Tom Moeller

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223d.jpg" style="width: 353px; height: 265px;" align="right">Continuing
to move generally in a sideways pattern, the pump price for
regular gasoline rose last week to $2.66. Nevertheless,
prices remained up by more than one-third from last year. Yesterday,
the spot market price for a gallon of regular gasoline rose to its
highest level since January. The figures are reported by the U.S.
Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
 The price for a barrel of light
sweet crude (WTI) oil recovered prior weakness and rose last week to
$78.30. Nevertheless, it was down from the early-January high of
$82.59. Yesterday, the spot price was up further to $80.16. <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223e.jpg" style="width: 353px; height: 265px;" align="right">
Prices have
risen from $71.53 early this past December and are more than double the
December 2008 low of $32.37.Demand for gasoline fell 3.0% last week
versus one year ago. That decline compared to a 3.9% increase at the
beginning of October. Breaking away from earlier y/y strength, the
demand for residual fuel oil fell 3.7% y/y. Distillate demand fell
12.3% y/y, a decline more moderate than the 21.6% y/y shortfall at the
beginning of last July. Inventories of crude oil and petroleum products
slipped in February but were up 0.7% from one year ago.
 U.S. natural
gas prices have been roughly flat this year as temperatures have been
volatile. They fell to an average $5.40 per mmbtu (+25.21% y/y) from
the high of $6.50 early in January. Nevertheless they remained double
the September low.The energy price data can be found in Haver's WEEKLY
database while the daily figures are in DAILY.
The gasoline demand figures are in OILWKLY.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM" style="color: white;">Weekly Prices</a></th>
<th scope="col">02/22/10</th>
<th scope="col">02/15/10</th>
<th scope="col">02/08/10</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.66</td>
<td>2.61</td>
<td>2.65</td>
<td>39.1%</td>
<td>2.35</td>
<td>3.25</td>
<td>2.80</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>78.30</td>
<td>73.91</td>
<td>74.59</td>
<td>111.7%</td>
<td>61.39</td>
<td>100.16</td>
<td>72.25</td>
</tr>
</tbody>
</table>

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Continuing to move generally in a sideways pattern, the pump price for regular gasoline rose last week to $2.66. Nevertheless, prices remained up by more than one-third from last year. Yesterday, the spot market price for a gallon of [...]

U.S. Weekly Gasoline Prices Recover Somewhat

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223a.jpg" style="width: 353px; height: 265px;" align="right">Ever-so-slightly,
home prices are rising m/m and the annual decline has
eased. The December S&amp;P/Case Shiller Home Price Index edged up
another 0.3% and they have risen 3.6% from the May low. That
improvement pared the 12-month price decline to 3.1% from its worst of
-19.0% last January. For 2009 as a whole, prices fell 13.3% and they
have fallen 29.4% from the early-2006 peak.&nbsp;
The narrower 10 City
Composite Index also gained 0.3% following three months of 0.2%
increase. As a result, the 12-month decline eased to -2.4% from -19.4%
at its worst. These negative comparisons by far outpace those during
the 1990-91 recession when home prices fell 6.3%.
 The performance of
home prices has been quite varied around the country. During December,
price gains near or above 1.0% were logged in Boston, Las Vegas, San
Diego, San Francisco and Phoenix but prices still fell in Chicago,
Miami, New York, Cleveland, and Tampa.
The Case Shiller home price
series are value-weighted, i.e., a greater index weight is assigned to
more expensive homes. The S&amp;P/Case-Shiller home price series
can be found in Haver's USECON database and the
city data highlighted below is in the REGIONAL
database.
Mortgage
Choice and the Pricing of Fixed-Rate and
Adjustable-Rate Mortgages from the Federal Reserve Bank of
San Francisco is available here <a href="http://www.frbsf.org/publications/economics/letter/2010/el2010-03.html">here</a>.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (SA, Jan 00 = 100)</th>
<th scope="col">December m/m</th>
<th scope="col">November m/m</th>
<th scope="col">October&nbsp;&nbsp;
m/m</th>
<th scope="col">Dec. y/y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">20 City Composite Index</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>-3.1%</td>
<td>-13.3%</td>
<td>-15.7%</td>
<td>-3.8%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">&nbsp; Regional
Indicators</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Atlanta</td>
<td>-0.0</td>
<td>0.2</td>
<td>-0.3</td>
<td>-3.9</td>
<td>-11.6</td>
<td>-8.5</td>
<td>0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Boston</td>
<td>0.9</td>
<td>0.5</td>
<td>-0.3</td>
<td>0.5</td>
<td>-4.9</td>
<td>-5.7</td>
<td>-4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Chicago</td>
<td>-0.6</td>
<td>-0.6</td>
<td>-1.1</td>
<td>-7.2</td>
<td>-14.2</td>
<td>-10.0</td>
<td>-1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Dallas</td>
<td>0.1</td>
<td>0.6</td>
<td>0.2</td>
<td>3.0</td>
<td>-2.3</td>
<td>-3.2</td>
<td>0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Denver</td>
<td>0.1</td>
<td>0.2</td>
<td>0.3</td>
<td>1.2</td>
<td>-2.8</td>
<td>-4.9</td>
<td>-1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Los Angeles</td>
<td>1.4</td>
<td>1.2</td>
<td>0.7</td>
<td>-0.1</td>
<td>-15.4</td>
<td>-24.2</td>
<td>-5.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
New York</td>
<td>-0.5</td>
<td>-0.9</td>
<td>-0.4</td>
<td>-6.3</td>
<td>-9.8</td>
<td>-7.4</td>
<td>-2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
San Francisco</td>
<td>1.0</td>
<td>1.2</td>
<td>1.7</td>
<td>4.8</td>
<td>-18.4</td>
<td>-24.3</td>
<td>-4.5</td>
</tr>
</tbody>
</table>

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Ever-so-slightly, home prices are rising m/m and the annual decline has eased. The December S&P/Case Shiller Home Price Index edged up another 0.3% and they have risen 3.6% from the May low. That improvement pared the 12-month price [...]

U.S. Weekly Gasoline PricesRecover Somewhat

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223a.jpg" style="width: 353px; height: 265px;" align="right">Ever-so-slightly,
home prices are rising m/m and the annual decline has
eased. The December S&amp;P/Case Shiller Home Price Index edged up
another 0.3% and they have risen 3.6% from the May low. That
improvement pared the 12-month price decline to 3.1% from its worst of
-19.0% last January. For 2009 as a whole, prices fell 13.3% and they
have fallen 29.4% from the early-2006 peak.&nbsp;
The narrower 10 City
Composite Index also gained 0.3% following three months of 0.2%
increase. As a result, the 12-month decline eased to -2.4% from -19.4%
at its worst. These negative comparisons by far outpace those during
the 1990-91 recession when home prices fell 6.3%.
 The performance of
home prices has been quite varied around the country. During December,
price gains near or above 1.0% were logged in Boston, Las Vegas, San
Diego, San Francisco and Phoenix but prices still fell in Chicago,
Miami, New York, Cleveland, and Tampa.
The Case Shiller home price
series are value-weighted, i.e., a greater index weight is assigned to
more expensive homes. The S&amp;P/Case-Shiller home price series
can be found in Haver's USECON database and the
city data highlighted below is in the REGIONAL
database.
Mortgage
Choice and the Pricing of Fixed-Rate and
Adjustable-Rate Mortgages from the Federal Reserve Bank of
San Francisco is available here <a href="http://www.frbsf.org/publications/economics/letter/2010/el2010-03.html">here</a>.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (SA, Jan 00 = 100)</th>
<th scope="col">December m/m</th>
<th scope="col">November m/m</th>
<th scope="col">October&nbsp;&nbsp;
m/m</th>
<th scope="col">Dec. y/y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">20 City Composite Index</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>-3.1%</td>
<td>-13.3%</td>
<td>-15.7%</td>
<td>-3.8%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">&nbsp; Regional
Indicators</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Atlanta</td>
<td>-0.0</td>
<td>0.2</td>
<td>-0.3</td>
<td>-3.9</td>
<td>-11.6</td>
<td>-8.5</td>
<td>0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Boston</td>
<td>0.9</td>
<td>0.5</td>
<td>-0.3</td>
<td>0.5</td>
<td>-4.9</td>
<td>-5.7</td>
<td>-4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Chicago</td>
<td>-0.6</td>
<td>-0.6</td>
<td>-1.1</td>
<td>-7.2</td>
<td>-14.2</td>
<td>-10.0</td>
<td>-1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Dallas</td>
<td>0.1</td>
<td>0.6</td>
<td>0.2</td>
<td>3.0</td>
<td>-2.3</td>
<td>-3.2</td>
<td>0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Denver</td>
<td>0.1</td>
<td>0.2</td>
<td>0.3</td>
<td>1.2</td>
<td>-2.8</td>
<td>-4.9</td>
<td>-1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Los Angeles</td>
<td>1.4</td>
<td>1.2</td>
<td>0.7</td>
<td>-0.1</td>
<td>-15.4</td>
<td>-24.2</td>
<td>-5.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
New York</td>
<td>-0.5</td>
<td>-0.9</td>
<td>-0.4</td>
<td>-6.3</td>
<td>-9.8</td>
<td>-7.4</td>
<td>-2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
San Francisco</td>
<td>1.0</td>
<td>1.2</td>
<td>1.7</td>
<td>4.8</td>
<td>-18.4</td>
<td>-24.3</td>
<td>-4.5</td>
</tr>
</tbody>
</table>

