Tom Moeller

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The overall Final Demand Producer Price Index increased 0.3% (-1.1%
y/y) during November, following a 0.4% October decline. The Action Economics
Forecast Survey expected no change in prices. Prices excluding food &amp; energy
gained 0.3% (0.5% y/y) after two months of 0.3% decrease. A 0.1% rise had been expected.

Final demand goods prices (35% of the total index) eased 0.1% (-1.2%
y/y), down for the fifth straight month. The latest decline was led by a 0.6%
drop (-19.0% y/y) in energy prices. Gasoline prices fell 1.3% (-33.4% y/y) while
home heating oil prices declined 5.2% (-40.4% y/y). Residential natural gas
prices were off 3.1% (-11.8% y/y) and residential electric power costs fell 0.3%
(+0.1% y/y). Offsetting this decline was a 0.3% gain (-3.9% y/y) in food prices.
Egg prices jumped 10.8% (45.7% y/y) and beef &amp; veal costs rose 1.2% (-10.2%
y/y). Bakery product prices rose 0.5% (1.4% y/y) but fish &amp; shellfish prices
declined 3.5% (-6.3% y/y).

Final demand goods prices excluding food &amp; energy eased 0.1% (-0.1% y/y)
after declining 0.3% in October. Core finished consumer goods ticked 0.1% higher
(2.4% y/y) after a 0.2% decline. Core consumer nondurables costs rose 0.2% (3.3%
y/y) following no change, and consumer durables edged 0.1% higher (1.1% y/y).
Private capital equipment costs improved 0.1% (1.0% y/y) while core goods prices
for government purchases eased 0.1% for a second month (-0.1% y/y). Prices of
goods for export fell 0.5% (-3.6% y/y), down for the fifth straight month.

Final demand services costs (63% of the total index) increased 0.5%
(0.5% y/y) after a 0.3% fall. This was led by trade services which rebounded 1.2%
(1.0% y/y); trade services represent the margins charged by retail and wholesale
dealers and merchants. Prices for transportation of passengers rose 0.4% (-6.2%
y/y) after three months of decline. Prices for transportation and warehousing of
goods gained 0.4% (-1.9% y/y). Other services, including financial, health care
and communications, improved 0.1% (+0.8% y/y).

Final demand construction prices (2.0% of the index) fell 0.3% (+2.1%
y/y) after rising 1.0%. Private capital investment costs fell 0.4% (+2.0% y/y).
Prices of processed goods for intermediate demand fell 0.6% (-7.1%
y/y), off for the fifth straight month.

The PPI data are contained in Haver's USECON database with further
detail in PPI and PPIR. The expectations figures are available in
the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Producer Price Index (SA, %)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Final Demand</td>
 <td >0.3</td>
 <td >-0.4</td>
 <td >-0.5</td>
 <td >-1.1</td>
 <td >1.6</td>
 <td >1.4</td>
 <td >1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Excluding Food &amp; Energy</td>
 <td >0.3</td>
 <td >-0.3</td>
 <td >-0.3</td>
 <td >0.5</td>
 <td >1.7</td>
 <td >1.5</td>
 <td >1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp; Goods</td>
 <td >-0.1</td>
 <td >-0.4</td>
 <td >-1.2</td>
 <td >-4.3</td>
 <td >1.3</td>
 <td >0.8</td>
 <td >1.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 Foods</td>
 <td >0.3</td>
 <td >-0.8</td>
 <td >-0.8</td>
 <td >-3.9</td>
 <td >3.2</td>
 <td >1.7</td>
 <td >3.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 Energy</td>
 <td >-0.6</td>
 <td >0.0</td>
 <td >-5.9</td>
 <td >-19.0</td>
 <td >-0.9</td>
 <td >-0.8</td>
 <td >0.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp; Goods Excluding
 Food &amp; Energy</td>
 <td >-0.1</td>
 <td >-0.3</td>
 <td >0.0</td>
 <td >-0.1</td>
 <td >1.5</td>
 <td >1.1</td>
 <td >1.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Services</td>
 <td >0.5</td>
 <td >-0.3</td>
 <td >-0.4</td>
 <td >0.5</td>
 <td >1.8</td>
 <td >1.6</td>
 <td >1.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Construction</td>
 <td >-0.3</td>
 <td >1.0</td>
 <td >0.0</td>
 <td >2.1</td>
 <td >2.9</td>
 <td >1.8</td>
 <td >2.9</td>
 </tr>
 <tr>
 <td class="firstcol" >Intermediate Demand - Processed Goods</td>
 <td >-0.6</td>
 <td >-0.4</td>
 <td >-1.5</td>
 <td >-7.1</td>
 <td >-2.6</td>
 <td >0.1</td>
 <td >0.4</td>
 </tr>
 </tbody>
 </table>
 
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The overall Final Demand Producer Price Index increased 0.3% (-1.1% y/y) during November, following a 0.4% October decline. The Action Economics Forecast Survey expected no change in prices. Prices excluding food & energy gained 0.3% [...]

U.S. Producer Prices Rebound

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Consumers began to open their wallets in advance of the holiday season.
Purchases at retail stores and restaurants increased 0.2% during November
following little change in the prior three months, which were unrevised. The
latest increase fell short of expectations for a 0.3% rise in the Action
Economics Forecast Survey. Sales excluding autos gained a firmer 0.4% and also
made up for weakness in the prior four months. A 0.3% gain was expected. During
the last ten years, there has been a 92% correlation between the change in
retail sales and the change in real GDP.

