Latest / Markets with Megan: A Quick Financial Markets Update / Are Consumers Losing Confidence? | S2 E004 | 01-24-25

Transcript

Are Consumers Losing Confidence? | S2 E004 | 01-24-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The confidence in consumers is starting to fade as we enter 2025.
• 0:05
  Megan Horneman: It is Friday, January the 24th, and this is Megan Horneman, and you're listening to Markets with Megan.
• 0:11
  Megan Horneman: This morning.
• 0:12
  Megan Horneman: We got a data report on consumer confidence and this was the final reading from the University of Michigan on confidence for the month of January.
• 0:22
  Megan Horneman: We actually saw the first drop in this reading in six months.
• 0:25
  Megan Horneman: We also got, when you look at the two different components in this, which is confidence on the current conditions and then confidence on future expectations, both of them declined.
• 0:35
  Megan Horneman: Confidence on the current situation fell to a three-month low and then it was really led by that expectation component of this index, which fell to a six-month low.
• 0:49
  Megan Horneman: One of the other key pieces of data that come out of this report is the inflation expectation for consumers, and this is important because if the consumers think inflation is going to be higher in the future, they may feel compelled to spend now, and what that does is just exacerbate inflation at the current time.
• 1:03
  Megan Horneman: And what we're seeing, unfortunately and the Fed will take notice of this is that the one-year inflation expectation went from 2.8% in December to 3.3%, so a pretty big jump just on a month-over-month basis In the 5 to 10 year.
• 1:19
  Megan Horneman: That also increased from 3% for the next 5 to 10 years to 3.2%.
• 1:24
  Megan Horneman: So consumers are still concerned about inflation.
• 1:27
  Megan Horneman: Some of the things that they noted was the concern about tariffs and what that may do to inflation.
• 1:32
  Megan Horneman: But this is not a good signal for the Federal Reserve and the markets are slightly lower.
• 1:37
  Megan Horneman: From an equity standpoint today it's been kind of a up and down day, but this is more to do with some of the semiconductors that are selling off.
• 1:45
  Megan Horneman: There might be some just profit taking as well.
• 1:48
  Megan Horneman: This week it's been the best first week for the market of a presidential term since Ronald Reagan in 1985.
• 1:55
  Megan Horneman: So we're watching this closely.
• 1:57
  Megan Horneman: Next week the big report will be the Fed meeting.
• 1:59
  Megan Horneman: We don't expect the Fed's going to make any changes next week.
• 2:02
  Megan Horneman: We think they'll stay on, they'll keep interest rates steady, they'll pause.
• 2:05
  Megan Horneman: They will probably make a note of the inflation situation and that the economy still remains relatively solid in that report.
• 2:14
  Megan Horneman: So we'll have much more next week to discuss.
• 2:16
  Megan Horneman: As I mentioned, it's not only the Federal Reserve that comes out, but we also have data on housing, new home sales, building permits as well as home prices, and we'll get another reading from the conference board on consumer sentiment.
• 2:30
  Megan Horneman: That's all we have today.
• 2:31
  Megan Horneman: If you like this podcast, please subscribe.
• 2:34
  Megan Horneman: Hit that alarm bell and if you want further history of our podcast, you can go to marketswithmegan.
• 2:38
  Megan Horneman: fm.
• 2:39
  Megan Horneman: Thank you.