A Vineland-based economist and an Ocean City banker predicted slow growth for the economy in separate forecasts delivered Thursday in South Jersey.
Steven Brady, president and CEO of Ocean City Home Bank, said he expects 2013 to look only slightly better than last year.
David Kotok, chairman and chief investment officer for Cumberland Advisors in Vineland, said the expiration of the Social Security payroll tax reduction on Jan. 1 will curb growth more than tax increases to the rich.
The payroll tax, which increased 2 percentage points to 6.2 percent after a two-year holiday, affects working Americans — costing about $20 a week for those earning $50,000 a year.
The impact on U.S. and local businesses will be “a slower recovery than we thought — still positive, but slower,” Kotok said, in speaking to the Greater Vineland Chamber of Commerce on Thursday in Vineland.
That also means the Federal Reserve’s policy to hold down interest rates until the national unemployment rates drops to 6.5 percent will be in place longer, he said.
“Whatever it was going to be, it’s going to take another six months or a year longer to get there,” he said.
Kotok said the equivalent effect on consumers would be if gasoline prices jumped from $3.50 to $4.50 on Jan. 1 and stayed there all year.
And he said the payroll tax will have greater impact on the economy than higher taxes for upper income earners, which got more attention during the “fiscal cliff” debates.
“My view (is that) Democrats and Republicans, White House, Senate and House took a punch at the rich and kicked every working American in the gut,” he said. “Every working American. If we tax the working Americans at 20 bucks a week, or 40 bucks a week, how can you expect economic growth in the United States to become more robust?”
At a separate speech, Brady, a former member of the Philadelphia Federal Reserve Advisory Board, gave his economic forecast Thursday to the Ocean City Regional Chamber of Commerce in Ocean City.
Brady, of Upper Township, said there were signs of economic progress in 2012, with the stock market improving for the fourth-consecutive year.
Brady said it will be difficult to gauge how new federal rules will affect the stock market and predicted the Dow could finish the year between 10,500 and 14,500. It closed at 13,596 on Thursday.
Brady projected another transitional year for real estate in New Jersey. It still takes about 960 days for a distressed property to go through foreclosure in New Jersey, he said.
“We’ll continue to see prices stabilize. The unsold inventories are still high. The foreclosure process will still be an issue,” he said.
Interest rates remain flat. The 30-year mortgage interest rate declined slightly from 3.92 percent to 3.54 percent in 2012, he said.
“That’s still a 60-year low,” he said. “We’re in a very flat yield market right now.”
Unemployment also declined in 2012 nationwide and in New Jersey but continues to dog both economies, he said. And when you factor in discouraged workers who have stopped actively seeking a job, it’s more dismal.
Brady projected the national unemployment rate will remain between 7.5 percent and 8.5 percent this year. Economists are hoping the unemployment rate will drop to 6.5 percent in 2013, but for that to happen the nation has to add 280,000 jobs per month.
“I don’t see that happening in the near future,” he said.
But Brady saw positive signs locally, particularly in Atlantic City.
He pointed to the $135 million casino conference center under construction at Harrah’s Resort, the new $35 million Margaritaville complex at Resorts Casino Hotel and the Bass Pro Shops store planned for Tanger Outlets The Walk.
“Atlantic City made a good strategic decision to focus on nongaming,” he said.
And Ocean City’s real-estate market is showing signs of improvement, he said.
The resort had 963 unsold homes at the end of 2011. By the end of 2012, that inventory dropped to 734 unsold homes, he said. Likewise, the average price per home increased from $564,000 in 2011 to $578,000 in 2012.
“I believe Ocean City is a little bit ahead of the curve. Prices have stabilized and are actually going to increase. It’s a good time to buy in Ocean City,” he said.
But Ocean City, Atlantic City and other coastal resorts in New Jersey will have to overcome the public misperception that they were excessively damaged by Hurricane Sandy, he said.
“We need to get the word out that we’re up and running,” he said.
Brady has presented an economic forecast to the chamber in each of the last 22 years.
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