Tom Moeller

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      <p><a href="/comment/140303i_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140303i.png"></a>
      <a href="/comment/140303j_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140303j.png"></a></p>
      
      <p>The value of construction put-in-place ticked 0.1% higher in January
      (5.3% y/y) following a revised 1.5% December increase, initially reported
      as 0.1%. A 0.3% slip in building activity had been expected in the Action
      Economics Consensus Survey.</p>
      
      <p>Private sector construction activity improved 0.5% (12.3% y/y) in
      January following 1.9% growth in December. Residential building gained
      another 1.1% (14.6% y/y) as single-family home activity jumped 2.3% (21.0%
      y/y). Multi-family building rose 1.0%, up 28.0% y/y, but spending on
      improvements edged 0.4% lower (+4.3 y/y). Nonresidential building activity
      slipped 0.2% (+9.7% y/y) following its 1.2% December gain.</p>
      
      <p>Offsetting the private sector gains was a 0.8% decline (+2.5% y/y) in
      the value of public sector building activity. Spending on highways &amp;
      streets surged again, posting a 3.7% gain (15.3% y/y). Spending here
      accounts for 30% of total public sector construction activity. Offsetting
      the rise was a 9.5% decline (-27.8% y/y) in commercial construction and a
      5.2% drop (+8.7% y/y) in power activity.</p>
      
      <p>The construction spending figures are in Haver's <b>USECON</b> database
      and the expectations figure is contained in the <b>AS1REPNA</b> database.</p>
      
      <p><a href="/comment/140303k_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140303k.png"></a>
      <a href="/comment/140303l_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140303l.png"></a></p>
   
   
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
	
        <thead>
          <tr>
            <th class="firstcol" scope="col" >Construction Put in
              Place (%)</th>
            <th scope="col" >Jan</th>
            <th scope="col" >Dec</th>
            <th scope="col" >Nov</th>
            <th scope="col" >Y/Y</th>
            <th scope="col" >2013</th>
            <th scope="col" >2012</th>
            <th scope="col" >2011</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >Total</td>
            <td  >0.1</td>
            <td  >1.5</td>
            <td  >0.6</td>
            <td  >9.3</td>
            <td  >5.5</td>
            <td  >8.1</td>
            <td  >-1.9</td>
          </tr>
        </tbody>
          <tr class="odd">
            <td class="firstcol" >&nbsp; Private</td>
            <td  >0.5</td>
            <td  >1.9</td>
            <td  >1.3</td>
            <td  >12.3</td>
            <td  >9.6</td>
            <td  >14.4</td>
            <td  >0.2</td>
          </tr>
        <tbody>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;&nbsp; Residential</td>
            <td  >1.1</td>
            <td  >2.6</td>
            <td  >2.0</td>
            <td  >14.6</td>
            <td  >18.5</td>
            <td  >14.6</td>
            <td  >1.9</td>
          </tr>
        </tbody>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nonresidential</td>
            <td  >-0.2</td>
            <td  >1.2</td>
            <td  >0.6</td>
            <td  >9.7</td>
            <td  >1.2</td>
            <td  >14.3</td>
            <td  >-1.4</td>
          </tr>
        <tbody>
          <tr>
            <td class="firstcol" >&nbsp; Public</td>
            <td  >-0.8</td>
            <td  >0.4</td>
            <td  >-1.1</td>
            <td  >2.5</td>
            <td  >-2.6</td>
            <td  >-2.9</td>
            <td  >-5.4</td>
    </tr>
              </tbody>
            
            
</html>

The value of construction put-in-place ticked 0.1% higher in January (5.3% y/y) following a revised 1.5% December increase, initially reported as 0.1%. A 0.3% slip in building activity had been expected in the Action Economics [...]

U.S. Construction Spending Growth Remains Moderate

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      <p><a href="/comment/140303d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140303d.png"></a>
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      <p>The factory sector began to bounce back last month following heavy
      winter snowfalls. The Composite Index of Manufacturing Sector Activity from 
      the Institute for Supply Management improved to 53.2 during February from 51.3 in January. 
      The latest reading beat expectations for little change at 51.5 as measured by the Action
      Economics Forecast Survey. Any figure above 50 indicates an increasing
      level of activity in the factory sector. During the last ten years, there
      has been a 76% correlation between the ISM index and the q/q change in
      real GDP.</p>
      
      <p>Recoveries in inventories (52.5) and supplier
      deliveries (slower) prompted the improvement in last month's factory
      sector. New orders also rose slightly (54.5). Offsetting these gains was a
      sharply lower reading for production (48.2) and an unchanged employment
      figure (52.3). During the last ten years there has been an 88% correlation
      between the employment index and the m/m change in factory payrolls. The new
      export orders index fell to 53.5, the lowest reading since September and the
      imports index was unchanged at 53.5, the lowest reading since January of
      last year.</p>
      
      <p>The prices paid index series slipped marginally to 60.0 but remained
      near the highest level in twelve months. Twenty seven percent of firms
      raised prices while seven percent lowered them. During the last ten years
      there has been a 67% correlation between the index and the m/m change in
      the intermediate producer price index.</p>
      
      <p>The figures from the Institute For Supply Management (ISM) are
      diffusion indexes and can be found in Haver's <b>USECON</b> database. The
      expectations number is in the <b>AS1REPNA</b> database.</p>
      
      <p><a href="/comment/140303f_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140303f.png"></a>
      <a href="/comment/140303g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140303g.png"></a></p>
      
      <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

        <thead>
          <tr>
            <th class="firstcol" scope="col" >ISM Mfg</th>
            <th scope="col" >Feb</th>
            <th scope="col" >Jan</th>
            <th scope="col" >Dec</th>
            <th scope="col" >Feb'13</th>
            <th scope="col" >2013</th>
            <th scope="col" >2012</th>
            <th scope="col" >2011</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >Composite Index</td>
            <td  >53.2</td>
            <td  >51.3</td>
            <td  >56.5</td>
            <td  >53.1</td>
            <td  >53.9</td>
            <td  >51.8</td>
            <td  >55.2</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;New Orders</td>
            <td  >54.5</td>
            <td  >51.2</td>
            <td  >64.4</td>
            <td  >55.7</td>
            <td  >57.2</td>
            <td  >53.1</td>
            <td  >56.4</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;Production</td>
            <td  >48.2</td>
            <td  >54.8</td>
            <td  >61.7</td>
            <td  >54.5</td>
            <td  >57.7</td>
            <td  >53.8</td>
            <td  >57.4</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;Employment</td>
            <td  >52.3</td>
            <td  >52.3</td>
            <td  >55.8</td>
            <td  >52.2</td>
            <td  >53.2</td>
            <td  >53.8</td>
            <td  >57.4</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;Supplier Deliveries</td>
            <td  >58.5</td>
            <td  >54.3</td>
            <td  >53.7</td>
            <td  >51.5</td>
            <td  >51.9</td>
            <td  >50.0</td>
            <td  >54.7</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;Inventories</td>
            <td  >52.5</td>
            <td  >44.0</td>
            <td  >47.0</td>
            <td  >51.5</td>
            <td  >49.4</td>
            <td  >48.2</td>
            <td  >50.1</td>
          </tr>
          <tr>
            <td class="firstcol" >Prices Paid Index (NSA)</td>
            <td  >60.0</td>
            <td  >60.5</td>
            <td  >53.5</td>
            <td  >61.5</td>
            <td  >53.8</td>
            <td  >53.2</td>
            <td  >65.2</td>
   </tr>
              </tbody>
            </table>
            </span>
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The factory sector began to bounce back last month following heavy winter snowfalls. The Composite Index of Manufacturing Sector Activity from the Institute for Supply Management improved to 53.2 during February from 51.3 in January. [...]

