Tom Moeller

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119g.jpg" style="width: 353px; height: 265px;" align="right">According
to The National Association of Home Builders, housing market activity
slipped again from its earlier improved level. The
Association&nbsp; reported that its January Composite Housing
Market Index edged lower to 15 from 16 in December and from 19 last
September. Nevertheless, the index remained nearly double the low of 8
last January. The index is compiled from survey questions asking
builders to rate market conditions as &#8220;good&#8221;, &#8220;fair&#8221;, &#8220;poor&#8221; or &#8220;very
high&#8221; to &#8220;very low&#8221;.<span> </span>The figure is a
diffusion index, therefore, numerical results over 50 indicate a
predominance of &#8220;good&#8221; readings. In the West the index fell hard to a
reading of 16 from 19 in December but remained up by four times since
January '09. In all other regions the m/m declines were moderate and
levels remained up sharply from January 2009.</p>
<p>The present
sales index slipped to 15 which was down from the August high but the
sub-index of sales during the next six months held steady&nbsp;
m/m. Improvement from 2009 was moderate.&nbsp;The Home Builders'
Association also reported that traffic of prospective buyers slipped
from December to the lowest level since March.</p>
<p>The
Home Builders' Housing Opportunity Index, which is the share of homes
sold that could be considered affordable to a family earning the median
income, fell in 3Q '09 to 70.1%. It had jumped earlier to a record high
of 72.5% buoyed by lower home prices, lower interest rates and higher
income. (There is a break in the series from 2002 to
2003.)</p>
<p>The NAHB has compiled the <b>Housing Market
Index</b> since 1985.<span> </span>The weights
assigned to the individual index components are .5920 for single family
detached sales, present time; .1358 for single family detached sales,
next six months; and .2722 for traffic of prospective buyers. The
results, along with other housing and remodeling indexes from NAHB
Economics, are included in Haver&#8217;s <b>SURVEYS</b> database.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119h.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119i.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM" style="color: black;">Nat'l Association of Home Builders</a></b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>November</b></th>
<th scope="col"><b>&nbsp;January '09</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Housing Market Index
(All Good=100)</td>
<td>15</td>
<td>16</td>
<td>17</td>
<td>8</td>
<td>15</td>
<td>16</td>
<td>27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>15</td>
<td>16</td>
<td>17</td>
<td>6</td>
<td>13</td>
<td>16</td>
<td>27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales:
Next Six Months</td>
<td>26</td>
<td>26</td>
<td>28</td>
<td>17</td>
<td>24</td>
<td>25</td>
<td>37</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Traffic of
Prospective Buyers</td>
<td>12</td>
<td>13</td>
<td>13</td>
<td>8</td>
<td>13</td>
<td>14</td>
<td>21</td>
</tr>
</tbody>
</table>
</span>
</body></html>

According to The National Association of Home Builders, housing market activity slipped again from its earlier improved level. The Association reported that its January Composite Housing Market Index edged lower to 15 from 16 in [...]

U.S. Home Builders’ Index Dips Again

Louise Curley

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<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119d.jpg" style="width: 353px; height: 265px;" align="right">According
to
the January ZEW indicator, the percentage of German investors and
analysts optimistic about the outlook six months ahead declined for the
fourth month.&nbsp; The percent balance is now 47.2% compared with
the recent peak of 57.7% in September, however, it is still well above
the long term average of 27.1%.&nbsp; At the same time, more of
these investors see improvement in current conditions although the
pessimists still outweigh the optimists.&nbsp; The percent balance
between those who see improvement in current conditions and those who
see deterioration was -56.6% in January, 2010, compared with -60.6% in
December and the peak of -92.8% in May of 2009.&nbsp; The disparity
between the participants' views of current conditions and expectations
is not unusual as can be seen in the first chart.</p>
<p> The impact on the
Euro Area of the financial difficulties in Greece that have come to the
surface during the survey period may have had some dampening effect on
expectations and outweighed some of the more favorable economic
developments. Over the past month or so, the Euro has declined 5.5%
from $1.5120 to $1.4279 today and exports continue to rise.&nbsp;
The second chart shows the movement in the Euro on a daily basis and
the trend in monthly exports over the past year.</p>
<p> Along with the
improvement in the appraisal of current conditions there has been a
general improvement in the outlook for profits in the 13 industries
that ZEW monitors.&nbsp; The positive appraisal for profits in
Banking, Chemical, Steel/Metal, Electronic, Machinery, Utilities,
Service, Telecommunications, and Information Technology industries
increased in January and the negative percent balance for profits in
the Vehicles/Automotive industry was reduced.&nbsp; The percent
balances on only three industries declined--Insurance,
Consumption/Trade and Construction in January, but the profit outlook
in these industries has shown improvement since the low point reached
in October 2008 as can be seen in the third chart.&nbsp; There are
now only two industries where the percent balances on the profit
outlook are negative--Consumption/Trade (-12.1%) and
Vehicles/Automotive (-23.2%).&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119e.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119f.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ZEW
INDICATORS (% Balance)</th>
<th scope="col"><b>Jan 10</b></th>
<th scope="col"><b>Dec 09</b></th>
<th scope="col"><b>Nov 09</b></th>
<th scope="col"><b>Oct 09</b></th>
<th scope="col"><b>Sep 09</b></th>
<th scope="col"><b>Aug 09</b></th>
<th scope="col"><b>July 09</b></th>
<th scope="col"><b>June 09</b></th>
<th scope="col"><b>May 09</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Conditions</td>
<td>-56.6</td>
<td>-60.6</td>
<td>-65.6</td>
<td>-72.2</td>
<td>-74.0</td>
<td>-77.2</td>
<td>-88.3</td>
<td>-89.7</td>
<td>92.8</td>
</tr>
<tr>
<td class="firstcol">Expectations 6
Months Ahead</td>
<td>47.2</td>
<td>50.4</td>
<td>51.1</td>
<td>56.0</td>
<td>57.7</td>
<td>56.1</td>
<td>39.5</td>
<td>44.8</td>
<td>31.1</td>
</tr>
</tbody>
</table>
</span>
</body></html>

