The purpose of this bulletin is to provide local leaders with information on key economic trends that make up the current economic climate. These trends are significant because they impact the availability of funds for education, health care, and other public services at the national, state, and local levels.
This bulletin is issued twice each calendar year — summer and winter — and presents information about changes in the gross domestic product, employment and unemployment, consumer prices, retail sales, housing, industrial production, and stock market performance. Other pertinent trends are described as well. In addition, a brief summary of projections for the economy is presented. Finally, comments on both the Federal and State Budgets are offered. We will continue to issue the regular monthly Information Bulletin on the Consumer Price Index (CPI).
This is the seventh issue of Current Economic Climate. Your reactions and suggestions on this series of Information Bulletins are most welcome. Please contact Dan Kinley or Neil Foley at NYSUT Research and Educational Services with your feedback and comments.
The Real Gross Domestic Product grew sharply in the first quarter of 2006 at a rate of 5.6 percent. This growth over the previous quarter of 1.8 percent reflects the disruption to the economy caused by Hurricanes Katrina and Rita. The second quarter of 2006 moderated to a rate of increase of 2.5 percent with projections placing the total 2006 year at a rate of 3.4 percent growth in GDP over 2005.
The unemployment rate for the nation for 2006 was 4.6 percent which is the lowest rate since 2001.
The unemployment rate for New York State for June 2006 was 4.6 percent which is the lowest the rate has been for June since June 2001.
There were 8.6 million workers employed in New York State in June 2006, the highest number since June 2001.
The changing nature of the New York State employment picture is marked by the loss of manufacturing jobs — 433,000 since 1990, and the increase in jobs in health care and social assistance — 366,000 since 1990.
The Consumer Price Index is increasing. The New York-Northern New Jersey Area Consumer Price Index for June 2006 was 222.6 — representing an increase of 5.6 percent over the index for June 2005. The June 2006 increase was the largest since February of 1991.
The price of regular gasoline per gallon had increased to $2.80 per gallon in June of 2006 which is more than double the price of $1.34.1 per gallon in June of 2002.
The economy is projected to grow at an annual rate of 3.4 percent for the 2006 calendar year with a lower annual rate of 2.7 percent projected for 2007.
The federal budget deficit declined by $111 billion to $260 billion for this fiscal year with deficit projections of $335 billion for 2007 and $236 billion for 2008.
The New York State Budget for the current year is in balance, but there are estimates for gaps in the next two years for the General Fund that range in total from almost $9 billion to almost $14 billion.