Job losses

If there is another boom that will happen, like the internet boom, etc. Some revolutionary idea that will change the world and create lots of jobs. :) You should start the race...

2001 wasn't much of a recession....

What you miss is that it was the beginning of the NEXT bubble, RE. We didn't have the recession fallout because the recession never really hit.

If anything, that makes it a DOUBLE dangerous mistake.

Not only is it a mistake to think that recessions normally look like 2001-2003 (they don't), we also get to have all the fallout that we SHOULD have gotten in 2001-3 going to hit us now.

So, in short, 2001 was a baby recession. Because of that, we get a double recession. Trying to make comparisons between them is going to get you into some serious mistakes.

nyc10022-I'm trying to avoid making a mistake. Explain to me - if a terrorist attack on NYC didn't harm RE, than why will this recession? How do we know this isn't just a quick drop that will turn around once the credit markets loosen and we have a 4.5% rate?

A terror attack did harm RE, for a bit of time.
But the government responded with SUPER low interest rates, which drove an even bigger RE bubble. The city rallied, and confidence came. There was fear for a bit, and some people left the city, but overall even more confidence returned, right or wrong.

We're in different territory now. The national RE bubble has popped, people won't buy RE confidently for years. And the source of 30% of NYC income - Wall Street - has been decimated. And the national economy has a painful recovery ahead. There will simply be less money in this city for a long time.

You can bring in all the loose credit and 4.5% rates you want, but if people have half the money they had, I'm not sure how you expect them to pay the same for apartments.

BTW, the decline in just 3 months in Manhattan median has already surpassed the decline in 2001. This is much deeper in SO many ways.

hotproperty do me a favor and just wait until at least GM goes under and then wait 1 year from that point as the U # goes to 10% and when every single talking head on TV tells you to sell your house and rental rates to carrying cost on the same comp apt's you'd want to live for 10 years

right on.

This is the 2nd inning of of a 9 inning (at least) game...

hotproperty..these bitter bear wannebee owners hoping for a crash will not listen to the excellent advice you just gave them. They feel that this is it! We are all finished! This is the 2nd inning of a nine innning game, with one out, and a man on second an third, with a 1 and 2 count!..:)...yes, every recession is GONNA be the big one but it never is.

> hotproperty..these bitter bear wannebee owners hoping for a crash will not listen to the excellent
> advice you just gave them.

Why would we have to hope for one? We've got it already....

> yes, every recession is GONNA be the big one but it never is.

steveF, time to actually read the paper.

Biggest job losses since '74. Biggest stock market since depression. You're in a pile of shit and you don't even know it.

Its more like "every bubble, they say THIS TIME ITS DIFFRENT".

As we proved, it never is...

"You can bring in all the loose credit and 4.5% rates you want, but if people have half the money they had, I'm not sure how you expect them to pay the same for apartments."

People still found the money after the dot.com and tech bust. Didn't they? and ny unemployment was at 9%. What makes you think the 4.5% interest rate won't fruther sustain the bubble?

So just how bad will this get?

> People still found the money after the dot.com and tech bust. Didn't they?

30% of NYC income didn't come from dot com salaries....
And, if you recall, SF real estate WAS decimated.

We've already BLOWN AWAY the job losses from 2001-3. We've had a record market drop, and we didn't even start with a bubble (like in 2001-3) or a record RE bubble. And, unlike 2001-3, this one is focuses on the heart of NYC.

> So just how bad will this get?

The range of data seems to say we're 20% or so off peak now, perhaps more. Given how quick that went, with no real long-term relief in sight (economy will improve, but record salaries not coming back) I don't really see how that won't be at least another 10%, perhaps 15% or even 20%.

nyc10022..the equity markets have already stabilized, that's the first step. Than rationality returns leading to the realization that there is free monry out there!!!! That leads us to new growth. The fear is dissipating. That's a big deal..fear going away. Sorry to bring you such bad news.

> What makes you think the 4.5% interest rate won't fruther sustain the bubble?

1) because the bubble already popped. You can't unpop it
2) the idea of "real estate only goes up" has been stripped out of the equation, making the underlying fundamentals look horrible.
3) not that many folks qualify for the 4.5% anyway

Remember, most of your logic was used to explain why there WOULDN'T be a bubble pop. Now that we're in in, you can't really believe that the logic is going to suddenly start working after it didn't...

We've already BLOWN AWAY the job losses from 2001-3.

