The Erie Economy: Performance, Opportunities, and Challenges Eggs n Issues Manufacturer and Business Association December 2015 Dr. Kenneth Louie The Economic Research Institute of Erie Sam and Irene Black School of Business Penn State Behrend
Overview Employment, Unemployment, & Labor Force Participation Output (GDP) Income per Capita Cost of Living Components of Personal Income Erie in the Global Economy 2016 Economic Outlook The Erie Leading Index (ELI) Highlights of Some of Our Work at the Economic Research Institute of Erie in the Black School of Business at Penn State Behrend 1
Erie Employment (SA*) 127,000 *SA = seasonally adjusted, not South America. Source: Bureau of Labor Statistics, Local Area Unemployment Statistics 2
Unemployment Rate (%) Erie & US Unemployment (SA) 12 11 10 9 8 7 6 5 4 3 2 1 9.7 9.1 7.0 Erie U.S. Latest: October 2015 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 4.5 5.5 5.0 Source: Bureau of Labor Statistics, Local Area Unemployment Stats 3
Difference in Erie - US Unemployment Rates (SA) 2.5 2.0 1.5 1.0 1.9 Average difference Jan 1990 - April 2008: +.53 Average difference May 2008 - April 2015: -.29 1.3 0.5 0.0-0.5-0.3-1.0-1.0 Latest: September 2015-1.5 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Source: Bureau of Labor Statistics, Local Area Unemployment Stats 4
% Change in Employment The U.S. s 9 Recessions since 1950 20 15 10 5 0-5 -10 2008-10 1957-59 1953-54 1960-61 1970-71 1974-76 1978-82 1990-91 2000-03 +1.23 0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96-6.28 2/10-15 -20 Months after Peak Latest: November 2014, Peak = Jan 2008 Source: Bureau of Labor Statistics, Current Employment Survey 5
% Change in Employment Erie s 9 Recessions since 1950 20 15 10 1970-71 1960-61 5 0-5 -10 2008-10 1974-76 1990-91 -1.65 0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96 2000-03 -6.52 1/10 1953-54 -15-20 1957-59 Months after Peak 1978-82 Latest: October 2014, Peak = May 2008 Source: Bureau of Labor Statistics, Current Employment Survey 6
Number of Jobs Erie Gross Job Losses During the Recession 4,000 2,000 1,400 Gain 0-2,000-4,000-6,000-8,000-2,300-6,100-3,100-600 - - 800-2,600-2,700-300 - 600-10,000-12,000-14,000-16,000-13,400 Note: Industry detail does not add to total due to use of different peak & trough dates for each industry. Source: Bureau of Labor Statistics, LAUS 7
Jobs Lost and Regained 14,000 12,000 10,000 13,400 10,700 Latest: October 2015 8,000 6,000 6,100 4,000 2,000 0-2,000 2,300 1,400 3,600 3,100 2,500 600 800-500 400 2,600 2,700 1,600 700-200 -1,400 300 300 600 900 Source: Bureau of Labor Statistics, LAUS 8
Percent Labor Force Participation Rate (SA) 68 66 U.S. LFPR 64 62 60 58 56 Size of Erie Year Labor Force 2005 140,605 2006 140,301 2007 140,590 2008 141,912 2009 139,893 2010 136,354 2011 137,266 2012 137,447 2013 135,990 2014 134,343 48 53 58 63 68 73 78 83 88 93 98 03 08 13 Latest: July 2014 Source: Bureau of Labor Statistics 9
% Change from Peak Value U.S. LFPR in 11 Cycles 4 3 2 1 0-1 -2-3 -4 0 12 24 36 48 60 72 84 96 108 120 Months Past Cycle Peak Nov 1948 Jul 1953 Aug 1957 Apr 1960 Dec 1969 Nov 1973 Jan 1980 Jul 1981 Jul 1990 Mar 2001 Dec 2007 Source: Bureau of Labor Statistics 10
Indexed GDP (2001 = 100) Erie & US Output (GDP, GMP) 175 150 2014 GDP: Erie: $10,856,000,000 U.S.: $17,316,314,000,000 %DRGDP (2001-2014): Erie: +0.2% U.S.: +1.7% U.S. 158 135 125 Erie 100 Latest: 2013 75 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Bureau of Economic Analysis, REIS 11
