Slow job creation continues to drag on the US economy, according to the Consumer Reports Index for March. This month’s findings show that, although the tide of job losses has been stemmed, the level of job creation needed to fuel a consumer recovery has not developed.

Consumer Reports Employment Index, published by the national consumer product review organisation, stands at 48.7 for March, reflective of net job losses in the prior 30-days and on-par with February at 49.0. Over the past several months the proportion of Americans reporting losing their job in the past 30 days has been on a decline and is now stabilised at 6.0 percent versus 5.7 percent in February.

However, in recent months the proportion of Americans starting a new job in the past 30 days has also dropped, declining to 3.5 percent in February from a recent high of 6.2 percent in September. This may be an indicator that there is a deepening problem in getting the unemployed back to work. The expanding pool of unemployed and the effect this invariably has on the spending habits of the employed seriously restricts economic activity.  Results indicate that labour conditions are poorest in the West, where the employment index dropped 1.2 percent.

The Consumer Reports Trouble Tracker Index has shown improvement over the past several months, falling to 52.3 in March from 53.4 in February, continuing a downward trend from September 2009 (68.7). The key financial difficulties faced by consumers this month continue to be the inability to afford medical bills or medications (14.3%), and credit card increased interest rates, penalty fees, etc. (10.1%).  This month, the North Central region of the U.S. saw an uptick in financial difficulties to 50.0 up from 43.1 in February.

“Though we are seeing modest gains in consumer confidence, led by the Trouble Tracker, pointing to a decline in financial difficulties, without improvement to the employment picture consumers will be reluctant to engage in the recovery,” said Ed Farrell, a director of the Consumer Reports National Research Center. “Once we begin to see job creations, a return to a solid, sustainable retail growth will emerge, and the consumer recovery will be more attainable.” 

The lack of engagement with the economy is reflected in Americans’ spending habits. The Consumer Reports Past 30-Day Retail Index for March, reflective of February activity, is at 11.1, virtually unchanged from the prior month (10.9).  This number stands firmly at pre-holiday levels, indicating that consumers are once again hunkering down. The Next 30-Day Retail Index, reflective of planned purchases for March, at 7.3, is below pre-holiday levels and marks the lowest levels tracked since August 2009 (7.5). The softness in this index points to a hesitancy among consumers to commit to spending in this uncertain economy.

Slow job creation continues to drag on the economy, according to Amanda Walker, of Consumer Reports: