New York City’s economic decline is likely in its early stages – and the unemployment rate may reach 10.5 percent, a level not seen since the mid-1970s administration of Mayor Abraham Beame, a new report says.
The city’s residential real-estate market and employment levels have so far held up better than most areas in the nation amid a delayed impact from job and income losses from the financial sector.
But home prices, which had declined 14 percent as of November since their peak, may fall another 20 to 25 percent “if not more,” according to the report by UBS bank.
“With job losses accelerating in financial services and more spillover impact still to come, we believe unemployment may approach the previous peak for the tri-state area of 10.5 percent” reached in 1976, the report says.
The city’s unemployment rate in December was 7.4 percent, up from 5.1 percent a year earlier, according to the state Department of Labor.
Financial services accounted for 13 percent of city employment in 2007.
Losses from Wall Street firms are expected to tally $47.2 billion for 2008, and further shortfalls are expected this year, Mayor Bloomberg said last week.
Budget officials assume the city will have shed 294,000 jobs from mid-2008 through 2010, the highest official estimate by government officials yet, including 46,000 in financial industries.
Bloomberg has proposed cutting the city budget by about $1 billion and raising its sales tax to help close a $4 billion shortfall for the fiscal year that begins on July 1.