New York City’s 2026 Economic & Budget Outlook: Making Affordability a Reality Amidst Inequality and Fiscal Constraints
In this new report, the Center for New York City Affairs provides a roundup of data-driven insights on the challenges New York policymakers face in 2026 and practical strategies they can employ to confront those challenges.
In it, we describe how New York City’s economy:
Slowed in 2025, and is expected to face continued slow growth or a contraction in 2026.
Has seen job growth concentrated in a few industries, exacerbating labor market and wage inequality, especially impacting workers of color.
Faces new challenges in 2026 as many of the city’s 2.9 million residents living below 200 percent of the Federal Poverty Line face new work requirements for, and obstacles, to maintaining critical benefits as a result of the federal One Big Beautiful Bill Act (OBBBA).
At his inaugural address on January 1st, Mayor Mamdani declared he would “transform the culture of City Hall from one of ‘no’ to one of ‘how?’” Given the acute economic crises facing New Yorkers today, this report helps to identify “how” to prioritize.
The report finds that New York City and State:
Face immediate – but avoidable – losses of $520 million and $2.9 billion in City and State revenues, respectively, as the result of Federal business tax changes.
Begin the new year with budgets in balance, but face substantial and growing budget shortfalls as a result of the OBBBA, with a number of cuts already impacting City programs and projects.
Must take steps to retain every federal dollar immediately, from decoupling OBBBA business tax changes from New York tax law to investing in agency staffing and outreach to minimize the likelihood that people will lose critical federally funded benefits.
Should work together this year to develop multi-year progressive revenue raising plans to address federal funding shortfalls, the need for new programs to mitigate the affordability crisis, and growing local income inequality.
Bold policy interventions are needed to address poverty, inequality, and affordability. They require new government revenue sources and multi-year plans. The report includes recommendations for how the City can start pursuing these objectives.