Forget six more weeks of winter, a panel of Pittsburgh-based economists predicted another year of growth and a continued tight labor market in the economic forecast.
“I’m feeling pretty good about the U.S. economy in 2025,” said Gus Faucher, chief economist at PNC Financial Services group. Interest rates have been around 4% and Faucher thinks that’s where they’ll peak with two rate cuts expected this year from the Fed.
The U.S. economy is now 11.5% larger than it was before the pandemic, and while there’s still concerns about inflation, “we should have continued economic growth in 2025, but a bit slower,” Faucher said.
Consumer sentiment — or how people feel about the economy — has taken a dip in the past year; that metric is down 7.3% from January 2024 to January 2025, according to the University of Michigan’s Surveys of Consumers. This reflects “easing concerns over the current cost of living this month, but surging worries over the future path of inflation,” according to Joanne Hsu, director of Surveys of Consumers.
But the “biggest reason for optimism,” according to Faucher is that consumers “are in pretty good shape.” He pointed to household savings rates on the rise and “historically low” rates of layoffs, as companies cling to their workers in a tight labor market.
“This is the best labor market that we've had during my lifetime,” Faucher said.
And in Pittsburgh it’s more cramped than elsewhere in the country. The Pittsburgh region’s unemployment rate of 3.5% in November 2024, the most recent month available, fell below the national rate of 4.2% for that month, according to Bureau of Labor Statistics data. Unemployment has been consistently low throughout 2024 — the lowest since the 1960s.
“If you are an employer or a worker, the labor markets are as tight as they've ever been here in Pittsburgh,” said Chris Briem, regional economist at the University of Pittsburgh Center for Social and Urban Research. “If you're trying to hire folks and think it's a little different — it is a very different environment. Other regions that have gone through booms and busts have seen sort of low-three, even sub-three [percent] unemployment rates. So, certainly some growing regions have seen that. It is not an experience anyone here in Pittsburgh has any experience with, especially if you are an employer looking to staff out.”
Employment in the U.S. has bounced back since the pandemic. The number of employees at work in the country exceeds pre-pandemic levels by 3.6%, according to a recent report from the Federal Reserve Bank of Cleveland. Places like Austin, Nashville and Raleigh have boomed during this time. But Pittsburgh ranks next to last in the country among large metro areas in employment recovery from February 2020 to March 2024 — losing 2.1% of its employees, according to the report.
Employment “is a real issue going forward,” Briem said. The challenge lies in the local economy, which is driven by consumer spending — what people buy locally. It makes up about two-thirds of the region’s economy and it’s driven by demographics — the workers and the people who buy goods and services around town. The Pittsburgh metro area lost 9,907 or 0.4% of its population from 2022 to 2023 — the second-largest rate of decline among large metros in the U.S., according to the most recent data available from the U.S. Census Bureau’s Population Estimates Program.
Pittsburgh’s history plays a big role in its population decline. A mass population exodus in the 1980s when steel collapsed — taking with them future families — has left the region with an aging population. Pittsburgh is the oldest large metro in the country with 21.6% of the population aged 65 or older, according to Census data. And the resulting imbalance of more deaths than births has played a big role in current population trends and in who’s available to work and who’s spending money.
“Lots of parts of the economy can be doing well,” Briem said. “If you just obsess on what this top line population or worker or employment numbers are, you're really missing a lot of dynamics. A lot of those top line numbers are baked in from a history that none of us can change and don't reflect on the current competitiveness of the Pittsburgh region.”
