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New York City’s Economy

Cityscape | Economy

New York's economy covers such a wide spectrum of income-producing activity that the city is almost always in a state of simultaneous boom and bust. Unlike many other United States cities, where prosperity rises and falls with a particular industry, New York relies for its continued vitality on a plethora of businesses as many as 2,500 major United States corporations. As one industry declines, others rise to take its place.

An example is the manufacturing industry. For much of the first half of the 20th century, downtown Manhattan was jammed with small factories mingled among the tenements of Midtown and lower Broadway . The city remains a manufacturing center for clothing the garment district in lower Manhattan has long been the unofficial capital of the "rag trade" but by the 1980s manufacturing overall had declined dramatically. Automation, the switch to larger, more efficient factories, and the search for lower labor costs in Southern states and overseas caused a steady loss of factory jobs.

As a banking center, New York is headquarters for five of the six largest United States banks and more than 400 institutions in all, with total resources of approximately 348 billion dollars and deposits of about 174 billion dollars. Also in New York are the country's two major stock exchanges, commodities exchanges, the dominant securities firms and investment banks, and major accounting and law firms.

In the 1980s, deregulation of financial markets, an unprecedented wave of corporate mergers and acquisitions, and the record-setting performance of the stock market combined to step up Wall Street's already frenetic pace. With this boom came attendant rewards for the businesses that serve the financial community brokers, lawyers, and accountants, among others and ultimately for firms that provided entertainment, housing, and luxury goods.

An additional example of decline is the city's once-bustling port. The adjacent ports of New York and New Jersey (managed by a single agency, the Port Authority of New York and New Jersey) cover some 1,500 shoreline miles (2,400 kilometers) and handled 58.6 billion dollars in trade goods in 1984 greater by half than the nearest competitor. The shift to shipping by container cargo, among other factors, has rendered many New York City facilities obsolete, and much of the port traffic goes instead to New Jersey . The grand ocean liners that once sailed from the city's west-side piers also have gone into eclipse.

Meanwhile air cargo into New York has grown dramatically. The cargo facility at the John F. Kennedy International Airport in Queens, New York, handles upward of 1 million tons per year, the most of any such facility in the country, and the Newark Airport , also operated by the Port Authority, is second. In 1984 the three metropolitan airports Kennedy, LaGuardia, and Newark managed more than 780,000 airplane arrivals and departures and 56 million passengers.

While individual industries undergo cycles of rise and fall, New York's position as the United States' corporate headquarters has never been seriously challenged. This is largely because of its strategic concentration of service businesses on which large companies rely not only law, banking, accounting, and finance but advertising (33 of the top 40 firms) and insurance (ten of the 15 largest are in New York and Connecticut). More than 100 of the Fortune 500 largest industrial corporations have their head offices in New York, and by sales volume New York ranks as the world's largest corporate headquarters.

In the 1960s several industrial giants pulled out of the city, pointing to such problems as crime, high taxes, and the high cost of living for their employees. These much-publicized defections proved to be isolated incidents rather than the advance party of an exodus. Prominent among the many corporations based in New York are the leaders in such glamorous fields as book, magazine, and newspaper publishing, television, and fashion.

Another relative constant in New York is its enormous and freewheeling marketplace. At the wholesale level New York City has as many as 20,000 establishments (14,000 in Manhattan alone) that employ 220,000 people and handle sales of nearly 120 billion dollars a year. Only three states exceed these single-city totals. On the retail level New York had, at one count, 53,600 stores more than 170 stores per square mile (66 per square kilometer).

Visitors are also a constant. The allure of the nation's largest and most complex city feeds a substantial tourist industry. In 1985 the city estimated that more than 17 million tourists crowded the more than 100,000 first-class hotel rooms and spent an estimated 2.4 billion dollars in such establishments as the city's 25,000 restaurants, 400 or more art galleries, and 30 large department stores.