Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123b.jpg" width="353">
Initial claims for unemployment insurance rose 30,000 to 335,000 last week and reversed the little revised 23,000 decline the prior week. Consensus expectations had been for a lesser increase to 311,000 claims.
Hurricane related claims totaled 21,000 and brought the total of the three storms during the last twelve weeks to 582,000.
The four-week moving average of initial claims ticked up slightly to 323,250 (-2.5% y/y).
Continuing claims for unemployment insurance rose a sharp 59,000 following three successive weeks of decline.
The insured rate of unemployment held at 2.2% for the ninth consecutive week.
Minutes of the Federal Open Market Committee November 1, 2005 can be found <a href="http://www.federalreserve.gov/fomc/minutes/20051101.htm"> here</a>.
Estimating the &quot;Neutral&quot; Real Interest Rate in Real Time from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-27.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">11/19/05</th>
<th scope="col">11/12/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>335</td>
<td>305</td>
<td>3.4%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,824</td>
<td>3.1%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
</body>
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Initial claims for unemployment insurance rose 30,000 to 335,000 last week and reversed the little revised 23,000 decline the prior week. Consensus expectations had been for a lesser increase to 311,000 claims. Hurricane related [...]

Initial Claims for Jobless Insurance Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123a.jpg" width="353">
The Conference Board&#39;s Index of Help-Wanted Advertising held at 38 in October versus the downwardly revised September level and 38 in August. The average level so far this year is 39.
During the last ten years there has been a 62% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume improved further to 57% in October after gains during the prior two months.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Oct &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>38</td>
<td>38</td>
<td>36</td>
</tr>
</tbody>
</table>
</body>
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The Conference Board's Index of Help-Wanted Advertising held at 38 in October versus the downwardly revised September level and 38 in August. The average level so far this year is 39. During the last ten years there has been a 62% [...]

Help-Wanted Advertising Stable

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123c.jpg" width="353">
The total number of mortgage applications dropped 3.4% last week to the lowest level since January, according to the Mortgage Bankers Association. The decline pulled the average level in November 5.5% below October.
Applications to refinance, down 6.9%, fell sharply for the fifth consecutive week. The November average is down 14.0% from October.
Purchase applications fell 1.2% and reversed about half of the prior week&#39;s gain. Purchase applications in November are 0.6% ahead of October. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The effective interest rate on a conventional 30-year mortgage slipped to 6.48% from 6.59% the prior week. The effective rate on a 15-year mortgage also fell to 6.11% from 6.18%. The interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
Can U.S. Monetary Policy Fall (Again) into an Expectation Trap? from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr229.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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">11/18/05</th>
<th scope="col">11/11/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>635.4</td>
<td>657.6</td>
<td>-11.1%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>472.3</td>
<td>477.9</td>
<td>1.9%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,584.1</td>
<td>1,702.4</td>
<td>-27.3%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
</body>
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The total number of mortgage applications dropped 3.4% last week to the lowest level since January, according to the Mortgage Bankers Association. The decline pulled the average level in November 5.5% below October. Applications to [...]

Mortgage Applications Fell Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123d.jpg" width="353">
The November reading of consumer sentiment from the University of Michigan rose 10.0% m/m to 81.6, adding a bit to the improvement through mid-month. Consensus expectations had been for a rise to 81.0.
During the last ten years there has been a 78% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
Improved expectations fostered the m/m rise. The index of Consumer expectations rose 10.1% as expected business conditions during the next year surged 22.1% while expectations for personal finances recovered all of the prior month&#39;s drop. The mean expected inflation rate for the next twelve months fell further to 4.1% from 5.5% expected in October &amp; September.
The current conditions index held onto the improvement through mid-month and rose 9.9% versus October. The reading of personal finances rose 7.3% and reversed all of the October decline and the reading of buying conditions for large household goods jumped 12.9% to the highest level since August.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
Why Hasn&#39;t the Jump in Oil Prices Led to a Recession? from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-31.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
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<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">Nov (Final)</th>
<th scope="col">Nov (Prelim)</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>81.6</td>
<td>79.9</td>
<td>74.2</td>
<td>-12.1%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>100.2</td>
<td>100.3</td>
<td>91.2</td>
<td>-4.3%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>69.6</td>
<td>66.8</td>
<td>63.2</td>
<td>-18.3%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
</body>
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The November reading of consumer sentiment from the University of Michigan rose 10.0% m/m to 81.6, adding a bit to the improvement through mid-month. Consensus expectations had been for a rise to 81.0. During the last ten years there [...]

