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COMMENTARY

David Robinson: Finally, something for Buffalo Niagara to build on

David Robinson

We're doing pretty good. But other places are doing better.

That, in a nutshell, sums up the Buffalo Niagara economy in an expansion that is just a few months away from becoming the longest in more than a century.

And that's not a bad thing, especially since we have actually experienced honest-to-goodness growth since the Great Recession ended almost 10 years ago – an unusually positive twist for a region that, in the post-war era, has tended to fall hard during recessions and only partly recover before getting blasted by the next downturn.

"We're still making progress," said Gary Keith, the regional economist at M&T Bank in Buffalo. "You can see it in the types of activity in the Buffalo Niagara economy."

You can see it in the help wanted signs outside local businesses, which in some cases have resorted to taking out billboards in hopes of landing new employees.

"Everybody's looking for employees," Keith said. "It's about landing and keeping them."

You can see it in the flurry of new restaurants and craft breweries that have opened in downtown Buffalo and throughout the region.

That's a sign that disposable incomes are on the rise, giving people a little extra to spend after they pay the mortgage, the car payment and all the rest of their bills.

"If earnings have gone up and income has gone up, those are a double indicator that things are better," said George Palumbo, a Canisius College economist who keeps a close eye on the Buffalo Niagara economy.

You can see it in the housing market, where homes are selling for more than ever before. The solid economy, with unemployment now below 4 percent, and low mortgage rates are part of the reason. But so is a shortage of homes for sale, which has created stiffer competition for quality houses in high-demand neighborhoods.

It also helps that our median sale price is still around $150,000, which is about a third lower than the national average. At today's still-low mortgage rates, that makes homes here more affordable, even with today's higher prices. That's partly because housing values here have been fairly soft across the Buffalo Niagara region for the last two decades – a time when home prices nationwide have been rising much faster, Palumbo said.

Still, there are some warning signs.

Despite the "help wanted" signs, the Buffalo Niagara region's job growth has slowed over the past two years. If you look at the set of data that most economists consider to be the most accurate – albeit less timely – it shows that job growth here slowed to a trickle in 2017 and didn't rise much in the first six months of 2018, the most recent data available.

Part of that may be because of the region's stagnant population, which is contributing to the worker shortage at a time when the labor supply is increasing in other parts of the country where population is rising.

"The pool of available workers has been declining, and that's a key contributor," said Jaison Abel, a regional economist at the Federal Reserve Bank of New York in Buffalo.

For one, the sluggish job growth over the past three or four decades has prompted many workers to flee upstate New York, leaving a population base that is older than most other places. Beyond that, it isn't easy to convince people to move to upstate New York, especially since that usually takes openings in high-quality, good-paying jobs that have long been in short supply here.

That, however, has been changing slowly in the Buffalo Niagara region, where the population decline has stabilized and the flurry of new development downtown, including the Buffalo Niagara Medical Campus, is starting to help the region shake off its depressed industrial past and create a more positive vibe of revival and renovation.

That's something that the region can build on.

Read the rest of The Buffalo News: The 2019 Prospectus special section.

 

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