U.S. Weekly Gasoline Prices
Recover Somewhat 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 23, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223d.jpg" style="width: 353px; height: 265px;" align="right">Continuing
to move generally in a sideways pattern, the pump price for
regular gasoline rose last week to $2.66. Nevertheless,
prices remained up by more than one-third from last year. Yesterday,
the spot market price for a gallon of regular gasoline rose to its
highest level since January. The figures are reported by the U.S.
Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
 The price for a barrel of light
sweet crude (WTI) oil recovered prior weakness and rose last week to
$78.30. Nevertheless, it was down from the early-January high of
$82.59. Yesterday, the spot price was up further to $80.16. <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223e.jpg" style="width: 353px; height: 265px;" align="right">
Prices have
risen from $71.53 early this past December and are more than double the
December 2008 low of $32.37.
Demand for gasoline fell 3.0% last week
versus one year ago. That decline compared to a 3.9% increase at the
beginning of October. Breaking away from earlier y/y strength, the
demand for residual fuel oil fell 3.7% y/y. Distillate demand fell
12.3% y/y, a decline more moderate than the 21.6% y/y shortfall at the
beginning of last July. Inventories of crude oil and petroleum products
slipped in February but were up 0.7% from one year ago.
 U.S. natural
gas prices have been roughly flat this year as temperatures have been
volatile. They fell to an average $5.40 per mmbtu (+25.21% y/y) from
the high of $6.50 early in January. Nevertheless they remained double
the September low.
The energy price data can be found in Haver's WEEKLY
database while the daily figures are in DAILY.
The gasoline demand figures are in OILWKLY.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM" style="color: white;">Weekly Prices</a></th>
<th scope="col">02/22/10</th>
<th scope="col">02/15/10</th>
<th scope="col">02/08/10</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.66</td>
<td>2.61</td>
<td>2.65</td>
<td>39.1%</td>
<td>2.35</td>
<td>3.25</td>
<td>2.80</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>78.30</td>
<td>73.91</td>
<td>74.59</td>
<td>111.7%</td>
<td>61.39</td>
<td>100.16</td>
<td>72.25</td>
</tr>
</tbody>
</table>

U.S. Weekly Chain Store Sales Look
Lifeless 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 23, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223f.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Consumer spending has yet to show real spark. Weekly chain
store sales improved by 2.3% last week but for the month so far sales
remained down slightly from the January average. Sales also remained
down 1.6% from last summer's high.
The ICSC-Goldman
Sachs retail chain-store sales index is constructed using the
same-store sales (stores open for one year) reported by 78 stores of
seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.
 During the last ten years there has been a 69%
correlation between the year-to-year growth in chain store sales and
the growth in general merchandise retail sales. The weekly
figures are available in Haver's SURVEYW database.

Also treading water has been the leading indicator of chain
store sales. It's been roughly unchanged since early-January and flat
for the last year. This composite leading economic indicator is
compiled from four series: (1) the MBA's volume index of mortgage
applications for home purchase (2) the ABC News/Money magazine's survey
of consumer buying conditions (3) new filings for jobless benefits and
(4) the 30-year government bond yield.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM" style="color: white;">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">02/20/10</th>
<th scope="col">02/13/10</th>
<th scope="col">02/06/10</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>490.4</td>
<td>479.5</td>
<td>487.1</td>
<td>0.9%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
Confidence Among German
Industrialists Slips A Bit In February 
by <a href="/comment/Curley.html">Louise
Curley</a> February 23, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223g.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
German business confidence, which had been improving since
March 2009, declined slightly in February. On a percent balance
measure, which subtracts the percentage of respondents who are negative
from those who are positive, confidence among German entrepreneurs fell
to -10.3% from -9.0%. The climate measure is a combination of the
business opinions regarding current conditions and expectations for the
next six months.. The percent balance of business opinion on current
conditions fell to -23.8% in February from -21.0% in January. Much of
the decline can probably be attributed to the weather. Heavy snow fall
and cold temperatures were particularly bad for construction and the
distributive trades, both wholesale and retail.
In spite of the fact
that the pessimists have exceeded the optimists regarding current
conditions by more than 20% over the past several months, the
proportion of German entrepreneurs who expect better condition six
months ahead has been increasing. In December there was a slight excess
of optimists over pessimists of 0.3%. In February the percent balance
on expectations increased to 4.2% from 3.8% in January.
The increase
in the proportion of business people who expect better conditions is in
sharp contrast to the declines in the proportion of financial people
who expect better conditions as revealed last Week in the ZEW survey.
Not only do the business and financial communities sometimes differ in
their appraisals of the future, but, they apparently differ in
temperament, as shown in the attached chart which compares the percent
balances on expectations of the two surveys. The financial community
appears to have a positive bias and to have wide mood swings while the
business community tends to have a negative bias and more restrained
mood swings. In statistical terms--over entire history of each of the
two series--the mean of the ZEW series is 27.1% and its standard
deviation, 40.6%; the mean of the IFO series is -5.2% and its standard
deviation, 10.6%

