PNC forecasts strong 2013 for Pittsburgh region
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The Pittsburgh regional economy, which snapped back from the recession early but stalled in 2012, is poised to head higher again this year, according to forecasters at PNC Financial Services Group.
A reviving national economy will provide the oomph needed to reignite growth locally, PNC economist Kurt Rankin said in an interview.
The Pittsburgh region experienced above average growth in the first two years of the economic recovery in 2010 and 2011, but hit a lull the middle of last year.
Pittsburghers were more willing to spend coming out of the recession than consumers in many other regions because the local economy did not fall as far, but that willingness has been fully tapped, Mr. Rankin said.
"There is only so much that local consumption can do to add jobs without the national economy getting back on its feet and supplying outside demand," he said.
Mr. Rankin measures the strength of the local economy primarily by tracking job growth.
By early last year, the region had regained all of the jobs it had lost since hitting a recessionary low in early 2010. Employment dropped back again in mid-2012, but picked up to an all-time high of 1.17 million jobs by year end.
Meanwhile, the region's jobless rate, which hit a recessionary high of 8.3 percent in early 2010, fell to as low as 6.7 percent by the middle of last year but then ticked up to 7.2 percent as of December, the latest available figure.
That compares with a national unemployment rate of 7.8 percent in December and 7.7 percent as of February. The national rate hit a recent peak of 10 percent near the end of 2009.
Mr. Rankin is projecting a continued slow recovery in the local jobless rate, which should dip to around 6.8 percent by the end of this year and to about 6.5 percent by the end of 2014.
He said the Pittsburgh job market is actually healthier than the slowly declining unemployment rate might suggest.
Unlike on the national stage where a large number of people discouraged by their job prospects have been sitting on the sidelines waiting for the economy to perk up before looking for work, people in this region continue to enter the labor force "confident of being able to find a job," Mr. Rankin said.
When those people are counted in the workforce, it keeps the jobless rate from coming down even more than it has.
He projects the region will get a boost later this year from a nationwide pick up in the economy.
"That's where we see Pittsburgh's growth potential ramping up again," Mr. Rankin said. "Businesses across the country will be taking profits they've been accumulating since 2009 and putting them to work," buying supplies, software and equipment, and adding staff.
Pittsburgh, like elsewhere, will reap the benefits, he said.
PNC's forecast calls for relatively weak growth of about 1.5 percent in the U.S. gross domestic product in the first quarter -- weighed down by the two percentage point jump in Social Security payroll taxes that kicked in at the start of the year -- accelerating to around 2.4 percent by the fourth quarter.
PNC's outlook was knocked back a bit by the automatic federal spending cuts, known as sequestration, which took hold March 1.
The bank had been expecting fourth-quarter growth of around 2.9 percent.
If some of those federal spending cuts are rolled back later in the year, as many expect, PNC's forecast likely would go up a few notches, Mr. Rankin said.
First Published March 14, 2013 12:00 am