Finance led NY metro economic growth in 2010
The economy in the metropolitan area grew 4.7 percent in 2010, boosted by strength in the financial sector, according to federal data released Tuesday, highlighting again the industry's importance to the region.
The New York-New Jersey-Long Island-Pennsylvania metropolitan statistical area had the second-highest growth among the top 10 metropolitan areas in country. That growth compared with a 3.6 percent 2009 decline in the region's economy, or gross domestic product. Gross domestic product measures the value of goods and services in an area.
Besides financial activities, other sectors measured include construction, durable-goods manufacturing, education and health services, and leisure and hospitality.
The Boston metropolitan region edged out the New York area as the fastest-growing, with 4.8 percent growth.
But the local area's growth spurt largely reflected New York City's stronger economy in 2010, because of increased activity in areas such as financial services, tourism and exports, said Pearl Kamer, chief economist for the Long Island Association. But the suburbs weren't so lucky, she said.
"I don't think it reflects strength in the suburbs," she said. "We certainly have not seen it on Long Island."
The Island, she said, was still suffering under the weight of weak consumer spending and falling home prices, she said.
Hofstra economics professor Martin Melkonian said the financial sector benefitted last year from trillions of dollars in near-zero interest loans from the Federal Reserve.
"If you're getting free money, it's pretty hard not to show a profit . . . and that pretty much happened," Melkonian said. But he expects the sector to slow this year because of "contagion" from struggling European banks and a worsening housing sector.
Kamer pointed out that Long Island, which experienced modest job growth for most of last year, is losing jobs now and could show overall slower growth for 2011. In July, the Island had 7,800 fewer jobs than it had the year before, according to the latest State Labor Department data. It was the third consecutive month showing a year-over-year decline. And the educational and health care sector had its first decline since 1990.
Last month, the Federal Reserve of New York said it was lowering its third-quarter outlook for the region because of the "disappointing pace of recovery" and "stubbornly high" jobless rates. It declined to be more specific, however.