U.S. Consumer Sentiment Lifted Further By Drop in Oil Prices

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123d.jpg" width="353">
The November reading of consumer sentiment from the University of Michigan rose 10.0% m/m to 81.6, adding a bit to the improvement through mid-month. Consensus expectations had been for a rise to 81.0.
During the last ten years there has been a 78% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
Improved expectations fostered the m/m rise. The index of Consumer expectations rose 10.1% as expected business conditions during the next year surged 22.1% while expectations for personal finances recovered all of the prior month&#39;s drop. The mean expected inflation rate for the next twelve months fell further to 4.1% from 5.5% expected in October &amp; September.
The current conditions index held onto the improvement through mid-month and rose 9.9% versus October. The reading of personal finances rose 7.3% and reversed all of the October decline and the reading of buying conditions for large household goods jumped 12.9% to the highest level since August.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
Why Hasn&#39;t the Jump in Oil Prices Led to a Recession? from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-31.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">Nov (Final)</th>
<th scope="col">Nov (Prelim)</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>81.6</td>
<td>79.9</td>
<td>74.2</td>
<td>-12.1%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>100.2</td>
<td>100.3</td>
<td>91.2</td>
<td>-4.3%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>69.6</td>
<td>66.8</td>
<td>63.2</td>
<td>-18.3%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
Mortgage Applications Fell Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123c.jpg" width="353">
The total number of mortgage applications dropped 3.4% last week to the lowest level since January, according to the Mortgage Bankers Association. The decline pulled the average level in November 5.5% below October.
Applications to refinance, down 6.9%, fell sharply for the fifth consecutive week. The November average is down 14.0% from October.
Purchase applications fell 1.2% and reversed about half of the prior week&#39;s gain. Purchase applications in November are 0.6% ahead of October. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The effective interest rate on a conventional 30-year mortgage slipped to 6.48% from 6.59% the prior week. The effective rate on a 15-year mortgage also fell to 6.11% from 6.18%. The interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
Can U.S. Monetary Policy Fall (Again) into an Expectation Trap? from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr229.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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">11/18/05</th>
<th scope="col">11/11/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>635.4</td>
<td>657.6</td>
<td>-11.1%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>472.3</td>
<td>477.9</td>
<td>1.9%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,584.1</td>
<td>1,702.4</td>
<td>-27.3%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Stable 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123a.jpg" width="353">
The Conference Board&#39;s Index of Help-Wanted Advertising held at 38 in October versus the downwardly revised September level and 38 in August. The average level so far this year is 39.
During the last ten years there has been a 62% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume improved further to 57% in October after gains during the prior two months.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Oct &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>38</td>
<td>38</td>
<td>36</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123b.jpg" width="353">
Initial claims for unemployment insurance rose 30,000 to 335,000 last week and reversed the little revised 23,000 decline the prior week. Consensus expectations had been for a lesser increase to 311,000 claims.
Hurricane related claims totaled 21,000 and brought the total of the three storms during the last twelve weeks to 582,000.
The four-week moving average of initial claims ticked up slightly to 323,250 (-2.5% y/y).
Continuing claims for unemployment insurance rose a sharp 59,000 following three successive weeks of decline.
The insured rate of unemployment held at 2.2% for the ninth consecutive week.
Minutes of the Federal Open Market Committee November 1, 2005 can be found <a href="http://www.federalreserve.gov/fomc/minutes/20051101.htm"> here</a>.
Estimating the &quot;Neutral&quot; Real Interest Rate in Real Time from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-27.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">11/19/05</th>
<th scope="col">11/12/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>335</td>
<td>305</td>
<td>3.4%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,824</td>
<td>3.1%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
Italian Consumer Confidence Improves in November as Inflation Concerns Moderate 
by <a href="/comment/Stone.html">Carol Stone</a> November 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123e.jpg" width="353">
Italy&#39;s private institute ISAE reported its monthly consumer survey results for November this morning. They show an improving trend in the overall confidence indicator, albeit well below the highs of about four years ago. The indicator is 108.8 this month, 1980=100 and seasonally adjusted, up 3.2 points from October and well above the average of 101.5 for 2004.
Looking at some of the broad components, it&#39;s a little hard to see the total index&#39;s better than 7% improvement in people&#39;s confidence levels over last year&#39;s average level. Only the same tiny portion of survey respondents believe the &quot;general situation&quot; is getting better, and the number of those perceiving a worsening trend has declined only minimally. Household financial expectations rated a -7 in November, compared with -8 in 2004. Unemployment expectations seem still to be deteriorating. The share of respondents looking for unemployment to increase over the coming year was 48%, compared with 40% for last year as a whole and only 35% in 2002. This group has taken away from those expecting steady unemployment, which has fallen to 35% this month from 44% for 2004. These movements toward increasing concerns about unemployment extend a pattern that has prevailed since 2001. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123f.jpg" width="353">
