Louise Curley

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<span id="articletext">
<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100419e.jpg" align="left" border="0" height="265" width="353"></p>
<p>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 R<sup>2 </sup>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.</p>
</span>
<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"><b>Mar 10&nbsp;</b></th>
<th scope="col"><b>Feb 10&nbsp;</b></th>
<th scope="col"><b>Jan 10</b></th>
<th scope="col"><b>Dec 09</b></th>
<th scope="col"><b>Nov 09</b></th>
<th scope="col"><b>Low</b></th>
<th scope="col"><b>Date</b></th>
<th scope="col"><b>High</b></th>
<th scope="col"><b>Date</b></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

Tom Moeller

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<p></p>
<p><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"></p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>The Empire State <b>index of expected business
conditions in six months</b> 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.</p>
<p>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.<span> 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>.</span>
<span>The Empire State data is available in Haver's <b>SURVEYS
</b>database.</span><span></span></p>
</span>
<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"><b><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State
Manufacturing Survey</a></b></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>April '09&nbsp;</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General 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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<p></p>
<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;">
<p>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.</p>
<p>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.</p>
<p>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).</p>
<p>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<span>
multi-family homes rose 15.4% and were 40.6% higher than their low last
July.</span></p>
<p>The housing starts figures can be found in Haver's <b>USECON
</b>database.</p>
<p><strong>Coordination of Expectations in the Recent
Crisis: Private Actions and Policy Responses </strong>from the
Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/10q1CooperWillis.pdf">here</a>.</p>
</span>
<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"><b>Housing
Starts (000s, SAAR)</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>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">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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<p></p>
<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;">
<p>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.</p>
<p>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.</p>
<p>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).</p>
<p>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<span>
multi-family homes rose 15.4% and were 40.6% higher than their low last
July.</span></p>
<p>The housing starts figures can be found in Haver's <b>USECON
</b>database.</p>
<p><strong>Coordination of Expectations in the Recent
Crisis: Private Actions and Policy Responses </strong>from the
Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/10q1CooperWillis.pdf">here</a>.</p>
</span>
<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"><b>Housing
Starts (000s, SAAR)</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>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">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>
<span id="articletitle">Empire State Business Conditions
Show Further Gain</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> April 16, 2010</span>
<span id="articletext">
<p></p>
<p><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"></p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>The Empire State <b>index of expected business
conditions in six months</b> 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.</p>
<p>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.<span> 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>.</span>
<span>The Empire State data is available in Haver's <b>SURVEYS
</b>database.</span><span></span></p>
</span>
<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"><b><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire
State
Manufacturing Survey</a></b></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>April '09&nbsp;</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General 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>
<span id="articletitle">Michigan Consumer Sentiment
Deteriorates With View Of Gov't Policy</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/100416h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>Expected price inflation during the next year rose further to
3.8% and was up from the December 2008 reading of 1.7%.</p>
</span>
<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"><b>University
of Michigan</b></a></th>
<th scope="col"><b>Mid-April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>&nbsp;February</b></th>
<th scope="col"><b>April y/y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>69.5</td>
<td>73.6</td>
<td>73.6</td>
<td><span>6.8%</span></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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<p></p>
<p><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"></p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> <b>GFK
Consumer Survey</b></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<br>
Range</td>
<td>% of 10Yr<br>
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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<p></p>
<p><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"></p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>The unemployment insurance claims data is available in Haver's
<b>WEEKLY</b> database and the state data is in the <b>REGIONW</b>
database.</p>
<p>The Fed's latest <b>Beige Book </b>covering
regional economic conditions is available <a href="http://www.federalreserve.gov/fomc/beigebook/2010/20100414/default.htm">here</a>.</p>
</span>
<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"><b><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM" style="color: black;">Unemployment Insurance (000s)</a></b></th>
<th scope="col"><b>04/10/10</b></th>
<th scope="col"><b>04/03/10</b></th>
<th scope="col"><b>03/27/10</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">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

