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Lehigh Valley Has Most Balanced and Diversified Economy in Pennsylvania

By Colin McEvoy on November 10, 2015

The GDP for the Lehigh Valley’s top four sectors are all extremely close, falling within $400 million of each other.

The GDP for the Lehigh Valley’s top four sectors are all extremely close, falling within $400 million of each other. Click the image above to enlargen.

The Lehigh Valley has the most balanced and diversified economy in the state of Pennsylvania, according to an analysis by the Lehigh Valley Economic Development Corporation (LVEDC).

The region’s gross domestic product (GDP) has risen to a record-high $35.4 billion as of 2014, showing not only strong overall growth, but also growth in every measurable subcategory, LVEDC announced last month.

Most Pennsylvania regions have a high GDP in one or two particular subsectors, then a significant drop-off in the rest. But that’s not the case in the Lehigh Valley, which has an unusually high balance among its top four sectors, demonstrating an extremely diverse and multi-faceted economy not dependent on any one single industry.

“The Lehigh Valley has not only experienced an unprecedented burst of growth since the end of the national recession, we’ve also seen a great balance in development, both in terms of geography across the Lehigh Valley and in different sectors of development,” said Don Cunningham, LVEDC president and CEO. “This ultimately results in a healthier and more vibrant regional economy.”

The GDP for the Lehigh Valley’s top four sectors – finance, insurance & real estate; professional & business services; manufacturing; and educational services & health care – are all extremely close, falling within $400 million of each other.

A comparison to 12 other metropolitan statistical areas in Pennsylvania reveals that none enjoy a balance as strong the Lehigh Valley, according to an LVEDC analysis based on data from the U.S. Department of Commerce’s Bureau of Economic Analysis.

Most regions have a high GDP in one sector, then a significant drop in the others. For example, York’s top sector is manufacturing, at $3.67 billion. But its next-highest sector – finance, insurance & real estate – is $1.92 billion, a 48 percent drop.

Likewise, Erie’s top sector is manufacturing, at $2.85 billion, and its second-highest sector is education & health care at $1.57 billion, a 45 percent decrease. In Reading, the top sector is also manufacturing at $3.7 billion, followed by professional & business services at $2.1 billion, a 43 percent drop.

By comparison, the Lehigh Valley’s balance is far better. The region’s top sector is finance at $5.24 billion. The second-highest is professional & business services at $5.01 billion, only a 4.4 percent drop. That is followed by manufacturing at $4.95 billion (a 1.2 percent drop), and educational services & health care at $4.84 billion (a 2.2 percent drop).

A comparison to the GDPs (broken down by sector) of other Pennsylvania regions shows they lack the balance of the Lehigh Valley. Click the above image to enlarge.

A comparison to the GDPs (broken down by sector) of other Pennsylvania regions shows they lack the balance of the Lehigh Valley. Click the above image to enlarge.

“This close split demonstrates how diverse the Lehigh Valley’s economy has become,” Cunningham said. “It’s very different from 20 years ago, when the region was largely dominated by a single industry anchored by the Bethlehem Steel Corporation. We don’t have all our eggs in one basket.”

This Philadelphia region was not considered in this analysis because GDP data was not available for each of its subsectors.

Having shown consistent growth nearly every year for more than a decade, the Lehigh Valley’s GDP is larger than that of the entire state of Vermont ($30.7 billion) and of 94 other countries in the world.

The regional GDP grew in every category from 2013 to 2014, including:

  • Manufacturing (4.1%)
  • Transportation and warehousing (4.7%)
  • Finance, insurance, and real estate (6.2%)
  • Professional and business services (6.6%)
  • Health care, educational services, and social assistance (2.6%)
  • Arts, entertainment, accommodation, and food services (0.6%)

From 2013 to 2014, the Lehigh Valley saw a 3.12 percent growth in GDP. Out of 19 major regions in Pennsylvania, only two others saw a larger year-to-year GDP increase (Centre and Lycoming counties, both with 3.87 percent), and both are rural counties falling within the Marcellus Shale foundation.

Gross domestic product is the measurement of a country’s economic output. It is the total market value of all finished goods and services produced within a country’s borders in a given year. It includes all consumer, investment and government spending and exports, minus the value of imports.

An equalized GDP-by-sector among Pennsylvania GDPs.

An equalized GDP-by-sector among Pennsylvania GDPs.


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