1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:35,840 Speaker 2: Terminal and the Bloomberg Business app. 10 00:00:36,520 --> 00:00:39,000 Speaker 3: There is a real question about whether the economic data 11 00:00:39,040 --> 00:00:41,560 Speaker 3: actually justifies it, and someone who's been making that argument 12 00:00:41,800 --> 00:00:44,120 Speaker 3: for quite a long time has been Neil Dada of Renmack, 13 00:00:44,159 --> 00:00:46,560 Speaker 3: who does join us now? Neil, what did you make 14 00:00:46,840 --> 00:00:49,360 Speaker 3: yesterday of the rhetoric coming out of the White House 15 00:00:49,360 --> 00:00:51,879 Speaker 3: and the first in person meeting between j Powell and 16 00:00:52,080 --> 00:00:53,639 Speaker 3: President Trump two point zero. 17 00:00:56,160 --> 00:01:00,240 Speaker 4: President from once lower Race. I mean, that's not exactly 18 00:01:00,280 --> 00:01:01,560 Speaker 4: breaking news in my opinion. 19 00:01:02,040 --> 00:01:03,920 Speaker 3: There is a feeling, though, that there has been a 20 00:01:04,000 --> 00:01:07,840 Speaker 3: number of data points, in particular yesterday's revision to GDP 21 00:01:08,080 --> 00:01:12,960 Speaker 3: that shows personal spending personal income isn't necessarily keeping pace. 22 00:01:13,040 --> 00:01:16,039 Speaker 3: We're expected to get core PC today. That does show 23 00:01:16,040 --> 00:01:20,640 Speaker 3: that ongoing disinflationary trajectory. Do you think even with some 24 00:01:20,720 --> 00:01:22,760 Speaker 3: of the on again off against tariffs, in the sense 25 00:01:22,800 --> 00:01:25,920 Speaker 3: that companies have adapted and adjusted, there is a legitimate 26 00:01:26,000 --> 00:01:28,039 Speaker 3: argument for the FED to be cutting more aggressively. 27 00:01:29,319 --> 00:01:31,800 Speaker 4: I do, you know, I think the Fed's job is 28 00:01:31,840 --> 00:01:35,400 Speaker 4: to make decisions with imperfect information, So just using uncertainty 29 00:01:35,440 --> 00:01:38,360 Speaker 4: as a crutch to just wait everything out, it's sort 30 00:01:38,400 --> 00:01:42,920 Speaker 4: of besides the point, you know, I do think that 31 00:01:43,000 --> 00:01:46,680 Speaker 4: companies are probably you know, for the time being. I mean, 32 00:01:46,720 --> 00:01:51,720 Speaker 4: I think they're eating much of the sort of inflationary 33 00:01:51,800 --> 00:01:54,520 Speaker 4: impact of the of the terrorifts, they're eating the tariffs. 34 00:01:54,520 --> 00:01:57,240 Speaker 4: They're the ones that are burying the cost margins are 35 00:01:57,280 --> 00:01:59,680 Speaker 4: probably being squeezed. So it's not like it's a good thing. 36 00:01:59,760 --> 00:02:03,760 Speaker 4: But I think the demand shock is more important to 37 00:02:03,760 --> 00:02:07,040 Speaker 4: be focusing on. And this was going into a situation 38 00:02:07,080 --> 00:02:10,800 Speaker 4: where the economy was already getting worse, and so you know, 39 00:02:10,800 --> 00:02:12,440 Speaker 4: when I look at the data, I mean, to me, 40 00:02:12,960 --> 00:02:15,399 Speaker 4: the most important thing that happened this week is that 41 00:02:16,639 --> 00:02:23,120 Speaker 4: extended unemployment claims hit a fresh high. That's important. Job 42 00:02:23,160 --> 00:02:27,000 Speaker 4: finding rates are low, and you know, even though initial 43 00:02:27,080 --> 00:02:30,720 Speaker 4: layoffs are low too, the fact that those newly laid 44 00:02:30,720 --> 00:02:33,360 Speaker 4: off people can't find any work is basically why the 45 00:02:33,440 --> 00:02:36,040 Speaker 4: sort of ranks of the unemployed continue to grow. So 46 00:02:36,080 --> 00:02:38,840 Speaker 4: I wouldn't be surprised to see, you know, the level 47 00:02:38,840 --> 00:02:43,079 Speaker 4: of permanent job losers take up a bit more when 48 00:02:43,120 --> 00:02:46,760 Speaker 4: the next unemployment sort of employment report comes out, So 49 00:02:46,880 --> 00:02:49,960 Speaker 4: you can't rule out ongoing increases in the unemployment rate. 50 00:02:50,040 --> 00:02:52,640 Speaker 4: The economy is growing below potential, and that's making it 51 00:02:52,720 --> 00:02:56,680 Speaker 4: very difficult for laydoff people to find work, and as 52 00:02:56,720 --> 00:02:59,040 Speaker 4: a result, the unemployment rate will keep rising. 53 00:02:59,200 --> 00:03:01,839 Speaker 1: Well, let's talk about the next job's number. It's going 54 00:03:01,880 --> 00:03:03,320 Speaker 1: to be Friday, June six. 55 00:03:03,400 --> 00:03:06,680 Speaker 4: What are you expecting, Neil, Well, I mean, I wouldn't 56 00:03:06,800 --> 00:03:09,280 Speaker 4: expect much. I mean I think I wouldn't rule out 57 00:03:09,320 --> 00:03:12,520 Speaker 4: like a two tenth increase in the unemployment rate. You know, 58 00:03:12,560 --> 00:03:15,239 Speaker 4: continuing jobless claims are basically sending you a message that 59 00:03:15,320 --> 00:03:17,920 Speaker 4: the unemployment rate's going up. We may well be at 60 00:03:17,919 --> 00:03:23,840 Speaker 4: the fed's unemployment rate forecast for Q four, a couple 61 00:03:23,840 --> 00:03:25,440 Speaker 4: of quarters ahead of schedule. 62 00:03:26,000 --> 00:03:27,800 Speaker 5: Would that be enough for the Fed to cut do 63 00:03:27,840 --> 00:03:30,200 Speaker 5: you think, given the fact that they talk about the 64 00:03:30,280 --> 00:03:32,200 Speaker 5: uncertainty of policy in Washington. 65 00:03:33,560 --> 00:03:35,280 Speaker 4: I don't know that'll be enough for them to cut 66 00:03:35,320 --> 00:03:39,840 Speaker 4: in June, but it'll probably get the markets betting on cuts, 67 00:03:40,560 --> 00:03:44,720 Speaker 4: more cuts and sooner, So maybe it ups the odds of. 68 00:03:46,320 --> 00:03:46,600 Speaker 1: July. 69 00:03:47,360 --> 00:03:51,280 Speaker 4: But I think, you know, frankly, you can't rule out 70 00:03:51,280 --> 00:03:54,720 Speaker 4: a scenario where, you know, it kind of looks like 71 00:03:55,600 --> 00:03:58,960 Speaker 4: you know what we saw last year, where they're waiting, waiting, waiting, 72 00:03:59,000 --> 00:04:02,000 Speaker 4: and then all of a sudden they make a very 73 00:04:02,400 --> 00:04:06,440 Speaker 4: sort of abrupt pivot and do more than that expected. 74 00:04:06,600 --> 00:04:08,200 Speaker 3: You know, why doesn't the long end of the yield curve? 