Understanding Gallup's Economic Measures
Gallup's Employment/Underemployment
Indexes provide continuous monitoring of U.S. employment and
underemployment, and serve as a key adjunct to the U.S. government's monthly
tracking. These indexes -- based on the combination of responses to a set of
questions about employment status -- are designed to measure U.S. employment
accurately, in accordance with International Conference of Labour Statisticians
standards. Based on an individual's responses to the question series (some of
which are asked of only a subset of respondents), Gallup classifies respondents
into one of six employment categories: employed full time for an employer;
employed full time for self; employed part time, but do not want to work full
time; employed part time, but want to work full time; unemployed; and out of the
workforce.
Payroll to Population is a measure of those
who are employed by an employer for at least 30 hours per week, calculated
as a percentage of the total population. Underemployed respondents are
those in the workforce who are either unemployed or employed part time,
but want to work full time. Unemployed respondents are those within the
underemployed group who are not employed, even for one hour a week, but are
available and looking for work.
Gallup interviews 1,000 Americans daily --
or about 30,000 per month. Because of its Daily tracking of other political,
business, and wellbeing measures, Gallup provides insights not available from
any other source on the health, wellbeing, optimism, financial situations, and
politics of those who are working or seeking work.
Gallup's Economic Confidence Index is based on the combined
responses to two questions asking Americans, first, to rate economic conditions
in the country today, and second, whether they think economic conditions in the
country as a whole are getting better or getting worse. The Index is computed by
adding the percentage of Americans rating current economic conditions
(("excellent" + "good") minus "poor") to the percentage saying the economy is
("getting better" minus "getting worse"), and then dividing that sum by 2. The
Index has a theoretical maximum value of +100 and a theoretical minimum value of
-100. Values above zero indicate that more Americans have a positive than a
negative view of the economy; values below zero indicate net-negative views, and
zero indicates that positive and negative views are equal. Gallup measures
Americans' economic confidence nightly as part of Gallup Daily tracking, and
reports the Index in three-day rolling averages daily
as well as in weekly
and monthly averages in Gallup's ongoing reporting. The daily reports are based
on interviews with approximately 1,500 Americans, aged 18 and older; weekly
averages are based on approximately 3,500 interviews; and monthly averages are
based on approximately 15,000 interviews. From October 2000 through October
2011, the Index has correlated at a .95 level with the Reuters/University of
Michigan Index of Consumer Sentiment and at a .82 level with the Conference
Board's Consumer Confidence Index®. This is based on analysis of
Gallup data from the first week of each month -- the period most comparable to
the Conference Board's data-collection period and significantly overlapping with
the Thomson Reuters/University of Michigan field period. In contrast to the
Conference Board and Thomson Reuters/University of Michigan reports that are
issued at the end of the month, Gallup's daily and weekly reports are issued
nearly in real time, providing the most timely insights available on consumer
attitudes.
Gallup's Job Creation Index is based on employed Americans'
estimates of their companies' hiring and firing practices. Gallup asks its
sample of employed Americans each day whether their companies are hiring new
people and expanding the size of their workforces, not changing the size of
their workforces, or letting people go and reducing the size of their
workforces. The resulting index -- computed on a daily and a weekly basis by
subtracting the percentage of employers letting people go from the percentage
hiring -- is a real-time indicator of the nation's employment picture across all
industry and business sectors. Gallup analysis indicates that the Job Creation
Index is an excellent predictor of weekly jobless claims that the U.S. Labor
Department reports each Thursday. The index has about a 90% chance of predicting
the direction of seasonally adjusted initial weekly jobless claims and a
better-than 90% chance of predicting the direction of seasonally adjusted
initial claims on a four-week average basis. It also has a better-than 80%
probability of projecting the direction of the unemployment rate as reported by
the Labor Department on the first Friday of every month. In some ways, Gallup's
Job Creation Index is more meaningful than the government's weekly new jobless
claims measure, given that not everyone who is laid off files for unemployment.
The index may also pick up hiring trends days or weeks before they are
manifested in the official unemployment rate or other lagging indicators.
Finally, the index measures job creation (hiring) and job loss (letting go) on a
continuous basis. This provides additional real-time insight not available from
broadly aggregated indicators and unemployment data. Read
more about Gallup's Job Creation Index.
Gallup's Consumer Spending measure is calculated from
responses to a basic question asking Americans each day to estimate the amount
of money they spent "yesterday," excluding the purchase of a home or an
automobile, or normal household bills. The result is a real-time indicator of
discretionary retail spending, fluctuations in which are sensitive to shifts in
the economic environment. Gallup's average monthly estimate of spending is
correlated at the .65 level with the U.S. government's report of total U.S.
retail sales (not seasonally adjusted), and exhibits similarly positive and
substantial correlations to other government measures of retail sales. These
positive correlations indicate that changes in Gallup's spending estimates are
related to changes in both direction and magnitude of actual consumer spending
as reported by the government. Further, Gallup's Consumer Spending measure
provides estimates on a continuing basis, giving an early read on what the
government eventually reports roughly two weeks after the close of each month.
Gallup's continuous surveying allows for analysis of spending patterns on a
daily and a weekly basis, which is particularly important to understanding
seasonal variations in spending. The spending measure allows business and
investment decisions to be based on essentially real-time information.
Copyright © 2013 Gallup, Inc.