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left" height="265"></p>
<p>Forward momentum is building behind consumer spending. March
retail sales rose 1.6%; triple the upwardly revised readings of the
prior two months and stronger than the 1.2% increase that had been
expected. On a three-month basis sales rose at an 11.0% annual rate.
Nonauto sales rose 0.6% but the February increase also was revised up
to 1.0% after an upwardly revised 0.6% January increase. The latest
gain was near expectations. On a three-month basis the gain in nonauto
sales remained strong at 9.3% (AR). These numbers were, of course,
helped by moderation in gasoline prices. Nonauto retail sales less
gasoline, a better measure of "core" spending, grew 0.7% last month and
at a 10.2% annual rate during the last three, the strongest since
January 2006.</p>
<p>"Core" discretionary spending improved. Apparel store sales
rose 2.3% during March and at a 22.1% annual rate during the last three
months. General merchandise store sales also rose a firm 0.6% and at a
11.9% three-month rate. Sales at furniture, home furnishings &amp;
electronics stores lagged these gains last month. They were unchanged
but were up at a 9.8% annual rate over the last three months. That's
improved from the 9.6% decline during all of last year. Furniture sales
alone have been rising at a 14.5% rate while sales of electronics
&amp; appliances have been rising at a 15.4% rate.</p>
<p>Mirroring the improvement in unit sales, motor vehicle sales
improved considerably by 6.6% last month and at a 19.8% rate during the
last three. Finally, growth in sales at gasoline service stations fell
0.4% and rose at just a 2.7% rate during the last three months.</p>
<p>Earlier strength in internet &amp; catalogue sales
continued to ease. Sales ticked up just 0.2% and the three-month rate
of gain backed off to 7.3%, one third the growth earlier this year.</p>
<p>The retail sales data are available in Haver's <b>USECON</b>
database</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100414g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>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"><a ;="" href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Total Retail Sales &amp; Food
Services</a> (%)</td>
<td>1.6</td>
<td>0.5</td>
<td>0.5</td>
<td>7.6</td>
<td>-6.0</td>
<td>-0.8</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol"><b>&nbsp; </b>Excluding
Autos</td>
<td>0.6</td>
<td>1.0</td>
<td>0.6</td>
<td>6.4</td>
<td>-4.8</td>
<td>2.4</td>
<td>3.9</td>
</tr>
<tr class="odd">
<td class="firstcol">
Non-Auto Less Gasoline</td>
<td>0.7</td>
<td>1.1</td>
<td>0.6</td>
<td>4.2</td>
<td>-1.9</td>
<td>1.6</td>
<td>3.6</td>
</tr>
</tbody>
</table>
</body></html>

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

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

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

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

IP Rebound Screams Recovery

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

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

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Michael J. Moran

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The Conference Board’s index of Consumer Confidence inched higher in April from an upwardly revised reading in March. The combined changes left the measure 1.1% higher than the preliminary tally in March. Despite the improvement, the index remained in the low end of the range for the current expansion. The index in April totaled 92.8, down from an average of 96.1 in 2025 and an annual cyclical high of 105.4 in 2023.

The Improvement in April reflected a pickup in the expectations component, which rose 1.7%. The current conditions component inched 0.2% lower. Overall views on current conditions slipped despite more favorable assessments of the labor market. The so-called measure of the jobs gap (share of respondents indicating that jobs are plentiful less the share saying that jobs are hard to get) rose 1.4 percentage points higher to 7.5%. The pickup reflected a drop in the share indicating that jobs are hard to get (down 1.5 percentage points to 19.8%). The share indicating that jobs are plentiful eased 0.1 percentage point to 27.3%.

Although expectations improved in April, from a long-term perspective they could be viewed as the more important factor restraining the headline measure of confidence. As shown in the left chart below, the expectations component of confidence shows considerably less volatility than the current conditions component does. The contrasting patterns suggest that individuals realize that the economy will undergo possibly sharp cyclical swings, but they expect conditions at some point to return to an underlying norm.

The current conditions index in the current cycle has indeed dropped noticeably, but it is still above the long run average (123.8 in April versus the average of approximately 108 from 1990 to 2025). The expectations component, as usual, has eased less than the current conditions component, but its shift has pushed the measure to the low end of its long-run range (72.2 in April versus an average of approximately 88).

