Tom Moeller

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Hopefully, recent improvement in existing single-family home
sales wasn't all due to buying ahead of the April 30th expiration of a
Federal home-buyer tax credit. Existing home sales rose 7.6% last month
to 5.770M (AR) according to the National Association of Realtors. The
gain followed a similar rise in March which followed declines during
the prior thee months. Sales in April exceeded Consensus expectations
for 5.65M. Total sales include sales of condos and co-ops. Sales of
existing single-family homes alone rose 7.4% from March to 5.050M.
(These data have a longer history than the total sales series). Sales
of condos and co-ops rose 42.3% from last year.</p>
<p>Sales have been helped by a tax credit for first-time home
buyers. Additionally, a credit of up to $6,500 was available to some
existing home owners who move. The full details of the home-buyer tax
credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.</p>
<p>The median price of all existing homes also rose in April to
$173,100 but remained off roughly 25% from the 2007 peak. The price of
a single-family home rose 2.3% to $173,400 (4.5% y/y). Earlier price
weakness sharply raised home affordability -- by three-quarters from
the 2006 low. The median family income for existing home buyers was
$60,498 and mortgage payments amounted to 14.7% of that total.</p>
<p>The number of unsold homes (single-family &amp; co-ops)
for sale rose sharply m/m, up 2.7% y/y. At the current sales rate there
was an 8.4 months' supply of homes on the market. That was down from a
high of 10.1 months during April of 2008. For single-family homes, the
inventory rose m/m to an 8.2 months' supply.</p>
<p>The data on existing home sales, prices and affordability can
be found in Haver's <b>USECON</b> database. The regional
price, affordability and inventory data is available in the <b>REALTOR
</b>database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524i.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524j.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Existing
Home Sales (Thous, SAAR)</b></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>April y/y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><b>Total</b></td>
<td>5,770</td>
<td>5,360</td>
<td>5,010</td>
<td>22.8%</td>
<td>5,160</td>
<td>4,893</td>
<td>5,674</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>1,090</td>
<td>900</td>
<td>840</td>
<td>41.6</td>
<td>863</td>
<td>845</td>
<td>1,010</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,330</td>
<td>1.210</td>
<td>1,110</td>
<td>29.1</td>
<td>1,166</td>
<td>1,130</td>
<td>1,331</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>2,140</td>
<td>1,970</td>
<td>1,840</td>
<td>23.0</td>
<td>1,913</td>
<td>1,860</td>
<td>2,243</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,210</td>
<td>1,290</td>
<td>1,220</td>
<td>5.2</td>
<td>1,216</td>
<td>1,064</td>
<td>1,095</td>
</tr>
<tr>
<td class="firstcol"><b>Single-Family Sales</b></td>
<td>5,050</td>
<td>4,700</td>
<td>4,360</td>
<td>20.5</td>
<td>4,573</td>
<td>4,341</td>
<td>4,960</td>
</tr>
<tr>
<td class="firstcol"><b>Median Price, Total, $
(NSA)</b></td>
<td>173,100</td>
<td>169,600</td>
<td>164,600</td>
<td>4.0</td>
<td>172,742</td>
<td>197,233</td>
<td>216,633</td>
</tr>
</tbody>
</table>
</body></html>

Hopefully, recent improvement in existing single-family home sales wasn't all due to buying ahead of the April 30th expiration of a Federal home-buyer tax credit. Existing home sales rose 7.6% last month to 5.770M (AR) according to [...]

