Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Job Creation Down 35%, Consumer Spending Down 33% From Year Ago

Economics / Recession 2008 - 2010 Sep 07, 2009 - 01:29 PM GMT

By: Mike_Shedlock

Economics

Best Financial Markets Analysis ArticleOn this Labor Day, inquiring minds are reading Gallup Economic Monthly: Job Creation Not Happening.


Gallup Daily economic data aggregated on a monthly basis show that job creation in August is just not taking place in the U.S. economy. While Gallup data for the month also show a slight moderation in job loss, this is not sufficient to take up the slack for a 35% decline in the rate of job creation compared to a year ago. And, while confidence in the future direction of the U.S. economy is at its highest level in 20 months, Gallup data also show a continued delinking of consumer spending -- which is down 33% from a year ago.


What Happened?


Job Creation was unchanged in August, with 24% of employees saying their companies were hiring, as was the case in July -- and once again within the 23%-24% range that has held throughout 2009. However, the gap between job creation and job loss did close slightly, as 25% of Americans said their companies were letting people go -- a slight improvement from the 26% of the previous three months. While Gallup data show fewer employees being laid off this summer than earlier in the year, the percentage of Americans reporting that their companies are hiring is down 35% from the same month a year ago.

Consumer Confidence hit a new high for the year in August and its highest level since Gallup Daily tracking began in January 2008, as the percentage of Americans saying the economy is "getting better" reached 39% for the month. Confidence is up from 33% during July and 16% a year ago. Still, even as confidence increases, 45% of consumers rate current economic conditions as "poor" -- not much different from the 43% of a year ago. Consumers continue to believe the economy is improving, but -- at least to this point -- they don't seem to see the improvement in their daily lives.

Consumer Spending improved slightly in August, as self-reported average daily spending in stores, restaurants, gas stations, and online increased by $3 per day. Still, spending over the first eight months of 2009 remains in a tight $6 range of $59 to $65, with August spending down 33% from the $97 daily average of a year ago. This lack of spending improvement even as confidence has improved dramatically since the beginning of the year seems to reflect a "new normal" in consumer spending.



It may be that the current inventory- and "clunker"-driven economic upturn will be a "jobless" recovery. It is possible that government and business spending alone can drive economic improvement for a short period of time. However, without significant job creation, it is hard to see how consumer spending will increase; how many retailers will survive after the Christmas holidays; and how the economic recovery will be maintained into early 2010.

Many think that consumer spending will return once job creation picks up. Actually, there is so much consumer debt, and for many, no reasonable way to service it, that consumer spending is likely to remain weak and defaults high even after unemployment starts inching back down.

Frugality The New Normal

Frugality is the "New Normal" as discussed on this blog for well over a year. Now, a Gallup Poll shows the effect in hard numbers. Please consider Consumers Adjust Attitudes Toward Spending.

Most Americans have consistently viewed themselves as financially cautious this summer, with about 9 out of 10 since early June saying they are watching their spending closely, and 7 in 10 saying they are cutting back on how much they spend each week. There has been little variation in these reported behaviors.


Solid majorities of Americans across all income categories report that they are watching their spending closely and are cutting back. Eight in 10 of those making $90,000 or more a year say they are watching their spending, and nearly two in three say they are cutting back on their spending -- nearly as high as the percentage of middle- and lower-income Americans doing the same.

Consumers are spending less because they have to. In many instances it is a forced attitude adjustment because debt levels are too high, and ability to service that debt increasing. Karl Denninger has some thoughts about that in 2009 Labor Day Ponderings..... It's well worth a look.

Bear in mind I think unemployment is going to continue rising for another year, then come back down slowly and reluctantly as noted in Structurally High Unemployment For A Decade. Thus a jobless recovery is a given, assuming there even is a recovery worth mentioning.

Happy Labor Day

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2009 Mike Shedlock, All Rights Reserved

Mike Shedlock Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in