Economic experts say local and national trends suggest that Long Island is teetering on the brink of a mild economic recession in 2007.
Due to the softened real-estate market, rising interest rates, stalled construction, and higher energy costs, a 0.5% national decline in jobs is likely, according to a new economic outlook report by the Center for Management Analysis at the C.W. Post Campus of Long Island University.
The report, which can be read in full here, claims that if housing prices fall or oil prices rise more than expected, the recession could be more severe. The report says a catastrophic event on American soil could lead to a more critical situation.
The report says that with proper planning over the coming 18 months, individuals, businesses, and organizations can plan accordingly.
Why Now?
The report says the stimulating effects of the 2001 and 2003 tax cuts have petered out; low interest rates that prompted widespread refinancing has given way to higher rates; higher interest rates have also ended the easy access to mortgages that fueled the strong housing market and construction industries; and elevated energy costs have put the brakes on consumer spending.
However, Pearl M. Kamer, chief economist for the Long Island Association, says she does not quite agree with the report.
“I foresee that we will continue the slow growth for some time. We have advocated making housing more affordable so that young people can continue to live and work here and educating the workforce, but frankly, I don’t think we’re heading for a recession,” she says.
“Given recent trends, especially given that energy prices have fallen, it is leaving consumers with more disposable income. I predict a strong holiday season and into next year,” she notes. ?
Kamer says the association, which works to strengthen Long Island as a place to live, work, and do business, instead sees slow-growth rates as a sign of a slow economy rather than a recessionary economy.
However, the authors say the report data is based on a variety of “what-if” scenarios using estimates of what is going to happen to housing and other variables.?