Tom Moeller

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The April end to the Federal government's $8,000 home-buyer
tax credit, like in March, caused new home sales to surge. <b>New
home sales jumped 14.8%</b> m/m to 504,000 following the upwardly
revised 29.9% advance during March. The latest level was the highest
since May 2008. The latest sales level greatly exceeded Consensus
expectations for 425,000 sales.</p>
<p>Price discounts likely helped sales during April. The median
home price fell nearly 10% m/m for a 9.5% y/y decline. Firmer sales
&amp; lower prices have been quite successful in lowering the
number of homes on the market to the lowest level in forty years.</p>
<p>At the current sales rate, the months' supply of unsold homes
dropped to 5.0 from its 2009 high of 12.1 months. However, despite all
this improvement,<b> it still took a near-record median 14.3
months to sell a new home in April</b>.</p>
<p><b>Central Bank Independence, Transparency, and
Accountability</b> is today's speech by Fed Chairman Ben S.
Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20100525a.htm">here</a>.</p>
</span>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526g.jpg" style="width: 312px; height: 265px;"></p>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>US
New Homes</b></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><b>Total Sales</b>
(SAAR, 000s)</td>
<td>504</td>
<td>439</td>
<td>338</td>
<td>47.8%</td>
<td>372</td>
<td>481</td>
<td>769</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>39</td>
<td>39</td>
<td>31</td>
<td>85.7</td>
<td>31</td>
<td>35</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>75</td>
<td>57</td>
<td>49</td>
<td>87.5</td>
<td>54</td>
<td>69</td>
<td>118</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>278</td>
<td>251</td>
<td>170</td>
<td>38.3</td>
<td>201</td>
<td>264</td>
<td>409</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>112</td>
<td>92</td>
<td>88</td>
<td>41.8</td>
<td>87</td>
<td>113</td>
<td>178</td>
</tr>
<tr>
<td class="firstcol"><b>Median Price</b>
(NSA, $)</td>
<td>$198,400</td>
<td>$219,600</td>
<td>$219,700</td>
<td>-9.5</td>
<td>214,500</td>
<td>230,408</td>
<td>243,742</td>
</tr>
</tbody>
</table>
</body></html>

The April end to the Federal government's $8,000 home-buyer tax credit, like in March, caused new home sales to surge. New home sales jumped 14.8% m/m to 504,000 following the upwardly revised 29.9% advance during March. The latest [...]

U.S. New Home Sales Soar With Pending Tax Credit Expiration

Robert Brusca

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>GFK&#8217;s confidence measure for Germany edged lower in June as
the ongoing Greek situation took a small toll on German optimism. Gfk&#8217;s
consumer confidence figure for June slipped to 3.5, a decrease on May's
revised 3.7, marking the end of the index's short 2-month up-streak.
According to the report, the key concern among German consumers is that
Greek rescue packages and the weakening euro could hamper the German
economy in its recovery.</p>
<p>The survey details recorded GFK&#8217;s fourth consecutive decline
in the propensity to buy index, and reversed half of prior month's
gains in the future salary expectations index. That index had recorded
the highest value since 2001 just last month.</p>
<p>Despite consumer concerns, German companies have not been
affected nor have they changed their business plans because of the
possibility of government debt increases resulting from Germany's
leadership of bailouts. Instead, German firms have actually benefited
in export competitiveness from a declining Euro; the macroeconomic
impact on the German budget has not been an issue.</p>
<p>Ironically the index and its supporting survey information
suggests that the net impact of Germany&#8217;s participation in the bailout
could be to get fiscally worried conservative German consumers to
cutback more on spending that already is weak while German firms pursue
a bonanza of opportunity abroad due to the euro&#8217;s weakening and their
improved competitiveness.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col"><b>Germany
Consumer Climate Survey GFK</b> </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td><b>Climate</b></td>
<td colspan="2"><b>Expecations</b></td>
<td><b>Propensity to Buy</b></td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td><b>Economic</b></td>
<td><b>Income</b></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Jun-10</td>
<td>3.5</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr>
<td class="firstcol">May-10</td>
<td>3.7</td>
<td>3.9</td>
<td>23.7</td>
<td>18.1</td>
</tr>
<tr>
<td class="firstcol">Apr-10</td>
<td>3.4</td>
<td>22.5</td>
<td>35.2</td>
<td>21.6</td>
</tr>
<tr>
<td class="firstcol">Mar-10</td>
<td>3.2</td>
<td>4.5</td>
<td>13.5</td>
<td>23.4</td>
</tr>
<tr>
<td class="firstcol">Feb-10</td>
<td>3.3</td>
<td>-5.6</td>
<td>12.0</td>
<td>24.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">Current</td>
<td style="font-weight: bold;" colspan="3">Lagged one month</td>
</tr>
<tr>
<td class="firstcol">Average</td>
<td>3.6</td>
<td>1.4</td>
<td>-2.8</td>
<td>-4.8</td>
</tr>
<tr>
<td class="firstcol">Max</td>
<td>9.1</td>
<td>69.5</td>
<td>35.2</td>
<td>64.4</td>
</tr>
<tr>
<td class="firstcol">Min</td>
<td>-3.5</td>
<td>-32.9</td>
<td>-24.5</td>
<td>-55.4</td>
</tr>
<tr>
<td class="firstcol">% range</td>
<td>55.6%</td>
<td>35.9%</td>
<td>80.7%</td>
<td>61.4%</td>
</tr>
<tr>
<td class="firstcol">Count%</td>
<td>44.7%</td>
<td>60.6%</td>
<td>93.6%</td>
<td>76.6%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">% range is
current
reading as a percentile of Hi/Low range</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Count 0s
current
reading ranked as a %-tile among all readings</td>
</tr>
</tbody>
</table>
</body></html>

