Latest / Markets with Megan: A Quick Financial Markets Update / What is the Fed Watching as Consumer Sentiment Slips? | S2 E088 | 10-17-25

Transcript

What is the Fed Watching as Consumer Sentiment Slips? | S2 E088 | 10-17-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  SPEAKER_00: We aren't able to get much economic data, but what we are seeing is that the consumer is telling the Fed to be very careful with what their next move is.
• 0:09
  SPEAKER_00: It's Friday, October the 17th, and this is Markets with Megan.
• 0:12
  SPEAKER_00: If you like this pot podcast, please subscribe, hit the alarm bell, share with friends, your family, or colleagues.
• 0:19
  SPEAKER_00: But we're here today to break down some of the economic data, and we're still in the government shutdown, so we don't have the regular reports that we can come to discuss with you.
• 0:29
  SPEAKER_00: But we are getting some of the private reports.
• 0:32
  SPEAKER_00: And what we've seen over the past week is we got the unit of the preliminary reading on the University of Michigan Consumer Confidence Index.
• 0:40
  SPEAKER_00: This is important because that consumer makes up the majority of GDP and their views on what they think for inflation and the labor market are important, especially important since the Fed's not getting economic data either.
• 0:53
  SPEAKER_00: So let's break down what we got for October's preliminary reading.
• 0:57
  SPEAKER_00: We did see that the overall consumer sentiment slipped again, a little bit.
• 1:02
  SPEAKER_00: It's down to 55, so it slipped from last month.
• 1:06
  SPEAKER_00: You're looking though, when we break down into some of these components of deport, that's where we want to focus.
• 1:12
  SPEAKER_00: It gets broken down into the sentiment on current economic conditions.
• 1:15
  SPEAKER_00: That bounced up just a tad bit, and that may be because of the Fed's interest rate cut in September.
• 1:21
  SPEAKER_00: When you look at the expectation component, though, that now is at a five-month low.
• 1:28
  SPEAKER_00: And when consumers talk about their expectation for finances in the future, they think they're going to be the worst that they've seen since 2011.
• 1:38
  SPEAKER_00: That's important because the two things they're looking at is their income expectations as well as inflation.
• 1:45
  SPEAKER_00: And when you look at that 12-month inflation expectation, there it consumers are expecting that to be about 4.6%.
• 1:53
  SPEAKER_00: It's slightly lower than September's, but at 4.6%, typically the when you look at what inflation actually comes in a year later, after this type of a report, when the consumer's forecasting it in that future year, it's almost spot on if you look at it historically, just on average.
• 2:12
  SPEAKER_00: So this is concerning.
• 2:14
  SPEAKER_00: A 4.6%, even a 3.6%.
• 2:18
  SPEAKER_00: This is not what the Fed wants to see.
• 2:20
  SPEAKER_00: So the Fed's walking a very fine line here when it comes to what they're going to do next at their October meeting.
• 2:26
  SPEAKER_00: We'll be back because we have a little bit more of a roundup to give you on some of these private sector reports, but that's what we have for this podcast today.
• 2:33
  SPEAKER_00: If you want a history of our podcast, you can go to marketswithmegan.fm.
• 2:36
  SPEAKER_00: Thank you.