JULY 1998DOB: NYS job growth will slow - but still improve relative to nation
Job growth in New York, at its best pace in years during 1998, will slow along with the national economy in 1999, the state Division of the Budget predicts.
The economic forecast, which is in DOB's report on the enacted 1998-99 budget, predicts statewide job growth of 1.5 percent this year. But the national economy will cool, and New York job growth will slow to 1 percent next year, DOB predicts.
"The growing trade deficit, fueled by economic difficulties in Asia, is projected to dampen the rate of U.S. economic growth during the second half of 1998," DOB says. "Moderating economic growth is expected to engender a slowdown in the rate of job creation."
Still, DOB says New York's job growth rate will continue to improve relative to that of the nation. New York's private-sector job growth rose from only 17 percent of the national rate in 1992 through 1994, to slightly over half of the U.S. rate in 1997.
DOB expects nationwide employment to increase by 1.5 percent in 1999, with New York growing at two-thirds of that rate.
The state added 107,000 private-sector jobs from December 1996 through December 1997, according to U.S. Bureau of Labor Statistics data. DOB projects overall employment growth of about 100,000 from the first quarter of 1998 through the start of 1999, with another 80,000 jobs created next year.
Growth of wages and personal income will slow more moderately than employment growth, according to DOB.
The report on the enacted budget shows that all-funds spending will rise 8.3 percent, to $71.5 billion, this fiscal year. State-funds spending (total spending minus federal funds) will rise 9.8 percent. About a fifth of that increase represents payments to homeowners through the STAR property-tax reduction program.
Major elements in the overall spending increase include a school-aid boost of 7.8 percent or $847 million, the largest such increase in state history. Unrestricted aid to local governments increases by $37 million, to $837 million.
Both the DOB report and a new analysis by Standard & Poor's DRI say the enactment of major new business tax reductions as part of this year's budget will improve the state's competitiveness in coming years.
"Fortunately, state government is addressing the high cost of doing business by lowering corporate and property taxes," said Sara Johnson, chief regional economist for DRI.
Despite that progress, Johnson said "high tax rates and uncompetitive costs "continue to drive businesses out of New York.
Standard & Poor's DRI predicts statewide job growth totalling 1.4 percent, falling to an average of 0.4 percent over the next four years. That rate would be the lowest in the nation, the firm said.
July 9, 1998