Consumer Confidence

By Jim Schaffer

May 2007

As one might have expected, overall consumer confidence fell to a six-month low in March, primarily as a result of the downturn in housing and higher gasoline prices. 

What might come as a surprise, however, is that consumer confidence in the job market remains very strong.  The fact is, despite the weight of the other burdens in the national economy, the working populace has seen the overall job market remain strong, and as a result, their confidence has held at record levels throughout the First Quarter.

Why is this and what does it mean?  Primarily, it is confirmation of the fact that we are living in what is functionally a full-employment economy.  As we have watched gasoline prices rise and housing starts fall rather dramatically, new jobs are still being created and the unemployment rate continues to ratchet downward.  According to the Department of Labor Statistics, the U.S economy added new jobs again in March, about 180,000, and the national unemployment rate fell to 4.4%.  

How does all of this translate into a positive influence on the individual consumer?  Well, as these consumers are obviously both employees and employers in the marketplace, they are certainly aware of what's going on around them within their own work environments.  They can see the number of unfilled positions up and down the production line and office hallways, and they read through the variety of job postings on the company bulletin boards.  In addition, many are getting calls from search firms and recruiters, often in greater numbers than ever before.  The reality is obvious to them . . . there are more jobs available than there are people to fill them.  One of the nation's leading human resource futurists, Joyce Gioia of the Herman Group, polled the audience at a recent conference and found that over half of the companies represented had employment positions open that they had been unable to fill for extended periods of time, from either inside the organization or outside!   So why not be confident in the job market?  It's evident to most workers that jobs are plentiful.

So what does this mean to us as employers in the marketplace?   First, it means that we need to focus more actively on retaining our employees.   Just as the old sales axiom compares the sizable challenges of opening new accounts to the lesser demands of maintaining existing ones, it really makes sense to focus on keeping the existing employee group happy, motivated, and productive.  Second, we need to recognize that the hiring dynamics have changed. 

Unlike the employment economy in the 1980's and 90's, it is becoming more and more a "seller's market" for the qualified candidate, and that's not likely to change in the near future.  From our perspective, good employees who are displaced or who choose to leave a company, find that there are a number of opportunities out there waiting, if they will simply look for them. 

This leads us to a third reality.  In recruiting a new employee, efficiency is now imperative.  No, we shouldn't compromise the integrity of the hiring process, but in the face of strong competition for the qualified candidate, "he who hesitates is lost."  Too many times we have seen a company procrastinate on a decision, even when the interviews, testing, and references were all complete, only to find that another company moved more expeditiously and recruited the candidate away.  

With all of this said, let me encourage you to develop a stronger line of focus on your human resource assets.  Despite what else is going on in the country and the industry, it will likely be the common denominator of success for companies going forward. 

Let us know if we can help!