Wall Street woes to take shine off lavish N.Y. lifestyles

Tue Sep 16, 2008 8:00am EDT
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By Michelle Nichols and Nicole Maestri

NEW YORK (Reuters) - The deepening upheaval on Wall Street has rippled throughout New York's business community, hurting everyone from luxury goods stores to charities to Manhattan restaurants, store owners and experts say.

With New York already feeling the effects of a weak U.S. economy, the fall of bank Lehman Brothers, the sale of its rival Merrill Lynch & Co Inc and the struggles of insurer American International Group, all headquartered in Manhattan, have only added to concerns as Wall Street lays off well-paid bankers and the wealthy rein in their spending.

"These people will probably have to start curbing on some of the more lavish expenses," said Matthew Miller, editor of Forbes magazine's list of the richest Americans. "A $20 martini might need to turn into a $15 martini -- it's all relative."

"There's probably a lot of millionaires who can't buy their girlfriends Prada bags this Christmas," he quipped.

The biggest financial industry shake-up since the Great Depression will likely worsen an already tough situation, the city's restaurant owners and retailers say.

Wall Street's total compensation is about 35 percent of all wages and salaries paid in New York. Each job in the financial sector creates from one to as many as four service jobs, at companies ranging from shops to law firms, economists say.

"There has been a definite downturn in the economy and a restaurant purchase is a discretionary purchase. People don't have to eat in restaurants," said Chuck Hunt, executive vice president of the New York State Restaurant Association.

"The only thing we've got going for us in terms of customers are the Europeans that come in with their euros that are worth a lot more than our dollar at this point," he said.   Continued...

<p>A model presents a creation at the Omnialuo Zheng Luo Spring 2009 collection during New York Fashion Week September 12, 2008. REUTERS/ Kena Betancur</p>