April 2003

New York City Unemployment Rate at Five-Year High
Thompson: City Needs More Financial Relief from Albany and Washington

As the nation tries to assess the economic impact of the war in Iraq, there remains very little question as to the current financial outlook in New York City.

According to the New York City Comptroller’s Office, the city’s January unemployment rate was the highest it’s been in five years. At 8.6 percent, the number of unemployed New York City residents stood at 334,400 (not adjusted for seasonal factors) in January, an increase of 48,900 from January 2002. New York City payroll jobs in January fell by 39,800 (not adjusted for seasonal factors) compared to the same month a year earlier. From 2000 to 2002, the city lost a total of 148,600 jobs.

Reflective of the decline in payroll jobs and real incomes, the gross city product—a measure of economic activity—fell by 1.9 percent in the fourth quarter of 2002. For the same period, the national economy grew by 1.4 percent, the office reported.

“While the national economy has grown moderately in each of the last five quarters since September 11, the city’s economy continues to decline, placing it in the eighth consecutive quarter of negative real growth,” city Comptroller William C. Thompson Jr. said in March. “In addition, the inflation rate increased to 3.1 percent in the fourth quarter (2002) from 2.6 percent in the third quarter. This is the fourth-highest rate among the 14 largest metropolitan areas.”

According to the comptroller, the city has taken the necessary actions, from an 18.49 percent property tax increase to major spending cuts, to help mitigate its economic woes, but will still be left with a fiscal year 2004 budget deficit around $3.9 billion. In a March 21 report, Thompson attributes this gap to the Sept. 11, 2001, terrorist attacks and Gov. George Pataki’s executive budget, which he maintains, if adopted, would widen the deficit by $844 million.

Thompson has said before that the economic impact of the terrorist attacks is a national issue that demands greater financial assistance by both the state and federal government to the city.

Accusing the governor of “completely ignoring the plight of New York City,” Thompson said in a March 4 press release, “If we do not get the help from Albany and Washington that we require, the city will be forced to adopt draconian budgetary measures such as further service cuts and revenue enhancements.”

Whether the city will receive the level of aid Thompson seeks remains to be seen. The state currently faces an $11.5 billion budget gap for fiscal year 2004. As of this writing, President Bush has requested $75 billion to pay for the war, a figure that many suggest is likely to rise.