Wall Street could shed another 10,000 jobs by the end of next year, drying up city and state tax revenue. Hit the jump to read the rest of the story.
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He said the European debt crisis, a sluggish domestic economy and volatility in the stock market will likely mean declines in securities industry profits, further job losses and smaller end-of-the-year bonuses than last year.
Despite a strong start to the year, Wall Street’s prospects “have cooled considerably,” which could mean the state and city fall short of tax collection projections this year and see further declines next year, DiNapoli said in releasing his annual securities report.
DiNapoli’s report found that New York Stock Exchange member firms earned $9.3 billion in the first quarter, almost half of the city’s $20 billion target for the year.
But profits dropped in the second quarter and DiNapoli is predicting that total 2011 profits won’t even reach $18 billion.
Meanwhile, Wall Street dropped by 4,100 jobs through August and DiNapoli warned another 10,000 jobs could be slashed by the end of next year.
If DiNapoli’s projection holds, Wall Street job losses would total 32,000 since January 2008.
DiNapoli blamed “excessive risk-taking on Wall Street” as a major factor leading to the financial crisis and recession.
“These developments will have a rippling effect through the economy and adversely impact state and city tax collections,” the controller said.
Wall Street traditionally makes up about 20% of the state’s total tax revenue.
Last year, it was down to 14% of the state’s tax revenues and almost 7% of the city’s.
One in eight jobs in the city and one of 13 in the state are tied to the securities industry.
DiNapoli called for regulatory changes that reduce risk and focus more on long-term profitability and less on short-term gains that he said would enhance stability.
“Despite the weaknesses we are seeing, the securities industry remains profitable and is a key component of the economies of New York City and New York State,” he said.
He said every job gained or lost on Wall Street leads to the creation or loss of two additional jobs in other industries.
Gov. Cuomo last week acknowledged Wall Street troubles could pose more problems for a state already facing a projected $2 billion budget shortfall in the coming fiscal year.
“The economy is slowing and people are now suggesting it may be especially slow on Wall Street, which we are heavily reliant on,” Cuomo said. “We already see the collections slowing, so yes, we are worried” that the deficit could grow.
