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Speaker 3: There is a real question about whether the economic data
Speaker 3: actually justifies it, and someone who's been making that argument
Speaker 3: for quite a long time has been Neil Dada of Renmack,
Speaker 3: who does join us now? Neil, what did you make
Speaker 3: yesterday of the rhetoric coming out of the White House
Speaker 3: and the first in person meeting between j Powell and
Speaker 3: President Trump two point zero.
Speaker 4: President from once lower Race. I mean, that's not exactly
Speaker 4: breaking news in my opinion.
Speaker 3: There is a feeling, though, that there has been a
Speaker 3: number of data points, in particular yesterday's revision to GDP
Speaker 3: that shows personal spending personal income isn't necessarily keeping pace.
Speaker 3: We're expected to get core PC today. That does show
Speaker 3: that ongoing disinflationary trajectory. Do you think even with some
Speaker 3: of the on again off against tariffs, in the sense
Speaker 3: that companies have adapted and adjusted, there is a legitimate
Speaker 3: argument for the FED to be cutting more aggressively.
Speaker 4: I do, you know, I think the Fed's job is
Speaker 4: to make decisions with imperfect information, So just using uncertainty
Speaker 4: as a crutch to just wait everything out, it's sort
Speaker 4: of besides the point, you know, I do think that
Speaker 4: companies are probably you know, for the time being. I mean,
Speaker 4: I think they're eating much of the sort of inflationary
Speaker 4: impact of the of the terrorifts, they're eating the tariffs.
Speaker 4: They're the ones that are burying the cost margins are
Speaker 4: probably being squeezed. So it's not like it's a good thing.
Speaker 4: But I think the demand shock is more important to
Speaker 4: be focusing on. And this was going into a situation
Speaker 4: where the economy was already getting worse, and so you know,
Speaker 4: when I look at the data, I mean, to me,
Speaker 4: the most important thing that happened this week is that
Speaker 4: extended unemployment claims hit a fresh high. That's important. Job
Speaker 4: finding rates are low, and you know, even though initial
Speaker 4: layoffs are low too, the fact that those newly laid
Speaker 4: off people can't find any work is basically why the
Speaker 4: sort of ranks of the unemployed continue to grow. So
Speaker 4: I wouldn't be surprised to see, you know, the level
Speaker 4: of permanent job losers take up a bit more when
Speaker 4: the next unemployment sort of employment report comes out, So
Speaker 4: you can't rule out ongoing increases in the unemployment rate.
Speaker 4: The economy is growing below potential, and that's making it
Speaker 4: very difficult for laydoff people to find work, and as
Speaker 4: a result, the unemployment rate will keep rising.
Speaker 1: Well, let's talk about the next job's number. It's going
Speaker 1: to be Friday, June six.
Speaker 4: What are you expecting, Neil, Well, I mean, I wouldn't
Speaker 4: expect much. I mean I think I wouldn't rule out
Speaker 4: like a two tenth increase in the unemployment rate. You know,
Speaker 4: continuing jobless claims are basically sending you a message that
Speaker 4: the unemployment rate's going up. We may well be at
Speaker 4: the fed's unemployment rate forecast for Q four, a couple
Speaker 4: of quarters ahead of schedule.
Speaker 5: Would that be enough for the Fed to cut do
Speaker 5: you think, given the fact that they talk about the
Speaker 5: uncertainty of policy in Washington.
Speaker 4: I don't know that'll be enough for them to cut
Speaker 4: in June, but it'll probably get the markets betting on cuts,
Speaker 4: more cuts and sooner, So maybe it ups the odds of.
Speaker 1: July.
Speaker 4: But I think, you know, frankly, you can't rule out
Speaker 4: a scenario where, you know, it kind of looks like
Speaker 4: you know what we saw last year, where they're waiting, waiting, waiting,
Speaker 4: and then all of a sudden they make a very
Speaker 4: sort of abrupt pivot and do more than that expected.
Speaker 3: You know, why doesn't the long end of the yield curve?