Interestingly, concern about the labor market seems to be a factor affecting expectations. While current views on the labor market are favorable (plentiful less hard to get jobs gap of 7.5%), Individual are concerned about the future. The survey asks respondents if they expect more jobs or fewer jobs six months hence. The share indicating fewer jobs has moved well into the upper end of the historical range. Such observations in the past were typically seen only during recession (chart, below right). An unfavorable view on interest rates also seems to be playing a role in depressing the expectations component. More than 60% of respondents to the current survey expect higher interest rates 12 months from now.

The results from the Conference Board survey of consumers differ markedly from those of the University of Michigan Survey Research Center. The Michigan results show consumer sentiment at a record low, while the Conference Board index is only slightly below its long-run average. The difference most likely reflects the nature of the questions in the surveys. The Conference Board focuses on business and employment conditions, while Michigan emphasizes personal finances. The focus on finances, along with questions on inflation, probably picks up concerns about affordability.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

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- Expectations improved slightly in April, but are still subdued relative to norms.
- Moderately favorable view of current conditions.

Consumer Confidence: Modest Change in April

Winnie Tapasanun

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U.S. house prices were essentially unchanged m/m in February after rises of 0.2% in January (+0.1% initially) and 0.3% in December (unrevised), according to the Federal Housing Finance Agency (FHFA) House Price Index. February marked the first flat reading since September following four consecutive m/m increases. The HPI was at 441.43 in February, up 14.8% from its August 2022 low of 384.59. The year-on-year growth rate eased to 1.7% in February—the lowest since March 2012—from 1.8% in January (+4.1% in February 2025), down from a high of 6.9% in February 2024 and well below a peak of 18.5% in February 2022.

By region, February FHFA house prices showed a mixed performance. House prices fell m/m in February (vs. January) in four of the nine census divisions. Declines were led by Mountain (-1.1% vs. +0.4%), followed by Pacific (-0.5% vs. +0.6%), West North Central (-0.4% vs. +0.3%), and Middle Atlantic (-0.1% vs. +0.3%). To the upside, house prices rose m/m in four census divisions in February (vs. January): South Atlantic (+0.6% vs. -0.2%), East South Central (+0.2% vs. +1.2%), New England (+0.2% vs. +0.6%), and West South Central (+0.2% vs. -0.3%). Meanwhile, house prices in East North Central were virtually unchanged m/m for the second successive month in February following seven straight m/m gains.

Year-on-year house prices continued to rise in February in most regions, except Mountain, Pacific, and West South Central. The y/y growth rate accelerated in February (vs. January) in only two of the nine census divisions: East South Central (+4.0% vs. +3.2%) and South Atlantic (+0.9% vs. +0.4%). Meanwhile, house price growth decelerated y/y in February (vs. January) in four regions: New England (+3.1% vs. +3.9%), West North Central (+3.1% vs. +3.6%), East North Central (+3.8% vs. +4.5%), and Middle Atlantic (+4.2% vs. +4.5%). To the downside, Mountain (-0.7% vs. 0.0%), Pacific (-0.4% vs. -0.3%), and West South Central (-0.1% vs. -0.4%) posted y/y declines in February.

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancing the same kind of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The FHFA data are available in Haver’s **USECON** database.

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260428M35.jpg

- February FHFA HPI 0.0% m/m; +1.7% y/y, lowest since Mar. ’12.
- House prices down m/m in four of nine census divisions, led by Mountain (-1.1%); up in four, driven by South Atlantic (+0.6%); flat in East North Central.
- House prices up y/y in six of nine regions, led by Middle Atlantic (+4.2%), but down in Mountain (-0.7%), Pacific (-0.4%), and West South Central (-0.1%).

U.S. FHFA House Prices Flat in February After Four Straight M/M Gains

Tian Yong Woon

In this week’s Letter, we cover the latest developments and implications of the Middle East conflict for Asia, while also making space for other important themes, including artificial intelligence (AI). The Middle East conflict remains in a no deal state coming out of the weekend, though some early Monday optimism emerged in Asian markets following Iran’s reported offer to reopen the Strait of Hormuz (chart 1). Nonetheless, as the Strait closure drags on, so too do the fiscal costs of domestic fossil fuel subsidies across Asia, which have been shown to move closely with crude oil prices (chart 2). While such measures offer direct relief by cushioning household energy costs, they remain difficult to sustain over the long haul.

