NYC Economic Forecast

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Brian Lehrer: It's The Brian Lehrer Show on WNYC. Good morning again, everyone. Hey, how about a little upbeat prediction for 2025? This is going to come from our frequent guest on the economy, Greg David, contributor covering fiscal and economic issues for the news organization The City and and director of the Business and Economics Reporting Program and the Ravitch Fiscal Reporting Program at the Newmark Graduate School of Journalism at CUNY. His latest piece in The City is called Fueled by Wall street and Crypto, New York City's Economic Outlook Looks Bright, but then he does qualify it with the words for now. Hey, Greg, always good to have you. Happy New Year. Welcome back to WNYC.

Greg David: Happy New Year, Brian and listeners. Yes, that's my take that we're going to have a good six months in the economy, primarily because of Donald Trump's victory and the Republican victories to control both houses of Congress.

Brian Lehrer: Well, let's take the crypto portion of that first. This has somewhat to do with bringing crypto companies or even individual crypto kingpins back into the country after they fled under Biden's policies.

Greg David: Yes, that's what I was told by the crypto people. As you know, the Biden administration, especially the SEC, was particularly interested in regulating them in a very tough way until many of them left the country. Crypto activity slowed, but the Trump administration and his appointees are all in on crypto. Trump even says we want to have a crypto reserve for the country. People say that crypto's evolved into what's called decentralized finance. Well, if you're going to do any finance, you want to be in New York.

Secondly, there's the idea that the banks are going to be allowed to play a bigger role in crypto. If that's true, where would you want to have a crypto company but New York? People expect there to be a significant boom in crypto. New York's already a key center. I think we used to be competing with Miami, but I guess we're going to leave them behind in the dust.

Brian Lehrer: Why is crypto apart as an issue? Why would Trump be for it and Biden against it if that's a legitimate representation of the divide?

Greg David: It is a legitimate representation about the divide because there's a whole divide. Is crypto merely a Ponzi scheme or is it really the future of finance? There's very few people in the middle, and the Biden administration was pretty clearly that it was for the most part, a Ponzi scheme. The crypto people spent an enormous amount of money to defeat the Ohio senator who was very tough on crypto and they did do that. The Republicans have embraced crypto and the Biden administration was against it. It's based on a fundamental belief about whether crypto is good or bad.

Brian Lehrer: If crypto is a currency, does it compete in some way with a dollar?

Greg David: [laughs] Brian, crypto is the most amazing thing because it's a currency and an asset at the same time. Frankly, you can tell what camp I am in because you can't have a currency that's an asset because you don't want a currency that performs like the stock market. I'm actually in the Biden camp on this one, but the country elected Republicans and they're on the other side so I guess we'll see what happens.

Brian Lehrer: If crypto is by definition a virtual thing, why would they need an in-person industry in New York. That's why you think it's going to be good for the city? Why would they even need it?

Greg David: Well, you need people to do all the work, Brian. It may be a digital thing, but it's not an artificial intelligence thing. You need people who could come up with things.

Brian Lehrer: People could live in Texas, people could live in North Carolina, wherever they want, theoretically.

Greg David: Brian, we've heard this a million times. It's never happened. Why is New York a tech center, the number two tech center in the country? Because location still matters. If you want to do crypto, you got to be near the banks and you got to be where the talent is. We've been over this a million times. Texas isn't got crypto and we do and Texas has a tech industry, but it doesn't have our tech industry.

Brian Lehrer: It's worth reminding people about from time to time. Listeners, any calls, comments, your own predictions as upbeat as Greg's, at least for the short term, on the New York City economy or anything else, or maybe a report from your industry that's New York-based. 212-433-WNYC, 212-433-9692. The other thing that your headline cites is Wall Street. For people who are not in the market or don't follow the market, it went up a lot in 2024, right?

Greg David: Two years in a row of more than 20% gains in '23 and '24. I didn't do the figures at the end of the year, but I had like 46% over two years when I wrote the story. Look, Wall Street's incredibly important in New York. It accounts for 20% of all state tax revenue and profits are already soaring. We expect profits this year to be $46 billion. They were only about $24 billion the last two years. Why does that matter to New York?

Well, first of all, when the bonuses are paid out in February, there's going to be a big burst of spending. Look, we're going to collect an enormous amount of income taxes from those bonuses. It's not just this year. The other thing, this is another Biden Trump contrast, Biden was very tough on antitrust. They blocked a lot of mergers and acquisitions.

