Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071114a.jpg" align="left" border="0" height="265" width="353">
Finished producer prices ticked up just 0.1% during October
following the firm 1.1% rise during September. The gain was the
smallest since June and was slightly less than Consensus expectations
for a 0.3% rise. Nevertheless, it lifted the y/y increase to 6.0% its
strongest in two years.
Core finished goods producer prices were
unchanged last month. It was the first month without an increase in
prices since a slight decline this past March and it was less than the
expected 0.2% increase. Again, it left the y/y gain at 2.5% which was
its strongest in two years. The recent momentum in core producer prices
did, however, fall to its lowest of 1.0% since May.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071114b.jpg" align="right" border="0" height="265" width="353">
Energy prices fell 0.8% (16.1% y/y) as prices for gasoline
fell 0.8% (+32.4% y/y) after the 4.7% September jump. Natural gas
prices also fell 0.5% (+7.7% y/y) but home heating oil prices increased
3.2% (16.2% y/y.
Food prices were again strong and rose 0.8% (7.1% y/y) on the
heels of a 1.5% jump during September. Vegetable prices soared 29.1%
(27.0% y/y) but beef prices fell 2.1% (+1.5% y/y). 
Household appliance prices were firm and rose 0.4% (1.2% y/y)
after two months of 0.2% decline while passenger car
prices jumped 5.7% (0.4% y/y).
Capital equipment prices jumped 1.0% (2.0% y/y) reflecting
strength in most categories. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071114c.jpg" align="left" border="0" height="265" width="353">
Intermediate goods prices ticked up 0.1% and the index
excluding food &amp; energy prices again rose a small 0.1%. Prices
for steel mill products fell 1.8%, the fourth month of sharp decline. 
 

The crude materials PPI rose 2.4% led higher by a 3.7% (4.1%
y/y) gain in crude petroleum and a 9.7% (37.6% y/y) rise in natural gas
prices. The core crude materials PPI also was strong and rose 1.4%.
Iron &amp; steel scrap prices again rose 1.4% (29.8% y/y).
Today's speech by Federal Reserve Chairman Ben S.
Bernanke on Federal Reserve Communications can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20071114a.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">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.1%</td>
<td>1.1%&nbsp;</td>
<td>&nbsp; 6.0%&nbsp;</td>
<td>2.9%</td>
<td>&nbsp;4.9%&nbsp;</td>
<td>3.6%&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.0%</td>
<td>0.1%</td>
<td>&nbsp;2.5%</td>
<td>1.4%</td>
<td>2.4%</td>
<td>1.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.1%</td>
<td>0.4%</td>
<td>5.4%</td>
<td>6.4%</td>
<td>&nbsp;8.0%</td>
<td>6.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.9%</td>
<td>6.0%</td>
<td>&nbsp;5.5%</td>
<td>5.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>2.4%</td>
<td>&nbsp;0.1%&nbsp;</td>
<td>&nbsp;25.6%</td>
<td>1.4%</td>
<td>14.6%</td>
<td>&nbsp;17.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>1.4%</td>
<td>1.6%</td>
<td>&nbsp;18.8%</td>
<td>20.9%</td>
<td>4.9%</td>
<td>&nbsp;26.5%</td>
</tr>
</tbody>
</table>
U.S. Retail Sales About As Expected 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 14 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071114d.jpg" align="left" border="0" height="265" width="353">
U.S. retail sales last month rose 0.2% after the 0.7%
September increase which revised up slightly. The gain matched
expectations and the prior month's 0.7% was revised up slightly.
Excluding autos, sales rose 0.2% and the prior month's gain of
0.4% was revised down slightly to 0.3%. A 0.3% October increase had
been expected.
Nonauto retail sales less gasoline ticked up just
0.1% (3.9% y/y) after an unrevised 0.2% rise in September. The 0.1%
decline during August was revised down to a 0.5% drop.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071114e.jpg" align="right" border="0" height="265" width="353">
Sales of discretionary items were generally
weak last month. Furniture, home furnishings &amp;
appliance stores sales fell 0.4% (0.8% y/y) and the prior
month's gain was revised down to a 0.8% decline. Sales have declined in
four of the last five months. Sales at general merchandise
stores fell 0.1% (+3.6 y/y). Apparel store sales rose
0.1% (4.4% y/y) but the prior month's decline was revised up to a 0.1%
increase.
Building material sales rose a firm 0.6% (1.3% y/y) though the
prior month's gain of 0.8% was revised down to a 0.4% decline.
Sales of nonstore retailers (internet &amp;
catalogue) fell 1.0% (5.9% y/y) after a little revised 0.9%
September increase.
Motor vehicle &amp; parts purchases rose 0.2% (5.0% y/y)
but unit sales of light vehicles fell 1.1% m/m in October.
Gasoline service station sales rose 0.8% after the 1.8%
September gain. Higher gas prices should lift this month's increase.
The recent Treasury Dept. study of Income Mobility
is available <a href="http://www.treasury.gov/press/releases/hp673.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">&nbsp;</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail
Sales &amp; Food Services</a></td>
<td>0.2%</td>
<td>0.7%</td>
<td>5.2%</td>
<td>6.2%</td>
<td>6.6%</td>
<td>6.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Autos</td>
<td>0.2%</td>
<td>0.3%</td>
<td>5.2%</td>
<td>7.3%</td>
<td>7.6%</td>
<td>7.1%</td>
</tr>
</tbody>
</table>
U.S. Pending Home Sales Stabilize 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 14, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071114f.jpg" align="left" border="0" height="265" width="353">
The National Association of Realtors reported that for
September, level of pending home sales held steady at the August level.
That level was, however, still down 20.4% from one year earlier and
24.4% year to date.
The latest monthly figure is about one third below the peak
average level during 2005. The data date back only to 2001.
These figures are analogous to the new home sales data from
the Commerce Dept. in that they measure home sales when the sales
contract is signed, not at the time the sale is closed.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071114g.jpg" align="right" border="0" height="265" width="353">
In further confirmation of the slow rate of home sales, the
Realtors indicated in an earlier report that the number of homes on the
market and available for sale rose September to a level 16.3% above the
year earlier level.
In the Western part of the nation, sales were about unchanged
m/m but remained down 25.6% from one year earlier.
In the Northeast, pending home sales are down 23.1% y/y. In
the Midwest sales are down 14.4% and in the South sales are down 19.7%.
The pending home sales data are available in Haver's PREALTOR
database and the number of homes on the market are in the REALTOR
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/WEEKLY/@W5/@W507/@W507.HTM">Pending
Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total</td>
<td>85.7</td>
<td>85.5</td>
<td>-20.4%&nbsp;</td>
<td>112.1&nbsp;</td>
<td>124.2</td>
<td>120.5&nbsp;</td>
</tr>
</tbody>
</table>
European Car Registrations Put in
Another Good Month 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 14 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071115d.jpg" align="left" border="0" height="265" width="353">
European car registrations jumped by 11.6% Y/Y following a
drop of 8.2% in September. Despite gains in two of the past three
months, sales are still lower year to date in 2007, by 0.4% compared to
sales last year. Germany lags the most as its year-to-date (YTD) sales
are lower by 7.7% through October. Spain is also lagging but with sales
off by 1.6% YTD. Italy is up strongly, by 6.9%, on a year-to-date
basis- surprising for a country where growth has been so weak. The UK
and France have stronger year-to-date numbers of 1.4% and 0.9%
respectively. Auto sales are mostly weak on the back of the German VAT
tax hike that shoved sales into late 2006 to avoid the tax. Apart from
that, European sales are doing ok. Excluding Germany European auto
sales are up by 2.6% over last year on a YTD basis. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">Ezone Car
Registrations </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo %</td>
<td colspan="2">3-Mo Trend From</td>
<td colspan="2">6-Mo Trend From</td>
<td colspan="2">12-Mo Trend From</td>
</tr>
<tr class="grey3">
<td class="firstcol">All Seas Adj</td>
<td>Oct 07</td>
<td>Sep 07</td>
<td>Aug 07</td>
<td>Oct 07</td>
<td>Sep 07</td>
<td>Oct 07</td>
<td>Sep 07</td>
<td>Oct 07</td>
<td>Sep 07</td>
</tr>
<tr class="grey2">
<td class="firstcol">Ezone Registrations</td>
<td>11.6%</td>
<td>-8.2%</td>
<td>3.8%</td>
<td>28.0%</td>
<td>-17.5%</td>
<td>32.2%</td>
<td>-10.9%</td>
<td>4.2%</td>
<td>-4.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany:</td>
<td>6.2%</td>
<td>-7.4%</td>
<td>6.3%</td>
<td>19.5%</td>
<td>5.4%</td>
<td>31.6%</td>
<td>-5.5%</td>
<td>-4.1%</td>
<td>-11.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France (WDA)</td>
<td>-0.2%</td>
<td>3.7%</td>
<td>-4.1%</td>
<td>-2.9%</td>
<td>12.0%</td>
<td>11.7%</td>
<td>7.5%</td>
<td>4.6%</td>
<td>7.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>11.5%</td>
<td>-10.6%</td>
<td>10.5%</td>
<td>47.2%</td>
<td>-39.0%</td>
<td>10.8%</td>
<td>-12.4%</td>
<td>8.5%</td>
<td>-0.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Spain</td>
<td>11.4%</td>
<td>-9.5%</td>
<td>5.3%</td>
<td>27.3%</td>
<td>-25.0%</td>
<td>28.1%</td>
<td>-25.8%</td>
<td>3.8%</td>
<td>-7.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK</td>
<td>7.1%</td>
<td>22.0%</td>
<td>-20.0%</td>
<td>19.6%</td>
<td>-0.3%</td>
<td>11.6%</td>
<td>-8.2%</td>
<td>7.2%</td>
<td>-0.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Base Month of Calc</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>Apr-07</td>
<td>Mar-07</td>
<td>Oct-06</td>
<td>Sep-06</td>
</tr>
</tbody>
</table>
Fed's Loan Officer Survey Shows
Drastic Tightening of Mortgage Lending, Weakening of Banks' Mortgage
Demand 
by <a href="/comment/Stone.html">Carol
Stone</a> November 14, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071114h.jpg" align="left" border="0" height="265" width="353">
This past spring, as disruptions in the residential mortgage
market became more severe, the Federal Reserve's Division of Monetary
Affairs revised some of the relevant questions on its quarterly Senior
Loan Officer Opinion Survey. Rather than inquiring about mortgage
demand and lending policies in general, they broke the category down
into three, "prime", "subprime" and "nontraditional". While this
modification is more descriptive of banks' current situations, it gave
no basis for comparison of current practice with previous periods.
So last week, following the release of the Q4 survey data, a
number of Haver clients called the Client Hotline, asking if there
wasn't something we could do with the information. Carol Stone here at
Haver devised a method for re-combining the three new questions into an
overall mortgage item.
On the lending policy aspect, banks report whether they have
"tightened" lending standards "considerably" or "somewhat" or "eased
considerably" or "somewhat" or left their lending policy "basically
unchanged". We simply added the responses together for each loan type
and took that total as a percentage of the total responses. This
ignores the response "do not offer" for each one, so the answers we've
used cover only banks that are active lenders in each category.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071114i.jpg" align="right" border="0" height="265" width="353">
The results show a dramatic policy shift. Through nearly all
of 2006, banks were easing their lending approval criteria, at least in
a modest way. They switched toward tightening in Q4 and then moved much
more aggressively in the new year. The old "total" mortgage series
shows a net tightening of 16.4% in the January survey; the Haver
calculations show that doubling by April to 32.7% and reaching 50% in
the latest poll. The actual measure here is a "net", that is, those
tightening less those easing, but in the last three quarters, no one
has eased lending standards. So the latest responses show 50%
tightening and 50% "basically unchanged". In the table below, we show
the original Federal Reserve series in regular typeface, and the Haver
figures in italics.
Demand for home mortgages -- at least as reported by the
responding banks -- is weakening, although the recent performance here
is no worse than last year. In fact, Q3 and Q4 of 2006 show the biggest
negatives, -58.5% and -60.4%, respectively. During 2007, the weighted
total of the new series moderated during the spring and early summer,
but the latest survey shows renewed erosion to -48.5%. These demand
figures reflect not only overall consumer demand for home purchase
and/or other mortgage credit, but also the competitive mix of lending
institutions. The moderation of banks' demand experience during part of
this year could indicate a relative turn toward banks as mortgage
companies and others pulled back more severely from the market.
We were cautioned by Federal Reserve analysts about making
these combination series, and we, in turn, need to pass that caution to
you as you use them. These are rough guides to the direction and degree
of changes in bank mortgage lending standards and loan demand. But they
cannot be numerically precise. The reason is that the three types of
loans, prime, subprime and nontraditional, are not completely separate
from each other. Prime loans include some nontraditional loans, as do
subprime loans. Other nontraditional loans are classified by the
lenders as a distinct category, neither prime nor subprime. So there is
an indeterminate amount of double-counting in our simple summation of
the total survey responses. Nonetheless, the resulting series look like
what we'd expect: greatly tightening lending policies and weakening
loan demand. 


