Mayor-elect Zohran Mamdani will be free to sidestep tough decisions when he presents his first budget a month after taking office on Jan. 1, 2026.
That’s mostly because Wall Street is booming, on pace to see record profits of more than $60 billion this year. Lavish year-end bonuses paid out starting early next week will provide a boost to the city’s economy and to tax revenue.
But he will soon face a worsening economic picture. While the administration of departing Mayor Eric Adams has relentlessly portrayed the city’s economy as a great success story, job growth in the last two years has been concentrated in low-paying health care jobs. Poverty has increased, and wages for most have not kept up with the cost of living — major themes in Mamdani’s winning message.
And as the months go on, the city’s $116 billion budget will be squeezed as revenue likely slows in the local economy and massive federal aid cuts to Medicaid and SNAP food assistance force difficult choices — and that’s before he begins to figure out how to deliver on promises, especially free buses and child care, that have an annual price tag in the billions of dollars.
“There is a real struggle for those who are in the middle class or working class,” said Eileen Torres, CEO of the social service agency BronxWorks. “There is a gap and it is getting wider and wider. People can’t afford the rent. They can’t afford food.”
But on Wall Street, the stock market is at an all-time high, as investors bet on the future of tech stocks like Nvidia, Microsoft, Alphabet and Apple. Commission revenue and fees from a surge in mergers and acquisitions, an especially profitable area for securities firms, is driving profits, which state Comptroller Tom DiNapoli expects to top $60 billion this year compared with $50 billion last year. City employment in the sector is also expected to end the year near 201,000, which would be a record as well.
“We want New York City to continue to be the global capital for finance,” DiNapoli said when he released his annual report on the industry last month. “When this sector of the economy does well, the tax revenue that’s derived for the city and especially for the state, is what helps to fund all the programs that everyday New Yorkers count on.”
Because people on Wall Street make so much money — average pay last year was $506,000, or five times the average wage for the rest of the private sector — it generates a significant share of tax revenue, to the tune of 22% of all taxes collected by the state and 9% for the city.
The finance sector is in large part responsible for the increase in tax revenue that will help Mamdani in the immediate future. The city reported an 8% increase for the fiscal year that ended June 30, with income tax collections up a whopping 17% over the prior year. While the increase for the first six months of the current year isn’t available yet, budget experts expect it to be almost as large.
In addition the city projects saving about $1 billion from a new health care plan for employees and often finds ways to lower its interest expenses by refinancing debt, maneuvers likely to allow Mamdani to close what is now calculated as a $6 billion gap in his first budget without much pain.
“The first six months of the fiscal year will be much different from the second six months, said Louisa Chafee, director of the city’s Independent Budget Office.
The Adams administration and especially Andrew Kimball, president of the Economic Development Corporation, have relentless touted the city’s recovery from the pandemic.
“After taking office at the end of the pandemic, the Adams Administration took action to stabilize and rebuild New York City’s economy. We succeeded: jobs and labor force participation hit record highs, and New York City’s job growth has outpaced that of the U.S.,” said his spokesperson Jeff Holmes.
While jobs are at an all-time high, other numbers paint a very different picture.
Last year, the city added a strong 129,000 jobs, but two-thirds of those were in low-paying health care roles. The imbalance is even worse this year as job growth has stalled both in New York and the rest of the nation. The city showed a gain of 52,000 jobs this year through August, 40,000 of them in health care. (The government shutdown has delayed the release of September data.)
A new report from local economist James Parrott at the Center for New York City Affairs at the New School shows the way the economy has become bifurcated.
From 2019 to 2024, New York City was the only one of the 10 largest cities with a significant increase in inequality when measured by the widely used Gini coefficient method. Hourly wages adjusted for inflation jumped 34% for the highest paid 3% of workers, four times the 8% increase for low- and middle-wage workers.
The share of New Yorkers in poverty over those four years rose to 16% from 18%; nationally it was essentially flat at 12%. Childhood poverty fell nationally but rose to one in every four children in the city.
People receiving cash public assistance jumped 85% to 600,000 in those four years.
“While the New York City economy overall may have recovered from the COVID-19 downturn, that recovery has been incredibly lopsided, with wage and income gains mainly flowing to those at the top, real incomes falling for most households and poverty and hardships rising for many,” Parrott told THE CITY.
Even if Mamdani avoids tough choices at the start of the year, a budget squeeze seems inevitable.
The Citizens Budget Commission estimates budget gaps for the second and third years of Mamdani’s term at more than $10 billion, a figure that will rise if the Wall Street boom falters.
“A strong Wall Street helps for sure but does not completely solve the incoming mayor’s fiscal challenge,” said Andrew Rein, president of the CBC. “The state and city are just starting to feel the impact of enacted Medicaid and SNAP changes, and more cuts are likely for housing, education, and health programs. These will put additional pressures on the city’s budget.”
The city gets a little more than $7 billion in federal aid each year, which is expected to shrink during Mamdani’s term even if Trump doesn’t follow through on threats to cut off aid entirely. The mayor will have to decide if he will use city funds to fill the gaps. The early-childhood program Head Start provides an example of the choices.
The Trump administration has canceled $78 million in Head Start funding to the city. The Adams administration has told BronxWorks, which uses the money it gets from that fund to provide day care for 102 3- and 4-year-olds, that it will lose its funding at the end of June, putting the program at risk of closing.
“If you have a family that’s working, you now have to figure out do I keep my job or do I not keep my job because I don’t have child care for my children,” Torres said.
The state is expected to see much bigger losses in federal aid, which the Fiscal Policy Institute estimates at about $8 billion a year, primarily in Medicaid and SNAP food aid. It will be under tremendous pressure to replace the federal funds. When faced with budget troubles in the past, the state has forced local governments to assume more costs, especially for Medicaid.
Eventually, Mamdami will have to propose ways to fulfill his agenda including free child care for all, free buses, building 200,000 affordable housing units over a decade using more costly union labor and opening city-owned grocery stores. Free buses have been estimated to cost $700 million a year. Estimates of universal free child care are as high as $6 billion a year, especially with his pledge to raise the wages of many of the workers. He has pledged to spend $100 billion on affordable housing, $70 billion of it borrowed.
His plan calls for a tax increase on corporations and wealthy New Yorkers to pay for much of it, which needs approval from Albany. Gov. Kathy Hochul, who faces a tough reelection campaign next year, had been opposed to any increase, but just before the election said she was open to “conversations” about one.
As he made clear in his victory speech Tuesday night, Mamdani is committed to what he promised.
“This will be an age where New Yorkers expect from their leaders a bold vision of what we will achieve, rather than a list of excuses for what we are too timid to attempt,” he told his cheering supporters. “Central to that vision will be the most ambitious agenda to tackle the cost-of-living crisis that this city has seen since the days of Fiorello La Guardia.”
