UNIVERSITY PARK — In September, the bottom was dropping out of the nation’s financial markets. The nation posted eight months of job losses and the public-at-large awoke to the fact that a recession was under way.
But in Centre County, employment was peaking. There were 72,800 people working in the county in September 2008, up 2,000 from September 2007 and 3,000 from September 2006.
The economic downturn, the most severe in at least a quarter-century, quickly caught up to Centre County and the rest of Pennsylvania. In seven months since that peak, the county shed almost 3,000 jobs, falling to a total employment of 69,900 in April.
No one knows for certain when the current economic recession, already more than a year old, will end.
But two separate reports — one from a private research firm, the other from three Penn State economists — paint a picture of what Pennsylvania could look like as it begins to emerge from the recession.
There is good news and bad news in both reports — a mixed bag for a state that is as diverse economically as Philadelphia is from Elk County and has already shed more than 110,000 jobs.
Pennsylvania lagged behind the rest of the nation as it entered the economic downturn and may do so on the exit — but once it does, it could enter a period of sustained growth.
Past recession may be guide to what’s next
Neither report claims to be a crystal ball for Pennsylvania or Centre County’s future.
“The only thing that is certain is uncertainty ... that’s the only thing that we know, is that we don’t know what will happen,” said Stephen Smith, head of the department of agricultural economics and rural sociology at Penn State and one of the coauthors of “Pennsylvania: Road to Growth.”
The report was written by Smith, Theodore Alter and Theodore Fuller, all professors in the agricultural economics department. While it is not a roadmap to recovery, they say it could be used as an indicator and a starting point for discussion of what may lie ahead.
“The idea is to look at the very recent past as a way to generate discussion on what are the possibilities going forward,” Alter said. “This is not a projection of what will happen, but rather an indication of what industries are the best positioned to grow or expand following the recession.”
To compile the report, Alter and his colleagues looked at previous business cycles, specifically the
one from 2001 to 2007, and aggregated all of the labor and industry employment statistics available.
There may be lessons in the pace of job losses and growth seen during and after the last recession. Officially, it lasted from March to November 2001. However, employment in Pennsylvania and the nation continued to decline for two more years, through 2003.
It was not until 2004 and 2005 that the state began to see a sustained, continued growth. That pattern is expected to happen again in the current downturn.
Job losses are expected to continue to climb in 2009 and peak sometime in early 2010, the Pennsylvania Department of Labor and Industry has projected.
The good news: State College and Centre County will, according to the report, be one of the first areas in Pennsylvania to reach pre-recession peak employment levels, projects IHS Global Insight, an economic forecaster.
The bad news: It may take until the end of 2012, or longer, for that to happen.
Steady growth expected
Centre County is not expected to see peak pre-recession employment levels until the last quarter of 2012, according to the Global Insights report.
By comparison, the firm projects Altoona to return to peak employment levels in 2014; Harrisburg, 2013; Johnstown, 2014 or later; and Williamsport, not until 2014 or later.
The projections reflect the areas’ responses to various economic factors based on a statistical analysis of recent history.
If the economic recovery follows trends from the last business cycle, the first areas to begin to add jobs will be the service sectors.
In the post-2001 recession economy, jobs in health and human services grew steadily within the county. Labor and Industry data shows that after initial declines during the recession, so too did the professional, scientific and technical services sector.
Retail trade and the hospitality sector fluctuated widely by season, but over the entire cycle, added jobs.
But two of the eight largest private employment sectors in the state — manufacturing and administration services — recorded a net loss in jobs over the last business cycle in Centre County.
Manufacturing in Centre County — like the rest of the state — has been in a steady decline for much of the past decade.
While the three economists said they do not expect the manufacturing industry as a whole to rebound in the next business cycle, “that doesn’t mean that certain sectors or industries won’t,” Alter said.
However, if the current recession follows past patterns, the county and state should eventually enter a period of sustained economic growth.
“It should end in an upswing, as have all previous recessions,” the three professors wrote. “If the past repeats, the state should have the opportunity to grow jobs and output in the post-recession.”
The key, they said, will be for Pennsylvania to adapt and change with the economic and technological landscape — paving the way for sustained growth in the next business cycle.
Nick Malawskey can be reached at 235-3928.
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