I'm currently reading a rather academic book titled "From Urban Village to East Village: The Battle for New York's Lower East Side." It was first published in 1994. The chief author is Janet L. Abu-Lughod, at the time of the book's release a professor of sociology at the Graduate Faculty of the New School for Social Research.
Her section on the the beginning of 1992 is particularly interesting...perhaps you can draw a few parallels to another time in the city. Like now...
The economy of the city also appeared to be going to seed. Recently released data on jobs and unemployment revealed that in 1991 the city had lost jobs at an even faster rate than in the 1975 recession. And these were jobs not only in manufacturing, which had long been deserting Manhattan, but in the services as well. Service job losses, while they began at the high end of the scale when the stock market first tumbled in 1987, were now being translated, through a multiplier effect, into losses within demand sectors that "yuppies" had formerly supported.
Vacancy rates in hotels were rising. It was easier to get a cab, even in bad weather. Reservations were no longer needed at many good restaurants and tickets to concerts and the theater were once again more available. Employees of commercial firms, both high on the ladder and now, in back offices as well, were being let go, and in the interests of reducing municipal and state costs -- and New York City and the State struggled with mounting budget defecits -- the number of public employees was also being reduced. The 1991 Christmas buying season was one of the most disappointing on record.
The bottom was also falling out of the housing market. Real estate agents, never ones to suggest at any time that housing might be a poor investment, were estimating that sale prices on luxury flats in the city had dropped a fourth to a fifth from their peak values in the late 1980s and that there were "real bargains" to be had in rental units, co-ops and condominia. But sellers, even those offering "bargains," reported months without a single buyer nibble. Advertisements in the Sunday real estate section of The New York Times for auctioned residential and commercial units expanded from half a page to several pages, and the lower auction prices established a ceiling beyond which other prospective buyers refused to bid.
The commercial firms in Lower Manhattan, whose job holders were the "white-collar workers" that a walk-to-work gentrifying zone of the East Village was intended to attract, were especially hard hit. Vacancy rates in privately owned buildings soared from under 3 percent in 1981 to over 20 percent in 1991.
In the East Village, although properties were too downscale to warrant private auctions and many residents were already so marginal to the economy that its collapse left them relatively unaffected, the wind was definitely out of the gentrifiers' sails.
The book includes the map of the East Village below...it's included in a section that discusses 1987. (Click to enlarge.)