Tom Moeller

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The advance estimate of the U.S. trade deficit in
goods narrowed to $59.88 billion in February from $65.90 in January. A $63.8
billion deficit had been expected in the Action Economics Forecast Survey. 

Exports of goods increased 0.6% m/m (-1.6% y/y) in February
following a 0.9% decline. The gain was led by a 5.0% increase in the
&quot;other&quot; category which followed a 12.9% decline. Motor vehicles &amp;
parts exports also were strong, posting a 3.2% rise (2.1% y/y) on top of a 7.6%
January increase. Industrial supplies exports rose 1.5% and recaptured the prior
month's decline. Capital goods exports improved 0.5% (-5.6% y/y) following a
2.4% drop. Working the other way were consumer goods exports which fell 4.7%
(-10.0% y/y) after a 0.8% rise. Foods, feeds &amp; beverages exports which fell
0.6% (-0.7% y/y) following a 2.1% rise.

Imports of goods fell 2.4% (-7.7% y/y) following a 2.0%
decline as most categories exhibited weakness m/m. Capital goods imports
weakened 6.8% (-11.2% y/y) after slipping 0.8% in January. Industrial supplies
&amp; materials imports fell 3.8% (-10.1% y/y) as oil prices declined. Foods,
feeds &amp; beverages imports were off 3.1% both m/m and y/y following a 4.9%
gain. Consumer goods imports declined 1.8% (-7.4% y/y) after edging 0.7% higher.
Increasing by 4.9% (-4.8% y/y) were auto imports which reversed two months
of decline. Imports of other goods also rose 4.9% (7.9% y/y) and recovered much
of a 13.5% drop during January.

The advance international trade data can be found in Haver's USECON
database. The expectation figure is from the Action Economics Forecast Survey,
which is carried in AS1REPNA.

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	 	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Advance U.S. Foreign Trade in
 Goods (Current Customs Value $)</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Dec</th>
 <th>Feb Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 
 <tr class="odd">
 <td class="firstcol" >U.S. Trade Deficit ($ bil.)</td>
 <td>59.88</td>
 <td>65.90</td>
 <td>68.48</td>
 <td>70.31 
 (02/19)</td>
 <td>852.79</td>
 <td>874.81</td>
 <td>793.41</td>
 </tr>
 <tr>
 <td class="firstcol" >Exports (% Chg)</td>
 <td>0.6</td>
 <td>-0.9</td>
 <td>0.4</td>
 <td>-1.6</td>
 <td>-1.3</td>
 <td>7.9</td>
 <td>6.4</td>
 </tr>
 
 <td class="firstcol" >Imports (% Chg)</td>
 <td>-2.4</td>
 <td>-2.0</td>
 <td>2.9</td>
 <td>-7.7</td>
 <td>-1.7</td>
 <td>8.7</td>
 <td>7.4</td>

 
 

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The advance estimate of the U.S. trade deficit in goods narrowed to $59.88 billion in February from $65.90 in January. A $63.8 billion deficit had been expected in the Action Economics Forecast Survey. Exports of goods increased 0.6% [...]

Advance U.S. Trade Deficit in Goods Shrinks in February

Gerald D. Cohen

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&bull; Initial jobless claims jumped to a record 3.283 million in the week ending March 21.
&bull; This is the largest weekly increase since the data was first collected in 1967.
&bull; Claims rose in every state led by Pennsylvania, Ohio and New Jersey.
&bull; This data suggests a 1.8 percentage point rise in the unemployment rate.


Initial jobless claims for unemployment insurance jumped 3.001 million to a record 3.283 million (1,427% year-on-year) during the week ending March 21, This is also the largest weekly increase in claims both on a level and percent change basis since the data was first collected in 1967. The previous high for claims was 695,000 set in 1982. Based on this data alone, the unemployment rate should rise by 1.8 percentage points. The Action Economics Forecast Survey mean was 1.157 million claims while its median was 800,000.

The previous week's claims were revised slightly higher to 282,000 (was 281,000). This data is from the survey week for the March employment report, which is scheduled to be released on Friday, April 3. As a result, we will not see the rise in unemployment represented in the latest data until the April employment figures released on Friday, May 8.
The <a href="https://www.bls.gov/bls/bls-covid-19-questions-and-answers.htm">Bureau of Labor Statistics</a> anticipates that COVID-19 will not impact its release calendar.

The four-week moving average of initial claims, which smooths out week-to-week volatility and is less important at the moment since its spans pre- and post-coronavirus shutdowns, jumped to 998,250.

Claims increased in the week ending March 21, led by Pennsylvania (397,975), Ohio (212,773), and New Jersey (179,144) followed by Michigan, Massachusetts and California (these calculations are based on seasonally-adjusted data calculated by Haver Analytics). In total 11 states showed gains of over 100,000. New Hampshire, Rhode Island and Maine had the largest percent gains in claims. The Department of Labor notes that advance claims are not directly comparable to claims reported in prior weeks and some states indicated these numbers are only estimates. A more accurate picture of state claims in the week ending March 21 will be available next week.

Continuing claims for unemployment insurance increased 101,000 to 1.803 million (4.1% y/y) in the week ending March 14, from a slightly-upwardly revised 1.702 million (was 1.701). The four-week moving average of claimants increased to 1.731 million from 1.704 million. The insured rate of unemployment was unchanged at 1.2%. The state insured rates of unemployment are lagged by two weeks, thus this data has yet to see any major impact from COVID-19.

Data on weekly unemployment claims going back to 1967 are contained in Haver's WEEKLY database,
and they are summarized monthly in USECON. Data for individual states are in REGIONW. The expectations
figure is from the Action Economics Forecast Survey, carried in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" >Unemployment Insurance (SA, 000s)</th>
 <th>03/21/20</th>
 <th>03/14/20</th>
 <th>03/07/20</th>
 <th>Y/Y %</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Initial Claims</td>
 <td>3,283</td>
 <td>282</td>
 <td>211</td>
 <td>1,427.0</td>
 <td>218</td>
 <td>221</td>
 <td>244</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >4-wk avg</td>
 <td>998.25</td>
 <td>232.50</td>
 <td>215.75</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr>
 <td class="firstcol" >Continuing Claims</td>
 <td>--</td>
 <td>1,803</td>
 <td>1,702</td>
 <td>4.1</td>
 <td>1,701</td>
 <td>1,756</td>
 <td>1,961</td>
 </tr>
 <tr class="odd">
	 <td class="firstcol" >4-wk avg</td>
	 <td>--</td>
	 <td>1731.00</td>
	 <td>1703.50</td>
	 <td>--</td>
	 <td>--</td>
	 <td>--</td>
	 <td>--</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Insured Unemployment Rate (%)</td>
 <td>--</td>
 <td>1.2</td>
 <td>1.2</td>
 <td>
 1.2 
 (Mar. 2019)
 </td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.4</td>
 </tr>
 </tbody>
 </table>
 
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• Initial jobless claims jumped to a record 3.283 million in the week ending March 21. • This is the largest weekly increase since the data was first collected in 1967. • Claims rose in every state led by Pennsylvania, Ohio and New [...]

