Economy of New York City
The economy of New York City encompasses the largest municipal as well as regional economy in the United States. Anchored by Wall Street, in Lower Manhattan, New York City has been characterized as the world's premier financial center, and is home to the New York Stock Exchange and NASDAQ, the world's largest stock exchanges by market capitalization and trading activity. In 2012, the New York City Metropolitan Statistical Area generated a gross metropolitan product (GMP) of over US$1.33 trillion, while the Combined Statistical Area produced a GMP of over US$1.55 trillion, both ranking first nationally by a wide margin and behind the GDP of only twelve nations and eleven nations, respectively. The city's economy accounts for the majority of the economic activity in the states of New York and New Jersey.
Manhattan is the leading center of banking, finance, and communication in the United States and is the location of the New York Stock Exchange (NYSE) on Wall Street. Many of the world's largest corporations locate their home offices in Manhattan. Manhattan contained over 500 million square feet (46.5 million m2) of office space in 2015, making it the largest office market in the United States, while Midtown Manhattan, with nearly 400 million square feet (37.2 million m2) in 2015, is the largest central business district in the world. New York City is distinctive for its high concentrations of advanced service sector firms in fields such as law, accountancy, banking and management consultancy, and is the top global center for the advertising industry, which is metonymously referred to as "Madison Avenue"; while Silicon Alley, metonymous for New York's broad-spectrum high technology sphere, continues to expand.
The financial, high technology, real estate, insurance, and health care industries form the basis of New York's economy. The city is also the most important center for mass media, journalism and publishing in the United States, and is the preeminent arts center in the country. Creative industries such as digital media, advertising, fashion, design and architecture account for a growing share of employment, with New York City possessing a strong competitive advantage in these industries. Manufacturing, although declining, remains consequential.
Real estate and corporate location
Real estate is a significant component of the New York City economy. In 2006 the total value of New York City property was $807.5 billion The Google building, 111 Eighth Avenue is the property with the highest-listed market value in the city, at $1.8 billion in 2006. In a 2009 assessment "conducted to help governments and major companies place employees on international assignments", the consulting firm Mercer ranked New York City 49th worldwide in quality of living; the survey factored in political stability, personal freedom, sanitation, crime, housing, the natural environment, recreation, banking facilities, availability of consumer goods, education, and public services including transportation.
Some of the most expensive office space in the United States is located in New York City. 450 Park Avenue was sold on July 2, 2007, for $510 million, about $1,589 per square foot ($17,104/m²), breaking the barely month-old record for an American office building of $1,476 per square foot ($15,887/m²) set in the June 2007 sale of 660 Madison Avenue. Manhattan had 353.7 million square feet (32,860,000 m²) of office space in 2001.
Midtown Manhattan is the largest central business district in the world. New York City has long been the leading business center in the United States, but with the city's fiscal crisis in the 1970s a new trend began to develop resulting in corporate headquarters and subsidiaries gradually moving to the suburbs and other regions.
In 2005 there were 602 stand-alone headquarter operations for major companies in the city. Many international corporations are headquartered in the city, including more Fortune 500 companies than any other city. It is also the home of JetBlue Airways, headquartered in the Long Island City neighborhood of Queens.
Out of the 500 U.S. corporations with the largest revenues in 2010, as listed by Fortune magazine in May 2011, 45 had headquarters in New York City and another 12 elsewhere in New York state (total 57). In the 1997 Fortune 500, 46 corporations had New York City headquarters, out of 61 corporations headquartered in New York state.
In the May 2008 Fortune 500 list, reflecting the year before the global financial crisis of 2007-2010, five of the top 25 Fortune 500 companies in New York City were classified as securities firms (reflecting the importance of Wall Street), but two years later, none were. Two of the securities firms (Goldman Sachs and Morgan Stanley) had converted themselves into commercial banks, while different banks had absorbed either the organization or the post-liquidation assets of the other three firms (Merrill Lynch, Bear Stearns and Lehman Brothers).