U.S. Existing Home Sales Improve With Tax Credit Expiration

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524e.jpg" style="border: 0px solid ; width: 363px; height: 265px; float: left;" align="left"></p>
<p>Economic growth continued to improve last month. The Chicago
Fed indicated that its National Activity Index (CFNAI) rose to 0.29
from an upwardly revised March level. The increase was to the highest
level since 2006 and added to earlier gains from the series' low of
-4.14 reached in January '09. During the last ten years the has been a
76% correlation between the index level and the q/q change in real GDP.</p>
<p><b>The three-month moving average of the index, which
smoothes out some of the series' volatility, also rose to its highest
level since early-2007.</b></p>
<p>An index level at or below -0.70 typically has indicated
negative U.S. economic growth. A zero value of the CFNAI indicates that
the economy is expanding at its historical trend rate of growth of
roughly 3.0%. The complete CFNAI report is available <a href="http://www.chicagofed.org/digital_assets/publications/cfnai/2010/cfnai_april2010.pdf">here</a>.</p>
<p>The Chicago Fed indicated that rebounds in the employment and
in the production components contributed to the total index
improvement. Overall, 51 of the 85 individual indicators made positive
contributions to the index while 34 made negative contributions. The
CFNAI is a weighted average of 85 indicators of economic activity. The
indicators reflect activity in the following categories: production
&amp; income, the labor market, personal consumption &amp;
housing, manufacturing &amp; trade sales, and inventories &amp;
orders.</p>
<p>In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index improved during March to its highest level
since December 2008. Indicators for the auto, steel, machinery and
resource sectors each rose. The Chicago Federal Reserve figures are
available in Haver's <b>SURVEYS </b>database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524g.jpg" style="width: 312px; height: 265px;">
<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/SURVEYS/@S5/@S503/@S503.HTM"><b>Chicago Fed</b></a></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>April '09</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">CFNAI</td>
<td>0.29</td>
<td>0.13</td>
<td>-0.52</td>
<td>-2.12</td>
<td>-1.61</td>
<td>-1.80</td>
<td>-0.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-0.03</td>
<td>-0.09</td>
<td>-0.29</td>
<td>-2.65</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Personal Consumption &amp; Housing&nbsp;</td>
<td>-0.41</td>
<td>-0.35</td>
<td>-0.38</td>
<td>-0.56</td>
<td>-0.49</td>
<td>-0.32</td>
<td>-0.09</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Employment, Unemployment &amp; Hours</td>
<td>0.23</td>
<td>0.16</td>
<td>-0.07</td>
<td>-0.89</td>
<td>-0.76</td>
<td>-0.67</td>
<td>-0.15</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Production &amp; Income</td>
<td>0.41</td>
<td>0.23</td>
<td>-0.16</td>
<td>-0.39</td>
<td>-0.23</td>
<td>-0.56</td>
<td>-0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Sales, Inventories &amp; Orders</td>
<td>0.06</td>
<td>0.08</td>
<td>0.11</td>
<td>-0.28</td>
<td>-0.13</td>
<td>-0.25</td>
<td>-0.06</td>
</tr>
</tbody>
</table>
</body></html>

Economic growth continued to improve last month. The Chicago Fed indicated that its National Activity Index (CFNAI) rose to 0.29 from an upwardly revised March level. The increase was to the highest level since 2006 and added to [...]

Chicago Fed Index Improves To Highest Since 2006

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<p></p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524b.jpg" style="width: 312px; height: 265px;">&gt;
<p>The National Association For Business Economics (NABE)
indicated in its latest survey of 46 economists that economic growth
would continue this year and next at a 3.2% rate. Though that
expectation is slightly higher than the 3.1% growth forecasted in the
February survey, it remains well short of the four-to-seven percent
growth following past severe recessions.</p>
<p>Improved, but still subpar, growth in consumer spending is
expected to bolster the economic recovery. Growth of 2.6% and 2.8%
compares to the five percent growth after prior recessions.</p>
<p>Capital spending also is expected to improve -- and with more
momentum -- than the consumer's rebound. The 11% gains in equipment
spending this year and next are just shy of the higher double-digit
gains following earlier recessions. The recovery in residential
investment, while respectable at 12.6% in 2011, follows subpar growth
this year and compares to the up to 41% gains after earlier, severe
downturns.</p>
<p>As a result of the economic rebound, the unemployment rate is
expected to fall. Here again, however, the half a percentage point
decline is much smaller than the one-to-three point drops after earlier
recessions. That implied level of continued economic slack is expected
to leave core consumer price inflation roughly stable near 1.5%.
Overall inflation remains relatively higher at 2.0% due to higher oil
prices which is expected to average $88.80 per barrel of crude next
year while interest rates rise modestly with the economic recovery. <br>
<br>
</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524d.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Nat'l
Assn. For Business Economics Outlook</b></th>
<th scope="col"><b>2011</b></th>
<th scope="col"><b>2010</b></th>
<th scope="col"><b>2009</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Real GDP (%)</td>
<td>3.2</td>
<td>3.2</td>
<td>-2.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Personal Consumption
Expenditures</td>
<td>2.8</td>
<td>2.6</td>
<td>-0.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital Spending -
Structures</td>
<td>-1.1</td>
<td>-12.6</td>
<td>-19.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital Spending -
Equipment &amp; Software</td>
<td>11.0</td>
<td>10.7</td>
<td>-16.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential
Investment</td>
<td>12.6</td>
<td>1.9</td>
<td>-20.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>9.0</td>
<td>9.6</td>
<td>9.3</td>
</tr>
<tr class="odd">
<td class="firstcol">CPI</td>
<td>2.0</td>
<td>2.0</td>
<td>-0.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Price Index - PCE
Less Food &amp; Energy</td>
<td>1.7</td>
<td>1.3</td>
<td>1.4</td>
</tr>
<tr class="odd">
<td class="firstcol">10-Year Treasury Note</td>
<td>4.70</td>
<td>4.20</td>
<td>3.85</td>
</tr>
</tbody>
</table>
</body></html>

