Hello and welcome to the March episode of Economy Watch. My name is Eric Lund. I am Senior Economist for Global Research at the Conference Board. And welcome to the program. Today we are going to be talking about two of the indicators that we produce at the Conference Board today, CEO com confidence and consumer confidence. So there's some interesting developments in those data over the last couple of months. So yeah, well, we'll look at that. We'll talk a little bit about, you know, whether they're agreeing or disagreeing, what they're saying about the future. And then, as we do every episode, we'll take a look at the latest US forecast and the global forecast for the global economy. So I have two guests to join me, two guests to know a lot about these numbers and can help us explore them in great detail or, you know, moderate detail at at the least. Stephanie Guishar is senior economist, Global indicators. Welcome, Stephanie. Hi. Hello. And Alan Lee is Associate Economist for the CCI, and it's his first time on the program, so we're super excited to have him. Pleased to be here. Excellent. So we're going to start off by talking about the CEO confidence numbers and then we'll pivot over and talk about consumer. And then maybe we can mix it up a little bit and say why one is saying one thing and the other is saying the other. And then we'll we'll finish up with the global and US forecasts. So Stephanie, before we hand it over, we do offer credits, attendance credits for this. So if your company takes advantage of those, make sure you do as well. So, Stephanie, I'll hand the microphone over to you and tell us a little bit about CEO confidence. Yeah. So we are starting with the good news. So let me first tell you a bit more about CEO survey. So this survey is about 50 years old. It's a quarterly survey. We do it in collaboration with the Business Council and we are surveying the 14500 companies in the US We get about 130 responses every quarter. And you know we ask them a bunch of questions and we use them to build a measure of consumer of Co confidence which includes their view of the current economic conditions and the expectations for the next six months regarding the economy in general and their own industry. And we also ask plenty of other questions about the workforce, about investment that we also use to assess what they are thinking. So not a good news. So. This was our first survey post election and we saw a very large increase in TO confidence. Optimism is the highest in the past three years. So what you can see on the chart is that we have this kind of 50 line which is the border between pessimism and optimism. In 2023, they were clearly pessimistic. 2024 they started to be more optimistic, but it was, you know, it was kind of very cautious optimism. And toward the last quarter, just before the election when we did the survey, they were close to natural. Then comes the first quarter of 2025 and we saw the surge in optimism. And just to make it clear, the survey was in the field between the end of January, January 27 and April 10th, No, February, February 10th, sorry. So we were kind of already in the new administration policies. Some tariffs had been announced, they had been postponed, new tariffs were announced. So we are already in this. Kind. Of yeah. So we capture some of that and because we had a lot of question when we released the data, people were saying, well, we see what's happening, how come they are so optimistic? Yeah. So Jan 27th through February 10th was the was the OK? So now if I can move my slides, we're going to look at the different components. And what's interesting is this time all the components of the survey just improve and there was optimism everywhere both I mean regarding trend economic conditions, we saw strong improvement which I mean, in fact last year when we're looking at the data, it was hard to understand why CEO were saying we're current economic conditions are so, so when we saw this strong growth in the US economy. So now I think it seems that they have been catching up with variety and they think that the economy is doing well at least when there was survey between end of January and mid February and the expectation going forward we're also very optimistic. I have another slide which is kind of showing the change from 1/4 to the next. So the end of last year that's the bars at the bottom. You see that only 20% of CEO were thinking that the economy was better than six months before in the first quarter of 20, 25 is 44%. So it's a huge increase in CE OS thinking that the economy was getting better. And on the other side, you see the yellow bars where the sheriff CEO, thinking that the economy was doing worse, declined from 30% to 11%. Can I ask a quick question? Yes, the audience actually not someone in the audience brought this up. Please put your questions and we we really do want to see them and and try to use them. So 130 CE OS, yes, representative sort of Fortune 500 kind of companies, yes. What about this the industry sort of breakdown that's what the question gets to. It's a pretty consistent we see it weighted more towards, you know, manufacturing and services. Does it change overtime? Any any? It changes slightly overtime, but I would say we have a pretty good representation of all the industrial sectors. OK. We can't give the exact breakdown because it would be too easy to identify. I mean, there are not so many companies. So we don't give the exact breakdown, but I think it's very representative of the US economy. Thank you very much. I'm glad to hear that. OK. And then you know going forward 56% we're expecting the economy to be better in six months versus only 33% at the end of of last year. Now we're going to move to their own industries and you know same thing everything moving to optimism especially like current condition in their industry, there were negative at the end of last year and now they are positive. And then going forward they also expect some improvement. And I mean, as you can see on the charts, it's optimism about their own industry in the next six months is the highest since like just the COVID time like so. And here I have the the same slide that you saw before. It's same thing. But normally when I present this, you, you really need to look closely to see any changes in the bars. But this time it's obvious. Yeah, it's really like striking. I've been doing this for a year and that's the first time I