2017 is shaping up to be another interesting year on a number of fronts, many of which will impact the economy. A new president, continued low energy costs, another increase in minimum wages in New York state, rising costs of health care and ACA compliance will all influence the economy.
Nationally, the big event late in 2016 was, of course, the election of Donald Trump as president. The stock market certainly anticipates that his presidency will be beneficial to the economy. Business owners are cautiously optimistic that tax rates will decline and some of the regulations that were imposed over the last eight years will be rolled back.
Business owners who have been reluctant to reinvest earnings or borrow to expand will wait and see if, and to what extent, President Trump can work with Congress to accomplish even some of his goals. If “hope” turns into reality, expect significant business investment in 2017 and 2018. Infrastructure investment, which is supported by both parties, once initiated will also significantly impact the economy, though I expect not until 2018.
The Federal Reserve raised interest rates by 0.25 percent last fall to 0.75 percent and is expected to continue a measured series of increases during 2017. Even doubling the Fed rate to 1.5 percent would not adversely affect most businesses.
Unemployment rates continued to decline in 2016 to a level that economists consider “full employment” to targeted levels. The result in some market segments will be an increase in wages. Businesses that require high-skilled labor are having more difficulty finding qualified employees, while the unemployment rate for unskilled individuals remains stubbornly high.
Energy prices remained low in 2016 and are projected to increase moderately in 2017. Consumers and many businesses and municipalities will continue to benefit from relatively low energy prices in 2017, which will continue to positively impact discretionary spending.
In New York state, we have seen the impact of higher minimum wages and burdensome regulations, as large employers continue to close facilities and relocate elsewhere. Minimum wages in New York state are scheduled to increase to $15 per hour by 2021 (2019 in New York City).
Tipped restaurant staff received a 50 percent increase in their hourly pay in 2016. The real property tax cap, which first went into effect in 2011, appears to be having the intended effect of controlling property tax increases even though state mandates that are a significant contributor to higher than average property taxes have yet to be addressed.
On a more positive note, New York state offers a number of tax incentives to manufacturers and small businesses, and provides for a minimum wage tax credit to businesses that employ and pay the minimum wage to students between the ages of 16-19. The state economy is slowly but steadily improving, as evidenced by a net employment increase of just over 100,000 through the first 11 months of 2016.
I believe that the 2017 economic outlook for Glens Falls and surrounding regions continues to be positive. Tourism is certainly thriving and is expected to increase, as evidenced by the recently opened Courtyard by Marriott in Lake George and new developments at Exit 18. Plans for the $10 million Downtown Glens Falls Revitalization Initiative will be revealed in the near future.
Several exciting new construction projects were completed in 2016 and others are in process, including the SUNY Adirondack NSTEM and Workforce Readiness Center, which is scheduled to open this fall. The availability of highly trained graduates is exactly what employers are looking for. This will encourage more employers to locate in the greater Glens Falls Region.
The Civic Center and the Arts District will continue to attract more visitors to the region. Our region offers one of the best (ok, the best) quality of life opportunities in the state with outstanding recreational activities at our doorstep, a vibrant yet cozy downtown, sporting events, museums, library, music, theater, excellent schools and affordable cost of living that is a strong selling point to businesses considering locating in our community.
All in all, I expect 2017 to be a very interesting year, and economically very positive in our region.