Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222a.jpg" align="right" border="0" height="265" width="353">The second
revision to 3Q U.S. real GDP lowered growth again, this time to 2.2%
(AR) from last month's report of 2.9% growth. The revised figure
compares to the advance report of 3.5% growth and was contrary to
expectations for an improvement to 2.8%. Still, growth last quarter was
the first positive figure since 4Q 2007. Estimates of economic growth
this quarter recently have been rising to roughly 4.0%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222b.jpg" align="right" border="0" height="265" width="353">The
largest surprise in the revision was that domestic final demand growth
was again revised down, to 2.3% from 2.7%. On the fixed-investment
side, business fixed investment fell at an increased 5.9% (-19.6% y/y)
rate. The quarterly rise in residential spending was reduced to 18.9%
(-18.9% y/y) and government investment grew at a reduced 2.7% rate
(2.0% y/y). Real PCE growth was little changed at 2.8% (-0.2% y/y).

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222c.jpg" align="right" border="0" height="265" width="353">Another
surprise in the figures was
that the 3Q contribution to GDP growth from inventories was revised
lower to 0.7 percentage points. Nevertheless, the 3Q addition followed
subtractions of 1.4 and 2.4 percentage points during the prior two
quarters, and was just the second positive contribution to GDP growth
in two years.
Accompanying the GDP figure was a
little-revised estimate that 3Q corporate profits rose 10.8% versus 2Q.
That was the third consecutive quarterly increase and diminished the
y/y change to -6.6% from -25.1% at its worst in 4Q' 08. Lower market
interest rates lifted earnings in the financial sector by more than
one-third (20.5% y/y) and they tripled from year-end '08. Earnings from
the rest of the world increased 7.3% (-18.6% y/y) while the end of the
recession raised domestic nonfinancial profits by an upwardly revised
4.2% (-10.6% y/y) for the second quarterly increase.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222d.jpg" align="right" border="0" height="265" width="353">Deterioration
in the foreign trade deficit subtracted an unrevised 0.8 percentage
points from 3Q GDP growth following an advance estimate of a&nbsp;
0.5% subtraction. Imports grew 21.3% (-14.0% y/y) and the gain in
exports also was little-revised at 17.8% (-10.7% y/y).
The gain in the GDP price deflator was lowered slightly
to 0.4%. The PCE price index was ticked lower to 2.6% (-0.7% y/y) and
the rise in the overall domestic final sales price index was brought
down to 1.4% (-1.0% y/y).
 The U.S. National Income &amp; Product
Account data are available in Haver's USECON and
the USNA databases.&nbsp;
<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"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">3Q '09 Final</th>
<th scope="col">3Q '09 Preliminary</th>
<th scope="col">3Q '09 Advance</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">2Q 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">GDP</td>
<td>2.2</td>
<td>2.4</td>
<td>3.5</td>
<td>-0.7</td>
<td>-6.4</td>
<td>-2.6</td>
<td>0.4</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Inventory
Effect</td>
<td>0.7</td>
<td>0.9</td>
<td>0.9</td>
<td>-1.4</td>
<td>-2.4</td>
<td>-0.9</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>1.5</td>
<td>1.9</td>
<td>2.6</td>
<td>0.7</td>
<td>-4.1</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Foreign
Trade Effect</td>
<td>-0.8</td>
<td>-0.8</td>
<td>-0.5</td>
<td>1.7</td>
<td>2.6</td>
<td>0.8</td>
<td>-1.2</td>
<td>0.8</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>2.3</td>
<td>2.7</td>
<td>3.0</td>
<td>-0.9</td>
<td>-6.4</td>
<td>-2.5</td>
<td>-0.4</td>
<td>1.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.4</td>
<td>0.5</td>
<td>0.8</td>
<td>-0.0</td>
<td>1.9</td>
<td>0.6</td>
<td>2.1</td>
<td>2.9</td>
<td>3.3</td>
</tr>
</tbody>
</table>

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The second revision to 3Q U.S. real GDP lowered growth again, this time to 2.2% (AR) from last month's report of 2.9% growth. The revised figure compares to the advance report of 3.5% growth and was contrary to expectations for an [...]

U.S. GDP Revised Downward: Domestic Demand & Inventories Are Shaved

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222a.jpg" align="right" border="0" height="265" width="353">The second
revision to 3Q U.S. real GDP lowered growth again, this time to 2.2%
(AR) from last month's report of 2.9% growth. The revised figure
compares to the advance report of 3.5% growth and was contrary to
expectations for an improvement to 2.8%. Still, growth last quarter was
the first positive figure since 4Q 2007. Estimates of economic growth
this quarter recently have been rising to roughly 4.0%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222b.jpg" align="right" border="0" height="265" width="353">The
largest surprise in the revision was that domestic final demand growth
was again revised down, to 2.3% from 2.7%. On the fixed-investment
side, business fixed investment fell at an increased 5.9% (-19.6% y/y)
rate. The quarterly rise in residential spending was reduced to 18.9%
(-18.9% y/y) and government investment grew at a reduced 2.7% rate
(2.0% y/y). Real PCE growth was little changed at 2.8% (-0.2% y/y).

