Hudson Valley Review

First Quarter 2003

Marist College

Dr. Ann Davis, Director
Bureau of Economic Research
School of Management
Poughkeepsie, NY 12601

June 2003

The assistance of Kevin Edson, Shivan Durbal, and Chris Trocino is gratefully acknowledged. Also, the cooperation of the Council of Industry of Southeastern New York is appreciated in the conduct of the Business Confidence Survey.

Now available as a downloadable PDF file.

Table of Contents

First Quarter 2003

Summary and Highlights
National Review
Hudson Valley Review

First Quarter 2003 Exhibits

U.S. Nonfarm Employees


Stewart and Westchester Airports

Home Sales


Consumer Price Index

Temporary Assistance - First Quarter 2003

Special Focus - Select Hudson River Cities

Summary and Highlights
Hudson Valley Review - First Quarter 2003

  • In spite of slow growth at the national level, and constrained state and local finance, the Hudson Valley region showed a gain in jobs held by residents, and a 4% unemployment rate for the region as a whole. The jobs actually located in the region remained steady, in spite of continuing declines in manufacturing employment.
  • Home sales declined by 12% for the region, while average and median price of homes sold continued to increase. Permits for residential construction, an indicator of future housing sector activity, declined by over 25%.
  • Using one measure of tourism to the region, visitors at the Roosevelt/Vanderbilt sites declined from the same quarter one year ago.
  • Passenger traffic increased at Stewart Airport by 5%, although cargo traffic declined. There were slight declines in Westchester County airport as well.
  • Sales tax revenue collections declined for the region in first quarter, an unusual development, although the declines are small.
  • The bankruptcy rate for the southern district exceeded the average for New York State and the U.S., but this district also includes New York City. The northern district, which also includes some counties in the region, combines a total of 32 upstate New York counties.
  • Transfer payments to needy families declined in terms of total recipients and expenditures for the first quarter, but increased in the safety net, a New York State program. There were increased numbers of recipients and expenditures for the entire region for food stamps, and a mixed pattern for supplemental security income.
  • Consumer Price Index increased by over 3% for the first quarter in the New York/New Jersey region, a faster rate than the average for all U.S. cities.

Special Focus - Select Hudson River Cities

Business Confidence

In cooperation with the Council of Industry of Southeastern New York, a business confidence survey of regional companies was conducted in May, 2003. Expectations for profits, sales, investment, and employment remain strong, although with some deterioration compared with the same survey conducted last fall.


The region has lost almost 70% of its farmland since 1940, with a simultaneous gain of more than 80% of population. Specific policies are needed to balance growth and open space, to preserve this vital sector of the regional economy.

Select River Cities

Although the bulk of the population growth in recent decades has occurred in the suburban areas, several river cities have gained population, income, and value of housing stock. While all the cities included in this focus lost in the share of households composed of families with children from 1970 to 2000, two at least gained in this population segment from 1990 to 2000, Sleepy Hollow and Irvington. Rental units comprise from 20% to 70% of the housing stock in the river cities in 2000, adding an element of affordable housing, but possibly weakening the personal investment in maintaining home values. Still, the city with the highest share of rental housing, Newburgh, also had the largest increase in the value of owner-occupied housing from 1980 to 1990, among those areas for which data is available.


Given the resilience of the regional employment to date, and the combined effect of highly expansionary federal monetary and fiscal policies, the prospects look favorable for continued growth in jobs held by residents in the region. The region will also gain from recent improvements in the stock market, from the Wall Street spill over, and from a gradual recovery in tourism. Nonetheless, employment growth for jobs located in the region will face stiff obstacles, from continuing global excess capacity in manufacturing, holding action in finance, and continuing decline in government employment.

National Review
First Quarter 2003

Gross domestic product increased by 1.9% in the first quarter, 2003, the sixth consecutive quarterly output gain. The first quarter rate of growth was higher than fourth quarter pace of 1.4%, 2002, but lower than the full year rate of 2.4% in 2002. Consumer spending increased by 2%, faster than the fourth quarter, but slower than the full year of 2002 pace of 3.1%. Gross domestic investment decreased by 3.3%, the first decline since fourth quarter, 2001. Equipment and software spending decreased by 6.3%. for the first time since first quarter, 2002. The only major category of investment to increase in the first quarter was residential investment. Residential investment increased rapidly, at 11%, higher than fourth quarter, 2002 pace of 9.4%. This quarterly increase in residential construction continues a series of consecutive increases since first quarter, 2002, benefiting from the record low interest rates.