> The National Association For Business Economics (NABE) indicated in its latest survey of 46 economists that economic growth would continue this year and next at a 3.2% rate. Though that expectation is slightly higher than the 3.1% [...]

National Association For Business Economics Expects Positive Growth, Low Inflation & Higher Interest Rates

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<p></p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524b.jpg" style="width: 312px; height: 265px;">&gt;
<p>The National Association For Business Economics (NABE)
indicated in its latest survey of 46 economists that economic growth
would continue this year and next at a 3.2% rate. Though that
expectation is slightly higher than the 3.1% growth forecasted in the
February survey, it remains well short of the four-to-seven percent
growth following past severe recessions.</p>
<p>Improved, but still subpar, growth in consumer spending is
expected to bolster the economic recovery. Growth of 2.6% and 2.8%
compares to the five percent growth after prior recessions.</p>
<p>Capital spending also is expected to improve -- and with more
momentum -- than the consumer's rebound. The 11% gains in equipment
spending this year and next are just shy of the higher double-digit
gains following earlier recessions. The recovery in residential
investment, while respectable at 12.6% in 2011, follows subpar growth
this year and compares to the up to 41% gains after earlier, severe
downturns.</p>
<p>As a result of the economic rebound, the unemployment rate is
expected to fall. Here again, however, the half a percentage point
decline is much smaller than the one-to-three point drops after earlier
recessions. That implied level of continued economic slack is expected
to leave core consumer price inflation roughly stable near 1.5%.
Overall inflation remains relatively higher at 2.0% due to higher oil
prices which is expected to average $88.80 per barrel of crude next
year while interest rates rise modestly with the economic recovery. <br>
<br>
</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524d.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Nat'l
Assn. For Business Economics Outlook</b></th>
<th scope="col"><b>2011</b></th>
<th scope="col"><b>2010</b></th>
<th scope="col"><b>2009</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Real GDP (%)</td>
<td>3.2</td>
<td>3.2</td>
<td>-2.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Personal Consumption
Expenditures</td>
<td>2.8</td>
<td>2.6</td>
<td>-0.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital Spending -
Structures</td>
<td>-1.1</td>
<td>-12.6</td>
<td>-19.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital Spending -
Equipment &amp; Software</td>
<td>11.0</td>
<td>10.7</td>
<td>-16.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential
Investment</td>
<td>12.6</td>
<td>1.9</td>
<td>-20.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>9.0</td>
<td>9.6</td>
<td>9.3</td>
</tr>
<tr class="odd">
<td class="firstcol">CPI</td>
<td>2.0</td>
<td>2.0</td>
<td>-0.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Price Index - PCE
Less Food &amp; Energy</td>
<td>1.7</td>
<td>1.3</td>
<td>1.4</td>
</tr>
<tr class="odd">
<td class="firstcol">10-Year Treasury Note</td>
<td>4.70</td>
<td>4.20</td>
<td>3.85</td>
</tr>
</tbody>
</table>
<span id="articletitle">Chicago Fed Index Improves To
Highest Since 2006 </span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> May 24, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524e.jpg" style="border: 0px solid ; width: 363px; height: 265px; float: left;" align="left"></p>
<p>Economic growth continued to improve last month. The Chicago
Fed indicated that its National Activity Index (CFNAI) rose to 0.29
from an upwardly revised March level. The increase was to the highest
level since 2006 and added to earlier gains from the series' low of
-4.14 reached in January '09. During the last ten years the has been a
76% correlation between the index level and the q/q change in real GDP.</p>
<p><b>The three-month moving average of the index, which
smoothes out some of the series' volatility, also rose to its highest
level since early-2007.</b></p>
<p>An index level at or below -0.70 typically has indicated
negative U.S. economic growth. A zero value of the CFNAI indicates that
the economy is expanding at its historical trend rate of growth of
roughly 3.0%. The complete CFNAI report is available <a href="http://www.chicagofed.org/digital_assets/publications/cfnai/2010/cfnai_april2010.pdf">here</a>.</p>
<p>The Chicago Fed indicated that rebounds in the employment and
in the production components contributed to the total index
improvement. Overall, 51 of the 85 individual indicators made positive
contributions to the index while 34 made negative contributions. The
CFNAI is a weighted average of 85 indicators of economic activity. The
indicators reflect activity in the following categories: production
&amp; income, the labor market, personal consumption &amp;
housing, manufacturing &amp; trade sales, and inventories &amp;
orders.</p>
<p>In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index improved during March to its highest level
since December 2008. Indicators for the auto, steel, machinery and
resource sectors each rose. The Chicago Federal Reserve figures are
