No. 65 - May 2nd, 2022

A Message from the Comptroller

Dear New Yorkers,

When Mayor Adams released his Executive Budget last Tuesday, the Office of Management and Budget revised revenue projections for the current fiscal year upward by $1.6 billion (as our office had projected) based on increased collections year-to-date. Then the end of the month brought the news that personal income tax collections in April exceeded projections by an additional $2 billion.

That provides the Mayor and the City Council with an opportunity to invest strategically in an inclusive recovery that will bring our economy back to life and support struggling New Yorkers – while also making the city more resilient for future crises, with larger investments in long-term fiscal reserves and infrastructure.

Our spotlight this month takes a close look at New York metro area inflation compared to the nation. While inflation is at its highest locally since February 1991, it is more than 2% lower than the national average. Part of that is due to lower-than-national-average transportation spending (amidst rising fuel prices), no surprise given the prevalence of our public transit here.

More surprising is that “shelter CPI,” which reflects the cost of housing, is growing more slowly than elsewhere, even though rents here are rising rapidly. Why? It may be that rent stabilization acts to hold down inflation. Of course, even if its lower than in other U.S. cities, inflation is still eating into the pockets of working New Yorkers.

We’ll keep watching the numbers.

Sincerely,


Brad Lander

The U.S. Economy

• The nation’s real gross domestic product (RGDP) dropped by an annualized rate of 1.4% in the first quarter of 2022[1]. This unexpected decline came on the heels of a 6.9% increase in the last quarter of 2021.
  • Personal consumption expenditures (PCE) grew 2.7% last quarter, slightly higher than the 2.5% growth experience in the previous one, undeterred so far by inflation.
  • Investment grew 2.3%, a much slower growth than the 36.7% seen in the last quarter of 2021, while government consumption expenditures and gross investment dropped 2.7%.
  • Exports dropped 5.9%, after growing 22.4% in the final quarter last year, while imports, which deduct from economic growth, continued to grow, at 17.7%.
• The nation’s Consumer Price Index (CPI) rose by 8.5% for the 12-month period ending March 2022 (up from a 7.9% annual rate of inflation from the prior month). CPI for the NY-NJ-PA metro area rose 6.1% for the year ending in March – far higher than recent years, but more than 2% less than the national average. This month’s spotlight explores this difference between the NY metro area rate and the national rate.

NYC Labor Markets

• The private sector gained 35,000 new jobs in New York City in March 2022 (Table 1). This is an improvement from the 29,000 jobs gained in February and the loss of 6,000 jobs in January.
  • The City’s total employment, seasonally adjusted, grew 8.9% on an annualized basis in March 2022, higher than the national rate of 3.5%.
• Except for Information (-1,000), all industries showed some gains with the largest gains occurring in Health Care and Social Assistance (+8,600), Professional and Business Services (+7,500), Accommodation and Food Services (+7.500) and Educational Services (+5,000).
• As of March, the private sector has recovered 688,000 jobs or 75.7% of the losses suffered in March and April 2020.

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

• The New York City unemployment rate declined to 6.1% in March from 6.6% in February, but it remains far above the nation’s (3.6% in March 2022).
• Unemployment rates continue to vary highly by race/ethnicity. The unemployment rate for Black New Yorkers declined to 10% in March, while the unemployment rate for Hispanic New Yorkers declined to 6.6%, compared to 4.8% for both white and Asian New Yorkers (Chart 1).
• Compared to pre-pandemic, the unemployment rate was 0.8 percentage points higher for Hispanic residents, 2.3 percentage points higher for Asian New Yorkers, 2.9 percentage points higher for non-Hispanic White New Yorkers, and 4.4 percentage points higher for Black New Yorkers.

Chart 1

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

• All boroughs are experiencing a steady decline in unemployment, and all are at their lowest unemployment rates since March 2020. (Chart 2)
• The Bronx unemployment rate remains well above the other boroughs. The gap between the Bronx’s unemployment rate and the citywide average narrowed slightly but remains wider than before the pandemic.

