In order to achieve a robust economic recovery, spending must ramp up. Yet, with unemployment so high, consumer sentiment has been rather weak. That's hurt spending. But a recent Gallup poll offers some good news: spending in 2010 reached a new high last week. And that's despite the fact that hiring doesn't appear to be getting any better.
Here's a chart from Gallup showing the spending change:
You're looking for the light green line for 2010. Spending has been doing significantly better in March -- now better than last year. Yet, as you can see, spending is still below 2008 levels, though it's getting closer.
What's causing people to open their wallets? Not more jobs. Gallup separately found the following about new hiring:
Hiring has been better this year than in 2009, but only slightly. And this year remains much worse than 2008.
So what is causing people to spend more this month? Perhaps it's the better weather? If people are outside more, they're probably going to shop more. Or it could be that Americans are finally feeling that the layoffs are over. That could mean the only people still uncomfortable spending are those who really can't, because they remain unemployed.
At this point, last week's uptick in spending is notable, but not a huge outlier. If this trend continues over the next several weeks, however, then we might have a legitimate paradigm shift on our hands. That would be a happy result, since a sustained increase in consumer demand could go a long way in creating jobs.