♪ romaine: from bloomberg world headquarters in new york, i'm romaine bostick. joe: i'm joe weisenthal. caroline hyde has the day off. romaine: market jitters back, s&p 500 index down on the day. joe: the question is, "what'd you miss?" romaine: a lot of worries right now about potential slowdown of economic tiffany -- economic activity, yet apple, facebook,

growing but a potential slowdown in revenue growth. focusing today on the road to recovery, a rocky road, and parts of the economy are reopening on art of the economy are now facing potential new restrictions. we talk about broadway, corporate offices, vaccines and masks that are now being mandated. we dig into all these areas including supply chains and housing, is hot and restaurants, even hotter. that is where we want to start, an area of the economy that has been growing -- consumer spending. we are spending money and that is giving us a boost. joe: brisk consumer personal income and spending data out today, always one of the more interesting numbers. we have it. it is interesting, because we have these huge swings and a huge drop in spending. a big increase in income.

but we see something resembling normalization. it is almost as if you put your hand at the top of the chart and the other at the bottom and draw a line through the middle, we couldn't even imagine the last year and a half happened. romaine: it did. joe: let's bring in reade pickert. reade, tell us about the health of household income and spending. reade: it tells us the consumer is really healthy for now. we saw personal spending increase more than forecast. a lot of that was driven by services. we saw pent-up demand we have been talking about for months. we announcing that in data, and seeing a rotation from spending on goods, to services. seeing where we go from here will be interesting. crisis -- prices are continuing

to grow, we have supply constraints and now, we have the delta variant presenting a risk about whether consumers feel comfortable spending. because right now, spending is well above pre-pandemic levels, goods, but services spending has a ways to go. romaine: that seems to be were some concern is. we are all spending and services and that is good but there is concerned that pent-up demand will fade. it will come back down, do we revert more to normal pre-pandemic levels? or do we fall back down to somewhere where we were during the pandemic? reade: a lot of economists expect us to retain above-trend growth. we have the concept of peak wrote, as in the best growth of the expansion being behind us, cutting into the gdp report yesterday. what we are saying is that demand continues to outstrip

supply. what i am curious to watch is how the factors that have been weighing on the economy, such as the work downing inventory because demand has been so strong, how that looks going forward and what that means for growth. joe: one contributor it seems, to elevated inflation data, is this shift goods spending. we know that clogged ships coming from china and the trucking system and warehouses and so forth, does data we are seeing in consumption, that goods spending is picking up, does that augur for normalization, that could ease the supply chain? reade: more generally, we are still seeing at least from earnings calls is that companies expect supply chain disruptions to be with us for a while. a company like ford motors, who came out earlier this week and

said demand is far outstripping supply and they expect to have a lot of pricing power for a while. but the timing is uncertain in terms of how this will play out. i think we are seeing that from economists as well, in terms of how people look like to figure out how to time when we might get this tailwind for growth. looking forward, prices or something to keep an eye on in terms what it means for consumer spending, but also what that means for the fed. romaine: the fed is also go to keep an eye on the labor market at how that feeds into all the issues you talked about. we are going to get that monthly jobs report friday. does it change the equation? because hiring seems to be going at the same pace we have been looking at. some of the wage pressures aren't as bad as we thought that would be. where are we going to stand a week from now? reade: it doesn't change the picture much. fed chair powell made it very

clear in the press conference this week that we are a ways away from a full labor market recovery. so while we are respecting -- expecting 900,000 jobs next week, which is great, it is still leaving us 7 million jobs shy of pre-pandemic levels. we have a long way to go. but looking in the jobs of work, one thing i want to keep in mind and will be looking for is the participation rate. we have had this massive snapback in terms of the u.s. economy at a time would work worst participation is really depressed, for a variety of reasons. so until we see participation come back, we are going to struggle to post the job gains that we need to have a full recovery. romaine: bloomberg economics reporter reade pickert giving us an update. she talked about supply chain issues. we are going to continue that

conversation as it wreaks havoc on homebuilders. our next guest says it has reached epidemic levels in the building industry. allie will was joining the program in a bit. -- allie wolf is joining the program in a bit. this is bloomberg. ♪

