The new Fiscal Outlook from the New York City Independent Budget Office finds that the COVID-19 pandemic has likely made it so the city’s economy won’t fully recover for years.
The report released Wednesday (Jan. 6) noted that the recent beginnings of vaccine distribution could mean a more quick positive turn, although “this optimism is tempered by the knowledge that the city and the world are still treading in unknown waters, with much about the coming months to be determined by the course of the pandemic.”
The report goes on to say that NYC was hit extra hard by the pandemic because of its status as an early starting point in the U.S. as well as its presence as a heavily-traversed destination for entertainment, travel, tourism and trade.
According to the report, NYC is likely to end the current fiscal year with a surplus of $1.5 billion, which could go toward paying 2022’s expenses, still leaving a $2.6 billion budget gap. The report forecasts budget gaps of $2.3 billion and $1.5 billion for 2023 and 2024 respectively.
“While the city has routinely dealt with future budget gaps of this scale in the past, at this point the city has fewer resources available,” the report said, noting that the city doesn’t currently have a substantial revenue to help reduce next year’s gap, as the city used $1.15 billion of expense funds not allocated to balance the 2021 budget.
The report says that while unemployment will likely continue to go down over the next few years, but “we do not expect the rate to reach its pre-pandemic level” within those next few years.
According to PYMNTS, NYC has seen a 40 percent rise in bankruptcies due to the pandemic, with almost 6,000 business closures, and it’s not likely to stop there. A report from Bloomberg found that more landlords are likely to boot tenants for not paying, and businesses are likely to lose money as they reach the end of their financial aid.
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