Editor's note: Below you'll find the week 21 release of the NYC Recovery Index, originally published Dec. 14, 2020. Visit the NYC Recovery index homepage for the latest data.
New York City’s economic recovery stumbled during the week of Dec. 5 as the city witnessed a continued rise in COVID-19 hospitalizations as well as an increase in the amount of available rental units. In an effort to curb the spread of the virus, Gov. Andrew Cuomo said restaurants in New York City will be forced to close their indoor dining sections starting Dec. 14 in what is likely the first of more commercial restrictions to be imposed on the city.
New York City’s recovery stands at just 47 out of a total score of 100, according to the New York City Recovery Index, a joint project between Investopedia and NY1. The index decreased 1 point from the prior week. More than nine months into the pandemic, New York City’s economic recovery is less than halfway back to early March 2020 levels, and most components of the recovery index are still trending in the wrong direction.
COVID-19 Hospitalizations Continue to Climb
New York City hospitalizations continued to accelerate during the week of Dec. 5, with an average of 164 hospitalizations per day, up from 117 average daily hospitalizations the prior week. This was the highest weekly average recorded since May 12 as cold weather and relaxed social distancing practices brought a new wave of COVID-19 cases to the city. New York City recorded 361,000 total COVID-19 cases and 24,501 deaths as of Dec. 14.
The rising number of cases and deaths prompted Gov. Cuomo to ban indoor dining in NYC starting Dec. 14. “You’re going to see a bad December, a bad January. How bad is the question,” Cuomo said at a press briefing. The rising number of cases could be an important factor in the holiday shopping and travel plans of consumers in the area.
Unemployment Still on the Rise
During the week of Dec. 5, New Yorkers filed 4,880 more unemployment insurance claims compared to the previous week. However, this represented a smaller year-over-year percentage increase (265%) compared to the previous week (314%), indicating that unemployment could be slowing.
The trend in New York City mimics the U.S. at large, which saw the number of initial unemployment insurance claims reach the highest point since September during the week ending Dec. 5 following the Thanksgiving holiday. Future unemployment claims will largely depend on how widespread potential future shutdowns are in New York City and how quickly vaccine distribution and development can occur. The Food and Drug Administration granted emergency use authorization to Pfizer and BioNTech’s COVID-19 vaccine on Dec. 11 and the first shipments of the vaccine were dispatched on Dec. 13.
Home Sales Continue to Increase
Pending home sales, or homes in contract, returned to positive growth during the week of Dec. 5, after dipping the previous week, and are up over 25% compared to the same period last year. Across New York City, 459 homes went into contract during the week of Nov. 21, compared to 327 the previous week and 466 at the same point in 2019, according to data from StreetEasy. Manhattan, Queens, and Brooklyn all saw year-over-year increases of 35%, 28%, and 17% respectively.
Number of Available Rental Units Grows
This is the first week we are officially incorporating rental data into the index and the inclusion of the data has provided a gloomier picture of the housing market in New York City. While the number of available rental units typically declines following the summer high, the New York City rental market is currently trending in the opposite direction. There were more than 42,000 units available for rent in New York City as of the week of Dec. 5, which is more than two times the expected number of rental units for this time of year, according to data from StreetEasy. This indicates that people are still choosing to leave New York City for the suburbs or cities with lower costs of living.
Moreover, Manhattan apartment rents have tumbled to the lowest price point in a decade, with the median monthly rent at $2,743, according to Miller Samuel Inc. and Douglas Elliman Real Estate. As New York City recovers from the COVID-19 pandemic, the rental market will be worth watching to see if there is an influx of folks moving back to the city throughout the hot months of 2021 to counterbalance the many departures of 2020.
More than 300,000 New Yorkers have left the city in the last nine months, data shows. New York City residents filed 333,588 change of address requests between March 1 and Nov. 30, according to data from the United States Postal Service. Many New Yorkers moved to nearby suburbs in Long Island, Westchester, New Jersey and Connecticut. However, others moved to locations across the country, including Texas, Florida and Colorado.
Subway Ridership Sees Decline
Subway ridership dipped during the week of Dec. 5 as just over 1.4 million riders used the New York City public transit system, compared to 1.5 million riders the week prior, according to the MTA. This represents a year-over-year decline of 69%.
The MTA is currently facing a $6.1 billion funding shortfall for 2021, largely due to decreased ridership. Last week, the agency maxed out its Federal credit line, borrowing $2.9 billion from the Federal Reserve’s Municipal Liquidity Facility. This comes after the MTa already borrowed $450.7 million from the Fed in August.
Restaurant Reservations Still Falling
Restaurant reservations continued to decrease during the week of Dec. 5 as the estimated number of seated diners was down 86% compared to last year, a decline from the previous week’s 84%, according to OpenTable. The negative trend is expected to accelerate further with Gov. Cuomo’s restriction on indoor dining.
Continued spikes in COVID-19 and the impending cold weather are also hampering potential future gains in reservations. Moreover, uncertainty over a potential future stimulus package could further impede the restaurant industry’s recovery.
How Does NYC Compare to Other Cities?
Last week, we launched the Investopedia City Economic Recovery Tracker to chart the recovery of five cities across the U.S., including New York. What’s not surprising is that large metropolitan cities like New York, Chicago, and Los Angeles are lagging smaller cities like Houston and Columbus, Ohio on the path to recovery. Larger populations, more reliance on public transportation, and more service-sector employees have all translated into higher COVID-19 hospitalizations and more economic restrictions.
The city of Houston, with a population of 2.32 million, is showing the strongest recovery of the five cities that we are tracking on a weekly basis. It has an unemployment rate of 7.7%, compared to 13.2% in New York City.