Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090603c.jpg" width="353">
No doubt the job market has yet to materially improve. However, the latest report from the payroll processor ADP in their National Employment Report showed an easing in the rate of contraction. It indicated that private nonfarm payrolls fell 532,000 last month after a revised 545,000 decline during April. (Recent months&#39; declines were revised deeper from the earlier estimates.) The latest reading was the sixteenth consecutive monthly decline, but the annualized rate of decline in payrolls eased somewhat to 6.3% during the last three months.
ADP compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
The U.S. Bureau of Labor Statistics will report payroll employment this Friday. For comparison, April&#39;s 545,000 worker decline in ADP&#39;s measure of private nonfarm payrolls was accompanied by 611,000 job losses in the BLS measure of private sector payrolls. According to ADP and Macro-Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090603d.jpg" width="353">
ADP reported that last month medium-sized payrolls fell 223,000 (-5.3% y/y) followed by a 209,000 (-4.0% y/y) worker decline in small sized payrolls. Large payrolls fell by 100,000 (-5.3% y/y). In the goods producing sector there were 267,000 fewer jobs in April (-12.0% y/y). Medium-sized payrolls fell 114,000 (-12.5% y/y) followed by a 98,000 (-11.4% y/y) shortfall in small-sized payrolls. Large payrolls fell 55,000 (-12.1% y/y). In the manufacturing sector alone, payrolls fell 149,000 (-11.8% y/y) and that rate of decline has been gaining steam.
Declines in employment in the service producing industry have lagged just slightly the factory sector&#39;s workforce contraction. The 265,000 (-3.1% y/y) decline last month was the fourteenth consecutive monthly decline. Medium-sized service payrolls fell 109,000 (-3.4% y/y) and small-sized payrolls were off 111,000 (-2.7% y/y). Large service producing payrolls dropped by 45,000 (-3.3% y/y).
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical figures date back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/FINAL_Report_May_09.pdf">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">May</th>
<th scope="col">April</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">Nonfarm Private Payroll Employment (m/m Chg.)</td>
<td>-532,000</td>
<td>-545,000</td>
<td>-4.8%</td>
<td>-0.4</td>
<td>1.2%</td>
<td>2.0%</td>
</tr>
</tbody>
</table>


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No doubt the job market has yet to materially improve. However, the latest report from the payroll processor ADP in their National Employment Report showed an easing in the rate of contraction. It indicated that private nonfarm [...]

ADP Report: Rate Of Job Loss Moderates

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090603a.jpg" width="353">
Consumers still are shying away from big-ticket expenditures. The added evidence of that trend is that unit sales of light vehicles during May increased just 6.4% m/m to make up an April decline. Year-to-date, total May vehicle sales remained down 3.8% at 9.91 million units (SAAR).
U.S. unit sales of light vehicles rebounded 7.0% to 7.26M units, still near the lowest since 1982 according to the Autodata Corporation and Ward&#39;s Automotive News. (Seasonal adjustment of the figures is provided by the U.S. Bureau of Economic Analysis). Sales of domestically made light trucks rose 9.1% to 4.01M units while auto sales rose a lesser 4.5% to 3.25M units. Sales of domestic vehicles YTD are down 5.6%.
Imported light vehicle sales also rose but they made up only about one-third of their 14.0% m/m April decline. At 2.66M units they remained near their lowest level in roughly ten years. Sales of imported light truck sales rose 9.4% to 0.91M units while sales of imported autos rose a modest 2.7% returning only to their February level. Sales of imported vehicles YTD increased 1.3%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090603b.jpg" width="353">
Overall, import&#39;s share of the U.S. light vehicle market fell again, last month to 26.8% which was their lowest level of this year. Nevertheless, the figure remained up from the 2008 average of 26.3%. (Imported vehicles are those produced outside the United States.) Imports&#39; share of the U.S. car market totaled 34.9%, up slightly from the 2008 average, while the share of the light truck market was 18.6%, roughly equal to last year.
The U.S. vehicle sales figures can be found in Haver&#39;s USECON database.
The Financial Crisis - Toward an Explanation and Policy Response from the Federal Reserve Bank of Richmond is available <a href="http://www.richmondfed.org/publications/research/annual_report/2008/pdf/article.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"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">May 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</td>
<td>9.91</td>
<td>9.32</td>
<td>9.86</td>
<td>-30.5%</td>
<td>13.17</td>
<td>16.16</td>
<td>16.54</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>4.99</td>
<td>4.81</td>
<td>5.09</td>
<td>-36.4</td>
<td>6.71</td>
<td>7.58</td>
<td>7.77</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>3.25</td>
<td>3.11</td>
<td>3.23</td>
<td>-37.1</td>
<td>4.42</td>
<td>5.07</td>
<td>5.31</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.74</td>
<td>1.70</td>
<td>1.86</td>
<td>-35.0</td>
<td>2.29</td>
<td>2.52</td>
<td>2.45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>4.92</td>
<td>4.51</td>
<td>4.78</td>
<td>-23.3</td>
<td>6.47</td>
<td>8.60</td>
<td>8.78</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>4.01</td>
<td>3.67</td>
<td>3.70</td>
<td>-22.6</td>
<td>5.29</td>
<td>7.10</td>
<td>7.42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>0.91</td>
<td>0.84</td>
<td>1.08</td>
<td>-26.0</td>
<td>1.18</td>
<td>1.47</td>
<td>1.37</td>
</tr>
</tbody>
</table>


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Consumers still are shying away from big-ticket expenditures. The added evidence of that trend is that unit sales of light vehicles during May increased just 6.4% m/m to make up an April decline. Year-to-date, total May vehicle sales [...]

