New York’s economy ended the first quarter of this year in virtual free fall, the latest federal data show.

The Empire State’s real gross domestic product (GDP) decreased 8.2 percent in the first three months of 2020 compared to the fourth quarter of 2019, ranking 49th out of 50 states as the new coronavirus began to spread, according to Bureau of Economic Analysis (BEA) estimates of seasonally adjusted annual data. Only Nevada was ranked lower; the output of that state’s gambling-intensive economy also sank 8.2 percent as casino customers vanished, but its decline was marginally worse than New York’s.


This is an installment in a special series of #NYCoronavirus chronicles by Empire Center analysts, focused on New York’s state and local policy response to the Coronavirus pandemic.


Real GDP dropped in all 50 states, producing an average decline of 5 percent through the first quarter. Reflecting the pattern of the COVID-19 outbreak during that period, the slowdown was least severe in central and western states where the impact of the virus was most limited.

California, which imposed equally extensive lockdowns and shelter-in-place orders slightly earlier than New York’s in March, experienced a real GDP decline of 4.7 percent, not quite as bad as the national average. This suggests the extent to which New York’s crash reflected not just the suspension of normal commerce but the particular structure of the state economy, especially in and around densely populated, transit- and tourism-intensive New York City.

According to the BEA statistics, the biggest contributor to New York’s meltdown was the financial services sector, which accounted for 2.18 percentage points of the 8.2 percent decrease. The next biggest contributors to the state’s GDP drop were accommodation and food services (-1.18 percent), arts, entertainment and recreation (-0.79 percent) and retail trade (-0.54 percent), respectively. The only sizable New York business sector not to register a decline was management of companies and  enterprises (up 0.12 percent), which was most prepared to continue operating remotely after offices began closing in in mid March. Tiny increases in output were estimated for the utilities sector, and for agricultural, forestry, fishing and hunting, and mining and quarrying sectors.

Like the personal income estimates released by BEA last month, the GDP numbers also showed that New York was an economic underperformer even before the pandemic. According to updated estimates, New York’s economy expanded just 1.4 percent in the fourth quarter of 2019, well below the U.S. average of 2.1 percent. Only nine states had lower numbers for that period.

The data provide further evidence that a V-shaped recovery is not in the cards for New York, in particular. As reflected in more recent payroll employment estimates, the economic downturn was, if anything, even worse in April and May. And as The New York Times reports today—echoing warnings here months ago—New York City in particular “is mired in the worst economic calamity since the financial crisis of the 1970s, when it nearly went bankrupt.”

The continuing impact of the pandemic on every region of the state was reflected in the latest unemployment benefit filing statistics. As shown below, the number of initial claims filed during the week ending June 27  actually increased over the previous week in every region of upstate New York, and on Long Island.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

The Health Department’s FOIL Responses Signal an Indefinite Wait for Pandemic Data

The quest for comprehensive data on New York's coronavirus pandemic hit a bureaucratic roadblock this week Read More

A Study of COVID-19 in Nursing Homes Raises Doubt About New York’s Minimum Staffing Law

A newly published study of COVID-19 in nursing homes links larger numbers of employees to higher rates of infection and death for residents – raising fresh doubts about New York's recently enacted "safe staffing" law. Read More

New York’s State Share of Medicaid Spending is Due to Jump 22 Percent This Fiscal Year

The state share of Medicaid spending is projected to jump 22 percent under the recently approved state budget, an unusually steep one-year jump for what is already one of New York's biggest expenditures. Read More

New York’s ‘Bluest’ Counties Have the Lowest COVID Vaccination Rates for Older Residents

New York's bluest counties are posting the lowest coronavirus vaccination rates for older residents, a striking contrast with the pattern in the U.S. as a whole. The disparity appea Read More

The Public Can Now See the Vaccine Task Force Recommendations that the Cuomo Administration Held Back

Even as Governor Cuomo touted vaccine approvals by a state-appointed panel of experts, his office was withholding the group's detailed findings from public view. The governor's six- Read More

New York Lags in COVID-19 Vaccinations for Older Residents

In the race to vaccinate its oldest and most vulnerable residents, New York has fallen behind. Although the state's overall COVID-19 vaccination rate is somewhat higher than the nat Read More

The Cuomo Administration Is Withholding Pandemic-Related Records Again

In an echo of the Cuomo administration's stonewalling on nursing home data, the governor's office has for a third time delayed releasing records of its vaccine review panel, this time until mid-April. Read More

Cuomo’s Schedules for the Peak of New York’s Pandemic Show Limited Contact with Outside Experts

As New York's coronavirus pandemic exploded last spring, Governor Cuomo's circle of regular contacts dwindled to a handful of close advisers, according to his recently released official schedules for March and April. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!