Tom Moeller

News-wire headlines indicate that the rebound in home prices has stalled. Seasonally adjusted, the Case Shiller Home Price Index fell during January by 0.4% for the fourth consecutive month. This, however, overstates the weakness [...]

Case-Shiller Home Price Index HitsA Brick Wall?

Louise Curley

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Economic Sentiment Indicator (ESI) of the European
Commission for the 16 countries in the Euro Area rose to 97.9 in March
from 95.9 in February. The ESI for the 27 countries in the European
Union rose to 99.6 from 97.6. Both indicators have risen substantially
from their low points reached in February and March of this year and
are close to their long term average of 100, but are well below their
pre crisis peak. The first chart shows the history of the two
indicators.</p>
<p>The higher level of sentiment in the EU than in the EA
suggests that sentiment is somewhat higher in the non Euro Area
countries than in the Euro Area Countries. Arithmetically, the low
level of sentiment in Greece has reduced the level of average sentiment
in the Euro Area, but more important, Greece's problems have no doubt
dampened sentiment in the rest of the Euro Area. There were only 3
countries in the Euro Area in March that were at or above 100--Belgium
at 103.2, Finland at 102.2 and Germany at 100.4. These countries
together with Greece are shown in the second chart.</p>
<p>In the non Euro Area there were four countries where sentiment
was at or above 100--the United Kingdom at 100.9, Poland at 101.5,
Denmark at 110.0, and Sweden at 111.5. These are shown in the third
chart</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Economic
Sentiment Indicator</th>
<th scope="col"><b>Mar 10&nbsp;</b></th>
<th scope="col"><b>Feb 10&nbsp;</b></th>
<th scope="col"><b>Mar 09</b></th>
<th scope="col"><b>Recent Low&nbsp;</b></th>
<th scope="col"><b>Date</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Euro Area</td>
<td style="font-weight: bold;">97.9</td>
<td style="font-weight: bold;">95.9</td>
<td style="font-weight: bold;">96.0</td>
<td style="font-weight: bold;">68.2</td>
<td style="font-weight: bold;">2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Greece</td>
<td>69.6</td>
<td>72.4</td>
<td>76.1</td>
<td>60.4</td>
<td>3/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Germany</td>
<td>100.4</td>
<td>97.0</td>
<td>96.1</td>
<td>75.2</td>
<td>3/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Belgium</td>
<td>103.2</td>
<td>98.1</td>
<td>97.7</td>
<td>72.6</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Finland</td>
<td>102.2</td>
<td>102.8</td>
<td>99.4</td>
<td>77.7</td>
<td>9/09</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">European Union</td>
<td style="font-weight: bold;">99.6</td>
<td style="font-weight: bold;">97.6</td>
<td style="font-weight: bold;">97.2</td>
<td style="font-weight: bold;">68.2</td>
<td style="font-weight: bold;">2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Denmark</td>
<td>110.0</td>
<td>105.7</td>
<td>105.3</td>
<td>66.5</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Sweden</td>
<td>111.5</td>
<td>110.5</td>
<td>106.6</td>
<td>78.8</td>
<td>4/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United
Kingdom</td>
<td>100.9</td>
<td>98.3</td>
<td>98.2</td>
<td>65.4</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Poland</td>
<td>101.5</td>
<td>98.8</td>
<td>94.6</td>
<td>79.0</td>
<td>3/09</td>
</tr>
</tbody>
</table>
</body></html>

The Economic Sentiment Indicator (ESI) of the European Commission for the 16 countries in the Euro Area rose to 97.9 in March from 95.9 in February. The ESI for the 27 countries in the European Union rose to 99.6 from 97.6. Both [...]