Over the week, we also saw a further fraying in regional monetary policy trends, with the Philippines hiking its policy rate for the first time in about two years amid inflation concerns, while Indonesia stood pat on rates (chart 3). Investor attention is likely to remain fixed on monetary policy this week, with the Bank of Japan due to decide on policy. Expectations for an April hike have faded amid the persistent Middle East conflict, though yen weakness continues to present a source of concern (chart 4). The week also brings China’s latest PMI readings (chart 5), adding to the recent run of hard data accompanying the Q1 GDP release.

Beyond the Middle East conflict, the evolution of AI continues to demand close attention. Before geopolitical tensions took centre stage, AI was the dominant market narrative — and that enthusiasm has hardly faded. If anything, recent developments suggest the story is broadening: use cases are expanding, scalability is improving, and access is widening beyond large corporates to the mass market — increasingly spilling into the realm of physical AI. It may well be this persistent wave of optimism that is helping to underpin equity valuations, even as the geopolitical backdrop darkens (chart 6).

**The Middle East conflict**
About two months in, we remain stuck in the limbo of the US-Iran conflict, which has left the Strait of Hormuz largely closed and much of the world starved of the critical oil flows needed to power the global economy. The back and forth between the US and Iran has persisted in recent weeks, with both sides again failing to reach a peace deal over the weekend, though Monday’s news of Iran offering to reopen the Strait has revived some hope in markets. In truth, commodity and market valuations do not hinge so much on a peace deal itself, but rather on the resumption of oil flows through the Strait, something that could materialise even in the absence of a formal deal, though any agreement that includes and credibly delivers such a reopening would likely be warmly received by markets. Until then, market gyrations are likely to persist, with prices fluctuating in response to each new snippet of news. And until then, the world will continue both to be starved of, while gradually adapting to, the drip feed of oil flows emerging from the Strait.

260427T1.jpg

**The fiscal costs of the Middle East conflict**
As the Middle East conflict drags on, so too does the strain on fiscal resources across parts of Asia, as the costs of energy-related subsidy programmes continue to mount. While such programmes have an immediate, direct, and tangible impact in shielding households from surging energy costs, they are far from sustainable, particularly if oil prices remain well above targeted levels or stay elevated for an extended period. As chart 2 illustrates, the costs of these explicit subsidy programmes tend to rise closely with crude oil prices, as seen in India and Indonesia. Other measures adopted elsewhere, such as drawing down oil reserves, may be less fiscally costly, but are similarly difficult to sustain indefinitely. In both respects, the clock is ticking, and the world continues to hold its breath as the conflict drags on.

260427T2.jpg

**The latest central bank responses to the conflict**
Over the past week, Asia saw two central bank decisions. The Philippines’ (BSP) opted to deliver its first rate hike in about two years, while Indonesia’s (BI) chose to stand pat on policy rates and instead committed to stepped up FX intervention (chart 3). This latest round of decisions points to a further fraying of what had been a broad regional monetary policy consensus, namely that central banks would delay additional easing while maintaining a high bar for outright tightening. Domestic considerations, however, remain paramount. In the Philippines’ case, the central bank has moved to rein in inflation, which is already showing notable signs of price pass through stemming from disruptions linked to the Strait of Hormuz. That said, BSP is not the first in the region to buck the reluctance to tighten. Singapore’s central bank had already tightened policy in mid-April, albeit through its own distinct framework, given its use of the exchange rate rather than policy rates as the primary channel for monetary policy.

260427T3.jpg

**The week ahead**
Looking to the week ahead, a major central bank decision looms in Japan. Market expectations for the Bank of Japan to deliver a rate hike at its April meeting have ebbed amid the persistence of the Middle East conflict, to which Japan remains particularly vulnerable given its reliance on oil imports flowing through the Strait of Hormuz. At the same time, inflation in Japan has yet to become a major concern, with recent readings having picked up but not yet entering troubling territory. One potential source of concern, however, lies with the Japanese yen, which has remained on a weakening trend since early last year (chart 4). That depreciation has been one of the key arguments underpinning calls for further rate hikes.

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The week also brings China’s latest PMIs into focus. March saw a divergence between China’s official PMI readings, which improved, and the unofficial readings from RatingDog, which instead pulled back. Nonetheless, both official and unofficial gauges remained in expansionary territory (chart 5), with investors now watching closely to see whether that resilience can be sustained amid ongoing stresses from the Middle East, or whether offsetting drivers can continue to keep Chinese business sentiment and prospects buoyant.