U.S. ISM Index Begins to Recover

Robert Brusca

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<b>The peculiar case of the EMU slowdown:</b>
Just as everyone has begun to agree that the European Monetary Union (EMU) is in a state of recovery, that recovery has begun to downshift. In Q4 much of the euro area emerged from a long, ongoing recession. But in February the overall EMU metric for manufacturing from Markit fell back to 53.17 from 54.01 in January. Germany slipped in a noticeable way, dropping from a reading of 56.52 in January to 54.78 in February. Of the countries in the table, Germany, Italy and Austria backtracked.
</p><p>
Over three months, only France and Ireland have lower gauges than they did over six months, although the Netherlands is close to being in the same boat. All the EMU members in the table have better readings over three months than they have over 12 months; that also enhances the view that the setback in February was temporary.
</p><p>
The standing of the various PMI metrics in their historic ranges also adds to the notion that something good is in train. For all of EMU, the manufacturing PMI metric stands in the 69th percentile of its historic queue. While that is not a strong reading, the top 30th percentile is certainly a position that stands for growth, rather than for contraction.
</p><p>
Spain's manufacturing PMI stands in the 78th percentile of its historic queue. Ireland and the Netherlands stand in their respective 73rd percentiles. Germany stands in its 70th percentile. Close behind is Italy in its 69th percentile, despite its ongoing issues. Austria is sitting in its 59th percentile and France is really behind, standing in the 39th percentile of its historic queue. And these of course are only some of the EMU members and we already find a good deal of variability.
</p><p>
Among the non-EMU countries in the table, the UK and Hungary are particularly strong. But the rest of the non-EMU countries are, for the most part, much weaker than the run-of-the-mill EMU member. Four non-EMU members show slippage in their 3-month PMIs compared to six months and several others are barely higher. But compared to 12-month values, two countries, Sweden and Denmark, have weaker readings in the last 3-months. Thus, the euro area not only is struggling itself, but is surrounded by countries that themselves are struggling. 
</p><p>
Manufacturing is not the whole of the economy, but it is a sector that has consistently been pushing ahead. Now we see evidence of some waffling and we see come splits developing among various European nations, both EMU members and not EMU members. 
</p><p>
While the broad comparisons and the outright ranking of the topical EMU PMIs suggest that recovery is indeed in train, there is also clear contrary evidence of nagging problems that keep the engine missing rather than running smoothly. And this, of course, remains a threat to ongoing growth. For now Europe is on the growth path, but there are clear bumps in the road and obvious unevenness within and around the EMU community itself, and these irregularities pose threats to continued growth.
</p>


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The peculiar case of the EMU slowdown: Just as everyone has begun to agree that the European Monetary Union (EMU) is in a state of recovery, that recovery has begun to downshift. In Q4 much of the euro area emerged from a long, [...]

EMU PMIs Back-off: Worried?

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      <p><a href="/comment/140303a_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140303a.png" align="left"></a>
      <b>Personal income gained 0.3% during January (4.1% y/y) after </b>little
      change in December. The gain beat expectations for a 0.2% rise in the
      Action Economics Forecast Survey. Disposable personal income increased
      0.4% (4.0% y/y). Wages &amp; salaries advanced 0.2% and the 3.6%
      year-to-year increase was improved. To the upside, transfer receipts
      jumped 1.2% (3.2% y/y), rental earnings rose 0.9% (7.9% y/y) and
      proprietors income gained 0.3% (4.7% y/y). Working lower were dividend
      income by 0.4% (+17.2% y/y) and interest income by 0.3% (+1.1 y/y).
      Adjusted for price inflation disposable income recovered 0.3% (-2.8% y/y).</p>
      
      <p><b>Personal consumption expenditures matched
      expectations and edged 0.1% higher (3.5% y/y) </b>after a 0.1% December
      uptick. Late-2013 outlay levels were revised sharply lower. Motor vehicle
      purchases slipped 0.1% (-0.3% y/y) after a hefty 4.7% December drop while
      spending on furnishings &amp; household equipment slipped 0.2% (+1.4%
      y/y). Clothing purchases were off 1.2% (+0.1% y/y). Gasoline expenditures
      plunged 3.3% (+2.9% y/y) due to lower prices &amp; volumes. Services
      outlays jumped 0.9% (4.1% y/y) led by a 1.6% rise (4.7% y/y) in health
      care spending. Adjusted for inflation, PCE gained 0.3% (2.2% y/y).</p>
      
      <p>The <b>personal savings rate</b> held steady at 4.3% but earlier
      figures were raised with the revised spending levels. Nevertheless, the
      savings rate remained close to its lowest since January 2008. The total
      amount of personal saving has been trending lower since 2009.</p>
      
      <p><b>The PCE chain price index ticked up 0.1% (1.2% y/y) in January</b>.
      The price index excluding food &amp; energy also rose a steady 0.1% and 1.1%
      y/y, the slowest annual increase since early-2011.<b> </b>Durable goods
      prices slipped 0.1% (-2.2% y/y) while nondurable goods prices were
      unchanged (0.7% y/y). Prices for services gained 0.2% (1.9% y/y).</p>
      
      <p>The personal income &amp; consumption figures are available in Haver's <b>USECON</b>
      and <b>USNA</b> databases. The consensus expectation figure is in the <b>AS1REPNA</b>
      database.</p>
      
      <p><a href="/comment/140303b_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140303b.png"></a>
      <a href="/comment/140303c_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140303c.png"></a></p>
      
      <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

        <thead>
          <tr>
            <th class="firstcol" scope="col" >Personal Income &amp;
              Outlays (%)</th>
            <th scope="col" >Jan</th>
            <th scope="col" >Dec</th>
            <th scope="col" >Nov</th>
            <th scope="col" >Y/Y</th>
            <th scope="col" >2013</th>
            <th scope="col" >2012</th>
            <th scope="col" >2011</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >Personal Income</td>
            <td  >0.3</td>
            <td  >-0.0</td>
            <td  >0.3</td>
            <td  >4.1</td>
            <td  >2.8</td>
            <td  >4.2</td>
            <td  >6.1</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Wages &amp; Salaries</td>
            <td  >0.2</td>
            <td  >-0.1</td>
            <td  >0.6</td>
            <td  >3.6</td>
            <td  >3.1</td>
            <td  >4.3</td>
            <td  >4.1</td>
          </tr>
          <tr>
            <td class="firstcol" >Disposable Personal Income</td>
            <td  >0.4</td>
            <td  >-0.1</td>
            <td  >0.2</td>
            <td  >4.0</td>
            <td  >1.9</td>
            <td  >3.9</td>
            <td  >4.8</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Personal Consumption Expenditures</td>
            <td  >0.4</td>
            <td  >0.1</td>
            <td  >0.5</td>
            <td  >3.5</td>
            <td  >3.1</td>
            <td  >4.1</td>
            <td  >5.0</td>
          </tr>
          <tr>
            <td class="firstcol" >Personal Saving Rate</td>
            <td  >4.3</td>
            <td  >4.3</td>
            <td  >4.4</td>
            <td  >3.6<br>
              (Jan '13)</td>
            <td  >4.5</td>
            <td  >5.6</td>
            <td  >5.7</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >PCE Chain Price Index</td>
            <td  >0.1</td>
            <td  >0.2</td>
            <td  >0.1</td>
            <td  >1.2</td>
            <td  >1.1</td>
            <td  >1.8</td>
            <td  >2.4</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Less Food &amp; Energy</td>
            <td  >0.1</td>
            <td  >0.1</td>
            <td  >0.1</td>
            <td  >1.1</td>
            <td  >1.2</td>
            <td  >1.8</td>
            <td  >1.4</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Real Disposable Income</td>
            <td  >0.3</td>
            <td  >-0.2</td>
            <td  >0.1</td>
            <td  >2.8</td>
            <td  >0.7</td>
            <td  >2.0</td>
            <td  >2.4</td>
          </tr>
          <tr>
            <td class="firstcol" >Real Personal Consumption
              Expenditures</td>
            <td  >0.3</td>
            <td  >-0.1</td>
            <td  >0.4</td>
            <td  >2.2</td>
            <td  >2.0</td>
            <td  >2.2</td>
            <td  >2.5</td>
 </tr>
              </tbody>
            </table>
            </span>
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Personal income gained 0.3% during January (4.1% y/y) after little change in December. The gain beat expectations for a 0.2% rise in the Action Economics Forecast Survey. Disposable personal income increased 0.4% (4.0% y/y). Wages & [...]

