Consumers: Employment Won’t Improve for Another 2+ Years
While Back-to-School spending buoyed this year and the outlook for Holiday 2012 just *might* be cautiously optimistic, the unemployment rate still seems to be the sticking point between consumers and that “recovery” word.
Those of us “in the know” are aware that the official U.S. unemployment rate remained a discouraging 8.3% for July (not accounting for the underemployed or discouraged workers, of course). What might a spouse, sibling, or parent tell you about the state of the job market though? Your dentist? Your child’s teacher? John [or Jane] Q. Public? If you aren’t tracking this rate on a continuous basis, you would probably be more apt to respond that or the unemployment rate is “high” or the employment situation is “bad.”
In fact, when we asked the more than 3,000 consumers in our latest American Pulse™ survey what they believed to be the current U.S. unemployment rate, respondents’ answers averaged 11.6%. While most consumers (54.4%) felt that the rate was somewhere between 8% and 10%, nearly one out of five (a whopping 18.9%) estimates that the rate is higher than 15%, which is more in line with the Bureau of Statistics’ much less publicized U-6 rate of unemployment.
So we’ve established that consumers think the unemployment rate is “high,” but how “bad” do they perceive the employment situation to be? According to our latest insights for August, nearly three out of ten (27.7%) believe it will take more than 2 years for the job market to improve. Fewer place bets on 7-12 months (17.3%), 13-18 months (15.8%), or 19 months to 2 years (16.3%), while just 7.8% optimistically assert that the employment situation has already improved.
Among the generations, Gen Y is the group most likely to view the outlook for employment with rose colored glasses; in fact, more than one in ten born between 1983 and 1993 is anticipating improvement in the job market within the next three months. [Holiday hiring season anyone?] The Boomer (born 1946-1964) and Silent (born before 1946) generations maintain a more long-term stance on improving employment, with about a third in each group looking beyond two years from now. Gen X (born 1965 – 1982) is more likely to follow the opinions of the general public.
Now while these insights are interesting, why are they important? Employment remains THE key issue when it comes to discussing the slow growth and recovery of the U.S. economy. Whether on a micro (i.e. personal job security) or macro (i.e. overall economic health) level, doubt in the employment environment breeds uncertain and hesitant spending patterns among consumers. If they fear the pink slips, they’ll snap their wallets shut. If they think they’ll go another year or two or three without a raise or promotion, they’ll think twice about upgrading their homes or cars or about taking a vacation. It’s the retailers, marketers, and advertisers who are attuned to consumers’ concerns that will be better positioned to react and adapt to these realities as the economy sputters toward a long-awaited recovery.