According to the January ZEW indicator, the percentage of German investors and analysts optimistic about the outlook six months ahead declined for the fourth month. The percent balance is now 47.2% compared with the recent peak of [...]

German Investors More Cautious On The General Outlook But Still See Improvement In The Profit Outlook

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<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119a.jpg" style="width: 353px; height: 265px;" align="right">
The U.S.
economic recession brought with it the highest level of misery in over
twenty five years. The December misery index reached 12.7% which was up
from 11.8% during November. The index is calculated as the sum of the
unemployment rate and the y/y change in the consumer price index. Not
only was the index level its highest since 1983, but the 5.2 point
increase versus December '08 was the quickest since the "credit crunch"
recession of 1980.</p><p>Higher unemployment accounts the index's
stretch into double digits. At 10.0%, not only is the unemployment rate
high but its 2.6 percentage point increase over the last twelve months
is nearly the quickest since 1975. (Before the current reading, the 4.0
point rise as of June set the record.)</p><p> Low inflation has
ameliorated some of the pain caused by higher unemployment, but the
positive effect is about to diminish. The 2.8% gain in the CPI versus
last year was down sharply from the 1980 peak of 14.6% when oil prices
spiked. However, the misery index soon will reflect the increase in
energy prices.&nbsp;
</p><p>The <b> Misery Index is calculated by Haver Analytics</b>.
It is the sum of the unemployment rate and the year-over-year
percentage change in the CPI-U from the Bureau of Labor
Statistics.·&nbsp; <strong>The Fed's Monetary Policy
Response to the Current Crisis</strong> is from the San Francisco
Federal Reserve published last May and it can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-17.pdf">here</a>.</p>

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119c.jpg" style="width: 312px; height: 265px;">



<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>November</b></th>
<th scope="col"><b>December '08</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Misery Index (%)</td>
<td>12.7</td>
<td>11.8</td>
<td>7.5</td>
<td>8.9</td>
<td>9.7</td>
<td>7.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Unemployment Rate (%)</td>
<td>10.0</td>
<td>10.0</td>
<td>7.4</td>
<td>9.3</td>
<td>5.8</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Consumer Prices (Y/Y
%)</td>
<td>2.7</td>
<td>1.8</td>
<td>0.1</td>
<td>-0.4</td>
<td>3.8</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</span></body></html>

The U.S. economic recession brought with it the highest level of misery in over twenty five years. The December misery index reached 12.7% which was up from 11.8% during November. The index is calculated as the sum of the unemployment [...]

