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Briefing on the Regional Economy Presented to the New York State Network for Economic Research Rockefeller Institute for the Study of the States Albany, New York Rae D. Rosen Assistant Vice President Federal Reserve Bank of New York March 30, 2005 Key Points:

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slide1

Briefing on the Regional Economy

Presented to the New York State Network for Economic Research

Rockefeller Institute for the Study of the States Albany, New York

Rae D. Rosen

Assistant Vice President

Federal Reserve Bank of New York

March 30, 2005

slide2

Key Points:

    • Our coincident economic indicators show that a moderate economic recovery continues underway in New York State and New York City.
    • The pace of the recovery is on par with prior recovery periods in terms of output.
    • Employment continues to recover more slowly than output in New York State and New York City and the rebenchmark revisions lowered the already low rates of job growth in New York City.
    • Our forecast calls for a continuation of this trend: a moderate pace of recovery in output this year and next coupled with a slowly improving job market.
    • This economic pattern suggests that the distribution of wage gains, income growth and migration will become increasingly important to the economic health of NYS and NYC.
indexes of coincident economic indicators
INDEXES OF COINCIDENT ECONOMIC INDICATORS

Index July 1992=100

Index July 1992=100

New York

New York City

Peak in

January 2001

Peak in

December 2000

Index July 1992=100

New Jersey

Peak in

November

2000

Note: Shading denotes state or local recession.

Source: FRBNY.

slide4

Expansion Patterns Increase from CEI Trough to Peak

for the First 24 months

Index

Index

New York State

New York City

Dec. 1982- Apr. 1989

Oct 1976-

Feb.1980

Aug. 2003 – Jan. 2005

Nov. 1965-

Oct. 1969

Aug. 1992- Jan. 2001

Oct. 1971-Jun. 1973

Nov.1965- Oct. 1969

Jul. 1980-Aug. 1981

Nov. 1976 - Apr. 1989

Oct. 1992-Dec. 2000

Nov. 1971- Feb. 1973

July 2003- Jan.2005

Source: FRBNY.

slide5

New York State Real Per Capita Personal Income

1978 – 2004

Percent

Yr/Yr

Percent

Yr/yr

NYS Real per Capita

Personal Income

NYS Real GSP

Source: U.S. Bureau of Economic Analysis, FRBNY Calculations.

recent trends in regional employment percent change from 12 months earlier
Recent Trends in Regional EmploymentPercent change from 12 months earlier

Percent

Percent

NYC

US

NYS

US Mar. ‘05 = 1.6%

NYC Feb. ’05 = 0.9%

NYS Feb. ’05 = 1.0%

Source: Bureau of Labor Statistics, FRBNY calculations.

slide7

Private-Sector Job Growth: U.S. and RegionPercent change from 12 months earlier

Percent

Percent

US

NYS

US Mar. ‘05 = 1.8%

NYC Feb. ’05 = 1.2%

NYS Feb. ’05 = 1.2%

NYC

Source: Bureau of Labor Statistics, FRBNY calculations.

new york state employment percent change from 4 quarters earlier
New York State Employment Percent change from 4 quarters earlier

Percent

Percent

Non-farm Employment

Covered Employment

Source: Bureau of Labor Statistics, FRBNY calculations.

new york city employment percent change from 4 quarters earlier
New York City EmploymentPercent change from 4 quarters earlier

Percent

Percent

Non-farm Employment

Covered Employment

Source: Bureau of Labor Statistics, FRBNY calculations.

new york city information employment percent change from 4 quarters earlier
New York City Information EmploymentPercent change from 4 quarters earlier

Percent

Percent

Non-farm Employment

Covered Employment

Source: Bureau of Labor Statistics, FRBNY calculations.

new york city financial activities employment percent change from 4 quarters earlier
New York City Financial Activities EmploymentPercent change from 4 quarters earlier

Percent

Percent

Non-farm Employment

Covered Employment

Source: Bureau of Labor Statistics, FRBNY calculations.

new york city professional business services employment percent change from 4 quarters earlier
New York City Professional & Business ServicesEmploymentPercent change from 4 quarters earlier

Percent

Percent

Non-farm Employment

Covered Employment

Source: Bureau of Labor Statistics, FRBNY calculations.

slide13

Growth in Service Jobs% change January 2005/ January 2004

Note: U.S. data are for February 2005.

