26 BARRON’S April 6, 2020
drove to family in Texas to ride out the
coronavirus. They’re hopeful they can
return but unsure when, and to what.
“We finally got our dream, and we
don’t want to let that go,” he said. “But
we’re just not sure.”
In one month, New York City has
become the epicenter of the novel coro-
navirus outbreak in the U.S. Responsi-
ble for nearly a tenth of overall U.S.
economic output, the city of more than
eight million is all but frozen, as the
restaurants and shops that line its
streets are shuttered. Cars and taxis
are empty, and lights are out across
Broadway. Even the New York Stock
Exchange, a symbol of American finan-
cial might, has shut its trading floor.
What is happening in New York’s
five boroughs and suburbs is both in-
formative for other metropolitan areas
across the country bracing for the
stealthily spreading virus and indica-
tive of how the U.S. economy will fare
through the widespread business shut-
down and beyond.
It’s often underappreciated how
concentrated the U.S. economy is in
metropolitan areas, says Ryan Sever-
ino, chief economist at Jones Lang
LaSalle. “You start adding New York
City to Los Angeles, Chicago, and other
major cities, very quickly you get to a
majority of the U.S. economy,” he says.
To that point, the American Enter-
prise Institute noted in December that
the six biggest U.S. metro areas pro-
duced $5.1 trillion of economic output in
2018, or a quarter of total gross domes-
tic product, and together would have
ranked as the third-largest economy in
the world. Two dozen metro areas ac-
counted for roughly half of America’s
2018 GDP.
While it’s too soon to gauge the eco-
nomic hit to New York City, its experi-
ence shows there are risks to letting the
contagion spread for too long before
taking aggressive action. In some
places, such as California and Texas,
stay-at-home orders came earlier in
outbreaks and have been stricter.
What New York does have going for
it, Severino says, is that the outbreak
struck relatively early. While the eco-
nomic toll will be acute, the city may
emerge from it sooner than other parts
of the country. But that depends on
how well the shutdown works and
lasts, and so far there’s no end in sight.
Cities with similar characteristics,
even if to a lesser extent, can heed les-
sons from New York as the virus con-
tinues to spread, Severino says. “Deal-
ing with it painfully upfront might help
in the long run.”
While New York has a history of
resiliency amid adversity—the recovery
from the 9/ 11 terrorist attacksand the
devastation of Superstorm Sandy
among recent examples—there are ele-
ments of city life that make the corona-
virus hit more brutal, both from a
health and an economic perspective.
There’s a population density and reli-
ance on public transit unlike those of
other U.S. cities, and the wealth gap is
greater in Manhattan than in any other
urban area: The top 1% make 113 times
as much as the bottom 99%, according
to the Economic Policy Institute.
And there are limits to how far re-
solve can go during an extraordinary
crisis with an uncertain timeline. It
remains to be seen how many busi-
nesses survive the crisis and how many
displaced workers can be absorbed by
other industries.
Luca Di Pietro, the owner of five
WhatNewYorkSays
AbouttheSlogAhead
The eerily quiet city, one-tenth of the national economy, shows why other
metro areas must act aggressively to forestall the coronavirus’ spread
“It all fell
apart in a
week. We
lost all of
our income.
We’re not
sure how
we’re going
to get the
rent paid.”
Andy Henderson,
24, Broadway
photographerA
ndy Henderson landed his
dream job as a Broadway
photographer in late
March, soon after he and
his wife moved from Rock-
wall, Texas, a small city
outside Dallas, to a tiny
studio apartment in Harlem. Two days
and one photo shoot later, it was over.
The coronavirus crisis had arrived
in New York City, and Gov. Andrew
Cuomo said that all nonessential busi-
nesses must close to combat the pan-
demic. Henderson, 24, not only lost the
Broadway job and another managing a
photo studio, but his freelancing work
also dried up. His wife, Kenzie, 23, lost
her rehearsal-studio job.
“It all fell apart in a week. We lost
all of our income. We’re not sure how
we’re going to get the rent paid,” Hen-
derson said. They rented a car and
By LISA BEILFUSS
small neighborhood restaurants across
New York City, let go of 95 employees—
nearly all of his staff—when restau-
rants were ordered on March 16 to
close regular service. He and his wife
began raising donations for meals they
are preparing and delivering to hospi-
tal workers. They’ve rehired 30 people
and now serve 1,000 meals a day.
“This was out of necessity. We were
bleeding, and it has kept the lights on
and is a chance to survive,” Di Pietro
said of his work-around. Already, he’s
dealing with a shuttered bread vendor
and vegetable deliveries that have
shrunk to twice a week. And with
rents for his restaurants ranging from
$13,000 to $35,000 a month, he said,
“we don’t know what the world will
look like after this.”
Job growth in New York City out-
paced the nation’s in every year since
the end of the last financial crisis
through 2018, according to the most
recent data from the state comptroller.
Behind the boom: leisure and hospital-
ity, the fastest-growing sector, which
accounted for about a fifth of all jobs
added during that stretch. Those jobs,
usually low-paying, were hit hardest
and fastest by the coronavirus ambush,
but the pain is quickly spreading.
More than 10 million Americans
have been laid off in recent weeks, and
that doesn’t include the many who still
can’t file for benefits because of over-
whelmed state offices. Henderson, the
photographer, said it took him 96 calls
to reach a person able to help after days
of New York’s website crashing. It took
a month for Gabi Donchez, a 28-year-
old Brooklyn resident, to get an unem-
ployment check after she lost her mar-
keting job due to event cancellations
that began in February. Economists
predict at least 20 million in virus-
related layoffs by the end of April.
The federal government is trying to
help, passing late last month a $2 tril-
lion relief package for business and
workers, but the rollout has been cha-
otic. Some small-business owners say it
has been difficult to learn details of the
Cares Act’s provisions, which include
nearly $350 billion in two-year loans for
businesses with fewer than 500 work-
ers, and to gain access to the funds.
Di Pietro, the restaurateur, says he
has been unable to get tax accountants
or other professionals to advise on the
Small Business Administration’s virus-
relief program. In the meantime, he
adds, “I’d rather do the work than wait
for government money that may or
may not come.”B Glenn Harvey