WEBVTT - Conference Board's Franco: Consumers Are Still Cautious (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 Strom, Bloomberg World Headquarters.

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<v Speaker 1>I'm Charlie Pellett dal the SMP and has Stack all

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<v Speaker 1>declining at or near their worst level of the session.

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<v Speaker 1>This update is brought to you by Bentley University. What

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<v Speaker 1>the tying up the finances at Converse and managing asset

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<v Speaker 1>allocations at JP Morgan have in common a business degree

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<v Speaker 1>from Bentley University. Because business is everywhere, Prepare here right now.

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<v Speaker 1>We've got the SMP five hundred index down ten at

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<v Speaker 1>two thousand eighty eight, a drop of five tenths of

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<v Speaker 1>one percent down. Industrials down a hundred and forty five

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<v Speaker 1>points down eight tenths of one percent. Has Stacktown six

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<v Speaker 1>a drop of point one percent ten. You're up three

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<v Speaker 1>thirty second, Zeal there one point eight three percent, Gold

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<v Speaker 1>up three to twelve seventeen twenty, a gain of three

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<v Speaker 1>tenths of one percent. Crude lower little changed. West Texas

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<v Speaker 1>Intermediate down thirteen cents to forty nine nineteen of barrel,

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<v Speaker 1>a drop of three tenths of one percent. I'm Charlie Pellett,

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<v Speaker 1>and that's a bloom Bird business flash. This is taking

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<v Speaker 1>stock with bim Box and Kathleen Hayes on bloom Bird Radio.

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<v Speaker 1>The US consumer is sending mixed signals gauges of US

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<v Speaker 1>consumer confidence well, fostering uncertainty about whether the reason pickup

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<v Speaker 1>in consumer spending will be sustained throughout the summer. For example,

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<v Speaker 1>the Conference boards Consumer Confidence Index fell to nine two

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<v Speaker 1>point six in May from an upwardly revised ninety four

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<v Speaker 1>point seven in April, and it was the second consent

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<v Speaker 1>consecutive monthly decline. Let's find out what it all means.

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<v Speaker 1>From Lynn Franco, Director of Economic Indicators for the Conference Board. Then,

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<v Speaker 1>thanks very much for being with us. You're quite welcome.

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<v Speaker 1>So how do we calculate this? How do we make

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<v Speaker 1>sense of the of these almost divergent reports of the consumer.

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<v Speaker 1>The Conference Board's Consumer Confidence Index, as I indicated, that fell,

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<v Speaker 1>But if you look back the last Friday, the University

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<v Speaker 1>of Michigan had their report seemed to contradict what this

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<v Speaker 1>report says. What's going on? Well, I think you know

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<v Speaker 1>ours is a little bit more focused on the job situation.

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<v Speaker 1>Um and despite this decline. I think that pretty much.

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<v Speaker 1>It's been the same message for several months now, and

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<v Speaker 1>that's a looking ahead. Consumers are quite cautious, both in

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<v Speaker 1>terms of the economic outlook and also in terms of

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<v Speaker 1>the employment outlook. Well. Of course, that employment outlook is

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<v Speaker 1>reflected very directly in your questions, are jobs more plentiful,

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<v Speaker 1>not so plentiful or hard to get? Because the plentiful

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<v Speaker 1>part didn't change so much, but the hard to get

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<v Speaker 1>number moved up a bit. Yes, we had some of

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<v Speaker 1>heard mobility there, and if you take a look at

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<v Speaker 1>the expectations, um, you know, six months down the road,

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<v Speaker 1>there was an increase in nose saying to take expect

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<v Speaker 1>fewer jobs to pay available. And I think this really

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<v Speaker 1>translates into what we're sort of seeing a little bit

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<v Speaker 1>in the labor market, is that job growth may be slowing.

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<v Speaker 1>I think the expectations are for about a hundred and

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<v Speaker 1>sixty thou jobs, perhaps less because the Verizon strike at

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<v Speaker 1>the end of this week, but clearly a little bit

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<v Speaker 1>slower than the two hundred plus that we had averaged

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<v Speaker 1>earlier months. Do you think that, based on the information line,

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<v Speaker 1>that it is sustainable throughout the remainder of the year.

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<v Speaker 1>I think in terms of confidence levels, I mean there's

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<v Speaker 1>still not enough I think momentum to to really give

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<v Speaker 1>consumers additional confidence. Again, on the other side, is not

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<v Speaker 1>enough to take it away. So I think we stay

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<v Speaker 1>sort of in the zone where we continue, you know,

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<v Speaker 1>with growth around two two and a half percent. Uh,

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<v Speaker 1>clearly no no significant take up, and I think that

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<v Speaker 1>you know, casts a little bit of a cloud over consumers.