Sales in the retail control group increased 0.6%, the largest rise since
July. These purchases do not include autos, gasoline, building materials and
food services and align with the consumer spending estimates in the GDP accounts.

Light motor vehicle sales fell 0.4%, down for the second straight month. The
decline compares to a 0.3% drop in unit motor vehicle sales. Falling prices
continued to lower sales at gasoline service stations where a 0.8% decline was
the fifth in as many months.

Sales in other discretionary categories were firm. Apparel store sales
increased 0.8% (-1.6% y/y) following three months of decline. Sales at sporting
goods, hobby, book &amp; music stores also jumped 0.8% (5.0% y/y) after a 0.1%
uptick. Restaurant sales increased 0.7% (5.4% y/y), the strongest rise since
April. General merchandise store sales grew gained 0.7% (1.4% y/y) after a 0.1%
dip and purchases at electronics &amp; appliance stores rose 0.6% (-1.8% y/y),
also following a 0.1% dip. Nonstore retailers sales increased 0.6% (10.3% y/y)
after a 1.4% spurt. Holding back the total's rise was a 0.3% decline in sales
(+4.9% y/y) at furniture &amp; home furnishing store sales, but it was the first
decline in three months. Also down 0.3% (+4.1% y/y) were sales at building
materials &amp; garden supply stores, off for the third month in the last four.

In the nondiscretionary sales categories, food &amp; beverage store sales
increased 0.7% (0.8% y/y) following two months of decline. Sales at health &amp;
personal care stores were little-changed (+4.6% y/y), following a 0.5% rise.

The retail sales figures are available in Haver's USECON database. The
Action Economics figures are in the AS1REPNA database.

Do We Know What We Owe? Consumer Debt as Reported By Borrowers and Lenders
from the Federal Reserve Bank of New York is available <a href="https://www.newyorkfed.org/medialibrary/media/research/epr/2015/EPR_2015_comparisons_brown.pdf">here</a>.

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 <thead>
 <tr>
 <th class="firstcol" scope="col" >Retail Spending (%)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr class="grey2">
 <td class="firstcol" >Total Retail Sales &amp; Food
 Services</td>
 <td >0.2</td>
 <td >0.1</td>
 <td >-0.1</td>
 <td >1.5</td>
 <td >3.9</td>
 <td >3.7</td>
 <td >5.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Excluding Autos</td>
 <td >0.4</td>
 <td >0.1</td>
 <td >-0.5</td>
 <td >0.9</td>
 <td >3.1</td>
 <td >2.7</td>
 <td >4.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Non-Auto Less Gasoline, Building
 Supplies &amp; Food Services</td>
 <td >0.6</td>
 <td >0.2</td>
 <td >0.0</td>
 <td >2.9</td>
 <td >3.3</td>
 <td >2.7</td>
 <td >3.6</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol" >Retail Sales</td>
 <td >0.2</td>
 <td >0.0</td>
 <td >-0.1</td>
 <td >1.0</td>
 <td >3.7</td>
 <td >3.8</td>
 <td >4.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Motor Vehicle &amp; Parts</td>
 <td >-0.4</td>
 <td >-0.3</td>
 <td >1.4</td>
 <td >4.3</td>
 <td >7.5</td>
 <td >8.3</td>
 <td >9.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Retail Less Autos</td>
 <td >0.3</td>
 <td >0.1</td>
 <td >-0.6</td>
 <td >0.1</td>
 <td >2.6</td>
 <td >2.6</td>
 <td >3.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Gasoline Stations</td>
 <td >-0.8</td>
 <td >-1.0</td>
 <td >-4.8</td>
 <td >-19.7</td>
 <td >-2.7</td>
 <td >-0.7</td>
 <td >4.3</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol" >Food Service &amp; Drinking Places
 Sales</td>
 <td >0.7</td>
 <td >0.3</td>
 <td >0.5</td>
 <td >5.4</td>
 <td >6.2</td>
 <td >3.4</td>
 <td >5.9</td>
 </tr>
 </tbody>
 </table>
 
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Consumers began to open their wallets in advance of the holiday season. Purchases at retail stores and restaurants increased 0.2% during November following little change in the prior three months, which were unrevised. The latest [...]

U.S. Retail Sales Show Widespread Improvement

Robert Brusca

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France's current account surplus proved to be short-lived. A smattering of monthly surpluses has given way to deficits again. The current account averages deficits over 12 months, six months and three months.

French export growth peaked early in the year but has since lost its zest and exports are backsliding. Export growth currently logs a gain of 1% over 12 months. Exports are falling at a 4.7% pace over six months and at a faster 9.5% annual rate over three months. The thrill is gone. Whatever fundamentals were supporting the rebound in French exports, they are gone too.

Exports of food and other items are decelerating and contracting at a horrific pace over three months. The single strong category that staves off some of this weakness in total exports is transportation equipment where shipments are up at a 40.1 annualized rate over three months. The auto sector has been the one resilient sector for all of Europe as well as in the U.S. France is no exception to this exception.

French import trends are not as easily pigeon-holed. Overall imports are up by just 0.9% over 12 months, just a hair slower than exports. Import trends are erratic across timelines with six-month growth at a 1.9% pace and three-month growth at a -1.6% pace.

