4,300 Jobs Added in the Fourth Quarter

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New York City’s economy in the fourth quarter of 2003 had its highest growth rate since the second quarter of 2000, according to Economic Notes, a publication issued by New York City Comptroller William C. Thompson, Jr.

“Although in November 2001 the National Bureau of Economic Research officially declared the U.S. recession over, it took the City two more years to bounce back,” Thompson said. “I am pleased that the City’s economy has inched out of its recession with both the increase of 4,300 jobs and a high growth rate in the fourth quarter. I am still concerned, however, about the City’s higher inflation rate and the decline in the help-wanted advertising index.”

For the full year 2003, the City's economy remained in recession as GCP declined 2.2 percent in 2003.

The latest issue of Economic Notes also reports the following developments in the fourth quarter:

• Real gross City product (GCP) increased at an annualized 4Q03 rate of 2.2 percent.This followed a 3Q03 decline of 0.5 percent (revised following downward revisions in City jobs data). Nationally, real gross domestic product (GDP) grew by 4.1 percent in 4Q03, compared with 8.2 percent in 3Q03.

• In 4Q03 the City added 4,300 jobs, the first quarterly increase since a rise of 600 jobs in 4Q02. Private firms added 1,900 jobs and the public sector added 2,400 jobs. Compared with 4Q02, NYC jobs (not seasonally adjusted) fell 1.6 percent, the fourth-weakest performance of the 20 largest metro areas. In 4Q03, the nation gained 183,000 jobs (seasonally adjusted), the first quarter of job growth after 10 quarters of decline.

• Personal income tax (PIT) revenues rose 16.2 percent in 4Q03, on a year-over-year basis. PIT is a current proxy for personal incomes that are reported only after a two-year lag. The 4Q03 increase partly reflects higher City tax rates. Estimated taxes increased 13 percent, reflecting higher dividends and capital gains. Withholding taxes increased 18.3 percent. For 2003 as a whole, NYC’s PIT revenues increased 6.6 percent, primarily because of higher tax rates. U.S. PIT revenues increased 0.5 percent in 4Q03, despite cuts in taxes; but for the full calendar year 2003, U.S. PIT revenues declined 4.2 percent because of the cuts.

• The NYC metropolitan area inflation rate rose to 3.2 percent in 4Q03. Except for 2Q03, NYC’s inflation rate has been close to 3.1 percent since 2Q02, averaging 3.1 percent in 2003. The U.S. inflation rate was 1.9 percent in 4Q03 and 2.3 percent in 2003.

• The Manhattan commercial vacancy rate in 4Q03 increased to 12.5 percent.This was 0.5 percentage points higher than the 12.0 percent rate in 4Q02. Average Manhattan commercial rents decreased to $40.53 per square foot in 4Q03, down from $42.96 in 4Q02.

• Two leading indicators improved and one deteriorated.While the quarterly help-wanted-advertising index fell, the NYC business-conditions index and the number of building permits authorized rose in 4Q03 on a year-over-year basis.