New York by the Numbers
Monthly Economic and Fiscal Outlook

A Message from the Comptroller

Dear New Yorkers,

It’s no surprise that the economic data show the Omicron wave hit New York City’s economy hard in January, with low hotel occupancy, and more New Yorkers working from home due to COVID. But more recent data show an economic rebound is already underway: restaurant reservations, Broadway attendance, and transit ridership all bounced back in February, and unemployment insurance claims fell.

Inflation continued to rise nationally through January, driven by energy and food prices, even before Russia’s attack on Ukraine. Rents in NYC continued to rise without interruption, a good sign for property owners — but concerning for New Yorkers whose incomes have not kept pace with rising costs. The recovery remains far from equal, with unemployment rates for Black and Latino New Yorkers approximately double the rates for white and Asian New Yorkers.

This month’s spotlight dives into good news for the City’s budget outlook: tax revenues collection trends are above expectations. The Comptroller’s office predicts higher-than-expected revenues will carry through for the rest of the fiscal year, bringing in an additional $1.3 billion to City coffers.  Ensuring that these funds are focused on improving services and creating opportunities for New Yorkers that need them most remains a critical task for this year’s budget.

The U.S. Economy

• March 4^th figures from the Bureau of Labor Statistics show the U.S. economy added 678,000 jobs in February, led by an increase of 179,000 jobs in Leisure and Hospitality. U.S. employment is still 2.1 million (1.4%) below pre-pandemic levels.
• The U.S. unemployment rate declined to 3.8% in February 2022, down from 4.0% in January, but still above the pre-pandemic low of 3.5% in February 2020.
• The Consumer Price Index rose 7.5% over the 12 months ending in January 2022, the largest 12-month increase since February 1982, driven by energy (up 27%) and food prices (up 7%).

NYC Labor Markets

• January employment figures for New York City will be available on March 10^th, and February figures will be released March 24^th; this is a result of the Bureau of Labor statistics annual benchmarking of the Current Employment Survey.
• January unemployment figures for New York City from the New York Department of Labor are also as yet unavailable, but non-seasonally adjusted data from the Current Population Survey shows New York City unemployment rising slightly in January (Chart 1).
• New York City’s economic recovery remains far from equal, with unemployment rates for Black (10.6%) and Hispanic (8.2%) New Yorkers remaining far above those of white (4.7%) and Asian (5.0%) residents in January.

Chart 1

SOURCE: Current Population Survey, unemployment rates are not seasonally adjusted, unemployment rates by race/ethnicity calculated as 3-month averages

• Initial New York City unemployment insurance claims fell to 5,320 the week of February 26^th, down from 5,410 the week prior and a recent peak of 15,340 the week of January 8^th (Chart 2).

Chart 2

SOURCE: NY DOL

• An industry breakdown (not yet available for February) shows January unemployment claims were led by 5,140 new claims in Food Service and Accommodation and 7,520 in Transportation and Warehousing, reflecting both the impact of the January Omicron wave, and the end of holiday package delivery (Chart 3).
• At the national level (not shown), seasonally adjusted initial claims rose in tandem with the January Omicron wave.

Chart 3

SOURCE: NY DOL

NYC Real Estate Markets

• Data from Douglas Elliman show that rents for the higher-end brokered Manhattan apartment market continued to rise in January. Average asking rents rose to $74.83 per square foot, up from $72.00 in December, the eleventh straight monthly increase (Table 1).
• New leases fell to 3,159, reflecting the dwindling stock of available apartments. Available inventories fell to 4,316, down from 4,753 in December.

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

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

*NOTE:  2021 data reflect expanded collection of listing data

• January data from Streeteasy.com show the number of apartments available for rent citywide held steady at 24,869 in January but inventories are well below the pre-pandemic 29,213 in January 2020 (Chart 4).
• Median asking rents rose sharply for the second month in a row, to $2,895 in January, up from $2,800 in December, and $2,700 in November.

Chart 4

SOURCE: Streeteasy.com

• CoStar reports roughly 126 million square feet of office space is available for lease in New York City as of March 1^st, 2022, up from 124 million at the start of the year (Chart 5).
• Average asking rents were up slightly at roughly $66 per square foot as of March 1^st, up from $65 at the start of the year.
• The “flight to quality” trend, observed since 2019, has intensified as companies planning their return to the office seek out only the better office space to lure back reluctant office workers, leaving older space to languish on the market.

Chart 5

SOURCE: CoStar

NYC Return to Office

• The latest security card data from Kastle Systems show New York City area office occupancy rose to 33.8% for the week ending March 2^nd, up from 30.8% the week prior and a recent low of 10.6% the week of December 29^th (Chart 6).
• Office occupancy in New York City is above San Francisco (where rates remain below 30%) but well below Dallas and Austin (where office occupancy has climbed above 50%).

Chart 6

SOURCE: Kastle Systems, weekdays excluding Federal holidays through March 2nd, 2022.

• The latest Google mobility data show time spent at New York City workplaces rose through February but dropped the most recent week. As of February 26^th, time spent at workplaces was down 36% from pre-pandemic levels (Chart 7).

Chart 7

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

• January data from the Current Population Survey show the share of New Yorkers working from home due to COVID jumped to 26.9%, up from 21.8% in December, reflecting the January surge in Omicron cases (Chart 8).

