Taking the Pulse of the New York City Economy

This paper assesses the overall health of the city's economy and address the concerns about the strength of the city's recovery. This analysis attributes much of the shortfall in the payroll figures to the extraordinary run-up in the city's employment in the late 1990s and to the relatively slow recovery of employment nationally rather than to any fundamental weakness unique to the local economy. While payroll employment is the most timely and reliable monthly measure of short-term movements in the local economy, interpreting the health of a local or national economy with a single indicator may be unwise. Moreover, payroll employment makes a particularly poor proxy for economic trends over longer periods because it fails to capture growth in productivity and the steadily increasing share of self-employed workers. In general, broader measures of economic activity provide better gauges of economic performance.