New shoots of growth in New York
Tourists are back, stocks are up, and real estate is climbing once again in the Big Apple.
New York is finally on the rebound. But it's experiencing a small bounce compared to the mighty metropolis' booming 1990s. And that's creating an unusually tempered kind of economic enthusiasm in this city known more for its braggadocio than its humility.
Still, almost three years after terrorist tore a hole in the heart of the financial district, the New York's economic indicators are finally pointing in a steady upward direction - like the new Freedom Tower, which officially began construction at Ground Zero with the laying down of a cornerstone on July 4th.
Hordes of tourists are back, toting Armani bags through Times Square, $345 shoes are flying off Botticelli's shelves in Rockefeller Center and hotels are as packed as they were back in 2001. And don't expect to eat until 9:30 p.m. or 10:00 p.m. at Tabla or any of the city's other top restaurants, unless you get a reservation well in advance.
"New York has risen," says Jonathan Tisch, chairman & CEO of Loews Hotels and chairman of the Board of Directors of NYC & Company, the city's official marketing arm. "Certainly, tourism is back to a level we haven't seen in the last four or five years."
Wall Street is also fueling this comeback, as it did in the heady days before 9/11 and corporate scandals. During the first quarter, big securities firms like Morgan Stanley, Goldman Sachs, and Bear Stearns racked up a record $4.8 billion in profits. And second quarter profits were up sharply for a couple as well. That helped give New York City stronger economic growth than any other part of the country.
Then there's real estate. Prices just keep climbing, pushing the average Manhattan apartment up to almost a million dollars and prompting a frenzied buying and selling spree. In the past two months, job growth has jumped across the board, not only in education but also in the financial sector.
All of that combined has pushed income tax and sales tax receipts up enough to have the Mayor and City Council approving property tax rebates and talking big new stadiums and expanded civic centers.
But mixed within all of this heartening economic news, there is caution - in part, because some analysts worry this boomlet, while it appears sustainable, could easily fall victim to an unexpected spike in interest rates, a few bad quarters on Wall Street, or - what everyone hopes is the unthinkable - another terror attack.
"What this is not likely to be is the boom of the 80s and 90s; this is going to be a mild recovery," says Fred Siegel, a senior fellow at the Progressive Policy Institute. "We're not likely to get the kind of kick we got back then."
In part, that's because each positive economic indicator is accompanied by a caveat. Restaurants, for example: While bookings are up, so is the cost of everything from insurance to meat to milk. So while the glittering Tavern on the Green served 4,000 more à la carte meals during one recent week than its waitstaff did a year ago, its annual total gross still lags a million or two behind its record $37 million year in 2001. "We hope to be getting back to that record gross soon," says the Tavern's Shelley Clark.
Much the same pattern is at work across the city. Occupancy rates at hotels from the The Plaza on Central Park South to the Howard Johnson's on 9th Avenue are finally higher than they were in 2001, but rooms still cost a fair amount less.
The number of tourists is expected to peak past the record high of 36.2 million reached in 2000. But they're not bringing in as much revenue because they're staying shorter periods and dropping less cash. In part that's because there are fewer of the big-spending foreign visitors . Add to all of these caveats a structural deficit facing the city, and many economists say the city is not out of the woods.
"This kind of moderate growth in the economy will not be sufficient to close a budget gap that's estimated at 3 to 4 billion dollars in the fiscal year which begins almost 12 months from now," says Rae Rosen of the Federal Reserve Bank of New York. That economic wariness echoes from midtown's skyscrapers to tree-lined neighborhoods in Queens.
Joan Antoniello sells insurance to affluent bankers, brokers, and small businessmen. She says her sales are only OK. At the same time, she sees more people loosing their jobs now than in 2001.
"New York took the hit for the rest of the country psychologically and physically, and it's still a very mixed bag," she says. "I haven't heard anyone saying they're having a fabulous year." Elsa Slovak who lives in Forest Hills, Queens, doesn't think there's much of a rebound under way either. Indeed, while she and her husband's income has stayed pretty much the same, the rent is up just like the cost of food and gas.
"Salaries don't compensate for the increased costs, everything is up," she says. "You can't shop for food without spending $70 or $80 a week." This mixed economy, tinged with uncertainty, has prompted some New Yorkers to cash out.
After watching the real estate market continue to climb to what she thought were ridiculous heights, Melissa Nettles decided it had reached a peak. She just sold the triplex apartment in the East Village she bought in 1995 for more than three times what she paid. She and her partner are now renting in far less fashionable Brooklyn.
"I don't think it's sustainable," she says. "I think I'll be able to buy that apartment back sometime in the next 10 years for a third less than I sold it for."
And then, of course, there's the shadow of terrorism that hovers at the edge of every conversation about New York's future, and not just the ones about economics. But like the many threats that have dogged this teeming metropolis during its history from riots to economic ruin, New Yorkers are just taking it in stride.
"We are an optimistic group of people who want the best and who aren't going to run and hide," says Mr. Tisch. "That has not changed about New York."