Speaker 3: For you, the fact that some people believe that there
Speaker 3: is going to be longer term structural inflation and a
Speaker 3: term premium and the FED looking more accommodative will only
Speaker 3: expedite that.
Speaker 4: Sure, that's I mean again, I don't know that that's
Speaker 4: the reason why the long end is elevated. A lot
Speaker 4: of it I think has to do with what's going
Speaker 4: on globally. I mean, even if you look at some
Speaker 4: of the movements you know, in rates this year, it's
Speaker 4: been happening on days of some sort of like you know,
Speaker 4: some global development, whether it's a bad Japanese bond auction,
Speaker 4: bad inflation data overseas. What we know is not that
Speaker 4: people don't want to hold US long bonds. They don't
Speaker 4: want to hold long bonds. I mean, the curve is
Speaker 4: steepening everywhere. So I wouldn't lay that, you know, as
Speaker 4: purely like a US centric thing. I think the bigger
Speaker 4: story is that, you know, the markets have really had
Speaker 4: to come to grips with the idea that the economy
Speaker 4: might be slow in we haven't really had that one
Speaker 4: piece of very you know, bad hard data where it's like,
Speaker 4: oh aha, like sort of you know, recession risks are
Speaker 4: higher than we thought. Yeah, when that happens, I think
Speaker 4: you probably see, you know, mother nature kind of taking course,
Speaker 4: not only for equities, but with the fixed income market
Speaker 4: as well.
Speaker 1: Mother nature is a fickle creature, as you know.
Speaker 3: And there's been a change in the narrative recently, with
Speaker 3: the US Economics Surprise Index actually arising some of the
Speaker 3: highest levels.
Speaker 1: That we've seen in months.
Speaker 3: You've seen consumer sentiment actually changed to up up.
Speaker 1: Itself to closer to some of the hard data.
Speaker 3: Will gives you confidence that, especially as some of these
Speaker 3: tariffs get rolled back from worst case scenarios, there will
Speaker 3: be a slowdown that is not showing up at a
Speaker 3: lot of the earnings that we're getting at a number
Speaker 3: of different companies that are managing to whether that's just fine.
Speaker 4: If you punch someone in the face over and over
Speaker 4: and over again, and then you decided not to them
Speaker 4: in the face, would that mean that they would be
Speaker 4: okay at that point? That's all the confidence data is
Speaker 4: telling you, right, I mean, we just I mean, I
Speaker 4: don't know that there's anything interesting, and that, to me,
Speaker 4: the most interesting data point within within the confidence survey
Speaker 4: was simply that consumer attitudes are on the labor market
Speaker 4: kept getting worse.
Speaker 6: You know.
Speaker 4: To me, all the confidence data are reflecting is the
Speaker 4: fact that equity prices rose nothing, nothing else. And you know,
Speaker 4: it's important for people to remember, even though the stock
Speaker 4: markets had a really good run over the last twelve eighteen,
Speaker 4: twenty four months, that hasn't stopped labor market conditions from
Speaker 4: continuing to cooled off. That hasn't helped. I mean, you
Speaker 4: talk about loose financial conditions, how about that. If financial
Speaker 4: conditions are so loose, why are home sales so weak?
Speaker 1: Because mortgages are still so high with the idea.
Speaker 4: Sorry, you go ahead.
Speaker 5: Well, mortgages are still too high for a lot of
Speaker 5: people to.
Speaker 1: Get on the property ladder exactly.
Speaker 4: So that means that financial conditions are in fact not
Speaker 4: that easy.
Speaker 1: Neil.
Speaker 3: This goes to the point of just how to interpret
Speaker 3: data that you say is unreliable. You think that the
Speaker 3: housing market data is actually the number one indicator to watch,
Speaker 3: as you did see pending home sales yesterday comes to
Speaker 3: some of the lowest levels.
