Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118c.jpg" align="left" border="0" height="265" width="353">
French new industrial orders are lower in two of the past
three months. Still, year over year orders retain solid upward
momentum. The sequential growth rates, however tell a different story,
one of a loss in momentum within the past year. That loss is stronger
on the domestic front since we see that foreign orders have stepped
down in growth from their Yr/Yr to six month pace but then recovered in
the recent three months, when total orders slowed, presumable weighed
down by weak domestic orders. Still with that in train Q4 growth in
orders is still positive. Total orders are up at a 1.2% pace in the
fourth quarter with two months of data in, while foreign orders are up
by a much stronger 6.5%.

A survey of small French firms finds that they are reasonably
comfortable for now but are concerned about the outlook. France is one
of the large EMU economies and is going through a shifting in gears
that will impact the EMU growth rate itself.

While today German government officials said there is no need
for an EMU-wide stimulus program, the main growth signals from Europe
have indicated a slowing. Germans retain confidence that growth will
continue despite the challenges and risks. Although there is no way to
tell yet how severe the slowing will be in Germany, France, Italy and
in the EU&#8217;s UK all major EU nations are showing signs of some
unevenness in growth.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> French Orders</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>-0.2%</td>
<td>2.4%</td>
<td>-2.5%</td>
<td>-1.3%</td>
<td>2.7%</td>
<td>8.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign</td>
<td>1.7%</td>
<td>2.2%</td>
<td>-2.9%</td>
<td>3.7%</td>
<td>2.7%</td>
<td>6.6%</td>
</tr>
</tbody>
</table>
</body></html>

French new industrial orders are lower in two of the past three months. Still, year over year orders retain solid upward momentum. The sequential growth rates, however tell a different story, one of a loss in momentum within the past [...]

French New Orders Soften but Still Grow

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118d.jpg" width="353">
The Conference Board reported that the December composite index of leading economic indicators fell 0.2% after an unrevised 0.4% decline during November. A 0.1% decline had been expected.
For all of last year the leaders fell 0.2% and their six month growth rate, which is calculated as the latest month&#39;s reading divided by the average of the prior twelve months, stood at -1.6%. That was equal to the lowest level since 2001.
During the last ten years there has been a 59% correlation between the y/y change in the leading indicators index and the lagged change in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118f.jpg" width="353">
The breadth of one month gain amongst the 10 components of the leading index rose slightly to a still low 40.0%. Over a six month period, the breadth of gain amongst the leaders components was 30%, equal to its lowest level since 2002.
Last month unemployment insurance claims, stock prices, and consumer expectations made the largest contributions to the decline in the overall leading index.
The method of calculating the contribution to the leading index from the spread between 10 year Treasury securities and the Fed funds rate has been revised. A negative contribution will now occur only when the spread inverts rather than when declining as in the past. More details can be found <a href="http://www.conference-board.org/pdf_free/economics/bci/lei0705.pdf">here</a>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118e.jpg" width="353">
The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.
The coincident indicators rose 0.1% after a downwardly revised 0.1% November uptick. Over the last ten years there has been an 86% correlation between the y/y change in the coincident indicators and real GDP growth. Three of the four coincident series components rose very slightly and the gains were offset by a decline in real income.
The lagging index rose 0.4% and continued its steady rise. Last month the gain was due to a longer duration of unemployment. The ratio of coincident to lagging indicators (a measure of economic excess) fell during nine months last year to the lowest level since 1991. 
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.
Signal or Noise? Implications of the Term Premium for Recession Forecasting from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/epr/forthcoming/0801rose.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">December</th>
<th scope="col">November</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">Leading</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>-1.4%</td>
<td>-0.2%</td>
<td>1.2%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>2.5%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.4%</td>
<td>0.2%</td>
<td>2.3%</td>
<td>3.0%</td>
<td>3.0%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>


</html>

The Conference Board reported that the December composite index of leading economic indicators fell 0.2% after an unrevised 0.4% decline during November. A 0.1% decline had been expected. For all of last year the leaders fell 0.2% and [...]

