Bear Stearns could lay off 5,000 New York City employees.

The wave of pink slips about to hit Wall Street should be a warning to New York's luxury retailers, although the ripples of Bear Stearns' fall last week might not be fully felt until bonus season next winter.

The wave of pink slips about to hit Wall Street should be a warning to New York’s luxury retailers, although the ripples of Bear Stearns’ fall last week might not be fully felt until bonus season next winter.

The New York City comptroller’s office is guessing that the investor run on Bear Stearns and proposed acquisition by J.P. Morgan Chase & Co, which is still subject to approval by shareholders, will cost the city about 5,000 jobs. Other Wall Street heavyweights, such as Lehman Brothers, Goldman Sachs and Citigroup, also have either laid off workers or are said to be considering payroll cuts.

“Clearly, it’s not good news for the luxury retailers,” said Marcia Van Wagner, deputy controller for the budget, New York City comptroller’s office. “There’s going to be a lot of retrenchment in that area of spending.”

Finance professionals losing their jobs, though, are expected to largely land on their feet.

“A lot of hedge funds and private equity firms are hiring,” said Marisa DiNatale, senior economist at Moody’s, who studies the New York market. “Some people might not find a job for a while, but certainly others will find one right away.”

“It’s too soon to tell,” said Michael Gould, Bloomingdale’s chairman and chief executive officer, of any impact from Wall Street layoffs. “This moment, the business in Manhattan is phenomenal.”

Overall, the luxury market has lost some steam, with sales decreasing 2.2 percent in February, the third consecutive month of year-over-year declines, according to MasterCard SpendingPulse, which uses credit card and other data to estimate the total market.

New York’s securities industry employed almost 186,000 people as of January, said Van Wagner, citing government figures. While that is only about 5 percent of all New York City jobs, it accounted for 24 percent of total wages last year and a large portion of that is in the form of bonuses.

“It’s not like it’s the end of the world,” said Van Wagner, noting people at Bear Stearns who keep their jobs will hold onto their salaries. But in many cases salary makes up only a small percentage of wages for top executives at financial firms, with the vast majority coming through bonuses.

This story first appeared in the March 24, 2008 issue of WWD. Subscribe Today.

Last year, Wall Street bonuses slipped from record levels in 2006, but not as much as some feared. The comptroller’s office estimated that the securities industry paid out $33.2 billion in bonuses to its New York City employees, a 2 percent drop.

Still, much of the economic well-being of New York City depends on Wall Street.

“The combination of a bad year on Wall Street and a national recession is when we really start to feel pain,” said Van Wagner.

Overall, the New York City economy is expected to grow by about 1 percent this year and add 13,000 jobs, though both figures are subject to downward revisions.

For now, weakness in the luxury market Stateside is being delayed by an influx of foreign shoppers.

“It’s definitely being offset to some extent…by the fact that the dollar’s so weak and there’s been so much international visitation to the U.S., and especially New York,” said DiNatale. As stores look out over the horizon, perhaps seeing the storm clouds of more declines, they might choose to pull back on their orders.

“The fallout from the macro climate definitely is going to impact wholesale because stores are looking at it and they’re going to plan their budgets,” said Jeffry Aronsson, former ceo of Donna Karan International and Marc Jacobs, who now runs his own luxury investment firm. “If it’s a big company that in effect has been betting on its future or has analysts on the Street that they have to please, they’re going to be under pressure.”

Companies that don’t depend on continuous and consistent growth, but can swim with the ebbs and flows of the market, will fare better, said Aronsson.

“It may be a hard day, but it’s just another day,” he said.