Gallup's U.S. employment measures report the percentage of U.S. adults in the workforce, ages 18 and older, who are underemployed and unemployed, without seasonal adjustment. "Underemployed" respondents are employed part time, but want to work full time, or they are unemployed. "Unemployed" respondents are those within the underemployed group who are not employed, even for one hour a week, but are available and looking for work. Results for each 30-day rolling average are based on telephone interviews with approximately 30,000 adults.   The BLS report includes individuals that are 16 years and older and uses seasonal adjustments for comparison.

While the number of those directly unemployed has fallen from the peak of when this poll was began at 11% to 8.5% today the number of individuals that are underemployed has fairly stagnant and close to its peak of just over 20%.    The recent decline in the percentage of unemployed does confirm the recent slight upticks in hiring seen in the recent employment reports.   However, it also shows that a lot of that hiring may be occurring in areas that are part time or lower paying wage jobs as shown by the larger uptick in the "underemployed" status recently. 

Regardless, the levels of unemployment and underemployment are high, and while recent improvements are encouraging, any economic shocks could send these numbers higher in a hurry.   Notice the spikes in both reports early in 2011 as the economy was struggling through a very weak patch.   With the "super committee" now effectively out of commission and automatic spending cuts looming that will subtract from GDP growth, international worries and a potential recession in the next year there are plenty of catalysts to send workers back to the unemployment line.   This leads us to the confidence in the economy as a whole.

Economic Confidence

Gallup's economic confidence survey which is the combined responses to two questions: 1) rate the economic condition of the country today, and; 2) is the economic condition getting better or worse, really ties into consumers employment status and their ability to live.    The chart compares the results of the economic confidence survey to the S&P 500.   What is important to note is that economic confidence is closely tied to the performance of the S&P 500.  

This was "The Bernank's" direct remarks when launching QE 2 in 2010 when we said that by targeting asset prices it would boost consumer confidence.  He was correct.   As the market rallied consumers expectations about the economy improved but unfortunately their ability to consume didn't improve along with it.

However, there is another way to look at this chart.   The economic survey has tended to be a leading indicator of the economy as a whole and the markets.   The last time that the survey had declined to these levels the economy was mired in a deep recession BUT the market was still near its highs.   As we have discussed in recent missives on the economy, and as confirmed by the ECRI, we are likely in, or about to be in, a recession.   If that analysis is correct then the economic survey may be confirming the same which means the stock market has some catching up to do.

It's All About The Consumer

While we watch the almost daily deluge of government reports that the media focuses on from one minute to the next it is important not to forget that it really all revolves around the consumer and primarily the small businesses that make up the bulk of hiring in the country.  With real incomes declining, debt burdens stripping cash flows, home values falling, international turmoil, domestic political infighting and concerns about keeping a job if they have one, or finding one if they don't, there are not a lot of positive inputs to spur a strong consumer driven recovery.   This lack of demand by the consumer is also why small businesses have no appetite for obtaining credit, increasing production or expansion of hiring beyond absolute necessity.  

So, while "Rome burns" and our government "fiddles" while warring amongst itself over what policies to enact, where to cut spending or how to increase revenues it is important to remember that there are "real" people affected by the decisions made and actions taken.   This is why I find the Gallup polls interesting - it is the voice of the "average American" ringing through and it is only a shame that our leaders aren't listening.