New York and California each lose $1 trillion due to the exodus of financial firms

In recent years, the financial map of the United States has undergone significant changes after many Wall Street banks and large technology companies began to abandon their traditional homes (New York and California, respectively) to head mainly to southern states with a more favorable tax burden.

An analysis by Bloomberg News revealed that New York and California each lost $1 trillion as a result of this financial migration. The main reasons for the companies' decision are lower taxes and better weather elsewhere, such as Texas and Florida. The study details that from the beginning of 2020 to the end of March 2023, more than 370 investment firms (about 2.5% of the U.S. total, managing $2.7 trillion in assets) moved their headquarters to a new state.

“The vast majority of the migration was out of high-cost-of-living locales in the Northeast and on the West Coast and into Florida, Texas and other Sun Belt refuges. North Carolina and Tennessee each added more than $600 billion in assets, mostly from just two relocations: AllianceBernstein to Nashville from New York in 2021 and Allspring Global Investment to Charlotte from San Francisco last year,” claims Bloomberg.

The pandemic's influence on businesses' decisions

"Florida was the top destination for companies that left New York, with Icahn Capital Management and Cathie Wood’s ARK Investment Management among the most prominent to follow that path. Ken Griffin’s Citadel was the splashiest new arrival in Miami after it departed Chicago. Money manager DoubleLine headed to Tampa from suburban Los Angeles," the report said.

Bloomberg's analysis was based on testimony from more than 17,000 companies since the end of 2019 and highlighted that the pandemic also contributed to a more relaxed lifestyle for people in finance. For example, people who fled the Northeast for Florida's sunny weather when COVID-19 took off ended up staying longer than expected when lockdowns were extended.