CenterState CEO President Rob Simpson's Remarks - 2023 Economic Forecast Breakfast
Posted on January 24, 2023
Good morning! First and foremost, I would like to thank our partners, St. Joseph’s Health and M&T Bank, for their continued support of this event.
To our members and partners who have joined us today, thank you. The enthusiasm and optimism for what is ahead is radiating throughout this room, and it is incredible to be here in person with you all this morning.
And to our staff at CenterState CEO - day in and day out, you bring your energy and passion to this work, and it matters. You each play a role in the new trajectory on which the region now finds itself. Thank you.
To my wife, Corinne and son, Ben. Thank you for your support and patience over the past year. Corinne, I could not do this without you, and I am endlessly grateful to have you as my partner in all things.
I would like to thank Luke for joining us today. We appreciate your expertise and insights as we seek to understand the larger forces that will impact our economy in the coming year.
While Luke shared some very real and important trends to watch as we consider our economic outlook in the near term, those pressures do not tamper my confidence for what lies ahead for this community. This is reflected in the positive sentiment of our forecasters for a second straight year – even as they prepare to face ongoing or new challenges. Here is what they said about the year ahead in 2023.
- Nearly 70% say their outlook for the strength of their business in 2023 is strong or very strong - similar to last year, when 72% described their business the same.
- 73% expect sales or revenues to increase in 2023, on average by about 38%.
- 54% expect to expand products and services this year, down about 2% from 2022.
- 47% expect to increase capital investments this year, down 2% from 2022.
- And more than 72% expect an increase in jobs and hiring in 2023, up 4% from 2022 projections.
As much as this event is about putting into context the economic trends of the past year, and anticipating what we will likely experience in the year ahead, it is also about how we use this data for longer-term future planning. Even as this year’s data is slightly tempered comparatively to 2022’s outlook, it is on par – or better in the case of hiring plans - with where we were in January of 2020, just before the pandemic hit and when there was considerable optimism about the economic outlook for the region. The upward trends of the past two years following the pandemic, and the momentous opportunities announced last quarter, are indicative of a bold new trajectory. This is likely to dominate our forecast for years to come.
Other economic indicators also highlight this new growth trajectory and an economy that is outperforming the nation by several measures.
Take unemployment. The unemployment rate for Central New York was 2.8% as of November 2022, compared to 3.6% statewide, and 3.4% nationally.
We are not only outperforming the rest of the state and country but also several of our upstate peers. Utica’s unemployment rate is 3.9%; and Buffalo 2.7%.
In 2018, job growth in the region back was just 1.2%. Today, its 4.0% in the CNY region. For comparison it is 5% in New York state and 4.4% nationally.
Again, when compared to our upstate peers we are on par or outperforming on job growth - Utica's employment increased 1.6%, Albany MSA 3.3%, Rochester 3.5% and Buffalo MSA 4.1%.
And wage growth an area in which we have historically underperformed is 7% for the CNY region, 7.5% for New York State and 6.7% nationally.
For comparison, Utica's average annual wages increased 9%, Albany MSA wages increased 8.1%, Rochester wages increased 5.1 %, and Buffalo MSA wage growth is 5.7%.
Perhaps most notable is GDP growth. Right now, Central New York’s GDP is about 44.3 billion which represents a 6.3% expansion.
And according to Empire State Development’s research, starting in 2025 Micron will increase the state’s GDP by 9.6 billion a year with most of that going to Central New York. That is level of growth that will be unmatched.
And so while the anticipated economic headwinds, that you heard from Luke, are ones we’d be wise to heed, they represent a short-term challenge. It also places before us a critical imperative to plan for the future that is coming fast and will without question exist on the other side of the recession that will impact us for the next six to 12 months.
Right now, is when we must begin to drive forward our goals and change the mindset of how we see our community.
A growth mindset is hardly a new field of study but one that is incredibly relevant to where we are as a community in this moment. Over 30 years ago, Carol Dweck and her colleagues embarked on a study to evaluate students' aptitude for success and how attitudes about failure contribute to those long-term outcomes. Her research led her to coin the terms fixed mindset and growth mindset. As researchers began to uncover the link between mindsets and achievement, they discovered two important things. First, grit was the leading determinate of success – over family income, intelligence, and talent. Second, those who believed in the possibility of growth were more likely to succeed in growing. Those who possessed a growth mindset, believe that even if they struggle with certain skills, their abilities aren't set in stone. They tend to take challenges head on and learn from them, increasing both their abilities and achievement.
Just like people, businesses and communities with a growth mindset are better equipped to overcome challenges and adapt to change. Because a growth mindset is about perception and the ability to adapt and evolve as a result of challenges. What’s more, those who possess a growth mindset recover more quickly from setbacks because they see problems not as barriers to progress but as opportunities for growth.
Thankfully, we have optimism on our side. Five years from now 84% of forecasters see the Central New York economy as better than it is today. And I see and hear it every day in my interactions with members.
While much of this optimism reflects the announcement made by Micron to make historic and transformative investments in this community, I believe it reflects something even bigger.
