Confidence key to economic recovery
There is light at the end of the tunnel for the national economy, according to Granville Area Chamber of Commerce President and Citizen’s Bank branch manager Harry Haldt, although it remains to be seen how long the recession will last.
Haldt said remarks made by TD Banknorth economist J. Alan Day at a recent presentation at the Adirondack Regional Chamber of Commerce luncheon entitled “When will our economy recover?” struck him as important enough to pass around.
Haldt said he included his thoughts on the June presentation in a chamber newsletter to get the information out to other business leaders in the area.
“While talking candidly about the nation’s economic challenges, (Day) balanced these opening remarks with some other facts that suggest a recovery is inevitable and that we’re perhaps better positioned than other areas of the country to expand economic opportunity,” Haldt said.
Negatives hindering recovery include the high level of personal debt, Haldt said. “This means we are less likely to buy bigger priced items like cars, homes and appliances. That is why car and home buying is down even with low interest rates,” he said.
Day also said state income tax collections are down throughout the nation and in New York, especially. Day said the state continues to spend too much money and paying the bill will mean either cuts or even higher taxes.
Day told those at the regional chamber meeting that the “misery index” at 11 percent was high, but not nearly as high as it had been in the early 1980s when it reached 20 percent. The “misery index” measures unemployment, interest rates and other factors. The current level is high largely due to unemployment, Day said. However, the “misery index” in 1981 surpassed 20 percent because Americans then faced both high unemployment and high interest rates, Haldt said.
Haldt said consumer confidence seems to be recovering, a bit at a time. People are still concerned about job security and holding off on some big purchases.
“People still aren’t willing to say, ‘Yippee, it’s over and I’m going to go out and buy that (thing) that I’ve been wanting,’” Haldt said.
Locally, Haldt said, when the confidence returns recovery will return with it.
“We do have some major businesses here, but this tends to be a town of smaller businesses. Even the smaller businesses are certainly affected by this. Whereas people before would go and do home improvement or other projects, sometimes they’re thinking about it and maybe slowing down or scaling back the project a little bit. Or, the guys with excavators who go and dig holes for foundations, people aren’t building quite as many new homes, so it all ripples through the economy,” he said.
At this point, Haldt said, it looks like people have not stopped spending, which in a consumer-driven economy is a good thing, but what they are doing is scaling back or holding off on major purchases.
Haldt said people are more likely to be improving their kitchen versus completely renovating it or taking steps to keep their car going versus trading in for something brand new.
Perhaps helping to lessen the blow is the relative stability of the real estate market, Haldt said.
“We may have been affected to a lesser degree than a lot of other parts of the country that have really been slammed,” Haldt said.
Although the dairy industry faces real trouble, with milk prices of a hundred pounds of milk selling for less than it costs to produce, other areas such as real estate did not see the boom and should not experience the bust.
In real estate, people bought homes in the area to live in or as second homes. The lack of flipping and speculation was a positive in the long run, he said. “This kind of area I think probably historically – I haven’t done that statistics – but it probably doesn’t peak as high and it doesn’t drop as far,” Haldt said. “That is a positive.”
Day told the group consumers seem to believe that the worst is over.
“There’s a new consumer normal where we are optimistic but still conservative, opening our wallets again but not as much as before, Haldt said.
Haldt said one thing that would affect consumer confidence was employment and how secure people feel in their jobs.
Day told the group the recovery at first may be a jobless one. Unemployment is likely to remain high as productivity and technological gains enable the U.S. economy to grow without having to hire new workers right away, Haldt said.
Day said technology was allowing productivity of workers to continue to improve.
Haldt summarized, “We’re all getting more efficient and capable of doing more work because of our use of technology.”
A sign Day saw as evidence of consumer confidence was tourism, which seems to have remained strong in the area this summer. People are still visiting the Lake George and Lake Champlain region, Day said.
Haldt said the “rub-off” from a large tourist areas such as Lake George helps not just the economy of that one town but many others rippling outward.
“You’ve still got people who are going to vacation. They will take drives and they will go places; so even us – we’re an hour to 45 minutes away – you do get a few people who will come around and go places,” he said.
Haldt said he had taken a dinner cruise with the Granville Lions Club Sunday and when the boat docked back in Lake George at 9 p.m. he was surprised to see the village was packed with people walking around.
“And, all of the shops were open,” he said, noting that people are still spending money on vacations.
Day also said the region benefits from having Canada as a neighbor. New York, he said, welcomes 469,000 visitors from Canada into the state every year. These tourists spend $855 million annually in New York.
Haldt said the chamber focuses on helping local businesses through making them aware of opportunities for loan programs, actions of community groups like GPED, and the Granville Partnership for Economic Development and letting people know where they can go for help with anything relating to their business.
“We’re just trying to encourage people,” he said.
Haldt said it was also important to buy local whenever possible to keep spent dollars and tax dollars in the area economy.