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Spread & Containment

The Region Is Struggling to Recover from the Pandemic Recession

The pandemic struck the New York-Northern New Jersey region early and hard, and the economy is still struggling to recover nearly two years later. Indeed, employment fell by 20 percent in New York City as the pandemic took hold, a significantly sharper…



The pandemic struck the New York-Northern New Jersey region early and hard, and the economy is still struggling to recover nearly two years later. Indeed, employment fell by 20 percent in New York City as the pandemic took hold, a significantly sharper decline than for the nation as a whole, and the rest of the region wasn’t far behind, creating a much larger hole to dig out of than other parts of the country. While the region saw significant growth as the economy began to heal, growth has slowed noticeably, and job shortfalls—that is, the amount by which employment remains below pre-pandemic levels—are some of the largest in the nation. Among major metro areas, job shortfalls in New York City, Buffalo, and Syracuse rank among the five worst in the country. Thus, despite much progress, the region is struggling to recover from the pandemic recession. By contrast, employment has rebounded above pre-pandemic levels in Puerto Rico, reaching a five-year high.

Large Job Shortfalls Remain in the Region

The New York-Northern New Jersey region saw particularly sharp job losses during the pandemic recession (February to April 2020), and the region has not yet caught up to the rest of the nation during the recovery. The chart below shows employment trends through the pandemic, indexed to pre-pandemic (February 2020) levels. With New York City emerging as the epicenter of the pandemic early on, the initial job loss of more than 20 percent in the downstate New York region greatly exceeded the national decline of 15 percent. Similarly, job losses in Northern New Jersey, Fairfield County, and upstate New York were greater than for the nation, at around 17-18 percent.

As the economy began to recover last spring, job growth in the region generally matched or even exceeded that of the nation. But for the region to catch up, job growth needed to be well above average for a sustained period—a difficult feat in the midst of a pandemic with the labor market in turmoil and workers hard to find. In fact, the opposite pattern began to occur in 2021: after a brief slowdown in late 2020, job growth resumed throughout the region but lagged the nationwide pace, especially in upstate New York. This was likely the result of the renewed spread of the virus at the end of last year, as people pulled back on many activities and restrictions were implemented in the region. The result of these two forces—a larger initial job loss and a slower pace of job gains for much of this year—has led to job shortfalls that significantly exceed the nation’s. As of October 2021, our early benchmark estimates indicate that payroll employment is still 9 percent below pre-pandemic levels in downstate New York, 7 percent below in upstate New York, and 5 percent below in Northern New Jersey, compared to less than 3 percent nationally (these and other data are available in our new Regional Employment Trends web interactive).

Large Job Shortfalls Remain in Much of the Region

Sources: U.S. Bureau of Labor Statistics/ Moody’s
Notes: Shading indicates a period designed a recession by the NBER. Data are early benchmarked by New York Fed staff.

Looking at local areas, the region is home to some of the largest job shortfalls in the country. The table below shows the initial employment decline and remaining job shortfalls for metro areas in the tri-state region. Job shortfalls in Buffalo, New York City, and Syracuse rank second, third, and fourth, respectively, among the nation’s largest 100 metropolitan areas (the complete list is available in the data file at the end of this post). In addition, Albany, Rochester, Long Island, and Newark all fall within the top 20. Many of the other metro areas in the region that are not among the 100 largest have job shortfalls well in excess of the national rate.

The New York-Northern New Jersey Region Is Home to Some of the Country’s Largest Job Shortfalls

Percent change in employment since February 2020

Initial Decline, 
February 2020 to April 2020
Remaining Shortfall
as of October 2021
Shortfall Rank
(Largest 100 Metros)
United States-14.7-2.7

Largest Metros in
the Region
Buffalo, NY MSA-21.3-8.72
New York City Metro Division-19.6-8.33
Syracuse, NY MSA-17.1-8.14
Albany, NY MSA-15.4-6.011
Rochester, NY MSA-17.2-5.713
Long Island-23.4-5.614
Newark Metro Division-15.7-5.615
Fairfield County, CT-17.9-3.742

