Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091224d.jpg" align="right" border="0" height="265" width="353">
The jobs
market resumed its recent trend toward improvement. The Labor
Department reported that initial claims for unemployment insurance fell
to 452,000 from an unrevised 480,000 during the prior week. Claims now
stand at the lowest level since the first week of September 2008 and
were down from the recession peak of 674,000 hit in March. The
four-week moving average of claims also fell to a new low of 465,250.
The latest weekly figure was lower than Consensus expectations for
470,000 claims.
Continuing claims for unemployment insurance during
the latest week fell 127,000 after an upwardly revised 40,000 gain
during the prior week. Continuing claims were at the lowest level since
February. 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 fell to
5,233,000. This series dates back to 1966.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091224e.jpg" align="right" border="0" height="265" width="353">Extended
benefits for unemployment insurance dropped sharply to 393,956 during
the first week of December. The latest was down from the peak during
last month of 597,688.
The insured rate of unemployment remained
stable at 3.9%, the lowest level since February. The rate reached a
high of 5.2% during late-June. During the last ten years, there has
been a 93% correlation between the level of the insured unemployment
rate and the overall rate of unemployment published by the Bureau of
Labor Statistics.&nbsp;
p&gt;<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091224f.jpg" align="right" border="0" height="265" width="353">
The highest insured unemployment rates in
the week ending December 5 were in&nbsp; Puerto Rico (6.4%), Oregon
(5.9), Pennsylvania (5.6), Wisconsin (5.6), Alaska (5.5), Nevada (5.2),
Michigan (4.9), California (4.9) and South Carolina (4.7). The lowest
insured unemployment rates were in North Dakota (1.7%), Virginia (2.0),
Texas (2.5), Wyoming (3.0), Maine (3.3), Maryland (3.4), Mississippi
(3.4), Florida (3.5), New York (3.7) and Ohio (3.7). The 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.&nbsp;
<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">Unemployment
Insurance (000s)</a></th>
<th scope="col">12/19/09</th>
<th scope="col">12/12/09</th>
<th scope="col">12/05/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>452</td>
<td>480</td>
<td>475</td>
<td>-19.9%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,076</td>
<td>5,203</td>
<td>17.2%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.9</td>
<td>3.9</td>
<td>3.3 (12/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>


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The jobs market resumed its recent trend toward improvement. The Labor Department reported that initial claims for unemployment insurance fell to 452,000 from an unrevised 480,000 during the prior week. Claims now stand at the lowest [...]

U.S. Initial Jobless Insurance Claims Fall Back To New Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091224d.jpg" align="right" border="0" height="265" width="353">The jobs
market resumed its recent trend toward improvement. The Labor
Department reported that initial claims for unemployment insurance fell
to 452,000 from an unrevised 480,000 during the prior week. Claims now
stand at the lowest level since the first week of September 2008 and
were down from the recession peak of 674,000 hit in March. The
four-week moving average of claims also fell to a new low of 465,250.
The latest weekly figure was lower than Consensus expectations for
470,000 claims.

Continuing claims for unemployment insurance during
the latest week fell 127,000 after an upwardly revised 40,000 gain
during the prior week. Continuing claims were at the lowest level since
February. 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 fell to
5,233,000. This series dates back to 1966.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091224e.jpg" align="right" border="0" height="265" width="353">Extended
benefits for unemployment insurance dropped sharply to 393,956 during
the first week of December. The latest was down from the peak during
last month of 597,688.
The insured rate of unemployment remained
stable at 3.9%, the lowest level since February. The rate reached a
high of 5.2% during late-June. During the last ten years, there has
been a 93% correlation between the level of the insured unemployment
rate and the overall rate of unemployment published by the Bureau of
Labor Statistics.&nbsp;
p&gt;<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091224f.jpg" align="right" border="0" height="265" width="353">
The highest insured unemployment rates in
the week ending December 5 were in&nbsp; Puerto Rico (6.4%), Oregon
(5.9), Pennsylvania (5.6), Wisconsin (5.6), Alaska (5.5), Nevada (5.2),
Michigan (4.9), California (4.9) and South Carolina (4.7). The lowest
insured unemployment rates were in North Dakota (1.7%), Virginia (2.0),
Texas (2.5), Wyoming (3.0), Maine (3.3), Maryland (3.4), Mississippi
(3.4), Florida (3.5), New York (3.7) and Ohio (3.7). The 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.&nbsp;
<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">Unemployment
Insurance (000s)</a></th>
<th scope="col">12/19/09</th>
<th scope="col">12/12/09</th>
<th scope="col">12/05/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>452</td>
<td>480</td>
<td>475</td>
<td>-19.9%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,076</td>
<td>5,203</td>
<td>17.2%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.9</td>
<td>3.9</td>
<td>3.3 (12/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>

