Tom Moeller

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Mortgage applications increased 7.4% (-59.9% y/y) in the week ended March 3 following declines in the prior three weeks. These data are from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

Applications to refinance an existing loan increased 9.4% (-76.1% y/y) after falling 6.1% in the prior week. Applications for purchase rose 6.6% (-42.3% y/y) following five straight weeks of decline.

The percentage of applications for refinancing an existing loan rose to 28.9% in the week ended March 3, up from 30.5% four weeks earlier. The percentage of ARM loans rose to 8.6% but remained down from a recent high of 12.8% in the second week of October.

The effective interest rate on a 30-year fixed-rate loan rose to 7.02% from 6.93%. It was the highest level since the second week of November. The effective rate on 15-year fixed-rate mortgages rose to 6.50% last week from 6.36% in the prior week. The rate on 30-year Jumbo loans increased 6.67%. The rate on a 5-year ARM rose to 6.10% from 6.05% in the prior week.

The average loan size rose 0.7% (0.8% y/y) to $379,200 in the week ended March 3. The series high of $401,900 was reached in the week ended May 6. The average size of a purchase loan held steady (-5.6% y/y) at $425,700. The average loan size to refinance a mortgage rose 3.7% (-11.8% y/y) to $264,500.

The Mortgage Bankers Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's **SURVEYS** database.

- Refinancing and purchase applications both rise.
- Mortgage interest rate on a 30-year loan increases.

U.S. Mortgage Applications Rebound

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Wholesale inventories fell 0.4% (+15.8% y/y) during January following an unrevised 0.1% December uptick. The decline matched the change in the advance report issued earlier. Inventory growth has slowed considerably since early last year.

Durable goods inventories eased 0.1% (+18.0% y/y) in January following a 0.7% December gain. Motor vehicle & parts inventories fell 0.5% (+25.1% y/y). Furniture & home furnishings inventories declined 2.7% (+14.1% y/y) while professional equipment inventories fell 1.1% (+6.6% y/y). Electrical equipment inventories rose 0.3% (21.9% y/y) while machinery inventories gained 1.8% (29.8% y/y).

In the nondurable goods sector, inventories declined 0.9% (+12.4% y/y) in January, the same as in December. Petroleum & petroleum product inventories rose 1.3% (13.8% y/y). Chemical inventories declined 1.6% (+10.0% y/y), the fifth straight monthly decline. Apparel inventories declined 5.5% (+36.2% y/y) and grocery product inventories fell 1.0% (+9.1% y/y).

Wholesale sales rose 1.0% (3.6% y/y) in January after declining 0.2% in December. The yearly gain is reduced significantly from the 23.4% rise in January 2022. The Action Economics Forecast Survey expected a 0.8% monthly gain. Durable goods sales rose 0.7% (-0.5% y/y) after a 0.5% December gain. Motor vehicle & parts sales strengthened 1.2% (9.7% y/y). Sales of machinery rose 1.2% (15.8% y/y) while electrical machinery sales increased 2.4% (-4.6% y/y). Professional equipment sales weakened 2.0% (-6.7% y/y), and furniture & home furnishings sales declined 1.7% (+3.2% y/y).

Sales of nondurable goods rose 1.3% (7.4% y/y) in January after declining in five of the previous six months. A 3.5% rise (10.1% y/y) in petroleum sales was accompanied by a 0.6% drop (-8.7% y/y) in apparel sales. Chemical sales weakened 4.0% (-2.1% y/y) and farm product sales eased 0.3% (+17.5% y/y). Paper product sales fell 2.5% (1.0% y/y).

The inventory-to-sales (I/S) ratio fell to 1.34 in January but remained up from a low of 1.19 in July of 2021. The I/S ratio in the durable goods sector fell to 1.79 but compared to a low of 1.48 in July 2021. The I/S ratio for nondurable goods eased to 0.95 but was higher than the 0.91 low in February 2022.