U.S. Initial Claims for Unemployment Insurance Soar to Record 3.3 Million

Advance 
<a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;&nbsp;March 26, 2020
The advance estimate of the U.S. trade deficit in
goods narrowed to $59.88 billion in February from $65.90 in January. A $63.8
billion deficit had been expected in the Action Economics Forecast Survey. 
Exports of goods increased 0.6% m/m (-1.6% y/y) in February
following a 0.9% decline. The gain was led by a 5.0% increase in the
&quot;other&quot; category which followed a 12.9% decline. Motor vehicles &amp;
parts exports also were strong, posting a 3.2% rise (2.1% y/y) on top of a 7.6%
January increase. Industrial supplies exports rose 1.5% and recaptured the prior
month's decline. Capital goods exports improved 0.5% (-5.6% y/y) following a
2.4% drop. Working the other way were consumer goods exports which fell 4.7%
(-10.0% y/y) after a 0.8% rise. Foods, feeds &amp; beverages exports which fell
0.6% (-0.7% y/y) following a 2.1% rise.
Imports of goods fell 2.4% (-7.7% y/y) following a 2.0%
decline as most categories exhibited weakness m/m. Capital goods imports
weakened 6.8% (-11.2% y/y) after slipping 0.8% in January. Industrial supplies
&amp; materials imports fell 3.8% (-10.1% y/y) as oil prices declined. Foods,
feeds &amp; beverages imports were off 3.1% both m/m and y/y following a 4.9%
gain. Consumer goods imports declined 1.8% (-7.4% y/y) after edging 0.7% higher.
Increasing by 4.9% (-4.8% y/y) were auto imports&nbsp; which reversed two months
of decline. Imports of other goods also rose 4.9% (7.9% y/y) and recovered much
of a 13.5% drop during January.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 
The advance international trade data can be found in Haver's USECON
database. The expectation figure is from the Action Economics Forecast Survey,
which is carried in AS1REPNA.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="956">Advance U.S. Foreign Trade in
 Goods (Current Customs Value $)</th>
 <th width="130">Feb</th>
 <th width="130">Jan</th>
 <th width="130">Dec</th>
 <th width="130">Feb Y/Y</th>
 <th width="130">2019</th>
 <th width="130">2018</th>
 <th width="131">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="956">U.S. Trade Deficit ($ bil.)</td>
 <td align="center" width="130">59.88</td>
 <td align="center" width="130">65.90</td>
 <td align="center" width="130">68.48</td>
 <td align="center" width="130">70.31 
 (02/19)</td>
 <td align="center" width="130">852.79</td>
 <td align="center" width="130">874.81</td>
 <td align="center" width="131">793.41</td>
 </tr>
 <tr>
 <td class="firstcol" width="956">Exports (% Chg)</td>
 <td align="center" width="130">0.6</td>
 <td align="center" width="130">-0.9</td>
 <td align="center" width="130">0.4</td>
 <td align="center" width="130">-1.6</td>
 <td align="center" width="130">-1.3</td>
 <td align="center" width="130">7.9</td>
 <td align="center" width="131">6.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="956">Imports (% Chg)</td>
 <td align="center" width="130">-2.4</td>
 <td align="center" width="130">-2.0</td>
 <td align="center" width="130">2.9</td>
 <td align="center" width="130">-7.7</td>
 <td align="center" width="130">-1.7</td>
 <td align="center" width="130">8.7</td>
 <td align="center" width="131">7.4</td>
 </tr>
 </tbody>
</table>
&nbsp;
&nbsp;
Kansas City Fed Factory Index Collapses 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;March 26, 2020
In lockstep with other regional Fed indexes recently
released, the Federal
Reserve Bank of Kansas City reported that its reading of manufacturing
business activity plunged to -17 in March following February's improvement to 5.
It was the lowest&nbsp; reading since March 2009, indicating major recession in
the area's factory sector activity. The index of expectations in six months fell
to -19, also the weakest reading in eleven years.
The ISM-Adjusted Index fell to 43.1 (NSA) in March. It was
the lowest index level since December 2015 and down from the May 2018 high of
64.2.
The current condition components all weakened
this month with new orders, shipments and production each falling sharply. The
employment index fell further into negative territory, nearly touching its March
2009 low. The export measure also reached a record low. The employee workweek
measure fell deeper into negative territory where it's been for five months.
On the inflation front, prices received for finished products
turned negative. The fall to -6 compares to +27 in August 2018. The raw materials
prices index hit a four-year low.
The index measuring expectations in six months similarly fell
significantly, reflecting sharply lower new orders, shipments and production. The
expected employment measure also collapsed.
Expected finished product prices fell sharply along with
expected raw materials prices.
The
diffusion indexes are calculated as the percentage of total respondents
reporting increases minus the percentage reporting declines. The survey includes 93 responses from plants in Colorado, Kansas, Nebraska, Oklahoma,
Wyoming and northern New Mexico and was conducted mid-month. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS
database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" width="1130">Kansas City Federal Reserve
 Manufacturing Survey (SA)</th>
 <th width="105">Mar</th>
 <th width="105">Feb</th>
 <th width="105">Jan</th>
 <th width="105">Mar'19</th>
 <th width="105">2019</th>
 <th width="106">2018</th>
 <th width="106">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1130">Conditions Versus One Month Ago (%
 Balance)&nbsp;&nbsp;&nbsp;&nbsp;</td>
 <td width="105" align="center">-17</td>
 <td width="105" align="center">5</td>
 <td width="105" align="center">-1</td>
 <td width="105" align="center">9</td>
 <td width="105" align="center">0</td>
 <td width="106" align="center">17</td>
 <td width="106" align="center">14</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1130">ISM-Adjusted Composite Index (NSA)</td>
 <td width="105" align="center">43.1</td>
 <td width="105" align="center">52.7</td>
 <td width="105" align="center">48.3</td>
 <td width="105" align="center">56.4</td>
 <td width="105" align="center">50.0</td>
 <td width="106" align="center">58.9</td>
 <td width="106" align="center">56.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="1130">&nbsp;&nbsp; New Orders Volume</td>
 <td width="105" align="center">-38</td>
 <td width="105" align="center">8</td>
 <td width="105" align="center">-2</td>
 <td width="105" align="center">3 </td>
 <td width="105" align="center">-3</td>
 <td width="106" align="center">17</td>
 <td width="106" align="center">17</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1130">&nbsp;&nbsp; Number of&nbsp; Employees</td>
 <td width="105" align="center">-32</td>
 <td width="105" align="center">-4</td>
 <td width="105" align="center">4</td>
 <td width="105" align="center">12</td>
 <td width="105" align="center">-1</td>
 <td width="106" align="center">17</td>
 <td width="106" align="center">15</td>
 </tr>
 <tr>
 <td class="firstcol" width="1130">&nbsp;&nbsp; Production</td>
 <td width="105" align="center">-18</td>
 <td width="105" align="center">8</td>
 <td width="105" align="center">-4</td>
 <td width="105" align="center">13</td>
 <td width="105" align="center">2</td>
 <td width="106" align="center">19</td>
 <td width="106" align="center">17</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1130">&nbsp;&nbsp; Prices Received for
 Finished Product</td>
 <td width="105" align="center">-6</td>
 <td width="105" align="center">9</td>
 <td width="105" align="center">-3</td>
 <td width="105" align="center">8</td>
 <td width="105" align="center">7</td>
 <td width="106" align="center">22</td>
 <td width="106" align="center">7</td>
 </tr>
 <tr>
 <td class="firstcol" width="1130">Expected Conditions in Six Months</td>
 <td width="105" align="center">-19</td>
 <td width="105" align="center">16</td>
 <td width="105" align="center">14</td>
 <td width="105" align="center">20</td>
 <td width="105" align="center">12</td>
 <td width="106" align="center">28</td>
 <td width="106" align="center">26</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1130">&nbsp;&nbsp; New Orders Volume</td>
 <td width="105" align="center">-35</td>
 <td width="105" align="center">21</td>
 <td width="105" align="center">9</td>
 <td width="105" align="center">26</td>
 <td width="105" align="center">17</td>
 <td width="106" align="center">35</td>
 <td width="106" align="center">35</td>
 </tr>
 <tr>
 <td class="firstcol" width="1130">&nbsp;&nbsp; Number of Employees</td>
 <td width="105" align="center">-19</td>
 <td width="105" align="center">20</td>
 <td width="105" align="center">20</td>
 <td width="105" align="center">29</td>
 <td width="105" align="center">15</td>
 <td width="106" align="center">33</td>
 <td width="106" align="center">31</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1130">&nbsp;&nbsp; Production</td>
 <td width="105" align="center">-36</td>
 <td width="105" align="center">21</td>
 <td width="105" align="center">23</td>
 <td width="105" align="center">26</td>
 <td width="105" align="center">19</td>
 <td width="106" align="center">40</td>
 <td width="106" align="center">40</td>
 </tr>
 <tr>
 <td class="firstcol" width="1130">&nbsp;&nbsp; Prices Received for
 Finished Product</td>
 <td width="105" align="center">-10</td>
 <td width="105" align="center">28</td>
 <td width="105" align="center">20</td>
 <td width="105" align="center">36</td>
 <td width="105" align="center">26</td>
 <td width="106" align="center">42</td>
 <td width="106" align="center">27</td>
 </tr>
 </tbody>
</table>

