Metro Summary-Eco & Market Analysis

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ANALYSIS

VITALITYRELATIVE COSTS LIVING BUSINESS RELATIVE OF LIFE

Best=1, Worst=378Best=1, Worst=403

STRENGTHS & WEAKNESSES

U.S.=100%

SHORT TERM

FORECAST RISKS

LONG TERM

RISK EXPOSURE 2019-2024

BUSINESS CYCLE STATUS

MOODY’S RATING

ECONOMIC DRIVERS

Highest=1 Lowest=403

EMPLOYMENT GROWTH RANK

Best=1, Worst=410

2018-2020 2018-2023 QUALITY

MOODY’S ANALYTICS / Précis® U.S. Metro / November 2019

FINANCIAL

CENTER

$ £ €

TOURIST

DESTINATION

MEDICAL

CENTER

2013 2014 2015 2016 2017 2018 INDICATORS 2019 2020 2021 2022 2023 2024 1,021.1 1,042.6 1,062.0 1,078.3 1,104.9 1,124.9 Gross metro product (C12$ bil) 1,145.6 1,161.2 1,176.3 1,205.8 1,228.1 1,249.9 0.2 2.1 1.9 1.5 2.5 1.8 % change 1.8 1.4 1.3 2.5 1.9 1.8 6,410.8 6,578.5 6,746.0 6,880.3 7,006.8 7,120.1 Total employment (ths) 7,210.3 7,236.5 7,212.6 7,251.7 7,274.8 7,294.6 1.9 2.6 2.5 2.0 1.8 1.6 % change 1.3 0.4 -0.3 0.5 0.3 0.3 8.3 6.8 5.5 5.0 4.5 4.0 Unemployment rate (%) 3.8 4.0 4.9 5.2 5.3 5.3 1.7 5.0 4.5 3.9 6.7 5.8 Personal income growth (%) 4.1 2.9 2.4 4.2 3.8 3.6 60.2 61.4 63.3 65.9 69.2 71.7 Median household income ($ ths) 71.9 73.8 75.5 78.0 80.4 82.7 14,169.7 14,224.6 14,270.3 14,290.2 14,267.9 14,242.8 Population (ths) 14,236.2 14,228.7 14,233.2 14,261.7 14,295.6 14,328.2 0.5 0.4 0.3 0.1 -0.2 -0.2 % change -0.0 -0.1 0.0 0.2 0.2 0.2 -18.9 -36.1 -44.8 -70.5 -99.6 -95.2 Net migration (ths) -80.1 -85.0 -73.3 -48.9 -42.8 -43.3 6,447 7,270 6,823 6,637 7,212 6,989 Single-family permits (#) 7,670 8,061 10,792 13,388 13,406 12,986 25,857 30,011 67,017 27,073 33,942 32,008 Multifamily permits (#) 32,573 22,365 25,226 26,596 26,153 25,758 218.4 225.1 233.8 242.7 255.1 268.2 FHFA house price (1995Q1=100) 276.6 287.6 300.0 312.1 325.6 342.0

Recent Performance. The New York City-Jer- sey City-White Plains economy is screeching to a halt. Payrolls have flattened since the beginning of the year, and the falling unemployment rate reflects a shrinking labor force. The tight labor market has put upward pressure on wages, but this only exacerbates NEY’s cost disadvantage. Finance has slowed most dramatically this year and consumer industries are beginning to falter as well, spelling downward pressure on high- and low-wage industries. Fortunately, healthcare is keeping NEY above water. The housing market remains stagnant, with both single-family and condo prices moving sideways or lower and mul- tifamily building well below its mid-decade peak.

Wall Street. The outlook for NEY’s pivotal fi- nancial services industry is cloudy. Although the rate of job losses will slow, obstacles for banks in the Big Apple are mounting. The trade war, an inverted yield curve for much of 2019, and less accommoda- tive monetary policy are all making investors ner- vous. And while banks’ bottom lines have recovered from their December 2018 swoon, the state comp- troller reports that the pool for Wall Street bonuses is down slightly, following a disappointing 2018.

Longer-term concerns are also mounting. Deutsche Bank and Goldman Sachs, among other banks, have had layoffs, and the migration of support positions to lower-cost areas shows no sign of relenting. Recent developments signal that high-wage jobs may be growing more foot- loose as well. JPMorgan is considering moving thousands of lucrative positions to lower-cost places such as Plano TX, Wilmington DE, and Co- lumbus OH. Should this become widespread, se- curities industry output and wages—which have proven resilient despite job losses—would falter.