Erie GMP by Industry, 2014 Erie U.S. Erie Erie to to Industry GMP % of GDP %% of of U.S. U.S. (in millions) GMP (in billions) GDP LQ LQ All All industry total $10,856 $10,485 100.00 $16,701,415.0 $15,678,767.0 100.00 1.00 1.00 Private industries 9,432 9,099 89.96 86.78 14,613,827.0 13,795,560.0 87.50 82.60 0.99 1.09 Agriculture, forestry, fishing, and hunting 117 63 0.60 1.12 269,099.0 98,120.0 1.61 0.59 0.69 1.02 Mining 49 41 0.47 0.39 449,352.0 342,172.0 2.69 2.05 0.15 0.23 Utilities 162 148 1.55 1.41 287,068.0 244,773.0 1.72 1.47 0.82 1.05 Construction 281 274 2.68 2.61 611,374.0 583,863.0 3.66 3.50 0.71 0.77 Manufacturing 2,851 2,696 27.19 25.71 2,079,518.0 1,797,015.0 12.45 10.76 2.07 2.53 Durable goods 1,953 1,892 18.63 18.04 1,096,437.0 984,754.0 6.56 5.90 2.75 3.16 Nondurable goods 898 804 8.56 7.67 983,081.0 812,261.0 5.89 4.86 1.30 1.76 Wholesale trade 465 434 4.43 4.14 998,685.0 966,228.0 5.98 5.79 0.69 0.77 Retail trade 751 734 7.16 7.00 956,302.0 899,351.0 5.73 5.38 1.22 1.33 Transportation and warehousing 216 223 2.06 2.13 490,257.0 444,111.0 2.94 2.66 0.72 0.77 Information 212 237 2.02 2.26 802,378.0 782,769.0 4.80 4.69 0.47 0.43 Finance and and insurance 1,387 869 13.23 8.29 3,293,209.0 1,206,273.0 19.72 7.22 0.67 1.15 Real Real estate estate and and rental and leasing 606 555 5.78 5.29 2,178,614.0 2,161,629.0 13.04 12.94 0.41 0.45 Professional, Professional, scientific, and and technical technical services services 325 313 3.10 2.99 1,172,107.0 1,180,896.0 7.02 7.07 0.43 0.44 Management Management of of companies companies and and enterprises enterprises 47 48 0.45 0.46 327,891.0 334,600.0 1.96 2.00 0.23 0.22 Administrative Administrative and and waste waste management management services services 224 205 2.14 1.96 505,340.0 499,967.0 3.03 2.99 0.65 0.71 Educational services 176 1.68 187,077.0 1.12 1.50 Educational services 209 1.99 180,387.0 1.08 1.85 Health care and social assistance 1,326 12.65 1,200,938.0 7.19 1.76 Health care and social assistance 1,359 12.96 1,133,121.0 6.78 1.91 Arts, entertainment, and recreation 430 4.10 622,603.0 3.73 1.10 Arts, entertainment, and recreation 147 1.40 163,483.0 0.98 1.43 Accommodation and food services 279 2.66 460,054.0 2.75 0.97 Accommodation and food services 285 2.72 434,632.0 2.60 1.04 Other services, except government 309 2.95 360,630.0 2.16 1.36 Other services, except government 311 2.97 342,171.0 2.05 1.45 Government 1,386 13.22 2,087,589.0 12.50 1.06 Government 1,424 13.58 1,883,207.0 11.28 1.20 Source: Bureau of Economic Analysis, REIS 12
Annual % Change 6 4 2 0-2 -4-6 -8 Growth Rate of Real GDP Annual Average: Erie 0.25%, U.S. 1.70% 4.02 3.44 3.61 3.24 2.56 2.71 2.54 2.18 2.18 1.80 1.45 1.56 1.84 2.20 0.98 1.36 0.38 0.16 0.18 0.30-0.30-0.21-0.65-2.98-2.72 Erie U.S. -6.39 Latest: 2014 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Bureau of Economic Analysis, REIS 13
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Millions (2009$s) Erie Goods and Services Production 6,500 6,000 5,500 5,000 4,500 4,000 5,152 Services 5,682 3,500 3,000 2,500 3,215 Goods 2,992 2,000 1,500 Latest: 2014 Source: Bureau of Economic Analysis, REIS 14
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Index Value (2001=100) 1.3 1.2 1.1 Goods and Services Indexes U.S. Services Erie Services 1.27 1.10 1.08 1.0 0.9 Erie Goods U.S. Goods 0.91 0.8 0.7 Latest: 2013 Source: Bureau of Economic Analysis, REIS 15
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Millions of Dollars (Chained 2009$) Erie Goods Production 3,000 Manufacturing Total 2,790 2,500 2,663 2,000 Durable Goods 2,065 2,202 1,852 1,500 1,442 1,000 Non-Durables 500 Ag., Min., & Const. 810 328 0 Latest: 2014 Source: Bureau of Economic Analysis, REIS 16
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Millions of Dollars (Chained 2005$) Erie Services Production 3,000 Latest: 2013 Info, Prof, Mgmt, Admin, Other Services 2,500 2,338 2,000 1,500 Government Healthcare & Education 1,000 Real Estate Retail 500 Wholesale & Transportation Utilities 0 1,399 1,297 Finance & Insurance 762 692 596 529 Arts & Accom. 410 152 Source: Bureau of Economic Analysis, REIS 17
Per Capita Income ($) Income Per Capita 50,000 40,000 30,000 20,000 % Increase (1969-2014): Erie: 959.9% US: 1,071.7% US Erie 46,049 40,873 39,379 33,518 38,200 33,225 10,000 3,930-3,604 Latest: 2014 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 Source: Bureau of Economic Analysis, REIS 18
Real Per Capita Income (2000$) Real Income Per Capita 50,000 45,000 40,000 35,000 % Increase (1969-2014): Erie: 64.3% US: 87.8% US 44,721 42,760 36,567 36,078 46,855 37,590 30,000 25,000 20,000 24,946 22,877 Erie 15,000 10,000 5,000 - Latest: 2014 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 Source: Bureau of Economic Analysis, REIS 19
Percentage of U.S. (%) 100 Erie Real Income Per Capita as a % of U.S. 95 94.6 90 91.7 90.3 85.6 85 80 83.9 80.7 80.2 75 Latest: 2014 70 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 Source: Bureau of Economic Analysis, REIS 20
Cost of Living Index, 2014 (Annual Averages) Erie, PA Composite Index: 95.4 100.0 = average of 264 U.S. urban areas Components: Grocery Items 103.7 Housing 83.6 Utilities 91.5 Transportation 95.7 Health care 92 Miscellaneous 103.7 Source: C2ER, Cost of Living Index Annual Averages 2014 21
1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 % of Total Income of Erie Residents Erie Personal Income Breakdown 100 90 80 86.72 Earnings Latest: 2014 70 69.30 60 50 40 30 20 10 0 12.47 9.67 8.72 Div, Int, & Rent Proprietorship s Transfers 24.99 16.09 5.04 Source: Bureau of Economic Analysis, Local Area Personal Income 22
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 % of Total Income Earnings as a % of Total Income 100 90 80 70 60 86.72 82.82 Erie Earnings U.S. Earnings 72.08 69.30 50 40 30 20 10 0 Latest: 2014 Source: Bureau of Economic Analysis, Local Area Personal Income 23
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 % of Total Income Transfers as a % of Total Income 30 25 Erie Transfers 24.99 20 17.22 15 10 5 9.66 8.74 U.S. Transfers 0 Latest: 2014 Source: Bureau of Economic Analysis, Local Area Personal Income 24
Transfer Receipts in $ Millions Types of Transfer Payments: Erie 1,400 Latest: 2014 1,200 Medical 1,000 800 600 Retirement and Disability 400 200 0 Unemployment Insurance Compensation Income Maintenance Other 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 Source: Bureau of Economic Analysis, Local Area Personal Income 25
Transfer Receipts in $ Millions Types of Transfer Payments: U.S. 1,200,000 Latest: 2013 1,000,000 800,000 Medical 600,000 Retirement and Disability 400,000 200,000 Unemployment Insurance Compensation Income Maintenance Other 0 1969 1974 1979 1984 1989 1994 1999 2004 2009 Source: Bureau of Economic Analysis, Local Area Personal Income 26
Increasing Global Interdependence 27
Jobs Supported by Total Goods Exports, Top 10 States, 2014 Rank State Jobs Supported Share of U.S. All States 7,123,110 100% 1 Texas 1,117,318 15.7% 2 California 775,320 10.9% 3 Washington 390,690 5.5% 4 New York 389,957 5.5% 5 Illinois 345,050 4.8% 6 Michigan 270,927 3.8% 7 Florida 270,473 3.8% 8 Ohio 263,356 3.7% 9 Georgia 209,071 2.9% 10 Pennsylvania 191,779 (3% of PA Empl) 2.7% Source: U.S. Dept. of Commerce, International Trade Administration 28
Millions of Jobs Jobs Supported by Exports is Increasing 14 12 10 9.9 10.4 11.2 11.4 11.4 11.7 8 6 4 2 0 2009 2010 2011 2012 2013 2014 Year Source: U.S. Dept. of Commerce, International Trade Administration 29