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<v Speaker 1>A slowing job market can also cast a bit of

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<v Speaker 1>a cloud this level of consumer confidence. Does it correlate

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<v Speaker 1>in any way with a certain level of personal consumption

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<v Speaker 1>expenditures PC as a key part of the GDP report,

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<v Speaker 1>or even more broadly with GDP, Well, I think, you know,

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<v Speaker 1>one key slight silver lining that we can take away

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<v Speaker 1>from this report is that we did see a little

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<v Speaker 1>bit of a nut chick. Obviously a month does not

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<v Speaker 1>a trend to make in consumers income expectation. So I

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<v Speaker 1>think if that continues to hold ups and I think,

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<v Speaker 1>you know, we'll continue to see consumers spending sort of

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<v Speaker 1>at the same pace, But nothing in this would indicate

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<v Speaker 1>that we're going to get a big surge in spending

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<v Speaker 1>or being declined either. Then the conference Sports Consumer Confidence

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<v Speaker 1>index is that its lowest level in six months. When

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<v Speaker 1>should we start to be concerned? I think if we

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<v Speaker 1>begin to see very sharp declined in the expectations and

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<v Speaker 1>the present situation, we should become concerned. For now, it's

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<v Speaker 1>been much more of a sideways movement. I think that

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<v Speaker 1>has to do with a lack of strength. Let's say,

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<v Speaker 1>in the economy, we've been growing at a rather sort

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<v Speaker 1>of lackluster pace, and I think that's reflected in the

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<v Speaker 1>confidence numbers. Uh, the feder reserve. What's the bet from

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<v Speaker 1>the conference board? Right now? And when the Fed moves

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<v Speaker 1>on that key rate for the first time this year,

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<v Speaker 1>I think we'll see movement probably over the next two

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<v Speaker 1>to three months, so June July and there's no meaning

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<v Speaker 1>in August. Probably during the summer, yes, so um, I

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<v Speaker 1>think I think the majority of folks are anticipating a

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<v Speaker 1>summertime increase, a summertime increase. How will that or do

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<v Speaker 1>we not know? How will that affect the consumer confidence report?

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<v Speaker 1>How will they filter into such a report? Well, you know,

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<v Speaker 1>we do ask about their expectations regarding interest rates, So

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<v Speaker 1>folks are you know they do foresee a rate hike

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<v Speaker 1>in the foreseeable future, So I don't think that will

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<v Speaker 1>come as a shock. So I think it's really going

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<v Speaker 1>to come down to what's happening in terms of the

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<v Speaker 1>labor market, what's happening in terms of wages, and whether

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<v Speaker 1>or not the economy can pick up a little steam,

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<v Speaker 1>which we and anticipate. How accurately, how closely does your

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<v Speaker 1>consumer confidence report track correlate with even um sort of

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<v Speaker 1>predict where consumer spendings going in the United States? Well,

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<v Speaker 1>I think, you know, confidences is only one factor. I mean,

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<v Speaker 1>you have to have an ability to spend as well.

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<v Speaker 1>So despite the decline that we've seen in confidence over

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<v Speaker 1>the last several months, we're still at relatively good readings.

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<v Speaker 1>So as long as consumers have that ability, you know,

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<v Speaker 1>in terms of credit, in terms of wages and a desire.

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<v Speaker 1>I mean, we've seen a consumer now that's become very selective.

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<v Speaker 1>Uh So they're looking for bargains, they're looking for initiatives.

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<v Speaker 1>They do have spending power, but they're being very selective

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<v Speaker 1>as to when they use that. All right, Lin Franco,

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<v Speaker 1>thank you so very much for joining us to talk

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<v Speaker 1>to us about the Consumer Confidence Report. A little bit

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<v Speaker 1>of a pullback in the latest report. She's the director

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<v Speaker 1>of Economic Indicators at the Conference Board and Pam, I

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<v Speaker 1>think the report today that really got the most detention

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<v Speaker 1>was that consumer spending out. We're gonna be speaking, of

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<v Speaker 1>course to Carl Rickadonna from Bloomberg Intelligence later in the show,

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<v Speaker 1>but that certainly was a boost of stocks. And but

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<v Speaker 1>there's a lot of focus right now on global markets

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<v Speaker 1>and global events. We'll just to give you the details

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<v Speaker 1>personal spending and that measures how much Americans paid for

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<v Speaker 1>everything from I don't know, clothing to uh two food

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<v Speaker 1>items increased one percent in April from month earlier, and

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<v Speaker 1>that was the biggest one month jump since August of

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<v Speaker 1>two thousand nine. So we're gonna keep it going here.

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<v Speaker 1>On taking Stock, I'm Kathleen Haze along with Pim Fox.

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<v Speaker 1>We're gonna be looking at VW and we're gonna get

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<v Speaker 1>a preview of testla's shareholder meeting. All this coming up

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<v Speaker 1>now on Bloomberg Radio. Coming up on taking Stock, we're

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<v Speaker 1>going to take stock of Quervo find out if it

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<v Speaker 1>tequila maker will actually raise a billion dollars in an

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<v Speaker 1>I p o. We've got the details coming up. If

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<v Speaker 1>you