U.S. Personal Income, Outlays & Savings Firm

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      <p><a href="/comment/140228g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140228g.png"></a>
      <a href="/comment/140228h_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140228h.png"></a></p>
      
      <p>The National Association of Realtors (NAR) reported that <b>pending
      sales of single-family homes ticked up 0.1% during January </b>following a
      5.8% December decline, revised from an 8.7% shortfall. The latest uptick
      followed six consecutive months of sharp decline. Therefore, sales were
      14.3% below the peak last June. Expectations had been for a 1.8% rise
      according to Bloomberg. Data were revised back through 2011.</p>
      
      <p>Home sales were mixed across the country last month. In the South,
      sales rose 3.5% (-5.5% y/y) following a 5.7% December drop. Sales remained
      down 7.7% from the May peak. In the Northeast, a 2.3% rise (-5.3% y/y)
      followed two months of sharp decline. Sales remained 12.3% lower than the
      peak last April. In the West, sales declined 4.8% (-17.5% y/y) and have
      fallen in each of the last seven months, a decline totaling more than
      one-quarter from the peak. In the Midwest, sales fell 2.5% last month
      (-9.3% y/y), off for the seventh straight month and down 17.6% from the
      May peak.</p>
      
      <p><b>The pending home sales figures are analogous to the new home sales</b>
      data from the Commerce Department. They measure home sales when the sales
      contract is signed, not at the time the sale is closed. In developing the
      model for the index, the NAR demonstrated that the level of monthly
      sales-contract activity parallels the level of closed existing-home sales
      in the following two months. The series dates back to 2001 and the data
      are available in Haver's <b>PREALTOR </b>database.</p>
      
      <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

        <thead>
          <tr>
            <th class="firstcol" scope="col" >Pending Home Sales (%)</th>
            <th scope="col" >Jan</th>
            <th scope="col" >Dec</th>
            <th scope="col" >Nov</th>
            <th scope="col" >Y/Y </th>
            <th scope="col" >2013</th>
            <th scope="col" >2012</th>
            <th scope="col" >2011</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >Total</td>
            <td  >0.1</td>
            <td  >-5.8</td>
            <td  >-1.2</td>
            <td  >-9.0</td>
            <td  >4.5</td>
            <td  >11.3</td>
            <td  >1.3</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Northeast</td>
            <td  >2.3</td>
            <td  >-7.3</td>
            <td  >-2.0</td>
            <td  >-5.3</td>
            <td  >6.1</td>
            <td  >16.6</td>
            <td  >-4.0</td>
          </tr>
          <tr>
            <td class="firstcol" >Midwest</td>
            <td  >-2.5</td>
            <td  >-5.2</td>
            <td  >-3.1</td>
            <td  >-9.3</td>
            <td  >10.4</td>
            <td  >17.7</td>
            <td  >2.2</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >South</td>
            <td  >3.5</td>
            <td  >-5.7</td>
            <td  >0.0</td>
            <td  >-5.5</td>
            <td  >5.4</td>
            <td  >12.7</td>
            <td  >1.4</td>
          </tr>
          <tr>
            <td class="firstcol" >West</td>
            <td  >-4.8</td>
            <td  >-5.9</td>
            <td  >-0.3</td>
            <td  >-17.5</td>
            <td  >-3.6</td>
            <td  >1.2</td>
            <td  >3.4</td>
   </tr>
              </tbody>
            </table>
            </span>
</body></html>

The National Association of Realtors (NAR) reported that pending sales of single-family homes ticked up 0.1% during January following a 5.8% December decline, revised from an 8.7% shortfall. The latest uptick followed six consecutive [...]

U.S. Pending Home Sales Remain Depressed by Winter Storms

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      <p></p>
      
      <p><a href="/comment/140228a_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140228a.png"></a>
      <a href="/comment/140228b_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140228b.png"></a></p>
      
            <p>Real GDP growth for Q4'13 eased more than initially estimated.
            The growth estimate was lowered by the Department of Commerce to 2.4% (2.5% y/y) 
            from 3.2% in the advance release, down sharply from 4.1% in the third
            quarter. The gain roughly matched consensus expectations for a 2.5%
            rise in the Action Economics Forecast Survey. For all of last year
            growth moderated to 1.9%, down nearly a full percentage point from
            2012.</p>
            
            <p>Domestic final sales rose at a lessened 1.2% rate (1.5% y/y) last
            quarter. Growth in personal consumption expenditures was lowered to
            2.6% (2.1% y/y). Spending growth on durable goods eased sharply to
            2.5% (5.6% y/y) as motor vehicle purchases slipped (+2.1% y/y).
            Spending on home furnishings &amp; appliances rose at a 2.4% rate
            (7.1% y/y), the weakest gain since Q2 2012. Nondurable spending,
            however, jumped at a 3.5% rate (2.7% y/y) led by a surge in
            purchases of apparel. Growth in spending on services still improved
            sharply to 2.2% (1.4% y/y). To the upside, business fixed investment
            growth was nearly doubled to 7.3% (3.0% y/y). Residential investment
            showed a lessened 8.8% decline (+6.6% y/y) but spending still jumped
            12.1% for all of 2013. The decline in government spending was
            deepened to 5.5% (-2.5% y/y). The fall subtracted roughly a full
            percentage point from Q4 GDP growth. Defense spending fell at a 14.5%
            rate (-6.9% y/y) while state &amp; local government spending growth
            eased 0.5% (+0.1% y/y). Final sales to private domestic purchasers
            grew at a 2.8% rate (2.4% y/y), little changed from the advance
            estimate.</p>
            
            <p><a href="/comment/140228c_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140228c.png"></a>
      <a href="/comment/140228d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140228d.png"></a></p>
            
            <p>The effects from inventory investment and foreign trade were
            lessened but remained positive. A faster rate of inventory
            accumulation added 0.1 percentage point to Q4 GDP growth following
            the 1.7 point addition in Q3. A lessened foreign trade deficit added
            one percentage point to Q4 growth. The improvement owed last quarter
            to a 9.4% rise (4.9% y/y) in exports versus a 1.5% gain (2.8% y/y)
            in imports.</p>
            
            <p>Price inflation moderated in Q4, though not as much as initially
            estimated. The chain-type GDP price index rose at a 1.6% rate (1.4%
            y/y) versus the advance estimate of a 1.3% increase and a 2.0% Q3
            gain. A 1.3% rise had been expected. The personal consumption price
            index rose at a 1.0% rate (1.0% y/y) while the business fixed
            investment price index increase held q/q at 1.2% (1.2% y/y). The
            residential investment price index surged at an 8.2% rate (6.2%
            y/y), the fastest y/y growth since early 2006.</p>
            
            <p>The latest GDP figures can be found in Haver's <b>USECON</b> and <b>USNA</b>
            databases; <b>USNA</b> contains basically all of the Bureau of
            Economic Analysis' detail in the national accounts, including the
            new integrated economics accounts and the recently added GDP data
            for U.S. Territories. The Action Economics consensus estimates can
            be found in <b>AS1REPNA</b>.</p>
            
            <p><a href="/comment/140228e_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140228e.png"></a>
      <a href="/comment/140228f_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140228f.png"></a></p>
      
