The U.S. securities industry is expected to generate pre-tax profits of $18.9 billion in 2004, down more than 20% from 2003, the U.S. Securities Industry Association says.

This represents a 22% drop from the $24.1 billion recorded in 2003, but it still represents the fourth most-profitable year for the industry, the SIA says. Total revenues are forecast to reach $216.3 billion in 2004, up 1.7% from last year. (All figures are in U.S. dollars.)

Industry employment has been rising too. Securities and commodities industry employment reached a record high of 840,900 in March 2001, then declined 9.9% over the next two years to a low of 757,800 jobs in May 2003. Since May 2003, employment has risen, mirroring the increase in industry revenues and pre-tax profits for the year, the SIA says. Since the May 2003 low, the industry has regained a total of 35,800 jobs — a 4.7% increase over the past 16 months to 793,600 in September.

The SIA estimates that the industry will raise $2.9 trillion of capital in 2004 (annualized based on nine months of data) through corporate underwriting activity in the U.S. The SIA says that this marks the second-straight year in which nearly $3 trillion was raised through new bond and equity issues. It also notes that in the last five years, the industry raised approximately $12.8 trillion, surpassing the $12.4-trillion raised during the 30-year period from 1970 to 1999.

Initial public offerings rebounded in 2004, generating an estimated $42 billion in 2004 (based on nine-months annualized data). This is a sharp rebound from the $16 billion raised in 2003, but well off the record of $76 billion recorded in 2000.

The dollar volume of announced and completed M&A deals is expected to total $757 billion and $669 billion, respectively, in 2004. This is a far cry from 2000’s peak of $1.741 trillion and $1.768 trillion, respectively, the SIA says.

Cross-border trading has grown dramatically since 1980, the SIA reports. From 1980 to today, U.S. trading in foreign securities grew dramatically from $53 billion to almost $7.4 trillion today (annualized based on data from the first eight months of 2004). Foreign gross activity in U.S. securities has also grown exponentially from $198 billion in 1980 to $32.95 trillion today (annualized based on data from the first eight months of 2004), the association reports.

Today, about 73% of Americans’ liquid financial assets today are invested in securities-related products, such as stocks, bonds, and mutual funds, with the balance in bank deposits and certificates of deposit, according to Federal Reserve data. In 1975, 55% of Americans’ assets were in bank deposits. The total value of assets grew from $1.7 trillion in 1975 to a peak of $19.3 trillion in the first quarter of 2000, before falling back to $16.5 trillion by mid-year 2004 (a 10-fold increase since 1975).