Pennsylvania's economy mirrors changes in U.S.

Pennsylvania's economy mirrors changes in U.S.

University Park, Pa. -- Pennsylvania’s economy, both in the growth years of the 1990s and the recent recession, roughly mirrored the nation. In 2001, after eight years of expansion, both the U.S. and Pennsylvania economies slipped into a recession followed by slow recovery in 2002-03, says a new report produced by Penn State.

"Road to 2004: Update on Pennsylvania," the 16th annual edition of this report, notes that during the 1990s, Pennsylvania's economy expanded -- but not at the nation's pace. During the growth years of that decade, total employment increased only 10.3 percent in the state versus 20.6 percent nationally. On the plus side, even with a slow rate of job growth, the state did keep pace with the U.S in reducing unemployment over the decade, says Ted Fuller, Penn State economist and report co-author.

Pennsylvania and the nation were both near 8.0 percent unemployment in June 1992 during the slow job recovery following the 1991 recession, but by the end of the growth years in June 2000, the rate of unemployment had fallen to a low of 4.2 percent near the end of the growth years in June 2000.

However, population growth was only 3.2 percent in Pennsylvania in the 1990s -- a mere one-fourth the national rate of 12.8 percent. Again on the plus side, per capita personal income did hold steady in the state throughout the decade. It was 101 percent of the U.S. in both 1990 and 2001, the report says.

Since the start of the recession in March 2001, the big picture of the Pennsylvania versus the national economy seems to be one of the state nearly holding its own in job decline, outpacing the U.S. in the lower rate of unemployment, but lagging in population growth, according to co-author Dr. Stephen Smith, director of the Center for Economic and Community Development at Penn State.

During the recession from June 2001-2002 total employment declined -1.0 percent in the state and -1.1 percent in the nation. During slow recovery from June 2002-2003, job decline eased to -0.6 percent in the state –- only slightly more than the nation's -0.4 percent rate of job loss.

Again, during June 2000-03 as growth gave way to recession and slow recovery, Pennsylvania performed well relative to the nation in unemployment. Both the state and the U.S. were at 4.2 percent unemployed in June 2000, but by June 2003, Pennsylvania's rate stood at 5.8 percent versus 6.5 percent nationwide.

In population growth it is likely that Pennsylvania has continued to lag the U.S. since 2000. It is estimated that during 2000-02 that the state's population has increased only 0.4 percent versus 2.5 percent nationwide.

Dr. Martin Shields, also a co-author of "Road to 2004" and assistant professor of agricultural and regional economics at Penn State, also notes that the incidence of job, unemployment, and population change of course has not been uniform either among sectors in the state or among urban and rural areas of the state either in the growth years of the 1990s or in the recent recession and slow recovery.

For example, the current two largest employment sectors -– manufacturing and health care and social assistance -- have recently shown considerable variation in job loss/gain. During June 2001-02 manufacturing jobs declined -7.4 percent in Pennsylvania and -7.1 percent in the nation, while health care and social assistance had a job gain of 2.7 percent in the state versus 3.1 percent in the U.S., adds Shields.

Among areas of the state, there have also been considerable variations in economic prosperity both in the growth years of the 1990s and during the recent recession and slow recovery. Although most counties achieved slow job growth in the 1990s and a majority lost jobs in the recession, it is evident that the southeastern portion of the state (excluding Philadelphia) is the most prosperous with lower rates of unemployment and above average per capita incomes than most of the rest of the state. One reason is that the more rural or small city areas of the state are often handicapped with a higher proportion of jobs in the declining manufacturing sector.

"Road to 2004" provides data on broad economic trends in Pennsylvania from 1990-2003 and detailed data on job change by sector among counties and detailed industry changes statewide during 2001-2002. It gives forecasts for the state's economy which suggest some upswing in 2004-2005. The report also includes a guide to the many business assistance programs offered by state agencies.

Copies of "Road to 2004" may be obtained free by contacting Smith at (814) 863-8245 or at smsmith@psu.edu by email, or Shields at (814) 865-0659 or mshields@psu.edu by email. "Road to 2004" is also available on web sites at
http://cecd.aers.psu.edu and www.teampa.com