National economy buoyed Erie County in late 2017, Behrend economist says

ERIE, Pa. — The strength of the national economy led to growth in Erie County in the third quarter of 2017, even as the region’s largest employer, GE Transportation, prepared to end production of locomotives at its Lawrence Park facility, said Ken Louie, associate professor of economics at Penn State Behrend and director of the Economic Research Institute of Erie (ERIE).

Five of the eight measures in the Erie Leading Index, an economic forecasting tool developed by ERIE, showed growth between June and September, Louie said. That reflected gains in the S&P 500, the U.S. Transportation Services Freight Index and the U.S. Real Money Supply.

“That’s consistent with other indicators that suggest Erie’s economy is holding its own in the face of recent job losses in local manufacturing,” Louie said.

Real per capital personal income in Erie has increased by 7.6 percent since 2010, Louie said. Real median household income also is higher.

Income in Erie still trails the state and national averages, however. The local unemployment rate — 5.5 percent in December — also was slightly higher than the state and national rates, which were 4.7 percent and 4.1 percent, respectively.

“Our income measures aren’t stellar, but they’re moving in the right direction, especially when you factor in the losses in the manufacturing sector,” Louie said. “That tells me the economy is adjusting. Like a ship rocking from an unexpected wave, it’s righting itself.”

Some uncertainty remains, however. The ELI does not yet reflect recent losses in the stock market. It’s also too soon to see the full impact of the $1.5 trillion tax overhaul.

The U.S. Interest Rate Spread also could pose a problem, Louie said. That benchmark, which measures the difference between the 10-year Treasury bond yield and the short-term federal funds rate, dipped 8.7 percent from June through September. A negative spread could signal an economic downturn, Louie said.

“Many experts point to that as a bellwether of economic conditions to come,” Louie said. “It’s something we’ll have to watch.”