The Hudson Valley, much like the rest of the nation, is working hard to recover from a challenging economic climate that has hampered growth over the past several years. However, like an airplane trying to take off with too much weight on board, the U.S. economy is likely to continue its slow growth in the next year, bouncing up and down along the runway, but never reaching enough momentum to truly lift itself above the clouds.
As 2013 comes to a close, let us take a look at the past 12 months as well as a peek ahead at the opportunities and challenges coming to the Hudson Valley economy in 2014.
On a national level, this year has seen an unusually high number of initial public offerings (IPOs), including one by social media giant, Twitter, in early November. These offerings sent stock prices soaring to near-record highs, but are not sustainable in the long term. There is a strong possibility this euphoria will disappear as the stock market experiences a significant correction in the second or third quarter next year, which may put a dent in short-term growth. This correction will signal to economists that stronger economic growth will emerge near the end of 2014 and will continue building steam throughout 2015 and beyond.
In 2013, employment growth in the Hudson Valley continued to increase from 1.3 percent to 1.4 percent, with a total labor force of about 1.2 million workers. Next year, the Hudson Valley will realize continued employment growth in the health care, education and professional fields. Related to this trend is the evolutionary progression of health care-related technology as a positive outgrowth of the Affordable Care Act ”“ namely incentives for providing more efficient care to patients through the deployment of digital tools. This will spur the seeding of entrepreneurial businesses in this new area; thereby, creating new fields ripe for hiring.
On the flipside, the hospitality and tourism industries, which are critical to many areas of the Hudson Valley, may experience a little slower growth if the overall economy doesn”™t reach a faster and more sustainable pace. The only exception to this trend is the expected employment opportunities that will arise from new regional gaming destinations and the rapid rise of new craft breweries and distilleries.
Additionally, the Hudson Valley unemployment rate went down from 7.6 percent a year ago to 6.6 percent this fall. The unemployment rate in the region will continue to improve next year, but there is a strong possibility that we will see an increase in the number of people leaving the workforce across the nation. This is due to more Baby Boomers retiring and the longer-term trend of people stopping their search for a job because of a skills deficit. One more alarming trend; according to the U.S. Department of Labor, the number of part-time workers across the country has grown more than four times as quickly as the number of people working full time.
The changing of administration in New York City government will ignite an increase in aggressive marketing from New Jersey and Connecticut in an attempt to attract businesses to their respective states. While this will mostly impact the New York City metro area, the Hudson Valley will see some residual effects, as an “Incentive War” will drive up the cost of retaining and attracting companies.
We are also likely to see a great deal of discussion, and potential action, on a much-needed New York state tax reform package. In November, the New York State Tax Reform and Fairness Commission presented Gov. Andrew Cuomo with recommendations to make the state”™s tax code more simple and fair, while reducing burdens for business owners and families. The governor has indicated his support for reform efforts, believing that a tax reduction will boost the state”™s economy. We can expect to see some movement on this in the coming year as the governor works with members of the state Assembly and Senate to reach an agreement.
In Washington, D.C., however, the current period of uncertainty as evidenced by continuing budget and debt ceiling battles, as well as the tumultuous nature of the midterm election cycles, indicate a “more of the same” strategy from large corporations, translating into tight spending throughout 2014. However, if interest rates continue rising, corporate executives may unlock their safes by midyear before the cheap money dries up and bargain basement properties are gone.
The key word for the Hudson Valley economy in 2014 is “relevance.” Even with some challenging conditions, our region has experienced significant economic improvement in recent years. The Hudson Valley remains an attractive place for many business owners, as the region represents a gateway to a consumer base with rising incomes and improving home values. Therefore, we remain relevant to those who see the region as a healthy ecosystem within which a business can grow. Let”™s keep it that way.
Laurence P. Gottlieb is President and CEO of the Hudson Valley Economic Development Corp., the region”™s leading economic development organization. He can be reached at (845) 220-2244 or lgottlieb@hvedc.com.
