WEBVTT - Conference Board's Goldstein on the May LEI Index (Audio)

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<v Speaker 1>results coming across a day of special coverage. The SMP

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<v Speaker 1>five hundred index up nineteen five, a gain of nine

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<v Speaker 1>tenths of one percent. Down Industrial is up one hundred

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<v Speaker 1>sixty six points, also up nine tenths of one percent.

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<v Speaker 1>Now to stack up fifty five, a gain of one

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<v Speaker 1>pot two percent. Tenure down fourteen thirty seconds, yield there

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<v Speaker 1>one point seven three gold down sixty ounce to twelve

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<v Speaker 1>sixty three, a drop of five tenths of one percent.

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<v Speaker 1>I'm Charlie Pellot. That's a Bloombrid business flash. You're listening

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<v Speaker 1>to taking Stock with Kathleen Hayes and Pimp Box on

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<v Speaker 1>Bloomberg Radio. Where's the economy? Heaving that question all the

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<v Speaker 1>more important after FED share Janet Yellen said she thinks

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<v Speaker 1>it's rebounding. Even so she's gonna wait until she sees

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<v Speaker 1>the whites of an econmic economic rebound eyes until she's

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<v Speaker 1>ready to push for that next interest rate increase. What

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<v Speaker 1>she thinks is in keeping with where the Fed wants

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<v Speaker 1>to go, but she's not going to make the mistake

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<v Speaker 1>of raising it too quickly. Looking Leading Economic Indicators out today,

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<v Speaker 1>bit of a surprise, heading a bit lower last month,

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<v Speaker 1>Ken Goldstein joins us Now Economist with the Conference board

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<v Speaker 1>to look at the latest l EI Leading Economic Indicators Index,

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<v Speaker 1>And if we'll give Janet Allen any more pause on rates,

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<v Speaker 1>can welcome back, thank you. So, what do we see

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<v Speaker 1>in the l E I. What we see is what

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<v Speaker 1>we saw last month, in the month before and very

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<v Speaker 1>likely next month in the month after that, And that

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<v Speaker 1>is an economy. It's not losing steam, is not picking

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<v Speaker 1>up steams, So we just continue to muddle along. That's

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<v Speaker 1>what the Coincident Economic Index, the number that tells us

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<v Speaker 1>where we are right now. That's what it's telling us,

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<v Speaker 1>and the lead is telling us if you look not

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<v Speaker 1>just at the last month, the last few months, this

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<v Speaker 1>is just continuing to be a muddle through this summer.

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<v Speaker 1>Can I wonder if you get into details and tell

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<v Speaker 1>us about initial claims for unemployment and what that did

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<v Speaker 1>to the results. You know, that's the you know, without that,

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<v Speaker 1>this probably would have been a flat month. But because

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<v Speaker 1>of the dropping claims, we actually have a zero point

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<v Speaker 1>to percent decline in the leading Economic Index, so that

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<v Speaker 1>claims are sort of bouncing a little bit, but bouncing

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<v Speaker 1>at a very low level. So you know, whether it

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<v Speaker 1>bounces up this month, it bounces down last month, there's

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<v Speaker 1>no sign there that the labor market is beginning to

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<v Speaker 1>lose steam. Yes, employment is beginning to moderate, and part

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<v Speaker 1>of that is because at four point seven percent unemployment rate,

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<v Speaker 1>that pool out there is starting to thin, you know,

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<v Speaker 1>So it's not as if we're starting to look at

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<v Speaker 1>and more people being laid off as opposed to being hiring.

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<v Speaker 1>It's just as I just said, just to continue muddle through. Okay.

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<v Speaker 1>So Janet Yellen, even though she made it very clear

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<v Speaker 1>that she's more cautious than ever, she also made it

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<v Speaker 1>clear that what she sees is the following. You had

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<v Speaker 1>week first quarter g d P, so then you had

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<v Speaker 1>weak jobs in the second quarter. Now, she says, retail

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<v Speaker 1>sales the consumer driving and we laugh. A couple of

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<v Speaker 1>retail sales reports have been pretty strong, right, or stronger

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<v Speaker 1>than they've been in the past. So that means, she says,

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<v Speaker 1>the economy is picking up. So if you look at

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<v Speaker 1>the pattern GDP, better jobs better vice versa, in the

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<v Speaker 1>second half, we should have stronger jobs growth. But from

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<v Speaker 1>all the information of the conference boardbuck In, you tell us, well, look,

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<v Speaker 1>I mean, you know, wages are and d because the

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<v Speaker 1>labor market is so tight and going to get tighter,

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<v Speaker 1>that wage growth is starting to pick up, and consumers

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<v Speaker 1>are very likely to go out and spend that money

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<v Speaker 1>uh this summer and into the fall, and indeed right

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<v Speaker 1>into the holiday season. So consumer spending power and therefore

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<v Speaker 1>consumer spending plus housing, there's some tail winds here pushing

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<v Speaker 1>the economy, but the industrial sector of the economy, the

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<v Speaker 1>trade part of the economy, they've been in weak position

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<v Speaker 1>and they're not really moving into fact with with the

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<v Speaker 1>very weak profit growth. In all of this, um you know,

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<v Speaker 1>we've got this mix of some strong headwinds strong tail winds.