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">GERMANY</th>
<th scope="col">Feb 10&nbsp;</th>
<th scope="col">Jan 10&nbsp;</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Low</th>
<th scope="col">Date</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">IFO:&nbsp;&nbsp;
Climate (% Bal.)</td>
<td>-10.3</td>
<td>-9.0</td>
<td>-16.5</td>
<td>-12.9</td>
<td>-16.5</td>
<td>-17.8</td>
<td>-36.0</td>
<td>Mar 09</td>
</tr>
<tr>
<td class="firstcol">Current Conditions (% Bal.)</td>
<td>-23.8</td>
<td>-21.0</td>
<td>-22.5</td>
<td>-24.9</td>
<td>-28.4</td>
<td>-29.0</td>
<td>-38.1</td>
<td>Jun 09</td>
</tr>
<tr class="odd">
<td class="firstcol">Expectations
(% Bal.)</td>
<td>4.2</td>
<td>3.8</td>
<td>0.3</td>
<td>0.0</td>
<td>-3.9</td>
<td>-5.9</td>
<td>-44.8</td>
<td>Dec 08</td>
</tr>
<tr>
<td class="firstcol">ZEW: Expectations
(% Bal.)</td>
<td>45.1</td>
<td>47.2</td>
<td>50.4</td>
<td>51.1</td>
<td>56.0</td>
<td>57.7</td>
<td>-63.0</td>
<td>Oct 08</td>
</tr>
</tbody>
</table>
U.S. Consumer Confidence Falls
Sharply 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 23, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223h.jpg" style="width: 353px; height: 265px;" align="right">There
was a
slowing of retail sales during December and January. More weakness may
be in the offing given the latest souring of consumers' mood. For
February, the Conference Board reported that consumer confidence fell
18.6% from January and that brought down the level of confidence to its
lowest since last April. Just a modest m/m decline had been the
Consensus expectation for February and during the last ten years there
has been an 83% correlation between the level of consumer confidence
and the y/y change in real consumer spending. The Conference Board data
can be found in Haver's CBDB database.
Consumers'
assessment of current economic conditions slumped by nearly one-quarter
m/m. That reversed all of a January increase and left the measure near
the historic low. Jobs were seen as hard to get by 47.7% of respondents
and jobs were seen as plentiful by only 3.6%. That was up just slightly
from the series' historic low. Also at a record low was the percentage
of respondents who saw business conditions as good. The percentage of
consumers who thought business conditions were bad rose to 46.3%, off
somewhat from its peak but nearly the highest since 1983.&nbsp;
The expectations component of confidence also fell sharply to
its
lowest level since April. Lessened expectations for business
conditions, employment and income have led the latest downdraft.
Expectations for the inflation rate in twelve months held stable at
5.2%, the lowest level since 2007 and down from last year's high of
7.7%. Interest rates in twelve months were expected to be higher by
52.2% of respondents while 14.2% expected rates to fall. A greatly
lessened 28.6% of respondents expected stock prices to rise.
&nbsp;
An improved 2.7% of those surveyed plan to buy a home
during the next six months. An increased 27.1% plan to buy a major
appliance versus 30.9% back in 2007. Only 4.8% plan to buy an
automobile versus 6.0% in 2007 and just 1.8% plan to buy a new
one.&nbsp;&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223i.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100223j.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board&nbsp;(SA, 1985=100)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y %</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>46.0</td>
<td>56.5</td>
<td>53.6</td>
<td>81.8</td>
<td>45.2</td>
<td>57.9</td>
<td>103.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>19.4</td>
<td>25.2</td>
<td>20.2</td>
<td>-13.0</td>
<td>24.0</td>
<td>69.9</td>
<td>128.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>63.8</td>
<td>77.3</td>
<td>75.9</td>
<td>133.7</td>
<td>59.3</td>
<td>50.0</td>
<td>86.4</td>
</tr>
</tbody>
</table>

</body></html>

U.S. Weekly Gasoline PricesRecoverSomewhat

Louise Curley

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222e.jpg" style="width: 353px; height: 265px;" align="right">Taiwan
and
Thailand released fourth quarter Gross Domestic Product data this
morning.&nbsp; Taiwan is a small highly industrialized island
nation of about 7 million people with a per capita income of $16,428 in
2009 .&nbsp; Thailand, by contrast, is a large continental nation
of some 23 million people with a per capital income of $4,108 in
2008.&nbsp;&nbsp; Taiwan reported a fourth quarter increase of
4.23% and Thailand one of 3.6%.
In Taiwan, although the rate of
increase in the exports of good and service declined from 7.92% in the
third quarter, it was still a respectable 6.08%.&nbsp; Private
consumption, however, increased by 4.52% in the fourth quarter,
compared with 0.77% in the third quarter.&nbsp; Fixed capital
formation was up by 10.04% and inventory liquidation was sharply lower.
Inventories have been cut back aggressively since the beginning of
2009.&nbsp; From declines 52,762, 29,881 and 75,142million 2006 NT$
in the third, second and first quarters of 2009 respectively, the
fourth quarter saw a decline of only 2,555 million 2006 NT$.
In
Thailand, exports of goods and service increased 7.69% in the fourth
quarter, compared with 2.39% in the third quarter.&nbsp; Private
consumption also accelerated, from 1.78% to 2.97%.&nbsp; Fixed
investment, however, was 1.66% lower in the fourth quarter than in the
third quarter and inventories were increased by 1,806 million '88 Bahts
The inventory accumulation in the fourth quarter followed three
previous quarters of liquidation.&nbsp; 17,367 mil 88 bahts in the
third quarter, 910 in the second and 74,368 in the first quarter of
2009.
Quarterly changes in the major components of GDP for the two
countries are shown in the accompanying charts and in the table
below.&nbsp; Additional data for Taiwan and Thailand can be found
in the Haver Data Base:&nbsp; EMERGEPR
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222f.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Q/Q
Percent Changes (ex where noted)</th>
<th scope="col">Q4 09&nbsp;</th>
<th scope="col">Q3 09</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08</th>
<th scope="col">Q1 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP:&nbsp;
Taiwan</td>
<td>4.23</td>
<td>2.45</td>
<td>4.25</td>
<td>-2.55</td>
<td>-3.62</td>
<td>-3.62</td>
<td>-0.33</td>
<td>1.26</td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>3.63</td>
<td>1.68</td>
<td>2.03</td>
<td>-1.45</td>
<td>-5.04</td>
<td>-0.49</td>
<td>-0.22</td>
<td>1.70</td>
</tr>
<tr class="odd">
<td class="firstcol">Private
Consumption:&nbsp; Taiwan</td>
<td>4.52</td>
<td>0.77</td>
<td>0.65</td>
<td>0.39</td>
<td>0.38</td>
<td>-1.192</td>
<td>-0.78</td>
<td>0.30</td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>2.97</td>
<td>1.78</td>
<td>0.17</td>
<td>-3.43</td>
<td>0.25</td>
<td>0.87</td>
<td>-0.13</td>
<td>1.11</td>
</tr>
<tr class="odd">
<td class="firstcol">Fixed Capital
Formation:&nbsp; Taiwan</td>
<td>10.07</td>
<td>7.68</td>
<td>22.38</td>
<td>-30.52</td>
<td>-10.46</td>
<td>-2.31</td>
<td>-8.93</td>
<td>-7.20</td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>-1.66</td>
<td>5.81</td>
<td>5.04</td>
<td>-11.68</td>
<td>-4.53</td>
<td>1.37</td>
<td>-1.59</td>
<td>-0.34</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports of Gds
&amp; Serv:&nbsp; Taiwan</td>
<td>6.08</td>
<td>7.92</td>
<td>12.20</td>
<td>-7.32</td>
<td>-17.35</td>
<td>-2.45</td>
<td>-1.0</td>
<td>2.62</td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>7.69</td>
<td>2.39</td>
<td>-3.40</td>
<td>-6.66</td>
<td>-11.90</td>
<td>-1.33</td>
<td>2.52</td>
<td>1.96</td>
</tr>
<tr class="odd">
<td class="firstcol">Chg in
Inventories: Taiwan (Mil 2006NT$)</td>
<td>-2555</td>
<td>-52762</td>
<td>-29882</td>
<td>-75142</td>
<td>37228</td>
<td>42424</td>
<td>25900</td>
<td>46269</td>
</tr>
<tr>
<td class="firstcol">Thailand
(mil 1988Bahts)</td>
<td>1806</td>
<td>-17367</td>
<td>-910</td>
<td>-74368</td>
<td>21240</td>
<td>30930</td>
<td>-106</td>
<td>6497</td>
</tr>
</tbody>
</table>


</body></html>

Taiwan and Thailand released fourth quarter Gross Domestic Product data this morning. Taiwan is a small highly industrialized island nation of about 7 million people with a per capita income of $16,428 in 2009 . Thailand, by contrast, [...]

