Lehigh Valley’s top four industries in 2019 were more balanced than the national economy as a percentage of private output. (Graphic/Liz Martin)

Lehigh Valley entered the COVID-19 pandemic with a record $43.3 billion in private-sector economic output in 2019 that was more balanced than the national economy, according to a new analysis by Lehigh Valley Economic Development Corporation (LVEDC).

The top four industries driving Lehigh Valley’s private-sector output in 2019 were separated by just 5.4 percentage points, ranging from the Finance, Real Estate and Insurance sector at 17.9% of the Gross Domestic Product (GDP) to the Professional and Business Service sector at 12.5%, according to the review of Bureau of Economic Analysis data.

By contrast, the Finance sector commanded nearly a quarter of the U.S. GDP and was separated by 14.3 percentage points from its fourth top industry — Education, Health Care and Social Assistance. Among the top drivers of the region’s GDP was manufacturing, which represented a higher percentage of private-sector GDP than what the share was on the national level.

“Lehigh Valley’s leaders have long extolled the balance of the regional economy – a strategic effort by the community after a long period in which the economy was dominated by a few large companies,” said George Lewis, LVEDC’s Vice President of Communications, Marketing and Research. “While that balance hasn’t entirely shielded us from the economic effects of the pandemic, we believe it has helped us weather the downturn better than many regions and positions us for even greater success as the U.S. economy rebounds.”

GDP measures total market value of the goods and services produced in a region over a year. The LVEDC tracks GDP for the Lehigh Valley metropolitan region. That region includes Lehigh, Northampton, Carbon and Warren counties. The 2020 GDP for metropolitan regions will be available in December 2021.

Here is a look at how the region’s industries were positioned on the eve of COVID-19 upending the economy:

Manufacturing

A Martin Guitar employee adding strings to an instrument at the manufacturing facility in Upper Nazareth Township.

What Lehigh Valley’s 2019 GDP says: Manufacturing comprised $7.1 billion, or 16.3% of Lehigh Valley’s economy, compared to 12.5% of the national economy in 2019.  While Lehigh Valley was the 65^th largest economy overall in 2019, it ranked 52^nd among the U.S. markets for manufacturing. From Crayola to Mack Trucks, the region’s manufacturers have added 5,000 jobs from 2014-2019.

The pandemic’s impact in Lehigh Valley: Manufacturing jobs contracted this year amid the pandemic. Employment is slowly recovering but still down by about 2,000 jobs over the previous year. A May analysis done by the Institute of State and Regional Affairs at Penn State-Harrisburg show a majority of manufacturing employment in Lehigh Valley were in sectors defined as essential by state government.

What the 2020 National GDP says about the sector: Manufacturing GDP was down by $19.6 billion year over year or by about 1%. The manufacturing of durable goods, such as computers and desks, was up by $6.5 billion and non-durable products such as clothing and paper was down by $26.1 billion.

Education, Health Care and Social Assistance

Nurse Sonia Iparraguirre was the first individual to receive the COVID-19 vaccine at St. Luke’s University Health Network this month. (photo courtesy St. Luke’s)

What the 2019 GDP says about Lehigh Valley: The Education, Health Care and Social Assistance sector comprised nearly 14.8% of the metropolitan region’s GDP, about 3% higher than the share the sector comprises in the national economy. It’s the region’s third top industry in terms of GDP and first in terms of employment. Health care providers such as Lehigh Valley Health Network and St. Luke’s University Health Network are among the region’s largest employers.

The pandemic’s impact in Lehigh Valley: While employment initially suffered in the sector, it has recovered as demand for registered nurses and other health care occupations rose during the pandemic.

What the 2020 National GDP says about the pandemic’s impact in the sector: Nationwide, the sector was down $24.5. billion, or by about 1%, from the Third Quarter of 2019 to the Third Quarter of 2020. However, the drop was mainly due to nursing home and educational service sectors. The GDP for hospitals and outpatient centers, which are subsectors, was $2.9 billion higher.

Logistics

What Lehigh Valley’s 2019 GDP says: The Transportation, Warehousing and Utilities sector made up $2.5 billion, or 5.7% of Lehigh Valley’s GDP. The sector comprised 3.7% of the national GDP. Lehigh Valley, which sits in the heart of the Northeast market, counts logistics leaders such as Amazon and FedEx among the tenants occupying 108.9 million square feet of logistics space. While logistics employs more than 30,000 workers in the region, it is not one of the top sectors in terms of economic output.

The pandemic’s impact in Lehigh Valley: While employment took an initial hit at the beginning of the pandemic, jobs recovered by the end of the second quarter. The shift to online shopping made those jobs even more critical.

What the 2020 National GDP says about the sector: The transportation and warehousing sector was down $125.1 billion, mostly due to air travel. But the subset of warehousing and storage was up by $8.5 billion, or by about 11%.

Hospitality

Patrons visit Steelstacks three years ago during Musikfest, which historically draws a million people to Bethlehem over ten days in August. Musikfest modified its programming last year to account for social distancing protocols brought on by COVID-19.  (photo courtesy Discover Lehigh Valley)

What Lehigh Valley’s 2019 GDP says: From Musikfest to Lehigh Valley Phantoms, the hospitality industry showcases a very visible but relatively small slice of the region’s economy. It produced in 2019 of $1.9 billion GDP, or about 4.4% of the economy, slightly less than the U.S. portion of 4.7%.

The pandemic’s impact in Lehigh Valley: The industry felt the brunt of the effects of downturn with social distancing mandates. Employment in November was still down by about a quarter over the previous year.

What the 2020 National GDP says about the sector: No other industry suffered as much. It was down $232.9 billion, or by 25%, from the Third Quarter of 2019 to 2020.