
4.8%
3.8%
$160
$150
$140
1.2%
3.0%
5.1%
0.3%
$130
$120
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Real GRP
Source : Moody’s Economy.com
Average Annual Growth = 1.4%
The most recent estimates from economy.com
show Northeast Ohio’s GRP contracting by
approximately 5% in 2009. This decline reflects
the ongoing recession in the U.S. economy.
Data from economy.com is continuously
updated and are subject to revisions.
December 2009 | Volume 3, Issue 4
About Team NEO
Team NEO advances Northeast Ohio’s
economy by attracting businesses worldwide
to the 16-county Cleveland Plus region.
The organization is a joint venture of the
region’s largest metro chambers of commerce.
Since 2007, the organization has attracted 29
new companies, 3,100 new jobs and more
than $95M in annual payroll to Northeast Ohio,
leading to a total regional annual payroll impact
of more than $260M. For more information,
visit www.clevelandplusbusiness.com.
Data Sources: Team Northeast Ohio uses a number of data sources for
the Regional Economic Review. One of the primary sources is the Moody’s
Economy.com (www.economy.com) Northeast Ohio modeling system.
This firm is the leading independent provider of economic, financial and
industry research and data that specializes in national and metropolitan
economic growth forecasts. Moody’s Economy.com county level output,
employment and payroll historical data are estimated from several
publicly available sources and are summarized into the Team NEO
regional footprint. It is important to understand data provided by
Economy.com are estimates of economic activity.
Team NEO also uses data from federal and state sources as part of the
report. As with Economy.com, the information for the Team NEO footprint
is derived from data reported at either the county or metropolitan level.
We rely heavily on data from the U.S. Bureau of Labor Statistics
(www.bls.gov) and Ohio’s Labor Market Information (www.lmi.state.oh.us)
for information on wages, unemployment and both general and industryspecific employment. In addition, Team NEO uses data from the Census
(www.census.gov) to track housing-related activity including the
number of single and multifamily permits, as well as their values.
737 Bolivar Road, Suite 2000, Cleveland, Ohio 44115
888.NEO.1411 • www.clevelandplusbusiness.com
2005
2006
2007
Occupied Square Feet
2008
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Vacancy Rate
6.5%
Q2
7.0%
375
Q1
7.5%
380
Q4
8.0%
385
Q3
8.5%
390
Q2
395
Q1
9.0%
Q4
9.5%
400
Q3
405
Q2
This graph shows the total amount of
industrial space occupied by quarter
between the first quarter of 2005 and the
third quarter of 2009. The vacancy rate for
industrial space in Northeast Ohio rose
slightly to 7.6% in Q3 2009, while occupied
space continues to remain fairly stable.
NEO Occupied Industrial Space & Vacancy Rate
Occupied Square Feet (Millions)
Industrial Space Strong
Despite Economic
Downturn
2009
Vacancy Rate
Source : CoStar Industrial Data
Industrial real estate data for this edition was derived from the CoStar Group.
The CoStar Group is a leading provider of commercial real estate data
throughout the United States, covering more than 58 billion square feet
of property throughout the country.
Due to market limits within the CoStar database, historic trend data for the
Team NEO region is defined as 10 of the 16 counties forming the regional
footprint. These counties include Ashtabula, Cuyahoga, Geauga, Lake,
Lorain, Medina, Portage, Richland, Stark and Summit.
Cleveland Plus 16-County Region
Ashtabula
Lake
Cleveland Geauga
Cuyahoga
Trumbull
Lorain
Medina
Ashland
Richland
Summit Portage
Youngstown
Akron
Mahoning
Wayne
Stark
Canton
Carroll
All data are for seven quarters of each respective recession
and does not project future performance.
Columbiana