Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829a.jpg" width="353">
According to the International Council of Shopping Centers (ICSC)-UBS survey, chain store sales rose a moderate 0.6% last week, the first w/w gain since July.
The increase helped the average sales level in August rise 0.4% above July, the first m/m gain in four months.
During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829b.jpg" width="353">
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 a modest 0.1% (-2.4% y/y) in the latest week after several weeks of decline.
The retail price for a gallon of regular unleaded gasoline fell another eight cents to an average $2.85 (+9.0% y/y). The decline lowered the average this month to $2.95 versus a July average of $2.98. In spot market trading yesterday, regular unleaded gasoline prices fell sharply to $1.77 as Ernesto was downgraded to a tropical storm and moved out of the Gulf of Mexico. 
Oil prices similarly fell with the spot price of WTI crude down to $70.62 per bbl. (+5.1% y/y) and the price is lower today. Natural gas prices also fell to $6.52/mmbtu (-33.9% y/y) in spot trading. 
The latest Short-Term Energy Outlook from the U.S. Energy Information Administration is available <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<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">08/26/06</th>
<th scope="col">08/19/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>471.7</td>
<td>469.1</td>
<td>3.6%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


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According to the International Council of Shopping Centers (ICSC)-UBS survey, chain store sales rose a moderate 0.6% last week, the first w/w gain since July. The increase helped the average sales level in August rise 0.4% above July, [...]

Weekly Chain Store Sales Up, Gasoline Prices Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829d.jpg" width="353">
The Conference Board reported that consumer confidence in August fell a sharp 6.9% to 99.6, its lowest level since November. The July level was revised up slightly but Consensus expectations had been for a more moderate decline in August confidence to 102.9.
During the last twenty years there has been a 52% correlation between the level of consumer confidence and the y/y change in real consumer spending. The correlation rose to 66% during the last ten years.
Consumers&#39; assessment of the present situation reversed all of the prior month&#39;s modest uptick and fell 8.0% (-0.3% y/y) to the lowest level (123.4) this year. The percentage of respondents who viewed business conditions as good (26.1%) fell though the percentage that viewed jobs as hard to get (21.1%) rose to its highest level this year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829c.jpg" width="353">
The index measuring consumers&#39; expectations fell 5.7% (-10.2% y/y). Expectations for better business conditions worsened to the lowest (15.9%) since October and fewer respondents expected more jobs.
Expectations for the inflation rate in twelve months jumped to 5.5%, the highest level since May.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.
Wealth inequality is vast and growing from the Economic Policy Institute is available <a href="http://www.epi.org/content.cfm/webfeatures_snapshots_20060823"> here</a>

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>99.6</td>
<td>107.0</td>
<td>-5.6s%</td>
<td>100.3</td>
<td>96.1</td>
<td>79.8</td>
</tr>
</tbody>
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The Conference Board reported that consumer confidence in August fell a sharp 6.9% to 99.6, its lowest level since November. The July level was revised up slightly but Consensus expectations had been for a more moderate decline in [...]

Consumer Confidence Fell Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829d.jpg" width="353">
The Conference Board reported that consumer confidence in August fell a sharp 6.9% to 99.6, its lowest level since November. The July level was revised up slightly but Consensus expectations had been for a more moderate decline in August confidence to 102.9.
During the last twenty years there has been a 52% correlation between the level of consumer confidence and the y/y change in real consumer spending. The correlation rose to 66% during the last ten years.
Consumers&#39; assessment of the present situation reversed all of the prior month&#39;s modest uptick and fell 8.0% (-0.3% y/y) to the lowest level (123.4) this year. The percentage of respondents who viewed business conditions as good (26.1%) fell though the percentage that viewed jobs as hard to get (21.1%) rose to its highest level this year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829c.jpg" width="353">
The index measuring consumers&#39; expectations fell 5.7% (-10.2% y/y). Expectations for better business conditions worsened to the lowest (15.9%) since October and fewer respondents expected more jobs.
Expectations for the inflation rate in twelve months jumped to 5.5%, the highest level since May.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.
Wealth inequality is vast and growing from the Economic Policy Institute is available <a href="http://www.epi.org/content.cfm/webfeatures_snapshots_20060823"> 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/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>99.6</td>
<td>107.0</td>
<td>-5.6s%</td>
<td>100.3</td>
<td>96.1</td>
<td>79.8</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Up, Gasoline Prices Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 29, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829a.jpg" width="353">
According to the International Council of Shopping Centers (ICSC)-UBS survey, chain store sales rose a moderate 0.6% last week, the first w/w gain since July.
The increase helped the average sales level in August rise 0.4% above July, the first m/m gain in four months.
During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829b.jpg" width="353">
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 a modest 0.1% (-2.4% y/y) in the latest week after several weeks of decline.
The retail price for a gallon of regular unleaded gasoline fell another eight cents to an average $2.85 (+9.0% y/y). The decline lowered the average this month to $2.95 versus a July average of $2.98. In spot market trading yesterday, regular unleaded gasoline prices fell sharply to $1.77 as Ernesto was downgraded to a tropical storm and moved out of the Gulf of Mexico. 
Oil prices similarly fell with the spot price of WTI crude down to $70.62 per bbl. (+5.1% y/y) and the price is lower today. Natural gas prices also fell to $6.52/mmbtu (-33.9% y/y) in spot trading. 
The latest Short-Term Energy Outlook from the U.S. Energy Information Administration is available <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<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">08/26/06</th>
<th scope="col">08/19/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>471.7</td>
<td>469.1</td>
<td>3.6%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
 Japanese Household's Living Expenditures  
by <a href="/comment/Curley.html">Louise Curley</a> August 29, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829e.jpg" width="353">
The Japanese Ministry of Internal Affairs and Communication publishes a variety of data relating to household&#39;s living expenditures as part of their report on the Family Income and Expenditure Survey. There are data on the actual expenditures for all households and for workers&#39; household. In addition to total expenditures, there are a number of spending categories.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829f.jpg" width="353"> Data are given for &quot;fundamental&quot; and &quot;selective&quot; expenditures, what we would call nondiscretionary and discretionary spending. There are indexes--seasonally adjusted and not seasonally adjusted-- of the actual expenditures based on 2005=100. . Nominal and Real Indexes on a seasonally adjusted basis are available for all households, including agricultural, forestry and fisheries households and for all households excluding those households. Similar data for workers&#39; households are also available. The data start in January 2000.
The monthly data have shown a slight downward trend over the past seven years as can be seen in the first chart that shows the year to year changes in the real and nominal indexes for workers&#39; households. If the monthly data of the real index for living expenditures for all households including agriculture, forestry and fisheries households are aggregated to a quarterly basis, the quarterly data appear to show the same general movement as that shown by household consumption in the national accounts as can be seen in the second chart. Thus the living expenditure data appear to be coincident rather than leading indicators of total household consumption.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829g.jpg" width="353">
The data can be used to reveal spending patterns. For example, fundamental expenditures tend to take up between 52-58% of total spending while selected expenditures take up between 40-48% as shown in the third chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J8/@J808/@J808.HTM">Japan</a></th>
<th scope="col">Jul&nbsp; 06</th>
<th scope="col">Jun 06</th>
<th scope="col">May 05</th>
<th scope="col">Apr 06&nbsp; &nbsp;&nbsp;</th>
<th scope="col">Mar 06 &nbsp;&nbsp;&nbsp;&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Household Living Expenditures</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">All Household (000 Yen)</td>
<td>292.328</td>
<td>280.824</td>
<td>292.114</td>
<td>312.872</td>
<td>313.350</td>
<td>-0.81</td>
<td>0.38</td>
<td>-1.34</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Year/Year % Change</td>
<td>-0.83</td>
<td>-1.12</td>
<td>-1.24</td>
<td>-1.56</td>
<td>-1.87</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol"> Workers&#39; HHs&nbsp; (000 Yen) </td>
<td>320.677</td>
<td>301.978</td>
<td>310.482</td>
<td>346.086</td>
<td>340.010</td>
<td>-0.64</td>
<td>1.55</td>
<td>-1.40</td>
</tr>
<tr class="odd">
<td class="firstcol"> &nbsp; Year/Year % Change </td>
<td>-1.46</td>
<td>-2.29</td>
<td>-2.10</td>
<td>-3.88</td>
<td>-3.77</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Workers&#39;&nbsp; Households&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Real (2005=100)</td>
<td>96.1</td>
<td>96.7</td>
<td>97.9</td>
<td>96.2</td>
<td>95.5</td>
<td>-0.34</td>
<td>1.61</td>
<td>-1.12</td>
</tr>
<tr>
<td class="firstcol"> &nbsp; Year/Year % Change </td>
<td>-1.74</td>
<td>-2.91</td>
<td>-2.30</td>
<td>-3.90</td>
<td>-3.34</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol"> Nominal (2005=100) </td>
<td>96.4</td>
<td>97.0</td>
<td>99.2</td>
<td>96.3</td>
<td>95.3</td>
<td>-0.70</td>
<td>1.61</td>
<td>-1.38</td>
</tr>
<tr>
<td class="firstcol"> &nbsp; Year/Year % Change </td>
<td>-1.23</td>
<td>-2.41</td>
<td>-2.19</td>
<td>-4.08</td>
<td>-3.74</td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>