Rate of U.S. GDP Decline Slows in
Q2 2009 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 24, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091224a.jpg" align="right" border="0" height="265" width="353">Despite
only
a modest rise in November durable goods orders, the trend has improved
sharply. Durable goods orders rose 0.2% last month after an unrevised
0.6% October decline. The latest increase lifted orders 5.4% above the
March low and the y/y decline of 7.8% compares with a peak 26.6%
decline last winter. A 0.5% November gain had been the Consensus
expectation.
A 5.5% (-10.9% y/y) decline in transportation equipment
orders in fact masked the degree of improvement in overall orders.
Transportation orders were pulled down by a 32.6% (-3.7% y/y) decline
in civilian aircraft. Excluding transportation altogether, orders rose
2.0% during November and have risen 7.3% from their April low.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091224b.jpg" align="right" border="0" height="265" width="353">
Primary
metals orders also continued their recovery with a 1.4% November
increase (-7.3% y/y) and they have risen one-quarter from the March
low. Electrical equipment orders rose about as they did during October.
The 3.2% gain lifted orders 10.0% from the spring low. Orders for
computers &amp; related equipment also improved for the second
month by 1.6% during November. The increase lifted them 14.9% above
April's low. Finally, machinery orders increased 3.5% (-14.0% y/y),
made up half of the October decline and raised them 9.8% from the low.

The decline in aircraft bookings also masked improvement in other
capital goods orders. Nondefense capital goods orders less aircraft
more than recovered the October slump with a 2.9% increase and they now
are 9.8% above the April low.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091224c.jpg" align="right" border="0" height="265" width="353">
Shipments of durable goods ticked up
0.3% (-8.8% y/y) during November following increases in two of the
prior three months. Shipments now have risen 4.4% from the April low.
The improvement has been paced by strong monthly gains in shipments of
metals (-16.6% y/y), up 24.2% from the low. Machinery orders rose 2.0%
(-20.3% y/y) after touching the cycle low in October. Electrical
equipment orders rose 2.2% (-9.1% y/y), about as they did in October.
As was
suggested by the October data, the shedding of inventories of
durable manufactured goods seems to be ending after nearly a year of
correction. Durable goods inventories slipped 0.2% (-11.3% y/y) after
no change during October. Declines in inventories lowered the ratio to
shipments to its lowest since October of last year.. Unfilled orders
fell another 0.7% (-10.9% y/y) led by declines in the transportation
sector. Less transportation backlogs rose 0.1% (-11.4% y/y) for the
second gain in three months.
The durable goods figures are available
in Haver's USECON database.
<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/@ED/@ED01/@ED0101/@ED0101.HTM" style="color: rgb(0, 0, 0);">NAICS Classification
</a>(%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>0.2</td>
<td>-0.6</td>
<td>2.2</td>
<td>-7.8</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>2.0</td>
<td>-0.7</td>
<td>2.1</td>
<td>-6.9</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-1.9</td>
<td>0.8</td>
<td>3.4</td>
<td>-11.1</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>2.9</td>
<td>-2.0</td>
<td>2.9</td>
<td>-10.2</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>

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U.S. Initial Jobless InsuranceClaims Fall Back To New Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223e.jpg" align="left" border="0" height="265" width="353">
Confidence rose again in December for Italian consumers making
the string of rises two months long. Still, the overall situation
deteriorated by one point to a -57 reading in December leaving the
current situation in the 68th percentile of its range. 

The outlook for the overall situation also backtracked
dropping by 5 points month to month. Unemployment expectations rose and
now reside on the top 5% of their range. 

The outlook for current savings backtracked but the outlook
for future savings rose sharply in the month. 

The current environment for major purchase was sharply better
with its index rising to -38 from -43 and moving up to the 59th
percentile of its range. 

Clearly the Italian consumer still feels pressured. The rise
in confidence is a good development despite backtracking in some key
components. 
 

Italy still has a long way to go to cement any notion of
stability. 