However, there are some positive hints on the inflation front. More consumers look for inflation to pick up than did so last year, but these are many fewer than expected so in 2001 and 2002. This is illustrated in the second graph, where it is also seen that the November figures show marked improvement from October. These price expectations are giving some aid to plans for &quot;major purchases&quot;; the outlook there is still absolutely negative, but it has stabilized in recent months. Referring to durable goods, the survey item &quot;present ability for purchases&quot; has a 10% &quot;favorable&quot; reading in November, up from 7 last year. The &quot;unfavorable&quot; reading is 58% compared with 58% last year. These hardly indicate a consumer spending boom on the horizon, but they do suggest that consumers are less stressed about the buying environment than they have been for some time.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Italy ISAE Consumer Survey</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Nov 2004</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Confidence Indicator (SA, 1980 =100)</td>
<td>108.8</td>
<td>105.6</td>
<td>103.8</td>
<td>101.5</td>
<td>106.2</td>
<td>115.8</td>
<td>122.6</td>
</tr>
<tr>
<td colspan="8">General Situation Last 12 Mos.</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Improving</td>
<td>4</td>
<td>3</td>
<td>4</td>
<td>3</td>
<td>4</td>
<td>9</td>
<td>15</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Worsening</td>
<td>72</td>
<td>77</td>
<td>76</td>
<td>77</td>
<td>73</td>
<td>54</td>
<td>43</td>
</tr>
<tr class="odd">
<td colspan="8">Price Trends Next 12 Mos.</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rapid Increase</td>
<td>7</td>
<td>11</td>
<td>6</td>
<td>5</td>
<td>7</td>
<td>16</td>
<td>21</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Modest Increase</td>
<td>17</td>
<td>21</td>
<td>13</td>
<td>14</td>
<td>15</td>
<td>35</td>
<td>37</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Flat</td>
<td>47</td>
<td>41</td>
<td>52</td>
<td>54</td>
<td>51</td>
<td>31</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unsure</td>
<td>10</td>
<td>8</td>
<td>8</td>
<td>5</td>
<td>5</td>
<td>2</td>
<td>5</td>
</tr>
<tr>
<td colspan="8">Unemployment Next 12 Mos.</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Large Increase</td>
<td>14</td>
<td>17</td>
<td>13</td>
<td>8</td>
<td>8</td>
<td>7</td>
<td>7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Modest Increase</td>
<td>34</td>
<td>33</td>
<td>32</td>
<td>32</td>
<td>31</td>
<td>28</td>
<td>23</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unchanged</td>
<td>35</td>
<td>35</td>
<td>36</td>
<td>44</td>
<td>42</td>
<td>43</td>
<td>39</td>
</tr>
</tbody>
</table>
</body>
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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122e.jpg" width="353">
Final results for Germany&#39;s third quarter Gross Domestic Product were released today. In addition to revisions of the preliminary estimates of total GDP released a week ago, details of the composition of both the expenditure and income sides of the national accounts are given. Estimates of the contribution to growth of the various sectors are also available and are shown in the table below for the first three quarters of 2005.
In the first chart we show the contribution of domestic demand and net exports to total GDP growth. Over the past five years changes in both net exports and domestic demand have been erratic and have tended to offset one another. In the last quarter, a positive contribution of 1.30 percentage points from net exports was offset by a negative contribution of 0.60 percentage points from domestic demand.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122f.jpg" width="353">
According to data on the income side of the National Accounts there has been a marked change in the distribution of income in Germany over the past five years. The share of compensation of employees in net national income has been declining over this period, as shown in the second chart. From 62.9% of net national income in the first quarter of 2001, employee compensation has declined to 58.5&amp; in the third quarter of 2005. The counterpart to the decline in the share of compensation has been the rise in the share of entrepreneurial income (shown in the third chart) from 25.1% in the first quarter of 2001 to 29.1% in the third quarter of 2005. The changing distribution of income may account for a part of the sluggish trend in private consumption over this period.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122g.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Germany Contribution to Growth</th>
<th scope="col">Q3 05&nbsp; % Pts</th>
<th scope="col">Q2 05 % Pts </th>
<th scope="col">Q1 05 % Pts</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Growth of Gross Domestic Product</td>
<td>0.70</td>
<td>0.0</td>
<td>0.10</td>
</tr>
<tr>
<td class="firstcol">Net Exports</td>
<td>1.30</td>
<td>-1.00</td>
<td>-0.50</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Demand</td>
<td>-0.60</td>
<td>0.90</td>
<td>-0.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumption</td>
<td>-0.10</td>
<td>0.30</td>
<td>-0.30</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Private</td>
<td>-0.10</td>
<td>0.00</td>
<td>-0.60</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Government</td>
<td>0.00</td>
<td>0.30</td>
<td>0.20</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Gross Fixed Investment</td>
<td>0.20</td>
<td>0.10</td>
<td>0.10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>-0.70</td>
<td>0.50</td>
<td>-0.20</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Share of Net National Income</td>
<td>Q1 01&nbsp; %&nbsp;</td>
<td>Q3 05 %&nbsp; </td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Compensation of Employees</td>
<td>62.9</td>
<td>59.5</td>
<td></td>
</tr>
<tr>
<td class="firstcol">Entrepreneurial Income</td>
<td>25.1&nbsp;</td>
<td>&nbsp;29.1</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
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Final results for Germany's third quarter Gross Domestic Product were released today. In addition to revisions of the preliminary estimates of total GDP released a week ago, details of the composition of both the expenditure and [...]

