One of New York’s biggest boosters is taking stock of where the city stands heading into the new year.
Record-high employment and a diversifying economy are key bright spots for the city, according to the New York City Economic Development Corporation’s first-ever year-end analysis of the local economy, released on Tuesday. But the report also highlights some causes for concern, namely the city’s housing crisis, income inequality and racial disparities in the workforce.
“New York City’s economy has hit historic milestones this year,” wrote EDC president Andrew Kimball in a statement announcing the report, but hedged that”large challenges remain.”
There is a lot for New Yorkers to be optimistic about regarding the local economy, according to the quasi-public nonprofit’s analysis. For starters, labor force participation is strong. Data from the New York State Department of Labor shows a higher share of city residents either have a job or are actively seeking one than ever before. Plus, the city leads the nation in attracting young talent with 5.7% of college graduates nationwide now flocking to New York for work.
The city also continues to be a leader in attracting venture capital investment for fledgling companies. Funding activity for upstarts was up 340% from where it was 10 years prior according to research firm PitchBook. The uptick is thanks, in part, to New York’s competitive position in expanding artificial intelligence and machine learning, the report says.
An uptick in office leasing going into 2025 marks a glimmer of hope as vacancy rates have remained stubbornly high. The city also has the lowest prevalence of fully remote workers compared to its peers, the report says.
That’s good for both Manhattan businesses and commercial real estate, Kimball said. “It means more feet coming back into the office, riding our subways, supporting our local small businesses,” he said. The report acknowledges local office vacancy rates are still too high but said it sees an uptick in leasing going into 2025.
Also of note: the New York City Tourism + Conventions office expects a record 68 million local visitors this year, which would mark a full recovery after five slow pandemic-tainted years.
The EDC, which aims to “strengthen confidence in NYC as a great place to do business,” acknowledged the challenges confronting the city as well.
Chief among those pain points is housing affordability. Census Bureau data shows 43% of renter households in New York are rent-burdened, or spend more than a third of their income on rent. The report argues that this is in part because job growth in New York has far surpassed housing growth; an EDC analysis found the city added 5.7 jobs per housing unit added between 2011 and 2023, excluding the anomaly in 2020.
The report applauded some city and state policy initiatives to address the issue — most recently the City of Yes housing reform initiative — but insisted more must be done.
Another major challenge facing the city, according to the report, is racial disparities in unemployment and labor force participation rates. Both Black and Hispanic New Yorkers are unemployed at more than twice the rate of white New Yorkers. Gender gaps persist as well; labor participation in 2024 for women was roughly 11% lower than it was for men.
