The Buffalo Niagara region ranks among the 20 major U.S. metropolitan areas that are weathering the recession the best, according to a study being released today by the Brookings Institution.
Thanks to a housing market that has been stable while much of the country's home values have plunged and a job market that has not taken as big of a hit as many other places, the Buffalo Niagara region ranked in the top fifth in a survey of the nation's 100 biggest metro areas.
While Brookings researchers said the national economic recovery is slow and fragile, with the job market particularly weak, the study portrays Buffalo Niagara as a place that has managed to dodge the worst blows from the deepest recession since the 1930s.
Howard Wial, an economist for Brookings, a think tank based in Washington, D.C., said the job losses during the current downturn are fairly comparable to the previous recession in 2001 but much less severe than the harsh decline during the 1981 recession that ruined the local steel industry.
"The decline in the auto and steel manufacturing industries is one of the reasons why this recession was not as deep," Wial said. "The changing nature of the Buffalo economy has protected Buffalo during the downturn."
But Wial also warned that the current recession, which began in December 2007, continues to depress the job market, which is recovering more slowly than it has during the previous three downturns.
"The country is recovering much more slowly from this recession than it did from others over the past three decades," Wial said.
The report is encouraging because it indicates that the region bucked its historical trend of falling into recession before the rest of the country, taking a harder hit than most of the nation during the downturn and then rebounding much more slowly after it ends.
In the current recession, the Buffalo Niagara decline did not start until the second half of last year, after much of the rest of the country already had entered a downturn in late 2007 as housing markets collapsed.
"It doesn't mean this hasn't been a painful recession," said John Slenker, the state Labor Department's regional economist in Buffalo.
The region has lost more than 15,000 jobs over the last two years and this January had fewer jobs for that month than at any time since 1994, according to state Labor Department statistics. The more than 53,000 people who were listed as unemployed in January was the most in more than 20 years.
"The rest of the country had been experiencing this massive boom in real estate and job growth" during most of the last decade, Slenker said. "That wasn't true in our area. We didn't go as high, so we didn't fall as far."
Buffalo Niagara also never regained all of the jobs it lost during the 2001 recession, leaving the local economy in a weakened state even before the latest downturn hit.
"Since we never recovered from the last one fully, it's hard for me to say 'What a triumph,' " said George M. Palumbo, a Canisius College economist.
The report gives Buffalo Niagara high marks for the health of its housing market, where its relatively stable prices over the last year, after adjusting for inflation, left it ranked second among the 100 largest metro areas, which overall endured an average price drop of more than 7 percent.
While the pace of home sales has slowed, median sale prices here remain about a third lower than the national average, which bolsters affordability and makes buying a home less of a stretch for consumers on a budget. As a result, foreclosures also are far less of a problem here than in many other parts of the country, the study says.
The region's job market, while battered, also has taken less severe blows than many other metro areas. While Buffalo Niagara's total employment is down by 3 percent from its peak in the third quarter of 2008, it still ranks in the top quarter among all metro areas, where the average drop in jobs of 4.6 percent was almost 50 percent more severe.
The region's unemployment rate, which averaged 8.5 percent during the fourth quarter and stood at 8.3 percent in January, was better than the 9.6 percent jobless rate among the major metro areas. In addition, the increase in the unemployment rate over the last year, which totaled 1.3 percentage points locally, was half as large as the jump of 2.6 points in the 100 biggest metro areas.
The report also noted slight improvement in the region's overall economy from the third quarter to the fourth, based on Moody's Economy.com's estimates of gross economic output. The region's 1.8 percent growth rate from quarter to quarter ranked 40th among the major metro areas, slightly better than the 1.7 percent average increase.
"In most metro areas," Wial said, "increased economic output is juxtaposed with continued high unemployment."