The first place to feel the spillover effect? Wall Street's own backyard.
New York City's economy is closely tied to its financial center. In the past, the City has gained from the prosperity of Wall Street. But now the turmoil in the financial sector is bubbling over and dragging the rest of the City down with it.
"New York is, to a very large degree, a one industry town - meaning financial services," according to Paul Bernard, a veteran executive coach and career management adviser who runs his own firm. "All businesses eat at the Wall Street trough," he said.
In large part because of tremendous job losses on Wall Street, New York City's unemployment rate jumped to 5.8% in August from 5% in July. That was the largest monthly increase in the City's jobless rate since the Labor Department started tracking unemployment in 1976.
"Pretty much every sector [in New York City] has slowed noticeably in 2008, compared to 2007 and 2006," according to James Brown, an analyst with the New York Labor Department.
"As the data now stand, the city is doing better than the national economy, but yes, it's obvious that we are going to decelerate dramatically going forward," Brown said.
A ripple effectOver 11,000 workers in the financial sector in New York City lost their jobs in the last year as of August, according according to the New York Department of Labor. Add to that more anticipated layoffs from New York-based Lehman Brothers, Merrill Lynch and American International Group and the number of financial services employees seeking work is overwhelming.
Not all of the casualties of those firms are executives and analysts. Many are administrators, entry level assistants, maintenance workers and so on.
And then there are those workers in industries that are directly related to the financial services sector - including information technology and consulting - who are also at risk. "We're starting to see a widening impact," Brown said.
But it doesn't stop there. Many other New Yorkers are also struggling to hold on to their jobs in the midst of an economic storm - jobs that depend on the financial industry. From bike messengers to small business owners, "these are the people that live from paycheck to paycheck," Bernard said.
Robert Wyatt, 49, runs a courier business called Lightspeed Express Delivery in Manhattan. He's been in business for 24 years and has weathered financial storms before. But he's already feeling the crippling effects of the financial fallout.
"This September, it seems like everything is seized up," he said. "That's never happened before."
Wyatt's clients are not Wall Street firms, but rather media companies and advertising agencies based in Manhattan. Those businesses are also tightening their belts in the wake of the Wall Street financial crisis, and that impacts Wyatt's business as well, "the same customers are doing less work," he said, and "it probably will continue to get worse."
Anupa Wijaya, 32, worked as a freelance consultant for Safe Horizon, a nonprofit organization in Manhattan dedicated to protecting women and families from violence, before taking six months off after the birth of her first child.
Now, she says, she's worried that finding a comparable position will be impossible. "I don't even know how much opportunity is going to be there because they don't have the funding they used to have," Wijaya said.
Safe Horizon, like other charity and nonprofit organizations in New York is heavily reliant on donations from financial services firms and their well-paid executives, which are largely drying up.
Troubled or now nonexistent firms, including Lehman Brothers, AIG and Bear Stearns had been major philanthropic donors to museums, colleges, hospitals and social service organizations, both in New York and elsewhere. But now, "that plug has been pulled," said Bernard. "The irony is, it's a time when a lot of social service organizations will desperately need it."
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