Americans earning $200,000 a year or more filed 113,796 claims for unemployment benefits in recent weeks, the highest rate since the COVID War began to wane, according to Fundstrat Global Advisors.
“The trend shows this is accelerating,” Fundstrat managing partner Tom Lee told Business Insider.
Last week likely was a crossover point at which high earners filed more jobless claims than workers earning $25,000 or less annually, he predicted.
The trail of top-earning workers without jobs follows rolling layoffs by Google parent Alphabet, Amazon, Meta, Microsoft, Tesla, Twitter, and other major and lesser tech firms.
“Wage income might be deteriorating faster than is implied by jobless claims alone,” Lee noted. “That’s a big deal in our view.”
The U.S. Federal Reserve should view it the same way when it meets this week to mull another interest rate increase, Lee contends.
“The composition of jobless claims argues strongly for a ‘dovish’ hike” of a quarter point, after which the Fed could pause to see that “upside and downside risks are far more balanced,” Lee added.
“This would mean the Fed would tolerate an easing of financial conditions,” he said.
The wave of layoffs among high-earning—and, presumably, high-spending—persons, coupled to the lingering upset in the banking industry and a tightening of lending conditions, should persuade the Fed that inflation is losing momentum, Lee argued.
That, along with a strong first-quarter earnings round, should send stock prices back up as the year progresses, he believes.
TRENDPOST: High-priced earners include lawyers and others who provide specialized services. The loss of those jobs is another indication of an overall economic retrenchment that nudges the U.S. economy closer to a recession.