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222c.jpg" align="right" border="0" height="265" width="353">Another
surprise in the figures was
that the 3Q contribution to GDP growth from inventories was revised
lower to 0.7 percentage points. Nevertheless, the 3Q addition followed
subtractions of 1.4 and 2.4 percentage points during the prior two
quarters, and was just the second positive contribution to GDP growth
in two years.
Accompanying the GDP figure was a
little-revised estimate that 3Q corporate profits rose 10.8% versus 2Q.
That was the third consecutive quarterly increase and diminished the
y/y change to -6.6% from -25.1% at its worst in 4Q' 08. Lower market
interest rates lifted earnings in the financial sector by more than
one-third (20.5% y/y) and they tripled from year-end '08. Earnings from
the rest of the world increased 7.3% (-18.6% y/y) while the end of the
recession raised domestic nonfinancial profits by an upwardly revised
4.2% (-10.6% y/y) for the second quarterly increase.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222d.jpg" align="right" border="0" height="265" width="353">Deterioration
in the foreign trade deficit subtracted an unrevised 0.8 percentage
points from 3Q GDP growth following an advance estimate of a&nbsp;
0.5% subtraction. Imports grew 21.3% (-14.0% y/y) and the gain in
exports also was little-revised at 17.8% (-10.7% y/y).
The gain in the GDP price deflator was lowered slightly
to 0.4%. The PCE price index was ticked lower to 2.6% (-0.7% y/y) and
the rise in the overall domestic final sales price index was brought
down to 1.4% (-1.0% y/y).
 The U.S. National Income &amp; Product
Account data are available in Haver's USECON and
the USNA databases.&nbsp;
<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"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">3Q '09 Final</th>
<th scope="col">3Q '09 Preliminary</th>
<th scope="col">3Q '09 Advance</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">2Q 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">GDP</td>
<td>2.2</td>
<td>2.4</td>
<td>3.5</td>
<td>-0.7</td>
<td>-6.4</td>
<td>-2.6</td>
<td>0.4</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Inventory
Effect</td>
<td>0.7</td>
<td>0.9</td>
<td>0.9</td>
<td>-1.4</td>
<td>-2.4</td>
<td>-0.9</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>1.5</td>
<td>1.9</td>
<td>2.6</td>
<td>0.7</td>
<td>-4.1</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Foreign
Trade Effect</td>
<td>-0.8</td>
<td>-0.8</td>
<td>-0.5</td>
<td>1.7</td>
<td>2.6</td>
<td>0.8</td>
<td>-1.2</td>
<td>0.8</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>2.3</td>
<td>2.7</td>
<td>3.0</td>
<td>-0.9</td>
<td>-6.4</td>
<td>-2.5</td>
<td>-0.4</td>
<td>1.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.4</td>
<td>0.5</td>
<td>0.8</td>
<td>-0.0</td>
<td>1.9</td>
<td>0.6</td>
<td>2.1</td>
<td>2.9</td>
<td>3.3</td>
</tr>
</tbody>
</table>

 U.S. Existing Home Sales Improve
Further To Highest Since 2007 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 22, 2009
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222e.jpg" align="right" border="0" height="265" width="353">The
front-end of the economy is improving markedly. The National
Association of Realtors reported that November sales of
existing homes again rose sharply to the highest level since
February 2007. The 7.4% m/m increase to 6.540M units (SAAR) followed a
little-revised 9.9% rise during October. The latest was the fourth
strong gain in five months and it raised sales 45.7% from the January
low. The gain in November home sales greatly exceeded Consensus
expectations for a rise to 6.25M. 
 Total sales include sales of condos
and co-ops. Sales of existing single-family homes alone increased a
sharp 8.5% to 5.770M (42.1% y/y) last month and were up 42.5% from the
January low. (These data have a longer history than the total sales
series). Sales of condos and co-ops were unchanged m/m and were up by
60.1% from last November.
 Sales have been helped by a
recently extended tax credit for first-time home buyers. The credit of
up to $8,000 now runs though early next year. The full details of the
home-buyer tax credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091222f.jpg" align="right" border="0" height="265" width="353">The median
price of all existing homes rose
slightly to $172,600 after
four consecutive months of decline. Nevertheless, the y/y
decline&nbsp; moderated to 4.3% from its worst of -17.5% as of
January and prices have risen 4.7% from the low. The median price for a
single-family home alone was little-changed at $171,900 (-4.4% y/y).
Price weakness has sharply raised home affordability; by 7.2% since
July and by roughly two-thirds from the 2006 low.
 The number of unsold
homes (single-family &amp; co-ops) for sale fell 1.3% (-15.5% y/y)
during November and to the lowest level since December 2006. At the
current sales rate there was a 6.5 months' supply of homes on the
market which was the lowest since December 2006. The latest figure was
down from a high of 11.3 months during April of last year. For
single-family homes, the inventory fell to a 6.2 month's supply, also
the lowest since December 2006.
The data on existing home
sales, prices and affordability can be found in Haver's USECON
database. The regional price, affordability and inventory data is
available in the REALTOR 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">Existing
Home Sales (Thous, SAAR)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. 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>6,540</td>
<td>6,090</td>
<td>5,540</td>
<td>44.1%</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>1,130</td>
<td>1,060</td>
<td>950</td>
<td>52.7</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,550</td>
<td>1,430</td>
<td>1,250</td>
<td>53.5</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>2,390</td>
<td>2,280</td>
<td>2,040</td>
<td>44.8</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,460</td>
<td>1,320</td>
<td>1,290</td>
<td>28.1</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>5,770</td>
<td>5,320</td>
<td>4,860</td>
<td>42.1</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $
(NSA)</td>
<td>172,600</td>
<td>172,200</td>
<td>176,000</td>
<td>-4.3</td>
<td>197,233</td>
<td>216,633</td>
<td>222,042</td>
</tr>
</tbody>
</table>
FHFA Home Price Index Improves
Slightly M/M But Greatly Y/Y 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 22, 2009


<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>
 German Consumer Climate Cooling
Slightly 
by <a href="/comment/Curley.html">LouiseCurley</a>
December 22, 2009


