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Coal for Kasich: Philly Fed shows Ohio contracting as 47 states expand

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On Christmas Day in Ohio, those who have been naughty or nice received appropriate gifts from the jolly big man in the red suit.

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Coal for Kasich

What Santa brought to Ohio Gov. John R. Kasich, who hopes voters will rehire him next year after lackluster job production over the last three years since he squeaked to a victory in 2010, was a couple lumps of coal in the form of not so good news from the Federal Reserve Bank in Philadelphia and the non-partisan W.P.Carey School of Business at Arizona State University.

The Philadelphia Fed just released November data updating its monthly series of coincident indices for the 50 U.S. states showing only three states are contracting: Alaska, Ohio, and Wyoming.

A month ago, a similar report by the Philly Fed painted a bleak picture of Ohio’s economy, showing the state headed in the wrong direction as the rest of the country continues to improve. According to the October report released in November, over the past three months the Federal Reserve’s "Coincident State Index" moved in a positive direction in 45 states, remained stable in 2 states, and decreased in only 5 states: Ohio, Alabama, Alaska, Wyoming, and Montana.

The last time Ohio’s three-month index decreased was more than three years ago in September of 2010, prior to the election of John Kasich, a former 18-term Congressman whose staunch belief in Jack Kemp-style supply side economics and cutting taxes whenever possible makes him a relic of the Reagan Era.

The coincident indexes of the Philadelphia Fed combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

In November, according to the Ohio Department of Jobs and Family Services, Ohio lost 12,000 jobs, the worst job loss of any state in the nation. Employment increased in 43 states across the country at the same time.

Ohio near bottom of states

Previously, Ohio ranked as low as 48th in March. The state-by-state report by the W.P.Carey School of Business notes that Ohio plummeted to 46th in the nation in job growth for the month of November. In October, a similar report by the same group showed Ohio at 44th in the nation in job growth.

Gov. Kasich won his narrow election in 2010, the year of the rise of the Tea Party, by only 77,127 votes statewide. He promised to outperform the national average on job creation. At his 2013 year end review last week before a friendly audience of chamber officials, Gov. Kasich touted the creation of 174,800 jobs so far, an impressive number, but out of context for where Ohio is today, following the drubbing it took during the Great Recession.

What remains an inconvenient truths for Team Kasich is that 427,000 Ohioans are still without jobs, a failure manifested in a state unemployment rate of 7.4 percent compared to the national average of seven percent.

A year ago, Kasich enjoyed a rate of 6.8 percent, due in large part to job-recovery momentum under former Democrat Gov. Ted Strickland, whose arrival in office in January 2007 coincided with a state, which had already been sliding from the Taft years, that like many other states, especially midwestern states, would be economically ravaged by the Great Recession of 2008-09.

Democrats pounced on the news, saying the report from Arizona "adds to the overwhelming number of statistics showing that under Governor Kasich’s policies, Ohio’s economy is headed in the wrong direction as the rest of the nation continues to recover."

"With more than 427,000 Ohioans out of work and our unemployment worse than the nation’s for the first time in three years, Governor Kasich continues to benefit his rich friends at the expense of the rest of us. Ohioans deserve better," a spokesman for the state Democratic Party crowed.

More optimism for next year

Meanwhile, in separate news, a business survey of Ohio businesses conducted by Milwaukee-based Employer Associations of America shows more Ohio businesses optimistic about next year. A survey of 149 businesses in the Buckeye State showed that 92 percent of them are convinced the economy will be good or better next year than it was in 2013.

The report appears to be a reversal from last year, when executives or companies in Ohio were less enthusiastic than those in Michigan, the Midwest, and the United States about the performance of the economy in 2013.

The bad economic news could have political implications for Gov. Kasich's hope to win a second term. But one big problem for Democrats is their candidate for governor, Ed FitzGerald from Cleveland, is little known. In spite of that, Kasich fares poorly in polls that range from Kasich enjoying a seven point lead to FitzGerald up by three points.

For Democrats to defy the conventional wisdom that Republicans will dominate the 2014 midterm elections, voter turnout next year needs to look like 2012, when voters turned out in record number to give President Obama a second term, than 2010, when Kasich won with only 23.5 percent of registered voters due to low voter turnout.

Gov. Kasich only won 49 percent of voter turnout of 49 percent in 2010, besting Strickland by 2 percentage points.

Adding unneeded difficulty to FitzGerald's hopes of unseating a powerful incumbent like Kasich was the three week ordeal the former FBI agent and Mayor of Lakewood, Ohio, underwent with his first big campaign decision, pick a strong lieutenant governor running mate.

FitzGerald's pick crashed and burned when back taxes owed by State Senator Eric Kearney consumed the attention of political reporters across the state. Team FitzGerald knows Gov. Kasich will not want for campaign funds and will have allies retell his story of an "Ohio Miracle" under his regime of reform. Objectively, though, the miracle is little more than a mirage, based on measurable job performance criteria that sources like the Philly Fed and the W.P.Carey School of Business at Arizona State University use routinely to compare and contrast.

With 2014 less than a week away, Gov. Kasich's constant repetition of how effective his reforms have been on job creation cannot explain away reports like the two Santa delivered this Christmas season to the peripatetic governor, who clearly relishes the political buzz of him re-enter the national spotlight as a GOP presidential contender in 2016.

Gov. Kasich must convince voters, again, that his vision is the right vision. So far, the numbers tell the story that Kasich's economic promised land, where jobs are plentiful and wages rise, is still far over the horizon. For a seasonal metaphor, if the star Kasich is following because he thinks it leads to a new economic salvation is JobsOhio, he may be wandering in the desert for years to come.

His signature proposal, to privatize what once had been a public job development effort for 40 years, just isn't getting the jobs done. His followers call him a visionary, but Gov. Kasich's vision so far has been more mirage than miracle.

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The post Coal for Kasich: Philly Fed shows Ohio contracting as 47 states expand appeared first on Columbus Government Examiner.

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