COURT HOUSE – Stockton University economist Dr. Oliver Cooke provided an optimistic 2021 forecast to the Cape May County Chamber of Commerce April 29.
His talk focused on the 2020 Covid recession and a look ahead. Cooke detailed the devastation in the early part of 2020, when job loss was 6.5% greater than it was during the Great Recession (2007-2009).
Cooke’s data showed the beginnings of a rebound, a building fourth quarter momentum, in 2020, that Cooke sees carrying over into 2021.
His forecast was for a strong summer in the county, with the caveat that “stumbles” should be expected, and new variants of the virus could have a yet unknown impact.
Cooke began his presentation with evidence of a positive rebound in the national economy. He cited strong job growth, a turndown in unemployment, and a significant jump in March retail sales. Noting that the general savings rate was at an all-time high, up 20% in January alone, Cooke presented a picture of growing consumer confidence and an accelerated first-quarter gross domestic product (GDP) figure.
Cooke’s review of 2020 showed total employment in Cape May County during the second quarter fell 25% year-to-year, with lodging and hospitality down almost 50%.
The non-farm losses in jobs hit 11,400, a huge number for a small county labor force. Yet, by the fourth quarter, employment was up 5.8% from the same point the previous year.
He called the rebound a “very good story,” but also noted that total employment for the year remained down, with lodging and hospitality, the county’s largest employer, left with 63% of the losses.
During the Covid recession’s peak, in 2020, the economic devastation was greater than that caused by the Great Recession a decade earlier, but the rebound was coming faster than it did during that previous downturn.
Cooke said the current labor force numbers returned to levels higher than the pre-Covid year. He pointed to the fact that Cape May County’s experience differed from that of neighboring Atlantic County, which he predicted would take longer to rebound.
A bright spot for Cooke, in 2020, was the rise in single-home prices across Cape May County. Single-home prices were up over 18% year-to-year. Relative to what he termed the 2011 trough of the Great Recession, county single-family home prices are up 39%.
Last year was difficult for small businesses in the county. Nationally, 71% of small businesses said they experienced large to moderate negative effects from the Covid recession. The number was 80% in New Jersey.
Using statewide survey data where county data is not yet available, Cooke said 46% of small businesses expect it will take a minimum of six months or more “before normal operations resume.” Again, that was a higher percentage than the national one, which stands at 37%.
He said the survey data showed 8.5% of small businesses said they did not expect to ever return to pre-Covid levels, and 2.7% of small businesses statewide closed permanently.
Cooke cited strong pre-booking numbers for Cape May County, referencing the fact that summer rentals are increasingly hard to get as more evidence of a strong summer for 2021.
Responding to questions on the federally enhanced unemployment benefits, Cooke admitted that they may hurt businesses seeking seasonal employees. Overall, however, Cooke saw the enhanced unemployment as something that prevented an economic meltdown in 2020’s worst months. Money was in the economy that otherwise would not have been there, he said.
Cooke cited several factors that will make finding employees more difficult, even as the demand for business services grows. These included the continuation of enhanced unemployment benefits, the late start to restoring the J-1 visa program, and fear, which he said is still present in a subpopulation of potential workers for whom the face-to-face nature of most lodging and hospitality jobs is something for which they are not yet ready.
Cooke also said the labor market downturn, in 2020, may have led some workers who normally would have been available for seasonal employment to turn to new employment opportunities in areas they had not previously considered. One example he mentioned was the surging employment at Amazon.
The discussion during an exchange with webinar attendees moved to a possible need to increase pay scales, as a means of attracting workers.
Cooke also pointed to what he termed “wage-led price increases,” citing significant increases in select home repair prices caused by smaller contractor labor pools and the need to pay more to get workers.
Cooke produces the South Jersey Economic Review, a journal focused on the region’s economy. He expects to have a new edition with analysis on the Covid year published in May. It is available to the public through Stockton University’s website (https://bit.ly/2QNRpoq).
Cook’s presentation is available to the public on the chamber’s YouTube channel (https://bit.ly/3tdOrag). A copy of the slide deck from the presentation is available here: https://bit.ly/3gQw6x8.
To contact Vince Conti, email vconti@cmcherald.com.
