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Conference Board's Franco: Consumers Are Still Cautious (Audio) · Bloomberg Intelligence

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  Speaker 1: and that's a bloom Bird business flash. This is taking
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  Speaker 1: stock with bim Box and Kathleen Hayes on bloom Bird Radio.
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  Speaker 1: The US consumer is sending mixed signals gauges of US
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  Speaker 1: consumer confidence well, fostering uncertainty about whether the reason pickup
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  Speaker 1: in consumer spending will be sustained throughout the summer. For example,
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  Speaker 1: the Conference boards Consumer Confidence Index fell to nine two
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  Speaker 1: point six in May from an upwardly revised ninety four
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  Speaker 1: point seven in April, and it was the second consent
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  Speaker 1: consecutive monthly decline. Let's find out what it all means.
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  Speaker 1: From Lynn Franco, Director of Economic Indicators for the Conference Board. Then,
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  Speaker 1: thanks very much for being with us. You're quite welcome.
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  Speaker 1: So how do we calculate this? How do we make
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  Speaker 1: sense of the of these almost divergent reports of the consumer.
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  Speaker 1: The Conference Board's Consumer Confidence Index, as I indicated, that fell,
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  Speaker 1: But if you look back the last Friday, the University
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  Speaker 1: of Michigan had their report seemed to contradict what this
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  Speaker 1: report says. What's going on? Well, I think you know
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  Speaker 1: ours is a little bit more focused on the job situation.
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  Speaker 1: Um and despite this decline. I think that pretty much.
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  Speaker 1: It's been the same message for several months now, and
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  Speaker 1: that's a looking ahead. Consumers are quite cautious, both in
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  Speaker 1: terms of the economic outlook and also in terms of
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  Speaker 1: the employment outlook. Well. Of course, that employment outlook is
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  Speaker 1: reflected very directly in your questions, are jobs more plentiful,
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  Speaker 1: not so plentiful or hard to get? Because the plentiful
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  Speaker 1: part didn't change so much, but the hard to get
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  Speaker 1: number moved up a bit. Yes, we had some of
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  Speaker 1: heard mobility there, and if you take a look at
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  Speaker 1: the expectations, um, you know, six months down the road,
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  Speaker 1: there was an increase in nose saying to take expect
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  Speaker 1: fewer jobs to pay available. And I think this really
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  Speaker 1: translates into what we're sort of seeing a little bit
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  Speaker 1: in the labor market, is that job growth may be slowing.
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  Speaker 1: I think the expectations are for about a hundred and
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  Speaker 1: sixty thou jobs, perhaps less because the Verizon strike at
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  Speaker 1: the end of this week, but clearly a little bit
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  Speaker 1: slower than the two hundred plus that we had averaged
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  Speaker 1: earlier months. Do you think that, based on the information line,
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  Speaker 1: that it is sustainable throughout the remainder of the year.
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  Speaker 1: I think in terms of confidence levels, I mean there's
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  Speaker 1: still not enough I think momentum to to really give
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  Speaker 1: consumers additional confidence. Again, on the other side, is not
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  Speaker 1: enough to take it away. So I think we stay
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  Speaker 1: sort of in the zone where we continue, you know,
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  Speaker 1: with growth around two two and a half percent. Uh,
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  Speaker 1: clearly no no significant take up, and I think that
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  Speaker 1: you know, casts a little bit of a cloud over consumers.