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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828d.jpg" width="353">
Estonia and Lithuania reported that average monthly wages in the second quarter were 14.96% and 14.12%, respectively, above the second quarter of 2005. Wage growth in Lithuania has been accelerating and this was the highest year-to-year increase to date.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828f.jpg" width="353"> Wage growth in Estonia, on the other hand, had decelerated from 14.63% in the second quarter of 2001 to 7.26% in the second quarter of 2004, since then it has accelerated. The trends of wage growth in the two countries are shown in the first chart. To get some idea of the relative level of wages in the two countries we converted the wages in local currency into wages in euros. There are 15.646 Estonian Kroon in one Euro and 3.452 Lithuanian Litas in one Euro. In terms of euros the average monthly wage level in the second quarter of this year was 440 euros for Lithuania and 609.euros for Estonia.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828e.jpg" width="353">
Two other emerging countries of Europe, Slovenia and Slovakia reported the results of recent business surveys. The results are the excess of those who believe conditions will improve over those who believe conditions will worsen. Those participating in Slovakia&#39;s Industry Confidence Survey have generally shown an excess of optimists over pessimists, while those participating in Slovenia&#39;s Combined Confidence Indicator have had an excess of pessimists until November, 2005. Since then there has been an increasing excess of optimists as can be seen in the second chart. The disparity between the two surveys may be due to the fact that the Combined Confidence Indicator includes the opinions of consumers who until recently have been pessimistic whereas Slovakia&#39;s Industry Confidence Survey does not. In the third chart, we have plotted the Slovenia&#39;s Combined Confidence Indicator with the Consumer Component. It is clear that the consumer has had a negative effect on the combined index until recently. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">Q2 06</th>
<th scope="col">Q1 06</th>
<th scope="col">Q2 05</th>
<th scope="col">Q/Q %</th>
<th scope="col">Y/Y %</th>
<th scope="col">2005&nbsp;%</th>
<th scope="col">2004 %</th>
<th scope="col">2003 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;Monthly Wage NAS</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Estonia (Kroon)</td>
<td>9531</td>
<td>8591</td>
<td>8291</td>
<td>2.96</td>
<td>14.96</td>
<td>11.94</td>
<td>7.71</td>
<td>9.64</td>
</tr>
<tr class="odd">
<td class="firstcol">Estonia (Euro</td>
<td>609</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Lithuania (Litas)</td>
<td>1519.7</td>
<td>14370</td>
<td>1331.5</td>
<td>5.76</td>
<td>14.13</td>
<td>10.02</td>
<td>5.71</td>
<td>4.41</td>
</tr>
<tr class="odd">
<td class="firstcol">Lithuania&nbsp; (Euro)</td>
<td>440</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Aug 06</td>
<td>Jul 06</td>
<td>Aug 05</td>
<td>Q/Q Dif</td>
<td>Y/Y Dif</td>
<td>2005 Dif</td>
<td>2004 Dif</td>
<td>2003 Dif</td>
</tr>
<tr class="odd">
<td class="firstcol">Measures of Confidence</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Slovakia Business Survey % Bal</td>
<td>10.7</td>
<td>9.7</td>
<td>-1.3</td>
<td>1.0</td>
<td>12.0</td>
<td>4.6</td>
<td>6.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovenia Combined Sentiment Indicator % Bal</td>
<td>6</td>
<td>7</td>
<td>-1</td>
<td>-1</td>
<td>7</td>
<td>-1</td>
<td>-1</td>
<td>-5</td>
</tr>
<tr>
<td class="firstcol">Slovenia Consumer</td>
<td>-14</td>
<td>-13</td>
<td>-20</td>
<td>-1</td>
<td>6</td>
<td>-19</td>
<td>-19</td>
<td>-20</td>
</tr>
</tbody>
</table>
</body>
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Estonia and Lithuania reported that average monthly wages in the second quarter were 14.96% and 14.12%, respectively, above the second quarter of 2005. Wage growth in Lithuania has been accelerating and this was the highest year-to- [...]

