New York by the Numbers
Monthly Economic and Fiscal Outlook

A Message from the Comptroller

Dear New Yorkers,

The economic numbers are mixed again this month. On the positive side, employment in New York City is now back at 99% of pre-pandemic levels, even with layoffs in technology. Restaurants and hotels, which took the hardest hit, are back at 95%.

But the bank failures at Silicon Valley Bank and Signature Bank pose serious new concerns (and remind us of the importance of strong public policy to manage risk, even when fast-talking lobbyists push to eliminate it). Inflation remains stubbornly high, and now the Fed’s ongoing efforts to combat it through interest rate increases could have implications for other mid-sized banks already under scrutiny by their depositors. And if banks become even more reluctant to make new loans, the likelihood of a recession grows.

Meanwhile, the ongoing arrival of families seeking asylum has pushed the shelter census to its highest levels ever, as the housing market remains tight. (Check out our issue brief, which details the contracts the City is entering into to provide shelter – and outlines the work needed to help people get out of shelter).

The City’s budget is mixed-news, too. Higher-than-expected revenues thus far will help to balance the budget for this fiscal year and next. But new labor contracts, declines on Wall Street, and the end of federal pandemic aid portend big gaps in the following years. (See our analysis of the Mayor’s Preliminary Budget and my testimony to the City Council).

For Women’s History Month, our spotlight focuses on the “care economy,” which has long been neglected and undercompensated, despite the centrality of care workers to all of our families, precisely because nurturing our kids and caring for our elders has been characterized as “women’s work.”

If we learned anything from the pandemic, it should drive us to better value care work. As the data shows, it has largely been public policy – raising the minimum wage, adding a small but meaningful boost for home care workers, and “pay parity” for childcare workers in the public and nonprofit sectors – that has achieved modest pay raises for home care and childcare workers in NYC, a workforce that remains largely low-income women of color.

Don’t let the mixed economic signals keep you from enjoying the first hints of spring. While you’re watching for the first blooms, we’ll keep watching the numbers.

Sincerely,

Brad Lander

The U.S. Economy

• The most recent data on U.S. prices indicate stubbornly elevated inflation, as the downward trend of late 2022 stalled. The Consumer Price Index (CPI) rose by 0.4% in February (seasonally adjusted), its second consecutive month of moderately fast growth. Core CPI, which excludes volatile food and energy prices, rose by an even quicker 0.5% and has risen by 0.4-0.5% each of the past three months. On the brighter side, wholesale prices as measured by the Producer Price Index fell in February, -0.2% for goods and -0.1% for services.
• Bank failures at Silicon Valley Bank in California and Signature Bank in New York stoked fears about the banking sector and prompted the federal government to take over both banks and insure all deposits (far above the stated $250,000 FDIC limit). These banking failures will likely have a dampening effect on lending, raising bank lending costs and precipitating tightening of lending standards. This will likely have a negative impact on economic and job growth.
  • The New York City economy may be adversely affected by the closing of Signature Bank and by a further pullback in lending by other mid-sized banks. Signature has been especially prominent in real estate lending in New York City—ranking first in number of loans (882) and third in loan volume ($13.4 billion), according to an analysis by the property data company PincusCo. Signature and other regional lenders are believed to be especially important in lending to rent-stabilized multifamily buildings that larger banks are less likely to pursue.
• As a result of the bank failures, the Federal Reserve is caught in the position of still aiming to calm stubborn inflationary pressures while trying to avoid creating further strain on commercial banks’ balance sheets. The Federal Open Market Committee is meeting March 21-22, and they may choose to pause or reduce the size of additional monetary tightening. A continued increase in interest rates right now could exacerbate losses on the balance sheets of many of the mid-sized banks that are currently under very close scrutiny by their depositors.
• Payrolls nationally rose by 311,000 in February, bringing the three-month total gain over 1 million. Gains were most prominent in leisure and hospitality (+105,000 in February), health care and social assistance (+62,800), and retail (+50,000). Information technology jobs fell (-25,000). The U.S. unemployment rate rose slightly to 3.6%, still a historically low level. While most economists have been expecting a slowdown this year, there have been few indications that one has begun.

