Will Slight Improvement in Overall Jobs Outlook Boost Confidence to Keep Spending?

On its surface, last week’s job report was anemic at best and confounding at worst.

And where there’s a cloudy picture on job prospects, the outlook for spending — and by extension, spending — remains muddied a bit, too.

But, connect the dots a bit, and the last few readings of sentiment on jobs indicate a (slightly) more positive mindset on the labor market. They say that perception is reality, and the end-of-October reports signal that consumers feel a little bit more positive about the availability of jobs, which may bolster their willingness to keep spending. However, there’s no doubt that they’d like to feel that their wage growth can and will overtake inflation. Inflation’s still a key headwind, and the election’s almost here. 

As we noted last week, the headline that 12,000 positions were created reflected the vagaries of weather and labor strikes, but general trends in unemployment and job openings described in other reports logging September’s progress were intact. 

And, at least as shown by the Conference Board’s latest Employment Trends Index for October (released Nov. 4), October’s outlook is marginally better; respondents put forth a slightly more sanguine outlook on jobs — how available they are and whether they’re hard to get.

A Slight Tick Higher

The Conference Board noted that the index, at 107.66 in October, was roughly the same as 107.58 in September. As the Board described the index, when the index increases, “employment is likely to grow as well, and vice versa.”

According to a statement from Mitchell Barnes, economist at the Conference Board, “the labor market continues to cool from its rapid post-pandemic pace, but the ETI suggests that this trend may be leveling out. This comes at a time when we expect business uncertainty to begin lifting, as the Federal Reserve’s rate cuts start taking hold and uncertainty around the US election subsides.”

As for the metrics focused on labor markets and workers’ views of their own prospects, the report noted that the share of involuntary part-time workers ticked down in October, while the share of respondents who report “jobs are hard to get” fell from 18.6 to 16.8, marking the largest decrease since January. We found that in the spring of this year, most Gen Z workers anticipated a job switch; might they feel more emboldened to make a leap as 2025 dawns?

It’s important to note that the slight boost to the index comes right into the teeth of the election, and past reports from the likes of the University of Michigan have detailed that though consumer sentiment has been improving, sentiment may be “somewhat unstable” in the months ahead as a new administration takes shape. 

The Clash Between Inflation and Income Growth

There are still some concerns among consumers over inflation as we head into the final weeks of the year. Consumers’ expectations of income growth rose during October, but respondents to the University’s queries expect inflation to, as that report put it, “exceed income gains in the year ahead. This suggests that the fact that high prices remain the number one factor for the current state of their personal finances — spontaneously mentioned by 43% of consumers — will likely persist for some time.”

At the end of last month, the Conference Board’s take on Consumer Confidence for October said that  35.1% of consumers said jobs were “plentiful,” up from 31.3% in September, while 18.9% of consumers expected their incomes to increase, unchanged from September.

As PYMNTS Intelligence found headed into the fall, there was still a perception that prices were rising for key staples such as groceries; 85% of individuals and households we’ve surveyed through the past several months have stated that they did not feel that their incomes were matching inflation.

Another Fed cut looms this month, and the prospect of lower rates, at least some post-election clarity and more normalized job market data may give some momentum to consumers ponying up at the register.

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