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October 18, 04 Reader Services |
Waiting for a recovery As election nears, business cautious on the economy Tom Scaramellino's Peekskill restaurant is as busy as ever when it comes to booking parties and other catered events. But he admits the number of people dropping by for dinner at his Crystal Bay Seafood & Co. has dropped in recent weeks. Now, Scaramellino is working to win back those customers with a new special menu: an appetizer, a salad, a choice of entrees, all for under $20 and available Sundays through Fridays. "Our off-street business has gone down by a third from the summer," said Scaramellino, who declined to quantify the decrease. "I think it's because of the Yankees and the presidential debates. They may be great for the country but they're not necessarily great for dining out. People just stayed home. "I talk to a lot of people and I hear the same thing: Business is down and things still haven't bounced back." Scaramellino's view is shared by a consensus of a dozen businesspeople and economists interviewed in recent days about the economy and its effect on their businesses. Their caution persists despite the mostly favorable messages offered about the economy this year by county, state and federal officials, including President Bush. Bush's neck-and-neck campaign against Sen. John Kerry, who has promised to strengthen the nation's economy if elected, is one key reason for caution, say businesspeople. Other reasons they cited were a lack of confidence among buyers and concern that the price of oil will remain above the $50-per-barrel level for a long time. Crude oil reached an all-time high on Oct. 12 of $54 a barrel before retreating slightly. One effect of higher crude oil prices will be felt this winter when businesses and residents can expect their heating oil bills to rise by double digits - as much as 25 percent above last year's range of $1.49 to $1.79 per gallon. "The average price in Westchester, if all things stay the way they are now, will be about $2, probably $2.25 a gallon at the higher end and $1.99 at the lower end. If it gets worse, if crude oil continues to rise, then I can't even predict how much higher the next level of prices would be," said David Singer, vice president of Robison Oil in Elmsford. Srinivas Thiruvadanthai, resident scholar at the Jerome Levy Forecasting Center L.L.C. in Mount Kisco, said the oil price surge could potentially slow down business activity even further, but only if the surge past the $50 per-barrel plateau lasts into the winter. He noted that four previous oil price spikes since 1990 had not managed to disrupt the economy since they lasted only a few days or weeks before market conditions brought prices back down. "The pressure for businesses will come if the current increase continues. As the winter is coming on, and there are heating costs to be factored in, the cost of doing business will go up. You will have an outright increase in the cost of doing business, but the ability of businesses to raise prices is limited. You cannot simply pass on all your costs onto your buyers in the form of higher prices," Thiruvadanthai said. Another reflection of the uncertain economy is the relatively flat performance of the stock market in recent weeks, said Greg Werlinich, president of Werlinich Asset Management, a Valhalla-based adviser to small and medium-sized investors. "There's a general wariness in the market. There's the implied risk of new terrorism. There's certainly a lot of fear about corporate profits. The market is going to pay attention to the reports coming out in the next few weeks. There are also concerns in the market about oil prices. The more you pay to use your car, the less discretionary income people will have to spend," Werlinich said.
'MUDDLING THROUGH' Thomas J. Spitznas, economist and principal of T.J. Spitznas & Associates in Mount Vernon, said the oil price spike would not likely prove to be a drag on Westchester's economy given the county's relative affluence, reflected in a U.S. Census-calculated average household median income last year of $66,560 as well as sky-high housing prices - like the $660,000 median price recorded for single-family homes in the second quarter by the Westchester-Putnam Multiple Listing Service Inc. "It's not steep enough to pull down the economic house of cards. It's going to be a case of - I hesitate to use the words - just muddling through. Consumers are pulling back their spending, and that is something that has to be watched," Spitznas said. Businesses are also pulling back, judging from the lower-than-usual demand for printing services at Devlin Graphic Industries Inc. in North White Plains, says Joan Devlin, the president of the 32-year-old company. As a result, the company has broadened its marketing effort. "This is traditionally the time of year when a lot of printing activity is taking place, but the clients I print for, I'm not seeing them increase their printing since the summer or spring. I'm not seeing them come out with any new marketing brochures," Devlin said. She added, however, that the Internet and new technology may be as important as the economy in explaining the flat activity. "I don't foresee any change any time soon. Some people talk about waiting till after the election. I don't see how it's really going to affect the Westchester economy all that much," Devlin said. The tepid economy has affected Westchester's office market, where prospective tenants have taken longer to conduct office searches and have been more hesitant than in past years to conclude lease deals, says Frank M. Boccanfuso, president of FMB Real Estate in Purchase. "I'm not seeing a lot of activity. From what tenants are saying, it's the economy and oil. The election and taxes and employment. We haven't had a real robust kind of recovery. We're kind of floundering around where we are right now," Boccanfuso said. An engineering firm says caution about the economy is making developers even more reluctant to proceed with new projects in Westchester's suburban towns, where local board reviews can exceed two years - but not as much in urban areas, where officials in Mount Vernon, New Rochelle, Port Chester, White Plains and Yonkers have shepherded billions of dollars worth of redevelopment projects. "Every year it gets a little more grinding and slower to get something built in Westchester. Every year it just drags on a little more. What does that do for the economy? It doesn't generate business, except for the engineers, architects and land-use attorneys who handle these cases for years," said Bob Roth, a senior associate with the Armonk engineering firm John Meyer Consulting. With less work in Westchester, John Meyer has adjusted by expanding to nearby states. Connecticut and New Jersey now account for 70 percent of the firm's activity, which Roth said has been steady in recent years. The owner of two Westchester travel agencies says her business has stayed the same, judging by the volume of her bookings. "We've been pretty steady as business goes. We're still getting last-minute travelers looking for warm places to visit for the holidays, Christmas, Presidents' Week and into the March holidays," said Barbara Nichuals, president of Bayside Travel in Larchmont and Gramatan Travel in Bronxville. "The Caribbean has always been a favorite, but we have also seen interest in Mexico, and there's a surge of interest in South American travel as well." But at ASAP Messenger Inc. in Thornwood, owner Roy Westmoreland says the 10th anniversary of his business has been neither great nor terrible. "While this has been a reasonably good year for us, we're not exuberant about it," Westmoreland said. "My clients are all cautious. I think everyone is kind of apprehensive about the future and therefore being very cautious." |
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Copyright 2004, Westfair Communications Inc. |