Taiwan And Thailand Report Q4 09 GDP Growth

Robert Brusca

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Germany no longer seems to be locked in to the wining
trajectory that leads the e-Zone. France and Italy each have stronger
orders growth than Germany Yr/Yr. Among the four largest EU nations
Germany alone is the one with declining orders growth over the most
recent three months on order declines in December and in October.
The UK shook off a steep decline in orders in November; that
drop unwound a huge spike in orders in October. UK data have become
extremely volatile. December has brought another outsized gain in
orders this time of 8.5%. Despite some major league see-sawing the UK
orders series appears to be in the same sort of rebound as Germany
Italy and France.
The clear message from the chart above is that despite some
period-to-period volatility in orders an upswing is still in train.
Orders are climbing up out of the hole they were dug into during the
recession. In November the large three EMU countries each had Yr/Yr
declines in orders but in December orders in Italy, France and Germany
all are in the plus column again for Yr/Yr growth.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="10" scope="col">Selected Euro-Area and UK Industrial Orders </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Dec 09</td>
<td>Nov 09</td>
<td>Dec 09</td>
<td>Nov 09</td>
<td>Dec 09</td>
<td>Nov 09</td>
</tr>
<tr>
<td class="firstcol">Countries:</td>
<td>Dec 09</td>
<td>Nov 09</td>
<td>Oct 09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
</tr>
<tr>
<td class="firstcol">Germany
(MFG):</td>
<td>-1.8%</td>
<td>3.2%</td>
<td>-2.1%</td>
<td>-3.4%</td>
<td>9.9%</td>
<td>10.3%</td>
<td>23.7%</td>
<td>4.2%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">France(Ind):</td>
<td>17.1%</td>
<td>0.5%</td>
<td>-8.2%</td>
<td>36.4%</td>
<td>-7.3%</td>
<td>40.5%</td>
<td>4.5%</td>
<td>15.5%</td>
<td>-4.2%</td>
</tr>
<tr>
<td class="firstcol">Italy
(Ind):</td>
<td>4.7%</td>
<td>2.9%</td>
<td>0.7%</td>
<td>38.5%</td>
<td>47.6%</td>
<td>18.5%</td>
<td>15.4%</td>
<td>5.3%</td>
<td>-3.5%</td>
</tr>
<tr>
<td class="firstcol">UK
(Engineering Industy):</td>
<td>8.5%</td>
<td>-15.6%</td>
<td>14.1%</td>
<td>19.1%</td>
<td>-18.1%</td>
<td>7.1%</td>
<td>-9.9%</td>
<td>-16.2%</td>
<td>-3.8%</td>
</tr>
</tbody>
</table>
</body></html>

Germany no longer seems to be locked in to the wining trajectory that leads the e-Zone. France and Italy each have stronger orders growth than Germany Yr/Yr. Among the four largest EU nations Germany alone is the one with declining [...]

Large EU Country Orders Go Back On The Rise…Mostly

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222a.jpg" style="width: 353px; height: 265px;" align="right">The U.S.
economy regained forward momentum last month. The January Chicago Fed
National Activity Index (CFNAI) from the Federal Reserve Bank of
Chicago rose to a reading of 0.02 from a little-revised -0.58 in
December. Also pointing toward positive economic growth was the rise
from the series' low of -4.14 reached one year ago. During the last ten
years the has been a 76% correlation between the index level and the
q/q change in real GDP.The three-month moving average of the
index, which smoothes out some of the series' volatility, also rose to
its highest level since 2007. An index level at or below
-0.70 typically has indicated negative U.S. economic growth. A zero
value of the CFNAI indicates that the economy is expanding at its
historical trend rate of growth of roughly 3.0%. The complete CFNAI
report is available <a href="http://www.chicagofed.org/digital_assets/publications/cfnai/2010/cfnai_february2010.pdf">here</a>.The Chicago Fed indicated that the production &amp; income series
made the largest positive contribution to the series improvement in
January. Overall, 50 of the 85 individual indicators made positive
contributions to the index while 35 made negative contributions. The
CFNAI is a weighted average of 85 indicators of economic activity. The
indicators reflect activity in the following categories: production
&amp; income, the labor market, personal consumption &amp;
housing, manufacturing &amp; trade sales, and inventories &amp;
orders.· In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index slipped during December but remained close
to its highest level of the year. Indicators for the auto, steel,
machinery and resource sectors were roughly unchanged. The Chicago
Federal Reserve figures are available in Haver's SURVEYS database.&nbsp;The Challenges Ahead is the title of N.Y.
Federal Reserve Bank President William C. Dudley's comments and they
are available&nbsp; <a href="http://www.newyorkfed.org/newsevents/speeches/2010/dud100219.html">here</a>.&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM" style="color: white;">Chicago Fed</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">CFNAI</td>
<td>0.02</td>
<td>-0.58</td>
<td>0.06</td>
<td>-1.64</td>
<td>-1.79</td>
<td>-0.35</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-0.16</td>
<td>-0.47</td>
<td>-0.59</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Personal Consumption &amp; Housing&nbsp;</td>
<td>-0.45</td>
<td>-0.49</td>
<td>-0.42</td>
<td>-0.49</td>
<td>-0.32</td>
<td>-0.09</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Employment, Unemployment &amp; Hours</td>
<td>-0.01</td>
<td>-0.26</td>
<td>0.12</td>
<td>-0.76</td>
<td>-0.67</td>
<td>-0.15</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Production &amp; Income</td>
<td>0.45</td>
<td>0.14</td>
<td>0.25</td>
<td>-0.23</td>
<td>-0.56</td>
<td>-0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Sales, Inventories &amp; Orders</td>
<td>0.04</td>
<td>0.03</td>
<td>0.11</td>
<td>-0.15</td>
<td>-0.25</td>
<td>-0.06</td>
</tr>
</tbody>
</table>
</body></html>

The U.S. economy regained forward momentum last month. The January Chicago Fed National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago rose to a reading of 0.02 from a little-revised -0.58 in December. Also pointing [...]

Chicago Fed Index Increases To Nearly Highest Since 2007

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222a.jpg" style="width: 353px; height: 265px;" align="right">The
U.S.
economy regained forward momentum last month. The January Chicago Fed
National Activity Index (CFNAI) from the Federal Reserve Bank of
Chicago rose to a reading of 0.02 from a little-revised -0.58 in
December. Also pointing toward positive economic growth was the rise
from the series' low of -4.14 reached one year ago. During the last ten
years the has been a 76% correlation between the index level and the
q/q change in real GDP.
The three-month moving average of the
index, which smoothes out some of the series' volatility, also rose to
its highest level since 2007.
 An index level at or below
-0.70 typically has indicated negative U.S. economic growth. A zero
value of the CFNAI indicates that the economy is expanding at its
historical trend rate of growth of roughly 3.0%. The complete CFNAI
report is available <a href="http://www.chicagofed.org/digital_assets/publications/cfnai/2010/cfnai_february2010.pdf">here</a>.
The Chicago Fed indicated that the production &amp; income
series
made the largest positive contribution to the series improvement in
January. Overall, 50 of the 85 individual indicators made positive
contributions to the index while 35 made negative contributions. The
CFNAI is a weighted average of 85 indicators of economic activity. The
indicators reflect activity in the following categories: production
&amp; income, the labor market, personal consumption &amp;
housing, manufacturing &amp; trade sales, and inventories &amp;
orders.· In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index slipped during December but remained close
to its highest level of the year. Indicators for the auto, steel,
machinery and resource sectors were roughly unchanged. The Chicago
Federal Reserve figures are available in Haver's SURVEYS database.&nbsp;
The
Challenges Ahead is the title of N.Y.
Federal Reserve Bank President William C. Dudley's comments and they
are available&nbsp; <a href="http://www.newyorkfed.org/newsevents/speeches/2010/dud100219.html">here</a>.&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM" style="color: white;">Chicago Fed</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">CFNAI</td>
<td>0.02</td>
<td>-0.58</td>
<td>0.06</td>
<td>-1.64</td>
<td>-1.79</td>
<td>-0.35</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-0.16</td>
<td>-0.47</td>
<td>-0.59</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Personal Consumption &amp; Housing&nbsp;</td>
<td>-0.45</td>
<td>-0.49</td>
<td>-0.42</td>
<td>-0.49</td>
<td>-0.32</td>
<td>-0.09</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Employment, Unemployment &amp; Hours</td>
<td>-0.01</td>
<td>-0.26</td>
<td>0.12</td>
<td>-0.76</td>
<td>-0.67</td>
<td>-0.15</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Production &amp; Income</td>
<td>0.45</td>
<td>0.14</td>
<td>0.25</td>
<td>-0.23</td>
<td>-0.56</td>
<td>-0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Sales, Inventories &amp; Orders</td>
<td>0.04</td>
<td>0.03</td>
<td>0.11</td>
<td>-0.15</td>
<td>-0.25</td>
<td>-0.06</td>
</tr>
</tbody>
</table>

