Thirty years ago, Cleveland was left for dead on the shore of Lake Erie as residents migrated out of Northeast Ohio for nearly two straight decades.
By the 1980s, the jobless rate was one point higher than the national average and Cleveland’s slow decline become known as a “rustbowl era” for Northeast Ohio.
But somewhere around 1990, the decades of slow decline started to reverse. Ten years later, it’s hard for newcomers to imagine the city as the aging remnant of the industrial revolution it once was. During a recent visit to the newly renovated City Club, Vice Chairman of the Governor’s Board of the Federal Reserve System Roger Ferguson shared his take on how Cleveland steered clear of imminent disaster and took its role in the world economy.
“After peaking in the 1970s, the population of the six-county area, including Cuyahoga County, declined annually for nearly two straight decades,” says Ferguson. “But since 1990, more families have been arriving than leaving, which can only be due only to this area’s rejuvenated economy.”
Ferguson chalks the transformation up to several factors. He took time during the May visit to point out where Cleveland, as well as the nation as a whole, has gained ground during the past 10 years.
Productivity boom
National productivity nearly doubled during the last half of the 1990s. While nonfarm business sector productivity grew around 1.6 percent annually between 1990 and 1995, that measure jumped to 2.6 percent a year after 1995.
“Cyclical forces, such as the inability of businesses to add to their payrolls as rapidly as they would have liked, probably played some role in the efficiency gains,” explains Ferguson. “But, I suspect longer-term structural changes reflecting the boom in capital spending and the revolution in information technology have probably been more important.”
Export growth
Between 1987 and 1997, Ohio’s exports grew 60 percent faster than the exports overall in the United States, pushing the state to the position of the nation’s seventh biggest exporter.
“In 1996, the Cleveland area ranked 23rd in the top 70 export communities in the nation,” says Ferguson. “This region’s influence in the global economy appears to be still growing as its capital base expands.”
Wealth creation
The national income has jumped one-third since 1991, or about 3.5 percent a year. However, in Northeast Ohio, wealth creation has moved along at a much faster clip, according to Ferguson. “Wealth is being created at a pace rarely seen before and growth in this region has been even more impressive,” he says. “On a per capita basis, Ohioans have seen 5 percent income growth (annually) during the past eight years.”
What’s that all mean in the big picture? Well, Ferguson says, Northeast Ohio has become a dominant player in the world economy.
How to reach: Board of Governors of the Federal Reserve System, www.federalreserve.gov
Jim Vickers ([email protected]) is an associate editor at SBN.
