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Execs Predict Warmer Economic Climate

by Mike Sepanic

In the wake of news reports about a sputtering national economic recovery, five top regional business leaders offered some cause for optimism in southern New Jersey, where they predict economic improvement during the next six months.

During the Rutgers-Camden Quarterly Business Outlook for the second quarter of 2003, panelists sounded notes of cautious optimism with their overall suggestion that growth will continue and, in fact, improve, despite less-than-optimal current conditions.

More than 250 executives received an overview of the region's economic health during the April 15 session, where none of the panelists predicted worsening conditions for the next six months; in fact, three individuals suggested improvement. Dr. Milton Leontiades, dean of the Rutgers University School of Business at Camden, moderated the discussion.

This Rutgers-Camden School of Business event is co-sponsored by the Cherry Hill law firm of Flaster/Greenberg and the Chamber of Commerce Southern New Jersey.

The following summarizes the report of each executive.

Economic Overview
Dr. Ted Crone, vice president and economist for the Federal Reserve Bank of Philadelphia, reported that New Jersey is doing "slightly better" than the rest of the nation during the economic downturn. He encouraged the audience to consider weather woes and war concerns when viewing negative economic data from February, and offered the prediction that drop-offs in hospitality and residential construction will rebound. Manufacturing in New Jersey continues to experience "soft spots," with uncertainty as to whether geopolitics or an underlying weakness in the national economy are to blame.

While New Jersey retailers report weakness during the first quarter of 2003, national retail sales were up in March, with consumer confidence beginning to rise from its nine-year low. Crone suggests that the first quarter is "likely to be the worst quarter in 2003" with fewer uncertainties boosting the likelihood of a moderate recovery. Still, the lack of job growth and capital investment, combined with continued overcapacity in manufacturing, will pose threats to a true boom recovery.

Current conditions:    75
Forecast:    Better

Automotive
Mindy Holman, president of Holman Automotive, reported that strong manufacturers' incentives are holding a weak economy at bay and attracting buyers into auto showrooms. While the impact of war on automobile buying patterns is not yet discernible, she observed that neither war nor increased gas prices seem to have made a large impact on business. Similarly, a predicted anti-SUV backlash has yet to manifest itself in the region, as evidenced by a 50-percent increase in SUV sales.

At Holman Automotive, March sales were up 24 percent; she predicts a short and mild softening in the industry. "While I believe that economic conditions will improve over the next six months, we may not see much of an increase in business due to the 'pull-ahead' effect of current incentives," she said.

Current conditions:    75
Forecast:    Same

Manufacturing
Luther "Buddy" Holt, regional director of manufacturing for Lenox, Inc., testified that manufacturing continues to experience difficulties in maintaining margins and retail pricing in the face of current economic conditions. He noted that traditional retail sales are down, although big box retailers provide some bright spots. Holt cited China's excess supply of labor as the "biggest threat" to U.S. manufacturing; the large inventory of labor is leading to wage deflation around the world. "U.S. manufacturers need to ask themselves how they need to operate in order to be competitive," he said, suggesting a strategy that includes active employee involvement; good management with strong tech support; and efficient distribution to customers. He predicts a continuation of current conditions during the coming six months, but quoted Burlington County war hero James Lawrence and told the audience "Don't give up the ship."

Current conditions:    50
Forecast:    Same

Financial Services
Susanne Svizeny, regional president of First Union National Bank, offered a positive outlook on tough times. "I believe that in more challenging economic conditions, both individuals and businesses seek more guidance and feedback from their financial advisors, which presents opportunity for our industry in terms of investment advice," she said. Citing general economic questions generated by war, government, and unemployment trends, Svizeny nonetheless delivered an optimistic forecast grounded in rising retail and consumer confidence trends, noting particular confidence on the growth of small-/mid-sized businesses.

She reported a positive first quarter for banks and financial services institutions, fueled in part by the decline in interest rates and diversification in customer service offerings. In New Jersey, financial service organizations are placing distribution centers in their customers' neighborhoods; focusing on acquiring new customers; and offering service-oriented choices to better meet their clients' needs. Svizeny noted "some resiliency" in New Jersey, generated in part by the state's strong small businesses. She stressed the need for financial service providers to better develop their employees; invest in the communities which they serve; and recognize the need for integrity in their services.

Current conditions:    80
Forecast:    Better

Small Business
Michael Pappas, regional administrator for the U.S. Small Business Administration, reported that small business growth in southern New Jersey is expanding. He noted that the SBA provided 465 loans totaling $98 million to South Jersey clients during federal fiscal year 2001, and 533 loans totaling $123 million during fiscal year 2002. The food service industry is one of the fastest growing among South Jersey entrepreneurs.

As the SBA celebrates its fiftieth anniversary during 2003, the organization is producing more loans in an effort to fuel job growth in New Jersey. Pappas reported that 1.7 million New Jerseyans are employed by small businesses, which contribute to 51 percent of the state's businesses.

Current conditions:    70
Forecast:    Better

The next Outlook will be held on Tuesday, July 15, 2003, at the Clarion Hotel and Conference Center in Cherry Hill. The 2003 schedule of Outlooks also includes Oct. 21. For more information, contact Samantha Collier.

 

 

 

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