Corrections or additions?
This article by Bart Jackson was prepared for the January 3, 2001
edition of U.S. 1 Newspaper. All
Soft Splashdown In 2001
When the big money boys from Atlantic City’s casinos
need a financial forecast, they don’t want to hear some airily erudite
economist frothing scholarly hypotheses. Instead, they call for
Scarry, a nuts and bolts veteran who can tell them just how much
cash will be flowing around New Jersey in the near future, for how
long — and why.
Right about now, as all the financial indicators are creaking death
rattles, many are asking those same questions. Some of the answers
will come when Scarry discusses "Is New Jersey’s Economy headed
for a Soft Landing?" at the Princeton Chamber of Commerce luncheon
on Thursday, January 4, at 11:30 a.m. at the Doral Forrestal. Cost:
$33. Call 609-520-1776.
Analysts now warn that the growth boom we have been giddily riding
is about to become but a fond memory of the Clinton years. While
admits that nothing lasts forever, he’s still insistent on one point:
it is foolhardy and inaccurate to tar New Jersey’s economic picture
with the national brush. "New Jersey faces its own growth
limits, beyond global and national trends."
New Jersey bred, Scarry began his education in night school at Rutgers
in Newark. "I’m darn proud of that degree," Scarry says.
on the Rutgers New Brunswick campus, he earned his PhD in economics
and a law degree. His nine-year-old Mount Laurel-based company, New
Jersey Economic Policy Consultants, takes him into the heart of the
state’s business. Boat builders, lobbyists, Mercer and Ocean counties,
law firms, casinos, and the City of Newark all count on Scarry for
And for the upcoming year, Donald Scarry predicts four major factors
that might in all likelihood limit New Jersey’s economic growth.
any business expansion, Scarry feels, is the lack of highly skilled
personnel. "The numbers speak for themselves," he says. This
past year, 80 percent of New Jersey businesses surveyed had trouble
finding skilled technical and laboratory employees. In 1999, 78
held the same complaint. Finding professional people was a major
for 72 percent of our state’s companies, up from 65 percent last year.
Managers were hens-teeth scarce for 60 percent of New Jersey firms;
up five per cent from 1999.
rise steadily, but benefits are the real soaring factor in the cost
of putting an employee into the work force. "We are now in . .
. and face more years of double digit increases in health care
says Scarry. "Combined with the labor shortage, costs spiral."
Benefits become a competitive tool to lure the needed upper level
employees. If employment costs rise faster than the rate of
growth could be limited.
Scarry points out that "the technology that is boosting many
and giving us new medical machinery is raising the cost of healthcare
(and business costs) all around on the short term." For instance,
when a doctor orders a CAT scan of your spine, the diagnosis may
your productivity and be beneficial to your company, but for now it’s
all those empty bike racks and kneeling steps on buses, and
drug costs are just some of the government expenditures that worry
Scarry. Having the state shell out for all these, he feels, will cramp
the illusion of — rather the prayer for — an eternal
says Scarry with a shake of his head. "We have state government
leaders and political candidates wanting to, for instance, lower
taxes. When asked how, they point to the surplus as an endless well.
Debts incurred must be paid for. In truth, any government surplus
is a shallow bucket whose bottom government shall all too soon hit
with a thump, bringing a heavy blow of taxation to all business."
from Scarry’s potential growth-pinching list. What about our new
Scarry grants that the federal administration does play a role in
our state economy. One positive factor in our last eight-year boom,
for example, was the Clinton/Greenspan agreement that the White House
would work to balance the budget, if the Feds would keep interest
rates down. But he sees President Bush having a major economic effect
only if he is able to induce a substantial tax cut.
Spiraling gas and energy costs, Scarry also foresees, will be less
of an economic threat than we may fear. Even though energy costs make
every item more expensive, this expense puts more money out in the
market, "so we are just dealing in higher figures."
Third, the whole E-commerce downturn is less of a disaster than a
sorting out. "It is a new technology, filled with inexperienced
investors," says Scarry. "The pattern is historical; there
will be lots of quick starts and lots of failures. But E-commerce
will play a huge part in our business future." That will be true
not only for the high tech end, but for the old standbys such as
Express and United Parcel Service, and every aspect of fulfillment
enterprise. So in the long term, E-commerce will prove an economic
Doctor Scarry’s medicine for the small business folk in the Garden
State: "Hang in there." Don’t fall victim to crisis rumors.
Interest rates will most likely drop, increasing spending. The current
market mess will indeed clear up and we will probably hold onto good
growth "for at least another 10 months." If afterwards the
market plummets like Hephaestus from its current lofty peaks, we may
wake up temporarily lamed. But we will stagger back to the forge and
produce. We will keep going, investing, and bounce back.
— Bart Jackson
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