CRE. The commercial real estate market will go from catalyst to obstacle. The office market has been helped by tech giants such as Google, which is building a new campus in Hudson Square. But

net absorption has gone negative in Manhattan, and WeWork’s troubles pose a risk given the com- pany’s once-insatiable demand for office space.

Retail and hotels face problems of their own. Major retail centers such as Fifth Avenue have been plagued by store closures for years due to rising rents and falling demand. While demand for hotels remains healthy, a sizable pipeline of new projects, competition from Airbnb, and a potential decline in visitors from China due to trade tensions and a strong dollar all spell trouble.

Demographics. High costs and quality-of- life concerns will drive further migration out of NEY, holding back its potential. Domestic out- migration has intensified in recent years due in part to mounting cost pressures. Compounding this, subpar infrastructure, which includes an ag- ing subway system, has made living in the city less appealing. Although on-time performance metrics have improved this year and state lead- ers have proposed a sizable investment in the subway system, ridership keeps trending down, revealing the stickiness of negative perceptions.

Further, NEY’s reliance on international migra- tion to sustain population gains could prove a li- ability due to the Trump administration’s efforts to restrict immigration. Couple this with the lin- gering threat that higher state and local tax bills stemming from the Tax Cuts and Jobs Act could drive additional out-migration, and risks are tilt- ed decisively to the downside.

The clock will soon strike midnight on New York City-Jersey City-White Plains. Job growth will continue through the first half of 2020 before a national slowdown drives financial services lower, spilling more broadly into con- sumer industries and real estate. Longer term, high costs will drive continued out-migration, leading to subpar income and output growth.

Adam Kamins November 2019

STRENGTHS » Financial capital of the world. » High per capita income and limited exposure to

manufacturing. » Strong international immigration.

WEAKNESSES » High costs, including taxes, housing, office rents

and energy. » Rapidly aging infrastructure. » Overreliance on wealthy overseas buyers to

support real estate market.

UPSIDE » Infrastructure upgrades slow out-migration. » Domestic tourism strengthens further, bolstering

NEY’s hotel market.

DOWNSIDE » Fed halts interest rate cuts, sending the stock

market tumbling. » Trade war with China hurts service exports,

hitting finance and tourism. » Amazon pullout causes other firms to think twice

about locating in NEY.

W W

CITY AS OF MAR 01, 2019Aa1

375 5th quintile

11299% Rank: 150

156%120%274 4th quintile

237 3rd quintile

At Risk

Recovery

Mid Expansion

Late Expansion

In Recession

NEW YORK-JERSEY CITY-WHITE PLAINS NY-NJ Data Buffet® MSA code: IUSA_DMNEY

MOODY’S ANALYTICS / Précis® U.S. Metro / November 2019

3-MO MA May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Employment, change, ths 11.2 5.0 0.0 -1.0 0.8 2.8 Unemployment rate, % 4.0 4.0 3.9 3.8 3.6 3.6 Labor force participation rate, % 61.7 61.7 61.7 61.6 61.4 61.4 Average weekly hours, # 33.7 33.9 33.8 33.9 33.8 33.7 Industrial production, 2012=100 105.7 105.6 105.5 105.7 105.9 106.0 Residential permits, single-family, # 6,147 6,731 7,612 9,377 8,290 8,238 Residential permits, multifamily, # 34,074 32,187 29,998 33,362 34,368 36,378

Dec/Dec 2013 2014 2015 2016 2017 2018 Employment, change, ths 150.5 184.3 147.7 118.0 129.6 95.6