Speaker 4: I do think it's important. I think what's important about
Speaker 4: this decline and residential investment that we're seeing right now
Speaker 4: is that it's coming alongside an ongoing decline and units
Speaker 4: under construction that didn't happen last time, right, So there's
Speaker 4: less building going on, and if there's less building going on,
Speaker 4: there may be less need for construction workers. Simultaneously, we
Speaker 4: also know that resale inventories are rising and that's weighing
Speaker 4: on home prices. Importantly, it's weighing on prices in the
Speaker 4: areas where the builders have been making the most homes.
Speaker 4: So again that goes back to the construction piece. But
Speaker 4: you know, again, it's important to kind of understand how
Speaker 4: the sort of some of these data points how the
Speaker 4: sausage is made. I mean you mentioned the surprise indicator.
Speaker 4: That's the city economic surprise indicator that you're probably mentioning.
Speaker 4: If you look at other measures like your own Bloomberg
Speaker 4: Economic surprise and dex it doesn't really show that. So
Speaker 4: it's important to kind of know which indicators to look
Speaker 4: at and why those numbers are going up. I mean,
Speaker 4: you saw a very large increase in consumer confidence, and
Speaker 4: that delta is probably why these surprise indicators moved up.
Speaker 4: But when you sort of peel back the onion and
Speaker 4: take a look, you know the things that actually move more,
Speaker 4: you know, slowly, like labor market conditions, that shows you
Speaker 4: that things are continuing to get worse.
Speaker 3: Neil, I will never look at some of the consumer
Speaker 3: confidence data in the same way after the punch in
Speaker 3: the face analogy that you just drew.
Speaker 1: Neil Deta of run MAAC, thank.
Speaker 3: You so much for being with us. A lot of
Speaker 3: investors are really watching what company CEOs have to say
Speaker 3: in the conference boards. Measure of CEO confidence fell to
Speaker 3: its lowest level since Q four of twenty twenty two,
Speaker 3: seeing the largest quarter of her quarter decline in nearly
Speaker 3: fifty years. According to the survey, the majority of CEOs
Speaker 3: are bracing for a recession in the next twelve to
Speaker 3: eighteen months. Dana Peterson of the Conference Board joins US
Speaker 3: now Data.
Speaker 1: Thank you so much for being with us. I want
Speaker 1: to talk about how.
Speaker 3: Surprised you were to see this data given the fact
Speaker 3: that a lot of sentiment data among consumers has been
Speaker 3: ticking up and we have gotten pretty good results in
Speaker 3: terms of earnings from a lot of companies.
Speaker 1: Well, I wasn't terribly surprised.
Speaker 7: Certainly, since the beginning of the year, there have been
Speaker 7: there's been a lot of volatility coming out of Washington
Speaker 7: in terms of policies around trade, around regulation and spending,
Speaker 7: and I think it just really spooked many CEOs, especially
Speaker 7: those who are very dependent upon trade for their businesses.
Speaker 7: And so we did notice that were the responses that
Speaker 7: were before May twelfth, where where we had this deta
Speaker 7: between China and the US on trade, and those afterwards.
Speaker 7: The ones afterwards were a little better, but they were
Speaker 7: still negative. The idea of how to read this and
Speaker 7: how much of a forward indicator these surveys traditionally have
Speaker 7: been how much has a CEO confidence index really been
Speaker 7: something of a harbinger of a change in economic trajectory
Speaker 7: versus kind of noise. The way that we have seen
Speaker 7: a lot of the consumer confidence surveys well over the
Speaker 7: well since we've been doing this almost fifty years, when
Speaker 7: the measure drops below fifty, which is you know, that
Speaker 7: means it's pessimism as opposed to optimism, it has done
Speaker 7: a pretty good job of signaling recession. Now when we
Speaker 7: look at the measure today versus what it did back
Speaker 7: in twenty twenty two, late twenty twenty two or early
Speaker 7: twenty twenty three, we saw similar numbers where many CEOs
Speaker 7: were afraid that there was going to be a shortened,
Speaker 7: shallow recession. We didn't get a shortened shallow recession because
Speaker 7: consumers continued to work. And the reason why is because
Speaker 7: companies didn't let them go. Companies cut elsewhere, and we
Speaker 7: think that, you know, certainly this time around, there's just
Speaker 7: a lot of noise, a lot of volatility, and it
Speaker 7: really spooked a lot of CEOs. We still hear a
Speaker 7: lot of them saying, well, we're going to raise prices,
Speaker 7: you know, because these tariffs are going to affect us.
