The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
Regional & Community Outreach connects the Bank to Main Street via structured dialogues and two-way conversations on small business, mortgages, and household credit.
Economic Education improves public knowledge about the Federal Reserve System, monetary policy implementation, and promoting financial stability through the Museum and programs for K-16 students and educators, and the community.
In the first of this two post series, we investigated the relationship between state aid and local funding before and after the Great Recession. We presented robust evidence that sharp changes in state aid brought about by the prolonged downturn influenced local budget decision-making. More specifically, we found that relative to the pre-recession relationship, a dollar decline in state aid resulted in a $0.19 increase in local revenue and a $0.14 increase in property tax revenue in New York school districts. In this post, we dive deeper to consider whether there were variations in this compensatory response across school districts, using an approach described in our recent study. For example, one might expect that there would be differences in willingness and ability to offset cuts in state aid across districts with varying levels of property wealth, which in turn might lead to differences in responses. Was this really the case?
Correction: Earlier, we inadvertently posted the content of the second post in this two-part series under today’s headline. We have updated the blog with the correct content and will post part two on November 12. We apologize for the error.
It’s well known that the Great Recession led to a massive reduction in state government revenues, in spite of the federal government’s attempt to ease budget tightening through American Recovery and Reinvestment Act aid to states. School districts rely heavily on aid from higher levels of government for their funding, and, even with the federal stimulus, total aid to school districts declined sharply in the post-recession years. But the local school budget process gives local residents and school districts a powerful tool to influence school spending. In this post, we summarize our recent study in which we investigate how New York school districts reacted when state aid declined sharply following the recession.
Ever since the first census of the U.S. population was taken, back in 1790, New York City has been the nation’s largest city, and for most of this time by a factor of more than two. But how has the city—in particular, the city’s boundaries—evolved over time?
The Federal Reserve Bank of New York’s monthly surveys of manufacturers and service-sector firms include special supplementary questions on topics of interest. The August survey questions focused on the effects of the Affordable Care Act (ACA) on businesses in the District, and how, if at all, firms are making changes in response to it.
An Update on the Competitiveness of Puerto Rico’s Economy, released today, offers six steps that the Island’s government should consider taking to restore its fiscal health. Puerto Rico faces interrelated economic and fiscal challenges. The report characterizes economic activity in Puerto Rico as flat at a depressed level and shows that public debt has risen to about 100 percent of GNP, a high ratio compared with the ratios for U.S. mainland states and a number of foreign economies. Besides the weak economy, the main sources of the debt buildup have been increasing general government deficits; debt incurred by COFINA, a special-purpose bond issuing entity; and rising deficits in a group of public-sector corporations that provide a variety of services on the Island, including electricity, water, and transportation. A series of ratings downgrades eventually pushed the credit ratings on the Island’s debt below investment grade in early 2014, and it has become increasingly evident that fiscal and economic reforms will be needed in order to maintain access to capital markets on a sustainable basis.
The July 2014 Empire State Manufacturing Survey, released today, points to some notable strengthening in New York’s manufacturing sector. The survey’s headline general business conditions index and the new orders and shipments indexes all climbed to their highest levels in more than four years. The employment measure also moved up in July and is close to the three-year high set in April. Because the survey’s diffusion indexes measure the breadth of change for their respective indicators, greater values tend to indicate not just higher levels of activity, but also a faster pace of growth, so today’s report is quite encouraging. This month’s Empire Survey suggests a fundamental improvement in New York State’s manufacturing climate that has now persisted for three months—a break from the winter doldrums of February, March, and April, when there were few signs of any growth at all. Some of the improvement over the past few months may reflect a bounce-back from the weak winter, but we are now getting past the point where this is likely to be the predominant factor. This provides a hopeful sign that we may see some of these positive trends reflected in hard data on statewide manufacturing employment, which looked quite weak during the first part of 2014.
With more than 35,000 farms and $5.5 billion in annual sales, the agriculture industry is an important part of the New York State economy. New York produces a wide array of agricultural goods, from dairy products (the state has the third largest dairy industry in the country) to fruits and vegetables, livestock, and even fish. It is also a growing industry: agricultural exports, for example, have more than doubled in the state since 2000. And the action isn’t just on farms: agriculture reaches into many other parts of the economy, such as farmers’ markets, food manufacturing and processing firms, restaurants, and agritourism.
Recognizing that firms that make, process, and sell agricultural products play an important role in the state’s economy, the Regional and Community Outreach team at the New York Fed recently held a conference for N.Y. food and beverage firms on accessing capital, co-sponsored by Empire State Development and the New York State Department of Agriculture and Markets. The goal of the event, which was held on June 24, was to provide information about the wide array of financing available for these firms, and to help them decide which types of financing would best suit their credit needs. The conference also highlighted opportunities in international markets, and identified financing tools available to assist firms with exporting their goods abroad.
At today’s regional economic press briefing, we provided an update on economic conditions in New York, northern New Jersey, and Puerto Rico, with a special focus on the kinds of jobs that have been created in each of these places during the recovery. Led by New York City, economic activity has continued to expand in most parts of the region. As a result, a growing number of places have now gained back, or are close to gaining back, all of the jobs that were lost during the Great Recession. That said, not all the news was positive. Economic conditions appear to have weakened somewhat in northern New Jersey during the first few months of 2014, in part due to the harsh winter weather earlier this year. And a few places remain very weak. In particular, Binghamton, Elmira, Utica, and Puerto Rico have yet to see any meaningful jobs recovery.
The Federal Reserve Bank of New York’s monthly business surveys include special supplementary questions on topics of interest. April’s survey questions focused on how difficult it has been for firms in the region to find and retain workers with basic skills, such as math and English, as well as advanced computer skills and “soft skills,” such as punctuality and interpersonal skills. Overall, the level of difficulty finding workers has not changed much since April of last year, when these questions were previously asked. Workers with advanced computer skills were the hardest to find, for both manufacturing and service firms. Manufacturers report much more difficulty than service firms in finding people with basic English, computer, and especially math skills, and even seem to be having difficulty in finding workers that are simply punctual and reliable. Service firms say they’ve had particular trouble finding candidates with good interpersonal skills. These findings suggest that although the job market recovery remains tepid, demand for workers with particular skills is still significant.
The New York Fed’s latest Beige Book report indicates that harsh winter weather hampered economic activity in the region in early 2014.
Eight times a year, each of the nation’s twelve Federal Reserve Banks produces a report on current economic conditions in its District, based largely on anecdotal information obtained from regional business contacts. The New York Fed’s report covers New York State, northern New Jersey, and southwestern Connecticut. The twelve District reports are combined with a national summary to produce what’s come to be known as the Beige Book—a report that provides some of the most timely information available on economic conditions.
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