Executive Summary

Stagflation is the deadly combination of low growth and high inflation. With the implementation of sweeping and high tariffs by the federal government, most economists and forecasters currently predict something resembling “stagflation” on the Unites States’ economic horizon. But New York may have already entered a period of stagflation: New York’s economy has recovered the jobs lost during the Covid-19 pandemic, but lags the economic growth seen in the rest of the country.

• New York was one of the five slowest growing states in the country from 2020-2024, with an annualized growth rate of 1.6 percent. Peer states such as New Jersey, California, and Massachusetts all saw annual growth rates above 2 percent.
• Inflation in New York appears to be stickier than inflation in the US as a whole: while inflation has lowered to about 2.6 percent nation-wide, inflation in the New York City metro area has hovered around 4 percent for the past year, driven by the perpetually increasing cost of housing.
• In 2024 New York’s housing costs continued to climb at a steady 5.6 percent rate annually, while shelter costs around the rest of the country have seen slower price increases over the past year and are now at an inflation rate of 4 percent.
• Cost-of-living pressures are exacerbated by the decline in middle-class jobs and the growth in high-wage jobs in finance and technology, which put upward price pressure on the local economy. Over 2019-2024, the majority of employment growth in New York was in industries with high average wages (over $100,000 per year in 2019) while the majority of job losses were in industries with “middle class” wages (between $40,000 and $100,000 per year).