WEBVTT - Conference Board's Franco: Economy Is On Solid Footing (Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World Handquarters.

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<v Speaker 1>I'm Charlie, held at the dial. The SMPNAZ DAK are

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<v Speaker 1>all advancing right now, and this update is brought to

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<v Speaker 1>you by the American Arbitration Association. Business disputes are inevitable,

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<v Speaker 1>at ad R dot org. Stocks are advancing after last

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<v Speaker 1>night's presidential debate. Consumer confidence data boosting optimism in the

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<v Speaker 1>US economy. Will have more on that confidence data coming

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<v Speaker 1>up on taking stock SMP five hundred index up thirteen

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<v Speaker 1>now to fifty nine, a gain of six tenths of

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<v Speaker 1>one percent down, Industrials up one thirty one points, up

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<v Speaker 1>seven tenths of one percent, as stack up forty five

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<v Speaker 1>a gain of nine tenths of one per cent, the

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<v Speaker 1>tenure up seven thirty seconds yield there one point five

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<v Speaker 1>six gold down twelve ninety beams, decline of one percent,

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<v Speaker 1>and crude oil slumping three percent now a barrel of

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<v Speaker 1>West Texas Intermedia down a dollar thirty six. Right now

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<v Speaker 1>on w t I, I'm Charlie Pellet and that's subloom

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<v Speaker 1>Bred Business Flash. You're listening to Taking Stock with pim

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<v Speaker 1>Box and Kathleen Hayes on Bloomberg Radio. Consumer confidence is

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<v Speaker 1>growing stronger every day. No, it's not just the lyrics

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<v Speaker 1>to a Chicago song. It's a description of what's going

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<v Speaker 1>on in the world economy. Lynn Franco is Director of

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<v Speaker 1>Economic Indicators for the Conference Board, and she joins us

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<v Speaker 1>here in studio. Linn Franco, thank you very much for

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<v Speaker 1>being with us. Good to be back. All right, give

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<v Speaker 1>us the details of this latest report. Oh, we had

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<v Speaker 1>some pretty good news back to back monthly gained or

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<v Speaker 1>one oh four point one in September, which last time

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<v Speaker 1>we were this confident was before the Great Recession. So

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<v Speaker 1>it are nine year high. And basically what we're seeing

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<v Speaker 1>that's driving this is consumers assessment of the present situation

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<v Speaker 1>that's also at a nine year high. So that tells

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<v Speaker 1>us that the economy remains relatively strong and expectations are

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<v Speaker 1>that this is going to continue. I'm glad you mentioned

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<v Speaker 1>the present situation in de because yes, it is strong.

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<v Speaker 1>In fact, if we could throw up a chart here

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<v Speaker 1>on radio, you'd see that it is higher than actually

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<v Speaker 1>the overall consumer confidence because expectations are so much lower.

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<v Speaker 1>They look a lot flatter and more than what economists

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<v Speaker 1>has told me. That If you want the part of

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<v Speaker 1>this report that tracks spending more closely, it is expectations.

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<v Speaker 1>It's looked to the future, and I would say that's

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<v Speaker 1>a signal if that correlation is true. That doesn't say

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<v Speaker 1>this necessarily translates into a lot more spending. Even though

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<v Speaker 1>it's great that people are feeling better, particularly about labor market, right,

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<v Speaker 1>it doesn't necessarily translate into more robust economic growth either.

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<v Speaker 1>It's sort of more of the same, which is a

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<v Speaker 1>theme that we've had. Um. But I think the key

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<v Speaker 1>takeaway here is really the fact that, um, you know,

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<v Speaker 1>this is sort of typical behavior that we see during

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<v Speaker 1>an expansion, where the present situation continues to grow, expectations

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<v Speaker 1>tend to level off, and I think it just shows

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<v Speaker 1>us that the economy is still on solid footing, at

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<v Speaker 1>least that's how consumers assess it. Now. I just want

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<v Speaker 1>to read into some of the details, and I know

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<v Speaker 1>that there are many of them. So I'm just going

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<v Speaker 1>to give you a little thought here, which is the

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<v Speaker 1>automobile sector, particularly because you ask the question do you

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<v Speaker 1>plan to buy within the next six months? Uh? And

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<v Speaker 1>there's yes uh. And then in the various categories, weren't

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<v Speaker 1>just if you could tell us a little bit about that,

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<v Speaker 1>just noting if there's a trend or something we should

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<v Speaker 1>pay attention to. Sure, I think here, you know, we've

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<v Speaker 1>seen pretty robust growth in auto sales for several months now.

