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New York City's economy remained in recession during the second quarter of 2002, according to the latest issue of Economic Notes, a publication issued by the office of New York City Comptroller William C. Thompson, Jr. The City's recession, in its sixth consecutive quarter, has now lasted twice as long as the national recession, which continued for only three consecutive quarters. The gross city product, a measure of economic activity in New York City, fell at an annual rate of 1.3 percent in the second quarter of 2002, compared to a 1.1 percent* growth in the national economy.

"Despite the continued recovery of our national economy, New York City remains in recession," Thompson said. "We have been especially hard hit by the downturn in the financial markets because our economy and tax revenues remain highly dependent on these markets."

"As the recession drags on, it will place an increasing burden on the City's budget. We must work to quickly develop and implement economic policies that will address this problem," Thompson added.

The unemployment rate in New York City, seasonally adjusted, rose to 7.9 percent in the second quarter of 2002, from 7.3 percent in the first quarter of 2002. This rate of unemployment is the highest since 8.0 percent in the second quarter of 1998. Although the number of City residents with jobs rose by 25,400 in the second quarter of 2002, this rise was more than offset by an increase in the labor force of 50,800 workers, which led to the increase in the unemployment rate. The U.S. unemployment rate rose to 5.9 percent in the second quarter of 2002, from 5.6 percent in the first quarter of 2002. At the same time, payroll jobs, seasonally adjusted, grew by 7,500 or 0.8 percent, the first quarter of job growth out of the last six.

The latest issue of Economic Notes also reports the following New York City economic data:

• Payroll Jobs in 2Q02, seasonally adjusted, grew by 7,500 or 0.8 percent, the first quarter of job growth out of the last six, with a rise of 7,800 private jobs. However, NYC jobs (for comparative purposes not adjusted for seasonal fluctuations) were still down in 2Q02 by 2.7 percent over the same quarter a year earlier (2Q01). On a comparative basis, this reflects the fourth-highest rate of job loss among the 20 largest metropolitan areas.
  
• Personal Income Tax (PIT) revenues, a proxy for personal incomes, were down 35.9 percent in 2Q02 over 2Q01. Estimated tax returns filed by taxpayers were down 41.3 percent, reflecting lower dividends and capital gains.
  
• The Inflation Rate in the NYC metropolitan area was 2.2 percent in 2Q02, the third highest among the 14 largest metropolitan areas (ranking after Los Angeles and Washington) but lower than NYC's 1Q02 rate of 2.3 percent. The cost of services rose 4.2 percent.
  
• Leading Indicators for the City point to continued weakness. The help-wanted ads index dropped to 22.3 in 2Q02, the lowest since 1951. The number of building permits fell 2.9 percent in 2Q02 over 2Q01, the biggest second-quarter loss since 1992. The Manhattan commercial vacancy rate in 2Q02 almost doubled to 11.3 percent from 6.7 percent in 2Q01.

Summary Table. Five Key Economic Indicators, NYC and United States, 2Q02

* NOTE: On September 27, 2002, after the Comptroller's Economic Notes was printed, the Department of Commerce revised the GDP growth rate to 1.3% from 1.1%

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