Strong Increases in Wages in Estonia and Lithuania: Improved Confidence in Slovenia and Slovakia

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828a.jpg" width="353">
Railcar loadings through July grew 2.7% y/y, according to Atlantic Systems. Though y/y growth has been firm, the six month growth in loadings eased to 1.4% though some pickup may be evident in the weekly data for August.
Intermodal loadings (containers &amp; trailers on flat cars) grew 5.4%. That rate of growth is roughly half the rate during 2004 and is down from 7.0% last year. Carload tonnage (which includes bulk shipping of materials) grew 0.8% y/y after a slight decline last year and 1.8% growth in 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828b.jpg" width="353">
During the last ten years there has been a 37% correlation between the y/y growth in total freight car loadings and the change in factory production.
The truck tonnage index from the American Trucking Association fell 1.6% y/y during July. The index level improved some 3.0% from a low in March, but forward momentum has been constrained since last year&#39;s highs.
During the last ten years there has been a 44% correlation between the y/y growth in the truck tonnage index and the change in factory production.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828c.jpg" width="353">
Air Freight Revenue Ton-Miles generated within the U.S. grew 5.0% y/y through June, according to the Air Transport Association. That growth is quite respectable but much of its strength owes to a favorable comparison to a weak period last year. The six-month growth rate of U.S. air-freight dropped to a negative 7.5%.
During the last ten years there has been a 38% correlation between the y/y growth in Air Freight and the change in factory production.
Chairman Ben S. Bernanke remarks at the Kansas City Fed&#39;s Annual Economic Symposium in Jackson Hole, Wyoming can be found <a href="http://www.federalreserve.gov/boarddocs/speeches/2006/20060825/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">U.S. Industry Statistics</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><a href="http://www.haverselect.com/dlx/RAILSHAR/RAILSHAR.HTM">Railcar Loadings</a></td>
<td>2.7%</td>
<td>5.9%</td>
<td>5.4%</td>
<td>2.5%</td>
<td>4.8%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED11/@ED11.HTM">Truck Tonnage Index</a></td>
<td>-1.6%</td>
<td>-1.1%</td>
<td>-1.2%</td>
<td>2.3%</td>
<td>5.9%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol"><a href="http://www.haverselect.com/dlx/INDUSTRY/@I01/@I0124/@I0124.HTM">ATA Domestic Freight Revenue Ton-Miles</a></td>
<td>--</td>
<td>5.0%</td>
<td>8.0%</td>
<td>-0.4%</td>
<td>5.2%</td>
<td>1.2%</td>
</tr>
</tbody>
</table>
</body>
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Railcar loadings through July grew 2.7% y/y, according to Atlantic Systems. Though y/y growth has been firm, the six month growth in loadings eased to 1.4% though some pickup may be evident in the weekly data for August. Intermodal [...]