Exports (In Millions of Chained 2009$) Erie Merchandise Exports 2,000 1,800 1,600 1,400 1,200 Erie 1,305 1,000 1,028 800 Latest: 2014 600 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: International Trade Administration 30
Exports (In Millions of Chained 2009$) Merchandise Exports 16,600 Latest: 2014 14,600 12,600 10,600 8,600 7,785 Pittsburgh Cleveland 9,782 9,151 7,579 6,600 4,600 2,600 Buffalo 3,795 4,384 1,028 Erie 1,305 600 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: International Trade Administration 31
Exports as a % of RGDP Erie Exports as a % of Real GDP 20 18 16 16.95 14 12 Erie 13.10 10 10.37 Latest: 2014 8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: International Trade Administration, Bureau of Economic Analysis 32
Top 10 Exporting MSAs, 2014 Rank *Out of 362 MSAs MSA Source: International Trade Administration Exports (in $ millions) 1 Houston; TX 108,693.79 2 New York; NY 96,177.26 3 Los Angeles-Long Beach-Anaheim; CA 68,954.63 4 Seattle; WA 56,590.31 5 Detroit; MI 45,937.90 6 Chicago; IL 43,252.50 7 Miami; FL 34,690.95 8 New Orleans; LA 31,869.67 9 Dallas; TX 26,193.95 10 San Francisco; CA 24,544.12 Erie; PA 130 1,304.56 33
The Future 34
Growth in Real GDP (%) IMF Forecasts of Growth in Real GDP 8 7 6 6.8 Ave RGDP growth in G-7 Countries: 1990-2007: 2.14% 2000-2015: 1.38% 5 4 3 2.6 2.5 2 1 1.8 1.5 1.5 1.2 1.0 0.8 0.6 0 China U.S. U.K. Euro area Germany G-7 Ave France Canada Italy Japan 2015 2016 2017 Source: International Monetary Fund 35
U.S. Forecast PNC Bank, Northwest Pennsylvania Market Outlook (October 2015) U.S. Forecast Real GDP Growth (% change) Job Growth (% change) Unemployment Rate (%) Median HH Income (Ths. $) Home price (% change) Single-Fam permits (% change) Mult-Fam permits (% change) 30-Year Fixed Mortgage (%) 2014 (Actual) 2.4 1.9 6.2 53.1 6.6 4.3 14.8 4.17 Annual Data 2015 2016 (Forecast) (Forecast) 2.5 2.1 5.3 54.1 3.9 6.5 10.7 3.86 2.5 1.7 4.9 55.3 2.6 4.8 4.5 4.13 Source: PNC Bank 36
Erie, PA Forecast PNC Bank, Northwest Pennsylvania Market Outlook (2015 Q3) Erie Forecast Job Growth (% change) Unemployment Rate (%) Median HH Income (Ths. $) Home price (% change) Single-Fam permits (% change) Mult-Fam permits (% change) 2014 (Actual) 0.4 6.0 45.0 1.0-35.7-25.8 Annual Data 2015 (Forecast) 2.1 5.1 45.7 1.6 0.5-9.3 2016 (Forecast) 1.5 4.7 46.5 3.2 30.3 25.0 Source: PNC Bank 37
Issue #18: Fourth Quarter 2015 (data through September 2015) 5/07 2/10 ELI Takes a Break, But Manages to Spread a Little Holiday Cheer Will ELI be naughty or nice after the holiday season? Though it has been rising fairly consistently since 2010 as Erie recovered from the Great Recession along with the national economy, the Erie Leading Index (ELI) has apparently decided to take a holiday break this season from its steady five-year upward climb. ELI has remained stable through the past few quarters and is currently hovering at just below 105. Overall, ELI grew by only 0.11% through the third quarter and even dipped slightly in August before picking back up again. Although this represents a slight improvement compared to the 0.05% growth that ELI saw in the previous quarter, it unfortunately is much less than the 2.0% growth that ELI enjoyed over the course of 2014. 39 38
ERIE Leading Index (2004 = 100) ERIE Leading Index (ELI) 107.5 105.0 102.5 12/91 6/00 7/03 Erie Total Employment ERIE Leading Index ELI Turning Points Erie Recessions 5/07 2/10 100.0 97.5 95.0 92.5 90.0 87.5 85.0 90 92 94 96 98 00 02 04 06 08 10 12 14 Latest: September 2015 39
ELI Components: Manufacturing PA Avg. Weekly Mfg. Hours (SA) 41.69 38.99 36.81 Latest: September 2015 Source: Bureau of Labor Statistics, Local Area Unemployment Stats 40