Economic Sentiment In Non Euro Countries Exceeds That Of Euro Area Countries

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<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329a.jpg" align="right" border="0" height="265" width="353">
Overall <b>personal income</b> was unchanged in
February following a 0.3% January increase, originally reported at
0.1%. The latest reading was the weakest since July and it disappointed
Consensus expectations for a 0.1% uptick. Though moderate, these gains
were enough to lift yearly income growth to 2.0% after the 1.7% decline
in 2009. The three-month rate of increase also improved to 2.8%.
Disposable income was unchanged after January's 0.2% decline. These
moderate income gains caused the savings rate to decline to 3.1%, its
lowest since late-2008. The rate still was up, however, from the 1.0%
low at the beginning of the last recession.</p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329b.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: right;" align="left">
Moderate employment declines left wages &amp; salaries
unchanged for the second month in the last three. Nevertheless the
modest y/y drop is improved from the sharp 4.0% decline last year.
Wages in the factory sector slipped by 0.2% and the 4.7% y/y decline
was half that during all of last year. In the private service sector
wages ticked up 0.1% for the second month in the last three. Here
again, however, the 1.0% y/y gain is improved versus last year's 3.8%
decline. Working the other, a 0.1% uptick in government sector wages
was behind a deceleration in y/y growth to 2.3%, its lowest since
early-1994.</p>
<p>The weak housing market pulled proprietors' income down 0.6%
(+1.9% y/y) for the second consecutive month. Lower interest rates
caused interest income also to slip 0.1% but the y/y change of -0.6%
was improved from the 5.3% decline during 2009. Dividend income again
fell a sharp 2.8% (-11.6% y/y). Finally, unemployment insurance
benefits rose 4.2% (54.4% y/y) and offset a January decline.</p>
<p><b>Personal spending </b>rose 0.3%, down from
0.4% gains during the prior two months. Spending on gasoline fell 1.0%
after the 7.3% January jump. Higher prices kept the y/y gain strong at
31.2% but real spending rose just 0.8% y/y. Nominal apparel spending
rose a strong 1.2% (0.1% y/y) while spending on home furnishings rose
0.9% (0.5% y/y). That latter decline is improved from a 6.2% drop
during all of last year Spending on services continued firm at 2.6% y/y
but that was raised by a 4.5% jump in health care expenditures and a
3.1% gain in spending on financial &amp; insurance. Offsetting
these gains was a 3.9% decline in spending on motor vehicles &amp;
parts (-0.1% y/y).</p>
<p>The <b>PCE chain price index</b> slipped modestly
with lower gasoline prices. The core PCE price deflator again was
unchanged reflecting a 0.6% decline in furniture prices (-1.6% y/y) and
a modest 0.3% increase (-4.2% y/y) in appliance prices. Services prices
ticked up 0.1% (1.3% y/y) led by a 0.3% gain (2.4% y/y) in health care.
Offsetting some of this strength was a 0.5% decline in computer prices
(-12.5% y/y) and a 0.7% fall in clothing prices (-0.2% y/y).</p>
<p>The personal income &amp; consumption figures are
available in Haver's <b>USECON</b> and <b>USNA</b>
databases.</p>
<p><b>Lessons from the Crisis Stress Tests</b> is the
title of last week's speech by Fed Governor Daniel K. Tarullo and it
can be found <a href="http://www.federalreserve.gov/newsevents/speech/tarullo20100326a.htm">here</a>.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329c.jpg" style="border: 0px solid ; width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329d.jpg" style="border: 0px solid ; 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/@E7/@E711/@E71102/@E71102.HTM" style="color: black;"><b>Disposition of Personal Income</b></a><b>
(%)&nbsp;</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</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>Personal Income</b></td>
<td>0.0</td>
<td>0.3</td>
<td>0.4</td>
<td>2.0</td>
<td>-1.7</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>&nbsp;
&nbsp;Disposable Personal Income</b></td>
<td>0.0</td>
<td>-0.2</td>
<td>0.5</td>
<td>2.8</td>
<td>1.1</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Personal Consumption
Expenditures</b></td>
<td>0.3</td>
<td>0.4</td>
<td>0.4</td>
<td>3.4</td>
<td>-0.4</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol"><b>Saving Rate</b></td>
<td>3.1</td>
<td>3.4</td>
<td>4.0</td>
<td>3.4 (Feb.'09)</td>
<td>4.3</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>PCE Chain Price Index</b></td>
<td>-0.0</td>
<td>0.2</td>
<td>0.2</td>
<td>1.8</td>
<td>0.2</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>&nbsp;&nbsp;
Less food &amp; energy</b></td>
<td>0.0</td>
<td>-0.0</td>
<td>0.1</td>
<td>1.3</td>
<td>1.5</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body></html>

Overall personal income was unchanged in February following a 0.3% January increase, originally reported at 0.1%. The latest reading was the weakest since July and it disappointed Consensus expectations for a 0.1% uptick. Though [...]

