To all you skeptics out there: it’s really happening.
The Buffalo Niagara economy is turning a corner, and the slow-moving numbers that economists follow are showing it.
• The region is roughly matching the national employment growth. And by Buffalo standards, the job growth this year is robust, averaging 1.7 percent through July. At that pace, 2015 will be the best year for job growth in the Buffalo Niagara region since 1989.
• Average annual pay in Erie County grew by 3.2 percent last year, slightly faster than the 3.1 percent pay hike that workers nationally received. That marks the first time in seven years local wage growth topped 3 percent and the second straight year that the growth in average annual pay here exceeded the increase across the country.
• Home sales during the first half of this year are up 3 percent and had the second-strongest first half since 2010, according to data from the Buffalo Niagara Association of Realtors. And homes are selling briskly. The homes that sold during June were on the market for an average of 56 days – the fastest sales pace for any June since 2010.
Even cautious economists see it. Richard Dietz and Jaison Abel of the Federal Reserve Bank of New York are calling it “the strongest regional economy in Buffalo in recent memory.”
That doesn’t mean economic conditions are entirely rosy, of course, nor does anyone suggest a turnaround is complete. Wages are still below the national average and not growing quickly, large swaths of the East Side are still impoverished and desolate, and Erie County’s population isn’t increasing much.
“It’s a little premature. Let’s temper this a little bit,” said Canisius College economics professor George Palumbo. “They’re starting to look better. I’m happy to say that, and I’ll be happier in a year to say they look a lot better. But I’m not ready to say they do yet.”
Yet, from the multi-billion-dollar investments by Terry and Kim Pegula in the region’s two major sports teams and their $200 million HarborCenter facility, to the state’s Buffalo Billion initiative and a flurry of redevelopment projects, Western New York has experienced a healthy dose of both public- and private-sector spending.
“I was downtown this past weekend with my family, and it was crowded,” said M&T Bank Corp. Chief Economist Gary Keith. “It always is a little interesting to see that. It’s not just a work-and-go-home atmosphere anymore downtown.”
That’s now spilling over into the rest of the economy. The Fed’s Abel said there’s evidence that the employment growth in Western New York is “broad-based” and “not just one sector that’s carrying the day.”
Over the past year, the local job market has gained 12,600 jobs – more jobs than the region added during the entire four-year period between 2009 and 2013. And the pace of the job growth has been steadily accelerating this year. During May, June and July, the pace of job growth exceeded a 2 percent annual pace – something that had happened during only three other months in the previous 25 years.
The local unemployment rate, while still higher than its pre-recession lows, has dropped sharply, falling from a peak of 8.9 percent in July 2012 to a seven-year low of 5.8 percent in July. The number of unemployed workers has plunged by more than 35 percent during the past three years, while the number of workers holding jobs is at a five-year high.
The construction sector in July had more jobs than it had during any month going back to the summer of 1990. In the last year alone, the region has added 2,900 construction jobs.
Manufacturers, who eliminated almost half of their local jobs in the 20 years before 2010, have started hiring again. Over the past five years, local factories have increased their work forces by almost 8 percent, or nearly 4,000 jobs.
The financial services sector has added 3,700 jobs over the past five years, and education and health services added 6,400. Leisure and hospitality firms, which include bars, restaurants and hotels, now have 14 percent more jobs than they did five years ago, according to state Labor Department data.
Moreover, the region has now exceeded its benchmark job level from 2001, after regaining all the jobs lost since then in two recessions, which “can’t be viewed as bad news,” said the often-skeptical Palumbo.
“There’s a lot of things we haven’t been able to say in a long time,” Dietz agreed. “You can tell something very different is happening than has happened in at least the past few decades.”
Over the past decade, local home prices have continued their slow-but-steady growth, rising by almost 26 percent – during a period when the Great Recession pummeled the national housing market. During that time, the median sale price of existing homes across the country has inched up by just 2 percent.
More recently, the uptick in sales has included only modestly higher home prices. The median sale price during the second quarter of this year, at $129,800, is 2 percent higher than it was a year ago – just a quarter of the 8 percent price increase nationally. Home prices here also remain reasonable, with a median-priced home selling for almost $100,000 less than the nationwide median of $229,400, according to National Association of Realtors data.
The population of young adults with college degrees is rising again, changing the composition of the region’s demographic to be more favorable for “risk-taking from an entrepreneurial, spending and leisure standpoint,” Keith added. Between 2000 and 2013, the number of Buffalo Niagara residents between the ages of 25 and 34 with a bachelor’s degree or higher grew by nearly 31 percent, according to a report by Manhattan Institute researcher Aaron M. Renn.
“Years ago, people were negative about the area. They felt stuck here almost,” Abel said. “Now the attitude is much more positive and people really want to be here. And this change in attitude is a real positive sign going forward and something to build on, and a real change from what we’ve seen in the past.”
And there’s no indication of anything disrupting the trajectory, he added. “There’s nothing that I can point to as a real concern, in terms of whether the pace of growth will continue,” Abel said.
Jamestown business owner David Dawson sees it firsthand. For more than 70 years, the Dawson family companies have been making specialty doors and industrial metal products. The company built the bronze doors for Shea’s Performing Arts Center in Buffalo and all the stainless steel-and-glass doors at the Buffalo Niagara International Airport in Cheektowaga. It recently won a “significant” order for the entrances to the new Capitol Visitors Center at Congress in Washington, and another for the Smithsonian Institution’s new National Museum of African American History and Culture. And a year ago it hired a marketing team in Amherst to boost its metals business regionally.
“Our business is very strong,” said Dawson, the firm’s owner and CEO, who expects to add 10 production and sheet-metal engineering jobs to its 115-person work force. “We probably are riding our second-largest order entry period in our history.”
Despite the optimism, though, Dietz and Abel cited lingering concerns about just how widely the benefits and gains are being felt. That’s also a worry for Buffalo Mayor Byron W. Brown and local community activists, as well as a focus for state leaders, who worked with the city to put a job-training program on the East Side.
Not reaching everyone
“It’s not good enough for just a certain sector or a certain demographic in Western New York to be reaping the benefits of this economic success that we’re enjoying,” said Sam Hoyt, Western New York regional president for Empire State Development Corp. “It’s got to be the entire population.”
And Dietz said the region still faces a significant skills and education gap in the city, posing a challenge that is “not going to be addressed just by the economy growing a little faster.”
Pointing to the graduation rates of city schools and the percentage of people in Buffalo with high-school diplomas, he said there’s “a bit of a disconnect between how fast the economy grows and how good it can get.”
“The fact that there are a lot of people who lack the skills necessary to participate in the economy needs attention, because a growing economy is not going to help that if they don’t have the skills. People are still going to be stuck,” he said.
“Those require a different approach, special attention, in a lot of ways. It’s really important that we think progressively about how are we going to address that, because otherwise I don’t think things are going to get a lot better.”
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