see these kind of changes. So there was a massive change in CE OS views about the economy. One of the question that we asked them is whether they're going to change their capital spending plans and you know, kind of in line with this renewed optimism we see. I mean, still the majority is not revising their plans, but we saw this uptick in the Sheriff CEO saying I'm going to invest more than planned and the decline in the Sheriff CEO that was saying I'm going to invest less than planned. And I, I, I have a slide on this a bit later, but it's it, this is all surprising given the level of uncertainty. I mean, we everyone has been talking about uncertainty. I think uncertainty is the magic worst these days. We are tracking some measure of economic policy uncertainty which has increased to levels that we didn't see since I guess we haven't seen them since 2020 like. You have a chart on it later on. Yeah, very, very big Spike. Yeah. So Eric has a slide and I also have something, I also have something uncertainty. So you see it in two different ways. But so this is unusual, you would expect that with uncertainties as CE OS are more like in the wait and see more so we would have seen the the black bar going up like saying I'm not changing my plans, but this is not what we saw. So that that's very interesting. Well, I mean, they're saying that their plans are to deploy more capital, but have they? But then, you know, I plan on doing, but actually doing it you. Know that's a survey. So that's, I mean we have the same whether people do what they tell you, but they are we are asking them, are you planning, are you planning to revise your plans? And we don't know what the previous plans were, but what we see is that they are saying, well, I'm planning to revise it up, revise it up. So that's an indication that they are, they were between 27th of February and 10th of the 27th of January and 10th of February. They were quite optimistic. Now we also ask them about whether they are still suffering of difficulties to find the labours, the labor and the skills that they need. And I mean this is I mean the labor shortage situation that we saw post COVID is it seems to be already over. We have many more, most businesses saying that they have no programs hiring or very limited programs hiring. When you look back on the left side of the chart, you see that in 2021-2022 you had the dark blue and the light blue showing how you know the numbers of Co reporting difficulties to hire people. I mean this is this is largely, this is largely over. We also asked them what they are planning to do with their workforce. So here I mean this is where you see a bit more caution. The vast majority is still like into expansion or little change. But we saw this slight increase in the share saying that are considering laying of people in the in the next 12 months. And we saw this decline in the share saying that they are planning expansion while the ones planning little chance of increase. So it's kind of if there is any channel of uncertainty going into CE OS mine, it was maybe a bit on the labor market. Side when we are seeing labor market soften just a little bit. Yeah, just a little bit, but. What do these look like? I know the chart goes back to 2021, but like 20/18/2017, you know, before the pandemic, you know, is this, is this, are we kind of landing roughly the same kind of dynamic that we were, you know, all the way back then? That's a tricky question because I can't remember. I look at this all the time but I can't tell you like. That, but the numbers look OK right now. It seems like it's more towards little change, more balance. Yeah, more. Balance, yeah. So let's so we also asked CE OS about work arrangements. You know, there is this kind of trend of trying to reduce the possibilities of people to work from home. Why are you looking at me when you say that? Because. I'm talking to. You because I do work from home quite a bit so. Yeah. So luckily you work for the Conference Board because otherwise you would be in trouble. Because what you can see here is that while currently 13% of companies are letting people work in the office only one to two days a week, the share is going to go down to 2% in in the next 12 months. And you know, the most adopted work arrangement, we're still going to be three to four days a week, but we will have more companies asking everyone to be back in the office full time. And this is confirming some results. We have the same question at the end of last year and it was kind of the the same. I have to add more money to my metro card soon. So another question salary increases. So most CE OS plan to increase salaries between 3:00 to 3.9%. What we saw that quarter is kind of a convergence towards the three to 3.9%. So CE OS were planning, I mean to increase wages by more than 3.9% just kind of the share decline. The ones planning to increase wages by less than 3% also decline and everyone converts to this 3.3 to 3.9 range, which is kind of, I mean it's OK getting even like current the current inflation level, the productivity level. So it's kind of it's kind of what you would expect. Yeah. I mean that's, that's, you know, at or above, you know, what we're seeing on, on sort of inflation at least presently, you know, a year from now, yeah, you know, so I mean that's real income growth I guess is what I'm saying on inflation adjusted basis. Yeah. And but it's kind of matching productivity. Yeah, it's kind of all good. It's not inflationary. This what I want to. No, no, no. So last question, we asked CEO's about risks. So we get the same top risks almost every quarter. Cyber risk are the top risk for most CE OS, then geopolitical instabilities, legal and regulatory uncertainty and financial and economic risk. What's interesting in this risk is, is like the intensity of the risk has declined since since the end of last year for every single risk except geopolitical instability. And you're going to be asking me, you're not asking about tariffs. So no, we were not. However, we have a, we give the opportunity to see how to add any risks that we may have missed when we did this list. And typically we don't see much. We go through it every quarter. There is nothing like striking, but this time there was like many references to tariffs as a risk to the industry. So we are thinking of adding the tariff to this series of risk and so then we can see next quarter where where it's ranking. So, but