The holes blown in New York budgets by Wall Street’s meltdown could reverberate through the Northeast region and beyond, after several years in which the financial capital’s strong performance helped drive national growth… New York state and New York City are preparing to address big budget deficits. And that is bad news for the wider U.S. economy, especially as other powerhouse states reel from job losses and sizable deficits. Next door in New Jersey, tax revenue fell short of projections by $258 million for the first four months of the fiscal year, and state officials there last week said Trenton’s budget deficit could reach $1.2 billion, triple the previous prediction. Neighboring Connecticut’s budget deficit, meanwhile, could hit $6 billion over the next two years… New York finds itself in a particularly perilous spot because of its increasingly heavy reliance on the financial sector as its tax base… Wall Street accounts for 5% of all jobs but could account for one in five job losses. “We’ll feel the major effects come January and February, when people would normally be getting bonuses,” says David I.Weprin, the city council’s finance-committee chairman… “the city and the state will have to tighten their belts permanently,” says Kathryn Wylde, president of the Partnership for New York City, a group of chief executives. “The financial-services industry will never be the bonanza [for the city] that it once was“…

…With Wall Street bonuses expected to decline significantly this year and the credit crisis only getting worse, Manhattan - where prices stood firm as those in the rest of the nation crumbled - is destined for a hit. “It’s going to affect all price points,” said Jonathan Miller, president and chief executive of Miller Samuel, a real estate appraisal and consulting firm. “Consumers right now are in a wait-and-see mode, and it’s not going to get better until the credit situation does.” The economy’s recent tumultuous twists and turns haven’t shown up in official data yet. In the third quarter, co-op and condo inventory numbers increased and sales numbers fell from their respective record lows and highs last year, according to a report from Prudential Douglas Elliman. Listing inventory for co-ops and condos climbed 34.6% to 7,003 units from the 5,204 units in the prior year quarter. Inventory levels in 2007 were near historic lows due to the record level of sales activity during the period that absorbed excess supply. The number of sales fell 24.1% to 2,654 from the prior year quarter of 3,499… Some real estate executives say they are already seeing a slowdown…

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