How Philly’s business leaders feel about the city’s economy — and what to expect for 2024

Business leaders from the region spoke about the state of Philadelphia’s economy and their expectations for the year to come at the Chamber of Commerce for Greater Philadelphia’s economic outlook event on Wednesday.

Here are four takeaways of where Philadelphia stands today and what it can expect in the year to come.

Philadelphia is recovering well from the pandemic compared to other metro areas, said Jodie Harris, president of the Philadelphia Industrial Development Corp., who took the position this year.

The city has a large population of residents in its downtown, which has been a positive for the recovery, Harris said. There are more residents in Center City now than there were in 2019. Cities that aren’t experiencing a lot of recovery from the pandemic don’t have the seven-day traffic that comes from having residents, visitors, and workers in an area, she said.

Philadelphia is also host to “more diverse employers than we promote and realize,” she said, which has allowed the city to recover better than those that rely primarily on a few employers. Beyond the education and medical sectors, Philadelphia is also host to a strong small-business community and a creator and maker community, Harris said.

There is also an increase in businesses looking to purchase their own physical space, said Harris, which could be an indicator of a need for a sense of stability coming out of the pandemic.

A majority of companies felt the same or better about conditions for their own businesses in 2023 compared to last year, according to a November survey conducted of the chamber by the Federal Reserve of Philadelphia, which had 87 respondents. Looking ahead, almost half of respondents believed 2024 held a better outlook for their business compared to 2023.

“I see quite a bit of optimism,” said Roc Armenter, the Federal Reserve Bank of Philadelphia’s executive vice president and director of research.

Companies report being happy with their staffing levels: A small fraction is looking to decrease their workforce in the next year, and a larger percentage is looking to hire, said Armenter, who is also director of the Philly Fed’s Consumer Finance Institute. Fewer companies are talking about supply chain issues, he said.

While companies are optimistic about their own businesses, their outlook of the region as a whole was not as bright, Armenter said. A majority of survey respondents had a worse outlook on the business conditions of the region this year compared to last year, and only about a quarter of respondents believe there will be a better outlook next year.

Among the biggest problems faced by companies in 2023 were labor costs, financing and interest rates, and labor availability, according to the Fed’s November survey of the chamber.

John Fry, president of Drexel University, said recruiting had been a challenge when competing on the national market for faculty. “It’s a war. … The thing that we’re finding the most difficult is keeping our best talent, particularly our best diverse talent,” he said.

Armenter noted research has shown a shift since the pandemic in terms of what workers report wanting out of a job generally. “They’re looking for opportunities to climb the economic ladder,” he said.

“We did see significant travel increases in 2023. We have every indication that will continue through 2024,” said Kathryn Ott Lovell, president and CEO of the Philadelphia Visitor Center Corp.

Leisure travel has especially recovered, she said, and business travel is returning to conferences and conventions.

At the same time, Philadelphia is up against a negative perception of the city, Lovell said. Negativity shared in the news or on social media affects not only those outside Philadelphia, but also people in the region, she said.

Less than half of Americans surveyed in a national poll this year by Gallup believe Philadelphia is safe. Philadelphia has experienced historic levels of gun violence in the last few years, but according to a study from the Brookings Institution this year, Center City is one of the safest areas, compared to the city as a whole.

“We all have to be bullish in our belief that there are extraordinary things happening as well in the city, and that we’re not doing enough to push that narrative,” Lovell said.