Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090225a.jpg" width="353">
Any prior indication that home sales were stabilizing should be dismissed. According to the National Association of Realtors, sales of existing homes fell 5.3% last month to 4.490M after an unrevised December rise of 4.4%. Consensus expectations had been for January sales of 4.79M homes. Total sales include sales of condos and co-ops.
For existing single-family homes alone sales reversed all of their December rise with a 4.7% decline to 4,050 million units, the lowest level since July 1997. (These data have a longer history than the total series).
The weakness in sales continued to lower pricing power. Median home prices plumbed a new cycle low with a 3.1% month-to-month (NSA) decline. It was the seventh consecutive monthly drop and it lowered prices by 14.8% from January of 2008. Prices have fallen 25.8% since their peak in June 2005.
The number of unsold homes (condos &amp; single-family) on the market dropped 2.7% (-13.5% y/y) as sellers pulled homes for sale. At the current sales rate there was a 9.6 months&#39; supply on the market which was near the lowest since 2007. For single-family homes the inventory was unchanged after a sharp December decline and at the current sales rate there was a 9.2 month&#39;s supply, near the lowest since 2007.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090225b.jpg" width="353">
By region, home sales in the Northeast collapsed 14.7% m/m to lower them by nearly one quarter from the year ago level. Single family home sales here were at their lowest since 1991, off 46% from the 2007 peak. Sales in the South followed with a 5.7% decline which reversed the December gain. Single family sales were at their lowest since early 1998. Sales in the Midwest also reversed the December gain with a 5.7% decline to the lowest level since 1997. Only sales in the West held up. They were unchanged last month from December and they were up by 29% from the year ago level.
Declines in home prices and lower interest rates have gone a long way to increase the affordability of an existing home. The measure rose to a record high for the series which dates back to 1971.
The data on existing home sales, prices and affordability can be found in Haver&#39;s USECON database. The regional price, affordability and inventory data is available in the REALTOR database.
Commitment Versus Discretion in Monetary Policy from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2008/q4/brq408_commitment-vs-discretion.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Existing Home Sales (Thous)</th>
<th scope="col">January</th>
<th scope="col">y/y %</th>
<th scope="col">December</th>
<th scope="col">January &#39;08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>4,490</td>
<td>-8.6</td>
<td>4,740</td>
<td>4,910</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>640</td>
<td>-23.8</td>
<td>750</td>
<td>840</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,000</td>
<td>-16.7</td>
<td>1,060</td>
<td>1,200</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>1,640</td>
<td>-15.9</td>
<td>1,740</td>
<td>1,950</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,200</td>
<td>29.0</td>
<td>1,200</td>
<td>930</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,050</td>
<td>-7.1</td>
<td>4,250</td>
<td>4,360</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr class="odd">
<td class="firstcol">Median Price, Total, $</td>
<td>170,300</td>
<td>-14.8</td>
<td>175,700</td>
<td>199,800</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042++</td>
</tr>
</tbody>
</table>
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Any prior indication that home sales were stabilizing should be dismissed. According to the National Association of Realtors, sales of existing homes fell 5.3% last month to 4.490M after an unrevised December rise of 4.4%. Consensus [...]

January U.S. Existing Home Sales & Prices Fell

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090225a.jpg" align="left" border="0" height="265" width="353">
Any prior indication that home sales were stabilizing should
be dismissed. According to the National Association of Realtors, sales
of existing homes fell 5.3% last month to 4.490M
after an unrevised December rise of 4.4%. Consensus expectations had
been for January sales of 4.79M homes. Total sales include sales of
condos and co-ops.
For existing single-family homes alone sales reversed all of
their December rise with a 4.7% decline to 4,050 million units, the
lowest level since July 1997. (These data have a longer history than
the total series).
The weakness in sales continued to lower pricing power. Median
home prices plumbed a new cycle low with a 3.1%
month-to-month (NSA) decline. It was the seventh consecutive monthly
drop and it lowered prices by 14.8% from January of 2008. Prices have
fallen 25.8% since their peak in June 2005.
The number of unsold homes (condos &amp; single-family) on
the market dropped 2.7% (-13.5% y/y) as sellers pulled homes for sale.
At the current sales rate there was a 9.6 months' supply on the market
which was near the lowest since 2007. For single-family homes the
inventory was unchanged after a sharp December decline and at the
current sales rate there was a 9.2 month's supply, near the lowest
since 2007.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090225b.jpg" align="right" border="0">
By region, home sales in the Northeast collapsed 14.7% m/m to
lower them by nearly one quarter from the year ago level. Single family
home sales here were at their lowest since 1991, off 46% from the 2007
peak. Sales in the South followed with a 5.7% decline which reversed
the December gain. Single family sales were at their lowest since early
1998. Sales in the Midwest also reversed the December gain with a 5.7%
decline to the lowest level since 1997. Only sales in the West held up.
They were unchanged last month from December and they were up by 29%
from the year ago level.
Declines in home prices and lower interest rates have gone a
long way to increase the affordability of an existing home. The measure
rose to a record high for the series which dates back to 1971.
The data on existing home sales, prices and affordability can
be found in Haver's USECON database. The regional
price, affordability and inventory data is available in the REALTOR
database.
Commitment Versus Discretion in Monetary Policy
from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2008/q4/brq408_commitment-vs-discretion.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Existing
Home Sales (Thous)</th>
<th scope="col">January</th>
<th scope="col">y/y %</th>
<th scope="col">December</th>
<th scope="col">January '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>4,490</td>
<td>-8.6</td>
<td>4,740</td>
<td>4,910</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>640</td>
<td>-23.8</td>
<td>750</td>
<td>840</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,000</td>
<td>-16.7</td>
<td>1,060</td>
<td>1,200</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>1,640</td>
<td>-15.9</td>
<td>1,740</td>
<td>1,950</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,200</td>
<td>29.0</td>
<td>1,200</td>
<td>930</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,050</td>
<td>-7.1</td>
<td>4,250</td>
<td>4,360</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr class="odd">
<td class="firstcol">Median Price, Total, $</td>
<td>170,300</td>
<td>-14.8</td>
<td>175,700</td>
<td>199,800</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042++</td>
</tr>
</tbody>
</table>
 U.S. Mortgage Applications Fall:
Refi's &amp; Purchase Applications Off 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 25, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090225c.jpg" align="left" border="0" height="265" width="353">
The Mortgage Bankers Association indicated that the total
number of mortgage applications fell 15.1% from the prior week and that
they were off roughly 40% from the peaks earlier this year.
Applications had been boosted by lower interest rates which touched the
lows of 2003. Few borrowers took out an adjustable rate loan last week
(-85.6% y/y) while low interest rates encouraged fixed rate financing;
it's more than double the volume at the end of last year.
The index of applications to refinance a home mortgage fell by
19.1% last week after a 64.3% spike during the prior period. While
these applications are down by half from their earlier high, the trend
still is up due to the decline in interest rates.
Applications for a mortgage to purchase a home also fell last
week. The 2.6% decline reversed only some of the prior week's 9.1% rise
but the trend remained sharply downward with the fallout in home sales.
Since their peak early last year these applications are down nearly 50%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090225d.jpg" align="right" border="0" height="265" width="353">
The effective interest rate on a conventional 15-year mortgage
fell week-to-week to 4.99%. That was near the lowest level since 2003,
after which home sales surged. For a 30-year mortgage rates held near
their recent lows at 5.32%. Interest rates on 15 and 30 year mortgages
are closely correlated (&gt;90%) with the rate on 10-year Treasury
securities. For an adjustable 1-Year mortgage the rate also held near
its recent low at 6.18%, down nearly a full percentage point from this
past Fall.
During the last ten years there has been a (negative) 79%
correlation between the level of applications for purchase and the
effective interest rate on a 30-year mortgage. Moreover, during the
last ten years there has been a 61% correlation between the y/y change
in purchase applications and the change in new plus existing single
family home sales.
The figures for weekly mortgage applications are available in
Haver's SURVEYW database.
The Mortgage Bankers Association surveys between 20 to 35 of
the top lenders in the U.S. housing industry to derive its refinance,
purchase and market indexes. The weekly survey covers roughly 50% of
all U.S. residential mortgage applications processed each week by
mortgage banks, commercial banks and thrifts. Visit the Mortgage
Bankers Association site <a href="http://www.mbaa.org">here</a>.
Tax Credits for Job Creation and Retention: What
Can We Learn from the States? from the Federal Reserve
Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-08.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA
Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">02/20/09</th>
<th scope="col">02/13/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>743.5</td>
<td>875.3</td>
<td>11.8%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>250.5</td>
<td>257.3</td>
<td>-30.1%</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>3,618.0</td>
<td>4,472.9</td>
<td>47.1%</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
</tbody>
</table>
 