U.S. May Light Vehicle Sales Recover Only To Low March Level

Improvement in service sector activity is accompanying the factory sector's recent rise. The May Composite Index for the nonmanufacturing sector from the Institute for Supply Management (ISM) rose to 44.0 last month from an unrevised [...]

U.S. ISM Nonmanufacturing Index Improves Further

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602f.jpg" align="left" border="0" height="265" width="353">
Unemployment rates are on the rise around the world. In EMU
the new rate jumped up to 9.2%; the highest rate for the Area in 9-1/2
years (Sept 1999). There have been 3.1million jobs losses since the
recession began. The US has seen a sharp rise in its rate of
unemployment over the past year, a gain of 3.9%. This surpasses the
1.9% point rise in EMU and the 1% point rise in Japan. However, the
rise in Spain as been of a whopping 8.1 percentage points, bringing in
its overall rate to 18.1%. And that spells e-Zone trouble. 
 

Since the start of the US recession in December of 2007 the
German rate of unemployment has dropped &#8211; dropped - by 0.2% points. The
French rate has risen by 0.2% points. Spain&#8217;s U-rate is up by 9.2%
points. The US unemployment rate is higher by 4% points. In Japan the
U-rate is up by 1.3% points. 
 

Spain&#8217;s rate has jumped as the property market has collapsed.
The rise there appears to have a very large structural element. In the
US the rise seems to be mostly cyclical but it is a substantial rise: a
gain of four percentage points compared to a level of 4.9% in December
of 2007. 
 

Europe seems to have forestalled much of the rise in the rate
of unemployment &#8211; Spain excepted, of course. That leads to the
conclusion that despite a substantial social safety net in Europe, the
rise in unemployment is still in progress and will hit Europe later.
Moreover, Europe has different sorts of stresses as the social safety
net is uneven and spreads stress unevenly, across the Area. EMU is only
a common currency area with some economic harmonization rules; fiscal
policy is left to local custom and practice with two overall metrics in
place to constrain aggregate usage. That lack of commonality is now a
problem for the Area. 
 

For the moment the e-Area&#8217;s MFG PMI indices are rising on only
a slight lag with the index in the US. This is with a relatively small
hike in the rate of unemployment in Europe (much of that in Spain) and
a substantial jump in the US. If the unemployment problem in Europe
grows worse, the European recovery that now seems to be on the heels of
the US could suffer substantial erosion. There is also a possibility of
political tensions in Europe as the recessions hit the various EMU
nations unevenly. 
 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> Unemployment rate and changes</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3"> Level</td>
<td colspan="3"> Simple Changes</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">EU-Urate</td>
<td>8.6</td>
<td>8.4</td>
<td>8.1</td>
<td>0.7</td>
<td>1.3</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">EMU-Urate</td>
<td>9.2</td>
<td>8.9</td>
<td>8.7</td>
<td>0.8</td>
<td>1.4</td>
<td>1.9</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3"> m/m%</td>
<td colspan="3"> % changes (ar)</td>
</tr>
<tr>
<td class="firstcol">EU-U 000s</td>
<td>2.7%</td>
<td>3.2%</td>
<td>3.5%</td>
<td>9.7%</td>
<td>19.0%</td>
<td>28.8%</td>
</tr>
<tr>
<td class="firstcol">EMU-U 000s</td>
<td>2.8%</td>
<td>3.1%</td>
<td>3.0%</td>
<td>9.1%</td>
<td>17.7%</td>
<td>27.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">U-Rates</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Germany</td>
<td>7.7</td>
<td>7.6</td>
<td>7.4</td>
<td>0.4</td>
<td>0.6</td>
<td>0.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; France</td>
<td>8.9</td>
<td>8.8</td>
<td>8.6</td>
<td>0.4</td>
<td>0.9</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Spain</td>
<td>18.1</td>
<td>17.3</td>
<td>16.5</td>
<td>2.5</td>
<td>4.9</td>
<td>8.1&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; USA</td>
<td>8.9</td>
<td>8.5</td>
<td>8.1</td>
<td>1.3</td>
<td>2.3</td>
<td>3.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Japan</td>
<td>5</td>
<td>4.8</td>
<td>4.4</td>
<td>0.9</td>
<td>1.2</td>
<td>1</td>
</tr>
</tbody>
</table>
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Unemployment rates are on the rise around the world. In EMU the new rate jumped up to 9.2%; the highest rate for the Area in 9-1/2 years (Sept 1999). There have been 3.1million jobs losses since the recession began. The US has seen a [...]