Revisions and Additions to German National Accounts Data for Q3

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122c.jpg" width="353">
Last week, the US average retail gasoline price continued lower to $2.20 per gallon from $2.30 during the prior week and from $2.73 one month earlier. As of yesterday, the spot market price for gasoline was $1.44 per gallon and has roughly held that level for seven days.
Retail gasoline prices peaked in early September at $3.07 per gallon and have since fallen 72 cents or 28%. During that period spot gasoline prices are down $1.18 or 45%. The implied rise in gasoline retailers&#39; margins has restored profitability. However, that rise in the retail price of gasoline versus the spot price followed several years of margin decline.
During the past month margins have fallen roughly 20%, in part reflecting a decline in gasoline demand of up to 3.5% versus the year ago level. In turn, lower prices seem to have revived demand which spiked last week and raised the four week average level of gasoline demand to roughly even with a year earlier after declining sharply through September &amp; October. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122d.jpg" width="353">
Crude oil prices have continued lower as well. WTI crude yesterday at $57.21 per barrel was down versus an average of $62.50 during October and was 18% lower than the late August high of $69.82.
In November, natural gas prices reversed some of the strength of the prior three months. During the last three weeks gas prices averaged $10.08/mmbtu versus the high of $13.53 averaged during October. Nevertheless, prices still are up 71% versus all of last year.

<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/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">11/21/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.20</td>
<td>$1.79</td>
<td>13.0%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$57.21</td>
<td>$41.78</td>
<td>18.0%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
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Last week, the US average retail gasoline price continued lower to $2.20 per gallon from $2.30 during the prior week and from $2.73 one month earlier. As of yesterday, the spot market price for gasoline was $1.44 per gallon and has [...]

Gasoline Prices Fell In A Competitive Market

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122b.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey indicated that last week, chain store sales recovered more than all of the prior period&#39;s decline with a 1.0% jump. It was the second w/w jump that strong this month and it lifted the average level of sales in November 1.2% above October which rose 0.1% from September.
During the last ten years there has been a 51% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC rose 0.6% (-1.7% y/y) during the latest week following a 0.2% increase the prior week.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122a.jpg" width="353">
Through the second week of November, the Johnson Redbook survey indicated a lesser 0.2% (3.5% y/y) gain in store sales versus October. The survey tracks 15 stores and reflects same-store sales of retailers that account for roughly 85% of the department store category in the Census Bureau&#39;s monthly retail sales report.
During the last nine years there has been a 67% correlation between the y/y change in the Redbook store sales index and the change in non-auto retail sales less gasoline, as published by the US Census Department.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/19/05</th>
<th scope="col">11/12/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>458.0</td>
<td>453.3</td>
<td>4.2%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


</html>

The International Council of Shopping Centers (ICSC)-UBS survey indicated that last week, chain store sales recovered more than all of the prior period's decline with a 1.0% jump. It was the second w/w jump that strong this month and [...]

Chain Store Sales Up

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

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

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The Consumer Price Index increased 2.7% y/y during November, down from 2.8% in October. The 0.2% m/m increase fell short of the 0.3% gain expected in the Action Economics Forecast Survey. The y/y gain in the headline CPI was the weakest since April. It was down from September’s high of 3.0% and compared to 2.9% during 2024. The CPI excluding food & energy increased 0.1% (2.6% y/y) in November. Its y/y rise compared to 2.8% y/y in October and was the weakest rise since March 2021.	

Energy prices rose 1.6% (4.1% y/y in November. Gasoline prices strengthened 3.0% (0.9% y/y). Fuel oil prices increased 3.1% (11.3% y/y). Natural gas prices fell 2.1% (+9.1% y/y), and electricity prices strengthened 1.1% (6.9% y/y). 
Food prices rose 0.1% (2.6% y/y) during November. Egg prices declined 6.4% (-13.2% y/y). Meat, poultry & fish prices strengthened 0.8% (6.8% y/y), while dairy product prices fell 0.9% (-1.6% y/y). Cereal & bakery product costs held steady (+1.9% y/y). Fruit & vegetable prices fell 0.4% and were little changed y/y. Nonalcoholic beverage prices increased 0.9% and 4.3% y/y in November.

