While the continued growth is a positive indicator for Ohio’s economy, the state is still lagging behind national figures.
“We still have not yet recovered all of the jobs that were lost,” said Brad Evans, U.C. Economics Center director of research. “We lost more wages relative to the nation, and they’ve been slower to rebound.”
Evans said Ohio’s population is also a little bit older, and the baby boomer generation is expected to cut holiday spending by approximately 11% this year.
Increased holiday spending projected for metropolitan regions
The growth rates for the retail spending this holiday shopping vary from regions from as low as 0.2% in the Cincinnati region, which includes Butler, Warren, Hamilton, Clermont, and Brown counties, up to 17.5% in the Mansfield area. The Dayton metropolitan area, which includes Montgomery, Miami, Preble, and Greene counties in the study, is expected to have a growth rate of 5.3% in 2022 over 2021.
“We found that the state’s three largest metro areas, Columbus, Cleveland, and Cincinnati, will again account for more than half of estimated retail sales over the holidays,” said senior research associate Megan Heare. “We’re also forecasting positive holiday sales growth in all nine of the metro areas we studied.”
While researchers are anticipating Columbus, Cleveland, and Cincinnati to make up 54% of estimated holiday retail sales, those regions are forecasted to experience the smallest increase in holiday retail sales in 2022 compared to 2021. The study did not include forecasts for Clark or Champaign counties, by the nearby Columbus metropolitan area in the study, its growth rate is forecasted to be 2.7%.
Most consumers, or approximately 57%, are forecasted to do their holiday shopping online with more shoppers looking to utilize same-day or next-day delivery options.
“Consumers like to shop from the curb,” Gough said.
Housing costs outpace wage growth
Ohio employment levels are still behind pre-pandemic levels, but researchers found there was a 12.3% increase in wages and salaries between the first quarter of 2020 and the second quarter of 2022.
“Consumer confidence is still below its peak in February 2020 before the pandemic, but we’ve seen a partial recovery, and that, coupled with the salary growth, are factors in our forecast for higher holiday sales this year,” said Evans. Consumer confidence has recovered by approximately 17.7% from between December 2020 and October 2022, according to the U.S. Conference Board Consumer Confidence Index.
Ohioans are expected to be spending more of their disposal income on mortgage payments, though, as the house price index for Ohio increased by 32.8% over the last two years, outpacing wages. The growth in the house price index for Ohio was 18.4% between the second quarter of 2021 and the second quarter of 2022, compared to growth of 8.6% in total wages in Ohio during that same time frame, according to this study.
The study noted that while homeowners have been spending more of their disposable income on household debt payments, which have increased to 9.6% in 2022, according to the U.S. Federal Housing Finance Agency, this is still lower than pre-pandemic levels. The 10-year high was 10.2% in 2012.
Inflation, railway uncertainly concerning shoppers, retailers
Inflation and supply chain issues remain concerns for shoppers and retailers. The Ohio Council of Retail Merchants is optimistic the holiday shopping season will not be disrupted by a possible railway strike, but Gough said if rail workers decide to strike, the outcomes would be “devastating.”
“A railroad strike would be hurtful for the holiday season,” Gough said. “Rail is one piece of the transportation network for moving goods.”
Inflation has been growing since 2015, according to the Midwest Consumer Price Index. Increases were modest through 2020, according to the study, which stated those increases were 2.2% annually. Significant increases began in 2020 with a 6.6% increase from October 2020 to October 2021 and a 7.4% increase from October 2021 to October 2022. The month-to-month inflation rate was also positive between December 2022 and June 2022.
“I think consumers are being choosier,” Gough said. “I think inflation is having an impact in overall sales.”