New York by the Numbers
Monthly Economic and Fiscal Outlook

A Message from the Comptroller

Dear New Yorkers,

As we start the new year, the data on both the U.S. and the New York City economy continue – for the moment – to be fairly strong. Job growth has slowed somewhat but continues across sectors. The U.S. unemployment rate is as low as it has been at any point since 1969 (though persistently higher in communities of color). Inflation has begun to ease, and asking rents have declined from their sky-high peak.

Yet, as we discuss in our recent State of the City’s Economy and Finances, most economists continue to predict an economic slowdown in the coming year.

With a potential downturn on the horizon, this month’s Spotlight looks back at the impact that federal pandemic assistance had on individuals and business in New York City, to help them weather that downturn, with the hope of learning lessons for the future.

The federal government’s large-scale expansion of unemployment insurance, stimulus checks, and the paycheck protection program for businesses brought approximately $100 billion to NYC households and businesses, and was largely successful in staving off a great deal of economic pain for New Yorkers. During this period, despite job losses, population decline, and high inflation, both per capita and total income for New Yorkers rose.

For the first time, pandemic unemployment insurance was expanded to the self-employed, gig workers, and part-time workers – who do not normally have access to those programs, even though they are a growing share of the economy. Evidence suggests this program was successful at increasing access to benefits and insuring against income losses for workers on the margins of the labor market.  Permanent eligibility expansion should be considered.

Not everything worked as well as intended, of course. The forgivable business loans of the Paycheck Protection Program were not sufficiently well-targeted to preserve jobs and promote equity. And, of course, an important debate continues about the role that stimulus played in fueling inflation. We hope this month’s Spotlight will contribute to the policy dialogue.

Over the past two terms, the U.S. Congress has invested heavily in economic stimulus. The most recent term was arguably the most Keynesian since the Great Society. Many of those programs – the federal infrastructure bill, the Inflation Reduction Act, the CHIPS Act – will disburse funding over the next few years, functioning as counter-cyclical stimulus amidst a potential downturn. We’ll be working to make sure New York City gets as great a share of those resources as we appropriately can.

The newly sworn-in Congress, however, as we saw in technicolor last week, hardly seems likely to be willing to continue such investments, even if the U.S. economy goes into recession. If a recession comes in the next two years, New Yorkers and other Americans will likely have to weather its impacts without significant new federal help.

To help make plans for how to do that as wisely as we can, we’ll keep watching the numbers.

The U.S. Economy

• Recent indicators all continue to confirm slowing inflation rates in late 2022. The November Producer Price Index (PPI) showed a year-over-year inflation rate of 7.4%, down from its March 2022 peak of 11.7%. Similarly, the November Personal Consumption Expenditures (PCE) price index, which is the measure preferred by the Federal Reserve in its monitoring, rose 5.5% over 12 months, down from 6.8% in March. PCE index core inflation (which excludes volatile energy and food prices) was 6.1% above the prior year as compared to 10.6% in March. A similar autumn slowdown has been exhibited in the Consumer Price Index (CPI), for which December numbers will be reported January 12.
• Nonfarm payrolls increased 223,000 in December, capping off full calendar year 2022 growth of 4.5 million (an average pace of 375,000 per month). While significantly lower than the first year of pandemic recovery-fueled growth in 2021 (6.7 million), it remains nearly double the typical growth in pre-pandemic years (2.3 million per year average, 2015-19). The U.S. unemployment rate moved slightly down to 3.5% in December, close to the level it has been since last March. The New York City unemployment rate has remained somewhat higher, at 5.8% in November (the December rate is not yet available).
• Labor markets have shown few concrete signs of loosening. Job openings reported by the Bureau of Labor Statistics have stopped falling since August and remained nearly 50% above their pre-pandemic level. The data also indicate 1.7 job openings per unemployed person. The quits rate has also held steady at an elevated 2.7% in November. Such conditions indicate a risk of future wage pressures that potentially reverses currently cooling inflation.
• The Federal Reserve raised interest rates by 50 basis points (0.50%) at its December meeting, to a range of 4.25-4.50%. Meeting minutes and statements from the Fed Chairman indicate that the committee generally expects rates to rise further through the first half of 2023, but not higher than 5.00%.
• Treasury yield curves have continued to become even more sharply inverted into January, with 3-month rates more than three-quarters of a point above 10-year rates. This rare phenomenon is usually interpreted as indicative of market expectations of a high likelihood of impending recession.
• Real gross domestic product (GDP) growth was once again revised upward, to 3.2% for the 3^rd quarter of 2022 (from a prior estimate of 2.9%). This gain follows two quarters of real GDP decreases in the first half of 2022. Advanced estimates for the 4^th quarter of 2022 will be reported in late January.

NYC Labor Markets

• Seasonally adjusted New York City private employment increased by roughly 6,300 in November to 3.995 million, to about 97.2% of the pre-pandemic peak.
• New York City employment in Health care and Social Assistance increased by almost 8,000 jobs in November, the largest increase of any sector, followed by Professional Business Services, Financial Activities, and Accommodation and Food Services.
• Despite these increases, employment in food and hospitality remains about 50,000 (13.1%) below the pre-pandemic highs, and employment in arts, entertainment, and recreation remains about 13,500 (14%) below.

