Overview of the Regional Economy Jason Bram, Research Officer Presentation to the Community Depository Institutions Advisory Council (CDIAC) March 9, 2018 The views expressed here are those of the presenter and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System.
Private-Sector Job Trends Percent Change From Previous Peak to December 2017 WA MT ND ME CA OR NV ID UT WY CO SD NE KS MN IA MO WI IL MI OH IN KY WV PA VA NY VT NH MA RI CT NJ DE MD AZ NM OK AR TN SC NC MS AL GA AK TX LA FL HI PR Down Flat Up to 3% Up 3% to 7% Up More Than 7% Source: Bureau of Labor Statistics and Moody's Economy.com. 1
Recent Private-Sector Job Trends Year-Over-Year Percent Change as of December 2017 WA MT ND ME CA OR NV ID UT WY CO SD NE KS MN IA MO WI IL MI OH IN KY WV PA VA NY VT NH MA RI CT NJ DE MD AZ NM OK AR TN SC NC MS AL GA AK TX LA FL HI PR Down Flat Up to 1.25% Up 1.25% to 2% Up More Than 2% Source: Bureau of Labor Statistics and Moody's Economy.com. 2
124 118 Index (Dec2007=100) Private-Sector Employment Seasonally Adjusted Index Dec 112 Jan 106 New York City 100 United States 94 New York New Jersey Puerto Rico 88 82 2007 2008 2009 Shading indicates NBER recession 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Bureau of Labor Statistics and Moody's Economy.com. 3
Private-Sector Employment Seasonally Adjusted Index 124 Index (Dec2007=100) 118 112 Jan 106 Dec 100 Albany Upstate 94 Utica United States Glens Falls Shading indicates NBER recession 88 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Bureau of Labor Statistics and Moody's Economy.com. 4
Private-Sector Employment Seasonally Adjusted Index 124 Index (Dec2007=100) 118 112 106 United States Jan Dec 100 Rochester Buffalo Upstate Syracuse 94 Shading indicates NBER recession 88 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Bureau of Labor Statistics and Moody's Economy.com. 5
Private-Sector Employment Seasonally Adjusted Index 124 Index (Dec2007=100) Dec 118 New York City 112 106 Long Island United States Jan 100 Orange-Rockland- Westchester Fairfield 94 Shading indicates NBER recession 88 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Bureau of Labor Statistics and Moody's Economy.com. 6
Employment Trends In and Around NYC Private-Sector Job Growth First Half of 2017 vs First Half of 2016 Up more than 2.5% Up 1.6% to 2.5% Up 0.6% to 1.5% Up 0.5% or less Down Orange Ulster Dutchess Putnam Westchester Fairfield Sussex Passaic Rockland Bergen Warren Morris Essex Bronx Suffolk Queens Nassau Union Kings Hunterdon Somerset Middlesex Source: Bureau of Labor Statistics and Moody s Economy.com. Monmouth 7
Current Economic Conditions FRBNY Business Surveys, Current Conditions 60 Diffusion Index 40 20 Empire State Manufacturing Survey 0 Feb -20 Business Leaders Survey -40-60 2007 2008 2009 Shading indicates NBER recession 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Federal Reserve Bank of New York. 8
Future Economic Conditions FRBNY Business Surveys, Conditions Six Months Ahead 60 Diffusion Index Empire State Manufacturing Survey 40 Feb 20 0 Business Leaders Survey -20-40 -60 2007 2008 2009 Shading indicates NBER recession 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Federal Reserve Bank of New York. 9
NYC Securities Employment Seasonally Adjusted Levels 290 Thousands Shading indicates time between securities peak and trough Thousands 4,500 230 4,000 Total Employment Minus Securities (right axis) Securities Employment (left axis) Dec 170 3,500 110 3,000 50 2,500 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Source: Bureau of Labor Statistics,Moody's Economy.com, and FRBNY calculations. 10
NYC Tech and Securities Employment Thousands of Jobs 200 Thousands +13,000 150 Securities Employment Jan10 to Jun17 +63,000 100 Technology Employment 50 Technology Employment Computer manufacturing Electronic shopping Software publishing Data processing, hosting, etc. Internet/web search portals Computer systems design Scientific R&D services 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: Bureau of Labor Statistics and Moody s Economy.com.; FRBNY Staff Calculations 11
Manhattan 2016 Employment Location Quotient Manhattan Specialization Employment Change, Location Quotient, and Sector Size Securities, Commodity Contracts, Investments Apparel Manufacturing Information Performing Arts Professional & Technical Services Museums, Zoos & Parks Educational Services Insurance Carriers Food Service and Drinking Miscellaneous Manufacturing Merchant Wholesalers Administrative & Support Ambulatory Health Services Non Store Retailers Nursing & Residential Care Facilities Bubble Size Represents Number of Employees in 2016-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% Percent Change in Manhattan Employment: 2006-2016 Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW). 12
What Lies Ahead for Puerto Rico & the US Virgin Islands? Both territories were in precarious shape, economically & fiscally, prior to hurricanes Irma & Maria. Irma & Maria caused substantial damage and disruption: More than 1,000 lost lives, attributable to the storms, in Puerto Rico. Widespread damage to homes, businesses, infrastructure, agriculture. Puerto Rico s power outage has been the biggest, by far, in US history. To begin to gauge the likely economic effect, we look at: How many people left following the storms? and how many will return? What can satellite imagery of nighttime lights tell us about the persistence and geographic breadth of the disruption? How severe have the measured job losses been thus far? What sectors were affected most and has there been any bounce-back? 13
