Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226k.jpg" align="left" border="0" height="265" width="353">
Italy&#8217;s Business Confidence Indicator by ISAE is still
dropping but not at the sort of speed that we saw in 1998 or in 2000.
The downward gradient is steep enough to worry about but not as
uncontrolled as in some recent past episodes. Indeed, we plot the index
on a two-scale chart that suggests that period of weakening may be
coming to an end. On this chart we see that rate of change lags behind
the index (of necessity) and that when it stops worsening, that is a
sign that the index itself may be near its bottom. In 1998, both the
rate of change and the index itself bottomed at the same time. In 2001
the rate of change and the index were separated but both paused before
falling and consolidating late in the year. What we see now is that the
raw index is still falling but the speed of the drop is not
accelerating and that is a constructive development.
Beyond the overall index and its behavior, there are its
merits; its details: The survey across total industries and its
components show that every component across the main industry sectors
is now barely at or below its own midpoint (since January 1999) except
for the reading on inventories. Inventories remain high. Overall orders
are in the 38th percentile of their range, roughly the same for both
domestic and foreign components.
The consumer goods sector is the weakest. Total orders are in
their 13th percentile only. Domestic orders are
the relative weakest, in their 11th percentile.
Foreign orders are just above the bottom third of their range.
Inventories are in the top third of their range. And production is in
the 13th percentile of its range - in some sense
balanced with orders.
Italy is seeing weakness across industry. Business morale is
poor. For now, the good news is that the deterioration is not
accelerating.
<div align="left"> </div>



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> Italy ISAE Business Sentiment</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 colspan="2">Since January 1999</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>Percentile</td>
<td>Rank</td>
</tr>
<tr class="odd">
<td class="firstcol">Biz Confidence</td>
<td>89.8</td>
<td>91.3</td>
<td>91.7</td>
<td>92.2</td>
<td>43.7</td>
<td>68</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="7">TOTAL INDUSTRY</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">Order books &amp;
Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-13</td>
<td>-8</td>
<td>-6</td>
<td>-7</td>
<td style="color: red;">38.1</td>
<td>54</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>-16</td>
<td>-15</td>
<td>-9</td>
<td>-11</td>
<td style="color: red;">35.7</td>
<td>62</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>-17</td>
<td>-11</td>
<td>-6</td>
<td>-9</td>
<td style="color: red;">36.4</td>
<td>53</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>5</td>
<td>5</td>
<td>6</td>
<td>6</td>
<td>66.7</td>
<td>51</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-13</td>
<td>-12</td>
<td>-4</td>
<td>-4</td>
<td style="color: red;">28.6</td>
<td>75</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="7">INTERMEDIATE</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">Order books &amp;
Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-14</td>
<td>-13</td>
<td>-13</td>
<td>-11</td>
<td style="color: red;">40.0</td>
<td>56</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>-14</td>
<td>-17</td>
<td>-15</td>
<td>-12</td>
<td style="color: red;">43.4</td>
<td>49</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>-21</td>
<td>-13</td>
<td>-13</td>
<td>-10</td>
<td style="color: red;">33.9</td>
<td>70</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>4</td>
<td>3</td>
<td>6</td>
<td>7</td>
<td>65.5</td>
<td>29</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-13</td>
<td>-14</td>
<td>-11</td>
<td>-5</td>
<td style="color: red;">31.0</td>
<td>64</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="7">INVESTMENT GOODS</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">Order books &amp;
Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-4</td>
<td>1</td>
<td>4</td>
<td>4</td>
<td>50.7</td>
<td>42</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>-8</td>
<td>-5</td>
<td>0</td>
<td>-6</td>
<td>50.7</td>
<td>39</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>-8</td>
<td>-1</td>
<td>2</td>
<td>-1</td>
<td style="color: red;">44.6</td>
<td>46</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>6</td>
<td>4</td>
<td>3</td>
<td>6</td>
<td>62.2</td>
<td>34</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-4</td>
<td>-1</td>
<td>6</td>
<td>5</td>
<td style="color: red;">40.9</td>
<td>46</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="7">CONSUMER GOODS</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">Order books &amp;
Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-23</td>
<td>-18</td>
<td>-5</td>
<td>-10</td>
<td style="color: red;">13.6</td>
<td>93</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>-24</td>
<td>-21</td>
<td>-8</td>
<td>-15</td>
<td style="color: red;">11.1</td>
<td>90</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>-18</td>
<td>-24</td>
<td>-11</td>
<td>-15</td>
<td style="color: red;">36.2</td>
<td>57</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>6</td>
<td>6</td>
<td>5</td>
<td>8</td>
<td>65.4</td>
<td>47</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-20</td>
<td>-17</td>
<td>-2</td>
<td>-8</td>
<td style="color: red;">13.9</td>
<td>95</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="7">Total number of months: 110</td>
</tr>
</tbody>
</table>
</body></html>

