Louise Curley

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Economic Sentiment Indicator (ESI) of the European
Commission for the 16 countries in the Euro Area rose to 97.9 in March
from 95.9 in February. The ESI for the 27 countries in the European
Union rose to 99.6 from 97.6. Both indicators have risen substantially
from their low points reached in February and March of this year and
are close to their long term average of 100, but are well below their
pre crisis peak. The first chart shows the history of the two
indicators.</p>
<p>The higher level of sentiment in the EU than in the EA
suggests that sentiment is somewhat higher in the non Euro Area
countries than in the Euro Area Countries. Arithmetically, the low
level of sentiment in Greece has reduced the level of average sentiment
in the Euro Area, but more important, Greece's problems have no doubt
dampened sentiment in the rest of the Euro Area. There were only 3
countries in the Euro Area in March that were at or above 100--Belgium
at 103.2, Finland at 102.2 and Germany at 100.4. These countries
together with Greece are shown in the second chart.</p>
<p>In the non Euro Area there were four countries where sentiment
was at or above 100--the United Kingdom at 100.9, Poland at 101.5,
Denmark at 110.0, and Sweden at 111.5. These are shown in the third
chart</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Economic
Sentiment Indicator</th>
<th scope="col"><b>Mar 10&nbsp;</b></th>
<th scope="col"><b>Feb 10&nbsp;</b></th>
<th scope="col"><b>Mar 09</b></th>
<th scope="col"><b>Recent Low&nbsp;</b></th>
<th scope="col"><b>Date</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Euro Area</td>
<td style="font-weight: bold;">97.9</td>
<td style="font-weight: bold;">95.9</td>
<td style="font-weight: bold;">96.0</td>
<td style="font-weight: bold;">68.2</td>
<td style="font-weight: bold;">2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Greece</td>
<td>69.6</td>
<td>72.4</td>
<td>76.1</td>
<td>60.4</td>
<td>3/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Germany</td>
<td>100.4</td>
<td>97.0</td>
<td>96.1</td>
<td>75.2</td>
<td>3/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Belgium</td>
<td>103.2</td>
<td>98.1</td>
<td>97.7</td>
<td>72.6</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Finland</td>
<td>102.2</td>
<td>102.8</td>
<td>99.4</td>
<td>77.7</td>
<td>9/09</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">European Union</td>
<td style="font-weight: bold;">99.6</td>
<td style="font-weight: bold;">97.6</td>
<td style="font-weight: bold;">97.2</td>
<td style="font-weight: bold;">68.2</td>
<td style="font-weight: bold;">2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Denmark</td>
<td>110.0</td>
<td>105.7</td>
<td>105.3</td>
<td>66.5</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Sweden</td>
<td>111.5</td>
<td>110.5</td>
<td>106.6</td>
<td>78.8</td>
<td>4/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United
Kingdom</td>
<td>100.9</td>
<td>98.3</td>
<td>98.2</td>
<td>65.4</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Poland</td>
<td>101.5</td>
<td>98.8</td>
<td>94.6</td>
<td>79.0</td>
<td>3/09</td>
</tr>
</tbody>
</table>
</body></html>

The Economic Sentiment Indicator (ESI) of the European Commission for the 16 countries in the Euro Area rose to 97.9 in March from 95.9 in February. The ESI for the 27 countries in the European Union rose to 99.6 from 97.6. Both [...]

Economic Sentiment In Non Euro Countries Exceeds That Of Euro Area Countries

Tom Moeller

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<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329a.jpg" align="right" border="0" height="265" width="353">
Overall <b>personal income</b> was unchanged in
February following a 0.3% January increase, originally reported at
0.1%. The latest reading was the weakest since July and it disappointed
Consensus expectations for a 0.1% uptick. Though moderate, these gains
were enough to lift yearly income growth to 2.0% after the 1.7% decline
in 2009. The three-month rate of increase also improved to 2.8%.
Disposable income was unchanged after January's 0.2% decline. These
moderate income gains caused the savings rate to decline to 3.1%, its
lowest since late-2008. The rate still was up, however, from the 1.0%
low at the beginning of the last recession.</p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329b.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: right;" align="left">
Moderate employment declines left wages &amp; salaries
unchanged for the second month in the last three. Nevertheless the
modest y/y drop is improved from the sharp 4.0% decline last year.
Wages in the factory sector slipped by 0.2% and the 4.7% y/y decline
was half that during all of last year. In the private service sector
wages ticked up 0.1% for the second month in the last three. Here
again, however, the 1.0% y/y gain is improved versus last year's 3.8%
decline. Working the other, a 0.1% uptick in government sector wages
was behind a deceleration in y/y growth to 2.3%, its lowest since
early-1994.</p>
<p>The weak housing market pulled proprietors' income down 0.6%
(+1.9% y/y) for the second consecutive month. Lower interest rates
caused interest income also to slip 0.1% but the y/y change of -0.6%
was improved from the 5.3% decline during 2009. Dividend income again
fell a sharp 2.8% (-11.6% y/y). Finally, unemployment insurance
benefits rose 4.2% (54.4% y/y) and offset a January decline.</p>
<p><b>Personal spending </b>rose 0.3%, down from
0.4% gains during the prior two months. Spending on gasoline fell 1.0%
after the 7.3% January jump. Higher prices kept the y/y gain strong at
31.2% but real spending rose just 0.8% y/y. Nominal apparel spending
rose a strong 1.2% (0.1% y/y) while spending on home furnishings rose
0.9% (0.5% y/y). That latter decline is improved from a 6.2% drop
during all of last year Spending on services continued firm at 2.6% y/y
but that was raised by a 4.5% jump in health care expenditures and a
3.1% gain in spending on financial &amp; insurance. Offsetting
these gains was a 3.9% decline in spending on motor vehicles &amp;
parts (-0.1% y/y).</p>
<p>The <b>PCE chain price index</b> slipped modestly
with lower gasoline prices. The core PCE price deflator again was
unchanged reflecting a 0.6% decline in furniture prices (-1.6% y/y) and
a modest 0.3% increase (-4.2% y/y) in appliance prices. Services prices
ticked up 0.1% (1.3% y/y) led by a 0.3% gain (2.4% y/y) in health care.
Offsetting some of this strength was a 0.5% decline in computer prices
(-12.5% y/y) and a 0.7% fall in clothing prices (-0.2% y/y).</p>
<p>The personal income &amp; consumption figures are
available in Haver's <b>USECON</b> and <b>USNA</b>
databases.</p>
<p><b>Lessons from the Crisis Stress Tests</b> is the
title of last week's speech by Fed Governor Daniel K. Tarullo and it
can be found <a href="http://www.federalreserve.gov/newsevents/speech/tarullo20100326a.htm">here</a>.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329c.jpg" style="border: 0px solid ; width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329d.jpg" style="border: 0px solid ; 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/@E7/@E711/@E71102/@E71102.HTM" style="color: black;"><b>Disposition of Personal Income</b></a><b>
(%)&nbsp;</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>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>Personal Income</b></td>
<td>0.0</td>
<td>0.3</td>
<td>0.4</td>
<td>2.0</td>
<td>-1.7</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>&nbsp;
&nbsp;Disposable Personal Income</b></td>
<td>0.0</td>
<td>-0.2</td>
<td>0.5</td>
<td>2.8</td>
<td>1.1</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Personal Consumption
Expenditures</b></td>
<td>0.3</td>
<td>0.4</td>
<td>0.4</td>
<td>3.4</td>
<td>-0.4</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol"><b>Saving Rate</b></td>
<td>3.1</td>
<td>3.4</td>
<td>4.0</td>
<td>3.4 (Feb.'09)</td>
<td>4.3</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>PCE Chain Price Index</b></td>
<td>-0.0</td>
<td>0.2</td>
<td>0.2</td>
<td>1.8</td>
<td>0.2</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>&nbsp;&nbsp;
Less food &amp; energy</b></td>
<td>0.0</td>
<td>-0.0</td>
<td>0.1</td>
<td>1.3</td>
<td>1.5</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body></html>