NYC Labor Markets

• In its annual benchmark revisions released earlier this month, the New York State Department of Labor revised its NYC employment counts dating from January 2020 to December 2022. Beginning in the fourth quarter of 2021 and lasting throughout 2022, the revision shows an additional 42,000 private sector NYC jobs each month, on average, more than previously estimated.
• The benchmark revision plus new estimates for January 2023 jobs puts the city very close to its pre-pandemic level. On a seasonally-adjusted basis, January 2023 private employment in the City (4,084,000 jobs) was 99% of the February 2020 level (see Table 1).
• As a result of the revision, certain industries in NYC now appear further along their post-pandemic recoveries than previously believed. Jobs in the accommodation and food sector are estimated for January 2023 to be 95% of their February 2020 count, and financial sector employment now appears to have surpassed its pre-pandemic high (102%) (Chart 1).
• This benchmark revision has also recast the post-pandemic job recovery in NYC as closer to the national job recovery. The U.S. has already surpassed pre-pandemic levels by 3%.
• In January, private payrolls in NYC were estimated to increase by under 5,000 jobs, a modest increase relative to the average gain of nearly 20,000 over the past year. Jobs in the Information sector, which includes many high-tech positions, fell by an estimated 5,000 jobs.

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

SOURCE: NYS DOL, NYC Office of Management and Budget, and Office of the NYC Comptroller

Note: Due to revisions to earlier months, numbers may not match to previous monthly newsletters.

Chart 1

SOURCE: NYS DOL, NYC Office of Management and Budget, and Office of the NYC Comptroller

• Recently released data for the third quarter of 2022 from the Quarterly Census of Employment and Wages show that in the past year, total wages in the lowest-wage industries in NYC have grown more rapidly than in the highest-wage ones (Table 2).
  • Employment in the accommodation and food service industries surged by 24% from the third quarter of 2021 to the third quarter of 2022—a result of recovery from pandemic-restricted travel and dining. Retail employment levels have been rising much more slowly, as pandemic-related closures have likely accelerated a longer-term trend reduction in NYC employment in the sector.
  • Average wages in the two lower-wage industries rose 10% from the third quarter of 2021 to the third quarter of 2022. In contrast to wages in the higher-wage industries, which rose only 1-2% in the same period. Across all NYC industries, wages rose by 3% over the same four quarters ending in Q3 2022.

Table 2: Employment and Wages in High and Low-Wage Sectors of the New York City Economy

SOURCE: Quarterly Census of Employment and Wages. Lowest-wage and highest-wage sectors chosen according to average quarterly wages in 2019.

• The seasonally adjusted unemployment rate in NYC was 5.3% in January 2023, slightly higher than December 2022 rate (5.1%). Note, however, that the NY State Department of Labor also made an annual benchmark revision this month to the household data underlying the unemployment rate, which revised the December unemployment rate downward by 0.8%, and recast NYC as closer than previously thought to the U.S. national unemployment rate—which has been ranging between 3.4% and 3.6% since December 2022.

WARN Layoff Data

• In the past few weeks there have been Worker Adjustment and Retraining Notification (WARN) Act layoff notices posted in NYC by several prominent firms, including Goldman Sachs, Google, Amazon, Meta, and Twitter.
• WARN notices are a timely source of labor market information and have been shown to be a leading indicator of initial unemployment claims, in part because the notices predate the layoffs by several weeks.
• NY State data available here and updated twice-monthly shows that overall WARN-noticed layoffs started increasing over the summer and rose above pre-pandemic levels in January of 2023, the latest month available (Chart 2).

Chart 2

SOURCE: Pawel Krolikowski and Kurt Lunsford (data as of 2.28.2023) and Office of the NYC Comptroller.