<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>

U.S. GDP Revised Downward:Domestic Demand & Inventories Are Shaved

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221g.jpg" align="right" border="0" height="265" width="353">
Japanese balance of trade continues to improve in spite of the
high and rising yen. In November the seasonally adjusted trade balance
was 492.4 billion yen, up from the low point reached in January, 2009
when the balance was a negative 478 billion yen and it is now at the
highest level since April 2008 when the balance was 660 billion yen.
Exports reached a peak of 7,591.4 billion yen in January, 2009
and declined to 3,983.0 in February, 2009. Since then, they have risen
to 4,998.0 billion yen. Imports reached a peak in August, 2008 at 7,
209.l and declined to 4.030.6 billion yen in June, 2009. Imports have
since recovered to 4,506.1 billion yen. The trends of exports, imports
and trade balance are shown in the first chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221h.jpg" align="right" border="0" height="265" width="353">
Data on trade by area are not seasonally adjusted. As a
result, trends in these data are best shown by the year over year
changes. The year to year changes for Japan's trade with Asia, Western
Europe and the United States are shown in the second chart. The year to
year change in the trade balance with Asia is the most striking. It has
been positive and increasing since September of the year. The year to
year change in the trade balance with Western Europe is still negative,
but the magnitude of the difference, -44.5 billion yen, is greatly
lower than the -246.4 billion yen recorded in August. 2009. The year to
year change in the trade balance with the United States has also
improved and, for the first time in over two years, was positive.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
JAPAN TRADE IN GOODS</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
<th scope="col">Nov&nbsp; 08</th>
<th scope="col">M/M CHG</th>
<th scope="col">Y/Y CHG </th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007 </th>
<th scope="col"> 2006 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Balance (SA bil
yen)</td>
<td>492.4</td>
<td>460.8</td>
<td>368.6</td>
<td>31.6</td>
<td>861.0</td>
<td>2244.5</td>
<td>10854.4</td>
<td>7762.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Exports</td>
<td>4998.9</td>
<td>4765.3</td>
<td>5293.6</td>
<td>233.2</td>
<td>-295.1</td>
<td>80916.2</td>
<td>83856.4</td>
<td>75144.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports</td>
<td>4506.1</td>
<td>4304.6</td>
<td>5662.2</td>
<td>201.6</td>
<td>-1156.1</td>
<td>78671.7</td>
<td>73002.0</td>
<td>67382.0</td>
</tr>
<tr>
<td class="firstcol">Year to Year Change
(bil yen)</td>
<td>Nov 09</td>
<td>Oct 09</td>
<td>Sep 09</td>
<td>Aug 09</td>
<td>Jul 09 </td>
<td>Jun 09&nbsp;</td>
<td>May 09 </td>
<td> Apr 09 </td>
</tr>
<tr class="odd">
<td class="firstcol">Trade Balance with Asia</td>
<td>460.8</td>
<td>372.1</td>
<td>53.1</td>
<td>-303.0</td>
<td>-224.9</td>
<td>-221.1</td>
<td>-298.2</td>
<td>-388.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Trade Balance with Western
Europe</td>
<td>-44.5</td>
<td>-119.6</td>
<td>-194.8</td>
<td>-246.4</td>
<td>-237.3</td>
<td>-182.8</td>
<td>-227.4</td>
<td>-241.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Trade Balance with U.S.A</td>
<td>59.7</td>
<td>-132.4</td>
<td>-155.2</td>
<td>-86.5</td>
<td>-232.8</td>
<td>-129.2</td>
<td>-234.7</td>
<td>-398.8</td>
</tr>
</tbody>
</table>
</body></html>

Japanese balance of trade continues to improve in spite of the high and rising yen. In November the seasonally adjusted trade balance was 492.4 billion yen, up from the low point reached in January, 2009 when the balance was a [...]

Japanese Trade Balance Improves

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221e.jpg" align="right" border="0" height="265" width="353">The
U.S. economy seems to be regaining forward momentum. That is the
indication from the Chicago Fed National Activity Index (CFNAI) from
the Federal Reserve Bank of Chicago. The index improved during November
to a reading of -0.32. That gained back the declines during the prior
three months and pulled the index level to its highest since November
2007, up from the series' low of -4.13 reached this past January. Since
1970 there has been a 74% correlation between the level of the index
and the q/q change in real GDP but during the last ten years that
correlation has risen to 80%.


 The three-month moving average
which smoothes out some of the volatility of the index also improved to
near its highest level since February of 2008.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221f.jpg" align="right" border="0" height="265" width="353">An index
level at or below -0.70 typically has indicated negative U.S. economic
growth. A zero value of the CFNAI indicates that the economy is
expanding at its historical trend rate of growth of roughly 3%. The
complete CFNAI report is available <a href="http://www.chicagofed.org/digital_assets/publications/cfnai/2009/cfnai_december2009.pdf">here</a>.·
The Chicago Fed indicated that 36 of the series' individual indicators
made positive contributions to the November index while 49 made
negative contributions. The CFNAI is a weighted average of 85
indicators of economic activity. The indicators reflect activity in the
following categories: production &amp; income, the labor market,
personal consumption &amp; housing, manufacturing &amp; trade
sales, and inventories &amp; orders. 
In a separate survey, the
Chicago Fed indicated that its Midwest manufacturing index improved
modestly during October to its highest level since the June low.
Indicators for the auto, steel, machinery and resource sectors each
improved. The Chicago Federal Reserve figures are available in Haver's SURVEYS
database.&nbsp;&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/SURVEYS/@S5/@S503/@S503.HTM" style="color: black;">Chicago Fed</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">November '08</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">CFNAI</td>
<td>-0.32</td>
<td>-1.02</td>
<td>-0.95</td>
<td>-2.99</td>
<td>-1.77</td>
<td>-0.35</td>
<td>0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-0.77</td>
<td>-0.87</td>
<td>-0.61</td>
<td>-2.63</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Personal Consumption &amp; Housing&nbsp;</td>
<td>-0.48</td>
<td>-0.48</td>
<td>-0.64</td>
<td>-0.43</td>
<td>-0.33</td>
<td>-0.10</td>
<td>0.06</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Employment Unemployment &amp; Hours</td>
<td>-0.12</td>
<td>-0.42</td>
<td>-0.53</td>
<td>-1.06</td>
<td>-0.62</td>
<td>-0.15</td>
<td>0.01</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Production &amp; Income</td>
<td>0.35</td>
<td>-0.09</td>
<td>0.19</td>
<td>-0.95</td>
<td>-0.55</td>
<td>-0.05</td>
<td>-0.01</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Sales, Inventories &amp; Orders</td>
<td>-0.07</td>
<td>-0.02</td>
<td>0.03</td>
<td>-0.53</td>
<td>-0.24</td>
<td>-0.06</td>
<td>-0.01</td>
</tr>
</tbody>
</table>

