Dear New Yorkers,
From tariffs and terminations to trillions in proposed federal spending cuts, you may be wondering what effect the headlines out of DC are having on the local economy. While it is still too early to see full impacts in the indicators we routinely track, these are extraordinary measures that will shape New York City’s economy in the months to come.
Changes at the federal level have already endangered the City’s finances. Just one day after publishing our last newsletter, we sounded the alarm about the Trump Administration brazenly seizing $80 million in Congressionally authorized FEMA funds out of the City’s bank account. The fight to recoup the money continues in the courts, but the episode shows the challenges ahead of us.
Data show signs that businesses and households alike are bracing for the fallout of the new national posture. Business sentiment is now at a 14-month low, and consumer confidence has soured. Trump’s trade wars risk worsening the affordability crisis at a time when New Yorkers are already confronting high rents and struggling to keep up with the costs of everyday goods.
There are some bright spots. Though the rental market remains tight, housing production is the highest it’s been in well over a decade. And the data continue to show that congestion pricing is working. Comparing year-over-year ridership during the two-month period before and after the policy went into effect suggests congestion pricing has directly boosted subway and bus ridership by three and four percentage points respectively.
Tourism, the focus of this month’s spotlight, is also strong. Hotel capacity has grown faster in New York City than in any other major city, and occupancy is also well above the national average (85 percent versus 63 percent). And after the pandemic wreaked havoc on the industry, Broadway is firmly back. New Yorkers across the creative economy – artists who make the city such a vibrant and desirable destination for tourists from around the world – are getting their curtain call again.
But as I said in my testimony on the Adams Administration’s Preliminary Budget for next fiscal year, we need to be more proactive in safeguarding the city and its finances during this tumultuous period. That is why I’ve proposed a $1 billion “Protecting New York City Reserve” to blunt the worst effects of funding cuts that Trump and Congress are poised and eager to make.
In spite of Trump’s attacks on his hometown, people want to come to New York City. We need to make sure the boroughs are places that New Yorkers can afford to live and thrive.
Finally, on a programing note, for the next three months, our Monthly Economic Newsletter will not be sent via email due to City Charter regulations surrounding the 2025 primary election. We will resume the monthly emails in July, but until then please find them on our website!