U.S. Personal Income & Spending Both Moderate

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<span id="articletext">
<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329a.jpg" align="right" border="0" height="265" width="353">
Overall <b>personal income</b> was unchanged in
February following a 0.3% January increase, originally reported at
0.1%. The latest reading was the weakest since July and it disappointed
Consensus expectations for a 0.1% uptick. Though moderate, these gains
were enough to lift yearly income growth to 2.0% after the 1.7% decline
in 2009. The three-month rate of increase also improved to 2.8%.
Disposable income was unchanged after January's 0.2% decline. These
moderate income gains caused the savings rate to decline to 3.1%, its
lowest since late-2008. The rate still was up, however, from the 1.0%
low at the beginning of the last recession.</p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329b.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: right;" align="left">
Moderate employment declines left wages &amp; salaries
unchanged for the second month in the last three. Nevertheless the
modest y/y drop is improved from the sharp 4.0% decline last year.
Wages in the factory sector slipped by 0.2% and the 4.7% y/y decline
was half that during all of last year. In the private service sector
wages ticked up 0.1% for the second month in the last three. Here
again, however, the 1.0% y/y gain is improved versus last year's 3.8%
decline. Working the other, a 0.1% uptick in government sector wages
was behind a deceleration in y/y growth to 2.3%, its lowest since
early-1994.</p>
<p>The weak housing market pulled proprietors' income down 0.6%
(+1.9% y/y) for the second consecutive month. Lower interest rates
caused interest income also to slip 0.1% but the y/y change of -0.6%
was improved from the 5.3% decline during 2009. Dividend income again
fell a sharp 2.8% (-11.6% y/y). Finally, unemployment insurance
benefits rose 4.2% (54.4% y/y) and offset a January decline.</p>
<p><b>Personal spending </b>rose 0.3%, down from
0.4% gains during the prior two months. Spending on gasoline fell 1.0%
after the 7.3% January jump. Higher prices kept the y/y gain strong at
31.2% but real spending rose just 0.8% y/y. Nominal apparel spending
rose a strong 1.2% (0.1% y/y) while spending on home furnishings rose
0.9% (0.5% y/y). That latter decline is improved from a 6.2% drop
during all of last year Spending on services continued firm at 2.6% y/y
but that was raised by a 4.5% jump in health care expenditures and a
3.1% gain in spending on financial &amp; insurance. Offsetting
these gains was a 3.9% decline in spending on motor vehicles &amp;
parts (-0.1% y/y).</p>
<p>The <b>PCE chain price index</b> slipped modestly
with lower gasoline prices. The core PCE price deflator again was
unchanged reflecting a 0.6% decline in furniture prices (-1.6% y/y) and
a modest 0.3% increase (-4.2% y/y) in appliance prices. Services prices
ticked up 0.1% (1.3% y/y) led by a 0.3% gain (2.4% y/y) in health care.
Offsetting some of this strength was a 0.5% decline in computer prices
(-12.5% y/y) and a 0.7% fall in clothing prices (-0.2% y/y).</p>
<p>The personal income &amp; consumption figures are
available in Haver's <b>USECON</b> and <b>USNA</b>
databases.</p>
<p><b>Lessons from the Crisis Stress Tests</b> is the
title of last week's speech by Fed Governor Daniel K. Tarullo and it
can be found <a href="http://www.federalreserve.gov/newsevents/speech/tarullo20100326a.htm">here</a>.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329c.jpg" style="border: 0px solid ; width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329d.jpg" style="border: 0px solid ; 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/@E7/@E711/@E71102/@E71102.HTM" style="color: black;"><b>Disposition of Personal Income</b></a><b>
(%)&nbsp;</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</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>Personal Income</b></td>
<td>0.0</td>
<td>0.3</td>
<td>0.4</td>
<td>2.0</td>
<td>-1.7</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>&nbsp;
&nbsp;Disposable Personal Income</b></td>
<td>0.0</td>
<td>-0.2</td>