Smaller Metros in

the Region
Ithaca, NY MSA-10.1-9.8
Dutchess-Putnam Counties, NY-18.8-9.2
Kingston, NY MSA-21.3-8.6
Binghamton, NY MSA-18.0-7.7
Elmira, NY MSA-16.3-6.7
Utica-Rome, NY MSA-17.0-6.5
Glens Falls, NY MSA-19.8-6.2
Watertown, NY MSA-17.2-1.2
Sources: U.S. Bureau of Labor Statistics; Moody’s
Notes: Data are early benchmarked by New York Fed staff. MSA refers to “metropolitan statistical area.”

With a job shortfall exceeding 10 percent, New York City (defined here as the five boroughs, not the larger metro shown in the table above) stands out as having a particularly large hole, while the surrounding areas—Long Island, Northern New Jersey, and Fairfield County—have fared a bit better, though shortfalls in all of these places are still above the national average.

Which Sectors Account for Such Large Shortfalls?

To better understand which parts of the regional economy are contributing most to outsized job shortfalls, we decompose job shortfalls into industry contributions for broad geographic aggregates in the region. Here’s how to interpret the chart: nationwide, the total job shortfall is 2.7 percent, shown by the full length of the stacked bar on the right. Each segment within the bar represents an industry’s contribution to that 2.7 percent. About 0.9 percentage points—or roughly a third of the shortfall—comes from the leisure & hospitality industry; 0.5 percentage points is attributable to education & health services; and another 0.6 points comes from the government sector. Indeed, these three sectors alone account for the vast majority of the job shortfall in the United States.

Industry Contributions to Job Shortfalls as of October 2021

Sources: U.S. Bureau of Labor Statistics; Moody’s
Note: Data are early benchmarked by New York Fed staff.

Shortfalls are larger in the region than in the nation in nearly all industries, but some differences are particularly striking. Two consumer service-oriented sectors—leisure & hospitality and trade—have had an outsized impact on job shortfalls in the region. In downstate New York, the contribution of these two sectors alone to job shortfalls are significantly larger than the entire job shortfall in the nation. The outsized shortfalls in leisure & hospitality and trade downstate reflect the much more significant spread of the virus in and around New York City early in the pandemic, as well as restrictions on activities like air travel and dining out that were in place during much of the pandemic. Indeed, these consumer service-oriented sectors in New York City rely heavily on office workers, business travelers, and tourists—all of which have been sparse during the pandemic. Within New York City, the lion’s share of the job shortfall accrues to Manhattan, its central business district, while surrounding areas performed noticeably better. In effect, much of the money previously spent at Manhattan bars, restaurants, gyms, nail salons, and retail stores has gone to the outlying areas, which have benefitted from local residents working from home. The closing of the Canadian border also likely depressed tourism and some cross-border business activity in parts of upstate New York.

The education & health and government sectors are also more significant contributors to job shortfalls in the region than is the case nationally. The contribution from education & health is more than three times as large in upstate New York as nationwide, a result of the region having an above average share of workers in these sectors and of a more significant and persistent decline in health care workers across New York State, from hospitals to nursing homes. The pandemic also led to significant declines in teachers in the region as schools intermittently closed and went to online classes at various times, reflected by large shortfalls in the education sector, as well as the government sector (which includes public school teachers).

Finally, while the professional & business services sector has recouped nearly all its job losses in the nation and in Northern New Jersey, it remains a significant contributor to shortfalls in upstate and downstate New York, as those core business services have not recovered as well in these areas.

Puerto Rico Is Bucking the Trend

Puerto Rico and the U.S. Virgin Islands—both of which are in the Federal Reserve’s Second District—have traced very different paths. The chart below shows employment trends through the pandemic for Puerto Rico and the U.S. Virgin Islands compared to the U.S. mainland. While initial job losses were not as severe as on the mainland in either place, the path of recovery has diverged considerably through the pandemic. Indeed, employment is now 1 percent above pre-pandemic levels in Puerto Rico, reaching a five-year high. This is a striking feat, given that Puerto Rico’s economy had significantly lagged the mainland for decades. By contrast, with a job shortfall of nearly 10 percent, the U.S. Virgin Islands has recovered only a handful of the jobs that were lost.

