No. 64 - April 4th, 2022

A Message from the Comptroller

Dear New Yorkers,

The economic data this month is decidedly mixed. New York City’s recovery continues, with steady if modest improvements on Broadway, and in restaurants and tourism, after pauses due to Omicron at the start of the year. Job growth has been strong, unemployment declining, and workers are seeing significant wage increases across sectors.

But unemployment in New York City remains nearly double the nation’s, and much higher for Black and Hispanic New Yorkers – unemployment actually increased in February for Black New Yorkers.

Meanwhile, rising inflation is eroding the wage gains many workers are seeing. Average hourly wages nationally have grown by 5.6% in March over the last year (with double-digit increases in the Leisure and Hospitality sector), but the Consumer Price Index nationally was up 7.9% in February over the last year. Locally, the CPI was up less but is still 5.1% higher than a year ago in the NY-NJ-PA metro area. My office will be doing a deeper dive on local inflation indicators in the coming weeks, with a particular look at the impact on low-wage workers.

In response to accelerating inflation, the Federal Reserve raised interest rates for the first time in over three years and has signaled that they intend to increase rates again at future meetings this year, as the Fed aims to slow demand.

This month’s spotlight focuses on the sharp increase in gas prices, spurred by inflation and Russia’s invasion of Ukraine. We look at the disparate impact across NYC neighborhoods, as New Yorkers in areas with less access to transit will feel the pinch at the pump more deeply. Public transit use continues to rebound, but relative to pre-pandemic levels, vehicle use is far ahead.

One bright spot here is that the City of New York has taken steps in recent years to shift approximately two-thirds of its fleet to electric and hybrid vehicles, which will help mitigate the impact of rising gas prices on the City’s budget.

Enjoy the warmer weather, and we’ll keep watching the numbers,

Sincerely,


Brad Lander

The U.S. Economy

• The nation created 431,000 jobs in March 2022, down from 750,000 in February. The labor market continues to tighten, with the unemployment rate down from 3.8% in February to 3.6% in March, essentially the same level as in February 2020.
• Average hourly earnings for all employees on private nonfarm payrolls grew by 5.6% over the prior year.
• The Consumer Price Index (CPI) rose by 7.9% for the 12-month period ending February 2022, up from a 1.7% inflation rate a year ago (Chart 1). The increase is attributable to energy (25.6%), food prices (7.9%), and shelter (4.7%).
• The NY-NJ-PA metro area inflation rate is lower than the national rate at 5.1% (Chart 2) due to energy and shelter prices rising less steeply in the metro area. The Comptroller’s Office will be doing a deeper dive on local inflation indicators in the coming weeks.
• The Federal Reserve raised the Federal Funds Rate by 0.25% in March, the first hike in over three years, and signaled a significantly steeper path going forward, peaking around 2.75% in 2023 (Survey of Economic Projections: https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20220316.pdf)

Chart 1

SOURCE: Bureau of Labor Statistics

 

Chart 2

SOURCE: Bureau of Labor Statistics

NYC Labor Markets

• The private sector gained 25,300 jobs in New York City in February 2022 (Table 1). This is a marked improvement from the gain of just 2,500 in January, when the omicron wave diminished expected gains.
• Weakness in Accommodation and Food Services (-1,900) was offset by growth in Health Care and Social Assistance (+8,400), Professional and Business Services (+8,200), Construction (+4,800), and Financial Activities (+4,300).
• As of February, the private sector recovered 647,000 jobs or 71.2% of the losses suffered in March and April 2020. Over the same period, the US private sector recovered all the losses and was above February 2020 employment levels.
• The unemployment rate dropped to 7.0% in February from 7.6% in January, but it remains nearly double the nation’s (3.8% in February 2022).

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

• Every year, monthly jobs data are benchmarked to the more comprehensive but lagged Quarterly Census of Employment and Wages. The new data shows a faster recovery than previously thought:
  • Private employment was revised upward by 86,400 in December 2020 and by 114,600 in December 2021 (Table 2).
  • As of December 2021, the largest revisions were in office-using employment* (+35,600) and in Accommodation and Food Services (+36,700).
  • The revised data also lowered unemployment to 7.4% in December (seasonally adjusted) versus 8.8% in the previous data vintage.
• The new data also shows that by the end of 2021, the private sector recovered 68.1% (vs. 55.2% before revisions) of the losses incurred in March and April 2020.

