That’s the conclusion of today’s Morning Brief for you to read Log in in your inbox every morning, along with:
The economic story of the summer revolved around robust growth in the US.
But for months, survey-based results in the manufacturing and services sectors have been pointing to greater economic weakness than hard data such as GDP figures and the monthly jobs report show.
The Conference Board’s monthly consumer confidence index showed a surprise decline in August, with rising gasoline prices and reduced optimism about the jobs market being the main drivers.
Dana Peterson, the Conference Board’s chief economist, said in a press release: “Assessments of the current situation declined in August on falling optimism about employment conditions: Fewer consumers said jobs were ‘abundant’ and more said jobs are “hard to come by”.
“Hard data confirm that job gains have slowed, overall wage increases are less generous compared to last year and the average number of weeks of unemployment is rising.”
That said, on Tuesday we also learned that July job vacancies fell to 8.83 million, the US economy’s lowest level since March 2021. New hires also came in at 5.78 million in July lowest level since January 2021.
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In the same month that this JOLTS data was collected, we saw new hires in the economy slow to the lowest since December 2020 as just 187,000 new jobs were added.
And while unemployment remains near record lows, the numbers captured by hard data like the BLS monthly jobs report may not spot changes on the fringes of the labor market as quickly as the Conference Board’s poll-based measure of consumer confidence.
And distinguishing between these types of reports is crucial.
It sounds like survey-based data — economic reports based on surveys of company executives or consumers asking how things are going. These reports are generally measured as the difference between the number of people who say things are good and those who think things are bad.
In contrast, hard data is compiled responses that are measured against an index of previously compiled responses. For example, the monthly index of consumer prices (CPI) is created by asking consumers what they pay for various goods over a two-week period, and then comparing those prices to what other people paid for similar goods in previous periods.
As TKer’s Sam Ro pointed out on Tuesday, recent polls show that many Americans hear overwhelmingly negative news about the economy.
And so it is tracked that both consumers and business leaders – who are also consumers! – would respond with generally more negative views of the economy when asked. Hence, there is a more negative view of data that measures differences rather than levels.
So the overall risk to the economy is that the latter dataset catches up or catches up with the former.
And on Tuesday there were some signs that this momentum was creeping in.
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