Conference Board's Goldstein on the June LEI Index (Audio)

five tenths of one percent. Nasdaq is down twenty two points to drop of five tenths of one percent down. Industrials down a hundred and fourteen points to drop of six tenths of one percent. The tenure of five thirty seconds yield there one point five six percent. Gold up ten dollars an ounce to thirteen twenty nine, a gain of eight tenths of one percent, and crude oil down one nine percent, down eighty six cents forty four eighty nine for a barrel of West Texas Intermediate crude. I'm

Charlie Palot, and that's a Bloomberg business fly. This is taking stock with Pim Fox and Kathleen Hayes on Bloomberg Radio. A basket of leading economic indicators rose in June, as jobless claims fell and home builders signaled that they would break more ground. That's the latest report to show the U. S economy is starting the second half of the year on more solid footing. Here to tell us more, Ken Goldstein, he is the economist at the conference board. Can always

a pleasure. Thanks for coming in. Give us the broad picture right now on the conference boards June Leading Economic Index report. I keep telling you we start with the coincident because that tells us where we are right now in terms of production, terms of jobs, terms of incomes. We've actually moved up a little bit in the last

month or so. And in terms of leading indicators, not just the latest month, but even the six month change is telling us either we stay on the course that we're on, or if anything, actually pick up a little bit of momentum, especially out of the housing market. So a three tenths of a percent increased last month that reverses May's two tents of a present decline. That was better than economists had estimated. Yeah, I mean, if you've average the two months, basically they haven't done much. But

here's the thing. One of the things that we're seeing right now, and you saw this in the CBI just last week, is that the only thing that's moving in the CPI are rents and home mono costs because vacancy rates for apartments are so low, and because demand for homes is being you know, is exceeding the supply. So these builders are out there trying to build new apartment buildings, new homes as fast as they can, and that's giving

this economy a little bit of a spark. Well, earlier today, the Chicago Federal Reserve said that national economic activity rose in June at the best pace since the beginning of the year, mainly because of improvement around the domestic manufacturing sector. What do you make of that, Well, you know, part of it may very well be catch up. But here's what I find really interesting. This is not just the

US phenomenon. Brazil, um Uh, South Korea, you know, are even Mexico are going through the same kind of thing. So maybe there's a little bit of a momentum not just to the domestic economy, but to the global economy that will feed back to the domestic economy. Jovass claims that came in today. People were not necessarily surprised, but they were certainly feeling much more optimistic about the economy

after the initial Topics Claims report. You know, so, one of the things that we saw in the first half of the year is a drop down from two hundred jobs a month to about a hundred fifty thousand. But it's not a steady decline. It's like we moved from a step to a step as opposed to a decline. And if the labor market remains so strong and the housing markets picking up momentum, that's going to feed consumer confidence.

That's going to feed consumers spending, and you're gonna see some of that in the reports about back to school sales this very summer. As as we speak, I'm wondering if you could just tell us a little bit about the index and how it was composed and what it tells you, not necessarily about the future, but how it describes the present for people. In other words, the components are not all the same. Some of the measure stock prices.

This is this is a great question because the whole point I mean, imagine you're at a doctor's office and the doctor wants to check. So he doesn't just put one probe, he puts them all over. Will we put one in the housing market, the labor market, the industrial market, and so we get a sense about what's going on because not all pieces of the economy moving at the

same pace at the same time. What this is telling us is that there's enough momentum in enough sector so that overall there's not a lot, but there's a little bit of momentum to the U. S economy. And as they just suggested, in at least some parts of the global economy, we're seeing the same thing. Today's existing home sales report. Home sales are at a pace that we have not seen in nine years. This is pent up

to man. These are all these folks, especially the young folks who took so long to get you know, a down payment together because you can't get a surprime mortgage anymore, as well as the banks allowing you know, approving of mortgage mortgages. So that's feeding this demand not only for apartments but also for new homes. And you know, it's gonna take a while to really scratch that itch. I

was looking at. For example, the rate on thirty year mortgages right thirty your paper, someone is taking the other side of that trade. I mean three three and a quarter percent. You see that people are going to do a lot of refinancing. I mean, now that the rates have come down just a little bit, that would put more money in their pockets on a monthly basis, they'll

do some. But here's you know, the fact that that will slow that down at least a little bit is banks don't really make that much money on that, so yes, there will be some question is how much? But that only feeds this overall momentum in terms of the housing market, which along as I'm suggesting, with the labor market, is feeding the consumer market, which is the thing that's really been holding up the economy in the first half of the year. That's the thing we're banking for the second

half of the year. I beg your pardon. Three point four five percent. That's the average for US thirty year mortgage rate. And that's actually slightly higher than it was last month. And the last time we saw the numbers that low might have been when Truman was president. Well well, and the fixed year UH fixed year, the fifteen year

fixed rate mortgage two point seven five. It's amazing. Well if, of course, as that happens, so that the affordability of a new house, you know, pushing some of these folks who got pushed into the rental market, it's pushing them

back into the home owner market. As far as those mortgage rates go, though, do you feel that they are readily accessible to the people that want to buy homes, you know, to some who want to buy homes, to those who have a down payment you know, and have the kind of income, uh, you know, to be able to sustain that. So what we will absolutely not do is go back to a period of time that we have befood the debacle when you had people who were paying half of their income to make a teaser rig.

Those days are long gone and they're not coming back. What about the people who are on the other side of the trade taking thirty year paper for three three and a half pers This is a whole other question about how low interest rates are and that they're not fully priced in risk, and what's going to be the penalty for that, and when is that going to start to hit? Not now, but that's the day that's coming. Well, we look forward to having you on that as always

Ken Goldstein. He is economist with the Conference Board and giving us details about the conference boards leading Economic Index up three tenths of our percent for the month of June. I'm Pim Fox and this is Bloomberg. Coming up on taking Stock. We're going to talk about a company who's closing a twenty two million dollar funding round and how they're trying to redefine companies such as ge, Microsoft, and Fiser to find talented workers. That's next