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-- Despite five your -- -- consumer confidence consumer spending.
-- for the first time nearly a year in April and backtracking a slight drop also in wages joining us now RBC capital markets chief economist Tom were selling.
-- -- mixed data that we've gotten out once again one piece of good news is that consumers are spending.
Little less on gasoline but what are your overall thoughts on the economy right now just.
It seems pretty obvious at this point that the -- the economy has lost a little bit of momentum here in the second quarter particularly from a consumption perspective.
We know that Q1 was a blowout because -- -- way to describe it was came in about 3.4 percent.
From consumption perspective in Q2 -- looking for that I've referred to cut nearly in half -- for a one and a half percent.
Consumption outcome the important thing to remember I think particularly -- relates to that to the first quarter number.
The only reason why the consumers it would grow consumption where hey -- such a sort of frothy rate.
But because of a massive draw down in the savings rates -- great went from about 5% in the fourth quarter to about two and a half percent in the first quarter.
And that enabled the consumer -- to really drive spending that's obviously not fundamentally sound we are you are not happy to see something like that.
And what we know now here in the second quarter is that the income -- shrunk a bit.
As a result of that we think that the consumer will probably -- building back seems a bit.
And that they really explains why you we should be expecting more of a softer outcome in the second quarter.
Right I want to talk about what we've been seeing from the Fed -- -- you're talking about him.
Economic numbers that better showing that consumers are spending -- when they are spending -- they're not -- we're seeing the savings rate as you noted.
Dropping her people are digging into savings in many cases just pay some of the basics so the idea that -- fed may.
Stop with the bond purchases it sooner than later do you think that's going to happen or not necessarily right.
You know so I.
I what I loved it loved the city people as I think that people sort of they have been giving exact date to when it's gonna happen this is literally a dart throwing contest I mean it's hard to say.
Precisely when the Fed will.
At -- CL -- sooner or later.
And I know they'll have an hour later.
Sure well but how useful that from a market which isn't true perspective and -- you say in five years it means that sooner or later I mean I think you need precision.
And what I would actually argue is that would you want to look at is.
A handful of employment metrics.
And once those become a bit more stable.
That's when the Fed will actually start to scale back -- asset purchases we believe that that's actually at the end of this year.
That's when the federal -- to scale back asset purchases they'll continue to scale back over the course of call it anywhere between six and nine months.
And then at that point they'll actually stopped the process I think the important point -- you need a stabilization and in -- economic data and as you pointed out.
The data have been very and even now get an uneven at a 2% clip it's not that we're following up to click here anything right but I think it's beyond even -- -- keeps defending gauged.
It's a ten year bond I mean that's something that we've been getting has been running up but it's it's completely different situation a -- time.
That we sought at these levels number one is set a different situation a number till you don't think it's a one way path opt for the ten years.
Yeah no I think it's actually accurate and if you look last.
Last I'm a few -- -- in March we actually were in sort of the same vicinity in terms of tenure yields.
Both interesting is -- you'll Verizon over that period you actually -- that was accompanied by a rod by an improvement in the economic data.
That is largely absent today again our interest points clear I'm talking about as sort of -- -- even backed up still around it 2% pace.
Nevertheless the data have been very uneven that's very different don't we saw last time ten year yields rose so.
What we would actually say is if you want this -- big deals to get a little bit attraction here.
-- continue to Roger -- that's going to need to be accompanied by an improvement economic data.
Instead of it moving sideways which is what to -- what it can do over the course of the last couple weeks RBC chief market economist we appreciate it -- -- selling and thanks guys.
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