The New York Stock Exchange, located on Wall Street, and the NASDAQ are the world's first and second largest stock exchanges, respectively, when measured by average daily trading volume and overall market capitalization. Financial services account for more than 35 percent of the city's employment income.
New York City has been a leading center of finance in the world economy since the end of World War I. As of August, 2008 the city's financial services industry employs 344,700 workers. Manhattan is home to six major stock, commodities, and futures exchanges: American Stock Exchange, International Securities Exchange, NASDAQ, New York Board of Trade, New York Mercantile Exchange, and New York Stock Exchange. This contributes to New York City being a major financial service exporter, both within the United States and globally.
The 344,700 workers in the finance industry collect more than half of all the wages paid in Manhattan, although they hold fewer than one of every six jobs in the borough. The pay gap between them and the 1.5 million other workers in Manhattan continues to widen, causing some economists to worry about the city’s growing dependence on their extraordinary incomes. Those high salaries contribute to job growth, but most of this job growth occurs in lower-paying service jobs in restaurants, retail and home health care and not many jobs in highly paid areas.
Since the founding of the Federal Reserve banking system, the Federal Reserve Bank of New York in Manhattan's financial district has been where monetary policy in the United States is implemented, although policy is decided in Washington by the Federal Reserve Bank's Board of Governors. The New York Fed is the largest, in terms of assets, and the most important of the twelve regional banks. It is responsible for the second district, which covers New York State and the New York City region, as well as Puerto Rico and the U.S. Virgin Islands. The New York Fed is responsible for conducting open market operations, the buying and selling of outstanding US Treasury securities. In 2003, Fedwire, the Federal Reserve's system for transferring balances between it and other banks, transferred $1.8 trillion a day in funds, of which about $1.1 trillion originated in the Second District. It transferred an additional $1.3 trillion a day in securities, of which $1.2 trillion originated in the Second District. The New York Federal Reserve is the only regional bank with a permanent vote on the Federal Open Market Committee and its president is traditionally selected as the Committee's vice chairman. The bank also has the largest gold repository in the world, larger even than Fort Knox. Its vault is 80 feet (25 m) beneath the street and holds $160 billion worth of gold bullion.
Silicon Alley, centered in Manhattan, has evolved into a metonym for the sphere encompassing the New York City metropolitan region's high tech enterprises involving the Internet, new media, telecommunications, digital media, software development, biotechnology, game design, and other fields within information technology that are supported by its entrepreneurship ecosystem and venture capital investments. In the first half of 2014, Silicon Alley generated over US$2.1 billion in venture capital investment across a broad spectrum of high technology industries, most based in Manhattan, or alternatively, Brooklyn. High technology startup companies and employment are growing in New York City and the region, bolstered by the city's position in North America as the leading Internet hub and telecommunications center, including its vicinity to several transatlantic fiber optic trunk lines, New York's intellectual capital, and its extensive outdoor wireless connectivity.
According to New York’s Economic Development Corporation, telecom carriers, cable companies, Internet service providers and publishers were a $23 billion industry in 2003. This represents over three percent of the city’s economy. The sector employs 43,000 city residents.
In 2007 Google moved into 311,000 square feet (28,900 m2) of office space in the second-largest building in New York City, at 111 Eighth Avenue in Manhattan. The location is one of the most important "telecom hotels" in the world, a giant networking facility adjacent to the Hudson Street/Ninth Avenue fiber highway, one of the most critical Internet arteries in the world. Employing more than 500 people, it is Google's largest engineering complex outside of company headquarters. Google products engineered in the New York offices include Maps, Docs, Checkout, Blog search, and Mobile search. Google's large investment in its New York operations has led to speculation about new multimedia initiatives by the company.
Health care and biomedical
Research and medical services drive New York's healthcare industry. The city has the most post-graduate life sciences degrees awarded annually in the United States, 60,000 licensed physicians, and 127 Nobel laureates with roots in local institutions. New York receives the second-highest amount of annual funding from the National Institutes of Health among all U.S. cities, after Boston.
