Tom Moeller

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left" height="265">
Forward momentum is building behind consumer spending. March
retail sales rose 1.6%; triple the upwardly revised readings of the
prior two months and stronger than the 1.2% increase that had been
expected. On a three-month basis sales rose at an 11.0% annual rate.
Nonauto sales rose 0.6% but the February increase also was revised up
to 1.0% after an upwardly revised 0.6% January increase. The latest
gain was near expectations. On a three-month basis the gain in nonauto
sales remained strong at 9.3% (AR). These numbers were, of course,
helped by moderation in gasoline prices. Nonauto retail sales less
gasoline, a better measure of "core" spending, grew 0.7% last month and
at a 10.2% annual rate during the last three, the strongest since
January 2006.
"Core" discretionary spending improved. Apparel store sales
rose 2.3% during March and at a 22.1% annual rate during the last three
months. General merchandise store sales also rose a firm 0.6% and at a
11.9% three-month rate. Sales at furniture, home furnishings &amp;
electronics stores lagged these gains last month. They were unchanged
but were up at a 9.8% annual rate over the last three months. That's
improved from the 9.6% decline during all of last year. Furniture sales
alone have been rising at a 14.5% rate while sales of electronics
&amp; appliances have been rising at a 15.4% rate.
Mirroring the improvement in unit sales, motor vehicle sales
improved considerably by 6.6% last month and at a 19.8% rate during the
last three. Finally, growth in sales at gasoline service stations fell
0.4% and rose at just a 2.7% rate during the last three months.
Earlier strength in internet &amp; catalogue sales
continued to ease. Sales ticked up just 0.2% and the three-month rate
of gain backed off to 7.3%, one third the growth earlier this year.
The retail sales data are available in Haver's USECON
database

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414g.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">&nbsp;</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">March Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Total Retail Sales &amp; Food
Services</a> (%)</td>
<td>1.6</td>
<td>0.5</td>
<td>0.5</td>
<td>7.6</td>
<td>-6.0</td>
<td>-0.8</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Autos</td>
<td>0.6</td>
<td>1.0</td>
<td>0.6</td>
<td>6.4</td>
<td>-4.8</td>
<td>2.4</td>
<td>3.9</td>
</tr>
<tr class="odd">
<td class="firstcol">
Non-Auto Less Gasoline</td>
<td>0.7</td>
<td>1.1</td>
<td>0.6</td>
<td>4.2</td>
<td>-1.9</td>
<td>1.6</td>
<td>3.6</td>
</tr>
</tbody>
</table>
</body></html>

Forward momentum is building behind consumer spending. March retail sales rose 1.6%; triple the upwardly revised readings of the prior two months and stronger than the 1.2% increase that had been expected. On a three-month basis sales [...]

U.S. Retail Sales Strengthen; Core Sales Strongest Since 2006

Robert Brusca

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Even with that strong-seeming chart and rock solid 0.9% gain
in February, manufacturing IP in the Zone remains some 14% below it
past cycle peak. But eh current progress looks good as growth over
3-and 6-months have average a pace of 19%. The consumer sector
continues to lag with a three-month growth rate of 2.2%.
Among large Euro-Area member countries Spain grew the
strongest in Feb, but it is a volatile report from Spain that fell by
3.4% in January, undercutting the impact of the gain in February. The
UK, an EU member, had the next strongest gain among large European
economies at 1.3% but that was a recoup from a -0.9% result in January.
Italy with a 0.2% rise on the heels of a 1.7% gain has the best
two-month result followed by Germany at 0.2% and 0.6%, in Feb and Jan,
respectively. Still, both Germany and Spain show IP contractions over
three-months. Spain&#8217;s output is still falling over 12-months but over
12-months German IP is up by 7.1%., followed by France at 3.3% Italy at
3% and the UK at 1.5%.
The February gains were on the back of a spike in intermediate
goods output which advanced by 1.5%. Capital goods output rose by 0.9%.
The consumer categories receded. Europe needs to get its consumer in
gear. Europe, like many countries is trying to let its export sector
pull it out of its recessionary hole almost all by itself. This is
imbalanced growth that leans heavily on demand with origins elsewhere.
Europe needs to learn to stand on its own two feet.

<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th colspan="111" scope="col"> Euro-Area
MFG IP</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td></td>
</tr>
<tr class="even">
<td class="firstcol">Euro-Area Detail</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>Dec 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q-4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;MFG</td>
<td>0.9%</td>
<td>1.3%</td>
<td>0.3%</td>
<td>10.6%</td>
<td>12.6%</td>
<td>10.1%</td>
<td>9.0%</td>
<td>4.2%</td>
<td>0.9%</td>
<td>12.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>-0.3%</td>
<td>0.5%</td>
<td>0.3%</td>
<td>2.2%</td>
<td>9.1%</td>
<td>1.2%</td>
<td>2.2%</td>
<td>1.1%</td>
<td>-0.1%</td>
<td>5.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">
C-Durables</td>
<td>-0.6%</td>
<td>2.6%</td>
<td>-1.5%</td>
<td>1.4%</td>
<td>12.2%</td>
<td>7.3%</td>
<td>10.5%</td>
<td>-0.3%</td>
<td>-2.5%</td>
<td>&nbsp;&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">
C-Non-durables</td>
<td>-0.2%</td>
<td>0.3%</td>
<td>0.6%</td>
<td>2.8%</td>
<td>7.5%</td>
<td>3.1%</td>
<td>1.3%</td>
<td>1.5%</td>
<td>0.6%</td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>1.5%</td>
<td>0.8%</td>
<td>-1.1%</td>
<td>4.6%</td>
<td>1.8%</td>
<td>-4.2%</td>
<td>6.2%</td>
<td>6.9%</td>
<td>3.6%</td>
<td>5.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>0.9%</td>
<td>-1.1%</td>
<td>0.0%</td>
<td>-0.7%</td>
<td>1.5%</td>
<td>4.5%</td>
<td>5.9%</td>
<td>3.1%</td>
<td>-0.8%</td>
<td>-0.7%</td>
</tr>
<tr>
<td colspan="11" class="firstcol">Main
Euro-Area
Countries and UK IP in MFG</td>
</tr>
<tr class="even">
<td class="firstcol"></td>
<td colspan="3">Mo/Mo</td>
<td>Feb10</td>
<td>Jan10</td>
<td>Feb10</td>
<td>Jan10</td>
<td>Feb10</td>
<td>Jan10</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">MFG Only</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>Dec 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q:4 
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany:</td>
<td>0.2%</td>
<td>0.6%</td>
<td>-1.3%</td>
<td>-2.1%</td>
<td>1.3%</td>
<td>4.5%</td>
<td>8.7%</td>
<td>7.1%</td>
<td>3.2%</td>
<td>-3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">France: 
IPxConstruct'n</td>
<td>0.0%</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>3.2%</td>
<td>6.9%</td>
<td>0.7%</td>
<td>5.3%</td>
<td>3.3%</td>
<td>2.6%</td>
<td>4.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.2%</td>
<td>1.7%</td>
<td>-0.6%</td>
<td>5.3%</td>
<td>6.8%</td>
<td>7.6%</td>
<td>3.8%</td>
<td>3.0%</td>
<td>-0.6%</td>
<td>5.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>1.6%</td>
<td>-3.4%</td>
<td>-0.6%</td>
<td>-9.3%</td>
<td>-15.4%</td>
<td>-11.9%</td>
<td>-7.3%</td>
<td>-2.1%</td>
<td>-2.0%</td>
<td>-9.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK: EU
member</td>
<td>1.3%</td>
<td>-0.9%</td>
<td>0.9%</td>
<td>5.5%</td>
<td>0.5%</td>
<td>6.3%</td>
<td>-0.7%</td>
<td>1.5%</td>
<td>0.1%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
</body></html>