U.S. Trade Deficit in Goods Shrinks in February

Sandy Batten

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The Federal Housing Finance Agency (FHFA) Price Index
increased 0.6% during December.........




The FHFA house price index is a weighted purchase-only index
that measures average price changes in repeat sales of the same property. An
associated quarterly index includes refinancings on the same kinds of
properties. The indexes are based on transactions involving conforming,
conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.
Only mortgage transactions on single-family properties are included. The FHFA
data are available in Haver's USECON database.

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<table class="centered" width="100%" border="0" cellspacing="0">
 <colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
 <tr>
 <th class="firstcol" >FHFA U.S. House Price Index, 
 Purchase Only (SA %)</th>
 <th scope="col" >Jan</th>
 <th scope="col" >Dec</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Jan Y/Y</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td>0.6</td>
 <td>0.3</td>
 <td>0.3</td>
 <td>5.2</td>
 <td>5.3</td>
 <td>6.6</td>
 <td>6.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; New England</td>
 <td>0.7</td>
 <td>0.3</td>
 <td>0.2</td>
 <td>4.3</td>
 <td>4.5</td>
 <td>5.3</td>
 <td>5.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Middle Atlantic</td>
 <td>0.7</td>
 <td>0.1</td>
 <td>0.7</td>
 <td>4.1</td>
 <td>4.4</td>
 <td>5.4</td>
 <td>4.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; East North Central</td>
 <td>-0.3</td>
 <td>1.0</td>
 <td>-0.3</td>
 <td>4.7</td>
 <td>5.4</td>
 <td>6.5</td>
 <td>5.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; West North Central</td>
 <td>0.8</td>
 <td>0.0</td>
 <td>-0.1</td>
 <td>4.9</td>
 <td>5.1</td>
 <td>6.1</td>
 <td>5.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; South Atlantic</td>
 <td>1.0</td>
 <td>0.3</td>
 <td>0.3</td>
 <td>5.8</td>
 <td>5.8</td>
 <td>7.2</td>
 <td>6.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; East South Central</td>
 <td>1.0</td>
 <td>-0.4</td>
 <td>0.7</td>
 <td>5.9</td>
 <td>5.8</td>
 <td>6.1</td>
 <td>5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; West South Central</td>
 <td>0.6</td>
 <td>0.1</td>
 <td>0.4</td>
 <td>4.5</td>
 <td>4.7</td>
 <td>5.3</td>
 <td>6.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Mountain</td>
 <td>1.0</td>
 <td>-0.0</td>
 <td>0.5</td>
 <td>7.4</td>
 <td>7.1</td>
 <td>9.1</td>
 <td>8.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Pacific</td>
 <td>0.4</td>
 <td>0.3</td>
 <td>0.8</td>
 <td>4.8</td>
 <td>4.6</td>
 <td>7.5</td>
 <td>8.5</td>
 </tr>
 </tbody>
</table>
</html>

The Federal Housing Finance Agency (FHFA) Price Index increased 0.6% during December......... The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An [...]

