New York State Comptroller Tom DiNapoli is out with his annual report on Wall Street profits, and he finds, not surprisingly, they are up.
DiNapoli says pre-tax profits in the securities and financial industry rose by 11 percent in the first six months of 2018, above the increases during a strong 2017. Wall Street firms pay the highest average salary, over $400,000 a year, of any major industry in New York City, and annual bonuses paid to those workers are expected to be up for the third year in a row. The Comptroller says that’s good for the city’s and the state’s economy, and their tax collections. Eighteen percent of the state’s total revenue comes from the financial industry.
“However you feel about Wall Street, and sometimes it is a love–hate relationship among many folks, when they do well, we do well,” DiNapoli said.
The Comptroller says while profits are increasing in the financial industry, that wealth is not necessarily translating to those lower down the economic ladder. But he says the climb in revenues to the state helps, and can be used for programs to assist those in need.
DiNapoli, a Democrat, admits that the tax changes approved by President Trump and the Republican-led Congress late last year is boosting profits, at least in the short term.
“It would be fair to say in the short run that it probably had a positive impact in terms of the psychology of what’s happening on Wall Street,” said DiNapoli, who said “the jury is still out” on the tax overhaul’s long-term effects.
He says the market is overdue for a correction though.
The Comptroller says Wall Street is booming, even when reined in by the regulations imposed after the 2008 crash. He says it shows the market can flourish even without having to take excessive risks. And he says attempts in Washington to roll back the oversight would be a “mistake” and lead to a return to a boom and bust cycle.
“This report shows that they’ve been doing well, even with the enhanced oversight,” said DiNapoli who said it’s better to avoid the “high risk, high reward mentality” that has wreaked havoc on the markets, and on the state’s budgets. After the 2008 crash, the governor and legislature had to cut $10 billion from the state budget.
DiNapoli also says the British withdrawal from the European Union could benefit New York. He says the financial industry, which remains much smaller than before the 2008 crash, is projected to add 1,700 jobs by the end of year, some a result of Brexit’s effect on London’s markets.