Overall personal income was unchanged in February following a 0.3% January increase, originally reported at 0.1%. The latest reading was the weakest since July and it disappointed Consensus expectations for a 0.1% uptick. Though [...]

U.S. Personal Income & Spending Both Moderate

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<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329a.jpg" align="right" border="0" height="265" width="353">
Overall <b>personal income</b> was unchanged in
February following a 0.3% January increase, originally reported at
0.1%. The latest reading was the weakest since July and it disappointed
Consensus expectations for a 0.1% uptick. Though moderate, these gains
were enough to lift yearly income growth to 2.0% after the 1.7% decline
in 2009. The three-month rate of increase also improved to 2.8%.
Disposable income was unchanged after January's 0.2% decline. These
moderate income gains caused the savings rate to decline to 3.1%, its
lowest since late-2008. The rate still was up, however, from the 1.0%
low at the beginning of the last recession.</p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329b.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: right;" align="left">
Moderate employment declines left wages &amp; salaries
unchanged for the second month in the last three. Nevertheless the
modest y/y drop is improved from the sharp 4.0% decline last year.
Wages in the factory sector slipped by 0.2% and the 4.7% y/y decline
was half that during all of last year. In the private service sector
wages ticked up 0.1% for the second month in the last three. Here
again, however, the 1.0% y/y gain is improved versus last year's 3.8%
decline. Working the other, a 0.1% uptick in government sector wages
was behind a deceleration in y/y growth to 2.3%, its lowest since
early-1994.</p>
<p>The weak housing market pulled proprietors' income down 0.6%
(+1.9% y/y) for the second consecutive month. Lower interest rates
caused interest income also to slip 0.1% but the y/y change of -0.6%
was improved from the 5.3% decline during 2009. Dividend income again
fell a sharp 2.8% (-11.6% y/y). Finally, unemployment insurance
benefits rose 4.2% (54.4% y/y) and offset a January decline.</p>
<p><b>Personal spending </b>rose 0.3%, down from
0.4% gains during the prior two months. Spending on gasoline fell 1.0%
after the 7.3% January jump. Higher prices kept the y/y gain strong at
31.2% but real spending rose just 0.8% y/y. Nominal apparel spending
rose a strong 1.2% (0.1% y/y) while spending on home furnishings rose
0.9% (0.5% y/y). That latter decline is improved from a 6.2% drop
during all of last year Spending on services continued firm at 2.6% y/y
but that was raised by a 4.5% jump in health care expenditures and a
3.1% gain in spending on financial &amp; insurance. Offsetting
these gains was a 3.9% decline in spending on motor vehicles &amp;
parts (-0.1% y/y).</p>
<p>The <b>PCE chain price index</b> slipped modestly
with lower gasoline prices. The core PCE price deflator again was
unchanged reflecting a 0.6% decline in furniture prices (-1.6% y/y) and
a modest 0.3% increase (-4.2% y/y) in appliance prices. Services prices
ticked up 0.1% (1.3% y/y) led by a 0.3% gain (2.4% y/y) in health care.
Offsetting some of this strength was a 0.5% decline in computer prices
(-12.5% y/y) and a 0.7% fall in clothing prices (-0.2% y/y).</p>
<p>The personal income &amp; consumption figures are
available in Haver's <b>USECON</b> and <b>USNA</b>
databases.</p>
<p><b>Lessons from the Crisis Stress Tests</b> is the
title of last week's speech by Fed Governor Daniel K. Tarullo and it
can be found <a href="http://www.federalreserve.gov/newsevents/speech/tarullo20100326a.htm">here</a>.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329c.jpg" style="border: 0px solid ; width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329d.jpg" style="border: 0px solid ; 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/@E7/@E711/@E71102/@E71102.HTM" style="color: black;"><b>Disposition of Personal Income</b></a><b>
(%)&nbsp;</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>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>Personal Income</b></td>
<td>0.0</td>
<td>0.3</td>
<td>0.4</td>
<td>2.0</td>
<td>-1.7</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>&nbsp;
&nbsp;Disposable Personal Income</b></td>
<td>0.0</td>
<td>-0.2</td>
<td>0.5</td>
<td>2.8</td>
<td>1.1</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Personal Consumption
Expenditures</b></td>
<td>0.3</td>
<td>0.4</td>
<td>0.4</td>
<td>3.4</td>
<td>-0.4</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol"><b>Saving Rate</b></td>
<td>3.1</td>
<td>3.4</td>
<td>4.0</td>
<td>3.4 (Feb.'09)</td>
<td>4.3</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>PCE Chain Price Index</b></td>
<td>-0.0</td>
<td>0.2</td>
<td>0.2</td>
<td>1.8</td>
<td>0.2</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>&nbsp;&nbsp;
Less food &amp; energy</b></td>
<td>0.0</td>
<td>-0.0</td>
<td>0.1</td>
<td>1.3</td>
<td>1.5</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
<span id="articletitle">Economic Sentiment In Non Euro
Countries Exceeds That Of Euro Area Countries</span><br>
<span id="byline">by <a href="/comment/Curley.html">Louise
Curley</a> March 29, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Economic Sentiment Indicator (ESI) of the European
Commission for the 16 countries in the Euro Area rose to 97.9 in March
from 95.9 in February. The ESI for the 27 countries in the European
Union rose to 99.6 from 97.6. Both indicators have risen substantially
from their low points reached in February and March of this year and
are close to their long term average of 100, but are well below their
pre crisis peak. The first chart shows the history of the two
indicators.</p>
<p>The higher level of sentiment in the EU than in the EA
suggests that sentiment is somewhat higher in the non Euro Area
countries than in the Euro Area Countries. Arithmetically, the low
level of sentiment in Greece has reduced the level of average sentiment
in the Euro Area, but more important, Greece's problems have no doubt
dampened sentiment in the rest of the Euro Area. There were only 3
countries in the Euro Area in March that were at or above 100--Belgium
at 103.2, Finland at 102.2 and Germany at 100.4. These countries
together with Greece are shown in the second chart.</p>
<p>In the non Euro Area there were four countries where sentiment
was at or above 100--the United Kingdom at 100.9, Poland at 101.5,
Denmark at 110.0, and Sweden at 111.5. These are shown in the third
chart</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Economic
Sentiment Indicator</th>
<th scope="col"><b>Mar 10&nbsp;</b></th>
<th scope="col"><b>Feb 10&nbsp;</b></th>
<th scope="col"><b>Mar 09</b></th>
<th scope="col"><b>Recent Low&nbsp;</b></th>
<th scope="col"><b>Date</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Euro
Area</td>
<td style="font-weight: bold;">97.9</td>
<td style="font-weight: bold;">95.9</td>
<td style="font-weight: bold;">96.0</td>
<td style="font-weight: bold;">68.2</td>
<td style="font-weight: bold;">2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Greece</td>
<td>69.6</td>
<td>72.4</td>
<td>76.1</td>
<td>60.4</td>
<td>3/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Germany</td>
<td>100.4</td>
<td>97.0</td>
<td>96.1</td>
<td>75.2</td>
<td>3/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Belgium</td>
<td>103.2</td>
<td>98.1</td>
<td>97.7</td>
<td>72.6</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Finland</td>
<td>102.2</td>
<td>102.8</td>
<td>99.4</td>
<td>77.7</td>
<td>9/09</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">European
Union</td>
<td style="font-weight: bold;">99.6</td>
<td style="font-weight: bold;">97.6</td>
<td style="font-weight: bold;">97.2</td>
<td style="font-weight: bold;">68.2</td>
<td style="font-weight: bold;">2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Denmark</td>
<td>110.0</td>
<td>105.7</td>
<td>105.3</td>
<td>66.5</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Sweden</td>
<td>111.5</td>
<td>110.5</td>
<td>106.6</td>
<td>78.8</td>
<td>4/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United
Kingdom</td>
<td>100.9</td>
<td>98.3</td>
<td>98.2</td>
<td>65.4</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Poland</td>
<td>101.5</td>
<td>98.8</td>
<td>94.6</td>
<td>79.0</td>
<td>3/09</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Personal Income &Spending Both Moderate