Italy ISAE Consumer Confidence
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since Jan 1992&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Rank</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Dec-09</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>percentile</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Confidence</td>
<td>113.7</td>
<td>112.8</td>
<td>111.7</td>
<td>113.6</td>
<td>60.1</td>
<td>76</td>
<td>64.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Last 12 months</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; OVERALL SITUATION</td>
<td>-57</td>
<td>-56</td>
<td>-58</td>
<td>-58</td>
<td>72.0</td>
<td>68</td>
<td>68.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; PRICE TRENDS</td>
<td>-41</td>
<td>-39</td>
<td>-40.5</td>
<td>-42</td>
<td>13.6</td>
<td>207</td>
<td>2.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Next 12months</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; OVERALL SITUATION</td>
<td>-1</td>
<td>4</td>
<td>-2</td>
<td>5</td>
<td>60.3</td>
<td>109</td>
<td>48.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; PRICE TRENDS</td>
<td>8.5</td>
<td>8</td>
<td>7</td>
<td>9.5</td>
<td>17.3</td>
<td>96</td>
<td>54.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; UNEMPLOYMENT</td>
<td>16</td>
<td>15</td>
<td>19</td>
<td>17</td>
<td>67.6</td>
<td>10</td>
<td>95.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; HOUSEHOLD BUDGET</td>
<td>1</td>
<td>3</td>
<td>5</td>
<td>6</td>
<td>17.8</td>
<td>199</td>
<td>6.6%</td>
</tr>
<tr class="grey3">
<td colspan="4">HOUSEHOLD FIN SITUATION</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Last 12 months</td>
<td>-37</td>
<td>-36</td>
<td>-35</td>
<td>-33</td>
<td>38.8</td>
<td>129</td>
<td>39.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Next12 months</td>
<td>-3</td>
<td>-2</td>
<td>-4</td>
<td>-1</td>
<td>65.3</td>
<td>102</td>
<td>52.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">HOUSEHOLD SAVINGS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Current</td>
<td>73</td>
<td>77</td>
<td>79</td>
<td>80</td>
<td>88.3</td>
<td>6</td>
<td>97.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Future</td>
<td>-20</td>
<td>-29</td>
<td>-30</td>
<td>-16</td>
<td>62.2</td>
<td>124</td>
<td>41.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">MAJOR Purchases</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Current</td>
<td>-38</td>
<td>-43</td>
<td>-38</td>
<td>-40</td>
<td>47.3</td>
<td>87</td>
<td>59.2%</td>
</tr>
<tr class="grey1">
<td colspan="8">Total number of
months:&nbsp;&nbsp; 213</td>
</tr>
</tbody>
</table>
</body></html>

Confidence rose again in December for Italian consumers making the string of rises two months long. Still, the overall situation deteriorated by one point to a -57 reading in December leaving the current situation in the 68th [...]

Italy's Consumer Confidence Lifts Spirits For Christmas Oh Come Ye Faithful...

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223e.jpg" align="right" border="0" height="265" width="353">Though the
December Reuters/University of Michigan Index of Consumer Sentiment
slipped from mid-month, is 7.6% increase to 72.5 recovered most of the
declines during the prior two months. The latest figure fell short of
Consensus expectations for a level of 73.8. Nevertheless, sentiment was
up sharply from its low last Fall. During the last ten years there has
been a two-thirds correlation between the level of sentiment and the
three-month change real consumer spending.
Sentiment about
current economic conditions jumped 13.4% from November to the highest
level since March of last year. Assessments of&nbsp; current
financial conditions improved to the highest since September of last
year. Buying conditions for large household goods, including furniture,
refrigerators, stoves &amp; televisions, also moved up by 12.3% to
the highest level since January 2008.&nbsp;&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223f.jpg" align="right" border="0" height="265" width="353">The
full-month December reading on expected economic conditions recovered
its November decline with a 3.6% increase to the highest level since
September. The outlook for business conditions during the next twelve
months improved sharply and recovered most of November's decline but
the expected business conditions during the next five years fell and
expected personal finances advanced just modestly. All three of these
readings recently have been flat after sharp improvement early this
year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223g.jpg" align="right" border="0" height="265" width="353">Expected
price inflation during the next year was roughly steady
m/m at 3.0% but it was up from last December's reading of
1.7%.&nbsp;Respondents' view of government policy, which may
eventually influence economic expectations, fell sharply m/m to the
lowest level since February. Sixteen percent of respondent thought that
a good job was being done by government versus 39% who thought a poor
job was being done.
The Reuters/University of
Michigan survey data are not seasonally adjusted. The reading is based
on telephone interviews with about 500 households at
month-end.&nbsp; These mid-month results are based on about 320
interviews. The summary indexes are in Haver's USECON database
with details in the proprietary UMSCA database.
Inflation Expectations and the Risk of Deflation from
the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-34.html">
here.</a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">December</th>
<th scope="col">Mid-December</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">Dec 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>72.5</td>
<td>73.4</td>
<td>67.4</td>
<td>70.6</td>
<td>20.6%</td>
<td>66.3</td>
<td>63.8</td>
<td>85.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>78.0</td>
<td>79.1</td>
<td>68.8</td>
<td>73.7</td>
<td>12.2</td>
<td>69.6</td>
<td>73.7</td>
<td>101.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>68.9</td>
<td>69.7</td>
<td>66.5</td>
<td>68.6</td>
<td>27.6</td>
<td>64.1</td>
<td>57.3</td>
<td>75.6</td>
</tr>
</tbody>
</table>


</body></html>

Though the December Reuters/University of Michigan Index of Consumer Sentiment slipped from mid-month, is 7.6% increase to 72.5 recovered most of the declines during the prior two months. The latest figure fell short of Consensus [...]

