All’s <i>very</i> well on Wall Street

Amy Scott Oct 18, 2006

KAI RYSSDAL: You tick ’em off on your fingers if you like. Yesterday, Merrill Lynch: $3 billion in quarterly profit. This morning, JP Morgan Chase: $3.3 billion, a 32 percent jump in net income. Tomorrow, Citigroup. I betcha it’ll be the same story there. Marketplace’s Amy Scott reports now on a banking boom that’s been fueling the whole New York economy.

AMY SCOTT: The average Wall Street salary hit almost $290,000 last year. More than five times what the average New Yorker makes. That’s according to a report by the New York State Controller’s office.

It says the recent surge in profits at firms like Goldman Sachs and Merrill Lynch has boosted pay and created jobs. But the report warns that the New York City economy may rely too heavily on Wall Street.

Ronnie Lowenstein with the New York’s Independent Budget Office says by some estimates more than a third of the city’s tax revenues come from the finance industry.

RONNIE LOWENSTEIN: When Wall Street has a good year, city tax revenues come in very strongly. When Wall Street has a bad year, there are problems.

And some are forecasting bad times ahead. The Securities Industry Association predicts Wall Street earnings will fall 23 percent next year as the economy slows. Anton Schutz makes his living investing in financial services firms.

ANTON SCHUTZ: When things are great, you always have to go “OK, what can go wrong? What can derail this?”

The answer, Schutz says, is anything from higher interest rates to political turmoil. Already many analysts have scaled back their earnings forecasts for the rest of the year.

In New York, I’m Amy Scott for Marketplace.

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