The recent 2024 Economic Forecast & Business Leadership Summit, which was co-hosted by the PA Chamber Foundation and the PA Bankers Association, explored the current and future outlook for Pennsylvania and the nation’s economies, as well as strategies for thriving in today’s challenging environment.
Three key sessions at the summit covered Pennsylvania’s economic landscape, the national economic outlook, and the state’s role in the upcoming political landscape—each providing a unique perspective on the current economic environment and future trends.
Pennsylvania Economic Forecast
Matthew Knittel, Director of the Independent Fiscal Office, presented an in-depth analysis of Pennsylvania’s economic journey since the onset of the COVID-19 pandemic. Despite initial predictions of a steep recession, the economy experienced a dip followed by a rise in January 2022, reaching its peak in July 2022. Various challenges, including a spike in energy prices and the waning effects of federal stimulus packages, characterized this period.
Looking ahead, Knittel predicted a large downward revision in Pennsylvania jobs, signaling a slowdown in job creation and a potential uptick in the unemployment rate. Inflation is expected to persist, particularly in energy and durable goods, while medical care and housing inflation may also rise.
Additionally, corporate profits are at historically high levels, with Pennsylvania’s corporate net income tax revenue up 124% since 2016-2017, outperforming the national average. However, there are concerns about the impact of regulatory overreach on the financial services sector, as well as challenges related to state issues such as infrastructure and trade.
National Economic Update
Dr. Russell Mills, Senior Principal and Senior Regional Officer at the Federal Reserve Bank of Cleveland, provided a national economic update, highlighting robust real GDP growth, driven largely by consumer spending. Despite this growth, consumer confidence in the economy remains uncertain.
The labor market showed signs of improvement, with modest population gains and low unemployment rates. However, challenges such as population migration and the impact of remote work on office spaces were noted.
Dr. Mills also provided additional key insights including the following:
- Consumers continue to demonstrate resilience, adapting to changing economic conditions.
- Pennsylvania’s job growth has lagged behind the US economy, with demographic and population migration playing a significant role.
- Unretirements among individuals aged 55 and over have not occurred in a meaningful way yet but are anticipated.
- There has been an increase in disabled individuals since COVID due to lingering effects, impacting labor force considerations.
- Work-from-home (WFH) arrangements have significantly impacted downtown office space, with newer, well-amenitized buildings faring better than older ones.
Pennsylvania Battleground 2024
This session, which featured insights from several experts in their respective areas, focused on Pennsylvania’s role in the national political landscape as well as the challenges and opportunities it presents for businesses.
In the upcoming 2024 election, Pennsylvania will have a large number of seats up for grabs in the House, Senate, and presidential races, making it a key state to watch. Winning Pennsylvania is crucial for any candidate looking to secure the presidency, as well as for control of the US Senate and House of Representatives.
The upcoming election presents several challenges for the financial services sector, including navigating regulatory issues and addressing state-specific concerns such as infrastructure and trade. However, businesses also have the opportunity to make a positive impact by staying informed, engaging with the political process, and advocating for their interests.
Despite the challenges posed by the COVID-19 pandemic, the upcoming election, and other economic uncertainties, there are clear opportunities for growth and resilience. Businesses can benefit from staying informed, adapting to changing economic conditions, and advocating for their interests. As we navigate the road ahead, these insights will be crucial for businesses seeking to thrive in today’s ever-changing environment.
If you are interested in discussing any of the above takeaways or have any questions on this topic, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
