Tom Moeller

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Economic growth was revised up to 3.3% (AR, 2.3% y/y) during
Q3'17 from an advance estimate of a 3.0% gain. The latest figure was the
strongest in three years and equaled expectations in the Action Economics
Forecast Survey.

After-tax corporate profits increased 4.9% (10.0% y/y)
following a 2.0% decline. Profits without IVA &amp; CCA gained 4.3% (5.4% y/y).
Earnings in the domestic financial sector strengthened 13.7% (13.2% y/y) while
nonfinancial U.S. earnings improved 1.0% (4.5% y/y). Foreign sector profits
increased 4.5% (11.8% y/y).

The change in business inventories added 0.8 percentage point
to growth last quarter, revised from 0.7 point. Improvement in net exports also
was revised up to 0.5 percentage point from 0.4. Exports grew 2.2% (2.2% y/y).
Imports fell 1.1% (+3.1% y/y), the first decline since Q1'16.

Domestic final sales growth was raised to 2.0% (2.3% y/y)
from 1.8%, but it remained the weakest advance since Q1'16.

Business fixed investment grew 4.7% (4.6% y/y), revised from
3.9%, after a 6.7% rise. Equipment spending grew an increased 10.4% (6.3% y/y)
as investment in information processing equipment rose 10.4% (8.0% y/y).
Industrial equipment investment grew 7.5% (8.1% y/y) and intellectual property
product investment improved 5.8% (3.7% y/y). Growth in these latter two
categories was revised up. Structures investment fell by a deeper 6.8% (+2.9%
y/y), the first decline in three quarters.

Government sector spending improved 0.4% (-0.1% y/y), revised
from -0.1%. State &amp; local government spending slipped 0.1% (-0.1% y/y),
revised from -0.9%. Federal government investment increased a little-changed 1.3%
(0.1% y/y). Defense spending grew 2.4% (0.1% y/y) after a 4.7%
rise. Nondefense spending eased 0.4% (0.0% y/y), off for the third straight quarter.

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Consumer spending growth slowed to 2.3% (2.6% y/y), revised from 2.4%,
versus 3.3% growth in Q2 as nondurable goods consumption more than halved their Q2 growth to
2.0% (2.5% y/y). Gasoline &amp; fuel oil consumption declined 3.3% (-0.9% y/y) while clothing
purchases fell 0.7% (+1.6% y/y. Durable goods consumption growth quickened to 8.1% (6.1% y/y) as
motor vehicle sales strengthened 12.6% (3.8% y/y). Spending on home furnishings
and appliances grew 7.9% (6.7% y/y), but recreational goods purchases eased 0.2%
(+8.5 y/y) following three straight quarters of double-digit growth. Services
spending grew 1.5% (2.1% y/y), the weakest quarterly gain in four years. Housing
and utilities spending held steady (0.5% y/y) after strengthening 3.4%. Recreation
spending improved 4.1% (3.1% y/y) while restaurant &amp; hotel expenditures rose 2.1% (1.0% y/y).

Residential investment fell a lessened 5.1% (+1.1% y/y)
following a 7.3% decline in Q2.

The GDP price index rose a little-changed 2.1% (1.8% y/y).
The personal consumption price index rose an unchanged 1.5% (1.5% y/y), up from
the 0.3% Q2 increase. The business fixed investment price index rose 1.2% (1.3% y/y).

The GDP figures can be found in Haver's USECON and USNA
database. USNA contains virtually all of the Bureau of Economic Analysis' detail
in the national accounts, including the integrated economic accounts and the
recently added GDP data for U.S. Territories. The Action Economics consensus
estimates can be found in AS1REPNA.

The Current Economic Outlook and Monetary Policy from
Fed Chair Janet L. Yellen can be found <a href="https://www.federalreserve.gov/newsevents/testimony/yellen20171129a.htm">here</a>.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM" ;>Chained
 2009 $ (%, AR</a>)</th>
 <th scope="col" >Q3'17 (Second Estimate)</th>
 <th scope="col" >Q3'17 (Advance Estimate)</th>
 <th scope="col" >Q2'17</th>
 <th scope="col" >Q1'17</th>
 <th scope="col" >Q3'17 Y/Y</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 </tr>
 <tbody>
 <tr>
 <td class="firstcol" >Gross Domestic Product</td>
 <td >3.3</td>
 <td >3.0</td>
 <td >3.1</td>
 <td >1.2</td>
 <td >2.3</td>
 <td >1.5</td>
 <td >2.9</td>
 <td >2.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Inventory Effect</td>
 <td >0.8</td>
 <td >0.7</td>
 <td >0.12</td>
 <td >-1.5</td>
 <td >0.1</td>
 <td >-0.4</td>
 <td >0.3</td>
 <td >-0.1</td>
 </tr>
 <tr>
 <td class="firstcol" >Final Sales</td>
 <td >2.5</td>
 <td >2.26</td>
 <td >2.95</td>
 <td >2.7</td>
 <td >2.2</td>
 <td >1.9</td>
 <td >2.6</td>
 <td >2.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Foreign Trade Effect</td>
 <td >0.5</td>
 <td >0.4</td>
 <td >0.2</td>
 <td >0.2</td>
 <td >-0.1</td>
 <td >-0.2</td>
 <td >-0.7</td>
 <td >0.0</td>
 </tr>
 <tr>
 <td class="firstcol" >Domestic Final Sales</td>
 <td >2.0</td>
 <td >1.8</td>
 <td >2.7</td>
 <td >2.4</td>
 <td >2.3</td>
 <td >2.1</td>
 <td >3.3</td>
 <td >2.7</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="9" >Demand Components</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Personal Consumption Expenditures</td>
 <td >2.3</td>
 <td >2.4</td>
 <td >3.3</td>
 <td >1.9</td>
 <td >2.6</td>
 <td >2.7</td>
 <td >3.6</td>
 <td >2.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Business Fixed Investment</td>
 <td >4.7</td>
 <td >3.9</td>
 <td >6.7</td>
 <td >7.1</td>
 <td >4.6</td>
 <td >-0.6</td>
 <td >2.3</td>
 <td >6.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Residential Investment</td>
 <td >-5.1</td>
 <td >-6.0</td>
 <td >-7.3</td>
 <td >11.1</td>
 <td >1.1</td>
 <td >5.5</td>
 <td >10.2</td>
 <td >3.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Government Spending</td>
 <td >0.4</td>
 <td >-0.1</td>
 <td >-0.2</td>
 <td >-0.6</td>
 <td >-0.1</td>
 <td >0.8</td>
 <td >1.4</td>
 <td >-0.6</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="9" >Chain-Type Price Index</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; GDP&nbsp;&nbsp;&nbsp;</td>
 <td >2.1</td>
 <td >2.2</td>
 <td >1.0</td>
 <td >2.0</td>
 <td >1.8</td>
 <td >1.3</td>
 <td >1.1</td>
 <td >1.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Personal Consumption
 Expenditures</td>
 <td >1.5</td>
 <td >1.5</td>
 <td >0.3</td>
 <td >2.2</td>
 <td >1.5</td>
 <td >1.2</td>
 <td >0.3</td>
 <td >1.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp; Less Food/Energy</td>
 <td >1.4</td>
 <td >1.3</td>
 <td >0.9</td>
 <td >1.8</td>
 <td >1.4</td>
 <td >1.8</td>
 <td >1.3</td>
 <td >1.</td>
 </tr>
 </tbody>
 
 

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Economic growth was revised up to 3.3% (AR, 2.3% y/y) during Q3'17 from an advance estimate of a 3.0% gain. The latest figure was the strongest in three years and equaled expectations in the Action Economics Forecast Survey. After-tax [...]

