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Conference Board's Franco: Economy Is On Solid Footing (Audio) · Bloomberg Intelligence

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  Speaker 1: at ad R dot org. Stocks are advancing after last
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  Speaker 1: night's presidential debate. Consumer confidence data boosting optimism in the
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  Speaker 1: US economy. Will have more on that confidence data coming
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  Speaker 1: a gain of nine tenths of one per cent, the
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  Speaker 1: Bred Business Flash. You're listening to Taking Stock with pim
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  Speaker 1: Box and Kathleen Hayes on Bloomberg Radio. Consumer confidence is
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  Speaker 1: growing stronger every day. No, it's not just the lyrics
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  Speaker 1: to a Chicago song. It's a description of what's going
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  Speaker 1: on in the world economy. Lynn Franco is Director of
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  Speaker 1: Economic Indicators for the Conference Board, and she joins us
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  Speaker 1: here in studio. Linn Franco, thank you very much for
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  Speaker 1: being with us. Good to be back. All right, give
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  Speaker 1: us the details of this latest report. Oh, we had
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  Speaker 1: some pretty good news back to back monthly gained or
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  Speaker 1: one oh four point one in September, which last time
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  Speaker 1: we were this confident was before the Great Recession. So
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  Speaker 1: it are nine year high. And basically what we're seeing
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  Speaker 1: that's driving this is consumers assessment of the present situation
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  Speaker 1: that's also at a nine year high. So that tells
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  Speaker 1: us that the economy remains relatively strong and expectations are
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  Speaker 1: that this is going to continue. I'm glad you mentioned
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  Speaker 1: the present situation in de because yes, it is strong.
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  Speaker 1: In fact, if we could throw up a chart here
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  Speaker 1: on radio, you'd see that it is higher than actually
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  Speaker 1: the overall consumer confidence because expectations are so much lower.
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  Speaker 1: They look a lot flatter and more than what economists
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  Speaker 1: has told me. That If you want the part of
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  Speaker 1: this report that tracks spending more closely, it is expectations.
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  Speaker 1: It's looked to the future, and I would say that's
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  Speaker 1: a signal if that correlation is true. That doesn't say
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  Speaker 1: this necessarily translates into a lot more spending. Even though
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  Speaker 1: it's great that people are feeling better, particularly about labor market, right,
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  Speaker 1: it doesn't necessarily translate into more robust economic growth either.
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  Speaker 1: It's sort of more of the same, which is a
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  Speaker 1: theme that we've had. Um. But I think the key
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  Speaker 1: takeaway here is really the fact that, um, you know,
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  Speaker 1: this is sort of typical behavior that we see during
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  Speaker 1: an expansion, where the present situation continues to grow, expectations
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  Speaker 1: tend to level off, and I think it just shows
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  Speaker 1: us that the economy is still on solid footing, at
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  Speaker 1: least that's how consumers assess it. Now. I just want
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  Speaker 1: to read into some of the details, and I know
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  Speaker 1: that there are many of them. So I'm just going
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  Speaker 1: to give you a little thought here, which is the
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  Speaker 1: automobile sector, particularly because you ask the question do you
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  Speaker 1: plan to buy within the next six months? Uh? And
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  Speaker 1: there's yes uh. And then in the various categories, weren't
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  Speaker 1: just if you could tell us a little bit about that,
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  Speaker 1: just noting if there's a trend or something we should
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  Speaker 1: pay attention to. Sure, I think here, you know, we've
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  Speaker 1: seen pretty robust growth in auto sales for several months now.
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  Speaker 1: There's no indication that that's going to fall off at
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  Speaker 1: this moment. You know, we might get a little fluctuation
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  Speaker 1: month to month, but if we go back a year
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  Speaker 1: or two ago, we're still relatively strong. So yes, consumers
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  Speaker 1: do remain sort of on the sidelines. There's still careful
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  Speaker 1: about where they're going to spend their money, when they're
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  Speaker 1: going to spend their money, but they are willing to
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  Speaker 1: make these big ticket item purchases. You know, I was
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  Speaker 1: sitting here thinking about this consumer confidence number, and it's
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  Speaker 1: the strongest in nine years, so I thought. But I remember,
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  Speaker 1: because I've been following this for a long time, when
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  Speaker 1: it used to be easily in the hundred and twenties,
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  Speaker 1: instead of like the one oh four's. So I went
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  Speaker 1: back on my Bloomberg, Uh, went into my eco page
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  Speaker 1: and into the historical price page, and the high and
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  Speaker 1: consumer confidence was January thirty one of two thousand, it
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  Speaker 1: was at one forty four, almost one forty. Consumer confidence
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  Speaker 1: in the two thousands ran consistently a lot higher than
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  Speaker 1: it runs. Now. Do you need to rejig your base?
