On September 25, economist Dr. Martin Cantor spoke to members of LIMBA (Long Island Metro Business Action) about the future of Long Island’s economy. He said that the COVID-19 pandemic has ravaged the nation’s economy, especially on Long Island, where downtowns were “decimated” by the closures of small businesses in these areas.
With 70% of the nation’s economy being consumer-driven, Dr. Cantor said, fewer people were shopping out of “fear” of the pandemic. When people don’t spend money, retail establishments suffer. Even online sales cannot save them.
Dr. Cantor also noted that a lot of the businesses that closed down did not have enough cash reserves to cover their losses. As a rule of thumb, he recommends to his business clients that they keep at least six months of cash reserves.
According to Dr. Cantor, 152,000 jobs were lost on Long Island due to the pandemic. Most of those jobs were in the restaurant industry. With the fall season coming and limited indoor dining, he said, many restaurants are closing their doors. Another 50,000 jobs were lost in the tourism, hotel and small retail industries, which, Dr. Cantor said, will not be returning to Long Island.
“There are a lot of businesses I see that pay 100% of the rent, 100% of the utilities, yet they are only operating at 25-50%,” Dr. Cantor said.
Airlines have been impacted as well, with 40,000-60,000 jobs lost, said Dr. Cantor. These losses also affect the surrounding communities. Each job loss in that industry equals 1.5 jobs lost in the local economy.
The pandemic has also impacted county governments. Dr. Cantor said that the Nassau and Suffolk County governments have combined deficits of over $1.5 billion. He credited the Nassau Interim Finance Authority (NIFA) for overseeing Nassau’s finances and ensuring that spending would be kept in check. If it weren’t for the COVID-19 pandemic, “Nassau would’ve had a balanced budget,” he said. Suffolk, however, has “made no concerted effort” to rein in spending. County government expenditures should only be used for public health and public safety and not for redundant services provided by the state.
Dr. Cantor talked about plans by elected officials to raise taxes on the top 1% to plug the budget holes, but he said that wouldn’t work because millionaires “can’t pay for everything.” He also opposes “congestion pricing,” which imposes surcharges on fares for taxis and ride-shares for driving into certain parts of New York City. He said that “people can’t afford it.”
New York State leads all other states in the number of residents moving to other parts of the country, according to Dr. Cantor. Most of those who leave the state are the upwardly mobile, including the wealthy and the upper-middle class. Last year, 50,000 Long Islanders left the state. The exodus could be attributed to rising home prices and the lack of houses on the market. Some of these homes that aren’t being sold are occupied by seniors who wouldn’t be able to afford a new house f they were to sell their current one.
With more people working remotely, Dr. Cantor foresees a decline in commercial real estate and construction because of less demand for office space. He also noted that New York City residents are able to work out of their second homes on the East End without having to check into the office.
Dr. Cantor said it would take between six and 12 months for the economy to return to normal. Further, it would take the “bold leadership” of elected officials to lead their localities through the economic morass; doing do would allow these municipalities to be economically sustainable with federal funding by 2021.