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Senior
Loan Officers Survey</th>
<th scope="col">Oct 2007</th>
<th scope="col">July 2007</th>
<th scope="col">Apr 2007</th>
<th scope="col">Jan 2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total
Mortgages: Haver Series: Net Tightening</td>
<td>50.0</td>
<td>30.8</td>
<td>32.7</td>
<td>16.4</td>
<td>-4.2</td>
<td>-3.4</td>
<td>-3.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Prime</td>
<td>40.8</td>
<td>14.3</td>
<td>15.1</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nontraditional</td>
<td>60.0</td>
<td>40.5</td>
<td>45.5</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Subprime</td>
<td>55.5</td>
<td>56.3</td>
<td>56.3</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Haver
Mortgage Series: &nbsp; 
Net Demand</td>
<td>-48.5</td>
<td>-19.4</td>
<td>-17.7</td>
<td>-37.0</td>
<td>-46.5</td>
<td>-11.9</td>
<td>-19.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Prime</td>
<td>-51.0</td>
<td>-10.0</td>
<td>-18.9</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nontraditional</td>
<td>-45.0</td>
<td>-21.3</td>
<td>-15.9</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Subprime</td>
<td>-50.0</td>
<td>-43.8</td>
<td>-18.8</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

Finished producer prices ticked up just 0.1% during October following the firm 1.1% rise during September. The gain was the smallest since June and was slightly less than Consensus expectations for a 0.3% rise. Nevertheless, it lifted [...]