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  Speaker 1: Is something off or people just a lot less confident
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  Speaker 1: than they used to be. I think we need to
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  Speaker 1: put it into perspective. That was sort of the Internet bubble,
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  Speaker 1: and we see how that ended up. So typically what
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  Speaker 1: we've seen it runs somewhere between a hundred two a
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  Speaker 1: hundred and twenty. And I also think we need to
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  Speaker 1: put this in perspective. Um, during other recessions, we had
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  Speaker 1: seen consumer confidence dropped to about sixty maybe a little
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  Speaker 1: bit lower at our lowest point we were at during
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  Speaker 1: this recession. So we have come a long way, um,
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  Speaker 1: and I think we may have a little bit further togo,
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  Speaker 1: but I think these levels and the overall trend are
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  Speaker 1: positive news. All Right, a little bit more detail on
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  Speaker 1: the trend in vacations. You know, I was looking that
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  Speaker 1: we're talking about automobiles, you think that's going to remain steady.
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  Speaker 1: What about vacation data, We see the vacations here as
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  Speaker 1: well that it's holding up quite well. And now I
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  Speaker 1: think we get sort of into that time where we
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  Speaker 1: start thinking about our next vacation, our next time off.
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  Speaker 1: At least maybe I do. But anyway, I think that's
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  Speaker 1: going to hold up to again. You know, consumers, now
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  Speaker 1: the confidence level is high, so that means they're willing
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  Speaker 1: to spend. They have the ability to spend, it's just
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  Speaker 1: making those decisions. I mean, there's still a little bit cautious.
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  Speaker 1: We're all sort of scarred. But in terms of autos, vacation,
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  Speaker 1: and even in homes, I think we have positive news.
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  Speaker 1: So when you look at the election, and of course,
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  Speaker 1: coming off of the debates last night, the certainly right
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  Speaker 1: up there with everybody's minds, so much so that Mike
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  Speaker 1: McDonald from our Bloomberg Intelligence team looked at Bloomberg's Consumer
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  Speaker 1: Comfort Index and tracked how it shows how college educated
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  Speaker 1: consumers and people who have at least some college or
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  Speaker 1: more and incomes over a hundred thousand, it looks like
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  Speaker 1: their confidence is rising and falling. With Clinton, Hillary Clinton
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  Speaker 1: standings in the polls, and of course the Mexican pay
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  Speaker 1: So rally today when many people said that she beat
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  Speaker 1: Donald Trump in the debate last night at the conference board.
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  Speaker 1: Are you guys looking at this? Are you tracking confidence
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  Speaker 1: versus the elections? We've actually gone back and look at
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  Speaker 1: a few articles at the New York Times has done
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  Speaker 1: in the past, and generally what they've seen is in
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  Speaker 1: September of confidence readings are above a hundred, the party
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  Speaker 1: in office tends to stay in office. The last exception, however,
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  Speaker 1: was the re election of President Obama, ware confidence levels
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  Speaker 1: were a little bit below seventy. Um. But this does,
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  Speaker 1: I guess point sort of towards positive news for the
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  Speaker 1: current administration. What about the specific just quickly about Ohio.
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  Speaker 1: What did I tell you there about the confidence in Ohio?
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  Speaker 1: Because I was looking at that. You do it by state,
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  Speaker 1: almost in region. I was thinking, here in eighty three
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  Speaker 1: point five, that's down from nineties six point nine. Right. Um. Well, actually,
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  Speaker 1: what we do with the states is we tend to
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  Speaker 1: look at a three month moving average kind of takes
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  Speaker 1: out a little bit of the noise. What we've seen
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  Speaker 1: across the nine regions basically is there have been improvements
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  Speaker 1: over the course of the past year. It's been a
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  Speaker 1: little bit bumpy. The one exception has sort of been
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  Speaker 1: what's happening in terms of the West, South Central or
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  Speaker 1: in Texas because of oil prices, well at oil prices
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  Speaker 1: can certainly make it consumer less confident when they go
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  Speaker 1: up too high. Of Kathy Hayes, along with Kim Fox
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  Speaker 1: and Mrs Bloomberg. Coming up on taking stock, will be
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  Speaker 1: speaking with Margaret Tullive, white House correspondent for Bloomberg News.
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  Speaker 1: Presidential debate recap and what's next for the candidates