Editor's note: Below you'll find the week 23 release of the NYC Recovery Index, originally published Jan. 11, 2021. Visit the NYC Recovery index homepage for the latest data.
The new year brought new optimism as New York City’s economic recovery continued to improve during the week of Jan. 2. A decrease in unemployment claims, increase in restaurant reservations, and gains in the rental market all contributed to the city’s recovery. However, COVID-19 hospitalizations continue to haunt the city, while subway ridership is still less than half of its pre-pandemic levels.
New York City’s recovery stands at 59.2 out of a total score of 100, according to the New York City Recovery Index, a joint project between Investopedia and NY1. The index increased 7.8 points from the prior week — it’s biggest jump in over three months. Ten months into the pandemic, New York City’s economic recovery is only a little more than halfway back to early March 2020 levels.
Editor’s note: We slightly modified our calculation for the unemployment index, retroactively altering the index score for last week. That is why the week-over-week change of 7.8 comes out to 59.2 for this week instead of 60.9.
COVID-19 Hospitalizations Continue to Climb
The number of New York City hospitalizations continued to rise during the week of Jan. 2, with an average of 261 hospitalizations per day, up from 250 average daily hospitalizations the previous week. This seven-day average is on par with the rates of late-spring and is more than five-times the rate of two months ago.
The high caseload comes as colder weather and relaxed social distancing practices during the holiday season brought a new wave of COVID-19 cases across the country. New York City recorded a total of 488,000 cases and 25,562 deaths as of Jan. 11.
Case number trends will be an important factor to watch as vaccine distribution continues throughout the country. New York opened the vaccine signup to teachers, first responders, public safety and transit workers, and New Yorkers aged 75 or older on Jan. 1. Gov. Andrew Cuomo and Mayor Bill De Blasio have previously faced criticism for the slow vaccine distribution as the virus surges So far 1.2 million vaccines have been distributed in New York, although only 434,802 people have been inoculated with the first dose.
Unemployment Claims Continue to Decline
Year-over-year initial unemployment insurance claims, while still high, decreased significantly during the week of Jan. 2. The year-over-year percentage change for the week of Jan. 2 was only 31% above last year’s numbers, compared to the rates of between 200% and 400% higher for the previous weeks.
While this is an undisputed improvement, the number of future unemployment claims largely hinges on how long and widespread potential future shutdowns in NYC could last, as well as the speed and efficiency of vaccine distribution. Cuomo previously warned that a January economic shutdown of nonessential businesses is possible as COVID-19 cases soar to springtime records However, he later proposed a rapid COVID-19 testing network to help businesses reopen with reduced capacity restrictions. “We simply cannot stay closed until the vaccine hits critical mass. The cost is too high. We will have nothing left to open,” he tweeted on Jan. 11. “We must reopen the economy, but we must do it smartly and safely.”
The Bureau of Labor Statistics reported that 140,000 jobs were lost in December nationwide as layoffs mounted in the services sector due to tightened restrictions because of cold weather and the unmitigated spread of the coronavirus.
Home Sales Still Hot
Pending home sales increased during the week of Jan. 2 as 366 homes went into contract, compared to 339 the previous week, according to data from StreetEasy. This metric continues to be a bright spot in New York City’s economic recovery, representing a 51% increase compared to the same period last year when just 243 homes were in contract. Manhattan, Queens, and Brooklyn all saw year-over-year increases of 41%, 35%, and 6%, respectively.
Rental Vacancies Continue to Drop
New York City’s rental market has been significantly more impacted by the economic effects of COVID-19 than its housing market, speaking to the k-shaped recovery of the city. The city tells a tale of two housing markets: one where homeowners welcome a hot sellers market, while renters struggle to post their next payment and are forced to drop or not renew leases they can no longer afford.
However, the rental market is taking a turn for the better as vacancies have consistently declined over the past few weeks, according to data from StreetEasy. There were just over 35,000 rental units available in New York City as of the week of Jan. 2, down from approximately 36,000 the prior week. However, the number of available rental units is still greater than what would normally be expected for this time of year.
Moreover, rents for retail spaces in New York City have fallen to historic lows as troubled retailers closed shop and vacancies soared. These vacancies put intense pressure on landlords to fill their empty storefronts. While asking rents dropped significantly, taking rents are reported to be even lower, with some brokers citing average differences between asking and taking rents around 20%.
As New York City continues to recover from the COVID-19 pandemic, the rental market will be worth watching to see if there is an influx of people who return to the city in the summer of 2021 to counterbalance the hundreds of thousands of departures in 2020.
Subway Ridership Still Down
Subway ridership continued to sit 67% lower than last year during the week of Jan. 2, with an estimated rolling seven-day average of just over 1.18 million riders for the week. With ridership still down, the MTA has no plans to restore 24-hour subway service. Subway service between 1 a.m. and 5 a.m. was halted in May to allow for deep cleaning of stations and equipment, ending 107 years of 24-hour service. The number of overnight riders dropped to a low of about 10,000 people during the early days of the pandemic and have since rebounded to about 20,000 riders, most of whom are essential workers.
Restaurant Reservations See Modest Bump
Restaurant Reservations increased slightly during the week of Jan. 2, though the number is still significantly below last year’s level. The estimated number of seated diners remained 87% below last year’s figure, according to data from OpenTable, though this is an improvement on last week’s 92% drop.
Continued spikes in COVID-19 and colder weather have hampered gains in reservations. Moreover, Cuomo’s Dec. 14 ban on indoor dining has exacerbated the restaurant industry’s struggles. Several restaurants have sued the state over those dining restrictions, citing the fact that only 1.43% of transmitted COVID-19 cases come from restaurants.
Over 1,000 NYC restaurants have closed since late March, costing thousands of workers their jobs. The restaurant industry was not included in the latest $900 billion stimulus plan signed by President Trump, which may threaten the survivability of hundreds more restaurants. Nonetheless, the industry is hoping the federal government will provide assistance before normal capacity can resume.