</body></html>

The U.S. economy seems to be regaining forward momentum. That is the indication from the Chicago Fed National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago. The index improved during November to a reading of -0.32. [...]

Chicago Fed Index Recovered Recent Declines To Best In Two Years

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221a.jpg" align="right" border="0" height="265" width="353">
Recent signs of stability in home sales and construction hold
promise that deflation in home prices is abating. Of course, that
depends on whether the only reason for pricing improvement is due to
the increased affordability of housing created by past price declines.
Positive growth in jobs and income would support a more lasting bottom
in pricing power ... then growth in housing sector activity. States'
home price data in the table below is arranged by highest-to-lowest y/y
change during all of last year. The difference between the state with
the best performance (Texas) and the worst performance (Nevada) is a
huge twenty percentage points. Versus 2007, the rate of price change
slowed throughout the country, but nowhere was it more pronounced than
in California; to a 17.2% rate of decline from negative 4.7%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221b.jpg" align="right" border="0" height="265" width="353">
Through the third quarter of this year, home price declines
occurred in all but a few states. For the country as a whole home
prices fell another 4.1% y/y during 3Q after the 2.7% decline during
2008. So far this year, however, the rate of price decline has
stabilized. The good news was that the rate of price deflation both in
Florida and California slowed versus 2008. In fact, the rate of home
price decline halved in California. Alabama, North Carolina and Indiana
are three states where earlier stability in home prices gave way to
deflation. Past stability was, however, tenuous as price appreciation
already had slowed appreciably. In Texas, Nebraska and Louisiana home
price gains all but disappeared.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221c.jpg" align="right" border="0" height="265" width="353">
Where home prices go from here clearly is a hard call. And as
individual states' recent performance indicates, much of the story may
be local. Is there a heavy concentration of certain industries in the
state such as finance or defense, or were a state's home prices
inordinately influenced by speculative forces. Home Prices: A
Case for Cautious Optimism from the Federal Reserve Bank of
St. Louis is available <a href="http://research.stlouisfed.org/publications/es/09/ES0942.pdf">here</a>.
The latest report from the Federal Housing Finance Agency can
be found <a href="http://www.fhfa.gov/webfiles/15235/3q09HPI.pdf">here</a>.
The states' home price figures can be found in Haver's REGIONAL
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Median
Price of Single-family Homes&nbsp; (y/y % Chg.)</th>
<th scope="col">3Q '09</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp; Texas</td>
<td>0.5</td>
<td>3.2</td>
<td>5.7</td>
<td>5.9</td>
<td>4.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Alabama&nbsp;</td>
<td>-1.1</td>
<td>2.5</td>
<td>5.1</td>
<td>8.1</td>
<td>7.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; North Carolina</td>
<td>-2.1</td>
<td>2.2</td>
<td>6.0</td>
<td>7.7</td>
<td>6.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Tennessee</td>
<td>-1.1</td>
<td>1.7</td>
<td>5.2</td>
<td>7.4</td>
<td>6.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Louisiana</td>
<td>0.4</td>
<td>1.6</td>
<td>5.5</td>
<td>11.2</td>
<td>7.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Colorado</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.0</td>
<td>3.2</td>
<td>5.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Indiana</td>
<td>-1.3</td>
<td>0.7</td>
<td>1.9</td>
<td>1.9</td>
<td>3.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Arkansas</td>
<td>-0.8</td>
<td>0.6</td>
<td>3.7</td>
<td>6.5</td>
<td>7.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nebraska</td>
<td>0.7</td>
<td>0.4</td>
<td>1.7</td>
<td>2.3</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Missouri</td>
<td>-1.8</td>
<td>-0.1</td>
<td>2.5</td>
<td>4.3</td>
<td>6.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Wisconsin</td>
<td>-1.9</td>
<td>-0.3</td>
<td>1.8</td>
<td>3.8</td>
<td>7.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Maine</td>
<td>-3.2</td>
<td>-0.4</td>
<td>2.0</td>
<td>4.8</td>
<td>11.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Washington</td>
<td>-8.3</td>
<td>-1.3</td>
<td>7.5</td>
<td>15.7</td>
<td>15.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; New York</td>
<td>-4.0</td>
<td>-1.8</td>
<td>1.4</td>
<td>7.3</td>
<td>13.1</td>
</tr>
<tr>
<td class="firstcol">U.S. Total</td>
<td>-4.1</td>
<td>-2.7</td>
<td>1.9</td>
<td>7.3</td>
<td>11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Connecticut</td>
<td>-4.8</td>
<td>-3.0</td>
<td>0.9</td>
<td>5.9</td>
<td>12.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Virginia</td>
<td>-4.2</td>
<td>-3.2</td>
<td>2.3</td>
<td>10.8</td>
<td>19.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Hawaii</td>
<td>-8.2</td>
<td>-3.8</td>
<td>2.5</td>
<td>14.4</td>
<td>24.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Massachusetts</td>
<td>-3.4</td>
<td>-3.9</td>
<td>-2.7</td>
<td>1.0</td>
<td>9.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; New Jersey</td>
<td>-6.0</td>
<td>-4.1</td>
<td>0.6</td>
<td>9.1</td>
<td>15.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; District of Columbia</td>
<td>-3.9</td>
<td>-4.8</td>
<td>3.1</td>
<td>12.1</td>
<td>23.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Michigan</td>
<td>-5.9</td>
<td>-5.3</td>
<td>-3.1</td>
<td>-1.0</td>
<td>3.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Maryland</td>
<td>-7.4</td>
<td>-5.8</td>
<td>2.3</td>
<td>13.2</td>
<td>21.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Rhode Island</td>
<td>-6.8</td>
<td>-6.6</td>
<td>-2.0</td>
<td>4.5</td>
<td>13.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Arizona</td>
<td>-13.6</td>
<td>-11.9</td>
<td>-0.2</td>
<td>19.0</td>
<td>29.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Florida</td>
<td>-12.4</td>
<td>-14.6</td>
<td>-1.5</td>
<td>16.5</td>
<td>25.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; California</td>
<td>-8.4</td>
<td>-17.2</td>
<td>-4.7</td>
<td>10.2</td>
<td>22.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nevada</td>
<td>-16.7</td>
<td>-17.8</td>
<td>-3.5</td>
<td>9.0</td>
<td>23.5</td>
</tr>
</tbody>
</table>
</body></html>