U.S. GDP Growth is Revised Up; Profits Strengthen

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Retail gasoline prices declined last week to $2.53 per
gallon (+17.6% y/y) following a slip to $2.57 in the prior week. Haver Analytics
constructs factors adjusting for the seasonal variation in gasoline pump prices.
At $2.72 per gallon, the seasonally adjusted gasoline pump price was fairly
steady w/w near the highest level since December 2014.

WTI crude oil prices increased to $57.51 per barrel
last week (20.9% y/y) from $55.82 in the prior week. Prices rose to $58.11 per
barrel yesterday. Brent crude oil prices increased to $62.62 per barrel last
week and were $63.25 per barrel yesterday.

Natural gas prices eased last week to $3.01/mmbtu (+9.1%
y/y y) then fell to $2.82 yesterday.

In the week ended November 17, gasoline demand rose 1.7%
y/y, while total petroleum product demand was fairly steady y/y. Gasoline
inventories fell 6.0% y/y, while inventories of all petroleum products
declined 5.3% y/y. Crude oil input to refineries improved 3.1% y/y in the last four weeks.

The energy price data are reported by the U.S. Department of
Energy. The petroleum demand and inventory figures are from the Oil &amp; Gas
Journal Weekly. These data can be found in Haver's WEEKLY database. The
daily figures are in DAILY and greater detail on prices, demand and
production, along with regional breakdowns, are in OILWKLY.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Weekly Energy Prices</th>
 <th scope="col" >11/27/17</th>
 <th scope="col" >11/20/17</th>
 <th scope="col" >11/13/17</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Retail Gasoline ($ per Gallon, Regular)</td>
 <td >2.53</td>
 <td >2.57</td>
 <td >2.59</td>
 <td >17.6</td>
 <td >2.31</td>
 <td >2.03</td>
 <td >2.30</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Light Sweet Crude Oil, WTI ($ per bbl.)</td>
 <td >57.51</td>
 <td >55.82</td>
 <td >57.05</td>
 <td >20.9</td>
 <td >43.22</td>
 <td >48.90</td>
 <td >93.64</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Natural Gas ($/mmbtu, LA, WSJ)</td>
 <td >3.01</td>
 <td >3.08</td>
 <td >3.12</td>
 <td >9.1</td>
 <td >2.49</td>
 <td >2.62</td>
 <td >4.37</td>
 </tr>
 </tbody>
 </table>
 
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Retail gasoline prices declined last week to $2.53 per gallon (+17.6% y/y) following a slip to $2.57 in the prior week. Haver Analytics constructs factors adjusting for the seasonal variation in gasoline pump prices. At $2.72 per [...]

U.S. Gasoline Prices Ease; Crude Costs Rise

Robert Brusca

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The EMU shows some acceleration in credit over the last three months. Private credit shows regular if slow step-ups in credit growth rates. Money supply, however, has slowed slightly compared to its 12-month pace. The real balance growth rate for money supply has slipped. However, private credit in inflation-adjusted terms continues to show a step-up in its growth.

U.S. money supply shows a moderate but clear deceleration in progress. The U.K. and Japan show increases in the nominal money supply growth rate. Japan's pace is up slightly while in the U.K. the pace of money growth has stepped up significantly and it's excessive. And the Bank of England has begun to hike rates in the U.K. The growth of real money balances in the U.S. has actually turned negative over three months compared to a 2.9% pace over 12 months. In the U.K., the growth rate for real balances is double over three months compared to 12 months and about one percentage point stronger over three months than over two years. At 4.2%, the real U.K. three-month money growth rate is also excessive. In Japan, real balance growth has slipped slightly over three months.

The far right hand column shows the path of oil prices (West Texas Intermediate).

In assessing these trends, the upturn in credit in the EMU is encouraging, while the slowing in money growth is still modest.

In the U.S., the slowing in money growth and the drop in the three-month real balance growth rate is an eye-opener. At the same time, the U.S. yield curve has continued to flatten out and inflation remains under the Fed's target, as it has since the target was adopted in early-2012. In the University of Michigan survey, inflation expectations continue to be modest with median inflation in that survey at an all-time low. While U.S. growth is looking better and has picked up, in some respects growth still has challenges and has been stimulated artificially by hurricane damage induced spending on vehicles and on other replacements and repairs.

In the U.K., money supply growth is rising along with inflation. But in the U.K., wages are lagging behind prices. It does not appear to be engaged in a price-wage spiral. A weak pound sterling in reaction to previous BOE easing is partly responsible for the excesses we see in the U.K. But the U.K. is also seeing weakness in the form of weak building activity in London and a slowing nationwide service sector. There is a blow coming to the U.K. as a result of the Brexit process. EU institutions that had been located in the U.K. plus some banking activity will be moved outside of the U.K. borders causing a loss of incomes and of relatively high-paying jobs on a permanent basis. These realities leave the BOE with some tough choices. Some think inflation needs to be addressed now - and the BOE has begun to hike rates already. But adding a depressing monetary wave of restriction to an economy already facing persistent headwinds that will have lasting consequences puts the BOE in a tight spot.

In Japan, because inflation is so low and has been so low for so long, the stirring of nominal money growth is encouraging. But the fact of slightly weaker growth in real balances over three months suggests that the tick-up in nominal growth is not yet real good news. The slowing in Japan's real balances will require some monitoring.

There are finally some shifts in money and credit growth and more broadly in financial conditions as well as growth globally. But it is still a world of different strokes for different folks. As an over view, Japan seems to have the least in flux. The U.K. is in the most difficult policy box with the crush of Brexit in train even as inflation and money growth are both rising. In the U.S., despite some upbeat consumer surveys and growth news, inflation is undershooting and the bond market is offering a more questionable view of the future. The news in the EMU is perhaps the best of all. The pick-up in private credit growth is truly goods news, and while the tail-off in the growth rate of real balances is only a modest slippage, it is still something to monitor.


