MONTGOMERY: Panel addresses economic fears at forum

By Kristine Snodgrass, Staff Writer
   MONTGOMERY — A panel of regional business experts attempted to assuage local fears about the current economic crisis during a forum held by Montgomery’s Economic Development Commission this week.
   About 70 people, many of them long-time business owners, turned out for the free event Tuesday night at the Princeton Elks Lodge.
   The Economic Development Commission, appointed by the mayor and approved by the Township Committee, was created to analyze the economic development of the region and to promote sound development in Montgomery. Experts on banking, retirement and real estate were recruited by the commission for the event.
   Bob Young, senior vice president of business banking at PNC, attempted to put the current situation in perspective. He asked who in the audience remembered the impact of the oil crisis in the late ‘70s and early ‘80s. The U.S savings rate approached 14 percent in 1975 and the prime interest rate that banks offered lenders reached 21.5 percent at the end of 1980. The period was also compared to the Great Depression, Mr. Young said, with gas rationing leading to long lines at the pumps and bankruptcies increasing by 50 percent.
   ”Guess what?” he said. “We’re all still here, right?”
   The situation was similar during the construction crisis of the late ‘80s and early ‘90s, when 747 savings and loan banks failed, Mr. Young said. The prime rate climbed above 11 percent in 1989.
   To deal with the current situation, he advised business owners to go “back to the basics.” In good economic times, business owners can lose focus of efficiencies and business risks. These issues come into focus in a situation like now, and every dollar becomes a focus, he said.
   Mr. Young advised business owners to look at the basics of cash flow management: getting paid, paying bills, maximizing excess cash and finding ways to supplement shortages of cash.
   ”What we try to do is to get into a good understanding… of how money goes in and out,” he said. He cited the examples of one local business deciding to accept credit cards after struggling with bounced checks and another that used remote depositing of checks to free up cash flow.
   Every case is unique, Mr. Young said, and he advised business owners to be proactive and remember they are the sole expert on their own business. “This too will pass — we hope sooner than later,” he concluded.
   Stephen Reynolds, senior vice president and regional director for PNC Wealth Management, discussed a recent survey of wealthy retirees. Despite the wealth of the study group — all participants had at least $500,000 to invest — a considerable number of them are not prepared for retirement, he said.
   Mr. Reynolds said people commonly have what he called a Scarlett O’Hara attitude about retirement, thinking, “I don’t think I’ll deal with it today, I’ll deal with it tomorrow.”
   ”Thirty-four percent report that they are behind schedule, do not believe they will meet their goal, or have no retirement goal at all,” he said.
   He added that analysts believe there is a 65 percent chance that an economic recovery will begin in the fourth quarter of this year, though 2010 would remain a modest growth year.
   Judd Henderson, of Henderson-SRI Realty, gave an overview of the local real estate market, comparing Hopewell, Montgomery, Princeton Township and Princeton Borough.
   Montgomery Township has fared the best in the market over the past four months, he said, with the smallest decrease in price, by about 8.5 percent, and number of homes under contract, by 9.8 percent.
   In the same period, Princeton Township homes have decreased in value by 20 percent, and the number of contracts has decreased by 43 percent, according to Mr. Henderson’s data. In Princeton Borough, the price of homes has decreased 26 percent and contracts have decreased 9 percent.
   The average time that a home spends on the market has more than doubled, he added. In 2005, homes were typically on the market for 45 days. Last year, it was 77 days, and in the past four months it has jumped to 93 days.