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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Coarclay, and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Let's go to join Sue, University of Michigan Surveys of

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Speaker 2: Consumer Director. Let's talk about this umished data, Joanne, a

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Speaker 2: little bit weaker than expected on the surface.

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Speaker 3: What can you tell us?

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Speaker 4: So it came in a little bit weaker, It declined

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Speaker 4: from last month, but it was actually a very pervasive drop.

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Speaker 4: We sought across all demographic groups. Republicans, Independence, Democrats alike.

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Speaker 4: All declined from last month and very much. So this

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Speaker 4: is a worry about inflation coming back in the year ahead.

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Speaker 5: Yeah, speaking of that, I mean that one year inflation

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Speaker 5: expectation ticking up to four point three percent. That's one

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Speaker 5: hundred bass points higher than what was estimated and the

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Speaker 5: prior read that seems very significant.

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Speaker 6: Can you walk us through that?

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Speaker 4: Absolutely, So this is a huge jump. We very rarely

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Speaker 4: see such a huge one month jump in year ahead

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Speaker 4: inflation expectations. So overall consumers are just really worried about

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Speaker 4: the negative impacts of tariffs, and they're really expecting tariffs

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Speaker 4: to yield quite a bit of inflation in the year ahead.

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Speaker 4: We're seeing a little bit of movement on the long run.

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Speaker 4: I think consumers are waiting to see how things unfold

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Speaker 4: before they really update their expectations over the long run.

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Speaker 2: And again, the emish current conditions came in at sixty

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Speaker 2: eight point seven. Consensus was seventy three point seven. Last

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Speaker 2: period was seventy four. What's the again? Kind of a

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Speaker 2: big drop? Does that surprise you the magnitude of the drop.

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Speaker 4: The main reason for the dropping current conditions is that

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Speaker 4: buying conditions for durables really plunged this month. And the

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Speaker 4: main reason for that is that over the last couple

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Speaker 4: of months, a lot of consumers spot like you needed

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Speaker 4: to buy durables now to avoid price increases in the

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Speaker 4: future because economic policy like tariffs. However, with tariffs on

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Speaker 4: imminent the ones on China already implemented, people are kind

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Speaker 4: of getting concerned that it's already too late to avoid

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Speaker 4: those high prices for durable So that's why current conditions

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Speaker 4: really took a time.

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Speaker 2: Very good joined Sue.

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Speaker 3: Thank you so much. Joined Sue.

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Speaker 2: She's the Surveys of Consumers Director at the University of Michigan.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Coarclay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 5: You got those jobs numbers today and the immediate reaction

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Speaker 5: in the market, in particular that you Mish sentiment which

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Speaker 5: is the weakest, and seven months inflation expectations moving one

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Speaker 5: hundred basis points higher for the next year. Joining us now,

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Speaker 5: Lindsay paeisga is a chief economist.

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Speaker 6: Over at Steefel.

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Speaker 5: Can we just talk about the U Mish numbers for

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Speaker 5: a second and the reaction within the market and that

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Speaker 5: big jump in inflation expectations.

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Speaker 6: What do you make of that?

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Speaker 7: A concern for the market recognizing that inflation is likely

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Speaker 7: to prove much stickier in nature than the Fed had

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Speaker 7: previously anticipated. And this not only calls into question the

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Speaker 7: Fed's earlier decision to stop short of what we've long

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Speaker 7: argued should have been a much higher terminal level, but

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Speaker 7: it also calls into question now the Fed's ability for

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Speaker 7: further downside relief, and so you see the market responding

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Speaker 7: to that, with yields pushing higher this morning after this

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Speaker 7: morning's jobs report and the confidence report.

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Speaker 2: So, lindsay, what did you take away from the jobs

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Speaker 2: report this morning?

