Aug. 24 - Moody's John Lonski says that recent economic data may show some signs of improvement, but leading indicators suggest the U.S. isn't out of the woods yet and the Fed will need to enact more stimulus.
Pretty good week for economic data we've gotten more signs that housing market is on the rebound and her goods orders posted about an expected increase. So what the economic heavyweights can beating in Jackson Hole Wyoming next week think about all this news. Remarked on by John -- ski chief economist at Moody's does -- job. Thank you so you wait the data that we got this week are you feeling better about the economy. Well I don't think. The threat of recession looms large at this point in time. The housing data has improved. But it's off of a very low base. Home sales remain very low from a historical perspective. Durable goods orders to look good. However upon closer inspection we thought. That -- waters. For non defense capital goods excluding aircraft a -- capital goods orders. Which supplies -- very good leading. An indication of where it's investment spending is added. I've just experienced its worst decline. Of the core recovery this warrants have reduced capital spending. So -- ballads that -- is simply is not strong enough. To rule out the need for additional monetary stimulus. So what does that mean for the prospects of QE3 coming sooner rather than later that. Especially -- what the Fed said during the minutes from me. Right Ed recently Ben Bernanke provided additional. Signs. That the Fed might be ready to move as early as the September meeting of the apple -- seat. The Fed does admit that the US economy's growing. But the problem is. That the rate of growth is not rapid enough. So that the US as well insulated. From global economic risks. Problems in Europe the ongoing slowdown in emerging market countries. As well as politically related risks. We're the US's fiscal. Cliff. Represents. A you know -- potential. Problem for the US economy. I think John next week Ben Bernanke is going to be speaking at Jackson Hole Wyoming it's always very closely followed at that particular speech. What do you wanna hear from him next week. Think we're gonna hear that the Fed will do what ever it takes to keep the US economy safely distance from a recession. That the Fed will not be shy about using any thing at its disposal that will -- 20 wait. That at the US economy continues to grow but I think effect will that. That -- very capable of curing everything that ails the world economy. That we need more help from European policy makers. And that all the bad. Can't offset. Global had -- to a certain extent the Fed can not why it global had wins. It got interesting listening to some issues you're talking about it some concerns. We really have these same concerns a year ago right there are concerns that US economy what's happening in Europe. So what really would QE3 even do for the economy at this point if we're having the same worries -- -- while ago. Well as we've seen recently you know the mere mention. The possibility of QE3 provides an important lift. Two financial markets. At higher prices for equities in narrower spreads on corporate bonds. Can only be viewed positively. For economic performance. And of course earlier we spoke of the recovery by housing. Now if we do have the ten year treasury yield. Steered down to a range of one and a quarter to one and a half percent. Chances are we'll see it even stronger group won it by home sales in the United States which could only be a positive. And not only for residential investment spending but for what segments of consumer spending as well. Moody's John -- great to talk again John thanks so much. My pleasure. And be sure to check the Reuters Insider platform every day 3 PM for more wealth strategies segments. I'm Rhonda -- this is writers. Thank you John very much OK talk to my pleasure. Particular group.