New York City could lose 165,000 jobs

October 14, 2008 2:31:02 PM PDT
New York City could lose as many as 165,000 jobs over the next two years as the financial meltdown ripples beyond Wall Street, according to a new economic forecast to be made public this week. The job loss projection by the city comptroller's chief economist is nearly double the 85,000 forecast in July. The revised numbers were shared with The Associated Press ahead of the forecast's scheduled Wednesday release.

The report reflects the sense that the city's economy is showing more of the deteriorating nationwide trends it had resisted for so long. And city officials are particularly troubled by what they see as evidence that the economic crisis in New York City is spreading to other industries and is no longer contained on Wall Street.

"This was what we had feared, but hoped we could avoid," said Frank Braconi, the chief economist who authored the report. "It represents that there's a much wider range of problems in the economy now than six months ago."

The forecast of 165,000 lost jobs includes the prediction that as many as 35,000 could be lost in the financial services industry, up from a previous forecast of 25,000 financial jobs out of a total of 85,000. That means a greater percentage of job losses are forecast for other industries.

Braconi said economists are no longer just concerned that the city's economy will suffer from the effects of financial services workers being laid off and spending less money. The pains are more widespread, he said, as business activity slows in other economic sectors, and not as a direct result of the trouble on Wall Street.

Another troubling indicator is the next revenue forecast, due out in November.

The July report anticipated that the city's tax revenues would decline by about $2.4 billion, or 6.2 percent, in the fiscal year that began July 1. Braconi said the next revenue forecast is likely to be worse than anticipated.

In particular, taxes from real estate transactions, which were already slowing, are predicted to take an even greater hit because lending has dried up and businesses and would-be homeowners have not been able to borrow.

He makes these points in an online column that the comptroller is set to launch Wednesday as a regular feature, called the C-Note.

In the first installment, Braconi also predicts that the worsening local picture could mean a faster end to New York's dominance as the world's financial center, a spot it was already losing.

Economists and city officials have said for months that New York City's economy was holding up remarkably well when compared with the troubles seen nationwide, like the ongoing credit crunch and massive job losses elsewhere.

From August 2007 to August 2008, the nation lost 600,000 private sector jobs, while the city actually added 32,000 jobs in the same period.

But the turbulence of the past several weeks, including the breakup of Lehman Brothers, the Merrill Lynch merger and the government rescue of AIG, creates forces that even the city cannot resist, Braconi said.