Chart 2

SOURCE: NYS Department of Labor 

NYC Real Estate Markets

• Data from Douglas Elliman show that vacancy rates in higher-end brokered Manhattan apartments have remained below 2 percent since December. March 2022’s vacancy rate of 1.89 percent is a stark contrast from the 11.25 percent vacancy rate in March 2021.
• The volume of new leases is up by approximately 1,400 in March while listing inventory has dropped slightly. The average asking rent of $75.05 per square foot in March represents a 7.8 percent decrease from the prior month, but remains higher than any other month since the pandemic began (Table 2).

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

• March data from Streeteasy.com show a continued ascension of median citywide rents as depicted by the black line in Chart 3. March’s median citywide rent of $3,000 was 20 percent higher than median rents in March 2021 and surpassed its pre-pandemic peak to hit its highest level ever.
• Citywide inventory increased by 10% to 2,900 additional apartments available for rent in March, compared to February, bringing the number of available apartments to more than 27,000 units. But that remains about half of what it was just one year prior, and near historic lows.

Chart 3

• The first quarter of 2022 was another strong one for New York City real estate sales, with total sales of $24.3 billion, up from $15 billion in the first quarter of 2021 (Chart 4).
• Residential sales totaled more than $15 billion, the highest first quarter going back to 2016. Commercial sales showed another strong quarter at $9 billion after a record-breaking quarter at the end of 2021 when commercial sales reached a total of $17 billion.

Chart 4

• There were 1,204 residential building permits filed citywide in February 2022, which trails the average 1,544 permits that were filed in the last 12 months (March 2021 – February 2022).
• In a comparable 12-month period prior to the pandemic from March 2019 and February 2020, an average of 2,234 residential permits were filed.
• The current 12-month mean represents a decrease of 31 percent in residential permitting activity vs. the pre-pandemic average. (Chart 5)

Chart 5

 

• Commercial office space availability remains near record-highs as leasing activity has slowed in 2022 when compared to the second half of 2021. This may be an indication that available square footage is plateauing, at least temporarily, at a higher level as companies have shifted to more remote/hybrid operations for a longer term (Chart 6).

Chart 6

• The availability rate for retail space declined in 10 of 11 Manhattan submarkets during the first quarter of 2022, compared to the same quarter one year ago (Table 3). Times Square had the largest decline, with retail availability falling from 31.4% in the first quarter of 2021 to 17.6% in early 2022.
• However, compared to the first quarter of 2020, availability rates were elevated in seven of the 11 submarkets. The largest increase has been in Herald Square/34^th Street, which saw its first quarter retail availability rate rise from 25.0% in 2020 to 39.0% in 2022.

Table 3: Manhattan Retail Availability Rate

NYC Return to Office

• The latest security card data from Kastle Systems show New York City area office occupancy stayed flat (other than a dip for the Spring holidays) compared to March at the rate of 37.4% for the week ending April 27^th (Chart 7).
• Office occupancy in New York City remains above San Francisco and San Jose (with a small margin) but significantly below Houston, Dallas and Austin (where office occupancy has climbed above 50%).

Chart 7

• The latest Google mobility data show time spent at New York City workplaces continued to be 25% below pre-pandemic levels through the first two weeks of April but declined to 36% as of April 22^nd due to school holidays (Chart 8).

Chart 8

• March data from the Current Population Survey show the share of New Yorkers working from home due to COVID continued to decline and reached the lowest point since the start of pandemic at 19.4% (Chart 9).