Table 1: Seasonally Adjusted NYC Private Employment, by Industry (‘000s)

SOURCE: NYS DOL, NYC Office of Management and Budget, and NYC Office of the Comptroller. Due to revisions to earlier months, numbers may not match to previous monthly newsletters

• New York City’s seasonally adjusted unemployment rate stayed at 5.8% from October to November (Chart 1).
• Unemployment rates for Black New Yorkers (11.7%) remain above the citywide rate. Small sample sizes for the Current Population Survey make it difficult to interpret short-term unemployment fluctuations for racial and ethnic subgroups.

Chart 1

SOURCE: Current Population Survey (Bureau of Labor Statistics/Census Bureau)

Housing & Real Estate

• StreetEasy data show median New York City asking rents dropped to $3,400 in November, falling for the first time since May 2022 (Chart 2). Asking rents remain up 16% from pre-pandemic levels, and up 27% from pandemic lows.
• The number of listed apartments available for rent fell to 28,691 in November, down from 29,353 in October and 30,658 in September.

Chart 2

SOURCE: Streeteasy.com

• The New York City shelter system recorded a new all-time high of 67,880 total individuals in shelter as of January 8, 2023. Between December 31, 2021 and December 31, 2022 there was a net increase of 21,338 individuals in shelter (Chart 3).  This one-year increase was unprecedented in terms of its size and magnitude.
• The surge in shelter population has been attributed to the arrival of tens of thousands of asylum seekers in the second half of 2022. Over 38,000 asylum seekers have arrived in NYC, and 26,100 remain in the Department of Homeless Services’ shelter system or the four Humanitarian Emergency Response and Relief Centers (HERRCs).  The chart below is exclusive of asylum seekers staying in the HERRCs.
• Although the City’s average monthly shelter population rose by a relatively moderate 2% in December, following increases as high as 10.8% in October and 9.9% in September, this is largely due to the opening of the HERRCs during that time. The City has since resumed the use of emergency shelters within the DHS system to house incoming asylum-seekers, and the end of year census began again to pick up.

Chart 3

SOURCE: NYC DHS, via NYC Open Data

• New York City closed 4Q-2022 with approximately 123,600,000 square feet of available office space for rent. The total amount of available office space for rent has been largely flat since 2Q-2021 (Chart 4).
• The current average rent is $66.10 per square foot and has similarly plateaued since 2Q-2021.

Chart 4

SOURCE: CoStar

Travel and Tourism

• Airport passenger volume at New York City area airports has surpassed pre-pandemic levels for the first time in November, with travelers up 2% compared to November 2019 (Chart 5).
• The City’s air travel again outpaced the nation: air travel in the U.S. was down 6% from pre-pandemic levels in November.

Chart 5

SOURCE: TSA and Port Authority of New York and New Jersey

• International passenger travel at New York City area airports dropped to 3.2 million in November, a decline of 294,000 from October, and 414,000 lower than November 2019.
• The month-to-month declines are consistent with regular pre-Covid seasonal patterns (October typically sees higher levels of international visitors than November) and overall international visitation is showing a slow but steady recovery pattern (Chart 6).

Chart 6

SOURCE: Port Authority of New York and New Jersey, international revenue passengers

• Metro area transportation weekday bridge and tunnel traffic continues on par with pre-pandemic levels, but public transit remains down by about a third with subways, buses, and trains (LIRR and Metro-North) all clustering around 62% to 64% of pre-pandemic usage (Chart 7).
• Weekend service on the subway has hit higher utilization than average weekday use, with 67% of pre-pandemic levels over December (adjusted for holiday weekends). LIRR and Metro-North weekend utilization levels are much higher than weekday usage, with the Metro-North hitting 101% of pre-pandemic usage.

Chart 7

SOURCE: MTA

• Broadway gross revenues continued to inch back towards pre-pandemic levels, with December 2022 averaging 95% of December 2019’s levels (Chart 8).
• The strong numbers for the week ending on New Year’s Day were due to holiday timing. When combined with the prior week and compared to 2019, gross revenues were $6.5 million (7%) short of pre-pandemic levels.

Chart 8

SOURCE: The Broadway League

City Finances

Tax Revenues

• Personal Income Tax (PIT) withholding collections totaled $1.05 billion in December (-5.9% relative to December 2021, biased downward by fewer business days in 2022), essentially in line with budget projections. After correcting for calendar effects and the growth in base collections, our tracking estimate of bonus payments indicates a decline of around 20% in December.
• December was the first month of collections for the NYC Pass-Through Entity Tax (NYC PTET). Preliminary data indicates that combined NYS and NYC PTET collections were $5.7 billion. The preliminary allocation percentage to NYC is 30% or $1.7 billion. December NYC PTET collections are expected to reduce April NYC PIT payments by a corresponding amount.
• Preliminary data show that NYC’s corporation and unincorporated business taxes remained elevated in December 2022, growing 2.9% from December 2021.