The wholesale trade figures are available in Haver's **USECON** database. The expectations figure for inventories is contained in the **MMSAMER** database. Expectations for sales are in the **AS1REPNA** database.

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- Inventory growth continues to weaken y/y.
- Sales rebound m/m; trend gain slows significantly.
- Inventory-to-sales ratio remains elevated.

U.S. Wholesale Inventories Decline in January

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Retail gasoline prices rose in the week ended March 6 to $3.39 per gallon (-17.4% y/y) after falling to $3.34 per gallon in the previous week. Prices remained below the mid-June 2022 peak of $5.01 per gallon but above their late December 2022 low of $3.09. The retail price of diesel fuel eased to $4.28 per gallon (-13.7% y/y) last week from $4.29 per gallon in the previous week. The price reached a recent peak of $5.81 per gallon in the third week of June 2022.

The average price of West Texas Intermediate crude oil rose to $77.60 per barrel (-27.3% y/y) in the week ended March 3 following a decline to $75.45 in the prior week. Its recent high was $120.46 in the second week of June 2022. Yesterday, the price was $80.46 per barrel. The average price of Brent crude oil rose to $83.82 per barrel (-26.7% y/y) last week after falling to $81.77 per barrel in the previous week. The price peaked at $127.40 in mid-June of 2022. Yesterday, the price was $85.92 per barrel.

The price of natural gas improved to $2.59/mmbtu (-43.3% y/y), the highest level in four weeks. The increase came after declining to $2.18/mmbtu during the prior week, which was the lowest level since October 2020. The latest price was down from $6.78/mmbtu in the third week of December. The most recent peak was $9.56/mmbtu in the last week of August. Yesterday, the price was $2.46/mmbtu.

In the four weeks ended February 24 gasoline demand declined 1.1% from a year earlier after having fallen 1.4% y/y in prior week. These declines compare to 15.2% y/y growth at the end of 2021. Demand for all petroleum products fell 7.4% y/y in the latest four weeks in contrast to the 14.4% annual growth at the end of 2021. Crude oil input to refineries fell 1.1% y/y.

Gasoline inventories declined 2.8% y/y in the week ended February 24 while crude oil inventories slumped 14.3% y/y. Inventories of distillate fuel oil increased 2.5% y/y.

Measured in days’ supply, gasoline inventories in the week ended February 24 fell w/w to 27.6 days from 28.2 days in the previous week. It was the lowest level since early-January. The supply of crude oil edged higher to 31.8 days from 31.7 days in the prior week. It was increased from a low of 25.3 days at the end of last June.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price data can be found in Haver’s **WEEKLY** and **DAILY** databases. Greater detail on prices, as well as the demand, production and inventory data are in **USENERGY**.
	

- Gasoline prices improve.
- Crude oil prices increase.
- Natural gas prices recover.

U.S. Energy Prices Rise

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Total factory orders fell 1.6% (+4.3% y/y) during January after rising 1.7% in December, revised from 1.8%, according to the U.S. Census Bureau. A 1.9% decline had been expected in the Action Economics Forecast Survey. Factory orders excluding the transportation sector rose 1.2% (4.0% y/y) and reversed an unrevised 1.2% December decline. Orders less transportation also fell 1.2% in November.

Durable goods orders fell 4.5% (+3.0% y/y) in January after rising 5.1% in December. The decline was unrevised from the advance report. A 13.3% plunge (+5.8% y/y) in transportation equipment orders weighed on orders overall. It reflected a halving in civilian aircraft orders. Motor vehicle orders rose 1.3% (5.4% y/y). Electrical equipment & appliance orders rose 1.3% (9.7% y/y), strong for the third straight month, while machinery orders increased 1.6% (2.3% y/y). Orders for computers & electronic products improved 0.6% (2.3% y/y) while furniture orders rose 0.7% (7.2% y/y).