U.S. PPI Total & Core Weak

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113d.jpg" align="left" border="0" height="265" width="353">
After remaining steady in October at -18.1%, the ZEW indicator
of economic sentiment among institutional investors and analysts for
the next 6 months took a tumble in November, falling sharply to -32.5%.
The decline brought the indicator to its lowest value since February
1993. (The history of this indicator is shown in the first chart.)
The indicator is a percent balance measure, that is, it
measures the difference between those participants who are optimistic
and those who are pessimistic. In October, the pessimists outweighed
the optimists by 32.5%. The indicator is based on the qualitative
assessments of the participants regarding the macro economic outlook,
the inflation rate, short and long term interest rates, the stock
market and exchange rates. The decline in sentiment reflects the
deterioration that has been taking place in most of these components.
The continuing uncertainty
regarding the magnitude and spread of the sub prime mortgage collapse
in the U. S. has been a major depressant, but other factors have also
contributed to the decline in sentiment. Inflation has been rising and
in October was 2.45% compared with 1.65% in January. During the time
that the survey took place--October 29 to November 12, the Euro rose
7.23% from $1.3596 to $1.4579. The Frankfurt Xetra Dax (12/31/87=1000)
stock market index declined 2.5% during this same time. The second
chart shows the year over year changes in the daily figures for the
Euro and the Dax stock market index from late October to date, roughly
the time during which the survey took place.
In contrast to their pessimistic views about the next six
months, investors and analysts continue to view current conditions very
favorably with the optimists outweighing the pessimists by 70%, one of
the highest balances on record. The third chart shows the history of
the indicator of current conditions. 

 <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113e.jpg" height="265" width="314"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113f.jpg" height="265" width="314">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;ZEW
INDICATOR OF ECONOMIC SENTIMENT&nbsp; (% Balance)&nbsp;</th>
<th scope="col">Nov 07</th>
<th scope="col">Oct 07&nbsp;</th>
<th scope="col">Nov 06&nbsp;</th>
<th scope="col">M/M&nbsp; Dif&nbsp;</th>
<th scope="col">Y/Y&nbsp;&nbsp;&nbsp;&nbsp;
Dif&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">
Macro Expectation (Next 6 Months)
</td>
<td>-32.5</td>
<td>-18.1</td>
<td>-28.5</td>
<td>-14.4</td>
<td>-4.0</td>
<td>22.3</td>
<td>34.8</td>
<td>44.6</td>
</tr>
<tr>
<td class="firstcol">Current
Economic Conditions&nbsp;</td>
<td>70.0</td>
<td>70.2</td>
<td>53.0</td>
<td>-0.2</td>
<td>17.0</td>
<td>18.3</td>
<td>-61.8</td>
<td>-67.7</td>
</tr>
</tbody>
</table>
</body></html>

After remaining steady in October at -18.1%, the ZEW indicator of economic sentiment among institutional investors and analysts for the next 6 months took a tumble in November, falling sharply to -32.5%. The decline brought the [...]

Economic Sentiment Among the German Financial Community Takes a Tumble in November

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113h.jpg" align="left" border="0" height="265" width="353">
In October, as energy prices have surged again, the Euro area
is suffering inflation bulging beyond the limits of its ceiling. We
know that the ECB is not happy with this development even though most
of it is due to oil prices and core inflation seems less of a problem.
Still the ECB makes policy without an explicit reference to core prices
unlike the Federal Reserve in the US.
Despite a surging Euro that should help to combat any true
inflation forces in the Euro area economy, the ECB remains wary of this
over top inflation partly because of the ongoing strong money and
credit growth in the EMU. So Europeans find themselves in the sticky
position of seeing inflation flare, the central bank remain wary, ready
to act, even as their currency value remains quite strong and the
competitiveness pressures from that strength are squelching growth and
killing Europe&#8217;s export orders. The European policy dilemma has become
an economic oxymoron: the ECB&#8217;s own threat to hike rates is further
bolstering the euro and further exacerbating the economic problems
within the zone as the ECB does nothing and worries about inflation
pressure which worsen.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Euro
area &amp; Friends: Headline Inflation Yr/Yr</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Year/year</td>
<td colspan="2">Mo/Mo</td>
<td>3Mo: AR</td>
<td>6Mo:Ar</td>
</tr>
<tr>
<td class="firstcol">Core HICP</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>May-07</td>
<td>Apr-07</td>
</tr>
<tr>
<td class="firstcol">Belgium</td>
<td style="color: red;">2.2%</td>
<td>1.5%</td>
<td>1.2%</td>
<td>0.8%</td>
<td>0.1%</td>
<td style="color: red;">3.5%</td>
<td style="color: red;">2.1%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td style="color: red;">2.1%</td>
<td>1.6%</td>
<td>1.3%</td>
<td>0.2%</td>
<td>0.1%</td>
<td style="color: red;">2.6%</td>
<td style="color: red;">2.3%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td style="color: red;">2.7%</td>
<td style="color: red;">2.6%</td>
<td>2.0%</td>
<td>0.2%</td>
<td>0.7%</td>
<td style="color: red;">3.1%</td>
<td style="color: red;">2.7%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td style="color: red;">3.1%</td>
<td style="color: red;">2.9%</td>
<td style="color: red;">2.7%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>1.1%</td>
<td style="color: red;">4.0%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td style="color: red;">3.0%</td>
<td style="color: red;">2.9%</td>
<td style="color: red;">2.3%</td>
<td>0.2%</td>
<td>0.3%</td>
<td style="color: red;">2.3%</td>
<td style="color: red;">2.5%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td style="color: red;">2.3%</td>
<td>1.8%</td>
<td>1.7%</td>
<td>0.7%</td>
<td>0.3%</td>
<td style="color: red;">4.7%</td>
<td style="color: red;">3.3%</td>
</tr>
<tr>
<td class="firstcol">Luxembourg</td>
<td style="color: red;">3.6%</td>
<td style="color: red;">2.5%</td>
<td>1.8%</td>
<td>0.6%</td>
<td>0.0%</td>
<td style="color: red;">2.8%</td>
<td style="color: red;">2.7%</td>
</tr>
<tr>
<td class="firstcol">The Netherlands</td>
<td>1.6%</td>
<td>1.3%</td>
<td>1.0%</td>
<td>0.4%</td>
<td>0.0%</td>
<td>1.5%</td>
<td>0.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="8">EU:
Other HICP/CPI</td>
</tr>
<tr>
<td class="firstcol">UK(HICP)</td>
<td style="color: red;">2.0%</td>
<td>1.7%</td>
<td>1.8%</td>
<td>0.5%</td>
<td>0.1%</td>
<td style="color: red;">2.7%</td>
<td>1.5%</td>
</tr>
</tbody>
</table>
</body></html>

In October, as energy prices have surged again, the Euro area is suffering inflation bulging beyond the limits of its ceiling. We know that the ECB is not happy with this development even though most of it is due to oil prices and [...]

