Economy of New York City
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The economy of New York City is one of the largest regional economies in the United States. The city is a global center for business and commerce and one of the most important center in world finance, along with London, Hong Kong, and Tokyo. It is considered by most economists to be the financial capital of the world.
The financial, insurance, and real estate industries form the basis of New York's economy. The city is also the most important center for mass media, journalism and publishing in the United States, and is the preeminent arts center in the country. Medical research, technology, and fashion are also significant sectors. Manufacturing, although declining, remains consequential.
The city's stock exchanges are the most important in the United States. The New York Stock Exchange is by far the largest stock exchange in the world by market capitalization of listed companies. The NASDAQ has the most companies listed and is third largest in the world by market capitalization of listed companies, although since the NASDAQ is an entirely electronic exchange, its trading does not take place physically in New York City. Many international corporations are headquartered in the city, including more Fortune 500 companies than any other city.
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[edit] Statistics and history
New York City has an estimated gross city product of $457.3 billion(2006), larger than the GDP of Switzerland ($377 billion). If it were a country, the city's economy would be 17th largest in the world, and at $56,000 per person, New York would have the second highest per capita GDP in the world after Luxembourg. The New York metro region's GMP of $901 billion is larger than the total Gross State Product of every state in the United States except California and Texas. It accounts for 65% of economic output in the state of New York, 75% of economic output in the state of New Jersey and 50% of Connecticut's economic output.[1]As of 2006 the city is the headquarters of 24 Fortune Global 500 corporations(3rd after Tokyo and Paris) and its metropolitan area is home to 38 Fortune Global 500 corporations(2nd after Tokyo). Over a hundred of the Global 2000 companies have a prescence in New York and likewise for the American Fortune 500.
[edit] History
New York City's economic growth was made possible by its harbor, widely considered one of the finest natural ports in the world. The value of this port was greatly enhanced in 1819 with the opening of the Erie Canal, which gave New York a decisive advantage over the competing ports of Boston and Philadelphia.
The old port facility was at the South Street Seaport in Manhattan, but today there is still residual activity remaining at Red Hook in Brooklyn, and the Howland Hook Marine Terminal in Staten Island. Red Hook, for instance, handles the majority of the cocoa bean imports to the United States. Since the 1950s, most shipping activity in the area has shifted to Port Newark-Elizabeth Marine Terminal in New Jersey. But despite changes in international shipping, trade and the tertiary sector have always remained the real basis of New York's economy.
Manufacturing first became a major economic base for New York City in the mid-nineteenth century with the advent of industrialization and the railroad. New York was formerly a national center for clothing manufacture, and some continues, sometimes in sweatshops. There are still around 120,000 manufacturing jobs in the city compared to over a million in the middle of the 20th century. Like international shipping, though, manufacturing gradually declined in the late-twentieth century with rising land values. The city was also a first center of the American film industry, along with Chicago, Illinois, until it moved to Hollywood, California, and still has some television and movie production.
The Wall Street Crash of 1929 was a precursor to the Great Depression.
In recent years the city has made efforts to diversify its economic base. The city government's Economic Development Corporation maintains industry desks geared toward the financial, media, real estate, biotechnology and retail industries, as well as the city's diverse non-profit sector that encompasses hospitals, schools and arts and cultural institutions.
[edit] Post-September 11, 2001
New York City's economy was hurt by the terrorist attacks of September 11, 2001 on the World Trade Center. The economy rebounded quickly, however, according to a 2006 report from the Federal Reserve Bank of New York. The report found that there were 100,000 fewer jobs in the city five years after the attacks, but also pointed to other signs of economic health. For example, the average incomes of New Yorkers increased faster than for other Americans during the time period. The study concluded that the economic effects of the terrorist attacks were sharp but short-lived and had largely disappeared by the end of 2002. New York City’s unemployment rate in May 2006 was 5 percent, its lowest level in nearly 18 years, with household employment surpassing both the pre-9/11 peak in 2001 and the previous high mark reached in 1969. The number of city residents with jobs rose above 3.6 million that same month.[2]
[edit] International trade
New York is unique among American cities for its large number of foreign corporations. One out of every ten private sector jobs in the city is with a foreign company. Often this makes the perspective of New York’s business community internationalist and at odds with Washington’s foreign policy, trade policy, and visa policy.[3]
China has been New York's leading growth market for exports since 2000. The New York Metropolitan Region is home to more than half of the 32 largest Chinese companies with offices in the United States. These companies represent a broad array of industries including shipping, steel, energy and manufacturing firms, and services. Many have chosen to open headquarters in New York in anticipation of eventual listing on the respective New York stock exchanges and entering U.S. capital markets.[1]
New York’s tax code differs from many other states in ways that substantially reduce the effective tax rate for many corporations, particularly foreign firms setting up U.S. headquarters. New York City currently boasts seven Chinese daily newspapers, two Chinese language television stations, and the largest Chinese neighborhood in the United States. New York area airports provide 12 daily flights to Hong Kong and five to Beijing, the most flights out of the eastern half of the United States.[2]
In one measure of how international New York City's economy is, data compiled by the agents Knight Frank show foreign owners make up 34% of sales in the city's prime residential market. New York ranks ahead of Paris, where such sales account for 27%, Hong Kong (13%), and Sydney (9%). London, however, is the most cosmopolitan world city in terms of property ownership; more than 51% of homes there worth more than £2m ($3.8m, EU3m) sold in 2005 have gone to overseas buyers from Russia, the Middle East and elsewhere.[3]
[edit] Corporate sector
Midtown Manhattan is the largest central business district in the world, while the Financial District is also the third largest in the United States. New York City has long been the dominant business center of the United States, but with the city's fiscal crisis in the 1970s a new trend began to develop resulting in corporate headquarters and subsidiaries gradually moving to the suburbs and other regions.