Orders for nondurable goods, which equal shipments, rose 1.5% (5.5% y/y) during January. Petroleum & coal shipments increased 5.1% (14.5 y/y). Food product shipments rose 0.4% (3.0% y/y) but apparel shipments fell 0.9% (+8.3% y/y). Textile product shipments held steady (-1.1% y/y). Paper product shipments rose 1.1% (1.4% y/y) and basic chemical shipments strengthened 1.1% (2.3% y/y).

Total manufacturing shipments increased 0.7% (6.2% y/y) in January. Shipments excluding transportation rose 1.2% (4.7% y/y) after falling sharply for two straight months. Shipments of durable goods eased slightly (+6.9% y/y). Electrical equipment and appliance shipments rose 3.3% (+11.7% y/y) but transportation shipments weakened 1.7% (+14.2% y/y). Primary metals shipments improved 0.9% (0.6% y/y) while machinery shipments increased 1.2% (4.9% y/y). Computer & electronic product shipments increased 0.4% (6.1% y/y).

Unfilled orders held steady in January (6.3% y/y) after increasing 1.1% in December. Order backlogs excluding transportation eased 0.1% (+1.5% y/y) and have been roughly unchanged for five straight months. Backlogs of durable goods also were unchanged (6.3% y/y) as were backlogs in most major industry groups.

Factory sector inventories in January were unchanged (5.6% y/y) after rising 0.4% in December. Excluding transportation, inventories rose 0.1% (6.3% y/y) after increasing 0.2% in December. Durable goods inventories eased 0.1% (+5.2% y/y) and nondurable goods inventories rose 0.2% (6.3% y/y).

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- New orders reverse December increase.
- Shipments rebound after two months of decline.
- Unfilled orders and inventories hold steady.

U.S. Factory Orders Decline in January

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The U.S. ISM Services PMI eased to 55.1 during February from an unrevised 55.2 in January, according to the Institute for Supply Management. These levels are improved from a business contraction level of 49.2 in December of last year. The Action Economics Forecast Survey expected a reading of 54.2 for February.

Haver Analytics constructs a composite index combining the services index and the manufacturing reading released on Wednesday. This index eased to 54.3 last month from 54.4 in January	 but still was higher than 49.1 in December. These readings were below a high of 66.9 in November 2021. The series dates back to July 1997.

During February, the business activity index declined to 56.3 from 60.4 in January, suggesting slower growth overall. The index was below a 70.4 high in November 2021. A lessened 23.7% of respondents (NSA) reported higher activity last month while a smaller 15.7% reported a decline. The supplier delivery measure fell to 47.6 (NSA) from 50.0 in January. It was the lowest level since June 2009. A slightly increased 11.1% of respondents reported faster delivery speeds while a greatly lessened 6.2% reported a slowdown. 

To the upside, the new orders index increased to 62.6 after strengthening to 60.4 in January. The index was below a record 69.2 in October 2021. An increased 33.7% of respondents (NSA) reported more orders while a lessened 10.2% reported a decline. The employment index also improved to 54.0 from 50.0 in January. It was the highest level since December 2021. An increased 21.7% of respondents (NSA) indicated higher employment while a greatly lessened 18.1% reported a decline. 

The prices index declined to 65.6 from 67.8 in January. It was the lowest level since January 2021. The index remained below a record 84.5 in December 2021. A lessened 34.9% (NSA) of respondents reported price increases and just 5.1% reported price declines.

In other categories not in the overall index, the new export orders index increased to 61.7 last month from 59.0 in January. It was the highest level since September of last year. The imports index eased to 52.6 in February after rising to 53.0 in the prior month. The backlog of orders index was little-changed at 52.8 but was increased from a December low of 51.5. The inventory change index rose to 50.6 in February from 49.2. It was the highest level in nine months, up from a September low of 44.1. These series are not seasonally adjusted and not included in the ISM Services PMI total.

The ISM figures are available in Haver's **USECON** database, with additional detail in the **SURVEYS** database. The expectations figure from Action Economics is in the **AS1REPNA** database.