Yen-Based Japan Exports Are CutNearly In Half 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 25, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090225e.jpg" align="left" border="0" height="265" width="353">
In a stunning blow to a reeling economy Japan reports that its
exports are lower in January compared to one year ago by 45% - nearly
halving of the flow. There are several components to this drop. One is
the yen that has risen; that will translate foreign currency-based
Japan exports into a smaller value in terms of yen. The yen rose to
90.12/$ in January compared to its level of 101.91/$ a year ago, a yen
rise of 16%. Another aspect of the drop in value is that yen-based
export prices have fallen Year over year. Japan export prices fell by
13.5% Year over year. These two factors make up a good deal of the 45%
drop in the yen value of Japan&#8217;s exports. But not all of Japan&#8217;s
exports are in dollar terms. Japan&#8217;s largest trade partner in fact is
China; its second largest partner is the US. Moreover, the drop in the
current value of yen trade flows is not simply an &#8216;index number&#8217;
problem. It does reflect real stress that flows back to Japan when
export dollar sales buy fewer yen, especially if Japan&#8217;s costs are
expressed in yen- as most surely are despite outsourcing. 
 

Japan&#8217;s imports are down by nearly 30% Year-over-year, another
significant number. The rise in the yen plays a role there by first
taking a fixed import bill expressed in foreign currency and making it
smaller when translated into a stronger yen, just as for exports. But
eventually the stronger yen and weaker FX value of competing currencies
should lead to an increase in Japan&#8217;s import volumes and cause yen
VALUE flows to rise or at least to mitigate their drop (depending on
the size of the import price elasticities). Let&#8217;s look at this concept
of &#8216;elasticity:&#8217; If Japan import price elasticities are less than
&#8216;minus one&#8217; Japan&#8217;s import values will eventually rise further as Japan
buys more of the cheaper import and that offsets the fact that each
import is worth fewer yen by increasing the volume of its purchases.
That is what the concept of elasticity measures. A price elasticity of
less than &#8216;minus one&#8217; means that a one percent drop in yen prices (say
forced by a yen appreciation) will lead to more than a one percent
increase in the volume of goods imported. Yen import prices are falling
already (mostly lower oil prices). But the progression of events that
lead to a boost in import volumes takes time. Plus don&#8217;t hold your
breath waiting for this impact since Japan&#8217;s own recession is
contracting imports, a factor that will swamp and elasticity effect
from prices. For the moment, yen-based import prices are down by nearly
25% Yr/Yr accentuating any VOLUME drop in Japan&#8217;s imports on observed
import VALUE. Of course, to the extent that Japan invoices its imports
in yen the result of the yen&#8217;s rise would me blunted, since a yen
import is a yen import regardless of the dollar, euro or yuan exchange
rate. 
 

On balance these trade flows for Japan paint a very distressed
picture of Japan&#8217;s economy. Japan has joined Germany and others in
being a voice in favor of maintaining &#8216;free trade.&#8217; Just today the WTO
has issued another call for nations to uphold their free trade
agreements. The &#8216;buy America&#8217; clause in the US stimulus bill is one
development that is cited again and again in these sorts of
communiqués. The US insists that its provision is fully consistent with
its free trade agreements. 
 

We can see that with the world economy shutting down, like
some out of control Windows command that is turning off your computer
while you are trying to work, that chaos is being spread. Export
dependent nations are being crushed by the global economies since
manufactured goods exports have high relatively high income
elasticities. That means when times are good and global incomes are
growing exports shoot ahead strongly but it also means that export
volumes contract sharply in a downturn. Japan is being battered in part
by the impact of US auto sales dropping from over 15mu to just about
10mu. There is nothing anticompetitive about that: it&#8217;s just recession.
That is a drop of 33% and it will cause the Yr/Yr drop in yen exports
to be registered at about 46% if Japan holds its share in this
contracting market. Of course cutting back on shipments to the US to
trim inventories plus taking lower prices into account could further
exaggerate the flow&#8217;s ultimate decline. In the event, Japan&#8217;s exports
of autos in yen terms to the world have fallen by 66% since January of
one year ago. 


 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Japan
Trade Trends</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3"> in period level of % ch</td>
<td colspan="4"> Average in period/or %
change</td>
</tr>
<tr>
<td class="firstcol">All data yen
basis</td>
<td> Jan-09</td>
<td> Dec-08</td>
<td> Nov-08</td>
<td> 3Mprev</td>
<td> 6Mprv</td>
<td> 12-Mprv</td>
<td> 12 mo Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Goods</td>
<td>#N/A</td>
<td>(1,341)</td>
<td>(3,343)</td>
<td>(1,167)</td>
<td>(70)</td>
<td>3,271</td>
<td>10,356</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td colspan="3">% m/m</td>
<td colspan="4">% saar</td>
</tr>
<tr class="odd">
<td class="firstcol"> &nbsp;&nbsp;
X Goods %</td>
<td> -10.4%</td>
<td> -11.6%</td>
<td> -13.4%</td>
<td> -83.5%</td>
<td> -63.5%</td>
<td> -44.9%</td>
<td> 8.8%</td>
</tr>
<tr class="odd">
<td class="firstcol"> Motor Vehicles</td>
<td> -39.0%</td>
<td> -18.1%</td>
<td> -20.6%</td>
<td> -98.2%</td>
<td> -89.1%</td>
<td> -66.1%</td>
<td> 12.7%</td>
</tr>
<tr class="odd">
<td class="firstcol"> &nbsp;&nbsp;
M Goods %,</td>
<td> -6.9%</td>
<td> -14.2%</td>
<td> -11.7%</td>
<td> -79.5%</td>
<td> -57.1%</td>
<td> -29.6%</td>
<td> 11.3%</td>
</tr>
<tr class="odd">
<td class="firstcol"> Motor Vehicles</td>
<td> -24.4%</td>
<td> 7.4%</td>
<td> 6.2%</td>
<td> -74.1%</td>
<td> -61.1%</td>
<td> -31.5%</td>
<td> 4.3%</td>
</tr>
<tr>
<td class="firstcol">Prices In %, saar</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>3M</td>
<td>6M</td>
<td>12-M</td>
<td>12 mo Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; PX</td>
<td>0.1%</td>
<td>-4.4%</td>
<td>-3.7%</td>
<td>-46.8%</td>
<td>-29.0%</td>
<td>-13.5%</td>
<td>-5.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; PM</td>
<td>-4.2%</td>
<td>-11.4%</td>
<td>-10.3%</td>
<td>-77.8%</td>
<td>-57.0%</td>
<td>-24.6%</td>
<td>7.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: Yen/$, AVG, Level</td>
<td>90.12</td>
<td>91.28</td>
<td>96.97</td>
<td>92.79</td>
<td>99.05</td>
<td>101.91</td>
<td>116.72</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo Yen Percent ('-' is a fall)</td>
<td> 1.3%</td>
<td> 5.9%</td>
<td> 3.0%</td>
<td>48.9%</td>
<td>28.9%</td>
<td>16.4%</td>
<td>10.5%</td>
</tr>
</tbody>
</table>
</body></html>