Goods prices less food and energy rose 0.2% and rose a steady 1.4% y/y during November. Prices of used cars and trucks increased 0.3% (3.6% y/y), and new vehicle costs rose 0.2% (0.6% y/y). Appliance prices fell 0.6% (+0.5% y/y) while home furnishings prices rose 0.4% (2.6% y/y). Recreation product costs fell 0.3% but increased 0.7% y/y in November. Apparel prices increased 0.6% (0.1% y/y) in November. Education & communication product costs declined 0.3% (-3.1% y/y). Medical care goods prices rose 0.1% (1.1% y/y) in November. 

Services prices less energy edged 0.1% higher but increased 3.0% y/y in November, down from 7.0% y/y in 2022. Shelter prices (35.5% of the CPI) rose 0.1% (3.0% y/y), as owners’ equivalent rent of primary residences also rose 0.1% (3.4% y/y). Transportation service prices fell 0.3% (1.7% y/y). The cost of medical services edged 0.1% and rose 3.3% y/y, and the cost of recreation services fell 0.3% (+2.4% y/y). Education & communication services prices increased 0.4% m/m and 2.2% y/y.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

For the release of CPI on December 18, 2025, the BLS was able to retroactively acquire most nonsurvey data for October and will publish October 2025 values where possible. However, the majority of the CPI series rely on survey data which was not collected for October 2025 due to the government shutdown. Accordingly, the BLS will not publish October values for those series. Haver Analytics has created a second set of CPI indexes and relative importance series in **USECON**. These series will contain any published BLS values for October and interpolated values for unpublished detailed indexes. We will then calculate higher aggregate series such as the All Items index and All Items less food and energy using any published indexes along with our interpolated indexes and relative importance. 


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- Year-to-year comparison is slowest in four months.
- Core price gain exhibits weakest y/y increase since 2021. 
- Services price inflation tumbles y/y; core goods price gain is stable.


U.S. Consumer Price Inflation Moderates in November

Sandy Batten

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Existing home sales rose 0.5% m/m (-1.0% y/y) in November to 4.13 million homes (SAAR) following a 1.5% monthly gain in October and a 1.3% monthly rise in September, according to the National Association of Realtors (NAR). It was the highest level of sales since February and matched expectations in the Action Economics Forecast Survey. The average effective 30-year mortgage interest rate was unchanged at 6.54% last month, but this is down markedly from 7.10% in May and accounts for some of the revival in home sales over the past several months. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales rose 0.8% m/m (-0.8% y/y) in November to 3.75 million units after a 1.1% m/m rise in October and a 1.4% monthly gain in September. Sales of condos and co-ops slumped 2.6% m/m (-2.6% y/y) to 380,000 in November following a 5.4% monthly jump in October.

Compared to a month ago, sales rose 4.1% m/m in the Northeast, increased 1.1% m/m in the South, were unchanged in the West and fell 2.0% m/m in the Midwest. Compared to a year ago, sales were unchanged in both the Northeast and the South, fell 3.0% y/y in the Midwest and declined 1.3% y/y in the West.

The median price of all existing homes (NSA) declined 1.4% m/m (+1.2% y/y) to $409,200 in November. The median price of an existing single-family home fell 1.4% m/m (+1.2% y/y) to $414,300 in November. Prices of single-family homes in the Northeast edged up 0.9% from a year ago. Prices in the Midwest jumped 5.8% y/y; prices in the South rose 1.0% y/y. In contrast, prices in the West declined 0.8% from a year ago.

Inventories of homes for sale continued to weaken in November. The number of existing homes for sale (NSA) slumped 5.9% m/m (+7.5% y/y) to 1.43 million units in November. The supply of homes on the market at the current selling rate (NSA) slid to 4.2 months, its lowest reading since March.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.


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- Existing home sales increased 0.5% m/m in November, the third consecutive monthly gain.
- Month-over-month sales increased in the Northeast and South, were unchanged in the West, and fell in the Midwest.
- Year-over-year sales were unchanged in the Northeast and South and decreased in the Midwest and West.


U.S. Existing Home Sales Edged Up in November

Robert Brusca

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The new UK Confederation of British Industry (CBI) survey on the distributive trades sector shows a sharp weakening of an already weak survey for December and for the outlook into January of 2026. 

The month-to-month deterioration from November was widespread across metrics for retailing as well as for wholesaling for the current month as well as for the outlook. The monthly degradation is without exception across the board - omitting the inventory metric which is a different animal in any event since inventory building is sometimes involuntary. 

