Dana Peterson, The Conference Board Chief Economist, joined Yahoo Finance Live to discuss the lastest consumer confidence data and her outlook for the economic recovery.
- We're going to shift gears, though, because this kind of issue does have an impact, at times, on consumer confidence. And to help us better understand where can-- the consumer confidence index is right now, we invite into the stream Dana Peterson, the Conference Board's chief economist. Good to have you here, and we appreciate it. The confidence-- the consumer confidence index is at 109.7, whereas it had been revised to 90.4 in February. Before we ask you about the impact of everything that's happened just in the last week, explain to us what that means, those numbers that I just quoted.
DANA PETERSON: Sure. These numbers mean that consumers are the most confident that they've been since the pandemic. Well, since we realized there was a pandemic that was hitting the United States last year. So it's the best number in a year. And we saw improvements not only in the overall headline figure, but certainly current conditions were improved, and also expectations were a lot better. Consumers are anticipating that businesses will do better over the course of the next six months or so, and consequently, that's a positive for job prospects.
- Dana, what do you attribute this to? Is it-- are we seeing this jump in consumer confidence, is it all related to the reopenings and the higher vaccination numbers?
DANA PETERSON: We think it's a combination of several things. Indeed, you've had restrictions on mobility lifting. I'm here in the tri-state area. Governments are saying that you can go out, you can get vaccinated. Certainly, the vaccination process throughout the US is much better than many other economies. And so we think that that's also raising confidence. But also, our survey happened just before the passage of the third fiscal support package. And so potentially, anticipation of another round of stimulus checks also helped to bolster expectations. But all in all, consumers are a lot happier than they are now. And they're looking forward to really capitalizing on an expanding economy as we get into the second, third, and fourth quarters of this year.
- We just devoted the first 10 minutes of our program to a discussion that, for some people, might be kind of wonky Wall Street, but for someone like you, you understand the big picture. Does the consumer who's part of the consumer confidence index get motivated one way or the other when this kind of situation happens with a hedge fund that essentially blows up?
DANA PETERSON: Well, I think most consumers in the US actually don't own these types of assets. But I would suggest that, for those who don't own stock-- and many people don't-- that a lot more people actually own homes. And this morning, we learned that the Case-Shiller home price index reached the highest we've seen probably since the housing bubble. 11.5% year-on-year growth, I believe, was the reading. And so for anyone who owns a home-- and that's a lot of Americans-- that certainly is a positive in terms of seeing that asset improve.
But I would also suggest that, for people who don't own homes or even own financial assets, that certainly the jobs prospects outlook has improved. And certainly as governments are reopening and allowing businesses to get back to normal, that's a plus. That means many people who have been sidelined over the last year in in-person services are potentially going to be rehired. And also, people who have struggled are going to receive, potentially, another check, especially persons in the lower and middle income households. That can all contribute to consumption, certainly, again, heading into the second quarter, and ramping up even more so in the second half of the year.
- Dana, there's still so much uncertainty out there. We're getting the jobs report out on Friday, the March jobs report, or looking back to the February numbers, I should say, that we got in the beginning of March. We made some progress, yes, but we still have the labor force participation is dropping for men and for women. That has been falling. 9 and 1/2 million Americans still remain out of work compared to a year ago. What's your best guess on where we're going to be, say, just around six months from now?
DANA PETERSON: Sure. I would say that we'd definitely be in a much better position six months from now. Look at jobless claims. They're almost close to where we were pre-pandemic. I mean, that is just astounding after the heights that we saw the number of people were filing for unemployment. Also, we're expecting not 7% growth this year in the US, but potentially 5.5% growth. And there's upside risk, clearly, to that, as many other economists have 6% and 7% growth rates. And all of that's going to be positive and constructive.
Again, when we look at our CEO confidence index for the US, it's at a 17-year high. So that means businesses are excited about what's going to happen. And that means that they're most likely going to start hiring people back and drawing those people who have left the labor market, at least some of them, back into the labor force. And also, just getting back to consumers, in our survey, we found that consumers are thinking about purchasing cars, homes, big-ticket items like appliances. You're not going to be-- you're not going to think about purchasing those types of things unless you believe that the economy is going to continue to improve, and that you are going to keep your job, and also, if you don't have a job, that you're going to get that job back.