available in Haver's <b>SURVEYS </b>database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524g.jpg" style="width: 312px; height: 265px;">
<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/SURVEYS/@S5/@S503/@S503.HTM"><b>Chicago
Fed</b></a></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>April '09</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">CFNAI</td>
<td>0.29</td>
<td>0.13</td>
<td>-0.52</td>
<td>-2.12</td>
<td>-1.61</td>
<td>-1.80</td>
<td>-0.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-0.03</td>
<td>-0.09</td>
<td>-0.29</td>
<td>-2.65</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Personal Consumption &amp; Housing&nbsp;</td>
<td>-0.41</td>
<td>-0.35</td>
<td>-0.38</td>
<td>-0.56</td>
<td>-0.49</td>
<td>-0.32</td>
<td>-0.09</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Employment, Unemployment &amp; Hours</td>
<td>0.23</td>
<td>0.16</td>
<td>-0.07</td>
<td>-0.89</td>
<td>-0.76</td>
<td>-0.67</td>
<td>-0.15</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Production &amp; Income</td>
<td>0.41</td>
<td>0.23</td>
<td>-0.16</td>
<td>-0.39</td>
<td>-0.23</td>
<td>-0.56</td>
<td>-0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Sales, Inventories &amp; Orders</td>
<td>0.06</td>
<td>0.08</td>
<td>0.11</td>
<td>-0.28</td>
<td>-0.13</td>
<td>-0.25</td>
<td>-0.06</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. Existing Home Sales Improve
With Tax Credit Expiration</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a>May 24, 2010 </span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Hopefully, recent improvement in existing single-family home
sales wasn't all due to buying ahead of the April 30th expiration of a
Federal home-buyer tax credit. Existing home sales rose 7.6% last month
to 5.770M (AR) according to the National Association of Realtors. The
gain followed a similar rise in March which followed declines during
the prior thee months. Sales in April exceeded Consensus expectations
for 5.65M. Total sales include sales of condos and co-ops. Sales of
existing single-family homes alone rose 7.4% from March to 5.050M.
(These data have a longer history than the total sales series). Sales
of condos and co-ops rose 42.3% from last year.</p>
<p>Sales have been helped by a tax credit for first-time home
buyers. Additionally, a credit of up to $6,500 was available to some
existing home owners who move. The full details of the home-buyer tax
credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.</p>
<p>The median price of all existing homes also rose in April to
$173,100 but remained off roughly 25% from the 2007 peak. The price of
a single-family home rose 2.3% to $173,400 (4.5% y/y). Earlier price
weakness sharply raised home affordability -- by three-quarters from
the 2006 low. The median family income for existing home buyers was
$60,498 and mortgage payments amounted to 14.7% of that total.</p>
<p>The number of unsold homes (single-family &amp; co-ops)
for sale rose sharply m/m, up 2.7% y/y. At the current sales rate there
was an 8.4 months' supply of homes on the market. That was down from a
high of 10.1 months during April of 2008. For single-family homes, the
inventory rose m/m to an 8.2 months' supply.</p>
<p>The data on existing home sales, prices and affordability can
be found in Haver's <b>USECON</b> database. The regional
price, affordability and inventory data is available in the <b>REALTOR
</b>database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524i.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524j.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Existing
Home Sales (Thous, SAAR)</b></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>April y/y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><b>Total</b></td>
<td>5,770</td>
<td>5,360</td>
<td>5,010</td>
<td>22.8%</td>
<td>5,160</td>
<td>4,893</td>
<td>5,674</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>1,090</td>
<td>900</td>
<td>840</td>
<td>41.6</td>
<td>863</td>
<td>845</td>
<td>1,010</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,330</td>
<td>1.210</td>
<td>1,110</td>
<td>29.1</td>
<td>1,166</td>
<td>1,130</td>
<td>1,331</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>2,140</td>
<td>1,970</td>
<td>1,840</td>
<td>23.0</td>
<td>1,913</td>
<td>1,860</td>
<td>2,243</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,210</td>
<td>1,290</td>
<td>1,220</td>
<td>5.2</td>
<td>1,216</td>
<td>1,064</td>
<td>1,095</td>
</tr>
<tr>
<td class="firstcol"><b>Single-Family Sales</b></td>
<td>5,050</td>
<td>4,700</td>
<td>4,360</td>
<td>20.5</td>
<td>4,573</td>
<td>4,341</td>
<td>4,960</td>
</tr>
<tr>
<td class="firstcol"><b>Median Price, Total, $
(NSA)</b></td>
<td>173,100</td>
<td>169,600</td>
<td>164,600</td>
<td>4.0</td>
<td>172,742</td>
<td>197,233</td>
<td>216,633</td>
</tr>
</tbody>
</table>
<span id="articletitle">Japan Sector Index Drops In March</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> May 24, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524k.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>After an encouraging spurt in January Japan&#8217;s overall sector
index has fallen back for two straight months and is back barely above
its level of December 2009. Only the industry index is up this month.
The industrial index is up in 12 of the last 13-months but the even the
pace of its increase is tailing off. The construction index is still
