Tom Moeller

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100420a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The trend has been upward for the cost of regular
gasoline. Last week the price for a gallon remained at the
prior week's high of $2.86 which was up by 78% since the December, 2008
low. At the margin, however, there's been some shakiness. Yesterday,
the spot market price for a gallon of regular gasoline fell back by ten
cents from the early-April high. The figures are reported by the U.S.
Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
Crude oil costs have been behind the gasoline price
volatility. The price for a barrel of light sweet crude (WTI) fell a
modest 1.6% last week to $84.60 from $85.97 but then fell twice that
percent yesterday to $81.45. Regardless, prices remain up by
two-and-one half times the 2008 low
The easing of gasoline prices has had nothing to due with the
trend in demand. Weekly gasoline usage has been trending higher with
more temperate weather and the improved economy. It was up 1.0% last
week versus one year ago and that compares with a 3.0% decline in
early-February. The demand for residual fuel oil fell 1.6% and
distillate demand fell 4.8% y/y. Inventories of crude oil and petroleum
products were stable through much of last month and were down slightly
from one year ago.
U.S. natural gas prices were up slightly last week at $4.09
per mmbtu (+15.3% y/y). Prices reached a high of $6.50 early in
January. Nevertheless, prices remained nearly double the September low.
The energy price data can be found in Haver's WEEKLY
database while the daily figures are in DAILY.
The gasoline demand figures are in OILWKLY.
Lessons from the failure of Lehman Brothers is
this morning's House testimony by Fed Chairman Ben S. Bernanke and it
can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20100420a.htm">here</a>.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100420b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100420c.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/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">04/17/10</th>
<th scope="col">04/12/10</th>
<th scope="col">04/05/10</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>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.86</td>
<td>2.86</td>
<td>2.83</td>
<td>38.9%</td>
<td>2.35</td>
<td>3.25</td>
<td>2.80</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>84.60</td>
<td>85.97</td>
<td>83.29</td>
<td>69.9%</td>
<td>61.39</td>
<td>100.16</td>
<td>72.25</td>
</tr>
</tbody>
</table>
</body></html>

The trend has been upward for the cost of regular gasoline. Last week the price for a gallon remained at the prior week's high of $2.86 which was up by 78% since the December, 2008 low. At the margin, however, there's been some [...]

U.S. Petroleum Prices Remain Near High But Spot Prices Fall

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100420a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The trend has been upward for the cost of regular
gasoline. Last week the price for a gallon remained at the
prior week's high of $2.86 which was up by 78% since the December, 2008
low. At the margin, however, there's been some shakiness. Yesterday,
the spot market price for a gallon of regular gasoline fell back by ten
cents from the early-April high. The figures are reported by the U.S.
Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
Crude oil costs have been behind the gasoline price
volatility. The price for a barrel of light sweet crude (WTI) fell a
modest 1.6% last week to $84.60 from $85.97 but then fell twice that
percent yesterday to $81.45. Regardless, prices remain up by
two-and-one half times the 2008 low
The easing of gasoline prices has had nothing to due with the
trend in demand. Weekly gasoline usage has been trending higher with
more temperate weather and the improved economy. It was up 1.0% last
week versus one year ago and that compares with a 3.0% decline in
early-February. The demand for residual fuel oil fell 1.6% and
distillate demand fell 4.8% y/y. Inventories of crude oil and petroleum
products were stable through much of last month and were down slightly
from one year ago.
U.S. natural gas prices were up slightly last week at $4.09
per mmbtu (+15.3% y/y). Prices reached a high of $6.50 early in
January. Nevertheless, prices remained nearly double the September low.
The energy price data can be found in Haver's WEEKLY
database while the daily figures are in DAILY.
The gasoline demand figures are in OILWKLY.
Lessons from the failure of Lehman Brothers is
this morning's House testimony by Fed Chairman Ben S. Bernanke and it
can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20100420a.htm">here</a>.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100420b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100420c.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/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">04/17/10</th>
<th scope="col">04/12/10</th>
<th scope="col">04/05/10</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>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.86</td>
<td>2.86</td>
<td>2.83</td>
<td>38.9%</td>
<td>2.35</td>
<td>3.25</td>
<td>2.80</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>84.60</td>
<td>85.97</td>
<td>83.29</td>
<td>69.9%</td>
<td>61.39</td>
<td>100.16</td>
<td>72.25</td>
</tr>
</tbody>
</table>
U.S. Weekly Chain Store Sales Hold
On To Early-April Gain 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 20, 2010



<img alt solid src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100420d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Consumers still seem interested in spending money after being
cooped up indoors this winter. As a result, chain store sales last week
held onto the sharp gain early in the month and the y/y change remained
at 4.6%, its strongest gain since early-2007.
During the last ten
years there has been a 68% correlation between the y/y change in chain
store sales and the change in retail sales at general merchandise
stores.
 That correlation recently has increased.

