Tom Moeller

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<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080229a.jpg" width="353">
Adjusted for prices, disposable personal income squeaked out a 0.1% gain last month. The weak rise followed a like increase in December but two months of decline preceding that. It left the three-month growth rate at a negative 0.7% (AR).
Nominal personal income slightly beat Consensus expectations last month with a 0.3% rise and three-month growth in income held steady at a 4.1% annual rate. Wage &amp; salary income rose 0.5% (4.1% y/y) after firm gains during the two prior months. Factory sector wages, however, were flat (+0.6% y/y) while wage &amp; salary income in the private service-providing industries rose 0.5% (4.7% y/y). Wages in the government sector rose a strong 0.9% (4.7% y/y).
Lower interest rates caused the forth straight monthly decline in interest income (+5.2% y/y). That y/y increase was less than one third the rate of gain at the end of 2005. Dividend income rose another firm 0.5% (11.9% y/y), a double digit rate of gain that is down somewhat from its peak 16.3% in 2006.
Weakness in income growth caught up with personal spending. During the last two months, real personal consumption expenditures have been flat. As a result the three-month growth rate held at 1.1%, its lowest since last May. Nominal spending grew 0.4% which was double the expected increase.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080229b.jpg" width="353">
Real spending on discretionary items weakened substantially led by a 3.3% (-5.3% y/y) drop in motor vehicle &amp; parts purchases. Real spending on household furniture &amp; appliances also fell 0.4% (+4.4% y/y) for the second consecutive month of decline. Spending on apparel did post a 0.3% (0.1% y/y) in January but that followed four months of either having been unchanged or down, including a 1.9% downdraft during December.
Spending in the less discretionary area continued to show growth. Medical care spending rose 0.2% (2.7% y/y) and spending on transportation services rose 0.2% (3.1% y/y). Spending on food, however, fell 0.2% (+0.7% y/y) during January. These and other detailed spending figures are available in Haver&#39;s USNA database.
The PCE chain price index rose a firm 0.4% lifted by higher energy prices. That raised the y/y gain to 3.7%, the quickest since mid-2005. The rise in the core PCE price index was ahead of expectations. A 0.3% gain beat expectations for a 0.2% rise but, more significant, was an acceleration in the three month growth rate to 3.0% that was its fastest since late 2001 and up by half from last year.
Overview: Monetary Policy and the Economic Outlook from the Federal Reserve&#39;s Monetary Report to Congress can be found <a href="http://www.federalreserve.gov/boarddocs/hh/2008/february/0208mpr_part1.htm">here</a>.</div>

<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/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.3%</td>
<td>0.5%</td>
<td>4.9%</td>
<td>6.1%</td>
<td>6.6%</td>
<td>5.9%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.4%</td>
<td>0.3%</td>
<td>5.5%</td>
<td>5.5%</td>
<td>5.9%</td>
<td>6.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Saving Rate</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>0.6% (Jan. 07)</td>
<td>0.4%</td>
<td>0.4%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.4%</td>
<td>0.3%</td>
<td>3.7%</td>
<td>2.6%</td>
<td>2.8%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.3%</td>
<td>0.2%</td>
<td>2.2%</td>
<td>2.1%</td>
<td>2.2%</td>
<td>2.2%</td>
</tr>
</tbody>
</table>
</body>
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Adjusted for prices, disposable personal income squeaked out a 0.1% gain last month. The weak rise followed a like increase in December but two months of decline preceding that. It left the three-month growth rate at a negative 0.7% [...]

U.S. Real Disposable Income Up 0.1%, Spending Flat, Core Price Gains Faster

Robert Brusca

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<div align="left"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080228h.jpg" align="left" border="0" height="265" width="353">

Japan&#8217;s dip in IP in January is hard to evaluate right now. IP
trends are moving lower but the Yr/Yr rate is still steady. The shorter
term sequential growth rates, in the table below, show that the recent
weakness is an artifact of the 3-month growth rates alone. Six-month
growth rates are higher that 12-month rates for Total MFG and total
industry. But textiles output, investment goods and minting show
erosion between the 6 and 12-month horizons. All sectors and industries
see declines in January and all are lower over three months except
electricity and gas producers.
</div>
<div align="left"> </div>


