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Gallup's Job Market Index has been a reliable indicator of the overall state of the job market. The index is a simple one. Gallup conducts random telephone interviews with 1600 adults each day and asks them whether the company they work for is expanding its work force, not changing the size of its workforce, or letting people go. The numbers are reported as a three day rolling average which tends to smooth out any abnormal daily fluctuations.
If 30% say their firm is hiring, 44% say no change, and 20% say they are letting people go, the index is 10 (30-20). Incidentally, I chose these particular numbers because they are the numbers Gallup came out with for today. The previous index a day or two ago was also 10 with a slight fluctuation in the number of people reporting no change.
During much of the recent economic downturn, the Gallup Job Market index was in the negatives. An interesting feature of the index is that it lags the actual job market by 3-6 months. While jobs were being shed at the end of the Bush administration, the index was still positive. It didn't turn negative until December 2008/January 2009 even though massive job losses in the neighborhood of 500,000-700,000 per month were well underway. It seems that people's perceptions of what is happening at work take a while to reflect reality. This makes sense. Most of us don't work in human resources and aren't immediately aware of changes in the hiring situation at work.
Similarly, the economy started to create jobs close to the beginning of this year but there wasn't much of that to see in the Gallup Job Index until recently. In mid March and mid April, the index rose to between 5 and 8.
For the index to hit positive double digits means that hiring and job creation is really starting to accelerate. It's almost certainly not accelerating fast enough to save me from some personal embarrassment (I bet the Fox News Cashin' In crew that unemployment would be 7.5% by August or I would come on the show dressed as Klinger from M*A*S*H), but my perception that President Obama's stimulus would work and show significant results by spring and summer of this year turned out to be correct.
The improving employment situation is probably part of the cause of some interesting congressional preference polls. For the past several months, most polls had shown that more Americans were planning to vote for the Republican candidate for congress and senate in November than were planning to vote for the Democratic candidate. In several recent polls, that is now reversed. One can only imagine what will happen in November if the current economic and job creation trend continues or accelerates as is my prediction.
We could be looking at a situation where Democrats pick up seats in the 2010 midterm elections. In fact, I am ready to make that prediction right now. This election was always going to be about, as James Carville would say "it's the economy stupid." If President Obama and the Democratic congress have engineered a successful turnaround, hold the tea, 2010 will be the year of the Donkey.
Gallup's job market index can be seen at http://www.gallup.com/poll/110134/Gallup-Daily-US-Job-Market.aspx
