UBS Says New York City Unemployment Could Reach Mid-1970s High

Investment Bank UBS published a report today that said New York City’s economic decline is likely only in the innings and it is likely to only get worse. UBS said the unemployment rate may reach 10.5%, a level not seen since the mid-1970s.

The city’s residential real estate market and employment has held held up better than most areas. Home prices, which declined 14% as of November since their peak, may fall another 20 to 25% "if not more," according to the report.

In December, NYC unemployment rate was 7.4%, up from 5.1% a year earlier. Financial services accounted for 13% of city employment in 2007.

Budget officials assume the city will shed 294,000 jobs from mid-2008 through 2010, the highest official estimate by a government official yet, including 46,000 in financial industries. For each financial-sector job lost, two positions will vanish in other industries in New York City, according to New York State Comptroller.

The report said JPMorgan Chase (NYSE: JPM) which has 34% of its total deposits in the New York area, faces the greatest risk among banks to the city’s economic decline. The report ranked Bank of America (NYSE: BAC) with 9% of total deposits, and Citigroup (NYSE: C) with 8%, rank second and third.

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