1 00:00:00,840 --> 00:00:03,840 Speaker 1: You're listening to Taking Stock with Kathleen Hayes and Pim 2 00:00:03,920 --> 00:00:08,640 Speaker 1: Fox on Bloomberg Radio. Where is the economy heading? Is 3 00:00:08,640 --> 00:00:12,560 Speaker 1: it heading for an interest rate increase in December? Or 4 00:00:12,720 --> 00:00:15,560 Speaker 1: is it going to have to wait and see. That's 5 00:00:15,560 --> 00:00:18,160 Speaker 1: why we're so happy to welcome back Ken Goldstein. He's 6 00:00:18,280 --> 00:00:20,800 Speaker 1: economists with the Conference Board to take a look at 7 00:00:20,840 --> 00:00:24,960 Speaker 1: the Leading Economic Indicators Index put together by the Conference 8 00:00:24,960 --> 00:00:27,640 Speaker 1: Board every month. It's been had a bit of a 9 00:00:27,760 --> 00:00:30,280 Speaker 1: rocky road. It was up at zero point five last month, 10 00:00:30,480 --> 00:00:33,400 Speaker 1: down zero point two. If you look out and sort 11 00:00:33,440 --> 00:00:36,520 Speaker 1: of average where it's going. It continues to uh point 12 00:00:36,560 --> 00:00:39,199 Speaker 1: towards growth. The question is how much? And the question 13 00:00:39,280 --> 00:00:42,120 Speaker 1: big question there enough for the Fed? So can let's 14 00:00:42,159 --> 00:00:44,680 Speaker 1: start with what we're seeing in the latest l EI 15 00:00:44,800 --> 00:00:47,599 Speaker 1: for the month of August really, in a sense, no 16 00:00:47,760 --> 00:00:50,920 Speaker 1: change from what we've been looking at all through the spring, 17 00:00:50,960 --> 00:00:53,279 Speaker 1: all through the summer, and now into the fall. You've 18 00:00:53,320 --> 00:00:56,240 Speaker 1: got a weak industrial sector, You've got some strength and 19 00:00:56,360 --> 00:01:00,320 Speaker 1: services because of the consumer and housing that really hasn't change. 20 00:01:00,360 --> 00:01:03,320 Speaker 1: So while the number fluctuates from one month to the next, 21 00:01:03,600 --> 00:01:06,760 Speaker 1: there's no sign here either of acceleration of growth. But 22 00:01:06,840 --> 00:01:10,560 Speaker 1: certainly no sign here of deceleration of growth anytime soon? 23 00:01:11,440 --> 00:01:14,480 Speaker 1: Can twenty seven? I think you've been doing this for 24 00:01:14,560 --> 00:01:19,440 Speaker 1: twenty seven years? Correct? No, no, no, I thought since nine, 25 00:01:20,000 --> 00:01:25,280 Speaker 1: since seventy even oh even better, well done, even better? Okay, 26 00:01:25,280 --> 00:01:28,800 Speaker 1: all right, So in that context, as an economist, are 27 00:01:28,840 --> 00:01:31,720 Speaker 1: there new tools? Are there new ways of looking at 28 00:01:31,720 --> 00:01:35,520 Speaker 1: the economy that would be just as relevant because you're 29 00:01:35,520 --> 00:01:38,520 Speaker 1: not just an economist, you're also someone that understands and 30 00:01:38,560 --> 00:01:41,240 Speaker 1: has his pulse on kind of what's happening in the 31 00:01:41,360 --> 00:01:43,360 Speaker 1: in the world. You have to be to stay on 32 00:01:43,440 --> 00:01:45,840 Speaker 1: top of things. What kinds of tools because you say, 33 00:01:45,880 --> 00:01:48,240 Speaker 1: all right, you know it's flat, a little more of 34 00:01:48,240 --> 00:01:51,400 Speaker 1: the same, bad, so on. But how can you add 35 00:01:51,440 --> 00:01:53,400 Speaker 1: some nuance to all of that? This is a great 36 00:01:53,440 --> 00:01:56,639 Speaker 1: question because again, if you split between the industrial corps 37 00:01:57,120 --> 00:01:59,960 Speaker 1: and we have really good metrics of the industrial coo 38 00:02:00,120 --> 00:02:01,720 Speaker 1: or and that's where you get the you know, the 39 00:02:01,760 --> 00:02:04,080 Speaker 1: boom and busted the economy. Give us some examples of, like, 40 00:02:04,160 --> 00:02:07,520 Speaker 1: you know, what kind of great measurements in those kinds 41 00:02:07,520 --> 00:02:10,600 Speaker 1: of businesses. You look at industrial production, you look at orders, 42 00:02:11,000 --> 00:02:13,720 Speaker 1: which is a leading indicator about where industrial productions going. 43 00:02:14,040 --> 00:02:18,080 Speaker 1: As really been soft. Um, you look at at business confidence. 