Wall St. Profits Soared in First Half of 2020 Securities Industry Buoyed by Federal Stimulus, Massive Influx of Liquidity

Amidst the economic tumult brought on by the COVID-19 pandemic, the securities industry saw its pretax profits reach $27.6 billion in the first six months of 2020, an 82 percent increase over the same period last year, according to State Comptroller Thomas DiNapoli’s annual report on Wall St.’s performance.

Industry performance is traditionally measured by the pretax profits of the broker/dealer operations of New York Stock Exchange (NYSE) member firms. There are now about 120 member firms.

First half profits in 2020 were nearly equal to 2019’s total profits of $28.1 billion. The jump was propelled by $2.4 trillion in federal stimulus funds and the lowering of interest rates. In addition, market swings drove trading volume upward along with firms’ commissions and trading income. Firms’ income from underwriting rose by more than one-third in the first half of 2020 over the same period last year.

According to the Comptroller, while continued profit growth in the second half remains to be seen, 2020 profits are on pace to surpass last year.

Other findings included in the report are:

• Employment: In 2019, the securities industry was at its highest employment level since the 2008 financial crisis with 182,100 jobs. This year, Wall Street is on pace to shed 7,300 jobs, erasing nearly half (45 percent) of the jobs gained since 2013.
• Salary: The average salary, including bonuses, for industry employees in New York City was $406,854 in 2019, an increase of 2 percent compared to 2018. It is nearly five times more than the $82,938 average salary for the rest of the private sector in the city in 2019.
• Bonuses: The average bonus paid in the industry for 2019 was $164,100, up 3 percent from 2018, and in line with last year’s increased profits. In the first half of 2020, firms have set aside nearly 5 percent more for compensation than last year. According to the Comptroller, the size of 2020 bonuses will heavily depend on the resumption of broad economic activity in the second half of the year, as well as associated loan performance. The city has forecast a one-third (34 percent) decline in bonuses this year. The state Division of the Budget has projected a decline in finance and insurance bonuses of 28 percent as part of the state’s first quarter financial plan update.
• Economic Impact: State and city economic impact from the securities industry has also lessened. The industry is the largest single contributor to the city’s economy, responsible for 17 percent of all economic activity in 2018. Wall St.’s share of state economic activity was 5.9 percent in 2019.Wall St. accounts for 18 percent ($15.1 billion) of all tax collections in state fiscal year ending March 30, 2020. The industry’s estimated contribution of $3.9 billion to the city’s total tax collections in its fiscal year ending June 30, 2020, was down 5 percent from the previous year, reflecting a decline in jobs and capital gains. Wall St.’s share of city tax revenue has declined over the past several years as the city’s economy has diversified.

Mayor Bill de Blasio this week appointed Melanie Hartzog as Deputy Mayor for Health and Human Services and Jacques Jiha as Director of the Mayor’s Office of Management and Budget.

Hartzog previously served as Budget Director and Jiha served as the Commissioner for the New York City Department of Finance.

Before joining the Office of Management and Budget, Hartzog served as Executive Director of the Children’s Defense Fund. Previously, she served as Family Services Coordinator for the Deputy Mayor for Health and Human Services and Deputy Commissioner of the Administration for Children’s Services. She also led a social services unit in the Mayor’s Office of Management and Budget, and was Director of Policy and Advocacy for the Human Services Council of New York City, Inc.

Hartzog holds a Master of Science degree from the New School’s Milano School of International Affairs, Management and Urban Policy and Bachelor of Arts from Eckerd College. She lives in Brooklyn with her husband and three children.

Prior to becoming commissioner of the Department of Finance, Dr. Jiha was the chief operating officer and chief financial officer of Earl G. Graves, Ltd/Black Enterprise. Previously, he served as deputy comptroller for pension investment and public finance in the Office of the New York State Comptroller, deputy comptroller for Nassau County, chief economist for the New York City Office of the Comptroller, executive director of the New York State Legislative Tax Study Commission, and principal economist for the New York State Assembly Committee on Ways and Means.

Born in Haiti, Dr. Jiha immigrated to New York City in 1979 and earned his bachelor’s degree in economics from Fordham University. He also holds a Ph.D. and a master’s degree in economics from the New School for Social Research. He lives in Queens with his wife and daughters.