NYC'S ECONOMY SOARS,
BUT NATION'S GROWTH IS DIPPING

By PAUL THARP

January 31, 2004 -- America's economy is trudging along to better days, but the business pace in New York is showing spectacular gains.
Government reports yesterday said the U.S. expansion is on a slow track for a solid rebound, with the nation's gross domestic product growth advancing at a 4 percent rate.

Economist Donald Straszheim called the modest growth rate "respectable."

"The recession is long gone. The U.S. economy has absorbed the dislocations of 9/ll and will grow faster than most other industrialized nations by a wide margin," Straszheim said.

But data on the Big Apple's own economic recovery overshadowed the nation's fourth-quarter report.

The New York City area's business activity in December and January is soaring at record paces - good news for local retailers, restaurants and the real estate and entertainment industries.

Business expanded here in January to its second-fastest rate in a decade, while December's growth hit a record, according to the National Association of Purchasing Management New York's index of business activity.



The index, which measures economic health in surveys of the city's service industry and manufacturing, has expanded for the fifth consecutive month.

Meanwhile, another report yesterday on New York City's jobs said that 51 percent of executives plan to increase their hiring in the first quarter this year - reversing a trend of increasing layoffs here.

The jobs report in the New York Corporate Confidence Index also said executive confidence about the city's economy has soared in the past six months.

The national GDP pace of 4 percent for the fourth quarter cooled dramatically from the 8.2 percent growth in the third quarter, which was almost an overdose of rosy economics. That figure has been inflated by the White House's tax cuts, increased defense spending and a crush of home refinancing that gave a typical consumer as much an added $200 a month to spend.

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(Reuters) - U.S. employment growth has been disappointing but should rebound as long as the economy keeps growing at a healthy pace, Robert McTeer, president of the Federal Reserve Bank of Dallas, said Thursday. "

2003 was quite a year.

Although the figures are not out yet, many technologists lost their jobs. The country fought a war and defeated the Iraqi army and is now fighting guerillas there.

The government decided to inflate the system by cutting taxes, sending out rebate checks, and announcing that $87 billion in additional expenditures would be needed to fund operations in Iraq.

The stock market returned to a point over 10000 to close the year; the Nasdaq is over 2000. Cisco stock has doubbled off its lows. Technology hardware and software expenditures are increasing. Spending on ERP implementations is increasing.

And, finally, the technology labor market started to catch up. beginning in the late summer, a very noticeable increase in consulting requirements started to occur in my office and around the country. Speaking for myself, our firm did nothing extraordinary to foster this increase; in fact, firms started to come to us looking for contractors for fixed duration assignments and, most interestingly, temp-to-perm situations (Temp-to-perm is a way that firms can get through a budget cycle and then convert people to full-time employment when their new operating budget goes into effect).

Full-time hiring has also noticeably improved as well to a point where government is noticing a discernable improvement in hiring in the New York area. In other words we're finally about to enter a gradual build up in hiring.

Now, if there is a terrorist attack in the US, then we will grind to a halt again. But for now, we are at a point where we can start to breathe again.

Now this doesn;t mean that salaries or billing rates are going to look like they did during the god ol' days because there are still too many people looking for work and the availability of off-shore solutions to salaries and billing rates low. But this is how a recovery usually starts--tech spending increases, consultant utilization picks up, full-time hiring ocurs and then . . . well, let's not get too far ahead here.

The first week or two in January may be a little lethargic, impacted by the affects of the two long weekends known as Christmas and New Year's. And the stock market may disappoint at intermittent intervals, too.

But with a Presidential election ahead of us, there is no way that the flow of money will be seriously contracted in time to reduce Bush's chances of re-election.

In other words, I believe we're going to be fine.