overall, you know if you look just at this survey, you think OK, CEO's are more optimistic. They are planning to revise up investment plans. They may be a bit cautious on labor market, but not so much we are going to give decent wage increase. And in terms of risk, the intensity of the risk has declined a little bit. So this is all good, but that's my chat. With an uncertainty, this is a bit surprising. So I'm going to explain this chart. The horizontal axis is the change in uncertainty over a year, OK. And the vertical axis is the level of confidence of seals. And basically when you are above the vertical line, CEO's optimistic, when you are below CEO's optimistic. So there is this kind of negative relationship which is in general when uncertainty increases, CEO's optimistic, when uncertainty decreases. So certain when certainty is on the left, which is a decline, CEO's optimistic. OK. I mean, it's not a super clear correlation, but I mean the correlation is there. You can get the line. So what we saw is this kind of the yellow, that's the latest observation. So you have a huge increase in uncertainty in Q 12025 compared to Q 1/20/24 as measured by the economic policy uncertainty that has been calculated by some academics, Baker, Bloom and Davies. So and typically when uncertainty increase by that much, you would expect you to be pessimistic. You know the line. And I mean, we are clearly like, this is clearly an outlier. So when you think about it, one of the things that has changed since last year is OK, the election is over. This was this was an uncertainty we and we tend to forget it. But you know, in October when we asked the question, we didn't know who was going to win, but we didn't even know how quickly we would have a winner. So this uncertainty is over and the other forms of uncertainty that that we are measuring straightly linked to the trade policy and the back and forth of the of the current administration. But we think that, you know, CEOs are thinking a bit more long term. They think that with this new administration, they're going to get tax cuts, we're going to get deregulation. So overall this has been supporting their confidence. So the uncertainty in before the election was less than. Yeah. Uncertainty. The way it's captured, yeah, it's, it's economic policy uncertainty. And you know, the way it's capture, it's capturing all the back and forth currently. So This is why. It's very interesting, yeah. And then so as a transition, the other thing that's surprising, I mean not surprising, but where we have a kind of disconnect is in this quarter we saw so this decline in consumer confidence right at the time Co confidence was increasing and the survey were in the field more or less at the same time. Yeah. So that's kind of a puzzle. I mean it does happen in the past as you can see here typically that the the disconnect doesn't last for too long. So, but so to see, you know, where it's going to go, whether you know, for now CE OS and consumers disagree, at some point they would agree. The question is whether they're going to agree on the pessimist side or on the optimist side. And but to understand that, I'm going to leave the floor to Allen, who's going to try to explain what has been driving consumer confidence in the recent months. Sure. Yeah, I'm happy to shed some color on this and hopefully we'll come out with a better picture of where we're going. So like Stephanie mentioned, the surveys do pretty much overlap. The cut off date for the February preliminary results that were released are from survey recorded from February 1st through the 19th. So this is there's a pretty much 2/3 of the surveys at at the same time as the CEO confidence survey. We're going to look at a lot of charts. But before I get into it, I want to give some background on the survey. Every month, we pull 3000 consumers. And this sample is actually in fact balanced for the US to be representative of the US consumer by we think of gender, income, age and geography. So within the consumer confidence index, we have 5 components, two of which are regarding the present situation, whether you know for business conditions how, how there are currently how the employment conditions are currently three are in the expectations index. So like whether also consumers think business conditions will be better or worse, whether they think employment, the well, is there going to be more or less jobs? And is my, the third thing is, is my personal income going to be higher or lower? So along with the rest of the, along with the five that make up the the index, we have other questions that aren't in the index calculation, but we use it to, you know, give some more color on what the consumer is thinking in the month. So that's very useful. And if you see the press releases, that's, that's we try to highlight some of that. OK, So this chart, yes, we economists, we love our line charts. Now what I'm looking at to start is the downtick right all the way to the left, sorry, all the way to the right, which is the February decline. This number is actually been declining for three consecutive months, although we did get a lot of enthusiasm, euphoria during and around the elections. So you see, if you look back in October and November, it went up and now basically that enthusiasm is just dissipated. However, we don't believe that this is a tipping point into more negative sentiment for two things like #1 it's still within the range that is currently holding since about 2022. And for the second one, if you look at the dotted orange line, it's stillwell, it's still above its long term average, even though it's, you know, at the bottom of the range, still above the long term average. And well, I for in my opinion, I guess if we see a sustained decline below this orange line, if that could portend perhaps like more negatives, that means more negative sentiment and it could portend possibly more significant cutbacks in consumer spending. So Alan, I know you and I talk about markets lot. We're both kind of like to chit chat about, you know, what's happening. And when I'm looking at this chart, I'm thinking sort of about technical analysis and breakthrough kind of data in terms of trend and I'm not seeing, you know, a breakout. There's no terms of. The range that we've been seeing really over the last two years, it's oscillated sort of in this band. And while it has ticked down, is that the bottom of that band? It hasn't sort