The Atlantic City area economy improved significantly in the first five months of this year, but growth is likely to be slower the rest of the year, according to the latest South Jersey Economic Review from the Richard Stockton College of New Jersey.
“After suffering through the worst national recession in the post-World War II era, a global financial crisis and a dramatic increase in regional gaming competition, Atlantic City’s economy appears to have finally begun to turn a corner in 2012,” Oliver Cooke, associate professor of economics, wrote in his research report. “Fueled by the opening of Revel, total establishment employment in the metropolitan area was increasing at a brisk 4.3 percent year-on-year rate in May.”
The entrance of Revel into the city gambling market was largely responsible for increasing employment in the leisure and hospitality sector over last year by 3,500 jobs as of April — a sector that had shed more than 4,000 jobs from 2009 to 2011.
But Cooke pointed out that outside the hospitality industry, the area has seen slow and steady increases in jobs for 15 consecutive months.
Year-to-date through May compared to the same period last year, area construction employment is up 800 jobs, retail trade 400 jobs, and government 1,000 jobs, he said, citing N.J. Department of Workforce and Development data.
The department’s latest unemployment rate for the Atlantic City metropolitan statistical area, which includes all of Atlantic County, was 12.4 percent in May (not seasonally adjusted).
That’s down from 14 percent in January and slightly better than the 12.7 percent jobless rate in May 2011.
By comparison, Cape May County’s unemployment rate has edged upward, from 11.4 percent in May 2011 to 11.9 percent the same month this year.
Ideally, the addition of Revel would increase the revenue coming into the Atlantic City market.
Cooke said that in the two years following the entrance of Borgata, 2004 and 2005, gross gambling revenue increased 7.3 percent and 4.4 percent.
But this time, the industry’s gambling revenue has been in a five year decline as a result of increasing regional competition and a weakening U.S. economy.
The economist cited a number of factors that could undermine job growth in the Atlantic City area going forward:
The U.S. economy has slowed in the first half of 2012;
Uncertainty about Europe and the ability of Congress to deal with deficit-induced automatic spending cuts has contributed to a decline in consumer confidence;
Private-sector employers may be delaying investment and hiring plans until after the November presidential election.
“The immediate implication of all this for Atlantic City’s economy is that this spring’s strong pickup in job growth will likely fail to be sustained,” Cooke wrote. But even if job growth slows, “it seems likely that 2012 will mark an important turning point for the metro area’s economy.”
New Atlantic City index
Cooke also announced in the current South Jersey Economic Review that starting in late fall, he will begin producing something long sought by many stakeholders in Atlantic City’s tourism economy: a measure of the sector’s vitality that goes beyond gambling revenue.
For years, the Greater Atlantic City Chamber and others have pointed out that gambling revenue is only a part of the city’s tourism business, one whose share is diminishing as non-gambling attractions such as food and entertainment have become more important in distinguishing casino markets.
But since gambling revenue is the only regularly and reliably available measure of the industry, that’s what gets reported as the main indicator of its economic health.
Cooke said that his quarterly publication will develop a South Jersey Entertainment Index to capture more of the city’s tourism economy.
“By drawing upon and pooling several relevant data sets, this index will track the performance of the local economy’s broader hospitality and entertainment industry, including both its gaming and nongaming components,” he said.
He said the new index will be produced quarterly, and will include “a complete discussion of its methodology.”
Much has been made of how the severe downturn has resulted in job losses for men more than for women.
But a new research paper by three economists at the University of California, Davis, says the difference is typical of past recessions — that the effects on the labor market are the same kind seen in prior downturns, just larger and longer lasting.
The working paper for the National Bureau of Economic Research by Hilary Hoynes, Douglas Miller and Jessamyn Schaller says recessions put more men out of work mainly because cyclical industries such as construction and manufacturing are more likely to employ men.
Less cyclical industries such as services and public administration are more likely to employ women.
Even looking at other work-force segments — including black and Hispanic workers, and younger and older workers — proportionately greater impacts were found, but similar in kind to past downturns.
The authors said the losers from the severe recession of 2007 to 2009 have been “the same groups who lost in the recessions of the 1980s, and who experience weaker labor market outcomes even in the good times.”
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