Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119a.jpg" width="353">
The consumer price index (CPI-U) fell a record 1.0% last month versus September, according to the Bureau of Labor Statistics. The decline followed a roughly unchanged figure and it about matched Consensus expectations for a 0.8% decline. The latest reading lowered the three-month rate of change to 4.4% (AR).
Lower energy prices accounted for most of the decline in the total as they fell 8.6% from September. The drop was led by a record 14.2% drop in gasoline prices (+12.0% y/y) to an average of $3.05 per gallon. Prices have moved even lower this month to $2.07. Fuel oil prices fell a sharp 8.8% (+21.7% y/y), down for the third straight month. Prices for natural gas &amp; electricity fell just slightly m/m (+9.8% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119b.jpg" width="353">
Food &amp; beverage prices increased 0.3%, half the September rise and the weakest gain since March. For the bulk of the year, however, food prices have been quite strong. They have posted a 6.1% y/y increase, the fastest since early 1990. September prices for cereals &amp; bakery products and meats, poultry &amp; fish remained firm, each up 0.6%. Year-to-year, they have increased 12.5% y/y and 6.2% y/y, respectively.
The CPI less food &amp; energy fell 0.1%, the first decline since late 1982. Consensus expectations were for a 0.2% increase. The three-month annual rate of increase fell to 1.1% from its July high of 3.5%.
Core goods prices fell by 0.2%, the second consecutive monthly drop. The three-month rate of decline amounted to 1.9%, the weakest since late 2006. The latest decline was led again by lower prices for new &amp; used motor vehicles which were down another 0.7% (-2.3% y/y). Apparel prices also fell by a sharp 1.0% (+0.3% y/y). Apparel prices fell 0.4% last year. Prices for household furnishings &amp; operations were unchanged (+2.0% y/y). Continued strength was seen in tobacco prices which rose 0.4% (7.0% y/y).
Core services prices were unchanged, their weakest performance since 1982. The three-month growth rate eased to 2.2%, the lowest since April. Medical care services prices rose just 0.2% (3.4% y/y) while education costs remained firm and gained another 0.4% (5.9% y/y). Shelter prices were unchanged (+2.2% y/y) as the housing market remained depressed, the weakest y/y gain since mid-2005. Owners equivalent rent of primary residence, a measure not equivalent to other house price measures, ticked up 0.1% (2.3% y/y). Rents remained firm and rose by 0.4% (3.7% y/y). Public transportation prices fell for the second consecutive month. The 3.3% decline nevertheless left them up 8.4% y/y. Recreation prices ticked 0.1% higher (2.2% y/y).
The chained CPI, which adjusts for shifts in consumption patterns, fell 0.8%. Less food and energy, chained prices ticked up just 0.1%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total&nbsp;</td>
<td>-1.0</td>
<td>-0.1</td>
<td>3.7</td>
<td>2.9</td>
<td>3.2</td>
<td>3.4</td>
</tr>
<tr class="even">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>-0.1</td>
<td>0.1</td>
<td>2.2</td>
<td>2.3</td>
<td>2.5</td>
<td>2.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.4</td>
<td>-0.2</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
<td>0.5</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Services less Energy</td>
<td>0.0</td>
<td>0.3</td>
<td>3.0</td>
<td>3.4</td>
<td>3.4</td>
<td>2.8</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Energy</td>
<td>-8.6</td>
<td>-1.9</td>
<td>11.6</td>
<td>5.6</td>
<td>11.0</td>
<td>17.0</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Food &amp; Beverages</td>
<td>0.3</td>
<td>0.6</td>
<td>6.1</td>
<td>3.9</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a>&nbsp;</td>
<td>-0.8</td>
<td>-0.1</td>
<td>3.3 </td>
<td>2.5</td>
<td>2.9 </td>
<td>2.9</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Total less Food &amp; Energy&nbsp;</td>
<td>0.1</td>
<td>0.2</td>
<td>1.9</td>
<td>2.0</td>
<td>2.2</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
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The consumer price index (CPI-U) fell a record 1.0% last month versus September, according to the Bureau of Labor Statistics. The decline followed a roughly unchanged figure and it about matched Consensus expectations for a 0.8% [...]