Michigan Consumer Sentiment Increases Smartly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223a.jpg" align="right" border="0" height="265" width="353">Tax breaks
continued to spur growth in disposable personal income.
Last month's 0.5% gain followed an upwardly revised 0.5% October
increase. A decline in tax payments (-25.7% y/y), which began early in
2008, helped spur y/y disposable income growth to 3.1%. Adjusted for a
0.2% (1.5% y/y) rise in the chain price index, real disposable income
rose 0.2% (1.5% y/y) for the third consecutive month. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223b.jpg" align="right" border="0" height="265" width="353">Personal
spending rose 0.5% after a 0.6% October increase which was
double the initial estimate. The rise fell short of the 0.7% increase
which was the Consensus expectation. Durables spending jumped 1.1%
(2.5% y/y) as spending on motor vehicles gained another 2.2% (7.9% y/y)
following a 9.5% October surge. Spending on other durables, however,
remained lackluster. Furniture &amp; appliance purchases fell
slightly for the second month and were off 2.9% y/y. Spending on
nondurables increased 1.5% (4.6% y/y) as outlays on gasoline jumped
7.2% (18.6% y/y) with higher prices. In constant dollars gasoline
outlays rose just 0.9% and were down slightly y/y. Spending on clothing
slipped 0.3% (-1.1% y/y) though that y/y change is improved from 6.8%
decline at the worst of the recent recession. Outlays on services were
unchanged (1.5% y/y). Spending on health care rose 0.4% (4.8% y/y) but
housing &amp; utilities spending fell 0.4% (+0.2% y/y).
As a
result of tax cuts and moderate spending, the savings rate held steady
at the upwardly revised 4.7% October level. The rate has risen sharply
from near 1.0% at the beginning of last year.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223c.jpg" align="right" border="0" height="265" width="353">Overall personal
income gained 0.4% during November after an upwardly revised
0.3% October increase. The latest figure fell short of Consensus
expectations for a 0.5% rise. Wages &amp; salaries rose 0.3% due to
the pickup in average hourly earnings reported with the jobs numbers.
Nevertheless, year-to-year growth in wages continued negative (-2.8%
y/y), only slightly improved from the worst y/y growth of this cycle.
Wages in the factory sector rose 0.2% (-10.4% y/y) after a 0.4% October
decline. In the service sector wages rose a firmer 0.4% (-1.7% y/y).
Though wages in the government sector only ticked up 0.1% last month,
the 2.9% y/y gain easily outpaced the 4.1% decline in private sector
earnings.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223d.jpg" align="right" border="0" height="265" width="353">Growth in
unemployment insurance payments slowed
further as joblessness fell. In fact, moderate declines during the last
two months compare with the y/y doubling earlier this year. Interest
income rose 0.2% (-4.6% y/y) as the decline in rates found a bottom
while another 0.9% m/m&nbsp; increase in dividend income
nevertheless left it down 18.0% y/y with the weaker economy.
The PCE chain price index increased a
moderate 0.2%
during November led by a 6.2% (18,5% y/y) increase in gasoline costs.
Less food-and-energy, "core" prices were unchanged. Prices for durable
goods were off 0.1% (-1.1% y/y) as home furnishing prices fell 0.5%
(-2.1% y/y) and apparel prices also fell 0.5% (+0.8% y/y). Prices for
services gained a steady 1.2% y/y.
The personal income &amp;
consumption figures are available in Haver's USECON
and USNA databases.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM" style="color: Black;">Disposition of Personal Income</a>
(%)&nbsp;</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.4</td>
<td>0.3</td>
<td>0.3</td>
<td>-0.3</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp;Disposable Personal Income</td>
<td>0.5</td>
<td>0.5</td>
<td>0.3</td>
<td>3.1</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>0.5</td>
<td>0.6</td>
<td>-0.6</td>
<td>2.3</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>4.7</td>
<td>4.7</td>
<td>4.8</td>
<td>3.8 (Nov.'08)</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.2</td>
<td>0.3</td>
<td>0.1</td>
<td>1.5</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Less food &amp; energy</td>
<td>0.0</td>
<td>0.2</td>
<td>0.1</td>
<td>1.4</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>


</body></html>

Tax breaks continued to spur growth in disposable personal income. Last month's 0.5% gain followed an upwardly revised 0.5% October increase. A decline in tax payments (-25.7% y/y), which began early in 2008, helped spur y/y [...]