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Speaker 7: Well, it was somewhat disappointing on the headline, no doubt,

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Speaker 7: falling to a three month low in terms of that

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Speaker 7: monthly job creation number. But what we see is a

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Speaker 7: lot of that was likely weather related weakness. And when

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Speaker 7: we look at the other components that strong upward momentum,

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Speaker 7: a stronger than expected monthly jump in average hourly earnings,

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Speaker 7: the unemployment rate taking down to an oppressive four percent. Again,

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Speaker 7: this continues to set the stage, or set the tone

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Speaker 7: of tight ish labor market conditions, supporting the Fed's assessment,

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Speaker 7: as we saw in that January FOMC statement that Committee

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Speaker 7: members are moving away from concerns of emerging weakness on

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Speaker 7: the labor market side and conceding now that labor market

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Speaker 7: conditions are likely to remain not only stable but solid

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Speaker 7: going forward into twenty twenty five.

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Speaker 5: The risk, though, has to be the TEARFF question. I

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Speaker 5: forgot to turn on my mic. I love that I

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Speaker 5: knew that on a Friday, and you saw that in

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Speaker 5: you mish. Like both groups from both sides of the aisle,

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Speaker 5: are worried about inflation expectations related to tariffs, particularly when

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Speaker 5: it comes to say, durable goods and buying them now

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Speaker 5: rather than later. We also saw wages take up in

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Speaker 5: the jobs number. All of that is an inflationary spiral.

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Speaker 6: No, well, it can be. It depends.

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Speaker 7: Tariffs in and of themselves are not inflationary if we're

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Speaker 7: talking about a one time price increase, but they absolutely

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Speaker 7: can be inflationary if they result in this tit for

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Speaker 7: tag retaliatory cycle that we saw during Trump's first term

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Speaker 7: back and forth with China. So again it's going to

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Speaker 7: depend on the scope and the intensity of these programs.

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Speaker 7: But also from an immigration standpoint, policies that further restrict

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Speaker 7: the labor supply in this country could exacerbate the already

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Speaker 7: present divide between labor demand and labor supply, and as

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Speaker 7: you mentioned, continue to put upward pressure on wages. At

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Speaker 7: the same time, the administration has talked about raining in

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Speaker 7: the size of government, reducing outlays, finding areas of waste

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Speaker 7: and inefficiencies which could more than offset some of those

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Speaker 7: inflationary pressures in the marketplace. So it remains a big

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Speaker 7: question mark, but it does appear that investors looking at

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Speaker 7: markets reaction, it does appear that investors are concerned about

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Speaker 7: the upside risks to inflation at this point.

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Speaker 2: So, putting all that together, Lindsey, what's your view of

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Speaker 2: the consumer right here?

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Speaker 7: Well, I think the consumer is still very solid. The

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Speaker 7: consumer continues to prove very resilient in the fame of

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Speaker 7: a difficult environment, years of elevated prices, elevated borrowing costs,

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Speaker 7: the resumption now of student debt payments. That being said,

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Speaker 7: there are a lot of challenges facing consumers potentially further

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Speaker 7: higher prices or further increases in borrowing costs at this point,

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Speaker 7: but we also have to look at the fact that

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Speaker 7: consumers are incredibly savvy and with real growth in income

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Speaker 7: excuse me gaining momentum, as well as access to other

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Speaker 7: supplemental factors like four oh one k's hardship withdrawals credit cards,

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Speaker 7: it's clear that consumers still have a good amount of

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Speaker 7: spending and borrowing power left. But again, those challenges are

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Speaker 7: very real as we look further into the new year.

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Speaker 6: All right, Lindsay, thank you so much. Really appreciate it.

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Speaker 5: Lindsay Pieza joining us chief economist over at Steefeld.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on applecar Play and Android

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Speaker 1: with the Bloomberg Business App, Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 5: One stack we're watching today is Huntington Bank shares. Over

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Speaker 5: the last two days, they're up by about one percent.

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Speaker 5: They had an investor day yesterday where they laid out

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Speaker 5: their strategy for the next few years and where their

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Speaker 5: growth opportunities are, and the market took it really well.

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Speaker 5: Zach Wasserman is chief financial officer at Huntington, a national bank,

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Speaker 5: and he joins us here in the studio. Thank you

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Speaker 5: so much for joining us. We appreciate this.

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Speaker 3: It's a pleasure to be with you.

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Speaker 5: So I think Huntington, and I think a company that

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Speaker 5: lends a lot to average people and small businesses and

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Speaker 5: sort of knows.