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224i.jpg" align="right" border="0" height="265" width="353">
The latest release of the IFO survey of German entrepreneurs
engaged in industry and trade shows little change in their dismal
appraisal of the business climate. The overall business climate
indicator declined from 83.0 (2000=100) in January to 82.6 in February
to a new all time low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224j.jpg" align="right" border="0" height="265" width="353">
Concern over current conditions outweighed a
slightly less negative appraisal of the outlook for the next six
months. The indicator for current conditions declined from 86.8 to 84.3
while that for the next six months rose from 79.5 to 80.9. All three
measures are below or, close to, their all time lows, as can be seen in
the first chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224k.jpg" align="right" border="0" height="265" width="353">
The indexes are based on the balance of opinions expressed by
the participants in the survey. The balance of opinion data are
published as well as the indexes, and, in the first release of the
data, only the balance of opinion data for the detailed business
sectors are given. Among the major business sectors, manufacturers are
the most pessimistic and they became more so in February, as the excess
of pessimists rose from 40.0% in January to 42.8%. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224l.jpg" align="right" border="0" height="265" width="353">
Those engaged in
construction and trade were less negative. Wholesalers, however, became
more pessimistic in February, going to -27.8% from -25.4% in January.
The climate in construction improved to -24.5% in February from -29.5%
in January. The comparable figures for retail trade were -24.3% and
26.5%. The balance of opinions for the major sectors are shown in the
second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">GERMANY&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan&nbsp; 09&nbsp;</th>
<th scope="col">Dec 08&nbsp;</th>
<th scope="col">Nov 08&nbsp;</th>
<th scope="col">Oct 08</th>
<th scope="col">Sep 08</th>
<th scope="col">Aug 08</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">IFO Survey&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Business Climate
(2000=100)</td>
<td>82.6</td>
<td>83.0</td>
<td>82.7</td>
<td>85.9</td>
<td>90.1</td>
<td>92.7</td>
<td>94.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current
Conditions (2000=100)</td>
<td>84.3</td>
<td>86.8</td>
<td>88.8</td>
<td>94.8</td>
<td>99.9</td>
<td>99.6</td>
<td>103.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Condition 6
Months Ahead (2000=100)</td>
<td>80.9</td>
<td>79.5</td>
<td>76.9</td>
<td>77.8</td>
<td>81.4</td>
<td>86.9</td>
<td>86.8</td>
</tr>
<tr class="even">
<td class="firstcol">Business Climate by
Sector&nbsp; (Percent Balance)&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>-35.4</td>
<td>-34.4</td>
<td>-35.2</td>
<td>-28.8</td>
<td>-20.5</td>
<td>-15.2</td>
<td>-11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Manufacturing</td>
<td>-42.8</td>
<td>-40.0</td>
<td>-39.9</td>
<td>-29.3</td>
<td>-19.2</td>
<td>-12.0</td>
<td>-7.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction</td>
<td>-24.5</td>
<td>-29.5</td>
<td>-30.3</td>
<td>-30.1</td>
<td>-27.7</td>
<td>-25.2</td>
<td>-26.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Wholesale
Trade</td>
<td>-27.8</td>
<td>-25.4</td>
<td>-26.2</td>
<td>-21.8</td>
<td>-15.3</td>
<td>-10.9</td>
<td>-5.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Trade</td>
<td>-24.3</td>
<td>-26.5</td>
<td>-30.4</td>
<td>-33.2</td>
<td>-25.5</td>
<td>-24.5</td>
<td>-21.5</td>
</tr>
</tbody>
</table>
</body></html>

The latest release of the IFO survey of German entrepreneurs engaged in industry and trade shows little change in their dismal appraisal of the business climate. The overall business climate indicator declined from 83.0 (2000=100) in [...]

German IFO Survey Shows Little Change in the Dismal Appraisal of the Business Climate

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224e.jpg" align="right" border="0" height="265" width="353">The
Conference Board reported that its February index of consumer
confidence fell to another record low.&nbsp; The decline to a
reading of 25.0 was a one-third drop versus January and it lowered
confidence by three-quarters from the July 2007 peak.&nbsp; The
February decline was much deeper than Consensus expectations. The
Conference Board data can be found in Haver's CBDB
database. During the last ten years there has been an 83% correlation
between the level of consumer confidence and the y/y change in real
consumer spending. The present conditions index fell 28.6% from the
January level and it was off more than three-quarters from a year
earlier.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224f.jpg" align="right" border="0" height="265" width="353">
Jobs were seen as hard to get by 47.8% of
respondents, the highest since 1992 and jobs were seen as plentiful by
only 4.4%.&nbsp; Business conditions were seen as good by just 6.8%
and that matched the 1991 low.&nbsp; Those who thought conditions
were bad rose to 51.1%, the highest since 1983. Consumers'
economic outlook continued to worsen as indicated by yet another
decline in the expectations index.&nbsp; The figure fell by more
than one-third from January and by more than one-half from last
February.&nbsp; The percentage of respondents expecting business
conditions to worsen in six months rose to 40.5%, the highest since
1974.&nbsp; Just 8.7% expected improvement in conditions.&nbsp;
More jobs were expected by only 7.1% of respondents while a near-record
23.8% foresaw less income. Expectations for the inflation rate in
twelve months have been roughly stable at the February level of
5.9%.&nbsp; That's down from last year's high of 7.7%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224g.jpg" align="right" border="0" height="265" width="353">
Confusion about the interest rate outlook was evident by the fact that
roughly one-third of respondents expected higher interest rates while
one-third expected rates to fall.&nbsp; A separate question
indicated that 49.5% expected lower stock prices. The
decline in overall consumer confidence over the last year has been
greatest amongst higher income earners.&nbsp; It has been fairly
uniform by age group. An
Experimental Investigation of Why Individuals Conform from
the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr365.pdf">here</a>. Prospects for Macro- and Financial Policy is a
recent speech given by Gary H. Stern, President of the Federal Reserve
Bank of Minneapolis and it available <a href="http://www.minneapolisfed.org/news_events/pres/Stern02-05-09.cfm">here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board &nbsp;(SA, 1985=100)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y %</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>25.0</td>
<td>37.4</td>
<td>-67.3</td>
<td>57.9</td>
<td>103.4</td>
<td>105.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>21.2</td>
<td>29.7</td>
<td>-79.6</td>
<td>69.9</td>
<td>128.8</td>
<td>130.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>27.5</td>
<td>42.5</td>
<td>-52.6</td>
<td>50.0</td>
<td>86.4</td>
<td>89.7</td>
</tr>
</tbody>
</table>
</body></html>

The Conference Board reported that its February index of consumer confidence fell to another record low. The decline to a reading of 25.0 was a one-third drop versus January and it lowered confidence by three-quarters from the July [...]

