With Wall Street Slowing, Uncertainty Descends

Now that the biggest firms on Wall Street, widely regarded as the economic engines of New York City, have begun to sputter, economists and city officials are beginning to fear that the city’s run of steady growth will stall.

One big bank after another has announced shrinking profits, job cuts or both. And the gloomy reports are dashing hopes that large year-end bonus checks for investment bankers and traders would continue to fuel the local economy.

The latest psychic blow came on Thursday when the chief executive of Bank of America hinted that his company might reverse the expansion of its investment banking operations after suffering big trading losses in the last three months. That warning seemed particularly ominous because the bank, based in North Carolina, is building a $1 billion office tower on 42nd Street to herald its arrival as an important player in the financial capital of the country.

With the tally of casualties from the turmoil in the financial markets mounting, analysts are rethinking their predictions of a gradual cooling of the local economy.

The city comptroller, William C. Thompson Jr., had been forecasting a general slowdown this year after three years of steady growth. But now Frank Braconi, the chief economist in the comptroller’s office, says he is not yet sure whether the troubles in the financial markets will turn into “something worse than we were predicting.”

The comptroller’s office is not forecasting a local recession in the next several months, but the odds that one will occur are rising, Mr. Braconi said. A national recession would almost certainly drag the local economy down with it, he said.