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Japan Industrial
Production Trends</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">
m/m %
</td>
<td colspan="3">
Saar %
</td>
<td>
Yr/Yr
</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Jan-08
</td>
<td>Dec-07
</td>
<td>Nov-07
</td>
<td>3-mo
</td>
<td>6-mo
</td>
<td>12-mo
</td>
<td>Yr-Ago
</td>
</tr>
<tr>
<td class="firstcol">
Mining
&amp; Mfg
</td>
<td>-2.0%
</td>
<td>
1.4%
</td>
<td>-1.6%
</td>
<td>-8.3%
</td>
<td>
3.2%
</td>
<td>
2.5%
</td>
<td>
3.2%
</td>
</tr>
<tr>
<td class="firstcol">
Total
Industry
</td>
<td> -2.3%
</td>
<td>
1.7%
</td>
<td>-1.3%
</td>
<td>-7.6%
</td>
<td>
3.9%
</td>
<td>
2.6%
</td>
<td>
2.6%
</td>
</tr>
<tr>
<td class="firstcol">
Mfg
</td>
<td>&nbsp;-1.9%
</td>
<td>
1.4%
</td>
<td>-1.6%
</td>
<td>-8.3%
</td>
<td>3.4%
</td>
<td>
2.5%
</td>
<td>
3.2%
</td>
</tr>
<tr>
<td class="firstcol">
Textiles
</td>
<td> -2.3%
</td>
<td>
2.5%
</td>
<td> -2.2%
</td>
<td> -7.7%
</td>
<td> -7.4%
</td>
<td> -5.0%
</td>
<td> -4.2%
</td>
</tr>
<tr>
<td class="firstcol">
Transport
</td>
<td> -3.2%
</td>
<td>
2.4%
</td>
<td> -2.9%
</td>
<td> -14.2%
</td>
<td>
31.5%
</td>
<td>
11.6%
</td>
<td>
4.6%
</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="8"> Product
Group
</td>
</tr>
<tr>
<td class="firstcol">
Consumer
Goods
</td>
<td> -1.5%
</td>
<td>
2.1%
</td>
<td> -2.1%
</td>
<td> -6.1%
</td>
<td>
13.2%
</td>
<td>
4.2%
</td>
<td> -0.8%
</td>
</tr>
<tr>
<td class="firstcol">
Intermediate
Goods
</td>
<td>
-2.6%
</td>
<td>
1.3%
</td>
<td>
-1.1%
</td>
<td> -9.4%
</td>
<td>
3.6%
</td>
<td>
4.3%
</td>
<td>
3.8%
</td>
</tr>
<tr>
<td class="firstcol">
Investment
Goods
</td>
<td> -0.4%
</td>
<td> -0.6%
</td>
<td> -1.9%
</td>
<td> -11.1%
</td>
<td> -7.6%
</td>
<td> -3.4%
</td>
<td>
5.8%
</td>
</tr>
<tr>
<td class="firstcol">
Mining
</td>
<td> -2.9%
</td>
<td>
1.1%
</td>
<td> -5.9%
</td>
<td> -27.2%
</td>
<td> -15.9%
</td>
<td> -5.1%
</td>
<td>
3.5%
</td>
</tr>
<tr>
<td class="firstcol">
Electric
&amp; Gas
</td>
<td> -1.4%
</td>
<td>
0.2%
</td>
<td>
2.0%
</td>
<td>
3.2%
</td>
<td>
15.2%
</td>
<td>
5.9%
</td>
<td> -2.8%
</td>
</tr>
</tbody>
</table>
</body></html>

Japan’s dip in IP in January is hard to evaluate right now. IP trends are moving lower but the Yr/Yr rate is still steady. The shorter term sequential growth rates, in the table below, show that the recent weakness is an artifact of [...]

