The Recession Finally Comes to Pittsburgh (by Harold D. Miller)

After 5 straight months of maintaining positive job growth in the face of national declines, the Pittsburgh Region finally dipped -- ever so slightly -- into the negative column in November. There were 500 fewer jobs in the region in November than a year earlier, whereas in previous months, the region had been up by 5,000 - 7,000 jobs over the prior year.


What happened? Two sectors saw significant drops in jobs compared to the previous year -- Leisure and Hospitality (3,000 jobs) and Manufacturing (1,000 jobs). Although there were 2,600 more retail jobs in November than in October, that increase was 1,500 less than in the two prior years, so in that sense, slow holiday growth in retail contributed to the decline in overall regional job growth. The reductions in Leisure and Hospitality jobs are unfortunate, but not surprising, since that sector saw some of the largest declines nationally in November, and discretionary spending is one of the first things to be cut when people are worried about paying the bills. The same is true with retail. The reductions in manufacturing are more troubling, since we had the 7th largest percentage decline in manufacturing jobs among the top 40 regions between October and November.

Beyond that, there was a general slowing of job growth across almost all sectors. For example, although Professional and Business Services still has 2,900 more jobs than a year ago, it had 900 fewer jobs in November than October, consistent with news reports of reductions in support personnel in law firms, slowing of work for architectural firms, etc. The only sectors that did better in November than October were Health Care/Social Assistance and Finance.

What this means is that although jobs continue to be added in some areas, the rate of those additions is slowing, and a growing number of people are losing jobs in both high-wage and low-wage sectors. As a result, the unemployment rate for the region will likely be higher when the November figures are released in January.


Although it's little comfort to the thousands of people who have lost jobs, Pittsburgh continues to have fewer problems than most parts of the country. Although Pittsburgh is no longer among the fortunate few regions that continue to have more jobs than a year ago, it is one of a group of regions that have remained relatively stable in terms of overall employment. Our .04% reduction in jobs over the past year looks pretty good compared to rates of job loss that are literally 50-100 times greater in places like Detroit, Milwaukee, Minneapolis, and St. Louis.


And we still have many more jobs than we did in the 1990s.


Among our benchmark regions, the only one that is doing significantly better than we are is Boston -- that's because Boston hasn't seen the declines in Leisure and Hospitality or Transportation that we have, at least so far. On the other hand, we're doing better than Boston in Construction, Finance, and Mining jobs. Otherwise, Boston is benefiting from some of the same strengths we are -- a concentration of jobs in health care, higher education, and business services that have been relatively resistant to the recesssion to date.


What will Pittsburgh see in the months ahead? The structure of our region's economy will, hopefully, make us less susceptible to the kinds of dramatic dislocations occurring in many other areas. Although the November dip is troubling, we have not been tracking the U.S. decline the way we did in the 2001 recession. Then, the Pittsburgh Region went into the recession more slowly than the U.S. as a whole, but it wasn't far behind. This year, we've been following a very different trend.

But our community will, inevitably, suffer more and more from the same economic forces that are affecting the nation as a whole. As long as the U.S. economy continues to decline, our manufacturers and professional services firms will have fewer customers nationally and globally; our retailers, restaurants, and entertainment venues will see less consumer spending; our construction workers will see fewer projects in the pipeline; etc. And even our recession-resistant sectors like health care and higher education will begin showing the effects of the recession, as recent reports of hiring freezes and layoffs foretell.


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If you look at the right hand side of the last chart in this post, you'll see how the regional economic picture compared to the U.S. over the past year. In the fall of 2007, the Pittsburgh Region's job growth rate was declining faster than the U.S., and it appeared we might be leading the way into the recession. But in early 2008, Pittsburgh's job growth rate stabilized, while the U.S. rate accelerated its decline, and by the fall of 2008, we were still showing positive job growth while the U.S. was losing jobs. Pittsburgh's job growth rate during 2008 hasn't been any better than the growth rate it has experienced for several years. But because the U.S. as a whole and most large regions are doing dramatically worse in 2008 than they had previously, our economy now looks much better in relative terms.

Last year around this time you said Pittsburgh was already falling harder and faster than other regions?

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