Dayton-Springfield region economic outlook for 2023 is positive though tinged with recession worries

Recession worries are real in the Dayton-Springfield region, but the strong job market, big wins in economic development, the easing of inflation and loosening of supply chain tangles have local experts feeling generally positive about the region’s 2023 economic prospects.

But they’re also wary of economic uncertainty, as rising interest rates slow the economy, companies struggle with workforce challenges and inflation drives up costs. The continued war in Ukraine and brewing congressional battle over raising the nation’s debt limit add to that uncertainty about 2023.

“I believe specifically in the Springfield region that the economic outlook is positive in 2023. There are pressures on the economy that we continue to address and monitor and will look at alternatives to address,” said Springfield City Manager Bryan Heck, listing inflation and supply chain issues as stressors. “I believe it is correct that we are not going to experience a huge downturn in the economy.”

A dozen local experts from the business, financial, government, development and real estate sectors weighed in about this year’s economic outlook for the Dayton, Springfield and Butler County regions in southwest Ohio.

In this four-part series publishing today through Wednesday the experts discuss the overall view of the region’s prospects, how the region can leverage its strengths, the possibility of an economic recession, the impact of inflation and higher interest rates and how the region is coping with labor shortages and workforce training issues.

Those interviewed for the story included:

  • Ben Ayers, senior economist for Nationwide Insurance in Columbus
  • Greg Blatt, president of Dayton Realtors and a realtor at Keller Williams Advisors Realty
  • Jim Bowman, owner and CEO of Noble Tool LLC of Dayton
  • Montgomery County Administrator Michael Colbert
  • Crystal L. Corbin, executive director of the Montgomery County Transportation Improvement District
  • Dave Dickerson, partner and president of midwest market at Miller Valentine Construction of Dayton
  • Butler County Commissioner Don Dixon
  • Tom Franzen, Springfield assistant city manager and director of economic development
  • Springfield City Manager Bryan Heck
  • Chris Kershner, president and CEO of the Dayton Area Chamber of Commerce
  • David Melin, PNC regional president for Dayton
  • Julie Sullivan, executive vice president of regional development at the Dayton Development Coalition

What is your view of the Dayton region’s economic outlook in 2023?

The generally optimistic view for 2023 stems in part from the region’s success in diversifying its business sectors after the Great Recession-era shuttering of General Motors and Delphi plants laid bare the region’s overreliance on the automotive industry.

“Just by strategy we have moved further away from that and gotten involved in some higher end manufacturing, which is more advanced manufacturing,” Dickerson said. “Obviously we have a huge resource in the market with Wright-Patt. It continues to grow and provide a lot of ancillary services. Companies want to be located close to it.”

The new $9.5 million National Advanced Air Mobility Center of Excellence is a good example. The facility now under construction at the Springfield-Beckley Municipal Airport will support flight test and development of electric vertical take-off and landing aircraft and provide testing capacity to the Air Force Research Laboratory at Wright-Patterson Air Force Base, Franzen said. The city will operate it as part of a consortium of universities and private research entities.

Credit: Bill Lackey

Credit: Bill Lackey

“This fits in obviously as the birthplace of aviation. It’s a natural place where we are going to lead the next evolution of flight, including electrification of aircraft, vertical takeoff and landing elements,” Heck said of the facility, which is expected to be completed this summer.

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The 32,000-strong workforce at Wright-Patterson Air Force Base makes it the state’s largest single-site employer. The second and third largest employers in the Dayton region are Premier Health and Kettering Health, which together employ about 24,521 people, according to tallies provided by the Dayton Development Coalition using Dun and Bradstreet and Salesforce data.

Credit: Alexis Larsen

Credit: Alexis Larsen

“I have been part of the Dayton community for many years and experienced numerous economic cycles. During the past several decades, the Dayton economy has emerged stronger and more diverse,” Melin said. “As such, the region should continue to exhibit a resiliency, faring slightly better that the national economy driven in part by our sizable education, healthcare and government sectors.”

Companies expanding or coming to the area committed to creating 5,943 new jobs and retaining 6,865 in 2022, according to data provided by the coalition, which is the western regional partner for JobsOhio, the state’s privatized economic development arm.

