skip to main content
Economy
Midwestern Economy Improving in September
Economy

Midwestern Economy Improving in September

by Dennis Jacobe

PRINCETON, NJ -- Gallup Daily tracking results from Sept. 1-24 find job creation nationwide down 17 points and consumer spending down 34% from the same period a year ago. These year-over-year declines are generally consistent across regions, with the exception of the Midwest. There, both job creation and spending are down less -- partly due to easier comparables from a year ago, but also due to some improvement in job-market conditions.

Year-Over-Year Changes in Job Creation and Consumer Spending, September 2008-September 2009

East

Job-market conditions continue to deteriorate in the East, as Gallup's Job Creation Index has fallen back to -2 so far in September -- suggesting the job situation remains essentially unchanged from June and July. Hiring remains anemic, with 24% of workers in the East reporting that their employers are hiring new employees and expanding the size of their workforces while 26% say their companies are letting people go. Although the Eastern job market is not good, it is better than it was earlier this year, when the fallout from the financial crisis was most pronounced.

Consumer spending is down 40% from a year ago in the East, with self-reported daily spending in stores, restaurants, gas stations, and online averaging $59 per day so far in September. This is the lowest spending level for any region; year-over-year spending in the East has not improved over the past four months. A lackluster job market appears to be reinforcing the new normal in consumer spending, producing a weak retail sales outlook in the East as the holiday season approaches.

East: Job Creation Index, June-September 2009 East: Year-Over-Year % Change in Spending, June-September 2009

Midwest

Job-market conditions have improved in the Midwest, as Gallup's Job Creation Index has increased to 3 so far in September -- its highest level since October 2008. Hiring is the highest for any region, with 25% of workers reporting that their companies are hiring new employees, and only 22% -- the lowest for any region -- letting people go. "Cash for clunkers"-stimulated improvements in auto industry sales seem to have led to increased hiring and a better employment picture in this part of the country.

Consumer spending in the Midwest is down 26% from a year ago, averaging $65 per day so far in September. This is the smallest decline in year-over-year spending for any region, and the second consecutive month that the Midwest has held this position among the regions. In part, this reflects the lower spending a year ago in the Midwest compared to other regions, as manufacturing in general and autos in particular have been struggling for a long time. At the same time, average daily spending in the Midwest is at its highest level since December 2008, suggesting that improving job-market conditions do translate into increased consumer spending -- and could produce better holiday sales in this region.

Midwest: Job Creation Index, June-September 2009 Midwest: Year-Over-Year % Change in Spending, June-September 2009

South

Job-market conditions have deteriorated in the South in September, as Gallup's Job Creation Index fell back to zero -- down from 4 in each of the past two months. The drop in the Index is attributable to a similar decline in hiring, with 23% of employees reporting that their companies are hiring new employees -- down from 27% in August. At the same time, 23% of workers say their employers are letting people go -- the same as in August. The extended period of decreasing demand for oil and gas products may be stalling job growth in this part of the country.

Consumer spending is down 34% from a year ago in the South, averaging $66 per day in September -- a modest $6 improvement compared to August. As is the case in the East, a lackluster job market appears to be reinforcing the new normal in consumer spending to produce a weak retail sales outlook in the South as the holidays approach.

South: Job Creation Index, June-September 2009 South: Year-Over-Year % Change in Spending, June-September 2009

West

Job-market conditions have improved in the West, with Gallup's Job Creation Index improving to -2 in September -- much better than the -7 of August and similarly weak market conditions in July. Improving job-market conditions here are primarily due to a sharp drop in the percentage of employees reporting that their companies are letting people go -- this has declined to 24% in September from 30% the prior month. Still, hiring remains weak, with just 22% of workers reporting that their employers are hiring new employees. The falling dollar and increasing exports seem to have slowed the deterioration of the job market in the West as the pace of layoffs has declined, but job creation remains anemic at best.

Consumer spending in the West is down 36% from a year ago, averaging $69 per day in September. This is essentially unchanged from recent months, and reflects a continued lack of improvement in year-over-year spending. Despite a slowing of the job market's deterioration in this region, the new normal in consumer spending and a dearth of job creation suggest a weak retail sales outlook for the West as the holiday sales season approaches.

West: Job Creation Index, June-September 2009 West: Year-Over-Year % Change in Spending, June-September 2009

Commentary

Just a year ago, the worst financial crisis since the Great Depression was underway and the U.S. economy hit a proverbial "wall." Ironically, this September, Gallup's Consumer Confidence Index has shown consumer confidence hitting its highest level since January 2008 -- a finding also reflected by the traditional Reuters/University of Michigan Consumer Sentiment Index, as reported on Friday morning. However, before any retailers or other businesses become too enthused, they should recall that Gallup's data show a virtually complete decoupling of consumer confidence from consumer spending.

On the other hand, this regional discussion of job-market conditions and consumer spending does suggest that improvements in the job market could lead to some improvements in spending. For example, increased spending seems to be accompanying new job creation in the Midwest -- after perhaps some lag -- while a moderation in job layoffs, as is the case in the West, does not seem to be having such a salutary effort.

Right now, the new normal for spending combined with continued weak job-market conditions are not promising for holiday retail sales. Still, it is possible that some areas such as the Midwest could provide a modest positive surprise in this regard, while areas such as the East could simply confirm today's weak holiday sales expectations.

Survey Methods

For Gallup Poll Daily tracking, Gallup interviews approximately 1,000 national adults, aged 18 and older, each day. The Gallup consumer spending results are based on random half-samples of approximately 500 national adults, aged 18 and older, each day. The Gallup Job Creation Index 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 ±3 percentage points.

Results for September are based on Gallup Poll Daily tracking interviews conducted over the period of Sept. 1-24, 2009. All sample sizes for consumer spending and the Job Creation Index exceed 1,000 in all regions. For the total regional samples of these surveys, one can say with 95% confidence that the maximum margin of sampling error is ±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.


Gallup https://news.gallup.com/poll/123200/midwestern-economy-improving-september.aspx
Gallup World Headquarters, 901 F Street, Washington, D.C., 20001, U.S.A
+1 202.715.3030