Job creation has occurred in private sector as well as in federal government
PRINCETON, NJ -- Americans reported spending an average of $80 a day last week, the highest such weekly spending average in more than 17 months, and Gallup's Job Creation Index, at +8 last week, continues to reflect the recent pattern of more positive reports of hiring at Americans' places of employment. These two positive economic trends have occurred despite a slight erosion of Americans' expressed confidence in the U.S. economy in the last several weeks.
The accompanying graph displays the year-to-date weekly averages of Gallup's three key economic measures: economic confidence, job creation, and consumer spending. (Complete data are located on page 2 of this report.)
Perhaps the most important trend in these results is the continuation of American workers' more positive reports of hiring and firing at their places of employment. After measuring between -2 and +3 from January through early April of this year, Gallup's Job Creation Index has been at +5 or higher each week since. For the week ending June 6, the Index was +8, with 29% of workers reporting that their employers were hiring workers and expanding the size of their workforces, and 21% saying their employers were laying off workers and reducing the size of their workforces. (The rest reported no change in workforce status at their places of work.)
This week's +8 and last week's +9 readings are the highest weekly Job Creation Index averages since October and November 2008, and reflect significant year-to-year improvement compared to the -5 of a year ago. Still, the Job Creation Index was above +20 for the first 19 weeks of 2008, when Gallup began tracking it, underscoring the fact that the jobs picture has substantial room for more improvement.
Gallup research indicates that job creation is correlated with consumers' self-reported daily spending, a relationship seen in the concomitantly positive increases in both measures in recent weeks. Average reported daily spending was at $80 last week, the highest weekly average since December 2008. More generally, consumer weekly spending averages have been higher than $70 for four of the last five weeks; the last time weekly spending averages were above $70 for two consecutive weeks was December 2009.
At the same time, Americans' attitudes about the economy, as measured by Gallup's Economic Confidence Index, have been drifting downward. The Index values for the last two weeks have been -27 and -26, after reaching a more positive -21 in late April and early May. Previous Gallup research has shown that economic confidence can reflect politics and current news events, and is not necessarily highly correlated with consumer spending. The current downtick in economic confidence occurs even as the BP Gulf Coast oil spill is dominating the news, and as the U.S. stock market has retreated significantly from previous highs.
Last week's government report on employment was accompanied by a number of negative interpretations concluding that many of the new jobs created in May were short-term government jobs.
A Gallup analysis of job creation in May does show that the federal government is leading the nation's hiring parade. Federal employees report an overall Job Creation Index of +17, significantly higher than the overall index value of +7. (It is possible that this measure understates concentrated part-time government hiring by the Census Bureau. It should also be noted that Gallup's jobs data are not seasonally adjusted.) The more robust picture of job creation at the federal government level stands in sharp contrast to job creation as reported by employees who work for state and local governments, whose Job Creation Index values are -22 and -21, respectively.
Importantly, however, Gallup's May data show that job creation was not confined to the federal government sector. Employees who work in the private sector reported an average Job Creation Index value of +11, meaning that hiring significantly outpaced layoffs in nongovernmental companies across the country.
These data suggest that state and local government employment, which constituted about 13% of the overall adult workforce in Gallup's May interviewing, is indeed a drag on the overall employment picture nationally, while federal government employment, about 5% of the workforce, is a definite lift. Still, the majority of all workers are not employed by the government, and the important factor is that private sector workers in May were significantly more likely to report that their companies were hiring rather than firing.
Overall, job creation at the federal government level appears to have dropped slightly over the first five months of the year, while job creation in the private sector has grown. As recently as January of this year, the Job Creation Index value for private sector employees was zero, meaning that just as many companies were firing as were hiring workers. Now, as noted, the Job Creation Index in the private sector is at +11. Job creation at the state and local government level fell from January through April, but had a modest uptick in May -- although the overall picture for these groups of employees remains bleak.
Gallup's latest economic data reflect a continuation of more positive values on two critical measures: job creation and consumer spending. Both measures are at or near their highest points in well over a year -- although both have yet to approach the baseline positive readings of early 2008, when Gallup first began measuring them.
Gallup analysis confirms that federal government employees are particularly likely to report that their employer is hiring and not firing, while state and local government employees report just the opposite. But Gallup's Job Creation Index among private sector employees in May is also well into positive territory, indicating that job growth is not confined primarily to the federal government.
The fact that Gallup's Economic Confidence Index remains in negative territory and has in fact slipped in recent weeks underscores the degree to which attitudes about the economy may diverge from actual economic behavior. Americans' economic attitudes at this point may reflect concern over the oil spill, the declining stock market, and other news events, but their actual spending behavior appears to be more reflective of the real-world situation relating to jobs.
Gallup.com reports results from these indexes in daily, weekly, and monthly averages and in Gallup.com stories. Complete trend data are always available to view and export in the following charts:
Read more about Gallup's economic measures
Results are based on weekly and monthly aggregates of telephone interviews conducted as part of Gallup Daily tracking. Economic confidence and consumer spending data are based on random samples of approximately 3,500 adults each week, aged 18 and older, living in all 50 U.S. states and the District of Columbia, selected using random-digit-dial sampling. Job Creation data are based on random samples of approximately 4,000 employed adults each week, aged 18 and older, living in all 50 U.S. states and the District of Columbia, selected using random-digit-dial sampling
For results based on weekly samples for all three indices, one can say with 95% confidence that the maximum margin of sampling error is ±2 percentage points.
Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each daily sample includes a minimum quota of 150 cell phone respondents and 850 landline respondents, with additional minimum quotas among landline respondents for gender within region. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.
Samples are weighted by gender, age, race, Hispanic ethnicity, education, region, adults in the household, cell-phone-only status, cell-phone-mostly status, and phone lines. Demographic weighting targets are based on the March 2009 Current Population Survey figures for the aged 18 and older non-institutionalized population living in U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.
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.
For more details on Gallup's polling methodology, visit www.gallup.com.