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Economy

July is truly upon us, and that means half the year is gone. Those who deal with numbers are busily tallying up all sorts of statistics for the first two quarters. Business people with large and small companies alike are checking to see how the numbers compare with last year, and what they can do to improve the depressed
bottom line — or maintain the improved bottom line for the next six months. And for those of us in the stock market with pension plans or investments, there will be half-year statements coming to let us know how we stand.

As we are taking stock of our stocks, there is this interesting bit of news to consider. According to a recent article by Matt Phillips in The New York Times, we are getting an important signal from the bond market. Now there are all sorts of predictors about which way stocks will move, from who wins ballgames to the length of hemlines, and they are often as wrong as the Farmers’ Almanac about the coming winter weather. But there is one telltale that is surprisingly accurate: the bond-yield curve. And that yield curve is “flashing yellow.”

Here is what the yield curve means. The yield curve is the difference between interest rates on short-term government bonds like those maturing in two years compared with those maturing further out, like 10 years. Remember that a bond is a promissory note to repay a debt that the government has incurred, along with interest on the debt, for a set period of time.

So, if the government borrows $10,000 from you and pays it back in two years, you will also get interest on that sum in return for lending the government the money. Normally the longer you agree to lend the money, the higher the interest rate you get in return for taking additional risk concerning the health of the economy. A healthy economy usually encourages inflation, which is countered by higher interest rates — hence an increased long-term rate, including the built-in risk compensation.

Lately, long-term interest rates on government bonds have been slow to rise, predicting a less healthy economy on the horizon. The short-term interest rates on government notes, as these instruments are called, have been rising, however, because inflation seems to have started. So the difference between the interest rates, short-term and long-term — the yield curve — has been decreasing or “flattening.” The difference between the two-year and 10-year interest rates is now about 0.34 percentage points, and the last time it was so little was just before the 2008 recession.

Does that mean a recession is coming?

If the trend continues, and the long-term interest rate dips below the short-term rate, this is called an “inversion.” An inversion is, according to the way John Williams — the new president of the Federal Reserve Bank of New York — told it earlier this year, “a powerful signal of recessions.” The Times article indicated that every recession in the last 60 years has been preceded by an inverted yield curve, when short-term interest is higher than that for the longer term. Only once was there a false positive, in the mid-1960s, when there was only a slowdown in the economy. That is why economists and those on Wall Street are watching the yield curve so closely these days.

This concern does seem to fly in the face of the present economic conditions. Unemployment is at a low, consumers seem to be happily spending and corporations are reinvesting in their companies. However accurate the yield-curve predictor may be, it cannot precisely tell us when a recession will occur. In the past, the falloff of the economy could happen in six months or two years after the inversion.

There is always another side to every story. Because central banks own massive amounts of government bonds, which they bought not so long ago to try and stimulate the economy by providing liquidity, that may be keeping long-term rates low. And the Federal Reserve has been tightening monetary policy lately to keep
inflation in check, hence higher short-term rates. So, who knows?

Cutting costs, growing local economy, combatting climate change, modernizing transportation among Romaine’s goals for ‘18

Brookhaven Supervisor Ed Romaine at his state of the town address April 3. Photo by Alex Petroski

By Alex Petroski

Supervisor Ed Romaine (R) is nothing if not confident about the future of the town he oversees.

Brookhaven Town’s leader delivered his annual state of the town address at Town Hall April 3 in which he touted its financial footing while also looking toward the future.

“The state of Brookhaven Town is good and getting better,” Romaine said. “Brookhaven Town, though not perfect, is still a town full of promise and hope. It is up to all of us who live here to help realize that promise.”

“Brookhaven Town, though not perfect, is still a town full of promise and hope. It is up to all of us who live here to help realize that promise.”

—Ed Romaine

Brookhaven has a structurally balanced budget for the current fiscal year that stays within the state mandated tax levy increase cap, in addition to maintaining its AAA bond rating from Standard & Poor’s financial services company. Romaine detailed a few cost-saving measures he said he’d like to accomplish going forward, including more sharing of services amongst other municipalities as a way to streamline government and save taxpayer money.

“Sharing resources and services to reduce the size, scope and cost of government is one of the best ways to control and reduce expenses,” he said, adding the town remains in the running for a shared services grant from New York state that, if selected, would add $20 million to Brookhaven’s effort. “We must continue to closely monitor our capital and operating expenses. Our residents cannot pay more in taxes. Too many Long Islanders are leaving.”

He said growing the local economy through additional jobs was another priority for him and the town going forward. Romaine said he still hopes Brookhaven will be selected as the second national headquarters for Amazon, which he said could bring in about 50,000 jobs to the town. He also praised the work of the Brookhaven Industrial Development Agency, an arm of municipalities dedicated to funding projects that will stimulate job creation and economic growth.

