Ink and more

yeah, yeah.. my ink:  Two presidents, one message.

Personally, the story today of our visitors from Russia is more interesting to me. Specifically the point mentioned in passing about the artificially created Soviet "mono-cities" or моногород which have a tough future in a world where they have to compete on their own.  This has been a big topic to a degree in economic development world and has some scary analogies for us.  If ever there was a mega "mono-city" in the US it was Pittsburgh for a long time... let alone our score of mill-towns and coal patch towns that face many of the same histories.   Lots worth writing about in the comparisons.

Ever more redistricting

So I just got around to reading the snippet in the news yesterday portending some of the redistricting that has to happen for Allegheny County Council districts.   It was strange a bit.  You would think whatever was behind that story someone might be interested in how much redistricting actually has to happen on county council.

Wait.  Quick, and without Google's help, who is your county council representative?  I really do want to survey the general public on that one day and find out the percentage who know the answer off the top of their head. 

Anyway, not that anyone has asked, and for the bakers dozen of folks* in the county who care about redistricting the 13 geographic districts of council (2 of the 15 seats on council are elected at-large within the county as a whole) here is what I get for the updated 2010 populations for each council district.     Also, the new nominal size of post-2010 districts should be a population of around 94,103.  So the percentage I put in there is the amount of population each of the currently defined districts needs to change by in order to get to an equal apportionment of the population. So the districts that have grown more or shurnk less than others need to shrink by the given percentage. The districts that have shrunk more or grown less than the others on average need to grow by the percentage shown. 

* That would be the 13 incumbents of said districts.

Still seeking words

I don't know if the news just out constitutes closure for anyone, nor even what closure means in all of this.  The Sciullos and my family did once live side by side in a split parcel between Edmund and State in Bloomfield long ago. Paul was literally an infant, his sisters more my age; so for this the 2 degrees that separate all of us in town are no more than a few feet over the backyard fence for me.  I am left only able to repeat what I typed at the time: Seeking Words

""If I was in Pittsburgh, I would have a guaranteed job,"

Whether true or not, just the fact that this is someone's perception out there is pretty amazing.  From the Philadelphia Inquirer today is a young diasporan's comment: ""If I was in Pittsburgh, I would have a guaranteed job,"  When was the last period anyone even thought such a thing, let alone said it out loud and for the record?   and I might add, didn't have the journalist choke in response?

Just a coincidece that story runs on the day we get the monthly data dump which is showing the regional unemployment rate ticked up a bit.  The curious thing about the regional unemployment rate the last few months is that the trend has diverged from the state's unemployment rate.  Pennsylvania's unemployment rate has trended down, while Pittsburgh's has trended up.  That is unusual over recent years.  What's it mean?  If not a sample error issue that will converge, it is worth watching.  Still the regional unemployment rate is well below the state and far below the nation. by 2.1 percentage points which is nearly a record.

I've been trying to figure if any period before 1970 is comparable to today and it's a bit hard to compare  The lowest recorded unemployment rate for the region since the state began regularly reporting Pittsburgh region labor force data in 1949 I think was 2.3% in November of 1966.  But the labor market area back then was 4 counties and if you did any spatial adjustment it would not be so low.  Still, even then, with a national unemployment rate of 3.6% the difference was only 1.3% points. 

Which all goes back to our quote above. High local employment at 7% or not, people make the best choices they can.  Regional unemployment rates in themselves are not very good predictors of population migration, but relative unemployment rates do much better.  Things could be great in one location, but if things are even better elsewhere folks will move away.  Similarly, things can be bad in one region, but if they are even worse elsewhere folks will move in.  So we are at 57 months and counting since the national unemployment rate was lower than the region's and most of that time by an unprecedented amount. Barring some unprecedented convergence we will get to 5 straight years in the fall.

