Job-market conditions remained anemic while spending bounced back to last year’s new normal
PRINCETON, NJ -- Gallup's Economic Confidence Index was unchanged last week at -28 -- essentially the same as the prior two weeks' readings, and down from the optimism of a month ago (-20). Job-market conditions remained anemic and self-reported consumer spending improved slightly to match last year's new normal.
What Happened (Week Ending Jan. 31)
Economic Confidence was unchanged last week, as Gallup's Economic Confidence Index stood at -28 -- virtually the same as it has been over the prior two weeks (-28 and -29). Forty-six percent of Americans rated the economy "poor" and 10% rated it "excellent" or "good." Thirty-seven percent said the economy is "getting better" while 57% said it is "getting worse." Although economic confidence has been flat over the past three weeks, it is down from a month ago, when post-holiday confidence matched its highest level of the past two years (-20). Even so, economic confidence is much better now than it was at this time a year ago (-58).
Job Creation deteriorated slightly last week, as Gallup's Job Creation Index worsened to -1 from 0 the prior week. Twenty-three percent of employees reported that their companies are hiring and 24% said their employers are letting people go. While current job-market conditions remain bleak compared to those of two years ago as the recession got underway (37% hiring and 15% letting go), they are better than what Gallup measured a year ago (21% hiring and 27% letting go).
Consumer Spending bounced back somewhat last week from the prior week, when spending was at its lowest weekly average since Gallup began daily measurement in January 2008. Self-reported daily spending in stores, restaurants, gas stations, and online averaged $60 per day -- up 15% from the prior week and up 5% from the same week a year ago. Consumer spending this year has modestly exceeded that of a year ago during three of the past four weeks. As a result, January 2010 spending ($62 per day) essentially matched that of January 2009 ($64 per day) -- suggesting a continuation of what turned out to be a "new normal" for spending during most of last year. Consumer spending during this same week in 2008 was much higher, averaging $104 per day.
What to Watch For
Improvements in confidence as reported last week in the Conference Board's Consumer Confidence Index and the Reuters/University of Michigan Consumer Sentiment Index reflect in large part the improved economic confidence Gallup recorded at the beginning of January. What these monthly measures fail to show is that economic confidence has deteriorated over the past three weeks.
Given the Obama administration's effort to refocus on jobs, there was some hope that the president's State of the Union message would have a positive impact on Americans' confidence -- perhaps returning it to early January levels. However, last week's economic confidence results and the three-day polls taken before and after the president's address to Congress, like the performance of the equity markets, did not show such a positive bump, at least to this point in time. After a year of hoping and then experiencing repeated disappointments, many Americans may need to see a real upturn in their local economies before they buy into the idea that things are actually getting better.
Of course, the center of attention this week is Friday's jobs report for January. The government's jobless claims report last week indicated that claims are running higher than generally expected -- but in line with Gallup's Job Creation Index. Gallup's Jan. 25-31 results suggest that once again this coming Thursday, jobless claims may continue to run higher than the consensus expectation. And, as noted the past couple of weeks, Gallup's data also imply that the January unemployment rate will exceed the consensus of 10.0% when reported Friday.
Lawrence Summers, director of the White House's National Economic Council, noted in Davos, Switzerland, last week that while the recession, statistically speaking, may be over given two consecutive quarters of positive economic growth, the "human recession" is not. Gallup's economic data suggest that is clearly the case. Not only does the job market continue to show no improvement in hiring, but consumer spending continues to languish at least year's depressed, if new normal, level. Only when private-sector job growth returns in earnest and consumers who can afford to do so decide to spend once more will the "human recession" be over.
Learn more about Gallup's economic measures.
On Feb. 23, 2010, at its world headquarters in Washington, D.C., Gallup for the first time will release the findings from its daily U.S. employment tracking, including insights into the U.S. workforce's state of mind. Learn more ...
For Gallup 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 500 current full- and part-time employees each day. Results from the week of Jan. 25-31, 2010, are based on telephone interviews with 3,513 adults for the consumer perceptions and spending questions. For these results, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points. Results for the job creation and job loss questions are based on interviews with 3,938 employees, with a maximum margin of error of ±3 percentage points.
Interviews are conducted with respondents on land-line telephones and cellular phones.
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.