U.S. Disposable Personal Income & Spending Continue Firm

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223a.jpg" align="right" border="0" height="265" width="353">Tax breaks
continued to spur growth in disposable personal income.
Last month's 0.5% gain followed an upwardly revised 0.5% October
increase. A decline in tax payments (-25.7% y/y), which began early in
2008, helped spur y/y disposable income growth to 3.1%. Adjusted for a
0.2% (1.5% y/y) rise in the chain price index, real disposable income
rose 0.2% (1.5% y/y) for the third consecutive month. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223b.jpg" align="right" border="0" height="265" width="353">Personal
spending rose 0.5% after a 0.6% October increase which was
double the initial estimate. The rise fell short of the 0.7% increase
which was the Consensus expectation. Durables spending jumped 1.1%
(2.5% y/y) as spending on motor vehicles gained another 2.2% (7.9% y/y)
following a 9.5% October surge. Spending on other durables, however,
remained lackluster. Furniture &amp; appliance purchases fell
slightly for the second month and were off 2.9% y/y. Spending on
nondurables increased 1.5% (4.6% y/y) as outlays on gasoline jumped
7.2% (18.6% y/y) with higher prices. In constant dollars gasoline
outlays rose just 0.9% and were down slightly y/y. Spending on clothing
slipped 0.3% (-1.1% y/y) though that y/y change is improved from 6.8%
decline at the worst of the recent recession. Outlays on services were
unchanged (1.5% y/y). Spending on health care rose 0.4% (4.8% y/y) but
housing &amp; utilities spending fell 0.4% (+0.2% y/y).
As a
result of tax cuts and moderate spending, the savings rate held steady
at the upwardly revised 4.7% October level. The rate has risen sharply
from near 1.0% at the beginning of last year.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223c.jpg" align="right" border="0" height="265" width="353">Overall personal
income gained 0.4% during November after an upwardly revised
0.3% October increase. The latest figure fell short of Consensus
expectations for a 0.5% rise. Wages &amp; salaries rose 0.3% due to
the pickup in average hourly earnings reported with the jobs numbers.
Nevertheless, year-to-year growth in wages continued negative (-2.8%
y/y), only slightly improved from the worst y/y growth of this cycle.
Wages in the factory sector rose 0.2% (-10.4% y/y) after a 0.4% October
decline. In the service sector wages rose a firmer 0.4% (-1.7% y/y).
Though wages in the government sector only ticked up 0.1% last month,
the 2.9% y/y gain easily outpaced the 4.1% decline in private sector
earnings.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223d.jpg" align="right" border="0" height="265" width="353">Growth in
unemployment insurance payments slowed
further as joblessness fell. In fact, moderate declines during the last
two months compare with the y/y doubling earlier this year. Interest
income rose 0.2% (-4.6% y/y) as the decline in rates found a bottom
while another 0.9% m/m&nbsp; increase in dividend income
nevertheless left it down 18.0% y/y with the weaker economy.
The PCE chain price index increased a
moderate 0.2%
during November led by a 6.2% (18,5% y/y) increase in gasoline costs.
Less food-and-energy, "core" prices were unchanged. Prices for durable
goods were off 0.1% (-1.1% y/y) as home furnishing prices fell 0.5%
(-2.1% y/y) and apparel prices also fell 0.5% (+0.8% y/y). Prices for
services gained a steady 1.2% y/y.
The personal income &amp;
consumption figures are available in Haver's USECON
and USNA databases.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM" style="color: Black;">Disposition of Personal Income</a>
(%)&nbsp;</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.4</td>
<td>0.3</td>
<td>0.3</td>
<td>-0.3</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp;Disposable Personal Income</td>
<td>0.5</td>
<td>0.5</td>
<td>0.3</td>
<td>3.1</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>0.5</td>
<td>0.6</td>
<td>-0.6</td>
<td>2.3</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>4.7</td>
<td>4.7</td>
<td>4.8</td>
<td>3.8 (Nov.'08)</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.2</td>
<td>0.3</td>
<td>0.1</td>
<td>1.5</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Less food &amp; energy</td>
<td>0.0</td>
<td>0.2</td>
<td>0.1</td>
<td>1.4</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>