Cash Balances

• At the end of calendar year 2022, The City’s central treasury balance (funds available for expenditure) stood at $8.3 billion, compared to $6.5 billion at the same time last year. On January 5^th, 2023, the cash balance rose to $15.3 billion, primarily due to incoming property tax receipts. It was the highest cash balance on record, exceeding last year’s number by $5.8 billion.
• Another part of the reason for the early-January spike was the receipt, on January 3^rd, of over $2.3 billion in American Rescue Plan-State and Local Fiscal Recovery Funds (ARP-SLFRF) and Coronavirus Response and Relief Supplemental Appropriations (CRRSA) education grants.
• The year-end cash balance includes $1.954 billion in the Revenue Stabilization Fund (RSF), the City’s rainy-day fund, the majority of which was allocated in fiscal year 2022.
• On Thursday, December 1^st, the cash balance measured close to $4 billion. It was the lowest cash balance of the fiscal year, but significantly higher than in previous years. The seasonal low measured $1.338 billion in FY 2022, $2.143 billion in FY 2021, and $1.769 billion in FY 2020.
• The Comptroller’s Office’s review of the City’s cash position during the first quarter of FY 2023 and projections for cash balances through March 31, 2022, are available here.

SPOTLIGHT

Pandemic Aid to NYC Households and Businesses

This month’s spotlight looks back at the substantial federal aid that individuals and businesses in New York City received to help them weather the Covid-19 pandemic. In response to the threat of economic collapse brought about by the pandemic and its ensuing closures, the federal government implemented a massive expansionary fiscal policy exceeding $5 trillion.

In the ongoing work of the Comptroller’s Office, we have to date focused largely on the approximately $26 billion in federal fiscal transfers that directly impact the City’s budget, providing the City with assistance to enable it to scale up testing and vaccination, to avoid laying off teachers and other municipal workers, and to preserve a wide array of municipal services.

At the same time, a much larger amount of federal spending has been paid directly to households and businesses.[1] In this spotlight we give a first, partial description of their scope in NYC. We start by looking at the personal income statistics published by the Bureau of Economic Analysis (BEA) in November of 2022. We then provide NYC-specific data on some of the main components of the transfers: Unemployment Insurance and its supplements; Economic Impact Payments (EIP) to individuals, also commonly referred to as “stimulus checks”; and the Payroll Protection Program (PPP) for businesses. Table S.1 provides a breakdown of the spending on these federal programs.

We find that New York City residents received over $52 billion in pandemic unemployment insurance benefits during the period between April 2020 through September 2022, and another $17.3 billion in stimulus payments. New York City businesses received $30.6 billion in loans, of which $28.0 billion (91.4%) has been forgiven.

The federal government’s expansion of unemployment insurance, stimulus checks, and the paycheck protection program for businesses helped alleviate and avert economic distress for many New Yorkers. It also significantly shored-up NYC’s economy as a whole. Despite historic job losses, population decline, and high inflation, total and per capita personal income rose during this period – due primarily to the federal government’s fiscal interventions.

Economists are engaged in an important debate about the fiscal impacts of such a massive stimulus program, which added an estimated $5.1 trillion to the federal deficit,[2] or nearly 24% of 2019 GDP (in current dollars) – in particular, to what extent it contributed to inflationary pressures.

Moving forward, in addition to these macroeconomic questions, it will also be important for policymakers to assess how well these specific programs worked, to help shape policy design for future economic crises.

Table S.1: Summary of Federal Pandemic-Related Aid to Individuals and Businesses

 SOURCE: Internal Revenue Service, U.S. Department of Labor, Pandemic Response Accountability Committee, Office of the NYC Comptroller

Personal Income

Despite historic job losses, population declines, and high inflation, total and per capita personal income (which represents all sources of income received by New York City residents) strongly increased in both 2020 and 2021 in real terms, as shown in Table S.2. Based on Census data, the Bureau of Economic Analysis (BEA) estimates that the NYC population dropped 4.0% between 2019 and 2021, the largest 2-year drop in data going back to 1969.[12] Total employment (the sum of wage and salary employment and proprietors’ employment) dropped 8.1% in 2020, the largest one-year drop in available data.

Table S.2: NYC Personal Income

 SOURCE: Bureau of Economic Analysis, Bureau of Labor Statistics.

The main driver of the growth in personal income was a large increase in personal transfer receipts, the vast majority of which are transfers from governments. Transfers increased by 38.3% in 2020, a result of pandemic-related federal spending, while the other sources of income dropped. In 2021, personal transfers grew again by 2.6% to nearly $160 billion. The end of pandemic spending programs in 2022 implies that personal transfers fell last year in both nominal and inflation-adjusted terms, although income estimates showing this will not be available until late in this year.

Table S.3: Components of NYC Personal Income ($2021, $b)

SOURCE:  Bureau of Economic Analysis, Bureau of Labor Statistics.