Cincinnati to banks: Drop dead

From my Cincinnati peeps.....   Has anyone thought of something similar here: Cincinnati suing banks over empty eyesores

Read the story carefully.  Lots of financial institutions want it both ways.  They essentially want to foreclose on you, but don't want to file the paperwork to actually make the transaction and then incur the liabilities of actual ownership.  Can't have your cake and eat it as well.  I bet we could come up with a list of properties comparable to what is being litigated over in Cincinnati in half a heartbeat.  The legal netherworld lots of institutions are operating in when it comes to foreclosure is about as close to market failure as we come.  Where's Coase when you need him?

Greater greater Pittsburgh Life Sciences watch

Nothing on us, and behind the paywall, but some may be interested that the Financial Times has its special section today focused on the Life Sciences as they are.  

The interesting thing is that the biggest, only actually, advertisement in the section is a half page sponsored by Ontario.   Where's Ontario you ask?

Save money on TIFs - 说中国话

I still think that the most efficient economic development program in the world would be to put a Chinese teacher in every school.

Happening in eastern PA: Pen Argyl Area School District offering Mandarin Chinese.

Has to be a lot cheaper than some of the things we spend money on, or other tax loopholes.

Irony there is the school district out there did it with our help according to the article.  How many local schools have anything resembling a teacher capable of teaching Mandarin?

Update:  I didn't mean to imply there were no such teachers here, and the Pitt program clearly has teachers placed locally.  Imagine though if someone pushed making Mandarin available as an option in every school district.  I bet the supply of instructors is out there and in the end it just has to be cheaper than a lot of other things we try with little hope of making an impact.

Update 2: a complete coincidence, but at the moment this went online, the Jewish Chronicle put up an article on the diasporan of the moment who has made it big in China: Former Pittsburgher became ‘Big in China’

In case you missed it

In case you missed it, worth reading from this week is the City Paper's interview with Columbia's Mindy Fullilove. Her book:  Root Shock: How Tearing Up City Neighborhoods Hurts America, and What We Can Do About It, tells the impact of the Lower Hill District's deconstruction a half century ago.  I once had a book review of same in the PG.

Revisionist Pittsburgh Nabobism

Is Forensic economic blogging a term?  Points all around for some clever forensic economics by Jim Russell and friends.

You will want to read this if you read the PG story covering a recent Brookings report:  Region Did Better in Recession than Recovery.

I won't steal Jim's thunder, but read his blog post for the longer version: Government Jobs Recovery Update.  The Brookings report had some slight adjustments that impacted the whole tenor of its analysis of Pittsburgh, and unfortunately the unduly negative local coverage of their report.  I'll go back to my own post last week, the nabobism locally in economic reporting is just getting too much to pass off. Granted it probably reflects a lot of local popular sentiment, but still. 

Points for Brookings for catching and fixing their error.  Points for Jim and his commenters for catching it.  Of course, the public consciousness only gives reports like this a passing notice so the negative headline will be all that is remembered...  for the time being.

It's raining men

Just a census curiosity.  Various new census data was dumped the other day.  This is just one little demographic curiosity for the city of Pittsburgh.  Here is the ratio of men to women in the city of Pittsburgh by age group.

The 'excess' men in their early 30's I am almost sure an artifact of the populations incarcerated in the jails located within the city proper.  The local jail population is something like 90% or more men I believe.   For those in their early 20's the dearth of men is likely a reflection of the greater number of women in college here these days.  I actually think that ratio would be more pronounced except  that it appears to be offset by the jail demographic for the 20 year olds.  Then in the older ages you see the clear health impact as women outlive men.

Fireworks coming soon

What has been the latent elephant of late?  Really latent, and really an elephant.  Starts with an 'A'.......?

So just in time for the long weekend:  Baseball, football, apple pie and...   assessments!

Who knows what the actual timeline is, but according to the last timeline that the public can view, July 4th is listed in court filings as the date Allegheny County will begin to mail out information on new assessment values.  I don't think the post office is going to be open that day, but hey, it's a date.

And you thought the race for county chief executive was going to be boring.