 Michigan Consumer Sentiment
Increases Smartly 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 23, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223e.jpg" align="right" border="0" height="265" width="353">Though the
December Reuters/University of Michigan Index of Consumer Sentiment
slipped from mid-month, is 7.6% increase to 72.5 recovered most of the
declines during the prior two months. The latest figure fell short of
Consensus expectations for a level of 73.8. Nevertheless, sentiment was
up sharply from its low last Fall. During the last ten years there has
been a two-thirds correlation between the level of sentiment and the
three-month change real consumer spending.
Sentiment about
current economic conditions jumped 13.4% from November to the highest
level since March of last year. Assessments of&nbsp; current
financial conditions improved to the highest since September of last
year. Buying conditions for large household goods, including furniture,
refrigerators, stoves &amp; televisions, also moved up by 12.3% to
the highest level since January 2008.&nbsp;&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223f.jpg" align="right" border="0" height="265" width="353">The
full-month December reading on expected economic conditions recovered
its November decline with a 3.6% increase to the highest level since
September. The outlook for business conditions during the next twelve
months improved sharply and recovered most of November's decline but
the expected business conditions during the next five years fell and
expected personal finances advanced just modestly. All three of these
readings recently have been flat after sharp improvement early this
year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223g.jpg" align="right" border="0" height="265" width="353">Expected
price inflation during the next year was roughly steady
m/m at 3.0% but it was up from last December's reading of
1.7%.&nbsp;Respondents' view of government policy, which may
eventually influence economic expectations, fell sharply m/m to the
lowest level since February. Sixteen percent of respondent thought that
a good job was being done by government versus 39% who thought a poor
job was being done.
The Reuters/University of
Michigan survey data are not seasonally adjusted. The reading is based
on telephone interviews with about 500 households at
month-end.&nbsp; These mid-month results are based on about 320
interviews. The summary indexes are in Haver's USECON database
with details in the proprietary UMSCA database.
Inflation Expectations and the Risk of Deflation from
the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-34.html">
here.</a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">December</th>
<th scope="col">Mid-December</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">Dec 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>72.5</td>
<td>73.4</td>
<td>67.4</td>
<td>70.6</td>
<td>20.6%</td>
<td>66.3</td>
<td>63.8</td>
<td>85.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>78.0</td>
<td>79.1</td>
<td>68.8</td>
<td>73.7</td>
<td>12.2</td>
<td>69.6</td>
<td>73.7</td>
<td>101.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>68.9</td>
<td>69.7</td>
<td>66.5</td>
<td>68.6</td>
<td>27.6</td>
<td>64.1</td>
<td>57.3</td>
<td>75.6</td>
</tr>
</tbody>
</table>

 
U.S. New Home Sales Fall
Sharply 
by <a href="/comment/Moeller.html">Tom
Moeller</a> Deecember 23, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223h.jpg" align="right" border="0" height="265" width="353">Conflicting
signals have been flashed regarding homes sales last month. In contrast
to yesterday's report that existing home sales rose, today the Commerce
Department reported that new home sales fell by 11.3% m/m to 355,000,
the lowest level since April. Nevertheless, near term home sales should
be helped by the recent extension of the Federal government's tax
credit which now it is for all home buyers and not just first-time
purchases. The November sales figure fell well short of Consensus
expectations for 439,000 sales.&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223i.jpg" align="right" border="0" height="265" width="353">Home
prices firmed
during November though the October figure was revised down. The median
price of a new single-family home rose to $217,400 which was the
highest level since May. The increase pared the y/y decline to 1.9%
from its worst of -14.5% this past February. The average new home price
of $280,300 was off 3.4% y/y.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223j.jpg" align="right" border="0" height="265" width="353">Price
discounts, higher sales
and much lower housing starts have combined to lower the overhang of
unsold homes by more than one-third y/y to the overhang lowest level
since the early-1970s. The months' supply of unsold homes rose
moderately to 7.9 months but remained down from the high of 12.4 months
in January. The figure was the lowest since May 2007.
Recent
Developments in Mortgage Finance from the Federal Reserve
Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-33.html">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">US
New Homes</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales
(SAAR, 000s)</td>
<td>355</td>
<td>400</td>
<td>393</td>
<td>-9.0%</td>
<td>481</td>
<td>769</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>29</td>
<td>30</td>
<td>36</td>
<td>&nbsp;-23.7</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>68</td>
<td>56</td>
<td>68</td>
<td>23.6</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>179</td>
<td>227</td>
<td>196</td>
<td>-14.8</td>
<td>264</td>
<td>409</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>79</td>
<td>87</td>
<td>93</td>
<td>-9.2</td>
<td>113</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price
(NSA, $)</td>
<td>217,400</td>
<td>209,400</td>
<td>213,500</td>
<td>&nbsp;-1.9</td>
<td>230,408</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>

 Italy's Consumer Confidence Lifts Spirits For Christmas Oh Come Ye Faithful... 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 23, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091223e.jpg" align="left" border="0" height="265" width="353">
Confidence rose again in December for Italian consumers making
the string of rises two months long. Still, the overall situation
deteriorated by one point to a -57 reading in December leaving the
current situation in the 68th percentile of its range. 

The outlook for the overall situation also backtracked
dropping by 5 points month to month. Unemployment expectations rose and
now reside on the top 5% of their range. 

The outlook for current savings backtracked but the outlook
for future savings rose sharply in the month. 
 

The current environment for major purchase was sharply better
with its index rising to -38 from -43 and moving up to the 59th
percentile of its range. 

Clearly the Italian consumer still feels pressured. The rise
in confidence is a good development despite backtracking in some key
components. 

Italy still has a long way to go to cement any notion of
stability. 


