(Buffalo, NY) Statistics released this year in September by the BEA indicate that the economic recovery in the Buffalo metro area is relatively sluggish. Growth of private-sector real GDP for each full year of recovery since the recession of 2008-9 is lower in the Buffalo metro area than for all US metro areas as a whole, with the gap widening each year (see chart). As other parts of the country show a pick-up in growth during 2012, Buffalo and its surrounding metro area is increasingly falling behind.
The arithmetic of compound growth makes this scenario potentially very worrisome, because when measured simply as a level, the gap in real GDP between Buffalo and other metro areas is growing even faster. Some of this growing gap can be attributed to Buffalo’s declining population, since as the metro population declines, so too will a tendency for both employment and output (to decline).
Buffalo still very much faces a challenge of reinvention after losing its traditional manufacturing base in the 1980s. Growth of employment in low-paying, service-providing industries will not produce sufficient income locally to keep pace with the rest of America. Until the area’s private sector can generate good-paying jobs – most likely in the goods-producing industries like manufacturing – expect a widening gap between Buffalo and other metro areas in measures indicating a standard of living. Simply stated, it’s going to get worse before it gets better.