ALBANY – New York City’s economy is bouncing back from the devastating blow of the September 11 terror attacks, creating jobs again for the first time in almost three years, according to a report from the state comptroller’s office.

The report said the city’s workforce grew by 35,200 jobs over the past year, to 3.55 million, having lost 243,100 jobs between the destruction of the World Trade Center and July of last year.

Private-sector wages in the city, which were down 6.5% in 2002 and flat in 2003, are expected to climb in 2004 – thanks in large part to a 25% increase in year-end bonuses at Wall Street firms, most of which were paid in the first quarter.

Another sign of renewed vigor is a decline in the vacancy rate for commercial real estate in Manhattan, which is down to 12% from a peak of 13% last year, and a corresponding increase in rents.

Last year a record 37.8 million visitors came to New York City, up 7.2%. Hotel occupancy rates this year are significantly higher than in 2003.

The report warned of several clouds on the horizon though, including soaring energy prices, a higher-than-average inflation rate, expensive housing, and persistently high unemployment.

“While there have been a number of positive developments, the pace of job growth is still too slow, and rising inflation and the continuing volatility in the performance of the financial markets could hamper growth,” said the comptroller, Alan Hevesi. “Given the importance of the national economy in influencing local economic growth, it remains to be seen whether the uneven national recovery can strengthen and sustain itself.”

Mayor Bloomberg hailed the report as good news.

“Comptroller Hevesi’s report shows that our five-borough economic development strategy is creating jobs and opportunity across the city,” Mr. Bloomberg said. “We will continue to make our city more livable, more economically diverse, and business-friendly, so that every New Yorker who wants a job can get one. However, the city’s financial challenges persist and fiscal prudence is still necessary.”

A fiscal policy analyst at the Manhattan Institute, E.J. McMahon, faulted the report for not mentioning the impact of President Bush’s tax cuts, which he said pumped $15 billion into the city’s economy over the past three years. A reduction in federal income taxes on capital gains was particularly important to reviving the stock markets, Mr. McMahon said.

“The fact is the tax cuts had a massively favorable impact on New York, spurred the recovery of Wall Street … and pumped billions and billions of dollars into the economy of New York City,” he said. “This is the equivalent of writing about Detroit’s economy and ignoring a tax break for automobiles.”

Mr. McMahon said one of the biggest threats the city economy is the possibility of tax hikes – at the federal, state, or local level – to close mounting budget deficits.

The comptroller’s report found that the inflation rate for New York City rose to 3.5% during the first seven months of 2004, compared to a national rate of 2.4%. The biggest factors in that discrepancy were the cost of housing, which rose 4.1% in the city this year compared to 2.2% nationally, and the cost of food, which rose 3.9% in the city and 3.5% nationally.

The average value of one-, two-, and three-family houses in New York City has soared to $433,000 on the tentative tax roll for 2005, almost double what it was five years ago. The average sale price of a Manhattan condominium this year is $1.2 million, up 38% from last year, the average price of a cooperative apartment is up 19% to $858,000.

The comptroller’s statement portrayed this as a mixed blessing. “Although rising real estate values increase consumers’ wealth, high housing costs make it difficult for the city to attract and retain a skilled labor force,” it said.

The city’s unemployment rate for 2004, 7.8%, is down slightly from 2003 but remains well above the national rate of less than 6%. The comptroller’s statement said part of the recent decline in unemployment can be attributed to a growing number of people who have given up looking for work.