Even with that strong-seeming chart and rock solid 0.9% gain in February, manufacturing IP in the Zone remains some 14% below it past cycle peak. But eh current progress looks good as growth over 3-and 6-months have average a pace of [...]

IP Rebound Screams Recovery

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Consumer price inflation remain subdued last month, according
to the U.S. Bureau of Labor Statistics. It reported that the CPI during
March rose all of 0.1% after having been unchanged during February.
That was enough to leave the change during the last three months at
0.9% (AR), its lowest since May of last year. The latest figure matched
Consensus expectations.
Core consumer prices also were weak. Goods
&amp; services together were unchanged while a 0.1% increase had
been expected. That pulled the three-month change to negative 0.1%
which was its lowest since January 2009. Core goods prices
fell 0.1% as they did in February. That was enough to pull the
three-month gain to a negative 0.1% versus the high of 5.4% last April.
New &amp; used motor vehicles prices posted a 0.2% increase (5.5%
y/y). Apparel prices began to fall slightly versus last year while
prices for household furnishings &amp; operation fell 2.3% y/y.
Core services prices again inched up 0.1%
(+0.9% y/y). Weakness in the housing market caused a 0.5% y/y decline
in shelter prices while owners equivalent rent of primary residences, a
measure not equivalent to other house price measures, slipped again
m/m. A slight y/y decline in this measure was the weakest reading since
the series' start in 1983. Elsewhere in services, prices have been
relatively strong. Public transportation prices rose 0.5% (6.1% y/y)
and medical care services prices gained another 0.3% (3.8% y/y).
Finally, education costs posted a strong 0.6% increase (4.9% y/y) but
recreation prices slipped for the seventh straight month (-1.1% y/y).
Energy prices slipped slightly again as
they reflected a 0.8% m/m decline in gasoline prices. Gas prices are
up, however, by 41.4% y/y. Fuel oil prices slipped 1.3% (+19.6% y/y)
but natural gas &amp; electricity prices rose a firm 1.4% (-1.8%
y/y).
Food &amp; beverage prices firmed a bit
by 0.2% but the y/y gain of 0.3% followed six months of price
deflation. A 0.4% decline in dairy prices was an improvement from the
10.4% decline last summer. Also showing less deflation were prices for
meats, poultry, fish &amp; eggs (-1.7% y/y) but cereal &amp;
bakery product prices continued weak (-1.1% y/y). Dairy product prices
also showed less deflation (-0.4% y/y) while fruit &amp; bakery
products rose 2.1% y/y. Finally, the cost of eating out rose just 1.2%,
a record low increase, while alcoholic beverage prices also rose just
1.1% y/y, the least since 1995.
The chained CPI, which adjusts for shifts in consumption
patterns improved last month and rose 2.5% year-to-year. Chained prices
less food &amp; energy gained 0.8% y/y.
The consumer price data is available in Haver's USECON
database while detailed figures can be found in the CPIDATA
database.
Has the behavior of inflation and long-term inflation
expectations changed? from the Federal Reserve Bank of
Kansas City can be found <a href="http://www.kansascityfed.org/Publicat/ECONREV/PDF/1q08Clark.pdf">here</a>.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414c.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/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a> 
(%)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">March y/y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.1</td>
<td>0.0</td>
<td>0.2</td>
<td>2.4</td>
<td>-0.3</td>
<td>3.8</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.0</td>
<td>0.1</td>
<td>-0.1</td>
<td>1.2</td>
<td>1.7</td>
<td>2.3</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>-0.1</td>
<td>-0.1</td>
<td>0.1</td>
<td>2.0</td>
<td>1.3</td>
<td>0.1</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.2</td>
<td>0.9</td>
<td>1.9</td>
<td>3.1</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>-0.0</td>
<td>-0.5</td>
<td>2.8</td>
<td>14.9</td>
<td>-18.1</td>
<td>13.7</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.2</td>
<td>0.0</td>
<td>0.2</td>
<td>0.3</td>
<td>1.9</td>
<td>5.4</td>
<td>3.9</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM" style="color: black;">Chained CPI: Total (NSA)</a>&nbsp;</td>
<td>0.4</td>
<td>-0.0</td>
<td>0.4</td>
<td>2.5</td>
<td>-0.1</td>
<td>3.7</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.2</td>
<td>0.2</td>
<td>-0.0</td>
<td>0.8</td>
<td>1.5</td>
<td>2.0</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

Consumer price inflation remain subdued last month, according to the U.S. Bureau of Labor Statistics. It reported that the CPI during March rose all of 0.1% after having been unchanged during February. That was enough to leave the [...]