GFK’s confidence measure for Germany edged lower in June as the ongoing Greek situation took a small toll on German optimism. Gfk’s consumer confidence figure for June slipped to 3.5, a decrease on May's revised 3.7, marking the end [...]

German Confidence Is Set Back Very Little By Greek Tragedy

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>No category of factory orders can influence the Commerce
Dept's monthly figures more than commercial aircraft. This has never
been more evident than in recent months. During April, overall durable
goods orders jumped 2.9%, while excluding the transportation sector
altogether, orders fell 1.0%. That follows a roughly unchanged level of
new durable orders during March and a 4.8% gain less transportation.
Nevertheless, the trend improvement in the new orders total has been
notable and part of the overall picture of factory sector improvement.
A 1.5% gain in April durable goods orders was the Consensus expectation.</p>
<p>An 81.2% rise (91.5% y/y) in orders for aircraft &amp;
parts was behind the gain in transportation sector orders. Economic
recovery and an aging fleet of planes caused orders for nondefense
aircraft to more-than-triple m/m and they've also tripled during the
last year. For the capital goods sector overall, April orders jumped
9.2% but less aircraft they fell 2.4%. Month-to-month volatility also
was notable for primary metals orders which fell 2.0%. (They've risen
55.0% during the last year.) Machinery orders also fell a sharp 5.9%
last month but they're up 24.2% y/y due to strength in four of the last
five months. April orders for electrical equipment were weak and fell
6.9% (+13.4% y/y) while computer orders fell 3.0% but they're up by
nearly one-half y/y.</p>
<p>Shipments of durable goods followed the gains in orders and
posted a 1.4% increase (8.8% y/y) after a 2.1% March rise. Shipments of
computers led the gain with an 8.0% increase (27.8% y/y) along with a
1.9% increase (5.5% y/y) in shipments of electrical equipment.
Machinery shipments fell 3.0% (+5.1% y/y) and primary metals shipments
slipped 0.2% m/m (+46.1% y/y).</p>
<p>Accumulation of inventories is bolstering the increase in
orders &amp; shipments. Durable goods inventories rose 0.7% (-5.4%
y/y) for the third month of firm increase. Nevertheless, inventories
remained well below past levels. Since December 2009 inventories have
risen 2.1% but levels remain lean after last year's 12.8% decline.
Finally, backlogs of durable goods orders gained 0.4% last month but
remained down 3.8% y/y.</p>
<p>The durable goods figures are available in Haver's <b>USECON
</b>database. The latest durable goods data reflected earlier
benchmark revisions.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526c.jpg" style="width: 312px; height: 265px;">
<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/USECON/@ED/@ED01/@ED0101/@ED0101.HTM"><b>NAICS Classification</b>
</a>(%)</th>
<th scope="col"><b><span>April</span></b></th>
<th scope="col"><small><span style="font-weight: bold; font-family: Verdana;">March</span></small></th>
<th scope="col"><b><span>February</span></b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>2.9</td>
<td>-0.0</td>
<td>0.5</td>
<td>18.9</td>
<td>-20.7</td>
<td>-9.0</td>
<td>9.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>-1.0</td>
<td>4.8</td>
<td>2.1</td>
<td>18.0</td>
<td>-18.4</td>
<td>-2.5</td>
<td>4.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>9.2</td>
<td>-6.8</td>
<td>9.0</td>
<td>36.8</td>
<td>-26.8</td>
<td>-12.6</td>
<td>17.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-2.4</td>
<td>6.5</td>
<td>3.0</td>
<td>21.4</td>
<td>-19.8</td>
<td>-4.2</td>
<td>5.3</td>
</tr>
</tbody>
</table>
</body></html>