Table S.4 provides a breakdown of the major components of personal transfer receipts. Income maintenance benefits were boosted by the increase in SNAP and child tax credits. Unemployment benefits increased 30-fold in 2020[13] and remained elevated through their expiration in September 2021. Economic Impact Payments are included in the “other transfers” category, which, relative to 2019, increased 15-fold by 2021.

Table S.4: Components of NYC Personal Transfer Receipts ($2021, $b)

SOURCE: Bureau of Economic Analysis, Bureau of Labor Statistics.

Geographic Distribution of Income Supplements

The extraordinary increase in means-tested transfers and unemployment benefits disproportionately accrued to outer borough residents. In Chart S.1, we look at inflation-adjusted personal income per capita and the share of personal income accruing to Manhattan residents. Historically, the correlation has been generally positive over recent decades, suggesting that long-term growth in NYC personal income per capita has been driven by Manhattan residents. However, the relationship weakened in the 2010s, when NYC income per capita continued to increase while Manhattan’s share remained flat or declined. Manhattan’s share of personal income peaked in 2017 at 48.5%, declined to 46.4% by 2019 and dropped further to 43.6 % in 2021.

Chart S.1

SOURCE: Bureau of Economic Analysis, Bureau of Labor Statistics.

Looking more closely at the dynamics by income component and borough, Manhattan recorded the largest population and employment drops and was the only borough to lose total earnings between 2019 and 2021. In addition, personal transfers to Manhattan residents increased at a lower rate than in the other boroughs. The Bronx received the highest percentage increase, 48.9%, in personal transfer receipts from the federal programs outlined above, just enough to keep overall earnings steady.

Table S.5: Inflation-adjusted Income Growth Rates by Borough 2019-2021

 SOURCE:  Bureau of Economic Analysis, Bureau of Labor Statistics.

Unemployment Insurance

Traditional UI

At the start of the pandemic, New York City’s unemployment rate spiked to its highest level since the Great Depression, reaching 21.0% in May 2020, or over five times the city’s 2019 average.[14] With this came a massive increase in initial claims for unemployment insurance (UI).[15] Weekly initial claims peaked in early April 2020 at 184,530—nearly thirty times the average weekly level in 2019. While this figure dropped below 50,000 by June 2020, it remained substantially elevated above pre-pandemic levels well into 2021. Chart S.2 provides an overview of weekly initial claims for “regular” (or “traditional”)[16] unemployment insurance broken down by county.

Chart S.2

SOURCE: NY State Department of Labor

To better understand the relative impact of unemployment—and prevalence of unemployment insurance payments—in each New York City borough, Chart S.3 plots the monthly amount of regular UI beneficiaries in each borough as a percentage of the borough’s labor force size in 2019.[17] The Bronx saw the highest amount of UI beneficiaries relative to its labor force size, reaching over 19% in June and July 2020. This figure dropped rapidly beginning in late 2020 but has remained elevated above all other boroughs. Queens had a similarly high level of UI beneficiaries as the Bronx in the early months of the pandemic but recovered more quickly. Meanwhile, Manhattan saw the lowest level of UI beneficiaries across all boroughs, though it still reached over 11% of the labor force size in June and July 2020.

Chart S.3

SOURCE: NY State Department of Labor; Office of the NYC Comptroller

The pandemic had a greater impact on some New York City industries than others. Chart S.4 depicts the monthly number of regular UI beneficiaries in select industries as a multiple of each industry’s 2019 average. The Accommodation and Food Services sector was especially hard hit, as the number of UI beneficiaries reached over 43 times the industry’s 2019 average in June and July 2020. The level of UI beneficiaries in both Retail Trade and Arts, Entertainment, and Recreation reached over twenty times their 2019 averages at their respective peaks. Among New York City’s largest industries, Finance and Insurance saw the lowest level of UI beneficiaries, peaking at four times the industry’s 2019 average in June 2020.

Industries also recovered at differential rates. For example, while UI uptake in Health Care and Social Assistance did not peak as high as in other industries, it has remained elevated above them since mid-2021. On the other hand, the level of UI beneficiaries in Arts, Entertainment, and Recreation dropped nearly back to pre-pandemic levels earlier than in other industries.

Chart S.4

SOURCE: NY State Department of Labor; Office of the NYC Comptroller

COVID-19’s disproportionate impact on women, especially when compared with previous recessions, has been well documented. It is also reflected in the level of unemployment insurance uptake by gender. Chart S.5 plots the monthly ratio of female to male UI beneficiaries in New York City beginning in 2019. While this ratio mostly hovered below 1.00 prior to the start of the pandemic, reaching as low as 0.83 in February 2020, it steadily grew to 1.31 by October 2021 before beginning to decline again. An analysis of nationwide unemployment insurance data from the Bureau of Labor Statistics supports the idea that the share of women receiving UI benefits increased during the pandemic relative to long-term trends. The greater increase in unemployment among women after the pandemic began likely reflects disproportionate reductions in service occupations as well as the impact of child care facility closures on female caregivers.[18]

Chart S.5

SOURCE: NY State Department of Labor; Office of the NYC Comptroller

Federal Supplemental UI Programs

To fully understand the scale of unemployment insurance benefits which reached New York City households during the pandemic, we must look not only at traditional unemployment insurance but also at the federal supplemental UI programs implemented during this period.

