WEBVTT - Conference Board's Dana Peterson Talks Consumer Sentiment

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Okay, this is important. We get some piece here on

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<v Speaker 2>what really matters, which is the seventy percent of the

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<v Speaker 2>American economy, the consumer. Dana Peterson joins own chief economists

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<v Speaker 2>at the Conference Board and the Conference Board, I really

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<v Speaker 2>I can't say enough about the heritage out of one

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<v Speaker 2>of the really difficult times here. The Triangle shirtwais factory

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<v Speaker 2>fire before World War One. It's a venerable organization and

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<v Speaker 2>they carry that with them each and every day. Dana,

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<v Speaker 2>how is the Conference Board different from every other economic shop.

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<v Speaker 1>Well, we're different because we're non partisan. We don't have

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<v Speaker 1>an ax to grind. We like to give people the

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<v Speaker 1>facts and help them to understand it.

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<v Speaker 2>What do you understand now about the American consumer? The

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<v Speaker 2>not exuberance, but the effervescence right now is tangible. Does

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<v Speaker 2>it continue?

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<v Speaker 1>I think it does as long as consumers continue to work,

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<v Speaker 1>And certainly, our own consumer confidence measures signals that consumers

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<v Speaker 1>are saying that it's very easy to find a job

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<v Speaker 1>right now and they expect that to be so in

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<v Speaker 1>six months. So as long as consumers feel confident that

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<v Speaker 1>they will be working, they're happy to spend, they're spending

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<v Speaker 1>on good services, they're going on vacation.

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<v Speaker 2>So then why does it feel like too Americas the

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<v Speaker 2>one you just describe. And there's a lot of angst

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<v Speaker 2>out there from people saying it's not nearly as rosy

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<v Speaker 2>as what Dana Peterson says.

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<v Speaker 1>Well, there's the other half of that coin, and that's inflation.

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<v Speaker 1>While the pace of inflation has slowed significantly, prices are

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<v Speaker 1>still a lot higher now than they were a pre pandemic.

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<v Speaker 1>Inflation bites everyone, and that's what consumers are feeling. Yes,

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<v Speaker 1>they have higher wages, they're taking home more money, but

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<v Speaker 1>it's going back to the store in the form of inflation,

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<v Speaker 1>and I think that's what's concerning many consumers.

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<v Speaker 3>Yeah, that's right, Dana. I think that's kind of what

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<v Speaker 3>we hear from a lot of folks out there. Is

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<v Speaker 3>there a time when that kind of plays out, when

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<v Speaker 3>we stop saying, boy, my supermarket bill is a lot

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<v Speaker 3>higher than it used to be, Because one could argue

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<v Speaker 3>we're almost five years into the onset of the pandemic

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<v Speaker 3>and the inflation resulting therefrom Is there a point where

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<v Speaker 3>this becomes less of an issue for people?

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<v Speaker 1>I think once people get used to it. So for example,

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<v Speaker 1>with the housing market, you know, there's a whole generation

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<v Speaker 1>of folks who never owned a home and they don't

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<v Speaker 1>remember three percent mortgages, and they're saying, well, I guess

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<v Speaker 1>this is what the environment looks like. The mortgage is

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<v Speaker 1>going to be five six percent, but I still don't

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<v Speaker 1>want to buy that house, so they go for And

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<v Speaker 1>that's what we're seeing more of people just kind of

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<v Speaker 1>resigning themselves to this is the new normal.

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<v Speaker 3>And so, Dana, I mean, the labor market, you know,

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<v Speaker 3>by all measures, is still very very strong, very vibrant.

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<v Speaker 3>It seems like if people want a job, they can

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<v Speaker 3>get a job. Wagers are rising now at a faster

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<v Speaker 3>rate than inflation. How do you characterize the labor market

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<v Speaker 3>these days?

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<v Speaker 1>I think the labor market's super robust. We're still seeing

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<v Speaker 1>job gains. November was really outsized. Yes, we had a

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<v Speaker 1>bit of a payback from the hurricane related weakness, but

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<v Speaker 1>you know, again people are working. Many companies are still

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<v Speaker 1>hiring or they're at least holding on to their workers.

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<v Speaker 1>When we ask CEOs what they're planning to do, seventy

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<v Speaker 1>five percent say we're going to hire or basically ward

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<v Speaker 1>our labor force.

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<v Speaker 2>Frame out your real GDP twelve months out and overlay

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<v Speaker 2>inflation to a nominal GDP number. What does the Conference

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<v Speaker 2>sports see?

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<v Speaker 1>Well, four percent, so that'd be two percent GDP and

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<v Speaker 1>then two percent inflation. So we hope that happens, although

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<v Speaker 1>there are very many risks that could cause inflation to

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<v Speaker 1>be higher than we exchect and also growth to be lower.

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<v Speaker 2>But is that your definition of a solid economy or

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<v Speaker 2>I'm like, OMG, the COVID boom is over and we're

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<v Speaker 2>slowing down.

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<v Speaker 1>Well, we've already kind of slowed down to I think

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<v Speaker 1>what's a new normal. We'll probably get there next year

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<v Speaker 1>with two percent growth. That's quite strong. The key thing

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<v Speaker 1>is just keeping me unemployment right low.

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<v Speaker 2>Yeah. Is there a wealth affect Dana Peterson? I mean,

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<v Speaker 2>are people looking at like Sweeney's looking at his Nvidia

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<v Speaker 2>going You know, I can afford the sphere and the

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<v Speaker 2>eagles because I'm large. Is there a wealth effect out

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<v Speaker 2>there going on?

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<v Speaker 3>Well?

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<v Speaker 1>For those who own financial assets, yes, there is a

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<v Speaker 1>wealth effect. If you own a home, your home home

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<v Speaker 1>prices have almost doubled. If you own stocks, they continue

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<v Speaker 1>to rise. The bond market it's in and out, but

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<v Speaker 1>you know, things are I think, well for those who

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<v Speaker 1>have assets, but for folks who don't have assets, they're

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<v Speaker 1>probably not as excited, but still they may look at

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<v Speaker 1>the strength of the stock market as an indicator that

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<v Speaker 1>their job is going to be there and that they're

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<v Speaker 1>going to prosper.

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<v Speaker 2>This is dead on. I can't what you just heard,

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<v Speaker 2>folks from mss Peterson is so so important. We look

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<v Speaker 2>at like the halves and they have nots, and we

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<v Speaker 2>look at the paycheck, which makes sense, but there's also

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<v Speaker 2>the halves and the have nots with assets and that's

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<v Speaker 2>not nearly discussed as it should be. Dana Peterson, thank

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<v Speaker 2>you so much, Chief Economist at the Conference Board,