Robert Brusca

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Italian consumers used to feel better. They used to feel a lot
better just a few short months ago. In December of 2009 at a level of
113.6 Italy&#8217;s consumer confidence measure compiled by ISAE hit what is
for now its cycle high. That reading had barely surpassed the December
2006 confidence peak-reading of 113.4. But December 2009 stood as the
best reading since July 2002 and all seemed good. In retrospect,
Italy&#8217;s funk goes back to that late 2000 transitional period when
confidence dropped from very strong levels to begin its period of what
has been readings that have persisted at much lower levels. For Italy
it&#8217;s problems are not just the financial crisis and economic recovery.</p>
<p>Now it is clear that the bloom is off the consumer&#8217;s rose.
That rose seemed to bloom early and with all of Italy&#8217;s troubles it was
hard to tell what the real truth was. The truth appears to be that
Italy&#8217;s consumers were overly optimistic or actually in denial. Their
spirits are now deflating fast.</p>
<p>Italian consumers rate the past twelve months as better in
March than they did in February. But that was only a 61st percentile of
the range response. In March, looking to the more important next
12-months, the overall rating remains what is was in February but that
is a lower 34th percentile of range response. In other words the level
of the reading is nearly in the lower one-third of its range.
Expectations of unemployment are up and that reading is in the top 2%
of its range. Unemployment fears have really ratcheted up in Italy.
It&#8217;s possible that events in fellow Mediterranean country Greece are
having some chilling knock-on effects.</p>
<p>Despite these responses consumers rate their household
finances as one point improved over the next 12-months compared to last
month&#8217;s outlook reading; it&#8217;s a 36 range percentile assessment.
Households also rate current savings as high, in the top 7% of their
range, but future savings are rated in the bottom 25th percentile of
their range. But where the rubber hits the road and the spending
environment is assessed Italian consumers place the assessment right in
the middle at the 54th percentile of the range. Good time to spend?
Mezzo-mezzo.</p>
<p>There is a lot of confusion in Italy about where the country
is going and how fast. There is a lot of concern about unemployment.
Recent events in the e-Zone must have Italians worried; they can see
that if they slip-up there is no safety net that will be thrown under
them, maybe a blanket thrown over them after-the-fact. The thought is
chilling. Not even pasta can salve the pain.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"><b>Italy ISAE
Consumer Confidence</b> </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="4">&nbsp;</td>
<td colspan="2">Since 1992</td>
<td>Rank</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>106.3</td>
<td>107.7</td>
<td>111.6</td>
<td>113.6</td>
<td>37.4</td>
<td>146</td>
<td>31.5%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">Last 12 months</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; OVERALL
SITUATION</td>
<td>-63</td>
<td>-67</td>
<td>-54</td>
<td>-57</td>
<td>67.2</td>
<td>83</td>
<td>61.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; PRICE
TRENDS</td>
<td>-41.5</td>
<td>-45</td>
<td>-38</td>
<td>-41</td>
<td>12.6</td>
<td>206</td>
<td>3.3%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">Next 12months</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; OVERALL
SITUATION</td>
<td>-14</td>
<td>-14</td>
<td>-1</td>
<td>-1</td>
<td>39.7</td>
<td>140</td>
<td>34.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; PRICE
TRENDS</td>
<td>17</td>
<td>16</td>
<td>11.5</td>
<td>8.5</td>
<td>39.5</td>
<td>48</td>
<td>77.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
UNEMPLOYMENT</td>
<td>26</td>
<td>25</td>
<td>16</td>
<td>16</td>
<td>82.4</td>
<td>4</td>
<td>98.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
HOUSEHOLD BUDGET</td>
<td>0</td>
<td>2</td>
<td>-1</td>
<td>1</td>
<td>16.3</td>
<td>202</td>
<td>5.2%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">HOUSEHOLD FIN SITUATION</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Last 12
months</td>
<td>-38</td>
<td>-39</td>
<td>-36</td>
<td>-37</td>
<td>36.7</td>
<td>138</td>
<td>35.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Next12 months</td>
<td>-6</td>
<td>-7</td>
<td>-6</td>
<td>-3</td>
<td>59.2</td>
<td>136</td>
<td>36.2%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">HOUSEHOLD SAVINGS</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current</td>
<td>69</td>
<td>73</td>
<td>78</td>
<td>73</td>
<td>81.7</td>
<td>13</td>
<td>93.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Future</td>
<td>-29</td>
<td>-24</td>
<td>-23</td>
<td>-20</td>
<td>43.2</td>
<td>159</td>
<td>25.4%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">MAJOR Purchases</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current</td>