Manufacturing Mythos

So the President is coming to Pittsburgh on Friday to talk about manufacturing.  We may be at the point now where people forget how much manufacturing was lost here.  At the beginning of the 1970's the region had just over 325 thousand manufacturing jobs.  Depending on the month, we are around 90 thousand today.  It's almost hard to imagine the region if we took Pittsburgh today and added in the net 235K manufacturing jobs that were lost.  It's even a bit hard to figure where we would be right now if we just added back in the 40 thousand or so manufacturing jobs lost in just the last decade.  Yes, that really is the story of late.  It's not all ancient history and 40K manufacuring jobs that were here in 2000 are not here now.  Whatever story you want to paint on how Pittsburgh is doing economically, you have to talk about it realizing the story includes continuing hits. Not just the manufacturing loss, but all the USAirways jobs as well for that matter. 

Anyway, this is what the long term manufacturing trend looks like. Still scary to look at and it's just lines on a page. Each job was someone's career, in most cases their only career, and in many households the only wage earner. Lots of pain in that graph.

thumping the ground

Here is the big debate of the day. The Keystone Research Center is out with a report that concludes the net job creation from Marcellus Shale activity is a bit less than you might read elsewhere. They key issue in this spat is whether or not the count of 'new hires' reflects net new job creation which is what we usually use as a metric in evaluating economic growth and change.

If you have any doubt on which way to interpret the numbers, realize that in the Pittsburgh region last year there were probably 500 thousand 'new hires'.  Would be quite a boom time if it was true and that net job creation was that high.  Workforce flows are always much larger than net change.

Unsurprisingly and in record time the Marcellus Shale Coalition has a detailed response to the KRC report. Can't say they are not getting their money's worth from their PR consultants on retainer.  Here is the thing.  Read the MSC's response, and they reference as counterexamples a lot of media reports as if they are primary source material.  It clearly is something written by media people for media people. The KRC report has some real employment numbers that are worth talking about at the very least.  The MSC response does not seem to address any of the specific points in the KRC report, but does throw up enough chaff to confuse the issue.  Probably exactly what the PR handbook says to do.

The meta news issue is who is even reporting on any of the different numbers out there.  One of the few stories I've seen of anyone reporting on folks who dare question the huge economic impact numbers was over a year ago. (a recent lecture discussing some of these economic impact reports is online here).  What you really see in the news are generally folks echoing the same stats repeatedly to the point where it sounds like there is wide agreement, when in fact they are point sources.  So go and read the data compiled by the Keystone Research Center and you will see that there is a big gap between all the jobs numbers that we can add up and the 100-200K job creation range that is what is so often quoted.

A Tale of Two Markets

When I say writing matters, it's no joke.  I still am trying to figure how these two headlines represent reporting on the same exact new data:

Trib:  Western Pennsylvania home sales plummet during May

PG: House Sales in Region Rise in May

Good thing everyone reads more than the headlines. 

Ignore the meta for the moment.  The data out there on the local real estate market is getting interesting beyond the generally positive trends that is getting more and more notice nationally.  The fact that average prices are accelarating so much more than median prices here for residental real estate could be quite significant.  It probably correlates with the faster appreciation for new homes compared to existing homes that is being reported as well.  

If we are seeing some marginal improvement in population migration into the region, then it follows those folks might be in the market for homes. Do the numbers suggest that the existing housing supply in the region is not what these new residents are looking for.  That is my best hypothesis how we have a bifurcated market to the degree we do with ample supply of for lack of a euphemism we will call low-end housing... but at the same time a lack of supply in what the average US home buyer wants.

Just a hypothesis, but whatever the answer is, it is awfully important and would have lots of implications for growth patterns within the region and possibly overall regional growth.  It all would fit with what is another known known that residential real estate construction has been on life support here for decades.  Lack of new supply has resulted in one of the oldest housing stocks in the nation.  In that sense we have decades of catching up to do before the local real estate market can supply what is common elsewhere. 

Speaking of writing...  another headline today:  "Pittsburgh, Worldwide economic powerhouse". Not over the top is it?  Maybe it is time for Westsylvania to actually secede?

more WSJ love

East Liberty and Shadyside get some nice photos in the WSJ. today - Housing Bust? What Housing Bust? This is their graphic from FHFA data comparing us and Las Vegas..  its pretty amazing when you think about it:

My version using similar data from a few weeks ago:

Random Balks Down at PNC Park

The news that the Pirates are hovering around .500 almost halfway though the season seems to have both reporters and fans caught somewhere between a suspension of disbelief and outright cognitive dissonance. Thus the dichotomy of a team which has set records for losing in a region where for many it is still true that Baseball Comes First in Pittsburgh.