How do you figure we've surpassed the 221,000 jobs lost in 2001-2003?

"The city lost 221,000 jobs during the 2001-2003 recession"

where did you get that number from? I think it was lower than that.

> How do you figure we've surpassed the 221,000 jobs lost in 2001-2003

I'm going off national numbers here.... we had the biggest monthly job losses since 1974.

221k, 190k, 250k, 175k, who cares!..once we are past this, companies will hire them back just a fast as they layed them off.

What would spur massive hiring and massive salaries again?

and RE will double every year!

I swear!

(I guess this is the wing and a prayer thread)

What would spur massive hiring and massive salaries again?

massive stimulus

cleanslate - I don't know about massive hirings, but once they show a quarter of good numbers they will likely begin to hire people back. You can only go so long with a shortened staff. Firms also have a habit of over-firing, which is not a surprise since it is a tough to gauge.

That said, we aren't anywhere near the hiring-back part yet.

"What would spur massive hiring and massive salaries again?

massive stimulus"

Only if the stimulus is up to the task of digging out of the hole. The questions really are: How deep is this hole? and How big and effectively implemented will the stimulus be?

Finally, it will take time. How long?

> What would spur massive hiring and massive salaries again?
> massive stimulus

Just not on wall street.

I'm sure we'll get lots of $50k construction jobs and $75k a year beauracrat jobs, but I'm not sure how that is supposed to replace the 30% of city income in the shitter.

I'm sure all the new hardhats will buy condos.

"Just not on wall street.

I'm sure we'll get lots of $50k construction jobs and $75k a year beauracrat jobs, but I'm not sure how that is supposed to replace the 30% of city income in the shitter."

"I'm sure all the new hardhats will buy condos."

nyc10022...whatever..you are just a misinformed sad state of affairs. I say adios to you.

type3 - I do think there will be more jobs created for auditors and examiners for the financial services industry. They will certainly be under greater scrutiny and already have a much different appetite for risk management. Hedge funds will be the next domino to fall in the regulatory world and Madoff will only hasten this change. It won't be a game-changing amount of jobs, but I could easily see a new regulatroy environoment create a few thousand jobs in th industry.

> nyc10022...whatever..you are just a misinformed sad state of affairs. I say adios to you.

Yes, and you've been saying that for months... even as every denial you've made has been proven ridiculous.

Did anyone bother to notice that only Studios in NY (and not all of them) qualify for that vaunted 4.5% rate? Everyone else has to pay a jumbo rate that now starts at 7%.

Waverly - Ever compare the salary of a CPA or even a forensic accountant with that of the average iBanker? I assure you there is a reason all the accounting types live in NJ and commute to NY.

steve F certainly hasn't... it wouldn't fit in with his denial.

"Biggest job losses since '74. Biggest stock market since depression. You're in a pile of shit and you don't even know it."

Its always the biggest since . Why? Population only goes up up up. The Dow and other major index funds have much higher base rates now than they did then.

http://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average

2008 is number NINE in largest percentage drop. It also has 12th and 13th place for other days. Then again, this year has the 5th and 6th largest percentage *gains*. Doesn't seem so doomy and gloomy, now does it?

It seems Streeteasy killed my mad-libs tagging attempt. That sentence should read:

"Its always the biggest (insert disaster) since (insert something scary). Why? Population only goes up up up. The Dow and other major index funds have much higher base rates now than they did then."

Wait, let me get this straight... you're trying to note that the % decline in the stock market is less meaningful because the denominator is smaller?

So, you don't know math either?

btw, job losses are bigger than 2001-2002 in nominal AND real terms.
and 1987 stock market ended up for the year...

So yes, absolultely seems doomy and gloomy.

But I guess its because I finished math class.

You really are fond of twisting things horribly? You quote the largest decline. I note that its the largest decline nominally only, and number nine in percentage terms. Now you're trying to twist this as me misunderstanding percentages? Hardly.

I'm sure you're going to troll on 10 more posts about how you were right and I was wrong, but the history is there for everyone to see. Saying you're right 10 times doesn't actually make you right.

hotproperty - the only prob with making this sort of comparison is that after 2002 or so, the credit boom went totally parabolic, rates were ultra low, house prices did NOT start their parabolic boom, lending got looser and looser as the years went on until 2007, and there were more and more exotic loan products offered.