Inflation Trends Turn Bleak in the Euro Area…

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113g.jpg" align="left" border="0" height="265" width="353">
Spending patterns improved in September from August despite
their downward revision. Sequential rates of growth find 3-month and
6-month rates of growth are generally improved form their respective
year ago pace. Nominal auto sales were especially strong in the quarter
expanding at a growth rate of better than 20%. But excluding autos
consumer spending is still very restrained. For the quarter real German
retail sales excluding autos are up by just a rate of 0.7%. Nominal
retail sales are up at a 1.6% pace in the quarter. Nominal food and
tobacco sales are off by 0.9% in the quarter. Clothing and shoe sales
are up by just 2.3%. The sequential growth rates show more pop than the
quarterly growth rates do. Time will tell if the rebound is authentic
or not.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">German Real and Nominal Retail Sales New QTR </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAGo</td>
<td>New Qtr Saar</td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>2.0%</td>
<td>-1.1%</td>
<td>0.6%</td>
<td>6.3%</td>
<td>3.7%</td>
<td>1.9%</td>
<td>5.6%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">MV and Parts</td>
<td>-2.4%</td>
<td>4.3%</td>
<td>0.8%</td>
<td>10.7%</td>
<td>12.8%</td>
<td>-2.5%</td>
<td>15.2%</td>
<td>21.8%</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>2.9%</td>
<td>-0.8%</td>
<td>-0.2%</td>
<td>7.7%</td>
<td>4.4%</td>
<td>1.7%</td>
<td>5.1%</td>
<td>-0.9%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>3.8%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>18.3%</td>
<td>8.2%</td>
<td>14.5%</td>
<td>3.4%</td>
<td>2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Real</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>1.6%</td>
<td>-1.5%</td>
<td>0.8%</td>
<td>3.7%</td>
<td>1.7%</td>
<td>0.7%</td>
<td>5.1%</td>
<td>0.7%</td>
</tr>
</tbody>
</table>
</body></html>

Spending patterns improved in September from August despite their downward revision. Sequential rates of growth find 3-month and 6-month rates of growth are generally improved form their respective year ago pace. Nominal auto sales [...]

German Sales Trends Improving; But Still a Moderate Quarter

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113c.jpg" width="353">
Chain store sales last week eased 0.5% and reversed half of the gain earlier in November, according to the International Council of Shopping Centers (ICSC)-UBS.
For both weeks this month, sales were up a small 0.2% from the October average which fell 0.8% from September.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS 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 leading indicator of chain store sales from ICSC-UBS rose 0.2% (-0.1% y/y) reversing a price of the prior week&#39;s rise.
The October 2007 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve Board is available <a href="http://www.federalreserve.gov/boarddocs/SnLoanSurvey/200711/default.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/10/07</th>
<th scope="col">11/03/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>475.2</td>
<td>477.8</td>
<td>2.7%</td>
<td>3.3%</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>


</html>

Chain store sales last week eased 0.5% and reversed half of the gain earlier in November, according to the International Council of Shopping Centers (ICSC)-UBS. For both weeks this month, sales were up a small 0.2% from the October [...]

U.S. Chain Store Sales Eased

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113a.jpg" align="left" border="0" height="265" width="353">
Small business optimism rose by 1.1% last month and reversed all of
its September increase. Nevertheless, the level remained near the lows
of this past Summer, according to the National Federation of
Independent Business (NFIB).
During the last ten years there has been a 70% correlation between
the level of the NFIB index and the two quarter change in real GDP.
The percentage of firms indicating that credit was more difficult
to get reversed all of the September increase, though it remained in an
uptrend.
Respondents expecting the economy to improve fell and remained in
the low range of the last year. During the last ten years there has
been a 72% correlation between the NFIB percentage and the y/y change
in nonfarm payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113b.jpg" align="right" border="0" height="265" width="353">
The percent planning to raise capital expenditures fell to near the
lows of this cycle and the percentage planning to raise employment fell
sharply m/m to the lowest level since last December.
The percentage of firms indicating that inventories were too low fell to the current cycle's low..The percentage of firms planning to raise average selling prices remained low as did the percentage of firms actually
raising prices, though the latter rose m/m. During the last ten years
there has been a 60% correlation between the change in the producer
price index and the level of the NFIB price index.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

<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/@S7/@S7.HTM">Nat'l Federation of Independent Business</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>96.2</td>
<td>97.3</td>
<td>-4.5%</td>
<td>98.9</td>
<td>101.6</td>
<td>104.6</td>
</tr>
</tbody>
</table>
</body></html>

Small business optimism rose by 1.1% last month and reversed all of its September increase. Nevertheless, the level remained near the lows of this past Summer, according to the National Federation of Independent Business (NFIB). [...]

Small Business Optimism Held Low, Credit Problems Eased

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113a.jpg" align="left" border="0" height="265" width="353">
Small business optimism rose by 1.1% last month and reversed
all of its September increase. Nevertheless, the level remained near
the lows of this past Summer, according to the National Federation of
Independent Business (NFIB).
During the last ten years there has been a 70% correlation
between the level of the NFIB index and the two quarter change in real
GDP.
The percentage of firms indicating that credit was
more difficult to get reversed all of the September increase, though it
remained in an uptrend.
Respondents expecting the economy to improve fell and remained
in the low range of the last year. During the last ten years there has
been a 72% correlation between the NFIB percentage and the y/y change
in nonfarm payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113b.jpg" align="right" border="0" height="265" width="353">
The percent planning to raise capital expenditures fell to
near the lows of this cycle and the percentage planning to raise
employment fell sharply m/m to the lowest level since last December.
The percentage of firms indicating that inventories were too
low fell to the current cycle's low..The percentage of firms planning
to raise average selling prices remained low as did the percentage of
firms actually raising prices, though the latter
rose m/m. During the last ten years there has been a 60% correlation
between the change in the producer price index and the level of the
NFIB price index.
About 24 million businesses exist in the United States. Small
business creates 80% of all new jobs in America.

<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/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index
(1986=100)</td>
<td>96.2</td>
<td>97.3</td>
<td>-4.5%</td>
<td>98.9</td>
<td>101.6</td>
<td>104.6</td>
</tr>
</tbody>
</table>
U.S. Chain Store Sales Eased 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 13, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113c.jpg" align="left" border="0" height="265" width="353">
Chain store sales last week eased 0.5% and reversed half of
the gain earlier in November, according to the International Council of
Shopping Centers (ICSC)-UBS.
For both weeks this month, sales were up a small 0.2% from the
October average which fell 0.8% from September.



During the last ten years there has been a 45% correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.

The ICSC-UBS 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 leading indicator of chain store sales from ICSC-UBS rose
0.2% (-0.1% y/y) reversing a price of the prior week's rise.
The October 2007 Senior Loan Officer Opinion Survey
on Bank Lending Practices from the Federal Reserve Board is
available <a href="http://www.federalreserve.gov/boarddocs/SnLoanSurvey/200711/default.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/10/07</th>
<th scope="col">11/03/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total
Weekly Chain Store Sales</td>
<td>475.2</td>
<td>477.8</td>
<td>2.7%</td>
<td>3.3%</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>
Economic Sentiment Among theGerman
Financial Community Takes a Tumble in November 
by <a href="/comment/Curley.html">Louise
Curley</a> November 13, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113d.jpg" align="left" border="0" height="265" width="353">
After remaining steady in October at -18.1%, the ZEW indicator
of economic sentiment among institutional investors and analysts for
the next 6 months took a tumble in November, falling sharply to -32.5%.
The decline brought the indicator to its lowest value since February
1993. (The history of this indicator is shown in the first chart.)
The indicator is a percent balance measure, that is, it
measures the difference between those participants who are optimistic
and those who are pessimistic. In October, the pessimists outweighed
the optimists by 32.5%. The indicator is based on the qualitative
assessments of the participants regarding the macro economic outlook,
the inflation rate, short and long term interest rates, the stock
market and exchange rates. The decline in sentiment reflects the
deterioration that has been taking place in most of these components.
The continuing uncertainty
regarding the magnitude and spread of the sub prime mortgage collapse
in the U. S. has been a major depressant, but other factors have also
contributed to the decline in sentiment. Inflation has been rising and
in October was 2.45% compared with 1.65% in January. During the time
that the survey took place--October 29 to November 12, the Euro rose
7.23% from $1.3596 to $1.4579. The Frankfurt Xetra Dax (12/31/87=1000)
stock market index declined 2.5% during this same time. The second
chart shows the year over year changes in the daily figures for the
Euro and the Dax stock market index from late October to date, roughly
the time during which the survey took place.
In contrast to their pessimistic views about the next six
months, investors and analysts continue to view current conditions very
favorably with the optimists outweighing the pessimists by 70%, one of
the highest balances on record. The third chart shows the history of
the indicator of current conditions. 