44 00:02:18,080 --> 00:02:20,880 Speaker 1: Are they confident enough to say, okay, go ahead, let's 45 00:02:20,919 --> 00:02:23,799 Speaker 1: green light that project. You know. So we're looking at 46 00:02:23,840 --> 00:02:27,519 Speaker 1: capital investment, we're looking at industrial production, we're looking at orders, 47 00:02:27,600 --> 00:02:30,560 Speaker 1: and all of it tells us not that it's falling apart, 48 00:02:31,240 --> 00:02:33,959 Speaker 1: even though in the oil patch it's beginning to improve 49 00:02:33,960 --> 00:02:36,880 Speaker 1: a little bit, but elsewhere there's really no change, not 50 00:02:37,000 --> 00:02:39,680 Speaker 1: since the spring, maybe not since the winter. It's in 51 00:02:39,720 --> 00:02:42,639 Speaker 1: the service sector that we keep saying, you know, we 52 00:02:42,680 --> 00:02:45,919 Speaker 1: need new measures. We didn't have this back in seventy 53 00:02:45,919 --> 00:02:48,760 Speaker 1: one or earlier. But the service sectors don't have that 54 00:02:48,800 --> 00:02:51,920 Speaker 1: boom and bust. If you look at it regionally, you 55 00:02:51,960 --> 00:02:53,840 Speaker 1: want to pick up what's going on in the Midwest, 56 00:02:53,880 --> 00:02:56,200 Speaker 1: what's going on in the South. You don't want to 57 00:02:56,200 --> 00:02:59,320 Speaker 1: look here at the Northeast quarter because it's a service 58 00:02:59,360 --> 00:03:01,239 Speaker 1: economy and they just said you don't get the boom 59 00:03:01,280 --> 00:03:03,720 Speaker 1: and busted it. So you want to look at sectors. 60 00:03:04,000 --> 00:03:06,000 Speaker 1: You also want to look at regions, and all of 61 00:03:06,040 --> 00:03:09,119 Speaker 1: that is telling us. You know, what we're getting here 62 00:03:09,360 --> 00:03:13,079 Speaker 1: is relatively modest or moderate growth, whatever adjective you want 63 00:03:13,080 --> 00:03:15,840 Speaker 1: to use. It's not soft, but it certainly isn't strong. 64 00:03:16,360 --> 00:03:20,200 Speaker 1: And more important, there's no sign here of an acceleration separate. 65 00:03:20,200 --> 00:03:22,839 Speaker 1: Separate from that is the difference between some of these 66 00:03:22,840 --> 00:03:26,760 Speaker 1: measures and jobs. Jobs are very good, much better than 67 00:03:26,800 --> 00:03:28,359 Speaker 1: some of the rest of it. And so there's a 68 00:03:28,360 --> 00:03:30,880 Speaker 1: little bit of a puzzle here, which number do you follow, 69 00:03:30,960 --> 00:03:33,120 Speaker 1: especially if you're the FED, look at jobs or look 70 00:03:33,120 --> 00:03:35,160 Speaker 1: at some of the rest of this. In your view 71 00:03:35,160 --> 00:03:37,119 Speaker 1: as somebody again who has watched the economy for many, 72 00:03:37,120 --> 00:03:41,920 Speaker 1: many years, uh, is it your sense that whatever the 73 00:03:41,960 --> 00:03:45,520 Speaker 1: economy needs to grow faster, whatever businesses need to actually 74 00:03:45,560 --> 00:03:48,880 Speaker 1: start investing again, business investment has been so weak the past, 75 00:03:49,160 --> 00:03:51,400 Speaker 1: not just in the US, that's a global store. Okay, 76 00:03:51,400 --> 00:03:56,800 Speaker 1: So is this something that is receptive to fixable through 77 00:03:57,240 --> 00:04:01,040 Speaker 1: can be affected by monetary policy? And so so then 78 00:04:01,160 --> 00:04:03,560 Speaker 1: the the point so this is okay, no, why then 79 00:04:03,560 --> 00:04:06,040 Speaker 1: tell me why? Because I think there's an assumption, certainly 80 00:04:06,040 --> 00:04:08,560 Speaker 1: among central bankers that they can affect this by keeping 81 00:04:08,600 --> 00:04:12,840 Speaker 1: stimulus paddle to the metal. You know, Look, what you 82 00:04:12,920 --> 00:04:15,360 Speaker 1: need is demand. You need enough demand to push the 83 00:04:15,400 --> 00:04:18,360 Speaker 1: product out. You need enough demand to get a price increase, 84 00:04:18,640 --> 00:04:21,640 Speaker 1: so you generate the funds to generate that investment. So 85 00:04:21,760 --> 00:04:24,960 Speaker 1: even though the Fed and Central banks have been very 86 00:04:25,000 --> 00:04:29,160 Speaker 1: accommodative and remain so, and money is as cheap as possible, 87 00:04:29,839 --> 00:04:33,200 Speaker 1: but you're not seeing the investment because they don't see 88 00:04:33,200 --> 00:04:36,680 Speaker 1: the growth and they don't see the the the price 89 00:04:36,720 --> 00:04:39,440 Speaker 1: increase to be able to justify our rate to return 90 00:04:39,520 --> 00:04:42,520 Speaker 1: to that new investment. And again it's not new. It's 91 00:04:42,560 --> 00:04:44,880 Speaker 1: not a U S story. You see that across the globe. 