1 briefing on the regional economy presented to the new york state network for economic research...
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1
Briefing on the Regional Economy
Presented to the New York State Network for Economic Research
Rockefeller Institute for the Study of the States Albany, New York
Rae D. RosenAssistant Vice President
Federal Reserve Bank of New YorkMarch 30, 2005
2
Key Points:
• Our coincident economic indicators show that a moderate economic recovery continues underway in New York State and New York City.
• The pace of the recovery is on par with prior recovery periods in terms of output.
• Employment continues to recover more slowly than output in New York State and New York City and the rebenchmark revisions lowered the already low rates of job growth in New York City.
• Our forecast calls for a continuation of this trend: a moderate pace of recovery in output this year and next coupled with a slowly improving job market.
•This economic pattern suggests that the distribution of wage gains, income growth and migration will become increasingly important to the economic health of NYS and NYC.
3
105
115
125
135
145
155
95 96 97 98 99 00 01 02 03 04 05
105
115
125
135
145
155
INDEXES OF COINCIDENT ECONOMIC INDICATORS
Index July 1992=100
Note: Shading denotes state or local recession.Source: FRBNY.
Peak inDecember
2000105
115
125
135
145
155
95 96 97 98 99 00 01 02 03 04 05
105
115
125
135
145
155
105
115
125
135
145
155
95 96 97 98 99 00 01 02 03 04 05
105
115
125
135
145
155Index July 1992=100
Index July 1992=100
Peak inJanuary
2001
New York City
New Jersey
New York
Peak inNovember
2000
4
100
103
106
109
112
115
0 2 4 6 8 10 12 14 16 18 20 22 24
Number of Months
Index
Expansion Patterns Increase from CEI Trough to Peakfor the First 24 months
Source: FRBNY.
New York State
100
102
104
106
108
110
0 2 4 6 8 10 12 14 16 18 20 22 24
Number of Months
New York City
Aug. 2003 – Jan. 2005
Nov.1965- Oct. 1969
Nov. 1971- Feb. 1973
Aug. 1992- Jan. 2001
Nov. 1976 - Apr. 1989
Dec. 1982- Apr. 1989
Jul. 1980-Aug. 1981
Nov. 1965-
Oct. 1969
Oct. 1992-Dec. 2000
July 2003- Jan.2005
Oct 1976-
Feb.1980
Oct. 1971-Jun. 1973
Index
5
-4
-2
0
2
4
6
8
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
-4
-2
0
2
4
6
8
New York State Real Per Capita Personal Income 1978 – 2004
Source: U.S. Bureau of Economic Analysis, FRBNY Calculations.
PercentYr/Yr
PercentYr/yr
NYS Real GSP
NYS Real per Capita Personal Income
6
Recent Trends in Regional EmploymentPercent change from 12 months earlier
-6
-4
-2
0
2
4
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-6
-4
-2
0
2
4
Percent Percent
Source: Bureau of Labor Statistics, FRBNY calculations.
NYC
NYS
US Mar. ‘05 = 1.6%NYC Feb. ’05 = 0.9%
NYS Feb. ’05 = 1.0%
US
7
Source: Bureau of Labor Statistics, FRBNY calculations.
-6
-4
-2
0
2
4
6
92 93 94 95 96 97 98 99 00 01 02 03 04 05
-6
-4
-2
0
2
4
6
Private-Sector Job Growth: U.S. and RegionPercent change from 12 months earlier
NYC
USUS
Percent Percent
US Mar. ‘05 = 1.8%NYC Feb. ’05 = 1.2% NYS Feb. ’05 = 1.2%
NYS
8
New York State Employment Percent change from 4 quarters earlier
-3
-2
-1
0
1
2001Q2 2001Q4 2002Q2 2002Q4 2003Q2 2003Q4 2004Q2 2004Q4
-3
-2
-1
0
1
Percent Percent
Source: Bureau of Labor Statistics, FRBNY calculations.
Covered Employment
Non-farm Employment
9
New York City Employment Percent change from 4 quarters earlier
-5
-4
-3
-2
-1
0
1
2001Q2 2001Q4 2002Q2 2002Q4 2003Q2 2003Q4 2004Q2 2004Q4
-5
-4
-3
-2
-1
0
1
Percent Percent
Source: Bureau of Labor Statistics, FRBNY calculations.
Covered Employment
Non-farm Employment
10
New York City Information Employment Percent change from 4 quarters earlier
-20
-15
-10
-5
0
5
10
2001Q2 2001Q4 2002Q2 2002Q4 2003Q2 2003Q4 2004Q2 2004Q4
-20
-15
-10
-5
0
5
10
Percent Percent
Source: Bureau of Labor Statistics, FRBNY calculations.
