New York (May 21, 2003) -- Despite reports of doom and gloom, the economy has been expanding since the fourth quarter of 2001 and a trinity of factors are in place that may provide the catalyst for economic growth, both nationally and locally in the hard hit New York metro area, a leading economist told CPAs, broker/dealers, and other finance executives gathered here.
In remarks Tuesday at the Foundation for Accounting Education’s Broker/Dealer Conference, Marc Goloven, senior regional economist at JPMorgan, refuted the notion that the economy is mired in a lengthy recession, saying that incomes are growing, productivity is improving, and interest rates are low.
“We’re weathering a monsoon in New York City and New York state, but in sharp contrast to recessions past, we’re not experiencing a regional economic tailspin,” Goloven said. Goloven dispelled what he called common misperceptions about the current economy. Myth number one: it’s a “jobless recovery.” While there hasn’t been a net creation of jobs nationwide, Goloven said that’s been misread as employers’ reluctance to hire, when it is actually a reflection of a surge in productivity. Employers have had no reason to add workers, because the growth of productivity has contained inflation, Goloven noted.
Myth number two: it’s an “investment-less recovery,” because businesses aren’t spending on capital equipment. While companies aren’t spending to build structures, such as new hotels, warehouses, or retail outlets, spending on information technology and software -- which accounts for 75 percent of all equipment spending -- has increased for three of the past four quarters, he said. The third myth Goloven refuted is that it’s an “income-less recovery.” While wages and salaries are growing slowly, disposable income is growing at a relatively brisk pace. Inflation-adjusted disposable income grew 4.5 percent in 2002, the third fastest growth rate since 1987. He noted that small business income is also growing.
-- Melissa Klein