Looking ahead now, credit is deflating as the boom went bust, no securitization model to liquefy the credot system and keep loans moving along the investor chain, no secondary mortgage market for mbs, no wall street to package up the loans, etc..

In short, there is no credit boom that will allow house prices to make the moves they did after the 2001 recession and subsequent job losses. Besides, this downturn is way deeper and more severe than 2001 recession that was mainly a business driven recession. This one is consumer driven as consumers are tapped out, with huge debt, and can no longer use their home as ATM machine.

Man, you have to stop getting your education off wikipedia. Seriously.

This is why you make lousy RE investments and horrible market predictions and tell countries to put money under the mattress.

BTW, if you kept reading, you'd note that wikipedia only lists 3 stock market crashes - now, 87, and the depression. And, as I said '87 ended the year up...

You also seem to miss that we aren't finished yet...

But, hey, without folks like you, the rest of us couldn't profit in times like these. So, thanks.

btw, I also love the other stupid mistake you slipped in... that daily changes are more important than the total change.

Did you figure folks were dumb enough to let that slip by? Or are you dumb enough to have missed that that is meaningless...

urbandigs: Once the nation wide housing market stabilizes, the securitization model will be profitable again. People will want to get involved, although it will (hopefully) be much more heavily regulated. I don't see these as long term problems.

Do you see reason why this model (under heavy regulation to prevent a repeat of the underlying problems) won't survive at all?

for the people who actually understand what fractions are, I'm posting the data..

1929 90%
1937 52%
1919 47%
2008 46% (so far)
1973 46%
1907 45%
1917 40%
1903 38%
1969 36%
1987 36%
2000 34%

Anything else you'd like to show your complete stupidity on?

Plus, despite the bubble job creation was anemic at best. So, over the last few years we haven't been creating enough jobs, and now many more jobs need to be cut. Far more of the jobs cut in the 2001 recession were back office, support-type jobs. This round of cuts is much deeper, not surprising as the financial sector has grown disproportionately over the time period.

Much of the profits from the national real estate bubble wound up in NYC's financial sector. Much of the losses are showing up here now.

Waverly, just when do you expect a good quarter to drop in? Don't answer, I'm sure it's way too soon for me.

hotproperty - the only prob with making this sort of comparison is that after 2002 or so, the credit boom went totally parabolic, rates were ultra low, house prices did NOT start their parabolic boom, lending got looser and looser as the years went on until 2007, and there were more and more exotic loan products offered.

UrbanDiggs- What about the 4.5% rates to come? and NYC Co-op buyers were not using exotic loans.

"Anything else you'd like to show your complete stupidity on?"

I notice you didn't source your numbers. Probably because they're wrong. 46% drop in 2008? Nope, and here are my numbers:
http://finance.yahoo.com/q/hp?s=%5EDJI&a=00&b=1&c=2008&d=11&e=12&f=2008&g=w

Jan 2, 2008 closing price (higher than the open - giving you the benefit of the doubt though) was 13,338. Yesterday's close was 8565. (13338-8565)/13338 = 35.7%.

> Probably because they're wrong. 46% drop in 2008?

Probably because you're an idiot. Thats the number. Its even a thread on the damn board.... 45.6%
Its all peak to trough...

Jesus, you already proved you are a moron, why rub it in?

> UrbanDiggs- What about the 4.5% rates to come? and NYC Co-op buyers were not using exotic loans.

But they also can't get 4.5% rates unless they're buying in Queens.

Jumbo rates are still substantially higher. And thats if they even qualify.

I hear where bids are for these securities now, and they are nowhere near levels that holders want to sell at. Look, its nice to look at the end of the tunnel, there will be a time for that, but right now that light is a mack truck coming our way.

Look at the scam revealed today. We are just finding out how bad it is out there. Wall street is gone right now, and its not coming back anytime soon. The pain from all this will last years.

We are about to enter into the dark year for NYC jobs, so talking about the eventual V recovery to me is just silly. Thats all. I dont buy it, so Ill take the other side of the discussion, respectfully. I see a muddled L like adjustment and we are yet to find the base of the L.

4.5% rates are temporary. They wont last long, never do. Sure it may bring some buyers in but I doubt seeing a mass flood of buyers, when jobs are being lost, hitting this market because rates are at 4.5%. What if you can buy a place a year from now for 15% less. Wouldnt that be better? This is the mindset of buyers right now, confidence is way low. To me, confidence trumps anything and to focus on 4.5% rates and ignore the deteriorating fundamentals that is making confidence dive, doesnt hold water.