Italy’s Business Confidence Indicator by ISAE is still dropping but not at the sort of speed that we saw in 1998 or in 2000. The downward gradient is steep enough to worry about but not as uncontrolled as in some recent past episodes. [...]

Italy’s Business Morale is Still Sinking

Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080212a.jpg" align="left" border="0" height="265" width="353">
According to the International Council of Shopping Centers
ICSC-UBS Chain store survey, chain store sales rose 0.5% last week
after no change during the prior period. Sales so far this month are up
0.5% from January after a 1.3% gain during that period.

During the last ten years there has been a 45% correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.

The ICSC-UBS retail
chain-store sales index is constructed using the same-store sales
(stores open for one year) reported by 78 stores of seven retailers:
Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.


The leading indicator of chain store sales from ICSC-UBS fell
0.7% two weeks ago. It as the fifth decline in the last six weeks.
Retail gasoline prices recently moved further off the high
reached last Spring of over $3.20 per gallon, according to the US
Department of Energy survey.Last week the average retail price for
regular grade gasoline fell to $2.96, down 8.0% from last year's peak
in May. Prices did, however, remain up nearly 6% from an average of
$2.80 last year.
The recent decline in gasoline prices owes mostly to the
topping and decline in the price of crude oil. For spot WTI crude oil
prices last week of $88.42 per barrel were down 10% from last year's
high which nearly touched $100 per barrel.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">02/23/08</th>
<th scope="col">02/16/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>489.9</td>
<td>487.4</td>
<td>2.3%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">02/25/08</th>
<th scope="col">02/18/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.13</td>
<td>3.04</td>
<td>31.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>--</td>
<td>100.01</td>
<td>72.2%</td>
<td>94.00</td>
<td>61.11</td>
<td>58.16</td>
</tr>
</tbody>
</table>
</body></html>

According to the International Council of Shopping Centers ICSC-UBS Chain store survey, chain store sales rose 0.5% last week after no change during the prior period. Sales so far this month are up 0.5% from January after a 1.3% gain [...]

U.S. Chain Store Sales Up, Gasoline Prices Surged

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226g.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226h.jpg" height="265" width="312">
The Conference Board reported today that consumer confidence
plummeted this month. The 14.1% m/m decline to a reading of 75.0 was
the largest m/m give back since September of 2005 and it dropped the
level to its lowest since early 2003. A consensus of economists foresaw
less of a decline to a level of 82.
A decline in the expectations component accounted for much of
last month's decline in overall confidence. The 16.5% m/m drop followed
an 8.6% January decline and lowered the expectations component to its
lowest since early 1991. Expectations for business conditions
dropped to a 36 year low while expectations for employment dropped to
the lowest since 1980. 
Respondents planning to buy an automobile within the next six
months plummeted but plans to buy an appliance rose.
The present conditions index fell a somewhat lesser 12.0% m/m
to the lowest level since late 2004. Just 18.5% of respondents saw
business conditions as good, near the least since 2004. Jobs as
plentiful were seen by 18.6% while 23.8% saw them as hard to get. 
The expected inflation rate in twelve months was stable m/m at
5.3% but that still was up from the 5.1% expected rate during 2006 and
2007.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board &nbsp;(SA, 1985=100)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>75.0</td>
<td>87.3</td>
<td>-32.6%</td>
<td>103.4</td>
<td>105.9</td>
<td>100.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Conditions</td>
<td>100.6</td>
<td>114.3</td>
<td>-26.6%</td>
<td>128.8</td>
<td>130.2</td>
<td>116.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

The Conference Board reported today that consumer confidence plummeted this month. The 14.1% m/m decline to a reading of 75.0 was the largest m/m give back since September of 2005 and it dropped the level to its lowest since early [...]

