1. BOOM OR BUST: WHICH SIDE OF THE ECONOMIC RECOVERY DO YOU SIT ON? Janet Harrah, Senior Director Center for Economic Analysis and Development Northern Kentucky University

2. Defining boom and bust Economic turning points are never neat and tidy. Some sectors lead while others lag Couple economics and politics and you get hyperbole on both sides An examination of trends for key indicators shows an economy improving but with a long way to go to reach recovery

3. Key indicators Employment by sector Unemployment and labor force participation rates Average hours worked Average hourly wages Inflation Gasoline prices Food prices

4. EMPLOYMENT TRENDS In general employment is up for the 12 months ending February 2012, but down compared to the pre- recession peak

5. Cincinnati Employment by Sector 989,400 Total Jobs

6. Employment: boom or bust? Total jobs, Cincinnati MSA Recession 2007 through 2009 Level change-54,900 Percent change-5.2% Recovery 2009 through 2011 Level change(2,942) Percent change-0.3% Past 12 months (Feb 2012) Level change16,700 Percent change1.7% Feb 2012 versus Feb 2007 Level change(41,200) Percent change-4.0% Boom: employment is up 1.7% over the past year adding 16,700 jobs Bust: the Cincinnati metro area has 41,200 fewer jobs today than 5 years ago

7. Professional & Business Services: boom or bust? Professional services jobs, Cincinnati MSA Recession 2007 through 2009 Level change-9,600 Percent change-6.1% Recovery 2009 through 2011 Level change5,608 Percent change3.8% Past 12 months (Feb 2012) Level change2,000 Percent change1.3% Feb 2012 versus Feb 2007 Level change500 Percent change0.3% Boom: employment is up 1.3% over the past year adding 2,000 jobs More jobs today than 5 years ago Bust:

8. Health Services: boom or bust? Health services jobs, Cincinnati MSA Recession 2007 through 2009 Level change4,400 Percent change3.1% Recovery 2009 through 2011 Level change3,433 Percent change2.3% Past 12 months (Feb 2012) Level change3,400 Percent change2.3% Feb 2012 versus Feb 2007 Level change10,800 Percent change7.7% Boom: employment is up 2.3% over the past year adding 3,400 jobs Employment never declined More jobs today than 5 years ago Bust: economic or demographic growth? transfer of wealth?

9. Government: boom or bust? Government jobs, Cincinnati MSA Recession 2007 through 2009 Level change-1,700 Percent change-1.3% Recovery 2009 through 2011 Level change (5,367) Percent change-4.1% Past 12 months (Feb 2012) Level change (200) Percent change-0.2% Feb 2012 versus Feb 2007 Level change (7,300) Percent change-5.4% Boom: Government sector is “right sizing” Bust: Jobs losses continue in the sector Loss of government services Education is key to future economic success

10. MFG Employment: boom or bust? Manufacturing jobs, Cincinnati MSA Recession 2007 through 2009 Level change-14,700 Percent change-12.1% Recovery 2009 through 2011 Level change (317) Percent change-0.3% Past 12 months (Feb 2012) Level change6,100 Percent change5.9% Feb 2012 versus Feb 2007 Level change(12,200) Percent change-10.1% Boom: employment is up 5.9% over the past year adding 6,100 jobs Bust: the Cincinnati metro area has 12,200 fewer mfg. jobs today than 5 years ago

11. Leisure & Hospitality: boom or bust? Leisure & Hospitality jobs, Cincinnati MSA Recession 2007 through 2009 Level change-3,900 Percent change-3.7% Recovery 2009 through 2011 Level change2,700 Percent change2.6% Past 12 months (Feb 2012) Level change7,300 Percent change7.7% Feb 2012 versus Feb 2007 Level change3,400 Percent change3.4% Boom: employment is up 7.7% over the past year adding 7,300 jobs metro area has 3,400 more leisure & hospitality jobs today than 5 years ago Bust: Mostly low paying, part-time jobs

12. Leisure & Hospitality: boom or bust? Leisure & Hospitality jobs, Cincinnati MSA Recession 2007 through 2009 Level change-3,900 Percent change-3.7% Recovery 2009 through 2011 Level change2,700 Percent change2.6% Past 12 months (Feb 2012) Level change7,300 Percent change7.7% Feb 2012 versus Feb 2007 Level change3,400 Percent change3.4% Boom: employment is up 7.7% over the past year adding 7,300 jobs metro area has 3,400 more leisure & hospitality jobs today than 5 years ago Bust: Mostly low paying, part-time jobs

