ABLI economist: 'Hang on til June'.
In a whitepaper to members of the Association for a Better Long Island (ABLI) which represents some $15 billion worth of Long Island commercial, retail, industrial and residential property, Conoscenti reports that in contrast to past recessions, the economy of Long Island was affected by the downturn earlier and more severely than other regions in the U.S. and he doesn't see a sudden return to robust health in the next six months.
"Over the near-term, growth in the region will remain in a recession as the local economy is held back by an extremely slow recovery at the national level as well as structural problems endemic to Long Island. A significant pickup in economic activity in the region is not likely until mid 1993," he stated. "This assumes that the national economy will gather some strength by the middle of the next year with the regional economy following behind," he stated.
Conoscenti believes a Democratic Administration, coupled with majorities in the Senate and House, will spark a series of economic stimulus packages that should have an impact on the bicounty area. "Given the improving outlook for the national economy, some strengthening in regional business conditions should be evident by the end of 1993," the statement read. "Nevertheless, the rate of this improvement will be slow and gradual. Given the severity of the regional downturn coupled with the deep defense cutbacks, it will take a number of years for the local economy to fully recover from the losses in the current recession."
The rate of job loss has slackened somewhat in 1992. Even so, the level of employment is down by 36,700 or 3.4 percent in the first eight months of 1992 versus the same period in 1991. As measured by employment at business establishments, the high growth years for Long Island were 1983 through 1987 when an average of 36,000 new jobs were created each year. Over this period, nearly 12,000 manufacturing jobs were created.
The rate of employment growth came to a halt in 1989 and declined by 1.2 percent, or 14,000jobs, in 1990, as the economy moved into a recession. The rate of contraction accelerated in 1991 as the level of employment fell 4.5 percent below its 1990 level.
The recession hit the regional manufacturing sector very hard. Since its peak in 1985, over 50,000 manufacturing jobs, mainly defense-related, have been lost. Employment in the construction and trade sectors has likewise declined in response to the weakness in the housing market and consumer spending. Since its peak in 1988, construction jobs are down by nearly 16,000. Similarly, jobs in retail and wholesale trade have fallen by about 27,000 over this period.
The unemployment rate has continued to rise in both counties. In the first eight months of 1992, the unemployment rate averaged 6.4 percent in Nassau Count: and 8.4 percent in Suffolk County. With the unemployment rate a lagging indicator relative to the business cycle, higher rates of unemployment are likely in 1993.
Like manufacturing, the decline in the housing industry has been a severe drag on the local economy. The severity of the recession -as battered demand for new housing. As a consequence, inventories of unsold homes surged, reducing the need for new construction.
Preliminary data for 1992 through June show that permits are an anemic 5.0 percent above their already de pressed 1991 level.
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|Title Annotation:||Association for a Better Long Island economist Thomas Conoscenti predicts improvement in economic activity in Long Island, New York, New York for June 1993|
|Publication:||Real Estate Weekly|
|Date:||Feb 10, 1993|
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