75 00:04:08,240 --> 00:04:10,960 Speaker 3: For you, the fact that some people believe that there 76 00:04:11,080 --> 00:04:13,400 Speaker 3: is going to be longer term structural inflation and a 77 00:04:13,480 --> 00:04:16,800 Speaker 3: term premium and the FED looking more accommodative will only 78 00:04:16,800 --> 00:04:17,440 Speaker 3: expedite that. 79 00:04:18,960 --> 00:04:21,280 Speaker 4: Sure, that's I mean again, I don't know that that's 80 00:04:21,320 --> 00:04:26,360 Speaker 4: the reason why the long end is elevated. A lot 81 00:04:26,400 --> 00:04:28,320 Speaker 4: of it I think has to do with what's going 82 00:04:28,320 --> 00:04:30,880 Speaker 4: on globally. I mean, even if you look at some 83 00:04:31,000 --> 00:04:33,800 Speaker 4: of the movements you know, in rates this year, it's 84 00:04:33,839 --> 00:04:37,480 Speaker 4: been happening on days of some sort of like you know, 85 00:04:37,640 --> 00:04:41,279 Speaker 4: some global development, whether it's a bad Japanese bond auction, 86 00:04:41,480 --> 00:04:45,840 Speaker 4: bad inflation data overseas. What we know is not that 87 00:04:46,000 --> 00:04:49,960 Speaker 4: people don't want to hold US long bonds. They don't 88 00:04:49,960 --> 00:04:51,560 Speaker 4: want to hold long bonds. I mean, the curve is 89 00:04:51,839 --> 00:04:55,000 Speaker 4: steepening everywhere. So I wouldn't lay that, you know, as 90 00:04:55,400 --> 00:04:58,200 Speaker 4: purely like a US centric thing. I think the bigger 91 00:04:58,240 --> 00:05:00,600 Speaker 4: story is that, you know, the markets have really had 92 00:05:00,600 --> 00:05:03,440 Speaker 4: to come to grips with the idea that the economy 93 00:05:03,520 --> 00:05:07,040 Speaker 4: might be slow in we haven't really had that one 94 00:05:07,080 --> 00:05:10,240 Speaker 4: piece of very you know, bad hard data where it's like, 95 00:05:10,279 --> 00:05:13,520 Speaker 4: oh aha, like sort of you know, recession risks are 96 00:05:13,560 --> 00:05:16,960 Speaker 4: higher than we thought. Yeah, when that happens, I think 97 00:05:17,000 --> 00:05:20,599 Speaker 4: you probably see, you know, mother nature kind of taking course, 98 00:05:21,480 --> 00:05:23,799 Speaker 4: not only for equities, but with the fixed income market 99 00:05:23,839 --> 00:05:24,159 Speaker 4: as well. 100 00:05:24,240 --> 00:05:26,479 Speaker 1: Mother nature is a fickle creature, as you know. 101 00:05:26,600 --> 00:05:28,960 Speaker 3: And there's been a change in the narrative recently, with 102 00:05:29,080 --> 00:05:32,880 Speaker 3: the US Economics Surprise Index actually arising some of the 103 00:05:32,960 --> 00:05:33,880 Speaker 3: highest levels. 104 00:05:33,600 --> 00:05:34,560 Speaker 1: That we've seen in months. 105 00:05:34,640 --> 00:05:38,800 Speaker 3: You've seen consumer sentiment actually changed to up up. 106 00:05:38,680 --> 00:05:41,400 Speaker 1: Itself to closer to some of the hard data. 107 00:05:41,520 --> 00:05:44,400 Speaker 3: Will gives you confidence that, especially as some of these 108 00:05:44,440 --> 00:05:47,279 Speaker 3: tariffs get rolled back from worst case scenarios, there will 109 00:05:47,320 --> 00:05:49,320 Speaker 3: be a slowdown that is not showing up at a 110 00:05:49,320 --> 00:05:51,320 Speaker 3: lot of the earnings that we're getting at a number 111 00:05:51,360 --> 00:05:53,920 Speaker 3: of different companies that are managing to whether that's just fine. 112 00:05:55,520 --> 00:05:57,720 Speaker 4: If you punch someone in the face over and over 113 00:05:57,760 --> 00:06:00,360 Speaker 4: and over again, and then you decided not to them 114 00:06:00,360 --> 00:06:02,200 Speaker 4: in the face, would that mean that they would be 115 00:06:02,240 --> 00:06:05,080 Speaker 4: okay at that point? That's all the confidence data is 116 00:06:05,080 --> 00:06:07,440 Speaker 4: telling you, right, I mean, we just I mean, I 117 00:06:07,440 --> 00:06:09,080 Speaker 4: don't know that there's anything interesting, and that, to me, 118 00:06:09,160 --> 00:06:12,679 Speaker 4: the most interesting data point within within the confidence survey 119 00:06:12,800 --> 00:06:16,000 Speaker 4: was simply that consumer attitudes are on the labor market 120 00:06:16,080 --> 00:06:16,919 Speaker 4: kept getting worse. 121 00:06:18,160 --> 00:06:18,359 Speaker 6: You know. 122 00:06:18,440 --> 00:06:20,960 Speaker 4: To me, all the confidence data are reflecting is the 123 00:06:20,960 --> 00:06:25,400 Speaker 4: fact that equity prices rose nothing, nothing else. And you know, 124 00:06:25,440 --> 00:06:27,760 Speaker 4: it's important for people to remember, even though the stock 125 00:06:27,800 --> 00:06:31,000 Speaker 4: markets had a really good run over the last twelve eighteen, 126 00:06:31,200 --> 00:06:35,960 Speaker 4: twenty four months, that hasn't stopped labor market conditions from 127 00:06:36,040 --> 00:06:39,359 Speaker 4: continuing to cooled off. That hasn't helped. I mean, you 128 00:06:39,400 --> 00:06:43,200 Speaker 4: talk about loose financial conditions, how about that. If financial 129 00:06:43,200 --> 00:06:46,080 Speaker 4: conditions are so loose, why are home sales so weak? 130 00:06:47,200 --> 00:06:50,120 Speaker 1: Because mortgages are still so high with the idea. 131 00:06:50,000 --> 00:06:51,240 Speaker 4: Sorry, you go ahead. 132 00:06:51,000 --> 00:06:53,400 Speaker 5: Well, mortgages are still too high for a lot of 133 00:06:53,440 --> 00:06:53,840 Speaker 5: people to. 134 00:06:53,760 --> 00:06:55,560 Speaker 1: Get on the property ladder exactly. 135 00:06:55,600 --> 00:06:57,800 Speaker 4: So that means that financial conditions are in fact not 136 00:06:57,880 --> 00:06:59,840 Speaker 4: that easy. 137 00:07:00,200 --> 00:07:00,400 Speaker 1: Neil. 138 00:07:00,520 --> 00:07:03,560 Speaker 3: This goes to the point of just how to interpret 139 00:07:03,640 --> 00:07:06,000 Speaker 3: data that you say is unreliable. You think that the 140 00:07:06,000 --> 00:07:09,239 Speaker 3: housing market data is actually the number one indicator to watch, 141 00:07:09,320 --> 00:07:11,800 Speaker 3: as you did see pending home sales yesterday comes to 142 00:07:11,840 --> 00:07:12,840 Speaker 3: some of the lowest levels. 143 00:07:13,640 --> 00:07:17,239 Speaker 4: I do think it's important. I think what's important about 144 00:07:17,240 --> 00:07:20,840 Speaker 4: this decline and residential investment that we're seeing right now 145 00:07:20,920 --> 00:07:23,680 Speaker 4: is that it's coming alongside an ongoing decline and units 146 00:07:23,760 --> 00:07:26,320 Speaker 4: under construction that didn't happen last time, right, So there's 147 00:07:26,400 --> 00:07:29,520 Speaker 4: less building going on, and if there's less building going on, 148 00:07:29,560 --> 00:07:32,840 Speaker 4: there may be less need for construction workers. Simultaneously, we 149 00:07:32,920 --> 00:07:36,720 Speaker 4: also know that resale inventories are rising and that's weighing 150 00:07:36,720 --> 00:07:39,680 Speaker 4: on home prices. Importantly, it's weighing on prices in the 151 00:07:39,680 --> 00:07:41,920 Speaker 4: areas where the builders have been making the most homes. 