Federal Reserve Data Reveals Cincinnati Economy is Out-Performing Regionally, Lagging Nationally

New data from the Federal Reserve Bank of Cleveland, which covers Ohio, western Pennsylvania, the West Virginia panhandle, and the eastern half of Kentucky, provides a glimpse into the recovery and transition of the region’s economy.

According to the newly released data, spanning from 2001 to 2012, this Federal Reserve region has weathered an incredibly tumultuous 11 years.

“Historically, much of the region has specialized in manufacturing, a sector that has been particularly hard hit over the past few decades,” noted Federal Reserve Bank of Cleveland research analyst Matthew Klesta in his data brief. “Since the end of the Great Recession in 2009, however, the decline in manufacturing employment has slowed. In some places, employment has even grown.”

Since the first year of recorded information in this data set, all 17 Metropolitan Statistical Areas (MSA) in the region, with the exception of Wheeling, WV, saw losses in manufacturing employment – the region’s historical economic stalwart. MSAs like Dayton and Steubenville posted losses of almost 50%. Cincinnati, meanwhile, saw its manufacturing sector decline by nearly 25% – a mark that is low by regional standards.

International trends in trade in the early 2000s, like China’s entry into the WTO and the increase of offshoring from developed to developing nations, combined with the Great Recession, dealt a critical blow to the area’s manufacturing sector. Excluding education and health services, every other industry in the region saw significant jumps in the annual percentage of jobs being lost during the Great Recession.

For example, between 2001 and 2007 the average loss per annum for the manufacturing sector was a little less than 3%; but from 2008-2009 it jumped to nearly 7%. Since the Great Recession, however, many MSAs in the area have posted modest gains in manufacturing employment, while still falling well below baseline levels in 2001.

While the manufacturing sector has declined throughout this Federal Reserve region, health and education sectors have grown. Despite a nationwide average of 1.2 health and education service jobs gained per 1 manufacturing job lost, only four MSAs in the region (Cincinnati, Columbus, Huntington, Pittsburgh) can boast an overall replacement of lost manufacturing jobs with health and education employment.

The replacement of manufacturing jobs with health and education employment does not bode well for the region’s workers. According to the data, the health and education sectors pay, on average ($44,000 in 2012), significantly less than manufacturing ($55,000 in 2012).

But while this changing economic landscape has meant a smaller presence for manufacturing in the region, this Federal Reserve Bank region continues to be highly specialized in that economic sector. Perhaps as a result, population loss continues to plague many MSAs within the region.

From 2001-2011, while the national population grew by 10% the regional population posted an average gain of only 1.6%. In fact, only five (Cincinnati, Huntington, Akron, Columbus, Lexington) of the 17 MSAs in the region saw their population rise over that time period. Of those five metropolitan areas, only two (Lexington and Columbus) posted gains in both population and private-sector employment.

Pittsburgh and Wheeling, meanwhile, managed to post positive gains in private-sector employment while still shedding population. The remaining 10 MSAs all posted losses in private-sector employment and population.

Riding Double-Digit Growth, Megabus Adds New Service in Cincinnati

Megabus has added new service between Cincinnati and Lexington, bringing the total number of direct destinations out of Cincinnati to nine (Atlanta, Buffalo, Chattanooga, Chicago, Columbus, Erie, Indianapolis, Knoxville, and Lexington).

The new Lexington service, which runs twice a day with 9am and 9pm departures from the 4th/Race Street Stop, continues the growth of inter-city bus travel out of Cincinnati.

In December 2010, Greyhound Express service was added out of the bus operator’s center city terminal, and Chinatown bus operators have added service since being profiled on UrbanCincy in February 2012.

Cincinnati Megabus
Megabus has seen continued ridership growth in Cincinnati, but may have to soon relocate its downtown stop due to reconstruction of Tower Place Mall. Photograph by Thadd Fiala for UrbanCincy.

Megabus itself added a second station in Cincinnati at the University of Cincinnati earlier this year, due to requests from the institution and its riders, and it has bolstered service on other routes through the acquisition of Lakefront Lines in 2008.

“We launched the brand in April 2006, and it was a major and exciting event because we didn’t know how it would go,” explained Mike Alvich, Vice President of Marketing and Public Relations for Megabus.com.

Since its launch seven years ago, routes to Indianapolis and Chicago remain the most popular. Megabus officials also say that the Cincinnati hub has experienced double-digit ridership growth and has served as a critical component of its growing national network.

“Cincinnati has been one of the jewels in our crown since our story began,” Alvich stated.

While Megabus officials would not comment on specific ridership totals, they did note that inter-city bus travel has been growing faster than both intercity rail and air travel in recent years, with Megabus experiencing 30% growth between 2011 and 2012.

Part of the reason, Alvich says, is the fact that inter-city bus travel is now time-competitive and significantly cheaper than air travel and it offers growing cost savings over cars.

Inter-city trains, meanwhile, continue to see a lack of investment and service, even though ridership has grown on that mode at a faster rate than air travel in recent years, and is setting ridership records.

“We consider ourselves to have two real competitors,” Alvich explained. “The first is the car, and the second are people’s concerns that they cannot afford to travel nowadays. As a result, people are staying at home or going somewhere local…so in a way we’re also competing with people’s couches and air conditioners.”

Another factor with the continued growth on inter-city bus service is the different transportation preferences among Millennials and aging Baby Boomers.

For Megabus, the largest share of their customers is people from the ages between 18 and 39. But Alvich notes that some of their fastest-growing demographics are seniors and families.

He also says that approximately 55% of their riders are women, and says that a consistent source of business for Megabus is groups of three to five women going on short weekend trips together.

Additional changes appear imminent for intercity bus operators in Cincinnati, as the Greyhound Bus Terminal is surrounded by the Horseshoe Casino and the main Megabus stop at Fourth/Race will soon become a construction zone. Officials at both companies said that plans have not been agreed upon yet, but that they are tracking the situation and will make changes as necessary.