New York City is experiencing its first job losses in the first five months of the year since the onset of the pandemic five years ago, signaling an economic downturn driven by various factors, including tariffs and policies from President Donald Trump.
If the current trend persists, city officials may have to grapple with difficult decisions later this year as tax revenues could fall short of projections outlined in state and city budgets.
Job loss was significant, with the city shedding 8,000 positions between December and May, according to seasonally adjusted data from the city’s Office of Management and Budget.
This data contrasts sharply with a previous projection anticipating an increase of 77,000 jobs for the year.
While the national economy continues to create jobs, albeit at a slower pace than the previous year, New York City is struggling to keep pace.
The numbers may paint a more alarming picture when considering that private sector employment, excluding healthcare, plummeted by 33,000 positions.
This downward trend particularly affects the high-paying finance and professional business services sectors, which are vital for generating tax revenue.
Jessica Walker, president of the Manhattan Chamber of Commerce, expressed concerns over the uncertainty created by tariffs, indicating that while existing staff were not being laid off, businesses are refraining from hiring new employees as a precautionary measure.
The only sectors showing job growth are somewhat paradoxical, primarily thanks to state and city budget increases.
Healthcare roles expanded by 21,000 within the first five months, driven primarily by home health care jobs, which tend to be among the lowest paid in New York City.
Notably, healthcare accounted for two-thirds of total job growth seen in 2024.
Simultaneously, growth in government jobs is primarily at the local level, as the city attempts to rebuild its workforce that diminished during the pandemic.
Compounding these challenges is the persistence of inflation in New York, which remains significantly above the national average, largely due to soaring housing costs.
Emily Eisner, an economist with the progressive Fiscal Policy Institute, noted that prices in the New York area rose by 3.4% in May, ranking as the second-highest increase among the 20 largest metropolitan areas in the U.S.
The local job dip raises questions about whether the city is headed towards a recession, with experts pointing out four critical areas for consideration.
Rahul Jain, deputy state comptroller for New York City, highlighted the need to monitor the health care sector’s growth, the securities job market, and the states of leisure, hospitality, and retail sectors.
Leisure and hospitality positions took a hit, dropping by 5,000 so far this year.
Recent forecasts from NYC Conventions + Tourism were revised downward, now anticipating a decline of 300,000 visitors to the city in 2024, primarily due to declining international tourism, especially from Canada.
Despite a slight decline in hotel occupancy rates in May by one percentage point, the figure remains robust at 88%, with room rates still at record highs, as reported by data provider CoStar.
Economic downturns could severely impact both state and city budgets, concerning officials who project significant spending increases amid anticipated reductions in federal aid.
The state budget for the new fiscal year, which began on April 1, has risen by just over 12%, four times the inflation rate, according to calculations by the Citizens Budget Commission (CBC).
The CBC also predicts that city spending will rise by at least 4% in the upcoming budget, set to be adopted by the end of the month, following nearly an 8% increase last year.
Both budgets are heavily reliant on an expectation of adding 77,000 jobs.
However, the Republican tax and spending cut legislation currently under consideration in Congress could result in a loss of up to $20 billion for both state and city budgets, complicating financial planning further.
While affordability has emerged as a primary concern in the ongoing Democratic mayoral campaign, economic issues and job growth have received less attention, but this may soon change.
Mayor Eric Adams, who is seeking re-election as an independent, frequently boasts about his economic management and highlights job growth.
In March, he released a statement celebrating the achievement of an all-time high in total jobs recorded, marking it as the tenth time under his leadership.
However, experts argue that the claim exaggerates New York’s economic recovery, as the city’s resurgence has lagged behind that of the overall nation.
New York has only regained the jobs lost during the recession more than a year after the national recovery began, recording a mere 2.7% gain compared to the country’s 5% employment growth.
Despite these challenges, Mayor Adams continues to assert that the city’s economic indicators remain strong.
His spokesperson, William Fowler, stated, “We have 127,400 more private sector jobs than we had in February 2020 before the pandemic, our private sector jobs have grown faster than the nationwide rate over the past year, and the city’s unemployment rate continues to decline month after month — now sitting at 4.8%.”
He added, “While national trends suggest a slowdown in growth, New York City’s economy remains strong, and we will continue to monitor the numbers and economic landscape at the local and national level.”
Looking forward, one potential area of economic revival could lie in the construction sector, where employment remains consistent and could experience growth due to a surge in residential projects facilitated by recent state and city housing policy changes.
Emily Eisner of the Fiscal Policy Institute emphasized the importance of the construction sector, stating, “I don’t see the city’s economy turning around unless there is a change in housing construction and growth in the middle-class jobs and homes where middle-class people can live. We are in a bind.”
image source from：thecity