**The Retail survey**
Current conditions: In December, the retail survey for sales compared to a year ago, orders compared to year ago, and sales for the time of year (a seasonal adjustment metric), all worsened month-to-month. The November readings were weak and in December sales compared to a year-ago worsened by 12 points, Orders compared to a year ago worsened by 17 points month-to-month and sales for the time of year worsened by 11 points. These metrics for December are below their respective 12-month average by 6 to 13 points, as well for these categories. The rankings tell a stark story, year-on-year sales have been lower only 5.3% of the time, Year-on-year orders have been weaker only 5.6% of the time, while time of the year sales have been lower only 13% of the time. These are all extremely low-ranking metrics.

Expected Conditions: In January expected conditions have weakened month-to-month by amounts ranging from 33 points to 16 points depending on the metric. And sales and orders compared to a year ago as well as sales for the time of year each are weaker than their respective 12-month average readings by amounts ranging from 4 points to 23 points. The rankings on expectations are even worse than for the current metrics. Expected sales compared to a year ago rank lower less than 1% of the time, the same is true of orders. While sales for the time of year have been weaker 7.7 percent of the time. 
 
**Wholesale survey** 
The rankings for wholesaling are even lower than for retailing across the current and expected metrics. The month-to-month degradation for the current readings ranges from 7 points to 17 points weaker while the reading degradation monthly ranges from 5 points to 16 points. Wholesale sales and orders compared to a year ago and sales for the time of year each rank below the 5% mark. The expectations for January shows expectations for the three categories each are at a 2.5 percentile standing or lower. 

**Summing up**
The distributive trades survey has all but crashed and burned in December. Over the last 26 years the average of the three current metrics’ rankings has been lower only 18 times. The average outlook ranking for the month ahead has been weaker only 5 times in the last 26 years (over 313 months). On a relative basis the expected sales/orders performance is more depressed than the Current results for January. The pooled rankings show current ranking over the past 26-years weaker only 5.8 percent of the time with expectations lower only 1.6 percent of the time. These are very weak metrics. It is surprising that the BOE is walking on eggshells to cut rates with mixed support for rate cuts amid such weakness. There is already a GDP decline in the monthly data for October. UK and inflation is still too high, but it is breaking lower at a relatively fast pace. Will the UK be the first economy down after Covid? 




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United Kingdom

CBI’s Distributive Trades Survey Weakens Sharply in December

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Belgian consumer confidence has been on the rise since early this year, however, in December the index has taken a step backwards with a reading of -1 compared to a November reading of +2 and then an October reading of zero. The confidence indicator, on data back to 1991 has a ranking in its 78.5 percentile, marking it as a reasonably strong reading on confidence compared to its values over that period. On the whole the trend is still solid, the month’s step-back is small. 

**The Economic Situation** 
Economic situation for the next 12 months is weaker in December on a reading of -28 compared to -26 in November. The assessment of the previous 12-months is weaker in December at -42 compared to a reading of -38 in November. The outlook is weaker and the recent legacy is assessed as being slightly weaker as well, than it was in November. The assessment of the economic situation for the next 12 months is weak at a 9.7 percentile standing and the assessment of the previous 12 months is also weak at a 23.4 percentile standing.

**Price Trends**
Price trends are seen as higher over the next 12-months at a reading of 38 compared to 27 in November. The backward-looking assessment of price trends also has them stronger in December than 
in November at a reading of 58 compared to 56 in November. Both of these price trend assessments 
are high with the outlook reading at its 94th percentile and the backward-looking assessment in its 81st percentile. Price expectations hit their low mid 2023-late 2023 and have been on the rise steadily ever since. The price metric of ‘12-months ahead’ was at zero in April of 2024 but climbed to +19 by February 2025 and currently sits at a level of 38. Price expectations are well in gear to the upside in Belgium despite relative price stability in the Euro-Area. 

**Unemployment**
Concerns about unemployment elevated slightly in December to -9 from -10 in November but these are significant readings compared to, say, the 12-month-ago reading which is at a level of +32. The sense of backtracking here is extremely weak. The sense of progress on the part of survey respondents becoming more confident about the future is clearly the prevalent feature here. The December reading for unemployment in fact has only a 2.5 percentile standing, indicating extremely weak concerns about the prospects of unemployment ahead despite the minor month-to-month step-back.

**Major Household purchase environment**
The environment for making major household purchases deteriorates slightly in December at -15 compared to -13 in November. This only puts the index back to where it was in October. The response to the question, ‘is it favorable to buy at present’ is unchanged from its November value at -19 and it has been stuck there for three months in a row. The outlook to make major household purchases in the next 12-months logs a weaker reading at -15 than its 12-month value of -13but is stronger than its 12-month level of -18. The reading for the ‘favorable to buy at present’ question, however, is weaker at a -19 compared to -14, logged 12-months ago. The environment for making a household purchase over the next 12-months has a 55.6 percentile ranking which is above its median, however, the assessment of ‘favorable to buy at present’ has only a 20th percentile standing significantly below its median reading (median readings occur at a ranking of 50%)..