U.S. CPI Fell A Record 1.0% and Core Prices Declined As Well

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119a.jpg" align="left" border="0" height="265" width="353">
The consumer price index (CPI-U) fell a
record 1.0% last month versus September, according to the Bureau of
Labor Statistics. The decline followed a roughly unchanged figure and
it about matched Consensus expectations for a 0.8% decline. The latest
reading lowered the three-month rate of change to 4.4% (AR).
Lower energy prices accounted for most of
the decline in the total as they fell 8.6% from September. The drop was
led by a record 14.2% drop in gasoline prices (+12.0% y/y) to an
average of $3.05 per gallon. Prices have moved even lower this month to
$2.07. Fuel oil prices fell a sharp 8.8% (+21.7% y/y), down for the
third straight month. Prices for natural gas &amp; electricity fell
just slightly m/m (+9.8% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119b.jpg" align="right" border="0" height="265" width="353">
Food &amp; beverage prices increased
0.3%, half the September rise and the weakest gain since March. For the
bulk of the year, however, food prices have been quite strong. They
have posted a 6.1% y/y increase, the fastest since early 1990.
September prices for cereals &amp; bakery products and meats,
poultry &amp; fish remained firm, each up 0.6%. Year-to-year, they
have increased 12.5% y/y and 6.2% y/y, respectively.
The CPI less food &amp; energy fell
0.1%, the first decline since late 1982. Consensus expectations were
for a 0.2% increase. The three-month annual rate of increase fell to
1.1% from its July high of 3.5%.
Core goods prices fell by 0.2%, the second
consecutive monthly drop. The three-month rate of decline amounted to
1.9%, the weakest since late 2006. The latest decline was led again by
lower prices for new &amp; used motor vehicles which were down
another 0.7% (-2.3% y/y). Apparel prices also fell by a sharp 1.0%
(+0.3% y/y). Apparel prices fell 0.4% last year. Prices for household
furnishings &amp; operations were unchanged (+2.0% y/y). Continued
strength was seen in tobacco prices which rose 0.4% (7.0% y/y).
Core services prices were unchanged, their
weakest performance since 1982. The three-month growth rate eased to
2.2%, the lowest since April. Medical care services prices rose just
0.2% (3.4% y/y) while education costs remained firm and gained another
0.4% (5.9% y/y). Shelter prices were unchanged (+2.2% y/y) as the
housing market remained depressed, the weakest y/y gain since mid-2005.
Owners equivalent rent of primary residence, a measure not equivalent
to other house price measures, ticked up 0.1% (2.3% y/y). Rents
remained firm and rose by 0.4% (3.7% y/y). Public transportation prices
fell for the second consecutive month. The 3.3% decline nevertheless
left them up 8.4% y/y. Recreation prices ticked 0.1% higher (2.2% y/y).
The chained CPI, which adjusts for shifts in consumption
patterns, fell 0.8%. Less food and energy, chained prices ticked up
just 0.1%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total&nbsp;</td>
<td>-1.0</td>
<td>-0.1</td>
<td>3.7</td>
<td>2.9</td>
<td>3.2</td>
<td>3.4</td>
</tr>
<tr class="even">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>-0.1</td>
<td>0.1</td>
<td>2.2</td>
<td>2.3</td>
<td>2.5</td>
<td>2.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>-0.4</td>
<td>-0.2</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
<td>0.5</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.0</td>
<td>0.3</td>
<td>3.0</td>
<td>3.4</td>
<td>3.4</td>
<td>2.8</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Energy</td>
<td>-8.6</td>
<td>-1.9</td>
<td>11.6</td>
<td>5.6</td>
<td>11.0</td>
<td>17.0</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.3</td>
<td>0.6</td>
<td>6.1</td>
<td>3.9</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained
CPI: Total (NSA)</a>&nbsp;</td>
<td>-0.8</td>
<td>-0.1</td>
<td>3.3 </td>
<td>2.5</td>
<td>2.9 </td>
<td>2.9</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.1</td>
<td>0.2</td>
<td>1.9</td>
<td>2.0</td>
<td>2.2</td>
<td>1.9</td>
</tr>
</tbody>
</table>
U.S. Housing Starts At Record Low
in October 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 19, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119c.jpg" align="left" border="0" height="265" width="353">
Housing starts fell to a record low last month. At 791,000
units (SAAR), the level was the lowest in the series' history which
dates back to 1959. The 4.5% decline followed a revised 3.0% September
drop that was slightly shallower than reported initially.
Consensus expectations had been for 780,000 starts.
Starts of single-family homes fell another 3.3% to 531,000
units, their lowest level since late-1981. Since their peak in early
2006, single-family starts are down by roughly two-thirds. Permits to
build single family homes also fell 14.5% (-43.3% y/y) to 460,000,
their lowest since the 1981-82 recession.
Starts began 4Q down 11.9% from the 3Q average.
During the last ten years there has been an 84% correlation between the
q/q change in single-family starts and their contribution to quarterly
GDP growth.
October multi-family starts fell 6.8% from September and they
are down by one-third from last year.
By region, October starts of single-family units in the
Northeast were unchanged m/m but down 40.6% y/y. In the Midwest starts
rose 11.5% but they remained 42.9% lower than last October. In the
South single-family starts fell a hard 10.5% (-40.6% y/y) to their
lowest since 1990 while in the West starts ticked up 1.7% (-35.1% y/y)
after a 13.9% September decline.
Today's speech Monetary Policy and Asset Prices
Revisited by Fed Vice-Chairman Donald L. Kohn can be found <a href="http://www.federalreserve.gov/newsevents/speech/kohn20081119a.htm">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Housing
Starts (000s, SAAR)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</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">Total</td>
<td>791</td>
<td>828</td>
<td>854</td>
<td>-38.0%</td>
<td>1,341</td>
<td>1,812</td>
<td>2,073</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>531</td>
<td>549</td>
<td>615</td>
<td>-39.9</td>
<td>1,034</td>
<td>1,474</td>
<td>1,719</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>260</td>
<td>279</td>
<td>239</td>
<td>-33.5</td>
<td>307</td>
<td>338</td>
<td>354</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>708</td>
<td>805</td>
<td>857</td>
<td>-40.1</td>
<td>1,389</td>
<td>1,844</td>
<td>2,160</td>
</tr>
</tbody>
</table>
UK's CBI Survey of Industry 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 19, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119d.jpg" align="left" border="0" height="265" width="353">
UK orders rebounded ever so slightly from last month&#8217;s extreme
weakness and still reside in the bottom 2% of their range since about
2000. Export orders have had the same response, making a token bounce
in November. Stocks of finished goods are rated as at their highest
levels indicating a problem build up with orders falling so fast. 
 

Not surprisingly output volume for the next 3-months is rated
at a net of -42 the weakest reading on record. Prices are still posted
to make gains with a net +10 reading that is still in the top 21% of
its range. So inflation pressures are proving sticky in the face of
horrific weakness. The NTC (Markit) diffusion survey for Nov is not
quite ready but its low readings essentially confirms the deteriorating
picture from the CBI. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr> <th colspan="11" scope="col">UK
Industrial volume data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Reported:</td>
<td>Nov 08</td>
<td>Oct 08</td>
<td>Sep 08</td>
<td>Aug 08</td>
<td>Jul 08</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total Orders</td>
<td>-38</td>
<td>-39</td>
<td>-26</td>
<td>-13</td>
<td>-8</td>
<td>-4</td>
<td>2%</td>
<td>9</td>
<td>-40</td>
<td>49</td>
</tr>
<tr class="grey3">
<td class="firstcol">Export Orders</td>
<td>-31</td>
<td>-32</td>
<td>-25</td>
<td>-9</td>
<td>-7</td>
<td>-7</td>
<td>17%</td>
<td>3</td>
<td>-39</td>
<td>42</td>
</tr>
<tr class="grey3">
<td class="firstcol">Stocks: FinGds</td>
<td>25</td>
<td>24</td>
<td>21</td>
<td>18</td>
<td>13</td>
<td>13</td>
<td>100%</td>
<td>24</td>
<td>-2</td>
<td>26</td>
</tr>
<tr class="grey2">
<td colspan="11" class="firstcol">Looking ahead</td>
</tr>
<tr class="grey3">
<td class="firstcol">Output Volume: Nxt 3M</td>
<td>-42</td>
<td>-31</td>
<td>-16</td>
<td>-13</td>
<td>-7</td>
<td>1</td>
<td>0%</td>
<td>28</td>
<td>-31</td>
<td>59</td>
</tr>
<tr class="grey3">
<td class="firstcol">Avg Prices 4Nxt 3m</td>
<td>10</td>
<td>23</td>
<td>31</td>
<td>34</td>
<td>28</td>
<td>25</td>
<td>79%</td>
<td>34</td>
<td>-19</td>
<td>53</td>
</tr>
<tr class="grey2">
<td colspan="11" class="firstcol">From end 2000</td>
</tr>
<tr class="grey1">
<td colspan="11" class="firstcol">Compare to CIPS MFG</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>Oct 08</td>
<td>Sep 08</td>
<td>Aug 08</td>
<td>Jul 08</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK MFG</td>
<td>&nbsp;</td>
<td>41.49</td>
<td>41.15</td>
<td>45.28</td>
<td>44.37</td>
<td>48.05</td>
<td>2%</td>
<td>56.3</td>
<td>41.15</td>
<td>15</td>
</tr>
</tbody>
</table>
</body></html>

