Home > About BNE > Press Room > 2009 Archive > December > Recession Close to Over in Buffalo

Recession Close to Over in Buffalo, Experts Say

Survey of metro areas cites jobs, housing

By David Robinson
News Business Reporter

December 14, 2009,

 The recession may be close to over in the Buffalo Niagara region, researchers from the Brookings Institution said in a report released today.

With the region's job market showing signs of stabilizing and the region's home prices rising modestly, the Buffalo Niagara region could be on the cusp of beginning its recovery from the recession, the Brookings researchers said.

"Steady if not yet growing employment and increasing output, along with rising home prices, provides some indication that Buffalo, too, could be on the road to recovery," the researchers said in their quarterly report of economic activity in the top 100 metro areas.

But Howard Wiel, a Brookings economist, also cautioned that much of the improvement in the third quarter was due to federal stimulus programs, such as the now-expired Cash for Clunkers initiative and tax credits for homebuyers that have been extended into April.

"The growth that you saw was very dependent on the government stimulus programs," Wiel said. "Buffalo still has a ways to go to get back to where it was when the recession started."

The report's findings put the Buffalo Niagara region in a largely positive light, with high marks for its job market, which has held up better than it has in most other metro areas during the recession, and its slow-but-steady housing market. The overall decline in the regional economy from its prerecession peak also was smaller than it was in most other major metro areas.

"Buffalo, in particular, has been hit more lightly than most of the other major metro areas," Wiel said.

The report is encouraging because it indicates that the region bucked its historical trend of falling into recession before the rest of the country and taking a harder hit during a downturn.

In the current recession, the Buffalo Niagara decline did not start until the second half of last year, after much of the rest of the country already had entered a downturn as housing markets collapsed.

The report also noted that improvement in the region's overall economy from the second quarter to the third quarter was among the most sluggish in the nation, based on Moody's Economy.com's estimates of gross economic output.

That would dovetail with the region's historical trend of taking longer to recover from a recession as growth rates lag behind the rest of the nation once the rebound begins.

Still, the Brookings report ranks Buffalo Niagara among the nation's 20 strongest-performing metro areas during the third quarter — a list that also includes Syracuse and Rochester.

Much of the region's strength comes from its housing market, where home prices continue to rise modestly after missing the real estate boom that swept through much of the country during the early part of the decade.

While the national housing bubble has since burst, the local real estate market has continued its slow growth and stable home sales, despite the recession and the ensuing credit crunch. As a result, the Brookings rankings rated Buffalo Niagara as the nation's No. 5 housing market in the third quarter, based on the 4.3 percent rise in local housing prices over the last year.

With home prices still rising and median sale prices still far below the national average, foreclosures also are far less of a problem locally than in many other parts of the country, the study noted.

The local job market also compares fairly well, despite its recession-induced weakness. The 2.8 percent decline in the number of jobs in the last year ranked 24th among the top 100 metro areas, where the average decline was 4.3 percent.

Seasonally adjusted employment data also showed that the Buffalo Niagara job market was flat from the second quarter to the third quarter, ranking 13th nationally and topping the average 0.5 percent decline among major metro areas. But the report also noted that the rate of employment growth in the Buffalo Niagara region slowed from the second quarter to the third quarter.

Over the last year, the overall output of the local economy fell by 1.4 percent, which ranked 24th and was significantly better than the 2.4 percent average decline among all major metro areas.

The local auto industry, which has declined steadily over the last 30 years, still remains weak despite the boost from federal stimulus programs. Buffalo Niagara was one of 40 metro areas where auto industry output fell, but at a slower rate than in the second quarter. Auto industry output grew in the other metro areas.

Buffalo Niagara was one of just 13 major metro areas to have stable or growing employment, as well as an increase in output from the second quarter to the third quarter, the report found.

Unemployment averaged 8.4 percent locally during the third quarter, more than a full percentage point lower than the 9.6 percent average for major metro areas.

drobinson@buffnews.com