LVEDC Conducts In-Depth Analysis of Factors Driving Lehigh Valley Economy
By George Lewis on November 26, 2018
This article, written by LVEDC Director of Research & Analysis George Lewis, originally appeared in the November 8, 2018 issue of “Quarterly Connections,” a quarterly newsletter LVEDC distributes to municipal officials in the Lehigh Valley.
Essential in LVEDC’s mission to market the Lehigh Valley’s economic assets is an in-depth understanding of the factors that drive our regional economy.
When we collect, analyze, interpret, and share information about the Lehigh Valley, we gain insights that enable us to know ourselves more fully: we find strengths and shortcomings, we separate perceptions from realities, we identify established trends and emerging issues.
LVEDC conducts research using government data, private data services, and information we collect locally. Our analysis of all that information produces a greater understanding of the Lehigh Valley’s population, labor force, commercial real estate market, cost of living, and other factors that help LVEDC position the Lehigh Valley as the right place to do business and a desirable place to live and work.
Based on government data from the U.S. Department of Commerce, we know that in 2017 the Lehigh Valley’s private-sector economic output exceeded $40 billion for the first time. That’s larger than the states of Vermont and Wyoming. It represents a compound annual growth rate of 5.1 percent since 2011, the end of the last recession.
Digging into the numbers a little deeper provides a clearer view of the Lehigh Valley as a center of manufacturing. While our overall economic output is the 64th largest in the country, our $7.4 billion manufacturing sector ranks 51st nationally. Manufacturing accounts for 18.4 percent of the Lehigh Valley’s economy, compared with just 13.2 percent for the country.
With a growing economy and nearly full employment, one of the most important ongoing research projects at LVEDC is looking at the regional talent market. Our biggest challenges include the availability of workers, and perceived gaps between the skills that employers value and the skills job candidates possess.
To reach beyond what government data can tell us, LVEDC surveyed more than 300 Lehigh Valley businesses in five target economic sectors in late 2017. We learned that while 90 percent of those companies are hiring, more than 70 percent expressed concerns about their ability to recruit and retain workers. This type of insight puts the Lehigh Valley ahead of the pack in deploying new talent supply strategies and enhancing collaboration among employers, educators, municipal leaders and others.
Another local project that LVEDC directs is cost-of-living research as part of a national study conducted by the Council for Community and Economic Research. That research has tracked the Lehigh Valley’s cost-of-living about 5 percent higher than the national average, but much lower overall than big cities in the Northeast.
An emerging issue we have identified in the cost-of-living research is affordable housing. In the most recent quarter, Lehigh Valley housing costs were 20 percent higher than the national average. Both new home prices and apartment rents have been rising. Measures of housing affordability have been falling.
In recent years, the strong and diversified economy of the Lehigh Valley has provided job opportunities for people of all educational and skill levels. A shortage of affordable housing may in time affect our ability to attract workers for the growing manufacturing, skilled trades, distribution, fulfillment and health care support fields in the Lehigh Valley.
To follow these trends, and reports of LVEDC’s ongoing research, we encourage municipal officials to visit our website (www.lehighvalley.org), subscribe to our weekly newsletter, follow us on social media, and attend LVEDC events. These are all great ways to stay in the know about the regional economy and be an even more effective partner with LVEDC in improving economic conditions in our communities.
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