<td>0.5</td>
<td>2.8</td>
<td>1.1</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Personal Consumption
Expenditures</b></td>
<td>0.3</td>
<td>0.4</td>
<td>0.4</td>
<td>3.4</td>
<td>-0.4</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol"><b>Saving Rate</b></td>
<td>3.1</td>
<td>3.4</td>
<td>4.0</td>
<td>3.4 (Feb.'09)</td>
<td>4.3</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>PCE Chain Price Index</b></td>
<td>-0.0</td>
<td>0.2</td>
<td>0.2</td>
<td>1.8</td>
<td>0.2</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>&nbsp;&nbsp;
Less food &amp; energy</b></td>
<td>0.0</td>
<td>-0.0</td>
<td>0.1</td>
<td>1.3</td>
<td>1.5</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
<span id="articletitle">Economic Sentiment In Non Euro
Countries Exceeds That Of Euro Area Countries</span><br>
<span id="byline">by <a href="/comment/Curley.html">Louise
Curley</a> March 29, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Economic Sentiment Indicator (ESI) of the European
Commission for the 16 countries in the Euro Area rose to 97.9 in March
from 95.9 in February. The ESI for the 27 countries in the European
Union rose to 99.6 from 97.6. Both indicators have risen substantially
from their low points reached in February and March of this year and
are close to their long term average of 100, but are well below their
pre crisis peak. The first chart shows the history of the two
indicators.</p>
<p>The higher level of sentiment in the EU than in the EA
suggests that sentiment is somewhat higher in the non Euro Area
countries than in the Euro Area Countries. Arithmetically, the low
level of sentiment in Greece has reduced the level of average sentiment
in the Euro Area, but more important, Greece's problems have no doubt
dampened sentiment in the rest of the Euro Area. There were only 3
countries in the Euro Area in March that were at or above 100--Belgium
at 103.2, Finland at 102.2 and Germany at 100.4. These countries
together with Greece are shown in the second chart.</p>
<p>In the non Euro Area there were four countries where sentiment
was at or above 100--the United Kingdom at 100.9, Poland at 101.5,
Denmark at 110.0, and Sweden at 111.5. These are shown in the third
chart</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100329g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Economic
Sentiment Indicator</th>
<th scope="col"><b>Mar 10&nbsp;</b></th>
<th scope="col"><b>Feb 10&nbsp;</b></th>
<th scope="col"><b>Mar 09</b></th>
<th scope="col"><b>Recent Low&nbsp;</b></th>
<th scope="col"><b>Date</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Euro
Area</td>
<td style="font-weight: bold;">97.9</td>
<td style="font-weight: bold;">95.9</td>
<td style="font-weight: bold;">96.0</td>
<td style="font-weight: bold;">68.2</td>
<td style="font-weight: bold;">2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Greece</td>
<td>69.6</td>
<td>72.4</td>
<td>76.1</td>
<td>60.4</td>
<td>3/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Germany</td>
<td>100.4</td>
<td>97.0</td>
<td>96.1</td>
<td>75.2</td>
<td>3/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Belgium</td>
<td>103.2</td>
<td>98.1</td>
<td>97.7</td>
<td>72.6</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Finland</td>
<td>102.2</td>
<td>102.8</td>
<td>99.4</td>
<td>77.7</td>
<td>9/09</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">European
Union</td>
<td style="font-weight: bold;">99.6</td>
<td style="font-weight: bold;">97.6</td>
<td style="font-weight: bold;">97.2</td>
<td style="font-weight: bold;">68.2</td>
<td style="font-weight: bold;">2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Denmark</td>
<td>110.0</td>
<td>105.7</td>
<td>105.3</td>
<td>66.5</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Sweden</td>
<td>111.5</td>
<td>110.5</td>
<td>106.6</td>
<td>78.8</td>
<td>4/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United
Kingdom</td>
<td>100.9</td>
<td>98.3</td>
<td>98.2</td>
<td>65.4</td>
<td>2/09</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Poland</td>
<td>101.5</td>
<td>98.8</td>
<td>94.6</td>
<td>79.0</td>
<td>3/09</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Personal Income &Spending Both Moderate