Government spending increased by a slight .3%, while state and local spending declined by .1%.

Exports fell for the second quarter in a row, in spite of the declining dollar. Imports fell more rapidly, perhaps due to higher dollar prices of imports as the dollar weakens. The decline in imports was the first since fourth quarter, 2001.

The implicit price deflator, a measure of inflation for the entire gross domestic product, increased by 2.5%, the fastest rise since second quarter, 2001, and more rapid than the full year pace of 1.1% for 2002.

The recession which began in 2001 has not yet been officially declared over, by the National Bureau of Economic Research, the official group responsible for dating of business cycles. One reason for the delay is the continuing loss of jobs, in spite of the six quarters of increase in output. A total of 525.000 jobs has been lost in the last three months, and 2.1 million since the recession began in March, 2001. There are 9.2 million people who are unemployed, and another 4.8 million working involuntary part-time, an increase of nearly 50% since 2001. Typically the previous peak levels of employment are regained by two years after the onset of the recession, in the usual post-war business cycle. The 2001 recession, as well as the 1991 recession, have both taken much longer, due to productivity growth and international competition. A sector with global competition like manufacturing has lost 1.7 million jobs in the last two years, while health and education have increased employment.

Total compensation for all civilian workers increased by 3.9% for the full year ending March, 2003, the same as the previous year, and down from the pace exceeding 4% in 2000 and 2001. Wages and salaries increased by only 2.9%, while benefit costs increased by 6.1%.

With the passage of an additional federal tax cut package, and record low interest rates, the operant macroeconomic policy is wide-open spigots, in terms of as much stimulus as possible.

The low interest rates have provided a boost to the housing market, as the Fed has repeated cut interest rates over the past 2 . years. This housing market effect may have been more significant than the stock market, as 68% of families own homes, as of 2001, which had a $122,000 median market value, while 52% owned stocks, with a median value of $34,000. Housing starts hit a 16-year high of 1.7 million in 2002.

Several long term indicators reveal the impact of housing on the macro economy. The per capita value of real residential structures was $12,500 in 1920, and rose to $32,7000 in 2001, in constant 1996 dollars. Home mortgage debt as a share of total nonfinancial debt was 5% in 1945 and rose to 30% in 2001. Homes represent a significant financial asset for most families, and a transmission belt for monetary policy.

Still, in first quarter, 2003, the pace of the housing market may be slowing. At the end of the first quarter, the supply of available homes was 5.1 months at the current sales pace, up from 4.3 months in December, 2002. The increase in median home price rose 6.8% from one year ago to $163,400, down from 8.4% in the fourth quarter of 2002. The average home price rose 2% in April to $268,200.

As reported in the New York Times on June 3, 2003, the rate of appreciation in home prices nationally is near metropolitan areas where the prices of housing are being bid up on the fringes in the search for more affordability.

With the end of the Iraq war and the strong stimulus policies, the major stock market indices have been improving. The Dow Jones average rose 4.4% in May, 2003, and the Nasdaq increased 9%, its fourth straight month of gains. The Standard & Poors 500 rose 5.1% in May, the third straight month of gains. Although the Dow remains below 9000 and the Nasdaq below 2000, still the gains for the most recent period have been impressive.

The University of Michigan index of consumer confidence rose to 92.1 in May, the highest in a year, from 86 in April.

The federal funds rate was 1.31% and the 30 year Treasury bond at 4.37%. Mortgage interest rates remain low enough to stimulate refinancing, and fuel consumer spending.

Risks to the U.S. economy include the persistent trade deficit and the growing federal budget deficit. Both combined would tend to lead to increasing trade deficits and a weaker dollar, now the explicit policy stated by the Treasury Secretary Snow.