<td>-40</td>
<td>-39</td>
<td>-36</td>
<td>-38</td>
<td>47.1</td>
<td>98</td>
<td>54.0%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Total
number of months: Back to Jul-92</td>
</tr>
</tbody>
</table>
</body></html>

Italian consumers used to feel better. They used to feel a lot better just a few short months ago. In December of 2009 at a level of 113.6 Italy’s consumer confidence measure compiled by ISAE hit what is for now its cycle high. That [...]

Italian Households Take Another Step Back In Comfort Italian Consumer Confidence Turns The Corner, The Wrong Corner

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<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326b.jpg" style="width: 312px; height: 265px;"></p>
<p>Last quarter was a strong one for the U.S. economy and the
revised picture is little different from the one depicted earlier. The
latest revision, however, lowered the growth rate slightly to 5.6% from
5.9%. Nevertheless, last quarter's growth remained the best since 3Q
2003 and it pushed the y/y change into (slightly) positive territory
for the first time since early-2008. The revision exceeded Consensus
expectations for 5.9% growth.</p>
<p> The addition to growth from inventories was notched down to
3.8 percentage points. The strength in rebuilding was necessitated by
vigorous and unprecedented decumulation dating back to 2005.</p>
<p>Growth in domestic final demand also was shaved to a still
slow 1.4% from 1.6%. Business investment in equipment &amp;
software was revised up slightly to 19.0% (-7.5% y/y) after a 1.5% 3Q
rise. Investment in business construction, however, offset much of this
increase with a 18.1% decline (-25.3% y/y) which was more than
estimated last month. Growth in residential investment also was revised
down to 3.7% (-12.6% y/y) though it remains the second consecutive
quarterly increase. Personal consumption growth was little revised at
1.6% (1.0% y/y) following a 2.8% 3Q increase. Finally, government
spending dropped an unrevised 1.3% (+1.3% y/y), led by a decline in
defense spending as well as lower spending by state and local
governments.</p>
<p>Improvement in the foreign trade deficit added an unrevised
0.3 percentage points to last quarter's gain in GDP. Strong growth in
exports of 22.8% (-0.7% y/y) was little changed. That surge was offset,
however, by a 15.8% (-6.6% y/y) jump in imports.</p>
<p>Price inflation was revised slightly higher to 0.5% as
measured by the chained GDP price index. Diminished price gains for all
of last year pulled the annual increase down to 1.2% which was nearly
its weakest increase since the early-1960s. The personal consumption
chain price index rose a quickened 2.1%. However, it increased just
0.2% for the whole year owing to the yearly decline in energy prices.
The price index for fixed business investment fell 1.4% (-2.9% y/y),
the fourth consecutive quarterly decline. A 2.7% increase (-2.6% y/y)
in the residential investment price index offset a 3Q decline.</p>
<p>Corporate profits rose 8.0% (30.6% y/y) last quarter. The gain
was driven by an 18.6% jump in financial sector earnings, which are up
more than three-fold during the last year due to lower interest rates.
Nonfinancial sector earnings benefitted from the economic recovery and
cost cutting. The 8.7% (11.5% y/y) increase was offset, however, by a
5.0% decline (-7.6% y/y) in repatriated foreign sector profits.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326d.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"><a ;="" href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM"><b>Chained 2005$, % AR</b></a></th>
<th scope="col"><b>4Q '09&nbsp; Final</b></th>
<th scope="col"><b>4Q '09&nbsp; Preliminary</b></th>
<th scope="col"><b>4Q '09 <br>
Advance</b></th>
<th scope="col"><b>3Q '09</b></th>
<th scope="col"><b>4Q 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>GDP</b></td>
<td>5.6</td>
<td>5.9</td>
<td>5.7</td>
<td>2.2</td>
<td>0.1</td>
<td>-2.4</td>
<td>0.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol"><b>&nbsp;&nbsp;Inventory
Effect</b></td>
<td>3.8</td>
<td>3.9</td>
<td>3.4</td>
<td>0.7</td>
<td>0.2</td>
<td>-0.7</td>
<td>-0.4</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Final Sales</b></td>
<td>1.7</td>
<td>1.9</td>
<td>2.2</td>
<td>1.5</td>
<td>-0.1</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol"><b>&nbsp;&nbsp;Foreign
Trade Effect</b></td>
<td>0.3</td>
<td>0.3</td>
<td>0.5</td>
<td>-0.8</td>
<td>0.9</td>
<td>1.0</td>
<td>-1.2</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Domestic Final Demand</b></td>
<td>1.4</td>
<td>1.6</td>
<td>1.7</td>
<td>2.3</td>
<td>-1.0</td>
<td>-2.7</td>
<td>-0.4</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol"><b>Chained GDP Price Index</b></td>
<td>0.5</td>
<td>0.4</td>
<td>0.6</td>
<td>0.4</td>
<td>0.7</td>
<td>1.2</td>
<td>2.1</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</body></html>

