State Comptroller Thomas DiNapoli: Wall Street 1st half profits 'strong' but down from 2022

Wall Street profits so far this year are down compared with the same period of 2022, the New York State Comptroller’s Office said Thursday, reporting profits remain “strong” but warning that further declines could weaken the city’s and state’s budgets.

Profits for the first half of 2023 were $13 billion, down 4.3%, according to the office of state Comptroller Thomas P. DiNapoli.

The latest figures nevertheless tracked the industry's return to pre-pandemic levels of revenue following record profits in 2020 and 2021, the office said in a news release.

“The securities industry’s two years of record profits helped stabilize New York’s economy in difficult times,” DiNapoli said in a news release. “Since then the industry has maintained profits consistent with pre-pandemic levels. But these are volatile times in America and globally, and Wall Street’s relatively stable profits and employment levels could change quickly. Further declines could weaken New York’s tax revenue from the securities industry and have repercussions for our state and city budgets.”

The office said industry performance is typically measured by the pretax profits of the broker/dealer operations of the New York Stock Exchange member firms, currently 132 of them.

The state and New York City both rely heavily on taxing Wall Street for government budgets, giving both governments an advantage over most other places but also leaving both vulnerable to the vagaries of the market.

The comptroller’s office said: “In 2022, the city’s securities industry profits of $25.8 billion were a 55.8% drop from the previous year, but they were on par with pre-pandemic performance when annual profits averaged $22.3 billion from 2015 to 2019.”

The office estimates that Wall Street was responsible for $5.4 billion in city tax collections during the 2023 fiscal year. That is down 16% from the city’s record high of $6.4 billion in 2022.

About 74% of the $5.4 billion came in personal income tax collections. That is 23% of the city’s total personal income tax collections.

“In addition to personal income tax collections, the securities industry contributes to city property-related tax revenues as the largest segment of financial services office space tenants in the city,” the release said.

"The financial services sector is estimated to occupy approximately 30% of all office space in the city” and tends to be in higher-value properties. If remote work causes financial firms to reduce how much space is occupied, “it could impact city tax revenues significantly,” the release said.

By Matthew Chayes

matthew.chayes@newsday.comchayesmatthew

Matthew Chayes, a Newsday reporter since 2007, covers New York City.