Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929a.jpg" align="right" border="0" height="265" width="353">
Firmer
readings on home sales have given a lift to home prices. During July
the S&amp;P/Case-Shiller Home Price Composite
Index of twenty metro-markets rose 1.2% from June and that was the
firmest gain since late-2005. The monthly increase eased the y/y drop
to 13.3%, less than expected. Still, prices were down by
nearly one-third since the peak in May 2006. The July gain left prices
down less y/y than the expected 14.2%. Not seasonally adjusted prices
were even stronger m/m and posted a 1.6% increase after a 1.4% June
gain. The Case-Shiller index of 20 U.S. cities and their surrounding
areas is value-weighted. A greater index weight is assigned to more
expensive homes and the series dates back only to 2001. The
S&amp;P/Case-Shiller home price series can be found in Haver's USECON
database and the city data highlighted below is in the REGIONAL
database. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929b.jpg" align="right" border="0" height="265" width="353">
Here is a <a href="http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_092955.pdf">
link</a>&nbsp;to the latest press release. An overview of the
S&amp;P/Case-Shiller home price series can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.·
The Case-Shiller composite index of home prices in 10 metropolitan
areas, which has a longer history and dates back to 1987, also firmed
last month by 1.3% (-12.8% y/y). This measure also was down by nearly
one-third since the 2006 peak.Less Weak
Regions:&nbsp;&nbsp;Home prices in some areas of the
country have firmed lately though they remain down year-to-year.&nbsp;
In Cleveland, Ohio (-1.4% y/y) and in Dallas (-1.6% y/y)
prices rose for the fourth consecutive month. Prices in Denver rose for
their fifth month (-3.0% y/y). Boston prices also were higher during
the July (-5.0% y/y) while in Chicago home prices were quite strong m/m
and rose 2.1% (-14.2% y/y). In New York prices ticked up 0.9% m/m
(-10.4% y/y) while in Charlotte, North Carolina prices were roughly
unchanged (-9.0% y/y.)<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929c.jpg" align="right" border="0" height="265" width="353">
Weakest Regions: Though
home prices in Phoenix, Arizona rose 1.2% m/m they remained off 28.5%
y/y. Home prices in Las Vegas, Nevada continued their rapid rate of
decline with a 1.9% m/m drop (-31.4% y/y) and also were down by roughly
one-half from their peak. Home prices in Miami edged up (-21.2% y/y
while home prices in Los Angeles also firmed (-14.9% y/y). In Tampa,
ticked higher for the second month but remained off 18.5% y/y. In
Detroit, the monthly rate of price decline also eased considerably
(-24.7% y/y) but prices were off by early one-half from the
peak.&nbsp;In San Francisco prices firmed for the second straight
month and that eased the y/y decline to 17.9%.The Credit
Crisis and Cycle-Proof Regulation from the Federal Reserve
Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/09/09/part1/Rajan.pdf">
here.</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (SA, Jan 00 = 100)</th>
<th scope="col">July</th>
<th scope="col">June</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>
<td class="firstcol">20 City Composite
Index</td>
<td>143.05</td>
<td>141.42</td>
<td>-13.3%</td>
<td>-15.8%</td>
<td>-3.8%</td>
<td>7.6%</td>
</tr>
</tbody>
</table>
</body></html>

Firmer readings on home sales have given a lift to home prices. During July the S&P/Case-Shiller Home Price Composite Index of twenty metro-markets rose 1.2% from June and that was the firmest gain since late-2005. The monthly [...]

Case-Shiller Home Price Index Posts Largest Monthly Increase Since 2005

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929a.jpg" align="right" border="0" height="265" width="353">Firmer
readings on home sales have given a lift to home prices. During July
the S&amp;P/Case-Shiller Home Price Composite
Index of twenty metro-markets rose 1.2% from June and that was the
firmest gain since late-2005. The monthly increase eased the y/y drop
to 13.3%, less than expected. Still, prices were down by
nearly one-third since the peak in May 2006. The July gain left prices
down less y/y than the expected 14.2%. Not seasonally adjusted prices
were even stronger m/m and posted a 1.6% increase after a 1.4% June
gain.
 The Case-Shiller index of 20 U.S. cities and their
surrounding
areas is value-weighted. A greater index weight is assigned to more
expensive homes and the series dates back only to 2001. The
S&amp;P/Case-Shiller home price series can be found in Haver's USECON
database and the city data highlighted below is in the REGIONAL
database. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929b.jpg" align="right" border="0" height="265" width="353">
Here is a <a href="http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_092955.pdf">
link</a>&nbsp;to the latest press release. An overview of the
S&amp;P/Case-Shiller home price series can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.·
The Case-Shiller composite index of home prices in 10 metropolitan
areas, which has a longer history and dates back to 1987, also firmed
last month by 1.3% (-12.8% y/y). This measure also was down by nearly
one-third since the 2006 peak.
Less Weak
Regions:&nbsp;&nbsp;Home prices in some areas of the
country have firmed lately though they remain down year-to-year.&nbsp;
In Cleveland, Ohio (-1.4% y/y) and in Dallas (-1.6% y/y)
prices rose for the fourth consecutive month. Prices in Denver rose for
their fifth month (-3.0% y/y). Boston prices also were higher during
the July (-5.0% y/y) while in Chicago home prices were quite strong m/m
and rose 2.1% (-14.2% y/y). In New York prices ticked up 0.9% m/m
(-10.4% y/y) while in Charlotte, North Carolina prices were roughly
unchanged (-9.0% y/y.)
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929c.jpg" align="right" border="0" height="265" width="353">Weakest
Regions: Though
home prices in Phoenix, Arizona rose 1.2% m/m they remained off 28.5%
y/y. Home prices in Las Vegas, Nevada continued their rapid rate of
decline with a 1.9% m/m drop (-31.4% y/y) and also were down by roughly
one-half from their peak. Home prices in Miami edged up (-21.2% y/y
while home prices in Los Angeles also firmed (-14.9% y/y). In Tampa,
ticked higher for the second month but remained off 18.5% y/y. In
Detroit, the monthly rate of price decline also eased considerably
(-24.7% y/y) but prices were off by early one-half from the
peak.&nbsp;In San Francisco prices firmed for the second straight
month and that eased the y/y decline to 17.9%.
The Credit
Crisis and Cycle-Proof Regulation from the Federal Reserve
Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/09/09/part1/Rajan.pdf">
here.</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (SA, Jan 00 = 100)</th>
<th scope="col">July</th>
<th scope="col">June</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>
<td class="firstcol">20 City Composite
Index</td>
<td>143.05</td>
<td>141.42</td>
<td>-13.3%</td>
<td>-15.8%</td>
<td>-3.8%</td>
<td>7.6%</td>
</tr>
</tbody>
</table>