Speaker 7: But we haven't heard much about them saying they're going
Speaker 7: to let people go. Still, in all, if we do
Speaker 7: see these tariffs stay and even intensify, you know with
Speaker 7: some of these other investigations, that you may see some
Speaker 7: unemployment rates rise.
Speaker 1: Well.
Speaker 5: I found most interesting about the survey that most CEOs
Speaker 5: anticipate no change at all on the size of their
Speaker 5: workforce for the next twelve months. So doesn't that show
Speaker 5: that they can weather this storm?
Speaker 1: I think so.
Speaker 7: But we also need to remember that there's still labor
Speaker 7: shortages going on. You still have many, many people, thousands
Speaker 7: of people retiring every day, and you have you know,
Speaker 7: younger workers, but they have less experience. So I think
Speaker 7: that you know, that's that story is still there, that
Speaker 7: narrative is still there. Companies will cut other places, cut
Speaker 7: investment because indeed the investment measures were worse, and they'll
Speaker 7: raise prices, but they're not going to let go over
Speaker 7: their workers.
Speaker 5: We have almost mixed reviews when it comes to Corporate
Speaker 5: America in terms of how they're dealing with the tariffs.
Speaker 5: Costco yesterday, they're sourcing more locally produced mattresses and pillows,
Speaker 5: and they seem to be weathering this brilliantly almost gap.
Speaker 5: On the other hand, they're anticipating as much as three
Speaker 5: hundred million dollars in a tariff impact. But I want
Speaker 5: to get a sense from you. Do you think Corporate
Speaker 5: America is using terrafts sometimes as an excuse for other
Speaker 5: issues in their business.
Speaker 7: That's always possible, but I would say in general that
Speaker 7: most people will most companies and CEOs understand what tariffs are.
Speaker 7: Tariffs are attacks on their imports, and they're not going
Speaker 7: to absorb those costs, and so they just keep passing
Speaker 7: it down to the wholesale, to the retailer and ultimately
Speaker 7: the customer. And so you know, you know, retailers that
Speaker 7: sell clothing, most clothing is not made here in the US,
Speaker 7: so it makes absolute sense that they'd be more nervous
Speaker 7: versus maybe other types of entities that can source things
Speaker 7: from the United States. So I think that, you know,
Speaker 7: maybe some companies may use it as an excuse, but
Speaker 7: in general, this is a real thing. This is a
Speaker 7: real risk for many companies, and you know, they have
Speaker 7: to figure out a way to weather this, and a
Speaker 7: lot of it is going to be to raise prices.
Speaker 3: Dana Kann into this year, there was a tremendous amount
Speaker 3: of optimism and companies were talking about capex spending, mergers, acquisitions.
Speaker 1: Do we have a sense on.
Speaker 3: A holistic level of how much they've actually goes back
Speaker 3: in a more sort of sustained way as a result
Speaker 3: of some of the policy uncertainty.
Speaker 6: Sure.
Speaker 7: I mean at the beginning of the year, I think
Speaker 7: a lot of companies were anticipating deregulation, maybe some tax
Speaker 7: cuts for corporations, and then you know, the script flipped.
Speaker 3: We were, you know.
Speaker 7: Less worried about that, and I mean, uh, you know,
Speaker 7: those kinds of benefits faded away with the trade with
Speaker 7: the trade wars, and we did notice that there was
Speaker 7: a in the number of ceo saying that they were
Speaker 7: going to increase their capex investments. But I think many
Speaker 7: companies are on pause. They're waiting to see what's going
Speaker 7: to happen. And there unless you have some kind of
Speaker 7: long term project where you know, politics doesn't matter as much,
Speaker 7: I think a lot of companies are going to remain
Speaker 7: on hold until they see what's really going to happen.
