New York City and the national economies continue to outperform growth expectations without triggering higher inflation according to last month's issue of Economic Notes, a report on the region's economy published by City Comptroller Alan G. Hevesi. For the City, this is the 30th consecutive quarter of job growth; the previous record of 20 quarters' growth was set in the mid-1980s.
In the second quarter of 2000 (2Q00)the Gross City Product (GCP) grew at a real annual rate of 6.5%, compared with 4.3% in the first quarter. Real GDP grew 5.2%, compared with 4.8% in the first quarter. However, personal consumption expenditures grew 3%, well below the 7.6% growth in the first quarter.
Payroll jobs, seasonally adjusted, were up by 31,700 in 2Q00 and by more than 54,000 for the two quarters. The private sector added 17,600 jobs and the public sector added 14,100 (mostly due to temporary Census hiring). The city's 2Q00 job growth of 3.5% exceeded the nation's 2.8%. Most of the job gains were in the highly paid new media/high tech sector.
Personal-Income-Tax (PIT) revenues, on a year-over-year basis, fell 4.9% in 2Q00. But withholding taxes were up 4% and estimated taxes were up 3.8%. PIT fell largely because of the end of the 12.5% surcharge and the commuter tax. Although the taxes were reduced in 1999, in many cases refunds occurred in 2000.
The inflation rate for the NYC metro area was 2.9%, below the average US rate of 3.2%. The 15.4% rise in energy prices was the major reason for the rise in metro area inflation.
The unemployment rate fell to 5.8%, the lowest since 1Q89. The employment/population ratio reached a record high of 55.6% and the labor-force-participation rate rose to a record high of 59%. However, the national numbers were significantly better. The US unemployment rate was only 4%, the employment/population ratio was 64.6% and the labor-force-participation rate was 67.3%. For the first time since 1Q96, when the Comptroller's office started comparing unemployment rates among the 20 largest metro areas, the City's unemployment rate was not the highest; it was second highest, after Miami.
Other indicators continue positive. Two of the three leading indicators improved. While the help wanted ad index declined in 2Q00, initial unemployment claims and the number of building permits authorized both improved. Also, the hotel industry benefited from the strong economy by posting a significantly higher average daily occupancy rate than last year. Finally, 2Q00 commercial real estate data showed a significant drop in Manhattan's vacancy rates. The vacancy rate in Manhattan dropped to 3.7% in 2Q00 to less than half of the 8% rate in 2Q99. Also, rental rates in Manhattan rose by an average of $7.80 per square foot to $46.40 in the 2Q00, compared with $38.60 in 2Q99.