Import categories have somewhat mixed trends. Two of three categories show a drop off in growth from 12-month to six-month with `other imports' as the exception. Then, over three months, imports fall in all categories except transportation equipment. Both transportation equipment and good imports are higher year-over-year, but other imports are flat.

The overall lethargy in French imports speaks to the weakness of domestic demand in France. While the euro has regained a slight amount of strength recently, it is still weak and should be helping to boost French exports and should help to stave off imports. The euro may be helping to keep imports in check, but there is no boost to speak of for exports.

France's economy has been showing some signs of picking up as its manufacturing PMI has drifted above 50 and its services PMI has held above 51. But while these are positive readings, they still aren't strong and we see little evidence of strength in either French imports or exports. In that respect, this trade and current account report seems to be evidence of more that same-old, same-old in France. The economy is neither contracting nor accelerating. It's as though it is caught in some no-where zone of stunted growth and can't get out.


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France's current account surplus proved to be short-lived. A smattering of monthly surpluses has given way to deficits again. The current account averages deficits over 12 months, six months and three months. French export growth [...]

France's Current Account Swings Back to Deficit

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Initial claims for unemployment insurance rose to 282,000 (-1.2% y/y) in the
week ending December 5 from an unrevised 269,000 the previous week. The Action
Economics Forecast Survey expected 265,000 filings. The four-week moving average
rose slightly to 270,750 but remained near the 15-year low. During the last ten
years, there has been a 74% correlation between the level of initial claims and
the m/m change in payroll employment.
In the week ending November 28, continuing claims for unemployment insurance
edged up to 2.243 million, but were 18.7% lower than a year earlier. The
four-week moving average increased to 2.184 million and remained near the
15-year low.
The insured rate of unemployment notched higher to 1.7% but remained near the
cycle low.
The insured rate of unemployment across states continued to vary. The lowest
were South Dakota (0.4%), Nebraska (0.6%), Florida (0.6%), Indiana (0.7%),
Virginia (0.7%) and Tennessee (0.8%). At the other end of the spectrum were
California (1.7%), Illinois (1.8%), Massachusetts (1.9%), Connecticut (2.0%),
Pennsylvania (2.2%) and New Jersey (2.4%). The state data are not seasonally
adjusted and reported with a two-week lag versus the headline figure.
Data on weekly unemployment insurance 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 survey, carried in the AS1REPNA database.
<table class="centered" border="0" cellspacing="0" width="1871">
 <thead>
 <tr>
 <th class="firstcol" 0801 width="679">Unemployment Insurance (000s)</th>
 <th 0801 width="169">12/05/15</th>
 <th 0801 width="169">11/28/15</th>
 <th 0801 width="170">11/21/15</th>
 <th 0801 width="170">Y/Y %</th>
 <th 0801 width="170">2014</th>
 <th 0801 width="170">2013</th>
 <th 0801 width="170">2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" 0801 width="679">Initial Claims</td>
 <td 0801 align="center" width="169">282</td>
 <td 0801 align="center" width="169">269</td>
 <td 0801 align="center" width="170">260</td>
 <td 0801 align="center" width="170">-1.2</td>
 <td 0801 align="center" width="170">307</td>
 <td 0801 align="center" width="170">342</td>
 <td 0801 align="center" width="170">372</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 width="679">Continuing Claims</td>
 <td 0801 align="center" width="169">--</td>
 <td 0801 align="center" width="169">2,243</td>
 <td 0801 align="center" width="170">2,161</td>
 <td 0801 align="center" width="170">-18.7</td>
 <td 0801 align="center" width="170">2,607</td>
 <td 0801 align="center" width="170">2,978</td>
 <td 0801 align="center" width="170">3,308</td>
 </tr>
 <tr>
 <td class="firstcol" 0801 width="679">Insured Unemployment Rate (%)</td>
 <td 0801 align="center" width="169">--</td>
 <td 0801 align="center" width="169">1.7</td>
 <td 0801 align="center" width="170">1.6</td>
 <td 0801 align="center" width="170">
 1.8 
 (Nov. 2014)
 </td>
 <td 0801 align="center" width="170">2.0</td>
 <td 0801 align="center" width="170">2.3</td>
 <td 0801 align="center" width="170">2.6</td>
 </tr>
 </tbody>
</table>
&nbsp;
U.S. Import Price Decline Led By Cheaper Oil 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;December
10, 2015 
Import prices declined 0.4% during November following a 0.3% October drop,
revised from -0.5%. A 0.7% fall had been expected in the Action Economics
Forecast Survey. Petroleum prices fell 2.5% (-44.5% y/y) after a 0.4% rise,
revised from a 2.1% decline. Nonpetroleum import prices fell 0.3% (-3.4% y/y)
after an unrevised 0.4% decline. These prices have not risen m/m since March of
last year. A 1.0% decline (-11.2% y/y) in prices of nonoil supplies &amp;
materials led the way lower followed by a 0.5% drop (-5.0% y/y) in food &amp;
beverage costs. Capital goods prices eased 0.1% (-2.3% y/y) as did prices for
automotive vehicles &amp; sparts. Nonauto consumer goods prices remained
unchanged (-0.7% y/y) for a second straight month.
Export prices fell 0.6% (-6.3% y/y) following an unrevised 0.2% decline.
