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Forbes: County can ride out recession
Forbes report ranks Lancaster County economy among nation’s most capable of riding out bad times. Here’s why we’re so strong.
Lancaster New Era
Published: Oct 20, 2008
11:11 EST
Lancaster
By TIM MEKEEL, Staff Writer
Sure, the local housing market didn't soar as high as it did in some places during the boom a couple years ago.

But that means the economy here won't plunge as low as it will in some places when the recession hits, if it hasn't hit already, says a leading business publication.

A sturdy housing market is one reason Forbes magazine believes Lancaster County is the 10th best place "to ride out the recession."

"Lancaster shows that sometimes slow growth feels better than fast growth and big bust," the magazine writes.

In its article published last week, Forbes analyzes which communities are most and least vulnerable to the coming recession.

Its conclusions are based on three variables: housing, employment and the size of the community's financial services industry (which has been savaged by the financial crisis).

Elizabethtown College economist Tom Scheiding isn't surprised that Lancaster County would make Forbes' list of best-positioned areas.

"The business cycle is not as severe in Lancaster County," according to Scheiding.

"We're not immune to a recession, but the expansionary and peak periods are not as high and the contractionary and trough periods are not as low," he said today.
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At the same time, the fact that the local economy has been barely growing in recent years raises a legitimate concern, noted Scheiding, assistant professor of economics.

The minimal growth here, as measured by the county's gross domestic product, has led to average per-capita income here trailing the national norm.

"We're stable," he said, "but at a level that's below the national average for per-capita income."

The metropolitan area that's best positioned to withstand a recession is Austin, says Forbes. With many university and government jobs, Austin enjoys rising home prices, low unemployment and few foreclosures.

Worst positioned is Riverside, Calif. Its profile is the opposite of Austin's. Foreclosures are rampant and the unemployment rate jumped more than six points in a year.

Lancaster County joins Austin on the "best" list, even though the local economy clearly has weakened in recent months, with unemployment and foreclosures higher.

Yet, compared to other metro areas, the local economy is better able to withstand a national downturn, Forbes suggests.

Despite moving up in recent months, the unemployment rate here still is much lower than elsewhere. It's consistently among the best in the state.

In addition, homeowners generally "have a comfortable cushion of equity and very few houses have dipped under water" (meaning the amount owed on a home exceeds the home's worth).

"Many regions of the country would probably opt for slow growth rather than a massive housing correction," Forbes says.

TOP 10
1 Austin.
2 Oklahoma City.
3 Honolulu.
4 Portland, Ore.
5 Tulsa.
6 Virginia Beach.
7 Seattle.
8 Baltimore.
9 Boston.
10 LANCASTER.


Staff writer Tim Mekeel can be reached at tmekeel@LNPnews.com or 481-6030.

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Showing 5 most recent comments out of 11 total TalkBack comments about this article
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QUOTE (solitary @ Oct 21 2008, 09:02 AM)
I gotta ask, how many people know someone personally, not a friend of a friend, but a neighbor, mother, father, wife, husband, child who's been laid off or been laid off themselves? No need for specifics, just a yes or no will be fine.
How many people fear for their jobs who are grunt level workers? If you're a middle manager, got news for you, you're expendable and always will be.
How many have had a mortgage for over 10 years and are struggling to make the payments?
Downsized housing?
How many cancelled "basic" services, like cable, long distance, cell phones? (basic in quotes, because these aren't basic, but we as American's typically consider them basic necessities.)
How many sold a second/third car because of expense to keep it, not because it was worn out?


I agree that the doom-and-gloom reporting may be over stating things and is harmful as it creates a self-fulfilling prophecy. However, facts is facts.

