Last Friday, we learned that the U.S. labor market added 162,000 jobs in March. This is the most authentic job growth seen since the recession began in 2007. The poor labor market is mostly responsible for the weakness in consumer confidence. Could the fact that it's moving in the right direction be enough to restore sentiment on Main Street?
On one hand, you might not think so. Even though employment began to grow, we're off to a small start. 162,000 jobs isn't much, considering there are still 15 million unemployed, and far more underemployed. That 16.9% of underemployed Americans aren't going to feel good about spending at higher levels yet.
On the other hand, though significant, 16.9% is still a small minority of Americans. What about the other 83.1% who are fully employed? Their spending has been curbed too in recent months due to perceived weakness in the U.S. economy. Might some authentic jobs growth be enough to get them spending again?
A new poll from Rasmussen suggests that it could be:
Following release of Friday's official report on job creation, consumer and investor confidence jumped significantly and is now back to the levels that existed just before Lehman Brothers collapsed in the fall of 2008.
The Rasmussen Consumer Index, which measures the economic confidence of consumers on a daily basis, is up seven points since Friday morning to 85.3. Thirty-five percent (35%) of adults nationwide now believe the economy is improving. That's up six points since the government reported that 162,000 new jobs were created last month. Still, a plurality of adults (45%) continue to believe the economy is getting worse.
Clearly, consumer confidence has a ways to go. But this is a pretty good start. That seven-point-jump works out to a 9% rise in the index. Imagine how much that might improve when the unemployment rate actually declines a few percentage points.
Of course, it will still be quite some time before we sees a significant drop in the unemployment rate. But the rise in sentiment is encouraging: the U.S. economy needs the American consumer to start spending again for a strong recovery. But incomes will also need to begin improving to ensure that the recovery can last, instead of just creating another credit bubble. Unfortunately, the unemployment report didn't provide any good news on that front -- average earnings actually fell by 0.1%.