Betting against New York is always a losing proposition

Unlock the White House Watch newsletter for free

Your guide to what Trump’s second term means for Washington, business and the world

The writer is a visiting professor at Vanderbilt University, a professor at the University of Toronto and Kresge Foundation fellow

The approach of Zohran Mamdani’s swearing in as New York’s next mayor has set the city’s economic establishment on edge. Hedge fund managers, private equity partners, investment bankers and real estate titans warn that new taxes and regulations will drive business away. Conservative pundits say that capital and people will flee and the city’s economy will go into terminal decline.

But this isn’t the first time New York has been written off. The city has survived far worse — the Spanish flu, the Depression, deindustrialisation and white flight, fiscal crises that nearly bankrupted it, riots and the crack epidemic of the 1980s. Every time, it came back stronger.

If you want to know where business really stands on New York, follow the money. JPMorgan Chase is spending $3bn on a new Park Avenue tower. Google is completing its multibillion Hudson Square campus. BlackRock, Disney, and Pfizer have each made billion-dollar bets on Manhattan real estate. These aren’t the moves of companies heading for the exits.

New York’s staying power rests on fundamentals few cities can rival. The tri-state metro area of more than 20mn people produces $2.5tn a year. Anchoring the 50mn-person Acela corridor from Boston to Washington DC, New York sits at the heart of a more than $5tn mega-region, making it, by output, the world’s third-largest economy — bigger than Germany, Japan or the UK.

New York has also become a technology powerhouse. High-tech employment has surged more than 25 per cent since 2019. It is now the centre of a digitally connected global meta-city linking London, Dubai, Singapore and other economic hubs. Even Miami, where New York billionaires relocated to escape taxes, now functions as its economic suburb.

More than anything else, New York’s edge comes from its unmatched ability to attract top talent from around the world. The real risk to its prosperity isn’t capital flight; it’s the sky-high cost of living that is eroding the city’s ability to attract and retain that talent.

Addressing the housing affordability crisis is essential to the city’s continued prosperity. And New Yorkers made that clear on election day. On the same ballot, they approved charter reforms to accelerate housing construction and cut through zoning obstacles that have strangled supply for decades.

Most of the young professionals in finance, tech and the creative industries who supported Mamdani aren’t radicals. These are people who played by the rules, worked hard and built careers. Yet they still can’t see how they will ever afford a home, raise a family, or build a life in New York. Their vote wasn’t for socialism or upheaval. It was for a better future for themselves.

For the business community, this isn’t a threat — it’s a warning. When the city becomes too expensive for bright and ambitious people to stay, it loses its edge. The savviest members of New York’s financial and real estate elite already know it. Kathryn Wylde, president of the Partnership for New York City, which includes the city’s leading businesses, said she supported him in the general election. Even President Donald Trump, long hostile to liberal cities, invited Mamdani to the White House and seemed smitten. “I feel very confident that he can do a very good job,” he said.

The new mayor’s policies target the one weakness that could truly undermine the city’s prosperity. But his agenda faces real constraints — tight budgets, state oversight on key projects and entrenched interests that can tie up initiatives in court for years.

He will face other serious challenges. The biggest is the hard reality of housing economics. New York’s affordability problem is rooted in a brutal combination of intense demand and construction costs that remain among the highest in the nation. Still, even if certain policies falter, the larger imperative will endure and shape the city’s politics and priorities long after this mayor is gone.

New York’s underlying strength has been its ability to correct its excesses. The Gilded Age’s extremes gave rise to labour reform. New York was the birthplace of the modern union movement, which helped forge the social compact that allowed working families to achieve the American dream after the second world war. The fiscal collapse of the 1970s produced the public-private partnerships that revived its economy. And the disorder of the 1980s and 1990s spurred innovations in policing and public safety.

Mamdani’s agenda is the latest in a long line of adjustments that have kept New York at the centre of the global economy for more than a century. And it’s why, despite the noise, you still shouldn’t bet against it.