Wednesday, August 10, 2011

Tipping point fallacies

Beaten to the metric I am.  Hard to blog at 36K feet.  I note the news out of the BEA is that personal income growth in the Pittsburgh ranks pretty well.  It all begs an interesting question where all this (relative) good economic news for the region is coming from.

To answer that, first read this:  Pittsburgh’s Big Rank Jump

Then look at the date.

Go back and reread that every time you read some newly written story about how the economic story of Pittsburgh is something new or recent.  I just am not a big believer in simple stories or 'tipping points' in most economic stories for the region.  As Jim R. will point out, the mesofacts are closer to the real facts, but they don't make such easy stories to tell.

But going back to the news today.  The PG version compares Pittsburgh's income growth to some of the smaller metro areas in Pennsylvania.  Might be worth noting just now much smaller some of the noted metro areas are in comparsion to Pittsburgh.  They note we have not grown as much as the Williamsport metro area. Is Williamsport half the size of the Pittsburgh region?  A quarter?  Looking at the income data of note today, Williamsport had $3.9 billion in annual personal income.  The Pittsburgh region has over $103 billion.  So you are talking about a region less than 1/25th the size of Pittsburgh.  Statistically, the entire gain in income in Williamsport would not even be a blip if diluted across the larger Pittsburgh region.

Williamsport is itself an economic giant compared to some of the smaller areas of Pennsylvania that really are at the heart of the Marcellus Shale development that is said to be the cause of some of the the income growth in the state.  You have to keep the scale of these numbers in mind when thinking about that.  It goes back to a basic point that the Marcellus Shale story appears so outsized because in the places where the development is happening the economies are so small that new economic activity is inevitably very large in comparison to the status quo.


Anonymous BrianTH said...

I'd also guess Pittsburgh's story is more State College than Williamsport, but I'm also pretty sure Marcellus is contributing at least a bit.

Wednesday, August 10, 2011 12:04:00 PM  

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