Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090330a.jpg" width="353">
At best, the recent movement in commodity prices suggests that recessionary forces are diminishing. Prices for oil, copper and grains have stabilized after sharp declines in last year&#39;s second half. The price of gold has moved to the high end of the last year&#39;s range. Continued recovery in prices is dependent, of course, on whether worldwide economic recovery develops. So far, the move in commodity prices alone is not convincing.
Crude oil prices have shown some bottoming with the price of WTI crude rising to $50 per barrel from the $40 low. But the case for a turnaround is not strong. The recession in the U.S. industrial sector and fewer car-miles driven have lowered the demand for all petroleum products by 3.2% y/y after the 3.5% decline last year. And a pending upturn is not yet signaled by various leading indicators. Inventory decumulation rates are picking up steam and consumer sentiment remains depressed. Abroad, recessionary forces are gaining steam. Industrial output in Germany and France fell 11-12% through the end of last year and production in Japan was off by roughly one quarter.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090330b.jpg" width="353">
The worldwide recession also has taken its hold on industrial metals prices as factory sector output has fallen sharply. Prices for aluminum, stainless steel scrap and high grade copper are 50% lower than a year ago and the latest bottoming in copper prices is tentative, at best.An upturn in metals prices awaits recovery in global manufacturing sector activity.
Food prices have been mixed, with an upward trend. Wheat and corn prices recently recovered modestly after earlier sharp declines. Conversely, beef prices which showed signs of stability, have moved lower. The upward trend to prices overall derives from several global forces, notably economic development (upward income mobility) in the worlds&#39; economies and government mandated bio-fuel standards.
Finally, gold prices have strengthened recently and they have reached new highs of near $1,000 per ounce. Platinum and silver prices have strengthen as well from the lows of last fall but they still are down by 25% to 40% year to year.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090330c.jpg" width="353">
Overall, commodity prices have shown just a small effect on consumer price inflation. At most they account for one-third of the price of a particular product. It&#39;s as an indicator of demand that they are valuable. They are quite sensitive to changes in the supply-demand equation. As of yet they may be signaling that the U.S. recession was passed its worst stage. Factory sector output fell 5.4%, 9.2% then 17.4% (AR) through the first three quarters of 2008. OECD output in the big 7 nations similarly fell at a 3.5%, 6.8% then 21.8% rate in 2008.
The commodity price series in the table below can be found in Haver&#39;s WEEKLY database. The monetary and inflation figures cited above are available in USECON.
A Framework for Analyzing Bank Lending is today&#39;s speech by Fed Governor Elizabeth A. Duke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/F918CF1E7D0C4ABCBE1BDCB5E4918006.htm"> here</a>.
The Risk of Deflation from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-12.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Commodity Prices</a></th>
<th scope="col">Latest Week</th>
<th scope="col">Y/Y</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">March &#39;08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Metals</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Aluminum ($/lb.)</td>
<td>0.64</td>
<td>-50.4%</td>
<td>0.99</td>
<td>0.63</td>
<td>1.34</td>
<td>1.18</td>
<td>1.18</td>
<td>1.18</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Stainless Steel Scrap ($/Ton)</td>
<td>1,188</td>
<td>-59.9%</td>
<td>1,201</td>
<td>--</td>
<td>2,893</td>
<td>2,121</td>
<td>2,786</td>
<td>2,918</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; High Grade Copper ($/ton)</td>
<td>1.80</td>
<td>-51.4%</td>
<td>1.50</td>
<td>1.51</td>
<td>3.77</td>
<td>1.31</td>
<td>3.06</td>
<td>3.04</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Foods</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Milk (Cents/lb.)</td>
<td>85</td>
<td>-34.6%</td>
<td>85</td>
<td>84</td>
<td>132</td>
<td>86</td>
<td>172</td>
<td>145</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Beef Carcass (Index Value)</td>
<td>126.6</td>
<td>-4.3%</td>
<td>127.0</td>
<td>136.2</td>
<td>135.3</td>
<td>134.6</td>
<td>139.3</td>
<td>134.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Corn, No. 2 Yellow ($/bushel)</td>
<td>3.70</td>
<td>-27.5%</td>
<td>3.44</td>
<td>3.59</td>
<td>5.18</td>
<td>3.76</td>
<td>4.14</td>
<td>3.46</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Wheat, Soft Red ($/bushel)</td>
<td>4.35</td>
<td>-50.0%</td>
<td>3.42</td>
<td>3.49</td>
<td>9.43</td>
<td>4.78</td>
<td>8.64</td>
<td>4.77</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Light Sweet Crude Oil, WTI ($/bbl.)</td>
<td>49.46</td>
<td>-53.3%</td>
<td>39.05</td>
<td>41.72</td>
<td>105.78</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Gold, Handy &amp; Harmon ($/oz.)</td>
<td>923.75</td>
<td>-0.3%</td>
<td>941.63</td>
<td>856.38</td>
<td>972.06</td>
<td>869.75</td>
<td>810.5</td>
<td>628.7</td>
</tr>
</tbody>
</table>
</body>
</html>

At best, the recent movement in commodity prices suggests that recessionary forces are diminishing. Prices for oil, copper and grains have stabilized after sharp declines in last year's second half. The price of gold has moved to the [...]

Commodity Prices Meander

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327g.jpg" align="left" border="0" height="265" width="353">
 Egad! Still very weak: Euro industrial
orders continued their steep rate of decline in January. The 3.4% mo/mo
drop was less than the 8% plunge in December and the 9.4% stunner in
November, but it fell far short of being reassuring. 
 

Weak Q1 in train, too: The three month pace
of decline is 57% at an annual rate. The rate of decline in the quarter
is also at a -50% annual rate. So 2009-Q1 is not an encouraging number
to look forward to at this point. 
 

Imported weakness for Europe: The
domestic/foreign split for orders is somewhat illuminating. Domestic
orders fell at by 3.9% from December. Foreign orders fell by 7.3%. The
pace of decline for past growth rates also shows that the domestic rate
of decline has lagged the pace of the foreign orders decline. But that
growth gap has become more pronounced this month with domestic orders
off by so much less than foreign orders. Clearly the EMU is importing
weakness from abroad. Its foreign orders and exports are falling at a
faster pace than its domestic activity. 
 

Dissent at home: While the ECB is coming
under more criticism from business groups (today it is Business Europe,
which represents national business federations and industry groups) the
industrial orders data strongly suggest that the pulse of weakness is
from beyond the ECBs border and reach. That does not mean that the ECB
or that fiscal stimulus could not make up for it, but that there is a
continuing drag of controllable influence on the euro-economy. 
 

A glint or two of good news: Still, it is
encouraging that the Markit PMI indices for services and for MFG turned
higher in March. Today the CEPR index of activity echoed that signal
and turned just a little bit less negative in March compared to
February. This sort of statistic is not bankable but it is indicative
of an economy that may be passing from its most severe phase of
negative growth to a milder phase and perhaps eventually headed to
recovery. 
 

Looking ahead to March data&#8230; For the bulk
of Euro-data the readings remain dispirited and grim. But the March
reports which are so few in number have begun to stake out a less
negative view. There it is: the precursor to a positive view. Not to
get too excited yet, but this is the way that the rebound will start.
So despite the discouraging data on the day the there is some good news
in train but it&#8217;s only found in the freshest of reports. That means we
are apt to see better news for COUNTRY level data first, since the EMU
reports lag the timeliest of national reports. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="10" scope="col">E-zone-13 and UK Industrial Orders And Sales</th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Jan-09</td>
<td>Dec-08</td>
</tr>
<tr class="grey4">
<td class="firstcol">E- AREA Detail</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG Orders</td>
<td>-3.4%</td>
<td>-8.0%</td>
<td>-9.4%</td>
<td>-57.9%</td>
<td>-63.9%</td>
<td>-50.1%</td>
<td>-46.2%</td>
<td>-32.0%</td>
<td>-28.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG Sales</td>
<td>#N/A</td>
<td>-3.5%</td>
<td>-3.9%</td>
<td>#N/A</td>
<td>-34.7%</td>
<td>#N/A</td>
<td>-24.0%</td>
<td>#N/A</td>
<td>-11.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Consumer</td>
<td>#N/A</td>
<td>-0.4%</td>
<td>-0.4%</td>
<td>#N/A</td>
<td>-4.9%</td>
<td>#N/A</td>
<td>-4.3%</td>
<td>#N/A</td>
<td>-2.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Capital</td>
<td>#N/A</td>
<td>-1.7%</td>
<td>-2.1%</td>
<td>#N/A</td>
<td>-20.3%</td>
<td>#N/A</td>
<td>-16.1%</td>
<td>#N/A</td>
<td>-8.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Intermediate</td>
<td>-3.9%</td>
<td>-5.9%</td>
<td>-8.4%</td>
<td>-52.8%</td>
<td>-56.1%</td>
<td>-46.9%</td>
<td>-40.8%</td>
<td>-28.6%</td>
<td>-23.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Memo: MFG</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total Orders</td>
<td>-3.4%</td>
<td>-8.0%</td>
<td>-9.4%</td>
<td>-57.9%</td>
<td>-63.9%</td>
<td>-50.1%</td>
<td>-46.2%</td>
<td>-32.0%</td>
<td>-28.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; E-13 Domestic MFG
orders</td>
<td>-3.9%</td>
<td>-5.9%</td>
<td>-8.4%</td>
<td>-52.8%</td>
<td>-56.1%</td>
<td>-46.9%</td>
<td>-40.8%</td>
<td>-28.6%</td>
<td>-23.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; E-13 Foreign MFG
orders</td>
<td>-7.3%</td>
<td>-7.1%</td>
<td>-10.3%</td>
<td>-64.4%</td>
<td>-64.0%</td>
<td>-56.2%</td>
<td>-45.5%</td>
<td>-37.2%</td>
<td>-28.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Countries:</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Germany (MFG):</td>
<td>-7.6%</td>
<td>-8.1%</td>
<td>-7.5%</td>
<td>-61.9%</td>
<td>-61.3%</td>
<td>-52.5%</td>
<td>-46.3%</td>
<td>-35.0%</td>
<td>-30.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; France (Ind):</td>
<td>-2.5%</td>
<td>-2.0%</td>
<td>-6.6%</td>
<td>-36.6%</td>
<td>-52.1%</td>
<td>-44.6%</td>
<td>-36.5%</td>
<td>-28.0%</td>
<td>-23.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Italy (Ind):</td>
<td>#N/A</td>
<td>-2.0%</td>
<td>-6.6%</td>
<td>#N/A</td>
<td>-47.2%</td>
<td>#N/A</td>
<td>-31.4%</td>
<td>#N/A</td>
<td>-18.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; UK (Engineering Ind):</td>
<td>-25.2%</td>
<td>26.1%</td>
<td>-11.9%</td>
<td>-52.3%</td>
<td>-33.0%</td>
<td>-39.7%</td>
<td>5.0%</td>
<td>-34.4%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
</body></html>

