Ohio Reduces Taxes on Individuals and Corporations

Key Economic Insights

• Global: World Gross Product projections revised upward to 5.4% for 2021. Nearly 25% of global population has received at least one does of a COVID-19 vaccine.
• U.S.: Total nonfarm payroll employment rose by 850,000 in June. Consumer confidence rose to pre-pandemic level.
• Ohio: Ohio’s Fiscal Year 2022-2023 budget made substantial changes to state tax programs impacting corporate site location and economic development.

Global Insights

24.6% of the world population has received at least one does of a COVID-19 vaccine.  3.3B doses have been administered globally, and over 34M are now administered each day. The Biden Administration announced a plan to deploy response teams across the U.S. focused on combatting the highly contagious delta variant, which has now been detected in at least 98 countries.

World Gross Product projections expanded to 5.4% in 2021, and 4.1% in 2022 according to The UN Department of Economic as Social Affairs July World Economic Situation and Prospects.  The current global recovery is set to be faster than any of the previous recoveries from a worldwide recession since the end of World War II.  130 countries and jurisdictions, representing more than 90% of global GDP, have joined a new two-pillar plan to reform international taxation rules, including a global minimum corporate income tax of at least 15%.

Asia’s manufacturers are seeing the area’s economic recovery stumble as the pandemic weighs on output, increasing their reliance on exports to the rest of the world. Malaysia’s manufacturing purchasing managers’ index declined to 39.9 in June, its lowest in more than a year. Vietnam and India slipped below the 50 level that separates expansion and contraction. Euro-area and U.K. Manufacturing PMIs on Thursday were at or near the highest levels since the data started being collected more than two decades ago.

U.S. Insights

Total nonfarm payroll employment rose by 850,000 in June, up from 559,000 in May 2021, though the unemployment rate unexpectedly rose to 5.9%. Initial jobless claims fell by 51,000 to a seasonally adjusted 364,000 in the week ended June 26 from the prior week’s revised total of 415,000, according to the Labor Department. New jobs at restaurants, hotels, stores, salons and similar in-person roles accounted for about half of all payroll gains in June, reflecting consumers’ desires to return to these businesses as restrictions ease.

Economic activity in the services sector grew in June for the 13th month in a row.  While lower than May’s all-time high reading of 64%, the Services PMI registered 60.1% in June. Similarly, the June Manufacturing PMI registered 60.6%, a decrease of 0.6 percentage point from the May reading of 61.2%.  Consumer confidence index from The Conference Board improved in June to 127.3, the highest level since the onset of the pandemic’s first surge in March 2020. 10-year U.S. Treasury yields dropped to their lowest since February despite concerns about rising inflation and a gradual removal of Federal Reserve stimulus.

Lumber prices dove more than 40% in June, resulting in their worst month on record dating back to 1978.  Meanwhile, U.S. home prices surged at their fastest pace ever in April, with average home prices in major metropolitan areas across the nation rose 14.6% in the year that ended in April.  As high home prices continue to weigh on the housing market, mortgage applications decreased 1.8% last week, falling to the lowest level since the beginning of 2020.  Rising home prices and decreasing mortgage applications come alongside soaring rent prices across the U.S., as the median national rent climbed 9.2% in the first half of 2021. The U.S. trade deficit widened in May, as American consumers and businesses stepped up purchases of imported products and materials amid a continued economic recovery.

Ohio Employment & Economic Insights

Governor DeWine signed Ohio’s Fiscal Year 2022-2023 budget into law. The budget made substantial changes to state tax programs impacting corporate site location and economic development. State income tax rates saw a 3% reduction in tax year 2021 and thereafter. The new Ohio income tax also eliminates the top bracket, further reduces the tax rate in the next-to-top bracket to 3.99% and increases the income level at which the lowest tax bracket begins to $25,000 in tax year 2021. The changes were so significant they were covered by multiple media outlets including the Wall Street Journal.

The U.S. Department of Commerce’s Economic Development Administration is awarding a $1.9M CARES Act Recovery Assistance grant to the Youngstown Edison Incubator Corporation to renovate a 65,000 square foot building and further enhance the organization’s capacity to spur entrepreneurship and innovation.

Positive Company-Specific News

• Progressive Insurance intends to hire up to 6,400 new employees during the remainder of 2021 to support the insurance organization’s growth.
• Sutphen announced plans to combine its three Urbana manufacturing and service sites in a new facility in Urbana.
• Tokyo-based global parts supplier Chiyoda Integre chose Ohio for its first U.S. Manufacturing Facility.
• Forge Biologics and Case Western Reserve University announced gene therapy workforce development partnership.
• Honda continued to rack up record sales in June.
• Olive, the automation company creating the Internet of Healthcare, closed a $400M funding round, bringing the company to a $4B valuation.
• Avient, the specialized polymer materials maker in Avon Lake, has acquired United Kingdom-based company Magna Colour for $48M.
• Physna raises $56M led by Tiger Global – and adds Google’s VC arm as an investor. This marks the third Columbus startup that Tiger Global has invested in from the Drive Capital portfolio.

Negative Company-Specific News

• Justice Department reportedly probing Lordstown Motors. S. Bank has closed five branches in Greater Cincinnati so far this year as the pandemic accelerated changes in how customers do business.
• Cleveland office market lost 263,881 square feet of occupancy in the second quarter, according to the latest report by JLL.

Resources

• Ohio Department of Health’s COVID-19 Website: coronavirus.ohio.gov
• JobsOhio’s information about Open, Secure Supply Chains in Ohio