The major publicly traded biopharma companies include Bristol Myers Squibb, ImClone Systems, OSI Pharmaceuticals, Pfizer, Regeneron, CuraGen, and Alexion Pharmaceuticals. Pfizer shifted 1,000 jobs to New York City from New Jersey, Missouri, Michigan and California in 2003. According to the Partnership for New York City, New York institutions create more biotechnology-related patents than any other metropolitan area in the United States. In 2013, a news report observed that New York City had for several years increased commitment to the attraction of private investment in the pharmaceutical and biotech industries, aiming to "finally establish itself as a biotech hub."
Health care industry employs approximately 565,000 people in New York City, according to the U.S. Census, making it the city's 2nd largest employer, after government. In New York, the 565,000 people work at more than 70 hospitals, and the city's 20 public hospitals served 1.5 million people in 1998 alone.
Manufacturing accounts for a significant share of employment. Garments, chemicals, metal products, processed foods, and furniture are some of the principal products. The food-processing industry is the most stable major manufacturing sector in the city. Food making is a $5 billion industry that employs more than 19,000 residents, many of them immigrants who speak little English. Chocolate is New York City's leading specialty-food export, with $234 million worth of exports each year.
There are over 233,000 manufacturing jobs in more than 10,000 New York City industrial businesses , with the highest concentration of industrial employment in Manhattan. This includes manufacturing, warehousing, utilities, and transportation. Manufacturing jobs average $41,000 annually (NYS DOL, 2nd Qtr 2005), about $10,000 more than comparable jobs in retail or restaurants. The manufacturing sector has the highest percentage of first-generation immigrants making up 64% of the workforce (NYC Dept. City Planning) and African Americans comprising 78% of the production workforce (2004 American Community Survey).
These are small businesses, with an average size of 21 employees (NYS DOL, 2nd Qtr 2005). Examples of goods manufactured in the city include Broadway costumes, custom-made cabinets, croissants for hotels, and wooden crates for shipping fine art. These items are labor-intensive and require collaboration between the end-user and the manufacturer. In recent years, as real estate and globalization pressures have increased, the remaining manufacturers have become more design-oriented and single customer-focused. To boot, production methods have become cleaner and more technology-driven.
Despite the adaptability of New York manufacturers, there remain looming challenges to the sector’s survival. A 2003 city-sponsored survey of the industrial sector identified three major local challenges to retaining businesses: 1) high cost of real estate; 2) high costs of doing business; and, 3) uncertainty about land use policy.
A 12,900-square-foot (1,200 m2) biodiesel plant run by Tri-State Biodiesel, LLC will begin construction in the Bronx in 2010. The facility will process used cooking oil collected by TSB from over 2000 New York restaurants with methanol and a catalyst to create biodiesel fuel. More than 1 million US gallons (3,800 m3) of waste oil could be collected in Brooklyn every year according to a 2004 Cornell study. The fuel produces 78 percent less carbon-dioxide emissions than standard diesel.
The City of New York is unique among American cities for its large number of foreign corporations. One out of every ten private sector jobs in the city is with a foreign company. Often this makes the perspective of New York’s business community internationalist and at odds with Washington’s foreign policy, trade policy, and visa policy.
Since 2000, China has been New York's leading growth market for exports. The New York Metropolitan Region is home to more than half of the 32 largest Chinese companies with offices in the United States. These companies represent a broad array of industries including shipping, steel, energy and manufacturing firms, and services. Many have chosen to open headquarters in New York in anticipation of eventual listing on the respective New York stock exchanges and entering U.S. capital markets. New York City currently boasts seven Chinese daily newspapers, two Chinese language television stations, and the largest Chinese neighborhood in the United States. New York area airports provide 12 daily flights to Hong Kong and five to Beijing, the most flights out of the eastern half of the United States.
In one measure of how international New York City's economy is, data compiled by the agents Knight Frank show foreign owners make up 34% of sales in the city's prime residential market. New York ranks ahead of Paris, where such sales account for 27%, Hong Kong 13%, and Sydney 9%. London, however, is the most cosmopolitan world city in terms of property ownership; more than 51% of homes there worth more than £2m which is also $3.8m EU3m sold in 2005 have gone to overseas buyers from Russia, the Middle East and elsewhere.
