By Paige Cornicelli and Kraig Klein
Merchandise display and food fixture manufacturer Premier Fixtures LLC closed its Hauppauge office on Sept. 11, leaving 44 employees without a job. The business’s closure comes at a time when economists are predicting a recession.
Around 10,000 jobs in the Nassau-Suffolk area have been lost since Aug. 2018. The number of jobs fell from around 1,440,000 to around 1,430,000 between Aug. 2018 and Aug. 2019. The Aug. 2019 number reads at 1,431,200 which decreased from 1,441,800 in Aug. 2018, according to the New York State Labor Department. The slowing job rate in the economy may be a warning sign for an upcoming recession.
“As soon as the rate [of jobs]…slows down, it signals that [the economy lacks the capacity] to add more jobs,” Todd Yarborough, an economist at Pace University, said. “That either occurs because we are at full employment and there are no more jobs, or because the number of jobs out there have kind of shed.”
“This closing…[could have] happened as a result of downsizing by the firm in general,” Hofstra University economist Dr. Constantine Alexandrakis said. “This was just a smaller branch that was operating on Long Island. So, obviously, there’s a problem with a parent company, then a particular branch or subsidiary may be affected. If it’s a company that’s doing business mainly in that location, then maybe regional factors could also play a role, and there could also be factors that pertain to that particular industry.”
Premier Fixtures could have also been a victim of a shrinking national economy. The New York Times reported on July 26 that the GDP growth rate of the United States had fallen from 3.1 percent to 2.1 percent in the second quarter of the fiscal year while inflation had increased to 2.3 percent. This development, in tandem with an Oct. 2 report that the European stock market is sliding, has resulted in economists fearing a possible national–and maybe even global–recession.
“In general, the USA is producing less products and switching to a service economy. Manufacturing is below 30% of total GDP output,” Fred Campano, an economics professor at Fordham University said. “The service sector which includes government services–i.e. federal, state and local government–accounts for over 70% of our GDP. The best paying jobs are in the private service sector, [such as] medical doctors, lawyers, et cetera.”
Yarborough shed some more light on economists’ fears about the future of the United States’ economy.
“…We look at manufacturing and how the manufacturing sector in the US is doing, and just this week, [the report] came out from the federal reserve that looked at how there is a real slowdown…the manufacturing sector has attracted,” he said. “It actually is one of the worst [slowdowns] since 2009, since the Great Recession.”
Yarborough, however, indicated that the data does not definitively prove that the country will enter a recession.
“It doesn’t mean we are in a recession now,” he said. “It certainly suggests there are parts of our economy that are retracting and getting smaller, and of course [that is the opposite of] what we want and getting bigger.”
Suffolk County Community College economist Dr. John E. Krueger gave some additional details regarding how a changing economy could have been detrimental to Premier Fixtures.
“The challenges of scarce resources and elevating operating costs, among many other production factors, apply pressure on sustainability and growth,” Krueger said. “In addition, the attraction of lower labor costs have prompted many companies to move their manufacturing offshore. In turn, the companies who benefit from this strategy may have an absolute and/or comparative advantage over their competition. Lastly, the explosive growth of online shopping has redefined the customers’ buying behavior.”
Farmingdale State College economist David Vitt offered a more specific hypothesis as to why Premier Fixtures closed.
“It looks like they [could not] keep up in this busy e-commerce world,” Vitt said. “Since retail is experiencing an ‘e-commerce crunch,’ as is evident in monthly retail trade reports, it’s natural that ‘upstream’ firms like Premier will feel the same pinch the retailers are feeling.”
Alexandrakis was slightly doubtful about a recession happening.
“One of the things we know about recessions is that they’re inherently unpredictable. If you keep predicting a recession over and over and over, it will happen…I don’t necessarily see a recession coming…according to the data it’s very difficult for someone to foresee it happening. I personally do not see one coming,” Alexandrakis said.
Krueger was also skeptical of predictions.
“The US economy is a dynamic system subject to perpetual change. There are too many variables to consider to be definitive about an outcome of certainty,” he said.
Vitt does not think the economy is necessarily shrinking.
“Employment seems strong, [and] the unemployment rate tends to trickle down leading into the holidays,” he said. “Prices seem to be growing at rates that are reasonable by consensus, likely partially driven by the increase in minimum wages over time.”
However, he did not want to make any definitive statements regarding the future state of the economy.
“I’m not sure, I have no crystal ball. I certainly don’t dwell on trying to time the market,” Vitt said.
Premier Fixtures LLC declined to comment on the closure of its office.