No category of factory orders can influence the Commerce Dept's monthly figures more than commercial aircraft. This has never been more evident than in recent months. During April, overall durable goods orders jumped 2.9%, while [...]

U.S. Durable Goods Orders Soar With Aircraft

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>No category of factory orders can influence the Commerce
Dept's monthly figures more than commercial aircraft. This has never
been more evident than in recent months. During April, overall durable
goods orders jumped 2.9%, while excluding the transportation sector
altogether, orders fell 1.0%. That follows a roughly unchanged level of
new durable orders during March and a 4.8% gain less transportation.
Nevertheless, the trend improvement in the new orders total has been
notable and part of the overall picture of factory sector improvement.
A 1.5% gain in April durable goods orders was the Consensus expectation.</p>
<p>An 81.2% rise (91.5% y/y) in orders for aircraft &amp;
parts was behind the gain in transportation sector orders. Economic
recovery and an aging fleet of planes caused orders for nondefense
aircraft to more-than-triple m/m and they've also tripled during the
last year. For the capital goods sector overall, April orders jumped
9.2% but less aircraft they fell 2.4%. Month-to-month volatility also
was notable for primary metals orders which fell 2.0%. (They've risen
55.0% during the last year.) Machinery orders also fell a sharp 5.9%
last month but they're up 24.2% y/y due to strength in four of the last
five months. April orders for electrical equipment were weak and fell
6.9% (+13.4% y/y) while computer orders fell 3.0% but they're up by
nearly one-half y/y.</p>
<p>Shipments of durable goods followed the gains in orders and
posted a 1.4% increase (8.8% y/y) after a 2.1% March rise. Shipments of
computers led the gain with an 8.0% increase (27.8% y/y) along with a
1.9% increase (5.5% y/y) in shipments of electrical equipment.
Machinery shipments fell 3.0% (+5.1% y/y) and primary metals shipments
slipped 0.2% m/m (+46.1% y/y).</p>
<p>Accumulation of inventories is bolstering the increase in
orders &amp; shipments. Durable goods inventories rose 0.7% (-5.4%
y/y) for the third month of firm increase. Nevertheless, inventories
remained well below past levels. Since December 2009 inventories have
risen 2.1% but levels remain lean after last year's 12.8% decline.
Finally, backlogs of durable goods orders gained 0.4% last month but
remained down 3.8% y/y.</p>
<p>The durable goods figures are available in Haver's <b>USECON
</b>database. The latest durable goods data reflected earlier
benchmark revisions.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526c.jpg" style="width: 312px; height: 265px;">
<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/USECON/@ED/@ED01/@ED0101/@ED0101.HTM"><b>NAICS
Classification</b>
</a>(%)</th>
<th scope="col"><b><span>April</span></b></th>
<th scope="col"><small><span style="font-weight: bold; font-family: Verdana;">March</span></small></th>
<th scope="col"><b><span>February</span></b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>2.9</td>
<td>-0.0</td>
<td>0.5</td>
<td>18.9</td>
<td>-20.7</td>
<td>-9.0</td>
<td>9.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>-1.0</td>
<td>4.8</td>
<td>2.1</td>
<td>18.0</td>
<td>-18.4</td>
<td>-2.5</td>
<td>4.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>9.2</td>
<td>-6.8</td>
<td>9.0</td>
<td>36.8</td>
<td>-26.8</td>
<td>-12.6</td>
<td>17.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-2.4</td>
<td>6.5</td>
<td>3.0</td>
<td>21.4</td>
<td>-19.8</td>
<td>-4.2</td>
<td>5.3</td>
</tr>
</tbody>
</table>
<span id="articletitle">German Confidence Is Set Back Very
Little By Greek Tragedy</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> May 26, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>GFK&#8217;s confidence measure for Germany edged lower in June as
the ongoing Greek situation took a small toll on German optimism. Gfk&#8217;s
consumer confidence figure for June slipped to 3.5, a decrease on May's
revised 3.7, marking the end of the index's short 2-month up-streak.
According to the report, the key concern among German consumers is that
Greek rescue packages and the weakening euro could hamper the German
economy in its recovery.</p>
<p>The survey details recorded GFK&#8217;s fourth consecutive decline
in the propensity to buy index, and reversed half of prior month's
gains in the future salary expectations index. That index had recorded
the highest value since 2001 just last month.</p>
<p>Despite consumer concerns, German companies have not been
affected nor have they changed their business plans because of the
possibility of government debt increases resulting from Germany's
leadership of bailouts. Instead, German firms have actually benefited
in export competitiveness from a declining Euro; the macroeconomic
impact on the German budget has not been an issue.</p>
<p>Ironically the index and its supporting survey information
suggests that the net impact of Germany&#8217;s participation in the bailout
could be to get fiscally worried conservative German consumers to
cutback more on spending that already is weak while German firms pursue
a bonanza of opportunity abroad due to the euro&#8217;s weakening and their
improved competitiveness.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col"><b>Germany
Consumer Climate Survey GFK</b> </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td><b>Climate</b></td>
<td colspan="2"><b>Expecations</b></td>
<td><b>Propensity to Buy</b></td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td><b>Economic</b></td>
<td><b>Income</b></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Jun-10</td>
<td>3.5</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr>
<td class="firstcol">May-10</td>
<td>3.7</td>
<td>3.9</td>
<td>23.7</td>
<td>18.1</td>
</tr>
<tr>
<td class="firstcol">Apr-10</td>
<td>3.4</td>