Covered Employment
Non-farm Employment
11
New York City Financial Activities Employment Percent change from 4 quarters earlier
-10
-8
-6
-4
-2
0
2
2001Q2 2001Q4 2002Q2 2002Q4 2003Q2 2003Q4 2004Q2 2004Q4
-10
-8
-6
-4
-2
0
2
Percent Percent
Source: Bureau of Labor Statistics, FRBNY calculations.
Covered Employment
Non-farm Employment
12
New York City Professional & Business Services
Employment Percent change from 4 quarters earlier
-12
-9
-6
-3
0
3
2001Q2 2001Q4 2002Q2 2002Q4 2003Q2 2003Q4 2004Q2 2004Q4
-12
-9
-6
-3
0
3
Percent Percent
Source: Bureau of Labor Statistics, FRBNY calculations.
Covered Employment
Non-farm Employment
13
Growth in Service Jobs% change January 2005/ January 2004
U.S.* NJ NYC NYS
Business and Professional 3.8 0.6 1.1 1.6
Security/Commodity Broker 3.1 3.4 5.0 2.9
Leisure and Hospitality 2.3 3.6 3.9 3.1
Arts, Entertainment and Recreation -2.3 9.2 4.2 6.0
Accomodation and Food 3.0 2.7 3.8 2.4 Eating and Drinking 3.1 3.5 4.8 2.5 Accommodations 2.7 0.6 0.0 1.9Health and Social 2.3 3.2 2.3 1.8Educational 2.6 1.6 1.3 3.2All Services 1.9 1.9 1.4 1.4Services as % of Total Employment 83.6 87.6 93.9 89.5
Source: Bureau of Labor Statistics, FRBNY calculations.
Note: U.S. data are for February 2005.
14
Second District Employment ForecastPercent change from 12 months earlier
2002 2003 2004 2005F
New Jersey -0.3 -0.1 0.6 1.6
New York City -2.9 -1.4 0.3 1.1
New York State -1.6 -0.6 0.5 0.9
Note: F denotes forecast,Source: Bureau of Labor Statistics; Federal Reserve Bank of New York forecast.
15
Second District Unemployment Rates
Feb. 2004 Jan. 2004 Feb. 2005
United States * 5.6% 5.7% 5.2%
New Jersey 5.3% 5.4% 4.4%
New York 6.2% 6.3% 5.1%
New York City 7.7% 7.9% 6.2%
Note: U.S. data are for March 2005Source: Bureau of Labor Statistics.
16
-6
-4
-2
0
2
4
6
8
10
12
14
16
1992 1993 1995 1996 1998 1999 2001 2002 2004
-6
-4
-2
0
2
4
6
8
10
12
14
16
Percent
United States
NYS
Percent
Wages and SalariesPercent change from 4 quarters earlier
United States 2004 Q4 5.4%New York 2004 Q4 6.0%New Jersey 2004 Q4 5.1%
Source: Bureau of Labor Statistics, FRBNY calculations.
NJ
17
Personal IncomePercent change from 4 quarters earlier
-2
0
2
4
6
8
10
12
14
1992 1993 1995 1996 1998 1999 2001 2002 2004
-2
0
2
4
6
8
10
12
14
Percent
United States
United States 2004 Q4 6.7%New York 2004 Q4 6.8%New Jersey 2004 Q4 6.5%
Percent
Source: Bureau of Labor Statistics, FRBNY calculations.
NJ
NYS
18
Home PricesPercent change from 4 quarters earlier
-5
-3
-1
1
3
5
7
9
11
13
15
17
19
1992 1993 1995 1996 1998 1999 2001 2002 2004
-5
-3
-1
1
3
5
7
9
11
13
15
17
19
Percent Percent
Source: Office of Federal Housing Enterprise Oversight.
United States
United States 2004 Q4 11.2%New York 2004 Q4 12.6%New Jersey 2004 Q4 13.7%
NYS
NJ
19
Consumer Price IndexPercent change from 12 months earlier
0
1
2
3
4
5
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
0
1
2
3
4
5
Percent Percent
Source: Bureau of Labor Statistics, FRBNY calculations.
United States
United States Feb. '05 3.0%New York-Northern NJ Feb. '05 3.9%
New York-Northern NJ
20
$0.31
$0.38
$0.41
$0.82
$1.83
$0 $1 $2 $3
Billion
Top 5 Metropolitan Areasby Venture Capital Investments
Q4 2004
Source: PricewaterhouseCoopers MoneyTree Survey, Q4 2004.
Silicon Valley
New England
Southeast
DC/ Metroplex
LA/Orange County
21
Top 5 Investment IndustriesFor Venture Capital Firms in
Q4 2004
Source: PricewaterhouseCoopers MoneyTree Survey, Q4 2004.
