Ohio’s economic future is hazy, but a recession might be looming, Fed survey indicates
One measure used by the Federal Reserve Bank of Cleveland says there’s a 24% chance that the U.S. economy was in recession last month. But the bank warns that the measure has become less reliable in recent years.
Even so, signs are mounting that if the economy isn’t already in recession, it could be soon, with major banks this fall indicating high odds of it.
The Cleveland Fed and 11 other regions conduct surveys on regional economic conditions eight times a year by questioning businesses, community organizations, economists, and other sources for its Beige Book.
The findings from all 12 regions are used by the Federal Open Market Committee as it sets monetary policy, in part by establishing key interest rates.
The region represented by the Cleveland Fed includes all of Ohio and adjacent parts of Pennsylvania, West Virginia and Kentucky.
In its Beige Book report published last month, respondents told the Cleveland Fed that President Donald Trump’s shifting array of tariffs are increasing their costs and forcing them to raise prices.
The reserve bank this week reported that a model using data from the Beige Book found that there was a nearly one-in-four chance that the national economy was already in recession as of last month.
However, it accompanied that with new research showing that the model’s track record had gotten significantly worse since 2021, after a global pandemic took hold.
“We attribute this to the historically unusual nature of the post-pandemic economic expansion and to changes in the drivers of regional economic sentiment,” the report said.
Even so, economic warning signs for Ohio appear to be piling up.
Ohioans’ credit card debt is rising faster than in all but four other states, WalletHub reports.
And the Buckeye State again had the nation’s fifth-highest unemployment in August, despite years of spending billions on taxpayer-financed incentives to attract jobs.
Yahoo Finance this week reported that hiring across the country “has dramatically slowed.”
And a Harris Poll conducted for Bloomberg News in late October found that 55% of Americans are worried about losing their jobs.
That’s not a great sign for a consumer-driven economy as we head into the holiday shopping season.
The news organization Reuters last week reported that, amid the government shutdown, consumer sentiment hit a three-and-a-half year low. And inflation has been on the rise since April.
There are also concerns that the deregulatory zeal of the current administration could produce a result even worse than the meltdowns that paralyzed the economy in 2008 and created the Great Recession.
William A. Birdthistle, a top official at the U.S. Securities and Exchange Commission under former President Joe Biden, last week published a column in the New York Times. It was titled “Trump is Pushing us Toward a Crash. It Could be 1929 All Over Again.”
The reality might not be as bad as all that, but major banks in September predicted high odds of a recession.
And some experts raised fears that the Trump tariffs could feed “stagflation” — a period of high inflation and weak economic growth.
As the Cleveland Fed report indicates, it can be devilishly hard to know if we’re currently in a recession, much less predict whether one is coming.
But the New York Times last week reported that some members of the Trump administration are saying some parts of the economy are already in recession, as they pressure the Federal Reserve to again lower interest rates.
Ohio Capital Journal is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Ohio Capital Journal maintains editorial independence. Contact Editor David Dewitt for questions: info@ohiocapitaljournal.com.