Speaker 7: And also a number of companies are probably concerned about
Speaker 7: demand destruction. We think we're actually going to see some
Speaker 7: weakness and consumer spending, maybe even starting in the most
Speaker 7: recent data, but certainly in the third quarter, and that's
Speaker 7: going to be very gnarly from many CEOs and many companies.
Speaker 3: Dani Pittersoner of the Conference Conference Board, thank you so
Speaker 3: much for being with us. Joining us now is Lindsay
Speaker 3: Pie of Stephel Lindsay, what's your take on that resilient
Speaker 3: consumer and how much their incomes rose as well as
Speaker 3: their ability to spend on an inflation adjusted a basis.
Speaker 6: Well, certainly welcome support from that organic component of income
Speaker 6: supplementing consumer's ability to go out into the marketplace and spend,
Speaker 6: albeit at a reasonably reduced pace. We are seeing some
Speaker 6: loss of momentum, so the consumer is still resilient, but
Speaker 6: again it is at less robust levels than what we've
Speaker 6: seen over the past couple of years. And this supports
Speaker 6: exactly what we've seen in the price index, that deceleration
Speaker 6: in headline costs reflecting the fact that businesses aren't able
Speaker 6: to pass on further price increases to the consumer to
Speaker 6: the end user without the risk of losing market share.
Speaker 6: So while consumers are outspending, they are becoming increasingly cost sensitive.
Speaker 6: But for the FED, this is good news.
Speaker 4: We have a.
Speaker 6: Resilient economy, resilient consumer and inflation that has been decelerating
Speaker 6: now for the past couple of months.
Speaker 5: Is it enough for the Fed to, potentially, if inflation's
Speaker 5: coming down, to think about cuts this year?
Speaker 6: Well, I think the Fed is already thinking about rate cuts,
Speaker 6: but the window of opportunity for action is very limited.
Speaker 6: Against the backdrop of negative growth in the first quarter,
Speaker 6: against the backdrop of that deceleration of price pressures, the
Speaker 6: FED could act to cut rates and minimally maybe two
Speaker 6: twenty five basis point cuts mid year, But as we
Speaker 6: look out towards the second half, further out towards the
Speaker 6: fourth quarter, I do expect a more positive impact, a
Speaker 6: stronger impact from some of these trade policies, from tariffs
Speaker 6: to set into price pressures, risking upside momentum in costs
Speaker 6: and really removing any window of opportunity for rate cuts
Speaker 6: and potentially shifting the conversation back to rate hikes by
Speaker 6: the end of the year.
Speaker 1: Wow, rate hikes at the end of the year.
Speaker 5: And that's driven by what exactly, because the concern of
Speaker 5: in inflation driven by tariff policy.
Speaker 6: Well, again, right now, the Fed is walking a very
Speaker 6: delicate line as we saw in the FOMC meeting. There
Speaker 6: are downside risks to growth and employment, which we've already
Speaker 6: seen that storyline playing out, as I said, in the
Speaker 6: first quarter, and likely to see very minimal momentum in
Speaker 6: the economy in the second But by the second half
Speaker 6: of the year, those upside risks to inflation, I do
Speaker 6: think are going to become more prominent, and the FED
Speaker 6: has to focus on getting inflation back under control. Now,
Speaker 6: the numbers this morning in the PCE were favorable, that
Speaker 6: headline is moving closer to two percent, but the core
Speaker 6: numbers still remain stubbornly sticky, up at two and a half,
Speaker 6: and again the risk is to the upside.
Speaker 3: Lindsay Neil Dotta was talking earlier this morning that the
Speaker 3: housing market is kind of the fly in the ointment
Speaker 3: for this argument.
Speaker 1: That you've seen a real fall off in terms of.
Speaker 3: Activity people on its ability to buy homes. You've seen
Speaker 3: even prices come down in certain regions for the first
Speaker 3: time in years. There's a feeling that that aspect of inflation,
Speaker 3: which is a massive one, is really going to be
Speaker 3: more of a drag than some sort of boost, and
Speaker 3: that financial conditions have actually been incredibly tight in that area.
