The Erie region’s economic recovery stalled in late 2015, and planned layoffs at GE Transportation, Lord Corp. and other major employers could make conditions even rougher, said Ken Louie, director of the Economic Research Institute of Erie and an associate professor of economics at Penn State Behrend’s Black School of Business.
The Erie Leading Index, which has risen consistently since 2010 – albeit at a slow pace – showed growth of just 0.11 percent in the third quarter of 2015. That rate, though slightly better than the previous quarter, in which ELI grew by only 0.05 percent, falls short of the gains of the previous year, when ELI increased by 2 percent.
Louie still sees a glass half-full, however.
“We are seeing a stall, or a pause,” he said, “but we aren’t sounding the alarms just yet. The fact that ELI is holding its ground is still a good sign.”
Improvements in the U.S. Freight Index, which tracks rail, truck and air shipments, and increases in the U.S. real money supply helped ELI hold its recent growth. Employment in Erie County also edged up slightly, with approximately 700 jobs added in the third quarter.
Erie’s seasonally adjusted unemployment rate held steady through September, at 5.5 percent. That was still slightly higher than the unemployment rate for Pennsylvania (5.3 percent) and the national average (5.1 percent).
Layoff announcements – particularly at GE Transportation, the county’s largest employer – could eventually affect the local unemployment rate, Louie said, especially if the impacts ripple to suppliers and other support companies. In November, GE officials said they would eliminate 1,500 jobs – roughly a third of GE’s Erie workforce. In January, an undisclosed number of non-union employees learned their jobs also would be eliminated.
The announced job cuts had not been fully implemented by December, however. The Erie County unemployment rate actually fell on a seasonally adjusted basis to 4.9 percent at the end of 2015.
If all of the announced layoffs do occur, that could weaken ELI, which in this quarter was held in check by stock losses in the S&P 500 and a 17.5 percent drop in residential building permits. Some of that loss could be seasonal, Louie said, but a continued decline in building permits could quickly spill into other sectors of the local economy.
“We are still seeing quite a bit of spending,” he said. “In the short term, that will help. When you focus on some other specific variables, like gas prices or home heating prices, which are lower this year, you see a boost. People feel like they have more money to spend.”