U-Rates On The Rise

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602d.jpg" width="353">
The National Association of Realtors reported that pending sales of existing homes during April rose for the third consecutive month. The 6.7% m/m rise was to the highest level since last September and doubled the unrevised 3.2% March gain. Consensus expectations had been for a slight 0.5% increase in April sales.
Last month&#39;s gain in home sales was spread across the country except in the South where they fell slightly from March (+3.6% y/y). In the West (-3.0%y/y) sales recovered a piece of March&#39;s decline but remained down sharply from the highs of last summer. Elsewhere, sales in the Northeast jumped by nearly one-third from the March level but they were roughly unchanged from one year earlier. Sales in the Midwest jumped 9.8% from March and have rebounded 11.1% versus 2008.
The home sales figures are analogous to the new home sales data from the Commerce Department in that they measure existing home sales when the sales contract is signed, not at the time the sale is closed. The series dates back to 2001.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602e.jpg" width="353">
The latest monthly gains in home sales have been accompanied by a rise in home prices. The median sales price of an existing home increased a slight 0.2% in April (-15.4% y/y). The rise followed firm increases during the prior two months. The latest gains in home prices did lower housing affordability slightly but just slightly. Therefore, combined with lower interest rates, the affordability index of a home remained up by 29.2% year-to-year and by three quarters from the 2006 low. The latest level was a record high for the series which extends back to 1970.
As the Spring selling season began, the Realtors Association indicated in an earlier report that the number of homes on the market and available for sale rose 8.8% during April but were down 12.8% versus one year earlier. At the current sales rate there was a 10.2 months&#39; supply of homes on the market and there was a 10.4 months&#39; supply during all of last year, up from the 8.9 months supply during 2007 and 6.5 months during 2006. For single family homes, there was a 9.6 months&#39; supply in April versus a full-year figure of 10.0 months during 2008.
The pending home sales data are available in Haver&#39;s PREALTOR database. The number of homes on the market and prices are in the REALTOR database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Pending Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>90.3</td>
<td>84.6</td>
<td>&nbsp;&nbsp; 3.2%</td>
<td>86.8</td>
<td>95.8</td>
<td>112.1&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>78.9</td>
<td>59.5</td>
<td>0.8</td>
<td>72.6</td>
<td>85.6</td>
<td>98.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>90.4</td>
<td>82.3</td>
<td>11.1</td>
<td>80.6</td>
<td>89.5</td>
<td>102.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>93.0</td>
<td>93.2</td>
<td>3.6</td>
<td>89.8</td>
<td>107.3</td>
<td>127.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>94.8</td>
<td>93.1</td>
<td>-3.0</td>
<td>99.3</td>
<td>92.1</td>
<td>109.5</td>
</tr>
</tbody>
</table>
</body>
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The National Association of Realtors reported that pending sales of existing homes during April rose for the third consecutive month. The 6.7% m/m rise was to the highest level since last September and doubled the unrevised 3.2% March [...]

U.S. Pending Home Sales Rise To Their Highest Level Since September

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602c.jpg" width="353">
Consumers lost their mood for spending at the end of last month. According to the International Council of Shopping Centers-Goldman Sachs Index, store sales last week gave back with a 0.6% decline virtually all of the prior week&#39;s increase. That left sales for the entire month of May down 0.2% from April after that month&#39;s 1.4% rise from the March average.
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. These weekly figures are available in Haver&#39;s SURVEYW database.
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.
Prospects for spending also were tepid last week as indicated by the leading indicator of sales. It fell a modest 0.3% in the latest week. The May average stands just below April.

<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">05/30/09</th>
<th scope="col">05/23/09</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>487.4</td>
<td>490.5</td>
<td>0.6%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>


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Consumers lost their mood for spending at the end of last month. According to the International Council of Shopping Centers-Goldman Sachs Index, store sales last week gave back with a 0.6% decline virtually all of the prior week's [...]