U.S. Consumer Confidence Fell To A Record Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224d.jpg" width="353">
The consumer may be getting back on his feet. Chain store sales rose 0.6% last week (Feb.21) after the prior week&#39;s 0.9% increase, according to the International Council of Shopping Centers-Goldman Sachs Index. The latest increases lifted sales so far this month by 0.9% above the January average which had risen slightly from December.
The chain store sales figures are available in Haver&#39;s SURVEYW database.
During the last ten years there has been a 64% correlation between the year-to-year growth in chain store sales and the growth in general merchandise sales.
The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The outlook for sales, however, remains far from robust. The weekly leading indicator of chain store sales from ICSC-Goldman Sachs ticked up just slightly last week and so far this month is down 2.3% from January (-3.4% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">02/21/09</th>
<th scope="col">02/14/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>485.9</td>
<td>482.8</td>
<td>-0.8%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>


</html>

The consumer may be getting back on his feet. Chain store sales rose 0.6% last week (Feb.21) after the prior week's 0.9% increase, according to the International Council of Shopping Centers-Goldman Sachs Index. The latest increases [...]

U.S. Chain Store Sales Up Again Last Week

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224b.jpg" width="353">
According to the U.S. Department of Energy, regular gasoline prices last week dipped five cents from the earlier period. Nevertheless, at an average $1.91 per gallon prices remained near their recent high, up 30 cents from the low. Yesterday, the recent downturn continued. The spot market price for regular gasoline was $1.06 per gallon, down from the high of two weeks ago of $1.32 per gallon.
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database. Daily prices are in the DAILY database.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224c.jpg" width="353">
Gasoline demand continued down last week in reaction to the economy&#39;s weakness, the U.S. Department of Energy reported. But the year-to-year shortfall eased further to -1.2% from its worst comparison of -4.8% last October (the latest four weeks versus the same four weeks in 2008). Demand for all petroleum products was unchanged y/y after the -8.0% comparison last October. These numbers are available in Haver&#39;s OILWKLY database.
The price for a barrel of West Texas Intermediate crude fell back last week to $40.50 per barrel from the average $41.72 during January. Prices reached a high of $145.66 last July. In futures trading yesterday, the one-month price for crude oil was $38.44 per barrel. Last week&#39;s average was $36.99.
The price of natural gas fell further last week to $4.32 per mmbtu (-51.3% y/y). The latest average price was down two-thirds from the high reached in early-July of $13.19/mmbtu.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">02/23/09</th>
<th scope="col">02/16/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon)</td>
<td>1.91</td>
<td>1.96</td>
<td>-39.0%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>36.99</td>
<td>36.91</td>
<td>-62.8%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

According to the U.S. Department of Energy, regular gasoline prices last week dipped five cents from the earlier period. Nevertheless, at an average $1.91 per gallon prices remained near their recent high, up 30 cents from the low. [...]

U.S. Gasoline Prices Dipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224a.jpg" width="353">
The S&amp;P/Case-Shiller 20 Home Price Composite Index fell 2.0% during December, the third such decline in three months. That pulled prices down 18.5% during the last twelve months and by 26.7% since their peak in May 2006. The series dates back only to 2000. The December decline in prices was expected.
The S&amp;P/Case-Shiller home price series can be found in Haver&#39;s USECON database but the city data is in the REGIONAL database.
The Case-Shiller index of 20 U.S. cities and their surrounding areas is weighted to reflect price changes due to extensive remodeling, home additions or extreme neglect. For example, smaller weights are assigned to sales of homes that have undergone extensive remodeling.
The Case-Shiller composite index of homes in 10 metropolitan areas, which has a longer history and dates back to 1987, fell 1.8% during December and was down 19.2% year-to-year. The measure was down 28.2% since the 2006 peak.
Weakest Regions: Home prices in Phoenix, Nevada were quite weak last year and fell 34.0% y/y and in San Diego prices fell 24.8% y/y, off 39.1% from their early 2006 peak. Home prices in Las Vegas, Nevada fell 39.1% y/y and were down 44.1% from their peak. Prices in Miami fell 28.8% y/y last year while home prices in Los Angeles were down 26.4% y/y. In San Francisco home prices were off 31.2% year-to-year. In Tampa they fell 22.0% last year and in Detroit home prices fell by 21.7% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224h.jpg" width="353">
Less Weak Regions: In the Northeast, the decline in home prices continued less severe. In New York, prices fell 9.2% last year, off 15.2% from their 2006 peak. Prices were down 7.0% year-to-year in Boston. In Dallas prices also were off by a modest 4.2% y/y and by 7.1% from last year&#39;s peak. In Charlotte, North Carolina they fell a moderate 7.1% y/y and in Denver home prices were off 4.0% y/y. In Cleveland, Ohio prices were off 6.1% y/y but in Chicago home prices were down a larger 14.3% y/y, 18.5% from the 2007 peak.
The latest press release from Standard &amp; Poor&#39;s can be found <a href="http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_022445.pdf">here</a>.
An overview of the S&amp;P/Case-Shiller home price series can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.
Chairman Ben S. Bernanke&#39;s Semiannual Monetary Policy Report to the Congress is available <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20090224a.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller Home Price Index (NSA, Jan 00 = 100)</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">20 City Composite Index</td>
<td>150.99</td>
<td>154.04</td>
<td>-18.5%</td>
<td>-15.7%</td>
<td>-3.8%</td>
<td>7.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

The S&P/Case-Shiller 20 Home Price Composite Index fell 2.0% during December, the third such decline in three months. That pulled prices down 18.5% during the last twelve months and by 26.7% since their peak in May 2006. The series [...]

