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NY Fed chief: Most of NYC has recovered from Sandy

A newly built protective sea wall stands in

A newly built protective sea wall stands in front of beachfront property in Belle Harbor. (Oct. 9, 2013) Photo Credit: Getty Images

The New York City economy, a key driver of commerce on Long Island, has largely recovered from superstorm Sandy except for hard-hit communities in areas such as Queens and Staten Island, the region's top banker said Monday.

William Dudley, president of the Federal Reserve Bank of New York, cited "pretty solid job creation through this past summer" led by hiring in education, health care, advertising, computer services, tourism, retail and construction.

However, he said stock brokerages and investment banks -- long the city's economic engines -- did not contribute significantly to recent job gains.

A year after Sandy struck on Oct. 29, 2012, "Most of the city has bounced back strongly from this historic natural disaster," Dudley told about 125 students and professors at Queens College.

Economists have estimated the metropolitan area lost about $3.8 billion in commerce for each day that business was completely stopped. Most say that at least two days were lost from an economy valued at $1.4 trillion per year.

Dudley Wednesday also predicted an upswing in the U.S. economy next year, citing recent upticks in hiring and business activity: "I have to admit that I am getting more hopeful."

The central banker noted improvements in housing and the economies of trade partners such as Europe. He also predicted the impact of government spending cuts and layoffs would lessen in the new year.

"While growth in 2013 has been disappointing," Dudley said, "I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015."

Asked by a college student about what could be the next asset bubble to spark a financial crisis, Dudley said, "At the current time I don't see anything that's big enough or broad enough to be very disturbing" to the financial system.

The past two recessions have been blamed on investment bubbles around technology stocks and real estate.

"I'm certainly not fearful that there's going to be another financial crisis" in the near future, he added.

Dudley, who is vice chairman of the interest-rate-setting Open Market Committee, said a rate hike is "likely to be quite a ways away" because "inflation is too low and the unemployment rate is too high" compared with Fed goals. The central bank wants the inflation rate to rise to about 2 percent and the jobless rate to fall below 6.5 percent.

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