Jobs guarantee decks consumer confidence---statistical analysis proves.
Konstantinous & Tagkalakis ’11 [Panagiotis; Athanasios; 02-10-2011; “Boosting confidence: Is there a role for fiscal policy”; Panagiotis is a Lecturer at the University of Macedonia with a PhD from Department of Economics at the European University Institute; Athanasios has a PhD in Economics from the European University Institute; Economic Modeling 28 \\pairie]
When examining the effects of changes in government consumption on consumer confidence, we note that these are positive, but invariably insignificant. When we decompose this component into wage and non-wage government consumptions, we get more informative results (columns 7–9). Increases in the government wage bill (increasing wages and/or public sector employment) have a negative and at times significant effect. This clearly indicates that consumers perceive additional spending on the public wage-bill as an additional unproductive burden, which will have to be repaid by means of higher future taxes or reduced productive spending. Conversely, additional non-wage related government consumption spending has a positive and significant effect on consumer sentiment. This may be so for two reasons: on the one hand it boosts demand (by directly increasing government spending), i.e. kick-starting economic activity at times of recession (whereas public investment might have a much more delayed effect due to implementation lags); on the other hand, it is probably perceived as being reversible or implying only a temporary increase in the size of the public sector (contrary to permanently higher public employment or wages), thus generating a positive effect on consumer sentiment.