Crains New York - May 21, 2012 - (Page 4)

Economists throw cold water on record-hot jobs numbers Recession, weather may be skewing seasonal figures BY DANIEL MASSEY While the city economy is certainly improving, economists are skeptical that it’s growing faster than at any time since the 1950s, as data showed last week. A seasonal adjustment of state Department of Labor data found the city added 60,000 private-sector jobs this year through April, the largest four-month gain in about 60 years, according to real estate services firm Eastern Consolidated. It was a stunning development and a sign that the economy has diversified enough to grow without much help from the securities industry, which added just 1,000 jobs. But economists said that quirks in the seasonal adjustment, which is an objective and formulaic analysis, might be producing overly rosy results. “The New York City economy is doing relatively better than most places in the U.S., but I am not convinced that we have just seen a record four-month run,” said James Parrott, chief economist at the Fiscal Policy Institute. He said the seasonal adjustment was skewed by the recession. A sharp decline because of the recession might lead to exaggerated gains later. “Since the financial crisis, all bets are off about how businesses behave seasonally,” added Frank Braconi, chief economist in the city comptroller’s office. “Whether it’s interns, shopping season or hiring part-timers, all of that has been thrown off.” The warm winter could also be warping the adjustment. “A lot of the hiring that would have happened in the spring was pulled forward into winter months,” said Marisa Di Natale, a director at Moody’s Analytics.“I’m skeptical of all the employment data from November through March, just because of this weather phenomenon.” Other indicators give mixed signals. The commercial real estate market just recorded its worst quarter in years, and city income-tax withholdings were down by about 2% in March and April from the prior year. Still, from April 2011 to April 2012, the city gained an unambiguous 65,000 jobs. “Regardless of whether these numbers get revised down, the city’s economy is doing very well,” Ms. Di Natale said.“This may be overstating the strength a bit, but I don’t think there’s anything to worry about.” IN THE MARKETS by Aaron Elstein istockphoto Rivals circle as JPMorgan flails henever a New York bank stumbled a generation ago, executives at Chemical Bank were quick to pounce. “They were known for calling on clients at the bank in trouble and saying, ‘Come to us, we’re more stable,’ ” recalled Charles Wendel, president of Financial Institutions Consulting. Such aggressiveness helped make Chemical the city’s leading business bank of its time, and it’s a position that its successor, JPMorgan Chase, continues to enjoy. But now that the $2.3 trillion colossus has suffered a multibillion-dollar trading loss, its rivals are eager to give the bank a taste of its own medicine and chase down Chase clients. “This presents an opportunity for us over the long term,” said Scott Shay, chairman of Signature Bank, an institution with $15 billion in assets that caters to small and midsize companies.“Increasingly, clients are realizing that the financial system is more brittle than it should be, and that having so much business concentrated among a few mega-banks isn’t healthy for economic growth.” Mr. Shay has been busy lately making his pitch.A day after JPMorgan CEO Jamie Dimon appeared on NBC’s Meet the Press to explain his bank’s blunder, a publicist for Signature Bank sent out a link to a presentation Mr.Shay gave at a recent TED conference decrying the influence of the too-big-to-fail banks.The title of the speech: “Returning Banking to the People for the People.” Still,when asked how they plan to exploit their biggest rival’s woes, most local bankers are struck mute or start waxing magnanimous. “I say to all my lenders that we don’t want to take advantage of Chase when they’re down,” declared Greg Braca, head of U.S. corporate and specialty banking at TD Bank. An executive at Bank of America assured: “We see opportunity in front of us in daily interactions with our many small business clients and aren’t looking at anyone else’s.” A Wells Fargo spokeswoman said, “Our strategy hasn’t changed based on someone else’s situation.” One reason for the reticence: Larger banks aren’t yet sure whether they’ve avoided the disastrous trade that befell JPMorgan. Shares in local banks have fallen across the board since JPMorgan uncorked its stunning news earlier this month,an indication that investors don’t see anyone benefiting from its misery. “We’re all in the same business,” noted Kevin Cummings, CEO of Investors Bancorp and previously a KPMG partner who audited the books at Citigroup, Deutsche Bank and HSBC. “For anyone to go out and pound their chest and try to take advantage of someone’s bad luck, it could easily boomerang.” Still, the troubles at JPMorgan offer opportunity for local rivals because the bank has so many clients here. Its vaults hold 33% of all deposits in the metropolitan area, more than triple its nearest competitor, according to data from the Federal Deposit Insurance Corp. The number of Chase loans to New York-area small businesses was nearly four times higher than anyone else’s in 2010, according to the most recent Crain’s research. Smaller banks, which have the least to fear from a massive trading loss erupting on them, appear to be the most aggressive in the client chase. Signature, for instance, has broadened its offerings in recent months by hiring bankers who specialize in equipment-lease financing. “In the past, we had to refer clients to an outside entity,”Mr.Shay said,“but doing it ourselves is a tremendous competitive advantage for us.” Investors Bank recently opened a branch in Brooklyn across the street from a Chase and plans to add another in the borough later this year. Mr. Cummings said he’d more aggressively go after JPMorgan customers if the trading loss caused business bankers to leave and take clients with them, but added that he sees no evidence of such an exodus yet. (Chase didn’t respond to a request for comment for this article.) “A lot of middle-market clients are quite tight with Chase, and you can be sure their bankers are assuring them the loss is a one-off situation,” financial consultant Mr.Wendel said. “Only if the losses were to continue and get quite a bit larger would you see clients start to question their confidence in the bank.” That remains a possibility.By the end of last week, the loss that started at $2 billion had reportedly grown to $3 billion. W Let’s talk expertise. Hands-on partners with years of technical and industry-specific expertise. Advisors who offer insights and ideas to help you make smarter business decisions. Unmatched integrity. Unsurpassed results. 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Table of Contents for the Digital Edition of Crains New York - May 21, 2012

Crain's New York - May 21, 2012
Contents
Council Defies Mayor, Scares Business Leaders
Renegade Ceo Bucks Albany to Save His Hospital
Back to JPMorgan Chase’s Woes Have Some Local Bank Rivals Circling. in the Markets.
New York, New York
Hopes Rising Along B’klyn Waterfront in Sunset Park
Why Charlie Rangel Could Lose His Seat
Small Business
Viewpoint
Ibm Inside Big Blue’s Brain Trust, Which Pulled in More Than 6,180 Patents Last Year, the Most Ever by a Single Company. No Wonder the Stock Price Has More Than Doubled in the Past Five Years.
The List Our Annual Review of the New York Area’s Largest Publicly Held Companies, Ranked by Their 2011 Revenues.
What’s Up (And Down) at News Corp., Cbs, Bed Bath & Beyond, Vornado Realty, Mastercard, Jones Group, Revlon and Others.
For the Record
Classifieds
Real Estate Deals
The Week on the Web
Matchmakers Find Their Own Chemistry
Anne Fisher Tapping Into Human Emotions Pays Dividends
Hot Jobs
Executive Moves
Movers & Shakers Real Estate Veteran’s Surprising Switch
Gael Greene Dragonfly Lands on UES

Crains New York - May 21, 2012