The ICSC-Goldman
Sachs retail chain-store sales index is constructed using the
same-store sales (stores open for one year) reported by 78 stores of
seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.
 During the last ten years there has been a 69%
correlation between the year-to-year growth in chain store sales and
the growth in general merchandise retail sales. The weekly
figures are available in Haver's SURVEYW database.
Contrary to the trend in purchases, the leading indicator of
chain store sales slipped last week and was down slightly versus one
year ago. The composite leading economic indicator is compiled from
four series: (1) the MBA's volume index of mortgage applications for
home purchase (2) the ABC News/Money magazine's survey of consumer
buying conditions (3) new filings for jobless benefits and (4) the
30-year government bond yield.
Issues in Economic Development is
yesterday's speech by Fed Governor Elizabeth A. Duke and it can be
found <a href="http://www.federalreserve.gov/newsevents/speech/duke20100419a.htm">here</a>.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">04/17/10</th>
<th scope="col">04/10/10</th>
<th scope="col">04/03/10</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>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>513.8</td>
<td>513.0</td>
<td>512.7</td>
<td>4.6%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
German Investors Upbeat On
Economic Prospects 6 Months Ahead 
by <a href="/comment/Curley.html">Louise
Curley</a> April 20, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100420e.jpg" style="width: 353px; height: 265px;" align="right">The
German
financial community is upbeat on Germany's economic prospects over the
next six months despite the disruptions caused by the eruption of the
Icelandic volcano.&nbsp; The ZEW Survey of institutional investors
and analysts took place over the period, March 29 to April 19, that
latter part of which was affected by the eruption of the
volcano.&nbsp; The survey revealed that those expecting
macroeconomic conditions to improve over the next six months exceeded
those expecting conditions to worsen by 53% up from 44.5% in
March.&nbsp; This was the first increase since September of last
year and its magnitude exceeded consensus estimates of a
rise.&nbsp;&nbsp;
 The
change in the appraisal of current conditions was even
greater.&nbsp;&nbsp; The financial community has
had a dim view of current conditions since August, 2008 when the
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100420f.jpg" style="width: 353px; height: 265px;" align="right">pessimists
regarding current conditions began to exceed the
optimists.&nbsp; By May 2009 the excess of pessimists reached
92.8%.&nbsp;&nbsp; Since then, there has been a steady decline
in the percentage of pessimists.&nbsp; In April, the excess of
pessimists was 39.2% an 11.7 point decline from the 51.9% of March. The
percent balances between optimist and pessimists regarding current
conditions and expectations for the next six months are shown in the
first chart.
 The
improved appraisal of current conditions and expectations has led
to some changes in profit expectations.&nbsp; The second chart
shows those industries where profit expectations have increased the
most in the last month.&nbsp; Although expectations for profits in
the Vehicles/Automotive and Consumption/Trade are small and even
negative in the case of the latter, expectations for profits in both
these industries have increased the most in the last month.&nbsp;
Profit expectations for these industries and two other industries where
profit expectations have had big increases--Machinery and
Electronics--are shown in the second chart.&nbsp;&nbsp;
 Over the
past few months
the economic news in Germany had been encouraging.&nbsp; The euro
has declined almost 11% since early December.&nbsp; Unemployment
continues to fall and&nbsp; new orders, particularly foreign, have
been strong. may have contributed to the good feeling in the financial
community
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Percent</th>
<th scope="col">Apr 10</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>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Expectation 6 mo
Ahead</td>
<td>53.0</td>
<td>44.5</td>
<td>15.1</td>
<td>47.2</td>
<td>50.4</td>
<td>56.1</td>
<td>56.0</td>
<td>57.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Current Conditions</td>
<td>-39.2</td>
<td>-51.9</td>
<td>-54.8</td>
<td>-56.6</td>
<td>-60.6</td>
<td>-65.6</td>
<td>-72.2</td>
<td>-74.0</td>
</tr>
<tr>
<td colspan="9" class="firstcol" style="font-weight: bold;">Profit
Expectations</td>
</tr>
<tr class="odd">
<td class="firstcol">Vehicles/Automotive</td>
<td>3.1</td>
<td>-25.4</td>
<td>-29.7</td>
<td>-23.2</td>
<td>-26.5</td>
<td>-33.9</td>
<td>-40.9</td>
<td>-43.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumption/Trade</td>
<td>-2.3</td>
<td>-15.6</td>
<td>-18.9</td>
<td>-12.1</td>
<td>-10.4</td>
<td>-18.4</td>
<td>-16.7</td>
<td>-20.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Machinery</td>
<td>52.1</td>
<td>36.7</td>
<td>29.6</td>
<td>33.8</td>
<td>26.9</td>
<td>16.8</td>
<td>14.4</td>
<td>12.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Electronics</td>
<td>41.2</td>
<td>29.8</td>
<td>22.0</td>
<td>27.0</td>
<td>22.8</td>
<td>18.1</td>
<td>17.4</td>
<td>9.1</td>
</tr>
</tbody>
</table>