My favorite part is how the folks who are claiming that we'll have a V recovery with absolute certainty are the ones who claimed we'd never be here in the first place...

Just like the brokers who said prices would never go down, but as soon as they did, they were the experts telling us it was a historic buying opportunity.

BTW, keep in mind that the national association of realtors put out "now is the time to buy" ads almost a year ago...

nyc10022: When you learn to be slightly more civil, I'll continue debating the incorrect statements you push on us. Until then, troll on.

urbandigs: "I hear where bids are for these securities now, and they are nowhere near levels that holders want to sell at. Look, its nice to look at the end of the tunnel, there will be a time for that, but right now that light is a mack truck coming our way."

I think its extremely useful to figure out what is at that light, and what isn't at that light. Subprime and exotic mortgages clearly are not at that light at all. They are dead for good. However, they also don't affect Manhattan. Securitization is at that light.

Its the difference between a cut-and-run, "things will never get better" mentality, and a "bunker down, wait it out, a recovery may be a long way's away but it's there" mentality. 1987 was the former, especially with crime and drugs. I still don't see that mentality here.

> nyc10022: When you learn to be slightly more civil, I'll continue debating the incorrect statements
> you push on us. Until then, troll on.

ROFTL.

Putz gets proven 100% wrong again, and all he can do is yell "troll".
You are no better that perfitz, you are a joke.

Sorry, you were wrong.... AGAIN.

Time to stop getting your info off wikipedia.

"Its the difference between a cut-and-run, "things will never get better" mentality, and a "bunker down, wait it out, a recovery may be a long way's away but it's there" mentality. 1987 was the former, especially with crime and drugs. I still don't see that mentality here."

Yes, its called denial.

What an fing troll.

LOL

BTW, there were absolutely folks in 1987 who said it wasn't as bad as others thought, we've been through this before, etc, etc.

That happens in EVERY crash.

But, just wondering, given that you weren't alive in 2008, exactly what are you basing this observation on how now is different from then?

Let me guess... wikipedia..?

Even your fellow bears are calling you out on nastiness. Calm down, meditate, go to the gym, get laid, whatever it is that calms you down, then come back. Then I'll debate you civilly.

You're even doing your fellow bears a disservice. Someone so desperate that they need to be so nasty is clearly not very confident in their own arguments. I don't think your fellow bears feel nearly as weak as you do, so its wrong for yo to make the entire side of the argument sound so weak.

UD, I agree in general about NYC: that's the problem with being a one-horse town, and we're a one-horse town. The thing about Merrill is not only the job losses, but the transfers: why not Charlotte, where it's cheap, and taxes are low?

Wall Street is more than gone "now" - it's gone forever, in its old format. It will reemerge, smaller, less profitable, less leveraged, less bonused, more regulated. I was listening to the details of today's scam: same people controlled the funds, the clearing, and the custody, with 1 old auditor with a green visor. Short of forgery, that's how financial scams work. I can't believe no one noticed it. It will lead to regulation of that industry, and the closure of the SEC and its merger into another agency.

> Even your fellow bears are calling you out on nastiness. Calm down, meditate, go to the gym, get
> laid, whatever it is that calms you down, then come back. Then I'll debate you civilly.

Wait, you think thats a carrot???

ROTFL

Dude, go away. Noone wants any "debate" from you. You are a troll. And there is an entire thread by multiple posters on your complete stupidity.

You haven't added a thing to this board, you just troll. Your comments range from insults to mindless comments. Not a fact or insight anywhere.

The best service you could do is just leave while you're only the laughingstock...

Seriously, stop trolling. I have no interest in any conversation with you, I just want you to go. You've made me laugh enough, now go.

"UD, I agree in general about NYC: that's the problem with being a one-horse town, and we're a one-horse town. The thing about Merrill is not only the job losses, but the transfers: why not Charlotte, where it's cheap, and taxes are low?"

Pros and cons.... I do remember a NYC when it wasn't all investment bankers. Finance was important, but I remember when people talked more about writers or artists, or even folks in publishing.

A tanking economy won't be good. But more of a focus on folks who add value could be the silver lining.

NYC Co-op buyers were not using exotic loans...

right on Hotproperty..this has been the case since Day 1, that is why Manhattan continues to hold up as the fear subsides. manhattan has no subprime market that's why there a 7 foreclosures.