Case-Shiller Home Price Index Fell A Record 18.5% Last Year

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224a.jpg" align="left" border="0" height="265" width="353">
The S&amp;P/Case-Shiller 20 Home Price
Composite Index fell 2.0% during December, the third such decline in
three months. That pulled prices down 18.5% during the last
twelve months and by 26.7% since their peak in May 2006. The
series dates back only to 2000. The December decline in prices was
expected.
The S&amp;P/Case-Shiller home price series can be found in
Haver's USECON database but the city data is in the
REGIONAL database.
The Case-Shiller index of 20 U.S. cities and their surrounding
areas is weighted to reflect price changes due to extensive remodeling,
home additions or extreme neglect. For example, smaller weights are
assigned to sales of homes that have undergone extensive remodeling.
The Case-Shiller composite index of homes in 10 metropolitan
areas, which has a longer history and dates back to 1987, fell 1.8%
during December and was down 19.2% year-to-year. The measure was down
28.2% since the 2006 peak.
Weakest Regions: Home prices in Phoenix,
Nevada were quite weak last year and fell 34.0% y/y and in San Diego
prices fell 24.8% y/y, off 39.1% from their early 2006 peak. Home
prices in Las Vegas, Nevada fell 39.1% y/y and were down 44.1% from
their peak. Prices in Miami fell 28.8% y/y last year while home prices
in Los Angeles were down 26.4% y/y. In San Francisco home prices were
off 31.2% year-to-year. In Tampa they fell 22.0% last year and in
Detroit home prices fell by 21.7% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224h.jpg" align="right" border="0" height="265" width="353">
Less Weak Regions: In the Northeast, the
decline in home prices continued less severe. In New York, prices fell
9.2% last year, off 15.2% from their 2006 peak. Prices were down 7.0%
year-to-year in Boston. In Dallas prices also were off by a modest 4.2%
y/y and by 7.1% from last year's peak. In Charlotte, North Carolina
they fell a moderate 7.1% y/y and in Denver home prices were off 4.0%
y/y. In Cleveland, Ohio prices were off 6.1% y/y but in Chicago home
prices were down a larger 14.3% y/y, 18.5% from the 2007 peak.
The latest press release from Standard &amp; Poor's can be
found <a href="http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_022445.pdf">here</a>.
An overview of the S&amp;P/Case-Shiller home price series
can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.
Chairman Ben S. Bernanke's Semiannual Monetary
Policy Report to the Congress is available <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20090224a.htm">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (NSA, Jan 00 = 100)</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">20 City Composite
Index</td>
<td>150.99</td>
<td>154.04</td>
<td>-18.5%</td>
<td>-15.7%</td>
<td>-3.8%</td>
<td>7.6%</td>
</tr>
</tbody>
</table>
 U.S. Gasoline Prices Dipped 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 24, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224b.jpg" align="left" border="0" height="265" width="353">
According to the U.S. Department of Energy, regular
gasoline prices last week dipped five cents from the earlier
period. Nevertheless, at an average $1.91 per gallon prices remained
near their recent high, up 30 cents from the low. Yesterday, the recent
downturn continued. The spot market price for regular gasoline was
$1.06 per gallon, down from the high of two weeks ago of $1.32 per
gallon.
Weekly gasoline prices can be found in Haver's WEEKLY
database. Daily prices are in the DAILY
database.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224c.jpg" align="right" border="0" height="265" width="353">
Gasoline demand continued down last week
in reaction to the economy's weakness, the U.S. Department of Energy
reported. But the year-to-year shortfall eased
further to -1.2% from its worst comparison of -4.8% last October (the
latest four weeks versus the same four weeks in 2008). Demand for
all petroleum products was unchanged y/y after the -8.0%
comparison last October. These numbers are available in Haver's OILWKLY
database.
The price for a barrel of West Texas Intermediate crude fell
back last week to $40.50 per barrel from the average $41.72 during
January. Prices reached a high of $145.66 last July. In futures trading
yesterday, the one-month price for crude oil was $38.44 per barrel.
Last week's average was $36.99.
The price of natural gas fell further last week to $4.32 per
mmbtu (-51.3% y/y). The latest average price was down two-thirds from
the high reached in early-July of $13.19/mmbtu.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">02/23/09</th>
<th scope="col">02/16/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon)</td>
<td>1.91</td>
<td>1.96</td>
<td>-39.0%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>36.99</td>
<td>36.91</td>
<td>-62.8%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
 U.S. Chain Store Sales Up Again
Last Week 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 24 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224d.jpg" align="left" border="0" height="265" width="353">
The consumer may be getting back on his feet. Chain store
sales rose 0.6% last week (Feb.21) after the prior week's 0.9%
increase, according to the International Council of Shopping
Centers-Goldman Sachs Index. The latest increases lifted sales so far
this month by 0.9% above the January average which had risen slightly
from December.
The chain store sales figures are available in Haver's SURVEYW
database.


During the last ten years there has been a 64% correlation
between the year-to-year growth in chain store sales and the growth in
general merchandise sales.
The ICSC-Goldman
Sachs retail chain-store sales index is constructed using the
same-store sales (stores open for one year) reported by 78 stores of
seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.
The outlook for sales, however, remains far from robust. The
weekly leading indicator of chain store sales from ICSC-Goldman Sachs
ticked up just slightly last week and so far this month is down 2.3%
from January (-3.4% y/y).
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">02/21/09</th>
<th scope="col">02/14/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>485.9</td>
<td>482.8</td>
<td>-0.8%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
 U.S. Consumer Confidence Fell To A
Record Low 
by <a href="/comment/Moeller%20.html">Tom
Moeller </a>&nbsp; February 24, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224e.jpg" align="right" border="0" height="265" width="353">The
Conference Board reported that its February index of consumer
confidence fell to another record low.&nbsp; The decline to a
reading of 25.0 was a one-third drop versus January and it lowered
confidence by three-quarters from the July 2007 peak.&nbsp; The
February decline was much deeper than Consensus expectations.
 The
Conference Board data can be found in Haver's CBDB
database.
 During the last ten years there has been an 83% correlation
between the level of consumer confidence and the y/y change in real
consumer spending.
 The present conditions index fell 28.6% from the
January level and it was off more than three-quarters from a year
earlier.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224f.jpg" align="right" border="0" height="265" width="353">
Jobs were seen as hard to get by 47.8% of
respondents, the highest since 1992 and jobs were seen as plentiful by
only 4.4%.&nbsp; Business conditions were seen as good by just 6.8%
and that matched the 1991 low.&nbsp; Those who thought conditions
were bad rose to 51.1%, the highest since 1983.
 Consumers'
economic outlook continued to worsen as indicated by yet another
decline in the expectations index.&nbsp; The figure fell by more
than one-third from January and by more than one-half from last
February.&nbsp; The percentage of respondents expecting business
conditions to worsen in six months rose to 40.5%, the highest since
1974.&nbsp; Just 8.7% expected improvement in conditions.&nbsp;
More jobs were expected by only 7.1% of respondents while a near-record
23.8% foresaw less income.
 Expectations for the inflation rate in
twelve months have been roughly stable at the February level of
5.9%.&nbsp; That's down from last year's high of 7.7%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224g.jpg" align="right" border="0" height="265" width="353">
Confusion about the interest rate outlook was evident by the fact that
roughly one-third of respondents expected higher interest rates while
one-third expected rates to fall.&nbsp; A separate question
indicated that 49.5% expected lower stock prices. 
 The
decline in overall consumer confidence over the last year has been
greatest amongst higher income earners.&nbsp; It has been fairly
uniform by age group.
 An
Experimental Investigation of Why Individuals Conform from
the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr365.pdf">here</a>.
 Prospects for Macro- and Financial Policy
is a
recent speech given by Gary H. Stern, President of the Federal Reserve
Bank of Minneapolis and it available <a href="http://www.minneapolisfed.org/news_events/pres/Stern02-05-09.cfm">here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board &nbsp;(SA, 1985=100)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y %</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>25.0</td>
<td>37.4</td>
<td>-67.3</td>
<td>57.9</td>
<td>103.4</td>
<td>105.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>21.2</td>
<td>29.7</td>
<td>-79.6</td>
<td>69.9</td>
<td>128.8</td>
<td>130.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>27.5</td>
<td>42.5</td>
<td>-52.6</td>
<td>50.0</td>
<td>86.4</td>
<td>89.7</td>
</tr>
</tbody>
</table>

