The New York City Recovery Index – Investopedia

23

The current New York City Recovery Index, out of a possible score of 100.

New York City was among the hardest hit cities in the world by the COVID-19 pandemic. The concentration of population, front line workers, and use of public transit are all factors in how heavily it was struck by the virus. The toll on human life and economic disruption has been staggering, but NYC’s resilience has also shown through as it fights back to recovery.

The economic downturn was sudden and all-encompassing, as demonstrated by near vertical drops in transit, dining and other indicators reflecting normal life in New York. The recovery, however, has been slow and uneven as the city has moved from stage to stage in the reopening process. Investopedia and NY1 teamed up to track New York City’s economic recovery by creating a Recovery Index.

The New York City Recovery Index will be released both weekly and monthly, measuring micro and macroeconomic data points that illustrate the road back to normalcy in one of the most unique cities in the world. We’ll examine week-over-week changes, as well as deep dives into specific metrics as they rise or fall prominently.

The Timeline

At the end of February, COVID-19 hospitalizations began ticking upward, and the health component of the index began to drop, reflecting the negative change in health. However, restaurant bookings and subway ridership didn’t drop significantly until after March 14th, when the city entered lockdown. Cases peaked in April, and the health index has consistently improved weekly as daily hospitalizations have decreased. However, economic activity is improving more slowly than the health picture, with subway usage still less than one quarter of the normal volume for this time of the summer, even as the city enters phase 4 (the final phase) of re-opening.

We’ll track these components weekly to summarize New York’s recovery, and dig into the events driving changes in these five key metrics.

How to Read the Recovery Index

We’ve created the Recovery Index using a baseline score of 100, where 100 reflects the health of the New York City economy before the pandemic struck in late February. We weighed the various components of the Recovery Index equally, and pulled data from publicly available data sources from both the government and private organizations, and businesses, to track the strength of those components against their pre-pandemic baseline. The overall score reflects where the city stands in its recovery out of 100. As of today, based on the most recent data, New York City’s Recovery Index score is 23 out of 100. In other words, we are just a little under one-quarter of our way to recovery, with a long way to go. The full methodology of the index goes into more detail if you’re interested in understanding exactly what goes into the index.

While not an exhaustive list of every indicator underpinning the city’s well-being, these metrics do help tell the broad tale of recovery as NYC moves from phase to phase in its reopening. There are other metrics that could and should be included, of course, but not all data we would like to include is publicly available, or updated regularly on a weekly cadence. As relevant data becomes more available, we’ll include it in our index.

What Does the Recovery Index Track?

Weekly metrics will include:

  • Health: Are COVID-19 hospitalizations declining week over week?
  • Jobs and Unemployment: Are we getting back to work?
  • Small Business Licenses: Are entrepreneurs starting or restarting their businesses?
  • Mobility: Are we taking trains like we used to?
  • Restaurants: Are we comfortable eating both indoors and outdoors at restaurants again?

Week-over-week Changes

Current week-over-week changes show us that health is continuing its slow recovery as hospitalizations decrease slightly despite calls from Governor Cuomo and Mayor de Blasio for restaurants and bars to stop allowing dense crowds. The increase in restaurant patrons is visible in the restaurant reservation index, showing diners getting more confident week-over-week. However, the ultimate recovery for restaurants may be halted or reversed if crowding presents health issues.

Restaurants may be booking more, but New York residents don’t appear to be using the subway to get there, as there is no increase week-over-week in turnstile swipes. Independent of any phased re-opening, New Yorkers are just as cautious about the subway as they were last week and the week prior.

Unfortunately, the surprise this week is the increase in initial unemployment claims. After multiple weeks where this number has been trending down—closer to normal levels—this week saw a spike, with weekly initial claims 7.5 times higher than the same week last year. This shows the fragility of the economic recovery, even as hospitalizations in the city remain stable.

COVID-19 Hospitalizations

The daily count of hospitalizations which tested positive for COVID-19 are taken from New York City’s Department of Health and Mental Hygiene . We chose to base our health index on hospitalization counts rather than positive COVID-19 tests or deaths. Testing data is dependent on the number of people who can be tested, which fluctuates based on testing supplies available, distribution of those supplies to medical professionals, and testing facilities open to the public, as well as individuals’ decision to be tested. Hospitalizations are a more stable measure over time, as they track those people who are admitted with COVID-19. We don’t choose to use death counts because the number of deaths often considerably lags the spread of the virus.

Unemployment

The pandemic has hit New York City’s workforce particularly hard. As of June, New York City’s unemployment rate stood at 20.4%, up from 18.3% in May, and nearly twice the national average. With hundreds of thousands of front-line workers, especially in the services and hospitality industries, more than 1.3 million New Yorkers have filed for unemployment, according to the New York City Dept. of Labor. African American and Hispanic workers have been impacted the most, as they comprise a large portion of the service industries, where most front-line workers are employed.

Subway Ridership

The New York City Subway is a powerful indicator of movement around the city. It is by no means the only form of transportation in the city (we would have liked to include MTA Bus data, for example, but none were consistently available).

The physical reality of public transportation also means ridership has been especially impacted by the pandemic. Subway use is currently approximately 1 million average daily entrances, versus 4.8 million average daily entrances during this time in 2019, and at the peak of the spring pandemic, subway use was only 7% compared the same time in 2019. While subway use dropped sharply the week of March 12, and hit an index low of 7.4 in April, it never dropped off completely. In recent weeks, subway use has increased and is now running in July at just over 20% capacity compared to this time last year.

Small Business Licenses

The New Business License Index represents daily counts of new business licenses registered to the NYC Department of Consumer and Worker Protection . The index is calculated from counts by license creation date. We use the number of new license creations to measure small business confidence, because we believe that applying for a new business license is a clear indication of confidence amongst entrepreneurs and small business owners. While some businesses were allowed to remain open throughout all phases of the city’s shutdown, far more have remained closed, creating an enormous impact on small business activity in NYC. While many may remain closed permanently, we will track re-openings signaled by new business licenses as a measure of confidence.

Dining In/Restaurant Reservations

Restaurants are a key indicator of the economic life of New York City. While not all restaurants take reservations, OpenTable hosts reservations for over 36,000 restaurants in the New York area. Restaurant reservations began to show decline the week of March 12th, 5 days before NYC would order a mandatory shut down of bars and restaurants. The decline preceding the shut down orders indicates restaurants are a good measure of consumer confidence returning to normal- even when allowed to dine out, will the residents and tourists of NYC actually do it?

New York City’s Path to Recovery

Given the structure of New York City’s workforce, and its reliance on tourism, the City has been disproportionally impacted by the economic consequences of the pandemic. With an $86 billion per year budget, the largest of any city in the country, the loss of tax revenue from traditional sources of income will be felt for years to come. New York City’s GDP is an impressive $1.5 Trillion, so the City has an outsized influence on the country’s overall economic health.

On an individual level, nearly every New Yorker has been economically impacted in some way by this crisis- some far more than others. But as a city that has been built and battle-tested by one challenge after the other, where its citizens pick one another up and keep moving, the recovery is a team effort. The New York City Recovery Index is a scoreboard for that recovery, and will help us know how it is progressing.