U.S. Consumer Confidence and Jobs Numbers

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U.S. consumer confidence has just been reported as having risen in October to its highest level since early 2008.

What is wrong with this picture in the face of current levels of U.S.:

  • residential housing prices, which on average are reported to have dropped by about 9% on an inflation-adjusted basis from March 2008 levels;
  • average hourly wage rates that are reported to have been rising since March 2008 at a rate about equal to the reported inflation rate; and,
  • continuing high unemployment rates, which official reported unemployment rate has increased by about 55% since March 2008, and where the ‘unofficial’ unemployment rate likely has increased much more than that if those people who have abandoned jobs searches are taken into account?

See approximate comparator numbers in the following table.

  March 2008 Sept/Oct 2012
U.S. Housing Prices (inflation-adjusted) $185,000 $165,000
Average Hourly Wage Rate $21.42 $23.58
Unemployment Rate 5.1% 7.9%

Sources: U.S. Housing Prices, Average Hourly Wage Rates, Unemployment Rates

I continue to think I have to be missing something, as I can’t square increasing U.S. consumer confidence with the facts that U.S. consumers must deal with each day. I can only assume readers of this Newsletter are in the same quandary, as no one responded to my request to ‘tell me what I am missing’ when I requested them to do that a few days ago.

Topical References: Consumer Confidence Rises to Highest Level Since February 2008, from Real Time Economics, Kathleen Madigan, November 1, 2012 – reading time 1 minute. Also see US consumer confidence jumps to near five-year high, from BBC Business News, November 1, 2012 – reading time 3 minutes.

U.S. October jobs report

The U.S. Labor Department reported this morning that the U.S. economy added 171,000 jobs in October, but that the unemployment rate increased to 7.9% from 7.8%.

One has to wonder:

  • how many of those jobs are seasonal retail ones, what with U.S. Black Friday rapidly approaching and Christmas falling fast on Black Friday’s heels. Black Friday is the day after U.S. Thanksgiving Day, or this year Friday, November 23. Black Friday traditionally the biggest single retail sales day of the year in the U.S.; and,
  • how much 1/10th of 1% might mean to next Tuesday’s Presidential Election? Would a reported 8.0% unemployment rate have made a difference? That is something that I think would have almost certainly been on the U.S. Labor Department’s Board Table as the news release was being prepared.

I suspect Mr. Obama breathed a large sigh of relief when he learned – I suspect likely before the data was made public – that the reported unemployment rate statistic was going come in at under 8.0%. Expect to hear Mr. Romney raise the same point over the next three days – although perhaps not quite as gently.

There will be more detailed information and analysis on this in the next days, and I will update this commentary in Monday’s Newsletter.

Topical Reference: Economy adds 171,000 jobs in October, from The Boston Herald, from the Associated Press, November 1, 2012 – reading time 2 minutes.

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About Ian Campbell