Consumer Confidence Plummet, Expectations the Dreariest

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Week to week, retail gasoline prices rose nearly a dime per
gallon to $3.13 per gallon, according to the US Department of Energy
survey. The retail price for regular grade gasoline was its highest
since early last June. This week, a rise in wholesale gasoline prices
portend further gains in the retail price.
The price for a barrel of WTI crude oil broke just over $100.
This week crude prices have backed off but just slightly to $99.41 per
barrel.
Natural gas prices were strong last week. They rose nearly
$1.00 per mmbtu from the January average due to colder Winter
temperatures.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226e.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226f.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">02/25/08</th>
<th scope="col">02/18/08</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>
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.13</td>
<td>3.04</td>
<td>31.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>--</td>
<td>100.01</td>
<td>72.2%</td>
<td>94.00</td>
<td>61.11</td>
<td>58.16</td>
</tr>
</tbody>
</table>
</body></html>

Week to week, retail gasoline prices rose nearly a dime per gallon to $3.13 per gallon, according to the US Department of Energy survey. The retail price for regular grade gasoline was its highest since early last June. This week, a [...]

Gasoline Prices Surged, Crude Oil Crested $100

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226d.jpg" align="left" border="0" height="265" width="353">
According to the S&amp;P/Case-Shiller
Composite 20 home price index, U.S. home prices fell
2.1% m/m in December and repeated the prior months' decline. Home
prices have fallen in every month since July of 2006 and the total
decline over that period amounts to 10.5%. Prices were down 9.1% y/y.
The index of 20 U.S. cities and their surrounding areas is not
adjusted for the quality or the size of the home. The home price index
from the Office of Federal Housing Enterprise Oversight (OFHEO) does
make these adjustments. This series indicates that through the third
quarter home prices still were rising, but at a reduced 1.8% y/y rate.
The composite index of homes in 10 metropolitan areas fell
2.3% (-9.8% y/y) last month.
Home prices in San Diego California continued quite weak and
fell 15.0% y/y. Prices in Miami Florida also are down a sharp 17.5%
y/y. Home prices in Las Vegas Nevada also were on the list of very weak
home prices and fell 15.3% y/y while in Los Angeles prices fell 13.7%
y/y.
Relatively moderate declines were registered in New York
(-5.6% y/y), Chicago (-4.5% y/y) and Denver, also down 4.5% y/y.
An overview of the S&amp;P/Case-Shiller home price series
can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.
The S&amp;P/Case-Shiller home price series can be found in
Haver's REGIONAL database.
Bubble, Bubble, Toil, and Trouble is a 2007
article from the Federal Reserve Bank of Chicago and it can be found <a href="http://www.chicagofed.org/publications/economicperspectives/ep_1qtr2007_part2_haines_rosen.pdf">
here</a>. 
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (NSA, Jan 00 = 100)</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">20 City Composite
Index</td>
<td>184.86</td>
<td>188.92</td>
<td>-9.1%</td>
<td>-3.9%</td>
<td>7.6%</td>
<td>15.8%</td>
</tr>
</tbody>
</table>
</body></html>

According to the S&P/Case-Shiller Composite 20 home price index, U.S. home prices fell 2.1% m/m in December and repeated the prior months' decline. Home prices have fallen in every month since July of 2006 and the total decline over [...]