Japan Industrial Production is Slipping

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<div align="left"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080228g.jpg" align="left" border="0" height="265" width="353">
The UK economy has dropped and is dropping sharply in early
2008.The index is the
weakest it has been in at least 10 years. Over the past 12 months
households still rate their own financial situation in the top 80 percentile of its range the past 10
years. But they rate the time to make major purchases as the worst in
at least 10 years.The
general economic situation is called the worst in 10 years and the CPI
situation rates as the worst in 10 years.The
financial situation over the next 12 months is also rated as the worst
in the past 10 years. Income expectations are the lowest in 10 years
for lower as well as upper income earners.
Like in France, the UK consumers are very disturbed by recent
events. Both UK and French consumers rate prices as the worst in some
time. Living standards have been eroded in both countries. Despite
Europe&#8217;s continuing to grow there are obvious risks to the economy with
consumers feeling so glum. We see it in recent reports in the US, in
the UK, in France as well as in Japan.Consumer
spending has lagged in Europe, in the US and in Japan and we see why,
as consumers are forced to rate their own situation and that process
tells us how bad they feel. Weak growth, financial turmoil, rising
energy and food prices are taking a toll on consumers.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> GFK Consumer Survey</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>% of 2Yr</td>
<td>% of 10Yr</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Range</td>
<td>Range</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>-17</td>
<td>-13</td>
<td>-14</td>
<td>-10</td>
<td style="color: red;">0.0%</td>
<td style="color: red;">0.0%</td>
</tr>
<tr class="odd">
<td colspan="7">Current</td>
</tr>
<tr class="odd">
<td class="firstcol">Household Fin Sit</td>
<td>24</td>
<td>24</td>
<td>25</td>
<td>25</td>
<td>75.0%</td>
<td>83.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Major Purchases</td>
<td>-19</td>
<td>-13</td>
<td>-14</td>
<td>-7</td>
<td style="color: red;">0.0%</td>
<td style="color: red;">0.0%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Last 12 Months</td>
</tr>
<tr class="odd">
<td class="firstcol">Household Fin Sit</td>
<td>-1</td>
<td>2</td>
<td>-1</td>
<td>0</td>
<td>37.5%</td>
<td>44.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">General Econ Sit</td>
<td>-40</td>
<td>-36</td>
<td>-36</td>
<td>-32</td>
<td style="color: red;">0.0%</td>
<td style="color: red;">0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">CPI</td>
<td>82</td>
<td>78</td>
<td>74</td>
<td>73</td>
<td style="color: red;">100.0%</td>
<td style="color: red;">100.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings</td>
<td>28</td>
<td>30</td>
<td>33</td>
<td>35</td>
<td>22.2%</td>
<td>75.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Next 12-Months</td>
</tr>
<tr class="odd">
<td class="firstcol">Household Fin Sit</td>
<td>6</td>
<td>7</td>
<td>8</td>
<td>9</td>
<td style="color: red;">0.0%</td>
<td style="color: red;">0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">General Econ Sit</td>
<td>-29</td>
<td>-26</td>
<td>-26</td>
<td>-21</td>
<td style="color: red;">0.0%</td>
<td>16.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment</td>
<td>32</td>
<td>29</td>
<td>30</td>
<td>31</td>
<td>50.0%</td>
<td>70.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Major Purchases</td>
<td>-22</td>
<td>-19</td>
<td>-19</td>
<td>-20</td>
<td style="color: red;">12.5%</td>
<td style="color: red;">6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings</td>
<td>16</td>
<td>18</td>
<td>19</td>
<td>20</td>
<td>36.4%</td>
<td>74.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td colspan="7" class="firstcol">By Income</td>
</tr>
<tr class="odd">
<td class="firstcol">Lower</td>
<td>-24</td>
<td>-17</td>
<td>-19</td>
<td>-16</td>
<td style="color: red;">0.0%</td>
<td style="color: red;">0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Upper</td>
<td>-11</td>
<td>-12</td>
<td>-7</td>
<td>-6</td>
<td style="color: red;">5.6%</td>
<td style="color: red;">5.3%</td>
</tr>
</tbody>
</table>
</div></body></html>

The UK economy has dropped and is dropping sharply in early 2008.The index is the weakest it has been in at least 10 years. Over the past 12 months households still rate their own financial situation in the top 80 percentile of its [...]

