Consumer confidence slides to 12-year low

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Kai Ryssdal (1:00)

If not jobs, and if not bonds, then what?

From American Public Media, this is Marketplace.

In Los Angeles, I'm Kai Ryssdal. It is Tuesday, today, 29 September. Good as it always is. Have you along, everybody. I know, I know, I said yesterday, the big through line this week was the labor market. Well, that and bonds, but we are gonna give bonds a break today. And we are gonna get to the labor market, but we are going to start instead with a different A-list economic indicator, gross domestic product. Tomorrow morning, the Bureau of Economic Analysis is gonna tell us how much the economy grew in the second quarter. This will be the Bureau's third and final estimate of that number. It already reported the economy grew at an annualized rate of one and a half percent April through June. So we are just gonna get ahead of the news and have a look at what we know about how much the economy is growing right now. Marketplace's Justin Ho gets us going.

Justin Ho (2:14)

GDP is a measure of how much output the economy is producing, and the BEA tallies it by looking at who's buying all that output.

David Kelly (2:21)

So is it consumers? You got consumer spending. Is it businesses doing investments? So that's investment spending.

Justin Ho (2:27)

That's David Kelly with JP Morgan Asset Management. GDP also includes government spending and net exports. But Kelly says the first part of that list, consumer spending, has been resilient lately, partly because of the bigger tax refunds people got this year.

David Kelly (2:41)

And then there's also just this wealth effect. We're just coming up on the fourth year anniversary of a massive bull market in stocks, and that has generated a lot of wealth, making for a very resilient consumer.

Justin Ho (2:53)

Then there's investment spending. Bernard Yeros with Oxford Economics says businesses have been investing a lot in inventories.

Bernard Yeros (3:00)

When you look at a lot of the survey data, businesses are saying that their inventories are quite low, which means that they need to restock.

Justin Ho (3:08)

Yeros says there's also been plenty of investment in AI, spending on data centers and all of the equipment that goes into them. But he says a lot of that spending is boosting GDP more in Taiwan and Korea and other countries that make that equipment.

Bernard Yeros (3:22)

I just think we have to be careful not to overstate the benefits to growth in the economy because a lot of the AI spending by businesses is imported from abroad.

Justin Ho (3:35)

A lot of the factors that are powering growth right now also might not last. Matthew Miskin with Manulife John Hancock Investments says consumers might not keep spending the way they have been.

Matthew Miskin (3:45)

The tax cuts are going to be hard to replicate. Consumers are dealing with higher oil prices and higher mortgage rates at the same time.

Justin Ho (3:52)

And consumer spending depends on a strong labor market. Miskin says for GDP to keep growing at a steady pace.

Matthew Miskin (3:58)

I think you need to see broadening of the job gains. I think you need people that are moving up the job corporate ladder. I think that's really hard right now still.

Justin Ho (4:07)

Miskin says he expects GDP to pick up in the third quarter and slow down in the fourth. I'm Justin Howe for Marketplace.

Kai Ryssdal (4:15)

OK, as promised, and as the end of Justin's piece there sort of alluded to, the labor market, about which we got the first of the week's big reports this morning, the job openings and labor turnover survey, say it with me now, Jolts. It was pretty steady, low hire, low fire, if you will. The number of people hired last month was up just a touch. The number of people who quit their jobs or were laid off was pretty much flat. Marketplace's Stephanie Hughes has more.