Misery Reaches Highest Since 1983

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119a.jpg" style="width: 353px; height: 265px;" align="right">The
U.S.
economic recession brought with it the highest level of misery in over
twenty five years. The December misery index reached 12.7% which was up
from 11.8% during November. The index is calculated as the sum of the
unemployment rate and the y/y change in the consumer price index. Not
only was the index level its highest since 1983, but the 5.2 point
increase versus December '08 was the quickest since the "credit crunch"
recession of 1980.</p>
<p>Higher unemployment accounts the index's
stretch into double digits. At 10.0%, not only is the unemployment rate
high but its 2.6 percentage point increase over the last twelve months
is nearly the quickest since 1975. (Before the current reading, the 4.0
point rise as of June set the record.)</p>
<p> Low inflation has
ameliorated some of the pain caused by higher unemployment, but the
positive effect is about to diminish. The 2.8% gain in the CPI versus
last year was down sharply from the 1980 peak of 14.6% when oil prices
spiked. However, the misery index soon will reflect the increase in
energy prices.&nbsp;
</p>
<p>The <b> Misery Index is calculated by Haver Analytics</b>.
It is the sum of the unemployment rate and the year-over-year
percentage change in the CPI-U from the Bureau of Labor
Statistics.·&nbsp; <strong>The Fed's Monetary Policy
Response to the Current Crisis</strong> is from the San Francisco
Federal Reserve published last May and it can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-17.pdf">here</a>.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>November</b></th>
<th scope="col"><b>December '08</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Misery Index (%)</td>
<td>12.7</td>
<td>11.8</td>
<td>7.5</td>
<td>8.9</td>
<td>9.7</td>
<td>7.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Unemployment Rate (%)</td>
<td>10.0</td>
<td>10.0</td>
<td>7.4</td>
<td>9.3</td>
<td>5.8</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Consumer Prices (Y/Y
%)</td>
<td>2.7</td>
<td>1.8</td>
<td>0.1</td>
<td>-0.4</td>
<td>3.8</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</span>
<span id="articletitle">German Investors More Cautious On
The General Outlook
But Still See Improvement In The Profit Outlook
</span><br>
<span id="byline">by <a href="/comment/Curley.html">Louise
Curley</a> January 19, 2010</span>
<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119d.jpg" style="width: 353px; height: 265px;" align="right">According
to
the January ZEW indicator, the percentage of German investors and
analysts optimistic about the outlook six months ahead declined for the
fourth month.&nbsp; The percent balance is now 47.2% compared with
the recent peak of 57.7% in September, however, it is still well above
the long term average of 27.1%.&nbsp; At the same time, more of
these investors see improvement in current conditions although the
pessimists still outweigh the optimists.&nbsp; The percent balance
between those who see improvement in current conditions and those who
see deterioration was -56.6% in January, 2010, compared with -60.6% in
December and the peak of -92.8% in May of 2009.&nbsp; The disparity
between the participants' views of current conditions and expectations
is not unusual as can be seen in the first chart.</p>
<p> The impact on the
Euro Area of the financial difficulties in Greece that have come to the
surface during the survey period may have had some dampening effect on
expectations and outweighed some of the more favorable economic
developments. Over the past month or so, the Euro has declined 5.5%
from $1.5120 to $1.4279 today and exports continue to rise.&nbsp;
The second chart shows the movement in the Euro on a daily basis and
the trend in monthly exports over the past year.</p>
<p> Along with the
improvement in the appraisal of current conditions there has been a
general improvement in the outlook for profits in the 13 industries
that ZEW monitors.&nbsp; The positive appraisal for profits in
Banking, Chemical, Steel/Metal, Electronic, Machinery, Utilities,
Service, Telecommunications, and Information Technology industries
increased in January and the negative percent balance for profits in
the Vehicles/Automotive industry was reduced.&nbsp; The percent
balances on only three industries declined--Insurance,
Consumption/Trade and Construction in January, but the profit outlook
in these industries has shown improvement since the low point reached
in October 2008 as can be seen in the third chart.&nbsp; There are
now only two industries where the percent balances on the profit
outlook are negative--Consumption/Trade (-12.1%) and
Vehicles/Automotive (-23.2%).&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119e.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119f.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ZEW
INDICATORS (% Balance)</th>
<th scope="col"><b>Jan 10</b></th>
<th scope="col"><b>Dec 09</b></th>
<th scope="col"><b>Nov 09</b></th>
<th scope="col"><b>Oct 09</b></th>
<th scope="col"><b>Sep 09</b></th>
<th scope="col"><b>Aug 09</b></th>
<th scope="col"><b>July 09</b></th>
<th scope="col"><b>June 09</b></th>
<th scope="col"><b>May 09</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Conditions</td>
<td>-56.6</td>
<td>-60.6</td>
<td>-65.6</td>
<td>-72.2</td>
<td>-74.0</td>
<td>-77.2</td>
<td>-88.3</td>
<td>-89.7</td>
<td>92.8</td>
</tr>
<tr>
<td class="firstcol">Expectations 6
Months Ahead</td>
<td>47.2</td>
<td>50.4</td>
<td>51.1</td>
<td>56.0</td>
<td>57.7</td>
<td>56.1</td>
<td>39.5</td>
<td>44.8</td>
<td>31.1</td>
</tr>
</tbody>
</table>
</span>
<span id="articletitle">U.S. Home Builders&#8217; Index Dips
Again</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> January 19, 2010</span>
<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119g.jpg" style="width: 353px; height: 265px;" align="right">According
to The National Association of Home Builders, housing market activity
slipped again from its earlier improved level. The
Association&nbsp; reported that its January Composite Housing
Market Index edged lower to 15 from 16 in December and from 19 last
September. Nevertheless, the index remained nearly double the low of 8
last January. The index is compiled from survey questions asking
builders to rate market conditions as &#8220;good&#8221;, &#8220;fair&#8221;, &#8220;poor&#8221; or &#8220;very
high&#8221; to &#8220;very low&#8221;.<span> </span>The figure is a
diffusion index, therefore, numerical results over 50 indicate a
