New York City’s top numbers guy thinks a positive AI future is a 50/50 bet. And for the Big Apple, the stakes are high.
“There is no city in America—and perhaps none on earth—more exposed to both the promise and peril of artificial intelligence than New York City. And there are few places with more power to steer the transformation ahead.”
That’s the assessment of New York City comptroller Mark Levine in a new “AI and New York City’s Fiscal Future” report. And while Levine believes whatever effect AI has on the Big Apple is likely to mirror what happens in the rest of the United States, he’s hedging his bets. There are five likely outcomes, some rosy, others dire, says Levine. The challenge is preparing for all of them. The city’s AI preparedness will be heavily scrutinized as newly elected Mayor Zohran Mamdani’s political profile rises.
“We are sleepwalking into the age of AI,” says Levine, a current situation he partly blames on a lack of initiative from the Trump administration. “New York City has too much at stake to sit back and wait for action in Washington.”
Levine’s prognostications, underpinned by research data from Moody’s Analytics, envision five possible scenarios and assigns each a probability score. The rosiest scenario, the “AI-Empowered Economy,” gets a 35% probability baseline assessment. The assumption here is that AI replaces some jobs and enhances others at a gradual rate, boosting productivity growth modestly with little disruptive effect on the economy or employment. New York City could expect private-sector jobs to grow by 52,000 per annum with wages increases growing between 3.6% and 4.6% with a corresponding increase in tax revenues.
Levine’s 35% probability number is 5% lower than Moody’s assessment. That 5% figure moves into what Levine calls the “AI Shockwave” scenario that sees rapid AI development adversely affecting labor markets that fail to absorb the displacement smoothly. The biggest vulnerability lies with routine cognitive work in finance, law, customer service, and administrative support jobs that are replaced faster than displaced workers can be reabsorbed. The private sector loses 5.4 million jobs concentrated in high-paying, office-using industries. The job displacement initially boosts corporate profit margins but losses in aggregate consumption eventually drag down earnings. The AI Shockwave lasts for three years, beginning at the end of 2026. In New York City, job losses would tally up to 110,000, with three out of five coming from office-using industries.
“One reason supporting the shift of probability toward AI Shockwave is the rapid growth of projected AI-related investment and the exponential increase in compute usage since the beginning of the year,” says Levine. “These trends make a rapid diffusion of AI and deeper economic disruption slightly more likely.”
Levine otherwise aligns with Moody’s in its AI prognostications. The second most likely scenario, at 25%, is “AI Falls Flat.” In this instance, AI investment is deemed excessive. AI adoption rates, productivity gains, and profitability fall short of expectations. Energy constraints are a large contributing factor. A stock market decline of about 35% leads to a brief recession that wipes out 3.3 million private-sector jobs by the middle of 2027 but with recovery by the end of 2028. New York City would lose 52,500 jobs during this period, experiencing stagnant wages for workers and a $3.4 billion drop in tax revenue for the city.
The “Job Replacement” scenario gets a 20% probability rating. It assumes faster than expected AI adoption that leads to a rapid productivity growth. The downside is widespread replacement of jobs and an increase in unemployment with private-sector job losses accumulating to 1.4 million in 2027. New York City would shed 13,300 jobs before a modest recovery that still sees job losses mount to 96,000 by 2030.
The most optimistic scenario is maybe the most disillusioning. The “Productivity Boon” gets just a 15% probability rating. It envisions an outcome similar to the late 1990s Internet boom. Productivity growth doesn’t displace job growth but rather complements it, leading to significant increases in wage compensation. The Productivity Boon scenario is the future most hyped by AI advocates but it might look like a long shot from a bookie’s standpoint. It’s also the only one that leaves New York City unambiguously better off.
Levine notes that young New Yorkers are exceptionally vulnerable to AI uncertainty. For the first time, 20-somethings with college degrees have a higher unemployment rate than those without a degree due to what many call “low hire, slow fire” employment trends. New York City needs to build a substantial “rainy day fund” equal to 16% of current revenues to deal with potential AI disruptions over the next three to five years, says Levine, that may be akin to those experienced during the 40-year-long Industrial Revolution. Whichever scenario becomes dominant, there is no doubt in Levine’s mind that AI will transform the Big Apple. Add up the probability numbers and it is even money it will all end well.