 <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113e.jpg" height="265" width="314"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113f.jpg" height="265" width="314">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;ZEW
INDICATOR OF ECONOMIC SENTIMENT&nbsp; (% Balance)&nbsp;</th>
<th scope="col">Nov 07</th>
<th scope="col">Oct 07&nbsp;</th>
<th scope="col">Nov 06&nbsp;</th>
<th scope="col">M/M&nbsp; Dif&nbsp;</th>
<th scope="col">Y/Y&nbsp;&nbsp;&nbsp;&nbsp;
Dif&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">
Macro Expectation (Next 6 Months)
</td>
<td>-32.5</td>
<td>-18.1</td>
<td>-28.5</td>
<td>-14.4</td>
<td>-4.0</td>
<td>22.3</td>
<td>34.8</td>
<td>44.6</td>
</tr>
<tr>
<td class="firstcol">Current
Economic Conditions&nbsp;</td>
<td>70.0</td>
<td>70.2</td>
<td>53.0</td>
<td>-0.2</td>
<td>17.0</td>
<td>18.3</td>
<td>-61.8</td>
<td>-67.7</td>
</tr>
</tbody>
</table>
German Sales Trends Improving; But
Still a Moderate Quarter 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 13, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113g.jpg" align="left" border="0" height="265" width="353">
Spending patterns improved in September from August despite
their downward revision. Sequential rates of growth find 3-month and
6-month rates of growth are generally improved form their respective
year ago pace. Nominal auto sales were especially strong in the quarter
expanding at a growth rate of better than 20%. But excluding autos
consumer spending is still very restrained. For the quarter real German
retail sales excluding autos are up by just a rate of 0.7%. Nominal
retail sales are up at a 1.6% pace in the quarter. Nominal food and
tobacco sales are off by 0.9% in the quarter. Clothing and shoe sales
are up by just 2.3%. The sequential growth rates show more pop than the
quarterly growth rates do. Time will tell if the rebound is authentic
or not.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">German
Real and Nominal Retail Sales New QTR </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAGo</td>
<td>New Qtr Saar</td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>2.0%</td>
<td>-1.1%</td>
<td>0.6%</td>
<td>6.3%</td>
<td>3.7%</td>
<td>1.9%</td>
<td>5.6%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">MV and Parts</td>
<td>-2.4%</td>
<td>4.3%</td>
<td>0.8%</td>
<td>10.7%</td>
<td>12.8%</td>
<td>-2.5%</td>
<td>15.2%</td>
<td>21.8%</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>2.9%</td>
<td>-0.8%</td>
<td>-0.2%</td>
<td>7.7%</td>
<td>4.4%</td>
<td>1.7%</td>
<td>5.1%</td>
<td>-0.9%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>3.8%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>18.3%</td>
<td>8.2%</td>
<td>14.5%</td>
<td>3.4%</td>
<td>2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Real</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>1.6%</td>
<td>-1.5%</td>
<td>0.8%</td>
<td>3.7%</td>
<td>1.7%</td>
<td>0.7%</td>
<td>5.1%</td>
<td>0.7%</td>
</tr>
</tbody>
</table>
Inflation Trends Turn Bleak in the
Euro Area&#8230; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 13, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113h.jpg" align="left" border="0" height="265" width="353">
In October, as energy prices have surged again, the Euro area
is suffering inflation bulging beyond the limits of its ceiling. We
know that the ECB is not happy with this development even though most
of it is due to oil prices and core inflation seems less of a problem.
Still the ECB makes policy without an explicit reference to core prices
unlike the Federal Reserve in the US.
Despite a surging Euro that should help to combat any true
inflation forces in the Euro area economy, the ECB remains wary of this
over top inflation partly because of the ongoing strong money and
credit growth in the EMU. So Europeans find themselves in the sticky
position of seeing inflation flare, the central bank remain wary, ready
to act, even as their currency value remains quite strong and the
competitiveness pressures from that strength are squelching growth and
killing Europe&#8217;s export orders. The European policy dilemma has become
an economic oxymoron: the ECB&#8217;s own threat to hike rates is further
bolstering the euro and further exacerbating the economic problems
within the zone as the ECB does nothing and worries about inflation
pressure which worsen.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Euro
area &amp; Friends: Headline Inflation Yr/Yr</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Year/year</td>
<td colspan="2">Mo/Mo</td>
<td>3Mo: AR</td>
<td>6Mo:Ar</td>
</tr>
<tr>
<td class="firstcol">Core HICP</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>May-07</td>
<td>Apr-07</td>
</tr>
<tr>
<td class="firstcol">Belgium</td>
<td style="color: red;">2.2%</td>
<td>1.5%</td>
<td>1.2%</td>
<td>0.8%</td>
<td>0.1%</td>
<td style="color: red;">3.5%</td>
<td style="color: red;">2.1%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td style="color: red;">2.1%</td>
<td>1.6%</td>
<td>1.3%</td>
<td>0.2%</td>
<td>0.1%</td>
<td style="color: red;">2.6%</td>
<td style="color: red;">2.3%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td style="color: red;">2.7%</td>
<td style="color: red;">2.6%</td>
<td>2.0%</td>
<td>0.2%</td>
<td>0.7%</td>
<td style="color: red;">3.1%</td>
<td style="color: red;">2.7%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td style="color: red;">3.1%</td>
<td style="color: red;">2.9%</td>
<td style="color: red;">2.7%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>1.1%</td>
<td style="color: red;">4.0%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td style="color: red;">3.0%</td>
<td style="color: red;">2.9%</td>
<td style="color: red;">2.3%</td>
<td>0.2%</td>
<td>0.3%</td>
<td style="color: red;">2.3%</td>
<td style="color: red;">2.5%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td style="color: red;">2.3%</td>
<td>1.8%</td>
<td>1.7%</td>
<td>0.7%</td>
<td>0.3%</td>
<td style="color: red;">4.7%</td>
<td style="color: red;">3.3%</td>
</tr>
<tr>
<td class="firstcol">Luxembourg</td>
<td style="color: red;">3.6%</td>
<td style="color: red;">2.5%</td>
<td>1.8%</td>
<td>0.6%</td>
<td>0.0%</td>
<td style="color: red;">2.8%</td>
<td style="color: red;">2.7%</td>
</tr>
<tr>
<td class="firstcol">The Netherlands</td>
<td>1.6%</td>
<td>1.3%</td>
<td>1.0%</td>
<td>0.4%</td>
<td>0.0%</td>
<td>1.5%</td>
<td>0.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="8">EU:
Other HICP/CPI</td>
</tr>
<tr>
<td class="firstcol">UK(HICP)</td>
<td style="color: red;">2.0%</td>
<td>1.7%</td>
<td>1.8%</td>
<td>0.5%</td>
<td>0.1%</td>
<td style="color: red;">2.7%</td>
<td>1.5%</td>
</tr>
</tbody>
</table>
</body></html>

