Theeconomy ofBuffalo,New York has historically been shaped by its location at the eastern end ofLake Erie and the western terminus of theErie Canal, which made the city a major inland port and entrepôt for grain, coal, lumber and manufactured goods moving between the Great Lakes and the Atlantic seaboard in the 19th and early 20th centuries.^[1][2]

During its industrial peak in the late 19th and early 20th centuries, Buffalo was a center of steelmaking, automobile and aerospace parts production, flour and cereal milling, and rail and lake shipping. By mid-century the city ranked among the leading U.S. centers for steel production, manufacturing, and rail freight, but like many older industrial regions it experienced prolongeddeindustrialization and population loss after the 1950s as heavy industry, rail traffic and lake shipping declined or relocated.^[3][4]

In the early 21st century the metropolitan economy has diversified toward health care, higher education, professional and business services, tourism, and logistics while retaining a smaller manufacturing base. TheBuffalo–Cheektowaga–Niagara Falls metropolitan area had an estimated real gross domestic product of about US$73 billion in 2023 (US$90.7 billion in current dollars) and a population of about 1.16 million, making it the second-largest metropolitan economy in New York State.^[5][6] State economic-development initiatives such as theBuffalo Billion and the expansion of theBuffalo Niagara Medical Campus (BNMC) have supported redevelopment of the downtown and waterfront, though their long-term economic impact and cost-effectiveness have been debated.^[7][8]

Buffalo's economy has passed through several broad phases: an early canal- and lake-based trading economy; a turn-of-the-century industrial boom; a long period of post-war deindustrialization; and a more recent transition toward services, health care, education, and advanced manufacturing.^[1][3]

The opening of theErie Canal in 1825 and subsequent canal and rail connections to the Midwest transformed Buffalo from a small frontier town into a key transshipment point between the Great Lakes and the Atlantic coast.^[1] Grain from the prairies was off-loaded from lake vessels into a dense cluster of grain elevators along the Buffalo River and harbor, an area later nicknamed "Elevator Alley".^[9] The steam-powered grain elevator was invented in Buffalo in 1842 by Joseph Dart and Robert Dunbar; their innovation worked nearly seven times faster than previous methods and helped establish Buffalo as the world's largest grain port by the mid-19th century.^[10][11]

Canal and lake shipping supported related activities such as shipbuilding, flour milling, coal and lumber handling, and warehousing. The city's early economic growth was closely tied to its role as a gateway for westward migration and trade and to the development of theGreat Lakes transportation system.^[1]

By the late 19th century Buffalo had become an important manufacturing and transportation hub. The arrival of cheap hydroelectric power from nearbyNiagara Falls at the end of the century encouraged energy-intensive industries, including steelmaking, chemicals, and electrical equipment.^[1] Railroads radiating from Buffalo connected the Midwest, Canada, and the eastern seaboard, making the city one of the busiest rail centers in the United States.

During the first half of the 20th century, major employers included steel mills in nearby Lackawanna and Buffalo, automobile and auto-parts plants, aircraft and aerospace component manufacturers, and large flour and cereal mills along the waterfront. By 1950 Buffalo was the 15th largest city in the country, the nation's largest inland port (12th overall), second-largest rail center, sixth-largest steel producer, and eighth-largest manufacturer.^[3] At the same time, the region's economic base remained heavily concentrated in a small number of large, vertically integrated firms tied to heavy industry and transportation.

AfterWorld War II, Buffalo was strongly affected by national and global shifts in transportation and manufacturing. The opening of theSaint Lawrence Seaway in 1959 allowed ocean-going vessels to bypass Buffalo, reducing its role as a transfer point for Great Lakes shipping. The growth of interstate highways andcontainerization also favored newer ports and distribution hubs.^[1]

Several large steel, auto, and chemical plants in the metropolitan area closed or significantly downsized between the 1960s and 1980s, including the Bethlehem Steel complex in Lackawanna and multiple automotive and defense-related facilities.^[1] These closures, combined with suburbanization and out-migration to the Sun Belt, led to sustained job and population losses. The city's population fell by more than half from its 1950 peak by the turn of the 21st century, and poverty rates rose well above national averages.^[12]

For many years Buffalo was the nation's second-largest rail center, after Chicago. Freight traffic peaked during World War II but declined as trucking, air travel and state highways such as theNew York State Thruway diverted passengers and cargo away from rail. By 1980, the city's historic rail hub and its main passenger station,Buffalo Central Terminal, had been largely abandoned.^[13]

From the late 20th century onward, the Buffalo–Niagara region has gradually diversified away from heavy industry toward services, health care and education, tourism, logistics, and specialized advanced manufacturing. Major hospitals and educational institutions expanded, suburban office parks and back-office financial operations grew, and the region increasingly leveraged its position on the U.S.–Canada border and proximity to theGolden Horseshoe aroundToronto.^[14]