Case-Shiller Home Price Index Lowest Since 2005

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226a.jpg" width="353">
Finished producer prices surged 1.0% during January following a 0.3% dip in December. The latest increase was triple Consensus expectations for a 0.3% rise. At an annual rate the PPI is up 13.5% during the last three months.
Less food and energy this measure of core prices rose 0.4% and it was double expectations. At an annual rate core producer prices have risen 3.7% during the last three months.
Energy prices made up half of December&#39;s decline with a 1.5% rise (+23.7% y/y). Gasoline prices rose 2.9% (48.1% y/y) after a 7.6% December drop. Home heating oil prices surged 8.5% (48.% y/y) and natural gas prices rose 0.7% (0.6% y/y) after five consecutive months of decline.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226b.jpg" width="353">
Why Do Gasoline Prices React to Things That Have Not Happened? from the Federal Reserve Bank of St. Louis is available <a href="http://stlouisfed.org/publications/re/2007/c/pages/gas-prices.html">here</a>.
Finished consumer food prices jumped 1.7% (8.2% y/y) after an upwardly revised 1.4% December surge. During the past three months food prices have risen at a 12.0% annual rate.
Prices of core finished consumer goods rose 0.4% (2.7% y/y) lifted by a 0.8% rise (-0.5% y/y) in passenger car prices and a 0.4% (1.6%) gain in prices of household appliances. Core consumer nondurables prices were strong again and rose 0.4% (3.9% y/y). The three month gain in these prices is 3.9%. Pharmaceutical prices have been quite strong but apparel prices have been flat. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226c.jpg" width="353">
Capital equipment prices also rose 0.4% (1.6% y/y) after a 0.1% December uptick. Heavy truck prices rose 0.4% (3.3% Y/Y) but prices for light trucks fell 0.2% (+0.2% y/y), down for the second consecutive month.
Intermediate goods prices surged 1.4% after a modest 0.2% December decline. Excluding food &amp; energy prices also were strong. They posted a 0.8% increase led by strength in industrial chemical prices which have risen 40.7% (AR) over the last three months. Steel mill prices also have been strong but copper prices have been down.
The crude materials PPI surged 2.5%, more than double the strong December rise. Crude energy materials prices jumped 1.8% (40.9% y/y). The core crude materials PPI surged 4.0% (21.0% y/y) as prices for iron &amp; steel scrap as well as prices for aluminum scrap have been quite strong.

<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/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</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">Finished Goods</td>
<td>1.0%</td>
<td>-0.3%&nbsp;</td>
<td>7.7%&nbsp;</td>
<td>3.9%</td>
<td>3.0%</td>
<td>&nbsp;4.9%&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.4%</td>
<td>0.2%</td>
<td>&nbsp;2.4%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>1.4%</td>
<td>-0.2%</td>
<td>9.1%</td>
<td>4.1%</td>
<td>6.4%</td>
<td>&nbsp;8.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.8%</td>
<td>0.0%</td>
<td>4.1%</td>
<td>2.8%</td>
<td>6.0%</td>
<td>&nbsp;5.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>2.5%</td>
<td>&nbsp;1.1%&nbsp;</td>
<td>&nbsp;31.0%</td>
<td>12.2%</td>
<td>1.4%</td>
<td>14.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>4.0%</td>
<td>0.2%</td>
<td>&nbsp;21.0%</td>
<td>15.9%</td>
<td>20.8%</td>
<td>4.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

Finished producer prices surged 1.0% during January following a 0.3% dip in December. The latest increase was triple Consensus expectations for a 0.3% rise. At an annual rate the PPI is up 13.5% during the last three months. Less food [...]

