For three-plus weeks now, the U.S. has faced a perfect storm of economic uncertainties.
The warning signs were clear and the immediate effects have renewed concerns about a double-dip recession.
But as far as comparisons go, a number of financial experts and businesspeople surveyed by the Business Journal stopped short of calling this sequence a repeat of the 2008 crisis, though several were less than optimistic.
At the same time, many of those queried said Westchester County, with a July unemployment mark of 6.8 percent compared with the national rate of 9.1 percent, is in a position of relative stability and economic strength when weighed against the nation as a whole.
“With the market, there can be a decoupling from the overall economy certainly in the short run,” said Christopher P. Jordan, president and CEO of Lexco Wealth Management in Tarrytown. “The question is, where do we go in the overall economy? People are now trying to figure out, is this a tipping point or is this a cyclical pullback?”
If it is a tipping point, Anthony J. Domino Jr. said it will all hinge on a resurgence in consumer confidence and a halt to the ringing uncertainty.
“Americans don”™t like bad news, they prefer good news, but what they really, really can”™t tolerate is a lack of certainty,” said Domino, managing principal of Associated Benefit Consultants in Rye Brook.
Domino said the confusion has been fueled in part by the availability of real-time market updates, and that while companies have accumulated cash and assets throughout the downturn, they are willing to wait out the storm and delay any hiring plans if the uncertainty persists.
“Everyone is totally aware of the minute-by-minute moves of the market,” Domino said. “The impact to jobs is driven by the uncertainty in the marketplace. Not enough job growth feeds the uncertainty in the economy.”
Business owners concerned
The economic slowdown, rather than the stock market instability, has local business owners most worried, said Ted Miller, president of DataKey Consulting L.L.C. in Mount Kisco.
DataKey compiles a quarterly business confidence index together with The Business Council of Westchester.
Following an informal gathering last week of 10 CEOS of mid-sized companies based in Westchester, Miller said there is a growing realization that U.S. gross domestic product growth for the next several quarters will fall below projections made earlier this year. That realization, Miller said, could stem the tide of enthusiasm that has resulted in five consecutive quarters of increased business confidence readings in Westchester.
“That group was not really all that unnerved by the gyrations in the market,” he said. “They”™re more unnerved by the slow economy and projected slow economy for maybe several more years.” (For more on local business owners and how they are reacting to the slowdown, see page 17).
However, Allison Madison, president of Reinhard-Madison Approach Staffing Inc. of White Plains, said she has seen an improvement in the hiring market for Westchester, despite the fact that August is typically one of the worst months for hiring.
“The length and the scope of assignments are improving,” Madison said. “Last year they were only hiring if there was an immediate urgent need.” This summer, she said, companies are hiring more employees on a full-time basis instead of hiring temps and possibly taking them on as full-time down the road.
She said that due to the high volume of Westchester businesses with 50 or fewer employees, there are not the same levels of concern over fluctuations in the stock market that larger, public corporations might exhibit.
“Because we are the land of the small-business owner, I think there”™s a lot more opportunity and stability, collectively.”
Much of that stability can be credited to the sense of resilience among business owners, said Adam J. Stark, president of Stark Office Suites, which is uniquely positioned to gauge local businesses”™ reactions to the instability with office spaces for rent at several Westchester and Fairfield County, Conn., locations.
“A lot of the folks who are still in business now are the survivors,” Stark said. “There”™s something to be said for being able to survive the past few years and being able to grow through the past four years.”
All eyes on sales
With economic analysts closely monitoring home sales and automobile sales, indications suggest the annual summer slowdown for both industries has blunted the effects of the current stock market instability.
“It”™s hard to read anything into it right now,” said Dwight McGuirk, president of Smith Cairns Ford, Subaru, Lincoln Mercury, Mazda Inc. in Yonkers. “It is a little bit quiet but the summer, especially August, can tend to be that way.”
He said that while some of that slowdown may be attributed to a drop in consumer confidence and the market volatility, the general sentiment among local dealerships is that there is no reason to panic.
“Nobody”™s hitting the panic button, and for everyone I”™m talking to, that”™s the general feeling.”
Jonathan Miller, president and CEO of Miller Samuel Inc., a New York-based real estate consultancy firm, called the Westchester housing market “stable, but fragile,” and said any increase in sales will hinge on an increase in hiring in the region.
“The magic formula to everything is job creation,” he said. “If we create jobs then what we do is, people can afford to purchase beyond their basic needs.”