Egad! Still very weak: Euro industrial orders continued their steep rate of decline in January. The 3.4% mo/mo drop was less than the 8% plunge in December and the 9.4% stunner in November, but it fell far short of being reassuring. [...]

EMU Orders: Still Sinking Fast

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327d.jpg" align="right" border="0" height="265" width="353">
As reported
mid-month, consumers' moods have stabilized as suggested by the
University of Michigan. It reported that the full month March reading
of consumer sentiment held stable in the range of the last several
months. Despite this stability, however, the latest figure was down
17.6% from last March. During the last ten years, there has been a 63%
correlation between the level of sentiment and the three-month change
in real personal consumption expenditures. The March reading came in
slightly above Consensus expectations.The expectations component of
consumer sentiment firmed a bit and recovered nearly half of the
February decline. Expectations for business conditions during the next
year led that increase but remained near the lowest level
since 1980.&nbsp; Expectations for conditions during the
next five years fell slightly to the lowest level since last June.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327e.jpg" align="right" border="0" height="265" width="353">
The
expected change in personal finances ticked higher.The current
economic conditions index also improved slightly from February after an
initial reading of sharp decline. Buying conditions for large household
goods fell just slightly m/m but they remained down 21.0% from a year
earlier. The view of current personal finances also fell and remained
down by one-half from early 2007. The opinion of government
policy, which may eventually influence economic expectations, improved
sharply to the highest level since January of 2007. Twenty two percent
of respondents thought that a good job was being done by government, up
from the four percent low of last December, while a much reduced twenty
eight percent thought that a poor job was being done.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327f.jpg" align="right" border="0" height="265" width="353">
Inflation expectations for the next year were about stable at 2.4%.
They were as high as 7.0% last May. The range of expectations is from
slight price deflation to a 5.3% increase in prices. The expected
inflation rate during the next five years reversed most of the
increases during the last two months and fell to 2.9%. The
University of Michigan survey data is not seasonally adjusted.
&nbsp;The reading is based on telephone interviews with about 500
households at month-end; the mid-month results are based on about 300
interviews.&nbsp; The summary indexes are in Haver's USECON
database with details in the proprietary UMSCA database.
Payments Fraud: An Introduction from the Federal
Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/economicperspectives/ep_1qtr2009_part1_amromin_porter.pdf">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">March (Final)</th>
<th scope="col">Mid-March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">March y/y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>57.3</td>
<td>56.6</td>
<td>56.3</td>
<td>61.2</td>
<td>-17.6%</td>
<td>63.8</td>
<td>85.6</td>
<td>87.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>63.3</td>
<td>62.3</td>
<td>65.5</td>
<td>66.5</td>
<td>-24.8</td>
<td>73.7</td>
<td>101.2</td>
<td>105.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>53.5</td>
<td>53.0</td>
<td>50.5</td>
<td>57.8</td>
<td>-11.0</td>
<td>57.3</td>
<td>75.6</td>
<td>75.9</td>
</tr>
</tbody>
</table>
</body></html>

As reported mid-month, consumers' moods have stabilized as suggested by the University of Michigan. It reported that the full month March reading of consumer sentiment held stable in the range of the last several months. Despite this [...]