U.S. Leading Economic Indicators Down Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118a.jpg" width="353">
For early January, the University of Michigan&#39;s consumer sentiment index recovered 6.6% m/m to 80.5, the highest level since October.The increase was only the second in eight months and it beat expectations for a continued decline to a level of 74.8.
The current conditions index rose 7.8%, following declines in six of the prior seven months, to the highest level since August. Current buying conditions for large household goods rose 12.4% (-7.2% y/y) on the strength of a 2.3% jump in perceptions that now is a good time to buy. The view of current personal finances rose a lesser 2.0% (-18.7% y/y) following two months of decline.
Expected business conditions during the next year rose 5.3% (-21.1% y/y). A 7.4% improvement in expectations for business conditions during the next five years lifted the total. The latest reading is equal to the 4Q average. Expectations for personal finances rose all of 2.7% (-9.4% y/y), reversed the December decline but was only the second gain in the last nine months.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118b.jpg" width="353">
Expectations for inflation during the next twelve months slipped to 4.1%. For the next five to ten years expectations similarly slipped to a 3.4% rise in prices, equal to the expected gain during all of last year.
Opinions about government policy rose 8.1% m/m (-16.7% y/y) and made up most of December&#39;s decline.
The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end; the mid-month results are based on about 300 interviews. The summary indexes are in Haver&#39;s USECON database, with details in the proprietary UMSCA database.
A Primer on the Mortgage Market and Mortgage Finance from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/08/01/McDonald.pdf"> here</a>.
Evolving Inflation Dynamics from the New Keynesian Philips Curve from the Federal Reserve Bank of Richmond can be found <a href="http://www.richmondfed.org/publications/economic_research/economic_quarterly/pdfs/fall2007/hornstein.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Jan (Prelim)</th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Jan&nbsp; y/y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>80.5</td>
<td>75.5</td>
<td>76.1</td>
<td>-16.9% </td>
<td>87.3</td>
<td>88.5</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>98.1</td>
<td>91.0</td>
<td>91.5</td>
<td>-11.9%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>69.1</td>
<td>65.6</td>
<td>66.2</td>
<td>-21.1%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
</tr>
</tbody>
</table>
</body>
</html>

For early January, the University of Michigan's consumer sentiment index recovered 6.6% m/m to 80.5, the highest level since October.The increase was only the second in eight months and it beat expectations for a continued decline to [...]

