Private-sector employment in New York will rise by 0.8 percent in the coming year, compared to a national pace of 1.1 percent, Governor Spitzer's Budget Division estimates. That would mean an increase of 56,000 jobs statewide this year, slightly less than the increase in 2006.
In a message accompanying the fiscal plan, Budget Director Paul Francis wrote that New York's economy "is expanding but has chronically underperformed the nation, with employment growth ranking among the worst of all states." The state is also characterized, he said, by "wide gaps in performance between the downstate region, which is generally doing well, and most of the rest of the State, which is suffering stagnant or real declines in economic growth."
That disparity is expected to continue in 2007.
"While the (2006) slowdown in the downstate counties outside of New York City appears cyclically related, the weakness in the upstate regions appears more long term," Budget Division economists wrote in the Economic and Revenue Outlook section of Governor Spitzer's budget. "Indeed, for the last 10 years, the state's seven upstate labor market regions have lagged significantly behind downstate growth."
Statewide, the Budget Division predicts strong growth in the health care-social assistance sector during 2007, with employment rising by 19,100 jobs, or 1.6 percent. It forecasts increases of 9,900 jobs (1.8 percent) in professional, scientific and technical services; 7,800 (0.8 percent) in leisure, hospitality and other services; 5,300 (1.9 percent) in educational services; and 5,400 (1 percent) in finance/insurance. Management/administration, construction, wholesale and retail trade, and transportation/warehousing are expected to see smaller employment increases. The state will lose some 6,000 manufacturing jobs, for a decrease of 1.1 percent, the Budget Division predicts.
"Although the manufacturing sector continues to bear the brunt of the state's job losses, there has been some improvement since the end of the recession," Budget Division economists wrote. "Manufacturing lost 50,400 jobs in 2002, a decline of 7.2 percent, representing the greatest rate of decline since ... 1975."
The state's revenues remain "profoundly affected by the fortunes of the financial markets," the Budget Division said. Wages in the finance and insurance sector rose to a high of 20.6 percent of the statewide total in 2000-01, and declined in succeeding years along with the stock market. After several years of recovery on Wall Street, the sector may set a new record this year, the division said.
"The forces behind the anticipated slowdown in New York for 2007 highlight the impact national economic trends have on the state economy," the Budget Division said. "First, as the New York State economy becomes increasingly service-oriented, it depends ever more on demand generated by the rest of the nation and the world for professional, business, and financial services produced here, particularly in the downstate regions. The slowdown in the national economy and corporate profits is expected to slow the growth in demand for those services.
"Second, the current weakness in the nation's manufacturing sector, notably the auto industry, is expected to continue to have a negative impact on the state's manufacturers," the division reported. "Given the significant portion of the upstate economy that is tied to auto production, these developments can be expected to have a negative effect on employment in those regions."
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