UK Consumer Confidence Drops

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080228f.jpg" align="left" height="265" width="353">
French household confidence is at an all time life-of-series
low. Living standards for the past 12 months are rated as the worst of
this 18-year period.Expected
conditions over the next 12 months are rated in the bottom 3 percent of
their range. Unemployment still is not widely expected and the
expectations reading stands in the 43rd
percentile of its range. Price developments are in the top of their 18
range when assessed over the past 12 months but only in their 40th
percentile looking forward. The environment for spending is weak, in
the 27th percentile of its historic range. And
the financial situation is sub par. The current financial situation is
rated at the 47th percentile of its range, a
moderate step below the midpoint (50). But the past 12 months are rated
in the bottom 9 percent of its range and the next 12 months are rated
in the bottom 7 percent of its range. Clearly consumers are having a
great difficulty and are unsure of the future and generally more
pessimistic.
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col"> INSEE
Household Monthly Survey</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">Since Jan 1990</td>
<td colspan="4">Since Jan 1990</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Feb 
08</td>
<td>Jan 
08</td>
<td>Dec 
07</td>
<td>Nov 
07</td>
<td>%tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
</tr>
<tr>
<td class="firstcol">Household Confidence</td>
<td>-35</td>
<td>-34</td>
<td>-30</td>
<td>-29</td>
<td>0.0</td>
<td>215</td>
<td>10</td>
<td>-35</td>
<td>45</td>
<td>-17</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="11">Living
Standards</td>
</tr>
<tr>
<td class="firstcol">past 12 Mos</td>
<td>-68</td>
<td>-65</td>
<td>-62</td>
<td>-60</td>
<td>0.0</td>
<td>215</td>
<td>18</td>
<td>-68</td>
<td>86</td>
<td>-37</td>
</tr>
<tr>
<td class="firstcol">Next 12-Mos</td>
<td>-42</td>
<td>-44</td>
<td>-32</td>
<td>-36</td>
<td>3.4</td>
<td>212</td>
<td>15</td>
<td>-44</td>
<td>59</td>
<td>-18</td>
</tr>
<tr>
<td class="firstcol">Unemployment: Next 12</td>
<td>11</td>
<td>9</td>
<td>6</td>
<td>13</td>
<td>43.6</td>
<td>160</td>
<td>73</td>
<td>-37</td>
<td>110</td>
<td>29</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="11">Price
Developments</td>
</tr>
<tr>
<td class="firstcol">Past 12Mo</td>
<td>41</td>
<td>37</td>
<td>40</td>
<td>31</td>
<td>100.0</td>
<td>1</td>
<td>41</td>
<td>-57</td>
<td>98</td>
<td>-19</td>
</tr>
<tr>
<td class="firstcol">Next 12-Mos</td>
<td>-23</td>
<td>-11</td>
<td>-23</td>
<td>-8</td>
<td>40.7</td>
<td>34</td>
<td>31</td>
<td>-60</td>
<td>91</td>
<td>-34</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="11">Savings</td>
</tr>
<tr>
<td class="firstcol">Favorable to save</td>
<td>24</td>
<td>28</td>
<td>29</td>
<td>26</td>
<td>55.6</td>
<td>100</td>
<td>40</td>
<td>4</td>
<td>36</td>
<td>23</td>
</tr>
<tr>
<td class="firstcol">Ability to save Next 12</td>
<td>-12</td>
<td>-12</td>
<td>-12</td>
<td>-13</td>
<td>37.9</td>
<td>145</td>
<td>6</td>
<td>-23</td>
<td>29</td>
<td>-8</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="11">Spending</td>
</tr>
<tr>
<td class="firstcol">Favorable for major purchase</td>
<td>-26</td>
<td>-24</td>
<td>-23</td>
<td>-19</td>
<td>27.6</td>
<td>187</td>
<td>16</td>
<td>-42</td>
<td>58</td>
<td>-12</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="11">Financial
Situation</td>
</tr>
<tr>
<td class="firstcol">Current</td>
<td>13</td>
<td>14</td>
<td>14</td>
<td>15</td>
<td>47.6</td>
<td>83</td>
<td>24</td>
<td>3</td>
<td>21</td>
<td>12</td>
</tr>
<tr>
<td class="firstcol">Past 12 MOs</td>
<td>-25</td>
<td>-25</td>
<td>-23</td>
<td>-20</td>
<td>9.1</td>
<td>203</td>
<td>-5</td>
<td>-27</td>
<td>22</td>
<td>-16</td>
</tr>
<tr>
<td class="firstcol">Next 12-Mos</td>
<td>-14</td>
<td>-14</td>
<td>-10</td>
<td>-9</td>
<td>7.4</td>
<td>213</td>
<td>11</td>
<td>-16</td>
<td>27</td>
<td>0</td>
</tr>
<tr class="grey1">
<td class="firstcol" colspan="11">Number of
observations in the
period: 218</td>
</tr>
</tbody>
</table>

