Gothamist reports on the state of New York City's economy. The city's economy is not in a recession.
New York City’s recovery has been sluggish and uneven. The city lags behind the country and other major cities when it comes to regaining jobs lost during the pandemic. The slowest recovery has been in sectors with lower wage jobs like hospitality and retail.
Nonetheless, jobs are steadily returning, according to James Parrott, the director of economic and fiscal policy at the New School’s Center for New York City Affairs.
In August, the city added 24,000 jobs, according to data from the city’s Office of Management and Budget. Parrott said the figure is in line with the average monthly growth so far this year.
The city’s unemployment rate rose last month. However, the uptick was driven by a rise in job seekers — a sign that people are feeling more encouraged by the job market.
City tax revenues have yet to decline, despite Wall Street’s lagging performance this year.
Data compiled by the city Independent Budget Office (IBO), a nonpartisan agency, shows that city tax revenues grew between 2019 and 2021.
The IBO is projecting that combined tax revenues will increase this year as well. Money collected from property taxes, however, is expected to fall.
Nobody is saying that there isn't a real risk of a recession but the city does not need to be that worried. One of the causes for optimism for the city is nobody is expecting municipal union raises to be anywhere near the inflation rate.
Some budget experts have cautioned against making sky-is-falling predictions about the city’s fiscal future, saying the recent shortfall projections represent worst-case scenarios and that the economic conditions are still fluid.
Two factors driving the multi-billion dollar deficits are inflation and the struggling stock market. Both could cause the city’s labor costs to skyrocket, via upcoming contract negotiations with unions and pension investments.
The state comptroller’s office has said increases in union wages would cost taxpayers an additional $3.6 billion in 2026 under the projected inflation rate. That’s in addition to the $10 billion shortfall.
However, George Sweeting, the acting director of the IBO, said union raises have not always matched the inflation rate.
“So the assumption that it would be the same as the inflation rate may not hold,” he said.
The projected $10 billion budget hole assumes that Wall Street’s recent slide will force the city to contribute billions of dollars into its pension funds to meet the level of payments promised to municipal retirees.
But the stock market could recover some of its losses, blunting the impact on the city coffers.
Parrott stressed that the state comptroller is obligated to take a cautious approach in its fiscal forecast, one that uses conservative revenue estimates and assumes conditions for the city will not improve.
“That’s the nature of the reports they do,” he said. “It’s a risk-assessment approach to financial management.”
We can count on the unions to settle for much less than what the State Comptroller is projecting. We have Michael Mulgrew leading us who as usual will look out for the city more than his members. Members need to stand up and fight for fair raises.