Gallup's Economic Confidence Index is based on the combined responses to two questions asking Americans, first, to rate economic conditions in this country today, and second, whether they think economic conditions in the country as a whole are getting better or getting worse. The resulting index correlates at a .96 level with the Reuters/University of Michigan Index of Consumer Sentiment and at a .84 level with the Conference Board's Consumer Confidence Index. Gallup's Economic Confidence Index is updated daily, based on interviews conducted the previous night, as well as weekly, providing a far more up-to-date assessment than the monthly reports from the two traditional indices, which are often weeks old when issued. Further, Gallup's monthly sample of about 15,000 consumers far exceeds the Reuters/Michigan sample of 500 and the Conference Board's undisclosed but widely assumed-to-be sample of about 3,500 mail-in surveys.
Gallup's Net Hiring Index is based on employed Americans' estimates of their companies' hiring and firing practices. Gallup asks its sample of employed Americans each day whether their companies 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. The resulting index -- computed on a daily and a weekly basis by subtracting the percentage of employers letting people go from the percentage hiring -- is a real-time indicator of the nation's employment picture across all industry and business sectors. Gallup analysis indicates that the Net Hiring Index is an excellent predictor of weekly jobless claims that the U.S. Labor Department reports each Thursday. The index has about a 90% chance of predicting the direction of seasonally adjusted initial weekly jobless claims and a better-than 90% chance of predicting the direction of seasonally adjusted initial claims on a four-week average basis. It also has a better-than 80% probability of projecting the direction of the unemployment rate as reported by the Labor Department on the first Friday of every month. In some ways, Gallup's Net Hiring Index is more meaningful than the government's weekly new jobless claims measure, given that not everyone who is laid off files for unemployment. The index may also pick up hiring trends days or weeks before they are manifested in the official unemployment rate or other lagging indicators. Finally, the index measures job creation (hiring) and job loss (letting go) on a continuous basis. This provides additional real-time insight not available from broadly aggregated indicators and unemployment data.
Gallup's Consumer Spending measure is calculated from responses to a basic question asking Americans each day to estimate the amount of money they spent "yesterday," excluding the purchase of a home or an automobile, or normal household bills. The result is a real-time indicator of discretionary retail spending, fluctuations in which are sensitive to shifts in the economic environment. Gallup's average monthly estimate of spending is correlated at the .65 level with the U.S. government's report of total U.S. retail sales (not seasonally adjusted), and exhibits similarly positive and substantial correlations to other government measures of retail sales. These positive correlations indicate that changes in Gallup's spending estimates are related to changes in both direction and magnitude of actual consumer spending as reported by the government. Further, Gallup's Consumer Spending measure provides estimates on a continuing basis, giving an early read on what the government eventually reports roughly two weeks after the close of each month. Gallup's continuous surveying allows for analysis of spending patterns on a daily and a weekly basis, which is particularly important to understanding seasonal variations in spending. The spending measure allows business and investment decisions to be based on essentially real-time information.
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