      <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

              <thead>
                <tr>
                  <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM" ;>Chained
                    2009 $, %, AR</a></th>
                  <th scope="col"  >Q4'13&nbsp; (2nd
                    Estimate)</th>
                  <th scope="col"  >Q4'13 (Advance)</th>
                  <th scope="col"  >Q3'13</th>
                  <th scope="col"  >Q2'13</th>
                  <th scope="col"  >Q4 Y/Y</th>
                  <th scope="col"  >2013</th>
                  <th scope="col"  >2012</th>
                  <th scope="col"  >2011</th>
                </tr>
              </thead>
              <tbody>
                <tr>
                  <td class="firstcol" >Gross Domestic Product</td>
                  <td  >2.4</td>
                  <td  >3.2</td>
                  <td  >4.1</td>
                  <td  >2.5</td>
                  <td  >2.5</td>
                  <td  >1.9</td>
                  <td  >2.8</td>
                  <td  >1.8</td>
                </tr>
                <tr class="odd">
                  <td class="firstcol" >&nbsp; Inventory Effect</td>
                  <td  >0.1</td>
                  <td  >0.4</td>
                  <td  >1.7</td>
                  <td  >0.4</td>
                  <td  >0.2</td>
                  <td  >0.2</td>
                  <td  >0.2</td>
                  <td  >-0.2</td>
                </tr>
                <tr>
                  <td class="firstcol" >Final Sales</td>
                  <td  >2.3</td>
                  <td  >2.8</td>
                  <td  >2.5</td>
                  <td  >2.1</td>
                  <td  >1.7</td>
                  <td  >1.7</td>
                  <td  >2.6</td>
                  <td  >2.0</td>
                </tr>
                <tr class="odd">
                  <td class="firstcol" >&nbsp; Foreign Trade Effect</td>
                  <td  >1.0</td>
                  <td  >1.3</td>
                  <td  >0.1</td>
                  <td  >-0.1</td>
                  <td  >0.2</td>
                  <td  >0.2</td>
                  <td  >0.2</td>
                  <td  >0.2</td>
                </tr>
                <tr>
                  <td class="firstcol" >Domestic Final Sales</td>
                  <td  >1.2</td>
                  <td  >1.4</td>
                  <td  >2.3</td>
                  <td  >2.1</td>
                  <td  >1.5</td>
                  <td  >1.5</td>
                  <td  >2.4</td>
                  <td  >1.8</td>
                </tr>
                <tr class="grey3">
                  <td class="firstcol" colSpan="9" ><b>Demand
                    Components</b></td>
                </tr>
                <tr>
                  <td class="firstcol" >Personal Consumption</td>
                  <td  >2.6</td>
                  <td  >3.3</td>
                  <td  >2.0</td>
                  <td  >1.8</td>
                  <td  >2.1</td>
                  <td  >2.0</td>
                  <td  >2.2</td>
                  <td  >2.5</td>
                </tr>
                <tr class="odd">
                  <td class="firstcol" >Business Fixed Investment</td>
                  <td  >7.3</td>
                  <td  >3.8</td>
                  <td  >4.8</td>
                  <td  >4.7</td>
                  <td  >3.0</td>
                  <td  >2.8</td>
                  <td  >7.3</td>
                  <td  >7.6</td>
                </tr>
                <tr>
                  <td class="firstcol" >Residential Investment</td>
                  <td  >-8.8</td>
                  <td  >-9.8</td>
                  <td  >10.3</td>
                  <td  >14.2</td>
                  <td  >6.6</td>
                  <td  >12.1</td>
                  <td  >12.9</td>
                  <td  >0.5</td>
                </tr>
                <tr class="odd">
                  <td class="firstcol" >Government Spending</td>
                  <td  >-5.5</td>
                  <td  >-4.9</td>
                  <td  >0.4</td>
                  <td  >-0.4</td>
                  <td  >-2.5</td>
                  <td  >-2.3</td>
                  <td  >-1.0</td>
                  <td  >-3.2</td>
                </tr>
                <tr class="grey3">
                  <td class="firstcol" colSpan="9" ><b>Chain-Type
                    Price Index</b></td>
                </tr>
                <tr>
                  <td class="firstcol" >GDP&nbsp;&nbsp; &nbsp;&nbsp;</td>
                  <td  >1.6</td>
                  <td  >1.3</td>
                  <td  >2.0</td>
                  <td  >0.6</td>
                  <td  >1.4</td>
                  <td  >1.4</td>
                  <td  >1.7</td>
                  <td  >2.0</td>
                </tr>
                <tr class="odd">
                  <td class="firstcol" >Personal Consumption</td>
                  <td  >1.0</td>
                  <td  >0.7</td>
                  <td  >1.9</td>
                  <td  >-0.1</td>
                  <td  >1.0</td>
                  <td  >1.1</td>
                  <td  >1.8</td>
                  <td  >2.4</td>
                </tr>
                <tr>
                  <td class="firstcol" >&nbsp;Less Food/Energy</td>
                  <td  >1.3</td>
                  <td  >1.1</td>
                  <td  >1.4</td>
                  <td  >0.6</td>
                  <td  >1.2</td>
                  <td  >1.2</td>
                  <td  >1.8</td>
                  <td  >1.4</td>
                 </tr>
              </tbody>
            </table>
            </span>
</body></html>

Real GDP growth for Q4'13 eased more than initially estimated. The growth estimate was lowered by the Department of Commerce to 2.4% (2.5% y/y) from 3.2% in the advance release, down sharply from 4.1% in the third quarter. The gain [...]