predominance of &#8220;good&#8221; readings. In the West the index fell hard to a
reading of 16 from 19 in December but remained up by four times since
January '09. In all other regions the m/m declines were moderate and
levels remained up sharply from January 2009.</p>
<p>The present
sales index slipped to 15 which was down from the August high but the
sub-index of sales during the next six months held steady&nbsp;
m/m. Improvement from 2009 was moderate.&nbsp;The Home Builders'
Association also reported that traffic of prospective buyers slipped
from December to the lowest level since March.</p>
<p>The
Home Builders' Housing Opportunity Index, which is the share of homes
sold that could be considered affordable to a family earning the median
income, fell in 3Q '09 to 70.1%. It had jumped earlier to a record high
of 72.5% buoyed by lower home prices, lower interest rates and higher
income. (There is a break in the series from 2002 to
2003.)</p>
<p>The NAHB has compiled the <b>Housing Market
Index</b> since 1985.<span> </span>The weights
assigned to the individual index components are .5920 for single family
detached sales, present time; .1358 for single family detached sales,
next six months; and .2722 for traffic of prospective buyers. The
results, along with other housing and remodeling indexes from NAHB
Economics, are included in Haver&#8217;s <b>SURVEYS</b> database.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119h.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100119i.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM" style="color: black;">Nat'l Association of Home Builders</a></b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>November</b></th>
<th scope="col"><b>&nbsp;January '09</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Housing Market Index
(All Good=100)</td>
<td>15</td>
<td>16</td>
<td>17</td>
<td>8</td>
<td>15</td>
<td>16</td>
<td>27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>15</td>
<td>16</td>
<td>17</td>
<td>6</td>
<td>13</td>
<td>16</td>
<td>27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales:
Next Six Months</td>
<td>26</td>
<td>26</td>
<td>28</td>
<td>17</td>
<td>24</td>
<td>25</td>
<td>37</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Traffic of
Prospective Buyers</td>
<td>12</td>
<td>13</td>
<td>13</td>
<td>8</td>
<td>13</td>
<td>14</td>
<td>21</td>
</tr>
</tbody>
</table>
</span>
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<span id="articletext">
<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100118a.jpg" align="right" border="0" height="265" width="353"></p>
<p>A lot of data from Japan were released today: Industrial
Production, Operating Rates, Retail and Wholesale Trade, Cash Earnings
and Input and Output prices. All the data, except for the input and
output prices which are for December, are for November,</p>
<p>Input prices in the manufacturing industry have risen and
fallen faster than output prices as shown in the first chart.<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100118b.jpg" style="width: 353px; height: 265px;" align="right" height="265" width="353">
The
swings in the price of oil probably account for much of the greater
volatility in input prices than in output prices. While other factors
influence profits, in the manufacturing industry, the performance of
input and output prices has tended to depress profits.</p>
<p>
One of the other factors influencing profits is employment
cost and here the results for manufacturing are positive. Although the
year to year changes in monthly cash wages have recovered from the big
decline of more than 13% in June they were still 4.2% below the year
ago figure in November, as shown in the second chart</p>
<p>Both industrial production and operating rates continue to
improve from the big year over year decline reached in February of this
year, as can be seen in the third chart. Industrial production, which
had declined 37% from February 2008 to February 2009, was 5.5% below
the year ago figure in November. Comparable figures for operating rates
are 44% and 4.1%.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100118c.jpg" style="width: 312px; height: 265px;" height="265" width="312"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100118d.jpg" style="width: 312px; height: 265px;" height="265" width="353">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>JAPAN&nbsp;
(Y/Y% Changes)</b></th>
<th scope="col"><b>Dec 09</b></th>
<th scope="col"><b>Nov 09</b></th>
<th scope="col"><b>Oct 09</b></th>
<th scope="col"><b>Sep 09</b></th>
<th scope="col"><b>Aug 09</b></th>
<th scope="col"><b>July 09</b></th>
<th scope="col"><b>June 09</b></th>
<th scope="col"><b>May 09</b></th>
<th scope="col"><b>Apr 09</b></th>
<th scope="col"><b>Mar 09</b></th>
<th scope="col"><b>Feb 09</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Input Prices (Manufacturing)</td>
<td>-3.50</td>
<td>-8.15</td>
<td>-13.40</td>
<td>-17.30</td>
<td>-19.69</td>
<td>-19.30</td>
<td>-17.33</td>
<td>-15.10</td>
<td>-13.68</td>
<td>-7.93</td>
<td>-8.85</td>
</tr>
<tr>
<td class="firstcol">Output Prices (Manufacturing)</td>
<td>-3.68</td>
<td>-5.72</td>
<td>-8.18</td>
<td>-10.38</td>
<td>-11.30</td>
<td>-11.33</td>
<td>-9.21</td>
<td>-7.82</td>
<td>-6.03</td>
<td>-4.54</td>
<td>-8.81</td>
</tr>
<tr class="odd">
<td class="firstcol">Cash Earnings (Manufacturing)</td>
<td>&nbsp;</td>
<td>-4.17</td>
<td>-2.61</td>
<td>-2.79</td>
<td>-4.37</td>
<td>-8.66</td>
<td>-13.27</td>
<td>-5.34</td>
<td>-5.30</td>
<td>-5.88</td>
<td>-5.42</td>
</tr>
<tr>
<td class="firstcol">Industrial Production
(Manufacturing)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>-5.48</td>
<td>-13.99</td>
<td>-17.28</td>
<td>-18.94</td>
<td>-22.66</td>
<td>-24.63</td>
<td>-27.72</td>
<td>-30.71</td>
<td>-35.02</td>
<td>-36.88</td>
</tr>
<tr class="odd">
<td class="firstcol">Operating Rates&nbsp;
(Manufacturing)</td>
<td>&nbsp;</td>
<td>-4.07</td>
<td>-16.52</td>
<td>-20.04</td>
<td>-20.31</td>
<td>-24.79</td>
<td>-26.93</td>
<td>-32.46</td>
<td>-35.46</td>
<td>-41.15</td>
<td>-44.31</td>
</tr>
<tr>
<td class="firstcol">Wholesale Trade</td>
<td>&nbsp;</td>
<td>-18.75</td>
<td>-24.22</td>
<td>-27.14</td>
<td>-28.04</td>
<td>-29.82</td>
<td>-28.67</td>
<td>-30.35</td>
<td>-27.78</td>
<td>-28.22</td>
<td>-25.74</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade</td>
<td>&nbsp;</td>
<td>-1.10</td>
<td>-0.98</td>
<td>-1.35</td>
<td>-1.80</td>
<td>-2.40</td>
<td>-2.91</td>
<td>-2.74</td>
<td>-2.81</td>
<td>-3.80</td>
<td>-5.73</td>
</tr>
</tbody>
</table>
</body></html>