U.S. CPI Increase Is Weak; Core Prices Are Unchanged

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Consumer price inflation remain subdued last month, according
to the U.S. Bureau of Labor Statistics. It reported that the CPI during
March rose all of 0.1% after having been unchanged during February.
That was enough to leave the change during the last three months at
0.9% (AR), its lowest since May of last year. The latest figure matched
Consensus expectations.
Core consumer prices also were weak. Goods
&amp; services together were unchanged while a 0.1% increase had
been expected. That pulled the three-month change to negative 0.1%
which was its lowest since January 2009. Core goods prices
fell 0.1% as they did in February. That was enough to pull the
three-month gain to a negative 0.1% versus the high of 5.4% last April.
New &amp; used motor vehicles prices posted a 0.2% increase (5.5%
y/y). Apparel prices began to fall slightly versus last year while
prices for household furnishings &amp; operation fell 2.3% y/y.
Core services prices again inched up 0.1%
(+0.9% y/y). Weakness in the housing market caused a 0.5% y/y decline
in shelter prices while owners equivalent rent of primary residences, a
measure not equivalent to other house price measures, slipped again
m/m. A slight y/y decline in this measure was the weakest reading since
the series' start in 1983. Elsewhere in services, prices have been
relatively strong. Public transportation prices rose 0.5% (6.1% y/y)
and medical care services prices gained another 0.3% (3.8% y/y).
Finally, education costs posted a strong 0.6% increase (4.9% y/y) but
recreation prices slipped for the seventh straight month (-1.1% y/y).
Energy prices slipped slightly again as
they reflected a 0.8% m/m decline in gasoline prices. Gas prices are
up, however, by 41.4% y/y. Fuel oil prices slipped 1.3% (+19.6% y/y)
but natural gas &amp; electricity prices rose a firm 1.4% (-1.8%
y/y).
Food &amp; beverage prices firmed a bit
by 0.2% but the y/y gain of 0.3% followed six months of price
deflation. A 0.4% decline in dairy prices was an improvement from the
10.4% decline last summer. Also showing less deflation were prices for
meats, poultry, fish &amp; eggs (-1.7% y/y) but cereal &amp;
bakery product prices continued weak (-1.1% y/y). Dairy product prices
also showed less deflation (-0.4% y/y) while fruit &amp; bakery
products rose 2.1% y/y. Finally, the cost of eating out rose just 1.2%,
a record low increase, while alcoholic beverage prices also rose just
1.1% y/y, the least since 1995.
The chained CPI, which adjusts for shifts in consumption
patterns improved last month and rose 2.5% year-to-year. Chained prices
less food &amp; energy gained 0.8% y/y.
The consumer price data is available in Haver's USECON
database while detailed figures can be found in the CPIDATA
database.
Has the behavior of inflation and long-term inflation
expectations changed? from the Federal Reserve Bank of
Kansas City can be found <a href="http://www.kansascityfed.org/Publicat/ECONREV/PDF/1q08Clark.pdf">here</a>.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414c.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/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> 
(%)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">March y/y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.1</td>
<td>0.0</td>
<td>0.2</td>
<td>2.4</td>
<td>-0.3</td>
<td>3.8</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.0</td>
<td>0.1</td>
<td>-0.1</td>
<td>1.2</td>
<td>1.7</td>
<td>2.3</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>-0.1</td>
<td>-0.1</td>
<td>0.1</td>
<td>2.0</td>
<td>1.3</td>
<td>0.1</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.2</td>
<td>0.9</td>
<td>1.9</td>
<td>3.1</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>-0.0</td>
<td>-0.5</td>
<td>2.8</td>
<td>14.9</td>
<td>-18.1</td>
<td>13.7</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.2</td>
<td>0.0</td>
<td>0.2</td>
<td>0.3</td>
<td>1.9</td>
<td>5.4</td>
<td>3.9</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM" style="color: black;">Chained CPI: Total (NSA)</a>&nbsp;</td>
<td>0.4</td>
<td>-0.0</td>
<td>0.4</td>
<td>2.5</td>
<td>-0.1</td>
<td>3.7</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.2</td>
<td>0.2</td>
<td>-0.0</td>
<td>0.8</td>
<td>1.5</td>
<td>2.0</td>
<td>1.9</td>
</tr>
</tbody>
</table>
IP Rebound Screams Recovery 
by <a href="/comment/Brusca.html">Robert
Brusca</a> April 14, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Even with that strong-seeming chart and rock solid 0.9% gain
in February, manufacturing IP in the Zone remains some 14% below it
past cycle peak. But eh current progress looks good as growth over
3-and 6-months have average a pace of 19%. The consumer sector
continues to lag with a three-month growth rate of 2.2%.
Among large Euro-Area member countries Spain grew the
strongest in Feb, but it is a volatile report from Spain that fell by
3.4% in January, undercutting the impact of the gain in February. The
UK, an EU member, had the next strongest gain among large European
economies at 1.3% but that was a recoup from a -0.9% result in January.
Italy with a 0.2% rise on the heels of a 1.7% gain has the best
two-month result followed by Germany at 0.2% and 0.6%, in Feb and Jan,
respectively. Still, both Germany and Spain show IP contractions over
three-months. Spain&#8217;s output is still falling over 12-months but over
12-months German IP is up by 7.1%., followed by France at 3.3% Italy at
3% and the UK at 1.5%.
The February gains were on the back of a spike in intermediate
goods output which advanced by 1.5%. Capital goods output rose by 0.9%.
The consumer categories receded. Europe needs to get its consumer in
gear. Europe, like many countries is trying to let its export sector
pull it out of its recessionary hole almost all by itself. This is
imbalanced growth that leans heavily on demand with origins elsewhere.
Europe needs to learn to stand on its own two feet.