Trump is expected to be not tough on mergers and acquisitions. Wall street executives are expecting a wave of M&A and when there's a wave of M&A, Wall Street companies do extraordinarily well because they make a fortune off those deals. That's good, too. Wall street can fuel an economic-- The New York City economy when it's booming, it does trickle down.

Brian Lehrer: I think the last time you were on, you were talking about things that Trump wants to do that might be bad for the New York City economy like tariffs, increasing the cost of goods, and stifling trade, the mass deportation, potentially creating a labor shortage, which would push up prices just as tariffs would push up prices. Things like that. How do those weigh now in this balance that winds up with an optimistic prediction.

Greg David: Well, that's the for-now part of the headline. If these things happen, starting in six months, the outlook for the city's economy will dim. Tariffs are really bad for New York. They're going to raise the price of goods and we're not going to get any manufacturing employment as a result. Deportations. We have like half a million undocumented workers in the workforce. There's a half a million New Yorkers with an immigration status which could make them subject to deportation.

That would create tremendous problems in the workforce. Is he going to do those things? I think he's going to try. Would they be bad for New York? Yes, but he's not going to be able-- Despite what he says about day one, it's not going to happen on day one and that's why I've got the six-month outlook here.

Brian Lehrer: Carl, on Staten island, you're on WNYC with Greg David from the news organization The City and the Newmark Graduate School of Journalism at CUNY. Hi, Carl.

Carl: David, I heard you say-

Brian Lehrer: Greg.

Carl: -that you thought the sign [crosstalk].

Brian Lehrer: David's his last name, but go ahead.

Carl: Oh, I'm sorry. Mr. David then, I heard you just say that the stock market would do well because of a Republican executive branch and because of a Republican Congressional-

Brian Lehrer: Control.

Carl: -control. If you read economic history, which I assume you probably haven't, you would realize that that has been the opposite throughout the last 120 years of economic history. Okay? The stock market has always done better in a well-regulated economy.

Brian Lehrer: Carl, thank you very much. Well, I know you have read a lot of economic history, but of course, Greg, yes, you can answer that. He's got a certain accurate point to make there about the stock market under Democratic and Republican administrations, I think, but go ahead.

Greg David: First of all, it boomed under Trump, the first administration so there's some truth to that, but not a lot of truth. Look, I was actually making a distinction that Wall Street would do well. I don't make stock market predictions and it's possible the stock market forecasts the future, not the present. I think the huge increase in the run up in stocks is predictive of what people think is going to happen.

Now, there are other things that are going to happen that could fuel the stock market. They're going to cut corporate income taxes, they say. That's going to boost profits and profits are what boost stocks. One, I don't think he's exactly right. He isn't right about the first Trump administration and just for the record, I have read an enormous amount of economic history.

Brian Lehrer: You can't teach it if you didn't read it.

Greg David: I would think so.

Brian Lehrer: Tina in Harlem is going to be a critic of crypto. Tina, you're on WNYC. Hi, there.

Tina: Hi. Good morning, Brian and Mr. David. I have to agree with Carl, I think his name was, before I explain. The Trump administration did well in my mind in the stock market because of irrational exuberance over investors' expectations of him being able to make deregulations that would-- Everybody loves deregs when it comes to. He's back and they anticipate more deregulation. That on the side, to this whole crypto thing is just in a time where we bemoan rightly so this enormous divide between haves and have-nots.

People who have not who are going to be the little guys investing in this won't have a clue how to navigate waters of how it's proceeding and what are the impacts and indicators that will impact their investment. They are going to be the ones that are going to be left behind and only the guys who have the brilliant maniacs that are the financiers and understand these waters are going to be investing in it and navigating it with expertise. The little guys are going to get tossed aside again. There's going to be a greater economic dividend in this pseudo investment.

Brian Lehrer: Tina, thank you. I will say we have another caller who we're not going to have time to put on, but who's basically saying the same thing. Kevin in Denver, we see you. Kevin told our screener, "If it's an asset as opposed to a currency, doesn't it just perpetuate a greater divide between haves and have-nots in society?" Which is basically what Tina was asking, too, Greg. What do you think?