“Traditional” or “regular” unemployment insurance is a state-administered social insurance program which replaces a portion of a worker’s weekly wages during unemployment, typically after they have been laid off. In New York State, regular UI can replace an individual’s weekly wages for up to 26 weeks, at a maximum benefit of $504 per week.

Beginning with the Families First Coronavirus Response Act and the CARES Act in March 2020, Congress established a series of programs to expand UI eligibility to new workers, extend the maximum duration of UI benefits, and increase the maximum weekly level of UI benefits. Pandemic Unemployment Assistance, for example, provided unemployment benefits to individuals not traditionally eligible to receive unemployment benefits, such as part-time, self-employed, and “gig” workers. These programs are listed, along with a brief description, in Table S.6. Each program expired on or before September 5, 2021. Regular UI benefits averaged $399 per week over 2020 and 2021. Therefore, total UI benefits inclusive of FPUC in 2020 were higher than median weekly earnings of $920 for full-time workers in 2019.[19]

Table S.6: Pandemic-Era Federal Supplemental UI Programs and Descriptions

SOURCE: NY State Department of Labor; Office of the NYC Comptroller

Chart S.6 shows the weekly number of New York City beneficiaries for each program, including regular UI. Note how Federal Pandemic Unemployment Compensation (FPUC) benefits expired on July 25, 2020 and were not renewed until the last week of 2020. In order to replace part of the supplemental UI income people missed during this period, New York State applied for FEMA’s Lost Wages Assistance (LWA) program. The federal government approved a total of six weeks of LWA in New York State, covering the benefit weeks ending between August 2 through September 6, 2020. These payments were primarily administered during the weeks of September 14 and September 21, 2020,[21] as seen by the purple spike in LWA beneficiaries during this time. Around 26 weeks after the start of the pandemic, in September 2020, the number of beneficiaries of the Pandemic Emergency Unemployment Compensation (PEUC) and Extended Benefits (EB) programs began to grow. Both of these programs were set up to extend UI benefits to those who had exhausted their eligibility for traditional UI.

Chart S.6

SOURCE: NY State Department of Labor; Office of the NYC Comptroller

*Note: Total beneficiaries shown for Pandemic Unemployment Assistance includes beneficiaries of the Mixed Earner Unemployment Compensation program.

Chart S.7 shows the total weekly benefit volume for New York City UI beneficiaries by program, including regular UI. Compared with Chart S.6, FPUC now appears much more significant in the early months of the pandemic. This is because FPUC beneficiaries received up to $600 per week between April through July 2020, a figure which was reduced to up to $300 per week after the program was renewed in December 2020.

Chart S.7

SOURCE: NY State Department of Labor; Office of the NYC Comptroller

*Note: Total benefit volume shown for Pandemic Unemployment Assistance includes benefits from the Mixed Earner Unemployment Compensation program

Finally, Chart S.8 plots total spending on UI recipients by program. In all, New York City residents received over $52 billion in UI benefits during the period between April 2020 through September 2022—most of which came from the federal supplemental programs that expired by September 2021. $28 billion in benefits, over 48 percent of the total, came from FPUC. Pandemic Unemployment Assistance to NYC’s many gig workers, self-employed independent contractors, and part-time workers not eligible for regular UI amounted to over $10 billion. Regular UI, meanwhile, accounted for just under $10 billion—or 17 percent—of total UI spending during the pandemic period.

Chart S.8

SOURCE: NY State Department of Labor; Office of the NYC Comptroller

Economic Impact Payments (EIP)

In 2020 and 2021, the federal government made three rounds of direct cash transfers to individuals as part of three stimulus packages enacted over the first 12 months of the pandemic. These stimulus payments were all dependent on 2018, 2019 and 2020 adjusted gross income (AGI) levels, with the full payment amount beginning to phase-out for those with AGI above $75,000 ($150,000 joint, $112,500 head-of-household). Automatic payments were made to Social Security recipients and other federal beneficiaries, many of whom do not file tax returns. Other non-filers were also able to claim payments directly from the IRS. Undocumented immigrants – who number over half a million in NYC[23] – were not eligible to receive EIP, as they generally lack required Social Security numbers. (New York State created a $2.1 billion “Excluded Workers Fund” to provide support for jobless workers who were excluded from unemployment benefits, including undocumented adults and those with nontraditional jobs; this and other state programs not funded with federal dollars are not included here).

Table S.7 shows estimates of the payments made to NYC residents for each round of the stimulus checks. In total, New Yorkers received $17.3 billion in stimulus payments.

