This is how much Wall Street bonuses are expected to plunge in 2022

Wall Street bonuses are projected to plunge 22% this year as mounting recession fears and decades-high inflation weigh on the market, according to a report Tuesday from New York State Comptroller Thomas DiNapoli.

The 22% decline in revenue would mark a stark reversal from Wall Street’s windfall the previous year, when the average bonus paid to securities industry workers in New York hit a record $257,500. If it holds, the comptroller’s projection would place the average 2022 bonus at roughly $200,850.

“The last two years of profits and bonuses fueled in part by the extraordinary federal response to the pandemic were not sustainable,” DiNapoli said in a statement on the report’s findings.

“As the sector slows down in 2022, leading firms are reviewing staffing and office space needs and a prolonged downturn could negatively impact state and city coffers,” DiNapoli added. “Continued support for other sectors that have been slow to recover is needed to speed recovery to their pre-pandemic levels and to help offset the decline in Wall Street-related tax revenues.”

The comptroller’s office noted the projected 22% drop could prove to be conservative.

“Between the drop in profits in the first half of the year and continuing economic headwinds, bonuses may experience a larger decline this year,” the report said.

Securities firms are tightening their belts in response to various economic headwinds, including the Fed’s sharp interest rate hikes, geopolitical tensions such as the Russia-Ukraine war and red-hot inflation.

The economic slowdown has brought an end to “Wall Street’s pandemic boom,” according to the comptroller’s office, with a significant cooldown in the IPO market and a drop in revenue from trading, securities and underwriting.

Wall Street’s pretax profits in the first half of 2022 declined 56% compared to the $31 billion they earned in the same period one year ago, the report said. The comptroller noted the industry’s interest-related expenses tripled compared to the first half of 2021 as the Federal Reserve hiked interest rates.

“Profits so far in 2022 have returned to the range experienced prior to the pandemic. Challenging market conditions persist, and profits for the third and fourth quarters may see further declines,” the comptroller’s office said in a release.

The expected declines came after securities industry workers earned average compensation of $516,560 last year – more than five times more than the average pay in other private sector jobs based in New York. That figure included the record $257,500 average bonus payment.

DiNapoli’s office will release its annual report on this year’s Wall Street bonuses next March.