</body></html>

French household confidence is at an all time life-of-series low. Living standards for the past 12 months are rated as the worst of this 18-year period.Expected conditions over the next 12 months are rated in the bottom 3 percent of [...]

French Morale Slips Then Falls Flat. Worst In Over 18 Years

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<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080228e.jpg" width="353">
The Conference Board reported that its index of help-wanted advertising dipped last month to a reading of 21, the record low plumbed in November.
During the last ten years there has been a 57% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ads fell to 41% from 59% in December. Both figures were improved from the low of 12% in August.</div>
Most regions of the country showed the same, depressed readings of help wanted as December except the East South Central region where the index declined.
The Conference Board surveys help-wanted print advertising volume in 51 major newspapers across the country every month. The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.In 2006, the Conference Board introduced its Help Wanted Online Data Series and the latest release can be found in this <a href="http://www.conference-board.org/pdf_free/HWOnLinePR_080130.pdf">link</a>.<div align="left"> </div>

<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/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January 2007</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>21</td>
<td>22</td>
<td>31</td>
<td>26</td>
<td>33</td>
<td>39</td>
</tr>
</tbody>
</table>
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The Conference Board reported that its index of help-wanted advertising dipped last month to a reading of 21, the record low plumbed in November. During the last ten years there has been a 57% correlation between the level of help- [...]

U.S. Help-Wanted Advertising Back to Record Low in January

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080228c.jpg" width="353">
Initial claims for unemployment insurance rose a sharp 1,900 to 373,000 last week. During February claims have averaged 361,000, up 10.4% from the January average. The latest weekly level remained near the highest since October of 2005.
The four-week moving average of initial claims, a measure which smoothes out most of the series&#39; w/w volatility, dipped slightly to 360,500 (+7.6% y/y).
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last ten years there has been a (negative) 76% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance again rose sharply by 21,000 after a 49,000 increase during the prior week that was revised marginally higher. Insured unemployment stood at its highest level since Summer 2005. The figure provides some indication of workers&#39; ability to find employment.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080228d.jpg" width="353">
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment remained at 2.1% for the fourth consecutive week.

<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">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">02/23/08</th>
<th scope="col">02/16/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;373</td>
<td>354</td>
<td>10.7%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,807</td>
<td>7.0%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
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Initial claims for unemployment insurance rose a sharp 1,900 to 373,000 last week. During February claims have averaged 361,000, up 10.4% from the January average. The latest weekly level remained near the highest since October of [...]