Source: Bureau of Labor Statistics, FRBNY calculations.

slide14

Second District Employment Forecast

Percent change from 12 months earlier

Note: F denotes forecast,

Source: Bureau of Labor Statistics; Federal Reserve Bank of New York forecast.

slide15

Second District Unemployment Rates

Note: U.S. data are for March 2005

Source: Bureau of Labor Statistics.

slide16

Wages and SalariesPercent change from 4 quarters earlier

Percent

Percent

United States

NYS

NJ

Source: Bureau of Labor Statistics, FRBNY calculations.

personal income percent change from 4 quarters earlier
Personal IncomePercent change from 4 quarters earlier

Percent

Percent

NYS

United States

NJ

Source: Bureau of Labor Statistics, FRBNY calculations.

home prices percent change from 4 quarters earlier
Home PricesPercent change from 4 quarters earlier

Percent

Percent

NJ

NYS

United States

Source: Office of Federal Housing Enterprise Oversight.

consumer price index percent change from 12 months earlier
Consumer Price IndexPercent change from 12 months earlier

Percent

Percent

New York-Northern NJ

United States

Source: Bureau of Labor Statistics, FRBNY calculations.

slide20

Top 5 Metropolitan Areas

by Venture Capital Investments

Q4 2004

Source: PricewaterhouseCoopers MoneyTree Survey, Q4 2004.

slide21

Top 5 Investment Industries

For Venture Capital Firms in

Q4 2004

Silicon Valley Area

Software

Biotechnology

Semiconductors

Networking and Equipment

Medical Devices and Equipment

New York Metro Area

Networking andEquipment

Software

Biotechnology

Medical Devices and Equipment

Telecommunications

Source: PricewaterhouseCoopers MoneyTree Survey, Q4 2004.

slide22

Top Five States for R&D Funding

Source: National Science Foundation, FRBNY Calculations, 2002.

*Federal expenditures not available and Federal obligations may not equal expenditures

so the columns are not additive.

household median adjusted gross income
HouseholdMedian Adjusted Gross Income

Source: Internal Revenue Service, Statistics of Income.

migrant taxpayers aggregate adjusted gross income billions
Migrant TaxpayersAggregate Adjusted Gross Income$ Billions

Source: Internal Revenue Service, Statistics ofIncome.

slide25

Points of Concern Longer Term:

    • NYS has the fastest rate of out-migration of seniors. The rate has increased 2 ½ % from 1985-90 to 1995-2000 as the population has aged.
    • NYS has a very rapid rate of foreign immigration of younger working
    • age people and this contributes to a reasonably strong trend in births in NYC.
    • NYS and NYC have a high rate of out-migration of young prime working age people. However, there is evidence that this is a cyclically sensitive phenomena.
    • The out-migration of seniors and foreign immigration, coupled with a strong rise in births, have slowed the rate of aging in NYS and NYC compared to the nation.
    • On balance we are accelerating the export of our wealthier population and importing a less wealthy, less educated population.
    • We are failing to obtain our fair share of federal R&D spending. We have yet to capitalize on the potential in changing freight patterns.
slide27

Sales Tax Revenue Collections

Year to Date

New York City

New York State

Mil $

Mil $

2003

2004

2002

2003

2004

2002

2005

2005

Feb. 2005 YTD 7.8%

Feb. 2005 YTD 6.4%

Source: New York City Department of Finance, Office of the New York State Comptroller.

slide28

Personal Income Tax Revenue Collections

Year to Date

Mil $

Mil $

New York City

New York State

2004

2004

2003

2002

2003

2002

2005

2005

Feb. 2005 YTD 11.4%

Feb. 2005 YTD 14.2%

Source: New York City Department of Finance, Office of the New York State Comptroller.

slide29

Percent of Residential Mortgage Loans with

Installments 90 Days Past Due

Percent

Percent

United States

NJ

NYS

Source: Mortgage Bankers Association.

slide30

Percent of Residential Mortgage Loans in

Foreclosure Started During the Quarter

Percent

Percent

NJ

NYS

United States

Source: Mortgage Bankers Association.