152 00:07:42,560 --> 00:07:45,440 Speaker 4: So again that goes back to the construction piece. But 153 00:07:45,480 --> 00:07:47,640 Speaker 4: you know, again, it's important to kind of understand how 154 00:07:47,680 --> 00:07:50,920 Speaker 4: the sort of some of these data points how the 155 00:07:50,960 --> 00:07:53,400 Speaker 4: sausage is made. I mean you mentioned the surprise indicator. 156 00:07:53,440 --> 00:07:56,720 Speaker 4: That's the city economic surprise indicator that you're probably mentioning. 157 00:07:56,760 --> 00:07:59,160 Speaker 4: If you look at other measures like your own Bloomberg 158 00:07:59,200 --> 00:08:01,600 Speaker 4: Economic surprise and dex it doesn't really show that. So 159 00:08:01,960 --> 00:08:04,760 Speaker 4: it's important to kind of know which indicators to look 160 00:08:04,800 --> 00:08:07,120 Speaker 4: at and why those numbers are going up. I mean, 161 00:08:07,320 --> 00:08:11,080 Speaker 4: you saw a very large increase in consumer confidence, and 162 00:08:11,120 --> 00:08:14,000 Speaker 4: that delta is probably why these surprise indicators moved up. 163 00:08:14,000 --> 00:08:15,680 Speaker 4: But when you sort of peel back the onion and 164 00:08:15,680 --> 00:08:18,880 Speaker 4: take a look, you know the things that actually move more, 165 00:08:19,440 --> 00:08:23,680 Speaker 4: you know, slowly, like labor market conditions, that shows you 166 00:08:23,720 --> 00:08:25,280 Speaker 4: that things are continuing to get worse. 167 00:08:25,440 --> 00:08:27,760 Speaker 3: Neil, I will never look at some of the consumer 168 00:08:27,800 --> 00:08:30,680 Speaker 3: confidence data in the same way after the punch in 169 00:08:30,680 --> 00:08:32,680 Speaker 3: the face analogy that you just drew. 170 00:08:32,720 --> 00:08:34,240 Speaker 1: Neil Deta of run MAAC, thank. 171 00:08:34,120 --> 00:08:46,080 Speaker 3: You so much for being with us. A lot of 172 00:08:46,160 --> 00:08:49,760 Speaker 3: investors are really watching what company CEOs have to say 173 00:08:49,800 --> 00:08:53,640 Speaker 3: in the conference boards. Measure of CEO confidence fell to 174 00:08:53,720 --> 00:08:56,880 Speaker 3: its lowest level since Q four of twenty twenty two, 175 00:08:56,920 --> 00:08:59,520 Speaker 3: seeing the largest quarter of her quarter decline in nearly 176 00:08:59,600 --> 00:09:02,800 Speaker 3: fifty years. According to the survey, the majority of CEOs 177 00:09:02,840 --> 00:09:05,520 Speaker 3: are bracing for a recession in the next twelve to 178 00:09:05,600 --> 00:09:08,360 Speaker 3: eighteen months. Dana Peterson of the Conference Board joins US 179 00:09:08,360 --> 00:09:09,040 Speaker 3: now Data. 180 00:09:09,160 --> 00:09:11,160 Speaker 1: Thank you so much for being with us. I want 181 00:09:11,200 --> 00:09:12,160 Speaker 1: to talk about how. 182 00:09:12,000 --> 00:09:14,240 Speaker 3: Surprised you were to see this data given the fact 183 00:09:14,480 --> 00:09:17,199 Speaker 3: that a lot of sentiment data among consumers has been 184 00:09:17,240 --> 00:09:20,040 Speaker 3: ticking up and we have gotten pretty good results in 185 00:09:20,120 --> 00:09:21,840 Speaker 3: terms of earnings from a lot of companies. 186 00:09:23,160 --> 00:09:24,920 Speaker 1: Well, I wasn't terribly surprised. 187 00:09:25,360 --> 00:09:27,520 Speaker 7: Certainly, since the beginning of the year, there have been 188 00:09:28,000 --> 00:09:30,600 Speaker 7: there's been a lot of volatility coming out of Washington 189 00:09:30,640 --> 00:09:34,200 Speaker 7: in terms of policies around trade, around regulation and spending, 190 00:09:34,600 --> 00:09:38,240 Speaker 7: and I think it just really spooked many CEOs, especially 191 00:09:38,280 --> 00:09:44,199 Speaker 7: those who are very dependent upon trade for their businesses. 192 00:09:44,240 --> 00:09:47,720 Speaker 7: And so we did notice that were the responses that 193 00:09:47,760 --> 00:09:52,120 Speaker 7: were before May twelfth, where where we had this deta 194 00:09:52,320 --> 00:09:56,200 Speaker 7: between China and the US on trade, and those afterwards. 195 00:09:56,360 --> 00:09:58,360 Speaker 7: The ones afterwards were a little better, but they were 196 00:09:58,400 --> 00:10:02,080 Speaker 7: still negative. The idea of how to read this and 197 00:10:02,120 --> 00:10:05,120 Speaker 7: how much of a forward indicator these surveys traditionally have 198 00:10:05,240 --> 00:10:09,160 Speaker 7: been how much has a CEO confidence index really been 199 00:10:09,440 --> 00:10:12,479 Speaker 7: something of a harbinger of a change in economic trajectory 200 00:10:12,600 --> 00:10:14,840 Speaker 7: versus kind of noise. The way that we have seen 201 00:10:14,880 --> 00:10:19,640 Speaker 7: a lot of the consumer confidence surveys well over the 202 00:10:19,760 --> 00:10:23,880 Speaker 7: well since we've been doing this almost fifty years, when 203 00:10:23,880 --> 00:10:27,360 Speaker 7: the measure drops below fifty, which is you know, that 204 00:10:27,400 --> 00:10:30,760 Speaker 7: means it's pessimism as opposed to optimism, it has done 205 00:10:30,800 --> 00:10:34,600 Speaker 7: a pretty good job of signaling recession. Now when we 206 00:10:34,640 --> 00:10:38,040 Speaker 7: look at the measure today versus what it did back 207 00:10:38,080 --> 00:10:39,960 Speaker 7: in twenty twenty two, late twenty twenty two or early 208 00:10:40,000 --> 00:10:43,839 Speaker 7: twenty twenty three, we saw similar numbers where many CEOs 209 00:10:43,920 --> 00:10:45,600 Speaker 7: were afraid that there was going to be a shortened, 210 00:10:45,600 --> 00:10:48,959 Speaker 7: shallow recession. We didn't get a shortened shallow recession because 211 00:10:49,000 --> 00:10:53,040 Speaker 7: consumers continued to work. And the reason why is because 212 00:10:53,080 --> 00:10:56,320 Speaker 7: companies didn't let them go. Companies cut elsewhere, and we 213 00:10:56,360 --> 00:10:58,680 Speaker 7: think that, you know, certainly this time around, there's just 214 00:10:58,760 --> 00:11:01,480 Speaker 7: a lot of noise, a lot of volatility, and it 215 00:11:01,559 --> 00:11:04,680 Speaker 7: really spooked a lot of CEOs. We still hear a 216 00:11:04,679 --> 00:11:07,079 Speaker 7: lot of them saying, well, we're going to raise