ALBANY — A consultant’s report prepared for the state offers a forecast on how severe the COVID-19 pandemic’s impact is likely to be on New York’s economy.
Short answer: worse than the Great Recession of 2007-2009, significantly worse than the post-9/11 recession of 2001-2004, and longer-lasting than either — 13 quarters.
In a news release, the state Division of the Budget noted the Boston Consulting Group projects a $243 billion impact on the state’s gross domestic product over the course of three years, or about 14% of the GDP.
The Budget Division, meanwhile, has projected a $61 billion impact on state revenues over four fiscal years as people spend less and earn less, thus reducing the sales and income tax they pay.
Already, credit card sales have dropped 20% below average weekly levels, after a brief surge in March as New Yorkers hoarded goods, the consultant’s report noted.
If Gov. Andrew Cuomo begins to end the shutdown of New York in late May or June its economy could recover to pre-COVID levels by early 2023, the report’s authors project.
They note that the economic impact of COVID in New York could be more severe if: The restart doesn’t begin in early July; if the restart is slow across certain industries, geographies or demographics; additional waves of the pandemic hit; or the state makes the wrong tax policy decisions.
Due to the concentration of highly impacted industries, the recession is expected to be felt most in New York City, with an impact of 14.5% of pre-COVID GDP, followed by the seven counties closest to the city at 14%, and the rest of the state at 12.2%.
The six most impacted employment sectors and the prognosis for them are:
- Accommodation/food service — severe short-term impact, slower recovery;
- Construction — severe short-term impact, slower recovery;
- Finance and insurance — limited affect so far from shutdown, impact expected to be delayed and indirect due to industry and economic trends;
- Ambulatory healthcare — moderate short-term impact, fast recovery due to pent-up demand;
- Retail — impact depends on whether retailer is essential or non-essential and whether it has an online sales channel, many non-essential retailers expected to go out of business;
- Transportation — strong short-term impact, slower recovery due to social distancing and behavioral changes.
These six sectors account for 39% of the private-sector GDP in New York, 49% of the payroll, 54% of employees and 62% of unemployment claims filed in New York from early March through April 19.