Michigan Consumer Sentiment Highest in Four Months

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118a.jpg" align="left" border="0" height="265" width="353">
For early January, the University of Michigan's consumer
sentiment index recovered 6.6% m/m to 80.5, the highest level since
October.The increase was only the second in eight months and it beat
expectations for a continued decline to a level of 74.8.
The current conditions index rose 7.8%, following declines in
six of the prior seven months, to the highest level since August.
Current buying conditions for large household goods rose 12.4% (-7.2%
y/y) on the strength of a 2.3% jump in perceptions that now is a good
time to buy. The view of current personal finances rose a lesser 2.0%
(-18.7% y/y) following two months of decline.
Expected business conditions during the next year rose 5.3%
(-21.1% y/y). A 7.4% improvement in expectations for business
conditions during the next five years lifted the total. The latest
reading is equal to the 4Q average. Expectations for personal finances
rose all of 2.7% (-9.4% y/y), reversed the December decline but was
only the second gain in the last nine months.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118b.jpg" align="right" border="0" height="265" width="353">
Expectations for inflation during the next twelve months
slipped to 4.1%. For the next five to ten years expectations similarly
slipped to a 3.4% rise in prices, equal to the expected gain during all
of last year.
Opinions about government policy rose 8.1% m/m (-16.7% y/y)
and made up most of December's decline.
The University of Michigan survey is not seasonally
adjusted.The reading is based on telephone interviews with about 500
households at month-end; the mid-month results are based on about 300
interviews. The summary indexes are in Haver's USECON database,
with details in the proprietary UMSCA database.
A Primer on the Mortgage Market and Mortgage Finance from
the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/08/01/McDonald.pdf">
here</a>.
Evolving Inflation Dynamics from the New Keynesian
Philips Curve from the Federal Reserve Bank of Richmond can
be found <a href="http://www.richmondfed.org/publications/economic_research/economic_quarterly/pdfs/fall2007/hornstein.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">Jan (Prelim)</th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Jan&nbsp; y/y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>80.5</td>
<td>75.5</td>
<td>76.1</td>
<td>-16.9% </td>
<td>87.3</td>
<td>88.5</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current
Conditions</td>
<td>98.1</td>
<td>91.0</td>
<td>91.5</td>
<td>-11.9%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Expectations</td>
<td>69.1</td>
<td>65.6</td>
<td>66.2</td>
<td>-21.1%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
</tr>
</tbody>
</table>
U.S. Leading Economic Indicators
Down Again 
by <a href="/comment/Moeller.html">Tom
Moeller</a> January 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118d.jpg" align="left" border="0" height="265" width="353">
The Conference Board reported that the December composite
index of leading economic indicators fell 0.2% after an unrevised 0.4%
decline during November. A 0.1% decline had been expected.
For all of last year the leaders fell 0.2% and
their six month growth rate, which is calculated as the latest month's
reading divided by the average of the prior twelve months, stood at
-1.6%. That was equal to the lowest level since 2001.
During the last ten years there has been a 59% correlation
between the y/y change in the leading indicators index and the lagged
change in real GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118f.jpg" align="right" border="0" height="265" width="353">
The breadth of one month gain amongst the 10 components of the
leading index rose slightly to a still low 40.0%. Over a six month
period, the breadth of gain amongst the leaders components was 30%,
equal to its lowest level since 2002.
Last month unemployment insurance claims, stock prices, and
consumer expectations made the largest contributions to the decline in
the overall leading index.
The method of calculating the contribution to the leading
index from the spread between 10 year Treasury securities and the Fed
funds rate has been revised. A negative contribution will now occur
only when the spread inverts rather than when declining as in the past.
More details can be found <a href="http://www.conference-board.org/pdf_free/economics/bci/lei0705.pdf">here</a>.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118e.jpg" align="left" border="0" height="265" width="353">
The leading index is based on eight previously reported
economic data series. Two series, orders for consumer goods and orders
for capital goods, are estimated.
The coincident indicators rose 0.1% after a downwardly revised
0.1% November uptick. Over the last ten years there has been an 86%
correlation between the y/y change in the coincident indicators and
real GDP growth. Three of the four coincident series components rose
very slightly and the gains were offset by a decline in real income.
The lagging index rose 0.4% and continued its steady rise.
Last month the gain was due to a longer duration of unemployment. The
ratio of coincident to lagging indicators (a measure of economic
excess) fell during nine months last year to the lowest level since
1991. 
Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.


Signal or Noise? Implications of the Term Premium for
Recession Forecasting from the Federal Reserve Bank of New
York can be found <a href="http://www.newyorkfed.org/research/epr/forthcoming/0801rose.pdf">
here</a>.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business
Cycle Indicators</a></th>
<th scope="col">December</th>
<th scope="col">November</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">Leading</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>-1.4%</td>
<td>-0.2%</td>
<td>1.2%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>2.5%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.4%</td>
<td>0.2%</td>
<td>2.3%</td>
<td>3.0%</td>
<td>3.0%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
French New Orders Soften but
StillGrow 
by <a href="/comment/Brusca.html">Robert
Brusca</a> January 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118c.jpg" align="left" border="0" height="265" width="353">
French new industrial orders are lower in two of the past
three months. Still, year over year orders retain solid upward
momentum. The sequential growth rates, however tell a different story,
one of a loss in momentum within the past year. That loss is stronger
on the domestic front since we see that foreign orders have stepped
down in growth from their Yr/Yr to six month pace but then recovered in
the recent three months, when total orders slowed, presumable weighed
down by weak domestic orders. Still with that in train Q4 growth in
orders is still positive. Total orders are up at a 1.2% pace in the
fourth quarter with two months of data in, while foreign orders are up
by a much stronger 6.5%.

A survey of small French firms finds that they are reasonably
comfortable for now but are concerned about the outlook. France is one
of the large EMU economies and is going through a shifting in gears
that will impact the EMU growth rate itself.

