November 30, 2006
Hevesi Says NYC Economy Doing Well, But Watch Out
State Comptroller Alan Hevesi released a report about the city's economy, noting that we had been benefiting from "a growing economy and sound management decisions made by the Mayor and the City Council over the past five years." Well, isn't that a little post-election political butt kissing? But the Mayor's budget was pretty cautious for the year.
A surplus of $1.9 billion is projected for the 2007 fiscal year (which ends next June), and the projected budget gap has decreased by almost $2.3 billion to just $510 million. Here are some of the factors:
- Wall Street profits are projected to reach $14.5 billion in 2006, an increase of 53.6 percent.But after the 2007 fiscal year, there may be problems: Nondiscretionary spending will be a higher percent of city spending and debt service will increase by 63% between 2006 and 2010.
- The City added 56,300 jobs in the first ten months of 2006 compared to the same period last year—the best rate of job growth since 2000. If the job gain is retained for the rest of the year, it would be the sixth-highest increase since the fiscal crisis of the 1970s.
- The unemployment rate has dropped to 4.1 percent in October 2006—a record low—and wages have grown by about 8 percent during 2006.
- Commercial vacancy rates are declining and rental rates are rising. For example, vacancy rates for prime midtown properties are approaching 7 percent, compared with 10 percent during 2004.
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How can there be a surplus and a gap at the same time?
I think it's the magic of bureaucracy!
ny benefits from an extremely extremely diverse economy. It also has corporate institutions that aren't likey to leave anytime soon. The only thing I would worry about is NY not being able to accomodate the poor pushing people out of the city and into economically depressed suburbs/boros.
Anyone remember when Bloomberg changed his election promises to match his opponent, and said that he would provide universal healthcare for all children under 18 in NYC?
Hello? [cavernous echo]
ny benefits from an extremely extremely diverse economy
Are you kidding? New York has one industry: Wall Street.
I dunno...Aside from wall street it is one of the biggest media hubs in the world. I would say midtown rents are higher than downtown ones because of the growth in that area. Also what else...Let's see...fashion, design, IT, universities/research, a lot. food industry, real estate, tourism, hedge funds (connecticut), advertising, import/export, shipping, VC, insurance...I dunno, I would say that's pretty diverse. Then again I live on a farm in chicago so why would I know anything. I also take a cow to work.
Matty, all of those industries you listed are miniscule compared to Wall Street and most of them are shrinking e.g. fashion, advertising. And the others are tied to Wall Street like hedge funds and VCs and private equity. Most of the new construction in Manhattan is high priced condominiums that only bankers and law partners can afford. IT in New York is a joke as is just about all other tech when compared to California and Boston.
As for rents, many of the Wall Street firms have moved to midtown. That's why the rents are higher. Goldman Sachs wanted to move to midtown too but was given tax breaks to build in Battery Park. Morgan Stanley moved to Times Square a long time ago. Lehman Brothers. And most of the small firms like VCs, private equity etc prefer midtown for the proximity to Grand Central and better dining options.