January consumer sentiment, pending home sales add to swirl of economic data

Yahoo Finance Live anchors break down January consumer sentiment data.

Video Transcript

BRIAN SOZZI: Julie, over to you, breaking news on the econ front.

JULIE HYMAN: Yeah, we got the University of Michigan's Consumer Confidence Sentiment Index for the final read for January. 64.9 is where we find that headline number, which is a little bit above the prior reading. 64.6 was the last reading we got here. Current conditions, 68.4. Expectations coming in at 62.7. And inflation expectations have come down just a whisper of a touch to 3.9% from the initial read at 4%. So these numbers look like consumers are feeling pretty good here, which is interesting. The short run economic outlook, according to the statement here, was relatively unchanged from last month, but all other components of the index did increase in January.

And this is really interesting. I mean, I do want to mention pending home sales in a second, too. This is all very interesting, as we try to get a more complete picture of what's going on with the consumer. On the one hand, we had December personal spending fall. On the other hand, we had all the car makers-- card makers, credit card makers, that is, say that volumes were up, although they missed estimates. So, like, it's just a confusing time right now when we try and put all this together.

And then put pending home sales-- throw that into the mix as well-- down 34.3% in December on a year over year basis, up 2 and 1/2% on a month over month basis. Are you confused yet, guys?

BRIAN SOZZI: Yeah, well, I just wanted to get to this consumer sentiment nugget, Julie--

JULIE HYMAN: Go ahead.

BRIAN SOZZI: --besides pending home sales. So in the sentiment survey, they're noting 2/3 of consumers, Brad, they expect an economic downturn the next year. So not exactly bullish.

BRAD SMITH: Yeah, well, here's one of the other notes that's within this. And it comes back to something that is going to have an even more outsized impact to how quickly we may enter into a recession, and that is the debt ceiling. The debt ceiling looms ahead and can reverse-- at least, this is what the survey of consumers from the sentiment report is saying. It could reverse the gains seen over the last several months. Past debt ceiling crises in 2011 and 2013 actually prompted steep declines in consumer confidence.

JULIE HYMAN: Right, that's weird.

BRAD SMITH: Yeah.

JULIE HYMAN: Is that not weird?

BRAD SMITH: I-- is-- wait, what?

JULIE HYMAN: Why would the debt ceiling debate affect consumer confidence? We know they're going to figure it out in the end.

BRIAN SOZZI: Because maybe--

JULIE HYMAN: It's just going to take them a while.

BRIAN SOZZI: Maybe the US defaults on its debt, interest rates go up, and nobody can go out to eat, Julie.

JULIE HYMAN: I'm sure that that's exactly--

BRAD SMITH: But this is--

JULIE HYMAN: --how consumers are thinking of it.

BRIAN SOZZI: I mean, that's how I think of it.

JULIE HYMAN: I don't know. That's surprising to me.

BRAD SMITH: This is a much more theatrical type of Congress than we've seen before, though. And for--

JULIE HYMAN: I guess so.

BRAD SMITH: --all of the political posturing--

JULIE HYMAN: We've seen some pretty theatrical congresses.

BRAD SMITH: Yeah, we have, but this one is like the Greatest Showman type status here.