Justin Lahart
Appearances
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
So these measures of uncertainty, they've risen to the highest level ever except for COVID. And what this type of uncertainty does is it makes it very hard for businesses to plan.
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
Yeah, a lot of it is just keeping our ear to the ground on the news, watching what companies are saying in conference calls, looking at basically every front page in the U.S. There are some very good measures of uncertainty taken from textual analysis of newspapers. Those have really shot higher. We're looking at consumer confidence measures.
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
The Michigan sentiment number, for example, has deteriorated significantly. And we're looking at high frequency spending data, data from places like Bank of America, what are their customers doing with their card purchases? So we're seeing softness all around. And there's a real question of what that is going to turn into.
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
So these measures of uncertainty, they've risen to the highest level ever, except for COVID. And what this type of uncertainty does is it makes it very hard for businesses to plan. And we're also seeing that in comments from businesses. We're seeing that in surveys that are taken by Federal Reserve Banks and others. People are quite forthrightly saying tariffs. We don't know what's happening.
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
We're not sure how high the rates are going to be, what they're going to be on, where they're going to be. So even a business that is maybe excited about Trump's deregulatory agenda, it makes it very hard to say, well, OK, where am I going to hire people? Where am I going to invest? And that can freeze things for a moment. And that's not good for the economy.
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
So we have seen these measures of consumer confidence deteriorate, especially when it comes to asking consumers about what they think about the job market. If they think unemployment is going to be going up, that is often a sign that consumer spending is going to flag a bit. And we have seen that people are worrying more about the job market.
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
Some people obviously are quite worried if you're a federal worker. Many of them have lost their jobs. Many of them are worried that they're going to lose their job.
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
So the job market is really important. It also tends to lag a lot of the things that happen when a recession hits. So by the time the job market has really cracked, it's game over. But when people start worrying about the job market, when you start to see it fraying a little bit, that can cause problems with consumer spending, right? And that can, of course, have a snowball effect, right?
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
Once you rein in spending, then businesses aren't making more. Walmart, for example, has said that people are buying smaller package sizes. That's often something that they do if they're worried about their money running out. We're even seeing people are buying more little liquor bottles instead of the big ones, right?
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
That's, again, something that people do when they're starting to worry a little bit about what's going on. The transportation sector looks like it's having trouble. Plane tickets are an especially tough sell. Delta Airlines cautioned of that last week. The good news so far is the February job report was good. It was solid. And also, importantly, jobless claims.
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
These are initial jobless claims for people filing for unemployment. Those have stayed low. And typically what we see when things get quite bad, when a recession is hitting, you see those really start to move up.
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
You always have to be careful with recession calls. There are always things that can go wrong and it is easy to cherry pick and decide that the world is going to end and it doesn't. The U.S. economy has been very dynamic, has been very resilient. If you remember during the Biden administration, people were sure, they were certain that a recession was coming and nothing like that ever occurred.
WSJ What’s News
Trump and Putin to Hold Ceasefire Talks
This could be a repeat. So what's really important is watching all of these indicators, not just ones that might fit with our personal narrative, to really understand what's going on. And that's what we're trying to do.
WSJ What’s News
U.S. Stocks Fall Sharply as Consumer Sentiment Sours in March
A lot of it is just the headlines that you've been seeing. Tariffs, government layoffs, spending cuts, maybe immigration restrictions. You also have to consider with these measures of sentiment, they ask you, how are you doing? What are you seeing out there? So they can pick up things that maybe are happening on the ground that we're not seeing in the main economic data as of yet.
WSJ What’s News
U.S. Stocks Fall Sharply as Consumer Sentiment Sours in March
We're going to be watching any kind of spending report, any kind of sales data. We definitely have seen some weakening in those measures this quarter so far. There was a decline in spending in January. People chalked that up to weather, to the Los Angeles fires. People thought, oh, you know, it's going to bounce back. It did bounce back a little bit in February, but not that much.
WSJ What’s News
U.S. Stocks Fall Sharply as Consumer Sentiment Sours in March
So we've seen economists are marking down their forecasts of gross domestic product. Morgan Stanley, for example, they're at 0.4 percent growth for the first quarter. That's pretty weak. So these surveys may be telling you something about what's happening.
WSJ What’s News
Grocers Try to Hold Prices Steady as Tariffs Threaten Produce
The expectations component of the University of Michigan Sentiment Index is really the most predictive when it comes to future spending. And we saw that expectations really deteriorated across the board. Even Republicans were feeling less cheery. It doesn't mean that people are going to stop spending just because they're feeling a little down.
WSJ What’s News
Grocers Try to Hold Prices Steady as Tariffs Threaten Produce
However, you do have to be a little bit more worried about consumer spending in the months ahead than you might have been before this number came out.