Gallup measure suggests four-week average jobless claims will likely exceed 600,000
PRINCETON, NJ -- U.S. employees' perceptions of the job situation at their companies continued to worsen in early February, with Gallup's hiring measure falling to -8 during the week ending Feb. 7 -- even lower than the -4 of the prior week, and the lowest level for this measure since Gallup Poll Daily tracking began monitoring this measure in January 2008.
Job Losses Accelerating
The continued decline in Gallup's Net New Hiring measure suggests that the job market continues to weaken at an accelerating rate, with Thursday's government report of weekly jobless claims likely to exceed the 610,000 consensus forecast. How high will jobless claims for the week go? Predicting changes in weekly claims tends to be difficult given their volatility, particularly when one week's report is surprisingly high -- as was the case for the week ending Jan. 31, when the government reported 626,000 claims. That may be why the consensus forecast is for a lower level of jobless claims in Thursday's report.
Gallup's four-week moving average of jobless claims is not only a more stable but also a better predictor of actual conditions in the job market. The four-week average for the period ending Feb. 7 fell to -5 from -4 the previous week, suggesting that on Thursday, the Labor Department is likely to report that the seasonally adjusted four-week rolling average of jobless claims exceeded 600,000 -- up from 542,500 the previous week.
Jobless claims are now running at the highest level since the early 1980s. Gallup's hiring measure suggests that the pace of job losses continues to accelerate. And, as more people lose their jobs, more consumers and businesses pull back in an effort to reduce their exposure to the tumbling economy. This is the dangerous downward spiral policy-makers are trying to stop.
Over the next several days, the Congress is likely to pass a new fiscal stimulus plan and the Treasury will announce its new banking bailout plans. These represent unprecedented efforts to stem the rising tide of job losses.
If these plans are going to be effective, however, the new Obama administration and its economic team need to explain to both Main Street and Wall Street how these efforts are going to not only stop the current downward spiral but also turn the economy around and get it headed in a new, positive direction. Taking policy actions is not enough at this point. Rebuilding consumer and investor confidence will require much more. Americans need to believe that the actions being taken will make things better -- and that will be a much greater challenge than passing new legislation or creating new bailout programs.
Gallup.Com reports on its hiring measure every Tuesday.
Using weekly results for 2008, Gallup's analysis suggests that its hiring measure has a better than 7-in-10 probability of correctly projecting the direction of weekly jobless claims and a better than 8-in-10 probability of predicting the direction of the four-week average of jobless claims.
Gallup's hiring measure is based on aggregated interviews with a nationally representative sample of more than 2,000 U.S. workers each week. Gallup asks current full- and part-time employees whether their employers are hiring new people and expanding the size of their workforces, not changing the size of their workforces, or letting people go and reducing the size of their workforces. Gallup's hiring measure is computed by subtracting the "letting go and reducing" percentage from the "hiring and expanding" percentage. The assumption is that employees across the country have a good feel for what's happening in their companies, and that these insider perceptions can yield a meaningful indication of the nation's job situation.
Gallup's Net New Hiring Activity measure was initiated in January 2008. It is an effort to assess U.S. job creation or elimination based on the self-reports of more than 2,000 individual employees aggregated each week about hiring and firing activity at their workplaces. For results based on these samples, the maximum margin of sampling error is ±3 percentage point.
Interviews are conducted with respondents on land-line telephones (for respondents with a land-line telephone) and cellular phones (for respondents who are cell-phone only).
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.