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  Speaker 1: A slowing job market can also cast a bit of
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  Speaker 1: a cloud this level of consumer confidence. Does it correlate
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  Speaker 1: in any way with a certain level of personal consumption
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  Speaker 1: expenditures PC as a key part of the GDP report,
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  Speaker 1: or even more broadly with GDP, Well, I think, you know,
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  Speaker 1: one key slight silver lining that we can take away
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  Speaker 1: from this report is that we did see a little
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  Speaker 1: bit of a nut chick. Obviously a month does not
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  Speaker 1: a trend to make in consumers income expectation. So I
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  Speaker 1: think if that continues to hold ups and I think,
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  Speaker 1: you know, we'll continue to see consumers spending sort of
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  Speaker 1: at the same pace, But nothing in this would indicate
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  Speaker 1: that we're going to get a big surge in spending
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  Speaker 1: or being declined either. Then the conference Sports Consumer Confidence
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  Speaker 1: index is that its lowest level in six months. When
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  Speaker 1: should we start to be concerned? I think if we
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  Speaker 1: begin to see very sharp declined in the expectations and
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  Speaker 1: the present situation, we should become concerned. For now, it's
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  Speaker 1: been much more of a sideways movement. I think that
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  Speaker 1: has to do with a lack of strength. Let's say,
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  Speaker 1: in the economy, we've been growing at a rather sort
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  Speaker 1: of lackluster pace, and I think that's reflected in the
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  Speaker 1: confidence numbers. Uh, the feder reserve. What's the bet from
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  Speaker 1: the conference board? Right now? And when the Fed moves
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  Speaker 1: on that key rate for the first time this year,
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  Speaker 1: I think we'll see movement probably over the next two
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  Speaker 1: to three months, so June July and there's no meaning
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  Speaker 1: in August. Probably during the summer, yes, so um, I
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  Speaker 1: think I think the majority of folks are anticipating a
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  Speaker 1: summertime increase, a summertime increase. How will that or do
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  Speaker 1: we not know? How will that affect the consumer confidence report?
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  Speaker 1: How will they filter into such a report? Well, you know,
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  Speaker 1: we do ask about their expectations regarding interest rates, So
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  Speaker 1: folks are you know they do foresee a rate hike
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  Speaker 1: in the foreseeable future, So I don't think that will
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  Speaker 1: come as a shock. So I think it's really going
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  Speaker 1: to come down to what's happening in terms of the
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  Speaker 1: labor market, what's happening in terms of wages, and whether
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  Speaker 1: or not the economy can pick up a little steam,
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  Speaker 1: which we and anticipate. How accurately, how closely does your
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  Speaker 1: consumer confidence report track correlate with even um sort of
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  Speaker 1: predict where consumer spendings going in the United States? Well,
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  Speaker 1: I think, you know, confidences is only one factor. I mean,
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  Speaker 1: you have to have an ability to spend as well.
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  Speaker 1: So despite the decline that we've seen in confidence over
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  Speaker 1: the last several months, we're still at relatively good readings.
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  Speaker 1: So as long as consumers have that ability, you know,
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  Speaker 1: in terms of credit, in terms of wages and a desire.
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  Speaker 1: I mean, we've seen a consumer now that's become very selective.
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  Speaker 1: Uh So they're looking for bargains, they're looking for initiatives.
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  Speaker 1: They do have spending power, but they're being very selective
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  Speaker 1: as to when they use that. All right, Lin Franco,
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  Speaker 1: thank you so very much for joining us to talk
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  Speaker 1: to us about the Consumer Confidence Report. A little bit
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  Speaker 1: of a pullback in the latest report. She's the director
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  Speaker 1: of Economic Indicators at the Conference Board and Pam, I
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  Speaker 1: think the report today that really got the most detention
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  Speaker 1: was that consumer spending out. We're gonna be speaking, of
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  Speaker 1: course to Carl Rickadonna from Bloomberg Intelligence later in the show,
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  Speaker 1: but that certainly was a boost of stocks. And but
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  Speaker 1: there's a lot of focus right now on global markets
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  Speaker 1: and global events. We'll just to give you the details
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  Speaker 1: personal spending and that measures how much Americans paid for
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  Speaker 1: everything from I don't know, clothing to uh two food
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  Speaker 1: items increased one percent in April from month earlier, and
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  Speaker 1: that was the biggest one month jump since August of
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  Speaker 1: two thousand nine. So we're gonna keep it going here.
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