U.S. FHFA House Price Index Posts Modest Increase

Robert Brusca

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German business sentiment logged its steepest fall ever recorded since German reunification. The IFO also released analysis saying that the German economy could contract by 20% because of actions taken to prevent the spread of the coronavirus.

Lock-down and forecasting 
The BBC reports that one-quarter of the world's population is under some form of lockdown. With the German economy so export-dependent, it is not surprising to see such draconian projections being bandied about. The bottom line is that no one really knows. Forecasting in this environment is simply an exercise in thinking about what might happen under different future scenarios. Handicapping which future scenario is most likely is a thankless and impossible job. Welcome to economics.

February vs. March 
The IFO report shows a sudden collapse in economic conditions in March. This finding accords with Markit PMI data and with other incoming reports in other countries. Basically, data from February are simply to be viewed as one-off. The British CBI retail sales report today dismissed itself knowing full well that next month with a lock-down in store, conditions would weaken greatly. The U.S. durable goods report showed a nice gain and some building momentum as of February, but that hardly reflects the ongoing reality either. Even March reports are flawed since they are the first month of what is going to be an extraordinary string of unusual economic reports.

The IFO in March 
The IFO shows sharp drops in economic climate made up of sharp downgrades in current conditions as well as generally deeper mark downs of expectations that were already in the red. Ranked since early 2016, most of the standings are on their all-period lows this month - with very few exceptions. Ranked over the longer span since end 1991, rankings are higher; three sector rankings stand above their respective medians on that timeline (construction, wholesale and retail), but manufacturing and services are below median on their current gauges and everything is well below its long period median for expectations. Expectations are simply extremely weak readings across the board.


<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200325.png" width="660" height="580">


What's next? 
The real question is what's next and what does this mean. With one quarter of the world's population in some sort of lock down, whatever number you put on the future it is going to be a low one. Picking the inflection point for 'all this' to end and for recovery to set in is yet another opportunity for forecasters to disgrace themselves.

Already 'camps' are forming... In the U.S., Donald Trump and some Republicans are becoming advocates of an early end to the lockdown calling the cure 'worse than the disease.' I must admit I have a great deal of sympathy for this view. Taking a general lockdown and transforming it to a targeted lockdown focused on at risk groups, people with preexisting conditions and older people, would seem to apply the action where it is needed and limit externalities. Other economic agents could go 'about their different businesses' and still take caution to retard the spread of the disease which, once the at-risk groups are accounted for, is little more than the risk of flu-like symptoms to the remaining population. However, in Europe there are strong advocates for remaining hunkered down until there is a vaccine to eradicate it. I simply do not understand the 'need' for that much caution once the at-risk categories are dealt with.

One point to bear in mind is that the kinds economic destruction created by a broad prolonged lock-down would greatly damage Western economies and destroy many peoples' lives and careers. There would be a separate wave of problems induced by these policies including psychological problems for job losers, suicides and other risks. In short, the draconian lockdown strategy preferred by health-care officials would create even more health-care problems and do so among that larger group of people who are only at risk of getting flu-like symptoms. Does that seem like a wise choice?

Does science rule or drool (hint it's a little of both) 
The media is already stacking this up as a clash of Trump vs. Science. But I hope we can all see beyond that. Science has not done a good job here in a lot of places. In some places it was interfered with by politics (China), but in other cases it was tripped up by its own biases and practices (USA). Sometimes science, too, needs to learn. In the U.S., Trump closed borders early against medical advice; that decision helped protect the U.S. from infection that was spreading faster than health officials knew. Trump left policy in the U.S. to the CDC (Center for Disease Control). CDC would not accept test kits offered from abroad preferring its own standards and protocols to be met. In the event, this was a costly decision that CDC made on its own. As a result, test kit development in the U.S. was impaired. The first kits did not work. Then because CDC did not believe in widespread testing because testing itself might cause a panic, ramping up testing capacity was not a priority. It has since emerged that countries that tested aggressively have had the best containment results (South Korea vs. Italy is the prime example). That is all 'science' folks. So there is science and there is 'science.' And even scientists have gaps in their knowledge, biases and things to learn. I am a social scientist. My PhD is in economics. I do believe in science, but I also believe in understanding its limits and in collaboration. I do not believe in putting some 'scientist' on a pedestal because he/she has an opinion. I think intelligent people need to weigh the scientific evidence which we can trust and make decisions informed by the facts and advice of health professionals. What is needed is collaboration, not capitulation to a single view.

Caveat Emptor! 
Health professionals cannot be responsible for putting policies in motion that will wreak the global economy for no good reason. Be careful of the advice that you are buying… Unless there is something about the coronavirus they are hiding from us, there is no reason for these lockdowns. Or to put it another way, there is an alternative strategy. There is a strong case to protect those classes of people who are most at risk. Protect them and then get on with it. Everything we do in our economic lives involves some risk, from flying in an airplane, to driving a car to working in factory and more. If one sets the risk tolerance to zero nothing gets done anywhere. To be at risk of flu symptoms is no reason to play fast and loose with the global economy where the stakes are even higher. If global or national economic conditions are impaired that could send out more severe shock waves of their own. This idea is not even triage. It does not condemn people to death in favor of growth. It just approaches the protection of at-risk groups differently and in a way that permits more flexibility.

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German business sentiment logged its steepest fall ever recorded since German reunification. The IFO also released analysis saying that the German economy could contract by 20% because of actions taken to prevent the spread of the [...]

IFO Plunges

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The Mortgage Bankers Association reported that its Mortgage
Loan Application Index fell 29.4% (+78.6% y/y) during the week ending March 20 after an
8.4% decline in the prior week. The decline occurred as refinancings
fell by roughly one-third (+195.4% y/y) after a 10.4% drop, and purchase applications
weakened 14.6% (-11.3% y/y) following the prior week's 0.9% slip.

The effective interest rate on a 15-year fixed-rate mortgage
rose sharply to 3.38% from 3.20% in the week ended March 13. It was the highest
rate since early-January but remained well below the peak of 4.71% early in
November 2018. The effective interest rate on the 30-year fixed-rate mortgage also rose to 3.93%, the highest rate since
mid-January. The effective rate on a 30-year Jumbo mortgage increased to 3.95%, and the rate
on the 5-year adjustable rate mortgage rose to 3.48%.

