Philadelphia’s business leaders are preparing for challenges and opportunities as the economy faces uncertainty under the Trump administration.
Local experts discussed what might happen next at the Chamber of Commerce’s State of the Economy event.
Even though Philly is starting 2025 with a strong economy, the arrival of a new president means changes in policies are likely.
Because of this, big issues like tariffs and immigration rules could create challenges for businesses.
However, many leaders are hopeful and are putting their focus on strengths like artificial intelligence (AI), tourism, and the life sciences industry to keep the city growing.
The Federal Reserve Bank of Philadelphia shared important updates about how local businesses have been doing and what they expect for the future.
On the one hand, more than half of businesses—56%—said they experienced growth between 2023 and 2024, which lines up with the slight overall growth predicted by the Federal Reserve.
On the other hand, the outlook for 2025 isn’t as positive.
Only about one in three businesses believe conditions will improve this year.
Many expect things to stay the same or even get worse, which is unusual since business owners are usually optimistic about their progress.
At the same time, companies are still struggling with common problems like labor costs, high interest rates, and weak sales.
What’s different this year, though, is that more businesses are worried about uncertain government policies, which wasn’t as big of a concern in the past.
Due to this uncertainty, many companies are cautious about their hiring plans.
Over the last three years, fewer businesses have said they plan to hire new employees, and even fewer have followed through with adding jobs.
This year, only 20% of companies said they expect to expand their payrolls.
Consequently, the job market is tougher, and many industries are facing a shortage of workers with the right skills.
Meanwhile, artificial intelligence is gaining attention in Philly’s business community.
Because of its growing popularity, companies using generative AI are already seeing improvements in efficiency and making more money.
Nevertheless, for some businesses, figuring out how to use AI properly is still a challenge.
To deal with this, many companies focus on training employees to work with AI instead of replacing them.
By using AI to handle time-consuming tasks, companies are finding ways to save money and work more efficiently, which is especially helpful during uncertain times.
On another positive note, tourism is expected to boost Philly’s economy.
In 2026, the city will host major events like the MLB All-Star Game, the World Cup, and the 250th anniversary of the United States.
Thus, Philly is expected to attract visitors from all over the world and generate $1.3 billion in economic activity.
The World Cup alone is predicted to bring in $770 million and create over 6,000 jobs.
Local leaders are hopeful that this extra money will be used to improve the city’s infrastructure and raise Philadelphia’s reputation on a global scale.
Additionally, the life sciences industry continues to be a big part of Philly’s economy. It is home to about 1,200 companies and employs 88,000 people in life sciences.
With a talented workforce, top research institutions, and available real estate, Philly is one of the top 10 life sciences markets in the country.
Even in a tough venture capital market, the industry brought in nearly $1 billion in investments in 2024.
To keep this growth going, leaders are focused on helping life sciences startups stay in Philly, attracting top talent, and building training programs to prepare workers for these jobs.
Finally, the Trump administration’s policies are expected to bring big changes in areas like tariffs, immigration, and economic programs like the Inflation Reduction Act and the CHIPS Act.
And while new regulations could be put in place quickly, Trump’s push to bring manufacturing back to the U.S. might help industries like semiconductors and biotech.
But experts doubt these changes will bring back many jobs.
Since immigration is another big concern, fewer immigrants could slow the economy’s growth over time, making it harder for businesses to find workers.
Despite all this, Philly’s business leaders are focused on what the city does best.
Due to its strengths in AI, tourism, and life sciences, there are plenty of opportunities for growth.
By staying innovative, taking advantage of big events coming to the city, and supporting its key industries, Philly is preparing to handle whatever 2025 brings.