Diverging Employment Patterns in Puerto Rico and
U.S. Virgin Islands

Source: U.S. Bureau of Labor Statistics and Moody’s; data are early benchmarked by New York Fed staff.
Note: Shading indicates a recession, as designated by the NBER.

Puerto Rico’s favorable job performance is due to a some unique factors. First, the spread of the virus was more contained on the island than on the mainland—likely helped by limited entry points, intermittent curfews, and a milder climate—resulting in fewer disruptions to economic activity and the labor force. Second, the medical manufacturing industry is a key economic driver in Puerto Rico, and this sector has seen fairly strong job growth during the pandemic. By contrast, the Virgin Islands are more highly dependent on tourism, particularly cruise-ship stop-overs, which has waned considerably.

An Uncertain Path Forward

While the employment data we analyze cover trends through October, our business surveys indicate that business activity in the region’s service sector has slowed to a moderate pace since then, while manufacturing activity has continued to grow at a solid clip. Local businesses report that activity is being impeded by a combination of a renewed surge in the virus, severe supply chain disruptions, and widespread worker shortages. While businesses and households generally remain optimistic that conditions will improve over the next six months, the regional economy faces a number of headwinds. As in much of the rest of the country, growth is likely to be hampered until the virus comes under control and there is meaningful progress toward relieving shortages of both workers and supplies. We will continue to monitor economic conditions in the region, providing timely updates as additional data and information become available. You can visit our Regional Economy website to stay up to date on the progress of the region’s recovery from the pandemic recession.

The data underlying the charts in this blog post and other supplemental materials, including information for local areas in the Second District, are available in the link below.

Chart data

Jaison R. Abel is an assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

Jason Bram

Jason Bram is a research officer in the Bank’s Research and Statistics Group.

Richard Deitz is an assistant vice president in the Bank’s Research and Statistics Group.

Jonathan Hastings is a research associate in the Bank’s Research and Statistics Group.

How to cite:
Jaison R. Abel, Jason Bram, Richard Deitz, and Jonathan Hastings, “The Region Is Struggling to Recover from the Pandemic Recession,” Federal Reserve Bank of New York Liberty Street Economics, December 17, 2021,

The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York, the Federal Reserve Board, or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

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Spread & Containment

Las Vegas Strip faces growing bed bug problem

With huge events including Formula 1, CES, and the Super Bowl looming, the Las Vegas Strip faces an issue that could be a major cause for concern.



Las Vegas beat the covid pandemic.

It wasn't that long ago when the Las Vegas Strip went dark and people questioned whether Caesars Entertainment, MGM Resorts International, Wynn Resorts, and other Strip players would emerge from the crisis intact. 

Related: Las Vegas Strip report shares surprising F1 race news

In the darkest days, the entire Las Vegas Strip was closed down and when it reopened, it was not business as usual. Caesars Entertainment (CZR) - Get Free Report and MGM reopened slowly with all sorts of government-mandated restrictions in place.

The first months of the Strip's comeback featured temperature checks, a lot of plexiglass, gaming tables with limited numbers of players, masks, and social distancing. It was an odd mix of celebration and restraint as people were happy to be in Las Vegas, but the Strip was oddly empty, some casinos remained closed, and gaming floors were sparsely filled. 

When vaccines became available, the Las Vegas Strip benefitted quickly. Business and international travelers were slow to return, but leisure travelers began bringing crowds back to pre-pandemic levels. 

The comeback, however, was very fragile. CES 2022 was supposed to be Las Vegas's return to normal, the first major convention since covid. In reality, surging cases of the covid omicron variant caused most major companies to pull out.

