New York City Unemployment May Reach Mid-1970s High

New York City Unemployment May Reach Mid-1970s High, UBS Says 2009-02-05 17:54:12.833 GMT By Martin Z. Braun Feb. 5 (Bloomberg) -- New York City’s economic decline is likely in its early stages and the unemployment rate may reach 10.5 percent, a level not seen since the mid-1970s administration of Mayor Abraham Beame, a UBS AG report said. The city’s residential real estate market and employment... [more]

New York City Unemployment May Reach Mid-1970s High, UBS Says 2009-02-05 17:54:12.833 GMT By Martin Z. Braun Feb. 5 (Bloomberg) -- New York City’s economic decline is likely in its early stages and the unemployment rate may reach 10.5 percent, a level not seen since the mid-1970s administration of Mayor Abraham Beame, a UBS AG report said. The city’s residential real estate market and employment levels have so far held up better than most areas amid a delayed impact from job and income losses from the financial sector. Home prices, which declined 14 percent as of November since their peak, may fall another 20 to 25 percent “if not more,” the report said. “With job losses accelerating in financial services and more spillover impact still to come, we believe unemployment may approach the previous peak for the tri-state area of 10.5 percent” reached in 1976, UBS said. New York City’s unemployment rate in December was 7.4 percent, up from 5.1 percent a year earlier, according to the New York State Department of Labor. Financial services accounted for 13 percent of city employment in 2007. Wall Street firms are expected to lose $47.2 billion for 2008, and further shortfalls are expected in 2009, Mayor Michael Bloomberg said last week. Budget officials assume the city will shed 294,000 jobs from mid-2008 through 2010, the highest official estimate by a government official yet, including 46,000 in financial industries. City Finances Bloomberg has proposed cutting the city budget by about $1 billion and raising its sales tax to help close a $4 billion shortfall for the fiscal year that begins July 1. Officials may fire 14,274 teachers if the state doesn’t pass along $770 million in federal aid for education in each of the next two years, Bloomberg said. Another 9,000 jobs might be cut if unions don’t agree to allow members to pay more for their health care and create a new tier of reduced pension benefits for future employees, he said. New York City is particularly reliant on the financial services industry, which accounted for 36 percent of earnings in the city in 2007, according to the Federal Reserve Bank of New York. For each financial-sector job lost, two positions will vanish in other industries in New York City, according to New York State Comptroller Thomas DiNapoli. JPMorgan Chase & Co., which has 34 percent of its total deposits in the New York City area, faces the greatest risk among banks to the city’s economic decline, UBS said. Bank of America Corp, with 9 percent of total deposits, and Citigroup Inc., with 8 percent, rank second and third. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP. [less]