Jerry Seinfeld-James Altucher feud raises the question: Is New York City dead after coronavirus?
Jerry Seinfeld is the latest New Yorker to defend the city against claims that it's on a decline, driven by protests, budget woes and a coronavirus-fueled flight to the suburbs.
In an op-ed in the New York Times on Monday, the comedian and former sitcom star, said he has no plans to leave, calling the city "the brilliant diamond of activity it will one day be again." Seinfeld wrote, "Real, live, inspiring human energy exists when we coagulate together in crazy places like New York City."
Seinfeld was responding to a LinkedIn post from investment personality James Altucher that claimed New York was "dead forever." Altucher, who is better known for recommending that people invest in Bitcoin, argued that the current crisis differs from previous disasters, such as the September 11 terrorist attack and the 2008 economic collapse. His reasoning: Internet speeds have more than quadrupled since the late 2000s, making it easier to work remotely.
Altucher cited data from real estate website Redfin that show more than one-third of all house searches by New Yorkers in the second three months of the year were for residences outside the city. He predicted a larger-than-expected budget deficit would force the city to raise taxes. Combine those hikes with the fact that Broadway shows, museums, restaurants and other attractions keeping people in New York are closed, and you'll see a population exodus, he predicted.
While the city is far from dead, there is some early evidence to support the idea that post-pandemic New York, and cities in general, will be more empty.
Moving companies are so busy they are turning away customers. A recent report from New York real estate broker Douglas Elliman and appraisal firm Miller Samuel found about 13,000 empty apartments in Manhattan. That was the highest number of empty apartments the two firms had found since they began tracking vacancy data in New York City 14 years ago.
A poll taken in April found that more than 40% of urban dwellers around the country were considering moving out of the city limits. The unemployment rate in the New York metro area rose to 17% in June, according to the Bureau of Labor Statistics, while Los Angeles' rate was even higher, at just over 18%. Both are significantly above the 11% unemployment rate for the nation as a whole.
Seinfeld didn't offer much data to back up his argument that New York would survive the virus. But his basic argument is one that has been well proven in economics. Business, particularly ones that are in the same industry, tend to do better when they are grouped in the same geographic location. Seinfeld offered Silicon Valley in California as another example, saying proximity gives the companies more "energy."
Economists have long argued businesses group together because that tends to lower costs.
Altucher has a far from perfect track record when it comes to calling trends. He was the CEO of Beauty Brands Group from 2007 to 2010, a three-year period in which the company had $0 in sales. In 2017, Altucher predicted the price of a Bitcoin would reach $1 million by the end of 2020. Instead, Bitcoin has been stuck at just under $12,000, down 40% from where it was back in late 2017.
Richard Florida, a professor at the University of Toronto who is an expert in urban planning, told CBS MoneyWatch that, even in the age of mostly digital work, Seinfeld is "100% correct" about the resiliency of New York to any coronavirus fallout.
Florida said that at the height of the pandemic, 100,000 New Yorkers filed for a change of address, or about 1% of the population. And he said some of those people may have just changed their primary residence from their city address to a vacation or second home, not abandoned New York City completely.
And it appears the earlier spike in real estate browsing outside of urban areas has slowed down. Last week, real estate website Zillow, a rival to Redfin, released a report that found "suburban housing markets have not strengthened at a disproportionately rapid pace compared to urban markets." What's more, Zillow said it had seen no spike in searches for suburban real estate.
Moreover, the city still retains one of the largest workforces in the country, even accounting for pandemic-fueled layoffs. A blog post last week from the New York City comptroller's office put the number of nongovernment workers in the city at 3.4 million, a drop of 20% since February. There are also lots of jobs, including many on Wall Street, that either can't be done remotely or preferred by employers not to be done remotely.
"New York City has been pronounced dead at least three times in the past 20 years after 9/11, after 2008 and again now," said Florida. "Those two prior times it came back stronger and faster than anyone, including me, would have bet."