Tags: Faraci | consumer | confidence | Furman

Intl Paper's Faraci: 'Anxious' Consumers Are Slowing Economic Growth

By    |   Thursday, 19 December 2013 08:17 AM

Consumers' lack of confidence is inhibiting U.S. economic growth, says John Faraci, CEO of International Paper, told CNBC.

Even though the economy is "uneven and choppy," he noted, "It feels like 2 percent GDP growth.

"One month [consumers] feel good. One month they feel anxious," Faraci stated. "As long as the consumers feel that way, I think you're not going to see the kind of sustained consumer spending it's going to take to get this economy going, which is going to create the jobs."

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Considering International Paper is a leader in its industry, with 95 percent of all goods being shipped in its corrugated cardboard boxes, his evaluation of the economy carries a lot of clout.

Faraci believes consumer spending, which accounts for approximately two-thirds of the U.S. economy, was "a little bit better" in November.

Demand from consumers is the most important piece of the economic recovery puzzle, he told CNBC.

"I'm not a pessimist about the economy. I think this economy has the potential to grow at 3-plus percent. If it does, it solves a lot of problems. It makes the whole economic pie bigger," Faraci noted.

Faraci said tapering of the Federal Reserve's quantitative easing, which was announced Wednesday, will aid in spurring growth.

Jason Furman, chairman of the White House Council of Economic Advisers, believes the economy will end the year strong.

Americans have reason to be optimistic, Furman told CNBC.

"We've been through a many-year process of deleveraging. And if you look at interest payments as a share of income, they're now at very low levels. I think that's one of the best signs that consumers are poised to spend more and have a stronger year in 2014."

Both Faraci and Furman agree that in order to drive consumer spending, Americans need more money in the form of wage increases or hanging on to more of what they make.

The Confidence Board's Consumer Confidence Index fell in November after falling sharply in October.

“Consumer confidence declined moderately in November after sharply declining in October. Sentiment regarding current conditions was mixed, with consumers saying the job market had strengthened, while economic conditions had slowed," said Lynn Franco, director of economic indicators at The Conference Board.

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Consumers' lack of confidence is inhibiting U.S. economic growth, says John Faraci, CEO of International Paper, told CNBC.
Faraci,consumer,confidence,Furman
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2013-17-19
Thursday, 19 December 2013 08:17 AM
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