Expectations had been for a 0.2% shortfall. A 1.6% decline (-15.0% y/y) in
industrial supplies &amp; materials prices led the way lower. This drop
reflected lower fuels &amp; building materials costs, without which prices fell
0.4% (-8.4% y/y). Foods, feeds &amp; beverages prices were off 0.9% (-13.0% y/y)
and capital goods costs eased 0.1% (-0.2% y/y). Automotive vehicles &amp; parts
prices fell 0.2% (-0.5% y/y), but nonauto consumer goods prices improved 0.1%
(-2.1% y/y).
The import and export price series can be found in Haver's USECON
database. Detailed figures are available in the USINT database. The
expectations figure from the Action Economics Forecast Survey is in the AS1REPNA
database.
<table class="centered" border="0" cellspacing="0" width="1871">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="854"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export
 Prices (NSA, %)</a></th>
 <th scope="col" width="144">Nov</th>
 <th scope="col" width="144">Oct</th>
 <th scope="col" width="145">Sep</th>
 <th scope="col" width="145">Nov Y/Y</th>
 <th scope="col" width="145">2014</th>
 <th scope="col" width="145">2013</th>
 <th scope="col" width="145">2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="854">Imports - All Commodities</td>
 <td width="144" align="center">-0.4</td>
 <td width="144" align="center">-0.3</td>
 <td width="145" align="center">-1.1</td>
 <td width="145" align="center">-9.4</td>
 <td width="145" align="center">-1.1</td>
 <td width="145" align="center">-1.1</td>
 <td width="145" align="center">0.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="854">&nbsp;&nbsp;Petroleum</td>
 <td width="144" align="center">-2.5</td>
 <td width="144" align="center">0.4</td>
 <td width="145" align="center">-9.4</td>
 <td width="145" align="center">-44.5</td>
 <td width="145" align="center">-5.6</td>
 <td width="145" align="center">-2.6</td>
 <td width="145" align="center">-0.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="854">&nbsp;&nbsp;Nonpetroleum</td>
 <td width="144" align="center">-0.3</td>
 <td width="144" align="center">-0.4</td>
 <td width="145" align="center">-0.2</td>
 <td width="145" align="center">-3.4</td>
 <td width="145" align="center">0.1</td>
 <td width="145" align="center">-0.6</td>
 <td width="145" align="center">0.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="854">Exports - All Commodities</td>
 <td width="144" align="center">-0.6</td>
 <td width="144" align="center">-0.2</td>
 <td width="145" align="center">-0.6</td>
 <td width="145" align="center">-6.3</td>
 <td width="145" align="center">-0.5</td>
 <td width="145" align="center">-0.4</td>
 <td width="145" align="center">0.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="854">&nbsp;&nbsp;Agricultural</td>
 <td width="144" align="center">-1.1</td>
 <td width="144" align="center">0.1</td>
 <td width="145" align="center">-1.4</td>
 <td width="145" align="center">-12.8</td>
 <td width="145" align="center">-2.7</td>
 <td width="145" align="center">1.6</td>
 <td width="145" align="center">2.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="854">&nbsp;&nbsp;Nonagricultural</td>
 <td width="144" align="center">-0.6</td>
 <td width="144" align="center">-0.3</td>
 <td width="145" align="center">-0.5</td>
 <td width="145" align="center">-5.7</td>
 <td width="145" align="center">-0.3</td>
 <td width="145" align="center">-0.7</td>
 <td width="145" align="center">0.1</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Budget Deficit Deepens Y/Y 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;December
10, 2015
The U.S. Treasury Department reported a $64.6 billion budget deficit during
November, deeper than the $56.8 billion deficit twelve months earlier. A $68.0
billion deficit had been expected in the Action Economics Forecast Survey. In
the first two months of&nbsp; FY'16, the deficit deepened to $201.1 billion
versus $178.5 billion during the same period in FY'15.&nbsp; 
Overall revenues have increased 2.9% so far in FY'16 versus FY'15, dragged
down by a 38.1% y/y decline in corporate income tax payments. Individual income
taxes have increased a slightly improved 5.3% y/y. Growth in social insurance
contributions of 6.0% y/y have accompanied a 0.3% y/y gain in excise taxes.
Government spending has advanced 5.9% y/y so far in FY'16, held back by a
modest 2.7% y/y gain in defense outlays. Growth in outlays on health programs of
11.0% has been boosted by the Patient Protection and Affordable Care Act.
Veterans benefits &amp; services payments have grown 11.0% y/y. Medicare
payments have risen a firm 8.7% y/y while Social Security spending growth has
been steady at 4.3% y/y. Offsetting these gains have been a 9.2% y/y decline in
education, training, employment &amp; social services spending and a 2.4% y/y
decline in income security payments with the lower unemployment rate. Interest
payments also have declined 2.6% y/y.
Haver's data on Federal Government outlays and receipts are contained in USECON.
Considerable detail is given in the separate GOVFIN database. The Action
Economics Forecast Survey numbers are in the AS1REPNA database.
<table class="centered" border="0" cellspacing="0" width="1871">
 <colgroup>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 </colgroup>
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="717">United States Government
 Finance</th>
 <th scope="col" width="191">Nov' 2015</th>
 <th scope="col" width="191">FY'16 YTD</th>
 <th scope="col" width="192">FY'15</th>
 <th scope="col" width="192">FY'14</th>
 <th scope="col" width="192">FY'13</th>