The stock market loss of 40% is related to the bank stocks being priced way too high b/c the EPS was supported by artificial loans that never should have been made. The stocks have been repriced. Simple stuff.

there are no bids out there in Manhattan real estate. I dont know why you expect bids to just fly back in and this will be the shortest down cycle ever.

"manhattan has no subprime market that's why there a 7 foreclosures."

Actually, 60% of recent mortgages & co-op loans in Manhattan were variable-rate ARM's. Dangerous things.

But moreover, the reason there are only 7 foreclosures in Manhattan is likely that it takes from 12-18 months for foreclosure to occur under New York law which gives people plenty of time to sell, and co-ops are not recorded as foreclosures until possession is taken by the lender.

aboutready - I would not expect any major increase in the jobs situation in 2009, but some segments will certainly be hurt less and some will be hiring throughout. It is tenuous right now, so it would be easier for it to get worse than better, but I can give you a better read on what I see by february or March. So much unknown right now for NYC and on a national level.

AvUWS - there are a lot of people in those firms that make a pretty good living; not investment banker in '06 successful, but they don't plod around for $60k a year either.

> NYC Co-op buyers were not using exotic loans...

Problem is, its not just subprime anymore. The Alt-As are now having their own challenges.

And you don't need an exotic mortgage to not be able to afford payments. You just need a job loss.
Got plenty of those...

> that is why Manhattan continues to hold up as the fear subsides. manhattan has no subprime market
> that's why there a 7 foreclosures

No, we have fewer foreclosures because we had a MORATORIUM. The government literally banned them.

And, btw, how on earth do you call 20% decline in prices and 75% decline in sales "holding up".

You are in fantasy land.

> The stock market loss of 40% is related to the bank stocks being priced way too high
> The stocks have been repriced. Simple stuff.

Non bank stocks are also down 40%.

Simple.

Do you get your info off a cracker jack box?

"there are no bids out there in Manhattan real estate. I dont know why you expect bids to just fly back in and this will be the shortest down cycle ever."

Its called denial...

urbandigs...are you talkin to me, is he talkin to me??

I dont know why you expect bids to just fly back in and this will be the shortest down cycle ever.

..well if you're talking to me than i have an answer to that even if someone else brought it up. Human beings are extremely predictable, just like they stopped making bids so quickly, as soon as their perception has changed they will run right over you like Walmart..to get that apt.

"AvUWS - there are a lot of people in those firms that make a pretty good living; not investment banker in '06 successful, but they don't plod around for $60k a year either."

But not enough to afford manhattan 2007 prices... or keep them anywhere near that level.

" Human beings are extremely predictable, just like they stopped making bids so quickly, as soon as their perception has changed they will run right over you like Walmart..to get that apt. "

Interesting how predictable you think humans are, given how off your predictions of their behavior are.... RE bottoms have never (EVER) worked that way.

I didn't suggest that either. I was responding to a jobs/employment post.

You need to be making at least 250-500k in this city to afford the prices that existed at the peak. The accountants, even in the height of the SarbOx crush, were only getting at best 100-150k. You can't afford a $1.5 mill 2BR on that salary.

Who suggested that they could?

Who suggested that they could?

If they can't, why on earth would we be talking about them on a RE board?

If we lost a ton of high paying jobs, and they're being replaced by low paying jobs, clearly thats not a good sign for our tanking RE...

ok

That just shows how little you really know.

The con game is over for Wall Street

Frank Braconi seems comfortable working in a monotone office without basic accessories like lamps, a coat rack or photographs of loved ones. But what he sorely lacks these days is a crystal ball.
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Ozier Muhammad/The New York Times

Frank Braconi, the comptroller’s chief economist, mixes data and instinct as he tries to prepare New York City for what may lie ahead.
Related
Job Losses in City Reach Up Ladder (December 12, 2008)

Mr. Braconi, the chief economist for the comptroller of New York City, has been trying to explain why the city’s fortunes have reversed so suddenly and, more important, how much worse conditions will be next year. The implosion of Wall Street that has claimed tens of thousands of the city’s highest-paying jobs this year caught most economists — Mr. Braconi included — by surprise.

Now he and his peers are hurriedly revising their forecasts of employment and tax revenue and reconsidering their belief that the financial services industry will keep powering the local economy through boom and bust. Already, the prognosis has gone from grim to grimmer: the comptroller’s office now expects the city to lose 165,000 jobs by August 2010, about double what it projected at midyear.