Table S.7: Economic Impact Payments to New York City Residents, 2020-21

SOURCE: Internal Revenue Service (IRS), NYC Department of Finance, Office of the NYC Comptroller

* Estimates for tax filers in first two rounds based on Form 1040 tabulations by NYC Department of Finance. Due to IRS processing delays, 1040 data is incomplete, and the number of tax filers may be an undercount.

** Estimates for Round 3 and non-filers in all rounds by Office of the NYC Comptroller.

Paycheck Protection Program[24]

The Paycheck Protection Program (PPP) was the largest program providing direct assistance to businesses. PPP loans were made available to both employers (e.g., corporations) and non-employers (e.g., independent contractors) in the second and third quarter of 2020 and again in the first and second quarter of 2021. After spending down their “first draw” loan, businesses with fewer than 300 employees meeting certain revenue loss requirements were allowed to apply for a “second draw” loan. In order to obtain forgiveness (i.e., to convert the PPP award from a loan to a grant), borrowers were generally required to maintain employee and compensation levels over an 8- to 24-week period after disbursement (with weaker “safe harbor” provisions also applicable), and spend proceeds on eligible expenses, of which at least 60% had to be payroll costs, as well as rent, insurance, etc.[25]

Table S.8 summarizes the total amount approved and forgiven by draw and calendar quarter of approval. We estimate that New York City businesses received $30.6b in loans,[26] of which $28.0b (91.4%) was forgiven as of the latest data for the third quarter of 2022. First draw loans amounted to $21.2b, the majority of which ($18.2b) were approved in the second quarter of 2020. Total second draw was $9.4b, with most second draw loans ($8.0b) approved in the first quarter of 2021. Overall, nearly $12.0b in loans were approved in 2021, 39.1% of the total. Forgiveness percentages are above 91% for both first and second draw loans, with lower percentages for loans approved in the second quarter of 2020 and 2021.

Table S.8: Amount Approved and Forgiven as of 2022Q3

SOURCE: Small Business Administration

As shown in Table S.9, PPP targeting changed over time. Most loans approved in 2020 went to employers and most first draw loans in 2021 went to non-employers. The vast majority (81.3%) of loans to employers in 2021 were second draws.

Table S.9: Number of First and Second Draw Loans

SOURCE: Small Business Administration

To put the number of loans in context, we calculate first draw recipients as a percentage of businesses (both employers and non-employers) in 2019, by county. Among employers, the fraction receiving first draw loans was highest in Brooklyn (63.2%), followed by Manhattan (58.5%), and lowest in the Bronx (51.1%).  The fraction of non-employers receiving loans was quite low in the first round, but increased substantially in 2021 (as already shown in Table S.9), with the highest participation rate in the Bronx (22.2%).

Table S.10: First Draw Loans by Business Type and Take-up Rate

SOURCE: Small Business Administration, Census Bureau, Office of the NYC Comptroller.

Finally, we merge employer loans with Quarterly Census of Employment and Wages data. In Table S.11 we look at the distribution of first draw loans by (self-reported) sector and how the amount compares with pre-pandemic (2019q2) earnings.[27] Sector information can be noisy, with firms reporting higher than actual employment in agriculture, mining, and manufacturing. The data show that Professional, Scientific, and Technical Services obtained the largest share of loans, followed by Health Care and Social Assistance, and Accommodation and Food Services. A few sectors received more than 50% of pre-pandemic earnings: Construction, Accommodation and Food Services, and Other Services.[28] Overall, first draw loans amounted to 22.1% of quarterly pre-pandemic earnings. The share of first draw loans by sector and borough does not show a statistically significant correlation with job losses. Conversely, the job recovery does not appear to correlate with the share of loans received.[29]

Table S.11: First Draw Loans by Sector

SOURCE: Small Business Administration, Bureau of Labor Statistics, Office of the NYC Comptroller.

Conclusion

The fiscal policy response to the COVID-19 pandemic generated an increase in overall personal income of NYC residents, despite historic declines in other source of income, record job losses and outmigration. The programs were not only expansive, but they introduced innovations that should be considered in future downturns.

Substantial pandemic assistance was provided through automatic cash transfers, regardless of tax filing status. The simplicity of these programs has generally been viewed as a benefit for rapid distribution. However, because they relied heavily on discretionary choices by legislators amidst a crisis, some of that advantage was reduced. Scaling-up direct subsidies during future crises would likely be enhanced by a wider use of pre-planned policy triggers (often called “automatic stabilizers”).[30]

Pandemic unemployment insurance was extended to the self-employed, gig workers, and part-time workers, who are generally ineligible for conventional unemployment insurance in the United States. This was especially important given the growth of the gig economy in recent years. Research suggests that the PUA program was successful in increasing access to benefits and ensuring against income losses for workers on the margins of the labor market, and did not see clear evidence that PUA recipients exhibited greater work disincentive effects than did traditional UI recipients, suggesting that consideration is warranted of more permanent eligibility expansion.[31]

The performance of PPP loans appears less clear-cut with studies pointing to the high cost per job saved and to the misallocation of loans. Available estimates at the U.S. level suggest that firms receiving the loans increased employment by between 2% and 8% around the time of disbursement (with smaller impacts afterwards).[32] Another study finds that only about one-quarter of PPP loans supported jobs that otherwise would have disappeared, that that PPP benefits flowed disproportionately to wealthier households, rather than to the rank-and-file workers its funds were intended to reach.[33] However, a better targeted forgivable loan program to small businesses, e.g. focused on those sectors where job losses were concentrated, could be a viable policy option to protect vulnerable and cash-constrained enterprises.

