“Capital Insights” with Jack Kern
- Feb 13, 2009
Clemenza: You know any good-a spots on the west side?
Paulie Gatto: Yeah, I’ll think about it.
Clemenza: Well, think about it while you’re driving, will ya? I wanna hit New York sometime this month.
(c) The Godfather 1972
The effect of job loss is evident in New York. One friend of mine has a foolproof measure of the economic health of the city; how long does it take to get a taxi in the city. Time was, the streets were jammed with cars, traffic didn’t move and taxis were almost universally full. Now, a simple wave gets you a taxi in most parts of the city.
There are closed restaurants and shops all over the city, lots of ground floor retail with for lease signs and still some signs of construction, but as it was forecast just at the end of 2007, New York is showing signs of an urban recession. On a recent trip to the city, things have gotten so bad that the famed Metropolitan Opera announced it was laying off about 10% of its staff (it didn’t mention any mezzo soprano or tenors). Question: what do unemployed sopranos do when they lose their jobs?
In what is a contrary practice to the usual NYC behaviors, you can actually find apartments now in the city. There are more and more for lease signs in windows and while the full complement of Wall Streeters haven’t all left the city, job losses in the region estimated at almost 300,000 over the past 2 years are pushing NYC back to the 1980s, when the bond crisis and urban instability was the nightly news. When you go into restaurants or even local carry-outs, the line of customers is vastly shorter, and hotel rates have declined by almost $200 a night in some places to where a room at a satisfactory hotel is under $150.
I happened to stay in a place that was populated by a convention of Chinese and Korean nationals. I never found out what the meeting concerned, and I didn’t understand a single conversation in the elevators either. I also discovered, oh about every 7 or 8 minutes that my hotel was on the same block with an active fire house and a police precinct. The do love their horns and sirens in NYC. I never looked at an alarm clock in hotel room so many times before.
While I was watching the political theatre that is Tim Geithner, it did occur to me that New York has become a city in need, with massive repercussions from the collapse of investment banking firms, with concerns about TARP and TALF and maybe two trillion or more in spending, there is a reality in the city that is hard to ignore. Lives were disrupted in the city and part of what makes New York great was lost.
Congress likes to make speeches about small towns in Indiana or Wisconsin that need to be re-built and have their employment base somehow restored. It might be hard to get sympathy for New York, but in the end, it’s important to the economy of the U.S. and hopefully some of the upcoming spending will be targeted to help sustain and grow Wall Street. I’d hate the see the belief that somehow Manhattan greed caused the recession (not true) color the reality of what’s happened to New York since the collapse.
Next time you’re in the city, stop by, talk to the street vendors and do your part to help the economy grow, even if it’s only one pretzel at a time.
(Jack Kern is the Managing Director of Kern Investment Research and can be reached at 301-601-1900 or JKern@KernIRC.com.)