Wall Street profits surge as inflation and card debt stay elevated

Profits at New York Stock Exchange member firms reached $45.9 billion in the first half of 2026, up 51.3% from a year earlier and above the $45.3 billion New York City had forecast for the full year, according to a report released Tuesday by New York State Comptroller Thomas P. DiNapoli. Inflation averaged 3.3% over the first eight months of the year, the report said, and Americans owed $1.26 trillion on credit cards at the end of June, the New York Fed reported.

If the first-half pace continues, 2026 profits could exceed $90 billion, compared with a record $65.1 billion in 2025, the report said. The figures reflect pretax profits at the broker-dealer operations of NYSE member firms, which the comptroller’s office uses as its measure of the securities industry.

“Wall Street is having an exceptionally strong year,” Mr. DiNapoli said in a statement, pointing to artificial intelligence spending, merger activity and trading volume during market volatility. Underwriting revenue rose 68% in the first half, and global mergers and acquisitions reached $2.8 trillion, the highest total for any half-year on record, the report found.

Pay is rising with profits. The industry’s bonus pool reached a record $49.2 billion for 2025, and bonuses made up an estimated 43% of securities industry wages in the city. NYSE member firms spent 18.8% more on employee compensation in the first half than a year earlier. Mr. DiNapoli said he expects the 2026 bonus pool to increase, while the city’s forecast assumes a 20% decline. The industry also generated an estimated $7.8 billion in city tax collections in fiscal 2026, or 9.2% of the total.

The report lists several risks: ongoing global conflicts, high inflation, rising interest rates, the sector’s reliance on AI and federal deregulation. The Federal Reserve raised its target rate to 4% in September, its first increase in more than three years, the report said.

The report also noted that the national unemployment rate rose to 4.2% in preliminary September data, with 29,000 jobs added that month.

AI financing is a large part of the picture. Venture capital investment in AI companies totaled $407 billion in the first half, more than 50% above the $264 billion recorded for all of 2025. Large cloud companies building AI infrastructure were projected to borrow a record $420 billion in 2027, according to Goldman Sachs data reported by Reuters.

The New York Fed’s latest household debt report, released Aug. 11, put total household debt at $18.8 trillion in the second quarter, a $13 billion decrease from the first quarter. Credit card balances rose $21 billion to $1.26 trillion.

The share of credit card balances 90 or more days delinquent rose from 7.6% in the third quarter of 2022 to 12.8% in the first quarter of 2026, prompting concern about repayment levels not seen since the Great Recession, New York Fed researchers wrote. They said the increase was driven largely by a growing pool of charged-off debts that lenders continue to report, and that the rate of new serious delinquencies has been relatively stable for almost two years. That rate was 6.97% in the second quarter, compared with 6.93% a year earlier.

The AI buildout has drawn pushback from governors in both parties. Pennsylvania Gov. Josh Shapiro, a Democrat, signed an executive order Aug. 18 requiring developers seeking state permits to commit to standards that include paying for the new power infrastructure their projects need. The order also bars permits until local approvals are secured.

Texas Gov. Greg Abbott, a Republican, ordered state regulators in August to audit data centers seeking grid connections and pause approvals in the meantime. The directive affected an ERCOT interconnection queue containing more than 1,800 large-load projects, and Mr. Abbott said about 90% of the new power requests were for data centers. On Sept. 21, he directed environmental regulators to pause data center permits until the audit is completed.

Virginia Gov. Abigail Spanberger, a Democrat, on Sept. 18 unveiled a framework that includes proposed legislation to end by-right approval for data centers using more than 25 megawatts. The proposals need General Assembly action, and the plan does not include a statewide moratorium.

The National Conference of State Legislatures tracks moratorium proposals in 16 states. Several have failed or been vetoed.