Economy

Weekly Economic Wrap: Job Creation, Spending Unimproved

by Frank Newport

Consumer confidence is down slightly in July but up from a year ago

Washington, D.C. -- U.S. consumer confidence remains at a significantly higher level than it was a year ago, but Gallup's weekly update on Americans' economic behavior shows no sign yet of a similar uptick in job creation or consumer spending.

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From a short-term perspective, Gallup's consumer confidence measure for the week of July 20-26 finds 34% of Americans saying that the U.S. economy is getting better. This number is up slightly from 32% in the prior week, but taken as a whole, July so far is down slightly from June, and June was down from May. Thus, on a month-to-month basis, consumer confidence has been slipping.

From a long-term perspective, the current consumer confidence reading of 34% is almost three times as high as it was a year ago -- before the worst of the economic downturn -- when 12% of Americans said the economy was getting better. The most significant year-to-year gains came in March through May of this year. As noted, there has been a slight decrease in July, but confidence remains high relative to last year.

This gain in consumer confidence was not accompanied over the last several months by any concomitant gains in two key behavioral measures Gallup tracks: job creation and consumer spending.

Job creation is at 22% for the week of July 20-26, meaning that 22% of those employed indicated that their company was hiring new workers. This is down slightly from the prior week (26%) but is basically a continuation of the pattern of little sustained movement in either direction since January. On a year-to-year basis, Gallup's measure of job creation is off significantly. In late July 2008, 37% of those employed said their companies were hiring.

In similar fashion, there has been little sign of an uptick in the crucial measure of consumer spending. Spending began to collapse last fall and was off significantly in the first months of this year. Since then, there has been little movement in spending -- either up or down -- on a sustained basis. For the week of July 20-26, Americans reported spending $65 on an average day. That's very little changed from previous weeks. A year ago, Americans were spending about $100 a day, a pattern that typified the entire summer of 2008.

The accompanying table displays the full range of Gallup economic measures for the week of July 20-26, accompanied by readings from the prior week, the prior month, and a year ago.

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Summary

The fact that consumer confidence began to gain steam earlier this year has been perhaps the most significant shift in Gallup's continuous tracking of consumer economic measures this year. From a low point last summer of 8% who thought the economy was getting better, consumer confidence rose as high as 39% in early May before settling back down to the current weekly average of 34%. Some of that optimism may be attributable to the new presidential administration, some perhaps to the extraordinary efforts bound up in the stimulus package passed by Congress earlier this year in an effort to fight back the effects of the recession, and perhaps some to the rising stock market.

This increase in consumer optimism has not, however, been reflected in either increased spending or in workers' reports of job creation at their companies. These measures have remained at about the same level all year. For consumers' optimism to become economic reality, it will be necessary for job creation to show a decidedly more positive tilt, and for many sectors of the economy, consumers will need to loosen their purse strings and return to the level of spending seen last year.

Survey Methods

For Gallup Poll Daily tracking, Gallup interviews approximately 1,000 national adults, aged 18 and older, each day. The Gallup consumer perceptions of the economy and consumer spending results are based on random half-samples of approximately 500 national adults, aged 18 and older, each day. The Gallup job creation and job loss results are based on a random half sample of approximately 250 current full- and part-time employees each day. For the total samples of these surveys, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.

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.
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