Regional Report: Northeast 2016

A new approach to downtown development is reinvigorating the Northeast Corridor.

New-York-compressorGov. Andrew Cuomo nettled business leaders last year by raising the minimum wage for state workers to $15 an hour, the highest in the country; such hikes drive up labor costs for the private sector as well. He regained ground by relaunching plans to renovate Manhattan’s forlorn Pennsylvania Station, an antiquated rail hub serving New Jersey, the New York suburbs and Amtrak passengers. New York is doing a “fine job” making upstate more competitive through tax abatements, say site selectors Donovan and Renzas.

Employment grew about 2% last year, adding about 170,000 jobs as most metro areas experienced growth. Healthcare and social services led the gainers, followed by construction; Midtown Manhattan swarms with cranes. Professional, scientific and technical clusters pace expansion. The service industry, including jobs on Wall Street as well as in hospitals and social service agencies, drove New York City’s job growth in 2015, and should continue in 2016. Hospitality, food services and retail grew significantly as well, reflecting a surge in tourism. Last March, mayor Bill de Blasio announced a $150 million public-private partnership tasked with driving investment in life sciences. New York City’s surging economy bolstered local markets fanning out from midtown; the New York-Newark-Jersey City MSA is largest in the U.S.

Pennsylvania-compressorPennsylvania’s economy still trails the nation’s, but signs suggest improvement ahead. Ascending industries like life sciences, engineering and healthcare are expanding payrolls. Government services and corporate recruitment programs have been dialed back, reflecting a lower revenue base. With the manufacturing cluster downsizing, workers sometimes lack in-demand skills, especially in rural areas, says site selector James Renzas of the RSH Group. In Philadelphia, new buildings have begun to sprout, after years of a static skyline—although rents in Center City remain relative bargains.

Commercial development, such as FMC Tower and development in the Navy Yard approach completion. Northwest Pennsylvania, including Erie MSA, looks to enjoy “somewhat stronger economic growth” this year forecasts PNC Financial Services Group. The group sees manufacturing rebounding, professional and business services growing and consumer spending on the upswing. In Pittsburgh, gains in healthcare employment have offset losses from the natural gas sector.

Overall, Pittsburgh’s employment is at an all-time high. Harrisburg employment rose about 2% last year, reflecting government hiring, as well as payroll expansion in transportation and logistics. In Scranton, Tobyhanna Army Depot is moving forward with a $105 million renovation project slated for completion in 2017.

Rhode-Island-compressorRhode Island inches forward on the road to post-Recession recovery. The Plantation State’s economy “has sustained its recovery, but also displays troubling signs of major structural problems,” says Edinaldo Tebaldi, economics professor at Bryant University in Smithfield. With 1.8% GDP growth rate, Rhode Island is again forecasted to lag behind both New England (2%) and the U.S. (2.3%). Chronically postponed infrastructure repairs have relegated nearly a quarter of the state’s 1,162 bridges to structural deficiency. Many business leaders support Rhode Works, a proposed $4.7 billion infrastructure repair project linked to 11,000 new jobs.

Business owners last year gave their state government an “F” in categories like ease of starting a small business, regulations, tax code, licensing and zoning in a study conducted by, a business services firm. Gov. Gina Raimondo, citing the Ocean State’s dead-last finish in a poll of entrepreneurs, champions initiatives like the Qualified Jobs Incentive Program. Tax reform over the past two years has slashed the corporate tax rate from 9% to 7%, introduced combined reporting and eliminated sales tax on utility bills. Now, “we have a much better tax climate and economic climate,” says House Speaker Nicholas Mattiello.

Vermont-compressorThe state economy is crawling forward slower than at any time since World War II, report government economists Jeffrey Carr and Tom Kavet. Behind that dark cloud are bright spots, especially in Chittenden County and other northern districts. Corporate profits rose to a record $122 million in 2015. The tourism industry there recorded a record 4.7 million ski visits last year.

Business owners, however, are antsy. The Green Mountain State finished 49th out of 50 states on economic outlook in an annual Rich States, Poor States survey tracking tax rates, labor policies and regulatory burden. Vermonters groused over last year’s $30 million tax hike, which increased sales taxes and reduced deductions. Advocates cheered the new southern Vermont economic zone established last year, though officials neglected to set goals and provide funding.

Washington,-D.C.-compressorWashington is still the place to go if you need to be near the federal government. Unfortunately, that benefit doubles as the capital’s biggest drawback. Uncertainty over government budget-cutting casts a pall over micro-economic forecasting. “A renewed push for trimming federal outlays would further slow growth in Greater Washington,” observes PNC Financial Services Group. “Over the longer run, the Greater Washington area will adjust to a structurally smaller federal government.”


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