AI will help drive NYC economy in 2025, but some jobs could be ‘displaced,’ report says

New York City’s economy will continue to grow in 2025, powered in part by a revolution in artificial intelligence technology, or AI, according to a new report released on Tuesday.

The city’s “AI transformation has begun,” with more than 2,000 AI startups and 40,000 workers already forming a “thriving tech ecosystem,” according to the report by the city’s Economic Development Corporation.

Andrew Kimball, the corporation’s president and CEO, said he was optimistic that the technology would benefit a variety of sectors in the city, including life sciences, medicine and the green economy.

“All of those things get transformed by AI,” he said in an interview ahead of the release.

The projections come against a largely positive economic backdrop for New York City, with the report noting that the city has successfully emerged from the pandemic, growing in a number of key areas while continuing to attract and retain young talent.

“The fundamentals of New York City’s economy today are stronger than they have ever been,” Kimball said.

The report characterized the city’s labor market as “strong and improving,” with a record 4.1 million private sector jobs. Additionally, the city leads the nation in drawing young talent, with nearly a half-million recent graduates choosing to live here since 2021, according to the Economic Development Corporation.

Another bright spot: A record 68 million tourists are expected to visit in 2025, according to the report.

The report said fears of a “commercial doom loop” — widely described as urban decline fueled by the loss of tax revenues tied to vacant office buildings — had not come to pass, in part because commercial real estate had begun to stabilize and employers had been bringing workers back into offices after pandemic shutdowns.

The report also indicated that the city’s finance sector remains strong, with 21,500 more jobs than in the pre-pandemic era. That has allowed New York to remain the “global financial capital,” the Economic Development Corporation said.

Job creation in the city’s tech sector grew by 72% from 2013 to 2023, according to the report. It acknowledged that some local jobs “could be displaced by AI” in the coming years, but added that “for every job that gets displaced by AI, between four and 10 jobs might be augmented by AI.”

The report cited projections by the consultancy McKinsey that the adoption of AI and other technologies would help add 200,000 net jobs to the New York City region by 2030. The report did not specify where AI would displace workers.

The Economic Development Corporation also addressed the significant challenges facing the city in the coming year, including growing income inequality.

“Top earners in New York City are beating the rest of the country, but lower earners aren’t doing much better here than they could elsewhere,” the report states. “Black unemployment is more than double white unemployment.”

The “policies of the incoming Trump Administration, particularly with regard to taxes and trade, could certainly have an impact on the local economy in the years ahead,” according to the report. But it says “the uncertainty around policy specifics and timing” prevented the authors from weighing the potential impacts of federal policies in depth.

Kimball said the city’s top challenges remain “housing, housing and housing.”

The rental vacancy rate, according to the report, is at a multidecade low of 1.4%, forcing rental rates upward. And the city added nearly 900,000 jobs from 2011 to 2023 but just 353,000 housing units during the same period.

Still, the report was optimistic on this front too, citing the recent passage of the Adams administration’s signature land-use plan, which local officials estimated would create more than 80,000 new homes citywide. The plan was approved by the City Council in December, along with other investments.

“The City of Yes for Housing Opportunity proposal will allow for more housing in every neighborhood,” the report stated, “helping to make housing more affordable for everyone across the income distribution.”