Railcar Loadings, Truck Tonnage & Air Freight

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828a.jpg" width="353">
Railcar loadings through July grew 2.7% y/y, according to Atlantic Systems. Though y/y growth has been firm, the six month growth in loadings eased to 1.4% though some pickup may be evident in the weekly data for August.
Intermodal loadings (containers &amp; trailers on flat cars) grew 5.4%. That rate of growth is roughly half the rate during 2004 and is down from 7.0% last year. Carload tonnage (which includes bulk shipping of materials) grew 0.8% y/y after a slight decline last year and 1.8% growth in 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828b.jpg" width="353">
During the last ten years there has been a 37% correlation between the y/y growth in total freight car loadings and the change in factory production.
The truck tonnage index from the American Trucking Association fell 1.6% y/y during July. The index level improved some 3.0% from a low in March, but forward momentum has been constrained since last year&#39;s highs.
During the last ten years there has been a 44% correlation between the y/y growth in the truck tonnage index and the change in factory production.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828c.jpg" width="353">
Air Freight Revenue Ton-Miles generated within the U.S. grew 5.0% y/y through June, according to the Air Transport Association. That growth is quite respectable but much of its strength owes to a favorable comparison to a weak period last year. The six-month growth rate of U.S. air-freight dropped to a negative 7.5%.
During the last ten years there has been a 38% correlation between the y/y growth in Air Freight and the change in factory production.
Chairman Ben S. Bernanke remarks at the Kansas City Fed&#39;s Annual Economic Symposium in Jackson Hole, Wyoming can be found <a href="http://www.federalreserve.gov/boarddocs/speeches/2006/20060825/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">U.S. Industry Statistics (Y/Y % Change)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><a href="http://www.haverselect.com/dlx/RAILSHAR/RAILSHAR.HTM">Railcar Loadings</a></td>
<td>2.7%</td>
<td>5.9%</td>
<td>5.4%</td>
<td>2.5%</td>
<td>4.8%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED11/@ED11.HTM">Truck Tonnage Index</a></td>
<td>-1.6%</td>
<td>-1.1%</td>
<td>-1.2%</td>
<td>2.3%</td>
<td>5.9%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol"><a href="http://www.haverselect.com/dlx/INDUSTRY/@I01/@I0124/@I0124.HTM">ATA Domestic Freight Revenue Ton-Miles</a></td>
<td>--</td>
<td>5.0%</td>
<td>8.0%</td>
<td>-0.4%</td>
<td>5.2%</td>
<td>1.2%</td>
</tr>
</tbody>
</table>
Strong Increases in Wages in Estonia and Lithuania: Improved Confidence in Slovenia and Slovakia 
by <a href="/comment/Curley.html">Louise Curley</a> August 28, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828d.jpg" width="353">
Estonia and Lithuania reported that average monthly wages in the second quarter were 14.96% and 14.12%, respectively, above the second quarter of 2005. Wage growth in Lithuania has been accelerating and this was the highest year-to-year increase to date.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828f.jpg" width="353"> Wage growth in Estonia, on the other hand, had decelerated from 14.63% in the second quarter of 2001 to 7.26% in the second quarter of 2004, since then it has accelerated. The trends of wage growth in the two countries are shown in the first chart. To get some idea of the relative level of wages in the two countries we converted the wages in local currency into wages in euros. There are 15.646 Estonian Kroon in one Euro and 3.452 Lithuanian Litas in one Euro. In terms of euros the average monthly wage level in the second quarter of this year was 440 euros for Lithuania and 609.euros for Estonia.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828e.jpg" width="353">
Two other emerging countries of Europe, Slovenia and Slovakia reported the results of recent business surveys. The results are the excess of those who believe conditions will improve over those who believe conditions will worsen. Those participating in Slovakia&#39;s Industry Confidence Survey have generally shown an excess of optimists over pessimists, while those participating in Slovenia&#39;s Combined Confidence Indicator have had an excess of pessimists until November, 2005. Since then there has been an increasing excess of optimists as can be seen in the second chart. The disparity between the two surveys may be due to the fact that the Combined Confidence Indicator includes the opinions of consumers who until recently have been pessimistic whereas Slovakia&#39;s Industry Confidence Survey does not. In the third chart, we have plotted the Slovenia&#39;s Combined Confidence Indicator with the Consumer Component. It is clear that the consumer has had a negative effect on the combined index until recently. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">Q2 06</th>
<th scope="col">Q1 06</th>
<th scope="col">Q2 05</th>
<th scope="col">Q/Q %</th>
<th scope="col">Y/Y %</th>
<th scope="col">2005&nbsp;%</th>
<th scope="col">2004 %</th>
<th scope="col">2003 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;Monthly Wage NAS</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Estonia (Kroon)</td>
<td>9531</td>
<td>8591</td>
<td>8291</td>
<td>2.96</td>
<td>14.96</td>
<td>11.94</td>
<td>7.71</td>
<td>9.64</td>
</tr>
<tr class="odd">
<td class="firstcol">Estonia (Euro</td>
<td>609</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Lithuania (Litas)</td>
<td>1519.7</td>
<td>14370</td>
<td>1331.5</td>
<td>5.76</td>
<td>14.13</td>
<td>10.02</td>
<td>5.71</td>
<td>4.41</td>
</tr>
<tr class="odd">
<td class="firstcol">Lithuania&nbsp; (Euro)</td>
<td>440</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Aug 06</td>
<td>Jul 06</td>
<td>Aug 05</td>
<td>Q/Q Dif</td>
<td>Y/Y Dif</td>
<td>2005 Dif</td>
<td>2004 Dif</td>
<td>2003 Dif</td>
</tr>
<tr class="odd">
<td class="firstcol">Measures of Confidence</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Slovakia Business Survey % Bal</td>
<td>10.7</td>
<td>9.7</td>
<td>-1.3</td>
<td>1.0</td>
<td>12.0</td>
<td>4.6</td>
<td>6.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovenia Combined Sentiment Indicator % Bal</td>
<td>6</td>
<td>7</td>
<td>-1</td>
<td>-1</td>
<td>7</td>
<td>-1</td>
<td>-1</td>
<td>-5</td>
</tr>
<tr>
<td class="firstcol">Slovenia Consumer</td>
<td>-14</td>
<td>-13</td>
<td>-20</td>
<td>-1</td>
<td>6</td>
<td>-19</td>
<td>-19</td>
<td>-20</td>
</tr>
</tbody>
</table>
</body>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060825d.jpg" width="353">
The Japanese Ministry of Internal Affairs and Communications (MIC) today released its five-year revision of the consumer price index. Analysts and media reporters were surprised to find a larger downward revision than projected and a weaker report for July.
The General CPI, seasonally adjusted, fell 0.1% in July, leaving it just 0.3% ahead of July 2005. The decline was largest in food, especially fresh food, but there were also slight decreases in utilities, furniture &amp; other household goods and reading &amp; recreation. Clothing prices went down, but it appears that that is usual in July. Transportation costs were up, but by less than in July last year. Data for the individual categories are not seasonally adjusted.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060825e.jpg" width="353">
MIC also updated its former configuration of the CPI for July; this index also decreased 0.1% for the month, but it was up 0.8% from a year ago. It is the difference of 0.5% between the old and new series that was striking to economists and others, many of whom were speculating after the release that the downward revision would stop the Bank of Japan from raising interest rates again this year.
The revision involves basically two changes. One is numerical: the base period is changed from 2000=100 to 2005=100. While it sounds simple, this change can have a substantive impact, as the magnitude of individual components may shift dramatically if their prices have changed dramatically. Thus, as MIC points out in accompanying &quot;Frequently Asked Questions&quot;, the computer index on the previous base was 16 for 2005, but now it is 100, that is, more than six times larger. Since those prices are still falling, that provides a larger downward force on the index.
The other change involves rearranging the market basket of goods and services. Consumers obviously shift their spending patterns, particularly over a five-year span. So weights in the index change according to the results of one of the standard surveys taken in Japan, the Family Income and Expenditure Survey. This time, weights increased for items whose prices had fallen sharply, also biasing downward the new total index; the example cited by MIC is mobile telephone charges, whose weight rose from 74/10000 to 208/10000, that is, by nearly three times. The resulting change in the transportation and communication category is seen in the second graph. In addition, some items were dropped all together and others added. This time around the new items include ones where prices are falling, such as LCD TV sets; these are part of &quot;Reading and Recreation&quot;, illustrated in the third graph. Overall, 34 items were added to the CPI basket and 48 items were dropped. It&#39;s a sign of the times in Japan that one category of rice was among the deleted items, along with the low tables used when sitting on the floor. Some hand-rolled sushi was deleted, while &quot;conveyor belt&quot; sushi was added.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060825f.jpg" width="353">
It will obviously be up to the Bank of Japan to interpret the effect of these changes on its policy decisions. Most importantly, the lower price index does not come from weak demand, but from vigorous demand amidst rapidly changing technology. What should be the response of interest rates to such developments? It&#39;s a good question.
A technical note is appropriate on the historical data in these indexes. MIC released detailed data back only through January 2005 and published some broader groups back through July 2004. That agency and Nomura Research Institute, which provides the data to Haver Analytics, along with ourselves, have all spliced historical values onto the short period of new data in order to provide longer time series. So far the only change in the earlier components is their rebasing from 2000 to 2005. More calculation to factor in the new item mix is needed to make this history more comparable with the recent values. As MIC, working from its source price data, provides this history, we will be over-writing the temporary historical values currently in our database. Users should note that the data values prior to 2005 could change noticeably, and we recommend caution in drawing overly firm conclusions from them. Further, seasonal adjustment of even the available data has yielded awkward-appearing series, and we would also advise careful attention to those figures as well.
<table border="1" cellpadding="0" cellspacing="0" width="100%"><tbody><tr><td height="17" width="24%">Japan: % Changes</td><td align="right" height="17" width="11%">July 2006</td><td align="right" height="17" width="11%">June 2006</td><td align="right" height="17" width="11%">May 2006</td><td align="right" height="17" width="11%">Year Ago</td><td align="right" height="17" width="11%">2005</td><td align="right" height="17" width="11%">2004</td><td align="right" height="17" width="12%">2003</td></tr><tr><td height="34" rowspan="2" width="24%">General CPI - New*</td><td align="right" height="16" width="11%">100.2</td><td align="right" height="16" width="11%">100.3</td><td align="right" height="16" width="11%">100.2</td><td align="right" height="16" width="11%">99.9</td><td align="right" height="16" width="11%">100.0</td><td align="right" height="16" width="11%">100.3</td><td align="right" height="16" width="12%">100.3</td></tr><tr><td align="right" height="16" width="11%">-0.1</td><td align="right" height="16" width="11%">0.1</td><td align="right" height="16" width="11%">0.1</td><td align="right" height="16" width="11%">0.3</td><td align="right" height="16" width="11%">-0.3</td><td align="right" height="16" width="11%">0</td><td align="right" height="16" width="12%">-0.3</td></tr><tr><td height="34" rowspan="2" width="24%">General CPI - Old*</td><td align="right" height="16" width="11%">98.5</td><td align="right" height="16" width="11%">98.6</td><td align="right" height="16" width="11%">98.6</td><td align="right" height="16" width="11%">97.7</td><td align="right" height="16" width="11%">97.8</td><td align="right" height="16" width="11%">98.1</td><td align="right" height="16" width="12%">98.1</td></tr><tr><td align="right" height="16" width="11%">-0.1</td><td align="right" height="16" width="11%">0.0</td><td align="right" height="16" width="11%">0.3</td><td align="right" height="16" width="11%">0.8</td><td align="right" height="16" width="11%">-0.3</td><td align="right" height="16" width="11%">0</td><td align="right" height="16" width="12%">-0.3</td></tr><tr><td height="32" width="24%">CPI less Fresh Food - New</td><td align="right" height="32" width="11%">0.2**</td><td align="right" height="32" width="11%">0.2**</td><td align="right" height="32" width="11%">0.0**</td><td align="right" height="32" width="11%">--</td><td align="right" height="32" width="11%">-0.1</td><td align="right" height="32" width="11%">-0.1</td><td align="right" height="32" width="12%">-0.3</td></tr><tr><td height="32" width="24%">CPI less Fresh Food - Old</td><td align="right" height="32" width="11%">0.6**</td><td align="right" height="32" width="11%">0.6**</td><td align="right" height="32" width="11%">0.6**</td><td align="right" height="32" width="11%">--</td><td align="right" height="32" width="11%">-0.1</td><td align="right" height="32" width="11%">-0.1</td><td align="right" height="32" width="12%">-0.3</td></tr></tbody></table>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Japan: % Changes</th>
<th scope="col">July 2006</th>
<th scope="col">June 2006</th>
<th scope="col">May 2006</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General CPI - New*</td>
<td>100.2</td>
<td>100.3</td>
<td>100.2</td>
<td>99.9</td>
<td>100.0</td>
<td>100.3</td>
<td>100.3</td>
</tr>
<tr>
<td class="firstcol">-0.1</td>
<td>0.1</td>
<td>0.1</td>
<td>0.3</td>
<td>-0.3</td>
<td>0</td>
<td>-0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">General CPI - Old*</td>
<td>98.5</td>
<td>98.6</td>
<td>98.6</td>
<td>97.7</td>
<td>97.8</td>
<td>98.1</td>
<td>98.1</td>
</tr>
<tr>
<td class="firstcol">-0.1</td>
<td>0.0</td>
<td>0.3</td>
<td>0.8</td>
<td>-0.3</td>
<td>0</td>
<td>-0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">CPI less Fresh Food - New</td>
<td>0.2**</td>
<td>0.2**</td>
<td>0.0**</td>
<td>--</td>
<td>-0.1</td>
<td>-0.1</td>
<td>-0.3</td>
</tr>
<tr>
<td class="firstcol">CPI less Fresh Food - Old</td>
<td>0.6**</td>
<td>0.6**</td>
<td>0.6**</td>
<td>--</td>
<td>-0.1</td>
<td>-0.1</td>
<td>-0.3</td>
</tr>
</tbody>
</table>
</body>
</html>

