Oct 30, 2015 4 min read

MEADOW LANDS – PNC economist Mekael Teshome knew he was on track with one of his views of the economy recently when the bus driver on his commute to work offered his perspective on the job market.

Teshome, who was the keynote speaker at the annual luncheon of the Washington County Council on Economic Development Friday at the DoubleTree Hotel, related the story as he discussed a strengthening job market across both the U.S. and in the region.

“He said, ‘We have positions open and not enough people to fill them,'” Teshome said, noting the comment echoed what’s happening in the broader economy.

But in his presentation to an audience of about 80 people, entitled “The Long Expansion,” Teshome said the current U.S. economy is of two extremes.

“It’s now an employee’s market,” he said, explaining companies have begun raising wages to keep their good employees, with the national and Pennsylvania jobless rates holding at just over 5 percent, which is nearing the point of what economists call full employment.

He cited a U.S. Bureau of Labor Statistics finding that there are 5.8 million positions open, the highest number since the early 2000s.

“There are more jobs, more income growth and cheaper gas,” which is currently priced $1 per gallon less than a year ago, he said.

According to Teshome, that cheaper gas is translating into an extra $100 billion in consumers’ pockets to either save or spend.

When consumers do spend, they’ve helped to bolster back-to-school sales and auto sales, which are the best in a decade.

Other sectors that have been performing well and contributing to a “not bad, but not great” projected 2.5 percent growth rate for this year, as well as next, include construction.

But at the same time, “oil and gas have been hit hard. Oil is now (valued) at half of what it was last year.”

While cheap oil may be a boon to consumer spending, it also creates the lower extreme of the economy, he explained, because when oil gets cheaper, the dollar gets stronger and exporting companies “have really been taking a hit” as a result.

As a result, Teshome said, “You have really hot and cold sectors that tend to cancel each other out to get the slow growth,” which he called the “new normal.”

The other anomaly of the current economy’s slow but steady growth is that the U.S. marked the sixth year of expansion in June.

Noting that most expansions average around 5.5 years, “at any other time we would now be talking about when the next recession would be.”

But Teshome doesn’t see that happening, instead projecting another year of 2.5 percent growth for 2016 and a slightly better performance than the region has seen in 2014 or 2015, with growth expected in health care, manufacturing, technology and energy.

While the energy sector will continue with cost-cutting and oil and gas prices will remain low, Teshome has a brighter longer-term view for the industry here.

“We’re in a good place between the Marcellus and Utica shales,” he said. “We can expect modest improvement in energy for the year ahead.”

He also said he believes that in the case of energy, “the worst is behind us.”

And for WCCED, which provides loans for small business start-ups in Western Pennsylvania and West Virginia, entrepreneurship appears to be flourishing.

WCCED President Richard White said the council reviewed 43 loan applications over the past year, eventually approving financing for 36 loans totaling $1.4 million. The projects included a deli in Fairmont, W.Va., a farm equipment company and two ethnic restaurants in West Virginia.

In Pennsylvania, the group financed bakeries, flower shops, an antique store, a dance supply company, funeral home and a salon for special needs children.

WCCED Executive Director Dan Reitz said the council made more Small business Administration microloans than any other entity in Western Pennsylvania or in all of West Virginia.

Reitz said WCCED’s flagship project, the Starpointe Business Park in Smith and Hanover townships, is continuing to add companies.

• In May, HRP Metals, which processes precious metals for the defense industry, announced it will begin construction of a 25,000-square-foot building on Lot 5.

• On Tuesday, the council will close on the sale of Lot 12 to Samuel and Son, a Philadelphia-based seafood company that will build a 26,000-square-foot building to supply 119 local restaurants with fresh fish and seafood, and plans to hire 50 people.

The group also has a signed sales agreement for Lot 1 and is negotiating with a local company to build a facility on Lot 3.