New York City’s economy is progressing, Upstate New York’s is sluggish and the U.S. Virgin Islands’ is struggling in a post-COVID world.
Analysts with the Federal Reserve Bank of New York made these and other observations at a web conference Thursday morning on how Federal Reserve District 2’s economy has recovered since the COVID-19 pandemic fist hit in March 2020.
The Federal Reserve includes New York, the northern half of New Jersey, southwest Connecticut, Puerto Rico, and the U.S. Virgin Islands in District 2. Of these areas, Puerto Rico has the strongest showing, with a 7% job growth since February 2020. The USVI has the weakest, having lost 12% since then.
While United States employment is now 1.1% above pre-pandemic levels, New York City’s employment is still down 3.2%. However, city’s employment last year had been going up by 5% from a year earlier, said Jaison Abel, head of Urban and Regional Studies at the New York Fed. In recent months, the employment level has still been going up by about 3% from a year earlier, said Jason Bram, economic research advisor in Urban and Regional Studies at the New York Fed. This is “pretty good,” he said.
This past year for the first time the number of New York City jobs in the tech sector eclipsed the number in the financial sector, Bram said. While there have been tech sector layoffs there has been little evidence of this in New York City, Bram said. While there may be some contraction, “I don’t see that as having a big effect on the city’s economy.“
Because there are still substantially fewer office workers in New York City than there were pre-pandemic, parts of New York City’s economy are still hurting, Abel said. Weak areas include the hospitality and commercial real estate industries. New York City subway ridership is also down 30% from pre-pandemic levels, Bram said in an article “How did New York City’s economy weather the pandemic?” New York Fed, Liberty Street Economics blog.
“The ‘suburbanization’ of the United States over the second half of the twentieth century showed signs of reversing over the past two decades as the economies of the central cities, notably New York, outperformed their counterparts,” Bram said in the article. “While there are signs that the pandemic, which targeted dense cities in particular, caused some reversal in this trend, it remains to be seen what post-pandemic trends emerge.”
Upstate New York employment is down 1.6% compared to pre-pandemic levels. But employment is not growing from year-to-year as strongly as in New York City. Dutchess County, Putnam County, Elmira, Utica, Rochester, and Buffalo have substantial employment shortfalls compared to February 2020.
Bram attributed the USVI’s struggles, meanwhile, to high electricity rates, territorial government fiscal problems, and heavy dependence on cruise ships in particular and tourism in general. Over the last 10 years the territory has lost 10% of its population.
Abel said he anticipated a “brighter outlook” for the USVI. He said while cruise ship visits were hit hard by COVID there are signs they are coming back. While federal funding for recovery from the 2017 Irma and Maria hurricanes has been slow to arrive, it should accelerate this coming year.
More tourism and anticipated hotel re-openings should help.
Elsewhere in Region 2, Northern New Jersey has seen a 2% increase in employment since February 2020 and Fairfield County, Conn. has been achieved rough equality.
“Tri-state’s economy has a particularly large hole to dig out of, and, consequently, its recovery has taken longer than average,” Abel, Bram, Economic Research Advisor Richard Deitz, and Research Associate Jonathan Dietz wrote in “The Tri-State Region’s recovery from the pandemic recession three years on,” a post to Liberty Street Economics blog.