Is this year different?  Some version of a Wald-Wolfowitz Runs test might help answer that, but we'll skip that for the Mark I eyeball analysis. Here is how far the Pirates have been out of first place tracked by date over each of the last 20 seasons. You can see the last winning season from 1992 in green and the 2011 season played thus far in red.  The 18 seasons in between are not even worth distinguishing for the most part. 

If you rotate the whole graphic at the right angle, you really do get the motion of a Pachinko ball.

Anti-Couéism and Pittsburgh's Economic Psyche

This is the literal quote on the front page of the PG biz section today:

"Pennsylvania joined 12 other states that saw unemployment rates rise, and 13 states saw little change from April to May".  (emphasis added)

Pretty clear isn't it?  Pennsylvania unemployment rate UP. Bad, bad bad.....

It may be our cognitive dissonance that is so bad?  As a point in fact, the reported unemployment rate for Pennsylvania went down between April and May.  Most headlines I saw an the same exact data release made clear that the state's unemployment rate dropped. The press release the state blasts out to everyone is relatively clear as well.

Talk about glass half empty.  The AP story that I think that snipped was derived from was not about 12 states with unemployment rates going up, but about 24 states with unemployment rates going down. PA is one of the 24, not the 12 mind you.  Glass 2/3rd's full? 24 down (good), 12 up (bad), 13 unchanged.  Now go back and read what made it to ink here. Words matter, and words impact sentiment and even economists now begrudgingly accept that sheer sentiment is part of the economic equation.

So I understand and encourage scepticism and parsing of all factoids like that, but the "unemployment rate" is the "unemployment rate" and has a clear definition.  I'll be the first to pounce on overinterpretation of data from any one month and prefer to look at longer term trends.  So what does the trend for PA show?  Continuing and steady decline in the unemployment rate maybe? I actually think the recent trend in Pennylvania's unemployment rate is one of the steepest declines in the unemployment rate in Pennsylvania history.  Might be a small story in that somehow for someone.

I don't mean to be harsh on the one snippet, and yes I suspect the intention was to write something about the overall jobs numbers, but that is not what was written.  Deep down this all reflects something region-wide in our consciousness.  Any economic bad news is taken as Gospel truth, while anything remotely positive is discounted as an aberration or just plain old bad data that can't possibly be true under any circumstance.  Gets weird sometimes in the extreme cases. 

Book of the moment - Shannon's revenge

Open the barn door, find a cow

2004:  Pittsburgh Intergovernmental Cooperation Authority (ICA) created

2011:  Oversight board to scrutinize city budgets

What a curious thing for them to be doing......

Where women really are working

Via a WSJ article from the other day ("Where women are working") I learn of a McKinsey report on women in the workforce.  What I have mentioned a few times recently, and was news to me is that employed women now outnumber employed men locally. Seems like huge news to me, but maybe I am just slow and everyone knew that already.... but it really is just a recent shift in the context of the long term history where we were perpetually an outlier in the other direction. 

Of course... if Marcellus Shale is half as big as some want to believe, we may shift back given the labor force patterns there.

Factoid of the day: state GDP

Just some recent news on state GDP stats.

Redefining steel

WSJ: Pittsburgh Is Remade as Steal City

While a bit over the top in the details, I suspect even our nattering nabobs will have a hard time spinning this negative.

Fire up the DeLorean

Today: Airport Development as Regional Economic Engine

1988: Can city become an airport industry hub?

To die for

The Infrastucturist: The Surprising Life in America’s Supposedly ‘Dying’ Cities

Take that Newsweek.

