Wall Street bonuses might drop by as much as 20% as trading activity wanes and stock markets experience volatility, according to leading consultants.
Compensation firm Johnson Associates attributed this decline to concerns over President Trump’s potential imposition of substantial tariffs on imports.
In their latest report, released on Thursday, they forecast a 10% reduction in bonuses for investment banks, citing “economic uncertainty” as a reason for disappointing expectations surrounding mergers and acquisitions (M&A).
“Bankers are feeling anxious; they’re worried that client activity might stall, that companies won’t engage in investments, sales, or purchases, which could lead to a decrease in their fees. This is probably the biggest concern at the moment,” they noted.
The report further highlighted that prolonged uncertainty could worsen the situation.
Specifically, those involved in stock underwriting may experience bonuses dropping by 20%, while executives in hedge funds and asset management could see a decline of up to 10%.
Trump’s announcement about what he called “Liberation Day” stirred the markets globally, especially after he detailed a series of mutual tariffs aimed at countries perceived as unfair to the U.S. He postponed such tariffs—initially set to take effect on April 9—against all nations except China for a period of 90 days, as the administration sought to mitigate transactions with international trading partners.
Yet, this uncertainty has led companies to pull back on essential activities, affecting M&A deals and advisory fees.
This marks a significant shift from the previous year, as trade was revitalized following the economic impact of the COVID-19 pandemic.
Data from Dealogic indicates that the number of announced mergers and acquisitions worldwide plummeted in April to the lowest level seen in over two decades.
In the U.S., which is the largest M&A market globally, only 555 transactions were signed last month—a number last recorded during the financial crisis in May 2009.
Johnson’s report did suggest that some on Wall Street might find advantages in the volatile market conditions, as this upheaval could enhance profits for major bank trading desks. Investors are adjusting their portfolios to brace for an expected economic downturn.
According to Johnson, stock traders might see bonuses rise by 15% to 25%, while those in fixed income could experience increases between 10% and 20%.
Last year’s total bonus payouts reached a staggering $47.5 billion, driven by rising industrial profits, as per a report by New York State Secretary Thomas DiNapoli. The average annual bonus surged nearly a third, hitting an impressive $244,700.