U.S. Weekly Initial Claims for Unemployment Insurance Up

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080228a.jpg" align="left" border="0" height="265" width="353">
U.S. real GDP growth during last quarter
was unrevised at a 0.6% annual rate. The Commerce Department figure was
just slightly below the Consensus expectation for an upward revision to
a 0.8% rise. The gain still was down sharply from an average rate of
growth during the prior two quarters of 4.4%.
As expected, improvement in the foreign trade
deficit added more to growth last quarter as imports are now shown to
have declined at a 1.9% rate, rather than rise sharply. Export growth
also was revised slower to 4.8%.
Half of the addition to GDP growth from trade was offset by
more of a subtraction from inventory decumulation.
The remaining half of the revision stemmed from slower
estimated growth in final sales to domestic purchasers.
The decline in residential construction was
deepened slightly to -25.2% (-18.6% y/y) and that pulled 1.3 percentage
points out of GDP growth. Growth in business fixed investment
also was revised slightly slower to a 6.9% rise. Growth in real
personal consumption was held about steady at 1.9%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080228b.jpg" align="right" border="0" height="265" width="353">
Growth in the GDP chain price index was
added to slightly to a 2.7% (AR) gain. The PCE price index rose at a
4.1% rate which was revised up very slightly. Less food &amp;
energy prices rose at the same 2.7% rate as initially estimated.
Monetary Policy Actions and Long-Run Inflation
Expectations is from the Federal Reserve Board and it
can be found <a href="http://www.federalreserve.gov/pubs/feds/2008/200803/200803pap.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/@E7/@E701/@E701.HTM">Chained
2000$, % AR</a></th>
<th scope="col">4Q '07 (Preliminary)</th>
<th scope="col">4Q '07 (Advance)</th>
<th scope="col">3Q '07</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>0.6</td>
<td>0.6</td>
<td>4.9</td>
<td>2.5</td>
<td>2.2</td>
<td>2.9</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>-1.5</td>
<td>-1.3</td>
<td>0.9</td>
<td>-0.2</td>
<td>-0.3</td>
<td>0.1</td>
<td>-0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.1</td>
<td>1.9</td>
<td>4.0</td>
<td>2.7</td>
<td>2.5</td>
<td>2.8</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>0.9</td>
<td>0.4</td>
<td>1.4</td>
<td>0.8</td>
<td>0.7</td>
<td>-0.1</td>
<td>-0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>1.2</td>
<td>1.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.8</td>
<td>2.7</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.7</td>
<td>2.6</td>
<td>1.0</td>
<td>2.6</td>
<td>2.7</td>
<td>3.2</td>
<td>3.2</td>
</tr>
</tbody>
</table>
</body></html>

U.S. real GDP growth during last quarter was unrevised at a 0.6% annual rate. The Commerce Department figure was just slightly below the Consensus expectation for an upward revision to a 0.8% rise. The gain still was down sharply from [...]

US 4Q GDP Held at 0.6% Growth

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

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The number of weekly mortgage loan edged 0.6% higher (73.7% y/y) during the week ended November 7 after falling 1.9% during the prior week and rising 7.1% one week earlier.

The effective interest rate on a 30-year fixed-rate mortgage rose to 6.52% after rough stability at 6.48% during the prior week. These rates stand below their January average of 7.20%. Rates on a 15-year fixed rate loan were 5.86% while interest rates on a 30-year JUMBO loan averaged 6.57%. Rates on a 5-year ARM eased to 5.82%.

Purchase loan applications last week increased 5.8% (29.6% y/y) after falling 0.6% in the prior week and rising 4.5% one week earlier. Applications to refinance an existing loan declined 3.4% (+146.5% y/y) following a 2.8% decline in the prior week and rising 9.3% one week earlier.

Loans to refinance an existing mortgage fell to 55.6% of total applications from 57.0% in the prior week. The percentage of total loans that were ARMs declined to 7.8% from 8.7% one week earlier.

The average loan size declined to $396,500 last week from $414,900. The size of conventional purchase loans declined to $431,400 from $435,100 while the size of refinanced loans declined to $368,700 from $399,700 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.

- Mortgage interest rates rise to three-week high.
- Purchase loans surge but refinancing declines.

U.S. Weekly Mortgage Applications & Interest Rates Edge Higher

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The NFIB Small Business Optimism Index eased 0.6% (+4.8%) to 98.2 in October after falling 2.0% to a 98.8 in September and rising 0.5% to 100.8 in August, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. Four of the ten index components increased last month while five fell and one was unchanged. The NFIB Small Business Uncertainty Index fell 12.0% (-20.0% y/y) last month to 88 after rising 7.5% in September.

The outlook for business conditions was mixed in the latest survey. The net balance of respondents planning to add to inventories declined to a six-month low of -2% from +1% in September. The net percent expecting the economy to improve fell to 20% last month after weakening to 23% in September. A lessened 6% expected higher real sales in six months, compared to 8% in September. A lessened 15% of respondents indicated that now was a good time to increase employment compared to 16% in September. Earnings trends deteriorated sharply.

Offsetting these declines, plans to make capital outlays rose to a ten-month high of 23% of firms after steadying at 21%. The index of expected credit conditions jumped to -3% from -7%. It remained up from a low of -11 in November 2023. A modestly increased 13% of respondents felt that now was a good time to expand. Inventories were assessed as being too low by a lessened 4% of respondents after 7% in September.