Speaker 6: Make of that argument, well, I think when we look
Speaker 6: at the inflation numbers, it's going to be very difficult
Speaker 6: for the FED to achieve a sustainable two percent level
Speaker 6: without further reprieve in housing costs. Remember CPI shelter costs
Speaker 6: are still up over four percent, so that's double what
Speaker 6: the Fed's intended targeted. So intended target is and so
Speaker 6: it's going to be very difficult for the FED to
Speaker 6: achieve again that broader measure of price stability without further
Speaker 6: reprieve in the housing market. That being said, we haven't
Speaker 6: yet seen a sizeable amount of relief. Now price pressures
Speaker 6: have slowed, but nominally prices are still very elevated, as
Speaker 6: would be home buyers face a near record low affordability rates,
Speaker 6: so there's still a lock out effect, and existing homeowners
Speaker 6: are still facing a lock in effect whereby they're largely
Speaker 6: precluded from offloading their existing property for fear of resetting
Speaker 6: to significantly higher rates.
Speaker 1: Remember, even if you're.
Speaker 6: Buying a lower cost nominal asset, if you're resetting from
Speaker 6: sub three percent up near seven percent, well that's going
Speaker 6: to result in a sizable increase in your monthly payment,
Speaker 6: which most Americans simply cannot afford, so that lack of
Speaker 6: mobility both into and out of the housing market, I
Speaker 6: think is going to slow any further progress for the
Speaker 6: price pressures that we're seeing in the shelter component.
Speaker 3: There's a theory out there that the tariffs and trade
Speaker 3: debates will dampen growth, and that we're seeing that on
Speaker 3: the margins, whether it's people getting more concerned emotionally and
Speaker 3: maybe not in their spending habits, as well as companies
Speaker 3: that aren't hiring as robustly or doing capital investment plans
Speaker 3: the way that they have been in the past. Why
Speaker 3: do you think that won't be enough of a dampening
Speaker 3: effect to counterbalance some of the inflationary pressures and strength.
Speaker 3: Frankly that we're seeing in the consumer well.
Speaker 6: I think the biggest impact that we've seen thus far
Speaker 6: has been on the soft data on the confidence numbers.
Speaker 6: Consumer confidence has fallen into a multi year low as
Speaker 6: consumers are anticipating these dire conditions coming down the pipeline,
Speaker 6: driving inflation expectations up to a multi decade high. But
Speaker 6: on the business side, we've also seen that we've seen
Speaker 6: that impact on confidence come down to a multi month low,
Speaker 6: with ninety percent of businesses saying now is not a
Speaker 6: good time to hire, Now is not a good time
Speaker 6: to invest. But as we saw this morning when we
Speaker 6: look at that hard data, consumers are still spending, businesses
Speaker 6: are still investing. So it's as if we're vocalizing more
Speaker 6: concern than we are actually changing behavior, and so again
Speaker 6: that's going to perpetuate this resilient notion for the economy,
Speaker 6: both on the consumer and the corporate side, and help
Speaker 6: to offset that impact on inflation and still leave us
Speaker 6: facing significant upside risks in terms of price pressures.
Speaker 3: Lindsay Paxstepaul, thank you so much. I am still pleased
Speaker 3: to say joining us now. United Airlines Executive vice president
Speaker 3: and chief commercial Officer Andrew Andrew, thank you so much
Speaker 3: for being with us. First, can you just tell us
Speaker 3: why you thought this was an important deal to do.
Speaker 8: Sure, it's great to be here, good morning. You know,
Speaker 8: I think United is the largest airline in the world,
Speaker 8: In fact, I know it, but we also have a
Speaker 8: few gaps in our network and we would like to
Speaker 8: be a better choice for travelers in the New York
Speaker 8: City area. We're very strong on the New York on
Speaker 8: the New York side of the river, and we'd like
Speaker 8: to have a presence on the other side along with
Speaker 8: in Boston. That's more significant than we have today, and
Speaker 8: this partnership with jeff Blue is going to get us there.