There be freshmen here

Both the PG and the AP look at college enrollment issues over the weekend.  PG focuses on the trends in out of state enrollment at state schools, while the AP at overall demographic trends impacting colleges and universities.  The thing is, they are both part of the same story.  Pennsylvania has historically been the largest net attractor of freshman college matriculants.  So the PG story really is just documenting a bit how state schools are following the trend of lots of the state's private schools which bring in students from elsewhere in the nation.

The PG only touches upon the debate over what it means to bring students into the state from elsewhere and whether or not they stay when they graduate. As Border-Guard-Bob-ish that issue is, it is a recurring theme. The only thing I can say for sure is that enough graduates must be sticking around for Pittsburgh to have one of the most educated workforces in the nation. Still an underappreciated factoid. If you are interested in more details on the aggregate enrollment trends at all Pittsburgh regional schools we have compiled that in an article here which has the region-wide stats on where freshman at all local colleges are coming from...

For what it is worth below is my quick list of the colleges and universities (those granting bachelors degrees or higher) ranked by the percentage of incoming freshman who come from Pennsylania.  The highest and lowest are listed below.  An excel file of the complete list of institutions I have online here. 

Transportation roundup

That was quick.  Despite the bluster that it may take time to implement, there should be no doubt that increases in city parking meter rates have already begun to be implemented.  Granted, they may have started with the one meter I use the most and no doubt JP/Laz would not have delayed a moment either.

Am I the only one who wants to know how much of the recent bump up in traffic at the airport is due to Marcellus Shale workers commuting in and out?  Would make a big difference in interpreting what the numbers mean for how well the airport is doing.

Bueller?  It's that time of year again, I'm waiting for the obligatory annual story on someone wanting to create a viable ferry (as in waterborne) commuter service in town.  A submarine is about as likely to be commercially viable.

I have this long list of things we have talked about in the past, but generally go away a lot more quietly than when they came in.  Anyone have an update, or prognosis, on:  http://www.pittsburgh-oaklandconnector.com/

Let's not be too negative... I don't see anyone having noticed that PennDOT's West End Improvement project, won an award from the Northeast Association of State Transportation Officials.

Waiting, waiting, waiting..  Just curious.. but was checking to see if Delta would book me on a nonstop between PIT and CDG on November 1.. No luck.  Just saying is all. (update before Ken zaps me.  I picked Nov 1 when did checked and there was no flight, but am told there are flights bookable into November at the very least.  So the lack of flight that day may just mean a roll back from their 7 day schedule which was just for the summer.  So we will see. )

Neologic Cutting Edge

PG uses the word "Aerotropolis" today for the first time.. at least so their archives tell me. Was actually one of the first posts here.  All about a conference going on focusing on the airport here centered around the author the book we mentioned here last month. 

Reminds me though.. seems like we will learn what the future of the Pgh-Paris Delta flight is pretty soon?  I at least know of no definite answer to whether the flight stays or goes. Is the vast experiment in subsidizing flights, which I learn in the article today that we never do, succeed?  Set a precedent? or wind up being just a blip in the history of the US airline industry?

They came to Pittsburgh *

Story of the day is about a new report from Brookings looking at the immigrant labor force in metro areas.  Factoid that pops out is that Pittsburgh has one of the most educated immigrant flows in the nation. Actually it is again the most educated immigrant flow in the US.

The Brookings profile of our immigrants is here.  What you see is we are the outlier in both share of immigrants in the region, but also quite the outlier when it comes to the educational attainment of the immigrants we do have.

Again, because it really is not a new story in any sense.  That link goes to a 2004 article, which itself references some research using data back to 1995, and there is no reason to think that is the farthest back you could show similar things for the region.

That is not to say things are not changing in the region’s international diversity.  I pointed out last month that it has only been in the last few years that Pittsburgh’s foreign born population has shifted from mostly European to mostly Asian. I bet if you surveyed the public on that, the vast majority would not think that is the case.  

That we are attracting well educated immigrants is really part and parcel with where local job growth has been and the changes in the local labor force.  You have to get beyond some of the age distortions that come out of having an older population.. older folks (especially in Pittsburgh) generally did not achieve higher education in the same way folks do now.  If you are looking at regional metrics, conflating older and younger folks in education metrics confuses the issues.