Italy ISAE Consumer Confidence
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since Jan 1992&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Rank</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Dec-09</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>percentile</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Confidence</td>
<td>113.7</td>
<td>112.8</td>
<td>111.7</td>
<td>113.6</td>
<td>60.1</td>
<td>76</td>
<td>64.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Last 12 months</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; OVERALL SITUATION</td>
<td>-57</td>
<td>-56</td>
<td>-58</td>
<td>-58</td>
<td>72.0</td>
<td>68</td>
<td>68.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; PRICE TRENDS</td>
<td>-41</td>
<td>-39</td>
<td>-40.5</td>
<td>-42</td>
<td>13.6</td>
<td>207</td>
<td>2.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Next 12months</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; OVERALL SITUATION</td>
<td>-1</td>
<td>4</td>
<td>-2</td>
<td>5</td>
<td>60.3</td>
<td>109</td>
<td>48.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; PRICE TRENDS</td>
<td>8.5</td>
<td>8</td>
<td>7</td>
<td>9.5</td>
<td>17.3</td>
<td>96</td>
<td>54.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; UNEMPLOYMENT</td>
<td>16</td>
<td>15</td>
<td>19</td>
<td>17</td>
<td>67.6</td>
<td>10</td>
<td>95.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; HOUSEHOLD BUDGET</td>
<td>1</td>
<td>3</td>
<td>5</td>
<td>6</td>
<td>17.8</td>
<td>199</td>
<td>6.6%</td>
</tr>
<tr class="grey3">
<td colspan="4">HOUSEHOLD FIN SITUATION</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Last 12 months</td>
<td>-37</td>
<td>-36</td>
<td>-35</td>
<td>-33</td>
<td>38.8</td>
<td>129</td>
<td>39.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Next12 months</td>
<td>-3</td>
<td>-2</td>
<td>-4</td>
<td>-1</td>
<td>65.3</td>
<td>102</td>
<td>52.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">HOUSEHOLD SAVINGS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Current</td>
<td>73</td>
<td>77</td>
<td>79</td>
<td>80</td>
<td>88.3</td>
<td>6</td>
<td>97.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Future</td>
<td>-20</td>
<td>-29</td>
<td>-30</td>
<td>-16</td>
<td>62.2</td>
<td>124</td>
<td>41.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">MAJOR Purchases</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Current</td>
<td>-38</td>
<td>-43</td>
<td>-38</td>
<td>-40</td>
<td>47.3</td>
<td>87</td>
<td>59.2%</td>
</tr>
<tr class="grey1">
<td colspan="8">Total number of
months:&nbsp;&nbsp; 213</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Disposable Personal Income& Spending Continue Firm

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222k.jpg" align="left" border="0" height="265" width="353">
According to the latest GfK* survey, the German Consumer
Climate is cooling, not that it was recently especially warm. Based on
consumers' appraisals of the outlooks for the economy and their
personal situation and their willingness to spend in the current month,
GfK forecasts the Consumer Climate in the month ahead. Currently, they
are forecasting a decline in the Consumer Climate Indicator to 3.3% in
January. This is the third decline in the indicator from the 4.2%
reached in October, 2009. Since it began in January, 2002, the
indicator has been within a fairly narrow range, from a high of 9.1%
recorded in November and December of 2006 to a low of -3.5%, recorded
in March, 2003.
The balance of opinion of German Consumers on Economic
Expectations improved from -1.7% in November to 0.9% in December, but
was still well below the 8.7% of October. The balance of opinion on
Income Expectations more than doubled from 6.2% in November to 15.0% in
December. However, the balance of opinion on the Consumption and Buying
Propensity declined significantly from 26.3% in November to 21.1% in
December and is now well below the recent peak of 36.5% in September.
It appears that the decline in the balance of opinion on the
Consumption and Buying Propensity is the major cause of the decline in
the Consumer Climate.
The component parts of the Climate Indicator have shown much
greater variation than the over all indicator. In contrast to the
narrow range of the Consumer Climate indicator, cited above, the
balance of opinion on Economic Expectations has ranged from a high of
69.5% in May, 2007 to a low of -32/9 in January, 2009. The balance of
opinion for Income Expectations has ranged from 33.6% in May 2007 to
-24.5% in November, 2002 and for Consumption and Buying Propensity,
from a high of 64.4% in October 2006. to a low of -55.4% in November
2002. All four indicators are shown in the attached chart.*GfK
Gesellschaft fur Konsumforschung (Company for Consumer Research)