U.S. GDP Growth is Revised Lower; Price Inflation Raised

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      <p>New orders for durable goods fell 1.0% during January (+4.6 y/y)
      following a 5.3% December drop, revised from a 4.3% decline. The latest
      decline matched expectations in the Action Economics Forecast Survey. A
      5.6% drop (+13.6% y/y) in orders for transportation equipment weighed on
      last month's total. Nondefense aircraft &amp; parts orders fell 20.2%
      (+56.7% y/y) after December's 22.3% shortfall. Motor vehicle &amp; parts
      orders also softened, posting a 2.2% drop last month (+3.8% y/y) on the
      heels of a 6.6% decline. </p>
      <p>Outside of the transportation sector, new orders showed mixed
      performance as a 1.1% gain (1.2% y/y) countered December's 1.9% decline.
      Fabricated metal orders led the increase with a 7.3% rise (-9.1 y/y).
      Orders for computers &amp; electronic products followed with a 4.7% rise
      (1.7% y/y). Working to the downside, primary metal orders were off 2.3%
      (+7.0% y/y and electrical equipment, appliances &amp; components orders
      declined 2.1% (+3.7% y/y). Machinery orders slipped 0.4% (+1.5% y/y).
      Nondefense capital goods orders fell 3.9% (+5.6% y/y) reflecting the
      weakened aircraft bookings. Excluding aircraft, however, orders improved
      1.7% (-0.8% y/y) and reversed December's decline.</p>
      <p>Shipments of durable goods were off 0.4% (+3.4% y/y) in January
      following December's 1.8% fall. Shipments excluding the transportation
      sector slipped 0.5% (+2.7% y/y), the first material decline in nine months.
      Unfilled orders ticked 0.1% higher (7.1% y/y) while order backlogs outside
      of the transportation sector gained 0.3% (5.7% y/y). Inventories of
      durable goods improved 0.3% (3.7% y/y) after December's 0.9% jump.
      Inventories outside the transportation sector were roughly unchanged (1.4%
      y/y).</p>
      <p>The durable goods figures are available in Haver's <b>USECON </b>database.
      The Action Economics consensus forecast figure is in the <b>AS1REPNA</b>
      datab.</p>
      <p><b>Semiannual Monetary Policy Report to the Congress</b> by Fed Chair
      Janet L. Yellen can be found here&nbsp; <a href="http://www.federalreserve.gov/newsevents/testimony/yellen20140211a.htm">http://www.federalreserve.gov/newsevents/testimony/yellen20140211a.htm</a></p>
      <table class="centered" border="0" cellSpacing="0" width="1871">
        <thead>
          <tr>
            <th class="firstcol" scope="col" width="984">Durable Goods NAICS
              Classification</th>
            <th width="126">Jan</th>
            <th width="126">Dec</th>
            <th width="126">Nov</th>
            <th width="126">Y/Y</th>
            <th width="126">2013</th>
            <th width="126">2012</th>
            <th width="127">2011</th>
          </tr>
        </thead>
        <tbody>
          <tr class="odd">
            <td class="firstcol" width="984">New Orders (SA, %)</td>
            <td align="center" width="126">-1.0</td>
            <td align="center" width="126">-5.3</td>
            <td align="center" width="126">2.7</td>
            <td align="center" width="126">4.6</td>
            <td align="center" width="126">5.1</td>
            <td align="center" width="126">4.1</td>
            <td align="center" width="127">11.0</td>
          </tr>
          <tr>
            <td class="firstcol" width="984">&nbsp; Transportation</td>
            <td align="center" width="126">-5.6</td>
            <td align="center" width="126">-12.0</td>
            <td align="center" width="126">8.1</td>
            <td align="center" width="126">13.6</td>
            <td align="center" width="126">7.7</td>
            <td align="center" width="126">8.9</td>
            <td align="center" width="127">14.9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="984">Total Excluding Transportation</td>
            <td align="center" width="126">1.1</td>
            <td align="center" width="126">-1.9</td>
            <td align="center" width="126">0.2</td>
            <td align="center" width="126">1.2</td>
            <td align="center" width="126">3.9</td>
            <td align="center" width="126">2.1</td>
            <td align="center" width="127">9.5</td>
          </tr>
          <tr>
            <td class="firstcol" width="984">&nbsp; Nondefense Capital Goods</td>
            <td align="center" width="126">-3.9</td>
            <td align="center" width="126">-6.5</td>
            <td align="center" width="126">8.2</td>
            <td align="center" width="126">5.6</td>
            <td align="center" width="126">8.6</td>
            <td align="center" width="126">3.7</td>
            <td align="center" width="127">15.3</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="984">&nbsp;&nbsp;&nbsp; Excluding
              Aircraft</td>
            <td align="center" width="126">1.7</td>
            <td align="center" width="126">-1.8</td>
            <td align="center" width="126">3.0</td>
            <td align="center" width="126">-0.8</td>
            <td align="center" width="126">5.1</td>
            <td align="center" width="126">2.1</td>
            <td align="center" width="127">11.6</td>
          </tr>
          <tr>
            <td class="firstcol" width="984">Shipments</td>
            <td align="center" width="126">-0.4</td>
            <td align="center" width="126">-1.8</td>
            <td align="center" width="126">1.4</td>
            <td align="center" width="126">3.4</td>
            <td align="center" width="126">3.7</td>
            <td align="center" width="126">6.4</td>
            <td align="center" width="127">9.4</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="984">Inventories</td>
            <td align="center" width="126">0.3</td>
            <td align="center" width="126">0.9</td>
            <td align="center" width="126">0.3</td>
            <td align="center" width="126">3.7</td>
            <td align="center" width="126">3.7</td>
            <td align="center" width="126">4.5</td>
            <td align="center" width="127">10.8</td>
          </tr>
          <tr>
            <td class="firstcol" width="984">Unfilled Orders</td>
            <td align="center" width="126">0.1</td>
            <td align="center" width="126">0.2</td>
            <td align="center" width="126">0.9</td>
            <td align="center" width="126">7.1</td>
            <td align="center" width="126">6.8</td>
            <td align="center" width="126">3.7</td>
            <td align="center" width="127">10.0</td>
          </tr>
        </tbody>
      </table>
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      <span id="articletitle">U.S. Initial Claims for Unemployment Insurance
      Slip</span><br>
      <span id="byline">by <a href="http://www.haver.com/comment/Moeller.html">Tom
      Moeller</a>&nbsp;&nbsp;February 27, 2014</span><span id="articletext">
      <p>&nbsp;Initial claims for unemployment insurance edged down to 336,000
      (-8.2% y/y) during the week ended February 15 versus an unrevised 339,000
      during the week prior. Expectations had been for 335,000 claims in the
      Action Economic forecast survey. The four-week moving average of initial
      claims ticked up to 338,500.</p>
      <p>Continuing claims for unemployment insurance in the week ended February
      8 increased to 2.981 million (-5.8% y/y). The four-week moving average
      slipped to 2.960 million and still was near its highest level since early
      August. The insured rate of unemployment nudged up to 2.3% from a
      downwardly revised 2.2%. This particular count covers only
      &quot;regular&quot; programs and does not include all extended benefit and
      other specialized jobless insurance programs. In the week of February 1,
      the latest available, the total of all benefit recipients was
      little-changed at 3.525 million (-36.8% y/y). This broader measure is not
      seasonally adjusted. It compares to a cycle peak of 12.060 million in
      January 2010 and pre-recession figures that averaged 2.596 million in
      2007.</p>
      <p>By state, the insured rate of unemployment continued to vary greatly
      with Louisiana (1.24%), Tennessee (1.43%),&nbsp; Florida (1.44%), Texas
      (1.64%), North Carolina (1.89%), Indiana (2.14%) and Ohio (2.61%) at the
      low end of the range. At the high end were New York (3.10%), California
      (3.45%), Massachusetts (3.45%), Wisconsin (3.65%), Illinois (3.78%),
      Pennsylvania (3.84%) and Connecticut (4.01%). These data are not
      seasonally adjusted.</p>
      <p>Data on weekly unemployment insurance are contained in Haver's <b>WEEKLY</b>
      database and they are summarized monthly in <b>USECON</b>. Data for
      individual states are in <b>REGIONW</b>. The expectations figure is from
      the Action Economics survey, carried in the <b>AS1REPNA</b> database. </p>
      <table class="centered" border="0" cellSpacing="0" width="1871">
        <thead>
          <tr>
            <th class="firstcol" 0801 width="625">Unemployment Insurance (000s)</th>
            <th 0801 width="177">02/22/14</th>
            <th 0801 width="177">02/15/14</th>
            <th 0801 width="177">02/08/14</th>
            <th 0801 width="177">Y/Y %</th>
            <th 0801 width="178">2013</th>
            <th 0801 width="178">2012</th>
            <th 0801 width="178">2011</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" 0801 width="625">Initial Claims</td>
            <td 0801 align="center" width="177">348</td>
            <td 0801 align="center" width="177">334</td>
            <td 0801 align="center" width="177">340</td>
            <td 0801 align="center" width="177">0.0</td>
            <td 0801 align="center" width="178">343</td>
            <td 0801 align="center" width="178">374</td>
            <td 0801 align="center" width="178">409</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" 0801 width="625">Continuing Claims</td>
            <td 0801 align="center" width="177">--</td>
            <td 0801 align="center" width="177">2,964</td>
            <td 0801 align="center" width="177">2,956</td>
            <td 0801 align="center" width="177">-4.4</td>
            <td 0801 align="center" width="178">2,980</td>
            <td 0801 align="center" width="178">3,319</td>
            <td 0801 align="center" width="178">3,742</td>
          </tr>
          <tr>
            <td class="firstcol" 0801 width="625">Insured Unemployment Rate (%)</td>
            <td 0801 align="center" width="177">--</td>
            <td 0801 align="center" width="177">2.3</td>
            <td 0801 align="center" width="177">2.3</td>
            <td 0801 align="center" width="177">2.4<br>
              (2/13)</td>
            <td 0801 align="center" width="178">2.3</td>
            <td 0801 align="center" width="178">2.6</td>
            <td 0801 align="center" width="178">3.0</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" 0801 width="625">Total &quot;All Programs&quot;
              (NSA)</td>
            <td 0801 align="center" width="177">--</td>
            <td 0801 align="center" width="177">--</td>
            <td 0801 align="center" width="177">3.486 mil.</td>
            <td 0801 align="center" width="177">-39.5</td>
            <td 0801 align="center" width="178">4.659 mil.</td>
            <td 0801 align="center" width="178">6.047 mil.</td>
            <td 0801 align="center" width="178">7.750 mil.</td>
          </tr>
        </tbody>
      </table>
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New orders for durable goods fell 1.0% during January (+4.6 y/y) following a 5.3% December drop, revised from a 4.3% decline. The latest decline matched expectations in the Action Economics Forecast Survey. A 5.6% drop (+13.6% y/y) in [...]

U.S. Durable Goods Order Decline Reflects a Weaker Transportation Sector

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      <p><a href="/comment/140227j_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140227j.png"></a>
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      <p>The Federal Reserve Bank of Kansas City reported that its February Composite 
      index of 10th District factory sector activity dipped to 4 from 5 during January. 
      The composite index is an average of the production, new orders, employment, supplier 
      delivery time, and raw materials inventory indexes. The Bank cited severe winter weather 
      as responsible for holding back the current index component readings. Shipments and 
      production, nevertheless, improved versus January and versus one year ago.</p>
      
      <p>Expectations component readings remained above current activity indexes, suggesting 
      future improvement. Nevertheless, in February the index of expected business conditions 
      in six months retreated as the new orders, production and employment components fell. 
      Remaining near its recovery high was the index for capital expenditures in six months. 
      Also, inventory levels were viewed as being higher in six months. These projected 
      improvements were offset to some extent by a lower reading for expected exports.</p>
      
      <p>The diffusion indexes are calculated as the percentage of total
      respondents reporting increases minus the percentage reporting declines.
      The survey included 94 responses from plants in Colorado, Kansas,
      Nebraska, Oklahoma, Wyoming northern New Mexico. Data for the Kansas City
      Fed Survey can be found in Haver's <b>SURVEYS</b> database.</p>
      
      <p><a href="/comment/140227l_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140227l.png"></a>
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            <th class="firstcol" 0801 >Kansas City Federal Reserve
              Manufacturing Survey</th>
            <th 0801 >Feb</th>
            <th 0801 >Jan</th>
            <th 0801 >Dec</th>
            <th 0801 >Y/Y </th>
            <th 0801 >2013</th>
            <th 0801 >2012</th>
            <th 0801 >2011</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" 0801 >Conditions Versus One Month
              Ago (% Balance)</td>
            <td 0801  >4</td>
            <td 0801  >5</td>
            <td 0801  >-3</td>
            <td 0801  >-8</td>
            <td 0801  >0</td>
            <td 0801  >4</td>
            <td 0801  >9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" 0801 >&nbsp;&nbsp; New Orders Volume</td>
            <td 0801  >5</td>
            <td 0801  >5</td>
            <td 0801  >1</td>
            <td 0801  >-23</td>
            <td 0801  >1</td>
            <td 0801  >0</td>
            <td 0801  >5</td>
          </tr>
          <tr>
            <td class="firstcol" 0801 >&nbsp;&nbsp; Number of
              Employees</td>
            <td 0801  >3</td>
            <td 0801  >11</td>
            <td 0801  >0</td>
            <td 0801  >2</td>
            <td 0801  >-2</td>
            <td 0801  >5</td>
            <td 0801  >11</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" 0801 >&nbsp;&nbsp; Prices Received
              for Finished Product</td>
            <td 0801  >7</td>
            <td 0801  >8</td>
            <td 0801  >2</td>
            <td 0801  >4</td>
            <td 0801  >3</td>
            <td 0801  >5</td>
            <td 0801  >12</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" 0801 >Expected Conditions in Six
              Months </td>
            <td 0801  >11</td>
            <td 0801  >26</td>
            <td 0801  >15</td>
            <td 0801  >5</td>
            <td 0801  >10</td>
            <td 0801  >12</td>
            <td 0801  >16</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" 0801 >&nbsp;&nbsp; New Orders Volume</td>
            <td 0801  >23</td>
            <td 0801  >35</td>
            <td 0801  >24</td>
            <td 0801  >15</td>
            <td 0801  >18</td>
            <td 0801  >21</td>
            <td 0801  >24</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" 0801 >&nbsp;&nbsp; Number of
              Employees</td>
            <td 0801  >6</td>
            <td 0801  >29</td>
            <td 0801  >15</td>
            <td 0801  >3</td>
            <td 0801  >9</td>
            <td 0801  >13</td>
            <td 0801  >17</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" 0801 >&nbsp;&nbsp; Prices Received
              for Finished Product</td>
            <td 0801  >25</td>
            <td 0801  >30</td>
            <td 0801  >18</td>
            <td 0801  >24</td>
            <td 0801  >24</td>
            <td 0801  >24</td>
            <td 0801  >29</td>
          </tr>
              </tbody>
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The Federal Reserve Bank of Kansas City reported that its February Composite index of 10th District factory sector activity dipped to 4 from 5 during January. The composite index is an average of the production, new orders, [...]

Kansas City Fed Survey Depressed by Weather but Expectations Suggest Recovery

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

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Andrew Cates

**Front-End Yields Reflect Policy Reassessment**
Against a backdrop of key central bank meetings either having just taken place or imminent, short-dated government bond yields have moved decisively higher across most major economies since the escalation of the Middle East conflict, with the sharpest increase seen in the UK. The rise in 2-year yields reflects a repricing of near-term monetary policy expectations, as markets respond to the inflationary implications of higher energy prices and the growing likelihood that central banks will delay easing cycles. Moves have been most pronounced in economies where inflation is expected to be more persistent—most notably the UK—while increases have been more modest in the US and particularly Japan, where policy normalisation remains gradual. In effect, the front end of the curve is signalling a shift away from the “rate cuts soon” narrative that prevailed earlier in the year toward a more cautious, higher-for-longer policy outlook.

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**US Recession Risks Remain Contained—For Now**
Despite the recent deterioration in the macro backdrop, real-time recession risk indicators for the US remain relatively subdued. This is notable given the combination of softer growth momentum, higher bond yields and heightened geopolitical risk. The nowcast—derived from a blend of high-frequency activity data and financial stress measures—has historically tended to move sharply when conditions turn, rather than drift higher gradually. That asymmetry is important in the current environment. While recession risks are not yet flashing red, past cycles suggest they can reprice abruptly, and arguably at present if energy-driven inflation were to feed much more forcefully into financial conditions or begin to weigh more materially on demand.

260430Z2.jpg

**Consumer Confidence Diverges: Europe and UK Slide, US Stabilises**
Consumer confidence has weakened across the major economies, but the deterioration has been more pronounced in the euro area and the UK than in the US. While sentiment in the US has recently edged up, it remains at relatively subdued levels. By contrast, confidence in Europe and the UK has fallen more sharply, reflecting greater exposure to higher energy costs and a more direct squeeze on real household incomes. This divergence is consistent with broader macro trends, suggesting that demand in Europe may prove more sensitive to the current shock, with weaker sentiment feeding more quickly into consumption.

260430Z3.jpg

**Euro area Credit Conditions Turn More Restrictive**
The latest ECB lending survey points to a clear tightening in credit conditions across the euro area, with banks raising lending standards for both firms and households while loan demand weakens. This combination—more restrictive supply alongside softer demand—is typically associated with a cooling in activity, particularly in interest-sensitive sectors. Recent evidence suggests that higher perceived risks, rising funding costs and geopolitical uncertainty are all weighing on banks’ willingness to lend, while weaker confidence and reduced investment appetite are dampening borrowing needs. The result is a tightening in financial conditions that is likely to amplify the broader slowdown already evident in survey data, reinforcing the more fragile growth dynamics now emerging across the region.