<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th colspan="111" scope="col"> Euro-Area
MFG IP</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td></td>
</tr>
<tr class="even">
<td class="firstcol">Euro-Area Detail</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>Dec 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q-4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;MFG</td>
<td>0.9%</td>
<td>1.3%</td>
<td>0.3%</td>
<td>10.6%</td>
<td>12.6%</td>
<td>10.1%</td>
<td>9.0%</td>
<td>4.2%</td>
<td>0.9%</td>
<td>12.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>-0.3%</td>
<td>0.5%</td>
<td>0.3%</td>
<td>2.2%</td>
<td>9.1%</td>
<td>1.2%</td>
<td>2.2%</td>
<td>1.1%</td>
<td>-0.1%</td>
<td>5.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">
C-Durables</td>
<td>-0.6%</td>
<td>2.6%</td>
<td>-1.5%</td>
<td>1.4%</td>
<td>12.2%</td>
<td>7.3%</td>
<td>10.5%</td>
<td>-0.3%</td>
<td>-2.5%</td>
<td>&nbsp;&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">
C-Non-durables</td>
<td>-0.2%</td>
<td>0.3%</td>
<td>0.6%</td>
<td>2.8%</td>
<td>7.5%</td>
<td>3.1%</td>
<td>1.3%</td>
<td>1.5%</td>
<td>0.6%</td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>1.5%</td>
<td>0.8%</td>
<td>-1.1%</td>
<td>4.6%</td>
<td>1.8%</td>
<td>-4.2%</td>
<td>6.2%</td>
<td>6.9%</td>
<td>3.6%</td>
<td>5.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>0.9%</td>
<td>-1.1%</td>
<td>0.0%</td>
<td>-0.7%</td>
<td>1.5%</td>
<td>4.5%</td>
<td>5.9%</td>
<td>3.1%</td>
<td>-0.8%</td>
<td>-0.7%</td>
</tr>
<tr>
<td colspan="11" class="firstcol">Main
Euro-Area
Countries and UK IP in MFG</td>
</tr>
<tr class="even">
<td class="firstcol"></td>
<td colspan="3">Mo/Mo</td>
<td>Feb10</td>
<td>Jan10</td>
<td>Feb10</td>
<td>Jan10</td>
<td>Feb10</td>
<td>Jan10</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">MFG Only</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>Dec 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q:4 
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany:</td>
<td>0.2%</td>
<td>0.6%</td>
<td>-1.3%</td>
<td>-2.1%</td>
<td>1.3%</td>
<td>4.5%</td>
<td>8.7%</td>
<td>7.1%</td>
<td>3.2%</td>
<td>-3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">France: 
IPxConstruct'n</td>
<td>0.0%</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>3.2%</td>
<td>6.9%</td>
<td>0.7%</td>
<td>5.3%</td>
<td>3.3%</td>
<td>2.6%</td>
<td>4.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.2%</td>
<td>1.7%</td>
<td>-0.6%</td>
<td>5.3%</td>
<td>6.8%</td>
<td>7.6%</td>
<td>3.8%</td>
<td>3.0%</td>
<td>-0.6%</td>
<td>5.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>1.6%</td>
<td>-3.4%</td>
<td>-0.6%</td>
<td>-9.3%</td>
<td>-15.4%</td>
<td>-11.9%</td>
<td>-7.3%</td>
<td>-2.1%</td>
<td>-2.0%</td>
<td>-9.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK: EU
member</td>
<td>1.3%</td>
<td>-0.9%</td>
<td>0.9%</td>
<td>5.5%</td>
<td>0.5%</td>
<td>6.3%</td>
<td>-0.7%</td>
<td>1.5%</td>
<td>0.1%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
U.S. Retail Sales Strengthen; Core
Sales Strongest Since 2006 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 14, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left" height="265">
Forward momentum is building behind consumer spending. March
retail sales rose 1.6%; triple the upwardly revised readings of the
prior two months and stronger than the 1.2% increase that had been
expected. On a three-month basis sales rose at an 11.0% annual rate.
Nonauto sales rose 0.6% but the February increase also was revised up
to 1.0% after an upwardly revised 0.6% January increase. The latest
gain was near expectations. On a three-month basis the gain in nonauto
sales remained strong at 9.3% (AR). These numbers were, of course,
helped by moderation in gasoline prices. Nonauto retail sales less
gasoline, a better measure of "core" spending, grew 0.7% last month and
at a 10.2% annual rate during the last three, the strongest since
January 2006.
"Core" discretionary spending improved. Apparel store sales
rose 2.3% during March and at a 22.1% annual rate during the last three
months. General merchandise store sales also rose a firm 0.6% and at a
11.9% three-month rate. Sales at furniture, home furnishings &amp;
electronics stores lagged these gains last month. They were unchanged
but were up at a 9.8% annual rate over the last three months. That's
improved from the 9.6% decline during all of last year. Furniture sales
alone have been rising at a 14.5% rate while sales of electronics
&amp; appliances have been rising at a 15.4% rate.
Mirroring the improvement in unit sales, motor vehicle sales
improved considerably by 6.6% last month and at a 19.8% rate during the
last three. Finally, growth in sales at gasoline service stations fell
0.4% and rose at just a 2.7% rate during the last three months.
Earlier strength in internet &amp; catalogue sales
continued to ease. Sales ticked up just 0.2% and the three-month rate
of gain backed off to 7.3%, one third the growth earlier this year.
The retail sales data are available in Haver's USECON
database

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414g.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">&nbsp;</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">March Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Total
Retail Sales &amp; Food
Services</a> (%)</td>
<td>1.6</td>
<td>0.5</td>
<td>0.5</td>
<td>7.6</td>
<td>-6.0</td>
<td>-0.8</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Autos</td>
<td>0.6</td>
<td>1.0</td>
<td>0.6</td>
<td>6.4</td>
<td>-4.8</td>
<td>2.4</td>
<td>3.9</td>
</tr>
<tr class="odd">
<td class="firstcol">
Non-Auto Less Gasoline</td>
<td>0.7</td>
<td>1.1</td>
<td>0.6</td>
<td>4.2</td>
<td>-1.9</td>
<td>1.6</td>
<td>3.6</td>
</tr>
</tbody>
</table>
U.S. Business Inventories Resume
Accumulation 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 14,2010 


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Business inventories have resumed the trend toward modest
accumulation. During February, a 0.5% increase was the strongest of
four in the last five months. The gains follow 9.8% decumulation during
all of 2009 and the recent increases are the first since mid-2008.
Nevertheless, the increases have not kept up with improvement in sales
and the I/S ratio remained at its low of 1.27.
Retail inventories have started to rise. The 0.3% February
gain was third modest increase following sharp declines during 2008
&amp; 2009. That accumulation owes, however, to the auto sector
where inventories have been accumulating since September. Less autos,
the rate of decumulation only has slowed to 4.1% y/y from the peak
decumulation rate of 7.7% last fall. The slowdown has been led by
furniture stores and general merchandise but apparel store inventories
still are falling at near their strongest rate of 10.2% y/y.
Inventory accumulation in the factory sector compares with
sharp decumulation through most of 2009. It has been accompanied by
higher wholesale inventories, but here the improvement has been raised
by higher oil prices. Less oil, wholesale inventories still are being
shed at a 9.5% rate versus the 12.5% decline during all of last year.
The business sales and inventory data are available in Haver's
USECON database.
Inventories, inflation dynamics, and the New
Keynesian Phillips Curve from the Federal Reserve Bank of
Richmond is available <a href="http://www.richmondfed.org/publications/research/working_papers/2010/pdf/wp10-01.pdf">here</a>.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414i.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414j.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">Business
Inventories (%)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Feb. y/y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.5</td>
<td>0.2</td>
<td>-0.2</td>
<td>-6.7</td>
<td>-9.8</td>
<td>0.8</td>
<td>4.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.3</td>
<td>0.1</td>
<td>0.2</td>
<td>-7.2</td>
<td>-10.4</td>
<td>-3.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Retail excl. Auto</td>
<td>-0.1</td>
<td>-0.2</td>
<td>0.4</td>
<td>-4.1</td>
<td>-4.9</td>
<td>-1.9</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.6</td>
<td>0.1</td>
<td>-0.8</td>
<td>-7.4</td>
<td>-10.5</td>
<td>3.7</td>
<td>6.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.5</td>
<td>0.3</td>
<td>-0.2</td>
<td>-5.6</td>
<td>-8.7</td>
<td>2.2</td>
<td>3.7</td>
</tr>
</tbody>
</table>
</body></html>