Robert Brusca

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Italian consumers used to feel better. They used to feel a lot
better just a few short months ago. In December of 2009 at a level of
113.6 Italy&#8217;s consumer confidence measure compiled by ISAE hit what is
for now its cycle high. That reading had barely surpassed the December
2006 confidence peak-reading of 113.4. But December 2009 stood as the
best reading since July 2002 and all seemed good. In retrospect,
Italy&#8217;s funk goes back to that late 2000 transitional period when
confidence dropped from very strong levels to begin its period of what
has been readings that have persisted at much lower levels. For Italy
it&#8217;s problems are not just the financial crisis and economic recovery.</p>
<p>Now it is clear that the bloom is off the consumer&#8217;s rose.
That rose seemed to bloom early and with all of Italy&#8217;s troubles it was
hard to tell what the real truth was. The truth appears to be that
Italy&#8217;s consumers were overly optimistic or actually in denial. Their
spirits are now deflating fast.</p>
<p>Italian consumers rate the past twelve months as better in
March than they did in February. But that was only a 61st percentile of
the range response. In March, looking to the more important next
12-months, the overall rating remains what is was in February but that
is a lower 34th percentile of range response. In other words the level
of the reading is nearly in the lower one-third of its range.
Expectations of unemployment are up and that reading is in the top 2%
of its range. Unemployment fears have really ratcheted up in Italy.
It&#8217;s possible that events in fellow Mediterranean country Greece are
having some chilling knock-on effects.</p>
<p>Despite these responses consumers rate their household
finances as one point improved over the next 12-months compared to last
month&#8217;s outlook reading; it&#8217;s a 36 range percentile assessment.
Households also rate current savings as high, in the top 7% of their
range, but future savings are rated in the bottom 25th percentile of
their range. But where the rubber hits the road and the spending
environment is assessed Italian consumers place the assessment right in
the middle at the 54th percentile of the range. Good time to spend?
Mezzo-mezzo.</p>
<p>There is a lot of confusion in Italy about where the country
is going and how fast. There is a lot of concern about unemployment.
Recent events in the e-Zone must have Italians worried; they can see
that if they slip-up there is no safety net that will be thrown under
them, maybe a blanket thrown over them after-the-fact. The thought is
chilling. Not even pasta can salve the pain.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"><b>Italy ISAE
Consumer Confidence</b> </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="4">&nbsp;</td>
<td colspan="2">Since 1992</td>
<td>Rank</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>106.3</td>
<td>107.7</td>
<td>111.6</td>
<td>113.6</td>
<td>37.4</td>
<td>146</td>
<td>31.5%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">Last 12 months</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; OVERALL
SITUATION</td>
<td>-63</td>
<td>-67</td>
<td>-54</td>
<td>-57</td>
<td>67.2</td>
<td>83</td>
<td>61.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; PRICE
TRENDS</td>
<td>-41.5</td>
<td>-45</td>
<td>-38</td>
<td>-41</td>
<td>12.6</td>
<td>206</td>
<td>3.3%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">Next 12months</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; OVERALL
SITUATION</td>
<td>-14</td>
<td>-14</td>
<td>-1</td>
<td>-1</td>
<td>39.7</td>
<td>140</td>
<td>34.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; PRICE
TRENDS</td>
<td>17</td>
<td>16</td>
<td>11.5</td>
<td>8.5</td>
<td>39.5</td>
<td>48</td>
<td>77.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
UNEMPLOYMENT</td>
<td>26</td>
<td>25</td>
<td>16</td>
<td>16</td>
<td>82.4</td>
<td>4</td>
<td>98.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
HOUSEHOLD BUDGET</td>
<td>0</td>
<td>2</td>
<td>-1</td>
<td>1</td>
<td>16.3</td>
<td>202</td>
<td>5.2%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">HOUSEHOLD FIN SITUATION</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Last 12
months</td>
<td>-38</td>
<td>-39</td>
<td>-36</td>
<td>-37</td>
<td>36.7</td>
<td>138</td>
<td>35.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Next12 months</td>
<td>-6</td>
<td>-7</td>
<td>-6</td>
<td>-3</td>
<td>59.2</td>
<td>136</td>
<td>36.2%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">HOUSEHOLD SAVINGS</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current</td>
<td>69</td>
<td>73</td>
<td>78</td>
<td>73</td>
<td>81.7</td>
<td>13</td>
<td>93.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Future</td>
<td>-29</td>
<td>-24</td>
<td>-23</td>
<td>-20</td>
<td>43.2</td>
<td>159</td>
<td>25.4%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">MAJOR Purchases</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current</td>
<td>-40</td>
<td>-39</td>
<td>-36</td>
<td>-38</td>
<td>47.1</td>
<td>98</td>
<td>54.0%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Total
number of months: Back to Jul-92</td>
</tr>
</tbody>
</table>
</body></html>