prices, 217 00:11:07,400 --> 00:11:09,360 Speaker 7: you know, because these tariffs are going to affect us. 218 00:11:09,960 --> 00:11:11,960 Speaker 7: But we haven't heard much about them saying they're going 219 00:11:12,000 --> 00:11:14,680 Speaker 7: to let people go. Still, in all, if we do 220 00:11:14,720 --> 00:11:18,040 Speaker 7: see these tariffs stay and even intensify, you know with 221 00:11:18,080 --> 00:11:21,839 Speaker 7: some of these other investigations, that you may see some 222 00:11:22,160 --> 00:11:23,640 Speaker 7: unemployment rates rise. 223 00:11:24,320 --> 00:11:24,520 Speaker 1: Well. 224 00:11:24,520 --> 00:11:26,880 Speaker 5: I found most interesting about the survey that most CEOs 225 00:11:26,880 --> 00:11:29,400 Speaker 5: anticipate no change at all on the size of their 226 00:11:29,400 --> 00:11:32,839 Speaker 5: workforce for the next twelve months. So doesn't that show 227 00:11:32,920 --> 00:11:34,880 Speaker 5: that they can weather this storm? 228 00:11:36,120 --> 00:11:36,600 Speaker 1: I think so. 229 00:11:37,240 --> 00:11:39,400 Speaker 7: But we also need to remember that there's still labor 230 00:11:39,400 --> 00:11:43,000 Speaker 7: shortages going on. You still have many, many people, thousands 231 00:11:43,000 --> 00:11:45,960 Speaker 7: of people retiring every day, and you have you know, 232 00:11:46,040 --> 00:11:49,440 Speaker 7: younger workers, but they have less experience. So I think 233 00:11:49,480 --> 00:11:51,960 Speaker 7: that you know, that's that story is still there, that 234 00:11:52,080 --> 00:11:56,440 Speaker 7: narrative is still there. Companies will cut other places, cut 235 00:11:56,480 --> 00:12:02,240 Speaker 7: investment because indeed the investment measures were worse, and they'll 236 00:12:02,320 --> 00:12:04,000 Speaker 7: raise prices, but they're not going to let go over 237 00:12:04,080 --> 00:12:04,720 Speaker 7: their workers. 238 00:12:05,280 --> 00:12:08,679 Speaker 5: We have almost mixed reviews when it comes to Corporate 239 00:12:08,679 --> 00:12:10,600 Speaker 5: America in terms of how they're dealing with the tariffs. 240 00:12:10,679 --> 00:12:14,320 Speaker 5: Costco yesterday, they're sourcing more locally produced mattresses and pillows, 241 00:12:14,559 --> 00:12:18,080 Speaker 5: and they seem to be weathering this brilliantly almost gap. 242 00:12:18,280 --> 00:12:20,760 Speaker 5: On the other hand, they're anticipating as much as three 243 00:12:20,840 --> 00:12:23,720 Speaker 5: hundred million dollars in a tariff impact. But I want 244 00:12:23,720 --> 00:12:26,280 Speaker 5: to get a sense from you. Do you think Corporate 245 00:12:26,360 --> 00:12:29,480 Speaker 5: America is using terrafts sometimes as an excuse for other 246 00:12:29,520 --> 00:12:30,600 Speaker 5: issues in their business. 247 00:12:32,720 --> 00:12:35,960 Speaker 7: That's always possible, but I would say in general that 248 00:12:36,520 --> 00:12:40,120 Speaker 7: most people will most companies and CEOs understand what tariffs are. 249 00:12:40,280 --> 00:12:43,600 Speaker 7: Tariffs are attacks on their imports, and they're not going 250 00:12:43,679 --> 00:12:46,800 Speaker 7: to absorb those costs, and so they just keep passing 251 00:12:46,800 --> 00:12:49,319 Speaker 7: it down to the wholesale, to the retailer and ultimately 252 00:12:49,679 --> 00:12:54,040 Speaker 7: the customer. And so you know, you know, retailers that 253 00:12:54,160 --> 00:12:56,880 Speaker 7: sell clothing, most clothing is not made here in the US, 254 00:12:56,920 --> 00:12:59,760 Speaker 7: so it makes absolute sense that they'd be more nervous 255 00:13:00,040 --> 00:13:04,360 Speaker 7: versus maybe other types of entities that can source things 256 00:13:04,400 --> 00:13:07,320 Speaker 7: from the United States. So I think that, you know, 257 00:13:07,400 --> 00:13:09,640 Speaker 7: maybe some companies may use it as an excuse, but 258 00:13:09,679 --> 00:13:11,920 Speaker 7: in general, this is a real thing. This is a 259 00:13:11,920 --> 00:13:14,760 Speaker 7: real risk for many companies, and you know, they have 260 00:13:14,840 --> 00:13:16,640 Speaker 7: to figure out a way to weather this, and a 261 00:13:16,640 --> 00:13:19,000 Speaker 7: lot of it is going to be to raise prices. 262 00:13:19,240 --> 00:13:21,199 Speaker 3: Dana Kann into this year, there was a tremendous amount 263 00:13:21,200 --> 00:13:26,439 Speaker 3: of optimism and companies were talking about capex spending, mergers, acquisitions. 264 00:13:26,720 --> 00:13:28,200 Speaker 1: Do we have a sense on. 265 00:13:28,120 --> 00:13:31,120 Speaker 3: A holistic level of how much they've actually goes back 266 00:13:31,360 --> 00:13:34,000 Speaker 3: in a more sort of sustained way as a result 267 00:13:34,040 --> 00:13:35,359 Speaker 3: of some of the policy uncertainty. 268 00:13:36,360 --> 00:13:36,600 Speaker 6: Sure. 269 00:13:36,720 --> 00:13:38,600 Speaker 7: I mean at the beginning of the year, I think 270 00:13:38,640 --> 00:13:43,240 Speaker 7: a lot of companies were anticipating deregulation, maybe some tax 271 00:13:43,320 --> 00:13:48,040 Speaker 7: cuts for corporations, and then you know, the script flipped. 272 00:13:48,280 --> 00:13:49,280 Speaker 3: We were, you know. 273 00:13:49,360 --> 00:13:51,840 Speaker 7: Less worried about that, and I mean, uh, you know, 274 00:13:51,880 --> 00:13:55,400 Speaker 7: those kinds of benefits faded away with the trade with 275 00:13:55,480 --> 00:13:59,360 Speaker 7: the trade wars, and we did notice that there was 276 00:13:59,760 --> 00:14:03,120 Speaker 7: a in the number of ceo saying that they were 277 00:14:03,160 --> 00:14:08,280 Speaker 7: going to increase their capex investments. But I think many 278 00:14:08,320 --> 00:14:10,760 Speaker 7: companies are on pause. They're waiting to see what's going 279 00:14:10,800 --> 00:14:14,800 Speaker 7: to happen. And there unless you have some kind of 280 00:14:14,840 --> 00:14:18,160 Speaker 7: long term project where you know, politics doesn't matter as much, 281 00:14:18,480 --> 00:14:20,080 Speaker 7: I think a lot of companies are going to remain 282 00:14:20,120 --> 00:14:23,360 Speaker 7: on hold until they see what's really going to happen. 283 00:14:23,400 --> 00:14:26,360 Speaker 7: And also a number of companies are probably concerned about 284 00:14:26,360 --> 00:14:29,320 Speaker 7: demand destruction. We think we're actually going to see some 285 00:14:29,360 --> 00:14:32,720 Speaker 7: weakness and consumer spending, maybe even starting in the most 286 00:14:32,760 --> 00:14:36,080 Speaker 7: recent data, but certainly in the third quarter, and that's 287 00:14:36,120 --> 00:14:40,320 Speaker 7: going to be very gnarly from many CEOs and many companies. 