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118j.jpg" align="left" border="0" height="265" width="353">
The November Housing Market Index (HMI) from the National
Association of Home Builders plumbed a new record low. At a single
level of 9 nearly halved the old record low of 14 reached just last
month. 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;. Numerical equivalent results over 50 indicate a predominance of &#8220;good&#8221; readings.
Since 1990, the year-to-year change in this index has had a
correlation of 72% with the year-to-year percentage change in new
single-family home sales. As a result, the latest HMI index at best
indicates a bottoming of the housing market's troubles.
The Home Builders Association indicated that its sub-index of
present sales conditions also fell to a record low of 8. That was down
from last year's average level of 27 and 2006's average of 45.
Builders&#8217; expectations for sales six months was relatively strong an held steady at a level of 19. The &#8220;traffic of prospective buyers, however, fell to a new low index reading of 7.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118k.jpg" align="right" border="0" height="265" width="353">
Each of the country's regions showed deterioration in the index as conditions in each region fell to a new low.
Not only are builders disturbed by the market for new homes, but the
appraisal of conditions for remodeling a home also reached a record low
during the third quarter.
The current market condition for remodeling of a home also is deemed poor.
The NAHB has compiled the Housing Market Index since 1985. 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 SURVEYS database.
Mortgage Innovation, Mortgage Choice, and Housing Decisions from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/08/11/Chambers.pdf">here</a>.
Changing the Rule: State Mortgage Foreclosure Moratoria During the Great Depression is available <a href="http://research.stlouisfed.org/publications/review/08/11/Wheelock.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat'l Association of Home Builders</a></th>
<th scope="col">November</th>
<th scope="col">October &nbsp;</th>
<th scope="col">November '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>9</td>
<td>14</td>
<td>19</td>
<td>27</td>
<td>42</td>
<td>67</td>
</tr>
</tbody>
</table>
</body></html>

The November Housing Market Index (HMI) from the National Association of Home Builders plumbed a new record low. At a single level of 9 nearly halved the old record low of 14 reached just last month. The index is compiled from survey [...]

U.S. Home Builders' Survey Lower Still

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118g.jpg" align="right" border="0" height="265" width="353">
The
United Kingdom released inflation numbers today.&nbsp; The
acceleration in inflation in the previous months came to a halt in
October.&nbsp; The official measure, the year- to- year percent
change in the consumer price index, fell to 4.5% in October from 5.2%
in September.&nbsp; &nbsp;The core index, which excludes
energy, food, alcoholic beverages and tobacco, fell to 1.9% in October
from 2.2%.&nbsp; The year- to- year change in the retail price
index, which until 2003 was the official measure of inflation, fell to
4.2% in October from 5.00% in September. The three measures of
inflation are shown in the first chart.&nbsp;Except for
the last two months, the inflation rate as measured by the CPI has been
lower than that measured by the RPI largely because of the exclusion in
the former and inclusion in the latter of mortgage interest payments
and other housing related costs.&nbsp; Until June of this year the
exclusion of these items tended to lower the CPI inflation rate, but
since then it has added to it, as can be seen in the second
chart.The declines in the various measures of inflation were
due largely to the declines in the prices of food and oil that affected
the indexes directly and declines in the prices of&nbsp; base
metals that affected the indexes indirectly.&nbsp; The declines are
likely to continue, if not intensify, as world demand continues to
fall.&nbsp; Longer term, however, the current fiscal and monetary
policies being pursued by the developed and developing nations should
help to avoid deflation such as engulfed the globe in the thirties. (
If, indeed, they do not lead eventually to a resurgence of
inflation.)&nbsp; As an illustration of the course of inflation and
deflation in the twenties and thirties of the last century, we use the
changes in the consumer price index for the United States, the series,
PCUN67, found in the Haver Analytics' USECON&nbsp;
data base.&nbsp; &nbsp;&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118i.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118h.jpg" border="0" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">UNITED
KINGDOM INFLATION RATES&nbsp;</th>
<th scope="col">Oct 08</th>
<th scope="col">Sep&nbsp; 08&nbsp;</th>
<th scope="col">Oct&nbsp; 07&nbsp;</th>
<th scope="col">M/M Chg</th>
<th scope="col">Y/Y&nbsp; &nbsp;Chg</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">Consumer Price Index
(Y/Y % Chg)</td>
<td>4.5</td>
<td>5.2</td>
<td>2.0</td>
<td>-0.7</td>
<td>2.5</td>
<td>2.32</td>
<td>2.33</td>
<td>2.05</td>
</tr>
<tr>
<td class="firstcol">Core CPI Index (Y/Y %
Chg)</td>
<td>1.9</td>
<td>2.2</td>
<td>1.5</td>
<td>-0.3</td>
<td>0.4</td>
<td>1.69</td>
<td>1.30</td>
<td>1.51</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Price
Index&nbsp; (Y/Y % Chg)</td>
<td>4.2</td>
<td>5.0</td>
<td>4.2</td>
<td>-0.8</td>
<td>0.0</td>
<td>4.27</td>
<td>3.19</td>
<td>2.83</td>
</tr>
</tbody>
</table>
</body></html>

The United Kingdom released inflation numbers today. The acceleration in inflation in the previous months came to a halt in October. The official measure, the year- to- year percent change in the consumer price index, fell to 4.5% in [...]

Inflation in the U.K. Declines in October

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118f.jpg" width="353">
According to the International Council of Shopping Centers-Goldman Sachs Index, a 0.3% uptick in chain store sales last week made up a piece of the prior week&#39;s 1.0% decline. Nevertheless, sales ticked down 0.1% from the year-ago level.
The latest weekly increase left sales so far in November down 0.6% from October. During all of October sales fell 1.0% from September following that month&#39;s 1.9% drop. The level of sales during the latest week remained near the lowest since December of last year.
During the last ten years there has been a 59% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The weekly leading indicator of chain store sales from ICSC-Goldman Sachs ticked up 0.1% but was still down 5.7% from the year-ago level and it was at it&#39;s lowest level since 1996.
The chain store sales figures are available in Haver&#39;s SURVEYW database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/15/08</th>
<th scope="col">11/08/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>478.5</td>
<td>477.2</td>
<td>-0.1%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>


</html>

According to the International Council of Shopping Centers-Goldman Sachs Index, a 0.3% uptick in chain store sales last week made up a piece of the prior week's 1.0% decline. Nevertheless, sales ticked down 0.1% from the year-ago level.

U.S. Chain Store Sales Fell Versus Last Year

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118d.jpg">
Falling by another fifteen cents w/w to $2.07 per gallon, the retail price for a gallon of regular gasoline was at its lowest level since early 2005 according to the U.S. Department of Energy survey. Prices have now fallen $2.04 per gallon, or by more than one-half, since their peak early this past July. The latest decline was accompanied by a drop in the average price for all grades of gasoline to $2.13 per gallon.
Yesterday, the spot market price for a gallon of regular gasoline fell eight cents from last week&#39;s average to $1.24. In futures trading the November contract closed down further at $1.17 per gallon.
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database. Daily prices are in the DAILY database.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118e.jpg">
The U.S. Department of Energy reported that the demand for gasoline fell by 2.9% y/y. The rate of decline has bottomed out recently but the decline is still the fastest since late-1995 (the latest four weeks versus the same four weeks last year). The demand for all petroleum products also has softened, falling 6.6% y/y.
These DOE figures are available in Haver&#39;s OILWKLY database.
The price for a barrel of West Texas Intermediate crude oil fell further last week to an average $58.64 per barrel, down 60% since the peak in July of $145.66. In futures trading yesterday, the two-month price for crude oil was even lower at $54.95 per barrel.
Last week, prices for natural gas reversed the prior week&#39;s gain and ticked down to $6.65 per mmbtu (-7.4% y/y). The average price this month was nearly one-half below the high for natural gas prices in early-July of $13.19/mmbtu.
Signs of a Reprieve from the Federal Reserve Bank of Dallas can be found <a href="http://dallasfed.org/research/energy/en0803.cfm">here</a>.
Monetary Policy Transparency and Private Sector Forecasts: Evidence from Survey Data from the Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/3q08Sellon.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">11/17/08</th>
<th scope="col">11/10/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon)</td>
<td>2.07</td>
<td>2.22</td>
<td>-33.1%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>58.64</td>
<td>64.31</td>
<td>-37.4%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
</body>
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Falling by another fifteen cents w/w to $2.07 per gallon, the retail price for a gallon of regular gasoline was at its lowest level since early 2005 according to the U.S. Department of Energy survey. Prices have now fallen $2.04 per [...]

