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Nys Econ Trends15-2012

Nys Econ Trends15-2012

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Published by: Casey Seiler on Feb 02, 2012
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Office of the State Comptroller 1
In the past two years, New York State hasregained 46 percent of the jobs lost during therecession, but not all parts of the State havebenefited equally. While the rate of job growthover the past two years has outpaced the rate in thenation overall, New York has lost jobs in recentmonths while the nation has added jobs.Unemployment insurance claims in New York have fallen over the past year, and while theunemployment rate has dropped from its peak, itremains high at 8 percent. Consumer confidencehas also improved, but consumer spending, atraditional economic driver, has been weak.New York’s fragile economic recovery could bederailed by a number of developments. TheEuropean sovereign debt crisis could affect thebanking and tourism sectors, which are importantto the State’s economy. A spike in oil priceswould consume a greater share of consumers’disposable income, leaving less available forspending that ultimately creates jobs.Disposable incomes will be reduced unless thefederal government extends the payroll tax cut fora full year and reauthorizes a recently expired taxbenefit for transit commuters. Federal budget cutscould also slow the State’s recovery.The securities industry, the State’s economicengine, lost $3 billion in the third quarter of 2011,and most large firms reported weak earnings forthe fourth quarter. The industry has resumeddownsizing in response to reduced profitability(4,300 jobs have been lost since April 2011), andcash bonuses will likely be smaller than last year.After a strong first half of 2011, job growth inNew York was markedly weaker during thesecond half of the year, raising concerns about thepace of the recovery in 2012. Recent changes inNew York’s personal income tax rates will reducetaxes and could provide some needed economicstimulus. Similarly, the Governor has outlined anambitious economic development agenda thatcould create thousands of new jobs.
Economic Trends in New York State
Thomas P. DiNapoli
New York State ComptrollerReport 15-2012 February2012
Recent Trends
 
New York has regained 183,600 of the privatesector jobs lost during the recession (58 percent),but the government sector has lost 29,300 jobsover the past two years.
 
The percentage of all jobs regained in New York(46 percent) ranked 16th among the 50 states,outpacing the national average of 34 percent.
 
Initial unemployment insurance claims for thefour-week period ending December 31, 2011,averaged 27,362, or 9.7 percent less than the sameperiod in 2010.
 
The unemployment rate was 8 percent inDecember 2011, unchanged from the prior month.While this is less than the national rate(8.5 percent), it is only 0.9 percentage points belowthe State’s recessionary peak.
 
Consumer confidence has yet to rebound on asustained basis, but it has shown someimprovement in recent months.
 
New York City (which accounts for 43 percent of the State’s job gains since December 2009)regained 52 percent of the jobs it lost in therecession. The City’s suburbs, however, have notfared as well.
 
The suburban counties in the Lower HudsonValley have regained 14 percent of the jobs lostduring the recession, while those in Long Islandhave lost an additional 2,500 jobs (0.2 percent).
 
The Rochester metropolitan area regained98 percent of the jobs lost in the recession, butmost upstate metropolitan areas have experiencedweak job growth.
 
New York’s per capita personal debt rose to$49,700 in the third quarter of 2011, reversing adeclining trend since 2008. Personal debt as ashare of income peaked at 110 percent in 2009,and has remained high, at 100 percent, in 2011.
 
The latest Empire State Manufacturing Surveyindicates that manufacturing activity hasimproved in recent months; in January 2012, itwas at its highest level in the past nine months.
 
 
2
 
Office of the State Comptroller
Gross State Product
New York State’s economic growth is influencedby national economic trends. While the nationaleconomy rallied in the fourth quarter of 2011, IHSGlobal Insight forecasts that growth in the GrossDomestic Product will average only 2 percentduring 2012, as consumer and business spendingweaken and government spending contracts.New York’s Gross State Product (GSP) is alsoforecast to weaken in 2012, growing by only1.7 percent. Construction is forecast to contract,and the rate of growth is expected to slow sharplyin finance (which accounts for one-third of theState’s GSP), business services, education, andhealth services.
Manufacturing Activity
The Empire State Manufacturing Survey(conducted by the Federal Reserve) examinesbusiness conditions at a sample of manufacturersacross New York State. The current surveyindicates that economic activity has improved inrecent months; in January 2012, it was at itshighest level in the past nine months. The surveyfound improvements in the level of new orders,shipments, employment, number of hoursemployees worked, and prices. Despite the year-end improvement, overall conditions were stillbelow levels experienced through most of 2010and early 2011.
Consumer Confidence
Consumer confidence looked to be rebounding inearly 2011, but it quickly retreated to levels lastseen in early 2009. In the final months of 2011,consumer confidence improved sharply, but it stillremained far below prerecession levels.
Retail Sales
State sales tax collections rose by 4.5 percent in2011.
1
New York City, which accounted for43 percent of statewide sales tax collections, hadstrong growth driven by a vibrant tourism sector.Other regions with tourism industries, such as theFinger Lakes and the Adirondacks, also had stronggrowth in State sales tax revenue. Growth wasweakest in the Lower Hudson Valley and LongIsland.
1
 
After adjusting for changes in the clothing exemption.
 
