Philadelphia businesses told researchers they worry about sales, labor and uncertainty about government regulation

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Hundreds of business professionals leaned in at the Kimmel Center in Center City Philadelphia on Thursday for a snapshot of the regional and national economy.

Nearly 70 local businesses, all members of the Greater Philadelphia Chamber of Commerce, were surveyed by the Federal Reserve Bank of Philadelphia between Nov. 7 and Nov. 25 last year. Results were shared for the first time on Jan. 9.

Among concerns about the economy and their own companies, the top three included poor sales, labor availability and uncertainty about regulations and government policies.

That uncertainty is likely about President-elect Donald Trump’s decisions on immigration and trade tariffs — both which are important to the economy, economists said. Trump will be inaugurated on Jan. 20.

And the next Trump administration effect has already been baked into economic forecasts.

Vanguard’s chief economist Roger Aliaga-Diaz said that supply-side economics was the reason why the economy has been strong throughout 2024.

And why previous discussions about a hard or soft economic landing, different versions of a recession have not happened.

Aliaga-Diaz said that’s because supply-side economics are strong, the labor force is expanding and workers continue to become more productive.

“Over the last two years, both engines of supply [side economy] have been firing on all cylinders,” he said.

But the threat of policies that would reduce new immigration and potentially reduce the number of immigrants living in the United States, and proposed tariffs on foreign goods are contributing to a slower economic growth forecast in 2025.

He expects immigration patterns to slow under the new federal administration, and new select tariffs would be enacted.

“We do see a moderation in growth coming from 3% to a very respectable 2% growth for the year [2025],” he said. “It will be very hard to deploy all these policies on day one, they will be implemented throughout the year.”

The Federal Reserve Bank of Philadelphia conducts regional business surveys on a regular basis. The responses were shared in aggregate and no individual businesses were identified.

The questions included general economic sentiment, business growth outlook, plans for employment, capital investment, challenges, sales and price data. Respondents were asked to both look back at the changes between 2023 and 2024 and ahead comparing 2024 to 2025.

Philadelphia’s regional economy tends to follow national trends and business owners say uncertainty is a major concern this year, which is new, said Roc Armenter, executive vice president, economist and director of research of the Consumer Finance Institute at the Federal Reserve Bank of Philadelphia.

“No big surprises [with some results] it’s about the cost of labor, of materials, of financing, sales are not as high as they wanted to be, but the new kid on the block is actually uncertainty about regulations and government policy,” he said. “One thing that I want to emphasize is that uncertainty is coming and you know when it rains, it pours on us.”

According to the survey, 62.3% of respondents said they expect to pay more for goods and services in 2025 compared to 2024. That’s an increase compared to the 58% of respondents who said the same of goods and services in 2024 compared to 2023.

But fewer companies responded that they expect higher revenue in 2025 compared to 2024.

Businesses also responded that they were more likely to spend money on their physical space, equipment and software this year, too.

Over a 12-month period that started in mid-November 2024, most companies responded that they would keep the same footprint in the Philadelphia region. About 14.5% expect to expand and 8.7% look to downsize.