'Total private sector job losses during this two-year period could reach 225,000 in New York state, including 175,000 in New York city,' Mr DiNapoli said in a report on the crisis.

The report, covering the period October 2007 to October 2009, warned that 'job losses could be even greater if the downturn is longer and deeper than currently forecast'. The report underlines alarming budget shortfalls facing both New York city Mayor Michael Bloomberg and state Governor David Paterson.

Mr DiNapoli said that both city and state rely so heavily on Wall Street for tax revenues that they might need 'federal assistance to navigate these uncharted waters'.

The report predicts 48,000 job cuts in New York city's financial services sector, 38,000 of them in the securities industry.

The finance sector is so central to the area's economy that every Wall Street job supports two additional jobs in other fields in the city and another 1.3 elsewhere in the state.

Before the crisis, which has seen the collapse of major banks and the wiping out of trillions of dollars worth of investments, Wall Street was the engine of New York government revenues.

The securities industry accounted for just five per cent of New York city jobs, but 25 per cent of income.

A big slice of tax revenue has traditionally come in the fourth quarter when bonuses are paid out, but these are now expected to shrink dramatically, adding to the state's budget woes.

During the last big Wall Street downturn following the end of the dot.com bubble and the Sept 11, 2001 attacks, bonuses fell by 50 per cent over a two-year period.

'The size of the losses and the resulting consolidation and downsizing that is taking place in the securities industry suggest that a bonus decline of a similar or even greater magnitude could occur this time,' Mr DiNapoli said.

Bloomberg warned earlier this month that he would implement US$1.5 billion (S$2.3 billion) in spending reductions and cut 3,000 positions from the city workforce.

Paterson's warned last month that the state will have a US$47 billion budget shortfall over the next four years. -- AFP