While today German government officials said there is no need
for an EMU-wide stimulus program, the main growth signals from Europe
have indicated a slowing. Germans retain confidence that growth will
continue despite the challenges and risks. Although there is no way to
tell yet how severe the slowing will be in Germany, France, Italy and
in the EU&#8217;s UK all major EU nations are showing signs of some
unevenness in growth.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> French
Orders</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>-0.2%</td>
<td>2.4%</td>
<td>-2.5%</td>
<td>-1.3%</td>
<td>2.7%</td>
<td>8.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign</td>
<td>1.7%</td>
<td>2.2%</td>
<td>-2.9%</td>
<td>3.7%</td>
<td>2.7%</td>
<td>6.6%</td>
</tr>
</tbody>
</table>
UK Retail Sales Take a
Hit&nbsp; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> January 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118g.jpg" align="left" border="0" height="265" width="353">
The hit to UK retail sales was severe enough to reverberate in
the exchange markets where sterling suffered a set back in trading
after the retail figures were made public. The chart tells the story
without the benefits of numbers. The pattern clearly shows a loss in
headline momentum and a loss in momentum on all major horizons. Real
excl auto sales echos that pattern. 
 

In numbers retail sales drop by 0.4% (ex autos) in real terms
in December, and that drop is never a good sign. For the full quarter,
however, real retail sales ex autos continue to grow at a pace of 1.9%.
But the slip in the three month growth rate is a negative indicator for
momentum and the period ahead. Food sales were up in December with
nonfood spending weak. UK indicators have been touch and go in recent
months, This one pushes the BOE closer to being truly concerned about
growth and may be enough to get a rate cut from it. But since inflation
data are not cooperative and the EMU region is slowing but holding
policy pat, it is not yet clear if the UK will follow the US lead to
lower rates or to be stoic and stay with continental Europe. The UK
economy seems to be on the cusp. 
 
 


<table border="0" cellspacing="0" width="100%">
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">UK Real
and Nominal Retail Sales </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Year Ago</td>
</tr>
<tr>
<td class="firstcol">Total Retail</td>
<td>-0.6%</td>
<td>0.4%</td>
<td>0.0%</td>
<td>-0.9%</td>
<td>0.5%</td>
<td>1.7%</td>
<td>4.8%</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>0.4%</td>
<td>0.5%</td>
<td>0.1%</td>
<td>4.2%</td>
<td>5.4%</td>
<td>3.2%</td>
<td>5.0%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>0.0%</td>
<td>-0.7%</td>
<td>-0.9%</td>
<td>-6.2%</td>
<td>-0.1%</td>
<td>-0.5%</td>
<td>8.1%</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Retail excl auto</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>4.9%</td>
</tr>
</tbody>
</table>
</body></html>

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080117g.jpg" align="left" border="0" height="265" width="353">
Yr/Yr EMU import growth is now exceeding export growth. Import
growth is creeping up at a faster pace while export growth is being
damped and is faltering. But sequential growth rates within the past
year shows that most components within the import aggregate are seeing
growth tail off with the exception of food. For exports sequential
growth rates also indicates a slowing. The sequential growth rate
parses the data over the past year to allow us to get a sense of the
intra-yearly pattern. What we see there makes us wonder about demand
within the Euro Area since imports are slowing within that horizon.
Since Euro Area exports are slowing on that horizon as well we are left
to wonder if export markets for EMU are also slowing or if it is an
impact of the strong euro value or of both.
Global growth 

As we begin to get evidence of Europe&#8217;s slowing we are also
getting re-thinks on the growth rates for member countries. The Bank of
France&#8217;s survey is pointing to a softer rate of growth in Q4. Germany
is said to be considering a reduction in its new forecast as some
private outlooks have been cut. The EU Commission is now reported to be
in the process of revamping its outlook to find Europe less insulated
from the effect of a US slowdown. Japan has been slowing and the
government has been reluctant to downgrade growth, as has the BOJ.
China is suffering though some overheating and despite it&#8217;s trying to
forestall any slowing until after the Olympic games, it has been forced
into a more defensive monetary policy sooner than it desired.