Prepared by:  Francesco Brindisi, Jonathan Siegel and Andre Vasilyev

Endnotes

[1] See the tracker set up by the Committee for a Responsible Federal Budget https://www.covidmoneytracker.org. An more accessible source is New York Times Where $5 Trillion in Pandemic Stimulus Money Went, 3.11.2022.

[2] See Congressional Budget Office (2020) The Budgetary Effects of Laws Enacted in Response to the 2020 Coronavirus Pandemic, March and April 2020, June, https://www.cbo.gov/publication/56403 and (2021) The Budgetary Effects of Major Laws Enacted in Response to the 2020-2021 Coronavirus Pandemic, December 2020 and March 2021, September, https://www.cbo.gov/publication/57343.

[3] Direct payments to households. Combined three rounds of payments totaled up to $3,200 total per qualifying adult, plus up to $2,500 total per qualifying child.

[4] Authorized by the CARES Act (03/2020). Provided a refundable tax credit of up to $1200 for eligible individuals ($2400 for joint tax returns), plus $500 per qualifying child. Phased out at a rate of 5% AGI for income above $75,000 for individual filers ($112.5k for head of household, $150k for joint return).

[5] Authorized by the Tax Relief Act (12/2020). Provided a refundable tax credit of up to $600 for eligible individuals ($1200 for joint tax returns), plus $600 per qualifying child. Same phase out rules as those used under the First Round.

[6] Authorized by the American Rescue Plan Act (03/2021). Provided a refundable tax credit of up to $1400 for eligible individuals ($2800 for joint tax returns), plus $1400 per qualifying child. Phase out was steeper than under the previous rounds. Threshold income for individuals was set at $75,000, and the full phase-out amount was set at $80,000.

[7] The Families First Coronavirus Response Act and CARES Act authorized federal funds for several major temporary UI programs. The largest programs were Federal Pandemic Unemployment Compensation (FPUC), Pandemic Unemployment Assistance (PUA), and Pandemic Emergency Unemployment Compensation (PEUC). These programs expired in September 2021, though 24 states ended their participation in at least one program earlier. For more detail on these as well as smaller federal supplemental UI programs, see Table S.6.

[8] Provided low-wage, part-time, self-employed, and gig workers with benefits who were unemployed due to pandemic and not otherwise eligible for state UI benefits.

[9] Supplemented weekly UI benefits by $600 until July 25, 2020. It was then reestablished as a $300 supplement from December 26, 2020 to September 3, 2021. A separate program, Lost Wages Assistance, provided a supplement during the gap between these periods.

[10] Provided up to 49 additional weeks of benefits to workers who exhausted state UI benefits.

[11] Authorized by the CARES Act (March 2020). Uncollateralized, nonrecourse, forgivable loans offered to small businesses. Came with a 100% guarantee for SBA. Loans were forgiven if borrowers certified that funds were used within a specified period for payroll, utilities, rent, or mortgage payments, and that certain employment targets were maintained. Eligibility was limited to employers with fewer than 500 employees. Most loans were approximately 2.5 times the applicant’s average monthly payroll costs. Over 95% of total loan volume has been forgiven to date.

[12] Population estimates in the BEA data are described here: https://www.bea.gov/note-capita-personal-income.

[13] Unemployment benefits are taxable, and therefore provided indirect fiscal support to state and local governments. The NYC IBO estimates that unemployment compensation amounted to $22.9b in NYC Personal Income Tax returns for 2020.

[14] BLS unemployment estimates for New York City go as far back as 1976. 1976 was the peak of post-WWII unemployment rates in NYC, according to contemporaneous newspaper articles. See, for example, City’s 1975 Jobless Rate Was 10.6%,the U.S.’s7.5 – The New York Times (nytimes.com).

[15] The New York State Department of Labor defines initial claims as “the number of new applications filed by individuals seeking Regular unemployment insurance (UI) benefits. Every application is filed as a claim, regardless of the applicant’s eligibility to receive UI benefits.”

[16] The terms “traditional” and “regular” are used interchangeably here when referring to unemployment insurance. They are meant to distinguish pre-pandemic, standard unemployment insurance programs (which provide unemployment benefits for up to 26 weeks) from the federal unemployment insurance supplemental programs implemented after the start of the pandemic. New York State Department of Labor data on “Regular UI” claims and benefits includes traditional unemployment insurance, Unemployment Compensation for Federal Employees (UCFE), Unemployment Compensation for Ex-servicemembers (UCX), and Shared Work programs.

