Is New York's Economy Due for a Hit?

Wall Street’s fortunes may be taking a turn for the worse — a development that would have major ramifications for the local economy. Major banks - most recently Bank of America — have announced shrinking profits, job cuts or both.


The gloomy reports are dashing hopes that large year-end bonus checks for investment bankers and traders would continue to fuel the local economy, Patrick McGeehan writes in a news analysis. The chief economist for the city comptroller’s office says the chance of a recession is increasing.


Wall Street is a critical fulcrum of the local economy, generating one of every five dollars of income in the region. Economists estimate that each new job on Wall Street leads to at least 1.3 other jobs, so for every three investment bankers laid off, four other workers are in jeopardy.

Wall Street Hopes for a Better Week of Earnings

NEW YORK - Lukewarm third-quarter earnings reports to date imply that corporate America has some thorny problems. For the stock market to get back on track, this week’s releases will have to offer Wall Street some more upbeat news.

Last week’s batch of earnings reports, along with some downgrades from Standard & Poor’s on mortgage-backed securities, indicated credit tightness lasted well after summer ended. That suggests the fourth-quarter comeback Wall Street bet on when it hit record highs earlier this month may not happen.

It wasn’t only banks and housing-related companies that revealed troubles last week. Big Dow components including 3M Co., Honeywell Inc., and Caterpillar Inc. posted third-quarter profit rises, but their outlooks were much dimmer than anticipated.

Living Paycheck to Paycheck getting harder

The calculus of living paycheck to paycheck in America is getting harder.

What used to last four days might last half that long now. Pay the gas bill, but skip breakfast. Eat less for lunch so the kids can have a healthy dinner.

Across the nation, Americans are increasingly unable to stretch their dollars to the next payday as they juggle higher rent, food and energy bills. It's starting to affect middle-income working families as well as the poor, and has reached the point of affecting day-to-day calculations of merchants like Wal-Mart Stores Inc., 7-Eleven Inc. and Family Dollar Stores Inc.

Food pantries, which distribute foodstuffs to the needy, are reporting severe shortages and reduced government funding at the very time that they are seeing a surge of new people seeking their help.

While economists debate whether the country is headed for a recession, some say the financial stress is already the worst since the last downturn at the start of this decade.

From Family Dollar to Wal-Mart, merchants have adjusted their product mix and pricing accordingly. Sales data show a marked and more prolonged drop in spending in the days before shoppers get their paychecks, when they buy only the barest essentials before splurging around payday.

"It's pretty pronounced," said Kiley Rawlins, a spokeswoman at Family Dollar. "It seems like to us, customers are running out of food products, paper towels sooner in the month."

Wal-Mart, the world's largest retailer, said the imbalance in spending before and after payday in July was the biggest it has ever seen, though the drop-off wasn't as steep in August.

And 7-Eleven says its grocery sales have jumped 12-13 percent over the past year, compared with only slight increases for non-necessities like gloves and toys. Shoppers can't afford to load up at the supermarket and are going to the most convenient places to buy emergency food items like milk and eggs.

"It even costs more to get the basics like soap and laundry detergent," said Michelle Grassia, who lives with her husband and three teenage children in the Bedford-Stuyvesant section of Brooklyn, N.Y.

Her husband's check from his job at a grocery store used to last four days. "Now, it lasts only two," she said.

To make up the difference, Grassia buys one gallon of milk a week instead of three. She sometimes skips breakfast and lunch to make sure there's enough food for her children. She cooks with a hot plate because gas is too expensive. And she depends more than ever on the bags of free vegetables and powdered milk from a local food pantry.

Grassia's story is neither new nor unique. With the fastest-rising food and energy prices since the 1980s, low-income consumers are stretching their budgets by eating cheap foods like peanut butter and pasta.

Industry analysts and some economists fear the strain will get worse as people are hit with higher home heating bills this winter and mortgage rates go up.

It's bad enough already for 85-year-old Dominica Hoffman.

She gets $1,400 a month in pension and Social Security from her days in the garment industry. After paying $500 in rent on an apartment in Pennsauken, N.J., and shelling out money for food, gas and other expenses, she's broke by the end of the month. She's had to cut fruits and vegetables from her grocery order - and that's even with financial help from her children.

"Everything is up," she said.

Many consumers, particularly those making less than $30,000 a year, are cutting spending on nutritious food like milk and vegetables, and analysts fear they're further skimping on basic medical care and other critical services.

Coupon-clipping just isn't enough.

"The reality of hunger is right here," said the Rev. Melony Samuels, director of The BedStuy Campaign against Hunger, a church-affiliated food pantry in Brooklyn.

The pantry scrambled to feed 5,000 new families over the past 12 months, up almost 70 percent from 3,000 the year before.

"I am shocked to see such numbers," Samuels said, "and I am really concerned that this is just the beginning of what we are going to see."

In the past three months, Samuels has seen more clients in higher-paying jobs - the $35,000 range - line up for food.

The Regional Food Bank of Northeastern New York, which covers 23 counties in New York State, cited a 30 percent rise in visitors in the first nine months of this year, compared with 2006.