U.S. CPI Increase Is Weak; CorePrices Are Unchanged

Louise Curley

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413j.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Inflation, as measured by the year over year percentage change
in the Consumer Price Index, accelerated in France and Germany in March
as can be seen in the first chart.
Inflation in Germany increased to 1.21% in March, up from
0.47% in February. The sharp increase was due largely to the rise in
energy and fresh food prices. "Core" inflation, which excludes these
items, rose 0.85% in March compared with a rise of 0.57% in February.
The March rise in Core inflation was surprising and somewhat worrisome
in view of its generally downward trend since July, 2008 when it
reached 3.54%. Overall and core inflation for Germany are shown in the
second chart.
Inflation in France rose 1.58% in March, compared with a 1.28%
in February. "Core" inflation in France, however, declined from 1.85%
in February to 1.68% in March in contrast to Germany's rise. France
publishes a seasonally adjusted "underlying index", ISJ (Index Sous
Jacent) that excludes the prices of fresh products, energy, tobacco and
public service tariffs. Core inflation in France has tended to be some
100 basis points higher than that in Germany, as can be seen in the
following table. Overall and core inflation in France are shown in the
second chart.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413k.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413l.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Year
over Year % Change</th>
<th scope="col">Mar 10&nbsp;</th>
<th scope="col">Feb 10&nbsp;</th>
<th scope="col">Jan 10</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
</tr>
</thead>
<tbody>
<tr style="font-weight: bold;" class="odd">
<td colspan="9" class="firstcol">Germany</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Consumer Price Index</td>
<td>1.21</td>
<td>0.47</td>
<td>0.75</td>
<td>0.84</td>
<td>0.28</td>
<td>-0.09</td>
<td>-0.40</td>
<td>-0.09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; CPI ex
food and energy</td>
<td>0.85</td>
<td>0.57</td>
<td>0.76</td>
<td>1.04</td>
<td>0.95</td>
<td>1.05</td>
<td>1.05</td>
<td>1.14</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol">France&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Consumer Price Index</td>
<td>1.58</td>
<td>1.28</td>
<td>1.10</td>
<td>0.91</td>
<td>0.39</td>
<td>-0.21</td>
<td>-0.36</td>
<td>-0.18</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core
Index (ISJ)</td>
<td>1.68</td>
<td>1.85</td>
<td>1.57</td>
<td>1.76</td>
<td>1.65</td>
<td>1.79</td>
<td>1.95</td>
<td>2.31</td>
</tr>
</tbody>
</table>
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Inflation, as measured by the year over year percentage change in the Consumer Price Index, accelerated in France and Germany in March as can be seen in the first chart. Inflation in Germany increased to 1.21% in March, up from 0.47% [...]

Inflation In France And Germany

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413g.jpg" align="left" border="0" height="265" width="363">
Economic recovery continued to do little to bolster small
businesses' mood. The National Federation of Independent Business
(NFIB) reported their March small business optimism index fell m/m to
86.8 which the lowest level since July of last year. During the last
ten years there has been an 85% correlation between the level of the
NFIB index and the two-quarter change in real GDP.
Weaker figures on employment led the deterioration in last
month's overall reading. The percent of firms with one or more job
openings fell to its lowest since November and slightly fewer firms
were planning to increase employment. Expectations for overall economic
improvement remained near its lowest level since March of last year as
a majority of firms saw further economic deterioration. Expectations
for sales in six months fell back into negative territory and the
percentage thinking that now was a good time to expand the business
fell sharply to its lowest since in twelve months. Expectations for an
easing of credit market conditions remained near the lowest since the
Fall of 2008. The primary source of strength behind the numbers was
that the percent of firms planning to raise inventory levels remained
at the highest since early last year.
Hiring plans remain restrained. The percentage of firms with
one or more job openings fell back to near the series' low and the
percentage planning to increase hiring deteriorated. During the last
ten years there has been a 74% correlation between the NFIB employment
percentage and the six-month change in nonfarm payrolls.
On the pricing front weakness continued. The percentage of
firms actually raising prices slipped to -20%
(indicating deflation) and remained near the record low. During the
last ten years there has been a 51% correlation between the six-month
change in the producer price index and the level of the NFIB price
index.Also, the percentage of firms planning to
raise prices slipped from its highest level since late-2008. Finally,
the percentage planning to raise worker compensation reversed half of
its February improvement and fell to 3%.
The most important problems seen by business were poor sales
(34%), taxes (a reduced 19%), government requirements (11%), insurance
cost &amp; availability (9%), competition from large businesses (a
reduced 5%) and inflation (an increased 5%).
About 24 million small businesses exist in the United States.
Small business creates 80% of all new jobs in America and the NFIB
figures can be found in Haver's SURVEYS database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413h.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413i.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/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">March '09</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Small Business Optimism Index
(SA, 1986=100)</td>
<td>86.8</td>
<td>88.0</td>
<td>89.3</td>
<td>81.0</td>
<td>86.7</td>
<td>89.8</td>
<td>96.7</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Expecting
Economy To Improve</td>
<td>-8</td>
<td>-9</td>
<td>1</td>
<td>-22</td>
<td>-0</td>
<td>-10</td>
<td>-4</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms With One or
More Job Openings</td>
<td>9</td>
<td>11</td>
<td>10</td>
<td>10</td>
<td>9</td>
<td>18</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Reporting That
Credit Was Harder To Get</td>
<td>15</td>
<td>12</td>
<td>14</td>
<td>12</td>
<td>14</td>
<td>9</td>
<td>6</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms Raising Avg.
Selling Prices (Net)</td>
<td>-20</td>
<td>-21</td>
<td>-18</td>
<td>-23</td>
<td>-20</td>
<td>17</td>
<td>15</td>
</tr>
</tbody>
</table>
</body></html>

Economic recovery continued to do little to bolster small businesses' mood. The National Federation of Independent Business (NFIB) reported their March small business optimism index fell m/m to 86.8 which the lowest level since July [...]

