Big-City Shakeout: New York
As the poet said: "It is not now as it hath been of yore." Merrill Lynch — original address, back in 1914, 7 Wall Street, and you can't get more New York blue-blooded than that — is now owned by a bank headquartered in Charlotte, N.C. The huge neon video screens that used to proclaim the charms of Lehman Brothers at the corner of 50th Street and Seventh Avenue are now Barclays Capital blue. Bear Stearns? Gone. Citi? Humbled. Sure there are survivors — Goldman Sachs, JPMorgan Chase, Morgan Stanley among them, and pretty well they are doing. But buffeted by congressional inquiries and populist cable-TV motormouths, fending off pressure for tougher regulatory regimes and having to justify their compensation practices over and over and over again, even the biggest beasts in the New York City jungle can sound a little defensive these days.
Still, here's the headline for the city that thinks of itself as the financial capital of the world: It could have been a lot worse. New York was hit hard by the financial crisis and the Great Recession. But on the whole, the city has proved resilient — and by more than one measure, it's on its way back.
Unemployment — in common with the whole of the U.S. economy — is not one of those buoyant indicators. In February 2008, the high point of the employment cycle, there were 170,000 New Yorkers out of work, for an unemployment rate of just 4.4%. By September last year, the raw number of unemployed had soared to 413,000, and the rate was 10.3%, though it fell back a little in November.
About 40,000 of those lost jobs were on the Street. In August 2008, just before Lehman collapsed, the finance and insurance sector in the city employed 351,000 people. That number declined to 313,000 — a drop of 11% — by October 2009. New York has drawn on an $11 million "national emergency grant" to help laid-off denizens of Wall Street transition into new fields such as education or health care. But despite all the schadenfreude-larded headlines devoted to bankers' woes, the city's élite have done comparatively well. The worst job numbers have not been uptown or in the manicured suburbs of Westchester County, where the lawyers, brokers and bankers live. On the Upper East Side, in the depths of the recession in third-quarter 2009, unemployment hovered around just 5%, while at the same time in East New York, a predominantly African-American Brooklyn neighborhood, it neared 20%.
Despite the pain, though, the things that make New York, New York — its nightlife, its cultural scene — have fared pretty well. Yes, according to Zagat's 2010 New York City restaurant survey, New Yorkers reported eating out just three times a week in 2009, compared with 3.3 times a week the year before. Some 41% say they dine at cheaper establishments, and 19% are limiting their mealtime alcohol intake. The abstemiousness has had its consequences: the landmark Tavern on the Green restaurant in Central Park — the country's top-grossing eatery as recently as 2007 — closed its doors on New Year's Eve after 75 years. But more restaurants opened than closed from September 2008 to September 2009. And the relatively hard times may even have done something to improve New Yorkers' manners: 38% of diners say they now feel "more appreciated" when going out to eat than they did in better times.
Attendance at pricey Broadway shows dropped, with summer theater attendance falling 9.3% from 2008 levels, to 3.3 million. But traffic at museums, which offer families a cheaper way of enjoying the city, was robust. The Museum of Modern Art — one of the city's priciest, at $20 a ticket — drew 2.8 million visitors from June 2008 to June 2009, notching the best year in its 80-year history, and its membership swelled to a record 120,000. The Guggenheim Museum, meanwhile, broke its 2008 attendance record of just more than a million visitors and mounted its best-attended show in history: a Frank Lloyd Wright retrospective that drew 372,000 people.
All told, employment in the arts-and-entertainment sector — which for many people defines New York just as much as Wall Street does — dropped from 71,000 to 64,000 between the summer of 2008 and February 2009, though it has rebounded since. There are nearly 30% more people employed in the city's entertainment sector today than there were at the height of the Clinton boom in the late 1990s.
With all the arty date possibilities, is it any wonder that last July, Forbes magazine voted New York the top U.S. city for singles? So long as they have jobs, those singles make up one group that has done well during the downturn. Young people on low salaries, the kind who in years past often jumped ship to Brooklyn or Queens in search of cheaper digs, got a chance to stay in Manhattan. In the fourth quarter of 2009, median Manhattan apartment rents were down 9.4% from a year earlier, and island neighborhoods such as Chinatown and Hell's Kitchen gave outer-borough locations like Bushwick and Astoria a run for their money as up-and-coming spots for hipsters. (Meanwhile, in Greenwich, Conn., home of the hedge funds, house prices dropped 15.9% between fall 2008 and 2009 — though you'd still needed $1.68 million to buy a median home there.)
Tourists, too, saw the bargains to be had. Despite dismal forecasts, in 2009 New York City was the top U.S. tourism destination for the first time since 1990. (The average hotel room cost $70 less than it had the year before.)
Once in town, visitors could get into that classic New York act of the haggle, which came back into style; one woman reported bargaining a $260 cashmere sweater down to $100 at Bloomingdale's. And they could rejoice in the fact that in 2009, one correlation often seen in past downturns did not come to pass: the economy turned down, but crime did not go up. Astonishingly, in 2009 there were fewer murders in the city (466) than in any year since reliable records were first kept in 1963. Has the crisis turned New York into a run-down, crime-ridden, poor, no-fun shadow of itself? Fuhgeddaboutit.