ELI Components: Manufacturing Erie County Mfg. Employment (SA) Latest: September 2015 Source: Bureau of Labor Statistics, Local Area Unemployment Stats 41
A big THANK YOU to 42
www.eriedata.org 43
Latest Erie Data! Last updated November 19, 2015 (All data are for Erie County unless otherwise indicated) Change from Change from As of September, 2015: Latest (NSA)* Previous Month Latest (SA)* Previous Month Unemployment Rate (Erie County) 4.8% 0.8% 5.5% 0.0% -Erie City 5.5% 0.9% --- --- -Millcreek Township 4.2% 0.6% --- --- -U.S. 4.9% 0.3% 5.1% 0.0% -Pennsylvania 4.9% 0.6% 5.3% 0.1% Labor Force 135,000 100 134,700 800 Employment 128,500 1,000 127,300 700 Unemployment 6,500 1,000 7,400 0 *NSA: Not Seasonally Adjusted; SA: Seasonally Adjusted. SA data for Erie City and Millcreek Township are unavailable. Erie, Pennsylvania, and U.S. data provided by PA Department of Labor and Industry. Note: Latest Erie Data are preliminary and subject to revision next month As of September, 2015 Change from Previous Month Manufacturing Employment (NSA) 22,400 0 Change from Prior Year Population, 2014 278,443 0.47% from 279,760 Total Personal Income, 2014 $10,636,535,000 2.0% from $10,428,430,000 Income Per Capita, 2014 $38,200 2.5% from $37,276 -U.S., 2014 $46,049 3.6% from $44,438 44
45
5/07 2/10 Issue #18: Fourth Quarter 2015 (data through September 2015) I invite you to sign up for the emails at klouie@psu.edu, or at the bottom of www.eriedata.org. ELI Takes a Break, But Manages to Spread a Little Holiday Cheer Will ELI be naughty or nice after the holiday season? Though it has been rising fairly consistently since 2010 as Erie recovered from the Great Recession along with the national economy, the Erie Leading Index (ELI) has apparently decided to take a holiday break this season from its steady five-year upward climb. ELI has remained stable through the past few quarters and is currently hovering at just below 105. Overall, ELI grew by only 0.11% through the third quarter and even dipped slightly in August before picking back up again. Although this represents a slight improvement compared to the 0.05% growth that ELI saw in the previous quarter, it unfortunately is much less than the 2.0% growth that ELI enjoyed over the course of 2014. ELI s anemic performance reflects the recent sluggish pace of growth in Erie total nonfarm employment, which rose on a seasonally adjusted basis by only 1.5% (2,000 jobs) year-on-year in September, and by only 0.54% (700 jobs) in the third quarter. While the rate of employment growth has been less robust than we would have liked to see, the modest improvement means that ELI is still managing to spread a little holiday cheer! However, if the recently announced plans by G.E. and Lord Corp. for possible job reductions locally are realized, Erie manufacturing as well as total employment are expected to decrease in the next several months, unless those anticipated job losses are offset by job gains in other parts of the local economy. We will therefore need to pay careful attention to see if ELI will be naughty or nice next quarter. Of course, our holiday wish is for ELI to hold its ground, based on the strength of its other input components, and continue to point to growth (or at least stability) in overall local employment. Erie s seasonally adjusted unemployment rate in September remained at 5.5%, unchanged since June, and was just slightly higher than the unemployment rate in Pennsylvania (5.3%) and the nation as a whole (5.1%). Economic Research Institute of Erie, Sam and Irene Black School of Business, Penn State Behrend 46
47
48
49
Contact Info Dr. Kenneth Louie, Director klouie@psu.edu 898-6265 Dr. Jim Kurre, Director Emeritus k12@psu.edu 50