Signs of Recovery Are Budding
EASTERN SEABOARD. Lukewarm comeback, creating few new jobs, seen for Mid-Atlantic. From region to region across the country, recession appears to be ebbing. After a long decline, housing and manufacturing seem to be strengthening. But state budget woes will likely slow the upward trend.
THE Mid-Atlantic states - stretching from the noisy docks and teeming industrial sites of the Big Apple down to the suburbs of Baltimore and the gently rolling farmlands of Pennsylvania - are slowly coming out of recession. But experts agree that the recovery will be tepid rather than robust. The 1980s, by contrast, were go-go years for the Mid-Atlantic states, underscored by the upward momentum of the United States stock market. But by the later part of the decade Wall Street was skidding; brokerage houses were laying off thousands of employees. Banking, housing and insurance were also hard hit. Entrepreneurs such as Donald Trump found themselves in financial difficulty.
The boom of the mid-to-late '80s was "unsustainable for the region," says Robert Chandross, chief economist at Lloyds Bank in New York. Mr. Chandross says that while the region is now coming out of recession, there are no industries around that can give it an added kick - enough to spark major expansion.
Chandross notes that the recent upward hike in home mortgage rates comes at the worst possible time, since housing has started to show new signs of growth.
Regional economic statistics tend to be lagging indicators. But evidence suggests the recession has bottomed out. Example: New York City's unemployment rate in May was 8.9 percent, unchanged from April.
Housing sales have jumped, particularly in New Jersey. Even most Wall Street brokerage houses reported good profits during the first quarter.
One major drag: job cutbacks are occurring or projected to occur in the public sector, says Rosemary Scanlon, chief economist for the Port Authority of New York and New Jersey.
"Just as the recession is lifting in the private sector, the public sector looks like it is going downward," says Ms. Scanlon. Still, she says, the downturn in public-sector jobs (linked to state and local government budget-balancing agreements) will be offset by stepped-up spending in construction. Scanlon feels the recession has bottomed out here.
New Jersey, despite state budget problems, may help lead the region economically. According to a new survey released by National Westminster Bancorp, 78 percent of the 121 top business executives who took part in the survey say they believe that business will be better next year than in 1991.
Indeed, Garden State executives are far more bullish than their counterparts in New York.
Regional industries expected to hold their own or show modest growth include chemicals and pharmaceuticals, tourism, agriculture, and small-manufacturing linked to exports.
The retail industry, which is one of the largest in the greater New York area and employs many immigrants, is starting to show signs of a pickup. But sales are sluggish. Little new hiring is under way. Summer jobs for young people remain tight.
Still, it is the state budget crunch along the Atlantic Seaboard that is perhaps the most serious impediment to speedy recovery. In New York, state lawmakers are quarreling over the extent of cutbacks. Job layoffs loom at both the state and New York City levels.
In New Jersey, which has been the most vibrant state in the region economically, Gov. James Florio is struggling to plug a $1.5 billion shortfall for fiscal 1992, which starts next month.
Governor Florio has told union leaders that, without give-backs on pay and health benefits for state employees, he will be forced to lay off thousands of workers and make sharp cuts in state services.