Long Island’s economy has slowed in the past year as employers struggle to find workers and feel the effects of the trade war, economists at the Federal Reserve Bank of New York said Tuesday.
The economists, speaking to reporters at the bank’s Manhattan headquarters, said the job market in Nassau and Suffolk counties shrank 0.4% in October, year over year. That compares with a 0.9% increase annually, on average, between October 2013 and October 2018.
In New York City, the job market grew more slowly than in the recent past: 2% between 2018 and this year, compared with 2.6% annually, on average, between 2013 and 2018.
“There’s a little bit more slowing on Long Island, in terms of job growth, than there has been in New York City,” said economist Jason Bram, citing “big drop-offs” in the past 12 months in construction and tourism jobs.
However, he said a recession is not in the offing: “It’s a bit of a broad-based slowing but I wouldn’t say it’s indicative of an [economic] downturn.”
The shortage of workers on Long Island is evidenced by the current jobless rate of 3.6%, compared with 5.1% on average between 1990 and 2015.
In New York City, the jobless rate stands at 4.1% compared with 7.8% on average between 1990 and 2015.
“Businesses are having a lot of trouble finding qualified workers, especially for high-skilled jobs, but more broadly for pretty much any jobs,” Bram said.
Still, the New York Fed’s surveys of business executives, including some on Long Island, show an increase in those worried about slowing sales and therefore “an increasing reluctance to hire,” he said.
The U.S.-China trade war also is weighing on local economic growth.
In the surveys, 51% of executives at factories and 38% at retailers and service firms said profits were negatively impacted by higher import taxes or tariffs.
Bram said, “Uncertainty related to trade has been among the factors contributing to the [economic] slowdown.”
Separately on Tuesday, another New York Fed economist, Jonathan McCarthy, said the $10,000 cap on deductions of state and local taxes on federal income tax returns has affected home prices in New York State and other high-tax regions.
The SALT cap, instituted in December 2017, has had “a little bit of an effect" in holding real estate prices down, he told about 35 executives in Melville at a briefing organized by the Long Island Association business group.
Job growth on Long Island and in New York City has slowed in the past year compared with the previous five years.
0.9% annually, on average, between October 2013 and October 2018
-0.4% between October 2018 and October 2019
New York City
2.6% annually, on average, between October 2013 and October 2018
2% between October 2018 and October 2019
1.8% annually, on average, between October 2013 and October 2018
1.4% between October 2018 and October 2019
Sources: Federal Reserve Bank of New York, U.S. Bureau of Labor Statistics, Moody’s Economy.com