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Nation grim, but we look good
Region doesn't fear reports of recession
BY JIM MARTIN
jim.martin@timesnews.com [more details]
Published: January 22. 2008 6:00AM
(Chris Sigmund / Erie Times-News)
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Folks in Erie know a thing or two about recessions. History shows they arrive here sooner, last longer and cut more deeply.
But is one here already?
A recession is often defined as a decline in gross domestic product for two consecutive quarters. While there's widespread concern about the direction of the nation's economy, it's not clear if Erie has even started down that road.
In fact, based on local economic indicators, a case could be made that our region is bucking a national trend.
Erie County's unemployment rate fell from 5.2 percent in October to 4.5 percent in November.
"The employment data we have looks real good," said James Kurre, professor of economics at Penn State Behrend. "We were below the national average, and that's only happened 22 (months) out of the last 18 years."
Kurt Duska, president of Engineered Plastics Inc., said nothing has happened in recent months to suggest his business is slowing. In fact, he's seen tool companies recovering and local businesses taking advantage of a soft dollar to expand exports.
"I would say, compared to three years ago, our employment is up by 25 percent and our sales are up by 40 percent," he said.
The bottom line: If a downturn is lurking around the next corner, Duska hasn't spotted it.
Robin Scheppner goes even further. The owner and manager of American Tinning and Galvanizing Co. said her 77-year-old company enjoyed its best year ever in 2007.
"We've had phenomenal growth over the last couple years," she said.
Scheppner said her company's biggest customers are equally upbeat and planning investments in the months ahead.
"The picture is extremely bright," she said. "Manufacturing is alive and well on the corner of 12th and Cherry."
Of course, little is proved by isolated success stories.
"The plural of 'anecdote' is not 'data,'" Kurre said.
At the same time, he said, neither the anecdotes nor the data make a convincing case that Erie is in a recession.
Although holiday sales were off nationally, business on Peach Street was brisk by most accounts.
And while the national housing crisis has many worried, Kurre said, "we didn't have the bubble blow up to begin with, so we don't have to worry about it popping."
So how does all this add up to a recession? According to a front-page article in Friday's Wall Street Journal, Moody's Economy.com has identified Erie as one of several dozen metropolitan areas that appear to be in recession.
Stephen Onyeiwu, professor of economics at Allegheny College in Meadville, said that judgment might have been based on a recent report by the Federal Reserve Bank in Philadelphia.
"They found the recession had already begun in the manufacturing sector of Pennsylvania," Onyeiwu said. "One of the reasons is that business investment is down, which means manufacturers are not buying new equipment."
Onyeiwu doesn't dispute those findings, but wonders how precisely they apply here.
"They are lumping everyone together," he said. "You cannot say authoritatively this is what's happening. I would say generally in the aggregate that the national economy has slowed considerably."
Ralph Pontillo, president of the Manufacturers' Association of Northwest Pennsylvania, worries that the economy is moving in the wrong direction.
"I think there is a deep conviction that unless something changes in a meaningful way ... a recession is inevitable," Pontillo said. "I think most of the arguments today are how to avoid that."
Pontillo urges the government to make adjustments to improve the business climate. He's also a fan of stimulus packages that would return money to taxpayers.
Economists often note that a recession is part of a natural economic cycle. Natural or not, Pontillo thinks it should be put off for as long as possible.
"People get hurt in bad economic times," he said. "It's the last thing we need right now."
JIM MARTIN can be reached at (814) 724-6397, 870-1668 or by e-mail.
Going Global A Good Thing
An increasingly global economy could prove to be a good thing if we should find ourselves in a recession.
That's perhaps why General Electric Co. noted in its quarterly-earnings report Friday that more than half its sales are from abroad.
"It's like a stock portfolio," said Todd Nesbit, who teaches economics at Penn State Behrend. "It means you are better off in terms of risk. That's what having a global economy is."
Nesbit, who predicts the next recession will be mild and relatively short, said globalization is part of the reason why. "Having a global economy, when the dollar is getting weak, it brings in more sales to us. It is also going to moderate our good periods," he said.
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