Home > About BNE > Press Room > 2010 Archive > September > Region’s Economy Better than Nation’s

Region’s Economy Better than Nation’s

Stable housing market didn’t experience ‘bust’

By David Robinson

NEWS BUSINESS REPORTER

September 10, 2010
 

The Buffalo Niagara region is riding out the Great Recession better than most of the country, a Federal Reserve Bank of New York economist said Thursday.

While the downturn still has cost the region more than 16,000 jobs and pushed jobless levels to their highest points since the mid-1980s, the region’s stable housing market helped Western New York avoid the full brunt of the recession, said Jaison Abel, an economist at the Fed’s Buffalo office.

“Buffalo and Rochester have performed a little better than New York as a whole, and significantly better than the United States,” Abel told members of the CFA Society of Buffalo.

That’s a sea change from previous recessions, where the Buffalo Niagara region has tended to be among the first to feel the decline, to fall harder than most places and take longer to recover.

This time, the region didn’t begin to feel the effects of the recession, which began nationally in December 2007, until the late summer of 2008. And once the decline began, it wasn’t as severe as it was elsewhere, Abel noted.

Jobless levels here, which stood at 8 percent in July, are well below the 9.7 percent unemployment rate nationally.

As the steel and auto industries have declined locally, manufacturing has become less of a dominant factor in the Buffalo Niagara job market, which now more closely matches the overall employment mix of the nation. That has helped reduce the volatility of the once highly cyclical Buffalo Niagara job market, Abel said.

“The upstate economy, and Buffalo and Rochester in particular, tend to be more stable economies,” Abel said. “There’s less churn in and out of the job market.”

Home prices, which have dropped nationally as the housing bubble burst, have continued to rise slowly in a Buffalo Niagara region that missed out on

the boom during the early 2000s.

“Upstate New York and Buffalo have had a very different experience from the rest of the country,” he said.

But Abel also sees signs that the recovery, which started to take hold last year, is losing steam, both nationally and in the Buffalo Niagara region.

“It looks like there’s going to be continued slow growth in our region,” Abel said.

The Fed’s Empire State Manufacturing survey turned positive in July 2009 but has indicated that factory growth has slowed in recent months.

Locally, the Buffalo Niagara region lost jobs during July after experiencing modest job growth in May and June. While the private sector continued to add jobs during July, cutbacks in employment by cash-strapped government entities contributed to the overall decline.

“These are still extremely high unemployment rates. It’s a risk to the current recovery,” Abel said.

Consumer confidence levels, which had been on the upswing since last summer, weakened slightly in the Buffalo Niagara region during the spring and remain well below their pre-recession levels.

Even the local housing market, which has been a bastion of strength during the downturn, has softened this summer as the expiration of the homebuyer tax credit left the real estate sector with a hangover.