<td>22.5</td>
<td>35.2</td>
<td>21.6</td>
</tr>
<tr>
<td class="firstcol">Mar-10</td>
<td>3.2</td>
<td>4.5</td>
<td>13.5</td>
<td>23.4</td>
</tr>
<tr>
<td class="firstcol">Feb-10</td>
<td>3.3</td>
<td>-5.6</td>
<td>12.0</td>
<td>24.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">Current</td>
<td style="font-weight: bold;" colspan="3">Lagged
one month</td>
</tr>
<tr>
<td class="firstcol">Average</td>
<td>3.6</td>
<td>1.4</td>
<td>-2.8</td>
<td>-4.8</td>
</tr>
<tr>
<td class="firstcol">Max</td>
<td>9.1</td>
<td>69.5</td>
<td>35.2</td>
<td>64.4</td>
</tr>
<tr>
<td class="firstcol">Min</td>
<td>-3.5</td>
<td>-32.9</td>
<td>-24.5</td>
<td>-55.4</td>
</tr>
<tr>
<td class="firstcol">% range</td>
<td>55.6%</td>
<td>35.9%</td>
<td>80.7%</td>
<td>61.4%</td>
</tr>
<tr>
<td class="firstcol">Count%</td>
<td>44.7%</td>
<td>60.6%</td>
<td>93.6%</td>
<td>76.6%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">% range is
current
reading as a percentile of Hi/Low range</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Count 0s
current
reading ranked as a %-tile among all readings</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. New Home Sales Soar With
Pending Tax Credit Expiration</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> May 26, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The April end to the Federal government's $8,000 home-buyer
tax credit, like in March, caused new home sales to surge. <b>New
home sales jumped 14.8%</b> m/m to 504,000 following the upwardly
revised 29.9% advance during March. The latest level was the highest
since May 2008. The latest sales level greatly exceeded Consensus
expectations for 425,000 sales.</p>
<p>Price discounts likely helped sales during April. The median
home price fell nearly 10% m/m for a 9.5% y/y decline. Firmer sales
&amp; lower prices have been quite successful in lowering the
number of homes on the market to the lowest level in forty years.</p>
<p>At the current sales rate, the months' supply of unsold homes
dropped to 5.0 from its 2009 high of 12.1 months. However, despite all
this improvement,<b> it still took a near-record median 14.3
months to sell a new home in April</b>.</p>
<p><b>Central Bank Independence, Transparency, and
Accountability</b> is today's speech by Fed Chairman Ben S.
Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20100525a.htm">here</a>.</p>
</span>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526g.jpg" style="width: 312px; height: 265px;"></p>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>US
New Homes</b></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><b>Total Sales</b>
(SAAR, 000s)</td>
<td>504</td>
<td>439</td>
<td>338</td>
<td>47.8%</td>
<td>372</td>
<td>481</td>
<td>769</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>39</td>
<td>39</td>
<td>31</td>
<td>85.7</td>
<td>31</td>
<td>35</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>75</td>
<td>57</td>
<td>49</td>
<td>87.5</td>
<td>54</td>
<td>69</td>
<td>118</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>278</td>
<td>251</td>
<td>170</td>
<td>38.3</td>
<td>201</td>
<td>264</td>
<td>409</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>112</td>
<td>92</td>
<td>88</td>
<td>41.8</td>
<td>87</td>
<td>113</td>
<td>178</td>
</tr>
<tr>
<td class="firstcol"><b>Median Price</b>
(NSA, $)</td>
<td>$198,400</td>
<td>$219,600</td>
<td>$219,700</td>
<td>-9.5</td>
<td>214,500</td>
<td>230,408</td>
<td>243,742</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. Mortgage Refinance
Applications Surge With Lower Rates</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> May 26, 2010 </span>
<span id="articletext">
<p></p>
<p>Lower interest rates are encouraging mortgage refinancings,
but not so much new home purchases. The Mortgage Bankers Association
reported that mortgage applications jumped last week and for May
they've risen 11.5% from April. The May increase, however, just made up
an April decline.</p>
<p>Mortgage <i>refinancings</i> jumped for the third
consecutive week to the highest level since last October. Conversely,
applications to <i>purchase</i> a home dropped sharply
with the expiration of the Federal tax credit for home purchase. During
the last ten years there has been a 51% correlation between the y/y
change in purchase applications and the change in new plus existing
single family home sales. The correlation has lessened recently.</p>
<p>The effective fixed interest rate on conventional 15-year
mortgages averaged 4.50% during the latest week, the cycle low. For
30-year mortgages the rate also fell to an average 5.02%. Interest
rates on fixed 15-year and 30-year mortgages are closely correlated
(near-90%) with the rate on 10-year Treasury securities. Rates on
adjustable one-year mortgages rose during the month to 6.93%, its
highest since mid-2008.</p>
</span>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526h.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526i.jpg" style="width: 312px; height: 265px;"></p>
<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/SURVEYW/@S5/@S5.HTM%22" style="color: black;"><b>BA Mortgage Applications (SA,
3/16/90=100)</b></a></th>
<th scope="col"><b>05/21/10</b></th>
<th scope="col"><b>05/14/10</b></th>
<th scope="col"><b>05/07/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>633.5</td>
<td>569.2</td>
<td>578.1</td>
<td>-19.4%</td>
<td>736.4</td>
<td>642.9</td>
<td>652.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>185.7</td>
<td>192.1</td>
<td>263.6</td>
<td>-27.6</td>
<td>263.5</td>
<td>345.4</td>
<td>424.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>3,257.4</td>
<td>2,783.0</td>
<td>2,430.8</td>
<td>-16.3</td>
<td>3,509.2</td>
<td>2,394.1</td>
<td>1,997.9</td>
</tr>
<tr>
<td class="firstcol">15-Year Mortgage Effective
Interest Rate (%)</td>
<td>4.50</td>
<td>4.53</td>
<td>4.52</td>
<td>4.82 (05/09)</td>
<td>4.85</td>
<td>5.9</td>
<td>6.2</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Durable Goods Orders SoarWith Aircraft

