Special issue: Poised for Recovery?
Around the region, prospects are looking up
By: Linda Seida
If you had to judge by your wallet, you might think we were still in a recession.
After all, a paycheck doesn’t stretch as far these days as it used to. It seems the cost of almost everything is up, and the price of gas alone is enough to strain the budget.
Sure, it would be only natural to think the recession is still with us. But you’d be wrong.
At least, that’s what one economics expert and county officials are saying. Slowly but surely, the economy is recovering. And Hunterdon County’s municipalities are sitting in a better position than most others in the country.
"We are in an economic recovery, but it doesn’t feel like it," said James Hughes, a leading expert on regional economics and dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.
A big reason it doesn’t feel like it is because the period of strong economic growth we experienced from 1997 to 2000 is still so fresh in our minds. During that boom time, the number of New Jersey jobs increased by 90,000 per year, he said.
Dr. Hughes called that period of super-strong economic health a "Mae West economy."
Meaning, he said, "Too much of a good thing is wonderful. The problem is, wonderful doesn’t last forever. It’s like we were going 90 mph but slowed to 10 mph. You’re still moving forward, but it’s painful."
The state went into recession in June 2001, three months later than the rest of the country, according to Dr. Hughes.
"We think New Jersey’s recession ended in October 2002," he said, adding that during those months the state lost 32,000 jobs. The situation was even worse in the recession spanning 1989 to 1992, when 260,000 jobs were lost in the state.
The recession we’re recovering from now is a "different order of magnitude. It was more like a recession-ette," he said, acknowledging it was still "very painful" for those who were caught in it.
Residents of Hunterdon were in the best position to weather the storm and are doing quite well as the nation tries to get the economy up to speed, according to officials.
"Hunterdon County is doing better than the state, and the state is doing better than the nation as a whole," Dr. Hughes said. "Hunterdon County is extremely wealthy in terms of median household income. Hunterdon County ranks fourth among all counties in the country. Morris and Somerset counties are sixth and seventh. You don’t get any better positioned than that. Moving forward from here really depends on the strength of the national recovery and the strength of New Jersey’s recovery."
According to the U.S. Bureau of the Census, Hunterdon County’s median household income in 1999 was $79,888. That figure represents more than a 45 percent rise over just a decade earlier, when the median household income was $54,628.
The statistics back up the experience of Hunterdon County Planning Board Director John Kellogg.
"I’m not sure that we have really felt that much of a problem here," he said. "We’re one of the wealthiest counties in the country. I think we’re fortunate that we haven’t had a lot of the setbacks."
Unlike communities where much of the work force is centered around the telecommunications industry, Hunterdon’s work force hasn’t suffered as many layoffs.
"We don’t have a large labor base subject to layoffs," Mr. Kellogg said. "We’re fortunate to have Merck Pharmaceuticals as one of our largest employers. For the most part, we have been really lucky and haven’t experienced any fallout."
In Lambertville, Mr. Kellogg pointed to the strong presence of the Lambertville Station, one of the largest employers in the city.
"Lambertville is very strong and viable," he said. "It’s undergone a resurgence in the last decade or 15 years."
On the local level, it isn’t only the larger employers who are doing well. Smaller companies, many of them service oriented, are gaining in number. Although exact figures weren’t available, the percentage of small businesses starting up has risen at least 50 percent over last year, according to Sue Johnson, director of the Small Business Development Center at Raritan Valley Community College in North Branch. The center serves both Hunterdon and Somerset counties.
"In the past few weeks, we’re seeing a change in business patterns," Ms. Johnson said. "More people are coming in to get counseled to start businesses. In January and the beginning of February, we had sessions being canceled for lack of enrollment."
The jump in numbers could be attributable to several factors. On the positive side, the increase in small businesses could be a positive indicator of a recovering economy, Ms. Johnson said. On the other hand, the increase could be the result of large corporations laying off workers, who then use their buyout packages to set themselves up in business.
Ms. Johnson, Mr. Kellogg and Dr. Hughes all mentioned the large number of layoffs in the telecommunications industry.
"Here’s a telling statistic, hard to believe, but true: 97 percent of all long-distance fiber optic cable laid in the ’90s is not being used. It’s just sitting there," Dr. Hughes said.
What does all this mean for the local economy?
"On one hand, I can’t make predictions on the economy," Ms. Johnson said. "But from our own internal observations, I see a much larger swing to small businesses. Small businesses have always had high impact. I think it’s a positive for the economy. It creates additional economic growth and additional jobs."
Those additional jobs can be found in diverse areas.
"Anywhere from a hair salon to an accounting firm to consulting to wine retail or any type of retail," Ms. Johnson said. "I think a lot of the service businesses are very popular right now. There’s not as much cash investment in the business operation initially as opposed to that of a product."
If the economy is actually improving, then why do so many people still perceive this as a bad time?
"The national economy did really well in 2002," Dr. Hughes said. "The strange thing is, our reference point is the 1997-2000 period. We look at that as the way things are supposed to be. But that’s a very unique period. We’re not going to see that for a long time."
Experts are predicting an improvement in the labor market for the second half of 2003. If that happens, in 2004 stronger growth will become more apparent, Dr. Hughes said.
"We’ll see solid economic growth, but not a lot," he added.
Take heart.
"We have yet to invent a boom that lasts forever," Dr. Hughes said. "We have yet to invent a recession that lasts forever. The economy will recover."