Vol. LXII, No. 14
Wednesday, April 2, 2008
The Mercer County business community was offered a sobering assessment of the county- and state-wide business climate last week: all forecasts are calling for recession, job growth is weak, home prices are tumbling, and there’s a sense of fear on the street.
None of this news surprised anyone gathered at the third annual Mercer County Economic Summit Thursday at the Mercer County Community College Conference Center, as roughly 250 business owners, state and local government officials, and community leaders gathered to discuss the conference theme of businesses relocating to or expanding in Mercer County.
Weaker consumption numbers, caused by a myriad of market forces, including a fall in home prices, the weakest housing market since the Great Depression, and overhang in supply, shallow rates of construction, the subprime mortgage crisis, winding down job growth, and investors losing money in the stock market, all have business owners worrying. But as has been the case in other economic downturns, elected officials and financial experts remained positioned to look at the long term.
“I’m not going to give the doom and gloom discussion,” said Gov. Jon S. Corzine, who made introductory remarks. “We do have challenges in this state, but we also have a very bright future.” Mr. Corzine pointed to the county’s five higher education institutions, calling the “leveragability” of the research conducted here “the envy of the world.
The governor called for the alignment of municipal operating budgets that carry the proper debt load, and called on the Legislature to address the practice of “home rule” and to urge towns to provide shared municipal services “in an efficient manner.” Mr. Corzine, however, did acknowledge what he termed as “deeply disturbing issues” in regard to the housing industry.
Keynote speaker Robert Dye, vice president and senior economist with PNC Financial Services Group, pointed to an economic down cycle and recession forecasts that now hover toward 60 percent. Technically, two quarters of declining GDP equate a recession. A few months ago, the possibility of recession was slight, Mr. Dye said, but now it’s a “fairly strong likelihood.
“All stats are pointing on one direction,” he said, though adding that the Federal Reserve had taken an “activist” role, by reducing interest rates, putting stimulus in the pipeline.
Mr. Dye said this downturn is not as severe as that of the early 1990s: “We haven’t seen that slide over the cliff like we did in ’90-’91. Hopefully we’ll avoid that kind of recession.”
A 63,000 loss in jobs nationwide and zero-growth in payroll employment statewide will be reflected in local economic statistics, Mr. Dye said, adding that job loss is often a “lagging indicator,” and that the figure would “get worse before it gets better.”
The weak U.S. dollar could work for the country’s benefit: “if you have an export product, your demand will increase as the dollar falls. Exporters are doing well,” Mr. Dye said.
Mr. Dye was encouraged, however, by the prospect of the $168 billion fiscal stimulus package, with checks anticipated to start going out in May.
The bottom line was that Mr. Dye called for a “short, relatively mild recession,” through he warned that “things could get worse” with rising oil prices and potentially another fall on Wall Street.
Mercer County Executive Brian Hughes said despite the warning signs, 4,5000 new jobs were created countywide in FY2007, with $5.7 million in new construction.
Mercer County and the Princeton Regional Chamber of Commerce sponsored the Economic Summit.
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