New York City’s Economy Slowed in the Second Quarter: Comptroller Report by Reuters

By Stephanie Kelly

NEW YORK – The economy of New York City experienced a slowdown in the second quarter, with a decrease in both job creation and personal income tax revenues. This downturn led to the slowest rate of economic activity since the fourth quarter of 2013, according to a report from the city’s comptroller released on Wednesday.

During this period, the city saw a 1.7 percent increase in gross city product (GCP), a decline from the 4 percent growth recorded in the first quarter of the year.

Scott Stringer, New York City Comptroller, remarked, "Our city’s economy is still growing – but in 2016 we’ve gone from a sprint to a jog. This report confirms that our recovery is no longer gaining steam."

Despite the slowdown, New York City’s economic growth still surpassed that of the overall U.S. gross domestic product, which showed a 1.2 percent increase for the second quarter. The national economy faced challenges, including the largest drop in private domestic investment in seven years, uncertainty regarding interest rate policies, and low energy prices.

In the second quarter, the city added 13,400 private-sector jobs, reflecting a 1.4 percent increase that is significantly lower than the record increase of 42,100 jobs in the previous quarter. Notably, 85 percent of these new positions were in medium-wage sectors with annual starting salaries around $75,000, while high-wage industries, which typically offer starting salaries of approximately $187,000, experienced a loss of 500 jobs.

Manufacturing jobs saw the most significant decline, whereas the education and health services sectors experienced the largest gains compared to the first quarter.

The report also highlighted the largest quarterly drop in the city’s labor force, which decreased by 34,200 individuals, contributing to a reduction in the unemployment rate from 5.4 percent in the first quarter to 5.2 percent in the second quarter. This shrinking labor force may indicate that some discouraged job seekers are exiting the labor market.

Personal income tax revenues, serving as a proxy for overall personal income, fell by 5.7 percent year-over-year in the second quarter, amounting to over $3 billion. Furthermore, estimated tax payments dropped by 16 percent from the same period last year, totaling around $1.4 billion, as reported by the comptroller’s office.