New York by the Numbers
Weekly Economic and Fiscal Outlook

A Message from the Comptroller

Dear New Yorkers,

As expected, U.S. gross domestic product rebounded in the third quarter (July through September) as states and localities emerged from the lockdowns of the second quarter – but is still 2.2 percent below the first quarter.  Encouragingly, initial unemployment claims, both nationally and in New York City, continued to fall last week.  But as our analysis of commuter railroad data shows, ridership remains roughly 75 percent below its level a year ago.

Our economic struggles haven’t deterred us. New Yorkers are coming together and working harder than ever, and their resilience, creativity and determination will be what brings our city back. I hope this weekly newsletter serves as a helpful resource and regular update on the city’s progress as we navigate the challenges ahead.

And as a reminder – tomorrow is Election Day.  As of Sunday, over 1.1 million New Yorkers had voted early.  If you haven’t voted yet, find your polling place here – and put on your mask and go vote tomorrow!

Sincerely,

Scott M. Stringer

The Economy

National Indicators

• U.S. 3^rd quarter GDP increased from $19.5 trillion to $21.2 trillion, an increase of 8.4% from the 2^nd quarter, and rising at an annualized rate of 33.1%. Despite this record increase, U.S. GDP remains nearly 3% below the peak of $21.7 trillion reached in the 4^th quarter of 2019 (Chart 1).
• State level estimates, including 3^rd quarter estimates of GDP for New York State, will be released January 10^th.
• U.S. personal income increased $170.3 Billion (0.9%) in September, according to BEA figures released Friday. This follows a 2.5% August decline that was driven by the expiration of supplemental $600 Federal unemployment benefits.
• Personal Consumption Expenditures (PCE) rose $159.2 (1.4%) in September, as consumers spent $109.9 billion more on goods, and $61 billion more on services.

Chart 1

SOURCE: BEA

• Initial U.S. unemployment claims fell to 751,000 for the week ending October 24^th (Chart 2), down from a revised 791,000 last week.
• Continuing U.S. unemployment insurance claims fell to 7,756,000 for the week of October 17^th, down from a revised 8,465,000 last week.

Chart 2

SOURCE: U.S. DOL

• Recipients of Pandemic Emergency Unemployment Compensation (PEUC) grew to 3,683,496 for the week of October 10^th from 3,296,156 the week prior, an increase of 387,340. PEUC, enacted as part of the CARES Act, provides 13 weeks of extended benefits to unemployed workers whose 26 weeks of regular unemployment benefits have run out.
• Continuing claims for Pandemic Unemployment Assistance (PUA) rose to 10,324,779 from a revised 10,152,753 the week prior, an increase of 172,026. PUA, also enacted as part of the CARES Act, covers workers who are typically not eligible for state unemployment benefits, including the self-employed, and those with poorly documented income, who are unable to work due to COVID-19.
• Regular, PUA and PEUC continuing claims together covered 22,093,134 unemployed Americans as of the week ending October 3rd (Chart 3).

Chart 3

SOURCE: U.S. DOL

New York City

• Initial unemployment claims by New York City residents fell to 28,451 for the week of October 24^th, down from 31,971 the week prior (Chart 4). It is the fewest initial claims since the week of August 8^th, but weekly claims remain over four times as high as before the pandemic.

Chart 4

SOURCE: New York State DOL

Subway and Bus Ridership

• Average subway ridership for Monday, October 26^th to Wednesday, October 28^th was 1.78 million, down slightly from the prior week. (Chart 5) For the past four weeks, weekday subway ridership has averaged between about 1.77 million and 1.80 million, while MTA bus ridership has averaged between 1.09 million and 1.13 million.
• Compared to last year, subway ridership was down 70% and MTA bus ridership was down 55%, as of Wednesday, October 28^th.

Chart 5

SOURCE: Metropolitan Transportation Authority, Day-by-Day Ridership Numbers.
NOTE: Excludes holidays.  Figures for the week ending October 30 include data through Wednesday, October 28.

Commuter Railroads

• Like the subway, weekday ridership on the MTA’s two commuter railroads – the Long Island Rail Road (LIRR) and Metro-North Railroad (MNR) – has steadily grown since April yet remains far below normal ridership levels. (Chart 6) As of Wednesday, October 28^th, LIRR ridership was 72% below last year and MNR ridership was 78% below.
• Average weekday ridership on the LIRR reached a recent peak of 89,540 during the week ending September 25^th, while MNR ridership has hovered around an average of 66,000 per weekday for the past few weeks.
• According to a recent MTA survey of current and lapsed MNR riders, the makeup of riders has shifted since the pandemic. Before the shutdown, 27% of MNR riders were in finance and 21% were in professional/business services. Those shares have dropped to 11% and 15%, respectively, while the share of riders in health care rose from 6% to 19%.

Chart 6

SOURCE: Metropolitan Transportation Authority, Day-by-Day Ridership Numbers.
NOTE: Excludes holidays.  Figures for the week ending October 30 include data through Wednesday, October 28.

Current riders are also younger, have lower household incomes, and are more likely to be non-white than the typical pre-pandemic MNR rider.

City Finances

Taxes

• The decline in New York City taxable sales moderated during the summer’s June-August period as the City’s economy gradually reopened, but total sales remained 23% below last year.
• Taxable sales in the tourism (accommodation) and cultural sectors over the summer months were still down over 90% from a year ago.
• Declines in sales at restaurants and drinking places showed only moderate improvements through August, while purchases of alcohol were up 18% over last summer.
• Clothing and department store sales also improved, but remain 48% below last year.
• The stay-at-home sectors had mixed results:
  • sales of computers and software increased by 13% over last summer.
  • sales of groceries and home furnishings, which have rebounded outside the City, remain lower.
• The flip side of stay-at-home sectors – sales of office-related services – continued to decline and at an increasing pace.
• E-commerce sales have soared, more than doubling since the pandemic began.