The average mortgage loan size fell to $337,000 last week
(-2.8% y/y). The average loan size of refinancings declined to $337,500 (-6.9%
y/y). The average loan size for purchases fell to $336,000 and was unchanged y/y.

Applications for fixed-rate loans were up a lessened 81.9% y/y, while
applications for adjustable rate loans moved up 39.8% y/y.

The survey covers over 75% of all U.S. retail residential
mortgage applications and has been conducted weekly since 1990. Respondents
include mortgage bankers, commercial banks and thrifts. The base period and
value for each index is March 16, 1990=100. The figures for weekly mortgage
applications and interest rates are available in Haver's SURVEYW 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" >MBA Mortgage Applications (%,
 SA)</th>
 <th>03/20/20</th>
 <th>03/13/20</th>
 <th>03/06/20</th>
 <th>Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Total Market Index</td>
 <td>-29.4</td>
 <td>-8.4</td>
 <td>55.4</td>
 <td>78.6</td>
 <td>32.4</td>
 <td>-10.4</td>
 <td>-17.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Purchase</td>
 <td>-14.6</td>
 <td>-0.9</td>
 <td>5.6</td>
 <td>-11.3</td>
 <td>6.6</td>
 <td>2.1</td>
 <td>5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Refinancing</td>
 <td>-33.8</td>
 <td>-10.4</td>
 <td>78.6</td>
 <td>195.4</td>
 <td>71.1</td>
 <td>-24.3</td>
 <td>-34.0</td>
 </tr>
 <tr>
 <td class="firstcol" >15-Year Effective Mortgage Interest Rate
 (%)</td>
 <td>3.38</td>
 <td>3.20</td>
 <td>2.97</td>
 <td>4.07</td>
 <td>3.71</td>
 <td>4.35</td>
 <td>3.59</td>
 </tr>
 <tr>
 <td class="firstcol" >30-Year Effective Mortgage Interest Rate
 (%)</td>
 <td>3.93</td>
 <td>3.85</td>
 <td>3.55</td>
 <td>4.67</td>
 <td>4.34</td>
 <td>4.94</td>
 <td>4.32</td>
 </tr>
 </tbody>
 </table>
 
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The Mortgage Bankers Association reported that its Mortgage Loan Application Index fell 29.4% (+78.6% y/y) during the week ending March 20 after an 8.4% decline in the prior week. The decline occurred as refinancings fell by roughly [...]

U.S. Mortgage Applications Decline Sharply as Interest Rates Rise

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Manufacturers' orders for durable goods strengthened 1.2%
during February before business ground to a halt in March. Despite the
m/m improvement, orders remained down 0.1% y/y. A 1.0% decline had been expected
in the Action Economics Forecast Survey. The y/y orders decline closely matched
the 0.5% shortfall in industrial production of durable goods.

Last month's orders included a 0.8% drop (-0.6% y/y)
in nondefense capital goods orders excluding aircraft which reversed a 1.0% January increase.

Stronger transportation sector orders led the overall orders
increase in February with a 4.6% gain. Orders excluding transportation eased
0.6% (-0.9% y/y) and reversed January's rise. The transportation increase was led by a
1.8% surge (-2.6% y/y) in motor vehicle &amp; parts. Aircraft &amp; parts orders
eased m/m.

Orders for electrical equipment &amp; parts rose 1.3% (3.2%
y/y). Offsetting this rise was a 0.8% decline (-0.3% y/y) in bookings for
computers &amp; electronic products. Also weakening were machinery orders which
fell 0.5% (-2.5% y/y). Primary &amp; fabricated metals orders also eased both
m/m and y/y.

Shipments of durable goods rose 0.8% (-2.4% y/y) as
transportation shipments rose 2.9% (-5.1% y/y). Shipments less transportation
eased 0.2% (-1.0% y/y) helped by a 0.7% decline (-1.3% y/y) in nondefense
capital goods shipments excluding aircraft.

Unfilled orders for durable products improved 0.1% (-1.7%
y/y) following two months of stability.

Durable goods inventories were unchanged (3.7% y/y) last
month, although they had been rising steadily through December. These gains were
powered by strength in the transportation sector. Inventories less transportation
fell 0.2% for a second consecutive month and were down 0.7% y/y.

The durable goods figures are available in Haver's USECON
database. The Action Economics consensus forecast figure 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" >Durable Goods NAICS
 Classification</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Dec</th>
 <th>Feb Y/Y %</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >New Orders (SA, % chg)</td>
 <td>1.2</td>
 <td>0.1</td>
 <td>2.8</td>
 <td>-0.1</td>
 <td>-1.2</td>
 <td>7.9</td>
 <td>5.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Transportation</td>
 <td>4.6</td>
 <td>-0.9</td>
 <td>8.8</td>
 <td>1.5</td>
 <td>-4.3</td>
 <td>9.8</td>
 <td>3.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Total Excluding
 Transportation</td>
 <td>-0.6</td>
 <td>0.6</td>
 <td>-0.1</td>
 <td>-0.9</td>
 <td>0.4</td>
 <td>6.9</td>
 <td>6.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nondefense Capital
 Goods Excl. Aircraft</td>
 <td>-0.8</td>
 <td>1.0</td>
 <td>-0.8</td>
 <td>-0.6</td>
 <td>0.9</td>
 <td>6.0</td>
 <td>6.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Shipments</td>
 <td>0.8</td>
 <td>-0.1</td>
 <td>-0.2</td>
 <td>-2.4</td>
 <td>1.2</td>
 <td>7.1</td>
 <td>4.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nondefense Capital
 Goods Excl. Aircraft</td>
 <td>-0.7</td>
 <td>1.1</td>
 <td>-0.4</td>
 <td>-1.3</td>
 <td>2.1</td>
 <td>6.3</td>
 <td>5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Unfilled Orders</td>
 <td>0.1</td>
 <td>0.0</td>
 <td>0.0</td>
 <td>-1.7</td>
 <td>-2.1</td>
 <td>3.9</td>
 <td>1.9</td>
 </tr>
 <tr>
 <td class="firstcol" >Inventories</td>
 <td>0.0</td>
 <td>-0.1</td>
 <td>0.3</td>
 <td>3.7</td>
 <td>4.8</td>
 <td>4.8</td>
 <td>4.5</td>
 </tr>
 </tbody>
 </table>
 
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Manufacturers' orders for durable goods strengthened 1.2% during February before business ground to a halt in March. Despite the m/m improvement, orders remained down 0.1% y/y. A 1.0% decline had been expected in the Action Economics [...]