Michigan Consumer Sentiment Improves As The Opinion Of Government Jumps

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327a.jpg" align="right" border="0" height="265" width="353">Consumer
spending is recovering from its swoon this past Fall. The U.S. Bureau
of Economic Analysis reported that personal spending during February
logged its second increase after six consecutive monthly declines. That
recovery is hardly robust however. Adjusted for inflation, spending in
fact fell 0.2% last month after January's 0.7% rise. For the quarter so
far, real spending is up at just a 1.3% annual rate which makes up
little of the 4.3% rate of decline during 4Q and the 3.8% 3Q drop. 
Much of the recovery in overall real spending this quarter traces to
the modest, halting rise in spending on autos, after an abysmal Fall.
Real spending on autos &amp; parts fell 3.9% last month retracing
most of a 5.3% January increase. This flatness follows declines at 10%
to 40% annual rates during each quarter of 2008. Elsewhere, earlier
declines in real outlays indeed may be stabilizing as indicated by two
consecutive firm gains in furniture &amp; appliances spending. But
that's about it for the good news. Real spending on apparel rose all of
0.4% last month after no change during January. It's still down 2.6%
year-to-year. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327b.jpg" align="right" border="0" height="265" width="353">
And real spending on services has been modest as well. It
declined 0.1% last month and has been flat since November (+0.7% y/y).
The pullback in personal spending reflects lower levels of personal
income. Income declined 0.2% after a 0.2% January increase (that was
half the initially reported gain) and is down 1.3% versus its peak last
June. The latest decline about equaled the Consensus expectation. Also
losing steam, disposable personal income slipped
0.1% after the 1.6% January surge that owed to a 9.7% monthly drop in
taxes. Real disposable income also fell by 0.4% after January's gain of
1.3%. Despite the decline, real income increased 2.2% versus last
year. Wages &amp; salaries further reflected the weak job market
with a 0.4% decline (-0.2% y/y). So bad are the figures that wage
income was down in each of the last four months and at a 4.0% annual
rate during that period. That rate is the fastest since 1994. Private
sector wages during that period were down at a 6.0% annual rate, also
the worst since 1994. These declines contrast to wages in the
government sector which continue to increase. A 0.3% February rise
pulled wages up 5.1% versus last year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327c.jpg" align="right" border="0" height="265" width="353">
Lower interest rates continued
to pull interest income down. It has fallen 1.0% to 2.0% during each of
the last five months (-7.2% y/y). In addition, weak corporate profits
lowered dividend income by 1.5%, about the rate of decline since
September and down 7.2% year-to-year.The stabilization of oil prices
caused the PCE chain price index to rise 0.3%
during the last two months. Core pricing power in fact firmed slightly
showing two months of 0.2% increase after having been unchanged for
two. The latest gain matched Consensus expectations. The personal
income &amp; consumption figures are available in Haver's USECON
and USNA databases.&nbsp; &nbsp;
<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/@E7/@E711/@E71102/@E71102.HTM">Disposition
of Personal Income</a> (%)&nbsp;</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>-0.2</td>
<td>0.2</td>
<td>1.0</td>
<td>3.8</td>
<td>6.1</td>
<td>7.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Disposable
Personal Income</td>
<td>-0.1</td>
<td>1.6</td>
<td>3.2</td>
<td>4.6</td>
<td>5.5</td>
<td>6.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>0.2</td>
<td>1.0</td>
<td>-0.4</td>
<td>3.6</td>
<td>5.5</td>
<td>5.9</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>4.2</td>
<td>4.4</td>
<td>0.3 (Feb. 08)</td>
<td>1.8</td>
<td>0.5</td>
<td>0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.3</td>
<td>0.3</td>
<td>1.0</td>
<td>3.3</td>
<td>2.6</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food
&amp; energy</td>
<td>0.2</td>
<td>0.2</td>
<td>1.8</td>
<td>2.2</td>
<td>2.2</td>
<td>2.3</td>
</tr>
</tbody>
</table>
</body></html>

Consumer spending is recovering from its swoon this past Fall. The U.S. Bureau of Economic Analysis reported that personal spending during February logged its second increase after six consecutive monthly declines. That recovery is [...]

