Consumer confidence fell again in February recession fears and Rising Prices have outweighed a strong labor Market the conference boards index Dropped to 102.9 that is the lowest in Three months so joining us now is Chief Economist for the conference board Dana Peterson to talk a little bit more about The results of this um of this laser Report I guess it's all Completely surprising Um because because even though people Seem to be spending money even though People seem to have the jobs that they Want there's still this kind of cloud if You will yeah you know and it has to do With Rising interest rates that like the Other shoe is going to drop what are Some of the reasons behind why the index Dropped again Sure I think a lot of it reflects Expectations so our expectations gauge Fell into the 60s and any reading below 80 means that consumers are expecting a Recession at some point over the next 12 Months and indeed in the last 11 well 11 Out of the last 12 months consumers have Had that expectations gauge below 80. so That means consumers since sometime last Year are expecting some kind of Recession and certainly they're Concerned about their future wages They're concerned about income they're Concerned about whether or not they'll
Have jobs and whether business Conditions will be favorable for them So as you know the index has now reached A three-month low is there a concern That this could set the tone for the Rest of the year Well we do have a recession forecast and We're looking at negative GDP growth Probably in the first quarter second Quarter and third quarter not too deep Uh certainly a shallow recession and not Too long but nonetheless I think Consumers are picking up on that they're Pulling back on their expenditures Especially for Big Ticket items that They need to finance and they're also Pulling back on vacations which is a big Service that has been driving spending So far yet we keep hearing how there are You know so many job openings out there That employers just can't find people to Fill jobs that they're offering signing Bonuses and different sectors we're not Talking about the tech sector but in Other areas Um you know there seems to be a bit of a Disconnect between consumer confidence And the current low employment numbers How are we to sort of understand that Sure the reason why there are so many Labor shortages is because many baby Boomers are leaving the labor market so They're not enough workers younger Workers to replace them and so people
Have the option to quit find new jobs up Their wages but even with all that Interest rates are rising so it makes a Lot of things more expensive and let's Not forget about inflation that's why The FED is Raising interest rates things Like food gasoline even housing are very Expensive and that's going to weigh on The ability for consumers to spend even Though they have most of them are Working and some of them have seen Increases in their wages all right so we Know that it's become incredibly Difficult to purchase some of those Staples that you mentioned food and gas And the like but where are we saying Consumer demand strong remains strong or At least even increasing Well the date have been mixed certainly In November and December consumer Spending was quite weak and then in January we had a blockbuster number in Terms of consumption but we think some Of that might have reflected weather Which may be repeated certainly in February the weather was pretty bad Throughout most of the U.S and so we may See some of that come off but in general Consumers are thinking that there is Going to be another shoe to drop and That things are pointing to a worse Environment for them and hence we think That consumer spending is going to slow Over the course of the next few months
Dana you're an economist and so this Must be either very interesting or Frustrating time for you because so many Of the indicators that we normally look At that we think you know should predict X Y and Z it's not working out that way Um I'm wondering if we can still sort of Count on these kind of reports to give Us an accurate prediction into the Future I think we can and certainly we have our Own measure which is called the leading Index it collects 10 different measures Of of Labor Market activity consumer Confidence stock market activity even Things like whether businesses are Looking to invest or receiving orders And together that index continues to Signal that there is going to be a Slowdown that there may be a recession And so that indicator has been pretty Accurate over the last you know 40 50 Years and so we think that certainly When we look at all these measures Together in that index it is signaling Something that maybe we will fall into Recession anywhere between now and maybe Early in the second quarter All right Dana Peterson always great to Have you for your Insight thank you Thank you