Louise Curley

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<p></p>
<p>
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525k.jpg" height="265" width="314"> <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525l.jpg" height="265" width="314"></p>
<p>Just how the
European consumers and producers are reacting to the on going financial
problems of the Euro Area can be inferred, to some degree, from
measures of confidence. Two of these were published today--Consumer
Confidence in Italy and Producer Confidence in the Netherlands.</p>
<p> In
Italy, the ISAE (Instituto di Studi e Analisi Economica) index
(1980=100) of consumer confidence fell in May to 105.4 from 107.9 in
April.&nbsp; The index is now down 7.2% from the recent peak of
113.6 in December, 2009.&nbsp; The overall indicator is based on
the consumers' appraisals of the general economic situation, one's
personal economic situation, the current situation and the future
situation.&nbsp; Clearly confidence of the Italian consumers has
been shaken by current events.&nbsp; The index for the general
economic situation was reduced by 5.8% in May and the index for the
future situation by 3.8%.&nbsp; The appraisal of the future
situation is now close to the all time low reached in December
2008.&nbsp; The indexes for one's personal economic situation and
the current situation were reduced by only 0.3% and 0.5% respectively.
The four underlying appraisals are shown in the first chart.</p>
<p>In
contrast to the Italian consumer, the Dutch producer has become less
pessimistic in May than he was in April as can be seen in the second
chart.&nbsp; The measure of producer confidence published by the
Central Bureau of Statistics in the Netherlands is in the form of a
percent balance between optimists and pessimists.&nbsp; Producer
confidence in the Netherlands has not been strong.&nbsp; Ever since
August 2008, the pessimists have outweighed the optimists.&nbsp; A
peak excess of pessimists, 23.5%, was reached in February,
2009.&nbsp; Since then there has been a fairly steady decline in
the pessimists but it was only in May of this year that there was an
excess, though a small one, 0.4%, of optimists over pessimists. One
factor that may account for some of the difference in the reactions of
consumers and producers to the current financial turmoil is the
declinein the euro.&nbsp; A lower euro is good for exports and
hence for producers, while a lower euro makes imports more expensive
and hence is bad for consumers.</p>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col"><b>May 10&nbsp;</b></th>
<th scope="col"><b>Apr 10&nbsp;</b></th>
<th scope="col"><b>Mar 10</b></th>
<th scope="col"><b>Feb 10</b></th>
<th scope="col"><b>Jan 10</b></th>
<th scope="col"><b>Dec 09</b></th>
<th scope="col"><b>Nov 09</b></th>
<th scope="col"><b>Oct 09</b></th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Italy: Consumer
Confidence (1980=100)</td>
<td>105.4</td>
<td>107.9</td>
<td>106.3</td>
<td>107.6</td>
<td>111.6</td>
<td>113.6</td>
<td>112.7</td>
<td>111.7</td>
</tr>
<tr>
<td class="firstcol">Neth: Producer
Confidence (% Balance)</td>
<td>0.4</td>
<td>-1.4</td>
<td>-3.5</td>
<td>-5.0</td>
<td>-6.5</td>
<td>-8.1</td>
<td>-5.0</td>
<td>-7.2</td>
</tr>
</tbody>
</table>
</span>
</body></html>

Just how the European consumers and producers are reacting to the on going financial problems of the Euro Area can be inferred, to some degree, from measures of confidence. Two of these were published today--Consumer Confidence in [...]