On the labor front, 49% of businesses reported few or no qualified workers to fill job openings in October, down slightly from 50% in September. That remained up, however, from a low of 43% in August. These readings remained below a high of 56% in August of 2024.

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The net percent raising their average selling prices fell to 21% last month compared to 24% in September. It had grown to 32% in February. The percentage planning to raise prices eased to 30% in October, down from a 32% high in June. Worker compensation deteriorated as a net 26% of respondents lifted compensation during the last three months versus 31% in the last survey. Compensation gains peaked at 50% of firms in January 2022. A steady net 19% of firms are making plans to raise worker compensation in the next three months, below the November 2024 high of 28%.

The quality of labor was reported by 27% of member firms as the single most important issue facing small businesses. That was increased from 18% in September, and the highest in five years. Moving lower, the cost of labor was ranked by 8% of respondents as the largest problem, compared to 11% in September, while financial & interest rates worries dropped to 2%, the lowest in two years. A lessened 12% cited inflation as the most important problem. Other major concerns were taxes (16%) and poor sales (10%). 

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

- Inventory, economy & employment concerns weigh on optimism.
- Percentage of respondents raising prices moves down; price expectations ease.
- Concerns about quality of labor surge but labor cost worries recede.

U.S. NFIB Small Business Optimism Index Slips in October

251111E.jpg

Macroeconomic expectations in the ZEW survey backtracked slightly in Germany while improving slightly in the United States in November. The economic situation improved slightly in the euro area and Germany while backtracking in the United States. That's the assessments of the current economic situation and expectations for Germany or the EMU that are moving in different directions in the U.S. and in Germany or in the U.S. vs. the European Monetary Union in November.

Inflation expectations backed off across the board easing slightly in the euro area, Germany, and also in the United States. While that happened, expectations for short-term interest rates became less focused on rate cuts in the euro area and slightly less tilted toward the expectation for rate cuts in the U.S. as well. Long-term rate expectations receded somewhat in both Germany and in the U.S. in November by small amounts. Stock market expectations picked up in the euro area, Germany, and the U.S., and in most cases, somewhat significantly.

**The queue standings**
The queue standings are ranked standings of these various metrics, and they tell a clear story of how the ZEW experts see current conditions and policy tradeoffs. The euro area has an economic situation where the queue standing is at its 51st percentile, slightly above its historic median (on data since the early 1990s). However, Germany and the U.S. have very weak percentile standings with Germany in its 14.5 percentile and the U.S. in its 35th percentile. Macroeconomic expectations, however, find Germany at a solid 63.6 percentile while the U.S. is at a 23.3 percentile. ZEW experts are far more upbeat on prospects for German recovery right now than in the United States – and that seems odd to me with a lot of fiscal stimulus in train in the U.S. and tons of ‘AI’ investment.

Inflation expectations are high in the U.S. at an 85.5 percentile standing, well above the historic median, and clearly showing threatening conditions. This compares to a 30% queue standing for the euro area and Germany.

Short-term rate expectations are significantly below the median for both the euro area and the U.S. with the euro area at a 26.8 percentile and the U.S. at a 9.3 percentile standing. Long-term rate expectations have Germany at a 43-percentile and the U.S. at a more similar 35-percentile. Stock market expectations are fairly similar across the lot with the euro area at a 38-percentile standing, Germany at a 35-percentile standing and the U.S. at a 38-percentile standing.

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**Summing up**
These metrics remind us that ZEW experts see different inflation circumstances in the U.S. compared to Europe as well as very different current economic situations, especially between the U.S. and the euro area and very different macroeconomic expectations between the U.S. and Germany. The U.S. is seen more as a place that's percolating inflation despite the fact that the Federal Reserve continues to say inflation is under control and inflation expectations are well anchored. Apparently, they are not well-anchored among the ZEW financial experts. We might add, nor are they well-anchored among participants in the University of Michigan survey, or for respondents to the NFIB survey that was just released. Maybe it's the Fed that is not very well anchored to reality when it comes to inflation expectations assessments?

