Thursday, October 1, 2026
Most Long Islanders have a pretty good feel for the local economy, with housing demand up, unemployment down and new businesses replacing older ones. What many people don’t see is how all of those activities are connected.
A new apartment building isn’t just a construction project. A restaurant isn’t simply a place to grab dinner. A law firm does more than provide legal advice. Each of these businesses creates economic activity that extends well beyond its front door, generating jobs, income and spending throughout the region.
Economists call this the multiplier effect, and it impacts Long Islanders every day.
Our economy is often discussed in terms of individual industries — health care, education, construction, technology, hospitality, retail, professional services. Yet one of the reasons the economy has remained resilient through economic cycles is that no single industry dominates it. Instead, thousands of businesses of varying sizes create a diverse and interconnected economic ecosystem.
That diversity helps explain why Long Island’s economy has grown into something much larger than many residents realize. Nassau and Suffolk counties together generate approximately $256 billion in economic activity annually. If Long Island were a state, its economy would rank roughly 23rd in the nation.
While those numbers are impressive, the more interesting story is how that economic activity is created.
Consider a neighborhood bagel shop. When a customer purchases breakfast, the economic impact doesn’t stop at the cash register. The bakery purchases flour, cream cheese, utilities, equipment, insurance, accounting services and transportation. Employees spend their wages at local stores, restaurants and service providers. The original dollars continue to circulate through the economy, creating value long after the first transaction takes place.
This process happens every day, in every corner of Long Island.
Over the past year, the LIA Research Institute has been examining these relationships through input-output analysis, a methodology used to measure the direct, indirect and induced impacts of businesses and institutions. The findings reinforce something many business owners already know from experience: local spending creates local prosperity.
Take a hypothetical Long Island law firm generating $1 million in annual revenue. The direct activity supports attorneys, staff and business operations. But the firm’s impact extends to office suppliers, maintenance providers, technology vendors and numerous other businesses. When those secondary effects are included, the original $1 million generates roughly $1.6 million in total economic output throughout the region.
The multiplier effect becomes even more visible with large-scale investments. Consider the construction of a multifamily housing development. Before a single family moves in, the project generates significant economic activity through construction workers, architects, engineers, legal professionals, material suppliers, trucking companies, and dozens of supporting industries.
Our analysis of a hypothetical $100 million apartment development found that the project could support more than 600 jobs and create roughly $166 million in total economic output. This is in addition to the benefit of adding to our region’s housing stock to address the high demand and low inventory, which pushes up prices.
That’s why discussions of economic development should never focus solely on the initial investment. The broader impact often tells a much larger story. For example, the LIA Research Institute estimated that the 2025 Ryder Cup generated roughly $160 million in economic activity, not simply because spectators attended the tournament, but because visitors stayed in hotels, dined in restaurants and utilized transportation services. The ripple effects spread through our communities, strengthening the broader economy.
Long Island’s economy is powered by thousands of interconnected decisions made every day by entrepreneurs, workers, consumers, nonprofit organizations, educational institutions and investors. From a neighborhood bagel shop to new construction, from a local law firm to an international sporting event, economic activity rarely stops where it starts. Every transaction creates additional opportunities that ripple across our region.
The next time you buy a bagel, hire an attorney, dine at a local restaurant or drive past a construction site, remember that you are seeing the multiplier effect in action.
On Long Island, dollars we spend at local businesses become wages for workers, revenue for suppliers and opportunities for families across our region. That’s how $1 becomes $1.60 — and why the strength of our economy depends on the success of the businesses and institutions that keep that cycle moving forward.
Steven Kent is chief economist of the Long Island Association and an associate professor of economics and finance at Molloy University in Rockville Centre.
