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Panel: AI, tariffs and equity risks loom over New York’s revenue outlook
Summary
Economists told lawmakers that AI-driven labor shifts, tariff uncertainty and the possibility of a stock‑market correction are principal near‑term threats to economic growth and state revenues; panelists said measurable AI disruption is uneven and capital‑gains swings remain a dominant fiscal risk.
A panel of academics and private‑sector economists told New York lawmakers that while the baseline outlook is modest growth, three systemic risks — AI‑driven labor disruption, tariff and trade uncertainty, and a sharp equity market correction — could materially weaken tax receipts that the state now counts on.
Parul Jain of Rutgers said the U.S. economy may see “tepid growth” in 2026 and placed recession odds near 30%, citing sticky inflation and cooling labor markets. "The recession odds are still reasonably high at 30%, but that's down from the previous 35%," she told the panel.
Maria Mastro of Goldman Sachs said A.I. is already shaping corporate behavior but that its productivity gains are hard to quantify. She identified a sharp equity market correction as the largest risk to the near‑term outlook: Goldman’s modeling suggests a 10% decline in stock markets could lower 2026 GDP by roughly 0.5 percentage points and reduce capital‑gains realizations that feed state income tax collections.
On AI, presenters said effects are concentrated in industries where deployment is easiest (software and some white‑collar tasks) and that net impacts on statewide employment will take time to materialize. Mastro and others urged caution in assuming broad, immediate displacement: measurable job loss is visible in some subindustries but nationwide labor reallocation may offset some losses.
Panelists also flagged tariff policy and federal actions as sources of uncertainty. Jain said tariff announcements have shown the ability to pass through to producer prices and consumer inflation, amplifying downside revenue risk if higher tariffs translate into weaker demand.
Legislators used the discussion to probe policy responses. Assemblymember Gary Pretlow asked about workforce strategies; speakers noted the need for training in high‑skill technical and trade occupations and said state policies on workforce development and education were relevant but not a short‑run fix.
Panelists concluded that while the base case does not put recession at the center, simultaneous realization of multiple shocks — particularly an equity selloff combined with faster AI displacement — could produce a substantial growth headwind that would reduce the revenue baseline New York is preparing to adopt.