Chart 8

SOURCE: Current Population Survey, COVID Supplement

• Transit use rebounded in February, following systemwide declines during the December and January Omicron surge (Chart 9). Weekday subway ridership averaged 2.93 million in February, equal to 53% of pre-pandemic levels.
• Volumes improved across all MTA systems, as average weekday ridership in February rose to 43% of pre-pandemic levels on Metro-North and to 47% on the Long Island Railroad.
• On Tuesday, March 1^st, 3.15 million riders used the subway, the highest volume since mid-December.
• MTA Bridge and Tunnel traffic jumped to 97% of pre-pandemic levels in February, reflecting the post-Omicron return, and the longer-term pandemic shift in commuting from public transportation to driving.

Chart 9

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

NOTE: Excludes federal holidays.

NYC Business and Tourism

• Broadway revenue rose steadily through February to $23 million the week of February 27^th, 92% of seats were sold, suggesting strong demand by theatre goers (Table 2).
• Only 19 shows have been open the last five weeks, but Playbill shows another 15 shows scheduled to open at the end of March and in April, with more on the way.

Table 2: Broadway Performance Metrics

SOURCE: The Broadway League

• Although January is typically a slow month for New York City hotels, the Omicron wave made this January unusually hard. Revenue per available room (RevPAR) fell close to $70, down from over around $210 in December, though still above the $50 of January 2021 (Chart 10).
• Total room demand fell to 1.6 million in January, a sharp drop from 2.7 million in December. Room demand was just 1 million in January 2022, but 2.8 million before the pandemic in January 2020.

Chart 10

SOURCE: STR via CoStar

• Data from OpenTable show New York City restaurant reservations for the week ending March 1^st are down 45% from pre-pandemic levels, but have recovered substantially from early January when they were down as much as 81% (Chart 11).

Chart 11

SOURCE: OpenTable.com

• Times Square foot traffic dropped sharply in January, falling to a daily average of 150,356, a decline of 50% from January 2020 yet still 67% higher than one year ago (Chart 12).

Chart 12

SOURCE: Times Square Alliance, Monthly Indicator Reports.

• Average daily yellow taxi rides fell 24% in January, compared to an 8% contraction in daily volume for Uber and Lyft (Chart 13).
• As of January 2022, average volume was 62% below the number of trips recorded in January 2020 for yellow taxis but down by a far smaller 28% for Uber and Lyft.

Chart 13

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

• The impact of the Omicron variant and multiple winter storms disrupted air travel in January, as passenger volumes dropped to 29% below pre-pandemic 2019 levels in the New York City region and 23% nationwide (Chart 14).
• In the New York City region, domestic air travel continues to outperform travel from abroad with the number of domestic passengers down 11% in December, as compared to 2019 volume, while international volume was down 37%.

Chart 14

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

City Finances

• The City’s central treasury balance (funds available for expenditure) stood at $5.06 billion as of Wednesday, March 2^nd. At the same time last year, the City had $7.33 billion (Chart 15).
• The Comptroller’s Office’s review of the City’s cash position during the second quarter of FY 2022 and projections for cash balances through June 30^th, 2022, are available here.

Chart 15

SOURCE: Office of the NYC Comptroller

Spotlight

City Tax Revenue Collections

Fiscal year collections through January 2022 show overall New York City tax revenues are 3.8% higher than the same period in the previous fiscal year and almost $1.6 billion higher than the City had anticipated in November.[1] Excluding property taxes, which account for nearly 50% of local taxes, revenues are nearly 21% higher. Current year property tax collections are down 3.8% from last year, reflecting prior year assessment data that showed steep pandemic-related declines, particularly for commercial properties and apartments; nonetheless, they were still far above projections.

Table S.1:  Fiscal Year to Date Collections Compared to City’s November Projections (Plan), $Millions

SOURCE: Office of the NYC Comptroller, NYC OMB, *Total excludes revenues from audits

The strength in non-property tax collections is broad-based. Personal income and business tax collections have benefitted from a strong year on Wall Street in 2021. The largest year-over-year increases have occurred in those taxes that were most severely impacted by the shutdown: sales and real estate transaction taxes. Collections from these taxes collapsed during the height of the pandemic in the spring and summer of 2020 (Chart S.1). Since then, the reopening of businesses and the lifting of tourism restrictions have contributed to the rebound in sales tax collections. The uncertainty that caused buyers to remain on the sidelines during the pandemic has been replaced by renewed optimism and record purchases for homes.

Chart S.1

SOURCE: Office of the NYC Comptroller

What are the implications of the strength in collections for the remainder of the fiscal year?

In the recent Preliminary budget for FY 2023, the Office of Management and Budget increased its revenue forecast for the current fiscal year 2022 by $1.6 billion, which is almost identical to the amount of collections above previous expectations. In other words, the City does not anticipate additional tax revenue for the remainder of the year above what it forecast in November even though current collection trends are higher compared to November. Tax revenues fiscal year-to-date through January grew 3.8%, and the City projects they will end FY 2022 2.3% lower than in FY 2021.

In contrast, the Comptroller’s Office anticipates that some of this strength will carry forward for the remainder of the year. By the end of the year, revenues could be $1.3 billion higher than the City is currently estimating (Table S.2). For now, the City’s revenue outlook appears to be brighter than previously thought, although risks to the economic outlook have risen significantly in the past few weeks as a result of the Ukrainian conflict.

Table S.2:  Differences in Tax Revenue Estimates for FY 2022, NYC Comptroller vs. OMB

SOURCE: Office of the NYC Comptroller, *Total excludes audit revenue

A more detailed analysis of the City’s 2023 Preliminary Budget  by the Comptroller’s Office can be found here.

[1] The City had previously updated the June revenue projections in the FY 2022 Adopted Budget by a small $100 million in November, bringing total revenue projections to $1.7 billion higher compared to the initial Adopted Budget.

Sincerely,

Brad Lander