Recessions Impact on NYC vs USA

No surprise here:

"If the last two recessions are any guide, economists say, the city could be headed into a wrenching reversal that will last longer than the national downturn. Though by many measures the city’s economy is still chugging along even as the nation’s sputters, there are troubling signs: Business-tax revenues and the number of building permits are dropping while unemployment and office space availability are creeping up.

Perhaps most important, big investment banks continue to report losses on securities tied to mortgages, causing the elimination of thousands of high-paying jobs on Wall Street, with many more layoffs in the works."

Pretty much what you would expect, and it shows up in the charts:


The last two recessions hit NYC harder and lasted longer than the rest of the country.

Graphic courtesy NYT


History Hints a Recession Would Hit City Hard
NYT, April 28, 2008

Print Friendly, PDF & Email

What's been said:

Discussions found on the web:
  1. HCF commented on Apr 28

    But Barry…

    You must be wrong! NYC is the capital city of the fantasy land where the recession that never happened is over, where the government should stay away unless banks go bust (in which case they should give money, no questions asked), and where real estate can never go down because there is a pardigm shift in the laws of supply and demand


  2. AGG commented on Apr 28

    “This administration could not have done a better job of destroying American strength and leadership than if they had come into office with that express purpose… or, did they actually intend this result?

    “Their dogmatic perseverance at implementing perverse, pseudo-conservative politics, destruction of the rule of law at home and abroad, transfer of wealth from ‘lower’ classes to selected super-wealthy classes, and the milking of the American taxpayer for the benefit of their cronies the corrupt capitalists, all the while spouting slogans from a particular religious cult, fear mongering of terror and wrapping themselves in the flag, turning the country over to the tender mercies of hostile foreign creditor nations.

    “All this will be the wonder of future historians when they discuss how a great, free country can destroy itself in such short time with little or no protest from its citizens.” TG

  3. DL commented on Apr 28

    The truth of this probably won’t evoke a whole lot of sympathy for the (erstwhile) Wall Street fat cats or the Ferrari dealers who served them.

  4. bdg123 commented on Apr 28

    I don’t think the U.S. is going kaput. And, I don’t think it is the end of Wall Street. Neither of which would be good for me or anyone else in this world. But, I do think that from a financial industry standpoint, this is going to be the worst recession since the Great Depression. There is more and more evidence that Wall Street will be forced to give up much of what it created over a period of decades such as captive trading, the madness of leverage, quantitative finance, etc. Not because they want to but because they will be forced to in an act of survival. We already see rumors that some financial firms want to divest of certain business units. Wall Street is going to have to return to supporting the economy with capital. Not this jerk-off financial economy of pushing money around that leaves major turds in its wake. Most people don’t realize it yet, but that means a vast majority of the financial profits we saw over this past cycle are gone. Forever. Think about what that means. Forever.

    New York City is really going to suffer and there is nothing on any of the above charts that signals the scope of impact to come. Anyone who lived through the late 1980s in NY can attest to the brutality of what happened then. That was a comparative picnic. All of those quants are going to have to go find a real job. Doing what? Making things. And, since those jobs don’t yet exist…………

  5. Pat G. commented on Apr 28

    There are other metropolitan economies in the U.S.A. that to one degree or another will also suffer.

  6. Jim commented on Apr 28

    Seems NY suffers more in a downturn but doesn’t enjoy as much upside during growth years. I knew the city had negative alpha somewhere…

  7. CRG commented on Apr 28

    NYC’s economy is almost completely reliant on the financial sector these days; if things really do go bust on Wall Street, NYC is screeeeeewed like it hasn’t been in a long time.

  8. edhopper commented on Apr 28

    But I’ve been told that the New York housing market is bullet proof and there will always be plenty of Wall Street people who can but $1mil – $2mil condos in Manhattan and $500k starter homes in Queens.

  9. VennData commented on Apr 28

    Have you forgotten? What about when the Manhattanites get their soon-to-be-mailed tax rebate checks?

    I predict you’ll hear the Wal-Mart registers ringing from Greenwich to Central Park with folks stocking up on the necessities (not to mention those little Uptown indulgences from Sears.)

    Why, when it’s all right as rain again, look for a big outpouring of thanks and respect for our out-going Commander-in-Chief.

  10. jagmohan Swain commented on Apr 28

    Inventory-to-sales is at all time low.Low inventory means that sales are in keeping with production.If that is the case what will be the impact on production, if there is 2% sales adjustment to the downside?Not very much.So what is this brouhaha about recession?

    Employment never grew out of proportion with production growth during expansion phase of current business cycle, which means that there isn’t not much scope for lay offs without affecting current productions.So system is operating pretty efficiently on this front as well.Pretty much what you get at the end of a recession not at the beginning.

    Exports are booming ( WA & TX both grew their exports over 20% last year ), so that will provide some buffer.

    Yes Housing bubble has gotten a lots of people into massive debts especially speculators but take them out and most people who have bought houses have done a fair bit of planning for their mortgage obligations.It will take 1 year recession of unprecedented scale leading to unprecedented lay-offs to make a lots of people lose their jobs for 1 year long which then could worsen their own finances and deepen the housing crisis.I don’t see that kind of lay-off happening for the above reasons.The fact that Average Americans are not complete idiots ( excluding the speculators of course )can be gauged from a recent household survey where most people are bullish on their own financial situation ( which means they have planned their finances going forward ) but bearish on rest of the economy because of pervasive gloom and doom story coming from media.

    $DJT, the transport index, is already telling us that economy is not going under by any means.

    – A bullish voice

  11. Todd commented on Apr 28

    NY real estate has always defied logic to me because I have never understood the appeal to live there, and I grew up and lived in the NY area most of my life. The be-in-NY-at-all-costs mentality where a 400 sq foot studio for $1500/month staring at a brick wall across the way being with no natural sunlight is descibed as a ”gret deal.”

    Still, with the dollar being the new peso I can’t see Manhattan real estate devaluing anytime soon. Maybe it will just be rich foreigners who will be owning a lot of Manhattan, though.

    I, for one, am shedding no tears for the Hamptons crowd.

  12. daveNYC commented on Apr 28

    What CRG said.

  13. Eric commented on Apr 29

    “The last two recessions hit NYC harder and lasted longer than the rest of the country.”

    True, but the previous recessions did not. Notice that the job loss on wall street was severe following the dot com bust and 9/11. Banks have kept relatively lean since, so I don’t think we’ll see an over-sized drop this time round.

  14. Eric commented on Apr 29

    “The last two recessions hit NYC harder and lasted longer than the rest of the country.”

    True, but the previous recessions did not. Notice that the job loss on wall street was severe following the dot com bust and 9/11. Banks have kept relatively lean since, so I don’t think we’ll see an over-sized drop this time round.

Posted Under