It has happened before. The cuts were especially deep after the market crash in 1987. New York City now believes that Wall St. will cut 20,000 jobs over the next two years. The number seems too small.
Accoding to Reuters: "The city's Independent Budget Office, in its report, estimated that Wall Street's profits for 2007 will sink by more than 80 percent to the lowest level since 1994." Financial firms account for almost 35% of all income in NYC.
While this would seem to be a local problem, that is not entirely true. Companies that sell luxury items from Tiffany (NYSE:TIF) to BMW will take some hit from falling employment among workers at big banks and brokerages.
Just as important, all of these people pay a hefty federal income tax. As unemployment grows the government will see receipts from the IRS fall. The more of the rich who move off the payrolls, the more difficult it will be to cut the Federal deficit and fund agencies like the Fed.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
3-25-2008 @ 9:12AM
Joe said...
Cuts are way past due. FAR more use of technology has been slow to be used on Wall Street.
3-25-2008 @ 9:15AM
Harry said...
What a JOKE...trying to sell how the federal government will be hurt if Wall Street jobs are cut. STOP IT!