92 00:04:44,880 --> 00:04:47,400 Speaker 1: In fact, in some sense we're in better shape than 93 00:04:47,440 --> 00:04:49,840 Speaker 1: a lot of the rest of the world. I want 94 00:04:49,880 --> 00:04:52,440 Speaker 1: you to expand on that idea if you can, because, 95 00:04:53,080 --> 00:04:56,159 Speaker 1: as you noted, it is a changed economy and a 96 00:04:56,320 --> 00:04:59,200 Speaker 1: changed world. And sometimes we are too attuned and can 97 00:04:59,240 --> 00:05:02,200 Speaker 1: convince our els that certain things are true. What are 98 00:05:02,240 --> 00:05:05,200 Speaker 1: some of the misconceptions out there that you are seeing 99 00:05:05,240 --> 00:05:09,440 Speaker 1: and that you hear documented? But he raises a red 100 00:05:09,480 --> 00:05:11,880 Speaker 1: flag with gold team in a conference Yeah, one of 101 00:05:11,920 --> 00:05:13,920 Speaker 1: the things we have the conference board, have been preaching 102 00:05:13,960 --> 00:05:16,880 Speaker 1: for forever and it's more true now than it ever was. 103 00:05:17,080 --> 00:05:19,800 Speaker 1: You have to innovate or is the great economist Bob 104 00:05:19,839 --> 00:05:22,440 Speaker 1: Dylan once said he was not busy being born as 105 00:05:22,480 --> 00:05:26,119 Speaker 1: busy dying. Where's the innovation and where's the investment dollar 106 00:05:26,240 --> 00:05:29,320 Speaker 1: backing up that innovation. But again, I mean, you know, 107 00:05:29,360 --> 00:05:32,360 Speaker 1: if the demand isn't there, the price isn't there, where's 108 00:05:32,360 --> 00:05:35,360 Speaker 1: the money, where's the way to return? That's the missing piece, 109 00:05:35,920 --> 00:05:38,360 Speaker 1: and where's the confidence on the part of business to 110 00:05:38,520 --> 00:05:40,720 Speaker 1: go ahead and bite the bullet and say, you know, 111 00:05:40,800 --> 00:05:43,880 Speaker 1: let's try this, let's see where it goes. Let's economy. 112 00:05:44,839 --> 00:05:48,159 Speaker 1: We're in a mature economy, um, And the question is 113 00:05:48,200 --> 00:05:51,000 Speaker 1: are you know, are we at the late stage of 114 00:05:51,080 --> 00:05:54,560 Speaker 1: maturity or the early stage? Well, the answers both. Can 115 00:05:54,880 --> 00:05:59,320 Speaker 1: fiscal spending make the difference? Government of Okay, what kind 116 00:05:59,360 --> 00:06:02,560 Speaker 1: of fiscals infrastructure and happy to help somebody innovate a 117 00:06:02,560 --> 00:06:05,680 Speaker 1: new tech quality because that's where the infrastructure is. That 118 00:06:05,680 --> 00:06:08,479 Speaker 1: that's where the railroads and the highways and the tunnels 119 00:06:08,520 --> 00:06:11,000 Speaker 1: and the bridges for tech companies or services. But you 120 00:06:11,040 --> 00:06:13,000 Speaker 1: do need a grid that can handle all of that, 121 00:06:13,080 --> 00:06:15,560 Speaker 1: and we don't have that. You don't remember something we 122 00:06:15,640 --> 00:06:17,720 Speaker 1: had that blackout back in what was it seventy five 123 00:06:17,839 --> 00:06:20,479 Speaker 1: or something. They told us it would cost fifty billion 124 00:06:20,560 --> 00:06:22,679 Speaker 1: dollars to fix it, so that would never happen again. 125 00:06:22,880 --> 00:06:26,200 Speaker 1: We've never invested depending on that, Thank you, very much. 126 00:06:26,360 --> 00:06:28,359 Speaker 1: Always a pleasure to have you with us. Ken Goldstein 127 00:06:28,560 --> 00:06:32,320 Speaker 1: is economist for the Conference Board. Uh, well, we know 128 00:06:32,520 --> 00:06:35,880 Speaker 1: it was down zero point two in the month of August. 129 00:06:36,360 --> 00:06:38,919 Speaker 1: You're listening to taking Stock. I'm pim Fox, my co 130 00:06:39,000 --> 00:06:41,880 Speaker 1: host Kathleen Hayes, and this is Bloomberg.