“The IDA closed on 20 projects that will result in $435 million of private investment and the creation of 4,050 permanent or construction jobs,” the supervisor said. “In addition, the IDA has 13 approved projects that have or are about to close in 2018, with the potential for another $440 million of private investment into our town, creating or retaining another 1,000 jobs.”

Romaine detailed several “green” initiatives already underway or on the horizon in 2018, noting the real threat to Brookhaven posed by climate change and sea level rise.

“With the largest coastline of any town in New York state, the Town of Brookhaven knows full well that global climate change and sea level rise is real and poses significant challenges in the decades ahead.”

— Ed Romaine

“With the largest coastline of any town in New York state, the Town of Brookhaven knows full well that global climate change and sea level rise is real and poses significant challenges in the decades ahead,” he said.

He said the town has adopted a practice of “strategic retreat” from commercial and residential development in low lying areas to allow nature to reclaim wetlands. He called land use and zoning among the most important powers a town government possesses. He also pointed to the imminent closure of Brookhaven’s landfill as a wakeup call in need of attention in the coming years. He said the town is ready to work with the New York State Department of Environmental Conservation and other towns to formulate a regional plan for solid waste disposal.

The supervisor also made an impassioned call for updates to the Long Island Rail Road, including electrification of the Port Jefferson line east beyond the Huntington station, adding he co-authored a letter to the Metropolitan Transportation Authority asking for just that with Huntington Supervisor Chad Lupinacci (R) and Smithtown Supervisor Ed Wehrheim (R).

“It is time for a better transportation system, one based on 21st century innovation, not 19th century technology,” Romaine said.

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National Hispanic Heritage Month, a time when the country pays tribute to the generations of Hispanic-Americans who have influenced our society, ended on Oct. 15. But that doesn’t mean Long Island’s North Shore should stop thinking about this growing demographic.

There’s more we can do as a region to better accommodate and embrace Hispanic-Americans who help diversify our neighborhoods and are a huge economic driver on the Island. According to a 2007 research report, prepared for the Long Island social activism nonprofit, Hagedorn Foundation, Hispanic residents add nearly $5.7 billion to total Long Island output as a result of their consumer spending, and Hispanic employment continues to grow rapidly. Those numbers can only have grown in the last several years since the report was published — and community tensions have grown along with them.

Tensions between Hispanic residents and police officers have been well documented.

Earlier this year, a class action lawsuit by a group of Latinos alleged the Suffolk County Police Department targeted them. The group claimed several officers robbed them or issued them traffic citations in unfounded, race-based stops. There has also been an outcry from Huntington Station residents, many of them Hispanic, who say they don’t feel safe in their own neighborhoods or protected by police.

And there have been instances of Hispanic people being made to feel marginalized by their own neighbors.

Police should continue to cultivate a stronger relationship with the Island’s Hispanic communities by involving youth and hosting local programs, like forums, where residents can discuss local issues or share concerns. Non-Hispanic residents should also do their part to call out prejudice when they see it, and encourage more Hispanic neighbors to join their various community groups.

We should strive to include Hispanics as we steer Long Island toward its future, and we should do it because it’s necessary, not just because of some national holiday prompt.

By Larry Vetter

What does a vibrant industrial park bring to a town? The answer is simple: jobs and an increased tax base, to ease the burdens on everyone.

There are essentially two types of economic centers within the town of Smithtown. One type is visible. This is the downtown areas. The second is the industrial parks, equally important, but more hidden. When we think of industrial parks, Hauppauge immediately comes to mind; however, Nesconset, St. James and Kings Park also contain industrial zones.

Larry Vetter
Larry Vetter

Recently, I had the opportunity to drive through the various zones. The Hauppauge, Nesconset and St. James zones consist primarily of warehouse-type structures, while Kings Park consists mostly of yard-type commercial businesses. Many of the buildings in the Nesconset and St. James zones are empty or significantly underutilized. The Hauppauge Industrial Park was once vibrant with a mix of light industry, manufacturing and warehousing. Today, there is also a malaise in this industrial park.

Suffolk County and several of the townships within the county have developed industrial development associations. They recognize the “Long Island Brain Drain,” where many of our well-educated young people cannot find the type of employment commensurate with their education. The primary purpose of these associations is to entice business into the county and more specifically to our towns. Today, Smithtown contains no such association. It seems to be a rather significant oversight to have, within our borders, one of the largest industrial parks, and yet not have any plans for developing it.

So what do we do? What seems to happen is that we sit back and hope. Our only initiative was to allow building owners to extend the roof heights in hopes of attracting business. So far, neither idea appears effective.