U.S. Personal Spending Increases Again, Modestly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327a.jpg" align="right" border="0" height="265" width="353">Consumer
spending is recovering from its swoon this past Fall. The U.S. Bureau
of Economic Analysis reported that personal spending during February
logged its second increase after six consecutive monthly declines. That
recovery is hardly robust however. Adjusted for inflation, spending in
fact fell 0.2% last month after January's 0.7% rise. For the quarter so
far, real spending is up at just a 1.3% annual rate which makes up
little of the 4.3% rate of decline during 4Q and the 3.8% 3Q drop. 
Much of the recovery in overall real spending this quarter
traces to
the modest, halting rise in spending on autos, after an abysmal Fall.
Real spending on autos &amp; parts fell 3.9% last month retracing
most of a 5.3% January increase. This flatness follows declines at 10%
to 40% annual rates during each quarter of 2008. Elsewhere, earlier
declines in real outlays indeed may be stabilizing as indicated by two
consecutive firm gains in furniture &amp; appliances spending. But
that's about it for the good news. Real spending on apparel rose all of
0.4% last month after no change during January. It's still down 2.6%
year-to-year. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327b.jpg" align="right" border="0" height="265" width="353">
And real spending on services has been modest as well. It
declined 0.1% last month and has been flat since November (+0.7% y/y).

The pullback in personal spending reflects lower levels of
personal
income. Income declined 0.2% after a 0.2% January increase (that was
half the initially reported gain) and is down 1.3% versus its peak last
June. The latest decline about equaled the Consensus expectation. Also
losing steam, disposable personal income slipped
0.1% after the 1.6% January surge that owed to a 9.7% monthly drop in
taxes. Real disposable income also fell by 0.4% after January's gain of
1.3%. Despite the decline, real income increased 2.2% versus last
year.
 Wages &amp; salaries further reflected the weak job
market
with a 0.4% decline (-0.2% y/y). So bad are the figures that wage
income was down in each of the last four months and at a 4.0% annual
rate during that period. That rate is the fastest since 1994. Private
sector wages during that period were down at a 6.0% annual rate, also
the worst since 1994. These declines contrast to wages in the
government sector which continue to increase. A 0.3% February rise
pulled wages up 5.1% versus last year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327c.jpg" align="right" border="0" height="265" width="353">Lower
interest rates continued
to pull interest income down. It has fallen 1.0% to 2.0% during each of
the last five months (-7.2% y/y). In addition, weak corporate profits
lowered dividend income by 1.5%, about the rate of decline since
September and down 7.2% year-to-year.
The stabilization of oil prices
caused the PCE chain price index to rise 0.3%
during the last two months. Core pricing power in fact firmed slightly
showing two months of 0.2% increase after having been unchanged for
two. The latest gain matched Consensus expectations.
 The personal
income &amp; consumption figures are available in Haver's USECON
and USNA databases.&nbsp; &nbsp;
<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/@E7/@E711/@E71102/@E71102.HTM">Disposition
of Personal Income</a> (%)&nbsp;</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>-0.2</td>
<td>0.2</td>
<td>1.0</td>
<td>3.8</td>
<td>6.1</td>
<td>7.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Disposable
Personal Income</td>
<td>-0.1</td>
<td>1.6</td>
<td>3.2</td>
<td>4.6</td>
<td>5.5</td>
<td>6.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>0.2</td>
<td>1.0</td>
<td>-0.4</td>
<td>3.6</td>
<td>5.5</td>
<td>5.9</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>4.2</td>
<td>4.4</td>
<td>0.3 (Feb. 08)</td>
<td>1.8</td>
<td>0.5</td>
<td>0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.3</td>
<td>0.3</td>
<td>1.0</td>
<td>3.3</td>
<td>2.6</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food
&amp; energy</td>
<td>0.2</td>
<td>0.2</td>
<td>1.8</td>
<td>2.2</td>
<td>2.2</td>
<td>2.3</td>
</tr>
</tbody>
</table>
Michigan Consumer Sentiment
Improves As The Opinion Of Government Jumps 
by <a href="/comment/Moeller.html">Tom
Moeller</a> March 27, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327d.jpg" align="right" border="0" height="265" width="353">As reported
mid-month, consumers' moods have stabilized as suggested by the
University of Michigan. It reported that the full month March reading
of consumer sentiment held stable in the range of the last several
months. Despite this stability, however, the latest figure was down
17.6% from last March. During the last ten years, there has been a 63%
correlation between the level of sentiment and the three-month change
in real personal consumption expenditures. The March reading came in
slightly above Consensus expectations.
The expectations component of
consumer sentiment firmed a bit and recovered nearly half of the
February decline. Expectations for business conditions during the next
year led that increase but remained near the lowest level
since 1980.&nbsp; Expectations for conditions during the
next five years fell slightly to the lowest level since last June.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327e.jpg" align="right" border="0" height="265" width="353">The
expected change in personal finances ticked higher.
The current
economic conditions index also improved slightly from February after an
initial reading of sharp decline. Buying conditions for large household
goods fell just slightly m/m but they remained down 21.0% from a year
earlier. The view of current personal finances also fell and remained
down by one-half from early 2007.
 The opinion of government
policy, which may eventually influence economic expectations, improved
sharply to the highest level since January of 2007. Twenty two percent
of respondents thought that a good job was being done by government, up
from the four percent low of last December, while a much reduced twenty
eight percent thought that a poor job was being done.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327f.jpg" align="right" border="0" height="265" width="353">Inflation
expectations for the next year were about stable at 2.4%.
They were as high as 7.0% last May. The range of expectations is from
slight price deflation to a 5.3% increase in prices. The expected
inflation rate during the next five years reversed most of the
increases during the last two months and fell to 2.9%.
 The
University of Michigan survey data is not seasonally adjusted.
&nbsp;The reading is based on telephone interviews with about 500
households at month-end; the mid-month results are based on about 300
interviews.&nbsp; The summary indexes are in Haver's USECON
database with details in the proprietary UMSCA database.
Payments Fraud: An Introduction from the
Federal
Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/economicperspectives/ep_1qtr2009_part1_amromin_porter.pdf">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">March (Final)</th>
<th scope="col">Mid-March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">March y/y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>57.3</td>
<td>56.6</td>
<td>56.3</td>
<td>61.2</td>
<td>-17.6%</td>
<td>63.8</td>
<td>85.6</td>
<td>87.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>63.3</td>
<td>62.3</td>
<td>65.5</td>
<td>66.5</td>
<td>-24.8</td>
<td>73.7</td>
<td>101.2</td>
<td>105.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>53.5</td>
<td>53.0</td>
<td>50.5</td>
<td>57.8</td>
<td>-11.0</td>
<td>57.3</td>
<td>75.6</td>
<td>75.9</td>
</tr>
</tbody>
</table>