 <th scope="col" width="192">FY'12</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="717">Budget Balance</td>
 <td align="center" width="191">-$64.6</td>
 <td align="center" width="191">-$201.1 bil.</td>
 <td align="center" width="192">-$438.9 bil.</td>
 <td align="center" width="192">-$483.4 bil.</td>
 <td align="center" width="192">-$680.2 bil.</td>
 <td align="center" width="192">-$1,089.2 bil.</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;As a percent of GDP</td>
 <td align="center" width="191">--</td>
 <td align="center" width="191">--</td>
 <td align="center" width="192">2.5</td>
 <td align="center" width="192">2.8</td>
 <td align="center" width="192">4.1</td>
 <td align="center" width="192">6.8</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" width="717"></td>
 <td align="center" width="191">% of Total</td>
 <td align="center" width="191">Annual Change, YTD</td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 </tr>
 <tr>
 <td class="firstcol" width="717">Net Revenues </td>
 <td align="center" width="191">100</td>
 <td align="center" width="191">2.9%</td>
 <td align="center" width="192">7.6%</td>
 <td align="center" width="192">8.9%</td>
 <td align="center" width="192">13.3%</td>
 <td align="center" width="192">6.4%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;Individual Income Taxes</td>
 <td align="center" width="191">47</td>
 <td align="center" width="191">5.3</td>
 <td align="center" width="192">10.5</td>
 <td align="center" width="192">5.9</td>
 <td align="center" width="192">16.3</td>
 <td align="center" width="192">3.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp;&nbsp;Corporate Income Taxes</td>
 <td align="center" width="191">11</td>
 <td align="center" width="191">-38.1</td>
 <td align="center" width="192">7.2</td>
 <td align="center" width="192">17.3</td>
 <td align="center" width="192">12.9</td>
 <td align="center" width="192">33.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;Social Insurance Taxes</td>
 <td align="center" width="191">33</td>
 <td align="center" width="191">6.0</td>
 <td align="center" width="192">4.1</td>
 <td align="center" width="192">8.0</td>
 <td align="center" width="192">12.1</td>
 <td align="center" width="192">3.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp; Excise Taxes</td>
 <td align="center" width="191">3</td>
 <td align="center" width="191">-0.3</td>
 <td align="center" width="192">5.3</td>
 <td align="center" width="192">11.1</td>
 <td align="center" width="192">6.3</td>
 <td align="center" width="192">9.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="717"></td>
 <td align="center" width="191"></td>
 <td align="center" width="191"></td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 </tr>
 <tr>
 <td class="firstcol" width="717">Net Outlays </td>
 <td align="center" width="191">100</td>
 <td align="center" width="191">5.9</td>
 <td align="center" width="192">5.2</td>
 <td align="center" width="192">1.4</td>
 <td align="center" width="192">-2.4</td>
 <td align="center" width="192">-1.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;National Defense</td>
 <td align="center" width="191">16</td>
 <td align="center" width="191">2.7</td>
 <td align="center" width="192">-2.3</td>
 <td align="center" width="192">-4.7</td>
 <td align="center" width="192">-6.3</td>
 <td align="center" width="192">-3.9</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp;&nbsp;Health</td>
 <td align="center" width="191">13</td>
 <td align="center" width="191">11.0</td>
 <td align="center" width="192">17.8</td>
 <td align="center" width="192">14.3</td>
 <td align="center" width="192">3.3</td>
 <td align="center" width="192">-7.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;Medicare</td>
 <td align="center" width="191">15</td>
 <td align="center" width="191">8.7</td>
 <td align="center" width="192">6.7</td>
 <td align="center" width="192">2.8</td>
 <td align="center" width="192">5.5</td>
 <td align="center" width="192">-2.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp;&nbsp;Income Security</td>
 <td align="center" width="191">14</td>
 <td align="center" width="191">-2.4</td>
 <td align="center" width="192">-0.9</td>
 <td align="center" width="192">-4.3</td>
 <td align="center" width="192">-1.1</td>
 <td align="center" width="192">-9.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;Social Security</td>
 <td align="center" width="191">24</td>
 <td align="center" width="191">4.3</td>
 <td align="center" width="192">4.4</td>
 <td align="center" width="192">4.5</td>
 <td align="center" width="192">5.2</td>
 <td align="center" width="192">5.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp; Veterans Benefits &amp; Services</td>
 <td align="center" width="191">4</td>
 <td align="center" width="191">11.0</td>
 <td align="center" width="192">6.8</td>
 <td align="center" width="192">7.7</td>
 <td align="center" width="192">11.5</td>
 <td align="center" width="192">-2.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp; Education, Training, Employment
 &amp; Social Services</td>
 <td align="center" width="191">3</td>
 <td align="center" width="191">-9.2</td>
 <td align="center" width="192">34.7</td>
 <td align="center" width="192">25.9</td>
 <td align="center" width="192">-21.9</td>
 <td align="center" width="192">-10.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;Interest</td>
 <td align="center" width="191">6</td>
 <td align="center" width="191">-2.6</td>
 <td align="center" width="192">-1.8</td>
 <td align="center" width="192">2.8</td>
 <td align="center" width="192">0.4</td>
 <td align="center" width="192">-3.0</td>
 </tr>
 </tbody>
</table>


