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

The Economy

National Indicators

• Initial claims for unemployment insurance fell modestly to 1.48 million for the week ending June 20^th. Continuing claims fell 3.8% during the week ending June 13^th, to 19.5 million – continuing a declining trend that began in the 1^st week of May, when continuing claims peaked at 24.9 million (Chart 1).

Chart 1

• Pandemic Unemployment Assistance (PUA), enacted as part of the CARES Act, covers workers who are typically not eligible for state unemployment benefits, including the self-employed or those unable to work due to COVID-19. Continuing PUA claims increased by 1.672 million for the week ending June 6, 2020 (latest available). This resurgence in PUA set a new peak of more than 11 million continuing claims. Regular and PUA continuing claims together cover nearly 30 million unemployed Americans (Chart 2).

Chart 2

New York City

• Initial unemployment claims by New York City residents fell slightly last week, to 44,785 (Chart 3).

Chart 3

SOURCE: NYS DOL

• Continuing unemployment claims by New York City residents totaled 738,400 in May, with more than $1 billion in benefits paid out (Chart 4).

Chart 4

SOURCE: NYS DOL

• Average weekday MTA subway and bus ridership rose modestly from the prior week as more New York City businesses reopened on June 22 under Phase II guidelines (Chart 5).
• From the first week in March to the week ending April 17, average weekday ridership fell by 92 percent on subways, reaching an average weekday low of about 416,500 subway riders. Bus ridership reached a low point the week prior after falling 80 percent to a weekday average of 428,700 bus riders.
• During the week that ended on June 26, weekday ridership averaged 1.05 million on subways and 1.07 million on buses. Subway ridership remains roughly 80 percent below 2019 averages and bus ridership is roughly half of typical levels.
• The severe drop in ridership has contributed to a dire financial situation for the MTA. While the federal Coronavirus Aid, Relief and Economic Security (CARES) Act allocated $4 billion for the MTA, total COVID-19-related revenue losses and expenses are estimated to cost the MTA $7.75 billion in 2020 and $6.55 billion in 2021.

Chart 5

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

Note: Data for week ending 6/26 goes through Thursday, 6/25.

• Construction activity, measured by the number of permit applications for new buildings and alterations, has rebounded to its pre-lockdown levels since the beginning of June (Chart 6).
• New construction permits fell by roughly 50% from mid-March through May, and have returned to about 10% below their levels prior to mid-March. Alteration permits fell by two-thirds, and have since returned to roughly their prior level.  Demolition permits are also up after a steep drop.
• Construction employment also increased substantially in May after a steep drop in April, but remains 35% below its March level.

Chart 6

SOURCE: New York City Dept. of Buildings

City Finances

Revenues

• City personal income tax revenue (PIT) withheld from wages and salaries of employees (withholding) has deteriorated sharply since the beginning of the pandemic (Chart 7). This is not surprising given the unprecedented employment losses and reductions in earnings for many who are still employed.
• For the City, May’s sharp monthly year over year decline of 16.1% was followed by a smaller but still significant decline of 7.3% in June as the economy began to reopen.
• A factor that could affect future PIT revenues is City tax filers who left the City during the pandemic who may have changed their residency status to outside of New York City and are no longer subject to the City’s PIT.

Chart 7

SOURCE: NYS Department of Taxation and Finance

NOTE: June collections through June 25th.

COVID Spending

The authorized budget for COVID-related spending is $2.623 billion for FY 2020 (Table 1). 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, $2.71 billion has been committed – that is, the City has incurred obligations for that amount – as of June 25, exceeding the budgeted amount in the April Plan.  Medical, surgical and lab supplies account for $1.34 billion of the commitments. Of the total commitments, $1.22 billion has been expended.

Table 1: COVID19 Budget and Expenditures, FY 2020

SOURCE: Office of the Comptroller from FMS.

COVID Contracts

Through June 25, the City has registered $3.2 billion in contracts to procure goods and services in response to the COVID pandemic (Table 2). Almost 30 percent of the contracts, $937 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 $533 million, $349 million for hotels, $146 million for ventilators and $100 million for testing centers.

Table 2: 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 $5.912 billion as of Thursday, June 25.  At the same time last year, the City had $4.510 billion (Chart 8).

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 8

Spotlight of the Week

Uncertainty for the Creative Economy

New York City is uniquely dependent on the health of the creative economy, which includes museums, art galleries, zoos, theaters, fashion, advertising, film and television, and more. The sector collectively employs over 293,000 people and accounts for one out of every eight dollars of economic activity in New York City – $110 billion in 2017.  New York City is home to about 12 percent of all creative industry jobs in the United States – compared to less than 3 percent of total jobs.

But key pieces of the creative economy have been crippled by the COVID-19 pandemic and the future is uncertain. Major institutions such as Carnegie Hall, Lincoln Center, the Metropolitan Opera, and the New York Philharmonic have cancelled their fall seasons. City Ballet cancelled the Nutcracker, and Broadway theaters and city museums remain closed.  Many smaller organizations, particularly in the performing arts, face permanent closure, as employment in the performing arts and spectator sports sector has plummeted 76% since May of last year.

SOURCE: NYS DOL.

NOTE: Industry definitions do not correspond in all cases to definitions used in The Creative Economy, due to lack of sufficient detail in monthly labor statistics.

Other component sectors of the creative economy also have suffered significant job losses, including the film and television production, museums, and apparel manufacturing, while those that are better able to operate remotely, like architecture and advertising firms, publishing and broadcasting, have fared relatively better.

When and how arts, entertainment and cultural institutions in New York City will reopen is still unknown. Difficult to answer questions loom over the sector, including how indoor venues will maintain safety for patrons, performers and crewmembers.  Will tourists and older patrons return? New York State recently announced that “low-risk” indoor and outdoor arts and entertainment establishments may reopen during Phase 4. However, “high-risk” indoor establishments, including indoor concerts and performing arts productions, have not been given clearance to reopen during any phase so far.  New state safety requirements for low-risk institutions include mandatory masks for staff and visitors, daily health screenings for employees, enhanced and more frequent cleaning, prohibitions on interactive exhibits, and occupancy limits of up to 25 percent capacity for indoor institutions and 33 percent for outdoor venues.

For more about the economic importance of creative institutions, see the NYC Comptroller’s comprehensive review of the creative economy.