Italian Consumers More Pessimistic But Dutch Producers A Little Less Pessimistic

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525m.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>EMU order surged in March climbing at a 5.2% month to month
after rising by 1.9% M-o-M in February. The three months growth rate is
at 24.5% up from 17.3% over six months and 19.2% over 12-months. Orders
strength is being lead by &#8216;foreign orders&#8217; as that series is up a 33%
annualized rate over three months compared to a 9.5% pace for domestic
orders. But IN March domestic orders pulled ahead rising by 9.4% in the
month compared to again of 6.2% for foreign orders.</p>
<p>German and French orders were up very strongly in March as
Italian orders rose but not as briskly. German orders are building to a
hectic pace rising at a three-month pace of just under 60% at an annual
rate while in France the three-month pace is -22%. Italian orders are
off at a three month annualized rate of -8.7%.</p>
<p>Manufacturing in the zone is seeing all sorts of divergences
across countries right now. It is curious that concerns about Europe
are sweeping across the continent as some excellent economic activity
statistics are being posted. As of March the evidence is that the
Euro-economy was still building a head of steam although there are
differences across EMU member countries to be sure. Once again we get
evidence that as financial sector worries have mounted the euro-economy
is being underpinned by an event stronger economic recovery than had
been appreciated.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col"><b>Euro-Area-16
and UK Industrial Orders</b> </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Saar except m/m</td>
<td style="font-weight: bold;" colspan="3">Mo/Mo</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
</tr>
<tr class="grey3">
<td style="font-weight: bold;" class="firstcol">Euro-Area Overview</td>
<td style="font-weight: bold;">Mar<br>10</td>
<td style="font-weight: bold;">Feb<br>10</td>
<td style="font-weight: bold;">Jan<br>10</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">6mo</td>
<td style="font-weight: bold;">6mo</td>
<td style="font-weight: bold;">12mo</td>
<td style="font-weight: bold;">12mo</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>5.2%</td>
<td>1.9%</td>
<td>-1.5%</td>
<td>24.5%</td>
<td>7.0%</td>
<td>17.3%</td>
<td>10.2%</td>
<td>19.2%</td>
<td>12.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;E-16
Domestic MFG orders</td>
<td>9.4%</td>
<td>1.7%</td>
<td>-8.1%</td>
<td>9.5%</td>
<td>-5.2%</td>
<td>5.4%</td>
<td>2.2%</td>
<td>11.7%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;E-16
Foreign MFG orders</td>
<td>6.2%</td>
<td>6.8%</td>
<td>-5.1%</td>
<td>33.9%</td>
<td>20.3%</td>
<td>25.7%</td>
<td>29.1%</td>
<td>26.5%</td>
<td>20.9%</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Countries:</td>
<td style="font-weight: bold;">Mar<br>10</td>
<td style="font-weight: bold;">Feb<br>10</td>
<td style="font-weight: bold;">Jan<br>10</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">6mo</td>
<td style="font-weight: bold;">6mo</td>
<td style="font-weight: bold;">12mo</td>
<td style="font-weight: bold;">12mo</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Germany
(MFG):</td>
<td>5.7%</td>
<td>0.5%</td>
<td>5.5%</td>
<td>57.7%</td>
<td>17.5%</td>
<td>23.4%</td>
<td>16.1%</td>
<td>27.0%</td>
<td>24.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;France(Ind):</td>
<td>6.5%</td>
<td>-1.0%</td>
<td>-10.9%</td>
<td>-22.4%</td>
<td>12.5%</td>
<td>2.2%</td>
<td>3.1%</td>
<td>10.6%</td>
<td>-5.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Italy
(Ind):</td>
<td>1.0%</td>
<td>-0.4%</td>
<td>-2.8%</td>
<td>-8.7%</td>
<td>6.2%</td>
<td>12.7%</td>
<td>25.2%</td>
<td>9.1%</td>
<td>5.5%</td>
</tr>
</tbody>
</table>
</body></html>

EMU order surged in March climbing at a 5.2% month to month after rising by 1.9% M-o-M in February. The three months growth rate is at 24.5% up from 17.3% over six months and 19.2% over 12-months. Orders strength is being lead by [...]

EMU Order Growth Rates Stay Strong In Manufacturing

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Conference Board indicated that consumer confidence was
unshaken in early May by U.S. stock market declines nor by European
market turmoil. Their consumer confidence index rose 9.7% m/m to 63.3,
its highest level since March 2008. The gain outpaced the Consensus
expectation for a rise to 59.0. During the last ten years there has
been an 82% correlation between the level of consumer confidence and
the y/y change in real consumer spending. The Conference Board data can
be found in Haver's <b>CBDB</b> database.</p>
<p>The expectations component of confidence improved the most m/m
to its highest level since August 2007. Improved expectations for
business conditions led the gain while expectations for employment and
income rose to lesser extents. Consumers expect the inflation rate in
twelve months to be 5.3% as they did last month and that remained down
from last year's high of 7.7%. Interest rates in twelve months were
expected to be higher by a lesser 54.1% of respondents but a slightly
increased 12.5% expected rates to fall. A lessened 31.7% of respondents
expected stock prices to rise.</p>
<p>Consumers' assessment of the present situation increased 7.1%
m/m and May was improved by one-half from December's low. Jobs were
seen as hard to get by a reduced 43.6% of respondents but jobs were
seen as plentiful by only 4.6%. That was up just slightly from the
series' historic low reached in November. Also improved was the
percentage of respondents who saw business conditions as good. The
percentage of consumers who thought business conditions were bad fell
to 39.3%, off more-than ten points from its peak during the recession.</p>
<p>A reduced 1.9% of those surveyed plan to buy a home during the
next six months. Also down slightly m/m to 26.2% were those who plan to
buy a major appliance, versus 30.9% who planned to buy one back in
2007. An improved 6.0% plan to buy an automobile versus 6.0% in 2007
and a greater 2.8% plan to buy a new one, just off the series' historic
low.</p>
<p><b>The Shape of Things to Come</b> from the
Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2010/el2010-15.html">here</a>.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525i.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525j.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><strong>Conference
Board&nbsp;(SA, 1985=100)</strong></th>
<th scope="col"><strong>May</strong></th>
<th scope="col"><strong>April</strong></th>
<th scope="col"><strong>March</strong></th>
<th scope="col"><strong>y/y %</strong></th>
<th scope="col"><strong>2009</strong></th>
<th scope="col"><strong>2008</strong></th>
<th scope="col"><strong>2007</strong></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><strong>Consumer
Confidence Index</strong></td>
<td>63.3</td>
<td>57.7</td>
<td>52.3</td>
<td>15.5</td>
<td>45.2</td>
<td>57.9</td>
<td>103.4</td>
</tr>
<tr>
<td class="firstcol"><strong>&nbsp;
Present Situation</strong></td>
<td>30.2</td>
<td>28.2</td>
<td>25.2</td>
<td>1.7</td>
<td>24.0</td>
<td>69.9</td>
<td>128.8</td>
</tr>
<tr class="odd">
<td class="firstcol"><strong>&nbsp;
Expectations</strong></td>
<td>85.3</td>
<td>77.4</td>
<td>70.4</td>
<td>19.3</td>
<td>59.3</td>
<td>50.0</td>
<td>86.4</td>
</tr>
</tbody>
</table>
</body></html>

