New York by the Numbers
Monthly Economic and Fiscal Outlook

A Message from the Comptroller

Dear New Yorkers,

New York City’s jobs recovery stalled in September, with private employment declining on a seasonally adjusted basis. But by most metrics, the City’s economic recovery continues, with real estate markets strengthening, and more workers returning to offices and public transportation, and more visitors at hotels.

Vaccines will soon be available for children aged 5 to 11, and booster shots for eligible adults are widely available. Schedule your dose today, and don’t forget to vote tomorrow!

Sincerely,

Scott M. Stringer

Labor Markets

• New York City’s jobs recovery stalled in September, with seasonally adjusted private employment falling to 3.615 million, down from 3.629 million in August. Slowing growth in the national economy (GDP growth of just 2.0% in third quarter) may have been a factor. The unusually late start to the New York City school year may have also disrupted typical hiring patterns and affected the reliability of seasonal adjustments (Chart 1).
• New York City’s seasonally adjusted unemployment rate fell to 9.8% in September, down from 10.2% in August.
• New York City’s labor force participation rate (not shown) held steady at 60.6%, roughly equal to the pre-pandemic rate, and well above pandemic lows of 54.7% in May of 2020.

Chart 1

SOURCE: U.S. Dept. of Labor, private employment seasonally adjusted by NYC OMB

• The unemployment rate among Black (12.0%) and Hispanic (11.0%) New York City residents remains well above that of white (7.5%) and Asian (7.3%) New Yorkers (Chart 2).

Chart 2

SOURCE: Current Population Survey, 3-month average

• Data from Burning Glass shows overall job ads for New York City workers are 13.4% above pre-pandemic levels, as of the week of October 22^nd (Chart 3). Jobs ads in financial services are 15.3% above pre-pandemic levels, and job ads in education and health services 24.7% above.
• Job ads in leisure and hospitality, which were running very high over the summer months, have returned to pre-pandemic levels, while those in professional and business services are down 9.1% according to the most recent data.

Chart 3

SOURCE: Burning Glass via Tracktherecovery.org

• Continuing claims for regular unemployment insurance in New York State fell to 157,720 for the week of October 16^th, down from 164,023 the week prior.
• Between September 4^th and October 9^th, the number of New York State recipients of pandemic unemployment insurance, including Pandemic Unemployment Assistance (PUA), Pandemic Emergency Unemployment Compensation (PEUC), and Extended Benefits (EB), fell by 1,472,081 due to the September 5^th expiration of these programs. However, this did not lead to an increase in September employment in New York City, suggesting that many who had been receiving pandemic unemployment benefits are in no hurry to return to work, or are a poor fit for available jobs.

Chart 4

SOURCE: U.S. Dept. of Labor

Real Estate Markets

• Data from Douglas Elliman show the higher-end brokered Manhattan apartment market remained strong across all metrics in September (Table 1). Signed leases fell to 5,241, from 8,201 in August, but remain high even as inventories fell to 6,761 in September, down from 8,362 in August.
• September rental prices per square foot and the vacancy rate have returned close to pre-pandemic levels.

Table 1: Douglas Elliman Rental Matrix, Trends in High-End Residential Apartment Rentals

SOURCE: Elliman Report, September 2021, Manhattan, Brooklyn and Queens Rentals.

*NOTE:  2021 data reflect expanded collection of listing data

• CoStar reports 127 million square feet of office space is available for lease in New York City as of October 26^th, 2021, down slightly from a peak of over 128 million at the end of the second quarter (Chart 5).
• Average asking rents fell to $64 per square foot, but third quarter leasing and absorption was stronger than expected. CoStar’s revised forecasts predict a quicker and more robust recovery in office asking rents starting early in 2022.

Chart 5

SOURCE: CoStar, fourth quarter-to-date asking rents and available square footage measured as of October 26^th, 2021

• The third quarter was another strong one for New York City real estate sales, with total sales of $22.38 billion, up from $12.57 billion in the third quarter of 2020, and $19.4 billion in the third quarter of 2019 (Chart 6).
• Residential sales were well above pre-pandemic levels, but sales of office and commercial buildings were just $3.29 billion in the third quarter, down from $3.6 billion in the third quarter of 2020 and $6.43 billion in 2019. The 2021 data, however, still do not reflect Google’s reported $2.1 billion Manhattan office building purchase.

Chart 6

SOURCE: Comptroller’s Analysis of Department of Finance Data

Return to Office

• The latest data from Kastle Systems show New York City area office occupancy rose above 30% in the second half of October, the highest occupancy of the pandemic era (Chart 7). Occupancy remains lower than all but San Jose (27%) and San Francisco (25%) among major metropolitan areas, but New York is gaining on Chicago (33%) and Washington, D.C. (32%).

Chart 7

SOURCE: Kastle Systems, weekdays excluding Federal holidays through October 27^th, 2021.

• The share of New York City residents working from home due to COVID fell to 25.6% in September, down from 27.5% in August (Chart 8). A larger share of those in New York City are working from home due to COVID than in New York State (17.8%) and nationwide (13.2%), but the New York City share is falling more quickly.

