Marc Goloven cast a wry eye at the recent government pronouncement that the recession was over.
“Although the Bureau of Economic Research told us the recession ended a year ago,” said Goloven, “as I watch jobs evaporate, foreclosures continue to rise and the poverty rate at a 50-year high, I wonder whether this contraction which began in 2007 has indeed ended. I suspect there is a great deal of skepticism in this ”˜presumed recovery.”™”
Goloven, former vice president and senior economist for JPMorgan Chase now working with the city of Yonkers, made his comments Oct. 6 to more than 150 members of the business community at the Orange County Partnership breakfast at Central Valley”™s Falkirk Country Club.
Although Goloven noted many large corporations and megabanks became stronger and richer during the meltdown and “are sitting on $2 trillion, no seeds of economic growth will be sowed until the proper tax and regulatory environment is created to encourage these big businesses to spend.”
Many small businesses, he said, are finding it “more than exceptionally difficult to access credit these days; when you think of the megabanks closing the barn doors after the chickens escaped ”“ and for many of them, seeing them come home to roost already ”“ we see the need for regulatory reform, easier access to credit and the need to start the jobs creation machine…. but the contours of this recovery are much different than in recessions past.”
Citing nearly 10 percent unemployment and an additional 10 percent of the work force underemployed, Goloven said nearly one in every five people in the civilian labor force are unemployed or underemployed. And while consumers may have continued rushing to Woodbury Common Premium Outlets ”“ “second only in the state to attracting people, with JFK Airport first on the list, probably getting on buses to come up to Woodbury Common” ”“ they are continuing to spend frugally and cautiously. Since consumer spending makes up 70 percent of America”™s $14 trillion economy, the fact that wallets have remained in pockets has created a recession unlike any experienced in the past, he said.
The Hudson Valley has fared considerably better than other states, he said, citing California, Nevada, Michigan as areas where the housing collapse and lack of jobs have created a more than 12 percent unemployment rate.
“Right now, the manufacturing sector, which makes up only 15 to 18 percent of our economy, is powering the recovery … and since small businesses are the machines of job creation, if we neglect them, we do so at our own peril.”
Goloven suggested New York”™s dysfunctional political system has only helped hobble the state”™s economic recovery. He suggested to his listeners that perhaps it was time to pay attention to what was happening in local elections.
“In 2008, of our 62 state senators, only two incumbents lost their seats; of the 150 members of the House, only one incumbent lost … we have created a situation where many have secured jobs that pay well, but where little work is performed.”
Saying New York”™s economy and policy is often dictated by “three men in a room ”“ the governor, lame duck though he may be; the head of the Assembly; and the head of the Senate, who pounded out a $136 billion budget ”“ and with each senator and assembly member spending approximately $1 million a year ”“ if it takes only three people to create this budget, is there a need for these other members? Why don”™t we do away with those positions and save the state $210 million to help close the budget gap? Clearly, when we talk about dysfunction we talk about the roots of incumbency.”
Goloven also questioned the federal government”™s handling of ARRA (American Reform and Recovery Act) funding.
“As far as ARRA is concerned, we”™ve raised the bar on annual federal spending ”“ but where did it go? The city of Yonkers (where Goloven now advises Mayor Phil Amicone) had a major program studied to death for six years that would cost $1.6 billion and transform the city”™s waterfront ”“Yonkers is now the third largest city in the state. ARRA funding was supposed to help build infrastructure ”“ the city needed $250 million for sewer and electric ”“ that”™s considered infrastructure, correct? But our stimulus money got lost in Albany. And needless to say, this shovel-ready project ”“ I was even ready to bring my own shovel ”“ never came to Yonkers. We never got our stimulus money, nor saw the revitalization of its downtown.”
While several elected officials clearly unnerved by the economist”™s comments on political dysfunction pounced on Goloven after the presentation, business owners in the room gave Goloven a huge round of applause.
“What will November 2nd harken?” Goloven asked. “We”™ll see.”