**The Financial situation**
The financial situation for the next 12-months is assessed weaker at -3 in December, compared to zero in November; it compares to a - 2 in October. The assessment 12-months ago was also -2 so this is a very minor deterioration comparing the financial situation of households with the last 12-months produces another deterioration at -8 in December compared to -6 in November and that compares to 12-months ago at -5 another deterioration. However, the backward-looking assessment has a 52-percentile standing which is above its median while the outlook reading of -3 has a 23-percentile standing which puts it in the lower quarter of all expectations on data back to 1991. The current situation is appraised at 20 a step-back from November and October levels as well as from 12-months ago. But the current appraisal also has a queue standing in its 65.7 percentile which has a comfortable margin above its median reading. Households clearly have concerns about their financial situation even though their outlook for making household purchases is above median and their concerns about unemployment are low. Currently, conditions appear to be construed as solid.

**Savings**
Household savings over the next 12-months are weaker in December at a reading of 20 compared to 26 in November; they are closer to their 12-month ago reading of 21. December is still a relatively high reading, in any event, with a 91-percentile standing. The question, ‘is it favorable to save at present’ is unchanged in November compared to December at a reading of -28 although it is weaker than it was 12-months ago and the percentile standing at its 78th percentile, again, a firm reading for this metric.

**Summing up - assessment** 
The consumer confidence reading from the Belgian National Bank this month shows a slight set back month-to-month, however, there is a significant an improvement that has been underway that is quite clear from the chart. The concerns that consumers have seemed to be about their financial situation haven't translated into concerns about unemployment or their willingness to make major household purchases, with unemployment concerns very low and their willingness to make household purchases for the period ahead at essentially normal levels. Still, there is more concern about inflation that is percolating, which is interesting considering that overall inflation has been relatively stable and muted in the European monetary area. 




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Belgium

Belgian Consumer Confidence - On the Rise, but Weaker Month-to-Month

Andrew Cates

**Faster-than-Expected Monetary Easing**
Our first potential upside risk for 2026 is that monetary policy across most major advanced economies is loosened further and by more than markets and forecasters currently anticipate. Monetary policy cycles have a history of being underestimated in both length and magnitude—in large part because of the powerful feedback loops between interest rates, inflation, and economic behaviour. On the way up, higher policy rates feed into mortgage costs, debt-service burdens, rents, and the general cost of doing business, reinforcing wage pressures and inflation persistence. But these same channels work in reverse on the way down. As rates fall, debt servicing eases, housing and rental inflation softens, and cost pressures across the economy unwind more rapidly than expected—allowing inflation to decelerate faster and creating scope for further easing. A risk, therefore, is that if disinflation becomes self-reinforcing, central banks find themselves cutting rates more aggressively than currently priced, not because of economic distress, but because restrictive policy proves increasingly unnecessary.

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**Energy Supply Dynamics Prove More Supportive**
The second chart reinforces the message from the first: easing monetary policy may be accompanied—and amplified—by a more benign energy backdrop. Recent projections from the EIA point to a renewed build-up in OECD crude oil and liquids inventories over the year ahead, a dynamic that has historically been associated with downward pressure on oil prices. If inventories continue to rise as supply growth outpaces demand, spot prices for crude could undershoot current forecasts, keeping energy inflation subdued. That, in turn, would reinforce disinflationary forces already in play—lowering headline CPI, easing cost pressures for firms and households, and giving central banks greater confidence to loosen policy further. In that sense, softer oil prices would not just be a standalone positive shock, but part of a reinforcing feedback loop alongside rate cuts, supporting real incomes, financial conditions, and global growth into 2026.


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**AI-Driven Productivity Gains Materialise More Quickly** 
The third chart shows a clear pickup in US nonfinancial productivity growth, reviving the debate around whether AI-driven efficiency gains may arrive sooner than many forecasters expect. While the longer-term productivity potential of AI remains uncertain and uneven across sectors, there are reasons to think that at least some near-term gains could prove more tangible than currently assumed. Rather than transformative breakthroughs, early benefits are likely to come from incremental improvements—automation of routine processes, better scheduling and logistics, more efficient use of capital and labour, and modest reductions in overhead costs—areas where US firms are already well positioned to implement new technologies quickly. If these gains accumulate and diffuse more broadly, the implications would still be meaningful. Even a modest, sustained uplift in productivity would help contain unit labour costs, support real income growth, and raise the economy’s speed limit without generating renewed inflation pressure. In that scenario, productivity would not need to “revolutionise” the economy to matter: incremental efficiency gains could nonetheless provide a supportive backdrop for growth, earnings, and policy easing into 2026—representing a genuine upside risk to the outlook.