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**Beyond the strait**
Moving beyond the Middle East conflict, a whole host of developments continue to unfold globally, many of which have in fact helped offset some of the pessimism wrought by the Strait’s chokehold. One such development is artificial intelligence (AI), which had dominated headlines before the outbreak of the conflict and continues to advance at breakneck pace. AI capabilities are still rapidly evolving, while practical applications, such as physical AI embodied in humanoid robots, are beginning to show broader and stronger use cases. Production of such robots is also becoming increasingly scalable and within reach not just for industrial complexes and healthcare, but for the mass market as well. It is perhaps growing optimism around these prospects that has helped keep equity valuations buoyant, even in the face of the festering conflict in the Middle East. Moreover, while concerns over AI-driven job displacement persist, new opportunities are emerging as well, particularly for AI adopters, with a growing share of job postings in Western economies increasingly referencing AI-related skills, as shown in chart 6.

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Asia

Economic Letter from Asia: Not Just About the Strait

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**The Distributive Trades Survey**

The U.K. Distributive Trades Survey for April 2026 and the look-ahead expectation readings for May paint an extremely soured outlook for the U.K. economy.

**Retail ranking**: Surveys for retail sales compared to a year ago, orders compared to a year ago, and sales evaluated for the time of year all have rankings near zero, which is the worst result on this timeline. This zero distinction applies to retail sales compared to a year ago. The best ranking is 11.6%; that is for sales evaluated for the time of year. Orders compared to a year ago have a 4.2 percentile standing. The stock-to-sales ratio—which is a completely different concept—shows that the inventory-to-sales ratio has a 29.9 percentile standing.

**Retail diffusion**: The raw April diffusion readings (up minus down diffusion) show that sales compared to a year ago slipped to a reading of -68 in April from -52 in March. Orders fell to -46 in April from -26 in March. Sales evaluated for the time of year fell to -32 April from -23 in March. All three measures weakened, and all three weakened decisively, resulting in extremely weak rankings. All of the rankings are executed on data back to 2002.

**Expectations for retailing**: The expectations readings for May show slippage again across all three metrics: expected sales compared to a year ago, expected orders compared to a year ago, and expected sales for the time of year. Expected sales compared to a year ago fell to -60 in May from -49 in April. Orders compared to a year ago declined to -45 in May from -30 in April, and sales for the time of year slipped to -43 from -19. In May, these readings have rankings in a 0.4 percentile standing for sales compared to a year ago, a 1.8 percentile standing for sales evaluated relative to the time of year, and a 4.6 percentile standing for orders compared to a year ago. These two panels on current and expected retail sales volumes are just simply terrible: weak monthly, weak in ranking terms, and showing slipping momentum.

The distributor trade series also provides data on the wholesale sector. While the wholesale sector is not quite as beat up as the retail sector, it's still extremely weak. There is no cause for any kind of hope that things are getting better based on wholesaling trends.

**Wholesaling**: The wholesale survey for sales compared to a year ago edged lower to -32 in April from -31 in March. Orders compared to a year ago remained at a reading of -41 in April. Sales evaluated for the time of year improved to a reading of -20 in April from -39 in March—a significant step up, but still very weak. The percentile standings for these three categories show sales compared to a year ago at the 8.8 percentile, orders compared to a year ago at the 5.6 percentile, and sales evaluated for the time of year at the 14.8 percentile.

**Wholesale Expectations**: The look-ahead observations, which provide expectations for wholesaling in May, show a similar constellation of readings, with sales compared to a year ago falling to -37 in May from -27 in April and orders compared to a year ago falling to -42 from -38, while sales evaluated for the time of year improved to  16 from  37. That category for wholesale sales improved both in April in real time and in May for expectations; however, it continues to have a very weak percentile standing, at the 17.9 percentile in May, while sales for a year ago have a 6.7 percentile standing and orders for a year ago have a 6.0 percentile standing.

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While some of the global PMI data have improved, these survey data for the U.K. are particularly dour. The war in Ukraine drags on, and there's a new conflict in Iran that has shut the Strait of Hormuz, creating energy problems for much of Europe. More broadly, supply chains have been harmed. In addition, the U.K. is undergoing a bout of political instability, as its Prime Minister is under pressure and a good deal of political uncertainty is being worsened by deteriorating economic performance.