Last quarter was a strong one for the U.S. economy and the revised picture is little different from the one depicted earlier. The latest revision, however, lowered the growth rate slightly to 5.6% from 5.9%. Nevertheless, last [...]

U.S. GDP 4Q Increase Is Lowered Slightly; Profits Are Firm

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<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326b.jpg" style="width: 312px; height: 265px;"></p>
<p>Last quarter was a strong one for the U.S. economy and the
revised picture is little different from the one depicted earlier. The
latest revision, however, lowered the growth rate slightly to 5.6% from
5.9%. Nevertheless, last quarter's growth remained the best since 3Q
2003 and it pushed the y/y change into (slightly) positive territory
for the first time since early-2008. The revision exceeded Consensus
expectations for 5.9% growth.</p>
<p> The addition to growth from inventories was notched down to
3.8 percentage points. The strength in rebuilding was necessitated by
vigorous and unprecedented decumulation dating back to 2005.</p>
<p>Growth in domestic final demand also was shaved to a still
slow 1.4% from 1.6%. Business investment in equipment &amp;
software was revised up slightly to 19.0% (-7.5% y/y) after a 1.5% 3Q
rise. Investment in business construction, however, offset much of this
increase with a 18.1% decline (-25.3% y/y) which was more than
estimated last month. Growth in residential investment also was revised
down to 3.7% (-12.6% y/y) though it remains the second consecutive
quarterly increase. Personal consumption growth was little revised at
1.6% (1.0% y/y) following a 2.8% 3Q increase. Finally, government
spending dropped an unrevised 1.3% (+1.3% y/y), led by a decline in
defense spending as well as lower spending by state and local
governments.</p>
<p>Improvement in the foreign trade deficit added an unrevised
0.3 percentage points to last quarter's gain in GDP. Strong growth in
exports of 22.8% (-0.7% y/y) was little changed. That surge was offset,
however, by a 15.8% (-6.6% y/y) jump in imports.</p>
<p>Price inflation was revised slightly higher to 0.5% as
measured by the chained GDP price index. Diminished price gains for all
of last year pulled the annual increase down to 1.2% which was nearly
its weakest increase since the early-1960s. The personal consumption
chain price index rose a quickened 2.1%. However, it increased just
0.2% for the whole year owing to the yearly decline in energy prices.
The price index for fixed business investment fell 1.4% (-2.9% y/y),
the fourth consecutive quarterly decline. A 2.7% increase (-2.6% y/y)
in the residential investment price index offset a 3Q decline.</p>
<p>Corporate profits rose 8.0% (30.6% y/y) last quarter. The gain
was driven by an 18.6% jump in financial sector earnings, which are up
more than three-fold during the last year due to lower interest rates.
Nonfinancial sector earnings benefitted from the economic recovery and
cost cutting. The 8.7% (11.5% y/y) increase was offset, however, by a
5.0% decline (-7.6% y/y) in repatriated foreign sector profits.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326d.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"><a ;="" href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM"><b>Chained
2005$, % AR</b></a></th>
<th scope="col"><b>4Q '09&nbsp; Final</b></th>
<th scope="col"><b>4Q '09&nbsp; Preliminary</b></th>
<th scope="col"><b>4Q '09 <br>
Advance</b></th>
<th scope="col"><b>3Q '09</b></th>
<th scope="col"><b>4Q 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>GDP</b></td>
<td>5.6</td>
<td>5.9</td>
<td>5.7</td>
<td>2.2</td>
<td>0.1</td>
<td>-2.4</td>
<td>0.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol"><b>&nbsp;&nbsp;Inventory
Effect</b></td>
<td>3.8</td>
<td>3.9</td>
<td>3.4</td>
<td>0.7</td>
<td>0.2</td>
<td>-0.7</td>
<td>-0.4</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Final Sales</b></td>
<td>1.7</td>
<td>1.9</td>
<td>2.2</td>
<td>1.5</td>
<td>-0.1</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol"><b>&nbsp;&nbsp;Foreign
Trade Effect</b></td>
<td>0.3</td>
<td>0.3</td>
<td>0.5</td>
<td>-0.8</td>
<td>0.9</td>
<td>1.0</td>
<td>-1.2</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Domestic Final Demand</b></td>
<td>1.4</td>
<td>1.6</td>
<td>1.7</td>
<td>2.3</td>
<td>-1.0</td>
<td>-2.7</td>
<td>-0.4</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol"><b>Chained GDP Price Index</b></td>
<td>0.5</td>
<td>0.4</td>
<td>0.6</td>
<td>0.4</td>
<td>0.7</td>
<td>1.2</td>
<td>2.1</td>
<td>2.9</td>
</tr>
</tbody>
</table>
<span id="articletitle">Italian Households Take Another
Step Back In Comfort Italian Consumer Confidence Turns The Corner, The
Wrong Corner</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> March 26, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Italian consumers used to feel better. They used to feel a lot
better just a few short months ago. In December of 2009 at a level of
113.6 Italy&#8217;s consumer confidence measure compiled by ISAE hit what is
for now its cycle high. That reading had barely surpassed the December
2006 confidence peak-reading of 113.4. But December 2009 stood as the
best reading since July 2002 and all seemed good. In retrospect,
Italy&#8217;s funk goes back to that late 2000 transitional period when
confidence dropped from very strong levels to begin its period of what
has been readings that have persisted at much lower levels. For Italy
it&#8217;s problems are not just the financial crisis and economic recovery.</p>
<p>Now it is clear that the bloom is off the consumer&#8217;s rose.
That rose seemed to bloom early and with all of Italy&#8217;s troubles it was
hard to tell what the real truth was. The truth appears to be that
Italy&#8217;s consumers were overly optimistic or actually in denial. Their
spirits are now deflating fast.</p>
<p>Italian consumers rate the past twelve months as better in
March than they did in February. But that was only a 61st percentile of
the range response. In March, looking to the more important next
12-months, the overall rating remains what is was in February but that
is a lower 34th percentile of range response. In other words the level
of the reading is nearly in the lower one-third of its range.
Expectations of unemployment are up and that reading is in the top 2%
of its range. Unemployment fears have really ratcheted up in Italy.
It&#8217;s possible that events in fellow Mediterranean country Greece are