of hasn't broken through, right? Oh, exactly. Yeah. In trading terms or whatever, I would say, you know, it hasn't broken down, but it is a level we're watching and it's interesting. Yeah, it is interesting. But I don't see any, you know, super downside just yet, yeah. Yeah. And just yeah, I mean it was at this level in a few occasion in 2024 and consumer was still spending like crazy. That's yeah. So we need you need to look at this also in conjunction with consumer spending data and what's going to be. Coming and both, but this time around it. Declined in January, that's right. Yeah. So we are waiting for the February number to see. On the data point, so you know. Yeah, yeah, yeah. Well, this is the so February number and then yeah, March, April it's going to be. A little more down in January and in February and we got for the personal consumption expenditures data was quite weak for January. But like I said, you know, we need more data to confirm that these things are are more correlated. Yeah. But if we look deeper into the survey, though, we see a little bit more of that story unfolding, which now I want to, I'm looking at the present situation line, which is the dark blue line up there. And it looks quite positive still. Really the worries are in the expectations index, which just dropped below the orange line at 80, which is like usually a level we associate with heightened recession risks. And so let's start with the present situation. We'll go even one layer deeper. And this time I'm not looking at the lines, I'm looking at the orange bars. So we'll start from left. The current business conditions, actually, it is still in positive territory, which means that more people are saying business conditions are good than bad currently. And that's actually ticked up despite the, you know, softening in the overall index and the softening is actually occurring in the jobs, current jobs number. So we did kind of get confirmation of that in the BLS figures, which we you know, there were less jobs added and there was a tick up in unemployment. But it's still in positive territory I think. So we all want to see the expectations and here in the expectations now we see out of the five, I count only two that are in negative territory. So I'm going to start clockwise again. So expected business conditions. So more consumers said business conditions are worse and better and the yeah. And also the labor market is, is down. So they they feel that there will be fewer jobs in the future. But you have to look at the third component, which in their household income is still holding up. And what that's telling me is that I consumers don't feel that they're going to lose their own jobs. I think that the pictures painting is that if they were to look for, if they were to want to look for a new job, that would be less available. And I think like what Stephanie said, CE OS were overall keeping their labor force steady, right? So I think that corroborates with the story. OK, let's let's see. But so looking at it zooming back out by age, we did see a slight decline, but it's still, you know, holding well within that range from 2020 to now. Income, household income as well, just a little tick down and this is a six month moving average chart. So it's a little smoother, but we're still seeing that it's holding up for now. This is interesting. I don't know if I've seen this chart before. I love that it's broken down by the income groups. I mean, are we seeing any interesting kind of developments here? So you know, for instance, there was a Wall Street Journal article last week talked about the degree to which consumption is being driven by the top sort of 10% of earners. And we've seen that. I think in, I mean that's not atypical. Typically higher quintile households are much larger share. They sort of over represented in terms of overall consumption. And so I'm looking at this chart and I'm looking at sort of the trends among sort of the different income groups. And it does look like, I mean persistently higher income groups tend to be a little bit more confident, right. But especially maybe even recently, I'm looking at at sort of the 75 to 99 that's swelled upwards. So it does quite follow the income groups, but I like I said earlier, the survey is balanced towards household incomes. So we can't really take a just a pure weighted average of this. But you're right, the higher income groups are, you know, contributing to that high confidence. I wonder. Yeah. Interesting. So this the what you're saying for for the headline survey, the distribution is sort of, you know, everybody gets sort of an equal share in terms of the. Share. They get the share that is representative of the US population, OK. I mean, here they're all, they are not weighted. So you see everything. No, no, no. Yeah, I understand. Yeah, OK. Yeah. And we'll we'll see more actually in the next few slides actually. So here their families current financial situation is actually quite good. It actually hit a high where you see the differential with the with the good versus the bad is is at the highest since we pulled the survey and it's just taking a slight softening. We also despite the downturn in the expectations, all the worries in the overall index, they feel that their own expected situation in six months are still going to be good. So you know, just it did take a big significant step down, but I still see this as a quite positive. And OK. So we also asked consumers about what they think of the possibility of a recession around the corner and in the next 12 months at over the next 12 months. And the those who said somewhat are very likely are up. However, we see that they're still well below the level in 2023, right? So in 2023 they still spent like they still have opened their wallet. So you know, we'll that's however so here inflation expectations, that's I think what's weighing on the consumers minds. And you know, we see a rapid, a significant, quite a significant rise there. Then I want to just go straight into the next. One remind me really quickly, what was the sample period in terms of time for this survey for the most recent reading in February? One the first to the 19th. The 1st Jan or February 1st. February 1st to the 19th, yeah. Yeah, so. I mean you got the inflation number this morning, so there was a slow down in. There was, there was in. February, Yeah, but you know, when you need to. I mean, consumers are not. Thinking