Dear Colleagues:

I am pleased to provide you with the Ways and Means Committee New York State Economic Report for 1997 & 1998. This report is part of our commitment to presenting clear and accurate information to the public. It offers a complete and detailed assessment of the National and State economies, including an analysis of the areas of economic strength and weakness among the State’s regional economies.

State wage growth remains robust due to the durability of the national expansion, as well as another strong year on Wall Street producing solid growth in bonus income for employees in the State’s securities industry. The Committee staff predicts 1998 will be yet another highly successful year on Wall Street related to continuing high levels of merger and acquisition activity, strong stock market growth, and a large volume of corporate debt underwriting. This success should translate into continuing high levels of bonus income for the 1998-99 bonus season. The Committee staff is predicting State wages and salaries will grow 5.7 percent in 1998, following growth of 6.6 percent in 1997.

There is no doubt that the strength of the national economic expansion is having a positive impact on Wall Street. However, the impact on Main Street has been much more variable. While strong performances on Wall Street have strengthened some of our downstate regions, growth has begun to weaken in many upstate, as well as downstate areas. While there are pockets of significant growth, we see some areas, both upstate and downstate, which appear to have been left behind. The Committee staff is predicting job growth of 1.2 percent for 1998. However, this rate of growth appears weak when compared to the rest of the nation, as well as the State’s own experience during the 1980’s.

The Committee staff projections are reviewed by an independent panel of professional economists drawn from major financial and manufacturing corporations, prestigious universities, and private forecasters from across the State. Assembly Speaker Sheldon Silver and I would like to express our appreciation to all of the members of our Board of Economic Advisors. Their dedication and expert judgement have been invaluable in helping the Ways and Means Committee staff refine and improve this forecast. They have served to make the work of the staff the best in the State. Of course, they are not responsible for either the numbers or the views expressed in this document.

I wish to acknowledge the fine work done by the talented Ways and Means committee staff. Their forecasts are integral to the budget process. The Speaker and I look forward to working with each of you to achieve a budget fair for all New Yorkers.

 Sincerely,

Herman D. Farrell, Jr., Chairman