We need to once again think outside of the box. My solutions to this crucial problem are as follows:

1. Develop an industrial development association. This can be done with resources we already have within the town. It is not necessary to spend additional tax revenue on this process. We can piggyback with the existing Suffolk County program.

2. Actively entice businesses to Long Island. Who is to say that Hauppauge cannot become the next “silicone valley”? Technology companies often need minimal raw materials and shipping is often parcel post; something we are situated very well for.

3. Open discussions with Suffolk in an attempt to develop sewer system plans in Smithtown. As important as this topic is to homeowners, it is equally as important to businesses.

4. Suffolk County has a number of transportation initiatives. Why not work with the county to develop alternative transportation from our nearby rail hubs to enable easier movement into and out of the industrial park?

Smithtown is a great place. We have many hardworking families that take the education of their children seriously. As a result, there are well qualified individuals to staff modern technology enterprises. We have great public schools and nearby higher education facilities, as well as world-renowned research facilities. We have wonderful beaches and golf courses, and several nearby townships are undergoing a revival in eateries and entertainment. Finally, we are located very near one of the most vibrant cities in the world. It seems to me that it would not at all be a difficult sell, but like everything else, it must be worked for.

This November, take the opportunity to vote for individuals that will work toward solutions and not accept excuses for why things cannot happen. Let’s reverse the “Brain Drain” and give us all a chance to keep families together on Long Island.

The author is a Smithtown resident running for the Town Board on the Democratic line in November’s election.

A view of the Demerec Laboratory, slated to house a proposed Center for Therapeutics Research. The laboratory, completed in 1953, needs an upgrade. Photo from CSHL

Cold Spring Harbor Laboratory, a research center that has produced eight Nobel Prize winners and is stocked with first-class scientists generating reams of data every year, shared some numbers earlier this week on its economic impact on Long Island.

The facility brought in about $140 million in revenue in 2013 to Long Island from federal grants, private philanthropy, numerous scientific educational programs and the commercialization of technology its scientists have developed, according to a report, “Shaping Long Island’s Bioeconomy: The Economic Impact of Cold Spring Harbor Laboratory,” compiled by Appleseed, a private consulting firm.

At the same time the lab tackles diseases like cancer, autism and Parkinson’s, and employs 1,106 people with 90 percent working full time and 987 living on Long Island.

“We are recognized as being one of the top research institutions throughout the world,” Bruce Stillman, the president and CEO of CSHL said in an interview. The economic impact may help Long Islanders become “aware that such a prestigious institution exists in their backyard.”

Stillman highlighted programs that benefit the community, including public lectures, concerts and the school of education, which includes the DNA Learning Center, a tool to build a greater understanding of genetics.
The financial benefit to the economy extends well beyond Long Island, too.

“The research we do has an enormous impact on the development by others of therapeutics and plant science in agriculture,” Stillman said.

Indeed, Pfizer recently received U.S. Food and Drug Administration approval for a breast cancer drug called Ibrance that is expected to produce $5 billion in annual sales by 2020. The research that helped lead to that drug was conducted at CSHL in 1994.

In its 125-year history, this is the first time the laboratory has provided a breakdown of its financial benefit.
The impetus for this report occurred a few years ago, when Stillman met with Stony Brook University President Dr. Samuel Stanley Jr. and Sam Aronson, who was then the CEO of Brookhaven National Laboratory.

“We were talking about promoting further interactions and seeking state support,” Stillman said.

This year, CSHL will bring online a preclinical experimental therapeutics facility that will build out the nonprofit group’s research capabilities.

At the same time, CSHL is awaiting word on a $25 million grant it is seeking from New York State to support a proposed Center for Therapeutics Research.

The center would cost about $75 million in total, with CSHL raising money through philanthropic donations, partnerships with industry and federal aid. The center would “fit in well with our affiliation with North Shore-LIJ [Health System],” Stillman said.

CSHL plans to create the center in the Demerec Laboratory, which was completed in 1953 and needs an upgrade. Named after Milislav Demerec, a previous director at CSHL who mass-produced penicillin that was shipped overseas to American troops during World War II, the building has been home to four Nobel Prize-winning scientists: Barbara McClintock, Alfred Hershey, Rich Roberts and Carol Greider.

The renovated lab would house a broad range of research strengths, with candidates including a number of cancer drugs that are in the early stages of clinical trials; a therapeutic effort for spinal muscular atrophy, which is the leading genetic cause of death among infants; diabetes; and obesity.

The revenue from CSHL, as well as that from BNL, SBU and North Shore-LIJ, Stillman said, all have a “huge economic benefit to the Long Island community.”

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