New York City’s economy is steady but losing altitude, and its finances are under growing strain as federal support recedes and structural costs mount, according to the Annual State of the City’s Economy and Finances 2025 from Comptroller Brad Lander’s office.
In the report’s opening assessment, the comptroller’s economists say that “over the past 11 months the Trump Administration has launched a relentless assault on the U.S. and New York City institutions and economies,” through policy shifts on trade, immigration enforcement, and cuts to health and social assistance, adding that “the New York City economy has not escaped unscathed.” The office projects “growth will remain sluggish over the next year” as markets adjust to new tariffs.
Budget gaps now and ahead
The fiscal picture has deteriorated meaningfully. Instead of the usual mid-year cushion, the comptroller projects a $2.18 billion gap in FY 2026 (1.8% of revenues), with larger gaps looming: $10.41 billion in FY 2027, $13.24 billion in FY 2028, and $12.36 billion in FY 2029. The office criticizes a “recurring pattern of decisions that defer difficult budget choices rather than address them,” noting one-time maneuvers that lowered FY 2025 costs and the loss of federal pandemic aid.
Macro backdrop: weak, narrow growth
Nationally, the U.S. economy has been marked by “large and unstable increases in import tariffs” that have fueled uncertainty, with modest GDP gains outside of an “unusually high technology-related investment.” Employment growth slowed to 0.6% (December 2024–September 2025), initial claims stayed near historic lows, and both job openings and separations eased—signs of a low-churn labor market.
Within the five boroughs, the report highlights a striking divergence by race: the unemployment rate for Black New Yorkers surged to 15.6% over the summer of 2025 (July–August), the highest quarterly reading since 2021, even as the overall city unemployment rate stood at 5.1% in September, converging toward the U.S. rate (4.4%). The city’s employment-population ratio averaged 58.7% (Jan–Sep 2025)—an all-time high—helped by a roughly 2% decline in the adult population since 2019.
Job growth in 2025 was “stagnant in all but two industry sectors—Education & Health and Government,” and the next several years are forecast to remain dominated by lower-wage sectors, even as high-wage office-using industries (finance, information, professional services) stabilize.
Key revenue drivers and the office market
Despite softness in high-wage hiring, the securities industry again proved pivotal: it generated an estimated $6.7 billion in NYC revenue in FY 2025, up 35.1% year-over-year, accounting for 8.4% of total tax collections; 24.3% of the city’s personal income tax came from the sector. Tourism has essentially returned to pre-pandemic levels (Broadway attendance near par, revenues up ~10% year-to-date), while hotel room supply plateaued and inflation-adjusted room rates hovered modestly above 2019 levels.
The office market continues a slow repair. Citywide availability fell from 17.1% (mid-2024) to 13.9% (Nov. 2025), and NYC outperformed other major downtowns on Costar’s metrics, though a “sizable overhang” of vacant space remains.
Risks from federal policy and asylum-seeker costs
Federal actions are a mounting fiscal risk line-item, the report says, citing cuts embedded in the One Big Beautiful Bill Act (OBBBA) and executive-branch attempts to terminate or claw back grants. The comptroller flags litigation and uncertainties across education, housing, and social service grants, warning that these could reduce or delay payments and increase local costs.
The asylum-seeker response remains a multi-year obligation, but the acute surge has eased. “More than 240,400 asylum seekers have passed through the city’s intake system as of November 23, 2025, with 31,700 currently in shelter.” After peaking around 69,000 in January 2024, the in-shelter census declined 54%, and weekly reductions continued into fall 2025. Even with fewer entries, the budget footprint is material: as of the November 2025 Financial Plan, asylum-seeker funding (FY 2023–FY 2029) totals about $12.1 billion, with $8.6B City, $3.2B State, and $244M Federal. The Department of Homeless Services is now the lead agency, managing ~87% of those in shelter.
Child-care voucher shortfalls and social infrastructure
Even as need rises, child-care funding trails the projected costs. For FY 2026, the city recognizes $1.78B in funding for vouchers (including a one-time $350M State boost), but the comptroller estimates $1.93B in expenses—leaving a $146M shortfall tied to elevated use by families on public assistance and continuing demand among low-income households. Outyears would need substantial recurring resources to avoid new gaps once the state’s one-time funding expires.
Capital delivery and debt
Capital commitments in FY 2025 totaled $18.66B, or 80.2% of the Executive Capital Plan’s targeted $23.28B for the year—higher in dollars than FY 2024, but with a lower achievement rate. The Department of Education delivered $3.74B against a $4.55B plan (82.3%). Debt affordability metrics, debt-service trajectories, and borrowing capacity are detailed in the capital and financing sections; the Bureau also points readers to its Annual Report on Capital Debt and Obligations.
What it adds up to
The macro narrative is a tale of two New Yorks: headline employment ratios are high and tourism is back; office vacancies are receding; Wall Street receipts are buoyant. But growth is narrow, concentrated in lower-wage sectors, and racial disparities in unemployment have widened. The fiscal ledger shows widening gaps, a thicket of federal risks, persistent social-service shortfalls (notably child care), and still-significant asylum-seeker costs—even as that population declines.
The report’s bottom line: New York can manage through a slower growth era, but only with clearer, earlier budget choices. As the comptroller’s office puts it, repeated deferrals have “left a challenging fiscal landscape for the next mayor,” and “expenses have outpaced revenues” for three consecutive years—an imbalance that one-shots can’t fix.