Both the U.K. and the European Monetary Union had been showing some progress on inflation until the Iran war hit. Now, as the oil prices are up so sharply, headline inflation is going to be worse everywhere and there will probably be a bit more attention directed to the core inflation rate. However, the U.K. has had inflation too hot for a while, and it has failed to settle down. At its last meeting, the Bank of England’s Monetary Policy Committee warned that if the war was still ongoing at the next meeting, there would be a risk of a rate hike. So, it would seem that a rate hike is going to be in play unless the economy falls off a cliff first, which, based on the distributive trades data, is also something that could happen. The U.K. economy appears to be on very unsound footing, and what happens next is just about anybody's guess.

United Kingdom

U.K. Retail Sales: Worse Than During Covid

260424E.jpg

The onset of the war in Iran appears to have hit the German economy extremely hard as the Ifo survey shows very substantial and broad-based decline across its survey in April. The Ifo survey features readings for five sectors as well as an aggregate reading, and it surveys them for climate, current conditions, and expectations. The decline in the Ifo survey is present for all three concepts and across all five sectors, marking the weakening in April as a highly significant and extremely disturbing development. Only manufacturing in the current conditions survey escapes a month-to-month decline.

**The Ifo sequences**: The **climate** reading fell both overall and across each of the five sectors. **Current conditions** declined for the overall and for four of the five sectors, with manufacturing the sole exception. **Expectations** declined for the overall and for all sectors. Several of the sector declines were for a very substantial magnitude, especially when compared to historic changes in these indexes.

**Monthly changes in readings—severe broad deterioration**
The month-to-month change in the climate reading has weakened more month-to-month 19% of the time. That overall result, however, is boosted by manufacturing where the monthly change has been weaker 35% of the time (on data back to 2011). However, all other sectors have seen climate weaker m/m only 2.3% to 6.3% of the time! The current situation readings weakened, with the headline weakening more m/m 11% of the time. This was boosted by manufacturing, the only sector that improved on the month; its ranking on change was in its 85th percentile—quite good and truly stand-alone good news. The other current changes by sector ranged from construction being weaker 1.7% of the time, to retailing that has been weaker about 30% of the time in terms of m/m changes. Expectation changes were uniformly terrible, with the headline drop weaker only 6.3% of the time and sector change month-to-month weaker between 9% and 1.7% of the time. The monthly weakening was uniform and substantial. I document it with these calculations, but you can also see it on the chart above.

**Climate**: The bottom line is that the all-sector index for climate fell to -20.3 in April from -18 in March, placing it at a 10.5 percentile standing on data since 1993. The sector ranking is the highest for construction with a 42.2 percentile standing and the weakness for services at a 1.1 percentile standing—weaker than the table reading nearly 99% of the time. In terms of percentile standing levels or monthly changes, conditions are closing in on grim.

**Current conditions**: Current conditions saw the all-sector index slip to -5.3 in April from -2.4 in March. The headline ranking stands at a 9.8 percentile mark, making it—like the climate reading—weaker than its current reading only about 10% of the time. The strongest reading under current conditions is for construction which has a 60.6 percentile standing; it is the only ranking in the table above its historic median. Manufacturing, the only sector in the survey that improved month-to-month, has a 22.5 percentile standing, while services record the weakest percentile standing under current conditions, at an 8.4 percentile standing.

**Expectations:** The all-sector index for expectations fell to -25.3 in April from -19.9 in March, placing it at a 6.3 percentile standing. The percentile standings across sectors range from a high of 9.5% for manufacturing to a low of 1.5% for retailing. Up until earlier this year, the Ifo was showing signs of improvement; however, all of that has simply collapsed in the last month. Weakness is across economic concepts and sectors, as documented above. For reference, the table also gives a separate set of rankings on where the various indexes stand since the invasion of Ukraine, since that was another marked event that drove the index, that had been improving after Covid, down to lower levels.  Ranked even on this reduced scale looking at conditions only since the invasion of Ukraine, when conditions have generally been weaker, the current rankings across the Ifo survey remained extremely weak. This is a very disturbing survey for the German economy.