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 a senior fellow at the Empire Center.

Read more by E.J. McMahon

You may also like

Sluggish Reopening: NY’s Private Job Count Down 1.1 Million From Pre-Pandemic Level

Six months into the novel coronavirus pandemic, New York State's private-sector employment recovery was the slowest in the 48 contiguous states—and getting slower. Read More

Even After Aid Cut, New York Will Spend Most on Education

If New York was a country in 2016—the most recent year for global education spending data—it would have boasted the highest per pupil expenditure in the world, even after subtracting 20 percent of state aid. Read More

The CDC’s Nursing Home Death Count Is Even Less Complete Than New York’s

The result is that a major public health disaster affecting New York's nursing home residents is not being accurately documented by either of the agencies responsible for protecting them – because state officials are refusing to share the true numbers, and federal officials haven't yet asked for them. Read More

The Health Department Stalls a FOIL Request for the Full COVID Death Toll in Nursing Homes

The state Health Department is offering a new explanation for why it won’t provide the full death toll of coronavirus in nursing homes: it can’t find the records. Read More

The DOJ’s Probe of Coronavirus in Nursing Homes Appears to Leave Out Most Victims

The U.S. Justice Department's newly announced inquiry into coronavirus in New York's nursing homes comes with a crucial caveat: It will look only at government-operated facilities, which represent a small fraction of the state's nursing-home industry. Read More

NY’s Slow Job Climb Continued in July, But Unemployment Rate Unchanged

As the economy continued its slow post-pandemic reopening, New York State continued to slowly regain jobs—but preliminary data indicate there was no improvement in the state's unemployment rate in July. Read More

Filling in the Blanks of New York’s Coronavirus Pandemic

Because New York was hit with the coronavirus early, before testing was widely available, its official count of infections – at just over 400,000 – vastly understates the scale of its outbreak. Read More

Cuomo Administration Ducks Important Questions on Nursing Homes

A new report from the state Health Department tries to deflect blame for thousands of coronavirus deaths in the state's nursing homes—but undermines its own case by withholding data and engaging in tendentious analysis. 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
Fax: 518-434-3130
E-Mail: info@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.