Chart 9

• After recovering from a drop in January amidst the Omicron surge, weekday MTA subway and bus ridership remained flat during the month of April, with weekday ridership averaging 56% of 2019 levels on the subways, and 63% on MTA buses (Chart 10).
• Vehicle crossings over MTA bridges and tunnels remain steady near pre-pandemic volumes.
• Both of the MTA’s commuter rail systems rose slightly to new pandemic-era highs during April, as average weekday ridership improved to 56% of pre-pandemic levels on the Long Island Rail Road (LIRR) and 55% on Metro-North Railroad (MNR).

Chart 10

• The spring season began with continued growth in biking across the city. More than 428,000 bikers crossed the City’s four East River bridges during the month of March, 49% higher than the roughly 288,000 crossings in March 2019 and 6% higher than volume in March 2021 (Chart 11).

Chart 11

NYC Business and Tourism

• Broadway shows grossed $34 million in revenue for the week ending April 24^th, reaching 90% of gross revenue during the same week in 2019 (Chart 12). Attendance totaled 267,796, down 15% from 316,868 in 2019.

Chart 12

• Following a sharp dip in hotel demand brought on by the Omicron wave at the turn of the year, revenue per available room in April rose to $213, a near rebound to December’s $214 revenue per available room amount. Total room demand in March also rallied, reaching 2.59 million rooms but still shy of the December high mark of 2.68 million rooms, and far below pre-pandemic highs of over 3.5 million. (Chart 13)

Chart 13

• Data from OpenTable show New York City restaurant reservations for the week ending April 28^th are down 39% from pre-pandemic levels but have recovered substantially from early January when they were down as much as 81% (Chart 14).
• Excluding restaurants that have closed, seated diners at restaurants open for reservations continue to grow and reached 88% of pre-pandemic levels in April 2022, compared to April 2019 (not shown).

Chart 14

• More travelers returned to airports in March, as nationwide passenger volumes reached 88% of pre-pandemic levels, a new pandemic-era record (Chart 15). Volume at New York City-area airports also improved to 83% of pre-COVID levels from March 2019.
• Lower air travel volume in the New York City area is the result of a slower recovery in international travel. During February, domestic passenger volume was down 13% at local airports, while international volume was down 41%, as compared to February 2019.

Chart 15

• Daily visitors to Times Square in March 2022 averaged 259,574, more than double the number from one year ago, the highest level since the pandemic began, but still more than 25% below the pre-pandemic high of 400,000 (Chart 16).

Chart 16

City Finances

Executive Budget: City Revisions to FY 2022 Overall Tax Forecast

• The NYC Office of Management and Budget revised its FY 2022 forecast for tax revenues significantly upward, by $1.6 billion, in the Executive Budget released last week.
• The revision essentially reflected unanticipated strength in collection patterns seen through March, which showed revenues exceeding OMB’s previous Plan forecast by almost $1.6 billion.
• However, these revisions did not incorporate additional revenues from recent April personal income tax collections, which exceeded the prior Plan estimates by an additional $2 billion, as detailed below

• The April data indicates that FY 2022 will likely be another record for NYC personal income taxes. Compared to a forecast for the month of $1.2 billion, filing data showed actual collections of $3.3 billion.
• Almost all measures of tax liability are higher compared to last year (adjusted for filing dates) and have more than doubled in the past 5 years.
• Estimated payments, which include first quarter installment and extension payments, were 16.2 percent higher than in 2021 and almost three times higher than five years ago in 2017.
• April’s result brings year to date personal income tax collections to $14.6 billion, just shy of the $14.7 billion forecast for the entire fiscal year (with two additional months of collections remaining, so final collections will be well above projection, even as just adjusted by OMB in the Executive Budget).

Table 4: April Personal Income Tax Collections* 

$ (‘000,000s)

Cash Balances

• The City’s central treasury balance (funds available for expenditure) stood at $10.9 billion as of Thursday, April 28^th (Chart 17). While this is consistent with the same time last year, the current cash balance is higher than anticipated due to timing of transfers from capital proceeds and the unexpectedly high personal income tax proceeds noted above. (Chart 17)
• 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.

Chart 17