 Weekly Gasoline Prices Fall To
Lowest Level In One Month 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 29, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929d.jpg" align="right" border="0" height="265" width="353">The pump
price for regular gasoline fell last week to the lowest
level since late-July. At an average $2.50 per gallon the price dropped
a nickel from the prior week and may have broken out of the sideways
pattern since early-June. These prices compare to the December low of
$1.61. Yesterday, prices fell further. The wholesale gasoline price was
down to $1.65 per gallon. Prices had reached a high in early-August of
$2.03. The figures are reported by the U.S. Department of Energy and
can be found in Haver's WEEKLY &amp; DAILY databases.
During August, the consumer price index for gasoline recouped
the July
decline with a not seasonally adjusted 3.3% increase. Seasonally
adjusted gas prices were quite firm and rose 9.1% m/m, up 40.3% YTD.
 Crude
oil<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929e.jpg" align="right" border="0" height="265" width="353">
prices have led the decline in refined product prices.
Light sweet crude oil prices (WTI) fell to $68.41 per barrel, though
that still was up from the December low of $32.37. Yesterday, the spot
market price for light sweet crude oil fell further to $66.84 per
barrel versus a daily high of $71.55 last week.
The demand for
gasoline continued to improve through mid-month. The y/y rise of 1.1%
was the first meaningful positive comparison since early-2007. Demand
for residual fuel oil slacked off from its earlier strength and fell
5.1% y/y while distillate demand is off 13.2% y/y. Finally, oil remains
plentiful as evidenced by a 16.5% y/y rise in inventories of crude oil
&amp; petroleum products. Inventories of gasoline recently have
surged&nbsp; and are up 19.2% versus last year. The figures on
crude oil production and inventories are available in Haver's OILWKLY
database.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929f.jpg" align="right" border="0" height="265" width="353">
Natural gas prices increased again last week
to an average of $3.48 per mmbtu (-54.9% y/y) but they remained down by
three-quarters from the high reached in early-July of last year of
$13.19/mmbtu. Yesterday prices were up from last week's level at
$3.54/mmbtu.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">09/28/09</th>
<th scope="col">09/21/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.50</td>
<td>2.55</td>
<td>-31.2%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>68.41</td>
<td>71.36</td>
<td>-37.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>

 U.S. Consumer Confidence Moves
Sideways After Spring Bounce 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 29, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929g.jpg" align="right" border="0" height="265" width="353">
The Conference Board indicated that consumer confidence during
September dipped from August. Though both figures were up sharply from
the February low, the trend in the series has been roughly sideways
since May. The Conference Board data can be found in Haver's CBDB
database.
During the last ten years there has been an 86% correlation
between the level of consumer confidence and the y/y change in real
consumer spending.
Consumers' assessment of the current economic conditions fell
again this month and remained near the historic low. It remained off by
almost two-thirds from one year earlier. Jobs were seen as hard to get
by an increased 47.0% of respondents and jobs were seen as plentiful by
3.4% which was near the series' historic low. Business conditions were
seen as good by just 8.7% and that also was near the series' low.
Consumers who thought business conditions were bad rose slightly to
46.3%. While off somewhat from its high the reading still near the
highest since 1983.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929h.jpg" align="right" border="0" height="265" width="353">
The expectations component of confidence slipped from August
but the index remained near the highest level since late-2007. The
percentage of respondents expecting business conditions to improve
slipped to 21.3% though that remained near the highest level since
2004. A much reduced 15.0% expected conditions to worsen. That was off
from the recent February high of 40.7%. An improved 17.9% of
respondents expected economic improvement to generate more jobs, more
than double the percentage at the recent low.
Expectations for the inflation rate in twelve months fell back
to 5.2%, the lowest level since 2007 and down from last year's high of
7.7%. Interest rates in twelve months were expected to be higher by
48.8% of respondents, while 14.8% expected rates to fall. A greatly
increased 35.4% of respondents expected stock prices to rise.
Consumers continued to manage their spending plans cautiously.
Just 2.3% plan to buy a home during the next six months while 23.8%
plan to buy a major appliance. That's versus 30.9% back in 2007. Only
4.4% plan to buy an automobile versus 6.0% in 2007. Just 2.1% plan to
buy a new one.
Is The Financial Crisis Over? A Yield Spread
Perspective from the Federal Reserve Bank of St. Louis is
available <a href="http://research.stlouisfed.org/publications/es/09/ES0940.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board &nbsp;(SA, 1985=100)</th>
<th scope="col">September</th>
<th scope="col">August</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">Consumer
Confidence Index</td>
<td>53.1</td>
<td>54.5</td>
<td>-13.5</td>
<td>57.9</td>
<td>103.4</td>
<td>105.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>22.7</td>
<td>25.4</td>
<td>-62.8</td>
<td>69.9</td>
<td>128.8</td>
<td>130.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>73.3</td>
<td>73.8</td>
<td>19.2</td>
<td>50.0</td>
<td>86.4</td>
<td>89.7</td>
</tr>
</tbody>
</table>