A lower dollar can aid corporate profits by the restatement of earnings abroad in dollar terms. A lower dollar can also boost exports. On the other hand, continuing imports can be more costly, as the dollar falls. The lower dollar may not stimulate exports from the U.S. mainland when U.S.-based multinational corporations already have a globalized production system. Further, products which are priced in dollars, such as oil, or imports from countries whose currency is pegged to the dollar, like China, will not change. Currently the largest items in the U.S. trade deficit are from China and are oil imports. If the weakening trend of the dollar continues, or accelerates, ultimately the Fed would have to raise interest rates to protect the dollar, ending the present stimulative low-interest rate policy.

Anticipating a lower dollar, European investors are pulling funds out of the U.S. In Japan, by contrast, investors are continuing to invest in the U.S. financial markets, due to low domestic returns and falling stock prices at home, as well as the continuing Japanese trade surplus with the U.S.

Globally there is competition for capital investment, from alternate investments in Euro-denominated assets, or in Yuan-denominated assets in China. Gold funds may be increasingly popular, as well, as the precious metal market benefits from a falling dollar.

Regional Prospects

New York State, as well as several other states, face budget shortfalls. This may lead to cuts in state government employment, and less revenue sharing for local areas. This trend would exacerbate the tendency to raise local taxes and to cut local services, already evident in other parts of the country.

Hudson Valley Review
First Quarter 2003


Place of Residence

According to employment statistics released by the New York State Department of Labor, based on new definitions and Census 2000 benchmarks, jobs held by residents increased by 2.4% for the first quarter, 2003, over one year ago. The largest gains were in Columbia and Greene, and the only decline was in Sullivan. New York City employment declined by 1.76%, while New York State had a small gain of .5%.

The unemployment rate decreased in every county and for the entire region, as jobs grew faster than labor force, or declined less rapidly, in the case of Sullivan county. The first quarter unemployment rate for the region was 4%, compared with 9% for New York City and 6.65% for New York State.

The unemployment rate for selected cities is roughly double the respective county average, in cities such as the City of Poughkeepsie and Newburgh. The trend in Poughkeepsie is worsening relative to Dutchess county, compared with the same quarter one and two years ago, while Newburgh is gaining slightly relative to Orange county.

Place of Work

Jobs located in the region were roughly constant in first quarter, 2003, compared with the same quarter one year ago, with a growth of only .3%, and declined slightly from the same quarter two years ago. The growth of jobs located in the Albany area was slightly higher, at almost .5%, while New York City and New York State both declined.

In the Hudson Valley region, private jobs grew by .5% while government jobs declined by .5%. Manufacturing jobs declined by 3.9% from one year ago, along with the information and hospitality sectors. The strongest growth was in construction, business services, and trade.

Jobs increased most rapidly in Greene, Putnam, Dutchess, and Columbia, and declined in Sullivan, Ulster, and Rockland.

Manufacturing declined by nearly 10% from the first quarter two years ago in the Hudson Valley, but the rates of decline were even greater in Albany area, New York City, and New York State over the same period.

Longer term comparisons are complex because of the change in industry code from SIC to NAICS and with a new benchmark from the 2000 Census.

Home Sales and Prices

The number of homes sold in the region decreased from one year ago, even after adjusting for reporting problems in one county. The declines in the numbers sold were observed in all counties except Orange and Rockland. The average selling price increased by 13% for the region as a whole, and the median price of homes sold also increased in all counties.

The average number of construction permits for first quarter, 2003, decreased by nearly 30% for the region for single family homes. The declines were observed in all counties except Greene and Dutchess. The same pattern was observed for all residential construction. The average value per permit increased by nearly 10% for the region for single family homes, with declines only in Sullivan and Ulster. The pattern for all residential construction was mixed.


According to one indicator, the number of visitors taking tours at the Roosevelt/Vanderbilt sites in first quarter, 2003, declined by over 30% from the same quarter one year ago. The declining trend in first quarter visits has been in place roughly since 1985. The decline was smaller when tours and visits to the grounds were included, with indications of an increasing trend since 1993.

