ACEA Report Underscores the Need for Regional Economic Diversification

An economic analysis prepared for the Atlantic County Economic Alliance predicts that the Atlantic-Cape May County region will see a projected 24.1% reduction in local economic production for 2020 that will create large and long-term disruptions to the economy and lives of residents.

The report was authored by Dr. Richard E. Perniciaro who holds a doctorate in Economics from Temple University, a MA degree from the London School of Economics and a BA degree from Columbia University.  Most recently, he served as both the Executive Vice President of Facilities, Planning and Research at Atlantic Cape Community College as well as the Director of the Center for Regional and Business Research that performed economic, marketing and demographic studies for public agencies and private businesses.

According to Perniciaro, the impact on the Atlantic-Cape May region will be much greater due to the region’s seasonal economy and large dependence on tourism, hospitality and gaming. Approximately 30% of the jobs in the region are in leisure and hospitality, compared to 9.5% for the state.  COVID-19 related closures are occurring during the critical second and third quarters and will extend into the fourth quarter of 2020, and potentially well beyond. These economic shocks are taking place during the peak earning periods for Atlantic-Cape May businesses and are projected to have grave economic consequences well into the off season.

According to Lauren Moore, Executive Director of the ACEA, this economic disruption comes at a time when the regional economy was beginning to experience significant improvement. “The early 2020 data showed that the area was off to a healthy start before travel restrictions and stay at home requirements kicked in,” Moore said. “This makes the economic loss to the region even more significant.”

Moore noted that Dr. Perniciaro’s report states that the negative impact on the regional economy would have been even more significant if not for the presence of the FAA William J. Hughes Tech Center and regional medical facilities such as AtlantiCare and Shore Medical Center. The FAA Tech Center is the nation’s leading laboratory for research, development, test, evaluation, and in-service management for air transportation systems. The Technical Center is also home to operations for the Transportation Security Administration, a DHS Transportation Security Lab, the United States Coast Guard Group Air Station Atlantic City, and the New Jersey Air National Guard 177th Fighter Wing. While the Technical Center serves to advance aviation, it is a key focal point for Homeland Security as well.

Moore stated that more than 5,000 direct and indirect employees work at the Center which, although requiring employees to work from home, is continuing operations throughout the pandemic. He went on to state that the shutdown of the regional economy once again emphasizes the critical need for economic diversification since recovery will take considerably longer in the tourism sector. Moore notes that since 2009, the regional economy has taken five huge hits from economically traumatic events that include the Great Recession, Hurricane Irene, Hurricane Sandy and five casino closures. Each event had a significant, lingering impact on the local economy that in some cases took years to overcome.

Brett Matik, Chairwomen of the Atlantic County Economic Alliance, commented that despite COVID-19 and massive business closures and dislocations, the ACEA continues to make progress towards economic diversification and cited the creation of the National Aviation Research and Technology Park and an Aviation Innovation Hub, which includes air cargo and aircraft maintenance and repair operations as examples. In August 2020, the ACEA was awarded a $1.6 million USEDA i6 Challenge Grant to accelerate the development of Smart Airport and Unmanned Aerial Systems technologies. The Atlantic City International Airport has been designated as a Smart Airport Test Bed. “The ACEA is currently working on a post COVID-19 Economic Recovery Strategy that includes a component focuses on Health Smart Airports and Air Travel” Matik said.