On Thursday morning, the city comptroller, William C. Thompson Jr., updated his office’s outlook, saying the economy should hit bottom in the spring, then start recovering slowly. Wages paid to workers in the city will decline by more than 5 percent in 2009, according to an excerpt from the comptroller’s coming report on the city budget.

And the ratcheting may not be over yet. A more recent projection from the state comptroller’s office was even bleaker, estimating that 225,000 jobs would be lost in the state — 175,000 of them in the city — by the end of next year.

“We’ve underestimated how bad this crisis would get,” Mr. Braconi said, sitting behind a wooden desk in his brown-on-brown workspace a block from City Hall. “That’s what we’re trying to explain.”

A few minutes before, his supervisor, Marcia J. Van Wagner, the deputy comptroller for budget, had appeared in his doorway to discuss the report on the shrinking city budget that they must deliver by Dec. 15. During the brief interchange, Ms. Van Wagner pressed him to spell out how the global slowdown is affecting the city and ribbed him about his more optimistic nature.

“I’m always on the ledge,” Ms. Van Wagner said, describing her outlook. “Frank is always trying to pull me in, and I’m always trying to get him to come out on the ledge with me.”

The precipice is getting crowded as the financial crisis drags on, leaving even the optimistically inclined with no silver lining to cling to. At a gathering last month at the Federal Reserve Bank of New York, economic analysts tested several projections on computer models of the regional economy. The models spat back estimates of job losses in the metropolitan area during this recession that ranged from about 325,000 to nearly one million. (The latter result would be far worse than in any other recession in the last 30 years.)

With such a wide spread of possible outcomes, it is no wonder that John Kenneth Galbraith, the famed economist, once said that “the only function of economic forecasting is to make astrology look respectable.”

Still, a core group of economists like Mr. Braconi are paid to try their hands at this mixture of art and dismal science. Their forecasts are predicated on mounds of data and established patterns.

But some long-held notions have proved faulty in the last couple of years, like the idea that there would never be a nationwide housing slump or that investment banks would prosper whether times were good or bad.

Now that some of the biggest firms on Wall Street have failed or received federal bailouts and the prices of apartments in Manhattan and houses in Queens are tumbling, the old rules do not necessarily apply.

“These historical relationships, which is fundamentally what the models are based on, break down when there are structural changes in the economy,” said Ronnie Lowenstein, director of the Independent Budget Office, which also forecasts how the city’s economy will perform. “It’s not just that New York City is entering into recession, but also that the driving industry in our region seems to be in the midst of longer-term structural changes that we’re going to have to take into account as well.”

Like the Independent Budget Office, the office of the city comptroller serves as a check on the budgets drawn up by the mayor’s staff. After every revision to the city’s plan for collecting taxes and spending money, the comptroller responds, telling the City Council where his projections differ from the mayor’s.

Though Mr. Braconi says politics do not influence their economic calculations, his staff must, of course, weigh the economic impact of political decisions and government policies. For example, in the report due out this month, the comptroller will question the mayor’s assumption that the city would not send out $400 rebate checks that had been promised to homeowners — a position that Mr. Thompson, who plans to run for mayor next year, has challenged.
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Job Losses in City Reach Up Ladder (December 12, 2008)

Believing that the City Council is likely to prevail in insisting that the checks go out, the comptroller will note a $256 million “risk” to the mayor’s plan, a gap that may require a corresponding cut in spending to balance the budget, Ms. Van Wagner said.

During the heady years that followed the last recession, the comptroller’s reports tended to underestimate the surge in city revenue, from corporate and personal income taxes as well as taxes on real estate transactions. Now, with the boom over, Mr. Braconi and a team of four analysts are taking extra care to hone their estimates. “The consequences are much greater now,” he said. “The purposes to which our forecasts are being put have real consequences to real people.”

Mr. Braconi, who has a doctorate in economics from the City University of New York, is sensitive to the potential impact of budget cuts, having spent more than a decade as an advocate for affordable housing. He served as the executive director of the Citizens Housing and Planning Council before Ms. Van Wagner hired him in 2006. A Queens native with an accent to prove it, he has spent his whole life in the metropolitan area and vouches for the city’s ability to recover from recessions.

