Economic Conditions: A Look at Shale & the Tri-State Area

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1 Economic Conditions: A Look at Shale & the Tri-State Area Jim Robey, PhD Director Regional and Economic Planning Services October 11, 2017

2 Upjohn Institute for Employment Research The Institute is an activity of the Upjohn Unemployment Trustee Corporation, which was established in 1932 to administer a fund set aside by Dr. Upjohn, founder of the Upjohn Company. MISSION: The Upjohn Institute for Employment Research is a private, nonprofit, nonpartisan, independent research organization devoted to investigating the causes and effects of unemployment, to identifying feasible methods of insuring against unemployment, and to devising ways and means of alleviating the distress and hardship caused by unemployment. 2

3 The calendar isn t yet calling for a recession if you trust history Employment Index From Business Cycle Peak Month of Business Cycle Peak = present (118 months) Source: Bureau of Labor Statistics Current Employment Survey 3

4 Is about 2% growth the new norm? 6 Gross Domestic Product and Employment Change 1,500 GDP Change (%) Forecast 1, ,000-1,500 Employment Change (000s) -8-2, ,500 GDP Change (L) Employment Change (R) Source: Bureau of Labor Statistics Current Employment Survey, Bureau of Economic Analysis, Philadelphia Federal Reserve Consensus Forecast 4

5 University of Michigan RSQE Forecast (Forecast) 2018 (Forecast) GDP (Percent) Light Vehicle Sales ($Millions) Unemployment Rate (Percent) Housing Starts (Millions) CPI/Inflation (Percent)

6 August annualized sales were at 16.1 million and then rebounded to 18.3 million in September Annual Rate of Sales (in 000,000s) Annualized Rate of U.S. Light Vehicle Sales (in millions) (2000 to 2007 Peak) (2000 to 2007 Average) Source: Bureau of Economic Analysis 6

7 A sign of the times? 7

8 National nondurables Employment Change (%) Projection Gross Product Change (%) Food Beverage and Tobacco Products Textile Mills Textile Product Mills Apparel Leather and Allied Products Wood Products Paper Printing and Related Support Activities Petroleum and Coal Products Chemical Plastics and Rubber Products Source: Moody s Analytics and Upjohn Institute 8

9 National durables Employment Change (%) Projection Gross Product Change (%) Nonmetallic Mineral Products Primary Metals Fabricated Metal Products Machinery Computer and Electronic Products Electrical Equipment Components Transportation Equipment Furniture and Related Products Miscellaneous Source: Moody s Analytics and Upjohn Institute 9

10 National technology and services Employment Change (%) Projection Accounting Gross Product Change (%) Architectural and Engineering Computer Systems Design Data Processing Insurance Carriers Legal Services Management of Companies Professional, Scientific, and Technical Office Administrative Services Other Information Services Other Prof, Scientific, and Technical Services Scientific Research and Development Software Publishers Specialized Design Services Source: Moody s Analytics and Upjohn Institute 10

11 Defining the region, at least for the moment 11

12 Regional nondurables Employment Change (%) Projection Gross Product Change (%) Food Beverage and Tobacco Products Textile Mills Textile Product Mills Apparel Wood Products Paper Printing and Related Support Activities Petroleum and Coal Products Chemical Plastics and Rubber Products Source: Moody s Analytics and Upjohn Institute 12

13 Regional durables Projection Nonmetallic Mineral Products Primary Metals Employment Change (%) Gross Product Change (%) Fabricated Metal Products Machinery Computer and Electronic Products Electrical Equipment Components Transportation Equipment Furniture and Related Products Miscellaneous Source: Moody s Analytics and Upjohn Institute 13

14 Regional technology and business services Employment Change (%) Projection Accounting Gross Product Change (%) Architectural and Engineering Computer Systems Design Data Processing Legal Services Management of Companies Management, Scientific, and Technical Office Administrative Services Other Information Services Other Prof, Scientific, and Technical services Scientific Research and Development Software Publishers Specialized Design Services Source: Moody s Analytics and Upjohn Institute 14