TheBuffalo Niagara Medical Campus (BNMC), formally established in 2001, brought together institutions such asRoswell Park Comprehensive Cancer Center,Kaleida Health, theJacobs School of Medicine and Biomedical Sciences of theUniversity at Buffalo (UB), and theJohn R. Oishei Children's Hospital, creating a concentrated district for health care, research and education in downtown Buffalo.^[15]

In 2012 the State of New York announced theBuffalo Billion initiative, a package of state grants and tax incentives intended to invest at least US$1 billion in the region's economy. Projects have included waterfront redevelopment, infrastructure improvements, workforce-development programs and subsidies for high-tech manufacturing, most prominently the Tesla–SolarCity facility at the Riverbend site in South Buffalo.^[16][17] Independent audits and watchdog groups have raised concerns about governance, transparency and return on investment for some components of the program, particularly the Tesla project.^[18][19]

Employment in Buffalo has gradually shifted from manufacturing and transportation toward services, especially health care, education and business services, as the region's population and industrial base have changed. In 2023, the economy of the City of Buffalo employed about 123,000 people; the largest industries by employment were health care and social assistance (about 23,800 workers), educational services (about 14,800), and retail trade (about 12,800).^[20] At the metropolitan scale, health care, social assistance, government, retail, and manufacturing remain major employers.^[21]

Historically, manufacturing and rail-related activities accounted for a large share of regional employment. Those sectors shed tens of thousands of jobs from the 1960s onward as steel mills, chemical plants, and rail facilities closed or automated. While some specialized manufacturing remains—such as automotive components, chemicals, and food processing—the sector now accounts for a smaller share of regional employment and output than during Buffalo's industrial peak.^[22]

Unemployment in the region rose sharply during the recessions of the early 2000s and late 2000s, then gradually declined along with national trends. By late 2023, the unemployment rate for the Buffalo–Niagara Falls metropolitan area was in the mid-3 percent range, similar to or slightly above the U.S. average.^[23] Overall labor-force participation in the city remains lower than in many fast-growing metropolitan areas, reflecting an older age structure, population loss in previous decades, and continuing pockets of concentrated poverty.^[24]

Buffalo has developed a regional health care and life sciences cluster centered on theBuffalo Niagara Medical Campus (BNMC) in downtown Buffalo. The campus includesRoswell Park Comprehensive Cancer Center,Kaleida Health's Buffalo General Medical Center and Gates Vascular Institute, theJohn R. Oishei Children's Hospital, theJacobs School of Medicine and Biomedical Sciences of theUniversity at Buffalo, and several research institutes, private medical practices, and support organizations.^[25][26]

Roswell Park and UB researchers have played roles in the development of human genomics. A significant portion of the DNA used for the originalHuman Genome Project reference sequence came from anonymous donors in the Buffalo area, with samples prepared at Roswell Park.^[27] Local scientistNorma Nowak and colleagues conducted research that contributed directly to the Human Genome Project and to genomic and microarray-based approaches to understanding heritable disorders and cancer.^[28][29]

The BNMC has also fostered a number of spin-off and startup companies in diagnostics, medical devices, and health information technology, including firms such as Empire Genomics, which was founded to commercialize research from Roswell Park.^[30] These activities complement the region's large hospital systems and long-standing medical institutions and have become a notable component of Buffalo's post-industrial economic strategy.

Buffalo has long served as a regional center for banking and financial services.M&T Bank, which traces its origins to the 19th century, maintains its corporate headquarters atOne M&T Plaza in downtown Buffalo and operates as one of the larger regional banks in the northeastern United States.^[31] The city and its suburbs also host significant operations of national and regional banks such asKeyBank,Bank of America,HSBC Bank USA, andCitigroup.^[32]

First Niagara Bank, which had moved its headquarters from Lockport to downtown Buffalo in 2009 and acquired formerHSBC branches in Western New York and Pennsylvania, was itself acquired by KeyBank in 2016, with many former First Niagara operations integrated into KeyBank's Larkinville campus and other facilities.^[33] The consolidation of regional banks has reduced the number of locally headquartered depository institutions compared with earlier decades, but the sector remains a significant employer through retail banking, mortgage services, back-office operations, and specialized financial services.

Buffalo is also a center for debt-collection and credit-servicing agencies, although the industry has periodically attracted scrutiny and regulatory attention over consumer-protection issues.^[34]

Although the region's economic base has diversified, manufacturing, food processing, logistics, tourism and other tradable sectors remain important.

Some industry remains in Buffalo and its surrounding area in the 21st century.Ford maintains a stamping plant in South Buffalo,^[35] whileGeneral Motors operates theTonawanda Engine plant along the Niagara River.^[36] Additional chemical, plastics, metals, and electronics manufacturers have facilities in the city and region, often on former heavy-industrial sites that have been remediated and redeveloped.