The Japanese Ministry of Internal Affairs and Communications (MIC) today released its five-year revision of the consumer price index. Analysts and media reporters were surprised to find a larger downward revision than projected and a [...]

New CPI Shows Smaller Upturn in Japanese Inflation

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060825b.jpg" width="353">
The dissenting opinion at the last FOMC meeting from Richmond Fed Bank President Lacker no doubt reflected more than a concern that economic growth was still too robust to be consistent with moderate inflation, but that various measures of liquidity (money) growth needed further restraint.
Indeed, liquidity growth has slowed. Six-month growth in the monetary base near 2% (AR) is off the 6% highs, but M2 has not slowed as precipitously and recently has picked up some.
The 5-Year TIPS spread is down, but only to the middle of the range of the last year and the futures market is indicating that the forward inflation rate is in a rising trend.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060825a.jpg" width="353">
The dollar&#39;s value received some lift as the Fed was tightening, but the inkling and then the reality of a pause in the process recently caused the dollar&#39;s foreign exchange value to fall back near the bottom of its 18 month range.
Commodity prices. They&#39;ve had some lift due to higher oil prices and the industrial economy&#39;s recovery but the patterns showing strength have been uneven, and these prices in the past have been better indicators of real activity than of inflationary pressure.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060825c.jpg" width="353">
Inflation expectations as measured in the University of Michigan survey rose in August to 4.9% for the next twelve months, up off the 2.5% lows of the 2003, but down from last year&#39;s highs of 5.5%.
The effects of globalization on inflation and their implications for monetary policy: a speech by Fed Vice Chairman Donald L. Kohn is available <a href="http://www.federalreserve.gov/boarddocs/speeches/2006/20060616/default.htm"> here</a>.
The long run benefits of sustained low inflation from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20060201/cover.pdf"> here</a>.

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The dissenting opinion at the last FOMC meeting from Richmond Fed Bank President Lacker no doubt reflected more than a concern that economic growth was still too robust to be consistent with moderate inflation, but that various [...]