260430Z4.jpg

**An Intensifying AI Boom with Supply-Side Undercurrents**
Against the backdrop of surging AI-related investment, semiconductor prices are not just high—they are rising at an increasingly rapid pace. This chart shows a clear acceleration in both prices and export values, pointing to an intensifying boom in global chip demand. While this is in part a reflection of strong, structural demand, supply-side factors may also be playing a growing role. Although the Middle East is not a direct source of key chip-making minerals, it is central to the energy and petrochemical inputs that underpin semiconductor production. Ongoing geopolitical tensions are therefore likely feeding into higher costs and renewed frictions across supply chains. The combination of accelerating demand and tightening supply conditions suggests that semiconductor inflation could prove more persistent—and more globally consequential—than currently assumed.

260430Z5.jpg

**Labour Markets Reflect the AI Acceleration**
Our final chart this week highlights the extent to which the current AI boom is now feeding through into labour markets. This high-frequency indicator—based on the share of job listings containing AI-related keywords—shows a sharp and sustained increase since the widespread adoption of generative AI tools in late 2022. What began as a more traditional build-out in machine learning roles has evolved into a broader and more intense wave of hiring tied to generative AI capabilities, with demand accelerating markedly across multiple economies. The scale and persistence of this trend point to a structural shift rather than a cyclical upswing, reinforcing the view that AI is becoming an increasingly important driver of investment, productivity expectations and, potentially, broader macroeconomic dynamics.

260430Z6.jpg

Against a backdrop of persistent geopolitical tensions, firmer energy prices and a busy week of central bank meetings—including the Fed, ECB, BoE and BoJ—financial markets have remained notably resilient, even as the macro narrative has softened at the margin. The message from this week’s charts is one of growing tension beneath that surface calm. Front-end bond yields have moved higher, signalling a shift toward a more cautious, “higher-for-longer” policy outlook (chart 1). At the same time, real-time recession indicators for the United States suggest risks remain contained for now (chart 2). Consumer confidence data paint a more uneven picture, with sharper declines in the euro area and UK than in the US, highlighting regional vulnerabilities to the current energy shock (chart 3). The ECB’s latest bank lending survey reinforces this, pointing to tighter credit conditions and weaker demand—factors that are likely to weigh further on European growth (chart 4). By contrast, developments in the semiconductor sector underline a different dynamic: an intensifying global boom, with accelerating price pressures reflecting both strong AI-driven demand and emerging supply-side constraints linked indirectly to energy and logistics disruptions (chart 5). Finally, labour market data confirm that the AI surge is not merely a market narrative but a tangible structural shift, with hiring for AI-related roles accelerating across economies (chart 6). Taken together, these signals point to a more complex macro environment—one in which resilient markets coexist with softening growth, more persistent inflation risks and increasingly delicate policy trade-offs.

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/20j2LcPyLFkPvV7NrquXuj?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Tension Beneath the Surface

Michael J. Moran

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Real GDP grew at an annual rate of 2.0% in the first quarter of 2026, almost identical to the expected advance of 2.1%. The latest change was comfortably within the range of recent observations and close to the economy’s potential rate of growth. The year-over-year change totaled 2.7%, but that shift reflected what might be viewed as a special factor (robust growth in the second and third quarters that offset a trade-tariff-induced drop in 2025-Q1 GDP).

Business fixed investment was the star of the show in the first quarter, registering growth of 10.4%. Outlays for information processing equipment and software were especially strong, while outlays for industrial equipment and Research & Development contributed positively as well. Outlays for structures remained decidedly soft, dropping for the ninth consecutive quarter. Building of data centers have been vigorous, but softness in offices and manufacturing facilities has dwarfed the strength in this new area.

Federal spending surged 9.4% in Q1, but the rise reflected the reopening of most federal agencies after their closure during much of the fourth quarter. Excluding this noise, support from the federal government has been softening. Nondefense outlays peaked in the fourth quarter of 2024, and they were 6.9% shy of that total in the first quarter. Defense spending also peaked in 2024-Q4 and has eased 2.4% since then. Defense spending most likely will grow in coming quarters because of the efforts in the Middle East. Orders for defense goods have already started to rise.

Consumer spending rose 1.5% in the first quarter, a bit shy of the 2.1% pace over the four quarters of last year and less than half the rates in 2023 and 2024. Consumer spending showed signs of softening in late 2025 and January of this year, but activity picked up in February and March. Firm tax refunds might have provided a boost to household spending in the latest months. Some of the tax cuts from the One Big Beautiful Bill were applied retroactively to 2025, but withholding schedules were not adjusted last year. Thus, many households are receiving larger-than-normal tax refunds.

International trade acted as a drag on economic growth in Q1, with net exports subtracting 1.3 percentage points from the GDP increase. Exports did well in the first quarter with growth of 12.9%, but imports were even stronger with a jump of 21.4%. The real trade deficit of $1.1 trillion was noticeably smaller than the shortfall of $1.4 trillion in 2025-Q1 when importers were rushing to get goods into the US before the imposition of tariffs. Still, the trade shortfall was sizeable and its effect on growth noticeable.

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

260430P.jpg

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- Robust business investment led the advance; moderate support from consumers.
- Government spending jumped with the reopening of most federal agencies.
- The trade sector remained volatile, making a sizeable negative contribution in Q1.

Q1 GDP: Weathering the Challenges; Trend-Like Growth

Sandy Batten

260430A.jpg

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This monthly report contains a wealth of information concerning the state of the consumer. The anticipation ahead of today’s report centered on how much the surge in energy prices since the escalation of the US-Iran conflict in early March would push up overall PCE inflation. Prices of energy goods and services jumped 11.6% m/m not annualized in March. This was the largest monthly increase since September 2005. As a result, the headline PCE price index increased 0.7% m/m (3.5% y/y versus 2.8% y/y in February), the largest monthly gain since July 2022 but in line with expectations of the Action Economics Forecast Survey.

The core index (that is, excluding food and energy prices) rose by a more modest 0.3% m/m in March, down from a 0.4% monthly increase in February and in line with expectations. However, the yearly rate rose further to 3.2% y/y in March from 3.0% in February, well above and moving away from the Fed’s 2% target. The FOMC left its fed funds rate target unchanged at yesterday’s meeting, but some committee members dissented, opposing the implied easing bias contained in the statement. Chair Powell, in his press conference, noted that a number of members have become more concerned over the inflation outlook and the possible need for a Fed response.

Nominal personal income posted a solid 0.6% m/m (3.7% y/y) increase in March following an upwardly revised unchanged reading in February (previously -0.1% m/m). The March increase was twice the 0.3% monthly gain expected by the Action Economics Forecast Survey. However, after adjusting for inflation, real personal income slipped 0.1% m/m in March on top of a 0.4% m/m decline in February.

Employee compensation continued to be a major driver of personal income in March. It rose 0.4% m/m (4.1% y/y) in March after a 0.2% monthly increase in February. In March, proprietors’ income jumped 2.8%. This outsized increase reflected payments to farmers from the federal government’s Farmer Bridge Assistance Program. Rental income rose a solid 0.7% m/m, the same gain as in February. Income from financial assets increased 0.4% m/m following a 0.9% m/m decline in February. Personal current transfer payments edged up 0.1% m/m versus a 0.3% m/m decline in February.

