We’re not the only ones calling yesterday’s jobs report troubling.  Both economists cited in this morning’s Columbus Dispatch agreed.  But first, here’s a lede you don’t want in a major battleground newspaper if you’re an incumbent governor planning to run on a message of economic revival in Ohio:

Ohio’s unemployment rate seems to be stuck in neutral.

Nothing says a Governor has a raging case of impotency cause by ED (economic dysfunction) that a lede like that.  At least we found a story in the Dispatch Kasich’s campaign won’t be quoting in fundraising pitches and ads.

As we covered yesterday, the worse news is that the data points within July jobs report showing that underemployment is a growing problem, and that’s a sign that people are giving up looking for work because the jobs being created are insufficient to meet the labor demand.

And as we said, economists agree:

In the first seven months of 2011, the state gained an average of 6,100 jobs per month, said Dan Meges, an economist with Chmura Economics & Analytics in Cleveland. That has slowed to 5,100 jobs per month in the first seven months of this year.

Job growth should be better this far into the recovery, Meges said.

The first six months of 2011 Ohio was still operating under the policies and budget of Governor Ted Strickland (Ohio’s budget goes on the fiscal year, while the terms go almost by the calendar year.)  So, here we have an economist admitting that Ohio was doing better economically at the end of Ted Strickland’s last budget as it is at the end of Kasich’s first.  In other words, turns out all those times in 2010 when Kasich promised he’d put Ohio on a path to an even stronger recovery than Ohio already had under Governor Ted Strickland was, well, not true.

Also, while it’s swell that Ohio’s still creating jobs, it’s lackluster and far less than we should be at this phase of the economic cycle.  If Kasich were a stock, this economist just declared his economic policies overvalued and underperforming.

And he’s not alone.

Wells Fargo & Co. economist Michael Brown agreed.

“The labor-market situation has been very disappointing for the state,” he said.

Brown said permits for construction of single-family homes in the state are barely a third of the number before the recession. There has been improvement this year, but not much, he said. “It’s still way, way depressed,” he said.

Construction, as we pointed out yesterday, has shed 6,300 jobs over the past twelve months.  Housing may be on the rebound, but it’s probably because thanks to the wave of foreclosures and other economic factors there is an strong (maybe over) supply of existing homes at pricing that new construction are having a harder time in which to compete.

And they’re not alone in saying Ohio’s job growth is inadequate.

"Ohio’s rate of job growth during July 2013 was once again slower than the USA national average," [George Zeller of Cleveland, an economic research analyst] said in an email. "This extended Ohio’s current streak of below average job growth to 13 consecutive months."

We’ve gone a year of job growth below the rest of the nation.  Whereas Ohio was a leader in job creation in 2011 and early 2012, now we’re being left behind.

But not every economic analyst was down on yesterday’s report.

"No change in the unemployment rate means statewide people are starting to enter the labor force again, so they are seeing the economy pick up again, and confidence is growing," [Jacob Duritsky, managing director of research for Team NEO] said. "With employment going up and unemployment staying the same, that is a sign that more people are coming back into the labor force."

Of course, it should be noted that Team NEO is one of the regional partners of Governor Kasich’s JobsOhio, and has received reportedly $4.1 million in funding from JobsOhio, more than any other regional partner received at the time.  I’m not saying that makes Duritsky biased to the point of not being credible.  But while it’s true payrolls are up, employment is actually down and the reason Ohio’s unemployment stayed the same was because 11,000 Ohioans LEFT the labor market, not joined it.  So other than the fact he’s factually wrong and may have a financial motive that creates the appearance of bias in his opinion, Mr. Duritsky’s dissenting view has no other obvious issues.

Remember earlier in the week when we noted how last weekend Governor Kasich’s spokesman subtly tried to move the goal posts on how the Administration should be judged on the economy?  Yesterday’s jobs report and these economists are further evidence of why that was actually a major tell (as they’d say in poker) of where Governor Kasich believes the economy in Ohio is headed.  And it ain’t up.

Even though we’ve essentially been saying this since 2010, here’s what the data since then has shown.  In 2009, Ohio’s real GDP shrank in the last year of the Great Recession by a jaw dropping -5.7%.  In 2010, thanks to the federal stimulus and Governor Strickland’s budget, Ohio’s GDP went from shrinking nearly 6% to growing 2.1%.  As the last of the stimulus money was being applied in 2011, GDP growth peaked at 2.9% before dropping back to 2.2% in 2012 in Ohio.  In other words, the economy in Ohio grew essentially as much in 2012 as it was in 2010.  Kasich opposed the federal stimulus and attacked Strickland for using it to balance the budget (instead of just cutting funding).  Perhaps it’s just a coincidence in timing, but I’ve seen no other explanation for why Ohio’s economic growth patterns shows that the recession ended and its strongest changes in GDP just happen to be during the federal stimulus.