On balance there is a considerable amount of evidence to
support the notion of slowing growth on a widespread global scale.
Commodity prices are just beginning to reflect this shift. But so far
we have no indication how much the slowdown might progress. Some hold
out hope that demand will remain in place in the developing world and
will buffer the growth in the main industrial countries. There is
little evidence of that or that such a small amount of essentially
infrastructure spending that might be resilient might support global
growth. Instead, the evidence seems to be falling on the side of
showing that the US slowdown drags the world with it and that it is
happening again.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">Ezone 13-Trade trends for goods </th>
</tr>
</thead>
<tbody>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>12-Mo Ago</td>
</tr>
<tr class="grey4">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; 2,718</td>
<td>&#8364;&#8364; 2,984</td>
<td>&#8364;&#8364; 3,141</td>
<td>&#8364;&#8364; 3,160</td>
<td>&#8364;&#8364; 3,024</td>
<td>&#8364;&#8364; (1,251)</td>
</tr>
<tr class="grey3">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">All Exports</td>
<td>0.3%</td>
<td>1.2%</td>
<td>0.5%</td>
<td>9.9%</td>
<td>5.9%</td>
<td>11.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food and Drinks</td>
<td>-0.7%</td>
<td>1.6%</td>
<td>-3.4%</td>
<td>13.7%</td>
<td>8.3%</td>
<td>11.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Raw materials</td>
<td>-1.3%</td>
<td>1.0%</td>
<td>2.6%</td>
<td>-0.6%</td>
<td>0.9%</td>
<td>22.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>0.4%</td>
<td>1.2%</td>
<td>0.7%</td>
<td>10.0%</td>
<td>5.9%</td>
<td>11.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Manufacturing</td>
<td>-0.7%</td>
<td>0.3%</td>
<td>-8.1%</td>
<td>8.2%</td>
<td>1.9%</td>
<td>15.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Imports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">All Imports</td>
<td>0.5%</td>
<td>1.9%</td>
<td>4.4%</td>
<td>11.8%</td>
<td>6.6%</td>
<td>7.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food and Drinks</td>
<td>-3.4%</td>
<td>-1.2%</td>
<td>23.7%</td>
<td>26.0%</td>
<td>14.7%</td>
<td>5.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Raw materials</td>
<td>-3.9%</td>
<td>1.1%</td>
<td>-24.3%</td>
<td>-5.7%</td>
<td>-3.7%</td>
<td>27.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>1.0%</td>
<td>2.1%</td>
<td>5.0%</td>
<td>12.0%</td>
<td>6.7%</td>
<td>6.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Manufacturing</td>
<td>-2.4%</td>
<td>-0.9%</td>
<td>-19.2%</td>
<td>1.1%</td>
<td>-0.2%</td>
<td>10.6%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">*Eur mlns; mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

Yr/Yr EMU import growth is now exceeding export growth. Import growth is creeping up at a faster pace while export growth is being damped and is faltering. But sequential growth rates within the past year shows that most components [...]

Exports Slowing in the Zone; Imports improving...at least Yr/Yr

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080117e.jpg" width="353">
Unexpectedly, initial claims for jobless insurance dropped 21,000 last week to 301,000 after an unrevised 12,000 decline during the week prior. The latest level was the lowest since late September and contrasted with expectations for a rise to 332,000 claims. The recent claims figures may still be distorted by seasonal adjustment difficulties this time of year.
The latest claims figure covers the survey week for January nonfarm payrolls and claims fell 47,000 (-13.5%) from the December period.
The four week moving average of initial claims, a measure which smoothes out most of the series&#39; w/w volatility, fell to 328,500 (+5.6% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080117f.jpg" width="353">
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last six years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance rose 66,000 and reversed a revised 69,000 drop during the prior week. The figure provides some indication of workers&#39; ability to find employment.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment rose back to the cycle&#39;s high of 2.1%.
The Fed&#39;s latest Beige Book covering regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2008/20080116/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">01/12/08</th>
<th scope="col">01/05/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;301</td>
<td>322</td>
<td>4.9%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,751</td>
<td>11.3%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
</tbody>
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Unexpectedly, initial claims for jobless insurance dropped 21,000 last week to 301,000 after an unrevised 12,000 decline during the week prior. The latest level was the lowest since late September and contrasted with expectations for [...]