 German IFO Survey Shows Little
Change in the Dismal Appraisal of the Business Climate 
by <a href="/comment/Curley.html">Louise
Curley</a> February 24, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224i.jpg" align="right" border="0" height="265" width="353">
The latest release of the IFO survey of German entrepreneurs
engaged in industry and trade shows little change in their dismal
appraisal of the business climate. The overall business climate
indicator declined from 83.0 (2000=100) in January to 82.6 in February
to a new all time low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224j.jpg" align="right" border="0" height="265" width="353">
Concern over current conditions outweighed a
slightly less negative appraisal of the outlook for the next six
months. The indicator for current conditions declined from 86.8 to 84.3
while that for the next six months rose from 79.5 to 80.9. All three
measures are below or, close to, their all time lows, as can be seen in
the first chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224k.jpg" align="right" border="0" height="265" width="353">
The indexes are based on the balance of opinions expressed by
the participants in the survey. The balance of opinion data are
published as well as the indexes, and, in the first release of the
data, only the balance of opinion data for the detailed business
sectors are given. Among the major business sectors, manufacturers are
the most pessimistic and they became more so in February, as the excess
of pessimists rose from 40.0% in January to 42.8%. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090224l.jpg" align="right" border="0" height="265" width="353">
Those engaged in
construction and trade were less negative. Wholesalers, however, became
more pessimistic in February, going to -27.8% from -25.4% in January.
The climate in construction improved to -24.5% in February from -29.5%
in January. The comparable figures for retail trade were -24.3% and
26.5%. The balance of opinions for the major sectors are shown in the
second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">GERMANY&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan&nbsp; 09&nbsp;</th>
<th scope="col">Dec 08&nbsp;</th>
<th scope="col">Nov 08&nbsp;</th>
<th scope="col">Oct 08</th>
<th scope="col">Sep 08</th>
<th scope="col">Aug 08</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">IFO Survey&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Business Climate
(2000=100)</td>
<td>82.6</td>
<td>83.0</td>
<td>82.7</td>
<td>85.9</td>
<td>90.1</td>
<td>92.7</td>
<td>94.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current
Conditions (2000=100)</td>
<td>84.3</td>
<td>86.8</td>
<td>88.8</td>
<td>94.8</td>
<td>99.9</td>
<td>99.6</td>
<td>103.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Condition 6
Months Ahead (2000=100)</td>
<td>80.9</td>
<td>79.5</td>
<td>76.9</td>
<td>77.8</td>
<td>81.4</td>
<td>86.9</td>
<td>86.8</td>
</tr>
<tr class="even">
<td class="firstcol">Business Climate by
Sector&nbsp; (Percent Balance)&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>-35.4</td>
<td>-34.4</td>
<td>-35.2</td>
<td>-28.8</td>
<td>-20.5</td>
<td>-15.2</td>
<td>-11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Manufacturing</td>
<td>-42.8</td>
<td>-40.0</td>
<td>-39.9</td>
<td>-29.3</td>
<td>-19.2</td>
<td>-12.0</td>
<td>-7.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction</td>
<td>-24.5</td>
<td>-29.5</td>
<td>-30.3</td>
<td>-30.1</td>
<td>-27.7</td>
<td>-25.2</td>
<td>-26.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Wholesale
Trade</td>
<td>-27.8</td>
<td>-25.4</td>
<td>-26.2</td>
<td>-21.8</td>
<td>-15.3</td>
<td>-10.9</td>
<td>-5.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Trade</td>
<td>-24.3</td>
<td>-26.5</td>
<td>-30.4</td>
<td>-33.2</td>
<td>-25.5</td>
<td>-24.5</td>
<td>-21.5</td>
</tr>
</tbody>
</table>
</body></html>

Case-Shiller Home Price Index FellA Record 18.5% Last Year

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

US production rebounded in Q2, but demand continued to slow

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

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Andrew Cates

**US trade with Europe** 
Geopolitical tensions surrounding Greenland have abruptly sharpened investor sensitivity to US trade and foreign-policy risk. What might once have been dismissed as rhetorical brinkmanship has taken on greater macro-financial relevance as Donald Trump has coupled renewed interest in Greenland’s strategic importance with explicit threats of higher tariffs on European imports. The first chart below highlights that the US is materially more exposed to EU goods than the EU is to US trade, making any escalation asymmetrically more costly for the US economy. Beyond the direct inflationary impact of higher tariffs, the more immediate risk lies in confidence effects and capital flows: early signs of capital reallocation away from US assets over the past 24 hours suggest that markets could be beginning to price a broader erosion of policy predictability. In this environment, tariffs risk functioning less as a targeted trade tool and more as a systemic confidence shock—tightening financial conditions, unsettling the dollar’s safe-haven status and increasing downside risks to US growth via weaker investment and higher risk premia.

260122Z1.jpg

**Japan’s JGB yields**
That said, recent capital outflows from US assets may owe as much to developments in Japan as to geopolitical and trade-related shocks. While tariff threats and policy unpredictability have clearly unsettled sentiment, an underappreciated driver of the sell-off in US Treasuries has been the sharp repricing in the Japanese government bond market. Renewed domestic political uncertainty and intensifying concerns over Japan’s debt dynamics have triggered a rapid rise in JGB yields, prompting portfolio rebalancing by Japanese investors and reducing the relative appeal of US duration. Given Japan’s role as one of the largest foreign holders of US Treasuries, yield gyrations at home can translate quickly into capital repatriation, hedging adjustments and reduced demand for US bonds. In this sense, recent moves in US yields may reflect less a direct reaction to geopolitical risk and more a globally transmitted capital-flow shock—originating in Japan but felt most acutely in US financial markets.

260122Z2.jpg

**Inflation expectations and oil prices**
Capital-flow dynamics may have also begun to spill over into how markets are pricing US inflation risk and monetary credibility. Historically, medium-term US inflation expectations have remained closely anchored to global energy prices, as illustrated by the strong co-movement between the 5-year forward inflation rate and Brent crude prices. More recently, however, that relationship has begun to fray: inflation expectations have proven notably resilient even as oil prices have softened, suggesting that markets are increasingly pricing political and policy risk rather than cost-push fundamentals alone. Renewed tariff threats under President Trump, combined with heightened geopolitical tensions involving Greenland and transatlantic relations, risk reinforcing concerns that future inflation outcomes could be shaped as much by political intervention as by macroeconomic conditions. Any perception that the Federal Reserve may face constraints on its operational independence would compound this shift—loosening inflation anchors, raising term premia and increasing the sensitivity of capital flows to US policy credibility.

260122Z3.jpg

**UK inflation** 
UK inflation data released this week show a small upside surprise in headline CPI at year-end. Headline CPI inflation specifically rose from 3.2% y/y in November to 3.4% in December, a little more than expected. The chart below shows that the pickup was driven by persistent underlying pressures—most notably in services. While a negative drag from energy prices has largely faded, services inflation continues to account for a disproportionate share of overall price growth, probably reflecting ongoing wage pressures and limited slack in parts of the domestic economy.

260122Z4.jpg

**Wage growth in the US and Europe** 
Labour-market data from the Indeed Hiring Lab reinforce the picture of persistent services-side pressure in the UK inflation mix. As the chart shows, UK posted wage growth remains elevated relative to both the euro area and the US, even though momentum has eased from its 2023 peak. At around the mid-5% range on a three-month moving average basis, UK wage growth is still running at a pace that is difficult to reconcile with a rapid return of services inflation to target. By contrast, posted wage growth in the euro area has slowed more decisively, while the US has seen a sharper deceleration from earlier extremes.