A lot of data from Japan were released today: Industrial Production, Operating Rates, Retail and Wholesale Trade, Cash Earnings and Input and Output prices. All the data, except for the input and output prices which are for December, [...]

Japan Data Show Improvement but Indicators Still Below a Year Ago

Japan Data Show Improvement butIndicators Still Below a Year Ago

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100115i.jpg" style="width: 353px; height: 265px;" align="right">
Improvement
in consumer attitudes continues. The Reuters/University of Michigan
Index of Consumer Sentiment for mid-January ticked up to 72.8 from 72.5
last month. Though the latest figure fell short of Consensus
expectations for a reading of 74.0 it was well improved from the 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.</p><p>Sentiment about current economic
conditions increased another 3.8% after its 13.4% jump from November.
The latest was the highest level since March of 2008. Assessments of
current financial conditions improved modestly m/m to the highest since
September of last year. Buying conditions for large household goods,
including furniture, refrigerators, stoves &amp; televisions, also
moved up 4.7% to the highest level since January
2008.</p><p> The mid-January reading on expected economic
conditions fell for the third month in the last four. The 2.0% decline
left it down 8.2% from the September high. The outlook for personal
finances during the next twelve months fell hard to the lowest level
since last March but expectations for business conditions during the
year improved and have more-than doubled since last February.
Expectations for business conditions during the next five years were
unchanged m/m though improved from the 2008 low.</p><p>Expected price
inflation during the next year rose m/m to 3.3% and it was up from the
December 2008 reading of 1.7%.&nbsp;Respondents' view of government
policy, which may eventually influence economic expectations, held
steady following the sharp December decline. Just twelve percent of
respondents thought that a good job was being done by government versus
35% who thought a poor job was being done.</p><p> 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 <b>USECON </b>database
with details in the proprietary <b>UMSCA </b>database.</p><p>
<b>Personal Saving and Economic Growth</b> from the
Federal Reserve bank of St. Louis is available here <a href="http://research.stlouisfed.org/publications/es/09/ES0946.pdf">here</a>.&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100115j.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100115k.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM" style="color: white;"><b>University of Michigan</b></a></th>
<th scope="col"><b>Mid-January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>November</b></th>
<th scope="col"><b>Jan y/y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>72.8</td>
<td>72.5</td>
<td>67.4</td>
<td><span>19.0%</span></td>
<td>66.3</td>
<td>63.8</td>
<td>85.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>81.0</td>
<td>78.0</td>
<td>68.8</td>
<td>21.8</td>
<td>69.6</td>
<td>73.7</td>
<td>101.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>67.5</td>
<td>68.9</td>
<td>66.5</td>
<td>16.8</td>
<td>64.1</td>
<td>57.3</td>
<td>75.6</td>
</tr>
</tbody>
</table>
</span></body></html>

Improvement in consumer attitudes continues. The Reuters/University of Michigan Index of Consumer Sentiment for mid-January ticked up to 72.8 from 72.5 last month. Though the latest figure fell short of Consensus expectations for a [...]

Michigan Consumer Sentiment Edges Higher

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<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100115f.jpg" style="width: 353px; height: 265px;" align="right">For the U.S.
factory sector, 2009 was rough but activity improved as the year went
on. For the year as a whole industrial production fell 9.7% following a
lesser 2008 decline. In June, however, the decline in activity troughed
and since then is up 4.7% helped by an expected 0.6% December increase.
Though the latest gain was all due to a rise in utility output with
arrival of a winter cold snap, factory sector output alone is up 4.6%
from its trough.</p><p> Output of consumer goods rose 0.6% during December.
Production here is up 4.8% from its trough due to a one-third rise in
auto products output and a 4.4% gain in clothing. Computers, video
&amp; audio output lagged with a 2.2% rate of increase during the
last six months while output of appliances, furniture &amp;
carpeting slipped 0.1%. The latter figure, however, shows some
stabilization after an 18.0% full year decline. Business equipment
output rose 0.9% last month (-9.6% y/y) and reversed the November
decline. Moreover, since the June bottom activity has risen
3.2%.</p><p>Capacity utilization rose further to 72.0%, its highest
level since December 2008 but for the year as a whole the utilization
rate dropped to 70.2%. In the factory sector alone utilization held
steady m/m at 68.8% but dropped to 67.0% for the year from 75.0% in
2008. Utilization in the primary metals area has risen sharply to 58.9%
from a 2009 average of 51.0% with the rebound in output. There's also
been rise in utilization in the motor vehicle sector to 52.2% from a
low of 36.8% in June but it was 77.0% in 2005. In rise in utilization
was accompanied by a 0.1% m/m decline in capacity which was part of a
1.0% December-to-December decline.</p><p>The industrial
production data are available in Haver's <b>USECON</b>
database.</p><p><strong>Is the Great Moderation Over? An
Empirical Analysis </strong>from the Federal Reserve Bank of
Kansas City is available&nbsp; <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/pdf/09q4Clark.pdf">here</a>.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100115g.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100115h.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Industrial
Production (SA,%)</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>November</b></th>
<th scope="col"><b>October</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><b>Total Output</b></td>
<td>0.6</td>
<td>0.6</td>
<td>0.2</td>
<td>-2.1</td>
<td>-9.7</td>
<td>-2.2</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Manufacturing</td>
<td>0.0</td>
<td>0.9</td>
<td>-0.2</td>
<td>-1.9</td>
<td>-11.2</td>
<td>-3.2</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Consumer
Goods</td>
<td>0.6</td>
<td>0.0</td>
<td>0.6</td>
<td>0.3</td>
<td>-5.1</td>
<td>-2.6</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Business
Equipment</td>
<td>0.9</td>
<td>-0.7</td>
<td>0.6</td>
<td>-9.6</td>
<td>-12.6</td>
<td>-1.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Construction
Supplies</td>
<td>-2.0</td>
<td>1.5</td>
<td>-1.6</td>
<td>-10.1</td>
<td>-17.7</td>
<td>-6.3</td>
<td>-2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Materials</td>
<td>0.8</td>
<td>1.2</td>
<td>0.1</td>
<td>-0.2</td>
<td>-10.8</td>
<td>-1.9</td>
<td>2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>6.0</td>
<td>-2.4</td>
<td>2.6</td>
<td>-0.8</td>
<td>-2.6</td>
<td>0.3</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Capacity Utilization
(%)</b></td>
<td>72.0</td>
<td>71.5</td>
<td>71.0</td>
<td>72.7 (Dec. '08)</td>
<td></td>
<td>77.5</td>
<td>80.6</td>
</tr>
</tbody>
</table>
</span></body></html>