♪ romaine: today, we are focused on economic recovery. one area that has been superhot through the pandemic is housing, despite record demand that seems to still want. joe: yeah, exactly right. housing completions is a key question. we always talk about housing starts. but the question is, you can start a house, but if you can't get it window or bathtub, you can't complete the house. and if you see the ratio of completions adjusted to the

population, it is very low, not like the old days. what is holding back completions? joining us for more, zonda chief economist ali wolf. you are plugged in and talking to homebuilders nonstop, is the good news on supply chain or their ability to get windows or whatever it is? or is it really rough out there? ali: unfortunately, right now, supply chain issues are as bad as they have been. from our july data that came out this week, we have 92 percent of builders saying supply chain issues are a major problem. if you are looking for good news, there are some suppliers that can step in and can supplement what is going on in markets. but the reason builders word going to them in the first place is because they were more expensive. romaine: give us an idea, specifically, are there certain

areas in terms of types of materials and supplies they are looking for that are worse than others, not only in terms of pricing, but simply availability? ali: i will say no. it feels ubiquitous across building a home right now. ed it can hold up land development. -- and it can hold up land development. builders need lots to build homes at builders say the loss they planned for in 2021, for different reasons on the development side, are coming to them three to six months later than they expected. so that is definitely a challenge. and remember, when you are building a home, you are operating on a timeline. so any little thing -- not getting enough nails, windows, it really doesn't matter. i can't pinpoint what thing. i will say it is across-the-board. joe: let's take it from the other side.

there has been some evidence, and we talked to you about it, that because of this incredible home price run up, that consumers are baby, i'm out, not looking at a house right now. i think you have been tweeting evidence of that, the builders seeing bidding wars at high prices, could that ease things if the current state of the housing market cools? ed will have that a potential positive ripple effect on the supply chain? ali: i would say yes, once builders work through the backlog. because builders are still servicing contracts that were done six months ago. they still have to work through that. at that was when the market was really hot. you are right, we have seen some seasonality come back into the market. i would still classify the housing market as hot. 72% of builders are still able to raise prices month over month

and still have consumers show up. but we have seen that price increases are going down in dollar value. a few months ago when we spoke, it was $10,000, 20 thousand dollars month over month in terms of price increases now, home prices are going up closer to $5,000 or $7,000, depending on community. romaine: we can see that it is certainly there, but we haven't seen a wholesale shunning of the market. i wonder about the percentage drop over if people are saying, if housing prices were to somehow fall, would there be a percentage floor where people would jump back in? you still have mortgage rates relatively low, you still have a certain about of the population doing well financially and largely held up during the crisis. what is the main threshold here? ali: that is dead and that is what makes this market interesting, that you have a certain group of knives that say, if i don't jump in now, i

did miss -- i may miss the boat forever. that is why they are saying, i am willing to pay the extra price because i don't want to be stuck renting. you have a different group of buyers who say the prices make me really uneasy. if you look at prices across the country, they are going up on average between $50 and $400 every day. buyers are seeing that and saying this doesn't sustainable. i don't have the exact number of how much you will see prices level off, but i think if you see some correction and interest rates stay low, that is good for pushing the housing cycle longer. romaine: 20 find that number, text it to me discreetly. joe: i want that $400 a day gain. i want to buy a house and sell it for $800 two days later. i guess there are costs involved. we know about the austins and the nashvilles and the boises,

is it the same markets that are incredibly hot right now? ali: great question that you can answer into different ways. you can talk about hot in terms of consumer demand so yes, you see the same markets we have talked about, tampa, austin, phoenix, las vegas, almost markets hot. but you can also look at the supply chain and when you have those hot markets, those are markets where you can't increase sales 20% without increasing access to materials and access to labor 20% and expect the market to operate smoothly. those markets that are hottest for consumers, it is the same players we have been talking about, but those are the ones that are also a victim of their own success. joe: the big component we used to talk about that has cooled down is lumber. so homebuilders, it appears, are

getting substantial relief from lumber prices relative to april or may. how big a deal is that, how much is that saving them and how much of that is being counteracted by the fact they can't get other stuff? ali: lumber becomes really tricky. from a consumer point of view, consumers looking at headlines and saying the reason home prices are going up, is because lumber is going up, lumber is coming down so home prices should be coming down. 50% of builders in july said they did get substantial relief on lumber. they are starting to feel that on the ground. but in the same survey this week, 50% of builders said land rises are up between 50% and 35%. you can solve some of the lumber challenges, but as lumber has come down, a lot of other building tables have become more expensive. the important shift we noted this month is that tilting

material availability has leapfrogged building material costs. meaning affording the materials is a bigger issue. romaine: ali wolf, zonda chief economist talking about the housing market and the effort to meet demand. in the hospitality industry, i talked to a restaurant tour who turned the pandemic into an opportunity. that is next in the latest installment of our road to recovery series. this is bloomberg. ♪

