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Don Cunningham: Manufacturing-Fueled GDP Growth Hits New Heights

By Don Cunningham on October 23, 2015

This column, written by LVEDC President and CEO Don Cunningham, originally appeared in Lehigh Valley Business on October 19, 2015. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

When I was a kid, a visit to my great-grandmother’s house often included a stop at the hallway closet door to be measured and marked.

The inside door jam was littered with pencil lines, names, and dates. Each line marked the growth of dozens of grandchildren and great-grandchildren. Looking back, it was an exercise in both knowing where you are and from where you came.

The Lehigh Valley’s economy got its own pencil mark on the door jam last month with the release of the U.S. Department of Commerce’s GDP breakdown. The economic output of the Lehigh Valley region reached $35.4 billion in 2014, making it the 75th largest of the 381 largest statistical metropolitan areas in the United States.

It grew by $1.1 billion from the previous year.

Since the national recession ended, the Lehigh Valley has been on an unprecedented burst of growth. 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, including Bolivia ($35 billion) and Paraguay ($30.8 billion).

No other metropolitan area of Pennsylvania has grown at the rate of the Lehigh Valley.

From 2013 to 2014, the Lehigh Valley experienced a 3.12 percent growth in GDP. Out of 19 major regions in Pennsylvania, only two others had a bigger year-to-year GDP increase, Center and Lycoming counties, both rural counties in the Marcellus Shale foundation whose growth came from natural gas exploration.

Most notably, the Lehigh Valley’s economy grew in every sector: 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%) and arts, entertainment, accommodation and food services (0.6%).

The most significant indicator in these numbers is the return of manufacturing growth. Manufacturing is the third largest sector of GDP in the Lehigh Valley.

In previous years, manufacturing had slipped in the Lehigh Valley, but that trend appears to be reversed. In fact, the Lehigh Valley’s manufacturing rank is now 64th out of the 381 metropolitan markets that are tracked across the United States. Manufacturing output is up and growing in the region. While new technologies and automation have made manufacturing less labor intensive, it has contributed to growth in production. In addition, the region has seen new manufacturers come here and others choose to start here.

The Lehigh Valley outpaces the rest of Pennsylvania and much of the country in manufacturing growth.

Overall, the regional economy has grown each year of the past decade except in 2009, during the height of the Great Recession. The Lehigh Valley’s GDP for 2014 is 5.7 percent higher that it was in 2010 and 10.7 percent higher than in 2003.

It all reminds me of my great-grandmother and those marks inside the closet door.

Many years ago, someone I knew bought my great grandmother’s house.  It turned out that the markings were still there. She told me one of the last lines said, “Donny, 4’ 11.”

I’m sure when that mark went up I was excited about being nearly five feet. Today, I can’t remember being that short.

I have a feeling there will be a day in the future when someone will find it equally cute that the Lehigh Valley’s GDP was once a mere 35 billion.

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11% of Labor Force
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