New York Comptroller: As Many As 10,000 Financial Sector Layoffs Coming

Occupy Wall Street may soon be getting offers of cheap office space.

The New York State Comptroller reports that weakness in the US financial services sector may lead to 10,000 layoffs. To put that in perspective, there are, as of September 2011, almost 14 million unemployed in the US, not counting the people who have given up looking or are underemployed thanks to part time work.

So, while this is bad news for New York tax revenues and a personal tragedy for the people affected, it is not calamitous for the larger economy. In fact, the financial sector's percent contribution to GNP doubled in the 1990s over historical levels so could be due for a realignment which might offer benefits for economic rejuvenation. That is how the free market works. Or as the old saying goes, a recession is when your brother-in-law loses his job. A depression is when you lose yours. JL

The Associated Press reports:

Wall Street is again losing jobs because of global economic woes, threatening tax revenue for a city and state heavily reliant on the financial industry, New York Comptroller Thomas DiNapoli said Tuesday.

DiNapoli said that after adding 9,900 jobs between January 2010 and this April, the industry shed 4,100 jobs through August and could lose nearly 10,000 more by the end of 2012. That would bring the total industry loss to 32,000 positions since the economic crisis of 2008
He said profits at New York Stock Exchange firms earned $9.3 billion in the first quarter of this year, but profits declined sharply in the second quarter and are likely to reach $18 billion for the year, a third less than in 2010.

"The securities industry had a strong start to 2011, but its prospects have cooled considerably for the second half of this year," DiNapoli said. "It now seems likely that profits will fall sharply, job losses will continue, and bonuses will be smaller than last year."

Cash bonuses also declined last year.

Securities activities drove 14 percent of state tax revenue and 7 percent of New York City's last year. DiNapoli warned that current and future collections are likely to fall short because of the weakness.

"Excessive risk-taking on Wall Street was a major factor leading to the financial crisis and the recession," he said. "Regulatory changes that reduce risk and focus attention on long-term profitability rather than short-term gains will enhance stability.