Real Estate
Home values across New York fell by about20 percent between 2006 and 2009, according tothe New York State Association of Realtors. Thestatewide median sales price rebounded by10 percent in 2010, but during the first 11 monthsof 2011, it rose by only 1.2 percent compared tothe same period one year earlier, and the numberof sales fell by 4.6 percent. In general, theresidential market showed improvement in mostupstate communities in 2011, but weakened inNew York City’s suburbs. For example, salesprices declined by 2.4 percent in Nassau Countyand 4.5 percent in Suffolk County, while they roseby 2.8 percent in Broome County and 11 percentin Madison County. Residential markets improvedin Manhattan, Brooklyn and Queens, and thecommercial market strengthened in Manhattan.
Employment
As of December 2011, New York had regained183,600 (58 percent) of the private sector jobs lostduring the recession (see Figure 1), but most of those job gains occurred early in the recovery. Jobgrowth was weak in the second half of 2011, withthe State losing 11,200 private sector jobs sinceJuly 2011.Over the past two years, the government sector hasshed 29,300 jobs (1.9 percent) in response to fiscalpressures brought on by the recession, as well asthe loss of federal stimulus aid. More than two-thirds of the job losses have been in localgovernments across the State.Altogether, the State has regained 154,300 of the333,400 jobs that were lost in the recession, or46 percent. New York ranked 16th among the 50states in jobs regained, performing well above thenational average of 34 percent.
 
-100-50050100150200250
D e  c - 0   9   e  b  -1   0  A  p-1   0   J   un-1   0  A u  g-1   0   O c  t   -1   0  D e  c -1   0   e  b  -1  1  A  p-1  1   J   un-1  1  A u  g-1  1   O c  t   -1  1  D e  c -1  1  
Cumulative Change in New York StateEmployment Since December 2009
Sources: NYS Department of Labor; OSC analysis
   T   h  o  u  s  a  n   d  s  o   f   J  o   b  s
Figure 1
Private SectorGovernment
 
 
 
Office of the State Comptroller 3
 Job Sectors
More than two-thirds of the jobs lost in New York during the recession were in three sectors (trade,transportation and utilities; professional andbusiness services; and manufacturing), but the jobscreated during the recovery have beenconcentrated in business services, education,health services and tourism. The average salariesof the jobs created in the past two years is morethan 40 percent lower than the average salaries of the jobs lost during the recession.The education and health services sector is theonly sector that added jobs during the recessionand has continued to expand during the recovery.The leisure and hospitality sector is the only sectorto regain all the jobs lost during the recession (seeFigure 2). Some sectors, such as government andmanufacturing, have continued to shed jobs duringthe recovery.
Jul. 2008 -Dec. 2009ChangeDec. 2009 -Dec. 2011ChangeNetChangeNetPercentChange
Education & Health Services50.870.9121.77.5%Leisure & Hospitality-1.836.835.04.9%Other Services-4.2-0.3-4.5-1.2%Professional & Business Services-79.268.4-10.8-0.9%Information-16.3-4.7-21.0-7.8%Financial Activities-58.213.0-45.2-6.3%Government-17.5-29.3-46.8-3.1%Trade, Transportation & Utilities-79.921.5-58.4-3.8%Construction-52.0-8.8-60.8-16.8%Manufacturing-75.1-9.5-84.6-15.8%
Total-333.4154.3-179.1-2.0%
Source: NYS Department of Labor; OSC analysis
Figure 2
Employment Changes by Sector in New York State
(Thousands of Jobs)
 
 Regional Employment 
The economic recovery has been uneven acrossthe State. While total employment has increasedsince December 2009 in most metropolitan areas,the share of jobs recovered has exceeded thestatewide average in only three areas (seeFigure 3). More recently, growth in most areasslowed in the second half of 2011 compared withthe first half of the year.New York City, which has accounted for the bulk of the State’s net job gains since December 2009,has regained 52 percent of the jobs it lost in therecession. Most of the City’s jobs gains have beenin business services, education, health services andtourism. The securities industry, which added9,600 jobs between January 2010 and April 2011,has lost 4,300 jobs since then. A number of largesecurities firms have announced that cash bonuseswill be much smaller than last year.Growth in New York City’s suburbs has beenmuch slower than in the City itself. The suburbancounties in the Lower Hudson Valley (Putnam,Rockland and Westchester) have regained only13.8 percent of the jobs lost during the recession.Gains in education, health services and tourismhave been partially offset by sizable losses ingovernment, construction and manufacturing.Long Island has lost an additional 2,500 jobs(0.2 percent) since the end of the recession. Largelosses in government, construction andmanufacturing have been partly offset by gains inbusiness services, education and health services.Job growth in the Mid-Hudson Valley is weak,with gains in education, health services andbusiness services partly offset by losses ingovernment, manufacturing and construction.Albany, Binghamton and Ithaca continue toexperience job losses. In Albany, most of thelosses have been in government; in Ithaca, joblosses were concentrated in education and healthservices.
 
Jul. 2008 -Dec. 2009Dec. 2009 -Dec. 2011ShareChangeChangeRecovered
Rochester-18.518.198.1%Glens Falls-2.61.454.6%New York City-128.066.151.6%
New York State-333.4154.346.3%
Kingston-2.30.941.6%Utica-Rome-3.11.238.0%Syracuse-13.33.828.9%Buffalo-19.32.714.2%Lower Hudson Valley-28.84.013.8%Mid-Hudson Valley-7.81.012.4%Long Island-50.0-2.5NAAlbany-15.0-1.7NABinghamton-5.8-0.7NAIthaca-0.3-1.0NANote: Data has been seasonally adjusted by OSC.Sources: NYS Department of Labor; OSC analysis
Figure 3
Employment Changes by Metropolitan Area
(Thousands of Jobs)
 Among upstate cities that are adding jobs,Syracuse is experiencing strong gains in businessservices, but is still contracting in manufacturingand most other sectors. In Buffalo, construction,education and health services are adding jobs, butgovernment, tourism, finance and manufacturing jobs are contracting.The fastest job growth has been in the Rochestermetropolitan area, where employment has reached98 percent of its prerecession level. Rochester’sgrowth has been driven by gains in professionaland business services, but Kodak recently filed forbankruptcy protection, which could result in theloss of thousands of jobs.

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