U.S. Durable Goods Orders Surge Pre-Coronavirus Outbreak; Orders Excluding Aircraft Ease

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The Federal Housing Finance Agency (FHFA) Price Index increased 0.3% m/m in January after an upwardly revised 0.7% m/m gain in December (initially 0.6%). Prices rose 5.2% in January from a year earlier, down from an upwardly revised 5.4% y/y in December. Over the past three months, prices are up 5.6% at an annual rate versus 5.8% in December.

Prices across the nine census divisions generally rose in January with a 0.2% m/m drop in the Mountain region and a 0.1% m/m decline in the West North Central region the only declines. The Atlantic regions posted the strongest monthly gains with prices in the South Atlantic rising 0.7% m/m and prices in the Middle Atlantic region increasing 0.6% m/m.

Compared to a year ago, all census divisions posted higher prices, led by a 6.4% y/y rise in the South Atlantic region and a 6.1% y/y increase in the Mountain region. The Middle Atlantic region posted the weakest annual gain with a 4.1% y/y increase.

Note that these data are for January and are unlikely to have been impacted by the coronavirus outbreak. That effect is still to come.

The FHFA house price index is a weighted purchase-only index that measures
average price changes in repeat sales of the same property. An associated
quarterly index includes refinancings on the same kinds of properties.
The indexes are based on transactions involving conforming, conventional
mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only
mortgage transactions on single-family properties are included. The FHFA
data are available in Haver's USECON database.

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<table class="centered" width="100%" border="0" cellspacing="0">
 <colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
 <tr>
 <th class="firstcol" >FHFA U.S. House Price Index, 
 Purchase Only (SA %)</th>
 <th scope="col" >Jan</th>
 <th scope="col" >Dec</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Jan Y/Y</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
<td >0.3</td>
<td >0.7</td>
<td >0.3</td>
<td >5.2</td>
<td >5.3</td>
<td >6.6</td>
<td >6.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; New England</td>
<td >0.4</td>
<td >0.8</td>
<td >0.2</td>
<td >4.6</td>
<td >4.5</td>
<td >5.3</td>
<td >5.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Middle Atlantic</td>
<td >0.6</td>
<td >0.4</td>
<td >0.4</td>
<td >4.1</td>
<td >4.5</td>
<td >5.4</td>
<td >4.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; East North Central</td>
<td >0.3</td>
<td >0.0</td>
<td >1.1</td>
<td >4.8</td>
<td >5.5</td>
<td >6.5</td>
<td >5.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; West North Central</td>
<td >-0.1</td>
<td >0.8</td>
<td >0.1</td>
<td >4.6</td>
<td >5.1</td>
<td >6.1</td>
<td >5.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; South Atlantic</td>
<td >0.7</td>
<td >1.0</td>
<td >0.2</td>
<td >6.4</td>
<td >5.8</td>
<td >7.2</td>
<td >6.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; East South Central</td>
<td >0.2</td>
<td >0.9</td>
<td >-0.4</td>
<td >5.5</td>
<td >5.8</td>
<td >6.1</td>
<td >5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; West South Central</td>
<td >0.0</td>
<td >1.2</td>
<td >0.0</td>
<td >4.4</td>
<td >4.7</td>
<td >5.3</td>
<td >6.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Mountain</td>
<td >-0.2</td>
<td >1.3</td>
<td >0.0</td>
<td >6.1</td>
<td >7.2</td>
<td >9.1</td>
<td >8.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Pacific</td>
<td >0.5</td>
<td >0.6</td>
<td >0.4</td>
<td >5.2</td>
<td >4.7</td>
<td >7.5</td>
<td >8.5</td>
 </tr>
 </tbody>
 </table>
 
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The Federal Housing Finance Agency (FHFA) Price Index increased 0.3% m/m in January after an upwardly revised 0.7% m/m gain in December (initially 0.6%). Prices rose 5.2% in January from a year earlier, down from an upwardly revised [...]

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

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

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Initial claims for unemployment insurance dropped 10,000 to 214,000 in the week of December 20, from 224,000 during the week of December 13. The four-week moving average of initial claims was 216,750, a decrease of 750 from the prior week’s unrevised 217,500.

Federal government employees initially filed 805 (NSA) jobless insurance claims in the week ended December 13, after filing 1091 claims in the week ended December 6.

Continuing claims for unemployment insurance rose 38,000 to 1.923 million in the week ending December 13, after rising 55,000 to 1.885 million, revised from 1.897 million in the week ending December 6. The four-week moving average was 1.894 million in the week ending December 13, down 5,250 from 1.899 million, revised from 1,902,000 in the week ending December 6. The insured unemployment rate stood at 1.3% in the week of December 13, up from 1.2% in the week of December 6.

Federal government employees’ continuing benefits claims were 12,887 (NSA) in the week ending December 6, from 14,077 (NSA) in the week of November 29. 

The insured unemployment rate varied greatly across individual states and territories. In the week ending December 6, the highest unemployment rates were in New Jersey and Washington (both 2.40%), Massachusetts and Minnesota (both 2.10%), California and Rhode Island (both 2.00%). The lowest rates were in Florida (0.30%), and Alabama, Louisiana, North Carolina (all 0.40%). Rates in other notable states include New York (1.80%), Illinois and Pennsylvania (both 1.70%), and Texas (1.10%). 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.


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- Initial claims declined from the prior week.
- Continuing claims rose from the prior week.
- The insured unemployment rate edged up.


U.S. Initial Claims for Unemployment Insurance Dropped in Latest Week

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Mortgage applications dropped 5.0% w/w (+49.8% y/y) in the week of December 19, after a drop of 3.8% w/w (+40.9% y/y) in the week of December 12, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house fell 3.7% w/w (+15.9% y/y) in the latest week, the third consecutive weekly decline, following a drop of 2.8% w/w (+12.3% y/y) in the December 12 week. Applications for loan refinancing dropped 5.6% w/w (+110.1% y/y) in the December 19 week after a decline of 3.6% w/w (+86.0% y/y) in the week of December 12. 

The effective interest rate on a 30-year fixed-rate loan fell 8bps to 6.48% in the week ending December 19 from 6.56% in the week ending December 12. The rate on 15-year fixed-rate mortgages dropped 5bps to 5.86% in the latest week from 5.91% in the prior week. The 30-year Jumbo rate rose 8bps to 6.63% in the December 19 week from 6.55% in the December 12 week. The rate on a 5-year ARM jumped 20bps to 5.96% in the latest week from 5.76% in the December 12 week.