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The EMU shows some acceleration in credit over the last three months. Private credit shows regular if slow step-ups in credit growth rates. Money supply, however, has slowed slightly compared to its 12-month pace. The real balance [...]

Money and Credit Trends Finally Begin to Shift; Is It a Shift for the Better?

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The Conference Board Consumer Confidence Index increased 2.6%
during November (18.4% y/y) to 129.5 following an upwardly revised 4.6% October
improvement. The index was at its highest level since November 2000. The Action
Economics Forecast Survey expected a decline in the index this month to 124.0.
During the past thirty years, there has been a 70% correlation between the level
of consumer confidence and the y/y change in real PCE.

The increase in overall confidence reflected a 3.9% gain (20.0%
y/y) in the expectations index to 113.3. The present situation index reading
improved 1.2% (16.6% y/y) to 153.9.

The percentage of respondents indicating that business
conditions are &quot;good&quot; rose to 34.9%, the highest level since December
2000. The percentage saying business conditions are &quot;bad&quot; fell to a
recovery low of 12.7%. The 37.1% of respondents saying that jobs are
&quot;plentiful&quot; was a 16-year high. The percentage claiming jobs are
&quot;hard to get&quot; fell to a 16-year low of 16.9%. These readings of labor
market conditions led a labor market differential (plentiful minus hard to get)
of 20.2 percentage points, the highest since 2001. This differential is 97%
inversely related to the unemployment rate.

The percentage expecting business conditions to improve over
the next six months improved modestly to 22.4%, but remained well below the
26.9% March peak. The percentage expecting more jobs in six months rebounded to
22.6%, the most since March, following a sharp October decline. The percentage
expecting incomes to strengthen at 20.1% remained below the March high of 22.5%.

The expected inflation rate in twelve months eased m/m to 4.5%
and equaled the lowest level since February 2005. The percentage expecting
higher interest rates over the next twelve months rose slightly m/m to 64.3%,
but remained below the March high of 72.2%. An increased 6.9% expected to buy a
home, up versus 6.0% during all of last year and 5.6% in 2015.

Confidence amongst individuals over aged 55 rose 43.1% y/y to
a seventeen year high. Confidence amongst those aged 35-54 increased 8.4% y/y,
but was below the October peak. Confidence amongst those under age 35 rose 0.9%
y/y, also to the highest level since 2000.

The Consumer Confidence data is available in Haver's CBDB
database. The total indexes appear in USECON, and the market expectations
are in AS1REPNA

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Conference Board (SA,
 1985=100)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Consumer Confidence Index</td>
 <td >129.5</td>
 <td >126.2</td>
 <td >120.6</td>
 <td >18.4</td>
 <td >99.8</td>
 <td >98.0</td>
 <td >86.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Present Situation</td>
 <td >153.9</td>
 <td >152.0</td>
 <td >146.9</td>
 <td >16.6</td>
 <td >120.3</td>
 <td >111.7</td>
 <td >87.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Expectations</td>
 <td >113.3</td>
 <td >109.0</td>
 <td >103.0</td>
 <td >20.0</td>
 <td >86.1</td>
 <td >88.8</td>
 <td >86.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Consumer Confidence By Age Group</td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Under 35 Years</td>
 <td >139.8</td>
 <td >127.2</td>
 <td >127.5</td>
 <td >0.9</td>
 <td >122.4</td>
 <td >116.0</td>
 <td >106.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Aged 35-54 Years</td>
 <td >125.7</td>
 <td >135.0</td>
 <td >125.8</td>
 <td >8.4</td>
 <td >106.2</td>
 <td >103.9</td>
 <td >92.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Over 55 Years</td>
 <td >129.8</td>
 <td >116.1</td>
 <td >113.4</td>
 <td >43.1</td>
 <td >84.6</td>
 <td >84.1</td>
 <td >73.8</td>
 </tr>
 </tbody>
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The Conference Board Consumer Confidence Index increased 2.6% during November (18.4% y/y) to 129.5 following an upwardly revised 4.6% October improvement. The index was at its highest level since November 2000. The Action Economics [...]

U.S. Consumer Confidence Strengthens

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The Federal Housing Finance Agency's (FHFA) index of U.S.
house prices rose 6.3% y/y during September. This compared to a peak 7.1% y/y
gain in April. During the last three months, prices improved at a 6.1% annual
rate. In September alone, prices rose 0.3%, the weakest rise in three months.

The performance of home prices continued to vary greatly
around the country. On the strong side were the Pacific and Mountain regions
where prices rose 8.7% y/y and 8.5% y/y, respectively.

These strong y/y gains were followed by the South Atlantic,
East North Central, New England, West South Central and West North Central
regions. Prices rose roughly 6.0% y/y in these regions.

Slower house price inflation occurred amongst states in the
East South Central and the Middle Atlantic regions.

The FHFA house price index is a weighted repeat sales index,
measuring average price changes in repeat sales of the same property. An
associated quarterly index also includes refinancings on the same kinds of
properties. The indexes are based on transactions involving conforming,
conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.
Only mortgage transactions on single-family properties are included. The FHFA
data are available in Haver's USECON database.