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<v Speaker 1>That's why we're stuck in this kind of muddle through

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<v Speaker 1>and likely to stay in a muddle through through the

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<v Speaker 1>summer and into the fall months. I wonder if you

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<v Speaker 1>could give us your thoughts on GDP for the second quarter,

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<v Speaker 1>what does the tell you about GDP performance, and maybe

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<v Speaker 1>even for the rest of the year, the rest of

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<v Speaker 1>the year, probably close to two maybe a little bit more,

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<v Speaker 1>a little bit less, and indeed not just for the

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<v Speaker 1>second half of this year, even into the first half

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<v Speaker 1>of next year. So no words, is not weakening down

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<v Speaker 1>to one and a half, but it's not picking up

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<v Speaker 1>to two and a half. Obviously, if it were to

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<v Speaker 1>pick up because it wagesn't because of housing, then you'll

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<v Speaker 1>see more fat action. So if it's only gonna be

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<v Speaker 1>two percent a little bit less, that doesn't sound like

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<v Speaker 1>much of a pickup to me, although that would be

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<v Speaker 1>a pickup from the first quarter. Right, what have we

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<v Speaker 1>ended up with still something under one percent? Under one

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<v Speaker 1>percent second quarter, which is now almost over, It is

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<v Speaker 1>going to come in closer two percent stay there in

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<v Speaker 1>the third, fourth, first, second, So is it I mean,

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<v Speaker 1>so I would take the other side, then why does

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<v Speaker 1>it fat need to even move on rates at all,

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<v Speaker 1>at least when it comes to the economy, at least

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<v Speaker 1>when it comes to overheating or too much inflation. See,

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<v Speaker 1>that's not an argument per se about weird the economy

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<v Speaker 1>is or weird it's headed near term. That's an argument

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<v Speaker 1>that says they've waited too long and kept into strates

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<v Speaker 1>too low for too long, and that they need to

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<v Speaker 1>move to not a tightening but a normalization and you know,

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<v Speaker 1>begin to move down to that terminal rate. Um. But

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<v Speaker 1>you know they've waited this, you know, so if they

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<v Speaker 1>wait until after the election, what's the big deal? If

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<v Speaker 1>this is the growth path for the economy and that

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<v Speaker 1>is a two percent muddel alone. You know, we've been

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<v Speaker 1>focused a little bit on the real estate market because

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<v Speaker 1>of new home sales as well as the previous existing

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<v Speaker 1>new home sales report. What if you could tell us

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<v Speaker 1>about building permits. Is that a factor in this report

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<v Speaker 1>at all? Actually, that's one of the ten components in

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<v Speaker 1>little leading index UM and what's going on there is

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<v Speaker 1>a combination of both new home building as well as

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<v Speaker 1>apartment building UM and they're the problem is not a

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<v Speaker 1>lack of demand for new homes and new apartments, it's

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<v Speaker 1>the ability of the builders to put them a fast enough.

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<v Speaker 1>You know. So there really is some momentum building in

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<v Speaker 1>the housing market, not necessarily this month, but an overall

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<v Speaker 1>old trend. And again you know that momentum in housing

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<v Speaker 1>driven by the momentum and housing market driven by the

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<v Speaker 1>labor market along with the pickup and wages. Those are

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<v Speaker 1>the pauses for the economy. Thank you very much for

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<v Speaker 1>coming in and spending time with us. As always, Ken Goldstein,

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<v Speaker 1>economist for the Conference Board, speaking about the index are

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<v Speaker 1>leading economic indicators that slipped in May because of that

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<v Speaker 1>uptick in initial jobless claims, though the index continues to

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<v Speaker 1>suggest that the economy will expand at a moderate clip

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<v Speaker 1>in the months ahead. You're listening to Taking Stock. I'm

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<v Speaker 1>pim Fox my co host Kathleen Hayes, and you're listening

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<v Speaker 1>to Bloomberg Radio, a collection of luxury five star hotels,

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