Editor's note: Below you'll find the week 3 release of the NYC Recovery Index, originally published Aug 17, 2020. Visit the NYC Recovery index homepage for the latest data.
The latest reading of the New York City Recovery Index out of a possible score of 100.
As New York City enters the final phase of reopening, the road to economic recovery is progressing very slowly. Unemployment at more than 20% remains historically high for city residents, but subway traffic is starting to gain momentum. Zoos and botanical gardens are permitted to open at 33% capacity, professional sports teams have returned to their stadiums (without fans), and media production is now permitted with safety measures required. Still, more than five months since the pandemic was officially declared, New York City’s economic recovery is only about one quarter of the way back to February 2020 levels.
The New York City Recovery Index, developed in partnership with Investopedia and NY1, registered a 3.4 point increase over the past four weeks. Restaurant reservations, subway ridership, and a decline in COVID-19 hospitalizations has been leading the gains, but stubbornly high unemployment is subduing the overall progress of the city’s recovery.
According to the Governor’s office, COVID-19 cases, fatalities and new hospitalizations are at or near mid-March lows. While New York County still has a 5% positive test rate for COVID-19 as of this weekend, new hospitalizations and intubations continue to decline.
Unemployment is Still at Historic Highs
Unemployment in New York City is still at 20.4%, according to June data. (July’s data will be released in two weeks).
Weekly claims for initial unemployment showed modest declines last week, but are still 7.5X the same period one year ago. It’s worth noting that at the beginning of July, initial claims were only 4X higher than the same period last year.
That tells us that new layoffs increased in the first three weeks of July as businesses, especially restaurants and hospitality-oriented companies, were forced to lay off workers.
We should not be surprised to see that the leisure, hospitality and food service industries, which were the hardest hit as the city went on lockdown, are the slowest to recover. Thousands of restaurants have been forced to close for good, and thousands more are operating with minimal staff as dine-in restrictions remain in place.
Small Business Applications Remain Steady
New applications for small business licenses are an indicator of business owners’ willingness to launch or relaunch their businesses, and showed slight increases over the past few weeks. Most of those applications have been for food oriented businesses, namely food trucks and carts. While these are typically not big employers, the new applications are a welcome sign for NYC, which has lost billions of dollars in tax revenue amid the pandemic.
Restaurant Reservations Tick Upward
Many neighborhoods have allowed more outdoor dining permits for local restaurants, which was reflected in a spike in restaurant reservations over the past week. But until indoor dining is allowed, this indicator will remain muted. As part of the Phase 4 reopening, New York State has banned the sale of alcohol at restaurants and bars unless food is also being ordered in an attempt to crack down on crowds gathered for outdoor drinking. Alcohol sales are the highest margin products sold at restaurants, so the crackdown will impact their bottom lines.
Subway Use is Gathering Speed
As more New Yorkers return from summer vacations and some businesses are reopening, subway use has started to pick up, according to daily turnstile swipes. Subway mobility is still close to 80% lower than it was in February, but the last few weeks have seen a steady increase in underground travelers. With some schools set to return in the next two weeks, expect that trend to show a sharp increase as we head into September.
What’s Next in New York City’s Recovery?
As new virus cases continue to decline in what is a hopeful trend, more restrictions are likely to be lifted for restaurants and public gathering places. That is likely to increase mobility and consumer spending. With schools resuming over the next several weeks, subway use will spike across all boroughs and train lines. Unfortunately, unemployment is likely to remain high for several months, given the magnitude of small business closures—especially restaurants—over the past four months.
Housing Looks Vulnerable
Housing is the next hot zone of the economic crisis coming to New York City. Governor Cuomo extended the eviction moratorium until September 4th, and President Trump issued an executive order last weekend extending the moratorium nationally for 30 days. Still, a recent report by the National Low Income Housing Coalition estimates that 36% to 45% of New York City’s households, or between 2.8 million and 3 million residents, are at risk for eviction. The numbers are staggering, and the impact of even a fraction of these people losing their homes would be devastating, and a huge strain on social services, which are already stretched.
Beyond the potential homelessness crisis, we are already seeing signs that some residents are fleeing the city. Apartment vacancies increased in Manhattan by over 5% year-over-year in the past several weeks, while they have remained stable in the other boroughs. This could be a sign that some families are fleeing Manhattan ahead of the school year, or are unable to pay their rent or mortgage due to job or income losses.