Chart 8

SOURCE: Current Population Survey, COVID supplement

• Google mobility data shows a trend toward increased time spent at New York City workplaces. As of October 23^rd, time at workplaces is down 27.5% from pre-pandemic levels but was down over 40% as recently as early September and had been flat for most of the 2021 (Chart 9).

Chart 9

SOURCE: GPS mobility data indexed to 1/3/2020 to 2/6/2020, from Google COVID-19 Community Mobility Reports.

• Transit ridership continued to gradually improve in October (Chart 10). In recent weeks, weekday subway ridership has surpassed more than half of pre-pandemic ridership, and for the first time since March 2020, daily subway ridership exceeded 3.3 million on October 27^th.
• Riders have also returned to the MTA’s commuter rails. For the week ending October 22^nd, compared to pre-pandemic trends, average weekday ridership was down 47% on the Long Island Rail Road (LIRR) and down 51% on Metro-North Railroad (MNR).
• MTA bus ridership continues to moderately outperform the subways and commuter rails, while vehicle traffic on MTA bridges and tunnels has returned to pre-COVID norms.

Chart 10

SOURCE: Metropolitan Transportation Authority, Day-by-Day Ridership Numbers.

Business and Tourism

• Revenue per available hotel room (RevPAR) in New York City jumped to nearly $165 in September, up from just over $120 in August (Chart 11). Although RevPAR is now higher than February 2020, New York City hotel demand and room rates are historically lower in the winter months. September 2021 RevPAR is still 40% below that of September 2019.
• Room demand rose to nearly 2.2 million in September 2021, up over 100,000 from August. Year-over-year demand is up 1.2 million from September 2020, but down 1.2 million from September 2019.

Chart 11

SOURCE: STR via CoStar

NOTE: Some fraction of pandemic period revenues is attributable to the City’s temporary housing of the homeless.

• The return to air travel stalled in the New York City region in September, as passenger volume dropped to 40% below pre-pandemic trends in 2019 (Chart 12). This past August marked the best pandemic-era month for airports owned by the Port Authority of New York and New Jersey when volumes were 38% below the same month in 2019.
• Nationwide, air travel has plateaued since peaking in July. As of September, nationwide passenger volume was down 24% compared to 2019.

Chart 12

SOURCE: Port Authority of New York and New Jersey and the U.S. Transportation Security Administration.

• Pedestrian traffic in Times Square rose to an average of 218,829 per day in September, up 5% from August but still down 42% from 377,813 in September 2019 (Chart 13).

Chart 13

SOURCE: Times Square Alliance, Monthly Indicator Reports.

• Average daily use of high-volume, for-hire vehicle services Uber and Lyft fell 9% in September from 467,608 trips per day in August to 423,584 in September, marking three months of consecutive declines (Chart 14). Meanwhile, yellow taxi usage improved 10%, rising from an average of 89,901 trips per day in August to 98,724 in September.
• Compared to the same month in 2019, average daily use was down 37% for Uber and Lyft and 55% for yellow taxis as of September.

Chart 14

SOURCE: New York City Taxi and Limousine Commission, Monthly Data Reports.

City Finances

• New York City spent $6.2 billion on COVID response and recovery efforts in FY 2021.
• The response and recovery spending continues into FY 2022 with projected spending of $4.85 billion. Spending in the outyears of the plan is projected to drop to $983 million in FY 2023 and a little over $450 million in each of FY 2024 and FY 2025.
• Thus far, the City has committed to $2.1 billion of expenditures through October 27^th in the current fiscal year.
• Table 2 below is a summary table of the agencies that make up more than 90% of the spending.

Table 2: COVID-19 Response and Recovery Expenditures

SOURCE: Financial Management System, *Description provides a summary of items that constitute most of the agencies spending.

• City sales tax revenue has rebounded strongly from the pandemic lows of 2020. For the July-September quarter just ended, sales tax revenue is almost 28% higher than 2020.
• Although tax revenue is still 2.7% lower than pre-pandemic levels of 2019, the lifting of restrictions on vaccinated international tourists should help boost sales in the coming months.

 Table 3: New York City Sales Tax Revenue (July through September)

SOURCE: NYC Comptroller and OMB Monthly Collections Report 2021

• The City’s central treasury balance (funds available for expenditure) stood at $6.11 billion as of Tuesday, October 26^th. At the same time last year, the City had $6.36 billion (Chart 15).
• Taking advantage of a provision in the federal CARES Act, the City has deferred payment of payroll taxes from April 2020, which has led to a net improvement in the City’s cash balances of approximately $1.35 billion. Deferrals ended in December 2020 and deferred payments will be due in 2 installments no later than December 2021 and December 2022. Deferred payments are accrued to the fiscal year in which they are due.
• The Comptroller’s Office’s review of the City’s cash position during the fourth quarter of FY 2021 and projections for cash balances through December 31^st, 2021, are available here.

Chart 15

Spotlight

New York City’s Fiscal Year 2021 Financial Results

On Friday, October 29^th, the Comptroller’s Office published the City’s Annual Comprehensive Financial Report (ACFR) for Fiscal Year 2021, which ended on June 30^th. The ACFR (previously known as the Comprehensive Annual Financial Report) is published every year, and reports on the City’s financial condition based on standards set by the Governmental Accounting Standards Board (GASB).

