Monthly Archives: December 2009

Citing signs of stabilization, economists hopeful about next year

By Kieran K. Meadows

What a difference a year makes.

Jobseekers may not feel better, but if you ask economists, things are not nearly as bad as they thought they might be.

“Looking forward and looking backward, we’re better off than most people would have imagined at this point,” said Barbara Byrne Denham, an economist for Eastern Consolidated, a real estate investment company.

Just over a year since the financial crisis plunged New York into the depths of recession and uncertainty, some economists are now cautiously optimistic about next year’s outlook. They predict a moderate turnaround in mid-2010. While conceding there’s a long road ahead to a full recovery, they point to some encouraging signs the economy is stabilizing. Some say this is largely the result of government intervention.

“The government came in and bailed out the financial firms and they are major employers in New York City,” said Ken McCarthy, an economist for Cushman Wakefield, a real estate services firm. “The financial sector is coming back more quickly than anybody expected.”

After being propped up over the last year by the feds, Wall Street to estimated to make $59 billion in profits in 2009—its highest ever—and a complete U-turn from huge losses of $11 billion in 2007 and $42 billion in 2008.

On Thursday, the Independent Budget Office reported fewer job losses and higher tax revenues than it had originally projected. “We expect New York City job losses to be far lower than we anticipated last spring,” said Ronnie Lowenstein, the director of the IBO.

The revised report forecasts the city to lose 157,200 jobs from the peak of employment in August 2008 through mid-2010—much fewer than the 254,500 lost jobs from the earlier report. “That’s a huge difference,” Lowenstein said.

The construction sector has also showed signs it’s slowly improving. Work began at $3.9 billion worth of projects in the third quarter of 2009, twice that of the year’s first three months, according to an analysis by the New York Building Congress.

The state Department of Labor reported that the city’s jobless rate was 10.3 percent in October, unchanged from September. “After deteriorating for months, the city’s unemployment rate appears to be stabilizing,” said Comptroller William C. Thompson, Jr. in a statement.

Despite encouraging signs, the city is not close to being out of the woods yet. Unemployment is likely to come down very slowly, said Rae Rosen, an economist with the Federal Reserve Bank of New York. She says banks are rebuilding capital, which limits their ability to make loans to businesses. With less access to credit, small businesses, which are traditionally engines of recovery, have been unable to create jobs.

Moreover, the unemployment rate will likely inch higher until it levels off at least six months from now, after we shed another 50,000 to 75,000 jobs.

To counteract this trend in 2010, Jonathan Bowles, the director of the Center for an Urban Future, says city officials should focus on diversifying our economy to depend less on Wall Street. “We need to identify areas where there’s substantial opportunities for growth,” he said, citing the tech and creative sectors. “We attract the most talented and creative people,” which is “a core strength,” he said.

New Yorkers should hope the city follows the footsteps of the national economy. On Friday, more evidence revealed the U.S. is turning the corner toward recovery faster than expected. The U.S. unemployment rate dropped from 10.2 percent in October to 10 percent in November—perhaps not a significant drop, yet symbolic after a year of awful economic news.

“Positive job growth at the national level will be a huge boost in morale overall,” Denham said, building confidence on Wall Street and on the part of consumers, which can help accelerate the city’s economic recovery into the new year.

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The governor’s power to grant clemency

Under the New York State Constitution, the governor has the power to grant clemency to prisoners “upon such conditions and with such limitation, as he may think proper” (excluding for crimes of treason or impeachment). Most states in the U.S. give the extraordinary power of clemency to governors (or at least in some hybrid arrangement with a parole board). The issue is currently in the news because of the recent shooting deaths of four police officers in Washington State, allegedly by Maurice Clemmons, whose prison sentence in Arkansas was commuted in 2000 by then-Gov. Mike Huckabee. The speculation is that the willingness of Huckabee, who ran an upstart presidential campaign in 2008, to grant clemency may hurt his presidential ambitions in 2012. It is in this context that I noticed an excellent post on The New York Times’ City Room blog on this very issue. It begins:

This month Gov. David A. Paterson will be mulling the fate of roughly 150 inmates in New York prisons who have formally applied for clemency in the hope of having their prison sentences shortened or their criminal convictions forgiven.

It is a traditional — if increasingly rare — holiday gesture of mercy. Over three and a half decades the number of inmates who have had their sentences commuted or convictions pardoned has steadily dropped.

The post’s author, A.G. Sulzberger, goes on to say that unfortunately, many governors now weigh the political consequences of granting clemency, particularly if they are to soon to go before the electorate. Prison advocates like Robert Gangi, director of the Correctional Association of New York, fear that this year, Gov. Paterson, facing low poll numbers and the upcoming election, will grant clemency to few, if any, inmates.

Similarly, in 2006, when then-Gov. George E. Pataki was mulling over a 2008 presidential run, he declined to grant clemency to any inmates.

One wonders then, whether he would have been willing to commute the prison sentence of Elaine Bartlett in 2000 if he had faced an upcoming election (his next was in 2002) or considered vying for a spot on the Republican presidential ticket that year. I recently finished the book,“Life on the Outside: The Prison Odyssey of Elaine Bartlett,” which tells Bartlett’s story of serving a 20-to-life sentence for a first-time drug offense under the Rockefeller Drug Laws until Pataki commuted her sentence after 16 years. It was tough enough for Bartlett to receive clemency when Pataki did not face the circumstances described above, so I can only imagine if he had. She probably would have served at least another four years, when in truth, she should have been granted clemency after ten (half of the minimum of the sentence). But in 1995, Pataki had just been elected in the mold of a “law-and-order” Republican — surely not someone who was going to be granting clemency.

But after watching this clip of Pataki last week — considered a dark-horse for the 2012 Republican presidential nod — drawing a contrast between his record and that of Huckabee, I get the feeling that Elaine Bartlett was lucky to have received a commutation at all.

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