If the first step to progress is believing all is possible. The answer then is simple – anything. We will achieve anything as long as we are equally fearless in our vision and committed to sharing in the work.
That is a growth mentality that a team of leaders from this very community took to Micron to make them believe their growth was possible, here. That is the mentality that Micron then brought to the table as they worked with us to craft the most significant Community Investment Framework in our nation’s history, because they believe that their future success, and creating opportunity for their investment to be felt across this entire community are inextricably linked.
In a recent piece on Micron's investment in Central New York the Brooking's Institution rightfully pointed out that regional civic capacity will need to surge to ensure Micron’s investment meets its fullest potential, and that the announced development agenda will require a high-level of coordination across local governments, schools, colleges and universities, community-based organizations, economic development groups, and entrepreneurship support organizations.
In other words, all of us must pull together to lay out a strategy and dig into the effort that is required to lead. Sound familiar? That is why I know we will be successful. We have done it before. We are prepared to do it again. Something even Brooking’s pointed to as why we will likely break trends and lead.
You heard earlier about the economic challenges that will be faced by communities across the country. Likewise, I have also been asked about the cooling of the semiconductor industry and what that means for Micron’s investment.
But we have never won when we played the short-game and so those challenges while real and understandably frustrating, are not our future. Micron’s investment reflects a long-term strategy. It’s a 20-year investment that places a firm bet on the potential of our community to succeed.
Consider this. According to Exyte, one of the premier design and consulting firms for the semi-conductor industry, the total global datasphere -- the amount of data that is collected and stored from our phones, computers, digital cameras, smart thermostats, cars and more -- currently stands at approximately 100 Zettabytes...which is equivalent to 1 billion terabytes. But the world around us is changing so rapidly, advancing, becoming more wired and interconnected than even before. Which isn't just leading to growth in the demand for memory and storage, but exponential growth. In fact, in the next eight years our global data sphere is expected to grow to 600 ZB, a sixfold increase in eight years. Consumers -- you and I -- are demanding more data. More processing. And more technological advancements to enhance nearly every aspect of our lives. THAT is why these chip makers are building new fabs at an unprecedented rate. And why short-term market challenges have virtually no impact on these longer-range investments – including Micron.
So, to prepare for that future, where this community becomes a leading location of semi-conductor and smart systems companies, we must take this moment to make critical investments.
As many of you rightly, pointed out we need to expand our collective efforts when it comes to attracting and retaining a thriving pool of talent. At the same time, we must continue to invest in the skills development of those who already live here. As a part of these efforts, we must address head on those factors that are keeping millions of potential workers – most often women – on the sidelines – child and family care, and transportation. Our ability to ensure we all have the talent needed for growth is one of the single biggest determinates of our success, and it will take not us as individual companies but all working together to impact solutions.
Aligning housing needs to future use and focusing on revitalizing available and creating new multi-family housing that is safe and affordable must also be part of our strategy. Again, we have to think about housing as a single community and not disparate or siloed acting in our individual town or villages sole interests.
The same thinking must also be applied to our approach of transportation if we truly want to meet our full potential. I can’t believe that I must again call out the I-81 project that has been stalled by parochial and even fantastical thinking. As a community we have studied, debated, and come to the conclusion that the community grid is the best way forward. So why are we even entertaining going backward? Undoing that important work to take a closer look at a solution that is neither feasible nor in the interest of the community does nothing more than waste time and money. We need to be evaluating new opportunities for growth. I applaud the decision by CENTRO to bring Bus Rapid Transit to Syracuse as it reflects the kinds of forward-thinking investments that will help us meet the future needs of this community.
We must also take an immediate and hard look at the institutions that have long been the bedrock of our community – our educational and medical institutions and target the necessary and multi-faceted solutions they require to thrive. Because our ability to educate our future workforce and provide this entire community with a lifetime of high-quality care is essential to our collective success.
Achieving success across all of these measures will require us to embrace new levels of equitability, breaking the cycles that are too often seen as part and parcel to rapid growth.
Certainly, there are countless challenges we face, collectively and you as individual companies and organizations. However, every time we have been faced with a challenge, we’ve seen it not as a setback but an opportunity to develop a solution. We have been successful more times than not – even when things seemed unfairly stacked against us. And so, at a time when we have the upper hand, when we are brimming with more potential than not, I believe we can and will go further, and achieve more.
2023 is a year that represents the beginning of that new path where we begin to push the boundaries of our imagination to move that needle even further, and boldly ask the critical question, what will we achieve next?
As you leave here today, begin to tap into that grit and creativity that has truly been what defines us and join this organization as we embrace this new and exciting path toward that bright future.
About CenterState CEO
CenterState CEO is an independent and forward-thinking economic development strategist, business leadership organization and chamber of commerce; dedicated to the success of its members and the prosperity of the region. We serve as an advocate and resource for smart business, catalyze and facilitate regional growth, and promote community prosperity through results-driven partnerships, planning and problem-solving. www.centerstateceo.com
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