Economy Cool During Summer Heat

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The full audio proceedings of the Rutgers-Camden Quarterly Business Outlook may be heard online or downloaded for podcast here, courtesy of Lubektin Communications.

by Mike Sepanic

The weather may have been hot and sunny, but the economic temperature was cool and cloudy during the third Rutgers-Camden Quarterly Business Outlook of 2006, held on July 18.

More than 225 executives attended the July session to gauge the testimonies of four top industry leaders who discussed the strengths and weaknesses in the regional economy.

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
David Kotok, chair and chief investment officer of Cumberland Advisors offered an in-depth perspective on global economic forces and their impact on the region. His full presentation is online at http://camden-sbc.rutgers.edu/businessCommunity/images/kotok.pdf.

Current conditions: 50
Forecast: Worse

Energy
Edward Graham, chair, president, and CEO of South Jersey Industries, opened his presentation with the observation that the adequate balance of supply and demand enjoyed during the 1990s was thrown into price volatility from 2001 onward. He noted that “local utilities don’t profit from the supply. We just deliver the gas.”

Graham offered his anticipation that the cost escalation will continue for the near term, and suggested that businesses and individuals alike might confront the matter by regulating energy usage and taking advantage of alternative technologies. He noted that new mechanisms for billing would be implemented across the region by next winter.

Current conditions: 60
Forecast: Same

Health Care
Christopher Olivia, president and CEO of the Cooper Health System, reported on the factors that drive cost increases in health care, including technology, scare labor, unfunded government mandates, and Medicare Part D, which, he says, is “taking up very scarce resources on the federal level.”

“In New Jersey, health care is the number one issue behind property taxes,” said Olivia, who reported noted that the state has “lots of wealth and lots of poverty,” the latter driving the state’s high charity care expenses. He observed a “massive cost shifting” in charity care, with businesses and individuals paying 170 percent more due to this mandate.

Olivia reported that more than half of New Jersey’s hospitals are losing money, and offered some hope for reform efforts on the horizon, including quality data reporting to provide consumers with product information and greater transparency in pricing.

Current conditions: 25
Forecast: Worse

Banking
William Ryan, chair, president, and CEO of TD Banknorth, noted that rate increases implemented by the Federal Reserve during recent months benefit savings, but present difficulties for institutions engaged in lending and mortgages. Nonetheless, Ryan proclaimed the economy to be “very good right now, and should grow very nicely.” His optimism is fueled by strong revenue payments to the IRS and the ongoing trend toward consolidations, which offers greater efficiency for the financial services industry. He reported that the metro Philadelphia and southern New Jersey region is poised to do “very well,” and cited the lower cost of living in southern New Jersey as a regional and statewide competitive advantage.

Ryan said that world affairs are creating challenges to that bullish perspective. “Oil prices are very high, which tones down spending, and if we have another U.S. terrorism event, all bets are off.”

Current conditions: 75
Forecast: Same

The next Outlook will be held on Oct. 17 at the Clarion Hotel and Conference Center in Cherry Hill. For more information, contact Samantha Collier.

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