Greg David: I believe that. Look, I believe crypto is a scam. I do but that doesn't change that the country has voted and in voting, they are going to unleash crypto. It will have some good effects in New York, and deregulation will have good effects on the stock market for now, but that doesn't mean it's good for the long term. Look, we ought to get to the downside of the New York City economy, too. Things are going to be good for six months but there are a lot of problems in the New York City economy.

The mayor keeps talking about record jobs. Well, you know where all those jobs are? They're in health services, especially home health care. We added 65,000 jobs through October, virtually all in health care. In 2023, all the net jobs we added were in health care. These jobs pay less than $36,000 a year. I asked Andrew Kimball, the head of the Economic Development Corporation about this. He wouldn't even confront the answer. He just moved on to another topic.

I wish someone, the next time Adams talks about record job growth, would ask him about the kind of job growth we've had. Second of all, the gains in New York have been mostly to the people who already are doing well. There's been great work from the Center for New York City Affairs at The New School. Men of color have experienced significant declines in their employment rates. Young people 18 to 24 face the highest unemployment rate in The City. Favorable labor market outcomes are primarily concentrated among people who are historically privileged.

The New York City economy as a whole has done well, but not as well as the country. Since we regained all the jobs in the pandemic, we've gained about 1.4%, the country's gained about 4.4%. There's two parts to this economic story, and I've been writing a lot about the downsides that we've experienced, and they're here and they're real but we're supposed to concentrate on what's new in the news business. What's new is that the Republican victories in November mean good things for the New York City economy for the next six months. After that, God knows what's going to happen.

Brian Lehrer: Is the concentration of jobs in New York City, newly created jobs in relatively low paid health care positions, something that you think can be addressed at the city level? Should this be an issue in the mayoral race? Are there competing policy positions on creating better paying jobs for more New Yorkers?

Greg David: Well, I haven't seen any candidate who understands the issue, except maybe Brad Lander, but he hasn't confronted it directly. Well, first of all, this job growth in health care is going to slow because most of it is in this home health care program that Governor Kathy Hochul has called a racket. It's putting enormous pressure on the state budget and Albany is going to have to do something about it. The question is whether the other sectors in New York will do better next year.

I will say that the economists at the Independent Budget Office and the Controller's Office do expect that. Information is done very poorly this year. That could bounce back though we do have problems in the film business. The tech sector has done pretty well and is poised to grow. It's also possible we can finally get some big gains in construction, which has not rebounded enough since the pandemic. That's because we've gotten billions of dollars from the infrastructure bill passed by the Biden administration. Congestion pricing, if it does go into effect, will help and the City of Yes is going to spur some construction, maybe not enough, but some residential construction so we can get some gains next year from construction jobs which pay a lot better.

Brian Lehrer: Go ahead. You want to finish a thought?

Greg David: No, that's okay.

Brian Lehrer: Do you have a take on AI and its implications for jobs locally? Because that's your beat, or nationally, if you want to go there. Obviously, intuitively it's a threat to a lot of people's jobs. We see battles in particular industries that have already taken shape but I see some economists out there write that, "No, there's a bigger picture out here. New technologies have generally created more jobs than they've destroyed, and that looks likely to happen with AI too." Do you have a take?

Greg David: My take is that people have been predicting disaster from every technological innovation from the 1700s. It's never happened. Could it happen this time? Yes. Could AI be different than what has ever come before? Yes. I have no clue as to whether it will be or not. I was just reading, I read this newsletter about the media business and I think it was the head of Reuters who said AI is not going to replace journalists. Needless to say, how AI affects journalism is topic number one at the Newmark J School. I don't think we have any definitive answers yet and so I can't. The only thing I can say is that I agree with those economists. Technological change has never before resulted in significant erosion in the economy and job protection.

Brian Lehrer: Though it certainly can in individual industries, cause a lot of displacement, right?

Greg David: Yes, absolutely. They used to say in the media business that new technologies didn't replace old ones. Television didn't replace radio but I think the demise of news radio 880 and the problems that radio is having around the country tell us that something's different this time. I wonder if we're going to finally see some significant problems in the media. We worry about significant problems in the media business, that's for sure at the J School.

Brian Lehrer: Because Greg David is the director of the Business and Economics Reporting program and the Ravitch Fiscal Reporting Program at the Newmark Graduate School of Journalism of CUNY and he's a contributor to the news organization The City for Fiscal and Economic Issues. Greg, thanks. Happy 2025.

Greg David: Thank you, Brian.

 

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