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U.S. Petroleum Prices Remain NearHigh But Spot Prices Fall

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100419e.jpg" align="left" border="0" height="265" width="353">
The Japanese consumer is becoming a little less pessimistic.
The Economic and Social Research Institute's (ESRI) diffusion index for
Consumer Confidence reached a low point of 26.7 in December 2008. The
index rose steadily through October, 2009. After declining in November
and December the index has risen in each of the past three months and
is now at 41.0 in March, as can be seen in the first chart. Although it
has risen 3.1 points since December, the Index for March shows that
more than half of Japanese consumers continue to be pessimistic..The
ESRI' index does not have a long history, only beginning in April,
2004. Some of the indicators of confidence, however, have a much longer
history. One such is the percentage change in same store sales of
department stores that was released today. This series goes back to
January, 1965 and is shown in the second chart. The correlation between
consumer confidence and the year to year percent change in department
store sales for the period 2004 to date is .63 as can be seem in the
third chart. The R2 is .39, that is the
variation in department sales accounts for 39% of the variation in
confidence. Although far from perfect, the department store sales
history suggests that the level of Japanese consumer confidence
continues at historical lows.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100419f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100419g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</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">Low</th>
<th scope="col">Date</th>
<th scope="col">High</th>
<th scope="col">Date</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">ConsumerConfidence:
Diffusion Index</td>
<td>41.0</td>
<td>40.0</td>
<td>39.4</td>
<td>37.9</td>
<td>39.9</td>
<td>26.7</td>
<td>Dec 08</td>
<td>50.2</td>
<td>Apr 06</td>
</tr>
<tr>
<td class="firstcol">&nbsp; All
Japan</td>
<td>-3.5</td>
<td>-5.4</td>
<td>-5.7</td>
<td>-5.0</td>
<td>-11.8</td>
<td>-13.1</td>
<td>Mar 09</td>
<td>5.5</td>
<td>Jun 07</td>
</tr>
</tbody>
</table>
</body></html>

The Japanese consumer is becoming a little less pessimistic. The Economic and Social Research Institute's (ESRI) diffusion index for Consumer Confidence reached a low point of 26.7 in December 2008. The index rose steadily through [...]