the news in terms of yeah, and they see this everywhere and they don't think of course it's going to go up. Yeah. But they don't think in terms of CPI. Yeah, they think in terms of how much I spend when I go to the store. And as we saw this morning in the BLS data, the price of eggs increased by 20% in. That's not related to tariffs though, I mean. That's not related to tariffs. Maybe this is tariffs then? It's all together. It's. Everything it's. Kind of what's happening right now and what we're hearing, what they hear in the news. So what's happening right now, they see the price of eggs, they go to the shops, they see they're paying now it's like almost $2.00 more than what they were paying at the end of last year. I mean, it's 40% increase, more, less. It makes a big difference in how they ask. No, I wouldn't say they I it's affecting me. My food has less eggs now. I've been holding off on eating those. I think that's a great point. And then when I see this, I think tariffs and that's maybe that's I'm I'm wrong. Maybe it's this is eggs. It could. Be tariffs. I think it's everything at the same time it's the fact that inflation was not really slowing. I mean, it's not like they are they? Are down a bit. Yeah, it took down a bit, but 0.1, I don't think it makes a big difference is the price of something that have increased much more. And also reading in the news that tariffs are going to increase prices. Yeah. And that that's something that. OK, sorry. Yeah, no, that's, that's great, Yeah. But let's see what else we have here. Oh, in the February number, stock prices also were less positive. But it's a good thing that you asked about when the survey was conducted because on this the cut off date was February 19th, which was the date that the S&P 500 actually made its all time high, OK. And these numbers don't reflect the market negativity in the past few weeks. So it'll be interesting to see where we go from there. Yeah, I think this may look a little different in the next months. But you might be surprised. I always be surprised. I mean, typically what we saw in this index is when I mean whenever the stock market doesn't do well, there is some correction. We saw it in the summer. I remember in the summer when there was this kind of mini financial turmoil, we saw a deep, I mean small dip in consumers expectation about stock prices. So now that we are seeing a much larger decline in stock prices, yeah, I will see how they react. Yeah. And this is like expectations like in 12 months. So they they could. They could say we're so high. We're still high. We're going to continue falling. Or they could, or they could think that we're we're going to become. Who knows? Yeah. But we'll see, Yeah. So on purchasing, slightly less people said they were going to buy big ticket items. But I think also what we want to look at is services. And still quite a lot of people are are staying there. They plan to spend more on services. I think in the main list, if I can remember correctly, dining out was at the top of the list, which makes sense to me. Travel and vacation plans were down a little bit and I think consumers moved up. Personal care, healthcare, movies and live entertainment. I think that moved up. OK. I think we had a question about that. We'll circle back. We have some questions, but let's finish up the material and then we can chat a little bit. I think my let's see what else we have. I think this is one last thing that I want to focus on is we have another question regarding like it's an open-ended question, like what's the main thing that's affecting your view of the economy? And so we got a whole bunch of very interesting writings, something to highlight the prices of goods and services are still one of the top topics that that consumers on their minds right now. We did see a spike in talk about egg prices, which it actually follows the, I think 2023, the, the bird flu. They they also talked about their prices then and and we had a similar rise. Yeah. Yeah. And, you know, following the news, we also saw more increase about talks about tariffs. And also another big chunk was about the current administration, which rose for a second month. So January, February, we they talked about it a little more, but it was a mix of, you know, positive and negative comments. So yeah. Alan That was I saw much and learned a bunch of stuff that I did not know. And I've been here for 9 years. So there are some really cool charts in there that I that I've never seen before. I really like the one with the income groups all together like that. I'm sorry there are so many lines. No, it was great. It's one that I could sit and sort of stare at for, you know, a good 5-10 minutes and and try to make sense of some of the interesting developments over time. So we have one more section left. I'm going to talk about the forecast, but I'd really like to spend some time. We do have quite a few audience questions, so maybe we can sort of open the can on those for a little bit before we start sort of closing things up. One is let's see here, let me go back a little bit. There's a lot of questions about sort of CEO confidence. Do we think with all the more recent changes and flip flopping on policy that the level of CEO confidence will prevail? But number one, we don't, we don't forecast our own data, but. We can. I mean you can. It can go either way. And you know, it's really, I mean, see, I mean, the reason why there was this increasing confidence when we hear about CE OS, it's by expecting tax cuts and by expecting deregulation. And, you know, at the time of the survey, this was maybe, you know, the main goal. So maybe at the time they were closing their eyes on the tariffs and the and the changes because these tariffs are bringing a lot of uncertainty in terms of which countries are going to be affected, what would be the level of tariffs, which products are going to be affected. And it's changing very quickly. So now the question is whether seals are going to get what they are hoping for in terms of deregulation and lower taxes and that may still be more than compensate, you know, the policy uncertainty we see around tariffs or it could go the other way around. And you know, if you know, CEO is looking at all the economic indicators that we see, I mean, many are not going really in the good direction. You mentioned that consumer spending was going down. Now we have consumer survey that is OK but not that