 Confidence Improving in the Euro
Area: Recession Ending? 
by <a href="/comment/Curley.html">Louise
Curley</a> September 29, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929i.jpg" align="right" border="0">Eurostat
reported today that its economic sentiment indicator
(ESI) for September rose to 82.8 from 80.8 in August. The measure has
now risen in the last five months from the low of 64.6 reached in
March. Although it is still below its long term average of 100, the
improvement that has taken place in the indicator suggests that
economic activity in third quarter is likely to be positive for the
Euro area as a whole. The attached chart of the month to month changes
in the ESI and the quarter to quarter changes in GDP shows that the
change in the ESI is a good predictor of subsequent changes in GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929j.jpg" align="right" border="0">
Another indicator of rising sentiment in the Euro Area is the
"EuroCOIN" indicator that was released a few days ago. This is a
monthly indicator of GDP that, according to its authors, the Bank of
Italy in collaboration with the Centre for Economic Policy Research, is
"a real-time estimate of underlying trend of GDP. i.e. growth adjusted
for short term fluctuations." The EuroCOIN indicator has been rising
since January of this year and was slightly positive at 0.07 in
September, the first time it was positive since June 2008. The second
chart compares the EuroCOIN indicator with the changes in real GDP and
like the ESI suggests an ending of the recession in the third quarter
for the Euro Area as a whole.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">Apr 09&nbsp;</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">Feb 09 </th>
<th scope="col"> Jan 09 </th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Eurostat Economic Sentiment
Indicator (CSI)</td>
<td>82.8</td>
<td>80.8</td>
<td>76.0</td>
<td>73.2</td>
<td>70.2</td>
<td>9.73</td>
<td>64.6</td>
<td>65.3</td>
<td>67.2</td>
</tr>
<tr>
<td class="firstcol">EuroCOIN</td>
<td>0.07</td>
<td>-0.21</td>
<td>-0.42</td>
<td>-0.61</td>
<td>-0.88</td>
<td>-1.09</td>
<td>-1.22</td>
<td>-1.27</td>
<td>-1.21</td>
</tr>
</tbody>
</table>
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Case-Shiller Home Price IndexPosts Largest Monthly Increase Since 2005

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928c.jpg" align="right" border="0" height="265" width="353">
Along with the other Baltics, Estonia and Latvia, Lithuania,
having pegged its currency to the Euro has been unable to devalue its
currency to gain a competitive advantage. Instead it has been forced to
deflate its economy with the result that it has suffered one of the
most severe recessions in the European Union. Real Gross Domestic
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928d.jpg" align="right" border="0" height="265" width="353">
Product was down 13.4% from a year ago in the first quarter of this
year and was down 20.2% in the second quarter, as shown in the first
chart. The Central Bank Governor, Reinoldijus Sarkinas, reported
yesterday that the economy is close to bottoming out and could see some
growth next year, given positive external conditions. The one bright
spot in the Lithuanian economy has been the improvement in the balance
of payments in goods and services, as shown in the second chart..Data released today on
retail sales show that although sales in August are 19.6% below a year
ago, they are slightly below the peak decline of 21.1%, as can be seen
in the third chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928e.jpg" align="right" border="0" height="265" width="353">
While not particularly encouraging, the decline is
not getting worse. The July data on manufacturing new orders are
somewhat more encouraging. While domestic orders have fallen more than
foreign order, they appear to be recovering faster than the foreign
orders as shown in the fourth chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">APR 09&nbsp;</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">FEB 09 </th>
<th scope="col"> Jan 09 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Retail Trace ex motor vehicles
and motorcycles&nbsp;&nbsp;</td>
<td>-19.6</td>
<td>-19.6</td>
<td>-19.2</td>
<td>-19.8</td>
<td>-18.4</td>
<td>-21.1</td>
<td>-20.0</td>
<td>-16.2</td>
</tr>
<tr>
<td class="firstcol"> Manufacture 's New
Orders</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; Domestic&nbsp;
(y/y %)</td>
<td>&nbsp;</td>
<td>-38.64</td>
<td>-38.00</td>
<td>-41.48</td>
<td>-47.16</td>
<td>-43.15</td>
<td>-47.93</td>
<td>-41.38</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Foreign&nbsp;&nbsp;&nbsp;&nbsp; (y/y %)</td>
<td>&nbsp;</td>
<td>-38.41</td>
<td>-42.37</td>
<td>&nbsp;37.44</td>
<td>-36.45</td>
<td>-30.95</td>
<td>-24.55</td>
<td>-34.75</td>
</tr>
</tbody>
</table>
</body></html>

Along with the other Baltics, Estonia and Latvia, Lithuania, having pegged its currency to the Euro has been unable to devalue its currency to gain a competitive advantage. Instead it has been forced to deflate its economy with the [...]

Recession In Lithuania Bottoming?