$146
$156
$260
$323
$567
$0 $145 $290 $435 $580
Million
Software
SemiconductorsNetworking and Equipment
Medical Devices and Equipment
Biotechnology
$17
$20
$26
$59
$70
$0 $50 $100
Million
Networking and EquipmentSoftware
Telecommunications
BiotechnologyMedical Devices and Equipment
Silicon Valley Area
New York Metro Area
22
Top Five States for R&D Funding
Total Funding($ millions) Total* Federal* Industry*
Expenditures Obligations Expenditures
California 51,390 1450 440 1120Michigan 15,080 1500 125 1345Massachusetts 14,320 2225 725 1600Texas 14,225 645 150 485New York 13,355 700 195 480
New Jersey 13,020 1510 235 1340
Dollars Per Capita
Source: National Science Foundation, FRBNY Calculations, 2002.*Federal expenditures not available and Federal obligations may not equal expenditures so the columns are not additive.
23
HouseholdMedian Adjusted Gross Income
Source: Internal Revenue Service, Statistics of Income.
Leaving Entering Net Leaving Entering Net
2000 $27,800 $26,622 -$1,178 $35,128 $35,511 $383
1999 $26,038 $24,906 -$1,132 $32,913 $33,781 $868
1998 $25,196 $24,056 -$1,140 $31,731 $32,592 $861
1997 $23,911 $22,837 -$1,074 $29,451 $30,392 $941
1996 $23,083 $21,934 -$1,149 $28,088 $29,123 $1,035
1995 $22,808 $21,570 -$1,238 $27,322 $28,206 $884
New York New Jersey
24
Migrant TaxpayersAggregate Adjusted Gross Income
$ Billions
Source: Internal Revenue Service, Statistics of Income.
Leaving Entering Net Leaving Entering Net2000 $23.9 $19.7 -$4.2 $15.8 $14.0 -$1.81999 $19.3 $16.1 -$3.2 $12.3 $11.1 -$1.21998 $17.8 $14.5 -$3.3 $11.2 $10.5 -$0.71997 $16.3 $12.9 -$3.4 $10.1 $9.1 -$1.01996 $15.6 $11.6 -$4.0 $9.4 $8.5 -$0.9
New York New Jersey
25
Points of Concern Longer Term:
• NYS has the fastest rate of out-migration of seniors. The rate has increased 2 ½ % from 1985-90 to 1995-2000 as the population has aged.
• NYS has a very rapid rate of foreign immigration of younger working age people and this contributes to a reasonably strong trend in births in NYC.
• NYS and NYC have a high rate of out-migration of young prime working age people. However, there is evidence that this is a cyclically sensitive phenomena.
• The out-migration of seniors and foreign immigration, coupled with a strong rise in births, have slowed the rate of aging in NYS and NYC compared to the nation.
• On balance we are accelerating the export of our wealthier population and importing a less wealthy, less educated population.
•We are failing to obtain our fair share of federal R&D spending. We have yet to capitalize on the potential in changing freight patterns.
26
Appendix
27
0
500
1000
1500
2000
2500
3000
3500
J F M A M J J A S O N D
2002
Sales Tax Revenue CollectionsYear to Date
Mil $ Mil $
2003
0
1500
3000
4500
6000
7500
J F M A M J J A S O N D
2002
2003
New York City New York State
2004
2004
Source: New York City Department of Finance, Office of the New York State Comptroller.
Feb. 2005 YTD 6.4% Feb. 2005 YTD 7.8% 20052005
28
0
5000
10000
15000
20000
25000
30000
J F M A M J J A S O N D0
1000
2000
3000
4000
5000
6000
J F M A M J J A S O N D
2002
Personal Income Tax Revenue CollectionsYear to Date
Mil $
Source: New York City Department of Finance, Office of the New York State Comptroller.
2003
20022003
Mil $
New York City New York State
2004
2004
Feb. 2005 YTD 14.2% Feb. 2005 YTD 11.4%
20052005
29
Percent of Residential Mortgage Loans with Installments 90 Days Past Due
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
92Q2 94Q4 97Q2 99Q4 02Q2 04Q4
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
PercentPercent
Source: Mortgage Bankers Association.
United States 2004 Q4 0.80%New York 2004 Q4 0.58%New Jersey 2004 Q4 0.63%
United States
NJ
NYS
30
Percent of Residential Mortgage Loans in Foreclosure Started During the Quarter
0.0
0.5
1.0
1.5
2.0
2.5
3.0
92Q2 94Q4 97Q2 99Q4 02Q2 04Q4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
PercentPercent
Source: Mortgage Bankers Association.
United States 2004 Q4 1.11%New York 2004 Q4 1.03%New Jersey 2004 Q4 1.03%
United States
NJ
NYS