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Speaker 6: The economic roots.

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Speaker 5: But you guys are also trying to expand that and

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Speaker 5: become something different.

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Speaker 6: Can you walk me through that?

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Speaker 3: Sure? Yeah, you know the businesses.

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Speaker 8: We've been performing exceptionally well recently, and one of the

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Speaker 8: reasons is because we're driving expansion both geographically and in

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Speaker 8: our commercial business, expanding in a number of special de

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Speaker 8: vertical areas and national business lines. Just this year, we've

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Speaker 8: launched into three new states, North Carolina, South Carolina, and Texas,

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Speaker 8: and we've also established eight new specialty verticals that are

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Speaker 8: national for example of funds financed vertical that's supporting private

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Speaker 8: equity clients, one that's focused on the mortgage ecosystem, and

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Speaker 8: other national commercial areas.

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Speaker 2: Talk to us about loan growth, what I do know

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Speaker 2: about the bank of business.

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Speaker 3: That's an important driver. So talk to usbout loan growth,

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Speaker 3: where it's coming from, where.

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Speaker 2: You're seeing it, and is it kind of in line

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Speaker 2: with what you were expecting.

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Speaker 8: You know, we've actually had very strong loan growth of

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Speaker 8: the last two years. If you take us to back,

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Speaker 8: much of the industry has been in a pretty neutral position,

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Speaker 8: not actually growing. Huntington has grown outperformed that by about

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Speaker 8: ten percentage points. And for us, the growth is coming

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Speaker 8: from both our core business, which is consumer small business,

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Speaker 8: and then mid corporate typically private commercial clients, and then

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Speaker 8: also these new initiatives that I just mentioned before launching

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Speaker 8: into three new states, a number of specialty businesses.

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Speaker 3: So we're seeing a nice breadth of growth.

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Speaker 8: Actually, one thing that's actually you know, a nice indication

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Speaker 8: of the economic strength as we're seeing strong demand from

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Speaker 8: small businesses from our regional banking business, typically in the

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Speaker 8: kind of smaller middle market client set. So it's a

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Speaker 8: it's been a healthy dynamic we've been.

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Speaker 6: Seeing before you were in this position.

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Speaker 5: You also was chief financially financial officer to Visa, and

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Speaker 5: I know that Huntington is trying to get into the

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Speaker 5: payments business in a particular way too. What's the what's

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Speaker 5: the market for that? And how do you guys play

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Speaker 5: and compete in that?

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Speaker 8: You know, the market for payments is incredibly broad, and

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Speaker 8: if you think, if you took a.

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Speaker 6: Step back to categorize it, actually like is that zell

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Speaker 6: or like what is that?

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Speaker 3: You know, it is so broad. The one that really

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Speaker 3: needs to to zoom into it.

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Speaker 8: You know, we have a number of card based payment products,

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Speaker 8: so think consumer cards, commercial cards, but also importantly treasury management,

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Speaker 8: and that's really the biggest driver right now we're seeing

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Speaker 8: in payments growth supporting commercial clients with the ability to

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Speaker 8: accept payments and then make payments in essentially every form

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Speaker 8: you can imagine, Alex, so big big growth driver there.

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Speaker 8: One of the things that we've done recently is invest

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Speaker 8: to expand our merchant acquisition capability. Merchant acquiring is when

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Speaker 8: a company accepts payments electronically, and it's often the lynchpin

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Speaker 8: of their business. The lifeblood of the company is how

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Speaker 8: they accept payments. So we launched a merchant acquiring business

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Speaker 8: just in October and it's been going incredibly well. So,

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Speaker 8: you know, kind of almost every area there's growth in

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Speaker 8: payments for sure, but for US treasury management and commercial

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Speaker 8: payments in particular as a major growth driver.

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Speaker 2: Talk to us about your long portfolio, specifically your exposure to.

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Speaker 3: Office, yeah, real estate.

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Speaker 8: You know, office and commercial real estate generally for Huntington

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Speaker 8: is a very small exposure. Actually, typically for large regional banks,

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Speaker 8: the average commercial real estate within the loan portfolio might

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Speaker 8: be fifteen or twenty percent of the loan book. For US,

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Speaker 8: it's nine percent, so we're relatively smaller. In a office

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Speaker 8: is only one percent of that nine Give you a sense.