U.S. PPI Total & Core Strong

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226a.jpg" align="left" border="0" height="265" width="353">
Finished producer prices surged 1.0% during January following
a 0.3% dip in December. The latest increase was triple Consensus
expectations for a 0.3% rise. At an annual rate the PPI is up 13.5%
during the last three months.
Less food and energy this measure of core prices rose 0.4% and
it was double expectations. At an annual rate core producer prices have
risen 3.7% during the last three months.
Energy prices made up half of December's decline with a 1.5%
rise (+23.7% y/y). Gasoline prices rose 2.9% (48.1% y/y) after a 7.6%
December drop. Home heating oil prices surged 8.5% (48.% y/y) and
natural gas prices rose 0.7% (0.6% y/y) after five consecutive months
of decline.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226b.jpg" align="right" border="0" height="265" width="353">
Why Do Gasoline Prices React to Things That Have Not
Happened? from the Federal Reserve Bank of St. Louis is
available <a href="http://stlouisfed.org/publications/re/2007/c/pages/gas-prices.html">here</a>.
Finished consumer food prices jumped 1.7% (8.2% y/y) after an
upwardly revised 1.4% December surge. During the past three months food
prices have risen at a 12.0% annual rate.
Prices of core finished consumer goods rose 0.4% (2.7% y/y)
lifted by a 0.8% rise (-0.5% y/y) in passenger car prices and a 0.4%
(1.6%) gain in prices of household appliances. Core consumer
nondurables prices were strong again and rose 0.4% (3.9% y/y). The
three month gain in these prices is 3.9%. Pharmaceutical prices have
been quite strong but apparel prices have been flat. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226c.jpg" align="left" border="0" height="265" width="353">
Capital equipment prices also rose 0.4% (1.6% y/y) after a
0.1% December uptick. Heavy truck prices rose 0.4% (3.3% Y/Y) but
prices for light trucks fell 0.2% (+0.2% y/y), down for the second
consecutive month.
Intermediate goods prices surged 1.4% after a modest 0.2%
December decline. Excluding food &amp; energy prices also were
strong. They posted a 0.8% increase led by strength in industrial
chemical prices which have risen 40.7% (AR) over the last three months.
Steel mill prices also have been strong but copper prices have been
down.
The crude materials PPI surged 2.5%, more than double the
strong December rise. Crude energy materials prices jumped 1.8% (40.9%
y/y). The core crude materials PPI surged 4.0% (21.0% y/y) as prices
for iron &amp; steel scrap as well as prices for aluminum scrap
have been quite strong.

<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/@E8/@E802/@E80201/@E80201.HTM">Producer
Price Index</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">Finished Goods</td>
<td>1.0%</td>
<td>-0.3%&nbsp;</td>
<td>7.7%&nbsp;</td>
<td>3.9%</td>
<td>3.0%</td>
<td>&nbsp;4.9%&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.4%</td>
<td>0.2%</td>
<td>&nbsp;2.4%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>1.4%</td>
<td>-0.2%</td>
<td>9.1%</td>
<td>4.1%</td>
<td>6.4%</td>
<td>&nbsp;8.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.8%</td>
<td>0.0%</td>
<td>4.1%</td>
<td>2.8%</td>
<td>6.0%</td>
<td>&nbsp;5.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>2.5%</td>
<td>&nbsp;1.1%&nbsp;</td>
<td>&nbsp;31.0%</td>
<td>12.2%</td>
<td>1.4%</td>
<td>14.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>4.0%</td>
<td>0.2%</td>
<td>&nbsp;21.0%</td>
<td>15.9%</td>
<td>20.8%</td>
<td>4.9%</td>
</tr>
</tbody>
</table>
Case-Shiller Home Price
IndexLowest Since 2005 
by <a href="/comment/Moeller.html">Tom
Moeller&nbsp;</a> February 26, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226d.jpg" align="left" border="0" height="265" width="353">
According to the S&amp;P/Case-Shiller
Composite 20 home price index, U.S. home prices fell
2.1% m/m in December and repeated the prior months' decline. Home
prices have fallen in every month since July of 2006 and the total
decline over that period amounts to 10.5%. Prices were down 9.1% y/y.
The index of 20 U.S. cities and their surrounding areas is not
adjusted for the quality or the size of the home. The home price index
from the Office of Federal Housing Enterprise Oversight (OFHEO) does
make these adjustments. This series indicates that through the third
quarter home prices still were rising, but at a reduced 1.8% y/y rate.
The composite index of homes in 10 metropolitan areas fell
2.3% (-9.8% y/y) last month.
Home prices in San Diego California continued quite weak and
fell 15.0% y/y. Prices in Miami Florida also are down a sharp 17.5%
y/y. Home prices in Las Vegas Nevada also were on the list of very weak
home prices and fell 15.3% y/y while in Los Angeles prices fell 13.7%
y/y.
Relatively moderate declines were registered in New York
(-5.6% y/y), Chicago (-4.5% y/y) and Denver, also down 4.5% y/y.
An overview of the S&amp;P/Case-Shiller home price series
can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.
The S&amp;P/Case-Shiller home price series can be found in
Haver's REGIONAL database.
Bubble, Bubble, Toil, and Trouble is a 2007
article from the Federal Reserve Bank of Chicago and it can be found <a href="http://www.chicagofed.org/publications/economicperspectives/ep_1qtr2007_part2_haines_rosen.pdf">
here</a>. 
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (NSA, Jan 00 = 100)</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">20 City Composite
Index</td>
<td>184.86</td>
<td>188.92</td>
<td>-9.1%</td>
<td>-3.9%</td>
<td>7.6%</td>
<td>15.8%</td>
</tr>
</tbody>
</table>

