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Briefing on the Regional Economy Presented to the New York State Network for Economic Research

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. Rosen Assistant Vice President Federal Reserve Bank of New York March 30, 2005 Key Points:

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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. Rosen Assistant Vice President Federal Reserve Bank of New York March 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. INDEXES OF COINCIDENT ECONOMIC INDICATORS Index July 1992=100 Index July 1992=100 New York New York City Peak in January 2001 Peak in December 2000 Index July 1992=100 New Jersey Peak in November 2000 Note: Shading denotes state or local recession. Source: FRBNY.

  4. Expansion Patterns Increase from CEI Trough to Peak for the First 24 months Index Index New York State New York City Dec. 1982- Apr. 1989 Oct 1976- Feb.1980 Aug. 2003 – Jan. 2005 Nov. 1965- Oct. 1969 Aug. 1992- Jan. 2001 Oct. 1971-Jun. 1973 Nov.1965- Oct. 1969 Jul. 1980-Aug. 1981 Nov. 1976 - Apr. 1989 Oct. 1992-Dec. 2000 Nov. 1971- Feb. 1973 July 2003- Jan.2005 Source: FRBNY.

  5. New York State Real Per Capita Personal Income 1978 – 2004 Percent Yr/Yr Percent Yr/yr NYS Real per Capita Personal Income NYS Real GSP Source: U.S. Bureau of Economic Analysis, FRBNY Calculations.

  6. Recent Trends in Regional EmploymentPercent change from 12 months earlier Percent Percent NYC US NYS US Mar. ‘05 = 1.6% NYC Feb. ’05 = 0.9% NYS Feb. ’05 = 1.0% Source: Bureau of Labor Statistics, FRBNY calculations.

  7. Private-Sector Job Growth: U.S. and RegionPercent change from 12 months earlier Percent Percent US NYS US Mar. ‘05 = 1.8% NYC Feb. ’05 = 1.2% NYS Feb. ’05 = 1.2% NYC Source: Bureau of Labor Statistics, FRBNY calculations.

  8. New York State Employment Percent change from 4 quarters earlier Percent Percent Non-farm Employment Covered Employment Source: Bureau of Labor Statistics, FRBNY calculations.

  9. New York City EmploymentPercent change from 4 quarters earlier Percent Percent Non-farm Employment Covered Employment Source: Bureau of Labor Statistics, FRBNY calculations.

  10. New York City Information EmploymentPercent change from 4 quarters earlier Percent Percent Non-farm Employment Covered Employment Source: Bureau of Labor Statistics, FRBNY calculations.

  11. New York City Financial Activities EmploymentPercent change from 4 quarters earlier Percent Percent Non-farm Employment Covered Employment Source: Bureau of Labor Statistics, FRBNY calculations.

  12. New York City Professional & Business ServicesEmploymentPercent change from 4 quarters earlier Percent Percent Non-farm Employment Covered Employment Source: Bureau of Labor Statistics, FRBNY calculations.

  13. Growth in Service Jobs% change January 2005/ January 2004 Note: U.S. data are for February 2005. Source: Bureau of Labor Statistics, FRBNY calculations.

  14. Second District Employment Forecast Percent change from 12 months earlier Note: F denotes forecast, Source: Bureau of Labor Statistics; Federal Reserve Bank of New York forecast.

  15. Second District Unemployment Rates Note: U.S. data are for March 2005 Source: Bureau of Labor Statistics.

  16. Wages and SalariesPercent change from 4 quarters earlier Percent Percent United States NYS NJ Source: Bureau of Labor Statistics, FRBNY calculations.

  17. Personal IncomePercent change from 4 quarters earlier Percent Percent NYS United States NJ Source: Bureau of Labor Statistics, FRBNY calculations.

  18. Home PricesPercent change from 4 quarters earlier Percent Percent NJ NYS United States Source: Office of Federal Housing Enterprise Oversight.

  19. Consumer Price IndexPercent change from 12 months earlier Percent Percent New York-Northern NJ United States Source: Bureau of Labor Statistics, FRBNY calculations.

  20. Top 5 Metropolitan Areas by Venture Capital Investments Q4 2004 Source: PricewaterhouseCoopers MoneyTree Survey, Q4 2004.

  21. Top 5 Investment Industries For Venture Capital Firms in Q4 2004 Silicon Valley Area Software Biotechnology Semiconductors Networking and Equipment Medical Devices and Equipment New York Metro Area Networking andEquipment Software Biotechnology Medical Devices and Equipment Telecommunications Source: PricewaterhouseCoopers MoneyTree Survey, Q4 2004.

  22. Top Five States for R&D Funding 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.

  24. Migrant TaxpayersAggregate Adjusted Gross Income$ Billions Source: Internal Revenue Service, Statistics ofIncome.

  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. Sales Tax Revenue Collections Year to Date New York City New York State Mil $ Mil $ 2003 2004 2002 2003 2004 2002 2005 2005 Feb. 2005 YTD 7.8% Feb. 2005 YTD 6.4% Source: New York City Department of Finance, Office of the New York State Comptroller.

  28. Personal Income Tax Revenue Collections Year to Date Mil $ Mil $ New York City New York State 2004 2004 2003 2002 2003 2002 2005 2005 Feb. 2005 YTD 11.4% Feb. 2005 YTD 14.2% Source: New York City Department of Finance, Office of the New York State Comptroller.

  29. Percent of Residential Mortgage Loans with Installments 90 Days Past Due Percent Percent United States NJ NYS Source: Mortgage Bankers Association.

  30. Percent of Residential Mortgage Loans in Foreclosure Started During the Quarter Percent Percent NJ NYS United States Source: Mortgage Bankers Association.

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