Comptroller Tom DiNapoli is out with a report on the state of New York’s economy, and the news is bleak.
The Comptroller’s numbers show that the already sluggish economic recovery in New York is losing momentum. The slowdown began in the second half of 2011, and is expected to continue into 2012, says Comptroller DiNapoli.
“That trend is going to be with us, at least for the short term,” said DiNapoli.
Overall, 46% of the over 334,000 jobs lost during the recession have been recovered, though many of the new jobs are in the health services and tourism sectors, and pay less than the positions that vanished in the recession.
The fragile recovery has not occurred evenly around the state. The Rochester region fared the best, though DiNapoli notes the data was collected before Kodak declared bankruptcy, jeopardizing thousands of jobs. The lower Hudson Valley performed the poorest, regaining less than 14% of jobs lost during the height of the recession.
There are also ominous signs from Wall Street. Profits were down $3 billion dollars in the final quarter of 2011, and DiNapoli says he expects Wall Street bonuses to be smaller.
“The earnings have been off,” said DiNapoli. “Firms are continuing to shed jobs.”
The lowered earnings in New York City’s financial sector also impacts New York State’s finances. The state budget is dependent on Wall Street revenues for nearly 20% of total tax collections.
DiNapoli does not think the lowered expectations from Wall Street will increase the state’s budget deficit, which is already $2 billion dollars.
The state’s public sector, usually considered more stable, also lost nearly 30,000 jobs over the past two years. DiNapoli says initially state and local governments and schools were buffered by the federal stimulus act, but now that money has run out.
The Comptroller’s report warns there are a number of global factors that could further erode the state’s recovery, including the European debt crisis, a possible spike in oil prices, and whether Congress will continue the federal pay roll tax cut. DiNapoli says those factors are largely outside the control of state government officials, so he advises taking care of what can be managed here in New York State.
“Look carefully at spending,” DiNapoli advises. “Don’t be overly optimistic on revenues. Don’t assume that the recovery is going to be in robust mode.”
Comptroller DiNapoli says there is some good news in the report. He says at least New York is still considered to be in economic recovery.