having some chilling knock-on effects.</p>
<p>Despite these responses consumers rate their household
finances as one point improved over the next 12-months compared to last
month&#8217;s outlook reading; it&#8217;s a 36 range percentile assessment.
Households also rate current savings as high, in the top 7% of their
range, but future savings are rated in the bottom 25th percentile of
their range. But where the rubber hits the road and the spending
environment is assessed Italian consumers place the assessment right in
the middle at the 54th percentile of the range. Good time to spend?
Mezzo-mezzo.</p>
<p>There is a lot of confusion in Italy about where the country
is going and how fast. There is a lot of concern about unemployment.
Recent events in the e-Zone must have Italians worried; they can see
that if they slip-up there is no safety net that will be thrown under
them, maybe a blanket thrown over them after-the-fact. The thought is
chilling. Not even pasta can salve the pain.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"><b>Italy ISAE
Consumer Confidence</b> </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="4">&nbsp;</td>
<td colspan="2">Since 1992</td>
<td>Rank</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>106.3</td>
<td>107.7</td>
<td>111.6</td>
<td>113.6</td>
<td>37.4</td>
<td>146</td>
<td>31.5%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">Last 12
months</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; OVERALL
SITUATION</td>
<td>-63</td>
<td>-67</td>
<td>-54</td>
<td>-57</td>
<td>67.2</td>
<td>83</td>
<td>61.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; PRICE
TRENDS</td>
<td>-41.5</td>
<td>-45</td>
<td>-38</td>
<td>-41</td>
<td>12.6</td>
<td>206</td>
<td>3.3%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">Next 12months</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; OVERALL
SITUATION</td>
<td>-14</td>
<td>-14</td>
<td>-1</td>
<td>-1</td>
<td>39.7</td>
<td>140</td>
<td>34.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; PRICE
TRENDS</td>
<td>17</td>
<td>16</td>
<td>11.5</td>
<td>8.5</td>
<td>39.5</td>
<td>48</td>
<td>77.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
UNEMPLOYMENT</td>
<td>26</td>
<td>25</td>
<td>16</td>
<td>16</td>
<td>82.4</td>
<td>4</td>
<td>98.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
HOUSEHOLD BUDGET</td>
<td>0</td>
<td>2</td>
<td>-1</td>
<td>1</td>
<td>16.3</td>
<td>202</td>
<td>5.2%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">HOUSEHOLD
FIN SITUATION</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Last 12
months</td>
<td>-38</td>
<td>-39</td>
<td>-36</td>
<td>-37</td>
<td>36.7</td>
<td>138</td>
<td>35.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Next12 months</td>
<td>-6</td>
<td>-7</td>
<td>-6</td>
<td>-3</td>
<td>59.2</td>
<td>136</td>
<td>36.2%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">HOUSEHOLD
SAVINGS</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current</td>
<td>69</td>
<td>73</td>
<td>78</td>
<td>73</td>
<td>81.7</td>
<td>13</td>
<td>93.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Future</td>
<td>-29</td>
<td>-24</td>
<td>-23</td>
<td>-20</td>
<td>43.2</td>
<td>159</td>
<td>25.4%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">MAJOR
Purchases</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current</td>
<td>-40</td>
<td>-39</td>
<td>-36</td>
<td>-38</td>
<td>47.1</td>
<td>98</td>
<td>54.0%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Total
number of months: Back to Jul-92</td>
</tr>
</tbody>
</table>
<span id="articletitle">Michigan Consumer Sentiment Is
Stable At Improved Level</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> </span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326f.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326g.jpg" style="width: 312px; height: 265px;"></p>
<p>Consumer sentiment isn't exactly ebullient, but it is
improved. The University of Michigan reported that its index of
consumer sentiment for the full month of March held steady at 73.6 with
February. That was, however, up from the mid-month reading and up
considerably from the low late in 2008. The figure was slightly higher
than Consensus expectations. The index reached a high of 74.4 this past
January. During the last ten years there has been a 90% correlation
between the level of sentiment and the y/y change in real consumer
spending.</p>
<p>The index of expected economic conditions slipped 0.7% m/m.
Expectations for business conditions fell both for the next year fell
(+77.3% y/y) and for the next five years (+30.2% y/y) as well.
Expectations for personal finances improved (7.7% y/y) to the highest
level this year.</p>
<p>Sentiment about current economic conditions rose just slightly
(30.2% y/y) for the second month. The assessment of current personal
finances (20.3% y/y) recouped a February decline and buying conditions
for large household goods, including furniture, refrigerators, stoves
&amp; televisions (38.8% y/y) were unchanged.</p>
<p>Expected price inflation during the next year slipped to 3.4%
but was up from the December 2008 reading of 1.7%.Respondents' view of
government policy, which may eventually influence economic
expectations, improved slightly m/m but remained down 30.6% from its
high last May. Fifteen percent of respondents thought that a good job
was being done by government versus 40% who thought a poor job was
being done, a twelve-month high.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326h.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326i.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"><a ;="" href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM"><b>University
of Michigan</b></a></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>Mid-March</b></th>
<th scope="col"><b>&nbsp;February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>March 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">Consumer Sentiment</td>
<td>73.6</td>
<td>72.5</td>
<td>73.6</td>
<td>74.4</td>
<td><span>28.4%</span></td>
<td>66.3</td>
<td>63.8</td>
<td>85.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>82.4</td>
<td>80.8</td>
<td>81.8</td>
<td>81.1</td>
<td>30.2</td>
<td>69.6</td>
<td>73.7</td>
<td>101.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>67.9</td>
<td>67.2</td>
<td>68.4</td>
<td>70.1</td>
<td>26.9</td>
<td>64.1</td>
<td>57.3</td>
<td>75.6</td>
</tr>
</tbody>
</table>
</body></html>

