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Speaker 1: I'm Charlie Pellot. That's a Bloombrid business flash. You're listening
Speaker 1: to taking Stock with Kathleen Hayes and Pimp Box on
Speaker 1: Bloomberg Radio. Where's the economy? Heaving that question all the
Speaker 1: more important after FED share Janet Yellen said she thinks
Speaker 1: it's rebounding. Even so she's gonna wait until she sees
Speaker 1: the whites of an econmic economic rebound eyes until she's
Speaker 1: ready to push for that next interest rate increase. What
Speaker 1: she thinks is in keeping with where the Fed wants
Speaker 1: to go, but she's not going to make the mistake
Speaker 1: of raising it too quickly. Looking Leading Economic Indicators out today,
Speaker 1: bit of a surprise, heading a bit lower last month,
Speaker 1: Ken Goldstein joins us Now Economist with the Conference board
Speaker 1: to look at the latest l EI Leading Economic Indicators Index,
Speaker 1: And if we'll give Janet Allen any more pause on rates,
Speaker 1: can welcome back, thank you. So, what do we see
Speaker 1: in the l E I. What we see is what
Speaker 1: we saw last month, in the month before and very
Speaker 1: likely next month in the month after that, And that
Speaker 1: is an economy. It's not losing steam, is not picking
Speaker 1: up steams, So we just continue to muddle along. That's
Speaker 1: what the Coincident Economic Index, the number that tells us
Speaker 1: where we are right now. That's what it's telling us,
Speaker 1: and the lead is telling us if you look not
Speaker 1: just at the last month, the last few months, this
Speaker 1: is just continuing to be a muddle through this summer.
Speaker 1: Can I wonder if you get into details and tell
Speaker 1: us about initial claims for unemployment and what that did
Speaker 1: to the results. You know, that's the you know, without that,
Speaker 1: this probably would have been a flat month. But because
Speaker 1: of the dropping claims, we actually have a zero point
Speaker 1: to percent decline in the leading Economic Index, so that
Speaker 1: claims are sort of bouncing a little bit, but bouncing
Speaker 1: at a very low level. So you know, whether it
Speaker 1: bounces up this month, it bounces down last month, there's
Speaker 1: no sign there that the labor market is beginning to
Speaker 1: lose steam. Yes, employment is beginning to moderate, and part
Speaker 1: of that is because at four point seven percent unemployment rate,
Speaker 1: that pool out there is starting to thin, you know,
Speaker 1: So it's not as if we're starting to look at
Speaker 1: and more people being laid off as opposed to being hiring.
Speaker 1: It's just as I just said, just to continue muddle through. Okay.
Speaker 1: So Janet Yellen, even though she made it very clear
Speaker 1: that she's more cautious than ever, she also made it
Speaker 1: clear that what she sees is the following. You had
Speaker 1: week first quarter g d P, so then you had
Speaker 1: weak jobs in the second quarter. Now, she says, retail
Speaker 1: sales the consumer driving and we laugh. A couple of
Speaker 1: retail sales reports have been pretty strong, right, or stronger
Speaker 1: than they've been in the past. So that means, she says,
Speaker 1: the economy is picking up. So if you look at
Speaker 1: the pattern GDP, better jobs better vice versa, in the
Speaker 1: second half, we should have stronger jobs growth. But from
Speaker 1: all the information of the conference boardbuck In, you tell us, well, look,
Speaker 1: I mean, you know, wages are and d because the
Speaker 1: labor market is so tight and going to get tighter,
Speaker 1: that wage growth is starting to pick up, and consumers
Speaker 1: are very likely to go out and spend that money
Speaker 1: uh this summer and into the fall, and indeed right
Speaker 1: into the holiday season. So consumer spending power and therefore
Speaker 1: consumer spending plus housing, there's some tail winds here pushing
Speaker 1: the economy, but the industrial sector of the economy, the
Speaker 1: trade part of the economy, they've been in weak position
Speaker 1: and they're not really moving into fact with with the
Speaker 1: very weak profit growth. In all of this, um you know,
Speaker 1: we've got this mix of some strong headwinds strong tail winds.
Speaker 1: That's why we're stuck in this kind of muddle through
Speaker 1: and likely to stay in a muddle through through the
Speaker 1: summer and into the fall months. I wonder if you
Speaker 1: could give us your thoughts on GDP for the second quarter,
Speaker 1: what does the tell you about GDP performance, and maybe
Speaker 1: even for the rest of the year, the rest of
Speaker 1: the year, probably close to two maybe a little bit more,
Speaker 1: a little bit less, and indeed not just for the
Speaker 1: second half of this year, even into the first half
Speaker 1: of next year. So no words, is not weakening down
Speaker 1: to one and a half, but it's not picking up
Speaker 1: to two and a half. Obviously, if it were to
Speaker 1: pick up because it wagesn't because of housing, then you'll
Speaker 1: see more fat action. So if it's only gonna be
Speaker 1: two percent a little bit less, that doesn't sound like
Speaker 1: much of a pickup to me, although that would be
Speaker 1: a pickup from the first quarter. Right, what have we
Speaker 1: ended up with still something under one percent? Under one
Speaker 1: percent second quarter, which is now almost over, It is
Speaker 1: going to come in closer two percent stay there in
Speaker 1: the third, fourth, first, second, So is it I mean,
Speaker 1: so I would take the other side, then why does
Speaker 1: it fat need to even move on rates at all,
Speaker 1: at least when it comes to the economy, at least
Speaker 1: when it comes to overheating or too much inflation. See,
Speaker 1: that's not an argument per se about weird the economy
Speaker 1: is or weird it's headed near term. That's an argument
Speaker 1: that says they've waited too long and kept into strates
Speaker 1: too low for too long, and that they need to
Speaker 1: move to not a tightening but a normalization and you know,
Speaker 1: begin to move down to that terminal rate. Um. But
Speaker 1: you know they've waited this, you know, so if they
Speaker 1: wait until after the election, what's the big deal? If
Speaker 1: this is the growth path for the economy and that
Speaker 1: is a two percent muddel alone. You know, we've been
Speaker 1: focused a little bit on the real estate market because
Speaker 1: of new home sales as well as the previous existing
Speaker 1: new home sales report. What if you could tell us
Speaker 1: about building permits. Is that a factor in this report
Speaker 1: at all? Actually, that's one of the ten components in
Speaker 1: little leading index UM and what's going on there is
Speaker 1: a combination of both new home building as well as
Speaker 1: apartment building UM and they're the problem is not a
Speaker 1: lack of demand for new homes and new apartments, it's
Speaker 1: the ability of the builders to put them a fast enough.
Speaker 1: You know. So there really is some momentum building in
Speaker 1: the housing market, not necessarily this month, but an overall
Speaker 1: old trend. And again you know that momentum in housing
Speaker 1: driven by the momentum and housing market driven by the
Speaker 1: labor market along with the pickup and wages. Those are
Speaker 1: the pauses for the economy. Thank you very much for
Speaker 1: coming in and spending time with us. As always, Ken Goldstein,
Speaker 1: economist for the Conference Board, speaking about the index are
Speaker 1: leading economic indicators that slipped in May because of that
Speaker 1: uptick in initial jobless claims, though the index continues to
Speaker 1: suggest that the economy will expand at a moderate clip
Speaker 1: in the months ahead. You're listening to Taking Stock. I'm
Speaker 1: pim Fox my co host Kathleen Hayes, and you're listening
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