We’ve seen the same thing in job creation.  Even as the papers collectively agree in their reporting that Ohio’s job creation appears to have peaked in early 2012, none of talked about what a “post-peak” economy ordinarily means happens next as explained in this fundamental chart you’d find in any Intro to Economics textbook:

Business Cycle

If employers thought that the drop in GDP was just a statistical blip, then we would see job creation start to show some signs of acceleration.  It hasn’t. We’re seven months into this year, and it’s clear that while employers aren’t laying off people in droves, job creation is roughly half what it was last year.  If Kasich thought this slow down was just a temporary statistical blip, they’d say so.  Instead, I believe they are convinced that both GDP growth and job creation hit their peaks in 2011 and 2012 respectfully, and we are firmly to the post-peak side of the business cycle curve, where we’re still growing, but slower and slower until we enter into a recession.

How else do you interpret this statement from Rob Nichols a week ago?

“It’s what you did from the start to what you did to the end. That’s what Ohioans did with Strickland: They judged him over his term, and they voted him out,” Nichols said.

I bring this up again because this is what the entire 2014 gubernatorial race is about:  Setting expectations of the economy and then measuring Kasich’s performance to it.  What Nichols did last week was to not only to walk away from the very statements Nichols made in 2010 when he said candidate Kasich would lead Ohio to a stronger recovery than Strickland.   He lowered the bar of economic expectations so low you cannot imagine that he could credibly lower them any further.  Not only did Kasich promise he would do better than Strickland, he said he would make Ohio competitive to the rest of the nation, ahead of the pack, even.  That’s what Candidate Kasich said in 2010.  But now in 2013 and facing economic data that suggests Ohio may have already peaked in 2014, Governor Kasich suddenly is trying to reframe the standard to such a low standard that he cannot possible fail to meet it.

Nichols essentially said last week that it doesn’t matter how many jobs Ohio created under Kasich’s term, or when those jobs were created, or really what happens to the economy in Ohio since those jobs were created.  If by the time voters go to the polls in November 2014 and Ohio’s job creation scoreboard still shows they scored, really, ANY points since he’s been office, Nichols argues voters should re-elect Kasich to another term, even if every other State in the country has outscored Ohio in the meantime.  Gone is any pretense of doing better than Ohio was doing under Strickland, or the rest of the country, or even its neighbors.  That is how low the bar Nichols is now setting. 

To the extent a guy elected with less than 50% of the vote had any mandate, it wasn’t to attack women’s reproductive choices, it was to have the economic recovery in Ohio do better than it was already doing under Strickland.  If John Kasich thought the slowdown in the economy was just a blip and that Ohio hadn’t peaked yet, then why would Nichols say what he did? Is that really the talk of an Administration that believes Ohio is in miraculous recovery as Gov. Kasich has publicly claimed as he traveled the State even to this day?  We’re fifteen months away from the election, and already the Kasich Administration’s is asking to be judge by setting the bar of economic expectations to its lowest possible level.  What does THAT tell you?

While John Kasich and the national and state media are openly talking about the dream of a Kasich presidential campaign in 2016, 11,000 Ohioans gave up their simple dream of having a job.  Any job.  Which do you think is the more important story in Ohio?

As economists publicly start to describe Ohio’s economy as “stuck in neutral” and underperforming compared to the rest of the nation and where it should be this far out from a recession, you start to see the panic in Nichol’s words last week.   In 2010, Kasich exploited voters fears about the economy to convince them he had a plan that would work and Strickland did not.  Now, three years later, Kasich is worried that he could be hoisted on his own petard. 

What if Ohio’s economy already peaked in early 2012, and could Ohio be entering a recession just as voters head to the polls?  It’s enough to keep Kasich up at night, and it just might be the entire narrative for the 2014 campaign.  It’s a nightmare of Kasich’s own making.

Evangelize!
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  • dmoore2222

    Yes. This is a nightmare of his own making. Turning away almost a half billion dollars for high speed rail that would have created many really good jobs, and who knows how many more once up and running, was the height of stupidity. But that and all the economic data aside, women, teachers, cops, gays and public workers were gonna bury this turd anyway for his hostility toward them. The giant sleeps now but will awaken election day 2014–and he knows it.

  • duckmonkeyman

    I’m afraid too many of my firefighter and police friends are still strongly conservative.

  • CherMoe

    On the other hand, putting food on the table might be more of a priority than “religion”. Kasich wants to get rid of the unions. Remember, too, that many Ohio WOMEN vote, and we aren’t happy with the Kasich anti-women laws he rammed through OR his anti-child actions, cutting food stamps, cutting funding for the disabled kids, cutting education, etc. Then we come to SENIORS … and we will be nailed big time with his rescinding the rollback on our property taxes along with the extra .25% in sales tax he rammed through, along with all the other tax increases. And we are fully aware that he is still taking care of his cronies and the tax breaks for the rich.

  • Natasha

    Conservative does not necessarily mean stupid. That said, perhaps, your firefighter and police friends are simply being what Kasuck decreed them to be in his “Have you ever been stopped by a policeman who was an idiot? I had this idiot pull me over….”

    http://www.youtube.com/watch?v=KF0_Qe4zNrE

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