N.Y.C.s Economy Could be Ravaged by Coronavirus Outbreak – The New York Times

The sudden and prolonged shutdown of New York Citys museums and its iconic Broadway theaters. Restaurants and bars also closed except for take out and delivery. Hotels struggling to stay open in the face of a wave of canceled reservations. Movie theaters shuttered. The evaporation of nearly all business and leisure travel to the city.

The coronavirus pandemic is all but bringing life to a halt in the nations largest city, slamming the brakes on what had been a robust economy and leaving New York, which has more than 25,000 restaurants and 120,000 hotel rooms, confronting a dire threat that experts say will surely lead to sweeping layoffs and business failures.

The fallout could be more widespread than the economic damage from either of the past two crises the city had faced the Sept. 11 terrorist attacks in 2001 or the 2008 financial crisis said Ronnie Lowenstein, director of the citys Independent Budget Office. Economic activity slows and time stops, she said. Everything gets affected.

Both of those events caused significant harm to the citys financial health, Ms. Lowenstein said, but in both cases the city was rescued by huge infusions of federal aid.

But the coronavirus is spreading from coast to coast, leaving New Yorks city and state officials pleading for help in a large crowd of their counterparts, she said.

If it was one city under siege like 9/11, thats one thing, Ms. Lowenstein said. But the coronavirus pandemic is going to be disastrous for a lot of economies across the country, she added.

New York is also particularly exposed because of its heavy dependence on domestic and foreign visitors who come to the city to watch shows, visit museums and take advantage of its vibrant night life.

The city is likely to lose as many as 500,000 jobs in businesses that cater to tourists and people moving about the city, said James Parrott, director of economic and fiscal policies at the Center for New York City Affairs at The New School. In one month, their lost wages amount to $1 billion, he added.

Mr. Parrott said that those industries included hotels, restaurants, museums, movie and television production and ride-hailing apps like Uber and Lyft. Some of those businesses rely so heavily on tourists and business travelers that they probably will close and lay off most or all of their workers, as all 19 restaurants run by Danny Meyers company, Union Square Hospitality Group, did on Friday.

The owners of Chelsea Piers, a large sports and recreation complex on the West Side of Manhattan, decided on Thursday morning to close the location, as well as two smaller centers, in Brooklyn and Stamford, Conn., for the rest of March, said David Tewksbury, one of the owners.

He said that their 1,500 employees were furloughed and given two weeks pay but that he expected them to apply for unemployment benefits.

Mr. Tewksbury said he was unaware if any of those employees or any of the more than 25,000 members of the three locations had tested positive for the coronavirus.

But the decision to close, he added, was based on a concern for the health and safety of the workers and of members, and a social responsibility to be a leader as opposed to a follower.

Much like it was before the coronavirus swept across the country, the citys economy was relatively healthy before the Sept. 11 attacks. But, Mr. Parrott said, after 9/11, people woke up and realized that we were in a recession.

In the wake of that shock, the New York Stock Exchange and other financial markets shut down for a few days and air travel was disrupted for weeks.

But the city began to recover quickly, buoyed by support from Washington, which provided billions of dollars in disaster relief. Theaters reopened, ballgames resumed and elected officials urged New Yorkers to go out, spend money and get back to work.

The 2008 financial crisis was centered on Wall Street, where some major investment banks failed and others survived only through a massive federal bailout.

Now, with no certainty about when life might return to normal, the full effect on the citys economy is impossible to project, Ms. Lowenstein, director of the citys Independent Budget Office, said. But Mr. Parrott said the city would almost surely fall into a recession that would end its longest period of expansion and job growth on record more than 10 years.

This week, the state labor department said that New York Citys unemployment rate fell to an all-time low of 3.5 percent in January, compared with highs of about 8.5 percent in the aftermath of Sept. 11, and 10 percent during the financial crisis.

The ranks of the citys unemployed peaked between 340,000 and 400,000 in those downturns, about two and a half times the current official count.

The prospects for the citys economy has changed so abruptly as so many venues have shut down that its tourism agency, NYC & Company, has shelved its forecast for the year, said Fred Dixon, its chief executive.

As recently as two weeks ago, the city projected a slight increase in visitors in 2020. But that was before travel from most of Europe was banned. For now, Mr. Dixon said, the flow of international travelers has virtually dried up and it is not clear when it may resume.

Without tourists or business travelers, hotels in New York are struggling to continue operating and grappling with how many workers they can retain, said Fred Grapstein, chairman of the Hotel Association of New York City.

What youre seeing, unfortunately, is the layoff of all personnel both union and management, Mr. Grapstein said.

Hotel owners, he added, were negotiating with the Hotel Trades Council, the powerful union that represents 40,000 workers, including room cleaners, desk clerks, waiters and bartenders. The layoffs that were talking about are truly temporary, and we hope that business will pick up again soon, Mr. Grapstein said.

Peter Ward, the unions president, said, The union is working diligently with management to mitigate the consequences of this unprecedented crisis on our members and their families.

Mr. Grapstein said that there has been a lot of discussion about hotels making sure they are financially viable. Many of them routinely lose money in the slower months of January and February but start turning profits as tourism picks up in the spring, he said.

February was kind of bandaged together but things have fallen apart, Mr. Grapstein continued. Some hotels saw their occupancy rates fall from 70 percent to 30 percent, he said, and even lower as the news about the spread of the coronavirus became bleaker and spurred a cascade cancellations.

The sudden closing last week of Broadway theaters a keystone of New Yorks tourism industry as well as museums and other cultural institutions, dealt a blow to restaurants, too.

Before the order to close restaurants, some, like Rosa Mexicano, which has restaurants on the East Side of Manhattan and on the West Side near Lincoln Center, had been trying to stay open as long as they could though with half as many seats.

Rosa Mexicano removed tables and chairs from its dining rooms to comply with Gov. Andrew M. Cuomos order that smaller public spaces reduce their capacity by 50 percent, said Chris Westcott, the chief executive of the company that operates them.

Even without the new rule, diners had already been staying away.

Quite frankly, there wasnt enough business to fill a lot of those tables, Mr. Westcott said.

He said that on Thursday night, business was down about 60 percent at the Lincoln Center location and about 40 percent on the East Side, a more residential neighborhood.

Still, the company has not yet laid off any workers, opting instead to cut their hours and to try to continue providing customers with an atmosphere honed over 35 years: the same menu, guacamole prepared tableside.

Everybody still has a job, Mr. Westcott said. I think they all want to work more, but were not in a position to keep people whole.

Mr. Westcott, who worked for a different company in 2001, said the current situation made it more difficult to plan than in the days after Sept. 11. With 9/11, we hit bottom almost immediately, he said. Now, were still waiting to hit bottom.

The citys Chinatowns, in Manhattan, Brooklyn and Queens, have been reeling for weeks with many customers staying away after the coronavirus started to break out in China.

Jing Fong, a large and popular dim sum restaurant in Manhattan closed temporarily its owners said and laid off its entire staff of 180 employees.

Ming Lam, whose family owns Jing Fong, said business had dropped by 80 percent over the past six weeks.

Qing Chen, 59, a waiter at the restaurant, said he had applied for unemployment but was worried about when he could start collecting benefits and, more important, when he could go back to work. We live in a very confusing and worrying time, he said.

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N.Y.C.s Economy Could be Ravaged by Coronavirus Outbreak - The New York Times