2025 Economy: Labor, Housing & Policy Growth amid challenges
Northeastern Pennsylvania’s economy is positioned for continued growth in the new year, though several challenges remain.
Resilient labor markets, troubling housing market data and uncertain policy directions leave local experts cautiously optimistic about the national and regional economic outlooks for 2025.
Teri Ooms, chief executive officer at The Institute, a non-profit data, analytics and research organization based in Wilkes-Barre, feels bullish about the new year. She said if trends continue their pace, the local economy will be in a good place; however, several factors could affect that success.
“Certainly, different types of political influence could bolster the economy and then subsequently set it back,” Oooms said. “But, if we are looking at the status quo, I feel very confident that this regional economy is strong and will remain strong.”
Ooms points to indicators illustrating the local economy’s upward trajectory, particularly regarding employment since the COVID-19 pandemic.
The seasonally adjusted unemployment for the Scranton/Wilkes-Barre/Hazleton Metropolitan Statistical Area stood at 4% in November, according to the Pennsylvania Department of Labor & Industry. The local unemployment rate had been at an all-time low of 3.9 percent for a seven-month stretch from February to September 2024.
The unemployment figures remain consistent with state and national trends.
“It’s trending down but that’s happening virtually across the whole state and the whole country,” industry and business analyst Steven Zellers told the Scranton Times in December. “Right now, it’s a bit seasonal.”
According to the Bureau of Labor Statistics, average annual pay in the Scranton/Wilkes-Barre MSA grew to $53,424. Despite increasing 10.7 percent since 2020, the regional average salary stands at just 77.1 percent of the statewide totals.
Beyond the local level, as the national economy enters the new year it is good shape, said Satyajit Ghosh, Ph.D., an economics professor at The University of Scranton. With a resilient labor market, low unemployment rates and healthy GDP growth experienced over the past 18 months, the United States economy is an “envy to the rest of the world.”
Ghosh acknowledged that the inflation – a key voting issue in November – remains a sticking point in the national economy. He said offered assurance that the 2.7 percent inflation rate, according to U.S. Labor Department data in December, is close to where the Federal Reserve wants it to be.
“Contrary to popular belief, inflation has come down a lot,” Ghosh said.
Some price levels remain high and have created pressure on consumers. Most of the inflation that consumers complain about are right in front of them at the checkout line, he said.
A misunderstanding is that grocery store prices, in particular, can not be controlled very quickly.
“There is no doubt that grocery store prices are particularly high,” Ghosh said. “But if you look at the wages and salaries that people have, they mostly kept up with inflation. In that way, people were on an average were better doing than the rate of the inflation.”
Economic challenge: Housing market
The most significant national and regional challenge facing the economy in 2025 is the high cost of housing, economic experts said.
Renting prices have surged, placing a strain on younger generations, lower- and middle-income individuals, and those that have yet to purchase homes to find affordable living conditions.
The key issue, Ghosh suggests, is a lack of policy action on housing.
“We haven’t heard any policy proposals on how to address the housing crisis – absolutely none,” he lamented. Without federal intervention, housing affordability could continue to worsen.
Northeastern Pennsylvania has a significant housing shortage, according to The Institute.
Historically, low-housing costs have supported a relatively affordable costs of living in the region. Four decades of population decline led to weak housing demand relative to supply, maintaining stable housing prices.
The rapid population growth experienced since the pandemic has created a high demand for the area’s limited housing supply.
The housing inventory is low and that is often driving up prices in many cases, Ghosh said.
Locally, housing prices increased every year over the past six years. In Luzerne County, The Institute reported that the average home price has gone up 61.3% during that time. Meanwhile, the percentage of sales has decreased by 33%.
“If we want to continue to expand our workforce, we need to have places for people to live,” Ooms said. “We have a housing shortage, and we have an affordability problem.”
Key economic success
A tremendous workforce shortage is being experienced due to the Baby Boomers reaching retirement age.
The country’s largest population sector began retiring towards the end of the 2010s and will continue to retire through 2028. The result is that nearly every industry traditionally employed with Baby Boomers has potential job openings.
Ooms said that challenge is that Northeastern Pennsylvania, like the rest of the country, does not have enough younger people to fill those vacancies.
“For the first time ever, we find ourselves competing for talent with other communities and regions across the country,” Ooms said. “We need to be cognizant of this and actually look at our own pipeline in our local schools, and educate kids about the opportunities here in the region. It is everything from the trades onwards, there is incredible opportunities regardless of whether someone gets a four-year degree or not. That is going to be the key to our continued economic success.”
The Greater Wyoming Valley Chamber of Commerce’s Luzerne Learns to Work Initiative and Greater Scranton Chamber of Commerce’s Skills in Scranton are both working aggressively with school districts to educate teachers on occupations and skill requirements for specific occupations.
These programs aim at providing teachers with resources and data to help guide students towards career paths at the local level.
One part of the area’s economy that works in its favor is the diversity of its employers. Ooms noted that logistical and distribution fields have led to high employment growth and new employers coming to the area.
There has also been a growth in manufacturing in recent years.
Booming employment has led to populations gains in the more urban areas of the region, including Wilkes-Barre and Hazleton.
Ooms said the increase in remote work has led to some suburban growth among middle- and upper-middle-income individuals that moved here from the suburbs of New York, New Jersey and Philadelphia.
A challenge facing Northeastern Pennsylvania in 2025 is Commonwealth Health Systems’ recent divestiture attempts at selling three area hospitals. Health and Human Services has historically been a strong employment sector throughout the region. Ooms said a shortage of healthcare positions would need to be addressed in the coming year given the area’s growth and large senior population.
Uncertainty muddies outlook
The duality of a strong economy and the uncertainty surrounding a new presidential administration makes it difficult to forecast the upcoming year, Ghosh said.
“The economy is in a really good shape because of some policies of the government and the productivity of the workers. We might see the continuation of that unless the policies are reversed in some way.”
The University of Scranton professor addressed the two Trump economic policies that he said have been communicated so far.
He predicted that a massive tax cut would provide lackluster economic growth. Tax cuts can boost some spending but that can be inflationary. He said “people may feel good” about them, but the 2017 tax cuts failed to provide an economic boost.
Ghosh also expressed concern about the impact of potential tariffs that would be slapped on products purchased from most countries.
Tariffs, he said, would have a “disastrous effect on inflation,” driving up prices on most items. Typically, tariffs are only used to generate tax revenue, not as a protection for certain industries. If implemented, they would raise prices on finished and semi-finished products. Since tariffs are not paid for by other countries, they would significantly increase costs for consumers.
“Naturally, the costs are transferred mostly to the buyers, and the buyers are us,” Ghosh said. “It will have bad effects on the economy when people are trying to control inflation.”
Certain industries might be undermined by a non-economic policy that has been communicated. Both agriculture and construction will struggle if there is a mass deportation of undocumented workers. Ghosh said that in many states, including Pennsylvania, roughly half of the labor in these sectors consists of undocumented workers. Any sweeping policy enacted could affect prices of food and housing.
“Homeowners would feel the pain too,” Ghosh said. “If they have to get a new roof on their house, they will see how those particular prices will go up tremendously as well.”
It is difficult to understand whether or not political changes may affect the economy either way because of a lack of specifics or timeline of their economic plans.
“The economy has been put on a very, very solid path, and that has been happening for the past year and a half,” Ghosh said. “Assuming that continues, then it would be terrific. And we don’t know much about the economic policies of the new administration. But what we do know shouldn’t be giving a lot of comfort to people if they are thinking about what an economic outlook would be.”