U.S. GDP 4Q Increase IsLowered Slightly; Profits Are Firm

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<span id="articletext">
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100325e.jpg" style="width: 353px; height: 265px;" align="right">
The Federal Reserve Bank of San Francisco generates a figure called the
"Tech Pulse Index" to follow developments in the U.S. technology
sector. It is designed to be a summary statistic that tracks the health
of this sector in a timely manner. Lately, it has been flashing a
signal of solid recovery with activity at the highest level since the
summer of '08.&nbsp;&nbsp;</p><p>During 4Q09, the index
expanded by 33.7% (AR) following a lesser 3Q gain. These gains followed
four negative readings during the recession which totaled 25.8%. The
historical relationship of the index to the sector is quite good,
having<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100325f.jpg" style="width: 353px; height: 265px;" align="right">
an 92% correlation with the quarterly change in real information
processing equipment &amp; software spending in the National Income
&amp; Product Accounts during the last twenty years.&nbsp;</p><p>The
index is made up of several indicators: 1) The index of industrial
production of computers, communications equipment, and semiconductors,
2) payroll employment in the&nbsp; industries of computer and
electronic product manufacturing, telecommunications, web search
portals and data processing, computer systems design &amp; related
services, 3) real private nonresidential investment in computers
&amp; peripheral equipment, software, &amp; communications
equipment, 4) real personal consumption expenditures on computers,
peripherals and software, 5) manufacturers' shipments of computers and
electronic products in current dollars (used for January 1992
onwards.)</p><p> The data can be found in Haver's <b>SURVEYS</b>
database.&nbsp;</p>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Tech
Pulse Index&nbsp; (FRB San Francisco) </b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</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">Index Level (Jan. 2000 = 100)</td>
<td>94.0</td>
<td>87.5</td>
<td>84.0</td>
<td>87.7</td>
<td>107.2</td>
<td>102.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Q/Q Chg.</td>
<td>33.7%</td>
<td>17.3%</td>
<td>-6.1%</td>
<td>-18.2%</td>
<td>4.2%</td>
<td>9.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Y/Y Chg.</td>
<td>-1.6%</td>
<td>-18.8%</td>
<td>-25.8%</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</span></body></html>

The Federal Reserve Bank of San Francisco generates a figure called the "Tech Pulse Index" to follow developments in the U.S. technology sector. It is designed to be a summary statistic that tracks the health of this sector in a [...]

The Technology Sector Is Firming

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100325d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>UK retail sales are up by a sharper-than-expected 1.9% in
February but the bounce is from a 2.5% drop in January. The UK sales
path has been a rocky one as the growth rate chart above attests. As
you would expect, Yr/Yr sales have been the most stable and largely
have continued to post their fluctuations in positive territory. But we
get a sense of momentum in comparing the growth rate of six months with
twelve-months and in comparing three-months with six-months. The
shorter the period for the growth rate calculation, the weaker the
growth rate and with a rise as the last observation, that is not a good
thing. Momentum is eroding from twelve months to six months and from
six months to three months.</p>
<p>Ex autos the retail sales growth rates show the same pattern
of decay as 12-month growth is 3.4% compared to a arte of -0.7% over
six months and of -4.5% over three months.</p>
<p>In the quarter-to-date both overall and ex-auto sales are
posting sizeable negative numbers.</p>
<p>Against that background it is hard to call the day&#8217;s numbers
good news. They are better than negative numbers at this point but UK
retail sales are doing nothing very special. The UK still appears to be
very growth-challenged.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th colspan="9" scope="col"><b>UK Real
and Nominal Retail Sales</b> </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp; Nominal</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">Jan-10</td>
<td style="font-weight: bold;">Dec-09</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>
<td style="font-weight: bold;">YrAGo</td>
<td style="font-weight: bold;">Quarter<br>
2-date</td>
</tr>
<tr>
<td class="firstcol">Retail Total</td>
<td>1.9%</td>
<td>-2.5%</td>
<td>0.0%</td>
<td>-2.7%</td>
<td>0.7%</td>
<td>4.9%</td>
<td>-3.0%</td>
<td>-8.0%</td>
</tr>
<tr>
<td class="firstcol">Food Bev &amp;
Tobacco</td>
<td>-1.2%</td>
<td>-1.3%</td>
<td>1.4%</td>
<td>-4.5%</td>
<td>-2.1%</td>
<td>0.8%</td>
<td>5.6%</td>
<td>-4.2%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>1.5%</td>
<td>3.6%</td>
<td>0.5%</td>
<td>24.6%</td>
<td>12.5%</td>
<td>6.5%</td>
<td>-3.3%</td>
<td>20.4%</td>
</tr>
<tr class="odd">
<td colspan="9">&nbsp; Real</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Retial
Ex auto</td>
<td>2.1%</td>
<td>-3.0%</td>
<td>-0.2%</td>
<td>-4.5%</td>
<td>-0.7%</td>
<td>3.4%</td>
<td>-2.7%</td>
<td>-10.3%</td>
</tr>
</tbody>
</table>
</body></html>

UK retail sales are up by a sharper-than-expected 1.9% in February but the bounce is from a 2.5% drop in January. The UK sales path has been a rocky one as the growth rate chart above attests. As you would expect, Yr/Yr sales have [...]