U.S. Gasoline Prices Continued Lower

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118a.jpg" width="353">
U.S. finished producer prices during October matched Consensus expectations and fell 2.8% following their 0.4% drop during September.
A 12.8% decline in energy prices (+5.5% y/y) was due to a 24.9% plunge in gasoline prices, but gasoline prices were still up 3.2% y/y. Additionally, home heating oil prices fell by 9.6% (+24.2% y/y). Natural gas prices fell for the third consecutive month but, again, a 5.9% gain left them still up 10.4% y/y. Residential electric power costs slipped 0.5% (+5.8% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118b.jpg" width="353">
Less food &amp; energy, prices rose 0.4% for the second consecutive month and that compared to a Consensus expectation for a 0.1% uptick. Core pricing indeed has firmed. The y/y gain in the core PPI of 4.4% was the strongest since late-1989. Prices of core finished consumer goods rose 0.3% last month and that was enough to lift the y/y gain to 4.6%, its strongest since 1989. Durable consumer goods prices rose 0.4% (3.0% y/y) on the strength of higher furniture prices which increased 5.4% y/y after a 1.3% gain last year. Additionally, appliance prices firmed and posted a 2.9% y/y rise following the 1.1% increase during 2007. Core nondurable goods prices also strengthened and rose 0.3% last month. Their 5.8% y/y gain was the fastest since early 1999. Prices for capital equipment also firmed. A 0.5% rise during October was the second in a row and it raised the y/y rise to 4.4%, the strongest since 1989.
Finished consumer food prices reversed their September gain and fell 0.2%. However, they still have been strong. Rising 6.6% y/y food prices about matched last year&#39;s gain which was up from a 0.7% uptick during 2006. Meat prices have been firm as have been bakery product prices. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118c.jpg" width="353">
Intermediate goods prices fell 3.9% as energy prices dropped. However, excluding food &amp; energy a 1.7% m/m fall still left these prices up 9.7% y/y which remained near the strongest since 1980.
The crude materials PPI crashed 18.6% (-1.4% y/y) due to a 24.9% drop in energy prices (-1.7% y/y). Crude food prices fell 11.1% and that was enough to lower the y/y gain to -1.3% y/y. Less food &amp; energy crude prices fell 17.0% and that pushed the y/y gain into negative territory for the first time since 2005.
This morning&#39;s testimony by Fed Chairman Ben S. Bernanke is available <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20081118a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</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">Finished Goods</td>
<td>-2.8</td>
<td>-0.4</td>
<td>5.1</td>
<td>3.9</td>
<td>3.0</td>
<td>&nbsp;4.9&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.4</td>
<td>0.4</td>
<td>4.4</td>
<td>1.9</td>
<td>1.5</td>
<td>2.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>-3.9</td>
<td>-1.2</td>
<td>15.3</td>
<td>4.1</td>
<td>6.4</td>
<td>&nbsp;8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-1.7</td>
<td>-0.3</td>
<td>9.7</td>
<td>2.8</td>
<td>6.0</td>
<td>&nbsp;5.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>-18.6</td>
<td>-7.9</td>
<td>-1.4</td>
<td>12.1</td>
<td>1.4</td>
<td>14.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-17.0</td>
<td>-9.4</td>
<td>&nbsp;-3.1</td>
<td>15.6</td>
<td>20.8</td>
<td>4.9</td>
</tr>
</tbody>
</table>
</body>
</html>

U.S. finished producer prices during October matched Consensus expectations and fell 2.8% following their 0.4% drop during September. A 12.8% decline in energy prices (+5.5% y/y) was due to a 24.9% plunge in gasoline prices, but [...]

