NYC Economy Hits A 'Soft Patch'

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New York City, New York State and New Jersey saw a dip in economic activity at the end of last year even as the U.S. economy continued to grow, according to the Federal Reserve Bank of New York.

New York City and state hit bottom in December 2009 and then grew rapidly through the fall of 2010, more rapidly than the U.S. But in the last three months of the year, their economies stalled because state and local governments cut jobs more severely here, than in the rest of the country.

And local retail, tourism and construction industries suffered in the fourth quarter.

At a press briefing on Monday, economists at the New York Fed said the city's lower unemployment rates aren't necessarily a sign of good news. New York City's December unemployment rate was 8.9 percent, down from 9.1 percent in November.

"A large part of that decline is occurring through lower labor force participation, so people are actually no longer looking for work," said economist Jaison Abel. "So when you're interpreting the unemployment rate, with that in the backdrop, it's harder to say whether it's positive or negative."

Abel described the dip in economic activity in the region as a "soft patch."

So far, New Jersey's economy hasn't seen any signs of an upturn.