Table 2: Revisions to Private Sector Employment Data

• Newly released data for the third quarter of 2021 from the Quarterly Census of Employment and Wages shows employment in low-wage sectors of the economy was below 2019 levels while higher-wage sectors were close to pre-pandemic levels.
  • Third quarter employment in Accommodation and Food Services remained 29% below 2019 levels from the third quarter of 2020 (Table 3). Retail employment was 16% below the third quarter of 2019.
  • Employment in the Information sector was 4% above 2019. Jobs in Finance and Insurance declined by 4% and jobs in Professional Services declined by 2% compared to 2019 levels.
• Average wages were well above 2019 levels for both low and high-wage sectors.
  • Average wages increased by 9% in Accommodation and Food Service, and by 14% in Retail Employment.
  • Average wages increased 24% in the Information sector, by 16% in Finance and Insurance, and by 17% in Professional Services.

Table 3: Employment and Wages in High and Low-Wage Sectors of the New York City Economy, Q3 of 2019, 2020, and 2021

• Unemployment rates continue to vary highly by race/ethnicity. The unemployment rate for Black residents increased to 11.6% in February, while the rate for Asian and Hispanic New Yorkers, and the Citywide rate, dropped to new pandemic lows (data are not seasonally adjusted) (Chart 3).
• Relative to February 2020, the unemployment rate was 2.3 percentage points higher for Hispanic residents, 2.7 percentage points higher for Asian New Yorkers, 3.3 percentage points higher for non-Hispanic White New Yorkers, and 6.2 percentage points higher for Black New Yorkers.

Chart 3

SOURCE: Current Population Survery unemployment rates are not seasonally adjusted, unemployment rates by race/ethnicity calculated as 3-month averages

NYC Real Estate Markets

• Data from Douglas Elliman show that rents for higher-end brokered Manhattan apartments have continued to increase on a monthly basis in each of the last 12 months. The average asking rent of $80.66 per square foot in February represents a 7.8% increase from the prior month (Table 4, data are not seasonally adjusted).
• There were 346 fewer new leases in February while listing inventory increased by 225 housing units. The February vacancy rate of 1.32% is the lowest since the start of the pandemic.

Table 4: Douglas Elliman Rental Matrix, Trends in High-End Residential Apartment Rentals

• February data from Streeteasy.com show the number of apartments available for rent citywide has dropped to 23,880 housing units, the lowest inventory since the start of the pandemic in Spring 2020 (Chart 4).
• Citywide median asking rents continued their ascent in February, rising by $80 since January. The current median asking rent of $2,975 represents a 10% increase since October and November of last year (data are not seasonally adjusted).

Chart 4

• CoStar reports roughly 126 million square feet of office space is available for lease in New York City as of April 1^st, 2022, showing slight month to month increases since the beginning of this year, but down from peak availability in 2021 (Chart 5).
• Average asking rents continue a slight upward trend from the beginning of the year at roughly $66 per square foot as of April 1^st.

Chart 5

• During the final quarter of 2021, the availability rate for retail space declined or was unchanged in nine of 11 Manhattan submarkets, compared to the same quarter one year ago (Table 5). Rates ranged from about 17% on the Upper West Side and Third Avenue/Upper East Side to more than 30% in Herald Square and on Madison Avenue.
• Compared to the pre-pandemic fourth quarter of 2019, the retail availability rate has worsened in seven of the 11 submarkets.

Table 5: Manhattan Retail Availability Rate

NYC Return to Office

• The latest security card data from Kastle Systems show New York City area office occupancy continued to rise to 36.9% for the week ending March 30^th (Chart 6).
• Office occupancy in New York City is above San Francisco (where rates remain below 32%) but well below Houston, Dallas and Austin (where office occupancy climbed above 50%).