Large EU Country Orders Go Back On
The Rise&#8230;Mostly 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 22, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Germany no longer seems to be locked in to the wining
trajectory that leads the e-Zone. France and Italy each have stronger
orders growth than Germany Yr/Yr. Among the four largest EU nations
Germany alone is the one with declining orders growth over the most
recent three months on order declines in December and in October.
The UK shook off a steep decline in orders in November; that
drop unwound a huge spike in orders in October. UK data have become
extremely volatile. December has brought another outsized gain in
orders this time of 8.5%. Despite some major league see-sawing the UK
orders series appears to be in the same sort of rebound as Germany
Italy and France.
The clear message from the chart above is that despite some
period-to-period volatility in orders an upswing is still in train.
Orders are climbing up out of the hole they were dug into during the
recession. In November the large three EMU countries each had Yr/Yr
declines in orders but in December orders in Italy, France and Germany
all are in the plus column again for Yr/Yr growth.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">Selected
Euro-Area and UK Industrial Orders </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Dec 
09</td>
<td>Nov 
09</td>
<td>Dec 
09</td>
<td>Nov 
09</td>
<td>Dec 
09</td>
<td>Nov 
09</td>
</tr>
<tr>
<td class="firstcol">Countries:</td>
<td>Dec 
09</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
</tr>
<tr>
<td class="firstcol">Germany
(MFG):</td>
<td>-1.8%</td>
<td>3.2%</td>
<td>-2.1%</td>
<td>-3.4%</td>
<td>9.9%</td>
<td>10.3%</td>
<td>23.7%</td>
<td>4.2%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">France(Ind):</td>
<td>17.1%</td>
<td>0.5%</td>
<td>-8.2%</td>
<td>36.4%</td>
<td>-7.3%</td>
<td>40.5%</td>
<td>4.5%</td>
<td>15.5%</td>
<td>-4.2%</td>
</tr>
<tr>
<td class="firstcol">Italy
(Ind):</td>
<td>4.7%</td>
<td>2.9%</td>
<td>0.7%</td>
<td>38.5%</td>
<td>47.6%</td>
<td>18.5%</td>
<td>15.4%</td>
<td>5.3%</td>
<td>-3.5%</td>
</tr>
<tr>
<td class="firstcol">UK
(Engineering Industy):</td>
<td>8.5%</td>
<td>-15.6%</td>
<td>14.1%</td>
<td>19.1%</td>
<td>-18.1%</td>
<td>7.1%</td>
<td>-9.9%</td>
<td>-16.2%</td>
<td>-3.8%</td>
</tr>
</tbody>
</table>
Taiwan And Thailand Report Q4 09
GDP Growth 
by <a href="/comment/Curley.html">Louise
Curley</a> February 22, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222e.jpg" style="width: 353px; height: 265px;" align="right">Taiwan
and
Thailand released fourth quarter Gross Domestic Product data this
morning.&nbsp; Taiwan is a small highly industrialized island
nation of about 7 million people with a per capita income of $16,428 in
2009 .&nbsp; Thailand, by contrast, is a large continental nation
of some 23 million people with a per capital income of $4,108 in
2008.&nbsp;&nbsp; Taiwan reported a fourth quarter increase of
4.23% and Thailand one of 3.6%.
In Taiwan, although the rate of
increase in the exports of good and service declined from 7.92% in the
third quarter, it was still a respectable 6.08%.&nbsp; Private
consumption, however, increased by 4.52% in the fourth quarter,
compared with 0.77% in the third quarter.&nbsp; Fixed capital
formation was up by 10.04% and inventory liquidation was sharply lower.
Inventories have been cut back aggressively since the beginning of
2009.&nbsp; From declines 52,762, 29,881 and 75,142million 2006 NT$
in the third, second and first quarters of 2009 respectively, the
fourth quarter saw a decline of only 2,555 million 2006 NT$.
In
Thailand, exports of goods and service increased 7.69% in the fourth
quarter, compared with 2.39% in the third quarter.&nbsp; Private
consumption also accelerated, from 1.78% to 2.97%.&nbsp; Fixed
investment, however, was 1.66% lower in the fourth quarter than in the
third quarter and inventories were increased by 1,806 million '88 Bahts
The inventory accumulation in the fourth quarter followed three
previous quarters of liquidation.&nbsp; 17,367 mil 88 bahts in the
third quarter, 910 in the second and 74,368 in the first quarter of
2009.
Quarterly changes in the major components of GDP for the two
countries are shown in the accompanying charts and in the table
below.&nbsp; Additional data for Taiwan and Thailand can be found
in the Haver Data Base:&nbsp; EMERGEPR
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222f.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100222g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Q/Q
Percent Changes (ex where noted)</th>
<th scope="col">Q4 09&nbsp;</th>
<th scope="col">Q3 09</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08</th>
<th scope="col">Q1 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP:&nbsp;
Taiwan</td>
<td>4.23</td>
<td>2.45</td>
<td>4.25</td>
<td>-2.55</td>
<td>-3.62</td>
<td>-3.62</td>
<td>-0.33</td>
<td>1.26</td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>3.63</td>
<td>1.68</td>
<td>2.03</td>
<td>-1.45</td>
<td>-5.04</td>
<td>-0.49</td>
<td>-0.22</td>
<td>1.70</td>
</tr>
<tr class="odd">
<td class="firstcol">Private
Consumption:&nbsp; Taiwan</td>
<td>4.52</td>
<td>0.77</td>
<td>0.65</td>
<td>0.39</td>
<td>0.38</td>
<td>-1.192</td>
<td>-0.78</td>
<td>0.30</td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>2.97</td>
<td>1.78</td>
<td>0.17</td>
<td>-3.43</td>
<td>0.25</td>
<td>0.87</td>
<td>-0.13</td>
<td>1.11</td>
</tr>
<tr class="odd">
<td class="firstcol">Fixed Capital
Formation:&nbsp; Taiwan</td>
<td>10.07</td>
<td>7.68</td>
<td>22.38</td>
<td>-30.52</td>
<td>-10.46</td>
<td>-2.31</td>
<td>-8.93</td>
<td>-7.20</td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>-1.66</td>
<td>5.81</td>
<td>5.04</td>
<td>-11.68</td>
<td>-4.53</td>
<td>1.37</td>
<td>-1.59</td>
<td>-0.34</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports of Gds
&amp; Serv:&nbsp; Taiwan</td>
<td>6.08</td>
<td>7.92</td>
<td>12.20</td>
<td>-7.32</td>
<td>-17.35</td>
<td>-2.45</td>
<td>-1.0</td>
<td>2.62</td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>7.69</td>
<td>2.39</td>
<td>-3.40</td>
<td>-6.66</td>
<td>-11.90</td>
<td>-1.33</td>
<td>2.52</td>
<td>1.96</td>
</tr>
<tr class="odd">
<td class="firstcol">Chg in
Inventories: Taiwan (Mil 2006NT$)</td>
<td>-2555</td>
<td>-52762</td>
<td>-29882</td>
<td>-75142</td>
<td>37228</td>
<td>42424</td>
<td>25900</td>
<td>46269</td>
</tr>
<tr>
<td class="firstcol">Thailand
(mil 1988Bahts)</td>
<td>1806</td>
<td>-17367</td>
<td>-910</td>
<td>-74368</td>
<td>21240</td>
<td>30930</td>
<td>-106</td>
<td>6497</td>
</tr>
</tbody>
</table>


