NEW YORK, Oct. 22 (UPI) -- New York state Comptroller Thomas DiNapoli said gridlock in Washington and monetary policy are changing the state's financial picture.
"Failure to resolve the federal budget and debt ceiling impasse could disrupt the economy and hurt New York City and New York state," DiNapoli said in a report issued Tuesday.
Wall Street earnings reached $10.1 billion in the first half of 2013 and looked ready to keep up with 2012, which was the third most profitable year on record, The New York Times reported.
New York state earned $3.8 billion in taxes from Wall Street in 2012, which contrasted sharply with 2007 and 2008 when securities firms posted record losses, the Times said.
But two major developments in Washington have threatened Wall Street earnings. Besides the budget debacle in October and the default scare that ended with an 11th hour compromise on the debt ceiling, the U.S. Federal Reserve's relatively open debate about ending an $85 billion per month asset purchasing program prompted a rise in interest rates, which slowed the housing market recovery and investments in general, analysts said.
Wall Street's reaction is telling. Financial industry employment is down 13.5 percent from 2007, but compensation has reached an average of $360,700, higher than any year before the financial crisis except one, the Times said.
"There are going to be haves and have-nots this year," said Brad Hintz, a financial industry analyst at Sanford C. Bernstein.
And the third quarter may reshape those expectations, as well. Fixed income trading revenue fell sharply in the third quarter at Citigroup, JPMorgan Chase, Goldman Sachs and Morgan Stanley, the newspaper reported.