288 00:14:40,600 --> 00:14:43,080 Speaker 3: Dani Pittersoner of the Conference Conference Board, thank you so 289 00:14:43,160 --> 00:14:55,200 Speaker 3: much for being with us. Joining us now is Lindsay 290 00:14:55,240 --> 00:14:58,840 Speaker 3: Pie of Stephel Lindsay, what's your take on that resilient 291 00:14:58,880 --> 00:15:01,600 Speaker 3: consumer and how much their incomes rose as well as 292 00:15:02,000 --> 00:15:04,800 Speaker 3: their ability to spend on an inflation adjusted a basis. 293 00:15:05,680 --> 00:15:09,160 Speaker 6: Well, certainly welcome support from that organic component of income 294 00:15:09,560 --> 00:15:13,000 Speaker 6: supplementing consumer's ability to go out into the marketplace and spend, 295 00:15:13,080 --> 00:15:16,720 Speaker 6: albeit at a reasonably reduced pace. We are seeing some 296 00:15:16,960 --> 00:15:20,160 Speaker 6: loss of momentum, so the consumer is still resilient, but 297 00:15:20,240 --> 00:15:23,840 Speaker 6: again it is at less robust levels than what we've 298 00:15:23,880 --> 00:15:26,840 Speaker 6: seen over the past couple of years. And this supports 299 00:15:26,880 --> 00:15:30,920 Speaker 6: exactly what we've seen in the price index, that deceleration 300 00:15:31,160 --> 00:15:35,280 Speaker 6: in headline costs reflecting the fact that businesses aren't able 301 00:15:35,320 --> 00:15:39,280 Speaker 6: to pass on further price increases to the consumer to 302 00:15:39,320 --> 00:15:42,120 Speaker 6: the end user without the risk of losing market share. 303 00:15:42,440 --> 00:15:47,120 Speaker 6: So while consumers are outspending, they are becoming increasingly cost sensitive. 304 00:15:47,640 --> 00:15:49,800 Speaker 6: But for the FED, this is good news. 305 00:15:49,840 --> 00:15:50,280 Speaker 4: We have a. 306 00:15:50,240 --> 00:15:54,840 Speaker 6: Resilient economy, resilient consumer and inflation that has been decelerating 307 00:15:54,880 --> 00:15:56,480 Speaker 6: now for the past couple of months. 308 00:15:56,680 --> 00:15:59,200 Speaker 5: Is it enough for the Fed to, potentially, if inflation's 309 00:15:59,240 --> 00:16:01,080 Speaker 5: coming down, to think about cuts this year? 310 00:16:01,840 --> 00:16:04,640 Speaker 6: Well, I think the Fed is already thinking about rate cuts, 311 00:16:04,720 --> 00:16:08,480 Speaker 6: but the window of opportunity for action is very limited. 312 00:16:08,840 --> 00:16:11,800 Speaker 6: Against the backdrop of negative growth in the first quarter, 313 00:16:11,920 --> 00:16:15,600 Speaker 6: against the backdrop of that deceleration of price pressures, the 314 00:16:15,640 --> 00:16:19,560 Speaker 6: FED could act to cut rates and minimally maybe two 315 00:16:19,720 --> 00:16:23,000 Speaker 6: twenty five basis point cuts mid year, But as we 316 00:16:23,120 --> 00:16:25,720 Speaker 6: look out towards the second half, further out towards the 317 00:16:25,760 --> 00:16:29,640 Speaker 6: fourth quarter, I do expect a more positive impact, a 318 00:16:29,680 --> 00:16:33,000 Speaker 6: stronger impact from some of these trade policies, from tariffs 319 00:16:33,320 --> 00:16:38,600 Speaker 6: to set into price pressures, risking upside momentum in costs 320 00:16:38,880 --> 00:16:41,880 Speaker 6: and really removing any window of opportunity for rate cuts 321 00:16:41,920 --> 00:16:45,920 Speaker 6: and potentially shifting the conversation back to rate hikes by 322 00:16:45,920 --> 00:16:46,600 Speaker 6: the end of the year. 323 00:16:46,880 --> 00:16:48,840 Speaker 1: Wow, rate hikes at the end of the year. 324 00:16:48,920 --> 00:16:51,400 Speaker 5: And that's driven by what exactly, because the concern of 325 00:16:51,440 --> 00:16:53,720 Speaker 5: in inflation driven by tariff policy. 326 00:16:54,360 --> 00:16:56,360 Speaker 6: Well, again, right now, the Fed is walking a very 327 00:16:56,400 --> 00:17:00,480 Speaker 6: delicate line as we saw in the FOMC meeting. There 328 00:17:00,520 --> 00:17:03,720 Speaker 6: are downside risks to growth and employment, which we've already 329 00:17:03,720 --> 00:17:05,960 Speaker 6: seen that storyline playing out, as I said, in the 330 00:17:06,000 --> 00:17:08,919 Speaker 6: first quarter, and likely to see very minimal momentum in 331 00:17:08,920 --> 00:17:11,560 Speaker 6: the economy in the second But by the second half 332 00:17:11,600 --> 00:17:15,359 Speaker 6: of the year, those upside risks to inflation, I do 333 00:17:15,400 --> 00:17:18,080 Speaker 6: think are going to become more prominent, and the FED 334 00:17:18,240 --> 00:17:21,960 Speaker 6: has to focus on getting inflation back under control. Now, 335 00:17:21,960 --> 00:17:25,040 Speaker 6: the numbers this morning in the PCE were favorable, that 336 00:17:25,119 --> 00:17:28,280 Speaker 6: headline is moving closer to two percent, but the core 337 00:17:28,400 --> 00:17:32,560 Speaker 6: numbers still remain stubbornly sticky, up at two and a half, 338 00:17:32,600 --> 00:17:35,240 Speaker 6: and again the risk is to the upside. 339 00:17:35,600 --> 00:17:38,240 Speaker 3: Lindsay Neil Dotta was talking earlier this morning that the 340 00:17:38,240 --> 00:17:40,280 Speaker 3: housing market is kind of the fly in the ointment 341 00:17:40,320 --> 00:17:41,000 Speaker 3: for this argument. 342 00:17:41,080 --> 00:17:43,000 Speaker 1: That you've seen a real fall off in terms of. 343 00:17:42,960 --> 00:17:45,720 Speaker 3: Activity people on its ability to buy homes. You've seen 344 00:17:45,760 --> 00:17:48,240 Speaker 3: even prices come down in certain regions for the first 345 00:17:48,240 --> 00:17:51,680 Speaker 3: time in years. There's a feeling that that aspect of inflation, 346 00:17:51,720 --> 00:17:54,119 Speaker 3: which is a massive one, is really going to be 347 00:17:54,160 --> 00:17:56,240 Speaker 3: more of a drag than some sort of boost, and 348 00:17:56,240 --> 00:17:59,600 Speaker 3: that financial conditions have actually been incredibly tight in that area. 349 00:18:00,080 --> 00:18:02,720 Speaker 6: Make of that argument, well, I think when we look 350 00:18:02,720 --> 00:18:05,040 Speaker 6: at the inflation numbers, it's going to be very difficult 351 00:18:05,040 --> 00:18:07,760 Speaker 6: for the FED to achieve a sustainable two percent level 352 00:18:07,800 --> 00:18:11,800 Speaker 6: without further reprieve in housing costs. Remember CPI shelter costs 353 00:18:11,840 --> 00:18:14,760 Speaker 6: are still up over four