COVID-19 Crisis Necessitates Use of Non-Traditional Economic Indicators
By George Lewis on September 28, 2020
This article was originally featured in the October 8, 2020 issue of “Quarterly Connections,” a quarterly newsletter LVEDC is distributing to municipal officials in the Lehigh Valley.
The suddenness and severity of economic impacts to Lehigh Valley from the COVID-19 pandemic has brought attention to new, non-traditional indicators the Lehigh Valley Economic Development Corporation (LVEDC) is using to analyze performance of the region’s economy.
From online job ads to restaurant reservations, researchers are analyzing various data sources to assess the economy with local precision.
“One of LVEDC’s important roles is to be a leading source of data and market intelligence on Lehigh Valley’s economy, assets, and resources,” said George Lewis, LVEDC Vice President of Marketing and Communications. “Since the pandemic, we’ve found that traditional economic metrics provide limited insight into what is happening day-to-day and week-to-week. It has led us to seek out and analyze new sources and new metrics to guide strategies that will continue our economic growth.”
One of the traditional measures of economic performance is unemployment, which jumped from about 5% at the start of 2020 to 16.6% in April. In just one month, the number of people out of work in Lehigh and Northampton counties increased by nearly 40,000.
Since April, unemployment has decreased gradually, falling to 13.8% in July. The pace of the decline suggests that economic recovery will be gradual, even as thousands of jobs are added to the regional payroll, according to data from the Pennsylvania Department of Labor and Industry.
While unemployment rate reveals part of the economic picture for Lehigh Valley, the data is already several weeks old before it’s released. With economic conditions changing rapidly, other ways to analyze performance become more important.
For example, despite double-digit unemployment, Lehigh Valley added jobs in May, June, and July. The number of non-farm jobs bottomed out at 322,000 in April and rebounded to 354,000 in July, according to the U.S. Bureau of Labor Statistics.
Among regions of 500,000 to 1 million people, Lehigh Valley’s job growth percentage ranked among the top 10 in the country for July, the Brookings Institution reported.
Research by the website Apartmentlist.com found that Lehigh Valley is among the top 10 job markets in the country for the percentage of “exposed” workers, those in essential occupations who are not able to do their jobs at home.
Penn State-Harrisburg reported that nearly 80% of the jobs in Lehigh and Northampton counties are in companies that were defined as “essential” by Gov. Tom Wolf or received exemptions from the state to continue operating during stay-at-home orders.
New online job postings, measured by Chmura Economics JobsEQ platform, quickly dropped off after stay-at-home orders took effect, but rebounded by July to levels at or above 2019 job postings. In the last month, 20,000 jobs were posted for more than 600 occupations in Lehigh Valley. The most common positions sought were in distribution and fulfillment centers, delivery services, retail and fast food, and health care.
LVEDC also has tracked state data reporting weekly new claims for unemployment benefits. The number of new claims filed by people who are out of work spiked from 600 to 800 per week before the pandemic to a peak of 10,000 in early April.
The number of people seeking unemployment benefits has dropped from the peak, but consistently stayed between 1,200 and 1,400 per week in August, or about twice the pre-pandemic level, according to the Pennsylvania Department of Labor and Industry.
Meanwhile, the number of people in Lehigh Valley receiving unemployment benefits jumped from 6,000 in March to 66,000 in April and has settled at around 30,000 each week for the past month. Among the industries hardest hit, hospitality accounts for 18% of Lehigh Valley workers receiving unemployment benefits.
The unemployment claims data show no middle ground for the pandemic’s economic impact. Certain industries such as hospitality, retail, manufacturing and personal services were hit hard by the slowdown, while professional services, education and finance continue to have low unemployment levels reminiscent of the last five years.
Opportunity Insights, a nonprofit based at Harvard University, used anonymous data from private companies – credit card and payroll processors, for example – to track small business activity, consumer spending and more down to a county level on a daily basis.
The number of businesses open plummeted by mid-April to a low of 43% below pre-pandemic levels in Northampton County and 46% below in Lehigh County. By early July, the number of businesses opened were down just 1% from the January baseline in Northampton and 12% in Lehigh.
Consumer spending in the Lehigh Valley in July, measured by credit and debit card purchases, was down 13% from pre-pandemic levels in Lehigh County and 5% in Northampton County. That’s a big improvement from the April declines of 37% in both counties.
LVEDC continues to track these and other measures of the economy to understand the continuing effects of COVID-19 and to evaluate signs of recovery as business activity resumes.
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