For the U.S. factory sector, 2009 was rough but activity improved as the year went on. For the year as a whole industrial production fell 9.7% following a lesser 2008 decline. In June, however, the decline in activity troughed and [...]

Industrial Output In December Is Lifted By Utilities

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

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

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

Cost of transporting crude oil has soared to series high

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

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

Is recent drop in sentiment signaling softer growth ahead?

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

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

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

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Sandy Batten

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Housing starts and permits data were released for both February and March today. Release of these data has been delayed by the federal government shutdown in October 2025. Total starts fell 3.0% m/m in February to 1.356 million units from a downwardly revised 1.398 million in January (previously 1.487 million) but then rebounded to 1.502 million (+10.8% m/m) in March. The March level was the highest since December 2024 and 10.8% higher than a year earlier. The Action Economics Forecast Survey expected a 5.9% decline in March from January to a level of 1.4 million units. The 7.2% q/q increase in starts in Q1 is the first quarterly increase since Q1 2025. Residential investment has been a drag on overall GDP growth over the past year. The sharp Q1 increase raises hope that residential investment could make a small contribution to Q1 GDP growth in tomorrow’s report.

Single-family starts rose 4.8% m/m in February and 9.7% m/m in March to be 8.9% higher than a year ago. Multi-family starts plunged 17.0% m/m in February following an 18.2% monthly surge in January. They rebounded in March, rising 13.2% m/m to be up 15.5% y/y. The strong performance of starts in March following weakness earlier this year most likely reflects some catch-up as building conditions improved in March after having been very challenging in January and February.

Across the four major geographic regions, starts in the Northeast increased 24.8% m/m in March but fell 21.2% m/m in February. They were up 18.9% y/y. In the Midwest, starts increased 12.2% m/m in Mach on top of a 20.9% monthly gain in February. The March figure was down 0.9% from a year ago. In the South, starts rose 9.1% m/m in March but fell 3.6% m/m in February. In March they were up 14.1% from a year ago. In the West, starts rose 7.2% m/m in March after monthly declines of 7.7% in January and 3.7% in February. Compared with a year ago, they were up 8.0%.

The performance of building permits in February and March mirrored that of starts. Total permits rose 11.0% m/m in February but fell 10.8% m/m in March to be down 7.4% from a year ago. Single-family permits rose 6.2% m/m in February and then fell 3.8% m/m in March. They were 7.9% lower than a year ago. Multi-family permits rebounded 19.2% m/m in February after an 11.1% m/m fall in January. In March, they plunged 21.5% m/m and were down 6.3% from a year earlier.

In March, permits fell in each of the four major regions. In the Northeast, permits plunged 29.0% m/m in March following a 5.9% monthly gain in February. In the Midwest, permits declined 3.1% m/m in February and another 2.3% m/m in March. In the South, permits slumped 7.7% m/m in March but this following a 11.8% monthly jump in February. The March decline was the third in the past four months. In the West, permits fell 14.2% m/m in March following a 21.8% monthly surge in February and a 13.8% m/m slump in January.

The housing starts and permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Data for both February and March were included in today’s report to catch up from delays due to the federal government shutdown last October.
- Starts fell 3.0% m/m in February but rebounded 10.8% m/m in March.
- The 7.2% q/q increase in Q1 was the largest quarterly gain since the economy reopened after the pandemic shutdown in 2020.
- In contrast, permits jumped 11.0% m/m in February but fell 10.8% m/m in March and were up only 1.0% q/q in Q1.

U.S. Housing Starts Fell in February but Rebounded in March

Winnie Tapasanun

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New orders for durable goods rose a stronger-than-expected 0.8% m/m in March, the first monthly rise since November, after declines of 1.2% in February (-1.4% initially) and 0.4% in January (-0.5% previously), according to today’s advance report by the U.S. Census Bureau. The Action Economics Forecast Survey had expected a 0.5% m/m March increase. The year-on-year rate decelerated to 0.8% in March, the lowest since December 2024 (-4.5%), from 7.6% in February, though remaining positive since January 2025. Durable goods orders excluding the transportation sector rose 0.9% (7.6% y/y) in March, the 11th consecutive m/m rise, after a 1.2% gain in February. Durable goods orders excluding defense, however, fell 0.3% (-1.8% y/y), the third m/m fall in four months, following a 1.2% February drop.

