THOMPSON RELEASES ECONOMIC NOTES
-City's economy being outperformed by nation -
-Analysis of previous period of national job creation and current recession provides insight into which sectors are likely to spur the most jobs -
According to Economic Notes, a quarterly report released today by New York City Comptroller William C. Thompson, Jr., the City's economy posted its seventh consecutive quarter of negative growth, providing further evidence that we have yet to turn the corner and will lag the nation in economic growth.
In addition, Thompson's report includes an analysis of the 20 largest Metropolitan Statistical Areas (MSAs), titled "Where the Jobs Are," which provides insight into what regions of the nation created jobs during the 2000-2007 expansion, what sectors were the strongest, and the effect this recession has had on the respective locations and job sectors.
To view Economic Notes visit www.comptroller.nyc.gov
"It is clear by all indicators that our City continues to reel from the effects of the recession," Thompson said. "We are being outperformed by the nation, our unemployment rate continues to rise, and our tax collections have dropped. It is my hope that the analysis provided may be a point of reference to identify where we can maximize our efforts to create jobs in this economy.'
Thompson's analysis gives insight into what sectors are most likely to lead the way in job creation as we emerge from the recession.
Economic Notes provides a snapshot of some economic indicators for New York City such as:
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Real Gross City Product fell an estimated 1.6 percent in 3Q09 after a 3.2 percent decline in 2Q09, while the U.S. economy rose 3.5 percent during the third quarter
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NYC payroll jobs fell by 57,000 in September, bringing the total job losses to 113,700 since August 2008
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NYC unemployment rate rose to 10.3 percent in September 2009, as compared to 6.0 percent in September 2008
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General sales tax collections fell 12 percent in 3Q09 from 3Q08, and
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Ridership on NYC Transit plunged 4.5 percent in 3Q09 on a year-over-year basis
A special feature in this issue of Economic Notes is an analysis titled, "Where the Jobs Are," which provides insight into which of the twenty largest MSAs created jobs during the 2000-2007 expansion, what sectors were the strongest, and the effect this recession has had on the respective locations and job sectors.
The MSAs are broken down into three separate categories:
Mature - areas largely developed during the industrial era (e.g., New York, Boston, Chicago, etc)
Sunbelt - areas that experienced their most rapid growth after WWII (e.g., Los Angeles, Miami, San Diego)
Technology - (e.g., Washington D.C., Seattle, San Francisco)
"The economy needs to add over seven million jobs in order to return to a five percent national unemployment rate. The only way we will accomplish this is by identifying the sectors that have the most potential for job creation," Thompson said. "My analysis of the last expansion and the subsequent recession identified a few key areas we should be focused on as we aim to put America back to work."
Thompson noted that the employment in the nation's mature large cities, located in the northeast and Midwest, grew by only 76,000 during the 2000-20007 expansion, compared to 2 million in the Sunbelt and 160,000 in the technology regions.
The New York City metropolitan area added 181,000 payroll jobs during the expansion, an increase of 2.2 percent. In terms of percentage, New York was in the middle of the pack, outpaced by Baltimore, Philadelphia and Minneapolis, but faring much better than Boston and Chicago. The severe job decline in Detroit, which began well before the recession started, weighted down net employment growth in the mature northern cities.
One reason for the immense disparity in job creation between the regions is that population partially feeds job creation. Only six of the twenty MSAs experienced an increase in jobs per capita during the expansion. Much of the job growth in the Sunbelt areas was driven by migration, which spurred job creation in retail, construction and services.
In addition, Comptroller Thompson looked at various job sector performances during the expansion.
Retail employment as a whole only saw an increase of 154,000 jobs from 2000 through 2007. However, the slow creation in the retail sector was overshadowed by the dismal performance of two sectors once considered keys to metropolitan prosperity, manufacturing and information.
Manufacturing fell at a rate of 1.2 percent per year in the 20 largest MSAs from 2000-2007, and national manufacturing trends followed suit.
"At the end of 2007, our country had fewer workers on manufacturing payrolls that any time in the past 60 years," Thompson said. "New York was second only to Detroit in the rate of decline in this industry."
Coming as a particularly harsh blow to New York City was the rate of decline in the information industry. Information jobs declined at a rate of 2.5 percent each year from 2000-2007.
"While much has been written about the financial sector, information, including publishing and broadcasting is one of New York's signature industries," Thompson said. "Even before the recession began, we saw a trend of job losses in this industry. We need to better understand the economic problems of this sector and figure out ways to address them."
While the financial sector experienced losses in some regions including New York, the industry as a whole saw an increase during the expansion, mostly due to the Sunbelt regions.
The professional and business services sector, containing a mix of high-skill, high-wage industries including legal services and accounting, saw an increase in growth during the expansion. Washington D.C. led the way with job growth in this sector, accounting for more than 10 percent of the growth in the 20 MSAs.
By far, the most outstanding job growth sector during the expansion was that of educational and medical services, accounting for more that 50 percent of payroll employment increases in the 20 largest MSAs.
Educational services outpaced medical services due to the rapid growth of "educational support services," which includes educational consultants, guidance counselors, and educational testing and evaluation services. College and university employment also dramatically increased during the expansion, with New York City leading the way as compared to other traditional centers. In fact, for the first time in history, there were more New Yorkers employed in higher education than in manufacturing.
Almost all aspects of the medical sector, including home health care, out-patient clinics, nursing homes, and physicians' offices saw an increase in jobs during the expansion.
In addition, growth was also experienced in the leisure and hospitality sector, which added 640,000 jobs in the 20 largest MSAs. This sector flourished in the New York area, where we outpaced all other mature metros and exceeded the growth of some Sunbelt regions like Los Angeles, Miami, and Tampa.
Although they were responsible for much of the job growth during the expansion, the Sunbelt areas have been drastically affected by the recession, losing nearly 6 percent of their August 2007 job base. In fact, Phoenix (-12.1 percent), Riverside-San Bernardino (11.2 percent), Atlanta (-8.3 percent), and Tampa (-8.0 percent) have seen staggering losses. Only Detroit, among the mature areas, lost as high a proportion of its jobs.
"Much of the Sunbelt job growth this decade was driven by people migrating toward warmer climates," Thompson said. "We can't do anything about our weather, but we can work to minimize the other factors that cause people to leave our region."
Manufacturing suffered the most during the past two years, plunging nearly 15 percent in the 20 MSAs after a decline during the flush times of the expansion. Next to manufacturing, the construction industry suffered the biggest employment declines during the recession, losing more than 600,000 jobs from August 2007 through August 2009.
Only two sectors saw an increase in employment during this recession, education and medical care, and leisure and hospitality.
"As we look at this report and note where the jobs were created, lost, and sustained, we must ensure that any action to spur the economy does so with these trends in mind," Thompson said. "Clearly the most resilient sectors are education, medical care, and leisure and hospitality. We need to think more strategically about the role those sectors can play in our City's and our region's future.'