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928g.jpg" align="right" border="0" height="265" width="353">Getting better - Italian
consumer confidence rose sharply
higher in September. After bottoming in August of 2008, confidence made
a large 4.3point jump in August 2009 and in September of 2009 it has
added a further advance of 1.8 points. The rise in August had been the
13th largest monthly gain on record. Having another significant rise
(55th largest out of 215 total.) is a sign that the improvement has
legs. Now you have to go back to July of 2002 to find a higher reading
as the rise in September brings the consumer sentiment reading above
its previous local peak at end 2006.

Upbeat on the future - Italians rate their confidence overall
in the 79th percentile of its range since 1992 and better than the
readings that are produced 62% of the time (its rank standing). Italian
consumers now rate the overall situation as in the 77th percentile of
its range at a raw reading of -58. Over the next twelve months (the raw
reading is +6) but as a percentile it stands in the 69th percentile of
its range. Note the difference in Italian consumers and their
expectations. At a raw reading of -58 the overall situation is rated in
the 77th percentile of its range a rather high percentile standing for
such a sour (net!) negative reading. When it comes to looking ahead,
however, the raw reading of +6 stands in the 69th percentile of its
range, a roughly comparable relative position. Clearly this suggests
that Italian consumes are prone to optimism. But the percentiles of
course adjust for that; the raw readings do not, but they are
instructive. It is interesting ant a people whose capital city is
replete with ruins of its past greatness are able to shake off any
semblance of an empire past and look so optimistically to the future.

Flies in the ointment or outlook - Unemployment, however, is
still feared as the unemployment expectation reading is still in the
69th percentile of its range. The unemployment expectations worsened
month to month with 23% (up from 20) worried that it might rise
sharply. Those fearing a slight increase fell to 39% from 40%.. Stable
unemployment is now expected by 28% up from 26%. But only 3% (down from
5%) of Italians think unemployment will fall. It&#8217;s an odd set of
responses on unemployment prospects to occur is such another upbeat
assessment of the future.

Upbeat on spending - The household financial situation was in
the 46th percentile of its range over the past 12 months while
expectations are in the 69th percentile over the next 12-months. The
environment for making purchases is in the 42nd percentile while in the
next twelve months it is expected to rise to the 96th percentile.

High hopes - Obviously for Italy hopes are high. Current
measures have improved but there is still a lot that is wrong. For
whatever reason Italian consumers have ratcheted up their expectations
especially as to the future environment for making purchases. The news
is good news, but it is heavily dependent on confidence, per se. While
Germany seems to be getting more concerned about its future and the
potential for unemployment to rise in Italy, glee over the outlook is
spreading amid a still sour outlook for unemployment prospects. Still,
the overall reading is at its best level since mid-2002.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="12" scope="col">Italy
ISAE Consumer Confidence</th>
</tr>
</thead>
<tbody>
<tr class="grey8">
<td class="firstcol" colspan="5">&nbsp;</td>
<td colspan="2">Since Jan 1992</td>
<td colspan="4"></td>
<td>Rank</td>
</tr>
<tr class="grey7">
<td class="firstcol">&nbsp;</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>Percen 
tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>percen 
tile</td>
</tr>
<tr class="grey6">
<td class="firstcol">Consumer Confidence</td>
<td>113.6</td>
<td>111.8</td>
<td>107.5</td>
<td>105.5</td>
<td>59.8</td>
<td>79</td>
<td>127</td>
<td>94</td>
<td>33</td>
<td>110</td>
<td style="font-weight: bold;">62.9%</td>
</tr>
<tr class="grey7">
<td class="firstcol" colspan="12">Last
12 months</td>
</tr>
<tr class="grey5">
<td class="firstcol">OVERALL 
SITUATION</td>
<td>-58</td>
<td>-62</td>
<td>-68</td>
<td>-68</td>
<td>71.2</td>
<td>68</td>
<td>-22</td>
<td>-147</td>
<td>125</td>
<td>-70</td>
<td>68.1%</td>
</tr>
<tr class="grey5">
<td class="firstcol">PRICE TRENDS</td>
<td>-42</td>
<td>-42</td>
<td>-48</td>
<td>-40.5</td>
<td>11.7</td>
<td>208</td>
<td>4</td>
<td>-48</td>
<td>52</td>
<td>-9</td>
<td>2.3%</td>
</tr>
<tr class="grey7">
<td class="firstcol" colspan="12">Next
12months</td>
</tr>
<tr class="grey4">
<td class="firstcol">OVERALL 
SITUATION</td>
<td>5</td>
<td>1</td>
<td>2</td>
<td>-8</td>
<td>69.8</td>
<td>12</td>
<td>24</td>
<td>-39</td>
<td>63</td>
<td>-9</td>
<td>94.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">PRICE TRENDS</td>
<td>9.5</td>
<td>7.5</td>
<td>1.5</td>
<td>8.5</td>
<td>19.4</td>
<td>92</td>
<td>49</td>
<td>0</td>
<td>49</td>
<td>11</td>
<td>56.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol">UNEMPLOYMENT</td>
<td>17</td>
<td>11</td>
<td>8</td>
<td>15</td>
<td>69.1</td>
<td>7</td>
<td>38</td>
<td>-30</td>
<td>68</td>
<td>-1</td>
<td>96.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol">HOUSEHOLD BUDGET</td>
<td>6</td>
<td>0</td>
<td>1</td>
<td>0</td>
<td>27.7</td>
<td>178</td>
<td>40</td>
<td>-7</td>
<td>47</td>
<td>16</td>
<td>16.4%</td>
</tr>
<tr class="grey7">
<td colspan="12" class="firstcol">HOUSEHOLD
FIN SITUATION</td>
</tr>
<tr class="grey3">
<td class="firstcol">Last 12 months</td>
<td>-33</td>
<td>-34</td>
<td>-40</td>
<td>-37</td>
<td>46.9</td>
<td>89</td>
<td>-7</td>
<td>-56</td>
<td>49</td>
<td>-31</td>
<td>58.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Next12 months</td>
<td>-1</td>
<td>-2</td>
<td>-2</td>
<td>-4</td>
<td>69.4</td>
<td>86</td>
<td>14</td>
<td>-35</td>
<td>49</td>
<td>-3</td>
<td>59.6%</td>
</tr>
<tr class="grey7">
<td class="firstcol" colspan="12">HOUSEHOLD
SAVINGS</td>
</tr>
<tr class="grey2">
<td class="firstcol">Current</td>
<td>80</td>
<td>79</td>
<td>60</td>
<td>60</td>
<td>100.0</td>
<td>1</td>
<td>80</td>
<td>20</td>
<td>60</td>
<td>43</td>
<td>99.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Future</td>
<td>-16</td>
<td>-21</td>
<td>-30</td>
<td>-25</td>
<td>68.1</td>
<td>106</td>
<td>-1</td>
<td>-48</td>
<td>47</td>
<td>-19</td>
<td>50.2%</td>
</tr>
<tr class="grey7">
<td class="firstcol" colspan="12">MAJOR
Purchases</td>
</tr>
<tr class="grey1">
<td class="firstcol">Current</td>
<td>-40</td>
<td>-37</td>
<td>-40</td>
<td>-39</td>
<td>42.1</td>
<td>100</td>
<td>-7</td>
<td>-64</td>
<td>57</td>
<td>-39</td>
<td>53.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Future</td>
<td>4</td>
<td>4</td>
<td>4</td>
<td>3</td>
<td>96.8</td>
<td>3</td>
<td>7</td>
<td>-87</td>
<td>94</td>
<td>-64</td>
<td>98.6%</td>
</tr>
<tr class="grey7">
<td colspan="12" class="firstcol">Total
number of months: 213</td>
</tr>
</tbody>
</table>
</body></html>

