Courtney Wagner likes what she sees at her family-owned machine and tool shop off Wooster Road West in Norton.
Business is good and they are investing in new equipment, she said. She’s president of Wagner Machine Inc., the third generation member of her family running the business that was founded by her grandfather.
Wagner Machine says it can mill and turn metal pieces as small as a thumbtack and fabricate parts that weigh as much as 30,000 pounds.
Wagner also is president of the Akron chapter of the National Tooling and Machining Association, largely made of smaller suppliers to the auto, rubber/polymer, energy and other industries.
Think of Wagner Machine and related companies as leading economic indicators; when they get orders, that means their customers — larger firms further up the manufacturing food chain — expect increased business. And that means dollars come in, creating and retaining jobs.
“We see things six to eight weeks before they’re needed,” Wagner said. “Our association is very optimistic for this year.”
The optimism comes as billionaire Donald Trump prepares to take the oath of office Friday as the next U.S. president. Trump, nominated by Republicans at their convention in Cleveland last July, was elected in November after an economy-focused campaign promising to “Make America Great Again.”
But some see economic storm clouds ahead. Gov. John Kasich, one of Trump’s opponents for the nomination, warned in early December that lower-than-expected state tax revenue could be an indication of trouble ahead for Ohio.
“We’re on the verge of a recession in our state,” Kasich said in a visit to the Ohio House.
Since the governor’s remarks, though, state budget figures released this past week paint a still struggling but bit more optimistic outlook — at least for the near term.
Nationally, some fret that the long, yet historically weak, U.S. economic expansion since the end of the Great Recession could come to an end soon, too.
Still, it is difficult to make predictions, especially about the future — a saying attributed to the late Yogi Berra, Mark Twain, Albert Einstein and Danish physicist Niels Bohr. Take your pick.
Joe Savarise, for one, thinks his industry — he’s head of the Ohio Hotel & Lodging Association — should have a decent 2017.
“The growth of the hotel market in Ohio has been strong and continues to be so going into 2017,” he said. “This is a reflection of performance of the industry overall, and a basically sound underlying economy. We are still in a building/expansion phase, and we see that around Ohio and in the Akron market as well. While state sales tax receipts declined for some sectors of the economy, sales tax collections for industries related to travel and tourism increased 2.6 percent in 2016. The travel sector traditionally leads the way to economic recovery and growth.”
New hotels will continue to be built this year in the state and new hotel brands will also come to Ohio, he said.
“All of this growth has a positive impact on the economy of the entire state,” Savarise said. “Hotel development leads to additional growth in retail, restaurant and other businesses in the immediate vicinity. Across the state, more than 420,000 jobs are supported by travel and tourism — it’s big business.”
Ohio jobs are expected to increase this year, said Joel Elvery, economist at the Federal Reserve Bank of Cleveland. In addition, wages continue to increase, he said.
“[But] growth in Ohio is going to slow compared to 2015 and 2016,” he said.
An imminent state recession is unlikely based on broader economic indicators than state tax revenue, he said. For one thing, state sales tax collection is being hurt as consumers shift to online, not brick and mortar, shopping, he said. Ohio doesn’t capture all of the taxes from online sales the way it does with in-state store sales, Elvery said.
Ohio’s demographics also work against strong economic growth; the state’s aging population is not being offset with enough young people to replace retired workers, he said.
Ohio manufacturers also are upgrading their technology and increasingly automating, which improves productivity but results in fewer jobs, he said. “There’s no sign that will let up,” Elvery said.
Ohio retailers should have a good 2017, said Gordon Gough, president and chief executive officer of the Ohio Council of Retail Merchants.
Gough noted that the National Retail Federation on Friday reported that holiday sales, up 4 percent from a year ago to $658.3 billion, came in stronger than expected — the pre-holiday prediction was an increase of 3.6 percent. (The national retail group does not provide a breakdown by state.)
“I think our members are cautiously optimistic that our economy will grow,” Gough said.
A survey shows that Ohio construction firms anticipate 2017 will be a decent year. The national survey of nearly 1,300 businesses by the Associated General Contractors of America, released Jan. 10, says that 73 percent of construction firms expect to expand their payrolls.
In Ohio, 41 percent of (25) surveyed firms said they expect to add between one and five people, while 12 percent said they expect to add more than 25 people. A quarter of the firms said they expect no changes in employment.
Ohio’s latest monthly budget report, which goes to the governor, notes that “Ohio’s economy has hit a rough patch.” The new report was released this past Tuesday by the Office of Budget and Management.
Ohio’s economy is tied strongly into the national and global economies, said Tim Keen, OBM’s director. His office is two weeks away from finishing the state’s two-year budget.
“We are growing. We continue to grow,” Keen said. “We added jobs. But job growth slowed.”
Ohio’s current job growth rate is slower than from 2011 through 2015, the January report said. Ohio’s economy also has been impacted in part by a strong dollar, which hurts the state’s numerous companies that export.
The national economy is in its eighth year of expansion, the third-longest stretch since World War II, Keen said. If the expansion continues another two years, that will be the longest stretch in U.S. history without a recession, he said.
“We try to be restrained in our economic forecasts,” Keen said.
Ohio sales tax growth has been sluggish for a number of reasons, he said. That includes deflationary pressures on some consumer goods and the impact of online shopping, including downward pressure on prices created by people who comparison shop online, he said.
The January OBM report shows that the latest leading economic indicators for Ohio, which are for November, anticipate the state economy will grow the next six months. In addition, the state’s leading indicators released in October were revised upward after initially being negative. The state-by-state leading indicators are compiled monthly by the Federal Reserve Bank of Philadelphia.
As for Wagner, she said local companies are looking to start up new product lines and invest in workforce development, which are bullish signs. Wagner Machine and other local tool and die companies are doing well, she said.
“We are not industry-specific at all,” Wagner said. That is a primary reason why Wagner Machine has been able to stay in business for decades, she said.
“We diversified,” she said. “We are the jack of all trades.”
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.