Two New York City fiscal monitors in separate reports released yesterday compared the city's current economic problems to the crisis that gripped it in the mid-1970s and warned its economy will probably not benefit any time soon from a national recovery.
City Comptroller Elizabeth Holtzman said the latest economic analysis released by her office says the city continues to lose jobs at a very rapid rate and those numbers suggest an economic crisis similar to the 1970s, when the city was on the brink of bankruptcy.
State Comptroller Edward V. Regan weighed in with a report saying the city "remains in the grip of a downward economic cycle that began in 1989, shows few signs of easing, and may extend well into 1993."
The state comptroller's report states that "the current economic recession is clearly the worst the city has experienced since the 1970s." The economy has contracted almost 7%, with retail sales dropping 5% and the welfare case load up 17%, its highest level since 1977 when almost 1 million people were on the public assistance roles.
He warned that the local economic decline appears to be deepening, despite some bright spots -- such as strong profits in the securities industry.
Ms. Holtzman's report says that from September 1989 to September 1991 the city lost 225,000 jobs and projects a decline of 150,000 jobs in 1991 and 100,000 in 1992.
In the fiscal year ending Sept. 30, 1991, the city lost 168,000 jobs, the report says. That is just below the city's worst 12 month period, when it lost 169,000 jobs by the end of March 1975.
"Contnued job losses of this magnitude would mean a sharp contraction in the city's economy," Ms. Holtzman said. The report was presented at a hearing on the New York economy at City Hall sponsored by the Ms. Holtzman's office.
Mr. Regan said -- assuming a gradual recovery of the national economy -- that the city should see a bottoming out of its recession sometime next year, with a mild upturn in the 1993. If the nation, however, experiences a "double-dip" recession, this could prolong and worsen the local recession, the report says.
The municipal market gave a muted reaction to the reports as traders were struggling with other problems, but the news prompted concern.
"The fiscal situation is bad," the head of a major trading desk said yesterday. "Everybody knows that. Nobody has really tested city levels in a while.
"But it looks like we're going to have to go back in and take a new look at the price," the senior trader said.
City Water Municipal Authority 7s of 2015 were recently quoted at 98 1/4-3/4 to yield 7.10%, up 1/4 point on the day. Long term tax-exept city general obligation bonds have been recently quoted to yield 7.50%.