Japanese Consumer Confidence Improves But Is Still Historically Low

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Forward momentum is building behind business conditions in the
Northeast region of the country. The Federal Reserve Bank of New York
reported that its April Empire State Factory Index of General Business
Conditions rose to its highest level in six months. As a result it was
near the highest since 2004. At 31.86, the diffusion index was up from
its recession low of -32.29 in March 2009. The latest level suggests
positive growth in factory sector activity and it beat Consensus
expectations for a reading of 24.0.
The figure is a diffusion index. Since the series' inception
in 2001, there has been a 74% correlation between its level and the
three-month change in U.S. factory sector production. Like the
Philadelphia Fed Index of General Business Conditions, the Empire State
Business Conditions Index reflects answers to independent survey
questions; it is not a weighted combination of the components. The
series dates back only to 2001.
Amongst the separate survey questions, shipments and
inventories rose strongly. Also strong was the employment index which
rose to 20.25, near its highest since 2004 There has been an 87%
correlation between the employment index and the three-month growth in
factory sector employment as reported by the Labor Department.
The prices paid index rose m/m to 41.77, its highest since
September 2008. Since inception there has been a 76% correlation
between the index of prices paid and the three-month change in the core
intermediate materials PPI.
The Empire State index of expected business
conditions in six months held steady m/m and was near the
highest since early-2004. The capital expenditure and technology
spending series both remained near the highest levels since the
recession began.
The Empire State Manufacturing Survey is a monthly survey of
manufacturers in New York State. Participants from across the state in
a variety of industries respond to a questionnaire and report the
change in indicators from the previous month. Each index is seasonally
adjusted. Respondents also state the likely direction of these same
indicators six months ahead. For more on the Empire State
Manufacturing Survey, including methodologies and the latest report,
click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.
The Empire State data is available in Haver's SURVEYS
database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State
Manufacturing Survey</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">April '09&nbsp;</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">General Business Conditions
(diffusion index, %)&nbsp;&nbsp;</td>
<td>31.86</td>
<td>22.86</td>
<td>24.91</td>
<td>-14.59</td>
<td>-2.76</td>
<td>-9.97</td>
<td>17.22</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>29.49</td>
<td>25.43</td>
<td>8.78</td>
<td>-3.99</td>
<td>-2.52</td>
<td>-6.22</td>
<td>15.70</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Inventories</td>
<td>11.39</td>
<td>4.94</td>
<td>0.00</td>
<td>-35.96</td>
<td>-22.89</td>
<td>-7.87</td>
<td>-3.95</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>20.25</td>
<td>12.35</td>
<td>5.56</td>
<td>-28.09</td>
<td>-17.28</td>
<td>-5.36</td>
<td>11.28</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>41.77</td>
<td>29.63</td>
<td>31.94</td>
<td>-14.61</td>
<td>1.33</td>
<td>46.99</td>
<td>35.64</td>
</tr>
</tbody>
</table>
</body></html>

Forward momentum is building behind business conditions in the Northeast region of the country. The Federal Reserve Bank of New York reported that its April Empire State Factory Index of General Business Conditions rose to its highest [...]

Empire State Business Conditions Show Further Gain

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416b.jpg" style="width: 312px; height: 265px;">
Improved weather last month helped housing starts rise 1.6%
from February to 626,000 units (AR). Also good news from the housing
sector was that snowstorms didn't depress activity by 5.9% from January
as previously reported but instead February starts rose modestly.
Consensus expectations had been for 610,000 starts in March.
Starts of multi-family housing units accounted for the
increase in March activity. Moreover, the upward revision to February
to a lesser decline from January was behind much of the revision.
Starts of apartments, condominiums &amp; town houses recovered most
of the February decline with an 18.8% increase but they still were down
40.6% from last March. Regardless, the q/q increase in starts was the
first of this cycle.
Despite their 0.9% m/m decline from February, starts of
single-family homes also showed improvement. The decline was from an
upwardly revised February level. It now shows an increase from January
instead of the sharp decline reported earlier. Starts rose 48.7% from
the recession low during February 2009. Single-family starts in the
Northeast rose 5.6% during March and were more-than-double the January
'09 low. In the Midwest, single-family starts fell by one-third from
February (+19.0% y/y) and reversed all of the February gain. Though
starts rose from their January '09 low ,they remained down
three-quarters from the 2005 high. Starts in the South rose 9.9% (47.7%
y/y) and in the West they rose 0.9% (82.8% y/y).
During March, building permits rose 7.5% following a 2.4%
February increase. Permits to build a single-family home rose 5.6% and
were up 58.8% from the low in January '09. Permits to build
multi-family homes rose 15.4% and were 40.6% higher than their low last
July.
The housing starts figures can be found in Haver's USECON
database.
Coordination of Expectations in the Recent
Crisis: Private Actions and Policy Responses from the
Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/10q1CooperWillis.pdf">here</a>.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416d.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">Housing
Starts (000s, SAAR)</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</td>
<td>626</td>
<td>616</td>
<td>609</td>
<td>20.2%</td>
<td>553</td>
<td>900</td>
<td>1,342</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>531</td>
<td>536</td>
<td>507</td>
<td>47.1</td>
<td>440</td>
<td>616</td>
<td>1,036</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>95</td>
<td>80</td>
<td>102</td>
<td>-40.6</td>
<td>113</td>
<td>285</td>
<td>306</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>685</td>
<td>637</td>
<td>622</td>
<td>34.1</td>
<td>558</td>
<td>895</td>
<td>1,392</td>
</tr>
</tbody>
</table>
</body></html>

