What to Watch for This Week

There is a lot of U.S. economic data coming out this pre-Memorial Day week, but much of it may already be out of date. Most of the data will not reflect the European financial crisis, the resulting fallout on Wall Street, nor the impact on U.S. consumers and investors.

For example, Tuesday morning the Conference Board's consumer confidence index for May will be released and on Friday, so will the Reuters/University of Michigan consumer sentiment index. However, these surveys are unlikely to pick up the most recent economic trends. In sharp contrast, Gallup's Economic Confidence Index was essentially unchanged during the first two weeks of May compared to April, but during the week ending May 23, consumer expectations took a tumble -- getting worse on a daily basis. As Wall Street plunges in response to the European Union financial crisis, consumers have reason to become more concerned about the U.S. economic outlook.

At the same time, Gallup's Consumer Spending measure -- which had been doing well through the first two weeks of May -- also declined in the week ending May 23. It seems like the spending momentum that appeared to be building over the past couple of months could be losing some of that steam.

Finally, while Gallup's Job Creation Index continues to show new jobs are being created, Gallup's underemployment rate, the U.S. Workforce measure, has not been improving. It may be that some U.S. companies, particularly those exporting to Europe, may be getting somewhat hesitant about adding employees, given what has been happening in the global financial markets.

It is far too early to suggest that Gallup's data implies a significant downturn in the U.S. economy in response to the current European financial crisis. However, the data do suggest caution and careful monitoring during the weeks ahead.

Mother's Day Spending Up 40%

Mother's Day is special for millions of Americans as families get together to celebrate and say thanks for everything mothers do for their children every day. Consumers got back to celebrating this year as they spent an average of $88 per day over the Mother's Day weekend -- up 40% from last year.

The celebrating was limited in May 2009 as the economy was still crumbling and consumers were cutting spending in every way they could. Mother's Day weekend spending averaged $63 per day last year -- down 38% from the $102 average for the same weekend in 2008 -- and reflecting the financial worries that dominated the U.S. economy just a year ago.

It seems today's willingness to celebrate is another sign that in 2010, consumers will spend when they feel they have a good reason -- maybe not as much as in 2008 -- but more than a year ago. Further, it continues the positive economic trend of moderately increasing spending Gallup has reported over the past couple of months.

Best Time to Find a Job in More Than a Year

Friday's government job report confirms what Gallup has been reporting all week -- this is the best time to look for a job since late 2008. On Tuesday, Gallup reported a decline of more than 2 million in the number of "underemployed," and on Thursday Gallup reported the best job creation since November 2008.

Friday morning the government reported that business payrolls jumped the most in four years in April -- 231,000 new private sector jobs. In fact, the government's household survey shows even more Americans -- over 500,000 -- saying they got jobs in April than was reported in its survey of business payrolls.

While the unemployment rate increased from 9.7% to 9.9%, that was not totally unexpected. The seasonal adjustments the government uses tends to hold down the positive effect of job increases on the unemployment rate at this time of year. Many additional job seekers entered the workforce in April and that had a similar impact on the unemployment rate. Further, Gallup's underemployment data is broader and more up-to-date than that included in the government report.

Regardless, every one of the more than 28 million Americans currently underemployed should be encouraged by both the Gallup and the government job reports. Companies are hiring now -- providing the best time to find a job in more than a year.

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.