U.S. Small Business Optimism Falls To Lowest Since July

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413d.jpg" align="left" border="0" height="265" width="353">
For March, the U.S. federal budget deficit eased enough to
pull the deficit during the first six months of FY'10 to $717.0B versus
$781.4B during the first six months of last fiscal year. According to
the U.S. Treasury Department, the deficit of $65.4B compared to
Consensus expectations of $62.0B.
The hemorrhaging of Federal revenues due to the past recession
eased with moderate economic recovery. Net revenues during the first
six months of FY'10 fell 3.6% y/y versus declines near 20% last year.
As the employment picture brightened, the decline in individual income
tax receipts fell to 8.4% y/y through March versus a 14.7% decline
during the first six months of FY '09. The decline in corporate tax
receipts also eased sharply to 4.0% as corporate profits improved.
Working the other way was a record 5.0% decline in social insurance
taxes and contributions. Also, estate &amp; gift taxes fell by
nearly one-quarter, double the rate of decline during last fiscal
year's first six months.
Overall outlays declined 5.7% during the first six months of
FY'10 as outlays for the Troubled Asset Relief Program more-than
reversed the February increase. Defense spending (19% of total outlays)
rose by one-quarter y/y. Health spending (15% of total outlays)
continued to trend higher but income security payments (11% of outlays)
surged by one-quarter versus last year with higher unemployment. Growth
in social security payments (21% of outlays) rose 4.0% and net-interest
payments (5% of outlays) rose with higher rates. Medicare expenditures
(12% of outlays) rose by two-thirds but other health care services
spending (10% of outlays) fell modestly.
The Government's financial data are available in Haver's USECON
database, with extensive detail available in the specialized GOVFIN.
Public Opinion on Taxes from the American
Enterprise Institute can be found <a href="http://www.aei.org/docLib/AEIPublicOpinionTaxes2010April.pdf">here</a>.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413e.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413f.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E106021.HTM">US
Government Finance</a> &nbsp;</th>
<th scope="col">March</th>
<th scope="col">FY 'YTD</th>
<th scope="col">FY 'YTD</th>
<th scope="col">FY 2009</th>
<th scope="col">FY 2008</th>
<th scope="col">FY 2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-65.4B</td>
<td>$-717.0B</td>
<td>&nbsp;--</td>
<td>$-1,417.1B</td>
<td>$-454.8B</td>
<td>$-161.5B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$153.4B</td>
<td>$953.9B</td>
<td>-3.6%</td>
<td>-16.6%</td>
<td>-1.7%</td>
<td>6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$218.7B</td>
<td>$1,670.9B</td>
<td>5.7%</td>
<td>18.2%</td>
<td>9.1%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
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For March, the U.S. federal budget deficit eased enough to pull the deficit during the first six months of FY'10 to $717.0B versus $781.4B during the first six months of last fiscal year. According to the U.S. Treasury Department, the [...]

U.S. Budget Deficit Eased Versus FY'09

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413a.jpg" style="width: 353px; height: 265px; float: left;" align="left">
After falling sharply into last autumn, the U.S. foreign trade
deficit has bounced within a narrow range during the last four months.
For February, the deficit deepened to $39.7B from a little-revised
$37.0B during January. The latest figure was slightly deeper than
Consensus expectations for a deficit of $38.5B.
With a 1.7% increase, total imports reversed their January
decline. The latest gain reflected a modest 1.6% increase (69.9% y/y)
in imports of petroleum products as crude oil prices slipped m/m to
$72.92 per barrel. Earlier gains in petroleum prices continued to
effect a demand reaction. The quantity of petroleum imports fell 4.8%
m/m and 6.7% y/y following declines during the prior three years.
Outside of oil, imports reversed most of their January decline
with a 1.3% increase. Moreover, recovery in the U.S. economy has pulled
real non-oil imports up 14.1% y/y following a 17.7% decline for all of
last year. The increase has been led by imports of automotive vehicles
&amp; parts which surged by more-than one half y/y. Real nonauto
consumer goods imports reversed their January decline with a 3.2%
increase (10.0% y/y). Capital goods imports also recovered by 1.2% m/m
and by 14.1% over the last twelve months. Finally, services imports
increased a firm 3.3% (9.3% y/y). U.S. travels abroad recovered the
January decline with a 1.1% increase (0.2% y/y). Passenger fares fell
1.1% (-6.1% y/y) for the second consecutive monthly drop but "other"
transportation charges surged 4.0% (15.0% y/y).
Nominal exports posted a 0.2% uptick (14.3% y/y) and reversed
a December slip. Real merchandise exports made up half on their January
decline with a 0.8% increase and the 12.1% y/y gain remained near the
strongest since early-2008. Real capital goods exports gained 1.2%
(14.1% y/y) but auto exports fell for the second consecutive month
(+57.0% y/y). Adding to the overall rise in exports was a 3.2% increase
(10.0% y/y) in real exports of non-auto consumer goods. Exports of
services ticked up just 0.5% but the y/y gain of 9.0% fully reversed
the 2009 drop.
By country, the trade deficit with mainland China eased to
$16.5B and the deficit is roughly half its peak of $27.9B in October of
2008. Exports to China rose by nearly one-half y/y while imports rose
by one-quarter. With Japan, the trade deficit deepened to $4.3B as
exports rose 9.8% but imports jumped by one-third. With the European
Union, the trade deficit increased to $5.3B as exports fell 4.4% y/y
and imports rose 5.3%.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100413c.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/USECON/@EE/@EE01/@EE01.HTM">Foreign
Trade&nbsp;</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">U.S. Trade Deficit</td>
<td>$39.7</td>
<td>$37.0B</td>
<td>$39.9B</td>
<td>$26.5B (2/09)</td>
<td>$378.6B</td>
<td>$695.9B</td>
<td>$701.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Exports - Goods
&amp; Services</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>3.4%</td>
<td>14.3%</td>
<td>-14.9%</td>
<td>11.2%</td>
<td>13.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Imports - Goods
&amp; Services</td>
<td>1.7</td>
<td>-1.8</td>
<td>4.9</td>
<td>20.5</td>
<td>-23.4</td>
<td>7.6</td>
<td>6.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>1.6</td>
<td>-3.6</td>
<td>15.1</td>
<td>69.9</td>
<td>-44.1</td>
<td>37.0</td>
<td>9.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>1.3</td>
<td>-1.8</td>
<td>3.8</td>
<td>16.2</td>
<td>-21.0</td>
<td>1.5</td>
<td>4.8</td>
</tr>
</tbody>
</table>
</body></html>

After falling sharply into last autumn, the U.S. foreign trade deficit has bounced within a narrow range during the last four months. For February, the deficit deepened to $39.7B from a little-revised $37.0B during January. The latest [...]