♪ romaine: today, we are focused on the road to economic recovery

and what that is going to look like on the other side. today, we learned to broadway theaters are open but are going to require vaccination for audience members, performers and staff. you also have to wear your mask. joe: it feels like a bit of a moment where more and more businesses, whether for their employees or for people attending, whether it is a restaurant and so forth, are starting to take seriously, get vaccinated or don't show up. it feels like this week has been a tipping point. romaine: at this gets to the broader issue that these businesses have reopened and want to stay open. maybe that helps. i went out recently and spoke with restaurateurs, including on one on the upper west side of new york on how they are reopening, and how they managed to survive the covid crisis. take a listen. the pandemic has upended industries across the board, but maybe none more so than

restaurants and hospitality. as the world shut down, business owners were wondering about their future. >> hospitality is one of the things you cannot just switch work remotely or from your home. it is exactly what we were for bitten to do. romaine: marvel bistro on the upper west side of manhattan found a way to provide the human touch. but when the doors to marleau bistro closed, the owner decided to cook for those who most need it. they started cooking for hospital workers, firefighters and open to sunday soup kitchen at a cathedral a block away. marlow was able to generate food for a pandemic assistance program for the elderly sponsored by the city. it was the way for elaine at to address this urgent hunger she saw in her neighborhood from a

pandemic that left many families without food on the table. it was also a way for elaina to keep her business afloat and kitchen staff on the payroll. >> and we were even dropping off the food by really strict protocol. no one was touching it. it started little and naturally grew bigger. romaine: they weren't cooking up just anything, they were making the same fresh and locally-sourced dishes staff is to making paying customers. as new york works to reemerge from the slowdown, the team at marlow bistro has reinforced the sense of -- bistro said the pandemic has reinforced their sense of community. the big question is, how do you get customers back and do it safely? we had a great story this week

about danny meyer and his restaurant group, and the idea that they may require vaccinations for people to come in the door. the bloomberg food editor joins us now. let's start with danny myers' -- danny meyer's empire. >> he has opened a lot of them, including union square cafe and gramercy tavern, now open for business. joe: in theory, some would-be customers are may be put off by this, but on the other hand, this probably makes other people feel more safe. >> danny meyer, it was a great result of the delta very intent how dangerous it is. so he announced yesterday that he is requiring employees and diners indoors to show proof of vaccination. romaine: what does it look like? you get people in the door, we

talked about supply chain issues. i think you wrote this week that certain types of seafood are really not around. at the restaurant enter -- restaurant owner i interviewed said it wasn't just availability, she says her suppliers are having labor shortages as well. wind delivery doesn't show up when it is supposed to. -- wine delivery doesn't show up when it is supposed to be. kate: you would think it would be boom time as restrictions are lifting but restaurateurs are facing more challenges than ever from the delta very intent supply chain issues. they have yanked scallops and halibut off the menu because prices are unsustainable. they can't pass them onto customers and can't absorb them. joe: these restaurants are high-end with wealthier client talent have more capacity, and they can check things and have someone verify someone's

vaccination status. how are more common, everyday restaurants thinking about making changes to their policies, their customer policies in light of this? or's it too overwhelming for them to try to make changes? kate: great question. on one hand, if so many people are concerned about their safety eating in restaurants, you heard people saying they didn't want to eat indoors. if you know people are vaccinated, it makes a difference to a majority of customers. but even checking that people are vaccinated is no small thing. a woman i talked to from the musket room, jennifer who owns it, said she caught some people trying to fake their past. they were passing the phone down the line like you did when you were 16 with a fake id. romaine: bloomberg's kate krader , does a lot of great reporting on the food scene and restaurant scene and that is part of a

series we are featuring throughout restaurant month in new york city. we have continuing coverage on the industry' is road to recovery. tune in for that and also our weekly podcast, our best content each friday. joe: have a good evening. this is bloomberg. ♪

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