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<html><head>
<style>
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112c.jpg" align="left" border="0" height="265" width="353">
Another indicator that all is not well in Japan was released today.
The seasonally unadjusted diffusion index of consumer confidence for a
two or more person household was 42.8% in October, compared with 44.1%
in September and 48.2% in October, 2006. A value below 50% means that
the majority of the participants in the survey have a negative view of
the outlook. While the decline in October is significant, it should be
noted that since June, 1982, when the series began, there have been few
times when the level of the index was above 50% as can
be seen in the first chart. Japanese consumers have not been
particularly optimistic over the past twenty-five years. Monthly data
for confidence are available only since December 2004.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112d.jpg" align="right" border="0" height="265" width="353">
The index is based on the average of four sentiment indexes: Overall
Livelihood, Income Growth, Employment and Willingness to Buy. The year
to year changes in each of these indexes are shown in the second chart.
As shown there, the year to year changes have been declining from their
early 2006 peak and, since early 2007, have become negative. The
declines in the Employment and Willingness to Buy indexes have been
particularly sharp.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;JAPAN:&nbsp; CONSUMER CONFIDENCE (Diffusion Indexes)&nbsp;</th>
<th scope="col">Oct 07</th>
<th scope="col">Sep 07&nbsp;</th>
<th scope="col">Oct 06&nbsp;</th>
<th scope="col">M/M Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total: Two or More Persons Households</td>
<td>42.8</td>
<td>44.1</td>
<td>48.2</td>
<td>-1.3</td>
<td>-5.4</td>
<td>48.3</td>
<td>47.3</td>
<td>45.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Overall Livelihood</td>
<td>41.0</td>
<td>42.2</td>
<td>45.6</td>
<td>-1.2</td>
<td>-4.6</td>
<td>45.6</td>
<td>45.8</td>
<td>44.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Income Growth</td>
<td>42.2</td>
<td>42.4</td>
<td>44.9</td>
<td>-0.3</td>
<td>-1.9</td>
<td>44.7</td>
<td>44.8</td>
<td>43.1</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp; Employment</td>
<td>45.3</td>
<td>46.4</td>
<td>52.4</td>
<td>-1.1</td>
<td>-7.1</td>
<td>52.8</td>
<td>48.9</td>
<td>45.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Willingness to Buy</td>
<td>42.5</td>
<td>45.5</td>
<td>49.8</td>
<td>-2.7</td>
<td>-7.0</td>
<td>50.0</td>
<td>49.5</td>
<td>48.9</td>
</tr>
</tbody>
</table>
</body></html>

Another indicator that all is not well in Japan was released today. The seasonally unadjusted diffusion index of consumer confidence for a two or more person household was 42.8% in October, compared with 44.1% in September and 48.2% [...]

Japanese Consumers Becoming More Pessimistic

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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250829B1.jpg

The **PCE chain price index** increased 0.2% (2.6% y/y) after rising an unrevised 0.3% in June and an unrevised 0.2% in May. The y/y gain steadied at 2.6%. It was increased from 2.2% y/y in April. Energy prices fell 1.1% (-2.7% y/y) after rising 0.9%, while food & beverage prices eased 0.1% (+1.9% y/y) following a 0.3% rise. The price index excluding food & energy rose a steady 0.3%, after two straight 0.2% increases. The y/y gain edged up to 2.9% last month from 2.8% in June. It was increased from a low of 2.6% in April.

Durable goods prices eased 0.1% (+1.1% y/y) in July, after rising 0.5% in June. Home furnishings & appliance prices edged 0.1% higher (2.5% y/y), after increasing 1.3%. Recreational goods & vehicle costs declined 0.9% (-0.3% y/y) and reversed the 0.9% June strengthening. Motor vehicle & parts prices rose 0.2% (1.6% y/y), after a 0.4% June decline.

Prices of nondurable goods eased 0.1% (+0.2% y/y) last month after rising 0.4% in June. Clothing prices held steady both m/m and y/y after rising 0.3% in June. Food & beverage prices eased 0.1% (+1.9% y/y), following a 0.4% June increase. Gasoline & other energy prices fell 1.7% (-9.6% y/y), after rising 0.9% in June.

Services prices in July rose 0.3% (3.6% y/y), after four straight 0.2% increases. Housing & utility prices rose 0.2% (4.3% y/y), after two consecutive 0.3% increases, and services prices excluding energy & healthcare gained 0.4% (3.7% y/y) after two 0.2% gains. Healthcare prices rose 0.2% (2.7% y/y), after rising 0.4%. The cost of financial services & insurance jumped 1.2% (5.5% y/y) after rising 0.4% in June. Recreation services costs rose 0.3% (3.2% y/y) after rising 0.1%. Transportation prices gained 0.2% (4.4% y/y), following a 0.1% rise, while hotel & restaurant prices improved 0.1% (2.8% y/y) after a slight June decline.

**Personal consumption expenditures (PCE)** rose 0.5% (4.7% y/y) last month after increasing 0.4% in June, revised from 0.3%, after holding steady in May. The July rise matched expectations in the Action Economics Forecast Survey. When adjusted for price changes, PCE improved 0.3% in July (2.1% y/y) after rising 0.1% in June.

Real spending on durable goods increased 2.0% (3.2% y/y) in July, after falling for three straight months. Real spending on motor vehicles jumped 4.5% (3.5% y/y), after falling sharply in both June and May. Real outlays on furnishings & appliances improved 0.2% (0.9% y/y), after falling in each of the prior month. Real spending on recreational goods & vehicles increased 1.5% (4.9% y/y) last month, after falling 0.4% in June. Spending on “other” durable goods improved 0.4% (2.6% y/y) after rising 0.2% in June.

Nondurable goods spending in real terms rose 0.3% (2.7% y/y) in July after gaining 0.6% in June. Real clothing & footwear purchases rose 0.6% (4.9% y/y) last month, following a 0.5% rise during June. Real food & beverage purchases strengthened 0.7% (1.7% y/y) after rising 0.4%. Real outlays on gasoline & other energy products fell 1.3% (-1.5% y/y), after rising 1.5%. Real spending on “other” nondurable goods edged 0.1% higher (4.1% y/y) last month, following a 0.6% rise in June.

Real spending on services improved 0.1% (1.7% y/y) in July for the second straight month. Real spending on housing & utilities rose 0.1% (1.1% y/y) in July, for a second consecutive month, while real health care spending also rose 0.1% (3.9% y/y) after rising 0.2%. Real spending on food services & accommodations eased 0.2% (+1.7% y/y), after rising 0.4% in June. Real spending on financial services & insurance rose 0.2% (2.4% y/y) after increasing 0.4% in June. Real spending on transportation services rose 0.3% (-0.0% y/y) in July, after falling 0.6% in June. Recreation spending slipped 0.1% (+1.0% y/y), the same as in June. Spending on “other” services rose 0.3% (2.7% y/y) for the second straight month.

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250829G1.jpg

**Personal income** rose 0.4% last month (5.0% y/y) after increasing 0.3% in June. A 0.5% gain was expected. Wages & salaries moved 0.6% higher (5.3% y/y), following a 0.1% increase during June. Rental income increased 0.5% (4.0% y/y) in July, after falling for three straight months. Proprietors’ income improved 0.7% (2.3% y/y), after a minimal 0.1% increase. Income from assets rose 0.1% (1.4% y/y), after holding steady in June, and current transfer receipts were unchanged (8.3% y/y) following a 1.1% June increase.

Disposable personal income increased 0.4% (4.6% y/y) during July following a 0.3% June rise. After adjusting for price changes, disposable income improved 0.2% (2.0% y/y) after holding steady in June.

The personal saving rate held steady in July at 4.4%, after falling from 5.0% in April. It still stands well above low of 3.5% in December of last year. Personal saving fell 1.7% (+5.8% y/y) in July, after declining 0.9% in June.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

**Let’s Get On with It** from Fed Governor Christopher J. Waller is available [here](https://www.federalreserve.gov/newsevents/speech/waller20250828a.htm).