U.S. PPI Fell Again, Core Pricing Power Strong Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118a.jpg" align="left" border="0" height="265" width="353">
U.S. finished producer prices during October matched Consensus
expectations and fell 2.8% following their 0.4% drop during September.
A 12.8% decline in energy prices (+5.5% y/y) was due to a
24.9% plunge in gasoline prices, but gasoline prices were still up 3.2%
y/y. Additionally, home heating oil prices fell by 9.6% (+24.2% y/y).
Natural gas prices fell for the third consecutive month but, again, a
5.9% gain left them still up 10.4% y/y. Residential electric power
costs slipped 0.5% (+5.8% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118b.jpg" align="right" border="0" height="265" width="353">
Less food &amp; energy, prices rose 0.4% for the second
consecutive month and that compared to a Consensus expectation for a
0.1% uptick. Core pricing indeed has firmed. The y/y gain in the core
PPI of 4.4% was the strongest since late-1989. Prices of core finished
consumer goods rose 0.3% last month and that was enough to lift the y/y
gain to 4.6%, its strongest since 1989. Durable consumer goods prices
rose 0.4% (3.0% y/y) on the strength of higher furniture prices which
increased 5.4% y/y after a 1.3% gain last year. Additionally, appliance
prices firmed and posted a 2.9% y/y rise following the 1.1% increase
during 2007. Core nondurable goods prices also strengthened and rose
0.3% last month. Their 5.8% y/y gain was the fastest since early 1999.
Prices for capital equipment also firmed. A 0.5% rise during October
was the second in a row and it raised the y/y rise to 4.4%, the
strongest since 1989.
Finished consumer food prices reversed their September gain
and fell 0.2%. However, they still have been strong. Rising 6.6% y/y
food prices about matched last year's gain which was up from a 0.7%
uptick during 2006. Meat prices have been firm as have been bakery
product prices. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118c.jpg" align="left" border="0" height="265" width="353">
Intermediate goods prices fell 3.9% as energy prices dropped.
However, excluding food &amp; energy a 1.7% m/m fall still left
these prices up 9.7% y/y which remained near the strongest
since 1980.
The crude materials PPI crashed 18.6% (-1.4% y/y) due to a
24.9% drop in energy prices (-1.7% y/y). Crude food prices fell 11.1%
and that was enough to lower the y/y gain to -1.3% y/y. Less food
&amp; energy crude prices fell 17.0% and that pushed the y/y gain
into negative territory for the first time since 2005.
This morning's testimony by Fed Chairman Ben S. Bernanke is
available <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20081118a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM">Producer
Price Index</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</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">Finished Goods</td>
<td>-2.8</td>
<td>-0.4</td>
<td>5.1</td>
<td>3.9</td>
<td>3.0</td>
<td>&nbsp;4.9&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.4</td>
<td>0.4</td>
<td>4.4</td>
<td>1.9</td>
<td>1.5</td>
<td>2.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>-3.9</td>
<td>-1.2</td>
<td>15.3</td>
<td>4.1</td>
<td>6.4</td>
<td>&nbsp;8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-1.7</td>
<td>-0.3</td>
<td>9.7</td>
<td>2.8</td>
<td>6.0</td>
<td>&nbsp;5.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>-18.6</td>
<td>-7.9</td>
<td>-1.4</td>
<td>12.1</td>
<td>1.4</td>
<td>14.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-17.0</td>
<td>-9.4</td>
<td>&nbsp;-3.1</td>
<td>15.6</td>
<td>20.8</td>
<td>4.9</td>
</tr>
</tbody>
</table>
U.S. Gasoline Prices Continued
Lower 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118d.jpg" align="left" border="0">
Falling by another fifteen cents w/w to $2.07 per gallon, the
retail price for a gallon of regular gasoline was at its
lowest level since early 2005 according to the U.S.
Department of Energy survey. Prices have now fallen $2.04 per gallon,
or by more than one-half, since their peak early this past July. The
latest decline was accompanied by a drop in the average price for all
grades of gasoline to $2.13 per gallon.
Yesterday, the spot market price for a gallon of regular
gasoline fell eight cents from last week's average to $1.24. In futures
trading the November contract closed down further at $1.17 per gallon.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118d.jpg" align="right" border="0">
Weekly gasoline prices can be found in Haver's WEEKLY
database. Daily prices are in the DAILY
database.
The U.S. Department of Energy reported that the demand
for gasoline fell by 2.9% y/y. The rate of decline has
bottomed out recently but the decline is still the fastest since
late-1995 (the latest four weeks versus the same four weeks last year).
The demand for all petroleum products also has softened, falling 6.6%
y/y.
These DOE figures are available in Haver's OILWKLY
database.
The price for a barrel of West Texas Intermediate crude oil
fell further last week to an average $58.64 per barrel, down 60% since
the peak in July of $145.66. In futures trading yesterday, the
two-month price for crude oil was even lower at $54.95 per barrel.
Last week, prices for natural gas reversed the prior week's
gain and ticked down to $6.65 per mmbtu (-7.4% y/y). The average price
this month was nearly one-half below the high for natural gas prices in
early-July of $13.19/mmbtu.
Signs of a Reprieve from the Federal
Reserve Bank of Dallas can be found <a href="http://dallasfed.org/research/energy/en0803.cfm">here</a>.
Monetary Policy Transparency and Private Sector
Forecasts: Evidence from Survey Data from the Federal
Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/3q08Sellon.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">11/17/08</th>
<th scope="col">11/10/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon)</td>
<td>2.07</td>
<td>2.22</td>
<td>-33.1%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>58.64</td>
<td>64.31</td>
<td>-37.4%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
U.S. Chain Store Sales Fell Versus
Last Year 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118f.jpg" align="left" border="0" height="265" width="353">
According to the International Council of Shopping
Centers-Goldman Sachs Index, a 0.3% uptick in chain store sales last
week made up a piece of the prior week's 1.0% decline. Nevertheless,
sales ticked down 0.1% from the year-ago level.

The latest weekly increase left sales so far in November
down 0.6% from October. During all of October sales fell 1.0% from
September following that month's 1.9% drop. The level of sales during
the latest week remained near the lowest since December of last year.


During the last ten years there has been a 59% correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.

The ICSC-Goldman
Sachs retail chain-store sales index is constructed using the
same-store sales (stores open for one year) reported by 78 stores of
seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.


The weekly leading indicator of chain store sales from
ICSC-Goldman Sachs ticked up 0.1% but was still down 5.7% from the
year-ago level and it was at it's lowest level since 1996.
The chain store sales figures are available in Haver's SURVEYW
database.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">11/15/08</th>
<th scope="col">11/08/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>478.5</td>
<td>477.2</td>
<td>-0.1%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
U.S. Home Builders&#8217; Survey Lower
Still 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118j.jpg" align="left" border="0" height="265" width="353">
The November Housing Market Index (HMI) from the National
Association of Home Builders plumbed a new record low. At a single
level of 9 nearly halved the old record low of 14 reached just last
month. 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;. Numerical equivalent results over
50 indicate a predominance of &#8220;good&#8221; readings.
Since 1990, the year-to-year change in this index has had a
correlation of 72% with the year-to-year percentage change in new
single-family home sales. As a result, the latest HMI index at best
indicates a bottoming of the housing market's troubles.
The Home Builders Association indicated that its sub-index of
present sales conditions also fell to a record low of 8. That was down
from last year's average level of 27 and 2006's average of 45.
Builders&#8217; expectations for sales six months was relatively
strong an held steady at a level of 19. The
&#8220;traffic of prospective buyers, however, fell to a new low index
reading of 7.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118k.jpg" align="right" border="0" height="265" width="353">
Each of the country's regions showed deterioration in the
index as conditions in each region fell to a new low.
Not only are builders disturbed by the market for new homes,
but the appraisal of conditions for remodeling a home also reached a
record low during the third quarter.
The current market condition for remodeling of a home also is
deemed poor.
The NAHB has compiled the Housing Market Index since 1985.
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 SURVEYS
database.
Mortgage Innovation, Mortgage Choice, and Housing
Decisions from the Federal Reserve Bank of St. Louis can be
found <a href="http://research.stlouisfed.org/publications/review/08/11/Chambers.pdf">here</a>.
Changing the Rule: State Mortgage Foreclosure
Moratoria During the Great Depression is available <a href="http://research.stlouisfed.org/publications/review/08/11/Wheelock.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat'l
Association of Home Builders</a></th>
<th scope="col">November</th>
<th scope="col">October
&nbsp;</th>
<th scope="col">November '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>9</td>
<td>14</td>
<td>19</td>
<td>27</td>
<td>42</td>
<td>67</td>
</tr>
</tbody>
</table>
Inflation in the U.K. Declines inOctober 
by <a href="/comment/Curley.html">Louise
Curley</a> November 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118g.jpg" align="right" border="0" height="265" width="353">
The
United Kingdom released inflation numbers today.&nbsp; The
acceleration in inflation in the previous months came to a halt in
October.&nbsp; The official measure, the year- to- year percent
change in the consumer price index, fell to 4.5% in October from 5.2%
in September.&nbsp; &nbsp;The core index, which excludes
energy, food, alcoholic beverages and tobacco, fell to 1.9% in October
from 2.2%.&nbsp; The year- to- year change in the retail price
index, which until 2003 was the official measure of inflation, fell to
4.2% in October from 5.00% in September. The three measures of
inflation are shown in the first chart.&nbsp;
Except for
the last two months, the inflation rate as measured by the CPI has been
lower than that measured by the RPI largely because of the exclusion in
the former and inclusion in the latter of mortgage interest payments
and other housing related costs.&nbsp; Until June of this year the
exclusion of these items tended to lower the CPI inflation rate, but
since then it has added to it, as can be seen in the second
chart.
The declines in the various measures of inflation were
due largely to the declines in the prices of food and oil that affected
the indexes directly and declines in the prices of&nbsp; base
metals that affected the indexes indirectly.&nbsp; The declines are
likely to continue, if not intensify, as world demand continues to
fall.&nbsp; Longer term, however, the current fiscal and monetary
policies being pursued by the developed and developing nations should
help to avoid deflation such as engulfed the globe in the thirties. (
If, indeed, they do not lead eventually to a resurgence of
inflation.)&nbsp; As an illustration of the course of inflation and
deflation in the twenties and thirties of the last century, we use the
changes in the consumer price index for the United States, the series,
PCUN67, found in the Haver Analytics' USECON&nbsp;
data base.&nbsp; &nbsp;&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118i.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118h.jpg" border="0" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">UNITED
KINGDOM INFLATION RATES&nbsp;</th>
<th scope="col">Oct 08</th>
<th scope="col">Sep&nbsp; 08&nbsp;</th>
<th scope="col">Oct&nbsp; 07&nbsp;</th>
<th scope="col">M/M Chg</th>
<th scope="col">Y/Y&nbsp; &nbsp;Chg</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">Consumer Price Index
(Y/Y % Chg)</td>
<td>4.5</td>
<td>5.2</td>
<td>2.0</td>
<td>-0.7</td>
<td>2.5</td>
<td>2.32</td>
<td>2.33</td>
<td>2.05</td>
</tr>
<tr>
<td class="firstcol">Core CPI Index (Y/Y %
Chg)</td>
<td>1.9</td>
<td>2.2</td>
<td>1.5</td>
<td>-0.3</td>
<td>0.4</td>
<td>1.69</td>
<td>1.30</td>
<td>1.51</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Price
Index&nbsp; (Y/Y % Chg)</td>
<td>4.2</td>
<td>5.0</td>
<td>4.2</td>
<td>-0.8</td>
<td>0.0</td>
<td>4.27</td>
<td>3.19</td>
<td>2.83</td>
</tr>
</tbody>
</table>