PRÉCIS® U.S. METRO • New York-Jersey City-White Plains NY-NJ

NEY NY U.S. 09 10 11 12 13 14 15 16 17 18 19

100

105

110

115

120

14 15 16 17 18 19 -1

1 2

NEY NY U.S. 14 15 16 17 18 19

NEY NY U.S. 09 10 11 12 13 14 15 16 17 18 19F 20F 21F 22F 23F

100

105

110

115

120

l ▼▲ l ▼▲ l ▼▲ l ▼▲

W l ▼▲

NEY NY U.S. 98 01 04 07 10 13 16 19

80 100 120 140 160 180 200 220 240 260

NEY NY U.S. 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8

NEY NY U.S. 0 1 2 3 4 5 6 7

NEY NY U.S. 96 98 00 02 04 06 08 10 12 14 16 18

40 60 80

100 120 140 160 180 200 220

Overvalued Undervalued 98 01 04 07 10 13 16 19

-20 -10

0 10 20 30 40 50 60

% CHANGE YR AGO, 3-MO MA Oct 18 Apr 19 Oct 19 Total 1.6 1.6 1.1 Mining 9.3 2.9 0.7 Construction 2.3 3.2 1.1 Manufacturing -0.5 0.5 -0.5 Trade -0.6 0.2 0.1 Trans/Utilities 2.2 0.1 -0.6 Information 0.7 1.7 0.2 Financial Activities 1.4 -0.3 -1.8 Prof & Business Svcs. 2.0 1.9 1.1 Edu & Health Svcs. 3.8 3.6 3.3 Leisure & Hospitality 0.7 1.0 2.2 Other Services 0.8 2.9 1.6 Government 0.9 0.8 0.4

FORECAST VS. 6 MO PRIOR

2-Yr 5-Yr

3-DIGIT NAICS LEVEL, 6-MO MA

Sources: BLS, Moody’s Analytics

ECONOMIC HEALTH CHECK BUSINESS CYCLE INDEX

RELATIVE EMPLOYMENT PERFORMANCE

CURRENT EMPLOYMENT TRENDS

Source: Moody’s Analytics

Sources: BLS, Moody’s AnalyticsSources: BLS, Moody’s Analytics

Sources: BLS, Moody’s Analytics

% CHANGE YR AGO

Government Goods producing Private services

HOUSE PRICE

Sources: FHFA, Moody’s Analytics

Better than prior 3-mo MA Unchanged from prior 3-mo MA Worse than prior 3-mo MA Sources: BLS, Census Bureau, Moody’s Analytics

VACANCY RATES HOMEOWNER, % HOUSES FOR SALE

DIFFUSION INDEX

HOUSE PRICE TRENDS

Sources: NAR, Moody’s Analytics

GREATER THAN 100=MORE AFFORDABLE

HOUSING AFFORDABILITY

Sources: FHFA, Moody’s Analytics

JAN 2009=100

JAN 2009=100 1998Q1=100, NSA

RENTAL, % INVENTORY FOR RENT

Sources: Census Bureau, ACS, Moody’s Analytics, 2018

LO W

H IG

Ths % of total

MOODY’S ANALYTICS / Précis® U.S. Metro / November 2019

PRÉCIS® U.S. METRO • New York-Jersey City-White Plains NY-NJ

Source: Moody’s Analytics, 2018

98%

100

85 100

NEY U.S.

0.69

0.00

0.20

0.40

0.60

0.80

1.00

Location Employees NAICS Industry Quotient (ths)

6221 General medical and surgical hospitals 1.1 235.6 5231 Sec. & comm. contracts intermed. & brkrg. 5.7 117.3 5511 Management of companies & enterprises 1.1 117.3 6211 Offices of physicians 1.0 112.6 GVL Local Government 1.1 755.4 5613 Employment services 0.9 154.7 6113 Colleges, universities & prof. schools 1.8 141.5 GVS State Government 0.4 93.6 7225 Restaurants and other eating places 0.8 396.0 6216 Home health care services 2.6 162.6 6241 Individual and family services 1.5 154.7 4451 Grocery stores 1.0 120.0

Source: Moody’s Analytics, 2018

Federal 74,352 State 91,915 Local 766,077

2018

NEY 626.7 8.8

U.S. 14,296.2 9.6

NEY 344.9 4.8

U.S. 7,261.0 4.9

Montefiore Health System 32,232 Mount Sinai Health System 32,074 JPMorgan Chase & Co. 29,000 Bank of America 27,000 New York-Presbyterian Healthcare System 23,709 NYU Langone Medical Center 23,491 Macy’s Inc. 22,100 Verizon Communications 16,973 Columbia University 16,136 Citigroup Inc. 15,878 Morgan Stanley 15,380 Memorial Sloan-Kettering Cancer Center 14,908 City University of New York 13,777 PwC 11,429 Staffing Alternatives 11,382 Delta Air Lines Inc. 10,851 Time Warner Inc. 10,337 American Airlines 10,280 Archdiocese of New York 10,265 Rutgers, The State University of New Jersey 10,000

Sources: Crain’s New York Business Book of Lists - 2017, CUNY, 2017, nj.com, 2017, NJBIZ Business Book of Lists - 2018