[17] Source: 2019 ACS 1-Year Estimates Data Profiles. Note that both labor force size and amount of UI beneficiaries are based on place of residence, not place of work.

[18] For more on COVID’s impact on caregivers, see Pandemic School Closures and Parents’ Labor Supply from NBER.

[19] The estimate is based on 2019 CPS monthly files available from IPUMS-CPS, University of Minnesota, www.ipums.org.

[20] Lost Wage Assistance was funded by the Federal Emergency Management Agency (FEMA) through its Disaster Relief Fund. They are included here as part of UI payments but are included in “other transfer receipts of individuals from governments” by BEA in the Personal Income Statistics. Total Lost Wage Assistance payments in NYC were $2.3b.

[21] See New York State Department of Labor’s Lost Wages Assistance Program FAQs

[22] With the exception of regular UI, the average weekly benefit value of each program was calculated from the program’s start date until its end date. For regular UI, the average weekly benefit value was calculated over the period April 2020 through December 2022.

[23] See immigrant-economic-profile (nyc.gov).

[24] Data and information on the program are available from SBA PPP pages: https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program. A streamlined description of PPP is available from Congressional Research Service (2021) “COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options,” R46284, May, https://crsreports.congress.gov/product/pdf/R/R46284. The Office of the NYS Comptroller provides an early summary of the program in NYC: Office of the NYS Comptroller (2021) The Paycheck Protection Program in New York City: What’s Next?, February, https://www.osc.state.ny.us/files/reports/osdc/pdf/report-10-2021.pdf.

[25] Forgiven PPP loans are subsidies to employers in the national accounts and thus do not enter directly Personal Income statistics. Additional aid to PPP recipients whose loans were forgiven through the tax code. Specifically: a) the amount of forgiveness was excluded from gross income and, b) expenses paid with PPP loans remained deductible from income.

[26] We used the reported project county location to identify loans in NYC. Loan amount is the “current approved amount”, which is 0.5% less than the original approved amount. The as-yet undisbursed amount is less than ½ million dollar or 0.001% of current approved amount. 89.5% of the total loan amount was paid in full with the remainder neither not paid in full nor charged-off (for defaulted loans).

[27] We chose 2019q2 to avoid seasonal effects in QCEW data and because most first draw loans were approved in 2020q2. All monetary amounts are adjusted for inflation to 2020q2 dollars. We aggregate sectors at the 2-digit North American Industry Classification System (NAICS) level. The “Not classifiable” category includes loans with NAICS code 99. Loans with missing NAICS codes were dropped from the sample.

[28] As mentioned, recipients in manufacturing NAICS codes reported overall employment above those reported by BLS, likely also leading to an inflated share of loan amount to payroll. “Other Services” includes establishments primarily engaged in activities such as equipment and machinery repairing, promoting or administering religious activities, grantmaking, advocacy, and providing dry cleaning and laundry services, personal care services, death care services, pet care (except veterinary) services, photofinishing services, temporary parking services, and dating services. Private households that engage in employing workers on or about the premises in activities primarily concerned with the operation of the household are included in this sector. For more details on Other Services see https://www.census.gov/naics/?input=81&chart=2022&details=81.

Private household establishments were not eligible for PPP and were disproportionally affected during the pandemic as shown in our July 2022 Monthly Economic Newsletter.

[29] We calculate the share of 2020 first draw loans by borough and sector. We regress the share on a categorical variable indicating the intensity of job losses between 2019q2 and 2020q2 (borough/sectors in the highest category suffered average jobs declines of 49.1%, while those in the lowest category recorded average losses of 2.5%), and a borough-specific dummies. The intensity of job losses is not statistically significant. On the other hand, outer boroughs all received a lower loan share relative to Manhattan (as also suggested by Table S.10). We then run regressions of job gains in 2020q3 and to the end of 2020 on the share of PPP loans interacted with the intensity of job losses, and borough dummies. The results show that sectors with higher job and in the outer boroughs recovered jobs faster. However, a higher share of PPP loans does not appear (statistically) to accelerate the recovery.

[30] See Ugo Gentilini,“Ten lessons from the largest scale up of cash transfers in history,” World Bank Blogs, July 13, 2022.

[31]  See J.P. Morgan Chase Institute (2022) Lesson Learned from the Pandemic Unemployment Assistance Program during COVID-19, April.

[32] See David Autor & David Cho & Leland D. Crane & Mita Goldar & Byron Lutz & Joshua Montes & William B. Peterman & David Ratner & Daniel Villar & Ahu Yildirmaz, 2022. “An evaluation of the Paycheck Protection Program using administrative payroll microdata,” Journal of Public Economics, Vol 211 and Michael Dalton (2021) “Putting the Paycheck Protection Program into Perspective: An Analysis Using Administrative and Survey Data,” WP 542, November.

[33] William R. Emmons and Drew Dahl, “Was the Paycheck Protection Program Effective?” Federal Reserve Bank of St. Louis, July 6, 2022.

Sincerely,

Brad Lander