</body></html>

Next year's inflation forecasts are on the rise and above target

Disrupted global supply chains placing upward pressure on US goods prices

Construction of data centers has overtaken transportation construction in US

Elevated energy prices putting intense upward pressure on input prices around the globe

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

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

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Andrew Cates

**Equity Momentum and Global Surprises — Still Moving Together**
One of the more telling features of global equity markets in 2026 has been the persistence of the correlation between non-US equity momentum and global growth and inflation surprise indices. Equity markets outside the United States have generally prospered when economic data have beaten consensus expectations and when inflation surprises have been negative  — a combination that has historically been associated with stronger corporate earnings and a more benign policy backdrop in economies other than the US. That correlation has held reasonably well through the turbulence of the past few months, even as the Middle East conflict introduced significant noise into both the economic data and the financial market signal. What the chart reveals this week is a picture of moderate but not alarming deterioration: global growth surprises have softened at the margin, consistent with the energy cost headwinds that have weighed on European and Asian activity, but the relationship between equity momentum and the broader data pulse remains intact. It is a signal that market participants continue to track economic fundamentals rather than purely geopolitical newsflow — a modestly reassuring sign that the underlying framework for assessing the global cycle has not broken down.

260625Z1.jpg

**The Fed Decouples: Why Oil and US Two-Year Yields Have Parted Ways**
For much of 2026, oil prices and US two-year Treasury yields moved in close alignment. The logic was straightforward: higher oil prices raised inflation expectations, which in turn pushed market participants to anticipate a more hawkish Federal Reserve, lifting short-dated yields in the process. That relationship held with notable consistency through the March escalation and the months that followed, as energy market shocks and monetary policy expectations fed off each other. What this week’s chart captures is a striking breakdown in that correlation. As oil prices have fallen on the back of the US-Iran memorandum of understanding and the associated unwinding of the geopolitical risk premium, US two-year yields have not followed them lower. The reason is last week’s Federal Reserve meeting. Under new chair Kevin Warsh, the Fed delivered a hawkish dot plot that shifted the median year-end projection to a hike, making clear that the easing cycle previously priced by some market participants is no longer the central scenario. The message is important: the deflationary impulse from lower oil prices is being offset — at least in the Fed’s framing — by persistent underlying inflation pressures and a commitment to keeping policy tight.

260625Z2.jpg

**Flash PMIs Signal Easing Supply Chain Stress and Softer Price Pressures**
June’s flash PMI surveys, released this week across the major advanced economies, provide a timely read on how the global manufacturing and services sectors are absorbing the shifting macro backdrop. Two findings stand out. First, supplier delivery times have improved (or not lengthened as much as they had in the prior two months). This finding coheres naturally with the broader narrative: lower oil prices reduce transport and energy input costs, while the resumption of Strait of Hormuz shipping flows — examined in more detail in chart 4 — is beginning to reduce the freight disruption and re-routing costs that had been building since the conflict escalated. Second, output price inflation in manufacturing has softened, suggesting that some of the pipeline pressure from earlier energy cost spikes is beginning to fade.

260625Z3.jpg

**Hormuz Traffic and Oil: A Coherent Story of Tentative Normalisation**
The recent US-Iran memorandum of understanding to work towards a final deal, though not without subsequent flare-ups, has already brought relief to markets, most visibly in crude oil prices. This should go a long way towards unwinding the inflation-related concerns that previously elevated oil prices had stoked. While the pullback has owed much to anticipation of the glut of pent-up supply expected to follow, certain trackers of shipping volume through the Strait of Hormuz, such as the IMF’s, already point to a marked pickup in traffic, even if it remains well below pre-conflict levels. Should this normalisation of shipping flows persist, it would lend continued justification to a corresponding easing in oil prices, energy-related inflation and, by extension, headline inflation — a welcome development for central banks grappling with the delicate balancing act of reining in price pressures without dampening growth too sharply.

260625Z4.jpg

**South Korea’s Trade Data Flag a Modest Softening in Global Demand**
South Korea’s trade data serve as one of the global economy’s most useful early warning systems. As one of the world’s most open economies, with exports spanning semiconductors, petrochemicals, steel, automobiles and consumer electronics, South Korea’s monthly trade figures provide a timely and broad-based read on the state of global demand. This week’s data show a slightly softer picture than the strong prints that characterised much of the first quarter. Headline export growth has moderated at the margin, and crucially, semiconductor exports — which had been the most dynamic component of the trade data, propelled by AI-related chip demand — have also come in a touch below the exceptional run rates seen earlier in the year. This is not, in itself, alarming: some moderation from peak rates was always to be expected, and the semiconductor cycle remains structurally supported by the scale of AI infrastructure investment globally.