So when we looked at the younger part of the workforce, you really see how Pittsburgh is nearly the most educated place in the nation when it comes to workers.  For the proportion of workers age 25-34 with a graduate degree, we actually may be #1.. at worst tied with Washington, DC which has something of an artificially distinct workforce because of the Federal government.  The folks finding jobs here are those with higher education, and where we lack demand is for those without some advanced education.  That pattern is just what gets translated into the immigration flows.

All this also matches the data on where folks naturalizing as citizens are coming from; the latest public data on Pittsburgh I posted here, which was data from 2009.  The 2010 data is out, but USCIS online is only reporting the top 50 metro and micro areas ranked by immigration flow and we fall below the top 50 is you believe that.  So one big point is that this data on intl immigrants reflects both who comes to Pittsburgh (those with a lot of education, or those who acquire advanced education here), but also those who do not.  So we get very low flows of international immigrants without advanced education. 

* apologies to, or more a tip of the hat to the late Clarke Thomas' version: They Came to Pittsburgh

Way cool - interactive transit time mapping

From Mapnificent.com, interactive transit time mapping: http://www.mapnificent.net/pittsburgh/#/?lat0=40.4406248&lng0=-79.99588640000002&t0=70

Where were those transit deserts again?

and file this under "not in Pittsburgh": Google starts live transit updates in Google Maps - http://goo.gl/f7sqe

While we are on the subject of transit.  Remember how the example of Curibita could save our public transit?  and my retort?  Basically the argument back then really translated to an argument that we need to implement Bus Rapid Transit (BRT) here in Pittsburgh.  Well, there is a ranking recently out saying we do rank high on a list of best places for bus based transit.  But why?? According to this new ranking it's because we (already) use Bus Rapid Transit.  i.e. the thing Curibita was supposedly going to teach us how to do.  Have been for decades even.  Misidentifying the problem inevitably leads to misidentifying a solution.

That ranking probably came from data before recent cuts anyway.  We may see the day when the only Port Authority routes still operating are those running down the busways.

Da ink, da ink

Fill in the blank.   The largest number of local voters in the primary, those who actually show up at the polls that is, were born during the administration of President _____________?

My answer is in the City Paper today, which will not be online until tomorrow.  Guesses?

update:  I had no idea this story on youth voter participation was coming out today.

One clue:  It is not Benjamin Harrison, although I did find a couple (literally two) voters who had listed birthdates that far back.  I am pretty sure that for them the years were miscoded back when they registered 50+ years ago. If you know any 110 year old voters let me know and I bet we can pass that on and get them mentioned in one of the local (ink-based) papers. We certainly have some centenarians among the supervoters out there.

Do you know your neighborhood?

National readers may not be so interested, but for the Yunzer wonkerati are some new City of Pittsburgh Neighborhood Profiles.

Not your father's workforce

We'll crib off Mike explicitly this time, who is himself commenting on Harold's column over the weekend on women owned businesses.  All I can say it reminds me again of a quote I have wound up using a lot.  Really, it is one of the most remarkable quotes I have ever found about the Pittsburgh economy, past, present, or future, and use whenever the topic comes up:

(Pittsburgh) will, however, slowly decline unless new industries employing women and those engaged in the production of consumer goods are attracted to the area.

Which is from a report written by a place called the Econometric Institute based in News York City and titled: "Long Range Outlook for the Pittsburgh Industrial Area", stamped February 12, 1947 and was for the Allegheny Conference and the Pittsburgh Chamber of Commerce.

That date is no typo and as we have looked at this in depth, it really was true for a long long time that female labor force participation in Pittsburgh lagged the nation by a lot. It really took decades after the employment within manufacting imploded for the region's labor force to reach some semblence of gender-normalcy when compared to the nation.  This change in the regional labor force I still will argue is the single biggest factor in the economic transformation of Pittsburgh over the last 25 years.  Put another way, as long as women failed to have similar opportunities here compared to elsewhere, the entire regional economy was doomed to lag the nation.  It was as predicted in 1947.