U.S. Chain Store Sales Backpedal

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<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602a.jpg" width="353">
News of a rebound in the U.S. economy has generated the suspicion that more consumers will take to the roads on longer journeys. So far, the evidence of a recovery in driving is limited, but the energy market nevertheless has reacted in advance with higher prices. Regular gasoline prices last week moved even higher to an average $2.52 per gallon of regular. The gains have taken prices up by 91 cents, or by more than one-half, from the December low to the highest level since late-October. Yesterday, the cash market price for a gallon of regular gas rose further to $1.90 per gallon versus $1.85 averaged last week. These also were the highest prices since last October. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; DAILY databases.
So far the evidence of a rebound in driving is limited. The figures for miles driven have rebounded from this past winter but that&#39;s usual as the weather warms. Year-to-year, economic weakness continues to lower gasoline demand, last week by 2.1%. That is, however, a less severe shortfall than during last autumn&#39;s 5% y/y decline. The change in demand is measured using the latest four weeks versus the same four weeks in 2008. Demand for all petroleum products was down 7.3% y/y in the latest week led by a 38.5% drop in demand for residual fuel oil and a 13.4% drop in distillate demand. These numbers also are available in Haver&#39;s OILWKLY database.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602b.jpg" width="353">
Higher crude oil prices have accompanied the rise in gasoline costs. Crude prices averaged $64.32 last week for a barrel of West Texas Intermediate, up from the December low of $32.37 per barrel. Yesterday, crude oil prices rose even further to $68.58. Prices reached a high of $145.66 last July. The latest price increases occurred despite a 3.1% year-to-year rise in crude oil production during the latest four weeks. In addition, they have occurred despite a 12.3% y/y rise in inventories of crude oil &amp; petroleum products. The figures on crude oil production and inventories are available in Haver&#39;s OILWKLY database.
Finally, the gains in the price of natural gas paused last week and it fell back to $3.60 per mmbtu (-69.2% y/y). The latest price was nearly the lowest since 2002 and is down by two-thirds from the high reached in early-July of $13.19/mmbtu.
U.S. Treasury Secretary Timothy F. Geithner&#39;s speech titled The United States and China, Cooperating for Recovery and Growth is available <a href="http://www.ustreas.gov/press/releases/tg152.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"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">06/01/09</th>
<th scope="col">05/25/09</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, Regular)</td>
<td>2.52</td>
<td>2.44</td>
<td>-36.5%</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>64.32</td>
<td>60.48</td>
<td>-49.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

News of a rebound in the U.S. economy has generated the suspicion that more consumers will take to the roads on longer journeys. So far, the evidence of a recovery in driving is limited, but the energy market nevertheless has reacted [...]

Gasoline Prices Rise Further Reflecting Strength In Crude Oil Prices

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602d.jpg" align="left" border="0" height="265" width="353">
The National Association of Realtors reported that pending
sales of existing homes during April rose for the third consecutive
month. The 6.7% m/m rise was to the highest level since last September
and doubled the unrevised 3.2% March gain. Consensus expectations had
been for a slight 0.5% increase in April sales.
Last month's gain in home sales was spread across the country
except in the South where they fell slightly from March (+3.6% y/y). In
the West (-3.0%y/y) sales recovered a piece of March's decline but
remained down sharply from the highs of last summer. Elsewhere, sales
in the Northeast jumped by nearly one-third from the March level but
they were roughly unchanged from one year earlier. Sales in the Midwest
jumped 9.8% from March and have rebounded 11.1% versus 2008.
The home sales figures are analogous to the new home sales
data from the Commerce Department in that they measure existing home
sales when the sales contract is signed, not at the time the sale is
closed. The series dates back to 2001.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602e.jpg" align="right" border="0" height="265" width="353">
The latest monthly gains in home sales have been accompanied
by a rise in home prices. The median sales price of an existing home
increased a slight 0.2% in April (-15.4% y/y). The rise followed firm
increases during the prior two months. The latest gains in
home prices did lower housing affordability slightly but just slightly.
Therefore, combined with lower interest rates, the affordability index
of a home remained up by 29.2% year-to-year and by three quarters from
the 2006 low. The latest level was a record high for the series which
extends back to 1970.
As the Spring selling season began, the Realtors Association
indicated in an earlier report that the number of homes on the market
and available for sale rose 8.8% during April but were down 12.8%
versus one year earlier. At the current sales rate there was a 10.2
months' supply of homes on the market and there was a 10.4 months'
supply during all of last year, up from the 8.9 months supply during
2007 and 6.5 months during 2006. For single family homes, there was a
9.6 months' supply in April versus a full-year figure of 10.0 months
during 2008.
The pending home sales data are available in Haver's PREALTOR
database. The number of homes on the market and prices are in
the REALTOR database.

