N.Y. Fed lowers expectations for growth
A cornerstone in the Federal Reserve Bank of New York building is seen on July 29, 2011 in New York City. Credit: Getty Images
The Federal Reserve Bank of New York, the top financial regulator in this region, has lowered its expectations for economic growth in New York State and other areas it covers because of the "disappointing pace of recovery" and "stubbornly high" unemployment rates, the agency's president said Friday.
While the region performed better than the nation in the second quarter, growth here has been too weak to cut the unemployment rate significantly, New York Fed president William Dudley said in a quarterly news briefing in Manhattan.
He declined to predict future growth rates. But Jaison Abel, a Fed senior economist who also spoke, noted that regional economic growth in the second quarter was less than 1 percent.
Said Dudley, "Growth has been weak, and the unemployment rate has remained stubbornly high. This slow pace of recovery continued into the second quarter of 2011."
Long Island's unemployment rate is 7.1 percent, compared with 4 percent in December 2007, the start of the recession. The nation's jobless rate is 9.1 percent.
Dudley highlighted various factors hampering growth:
Public-sector employment. He noted that state and local governments in the metro area continue to cut jobs more sharply than governments elsewhere around the nation.
Financial sector. It expanded in the first quarter, but New York City's securities industry has shed nearly 4,000 jobs since April. "More difficulties may lie ahead, as there have been many recent announcements of consolidations and layoffs in the region's banking sector," he said.
Housing. The picture is mixed. "Although housing markets remain fragile, an encouraging development here is that home prices appear to be firming across much of our region," he said. The median home price in Nassau and Suffolk counties rose slightly in July, compared with June, according to the latest report from the Multiple Listing Service of Long Island.
Erica Groshen, an economist and Fed vice president, noted that as some areas recover, their employment markets are undergoing a transformation toward more jobs requiring college-educated, skilled workers. Those areas include Long Island and four other municipalities around the state, she said.
"These are the areas that stand out as undergoing the most transformation," Groshen said.
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