Italian consumers used to feel better. They used to feel a lot better just a few short months ago. In December of 2009 at a level of 113.6 Italy’s consumer confidence measure compiled by ISAE hit what is for now its cycle high. That [...]

Italian Households Take Another Step Back In Comfort Italian Consumer Confidence Turns The Corner, The Wrong Corner

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<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326b.jpg" style="width: 312px; height: 265px;"></p>
<p>Last quarter was a strong one for the U.S. economy and the
revised picture is little different from the one depicted earlier. The
latest revision, however, lowered the growth rate slightly to 5.6% from
5.9%. Nevertheless, last quarter's growth remained the best since 3Q
2003 and it pushed the y/y change into (slightly) positive territory
for the first time since early-2008. The revision exceeded Consensus
expectations for 5.9% growth.</p>
<p> The addition to growth from inventories was notched down to
3.8 percentage points. The strength in rebuilding was necessitated by
vigorous and unprecedented decumulation dating back to 2005.</p>
<p>Growth in domestic final demand also was shaved to a still
slow 1.4% from 1.6%. Business investment in equipment &amp;
software was revised up slightly to 19.0% (-7.5% y/y) after a 1.5% 3Q
rise. Investment in business construction, however, offset much of this
increase with a 18.1% decline (-25.3% y/y) which was more than
estimated last month. Growth in residential investment also was revised
down to 3.7% (-12.6% y/y) though it remains the second consecutive
quarterly increase. Personal consumption growth was little revised at
1.6% (1.0% y/y) following a 2.8% 3Q increase. Finally, government
spending dropped an unrevised 1.3% (+1.3% y/y), led by a decline in
defense spending as well as lower spending by state and local
governments.</p>
<p>Improvement in the foreign trade deficit added an unrevised
0.3 percentage points to last quarter's gain in GDP. Strong growth in
exports of 22.8% (-0.7% y/y) was little changed. That surge was offset,
however, by a 15.8% (-6.6% y/y) jump in imports.</p>
<p>Price inflation was revised slightly higher to 0.5% as
measured by the chained GDP price index. Diminished price gains for all
of last year pulled the annual increase down to 1.2% which was nearly
its weakest increase since the early-1960s. The personal consumption
chain price index rose a quickened 2.1%. However, it increased just
0.2% for the whole year owing to the yearly decline in energy prices.
The price index for fixed business investment fell 1.4% (-2.9% y/y),
the fourth consecutive quarterly decline. A 2.7% increase (-2.6% y/y)
in the residential investment price index offset a 3Q decline.</p>
<p>Corporate profits rose 8.0% (30.6% y/y) last quarter. The gain
was driven by an 18.6% jump in financial sector earnings, which are up
more than three-fold during the last year due to lower interest rates.
Nonfinancial sector earnings benefitted from the economic recovery and
cost cutting. The 8.7% (11.5% y/y) increase was offset, however, by a
5.0% decline (-7.6% y/y) in repatriated foreign sector profits.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326d.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM"><b>Chained 2005$, % AR</b></a></th>
<th scope="col"><b>4Q '09&nbsp; Final</b></th>
<th scope="col"><b>4Q '09&nbsp; Preliminary</b></th>
<th scope="col"><b>4Q '09 <br>
Advance</b></th>
<th scope="col"><b>3Q '09</b></th>
<th scope="col"><b>4Q 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>GDP</b></td>
<td>5.6</td>
<td>5.9</td>
<td>5.7</td>
<td>2.2</td>
<td>0.1</td>
<td>-2.4</td>
<td>0.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol"><b>&nbsp;&nbsp;Inventory
Effect</b></td>
<td>3.8</td>
<td>3.9</td>
<td>3.4</td>
<td>0.7</td>
<td>0.2</td>
<td>-0.7</td>
<td>-0.4</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Final Sales</b></td>
<td>1.7</td>
<td>1.9</td>
<td>2.2</td>
<td>1.5</td>
<td>-0.1</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol"><b>&nbsp;&nbsp;Foreign
Trade Effect</b></td>
<td>0.3</td>
<td>0.3</td>
<td>0.5</td>
<td>-0.8</td>
<td>0.9</td>
<td>1.0</td>
<td>-1.2</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Domestic Final Demand</b></td>
<td>1.4</td>
<td>1.6</td>
<td>1.7</td>
<td>2.3</td>
<td>-1.0</td>
<td>-2.7</td>
<td>-0.4</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol"><b>Chained GDP Price Index</b></td>
<td>0.5</td>
<td>0.4</td>
<td>0.6</td>
<td>0.4</td>
<td>0.7</td>
<td>1.2</td>
<td>2.1</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</body></html>