great. So if you see more weakening in consumer confidence in consumer spending like Co might start to be more worried about the economy and especially they keep their eyes on the stock market which is very important for them because sometimes they are jobs are tied to the stock prices. So things may change. But again it may go either way at this point in time. So what we are doing first we are looking forward to the next survey in May. But in the meantime I think we're going to do the same thing CE OS are doing. We're looking at all the economic data that's coming in and this would given kind of the direction of where this may go. Thank you. Another question, I like this one because it sort of pits the two of you against one another a little bit, OK. Which is the better indicator of judging the economy's future prospects, CEO confidence or consumer confidence? I think they are not looking at the same things and I tend to think and maybe Alan disagree that CEO's are more kind of a long term view of where the economy is going. Even if the, you know, the consumer confidence includes some expectation and questions, I think consumers really react to what they see in their day-to-day life. So it may be more short term. So the best is, you know, to get the two together. But I would tend to think maybe, you know, consumers are reflecting that the ongoing uncertainty and hesitation while I see you are thinking longer term and they're happier. So I don't know. Sure. No, Stephanie, that makes a lot of sense. But I think you got to look at them both at the same time. I'll use a very horrible analogy, I guess driving, you know, there's two gauges, there is the RPM meter and there is the speedometer. The short term is like, like you mentioned, the consumer is focused more on the short term. I would say that's a speedometer. And I look at the speedometer more than I look at the RPM. So yeah, you need both. Interesting. I really like that analogy. I might steal that. Actually I have no idea which to. I came out of. It from from came there. I think it's on a tachometer the. Tachometer OK, No one. OK, there you go. Anyways, that's I like that analogy. OK, let's see here. Are there any updates on data indicating consumers vacation plans? I think you already kind of talked about that a little bit, Alan, right? Yeah, yeah. No, I I saw, we saw a softening. So at the end to to know this is vacation plans in in six months. Yeah, Yeah. OK. And then let's see here. I think maybe there was one more. Let's see, there's a question. Do the government inflation indexes considered tariffs as part of prices or are they excluded from the index? Well, the inflation, the inflation index is a basic, are gauges of how much consumers are paying for goods, you know, at at the register. OK, so tariffs wind up in those prices. So you import the good you, you have let's say a 20% tariff on it. The person, the company who imports it has to pay that at the border. And they can do one of two things. They can either sort of take that hit in terms of their their profit and their margins or they can simply raise the price that they charge for that good by a corresponding amount. And so it depends on the product, depends on the economic state, but oftentimes you know a lot of that, if not all of that, that tariff can be passed on to the end consumer. So yes, these tariff numbers should be represented in a lot of the inflation data that we see from the government. We just got ACPI report this morning. It was for February. We did have some tariffs in place in February. The 10% tariffs on China were implemented. I believe it was on March or sorry, February the 4th. So those, you know, were in place. But we had a pretty good inflation report. Perhaps it's going to take a little bit of time for, for that tariff, which is actually at 20% now as of I think a few days ago and some of the other ones to start showing up in the inflation data, assuming that these tariffs are implemented. But it is our, yeah, our expectation tariffs are going to increasingly have an impact on the inflation numbers and we'll see that sort of more and more so in in future inflation prints over the coming months. Just a question for you. So these, these tariffs, I mean, OK, they're foreign China. Yeah. First it depends on the goods because sometime it's parts that are going into the supply chain. So you it's going to take a lot of time. Absolutely the case. To reach the final product, Yeah. And the other thing we heard that, you know, companies have been stocking up, yeah, since the end of last year thinking about these tariffs. So maybe that's something also that's going to slow the impact. That's a very good point. Yeah, Yeah, there may have been. I mean, if you look at the import data, you know, you did see quite a bit of surge in terms of imports as companies really try to get stuff across the border before, you know, the, the, the tariffs hit. So yeah, it is our expectation. We've we've actually made some changes to our inflation forecast. So we'll get into in a little bit. I'm kind of jumping the gun here where we are, we are increased increasing our inflation forecast for for this year and for next. OK, so I've got a few minutes. We're going to pivot and and dive into again the US and global forecast and then we'll maybe circle back at the end. And, and any other questions that we have, we can we can address them at that point. I just don't want to run out of time, which does happen sometimes. Oh, the poll question, the poll question. So before we actually tell you what we're thinking is going to happen in terms of the economic outlook, we want to hear from you. So we have a pretty simple poll question that we're going to ask. Let's see here. Do you think? And by the way, Alan, help me write this. Alan is very good at writing poll questions and keeping them very simple. So thank you, Alan, for simplifying whatever I was going to put here. Let's see the answers 1st. Do you think the US economy will be stronger, weaker or about the same six months from now? So peering forward, it's kind of the end of the summer. Kids are going back to school. How is the economy? Is it? This and we want to see whether you sign more with the CE OS or sign more with the consumers. Yeah. So I usually wait until we get at least 50% of the audience recorded. So we're going to sit here and wait for that number to tick up. It's at 35% right now, 41%. We're getting closer. We