Local economist: Expect recovery to continue, slow but steady

Bethlehem-based economist Kamran Afshar says latest survey results show moderate advances in purchasing and hiring activity.

A new survey among local businesses suggests the economic recovery will continue at a sustainable but not strong pace, its author said.

“The framework of economic growth is coming together,” Bethlehem-based economist Kamran Afshar said. “You might not see it for six months or nine months, but it’s there.

Afshar added a caveat: “The only thing that could derail all of this is if gas prices were to rise to $5 a gallon.”

Afshar conducts the Lehigh Valley Purchasing and Employment Index, a quarterly survey that polls about 200 businesses of varying sizes on their hiring and purchasing activity in the past six months, as well as plans for the coming six months.

The April result of 59.1 released Thursday is near the 59.4 score posted in January. Afshar said a score of 50 represents the line between growth and contraction.

Scores between 50 and 60 represent slow growth and beyond that indicates strong growth, Afshar said. The index hasn’t consistently surpassed 60 since before the Great Recession. The latest results are "moderately optimistic," he said.

Afshar said gas prices, which have begun to dip after approaching $4 a gallon, pose the biggest threat to recovery because rising energy costs leave business and consumers less room for discretionary spending.

“That is the one issue that keeps me awake at night,” he said.

Employment prospects show modest improvement. Afshar said the average business expects to add 0.8 employees over the next six months.

If that trend holds up, Afshar said it would push unemployment down to about 7.5 percent.

That’s still high by ordinary standards — the pre-recession norm was about 5 percent — but it would be the lowest in years.

The state and Department of Labor & Industry reported Tuesday the Lehigh Valley area’s jobless rate fell to 7.9 percent, its lowest point since March 2009.

But the same report indicated that employment fell slightly. The overall jobless rate fell because the labor force also shrank.

Afshar's survey is done in conjunction with the Greater Lehigh Valley Chamber of Commerce.