“If the plodding national economy stumbles into another recession, New York — plagued by high unemployment and the prospect of a rising tide of layoffs on Wall Street — probably will take a tumble, too.” That’s the main takeaway from an article in today’s New York Times on the outlook for the city’s economy — which, of course, has inevitable implications for all of the Empire State.
The Big Apple’s job losses were not as severe as the nation’s in the 2007-09 downturn, and the city’s budget shortfalls over the past three years were papered over with expansion-era surpluses. However, those surpluses are now almost completely depleted. And employment in the city’s financial sector, which had held up surprisingly well for the past few years, now looks ready to drop.
The concern that New York would not fare so well in another downturn stems partly from rumblings about layoffs from the big banks with headquarters in the city. They did not cut as many jobs during the downturn as city officials had been bracing for, but the worry is that a second round would make up for that.
“Now we’re starting to see another round of big layoffs in the financial services industry in New York, and it looks like that is going to be ongoing for some time,” Marisa DiNatale, an economist with Moody’s Economy.com, said. If the national economy stops growing altogether, Ms. DiNatale said, there will be “even a bigger chance that layoffs continue for longer and are even larger.”
In May and June, Wall Street already had “wiped out” all of the jobs it had added since January, Ms. DiNatale said. She added that she would not be surprised if employment in the securities industry fell nearly as low as it had at the depths of the recession. That would mean the loss of several thousand additional high-paying jobs.
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