</body></html>

Chicago Fed Index Increases ToNearly Highest Since 2007

Carol Stone, CBE

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100219e.jpg" style="width: 353px; height: 265px;" align="right">Yesterday,
February 18, the Federal Reserve Board announced several changes to the
extraordinary liquidity measures it instituted to help alleviate the
recent financial crisis. Just last week, Tom Moeller described here how
extensive those liquidity provisions have been for just one part of the
program, the Term Auction Facility. Even as that effort winds down &#8211; it
will be concluded altogether with a final auction on March 8,
yesterday&#8217;s announced said &#8211; the Fed Board is also pulling back or
diminishing some of its other emergency operations. In particular, the
old &#8220;discount window&#8221;, which is now also called &#8220;primary credit&#8221;, sees
its rate raised from 50 basis points (0.50%) to 75 basis points
(0.75%). · As the Fed&#8217;s statement explains, this move increases the
spread of the primary credit, or discount, rate to 50 basis points over
the high end of the FOMC&#8217;s target for the federal funds rate, as shown
in the chart. The chart also shows the altered treatment of the
discount window beginning in 2003. Previously, the discount rate
hovered just below coincident fed funds rates, but it was changed in
January that year to a penalty rate, pegged at some spread over the
funds rate. <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100219f.jpg" style="width: 353px; height: 265px;" align="right"> Generally this has been 1 percentage point, 100 basis
points. Part of the emergency liquidity boost beginning in August 2007
was making these funds cheaper for borrowing banks by cutting the
spread, first to 50 basis points, and then in March 2008, to 25 basis
points, where it has been until today, when the hike to 50 took
effect.The second graph shows the amount of this primary credit. This
is similar to, but not exactly the same as the old &#8220;adjustment credit&#8221;
in the pre-2003 procedures. The idea then was that banks avoided the
discount window like the plague, so there was rarely any use of it at
all. You can see the spike over the 9/11 period, which was, up to
mid-2008, by far the record amount of borrowing. The philosophy was
changing though; the rate was made higher than other sources of funds,
but banks theoretically wouldn&#8217;t be stigmatized by availing themselves
of it. In the easy-money period of those mid-2000s, hardly any ever
needed to anyway. All this changed in 2007 and 2008. The Fed Board cut
the spread with the express intention of helping banks get money. At
the peak in late October and early November 2008, banks were borrowing
more than $100 billion in this one facility alone. More recently, this
has shrunk markedly, to &#8220;just&#8221; $14.3 billion in the Fed&#8217;s statement
week ended this past Wednesday.Some wonder if this action by the Fed
is a &#8220;tightening&#8221;, even though their statement argues that it is not.
It certainly is the first action involving a rate. But they have
already reined in their &#8220;quantitative&#8221; easing substantially, and this
newest can thus be seen as part of a progression toward non-emergency
conditions. They further indicated that the maturity of the primary
credit borrowing, which has been as long as 90 days, will be shortened
to the more typical overnight on March 18. So there are several steps
here, and in one sense, they are reactive, not pro-active. They seem to
be a response to smoother money market conditions rather that an
attempt to disrupt the markets and alter the underlying demand
conditions. So technically, this would not be a &#8220;tightening&#8221;. But it is
a &#8220;de-easing&#8221;, which must, by definition, come first.The Fed&#8217;s
statement is&nbsp;<a href="http://www.federalreserve.gov/newsevents/press/monetary/20100218a.htm">here</a>
. The rates and borrowing amounts are contained in Haver&#8217;s DAILY and
WEEKLY databases, with monthly averages in USECON.
</body></html>

Yesterday, February 18, the Federal Reserve Board announced several changes to the extraordinary liquidity measures it instituted to help alleviate the recent financial crisis. Just last week, Tom Moeller described here how extensive [...]

The Fed De-Eases Bank Lending Terms

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

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Tian Yong Woon

In this week’s Letter, we cover the latest developments and implications of the Middle East conflict for Asia, while also making space for other important themes, including artificial intelligence (AI). The Middle East conflict remains in a no deal state coming out of the weekend, though some early Monday optimism emerged in Asian markets following Iran’s reported offer to reopen the Strait of Hormuz (chart 1). Nonetheless, as the Strait closure drags on, so too do the fiscal costs of domestic fossil fuel subsidies across Asia, which have been shown to move closely with crude oil prices (chart 2). While such measures offer direct relief by cushioning household energy costs, they remain difficult to sustain over the long haul.

Over the week, we also saw a further fraying in regional monetary policy trends, with the Philippines hiking its policy rate for the first time in about two years amid inflation concerns, while Indonesia stood pat on rates (chart 3). Investor attention is likely to remain fixed on monetary policy this week, with the Bank of Japan due to decide on policy. Expectations for an April hike have faded amid the persistent Middle East conflict, though yen weakness continues to present a source of concern (chart 4). The week also brings China’s latest PMI readings (chart 5), adding to the recent run of hard data accompanying the Q1 GDP release.

Beyond the Middle East conflict, the evolution of AI continues to demand close attention. Before geopolitical tensions took centre stage, AI was the dominant market narrative — and that enthusiasm has hardly faded. If anything, recent developments suggest the story is broadening: use cases are expanding, scalability is improving, and access is widening beyond large corporates to the mass market — increasingly spilling into the realm of physical AI. It may well be this persistent wave of optimism that is helping to underpin equity valuations, even as the geopolitical backdrop darkens (chart 6).

**The Middle East conflict**
About two months in, we remain stuck in the limbo of the US-Iran conflict, which has left the Strait of Hormuz largely closed and much of the world starved of the critical oil flows needed to power the global economy. The back and forth between the US and Iran has persisted in recent weeks, with both sides again failing to reach a peace deal over the weekend, though Monday’s news of Iran offering to reopen the Strait has revived some hope in markets. In truth, commodity and market valuations do not hinge so much on a peace deal itself, but rather on the resumption of oil flows through the Strait, something that could materialise even in the absence of a formal deal, though any agreement that includes and credibly delivers such a reopening would likely be warmly received by markets. Until then, market gyrations are likely to persist, with prices fluctuating in response to each new snippet of news. And until then, the world will continue both to be starved of, while gradually adapting to, the drip feed of oil flows emerging from the Strait.

260427T1.jpg

**The fiscal costs of the Middle East conflict**
As the Middle East conflict drags on, so too does the strain on fiscal resources across parts of Asia, as the costs of energy-related subsidy programmes continue to mount. While such programmes have an immediate, direct, and tangible impact in shielding households from surging energy costs, they are far from sustainable, particularly if oil prices remain well above targeted levels or stay elevated for an extended period. As chart 2 illustrates, the costs of these explicit subsidy programmes tend to rise closely with crude oil prices, as seen in India and Indonesia. Other measures adopted elsewhere, such as drawing down oil reserves, may be less fiscally costly, but are similarly difficult to sustain indefinitely. In both respects, the clock is ticking, and the world continues to hold its breath as the conflict drags on.

260427T2.jpg

**The latest central bank responses to the conflict**
Over the past week, Asia saw two central bank decisions. The Philippines’ (BSP) opted to deliver its first rate hike in about two years, while Indonesia’s (BI) chose to stand pat on policy rates and instead committed to stepped up FX intervention (chart 3). This latest round of decisions points to a further fraying of what had been a broad regional monetary policy consensus, namely that central banks would delay additional easing while maintaining a high bar for outright tightening. Domestic considerations, however, remain paramount. In the Philippines’ case, the central bank has moved to rein in inflation, which is already showing notable signs of price pass through stemming from disruptions linked to the Strait of Hormuz. That said, BSP is not the first in the region to buck the reluctance to tighten. Singapore’s central bank had already tightened policy in mid-April, albeit through its own distinct framework, given its use of the exchange rate rather than policy rates as the primary channel for monetary policy.

260427T3.jpg

**The week ahead**
Looking to the week ahead, a major central bank decision looms in Japan. Market expectations for the Bank of Japan to deliver a rate hike at its April meeting have ebbed amid the persistence of the Middle East conflict, to which Japan remains particularly vulnerable given its reliance on oil imports flowing through the Strait of Hormuz. At the same time, inflation in Japan has yet to become a major concern, with recent readings having picked up but not yet entering troubling territory. One potential source of concern, however, lies with the Japanese yen, which has remained on a weakening trend since early last year (chart 4). That depreciation has been one of the key arguments underpinning calls for further rate hikes.

