Work Experience Supports a Strong U.S. Consumer

Written by Richard Hokenson 

The usual metrics used to measure growth in consumer income, e.g. average hourly or weekly earnings, are just the tip of the iceberg in assessing the sustainability of consumer spending because it overlooks substantial changes that have occurred in the number of weeks worked during the year. The most recent report on Work Experience of the Population reveals that growth in income is significantly better than commonly perceived:

  • The proportion of workers who worked full-time, year-round (50-52 weeks) was a record high of 68.8% in 2016 (see Chart 1). This reflects a best ever for full time workers of 86.2% (35 or more hours per week, see Chart 2) and a continued high level for part time workers (1 to 34 hours per week, see Chart 3).

  • The results for both full time and part time workers since the recession trough in 2009 is even more impressive. More than all of the growth in employment for either group came from persons who worked year round (see Table 1). That reflected substantial improvements in the number of weeks worked -- there were significant declines in the number of workers who worked 1 to 13 weeks, 14 to 26 weeks and 27 to 39 weeks.

Investment Implications:

Full speed ahead for robust consumer spending. All workers experienced significant positive changes in the number of weeks worked in 2016. The fact that full time employment continues to dominate the monthly employment report for this year suggests that positive momentum for consumer expenditures has continued (see Chart 4). Last but not least, the “work experience unemployment rate” – defined as the number of persons unemployed at some time during the year as a proportion of the number of persons who worked or looked for work during the year declined by 0.8 percentage points to 9.4% in 2016 (see Chart 5). The fact that this series has not yet reached prior lows supports our view that there is still slack in the labor markets.



This update was researched and written by Richard Hokenson, as of December 14 2017