Recent signs of stability in home sales and construction hold promise that deflation in home prices is abating. Of course, that depends on whether the only reason for pricing improvement is due to the increased affordability of [...]

United States' Home Price Performance All Over The Map

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221a.jpg" align="right" border="0" height="265" width="353">
Recent signs of stability in home sales and construction hold
promise that deflation in home prices is abating. Of course, that
depends on whether the only reason for pricing improvement is due to
the increased affordability of housing created by past price declines.
Positive growth in jobs and income would support a more lasting bottom
in pricing power ... then growth in housing sector activity. States'
home price data in the table below is arranged by highest-to-lowest y/y
change during all of last year. The difference between the state with
the best performance (Texas) and the worst performance (Nevada) is a
huge twenty percentage points. Versus 2007, the rate of price change
slowed throughout the country, but nowhere was it more pronounced than
in California; to a 17.2% rate of decline from negative 4.7%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221b.jpg" align="right" border="0" height="265" width="353">
Through the third quarter of this year, home price declines
occurred in all but a few states. For the country as a whole home
prices fell another 4.1% y/y during 3Q after the 2.7% decline during
2008. So far this year, however, the rate of price decline has
stabilized. The good news was that the rate of price deflation both in
Florida and California slowed versus 2008. In fact, the rate of home
price decline halved in California. Alabama, North Carolina and Indiana
are three states where earlier stability in home prices gave way to
deflation. Past stability was, however, tenuous as price appreciation
already had slowed appreciably. In Texas, Nebraska and Louisiana home
price gains all but disappeared.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221c.jpg" align="right" border="0" height="265" width="353">
Where home prices go from here clearly is a hard call. And as
individual states' recent performance indicates, much of the story may
be local. Is there a heavy concentration of certain industries in the
state such as finance or defense, or were a state's home prices
inordinately influenced by speculative forces. Home Prices: A
Case for Cautious Optimism from the Federal Reserve Bank of
St. Louis is available <a href="http://research.stlouisfed.org/publications/es/09/ES0942.pdf">here</a>.
The latest report from the Federal Housing Finance Agency can
be found <a href="http://www.fhfa.gov/webfiles/15235/3q09HPI.pdf">here</a>.
The states' home price figures can be found in Haver's REGIONAL
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Median
Price of Single-family Homes&nbsp; (y/y % Chg.)</th>
<th scope="col">3Q '09</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp; Texas</td>
<td>0.5</td>
<td>3.2</td>
<td>5.7</td>
<td>5.9</td>
<td>4.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Alabama&nbsp;</td>
<td>-1.1</td>
<td>2.5</td>
<td>5.1</td>
<td>8.1</td>
<td>7.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; North Carolina</td>
<td>-2.1</td>
<td>2.2</td>
<td>6.0</td>
<td>7.7</td>
<td>6.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Tennessee</td>
<td>-1.1</td>
<td>1.7</td>
<td>5.2</td>
<td>7.4</td>
<td>6.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Louisiana</td>
<td>0.4</td>
<td>1.6</td>
<td>5.5</td>
<td>11.2</td>
<td>7.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Colorado</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.0</td>
<td>3.2</td>
<td>5.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Indiana</td>
<td>-1.3</td>
<td>0.7</td>
<td>1.9</td>
<td>1.9</td>
<td>3.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Arkansas</td>
<td>-0.8</td>
<td>0.6</td>
<td>3.7</td>
<td>6.5</td>
<td>7.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nebraska</td>
<td>0.7</td>
<td>0.4</td>
<td>1.7</td>
<td>2.3</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Missouri</td>
<td>-1.8</td>
<td>-0.1</td>
<td>2.5</td>
<td>4.3</td>
<td>6.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Wisconsin</td>
<td>-1.9</td>
<td>-0.3</td>
<td>1.8</td>
<td>3.8</td>
<td>7.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Maine</td>
<td>-3.2</td>
<td>-0.4</td>
<td>2.0</td>
<td>4.8</td>
<td>11.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Washington</td>
<td>-8.3</td>
<td>-1.3</td>
<td>7.5</td>
<td>15.7</td>
<td>15.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; New York</td>
<td>-4.0</td>
<td>-1.8</td>
<td>1.4</td>
<td>7.3</td>
<td>13.1</td>
</tr>
<tr>
<td class="firstcol">U.S. Total</td>
<td>-4.1</td>
<td>-2.7</td>
<td>1.9</td>
<td>7.3</td>
<td>11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Connecticut</td>
<td>-4.8</td>
<td>-3.0</td>
<td>0.9</td>
<td>5.9</td>
<td>12.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Virginia</td>
<td>-4.2</td>
<td>-3.2</td>
<td>2.3</td>
<td>10.8</td>
<td>19.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Hawaii</td>
<td>-8.2</td>
<td>-3.8</td>
<td>2.5</td>
<td>14.4</td>
<td>24.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Massachusetts</td>
<td>-3.4</td>
<td>-3.9</td>
<td>-2.7</td>
<td>1.0</td>
<td>9.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; New Jersey</td>
<td>-6.0</td>
<td>-4.1</td>
<td>0.6</td>
<td>9.1</td>
<td>15.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; District of Columbia</td>
<td>-3.9</td>
<td>-4.8</td>
<td>3.1</td>
<td>12.1</td>
<td>23.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Michigan</td>
<td>-5.9</td>
<td>-5.3</td>
<td>-3.1</td>
<td>-1.0</td>
<td>3.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Maryland</td>
<td>-7.4</td>
<td>-5.8</td>
<td>2.3</td>
<td>13.2</td>
<td>21.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Rhode Island</td>
<td>-6.8</td>
<td>-6.6</td>
<td>-2.0</td>
<td>4.5</td>
<td>13.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Arizona</td>
<td>-13.6</td>
<td>-11.9</td>
<td>-0.2</td>
<td>19.0</td>
<td>29.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Florida</td>
<td>-12.4</td>
<td>-14.6</td>
<td>-1.5</td>
<td>16.5</td>
<td>25.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; California</td>
<td>-8.4</td>
<td>-17.2</td>
<td>-4.7</td>
<td>10.2</td>
<td>22.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nevada</td>
<td>-16.7</td>
<td>-17.8</td>
<td>-3.5</td>
<td>9.0</td>
<td>23.5</td>
</tr>
</tbody>
</table>
 Chicago Fed Index Recovered
Recent Declines To Best In Two Years 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 21, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221e.jpg" align="right" border="0" height="265" width="353">The
U.S. economy seems to be regaining forward momentum. That is the
indication from the Chicago Fed National Activity Index (CFNAI) from
the Federal Reserve Bank of Chicago. The index improved during November
to a reading of -0.32. That gained back the declines during the prior
three months and pulled the index level to its highest since November
2007, up from the series' low of -4.13 reached this past January. Since
1970 there has been a 74% correlation between the level of the index
and the q/q change in real GDP but during the last ten years that
correlation has risen to 80%.


