Uncertainty and volatility due to the coronavirus pandemic were the themes of the Federal Reserve Bank
presentation at the 2021 State of the Region Conference from Bowling Green State University.
“The incoming data suggests that the recovery in the United States has slowed from the third quarter. The
first quarter is probably looking a lot like what we saw in the fourth quarter. The second half of the
year is likely to be much better as we make more progress in vaccine development and distribution, but
again, the recovery has been very uneven,” Rick Kaglic, vice president and senior regional officer at
the Cincinnati Branch of the Federal Reserve Bank of Cleveland, said at the event on Tuesday.
Kaglic said that the economy has not affected all sectors equally, but they have all had changes.
“Financial markets have generally been supportive of economic growth,” Kaglic said, adding that there had
been “an accompanying flight away from risk.”
“Fortunately, quick and aggressive action by the Federal Reserve system, and the federal government,
staved off a full-blown financial markets melt-down,” he said.
While all sectors of the economy showed volatility, particularly in the second quarter of 2020, he noted
that in an analysis of purchasing managers indexes that supplier delivery was marked by severe
disruptions to supply chains.
“As we assess the recovery to date, and the outlook moving forward, one of the saving graces is that the
government acted quickly to stabilize household balance sheets and prevent a financial panic. For better
or worse, we’re not that far removed from the Great Recession, so it’s still fresh on policy-makers’
minds when the pandemic hit, and policy-makers recognized that one of the biggest constraining forces on
economic growth coming out of the Great Recession was the inability of households to spend,” Kaglic
said.
He said that during the Great Recession the S&P 500 stock market index lost about 55% of its
value. The average price of home values declined 30-35%, the biggest asset for most families. He said
that put consumers in a position where they were unable to spend.
“The federal government put together the largest stimulus package in our history, about $2.7 trillion.
Partly as a result of that, we saw household wealth recover much more quickly this go-round, than in the
Great Recession,” Kaglic said.
That package was represented to most people in the form of government stimulus checks, which put
consumers in a better position to spend, compared to 10 years earlier.
Since the beginning of the pandemic, Kaglic said that “the economy is really all about consumer
spending.”
He said that consumer spending has recovered, but that recovery has been uneven across several
dimensions.
Geographically, the Midwest, including Ohio, has fared well. However, on the West Coast it is still down.

The biggest hit to the national economy was in the leisure and hospitality sector, which has 4 million
fewer jobs than a year ago when the pandemic started.
Seated dining has not recovered, Kaglic said. Nationally, the sector is down 47.7% compared to
pre-pandemic levels. Ohio is down 45.1%, which is only better than Kentucky, down 53.6% and Pennsylvania
at 57.8%.
As noted by BGSU hosting institution Center for Regional Development director Russell Mills, Ph.D., the
economic effects of the COVID-19 pandemic have impacted Northwest Ohio communities in many ways. He said
that in Wood County, the entertainment, accommodation and food service sector had a 6.6% drop in
employment, or 482 jobs, the second quarter of 2020, and the Northwest Ohio region lost 5,772.
Additionally, exports are down almost $400 trillion dollars; it was down almost a $800 trillion dollars
at its lowest point in 2020.
Kaglic had some positive points about the economy moving forward.
“So much is uncertain at this point, and dependent on the path of the virus, but it’s also going to be
dependent on the jobs recovery, as that drives consumer spending. But one of the unique characteristics
of this recovery is that so many people are spending more time in their homes,” Kaglic said.
In the construction sector, comparing February 2020 to December 2020, private residential construction
was up 16.5% to $691 billion.
Both Kaglic and Mills pointed to some new economic trends, such as the increase in remote work and
growing sectors such as logistics and distribution, represented by online purchasing.
They said these opportunities will increase the economic resiliency and quality of life for residents.

Emblematic of the changes discussed at the 19th annual event, it took place virtually for the first time.
Last year’s event was held at the Hilton Garden Inn at Levis Commons, only a week before the state stay
at home orders went into effect.