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©Rutgers University 2000

REGIONAL ECONOMY LEVELS OFF AT CLOSE OF 2000

by Mike Sepanic msepanic@crab.rutgers.edu

As 2000 comes to a close, look for the economy to keep an even keel into the new year. Such is the testimony of six top executives during the final Rutgers-Camden South Jersey Business Outlook conference of the year.

These business leaders rated current economic conditions as 70.8 (out of a possible 100). Dr. Milton Leontiades, dean of the Rutgers University School of Business at Camden, moderated the panel.

The Oct. 24 event was sponsored by First Union National Bank, with assistance from the Chamber of Commerce of Southern New Jersey.

The next Rutgers-Camden South Jersey Business Outlook will be held in January. To register for this free event, contact Paul Pressley at pmp41@crab.rutgers.edu.

The following summarizes the report of each executive.

ECONOMIC OVERVIEW

Dr. Theodore Crone Jr., vice president of the Federal Reserve Bank of Philadelphia, noted that the general outlook for New Jersey and the region turned from negative in the second quarter to positive in the third. A recent survey of business owners found a "much more positive" attitude. Still, Dr. Crone suggested that the stateÕs economic situation is at a precarious stage due to the loss of overall momentum from the first quarter. "Economic activity is still at a high level, the labor markets are still tight, but itÕs a question of whether weÕre going to reignite some of that momentum from the beginning of the year," he says. The stateÕs unemployment rate (slightly below 4%) is "very good, especially so far into a national expansion." Dr. Crone concluded by reporting that the regionÕs economy, while not robust, remains strong enough to sustain activity at a high level.
Current conditions: 80
Forecast: Same

BANKING

Suzanne Svizeny, regional president of First Union National Bank, reported that growth is slowing, but business activity remains at a decent level. Terming the banking industry as "dynamic," she noted three key drivers for the sector. One Ð legislative actions Ð has opened the floodgate for innovative combinations and corporate acquisitions. Technology is allowing banks to gain more efficiencies, although traditional methods still are needed; while younger customers may eschew visits to bank branches, older clients still rely on personal interaction. Finally, Ms. Svizeny stressed that the customer drives the industry. She observed "huge opportunities" for business-to-business. While a bumpy road may lie ahead, she concluded that the results will be good for the customer.
Current conditions: 80
Forecast: Same

HEALTH CARE

Mark Baiada, president of Bayada Nurses, said that insurers are raising their rates 10-to-20% and that New Jersey is switching Medicare recipients to managed HMOs. The demand for health-care services continues to grow, as does the use of pharmaceutical treatments. Reimbursements from insurance companies are flat; insurance companies have inadequate claims processing systems, he said. Health-care providers are "up against a stone wall in terms" of dealing with costs, a situation exacerbated by a severe labor shortage in nursing, clerical, administrative, and managerial positions. Mr. Baiada suggested that he next year will see continued rate increases. "A little recession would actually help health-care providers," he said.
Current conditions: 50
Forecast: Same

REAL ESTATE

David Rush, president of Surety Title Corporation, reported a slowdown in new home purchases after a busy summer. He predicts a healthy sales condition for the next six months, with the housing market sustaining a solid pace during the fourth quarter. Despite election year uncertainties, consumer confidence has remained strong nationwide. In the Philadelphia region, single-family home permits experienced a somewhat steeper decline this year than they did in 1999, despite a relatively flat population index. The median price of new homes is declining slightly. In southern New Jersey, sales are flat in Burlington and Gloucester counties, and down in Camden County (based on July figures). He cited Governor WhitmanÕs apparent desire to keep land in a "lock box" as a challenge to industry growth. On the positive side, he suggested that the interest rate climate was improving.
Current conditions: 75
Forecast: Worse

RETAIL AUTO SALES

Mindy Holman, vice chair of Holman Enterprises, provided a national overview of the auto sales industry. She noted that the frenzied acquisition of dealerships has slowed considerably. Locally, Auto Nation no longer seems to plan growth in southern New Jersey. The use of the Internet as a research tool continues to expand, with more than two-thirds of purchasers doing their research online. The Ford Explorer tire recalls hit industry hard nationwide and locally; Ms. Holman noted that Explorer sales have dropped off. National sales volume has been at a record-breaking pace, despite a fall-off in the third quarter. In the region, HolmanÕs sales have risen 10% Still, a tight labor market limits profitability.
Current conditions:70
Forecast: Same

TECHNOLOGY

Mel Baiada, president of Sengen, reported that the "burst bubble" of investment in Internet stocks experienced during the spring was needed and will result in improved conditions for the tech sector. Citing such initiatives as a future tech incubator at Rutgers-Camden, he noted that the regionÕs tech sector is stabilizing, in part due to the increased support infrastructure in the area. An enhanced realism on the part of investors also is helping the industry.
Current conditions: 70
Forecast: Better

For more information on future Outlooks, email here.

Previous South Jersey Business Outlook Conferences

• Summer 2000
• Spring 2000
• Fall 1999
• Summer 1999