New York by the Numbers
Weekly Economic and Fiscal Outlook

A Message from the Comptroller

We are living through extraordinary times – as a nation, as a City, and as individuals and communities.  A pandemic is raging that has no parallel in the past century. And in an unprecedented move, our economy was put on hold in order to protect lives and “flatten the curve,” resulting in mass layoffs and lost income for hundreds of thousands of New Yorkers, and a dramatic drop in tax revenues.  In these difficult and uncertain times, I offer this weekly update on the state of our City’s economy and finances in order to provide the public, elected officials, advocates and experts with a clear-eyed, sober assessment of the challenges.

Make no mistake – New York City will recover. Together we have overcome many challenges, and I know we will rise to the one ahead.

Sincerely,

Scott M. Stringer

Read the Comptroller’s report on the City’s unemployment situation in May.

The Economy

National Indicators

Recent economic data continues to point to a modest rebound in the nation’s economy, but the road to full recovery remains long and uncertain. Concerns are mounting about the impact of an increase in infections, particularly in southern states.

• Retail sales surged by a higher than anticipated 17.7% in May. The rebound in sales was broad-based and included purchases of big-ticket items like automobiles, an indication that consumers – at least those who still have jobs – are confident of future prospects.
• Industrial production also increased in May by a modest 1.4 percent but remains almost 15.4 percent below pre-pandemic levels.
• Initial claims for unemployment insurance dropped slightly from the previous week to 1.508 million (Chart 1). The decline was less than expected, however, and unemployment remains stubbornly high particularly in certain sectors of the economy.

Chart 1

• The Department of Labor separately reports claims for Pandemic Unemployment Assistance (PUA), enacted as part of the CARES Act for workers, mainly self-employed, who are typically not eligible for state unemployment benefits. Initial PUA claims totaled 760,526 for the most recent week. For the week ending May 30^th there were 9.3 million continuing PUA claims, a decline of 445,000 from the previous week.

New York City

• The unemployment rate in New York City continued to climb, to 18.3% in May, up from 15.0% in April. This contrasts with the national rate, which declined from 14.7% in April to 13.3% in May as some states began to re-open businesses (see NYC by the Numbers of June 8^th).
• Based on Current Population Survey data, the unemployment rate was highest among Asians (25.6%), Hispanics (25.1%), and African-Americans (23.5%), and lowest among Whites (11.8%). The unemployment rate for women was slightly lower (18.1%) than for men (21,5%) (Table 1).
• At the same time, the percentage of respondents reporting that they were either working or looking for work (the labor force participation rate) declined substantially, to 53.8% overall.
• A more in-depth discussion can be found in The New York City Unemployment Situation in May: Continued Deterioration.

Table 1

SOURCE:  Office of the Comptroller analysis of Current Population Survey (CPS).  Note that CPS data may differ from BLS Local Area Unemployment Statistics data, which are adjusted for seasonality and other factors.

• Initial unemployment claims by New York City residents ticked up slightly for the second week in a row, to 50,013 for the week ended June 13^th (Chart 2). Since the COVID-19 pandemic led to the shutdown of nonessential businesses, there have been 1.29 million initial unemployment claims by New York City residents.

Chart 2

SOURCE: NYS DOL

May saw an increase in employment in the City (Table 2)

• Total private employment increased 1.3%, or 42,200 jobs. Private employment remains nearly 20% below its level in March, however.
• The biggest rebounds were in Construction, which gained 23,100 jobs – a 32% increase above the April level, but still almost 35% below March; restaurants, up 80%, 18,400 jobs; and retail, which added 16,900 jobs, up 6.9% from April, but still almost 21% below March.
• Employment in the arts, entertainment and recreation sector continued to decline by another 4,100 jobs, or 12%, and accommodation, which fell another almost 33%, to just 15,000 jobs.

Table 2

SOURCE: Bureau of Labor Statistics, NYS Dept. of Labor.

• Note that the employment data includes all jobs in the City held by both residents and non-residents. The unemployment data includes City residents only, regardless of their place of work.