Speaker 3: How much is this tied to some of the issues
Speaker 3: that Nework has had with air traffic control signals and
Speaker 3: all of the publicity around that diversifying so that there
Speaker 3: are some options in the New York City region apart
Speaker 3: from that hub.
Speaker 8: Sure, it's a good question. We've had a very long
Speaker 8: term goal of being back at JFK Airport. We've been
Speaker 8: working on this particular partnership for Jeff Blue for a
Speaker 8: long time. So what's happened in New York and New
Speaker 8: York in particular of the LOWD few weeks is a
Speaker 8: bit of a speedbump. But the second runway will be
Speaker 8: operational again in just a few short weeks and we
Speaker 8: should be back to normal.
Speaker 3: Do you expect other types of agreements like this, Andrew?
Speaker 3: At a time when we know that airlines have been
Speaker 3: trying to come up with agreements to flesh out their
Speaker 3: service area, their options for consumers, is this kind of
Speaker 3: the path of travel?
Speaker 8: Well, that's a really good question. United We've always been
Speaker 8: focused on the consumer and providing choice, whether it's from
Speaker 8: basic Economy, our most basic offering to Polaris if you're
Speaker 8: trying to go to Singapore and have a Lifelive bed,
Speaker 8: and now the Polaris Studio, which is a brand new
Speaker 8: product we announced a few weeks ago. So we're always
Speaker 8: trying to figure out what the next step is, how
Speaker 8: to innovate, how to offer more choice to consumers. I
Speaker 8: think the rest of the industry is just finally caught
Speaker 8: up with that. I call it the Great Reset. The
Speaker 8: other airlines are out there are doing a big reset
Speaker 8: trying to figure out how to gain foot and again,
Speaker 8: whereas United we figured that out a long time ago.
Speaker 8: We figured out the consumer was in charge. Biden, optionality
Speaker 8: was what they wanted, and we're just a step ahead,
Speaker 8: a generation ahead because of that.
Speaker 5: What are you seeing right now the consumer really wants
Speaker 5: when it comes to.
Speaker 8: Travel, Well, I think they want choice. And what I'd
Speaker 8: say is the US consumer has been very resilient, and
Speaker 8: for example, trips to Japan I think are just really
Speaker 8: in fashion right now. To Japan I would describe as
Speaker 8: one of our hots destinations. This summer where everybody's trying
Speaker 8: to take the family to Japan. I'm not sure we'll
Speaker 8: have enough seats to be frank, but the consumer wants
Speaker 8: choice in a product range. They'd like the optionality of
Speaker 8: flying basic economy, but they also like, you know, sitting
Speaker 8: in a premium seat from time to time. And most
Speaker 8: importantly for United, they like the optionality we provide to
Speaker 8: go around the world. Whether you're trying to go to
Speaker 8: Mongolia or Cape Town or anywhere in between, United can
Speaker 8: get you there.
Speaker 5: It's interesting you talk about Japan because I remember Lisa
Speaker 5: sent her son to Japan and perfectly nailed it when
Speaker 5: the yen was really to her favor in terms of
Speaker 5: doing the currency exchange. Where else are travelers going this
Speaker 5: summer because people have been talking about there's all this
Speaker 5: concern about whether people are going to spend and travel
Speaker 5: because of terifs. But it sounds like for you it's
Speaker 5: pretty robust.
Speaker 3: Yeah.
Speaker 8: I think it's going to be a very busy, busy
Speaker 8: summer and our airplanes are going to be full. In
Speaker 8: addition to Japan, I would say that the hotspot, and
Speaker 8: this is for now the third year in a row,
Speaker 8: is Southern Europe. We just started flying to Sicily last week,
Speaker 8: and we fly to Naples, we fly to Rome, Athens, Spain.
Speaker 8: People in the United States are anxious to get to
Speaker 8: southern Europe and it's just, you know, it's a really
Speaker 8: great vacation, and I think that is another big hotspot
Speaker 8: across the globe.
