Economy dragging alone
Is there a light at the end of the recession tunnel? If so, it is dim, and the process is taking longer than Federal Reserve Bank of New York President and CEO William Dudley hoped. He”™s not alone.
With Dutchess, Orange and Rockland”™s close proximity to New York City and Westchester job markets, the mid-Hudson region has managed to keep unemployment lower than other rural areas of the state and also lower than other states in the nation.
On a two-day visit to Ulster, Orange and Dutchess, Dudley visited SUNY New Paltz, Solar Tech Renewables in Kingston”™s Tech City, the Orange County Chamber of Commerce and the Orange County Partnership, as well as touring Ball Corporation and President Container in Middletown on Thursday. He then joined members of the Dutchess County Regional Chamber of Commerce for breakfast at the Ramada Inn on Friday morning, May 23, planning to tour Walkway Over the Hudson and Poughkeepsie before leaving the area.
Dudley told his audiences that the national economy is growing, but first quarter 2011 was softer than anticipated. Adding to that unwelcome news, said the New York Federal Reserve Bank chief, “The real consumption growth was lower in the first quarter of 2011 than it was in first quarter 2010.”
Rising food and gasoline prices have put a damper on consumer spending, he acknowledged. Dudley said he was “hopeful the weakness of the first quarter 2011 will prove to be temporary.”
Vincent Ricotta, sales consultant for Friendly Mercedes in Wappingers, wanted to know what could be done about the escalating price of gasoline. Dudley attributed high prices at the pump to the ongoing violence in the Middle East ”“ particularly Libya ”“ but added that Saudi Arabia was prepared to tap into its reserves to lower the cost per barrel.
Dudley said as of the first quarter of 2011, debt was falling modestly, but delinquency rates continue to rise, with the proportion of debt at least 90 days old rising from 2 percent in 2005 to 9 percent in 2011 across the state.
“These patterns suggest households in the area are making progress on restoring their balance sheets, but they may not have completed the process,” he said. Unemployment climbed as high as 9 percent, but is only down 1 percentage point: “Not much improvement,” admitted Dudley. “Jobless rates have not retreated much thus far and remain stubbornly high.”
The state”™s budget gap and the weakening of its tax revenue, with many agencies in all levels of government shedding jobs to balance budgets, will continue to pose some risk to recovery, said Dudley.
“We”™ve hit a soft patch in activity in the first quarter of 2011. As elsewhere, state and local government will likely be a drag here and elsewhere for some time to come,” said Dudley. But he credited the mid-Hudson region”™s highly-skilled workforce and education, saying it “really determines its resiliency.”
Tom Bott, administrative manger for Ball Corporation in Middletown, celebrating its 40th anniversary and one of the manufacturing facilities Dudley visited, said, “It was a pleasure to have someone of his stature visit. I think he was impressed with our operation, and he did ask a lot of questions about our business. I think he was amazed by the process and understood that productivity is key to our competitiveness.”
“I did learn about how the New York Federal Reserve Bank operates.” said Bott, when Dudley spoke to the Orange County Chamber of Commerce before his visit to Fishkill. “I would have liked to hear more about the financial meltdown and what the Fed expected to see from the bailout of the banks.”