While the NYC unemployment rate in the late 1980s wasn't out of line with
other cities, I believe the LFPR and EPR were, but I'd have to check on that.
There is no "Wall Street bust" yet. Profits, until the beginning of this
year, were at record levels. But as John Keefe, a banking analyst who I
think still subscribes to PEN-L, put it, it was only record profits that
were keeping employment steady. Unlike previous WS booms, there was no
hiring binge, and there was little spillover into other industries
(retail in particular). The real estate glut also meant no new
construction, which depressed employment in that industry. Also, media
and other elite services were hit very hard by the 1989-92 slump - and
actually the slump began locally after the 1987 stock market crash.
Recovery has since been slow and nearly invisible, with no contribution
from FIRE, the leading sector.
Speaking of FIRE, the Giuliani administration offers this as their
economic development strategy: WS will soon hire, which will lead to a
reduction in office vacancies, which will lead to an upturn in
construction. That, and downsizing and privatization in government, will
lead to a return to prosperity.
The FIRE boom did drive up costs, but the real estate glut helped keep
them down. Meanwhile, social decay and the lack of a skilled labor force
make it more difficult to do business here. Giuliani's cutbacks will only
worsen this situation.
Doug
Doug Henwood [[EMAIL PROTECTED]]
Left Business Observer
212-874-4020 (voice)
212-874-3137 (fax)
On Tue, 16 Aug 1994, Eban Goodstein wrote:
> Doug--
>
> Thanks for getting back to me. Do you have any insights as to why things
> are so bad right now? Up through 1990 the NYC unemploment rate was not too
> far out of line for big cities in the Northeast, and about 2-3 points above
> the rest of the state. Now it is 4 points higher than other big cities, and
> 5 points higher than the rest of the state.
>
> Is it a Wall Street bust, with the other trends you talked about now
> showing up? If so is the bust "endogenous" in the sense that the boom drove
> up costs for F.I.R.E industries and they are now bailing out (and will come
> back when costs settle down)? Or is it a shift in technology, allowing more
> and more F.I.R.E firms to flee a sinking ship?
>
> Any thoughts would be helpful...
>
> eban
>
>
> **************
> Eban Goodstein Department of Economics
> 518-584-5000 (2739) 811 N. Broadway
> fax: 518-584-3023 Saratoga Springs, NY 12866
> [EMAIL PROTECTED]
> ************************
>
>