13. UNEMPLOYMENT TRENDS The percentage of Cincinnati adults participating in the labor force is down along with the unemployment rate

14. Unemployment: boom or bust? Cincinnati MSAUnemployedUnemployment Rate Recession 2007 through 2009 200755,9015.0% 2009105,2249.3% Recovery 2009 through 2011 2009105,2249.3% 201199,1738.9% Past 12 months (Feb 2012) Feb 2011103,5229.3% Feb 2012 85,5057.8% Feb 2012 versus Feb 2007 Feb 200755,2085.0% Feb 2012 85,5057.8%

15. Unemployment: boom or bust? Boom: More people are working Unemployment rate is down Bust: The labor force participation has declined from 67.1% to 66.4% If the labor force participation today were at 2007 levels, another 10,500 people would be looking for work If they were still in the labor force the unemployment rate would be 9.7% instead of 8.9% Unemployment rate does not differentiate between part-time and full-time or low-wage and high-wage jobs

16. AVERAGE HOURS WORKED AND WEEKLY EARNINGS

17. Avg. hours worked per week have nearly regained pre-recession levels

18. Avg. weekly earnings mixed results

19. Total earnings still down billions $ Jobs Avg. weekly earnings Annual earnings in billions 20071,047,200736.8$40.1 2011989,358747.5$38.5 Percent change-4.2% Level change($1.7) Jobs Avg. Weekly Earnings Annual earnings in billions 20071,047,200355.4$19.4 2011989,358332.3$17.1 Percent change-11.7% Level change($2.3)

20. PRICES AND INFLATION TRENDS

21. Inflation rate below historical averages but rising

22. CPI-U versus Core Inflation Long termShort term

23. Gasoline prices rising rapidly

24. Gas prices eat into disposable income Price per gallon of gas$2/gallon$3/gallon$4/gallon Median household income$45,090 Expenditure on gasoline2,2003,3004,400 Percent of household income4.9%7.3%9.8% Average American household purchases approximately 1,100 gallons of gasoline per year Every $1 rise in gas costs the average family an additional $1,100 per year or 2.2% of household income

25. Food prices rising as well In 2010 the average household spent $6,110 on food For the 12 months ending March 2012 food prices are up 4% or about $240 per year

26. Consumer spending sluggish Nationally, consumers continued to increase their spending in March (nominal dollars) Up 0.8 percent from Feb. 2012 Up 6.5 percent from March 2011 Gasoline stations up: 7.6% Restaurants up: 6.3% Special factors Release of new iPad lifted sales at electronics stores Outsize growth at building supply stores likely weather-related Modest growth for remainder of year

27. Outlook for 2012 Over the past 12 months: Cincinnati’s growth has kept pace with the rest of the country. That trend is expected to continue next year with employment increasing 1.4 percent adding 13,900 jobs. The unemployment rate is expected to remain relatively high, but below 2011 levels.

28. Summary Long slow recovery Lots of risks on the horizon Oil price volatility European debt crisis Federal debt and deficit management Potential changes in Federal tax policy Changes in health care costs

29. Discussion Questions Will Americans continue to retire at 65? The age workers expect to retire has increased from an average of 60 in 1995 to 66 in 2011, according to a Gallup poll. 42 percent of workers 55 and over have been jobless for at least a year 39 percent of 45 to 54-year-olds have been jobless for at least a year

30. Discussion Questions Are Americans abandoning the dream of owning their own home? Nationally, prices have now dropped 34.4% from their peak in 2006. Prices are now the lowest they have been since the end of 2002, according to the Case/Shiller index. Robert Shiller, co-creator of the index and long- term researcher on housing prices, warns that risks remain and that we may be seeing a broad shift in consumers' beliefs with regard to the desirability and risks of owning a house. In fact, Shiller speculates that it may take decades for suburban single-family housing prices to recover.dropped 34.4% from their peakCase/Shiller indexrisks remain

31. Discussion Questions Will Americans continue to save as the economy improves? Before the Great Recession, the American household sector, in the aggregate, had ceased to save at all. Now the American household sector is saving again. This is good news. In the long run, economies that don’t save either suffer slow long-term growth because their physical capital (machines) and human capital (our skills and training) grow slowly, or they borrow from other economies (China) that do save.