</body>

</html>

Initial claims for unemployment insurance rose to 282,000 (-1.2% y/y) in the week ending December 5 from an unrevised 269,000 the previous week. The Action Economics Forecast Survey expected 265,000 filings. The four-week moving [...]

U.S. Initial Unemployment Insurance Claims Increase

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<a href="/comment/151210n_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/151210n.png"></a>
 <a href="/comment/151210o_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/151210o.png"></a>

The U.S. Treasury Department reported a $64.6 billion budget deficit during
November, deeper than the $56.8 billion deficit twelve months earlier. A $68.0
billion deficit had been expected in the Action Economics Forecast Survey. In
the first two months of FY'16, the deficit deepened to $201.1 billion
versus $178.5 billion during the same period in FY'15.

Overall revenues have increased 2.9% so far in FY'16 versus FY'15, dragged
down by a 38.1% y/y decline in corporate income tax payments. Individual income
taxes have increased a slightly improved 5.3% y/y. Growth in social insurance
contributions of 6.0% y/y have accompanied a 0.3% y/y gain in excise taxes.

Government spending has advanced 5.9% y/y so far in FY'16, held back by a
modest 2.7% y/y gain in defense outlays. Growth in outlays on health programs of
11.0% has been boosted by the Patient Protection and Affordable Care Act.
Veterans benefits &amp; services payments have grown 11.0% y/y. Medicare
payments have risen a firm 8.7% y/y while Social Security spending growth has
been steady at 4.3% y/y. Offsetting these gains have been a 9.2% y/y decline in
education, training, employment &amp; social services spending and a 2.4% y/y
decline in income security payments with the lower unemployment rate. Interest
payments also have declined 2.6% y/y.

Haver's data on Federal Government outlays and receipts are contained in USECON.
Considerable detail is given in the separate GOVFIN database. The Action
Economics Forecast Survey numbers are in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >United States Government
 Finance</th>
 <th scope="col" >Nov' 2015</th>
 <th scope="col" >FY'16 YTD</th>
 <th scope="col" >FY'15</th>
 <th scope="col" >FY'14</th>
 <th scope="col" >FY'13</th>
 <th scope="col" >FY'12</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Budget Balance</td>
 <td >-$64.6</td>
 <td >-$201.1 bil.</td>
 <td >-$438.9 bil.</td>
 <td >-$483.4 bil.</td>
 <td >-$680.2 bil.</td>
 <td >-$1,089.2 bil.</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;As a percent of GDP</td>
 <td >--</td>
 <td >--</td>
 <td >2.5</td>
 <td >2.8</td>
 <td >4.1</td>
 <td >6.8</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" ></td>
 <td >% of Total</td>
 <td >Annual Change, YTD</td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 </tr>
 <tr>
 <td class="firstcol" >Net Revenues </td>
 <td >100</td>
 <td >2.9%</td>
 <td >7.6%</td>
 <td >8.9%</td>
 <td >13.3%</td>
 <td >6.4%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Individual Income Taxes</td>
 <td >47</td>
 <td >5.3</td>
 <td >10.5</td>
 <td >5.9</td>
 <td >16.3</td>
 <td >3.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Corporate Income Taxes</td>
 <td >11</td>
 <td >-38.1</td>
 <td >7.2</td>
 <td >17.3</td>
 <td >12.9</td>
 <td >33.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Social Insurance Taxes</td>
 <td >33</td>
 <td >6.0</td>
 <td >4.1</td>
 <td >8.0</td>
 <td >12.1</td>
 <td >3.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Excise Taxes</td>
 <td >3</td>
 <td >-0.3</td>
 <td >5.3</td>
 <td >11.1</td>
 <td >6.3</td>
 <td >9.2</td>
 </tr>
 <tr>
 <td class="firstcol" ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 </tr>
 <tr>
 <td class="firstcol" >Net Outlays </td>
 <td >100</td>
 <td >5.9</td>
 <td >5.2</td>
 <td >1.4</td>
 <td >-2.4</td>
 <td >-1.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;National Defense</td>
 <td >16</td>
 <td >2.7</td>
 <td >-2.3</td>
 <td >-4.7</td>
 <td >-6.3</td>
 <td >-3.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Health</td>
 <td >13</td>
 <td >11.0</td>
 <td >17.8</td>
 <td >14.3</td>
 <td >3.3</td>
 <td >-7.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Medicare</td>
 <td >15</td>
 <td >8.7</td>
 <td >6.7</td>
 <td >2.8</td>
 <td >5.5</td>
 <td >-2.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Income Security</td>
 <td >14</td>
 <td >-2.4</td>
 <td >-0.9</td>
 <td >-4.3</td>
 <td >-1.1</td>
 <td >-9.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Social Security</td>
 <td >24</td>
 <td >4.3</td>
 <td >4.4</td>
 <td >4.5</td>
 <td >5.2</td>
 <td >5.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Veterans Benefits &amp; Services</td>
 <td >4</td>
 <td >11.0</td>
 <td >6.8</td>
 <td >7.7</td>
 <td >11.5</td>
 <td >-2.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Education, Training, Employment
 &amp; Social Services</td>
 <td >3</td>
 <td >-9.2</td>
 <td >34.7</td>
 <td >25.9</td>
 <td >-21.9</td>
 <td >-10.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Interest</td>
 <td >6</td>
 <td >-2.6</td>
 <td >-1.8</td>
 <td >2.8</td>
 <td >0.4</td>
 <td >-3.0</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The U.S. Treasury Department reported a $64.6 billion budget deficit during November, deeper than the $56.8 billion deficit twelve months earlier. A $68.0 billion deficit had been expected in the Action Economics Forecast Survey. In [...]

