COURT HOUSE – An economist forecasted a slower summer in 2022 than in 2021 but caged it with an optimistic presentation on what he called a “remarkable recovery” in 2021 after the pandemic crippled the economy in 2020.
“Last summer’s shore season was nothing short of remarkable,” Dr. Oliver Cooke said to Cape May County Chamber of Commerce members during a Jan. 20 luncheon at Avalon Golf Club.
Cooke, an associate professor of economics at Stockton University who created and authors the South Jersey Economic Review, added that if inflation climbs higher in the coming months, the Federal Reserve may face tough decisions about raising interest rates “rather significantly,” causing disruptions to the real estate economy, with “some froth being taken off the housing market.”
“2022 is likely to be a very good year, albeit one that possibly is going to be very tough, relative to its year-on-year comparison to the blockbuster 2021,” said Cooke. “It may very well be that 2022 doesn’t look all that great, keeping in mind what happened the last year, the benchmark against which 2021 is going to be compared will be an important part of the story.”
Cooke used Ocean City as a microcosm of Cape May County, and most of the data he presented was taken from Ocean City statistics, not countywide data.
Cooke showed data indicating Ocean City’s jobs were up almost 19% in 2021 over 2020, fully recovering all jobs lost in 2020.
After the pandemic, unemployment rose by about 20%, according to Cooke’s presentation, but recovered in a major way. Ocean City saw 7,300 added jobs, with leisure and hospitality jobs up by 40%, retail trade jobs up 12%, and local government jobs up 9% in 2021.
“This rate of job growth – nearly 19% – outpaced the state’s 2.8% gain, Atlantic City’s 8% gain and outpaced the nation’s 2.7% gain last year,” he said. “It’s not only the case that Cape May (County) recovered more quickly than Atlantic City and the state did, but its rebound was significantly greater.”
Cooke warned, though, that the Federal Reserve could have some significant impact on the housing market, as well as the economy at large, and that 35% of Ocean City’s economy is tied to real estate.
“Barring some remarkable turnaround in what is accomplished in Washington, D.C., inflation is ultimately going to be in the hands of the Fed. At this point, I think it’s pretty clear, the Fed has signaled that not only is it going to begin withdrawing direct monetary supports… but we should also be well prepared for several rate hikes over the coming year,” said Cooke.
Housing at the shore has experienced a major boom since the onset of the pandemic, with more investors turning to real estate and Americans showing a rising interest in leaving urban areas, spurred, in part, by an added freedom to work remotely.
“What people think is going to happen to inflation ultimately dictates what they decide to do in many ways. In a very real sense, the expectations about where it’s heading are oftentimes almost equally, if not more, important than the overall pricing fundamentals in many ways,” Cooke said, adding he thinks that will play out for about the next six months.
Cooke said multiplier effects tied to the distribution of stimulus will fade and households will revert to the way they used to spend. There was a 69/31 split between services and goods. Over the last 15 months, service spending fell by 3.5 percentage points, accounting for a shift of trillions of dollars nationwide.
Still, the very fact that Cooke gave his presentation in person and not remotely, as it was in 2021, was a testament to how far things have come in one year.
“We’re all experiencing Zoom fatigue,” Cooke said.
To contact Shay Roddy, email sroddy@cmcherald.com.
