The 'meh' job market hasn't slowed consumer spending much

It will be a week of labor market data: On Friday, the Labor Department will release its latest employment report covering new jobs, the unemployment rate, and wages. The latest Job Openings and Labor Turnover survey comes out Tuesday — that’s a report measuring labor demand and labor market churn.

Economists expect more of the low-fire, low-hire labor market they’ve observed for months. Although those jobs numbers are some of the most important indicators for expert analysts, they don’t often factor into people’s everyday decision making.

“So long as you’re employed, it’s not something that you think about every morning, as to whether or not the overall labor market in the U.S. is expanding or contracting,” said Peter Orazem, an economics professor at Iowa State University.

He said people are certainly aware of what’s happening in the job market by way of what’s going on in their own industries or how easy it is to get a raise.

But actually changing someone’s behavior, Orazem said, takes something big — like being laid off.

“We simply don’t have that many people looking for work, and so that by itself is going to mean that fewer people are really feeling any pinch of the slow growth in the labor market,” he said.

It’s one of the reasons consumer behavior hasn’t really changed much. Even though people’s wages have not been keeping up with inflation for most of this year, “you still see consumer spending hold up over that same period,” said Sarah House, a senior economist with Wells Fargo.

Still, a lot of people have been spending by dipping into their savings, she said.

“When we look ahead, I think there’s some concern about, well, you can only drive the saving rate so low for so long. And so that does suggest some caution in terms of consumer spending in the back part of the year,” House said.

The weaker labor market is also having an outsized impact on lower-income households.

Nationwide Chief Economist Kathy Bostjancic said those people are having to shift their spending behavior. “And they are probably substituting for less-expensive goods, and maybe curtailing services, in order to make ends meet,” she said.

But either way, Americans are still spending.

“For the lower income households, lower-middle income, they just have no choice right now. They have a certain level of spending that they have to maintain,” Bostjancic said.

As long as people are employed, she said, they will keep spending.