Improved weather last month helped housing starts rise 1.6% from February to 626,000 units (AR). Also good news from the housing sector was that snowstorms didn't depress activity by 5.9% from January as previously reported but [...]

U.S. Housing Starts Improve With Better Weather

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416b.jpg" style="width: 312px; height: 265px;">
Improved weather last month helped housing starts rise 1.6%
from February to 626,000 units (AR). Also good news from the housing
sector was that snowstorms didn't depress activity by 5.9% from January
as previously reported but instead February starts rose modestly.
Consensus expectations had been for 610,000 starts in March.
Starts of multi-family housing units accounted for the
increase in March activity. Moreover, the upward revision to February
to a lesser decline from January was behind much of the revision.
Starts of apartments, condominiums &amp; town houses recovered most
of the February decline with an 18.8% increase but they still were down
40.6% from last March. Regardless, the q/q increase in starts was the
first of this cycle.
Despite their 0.9% m/m decline from February, starts of
single-family homes also showed improvement. The decline was from an
upwardly revised February level. It now shows an increase from January
instead of the sharp decline reported earlier. Starts rose 48.7% from
the recession low during February 2009. Single-family starts in the
Northeast rose 5.6% during March and were more-than-double the January
'09 low. In the Midwest, single-family starts fell by one-third from
February (+19.0% y/y) and reversed all of the February gain. Though
starts rose from their January '09 low ,they remained down
three-quarters from the 2005 high. Starts in the South rose 9.9% (47.7%
y/y) and in the West they rose 0.9% (82.8% y/y).
During March, building permits rose 7.5% following a 2.4%
February increase. Permits to build a single-family home rose 5.6% and
were up 58.8% from the low in January '09. Permits to build
multi-family homes rose 15.4% and were 40.6% higher than their low last
July.
The housing starts figures can be found in Haver's USECON
database.
Coordination of Expectations in the Recent
Crisis: Private Actions and Policy Responses from the
Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/10q1CooperWillis.pdf">here</a>.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416d.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">Housing
Starts (000s, SAAR)</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</td>
<td>626</td>
<td>616</td>
<td>609</td>
<td>20.2%</td>
<td>553</td>
<td>900</td>
<td>1,342</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>531</td>
<td>536</td>
<td>507</td>
<td>47.1</td>
<td>440</td>
<td>616</td>
<td>1,036</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>95</td>
<td>80</td>
<td>102</td>
<td>-40.6</td>
<td>113</td>
<td>285</td>
<td>306</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>685</td>
<td>637</td>
<td>622</td>
<td>34.1</td>
<td>558</td>
<td>895</td>
<td>1,392</td>
</tr>
</tbody>
</table>
Empire State Business Conditions
Show Further Gain 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 16, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Forward momentum is building behind business conditions in the
Northeast region of the country. The Federal Reserve Bank of New York
reported that its April Empire State Factory Index of General Business
Conditions rose to its highest level in six months. As a result it was
near the highest since 2004. At 31.86, the diffusion index was up from
its recession low of -32.29 in March 2009. The latest level suggests
positive growth in factory sector activity and it beat Consensus
expectations for a reading of 24.0.
The figure is a diffusion index. Since the series' inception
in 2001, there has been a 74% correlation between its level and the
three-month change in U.S. factory sector production. Like the
Philadelphia Fed Index of General Business Conditions, the Empire State
Business Conditions Index reflects answers to independent survey
questions; it is not a weighted combination of the components. The
series dates back only to 2001.
Amongst the separate survey questions, shipments and
inventories rose strongly. Also strong was the employment index which
rose to 20.25, near its highest since 2004 There has been an 87%
correlation between the employment index and the three-month growth in
factory sector employment as reported by the Labor Department.
The prices paid index rose m/m to 41.77, its highest since
September 2008. Since inception there has been a 76% correlation
between the index of prices paid and the three-month change in the core
intermediate materials PPI.
The Empire State index of expected business
conditions in six months held steady m/m and was near the
highest since early-2004. The capital expenditure and technology
spending series both remained near the highest levels since the
recession began.
The Empire State Manufacturing Survey is a monthly survey of
manufacturers in New York State. Participants from across the state in
a variety of industries respond to a questionnaire and report the
change in indicators from the previous month. Each index is seasonally
adjusted. Respondents also state the likely direction of these same
indicators six months ahead. For more on the Empire State
Manufacturing Survey, including methodologies and the latest report,
click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.
The Empire State data is available in Haver's SURVEYS
database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire
State
Manufacturing Survey</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">April '09&nbsp;</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">General Business Conditions
(diffusion index, %)&nbsp;&nbsp;</td>
<td>31.86</td>
<td>22.86</td>
<td>24.91</td>
<td>-14.59</td>
<td>-2.76</td>
<td>-9.97</td>
<td>17.22</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>29.49</td>
<td>25.43</td>
<td>8.78</td>
<td>-3.99</td>
<td>-2.52</td>
<td>-6.22</td>
<td>15.70</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Inventories</td>
<td>11.39</td>
<td>4.94</td>
<td>0.00</td>
<td>-35.96</td>
<td>-22.89</td>
<td>-7.87</td>
<td>-3.95</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>20.25</td>
<td>12.35</td>
<td>5.56</td>
<td>-28.09</td>
<td>-17.28</td>
<td>-5.36</td>
<td>11.28</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>41.77</td>
<td>29.63</td>
<td>31.94</td>
<td>-14.61</td>
<td>1.33</td>
<td>46.99</td>
<td>35.64</td>
</tr>
</tbody>
</table>
Michigan Consumer Sentiment
Deteriorates With View Of Gov't Policy 
by <a href="/comment/Moeller.html">Tom
Moeller</a> 