The share of applications for refinancing an existing loan edged up to 59.1% of total applications in the December19 week from 59.0% in the week ending December 12. The adjustable-rate mortgage (ARM) share of activity rose to 8.1% in the latest week from 7.2% in the December 12 week.

The average size of a mortgage loan edged down 0.1% w/w (+7.8% y/y) to $399,700 in the week ending December 19, following a rise of 1.5% w/w (6.4% y/y) to $400,000 in the December 12 week. The average size of a purchase loan rose 1.0% w/w (1.1% y/y) to $428,600 in the latest week, after rising 0.6% w/w (-0.3% y/y) to $424,200 in the prior week. The average size of a loan to refinance a mortgage declined 0.9% w/w (+24.9% y/y) to $379,700 in the December 19 week, following a rise of 2.3% w/w (19.8% y/y) to $383,300 in the week ending December 12.

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


- Both purchase applications and refinancing loan applications fell in the latest week.
- Effective interest rate on 30-year fixed loans fell to 6.48%.
- Average loan size edged down.


U.S. Mortgage Applications Dropped in the Week of December 19

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Real GDP grew 4.3% (SAAR) during the third quarter following a 3.8% Q2 gain, revised from 3.3% reported initially. These increases followed a minimally revised 0.6% decline in Q1. A 3.0% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.3% compared to 2.1% y/y in Q2 and remained below its most recent high of 3.4% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment surged 7.0% (4.2% y/y) last quarter after edging 0.6% higher in Q2. Before-tax earnings with IVA & CCA rose 4.2% (9.1% y/y) after improving 0.2% in Q2. Financial sector earnings rose 6.2% (21.1% y/y) after rising 1.1% in Q2. Nonfinancial corporate profits rose 2.5% (3.3% y/y) after edging 0.5% higher in Q2. Earnings from abroad jumped 10.6% (26.3% y/y) following a 2.9% Q2  decline.

Foreign trade balance improvement added 1.59 percentage points to growth last quarter after adding 4.83 percentage points in Q2. Real exports increased 2.1% (1.5% y/y) after falling 0.5% in Q2. Real imports declined 1.2% (-1.8% y/y) after declining 8.3% in Q2. Inventories subtracted 0.22 percentage points from growth after subtracting 3.44 percentage point from Q2 growth.

Real final sales to private domestic purchasers grew 3.0% (2.6% y/y) last quartter after rising 2.9% in Q2, revised from 1.6%. Personal consumption expenditures rose 3.5% (2.6% y/y) after a 2.5% rise, revised from 1.6%. Durable goods spending rose 1.6% (3.2% y/y) after increasing 2.3% in Q2. Motor vehicle purchases declined 6.7% (+1.6% y/y) after strengthening 9.7% in Q2. Spending on home furnishings & appliances weakened 4.2% (+0.7% y/y) following a 2.0% fall. Recreational goods & vehicle buying surged 15.7% (7.0% y/y) last quarter after falling 2.5% in Q2.

Nondurable goods outlays in constant dollars rose 3.9% (3.0% y/y) last quarter following 2.2% growth in Q2. Apparel spending strengthened 6.7% (7.0% y/y) following a 5.8% rise. Food & beverage buying gained 2.0% (1.3% y/y) after edging 0.2% higher. Gasoline & fuel oil purchases improved 1.3% (-0.2% y/y) after falling 2.8% in Q2.



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Real spending on services increased 3.7% (2.4% y/y) in Q3 after a 2.6% Q2 gain. Outlays on housing & utilities edged 0.3% higher (1.0% y/y) after easing 0.2% in Q2. Health care expenditures surged 6.8% (4.5% y/y) after a 4.8% increase. Transportation outlays gained 3.1% both  q/q and y/y after a 7.0% rise, while recreation spending jumped 6.6% (2.4% y/y) following a 3.9% rise. Restaurant & hotel expenditures increased 1.2% (2.0% y/y) after strengthening 5.9% in Q2. Financial services expenditures rose 2.6% both q/q and y/y following a 4.8% Q2 increase.

Business fixed investment in constant dollars increased 2.8% (3.9% y/y) last  quarter following a 7.3% Q2 rise, revised from 5.7%. Expenditures on structures declined 6.3% both q/q and y/y, after falling for six consecutive quarters. Expenditures on producers’ durable equipment increased 5.4% (7.4% y/y), after strengthening 8.5% in Q2. Outlays on information processing equipment rose 8.4% (18.6% y/y), after strengthening 11.7% during Q2. Industrial equipment investment rose 2.0% (3.4% y/y) after a 6.5% rise. Transportation equipment investment fell  2.7% (+3.0% y/y) after strengthening 25.2%. Intellectual property product spending rose 5.4% last quarter (6.4% y/y), after surging 15.0% in Q2.

Residential structures investment in real terms declined 5.1% (-1.8% y/y), the same as in Q2. It was the third consecutive quartly decline.

Government spending rose 2.2% (1.1% y/y) during the third quarter after an unrevised 0.1% easing in Q2. Federal government expenditures rose 2.9% (-1.0% y/y) after falling 5.3% in Q2. National defense expenditures increased 5.8% (1.0% y/y) after rising 0.9% in Q2. State & local government spending rose 1.8% (2.4% y/y) following a 3.1% rise.

The GDP chain price index rose 3.8% (3.0% y/y) last quarter vs. 2.1% in Q2. The PCE chain price index increased 2.8% (2.7% y/y) following a 2.1% rise. The PCE price index excluding food and energy rose 2.9% (2.9% y/y) after increasing 2.6% in Q2. The business fixed investment price index rose 5.2% (1.5% y/y) in Q3 after a 0.4% decline. The residential price index rose 4.5% (3.3% y/y) last quarter after a 2.2% rise, while the government price index increased 4.4% (3.5% y/y) following a 3.3% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.



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- Consumer spending strengthens; growth in business investment decelerates.
- Corporate profit growth led by earnings abroad.
- Rise in chain price index accelerates.


U.S. GDP Growth is Strong in Q3; Profits Jump

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Industrial production fell 0.1% m/m in October but rose 0.2% m/m (2.5% y/y) in November. The Action Economics Forecast Survey expected 0.1% monthly gains in both months. Manufacturing activity was tepid with manufacturing production falling 0.4% m/m in October and unchanged in November. Manufacturing output has not posted a monthly gain since July. Mining output fell 0.8% m/m in October but rebounded 1.7% m/m in November. Utilities output surged 2.6% m/m in October but fell 0.4% m/m in November. Compared to a year ago, manufacturing production is up 1.9%; mining output is up 3.9%; and utilities output is up 4.8%.

