Long Island's economy is expected to grow 2.5 percent to 3 percent next year as jobs become more plentiful, houses sell for higher prices and consumers feel more comfortable about spending, experts said.
The region will likely continue its long march back from the Great Recession, though the economy's growth rate still will be lower than the optimal range of 3 percent to 3.5 percent.
"I'm expecting the economy to pick up a bit," said John A. Rizzo, chief economist at the Long Island Association business group and a Stony Brook University professor. He estimated business activity in Nassau and Suffolk counties would end 2013 up 2 percent to 2.5 percent from a year earlier.
"Consumer spending will be strong and the unemployment rate will continue to improve," Rizzo said.
Potential drags on economic growth, which would temper this positive outlook, include the exodus of young workers from the area, long commutes to work and people lacking the skills needed by employers.
The Island, like much of New York State, also must remain focused on its future: technology businesses. Kenneth Adams, Gov. Andrew M. Cuomo's economic development czar, said: "We're definitely enjoying an economic recovery, but we need to continue to concentrate on research and development and other aspects of the new economy." -- James T. Madore
Although job growth in Nassau and Suffolk counties since the recession ended in June 2009 has outpaced the national rate, more full-time and high-wage jobs are needed to achieve "a broad and sustainable expansion," said economist Gregory E. DeFreitas, who heads Hofstra University's labor studies program. That will be a challenge in 2014 because mandated cuts to the federal budget could hamper private-sector expansion, he said.
The LIA's Rizzo predicted that if the stock market continues to climb, consumers will buy more with their increased wealth. -- Carrie Mason-Draffen
Long Island's housing market is likely to see modest price growth, as buyers lock in low interest rates and the supply of homes remains thin, brokers said.
Prices could climb by 4 percent or 5 percent, a pace that would be "sustainable," said Dottie Herman, chief executive of the leading brokerage Douglas Elliman. "It's healthier than having peaks and valleys."
But if mortgage interest rates keep rising, they could put a lid on prices, she said.
The Fed is unlikely to let rates increase sharply, predicted Joe Moshé, broker-owner of Plainview-based Charles Rutenberg Realty. However, he said, another storm as devastating as Sandy, which struck Oct. 29, 2012, could harm the local housing market. -- Maura McDermott
Banks and credit unions are likely to be challenged by rising mortgage interest rates, which have reduced home refinancing, especially now that the Fed has begun to scale back its stimulus efforts, bankers said. New federal regulations requiring safer mortgage loans for borrowers could hurt the ability of financially weak borrowers to purchase homes.
But lenders will benefit from the pickup in home buying activity that began this year, assuming higher interest rates resulting from the Fed's recent action to begin tapering its bond-buying, an effort to stimulate the economy, doesn't shut down prospective buyers. -- Tom Incantalupo
Business and academic leaders who have long talked of cultivating tech companies here say green shoots are finally sprouting.
"We have a new era ahead," said Mark Lesko, executive director of Accelerate Long Island, a group that supports startups.
The region's largest venture capital firm, Topspin Partners, has begun working with Accelerate, opening the door for the $213-million fund to back local companies. Several research institutions have hired specialists to help commercialize discoveries. And startup clusters have emerged in Huntington, Mineola and elsewhere.
"Entrepreneurial efforts are springing up," said AnnMarie Scheidt, Stony Brook's director of economic development.
The question is whether those efforts will finally take root. -- Joe Ryan
Consumers will cautiously spend more, analysts said.
Improvements in the job and housing markets will likely result in a 3.5 percent to 4 percent increase in Long Island retail sales, said Marshal Cohen, a retail analyst with The NPD Group, a Port Washington market-research firm.
Digital shopping tools and struggling consumers will drive a focus on deals and low prices, said Barry Berman, a Hofstra University business professor.
However, luxury spending is expected to rise, said Natalie Kotlyar, Northeast industry leader for BDO USA's retail and consumer products group, thanks to rising stock prices and a stabilizing economy. -- Keiko Morris
MANUFACTURING: DEFENSE CONTRACTORS
Long Island defense contractors are seeing glimmers of hope after Congress voted to restore part of the Pentagon budget lost to sequestration.
Congress' automatic budget cuts put the brakes on military spending this year, and Northrop Grumman's move to shift 61 percent of its 1,400 local jobs to Florida and California further clipped the wings of an iconic Long Island company.
William Wahlig, of the Long Island Forum for Technology, said Congress' partisan budget battle froze defense contractors' hiring and contract-bidding plans.
The recent bipartisan sequestration deal on Capitol Hill, however, added $22.4 billion back to the Defense Department budget in 2014. That move, said Bob Curtis, also of LIFT, provides "a measure of stability" to a beleaguered industry.
Even before Congress acted, Mike Porcelain, chief financial officer of Melville-based Comtech Telecommunications, said his firm was seeing signs of "stabilization." Still, he added, the crystal ball remains "very cloudy." -- Ken Schachter
Construction and hiring top the agendas of drugmakers as they accommodate growing consumer demand for low-cost generic prescription and over-the-counter medicines.
Amneal Pharmaceuticals LLC will complete a $100-million expansion of its South Yaphank factory, adding 400 people. A key challenge, top executive Chintu Patel said, "is attracting talent . . . I cannot fill my vacancies very fast."
The Amityville and Copiague plants of Hi-Tech Pharmacal Co., the area's only publicly owned drugmaker, will merge with those of Akorn Inc. once its purchase of Hi-Tech is completed.
Industry experts said the popularity of low-cost generics was behind the building boom at a dozen companies here. -- James T. Madore
COMMERCIAL REAL ESTATE
Commercial real estate activity is likely to maintain its upward swing. Organic business growth has given brokers and developers confidence.
"There's pretty good activity in the marketplace," said Gary Schacker, a principal at Jericho brokerage United Realty. "There's more confidence today."
Demand for local industrial, office and retail space could also mean tight inventory and rising costs. Growth in professional services and medical offices, as well as larger industrial spaces, will persist.
"In all likelihood, a lot of demand will carry over," said Mitchell Rechler, a managing partner at Plainview-based developer Rechler Equity Partners. -- Lisa Du
The local travel and leisure industry will grow by 4 percent to 5 percent to more than $5 billion in 2014 -- weather permitting, said Moke McGowan, president of the Long Island Convention & Visitors Bureau. He credited relatively low gasoline prices and a slowly improving economy.
Deputy regional state parks director George Gorman hopes for a return to a normal season without the rainy and cool weather that reduced park and beach attendance last summer. Memorial Day could get a boost from the Navy's Blue Angels aerial display, which was canceled last summer. -- Tom Incantalupo