Gasoline Prices Surged,
Crude Oil Crested $100 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 26, 2008




Week to week, retail gasoline prices rose nearly a dime per
gallon to $3.13 per gallon, according to the US Department of Energy
survey. The retail price for regular grade gasoline was its highest
since early last June. This week, a rise in wholesale gasoline prices
portend further gains in the retail price.
The price for a barrel of WTI crude oil broke just over $100.
This week crude prices have backed off but just slightly to $99.41 per
barrel.
Natural gas prices were strong last week. They rose nearly
$1.00 per mmbtu from the January average due to colder Winter
temperatures.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226e.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226f.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">02/25/08</th>
<th scope="col">02/18/08</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>
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.13</td>
<td>3.04</td>
<td>31.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>--</td>
<td>100.01</td>
<td>72.2%</td>
<td>94.00</td>
<td>61.11</td>
<td>58.16</td>
</tr>
</tbody>
</table>

Consumer Confidence Plummet,
Expectations the Dreariest 
by <a href="/comment/Moeller.html">Tom
Moeller&nbsp;</a> February 26, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226g.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226h.jpg" height="265" width="312">
The Conference Board reported today that consumer confidence
plummeted this month. The 14.1% m/m decline to a reading of 75.0 was
the largest m/m give back since September of 2005 and it dropped the
level to its lowest since early 2003. A consensus of economists foresaw
less of a decline to a level of 82.
A decline in the expectations component accounted for much of
last month's decline in overall confidence. The 16.5% m/m drop followed
an 8.6% January decline and lowered the expectations component to its
lowest since early 1991. Expectations for business conditions
dropped to a 36 year low while expectations for employment dropped to
the lowest since 1980. 
Respondents planning to buy an automobile within the next six
months plummeted but plans to buy an appliance rose.
The present conditions index fell a somewhat lesser 12.0% m/m
to the lowest level since late 2004. Just 18.5% of respondents saw
business conditions as good, near the least since 2004. Jobs as
plentiful were seen by 18.6% while 23.8% saw them as hard to get. 
The expected inflation rate in twelve months was stable m/m at
5.3% but that still was up from the 5.1% expected rate during 2006 and
2007.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board &nbsp;(SA, 1985=100)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>75.0</td>
<td>87.3</td>
<td>-32.6%</td>
<td>103.4</td>
<td>105.9</td>
<td>100.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Conditions</td>
<td>100.6</td>
<td>114.3</td>
<td>-26.6%</td>
<td>128.8</td>
<td>130.2</td>
<td>116.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>

U.S. Chain Store Sales Up,
Gasoline Prices Surged 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 26, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080212a.jpg" align="left" border="0" height="265" width="353">
According to the International Council of Shopping Centers
ICSC-UBS Chain store survey, chain store sales rose 0.5% last week
after no change during the prior period. Sales so far this month are up
0.5% from January after a 1.3% gain during that period.

During the last ten years there has been a 45% correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.

The ICSC-UBS retail
chain-store sales index is constructed using the same-store sales
(stores open for one year) reported by 78 stores of seven retailers:
Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.