The Conference Board indicated that consumer confidence was unshaken in early May by U.S. stock market declines nor by European market turmoil. Their consumer confidence index rose 9.7% m/m to 63.3, its highest level since March 2008. [...]

U.S. Consumer Confidence Improves To Highest Since 2008

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<br>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The coming summer driving season hasn't helped U.S. gasoline
prices as they've dipped from recent highs. Petroleum prices generally
weakened with evidence that forward economic momentum, globally, has
lost steam. Those worries lowered the pump price of <b>regular
gasoline </b>to $2.79 last week yet prices remained up more than
three-quarters since the December 2008 low. Yesterday the spot market
price for a gallon of regular gasoline fell further from last week's
average. The figures are reported by the U.S. Department of Energy and
can be found in Haver's <b>WEEKLY &amp; DAILY </b>databases.</p>
<p>Lower crude oil costs have very much reflected these concerns
over the worldwide economic recovery. The average price for a barrel of
light sweet crude (WTI) fell last week to $69.02 versus the recent high
of $84.23 averaged during April. Yesterday, crude prices fell further
to $66.88 per barrel.</p>
<p>Demand for gasoline hasn't yet much reflected the prospects
for economic weakness. It rose 1.6% last week versus one year ago. That
compares to a 3.0% decline in early-February. The demand for residual
fuel oil rose a lesser 7.7% and distillate demand surged 9.3% y/y.
That's improved from a 12.3% decline during February. Inventories of
crude oil and petroleum products improved into May but still were up
just a modest 0.2% from one year ago.</p>
<p>U.S. natural gas prices strengthened last week to an average
$4.25 per mmbtu (2.9% y/y). Prices reached a high of $6.50 early in
January. Nevertheless, prices remained nearly double the September low.</p>
<p>The energy price data can be found in Haver's <b>WEEKLY
</b>database while the daily figures are in <b>DAILY</b>.
The gasoline demand figures are in <b>OILWKLY</b>.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM"><b>Weekly Prices</b></a></th>
<th scope="col"><b>05/24/10</b></th>
<th scope="col"><b>05/17/10</b></th>
<th scope="col"><b>05/10/10</b></th>
<th scope="col"><b>y/y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.79</td>
<td>2.86</td>
<td>2.91</td>
<td>14.4%</td>
<td>2.35</td>
<td>3.25</td>
<td>2.80</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>69.02</td>
<td>74.97</td>
<td>80.22</td>
<td>14.1%</td>
<td>61.39</td>
<td>100.16</td>
<td>72.25</td>
</tr>
<tr class="odd">
<td class="firstcol">Natural Gas Price ($/mmbtu)</td>
<td>4.25</td>
<td>4.20</td>
<td>3.96</td>
<td>12.9%</td>
<td>3.95</td>
<td>8.88</td>
<td>6.97</td>
</tr>
</tbody>
</table>
</body></html>

The coming summer driving season hasn't helped U.S. gasoline prices as they've dipped from recent highs. Petroleum prices generally weakened with evidence that forward economic momentum, globally, has lost steam. Those worries lowered [...]

U.S. Gasoline Prices Fall To Lowest Since March

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: May 2010

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