Those companies pledged capital investments totaling $5.5 billion, far exceeding annual investments in previous years in the west region, which includes Auglaize, Champaign, Clark, Clinton, Darke, Fayette, Greene, Mercer, Miami, Montgomery, Preble and Shelby counties.

“We have had back-to-back record years for job creation in 2021 and 2022, so we’re moving into 2023 with incredible momentum and success,” Sullivan said.

Credit: Alexis Larsen

Credit: Alexis Larsen

The bulk of the new investment in the Dayton region comes from SEMCORP Advanced Materials Group and Honda.

SEMCORP is is building a battery materials manufacturing plant in Sidney that is expected to employ about 1,200. Honda anticipates creating 2,500 jobs as it retools its Anna and East Liberty plants for production of electric vehicles and has a joint venture with LG Energy Solutions to build a new battery factory in Fayette County.

The region also is expected to benefit from the $20 billion Intel semiconductor plants being built in Licking County.

Credit: Knack Video + Photo

Credit: Knack Video + Photo

“We’re seeing a lot of very large projects, often driven by reshoring opportunities as companies look to stabilize their supply chains,” Sullivan said. “Time will tell how many of those opportunities land here.”

How can the Dayton region leverage its strengths in 2023 to improve the economic outlook for businesses, workers and families?

The Dayton region has proven its resilience, weathering devastating job losses during the Great Recession and powering through the pandemic recession in ways those interviewed point to as the strengths that will carry the region through whatever 2023 brings.

“We believe that by supporting job growth in the region, we’re helping to create opportunities for the people who live here,” Sullivan said. “The economic impact of the projects we support ripple throughout the community, helping to create a stronger regional economy.”

The metro areas that include Dayton, Springfield and Butler County had some of the state’s lowest unemployment rates in November, just above the Columbus metro area’s 3.2%, according to preliminary, non-seasonally adjusted data from the U.S. Bureau of Labor Statistics.

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The unemployment rate in the Cincinnati metro area, which includes Butler County, was 3.3% and in the Dayton and Springfield metro areas it was 3.6%, the data show.

But all three regional metro areas lagged most of the state’s other regions in employment growth in November compared to a year earlier. The number of non-farm employees in Dayton and Springfield rose 0.8% and in Cincinnati increased 1.2% year-over-year, according to non-seasonally adjusted preliminary data from the BLS.

Those interviewed point to the region’s collaborative nature, low cost of living, thriving arts scene, good schools and neighborhoods, lack of highway gridlock and willingness to step up to help make economic development happen.

Credit: christine parlett

Credit: christine parlett

“Over the past 10 years, focused efforts to improve roadway access and bring jobs to the Dayton region spurred new investments from consumer goods giants like Procter & Gamble and Amazon,” Corbin said. “Projects and job creation will continue throughout 2023 as the TID does not foresee a slowdown anytime soon.”

The region should build on the momentum created by 2022′s huge new economic development investments, Melin said.

“Dayton used to be a market with disinvestment, now we are seeing significant new investment. We used to ask other cities and markets what they were doing to achieve success, now others are coming to Dayton and asking us how we are achieving results,” Melin said. “Success comes with strong leadership and collaborations, and we have that in Dayton.”

U.S. Economic Indicators - December 2022
 
Unemployment rate - Declined to 3.5%
Unemployed people - Decreased 278,000 from November
Non-farm employment - Increased 223,000 from November
Average hourly earnings - Increased 4.6% year-over-year
Consumer Price Index - Increased 6.5% year-over-year
Retail sales - Declined 1.1% from November
Gross Domestic Product 3rd Quarter - Increased 2.3% year-over-year
Note: CPI data is not seasonally adjusted. Employment, unemployment and retail sales data is seasonally adjusted.
Sources: U.S. Bureau of Labor Statistics, U.S. Bureau of Economic Analysis, U.S. Census Bureau


See our four-part 2023 economic outlook series

Part 1 - The region’s general economic outlook

Part 2 - The possibility of a recession and its impact

Part 3 - The effect of inflation and higher interest rates

Part 4 - Labor shortages and workforce issues

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