The leading indicator of chain store sales from ICSC-UBS fell
0.7% two weeks ago. It as the fifth decline in the last six weeks.
Retail gasoline prices recently moved further off the high
reached last Spring of over $3.20 per gallon, according to the US
Department of Energy survey.Last week the average retail price for
regular grade gasoline fell to $2.96, down 8.0% from last year's peak
in May. Prices did, however, remain up nearly 6% from an average of
$2.80 last year.
The recent decline in gasoline prices owes mostly to the
topping and decline in the price of crude oil. For spot WTI crude oil
prices last week of $88.42 per barrel were down 10% from last year's
high which nearly touched $100 per barrel.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">02/23/08</th>
<th scope="col">02/16/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>489.9</td>
<td>487.4</td>
<td>2.3%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">02/25/08</th>
<th scope="col">02/18/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.13</td>
<td>3.04</td>
<td>31.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>--</td>
<td>100.01</td>
<td>72.2%</td>
<td>94.00</td>
<td>61.11</td>
<td>58.16</td>
</tr>
</tbody>
</table>
</body></html>

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080225e.jpg" width="353">
Inflation in Singapore rose more than expected to 6.61% in January of this year, 2.2 percentage points above the 4.41% in December. A big part of the rise was due to the government&#39;s increasing the valuation of public housing on which imputed rents are partly based. The housing component rose 11.03% in January after rising only 2.88% in December.
While the jum<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080225f.jpg" width="353">p in housing cost in December was somewhat of an anomaly, the rise in food prices has become a regular feature in the cost of living ever since mid 2007. The first chart shows that, except for the spike in the housing component in January, the food component has been increasing in importance relative to the housing component since early 2007.
World grain prices rises have been pushing up the cost of food. The second chart shows the daily world prices of corn, soybeans and wheat for the past year. The continued rise in these prices in February suggests that further food inflation is in the works, not only for Singapore, but for most other countries.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INFLATION&nbsp; (Y/Y %Chg in CPI)</th>
<th scope="col">Jan 08</th>
<th scope="col">Dec 07&nbsp;</th>
<th scope="col">Nov 07&nbsp;</th>
<th scope="col">Oct 07&nbsp;</th>
<th scope="col">Sep 07</th>
<th scope="col">Jul 07&nbsp;</th>
<th scope="col">Jun 07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Singapore</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>6.61</td>
<td>4.41</td>
<td>422</td>
<td>3.63</td>
<td>2.76</td>
<td>2.96</td>
<td>2.56</td>
<td>2.10</td>
<td>0.96</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food</td>
<td>5.84</td>
<td>5.50</td>
<td>5.22</td>
<td>4.27</td>
<td>2.75</td>
<td>3.30</td>
<td>2081</td>
<td>1.56</td>
<td>1.33</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp;Housing</td>
<td>11.03</td>
<td>2.88</td>
<td>2.88</td>
<td>2.30</td>
<td>0.39</td>
<td>1.06</td>
<td>9.67</td>
<td>0.45</td>
<td>2.67</td>
</tr>
</tbody>
</table>
</body>
</html>

Inflation in Singapore rose more than expected to 6.61% in January of this year, 2.2 percentage points above the 4.41% in December. A big part of the rise was due to the government's increasing the valuation of public housing on which [...]

ааа Rise in Singapore's Inflation Spotlights Rises in World Grain Pricesа

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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Retail gasoline prices for all grades rose to an average $3.19 per gallon (0.3% y/y) in the week ended November 10 after easing to $3.15 in the previous week. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. Haver Analytics seasonally adjusts the retail price of regular grade gasoline. That price rose to $3.10 last week from $3.05 in the previous week. Diesel fuel prices rose to $3.84 per gallon last week (9.0% y/y) after increasing to $3.75 per gallon in the prior week.

The price of West Texas Intermediate crude oil fell to an average $60.08 per barrel (-16.1% y/y) in the week ended November 7 after improving to $60.70 per barrel in the prior week. Prices remained below a recent high of $74.17 during the third week of June. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $61.04 per barrel. The price of European Brent crude declined to $64.30 per barrel (-15.0% y/y) in the week of November 7 after rising to $65.02 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. Yesterday, the price was $63.86 per barrel.

Natural gas prices strengthened to an average $3.54/mmbtu (137.6% y/y) in the week ended November 7 after rising to $3.43/mmbtu in the prior week. The rise left prices at the highest level since the second week of April and well above the low of $1.40/mmbtu in the week of March 15, 2024. Yesterday, the price was $3.80 per mmbtu.