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Speaker 8: With that being said, you know what we're seeing in

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Speaker 8: that commercial real estate environment is this is gonna this

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Speaker 8: is gonna be a situation that plays out over multiple years. Thankfully,

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Speaker 8: we are seeing a fairly orderly process of refinancing and

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Speaker 8: generally seeing pretty sound ability for our commercial real estate

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Speaker 8: developers to maintain their financing and to successfully roll through maturities.

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Speaker 3: But it'll take a while to run through.

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Speaker 8: To give you a sense, something like twenty percent of

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Speaker 8: the portfolio matures any given year, so this will be

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Speaker 8: you know, on average, it will take five years to.

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Speaker 3: Really roll through.

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Speaker 8: So I think that's a kind of an industry dynamic

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Speaker 8: we're seeing, which this is a dynamic that will play out.

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Speaker 3: Over quite sometime.

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Speaker 5: What part of this encompasses any kind of M and

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Speaker 5: A versus organic I guess you know, for.

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Speaker 3: Us, we're focused on organic growth. You know, M and A.

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Speaker 8: It can be a tool for banks to grow, certainly,

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Speaker 8: we've seen m and A in the industry over time.

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Speaker 8: With that being said, it can also be distracting to

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Speaker 8: the progress that the companies making on organic growth. And

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Speaker 8: for us Alex we're seeing so much progress on our

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Speaker 8: organic growth initiatives, both acquiring customers but also importantly putting

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Speaker 8: more and more focus around the value added fee services

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Speaker 8: that come around that come to them, namely payments, wealth management,

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Speaker 8: and capital markets, and so, you know, just the customer acquisition.

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Speaker 8: We're seeing the success in those businesses. That's where our

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Speaker 8: focus is. To give you a sense in the fourth

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Speaker 8: quarter just that we just closed a ten percent year

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Speaker 8: over year revenue growth really driven by those organic strategies.

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Speaker 3: What's a typical corporate customer for you guys?

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Speaker 8: You know, often, Paul, they are middle market companies that

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Speaker 8: are private.

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Speaker 3: That's the most typical company, you know.

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Speaker 8: You know, the regional banks serve a really important niche

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Speaker 8: within the overall US economy because you know, the client

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Speaker 8: set that we are servicing are typically you know, focused

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Speaker 8: on their local market.

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Speaker 3: They want a bank with a.

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Speaker 8: Company that is deeply embedded in the community and knows

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Speaker 8: them personal, but importantly can bring down to them the

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Speaker 8: power of a large bank in terms of specialized capabilities.

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Speaker 8: It's actually one of the reasons why we've been so

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Speaker 8: successful in these new geographic launches.

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Speaker 3: How about private credit? Is that a competitor to you? No,

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Speaker 3: It's funny.

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Speaker 8: We get this question all the time and the answer

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Speaker 8: generally is no. Okay, you know, private credit is looking

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Speaker 8: for the sort of you know, the kind of loans

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Speaker 8: that they finance are typically where there's more leverage, where

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Speaker 8: there's more yield to be had. Because of the risk,

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Speaker 8: that's not the core client for Huntington. And so we

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Speaker 8: actually were up on stage at our investor day yesterday

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Speaker 8: and our head of Commercial Business mentioned that only in

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Speaker 8: two cases last year across our entire business did we

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Speaker 8: see commercial borrowers actually go to a private credit facility

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Speaker 8: away from our own lending facility.

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Speaker 3: All right, Zach, thank you so much. We appreciate that.

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Speaker 2: Zach Wasserman, chief financial office of Huntington National Bank located

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Speaker 2: in Columbus, Ohio, Miller Columbus, Ohio as well.

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Speaker 6: So he's still banks there even here.

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Speaker 3: Well, he's a player.

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Speaker 2: I think it's just this is old, this is a

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Speaker 2: Miller account.

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Speaker 6: Okay, this is different. Gotcha.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarcklay and Android Auto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 6: Right back to the market and what we're seeing right now.