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Despite the economy's recent improvement, it has yet to
translate into a sustained rise in consumer sentiment. The University
of Michigan reported that its mid-April index of consumer sentiment
fell to 69.5 from 73.6 and was at its lowest level since November. The
figure fell well short of Consensus expectations for a reading of 75.0.
Nevertheless, sentiment remained up considerably from the low late in
2008. 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.
Respondents' view of government policy, which may influence
economic expectations, fell to its lowest level since January of last
year. Just 11 percent of respondents thought that a good job was being
done by government versus 45% who thought a poor job was being done,
the highest since January '09.
The index of expected economic conditions fell 8.2% m/m to the
lowest level since March of last year. The decline was led by a 9.8%
decline in expectations for business conditions during the next five
years to their lowest since July. Expectations for conditions during
the next year fell 9.0% to their lowest since November. Perhaps more
troubling was the 8.0% m/m decline in expectations for personal
finances to the lowest level since February 2009.
The good news was that sentiment about current economic
conditions fell a lesser 2.1% last month and remained near its cycle
high. The assessment of current personal finances fell 2.6% and also
remained near the cycle high and buying conditions for large household
goods including furniture, refrigerators, stoves &amp; televisions
also fell just moderately.
Expected price inflation during the next year rose further to
3.8% and was up from the December 2008 reading of 1.7%.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416i.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100416j.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/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">Mid-April</th>
<th scope="col">March</th>
<th scope="col">&nbsp;February</th>
<th scope="col">April 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">Consumer Sentiment</td>
<td>69.5</td>
<td>73.6</td>
<td>73.6</td>
<td>6.8%</td>
<td>66.3</td>
<td>63.8</td>
<td>85.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>80.7</td>
<td>82.4</td>
<td>81.8</td>
<td>18.2</td>
<td>69.6</td>
<td>73.7</td>
<td>101.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>62.3</td>
<td>67.9</td>
<td>68.4</td>
<td>-1.3</td>
<td>64.1</td>
<td>57.3</td>
<td>75.6</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Housing Starts Improve WithBetter Weather