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-	Reading remains in expansion territory.
-	Business activity & supplier delivery measures decline; new orders & employment rise.
-	Prices index falls to a roughly two-year low.

U.S. ISM Services Index Is Little Changed in February

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Nonfarm business productivity rose 1.7% (SAAR) in Q4’22, revised from a 3.0% gain reported last month. This followed 1.2% growth in Q3 and declines during the prior two quarters. A 2.7% rise had been expected in the Action Economics Forecast Survey. Compared to one year earlier, productivity fell 1.8%.

The Q4 productivity gain reflected a 3.1% rise in output which was revised from 3.5%. It followed a 3.6% increase in Q3. For all of 2022, output rose 0.7%, down from 7.3% in 2021. Hours-worked increased 1.4% in Q4, revised from 0.5%. The 2.6% y/y gain followed a 5.8% rise in 2021.

Hourly compensation per hour rose 4.9% in Q4, revised from 4.1%, following an 8.2% increase in Q3. For all of 2022, compensation increased 4.4% after 4.6% growth in 2021. Adjusted for price increases, real compensation rose 0.7% in Q4, but it declined a near record 2.4% y/y.

Unit labor costs in the nonfarm business sector increased 3.2% in Q4. This was the smallest increase since a 4.2% decline in Q1 2021. The Action Economics Forecast Survey expected a 1.4% increase. Unit labor costs rose 6.3% y/y after a 3.2% y/y gain during 2021.

In the manufacturing sector, output per hour fell 2.7% in Q4 following a 3.9% fall in Q3. The 1.9% y/y decline followed 0.9% growth in 2021. Output fell 3.0% (+0.7% y/y) in Q4 after a 0.8% Q3 decline. Hours-worked declined 0.4% (+2.7% y/y) after a 3.2% rise.

Hourly compensation in the factory sector rose 4.8% (4.3% y/y) in Q4 following 7.7% growth in Q3. Unit labor costs rose 7.7% following a 12.1% Q3 rise. During all of 2022, unit labor costs in the factory sector rose 6.3% after increasing 2.1% in 2021.

The productivity and labor cost data are available in Haver’s **USECON** database. The expectations figures are in the **AS1REPNA** database.

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- Growth remains below 2021.
- Compensation revised higher.
- Unit labor costs rise modestly.

U.S. Productivity Gain Revised Lower in Q4’22

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Initial unemployment insurance claims eased to 190,000 (+4.4% y/y) in the week ended February 25 from an unrevised 192,000 in the prior week. Expectations had been for a rise to 197,000 in the Action Economics Forecast Survey. The four-week moving average of initial claims of 193,000 compared to 191,250 in the prior week. 

In the week ended February 18, the number of continuing weeks claimed for unemployment insurance eased to 1.655 million (2.0% y/y) from 1.660 million in the prior week. The four-week moving average of continuing claims edged higher to 1.672 million from 1.670 million.

The insured rate of unemployment held steady at 1.1%, below the 1.2% rate in the prior two weeks. It remained above the record low range of 0.9% and 1.0% in place since mid-April.
   
In the week ended February 11, the total number of continued weeks claimed in all unemployment insurance programs fell 1.0% (-0.6% y/y) to 1.959 million from 1.979 million in the prior week. This total includes federal employees, newly discharged veterans, extended benefits and other specialized programs and is not seasonally adjusted. Claims in the Pandemic Unemployment Assistance program and Pandemic Emergency Unemployment Compensation are no longer included in the main Labor Department press release, as both programs have expired.

The insured rates of unemployment in regular programs vary across states. The highest insured unemployment rates in the week ending February 11 were in New Jersey (2.68%), Massachusetts (2.33%) California (2.28%), Illinois (2.11%), Alaska (2.07%) and New York (1.93%). The lowest rates were in Alabama (0.27%), Virginia (0.31%), Kansas (0.40%), Nebraska (0.62%) and South Dakota (0.63%). Other major state rates include Pennsylvania (1.76%), Texas (0.97%) and Florida (0.41%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims going back to 1967 are contained in Haver's **WEEKLY** database, and they are summarized monthly in **USECON**. Data for individual states are in **REGIONW**. The expectations figure is from the Action Economics Forecast Survey, carried in the **AS1REPNA** database.