Monetary Policy's Posture: Many "Buts"

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

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

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The Consumer Price Index increased 2.7% y/y during November, down from 2.8% in October. The 0.2% m/m increase fell short of the 0.3% gain expected in the Action Economics Forecast Survey. The y/y gain in the headline CPI was the weakest since April. It was down from September’s high of 3.0% and compared to 2.9% during 2024. The CPI excluding food & energy increased 0.1% (2.6% y/y) in November. Its y/y rise compared to 2.8% y/y in October and was the weakest rise since March 2021.	

Energy prices rose 1.6% (4.1% y/y in November. Gasoline prices strengthened 3.0% (0.9% y/y). Fuel oil prices increased 3.1% (11.3% y/y). Natural gas prices fell 2.1% (+9.1% y/y), and electricity prices strengthened 1.1% (6.9% y/y). 
Food prices rose 0.1% (2.6% y/y) during November. Egg prices declined 6.4% (-13.2% y/y). Meat, poultry & fish prices strengthened 0.8% (6.8% y/y), while dairy product prices fell 0.9% (-1.6% y/y). Cereal & bakery product costs held steady (+1.9% y/y). Fruit & vegetable prices fell 0.4% and were little changed y/y. Nonalcoholic beverage prices increased 0.9% and 4.3% y/y in November.

Goods prices less food and energy rose 0.2% and rose a steady 1.4% y/y during November. Prices of used cars and trucks increased 0.3% (3.6% y/y), and new vehicle costs rose 0.2% (0.6% y/y). Appliance prices fell 0.6% (+0.5% y/y) while home furnishings prices rose 0.4% (2.6% y/y). Recreation product costs fell 0.3% but increased 0.7% y/y in November. Apparel prices increased 0.6% (0.1% y/y) in November. Education & communication product costs declined 0.3% (-3.1% y/y). Medical care goods prices rose 0.1% (1.1% y/y) in November. 

Services prices less energy edged 0.1% higher but increased 3.0% y/y in November, down from 7.0% y/y in 2022. Shelter prices (35.5% of the CPI) rose 0.1% (3.0% y/y), as owners’ equivalent rent of primary residences also rose 0.1% (3.4% y/y). Transportation service prices fell 0.3% (1.7% y/y). The cost of medical services edged 0.1% and rose 3.3% y/y, and the cost of recreation services fell 0.3% (+2.4% y/y). Education & communication services prices increased 0.4% m/m and 2.2% y/y.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

For the release of CPI on December 18, 2025, the BLS was able to retroactively acquire most nonsurvey data for October and will publish October 2025 values where possible. However, the majority of the CPI series rely on survey data which was not collected for October 2025 due to the government shutdown. Accordingly, the BLS will not publish October values for those series. Haver Analytics has created a second set of CPI indexes and relative importance series in **USECON**. These series will contain any published BLS values for October and interpolated values for unpublished detailed indexes. We will then calculate higher aggregate series such as the All Items index and All Items less food and energy using any published indexes along with our interpolated indexes and relative importance. 


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- Year-to-year comparison is slowest in four months.
- Core price gain exhibits weakest y/y increase since 2021. 
- Services price inflation tumbles y/y; core goods price gain is stable.


U.S. Consumer Price Inflation Moderates in November

Sandy Batten

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Existing home sales rose 0.5% m/m (-1.0% y/y) in November to 4.13 million homes (SAAR) following a 1.5% monthly gain in October and a 1.3% monthly rise in September, according to the National Association of Realtors (NAR). It was the highest level of sales since February and matched expectations in the Action Economics Forecast Survey. The average effective 30-year mortgage interest rate was unchanged at 6.54% last month, but this is down markedly from 7.10% in May and accounts for some of the revival in home sales over the past several months. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales rose 0.8% m/m (-0.8% y/y) in November to 3.75 million units after a 1.1% m/m rise in October and a 1.4% monthly gain in September. Sales of condos and co-ops slumped 2.6% m/m (-2.6% y/y) to 380,000 in November following a 5.4% monthly jump in October.

Compared to a month ago, sales rose 4.1% m/m in the Northeast, increased 1.1% m/m in the South, were unchanged in the West and fell 2.0% m/m in the Midwest. Compared to a year ago, sales were unchanged in both the Northeast and the South, fell 3.0% y/y in the Midwest and declined 1.3% y/y in the West.

The median price of all existing homes (NSA) declined 1.4% m/m (+1.2% y/y) to $409,200 in November. The median price of an existing single-family home fell 1.4% m/m (+1.2% y/y) to $414,300 in November. Prices of single-family homes in the Northeast edged up 0.9% from a year ago. Prices in the Midwest jumped 5.8% y/y; prices in the South rose 1.0% y/y. In contrast, prices in the West declined 0.8% from a year ago.

Inventories of homes for sale continued to weaken in November. The number of existing homes for sale (NSA) slumped 5.9% m/m (+7.5% y/y) to 1.43 million units in November. The supply of homes on the market at the current selling rate (NSA) slid to 4.2 months, its lowest reading since March.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.


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- Existing home sales increased 0.5% m/m in November, the third consecutive monthly gain.
- Month-over-month sales increased in the Northeast and South, were unchanged in the West, and fell in the Midwest.
- Year-over-year sales were unchanged in the Northeast and South and decreased in the Midwest and West.


U.S. Existing Home Sales Edged Up in November

Robert Brusca

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The new UK Confederation of British Industry (CBI) survey on the distributive trades sector shows a sharp weakening of an already weak survey for December and for the outlook into January of 2026. 

The month-to-month deterioration from November was widespread across metrics for retailing as well as for wholesaling for the current month as well as for the outlook. The monthly degradation is without exception across the board - omitting the inventory metric which is a different animal in any event since inventory building is sometimes involuntary. 

**The Retail survey**
Current conditions: In December, the retail survey for sales compared to a year ago, orders compared to year ago, and sales for the time of year (a seasonal adjustment metric), all worsened month-to-month. The November readings were weak and in December sales compared to a year-ago worsened by 12 points, Orders compared to a year ago worsened by 17 points month-to-month and sales for the time of year worsened by 11 points. These metrics for December are below their respective 12-month average by 6 to 13 points, as well for these categories. The rankings tell a stark story, year-on-year sales have been lower only 5.3% of the time, Year-on-year orders have been weaker only 5.6% of the time, while time of the year sales have been lower only 13% of the time. These are all extremely low-ranking metrics.

Expected Conditions: In January expected conditions have weakened month-to-month by amounts ranging from 33 points to 16 points depending on the metric. And sales and orders compared to a year ago as well as sales for the time of year each are weaker than their respective 12-month average readings by amounts ranging from 4 points to 23 points. The rankings on expectations are even worse than for the current metrics. Expected sales compared to a year ago rank lower less than 1% of the time, the same is true of orders. While sales for the time of year have been weaker 7.7 percent of the time. 
 
**Wholesale survey** 
The rankings for wholesaling are even lower than for retailing across the current and expected metrics. The month-to-month degradation for the current readings ranges from 7 points to 17 points weaker while the reading degradation monthly ranges from 5 points to 16 points. Wholesale sales and orders compared to a year ago and sales for the time of year each rank below the 5% mark. The expectations for January shows expectations for the three categories each are at a 2.5 percentile standing or lower. 

**Summing up**
The distributive trades survey has all but crashed and burned in December. Over the last 26 years the average of the three current metrics’ rankings has been lower only 18 times. The average outlook ranking for the month ahead has been weaker only 5 times in the last 26 years (over 313 months). On a relative basis the expected sales/orders performance is more depressed than the Current results for January. The pooled rankings show current ranking over the past 26-years weaker only 5.8 percent of the time with expectations lower only 1.6 percent of the time. These are very weak metrics. It is surprising that the BOE is walking on eggshells to cut rates with mixed support for rate cuts amid such weakness. There is already a GDP decline in the monthly data for October. UK and inflation is still too high, but it is breaking lower at a relatively fast pace. Will the UK be the first economy down after Covid? 




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United Kingdom

CBI’s Distributive Trades Survey Weakens Sharply in December

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Belgian consumer confidence has been on the rise since early this year, however, in December the index has taken a step backwards with a reading of -1 compared to a November reading of +2 and then an October reading of zero. The confidence indicator, on data back to 1991 has a ranking in its 78.5 percentile, marking it as a reasonably strong reading on confidence compared to its values over that period. On the whole the trend is still solid, the month’s step-back is small. 

**The Economic Situation** 
Economic situation for the next 12 months is weaker in December on a reading of -28 compared to -26 in November. The assessment of the previous 12-months is weaker in December at -42 compared to a reading of -38 in November. The outlook is weaker and the recent legacy is assessed as being slightly weaker as well, than it was in November. The assessment of the economic situation for the next 12 months is weak at a 9.7 percentile standing and the assessment of the previous 12 months is also weak at a 23.4 percentile standing.

**Price Trends**
Price trends are seen as higher over the next 12-months at a reading of 38 compared to 27 in November. The backward-looking assessment of price trends also has them stronger in December than 
in November at a reading of 58 compared to 56 in November. Both of these price trend assessments 
are high with the outlook reading at its 94th percentile and the backward-looking assessment in its 81st percentile. Price expectations hit their low mid 2023-late 2023 and have been on the rise steadily ever since. The price metric of ‘12-months ahead’ was at zero in April of 2024 but climbed to +19 by February 2025 and currently sits at a level of 38. Price expectations are well in gear to the upside in Belgium despite relative price stability in the Euro-Area. 

**Unemployment**
Concerns about unemployment elevated slightly in December to -9 from -10 in November but these are significant readings compared to, say, the 12-month-ago reading which is at a level of +32. The sense of backtracking here is extremely weak. The sense of progress on the part of survey respondents becoming more confident about the future is clearly the prevalent feature here. The December reading for unemployment in fact has only a 2.5 percentile standing, indicating extremely weak concerns about the prospects of unemployment ahead despite the minor month-to-month step-back.

**Major Household purchase environment**
The environment for making major household purchases deteriorates slightly in December at -15 compared to -13 in November. This only puts the index back to where it was in October. The response to the question, ‘is it favorable to buy at present’ is unchanged from its November value at -19 and it has been stuck there for three months in a row. The outlook to make major household purchases in the next 12-months logs a weaker reading at -15 than its 12-month value of -13but is stronger than its 12-month level of -18. The reading for the ‘favorable to buy at present’ question, however, is weaker at a -19 compared to -14, logged 12-months ago. The environment for making a household purchase over the next 12-months has a 55.6 percentile ranking which is above its median, however, the assessment of ‘favorable to buy at present’ has only a 20th percentile standing significantly below its median reading (median readings occur at a ranking of 50%)..

**The Financial situation**
The financial situation for the next 12-months is assessed weaker at -3 in December, compared to zero in November; it compares to a - 2 in October. The assessment 12-months ago was also -2 so this is a very minor deterioration comparing the financial situation of households with the last 12-months produces another deterioration at -8 in December compared to -6 in November and that compares to 12-months ago at -5 another deterioration. However, the backward-looking assessment has a 52-percentile standing which is above its median while the outlook reading of -3 has a 23-percentile standing which puts it in the lower quarter of all expectations on data back to 1991. The current situation is appraised at 20 a step-back from November and October levels as well as from 12-months ago. But the current appraisal also has a queue standing in its 65.7 percentile which has a comfortable margin above its median reading. Households clearly have concerns about their financial situation even though their outlook for making household purchases is above median and their concerns about unemployment are low. Currently, conditions appear to be construed as solid.

**Savings**
Household savings over the next 12-months are weaker in December at a reading of 20 compared to 26 in November; they are closer to their 12-month ago reading of 21. December is still a relatively high reading, in any event, with a 91-percentile standing. The question, ‘is it favorable to save at present’ is unchanged in November compared to December at a reading of -28 although it is weaker than it was 12-months ago and the percentile standing at its 78th percentile, again, a firm reading for this metric.

**Summing up - assessment** 
The consumer confidence reading from the Belgian National Bank this month shows a slight set back month-to-month, however, there is a significant an improvement that has been underway that is quite clear from the chart. The concerns that consumers have seemed to be about their financial situation haven't translated into concerns about unemployment or their willingness to make major household purchases, with unemployment concerns very low and their willingness to make household purchases for the period ahead at essentially normal levels. Still, there is more concern about inflation that is percolating, which is interesting considering that overall inflation has been relatively stable and muted in the European monetary area. 




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Belgium

Belgian Consumer Confidence - On the Rise, but Weaker Month-to-Month

Andrew Cates

**Faster-than-Expected Monetary Easing**
Our first potential upside risk for 2026 is that monetary policy across most major advanced economies is loosened further and by more than markets and forecasters currently anticipate. Monetary policy cycles have a history of being underestimated in both length and magnitude—in large part because of the powerful feedback loops between interest rates, inflation, and economic behaviour. On the way up, higher policy rates feed into mortgage costs, debt-service burdens, rents, and the general cost of doing business, reinforcing wage pressures and inflation persistence. But these same channels work in reverse on the way down. As rates fall, debt servicing eases, housing and rental inflation softens, and cost pressures across the economy unwind more rapidly than expected—allowing inflation to decelerate faster and creating scope for further easing. A risk, therefore, is that if disinflation becomes self-reinforcing, central banks find themselves cutting rates more aggressively than currently priced, not because of economic distress, but because restrictive policy proves increasingly unnecessary.

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**Energy Supply Dynamics Prove More Supportive**
The second chart reinforces the message from the first: easing monetary policy may be accompanied—and amplified—by a more benign energy backdrop. Recent projections from the EIA point to a renewed build-up in OECD crude oil and liquids inventories over the year ahead, a dynamic that has historically been associated with downward pressure on oil prices. If inventories continue to rise as supply growth outpaces demand, spot prices for crude could undershoot current forecasts, keeping energy inflation subdued. That, in turn, would reinforce disinflationary forces already in play—lowering headline CPI, easing cost pressures for firms and households, and giving central banks greater confidence to loosen policy further. In that sense, softer oil prices would not just be a standalone positive shock, but part of a reinforcing feedback loop alongside rate cuts, supporting real incomes, financial conditions, and global growth into 2026.


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**AI-Driven Productivity Gains Materialise More Quickly** 
The third chart shows a clear pickup in US nonfinancial productivity growth, reviving the debate around whether AI-driven efficiency gains may arrive sooner than many forecasters expect. While the longer-term productivity potential of AI remains uncertain and uneven across sectors, there are reasons to think that at least some near-term gains could prove more tangible than currently assumed. Rather than transformative breakthroughs, early benefits are likely to come from incremental improvements—automation of routine processes, better scheduling and logistics, more efficient use of capital and labour, and modest reductions in overhead costs—areas where US firms are already well positioned to implement new technologies quickly. If these gains accumulate and diffuse more broadly, the implications would still be meaningful. Even a modest, sustained uplift in productivity would help contain unit labour costs, support real income growth, and raise the economy’s speed limit without generating renewed inflation pressure. In that scenario, productivity would not need to “revolutionise” the economy to matter: incremental efficiency gains could nonetheless provide a supportive backdrop for growth, earnings, and policy easing into 2026—representing a genuine upside risk to the outlook.


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**The US Economy Proves Resilient Again**
The next chart highlights a further upside risk to the 2026 outlook: the possibility that the US economy once again outperforms its peers. Unlike the typical pre-recession backdrop, there is little evidence of meaningful financial stress in the US private sector. After a prolonged period of balance-sheet repair, private-sector debt ratios have been trending lower in recent years, while the sector as a whole is running a healthy financial surplus. This stands in stark contrast to previous late-cycle episodes, which were characterised by rising leverage, widening deficits, and growing dependence on credit expansion. The absence of private-sector excesses reduces the economy’s vulnerability to higher rates and external shocks, and helps explain why growth has remained more durable than expected. If households and firms continue to prioritise balance-sheet strength rather than forced deleveraging, the usual mechanisms that tip the economy into recession may fail to materialise. In that environment, even modest easing in financial conditions could translate into renewed spending and investment, allowing the US to sustain above-trend growth into 2026—representing another upside risk to the global outlook.


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**India’s Growth Engine Accelerates Further** 
Chart 5 points to another potential upside risk for 2026 emanating from India’s economy. After a period of relative pessimism earlier in the year, consensus growth forecasts for 2026 have been revised modestly higher, even as inflation projections have continued to drift lower. This combination—firmer growth expectations alongside easing inflation pressures—creates scope for a more supportive policy backdrop than markets currently assume. With real interest rates no longer rising and financial conditions stabilising, India’s investment cycle, already underpinned by public infrastructure spending and improving corporate balance sheets, could prove more durable than forecast. If these trends persist, India may deliver growth that is both stronger and more internally driven than expected, providing a meaningful demand impulse to the broader global economy. Given India’s increasing weight in global growth, even small upside surprises would have outsized effects on trade, commodity demand, and regional activity—reinforcing the case that the global outlook for 2026 may be skewed to the upside.


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**The Global South Becomes a More Independent Source of Demand** 
The final chart points to a broader upside risk for the global economy in 2026: that economies across the so-called Global South generate more durable momentum than currently assumed. With a few notable exceptions—such as China and Thailand—many emerging economies continue to benefit from stronger growth in their working-age populations and/or faster real GDP per capita growth than their advanced-economy counterparts. These demographic and income dynamics are helping to underpin domestic consumption, support labour-force expansion, and attract capital inflows, as reflected in the pattern of net FDI across countries. In contrast, much of the advanced world faces binding demographic constraints and lower steady-state growth rates, limiting the scope for demand to re-accelerate organically. If growth in the Global South proves more resilient and internally driven—rather than overly dependent on exports to advanced economies—it could provide a more stable and geographically diversified source of global demand. In that scenario, global growth in 2026 would be less reliant on a narrow set of advanced economies, reinforcing the case that risks to the outlook may be skewed to the upside.


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_This marks our final Charts of the Week publication for 2025 The next edition will be released on Thursday 8 January._

Last week’s Charts of the Week focused on the darker tail risks hanging over the 2026 outlook: the possibility of monetary policy mis-calibration, that geopolitics and trade fragmentation further disrupt supply chains, and that elevated debt levels—particularly in the public sector—reassert themselves as a drag on growth. This week’s charts take a deliberately different tack. Taken together, they highlight a set of upside risks that are possibly underappreciated in current forecasts. For example, policy easing across advanced economies may extend further than expected as disinflation feeds on itself (chart 1); oil prices could surprise on the downside as inventories rebuild (chart 2); US productivity may deliver incremental but meaningful gains sooner than assumed (chart 3); the US economy itself could continue to benefit from an absence of private-sector financial stress (chart 4); India’s growth momentum might firm again as inflation pressures recede (chart 5); and, more broadly, parts of the Global South appear increasingly capable of generating their own demand impulse, supported by favourable demographics and income growth (chart 6). None of these forces is guaranteed, and each carries its own caveats—but together they suggest that, having spent much of the past year fixated on downside risks, the risks to global growth in 2026 may be more evenly balanced than is widely assumed.

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