Editor's note: Below you'll find the week 22 release of the NYC Recovery Index, originally published Dec. 21, 2020. Visit the NYC Recovery index homepage for the latest data.
New York City’s economic recovery faltered during the week of Dec. 12 as COVID-19 hospitalizations and initial unemployment insurance claims continued to rise, while restaurant reservations continued to fall. In an effort to curb the spread of the virus, Gov. Andrew Cuomo said restaurants in New York City are required to close their indoor dining sections in what is likely the first of more commercial restrictions to be imposed on the city. This mandate will likely further drive up unemployment insurance claims and keep restaurant reservations down. Cuomo also called on federal officials to restrict travel from the UK in the hopes of limiting the spread of the virus.
New York City’s recovery stands at just 46.3 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 0.7 points from the prior week, though the drop would have been worse had there not been a significant spike in home sales across all five boroughs during the week of Dec. 12. 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 remain flat or continue to trend in the wrong direction.
COVID-19 Hospitalizations Soar
The number of New York City hospitalizations continued to rise during the week of Dec. 12, with an average of 207 hospitalizations per day, up from 164 average daily hospitalizations the previous week. This was the highest weekly average recorded since May 9, and nearly triple the rate one month ago, as colder weather and relaxed social distancing practices brought a new wave of COVID-19 cases across the country. New York City recorded 384,000 COVID-19 cases and 24,697 deaths as of Dec. 20. The rising case numbers will be an important factor in New Yorkers’ holiday travel and shopping plans as the end of the year approaches.
Unemployment Continues to Climb
During the week of Dec. 12, New Yorkers filed 2,589 more unemployment insurance claims compared to the previous week. This represented a significantly larger year-over-year percentage increase (433%) compared to the previous week (265%), indicating the significant struggles businesses and individuals are facing in New York City.
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 Moderna’s COVID-19 vaccine on Dec. 18, the second vaccine approved in the U.S. after Pfizer and BioNTech’s COVID-19 vaccine.
Home Sales Continue to Increase
Home sales provided one bright spot in an otherwise bleak week for New York City’s economy. Pending home sales, or homes in contract, continued to increase during the week of Dec. 12 and are up over 40% compared to the same period last year. Across New York City, 543 homes went into contract during the week of Dec. 12, compared to 459 the previous week and 384 at the same point in 2019, according to data from StreetEasy. Manhattan, Queens, and Brooklyn all saw year-over-year increases of 28%, 41%, and 54%, respectively.
Rental Market Struggles
This is the second week we are officially incorporating rental data into the index and the inclusion of the data has shown that the rental market is markedly more impacted by the pandemic than the home buying market. There were nearly 42,000 rental units available in New York City as of the week of Dec. 12, which is almost two times the expected number of units available this time of year, according to data from StreetEasy. This number indicates that more people have left New York City for the suburbs or other cities with lower costs of living than have moved into New York City during this time. In fact, 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.
“The amount of rentals on the market has been higher this year than we’ve ever seen before, driven by the amount of New Yorkers temporarily or permanently leaving the city during the pandemic," economist Nancy Wu told Investopedia. "There’s reason to believe that inventory has peaked as the amount of new inventory piling on has begun to slow down in recent weeks, but that doesn’t mean it’ll be back down to pre-covid levels any time soon.”
Congress reached a long-sought stimulus deal to provide Americans $900 billion in aid on Dec. 20. Though the deal still needs to be passed by President Trump, the package includes $25 billion in rental assistance. 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 people returning to the city throughout the hot months of 2021 to counterbalance the many departures of 2020.
"Inventory is high and will remain high until the city’s economy and jobs market recover," Wu continued. "Many of the city’s small businesses have closed permanently, and it will take time for new business and jobs to be created in their place. For this reason, it could take a while for the rental market to strengthen and inventory to normalize, even if a vaccine is widely available."
Subway Ridership Dips
Subway ridership continued to wane during the week of Dec. 12 as the average rolling seven-day average sat at less than 70% of last year’s average. The MTA estimates a rolling seven-day average of just over 1.5 million riders for the week of Dec. 12, a dropoff that is more significant than what is typically expected for the winter months.
The MTA is currently facing an $8 billion deficit, largely due to decreased ridership. However, help is likely on its way. Sen. Charles Schumer said the U.S. stimulus package will include more than $4 billion in funding for the MTA.
Restaurant Reservations Still Down
Restaurant reservations stagnated during the week of Dec. 12 as the estimated number of seated diners remained down 86% compared to last year, according to data from OpenTable. The number of reservations are trending even lower than the already decreased winter season numbers from 2019, and 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.