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- Initial claims at four-week low.
- Continuing claims slip, also to four-week low.
- Insured unemployment rate steady.

U.S. Unemployment Insurance Claims Slip

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The Autodata Corporation reported that February light vehicle sales fell 6.3% (+8.8% y/y) to 15.19 million units (SAAR) after increasing 19.2% to 16.21 million in January. Sales remain below the April 2021 peak of 18.37 million but the two months together stood at the highest level since June 2021. Vehicle sales comprise about four percent of real consumer expenditures.

Sales of light trucks fell 6.1% last month (+9.6% y/y) to 12.09 million after surging 22.1% in January to 12.87 million units. Purchases of domestically-produced light trucks weakened 5.3% (+11.3% y/y) to 9.46 million after rising 24.6% in January to 9.99 million units. Sales of imported light trucks declined 9.0% (+3.6% y/y) to 2.62 million after strengthening 14.3% to 2.88 million in January.

Trucks' share of the light vehicle market rose to 79.6% in February from 79.4% in January, and roughly matched a 79.7% high in March 2022.

Auto sales declined 7.2% in February (+6.2% y/y) to 3.10 million units after increasing 9.2% during January to 3.34 million units. Sales have been moving sideways since mid-2021. Purchases of domestically-made autos declined 7.8% (+10.4% y/y) to 2.13 million units and reversed all of the 7.9% January increase to 2.31 million units. Sales of imported autos weakened 6.8% (-3.0% y/y) to 0.96 million units after rising 12.0% to 1.03 million units in January.

Imports' total share of the U.S. vehicle market fell to 23.6% last month after falling to 24.1% in January. It was the lowest share since July of 2022 and below a high of 28.0% in September 2021. Imports' share of the passenger car market improved to 31.0% last month from 30.8% in January, but remained down from the September 2021 high of 37.9%. Imports' share of the light truck market fell to 21.7% in February from 22.4% in January.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the **INDUSTRY** database.

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- Total sales reverse just half of January surge.
- Light truck sales backpedal; car sales trend sideways.
- Imported vehicle sales fall sharply.

U.S. Light Vehicle Sales Retreat in February

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The U.S. ISM manufacturing index improved to 47.7 in February from 47.4 in January. It was below the reading of 48.4 in December, according to the Institute for Supply Management. The latest figure was the fourth consecutive month below the break-even level of 50 and it remained below the peak of 63.8 in March 2021. The figure remained near the lowest level since May 2020. The Action Economics Forecast Survey expected 47.9 for February.

Movement amongst the component series was mixed last month. The new orders index rose to 47.0 from 42.5 and stood at its highest level since October. It was, nevertheless, the sixth consecutive month below the break-even level of 50. An improved 21.3% (NSA) of respondents reported higher new orders in February while a lessened 24.1% reported a decline. Working the other way, the production index fell to 47.3 last month from 48.0, remaining well below its high of 67.0 in March 2021. Seventeen percent (NSA) of respondents reported higher production while 21.1% indicated a decline. February’s inventory index eased to 50.1 from 50.2, remaining beneath the most recent high of 56.6 in July. The supplier delivery index edged down to 45.2 but is down roughly one-third y/y, indicating much faster product delivery speeds.

The employment index declined to 49.1 in February from 50.6 in January. It was the first month below the break-even level of 50 in three months. A lessened 13.8% (NSA) of respondents reported higher employment last month while an also reduced 15.2% reported less hiring.

The prices index rose to 51.3 (NSA) in February from 44.5 in January. It stood well below its high of 92.1 in June of 2021, though it was above the December low of 39.4. A higher 24.7% (NSA) of respondents reported higher prices while a lessened 22.1% reported price declines.

