Long Island's economy is forecast to grow 2.5 percent to 3 percent next year as consumers spend much of the extra money they have because of low gasoline prices and, for growing numbers, pay raises, experts said.
The pace of the region's recovery from the Great Recession will finally accelerate, leading to greater demand for skilled workers and wage increases for some of them, according to John A. Rizzo, chief economist at the Long Island Association business group and a Stony Brook University professor.
"We may finally be getting to the point where the job market gets a little tighter and we start to see some improvement in wages," he said, noting recovery from the recession of 2007-09 has been slow.
Rizzo estimated the Island's economy would end 2014 up just shy of 2.5 percent because of severe winter storms in the January-March period. It grew 2.5 percent in 2013.
He also said gasoline prices are "going to stay low" next year, "and that increases real income and encourages people to spend."
-- JAMES T. MADORE
With mortgage lending standards loosening and the jobless rate falling, Long Island home prices will likely build upon the gradual gains they made this year, experts said.
"I really think it's going to be an extension of 2014, maybe a little bit better, because it's another year that the economy is improving," said Gary Baumann, an associate broker with Douglas Elliman in Huntington and Syosset. "If people have jobs, they want to buy houses."
Interest rates — 3.83 percent for a 30-year fixed-rate mortgage in the week ended Dec. 24, according to Freddie Mac — will probably rise a bit next year, but they're likely to stay below 5 percent, predicted Bob Moulton, president of Americana Mortgage Group in Manhasset.
-- MAURA MCDERMOTT
Many drugmakers plan to add staff and production space next year to accommodate growing consumer demand for low-cost generic prescription and over-the-counter medicines.
Most of the companies are in Suffolk County, and one of the fastest-growing is Contract Pharmacal Corp., which employs more than 900 workers. It's investing about $24 million in improvements to seven plants in Hauppauge and it plans to open an eighth.
MTC Industries Inc., based in Edgewood, is shifting production of nutritional supplements from China to Hauppauge. A&Z Pharmaceuticals Inc. is expanding production of calcium supplements and over-the-counter drugs in Hauppauge to meet the demands of Chinese consumers.
-- JAMES T. MADORE
Long Island defense companies in a recent survey were evenly split on whether the local economy improved in the past year. And 57.5 percent agreed that the region's high costs would force their company to leave Long Island, said Martin Cantor, who conducted the survey for the Long Island Forum for Technology.
Still, some defense contractors are hiring workers amid recent layoffs at Telephonics Corp. and transfers from Northrop Grumman Corp.'s Bethpage site, said William Wahlig, executive director of LIFT.
Wahlig estimated that about 800 defense and aerospace companies operate on Long Island and employ 25,000 to 30,000 people.
-- KENNETH SCHACHTER
COMMERCIAL REAL ESTATE
Brokerage firm Cushman & Wakefield is forecasting moderate growth in both the industrial and office markets next year, as recovery from the recession for Long Island remains slow, said David Pennetta of the firm.
Rising rental rates in Queens and Brooklyn may be the key driver of a healthier industrial real estate market in 2015, as tenants and owners shop around on the Island, especially in western Nassau.
In the office market, rates are expected to rise slightly. Preliminary statistics from commercial brokerage Jones Lang LaSalle show a 4.5 percent increase in rates for 2014, up to $29.93 per square foot. Next year, the brokerage firm projects, rates will rise 2 percent, to nearly $31 per square foot.
-- VICTOR OCASIO
Borrowers making loan payments on time will continue to give bankers some financial breathing room in 2015.
Low interest rates seem likely to remain a drag on profits, however.
Better-performing loans allow banks to set aside less money to cover loans gone bad, helping offset the drag on profits from extremely low interest rates.
That helps the bottom line, said Peter Winter, who covers Long Island-based New York Community Bank and Astoria Bank for BMO Capital Markets in Manhattan. "The level of nonperforming assets has been declining," he said.
-- TOM INCANTALUPO
TRAVEL AND TOURISM
A slowly recovering economy, lower gasoline prices and growing numbers of international visitors all bode well for the Island's travel and leisure industry in 2015 — if the weather cooperates.
The Long Island Convention & Visitors Bureau and Sports Commission expects another gain of 3 percent to 4 percent in revenues next year over the estimated $5.6 billion for 2014. "People are very excited about this year and going into next year," said Yan Baczkowski, the new head of the commission.
The commission says travel and leisure employs about 75,000 people directly on Long Island.
-- TOM INCANTALUPO
The decades-long effort to build an entrepreneurial technology economy on Long Island has never lifted far off the ground. Yet local officials say they continue to see positive signs.
In the past year incubators for high-tech startups have opened in Huntington, East Meadow and elsewhere. Another one is set to open early next year in Great Neck.
Meanwhile the three local schools designated as START-UP NY sites to offer tax breaks to lure out-of-state businesses — Stony Brook University, Farmingdale State College and Long Island University — have drawn applications from as far away as South Korea and Israel. More than 200 companies have applied to set up shop at Stony Brook University alone, officials said.
"That tells me we have a healthy business environment," said Yacov Shamash, Stony Brook's vice president for economic development. "Now we just have to make sure we keep nurturing it. "The decades-long effort to build an entrepreneurial technology economy on Long Island has never lifted far off the ground. Yet local officials say they continue to see positive signs.
-- JOE RYAN
Improvements in the job and housing markets will likely result in an increase in Long Island retail sales, said Danielle Conte, Centerport-based retail consultant and founder of customer shopping experience blog YoutailRetail.com.
To capture those sales, however, retailers will need to adapt to consumers' growing use of smartphones and tablets, analysts said.
Retailers will try to lure shoppers to their physical stores by integrating techniques like "beacons," which transmit messages directly to a smartphone or tablet, and third-party apps that aggregate deals, said Bryan Leach, CEO and founder of Ibotta, an app offering cash back for shopping with major retailers.
-- AISHA AL-MUSLIM
Economists expect the local labor market to add jobs at a moderate pace in 2015.
In November, Long Island added 15,100 jobs compared with a year earlier, the state Labor Department said, slightly fewer than the previous two months.
The one-two punch of stagnant wages and heavy debt loads, especially student loans, will continue to dampen local consumer spending and restrain hiring in 2015, said Martin Melkonian, associate professor of economics at Hofstra University. "It's going to be difficult for the Island to get back to its previous levels of economic activity," he said.
The job market, to be sure, is solid.
"The good news here is that it is unlikely that the Island is going to suffer further economic damage over the next 12 months," said Ken Goldstein, an economist at The Conference Board, a Manhattan-based business-research group. On the other hand, he said, "There's little reason to expect that the Island's economy is going to turn into a dynamo in the next 12 months."
-- CARRIE MASON-DRAFFEN