Housing & Real Estate

• Median asking rent for NYC residential properties rose slightly in January, to $3,450 per month, according to StreetEasy, but remains slightly below last summer’s highs (Chart 3). It was the first monthly increase since August 2022.
• Rental rates in Brooklyn have been responsible for most of the movement in citywide averages during the past six months, having fallen by 5% since July 2022 while Manhattan and Queens have stayed mostly unchanged. It should be noted, however, that in the first half of 2022 Brooklyn experienced the largest run-up in median rents (22%) as compared to Manhattan (12%) and Queens (13%).

Chart 3

SOURCE: Streeteasy.com

• Median home values have been falling in all boroughs except Staten Island since last July, according to the recently revised monthly Zillow Home Value Index from Zillow.com. Suburban counties also have seen prices fall over that period, but they remain at a much higher ratio to their prices three years prior when compared to the city (Chart 4).

Chart 4

SOURCE: Zillow.com and Office of NYC Comptroller.

NOTE: The county-based Zillow Home Value Index (ZHVI) for each area is expressed here as a percent of the same area’s ZHVI from January 2020. Percent values for Long Island and larger New Jersey suburban counties were averaged to obtain the composites shown.

• The New York City Department of Homeless Services’ (DHS) shelter census continues to push historical boundaries with an average monthly population of 70,711 in February. This total includes an average of 21,743 asylum seekers residing within the DHS shelter system. An additional 7,673 asylum seekers were housed in the seven Humanitarian Emergency Response and Relief Centers (HERRCs) operated by NYC Health + Hospitals. The combined average population in February for the two City systems was 78,384, with asylum seekers accounting for 29,416 (38%) of the total (Chart 5).
• As of March 19, the number of asylum seekers continues to grow and is currently over 31,900.

Chart 5

SOURCE: NYC DHS, via NYC Open Data

NOTE: Figures shown are monthly averages. Data on the asylum seeker population within DHS shelters is not available prior to August 31, 2022.

Wall Street Profits

• In the 4^th quarter of 2022, profits among New York Stock Exchange member firms were $6.20 billion, slightly higher than the prior two quarters but down from $13.45 billion in the 4^th quarter of 2021 (Chart 6). Equity values rose in the fourth quarter of last year, relative to their lows at the end of the prior quarter, but remained significantly below their late-2021 peak. 2022 was the first year since 2008 that the S&P 500 index ended the year below where it started. Profits were also diminished by higher borrowing costs, with the Federal Funds rate rising throughout the year by more than 4 percentage points.
• For the full calendar year 2022, NYSE member firm profits were $25.5 billion, less than half of profits in 2021 ($58.4 billion). Among the 129 member firms in 2022, 27% (35 firms) were unprofitable, up from 8% in the prior year.

Chart 6

SOURCE: Intercontinental Exchange, pre-tax profits of member firms doing business with the public

Travel and Tourism

• New York City’s hospitality sector ended 2022 on a high note, as the average revenue per room peaked at $298 in September (chart 7). This amount surpasses the figures observed in any month of the calendar year prior to the pandemic, highlighting the industry’s strong performance and resilience.
• The demand for rooms in the hospitality industry in 2022 approached levels not seen since late 2019. The number of room bookings exceeded 3 million per month between March and December of 2022, before experiencing a typical seasonal decline in January 2023.

Chart 7

SOURCE: STR via CoStar

City Finances

Preliminary February 2023 Major Tax Collections

• The preliminary total taxes collected for the major taxes are higher than OMB’s projected collections for the month of February.

Table 3: Preliminary February 2023 Major Tax Collections

SOURCE: NYC Office of Management and Budget’s January 2023 Cash Plan; NYC Financial Management System (FMS); NYC DOF; NYS Comptroller

Income Tax Withholding in Bonus Season

• During the first quarter of the year, NYC receives tax payments on most year-end bonuses. The Comptroller’s Office estimates that by the end of this month, NYC tax withholdings related to December through March bonus payments will total approximately $1.35 billion in FY 2023, down 20% (approximately $270 million) from the prior year. These diminished bonuses are largely driven by the financial sector, which experienced significantly lower profit in 2022 versus the prior year.