<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/@W5/@W507/@W507.HTM">Pending
Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>90.3</td>
<td>84.6</td>
<td>&nbsp;&nbsp; 3.2%</td>
<td>86.8</td>
<td>95.8</td>
<td>112.1&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>78.9</td>
<td>59.5</td>
<td>0.8</td>
<td>72.6</td>
<td>85.6</td>
<td>98.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>90.4</td>
<td>82.3</td>
<td>11.1</td>
<td>80.6</td>
<td>89.5</td>
<td>102.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>93.0</td>
<td>93.2</td>
<td>3.6</td>
<td>89.8</td>
<td>107.3</td>
<td>127.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>94.8</td>
<td>93.1</td>
<td>-3.0</td>
<td>99.3</td>
<td>92.1</td>
<td>109.5</td>
</tr>
</tbody>
</table>
Gasoline Prices Rise Further
Reflecting Strength In Crude Oil Prices 
by <a href="/comment/Moeller.html">Tom
Moeller</a> June 2, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602a.jpg" align="left" border="0" height="265" width="353">
News of a rebound in the U.S. economy has generated the
suspicion that more consumers will take to the roads on longer
journeys. So far, the evidence of a recovery in driving is limited, but
the energy market nevertheless has reacted in advance with higher
prices. Regular gasoline prices last week moved
even higher to an average $2.52 per gallon of regular. The gains have
taken prices up by 91 cents, or by more than one-half, from the
December low to the highest level since late-October. Yesterday, the
cash market price for a gallon of regular gas rose further to $1.90 per
gallon versus $1.85 averaged last week. These also were the highest
prices since last October. The figures are reported by the U.S.
Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
So far the evidence of a rebound in driving is limited. The
figures for miles driven have rebounded from this past winter but
that's usual as the weather warms. Year-to-year, economic weakness
continues to lower gasoline demand, last week by
2.1%. That is, however, a less severe shortfall than during last
autumn's 5% y/y decline. The change in demand is measured using the
latest four weeks versus the same four weeks in 2008. Demand for
all petroleum products was down 7.3% y/y in the latest week
led by a 38.5% drop in demand for residual fuel oil and a 13.4% drop in
distillate demand. These numbers also are available in Haver's OILWKLY
database.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602b.jpg" align="right" border="0" height="265" width="353">
Higher crude oil prices have accompanied
the rise in gasoline costs. Crude prices averaged $64.32 last week for
a barrel of West Texas Intermediate, up from the December low of $32.37
per barrel. Yesterday, crude oil prices rose even further to $68.58.
Prices reached a high of $145.66 last July. The latest price increases
occurred despite a 3.1% year-to-year rise in crude oil production
during the latest four weeks. In addition, they have occurred despite a
12.3% y/y rise in inventories of crude oil &amp; petroleum
products. The figures on crude oil production and inventories are
available in Haver's OILWKLY database.
Finally, the gains in the price of natural gas paused last
week and it fell back to $3.60 per mmbtu (-69.2% y/y). The latest price
was nearly the lowest since 2002 and is down by two-thirds from the
high reached in early-July of $13.19/mmbtu.
U.S. Treasury Secretary Timothy F. Geithner's speech titled The
United States and China, Cooperating for Recovery and Growth is
available <a href="http://www.ustreas.gov/press/releases/tg152.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"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">06/01/09</th>
<th scope="col">05/25/09</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, Regular)</td>
<td>2.52</td>
<td>2.44</td>
<td>-36.5%</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>64.32</td>
<td>60.48</td>
<td>-49.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
U.S. Chain Store Sales Backpedal 
by <a href="/comment/Moeller.html">Tom
Moeller</a> June 2, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602c.jpg" align="left" border="0" height="265" width="353">
Consumers lost their mood for spending at the end of last
month. According to the International Council of Shopping
Centers-Goldman Sachs Index, store sales last week gave back with a
0.6% decline virtually all of the prior week's increase. That left
sales for the entire month of May down 0.2% from April after that
month's 1.4% rise from the March average.
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. These weekly figures are
available in Haver's SURVEYW database.
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.


Prospects for spending also were tepid last week as indicated
by the leading indicator of sales. It fell a modest 0.3% in the latest
week. The May average stands just below April.
<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">05/30/09</th>
<th scope="col">05/23/09</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>487.4</td>
<td>490.5</td>
<td>0.6%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
U-Rates On The Rise 
by <a href="/comment/Brusca.html">Robert
Brusca</a> June 2, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090602f.jpg" align="left" border="0" height="265" width="353">
Unemployment rates are on the rise around the world. In EMU
the new rate jumped up to 9.2%; the highest rate for the Area in 9-1/2
years (Sept 1999). There have been 3.1million jobs losses since the
recession began. The US has seen a sharp rise in its rate of
unemployment over the past year, a gain of 3.9%. This surpasses the
1.9% point rise in EMU and the 1% point rise in Japan. However, the
rise in Spain as been of a whopping 8.1 percentage points, bringing in
its overall rate to 18.1%. And that spells e-Zone trouble. 
 

Since the start of the US recession in December of 2007 the
German rate of unemployment has dropped &#8211; dropped - by 0.2% points. The
French rate has risen by 0.2% points. Spain&#8217;s U-rate is up by 9.2%
points. The US unemployment rate is higher by 4% points. In Japan the
U-rate is up by 1.3% points. 
 

Spain&#8217;s rate has jumped as the property market has collapsed.
The rise there appears to have a very large structural element. In the
US the rise seems to be mostly cyclical but it is a substantial rise: a
gain of four percentage points compared to a level of 4.9% in December
of 2007. 
 

Europe seems to have forestalled much of the rise in the rate
of unemployment &#8211; Spain excepted, of course. That leads to the
conclusion that despite a substantial social safety net in Europe, the
rise in unemployment is still in progress and will hit Europe later.
Moreover, Europe has different sorts of stresses as the social safety
net is uneven and spreads stress unevenly, across the Area. EMU is only
a common currency area with some economic harmonization rules; fiscal
policy is left to local custom and practice with two overall metrics in
place to constrain aggregate usage. That lack of commonality is now a
problem for the Area. 
 