260625Z5.jpg

**A Super El Niño on the Horizon — The Next Inflation Risk**
With that said, while one driver of price pressures seems to be ebbing for now — albeit not without the risk of future flare-ups — another potential inflationary risk looms on the horizon. The chart illustrates the transmission mechanism. It plots Thailand’s milled rice production (left axis) against Australia’s Southern Oscillation Index (right axis), a well-established barometer of El Niño and La Niña conditions. The convention is straightforward: SOI readings persistently above +8 indicate La Niña, associated with above-average rainfall across Southeast Asia and broadly supportive crop conditions; readings persistently below -8 signal El Niño, which brings drought stress and reduced water availability across the region. The historical relationship is striking. The sharp negative SOI troughs around 2002–03, 2009–10 and most dramatically around 2015 all coincide with visible falls in Thai milled rice output. The severe El Niño of 2014–16 produced both the deepest SOI trough in the series and the sharpest single drop in rice production, to below 24,000 thousand tonnes. As meteorological authorities have been warning for some time, the world appears to be facing an imminent Super El Niño event, with the SOI already drifting back towards negative territory in recent months. Were a significant El Niño to materialise in the second half of this year, the implications for Thai rice output — and by extension for Asian food price inflation — could be substantial. Central bankers, in other words, may find themselves having to wrestle with a new inflationary impulse just as they had begun to hope the worst was behind them.

260625Z6.jpg

The mood in global financial markets this week is more settled, though “settled” should not be confused with resolved. The US-Iran memorandum of understanding, signed last week, has continued to do its work: oil prices have fallen further, Strait of Hormuz shipping traffic has picked up measurably, and the risk premium that had been embedded in energy markets since the conflict escalated in March is now visibly unwinding. That is a material development for the inflation outlook, and central bankers will be watching carefully. Yet the picture is not without its complications. Technology stocks — the most conspicuous beneficiary of the prevailing low-rate, high-growth narrative — have been subject to renewed jitters this week, as investors grow more attentive to stretched valuations and the implications of a Federal Reserve that, under new chair Kevin Warsh, is no longer signalling the easing cycle previously priced into markets. Against this backdrop, this week’s charts draw on the latest data to assess where the global economic cycle stands. Equity momentum outside the United States has tracked closely with global growth and inflation surprises, a correlation that tells us something important about how activity is being perceived (chart 1). Meanwhile, the breakdown of the previously tight relationship between oil prices and US two-year yields is arguably one of the more telling market signals of recent weeks (chart 2). June’s flash PMI surveys point to easing supply chain stress and softer output price inflation in manufacturing — a finding that chimes naturally with lower crude prices and the resumption of Hormuz flows (chart 3). The Strait of Hormuz itself deserves a closer look: traffic data and the mechanics of the oil price pullback are telling a coherent story that supports the PMI picture (chart 4). South Korea’s trade data, including semiconductors, offer a slightly softer read on global demand momentum at the margin (chart 5). And looming on the horizon, one new risk is drawing the attention of meteorological authorities: a Super El Niño event whose probability has been rising, with potentially significant implications for food commodity prices and Asian agriculture (chart 6).

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Charts of the Week: Calmer Waters, New Currents

Winnie Tapasanun

260624F59.jpg

260624G59.jpg

New single-family home sales unexpectedly fell 7.3% m/m (-6.8% y/y) to a seasonally adjusted annual rate of 580,000 units in May following an upwardly revised 5.7% decline to 626,000 in April (initially -6.2%, 622,000) and an upwardly revised 5.4% increase to 664,000 in March (previously +3.4%, 663,000), according to data from the U.S. Census Bureau. The Action Economics Forecast Survey had expected May sales of 640,000. May marked the lowest level since January, down 23.4% from a high of 757,000 in November 2025 but up 8.4% from a low of 535,000 in July 2022. The May decline coincided with a rise in the average 30-year fixed mortgage rate to 6.44%, the highest since August 2025, from 6.33% in April, according to Freddie Mac.

Regionally, May new home sales showed a mixed performance. Sales in the West plummeted 26.9% (-17.0% y/y) to 117,000 in May, a seven-month low, reversing a 19.4% rebound to 160,000 in April. Sales in the South fell 4.1% (-5.4% y/y) to 350,000, the lowest level since January, on top of an 11.4% April drop to 365,000. In contrast, sales in the Midwest recovered 16.2% (-3.7% y/y) to 79,000, the third m/m gain in four months, after a 20.0% April plunge to 68,000. Sales in the Northeast increased 3.0% (17.2% y/y) to 34,000, the highest level since December, following a flat reading in April and a 73.7% surge in March. Notably, the South remained the dominant region, accounting for 60.3% of total U.S. new home sales.

The median sales price of a new home rose 2.0% (0.0% y/y) to $424,900 in May, the highest since December, following a 6.0% rise to $416,500 in April and three consecutive m/m decreases. The median sales price was 6.9% above a low of $397,600 in November 2024 but 7.7% below its record high of $460,300 in October 2022. The average sales price of a new home climbed 7.8% (5.0% y/y) to $540,600, the first m/m increase in three months and the highest level since July 2022, following a 1.3% April decline to $501,400. The average price was 13.7% above a low of $475,600 in August 2024 and just 0.1% below a peak of $541,200 in July 2022. These sales price data are not seasonally adjusted.

The number of unsold new homes on the market grew 2.3% (-1.4% y/y) to 496,000 in May, the third m/m rise in four months and the highest level since July 2025, after a 0.8% rebound to 485,000 in April. The latest figure was 17.0% above a low of 424,000 in May 2023. The seasonally adjusted months' supply of new homes for sale rose to 10.3 months in May from 9.3 months in April, remaining above a low of 6.9 months in May 2023 and matching a high last seen in July 2022.

The median number of months a new home stayed on the market increased to 3.7 months in May, the highest since July 2021, from 3.6 months in April. The latest reading was above its record low of 1.5 months in September and October 2022 but well below a peak of 5.1 months in March 2021. These figures date back to January 1975.

New home sales are recorded when the sales contract is signed. New home sales activity and prices are available in Haver's **USECON** database. The consensus expectation figure from Action Economics is available in the **AS1REPNA** database.

260624H59.jpg

260624I59.jpg

- Sales -7.3% m/m (-6.8% y/y) to 580,000 in May; down 23.4% from a November high.
- Sales m/m down in the West (-26.9%) and South (-4.1%); up in the Midwest (+16.2%) and Northeast (+3.0%).
- Sales y/y down in all regions except the Northeast (+17.2%).
- Median sales price +2.0% m/m to $424,900, a 5-month high; avg. price +7.8% m/m to $540,600, highest since July ’22.
- Months' supply up to 10.3 mths., highest since July ’22.

U.S. New Home Sales Unexpectedly Hit a Four-Month Low in May

Michael J. Moran

260624A.jpg

260624B.jpg

The US current account balance, which consists of international trade and income flows, deteriorated slightly in the first quarter, moving to a deficit of $226.8 billion versus a shortfall of $221.1 billion in the fourth quarter of last year (chart, upper left). Trade flows moved slightly in favor of the US, as the deficit narrowed by $11.6 billion to $165.8 billion, with trade in both goods and services contributing to the improvement. The latest reading on the trade deficit was among the best of the post-pandemic period (chart, upper right).

