NEW YORK (Reuters) - An imminent recession could cost New York City 59,400 jobs between now and the middle of next year, with the profit-stricken financial sector the “epicenter” of the downturn, a report said on Tuesday.
This would amount to one-quarter of the hiring by private employers after the 2001 recession, according to the Independent Budget Office, a fiscal monitor that serves as the city’s equivalent of the Congressional Budget Office.
But the previous downturn, which accelerated after the September 11, 2001 attacks, will still turn out to have been more severe, as employers cut about 43 percent of jobs added in the expansion that lasted from 1993 to 2000, the report said.
Although the data are still too ambiguous to determine whether New York City is already in a recession, the report said the “Independent Budget Office is forecasting that a local recession is imminent, if it has not begun already.” No recovery is seen until the second half of 2009.
The past few months have seen steadily rising estimates of job losses, from the city and state comptrollers and private and public economists.
The Independent Budget Office’s new estimate assumes Wall Street will shed 33,300 jobs. This forecast is just a little less than the 36,000 positions the industry cut in the last downturn, according to James Brown, an analyst with the state labor department.
The consequences for New York City could be punishing if reality matches these forecasts, as the city’s financial sector serves the same role that the auto industry once did for Detroit.
Each job on Wall Street creates another two to three jobs in other industries, from law firms to restaurants. And Wall Street employees earn about 35 percent of all salaries and wages in the city of more than 8 million people.
Wall Street employment peaked at 200,300 in December 2000, and despite the last expansion, many companies permanently shifted workers outside the city in the wake of the September 11 attacks. The city had 182,300 people working for banks and brokerages at the end of March.
Mayor Michael Bloomberg, an independent, has cut spending several times since last autumn, and his revised proposal for a $59 billion budget would only increase spending by one-tenth of a percentage point.
Like much of the nation, New York City’s property owners saw values spike until the real estate market began icing over. Though the assessed values of apartment and commercial buildings will still rise 3.4 percent this year, partly because these increases are gradually phased in over time, that is quite a drop from the 16.7 percent surge last year.
Bloomberg on Tuesday listed of some of the billion-dollar projects under way, including the redevelopment of Ground Zero.
“Given the chaos in the financial markets, which makes it so difficult to get financing, we’re still doing spectacularly well,” the mayor said. But he noted that Wall Street companies typically seek big refunds months after they discover they overpaid their taxes, a possible budget-gouger.
The billionaire mayor said the slowdown was a bigger threat to the middle class than to the ultra-rich, whose spending can be a significant economic force in New York. It is easier to sell a $400,000 car than a $70,000 vehicle, he said, and partly due to a rush of overseas investors, a $25 million apartment sells faster than a $2.5 million dwelling.