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Speaker 5: We saw the job's number coming a little bit of

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Speaker 5: a disappointment, but then we had revisions higher. So the

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Speaker 5: idea was that relatively neutral for the jobs world. Average

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Speaker 5: hourly earnings though beating expectations, and then we got you

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Speaker 5: missed around ten and that really jolted markets as well,

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Speaker 5: falling to the lowest and seven months. Also, the inflation

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Speaker 5: expectation for one year rose one hundred bases points.

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Speaker 6: It was a very big jump. We wanted to get.

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Speaker 5: More into all of this and sort of encapsulate what

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Speaker 5: is happening within the jobs market. Kate Dushane is CEO

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Speaker 5: of RGP joining us.

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Speaker 6: What was your biggest takeaway?

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Speaker 9: Well, I think this job's report really a mixed bag.

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Speaker 9: We saw some numbers moving lawyer lower, as you said,

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Speaker 9: but also others getting revised higher. So I think it's

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Speaker 9: it's fairly neutral given the pressures from the LA wildfires

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Speaker 9: and some of the frigid weather that we've all endured

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Speaker 9: in January across the country, so we have to just

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Speaker 9: keep watching what's happening in the couple of months to come.

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Speaker 2: So, Kate, I guess one of the big issues is

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Speaker 2: what this might mean just from an overall labor market.

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Speaker 2: But my takeaway would be, I've got a market that

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Speaker 2: seems at four point one percent, it feels kind of

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Speaker 2: fully employed. I've got wages that are rising faster than inflation.

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Speaker 2: Is that what you see when you when when you

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Speaker 2: talk to your clients out there in terms of their

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Speaker 2: view of the labor market.

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Speaker 9: Yeah, I would still say this is a really strong

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Speaker 9: labor market. I think we have seen in our client

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Speaker 9: base employers or excuse me, employees staying put. So as

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Speaker 9: companies now are starting to increase some of their transformation

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Speaker 9: projects again, they're turning to other labor sources like outside

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Speaker 9: talent to supplement the teams that exist within their environments.

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Speaker 5: One of the biggest outside risks right now, like the

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Speaker 5: impact of terrorists, for example, the unknowns that we think

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Speaker 5: are coming.

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Speaker 6: How does it transmit into the jobs market.

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Speaker 9: Right Sorry about that. Unknowns make everyone nervous and that

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Speaker 9: can be a dampening effect on the labor market. But

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Speaker 9: there's also tremendous pent up demand in terms of innovation,

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Speaker 9: technology transformation, digital transformation that's happening in our client base.

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Speaker 9: There's a push around cost cutting and supply chain optimization.

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Speaker 9: Those pressures in a business don't go away. So we

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Speaker 9: have some countervailing I would say pressure is happening in

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Speaker 9: the marketplace that we see in our client base. I

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Speaker 9: would say, on the average, we are cautiously optimistic that

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Speaker 9: the environment for labor continues to improve throughout twenty twenty five.

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Speaker 9: But there are uncertainties related to Trump's trade policies and

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Speaker 9: immigration policies, and how they all play out and what

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Speaker 9: the timing is will certainly impact what is the ultimate outcome?

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Speaker 3: Kate.

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Speaker 2: Yeah, you mentioned immigration, and as this administration begins to

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Speaker 2: perhaps implement some changes, what kind of impact do you

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Speaker 2: think that could have. If there's in fact lower immigration,

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Speaker 2: maybe even forced deportations, how do you think that will

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Speaker 2: be felt within the labor market.

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Speaker 9: Well, it'll certainly impact certain sectors of the labor market

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Speaker 9: in certain industries.

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Speaker 6: You know, our.

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Speaker 9: Business is primarily professional services. You are looking at professional

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Speaker 9: and business services. Talent pools, and those, especially in this

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Speaker 9: hybrid environment, can often be delivered remotely, and we can

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Speaker 9: tap into labor pools that are global in nature. But

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Speaker 9: things like retail or construction or healthcare workers that have

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Speaker 9: to be on site. I think some of these immigration

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Speaker 9: policies will create supply and demand problems and put more

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Speaker 9: pressure there.

