Conference Board's Franco: Economy Is On Solid Footing (Audio)

in alternative dispute resolution for over eighty five years. More at ad R dot org. Stocks are advancing after last night's presidential debate. Consumer confidence data boosting optimism in the

US economy. Will have more on that confidence data coming up on taking stock SMP five hundred index up thirteen now to fifty nine, a gain of six tenths of one percent down, Industrials up one thirty one points, up seven tenths of one percent, as stack up forty five a gain of nine tenths of one per cent, the tenure up seven thirty seconds yield there one point five six gold down twelve ninety beams, decline of one percent, and crude oil slumping three percent now a barrel of

West Texas Intermedia down a dollar thirty six. Right now on w t I, I'm Charlie Pellet and that's subloom Bred Business Flash. You're listening to Taking Stock with pim Box and Kathleen Hayes on Bloomberg Radio. Consumer confidence is growing stronger every day. No, it's not just the lyrics to a Chicago song. It's a description of what's going on in the world economy. Lynn Franco is Director of Economic Indicators for the Conference Board, and she joins us

here in studio. Linn Franco, thank you very much for being with us. Good to be back. All right, give us the details of this latest report. Oh, we had some pretty good news back to back monthly gained or one oh four point one in September, which last time we were this confident was before the Great Recession. So it are nine year high. And basically what we're seeing that's driving this is consumers assessment of the present situation

that's also at a nine year high. So that tells us that the economy remains relatively strong and expectations are that this is going to continue. I'm glad you mentioned the present situation in de because yes, it is strong. In fact, if we could throw up a chart here on radio, you'd see that it is higher than actually the overall consumer confidence because expectations are so much lower. They look a lot flatter and more than what economists

has told me. That If you want the part of this report that tracks spending more closely, it is expectations. It's looked to the future, and I would say that's a signal if that correlation is true. That doesn't say this necessarily translates into a lot more spending. Even though it's great that people are feeling better, particularly about labor market, right, it doesn't necessarily translate into more robust economic growth either. It's sort of more of the same, which is a

theme that we've had. Um. But I think the key takeaway here is really the fact that, um, you know, this is sort of typical behavior that we see during an expansion, where the present situation continues to grow, expectations tend to level off, and I think it just shows us that the economy is still on solid footing, at least that's how consumers assess it. Now. I just want to read into some of the details, and I know

that there are many of them. So I'm just going to give you a little thought here, which is the automobile sector, particularly because you ask the question do you plan to buy within the next six months? Uh? And there's yes uh. And then in the various categories, weren't just if you could tell us a little bit about that, just noting if there's a trend or something we should pay attention to. Sure, I think here, you know, we've seen pretty robust growth in auto sales for several months now.

There's no indication that that's going to fall off at this moment. You know, we might get a little fluctuation month to month, but if we go back a year or two ago, we're still relatively strong. So yes, consumers do remain sort of on the sidelines. There's still careful about where they're going to spend their money, when they're going to spend their money, but they are willing to

make these big ticket item purchases. You know, I was sitting here thinking about this consumer confidence number, and it's the strongest in nine years, so I thought. But I remember, because I've been following this for a long time, when it used to be easily in the hundred and twenties, instead of like the one oh four's. So I went back on my Bloomberg, Uh, went into my eco page and into the historical price page, and the high and consumer confidence was January thirty one of two thousand, it

was at one forty four, almost one forty. Consumer confidence in the two thousands ran consistently a lot higher than it runs. Now. Do you need to rejig your base? Is something off or people just a lot less confident than they used to be. I think we need to put it into perspective. That was sort of the Internet bubble, and we see how that ended up. So typically what we've seen it runs somewhere between a hundred two a hundred and twenty. And I also think we need to

put this in perspective. Um, during other recessions, we had seen consumer confidence dropped to about sixty maybe a little bit lower at our lowest point we were at during this recession. So we have come a long way, um, and I think we may have a little bit further togo, but I think these levels and the overall trend are positive news. All Right, a little bit more detail on

the trend in vacations. You know, I was looking that we're talking about automobiles, you think that's going to remain steady. What about vacation data, We see the vacations here as well that it's holding up quite well. And now I think we get sort of into that time where we start thinking about our next vacation, our next time off. At least maybe I do. But anyway, I think that's going to hold up to again. You know, consumers, now the confidence level is high, so that means they're willing

to spend. They have the ability to spend, it's just making those decisions. I mean, there's still a little bit cautious. We're all sort of scarred. But in terms of autos, vacation, and even in homes, I think we have positive news.

So when you look at the election, and of course, coming off of the debates last night, the certainly right up there with everybody's minds, so much so that Mike McDonald from our Bloomberg Intelligence team looked at Bloomberg's Consumer Comfort Index and tracked how it shows how college educated consumers and people who have at least some college or more and incomes over a hundred thousand, it looks like

their confidence is rising and falling. With Clinton, Hillary Clinton standings in the polls, and of course the Mexican pay So rally today when many people said that she beat Donald Trump in the debate last night at the conference board. Are you guys looking at this? Are you tracking confidence

versus the elections? We've actually gone back and look at a few articles at the New York Times has done in the past, and generally what they've seen is in September of confidence readings are above a hundred, the party in office tends to stay in office. The last exception, however, was the re election of President Obama, ware confidence levels were a little bit below seventy. Um. But this does, I guess point sort of towards positive news for the

current administration. What about the specific just quickly about Ohio. What did I tell you there about the confidence in Ohio? Because I was looking at that. You do it by state, almost in region. I was thinking, here in eighty three point five, that's down from nineties six point nine. Right. Um. Well, actually, what we do with the states is we tend to look at a three month moving average kind of takes

out a little bit of the noise. What we've seen across the nine regions basically is there have been improvements over the course of the past year. It's been a little bit bumpy. The one exception has sort of been what's happening in terms of the West, South Central or in Texas because of oil prices, well at oil prices can certainly make it consumer less confident when they go up too high. Of Kathy Hayes, along with Kim Fox

and Mrs Bloomberg. Coming up on taking stock, will be speaking with Margaret Tullive, white House correspondent for Bloomberg News. Presidential debate recap and what's next for the candidates