U.S. Budget Deficit Deepens Y/Y

Carol Stone, CBE

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Total borrowing in the U.S. decreased to $933 billion at a seasonally adjusted annual rate in Q3, according to the Financial Accounts of the U.S., which were released today by the Federal Reserve Board. This was less than half the pace of the $2.470 trillion in Q2, and it amounted to just 5.2% of GDP, down from Q2's 13.8%. All major sectors of the domestic economy as well as the foreign sector borrowed noticeably less in Q3.

The federal government needed only $22 billion at a seasonally annual rate in Q3, down from $350 billion in Q2. The actual budget deficit for that quarter was $122.5 billion, about the same as a year ago, but far smaller than the deficit for Q3 in prior recent years. So it's not surprising that seasonally adjusted borrowing by the federal government was quite moderate.

Household borrowing in Q3, at $211 billion, SAAR, was less than half the pace of Q2, $585 billion. Home mortgages increased $147 billion, SAAR versus Q2's $226 billion, and consumer credit rose at a $246 billion pace, compared to Q2's $286 billion. Other institutions, such as hedge funds, which are included in "households" because they are not covered by specific published source data, had net paydowns of about $172 billion in Q3 in depository institution and "other" loans.

Nonfinancial corporate business borrowing retreated to $343 billion, SAAR, in Q3 from $685 billion in Q2. Corporate bond issuance was $326 billion, SAAR, compared to Q2's $626 billion. Depository institution loans were paid down at a $60 billion annual rate after Q2's net borrowing of $73 billion. But commercial paper issuance did pick up, with a net increase of $68 billion, SAAR, after a net paydown of $50 billion in Q2 and net paydowns the previous two quarters as well.

The financial sector basically maintained its Q2 borrowing pace, $368 billion, with $324 billion in Q3.

Press reports of these Financial Accounts highlight household balance sheets and net worth. Despite households' reduced borrowing, their net worth fell to $78.2 trillion (not seasonally adjusted) at the end of Q3 from $80.3 trillion at mid-year. This was largely due to the stock market decline over the summer, which reduced holdings of equities by $1.45 trillion (actual quarterly amount, not seasonally adjusted), the second largest quarterly decline ever. The largest was $1.50 trillion in Q1 2008.

The summer's stock price decline also cut the net wealth of the total economy. The Fed's recently devised measure, "U.S. net wealth" fell $2.12 trillion (not seasonally adjusted quarterly rate) as the overall market value of domestic corporations fell $2.54 trillion. The value of nonfinancial assets held by various sectors did increase, while U.S. financial claims on the "rest of the world" decreased, that by $778 billion. The opposite item, foreign claims on U.S. assets, also fell, by $489 billion, its first decline since Q3 2011 and the largest since Q1 2009, in the midst of the financial crisis.


The Financial Accounts data are in Haver's FFUNDS database. Associated
information is compiled in the Integrated Macroeconomic Accounts produced
jointly with the Bureau of Economic Analysis (BEA); these are carried in Haver's
USNA database.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col">Financial Accounts (SAAR, Bil.$)</th>
 <th>Q3'15</th>
 <th>Q2'15</th>
 <th>Q1'15</th>
 <th>2014</th>
 <th>2013</th>
 <th>2012</th>
 <th>2011</th>
 </tr>
 </thead>
 
 <tr>
 <td class="firstcol" scope="col">Total Borrowing*</td>
 <td>933</td>
 <td>2470</td>
 <td>1254</td>
 <td>2326</td>
 <td>2127</td>
 <td>1732</td>
 <td>1168</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Federal Government</td>
 <td>22</td>
 <td>350</td>
 <td>-156</td>
 <td>736</td>
 <td>857</td>
 <td>1181</td>
 <td>1139</td>
 </tr>
 <tr>
 <td class="firstcol">Households</td>
 <td>211</td>
 <td>585</td>
 <td>254</td>
 <td>418</td>
 <td>235</td>
 <td>260</td>
 <td>-71</td>
 </tr>
 
 <td class="firstcol">Nonfinancial Corporate Business</td>
 <td>343</td>
 <td>685</td>
 <td>620</td>
 <td>494</td>
 <td>446</td>
 <td>346</td>
 <td>355</td>
 <tr>
 <td class="firstcol">Financial Sectors</td>
 <td>325</td>
 <td>368</td>
 <td>-151</td>
 <td>343</td>
 <td>275</td>
 <td>-387</td>
 <td>-318</td>
 </tr>
 
 
 
 *Previously called "credit market borrowing" and includes debt securities plus loans. The total here includes noncorporate business, state and local government and foreign sectors, not shown separately.
 
</html>

Total borrowing in the U.S. decreased to $933 billion at a seasonally adjusted annual rate in Q3, according to the Financial Accounts of the U.S., which were released today by the Federal Reserve Board. This was less than half the [...]