The improvement in trade was more than offset by softening in both primary income and secondary income. Primary income consists of net receipts of both investment income and employee compensation, with net flows defined as receipts of US residents from abroad less US payments to residents in foreign countries. Net investment income is by far the larger of the two components of primary income, and it accounted for nearly all the slippage in primary income, dropping $17.0 billion to -$7.8 billion. The shift pushed net investment income back into negative territory after a quarter in the plus column (chart, lower left). Employee compensation moved in favor of the US by 4.0%, but given the small size of employee compensation, the improvement represented an insignificant offset to the slippage in investment income.

Secondary income consists of transfer payments (payments made without receiving something of economic value in return); examples include personal remittances (foreign workers sending funds to families in their home countries), charitable donations, taxes, fines, and penalties. Payments made by US residents have always exceeded payments received, leaving a regular deficit in secondary income. This component of the current account slipped 1.3% in Q1, but it remained within the range of observations over the past year.

Annual revisions to the current account were notable, as both the trade balance and the balance on primary income were revised to show deeper deficits. The quarterly average trade deficit for 2025 now totals $233.0 billion versus a previous estimate of $227.9 billion. Primary income now shows a quarterly average deficit of $11.9 billion for 2025 versus a surplus of $3.2 billion.

The shift to a deficit position in primary income in 2025 is not shocking, as previously estimated positive readings on average in 2025 (and prior years) were surprising in light of the international investment position of the US. Foreign investors hold far larger amounts of US assets than US investors hold of foreign assets (chart, lower right). That is, the US has a deficit in investment holdings. However, despite the differential in asset holdings, US investors typically earned higher rates of return on their foreign investments than foreigners earned on their US investments. Although the gap in asset holdings has been large, the higher returns earned by US investors left net investment income positive. Revised data now suggest that the net international investment position of the US has slipped to such a degree that higher rates of return will no longer offset the differential in asset holdings. Positive quarterly readings on net investment income might be apparent at times (such as 2025-Q4), but net investment income (and primary income in total) will probably be negative in most coming quarters.

Balance of Payments data are in Haver’s **USINT** database, with summaries available in **USECON**. The expectations figure is in the **AS1REPNA** database.

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- Improvement in the trade balance offset by weaker net investment income.
- Annual revision showed wider deficit in 2025.


Q1 Current Account: Modest Slippage in Early 2026

Robert Brusca

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**PMIs in June mark some progress**
The PMI report from S&P shows modest firming in conditions in June, even with the Middle East situation unresolved.

**Monthly:** The median reading for the 8 reporting countries or regions rose to 50.8 in June from 50.1 in May. Manufacturing improved to 52.7 from 52.4, while the services reading rose to 50.3 from 49.6, leaving a month of mild contraction behind.

**Most show June improvement:** Most countries or regions improved in June; the exceptions were Germany, the United Kingdom, and India, which were weaker. India was dragged down by a weaker service sector reading in June; the U.K. and Germany showed weakening conditions across the board for the composite index, the manufacturing sector, and services. On the other side of the coin, France, Japan, Australia, and the U.S. all showed improvement in each of three sectors: the composite, manufacturing, and services, in June compared to May.

**Sequentially still mixed:** The broader sequential readings show ongoing weakness, but these are derived from hard data and lag the monthly observations in the table that include preliminary flash estimates. All the composite readings weakened based on three-month averages except for India. However, seven of eight reporting areas showed improvement in manufacturing over three months compared to six months; the exception was Australia. Over six months, conditions are mixed, with four composite readings weaker compared to 12 months and with four stronger. However, over six months, all eight manufacturing sectors improved compared to 12 months. The 12-month readings are consistently stronger than their readings of 12 months ago. The only composite that's weaker is the U.S., while the services sectors in the monetary union, Germany, France, and the U.S. are weaker than they were 12 months ago.

**Standings are weak:** The queue percentile standings evaluate the current diffusion index in June compared to where it has been since January 2022, a period of about 4½ years. The queue standings show weakness up and down the line, with the exception of the manufacturing sector; that has the standing above its historic median in the monetary union, Germany, France, the U.K., the U.S., and Japan. Only Australia and India show manufacturing sectors whose current monthly standings are below their medians of the last 4½ years. In addition, Japan has a strong composite reading at its 81st percentile. Overall, the services sectors are weak and below their 50% standing every place, and below that mark by a large margin, except for Japan, where the services sector has a 47th percentile standing, only a few ticks below its median.

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**Summing up: A glimmer of hope but still a lot of weakness**
Manufacturing is stronger sequentially over three months, six months, and 12 months for every reporter except for Australia over three months. The rest of the report is not very impressive. There is some rebound in June, but here we're talking about volatile monthly data. The services sectors still show sequential weakness over 12 months, six months, and three months in the European Monetary Union, Germany, France, and the U.S. The U.K. and Japan showed three-month and six-month weakness as well. That’s too much weakness in the key job creation sector to think that this report is a positive signal.

S&P PMIs in June Firm

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Danish consumer confidence rose to -14 in June from -19.8 in May, a small pickup for a still-negative net reading. In June, the reading has a standing at its 7.9 percentile on data back to 1995. So, this confidence headline still has a lower 8% reading overall.

On the month, all seven component readings improved compared to May, although the environmental assessments were little changed across four components. As for the environment, the most changed reading is the improved favorability of the time to save, a metric that is not always a positive category.

As for the seven categories, the readings on the financial situation, general economy and the unemployment rate all improved month-to-month, while the inflation metrics both backed down sharply.

These changes show the financial situation and general economy gauges all at rankings in the lower 20th percentiles, with the outlook for the next 12 months having a standing in their lower 10th percentiles and lower for both the financial situation and the general economy.

Consumer prices, despite a strong monthly step-back, have a 90.2 percentile standing for prices over the past 12 months and a 94.3 percentile standing for the CPI over the next 12 months. Despite some let-up in concerns about unemployment, the unemployment gauge has an 85.1 percentile standing, still substantially elevated.

The environmental readings are less negative, starting with the ‘favorability of the time to purchase,’ a bit weaker month-to-month but improved on balance over two months. The June reading is slightly better than its 12-month average but still has a ranking only in its 21st percentile. The favorability of the time to purchase over the next 12 months is a tick weaker month-to-month and about a point worse than its 12-month average. Its June ranking is in its lower 10th percentile of its historic queue. The favorability of the time to save has a stronger ranking, but this is a more equivocal category. It is improved month-to-month and only slightly stronger over two months The June reading is stronger than its 12-month average, with a ranking in its 47.6 percentile—improved compared to previous categories but still worse than its historic median since 1995 (the median occurs at a ranking of 50%). The ‘general financial situation of households now’ ticked lower in June from May but is stronger on balance over two months. The June reading is above its 12-month average and has a 59.2 percentile standing—above its median.

On balance, Denmark shows improving confidence, progressing slowly but on the right path. There is a sharp downward adjustment in inflation, especially over the next 12 months, despite global conditions. Still, the ranking of the confidence metrics are uniformly weak.

Economy in Brief

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