 The three-month moving average
which smoothes out some of the volatility of the index also improved to
near its highest level since February of 2008.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221f.jpg" align="right" border="0" height="265" width="353">An index
level at or below -0.70 typically has indicated negative U.S. economic
growth. A zero value of the CFNAI indicates that the economy is
expanding at its historical trend rate of growth of roughly 3%. The
complete CFNAI report is available <a href="http://www.chicagofed.org/digital_assets/publications/cfnai/2009/cfnai_december2009.pdf">here</a>.·
The Chicago Fed indicated that 36 of the series' individual indicators
made positive contributions to the November index while 49 made
negative contributions. The CFNAI is a weighted average of 85
indicators of economic activity. The indicators reflect activity in the
following categories: production &amp; income, the labor market,
personal consumption &amp; housing, manufacturing &amp; trade
sales, and inventories &amp; orders. 
In a separate survey, the
Chicago Fed indicated that its Midwest manufacturing index improved
modestly during October to its highest level since the June low.
Indicators for the auto, steel, machinery and resource sectors each
improved. The Chicago Federal Reserve figures are available in Haver's SURVEYS
database.&nbsp;&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/SURVEYS/@S5/@S503/@S503.HTM" style="color: black;">Chicago Fed</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">November '08</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">CFNAI</td>
<td>-0.32</td>
<td>-1.02</td>
<td>-0.95</td>
<td>-2.99</td>
<td>-1.77</td>
<td>-0.35</td>
<td>0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-0.77</td>
<td>-0.87</td>
<td>-0.61</td>
<td>-2.63</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Personal Consumption &amp; Housing&nbsp;</td>
<td>-0.48</td>
<td>-0.48</td>
<td>-0.64</td>
<td>-0.43</td>
<td>-0.33</td>
<td>-0.10</td>
<td>0.06</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Employment Unemployment &amp; Hours</td>
<td>-0.12</td>
<td>-0.42</td>
<td>-0.53</td>
<td>-1.06</td>
<td>-0.62</td>
<td>-0.15</td>
<td>0.01</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Production &amp; Income</td>
<td>0.35</td>
<td>-0.09</td>
<td>0.19</td>
<td>-0.95</td>
<td>-0.55</td>
<td>-0.05</td>
<td>-0.01</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Sales, Inventories &amp; Orders</td>
<td>-0.07</td>
<td>-0.02</td>
<td>0.03</td>
<td>-0.53</td>
<td>-0.24</td>
<td>-0.06</td>
<td>-0.01</td>
</tr>
</tbody>
</table>

