00:00As well with Michael McKee, Bloomberg TV and Radio's international economics and policy correspondent.
00:04He is in our Bloomberg News D.C. Bureau and here with us in New York, Bloomberg News economics editor Molly Smith.
00:09Mike, let me start with you. This is an impossible task to synthesize these many pages just a few minutes after across the Bloomberg.
00:15But what are your takeaways? I think back on the last page book that we got.
00:19And, you know, I think that the broad indication I remember is how there's flats declining consumer spending because for many households,
00:26they were worried about the path of the economy, worried about these tariffs and the effects they were going to have going forward.
00:31Picking up on the headline, Carol just read a moment ago. Sounds like we're seeing more of the same here with this iteration.
00:36Yeah, pretty much. You asked how consumers and companies are feeling.
00:40I think the word would be meh. Economic activity slowed and we saw hiring basically flat, according to the beige book.
00:48Nobody's really going out and adding employees.
00:50There is some sign, according to the beige book, that companies are increasing the pace of layoffs and some are adopting more technology, they say.
01:00I guess a word for AI. Prices rising a little bit because of tariffs.
01:06And there are concerns about spending, which is slowing consumers starting to pull back, with the exception of autos,
01:14which the beige book says was driven by people trying to buy electric vehicles before the end of the tax credit at the end of September.
01:21So right now it looks like the economy is still moving ahead.
01:26But there's you get kind of a different picture.
01:28And I'll be interested in Molly's view on this from this beige book and what it's saying.
01:33And the Atlanta Fed's GDP now number for the third quarter, which is about three point eight percent.
01:39I think what stood out to me here is just this continued observation of this bifurcated economy between high and low income consumers.
01:49And that's what the beige book noted here is that higher income spenders were still going out buying luxury travel and accommodation,
01:57that those kinds of categories were still strong, but that lower and middle income households still seeking discounts and promotions in the face of rising costs.
02:05So this is like just a very much like something that we've been seeing for.
02:10It feels like I mean, this is pretty much to me what has defied every recession call that we've had for like the last two years.
02:16It's that high income households are increasingly making up the share of overall consumer spending right now.
02:23It's I think just right about 50 percent.
02:25Yeah, it's a big deal.
02:26You know, it's funny because I was thinking about LVMH came out, I think, with their results and their shares surged,
02:31suggesting that maybe that slump and luxury demand is easing because we have seen it in the space.
02:37Having said that, Molly, we're in this kind of void a little bit when it comes to government data.
02:42Right. We are expecting, though, the CPI print, I think, later this was supposed to be today.
02:46Right today. It was supposed to be.
02:49But in the absence of that, I compiled for you all of the other private sector.
02:53Thank you out there. You're so welcome.
02:55There aren't that many, though, honestly, which is something that Powell had observed yesterday when he was speaking at the NAEP conference,
03:03that unlike the job market, we have so many private sector alternatives there to see what's going on with labor demand,
03:11with hiring, with wage growth, inflation, not so much.
03:14So there are a couple of companies that compile price growth throughout the U.S.,
03:20but it really is biased toward the good space that don't do as good of a job looking at services inflation.
03:26There are a couple of companies that specialize in housing inflation in particular,
03:29but they don't really get the overall view.
03:32So if we're really looking at just what goods inflation seemed to do in September,
03:36you definitely did see some signs of tariff pass through in certain categories.
03:41But in general, a lot of these economists are saying that the expectation is still that inflation will eventually level off.
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