Getting better - Italian consumer confidence rose sharply higher in September. After bottoming in August of 2008, confidence made a large 4.3point jump in August 2009 and in September of 2009 it has added a further advance of 1.8 [...]

Italian Consumer Confidence Moves Sharply Higher

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928a.jpg" align="right" border="0" height="265" width="353">
The Chicago Federal Reserve Bank reported that its National
Activity Index slipped last month after having improved sharply from
the January low. The reading of -0.90 was down from -0.56 during July
but both figures were well improved from the series' low of -4.13
reached this past January. Since 1970 there has been a 74% correlation
between the level of the index and the q/q change in real GDP but
during the last ten years that correlation has risen to 80%.
The three-month moving average which smoothes out
some of the volatility of the index improved to its highest level since
June of '08.
An index level at or below -0.70 typically has indicated
negative U.S. economic growth. A zero value of the CFNAI indicates that
the economy is expanding at its historical trend rate of growth of
roughly 3%. The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_september2009.pdf">here</a>.
The production and employment components made smaller positive
contributions to the August CFNAI than during July while the
consumption, housing, sales, orders and inventories categories
improved. Overall, thirty-one of the index components had a positive
influence while 54 made a negative contribution.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928b.jpg" align="right" border="0" height="265" width="353">
The CFNAI is a weighted average of 85 indicators of economic
activity. The indicators reflect activity in the following categories:
production &amp; income, the labor market, personal consumption
&amp; housing, manufacturing &amp; trade sales, and inventories
&amp; orders.
In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index improved slightly during July but remained
near its lowest since late-1993. Indicators for the auto sector
improved but for the steel and machinery sectors the series fell to new
cycle lows. The Chicago Federal Reserve figures are available in
Haver's SURVEYS database.
Friday's speech by Fed Governor Kevin Warsh titled
Longer Days, Fewer Weekends can be found <a href="http://www.federalreserve.gov/newsevents/speech/warsh20090925a.htm">
here</a>.


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Fed</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.90</td>
<td>-0.56</td>
<td>-2.01</td>
<td>-1.77</td>
<td>-0.35</td>
<td>0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-1.09</td>
<td>-1.61</td>
<td>-1.42</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

The Chicago Federal Reserve Bank reported that its National Activity Index slipped last month after having improved sharply from the January low. The reading of -0.90 was down from -0.56 during July but both figures were well improved [...]

Chicago Fed Index Lower Last Month But Trend Still Firm

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928a.jpg" align="right" border="0" height="265" width="353">
The Chicago Federal Reserve Bank reported that its National
Activity Index slipped last month after having improved sharply from
the January low. The reading of -0.90 was down from -0.56 during July
but both figures were well improved from the series' low of -4.13
reached this past January. Since 1970 there has been a 74% correlation
between the level of the index and the q/q change in real GDP but
during the last ten years that correlation has risen to 80%.
The three-month moving average which smoothes out
some of the volatility of the index improved to its highest level since
June of '08.
An index level at or below -0.70 typically has indicated
negative U.S. economic growth. A zero value of the CFNAI indicates that
the economy is expanding at its historical trend rate of growth of
roughly 3%. The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_september2009.pdf">here</a>.
The production and employment components made smaller positive
contributions to the August CFNAI than during July while the
consumption, housing, sales, orders and inventories categories
improved. Overall, thirty-one of the index components had a positive
influence while 54 made a negative contribution.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928b.jpg" align="right" border="0" height="265" width="353">
The CFNAI is a weighted average of 85 indicators of economic
activity. The indicators reflect activity in the following categories:
production &amp; income, the labor market, personal consumption
&amp; housing, manufacturing &amp; trade sales, and inventories
&amp; orders.
In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index improved slightly during July but remained
near its lowest since late-1993. Indicators for the auto sector
improved but for the steel and machinery sectors the series fell to new
cycle lows. The Chicago Federal Reserve figures are available in
Haver's SURVEYS database.
Friday's speech by Fed Governor Kevin Warsh titled
Longer Days, Fewer Weekends can be found <a href="http://www.federalreserve.gov/newsevents/speech/warsh20090925a.htm">
here</a>.