eroding. The tertiary index which is a measure of the performance of
the services sector is on a steady slow path of recovery but it fell
sharply in March and in February. The tertiary index is below its
December 2009 level.</p>
<p>The construction index is near the bottom of its five year
range of values. The services sector is in the bottom 12% of its five
year range. The industrial sector is the best performing sector but
stands only in the 60th percentile of its range. As a result of these
standings the overall business index resides in the 28th percentile of
its range.</p>
<p>The sector indices paint an unclear picture of the Japanese
economy. While the trends for the indices are still rising, except for
construction, the recent weakness for industry and services is
disturbing.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"><b>Key
Japanese Sector Surveys</b> </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;" colspan="4">Raw
readings of each
survey</td>
<td style="font-weight: bold;" colspan="3">Percent
of 5Yr range*</td>
</tr>
<tr>
<td class="firstcol">Indices</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Jan-10</td>
</tr>
<tr class="odd">
<td class="firstcol">Biz
Activity(METI:Indices)</td>
<td>93.8</td>
<td>94.6</td>
<td>96.8</td>
<td>93.6</td>
<td>28.4%</td>
<td>34.3%</td>
<td>50.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Construction</td>
<td>75.2</td>
<td>78.2</td>
<td>75.0</td>
<td>74.5</td>
<td>2.6%</td>
<td>13.9%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Industry</td>
<td>94.8</td>
<td>93.7</td>
<td>94.3</td>
<td>90.4</td>
<td>60.5%</td>
<td>57.6%</td>
<td>59.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Tertiary(serv)</td>
<td>95.5</td>
<td>98.5</td>
<td>98.8</td>
<td>96.0</td>
<td>12.1%</td>
<td>45.1%</td>
<td>48.4%</td>
</tr>
</tbody>
</table>
<span id="articletitle">Confidence Improves In Slovenia,
One Of The Smaller Euro Area Countries </span><br>
<span id="byline">by <a href="/comment/Curley.html">Louise
Curley</a> May 24, 2010</span>
<span id="articletext">
<p></p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524l.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100524m.jpg" style="width: 312px; height: 265px;">
<p></p>
<p>The
financial turmoil in the Euro Area has resulted in a sharp drop in
confidence in the Euro Area, as a whole.&nbsp; The ZEW Indicator of
Expectations for the entire Euro Area, released last week, fell from a
balance of optimists of 46.0% in April to 37.6% in May. Today, however,
Slovenia, one of the smaller nations and one of the more recent members
of the euro area.&nbsp; reported today an increase in
confidence.&nbsp; (Slovenia has a population of about 2 million and
entered the Euro Area on January 1, 2007) The Statistical Office of
Slovenia publishes an overall sentiment indicator, which is based on
three separate indicators: consumer confidence, confidence in retail
trade and in manufacturing.&nbsp; The indicators are in the form of
percent balances.&nbsp;</p>
<p>Although the overall indicator still shows
an excess of pessimists, the excess of pessimists declined in May to 9
from 12.&nbsp; This is the best balance since October of
2008.&nbsp; Business personnel in Slovenia appear to be more
positive than the consumer.&nbsp; In Retail trade, there is
actually a small excess-2%-of optimists over pessimists and in
Manufacturing, the pessimists outweigh the optimists by only
1%.&nbsp; There are, however, many more pessimists among the
consumers.&nbsp; They exceeded the optimists by 22% in May, but
this was an improvement over April's excess of pessimist of
24%.&nbsp; The percent balance of the four indicators are shown in
the first chart.&nbsp;&nbsp;</p>
<p>The improvement in confidence in
May in Slovenia, in contrast to a decline for the Euro Area as a whole,
may be due in part to Slovenia's relatively favorable financial
situation.&nbsp; Although its government deficit as a percentage of
GDP increased in 2009, part of the increase reflects the decline in GDP
and may improve as the economy recovers.&nbsp; The level of debt to
GDP is well below any danger point&nbsp; These ratios are shown in
the second chart.</p>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">SLOVENIA</th>
<th scope="col"><b>May 10&nbsp;</b></th>
<th scope="col"><b>Apr 10&nbsp;</b></th>
<th scope="col"><b>Mar 10</b></th>
<th scope="col"><b>Feb 10</b></th>
<th scope="col"><b>Jan 10</b></th>
<th scope="col"><b>Dec 09</b></th>
<th scope="col"><b>Nov 09</b></th>
<th scope="col"><b>Oct 09</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Combined Sentiment
Indicator (% Bal)</td>
<td>-9</td>
<td>-12</td>
<td>-15</td>
<td>-11</td>
<td>-10</td>
<td>-13</td>
<td>-15</td>
<td>-13</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Consumer Confidence Indicator (% Bal)</td>
<td>-22</td>
<td>-24</td>
<td>-26</td>
<td>-24</td>
<td>-26</td>
<td>-26</td>
<td>-24</td>
<td>-21</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail
Confidence Indicator (%
Bal)</td>
<td>2</td>
<td>2</td>
<td>-3</td>
<td>-4</td>
<td>-6</td>
<td>-4</td>
<td>-7</td>
<td>-6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Manufacturing Confidence Indicator
(%Bal)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>-1</td>
<td>-2</td>
<td>-6</td>
<td>-8</td>
<td>-7</td>
<td>-12</td>
<td>-13</td>
<td>-16</td>
</tr>
</tbody>
</table>
</span>
</body></html>