<a href="/comment/171128c.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/171128c.png"></a>
 <a href="/comment/171128d.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/171128d.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" >FHFA U.S. House Price Index, 
 Purchase Only (SA %)</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Jul</th>
 <th scope="col" >Sep Y/Y</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >0.3</td>
 <td >0.8</td>
 <td >0.4</td>
 <td >6.3</td>
 <td >6.2</td>
 <td >5.6</td>
 <td >5.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Pacific</td>
 <td >0.7</td>
 <td >1.4</td>
 <td >-0.3</td>
 <td >8.7</td>
 <td >8.1</td>
 <td >8.0</td>
 <td >9.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Mountain</td>
 <td >0.8</td>
 <td >0.3</td>
 <td >0.7</td>
 <td >8.5</td>
 <td >8.0</td>
 <td >7.9</td>
 <td >7.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; South Atlantic</td>
 <td >0.1</td>
 <td >0.8</td>
 <td >0.6</td>
 <td >6.2</td>
 <td >7.2</td>
 <td >6.5</td>
 <td >5.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; East North Central</td>
 <td >0.6</td>
 <td >0.5</td>
 <td >0.8</td>
 <td >6.0</td>
 <td >5.4</td>
 <td >4.5</td>
 <td >4.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; New England</td>
 <td >0.6</td>
 <td >0.2</td>
 <td >0.5</td>
 <td >5.8</td>
 <td >4.0</td>
 <td >3.6</td>
 <td >3.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; West South Central</td>
 <td >0.0</td>
 <td >1.1</td>
 <td >-0.0</td>
 <td >5.8</td>
 <td >6.1</td>
 <td >6.4</td>
 <td >5.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; West North Central</td>
 <td >0.9</td>
 <td >0.5</td>
 <td >-0.2</td>
 <td >5.7</td>
 <td >5.7</td>
 <td >4.3</td>
 <td >4.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; East South Central</td>
 <td >-0.4</td>
 <td >0.5</td>
 <td >0.4</td>
 <td >5.1</td>
 <td >5.2</td>
 <td >4.8</td>
 <td >3.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Middle Atlantic</td>
 <td >-0.0</td>
 <td >0.8</td>
 <td >0.6</td>
 <td >4.6</td>
 <td >3.8</td>
 <td >2.6</td>
 <td >2.1 </td>
 </tr>
 </tbody>
</table>
&nbsp;
<table width="100%" class="centered" border="0" cellSpacing="0">
 <tbody>
 <tr>
 <td>
 Mountain: Montana, Idaho, Wyoming, Nevada, Utah,
 Colorado, Arizona and New Mexico. 
 South Atlantic: Delaware, Maryland, D.C., Virginia, West Virginia, North
 Carolina, South Carolina, Georgia and Florida. 
 Pacific: Alaska, California, Hawaii, Oregon, Washington. 
 West South Central: Oklahoma, Arkansas, Texas and Louisiana. 
 East North Central: Michigan, Wisconsin, Illinois, Indiana and Ohio. 
 East South Central: Kentucky, Tennessee, Mississippi and Alabama. 
 New England: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island
 and Connecticut. 
 Middle Atlantic: New York, New Jersey and Pennsylvania. 
 West North Central: North Dakota, South Dakota, Minnesota, Nebraska,
 Iowa, Kansas and Missouri.
 </td></tr>
	 </tbody>
	 </table>
	 
</body></html>

The Federal Housing Finance Agency's (FHFA) index of U.S. house prices rose 6.3% y/y during September. This compared to a peak 7.1% y/y gain in April. During the last three months, prices improved at a 6.1% annual rate. In September [...]

U.S. FHFA House Price Increase Moderates

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The Federal Housing Finance Agency's (FHFA) index of U.S.
house prices rose 6.3% y/y during September. This compared to a peak 7.1% y/y
gain in April. During the last three months, prices improved at a 6.1% annual
rate. In September alone, prices rose 0.3%, the weakest rise in three months.
The performance of home prices continued to vary greatly
around the country. On the strong side were the Pacific and Mountain regions
where prices rose 8.7% y/y and 8.5% y/y, respectively.
These strong y/y gains were followed by the South Atlantic,
East North Central, New England, West South Central and West North Central
regions. Prices rose roughly 6.0% y/y in these regions.
Slower house price inflation occurred amongst states in the
East South Central and the Middle Atlantic regions.
The FHFA house price index is a weighted repeat sales index,
measuring average price changes in repeat sales of the same property. An
associated quarterly index also includes refinancings on the same kinds of
properties. The indexes are based on transactions involving conforming,
conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.
Only mortgage transactions on single-family properties are included. The FHFA
data are available in Haver's USECON database.
<table width="1769" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" width="797">FHFA U.S. House Price Index, 
 Purchase Only (SA %)</th>
 <th scope="col" width="138">Sep</th>
 <th scope="col" width="138">Aug</th>
 <th scope="col" width="138">Jul</th>
 <th scope="col" width="138">Sep Y/Y</th>
 <th scope="col" width="138">2016</th>
 <th scope="col" width="139">2015</th>
 <th scope="col" width="139">2014</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="797">Total</td>
 <td align="center" width="138">0.3</td>
 <td align="center" width="138">0.8</td>
 <td align="center" width="138">0.4</td>
 <td align="center" width="138">6.3</td>
 <td align="center" width="138">6.2</td>
 <td align="center" width="139">5.6</td>
 <td align="center" width="139">5.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="797">&nbsp; Pacific</td>
 <td align="center" width="138">0.7</td>
 <td align="center" width="138">1.4</td>
 <td align="center" width="138">-0.3</td>
 <td align="center" width="138">8.7</td>
 <td align="center" width="138">8.1</td>
 <td align="center" width="139">8.0</td>
 <td align="center" width="139">9.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="797">&nbsp; Mountain</td>
 <td align="center" width="138">0.8</td>
 <td align="center" width="138">0.3</td>
 <td align="center" width="138">0.7</td>
 <td align="center" width="138">8.5</td>
 <td align="center" width="138">8.0</td>
 <td align="center" width="139">7.9</td>
 <td align="center" width="139">7.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="797">&nbsp; South Atlantic</td>
 <td align="center" width="138">0.1 </td>
 <td align="center" width="138">0.8</td>
 <td align="center" width="138">0.6</td>
 <td align="center" width="138">6.2</td>
 <td align="center" width="138">7.2</td>
 <td align="center" width="139">6.5</td>
 <td align="center" width="139">5.8</td>
 </tr>
 <tr>
 
 <td class="firstcol" width="797">&nbsp; East North Central</td>
 <td align="center" width="138">0.6</td>
 <td align="center" width="138">0.5</td>
 <td align="center" width="138">0.8</td>
 <td align="center" width="138">6.0</td>
 <td align="center" width="138">5.4</td>
 <td align="center" width="139">4.5</td>
 <td align="center" width="139">4.5</td>
 
 </tr>
 <tr>
 
 <td class="firstcol" width="797">&nbsp; New England</td>
 <td align="center" width="138">0.6</td>
 <td align="center" width="138">0.2</td>
 <td align="center" width="138">0.5</td>
 <td align="center" width="138">5.8</td>
 <td align="center" width="138">4.0</td>
 <td align="center" width="139">3.6</td>
 <td align="center" width="139">3.1</td>
 
 </tr>
 <tr>
 <td class="firstcol" width="797">&nbsp; West South Central</td>
 <td align="center" width="138">0.0</td>
 <td align="center" width="138">1.1</td>
 <td align="center" width="138">-0.0</td>
 <td align="center" width="138">5.8</td>
 <td align="center" width="138">6.1</td>
 <td align="center" width="139">6.4</td>
 <td align="center" width="139">5.6</td>
 </tr>
 <tr>
 
 <td class="firstcol" width="797">&nbsp; West North Central</td>
 <td align="center" width="138">0.9</td>
 <td align="center" width="138">0.5</td>
 <td align="center" width="138">-0.2</td>
 <td align="center" width="138">5.7</td>
 <td align="center" width="138">5.7</td>
 <td align="center" width="139">4.3</td>
 <td align="center" width="139">4.1</td>
 