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250829D1.jpg

- Core price increase y/y matches highest since February.
- Real spending moderation centers on services.
- Real disposable income improves; personal savings rate steadies.

U.S. Core PCE Price Inflation Up in July; Real Spending Slows Y/Y 

Winnie Tapasanun

250829H.jpg

250829I.jpg

The advance estimate of the U.S. international trade deficit in goods widened to a larger-than-expected $103.57 billion in July after narrowing to $84.85 billion in June, data from the U.S. Census Bureau showed. The July reading, the second widening in the goods trade deficit in three months, was slightly smaller than a $103.92 billion shortfall in July 2024. A deficit of $90.2 billion for July had been expected by the Action Economics Forecast Survey. The deficit reached a record $161.95 billion in March. In Q2'25, the goods trade deficit narrowed to $266.96 billion, the smallest since Q4'23, after ballooning to a record $465.035 billion in Q1'25; the monthly deficit averaged $88.99 billion in Q2'25, down from a record $155.01 billion in Q1'25.

Total goods exports dipped 0.1% m/m (+3.0% y/y), the third consecutive monthly decline, to $177.97 billion in July, the lowest level since January, after a 0.7% decrease to $178.08 billion in June. April registered a record high of $190.08 billion. Exports were up 9.6% from a June 2023 low but down 2.1% from a July 2022 high. The m/m decline in exports in July reflected exports m/m drops of 2.4% (+16.3% y/y) in other goods, 0.9% (+5.1% y/y) in nonfood consumer goods excluding autos, and 0.8% (-1.2% y/y) in industrial supplies & materials. To the upside, exports for the following end-use categories rose m/m in July: automotive vehicles & parts (2.2%; -4.0% y/y), capital goods excluding autos (0.7%; 7.0% y/y), and foods, feeds & beverages (0.5%; 1.4% y/y).

Total goods imports rebounded 7.1% m/m (1.7% y/y), the first monthly increase since March, to a four-month-high $281.54 billion in July following a 4.6% drop to $262.94 billion in June. March registered a record high of $344.59 billion. Imports were up 11.9% from a June 2023 low but down 2.6% from a March 2022 high. The m/m rebound in imports in July reflected m/m rises in most imports end-use categories. These included a 25.4% surge (the first m/m increase and the largest since January; 4.9% y/y) in industrial supplies & materials as well as rises of 11.5% (23.5% y/y) in other goods, 4.8% (14.7% y/y) in capital goods excluding autos, 2.4% (4.9% y/y) in foods, feeds & beverages, and 2.1% (-12.2% y/y) in nonfood consumer goods excluding autos. In contrast, imports of automotive vehicles & parts, the only end-use category with a monthly decline in July, fell 3.2% (-14.1% y/y), the third m/m fall in four months, on top of a 3.6% June decrease.

The advance international trade data can be found in Haver's **USECON** database. The expectation figure is from the Action Economics Forecast Survey, which is in **AS1REPNA**.

- Deficit: $103.57 bil. in July, jumping 22.1% from June’s $84.85 bil.
- Exports -0.1%, down for the third straight month, led by a 2.4% decline in exports of other goods.
- Imports +7.1%, up for the first time since March, led by a 25.4% surge in imports of industrial supplies & materials.

U.S. Goods Trade Deficit Balloons in July; Largest Since March’s Record High

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Inflation in the monetary union was tepid across the large, early-reporting, economies in August. The HICP rose by 0.2% on the month in Germany, rose by 0.1% in France, while it was flat in both Italy and Spain. However, these outstanding readings followed several months of stronger inflation; in particular in July German prices rose by 0.2%, in Italy the gauge rose by 0.3%, in France by 0.4%, and in Spain by 0.5%.

As a result, over three months, inflation is running hot on the headline gauge, over 2% in France, Italy, and Spain, and just below it, at a 1.8% annual rate in Germany. Over 12 months, inflation is well behaved, but that headline is up 0.8% in France, rises by 1.7% over 12 months in Italy, by 2.1% in Germany, and at a 2.6% pace in Spain. That is a bit more mixed but still quite solid set of results. The EMU-wide HICP for July – on a one-month lag- rises by 2.1% over 12 months with a core at 2.3%.

Core inflation is not well reported on an early basis. The Italian core rate rose 0.2% in August with Spain at 0.3%; both Italy and Spain logged increases of 0.3% in July and in June and as a result the 3-month inflation rate on the core for Italy and Spain runs at 2.7% in Italy and at 3.8% for Spain. These, of course, are much higher and more disturbing numbers for inflation. The 6-month inflation rate for core Italy and Spain runs at 2.9% and 3.1%, respectively, while over 12 months the Italian core is up by only 2.1% and the Spanish core is up by only 2.4%. The kick up and inflation for the core is a relatively recent phenomenon.

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These statistics give the ECB some room and some time to maneuver, since headline inflation is in pretty good shape and the inflation issues are scattered and have emerged more recently from the core and with growth still weak and with rising unemployment in Germany where it just topped 3 million for the first time in a decade. There may not be any impetus to have to raise rates to cool inflation. The European Central Bank, like the Federal Reserve, is likely playing a watch and wait game with the economic statistics, and this month the watch and wait game turned pretty much in its favor with very good headline figures although still having some difficult core figures. It will take a little time before we get the core numbers for the rest of the monetary union members to fill in to understand exactly where those trends sit.

However, based on the early returns, the ECB is probably relatively happy with how inflation is sitting even with the core rates slightly excessive and varied. There doesn't appear to be any burgeoning inflation problem; there's some kind of a modest core inflation issue building in Italy and Spain and we'll have to watch that in the coming months. For now, the ECB should be relatively content.

Europe

EMU Large Country Inflation Runs Cold – Over Tepid Cores

Andrew Cates

**The US labour market**
The latest data highlight a growing sense of fragility in the US labour market. The unemployment rate, while still relatively low by historical standards, has been edging higher through the course of this year. More telling, however, is the signal from this week’s consumer confidence survey from Conference Board and specifically the labour market differential — the gap between the share of consumers saying jobs are plentiful versus those saying jobs are hard to get. That balance has narrowed sharply, moving back toward levels historically associated with softer labour demand and rising unemployment.

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**Goods and services inflation** 
Haver’s breakdown of goods and services CPI inflation in the advanced economies highlights where fresh risks are emerging. Goods inflation, which had been receding sharply after the pandemic supply shocks, has recently shown signs of firming again. Some of this probably reflects the impact of US tariff policies, which are raising import costs and putting renewed upward pressure on traded goods prices. While services inflation remains the more stubborn component in most advanced economies, the risk is that tariffs could reintroduce stickiness into goods prices, slowing the overall disinflation process.

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**China, Europe and US trade policy**
A consequence of US tariff policies has been a sharp contraction in Chinese exports to the US market, with much of the surplus redirected elsewhere. Europe in particular has recorded near double-digit import growth in recent months, raising concerns that Beijing is deflecting its industrial overcapacity problem rather than resolving it, effectively transferring the pressure onto trading partners. China’s authorities, however, have begun to push back, introducing measures to curb excess supply and rein in so-called “involution,” including clampdowns on price wars across several industries.

