Amid all the buzz about the New Buffalo, there’s no question that the Buffalo Niagara economy is getting better.
It’s just not booming. In fact, its growth hasn’t even been average by national standards.
Still, there are unmistakable signs that we’re starting to break out of our rut. Backed by big public-sector investments, from the Buffalo Billion projects to the Buffalo Niagara Medical Campus, there is a flurry of construction and new initiatives here that hasn’t been seen on this level in decades.
The hope is that those big investments will be the seeds that take root and spur the kind of new opportunities that will create thousands of interesting and skilled new jobs that will become a magnet to lure young people – both those who were born here and left for greener pastures and those who have no ties to the region – to come here and seek their fortunes.
That’s important, because there’s a bit of a chicken-and-the-egg paradox going on here. The Buffalo Niagara economy’s below-average performance, even during the last couple of feel-good years, has a lot to do with our stagnant population and our aging demographics.
[See the rest of Prospectus 2017: Unveiling the New Buffalo]
For decades, one of the big differences between Buffalo and most other places was that people moved out of the region at a fairly normal pace. But hardly anyone moved in, and without that influx of new blood, we were at a big disadvantage compared to the rest of the country, which was steadily growing, said John Slenker, the state Labor Department’s regional economist in Buffalo.
As a region’s population grows, it increases the demand for housing, for consumer goods, for restaurants and leisure activities, simply because there are more people here to consume those goods and services. In a sense, a rising population is a natural sort of economic fertilizer.
The Buffalo Niagara region hasn’t had a good dose of that demographic fertilizer in a long time. In fact, our shrinking population has long been a drag on our economy. As people lost their factory jobs and moved away – or as our unusually large segment of older workers retired and turned into snowbirds – the demand for those same goods and services dropped.
So instead of the natural upward bias other places had because their population was growing, the Buffalo Niagara region was caught in a whirlpool of decline as people moved away.
That’s why it’s so heartening to see our population start to stabilize. And that’s why the new opportunities for 21st-century jobs at places like SolarCity and the Medical Campus are so encouraging. Our population of young people actually has increased a bit in the last few years, and if those new opportunities help accelerate that demographic trend, it could bring added momentum to the local economy.
For now, Slenker calls our slow-but-steady job growth, which has lasted for 6½ years, “the little engine that could” because of its endurance and its sustainability.
There are some encouraging signs that it’s starting to happen. Investors are beginning to build new apartments and condominiums in downtown Buffalo.
The housing market has tightened, with the balance between buyers and sellers now strongly tipped in favor of sellers, especially for attractive properties in popular neighborhoods. Home sales were up 16 percent through October, and there was less than a four-month supply of homes up for sale, far less than the six-month supply that is used as the benchmark for a housing market where buyers and sellers are in balance, according to the Buffalo Niagara Association of Realtors.
The consistent growth has pushed unemployment in the Buffalo Niagara region down around 5 percent, which is better than it’s been at any time since the Great Recession.
With more people working, income growth in 2015, after adjusting for inflation, was the strongest in 31 years as factory employment stabilized and we added more jobs in better-paying fields like financial services and construction.
“You see the power of some of the other sectors that have been performing,” said Gary Keith, M&T Bank’s regional economist in Buffalo. “We still have room to grow in some of the service sector.”
But it could be better. Our job growth still isn’t keeping pace with the rest of the country, running about a third or half as much as the national gains, depending on which set of employment numbers you use.
While pockets of the local housing market are hot, other pockets are not. The result is that the median sale price of homes sold through October rose just 2 percent, which is the mark of a stable market, not a booming one.
So there’s hope. There are signs of improvement.
Maybe 2017 will be the year when we see the big payoff.