Nominal consumption expenditures jumped 0.9% m/m (5.7% y/y) in March following an upwardly revised 0.6% monthly gain in February (previously +0.5% m/m). Spending on goods rose 2.0% m/m (4.5% y/y) while spending on services increased 0.4% m/m (6.3% y/y). As for overall inflation, the surge in energy prices also accounted for a large portion of the March gain in nominal spending. After adjusting for overall inflation, real PCE rose a more modest 0.2% m/m following an upwardly revised 0.3% m/m increase in February (previously +0.1% m/m). Still, the solid gains in February and March provide a strong starting point for Q2. The March level is 1.5% at an annual rate above the Q1 average. For all of Q1, real PCE rose 1.6% q/q saar.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

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- The PCE price index jumped 0.7%, reflecting an 11.6% m/m surge in energy prices.
- The core index was up 0.3%, in line with expectations but still well above the Fed’s target.
- Personal income increased 0.6% m/m, led by a 0.4% m/m rise in compensation.
- Personal consumption jumped 0.9% m/m with a slight upward revision to February.
- However, much of the March gain in nominal consumption also reflected the jump in energy prices.
- Real consumption rose by a more modest 0.2% m/m.

Surging Energy Prices Push Up PCE Prices and Consumption in March

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance dropped by 26,000 to 189,000 in the week ending April 25, from 215,000 in the week ending April 18, revised from 214,000. The four-week average declined by 3,500 to 207,500 in the week ending April 25, from 211,000 the April 18 week, revised from 210,750. The Action Economics/Haver Analytics Survey looked for 214,000 claims to have been filed.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—dropped by 23,000 to 1.785 million in the week ending April 18, from 1.808 million in the week ending April 11, revised from 1.821 million. The four-week moving average declined to 1.797 million in the latest week from 1.809 million in the April 11 week. The insured unemployment rate remained at 1.2% in the week of April 11. It has remained at that level since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending April 11, the highest unemployment rates were in New Jersey (2.51%), Washington (2.25%), Massachusetts (2.21%), Rhode Island (2.10%), and California (2.06%). The lowest rates were in Florida (0.31%), Louisiana (0.32%), Arkansas, North Carolina and Mississippi (all 0.35%), Alabama (0.36%), South Dakota (0.41%) and Tennessee (0.43%). Rates in other notable states include New York (1.96%), Illinois (1.77%), Pennsylvania (1.40%), and Texas (1.04%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

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- New claims dropped by 26,000 to 189,000.
- Continuing claims declined by 23,000 to 1.785 million.
- The insured unemployment rate remained at 1.2%.

U.S. Initial Unemployment Claims dropped in the Week of April 25

260430E.jpg

**Unemployment rates are stable near all-time lows for EMU**
Unemployment rates in the European Monetary Union (EMU) continued to hover at the lowest level. The EMU all-time low unemployment rate is 6.2%, and that’s the number reported for March. There have been five of these 6.2% unemployment rates monthly in the history of the monetary union.

Unemployment rates in March saw declines in five of the 12 early reporting countries: the Netherlands, Italy, Finland, Belgium, and Austria. Over the last three months, there were net declines in the unemployment rates in four countries, while year-over-year once again four countries—though a different four—showed declines in the unemployment rate.

Unemployment rates, evaluated relative to their historic standings, have a median rank standing in their 33.6 percentile. That is the median unemployment rank among these 12 countries; it shows that the unemployment rate is in the lower one-third of its historic rank. Among the 12 early reporting countries, only three failed to have unemployment rate rankings below their 30th percentile; those three are Austria with a 71.3 percentile ranking, Finland with an 80th percentile ranking, and Luxembourg with a 98.8 percentile ranking. So, there are three countries among these 12 that have relatively high unemployment rates compared to their histories, whereas the rest of the reporters have unemployment rates below their respective 30th percentiles.

260430.jpg

**Good, but not great, labor markets**
Clearly, the labor situation is in good hands; however, at the same time, inflation runs over the top of the ECB target, and with war in the Middle East and flurrying oil prices, inflation is going to climb higher. The ECB, like the Federal Reserve, finds itself in the awkward position of not wanting to raise rates because the economy is generating growth; on the other hand, growth seems somewhat fragile. The unemployment rate is low, and inflation has been overshooting, so the central bank is in a difficult position.

**Are central banks awakening from their slumber?**
Despite the good news on the unemployment front, central banks have been wary not to raise interest rates to fend off inflation. Inflation can really be described as having been moved around by financial crises and shocks going back to the great financial crisis. That shock, coupled with the losses that it created, left a legacy of inflation discipline for a very long run, basically, right into the COVID-created recession. COVID weakened economies globally as they were shut down by government policies and then inflation spurted as result of stimulative monetary action and fiscal excess. After that experience, central banks kept stimulative policies on the books and tried to coax growth out of a wounded economy and maintain low unemployment rates, while tolerating inflation that was excessive relative to their targets, but that did not accelerate and did decline slowly—at least for a while. As a result, there's now a legacy of overshooting inflation and more question marks about central banks and their backbone than central bankers want to admit as inflation rises, and as they continue to watch and postpone acting.

**ECB met and declared watchful waiting—not policy action**
At the recent meeting, the ECB policy statement admitted that “Longer-term inflation expectations remain well anchored, although inflation expectations over shorter horizons have moved up significantly.” They are following the model used in the U.S. to contend that long-term inflation expectations are still firmly anchored while they are only slipping away for the short term—a year ahead or so. However, to its credit, the ECB does refer to expectations having moved up significantly in the near term. This is something policy must be wary of, and it also must be wary that long-term expectations may have been damaged as well.

In her press conference, Christine Lagarde noted that the forward guidance from the ECB has several different elements: “There are sort of three anchors of what our reaction function is. So first of all, to remind you: target is 2% medium term, number one. Number two: symmetry. We discussed that today and we reaffirmed it. Number three: our reaction will depend on the type of deviation from target that we observe. Is it large and sustainable?”

"The increase in energy prices will keep inflation well above 2% in the near term. ⁠As the period of high energy prices extends, the likely impact on broader inflation through indirect and second-round effects intensifies. We will therefore closely monitor the size and persistence of the energy price surge, and how it feeds through to price and wage setting, inflation expectations and overall economic dynamics." (Source [here](https://www.reuters.com/business/finance/lagarde-comments-ecb-press-conference-2026-04-30/)).

**The road they kick the can down is getting narrower**
So, we are in store for more watchful waiting. Central bankers can feel that the flexibility is closing in on them. There's been a long period in which post financial crisis and post-COVID events helped to keep inflation under control, but now we're getting into a situation where it may be harder to keep control of inflation, especially since central bank credibility has been eroded by a long period of target misses. Two wars are in progress, and fiscal excess is the order of the day. So why not wait longer?

**No eager-beaver rate hikers**
No central bank seems eager to undertake this new challenge; however, they seem to be circling around the policy change and preparing to do something they haven't done in a long time, which would be to raise interest rates. Last time, in the wake of COVID, the central banks raised interest rates they waited too long to hike them, calling the situation of inflation temporary or transitory. Once again, the central banks see the oil price shock as something that is temporary; however, it's also severe, and while it's temporary, it could turn out to be ‘temporary’ but fairly long-lasting, making it harder to ignore or for a central bank that plans to ‘look through.’

**Some act, some talk, some just look...**
As I noted in the [report on money supplies](https://www.haver.com/articles/globally-money-supplies-accelerate-no-problemo) yesterday, the current practice of trying to look through this supply shock is creating an overshoot of money supply as we have money supply accelerations brewing in the U.S., the U.K., and the European Monetary Union. However, one of the rules from the 1970s was to not accommodate an oil price shock. Unfortunately, the practice of ‘looking through’ a supply shock—which means holding interest rates steady—is at the same time encouraging acceleration in the money supply, which looks accommodative to me. I don't see any evidence that central bankers have recognized the contradiction implied by these policies; it's something we should keep an eye on.