Wall Street’s ‘pandemic boom’ ends and impacts New York State budget | News, Sports, Jobs


Wall Street continues to make money, but a report released Tuesday by New York State Comptroller Thomas DiNapoli found that the “pandemic boom” that investment firms have enjoyed over the past two years is officially over.

How big has Wall Street’s boom been in the past two years? Profits generated by securities houses in the previous two years were $109 billion. In the previous five years, these companies reported profits of $112 billion.

The Comptroller cited higher interest rates, 40-year highs in inflation and “Geopolitical uncertainty” for depressing market activity over the past few months.

The 126 companies generated profits of $13.5 billion for the first six months of 2022. That’s a 56.3% drop from the money they earned in the same period l last year, but still comparable to the kinds of returns experienced by companies in the years before the COVID-19 pandemic.

The securities industry, which employs more than 200,000 people in New York City, is responsible for a significant portion of the state’s tax base. This is because of the high salaries taken from most of these jobs. Last year, the average salary, including bonuses, of someone working in the investment industry in New York was over $516,000. This is more than five times the average salary of workers in other parts of the private sector.

These companies accounted for about 22% of taxes collected by the state in the previous fiscal year, which ended in March. They also cover about 8% of the city budget.

DiNapoli told reporters on a call after the report was released that the estimated capital gains tax payments had “weakened” for the current quarter. If this continues, or if earnings continue to decline, it could influence negotiations in Albany for next year’s budget.

“It certainly underscores the importance, the critical importance of making sure other sectors of the economy, from retail to real estate to tourism, are able to recover. We have a diverse economy in New York and New York State, and we really need all sectors of the economy to succeed if New York is to regain the pre-pandemic economic strength that we have always been known for,” he said.

However, a bearish Wall Street could hamper the recovery of other sectors. DiNapoli’s report noted that the industry now accounts for fewer jobs — around 9% of New York’s workforce in 2022, compared to around 11% three years ago. This may be due to the rise of remote working in the financial sector, as people choose to telecommute from their suburban homes.

“This decline likely reflects the fact that with fewer workers in the office, they have fewer opportunities to patronize city businesses such as restaurants, retail stores, dry cleaners, and arts and recreational events,” says the report.

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