NYC Inaugural “State of the Economy” Report

Photo Courtesy of NYCEDC

Report Shows New York City Hit Record-High Employment and Labor Force Participation, Is Top Destination for Talent, and Has Diversifying Economy with AI Transformation Underway

Nearly Five Years Since the Start of Covid-19, Office Vacancy, Commercial Real Estate Supply, Remote Work, Tourism, and Population Have Stabilized and Show Signs of Improving

Pre-pandemic Challenges Such as Housing Affordability, Income Inequality, and Racial Disparities Remain, Targeted by Policy Action from City and State Leaders

New York City Economic Development Corporation (NYCEDC) today released a new report, “The State of the New York City Economy”, offering comprehensive data and analysis on the City’s economy. The report highlights the strength and resilience of New York City’s post-pandemic economy, with a number of positive points including record-high employment figures, continued attractiveness to young talent, and growth in new, innovative sectors like the life sciences, green economy, and tech. It also notes that negative trends in office and retail vacancy, tourism, and population have stabilized or reversed.

Key takeaways from the report include:

• Employment and labor force participation are at all-time highs: The city’s labor market is strong and improving, with a record number of private sector jobs (4,151,400 annual average) and a record high labor force participation rate (62.8%) as of September 2024.
• Over the past decade, the economy has diversified, helping it become more resilient to sector-specific shocks: New York City’s status as a major global financial capital remains secure, with 21,500 more jobs in the finance sector today than there were pre-pandemic. But rapid growth of the tech, life sciences, healthcare, and green economy sectors has provided for a greater diversity of high-growth, and high- or middle-wage jobs in the city.
• The AI transformation has begun: New York City is the applied AI capital of the world, home to over 2,000 AI startups and 40,000 workers with AI and AI-related skills. NYCEDC estimates that in New York City, for every job that gets displaced by AI, between 4 and 10 jobs might be augmented by AI.
• New York City continues to attract talent, business, investment, and tourism from around the world: New York City leads the nation in attracting young talent, with nearly 500,000 recent college graduates choosing to live here since 2021. The city also continues to be a global leader in attracting investment – New York City attracted over $11 billion in Foreign Direct Investment and over $97 billion in Venture Capital funding between 2021 and 2023 – facilitating future business growth. In 2024, nearly 65 million visitors came to New York City – the second-highest figure in city history and a 3.5 percent increase from the previous year.
• Remote work and commercial real estate have stabilized: The New York City metro area has the lowest rate of fully remote office workers among large US cities, and most office workers have stabilized on a schedule of three in-person days per week. Office vacancy rates declined in Q2 and Q3 2024, for the first time since the pandemic.
• The flight to quality continues in the office market: Occupied square footage in Manhattan trophy buildings is up 19 percent over the past 5 years, while occupied square footage in Manhattan non-trophy buildings is down 9 percent over that same time period. And office visitation metrics are higher for trophy office buildings compared to non-trophy buildings. The city is supporting renovation of office space in Manhattan’s central business districts with its M-CORE program, intended to create the type of high-quality office space that has seen increased demand in recent years.
• Population is at an inflection point: According to Census estimates, New York City lost over half a million residents from April 2020 to July 2023, although 83% of the decline occurred in the first two years of the pandemic. There is preliminary data that population will stabilize or even grow in 2024. Despite population losses, annual city tax revenues never declined during the pandemic and are now at record highs.

In addition to strong and stabilizing metrics, the report analyzes economic challenges that remain.

• Housing affordability remains the defining challenge, but the City is taking key policy steps to address the issue: Two-thirds of New York City households are renters, and the 2023 rental vacancy rate of 1.4% is a multi-decade low, putting upward pressure on housing costs. Job growth has far outpaced housing growth. From 2011 to 2023, New York City added 895,000 jobs but just 353,000 housing units. New York City and State are enacting comprehensive policies to mitigate the affordability crisis. The “City of Yes for Housing Opportunity” plan is modernizing the city’s zoning code, to create an estimated 82,000 additional housing units, while the state has introduced new 485-x and 467-m programs to incentivize the construction of affordable housing and office-to-residential conversions, respectively.
• Racial disparities on unemployment and labor force participation remain high, but are improving: The unemployment rates for Black and Latino New Yorkers stood at 8.5% and 6.7% in the third quarter of 2024, significantly lower than their pandemic peak but still higher than the white unemployment rate of 3.3%. While the labor force participation rate has improved for New Yorkers of all races since 2022, the white labor force participation rate, at 67.5% in Q2 2024, is well above the rates for other races and ethnicities.
• Income inequality remains a challenge: Income inequality has slightly widened in New York City over the past decade, driven by the fact that the city’s high earners make much more here than other cities, while low earners make close to what they would elsewhere. For example, a lawyer in New York City makes 55.5% more than the median lawyer nationwide, while a retail salesperson in New York City makes 12.8% more than the median retail salesperson nationwide. 

METHODOLOGY
The research in this report uses data from local, state, and federal government agencies; from banks, consulting firms, and real estate firms, academia, and nonprofits; and from private companies that track data on real estate investments, and mobility. The report is primarily focused on 2024 data for New York City. In general, 2024 data is compared to 2023 for annual growth, 2020 is used for pandemic comparisons, and 2019 is used for pre-pandemic comparisons.

Each month, NYCEDC issues an Economic Snapshot, highlighting key data and metrics and measuring the strength of NYC’s economy from month to month. To stay informed on economic trends in NYC, sign up for NYCEDC’s Economic Snapshot .

About NYCEDC
New York City Economic Development Corporation is a mission-driven, nonprofit organization that works for a vibrant, inclusive, and globally competitive economy for all New Yorkers. We take a comprehensive approach, through four main strategies: strengthen confidence in NYC as a great place to do business; grow innovative sectors with a focus on equity; build neighborhoods as places to live, learn, work, and play; and deliver sustainable infrastructure for communities and the city’s future economy. To learn more about what we do, visit us on Facebook, Twitter, LinkedIn, and Instagram.