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**The US Economy Proves Resilient Again**
The next chart highlights a further upside risk to the 2026 outlook: the possibility that the US economy once again outperforms its peers. Unlike the typical pre-recession backdrop, there is little evidence of meaningful financial stress in the US private sector. After a prolonged period of balance-sheet repair, private-sector debt ratios have been trending lower in recent years, while the sector as a whole is running a healthy financial surplus. This stands in stark contrast to previous late-cycle episodes, which were characterised by rising leverage, widening deficits, and growing dependence on credit expansion. The absence of private-sector excesses reduces the economy’s vulnerability to higher rates and external shocks, and helps explain why growth has remained more durable than expected. If households and firms continue to prioritise balance-sheet strength rather than forced deleveraging, the usual mechanisms that tip the economy into recession may fail to materialise. In that environment, even modest easing in financial conditions could translate into renewed spending and investment, allowing the US to sustain above-trend growth into 2026—representing another upside risk to the global outlook.


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**India’s Growth Engine Accelerates Further** 
Chart 5 points to another potential upside risk for 2026 emanating from India’s economy. After a period of relative pessimism earlier in the year, consensus growth forecasts for 2026 have been revised modestly higher, even as inflation projections have continued to drift lower. This combination—firmer growth expectations alongside easing inflation pressures—creates scope for a more supportive policy backdrop than markets currently assume. With real interest rates no longer rising and financial conditions stabilising, India’s investment cycle, already underpinned by public infrastructure spending and improving corporate balance sheets, could prove more durable than forecast. If these trends persist, India may deliver growth that is both stronger and more internally driven than expected, providing a meaningful demand impulse to the broader global economy. Given India’s increasing weight in global growth, even small upside surprises would have outsized effects on trade, commodity demand, and regional activity—reinforcing the case that the global outlook for 2026 may be skewed to the upside.


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**The Global South Becomes a More Independent Source of Demand** 
The final chart points to a broader upside risk for the global economy in 2026: that economies across the so-called Global South generate more durable momentum than currently assumed. With a few notable exceptions—such as China and Thailand—many emerging economies continue to benefit from stronger growth in their working-age populations and/or faster real GDP per capita growth than their advanced-economy counterparts. These demographic and income dynamics are helping to underpin domestic consumption, support labour-force expansion, and attract capital inflows, as reflected in the pattern of net FDI across countries. In contrast, much of the advanced world faces binding demographic constraints and lower steady-state growth rates, limiting the scope for demand to re-accelerate organically. If growth in the Global South proves more resilient and internally driven—rather than overly dependent on exports to advanced economies—it could provide a more stable and geographically diversified source of global demand. In that scenario, global growth in 2026 would be less reliant on a narrow set of advanced economies, reinforcing the case that risks to the outlook may be skewed to the upside.


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_This marks our final Charts of the Week publication for 2025 The next edition will be released on Thursday 8 January._

Last week’s Charts of the Week focused on the darker tail risks hanging over the 2026 outlook: the possibility of monetary policy mis-calibration, that geopolitics and trade fragmentation further disrupt supply chains, and that elevated debt levels—particularly in the public sector—reassert themselves as a drag on growth. This week’s charts take a deliberately different tack. Taken together, they highlight a set of upside risks that are possibly underappreciated in current forecasts. For example, policy easing across advanced economies may extend further than expected as disinflation feeds on itself (chart 1); oil prices could surprise on the downside as inventories rebuild (chart 2); US productivity may deliver incremental but meaningful gains sooner than assumed (chart 3); the US economy itself could continue to benefit from an absence of private-sector financial stress (chart 4); India’s growth momentum might firm again as inflation pressures recede (chart 5); and, more broadly, parts of the Global South appear increasingly capable of generating their own demand impulse, supported by favourable demographics and income growth (chart 6). None of these forces is guaranteed, and each carries its own caveats—but together they suggest that, having spent much of the past year fixated on downside risks, the risks to global growth in 2026 may be more evenly balanced than is widely assumed.

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Economy in Brief: 2005

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Initial Claims for Jobless Insurance Higher

Help-Wanted Advertising Stable

Mortgage Applications Fell Further

U.S. Consumer Sentiment Lifted Further By Drop in Oil Prices

U.S. Consumer Sentiment Lifted Further By Drop in Oil Prices

Revisions and Additions to German National Accounts Data for Q3

Gasoline Prices Fell In A Competitive Market

Chain Store Sales Up