Air Traffic

The number of passengers at Stewart Airport increased by roughly 5% in first quarter, 2003, from one year ago. This increase reverses a long declining trend from 1997, due to the declining number of carriers and fallout from September 11, 2001. The national context at present is more favorable for small, regional airlines than for the large national carriers. Cargo tonnage at Stewart declined, nonetheless, for the first quarter.

Westchester County Airport decreased by 2% - 5% for the first quarter, continuing a pattern of slight declines since 2001.

Retail Sales

One indicator of retail sales, sales tax revenue collections, decreased by 2% for the region in first quarter, 2003. The decrease was noted in all counties except Columbia and Rockland, with essentially no change in Ulster. While quarterly changes are affected by staggered reporting schedules by sector, this is the first decline in first quarter sales tax revenue since at least 1985.


Regional bankruptcies in the Hudson Valley increased in the first quarter, but the exact rate cannot be determined because of differing regional definitions.

Transfer Payments

Recipients of the new welfare program, Temporary Assistance to Needy Families (TANF) decreased in most counties, while recipients in the safety net sponsored by New York State increased for the quarter, compared with one year ago. Expenditures followed a similar pattern.

Food stamps recipients and expenditures increased in all counties in the first quarter. The pattern for recipients and expenditures for Supplemental Security Income was mixed across the region, with little change in overall regional trends.


The rate of increase of consumer prices was over 3% in the New York/New Jersey Metropolitan Area. The average for all U.S. cities was 2.9% for the first quarter. The implication is that the problem of deflation recently voiced at the national level is not a particular concern in this region.

Special Focus

Business Confidence Survey

A total of 136 firms responded to the business confidence survey of Spring, 2003, conducted in May, 2003. The sample was distributed across the region, and included manufacturing firms as roughly half of the respondents.

By examining the average rank of the responses, it is possible to compare the responses this spring with the same survey conducted in November, 2002. The average rank for expected profits and sales next year decreased slightly, compared with the fall survey. There was virtually no change in the average rank regarding expectations of materials prices and investment. There was a slight decline in expected employment levels for next year.

Overall the responses remained optimistic. Nearly half, 47% of the respondents, expected profits to be higher or much higher next year, compared with only 6.6% who expect lower or much lower. Over half, or 51.4%, expect sales to be higher or much higher next year, compared with 6.6% who expect lower or much lower sales.

Only 36.7% expect materials prices to be higher or much higher next year, compared with 55.8% who experienced higher materials prices last year. Over one quarter, 25.7%, expect investments to be higher or much higher next year, compared with only 9.6% who expect investment to be lower. Nearly one quarter, 23.6%, expect employment to be higher or much higher next year, compared with only 5.9% who expect employment to be lower.

Trends in Agriculture

Based on statistics from the New York State Department of Agriculture, acreage in farms decreased by 70% for the region, including Albany and Rensselaer, while population increased by over 80%, from 1940 to 1998. For some counties, such as Putnam and Rockland, the acreage in farms decreased by over 90%. The counties with farm acreage exceeding 100,000 include Columbia, Dutchess, and Rensslaer. Columbia, Dutchess, Rensselaer, and Ulster had the greatest amount of farm acreage at the beginning of the period. While the loss of farmland can be partially explained by the growth in population, specific land use policies, such as farmland preservation, and clustered development, can preserve open space even with the steady growth of population. Support for the economic vitality of regional agriculture can also help sustain this aspect of the diverse regional economy.

Select River Cities

The comparison of select river cities with the relevant counties will help assess the equity of growth in the region, as well as efficiency of land use in the past thirty years, along with the promise and challenges of future urban development.


Most cities for which data is available grew from 1970 to 2000 except Yonkers and Poughkeepsie, while only Hyde Park and Hudson lost population in this most recent decade.

Yonkers remained the largest city, with a population more than six times greater than the next largest cities, Newburgh and Poughkeepsie.

The fastest growing city was Sleepy Hollow, with a population increase of 11.85%, roughly double the rate of growth of Westchester county, 5.55%. The fastest growing counties over this period, Orange and Rockland, followed closely by Dutchess and Ulster, grew more rapidly than their respective cities, suggesting that most of the growth took place in outer suburban areas.