Table 1: Taxable Sales by Sector, $ Millions

SOURCE: NYS Dept. of Finance and Taxation

COVID-19 Spending

• In total, the City has incurred or committed to $4.79 billion in COVID-related spending in FY 2020 and FY 2021 (Table 2).
• The City accrued $2.62 billion in COVID-related expenditures in FY 2020. The FY 2020 expenditures are $1.39 billion below the June modification estimates, due to the roll-out of much of COVID spending into FY 2021.
• While the FY 2021 Budget assumed only $118 million in COVID-related spending, through October 28^th, the City has committed to $2.17 billion in COVID-related spending in FY 2021.

Table 2: COVID-19 Expenditures, FY 2020 and FY 2021

SOURCE: Office of the Comptroller from FMS.

COVID-19 Contracts

• Through October 28^th;, the City has registered $4.39 billion in contracts to procure goods and services in response to the COVID pandemic (Table 3). More than sixty percent of the contracts, $2.68 billion, are for hotel and food contracts and for the procurement of personal protective equipment (PPE).
• Other significant contracts include $505 million for medical staffing for COVID-19, $141 million for ventilators and $100 million for testing centers.

Table 3: Registered COVID-19 Contracts through 10-28-2020

SOURCE: Office of the Comptroller analysis of NYC FMS data.
NOTE: Includes only contracts with COVID budget codes.

Cash Position

• The City’s central treasury balance (funds available for expenditure) stood at $6.28 billion as of Wednesday, October 28^th. At the same time last year, the City had $3.87 billion (Chart 7).
• The Comptroller’s Office’s review of the City’s cash position during the fourth quarter and projections for cash balances through December 31^st, 2020, are available here.

Chart 7

SOURCE: Office of the NYC Comptroller

Spotlight of the Week

The City’s Fiscal Year 2020 Financial Results

On Friday, October 30th, the Comptroller’s Office published the City’s Comprehensive Annual Financial Report (Annual Report) for the fiscal year that ended June 30^th – fiscal year (FY) 2020. The Annual 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 2020 was adopted in June 2019, no one had yet heard of the novel coronavirus. Indeed, even as late as January when Mayor de Blasio submitted his preliminary budget for FY 2021, it was just beginning to be a story – and no cases had yet been confirmed in the United States. By April, however, when shutdowns of businesses deemed non-essential had taken effect, the outlook had changed radically. In the final modification of the FY 2020 budget, the City was projecting a loss of $2.28 billion in tax revenues compared to the January forecast. Additional spending reductions totaling $1.73 billion were enacted, almost a third of which were COVID-related service cuts or cancellations, while new spending to address the pandemic was put in place, supported in part by Federal Emergency Management Administration disaster relief funds and by nearly $1.4 billion in funding through the federal CARES Act.

Revenues

Final total revenues for FY 2020, which include restricted fund revenues for the first time, were $95.058 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 purpose of the Financial Emergency Act), revenues were $94.385 billion, up 2.8% from 2019, due to a $1.6 billion increase in tax revenues, and nearly $1.9 billion in additional federal aid, driven by $2.8 billion in COVID-related relief.

Table S.1:  General Fund Revenues, Fiscal Years 2019 and 2020

SOURCE:  Comprehensive Annual Financial Report, fiscal years 2019 and 2020

Compared to FY 2019, tax revenues were up 2.6% (Table S.2), with increases in the Real Property Tax, General and Banking Corporation Taxes (collectively, Business Corporation Tax) and the Personal Income Tax buoying declines in other sources, notably the Sales Tax, property transaction taxes (the Real Property Transfer and Mortgage Recording taxes), and the Hotel Occupancy Tax.  Payments-in-lieu-of-taxes increased nearly 50%, or $245 million because of a $250 million payment from the Hudson Yards Development Corporation.

Table S.2: Tax Revenues, Fiscal Years 2019 and 2020

SOURCE:  Comprehensive Annual Financial Report, fiscal years 2019 and 2020

Federal grants were $1.9 billion more than in FY 2019, largely due to the allocation of $1.38 billion in FEMA disaster assistance funding to cover 75% of eligible COVID-19 costs and another $1.38 billion in other funds from the CARES Act.  Federal grants for Social Services and Education were $607 million and $203 million lower in FY 2020 than in FY 2019, respectively.

State Aid was $364 million more than in 2019, including $308 million more in education aid.

Spending

Spending, net of restricted fund activities, was $94.4 billion in FY 2020, an increase of 2.8% or $2.6 billion from FY 2019. Other than personal services (OTPS) costs grew more rapidly than personal services spending, due to COVID-related spending which accounted for $2.1 billion of OTPS spending.

Table S.3: General Fund Expenditures, Fiscal Years 2019 and 2020

SOURCE:  Comprehensive Annual Financial Report, fiscal years 2019 and 2020
NOTE: Excludes Restricted Fund Activity of $719 million.

Endnote: Restricted Funds

This year the City reclassified certain accounts that had previously been included in its Fiduciary Funds as “Restricted Fund Activities,” following a change in financial reporting guidance by the Governmental Accounting Standards Board (GASB).  These are now included as part of the City’s reporting of its annual surplus or deficit.  However, Restricted Fund Activities are not part of the City’s budget process because the funds are not the City’s own resources. 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 Annual Report shows a $40 million deficit in FY 2020, when the Restricted Fund Activities are netted out, the City finished the year with its traditional $5 million surplus. For FY 2020 and future years, comparisons with past years should exclude Restricted Fund Activities.