A Look Into Westchester’s Economic Forecast for 2025

We tapped a local economist to break down what sectors will remain steady, and which will be in flux in 2025.

The economy remains one of the most talked about topics today, particularly in this past election cycle. With uncertainty in the background of every conversation, here is how Westchester will fare in 2025 and what sectors will be most impacted.

Michael Malenbaum, PH.D.Associate Professor of Economics and chair of the Economics Department at Iona University.
Michael Malenbaum, PH.D. Associate Professor of Economics and chair of the Economics Department at Iona University. Photo courtesy of Michael Malenbaum.

Overall Picture

In September and November 2024, the Federal Reserve lowered rates for the first time since March 2020. While the Fed has signaled possibly slowing rate cuts due to a recent uptick in inflation, the reduced rate should lead to more lending and investment moving forward, with further effects on banking and real estate. Lower rates could also lead to increased job growth, which is already strong in the area—Westchester has a significantly lower unemployment rate than New York State and the United States as a whole.

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Adobe Stock / Akuaku

Banking

Borrowing should continue to increase in 2025, further strengthening bank balance sheets. The banking industry as a whole is steadier after a turbulent 2023. Demand for loans is likely to tick up with lower rates, so banks will have an incentive to meet that demand.

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Commercial Real Estate

Office and retail development has been relatively stagnant for much of 2024, but lower interest rates should spur a stronger commercial market. Through three quarters, 2024 is on pace to be the county’s weakest year for transaction volume since the onset of the pandemic, despite commercial real estate prices remaining relatively stable over the last four years. Increased liquidity of funds driven by lower interest rates should alleviate this issue and drive up volume in 2025.

Residential Real Estate

Similar benefits seem unlikely to impact the residential real estate market as high house prices persist. Price per square foot of single-family houses in Westchester increased more than 6% in each of the last two years and continues to rise. Meanwhile, actual home sales held steady over the last year, suggesting housing demand remains high. As such, residential mortgage rates in the county will likely remain stubbornly high.

Incoming Administration

The Trump Administration, along with Republican majorities in both chambers of Congress, is likely to reduce federal income taxes and corporate taxes. The positive impact of these anticipated changes is already reflected in positive consumer and business sentiment since the election, which should persist into 2025. However, without increasing or eliminating the State and Local Tax (SALT) deduction cap, further tax cuts will have smaller effects in counties with high local taxes such as Westchester.

Other Trump policies could offset the benefits of lower federal taxes. Proposed mass deportations of undocumented workers will put a disproportionate strain on services, construction, and agriculture nationwide. Statewide, more than a third of undocumented workers are in service industries, and another fifth are in construction. Loss of labor in these fields will slow growth and raise prices in Westchester, particularly housing prices. While agriculture is not a major industry in the county, impacts will be felt everywhere in the form of rising food prices.

Similarly, proposed tariffs will be passed on to consumers in the form of higher prices to account for more expensive imports of intermediate goods. The impact of tariffs will be minimal on some of Westchester’s largest industries, such as health care and higher education, and possibly beneficial to some small businesses that rely less on imports. But manufacturing and construction prices will likely increase drastically if proposed tariffs are enacted, further affecting homebuilding and real estate in the county.

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Personal Recommendation

In sum, the Westchester economy should continue to strengthen over the first part of 2025. Consumer and business confidence are high, fueled by potential tax cuts, lower interest rates, and temporarily stable inflation. These conditions make this possibly the best time for Westchester residents to borrow, build, or make larger purchases because the longer-term forecast looks much less clear.

Related: Navigating Economic Uncertainty: Strategies for Business Resilience 

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