Are American Employees Happy With the Economy?
Employee confidence in business and the economy continued to climb in August, according to the Randstad Employee Confidence Index. The report — based off a sample of 1,073 employed adults in the United States — showed that there was widespread optimism among workers for both the macro-economy and individual employers.
The headline confidence index climbed 1.7 points on the month to 58, its highest reading of the year. Confidence in the overall economy improved dramatically — 3 full points — but remained below 50 at 47.3. Confidence in one’s personal position edged up to 68.7.
“The August numbers were notably strong and continue the positive trend we have seen over the past few months, starting in April when confidence figures reached pre-recession highs,” Jim Link, managing director of Randstad U.S., said in the report. “This is significant as we seldom see a scenario where nearly all indices indicate an improved outlook.”
The news stands somewhat in contrast to the August reading of Gallup’s Economic Confidence Index, which declined on the month. The index averaged -13 in August, down from -12 in July, indicating once again that Americans remain more negative than positive about overall economic conditions.
In May, buoyed by a string of relatively positive economic indicators and a slowly but consistently healing labor market, the index hit a high of -7. Economists were quick to cite this and similar consumer confidence readings from the Thomson Reuters/University of Michigan Surveys of Consumers and the Conference Board Consumer Confidence Survey as a reason for optimism about the recovery.
But with the taper timeline taking shape and a new round of fiscal negotiations on the horizon, it appears as though consumers are revisiting the higher levels of uncertainty that characterized the end of the 2012 and the beginning of 2013. Congress is due to once again tackle the debt ceiling at the beginning of the next fiscal year, and it’s unclear if the political climate has ever been more dense than it is now. Tapering of asset purchases by the U.S. Federal Reserve could also shake financial markets.
According to Thomson Reuters/University of Michigan’s preliminary reading, consumer sentiment plunged to 80, compared to June’s final reading of 85.1 — the best reading for the index since July 2007.
With economists expecting the index to reach an average of 85.5 this month, it was the first time consumer sentiment fell below estimates this year. In fact, the preliminary reading is the worst miss since records began in 1999.
During the last recession, the index averaged slightly above 64. In the five years before the financial crisis, it averaged almost 90. Consumer sentiment is one of the most popular measures of how Americans rate financial conditions and attitudes about the economy. The University of Michigan’s Consumer Survey Center questions 500 households each month for the index.
The reading on current and future conditions hit its lowest level in four months. Current economic conditions, which measure whether Americans think it is a good time to make large investments, fell from 98.6 to 91. Meanwhile, consumer expectations declined to 72.9 in August, compared to 76.5 in July.