The Federal Reserve Bank of New York today released Is the Worst Over? Economic Indexes and the Course of the Recession in New York and New Jersey, the latest article in its series Second District Highlights.
Using coincident indexes – composite measures that gauge the level of current economic activity – for New York State, New York City and New Jersey, authors Jason Bram, James Orr, Robert Rich, Rae Rosen and Joseph Song analyze the area’s most recent recession and provide an update on the regional economy as of July 2009.
The indexes show that the New York-New Jersey region began to experience a severe economic downturn in 2008, several months after the onset of a national recession in December 2007. The authors note that this sequence of events differs from the 1990-91 and 2001 U.S. recessions, when regional downturns preceded the corresponding national trends. This delayed start suggests that the regional economy had more momentum and showed more resilience than the U.S. economy during the early stages of the national recession.
Job losses and rising unemployment were largely responsible for the steep declines in the regional indexes. Employment losses have been particularly marked in the region’s finance industry—a high-income sector that is a key driver of the region’s economy. During the downturn, weakness in this sector spilled over to supporting sectors such as business and professional services, resulting in additional job losses.
The pace of decline in the region moderated considerably in the spring of 2009 and leveled off in July 2009. However, the authors note that a period of ongoing job losses and rising unemployment may continue in the region even as the U.S. economy begins to recover, owing to the region’s historical tendency to lag the national recovery, the restructuring in the finance sector, and fiscal pressures arising from decreases in tax revenue.
Jason Bram is a senior economist, James Orr an assistant vice president and Joseph Song an assistant economist in the Microeconomic and Regional Studies Function of the Bank’s Research and Statistics Group; Robert Rich is an assistant vice president in the Macroeconomic and Monetary Studies Function of the Research and Statistics Group; Rae Rosen is an assistant vice president in the Regional Affairs Function of the Communications Group.