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Speaker 6: What about Doge.

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Speaker 5: We just heard Scott Beson talking about Doge. If we

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Speaker 5: cut a boatload of government workers, doesn't that just lead

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Speaker 5: to so much supply in the labor market and just

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Speaker 5: really tick that unemployment rate higher.

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Speaker 9: Well, it depends on the skill sets that are coming

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Speaker 9: out of that environment. So we need to learn a

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Speaker 9: lot more before I think we decide what the impact

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Speaker 9: will be. You know, typically about six percent of federal

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Speaker 9: workers retire or resign in a typical year. It's looking

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Speaker 9: like that could be much much higher given the activities

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Speaker 9: that we're listening to around Doze right now. But it's

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Speaker 9: really going to depend on what are the skill sets

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Speaker 9: coming into the marketplace and are they the kind of

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Speaker 9: skill sets that private industry is looking for to decide

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Speaker 9: what impact might.

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Speaker 2: Come an old topic, but one I like revisiting is

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Speaker 2: the whole hybrid work thing. What do you are you

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Speaker 2: seeing any trends evolving here or is it kind of

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Speaker 2: set in stone? Hybrid three four days? Is that kind

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Speaker 2: of the new normal now?

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Speaker 9: We really believe it is, and that's supported by a

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Speaker 9: recent Gallup poll that said hybrid has really landed in

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Speaker 9: the economy. Here, and we see that to be true

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Speaker 9: in our client service. I'd say the only industries where

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Speaker 9: that maybe is less true is in financial services, which

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Speaker 9: tends to want people on site. We saw that with

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Speaker 9: the JP Morgan announcement last month, and healthcare certainly has

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Speaker 9: been more on site than others. But otherwise, you know,

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Speaker 9: we think about seventy five percent of our clients are

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Speaker 9: solidly in the hybrid camp.

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Speaker 5: You have like twenty years of experience working with C

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Speaker 5: suites and helping them to manage transformation initiatives. So what's

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Speaker 5: your best guess on what happens with DEI.

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Speaker 6: So thank you.

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Speaker 9: I mean, we've certainly all been reading lots of headlines

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Speaker 9: about what's happening around DEE and I I think what's

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Speaker 9: getting lost is that businesses can deliver the best results

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Speaker 9: for their customers or clients when they can attract the

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Speaker 9: smartest and innovative talent from a wide range of backgrounds

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Speaker 9: and experiences.

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Speaker 6: And that's what we focus on.

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Speaker 9: It's really about what are the skill sets and perspectives

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Speaker 9: you need for the best problem solving and fostering an

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Speaker 9: environment where employees can do their best work is how

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Speaker 9: businesses will compete and win and that's what we focus on.

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Speaker 9: It's really about problem solving and getting different perspectives.

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Speaker 2: Is AI a do you think is a net positive

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Speaker 2: for employment or net negative? A lot of folks saying, Gee,

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Speaker 2: it may take some jobs away from from individuals, but

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Speaker 2: then others say, no, it's just simply going to improve their.

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Speaker 3: Potential. How do you think about it?

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Speaker 9: Yeah, I am more of an optimist that AI is

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Speaker 9: going to bring more productivity and I actually think more

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Speaker 9: engagement in the workforce. That, however, requires that people be

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Speaker 9: willing to upskill and I think reskill a little bit.

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Speaker 6: Certainly, there are.

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Speaker 9: Jobs that are very task oriented and repetitive task oriented

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Speaker 9: that could be very disrupted by AI. But moving into

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Speaker 9: more business analytics, project management, technology skills, coding skills, I

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Speaker 9: mean as long as workers are willing to engage in

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Speaker 9: some skill set acquisition, I think by and large, we

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Speaker 9: need AI to play a role as the digital worker

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Speaker 9: or we will not achieve the productivity goals that our

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Speaker 9: economy needs.

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Speaker 6: Kate, we really appreciate it.

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Speaker 5: I don't envy how difficult this time must be for

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Speaker 5: you your clients at Kate Dushane, CEO of r GP,

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Speaker 5: joining us from California.

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Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

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Speaker 3: Yeah