Japanese Trade Balance Improves 
by <a href="/comment/Curley.html">Louise
Curley</a> December 21, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221g.jpg" align="right" border="0" height="265" width="353">Japanese
balance of trade continues to improve in spite of the
high and rising yen. In November the seasonally adjusted trade balance
was 492.4 billion yen, up from the low point reached in January, 2009
when the balance was a negative 478 billion yen and it is now at the
highest level since April 2008 when the balance was 660 billion yen.
Exports reached a peak of 7,591.4 billion yen in January, 2009
and declined to 3,983.0 in February, 2009. Since then, they have risen
to 4,998.0 billion yen. Imports reached a peak in August, 2008 at 7,
209.l and declined to 4.030.6 billion yen in June, 2009. Imports have
since recovered to 4,506.1 billion yen. The trends of exports, imports
and trade balance are shown in the first chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091221h.jpg" align="right" border="0" height="265" width="353">
Data on trade by area are not seasonally adjusted. As a
result, trends in these data are best shown by the year over year
changes. The year to year changes for Japan's trade with Asia, Western
Europe and the United States are shown in the second chart. The year to
year change in the trade balance with Asia is the most striking. It has
been positive and increasing since September of the year. The year to
year change in the trade balance with Western Europe is still negative,
but the magnitude of the difference, -44.5 billion yen, is greatly
lower than the -246.4 billion yen recorded in August. 2009. The year to
year change in the trade balance with the United States has also
improved and, for the first time in over two years, was positive.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
JAPAN TRADE IN GOODS</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
<th scope="col">Nov&nbsp; 08</th>
<th scope="col">M/M CHG</th>
<th scope="col">Y/Y CHG </th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007 </th>
<th scope="col"> 2006 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Balance (SA bil
yen)</td>
<td>492.4</td>
<td>460.8</td>
<td>368.6</td>
<td>31.6</td>
<td>861.0</td>
<td>2244.5</td>
<td>10854.4</td>
<td>7762.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Exports</td>
<td>4998.9</td>
<td>4765.3</td>
<td>5293.6</td>
<td>233.2</td>
<td>-295.1</td>
<td>80916.2</td>
<td>83856.4</td>
<td>75144.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports</td>
<td>4506.1</td>
<td>4304.6</td>
<td>5662.2</td>
<td>201.6</td>
<td>-1156.1</td>
<td>78671.7</td>
<td>73002.0</td>
<td>67382.0</td>
</tr>
<tr>
<td class="firstcol">Year to Year Change
(bil yen)</td>
<td>Nov 09</td>
<td>Oct 09</td>
<td>Sep 09</td>
<td>Aug 09</td>
<td>Jul 09 </td>
<td>Jun 09&nbsp;</td>
<td>May 09 </td>
<td> Apr 09 </td>
</tr>
<tr class="odd">
<td class="firstcol">Trade Balance with Asia</td>
<td>460.8</td>
<td>372.1</td>
<td>53.1</td>
<td>-303.0</td>
<td>-224.9</td>
<td>-221.1</td>
<td>-298.2</td>
<td>-388.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Trade Balance with Western
Europe</td>
<td>-44.5</td>
<td>-119.6</td>
<td>-194.8</td>
<td>-246.4</td>
<td>-237.3</td>
<td>-182.8</td>
<td>-227.4</td>
<td>-241.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Trade Balance with U.S.A</td>
<td>59.7</td>
<td>-132.4</td>
<td>-155.2</td>
<td>-86.5</td>
<td>-232.8</td>
<td>-129.2</td>
<td>-234.7</td>
<td>-398.8</td>
</tr>
</tbody>
</table>
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United States' Home PricePerformance All Over The Map

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091218a.jpg" align="left" border="0" height="265" width="353">
Consumer Confidence in the UK according to GFK has dropped
again in December marking a two-month backtrack in the index. The
current household financial situation is in the bottom 9 percentile of
its range but the major purchase index is in the 71st percentile of its
two year range and 44th percentile of its broader range. 
 

Over the past 12 months the percentile ratings were all below
the 50th percentile and the broad ranges are lower, at or near in the
bottom 25th percentile of their respective ranges. 
 

The outlook components deteriorated across the board in
December except that savings improved and the CPI gauge rose. However,
upper income category survey respondents registered an improved reading
in December as the lower income respondents index fell by a sharp five
points. 
 

Although the GFK index has risen strongly from its very low
recession depths, the new drop is significant and encompasses two
months of backtracking, not just one. It is not the kind of news that
we have been looking for but it fits with the sporadic and conflicted
reports we continue to get out of the UK economy whose readings seem to
run more hot and cold and with more erratic behavior than anywhere
else. Perhaps that is not surprising since the financial crisis has
been severe the UK which was more dependent on its financial sector
than any other country or region. 


GFK Consumer Survey
<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>% of 2Yr</td>
<td>% of 10Yr</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>Range</td>
<td>Range</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Confidence</td>
<td>-19</td>
<td>-17</td>
<td>-13</td>
<td>-16</td>
<td>64.5%</td>
<td>50.0%</td>
</tr>
<tr class="grey4">
<td colspan="7">Current</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>15</td>
<td>15</td>
<td>19</td>
<td>18</td>
<td>9.1%</td>
<td>9.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Major Purchases</td>
<td>-16</td>
<td>-19</td>
<td>-12</td>
<td>-15</td>
<td>71.1%</td>
<td>44.3%</td>
</tr>
<tr class="grey4">
<td colspan="7">Last 12 Months</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>-14</td>
<td>-14</td>
<td>-12</td>
<td>-13</td>
<td>27.3%</td>
<td>25.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">General Econ Sit</td>
<td>-61</td>
<td>-59</td>
<td>-53</td>
<td>-63</td>
<td>40.4%</td>
<td>30.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">CPI</td>
<td>58</td>
<td>60</td>
<td>64</td>
<td>67</td>
<td>0.0%</td>
<td>24.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Savings</td>
<td>-8</td>
<td>-10</td>
<td>-6</td>
<td>-5</td>
<td>27.0%</td>
<td>25.4%</td>
</tr>
<tr class="grey1">
<td colspan="7">&nbsp;</td>
</tr>
<tr class="grey4">
<td colspan="7">Next 12-Months</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>3</td>
<td>5</td>
<td>6</td>
<td>5</td>
<td>67.7%</td>
<td>65.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">General Econ Sit</td>
<td>-6</td>
<td>3</td>
<td>3</td>
<td>4</td>
<td>82.1%</td>
<td>82.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Unemployment</td>
<td>45</td>
<td>41</td>
<td>46</td>
<td>46</td>
<td>34.0%</td>
<td>49.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Major Purchases</td>
<td>-30</td>
<td>-28</td>
<td>-27</td>
<td>-28</td>
<td>45.5%</td>
<td>40.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Savings</td>
<td>4</td>
<td>0</td>
<td>6</td>
<td>0</td>
<td>30.4%</td>
<td>26.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">CPI</td>
<td>60</td>
<td>56</td>
<td>57</td>
<td>58</td>
<td>39.2%</td>
<td>39.2%</td>
</tr>
<tr class="grey1">
<td colspan="7">&nbsp;</td>
</tr>
<tr class="grey4">
<td colspan="7">By Income</td>
</tr>
<tr class="grey2">
<td class="firstcol">Lower</td>
<td>-26</td>
<td>-21</td>
<td>-23</td>
<td>-23</td>
<td>61.3%</td>
<td>44.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Upper</td>
<td>-7</td>
<td>-8</td>
<td>-8</td>
<td>-12</td>
<td>86.2%</td>
<td>65.8%</td>
</tr>
</tbody>
</table>
</body></html>