Robert Brusca

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100415k.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
According to the Nationwide Building Society&#8217;s measure, U.K.
consumer confidence fell in March by the most since July 2008 as the
election due within weeks fueled Britons&#8217; doubts about the economy.
Small surprise that is: so much for politicians shoring up a feeling of
hope and security. Increasingly elections are about making the opponent
seem worse than you are. The consumer confidence polls seem to have
picked up on this, with the obvious consequences. The index of
sentiment fell 9 points from February to 72, erasing the gains in
confidence seen so far this year. A gauge measuring expectations for
the economy in the next six months fell 11 points to 105.This fall
disappointed as the market consensus level was a reading of 81.
We contrast this result with the GfK survey above. It seems to
show less of hit from the electioneering effect but it does demonstrate
some backsliding in the assessment of the economy; plenty of raw nerves
here for the politicians to tap into. The household financial situation
eroded in March as did people&#8217;s assessment of their savings. Both lower
and higher income respondents saw a worsening.
Looking ahead, fears of unemployment have been rising. The
general economic situation is seen as poorer and households expect
their financial situation to deteriorate further. There are increased
concerns about savings adequacy and growing concerns about inflation.
With this as a back-drop there is plenty of fodder for
election politicking to push all the consumers&#8217; buttons. This appears
to be in train. Still consumer confidence in the GfK measure is in the
92nd percentile of its two-year range showing considerable progress has
been made, but that compares to a standing of just 60% in its 10_year
range which emphasizes a bit more how far there is to go. Clearly the
UK consumer remains challenged and will find his and her senses
assaulted in this election season. May the least worse man win.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> GFK
Consumer Survey</th>
</tr>
</thead>
<tbody>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>% of 2Yr 
Range</td>
<td>% of 10Yr 
Range</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Consumer Confidence</td>
<td>-15</td>
<td>-14</td>
<td>-17</td>
<td>-19</td>
<td>92.3%</td>
<td>60.0%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Current</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Household Fin Sit</td>
<td>18</td>
<td>18</td>
<td>17</td>
<td>15</td>
<td>40.0%</td>
<td>36.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Major
Purchases</td>
<td>-17</td>
<td>-16</td>
<td>-16</td>
<td>-16</td>
<td>83.9%</td>
<td>43.3%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Last 12
Months</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Household Fin Sit</td>
<td>-15</td>
<td>-13</td>
<td>-14</td>
<td>-14</td>
<td>22.7%</td>
<td>20.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; General
Econ Sit</td>
<td>-49</td>
<td>-50</td>
<td>-57</td>
<td>-61</td>
<td>71.7%</td>
<td>47.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; CPI</td>
<td>72</td>
<td>63</td>
<td>61</td>
<td>58</td>
<td>26.9%</td>
<td>40.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Savings</td>
<td>-13</td>
<td>-6</td>
<td>-2</td>
<td>-8</td>
<td>21.8%</td>
<td>17.9%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Next
12-Months</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Household Fin Sit</td>
<td>4</td>
<td>6</td>
<td>4</td>
<td>3</td>
<td>88.0%</td>
<td>68.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; General
Econ Sit</td>
<td>0</td>
<td>4</td>
<td>-2</td>
<td>-6</td>
<td>92.9%</td>
<td>92.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Unemployment</td>
<td>36</td>
<td>31</td>
<td>37</td>
<td>45</td>
<td>14.9%</td>
<td>34.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Major
Purchases</td>
<td>-28</td>
<td>-31</td>
<td>-29</td>
<td>-30</td>
<td>57.1%</td>
<td>48.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Savings</td>
<td>5</td>
<td>7</td>
<td>8</td>
<td>4</td>
<td>38.1%</td>
<td>30.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; CPI</td>
<td>63</td>
<td>60</td>
<td>62</td>
<td>60</td>
<td>45.1%</td>
<td>45.1%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">By Income</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Lower</td>
<td>-21</td>
<td>-18</td>
<td>-26</td>
<td>-26</td>
<td>85.7%</td>
<td>55.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Upper</td>
<td>-5</td>
<td>-3</td>
<td>-5</td>
<td>-7</td>
<td>93.1%</td>
<td>71.1%</td>
</tr>
</tbody>
</table>
</body></html>

According to the Nationwide Building Society’s measure, U.K. consumer confidence fell in March by the most since July 2008 as the election due within weeks fueled Britons’ doubts about the economy. Small surprise that is: so much for [...]

