Business activity in Nassau and Suffolk counties was hit hard by the Oct. 29 storm after "sputtering" in the months before, said Pearl Kamer, chief economist at the Long Island Association business group.
Employment is down, year over year, and consumer spending is weak, though the housing market appears to have finally shaken the recession.
Sandy's long-term impact on these and other sectors isn't known. But Kamer said business executives and politicians should use the rebuilding process to strengthen the economy by tackling perennial problems such as high costs, too many layers of government and a lack of affordable housing.
To prosper, she said, Long Island must convert research from laboratories and colleges into commercial products and support technology start-ups. These initiatives, she said, can make up for jobs lost in manufacturing, construction and government.
"A bruising battle over the [federal] debt ceiling and spending cuts could throw this all into a cocked hat," Kamer warned, referring to the next cliff. "If the country defaults on its debt obligations . . . it's going to kill our economy."
Businesses and consumers are tempering purchases because of worries about the next cliff, which could morph into a string of crises, she told the New York Chapter of the Association for Corporate Growth, which encourages private investment in medium-sized companies.
Giving a preview of his speech on Wednesday, Alexander also warned cliff negotiations could derail economic growth. He said Long Island and New York State were likely to grow "a bit" more slowly than the 2 percent rate he had predicted for the country. "There's lingering uncertainty about fiscal policy . . . the debt ceiling will be raised, but we don't know how messy or ugly the process will be," he said.
Separately Thursday, the Siena College Research Institute said its consumer confidence index for Nassau and Suffolk counties in the October-December period hit a four-year high of 73.6 points despite Sandy. That's up 3.4 points from last summer and 10.8 points from October-December 2011. Readings below 76 indicate the number of people who are pessimistic about their immediate financial future outnumber those who are optimistic.