U.S. Initial Claims for Jobless Insurance Lowest Since September

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080117c.jpg" width="353">
The Philadelphia Federal Reserve Bank reported that it&#39;s Index of General Business Conditions in the manufacturing sector cratered to -20.9 this month from what was a revised level of -1.6 in December. The latest level was the lowest since the recession year 2001.
The index is a diffusion index for each component or series. It reflects the increase in activity reported less the decrease.
During the last ten years there has been a 59% correlation between the level of the Philadelphia Fed Business Conditions Index and the three-month growth in factory sector industrial production. There has been a 42% correlation with q/q growth in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080117d.jpg" width="353">
The decline represented broad based moves by each of the sub indexes into negative territory. New orders and inventories were notably weak while shipments, unfilled orders and vendor deliveries all were down. The employment index also fell. During the last ten years there has been a 75% correlation between the employment index and the three-month growth in factory payrolls.
The business conditions index reflects a separate survey question, not the sub indexes.
The prices paid index also was strong, rising to the highest level since mid-2006. During the last ten years there has been a 76% correlation between the prices paid index and the three-month growth in the intermediate goods PPI. There has been an 85% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months fell sharply to the latest was the lowest reading since mid-2006. Expectations for new orders were notably weak but expectations for the number of employees rose for the second month.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Jan. &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-20.9</td>
<td>-1.6</td>
<td>3.6</td>
<td>5.1</td>
<td>8.1</td>
<td>11.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>49.8</td>
<td>&nbsp;36.5</td>
<td>&nbsp;15.6</td>
<td>26.4</td>
<td>36.6</td>
<td>40.1</td>
</tr>
</tbody>
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The Philadelphia Federal Reserve Bank reported that it's Index of General Business Conditions in the manufacturing sector cratered to -20.9 this month from what was a revised level of -1.6 in December. The latest level was the lowest [...]

Philadelphia Fed Index Plummets Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080117a.jpg" width="353">
Not since the recession of the early 1990s have housing starts fallen so low. A 14.2% m/m decline in December dropped starts to 1.006 million units after a downwardly revised 7.9% November decline. The decline, which by far exceeded Consensus expectations for 1.145M starts, was to the lowest level since 1991.
For all of 2007 housing starts fell 25.8% after a 12.6% decline during 2006.
The relatively mild 2.9% m/m drop to .794M single family starts in December was hardly indicative of a less dramatic decline this cycle. It too dropped starts to the lowest level since early 1991. The decline followed drops in each month since March. Since the peak in early 2006, starts of single family homes are down 56.8%.
Multi-family starts plunged 40.3% last month after a 10.1% November decline. That left starts at their lowest level since 1994.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080117b.jpg" width="353">
By region, single family starts in the Northeast continued down and fell 7.4% (-29.9% y/y) after a 16.5% November decline. Starts in the Northeast are 56.9% below the early 2006 peak. Single family starts in the Midwest fell 9.3% m/m (-29.4% y/y). These starts are down 65.3% from the early 2005 peak. Single family starts in the West nearly doubled the November rate of decline and fell 16.3% (-54.1% y/y). They are 71.0% below the 2005 high. And in the South, single family starts actually posted the second consecutive monthly gain (-30.0% y/y) but still closed the year 51.3% below peak.
Building permits fell 8.1% (-34.4% y/y) and were down 51.8% from the 2005 peak. Single-family permits posted a 10.1% m/m decline (-41.4% y/y), down 61.5% from the peak.
Today&#39;s Congressional testimony by Fed Chairman Ben S. Bernanke, The Economic Outlook, can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20080117a.htm"> here</a>.
Measuring Consensus as the Midpoint of Central Tendency from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20080201/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a></th>
<th scope="col">December</th>
<th scope="col">November</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">Total</td>
<td>1,006</td>
<td>1,173</td>
<td>-38.2%</td>
<td>1,344</td>
<td>1,812</td>
<td>2,073</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family</td>
<td>794</td>
<td>818</td>
<td>-35.7%</td>
<td>1,040</td>
<td>1,474</td>
<td>1,719</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-Family</td>
<td>212</td>
<td>355</td>
<td>-45.4%</td>
<td>304</td>
<td>338</td>
<td>354</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,068</td>
<td>1,162</td>
<td>-34.4%</td>
<td>1,370</td>
<td>1,842</td>
<td>2,159</td>
</tr>
</tbody>
</table>
</body>
</html>

Not since the recession of the early 1990s have housing starts fallen so low. A 14.2% m/m decline in December dropped starts to 1.006 million units after a downwardly revised 7.9% November decline. The decline, which by far exceeded [...]

