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Economic Conditions in the 2nd District Economic Press Briefing: August 26, 2015 The views expressed here are those of the presenter and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System. The 2nd Federal Reserve District Regions in the District Upstate Puerto Rico & Northern NJ U.S. Virgin Islands Downstate FEDERAL RESERVE BANK OF NEW YORK 2 Overview of Regional Conditions Some parts of the District are performing remarkably well, while other places are struggling with little or no growth New York City’s expansion is its strongest in recent history, with little help from Wall Street. Buffalo and Albany are seeing solid growth, with construction and manufacturing boosting employment for the first time in decades. Northern New Jersey is growing modestly, but is being weighed down by weak business services and finance sectors. Syracuse and Binghamton continue to struggle with little or no growth, and are feeling the sting of ongoing manufacturing job cuts. The economies of Puerto Rico and the U.S. Virgin Islands remain depressed. FEDERAL RESERVE BANK OF NEW YORK 3 Regional Economic Activity Index of Coincident Economic Indicators (CEI) 130 Index (Dec2007=100) 120 110 New York City 100 New York State New Jersey 90 Puerto Rico 80 2007 Shading indicates NBER recession 2008 2009 2010 2011 2012 2013 2014 Source: Federal Reserve Bank of New York; Government Development Bank for Puerto Rico. Note: The Puerto Rico composite index is based on a different methodology than the indexes produced by the FRBNY. 2015 4 FRBNY Regional Business Surveys Indexes of Current Economic Conditions 30 Diffusion Index 20 Business Leaders Survey (Service Sector) 10 Empire State Manufacturing Survey Aug 0 -10 -20 Sep14 Harsh Winter Oct14 Nov14 Dec14 Source: Federal Reserve Bank of New York. Jan15 Feb15 Mar15 Apr15 May15 Jun15 Jul15 Aug15 Sep15 5 FRBNY Regional Business Surveys Indexes of Current Economic Conditions 40 Diffusion Index Empire State Manufacturing Survey 20 0 Aug -20 Business Leaders Survey NBER Sandy (Service Sector) -40 -60 2007 Shading indicates NBER recession. 2008 2009 Source: Federal Reserve Bank of New York. 2010 2011 2012 2013 2014 2015 6 Regional Employment Trends Indexes of Total Employment, Seasonally Adjusted 110 Index (Dec2007=100) 2.0% 105 Jul 15 Jul 14 Downstate NY 2.1% 100 1.1% Upstate NY United States 95 0.4% 12-month % Change Northern NJ 90 Puerto Rico 0.2% 85 2007 2008 2009 2010 Source: Bureau of Labor Statistics and Moody’s Economy.com. 2011 2012 2013 2014 2015 7 Recent Job Growth Across the District May - July Average, Percent Change From a Year Earlier 2.5% NYC United States 2.0% 1.5% Fairfield Long Island Buffalo Rochester Albany 1.0% Northern NJ 0.5% 0.0% Utica Syracuse U.S. Virgin Islands Lower Hudson Valley Puerto Rico -0.5% Binghamton -1.0% Source: Bureau of Labor Statistics and Moody’s Economy.com. 8 Glens Falls Buffalo Utica Syracuse Rochester Ithaca Elmira Binghamton Downstate Downstate NY Downstate Employment Trends Employment Indexed to Local Employment Peak 112 Index (Start of Downturn = 100) Note: Lower Hudson Valley includes Ulster, Dutchess, Orange, Putnam, Rockland, and Westchester counties. 109 NYC 106 Long Island 103 100 Lower Hudson Valley 97 Fairfield 94 91 Start of Downturn Seven Years From Start One Year From Start Months 88 -12 0 12 24 Source: Bureau of Labor Statistics and Moody’s Economy.com. 36 48 60 72 84 10 NYC Employment Trends Last 3 Downturns - Indexed to Cyclical Employment Peak 112 Index (Start of Downturn = 100) 109 NYC Recent Downturn 106 103 100 NYC Early 2000s Downturn 97 94 NYC Early 1990s Downturn 91 Start of Downturn Seven Years From Start One Year From Start Months 88 -12 0 12 24 Source: Bureau of Labor Statistics and Moody’s Economy.com. 36 48 60 72 84 11 NYC Employment: Wall Street & Main Street Seasonally Adjusted 270 Thousands Thousands Dotted line indicates securities industry trough 4,250 240 4,000 210 3,750 Total Employment Minus Securities (right axis) 180 3,500 150 3,250 120 3,000 Securities Employment (left axis) 90 60 1966 2,750 2,500 1970 1974 1978 1982 1986 Source: Bureau of Labor Statistics and Moody’s Economy.com. 1990 1994 1998 2002 2006 2010 2014 12 Sectors Driving Recent NYC Job Growth Employment Change, Sep 2009 – July 2015 500 400 Thousands 65,000 Retail Trade 111,000 Leisure & Hospitality 124,000 Professional & Business Services 144,000 Educational & Healthcare Services 300 200 100 0 -100 Source: Bureau of Labor Statistics and Moody’s Economy.com. 13 Regional Tech Employment Number of Jobs 175 Thousands 150 125 New Jersey Average wage is roughly $130,000 100 Nearly 50,000 jobs created since Sept. 2009 New York City 75 50 Long Island 25 0 1990 Fairfield Shading indicates NBER recessions 1992 1994 1996 1998 2000 2002 Source: Bureau of Labor Statistics QCEW and Moody’s Economy.com. 2004 2006 2008 2010 2012 2014 14 Upstate NY Sectors Driving Upstate Job Trends Year-to-Date 2014 to Year-to-Date 2015 Net Change 10,000 Job Change Education & Health 7,500 5,000 Professional & Business Trade Leisure & Hospitality 2,500 Construction Transport & Utilities Financial Activities Manufacturing 0 Government Information -2,500 Source: Bureau of Labor Statistics and Moody’s Economy.com. 16 Upstate Construction Employment Annual Percent Change 12% 2012-2014 2014-2015 (YTD) 9% 10.0% 6% United States 3% Albany 3.7% 3.8% 3.3% Rochester 2.7% 2.4% 0.3% 0% Buffalo 2.3% Syracuse -0.9% Utica -3% 1.8% -1.4% -0.6% -2.4% Binghamton -3.8% -6% Source: Bureau of Labor Statistics and Moody’s Economy.com. 17 Upstate Manufacturing Employment Year-to-Date 2010 to Year-to-Date 2015 Percent Change 30% 20% 22.7% 10% 6.4% Utica 0% Albany Buffalo -2.0% Rochester Syracuse Binghamton -4.1% -9.0% -10% -20% -21.3% -30% Source: Bureau of Labor Statistics and Moody’s Economy.com. 18 Glens Falls Buffalo Utica Rochester Albany Ithaca Elmira Binghamton Northern NJ Total Employment Seasonally Adjusted Index 104 Index (Dec2007=100) Note: Northern NJ is here defined as Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Pike, Sussex, Somerset, and Union counties. Jul 102 100 United States 98 96 Northern NJ 94 92 2007 Shading indicates NBER recession 2008 2009 2010 Source: Bureau of Labor Statistics and Moody’s Economy.com. 2011 2012 2013 2014 2015 20 NNJ Sectors Underperforming the Nation May - July Average, Percent Change From a Year Earlier 5% 4% Professional & Business Services Leisure & Hospitality 3.5% 3% 3.0% Retail Trade 2% 2.1% Financial Activities 2.1% 1.9% 1% 0% -1% United States -0.8% - 0.2% - 1.9% Northern NJ -1.9% -2% Source: Bureau of Labor Statistics and Moody’s Economy.com. 21 NNJ Sectors Matching or Exceeding the U.S. May - July Average, Percent Change From a Year Earlier 5% Construction 4% 4.2% Educational & Health Services 3% Wholesale Trade 2% 2.7% 2.7% 2.8% 1.8% 1.5% 1% 0% State & Local Government 0.3% 0.3% United Northern States NJ -1% -2% Source: Bureau of Labor Statistics and Moody’s Economy.com. 22 Puerto Rico Puerto Rico Employment Trends Thousands 760 Private-Sector Employment Government Employment 340 740 320 720 300 Government (right axis) 700 280 Private-Sector (left axis) 680 260 Jul 660 240 640 2000 220 2001 2002 2003 2004 2005 2006 Source: Bureau of Labor Statistics and Moody’s Economy.com. 2007 2008 2009 2010 2011 2012 2013 2014 2015 24 Sectors Driving Puerto Rico Job Trends Year-to-Date 2014 to Year-to-Date 2015 Change Job Change 5,000 Education & Health Leisure & Hospitality 2,500 Transport & Utilities Information Professional & Business 0 Trade Financial Activities -2,500 Manufacturing Construction Government -5,000 Source: Bureau of Labor Statistics and Moody’s Economy.com. 25 Summary New York City’s job growth has been particularly strong, outpacing the nation, without much help from Wall Street. Growth has been more modest in the rest of downstate. Economic conditions are mixed across upstate New York, with Buffalo leading in job growth and Binghamton still seeing significant declines. Northern New Jersey’s economy is growing modestly, with varied performance across sectors. The economies of Puerto Rico and the U.S. Virgin Islands remain depressed, with no sign of recovery. FEDERAL RESERVE BANK OF NEW YORK 26 Economic Conditions in the 2nd District Economic Press Briefing: August 26, 2015 The views expressed here are those of the presenter and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System. How We Define the Tech Sector NAICS 334 NAICS 454111 Electronic Shopping NAICS 5112 Software Publishing NAICS 518 Data Processing, Hosting & Related Services NAICS 51913 Internet Publishing & Broadcasting and Web Search Portals NAICS 5415 Computer Systems Design & Related NAICS 5417 Scientific R&D Services Computer Manufacturing FEDERAL RESERVE BANK OF NEW YORK 28