A MARTÍNEZ, HOST:
Now that the Thanksgiving table has been cleared, retailers have their eye on Christmas, but a lot of shoppers are a little uneasy this year. A report this week from the Federal Reserve suggested consumer spending dipped since the last Fed meeting in October. It seems only wealthy shoppers are dropping cash all over the place. In a few minutes, we'll hear from one of the members of the Fed, who is considering all this data as the central bank decides what to do about interest rates. First, though, NPR's Scott Horsley is here to sort out the good, the bad and the lingering question marks in today's economy. Scott, we've heard from lots of people who aren't feeling too thankful about the economic situation right now. But is that rumble being felt and heard at the White House?
SCOTT HORSLEY, BYLINE: It is. Consumer confidence has dropped to its lowest level in seven months. There's a lot of grumbling about high prices, tariffs and political dysfunction in the wake of the six-week government shutdown. And that gloomy sentiment is weighing on the president's approval rating. A Fox News poll last week found 3 out of 4 people have a negative view of the economy, and most blame the president. That does have the administration on the defensive. In an interview with Breitbart last week, Vice President JD Vance urged people to be patient.
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JD VANCE: My message to the American people who are still feeling like things are unaffordable, who are still feeling like things are rough out there, is, look, we get it. And we hear you, and we know that there's a lot of work to do. There's a lot of wood to chop.
HORSLEY: But there's not a lot of faith right now that patience is going to pay off. In that consumer confidence survey, people across the political spectrum said they think economic conditions will be worse six months from now, not better.
MARTÍNEZ: Wow. Worse, not better. What are people worried about?
HORSLEY: Well, partly it's the job market. You know, the jobs report we got last week was not terrible. It showed hiring in September was stronger than expected. But it also showed hiring in July and August was weaker than we had thought, and the unemployment rate has been creeping up. Course, the other big worry is the cost of living. You know, beef prices are up. Electricity prices are up. Inflation has been steadily climbing since the president announced his worldwide tariffs back in April. You know, after Republicans took a beating in the elections earlier this month, we actually got a tacit admission from the White House that tariffs do raise prices. The administration agreed to roll back some of its import taxes on things like coffee and bananas. But right now policymakers at the Federal Reserve are divided over which of these two things is the bigger concern - the softening job market or stubborn inflation.
MARTÍNEZ: Scott, the president loves to tout and talk about the stock market - hit record highs this year - but I've always wondered what the stock market has to do with the actual economy.
HORSLEY: Well, that's a good question. You know, the stock market is doing well. Even with some of the recent ups and downs, stocks are up for the year. The Dow's up more than 9% since Trump went back to the White House. The S&P is up more than 13%. But most of those gains flow to the wealthiest Americans who own the lion's share of stocks. And Fed Governor Chris Waller says wealthy people are also doing the lion's share of the spending right now.
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CHRIS WALLER: While the booming stock market is supporting spending by a narrow band of well-off consumers, it does not reflect financial conditions for most Americans. And that is a vulnerability for the economy.
HORSLEY: We've been hearing from a lot of restaurants and retailers that low- and middle-income families are much more cautious about their spending right now, which is, of course, a challenge for those businesses. And because personal spending's such a big part of GDP, it could be a challenge for the broader economy as well.
MARTÍNEZ: All right. So that's personal spending. What about business spending?
HORSLEY: Businesses are spending a ton of money in one area, and that's artificial intelligence. You know, that is propping up GDP, but some skeptics are starting to wonder if all that massive investment's ever going to pay off. And if it does, whose jobs might be eliminated in the process?
MARTÍNEZ: That's NPR's Scott Horsley. Scott, thanks.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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