Outlook supported by job gains despite weak spots

The Fall outlook for consumer spending is being bolstered by sustained job gains at a national level—although pockets of weak growth persist through the country’s mid-section and Northeast states.

The weak spots—from Kansas and Wyoming to Alaska and West Virginia—remain depressed by job weakness focused in the energy and mining sectors.

The good news is that the weakness has been dissipating and increasingly offset by job gains in construction and manufacturing in addition to a core strength in service jobs.

Service jobs—led by food service, hotel, and related jobs—continue to support the strongest regional growth across the West, Southwest, and Southeast states.

The spending outlook will continue to reflect the unevenness in the underlying job trends:

  • Weak markets. Thirteen states are registering job losses or weakness in recent months. Notable, however, is that major local markets such as New Orleans-LA, Oklahoma City-OK, and Houston-TX are starting to see job gains again although still lagging at a state level.
  • Local market exceptions. Cases of relatively strong local markets despite average-to-lagging job markets at a state level are evident in: Atlanta-GA, Charlotte-NC, Raleigh-NC, Indianapolis-IN, and Cincinnati-OH among other places.
  • Strong markets. The strength in the top 10 states by job growth is led by local markets with the strongest gains nationally, which include: Orlando-FL, Nashville-TN, Las Vegas-NV, Jacksonville-FL, and Salt Lake City-UT.

The strength in places that benefit from leisure travel suggests that the revival in Boomer confidence (see post here) is benefitting spending on vacations much more than retail goods—where recent gains have been mixed (see here).

The differences by industry and local market are hidden amid the strong overall gain of 209,000 jobs in July—which keeps the job market on a healthy stretch of gains above 200,000 for five of the last seven months.

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