City Finances

Revenues

In contrast to the nation which saw retail sales rebound in May with the reopening of the economy in many States, City retail sales and sales tax revenue continued to decline and at an accelerating pace.

• May sales tax revenue declined by almost $200 million compared to the previous year, or a 31.5 percent decline (Chart 3).
• Since March, retail sales are $429 million below last year’s level.
• This sharp decline was mitigated in part by a surge in online shopping, which is estimated to have doubled over the previous year.
• May’s decline should in theory represent the peak loss for retail sales tax revenue. As the City’s economy begins to reopen, retail sales and tax revenue should see a gradual improvement although spending for certain categories like restaurants and hotels will continue to be suppressed in the near term due to limited reopening and concern over the virus

Chart 3

COVID Spending

The authorized budget for COVID-related spending is $2.623 billion for FY 2020 (Table 3). More than half of this spending, $1.42 billion, is for medical, surgical and lab supplies. Other significant COVID-related spending includes $246 million for NYC Health+Hospitals, $379 million for COVID-19 response in the Department of Emergency Management, $250 million for uniformed agencies overtime, and $131 million in the Department of Small Business Services, of which $81 million is budgeted for loan and grant programs.

Of this total, $2.70 billion has been committed – that is, the City has incurred obligations for that amount – as of June 18, exceeding the budgeted amount in the April Plan.  Medical, surgical and lab supplies account for $1.29 billion of the commitments. Of the total commitments, $1.13 billion has been expended.

Table 3: COVID19 Budget and Expenditures, FY 2020

SOURCE: Office of the Comptroller from FMS.

COVID Contracts

Through June 18, the City has registered more than $3 billion in contracts to procure goods and services in response to the COVID pandemic (Table 4). Almost 30 percent of the contracts, $935 million, are for the procurement of personal protective equipment (PPE). Other significant contracts include $505 million for medical staffing for COVID-19, food related contracts for $528 million, $348 million for hotels, $146 million for ventilators and $100 million for testing centers, as shown in Table 4.

Table 4: Registered COVID Contracts through 6-18-2020

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 $5.246 billion as of Thursday, June 18.  At the same time last year, the City had $6.124 billion (Chart 4).

The Comptroller’s Office’s review of the City’s cash position during the first quarter and projections for cash balances through September 30^th, 2020, are available here.

Chart 4

State Budget

During the month of May, New York State collected $767 million less in tax revenues than the prior year, a decline of 20 percent. The steepest drop was in consumption/use taxes, which fell by 32 percent. For the State’s fiscal year to date, tax revenues are down by 56 percent over the prior year. In addition to the economic effects of the pandemic, the shift in filing deadline for income taxes from April 15 to July 15 caused a $7.4 billion decline in the State’s personal income tax over the first two months of the year.

Table 5. New York State All Funds Tax Receipts in April and May 2020

SOURCE: Office of the New York State Comptroller.

Spotlight of the Week

Medicaid Enrollment Rises During the COVID Pandemic

Before the COVID19 pandemic, about 3.4 million New York City residents relied on publicly funded Medicaid for health insurance. As New Yorkers lost their jobs and employer-sponsored health insurance, Medicaid enrollment has grown. According to state health data, enrollment in mainstream Medicaid managed care – which accounts for about 70 percent of total beneficiaries – rose by 1 percent in April and another 2 percent in May. Enrollment through the New York State health exchange was even larger, expanding by nearly 6 percent since March.

New York City Mainstream Managed Care Enrollment

SOURCE: New York State Department of Health, Medicaid Managed Care Enrollment Reports.

Growth in Medicaid enrollment may add pressure to the state budget, which already included $2.2 billion in Medicaid savings in state fiscal year 2020-21. Some relief from the federal government was provided in the Families First Coronavirus Response Act by temporarily increasing the federal matching rate for Medicaid, called the Federal Medical Assistance Percentage (FMAP), by 6.2 percentage points. The increased reimbursement rate is retroactive to January 1 and will continue for any calendar quarter during the declared public health emergency.

The Families First Act included language ensuring that savings would be passed along by the State to New York City and county governments. New York City expects that the enhanced rate will generate about $940 million in city savings through the end of 2020.