National Association For BusinessEconomics Expects Positive Growth, Low Inflation & Higher Interest Rates

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100521a.jpg" style="border: 0px solid ; width: 363px; height: 265px; float: left;" align="left"></p>
<p>The outlook for U.S. consumer spending remains firm. That
should be the conclusion after looking at the Royal Bank of Canada
(RBC) CASH Index. It monitors several aspects of the consumer
environment and rose early this month to 72.7 from 64.6 in April. It
was up by more than two-thirds from last May.</p>
<p>Deterioration this month in the subcategories accompanied the
overall index improvement. Nevertheless, each remained solid versus
last year and portends continued improvement in consumer spending.
Since inception in 2002, the CASH index has an 85% correlation with the
y/y change in real personal consumption expenditures. The jobs index
has a similar correlation with the change in payroll employment.</p>
<p>The RBC U.S. CASH (Consumer Attitudes &amp; Spending by
Households) index is based on data collected from interviews with a
sample of 1,008 U.S. adults conducted over a five-day polling period
during the first week of each month by Ipsos, a market and opinion
research firm.</p>
<p>The RBC Financial Group figures can be found in Haver's <b>SURVEYS</b>
database.The latest report from RBC can be found <a href="http://www.rbc.com/newsroom/2010/0506-us-consumer.html">here</a>.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100521b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100521c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>RBC
Consumer Attitudes &amp; Spending by Households Survey (CASH)</b></th>
<th scope="col"><b>May</b></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>May '09</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nat'l RBC Index</td>
<td>72.7</td>
<td>64.6</td>
<td>58.2</td>
<td>43.0</td>
<td>30.0</td>
<td>36.1</td>
<td>82.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions
Index</td>
<td>63.6</td>
<td>66.5</td>
<td>56.7</td>
<td>45.0</td>
<td>28.2</td>
<td>46.0</td>
<td>99.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations Index</td>
<td>74.2</td>
<td>78.0</td>
<td>57.3</td>
<td>34.0</td>
<td>19.5</td>
<td>-12.4</td>
<td>34.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Jobs Index</td>
<td>74.2</td>
<td>74.9</td>
<td>68.2</td>
<td>54.4</td>
<td>50.9</td>
<td>88.7</td>
<td>122.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Investment Index</td>
<td>73.8</td>
<td>75.3</td>
<td>65.1</td>
<td>49.6</td>
<td>37.2</td>
<td>51.1</td>
<td>91.1</td>
</tr>
</tbody>
</table>
</body></html>

The outlook for U.S. consumer spending remains firm. That should be the conclusion after looking at the Royal Bank of Canada (RBC) CASH Index. It monitors several aspects of the consumer environment and rose early this month to 72.7 [...]