International shipping has always been a major part of the city's economy because of New York's natural harbor, but with the advent of [containerization] most cargo shipping has moved from the Brooklyn waterfront across the harbor to the Port Newark-Elizabeth Marine Terminal in New Jersey. Some cargo shipping remains; for example, Brooklyn still handles the majority of cocoa bean imports to the United States.
New York is by far the most important center for American mass media, journalism, and publishing. The city is the top media market in the United States, with 7% of the country’s television-viewing households. Three of the Big Four music recording companies have their headquarters in the city. More than 200 newspapers and 350 consumer magazines have an office in the city. The book publishing industry alone employs 25,000 people. For these and other reasons, New York is often called "the media capital of the world".
New York is a prominent location for the American entertainment industry, with many films, television series, books, and other media being set there. New York City is the second largest center for filmmaking and television production in the United States, producing about 200 feature films annually, employing 130,000 individuals; the filmed entertainment industry has been growing in New York, contributing nearly US$9 billion to the New York City economy alone as of 2015, and by volume, New York is the world leader in independent film production – one-third of all American independent films are produced in New York City. The Association of Independent Commercial Producers is also based in New York. In the first five months of 2014 alone, location filming for television pilots in New York City exceeded the record production levels for all of 2013, with New York surpassing Los Angeles as the top North American city for the same distinction during the 2013/2014 cycle.
Top publicly traded companies in New York
Fortune 500 companies headquartered in New York state that earned revenues of more than $15 billion in 2015. All but two are based in New York City; IBM and Pepsico are based in Westchester County, New York, just north of New York City.
|2||2||23||61||J.P. Morgan Chase & Co.||$101.0||234,598||Commercial Banks|
|(a)||4||31||82||IBM (Armonk, NY)||$82.5||411,798||Information Technology Services|
|4||5||40||121||MetLife||$70.0||69,000||Life and Health Insurance (stock)|
|(b)||6||44||141||Pepsico (Purchase, NY)||$63.1||283,000||Food Consumer Products|
|5||7||49||152||American International Group||$58.3||66,400||Property and Casualty Insurance (stock)|
|7||9||61||297||New York Life Insurance||$45.9||11,463||Life and Health Insurance (mutual)|
|8||10||74||278||Goldman Sachs Group||$39.2||36,800||Commercial Banks [formerly Securities]|
|9||11||78||306||Morgan Stanley||$37.9||56,218||Commercial Banks [formerly Securities]|
|10||12||82||349||TIAA (Teachers Ins. & Annuity)||$35.2||12,735||Life and Health Insurance (mutual)|
|11||13||83||352||INTL FCStone||$34.7||1,231||Diversified Financials|
|12||14||85||325||American Express||$34.4||54,800||Diversified Financials|
|13||15||96||375||Twentieth Century Fox||$29.0||20,500||Entertainment|
|15||17||105||438||Travelers Companies||$26.8||30,800||Property and Casualty Insurance (stock)|
|16||18||106||398||Philip Morris International||$26.8||80,200||Tobacco|
|17||19||116||–||Time Warner Cable||$23.7||56,430||Telecommunications|
|20||22||174||–||Colgate-Palmolive||$16.0||37,900||Household and Personal Products|
|21||23||179||–||The Bank of New York Mellon||$15.5||51,200||Commercial Banks|
|22||24||184||–||Icahn Enterprises||$15.3||73,807||Diversified Financials|
|23||25||188||–||Omnicom Group||$15.1||74,900||Advertising, Marketing|
|Sources: Fortune 500 website, Fortune Global 500 website and Fortune, Volume 173, Number 8 (June 15, 2016)|
(a), (b) : Armonk and Purchase are in Westchester County, NY, outside and north of New York City
Ranked by revenues in the fiscal year that ended before February 1, 2016.
The world rank is based on the Fortune Global 500's revenues for the fiscal year that ended before April 1, 2015.
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