Some other forecasters, like those at the Independent Budget Office, have sophisticated computer models that at a cost of several thousand dollars a month, produce estimates of employment, income and tax revenue. Mr. Braconi and his team have not purchased such a model, so they instead use arcane formulas to test hypotheses about how the recession will play out.

They begin with a forecast for the national and global economies that is teased out of available data, including a consensus of widely followed economists. Feeding that number into a formula known as an input-output model produces an estimate of how much the city’s economy will grow or shrink. And — here is where art sometimes supplants science — if that estimate seems to defy reality, Mr. Braconi will tweak it using other data, or his instincts.

None of that, of course, can ensure accuracy. In July, the comptroller’s report estimated that the gross city product would increase by 1.2 percent this year and that about 85,000 jobs would be lost in the subsequent downturn. But that was before the Lehman Brothers investment bank failed and the federal government rescued several big banks and insurance companies. Since then, Mr. Braconi said, there has been no denying that New York is headed into a “sharp recession.”

Now, the comptroller’s office is estimating that the city’s economy did not grow this year and will shrink in 2009 and 2010. It estimates that job losses will reach 165,000 before the economy bottoms out. A higher share of the layoffs will come from outside the financial services industry — almost three-fourths compared with the estimate of 60 percent in July — because the outlook for the overall economy has worsened, Mr. Braconi said.

He said he had been paying more attention to the pronouncements of Nouriel Roubini, an economist at New York University, who has gained fame for his early predictions of financial doom. But he said he had resisted the temptation to adopt such a dire view.

“There’s a certain seductiveness to the notion that things fall apart, whether it be in economics or other walks of life,” Mr. Braconi said. “At a time like this when the chorus of doom is particularly loud, it’s important to brace yourself. There would be disastrous consequences for city agencies to fully embrace the worst scenarios.”

Overstating a slowdown could lead to cuts in government programs that turn out not to have been necessary, he said. On the other hand, failing to spot a sharp drop in tax revenue can lead to drastic midyear cutbacks, like those Gov. David A. Paterson has called for in recent months.

The recovery from this recession may be slow, but it will happen, Mr. Braconi said. He placed himself in the same camp as Edward Glaeser, a Harvard economist who is a champion of cities as hubs of creativity and dynamism.

“I can’t necessarily predict the next big thing for New York or Boston other than to say that there will be a next big thing,” Mr. Braconi said. “I do have that kind of faith in New York.”

McHale, good article:
“It’s not just that New York City is entering into recession, but also that the driving industry in our region seems to be in the midst of longer-term structural changes that we’re going to have to take into account as well.”
and
"Wall Street is more than gone "now" - it's gone forever, in its old format. It will reemerge, smaller, less profitable, less leveraged, less bonused, more regulated."

To me, these 2 related issues are of major importance to NYC & NYC RE.

The Wall St paradigm not only shifted, it pretty much died and it's death has profoundly impacted NYC (its economy, municipality & RE) in a negative manner. Big picture, smaller picture, black swan, what will be the effects? How will NYC (& the US) emerge?

The question is, does Bloomberg, a child of Wall Street, understand what's actually happening? Because if he thinks that by raising taxes he is going to solve this problem, then I believe he's deluding himself. This is a structural issue that will take a Margaret Thatcher to resolve.

Reform, reform, reform government.

"This is a structural issue that will take a Margaret Thatcher to resolve.
Reform, reform, reform government."

Exactly, but is there any leader in the US who understands the structural shift & will commit to gov reform? I see no one.

Don't know, dwell. Not the Republicans, who even Cheney is calling the party of Hoover.

I think Bloomberg MAY be starting to get it. I think Paterson gets it, just not sure he's strong enough to do anything.

What I don't understand is that half of this state is dying, the entire state (and country) has been living off the largess of Manhattan. The giant sucking sound of money to the unproductive, jails upstate whose only purpose is to employ guards guarding no one.

Yet no one is willing to do anything.

Not to mention overpaid cops ($100k+ on Long Island), teachers, everybody but the judges. The worst judiciary in the country. The worst state government in the country. The most expensive Medicaid and education systems in the country, yet with the worst results.

I'm not a supplier sider. But sometimes, the supply siders are right.

Toronto, right next to Buffalo, is a beautiful and successful city. Then there's Buffalo. I say, build a new Erie Canal. It will be shorter and cheaper than the St. Lawrence Waterway.

"That just shows how little you really know."

Fantastic, factual comeback. You have me speechless.