U.S. Consumer Spending Outlook Improves According To RBC

U.S. Consumer Spending OutlookImproves According To RBC

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100520h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The economic recovery continued this month according to the
Philadelphia Federal Reserve Bank. It indicated that its May index of
regional factory sector activity rose for the fourth consecutive month
to the second highest level since early-2005. At 21.4 the index roughly
matched Consensus expectations and has been positive since the summer.
The latest figure compared to those near -40.0 at the recent
recession's weakest.</p>
<p>During the last ten years there has been a 75% 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 73% correlation with q/q growth in real GDP. The latest
survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2010/bos0510.pdf">here.</a></p>
<p>Improved shipments powered the June index gain. It was
accompanied by higher new orders. Factory payrolls, however, eased but
still showed net-hiring for the sixth straight month. During the last
ten years, there has been a 90% correlation between the index level and
the three-month change in manufacturing sector payrolls.</p>
<p>The prices paid index slipped from the recent high. During the
last ten years there has been a 66% correlation between the prices paid
index and the three-month growth in the intermediate goods PPI. There
has been an 77% correlation with the change in core intermediate goods
prices.</p>
<p>The separate index of expected business conditions in six
months also fell, to the lowest level since April of last year.
Expected prices paid also fell to the lowest level since last August.
Expected capital expenditures also fell m/m and were well below the
February high.</p>
<p>The figures from the Philadelphia Federal Reserve can be found
in Haver's <b>SURVEYS</b> database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100520i.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100520j.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Philadelphia
Fed (%)</b></th>
<th scope="col"><b>May</b></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>May '09</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General Activity Index</td>
<td>21.4</td>
<td>20.2</td>
<td>18.9</td>
<td>-21.7</td>
<td>-7.6</td>
<td>-21.4</td>
<td>5.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>6.1</td>
<td>13.9</td>
<td>9.3</td>
<td>-23.2</td>
<td>-9.7</td>
<td>-14.7</td>
<td>6.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Shipments</td>
<td>15.8</td>
<td>5.6</td>
<td>13.6</td>
<td>-18.7</td>
<td>-8.0</td>
<td>-9.2</td>
<td>9.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Delivery Times</td>
<td>-1.2</td>
<td>5.4</td>
<td>7.9</td>
<td>-19.1</td>
<td>-15.3</td>
<td>-10.6</td>
<td>-6.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Number of Employees</td>
<td>3.2</td>
<td>7.3</td>
<td>8.4</td>
<td>-29.8</td>
<td>-23.8</td>
<td>-8.8</td>
<td>6.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>-7.9</td>
<td>2.0</td>
<td>-11.0</td>
<td>-27.8</td>
<td>-24.0</td>
<td>-16.7</td>
<td>-3.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index</td>
<td>35.5</td>
<td>42.7</td>
<td>38.6</td>
<td>-23.8</td>
<td>-3.9</td>
<td>36.3</td>
<td>26.3</td>
</tr>
</tbody>
</table>
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The economic recovery continued this month according to the Philadelphia Federal Reserve Bank. It indicated that its May index of regional factory sector activity rose for the fourth consecutive month to the second highest level since [...]