In other ISM series, the new export orders index edged higher to 49.9 in February from 49.4 in January. It remained down, however, from its recent high of 57.1 in February 2022. The imports index increased to 49.9 in February from 47.8 in January, but it also was below its high of 61.0 in June 2021. The order backlog index rose to 45.1 from 43.4 and stood at the highest level in four months.

The ISM figures are based on responses from over 400 manufacturing purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states. These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver's **AS1REPNA** database.

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-	Index remains near three-year low.
-	Component changes are mixed.
-	Pricing power improves again.

U.S. ISM Manufacturing Index Edges Higher in February

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The Conference Board's Index of Consumer Confidence Index fell 2.9% (-2.6% y/y) to 102.9 during February after declining 2.8% to 106.0 in January, revised from -1.7%. A reading of 108.5 had been expected in the Action Economics Forecast Survey for February.

The Expectations Index fell 8.3% (-13.7% y/y) to 69.7 following an 8.9% January drop, revised from -6.7%. The Present Situation Index rose 1.1% (6.9% y/y) to 152.8, the highest level in ten months.

Consumers' assessment of current business conditions deteriorated m/m as 17.8% of respondents characterized conditions as good, the least in three months. Labor market readings improved sharply this month. The jobs gap, representing the difference between respondents indicating that jobs are plentiful versus those saying jobs are hard to get, rose to 41.5% in February, the highest level since April of last year. Calculated by Haver Analytics, this series has a 67% correlation with the unemployment rate over the last ten years. The jobs plentiful measure rose to 52.0, up 7.2% in the last four months. The jobs hard-to-get measure fell to the lowest level since April of last year.

A lessened 14.2% of respondents felt that business conditions would get better in six months. Fifteen percent of respondents felt there would be more jobs in six months, the fewest since October 2016. A lessened 13.4% expected income to increase in six months, the least since August 2020.

The expected inflation rate in twelve months declined to 6.3% from 6.7% in January. It remained below the 7.9% high in June of last year but remained higher than the 4.4% low in January 2020.

Sixty-three percent of respondents felt that interest rates would be higher in twelve months while 11.5% thought they would be lower. Thirty-one percent of respondents thought that stock prices would be higher in twelve months and 31.6% thought they would be lower.

The share of respondents planning to buy a home within six months plunged to 5.0% in February from 6.3% in January, still higher than its 4.5% July low. Those planning to buy a major appliance weakened to 41.8% of respondents this month after surging to 52.4% in October. It remained above its 41.1% July low.

The Consumer Confidence data are available in Haver's **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

**The Role of Immigration in U.S. Labor Market Tightness** from the Federal Reserve Bank of San Francisco can be found [here](https://www.frbsf.org/wp-content/uploads/sites/4/el2023-06.pdf).

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-	Expectations weaken again.
-	Present situation index improves.
-	Inflation expectations fall sharply.

U.S. Consumer Confidence Declines in February

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The Federal Housing Finance Agency reported that home prices eased 0.1% during December, the same as in November. Prices fell in four of the last six months and were stable in one. Prices increased 6.6% y/y versus a peak of 19.2% y/y reached in February of 2022. 
	
Seasonally adjusted monthly house price changes were mixed amongst Census regions with the largest decline occurring in the Middle Atlantic area, off 0.8% (+6.8% y/y). Following closely behind was a 0.7% decline (+7.4% y/y) in the West South Central region and a 0.3% drop (+3.4%) in the Mountain region. Prices also fell 0.3% (+5.4%) in New England and dipped 0.	2% (+6.3% y/y) in West North Central region. Home prices in the Pacific region eased slightly (+0.6% y/y).

Increasing in December were home prices in the East South Central Region by 0.9% (9.5% y/y) and the East North Central region where they rose 0.2% (6.7% y/y). Home prices also improved 0.1% (10.6% y/y) in the South Atlantic region of the country. Year-to-year price increases in each of the regions of the country were well below the gains reached in 2021 or 2022.