have to be patient. Step on the gas. 45. Rev up the tachometer. That's right. The tachometer. There we go. All right, 52%. All right. So let's see what what are we, what are we hearing? Oh, OK. Well, do you think the US economy will be stronger, weaker or about the same six months from now? 17% said stronger, 70% said weaker, and 12.5 said about the same. So that's a pretty clear message from the audience. I don't know. So that would make them more consumer confidence. I think even worse than more optimistic than the average. Well, the sample, the sample period for this poll is today versus, you know, February 1 to 19 for the last, the last one, so. We should have made bets between us. Well, I mean that is that is our view as well. So we we didn't actually downgrade our forecast for the US economy this cycle for a lot of the reasons I think that we talked about. But what's what's maybe walk the audience through, you know, the thinking at this point. So the chart on the left hand side, these are the growth rates that we're projecting on a quarterly basis for for 2025. So we, you know, we're coming off of a pretty strong 2024 and that wasn't the expectation. Again a year ago, you know, we were there was a lot of recession, I mean it's cyclical almost. There was a lot of recession fears at the beginning of of 2024. It was our expectation that we're going to see some really significant slowing. And yet, you know, the consumer blew the doors off the economy last year. It's funny, you know, at present we're also seeing a lot of recession buzz. We do not forecast a recession. You know, we, we think a slow down in growth is more likely, as you can see. But we're we don't think we're kind of getting down into sort of the danger zone in terms of, you know, a stalling speed in terms of economic growth. And again, the uncertainty is a huge factor in all this, especially I think among maybe the consumer more than than CE OS. And you can see that in my version of the sort of policy and certainty index on the right hand side. Circling back to consumer confidence as you can see again, I want to just really walk us through all this future expectations now down below 80, which in the past has been indicative of a recession warning. But again, we saw that in 2024 and 2023 and we did not get a recession. But regardless, you know, we have had several months where we've had a downtick in the confidence numbers. And the difference between I think you know, now and and last year and the year before is that at least for the beginning of the year, for January, the personal consumption expenditures data, which is a broad gauge of U.S. consumer spending on both goods and services. Yeah, retail sales just really focuses on services. PCE is much broader. We saw downtick. So you know, one data point doesn't make a trend, but it was a sizable downtick and we noticed it and we wrote about it a couple of weeks ago and it is corresponding with that consumer a number being lower as well. So you know, it is our expectation that that we'll see, we're not expecting big contractions in in consumer spending in 2025, but relative to the rapid growth that we had last year, you know, with labor market conditions cooling off, wage gains slowing, you know, we don't we don't think that we're going to see the, you know, the Super charge consumer spending that that we saw over the course of the last one to two years. And then there's the debt, you know, element as well. You know, we've seen we've seen credit card debt rise quite a bit, auto loans rise quite a bit, incomes have risen too. So you have to kind of kind of put them in that context in terms of sort of a debt to income ratio, how much debt is sustainable of the the corresponding numbers in terms of defaults and in terms of being behind, I can't remember the frequencies delinquencies. Thank you, Stephanie. Those have risen a lot and that is that is concerning. And so, you know, for those reasons, we think that consumer spending is going to be a little bit lower. What about the stock market? Do you think it impacts spending or could they be a wealth effect if this continues? Absolutely. You know, especially again, the, the, the income groups with the highest exposure to the stock market are the upper income individuals who happen to also be the same people who are, you know, driving a lot of that spending these days. And so with the kinds of, you know, days like what we had, you know, yesterday or in the day before, day before more so that can have a psychological impact for sure. Yeah, I mentioned the labor market already, you know, currently, you know, we had the jobs report last week. We're kind of in a not too hot, not too cold kind of a place in terms of the labor market. We had a lot of tightness a year ago. I think we had 151,000 jobs added to the payroll and unemployment said about four point 1% companies are saying that they're more likely to sort of maintain their workforces as opposed to bringing necessary new people on a slight increase maybe in terms of of layoff probabilities. But I mean we're approaching a pre pandemic kind of a labor market, which is a good thing because it's been too, too tight and it's probably, you know, responsible for, for a fair amount of the inflation that we saw in the economy. I mean there's a lot of things that we responsible for that over the course of 2022 and 2023, but labor market tightness was a factor as well. And then as I also mentioned on the inflation front, we saw some progress this morning, not a lot, but a bit, you know the, the big, the big sort of improvements in inflation that we saw you know in in early 2024 through maybe the summer, those have really dissipated. It's a much stickier, slower sort of crawl towards Feds 2% target. The concern was in January, especially for the CPI. We did have a big uptick in the especially in the month over month CPI data was up like 0.5% month over month, which is a pretty big number. Today reported February down to 0.2, which was below expectations that the survey, you know, the, the market had priced in about 0.3. So it came in below that, but should make everybody a little bit happier and the Fed happier too, because the Fed is sort of in a bit of a pickle. They raised, I'm sorry, the cut rates three times towards the end of last year. Monetary policy has sort of been on hold. the Fed is waiting to see additional progress on inflation before it brings interest rates down