All the cities gained in diversity, although Hyde Park retained the highest percent of white population, and Newburgh and Haverstraw had the lowest.

Poughkeepsie, Newburgh, and Beacon had the highest percent of African American population, while Irvington had the lowest.

Education and Income

Irvington and Sleep Hollow had the highest average income per family, in 1990, the latest year for which data is available, while Haverstraw and Kingston had the lowest. The income level in Irvington was over five times as large as the family income in Haverstraw, a relatively wide differential. Irvington also had the most rapid growth in average income per family from 1980 to 1990, which more than doubled, while the lowest rate of growth was 85% in Haverstraw.

Irvington and Sleepy Hollow were the most educated, while Hudson was the least, measured by the portion of the population with more than high school. More than one half of the Irvington population and more than one third of Sleep Hollow have completed at least some college. In Hudson and Haverstraw, the portion was less than 10%. All areas showed an increase in educational attainment over the last decades.

Household Composition

A significant trend for all of the cities along the river was a dramatic decline in the portion of the population who are married with children less than eighteen years old present. For Hyde Park the decline was from nearly half of all occupied housing units to just above one quarter. For Sleepy Hollow, the decline was the smallest, and for Sleepy Hollow and Irvington, the share increased again from 1990 to 2000. In 2000, Sleepy Hollow and Irvington have the highest fraction of families with children, 34% and 29% respectively, while Poughkeepsie, Hudson, and Kingston have the lowest.

The cities show significant differences in the pattern of renter-occupied housing as well. Newburgh, Hudson, and Poughkeepsie have the highest share of renter-occupied housing, while Irvington and Hyde Park have the lowest. The share of renters has decreased dramatically in Beacon over this period, from over 72% in 1970 to 43% in 2000, while Yonkers and Irvington had slight declines for most this period. In Sleepy Hollow, the share has remained roughly constant in the range of just less than half, and increased for the other cities.

In Westchester, two cities had an increase in housing stock which exceeded the rate of growth for the county from 1990 to 2000, Irvington and Sleepy Hollow, while there was a slower growth than the county average in Yonkers. In the remaining counties, the increase in housing stock in the county exceeded the growth rate in the respective cities. In Hudson, the number of occupied housing units declined.

From 1980 to 1990, the last period for which data is available, the value of owner-occupied housing stock increased most rapidly in Newburgh, and the slowest in Yonkers. For all the cities, however, the value of owner-occupied housing more than doubled. The average value of owner-occupied housing stock was greatest in Irvington and Sleepy Hollow, both exceeding $200,000, and the lowest in Hudson, just above $50,000.

While the cities had rapid increases in housing stock, the average value of owner-occupied housing was higher in the counties as a whole than the cities, except for Sleepy Hollow and Irvington, which had higher values than the average for Westchester county.

Quality of Life

While urban schools have the reputation of higher minority enrollments, the pattern varies widely across the region. Hyde Park, Irvington, and Sleepy Hollow have less than 10% of school district enrollment as African American, compared with over 60% in Poughkeepsie. Irvington, Kingston, and Hyde Park have less than 5% Hispanic enrollment in the public schools, while Sleepy Hollow and Yonkers have more than 40% Hispanic. None of the relevant counties have more then 20% of either African American or Hispanic students.

The crime index dropped dramatically between 1990 and 2000 for all cities for which data is available. The index dropped less notably in the counties, and actually increased in Orange county. Still, the level of crime is much higher in the cities than the counties.

What is more difficult to measure as an aspect of quality of life is the access to sidewalks and mass transit, cultural amenities, waterfront access, and diversity.

Sources: U.S. Census Bureau, Geolytics, Wall Street Journal, New York Times, Business Week, U.S. Department of Labor, U.S. Commerce Department, New York State Department of Labor, New York State Department of Taxation and Finance, U.S. Bankruptcy court, New York State Association of Realtors, Stewart Airport, Westchester County Airport, National Park Service, Federal Reserve Bank of Cleveland, Federal Reserve Bank of St. Louis. Cooperation of the Council of Industry of Southeastern New York and the Hudson Valley Technology Development Center in the conduct of the business survey is greatly appreciated.