WTC Records Folder 0139 label, 2001

NYC 9/11 Public Portal Document

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Effect of the Events of September 11, 2001 on the New York City Economy: A Preliminary Analysis of the Revenue Loss

The economic outlook underpinning the City's fiscal year 2002 budget called for a slowdown nationally. Locally, as a result of the weakening US economy, job gains were forecast to slow from nearly 100,000 in 2000 to 32.000 in 2001 and 7,400 in 2002. Prior to the attack on the World Trade Center the City's economy was showing some effects from the national slowdown. Through August minor losses, consistent with this forecast. were seen in several economic sectors--FIRE (Finance, Insurance, Real Estate), business services, trade and manufacturing—and the unemployment rate had jumped up in August to 5.8 percent from 5.0 percent in July.

The events of September II have markedly altered our view of a modest national and local slowdown for the attack will likely have significant short and long-term impacts for New York City's economy. The attacks destroyed or damaged nearly 30 million square feet of commercial space, nearly 9 percent of the City's cffice supply and effectively shut down Lower Manhattan, the location of an estimated 370,000 of the City's jobs, for 4 days. Over . 15.7 million square feet of World Trade Center commercial space was destroyed and there are at least 13.9 million square feet of space significantly impaired, including hotels in the surrounding area and the World Financial Center in Battery Park City. The Stock Exchange may have re-opened on the Monday following the attack, but even today the rest of Lower Manhattan has not completely re-opened and vehicular access to Lower Manhattan is still significantly curtailed.

The immediate effect has been a dramatic falloff in September tax collections. Taxpayers impacted by the disaster • were given a 90-day extension for filing, but even considering the extension the shortfalls are astounding. The personal income tax fell 24 percent from last year's level, the general corporation tax fell 40 percent. the bank tax fell 60 percent and the unincorporated business tax fell 26 percent. In all, tax collections for the month of September are behind plan by an estimated $241 million.

• Jobs Lost and Relocated Although we expect a portion of the tax shortfall to be made up by the end of the 90-day extension period, it is clear that a large portion of the shortfall will never be made up. The destroyed or damaged office space in the World Trade Center and World Financial Center was home to an estimated 2,000 businesses and almost 50,000 employees. An estimated 5,000 of these employees have died, and about 20.000 jobs are estimated to have moved outside the City, although some portion of these jobs may move back when the damaged buildings are renovated. The loss of • these highly paid jobs is expected to immediately reduce the City's wage income by $2.5 billion annually. In addition, businesses in the City and especially in the rest of Lower Manhattan, be hard pressed to make up the will

sales lost during the days when they were closed. The loss to New York City's economy from the impact of the closures is estimated to be $10 billion in output or Gross City Product.

Tourism, Travel and Retail Trade • Of course, major impacts have been felt by the travel and tourism industries. With airline travel seriously impacted in the aftermath of the attack, the City's hotels are empty, with occupancy falling below 50 percent. The number of visitors to New York City has fallen dramatically and visitor non-hotel spending has fallen by $3 3 billion on an annual basis. Over 23,000 jobs will likely be lost in the air transportation, hotel and eating and drinking sectors

Indirect Job Losses — Multiplier Effects Finally, the repercussions of these estimated 40,000 job losses directly attributable to the tragic events are expected • to reverberate throughout the City's economy, lowering employment by an additional 40,000 jobs. The attack, combined with the effects of an already slowing national economy, is estimated to result in a total loss of over 110,000 jobs in the City. Many of these losses will effect retail trade and service employment, especially in Lower Manhattan where shops and restaurants will have to reduce staff and may even close in the coming months due to the loss of so many of their World Trade Center customers.

• Of course, there can be expected to be some minor offset from the debris removal and reconstruction efforts, but the major reconstruction efforts will have to wait for the site to be cleared, which may be at least a year away.

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NYC-WTC 000136656