260427T4.jpg

The week also brings China’s latest PMIs into focus. March saw a divergence between China’s official PMI readings, which improved, and the unofficial readings from RatingDog, which instead pulled back. Nonetheless, both official and unofficial gauges remained in expansionary territory (chart 5), with investors now watching closely to see whether that resilience can be sustained amid ongoing stresses from the Middle East, or whether offsetting drivers can continue to keep Chinese business sentiment and prospects buoyant.

260427T5.jpg

**Beyond the strait**
Moving beyond the Middle East conflict, a whole host of developments continue to unfold globally, many of which have in fact helped offset some of the pessimism wrought by the Strait’s chokehold. One such development is artificial intelligence (AI), which had dominated headlines before the outbreak of the conflict and continues to advance at breakneck pace. AI capabilities are still rapidly evolving, while practical applications, such as physical AI embodied in humanoid robots, are beginning to show broader and stronger use cases. Production of such robots is also becoming increasingly scalable and within reach not just for industrial complexes and healthcare, but for the mass market as well. It is perhaps growing optimism around these prospects that has helped keep equity valuations buoyant, even in the face of the festering conflict in the Middle East. Moreover, while concerns over AI-driven job displacement persist, new opportunities are emerging as well, particularly for AI adopters, with a growing share of job postings in Western economies increasingly referencing AI-related skills, as shown in chart 6.

260427T6.jpg

Asia

Economic Letter from Asia: Not Just About the Strait

260427E.jpg

**The Distributive Trades Survey**

The U.K. Distributive Trades Survey for April 2026 and the look-ahead expectation readings for May paint an extremely soured outlook for the U.K. economy.

**Retail ranking**: Surveys for retail sales compared to a year ago, orders compared to a year ago, and sales evaluated for the time of year all have rankings near zero, which is the worst result on this timeline. This zero distinction applies to retail sales compared to a year ago. The best ranking is 11.6%; that is for sales evaluated for the time of year. Orders compared to a year ago have a 4.2 percentile standing. The stock-to-sales ratio—which is a completely different concept—shows that the inventory-to-sales ratio has a 29.9 percentile standing.

**Retail diffusion**: The raw April diffusion readings (up minus down diffusion) show that sales compared to a year ago slipped to a reading of -68 in April from -52 in March. Orders fell to -46 in April from -26 in March. Sales evaluated for the time of year fell to -32 April from -23 in March. All three measures weakened, and all three weakened decisively, resulting in extremely weak rankings. All of the rankings are executed on data back to 2002.

**Expectations for retailing**: The expectations readings for May show slippage again across all three metrics: expected sales compared to a year ago, expected orders compared to a year ago, and expected sales for the time of year. Expected sales compared to a year ago fell to -60 in May from -49 in April. Orders compared to a year ago declined to -45 in May from -30 in April, and sales for the time of year slipped to -43 from -19. In May, these readings have rankings in a 0.4 percentile standing for sales compared to a year ago, a 1.8 percentile standing for sales evaluated relative to the time of year, and a 4.6 percentile standing for orders compared to a year ago. These two panels on current and expected retail sales volumes are just simply terrible: weak monthly, weak in ranking terms, and showing slipping momentum.

The distributor trade series also provides data on the wholesale sector. While the wholesale sector is not quite as beat up as the retail sector, it's still extremely weak. There is no cause for any kind of hope that things are getting better based on wholesaling trends.

**Wholesaling**: The wholesale survey for sales compared to a year ago edged lower to -32 in April from -31 in March. Orders compared to a year ago remained at a reading of -41 in April. Sales evaluated for the time of year improved to a reading of -20 in April from -39 in March—a significant step up, but still very weak. The percentile standings for these three categories show sales compared to a year ago at the 8.8 percentile, orders compared to a year ago at the 5.6 percentile, and sales evaluated for the time of year at the 14.8 percentile.

**Wholesale Expectations**: The look-ahead observations, which provide expectations for wholesaling in May, show a similar constellation of readings, with sales compared to a year ago falling to -37 in May from -27 in April and orders compared to a year ago falling to -42 from -38, while sales evaluated for the time of year improved to  16 from  37. That category for wholesale sales improved both in April in real time and in May for expectations; however, it continues to have a very weak percentile standing, at the 17.9 percentile in May, while sales for a year ago have a 6.7 percentile standing and orders for a year ago have a 6.0 percentile standing.

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While some of the global PMI data have improved, these survey data for the U.K. are particularly dour. The war in Ukraine drags on, and there's a new conflict in Iran that has shut the Strait of Hormuz, creating energy problems for much of Europe. More broadly, supply chains have been harmed. In addition, the U.K. is undergoing a bout of political instability, as its Prime Minister is under pressure and a good deal of political uncertainty is being worsened by deteriorating economic performance.

Both the U.K. and the European Monetary Union had been showing some progress on inflation until the Iran war hit. Now, as the oil prices are up so sharply, headline inflation is going to be worse everywhere and there will probably be a bit more attention directed to the core inflation rate. However, the U.K. has had inflation too hot for a while, and it has failed to settle down. At its last meeting, the Bank of England’s Monetary Policy Committee warned that if the war was still ongoing at the next meeting, there would be a risk of a rate hike. So, it would seem that a rate hike is going to be in play unless the economy falls off a cliff first, which, based on the distributive trades data, is also something that could happen. The U.K. economy appears to be on very unsound footing, and what happens next is just about anybody's guess.

United Kingdom

U.K. Retail Sales: Worse Than During Covid

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The onset of the war in Iran appears to have hit the German economy extremely hard as the Ifo survey shows very substantial and broad-based decline across its survey in April. The Ifo survey features readings for five sectors as well as an aggregate reading, and it surveys them for climate, current conditions, and expectations. The decline in the Ifo survey is present for all three concepts and across all five sectors, marking the weakening in April as a highly significant and extremely disturbing development. Only manufacturing in the current conditions survey escapes a month-to-month decline.

**The Ifo sequences**: The **climate** reading fell both overall and across each of the five sectors. **Current conditions** declined for the overall and for four of the five sectors, with manufacturing the sole exception. **Expectations** declined for the overall and for all sectors. Several of the sector declines were for a very substantial magnitude, especially when compared to historic changes in these indexes.

**Monthly changes in readings—severe broad deterioration**
The month-to-month change in the climate reading has weakened more month-to-month 19% of the time. That overall result, however, is boosted by manufacturing where the monthly change has been weaker 35% of the time (on data back to 2011). However, all other sectors have seen climate weaker m/m only 2.3% to 6.3% of the time! The current situation readings weakened, with the headline weakening more m/m 11% of the time. This was boosted by manufacturing, the only sector that improved on the month; its ranking on change was in its 85th percentile—quite good and truly stand-alone good news. The other current changes by sector ranged from construction being weaker 1.7% of the time, to retailing that has been weaker about 30% of the time in terms of m/m changes. Expectation changes were uniformly terrible, with the headline drop weaker only 6.3% of the time and sector change month-to-month weaker between 9% and 1.7% of the time. The monthly weakening was uniform and substantial. I document it with these calculations, but you can also see it on the chart above.

**Climate**: The bottom line is that the all-sector index for climate fell to -20.3 in April from -18 in March, placing it at a 10.5 percentile standing on data since 1993. The sector ranking is the highest for construction with a 42.2 percentile standing and the weakness for services at a 1.1 percentile standing—weaker than the table reading nearly 99% of the time. In terms of percentile standing levels or monthly changes, conditions are closing in on grim.

**Current conditions**: Current conditions saw the all-sector index slip to -5.3 in April from -2.4 in March. The headline ranking stands at a 9.8 percentile mark, making it—like the climate reading—weaker than its current reading only about 10% of the time. The strongest reading under current conditions is for construction which has a 60.6 percentile standing; it is the only ranking in the table above its historic median. Manufacturing, the only sector in the survey that improved month-to-month, has a 22.5 percentile standing, while services record the weakest percentile standing under current conditions, at an 8.4 percentile standing.