Even with vaccines and covid tests required, an event that was supposed to be close to normal, ended up with 25% of 2020's pre-covid attendance. That CES showed just how quickly public sentiment — not actual danger — can ruin an event in Las Vegas.

Now, with November's Formula 1 Race, CES in January, and the Super Bowl in February all slated for Las Vegas, a rising health crisis threatens all of those events.

The Arena Media Brands, LLC and respective content providers to this website may receive compensation for some links to products and services on this website.

Covid left Las Vegas casinos empty for months.

Image source: Palms Casino

The Las Vegas Strip has a bed bug problem   

While bed bugs may not be as dangerous as covid, Respiratory Syncytial Virus (RSV),  Legionnaires’ disease, and some of the other infectious diseases that the Las Vegas Strip has faced over the past few years, they're still problematic. Bed bugs spread easily and a small infestation can become a large one quickly.

The sores caused by bed bugs are also a social media nightmare for the Las Vegas Strip. If even a few Las Vegas Strip visitors wake up covered in bed bug bites, that could become a viral nightmare for the entire city.

In late-August, reports came out the bed bugs had been at seven Las Vegas hotel, mostly on the Strip over the past two years. The impacted properties includes Caesars Planet Hollywood and Caesars Palace as well as MGM Resort International's (MGM) - Get Free Report MGM Grand, and others including Circus Circus, The Palazzo, Tropicana, and Sahara.

VISIT LAS VEGAS: Are you ready to plan your dream Las Vegas Strip getaway?

"Now, that number is nine with the addition of The Venetian and Park MGM. According to the health department report, a Venetian guest reported seeing the bloodsuckers on July 29 and was moved to another room. An inspection three days later confirmed their presence," reported.

The Park MGM bed bug incident took place on Aug. 14.

Bed bugs remain a Las Vegas Strip problem

Only Tropicana, which is soon going to be demolished, and Sahara, responded to about their bed bug issues. Caesars and MGM have not commented publicly or responded to requests from KLAS or

That makes sense because the resorts do not want news to spread about potential bed bug problems when the actual incidents have so far been minimal. The problem is that unreported bed bug issues can rapidly snowball.

The Environmental Protection Agency (EPA) shares some guidelines on bed bug bites on its website that hint at the depth of the problem facing Las Vegas Strip resorts.

"Regularly wash and heat-dry your bed sheets, blankets, bedspreads and any clothing that touches the floor. This reduces the number of bed bugs. Bed bugs and their eggs can hide in laundry containers/hampers. Remember to clean them when you do the laundry," the agency shared.

Normally, that would not be an issue in Las Vegas as rooms are cleaned daily. Since the covid pandemic, however, some people have opted out of daily cleaning and some resorts have encouraged that.

F1? SUPER BOWL? MARCH MADNESS? Plan a dream Las Vegas getaway.

Not having daily room cleaning in just a few rooms could lead to quick spread.

"Bed bugs spread so easily and so quickly, that the University of Kentucky's entomology department notes that "it often seems that bed bugs arise from nowhere."

"Once bed bugs are introduced, they can crawl from room to room, or floor to floor via cracks and openings in walls, floors and ceilings," warned the University's researchers.  



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Americans are having a tough time repaying pandemic-era loans received with inflated credit scores

Borrowers are realizing the responsibility of new debts too late.



With the economy of the United States at a standstill during the Covid-19 pandemic, the efforts to stimulate the economy brought many opportunities to people who may have not had them otherwise. 

However, the extension of these opportunities to those who took advantage of the times has had its consequences.

Related: American Express reveals record profits, 'robust' spending in Q3 earnings report

Credit Crunch

GLASTONBURY, UNITED KINGDOM - JANUARY 12: In this photo illustration the Visa, Mastercard and American Express logos are seen on credit and debit cards on March 14, 2022 in Somerset, England. Visa, American Express and Mastercard have all announced they are suspending operations in Russia and credit and debit cards issued by Russian banks will no longer work outside of the country. (Photo by Matt Cardy/Getty Images)

Matt Cardy/Getty Images

A report by the Financial Times states that borrowers in the United States that took advantage of lending opportunities during the Covid-19 pandemic are falling behind on actually paying back their debt.

