Interview Date: October 20, 2008
Viability of Pittsburgh in Economic Downturn
By Gary A. Storie, CFP®
First Commonwealth Financial Advisors
Interview Talking Points
1. What indicators in your position leads you to believe Pittsburgh is postured to impacted less than most other cities in the United States?
a. Personal experience, having lived in a variety of locations during my tenure with the military:
i. Elected to move to Pittsburgh in 1995 while still an active duty Air Force pilot.
ii. Previously lived in cities such as: Denver, San Antonio, TX, Phoenix, AZ, Montgomery Alabama, and Columbus, Mississippi.
b. At my retirement from the Air Force in 1998 when given the choice of where to live, my wife and I chose to stay in Pittsburgh. (I could have moved my family anywhere in the United States—free. Also, I’m originally from Wyoming and lived in Colorado many years growing up). Reasons why we stayed:
i. Great Public School systems in Southwestern PA – they were both well-prepared for college — and both went on to be graduates of Penn State.
ii. Both my wife and I enjoy the suburban setting in Peters Township, but also like the many benefits Pittsburgh offers—
1. Weather and strategic location of Pittsburgh
2. Best Places to Live Awards that Pittsburgh has received – we agree!
2. Those are social and personal reasons why you think Pittsburgh is a great place to live, but what makes Pittsburgh unique from other cities during an economic downturn?
a. Pittsburgh has consistently been a leader in developing and capitalizing on new industries.
b. Despite the loss of 150,000 manufacturing jobs in the 1980’s, Pittsburgh has reestablished itself as a leader in technological innovation.
c. Pittsburgh has evolved into a diverse economy consisting of high technology, finance, healthcare, retail, law, and education sectors.
d. Pittsburgh’s economy is fueled in great part by information technology and biotechnology firms that grew out of the regions strong universities.
3. A common misperception is that people flee Pittsburgh in droves—when in fact Pittsburgh has one of the lowest rates of domestic out-migration of any major metro in the country. Can you expound on this?
a. Pittsburgh has been one of the least successful major regions in attracting international migrants. In fact, only Cincinnati has a smaller percentage of population comprised of international migrants. The other major reason for Pittsburgh's population decline is that deaths have outnumbered births for about 15 years. This is a hangover affect from the 80s, when a huge proportion of 20-somethings left the Pittsburgh region. Steel mills shuttered and the region lost 150,000 jobs. Young adults had to seek work elsewhere in the country. This is the main demographic that would have been having children throughout the 90s until today. Pittsburgh experienced a catastrophic net domestic migration loss of 50,000 for several years in the 80s.
b. Due to the economic downturn, you may find many families returning to this area to be closer to families and find jobs.
c. A more favorable corporate tax policy at the state and local levels would go a long way to attract new businesses to the area and people will follow.
d. I believe an aggressive marketing and advertising campaign would also attract new jobs and people to the area.
4. What has been the impact of the financial crisis on First Commonwealth (and other regional banks/financial organizations)?
a. First Commonwealth (and many regional banks) are well capitalized and have a strong balance sheet with room to grow.
b. First Commonwealth was NEVER in the sub-prime mortgage business that has crippled other banks.
c. First Commonwealth is growing core deposits; we are making loans and adding customer relationships; we are opening several new branch offices this year; we are hiring new employees to staff our many job openings.
5. What about the stock market? As a financial advisor – what are you telling clients right now?
a. Buying opportunity – stocks are on sale
b. Stay calm
c. It’s a great time to work with an advisor (for those who have procrastinated or put the idea on the back burner)
d. This type of market is not for the do-it –yourselfer
e. Many people spent more time picking out their last TV or refrigerator than they spent working on a financial plan
Additional Guests: Jo Ann Forrester, SI Business Associates
Faye Ritter, Allegehny Group