Despite political turmoil, the Empire State’s business sector strikes back

New York State has seen significant economic contraction, population loss and questionable decision-making from its political leaders over the past year. However, despite the political and economic issues the state is currently facing, the overall economic condition, particularly when it comes to business growth, may be improving.

According to the latest edition of the New York Federal Reserve Bank’s Empire State Manufacturing Index, New York State may be starting to consistently improve business conditions despite its political leadership facing multiple legal investigations and ethical dilemmas. In the context of these investigations, the survey’s general business conditions index surprisingly yielded an increase of 16 points to 11.5. Expectations had the metric landing at -4.1.

The economic improvements

The manufacturing survey indicates New York State’s economic conditions are generally improving, regardless of its political leaders’ ability to fulfill their duties. On top of the sharp rise in the general business conditions index, the future business activity index increased by 8 points to 30.6, with 45% of respondents saying they expect improved business conditions over the next six months.

Multiple data points indicate business conditions in the state may continue to improve. The new orders and shipments indexes both increased to multi-year highs. The new orders index rose 17 points to 9.4, and the shipments index rose 18 points to 17.9, its highest mark in approximately 18 months, indicating a legitimate pipeline for sales growth if orders can be met.

Other notable improvements included the year-over-year number of employees hitting -5.7, a metric surveyors quantified as “another month of modest employment reductions.” There was also a 20.7-point increase to 2.9 in the average workweek index after a “steep drop” in that metric the previous month.

The report did note a few negative indicators. Although price changes remained relatively unchanged, the capital spending index dropped significantly. Year-over-year, it dropped 11 points to -2.1, the first negative reading since 2020.

“New York State manufacturing activity in September grew for the first time in nearly a year, with shipments increasing strongly. However, employment continued to decline modestly. Firms grew more optimistic that conditions would improve in the months ahead, though capital spending plans were weak,” said Richard Deitz, economic research advisor at the New York Fed in the release.

New York’s political issues

Although NY state is seeing a spurt of business growth, its political leadership at both the state level and within New York City is wrapped up in political turmoil. Governor Kathy Hochul, whose many political shifts have earned her no praise, including her about-face on the MTA’s controversial congestion tax, is now dealing with an inherited staffer from the Cuomo era being charged for acting as a Chinese spy.

Linda Sun, former deputy chief of staff to Hochul, whose Manhasset, New York, residence was raided by the FBI on Sept. 2, was charged two days later with being a Chinese spy. Her charges include violating and conspiring to violate the Foreign Agents Registration Act, visa fraud, alien smuggling, and money laundering conspiracy.

Sun not only is accused of receiving kickbacks from foreign agents for her input in state policy but was known for being a strong advocate for diversity, equity and inclusion within government and stressing the importance of “equity” on internal calls.

Sun’s incident is just another addition to a long list of woes faced by Hochul in 2024. Just before charges were imposed on Sun, Hochul had had her lowest approval rating ever. Over recent months across the political spectrum, her ability to fulfill her duties has come into question.

Then there’s the spiraling turmoil in leadership within New York City. Mayor Eric Adams’ administration is resigning en masse amid multiple FBI investigations. While no charges have been filed, Adams’ chief legal counsel Lisa Zornberg is the latest to resign after her request to fire some of the staffers in question was supposedly denied by Adams.