City’s Economy Expected to Soar--in a Few Years : The growth engine has run out of steam, an expert says. But the area is positioned to thrive in open world markets.

The potential for the recovery of the lagging New York area economy should not be underestimated, and the region could wind up prospering in the global competition of the 1990s, some economic insiders predict.

Even though a spurt of worrisome statistics and several more slow years are expected to continue, the region’s tough times should be viewed in long-term perspective, these experts say. They emphasize that New York’s ability to roll with the punches should not be ignored.

“A lot of people tend to be too gloomy,” said Samuel M. Ehrenhalt, the U.S. Department of Labor’s regional commissioner of labor statistics. “A lot didn’t happen that people thought would happen. New York had 10 years of unexpected, remarkable, vigorous growth. The problem is the growth engine has run out of steam.

“The starting point was the (1987) stock crash, which shook the financial rafters. Pessimistic forecasters saw the city in decline, but the recession of 1988 didn’t happen. True, job growth came to a halt. But there was no downturn. The number of jobs is a little higher than it was in October, 1987. It is not as horrific as people are predicting.”

DOOMSAYERS DOUBTED: Joseph W. Duncan, corporate economist and chief statistician of the Dun & Bradstreet Corp., has a similar view.

“New York’s economy is soft at the moment. It’s not declining, not growing, it’s sluggish,” Duncan said. “ . . . But it’s not as bad as the doomsayers were saying. In the ‘90s, you will see New York come back with more world-level competition.

“The U.S. is poised to be competitive in open world markets, and New York will benefit from that because of the role of the port and the financial role. But you do have a couple of very soft years ahead of us.”

Fortune Magazine viewed New York City’s economy recently and asked a fundamental question: “Is New York in danger of losing its spot as the world’s pre-eminent business center?”

“The short answer,” the magazine concluded, “which will surprise the prophets of demise, is no.”

Fortune listed a host of favorable factors that have been overshadowed by bad news in a time of city and state budget cutting: Office moves from the city to the suburbs are probably over because of growing employee resistance to long commutes, globalism should play to the city’s strengths, foreign banks in New York are poised for growth and New York remains one of the world’s great financial and information centers.

EXPORTS LOOK STRONG: Both Duncan and Ehrenhalt, who is regarded as the dean of New York regional economists, agree with that assessment--barring a serious downturn in the national economy. They say that, despite declines in manufacturing, the city’s export industries are still very strong and, in the years ahead, trade should increase with the European Community, Eastern Europe and the Pacific basin.

But, in the short run, the New York region’s economy remains in a slump. Mayor David N. Dinkins listed many of the problems in his recent message accompanying his administration’s proposed $27.9-billion budget--a budget stamped with service cuts.

The mayor said ripples from Wall Street’s crash of 1987 continue to be felt. Retail sales are weak, real estate prices are down, construction activity has declined and job growth in New York has slackened. Economically sensitive revenues are rising at only one-fifth the rate of between 1980 and 1988.

The collapse of Drexel Burnham Lambert Inc., continuing layoffs and sluggish stock trading volume are creating additional economic pressures. The forecast in New York City for employment has been revised downward to no growth in 1990 and 1991.

WIDER POTENTIAL: The weakened economy has hurt other parts of the region. “When New York City catches a cold, everyone in the region had better be sure they have a good supply of tissues,” said Ehrenhalt, who noted that 30% of the people who live in nearby Nassau County on Long Island work in the city.

Duncan believes some signs exist that the stock market shock may have begun to run its course. In 1987, after the market crash, business failures increased in New York City by 13.9%, and, in 1988, they rose an additional 60%. But, last year, failures declined 56% from the preceding year.

“People have underestimated New York’s most enduring characteristic, its capacity to surprise,” Ehrenhalt said.