UK Consumer Confidence Is Challenged By Electioneering

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100415h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
They weren't expected to move up, but they did anyway.
According to the Bureau of Labor Statistics, initial claims for jobless
insurance increased by 24,000 last week to 484,000, the highest level
in seven weeks. The gain followed an 18,000 increase. A decline had
been expected because of volatility associated with the closure of
offices on Good Friday. The good news is that the latest level is down
from the recession peak of 651,000 reached in March of 2009. Last
week's level exceeded Consensus expectations for 440,000 new claims and
the four-week moving average of initial claims rose slightly to
457,750, its highest in one month.
A 73,000 increase in continuing claims for unemployment
insurance during the latest week reversed most of the prior week's
decline. Still, they were down by one-third since the late-June peak.
The overall decline is a function of the improved job market but also
reflects the exhaustion of 26 weeks of unemployment benefits.
Continuing claims provide an indication of workers' ability to find
employment. The four-week average of continuing claims also fell to a
cycle low of 4.639 mil. This series dates back to 1966.
Extended benefits for unemployment insurance fell 99,716 to a
new low of 114,711. The decline more-than reversed the prior week's
increase and they were down by more than three-quarters from a peak of
597,688 reached in November.Each state administers a separate
unemployment insurance program within guidelines established by Federal
law. Benefit amounts and the length of time benefits are received are
determined by state law. For example, in Michigan and New York, an
additional 73 weeks of benefits are available while in California an
additional 79 weeks are available.
The insured unemployment rate nudged up to 3.6%. The rate
reached a high of 4.9% during May. During the last ten years, there has
been a 96% correlation between the level of the insured unemployment
rate and the overall rate of unemployment published by the Bureau of
Labor Statistics.
The highest insured unemployment rates in the week ending
March 27 were in Alaska (6.8 percent), Oregon (6.0), Puerto Rico (5.9),
Pennsylvania (5.6), Wisconsin (5.5), Michigan (5.4), Montana (5.3),
Idaho (5.2), Nevada (5.2), California (4.8), North Carolina (4.8), and
Rhode Island (4.8). The lowest insured unemployment rates were in
Virginia (1.9), Texas (2.2), Georgia (2.8), Florida (3.1), Wyoming
(3.3), Maryland (3.4), Ohio (3.4), New York (3.7) and Maine (4.1).
These data are not seasonally adjusted but the overall insured
unemployment rate is.
The unemployment insurance claims data is available in Haver's
WEEKLY database and the state data is in the REGIONW
database.
The Fed's latest Beige Book covering
regional economic conditions is available <a href="http://www.federalreserve.gov/fomc/beigebook/2010/20100414/default.htm">here</a>.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100415i.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100415j.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/WEEKLY/@W5/@W507/@W507.HTM" style="color: black;">Unemployment Insurance (000s)</a></th>
<th scope="col">04/10/10</th>
<th scope="col">04/03/10</th>
<th scope="col">03/27/10</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">Initial Claims</td>
<td>484</td>
<td>460</td>
<td>442</td>
<td>-20.5%</td>
<td>572</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,639</td>
<td>4,566</td>
<td>-22.6%</td>
<td>5,809</td>
<td>3,340</td>
<td>2,549</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.6</td>
<td>3.5</td>
<td>4.6 (4/2009)</td>
<td>4.4</td>
<td>2.5</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

They weren't expected to move up, but they did anyway. According to the Bureau of Labor Statistics, initial claims for jobless insurance increased by 24,000 last week to 484,000, the highest level in seven weeks. The gain followed an [...]

U.S. Claims For Jobless Insurance Increase, Again

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

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Andrew Cates

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

260205Z1.jpg

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

260205Z2.jpg

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

260205Z3.jpg

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

260205Z4.jpg

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

260205Z5.jpg

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

260205Z6.jpg

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

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

260206E.jpg

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

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

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

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

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

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

260206.jpg

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

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

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

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

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

260205X15.jpg

260205Y15.jpg

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

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

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

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

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

260205C15.jpg

260205D15.jpg

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

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

Sandy Batten

260205A2.jpg

260205B2.jpg

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

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

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

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

260205C2.jpg

260205D2.jpg

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

U.S. Initial Unemployment Claims Surged in Latest Week

260205E.jpg

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

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

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

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

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

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

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