 </tr>
 <tr>
 <td class="firstcol" width="797">&nbsp; East South Central</td>
 <td align="center" width="138">-0.4</td>
 <td align="center" width="138">0.5</td>
 <td align="center" width="138">0.4</td>
 <td align="center" width="138">5.1</td>
 <td align="center" width="138">5.2</td>
 <td align="center" width="139">4.8</td>
 <td align="center" width="139">3.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="797">&nbsp; Middle Atlantic</td>
 <td align="center" width="138">-0.0</td>
 <td align="center" width="138">0.8</td>
 <td align="center" width="138">0.6</td>
 <td align="center" width="138">4.6</td>
 <td align="center" width="138">3.8</td>
 <td align="center" width="139">2.6</td>
 <td align="center" width="139">2.1 </td>
 </tr>
 </tbody>
</table>
&nbsp;
<table width="100%" class="centered" border="0" cellSpacing="0">
 <tbody>
 <tr>
 <td>
 Mountain: Montana, Idaho, Wyoming, Nevada, Utah,
 Colorado, Arizona and New Mexico. 
 South Atlantic: Delaware, Maryland, D.C., Virginia, West Virginia, North
 Carolina, South Carolina, Georgia and Florida. 
 Pacific: Alaska, California, Hawaii, Oregon, Washington. 
 West South Central: Oklahoma, Arkansas, Texas and Louisiana. 
 East North Central: Michigan, Wisconsin, Illinois, Indiana and Ohio. 
 East South Central: Kentucky, Tennessee, Mississippi and Alabama. 
 New England: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island
 and Connecticut. 
 Middle Atlantic: New York, New Jersey and Pennsylvania. 
 West North Central: North Dakota, South Dakota, Minnesota, Nebraska,
 Iowa, Kansas and Missouri.
 </td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Consumer Confidence Strengthens 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;November
28, 2017
The Conference Board Consumer Confidence Index increased 2.6%
during November (18.4% y/y) to 129.5 following an upwardly revised 4.6% October
improvement. The index was at its highest level since November 2000. The Action
Economics Forecast Survey expected a decline in the index this month to 124.0.
During the past thirty years, there has been a 70% correlation between the level
of consumer confidence and the y/y change in real PCE.
The increase in overall confidence reflected a 3.9% gain (20.0%
y/y) in the expectations index to 113.3. The present situation index reading
improved 1.2% (16.6% y/y) to 153.9.
The percentage of respondents indicating that business
conditions are &quot;good&quot; rose to 34.9%, the highest level since December
2000. The percentage saying business conditions are &quot;bad&quot; fell to a
recovery low of 12.7%. The 37.1% of respondents saying that jobs are
&quot;plentiful&quot; was a 16-year high. The percentage claiming jobs are
&quot;hard to get&quot; fell to a 16-year low of 16.9%. These readings of labor
market conditions led a labor market differential (plentiful minus hard to get)
of 20.2 percentage points, the highest since 2001. This differential is 97%
inversely related to the unemployment rate.
The percentage expecting business conditions to improve over
the next six months improved modestly to 22.4%, but remained well below the
26.9% March peak. The percentage expecting more jobs in six months rebounded to
22.6%, the most since March, following a sharp October decline. The percentage
expecting incomes to strengthen at 20.1% remained below the March high of 22.5%.
The expected inflation rate in twelve months eased m/m to 4.5%
and equaled the lowest level since February 2005. The percentage expecting
higher interest rates over the next twelve months rose slightly m/m to 64.3%,
but remained below the March high of 72.2%. An increased 6.9% expected to buy a
home, up versus 6.0% during all of last year and 5.6% in 2015.
Confidence amongst individuals over aged 55 rose 43.1% y/y to
a seventeen year high. Confidence amongst those aged 35-54 increased 8.4% y/y,
but was below the October peak. Confidence amongst those under age 35 rose 0.9%
y/y, also to the highest level since 2000. 
The Consumer Confidence data is available in Haver's CBDB
database. The total indexes appear in USECON, and the market expectations
are in AS1REPNA
<table width="1769" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="819">Conference Board (SA,
 1985=100)</th>
 <th scope="col" width="135">Nov</th>
 <th scope="col" width="135">Oct</th>
 <th scope="col" width="135">Sep</th>
 <th scope="col" width="135">Y/Y %</th>
 <th scope="col" width="135">2016</th>
 <th scope="col" width="135">2015</th>
 <th scope="col" width="136">2014</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="819">Consumer Confidence Index</td>
 <td align="center" width="135">129.5</td>
 <td align="center" width="135">126.2</td>
 <td align="center" width="135">120.6</td>
 <td align="center" width="135">18.4</td>
 <td align="center" width="135">99.8</td>
 <td align="center" width="135">98.0</td>
 <td align="center" width="136">86.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="819">&nbsp; Present Situation</td>
 <td align="center" width="135">153.9</td>
 <td align="center" width="135">152.0</td>
 <td align="center" width="135">146.9</td>
 <td align="center" width="135">16.6</td>
 <td align="center" width="135">120.3</td>
 <td align="center" width="135">111.7</td>
 <td align="center" width="136">87.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="819">&nbsp; Expectations</td>
 <td align="center" width="135">113.3</td>
 <td align="center" width="135">109.0</td>
 <td align="center" width="135">103.0</td>
 <td align="center" width="135">20.0</td>
 <td align="center" width="135">86.1</td>
 <td align="center" width="135">88.8</td>
 <td align="center" width="136">86.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="819">Consumer Confidence By Age Group</td>
 <td align="center" width="135"></td>
 <td align="center" width="135"></td>
 <td align="center" width="135"></td>
 <td align="center" width="135"></td>
 <td align="center" width="135"></td>
 <td align="center" width="135"></td>
 <td align="center" width="136"></td>
 </tr>
 <tr>
 <td class="firstcol" width="819">&nbsp; Under 35 Years</td>
 <td align="center" width="135">139.8</td>
 <td align="center" width="135">127.2</td>
 <td align="center" width="135">127.5</td>
 <td align="center" width="135">0.9</td>
 <td align="center" width="135">122.4</td>
 <td align="center" width="135">116.0</td>
 <td align="center" width="136">106.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="819">&nbsp; Aged 35-54 Years</td>
 <td align="center" width="135">125.7</td>
 <td align="center" width="135">135.0</td>
 <td align="center" width="135">125.8</td>
 <td align="center" width="135">8.4</td>
 <td align="center" width="135">106.2</td>
 <td align="center" width="135">103.9</td>
 <td align="center" width="136">92.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="819">&nbsp; Over 55 Years</td>
 <td align="center" width="135">129.8</td>
 <td align="center" width="135">116.1</td>
 <td align="center" width="135">113.4</td>
 <td align="center" width="135">43.1</td>
 <td align="center" width="135">84.6</td>
 <td align="center" width="135">84.1</td>
 <td align="center" width="136">73.8</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Gasoline Prices Ease; Crude Costs Rise 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;November
28, 2017
Retail gasoline prices declined last week to $2.53 per
gallon (+17.6% y/y) following a slip to $2.57 in the prior week. Haver Analytics
constructs factors adjusting for the seasonal variation in gasoline pump prices.
The seasonally adjusted gasoline pump price was fairly steady at $2.72 per
gallon, near the highest level since December 2014.
WTI crude oil prices increased to $57.51 per barrel
last week (20.9% y/y) from $55.82 in the prior week. Prices rose to $58.11 per
barrel yesterday. Brent crude oil prices increased to $62.62 per barrel last
week and were $63.25 per barrel yesterday.
Natural gas prices eased last week to $3.01/mmbtu (+9.1%
y/y y) then fell to $2.82 yesterday.
In the week ended November 10, gasoline demand rose
1.6% y/y, while total petroleum product improved 0.5% y/y. Gasoline
inventories fell 5.1% y/y, while inventories of all petroleum products
declined 5.3% y/y. Crude oil input to refineries improved 3.2% y/y in the last
four weeks.
The energy price data are reported by the U.S. Department of
Energy. The petroleum demand and inventory figures are from the Oil &amp; Gas
Journal Weekly. These data can be found in Haver's WEEKLY database. The
daily figures are in DAILY and greater detail on prices, demand and
production, along with regional breakdowns, are in OILWKLY.
<table width="1769" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="753">Weekly Energy Prices</th>
 <th scope="col" width="144">11/27/17</th>
 <th scope="col" width="144">11/20/17</th>
 <th scope="col" width="144">11/13/17</th>
 <th scope="col" width="145">Y/Y %</th>
 <th scope="col" width="145">2016</th>
 <th scope="col" width="145">2015</th>
 <th scope="col" width="145">2014</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="753">Retail Gasoline ($ per Gallon, Regular)</td>
 <td align="center" width="144">2.53</td>
 <td align="center" width="144">2.57</td>
 <td align="center" width="144">2.59</td>
 <td align="center" width="145">17.6</td>
 <td align="center" width="145">2.31</td>
 <td align="center" width="145">2.03</td>
 <td align="center" width="145">2.30</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="753">Light Sweet Crude Oil, WTI ($ per bbl.)</td>
 <td align="center" width="144">57.51</td>
 <td align="center" width="144">55.82 </td>
 <td align="center" width="144">57.05</td>
 <td align="center" width="145">20.9</td>
 <td align="center" width="145">43.22</td>
 <td align="center" width="145">48.90</td>
 <td align="center" width="145">93.64</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="753">Natural Gas ($/mmbtu, LA, WSJ)</td>
 <td align="center" width="144">3.01</td>
 <td align="center" width="144">3.08</td>
 <td align="center" width="144">3.12</td>
 <td align="center" width="145">9.1</td>
 <td align="center" width="145">2.49</td>
 <td align="center" width="145">2.62</td>
 <td align="center" width="145">4.37</td>
 </tr>
 </tbody>
</table>