EMU Orders: Still Sinking Fast 
by <a href="/comment/Brusca.html">Robert
Brusca</a> March 27, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090327g.jpg" align="left" border="0" height="265" width="353">
 Egad! Still very weak: Euro industrial
orders continued their steep rate of decline in January. The 3.4% mo/mo
drop was less than the 8% plunge in December and the 9.4% stunner in
November, but it fell far short of being reassuring. 
 

Weak Q1 in train, too: The three month pace
of decline is 57% at an annual rate. The rate of decline in the quarter
is also at a -50% annual rate. So 2009-Q1 is not an encouraging number
to look forward to at this point. 
 

Imported weakness for Europe: The
domestic/foreign split for orders is somewhat illuminating. Domestic
orders fell at by 3.9% from December. Foreign orders fell by 7.3%. The
pace of decline for past growth rates also shows that the domestic rate
of decline has lagged the pace of the foreign orders decline. But that
growth gap has become more pronounced this month with domestic orders
off by so much less than foreign orders. Clearly the EMU is importing
weakness from abroad. Its foreign orders and exports are falling at a
faster pace than its domestic activity. 
 

Dissent at home: While the ECB is coming
under more criticism from business groups (today it is Business Europe,
which represents national business federations and industry groups) the
industrial orders data strongly suggest that the pulse of weakness is
from beyond the ECBs border and reach. That does not mean that the ECB
or that fiscal stimulus could not make up for it, but that there is a
continuing drag of controllable influence on the euro-economy. 
 

A glint or two of good news: Still, it is
encouraging that the Markit PMI indices for services and for MFG turned
higher in March. Today the CEPR index of activity echoed that signal
and turned just a little bit less negative in March compared to
February. This sort of statistic is not bankable but it is indicative
of an economy that may be passing from its most severe phase of
negative growth to a milder phase and perhaps eventually headed to
recovery. 
 

