Going over the fiscal cliff could cost the Big Apple more than 600,000 jobs, experts tell The Post.
The job losses would cause New York City’s unemployment rate to spike more than two percentage points to more than 11 percent, these experts warn.
“This can be devastating,” said Kathryn Wylde, president and CEO of the New York City Partnership, an organization made up of business leaders.
Economists fear the $600 billion in automatic tax hikes and spending cuts that are scheduled to kick in Jan. 1 — the so-called fiscal cliff — will push the fragile US economy back into a recession.
The economic tremors will certainly be felt here in Gotham.
The huge Big Apple jobs wipeout — pegged at roughly 614,000, or 15 percent of the city’s 3.88 million jobs — was projected by two prominent economists at the American Action Forum, a not-for-profit think tank.
The frightening forecast, using tools developed by the Federal Reserve Bank of Kansas City, was put together by Princeton- and Columbia-trained economist Douglas Holtz-Eakin, a former director of the Congressional Budget Office.
“I take his research very seriously,” said Wylde.
In the city, the tax hikes would cut the take-home pay of someone earning $90,000 by about 6 percent — or about $450 a month in after-tax pay, said a JPMorgan report, adding that the lost income would “significantly” crimp consumer spending.
That drop in consumer spending would force employers to cut payrolls to match the lower volume of business.
The state Labor Department said yesterday the city’s jobless rate dropped to 9.3 percent in October from 9.5 percent a month earlier. The number of jobless in the city now stands at 830,600, it said.
President Obama and congressional leaders are set to meet today to discuss taxes and federal spending to keep the economy from heading off the fiscal cliff.
City Hall stands to suffer hugely from federal aid cuts envisioned in the Dec. 31 reckoning.
Washington’s $7.7 billion of annual aid in so-called block grants for Big Apple projects — ranging for fixing potholes and roads to housing and social services —would likely disappear automatically, Wylde said.
That blow amounts to an 11.3 percent loss in the city’s $68 billion annual budget.
Indeed, the initial round of aid cutoffs could cost the city about $2.4 billion alone, or enough for payrolls of about 59,000 New Yorkers hired for projects in construction and health care.