Economic Outlook: What 240 Million Americans Think in New Index
The upcoming inflation report prompts a crucial question: how is the economy faring?
Assessing the state of an economy producing $28 trillion annually in goods and services is no simple task. The Bureau of Economic Analysis provides a quarterly snapshot after extensive data analysis. However, Zeta Global (ZETA), a marketing cloud powered by artificial intelligence, offers a monthly insight into the U.S. economy’s health with its new index, detailed exclusively to USA TODAY. In June, the index rose to 66, firmly within its “active” range, indicating “robust economic activity.”
The Zeta Economic Index: A Unique Approach to Economic Forecasting
David Steinberg, CEO of Zeta Global, emphasizes that their index aims to forecast GDP by integrating the behaviors of 240 million Americans in their data cloud, setting it apart from other indexes.
Economic Indicators and Data Sources
The Zeta Economic Index leverages years of traditional economic data, including GDP and the consumer price index, but its distinctive edge lies in its anonymized consumer behavior data. This data reflects almost 70% of consumer spending in the U.S. economy, sourced from:
- Information we read, hear, or view.
- Our online searches.
- Credit card expenditures.
Zeta Global also compiles a stability index to gauge Americans’ resilience to economic downturns, categorized from negative (extremely vulnerable) to positive (well-prepared). In June, the stability index was “stable” at 66.1.
Consumer Spending Amid Rising Prices
The most anticipated economic news this week is Thursday’s inflation rate report for June. Fed Chair Jerome Powell will address Congress, with the consumer price index details providing critical data for the Fed’s policymaking at the month’s end.
Economists predict a drop in June’s annual inflation rate from 3.3% to 3.1%, mirroring last year’s figure and still above the Fed’s 2% target. Despite high interest rates and rising prices, Zeta Global expects continued consumer spending based on their data tracking.
Key Indicators of Consumer Behavior
Zeta Global’s cloud data reveals three key indicators suggesting ongoing consumer activity:
- Increased online browsing time.
- Higher discretionary spending beyond basic needs.
- Expanded use of credit lines.
These insights align with Resonate, a consumer intelligence firm tracking 230 million U.S. consumers. Resonate’s summer report shows Americans are less worried about personal finances and health and remain willing to spend, though brand-switching to save money is common.
“Consumers have not cut back on spending yet,” says Steinberg. “They’re just trying to get more value for the same amount of money.”
Job Market Confidence Bolsters Spending
Steinberg attributes sustained consumer spending to the strong job market and prevailing optimism.
The U.S. employment report released last Friday supports this confidence. Although the unemployment rate rose to 4.1% in June, the economy added 206,000 jobs. However, job gains for April and May were revised down by 111,000, raising concerns about a potential slowdown.
Job Market Sentiment and Employment Trends
Consumers might not immediately sense a weakening job market until significant layoffs or hiring freezes occur. Zeta Global’s job market sentiment reflects a subtle decline, with the index down 2.6% from last June and 1% from May.
Conclusion: Economic Sentiment and Future Outlook
The Zeta Economic Index offers a comprehensive monthly view of the U.S. economy by integrating traditional economic measures with real-time consumer behavior data. As inflation rates and job market trends evolve, these insights will be crucial for understanding and forecasting economic health.
In the face of rising prices and interest rates, American consumers continue to spend, driven by confidence in the job market and a strategic approach to maximizing value. The unique blend of data in the Zeta Economic Index provides a robust tool for policymakers, businesses, and consumers to navigate the complexities of the modern economy.