Lehigh Valley Economic Report
Dr. Kamran Afshar
Chamber Chief Economist The Chamber’s Finance Committee
In 2019, around 2.2 million new payroll jobs were created nationally, some half a million fewer than in 2018. Unemployment rate, however has dropped to 3.5 percent nationwide. In Lehigh Valley, payroll employment rose by 3,200 above its 2018 level. Local unemployment level is now hovering around 4.3 percent which is technically at full employment level.
Twenty-nineteen was accommodating the sellers in the Valley’s housing market as average sales prices rose by around 2.5 percent, which is still ok, since inflation is just starting to pass 2 percent. However, this performance was nothing like 2018 when average sales prices rose by 5.5 percent. Local Housing sales volume which was mostly trending flat for a couple of years, climbed slightly in 2019.
However, the national economic headline grabber for 2019 was the stock market, which rose by 5200 points or 22 percent. It should be noted that the FED which was successful in siphoning out close to a trillion dollars of high-powered money that it pushed into circulation during multiple quantitative easing programs, reversed its course and pushed back into circulation inside of 7 months, almost half of what it took it years to withdraw. Three-quarters of last year’s stock market gain also happened during the same 7 months.
In the Lehigh Valley the most surprising economic news for many of us who have been analyzing the local data was the Bureau of Economic Analysis’ revision of the growth pattern of our region. According to the BEA’s new revised data, the manufacturing sector which produced 43 percent of the local GDP in 2001, shrunk in size by 65 percent, and its output now counts only as 16 percent of the local GDP. On the other side, the information sector which includes publishing, broadcasting, internet, telecom, and data process- ing has exploded by 3-fold, increasing its share of the economy from 1.8 percent to 5.7 percent percent.
Professional & business services sector has increased its share of the economy from 6.2 percent in 2001 to 11.9 percent in 2018. The
finance-insurance-real estate sec- tor’s output in the Valley is now equal to that of the manufacturing sector standing at 16.3 percent of the local GDP, up from 11.6 percent in 2001. And of course, the one constant in this sea of variables, health- care, has almost doubled its share of our local economy from 6.4 percent in 2001 to 11.8 percent in 2018.
The sector everybody is talking about, transportation and warehousing, which has grown in employment by close to 3-fold between 2001 and 2018, has barely increased its share of the economy rising from 3.8 percent to 5.0 percent.
According to the BEA, the Valley’s economy, similar to the rest of the nation is moving in the direction of services which on average used to pay less than the manufacturing sector. However, that was the last century, with the expansion of the healthcare, information and finance sectors we will soon catch up with the 21th century’s pay scales which are slowly starting the favor services.