New York’s Economy and Finances in the COVID-19 Era

Thomas P. DiNapoli

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January 7, 2021 Edition

Selected Economic Trends

Student Loan Balances Up 3.9% in New York; Will Pandemic-Related Relief Be Extended Again?

New Yorkers’ average student loan balance rose by 3.9 percent from the previous year to $37,600 as of June 2020, according to newly available data from the Federal Reserve Bank of New York. That figure has increased 20.1 percent since 2016. The average balance owed by New Yorkers was 5th highest among the states. The table below provides figures on average balances and delinquency rates for student loan borrowers in New York and other states.

Student Loan Debt by State, 2020 (Table)
  Average Amount Owed Percentage of Borrowers Delinquent
Alaska $33,000 11%
Alabama $36,800 13%
Arkansas $31,900 13%
Arizona $35,700 12%
California $36,800 10%
Colorado $36,100 9%
Connecticut $35,700 9%
Delaware $36,300 9%
Florida $37,900 12%
Georgia $41,100 13%
Hawaii $34,900 11%
Iowa $29,600 9%
Idaho $33,500 9%
Illinois $37,300 9%
Indiana $32,200 12%
Kansas $32,600 10%
Kentucky $32,800 13%
Louisiana $34,700 13%
Massachusetts $34,400 7%
Maryland $42,500 10%
Maine $32,200 9%
Michigan $35,700 12%
Minnesota $32,100 8%
Missouri $35,000 11%
Mississippi $36,600 15%
Montana $31,700 9%
North Carolina $36,200 11%
North Dakota $27,800 7%
Nebraska $31,400 8%
New Hampshire $33,400 8%
New Jersey $36,500 8%
New Mexico $33,600 14%
Nevada $34,700 13%
New York $37,600 7%
Ohio $34,300 12%
Oklahoma $31,400 13%
Oregon $36,900 12%
Pennsylvania $34,700 9%
Rhode Island $32,400 9%
South Carolina $36,600 13%
South Dakota $28,400 8%
Tennessee $35,500 13%
Texas $32,700 12%
Utah $32,100 8%
Virginia $38,100 9%
Vermont $34,300 6%
Washington $35,000 9%
Wisconsin $30,700 9%
West Virginia $31,800 14%
Wyoming $29,700 9%

Debt among borrowers with outstanding balances in June 2020. Delinquent borrowers have payments that are late 90 days or more. Student loans include federal student loans and private student loans.

Source: Federal Reserve Bank of New York Consumer Credit Panel/Equifax.

The Coronavirus Aid, Relief and Economic Security (CARES) Act enacted in March 2020 suspended federal student loan payments and the accrual of interest on such loans through September 30, 2020. It also suspended the involuntary collection of payments on defaulted loans through wage garnishment and reductions of tax refunds and other federal benefits, among other relief measures for borrowers.

Executive action extended these emergency relief measures first through December 31, 2020 and again through January 31, 2021. The most recent federal stimulus legislation did not extend this deadline further.

The delinquency rate for New Yorkers (with past due accounts that are late 90 days or more) decreased from 11.1 percent in 2019 to 7.4 percent in 2020, a drop of a third, comparable to the declines of a quarter to a third seen in other states. The Federal Reserve Bank of New York noted that the lower rates of delinquency for payments 90 days late or more in June 2020 are “due to the administrative forbearance on federal student loans” directed by the CARES Act.

A survey by the Pew Charitable Trusts, conducted in late summer of 2020 and released in November, found that nearly 6 out of 10 borrowers who reported having paused their payments said that it will be somewhat or very difficult to resume their payments. With so many borrowers still out of work and experiencing financial insecurity, many may continue to pursue other options with their loan servicers in order to reduce their payments. At the time of the survey, 22 percent of borrowers had reached out to their loan servicers for more information about lowering their payments.

2.1 Million New Yorkers Collecting Unemployment Benefits

More than 2.1 million New Yorkers collected unemployment benefits in the latest available weekly counts from the federal and State Departments of Labor.

For the week ending December 12, just over 1 million New Yorkers claimed Pandemic Unemployment Assistance (PUA), the program available to self-employed and “gig” workers who may not be eligible for traditional unemployment benefits, as well as certain individuals who are still working but have lost work hours due to the COVID-19 pandemic. More than 749,000 New Yorkers claimed Pandemic Emergency Unemployment Compensation (PEUC) for that week. PUA and PEUC, which are entirely federally funded, were both extended into March as part of the latest federal stimulus legislation. Another 390,000 New Yorkers claimed unemployment benefits under the regular State program for the week ending December 19.

The Office of the State Comptroller has processed nearly $59.2 billion in unemployment assistance payments from March 1 through the week of December 28, an increase of more than 3,000 percent from the same period a year earlier.

New York State GDP Jumped in 3rd Quarter 2020, But Was Still Below Pre-Pandemic Level

Real gross domestic product (GDP) in New York State increased by 30.3 percent to just over $1.7 trillion in the third quarter of 2020 (July through September, seasonally adjusted, annual rates) after a decline of 36.3 percent in the second quarter. However, this key measure of the State’s overall economic activity was nearly 5 percent below the pre-pandemic peak of $1.8 trillion in the fourth quarter of 2019.

While New York was the third largest contributor to the national economy among the states in the third quarter (behind California and Texas), it ranked 41st nationally for economic growth during the quarter. Nevada led all states with growth of 52.2 percent.

The largest contributors to economic growth in New York during the third quarter were the health and social assistance, and accommodation and food services industries. The utilities sector was the only industry to experience continued decline from the second to the third quarter.

New York State Budget and Spending

The State’s Coronavirus Relief Fund (CRF) balance declined by $1.5 billion to $2.2 billion during the week ending January 1. The change primarily reflected $1.3 billion in spending for personal services at the Department of Corrections and Community Supervision that was newly charged against the CRF, after the U.S. Treasury Department advised states that CRF resources may be used for personnel expenses of correctional employees. The spending for DOCCS operational costs now represents the largest category of spending from the State’s $5.1 billion CRF allocation, followed by $775 million in non-personal services spending by the Department of Health. Use of CRF resources for DOCCS costs previously planned to be paid with State resources may be one of several ways in which federal funding is used to reduce the State’s budget gap for the current and/or next fiscal year. Details of these and other issues may be outlined further in the Governor’s State Fiscal Year 2021-22 Executive Budget, expected to be released shortly.

The State’s General Fund balance was $16.4 billion as of January 1, 2021, up from $13.7 billion as of December 1.

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