In South Buffalo's Riverbend neighborhood, the State of New York financed and builtGigafactory New York, a high-tech manufacturing complex leased toTesla, Inc. as part of the Buffalo Billion initiative. The facility opened in 2017 on the formerRepublic Steel site and has produced solar roof tiles, solar modules and components forTesla Superchargers, as well as serving as a data-annotation center forTesla Autopilot.^[37][38] In 2024, Tesla announced a $500 million investment to build a Dojo supercomputer cluster at the facility and signed a lease extension committing to operate the factory through 2034.^[39] The project has been both promoted as a symbol of Buffalo's clean-energy ambitions and criticized for high public costs and lower-than-expected economic returns.^[40][41]

The current incarnation ofRepublic Steel maintains a facility in nearbyBlasdell.^[42] Buffalo's location along major road, rail, lake and border-crossing routes also underpins a substantial logistics, warehousing and distribution sector that serves both U.S. and Canadian markets.^[43]

Buffalo hosts a number of regional, national and international food and consumer-product firms.Rich Products produces frozen foods and toppings and maintains its corporate headquarters in the city.^[44] Canadian brewerLabatt relocated its U.S. headquarters to downtown Buffalo in 2007, reflecting the company's focus on the Great Lakes market and cross-border distribution.^[45] Cheese producerSorrento Lactalis (part of the Lactalis Group) andGeneral Mills' cereal and flour mill on the Buffalo River remain significant food-processing employers.^[9]

Regional supermarket chains such asTops Friendly Markets (headquartered in nearbyWilliamsville) andWegmans have major operations in the Buffalo area.^[46]Delaware North, a global hospitality and food-service company with operations in sports venues, airports, and national parks, maintains its corporate headquarters in downtown Buffalo.^[47]

Buffalo has also been home to several notable consumer-product manufacturers. The windshield-wiper companyTrico, founded in Buffalo byJohn R. Oishei, once operated several large plants in the city before moving its headquarters toRochester Hills, Michigan in 1998 and shifting most production to other locations.^[48]New Era Cap Company, a major producer of licensed sports headwear, is headquartered in downtown Buffalo in the former Federal Reserve Bank building.^[49]

Regionally based insurance companies that have maintained their headquarters in the Buffalo area includeMerchants Insurance Group and Lawley Insurance. Merchants Insurance Group provides property and casualty insurance and is headquartered in downtown Buffalo, with additional regional offices in New York and other states.^[50] Lawley Insurance, based on Delaware Avenue in Buffalo, offers commercial insurance, employee benefits, risk management, and personal insurance services.^[51]

Buffalo and its suburbs also host a variety of professional-services firms, including regional law firms, accounting and consulting practices, and information-technology companies such asComputer Task Group andSynacor.

The region has supported various technology and startup-oriented initiatives. Among the most prominent is43North, a venture-capital competition and accelerator founded in 2014 as part of the Buffalo Billion initiative. 43North invests a total of US$5 million annually in early-stage companies, typically offering several US$1 million awards along with office space on theBuffalo Niagara Medical Campus, mentorship, and tax incentives for companies that relocate to Buffalo.^[52][53]

Buffalo's long-term population decline, suburbanization, and loss of manufacturing employment contributed to high poverty rates and widespread neighborhood disinvestment in the late 20th and early 21st centuries. In the 2000s, various reports ranked Buffalo among the poorer large U.S. cities by median household income and share of residents living below thepoverty line.^[54][55]

More recent data show some improvement but continued economic challenges. According to the 2023American Community Survey, the City of Buffalo had a poverty rate of about 27 percent and a median household income of approximately US$48,000, while the surrounding metropolitan area had a substantially higher median household income and lower poverty rate.^[56][57]

Housing costs in the Buffalo–Niagara region have historically been modest compared with many U.S. metropolitan areas. In the mid-2000s, the National Association of Home Builders/Wells Fargo Housing Opportunity Index ranked the metropolitan area among the most affordable housing markets in the country.^[58] By 2023, the median property value in the City of Buffalo was about US$152,000, still below the national median, while home values in the metropolitan area had risen significantly since the late 2010s as demand rebounded and population decline stabilized.^[59][60]

Buffalo has long struggled with vacant and abandoned properties. A widely cited 2007 report noted that the city ranked second toSt. Louis among major U.S. cities in vacant properties per capita and that municipal demolition programs had cleared thousands of abandoned houses, with many more remaining.^[61] Since then, the city and various nonprofit and neighborhood-based organizations have continued efforts to demolish or rehabilitate derelict structures, assemble land for redevelopment, and expand affordable-housing options.

Environmental quality has generally improved with the decline of heavy industry and tighter regulations on emissions and water pollution. In 2005,Reader's Digest ranked Buffalo as the third-cleanest large city in the United States based on a composite measure of air quality, water quality, and sanitation indicators.^[62]

Buffalo's population, after decades of decline, increased between 2010 and 2020, marking the city's first decennial population gain in 70 years, a trend attributed in part to immigration and refugee resettlement and to downtown and waterfront redevelopment.^[63][64]

According to the City's 2023–2024 Annual Comprehensive Financial Report, the principal employers in the Buffalo metropolitan area were:^[65]

This is an incomplete list of notable companies with major operations or headquarters in Buffalo or within thesurrounding area. References:^[66][67]

• Economy of Buffalo, New York

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