Population Loss After the Storms Net Domestic Passengers to Puerto Rico, 12-Month Rolling Sum 50,000 0 U.S. Census Net PR Migration 2011-2016 Annual -50,000-100,000 Puerto Rico Net Airline Passengers 12 months ending in Aug -150,000-200,000 Between Aug. and Nov. 2017, the net number of domestic air passengers departing was roughly 160,000 above trend. 12 months Ending in Nov -250,000 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Note: Airports are Luis Munoz Marin Intl Airport in San Juan, Mercedita Intl Airport in Ponce, and Rafael Hernandez Intl Airport in Aguadilla. Source: U.S. Bureau of Transportation Statistics and FRBNY staff calculations. 14
Nighttime Lights in Puerto Rico August October San Juan Culebra Vieques San Juan Culebra Vieques Aguadilla Arecibo Caguas Humacao Aguadilla Arecibo Caguas Humacao Mayaguez Mayaguez Ponce Ponce December January San Juan Culebra Vieques San Juan Culebra Vieques Aguadilla Arecibo Caguas Humacao Aguadilla Arecibo Caguas Humacao Mayaguez Mayaguez Ponce Ponce Source: Earth Observation Group; NOAA National Geophysical Data Center. 15
January Nighttime Lights Brightness as a Percentage of August Baseline As of January 2018, Puerto Rico on whole is 76% as bright as the August baseline BRITISH VIRGIN ISLANDS St. John Aguadilla PUERTO RICO Arecibo San Juan Caguas Humacao Culebra Vieques St. Thomas U.S. VIRGIN ISLANDS St. Croix Mayaguez Ponce Less than 50% 50% - 60% 60% - 70% 70% - 80% 80% - 90% More than 90% Source: Authors Calculations; Earth Observation Group; NOAA National Geophysical Data Center. 16
How Does This Compare to Other Disasters? Local Job Loss Following Natural Disasters, from Onset to Trough -29.7% Katrina-Metro New Orleans (Aug2005) For context, during the Great Recession, NYC saw a 3.3 percent job loss over the course of 10 months -9.4% -7.8% -6.2% -4.2% -2.3% -1.3% -1.3% -0.9% -0.5% -0.3% -0.1% +0.0% Hugo-US Virgin Islands (Sep1989) Maria & Irma-US Virgin Islands (Sep2017) Marilyn-US Virgin Islands (Sep1995) Maria-Puerto Rico (Sep2017) Ivan-Pensacola (Sep2004) Irma-Florida (Sep2017) Sandy - NY/NJ Coastal Counties (Oct2012) Harvey-Metro Houston (Aug2017) Georges-Puerto Rico (Sep1998) Hugo-Puerto Rico (Sep1989) Blizzard-Philadelphia Metro (Jan1996) Andrew-Metro Miami (Aug1992) Source: U.S. Bureau of Labor Statistics, Haver Analytics, and Moody s Economy.com. 17
Employment Paths Post Hurricanes Index (Month Before Hurricane = 100) 110 100 Index (Month Before Hurricane = 100) U.S. Virgin Islands (Marilyn Sep 1995) Puerto Rico (Maria Sep 2017) 90 U.S. Virgin Islands (Hugo Sep 1989) U.S. Virgin Islands (Irma/Maria Sep 2017) New Orleans (Katrina Aug 2005) 80 Months Before Hurricane Months After Hurricane 70-12 -10-8 -6-4 -2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Source: U.S. Bureau of Labor Statistics, Moody s Economy.com, and FRBNY staff calculations. 18
Regional Recap NYC continues to lead the region in job growth. Fairfield County and much of upstate New York have lagged. Manufacturers report brisk growth in business activity, while service firms indicate more subdued growth. NYC s key securities industry has barely contributed to the city s boom; but brisk growth in a variety of other sectors, notably tech, has contributed to a broad-based expansion. Puerto Rico & USVI were devastated by Irma & Maria. Compounding this, they both had economic & fiscal problems beforehand. Puerto Rico s economy has shown signs of resilience. Looking ahead, the recovery will be affected by the degree of outmigration, external aid, fiscal and other reforms. 19
APPENDIX: Home Prices Around the District 20
Home Prices CoreLogic Home Price Index, Seasonally Adjusted 120 Index (Mar2006=100) 110 Upstate NY 100 NYC Metro Dec 90 New York State 80 Downstate NY 70 United States Shading indicates NBER recession 60 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: CoreLogic Home Price Index (including distressed sales). 21
Home Prices CoreLogic Home Price Index, Seasonally Adjusted 120 Index (Mar2006=100) 110 NYC Metro 100 Dec Westchester 90 Fairfield 80 Rockland 70 United States Shading indicates NBER recession 60 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: CoreLogic Home Price Index (including distressed sales). 22
Home Prices CoreLogic Home Price Index, Seasonally Adjusted 180 Index (Mar2006=100) 160 Kings 140 Manhattan 120 Queens 100 Nassau Dec 80 United States Suffolk 60 2006 2007 2008 2009 Shading indicates NBER recession 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: CoreLogic Home Price Index (including distressed sales). 23
Home Prices CoreLogic Home Price Index, Seasonally Adjusted 140 Index (Mar2006=100) 120 Buffalo Upstate NY 100 Rochester Albany Dec 80 United States 60 2006 2007 2008 2009 Shading indicates NBER recession 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: CoreLogic Home Price Index (including distressed sales). 24