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancing the same kind of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The **FHFA** data are available in Haver’s **USECON** database.

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- FHFA Home Price Index slips for second straight month.
- House prices are down in six of the nine census regions.

U.S. FHFA House Prices Edge Lower in December

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<i>The National Association for Business Economics forecast for real GDP growth in 2024 of 1.9% (Q4/Q4) compares to 0.3% estimated earlier. For 2023, expected growth of 0.3% was unchanged. These gains follow a 0.9% rise in 2022.</i> Quarterly, GDP is expected to hold steady in Q1’23 then rise 0.1% in Q2'23, increase 0.2% in Q3 and 1.1% in Q4.

Personal consumption expenditures are forecast to grow 1.3% this year and 1.3% in 2024, after a 2.8% gain in 2022. Business fixed investment is expected to rise 0.9% this year and 1.4% in 2024, following a 3.8% rise in 2022. An expected decline in residential investment this year of 14.2% should be followed by a 1.9% rise in 2024; all coming after a 10.7% decline in 2022. After falling 0.6% in 2022, government spending should rise 1.8% in 2023 then increase 1.0% in 2024.

The net export deficit is expected to shrink to $1.231 trillion in 2023 from the record $1.357 trillion in 2022, then marginally narrow to $1.217 trillion in 2024. Exports should rise 3.0% this year, then gain 3.6% in 2024. Imports are expected to decline 1.0% this year then rise 2.9% in 2024. Inventories are expected to rise $37 billion in 2023 after a $125 billion 2022 gain, then rise $40 billion in 2024.

Housing starts are forecasted to decline to 1.31 million in 2023 from 1.55 million in 2022, then rise to 1.35 million units in 2024. Light vehicle sales are projected to rise to 14.8 million this year from 13.8 million in 2022, then improve to 15.5 million in 2024. Sales will remain below the 2016 peak of 17.5 million. An average monthly gain in payroll employment of 61,000 in 2023 compares to 401,000 in 2022; it should then rise to 102,000 in 2024. Expectations for the unemployment rate place it at 3.9% this year compared to 3.6% in 2022; then it is expected to rise further to 4.4% in 2024.

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Inflation pressures should ease. After rising 7.1% (Q4/Q4) in 2022, the gain in the Consumer Price Index should moderate to 3.0% in 2023 and 2.3% in 2024. Price inflation, as measured by the PCE price index, is expected to slow to 2.8% in 2023 and 2.2% in 2024, after surging to 5.7% in 2022. The chain PCE price index excluding food & energy is projected to slow to 3.0% in 2023 and 2.2% in 2024, after rising 4.8% in 2022. The cost of crude oil is expected to be $79 at the end of this year and stay at $79 per barrel by the end of 2024.

Interest rates are expected to decline. The forecasted 3.55% rate on a ten-year Treasury note at the end of this year compares to 3.88% at the end of 2022. The rate should decline further to 3.42% by the end of 2024. The Federal funds rate is projected to rise, however, to 4.88% by the end of 2023 from 4.375% at the end of 2022. The funds rate is forecasted to decline to 3.50% at the end of 2024.

After-	tax corporate profits are predicted to decline 1.6% this year after rising 7.8% in 2022, then improve 2.5% next year. The expected Federal government budget deficit should fall to $1.185 trillion this year from $1.375 trillion in 2022, then total $1.250 trillion in 2024. The deficit hit a peak of $3.132 trillion in 2020.

The figures from the latest NABE report can be found in Haver's **SURVEYS** database.

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-	Growth in consumer spending should be slow & steady.
-	Housing starts are predicted to decline this year then rise next year.
-	Vehicle sales should improve this year and next.
-	Price inflation is expected to slow.

NABE Forecast Lifts U.S. Economic Growth in 2024 after Minimal Gain in 2023

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