percent, so that's double what 354 00:18:14,800 --> 00:18:18,960 Speaker 6: the Fed's intended targeted. So intended target is and so 355 00:18:19,080 --> 00:18:21,479 Speaker 6: it's going to be very difficult for the FED to 356 00:18:21,600 --> 00:18:24,960 Speaker 6: achieve again that broader measure of price stability without further 357 00:18:25,000 --> 00:18:28,000 Speaker 6: reprieve in the housing market. That being said, we haven't 358 00:18:28,080 --> 00:18:31,879 Speaker 6: yet seen a sizeable amount of relief. Now price pressures 359 00:18:31,920 --> 00:18:36,320 Speaker 6: have slowed, but nominally prices are still very elevated, as 360 00:18:36,400 --> 00:18:40,000 Speaker 6: would be home buyers face a near record low affordability rates, 361 00:18:40,000 --> 00:18:43,879 Speaker 6: so there's still a lock out effect, and existing homeowners 362 00:18:43,880 --> 00:18:47,159 Speaker 6: are still facing a lock in effect whereby they're largely 363 00:18:47,200 --> 00:18:51,480 Speaker 6: precluded from offloading their existing property for fear of resetting 364 00:18:51,480 --> 00:18:53,119 Speaker 6: to significantly higher rates. 365 00:18:53,359 --> 00:18:54,359 Speaker 1: Remember, even if you're. 366 00:18:54,240 --> 00:18:57,760 Speaker 6: Buying a lower cost nominal asset, if you're resetting from 367 00:18:58,200 --> 00:19:01,840 Speaker 6: sub three percent up near seven percent, well that's going 368 00:19:01,880 --> 00:19:05,080 Speaker 6: to result in a sizable increase in your monthly payment, 369 00:19:05,160 --> 00:19:08,600 Speaker 6: which most Americans simply cannot afford, so that lack of 370 00:19:08,640 --> 00:19:12,040 Speaker 6: mobility both into and out of the housing market, I 371 00:19:12,080 --> 00:19:14,720 Speaker 6: think is going to slow any further progress for the 372 00:19:15,440 --> 00:19:17,640 Speaker 6: price pressures that we're seeing in the shelter component. 373 00:19:17,840 --> 00:19:20,560 Speaker 3: There's a theory out there that the tariffs and trade 374 00:19:20,560 --> 00:19:23,800 Speaker 3: debates will dampen growth, and that we're seeing that on 375 00:19:23,880 --> 00:19:26,879 Speaker 3: the margins, whether it's people getting more concerned emotionally and 376 00:19:26,880 --> 00:19:30,120 Speaker 3: maybe not in their spending habits, as well as companies 377 00:19:30,119 --> 00:19:33,240 Speaker 3: that aren't hiring as robustly or doing capital investment plans 378 00:19:33,280 --> 00:19:35,120 Speaker 3: the way that they have been in the past. Why 379 00:19:35,160 --> 00:19:37,080 Speaker 3: do you think that won't be enough of a dampening 380 00:19:37,080 --> 00:19:40,879 Speaker 3: effect to counterbalance some of the inflationary pressures and strength. 381 00:19:40,880 --> 00:19:44,120 Speaker 3: Frankly that we're seeing in the consumer well. 382 00:19:44,080 --> 00:19:46,160 Speaker 6: I think the biggest impact that we've seen thus far 383 00:19:46,280 --> 00:19:49,280 Speaker 6: has been on the soft data on the confidence numbers. 384 00:19:49,600 --> 00:19:52,960 Speaker 6: Consumer confidence has fallen into a multi year low as 385 00:19:53,000 --> 00:19:57,240 Speaker 6: consumers are anticipating these dire conditions coming down the pipeline, 386 00:19:57,400 --> 00:20:02,159 Speaker 6: driving inflation expectations up to a multi decade high. But 387 00:20:02,240 --> 00:20:04,600 Speaker 6: on the business side, we've also seen that we've seen 388 00:20:04,600 --> 00:20:09,160 Speaker 6: that impact on confidence come down to a multi month low, 389 00:20:09,560 --> 00:20:12,119 Speaker 6: with ninety percent of businesses saying now is not a 390 00:20:12,359 --> 00:20:14,040 Speaker 6: good time to hire, Now is not a good time 391 00:20:14,080 --> 00:20:16,439 Speaker 6: to invest. But as we saw this morning when we 392 00:20:16,480 --> 00:20:20,639 Speaker 6: look at that hard data, consumers are still spending, businesses 393 00:20:20,760 --> 00:20:24,240 Speaker 6: are still investing. So it's as if we're vocalizing more 394 00:20:24,280 --> 00:20:28,000 Speaker 6: concern than we are actually changing behavior, and so again 395 00:20:28,160 --> 00:20:32,000 Speaker 6: that's going to perpetuate this resilient notion for the economy, 396 00:20:32,280 --> 00:20:34,880 Speaker 6: both on the consumer and the corporate side, and help 397 00:20:34,920 --> 00:20:38,040 Speaker 6: to offset that impact on inflation and still leave us 398 00:20:38,080 --> 00:20:41,880 Speaker 6: facing significant upside risks in terms of price pressures. 399 00:20:41,920 --> 00:20:54,280 Speaker 3: Lindsay Paxstepaul, thank you so much. I am still pleased 400 00:20:54,320 --> 00:20:57,760 Speaker 3: to say joining us now. United Airlines Executive vice president 401 00:20:57,760 --> 00:21:01,280 Speaker 3: and chief commercial Officer Andrew Andrew, thank you so much 402 00:21:01,280 --> 00:21:03,360 Speaker 3: for being with us. First, can you just tell us 403 00:21:03,600 --> 00:21:05,600 Speaker 3: why you thought this was an important deal to do. 404 00:21:06,840 --> 00:21:09,359 Speaker 8: Sure, it's great to be here, good morning. You know, 405 00:21:09,920 --> 00:21:12,880 Speaker 8: I think United is the largest airline in the world, 406 00:21:12,880 --> 00:21:15,760 Speaker 8: In fact, I know it, but we also have a 407 00:21:15,800 --> 00:21:17,960 Speaker 8: few gaps in our network and we would like to 408 00:21:18,040 --> 00:21:20,479 Speaker 8: be a better choice for travelers in the New York 409 00:21:20,520 --> 00:21:23,320 Speaker 8: City area. We're very strong on the New York on 410 00:21:23,359 --> 00:21:25,520 Speaker 8: the New York side of the river, and we'd like 411 00:21:25,560 --> 00:21:27,680 Speaker 8: to have a presence on the other side along with 412 00:21:27,760 --> 00:21:30,399 Speaker 8: in Boston. That's more significant than we have today, and 413 00:21:30,480 --> 00:21:32,920 Speaker 8: this partnership with jeff Blue is going to get us there. 414 00:21:33,160 --> 00:21:34,960 Speaker 3: How much is this tied to some of the issues 415 00:21:34,960 --> 00:21:38,400 Speaker 3: that Nework has had with air traffic control signals and 416 00:21:38,440 --> 00:21:41,720 Speaker 3: all of the publicity around that diversifying so that there 417 00:21:41,760 --> 00:21:44,719 Speaker 3: are some options in the New York City region apart 418 00:21:44,800 --> 00:21:45,879 Speaker 3: from that hub. 419 00:21:46,920 --> 00:21:49,120 Speaker 8: Sure, it's a good question. We've had a very long 420 00:21:49,200 --> 00:21:53,280 Speaker 8: term goal of being back at JFK Airport. We've been 421 00:21:53,320 --> 00:21:56,560 Speaker 8: working on this particular partnership for Jeff Blue for a 422 00:21:56,600 --> 00:21:59,000 Speaker 8: long time. So what's happened in New York and New 423 00:21:59,080 --> 00:22:01,320 Speaker 8: York in particular of the LOWD few weeks is a 424 00:22:01,320 --> 00:22:03,600 Speaker 8: bit of a speedbump. But the second runway will be 425 00:22:03,640 --> 00:22:06,359 Speaker 8: operational again in just a few short weeks and we 426 00:22:06,400 --> 00:22:07,399 Speaker 8: should be back to normal. 