FEBRUARY UPDATE SFY 2008-09 and SFY 2009-10 New York State Assembly - - PowerPoint PPT Presentation

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FEBRUARY UPDATE SFY 2008-09 and SFY 2009-10 New York State Assembly - - PowerPoint PPT Presentation

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FEBRUARY UPDATE SFY 2008-09 and SFY 2009-10 New York State Assembly February 11, 2009 1 U.S. Economy in Deep Recession Recession began in December 2007 Unemployment: 7.6% in January 2009 (highest in more than 15 years) Job

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FEBRUARY UPDATE

SFY 2008-09 and SFY 2009-10

New York State Assembly

February 11, 2009

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U.S. Economy in Deep Recession

  • Recession began in December 2007
  • Unemployment: 7.6% in January 2009 (highest in more than

15 years)

  • Job losses in January: 598,000; 3.6 million jobs lost so far in

this downturn – 1.8 million lost the last 3 months alone

  • Consumer Spending: 1.4% decline between last quarter of

2007 and last quarter of 2008, the worst 4 quarter decline since 1980

  • Housing market: not expected to stabilize until the end of 2009
  • Current forecast as of mid-February more pessimistic than

December 2008 forecast

  • This forecast includes an estimated $827 Billion fiscal stimulus
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Forecasters have included stimulus packages of varying sizes and allocations. The Assembly forecast includes January’s job loss, as well as benchmark employment revisions released on February 6, 2009 that were unavailable to the Division of the Budget.

GDP CPI E mployment

Assembly (1.9) (1.1) (2.7) Division of Budget (1.4) 0.1 (2.3) Macroeconomic Advisors (1.3) (0.9) (2.3) Moody's E conomy.com (1.7) 0.9 (2.5) IHS Global Insight (2.5) (2.2) (2.6) Blue Chip Consensus (1.9) (0.8) N/A

2009 U.S . Forecas t Comparis ons (Percent Change)

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Forecasters have included stimulus packages of varying sizes and allocations.

(Percent Change)

GDP CPI Employment

Assembly 2.1 2.0 0.1 Division of Budget 2.2 2.4 0.6 Macroeconomic Advisors 3.7 0.9 0.6 Moody's Economy.com 2.0 2.6 0.3 IHS Global Insight 2.2 2.4 0.0 Blue Chip Consensus 2.1 1.8 N/A

2010 U.S. Forecast Comparisons

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Comparison to Other U.S. Recessions

GDP: 2.9% decline

  • Worst decline since 1973-1974 recession

Consumer Spending: 2.7% decline

  • The largest decline since WWII

Employment: 3.8% decline or 5.3 million jobs lost

  • Worst level of decline of any post-war recession
  • Employment loss continues until the 1st quarter of

2010

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New York State Economy

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267,760 jobs will be lost in the current downturn Financial activities industry job loss: 64,200

New York State Employment Growth

0.7 1.4 2.4 2.5 (1.8) (0.6) 0.6 0.9 1.0 1.4 0.3 (2.0) (0.1) (0.6) 2.2 0.9 0.5 0.1 (1.9) (4.1) (0.4)

(5) (4) (3) (2) (1) 1 2 3 4 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 %

Note: Data for 2008 is estimated; 2009 and 2010 are forecasts. Sources: NYS Department of Labor, QCEW; Bureau of Labor Statistics, CES; NYS Assembly Ways and Means Committee staff.

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The percentage loss is more than double the percentage drop we had in 2002

New York State Wages 2007 - 2010

508.1 517.6 496.1 508.8

480 490 500 510 520 2007 2008 2009 2010 Billion

$ 21.5 Billion Drop

$

Sources: NYS Department of Labor; NYS Assembly Ways and Means Committee staff.

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Wall Street

  • Relative share of State employment and

wages is forecast to decline

– 24.4% of total New York State 2007 wages

  • Declines to 19.2% by 2010

– 8.5% of total New York State 2007 employment

  • Declines to 7.9% by 2010
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3 consecutive years of decline 2009 decline = 45.4% or $15.4 billion

New York State Securities Industry Percent Change in Bonuses and Stock Option Payments

12.9 (5.9) 18.4 (28.4) (11.3) 36.3 13.0 40.9 33.2 (9.0) (10.7) 41.4 30.4 (44.9) 8.6 136.8 (10.0) 76.9 (2.5) 71.8 (45.4)

(60) (40) (20) 20 40 60 80 100 120 140 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 %

Note: Total wage data for 2008 is estimated; 2009 and 2010 are forecasts. Base wages and variable wages are estimated by the NYS Assembly Ways and Means Committee staff and sum to total wages. Sources: NYS Department of Labor, QCEW; NYS Assembly Ways and Means Committee staff estimates.

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SFY 2008-09 and SFY 2009-10 Revenue Outlook

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Summary of Tax Revenue Forecasts

(Millions of Dollars)

  • 0.8%

($458) $60,151

  • 0.4%

($263) $60,609 Total Taxes

  • 21.4%

($432) $1,583

  • 3.3%

($68) $2,015 Other 2.6% $199 $7,941

  • 5.9%

($489) $7,742 Business 14.4% $2,043 $16,206 1.2% $170 $14,163 User

  • 6.2%

($2,269) $34,421 0.3% $124 $36,689 PIT Growth Change 2009-10* Growth Change 2008-09 Category * Includes Executive revenue actions as proposed in the Executive Budget

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Forecast Differences from Executive Budget

(millions of dollars)

2009-10 2008-09 Category ($1,018) ($178) Total Taxes: ($105) ($3) Other ($192) $27 Business ($573) ($208) User ($149) $6 PIT

Note: Executive forecast reflects amendments to Executive Budget published in January.

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Trends in Tax Revenue

  • The growth in tax revenue has slowed dramatically
  • Revenues are forecasted to decline by $3.6 billion – not

including the Executive’s revenue actions

13.4% 10.4% 9.5% 3.6%

  • 0.4%
  • 5.5%
  • 10%
  • 5%

0% 5% 10% 15% 2005 2006 2007 2008 2009 2010

State Fiscal Year

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FEBRUARY UPDATE

SFY 2008-09 and SFY 2009-10

New York State Assembly

February 11, 2009