Gasoline demand declined 2.1% y/y in the four weeks ending October 31, following a 4.2% y/y decline in the prior four weeks. Demand for all petroleum products weakened 1.2% y/y in the four weeks ending October 31, after falling 0.9% y/y in the previous four-week period. Crude oil input to refineries declined 4.5% y/y in the four weeks ending October 31, after falling 1.7% y/y in the prior four weeks.

Gasoline inventories fell 2.5% y/y in the week ending October 31 following a 0.1% y/y slip in the prior week. Residual fuel oil inventories fell 7.1% y/y in the October 31 week after falling 10.0% y/y in the prior week. Working higher, crude oil inventories rose 1.9% y/y in the week of October 31 after increasing 1.7% y/y in the previous week.

Measured in days’ supply, gasoline inventories fell to 23.7 days in the week of October 31 from 24.3 days in the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil rose to 27.5 days in the week of October 31 from 26.7 days in the prior week. The supply remained below a recent high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** and **USENERGY** databases.

- Gasoline prices rise to four-week high.
- Crude oil prices decline.
- Natural gas prices move to highest level since April.
- Demand for gasoline & all petroleum products falls.

U.S. Energy Prices Remain Mixed in Latest Week

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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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Global money supply growth boomed during COVID. Then growth ‘busted,’ decelerating sharply with the United States, the United Kingdom, and the European Monetary Union all showing monetary contraction to some degree throughout 2023. The only country to buck this trend was Japan which had a more modest boost in money supply during COVID and then more modest growth rates that decelerated and continued to gravitate toward near zero growth, until recently, when Japanese money supply started to accelerate very slightly.

**Euro Area**
Recent trends show nominal money growth in the euro area decelerating slightly from a 2.5% growth rate over 12 months to growth rates around 2% or a bit lower over three months and six months. Monetary union private credit has also decelerated from a growth rate of 2.4% over 12 months to 1.7% over six months and to a 1.3% annual rate over three-months.

**United States, United Kingdom, and Japan**
Nominal money supply growth in the U.S. remains fairly steady, growing 4.5% over 12 months and an annual rate of 5 to 5.4% over three months and six months. The U.K. nominal money supply growth is 3.5% over 12 months, 2.8% at an annual rate over six months and 3.6% at an annual rate over three months. Japan's M2 plus CDs has been stepping up its growth from 1.6% over 12 months to a 2% pace over six months to 4% at an annual rate over three months. Nominal money supply growth is mostly fluctuating between steady and stronger across these monetary center countries.

**Real balances in EMU**
Real money balances, however, are looking significantly weaker. In the European monetary Union, real M2 grows 0.3% over 12 months and then its growth rate slips to -0.6% at an annual rate over both three months and six months. Private credit in the euro area rises by 0.1% over 12 months, declines by 0.5% at an annual rate over six months, and declines at a 1.3% annual rate over three months. Real credit is weakening.

**More real balances**
In the U.S., real money supply growth is fluctuating, growing at 1.4% over 12 months, stepping up to 2.3% over six months and back to a 1.4% annual rate over three months. U.K. real money balances are simply shrinking at a -0.6% annual rate over 12 months and a -0.7% annual rate over three months. In Japan, real money balances are actually accelerating; real money growth is -1.3% over 12 months, which rises to plus 0.4% over six months with an annual rate of 2.9% at an annual rate over three months.


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**Global monetary growth conditions**
Global monetary conditions simply don't show a great deal of change over the last year. The perception is that nominal money growth has been relatively stable; however, we can see that real money growth and real credit growth are declining in the euro area and in the U.K. Real balances are growing at a relatively modest rate but also accelerating in Japan. On the whole, money supply doesn't seem to be playing a significant role in charting a new path for monetary policy- except perhaps in Japan.

Global Money Supplies Deliver Growth-Rate Plateau

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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

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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?

Economy in Brief: 2008

Jump to:

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U.S. PPI Total & Core Strong

ааа Rise in Singapore's Inflation Spotlights Rises in World Grain Pricesа