Lancaster Unemployment: Aug-07 3.5%, Aug-08 4.6%; still extremely low, but a 110 basis point jump is huge

Lancaster Housing Sales: Sept-07 444, Sept-08 333; that is a 25% drop which is pretty big

Year to date building permits: Aug-07 761, Aug-08 619; nearly a 20% drop, not that bad

Unemployment is rising (Sept numbers should be a big jump based upon what occurred nationally) and housing is slowing. A big driver of our local economy is housing. As resale activity and permit issues tighten, the impact will be felt throughout our county. To what degree is the variable.
PS-not to be argumentative, but our economy is not a free market. free-ish, maybe.
WinstonTheLastHuman
QUOTE (WinstonTheLastHuman @ Oct 21 2008, 02:23 PM)
Unemployment is rising (Sept numbers should be a big jump based upon what occurred nationally) and housing is slowing. A big driver of our local economy is housing. As resale activity and permit issues tighten, the impact will be felt throughout our county. To what degree is the variable.


Is unemployment based on just the number of people out of work, or is it strictly people actively searching but not finding employment?
twinmom
QUOTE (twinmom @ Oct 21 2008, 02:30 PM)
Is unemployment based on just the number of people out of work, or is it strictly people actively searching but not finding employment?


The pop you might have heard as you clicked submit was the air rushing out of the can of worms you just opened.

"What is the unemployment rate telling us" and "how is it determined" are two heated and controversial questions. The reason is the answer changes (and typically to the benefit of those who report it). That said, it's still all we got (but take with a grain of salt).

But to answer your question, the unemployment rate refers to those actively looking for work. Many feel true unemployment is much higher.

For those interested, www.shadowstats.com is a website run by a smarty-pants academic. He uses his own algorithms to provide, what he claims are, true government statistics (eg unemployment, cpi)-its fee based though.
WinstonTheLastHuman
QUOTE (WinstonTheLastHuman @ Oct 21 2008, 02:23 PM)
PS-not to be argumentative, but our economy is not a free market. free-ish, maybe.
Touche.

Housing, we over built, we should have stopped long ago. But that's also argumentative.
solitary
QUOTE (solitary @ Oct 21 2008, 09:02 AM)
I gotta ask, how many people know someone personally, not a friend of a friend, but a neighbor, mother, father, wife, husband, child who's been laid off or been laid off themselves? No need for specifics, just a yes or no will be fine.

A good friend of mine was laid off. 25 years at the same job.

Many of our customers have been laying people off. One of the biggest employers in Lancaster County recently laid off dozens of people, including a half-dozen I personally worked with on a regular basis.

QUOTE (solitary @ Oct 21 2008, 09:02 AM)
How many people fear for their jobs who are grunt level workers?

See above. I can name several medium-to-large employers in Lancaster County where workers are either on an occasional four-day week, or have been sent home without pay.

QUOTE (solitary @ Oct 21 2008, 09:02 AM)
How many have had a mortgage for over 10 years and are struggling to make the payments?

Since my pay is stagnant, and my expenses continue to escalate, it is getting difficult. Fortunately, the house will be paid off in a few years; I'll just continue to cut back on other things for now.

QUOTE (solitary @ Oct 21 2008, 09:02 AM)
How many cancelled "basic" services, like cable, long distance, cell phones? (basic in quotes, because these aren't basic, but we as American's typically consider them basic necessities.)

I've cut out most of the cable tv "extras" I used to pay for. My wife has health problems that keep her home much of the time, she watches television to keep occupied; if it were just me, the cable tv would be gone by now. My wife refuses to give up her cell phone, she tries to justify the expense because it has no long-distance fees for calling her daughter who lives out of state.

QUOTE (solitary @ Oct 21 2008, 09:02 AM)
How many sold a second/third car because of expense to keep it, not because it was worn out?

I did. I really liked that car, too.

QUOTE (solitary @ Oct 21 2008, 09:02 AM)
It's not a recession, a correction perhaps, a downswing definitely, not a recession. It will come back up again.

It is DEFINITELY a recession. Companies have all but eliminated capital spending on new equipment and/or upgrades. The equipment I service is only being utilized for a fraction of the time it was a year ago. Practically every business I deal with has cut back spending in some way. And a few of our smaller customers have either been bought out at fire-sale rates, or gone out of business completely.
Artie See
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