The Tribune Democrat, Johnstown, PA

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January 18, 2013

Analysis: Area economy slow to improve, statistics show

— There were not a lot of high expectations of the area economy in 2012. Far from it. In fact, it came as almost no surprise that the job level declined, albeit by a comparatively small margin, while the unemployment rate was again in the 8 percent range for the fourth consecutive year.

It is a trend that has caused some business owners to continue thinking that we have not really recovered from the recession, which was officially declared over more than three years ago, while others continue asking when we are going to see substantial improvement locally.

The recession, which was notable for its prolonged length and breadth of industries impacted, has had lasting consequences locally.

We are reminded that the recession deepened in its latter stages locally as job losses and unemployment spiked beginning in 2009. This development among others has the area still hanging in the recessionary period.

Linda Thomson, president of Johnstown Area Regional Industries, sees 2012 overall “as a really terrible economic year in relation to job growth.”

Much of that she attributes to economic uncertainty, political realities and a conservative approach by local employers.

“We have seen a good many layoffs, some positions going away, difficulty placing displaced workers, and more unemployment than in the past. However, on a positive note, there have been increases in small business startups.”

John McGrath, an associate professor at Pitt-Johnstown, suggests “that with weakness in our traditional job-producing sectors, that one major focus for our area should be growing entrepreneurs, who could add jobs in an unspectacular but steady pace. At Pitt-Johns­town, we are working with partners from the community, spearheaded by Mike Hruska, a successful local entrepreneur, to develop a new entrepreneurship initiative that will address this need.”

Economic damage has been significant and widespread, impacting many industry sectors throughout our local economy. The goods-producing industry, which includes area manufacturers, saw its job level remain at 6,600 last year.

Despite this disappointing trend, we must not lose sight of the fact that we continue to develop and support a much more diversified industry base, led by defense manufacturing, technology-based support companies and research firms. While some uncertainties may lie ahead, these industries remain deeply committed to this area.

 Meanwhile, the service-producing group posted an annual loss of 300 jobs that can be traced to fewer workers in trade, education, health services and government. Interestingly, these industries have been somewhat of a “mainstay” in the area, routinely adding jobs.

The job level in government that includes state, local and federal workers consistently has declined on an annual basis since 2007. The loss of 1,000 jobs in this period was shared by both federal and local government. The phasing out of National Drug Intelligence Center continued to have a substantial impact on both the collective employment level as well as the local economy as a whole.

Cutbacks in local government, many of which were prompted by budget constraints, continue to have an adverse effect on employment levels in this sector.

The unemployment rate in the Johnstown labor market area averaged 8.5 percent during the past year.

By comparison, both the state and nation posted lower rates at 7.8 percent and 8.1 percent, respectively. The jobless rate locally peaked in 2010, averaging 9.2 percent. In 2007, the year the recession began, 5.3 percent of the labor force was unemployed.

The consequences of this prolonged period of high unemployment are revealed through the persistence of long-term unemployment.

Not to be overlooked in this analysis is the measure of labor force activity throughout 2012. The modest month-to-month change characterizes an economy that is not growing.

Many of the more experienced jobless workers have remained attached to the labor force. At the same time, an increasing number of discouraged workers have opted out of the labor force.

Some of you are probably convinced that we never left the last recession, and that’s understandable. However, you may want to keep three key factors in mind.

The timing of the impact of the recession locally did not coincide with the recession dating procedure of the National Bureau of Economic Research. The recession was declared over at the national level about the same time this area began to see significant declines.

Many changes have evolved locally that have resulted in a more diversified economic base that has better equipped the local economy to stave off severe economic downturns. In many previous recessions, the jobless rate reached double digit proportions, but not this time.

Finally, the uncertainty that has permeated the employer community hopefully can be restored by positive economic developments as the area moves forward.

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