even further. So, you know, interest rates are still in sort of restrictive territory. They're still high enough to sort of tap the brakes a little bit on economic activity and, and, and in doing so bring inflation lower and the Fed would like to lower them more, but it has to wait for the inflation numbers to get closer or more sustainably moving towards again that 2% target. As I mentioned, we, we did raise our inflation forecast a little bit for this month. We think especially over the course of Q2, we're going to see an uptick in terms of year over year core PCE inflation that's largely associated with some of the tariffs that, that we've been talking about. But we don't think that that is going to necessarily last. We are we are expecting again inflation potentially to moderate towards the end of the year and into 2026. So that should mean that the Fed would hold off on, on lowering rates even more because inflation is is moving kind of in the wrong direction. But at the same time, we also think that the economy is going to weaken and the labor market's going to soften potentially as well. And so the Fed has a full mandate they have to address inflation and, and also labor market and, and sort of, you know, growth issues more broadly that keep an eye on that. If they start to see the economy weaken while the same time inflation goes up, there's a word for that. It's called stagflation or stagflationary maybe. And that is the Feds sort of worst nightmares. The central bankers hate stagflation because they don't know it's very difficult for them to address it. So Long story short, we are increasing our inflation forecast, but simultaneously decreasing our GDP forecast for for 2025. But we're maintaining our Fed call. And so you know, we're, we're expecting to see three cuts this year, one in July, 1 in September and one in December. So 75 basis points of easing as the Fed kind of grapples with with this issue. Just briefly, and I think I touched on this, we touched on this last month. We did make, you know, one of the other reasons that we made the downgrades was some of the tariffs that we're seeing. We've been running a lot of models on these in terms of what if, what if 25 on China, what if 25 on Mexico? What if both at the same time? What does that mean for growth? What does that mean for inflation? So we do have 20% on China at this point. These are real tariffs that are going to have an impact depending especially on how long they last for and what the corresponding tariffs are from China. So these, these sorts of models are, are working their way into our forecast as well in terms of trying to, you know, to get a sense of what is this going to mean? Is it going to last for 1/4 or four quarters? How much of, of this impact should we incorporate into our forecast? There's a whole paper on this that we published. I really recommend you go by the website and have a look because I could talk about this chart for way too long and keep you here for another half an hour. So this is the finalized forecast for the full year. We're down grading USGDP from 2.3 to 2%. So 3/10 of a percent lower. Also for 2026 are bringing it down from 1.8 to 1.6. So 2/10 of a percent down downgrade for for 2026 as well. A lot of that is represented in the the consumer spending numbers. You can also see the inflation numbers are up a little bit. We increased our unemployment forecast to 4.4% towards the end of end of this year, but there is no recession in these data. We do not forecast the recession. We don't think it's on on our front stoop, but it certainly is a possibility. We'll continue to watch what happens. We just don't think it's probable at this point. So that is the US forecast. I have two minutes left. I did this to myself. Here's the global forecast, a variety of upgrades and downgrades. I already mentioned the US, that's the the stack of bars on furthest on the left, slight improvement in terms of your euro area growth, especially in 2026. Japan, we're expecting improvement. They had a very unpleasant 2024. So we're expecting to see growth kind of slingshot forward to maybe about 1.4%. We changed our China forecast as well. We had been at 4.5% for 2025. And, and certainly we, we have economists in Beijing who, who sort of are responsible for this forecast. They're concerned about the tariffs as well. But also we just had a very big meeting of a political meeting in Beijing. Growth target was announced for 2025, which is 5%. That's the official government growth, growth target. And also about 3.4 trillion RM BS worth of stimulus was announced at the meeting as well. And so the thinking is, is that this volume of stimulus is going to more, you know, it's going to be able to offset a lot of any, you know, damage that's done by the tariffs. So that resulted in a slight increase in the forecast for 2025. We're still at 4.5% for 2026. In general, for the whole global economy, we expect deceleration. These are the chart. The bars on the right hand side for last year growth is estimated to be about 3.2%. It's actually a little bit higher than we thought it was as we get some of some additional national accounts data in from some of these country. But we're expecting that to slow to 3.1 and then to about 2.9% in 2026. So with a minute spare, we got through all the slides. So we'll wrap up now window on is coming up. We're, I think Alex is going to be talking about that. He he's going to talk about future of critical minerals. We have an economy and watch of course next month. I don't have a topic for that yet, but we will send the details out over the next week or two. Navigating Washington. This is a new initiative at the Conference Board. We've been throwing a lot of of research hours trying to help our members understand what is going on in DC. And what are the implications for their business? So please go by the website and have a look at that as well. And then of course, all the great work that Stephanie and Alan do, consumer confidence, growth trackers, LEIS, CEO competence, these are all data that come from not just the Stephanie and Alan, but a couple of their colleagues as well. So keep an eye on that. Out of time, Stephanie. Thank you so much for coming. Thanks for having me. Alan, thanks so much for coming. That was great. I'm definitely going to have you. Go back. Thanks SO. Much and thank you for sticking around for a full hour. We'll see you next month. Take care. _1742882487219