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New York City's economy fell deeper into recession during the fourth quarter of 2001, despite an earlier-than-expected U.S. recovery, according to the latest issue of Economics Notes, a publication issued by the office of Comptroller William C. Thompson, Jr. The gross city product, a measure of economic activity in New York City, declined by a rate of 4.4 percent in the fourth quarter, compared to a .2 percent growth for the national economy. For the year, the City's economy grew 1.4 percent, slightly ahead of the national growth rate of 1.1 percent, because the City outperformed the nation in the first nine months of the year.

"Although New York City's economy began to show signs of weakness in the second quarter of 2001, the recession has deepened as a result of the World Trade Center attack," Thompson said. "The number of payroll jobs in the City fell by a seasonally adjusted record of 88,900 jobs in the fourth quarter of 2001, following a loss of 22,000 jobs in the third quarter of 2001. The longer this recession continues, the heavier its burden will be on the budget."

The seasonally adjusted unemployment rate in New York City rose to 6.8 percent in the fourth quarter of 2001, from 5.7 percent in the third quarter of 2001. The U.S. unemployment rate rose to 5.6 percent from 4.8 percent over the same period. The number of City residents with jobs fell by 50,000 in the fourth quarter of 2001. This is the largest decline since the third quarter of 1977, when 67,700 jobs were lost. Except for a slight increase of 300 jobs in the second quarter of 2001, civilian employment has declined since the third quarter of 2000. As a result, the employment population ratio fell to 53.6 percent in the fourth quarter of 2001, the lowest since 53.6 percent in the fourth quarter of 1997. The City's unadjusted unemployment rate of 6.7 percent ranked second highest of the 20 largest metro areas, after Miami's 7.6 percent. Minneapolis and Washington had the lowest unemployment rate, each 3.4 percent.

The latest issue of Economic Notes also reports the following New York City economic data:

• The Private Sector lost 95,300 jobs, while the public sector gained 6,400 jobs because of a 6,600-job increase in local government. The City's 4Q01 job growth ranked last among the 20 largest metro areas.
  
  
• Personal Income Tax (PIT) revenues were down 4.8 percent in 4Q01.
  
  
• The Inflation Rate in NYC was 1.7 percent in 4Q01, the lowest in approximately two years and lower than the corresponding 1.9 percent U.S. rate. NYC energy prices and apparel prices declined 2.9 percent and 8.8 percent respectively
  
  Summary Table. Five Key Economic Indicators, NYC and United States, 4Q01 and 2001*
  

  	Period	1. GCP/GDP Growth	2. Payroll-Jobs Growth	3. Personal-Income-Tax Growth	4. Inflation Rate	5. Unemployment Rate, SA
  NYC	4Q01	-4.4% W	-9.1% W	-4.8% W	1.7% B	6.8% W
  USA		0.2% B	-2.6% W	2.9 % B	1.9% B	5.6% W
  NYC	2001	1.4% W	0.5% W	-2.8% W	2.5% B	5.8% W
  USA		1.1% W	0.3% W	-0.8% W	2.8% B	4.8% W

  
  *B=Better than prior period. N=No change. W=Worse. Indicators 1, 2, and 5 compare 4Q01 with 3Q01; indicators 3-4 compare 4Q01 with 4Q00. Sources: See Charts 1, 5, 7, 9, and 11. SA= Seasonally adjusted.
  
  
• Leading Indicators for the City were mixed. Initial unemployment claims significantly deteriorated and the help-wanted advertising index declined, but not as swiftly as in 3Q01. Issuance of building permits increased, a sign of a strengthening construction industry. The Manhattan commercial vacancy rate jumped to 9.0 percent in 4Q01, more than double the 4Q00 rate of 3.7 percent. Vacancy rates in all sub-markets nearly doubled in 4Q01 on a year-over-year basis. The hotel occupancy rate was 73.5 percent in 4Q01, the lowest fourth quarter in a decade.

  [Note: Economic indicators are the barometers of business cycles, which are widely used to determine the direction of current and future economic activity. Leading economic indicators are designed to signal peaks and troughs in the business cycle over a six-to-nine month period.]

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