15 Regional downstream: Four digits from IHS Markit Employment Change (%) Projection Gross Product Change (%) Resin, Synthetic Rubber, and Artificial Synthetic Fibers and Filaments Manufacturing Other Chemical Products Plastics Product Manufacturing Chemical and Allied Products Merchant Wholesalers Source: Moody s Analytics and Upjohn Institute 15

16 There appears to be capacity in the labor market. Full employment is generally between 5% and 5.5%. Source: Bureau of Labor Statistics and Upjohn Institute 16

17 While the Pittsburgh core is consistent with a national average of 62.8%, labor force participation is low in the rest of the region. Source: Bureau of Labor Statistics and Upjohn Institute 17

18 Sector investment matters: A sensitivity analysis Why export based? Multipliers Direct: In this case, 100 jobs Indirect: Suppliers Induced: Households Impacts Employment Value-added Output Income 18

19 Industries matter Chemicals: Plastics Material and Resins (NAICS ) Plastics: Plastic Packaging (NAICS ) Plastics: Plastic Pipe (NAICS ) Higher Education (NAICS 6112,6113 &6114) Hospitals (NAICS 622) 19

20 For this analysis, the region is: Source: Upjohn Institute 20

21 Multipliers vary by industry 7.0 Multiplier Plastics & material resins Plastic Packaging Plastic Pipe Higher education Hospitals Source: REMI and Upjohn Institute 21

22 Regional employment* per 100 jobs 700 Total Employment Plastics & material resins Plastic Packaging Plastic Pipe Higher education Hospitals *totals include the 100 direct jobs Source: REMI and Upjohn Institute 22

23 Total sales including labor & intermediate goods Output $400 $350 Millions$ $300 $250 $200 $150 $100 $50 $0 Plastics & material resins Plastic Packaging Plastic Pipe Higher education Hospitals 23

24 The value-added component in the region Value Added $160 $140 Millions$ $120 $100 $80 $60 $40 $20 $0 Plastics & material resins Plastic Packaging Plastic Pipe Higher education Hospitals Source: REMI and Upjohn Institute 24

25 Income: A portfolio of occupations Personal Income $70 Millions$ $60 $50 $40 $30 $20 $10 $0 Plastics & material resins Plastic Packaging Plastic Pipe Higher education Hospitals Source: REMI and Upjohn Institute 25

26 Shares of employment by sector Sector Plastics & Material Resins Plastic Packaging Plastic Pipe Higher Education Hospitals Construction 19.62% 13.48% 12.78% 13.84% 14.62% Manufacturing 18.73% 42.32% 48.02% 1.26% 1.15% Trade 15.19% 10.49% 9.69% 8.18% 9.23% Transportation and Warehousing 2.80% 2.25% 1.76% 1.26% 1.15% Finance, Insurance, & Real Estate 5.31% 3.75% 3.52% 3.14% 5.00% Professional, Scientific, & Technical Services 6.19% 5.24% 3.96% 3.14% 5.00% Management of Companies & Enterprises 5.31% 1.87% 1.32% 0.63% 0.38% Administrative & Waste Management Services 4.57% 3.75% 3.52% 1.89% 4.23% Educational Services; private 1.03% 0.75% 0.88% 52.20% 0.77% Health Care & Social Assistance 6.05% 4.87% 4.85% 4.40% 47.69% Other Services 10.47% 8.99% 7.93% 7.55% 9.23% Source: REMI and Upjohn Institute 26

27 Questions and comments? Upjohn Institute: Jim Robey, PhD, Director of Regional Economic and Planning 27

How are Things Going? Thoughts to Barry County

How are Things Going? Thoughts to Barry County Jim Robey February 25, 2016 1 Upjohn Institute for Employment Research The Institute is an activity of the Upjohn Unemployment Trustee Corporation, which