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The Federal Reserve Bank of Dallas indicated in its Texas
Manufacturing Outlook Survey that the November General Business Activity Index
fell to 19.4, the lowest point in three months. Despite the decline, the figure
still suggested firm growth in the factory sector. The production index declined
to the lowest level since June but growth in new orders strengthened. The
shipments and the inventories measures both fell. The jobs index weakened to the
lowest level since January and the workweek series also fell.
Finished goods prices received held steady m/m and remained
solid, mirroring the raw material prices measure. Both were up sharply versus
earlier lows. The wages &amp; benefits measure plummeted versus its August high
to the lowest level since July of last year.
The index of expected business conditions in six months
improved to the highest level since the beginning of the year. Expected new
orders improved and expected production remained firm. Working the other way, the
future employment index fell after moving sideways all year. The measure of
expected wages &amp; benefits increased to the highest level since March 2014.
Each index is calculated by subtracting the percentage
reporting a decrease from the percentage reporting an increase. When all firms
report that activity has increased, an index will register 100. An index will
register -100 when all firms report a decrease. An index will be zero when the
number of firms reporting an increase or decrease is equal. Items may not add up
to 100% because of rounding. Data for the Texas Manufacturing Outlook can be
found in Haver's SURVEYS database.
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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
 <thead>
 <tr>
 <th class="firstcol" >Texas Manufacturing Outlook Survey (SA,
 % Balance)</th>
 <th >Nov</th>
 <th >Oct</th>
 <th >Sep</th>
 <th >Nov'16</th>
 <th >2016</th>
 <th >2015</th>
 <th >2014</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Current General Business Activity Index</td>
 <td >19.4</td>
 <td >27.6</td>
 <td >21.3</td>
 <td >12.5</td>
 <td >-8.8</td>
 <td >-12.5</td>
 <td >8.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Production</td>
 <td >15.1</td>
 <td >25.6</td>
 <td >19.5</td>
 <td >9.8</td>
 <td >2.4</td>
 <td >-1.0</td>
 <td >14.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Growth Rate of New Orders</td>
 <td >18.1</td>
 <td >12.3</td>
 <td >9.7</td>
 <td >1.6</td>
 <td >-7.3</td>
 <td >-11.8</td>
 <td >4.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Number of Employees</td>
 <td >6.3</td>
 <td >16.7</td>
 <td >16.3</td>
 <td >4.5</td>
 <td >-4.9</td>
 <td >-0.4</td>
 <td >11.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Wages &amp; Benefits</td>
 <td >14.2</td>
 <td >22.5</td>
 <td >26.4</td>
 <td >19.5</td>
 <td >17.6</td>
 <td >16.5</td>
 <td >22.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Prices Received for
 Finished Goods</td>
 <td >15.1</td>
 <td >15.3</td>
 <td >17.5</td>
 <td >9.5</td>
 <td >-1.6</td>
 <td >-8.5</td>
 <td >8.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >General Business Activity Index Expected
 in Six Months</td>
 <td >39.0</td>
 <td >38.5</td>
 <td >34.5</td>
 <td >34.2</td>
 <td >8.9</td>
 <td >4.1</td>
 <td >17.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Production</td>
 <td >46.1</td>
 <td >46.0</td>
 <td >46.5</td>
 <td >51.9</td>
 <td >35.8</td>
 <td >31.1</td>
 <td >42.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Growth Rate of New Orders</td>
 <td >40.9</td>
 <td >36.7</td>
 <td >35.8</td>
 <td >42.8</td>
 <td >24.3</td>
 <td >20.7</td>
 <td >31.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Number of Employees</td>
 <td >29.8</td>
 <td >34.2</td>
 <td >41.3</td>
 <td >30.6</td>
 <td >16.7</td>
 <td >14.7</td>
 <td >28.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Wages &amp; Benefits</td>
 <td >46.6</td>
 <td >36.9</td>
 <td >39.8</td>
 <td >41.0</td>
 <td >34.8</td>
 <td >33.2</td>
 <td >43.1</td>
 </tr>
 </tbody>
</table>


</body>

</html>

The Federal Reserve Bank of Dallas indicated in its Texas Manufacturing Outlook Survey that the November General Business Activity Index fell to 19.4, the lowest point in three months. Despite the decline, the figure still suggested [...]

Texas Factory Index Backpedals

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The quarterly U.K. service sector survey by the CBI weakened in Q4. The assessment is for weakness and the prognosis is for weakness. There is really only one response that is truly strong and it is inconsistent with the other readings. We are left with a feeling of unease despite the CIPS own upbeat description and its focus on future employment prospects. But, that focus clearly is cherry-picking among some scarce good news.

Of 16 metrics on the health of the sector only four bear readings above 50 on a queue standing basis. That means that only four of sixteen responses rate an above-median reading. Those four sectors and their respective standings are (1) full-time employment expectations for three-months ahead in the consumer sector (91.5%), (2) three-month ahead full-time employment expectations in business and professional occupations (50.8%), (3) the assessment of demand in the consumer sector (67.8%) and (4) business prospects for businesses and professionals (57.6%).


Two other sectors are on the cusp of their median values: The consumer sector for capital spending authorizations (49.2%) and the volume assessment for businesses and professionals (49.2%).


We assess five of sixteen of these readings as exceptionally weak (below a 30th percentile queue standing): (1) the assessment of demand for businesses and professionals (18.6%), (2) the volume assessment for the next three-months for businesses and professionals (18.6%), (3) the volume assessment for the past three-months for consumer industries (22%), (4) consumer business prospects (25.4%), and (5) consumer optimism (27.1%). Close to the draconian line of demarcation is the past three-months' of volume assessment for businesses and professional at 30.5%.


The rest of the readings are sluggish, below their medians but not disturbingly weak. Still, it is a relative down beat assessment for the service sector as a whole. The consumer sector has a litany of weak readings but also has a strong outlook for employment three-months out. The percentile standing for employment three-months out is more than double the standing for the volume assessment for expected business three months out. Business and professional employment expectations have the same sort of imbalance at a lower level with full time employment expectations at a 50.8 percentile standing while future volume assessments are at their 18.6 percentile, less than half the standing of employment expectations.


Still both sectors possess near median authorizations for capital expansion - that's not much of a counterpoint to anything except to extreme weakness.



On balance the CIPS survey is soft and its brightest readings are built on an inconsistent foundation. Employment expectations are solid to strong while future sales assessments are weak to nearly disastrous. Clearly there are concerns here about the state of domestic demand in a post Brexit world in the U.K. If we exclude the buoyant and seemingly out of place employment expectations, the average consumer Vs business and professional expectation stands at its 39.5 percentile for the consumer and at the 37.5 percentile for businesses and professionals. Those are highly similar and sour readings, ten points or more below their respective medians. The service sector which is for the most part a domestic oriented sector will have to survive on the income Britons are earning in the wake of Brexit whatever that is. For now there is a lot of skepticism and a good deal is unknown about that. Clearly the U.K. will be losing a lot of high-end jobs and incomes as EU organizations leave the U.K. and as much of the (high paid) financial sector finds another home so it can do business in the EU. All of this will deplete the income base in the U.K. which is what supports the service sector. The down beat assessment of the survey is not surprising. And the employment gauge may be an artifact reflecting that a number of foreign workers laboring in the U.K. are leaving and many are concerned about their prospects in the future since the U.K. will not be in the EU and the current reciprocity employment rules may not be maintained. The need to hire more in the future may be real and may only reflect the need to hire to replace workers that are leaving because of Brexit.



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The quarterly U.K. service sector survey by the CBI weakened in Q4. The assessment is for weakness and the prognosis is for weakness. There is really only one response that is truly strong and it is inconsistent with the other [...]

U.K. Services Survey Weakens As Brexit Forces Play Out

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

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Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

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

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- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

U.S. GDP Unexpectedly Declines in Q1’25; Prices Strengthen

Michael J. Moran

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High-side readings on the price indexes for personal consumption expenditures in January and February caused some concern about emerging price pressure, especially with some policies of the Trump administration possibly adding to the upward force. However, March brought notable relief, with the headline price index falling slightly (-0.04%). A marked decline in energy prices was helpful (-2.7%), but core prices also were subdued, increasing less than 0.1%.  Year-over-year changes were still above the Fed’s target of 2%, but only barely so for the headline measure (2.3%). The core index backed away from the reading of 3.0% in February, but the latest reading of 2.7% was in line with observations in the past year, and still uncomfortably above target.

Consumers roused from a winter slumber in March, with nominal outlays increasing 0.7%. With inflation restrained, real outlays also posted a gain of 0.7%. Spending on durable gods stood out, with real outlays advancing 3.2%. Real outlays for both nondurable goods and services rose 0.4%, a solid pace. Signs of life were certainly welcome after an average decline of 0.1% in January and February. The March rebound left growth of 1.8% (annual rate) in the first quarter.

The brisk increase in spending in March was supported by a solid gain in personal income (0.5% in both nominal and real terms). Growth in wage income was firm at 0.5%, while proprietors’ income was robust with a gain of 1.8% (not annualized!). The farm sector led the advance in proprietors’ income, but the nonfarm sector also was strong (0.6%).

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

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- Price pressure eases.
- Spending rebounds after two soft months.

Personal Income, Consumption, and Prices in March

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The Pending Home Sales Index, a forward-looking home sales measure based on contract signings, from the National Association of Realtors rose 6.1% to 76.5 (-0.6% y/y) during March after rising a little-revised 2.1% in February. These changes followed a 4.6% January decline.

The rise in March sales occurred as the rate on a 30-year mortgage eased to an average 6.65% from 6.84% in February. This rate was well above a low of 2.68% averaged in December 2020.

Pending home sales were up in most regions of the country. Sales in the Midwest rose 4.9% (1.4% y/y) last month after rising 1.8% in February. Sales in the South increased 9.8% (-0.4% y/y) following a 5.8% February rise. Sales in the West improved 4.8% (-2.0% y/y) after falling 3.0% in February. Sales in the Northeast were off 0.5% (-3.0% y/y) in March after falling 0.9% in February.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Sales rise to highest level in four months.
- Strength is evident throughout most of country.