260122Z5.jpg

**China’s property market**
Finally, the Q4 GDP figures released in China this week sit uneasily alongside continued weakness in its domestic property sector, which remains a key drag on both investment and consumption. While Q4 growth of 4.5% y/y brought full-year GDP broadly in line with the authorities’ 5% target, the chart highlights how property-market adjustment is still running deep beneath the surface. Prices of existing homes across China’s 70 cities remain in year-on-year decline, while real estate investment continues to contract sharply, underscoring the scale and persistence of the sector’s retrenchment. This helps explain why fixed asset investment has softened further and why household demand remains subdued, despite more resilient industrial output.

260122Z6.jpg

This week’s data and market moves have been framed by an abrupt escalation in geopolitical tensions surrounding Greenland, which has served as a catalyst for broader financial unease rather than a standalone shock. The episode has sharpened investor focus on US policy predictability, amplifying concerns already evident in the charts on EU–US trade exposure, where tariff threats risk feeding directly into confidence effects and capital flows. At the same time, recent turbulence in Japanese government bonds appears to have been an underappreciated driver of the sell-off in US Treasuries, highlighting how global capital reallocation—rather than geopolitics alone—has contributed to higher US yields. These forces intersect with growing questions around the durability of US monetary credibility, as inflation expectations have shown signs of decoupling from traditional oil-price anchors, raising the sensitivity of markets to any perceived constraints on the Federal Reserve. Beyond the US, UK data delivered a modest upside surprise in headline inflation, with persistent services and wage pressures reinforcing a cautious policy backdrop for the Bank of England. In China, meanwhile, Q4 GDP growth of 4.5% y/y kept full-year expansion aligned with the government’s target, but continued weakness in the property sector remains a significant drag on investment and household confidence. Taken together, the week’s developments point to a global outlook increasingly shaped by geopolitical risk, capital-flow dynamics and domestic  structural constraints, rather than by straightforward cyclical momentum alone.

Charts of the Week: Seeing Green

Sandy Batten

260122N8.jpg

260122C8.jpg

Real GDP increased 4.4% q/q saar in the third quarter of 2025 in the final estimate, up marginally from 4.3% in the first release. The Action Economics Forecast Survey expected no revision. Growth from a year ago was unrevised at 2.3% y/y. Growth of corporate profits was revised up to 4.5% q/q not annualized from 4.2% in the previous report.

The revision to GDP mostly reflected slightly stronger nonresidential fixed investment, a larger increase in exports and a smaller decrease in inventory investment. Nonresidential fixed investment increased a revised 3.2% q/q saar versus a 2.8% gain in the previous release. This reflected a smaller decline in structures, a smaller increase in equipment and a larger increase in intellectual property products than previously estimated. Residential investment was revised weaker with a 7.1% quarterly decline versus -5.1% in the previous estimate.

Upon revision, exports rose 9.6% q/q in Q3 versus 8.8% in the first estimate. Consequently, the trade deficit narrowed a little more than in the first estimate, resulting in net exports adding 1.62%-points to overall growth, 0.03%-point more previously estimated. The decline in inventory investment in Q3 was smaller than previously estimated, reducing the drag from inventories by 0.1%-point versus the previous estimate. The decline in inventories subtracted 0.12%-point in Q3 on top of a 3.44%-point subtraction in Q2.

Domestic demand growth remained solid in Q3 but was revised down 0.1%-point. Final sales to domestic purchasers grew a revised 2.8% q/q saar in Q3 versus 2.9% in the first estimate. Final sales to private domestic purchasers increased 2.9% q/q, down slightly from 3.0% previously.

260122O8.jpg

260122P8.jpg

The primary driver of overall growth continued to be personal consumption expenditures. They increased an unrevised 3.5% q/q saar in Q3, adding 2.34%-points to total GDP growth. This reflected a 3.0% increase in spending on goods versus 3.1% previously and a 3.6% gain in spending on services versus 3.7% previously. The rise in government spending was unrevised at 2.2% q/q. However, spending by the federal government was revised slightly slower to 2.7% from 2.9% while spending by state and local governments was revised up slightly to 2.0% from 1.8%.

Key measures of inflation were unrevised. Inflation as measured by the GDP price index remained at 3.8% q/q saar in Q3, but this was up markedly from 2.1% in Q2. Similarly, PCE inflation in Q3 was unrevised at 2.8% versus 2.1% in Q2. Core PCE inflation was also unrevised at 2.9% in Q3.

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**.

260122Q8.jpg

260122S8.jpg

- Real GDP grew 4.4% q/q saar in Q3 2025, up slightly from 4.3% previously reported.
- The modest upward revision was due mostly to slightly stronger nonresidential fixed investment, a larger increase in exports and a smaller decrease in inventories.
- Growth of domestic demand remained solid in Q3 but was revised down 0.1%-point.
- GDP and PCE inflation were unrevised at 3.8% and 2.8%, respectively. Both are meaningful accelerations from Q2.

U.S. Q3 GDP Growth Revised Slightly Faster

Kathleen Stephansen, CBE

260122A2.jpg

260122B2.jpg

Initial claims for unemployment insurance edged up 1,000 to 200,000 in the week ending January 17, from 199,000 in the week ending January 10, revised from 198,000. The four-week moving average of initial claims was 201,500 in the January 17 week, down 3,750 from 205,250 in the January 10 week, revised from 205,000, and reaching the lowest level for this average since January 13, 2024, when it was 200,000.

Federal government employees initially filed 1010 (NSA) jobless insurance claims in the week ended January 10, after filing 646 (NSA) claims in the week ended January 3.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” –decreased by 26,000 to 1.849 million in the week ended January 10 from 1.875 million in the week ending January 3, revised from 1.884 million. The four-week moving average was 1.871 million in the latest week, down from 1.887 million in the January 3 week, revised from 1.889 million. The insured unemployment rate remained at 1.2% in the week of January 10, unchanged from previous 6 weeks.

Federal government employees’ continuing benefits claims were 12,977 (NSA) in the week ending January 3, from 12,803 (NSA) in the week of December 27.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 3, the highest unemployment rates were in Rhode Island (3.27%), New Jersey (3.17%), Washington (2.85%), Minnesota (2.75%), Massachusetts (2.74%), Oregon (2.37%), Connecticut (2.31%), Montana (2.26%), California (2.21%), and Alaska (2.06%). The lowest rates were in Florida (0.29%), North Carolina (0.40%), and Louisiana (0.43%). Rates in other notable states include New York (2.28%), Pennsylvania (2.23%), Illinois (2.21%), and Texas (1.14%). 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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U.S. Initial Claims for Unemployment Insurance Edged Up in Latest Week

Robert Brusca

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The National Bank of Belgium index for January 2026 rose to +4 from -1 in December, stronger than its November 2025 reading of +2. The survey value is exceptionally strong, lying in the top 6% of all observations back to 1991, even as the survey contains significant variations that range from strong to quite weak across its various components. What is most notable is that the index itself is extremely high-ranking; the current situation appraisal is also quite high-ranking; and, that the forecast for unemployment embedded in this survey is at a 35-year low. Considering current circumstances, against the events of the last 35 years, that's a rather remarkable finding especially considering the world situation.

