PNC Chief Economist Says 2017 Could Bring Local Economic Growth, Especially In Lagging Sectors
The same sectors that caused the economy to lag in southwestern Pennsylvania in 2016 could be the sectors that keep the region on pace with the national economy in 2017.
PNC Financial Services Group Chief Economist Stuart Hoffman said though the region saw growth in technology, health care and financial services jobs, other industries saw losses and the region trailed behind national trends.
“We lost jobs, obviously, in the energy sector,” he said. Additionally, local unemployment rates rose from 5 to 6 percent in 2016, he said.
A new study shows Pennsylvania saw a 32 percent loss in oil and gas jobs in 2016.
Hoffman said he expects to see rebounds in the energy sector and construction jobs, which could help to lower unemployment and grow wages. That job growth could be spurred by higher natural gas prices and construction work on the new ethane cracker plant in Beaver County.
Though the economy started on a weak note nationally, it grew in the latter half of 2016 and continued to grow following the presidential election. Though, Hoffman expects 2016 growth nationally to end at a relatively slow 1.75 percent with about 2 million jobs being created.
He said he thinks it is “highly likely” the Trump administration and the Republican-led congress will cut personal and corporate taxes, reduce regulations on businesses and increase infrastructure and defense spending, which he said could stimulate the economy. Trump promised on the campaign trail to "massively cut taxes for the middle class" and invest in infrastructure, including to "fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals."
“Hopefully there won’t be a trade war with China in particular—putting tariffs on Chinese goods and their responding, which would be a lose-lose for the U.S. economy and the Chinese economy,” Hoffman said. “That’s the biggest downside risk to the economic outlook.”
The other downside risk, according to Hoffman, is the potential to grow the national debt, which could hurt the economy in the long term.
“It’s going to be an interesting year,” Hoffman said. “I think it’s going to come out all right for the economy, but clearly there are some risks from a new administration and a Congress that a lot of people are very concerned about.”
Hoffman said he expects to see national growth around 2.25 to 2.5 percent in 2017. He said he also expects to see wage growth at around 3 percent and for the Federal Reserve to raise interest rates one-quarter of a percent twice next year.