U.S. Financial Accounts Show Less Borrowing But Also Smaller Net Wealth

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The Financial Accounts data are in Haver's FFUNDS database. Associated
information is compiled in the Integrated Macroeconomic Accounts produced
jointly with the Bureau of Economic Analysis (BEA); these are carried in Haver's
USNA database.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col">Financial Accounts (SAAR, Bil.$)</th>
 <th>Q2'15</th>
 <th>Q1'15</th>
 <th>Q4'14</th>
 <th>2014</th>
 <th>2013</th>
 <th>2012</th>
 <th>2011</th>
 </tr>
 </thead>
 
 <tr>
 <td class="firstcol" scope="col">Total Borrowing*</td>
 <td>2422</td>
 <td>1234</td>
 <td>2481</td>
 <td>2316</td>
 <td>2149</td>
 <td>1734</td>
 <td>1176</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Federal Government</td>
 <td>350</td>
 <td>-156</td>
 <td>838</td>
 <td>736</td>
 <td>857</td>
 <td>1181</td>
 <td>1139</td>
 </tr>
 <tr>
 <td class="firstcol">Households</td>
 <td>548</td>
 <td>240</td>
 <td>301</td>
 <td>414</td>
 <td>240</td>
 <td>261</td>
 <td>-71</td>
 </tr>
 
 <td class="firstcol">Nonfinancial Corporate Business</td>
 <td>675</td>
 <td>636</td>
 <td>483</td>
 <td>489</td>
 <td>432</td>
 <td>364</td>
 <td>295</td>
 <tr>
 <td class="firstcol">Financial Sectors</td>
 <td>377</td>
 <td>-160</td>
 <td>478</td>
 <td>333</td>
 <td>284</td>
 <td>-386</td>
 <td>-310</td>
 </tr>
 
 
 
 *Previously called "credit market borrowing" and includes debt securities plus loans. The total here includes noncorporate business, state and local government and foreign sectors, not shown separately.
 
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The Financial Accounts data are in Haver's FFUNDS database. Associated information is compiled in the Integrated Macroeconomic Accounts produced jointly with the Bureau of Economic Analysis (BEA); these are carried in Haver's USNA [...]

U.S. Financial Accounts Show Moderate Borrowing; Little Change in Net Wealth

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Import prices declined 0.4% during November following a 0.3% October drop,
revised from -0.5%. A 0.7% fall had been expected in the Action Economics
Forecast Survey. Petroleum prices fell 2.5% (-44.5% y/y) after a 0.4% rise,
revised from a 2.1% decline. Nonpetroleum import prices fell 0.3% (-3.4% y/y)
after an unrevised 0.4% decline. These prices have not risen m/m since March of
last year. A 1.0% decline (-11.2% y/y) in prices of nonoil supplies &amp;
materials led the way lower followed by a 0.5% drop (-5.0% y/y) in food &amp;
beverage costs. Capital goods prices eased 0.1% (-2.3% y/y) as did prices for
automotive vehicles &amp; sparts. Nonauto consumer goods prices remained
unchanged (-0.7% y/y) for a second straight month.

Export prices fell 0.6% (-6.3% y/y) following an unrevised 0.2% decline.
Expectations had been for a 0.2% shortfall. A 1.6% decline (-15.0% y/y) in
industrial supplies &amp; materials prices led the way lower. This drop
reflected lower fuels &amp; building materials costs, without which prices fell
0.4% (-8.4% y/y). Foods, feeds &amp; beverages prices were off 0.9% (-13.0% y/y)
and capital goods costs eased 0.1% (-0.2% y/y). Automotive vehicles &amp; parts
prices fell 0.2% (-0.5% y/y), but nonauto consumer goods prices improved 0.1%
(-2.1% y/y).

The import and export price series can be found in Haver's USECON
database. Detailed figures are available in the USINT database. The
expectations figure from the Action Economics Forecast Survey is in the AS1REPNA
database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export
 Prices (NSA, %)</a></th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Imports - All Commodities</td>
 <td >-0.4</td>
 <td >-0.3</td>
 <td >-1.1</td>
 <td >-9.4</td>
 <td >-1.1</td>
 <td >-1.1</td>
 <td >0.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Petroleum</td>
 <td >-2.5</td>
 <td >0.4</td>
 <td >-9.4</td>
 <td >-44.5</td>
 <td >-5.6</td>
 <td >-2.6</td>
 <td >-0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Nonpetroleum</td>
 <td >-0.3</td>
 <td >-0.4</td>
 <td >-0.2</td>
 <td >-3.4</td>
 <td >0.1</td>
 <td >-0.6</td>
 <td >0.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Exports - All Commodities</td>
 <td >-0.6</td>
 <td >-0.2</td>
 <td >-0.6</td>
 <td >-6.3</td>
 <td >-0.5</td>
 <td >-0.4</td>
 <td >0.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Agricultural</td>
 <td >-1.1</td>
 <td >0.1</td>
 <td >-1.4</td>
 <td >-12.8</td>
 <td >-2.7</td>
 <td >1.6</td>
 <td >2.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Nonagricultural</td>
 <td >-0.6</td>
 <td >-0.3</td>
 <td >-0.5</td>
 <td >-5.7</td>
 <td >-0.3</td>
 <td >-0.7</td>
 <td >0.1</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Import prices declined 0.4% during November following a 0.3% October drop, revised from -0.5%. A 0.7% fall had been expected in the Action Economics Forecast Survey. Petroleum prices fell 2.5% (-44.5% y/y) after a 0.4% rise, revised [...]

U.S. Import Price Decline Led by Cheaper Oil

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

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

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Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

260206.jpg

**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

260205X15.jpg

260205Y15.jpg

**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

260205C15.jpg

260205D15.jpg

- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

260205A2.jpg

260205B2.jpg

Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

260205C2.jpg

260205D2.jpg

- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

U.S. Initial Unemployment Claims Surged in Latest Week

260205E.jpg

German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.