When the budget for FY 2021 was adopted in June 2020, COVID-19 was raging in New York and across the country, and the City and State had enacted shutdowns of all non-essential businesses. The outlook was grim. The budget projected a $2.4 billion drop in tax revenues from FY 2020, and included measures to close the budget gap.

The reality proved to be considerably better, as employment began to recover quickly, and the Federal government ultimately enacted measures to pump money both into workers’ pockets and into state and local governments, which were on the front line of service response to the COVID-19 pandemic. An infusion of Federal aid, combined with much better than projected tax revenues, boosted final revenues and spending to over $99 billion.

Revenues

Final total revenues for FY 2021, including restricted fund revenues, were $99.587 billion (Table S.1; see endnote on restricted funds). Net of restricted funds activities, which are not included in the calculation of the annual surplus or deficit for purposes of the Financial Emergency Act, revenues were $99.073 billion, up 13.2% from projections in the Adopted Budget, due to $6.9 billion in additional tax revenues and nearly $5.3 billion in additional categorical Federal aid.

Table S.1: Adopted and Actual General Fund Revenues, Fiscal Year 2021

SOURCE:  Annual Comprehensive Financial Report, Fiscal Years 2020 and 2021

*Includes revenues from tobacco settlement, Build America Bonds reimbursement, and funds from pollution remediation bond sales.

Tax revenues exceeded the Adopted Budget projections for the year by 11.8%. Surprising strength in personal income tax receipts, which came in at $3.4 billion or nearly 30% above the projection, and in business taxes, which were up $2.3 billion or 47% above the projection, led the increase (net of audit revenues).

Compared to FY 2020, tax revenues were up 3.9% (Table S.2), with increases in the Real Property Tax, Personal Income Tax, and General and Banking Corporation Taxes (collectively, Business Corporation Tax) offsetting declines in the Sales Tax, property transaction taxes (the Real Property Transfer and Mortgage Recording taxes), and the Hotel Occupancy Tax. Payments-in-lieu-of-taxes declined by $187 million, largely because of a one-time $250 million payment from the Hudson Yards Development Corporation in FY 2020.

Table S.2: Tax Revenues, Fiscal Years 2020 and 2021

SOURCE:  Annual Comprehensive Financial Report, Fiscal Years 2020 and 2021.

NOTE: Results restated to show audit revenues separately.

Federal grants were $5.25 billion above the Adopted Budget plan, driven by an infusion of COVID-related Federal aid, including $2.93 billion more in FEMA aid than estimated, $2.08 billion in additional Coronavirus Aid, Relief, and Economic Security (CARES) Act funding, and $1.02 billion in American Rescue Plan Act (ARPA) grants.

State Aid was $828 million below the Adopted Budget projection. The primary contributing factor was the substitution of $781 million in Federal CARES Act funding for State aid to education.

Spending

Spending, net of restricted fund activities, was $99.1 billion in FY 2021, an increase of 5%, or $4.7 billion, from FY 2020.

Spending on salaries and wages declined $553 million, or 1.8%, as City full-time and full-time equivalent staffing declined by 11,175 positions by the end of the fiscal year compared to a year previously. The decline in salaries and wages and in pension contributions was offset by an increase in spending on other Fringe Benefits, due in large part to the reduction of FY 2020 retiree health benefits spending by $1.0 billion from a drawdown of Retiree Health Benefit Trust surplus balances, as well as a $425 million prepayment of FY 2022 retiree health benefits.

Other than personal services (OTPS) costs grew more rapidly than personal services spending, largely due to a $3.3 billion increase in OTPS spending for COVID response and recovery. The City also made substantial debt service prepayments of $5.68 billion in FY 2021 for FY 2022.

Spending in FY 2021 was offset by an unusually large write-off of prior-year payables – due to over-estimations of expenses in prior fiscal years – of $869 million. Moreover, this year’s higher-than-anticipated revenues also allowed the City to write-off over $1.0 billion in uncollected and uncollectible revenues – substantially more than usual – for a net increase in liabilities of $143 million. Spending was also offset by savings in the City’s share of Medicaid, due to the Federal government’s assumption of a larger share of Medicaid spending as part of its actions to reduce the fiscal burden of the pandemic on state and local governments.

Table S.3: General Fund Expenditures, Fiscal Years 2020 and 2021

SOURCE:  Annual Comprehensive Financial Report, Fiscal Years 2020 and 2021.

Endnote: Restricted Funds

Restricted Fund Activities are not part of the City’s budget process because the funds are not the City’s own resources. The City acts solely in a custodial capacity for restricted funds. State legislation passed in 2019 allows the City to exclude Restricted Fund Activities from the calculation of the annual surplus or gap under the New York State Financial Emergency Act. Thus, while the ACFR shows a $419 million deficit for FY 2021, when the Restricted Fund Activities are netted out, the City finished the year with its traditional $5 million surplus. Beginning with the Fiscal Year 2020 ACFR, comparisons with past years should exclude Restricted Fund Activities.