**Expectations:** The all-sector index for expectations fell to -25.3 in April from -19.9 in March, placing it at a 6.3 percentile standing. The percentile standings across sectors range from a high of 9.5% for manufacturing to a low of 1.5% for retailing. Up until earlier this year, the Ifo was showing signs of improvement; however, all of that has simply collapsed in the last month. Weakness is across economic concepts and sectors, as documented above. For reference, the table also gives a separate set of rankings on where the various indexes stand since the invasion of Ukraine, since that was another marked event that drove the index, that had been improving after Covid, down to lower levels.  Ranked even on this reduced scale looking at conditions only since the invasion of Ukraine, when conditions have generally been weaker, the current rankings across the Ifo survey remained extremely weak. This is a very disturbing survey for the German economy.

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Germany

German Ifo Plunges Everywhere

Andrew Cates

**Energy shock lifts inflation, trims growth**
The IMF’s latest WEO revisions for 2026 broadly reflect the classic stagflationary impact of the recent Middle East energy shock, with growth downgraded and inflation revised higher across most major economies. Higher energy prices act as a tax on real incomes while simultaneously pushing up costs. That said, the picture is not uniform: a number of economies—notably the US, China and India—have seen growth upgrades, reflecting stronger-than-expected momentum so far in 2026. By contrast, the UK stands out at the stagflationary extreme, combining one of the largest growth downgrades with a relatively strong inflation uplift—consistent with its weaker underlying momentum, greater energy sensitivity and more persistent domestic inflation dynamics. More broadly, while the global revisions remain modest—pointing to resilience in activity—the message is that disinflation is no longer a smooth glide back to target but increasingly contingent on energy prices and geopolitical developments.

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**Markets largely shrug off rising economic pessimism**
Notwithstanding a more downbeat assessment from economists—including the IMF’s stagflationary tilt to the outlook—there has been remarkably little follow-through into financial markets. Measures of systemic stress in both the US and UK remain low by historical standards, suggesting that investors are, for now, largely looking through the Middle East conflict. There are several possible explanations: corporate profits remain resilient, the AI-driven investment narrative continues to dominate market thinking, and markets may be assuming that any energy shock will be temporary and contained. In effect, investors appear to be pricing a benign baseline in which geopolitical risks do not materially disrupt growth, inflation expectations or policy. The UK is a partial exception, with a somewhat more visible uptick in stress, which aligns more closely with the IMF’s more challenging growth-inflation trade-off and the economy’s greater sensitivity to energy prices.

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**Volatility falls despite deteriorating growth surprises**
Market optimism is also increasingly at odds with the incoming data flow. Typically, equity volatility declines when growth surprises are positive and inflation surprises are benign. However, the recent pattern has broken that relationship. Growth surprises across the G10 have turned increasingly negative (our series is inverted in the chart below), yet volatility has continued to fall. In other words, markets are becoming less sensitive to weakening macro data, continuing to price a benign outlook even as the data deteriorate. This divergence reinforces the broader theme: investors are, for now, looking through both geopolitical risks and softer economic momentum, placing greater weight on resilience in earnings, the AI-driven narrative and the assumption that policy will remain supportive.

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**Inflation Nowcasts Have Jumped**
Incoming data suggest that headline inflation has moved higher in recent weeks, broadly in line with expectations given the rise in energy prices following the Middle East shock. Nowcasts for CPI across the major economies show a clear rebound in March and April from the lows seen at the start of 2026, with the move occurring in a relatively synchronised fashion. This reinforces the view that the recent pickup in inflation is being driven primarily by a common external factor—energy.

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**Energy shock not yet feeding into underlying inflation**
However, the detailed breakdown of March inflation outcomes suggests that this remains, for now, a largely headline-driven phenomenon. While headline CPI prints were firm across most economies, core inflation—stripping out energy and food—was more subdued and in some cases weaker. This indicates that there has been very limited pass-through from higher energy prices into broader goods and services inflation at this early stage. In other words, the shock is still being absorbed rather than propagated. That distinction is critical for policy and markets alike: as long as second-round effects remain contained, central banks may be able to look through the near-term rise in inflation, even as headline rates move higher.

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**Inflation Expectations Rising as Growth Sentiment Falters**
It remains early days, and much will hinge on how inflation expectations evolve from here. The latest ZEW survey for Germany already conveys the hallmarks of a classic stagflationary shock, with macroeconomic expectations weakening even as inflation expectations have ratcheted sharply higher. This shift is important: while the recent rise in headline inflation has so far shown limited pass-through into core, a sustained increase in expectations would raise the risk of second-round effects and make the inflation process more persistent. In that sense, the ZEW data highlight the key fault line in the current environment—whether the energy-driven shock remains contained, or begins to embed itself more broadly through expectations and pricing behaviour.

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Financial markets have remained notably calm in recent weeks despite rising geopolitical tensions in the Middle East, a more downbeat macroeconomic narrative and elevated uncertainty. Measures of financial stress and volatility remain low, and equity markets continue to look through both the conflict and softer data. That resilience sits alongside a more nuanced macro backdrop. The IMF’s latest WEO revisions point to a classic stagflationary energy shock—growth downgraded and inflation revised higher—although the global impact remains modest and uneven, with some economies still benefiting from stronger momentum (chart 1). At the same time, market pricing appears increasingly detached from the data flow, with volatility declining even as growth surprises have turned more negative relative to inflation (charts 2 and 3). Incoming inflation data reinforce the idea of a largely headline-driven shock, with nowcasts rising in line with higher energy prices but only limited pass-through into core inflation so far (charts 4 and 5). However, it remains early days. Survey evidence, such as the latest ZEW release, suggests that inflation expectations may already be responding in a more concerning way, with a marked rise alongside weakening growth sentiment (chart 6). Taken together, the key question for markets is whether this remains a contained, energy-driven shock that can be looked through—or whether it begins to embed more persistently via expectations, forcing a reassessment of the currently benign outlook.

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Charts of the Week: Risks Build, Markets Shrug

Sandy Batten

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The National Activity Index published by the Federal Reserve Bank of Chicago (CFNAI) slipped to -0.20 in March from an upwardly revised +0.03 in February (previously (-0.11). This is the lowest monthly reading since last November. Smoothing out the monthly volatility, the index's three-month moving average (CFNAI-MA3) declined to -0.03 in March from an upwardly revised +0.03 in February (previously -0.01).

This index is expressed in standard deviation units from zero (with a value of zero defined as trend real GDP growth). Research at the FRB Chicago indicates that readings on the 3-month average of -0.70 or below are consistent with the economy being in a recession. Therefore, even though the March reading on the 3-month average was negative, it indicates that the US economy is still growing, just slightly slower than trend, and is well away from recessionary conditions. The 3-month average would be much deeper in negative territory if the economy was at risk of contracting.

The National Activity Index is a composite of 85 economic indicators, grouped into four major categories: production and income; employment, unemployment, and hours worked; personal consumption and housing; sales, orders, and inventories. Three of the four broad categories of indicators used to construct the index decreased from February, and three categories made negative contributions in March. Production-related indicators contributed –0.20 to the CFNAI in March, down from +0.13 in February. The sales, orders, and inventories category's contribution to the CFNAI was –0.01 in March, down from +0.05 in February. Employment-related indicators contributed +0.02 to the CFNAI in March, up from –0.15 in February. The personal consumption and housing category's contribution to the CFNAI was –0.01 in March, down from a neutral value in February.

The CFNAI Diffusion Index, which measures the breadth of the change in the component series and is also a three-month moving average, increased to –0.04 in March from –0.08 in February. This is the highest reading since February 2025. A reading of zero indicates that all of the indicators are growing at their long-term average. If all of the underlying indicators in a given month are below their long-run averages, the diffusion index will equal -1. If all of the indicators are above their long-run averages, it will equal +1. Thirty-four of the 85 individual indicators made positive contributions to the CFNAI in March, while 51 made negative contributions. Forty-three indicators improved from February to March, while 40 indicators deteriorated and two were unchanged. Of the indicators that improved, 16 made negative contributions.

These figures are available in Haver's **SURVEYS** database.

- The monthly reading fell to -0.20 in March from an upwardly revised +0.03 in February.
- The three-month average slipped from +0.03 to -0.03.
- Despite the slip in March, the index points to near-trend economic growth and is well above recession territory.

Economy in Brief: 2010

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