ZEW Expectations Weaken Mildly

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Initial claims for unemployment insurance rose 9,379 during the week ended November 1 to 228,899 (3.4% y/y) and mostly reversed the prior week’s 12,643 decline to 219,520. The four-week moving average of initial claims eased to 225,213 from 226,766. The four-week average hit a low of 200,323 in January 2024.

Federal government employees filed 7,482 initial jobless insurance claims last week after 9,435 in the prior week. These figures are increased from 588 at the end of September.

Continuing claims for unemployment insurance rose to 1.964 million (4.4% y/y) in the week ended October 25 from 1.957 million in the prior week. The four-week moving average rose to 1.949 million from 1.940 million. It was the highest level since the last week of August.

Federal government employees continuing benefits rose to 30,649 in the week ended October 25 from 23,188 in the prior week. These figures are increased from 8,676 at the end of September.

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.

- Increase in initial claims reverses most of earlier decline.
- Continuing claims continue to increase.

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

251110E.jpg

Industrial production for the European Monetary Union (EMU) is not yet available for the union as a whole; however, a number of European countries have reported production, and they give us a good sense of what's happening. In September, among the 13 European countries that reported in the table, all but four of them showed increases in industrial production. Declines were posted in Ireland where production fell by 9.4% in one month, Luxembourg where it fell by 6.1%, Malta where it fell by 1.7%, and in Finland where it fell by 0.4%. In the remaining nine countries, production increased. The median increase for monetary union members in the table was a rise of 0.8% month-to-month. 45.5% of the reporters in the monetary union showed production acceleration.

In August, there were 5 European members with production decreasing. Among European Monetary Union members, the median was a decline of 0.5% with 46.2% of the reporters showing output accelerating on the month. July had been a much worse month with 8 reporting European countries showing declines and with the monetary union median showing a decline of 0.3% and only 38.5% of the reporting EMU members showing output accelerating month-to-month.

There has been gradual moderate improvement in these monthly statistics both in terms of improvement in the median and improvement in the breadth as output has accelerated, with a step back in August.

Looking at the sequential data that compare three-month results to six-month results to 12-month results, we see a median annualized increase of 2.9% for output across monetary union members over three months; that's up from 0.8% over six months and compares to a 2.1% increase for monetary union members over twelve months. The breadth of increase over the period is above 50% on all the horizons and it's fairly steady over three months and six months at about a 54-percentile standing.

September data conclude the results for the third quarter. In this quarter-to-date calculation, 6 of the 13 reporters in the table shows output declining in the third quarter. Monetary Union members generate a median increase of 0.3% in terms of annualized quarter-to-quarter industrial output changes. The pattern and the monthly data seem to be slightly stronger than what we see in the quarter-to-date.

The final column of the table presents the queue standings that calculate the positioning of the year-over-year growth rates across country-reporters among growth rates back to late-2007. Ranked among this cluster of growth rates, only five of the current year-over-year rates stand at levels that are below their median growth rate for the period. Countries with below median growth rates (below a standing of 50%) for industrial production growth are Austria, Germany, Finland, Luxembourg, and Malta. Among these, only one belongs to the four largest economies in the monetary union—Germany, which is also the largest of them. Germany has the standing only its 39th percentile. The unweighted median ranking for the group of monetary union economies is at 57.3%, above the 50% mark and therefore above the historic median.

The industrial production data for the monetary union in September is somewhat encouraging but certainly not crystal clear. There continues to be a lot of weaknesses displayed in the data. While the aggregate ranking is above its historic median, it's not above it by very much and clearly the growth rates are still relatively weak. There still is not a clear trend of acceleration in the group. However, what's lacking in the data is any sign of real deterioration. There clearly is weakness across countries but not a sense of deterioration. The best news in the report may be that there's not any really bad news.

Economy in Brief: 2008

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U.S. Real Disposable Income Up 0.1%, Spending Flat, Core Price Gains Faster

U.S. Real Disposable Income Up 0.1%, Spending Flat, Core Price Gains Faster

Japan Industrial Production is Slipping

UK Consumer Confidence Drops

French Morale Slips Then Falls Flat. Worst In Over 18 Years

U.S. Help-Wanted Advertising Back to Record Low in January

U.S. Weekly Initial Claims for Unemployment Insurance Up

US 4Q GDP Held at 0.6% Growth