For the moment the e-Area&#8217;s MFG PMI indices are rising on only
a slight lag with the index in the US. This is with a relatively small
hike in the rate of unemployment in Europe (much of that in Spain) and
a substantial jump in the US. If the unemployment problem in Europe
grows worse, the European recovery that now seems to be on the heels of
the US could suffer substantial erosion. There is also a possibility of
political tensions in Europe as the recessions hit the various EMU
nations unevenly. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr> <th colspan="7" scope="col"> Unemployment
rate and changes</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3"> Level</td>
<td colspan="3"> Simple Changes</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">EU-Urate</td>
<td>8.6</td>
<td>8.4</td>
<td>8.1</td>
<td>0.7</td>
<td>1.3</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">EMU-Urate</td>
<td>9.2</td>
<td>8.9</td>
<td>8.7</td>
<td>0.8</td>
<td>1.4</td>
<td>1.9</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3"> m/m%</td>
<td colspan="3"> % changes (ar)</td>
</tr>
<tr>
<td class="firstcol">EU-U 000s</td>
<td>2.7%</td>
<td>3.2%</td>
<td>3.5%</td>
<td>9.7%</td>
<td>19.0%</td>
<td>28.8%</td>
</tr>
<tr>
<td class="firstcol">EMU-U 000s</td>
<td>2.8%</td>
<td>3.1%</td>
<td>3.0%</td>
<td>9.1%</td>
<td>17.7%</td>
<td>27.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">U-Rates</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Germany</td>
<td>7.7</td>
<td>7.6</td>
<td>7.4</td>
<td>0.4</td>
<td>0.6</td>
<td>0.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; France</td>
<td>8.9</td>
<td>8.8</td>
<td>8.6</td>
<td>0.4</td>
<td>0.9</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Spain</td>
<td>18.1</td>
<td>17.3</td>
<td>16.5</td>
<td>2.5</td>
<td>4.9</td>
<td>8.1&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; USA</td>
<td>8.9</td>
<td>8.5</td>
<td>8.1</td>
<td>1.3</td>
<td>2.3</td>
<td>3.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Japan</td>
<td>5</td>
<td>4.8</td>
<td>4.4</td>
<td>0.9</td>
<td>1.2</td>
<td>1</td>
</tr>
</tbody>
</table>
</body></html>

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

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Andrew Cates

**The global business cycle** 
The recent sharp decline in the Future Output Balance in the global composite PMI survey reflects a sudden deterioration in global business expectations. The sweeping tariffs, introduced in April 2025, have generated heightened uncertainty around trade policy and sparked fears of retaliatory actions from key trading partners. As a result, businesses worldwide are scaling back their expectations for future output, wary of rising costs, disrupted demand flows, and a broader shift toward protectionism that could undermine global economic momentum.

250507Z1.jpg

Note: The extreme declines in the Future Output Balance that were recorded in the early months of 2020 (at the height of the COVID pandemic) have been removed from this chart.

**Global supply chain pressures**
Still, despite the marked deterioration in global business expectations, this second chart below provides a reassuring counterpoint: as of now, there is little evidence that global supply chain pressures have materially intensified. Both the New York Fed’s Global Supply Chain Pressure Index and the Baltic Exchange Dry Index remain relatively subdued, especially compared to the pandemic-era spikes of 2020–2022. While there has been heightened concern following the April 2025 US tariff announcements, these trade policy shifts have yet to translate into measurable physical disruption in logistics or freight rates. The stability of these indices suggests that although sentiment has taken a hit, global shipping networks and supply flows are, for now, absorbing the shock. However, this calm may prove fragile if the policy environment hardens further or retaliatory trade actions begin to compound the strain.

250507Z2.jpg

**Expectations for central banks’ policy rates** 
Adding to the picture of mounting economic caution, the latest Blue Chip Financial Forecasts survey reveals that expectations for policy easing over the next 12 months have become even more pronounced than in previous months. While earlier surveys had already pointed to a further extension of the global rate-cutting cycle, the latest results suggest forecasters now anticipate a deeper and more aggressive round of monetary easing—most notably from the US Federal Reserve, which is now expected to deliver nearly a full percentage point in rate cuts over the next 12 months. The sharp deterioration in business sentiment is reshaping the macro narrative: central banks are no longer simply guiding inflation lower, but are instead preparing to confront the risk of a deeper, demand-driven slowdown.

250507Z3.jpg

**Energy prices and inflation** 
Adding further context to the growing expectations for policy easing, oil prices have dropped sharply in recent weeks—driven by mounting concerns over global growth, as reflected in weakening business sentiment and softer demand indicators. The chart below provides a longer-run perspective on why this matters: energy prices have historically played a central role in shaping the global inflation trajectory. The strong positive correlation (r = 0.83) between median world energy price inflation and median core consumer price inflation underscores the powerful pass-through effects energy costs can have on broader price dynamics. While core inflation tends to be stickier, this historical relationship makes clear that sustained declines in energy prices often foreshadow broader disinflationary trends.

250507Z4.jpg

**Intangibles versus tangibles** 
Shifting focus from short-term cyclical risks to longer-term structural dynamics, the next chart below underscores a fundamental transformation in the composition of US investment: the economy has increasingly been built on intangibles. Over the past several decades, investment in intangible assets—such as software, intellectual property, R&D, and brand equity—has steadily climbed and, since the mid-2010s, has overtaken investment in both structures and equipment as a share of GDP. This shift reflects the rise of a knowledge-based, innovation-driven economy, but it also introduces new forms of vulnerability. Unlike physical capital, intangible assets rely heavily on trust, reputation, legal protections, and global openness. In this context, escalating trade frictions and a more confrontational US economic stance—as signalled by the recent tariff wave—risk eroding the goodwill and institutional credibility that underpin much of the value created by intangibles. If geopolitical uncertainty undermines the perceived reliability of US intellectual property protections or weakens global collaboration, it could pose a deeper structural challenge to future growth than any immediate cyclical downturn.