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**China’s excess capacity and Europe**
A closer look at Europe–China trade shows that electric vehicles remain a key flashpoint. Import volumes from China have continued to rise even as per-unit prices fall sharply from a year ago —evidence suggesting that industrial overcapacity persists, with low-cost Chinese EVs increasingly challenging European automakers. The surge has carried on despite EU tariffs of up to 45% on battery EVs, as Chinese producers have adapted by pushing plug-in hybrids and expanding onshore production in Europe to bypass duties and defend market share.

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**Wage growth in the US and Europe** 
Turning back to inflation dynamics, the UK stands out for its persistent wage pressures. While posted wage growth has cooled across the US and euro area, the UK measure has remained elevated at around 6% year-on-year, well above pre-pandemic norms. This stickiness reflects a still-tight labour market in key service sectors, even as broader activity has slowed and unemployment has edged higher. For the Bank of England, it underscores the dilemma: headline inflation is easing, but underlying pay growth risks keeping services inflation uncomfortably high, complicating the timing and scale of policy easing.

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**The UK economy**
The UK’s net international investment position has deteriorated noticeably in recent years, with both direct investment and portfolio flows showing persistent weakness. The latest data underline how net FDI has turned increasingly negative, while the portfolio investment balance has also eroded, leaving the UK more reliant on volatile short-term funding sources. This deterioration comes against a backdrop of heightened investor unease about the riskiness of UK debt markets, where elevated gilt yields and rising debt-servicing costs have amplified concerns over fiscal sustainability. Taken together, these trends underscore the vulnerability of the UK’s external position at a time when global capital is arguably proving more selective and risk sensitive.

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Global markets have continued to rally into late summer, buoyed by AI optimism, dovish signals from central bankers at Jackson Hole, and expectations of easier policy ahead. Yet beneath the surface, risks to the world economy are accumulating. In the US, labour market indicators point to softening conditions (chart 1), while tariff-driven pressures are beginning to push goods prices higher (chart 2). Global trade flows are being reshaped by US policy, with China’s excess capacity increasingly diverted toward Europe, most visibly through surging exports of electric vehicles (EVs) (charts 3 and 4). At the same time, wage growth remains stubbornly elevated in the UK, complicating disinflation (chart 5), while concerns are mounting over the country’s external vulnerabilities as net FDI and portfolio positions weaken against the backdrop of jittery debt markets (chart 6). Together, these dynamics highlight the tension between buoyant market performance and a global economy still grappling with structural fragilities.

Charts of the Week: Riskbusters

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Real GDP grew 3.3% (SAAR) during the second quarter of 2025, revised from a 3.0% gain reported initially. The increase followed an unrevised 0.5% decline in Q1. A 3.1% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.1% compared to 2.0% y/y in Q1, and remained below its most recent high of 3.2% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment increased 1.4% (7.0% y/y) last quarter after easing 0.8% in Q1. Before-tax earnings with IVA & CCA rose 1.7% (4.3% y/y) after falling 2.3% in Q1. Financial sector earnings rose 1.4% (15.3% y/y) after rising 2.3% in Q1. Nonfinancial corporate profits rose 2.2% (2.5% y/y) after falling 2.5% in Q1. Earnings from abroad eased 0.7% (-0.4% y/y) following a 7.3% Q1 decline.

Foreign trade balance improvement added 4.95 percentage points to growth last quarter after subtracting 4.61 percentage points in Q1. Imports fell 29.8% (+1.3% y/y) after surging 38.0% in Q1. Exports declined 1.3% (+2.0% y/y) after improving 0.4% in Q1. Inventories subtracted 3.29 percentage points from growth after adding 2.59 percentage point to Q1 growth.

Real final sales to domestic purchasers grew 1.6% (2.4% y/y), revised from 1.1%, in Q2 after rising 1.5% in Q1. Personal consumption expenditures rose 1.6% (2.4% y/y), revised from 1.4%, following a 0.5% gain. Durable goods spending rose 2.6% (4.6% y/y) after falling 3.7% in Q1. Motor vehicle purchases strengthened 11.7% (6.7% y/y) after declining 11.2% in Q1. Spending on home furnishings & appliances weakened 2.1% (+3.5% y/y) following a 1.5% rise. Recreational goods & vehicle outlays fell 3.5% (+4.3% y/y) last quarter after a 0.4% Q1 gain.

Nondurable goods outlays in constant dollars rose 2.3% (3.0% y/y) following 2.1% growth in Q1. Apparel spending increased 5.4% (4.8% y/y) following a 7.0% rise. Food & beverage buying gained 0.3% (1.5% y/y) after a 1.0% increase. Gasoline & fuel oil purchases weakened 1.4% (+0.9% y/y) after gaining 3.6% in Q1.

Real spending on services increased 1.2% (1.9% y/y) after a 0.6% gain. Outlays on housing & utilities eased 0.4% (+1.1% y/y) after rising 2.9% in Q1. Health care expenditures rose 4.2% (4.8% y/y) after a 3.1% increase. Transportation outlays declined 2.9% (-0.6% y/y) after a 1.4% rise, while recreation spending rose 3.6% (0.7% y/y) following a 5.1% decline. Restaurant & hotel expenditures increased 5.1% (1.9% y/y) after falling 1.8%. Financial services expenditures rose 1.9% (2.3% y/y) following a 0.1% Q1 increase.

Business fixed investment in constant dollars increased 5.7% last quarter (4.2% y/y), revised from 1.9%, following a 10.3% surge in Q1. Expenditures on structures declined 8.9% (-3.4% y/y), after falling 2.4% in Q1. Expenditures on producers’ durable equipment increased 7.4% (7.7% y/y), revised from 4.8%, after surging 23.7% in Q1. Outlays on information processing equipment rose 10.1% (20.1% y/y), revised from 5.5%, after soaring 72.8% during Q1. Industrial equipment investment rose 6.7% (4.0% y/y) after a 4.7% rise. Transportation equipment investment surged 20.4% (6.8% y/y) after a 6.9% gain. Intellectual property product spending rose 12.8% last quarter (5.2% y/y) following a 6.0% rise.

Residential structures investment in real terms declined a little-revised 4.7% (-1.3% y/y), the fourth decline in the last five quarters.

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Government spending eased 0.2%, revised from up 0.5% in Q2 (+1.8% y/y) after a 0.6% decline. Federal government expenditures declined 4.7% (+0.7% y/y) after falling 4.6% in Q1. National defense expenditures increased 1.4% (3.0% y/y) after declining 7.1% in Q1. State & local government spending rose 2.6% (2.5% y/y) following a 2.0% rise.

The GDP chain price index rose an unrevised and expected 2.0% last quarter (2.5% y/y) after increasing 3.8% in Q1. The PCE chain price index increased 2.0% (2.4% y/y) following a 3.7% rise. The PCE price index excluding food and energy rose 2.5% (2.7% y/y) after increasing 3.5% in Q1. The business fixed investment price index edged 0.5% lower (+1.1% y/y) after a 0.4% rise. The residential price index rose 1.1% (2.6% y/y) after a 4.1% rise while the government price index increased 3.3% (3.1% y/y) following a 4.6% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Business investment strengthens & consumer spending firms.
- U.S. business earnings reverse Q1 decline.
- Increase in price index is unrevised, remaining roughly half of Q1’s gain.

Economy in Brief: 2007

Jump to:

U.S. PPI Total & Core Weak

Economic Sentiment Among the German Financial Community Takes a Tumble in November

Inflation Trends Turn Bleak in the Euro Area…

German Sales Trends Improving; But Still a Moderate Quarter

U.S. Chain Store Sales Eased

Small Business Optimism Held Low, Credit Problems Eased

Small Business Optimism Held Low, Credit Problems Eased

Japanese Consumers Becoming More Pessimistic