No. 62 - February 7th, 2022

A Message from the Comptroller

Dear New Yorkers,

As we round the corner on the Omicron wave, there are many signs of a continuing economic recovery in NYC. Job creation is up and NYC’s unemployment rate is trending down, though still higher than the national rate. Despite a dip between the holidays and the surge in infections, security card and mobility data show New Yorkers are once again returning to offices.

Our spotlight this month highlights one piece of good news for that recovery and NYC’s FY23 budget: property values have recovered much more strongly than anticipated, and overall are now above pre-pandemic values.

While there’s reason to be optimistic about our city’s overall economy, there are serious questions about whether all New Yorkers will benefit. Persistent inflation represents a challenge for low-wage workers. Rental inventory has dropped below pre-pandemic lows, and asking rents are rising rapidly just as the eviction moratorium that has kept many in their homes expired.

We’ll be watching the numbers closely over the coming months, with a keen eye on whether it will be an inclusive recovery shared across all NYC neighborhoods.

Sincerely,


Brad Lander

The U.S. Economy

• Real US GDP grew at an annualized rate of 6.9% (preliminary) in the fourth quarter of 2021, boosted by the rebuilding of business inventories. Over the entire year, GDP grew at 5.7%, a pace almost entirely attributable to growth in consumption. Economic growth in 2021 was the fastest since 1984.
• Also highest in decades were December’s headline Consumer Price Index (CPI), (+7.0% year over year), core CPI (+5.5%), headline Personal Consumption Expenditures (PCE) price index (+5.8%), and the core PCE price index (+4.9%). (Core indexes exclude prices of food and energy, which tend to me more volatile).
• Despite the Omicron wave total nonfarm payroll employment increased by 467,000 in January, relatively close to the average monthly gain of 555,000 in 2021. The unemployment rate held steady at 4.0% and private-sector average hourly earnings rose 5.7% over the year.
• Other indicators reaffirmed the strength of labor income. In the last quarter of 2021, wages and salaries expanded at an annual rate of 9.8%. In December 2021, the Employment Cost Index for civilian workers grew 4.0% over the year, the fastest growth in 20 years.
• “With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate.” With these words, on January 26, the Federal Open Market Committee signaled that it could raise interest rates at its next meeting in March. The Comptroller’s Office expectation is currently for one 25-basis points increase per quarter in 2022.
• Furthermore, the Fed will end the purchase of Treasury and mortgage-backed securities in early March and published principles for “significantly” reducing its balance sheet, which will tighten financial conditions above and beyond the rate increases.

Labor Markets

• The NYC labor market continued to improve in December 2021, but private sector employment remained 10% below the pre-pandemic job peak reached in February 2020.
• Overall, the City has regained 509,000 of the 922,000 private sector jobs lost in March and April 2020. Nearly 60% of these gains were in Accommodation and Food Services, Health Care and Social Assistance, and Retail Trade. Despite this improvement, Accommodation and Food Services employment remained 33% below pre-pandemic levels (Table 1).

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

• New York City’s unemployment rate dropped to 8.8% in December 2021, down from 9.0% in November, and continuing its descent from the peak of 20.0% in May 2020 (Chart 1).
• Average hourly earnings in NYC increased 4.9% in 2021, the fastest pace since 2008 (not shown). Average weekly hours also increased in 2021, boosting the annual growth of average weekly earnings to 5.4% (source: NY Dept. of Labor).

Chart 1

SOURCE: NY DOL, private employment seasonally adjusted by NYC OMB

• Initial New York City unemployment insurance claims rose to 26,690 in December 2021, up from 21,730 in November, but remain well below the 84,695 in December 2020 (Chart 2), and the pre-pandemic 36,279 of December 2019 (not shown).

Chart 2

SOURCE: NY DOL

Real Estate Markets

• Data from Douglas Elliman show the higher-end brokered Manhattan apartment market continued to strengthen in December. Average asking rents rose to $72.00 per square foot, up from $71.24 in November, and the vacancy rate fell to 1.7% (Table 2).
• New leases were flat at around 3,300, but available inventory fell to 4,753, from 6,187 in November.

Table 2: Douglas Elliman Rental Matrix, Trends in High-End Residential Apartment Rentals

• December data from Streeteasy.com show the number of apartments available for rent citywide fell to 24,413, down from 27,992 in November (Chart 3). Apartment inventories have declined steadily across 16 months from a peak of over 75,000 in August 2020, and are below pre-pandemic levels.
• Median asking rents rose to $2,800 in December, up from $2,700 in November, and approaching the pre-pandemic average of nearly $2,900 in December 2019.

Chart 3

• CoStar reports roughly 124 million square feet of office space is available for lease in New York City as of February 1^st, 2022, showing little change from the beginning of the year (Chart 4).
• Average asking rents held steady at roughly $65 per square foot as of February 1^st, unchanged from both January 1^st and from the third quarter of 2021. CoStar predicts a recovery to pre-pandemic rents of $69 per square foot in the second quarter of 2023.

Chart 4

Return to Office

• The latest security card data from Kastle Systems show New York City area office occupancy rose to 25.8% the week ending Wednesday, February 2^nd, up from a recent low of 10.6% the week of December 29^th, but still well below the recent peak of 35% the week of November 10^th (Chart 5).

Chart 5

• The latest Google mobility data show time spent at New York City workplaces rebounded quickly, but not fully, from the dramatic year-end drop, which coincided with the holidays and the peak of the Omicron wave. As of January 26^th, time spent at workplaces was down 29% from pre-pandemic levels, compared to being down just 24% in mid-December (Chart 6).

Chart 6

• December data from the Current Population Survey show the share of New Yorkers working from home due to COVID fell to 21.8%, down from 23.1% in November, and the lowest of the pandemic period despite a December surge in COVID cases (Chart 7).

Chart 7

• The Omicron surge disrupted a long stretch of steady gains in weekday subway ridership, as average volume fell to 2.48 million in January, averaging 46% of pre-pandemic levels (Chart 8).
• Volumes declined across all MTA systems, as average weekday ridership in January fell to 34% of pre-pandemic levels on Metro-North and to 39% on the Long Island Railroad.

Chart 8

Business and Tourism

• Broadway revenue fell steadily through January to $15 million the week of January 30^th (Table 3). January is typically Broadway’s slowest month.
• Attendance fell to 139,584, and the number of shows fell to just 19, down from a recent high of 33 in late November.

Table 3: Broadway Performance Metrics

• Data from OpenTable show New York City restaurant reservations for the week ending February 1^st are down 63% from pre-pandemic levels, and down over 20 percentage points from late November, due to elevated COVID case numbers and winter weather (Chart 9).

Chart 9 

• The number of average daily visitors to Times Square has climbed for four consecutive months, reaching 244,194 in December, 72% of pre-pandemic levels (Chart 10).

Chart 10

• Average daily yellow taxi rides fell 10% in December to 103,585, less than half the 220,786 daily rides recorded in December 2019 (Chart 11).
• Daily volume for Uber and Lyft also dropped in December, falling 3% to 517,884 trips per day.

Chart 11

City Finances

• The City’s central treasury balance (funds available for expenditure) stood at $7.40 billion as of Tuesday, February 1^st. At the same time last year, the City had $10.11 billion (Chart 12).
• Lower property tax collections and payment of payroll tax in January 2022, that had been deferred under the CARES Act between April and December 2020, contributed to the decline.
• The Comptroller’s Office’s review of the City’s cash position during the first quarter of FY 2022 and projections for cash balances through March 31^st, 2022, are available here.

Chart 12