The general perception of the Pittsburgh economy is one of stagnation, even decline. Despite a flurry of announcements regarding new large-scale construction projects in the local area, the outlook still appears to be viewed with a mixture of gloom and resignation regarding the inevitability of, at best, a lackluster economic performance.

		Norman Robertson is economic adviser for the Smithfield Trust Co. and former chief economist for Mellon Bank. This analysis first appeared in the "The Smithfield Forecast," a quarterly survey of economic and investment trends.

The negative perceptions of the local economy do not, in our judgment, correspond to the facts. All too often, perceptions have been mistaken for realities. Thus, while growth in the Pittsburgh economy has been slow and has failed to match the national averages, this should not be construed as a sign that the local area is still struggling -- with only very limited success -- to recover from the loss of steel and other manufacturing jobs over the past 20 to 30 years.

Unfortunately, statistical data on the Pittsburgh economy is far from comprehensive and often out of date as well. But while the statistics that are available scarcely represent a complete picture of the Pittsburgh economy, they do not support the widely held view of Pittsburgh as a no-growth stagnant economic region. While lagging behind the nation as a whole, the economic indicators show that the local economy is appreciably stronger -- and more resilient -- than most of the downbeat assessments of economic conditions would imply.

Arguably, Pittsburgh, for all its well-documented problems, has fared as well -- or better -- than those areas of the country that in common with Pittsburgh were heavily dependent on manufacturing industries to sustain growth in employment and income.

		Chart: Pittsburgh's employment situation

Without minimizing the challenges that lie ahead -- particularly on the political front -- we believe that Pittsburgh has completed the painful, but necessary, transition from a predominantly manufacturing economy, namely steel, to one which is more diversified and increasingly oriented toward the fast growing service-producing industries.

While the local economy's ability to create new jobs is still limited -- and may well remain so -- we are encouraged by the steady gains in service-related jobs which, in our view, point to increased job opportunities over the coming years.

Moreover, the charts you see above -- notably those relating to income -- suggest that the local economy is a good deal healthier than the data on payroll employment alone might suggest. Without taking a Pollyannaish view of the outlook for Pittsburgh -- much will clearly depend on the national economy -- we believe that recent developments augur well for a narrowing of the gap between gains in economic activity at the national level and those in the local economy.