The Informed Investor

The unemployment rate still hovers around historic lows, inflation is finally falling, and GDP keeps ticking up. But for high-earning Americans, fresh off a couple of rollicking pandemic years, it’s beginning to feel a bit more like a recession, according to a recent analysis by The Wall Street Journal.

Thanks to the tight labor market, wage growth among lower-paid and less-educated laborers has finally outstripped that of their higher-paid and higher-educated counterparts after four decades of increasing wage inequality, according to a recent research paper published by the National Bureau of Economic Research. That dovetails with Labor Department data that shows recent wage growth among the highest earners in the bottom 10% has surpassed the rate of inflation, while those in the 90th percentile have seen wages fall behind rising prices. Meanwhile, ritzy jobs in the New York City securities industry saw a sizable 26% haircut to typical end-of-year bonuses in 2022, down to, ahem, just $176,700, according to state-level data.

And it’s not just income where society’s upper crust (or, at least, the lowest rungs of the upper class) are feeling the sting. There’s a reason why newspaper business sections feature seemingly contradictory headlines about both historically low unemployment rates and massive waves of high-profile layoffs:

Roughly one-third of layoffs announced by American companies this year have stemmed from tech; Meta, for example, where the median salary is nearly $300,000, has cut thousands of employees so far this year. Wall Street has been far from immune to layoffs this year as well.

Meanwhile, Bank of America Institute economists say the number of households earning at least $125,000 getting unemployment benefits was up 40% in April compared to a year before, a spike five times that of households earning less than $50,000. And that’s only in the 30 states in which laid-off workers receive benefits via direct deposit — a list of states that crucially doesn’t include California and its ailing tech hub.

The downturn has led, unsurprisingly, to some belt-tightening. The Bank of America Institute economists also found that discretionary credit and debit card spending dipped in April year-over-year for high-income households, even though it increased for most other households.

However,  high-earning Americans will likely be okay, even if they’re increasingly living paycheck to paycheck. But in California, home to an outsized share of the nation’s homeless population, loss of job or income was listed as the leading cause for homelessness in a new comprehensive study from researchers at the University of California. Meanwhile in Los Angeles, the homeless capital of the nation, rates soared roughly 10% last year, according to a recent annual report.

IMPORTANT DISCLOSURE INFORMATION

The Investment Counsel Company of Nevada (“Company”) is an SEC registered investment adviser located in Las Vegas, Nevada. Company may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. Company’s web site is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of Company’s web site on the Internet should not be construed by any consumer and/or prospective client as Company’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. Any subsequent, direct communication by Company with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of Company’s current written disclosure Brochure discussing Company’s business operations, services, and fees is available from Company upon written request. Company does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Company web site or incorporated herein, and takes no responsibility, therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

*Please Note: Limitations: Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by ICC) will be profitable, equal any historical performance level(s), or prove successful.

Certain portions of Company’s web site (i.e. newsletters, articles, commentaries, etc.) may contain a discussion of, and/or provide access to, Company (and those of other investment and non-investment professionals) positions and/or recommendations as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s). Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from Company, or from any other investment professional. Company is neither an attorney nor an accountant, and no portion of the website content should be interpreted as legal, accounting or tax advice.

Please Note: Limitations: Neither rankings and/or recognition by unaffiliated rating services, publications, media, or other organizations, nor the achievement of any professional designation, certification, degree, or license, membership in any professional organization, or any amount of prior experience or success, should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Investment Counsel Company is engaged, or continues to be engaged, to provide investment advisory services. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers (see below as to participation data/criteria, to the extent applicable). Unless expressly indicated to the contrary, Investment Counsel Company did not pay a fee to be included on any such ranking. No ranking or recognition should be construed as a current or past endorsement of Investment Counsel Company by any of its clients.

ANY QUESTIONS: ICC’s Chief Compliance Officer remains available to address any questions regarding rankings and/or recognitions, including the criteria used for any reflected ranking. Please review Important Disclosure Information set forth in the last section of this website.