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©Rutgers University 2000
South Jersey Economy Slows Down
by Mike Sepanic
Lowered expectations are the order of the day for southern New Jersey’s economy, but local executives aren’t crying the blues. At least, not yet.
Pragmatism characterized the composite testimony of six business leaders from key South Jersey sectors during the quarterly South Jersey Business Outlook Conference on April 17. The executives shared their perspectives on the region’s economic performance at the start of 2001 and offered their predictions for the spring and summer.
Dr. Milton Leontiades, dean of the Rutgers University School of Business at Camden, welcomed the law firm of Flaster Greenberg as a third partner in the Outlook, along with the Chamber of Commerce of Southern New Jersey. He and the panelists spoke to an audience of 225.
The following summarizes the testimony of each executive.
Economic Overview
Dr. Ted Crone,
vice president of the Federal Reserve Bank of Philadelphia, reported that
New Jersey still has an unemployment rate of less than 4%, while national
average is rising above that figure. Job growth, however, is "not
so good," with a prediction that the state will experience expansion
at half its 2000 rate. Dr. Crone suggested that the manufacturing sector
may be "bottoming out," which holds hope for improvement in
that area; challenges for manufacturing include a strong dollar and reductions
in capital spending. Retail experienced a very slow fourth quarter in
2000, due in part to weakened consumer confidence and increased energy
costs. Despite a slight rebound in January, the sector sagged again in
February and March. During the coming six months, Dr. Crone foresees continued
current conditions with the potential for the start of an upturn by the
end of the fourth quarter.
Current conditions: 70
Forecast: Same
Health Care
Les Hirsch, president and CEO of The
Cooper Health System, offered a portrait of an industry beset by challenges.
"Health care has defied the economy of the past five years,"
he said. "Health care violates a basic business premise: we are the
only industry to provide services with no guarantee of receiving reasonable
payment for those services." Despite continuing issues concerning
charity care and insurance reimbursables, Hirsch nonetheless observed
some stabilization in the regional industry, which "has trimmed and
restructured, and now may be moving back to the center." He anticipated
"continued pressure" on health care, with technology demands
outstripping funding resources. He proclaimed the national nursing shortage
as "the worst I’ve ever seen." Uninsured patients are expected
to remain the greatest challenge to the industry in New Jersey, where
"approximately 16% of the population has no health insurance."
Current conditions: 50
Forecast: Worse
Real Estate
Kevin Scarborough, president of the Scarborough
Land Group, reported that land availability has replaced interest rate
and employment statistics at the top of the list of factors affecting
new homes sales in southern New Jersey. Expenses, and governmental influence,
continue to increase in this industry. "It’s really a squeeze,"
he said concerning the land available for building. Scarborough wondered
if lots currently on builders’ "B" and "C" lists now
will become prime growth areas.
Current conditions: 70
Forecast: Same
Retail
Brian Ford, a partner with Ernst & Young, reported
that retail outlets have grown by 10%, compared to a population growth
of 3%. Given that disparity, he noted that "department stores continue
to be challenged the most," with substantial competition from such
retail discounters as Wal-Mart. Ford added that the industry is engaging
in innovative consolidations and adapting to e-commerce. He concluded
that a low rating for the retail industry "is great for consumers"
who benefit from sales and other efforts to retain market share.
Current conditions: 65
Forecast: Worse
Technology
Candida Seasock, business development manager for
the technology firm Cedar , predicted an evolution of the marketplace
that will see new approaches by innovative companies and a restructured
dot-com sector. "The outlook is positive, since technology is a constant
need," she said. Seasock encouraged South Jersey companies to capitalize
on dot-com innovations and continuously re-evaluate their technology needs.
Current conditions: 85
Forecast Better
Tourism
Mark Juliano, president of the MGM Mirage Atlantic
City Project and chair of the Atlantic
City Convention Center and Visitors’ Authority, offered an optimistic
overview of present and future conditions for southern New Jersey’s premier
tourism destination, the Atlantic City area. He cited the revitalized
Boardwalk Hall, the former Atlantic City Convention Center, as a potential
major attraction. "The hall will be a special event arena,"
he said. "It’s a nationally recognized historic landmark that will
allow the casinos to generate some needed new excitement." The development
of the H tract in the Marina District will result in new hotel/casino
destinations. All of this activity underscores the "huge upside"
to Atlantic City’s potential, concluded Juliano.
Current conditions: 90
Forecast: Same
The next Outlook will be held Tuesday, July 17. To register, email the Chamber of Commerce of Southern New Jersey here.
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