No secret that Harold is often talking about manufacturing.  It is indeed the continuing decline in local manufacutring employment that has precipitated the speed at which we have acheived a new paradigm I mentioned recently as well... namely that the regional workforce has in some recent quarters become majority women.  Here is some more specific data for employment in Allegheny County which has now been majority women year-round since 2005. 

Pension Parking Permutations again

I regret the snark, but if you want to see how professionals monetize parking revenues see the Bond Buyer today: MBTA Uses Parking to Get Ahead.

No need to sell off the assets, no need for any existential waving of hands about what is, and what is not, an asset.  Simple, or at least time-proven and financially well understood. But no, we can't do this here.  Council refuses to sell assets and administration refuses to do a bond, but you know... at the end of the day these options are all far more similar than they are distinct.  The machinations are really all just about how it appears to the public in the end.  One way or another, we really don't need a fraction of the drama we get.

Speaking of debt, this also in BB reminds me of other greater pain we keep putting off: St. Louis Sewer District Submits $945M Bond Plan for Capital Projects.

Is Pennsylvania beginning to look like Alaska?

This is just some documenting of the obvious and nothing surprisng in itself.

Statewide for Pennsylvania in the first half of 2010 (the latest this particular data is available), the Census gnomes report 8,837 new hires in industries classified under NAICS code 21 (Mining, Quarrying, Oil and Gas Extraction).  The breakdown by gender is:

New Hires by Gender in Mining, Quarrying, Oil and Gas Extraction Industries

Pennsylvania, 1st Half of 2010

Source: LEHD

New regional taxonomies

postscript up front:   egads... I just typed that and immediately checked and saw that Mike is already on the beat. We might have the same tipster.   I'll leave this up just as a corollary.

Always worth keeping track of the contrarian:  Five Places Where the Bubble May Burst. 

Probably the only time in history Pittsburgh and Elko (Nevada) will ever be put in a group of similar places.

but really..  I'm all for caution, but Elko?  Not even an MSA. Elko the city (itself a generous definition) is under 20K in population. It's like comparing us to something the size of a city neighborhood.  The vast Elko micropolitan statistical area is under 50K.  Elko is slated as vulberable because of the impact of gold mining and the view among some that the bubble in gold prices will eventually burst.  The argument for putting Pittsburgh on the list is that most of our recent economic stability can be pegged to growth in health care which again some think is an unsustainable trend.  There is a point in that, but the article actually cites the closure of Braddock Hospital as their key example of our economic apogee.  Seriously, that is their logic.   They also called Braddock a mere 'neighborhood'.  Fighing words for some.

That being said, they have hit upon an important point.. even if it was accidental.  Changes in health care spending can have a palpable impact on the regional economy and last I checked the news, there were some big things brewing in the structure of the regional health care industry.  Impossible for the resolution of all of that not to have some impact, good or bad, on local economic prognostications.

The semi-record

So I feel obliged to update my graphic on the region's relative unemployment rate.  The region's data for April came out the other day and with the region at 6.8% unemployment we are coming in 2.2% points below the nation's 9.0% for April.  The latest on the nation's unemployment rate is that it ticked up in May to 9.1%. 

For us though, the 2.2% point difference is tied with one recent month in 2009 as the largest difference between local and national unemployment rates since at least 1970.  I emphasize the at least part since I have not compiled a consistent time series further into the past and I suspect you would have to go quite a ways to find any comparable gap, if it really exists.  Probably did in a theoretical sense in the middle of WWII only in that our local unemployment rate then was probably negative.. but since we don't really talk about negative unemployment rates that wouldn't count.

And this is my personal perspective on studying regions, but you really don't want to measure just where we are at on the vertical axis at any point in time.  Look at the two dimensional areas on this chart for periods when we are above or below the national average (zero on this chart).  One month can be all sorts of things, but when you really compare areas you get a sense for a) how bad the 1980's were for us, and how different the last few years are compared to most any point in our recent history.