Product $ mil Food and kindred products ND Chemicals 15,633.6 Primary metal manufacturing 9,899.1 Fabricated metal products ND Machinery, except electrical ND Computer and electronic products 9,177.6 Transportation equipment 3,662.6 Miscellaneous manufacturing 24,217.0 Other products 35,102.4 Total 97,692.4

Destination $ mil Africa 1,584.7 Asia 37,005.7 European Union 25,135.9 Canada & Mexico 17,789.4 South America 3,100.5 Rest of world 13,076.2 Total 97,692.4

% of GDP ND Rank among all metro areas 381

Sources: BEA, International Trade Administration, Moody’s Analytics, 2018

118,043 114,350 92,001

NEY NY U.S.

0 50 100 150 200 250 300

COMPARATIVE EMPLOYMENT AND INCOME % OF TOTAL EMPLOYMENT AVERAGE ANNUAL EARNINGS Sector NEY NY U.S. NEY NY U.S. Mining 0.0 0.0 0.5 nd $173,764 $103,785 Construction 3.8 4.1 4.9 $87,774 $79,920 $68,455 Manufacturing 2.9 4.6 8.5 $87,512 $82,732 $83,365 Durable 42.5 58.2 62.6 nd $87,082 $86,331 Nondurable 57.5 41.8 37.4 nd $76,886 $78,483 Transportation/Utilities 3.7 3.1 4.0 $59,308 $58,996 $60,890 Wholesale Trade 3.9 3.4 3.9 $104,812 $98,631 $88,316 Retail Trade 9.2 9.7 10.6 $44,579 $40,058 $35,245 Information 3.5 2.9 1.9 $174,084 $155,268 $119,417 Financial Activities 8.8 7.4 5.7 $127,534 $114,922 $59,540 Prof. and Bus. Services 16.2 13.9 14.1 $106,493 $96,656 $71,767 Educ. and Health Services 20.9 21.3 15.9 $60,562 $59,678 $56,400 Leisure and Hosp. Services 9.7 9.9 11.0 $44,612 $39,482 $29,108 Other Services 4.2 4.3 3.9 $45,851 $43,567 $38,639 Government 13.1 15.4 15.1 $99,982 $98,352 $78,273

Sources: Percent of total employment — BLS, Moody’s Analytics, 2018, Average annual earnings — BEA, Moody’s Analytics, 2017

NEY NY U.S. 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8

EMPLOYMENT AND INDUSTRY ENTREPRENEURSHIP

Due to U.S. fl uctuations Relative to U.S.

TOP EMPLOYERS

PUBLIC

INDUSTRIAL DIVERSITY

EMPLOYMENT VOLATILITY

Due to U.S.

Most Diverse (U.S.)

Least Diverse

Not due to U.S. M

LEADING INDUSTRIES BY WAGE TIER HIGH-TECH

EMPLOYMENT

HOUSING-RELATED EMPLOYMENT

BUSINESS COSTS

Source: Moody’s Analytics

U.S.=100

EXPORTS

PRODUCTIVITY

Total

Unit labor

Energy

State and local taxes

Offi ce rent

REAL OUTPUT PER WORKER, $

EMPLOYMENT IN NEW COMPANIES, % OF TOTAL

Sources: BEA, Moody’s Analytics, 2017

2012 2017

Sources: Census Bureau, Moody’s Analytics, avg 2012-2016

NET MIGRATION, #

MOODY’S ANALYTICS / Précis® U.S. Metro / November 2019

NEY U.S.

Sources: Census Bureau, ACS, Moody’s Analytics, 2018

MNE NY U.S.

08 09 10 11 12 13 14 15 16 17 18 35 40 45 50 55 60 65 70 75 80

INTO NEW YORK NY Number of

Migrants Newark NJ 34,484 Nassau County NY 23,408 Bridgeport CT 6,119 Washington DC 5,866 Los Angeles CA 5,849 Dutchess County NY 4,044 Chicago IL 3,966 Austin TX 3,748 Philadelphia PA 3,702 Trenton NJ 3,687 Total in-migration 231,792

FROM NEW YORK NY Newark NJ 47,901 Nassau County NY 39,077 Bridgeport CT 10,832 Los Angeles CA 10,404 Orlando FL 8,666 Atlanta GA 7,644 Dutchess County NY 7,255 Washington DC 6,657 Tampa FL 6,114 West Palm Beach FL 5,965 Total out-migration 382,030

Net migration -150,238

Index 2018 Rank* Gini coefficient 0.53 7 Palma ratio 4.2 6 Poverty rate 14.2% 176

*Most unequal=1; Most equal=403

0 2 4 6 8 10

Net Migration, NEY

15 16 17 18 -120,000

-100,000

-80,000

-60,000

-40,000

-20,000

0 5 10 15 20 25 30

0 5 10 15 20

NEY U.S.

