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February 2, 2012

 

New York State's Economic Recovery May Be Losing Steam

Wall Street Job Losses Are Mounting


While New York State has regained 46 percent of the jobs it lost during the recession, in recent months the state has seen a decline in jobs while the nation has been adding them, according to a new report on economic trends released today by New York State Comptroller Thomas P. DiNapoli.

"New York's recovery appears to be losing momentum, which raises concerns about the pace of the economic recovery in 2012," DiNapoli said. "The ranks of the long-term unemployed have grown markedly and those that have found jobs are being paid less. New York's economy has improved over the past two years, but not all New Yorkers have benefitted equally."

As of December 2011, New York had regained 154,300 of the 333,400 jobs that were lost in the recession. New York ranked 16th among the 50 states in jobs regained, performing well-above the national average of 34 percent. Job growth in New York, however, was weak in the second half of 2011, with the state losing 11,200 private sector jobs since July. In addition, the average salaries of the jobs created in the past two years is more than 40 percent lower than the average salaries of the jobs lost during the recession.

The securities industry, a key economic engine for New York City and the state, lost $3 billion in the third quarter of 2011 and most large firms reported weak earnings for the fourth quarter. Job losses in the securities sector continue to grow as the industry downsizes in response to reduced profitability with 4,300 jobs lost since April 2011. Cash bonuses are also expected to be much lower than last year. Past studies by DiNapoli have found that the securities industry has a strong multiplier effect on the broader economy.

There have been some positive developments in recent months. The January 2012 Empire State Manufacturing Survey indicates that manufacturing activity is at its highest level in the past nine months. In the final months of 2011, consumer confidence improved sharply and initial unemployment claims have fallen over the past year. State sales tax collections rose by 4.5 percent in 2011, driven by tourism.

While the state has regained nearly half of the jobs lost during the recession, job gains have been uneven around the state. New York City has done well, regaining 52 percent of the jobs lost during the recession, but the city's suburbs have not fared well. The suburban counties in the Lower Hudson Valley have regained only 14 percent of the jobs lost, while Long Island lost an additional 2,500 jobs since December 2009.

Rochester regained 98 percent of the jobs lost, but Kodak filing for bankruptcy protection could result in thousands of lost jobs. Most other upstate metropolitan areas experienced weak job growth, while three upstate cites, Albany (1,700), Ithaca (1,000) and Binghamton (700), continue to experience job losses.

The report also found that:

  • Over the past two years, the government sector has shed 29,300 jobs (1.9 percent) in response to fiscal pressures brought on by the recession, as well as the loss of federal stimulus aid.
  • New York's Gross State Product is forecast to weaken in 2012, growing by only 1.7 percent, which is even less than the national forecast of 2 percent as consumer and business spending weaken and government spending contracts.
  • The state's unemployment rate remained at 8 percent in December 2011. There has been little change in the state's unemployment rate over the past year since it declined to 8.2 percent in December 2010.
  • The number of long-term unemployed people has increased significantly over the past two years. More than 350,000 state residents were without a job for at least 27 weeks in December 2011. While this is 23,000 less than one year earlier, it was 230,000 more than in December 2008. The long-term unemployed now comprise 40 percent of the unemployed, more than twice the rate than in December 2008.
  • Unemployment rates in New York City, Glens Falls, Binghamton and Utica-Rome exceeded the statewide rate in December 2011.
  • The residential real estate market in most upstate communities improved in 2011, but weakened in New York City's suburbs. Residential and commercial markets strengthened in Manhattan in 2011.

For a copy of the report visit: http://www.osc.state.ny.us/reports/economic/nys_econ_trends15-2012.pdf


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