Pennsylvania grew as fast as the United States for a change during the first half of 2019, thanks in part to biotech hiring in Philadelphia and Delaware County, and natural gas-related growth, writes Mark Vitner, senior economist at Wells Fargo, the largest commercial bank in Philadelphia.
Statewide gross domestic product rose 2.1% in 2018, marking the strongest gain in four years, Vinter said. GDP rose at a 2.9% annual rate in the first quarter of 2019, equaling the U.S. average.
That’s a switch: As Vitner has previously noted, Pennsylvania has grown at half the national average since the Great Depression, losing clout in Congress as young people moved to Florida, California and other growing areas. Philadelphia dropped from third to a projected seventh next year among U.S. cities as factories closed and the city’s banks, railroads, chemical and computer companies mostly sold to out-of-town companies or moved to the suburbs.
The gas processing facility at the former Sunoco refinery in Marcus Hook, the new Shell ethane plant in Beaver County near Pittsburgh and connecting pipelines helped boost Pennsylvania’s mining and energy jobs 18 percent in the first half of the year. Last year, there was a drop of nearly 6 percent.
Much of the fuel is being produced for export, though Vitner remains hopeful that more companies will choose to use cheap fuel and byproducts to build plastics factories and other manufacturing centers, hiring locally.
Big tech has moved into some parts of the state: About 500 Google engineers now work at the former Nabisco factory in Pittsburgh. (By contrast, a developer wants to turn the company’s shuttered Philadelphia plant site into a golf center.) Facebook also picked Pittsburgh over Philly for its new artificial-intelligence lab.
But overall, Philadelphia and Delaware County registered a combined 5 percent gain in professional, scientific and technical services in the last year, with more high-end job growth expected as Comcast fills its new 60-story Technology Center, SAP prepares its new lab at Drexel, and Intel and Johnson & Johnson roll out research partnerships with Penn.
However, Vitner’s review of federal data doesn’t include the impact of this month’s shutdowns of the city’s Hahnemann University Hospital and cuts to Drexel’s affiliated medical school, or the accelerated shutdown of the money-losing Philadelphia Energy Solutions refinery, which together directly eliminated nearly 4,000 jobs, not counting supporting businesses.
Vitner noted the University City Science Center is between projects (groundbreaking for One uCity Square, 400,000 sf at 225 N. 38th St., is scheduled for the end of this year, about 13 months after fully-leased 3675 Market was finished; both are joint ventures with Wexford Science & Technology and Ventas Inc.)
Meanwhile he expects that a suburban competitor, the Discovery Labs biotech project at the sprawling former GlaxoSmithKline plant near King of Prussia, will attract more industry jobs -- as will an increase in the National Institutes of Health funding available to Penn, Jefferson, Temple and other medical schools, after a decade of flat federal research spending.
Still, the continued drop in Pennsylvania’s college-age population is bad news for most of the state’s colleges, he observed. And Montgomery County has, surprisingly, been losing retail jobs, despite the opening of the Town Center development near the King of Prussia mall, and other retail near the Pennsylvania Turnpike’s Northeast Extension. Home sales and new-home starts are down, despite low mortgage rates.
Overall, Vitner expects that U.S. growth will “slow somewhat in 2019,” as President Trump’s tax reform “wears off” and new business investment slows amid the trade war with China. But “consumer spending is holding up relatively well,” and Pennsylvania’s many retail warehouses keep hiring and expanding, Vitner concluded.