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<v Speaker 1>There's no indication that that's going to fall off at

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<v Speaker 1>this moment. You know, we might get a little fluctuation

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<v Speaker 1>month to month, but if we go back a year

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<v Speaker 1>or two ago, we're still relatively strong. So yes, consumers

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<v Speaker 1>do remain sort of on the sidelines. There's still careful

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<v Speaker 1>about where they're going to spend their money, when they're

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<v Speaker 1>going to spend their money, but they are willing to

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<v Speaker 1>make these big ticket item purchases. You know, I was

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<v Speaker 1>sitting here thinking about this consumer confidence number, and it's

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<v Speaker 1>the strongest in nine years, so I thought. But I remember,

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<v Speaker 1>because I've been following this for a long time, when

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<v Speaker 1>it used to be easily in the hundred and twenties,

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<v Speaker 1>instead of like the one oh four's. So I went

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<v Speaker 1>back on my Bloomberg, Uh, went into my eco page

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<v Speaker 1>and into the historical price page, and the high and

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<v Speaker 1>consumer confidence was January thirty one of two thousand, it

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<v Speaker 1>was at one forty four, almost one forty. Consumer confidence

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<v Speaker 1>in the two thousands ran consistently a lot higher than

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<v Speaker 1>it runs. Now. Do you need to rejig your base?

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<v Speaker 1>Is something off or people just a lot less confident

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<v Speaker 1>than they used to be. I think we need to

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<v Speaker 1>put it into perspective. That was sort of the Internet bubble,

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<v Speaker 1>and we see how that ended up. So typically what

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<v Speaker 1>we've seen it runs somewhere between a hundred two a

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<v Speaker 1>hundred and twenty. And I also think we need to

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<v Speaker 1>put this in perspective. Um, during other recessions, we had

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<v Speaker 1>seen consumer confidence dropped to about sixty maybe a little

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<v Speaker 1>bit lower at our lowest point we were at during

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<v Speaker 1>this recession. So we have come a long way, um,

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<v Speaker 1>and I think we may have a little bit further togo,

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<v Speaker 1>but I think these levels and the overall trend are

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<v Speaker 1>positive news. All Right, a little bit more detail on

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<v Speaker 1>the trend in vacations. You know, I was looking that

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<v Speaker 1>we're talking about automobiles, you think that's going to remain steady.

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<v Speaker 1>What about vacation data, We see the vacations here as

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<v Speaker 1>well that it's holding up quite well. And now I

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<v Speaker 1>think we get sort of into that time where we

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<v Speaker 1>start thinking about our next vacation, our next time off.

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<v Speaker 1>At least maybe I do. But anyway, I think that's

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<v Speaker 1>going to hold up to again. You know, consumers, now

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<v Speaker 1>the confidence level is high, so that means they're willing

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<v Speaker 1>to spend. They have the ability to spend, it's just

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<v Speaker 1>making those decisions. I mean, there's still a little bit cautious.

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<v Speaker 1>We're all sort of scarred. But in terms of autos, vacation,

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<v Speaker 1>and even in homes, I think we have positive news.

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<v Speaker 1>So when you look at the election, and of course,

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<v Speaker 1>coming off of the debates last night, the certainly right

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<v Speaker 1>up there with everybody's minds, so much so that Mike

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<v Speaker 1>McDonald from our Bloomberg Intelligence team looked at Bloomberg's Consumer

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<v Speaker 1>Comfort Index and tracked how it shows how college educated

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<v Speaker 1>consumers and people who have at least some college or

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<v Speaker 1>more and incomes over a hundred thousand, it looks like

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<v Speaker 1>their confidence is rising and falling. With Clinton, Hillary Clinton

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<v Speaker 1>standings in the polls, and of course the Mexican pay

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<v Speaker 1>So rally today when many people said that she beat

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<v Speaker 1>Donald Trump in the debate last night at the conference board.

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<v Speaker 1>Are you guys looking at this? Are you tracking confidence

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<v Speaker 1>versus the elections? We've actually gone back and look at

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<v Speaker 1>a few articles at the New York Times has done

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<v Speaker 1>in the past, and generally what they've seen is in

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<v Speaker 1>September of confidence readings are above a hundred, the party

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<v Speaker 1>in office tends to stay in office. The last exception, however,

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<v Speaker 1>was the re election of President Obama, ware confidence levels

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<v Speaker 1>were a little bit below seventy. Um. But this does,

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<v Speaker 1>I guess point sort of towards positive news for the

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<v Speaker 1>current administration. What about the specific just quickly about Ohio.

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<v Speaker 1>What did I tell you there about the confidence in Ohio?

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<v Speaker 1>Because I was looking at that. You do it by state,

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<v Speaker 1>almost in region. I was thinking, here in eighty three

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<v Speaker 1>point five, that's down from nineties six point nine. Right. Um. Well, actually,

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<v Speaker 1>what we do with the states is we tend to

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<v Speaker 1>look at a three month moving average kind of takes

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<v Speaker 1>out a little bit of the noise. What we've seen

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<v Speaker 1>across the nine regions basically is there have been improvements

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<v Speaker 1>over the course of the past year. It's been a

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<v Speaker 1>little bit bumpy. The one exception has sort of been

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<v Speaker 1>what's happening in terms of the West, South Central or

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<v Speaker 1>in Texas because of oil prices, well at oil prices

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<v Speaker 1>can certainly make it consumer less confident when they go

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<v Speaker 1>up too high. Of Kathy Hayes, along with Kim Fox

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<v Speaker 1>and Mrs Bloomberg. Coming up on taking stock, will be

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<v Speaker 1>speaking with Margaret Tullive, white House correspondent for Bloomberg News.

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<v Speaker 1>Presidential debate recap and what's next for the candidates