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**Investment in Artificial Intelligence**
The centrality of intangibles to the US growth model is nowhere more evident than in the explosion of private investment in artificial intelligence. As this chart illustrates, global AI investment has surged over the past decade—reaching new highs in 2024—and the United States has consistently accounted for the lion’s share of that spending. This reflects not only America’s previous leadership in frontier technologies but also its dependence on intangible capital, from algorithms and data infrastructure to human expertise and institutional trust. However, this dominance also underscores the strategic stakes of current policy choices. In an environment of rising trade tensions and potential fragmentation, the foundations of US leadership in AI—cross-border collaboration, data openness, and global market access—could be at risk.

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Financial market sentiment has rebounded in recent weeks, buoyed by signs of de-escalation in the US-led trade war and growing confidence that central banks—particularly the Federal Reserve—will step in with more rate cuts to cushion any fallout. Yet beneath the surface, a more sobering picture of the global economy persists. For example, latest PMI surveys reveal that global business expectations have slumped to their lowest levels since the pandemic, reflecting widespread unease about the growth outlook (chart 1). While supply chain pressures have so far remained contained, suggesting no repeat of the logistical chaos seen during the pandemic (chart 2), the latest Blue Chip Financial Forecasts survey reveals that forecasters are now pencilling in deeper and more widespread monetary easing than previously anticipated—an acknowledgment that demand is faltering (chart 3). Falling oil prices further reinforce this view: they are both a symptom of weakening global demand and a potential source of disinflation, reducing the urgency for central banks to maintain tight policy (chart 4). At the structural level, the US economy's increasing reliance on intangible assets—ranging from intellectual property to reputation—has made it more vulnerable to geopolitical frictions and the erosion of global trust (chart 5). This risk is compounded by America's dominant role in AI investment, a sector symbolic of both its economic strengths and its exposure to international perceptions (chart 6). The longer-term challenge, then, is not just navigating the current downturn, but ensuring that the institutional goodwill and cross-border openness that support the modern US economy are not sacrificed in a more fragmented and uncertain global order.

Charts of the Week: Relief Rally Meets Recession Risk

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At today’s meeting of the Federal Open Market Committee, the target range for the Fed funds rate was left unchanged at 4.25% to 4.50%. This followed reductions at three consecutive meetings in the fall of 2024. Rates remain below the high of 5.25% to 5.50% in place in mid-September. Today’s target range matched expectations in the Action Economics Forecast Survey.

The statement following the meeting indicated that, “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”

“The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”

The Fed continued, “The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage backed securities.”

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- FOMC holds funds rate target at late-December level.
- Risk assessments include higher unemployment & inflation.

FOMC Targeted Funds Rate Range Is Unchanged; Increased Risks Acknowledged

Kathleen Stephansen, CBE

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Consumer credit outstanding rose $10.2 billion (1.9% y/y) during March after declining by $0.6 billion (+1.7% y/y) during February, revised from a decline of $0.8 billion (+1.7% y/y. A $10.0 billion rise had been expected in the Action Economics Forecast Survey. As a percentage of disposable personal income, consumer credit was 22.4% in March, compared to 22.9% one year earlier.

Nonrevolving credit outstanding rose $8.3 billion (1.5% y/y) in March after easing $0.3 billion (1.3% y/y) in February. Nonrevolving credit held by depository institutions declined 7.8% y/y in March after declining 9.0% y/y in February. Finance company debt holdings rose 0.8% y/y, while credit union holdings eased 1.9% y/y in March. Nonrevolving debt held by the federal government rose 3.4% y/y.

In March, revolving credit outstanding, which includes credit cards, rose $1.9 billion (2.9% y/y) following a decline of $0.3 billion (2.9% y/y) in February. Revolving credit outstanding held by depository institutions fell 1.5% y/y. Revolving credit held by finance companies dropped 12.2% y/y, while that held by credit unions rose 3.7% y/y.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

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- Consumer credit rises close to expectations.
- Nonrevolving and revolving credit rise.


U.S. Consumer Credit Rebounded in March

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Mortgage applications increased 11.0% (26.0% y/y) in the week ended May 2, after declining 4.2% in the week ended April 25, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications to purchase a home rose 11.1% (12.9% y/y) in the week ended May 2 after declining 4.4% in the previous week. Loan applications to refinance a home loan also increased 11.1% (51.0% y/y) in the latest week after falling 3.7% in the prior week.

The effective interest rate on a 30-year fixed rate loan of 7.03% in the week ended May 2 compared to 7.08% in the prior week. The effective rate on a 15-year fixed rate loan of 6.34% in the week ended May 2 followed 6.36% in the prior week. The rate on a 30-year jumbo loan declined to 6.99% in the latest week from 7.06% in the prior week, while the rate on a 5-year ARM eased	to 6.08% in the week ended May 2 from 6.12% in the prior week.

