Despite an uncertain economic future, local leaders are focused on Philly’s growth opportunities.
2025 begins with a strong economy, but a new presidential administration means change that business leaders must prepare for, said Roger Aliaga-Diaz, global head of portfolio construction and chief economist at The Vanguard Group at the Chamber of Commerce. State of the Economy. yesterday.
The terms depend on immigration policies and tariffs that may be imposed by the incoming Trump administration. Despite that, local business leaders are optimistic and remain focused on what 2026 could bring to the region in AI, the growing life science ecosystem and major tourism events, they said.
“2025 is no longer about the Fed,” said Aliaga-Diaz. “In our view, 2025 will be entirely shaped by what happens next with … supply chain forces.”
Here’s what knowledgeable leaders in the technology, tourism and life sciences sectors said they are preparing for this year.
Fewer new hires to stay ahead of potential turmoil
Philly’s business community expects business conditions to be mixed in 2025.
More than half, 56%, of Chamber of Commerce members say they saw an increase in business activity from 2023 to 2024, according to an annual survey by the Federal Reserve Bank of Philadelphia. That’s consistent with the mild growth the Federal Reserve Bank is seeing, Executive Vice President Roc Armenter said.
What surprised Armenter, however, were the respondents’ predictions for business activity in 2025, he said. More companies than expected reported that they expected business conditions for their companies to stay the same or worsen in 2025. Typically, business leaders are optimistic about their progress, so it was unusual to see just one in three respondents say they expect business conditions to improve.
The most common problems among businesses last year were labor costs, financing and interest rates, and poor sales, which are typical challenges, Armenter said. The local business community also expressed concern about uncertainty about government regulations and policy, which it did not have as much in the past.
However, the main area where the impact of these headwinds flows is employment.
Over the past three years, fewer companies have reported intentions to expand payroll, Armenter said. Each year, even fewer people report bringing on new employees.
This year, the survey found that only 20% of firms were looking to expand their payroll. This trend points to a difficult job market, with shortages in certain professions and skills, Armenter said.
AI to enhance, not replace, the existing workforce
Generative artificial intelligence has huge growth potential and is encouraging more companies and employees to embrace technology adoption, said Chris Goodchild, managing director of business strategy firm Boston Consulting Group.
Companies that are embracing generative AI early on are increasing revenue and shareholder value, he said.
“The biggest thing we think about for growing organizations is thinking about how to improve their employees,” Goodchild said.
However, companies struggle with how to integrate AI or create a strategy for responsible use, he said. In response, it helps show customers which tasks and processes can be taken over by AI to make the company more efficient, thereby saving money.
Increased tourism provides revenue to invest back into the city
Philadelphia is just one year away from major events and attractions in 2026, including the MLB All-Star Game, the World Cup and the United States’ sesquicentennial.
Tourism organization Visit Philadelphia predicts there will be an overall positive economic impact on the region from major events in 2026.
These events will also be a branding opportunity for the region to show people from around the world what the region has to offer, said Angela Val, president and CEO of Visit Philadelphia.
“We believe there will be a net impact of $1.3 billion in the region, in addition to what normally comes through tourism,” Val said.
The World Cup alone is expected to bring in $770 million and create more than 6,000 jobs, she said.
The hope is that this additional revenue will go back into the city, improving infrastructure and supporting the community, she said.
The life sciences momentum bolsters opportunities for growth
The life sciences industry is a major contributor to economic development in the region and continues to show growth.
The region has about 1,200 companies and 88,000 people in the life science sector, said Gerard Sweeney, president and CEO of real estate company Brandywine Realty Trust.
With a combination of a large talent pool, strong research institutions and available real estate, Philadelphia continues to maintain its status as a top 10 life science market. The key is to continue attracting capital to the region to fund the whole momentum, Sweeney said.
The life sciences sector saw about $1 billion in capital investment in 2024, the Philadelphia Business Journal reported, which is a lot for the Philadelphia region, especially considering the challenging venture capital market, Sweeney said.
“One of the main things we have to do is we have to make sure that when we bring in life science companies, they stay here,” Sweeney said. “To do this, we need capital. We need to recruit more executive talent. We need good workforce development programs.”
Sarah Huffman is a 2022-2024 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Lenfest Journalism Institute.
Companies: Chamber of Commerce for Greater Philadelphia