U.S. Pending Home Sales Surge in March

Sandy Batten

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The employment cost index (ECI) for civilian workers, arguably the most accurate measure of labor compensation in the United States, rose 0.9% q/q (3.6% y/y) in Q1, the same quarterly increase as in last year’s Q4, according to the Bureau of Labor Statistics. The quarterly gains have fluctuated between 0.8% and 1.0% for the past six quarters. The Action Economics Forecast Survey had expected a 0.9% q/q increase and a 3.5% y/y gain.

Wages and salaries for civilian workers rose 0.8% q/q (3.5% y/y) in Q1, down from 1.0% q/q in Q4. This tied the Q3 2024 quarterly rise as the smallest increase since Q2 2021. It was also the smallest y/y increase since Q2 2021. Benefits increased by an outsized 1.2% q/q (3.9% y/y) in Q1 versus 0.8% q/q in Q4. This is the largest quarterly gain since Q2 2022. In general, employment cost gains remain above the pace observed prior to the pandemic but are slowing gradually.

Private industry workers’ compensation rose 0.8% q/q (3.4% y/y) in Q1, down from 0.9% q/q (3.6% y/y) in Q4. Wages and salaries for private industry workers increased 0.8% q/q (3.4% y/y) in Q1 versus 0.8% q/q (3.7% y/y) in Q4. The quarterly gain in Q1 tied that in Q3 2024 as the smallest increase since Q4 2020. Benefits for private industry workers jumped 1.2% q/q (3.6% y/y). the largest quarterly gain since Q2 2022. The acceleration in benefits in Q1 was primarily in service-producing industries.

Compensation in private goods-producing industries increased 1.0% q/q (3.2% y/y) in Q1, the largest quarterly gain in five quarters, versus a 0.7% q/q increase in Q4. Compensation in construction jumped 1.3% q/q, its largest quarterly increase since Q2 2022, up from a 0.6% q/q gain in Q4. Manufacturing compensation growth slowed to 0.7% q/q, its slowest quarterly advance since Q4 2020, from 0.8% q/q in Q4. Compensation in private service-producing industries increased 0.8% q/q (3.5% y/y), down slightly from a 0.9% q/q gain in Q4. Compensation in education and health services jumped 1.3% q/q, its largest quarterly gain since Q3 2023. In contrast, compensation in other services edged up 0.1% q/q in Q1, its smallest quarterly advance since before the pandemic.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s **USECON** database. Consensus estimates from the Action Economics Forecast Survey are in Haver’s **AS1REPNA** database.

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- Compensation grew 0.9 q/q in Q1, the same pace as in Q4.
- Wage growth slowed to 0.8% q/q while benefits surged 1.2% q/q, their largest quarterly increase since Q2 2022.

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

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The ADP National Employment Report indicated that nonfarm private sector payrolls rose 62,000 (1.4% y/y) during April after increasing 147,000 (1.4% y/y) during March, revised from 155,000. A 124,000 April rise in ADP employment had been expected in the Action Economics Forecast Survey.

Growth in median annual pay for "job stayers" eased to 4.5% y/y during April, from 4.6% y/y in March and from 4.7% y/y in the prior two months. Manufacturing sector pay grew 4.6% y/y during April, down from 4.8% y/y in March. Construction sector pay was unchanged at 4.7% y/y. Natural resource & mining sector pay grew 4.4% y/y. Financial sector pay rose 5.1% y/y, while education & health services pay rose 4.7% y/y. Leisure & hospitality pay also increased 4.7% y/y. Professional & business service sector pay increased 4.3% y/y as did trade, transportation & utilities pay. Information pay rose 4.1% y/y. Median annual pay for “job changers” rose 6.9% y/y after 6.7% y/y in March.

Small business hiring (less than 50 employees) rose 11,000 (0.6% y/y) after rising 18,000 (0.6% y/y) in March, revised down from 52,000. Employment at medium-sized firms (50-499,000 employees) rose 40,000 (1.1% y/y) after rising 43,000 (1.1% y/y). Large business hiring (500+ employees) rose 12,000 (3.4% y/y) in April, after rising 61,000 (3.6% y/y) in March, revised from 59,000.

Goods-producing employment rose 26,000 (1.3% y/y) in April, after rising 16,000 (1.3% y/y) during March, revised from 24,000. Manufacturing jobs rose 4,000 (-0.2% y/y) after rising 17,000 (-0.3% y/y) in March. The number of construction sector jobs rose 16,000 (3.4% y/y) in April, following a 2,000 (3.6% y/y) March increase, revised from 6,000. Natural resources & mining jobs rose 6,000 (2.8% y/y) in April after falling 3,000 (+1.9% y/y) in March.

The number of service-producing jobs rose 34,000 (1.4% y/y) during April, following a rise of 131,000 (1.4% y/y) in March. Professional & business services employment fell 2,000 (0.6% y/y) after rising 46,000 (0.7% y/y) in the prior month, revised from 57,000. Employment in the financial industry rose 20,000 (2.1% y/y) in April, after rising 38,000 (2.0% y/y) in March. Leisure and hospitality employment increased 27,000 (3.0% y/y), following a 23,000 (2.9% y/y) March increase, revised from 17,000. The number of education & health care jobs fell 23,000 (1.6% y/y) in April, following a 15,000 (1.8% y/y) rise in March, revised from 12,000. Information sector employment fell 8,000 (-0.1% y/y) after a rise of 3,000 (0.2% y/y) in March. The number of jobs in trade, transportation & utilities rose 21,000 (0.4% y/y) in April, after falling 4,000 (+0.4% y/y) in March, revised from a 6,000 fall. Employment in “other” services rose fell 1,000 (+3.2% y/y) following a 10,000 (3.4% y/y) rise in March, revised from 11,000.

By region, employment in the Northeast increased 10,000 (1.9% y/y) in April, following an increase of 95,000 (2.0% y/y) in March, revised from 89,000. Employment in the Midwest rose 42,000 (1.5% y/y) after a gain of 84,000 (1.4% y/y) in March, revised from 81,000. In the South, employment rose 3,000 (1.3% y/y) during April, after rising 10,000 (1.4% y/y) in March, revised from 27,000. In the West, employment rose 9,000 (0.6% y/y) after declining 43,000 (+0.6% y/y), revised from a 41,000 decline in March.

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

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- Employment increase is modest in both services & factory sectors.
- Wage growth for “job stayers” moderates.
- Small and medium-sized business employment slows.

Economy in Brief: November 2017

Jump to:

U.S. GDP Growth is Revised Up; Profits Strengthen

U.S. Gasoline Prices Ease; Crude Costs Rise

Money and Credit Trends Finally Begin to Shift; Is It a Shift for the Better?

U.S. Consumer Confidence Strengthens

U.S. FHFA House Price Increase Moderates

U.S. FHFA House Price Increase Moderates

Texas Factory Index Backpedals

U.K. Services Survey Weakens As Brexit Forces Play Out