21,100 Jobs Added in the Quarter

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New York City’s economy in the first quarter of 2004 had its highest growth rate since the fourth quarter of 1999, according to Economic Notes, a publication issued today New York City Comptroller William C. Thompson, Jr.

“The City’s economy grew 7.0 percent in the first quarter, the second consecutive quarter of growth,” Comptroller Thompson said. “The two main factors behind the increase were jobs and incomes: The 21,100 increase in NYC payroll jobs, seasonally adjusted, and an increase in revenues based on the personal income tax.”

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

• The City added 21,100 jobs (seasonally adjusted), about five times the increase of 4,100 in 4Q03, and ahead of the nation’s 1Q04 job growth. Private firms added 21,600 jobs and the public sector lost 200 jobs. While an improvement, NYC job growth in 1Q04 is the fifth-weakest of the 20 largest metro areas. Also, year-over-year (i.e., compared with 1Q03 without seasonal adjustment), NYC jobs fell 0.2 percent in 1Q04.

• PIT increased 27.1 percent in 1Q04, compared with 1Q03. PIT is a current proxy for personal incomes, data for which are reported with a lag of about two years. The 1Q04 increase partly reflects higher City tax rates. Estimated taxes increased 48.1 percent, reflecting higher dividends and capital gains. Withholding taxes increased 23.5 percent. In 2003, NYC PIT rose 6.6 percent, primarily because of higher tax rates. U.S. PIT revenues fell 3.1 percent in 1Q04, possibly because of U.S. tax cuts

• The NYC metropolitan area inflation rate remained higher than the nation’s at 2.8 percent in 1Q04, compared with 3.2 percent in 4Q03. The U.S. inflation rate was 1.8 percent in 1Q04, compared with 1.9 percent in 4Q03. (NYC’s inflation rate jumped in April, raising NYC’s four-month year-over-year inflation rate to 3 percent and the nation’s equivalent to 1.9 percent.)

• NYC’s seasonally adjusted unemployment rate remained unchanged at 8.1 percent in 1Q04. This is the lowest number since 7.9 percent in 3Q02. The U.S. unemployment rate, seasonally adjusted, decreased to 5.6 percent in 1Q04, from 5.9 percent in 4Q03.

Summary Table. Five Key Economic Indicators, NYC and U.S., 1Q04

Note: Indicators 1, 2, 5 (SA) compare 1Q04 with 4Q03; indicators 3-4 (NSA) compare 1Q04 with 1Q03. See Charts 1, 3, 6, 7, and 9. NSA=Not Seasonally Adjusted. SA=Quarterly Data Seasonally Adjusted. SAAR=SA Annualized Rate.

1. GCP/GDP=overall increase in the economy (3 percent growth is a long-term target). 2. Payroll jobs=number of people on payrolls, by place of work, a key factor in GCP/GDP. 3. Income=key determinant of GCP/GDP (jobs x average income is 60-70 percent of GCP/GDP). 4. Inflation=a measure of economic sustainability (3 percent is for some a maximum acceptable average inflation rate). 5. Unemployment=a measure of human-resource utilization (6 percent was in the 1980s and early 1990s considered a maximum for a non-accelerating-inflation rate of unemployment).

• The Manhattan commercial vacancy rate in 1Q04 fell to 12.2 percent, 0.1 percentage points below the 12.3 percent rate in 1Q03.The vacancy rate fell most in Midtown South, followed by Downtown, but increased in Midtown. Despite the decline in vacancy rates (a sign of rising demand for space), the average Manhattan commercial rent decreased to $40.06 per square foot in 1Q04, down from $41.97 in 1Q03.

• Two leading indicators improved, while one deteriorated.The NYC business

-conditions index and the number of building permits authorized rose in 1Q04 on a year-over-year basis, but the City’s quarterly help-wanted-advertising index fell.

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