<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">GFK
Consumer Climate Survey&nbsp;</th>
<th scope="col">Jan 10</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct&nbsp; 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul 09&nbsp;</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Climate (% balance)</td>
<td>3.3</td>
<td>3.6</td>
<td>3.9</td>
<td>4.2</td>
<td>3.8</td>
<td>3.4</td>
<td>3.0</td>
<td>2.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Economic Expectations</td>
<td>--</td>
<td>1.7</td>
<td>0.9</td>
<td>8.7</td>
<td>3.4</td>
<td>-7.5</td>
<td>-14.0</td>
<td>-26.6</td>
<td>-28.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Income Expectations</td>
<td>--</td>
<td>15.0</td>
<td>6.2</td>
<td>12.9</td>
<td>16.0</td>
<td>8.8</td>
<td>1.8</td>
<td>-3.3</td>
<td>-9.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumption and
Buying Propensity</td>
<td>--</td>
<td>21.2</td>
<td>26.3</td>
<td>26.1</td>
<td>36.5</td>
<td>31.1</td>
<td>25.1</td>
<td>14.5</td>
<td>12.5</td>
</tr>
</tbody>
</table>
</body></html>

According to the latest GfK* survey, the German Consumer Climate is cooling, not that it was recently especially warm. Based on consumers' appraisals of the outlooks for the economy and their personal situation and their willingness [...]

German Consumer Climate Cooling Slightly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222g.jpg" align="right" border="0" height="265" width="353">
Improvement in housing prices continued this fall according
the U.S. House Price Index from the Federal Housing and Finance Agency
(FHFA). The Purchase Only Index for October rose 0.6% and reversed its
September. Nevertheless, the year-to-year decline in the nationwide
average of home prices eased to -1.9% from its worst reading of -8.8%
last November. Since their peak in early-2007 home prices nationwide
have fallen 10.7%. The FHFA uses data provided by Fannie Mae and
Freddie Mac and is not value-weighted.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222h.jpg" align="right" border="0" height="265" width="353">
The HPI is calculated using a repeat sales index. That means
that the HPI measures changes in the price of the same property over
time but does not measure changes in property types over time. So if,
for example, the price of a larger, new home was not growing very
rapidly, but the number of people transitioning from smaller homes to
larger homes greatly increased, median house prices would go up (people
buying more expensive houses) much more than the HPI. In this way, the
HPI is a better measure of how any particular home is appreciating
while the median house price is a better measure of what the typical
home buyer is paying.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222i.jpg" align="right" border="0" height="265" width="353">
Notable monthly gains in home prices during October were
logged in the Pacific, Middle Atlantic and the East South Central
regions of the country and the y/y declines have moderated
significantly. In the populous East North Central region prices slipped
another 0.6% during October and they were flat year-to-date. Prices
also fell sharply in the South Atlantic region to the lowest level
since 2004.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222j.jpg" align="right" border="0" height="265" width="353">


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">FHFA
U.S. House Price Index Purchase Only (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.6</td>
<td>-0.4</td>
<td>-1.9</td>
<td>-5.8</td>
<td>1.3</td>
<td>6.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New England</td>
<td>0.0</td>
<td>0.3</td>
<td>-1.8</td>
<td>-4.6</td>
<td>-1.7</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Middle
Atlantic</td>
<td>1.8</td>
<td>-1.5</td>
<td>-1.6</td>
<td>-2.3</td>
<td>1.9</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; East North
Central</td>
<td>-0.6</td>
<td>-0.7</td>
<td>-1.9</td>
<td>-4.4</td>
<td>-1.3</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West North
Central</td>
<td>0.2</td>
<td>0.0</td>
<td>-0.7</td>
<td>-2.8</td>
<td>1.0</td>
<td>3.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South
Atlantic</td>
<td>-1.1</td>
<td>0.2</td>
<td>-4.1</td>
<td>-7.2</td>
<td>1.3</td>
<td>7.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; East South
Central</td>
<td>1.6</td>
<td>-1.5</td>
<td>-0.4</td>
<td>-1.4</td>
<td>3.8</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West South
Central</td>
<td>0.5</td>
<td>-0.3</td>
<td>0.0</td>
<td>0.6</td>
<td>4.7</td>
<td>7.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mountain</td>
<td>0.8</td>
<td>-1.4</td>
<td>-7.5</td>
<td>-6.1</td>
<td>3.9</td>
<td>10.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Pacific</td>
<td>3.7</td>
<td>-0.9</td>
<td>-0.3</td>
<td>-17.3</td>
<td>0.1</td>
<td>9.8</td>
</tr>
</tbody>
</table>
</body></html>

Improvement in housing prices continued this fall according the U.S. House Price Index from the Federal Housing and Finance Agency (FHFA). The Purchase Only Index for October rose 0.6% and reversed its September. Nevertheless, the [...]

FHFA Home Price Index Improves Slightly M/M But Greatly Y/Y

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

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Andrew Cates

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

260205Z1.jpg

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

260205Z2.jpg

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

260205Z3.jpg

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

260205Z4.jpg

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

260205Z5.jpg

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

260205Z6.jpg

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

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

Robert Brusca

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.

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**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

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**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.

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- 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

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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.

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- 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

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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.