U.S. Housing Starts Plumb 1991 Lows

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

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

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Andrew Cates

**Upbeat investors**
Despite a year marked by major headwinds — from renewed US tariffs and persistent geopolitical strains to shifting interest-rate expectations — incoming global economic data have consistently outperformed forecasters’ expectations. The Citigroup Economic Surprise Index has remained in positive territory for most of 2025, indicating that growth, labour, and spending indicators have been “less bad” or outright stronger than consensus predicted. That resilience has helped to underpin market sentiment: while bouts of concern have occasionally lifted the Cboe Volatility Index (VIX), volatility has stayed relatively subdued, and equity markets have remained buoyant. In effect, 2025 has been a year in which the real economy has quietly outpaced the gloom, keeping risk appetite supported even as the macro narrative remained fraught with shocks and uncertainty.

251113Z1.jpg

**Less restriction from monetary policy**
Another key source of support for investors through 2025 has been the steady easing in both inflation and monetary policy across the major advanced economies. Core CPI has continued to trend lower from its 2022–23 highs, reflecting softer goods prices, moderating wage growth, and the lagged effects of tighter policy. With inflation now back within sight of central bank targets, policy rates have been edging down for the first time in several years. That shift has eased financial conditions, lowered real borrowing costs, and helped sustain asset valuations even as growth expectations have moderated. In effect, 2025 has marked the transition from a phase of inflation anxiety and policy restraint to one of gentle disinflation and tentative monetary normalisation—an environment that has kept liquidity abundant and risk assets well supported.

251113Z2.jpg

**A thrust from fiscal policy**
A further policy tailwind in 2025 has come from the fiscal side, where governments in the major advanced economies have largely resisted meaningful consolidation despite earlier pledges to rebuild buffers. Across the US, Europe, and Japan, the cyclically adjusted primary balance remains firmly expansionary, helping to sustain demand at a time when private investment and trade have softened. In the United States, spending linked to industrial policy, energy transition, and defence has continued to underpin activity; in Europe, fiscal policy has remained loose as governments balance social pressures and investment needs; and in Japan, the new prime minister has signalled further stimulus to support household income and productivity growth. Yet this persistent fiscal support has also had a side effect: it has kept longer-term real yields unusually elevated, reflecting both heavy sovereign issuance and investor recognition that governments are still running structural deficits even in a low-growth environment. In other words, fiscal policy has been a crucial prop for near-term growth—but also one reason why the “new normal” for real yields now looks higher than in the pre-pandemic decade.

251113Z3.jpg

**The AI Boom**
One of the defining features of 2025 has been the AI investment boom, centred on the extraordinary surge in spending on US data centres and digital infrastructure. Real private investment in this sector has soared to record highs as firms race to expand computing capacity, driven by optimism about artificial intelligence and its potential to transform productivity. The pickup in utilisation-adjusted total factor productivity suggests that some efficiency gains may already be materialising, though it remains too early to tell whether these effects will endure. Investors have largely welcomed this capital deepening as a sign of renewed US dynamism, but it also carries familiar late-cycle risks — from valuation bubbles in AI-related equities to mounting energy demands and strain on power grids. The key question for 2026 and beyond is whether this unprecedented capex wave will deliver the sustained productivity lift needed to justify its scale, or whether it proves another costly technological exuberance.

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**Global trade fragmentation** 
Global trade came under renewed strain in 2025 as President Trump moved quickly in his second term to escalate tariff actions against China and several key trading partners. The US effective tariff rate has surged from below 8% at the end of 2024 to around 21% by mid-2025, marking the most aggressive trade tightening since the late 2010s. The back-and-forth imposition of tariff and non-tariff barriers between Washington and Beijing has led to a sharp pullback in bilateral trade flows, with US imports from China falling markedly and Chinese imports from the US also sliding. The broader ripple effects have been significant: global supply chains are once again being re-routed, firms are diversifying production toward third-country hubs, and world trade growth has slowed. This latest round of protectionism has reinforced the trend toward strategic fragmentation — a more regional, politically filtered form of globalisation — that continues to reshape the post-pandemic trading landscape.