Looking ahead to March data&#8230; For the bulk
of Euro-data the readings remain dispirited and grim. But the March
reports which are so few in number have begun to stake out a less
negative view. There it is: the precursor to a positive view. Not to
get too excited yet, but this is the way that the rebound will start.
So despite the discouraging data on the day the there is some good news
in train but it&#8217;s only found in the freshest of reports. That means we
are apt to see better news for COUNTRY level data first, since the EMU
reports lag the timeliest of national reports. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">E-zone-13
and UK Industrial Orders And Sales</th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Jan-09</td>
<td>Dec-08</td>
</tr>
<tr class="grey4">
<td class="firstcol">E- AREA Detail</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG Orders</td>
<td>-3.4%</td>
<td>-8.0%</td>
<td>-9.4%</td>
<td>-57.9%</td>
<td>-63.9%</td>
<td>-50.1%</td>
<td>-46.2%</td>
<td>-32.0%</td>
<td>-28.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG Sales</td>
<td>#N/A</td>
<td>-3.5%</td>
<td>-3.9%</td>
<td>#N/A</td>
<td>-34.7%</td>
<td>#N/A</td>
<td>-24.0%</td>
<td>#N/A</td>
<td>-11.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Consumer</td>
<td>#N/A</td>
<td>-0.4%</td>
<td>-0.4%</td>
<td>#N/A</td>
<td>-4.9%</td>
<td>#N/A</td>
<td>-4.3%</td>
<td>#N/A</td>
<td>-2.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Capital</td>
<td>#N/A</td>
<td>-1.7%</td>
<td>-2.1%</td>
<td>#N/A</td>
<td>-20.3%</td>
<td>#N/A</td>
<td>-16.1%</td>
<td>#N/A</td>
<td>-8.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Intermediate</td>
<td>-3.9%</td>
<td>-5.9%</td>
<td>-8.4%</td>
<td>-52.8%</td>
<td>-56.1%</td>
<td>-46.9%</td>
<td>-40.8%</td>
<td>-28.6%</td>
<td>-23.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Memo: MFG</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total Orders</td>
<td>-3.4%</td>
<td>-8.0%</td>
<td>-9.4%</td>
<td>-57.9%</td>
<td>-63.9%</td>
<td>-50.1%</td>
<td>-46.2%</td>
<td>-32.0%</td>
<td>-28.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; E-13 Domestic MFG
orders</td>
<td>-3.9%</td>
<td>-5.9%</td>
<td>-8.4%</td>
<td>-52.8%</td>
<td>-56.1%</td>
<td>-46.9%</td>
<td>-40.8%</td>
<td>-28.6%</td>
<td>-23.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; E-13 Foreign MFG
orders</td>
<td>-7.3%</td>
<td>-7.1%</td>
<td>-10.3%</td>
<td>-64.4%</td>
<td>-64.0%</td>
<td>-56.2%</td>
<td>-45.5%</td>
<td>-37.2%</td>
<td>-28.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Countries:</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Germany (MFG):</td>
<td>-7.6%</td>
<td>-8.1%</td>
<td>-7.5%</td>
<td>-61.9%</td>
<td>-61.3%</td>
<td>-52.5%</td>
<td>-46.3%</td>
<td>-35.0%</td>
<td>-30.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; France (Ind):</td>
<td>-2.5%</td>
<td>-2.0%</td>
<td>-6.6%</td>
<td>-36.6%</td>
<td>-52.1%</td>
<td>-44.6%</td>
<td>-36.5%</td>
<td>-28.0%</td>
<td>-23.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Italy (Ind):</td>
<td>#N/A</td>
<td>-2.0%</td>
<td>-6.6%</td>
<td>#N/A</td>
<td>-47.2%</td>
<td>#N/A</td>
<td>-31.4%</td>
<td>#N/A</td>
<td>-18.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; UK (Engineering Ind):</td>
<td>-25.2%</td>
<td>26.1%</td>
<td>-11.9%</td>
<td>-52.3%</td>
<td>-33.0%</td>
<td>-39.7%</td>
<td>5.0%</td>
<td>-34.4%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
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U.S. Personal Spending IncreasesAgain, Modestly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326e.jpg" align="left" border="0" height="265" width="353">
If there is an enigmatic economy right now it is the UK&#8217;s. The
central bank is very worried about deflation and economic weakness. Yet
the last retail prices report showed inflation up sharply and the core
rate stubborn. While surveys of consumer activity and measures of
confidence are weak, Yr/Yr real retail sales excluding autos are up a
very solid and strong 5.6% and two months into the quarter they are up
at a 5.9% pace. 
 

Still, in February, retail sales fell by 1% in nominal terms
and 1.9% in real terms (ex autos). 
 

Retail sales have fallen in seven of the last 12 months. They
are down in four of the last six months and have risen in only one of
the last six months- hardly a picture of strength. The 1.5% rise in
nominal sales in January is an important factor keeping the current
growth rates firm. Just to complicated things, ex auto real retail
sales are up in Three of the past six months as well as in three of the
past four months. 
 