Philadelphia Fed Index Increases As Shipments Rise

Robert Brusca

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100520d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Orders growth has recovered substantially in Germany and in
France. Despite the recovery in orders, with the rebounding rates of
orders growth, the level of orders is still some 20% to 30% below their
respective cycle highs for France and Italy.</p>
<p>Germany posted some very strong orders. France and Italy, too,
have posted some degree of orders strength in March. While France&#8217;s
jump of 6.5% in one month seems very impressive (better than a 100%
annual rate) orders in France still are rebounding from a 10.9% drop in
January. As a result French orders are still falling on balance over
three-months even with this strong monthly rebound. So are orders in
Italy.</p>
<p>Europe is certainly due for some kick to growth as the euro
has fallen over the past year and plunged sharply over the past few
months. But the persisting weakness in European stocks speaks to a loss
of confidence. In part the Greek stimulus plan is not fully funded and
is awaiting some final votes from Germany to disburse funds. In part it
is the still uncooperative tone in Greece where further strikes are
planned to protest austerity. In part it is due to concern that,
despite all the reluctance to obey the rule of austerity, the fiscal
consolidation will prove to be too great to allow European growth to
press ahead.</p>
<p>It is these two conflicting ideas that are driving markets
into a frenzy, even though they are at odds with each other. Which is
it? Are countries going to avoid austerity and not do the right thing?
Or, are countries going to be so virtuous with fiscal controls that
consolidation will prove to be a load too-heavy and cause growth to be
set back? Or is there a middle ground with a more positive result? We
have seen recent improvements in the US and European economic reports.
Reports with expectations components have shown some of the weakest
recent readings. Barometers of current activity have been strong,
especially in the UK just outside the Euro-Area</p>
<p>I think we are in a region of political economic uncertainty.
Markets are not happy with the stewardship of our political or economic
direction in recent years. The private sector has failed us too. It is
no wonder that markets feel like taking no prisoners. But it&#8217;s also
true that at the end of the day the markets know that stock indices
have come a long way from their recession bottoms, that interest rates
had crept up and are now lower as a result of this sell-off, that
central banks are not eager to tighten but are planning to discharge
their responsibilities, that &#8211; at the end of the day- inflation has
remained under wraps. The blow-off in commodity prices that had run
well ahead of reality is a welcome event (unless you were long, of
course). As we go over the final technical hurdles to get money to
Greece (and to thereby protect exposed German and French banks with
Greek paper on their balance sheets) we can expect things to settle
down and for markets to pay attention of fundamentals again. It&#8217;s not
just pabulum from a policymaker looking to calm markets. It&#8217;s true. The
fundamentals are good. Even with the high debt-to-GDP levels the
problems are tractable.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"><b>Italy
Orders</b> </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td style="font-weight: bold;" class="firstcol">Saar
exept m/m</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">Jan-10</td>
<td style="font-weight: bold;">3-mo</td>
<td style="font-weight: bold;">6-mo</td>
<td style="font-weight: bold;">12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1.0%</td>
<td>-0.4%</td>
<td>-2.8%</td>
<td>-8.7%</td>
<td>12.7%</td>
<td>9.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Foreign</td>
<td>1.8%</td>
<td>-0.5%</td>
<td>-2.3%</td>
<td>-4.1%</td>
<td>22.0%</td>
<td>21.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Domestic</td>
<td>0.4%</td>
<td>-0.2%</td>
<td>-3.1%</td>
<td>-11.1%</td>
<td>7.7%</td>
<td>3.0%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="7" class="firstcol">Memo</td>
</tr>
<tr class="odd">
<td class="firstcol">Sales</td>
<td>1.5%</td>
<td>-2.6%</td>
<td>2.6%</td>
<td>6.2%</td>
<td>8.3%</td>
<td>6.3%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="7" class="firstcol">French Orders</td>
</tr>
<tr class="odd">
<td class="firstcol">Saar exept m/m</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>6.5%</td>
<td>-1.0%</td>
<td>-10.9%</td>
<td>-22.4%</td>
<td>2.2%</td>
<td>10.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>2.9%</td>
<td>1.0%</td>
<td>-8.7%</td>
<td>-19.1%</td>
<td>26.7%</td>
<td>28.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">IP xConstruct</td>
<td>0.8%</td>
<td>0.3%</td>
<td>0.6%</td>
<td>7.0%</td>
<td>3.7%</td>
<td>6.7%</td>
</tr>
</tbody>
</table>
</body></html>

Orders growth has recovered substantially in Germany and in France. Despite the recovery in orders, with the rebounding rates of orders growth, the level of orders is still some 20% to 30% below their respective cycle highs for France [...]

UK Trade Deficit Worsens As Exports Lag Imports

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

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

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Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

260206.jpg

**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

260205X15.jpg

260205Y15.jpg

**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

260205C15.jpg

260205D15.jpg

- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

260205A2.jpg

260205B2.jpg

Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data are not seasonally adjusted.

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

260205C2.jpg

260205D2.jpg

- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

U.S. Initial Unemployment Claims Surged in Latest Week

260205E.jpg

German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.