The m/m rise in March durable goods orders was driven by a 16.9% m/m jump in orders for defense aircraft & parts, the fourth gain in five months, following a 0.5% increase in February and a 26.9% slump in January. Orders for nondefense aircraft & parts dropped 21.1%, adding to a 33.3% February plunge and a 1.7% January decline. Orders excluding aircraft climbed 1.9% (9.2% y/y), the fourth straight m/m rise and the eighth in nine months, after a 1.8% February gain.

Durable goods orders for transportation rebounded 0.8% (-10.4% y/y) in March, the first m/m increase in four months, following a 5.6% drop in February. In addition to March’s m/m jump in defense aircraft orders and drop in nondefense aircraft orders, motor vehicles & parts orders rose 1.2% (7.9% y/y), the fourth successive m/m rise, after a 3.7% February gain. Orders for computers & electronic products jumped 3.7% (15.0% y/y), the largest of seven consecutive m/m increases, following a 1.3% February rise. Machinery orders grew 0.8% (10.4% y/y), the 11th straight m/m gain, on top of a 2.3% February advance. Orders for electrical equipment, appliances & components rose 0.7% (6.5% y/y), the first m/m rise in three months, reversing a 0.7% February decline. Orders for primary metals grew 0.4% (10.2% y/y), the fourth consecutive m/m increase, after a 2.4% February gain. Orders for all other durable goods rose 0.3% (1.2% y/y), up for the seventh straight month, after a 0.5% February rise. Orders for fabricated metal products rose 0.2% (7.2% y/y), the eighth m/m increase in nine months, following a 1.1% February gain.

Capital goods orders recovered 1.7% (-6.7% y/y) in March, the first m/m rise since November, after a 6.5% decrease in February. Nondefense capital goods orders slid 1.2% (-15.4% y/y), the sixth m/m slide in seven months, after a 7.9% February drop. Core capital goods orders (i.e., nondefense capital goods orders excluding aircraft) rose 3.3% (9.4% y/y), the eighth m/m gain in nine months, following a 1.6% February rise. Defense capital goods orders surged 18.0% (80.0% y/y) after a 2.3% February rebound. Notably, core capital goods shipments (core capex shipments)—a reliable coincident indicator of business spending on equipment in the national accounts—rose 1.2% (7.0% y/y), the sixth m/m rise in seven months, after a 1.3% February increase.

Shipments of all manufactured goods rose 1.4% (5.5% y/y) in March, the fifth m/m rise in six months, after a 1.7% gain in February. Durable goods shipments increased 0.7% (7.6% y/y), up for the sixth time in seven months, after a 1.6% February rise. Nondurable goods shipments advanced 2.1% (3.4% y/y), the strongest of four consecutive m/m increases, after a 1.9% February gain.

Unfilled orders of durable goods edged up 0.1% (9.5% y/y) in March, the eighth straight m/m increase, after a 0.1% uptick in February. Excluding transportation, unfilled orders rose 0.3% (2.5% y/y), also up for the eighth consecutive month, following a 0.3% February rise.

Manufacturing inventories advanced 0.6% (1.3% y/y) in March, the largest of five successive m/m increases, after a 0.1% uptick in February. Durable goods inventories grew 0.2% (1.9% y/y) in March, the sixth consecutive m/m rise, following a 0.1% increase in February, while nondurable goods inventories climbed 1.3% (0.4% y/y) after inching up 0.1%.

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.

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- March headline orders +0.8% m/m, first increase in four mths.; +0.8% y/y, lowest since Dec. ’24.
- Defense aircraft & parts +16.9% m/m following February’s +0.5%.
- Transportation orders +0.8%, first m/m rise since Nov.; orders ex transp. +0.9%, 11th straight m/m increase.
- Core capital goods shipments +1.2%, sixth m/m gain in seven mths., pointing to a solid contribution to Q1’26 GDP from business equipt. spending.
- Durable goods shipments +0.7%; unfilled orders +0.1%; inventories +0.2%.

U.S. Durable Goods Orders Rise in March, Led by a Jump in Defense Aircraft Orders

Kathleen Stephansen, CBE

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Mortgage applications fell 1.6% w/w (+33.4% y/y) in the week ending April 24, after rising 7.9% w/w (29.9% y/y) in the week ending April 17, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house rose 1.2% w/w (21.2% y/y) in the April 24 week, following a jump of 10.1% w/w (14.5% y/y) in the April 17 week.  Applications for loan refinancing declined 4.4% w/w (+50.7% y/y) after rising 5.8% w/w (51.9% y/y) in the week of April 17. 

The effective interest rate on a 30-year fixed-rate loan rose 1bps to 6.54% in the week ending April 24 from 6.53% in the week ending April 17. The rate on 15-year fixed-rate mortgages was unchanged at 5.92% in the latest week from the prior week. The 30-year Jumbo rate was also unchanged at 6.56% in the April 24 week from the April 17 week, while the rate on a 5-year ARM jumped 21bps to 6.02% in the latest week from 5.81% in the week ending April 17.

