Thursday, January 8, 2009

For an Example of Economic Success Turn to... Pittsburgh!?

Yes, denizens: Pittsburgh. My beloved home town has done it again. While I obviously have a very biased opinion on all things Pittsburgh, I promise this is a reliable story from a reliable source.

The New York Times (SHEAm calls it a record paper or something...) has a story yesterday about the economic recovery of the former Steel City and it's current (relative) prosperity.

Now, I'll be the first to openly admit that Pittsburgh is not a perfect place and has gone through some considerable hard times. But as the Times points out, while other industrial cities slid into a terrible stage of depression, Pittsburgh pulled itself out of the much by expanding into education and health care. Given the state of the economy now and the tough times ahead for places like Detroit, maybe Pittsburgh should serve as a model for these cities to replicate.

David Streitfield says it best himself:

This is what life in one American city looks like after an industrial collapse:

Unemployment is 5.5 percent, far below the national average. While housing prices sank nearly everywhere in the last year, they rose here. Wages are also up. Foreclosures are comparatively uncommon.

A generation ago, the steel industry that built Pittsburgh and still dominated its economy entered its death throes. In the early 1980s, the city was being talked about the way Detroit is now. Its very survival was in question.

Deindustrialization in Pittsburgh was a protracted and painful experience. Yet it set the stage for an economy that is the envy of many recession-plagued communities, particularly those where the automobile industry is struggling for its life.

It goes on:
Entrepreneurship bloomed in computer software and biotechnology. Two of the biggest sectors are education and health care, among the most resistant to downturns. Prominent companies are doing well. Westinghouse Electric, a builder of nuclear reactors, expects to hire 350 new employees a year for the foreseeable future. And commercial construction, plunging in most places, is still thriving partly because of big projects like a casino and an arena for the Penguins hockey team.
One of the points of the story is that part of Pittsburgh's current-enviable situation is due to the fact that it played things very by the book in recent years. There wasn't a large real estate bubble (so one didn't pop), and house prices are up about 2% as of Sept 2008 while nationally they fell 4%. PNC Bank, a big local bank (and my FAV!) didn't take a lot of risk in the midst of the sub-prime bonanza, and being cautious served them well: while other banks are folding in spades they just acquired several Ohio-based banks. The moral of the story: don't go nuts just because everybody else is doing it; it if seems to good to be true it probably is.

In any case, it's worth a read, especially for those of you in the new Rust Belt looking for some inspiration. There was life after steel, and there will be life after automobiles...

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