Economic Update for Upstate New York

Richard DeitzRegional Economist

Federal Reserve Bank of New York, Buffalo Branch

richard.deitz@ny.frb.orgMarch 12, 2003

Upstate Job Growth: On Par with Weak US Performance

99

100

101

102

Jan-00 Jan-02

Source: US Department of Labor

Employment Index: 2000 = 100

US

Upstate

Upstate Job Growth By Sector in 2002Compared to the US; bubble size indicates relative size of industry in the region

Source: US Dept of Labor-7

-6

-5

-4

-3

-2

-1

0

1

2

3

4

-7 -6 -5 -4 -3 -2 -1 0 1 2 3 4

Services

Finance

Upstate Growth Rate

US Growth Rate

Construction

Utilities/Comm

Trade

Gov’t

Manufacturing

-6,358 -1.1%

-10,525 -1.9%

Total Change in NonfarmPayroll Employment net percent

Job Growth in Upstate Metros: 2000-2002

-1,325 -0.4%

+5,500 +1.2%

-1,850 -1.4%

-2,533 -2.1%

Buffalo

Syracuse

Rochester

Albany

Utica

Binghamton

US -0.7%

Average Job Loss in Postwar RecessionsLocal area Peak through Trough

-2.10%

-2.20%

-2.60%

-3.30%

-4.20%

-4.30%

-4.50%

-5.80%

US

Albany

Rochester

Syracuse

Binghamton

Utica

NYC

Buffalo

Source: U.S. Department of Labor

Job Loss in This RecessionLocal area Peak through Local Trough

-2.9%

-1.2%

-5.2%

-2.4%

-3.4%

-1.5%

-1.3%

-0.5%

US

Albany

Rochester

Syracuse

Binghamton

Utica

NYC

Buffalo

Source: U.S. Department of Labor

The least diverse economies suffering the biggest losses

0

10

20

30

40

50

60

70

80

90

100

Buffalo Syracuse Albany Dutchess Utica Binghamton Rochester

Rochester & Binghamton: Least Diverse Industry MixIndustrial Diversity Index: 1997

Index

Source: Bureau of the Census, County Business Patterns, author’s calculations

Job Growth: 1990s Expansion vs Recessionrankings of the largest 100 metro areas

Las Vegas 1 8

Austin 2 61

Phoenix 3 69

Orlando 4 57

Atlanta 5 93

West Palm Beach 6 15

Tampa 7 36

Dallas 8 72

Salt Lake City 9 85

Sarasota 10 16Source: Bureau of Labor Statistics

1990-2001 3/01 - 12/02

Key Local IndustriesNational employment declines

• Buffalo: rank #48• Autos - 7% • Fabricated metal products - 8%

• Rochester: rank #77• Instruments - 7%

• Seattle: rank #98• Aircraft - 16%

• San Jose: rank #100• Communications equipment - 9%• Electronic components - 25%

Source: Bureau of Labor Statistics

Manufacturing

current recession compared to the last recession

0%

5%

10%

15%

20%

25%

Bing Syr Alb Roch Uti Buff

1990 Current

Manufacturing Job Losses

Index

US Loss: 1990

Note: 1990 recession is defined as employment peak toemployment trough; current recession defined as 3/01-12/02 Source: U.S. Department of Labor

0%

5%

10%

15%

20%

25%

Bing Syr Alb Roch Uti Buff

1990 Current

Manufacturing Job Losses

Index

Source: U.S. Department of Labor

US Loss: 1990

US Loss: Current

Note: 1990 recession is defined as employment peak toemployment trough; current recession defined as 3/01-12/02

Upstate Losing its Share of Manufacturing Jobs

0.023

0.025

0.027

0.029

Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02

Source: US Department of Labor

Percent of U.S. Manufacturing Employment

15% Drop

0%

10%

20%

30%

Rochester Binghamton Buffalo Utica Syracuse Albany

1990 Current

Percent of Employment in Manufacturing

Index

Source: Bureau of the Census, County Business Patterns, author’s calculations

US Average: 1990

0%

10%

20%

30%

Rochester Binghamton Buffalo Utica Syracuse Albany

1990 Current

Percent of Employment in Manufacturing

Index

Source: US Department of Labor

US Average: current

0.00%

1.00%

2.00%

3.00%

4.00%

Binghamton Rochester Syracuse Utica Buffalo Albany

1990 Current

Net Manufacturing Employment Impactweighted contribution to recessionary job loss

Net Job Loss Attributable to Manufacturing

Source: US Department of LaborNote: 1990 recession is defined as employment peak toemployment trough; current recession defined as 3/01-12/02

0.00%

1.00%

2.00%

3.00%

4.00%

Binghamton Rochester Syracuse Utica Buffalo Albany

1990 Current

Source: US Department of LaborNote: 1990 recession is defined as employment peak toemployment trough; current recession defined as 3/01-12/02

Net Manufacturing Employment Impactweighted contribution to recessionary job loss

Net Job Loss Attributable to Manufacturing

Long Term Sluggishness

Long-Term Job Growth is Sluggish

95

100

105

110

115

120

125

Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01

Source: US Department of Labor

Employment Index: 1991 = 100

US

Upstate

The Labor Force is Shrinking

95

100

105

110

115

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Source: US Department of Labor

Index: 1990 = 100

US

Upstate

As is the Population population growth 1990 to 2000

-5.3

-4.6

-1.6

-1.4

1.6

3.4

-6 -5 -4 -3 -2 -1 0 1 2 3 4

Percent Change in Population

Rochester

Albany

Syracuse

Buffalo

Binghamton

Utica

Source: Bureau of the Census

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

Albany Syracuse Buffalo Utica Binghamton Rochester

Average Wage Growth per Worker: 1997-2001private sector, in core MSA county

Source: ES202

US Average

Conclusions• This recession has not been particularly

severe for the majority of upstate• except for Rochester and Binghamton

• The manufacturing impact has been somewhat worse than the last recession

• and upstate is losing its share of manufacturing jobs

• Long term stagnation and low wage growth are more concerning