Cape May County and Regional Economic Outlook

Transcription

1 Cape May County and Regional Economic Outlook January 2019 Oliver Cooke, Ph.D. Associate Professor of Economics Stockton University

2 Last Year s Job Growth was Cape May s Strongest since 2004 Ocean City metropolitan area employment grew 3.2% last year (+1,400 jobs) Leisure and hospitality sector employment actually declined 5.4% last year (-700 jobs) Thus, non-l&h employment in the local economy expanded by a robust 6.6% last year (+2,100 jobs) Data limitations preclude full identification of the industries that drove non-l&h job growth. Much of it occurred in: Education and health services Local government Professional and business services

3 Thousand Jobs Cape May County Total Employment 1990 to : -3.8K (-9%) K (+10%) Source: U.S. Bureau of Labor Statistics.

4 % Change Year Ago Regional Employment Growth Annual Job Growth 1991 to % 4% 2% 0% -2% -4% -6% Cape May County Atlantic City Vineland-Bridgeton -8% Source: U.S. Bureau of Labor Statistics.

5 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Percent Regional Unemployment Rates 2004 to << Cape May unemployment rate doesn t begin to decline until early << National economic recession ends June Cape May Atlantic City Vineland-Bridgeton 2 0 Source: U.S. Bureau of Labor Statistics.

6 Hotel/Motel Sales Tax Data Suggest Summer of 2018 was Good Despite the overall job decline in Cape May s leisure and hospitality sector in 2018, hotel/motel sales tax data suggest summer of 2018 was good: During the summer months, sales tax collections in Cape May County were up 4.7% year-on-year (compared to rates of growth of 2.4% in 2017 and 3.4% in 2016) Sales tax collections were up 3.3% year-on-year thru September 2018 (compared to rates of growth of 2.9% in 2017 and 2.7% in 2016) Toll transactions through the Egg Harbor Toll Plaza also suggest that last year s summer season was solid: Total toll transactions last summer were up 4.6% year-on-year (compared to growth of 2.7% in 2017, and a decline of 2.4% in 2016)

7 Single Family Home Prices Continued to Recover Last Year 25% Annual Single Family Home Price Growth: Ocean City, NJ Metropolitan Area 2000 to % 22.5% 20% 15% 15.4% 14.3% 17.1% 17.2% 2006 to 2014: -22% 2014 to 2018: +11% 10% 5% 6.5% 5.5% 3.6% 0% 1.0% 0.5% 0.8% -5% -3.6% -4.0% -3.2% -4.4% -2.2% -1.4% -10% -6.6% Source: Freddie Mac Single Family Home Price Index.

8 Regional Economic Outlook in 2019 Regional economy s 2019 fortunes will be closely tied to national economy s health. Despite continued strong national job growth and a low national unemployment rate: This summer will mark the 10 th anniversary of the national expansion Financial markets late 2018 swoon worrying Fed monetary policy will be important (interest rates key to Cape May real estate) Banks already tightening consumer lending standards Trade war will continue to weigh on national economy Divided government s impact on national economy big wildcard Ocean City metropolitan area economy s fortunes heavily dependent upon healthy consumer: Despite steady growth in consumer spending over past few years, wage growth has been more modest >> credit growth fairly robust last year 35% of metro area s real GDP is tied to real estate and rental/leasing activity (14% nationally) >> second-home buying highly interest rate sensitive) 11% of real GDP tied to leisure and hospitality industry (4% nationally) 8.5% of real GDP tied to retail trade activity (6% nationally) Over half of the metro area s annual economic output tied to highly discretionary consumer spending on entertainment, vacationing, real-estate investing/transactions etc.

9 % Change Year Ago Ocean City Economy s Heavy Reliance on Real Estate Activity 40% Ocean City, NJ Real GDP Annual Growth in Total Real GDP vs. Real Estate/Rental & Leasing 2002 to 2017 Total Real Estate/Rental & Leasing 30% 20% 10% 0% -10% -20% -30% Source: U.S. Bureau of Economic Analysis.

10 Regional Outlook in 2019 Health of Atlantic City s gaming sector will also play key role in regional economy s 2019 fortunes Can sector sustain 2018 momentum generated by significant new supply? Recent news of potential problems at Ocean Resort Over 500 Cape May County residents work in casino hotels

11 Cape May long-run economic prospects Similar to Southern NJ regional economy, diversification key to Ocean City s longer-run economic prospects Transforming summer resort economy into more diversified one easier said than done, however Modest increases in professional and business services, health care, and non-durable goods manufacturing sectors shares of real GDP in recent years Cape May County s population declined -3.8% between 2010 and 2017 Third-largest percentage decline among all state counties (Sussex and Salem) Tied to diversification issue and regional economy s (especially gaming s) struggles over past decade Age-old local economic development quandary: Which comes first: the people or the jobs?

12 Be on the look out for the upcoming release of: The South Jersey Economic Review (SJER) If you d like to be added to the Review s release notification list, send an to: sjer@stockton.edu with the subject line sjer Prior editions can be found by Googling: sjer hughes