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Conference Board's Goldstein on the July LEI Index (Audio) · Bloomberg Intelligence

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  Speaker 1: Ju're listening to Taking Stock with Bim Box and Kathleen
• 0:04
  Speaker 1: Hayes on Bloomberg Radio. Where is the economy heading? That's
• 0:08
  Speaker 1: certainly this is something the Fed to Reserve is asking itself.
• 0:11
  Speaker 1: Bill Dudley, President of New York FED, saying today that
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  Speaker 1: he's much more focused on the labor market than he
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  Speaker 1: is on the actual GDP number. That's where we're very
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  Speaker 1: happy to have back with this For his monthly chat
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  Speaker 1: Ken Goldstein economist at the conference board, they put together
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  Speaker 1: the Leading Economic Index, giving us a sense of worth
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  Speaker 1: the economy will be in three to six months. It
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  Speaker 1: was up zero point four percent in July, following a
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  Speaker 1: zero point three percent jump in June and a zero
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  Speaker 1: point two percent decline in May. So Ken, where are
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  Speaker 1: we now? Where we are not just in terms of
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  Speaker 1: the lead, which tells us about where we're going, but
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  Speaker 1: in the coincident, which tells us where we are. This
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  Speaker 1: has been a pretty decent, not a great, but at
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  Speaker 1: least a decent summer because of the consumer and because
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  Speaker 1: of housing, not because of the industrial sector, um and
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  Speaker 1: you know all of those attendant things. So in some
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  Speaker 1: sense it's a tailor of two economies. Consumers, good housing
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  Speaker 1: is good, industrial activity not so much. Well, Ken, when
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  Speaker 1: I go through the list of the leading index and
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  Speaker 1: the coincident index, I see everything moving higher except the
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  Speaker 1: average consumer expectations for business conditions. Why is that? Because
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  Speaker 1: you know, there is this concern, has been this concern
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  Speaker 1: really all through the winter and spring and now into
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  Speaker 1: the summer. You know, it's as if the consumers saying,
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  Speaker 1: not that this is great, not even that this is
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  Speaker 1: necessarily good, but this is okay. We're just worried about
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  Speaker 1: what's coming next. They have been and they remain uh
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  Speaker 1: in that consideration, and you see some of that. I
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  Speaker 1: understand that, But why well, because they're they're worried about
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  Speaker 1: what's going to come next, to whether business is going
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  Speaker 1: to fall, whether profits are going to fall, whether these
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  Speaker 1: job numbers are gonna sustain, or whether they're gonna fall.
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  Speaker 1: You know, so that there is this lingering concern that's
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  Speaker 1: been there for quite some time. And you see there's
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  Speaker 1: not only in terms of their responses to surveys. You
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  Speaker 1: see this in terms of their spending habits. If you
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  Speaker 1: look at the you know, the back to school sales
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  Speaker 1: as reflected in the latest retail sales numbers, So in
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  Speaker 1: your sense of what's going on, Ken, what is driving
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  Speaker 1: or not driving the economy right now? Again, it's it's
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  Speaker 1: those two things. It's those two things. Consumer okay, industrial
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  Speaker 1: activity not so much. And in terms of the overall
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  Speaker 1: broad global economy US okay, the rest of it. So
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  Speaker 1: why why is the consumer has not been altogether okay?
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  Speaker 1: Certainly okay in the second quarter? But and why is
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  Speaker 1: the industrial side not so good? What's what's happening? In
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  Speaker 1: some sense this comes right back to to Pim's question,
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  Speaker 1: and that is, you know, there is the consideration, is
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  Speaker 1: the consumers strong enough that's finally going to pull out
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  Speaker 1: the industrial sector or is the industrial sector weak enough
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  Speaker 1: that's going to finally weaken the consumer globally? Is the
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  Speaker 1: world weak enough that's going to pull back to US?
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  Speaker 1: Or is the U S strong enough that's gonna finally
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  Speaker 1: pull up the globe? And it's not real clear either way.
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  Speaker 1: Can do you think that this for flex the consumers
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  Speaker 1: attitude because of the media attention that's given to bad news?
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  Speaker 1: Then what would be why why wouldn't they have a
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  Speaker 1: positive outlook if the indicators, in fact, all the others
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  Speaker 1: except this one are positive, and you don't just wake
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  Speaker 1: up feeling gloomy every day exactly. And it's and and
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  Speaker 1: again it's you know, it's this isn't new. It's been
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  Speaker 1: this way for months, maybe even a year and a half,
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  Speaker 1: for longer um and so there is this lingering sense.
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  Speaker 1: It's as if we've gone through so much over the
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  Speaker 1: last decade or so that this is a consumer who
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  Speaker 1: sort of is, you know, flinching at the next punch.
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  Speaker 1: Do you think that maybe it's because the consumer who
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  Speaker 1: maybe would try to save money isn't getting any interest
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  Speaker 1: on their money and as a result that just feel
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  Speaker 1: like they're never going to get ahead. That that's another factor.
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  Speaker 1: But it's far more about wages than than about that
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  Speaker 1: for the average household. So another factor is, indeed, you know,
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  Speaker 1: the stagnant wages, you know, not just for a year,
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  Speaker 1: but for a decade or more. You a lot of
• 4:00
  Speaker 1: concern at the FED, certainly if you listen to Jim Bullard,
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  Speaker 1: President St. Louis Fed, even to a certain extent, now
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  Speaker 1: maybe John Williams s f FED San Francisco, that we're
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  Speaker 1: stuck in kind of a low growth, low inflation environment.
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  Speaker 1: Do you see that all the work you do on
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  Speaker 1: the US economy and global economy. Is that possible right
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  Speaker 1: here in the US of A? Is it possible? Yes?
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  Speaker 1: Is it likely? That's and which comes back to the
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  Speaker 1: question we've been just been discussing. You know, it's not
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  Speaker 1: real clear whether that's the road that we're taken again.
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  Speaker 1: Can the consumer really drive the bus here and pull
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  Speaker 1: up the rest of the economy. There's a chance that
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  Speaker 1: that could happen, but it's just as you know, likely
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  Speaker 1: that they're going to be pulled back by the weakness elsewhere. Well,
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  Speaker 1: thank you very much. Ken Goldstein, economist for the Conference Board,
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  Speaker 1: based here in a New York City