By market group, output of durable consumer goods plunged 2.6% m/m in October and fell another 0.2% in November. Production of durable consumer goods has declined in five of the previous six months. Production of nondurable consumer goods rose 0.5% m/m in both October and November. Compared to a year ago, durable consumer goods production has fallen 5.9% while nondurable consumer goods output has risen 2.7%. Business equipment production fell 0.3% m/m in October but rebounded 0.3% m/m in November and is up 11.2% y/y. Production of nonindustrial supplies fell 0.3% m/m in both October and November.

By industry group, output of durable goods fell 0.5% m/m in October and declined 0.1% m/m in November but were up 3.2% from a year ago. Motor vehicle and parts production slumped 5.1% m/m in October and declined 1.0% m/m in November to be down 5.6% from a year ago. Monthly motor vehicle output has declined in five of the previous six months. In contrast, production of computers and electronic products increased 1.5% m/m in October and rose 0.8% m/m in November. Aerospace production continued to rise, increasing 2.0% m/m in October and 1.1% m/m in November to be up 25.2% from a year ago. Output of nondurable goods fell 0.2% m/m in October and edged up 0.1% m/m in November. Their output is up 0.9% from a year ago. Apparel output fell 1.3% m/m in October but recovered in November, rising 2.3% m/m. Food and beverage output rose 0.3% m/m in October and another 1.2% in November.

Output of selected high-technology industries rebounded in October and November. After having declined 1.0% m/m in both August and September, production jumped 1.9% m/m in October and 1.1% m/m in November to stand 11.8% higher than a year ago. Manufacturing output excluding selected high-tech industries fell 0.4% m/m in October and was unchanged in November. It has risen only 1.6% over the past year. Manufacturing excluding motor vehicle production was unchanged in October and edged up 0.1% m/m in November; it is up 2.6% y/y.

Total industry capacity utilization edged down to 75.9% in October from 76.0% in September and then recovered the decline in November, edging up to 76.0%. In the manufacturing sector, the utilization rate slumped to 75.4% in October from 75.8% in September and remained at 75.4% in November. The October/November reading is the lowest since January.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.



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- Today’s release contained figures for both October and November that had been delayed by the federal government shutdown.
- IP fell in October but recovered in November.
- Manufacturing output was tepid, falling in October and unchanged in November.
- A surge in utilities output in October prevented a larger decline in total production.
- A jump in mining output in November accounted for all of the increase in total production.


U.S. Industrial Production Fell in October and Recovered in November

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New orders for durable goods fell a more-than-expected 2.2% (+4.8% y/y) in October following an upwardly revised 0.7% m/m rise in September (previously +0.5% m/m) and a 3.0% monthly jump in August. The Action Economics Forecast Survey expected a 1.5% m/m decline. A 23.7% m/m drop in aircraft orders more than accounted for the overall decline. Orders excluding aircraft increased 0.2% m/m (4.0% y/y) in October on top of a 0.5% monthly increase in September.

More generally, transportation orders fell 6.5% m/m (+7.3% y/y) in October following a 0.6% m/m increase in September and an 8.0% monthly jump in August. In addition to the drop in aircraft orders, orders for motor vehicles and parts edged up 0.1% m/m in October, their sixth consecutive monthly increase. Across other sectors, orders for primary metals fell 0.7% m/m, their first monthly decline in ten months. Orders for electrical equipment and appliances slumped 1.5% m/m, their first monthly decline in seven months. In contrast, orders for fabricated metal products rose 0.5% m/m, their fourth consecutive monthly gain. Machinery orders increased 0.8% m/m, their eighth consecutive monthly rise. Orders for computers and electronic products increased a solid 1.0% m/m on top of a 1.2% monthly increase in September.

Shipments of core capital goods (nondefense capital goods shipments excluding aircraft) are a reliable coincident indicator of business spending on equipment in the national accounts. They rose 0.7% m/m in October following an upwardly revised 1.2% monthly gain in September (previously +0.9%). The was the second consecutive monthly increase and the fifth in the past six months. The strong end to Q3 and the continued rise in the first month of Q4 provides a solid starting point for all of Q4. The October shipments figure was 5.9% at an annual rate above the Q3 average. Core capital goods orders rose 0.5% m/m in October on top of an upwardly revised 1.1% m/m increase in September (previously +0.9%). This was the fourth consecutive monthly rise.

Total manufacturing shipments edged up 0.1% m/m (+2.8% y/y) in October after having been essentially unchanged in September. Shipments of durable goods increased 0.6% m/m (5.9% y/y), led by 1.4% monthly jump in transportation shipments. However, apart from a 0.1% m/m decline in shipments of other durable goods, all of the other major sectors posted monthly gains in October. In contrast, shipments of nondurable goods fell 0.4% m/m (-0.3% y/y) in October for their third consecutive monthly decline. The monthly decline was led by a 2.4% m/m fall in shipments of petroleum and coal products although it was relatively widely spread across major sectors. The one exception was a 2.1% m/m increase in leather product shipments, but this came after four consecutive sizeable monthly declines.

Unfilled durable goods orders increased 0.2% m/m (7.9% y/y) in October for their third consecutive monthly gain following a 0.8% m/m rise in September and a 0.7% m/m increase in August. Total factory inventories were unchanged in October (+1.4% y/y) following 0.1% monthly declines in both August and September. Durable goods inventories edged up 0.1% m/m in October while inventories of nondurable goods fell 0.2% m/m, the third consecutive monthly decline.

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



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- New orders for durable goods slumped 2.2% m/m in October following increases in both August and September
- A 24% monthly drop in aircraft orders drove the overall decline
- Orders excluding aircraft rose 0.2% m/m in October
- Core capital goods shipments and orders continued to rise in October with small upward revisions to September


Economy in Brief: 2020

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Advance U.S. Trade Deficit in Goods Shrinks in February

U.S. Initial Claims for Unemployment Insurance Soar to Record 3.3 Million

U.S. Trade Deficit in Goods Shrinks in February

U.S. FHFA House Price Index Posts Modest Increase

IFO Plunges

U.S. Mortgage Applications Decline Sharply as Interest Rates Rise

U.S. Durable Goods Orders Surge Pre-Coronavirus Outbreak; Orders Excluding Aircraft Ease

U.S. FHFA House Price Index Posts Modest Increase