**The times, they are a changin’ was Dylan 50 years early?** 
These have been remarkable times in a number of different ways with a clear transition from the circumstances of the post-war period under way. The solidarity of the NATO alliance is clearly in a situation in flux, revealed since Russia invaded Ukraine. Prior to that, the Europeans had resisted putting more money into the NATO pot as the United States had been frantically asking them while it funded most of the security umbrella. Now, in the wake of these new events, and with the changes to the global stage wrought by climate shifting, the U.S. finds Greenland to be a more important piece on the geopolitical chess board and wants to have more say there in order to protect its own flank as Arctic ice packs recede. This is after a period when NATO basically failed to engage in the front-line protections of its own doorstep that the U.S. had thought were necessary. Not surprisingly, the U.S. found that whole episode unsatisfactory and is now reluctant to give up control to NATO of what it regards as the protection of its own back door for the area around Greenland. But at last, Europe and the U.S. appear to have a deal or the makings of one, so, stay tuned. Maybe all civility is not lost.

**Geopolitical shifts meld with economic issues to change the landscape**
Geopolitical shifts are part of the problem because geopolitics and economics help shape one another. And there has been a great deal of economic turmoil as well. The U.S., after reassessing the Post War order, is bringing back to life tariffs, in order to try to get economic leverage after running 33 consecutive years of current account deficits under what people want to call a free trade system. The U.S. finds itself with a still very overvalued dollar and in a situation where its current account deficits are poised to continue to run high and perhaps get higher. Economists say tariffs are not the solution, but maybe they ARE the wake-up call that will lead to a solution? Europeans have also shifted to embracing a larger and larger government sector and ever larger fiscal deficits and more fiscal debt while absorbing migrants. This is constraining its ability to have any kind of a flexible macroeconomic policy and is a severe problem already for the U.K. and France. And these changes are wreaking havoc with what has been a very solid post-war Atlantic alliance.

**Views change**
But the changes that the U.S. has pushed on to the system from its geopolitical adventurism to its use of tariffs and other strong rhetorical comments have led economists to focus on the elevation of uncertainty in the economic system. Elevating uncertainty has an adverse impact on the economy and on growth. I mentioned this with the obvious caveat that this warning by economists seems to have been completely wrong. U.S. growth has turned out to be quite resilient and even strong. It is not the only adamant position that has proved to be wrong and malleable. Despite the reality of climate change, the view that once took carbon as the main and unequivocal climate change agent, itself is shifting. Opposition to carbon has dwindled, more as the U.S. is embracing nuclear power. Artificial intelligence is becoming a strong bet for stronger growth in the future, and this explains why there have been so many shifting views on energy since artificial intelligence requires massive amounts of energy and would make it impossible to make progress on carbon and to push ahead with the AI agenda at the same time. So, instead of delaying AI, the view on carbon had to go. So much for ‘science.’

**Why are Belgians so satisfied?**
The finding that in Belgium consumer confidence has risen sharply in this environment and fears of unemployment are the lowest they've been in 35 years is another shocking development in this pantheon of incredible and shocking changes. As the above discussion points out, a lot is changing and NATO is at odds with the U.S., its lynchpin. Yet, there is no clear increase in uncertainty in Belgium, while they maybe more in Brussels.

**The Belgian Survey: strong despite waffles**
Belgians do not read the economic situation over the next 12 months as that strong at a reading of -29 on the survey; it has weakened over the last few months, and the economic situation assessment is only at its 8.3 percentile, an extremely weak standing. Price trends are the opposite; they have eased somewhat in the recent months, but over the next 12 months the assessment still has a top 14-percentile evaluation. It is in this context that the unemployment forecast, which is the lowest in 35 years, emerges as surprising. The environment to make major household purchases over the next 12 months is only a mid-range at a 45.7 percentile standing. And people rate their financial situation over the next 12 months slightly better than at the end of last year but at only a 34.2 percentile standing. However, the appraisal of the current situation moved up sharply in January and has a 97.7 percentile standing, which is extremely strong.

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**Low unemployment fear spurs confidence**
The reason for consumer confidence to be strong is clear when you see how low concerns are about unemployment. But it's hard to understand why concerns about unemployment are so low with the rest of the economic metrics so varied in the survey. This is especially true with Belgium nestled in the heart of Europe and all of these concerns between the U.S. and NATO swirling around as well as a still very hot war occurring on Europe's border between Ukraine and Russia. Meanwhile, the U.S. position about this war continues to seem to back Ukraine a lot less than it should.

**Belgium is a good bellwether**
The Belgian survey is not the most important bit of economic activity. Belgium is not an extremely important country in Europe, although it's in the heart of the European Union, a member of the European Monetary Union, linked closely to Germany, and to other key European economies through trade, so that its performance likely is a good reflection of what's going on in Europe. It is not a European border country. It is in the heartland of Europe. That may explain a little bit why Belgians are not perhaps as nervous as Poles, are or Finns or the small Baltic countries, and others, with potentially more border proximity and vulnerability to the Russia-Ukraine conflict.

**Belgian optimism flies in out of the blue**
This is an observation. I think it's the kind of observation in this world economy that we find striking and unusual and will bear some further watching and some watching of other similar readings in Europe to see if there's evidence that there's some kind of new resilience that we might have missed. Economists seem hung-up broken-record style on uncertainty. Certainly, there's something here that economists have missed who have only seen these new actions by the U.S. as creating more uncertainty since we do not know what the new Greenland deal is. And uncertainty should create more adversity for growth except that it hasn't worked out that way. And it's a reminder that separating economics from geopolitics may take more than a crowbar. And also that uncertainty comes in many shapes and sizes while some may argue that there still is not a Greenland deal, what we see is a lowering of the temperature, a calming of the rhetoric and a sense that the parties have a horse trade they think they can do to resolve their differences. And while there is still uncertainty, there is also clear progress and a clear reduction in risk. Still, the times are changing.

Belgium

Belgian Consumer Confidence Up and Strong; Fear of Unemployment at 35-Year Low! Is That Possible?

Winnie Tapasanun

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The Pending Home Sales Index, a forward-looking measure of home sales based on contract signings, fell 9.3% m/m to 71.8 in December following unrevised increases of 3.3% in November and 2.4% in October, according to the National Association of Realtors (NAR). December marked the first m/m fall since July and the steepest since April 2020. The year-on-year rate was -3.0% in December, the first negative y/y reading since September, compared to +2.6% in November and -5.0% in December 2024. The index had fallen 42.6% since its October 2021 high of 125.1. In 2025, the PHSI declined 0.9% after drops of 3.0% in 2024 and 16.1% in 2023.

The m/m fall in December pending home sales occurred alongside a decline in the average 30-year mortgage rate to 6.20% in December, the lowest since September 2024, down from 6.24% in November and 6.25% in October. These rates, while below a peak of 7.62% in October 2023, had remained higher than a low of 5.22% in August 2022 and more than double a record-low 2.68% in December 2020.

Pending home sales decreased m/m in December across all four major regions. The Midwest recorded the sharpest drop, with sales plunging 14.9% (-9.8% y/y) in December—the first m/m decline since September and the deepest since April 2020—after a 1.3% increase in November. Sales in the West slumped 13.3% (-5.1% y/y), the third m/m decrease in four months, following a 9.2% November rebound. Sales in the Northeast slid 11.0% (-3.6% y/y), the first m/m slide since August, after a 1.8% November rise. Sales in the South fell 4.0% (+2.0% y/y), the first m/m fall since June, after a 2.5% November gain.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- PHSI -9.3% m/m (-3.0% y/y) to 71.8 in Dec., lowest index level since July.
- Home sales m/m down in all four major regions, w/ the Midwest seeing the steepest drop (-14.9%).
- Home sales y/y down in the Northeast, Midwest, and West, but up in the South (+2.0%).

Economy in Brief: 2009

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