U.S. Trade Deficit Deepens Slightly With Rise In Imports

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

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

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Kathleen Stephansen, CBE

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Mortgage applications jumped 28.5% w/w (55.1% y/y) in the week ending January 9 after rising 0.3% w/w (+60.8% y/y) in the week of January 2, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house rose 15.9% w/w (14.0% y/y) in the week ending January 9 after falling 6.2% w/w (+24.7% y/y) in the week ending January 2 and following five consecutive weekly declines. Applications for loan refinancing surged 40.1% w/w (128.1% y/y) in the latest week, after a rise of 7.4% w/w (133.6% y/y) in the January 2 week.

The effective interest rate on a 30-year fixed-rate loan fell 7bps to 6.35% in the week ending January 9 from 6.42% in the week ending January 2. The rate on 15-year fixed-rate mortgages dropped 5bps to 5.75% in the latest week from 5.80% in the prior week. The 30-year Jumbo rate rose 9bps to 6.54% in the January 9 week from 6.45% in the January 2 week. The rate on a 5-year ARM dropped 38bps to 5.60% in the latest week after jumping 28bps to 5.98% in the January 2 week.

The share of applications for refinancing an existing loan rose to 60.2% of total applications in the January 9 week from 56.6% in the week ending January 2. The adjustable-rate mortgage (ARM) share of activity rose to 7.0% in the week ending January 9 from 6.3% in the week ending January 2.

The average size of a mortgage loan rose 6.3% w/w (9.9% y/y) to $403,600 in the week ending January 9 after declining 4.5% w/w (+5.6% y/y) to $379,800 in the week ending January 2. The average size of a purchase loan rose 7.7% w/w (4.9% y/y) to $440,300 in the latest week after dropping 4.2% w/w (-1.4% y/y) to $408,700 in the prior week. The average size of a loan to refinance a mortgage rose 6.0% w/w (27.8% y/y) to $379,200 in the week ending January 9 after retrenching 4.1% w/w (+27.8% y/y) to $357,700 in the January 2 week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Purchase and refinancing loan applications jumped in the latest week.
- Effective interest rate on 30-year fixed loans fell to 6.35%.
- Average loan size rose.

U.S. Mortgage Applications Surged in the Week of January 9

Winnie Tapasanun

260113F29.jpg

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New single-family home sales dipped 0.1% m/m (+18.7% y/y) to a seasonally adjusted annual rate of 737,000 units in October following rises of 3.8% to 738,000 in September and 11.3% to 711,000 in August (+20.5%, 800,000 previously), data from the U.S. Census Bureau showed. The Action Economics Forecast Survey had expected sales of 710,000 for October. The October figure was the first m/m decline since July, though sales remained 42.0% up from the July 2022 low of 519,000. The sales dip occurred alongside a drop in the average 30-year fixed mortgage rate to 6.25% in October, the lowest since September 2024, after declining to 6.35% in September; it had subsequently continued trending downward, according to Freddie Mac.

By region, October new home sales fell m/m in all major regions except the South. Sales in the West plunged 36.3% (-24.8% y/y) to 109,000 in October, the lowest level since July 2022, after a 9.6% increase in September. Sales in the Northeast dropped 14.3% (-40.0% y/y) to 24,000 after registering at 28,000 in September and August. Sales in the Midwest fell 9.0% (+21.3% y/y) to 91,000 following a strong 25.0% September gain. For these three regions, October marked the first m/m decline since July. In contrast, sales in the South surged 16.9% (42.1% y/y) to 513,000, the highest level since March 2021, after a 1.8% September decline. The South remained the dominant region, accounting for 69.6% of total U.S. new home sales.

The median sales price of a new home fell 3.3% (-8.0% y/y) to $392,300 in October on top of a 3.4% decline to $405,800 in September, marking the fourth m/m fall in five months and the lowest level since July 2021. The median sales price had fallen 14.8% since its record high of $460,300 in October 2022. Meanwhile, the average sales price of a new home rose 3.0% (-4.6% y/y) to $498,000 in October after an 8.1% drop to $483,500 in September. The average price was 8.0% below a high of $541,200 in July 2022. These sales price data are not seasonally adjusted.

The number of unsold new homes on the market held steady at 488,000 (+1.7% y/y) in October after four straight m/m declines. The latest figure was 14.6% above a low of 426,000 in July 2023. The seasonally adjusted months' supply of new homes for sale remained at 7.9 months in October and September—the lowest reading since September 2024—after falling to 8.3 months in August. The latest reading, while above a low of 6.9 months in May 2023, remained below a high of 10.6 months in July 2022.

The median number of months a new home stayed on the market rose to 2.7 months in October, the highest since March 2025, after registering at 2.4 months in September and August. The latest number was above its record low of 1.5 months in both September and October of 2022 but well below a peak of 5.1 months in March 2021. These figures date back to January 1975.

New home sales are recorded when the sales contract is signed. New home sales activity and prices are available in Haver's **USECON** database. The consensus expectation figure from Action Economics is available in the **AS1REPNA** database.

260113H29.jpg

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- October sales -0.1% (+18.7% y/y) to 737,000; still 42.0% above the July ’22 low.
- Sales fall m/m in all major regions except the South (+16.9%).
- Median sales price down to $392,300, lowest since July ’21; avg. price up to $498,000.
- Months' supply of new homes for sale holds steady at 7.9 mths., lowest since Sept. '24.

U.S. New Home Sales Ease in October After Two Straight M/M Increases

Michael J. Moran

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The consumer price index rose 0.3% in December, while the core index (prices excluding food and energy) rose 0.2%. Both measures were faster than the averages of 0.1 percent in the prior two months. (The Bureau of Labor Statistics did not publish a CPI for October because of the government shutdown. Both the headline and core indexes showed increases of 0.2% for the two-month period from September to November.)

