In a clear sign of Wall Street’s rebound, investment firms are producing record profits this year and the average bonus could rise as much as 40 percent over 2008.
Wall Street firms produced $49.7 billion in profits in the first nine months of this year, a huge turnaround from the previous two years. The industry lost $42.6 billion in 2008 and $11.3 billion in 2007 — according to a new report from New York State comptroller Thomas P. DiNapoli.
“Profitability has soared because revenues rose while the costs of doing business – particularly interest costs – declined,” concluded DiNapoli. In addition, Wall Street has cut costs by continuing to shed jobs, losing 29,300 between November 2007 and October 2008.
In a twist emblematic of the Darwinian nature of Wall Street, those bankers who survived the mass layoffs are due to get huge bonuses outstripping last year’s payments. DiNapoli notes:
“The average bonus could grow at an even higher rate since there are fewer jobs than last year (some analysts estimate that the average could increase by up to 40 percent).”
Meanwhile, in a sign of the disparity between Wall Street and Main Street, the rest of New York City continues to suffer, according to the report, which notes that industries are still hurting and that the recovery is “expected to be slower” in the city than in the nation as a whole.
Read the report: