Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020722a.jpg" width="353">
The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) continued a sideways movement that began after reaching a peak in late May. The index has moved in a band between 122 and 124 since.
The prior improvement in the indicator&#39;s six-month growth rate, perhaps the more important indicator, stalled around a quite positive 6% late in June.
Construction of the ECRI Leading Index is quite different from the Index of Leading Economic Indicators published by the Conference Board. Nevertheless there has been an 80% correlation between the annual percent change in the two over the last 20 years.
The components of the index are money supply plus stock &amp; bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.
The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months. The sideways movement of the leading index in 2002 may or may not signal something about the economy&#39;s growth rate.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/weekly/@W8/@W801/@W801.HTM">ECRI</a></th>
<th scope="col">7/12/02</th>
<th scope="col">7/5/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Weekly Leading Index</td>
<td>122.3</td>
<td>123.4</td>
<td>2.3%</td>
<td>-5.0%</td>
<td>0.8%</td>
<td>2.4%</td>
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The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) continued a sideways movement that began after reaching a peak in late May. The index has moved in a band between 122 and 124 since. [...]

ECRI Leaders Stall

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020719b.jpg" width="353">
Consumer prices rose less than expected last month. Consensus expectations were for a 0.2% rise. Less food &amp; energy, prices also rose less than the expected 0.2%.
Price gains across categories were notably weak, especially for services. The 0.1% gain in core services was the second like gain this year and reflected a weak 0.1% (3.6% y/y) gain in shelter prices, a 0.2% (4.9% y/y) gain in medical care services and a decline in public transportation (-2.3% y/y).
Core goods prices were quite tame. Home furnishings and operation prices fell for the fourth month this year. New vehicle prices fell for the sixth consecutive month. Apparel prices fell for the fourth month this year.
Energy prices were unchanged reflecting slight gains for gasoline and fuel oil but lower prices for piped gas and electricity.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Total&nbsp;</td>
<td>0.1%</td>
<td>0.0%</td>
<td>1.1%</td>
<td>2.8%</td>
<td>3.4%</td>
<td>2.2%</td>
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<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>2.1%</td>
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<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>-1.0%</td>
<td>0.3%</td>
<td>0.5%</td>
<td>0.7%</td>
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<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.1%</td>
<td>0.3%</td>
<td>3.7%</td>
<td>3.7%</td>
<td>3.3%</td>
<td>2.7%</td>
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<td class="firstcol">&nbsp;Energy</td>
<td>0.0%</td>
<td>-0.7%</td>
<td>-11.3%</td>
<td>3.7%</td>
<td>16.9%</td>
<td>3.6%</td>
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<td class="firstcol">&nbsp;Food &amp; Beverages</td>
<td>0.1%</td>
<td>-0.2%</td>
<td>1.6%</td>
<td>3.1%</td>
<td>2.3%</td>
<td>2.1%</td>
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U.S. Trade Deficit Another Record in May 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020719a.jpg" width="353">
The U.S. foreign trade deficit deepened more than expected in May to a new record. April&#39;s deficit was revised deeper. 
So far in 2Q02 the monthly trade deficit has averaged $36.9B versus $31.6B in 1Q. Last year the trade deficit averaged $29.9B per month.
Exports rose less than expected reflecting a weak gain in capital goods (-13.6% y/y) and a decline in nonauto consumer goods (-12.4% y/y).
Imports rose sharply reflecting across the board strong gains.Imports of nonauto capital goods rose 0.7% (-3.2% y/y). Imports of nonauto consumer goods also were strong, up 2.3% (8.5% y/y). Automotive imports also surged and are up 13.2% y/y.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Trade Deficit</td>
<td>$37.6B</td>
<td>$36.1B</td>
<td>$30.1B(5/01)</td>
<td>$358.3B</td>
<td>$378.7B</td>
<td>$262.2B</td>
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<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>0.7%</td>
<td>2.1%</td>
<td>-6.3%</td>
<td>-6.2%</td>
<td>11.2%</td>
<td>2.6%</td>
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<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>1.8%</td>
<td>4.8%</td>
<td>1.7%</td>
<td>-6.0%</td>
<td>18.3%</td>
<td>10.9%</td>
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U.S. Budget Surplus Down Vs. Last June 
by <a href="/comment/Moeller.html">Tom Moeller </a> July 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020719c.jpg" width="353">
The June US budget deteriorated somewhat less than expected. A monthly surplus of $25.0B had been expected versus last year&#39;s June surplus of $31.9B. The June fiscal YTD deficit for 2002 was the largest since 1995. 
Receipts rose sharply m/m due to a surge in individual tax payments. Individual tax payments fell 19.6% fiscal YTD as a result of higher unemployment. Fiscal YTD corporate tax receipts fell 15.9% versus last year. 
Federal expenditures fell m/m but remained up 7.5% versus last fiscal year. Higher spending on defense (12.4% YTD), education (13.2% YTD) and income security (13.6% YTD).

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E10602.HTM">US Government Finance</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Fiscal YTD</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Budget Balance</td>
<td>$29.1B</td>
<td>$-80.6B</td>
<td>$-118.0B</td>
<td>$127.2B</td>
<td>$236.9B</td>
<td>$124.4B</td>
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<td class="firstcol">&nbsp; Revenues</td>
<td>$182.6B</td>
<td>$102.5B</td>
<td>-11.4%</td>
<td>-1.7%</td>
<td>10.8%</td>
<td>6.1%</td>
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<td class="firstcol">&nbsp; Outlays</td>
<td>$153.6B</td>
<td>$183.1B</td>
<td>7.5%</td>
<td>4.2%</td>
<td>5.0%</td>
<td>3.1%</td>
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Consumer prices rose less than expected last month. Consensus expectations were for a 0.2% rise. Less food & energy, prices also rose less than the expected 0.2%. Price gains across categories were notably weak, especially for [...]

CPI Rose Modestly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020718c.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions for July fell quite a bit more than expected following an outsized June gain.
New and unfilled orders fell sharply along with shipments. Delivery lead times shortened substantially. 
The business conditions index reflects a separate survey question, not the components. 
Pricing pressure fell moderately, the first monthly easing since last October. The pricing index level nevertheless remained elevated.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">General Activity Index</td>
<td>6.6</td>
<td>22.2</td>
<td>-12.4</td>
<td>-17.3</td>
<td>8.2</td>
<td>13.3</td>
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<td class="firstcol">Prices Paid Index</td>
<td>17.9</td>
<td>22.9</td>
<td>-5.0</td>
<td>-1.0</td>
<td>27.1</td>
<td>10.0</td>
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</table>
Leading Indicators Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 18, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020718b.jpg" width="353">
The Composite Index of Leading Economic Indicators was unchanged last month, as expected. The May gain was revised up. 
The ratio of coincident to lagging indicators rose for the eighth month in nine. The ratio is an indication that excesses in the economy are falling relative to the economy&#39;s actual performance.
The coincident indicators index was at the same level in June as in January 2001. The lagging indicators fell 7.0% during that period.
60% of the leaders&#39; component series rose last month versus 70% that rose in May. Longer hours worked, a decline in claims for jobless insurance, a rise in the money supply and improved vendor performance had the largest positive influence.
The Leading index is based on eight previously reported economic data series and two that are estimated.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Leading</td>
<td>0.0%</td>
<td>0.6%</td>
<td>2.6%</td>
<td>-0.6%</td>
<td>1.0%</td>
<td>3.3%</td>
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<td class="firstcol">Coincident</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>3.2%</td>
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<td class="firstcol">Lagging</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-5.1%</td>
<td>-1.3%</td>
<td>2.8%</td>
<td>1.8%</td>
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</table>
Initial Jobless Insurance Claims Down Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 18, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020718a.jpg" width="353">
Initial claims for unemployment insurance fell more than expected in the latest week. Claims were their lowest since February of last year. The prior week&#39;s level was revised up slightly.
The claims figure is for the July nonfarm payroll survey period. Initial claims were down about 20,000 from the June survey period. 
Continuing claims for unemployment insurance fell slightly but the prior week&#39;s level was revised down sharply. Continuing claims are down 6.3% from the peak in early May.
The four-week moving average of initial claims fell to 391,000, -1.6% y/y. 
The insured rate of unemployment was unchanged at 2.8%.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">7/13/02</th>
<th scope="col">7/6/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Initial Claims</td>
<td>379.0</td>
<td>407.0</td>
<td>6.4%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
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<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,591</td>
<td>17.5%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
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The Philadelphia Feds index of general business conditions for July fell quite a bit more than expected following an outsized June gain. New and unfilled orders fell sharply along with shipments. Delivery lead times shortened [...]

Philadelphia Fed Index Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020717a.jpg" width="353">
Housing starts fell about as expected last month following a strong May gain that was little revised. 
Single-family starts fell 2.9% following a strong 10.2% May gain. During the first six months of 2002 starts were up 5.8% from the first six months of last year. The level of single-family starts during the period was the highest for any six months since the late 1970s.
Multi-family starts fell 6.7% and have moved sideways since last year.
Starts in each of the country&#39;s regions fell except the Northeast where they rose to the highest level since last April.
Building permits rose for the third month in a row.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Total</td>
<td>1,672</td>
<td>1,735</td>
<td>2.4%</td>
<td>1,603</td>
<td>1,573</td>
<td>1,647</td>
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<td class="firstcol">&nbsp; Single Family</td>
<td>1,350</td>
<td>1,390</td>
<td>4.4%</td>
<td>1,273</td>
<td>1,232</td>
<td>1,306</td>
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<td class="firstcol">&nbsp; Multi Family</td>
<td>322</td>
<td>345</td>
<td>-5.3%</td>
<td>330</td>
<td>341</td>
<td>341</td>
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Housing starts fell about as expected last month following a strong May gain that was little revised. Single-family starts fell 2.9% following a strong 10.2% May gain. During the first six months of 2002 starts were up 5.8% from the [...]

Housing Starts Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020716b.jpg" width="353">
Industrial production rose more than expected last month, up twice the Consensus expectation for a 0.4% rise. May&#39;s gain was revised slightly higher. Factory sector output rose 0.8% (2.7% YTD) following a 0.6% May gain that was revised up.
Higher output of motor vehicles and parts, up 2.5%, led the June output gain. High tech output also was strong, up 1.7% (13.7% YTD). Excluding high tech, factory output rose 0.7% (2.5% YTD), the sixth monthly gain this year.
Output of consumer goods rose a strong 0.8% following the weak 0.1% May gain. Output of home electronics rose 0.3% following a 4.2% gain in May. Output of appliances and furniture retreated 2.9% following the 2.6% May surge. Nondurable output rose moderately following two months of decline.
Output of business equipment rose modestly for the second month in a row. Gains have been restrained all year by falling output of transportation equipment.
Capacity utilization rose for the sixth month this year, but remained down sharply from the late 1990s.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Industrial Production</td>
<td>0.8%</td>
<td>0.4%</td>
<td>0.2%</td>
<td>-3.7%</td>
<td>4.5%</td>
<td>3.7%</td>
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<td class="firstcol">Capacity Utilization</td>
<td>76.1%</td>
<td>75.6%</td>
<td>76.7%(6/01)</td>
<td>76.8%</td>
<td>81.8%</td>
<td>81.4%</td>
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</tbody>
</table>
Weekly Chain Store Sales Fell Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 16, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020716a.jpg" width="353">
Chain store sales fell 0.3% following a 0.7% surge the week prior according to the BTM-UBSW survey.
Early-July sales were 0.2% above the June average.
The leading indicator of chain store sales published by BTM rose in early July and began the month slightly ahead of the June average.
During the last five years there has been a 61% correlation between the year-to-year percent change in monthly chain store sales and the change in sales of general merchandise, apparel and furniture.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">7/13/02</th>
<th scope="col">7/6/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>414.4</td>
<td>415.6</td>
<td>3.5%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
</tbody>
</table>
Greenspan Suggests Economy Improving, Inflation Low 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 16, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020716c.jpg" width="353">
In testimony before the Senate Banking Committee, Federal Reserve Chairman Alan Greenspan suggested that the US economy is improving, but rates won&#39;t rise soon with inflation low. 
&quot;... the fundamentals are in place for a return to sustained healthy growth: Imbalances in inventories and capital goods appear largely to have been worked off; inflation is quite low and is expected to remain so; and productivity growth has been remarkably strong, implying considerable underlying support to household and business spending as well as potential relief from cost and price pressures. In considering policy actions this year, the Federal Open Market Committee has recognized that the accommodative stance of policy adopted last year in response to the substantial forces restraining the economy likely will not prove compatible over time with maximum sustainable growth and price stability. But, with inflation currently contained and with few signs that upward pressures are likely to develop any time soon, we have chosen to maintain that stance pending evidence that the forces inhibiting economic growth are dissipating enough to allow the strong fundamentals to show through more fully.&quot;
The complete text of the Chairman&#39;s latest report can be viewed at: <a href="http://www.federalreserve.gov/boarddocs/hh/2002/july/testimony.htm">http://www.federalreserve.gov/boarddocs/hh/2002/july/testimony.htm</a>



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Industrial production rose more than expected last month, up twice the Consensus expectation for a 0.4% rise. May's gain was revised slightly higher. Factory sector output rose 0.8% (2.7% YTD) following a 0.6% May gain that was [...]

Industrial Production Strong

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020715a.jpg" width="353">
Total business inventories rose in May versus consensus expectations for a slight decline. The previously reported decline in April inventories was little revised.
Retail inventories, reported for the first time, rose for the fourth month this year. Nonauto retail inventories also rose and a previously reported April decline was revised to show a gain. Nonauto retail inventories have risen 0.4% YTD. 
Inventory gains were across the board amongst retail industries. Inventories of general merchandise rose for the first month since last August.
Overall business sales fell 0.4% (-0.7% y/y) after a 1.7% April gain that was little revised.
The inventory-to-sales ratio rose slightly to 1.36 but remained near a record low.

<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/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>-5.7%</td>
<td>-6.3%</td>
<td>5.6%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>1.0%</td>
<td>0.3%</td>
<td>-1.3%</td>
<td>-5.0%</td>
<td>6.1%</td>
<td>7.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.4%</td>
<td>0.1%</td>
<td>-1.3%</td>
<td>-2.0%</td>
<td>4.1%</td>
<td>5.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.1%</td>
<td>-0.9%</td>
<td>-7.2%</td>
<td>-5.5%</td>
<td>6.6%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-8.6%</td>
<td>-8.0%</td>
<td>4.5%</td>
<td>3.1%</td>
</tr>
</tbody>
</table>
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Total business inventories rose in May versus consensus expectations for a slight decline. The previously reported decline in April inventories was little revised. Retail inventories, reported for the first time, rose for the fourth [...]

Business Inventories Rose Unexpectedly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020712a.jpg" width="353">
Total retail sales rose more than expected last month due to broadly based gains. May sales were revised down slightly due to a lowered estimate of auto sales. Sales excluding autos rose versus expectations for a 0.5% gain. 
Sales gains were widespread. Sales of motor vehicles rose 3.4% (-2.5% YTD). Apparel sales rose 2.0% (1.1% YTD). General merchandise sales were up 1.1% (2.9% YTD) and furniture &amp; home furnishings sales rose 0.4% (1.1% YTD).
Sales at food stores fell and sales of building materials rose a weak 0.1%.
Unit sales in June of domestic and imported light vehicles rose 5.2% to 16.48M (SAAR).

<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">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</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>1.1%</td>
<td>-1.1%</td>
<td>3.3%</td>
<td>3.8%</td>
<td>6.7%</td>
<td>8.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.4%</td>
<td>-0.4%</td>
<td>3.7%</td>
<td>3.4%</td>
<td>7.3%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Fell Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 12, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020712b.jpg" width="353">
The mid-July reading of Consumer Sentiment from the University of Michigan fell versus Consensus expectations for little change versus June.
Indexes fell for both expectations (down sharply) and current conditions.
The University of Michigan survey is not seasonally adjusted.
During the past five years there has been a 39% correlation between the level of consumer sentiment and the 3-month change in real PCE.

<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/@EF1402/@EF1402.HTM">Univ. of Michigan</a></th>
<th scope="col">Mid-July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Sentiment</td>
<td>86.5</td>
<td>92.4</td>
<td>-6.4%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
</tr>
</tbody>
</table>
</body>
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Total retail sales rose more than expected last month due to broadly based gains. May sales were revised down slightly due to a lowered estimate of auto sales. Sales excluding autos rose versus expectations for a 0.5% gain. Sales [...]

Retail Sales Recover in June

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020711a.jpg" width="353">
Finished producer prices rose as expected last month. It was the first increase in prices in three months. Core finished goods prices rose slightly more than expected but are up just 0.1% year to date.
Energy prices were unchanged following a decline in May. Market gasoline prices in early July are up moderately versus June.
Food prices rose slightly for the first increase in three months.
Core finished consumer goods prices rose 0.3%, the second strong increase in three months. Core nondurable goods prices have been strong but durable goods prices rose for just the second month this year. Capital goods prices rose slightly following three months of decline. 
Intermediate goods prices rose moderately. After weakness in May, a firming trend may be developing with core intermediate prices up 0.7% YTD. 
Crude goods prices fell reflecting lower energy prices. Elsewhere, the rebound in factory sector activity has lifted core crude prices 9.1% YTD.

<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">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.1%</td>
<td>-0.4%</td>
<td>-2.0%</td>
<td>2.0%</td>
<td>3.7%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.2%</td>
<td>-0.5%</td>
<td>-2.6%</td>
<td>0.4%</td>
<td>4.9%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.2%</td>
<td>0.0%</td>
<td>-1.0%</td>
<td>-0.1%</td>
<td>2.6%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>-3.6%</td>
<td>1.7%</td>
<td>-11.7%</td>
<td>0.3%</td>
<td>22.8%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>1.6%</td>
<td>3.4%</td>
<td>6.0%</td>
<td>-9.9%</td>
<td>7.3%</td>
<td>-4.7%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 11, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020711b.jpg" width="353">
Initial claims for unemployment insurance rose sharply in the latest week, boosted by the annual auto industry shutdowns for plant retooling. The prior week&#39;s level, which had fallen sharply, was revised up slightly.
It was the first increase in initial claims in three weeks. 
Continuing claims for unemployment insurance fell for the seventh week in eight third week and the prior week&#39;s level was revised down.
The four-week moving average of initial claims rose slightly to 395,000, -0.1% y/y. 
The insured rate of unemployment fell slightly to 2.8%.

<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">Unemployment Insurance (000s)</a></th>
<th scope="col">7/6/02</th>
<th scope="col">6/29/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>403.0</td>
<td>387.0</td>
<td>0.2%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,639</td>
<td>22.7%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
</body>
</html>

Finished producer prices rose as expected last month. It was the first increase in prices in three months. Core finished goods prices rose slightly more than expected but are up just 0.1% year to date. Energy prices were unchanged [...]

Producer Prices Up Slightly

Retail gasoline price still well above pre-conflict level and now rising again

PMIs showing widespread revival of global economy

Crude oil price has returned to pre-conflict level but traffic through Hormuz still subpar

Surging orders for computers and electronics propelling durable goods orders

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

Disrupted global supply chains placing upward pressure on US goods prices

Construction of data centers has overtaken transportation construction in US

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

US is big leader in global surge in private AI investment

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

Sharply rising share of AI-related jobs

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

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

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

Cost of transporting crude oil has soared to series high

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

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

Is recent drop in sentiment signaling softer growth ahead?

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

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

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

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Sandy Batten

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The Producer Price Index for final demand fell 0.3% m/m (+5.5% y/y) in June following a downwardly revised 0.6% (6.0%y/y) gain in May (previously 1.1% m/m, 6.5% y/y) according to the Bureau of Labor Statistics (BLS). This was the first monthly decline in the headline index since August 2025 and the largest decline since April 2025. The Action Economics Forecast Survey expected an unchanged reading in June. Producer prices excluding food, energy and trade services edged up 0.1% m/m (+5.1% y/y) in June after having jumped 0.8% m/m (5.1% y/y) in May. The PPI excluding food and energy (the previous core index) rose 0.2% m/m (4.7% y/y) in June versus a 0.1% m/m (4.6% y/y) increase in May. A 0.1% m/m increase was expected.

The June decline in the index for final demand was attributable to a 1.4% m/m decline (+7.9% y/y) in prices for final demand goods following a 2.3% monthly rise in May. The index for final demand services increased 0.2% m/m (4.6% y/y) in June after a 0.1% monthly decline in May.

The 1.4% m/m decline in final demand goods prices was the largest since July 2022. Leading the decline in June, prices for final demand energy dropped 6.4% m/m. A 12.0% m/m decline in gasoline prices accounted for two-thirds of the decline in final demand goods prices in June. The index for final demand foods moved down 0.6% m/m, the first monthly decline in three months. Conversely, prices for final demand goods less food and energy increased 0.2% m/m (+5.1% y/y). The indexes for diesel fuel, jet fuel, fresh vegetables (except potatoes), crude petroleum, and thermoplastic resins and materials fell. In contrast, prices for plastic products advanced 1.6% m/m. The indexes for residential electric power and for potatoes also increased.

The index for final demand services rose 0.2% m/m (4.6% y/y) in June after falling 0.1% m/m in May. Over 60% of the advance in June can be attributed to margins for final demand trade services, which moved up 0.4% m/m after a 2.3% m/m decline in May. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing increased 0.1% m/m. Conversely, the index for final demand transportation and warehousing services declined 0.1% m/m. The indexes for securities brokerage, dealing, and investment advice; furniture retailing; apparel, jewelry, footwear, and accessories retailing; loan services (partial); and inpatient care rose. In contrast, margins for machinery and vehicle wholesaling declined 8.4%. The indexes for food and alcohol wholesaling and for deposit services (partial) also fell.

Final demand construction costs edged up 0.1% m/m (3.5% y/y) in June, the same monthly increase as in May. Construction prices for private capital investment also edged up 0.1% (3.4% y/y) in June, the same monthly gain as in May.

Prices for intermediate demand processed goods fell 1.2% m/m (+11.1% y/y) in June, the first monthly decline since October 2025 and the largest monthly decline since December 2022. Processed energy goods prices slumped 7.3% m/m, the first monthly decline since January. Processed foods prices edged up 0.1% m/m following a 0.6% m/m jump in May. Prices of processed goods excluding foods and energy rose 0.6% m/m, down markedly from 1.7% monthly gains in both April and May.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s **USECON** database. Further detail is contained in **PPI** and **PPIR**. The expectations figures are available in the **AS1REPNA** database.

260715L5.jpg

260715M5.jpg

- Led by a 6.4% m/m decline in energy prices, the PPI for final demand fell 0.3% m/m in June.
- Goods prices fell 1.4% m/m, the first monthly decline since January, while services prices rose 0.2% m/m.
- Excluding food, energy and trade margins, the new core measure edged up 0.1% m/m while the old core (excluding just food and energy) rose 0.2% m/m in June.

U.S. Producer Prices Fell in June

Michael J. Moran

260714A.jpg

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Most analysts were looking for a dip in the CPI because of a likely retreat in gasoline prices, but the published decline of 0.4% in the headline index was noticeably softer than the consensus estimate of -0.1%. Gasoline prices did not disappoint, with a drop of 9.7% offsetting approximately one-quarter of the cumulative surge in the prior three months. Prices of fuel oil fell almost as much as gasoline prices, and electricity charges contributed to the softness with a decline of 1.0%. The price of natural gas services was the only major energy item to increase in June (0.5%). All told, the energy component of the CPI fell 5.7% after climbing 19.6% in the prior three months.

The drop in energy prices was notable, but the core component provided a bigger surprise by posting a decline, the first since a series of three consecutive decreases during the pandemic. Before the pandemic-related retreat, the core component fell only twice from 1990 to 2019. The drop in June was minuscule (-0.02%), but the fact that it carried a minus sign was striking.

Both the goods and services components of the core index contributed to the restraint. Prices of goods other than food and energy fell 0.1%. The Bureau of Labor Statistics publishes six key subcategories of core goods, and five of them fell in June. Apparel prices stood out with a decline of 0.6%. Prices of core services were nearly unchanged at 0.03%, restrained by declines in medical services and motor vehicle insurance. Airfares, which showed upward pressure from rising fuel prices in the prior three months, posted a nondescript increase of 0.2%. The modest increase in the prices of core services led to a dip in the 12-month average increase after stepping up in April and May. The trend in core goods prices continued its gradual deceleration (chart, below right).

Food prices in June rose 0.2%, a reading comfortably within the range of the past few years.

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

260714C.jpg

260714D.jpg

- The energy component retraced a portion of its surge in the prior three months.
- Prices excluding food and energy provided a surprise by posting a rare decline.

June CPI: Cooling Energy Prices and a Restrained Core Component

Winnie Tapasanun

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The NFIB Small Business Optimism Index rose to 97.4 in June, the highest level since February, after a 0.6-point decline to 95.3 in May, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. The index was slightly below its 52-year average of 98.0 for the fourth consecutive month and down from a peak of 105.1 in December 2024, albeit above a low of 88.5 in March 2024. Seven of the 10 index components rose, while three fell. Meanwhile, the NFIB Small Business Uncertainty Index edged down to 89 in June following a three-point increase to 91 in May, remaining well above its historical average of 68. The index was below its record high of 110 in October 2024 but above its recent low of 84 in December 2025 and a low of 65 in November 2023.

The outlook for business conditions in the next six months remained positive for the 20th straight month in the latest survey. The net balance of respondents expecting the economy to improve advanced to 13% in June, a four-month high, following a one-point decline to 3% in May; these readings were far below a high of 52% in December 2024 but significantly above a record low of -61% in June 2022. Expected real sales climbed to a net 9% in June, a five-month high, from 1% in May; the latest figure was below a high of 22% in December 2024 but above a low of -18% in August 2024. A net -4% of respondents reported higher nominal sales in the past three months, up from -5% in May and marking the highest reading in four months; the latest result remained above a low of -20% in October 2024 but below the recent positive reading of 1% in February and a peak of 9% in June 2021.

Plans to expand the business inched up to 8% in June from 7% in May and April; the latest figure was down from a high of 20% in December 2024 but up from a low of 2% in March 2023. Plans to make capital outlays rebounded to 20% in June from 16% in May; these numbers were still below a high of 28% in November 2024 and a peak of 31% in October 2021. Expected credit conditions slipped to -5% in June, a three-month low, from -3% in May; this result was slightly below a high of -2% in December 2024 but above a low of -11% in November 2023. Meanwhile, a net 0% of respondents viewed current inventory stocks as “too low” in June, up from -4% in May and matching the highest reading since August 2025 (also 0%); the positive reading of 1% was recorded in May 2025.

On the labor front, 51% of respondents reported that qualified workers to fill job openings were hard to find in June, up from 46% in May and registering the highest level since September 2024. These numbers were above a low of 43% in August 2025 but below a high of 56% in August 2024 and a peak of 62% in September 2021. A net 11% planned to increase employment in June, up from 9% in May; it matched a low of 11% in March 2024 but remained below its recent high of 19% in November 2025 and a peak of 32% in August 2021. Notably, 32% reported positions not able to be filled in June, up from 29% in May (the lowest level since May 2020); these figures remained below a high of 51% in May 2022.

Overall earnings trends had remained in negative territory since December 2019. The measure fell to -20% in June, the lowest level in three months, following a four-point increase to -15% in May. These readings were below the most recent high of -14% in February and a high of -5% in June 2021 but above a low of -37% in August 2024,

On the pricing front, actual and expected selling prices remained at an inflationary level, indicating continued inflationary pressures. The net percent of firms raising their average selling prices rose to 38% in June, the highest reading since February 2023, after a six-point increase to 36% in May. The latest reading was up from a low of 20% in August 2024 but well below a peak of 66% in March 2022. The percentage planning to raise prices eased to a still-elevated 32% in June following a seven-point rise to 34% in May (the highest level since November 2023); these readings remained above a low of 21% in April 2023.

Wage inflation remained relatively high in the June survey. A net 28% of respondents raised compensation during the last three months, down from 31% in May and marking the lowest since November 2025. It was also below a high of 46% in February 2023 and a peak of 50% in January 2022. A net 17% of firms planned to raise worker compensation in the next three months, slightly down from 18% in May and matching the lowest reading since July 2025; this remained below highs of 28% in November 2024, 30% in November 2023, and 32% in October 2022.

Inflation was cited as the single most important problem facing small businesses, as reported by 21% of NFIB members in June, up from 18% in May and representing the highest since October 2024; these readings were well below a peak of 37% in July 2022. Taxes ranked second as the next most important problem (alongside labor quality), as reported by 19% of respondents in June, unchanged from May. Labor quality also remained a key challenge for small businesses, as reported by 19% of respondents in June—the highest since December—compared with 13% in May (the lowest level since December 2016). Other concerns (in June vs. May) included labor costs (8% vs. 14%), government requirements (8% vs. 10%), insurance cost/availability (8% vs. 8%), poor sales (7% vs. 7%), and competition from large businesses (5% vs. 6%).

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

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- Uncertainty Idx down 2 pts. to 89, remaining well above the historical avg. of 68.
- Expectations for economy up 10 pts. to 13%, a four-month high.
- Expected real sales up 8 pts. to 9%, a five-month high.
- Plans to expand business up 1 pt. to 8%, highest in three mths.
- Firms raising avg. selling prices up 2 pts. to 38%, highest since Feb. ’23.
- Top three business concerns: inflation (21%), taxes (19%), and labor quality (19%).

U.S. NFIB Small Business Optimism Rebounds in June to a Four-Month High

Robert Brusca

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Industrial production in Japan fell by 0.5% in May after rising by 0.7% in April and declining by 0.2% in March. Manufacturing output rose by 0.1% in May after rising by 0.4% in April and declining by 0.3% in March. Total industrial output shows a 0.7% gain over 12 months, a 3.4% annual rate gain over six months, and zero change in output over three months. For manufacturing, 12-month output is up 0.7%; over six months, output is up at a 6.1% annual rate; and over three months, output is up by 0.8% at an annual rate.

These trends show that output continues to grow for manufacturing as well for total industry, but not by a great margin. In fact, there are still a number of industries still fighting off negative trends, such as textiles, where output falls over three months, six months, and 12 months, as well as investment goods and mining, both of which show declines over three months, six months and 12 months. One year ago, all of these sectors were showing year-over-year declines except for manufacturing, which was up by 0.5% over 12 months. Manufacturing output is now up by 0.7% year-over-year, with consumer goods up by 1.8%, intermediate goods output up by 2%, and investment goods falling by 3%. Japan is currently trying to fight off a legacy of weakness. The strength of the rebound is being borne by consumer goods and intermediate goods, with investment goods undergoing significant contractive effects.

Manufacturing is showing gains on all three sequential horizons. Utilities output is showing growth on each horizon, and actually shows gathering strength, rising by 0.9% over 12 months, at a 1.4% annual rate over six months, and at a very strong 7.9% annual rate over three months.

In the quarter-to-date (QTD) basis, most of these sectors are losing the battle against weakness, with most industry or sectors showing declines two months into the new quarter. Overall output declines at a 0.2% annual rate. Manufacturing output falls at a 2.2% annual rate, intermediate goods output falls at a 0.2% annual rate, and investment goods output falls at a 7.2% annual rate. The only exception is consumer goods output, which is rising at a solid 5.3% annual rate, but that's not strong enough to drag all of industrial output or even manufacturing into the plus column.

Manufacturing output currently is at about 87.7% of its past peak. Activity in electric and gas utilities are at 90.4% of their past peak, while mining is only at 59.6% of its past peak of activity. Comparing levels of output to where they were in January 2020, manufacturing is at 94% of that value, with total industry also at 94% of that value. Consumer goods are at 98% of that value, intermediate goods at 92%, and investment goods at 93%. Mining is only at 74% of its January 2020 value, while electric and gas utilities have moved beyond the January 2020 level and are 3.3% higher than they were and early 2020.

Since 2020, it has been a relatively difficult time for the global economy. The Japanese statistics show only one sector that has managed to create positive growth compared to its level in January 2020. The current month is a mix of plus-and-minus activity changes. Sequential trends generally show more positives than negatives, but there are still a lot of negatives in train that keep Japanese manufacturing from reaching clearly solid footing. When the Strait of Hormuz opened, it appeared that Japan would be in a position to build on its recovery, but now, with the failed peace agreement and failed ceasefire, the strait once again has been closed and the outlook is shrouded in negativity.

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Japan

Japan’s IP Is Fighting Off Weak Trends

Industrial output in Norway fell by 1% in May after rising by 0.6 in April and falling by 1.1% in March. The seesaw act for output continues. Over broader horizons, however, output is falling. It falls by 0.1% over 12 months, falls at a 1.1% annual rate over six months, and falls at a 6.2% annual rate over three months, giving us a clear sequential trend toward falling and decelerating output. Utilities output has chaotic trends, as do mining and quarrying; however, manufacturing shows a clear trend toward output acceleration, with a 2.1% output increase over 12 months, a 2.6% annual rate rise over six months, and a 9% annual rate increase over three months.

Manufacturing sectors show consumer goods output increasing in May, also showing secular acceleration from 12 months to six months to three months. Durable goods, however, are the fly in the ointment, with output up 2.2% over 12 months, accelerating over six months, and then dropping at a 20.4% annual rate over three months. However, consumer nondurables show growth and acceleration, with a 12-month gain of 1.8%, rising to a 3.6% annual rate increase over six months and a 10.9% annual rate increase over three months. Intermediate goods output trends return to more difficult times and show declines over 12 months, six months, and three months, but not a clear path of deceleration. Capital goods output is up 5.4% over 12 months and at an 8.5% annual rate over three months, but there is an intervening soft spot with output up at only a 3.4% annual rate over six months.

Against this background, inflation in Norway showed solid increases in May, rising by 0.2% overall and by 0.3% for the core HICP. However, sequentially inflation gains 3% over 12 months, rises at a 3.8% annual rate over six months, and then backs down to a 1.2% annual rate over three months. The core HICP is steadier, with a 3.4% gain over 12 months, rising to a 3.8% annual rate over six months, and then backing down to 3.2% at an annual rate over three months. That's a set of growth rates that are more stable than either accelerating or decelerating.

In the quarter-to-date (QTD) basis, industrial production is falling 4.6%; this is two months into the second quarter. On the other hand, manufacturing output is rising QTD at a 4.9% annual rate, with consumer nondurables showing strong positive growth along with intermediate goods output. There is a solid gain of 3.1% at an annual rate from capital goods. The QTD inflation trends remain somewhat mixed, with a weak headline showing a 1.6% annual rate, against a core HICP at a 3.4% annual rate rise, the latter gain being well in step with its sequential results.

The far right-hand column compares industrial production over the broad period from just before COVID (in January 2020) looking at the ratio of the level of output in May 2026 to its index value in January 2020. Remember that IP data are inflation-adjusted, so these are real data. Over this span, industrial production excluding construction is up by approximately 10%, with utilities output up at about 21%, mining and quarrying up about 5%, and manufacturing up a little more than 7%. This is a 5½-year period. Consumer goods output is up by 2.7%, led by consumer nondurables which rise 4.1% on the period and against durable goods output where there is a decline of about 13% on that timeline. Intermediate goods output drops slightly on the timeline by less than half a percentage point, while capital goods output is up at a solid and strong 23% gain. Looking at prices over the same period, the headline HICP is higher by 27% while the core is higher by 24%.

The weakened output shows the stresses and strains of the period, with weak gains in place over the last 5½ years and with the consumer showing considerable wear and tear, leaving consumer goods output lower on balance over this 5½-year span. It hasn't been such a bad time for capital goods, where output rose by 23% over the period. Inflation got out-of-the-box and grew quite strongly. The headline HICP grew by 27% since January 2020, a duration of time during which, sticking to its target, would have implied a gain in the price level of only 11.5%.

**Ongoing overshooting**
Even now central banks are trying to decide how to come to grips with the inflation pressures from that. Pressures continue to linger and threaten the economies. Of course, there are some new factors in place, but that's the nature of inflation: if it's not one thing, it's something else. And failing to respond to the one thing means that you're going to get hit even worse when it becomes something else. This is the lesson the central banks haven't learned during this period. 

**Have central banks learned their lesson?**
Noting that inflation is over target and then forecasting that it's going to come back down to target over some period ahead puts the inflation performance at risk to whatever happens between now and the end of that period ‘ahead.’ If that forecast isn't perfectly right and if there's something else that disturbs the path of prices, what will happen is that an inflation that is already over the top of the target will push even farther over the top of the target and the dilemma faced by the central bank will become even worse. This is why kicking the can down the road generally is not a very good strategy, but it's one that virtually all the central banks pursued in the wake of COVID. So, will central bankers come to see inflation that is here and now as a here-and-now problem to be addressed here and now, or as a candidate for tomorrow land? The ECB seems to be changing, and the Fed has formed task forces. What about Norway and the rest of the world? Norway did push its target rate up as the ECB hiked. But what is its plan?