The December results were not pronounced enough to suggest that the restraint in October and November reflected distortions triggered by the government shutdown. At the same time, they were not soft enough to suggest that October and November were signaling faster deceleration in inflation. The past three months seemed to be showing the same degree of random volatility seen in the prior two years, with the underlying trends showing a slight degree of deceleration. The year-over-year increase in headline CPI totaled 2.7%, only slightly slower than 3.0% in mid-2024. The Core has eased a bit more: 2.6% in December versus 3.3% in mid 2024.

260113N.jpg

Prices of core goods and services have been following different paths in the past few years, and they carried different signals in December. Prices of core goods showed no month-to-month change in December, which kept the year-over-year trajectory moving sideways. The flat pattern is encouraging in that it suggests that core goods inflation is perhaps steadying after trending upward since mid-2024. Core service prices rose 0.3 percent in December, in line with the recent average. Core service inflation showed little easing in the early part of 2025, but hints of slowing emerged from September to November. December results, though, raised questions about faster deceleration in service inflation.

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

- Not by enough to suggest that restraint in October and November reflected distortions from the government shutdown
- But by enough to suggest that October and November reflected normal volatility rather than the beginning of a slower trend.

December CPI: Price Increases Quickened After Two Slow Months

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Japan’s economy watchers index at year-end weakened slightly, but the future index strengthened slightly to counterbalance the drop-off. The December current index is weaker than it was in October as well, as is the headline for the future index. But the queue, or rank, standings of these indexes show the current index at a 60th percentile standing and a queue standing for the future index at its 70th percentile. Despite the end of year give back, the index headline readings are still, for the most part, firm-to-solid.

**The Current Index**
That is an assessment about the rankings of the December data compared to their respective histories back to end 2004- a twenty-year period. However, in terms of the diffusion values of the index per se, the current index has only two readings above the 50 mark indicating actual expansion. Expansion is the rule in current services industries and in nonmanufacturing, a broader sector dominated by services. Employment and readings for corporations overall both show readings close to neutral with diffusion at 49.2 or better, but still short of 50. Current retail at 46.5 is the weakest sector and shows the second weakest diffusion reading.  

The current index standings on employment has a reading below 50%- and that is despite having a diffusion reading near 50 -nearly  unchanged employment month-to-month. That diffusion reading for December is a low relative to its own history. The strongest two sectors on rankings are services and eating & drinking places with standings in the 70-percentile range. Apart from the weak employment standing, the weakest rankings are in the range of the lower sixty percentiles with only retailing lower, in its 56.5 percentile, manufacturing at its 61.7 percentile. 

**The Future Index**
The Future index has a slightly higher queue standing than the current index as noted above, but it is not vastly different. No future components rankings are below their 50%, but again, employment is weakest with a ranking in its 50th-percentile and with housing in its 53rd percentile. Nonmanufacturing and services have the highest queue standings.

In terms of diffusion readings as opposed to standings, the future index headline is above 50 unlike for the current headline. Six of nine observations in December have future readings in their respective 50.6 percentiles. The weakest future reading, housing, with a 46.2 reading, is followed by retailing and eating & drinking places, each at 49.6. But the above-50 readings ae not strong per-se either. The strongest is the services sector at 52.4, then nonmanufacturing at 51.7, followed by employment at 51.4 (and it has the weakest queue standing among future readings). Corporations have a diffusion reading at 50.9, households at 50.3, and manufacturers at 50.2. And that 50.2 reading for manufacturers has a 70.4 percentile standing.

Always remember that diffusion and the rank standings are different things and very different concepts even though they are both measured as percentages; they can be quite different. Various series have different histories and tendencies. Not too surprisingly the current and future diffusion readings are highly correlated (0.96) while the standings are not so well correlated in December between the current and future (0.37). The correlation I speak about above between diffusion and standing is at 0.20 for the current readings in December but is higher at 0.53 for the December future components.

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**Summing up**
The differences in the diffusion values tell us that retailing, households and employment are expected to pick up over the next six months. But housing is expected to weaken.

Japan is still in a fragile state with a relatively new PM still getting adjusted (but rumored to be considering an early snap-election). And with the economy generating excess inflation even with a shrinking population, addressing inflation in Japan is trickier since the Bank of Japan does not want to slay inflation at the cost of bringing back deflation. So, policy is Japan walks on eggshells.

Japan

Japan’s Economy Watchers Survey in December 2025

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Swiss consumer confidence at end-2025 (in Q4) fell to -34.5 from -32.7 in 2025-Q3. The average level for the confidence reading on data back to 1982 is -16.7 and the current queue standing is 13.9%. The Q4 reading is clearly weak- well below its own average and weaker than this month, less than 15% of the time.

Outlook confidence in Q4 fell to -44.9 from -38.0 in Q3, registering a 15.6 percentile standing. The past confidence reading at -61.2 at end-2025 is down from -43.5 at the end of the third quarter. The standing for this reading is in its 19th percentile. All of these are extremely weak readings.

People provide a job security response in Q4 that eases to -50.1, still well above its historic average of -58.2 for a queue ranking at its 57th percentile.

Personal financial readings are moderate to weak across the board. However, current financial conditions rose to 38.4 in Q4 from 35.2 at the end of Q3 and a queue standing above its median at its 56th percentile. But the outlook for financial conditions is much weaker and also weakened quarter-to-quarter to -31.4 in Q4 from a level of -28.6 in Q3 to a queue ranking in its 8.7 percentile. The evaluation of past financial conditions improved by a very small margin, rising to -38.3 in Q4 from -38.7 in Q3, and to a queue standing at the 11.6 percentile.

The spending environment in Switzerland improved slightly but remained weak, rising to -23.3 in Q4 from -25.5 in Q3 to a standing at their 23.1 percentile standing.

The best part of the report is that the perception of job security is above average, and the current financial situation is above its median. After that, all the individual assessment metrics are weak including overall confidence – everything except assessments for inflation.

On the inflation front, the price outlook is high, rising to a reading of 97.7 in Q4 from 95.8 in Q3 but is still below the second quarter reading at 113.1. The price outlook has a moderately high standing at its 70.5 percentile. This standing is slightly below the standing for prices past which is at 76.3%. The past metric was still rising in the fourth quarter but was weaker than its reading in both Q1 and Q2 of 2025.

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**Summing up**
Inflation fears appear to still linger, but they are not as intense as they once were. Confidence overall is weak, but the most important aspects of job security and assessment of financial conditions have the strongest readings; yet, the environment for major purchases is still at a weak position. In Switzerland, people do not feel threatened or financially unstable, but they are not positive enough to spend freely either. And inflation fears are creeping up again all key trends to watch.