427 00:22:07,520 --> 00:22:10,480 Speaker 3: Do you expect other types of agreements like this, Andrew? 428 00:22:10,560 --> 00:22:12,800 Speaker 3: At a time when we know that airlines have been 429 00:22:12,840 --> 00:22:15,359 Speaker 3: trying to come up with agreements to flesh out their 430 00:22:15,920 --> 00:22:20,240 Speaker 3: service area, their options for consumers, is this kind of 431 00:22:20,240 --> 00:22:21,200 Speaker 3: the path of travel? 432 00:22:22,320 --> 00:22:25,200 Speaker 8: Well, that's a really good question. United We've always been 433 00:22:25,200 --> 00:22:28,120 Speaker 8: focused on the consumer and providing choice, whether it's from 434 00:22:28,119 --> 00:22:31,600 Speaker 8: basic Economy, our most basic offering to Polaris if you're 435 00:22:31,640 --> 00:22:34,200 Speaker 8: trying to go to Singapore and have a Lifelive bed, 436 00:22:34,240 --> 00:22:36,479 Speaker 8: and now the Polaris Studio, which is a brand new 437 00:22:36,520 --> 00:22:38,679 Speaker 8: product we announced a few weeks ago. So we're always 438 00:22:38,680 --> 00:22:41,399 Speaker 8: trying to figure out what the next step is, how 439 00:22:41,440 --> 00:22:44,800 Speaker 8: to innovate, how to offer more choice to consumers. I 440 00:22:44,840 --> 00:22:47,080 Speaker 8: think the rest of the industry is just finally caught 441 00:22:47,200 --> 00:22:49,439 Speaker 8: up with that. I call it the Great Reset. The 442 00:22:49,480 --> 00:22:51,520 Speaker 8: other airlines are out there are doing a big reset 443 00:22:52,119 --> 00:22:54,400 Speaker 8: trying to figure out how to gain foot and again, 444 00:22:54,440 --> 00:22:56,800 Speaker 8: whereas United we figured that out a long time ago. 445 00:22:56,840 --> 00:23:01,320 Speaker 8: We figured out the consumer was in charge. Biden, optionality 446 00:23:01,440 --> 00:23:04,200 Speaker 8: was what they wanted, and we're just a step ahead, 447 00:23:04,200 --> 00:23:06,080 Speaker 8: a generation ahead because of that. 448 00:23:06,520 --> 00:23:08,800 Speaker 5: What are you seeing right now the consumer really wants 449 00:23:08,800 --> 00:23:09,560 Speaker 5: when it comes to. 450 00:23:09,640 --> 00:23:13,400 Speaker 8: Travel, Well, I think they want choice. And what I'd 451 00:23:13,400 --> 00:23:17,320 Speaker 8: say is the US consumer has been very resilient, and 452 00:23:17,400 --> 00:23:21,240 Speaker 8: for example, trips to Japan I think are just really 453 00:23:21,240 --> 00:23:23,479 Speaker 8: in fashion right now. To Japan I would describe as 454 00:23:23,520 --> 00:23:26,600 Speaker 8: one of our hots destinations. This summer where everybody's trying 455 00:23:26,600 --> 00:23:28,640 Speaker 8: to take the family to Japan. I'm not sure we'll 456 00:23:28,680 --> 00:23:31,440 Speaker 8: have enough seats to be frank, but the consumer wants 457 00:23:31,560 --> 00:23:34,159 Speaker 8: choice in a product range. They'd like the optionality of 458 00:23:34,480 --> 00:23:37,359 Speaker 8: flying basic economy, but they also like, you know, sitting 459 00:23:37,400 --> 00:23:39,520 Speaker 8: in a premium seat from time to time. And most 460 00:23:39,520 --> 00:23:42,480 Speaker 8: importantly for United, they like the optionality we provide to 461 00:23:42,520 --> 00:23:45,119 Speaker 8: go around the world. Whether you're trying to go to 462 00:23:45,280 --> 00:23:48,960 Speaker 8: Mongolia or Cape Town or anywhere in between, United can 463 00:23:49,040 --> 00:23:49,520 Speaker 8: get you there. 464 00:23:49,760 --> 00:23:51,800 Speaker 5: It's interesting you talk about Japan because I remember Lisa 465 00:23:51,840 --> 00:23:55,320 Speaker 5: sent her son to Japan and perfectly nailed it when 466 00:23:55,400 --> 00:23:57,480 Speaker 5: the yen was really to her favor in terms of 467 00:23:57,560 --> 00:24:01,800 Speaker 5: doing the currency exchange. Where else are travelers going this 468 00:24:01,920 --> 00:24:04,399 Speaker 5: summer because people have been talking about there's all this 469 00:24:04,480 --> 00:24:06,800 Speaker 5: concern about whether people are going to spend and travel 470 00:24:06,800 --> 00:24:09,040 Speaker 5: because of terifs. But it sounds like for you it's 471 00:24:09,119 --> 00:24:10,720 Speaker 5: pretty robust. 472 00:24:11,000 --> 00:24:11,240 Speaker 3: Yeah. 473 00:24:11,640 --> 00:24:13,600 Speaker 8: I think it's going to be a very busy, busy 474 00:24:13,640 --> 00:24:15,719 Speaker 8: summer and our airplanes are going to be full. In 475 00:24:15,720 --> 00:24:18,639 Speaker 8: addition to Japan, I would say that the hotspot, and 476 00:24:18,680 --> 00:24:20,639 Speaker 8: this is for now the third year in a row, 477 00:24:20,840 --> 00:24:25,000 Speaker 8: is Southern Europe. We just started flying to Sicily last week, 478 00:24:25,160 --> 00:24:29,240 Speaker 8: and we fly to Naples, we fly to Rome, Athens, Spain. 479 00:24:30,000 --> 00:24:32,280 Speaker 8: People in the United States are anxious to get to 480 00:24:32,359 --> 00:24:34,840 Speaker 8: southern Europe and it's just, you know, it's a really 481 00:24:34,880 --> 00:24:37,800 Speaker 8: great vacation, and I think that is another big hotspot 482 00:24:37,840 --> 00:24:38,639 Speaker 8: across the globe. 483 00:24:38,760 --> 00:24:41,879 Speaker 3: One big question has been not necessarily outbound traffic for 484 00:24:41,920 --> 00:24:45,520 Speaker 3: tourism outside of the US, but inbound traffic with people 485 00:24:45,560 --> 00:24:47,760 Speaker 3: from overseas coming to the US. How much have you 486 00:24:47,760 --> 00:24:50,560 Speaker 3: seen a real drop off, especially as we have heard 487 00:24:50,680 --> 00:24:54,119 Speaker 3: a lot of headlines and tensions between the US and 488 00:24:54,119 --> 00:24:54,760 Speaker 3: other countries. 489 00:24:55,880 --> 00:24:58,160 Speaker 8: I think that is a fair point. We have seen 490 00:24:58,280 --> 00:25:01,280 Speaker 8: a small drop off. We've talked about it from Canada. 