Here's an irony: while recent news reports were upbeat about the decline in unemployment (to 8.3 percent), Wall Street bonuses were being downsized.
Forget for a moment that the real unemployment number is 15.1 percent (counting the under-employed and those who've stopped looking for work). And forget for a moment that the Congressional Budget Office recently said that they expect the jobless rate to climb to 8.9 percent by Q4 of this year and to 9.2 percent by Q4 of 2013.
So again, even as good economic news gets the spotlight, Wall Street workers feel a pinch. A Los Angles Times headline (1/10) reads "As payday nears, Wall Street bonuses shrivel." A CNNMoney article says "... bonuses are expected to drop between 30% and 40% for the vast majority of those working on Wall Street." A New York Times (1/20) headline echoes the same theme "The Dawn of Lower Pay on Wall St." The article's first line states "The day of reckoning may be at hand."
Our monthly Financial Forecast was not surprised. In the July 2011 issue, subscribers saw this chart:
Here's the text that accompanied the chart:
In May 2000, [The Elliott Wave Financial Forecast] observed a five-wave pattern on a long-term chart of New York City financial employment and predicted an imminent decline. Back in 2000, it took about eleven months for the brokerage industry payrolls to feel the pinch at the end of the Grand Supercycle bull market in stocks. In August 2007, Big Apple financial employment turned down from a secondary high two months ahead of the Dow Jones Industrials’ all-time high. The latest bounce in Wall Street employment was extremely weak, and it has once again turned down...The dominant trend should be down for a long time.
Financial Forecast, July 2011
That dominant trend is now playing out.
The New York Times article quoted an investment banker who said "The industry is experiencing massive retrenchment...and repeated cutbacks in compensation levels.”
Will the cutbacks on Wall Street soon be the story on Main Street?
Robert Prechter devotes much of the January Elliott Wave Theorist to "The Miserable Shape of the Economy," which he supports with several revealing charts. And his NEW February Theorist is now online.
It has never been more important to read our independent analysis of the economy. Swift and dramatic changes will catch many off guard.
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