Wall Street is gaining ground despite recent economic developments, according to a report by New York State Comptroller Tom DiNapoli.
According to the report released Tuesday, the securities industry is being challenged by a weaker, and perhaps less stable, global economy. But during the first half of 2015, Wall Street profits were strong and steady, higher than in the past three years. Comptroller DiNapoli: “We certainly see 2015 as a year that started off very very strong for the first six months. Wall Street profits we estimate coming in at $11.3 billion. When you look at recent history, that’s the strongest first half of the year since 2011.”
Jobs also rose last year for the first time since 2011. “Employment numbers were up toward the end of 2014, we felt that hiring was going to be up for 2015, again, we’ll see what’ll happen in the second half of the year, but that’s important because we estimate that for every job that’s created on Wall Street, and in financial services, two other jobs are created in other parts of the city’s economy, one other job outside of New York City but within New York State, so there is that multiplier effect.”
DiNapoli’s figures show the street had 174,000 jobs in August, having added 2,300 in 2014, and appeared headed toward adding another 4,500 this year before the market soured a bit. The comptroller sees the seesaw economic climate as a sign of the times. “Outlooks and perspectives and psychology changes at a moment’s notice, and we are so connected now to the globalized economy and the global marketplace that, what happens in China, what happens in Greece, what happens when Volkswagen has an issue, all of this has a tremendous impact — short term — but does have an impact.”
Adding to concerns: the Federal Reserve plan to hike short-term interest rates, which could affect profitability in the second half of this year.
E.J. McMahon is president of the conservative Empire Center For Public Policy: “There is considerable uncertainty, looking ahead at the economy’s performance, and by extension the market’s performance. I think there’s increasing concern that the federal reserve has actually waited too long to raise short-term interest rates. We live in a climate of disinflation in wages and profits that have been pumped up by basically a bubble in the stock market and there’s a question of how much longer that can go on.”
DiNapoli, a Democrat, is confident the street can still have a good year overall, despite the volatility. “The reality still is the U.S. economy is the strongest economy, and whatever challenges we’ve had in recent times, you still see that even for foreign investors, the U.S. is still the place to put your money. So, the U.S. stocks, U.S. real estate, all of that is still very much in demand, and I think that will enable us to weather the storm, and certainly you see in the bounce back from the global financial crisis, you know New York has been the place that has attracted tremendous amount of attention in terms of investment and capital coming here.”
The paper says the securities industry remains 9 percent smaller than it was before the 2008 financial crisis.
© 2015 WAMC