Speaker 3: One big question has been not necessarily outbound traffic for
Speaker 3: tourism outside of the US, but inbound traffic with people
Speaker 3: from overseas coming to the US. How much have you
Speaker 3: seen a real drop off, especially as we have heard
Speaker 3: a lot of headlines and tensions between the US and
Speaker 3: other countries.
Speaker 8: I think that is a fair point. We have seen
Speaker 8: a small drop off. We've talked about it from Canada.
Speaker 8: There are previous reports that were just completely false, but
Speaker 8: it is a small drop off, and other parts of
Speaker 8: the world some of it driven by currency. I think
Speaker 8: Japan is largely driven by currency. But you know, the
Speaker 8: US consumer has been incredibly resilient and so from you know,
Speaker 8: load factor point of view on our jets, that small
Speaker 8: drop off overseas has been more than offset with more
Speaker 8: US consumers seeking that vacation to Rome or Japan.
Speaker 3: This year, we're about to get a read on inflation
Speaker 3: as well as consumer spending and income, and there's been
Speaker 3: a real question about what's driving disinflation.
Speaker 1: It has been airline prices.
Speaker 3: Actually, airplane tickets have been coming in, and I wonder
Speaker 3: whether you expect that to continue or whether that was
Speaker 3: a temporary blip that has changed, especially as people are
Speaker 3: feeling better well.
Speaker 8: As you imagine, airline tickets over the long run are
Speaker 8: a great bargain if you adjust for inflation, for sure,
Speaker 8: and we have seen a lot of inflation. I do think,
Speaker 8: you know, earlier this year, when we did see some
Speaker 8: consumer weakness, we adjusted our posture in terms of how
Speaker 8: much we're charging to fly within the United States and
Speaker 8: around the world. So that did stabilize demand, but yield,
Speaker 8: our ticket prices from our perspective, are a little bit
Speaker 8: lower than we expected this spring in this summer if
Speaker 8: you roll back to the very beginning of the year,
Speaker 8: based on what we see from consumer demand, So we
Speaker 8: do think there's a lot of bargains out there.
Speaker 1: Do you expect that to change later in the year.
Speaker 8: That really depends. It's hard to predict the economy. As
Speaker 8: you know, we spend all day trying to think about that.
Speaker 8: If the economy gets stronger, then of course we would reset.
Speaker 8: But once we get out of summer, my guess is
Speaker 8: these trends will probably continue for a bit. But twenty
Speaker 8: twenty six I think is going to set up to
Speaker 8: be a very great year for United. We have a
Speaker 8: bunch of new products we're introduced in including Star length
Speaker 8: and newclear seats, so we're bullish about the long term United.
Speaker 1: Andrew, it is so great to have you. Before we
Speaker 1: let you go, I want to ask, just finishing.
Speaker 3: Where we started with the idea of JFK versus Newark
Speaker 3: and the foray into JFK. I'm wondering whether this is
Speaker 3: the beginning of a broader expansion once again.
Speaker 1: I know you've had a love hate relationship with the airport.
Speaker 3: Is this sort of the first foray into getting a
Speaker 3: bigger footprint at that hub.
Speaker 8: There's no doubt we would like to get a bigger
Speaker 8: footprint at GfK. You know, we're going to be starting
Speaker 8: off with a high single digit number of flights, which
Speaker 8: is rather small for United. We are the largest airline
Speaker 8: in the world, so we look forward to looking for
Speaker 8: more opportunities to expand there. But GfK not like the
Speaker 8: other New York City airports are runway restricted. The runways
Speaker 8: are very full, as we've talked about often, and so
Speaker 8: the ability to grow at JFK or any of the
Speaker 8: three New York City airports is constrained by these runways.
Speaker 8: So we're sure hoping that there's advanced technology that allows
Speaker 8: runway expansion to continue. But in the medium term to
Speaker 8: short term, the runways are full at the New York
Speaker 8: City airports and our ability to grow by any airline
Speaker 8: is quite limited.
Speaker 1: We have all experienced that.
Speaker 3: Andrew Nocella, thank you so much for taking the time
Speaker 3: wonderful to speak with you. United Airlines Chief Commercial Officer there.
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