Since the 1990s, however, New York has regained its magnetic force and is re-establishing its claim as the city of corporate headquarters. The number of headquarters and subsidiaries in Manhattan has more than doubled since 1990, according to the federal Department of Labor. For the very largest American corporations it is important to be in a global city. Surveys done by New York's economic planners have also shown that the personal preference of the chief executive is a factor in determining whether a company moves to or from New York. In 2005 there were 602 stand-alone headquarter operations for major companies in the city.[4]
The 280,000 workers in the finance industry collect more than half of all the wages paid in Manhattan, although they hold fewer than one of every six jobs in the borough. The pay gap between them and the 1.5 million other workers in Manhattan continues to widen, causing some economists to worry about the city’s growing dependence on their extraordinary incomes. Those high salaries contribute to job growth, but most of this job growth occurs in lower-paying service jobs in restaurants, retail and home health care and not many jobs in highly paid areas.[5]
[edit] Finance and trade
Today, New York City is a major center of finance in the world economy, with Wall Street in Lower Manhattan's Financial District. Financial markets based in the city include the New York Stock Exchange, NASDAQ, American Stock Exchange, New York Mercantile Exchange, and New York Board of Trade. This contributes to New York City being a major financial service exporter, both within the United States and globally. Many corporations also have their headquarters in the city, including companies as prominent and diverse as Altria Group, Time Warner, American International Group, Pfizer, Bristol-Myers Squibb, JetBlue, Citigroup, DC Comics, Estée Lauder, and Sony Music Entertainment, among many others. Many other global companies have large offices in New York, such as General Electric. As the North American terminus of the transatlantic fiber optic trunkline, New York has extremely high internet connectivity and is the leading international internet gateway in the United States with 430 Gbit/s of international internet capacity terminates. By comparison, the number two U.S. hub, Washington/Baltimore, has 158 Gbit/s of internet terminates.[6]
Since the founding of the Federal Reserve banking system, the Federal Reserve Bank of New York in Manhattan's Financial District has been where monetary policy in the United States is implemented, although policy is decided in Washington by the Federal Reserve Bank's Board of Governors. The New York Fed is the largest, in terms of assets, and the most important of the twelve regional banks. It is responsible for the Second District, which covers New York State and the New York City region, as well as Puerto Rico and the U.S. Virgin Islands. The New York Fed is responsible for conducting open market operations, the buying and selling of outstanding US Treasury securities. In 2003, Fedwire, the Federal Reserve's system for transferring balances between it and other banks, transferred $1.8 trillion a day in funds, of which about $1.1 trillion originated in the Second District. It transferred an additional $1.3 trillion a day in securities, of which $1.2 trillion originated in the Second District. The New York Federal Reserve is the only regional bank with a permanent vote on the Federal Open Market Committee and its president is traditionally selected as the Committee's vice chairman. The bank also has the largest gold repository in the world, larger even than Fort Knox. Its vault is 80 feet (25 m) beneath the street and holds $90 billion worth of gold bullion.
- See also: Federal Reserve Bank of New York
[edit] Media
New York is by far the most important center for American mass media, journalism and publishing. The city is the number-one media market in the United States with 7% of the country’s television-viewing households. Three of the Big Four music recording companies have their headquarters in the city. One-third of all independent films are produced in the Big Apple. More than 200 newspapers and 350 consumer magazines have an office in the city. The book publishing industry alone employs 13,000 people. For these reasons, New York is often called "the media capital of the world."
[edit] Film
New York City's film industry is the nation’s second largest after Hollywood in California. Although much smaller, New York's film sector is growing rapidly and its billions of dollars in revenue makes it an important part of the city's economy.[7] It is also a growth sector; according to the Mayor's Office of Film, Theater and Broadcasting New York City attracted over 250 independent and studio films in 2005, an increase from 202 in 2004 and 180 in 2003. More than a third of professional actors in the United States are based in New York.[4] The city's movie industry employs 100,000 New Yorkers, according to the Office, and about $5 billion is brought by the industry to the city's economy every year.[5] International film makers work in the city, as well. The Bollywood film Kal Ho Naa Ho was shot in New York City in 2003, and has proceeded to become the fourth-highest grossing Indian film of all time.[6]
The Kaufman-Astoria film studio in Queens, built during the silent film era, was used by the Marx Brothers and W.C. Fields. It has also been the set for The Cosby Show and Sesame Street. The recently constructed Steiner Studios is a 15 acre (61,000 m²) modern movie studio complex in a former shipyard where The Producers and The Inside Man, a Spike Lee movie, were filmed.