Number of the day

Ratio of Highmark's surplus to WPAHS' deficit: 169:1

http://www.post-gazette.com/pg/11153/1150925-28.stm

http://www.pittsburghlive.com/x/pittsburghtrib/news/pittsburgh/s_740123.html

sequere pecuniam

What to do with the (never again to be called Mellon) Civic Arena? A big question. Don't ask me, I've already thrown my 2 cents out there.  I'm  more interested in the money.

(an aside, but speaking of the Civic Arena, it is an anniversary of sorts of the greatest euphemism of all time and the start of what was described as the "face-lifting" of the Lower Hill District, 55 years ago this week. Doesn't the face need to still be there after a 'face-lift'? )

In this recent story, we note that the Penguins are paying 6 million/year in rent (offset in whole or at least part by the naming rights they retained) for their use of Consol Arena.   Yet, we also know they SEA receives $7.5 million a year from the casino to pay for the arena as part of it’s license agrement.   Then there is the state that is supposedly paying $7.5 million a year for the arena a well.  Then there is the Pennsylvania Gaming Economic Development and Tourism Fund which also allocates $7.5 million a year to fund the arena bonds.   By my simple math that comes to $21 million a year cash in dedicated to the SEA to pay for arena financing.

Those numbers in themselves are not that interesting nor suprising; costs a lot to finance an arena that cost ~$325 million to build. 

Yet the bonds the SEA floated to pay for the arena are currenly only costing them 0.27%.  Note the decimal point is in the correct spot.   Anyone want to do the math there.  30 year bonds, 0.27% interest rate.  Principal payment say $11mil/year, interest costs work out to ~$300K. 

Hmmm...

I'm shocked, shocked to find that housing appreciation is going on here!

First off, I'm shocked that nobody could find any way to spin some recent real estate news as a downer.  Given the national news of continued real estate price declines most everywhere*, some of the recent local data showing continuing price appreciation was reported as being a good thing.  None of the discounting that most all similar stories of late have generally focused on such as the generally lower trend in the number of transactions which may not be good for real estate agents, but may or may not be a bad thing for the regional economy as a whole.

But just how much of a story is it that real estate prices are going up? Here is something I compiled quickly.  The OFHEO's Housing Price Index is one general measure of real estate price trends that is reported for MSA's, States and the US.  I created two time series for the year-over-year housing price appreciation in Pittsburgh and for the US.  The footnote is this is the seasonally-adjusted purchase-only data for those who want to check me. Then I computed the difference between the two time series (Pittsburgh appreciation minus US appreciation) over the last two decades and this is what it looks like. 

So basically since 2007 or so we are in some unprecedented territory when it comes to how local real estate is performing compared to a national norm.  While I should knowbetter than to presume, I think it is a safe bet there can be only rare and short (if any) periods in the decades before 1990 where local real estate outperformed the nation's.  I bet you have to go back quite a few decades to find a comparable period where local real estate price appreciation has topped national trends for so many consecutive months.  You can't just correlate it as a recession impact either.  Quite a few recessions over the last few decades where it looks like local real estate prices did not compare so favorably to the US.  This is an even more extreme case than the labor market trends which we also just learned April's unemployment rate for the region was 6.8 percent, or 2.2 percentage points below the nation which is tied with one other month in 2009 as the largest gap by which the local unemployment rate has dipped below the nations in at least 40+ years if not significantly longer.  No small bit of news in that, not that anyone will notice.

The real estate time series is even more remarkable when you consider that we went from trailing the US trend by 6-8% points a year to gaining on the US by 6-8% points a year in such a quick period of time.  There was an inflection point you would have missed if you blinked.

* On a side note, that national real estate story linked there is from the same reporter who wrote the story on Pittsburgh that I really do believe was the spark that brought the G20 to Pittsburgh:  Remember: For Pittsburgh, there's life after steel.

What a difference a century decade makes

Compare and contrast:

2001:  Midweek Perspectives: We can import the 'Irish Miracle'

and

2011: Irish view Pittsburgh's comeback as their pot of gold

Is Pittsburgh America's Most Livable City? Pt 1

Another perspective in 7 parts.  Here is just part 1:



See also:

Part 2
Part 3
Part 4
Part 5
Part 6
Part 7