The share of applications to refinance an existing mortgage slipped to 37.1% in the week ended May 2 from 37.3% in the prior week. The share of loans with an adjustable rate rose to 8.3% in the latest week from 7.4% one week earlier.

The average size of a mortgage loan rose 4.2% (3.8% y/y) to $400,200 in the week ended May 2, after slipping 0.7% to $384,100 in the prior week. The average size of a loan to purchase a home increased 1.0% (0.2% y/y) to $444,300 in the latest week from $440,100 in the week prior. The average size of a loan to refinance an outstanding mortgage increased 12.3% (27.6% y/y) last week to $325,400 from $289,800 one week earlier.

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.

- Purchase & refinancing loan applications jump.
- Effective interest rates remain range-bound.
- Average loan size increases.

Mortgage Applications Surge as Interest Rates Ease Last Week

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The U.S. trade deficit in goods and services (BOP basis) in March grew to $140.5 billion after narrowing slightly to $123.2 billion in February, revised from $122.7 billion, after widening to $130.7 billion in January according to the U.S. Census Bureau. A $136.7 billion deficit was expected by the Action Economics Forecast Survey. Exports rose 0.2% (6.7% y/y) in March after increasing 2.8% in February. This was accompanied by a 4.4% rise (27.1% y/y) rise in imports which came after m/m stability in February. In Q1’25, the deficit grew to an average $131.4 billion, after rising to an average $83.3 billion in Q4’24.

The trade deficit in goods (BOP basis) widened to a record $163.2 billion in March from $147.9	 billion in February, revised from $147.0 billion. Goods exports (customs value) rose 1.4% (7.0% y/y) in March, after increasing 3.6% in February. The latest increase reflected an 8.2% (8.4% y/y) surge in auto exports which came after a 12.7% strengthening. A 3.5% (4.0% y/y) gain occurred in industrial supplies & materials exports which followed a 5.1% rise. Foods, feeds & beverage exports rose 6.6% (1.4% y/y) after declining in four of the prior five month. Working lower, capital goods exports fell 2.5% (+13.9% y/y) in March after a 4.	8% increase and nonauto consumer goods exports were off 1.1% (+3.4% y/y) in March after a 2.4% gain.

Imports of goods increased 5.5% (31.4% y/y) in March after a 0.2% February easing. Imports of nonauto consumer goods imports surged 27.9% (56.0% y/y) following a 3.1% February gain. Auto imports rose 6.6% (8.7% y/y) after a 1.2% rise. Capital goods imports rose 4.2% (22.5% y/y) following a 1.1% rise. Foods, feeds & beverage imports eased 0.4% (+11.1% y/y) following a 2.0% weakening. Industrial supplies & materials imports declined 12.4% (+39.5% y/y) after weakening 4.6% in February. Petroleum imports by end-use fell 4.1% (-10.2% y/y) after a 2.9% decline. Nonpetroleum imports increased 6.0% (34.8% y/y) after holding steady in February.

The inflation-adjusted goods trade deficit (customs value) deepened to $150.9 billion in March from $136.9 billion in February. Real exports rose 1.6% (5.3% y/y) after a 3.0% February increase, while real imports rose 5.8% (29.8% y/y) in March following a 0.5% February slip.

The services trade surplus narrowed to $23.0 billion in March after decreasing to $23.8 billion in February. It reached a peak of $25.7 billion in November of last year. Service exports fell 0.9% (+5.7% y/y) after a 0.8% decline in February. Construction services exports rose 1.0% (37.7% y/y) after increasing 2.6% in February. Travel services exports fell 7.1% (-3.7% y/y) and financial exports increased 0.9% (7.3% y/y). Transport exports rose 3.1% (2.4% y/y). Service imports eased 0.1% (+10.8% y/y) in March following a 0.8% gain. Maintenance & repair services declined 1.5% (+32.1% y/y) while imported transport services increased 1.2% (1.7% y/y). Imported travel services fell 2.2% (5.3% y/y) while charges for use of intellectual property rose 1.0% (13.6 y/y).

The U.S. goods trade deficit with China narrowed to a seasonally adjusted $24.8 billion in March from $26.6 billion in February. Exports to China declined 8.2% (-10.5% y/y) while imports weakened 7.2% (-2.7% y/y). The deficit with the European Union deepened to a record $48.3 billion in March from $30.9 billion in February. Exports rose 10.9% (14.5% y/y) while imports soared 34.0% (65.4% y/y). The deficit with Japan deepened to $5.8 billion from $5.2 billion in February. Exports rose 1.8% (8.8% y/y) and imports rose 6.4% (9.9% y/y).

The international trade data, including relevant data on oil prices, can be found in Haver’s **USECON** database. Detailed figures on international trade are available in the **USINT** and **USTRADE** databases. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Goods deficit grows as imports surge ahead of tariff imposition.
- Exports edge higher, led by autos.
- Petroleum product imports fall as crude oil prices decline.

Economy in Brief: June 2009

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