UK Retail Sales Rebound After Larger Set-Back

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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Winnie Tapasanun

260113F29.jpg

260113G29.jpg

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.

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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.

Switzerland

Swiss Confidence Sags at End-2025

Tian Yong Woon

This week, we highlight several pertinent developments that have shaped the start of the year and may carry longer-lasting implications. To begin with, the recent capture of former Venezuelan President Maduro by the US authorities and the subsequent crude oil trade deal could have far-reaching effects—potentially altering China’s imports of Venezuelan crude and broader bilateral trade dynamics (chart 1), as well as global energy supply considerations (chart 2).

In Japan, Prime Minister Takaichi’s reported consideration of early snap elections, if enacted, would likely inject near-term political uncertainty (chart 3). However, should her gambit succeed, it could reduce  policy uncertainty and pave the way for more fiscal policy activism. Against this backdrop, it is unsurprising that investors remain divided over the timing of the Bank of Japan’s next policy tightening, although the upcoming Spring wage negotiations (chart 4) ought to provide clearer signals for the monetary policy outlook.

Turning to investor expectations from the latest Blue Chip survey, India is once again seen as the growth leader among major Asian economies, while also poised to record the highest inflation (chart 5). China, by contrast, is expected to deliver sub-5% growth this year alongside muted inflation. Lastly, in Southeast Asia, pockets of geopolitical tension persist—notably between Thailand and Cambodia (chart 6)—as Thailand prepares for snap elections next month.

**The US, Venezuela, and China**
2026 got off to a turbulent start following a recent US military operation in Venezuela that resulted in the capture of former President Maduro and his transfer to the US to face drug-related charges. In the aftermath, Venezuela’s former vice president (Delcy Rodriguez) was sworn in as interim leader, while US and Venezuelan authorities have reportedly already reached a new crude oil deal. Under the agreement, Venezuela would sell 30–50 million barrels of crude to the US at market prices, with the proceeds controlled by the US. These developments have several potential implications. First, some Venezuelan crude initially destined for China would likely be diverted to the US. China has been the main buyer of Venezuelan oil in recent years, although this is likely underreported in official data (chart 1), which would tighten conditions for the crude-import-dependent country. Second, an eventual increase in Venezuelan crude supply—previously constrained by heavy US sanctions—would likely exert downward pressure on global oil prices, all else equal, although significant challenges remain, as discussed below.

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To illustrate the potential significance of Venezuela’s crude oil industry, chart 2 shows that the country holds nearly a fifth of the world’s proved crude oil reserves. However, output remains disproportionately low relative to reserves, possibly reflecting years of US sanctions as well as mismanagement and chronic underinvestment. Given the current state of the industry, substantial investment will likely be required for Venezuela to restore production to historically high levels and to more fully tap its deep proved reserves. As a result, any meaningful surge in Venezuelan crude output is likely to take time, which may help explain the muted market response to recent US–Venezuelan developments. Also of note, China has been a major lender to Venezuela, including through “oil-for-loan” arrangements in which repayments are made in crude oil. It remains to be seen how these existing and future agreements may be affected by recent developments.

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**Japan**
Setting aside the interplay between the US, Venezuela, and China, another economy worth watching early this year is Japan. Developments continue to unfold following renewed China–Japan tensions after Prime Minister Takaichi assumed office. With her approval ratings having remained consistently high since taking the helm, Takaichi is reportedly considering snap elections as early as next month to strengthen her ruling coalition’s parliamentary position. While a stronger mandate could reduce policy uncertainty, near-term political uncertainty would be the likely case. This interim uncertainty may be weighing on the yen. It is being compounded by expectations of upcoming pro-growth measures, including the $118 million supplementary budget passed last December and the prospect of additional fiscal stimulus next fiscal year, contingent on an electoral win (chart 3).

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Turning back to Japan and the monetary policy outlook, investors remain divided over the timing of the Bank of Japan’s (BoJ) next policy move following its December rate hike. This uncertainty is understandable given the multiple moving parts shaping the BoJ’s path, including the factors discussed above. Looking ahead, the upcoming annual wage negotiations and broader trends in wage growth (chart 4) will be closely watched by the BoJ as key preconditions for further rate hikes. Reflecting this uncertainty, our latest Blue Chip Economic Indicators survey shows investors split between expectations for a hike in March and views that the next move will only come after April.

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**Blue Chip Economic Indicators**
Delving into the latest Blue Chip survey results, chart 5 summarizes panellists’ expectations for growth and inflation this year. Focusing on major Asian economies, and as in 2025, India is seen to be leading the pack in terms of both real GDP growth and CPI inflation. That said, the inflation outlook may be subject to further revisions should India’s currently muted inflation—driven by falling food prices—persist for longer. For China, panellists currently expect sub-5% growth this year, implying a likely miss should a 5% growth target again be pursued. Inflation in China is once again expected to remain subdued. Japan, meanwhile, is forecast to post sub-1% real GDP growth, while CPI inflation is expected to hover around the authorities’ preferred 2% level. Looking ahead, attention will also turn to the IMF’s upcoming World Economic Outlook forecasts, due later this month.

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**Southeast Asia**
Last but not least, turning to Southeast Asia, promising AI- and tech-related growth continues in economies such as Malaysia and Vietnam. However, pockets of geopolitical tension persist, notably between Thailand and Cambodia, where border clashes have occurred despite previous attempts at peace, including one co-brokered by US President Trump. Against this backdrop, Thailand’s Prime Minister Anutin is preparing for snap elections in early February, amid a reported rise in nationalist sentiment linked to the ongoing clashes. These developments create latent risks for both Thailand and Cambodia (chart 6), while the uncertainty surrounding the elections also clouds the implementation of longer-term policies aimed at addressing Thailand’s deeper structural challenges.