0 5 10 15 20 25 30

2015 2016 2017 2018 Domestic -133,830 -161,381 -177,421 -174,699 Foreign 89,055 90,929 77,837 79,513 Total -44,775 -70,452 -99,584 -95,186

Sources: IRS (top), 2016, Census Bureau, Moody’s Analytics

NEY NY U.S.

87.0%

Top Five Outside Sources of Workers New York NY Share Newark NJ 4.4 Nassau County NY 4.3 Dutchess County NY 0.9 Bridgeport CT 0.8 Trenton NJ 0.4

91.7%

Top Five Outside Sources of Jobs New York NY Share Newark NJ 4.1 Nassau County NY 1.9 Trenton NJ 0.5 Bridgeport CT 0.5 Dutchess County NY 0.2

Sources: Census Bureau, Moody’s Analytics, avg 2009-2013

RESIDENTS WHO WORK IN NEY WORKERS WHO LIVE IN NEY

PRÉCIS® U.S. METRO • New York-Jersey City-White Plains NY-NJ

NEY

COMMUTER FLOWS

ECONOMIC DISENFRANCHISEMENT

Undereducated Balanced Overeducated

MIGRATION FLOWS

GENERATIONAL BREAKDOWN

SKILLS MISMATCH

EDUCATIONAL ATTAINMENT

% OF ADULTS 25 AND OLDER

< High school High school Some college College Graduate school

100

POPULATION BY AGE, %

U.S.

≥75 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14

5-9 0-4

PER CAPITA INCOME

Sources: BEA, Moody’s Analytics

$ THS

POPULATION BY GENERATION, %

% OF TOTAL

Less than HS

High School

Some College

Associate’s

Bachelor’s

Graduate

Occupations Population

HOUSEHOLDS BY INCOME, %

Gen Z

Millennial

Gen X

Baby Boom

Silent & Greatest

0-19,999 20,000-39,999 40,000-59,999 60,000-74,999 75,000-99,999

100,000-124,999 125,000-149,999 150,000-199,999

200,000+

U.S.

NET MIGRATION, #

20 13

2018 NEY $75,699 NY $68,668 U.S. $54,446

Sources: Census Bureau, ACS, Moody’s Analytics, 2018

Sources: Census Bureau, Moody’s Analytics, 2018 Sources: Census Bureau, ACS, Moody’s Analytics, 2018 Sources: Census Bureau, Moody’s Analytics, 2018

MOODY’S ANALYTICS / Précis® U.S. Metro / November 2019

GEOGRAPHIC PROFILE

Sources: ACS, Moody’s Analytics

POPULATION DENSITY MEDIAN HOUSEHOLD INCOME AVERAGE COMMUTE TIME

PRÉCIS® U.S. METRO • New York-Jersey City-White Plains NY-NJ

POPULATION & HOUSING CHARACTERISTICS

Units Value Rank*

Total area sq mi 4,416.8 61

Total water area sq mi 828.4 21

Total land area sq mi 3,588.7 71

Land area - developable sq mi 3,408.2 18

Land area - undevelopable sq mi 180.2 270

Population density pop. to developable land 4,231.1 7

Total population ths 14,242.8 1

U.S. citizen at birth % of population 64.4 398

Naturalized U.S. citizen % of population 18.7 5

Not a U.S. citizen % of population 13.6 17

Median age 37.9 223

Total housing units ths 5,816.2 1

Owner occupied % of total 40.3 397

Renter occupied % of total 50.6 2

Vacant % of total 9.1 263

1-unit; detached % of total 25.4 402

1-unit; attached % of total 6.9 71

Multifamily % of total 67.3 1

Median year built 1957

* Areas & pop. density, out of 410 metro areas/divisions, including metros in Puerto Rico; all others, out of 403 metros.

Sources: Census Bureau, Moody’s Analytics, 2018 except land area 2010

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Additional terms for Japan only: Moody’s Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody’s Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.