On Edge: New Yorkers Brace for Recession
In September of this year, American International Group (AIG), the insurer at the center of the troubled Wall Street financial system, was bailed out in part by New York State Governor Paterson to the tune of 20 billion dollars. Now, the Governor wants to trim 2 billion dollars from the New York State Budget, as New Yorkers expect continuing "aftershocks" from the financial crisis.
Thousands of New Yorkers have lost their jobs in the last seven months, as one large financial firm after another failed or was bought out. The city's tax base, retail and service industries all depend on those highly-paid jobs in the finance industry, which account for an estimated one-third of all wages earned in the city. City leaders have already announced they are planning nearly $2 billion in budget cuts, and New Yorkers expect continuing aftershocks from the financial meltdown.
On the surface, everything is the same. Taxis ply the streets of Manhattan, buses and subways run, and the lights of Times Square are bright. Downtown, tourists still photograph themselves next to the statue of a bull, a symbol of Wall Street prosperity. But New Yorkers from all walks of life say they're on edge.
“Everybody is very quiet, waiting. The feeling is of waiting, perhaps not quite understanding. I don’t think any of us understands yet just how bad it might get,” said Rosemary Scanlon, a professor of real estate and urban regional economist. She noted that every Wall Street job supported as many as three jobs in other industries. “And so the income multiplier of a downturn in jobs is enormous,” she said. “And it’s felt immediately in the restaurants, in the city, taxi drivers and limo drivers will feel the impact."
Waiting next to his car outside a Brooklyn office building, driver for hire Jose Abreu said he's already having a hard time finding customers. “It’s getting very bad, every day,” he said. “Always you go on the street, gas is very expensive, and there's no money on the street.” Abreu said he's worried about how he will pay his children's college tuition.
On the other side of the East River, Manhattan hedge fund manager Patrick D'Angelo agreed that the mood couldn’t be more anxious. “We're in trouble, and right now we need to avoid a depression,” he said. D’Angelo said that although recession is painful – and he believes one began eight months ago – economic activity doesn’t grind to a halt in a recession. “We could all muddle through, and I think there’s [still] the opportunity to make money,” he said. “A depressionm on the other hand, which is something we're faced with in a very real way, scares me. Because there's nothing any of us can do, and a depression tends to last a lot longer than a recession.”
Fitness trainer Isaiah Truyman’s clientele is mostly Wall Street bankers and traders. “A lot of them have been saying to me that this is the worst thing they've seen in their lives, and it's going to get a lot worse before it gets better, and the average person really has no idea of what is coming down the pike,” he said. Truyman’s planning to move to California this fall, in part because of the downturn. He has no confidence that his clients have any special understanding of what will happen next. “I get the feeling that they don't have a clue,” he said, “that they're just sort of playing it day by day. My sense is most people don't have a clue.”
Related article: Wall Street: 20 billion dollar bail-out for AIG