Market briefing --- Matt (slow)
Interview:
Council on Foreign Relations --- Sperling, Gene --- Analyst
>> welcome back, folks. it’s called the “world financial report” and i’m called matt nesto and i host this show. we’re going to recap the day that was on wall street. not much to speak of with the dow and the s&p today. the big story, the nasdaq down over 1% today and all three of those benchmarks down for the fifth week out of the past six. interesting story in treasuries, though. they rose today because economists were wrong and so were traders. economists thought inflation was going to be lower. traders feared it was going to be higher and bonds rally as a result. if you take a look at the currency trading here today, the dollar mixed. you see you buy less yen for your dollar. the euro up against the dollar. the dollar down there. and the pounds down also against the dollar. new economic data out today reinforces expectations that the fed could start raising rates perhaps as soon as june. consumer prices rose amid higher costs for travel and medical care and consumer confidence came in slightly lower than expectations. bloomberg contributor and former clinton economic adviser as well as current kerry campaign economic adviser joins us now for a political and economic look at today’s news and numbers. gene, what do you make of today’s consumer price index information as juxtaposed with yesterday’s producer price index data?
>> today was somewhat of a mixed day. buff i think overall if there was something big about today it was there were, as you mentioned, some fear in some parts of market that maybe we could get a number on inflation that was well above what was expected. and i think that would have increased some fear that the fed might at some point make a 50-basis point move. the fact that it came in relatively as expected, actually lower than expected with core a little higher than expected, i think on the whole was calming. but as you mentioned, it wasn’t a completely good day because consumer confidence, particularly about the future, remains stubborn. it actually dropped some, which is, you know, again not what you might expect when you’ve had two months of fairly strong job growth.
>> not what you would expect, no question about it. at the same time, i put together a graph here that goes back with consumer confidence, all the way back into 1978 and the redline in the middle is a 75 level. i apologize, gene. you probably can’t see this. the real littlety is where we’re at now, even with the different dips and doodles that we’ve seen, consumer confidence running in the mid 90’s is still at close to an all-time high, except for one blip that we saw for the bush administration and far away from what we might call the third rail of danger in terms of consumer confidence, which is seen incumbents not being able to maintain the white house and that is a reading down around 75 or lower. do you think confidence would possibly have to sink to that level?
>> no, i think what has to be, you know, turning a political side has to be very discouraging for the bush administration is that the reason why the consumer confidence stayed flat today was that current conditions actually got a little better. perhaps representing the job numbers that it strengthened the last two months. but sentiment about the future falls. and it’s at quite a low level. and what that is showing is that even though some of these headline numbers are doing well, the long period of a weak job market , some of the more pressing issues affecting people, higher gas prices, higher health prices, higher tuition prices, and perhaps just anxiety over iraq, is preventing people from getting the brighter prospect for the future which can have certainly economic effects. but it can also have political impacts as well.
>> you said i. it’s also given the kerry campaign a towhold in an otherwise improving economy. most people would agree that the economy is adding jobs and is improving by almost all measures. that has been a very hard point to campaign on the economy until things like gas prices in the very near term have come along.
>> well, you know, i think that both sides will have their arguments. obviously the bush administration will focus on recent improvements. senator kerry’s clearly going to run more on what the performance has been over the last few years. but i think what―what’s probably giving some confidence is that is his view is that the typical family is still feeling squeezed, is still feeling pressed and we in the clinton administration in 1993 and 19 9 4 went through really 19 9 5 as well went through two or three years where the economy was improving in almost every measure and yet optimism about the economy didn’t really set in until early 1996. so, what looks good on your headline numbers and what translates into americans feeling more optimistic about their economic future are not always the exact same thing.
>> presumably, though, the fact that the price of gasoline is going to become a hot issue in the summer, there must be some sense of relief to have a great economic towhold to campaign on within the kerry campaign.
>> well, i think it fits into a general theme senator kerr riff has tried to do, which is―as you remember, we released the middle class misery index. the point there was to say to people look at what’s happened to your income. it’s been flat. a lot of people have taken jobs that are paying less. look at your health care, look at your education, look at your energy costs. it does fit into an overall approach that says we’re not going to just look at what the headline job numbers are. we’re going to ask people sitting around their kitchen tables, are you feeling more squeezed now? so, the higher gas prices do certainly fit into that critique. it also allows senator kerry to engage on an actual policy issue -- energy as well as health, where there are differences between the two camps.
>> gene sperling, thank you very much. folks, he’s an advisory to john kerry’s campaign and bloomberg contributor. stay with us.