At a time when stimulus checks were handed out and loan repayments were frozen to help those affected by the economic shock of Covid-19, many consumers in the States saw that lenders became more willing to provide consumer credit.

According to a report by credit reporting agency TransUnion, the median consumer credit score jumped 20% to a peak of 676 in the first quarter of 2021, allowing many to finally have “good” credit scores. However, their data also showed that those who took out loans and credit from 2021 to early 2023 are having an hard time managing these debts.

“Consumer finance companies used this opportunity to juice up their growth at a time when funding was ample and consumers’ finances had gotten an artificial boost,” Chief economist of Moody’s Analytics Mark Zandi told FT. “Certainly a lot of lower-income households that got caught up in all of this will feel financial pain.”

Moody’s data shows that new credit cards accounts that were opened in the first quarter of 2023 have a 4% delinquency rate, while the same rate in September 2022 was 4.5%. According to the analysts, these levels were the highest for the same point of the year since 2008.

Additionally, a study by credit scoring company VantageScore found that credit cards issued in March 2022 had higher delinquency rates than cards issued at the same time during the prior four years.

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Credit cards were not the only debts that American consumers took on. As per S&P Global Ratings data, riskier car loans taken on during the height of the pandemic have more repayment problems than in previous years. In 2022, subprime borrowers were becoming delinquent on new cars loans at twice the rate of pre-pandemic levels.

S&P auto loan tracker Amy Martin told FT that lenders during the pandemic were “rather aggressive” in terms of signing new loans.

Bill Moreland of research group BankRegData has warned about these rising delinquencies in the past and had recently estimated that by late 2022, there were hundreds of billions of dollars in what he calls “excess lending based upon artificially inflated credit scores”.

The Government's Role

WASHINGTON, DC - APRIL 29: U.S. President Donald Trump's name appears on the coronavirus economic assistance checks that were sent to citizens across the country April 29, 2020 in Washington, DC. The initial 88 million payments totaling nearly $158 billion were sent by the Treasury Department last week as most of the country remains under stay-at-home orders due to the COVID-19 pandemic. (Photo by Chip Somodevilla/Getty Images)

Chip Somodevilla/Getty Images

Because so many are failing to pay their bills, many are wary that the government assistance may have been a financial double-edged sword; as they were meant to alleviate financial stress during lockdown, while it led some of them to financial difficulty.

The $2.2 trillion Cares Act federal aid package passed in the early stages of the pandemic not only put cash in the American consumer’s pocket, but also protected borrowers from foreclosure, default and in some instances, lenders were barred from reporting late payments to credit bureaus.

Yeshiva University law professor Pam Foohey specializes in consumer bankruptcy and believes that the Cares Act was good policy, however she shifts the blame away from the consumers and borrowers.

“I fault lenders and the market structure for not having a longer-term perspective. That’s not something that the Cares Act should have solved and it still exists and still needs to be addressed.”

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Inflation: raising interest rates was never the right medicine – here’s why central bankers did it anyway

We need to start cutting rates, but there’s something that has to happen first.

Pain, no gain? Bank of England Governor Andrew Bailey. IMF, CC BY-SA

Inflation remains too high in the UK. The annual rate of consumer price inflation to September was 6.7%, the same as a month earlier. This is well below the 11.1% peak reached in October 2022, but the failure of inflation to keep falling indicates it is proving far more stubborn than anticipated.

This may prompt the Bank of England’s Monetary Policy Committee (MPC) to raise the benchmark interest rate yet again when it meets in November, but in my view this would not be entirely justified.

In reality, the rate hikes that began two years ago have not been very helpful in tackling inflation, at least not directly. So what’s the problem and is there a better alternative?

Right policy, wrong inflation

Raising interest rates is the MPC’s main tool for trying to get inflation back to its target rate of 2%. The idea is that this makes it more expensive to borrow money, which should reduce consumer demand for goods and services.

