By John Byczkowski
Enquirer staff writer
DOWNTOWN - The local economy in 2005 may look much the same as it does this year, but that's not necessarily a good thing.
While overall growth in employment and production won't be much different next year compared to 2004, the region likely won't keep pace with economic growth nationally, according to the 15th annual economic forecast released Thursday by the Cincinnati USA Partnership.
"We're concerned," said George Vredeveld, head of the Economics Center for Education & Research at the University of Cincinnati and one of six economists who wrote the forecast. "We've got tight labor markets. We don't have the basis for growth."
The unemployment rate for Greater Cincinnati was 5.0 percent in August, lower than the 5.4 percent rate nationally, and the economists forecast the rate locally would drop to 4.9 percent in 2005.
That should be good news, but there's a downside: Vredeveld said the region doesn't have enough workers to fuel business growth. Local population growth is slow, with little in-migration and low numbers of foreign immigrants.
In addition, "the Cincinnati area does not tend to attract younger workers right out of college," the panel of economists wrote in their forecast, released Thursday morning at a partnership event at the Hyatt Regency Cincinnati.
These economists expect growth in gross regional product to be 3.8 percent in 2005, the same as in 2004. This falls short, however, of their forecast of 4.0 percent nationally.
The Northern Kentucky economy is expected to grow somewhat faster than the region overall, said panel member Thomas Zinn, a UC economist who forecasts the economy for the Northern Kentucky Chamber of Commerce.
Zinn said he expects employment in Northern Kentucky to grow 2.1 percent in 2005 and output to grow 5 percent.
Panelist David Hehman, the president of the Federal Home Loan Bank of Cincinnati, said there are reasons to believe the growth in the national economy will be even stronger than that.
The Federal Reserve has kept interest rates low for the better part of three years, and that much stimulus will have to pay off in growth, he said.
In addition, inflation is low, federal tax cuts continue to give consumers more money, and economies around the world are improving.
And though mortgage rates are rising, housing values are appreciating faster, meaning on a relative basis, mortgage rates remain low, Hehman said, so housing should remain strong.
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