QUICK QUILL — Upper-income Consumer Expectations have fallen by a record degree, red flagging spending downside for this critical cohort that accounts for the lion’s share of consumption. Meanwhile, at 72% and 75%, respectively, Higher Unemployment Expectations for the highest earners and the college-educated signal more layoffs in train. Employment in the services sector is increasingly vulnerable and poised to grab the baton from the weakest job markets in industrial states, where the unemployment rate is rising faster than payrolls across the highest swath of states in the current cycle.
TAKEAWAYS
- Over the last six months, UMich Upper-Income Consumer Expectations have fallen by 40.4%, a record decline; meanwhile, the News Heard-Higher Unemployment Expectations spread for this cohort has collapsed to a cycle low -76%, flagging further core PCE cooling
- In the Kansas City Fed’s March Services report, Current Hours Worked fell from -4 to -10, a new post-pandemic low and third straight negative print; the downturn in Hours Worked red flagged the same in Employment, which flipped into negative territory from 3 to -5 in March
- In February, the share of states with unemployment rising faster than payrolls over the last 12 months hit a cycle high of 31%; this gauge also first crossed the 30% threshold in March 2001 and March 2008, and in both cases peaked north of 90% within the next 12 months