Recovery from the coronavirus-induced recession "is weakening" in the metropolitan area because of a spike in cases, targeted restrictions on activity in hard-hit communities and the end of federal stimulus programs, New York’s top bank said Wednesday.
The Federal Reserve Bank of New York said growth slowed at factories, retailers and other service firms in November after bouncing back from the blanket shutdown of nonessential activity in spring, according to two surveys conducted by the bank. Long Island businesses participated in both polls.
Consumer expenditures, which have increased for months, started to plateau in September in the metro area, based on credit card and debit card use. And the amount of time that people spend away from their homes is falling, which suggests fewer trips to shopping malls and stores, the New York Fed said on Wednesday, citing mobility data from Google and Harvard University’s Opportunity Insights.
In addition, area hiring has slowed with the rise in COVID cases and business owners' continued pessimism about the future. Nearly 5 in 10 service firms and more than 4 in 10 factories said their sales wouldn’t return to pre-pandemic levels for more than a year or never, the bank's surveys show.
"We’ve seen some signs of [economic] slowing in terms of the pace of growth, partially due to the second wave of COVID cases … but also the diminishing effects from the fiscal support that came earlier in the year from the federal government, which put a lot of money in people's pocketbooks," said New York Fed president John Williams during a virtual event with journalists.
He said small businesses need a second stimulus package from Congress and President Donald Trump with loan and grant programs to survive until the coronavirus vaccines are widely distributed and people feel safe to leave their homes.
Long Island, along with New York City’s northern suburbs, lost more jobs, on a percentage basis, than anywhere else in downstate: 22% between February and April. But the Island has outpaced everybody in regaining jobs, with employment down only 9% in October compared with the pre-COVID level, according to a New York Fed analysis.
Jason Bram, one of the bank's regional economists, said job losses in Nassau and Suffolk counties were exacerbated because there are fewer occupations here that allow for working from home compared with in New York City. Long Island employers resumed hiring at a fast pace once the economy reopened, in part because commuters were working from home and able to patronize local restaurants and shops more than if they were riding the Long Island Rail Road on a daily basis, he said.
Richard Deitz, another regional economist, predicted job cuts and furloughs will return. "Job growth is sluggish as we're entering into a new wave of the pandemic, with tightening restrictions [on activity], which will likely lead to more difficulties for many in the labor market going forward," he said.
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