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

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<v Speaker 1>Ju're listening to Taking Stock with Bim Box and Kathleen

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<v Speaker 1>Hayes on Bloomberg Radio. Where is the economy heading? That's

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<v Speaker 1>certainly this is something the Fed to Reserve is asking itself.

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<v Speaker 1>Bill Dudley, President of New York FED, saying today that

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<v Speaker 1>he's much more focused on the labor market than he

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<v Speaker 1>is on the actual GDP number. That's where we're very

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<v Speaker 1>happy to have back with this For his monthly chat

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<v Speaker 1>Ken Goldstein economist at the conference board, they put together

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<v Speaker 1>the Leading Economic Index, giving us a sense of worth

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<v Speaker 1>the economy will be in three to six months. It

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<v Speaker 1>was up zero point four percent in July, following a

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<v Speaker 1>zero point three percent jump in June and a zero

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<v Speaker 1>point two percent decline in May. So Ken, where are

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<v Speaker 1>we now? Where we are not just in terms of

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<v Speaker 1>the lead, which tells us about where we're going, but

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<v Speaker 1>in the coincident, which tells us where we are. This

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<v Speaker 1>has been a pretty decent, not a great, but at

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<v Speaker 1>least a decent summer because of the consumer and because

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<v Speaker 1>of housing, not because of the industrial sector, um and

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<v Speaker 1>you know all of those attendant things. So in some

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<v Speaker 1>sense it's a tailor of two economies. Consumers, good housing

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<v Speaker 1>is good, industrial activity not so much. Well, Ken, when

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<v Speaker 1>I go through the list of the leading index and

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<v Speaker 1>the coincident index, I see everything moving higher except the

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<v Speaker 1>average consumer expectations for business conditions. Why is that? Because

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<v Speaker 1>you know, there is this concern, has been this concern

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<v Speaker 1>really all through the winter and spring and now into

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<v Speaker 1>the summer. You know, it's as if the consumers saying,

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<v Speaker 1>not that this is great, not even that this is

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<v Speaker 1>necessarily good, but this is okay. We're just worried about

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<v Speaker 1>what's coming next. They have been and they remain uh

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<v Speaker 1>in that consideration, and you see some of that. I

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<v Speaker 1>understand that, But why well, because they're they're worried about

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<v Speaker 1>what's going to come next, to whether business is going

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<v Speaker 1>to fall, whether profits are going to fall, whether these

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<v Speaker 1>job numbers are gonna sustain, or whether they're gonna fall.

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<v Speaker 1>You know, so that there is this lingering concern that's

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<v Speaker 1>been there for quite some time. And you see there's

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<v Speaker 1>not only in terms of their responses to surveys. You

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<v Speaker 1>see this in terms of their spending habits. If you

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<v Speaker 1>look at the you know, the back to school sales

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<v Speaker 1>as reflected in the latest retail sales numbers, So in

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<v Speaker 1>your sense of what's going on, Ken, what is driving

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<v Speaker 1>or not driving the economy right now? Again, it's it's

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<v Speaker 1>those two things. It's those two things. Consumer okay, industrial

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<v Speaker 1>activity not so much. And in terms of the overall

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<v Speaker 1>broad global economy US okay, the rest of it. So

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<v Speaker 1>why why is the consumer has not been altogether okay?

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<v Speaker 1>Certainly okay in the second quarter? But and why is

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<v Speaker 1>the industrial side not so good? What's what's happening? In

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<v Speaker 1>some sense this comes right back to to Pim's question,

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<v Speaker 1>and that is, you know, there is the consideration, is

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<v Speaker 1>the consumers strong enough that's finally going to pull out

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<v Speaker 1>the industrial sector or is the industrial sector weak enough

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<v Speaker 1>that's going to finally weaken the consumer globally? Is the

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<v Speaker 1>world weak enough that's going to pull back to US?

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<v Speaker 1>Or is the U S strong enough that's gonna finally

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<v Speaker 1>pull up the globe? And it's not real clear either way.

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<v Speaker 1>Can do you think that this for flex the consumers

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<v Speaker 1>attitude because of the media attention that's given to bad news?

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<v Speaker 1>Then what would be why why wouldn't they have a

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<v Speaker 1>positive outlook if the indicators, in fact, all the others

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<v Speaker 1>except this one are positive, and you don't just wake

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<v Speaker 1>up feeling gloomy every day exactly. And it's and and

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<v Speaker 1>again it's you know, it's this isn't new. It's been

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<v Speaker 1>this way for months, maybe even a year and a half,

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<v Speaker 1>for longer um and so there is this lingering sense.

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<v Speaker 1>It's as if we've gone through so much over the

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<v Speaker 1>last decade or so that this is a consumer who

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<v Speaker 1>sort of is, you know, flinching at the next punch.

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<v Speaker 1>Do you think that maybe it's because the consumer who

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<v Speaker 1>maybe would try to save money isn't getting any interest

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<v Speaker 1>on their money and as a result that just feel

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<v Speaker 1>like they're never going to get ahead. That that's another factor.

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<v Speaker 1>But it's far more about wages than than about that

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<v Speaker 1>for the average household. So another factor is, indeed, you know,

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<v Speaker 1>the stagnant wages, you know, not just for a year,

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<v Speaker 1>but for a decade or more. You a lot of

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<v Speaker 1>concern at the FED, certainly if you listen to Jim Bullard,

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<v Speaker 1>President St. Louis Fed, even to a certain extent, now

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<v Speaker 1>maybe John Williams s f FED San Francisco, that we're

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<v Speaker 1>stuck in kind of a low growth, low inflation environment.

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<v Speaker 1>Do you see that all the work you do on

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<v Speaker 1>the US economy and global economy. Is that possible right

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<v Speaker 1>here in the US of A? Is it possible? Yes?

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<v Speaker 1>Is it likely? That's and which comes back to the

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<v Speaker 1>question we've been just been discussing. You know, it's not

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<v Speaker 1>real clear whether that's the road that we're taken again.

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<v Speaker 1>Can the consumer really drive the bus here and pull

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<v Speaker 1>up the rest of the economy. There's a chance that

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<v Speaker 1>that could happen, but it's just as you know, likely

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<v Speaker 1>that they're going to be pulled back by the weakness elsewhere. Well,

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<v Speaker 1>thank you very much. Ken Goldstein, economist for the Conference Board,

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<v Speaker 1>based here in a New York City