What to Watch for This Week

Although there are numerous issues vying for public attention these days, the most important both politically and economically is clearly the government's job report on Friday. Today's nascent economic recovery can only be maintained if the private sector begins creating new jobs so consumers can have the income to support their spending -- and all political incumbents need a recovering economy as they seek reelection.

Gallup's job data suggest that April results will bring some good news. Underemployment is down and Gallup's Job Creation Index has improved in April. Still, most of the improvement has come from a seasonal need for workers with more companies making an effort to hold on to their current employees. While this is a major improvement over last year, new job creation is needed in order to significantly reduce both the unemployment rate and the percentage of Americans who are underemployed.

On Thursday, we're also likely to see another increase in year-over-year chain store sales. Gallup's Consumer Spending measure suggests retailers will report beating last year's comparables by about the same amount as in March -- even without the benefit of Easter in April. Still, spending is likely to remain in the 2009 "new normal" range.

Finally, the "stealth" factor to watch is gas prices. Pump prices are already running about 40% above those of a year ago -- and with all the uproar over the "oil spill debacle" and the approach of the summer driving season -- prices could head far higher in the near term. In this regard, it is worth noting that surging gas prices started the recession in early 2008 and consumers are already worried about inflation in 2010.