Like most everybody, we are keeping a close eye on the economy. Right now, the uncertainty continues to grow.
Adding to inflation and the prospect of a recession, is a banking crisis that is rattling markets. And it could worsen. If lending tightens, many companies, especially smaller ones, could lose access to financing. It could cause severe distress to our economy — and our state leaders need to prepare now.
Given the new economic uncertainty, we are asking Gov. Murphy and state legislators to use the state’s proposed $10 billion budget surplus judiciously and, if the funds are used, to use it for programs that shore up New Jersey’s economy. If the banking crisis worsens and financial institutions pull back on lending, which many leading economists predict could happen, our member companies will need direct assistance. Some economists put the chance of recession this year at 65%, up significantly from a few weeks ago.
Ben Casselman of The New York Times wrote this past weekend in regards to the banking crisis: “Tighter credit is likely to be a particular challenge for small businesses, which typically don’t have ready access to other sources of financing. Many businesses may not be able to obtain credit at all, forcing them to cut back on hiring, investing and spending.”
Our members know this: Working capital, the lifeblood of any business, could become a scarce commodity.
We will make sure our leaders in Trenton understand this possibility and the actions they can take.
The state surplus could be used to create a fund to provide grants to entrepreneurs and business owners in every industry and region that are impacted of the crisis, an idea the New Jersey Chamber has long been seeking.
It could be used for relief initiatives such as replenishing the state’s Unemployment Insurance fund, like many states have done. Currently, it’s being replenished through a payroll tax increases on employers. This payroll tax increase only adds to the business community’s costs and economic stress.
Our message is this: We cannot let our economy be driven down because businesses become “cash starved.”
A state surplus is created to mitigate economic pressure, and therefore it should only be used for those purposes - until the full impact of the crisis can be evaluated.
If we are to create a “next” New Jersey, as Gov. Phil Murphy has called it, the Murphy administration must be ready to support companies in case the banking crisis worsens. More aggressive actions will be needed — and additional support for the business community will do just that.