This strength in ex-auto sales is surprising. The UK economy
is suffering though severe financial problems as is the US. Sentiment
is down strongly. But the inflation figures do not want to settle down
and consumer spending simply finds ways to stay alive despite some
sputtering. It is hard to get a grip on the UK economy because of these
divergences. The inability of the government to sell as many bonds as
it tried to auction yesterday is another sign of unmoored expectations.
Inventors are having a hard time getting a grip on the economy and that
makes it hard for them to make investment decisions. I still think
weakness will enfold this economy and that the moves to stimulate are
the right ones, but for the moment, some unexpected readings of
strength are helping to support UK growth and to confuse investors. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">UK Real
and Nominal Retail Sales</th>
<th scope="col">Quarter</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>Yr Ago</td>
<td>2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Total</td>
<td>-1.0%</td>
<td>1.5%</td>
<td>0.0%</td>
<td>2.1%</td>
<td>-0.7%</td>
<td>0.5%</td>
<td>4.8%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food Bev &amp;
Tobacco</td>
<td>0.7%</td>
<td>0.6%</td>
<td>-0.7%</td>
<td>2.2%</td>
<td>5.3%</td>
<td>5.1%</td>
<td>5.7%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Clothing footwear</td>
<td>-3.0%</td>
<td>5.0%</td>
<td>1.0%</td>
<td>11.8%</td>
<td>-4.8%</td>
<td>-1.1%</td>
<td>3.1%</td>
<td>19.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Ex auto</td>
<td>-1.9%</td>
<td>0.8%</td>
<td>1.9%</td>
<td>3.2%</td>
<td>0.9%</td>
<td>0.5%</td>
<td>5.6%</td>
<td>5.9%</td>
</tr>
</tbody>
</table>
</body></html>

If there is an enigmatic economy right now it is the UK’s. The central bank is very worried about deflation and economic weakness. Yet the last retail prices report showed inflation up sharply and the core rate stubborn. While surveys [...]

UK Retail Sales Fall But Trend Holds Up

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
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.grey5{
	background-color:#b8b8b8;
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</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326c.jpg" width="353">
Labor market stress continues. Continuing claims for unemployment insurance rose to yet another record high of 5,560,000 and remained nearly double that of last March. The series dates back to 1966. The four-week average of continuing claims also rose to another record of 5,331,250. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
At the margin, there appears to be no let-up in the bleak employment picture. Initial claims for unemployment insurance rose to 652,000 which was near the series&#39; recent high. At 652,000 the figure was close to its highest since 1982 and it roughly equaled expectations.
The Labor Department indicated that the largest increases in initial claims for the week ending March 14 were in Tennessee (+1,394), Texas (+1,028), Rhode Island (+904), North Dakota (+857), and Connecticut (+522), while the largest decreases were in California (-8,555), Michigan (-7,523), Indiana (-7,475), Pennsylvania (-3,757), and Ohio (-3,397).
Though the latest level of continuing claims was a record, the labor force has grown as well, by nearly 30% over the last twenty years. Therefore, the insured rate of unemployment is not at a record high. It rose to 4.2% which was the highest since June of 1983. During the last ten years there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326d.jpg" width="353">
The highest insured unemployment rates in the week ending March 7 were in Michigan (7.8 percent), Oregon (7.6), Idaho (7.2), Wisconsin (6.8), Pennsylvania (6.5), Rhode Island (6.5), Nevada (6.2), Montana (6.0), Indiana (5.9), and Vermont (5.9).
The unemployment insurance claim data is available in Haver&#39;s WEEKLY database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><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>&nbsp;</th>
<th scope="col">03/21/09</th>
<th scope="col">03/14/09</th>
<th scope="col">03/07/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>652</td>
<td>644</td>
<td>657</td>
<td>77.7%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,560</td>
<td>5,438</td>
<td>96.1%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
</body>
</html>

Labor market stress continues. Continuing claims for unemployment insurance rose to yet another record high of 5,560,000 and remained nearly double that of last March. The series dates back to 1966. The four-week average of continuing [...]

U.S. Continuing Claims for Unemployment Insurance Reach Another Record High

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: March 2009

Jump to:

Commodity Prices Meander

Commodity Prices Meander

EMU Orders: Still Sinking Fast

Michigan Consumer Sentiment Improves As The Opinion Of Government Jumps

U.S. Personal Spending Increases Again, Modestly

U.S. Personal Spending IncreasesAgain, Modestly

UK Retail Sales Fall But Trend Holds Up

U.S. Continuing Claims for Unemployment Insurance Reach Another Record High