Ohio’s economy in 2012 grew for the third consecutive year, but once again the growth lagged the national average, according to preliminary data released Thursday.
The state’s real gross domestic product increased 2.2 percent last year, compared to a 2.9 percent increase in 2011, according to new and revised data from the U.S. Bureau of Economic Analysis.
The national economy grew 2.5 percent in 2012, and it has outperformed Ohio’s economy in 13 out of the last 15 years.
But the state’s rate of economic growth more closely aligns with the national trend than it has in the past.
“Ohio has been lagging the growth in the U.S. economy for a decade now, and that is the bad news,” said William Even, Glos professor of business with the Farmer School of Business at Miami University. “But even though we are a bit below the national average rate of growth, we are starting to grow at a rate that’s similar — slightly below average — which is an improvement.”
Real GDP is the total value of all goods and services produced in the state, adjusted for inflation.
“It is the broadest measure of economic activity for a state, and it really is the state-level counterpart to national GDP,” said Thomas Dail, a spokesman for the bureau.
In 2012, Ohio’s real GDP increased to $435 billion from $426 billion in 2011, according to new and revised data.
The state’s real GDP increased 2.9 percent in 2011, much better than the 1.1 percent growth reported last year by the bureau. It was stronger growth than all but six other states.
But last year, Ohio’s real GDP growth ranked 20th in the nation. North Dakota had the fastest growth (13.4 percent) while Connecticut had the slowest (-0.1 percent). North Dakota’s economy is booming because of oil and gas activities in the state.
Since 1997, Ohio’s economy has only grown faster than the national average twice in 2002 and 2011.
In 2000, Ohio’s economy grew 2.6 percent while the U.S. economy grew 4.2 percent. In 2006, the state’s economy contracted by 1 percent, while the U.S. economy grew 2.7 percent.
“Between 2000 and 2007, before the recession, we were growing at a much slower pace than the rest of the country, and then the recession hit us harder than the average state,” said Even, with Miami University. “While we are a little bit below average in growth now, I would say things are looking a little bit better now than they did prior to the recession.”
The largest contributors to Ohio’s growing economic output was a 0.73 percent increase in durable-goods manufacturing, and a 0.7 percent increase in management of companies, which mainly reflects corporate headquarters.
The largest decreases were in real estate, rental and leasing (-0.3 percent) and professional, scientific and technical services (-0.15 percent).
The slowdown in economic growth in Ohio between 2011 and 2012 is likely attributable to job and spending cuts in the public sector, and slower growth in the manufacturing sector, said Brent Campbell, an associate economist with Moody’s Analytics in West Chester, Pa.
But Ohio’s economy is “still moving in the right direction” and the risk of another recession is very low, he said.
“All of the drivers are still in place, and manufacturing employment has picked up in the last few months in 2013, so it looks like 2013 will be OK for manufacturing as well,” Campbell said.
Last year, the state’s economy continued to recover, albeit fitfully, economists said.
Ohio’s unemployment rate in 2012 fell to 7.2 percent, the lowest level since 2008, according to data from the U.S. Bureau of Labor Statistics.
The state added 25,300 jobs between January and December 2012, and Ohio’s per capita personal income last year also rose at one of the fastest rates in the nation.
Economic forecasts predict similar real GDP growth in 2013.
“The revival of the motor vehicle industry and development of shale formations in the eastern part of the state seem to be behind the state’s improving fortunes,” said Jim Glassman, managing director and senior economist with commercial banking at JPMorgan Chase. “So is the leveraging of technology and health care spinoffs around the state’s colleges and universities.”
|Real gross domestic product increased for the third consecutive year in Ohio|
|YEAR||Ohio Real GDP||Ohio real GDP % change from previous year||U.S. real GDP % change from previous year|
|Source: U.S. Bureau of Economic Analysis|
|Note: Rounding may make % change slightly different|