Consumer Confidence in the UK according to GFK has dropped again in December marking a two-month backtrack in the index. The current household financial situation is in the bottom 9 percentile of its range but the major purchase index [...]

UK Consumer Confidence Continues Backtrack

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091218a.jpg" width="353">
Consumer Confidence in the UK according to GFK has dropped again in December marking a two-month backtrack in the index. The current household financial situation is in the bottom 9 percentile of its range but the major purchase index is in the 71st percentile of its two year range and 44th percentile of its broader range. 
Over the past 12 months the percentile ratings were all below the 50th percentile and the broad ranges are lower, at or near in the bottom 25th percentile of their respective ranges. 
The outlook components deteriorated across the board in December except that savings improved and the CPI gauge rose. However, upper income category survey respondents registered an improved reading in December as the lower income respondents index fell by a sharp five points. 
Although the GFK index has risen strongly from its very low recession depths, the new drop is significant and encompasses two months of backtracking, not just one. It is not the kind of news that we have been looking for but it fits with the sporadic and conflicted reports we continue to get out of the UK economy whose readings seem to run more hot and cold and with more erratic behavior than anywhere else. Perhaps that is not surprising since the financial crisis has been severe the UK which was more dependent on its financial sector than any other country or region. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
GFK Consumer Survey
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>% of 2Yr</td>
<td>% of 10Yr</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>Range</td>
<td>Range</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Confidence</td>
<td>-19</td>
<td>-17</td>
<td>-13</td>
<td>-16</td>
<td>64.5%</td>
<td>50.0%</td>
</tr>
<tr class="grey4">
<td colspan="7">Current</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>15</td>
<td>15</td>
<td>19</td>
<td>18</td>
<td>9.1%</td>
<td>9.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Major Purchases</td>
<td>-16</td>
<td>-19</td>
<td>-12</td>
<td>-15</td>
<td>71.1%</td>
<td>44.3%</td>
</tr>
<tr class="grey4">
<td colspan="7">Last 12 Months</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>-14</td>
<td>-14</td>
<td>-12</td>
<td>-13</td>
<td>27.3%</td>
<td>25.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">General Econ Sit</td>
<td>-61</td>
<td>-59</td>
<td>-53</td>
<td>-63</td>
<td>40.4%</td>
<td>30.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">CPI</td>
<td>58</td>
<td>60</td>
<td>64</td>
<td>67</td>
<td>0.0%</td>
<td>24.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Savings</td>
<td>-8</td>
<td>-10</td>
<td>-6</td>
<td>-5</td>
<td>27.0%</td>
<td>25.4%</td>
</tr>
<tr class="grey1">
<td colspan="7">&nbsp;</td>
</tr>
<tr class="grey4">
<td colspan="7">Next 12-Months</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>3</td>
<td>5</td>
<td>6</td>
<td>5</td>
<td>67.7%</td>
<td>65.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">General Econ Sit</td>
<td>-6</td>
<td>3</td>
<td>3</td>
<td>4</td>
<td>82.1%</td>
<td>82.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Unemployment</td>
<td>45</td>
<td>41</td>
<td>46</td>
<td>46</td>
<td>34.0%</td>
<td>49.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Major Purchases</td>
<td>-30</td>
<td>-28</td>
<td>-27</td>
<td>-28</td>
<td>45.5%</td>
<td>40.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Savings</td>
<td>4</td>
<td>0</td>
<td>6</td>
<td>0</td>
<td>30.4%</td>
<td>26.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">CPI</td>
<td>60</td>
<td>56</td>
<td>57</td>
<td>58</td>
<td>39.2%</td>
<td>39.2%</td>
</tr>
<tr class="grey1">
<td colspan="7">&nbsp;</td>
</tr>
<tr class="grey4">
<td colspan="7">By Income</td>
</tr>
<tr class="grey2">
<td class="firstcol">Lower</td>
<td>-26</td>
<td>-21</td>
<td>-23</td>
<td>-23</td>
<td>61.3%</td>
<td>44.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Upper</td>
<td>-7</td>
<td>-8</td>
<td>-8</td>
<td>-12</td>
<td>86.2%</td>
<td>65.8%</td>
</tr>
</tbody>
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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

260206E.jpg

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

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

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

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

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

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

260206.jpg

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

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

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

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

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

260205X15.jpg

260205Y15.jpg

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

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

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

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

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

260205C15.jpg

260205D15.jpg

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

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

Sandy Batten

260205A2.jpg

260205B2.jpg

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

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

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

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

260205C2.jpg

260205D2.jpg

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

U.S. Initial Unemployment Claims Surged in Latest Week

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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.

Economy in Brief

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