There are a number of reasons, all of the comments have touched on them, but I am bringing a few sources to this.

To get into why the city looked like such a war zone, you need to understand that New York city was broke. There were multiple causes for it, suburbanization and containerization major parts of the issue. However, these aspects simply reduced the city's tax base and employment, but what really killed the city in that era was gross fiscal mismanagement caused by overly generous pensions, a very large independent welfare system, and a refusal of the city's mayors to confront these issues. For years, the city had been making peacemeal efforts to reduce its workforce while paying its day to day bills with junk status bond issues. Eventually, this led to the city seeking a bailout from the federal government which, after a good amount of grumbling, the feds did in the 1970s^^^1 . With an inability to pay for its basic services, the city crumbled, streets went unpaired, the subway was a mess, and major projects went unnoticed. In many places, the city was physically falling apart, such as when the west side expressway collapsed (wikipedia) or when the city descended into actual chaos following a blackout in 1977 (wikipedia).

Now, to specifically why the city looked so chaotic. One major reason was widespread arson, particularly in the outer boroughs of the Bronx (especially the South Bronx) and Brooklyn. With the population decline in the city and the loss of so many wealthy residents and factories to the suburbs, there were thousands of landlords who were sitting on almost worthless properties with thousands of dollars in debt. One way that landlords found to solve this issue was to simply burn their properties for the insurance money. ^^2
This became so widespread that there were reports of tenants who would be burned out of one property only to relocate to a new property where the process would start again. This led to large sections of the outer boroughs to look like the war zones that you describe, particularly the South Bronx.

There are arguments as to why this was happening. The primary one was that so many properties were under New York's aggressive rent control policies that it simply became impossible for the landlords to make money on the properties or evict tenants. ^^3 ^^4 Another argument was that these newly evicted tenants would be given priority in the city's newly built public housing projects, at least until the 1970s.

However, it's worth noting that while New York was the most recognized, the issues that plagued New York were endemic in most major american cities. Some have not recovered, such as perennial basket cases Detroit or Cleveland. One common refrain from this era was that it simply wasn't worth saving the cities, which led to some interesting media productions. One is the excellent 1981 movie Escape from New York, where Manahattan, lawless and ungovernable, is simply turned into a Mad Max style prison colony where all the prisoners simply have to fend for themselves. After Air Force One crashes in Central Park our hero, Kurt Russell, must save the president who is being held captive by roaming street gangs. In another 1981 movie Fort Apache, the Bronx our hero cop must fight horrific crime in a forgotten police precinct in the south Bronx.

If your interested in more material from this time, here is an excellent video compilation from movies and home video of the south bronx in the 70s and 80s.. You should also google Charlotte Street, Bronx, NY for some incredible images of several entire street which were burned our and abandoned. This website will also give you some excellent historic aerials of the city from the 1980s where you can see the abandoned buildings and the wide swaths of the city that had been demolished.

1. Johnathan Soffer Ed Koch and the rebuilding of New York City (New York: Columbia University Press 2010)

2. Nightmare in the City that Never Sleeps (London, England: BBC, 2009)

3. ibid

4. Man Alive: The Bronx is Burning Jeremy James (London, England: BBC, 1972)

Edit: Formatting, grammar, and spelling

In a term, demographic shift; more often known as white flight but more like middle and upper class flight as it wasn't unique to white people. After World War II, millions of people began leaving the cities en masse to settle in the suburbs. This is part of why the demographics of most cities always show a shift downward in population post world war or during the 1950's. The effects that hundreds of thousands of people, most often middle and upper class, leaving any given city is that they also took their tax dollars with them. The inclusion of a vast highway network linking the constituent parts of metro areas with each other also meant that people did not have to live within a city to work there. They could live in a less densely populated area where they could raise a family and then commute daily into the city (in NYC the metro train corridors allowed people to live in Long Island, Upstate, and North Jersey). The outskirts of cities often became more affluent than the cities themselves.

Cities now had to provide services for the emptied out husks of their former selves. That is, they still had to cover the same area with emergency services, utilities, education, housing, and roadwork with much less money than they were accustomed to all while trying to provide the same level of services as before. The drawdown in wartime industry cost hundreds of thousands of people their well paying jobs on the West/East/South coasts which meant many people within the cities lost their prime sources of income which further depleted the tax dollars from industry, income taxes, and spending that happens when middle class people have enough money to spend on things they don't need (things other than food and shelter or debts. This is actually a bigger problem now and a reason for the depletion of the middle class overall).At the time, deindustrialization occurred on a large scale which took many jobs away and moved them elsewhere, often overseas or to Mexico, in later decades which is clearly shown in the films you listed. NYC was hit hard by the loss of industrial jobs and many thousands of people resorted to crime to help feed their families. Jobs that paid anything close to being able to sustain a living were in short supply. Street crime and gangland activity were at a highpoint in the 70's. This was an economic low point for New York.

New York City was susceptible to the same trends affecting most other metropolitan areas and large cities across the US at the same time. Cities like Chicago and especially Detroit have still not recovered their earlier glory. New York City, however, underwent a large scale makeover via the various revitalization programs (neighborhood revitalization program) in the 1990's. The Manhattan and outer boroughs of today are nothing like the NYC of the 70's and early 80's. With vast influxes of cash from the state, city, and wealthy businessmen who were assured low prices by politicians for real estate in return for doing something with the land came in and began a building boom that is still continuing in one form or another to this day. The revitalization of Manhattan brought in the tourist dollars now vital to much of the business there as people were no longer afraid to travel there. Times Square was revitalized and made less "sleazy" and more family friendly. Many people view this to be a loss in character of what the city used to be and use the revitalization of times square as the poster child of gentrification that took root in the area. It cannot be denied that cleaning up Times Square from this to this helped the tourist industry immensely and provided a central point for the city to interface with the world as if it is to NYC what the forum was to imperial Rome; although a New Yorker who doesn't have to work there wouldn't be caught dead there today.