Silvercup Studios revealed plans in February 2006 for a new $1 billion complex with eight soundstages, production and studio support space, offices for media and entertainment companies, stores, 1,000 apartments in high-rise towers, a catering hall and a cultural institution. The project is invisioned as a "vertical Hollywood" designed by Lord Richard Rogers, the architect of the Pompidou Center in Paris and the Millennium Dome in London. It is to be built at the edge of the East River in Queens and will be the largest production house on the East Coast. Steiner Studios in Brooklyn would still have the largest single soundstage, however. Kaufman Studios plans its own expansion in 2007.
Miramax Films, a Big Ten film studio, is the largest motion picture distribution and production company headquartered in the city. Many smaller independent producers and distributors are also in New York.
[edit] Fashion and advertising
Manhattan's Madison Avenue is synonymous with the American advertising industry, while Seventh Avenue is nicknamed "fashion avenue" as it serves as an important center for the fashion industry. Ninety percent of the diamonds imported to the United States pass through New York, and most of these are handled and cut in the city's Diamond District on 47th Street between Fifth and Sixth Avenues. New York also has among the most important scenes for art, music, and theater in the U.S., with an increasingly active artists' community. The city also has a large tourism industry. According to the Center for Women's Business Research, there are nearly 250,000 women-owned firms in New York City.
[edit] High tech
High-tech industries like software development, gaming design, and Internet services are also growing; New York is the leading international internet gateway in the United States, with 430 Gbit/s of international internet capacity terminates, because of its position at the terminus of the transatlantic fiber optic trunkline. By comparison, the number two U.S. hub, Washington/Baltimore, has 158 Gbit/s of internet terminates.[8] More than two-thirds of New Yorkers have Internet in their homes.
[edit] Internet & telecom
According to New York’s Economic Development Corporation, telecom carriers, cable companies, Internet service providers and publishers were a $23 billion industry in 2003. This represents over three percent of the city’s economy. The sector employs 43,000 city residents.
In 2006 Google moved into 311,000 square feet of office space in the second-largest building in New York City, at 111 Eighth Ave in Manhattan. The location is one of the most important "telecom hotels" in the world, a giant networking facility adjacent to the Hudson Street/Ninth Avenue fiber highway, one of the most critical Internet arteries in the world. Employing more than 500 people, it is Google's largest engineering complex outside of company headquarters. Google products engineered in the New York offices include Maps, Spreadsheets, Checkout, Blog search, and Mobile search. Google's large investment in its New York operations has led to speculation about new multimedia initiatives by the company.
[edit] Medicine and biomedical research
Medical services and research drive New York's major healthcare industry. The city has the most post-graduate life sciences degrees awarded annually in the United States, 40,000 licensed physicians, and 127 Nobel laureates with roots in local institutions. New York receives the second-highest amount of annual funding from the National Institutes of Health among all U.S. cities.
Major publicly-traded biopharma companies include Bristol Myers Squibb, Eyetech Pharmaceuticals, ImClone Systems, OSI Pharmaceuticals, Pfizer, Regeneron, CuraGen and Alexion. Pfizer shifted 1,000 jobs to New York City from New Jersey, Missouri, Michigan and California in 2003. According to the Partnership for New York City, New York institutions create more biotechnology-related patents than any other metropolitan area in the United States, including New Haven, home of Yale University's medical research complex, which produces the greatest per capita output.
The health care industry employs approximately 375,000 people in New York City, making it the city's largest employer. 40,000 physicians work at more than 70 hospitals in New York; the city's 20 public hospitals served 1.5 million people in 1998 alone.
[edit] Manufacturing and Industrial Sector
There are over 233,000 jobs[9] in more than 10,000 New York City industrial businesses[10], with the highest concentration of industrial employment in Manhattan. This includes manufacturing, warehousing, utilities, and transportation. Manufacturing jobs average $41,000 annually (NYS DOL, 2nd Qtr 2005), about $10,000 more than comparable jobs in retail or restaurants. The manufacturing sector has the highest percentage of first-generation immigrants making up 64% of the workforce (NYC Dept. City Planning) and people of color comprising 78% of the production workforce (2004 American Community Survey).
These are small businesses, with an average size of 21 employees (NYS DOL, 2nd Qtr 2005). Examples of goods manufactured in the city include broadway costumes, custom-made cabinets, croissant for hotels, and wooden crates for shipping fine art. These items are labor-intensive and require collaboration between the end-user and the manufacturer. In recent years, as real estate and globalization pressures have increased, the remaining manufacturers have become more design-oriented and single customer-focused. To boot, production methods have become cleaner and more technology-driven.
Despite the adaptability of New York manufacturers, there remain looming challenges to the sector’s survival. A 2003 city-sponsored survey of the industrial sector identified three major local challenges to retaining businesses: 1) high cost of real estate; 2) high costs of doing business; and, 3) uncertainty about land use policy.
[edit] See also
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