Despite an uncertain economic future, local leaders are focused on Philly’s growth opportunities.
2025 kicks off with a strong economy, but a new presidential administration means change that business leaders have to brace for, Roger Aliaga-Diaz, global head of portfolio construction and chief economist at The Vanguard Group said at the Chamber of Commerce’s State of the Economy yesterday.
Conditions depend on immigration and tariff policies that may be put in place by the incoming Trump Administration. Despite this, local business leaders are optimistic and staying focused what on AI, the growing life science ecosystem and large tourism events in 2026 could bring to the region, they said.
“2025 is no longer all about the Fed,” Aliaga-Diaz said. “In our view, 2025 will be entirely shaped by what happens next to … supply chain forces.”
Here’s what leaders knowledgeable about the technology, tourism and life sciences sectors said they’re preparing for this year.
Fewer new hires to stay ahead of possible 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 slight growth that the Federal Reserve Bank sees, said executive vice president Roc Armenter.
What surprised Armenter, though, were respondents’ predictions for business activity in 2025, he said. More companies than he anticipated reported that they expected business conditions for their own companies to stay the same or worsen in 2025. Typically, business leaders are optimistic about their own progress, so it was unusual to see only 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 showed concern about uncertainty related to regulations and government policy, which it hadn’t as much in the past.
The main area the impact of these headwinds trickle down to, however, is hiring.
Over the last three years, fewer companies have been reporting intentions to expand payroll, Armenter said. Each year, even less people report actually bringing in new employees.
This year, the survey found that only 20% of firms were looking to expand payroll. This trend points to a tough labor market, with shortages in certain professions and skills, Armenter said.
AI to upskill, not replace, the existing workforce
Generative artificial intelligence has huge growth potential and is encouraging more companies and employees to embrace adoption of the technology, 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 that we think about growing organizations is thinking about how to upskill their employees,” Goodchild said.
Companies, however, struggle with how to integrate AI or create a strategy for responsible use, he said. In response, it helps to show clients what tasks and processes can be taken over by AI to make the company more efficient, thus saving money.
Increased tourism provides revenue to invest back in the city
Philadelphia is only a year away from major events and attractions in 2026, including the MLB All-Star game, the World Cup and the semiquincentennial anniversary of the United States.
Tourism org Visit Philadelphia predicts that 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 all over the world what the region has to offer, Angela Val, president and CEO of Visit Philadelphia, said.
“We believe that there will be $1.3 billion net impact in the region, in addition to what normally comes in through tourism,” Val said.
Just the World Cup is expected to bring in $770 million and create over 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.
Life sciences momentum powers 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 all of the moment, Sweeney said.
The life sciences sector saw about $1 billion in capital investment in 2024, reported the Philadelphia Business Journal, which is a lot for the Philadelphia region, especially considering the challenging venture capital market, Sweeney said.
“One of the main things we need to do is we need to make sure that when we start life science companies, they stay here,” Sweeney said. “To do that, 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 Institute for Journalism.
Chamber of Commerce for Greater Philadelphia
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