"Imminent" recession may cost NYC 59,400 jobs: study

20/05/2008 - 17:08

By Joan Gralla

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 new 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 -- about 7.1 percent of the sector's employment. This forecast is just a little less than the 36,000 positions this 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 dire 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 over 8 million people.

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. A mayoral spokesman had no comment.

Like much of the nation, New York City's property owners saw values spike until the real estate market began iceing 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 pop last year.

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