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This article by Bart Jackson was prepared for the September 18, 2002 edition of U.S. 1 Newspaper. All rights reserved.
How Far Down? For How Long?
Jersey Goes Jobless," "Venture Capitalism’s Nuclear Winter," "Death of Dot Com" — the headlines go ever on. From the water cooler economist to pundits
of academe, every financial forecaster today vies to outgloom his
fellows in descriptions of our current business downturn. Be they
ever so dire, however, very few of these assessments stand cemented
in fact and hedged in perspective.
as he outlines "The Garden State’s Economy and Future Prospects"
in a talk sponsored by the Central Jersey Job Developers Association
(CJJDA) on Thursday, September 19, at 10:45 a.m. in the city planning
board offices, 40 Livingston Street, New Brunswick. Free, but registration
requested. Call Darma Silverman at 732-745-5300, ext. 4201.
As dean of Rutgers’ Edward J. Bloustein School of Planning and Public
Policy, Hughes keeps an eye on New Jersey’s employment, growth industries,
consumer spending, and all aspects of the state’s economy as they
compare with the nation and with our historic record. His talk is
designed for anyone seeking to learn in what directions — and how
swiftly — our state will be moving.
The Central Jersey Job Developers Association is a professional association
for all levels of career counselors. While best known for its huge,
annual January Job Fair, the CJJDA also offers a host of other employment
programs and meetings.
Touted as "The Garden State’s Trendiest Couple," Hughes and
his wife, Connie, doubtless have greater knowledge of New Jersey statistics
and what trends they indicate than any other pair from High Point
to Cape May. Connie Hughes, in addition to heading up New Jersey’s
last census count, has served as Deputy Commissioner of Labor, and
president of the state’s Public Utilities Board.
Originally from Elizabeth, James Hughes came to Rutgers in l961 and,
excepting what he calls one brief Forest Gump-style leap into the
service, never left. Collecting a B.A. in Engineering, and a Masters,
Ph.D., and Department Chair in Urban Planning, his experience and
acumen made Hughes the natural choice for dean of the Bloustein School
of Planning and Public Policy, a position he has held for the past
"The real truth of the matter," says Hughes, "is no one
has yet invented a recession that lasts forever." While certainly
not blind to New Jersey’s current economic downturn, he refuses to
join the pessimistic chorus of the less-informed majority. "Neither
history, nor our present state bears this out," Hughes insists.
in the past 20 years. The rocketing inflation of the early ’80s, the
crash of 1989, and the recession of 1992 all hit New Jerseyans harder
than this current recession, whose start Hughes pegs at June, 2001.
This past year, the Garden State lost 31,000 jobs. In l989, we lost
259,000 — nearly nine times as many.
One new concern does mar Hughes’ relative optimism — the debt
bubble. As home equity rates for 15-year fixed mortgages drop to an
abnormal 5.6 per cent, vast numbers of homeowners have leapt into
second and third mortgages seeking quick, easy-term cash. Thus, the
majority of Garden State homeowners now stand straddled with at least
two home mortgages.
by consumer spending and housing," says Hughes. "But this
time we were driven by business investment." From 1997 on, we
just couldn’t pour enough business capital into high tech ventures,
pharmaceuticals, and office construction. New Jersey had ceased to
be a manufacturing state by 1988, notes Hughes, but our telecommunications,
high tech, and service capabilities more than took up the slack. By
1997, already basking in five years of strong growth, the bubble kept
In the Garden State particularly, office space played a major role.
Ever since the S & Ls and like institutions were freed from lending
only to residential builders, loan monies gushed into office and warehouse
construction. Even after the loan spigot turned down to a trickle
in the ’90s, the building went merrily on. Hammers swung frantically
along the Route 1 corridor and elsewhere in anticipation of the office
space crunch of 2001. It never came. Instead businesses leased and
sub-leased old space, leaving the newly built rentals to imprison
old capital and past dreams.
to pull us out of a recession," states Hughes, "but interestingly,
we seldom predict accurately what that new engine will be."
Many New Jersey business people are currently eying pharmaceuticals
for the crown of economic savior, but that is a market with many of
its own problems and Hughes points out that it just might stop rising
or could even conceivably fail. In the ’80s forecasters bet on energy
as our hope for the future. For various reasons it never emerged.
After the low years of the early ’90s, no one had a clue. The Internet,
which was to prove so vital to our recovery, hadn’t even entered our
lives yet. It came about l996 as a true surprise. "The next locomotive
may not have been invented yet," says Hughes.
However, certain tacks must be taken for recovery, he believes. First,
companies cannot downsize their way out of a recession. Historically,
business has worked to grow its way out of down times, rather than
eliminating products and employees. Certainly increased productivity
is a goal, but is has a very short fiscal lifespan.
One move must be the cleanup of what Hughes calls the telecommunications
debacle. Ninety-seven percent of all fiber optic cable is now dark
— unused. This extensive overbuilding (coupled with over-investment
in unused technologies) will demand a long and slow — but necessary
— regeneration of these vital industries.
— Bart Jackson
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