The trouble is that the type of inflation recently witnessed in the UK seems less a problem of excessive demand than because costs have been rising for manufacturers and service providers. It’s known as “cost-push inflation” as opposed to “demand-pull inflation”.

Inflation rates (UK, US, eurozone)

Graph comparing inflation rates of UK, US and eurozone
UK = dark blue; eurozone = turquoise; US = orange. Trading View

Production costs have risen for several reasons. During the COVID-19 pandemic, central banks “created money” through quantitative easing to enable their governments to run large spending deficits to pay for furloughs and other interventions to help citizens through the crisis.

When countries started reopening, it meant people had money in their pockets to buy more goods and services. Yet with China still in lockdown, global supply chains could not keep pace with the resurgent demand so prices went up – most notably oil.

Oil price (Brent crude, US$)

Chart showing price of Brent crude oil
Trading View

Then came the Ukraine war, which further drove up prices of fundamental commodities, such as energy. This made inflation much worse than it would otherwise have been. You can see this reflected in consumer price inflation (CPI): it was just 0.6% in the year to June 2020, then rose to 2.5% in the year to June 2021, reflecting the supply constraints at the end of lockdown. By June 2022, four months after Russia’s invasion of Ukraine, CPI was 9.4%.

The policy problem

This begs the question, why has the Bank of England (BoE) been raising rates if it’s unlikely to be effective? One answer is that other central banks have been raising rates. If the BoE doesn’t mirror rate rises in the US and eurozone, investors in the UK may move their money to these other areas because they’ll get better returns on bonds. This would see the pound depreciating against the US dollar and euro, in turn increasing import prices and aggravating inflation.

Part of the problem has been that the US has arguably faced more of the sort of demand-led inflation against which interest rates are effective. For one thing, the US has been less at the mercy of rising energy prices because it is energy self-sufficient. It also didn’t lock down as uniformly as other major economies during the pandemic, so had a little more space to grow.

At the same time, the US has been more effective at bringing down inflation than the UK, which again suggests it was fighting demand-driven price rises. In other words, the UK and other countries may to some extent have been forced to follow suit with raising interest rates to protect their currencies, not to fight inflation.

What next

How harmful have the rate rises been in the UK? They have not brought about a recession yet, but growth remains very weak. Lots of people are struggling with the cost of living, as well as rent or mortgage costs. Several million people are due to be hit by much higher mortgage rates as their fixed-rate deals end between now and the end of 2024.

UK GDP growth (%)

Chart showing the annual rate of GDP growth
Trading View

If hiking interest rates is not really helping to curb inflation, it makes sense to start moving in the opposite direction before the economic situation gets any worse. To avoid any damage to the pound, the answer is for the leading central banks to coordinate their policies so that they cut rates in lockstep.

Unless and until this happens, there would seem to be no quick fix available. One piece of good news is that the energy price cap for typical domestic consumption was reduced from October 1 from £1,976 to £1,834 a year. That 7% reduction should lead to consumer price inflation coming down significantly towards the end of 2023.

More generally, the Bank of England may simply have to hope that world events move inflation in the desired direction. A key question is going to be whether the wars in Ukraine and Israel/Gaza result in further cost pressures.

Unfortunately there is a precedent for a Middle East conflict leading to a global economic crisis: following the joint assault on Israel by Syria and Egypt in 1973, Israel’s retaliation prompted petroleum cartel OPEC to impose an oil embargo. This led to an almost fourfold increase in the price of crude oil.

Since oil was fundamental to the costs of production, inflation in the UK rose to over 16% in 1974. There followed high unemployment, resulting in an unwelcome combination that economists referred to as stagflation.

These days, global production is in fact less reliant on oil as renewables have become a growing part of the energy mix. Nonetheless, an oil price hike would still drive inflation higher and weaken economic growth. So if the Middle East crisis does spiral, we may be stuck with stubborn, untreatable inflation for even longer.

Robert Gausden does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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