491 00:25:01,560 --> 00:25:04,080 Speaker 8: There are previous reports that were just completely false, but 492 00:25:04,119 --> 00:25:06,359 Speaker 8: it is a small drop off, and other parts of 493 00:25:06,400 --> 00:25:08,480 Speaker 8: the world some of it driven by currency. I think 494 00:25:08,520 --> 00:25:11,840 Speaker 8: Japan is largely driven by currency. But you know, the 495 00:25:11,920 --> 00:25:15,760 Speaker 8: US consumer has been incredibly resilient and so from you know, 496 00:25:15,840 --> 00:25:19,160 Speaker 8: load factor point of view on our jets, that small 497 00:25:19,240 --> 00:25:22,200 Speaker 8: drop off overseas has been more than offset with more 498 00:25:22,320 --> 00:25:25,280 Speaker 8: US consumers seeking that vacation to Rome or Japan. 499 00:25:25,320 --> 00:25:27,920 Speaker 3: This year, we're about to get a read on inflation 500 00:25:28,040 --> 00:25:31,520 Speaker 3: as well as consumer spending and income, and there's been 501 00:25:31,520 --> 00:25:33,800 Speaker 3: a real question about what's driving disinflation. 502 00:25:33,920 --> 00:25:35,160 Speaker 1: It has been airline prices. 503 00:25:35,200 --> 00:25:38,359 Speaker 3: Actually, airplane tickets have been coming in, and I wonder 504 00:25:38,400 --> 00:25:40,440 Speaker 3: whether you expect that to continue or whether that was 505 00:25:40,480 --> 00:25:44,359 Speaker 3: a temporary blip that has changed, especially as people are 506 00:25:44,400 --> 00:25:45,720 Speaker 3: feeling better well. 507 00:25:45,760 --> 00:25:48,199 Speaker 8: As you imagine, airline tickets over the long run are 508 00:25:48,200 --> 00:25:50,600 Speaker 8: a great bargain if you adjust for inflation, for sure, 509 00:25:50,800 --> 00:25:53,880 Speaker 8: and we have seen a lot of inflation. I do think, 510 00:25:54,000 --> 00:25:56,600 Speaker 8: you know, earlier this year, when we did see some 511 00:25:56,680 --> 00:25:59,720 Speaker 8: consumer weakness, we adjusted our posture in terms of how 512 00:25:59,800 --> 00:26:02,000 Speaker 8: much we're charging to fly within the United States and 513 00:26:02,040 --> 00:26:05,480 Speaker 8: around the world. So that did stabilize demand, but yield, 514 00:26:06,000 --> 00:26:08,679 Speaker 8: our ticket prices from our perspective, are a little bit 515 00:26:08,760 --> 00:26:11,960 Speaker 8: lower than we expected this spring in this summer if 516 00:26:11,960 --> 00:26:13,880 Speaker 8: you roll back to the very beginning of the year, 517 00:26:13,960 --> 00:26:17,000 Speaker 8: based on what we see from consumer demand, So we 518 00:26:17,040 --> 00:26:18,600 Speaker 8: do think there's a lot of bargains out there. 519 00:26:18,680 --> 00:26:20,400 Speaker 1: Do you expect that to change later in the year. 520 00:26:21,480 --> 00:26:24,280 Speaker 8: That really depends. It's hard to predict the economy. As 521 00:26:24,320 --> 00:26:26,680 Speaker 8: you know, we spend all day trying to think about that. 522 00:26:26,920 --> 00:26:29,520 Speaker 8: If the economy gets stronger, then of course we would reset. 523 00:26:29,520 --> 00:26:31,840 Speaker 8: But once we get out of summer, my guess is 524 00:26:31,920 --> 00:26:35,080 Speaker 8: these trends will probably continue for a bit. But twenty 525 00:26:35,119 --> 00:26:37,000 Speaker 8: twenty six I think is going to set up to 526 00:26:37,000 --> 00:26:38,879 Speaker 8: be a very great year for United. We have a 527 00:26:38,880 --> 00:26:41,680 Speaker 8: bunch of new products we're introduced in including Star length 528 00:26:42,520 --> 00:26:45,760 Speaker 8: and newclear seats, so we're bullish about the long term United. 529 00:26:45,920 --> 00:26:47,600 Speaker 1: Andrew, it is so great to have you. Before we 530 00:26:47,680 --> 00:26:50,040 Speaker 1: let you go, I want to ask, just finishing. 531 00:26:49,600 --> 00:26:53,680 Speaker 3: Where we started with the idea of JFK versus Newark 532 00:26:53,680 --> 00:26:56,560 Speaker 3: and the foray into JFK. I'm wondering whether this is 533 00:26:56,600 --> 00:26:58,640 Speaker 3: the beginning of a broader expansion once again. 534 00:26:58,680 --> 00:27:01,160 Speaker 1: I know you've had a love hate relationship with the airport. 535 00:27:01,560 --> 00:27:03,760 Speaker 3: Is this sort of the first foray into getting a 536 00:27:03,760 --> 00:27:05,800 Speaker 3: bigger footprint at that hub. 537 00:27:06,760 --> 00:27:08,560 Speaker 8: There's no doubt we would like to get a bigger 538 00:27:08,600 --> 00:27:11,359 Speaker 8: footprint at GfK. You know, we're going to be starting 539 00:27:11,359 --> 00:27:14,320 Speaker 8: off with a high single digit number of flights, which 540 00:27:14,359 --> 00:27:16,720 Speaker 8: is rather small for United. We are the largest airline 541 00:27:16,720 --> 00:27:19,679 Speaker 8: in the world, so we look forward to looking for 542 00:27:19,760 --> 00:27:22,919 Speaker 8: more opportunities to expand there. But GfK not like the 543 00:27:22,960 --> 00:27:26,960 Speaker 8: other New York City airports are runway restricted. The runways 544 00:27:26,960 --> 00:27:29,800 Speaker 8: are very full, as we've talked about often, and so 545 00:27:29,920 --> 00:27:32,159 Speaker 8: the ability to grow at JFK or any of the 546 00:27:32,200 --> 00:27:34,960 Speaker 8: three New York City airports is constrained by these runways. 547 00:27:35,640 --> 00:27:38,920 Speaker 8: So we're sure hoping that there's advanced technology that allows 548 00:27:39,240 --> 00:27:42,800 Speaker 8: runway expansion to continue. But in the medium term to 549 00:27:42,880 --> 00:27:45,399 Speaker 8: short term, the runways are full at the New York 550 00:27:45,400 --> 00:27:49,280 Speaker 8: City airports and our ability to grow by any airline 551 00:27:49,560 --> 00:27:50,320 Speaker 8: is quite limited. 552 00:27:50,440 --> 00:27:51,399 Speaker 1: We have all experienced that. 553 00:27:51,520 --> 00:27:53,840 Speaker 3: Andrew Nocella, thank you so much for taking the time 554 00:27:53,880 --> 00:27:57,080 Speaker 3: wonderful to speak with you. United Airlines Chief Commercial Officer there. 555 00:27:57,920 --> 00:28:01,520 Speaker 2: This is the Bloomberg Saventans podcast, bringing you the best 556 00:28:01,520 --> 00:28:04,840 Speaker 2: in markets, economics, and geopolitics. You can watch the show 557 00:28:04,920 --> 00:28:07,840 Speaker 2: live on Bloomberg TV weekday mornings from six am to 558 00:28:08,000 --> 00:28:11,720 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 559 00:28:11,880 --> 00:28:14,119 Speaker 2: or anywhere else you listen, and as always, on the 560 00:28:14,119 --> 00:28:16,560 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.