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**Lingering uncertainties**
If there has been one constant through 2025, it has been uncertainty itself. Both global economic policy uncertainty and geopolitical risk indices have remained at historically high levels, underscoring an environment shaped by unpredictable policy shifts, heightened conflict risks, and volatile leadership transitions. Trade tensions between the US and China, renewed instability in the Middle East, and political fragmentation across Europe have all contributed to a pervasive sense of unease. For businesses and investors, this has meant navigating a world where the policy outlook can change overnight — from tariffs and fiscal surprises to shifting regulatory regimes. Yet despite this turbulence, financial markets have shown remarkable resilience, helped by disinflation, easier monetary policy, and continued technological investment. In short, 2025 has been a year in which uncertainty has become the new normal — less an episodic shock, more a defining structural feature of the global economic landscape.


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The global economic story of 2025 has been one of resilience amid disruption. Despite a succession of shocks — from a renewed U.S.–China trade confrontation and elevated geopolitical risks, to a sharp rise in fiscal activism and the energy-intensive AI investment boom — the world economy has held up better than many feared. Activity data have consistently surprised on the upside, supporting buoyant equity markets and keeping volatility contained. Meanwhile, inflation has continued to ease and central banks have cautiously shifted toward easier policy, even as large government deficits have kept longer-term real yields elevated. At the same time, US tariff policies have re-emerged as a defining force in global trade, with steep new duties on Chinese, Canadian, and Mexican goods disrupting supply chains and prompting renewed fragmentation in world commerce. These measures have cooled bilateral trade flows and added another layer of uncertainty to an already unsettled policy environment. Yet uncertainty itself remains the dominant feature of 2025 — geopolitical tension, technological exuberance, and diverging fiscal and monetary paths have left investors navigating a world where optimism and fragility coexist.

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Charts of the Week: The Year in Review

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The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) increased 3.9% (-0.3% y/y) during September to 104.5 after rising 2.8% in August and 2.9% in July. The index roughly equaled the recent high of 104.8 in September of 2024. The level of home affordability was 16.2% higher than its low of 89.9 in October 2023, but remained 41.6% below the high of 179.0 in April 2020.

The rise in September affordability occurred as the median price of an existing single-family home fell 1.6% (+2.3% y/y) to $420,700. The price compared to the record $438,600 in June 2025. Mortgage rates fell to 6.43% after declining to 6.67% in August. The fall in mortgage rates left them above their low of 6.26% in September of last year, though below a 7.70% high in October of 2023. They remained well above a December 2020 low of 2.73%.

In September, the principal plus interest payment fell 4.0% (+4.1% y/y) to $2,112 per month, down 8.6% from June’s record high of $2,311, but still well above the most recent low of $984 in February 2020. Monthly mortgage payments averaged a lessened 23.9% of income during September, down from 24.9% in August, but increased from a low of 14.0% of income in April 2020.

The decline in housing costs in September was accompanied by a 0.3% decline (+3.8% y/y) in median family income to $105,946 after rising 0.3% in both August and July. Qualifying income declined 4.0% (+4.1% y/y) to $101,376, the third straight month of sharp decline.

Housing affordability improved m/m across the country in September. The index rose in the Midwest, the country’s most affordable region, by 5.1% (-2.8% y/y) to 131.9. In the South, the index increased 2.2% (0.6% y/y) to 109.9, while the affordability index in the Northeast jumped 9.4% (-2.8% y/y) to 92.7. In the West, where homes are the least affordable, the index improved 2.3% (1.1% y/y) to 75.0 in September.

The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990. It reached an all-time high of 213.3 in January 2013.

Data on Housing Affordability can be found in Haver’s **REALTOR** database. Median home sales prices are also available in **USECON**. Higher frequency interest rate data are found in **SURVEYS**, **WEEKLY**, and **DAILY**.

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- Home prices & mortgage rates continue to decline.
- Median income edges lower.
- Affordability increases across country.

U.S. Housing Affordability Increases in September

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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.

Economy in Brief: 2008

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French New Orders Soften but Still Grow

U.S. Leading Economic Indicators Down Again

Michigan Consumer Sentiment Highest in Four Months

Michigan Consumer Sentiment Highest in Four Months

Exports Slowing in the Zone; Imports improving...at least Yr/Yr

U.S. Initial Claims for Jobless Insurance Lowest Since September

Philadelphia Fed Index Plummets Further

U.S. Housing Starts Plumb 1991 Lows