PRINCETON, NJ -- Falling stocks, a lower unemployment rate, winter storms, and even the approach of the Super Bowl and the parties that surround it seem to have had little impact on American consumers last week, as Gallup's Economic Confidence Index was unchanged at -29 -- virtually the same reading as those of the prior three weeks. Job market conditions also remained essentially the same, as Gallup's Job Creation Index was at 0 -- compared to -1 the prior week and 0 for the week ending Jan. 24. Even with parties to hold and paychecks in hand, self-reported consumer spending remained unchanged at an average of $60 per day last week.
What Happened (Week Ending Feb. 7)
Economic Confidence was unchanged once again last week, as Gallup's Economic Confidence Index stood at -29. Forty-eight percent of Americans rated the economy "poor" and 11% rated it "excellent" or "good." Thirty-seven percent said the economy is "getting better" while 57% said it is "getting worse." Consumers' mood seems largely unaffected by weekly events these days, as economic confidence remains flat. Not only did the Super Bowl seemingly make no impact, but neither did the plunge in the stock market nor the global credit market concerns that spawned the plunge.
Job Creation inched back to 0 last week from -1 the prior week -- matching conditions of two weeks ago. Twenty-four percent of employees reported that their companies are hiring and 24% said their employers are letting people go. Both hiring and firing activities have shown virtually no variation so far in 2010 -- a situation that might not be so bad if overall job market conditions weren't so bleak.
Consumer Spending continues to disappoint. Last week's Super Bowl preparations -- particularly because it was a paycheck week -- might have encouraged consumers to increase their spending, at least on the margins. Instead, self-reported daily spending in stores, restaurants, gas stations, and online was flat, averaging $60 per day -- the same as the prior week and identical to spending during the same week a year ago. Evidence continues to mount that what turned out to be a "new normal" for spending during most of last year may also characterize consumer spending during the first part of 2010 -- if not longer.
What to Watch For
Gallup's economic data suggest consumers are pretty much stuck in place as recent events have swirled around them. The stock market plunge is generally described as a much-needed "correction." Recent international solvency worries may seem highly esoteric to many Americans. The winter storms may be severe but are not a surprise at this time of year. And perhaps the anticipation of last weekend's Super Bowl parties was not a big deal to Americans, either. Regardless, economic confidence remains unaffected.
However, when the Reuters/University of Michigan Consumer Sentiment Index is reported Friday, it will be compared to January's monthly reading -- not just that of recent weeks. Given the more positive levels of consumer confidence in early January, it seems likely that Friday's consumer sentiment reading will be down slightly.
Probably more importantly, last Friday's unemployment report did little to positively affect Americans' perceptions of the job market. The decline in jobs (down 20,000) seemed to offset any positive impression produced by the reported decline in the unemployment rate (from 10.0% to 9.7%). Gallup's job creation data -- which have shown no improvement in hiring activity for many months -- suggest this is a reasonable conclusion.
However, the most important (and perhaps disturbing) aspect of early 2010 economic trends involves the continuation of 2009 "new normal" spending levels. Of course, there is always hope that this may change if consumers open their wallets more for Valentine's Day than they did for the Super Bowl. Still, whatever happens this week, it seems unlikely that the U.S. economy can realize significant new hiring as long as consumer spending remains at last year's depressed levels.
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 Feb. 1-7, 2010, are based on telephone interviews with 3,481 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 3,981 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.