Chart 6

• The latest Google mobility data show time spent at New York City workplaces rose through March. As of March 26^th, time spent at workplaces was down 25% from pre-pandemic levels (Chart 7).

Chart 7

• February data from the Current Population Survey show the share of New Yorkers working from home due to COVID declined back to 21.4% – the lowest since the start of pandemic and down from 26.9% in January, reflecting the decline in Covid cases (Chart 8).

Chart 8

• MTA subway and bus ridership improved in February and March, with average weekday ridership reaching 57% of pre-pandemic volume on the subways and 62% on MTA buses in March (Chart 9).
• After a temporary drop in January, weekday vehicle traffic on MTA bridges and tunnels returned to near pre-pandemic levels in February and March, even as gas prices continued to rise (see spotlight).
• This MTA data continues to reflect a substantial modal shift away from mass transit and toward private vehicles. With vehicle traffic now at 98% of pre-pandemic levels, and only 37% office occupancy, it is reasonable to anticipate that traffic volumes could grow well above pre-pandemic levels as office occupancy returns.

Chart 9

• The city’s biking boom finished strong in 2021, with bike traffic on the four East River bridges increasing 93% in December 2021 over the same month in 2019 (Chart 10). An end-of-the-year surge in biking followed the mid-September opening of a dedicated bike lane on the Brooklyn Bridge.
• December volume increased on all four East River bridges but was up 190% on the Brooklyn Bridge, rising from 16,139 in December 2019 to 46,732 in December 2021.
• Biking volumes in January were closer to pre-pandemic levels, likely due to several winter storms, frigid temperatures, and Omicron’s impact on commuting and gatherings.

Chart 10

NYC Business and Tourism

• Broadway revenue rose steadily through March to $26.6 million the week of March 20^th, and 92% of seats were sold, suggesting strong demand by theatre goers (Table 6).
• Three new shows opened for previews by the third week of March bringing the total number of shows to 22 with another five opening in the rest of March and two in April according to Playbill.

Table 6: Broadway Performance Metrics

• Revenue per available hotel room (RevPAR) started to climb to $102 in February and $146 in March (through 19^th) after declining to $70 in January (data are not seasonally adjusted). RevPAR was significantly above the levels of $56 in February and $63 in March of 2021 (Chart 11).
• Total hotel room demand rose to 1.8 million in February, above the previous month and February 2021, but still short of the 2.8 million before the pandemic in February 2020.

Chart 11

• Data on hotel occupancy taxes through the first quarter of 2022 confirms that while there has been significant improvement, the recovery is only partial (Chart 12).
• In the latest two quarters, hotel revenues totaled $84.4 and $98.2 million respectively. Looking at comparable periods in 2018 Q4 and 2019 Q1, revenues are 58% lower than they were pre-pandemic.
• The hotel occupancy tax was suspended in 2021 Q3, resulting in an estimated revenue loss of $60 million.

Chart 12

• Data from OpenTable show New York City restaurant reservations for the week ending March 28^th are down 42% from pre-pandemic levels but have recovered substantially from early January when they were down as much as 81% (Chart 13).
• Excluding restaurants that have closed, seated diners at restaurants open for reservations (not shown) continue to grow and reached 84% of pre-pandemic levels in March 2022, compared to March 2019.

Chart 13

• After the Omicron variant disrupted travel plans in January, air travel improved in February. Nationwide, airport passenger volumes were 16% below pre-pandemic levels, similar to the performance recorded in November and December of 2021 (Chart 14).
• In the New York City area, airports handled 7.1 million passengers in February, about 23% less than the same month in 2019.

Chart 14

City Finances

• The City’s central treasury balance (funds available for expenditure) stood at $8.96 billion as of Thursday, March 31^st. At the same time last year, the City had $12.07 billion (Chart 15).
• The Comptroller’s Office’s review of the City’s cash position during the second quarter of FY 2022 and projections for cash balances through June 30^th, 2022, are available here.
• On a modified accrual basis, tax revenues in February 2022 were $355 million above NYC OMB’s projections. Preliminary data on March tax revenues show personal and business taxes significantly above projections.

Chart 15