All this being said, it is certainly worth noting that the poverty of New York was not alleviated. It was driven underground and outward. Minimum wage jobs ($15.00 per hour was passed just recently which will help this situation immensely) are highly prevalent and without having a rent controlled apartment it is very very hard to make a living in the city without help. Pay is just too low to even work full time and still have a roof over your head and a warm meal by the end of the day. The homeless population, while still prevalent, was moved out and around during the Giuliani administration which clamped down on homeless people in public demanding that they not be allowed to sleep in plain sight. The poverty of New York is probably worse in many ways than it used to be but it is out of sight and out of mind. The gap between rich and poor is immense and the middle class of the city is largely living in the outer boroughs.

This is a vast subject but I tried to give it justice in a few paragraphs. If you have any questions specific to anything I talked about, such as the economic downturn of inner city America, demographic shifts, the effects that inflation and stagnant pay has had on the middle class, or the revitalization programs, feel free to ask.

Hi, do check out this recent post, which has links to several on that era of NYC, as well as related posts on deurbanization issues

• So I keep hearing that in the 1970s that New York City was in a terrible shape. What happened?

This will be a very selective description of one aspect of this question: white flight and suburbanization.

First, racial segregation in northern cities existed long before the 1960s. For example, St. Claire Drake wrote extensively on areas such as Chicago's Black Belt prior to WWII.^1 In fact, more detailed analyses of historic Census data show that extreme levels of residential segregation existed prior to 1900.^2 In this sense, the aversion of whites to living near minorities is as old as modern cities themselves. We can claim that the 1960s were themselves unique, but in what way?

Many point to white flight as the ultimate culmination and expression of this racial tension, but even at the time there was significant focus on not just why whites wanted to leave cities but how they were able to do so. For example, research at the time suggested that "most factors, both racial and nonracial, affect central city flight less through the decision to move, than through the choice of destination."^3

In other words, your ability to leave an area with minorities is dependent on your ability to find housing in an area that is predominantly white. Later research bore out the importance of these externalities, despite local community characteristics and individual preferences.^4

This leads to a simple question: Why were whites able to find housing outside of the city? Typically people talk about the effects of deindustrialization interacting with white flight to lead to suburbanization. In one sense, it's difficult to sort out the causal direction - did people move to suburbs first or did we shift to a more white collar economy first? I personally believe the jobs had to be available first in order to allow/induce migration, but Ken Jackson makes a much larger, more important point: The suburbs would be impossible without advances in transportation technology.^5 Satellite communities would be nearly impossible without highways, cars, and cheap gas.

Of course, this is not the only cause of suburbanization and I highly suggest reading Jackson's book on the topic more generally, but the role of transportation helps explain why white flight was even possible. To me this suggests that white flight and suburbanization may be strongly related to race, but not a direct response to the turmoil of the 1960s.

Finally, cities had declining white populations prior to the 1970s and after the 1970s. It may have been more accelerated during this time period, but the 1970s were part of a trend. Moreover, if we believe Wikipedia, from 1950 to 2000 the percentage of NYC residents that were white dropped from 90% to 45%. During the 1970s, it dropped from 76% to 61%. Thus even during the time period discussed here, whites made up a clear majority of NYC residents.

This all suggests that, even if race was a contributing factor, the story here is largely economic. Either it was economic via poor financial management by city officials (see below), or it was economic via the vast disparities in wealth between whites and minorities, or it was economic via the greater capacity of middle class whites to move to the suburbs than poorer whites. If we assume that urban "warzones" were due to a loss of tax base, then I think there is good reason to simply follow the money rather than confuse the issue with race.

Note: Many have alluded to the New York City fiscal crisis as somehow illustrative of the impact of white flight. Others have pointed out historical sources, but I would also suggest reading other accounts on the details. For example, NYC had been borrowing to cover its costs since 1960.^6 In this sense, the budgetary crisis began long before the precipitous decline in white residents, which seems to have occurred between 1970-1980 if Wikipedia is to be believed (and, on this at least, I do believe it).

^1 Drake, St Clair. 1940. “Churches and Voluntary Associations in the Chicago Negro Community.” W.P.A. district 3: United States Work Projects Administration.

^2 Logan, John R., Weiwei Zhang, and Miao David Chunyu. 2015. “Emergent Ghettos: Black Neighborhoods in New York and Chicago, 1880–1940.” American Journal of Sociology 120 (4): 1055–94. doi:10.1086/680680.

^3 Frey, William H. 1979. “Central City White Flight: Racial and Nonracial Causes.” American Sociological Review 44 (3): 425–48. doi:10.2307/2094885.

^4 Crowder, Kyle. 2000. “The Racial Context of White Mobility: An Individual-Level Assessment of the White Flight Hypothesis.” Social Science Research 29 (2): 223–57. doi:10.1006/ssre.1999.0668.

^5 Jackson, Kenneth T. 1987. Crabgrass Frontier: The Suburbanization of the United States. 1st edition. New York: Oxford University Press.

^6 Gramlich, Edward M. 1976. “The New York City Fiscal Crisis: What Happened and What Is to Be Done?” The American Economic Review 66 (2): 415–29.

Rent control.

Cost more to operate the buildings than you could legally collect in rent. Landlords abandoned and/or did not invest in their properties. Warzones developed.