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Fed</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.90</td>
<td>-0.56</td>
<td>-2.01</td>
<td>-1.77</td>
<td>-0.35</td>
<td>0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-1.09</td>
<td>-1.61</td>
<td>-1.42</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
 
Italian Consumer Confidence Moves Sharply Higher 
by <a href="/comment/Brusca.html">Robert
Brusca</a> September 28, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928g.jpg" align="right" border="0" height="265" width="353">Getting better - Italian
consumer confidence rose sharply
higher in September. After bottoming in August of 2008, confidence made
a large 4.3point jump in August 2009 and in September of 2009 it has
added a further advance of 1.8 points. The rise in August had been the
13th largest monthly gain on record. Having another significant rise
(55th largest out of 215 total.) is a sign that the improvement has
legs. Now you have to go back to July of 2002 to find a higher reading
as the rise in September brings the consumer sentiment reading above
its previous local peak at end 2006.

Upbeat on the future - Italians rate their confidence overall
in the 79th percentile of its range since 1992 and better than the
readings that are produced 62% of the time (its rank standing). Italian
consumers now rate the overall situation as in the 77th percentile of
its range at a raw reading of -58. Over the next twelve months (the raw
reading is +6) but as a percentile it stands in the 69th percentile of
its range. Note the difference in Italian consumers and their
expectations. At a raw reading of -58 the overall situation is rated in
the 77th percentile of its range a rather high percentile standing for
such a sour (net!) negative reading. When it comes to looking ahead,
however, the raw reading of +6 stands in the 69th percentile of its
range, a roughly comparable relative position. Clearly this suggests
that Italian consumes are prone to optimism. But the percentiles of
course adjust for that; the raw readings do not, but they are
instructive. It is interesting ant a people whose capital city is
replete with ruins of its past greatness are able to shake off any
semblance of an empire past and look so optimistically to the future.

Flies in the ointment or outlook - Unemployment, however, is
still feared as the unemployment expectation reading is still in the
69th percentile of its range. The unemployment expectations worsened
month to month with 23% (up from 20) worried that it might rise
sharply. Those fearing a slight increase fell to 39% from 40%.. Stable
unemployment is now expected by 28% up from 26%. But only 3% (down from
5%) of Italians think unemployment will fall. It&#8217;s an odd set of
responses on unemployment prospects to occur is such another upbeat
assessment of the future.

Upbeat on spending - The household financial situation was in
the 46th percentile of its range over the past 12 months while
expectations are in the 69th percentile over the next 12-months. The
environment for making purchases is in the 42nd percentile while in the
next twelve months it is expected to rise to the 96th percentile.

