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New York: Comeback (After a Lag) Kid 

By: New York Times
New York Times, June 30, 2002

DO you remember the last recession? Lots of New Yorkers don't. Some — ah, youth! — were still in school back in the early 1990's. And many of those old enough to have been employed back then have been happy to forget those dark economic days, along with grunge fashion, "Dances With Wolves" and Marilyn Quayle's hairdo.

Which is why New York still needs Samuel M. Ehrenhalt. An economist who turns 77 today, Mr. Ehrenhalt studied New York City through half a century of booms and busts, until he retired as regional commissioner for the federal Bureau of Labor Statistics in 1995. So he has an unusual perspective on the city's current economic troubles: "The long view is the only view I have," he said last week.

What he has learned over the last 50 years suggests that, in the short term, the city's economy is likely to continue to suffer. But in the longer run, he said, the city will almost certainly bounce back. "We have a record of going through tough times and coming back stronger then ever," he said.

For most of the last half century, New York City has had what he calls a "roller coaster economy." In the 1950's, it fared well, but not as well in the suburbs. In the 60's, the economy started out very strong, but then went into a tailspin.

By the mid-70's, the city had lost 600,000 jobs — a sixth of its employment base — across almost every industry. "About when everyone had given up," he said, the economy turned up, making the 1980's "a decade of unexpected, remarkable, vigorous growth."

But in 1989, the city's economy went into free fall, more than a full year before the national recession began. And even after most of the country began to rebound in 1991, New York City didn't. "It was 1993 before we saw the light at the end of the tunnel," Mr. Ehrenhalt said.

"That lag in recovery is typical of New York," he warned. "We've seen it in almost every recession I've ever worked on." Places where the total population is surging seem to be the first to rebound, Mr. Ehrenhalt said.

The lag seems to be happening this time, too. For example, the national unemployment rate fell in May, to 5.8 percent from 6 percent, after adjustments for seasonal factors. But New York City's jobless rate continued to climb, rising to 8 percent from 7.7 percent. That's the highest it has been since May of 1998, when it was on its way down.

The employment picture is slightly better. As it does every spring, the city added jobs, especially at bars and restaurants, according to data from the New York State Department of Labor. Schools also hired people, at least temporarily, and construction jobs picked up.

Still, the seasonal gains paled in comparison to those of boom years of the late 1990's and 2000. And the city has a huge loss to recover from — over the past year, 104,000 private-sector jobs vanished. That works out to 3.3 percent of all the nongovernment jobs in the city, a decline more than twice as steep as the national loss of 1.6 percent.

Those statistics are rather grim for the roughly 267,000 people looking for work in the city (that's according to the state labor department). But New York City has a history of transforming its economy, Mr. Ehrenhalt said; after all, in 1961 its most important industries were wholesale trade, garment manufacturing and printing, none of which would make the Top 3 today.

And it has often confounded naysayers. He recalled a headline from the mid-60's, which read, basically, "Greatest City in the World and Everything Is Wrong With It." In 1980, a blue-chip group of economists predicted that in the coming decade, the city would experience absolutely no job growth. In the early 1990's, "people were saying we'd never see jobs on Wall Street like those of the 1980's," he said.

None of this turned out to be accurate. "The moral of that story is, don't sell New York short," he said.

Since he retired, Mr. Ehrenhalt has stopped poring over the reams of statistics he used to revel in. But he has his own ways of gauging the economy.

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