New York City’s Cash Balances

• Current cash balances are at a historical high. As of March 15th, the City’s cash balance stands at $12 billion, compared to $5.5 billion at the same time last year.
• The cash balance includes $1.954 billion in the Revenue Stabilization Fund (RSF), the City’s rainy-day fund. The majority of funds, $1.455 billion, were allocated to the RSF in FY 2022.
• On January 25th, 2023, the City received $1.7 billion in new Pass Through Entity Tax (PTET). The PTET is an optional tax that partnerships or New York S corporations may annually elect to pay on certain income. The PTET is intended to be revenue neutral but currently reflects as an increase against the cash balance at the same time last year.
• This year’s cash balance is also high relative to last year’s due to the increase in property tax receipts. December and January receipts combined were about $930 million higher than the prior year.
• The Comptroller’s Office’s review of the City’s cash position during the second quarter of FY 2023 and projections for cash balances through June 30, 2023, are available here.

Chart 8

SOURCE: Office of the NYC Comptroller

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Contributors

Comptroller Lander thanks the following members of the Bureau of Budget for their contributions to this newsletter:  Jonathan Siegel, Chief Economist; Yaw Owusu-Ansah, Director of Tax Policy and Revenue Analysis; Steve Corson, Senior Research Analyst; Astha Dutta, Economic Data Analyst; Irina Livshits, Chief, Fiscal Analysis Division; Marcia Murphy, Principal Revenue Analyst; Krista Olson, Deputy Comptroller; and Francesco Brindisi, Executive Deputy Comptroller. Andre Vasilyev, Principal Economic Development Analyst, was the principal author of this month’s spotlight. The Comptroller also thanks Archer Hutchinson for design and lay-out, and welcomes back Angela Chen.

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Endnotes

[1] Some organizations define care workers purely by industry. For example, they focus on anyone who works in a health care, education, and/or social service institution, even in an administrative or auxiliary capacity. Others define care workers by occupation—for example, nannies, caregivers, home care workers, and house cleaners. Our analysis combines the two approaches to focus on a “core” subset of direct care workers.

[2] Occupations and industries are based on classification by the U.S. Census Bureau.

[3] These estimates account for employed and unemployed care workers only. If an individual’s employment status is listed as “Not in labor force” in the ACS, we do not consider them a care worker, even if their previous occupation and industry (before they left the labor force) would have qualified them as a care worker. Likewise, “non-care workers” (also referred to as “other workers”) in this analysis are only employed or unemployed workers.

[4] This is the average of the year-over-year change in quarterly job numbers. See New York State Department of Labor’s Quarterly Census of Employment and Wages (QCEW).

[5] See NYC IBO (2019) Past as Prologue: Revised Histories and Extraordinary Trends in the New York City Economy, and NYC OMB (2019) Quarterly Report on Current Economic Conditions, August, p.8.

[6] Note that the growth figures from QCEW represent a somewhat different subset of workers than our ACS-based estimate of the number of New York City care workers. This occurs for two reasons: 1) the QCEW provides the total number of workers in the two specified industries (home health care services and services for the elderly and persons with disabilities) regardless of occupation, while our analysis filters by both industry and occupation; and 2) the QCEW captures workers who live outside of New York City but work in the city, while our analysis focuses on New York City residents.

[7] The growth in personal care aides and decline in childcare workers and preschool and kindergarten teachers (as a proportion of New York City’s population) was statistically significant at P<5%. Changes in the proportion of home health aides and nursing assistants was not statistically significant.

[8] Both changes in median income statistically significant at P<0.1%.

[9] A worker’s implied hourly wage was calculated by dividing their total wage income by total hours worked per year, both of which are self-reported. Self-employed workers are excluded due to less reliable data on earnings and total work hours.

[10] The statewide implementation of the higher minimum wage is estimated to cost $7.7 billion over the first four years. The FY 2024 Executive Budget minimum wage proposal provides that indexation for home care aides’ wages would not start until the statewide minimum wage reaches $18.00. The minimum wage schedule for other areas in New York State and the definition of home care aide is available here.

[11] See the FY 2024 New York State Executive Budget: Health and Mental Hygiene Article VII Legislation.

Sincerely,

Brad Lander