High hopes - Obviously for Italy hopes are high. Current
measures have improved but there is still a lot that is wrong. For
whatever reason Italian consumers have ratcheted up their expectations
especially as to the future environment for making purchases. The news
is good news, but it is heavily dependent on confidence, per se. While
Germany seems to be getting more concerned about its future and the
potential for unemployment to rise in Italy, glee over the outlook is
spreading amid a still sour outlook for unemployment prospects. Still,
the overall reading is at its best level since mid-2002.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="12" scope="col">Italy
ISAE Consumer Confidence</th>
</tr>
</thead>
<tbody>
<tr class="grey8">
<td class="firstcol" colspan="5">&nbsp;</td>
<td colspan="2">Since Jan 1992</td>
<td colspan="4"></td>
<td>Rank</td>
</tr>
<tr class="grey7">
<td class="firstcol">&nbsp;</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>Percen 
tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>percen 
tile</td>
</tr>
<tr class="grey6">
<td class="firstcol">Consumer Confidence</td>
<td>113.6</td>
<td>111.8</td>
<td>107.5</td>
<td>105.5</td>
<td>59.8</td>
<td>79</td>
<td>127</td>
<td>94</td>
<td>33</td>
<td>110</td>
<td style="font-weight: bold;">62.9%</td>
</tr>
<tr class="grey7">
<td class="firstcol" colspan="12">Last
12 months</td>
</tr>
<tr class="grey5">
<td class="firstcol">OVERALL 
SITUATION</td>
<td>-58</td>
<td>-62</td>
<td>-68</td>
<td>-68</td>
<td>71.2</td>
<td>68</td>
<td>-22</td>
<td>-147</td>
<td>125</td>
<td>-70</td>
<td>68.1%</td>
</tr>
<tr class="grey5">
<td class="firstcol">PRICE TRENDS</td>
<td>-42</td>
<td>-42</td>
<td>-48</td>
<td>-40.5</td>
<td>11.7</td>
<td>208</td>
<td>4</td>
<td>-48</td>
<td>52</td>
<td>-9</td>
<td>2.3%</td>
</tr>
<tr class="grey7">
<td class="firstcol" colspan="12">Next
12months</td>
</tr>
<tr class="grey4">
<td class="firstcol">OVERALL 
SITUATION</td>
<td>5</td>
<td>1</td>
<td>2</td>
<td>-8</td>
<td>69.8</td>
<td>12</td>
<td>24</td>
<td>-39</td>
<td>63</td>
<td>-9</td>
<td>94.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">PRICE TRENDS</td>
<td>9.5</td>
<td>7.5</td>
<td>1.5</td>
<td>8.5</td>
<td>19.4</td>
<td>92</td>
<td>49</td>
<td>0</td>
<td>49</td>
<td>11</td>
<td>56.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol">UNEMPLOYMENT</td>
<td>17</td>
<td>11</td>
<td>8</td>
<td>15</td>
<td>69.1</td>
<td>7</td>
<td>38</td>
<td>-30</td>
<td>68</td>
<td>-1</td>
<td>96.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol">HOUSEHOLD BUDGET</td>
<td>6</td>
<td>0</td>
<td>1</td>
<td>0</td>
<td>27.7</td>
<td>178</td>
<td>40</td>
<td>-7</td>
<td>47</td>
<td>16</td>
<td>16.4%</td>
</tr>
<tr class="grey7">
<td colspan="12" class="firstcol">HOUSEHOLD
FIN SITUATION</td>
</tr>
<tr class="grey3">
<td class="firstcol">Last 12 months</td>
<td>-33</td>
<td>-34</td>
<td>-40</td>
<td>-37</td>
<td>46.9</td>
<td>89</td>
<td>-7</td>
<td>-56</td>
<td>49</td>
<td>-31</td>
<td>58.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Next12 months</td>
<td>-1</td>
<td>-2</td>
<td>-2</td>
<td>-4</td>
<td>69.4</td>
<td>86</td>
<td>14</td>
<td>-35</td>
<td>49</td>
<td>-3</td>
<td>59.6%</td>
</tr>
<tr class="grey7">
<td class="firstcol" colspan="12">HOUSEHOLD
SAVINGS</td>
</tr>
<tr class="grey2">
<td class="firstcol">Current</td>
<td>80</td>
<td>79</td>
<td>60</td>
<td>60</td>
<td>100.0</td>
<td>1</td>
<td>80</td>
<td>20</td>
<td>60</td>
<td>43</td>
<td>99.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Future</td>
<td>-16</td>
<td>-21</td>
<td>-30</td>
<td>-25</td>
<td>68.1</td>
<td>106</td>
<td>-1</td>
<td>-48</td>
<td>47</td>
<td>-19</td>
<td>50.2%</td>
</tr>
<tr class="grey7">
<td class="firstcol" colspan="12">MAJOR
Purchases</td>
</tr>
<tr class="grey1">
<td class="firstcol">Current</td>
<td>-40</td>
<td>-37</td>
<td>-40</td>
<td>-39</td>
<td>42.1</td>
<td>100</td>
<td>-7</td>
<td>-64</td>
<td>57</td>
<td>-39</td>
<td>53.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Future</td>
<td>4</td>
<td>4</td>
<td>4</td>
<td>3</td>
<td>96.8</td>
<td>3</td>
<td>7</td>
<td>-87</td>
<td>94</td>
<td>-64</td>
<td>98.6%</td>
</tr>
<tr class="grey7">
<td colspan="12" class="firstcol">Total
number of months: 213</td>
</tr>
</tbody>
</table>
 
Recession In Lithuania Bottoming? 
by <a href="/comment/Curley.html">Louise
Curley</a> September 28, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928c.jpg" align="right" border="0" height="265" width="353">Along with the other
Baltics, Estonia and Latvia, Lithuania,
having pegged its currency to the Euro has been unable to devalue its
currency to gain a competitive advantage. Instead it has been forced to
deflate its economy with the result that it has suffered one of the
most severe recessions in the European Union. Real Gross Domestic
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928d.jpg" align="right" border="0" height="265" width="353">Product was down 13.4% from
a year ago in the first quarter of this
year and was down 20.2% in the second quarter, as shown in the first
chart. The Central Bank Governor, Reinoldijus Sarkinas, reported
yesterday that the economy is close to bottoming out and could see some
growth next year, given positive external conditions. The one bright
spot in the Lithuanian economy has been the improvement in the balance
of payments in goods and services, as shown in the second chart..Data
released today on
retail sales show that although sales in August are 19.6% below a year
ago, they are slightly below the peak decline of 21.1%, as can be seen
in the third chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090928e.jpg" align="right" border="0" height="265" width="353">
While not particularly encouraging, the decline is
not getting worse. The July data on manufacturing new orders are
somewhat more encouraging. While domestic orders have fallen more than
foreign order, they appear to be recovering faster than the foreign
orders as shown in the fourth chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">APR 09&nbsp;</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">FEB 09 </th>
<th scope="col"> Jan 09 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Retail Trace ex motor vehicles
and motorcycles&nbsp;&nbsp;</td>
<td>-19.6</td>
<td>-19.6</td>
<td>-19.2</td>
<td>-19.8</td>
<td>-18.4</td>
<td>-21.1</td>
<td>-20.0</td>
<td>-16.2</td>
</tr>
<tr>
<td class="firstcol"> Manufacture 's New
Orders</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; Domestic&nbsp;
(y/y %)</td>
<td>&nbsp;</td>
<td>-38.64</td>
<td>-38.00</td>
<td>-41.48</td>
<td>-47.16</td>
<td>-43.15</td>
<td>-47.93</td>
<td>-41.38</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Foreign&nbsp;&nbsp;&nbsp;&nbsp; (y/y %)</td>
<td>&nbsp;</td>
<td>-38.41</td>
<td>-42.37</td>
<td>&nbsp;37.44</td>
<td>-36.45</td>
<td>-30.95</td>
<td>-24.55</td>
<td>-34.75</td>
</tr>
</tbody>
</table>
</body></html>