The share of applications for refinancing an existing loan declined to 42.5% of total applications in the week of April 24, from 44.2% in the April 17 week. The adjustable-rate mortgage (ARM) share of activity rose to 8.3% in the week ending April 24 from 8.0% in the week ending April 17.

The average size of a mortgage loan rose 2.0% w/w (6.2% y/y) to $407,900 in the week ending April 24, after rising 1.2% w/w (3.4% y/y) to $399,900 in the week ending April 17. The average size of a purchase loan rose 1.0% w/w (4.6% y/y) to $460,200 in the latest week, after edging down 0.1% w/w (+3.6% y/y) to $455,600 in the April 17 week. The average size of a loan to refinance a mortgage rose 2.3% w/w (16.3% y/y) to $337,100 in the April 24 week, after rising 2.4% w/w (10.7% y/y) to $329,500 in the April 17 week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Applications for loans to purchase rose, while applications for loan refinancing declined in the latest week.
- Interest rate on 30-year fixed-rate loans rose 1bps to 6.54%. 
- Average loan size edged up.

U.S. Mortgage Applications Edged Down in the April 24 Week

Robert Brusca

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Globally, money supplies are accelerating. Three- and six-month money growth rates equal or exceed the year-on-year pace everywhere, and the 12-month growth rates accelerate over the recent 12 months compared to the 12-month pace of one year ago—except for the United Kingdom, where data lag by one month. This deviation may amount to the lack of topicality since money, credit, and inflation all are caught in an updraft prompted by rising oil prices. The oil price (Brent) is up at a 468% annual rate over three months, and over 12 months the oil price is up by 31.7%, compared to a 5.5% rise over 12 months one-year ago.

**Rising oil prices do NOT create inflation**
Now we all know that rising oil prices do not create inflation. So, thankfully, the 468% rise in oil prices is not driving up the inflation rate. But unfortunately, it is helping to drive up the price level. So, we are drawing a distinction between the price level and the inflation rate.

The year-over-year change in a price metric, like the CPI, is just that: the year-on-year gain. We often refer to this as ‘THE’ inflation rate. But that is only if the price level was at—and continued to rise at (about)—that same pace. Inflation is an ongoing rise in the price level. No one in their right mind thinks oil prices are going to rise by 468% year-over-year persistently. But of course, oil is a cost to producers and a price to consumers. It is a price that must be paid and cost that must be borne. The question is how much this bump-up in oil prices will contribute to the prices of the items we track in our various national price indexes in the future. Here I will refer to the CPI as the price index. And then we ask if that one-time rise in the relative price of oil will continue to bump up prices by the same amount month-after-month in the future. If it is, it is creating inflation. If not, it is creating a realignment of relative prices. The rise in relative prices is real. It may be painful to some and remunerative to others. The effects are complex.

But the spike in oil prices is not inflation. Even though we are tracking an unknown price rise that is continuing to waffle, I will speak of it as though we know the ultimate rise and speak of that as a one-time surge.

Expressed in this way, you should be able to see the oil price spurt as painful and as something that may be a temporary boost to inflation. If the price stays high, it will boost the price level based on the pass-through by commodity. After the oil price spurt, prices may be higher, but inflation will go back to ‘where it was.’

But all that happens if and only if monetary policy does not accommodate—does not monetize—the rise in oil prices. Unfortunately, we see money supplies are accelerating. Central banks have stepped up their rate of printing money as oil prices have risen, in order to stabilize interest rates. Printing more money, or increasing the money stock faster, is inflationary.

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**A dilemma**
Everywhere central banks have taken the bait, and to cushion the impact on oil prices, they are letting money supplies accelerate. They do this because of a focus on interest rates, as monetary policy has a ‘rule’ that has been developed that monetary policy should not respond to supply shocks. Should money supply respond and accelerate? Well, the answer to that is clear: no. So, we have a dilemma.

**Supply-demand argument**
Actually, the supply side edict is more complicated. Even those who note the monetary policy can’t solve supply problems realize that if a price spike is large enough or lasts long enough, it might, in the short run, impact prices with enough force to affect inflation expectations. Yet, for now we see no acknowledgement of this dilemma.

The expectations argument is the more sophisticated modern approach. Unfortunately, it refers to concepts we do not readily observe. Money supply growth, on the other hand we can measure. We see that money supply is accelerating, and that should make us worry about inflation. That in turn should, through one of several possible channels, get central banks to reign in money supply growth. To do that, they have to stop all this talk of ‘looking through’ the oil price increase, and they have to at least consider raising rates now. While the ECB and BOE have referred to this as a policy choice, the Federal Reserve in the U.S. has been far more circumspect and has just approved the election of a new chairman who thinks he can cut rates. I wonder whether, once he takes the helm at the Fed, he will continue to hold that view?

Economists are not watching money supply the way they used to. Central bankers need to have their eyes open as to the inflation risk, especially in the post Covid period, after which inflation targets had been consistently muddled by overshooting inflation.

Denial takes on many forms. The lesson learned is about money supply. The lesson is about not accommodating shocks to lessen their impact. But the focus on interest rates has muddied the meaning of that lesson in practice.

Globally, Money Supplies Accelerate... No Problemo?

Michael J. Moran

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

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

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

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

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

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

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

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

Economy in Brief

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U.S. Home Builders’ Index Dips Again

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Misery Reaches Highest Since 1983

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Michigan Consumer Sentiment Edges Higher

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