Why will the U.S. spending outlook remain unevenly modest despite sustained strong job gains in July?
It’s true that the gains are an encouraging sign. They show that the job market is overcoming the disruptions—primarily labor-strike and weather-related—that dramatically depressed the job market in May.
However, the gains only paper over weak job growth in certain industries—especially oil and manufacturing-related—that will continue to mean very weak growth in certain states while other states—and especially bigger urban markets—continue to grow disproportionately well.
Add in price weakness skewed to food and grocery categories and the result is a spending outlook further tilted in favor of certain discretionary categories as reflected in the latest insight from the Spending Confidence Index™ (see post here).
The strength and weakness in spending will reflect these job trends:
- Weak states.Twelve states are registering flat or declining job growth in recent months. The weakness is driven by oil, manufacturing, and related job losses in the worst-hit states: Alaska, Connecticut, Illinois, Kansas, Louisiana, Maine, Missouri, North Dakota, Oklahoma, Rhode Island, West Virginia, Wyoming.
- Metro markets.The major cities and metro markets are faring better. The top 35 metro markets representing nearly one-half of all jobs are growing at a 2.5% rate or better. The lagging metro markets include New Orleans, Houston, and Oklahoma City, which reflecting oil job losses.
- Strong markets.Amid the pockets of weakness, the top 13 states and 26 of the top 50 metro markets have been able to sustain strong job growth above 3.0% in recent months. Florida and California are among the biggest states sustaining strong growth—especially in key metro markets.
The local differences are hidden amid the overall gain of 255,000 jobs in July—and an upwardly revised gain of just 292,000 jobs in June.
See the table summary for detail on the latest job numbers.
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