The U.S. economy added more than 500,000 jobs in January, significantly defying expectations amid concerns in the private and government sectors of an economy and sharply increasing interest rates. 

But in New York, a very different picture on the jobs front has been the theme since the onset of the COVID-19 pandemic: Jobs have slowly come back, and the state may not recoup all of the 2 million jobs lost in the immediate shutdown in March 2020 for several more years. 

The assessment was made by Gov. Kathy Hochul's budget office this week when she introduced her $227 billion spending plan. New York has lagged the rest of the country in recovering jobs, many of them low wage and in sectors like hospitality. 

The Division of Budget noted that in December, when the U.S. reported a 3.5% unemployment rate, New York's jobless picture stood at 4.3%, the sixth highest in the country. As of December, New York has recovered 86.5% of the jobs lost in the initial wave of pandemic-related layoffs. The nation overall regained all its job losses by August of last year. 

New York's recovery has been hamstrung, in part, by inflation, labor shortages and the rising interest rates by the Federal Reserve. Bonuses on Wall Street, the financial health of which New York relies on for much of its revenue, are not as robust as they have been in more flush times. 

Tech companies, some of which have footprints in New York City, have seen layoffs in recent weeks. Combined with many of these information sector workers not going to offices as they once did, this has affected businesses who rely on commuter traffic, the Division of Budget reported. 

The budget office projects job growth will continue to be even slower at 0.7% this year and only 0.5% the following year. 

Much could depend on the so-called "soft landing" the Federal Reserve wants to achieve with the interest rate hikes. But the financial services sector could very well take the brunt of the increases. 

"The harder the Federal Reserve and other central banks press on the economic brakes, the deeper the ensuing national and global recessions in the upcoming fiscal year, which in turn could put downward pressure on both national and global demand for New York professional and business services," the budget office reported. "A deeper economic downturn could result in both lower wage growth due to greater layoffs and lower bonuses than forecast."