Chicago Fed Index Lower Last MonthBut Trend Still Firm

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090925g.jpg" align="right" border="0" height="265" width="353">
Consumer
sentiment may be showing the effects of the lessened declines recently
logged by overall employment. The University of Michigan's September
reading of consumer sentiment rose to 73.5 from the mid-month reading
of 70.2 and it was up by nearly one-third from the low last Fall.
Consensus expectations had been for a September reading of 70.5. During
the last ten years, there has been a 69% correlation between the level
of sentiment and the growth in real consumer spending during the next
five months.The expectations component of the sentiment index rose
the most this month with a 13.1% gain after a 2.8% August rise.
Expected business conditions during the next year jumped 27.5% (35.4%
y/y) to their highest in two years and expectations for conditions
during the next five years rose 13.7% (9.6% y/y). <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090925h.jpg" align="right" border="0" height="265" width="353">
Expectations for
personal finances rose a lesser 3.6% and remained down from last year.
Inflation expectations for the next year fell sharply to 2.8% which was
the lowest level since March. That compares to a low of 1.7% last
December but remained down from a reading which was as high as 7.0%
during May of last year.The reading of current economic conditions
made up the declines during the prior two months with a 10.2% increase.
The reading of current personal finances made up all of the August
decline with a 19.0% increase but that left it sharply below the year
ago level as employment &amp; income remained down. In fact, the
reading remained near the record low. Also within the current
conditions index was an increase in perceived buying conditions for
large household goods that made up declines during the prior two
months. (+12.1% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090925i.jpg" align="right" border="0" height="265" width="353">
The opinion of government policy,
which may eventually influence economic expectations, made up the
August decline but remained near the&nbsp; lowest level since
February. Thirty one percent of respondents thought that a poor job was
being done by government while 23% thought that a good job was being
done.The University of Michigan survey data is not seasonally
adjusted. The reading is based on telephone interviews with about 500
households at month-end; the mid-month results are based on about 300
interviews. The summary indexes are in Haver's USECON database
with details in the proprietary UMSCA 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/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">September</th>
<th scope="col">Mid-September</th>
<th scope="col">August</th>
<th scope="col">Sept 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>73.5</td>
<td>70.2</td>
<td>65.7</td>
<td>4.6%</td>
<td>63.8</td>
<td>85.6</td>
<td>87.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>73.4</td>
<td>71.8</td>
<td>66.6</td>
<td>-2.1</td>
<td>73.7</td>
<td>101.2</td>
<td>105.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>73.5</td>
<td>69.2</td>
<td>65.0</td>
<td>9.4</td>
<td>57.3</td>
<td>75.6</td>
<td>75.9</td>
</tr>
</tbody>
</table>
</body></html>

Consumer sentiment may be showing the effects of the lessened declines recently logged by overall employment. The University of Michigan's September reading of consumer sentiment rose to 73.5 from the mid-month reading of 70.2 and it [...]

Michigan Consumer Sentiment Improves To Highest Since Early 2008

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090925e.jpg" width="353">
Sales of new single-family homes rose during August for the fifth consecutive month of increase. The seasonally adjusted annual sales rate of 429,000 was up a disappointing 0.7% from a downwardly revised July level of 426,000. Nevertheless, sales have risen by nearly one-third from their January low. August sales fell short of expectations for 440,000.
Price discounts seem to have prompted the latest rise in sales. The median price of a new home fell to $195,200 from an upwardly revised July level. The latest figure, which was down 11.7% y/y, was the lowest level since October of 2003. The average price of a new home was less weak and off 3.3% y/y.
Only sales in the West posted an increase last month. The 12.1% m/m gain was to the highest level since July of last year. Sales have risen by nearly one-third from their low but were three-quarters below the 2005 high. That m/m gain in the West was offset by the second consecutive monthly sales decline in the Midwest. Sales there still were off by almost one-third from last year and by 81% from their 2003 peak. Sales in the Northeast also reversed most of their July gain with a 16.3% decline which left them two-thirds below the 2004 peak. In the South sales were unchanged m/m but still were off by two-thirds from the 2005 peak.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090925f.jpg" width="353">
Price discounts, higher sales and much lower housing starts have combined to lower the overhang of unsold homes. The August decline dropped them by more than one-third versus last year to the lowest level since 1992. In the West the number of homes for sale fell to a record low. The months&#39; supply of unsold homes at 7.3 months was down from the high of 12.4 months registered in January. 
Longer Days, Fewer Weekends is today&#39;s speech by Fed Governor Kevin Warsh and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/warsh20090925a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">US New Homes</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June</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">Total Sales (SAAR, 000s)</td>
<td>429</td>
<td>426</td>
<td>400</td>
<td>-3.4%</td>
<td>481</td>
<td>769</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>36</td>
<td>43</td>
<td>34</td>
<td>&nbsp;28.6</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>49</td>
<td>52</td>
<td>62</td>
<td>-31.9</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>224</td>
<td>224</td>
<td>195</td>
<td>-11.1</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>120</td>
<td>107</td>
<td>109</td>
<td>30.4</td>
<td>113</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>195,200</td>
<td>215,600</td>
<td>212,500</td>
<td>&nbsp;-11.7</td>
<td>230,408</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>
</body>
</html>

Sales of new single-family homes rose during August for the fifth consecutive month of increase. The seasonally adjusted annual sales rate of 429,000 was up a disappointing 0.7% from a downwardly revised July level of 426,000. [...]

U.S. New Home Sales Rise For Fifth Straight Month As Prices Decline To 2003 Low

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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250430Q1.jpg

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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250430S1.jpg

- 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

250430A.jpg

250430B.jpg

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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250430D.jpg

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

Personal Income, Consumption, and Prices in March

250430F20.jpg

250430G20.jpg

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: September 2009

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