Last quarter was a strong one for the U.S. economy and the revised picture is little different from the one depicted earlier. The latest revision, however, lowered the growth rate slightly to 5.6% from 5.9%. Nevertheless, last [...]

U.S. GDP 4Q Increase Is Lowered Slightly; Profits Are Firm

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<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326b.jpg" style="width: 312px; height: 265px;"></p>
<p>Last quarter was a strong one for the U.S. economy and the
revised picture is little different from the one depicted earlier. The
latest revision, however, lowered the growth rate slightly to 5.6% from
5.9%. Nevertheless, last quarter's growth remained the best since 3Q
2003 and it pushed the y/y change into (slightly) positive territory
for the first time since early-2008. The revision exceeded Consensus
expectations for 5.9% growth.</p>
<p> The addition to growth from inventories was notched down to
3.8 percentage points. The strength in rebuilding was necessitated by
vigorous and unprecedented decumulation dating back to 2005.</p>
<p>Growth in domestic final demand also was shaved to a still
slow 1.4% from 1.6%. Business investment in equipment &amp;
software was revised up slightly to 19.0% (-7.5% y/y) after a 1.5% 3Q
rise. Investment in business construction, however, offset much of this
increase with a 18.1% decline (-25.3% y/y) which was more than
estimated last month. Growth in residential investment also was revised
down to 3.7% (-12.6% y/y) though it remains the second consecutive
quarterly increase. Personal consumption growth was little revised at
1.6% (1.0% y/y) following a 2.8% 3Q increase. Finally, government
spending dropped an unrevised 1.3% (+1.3% y/y), led by a decline in
defense spending as well as lower spending by state and local
governments.</p>
<p>Improvement in the foreign trade deficit added an unrevised
0.3 percentage points to last quarter's gain in GDP. Strong growth in
exports of 22.8% (-0.7% y/y) was little changed. That surge was offset,
however, by a 15.8% (-6.6% y/y) jump in imports.</p>
<p>Price inflation was revised slightly higher to 0.5% as
measured by the chained GDP price index. Diminished price gains for all
of last year pulled the annual increase down to 1.2% which was nearly
its weakest increase since the early-1960s. The personal consumption
chain price index rose a quickened 2.1%. However, it increased just
0.2% for the whole year owing to the yearly decline in energy prices.
The price index for fixed business investment fell 1.4% (-2.9% y/y),
the fourth consecutive quarterly decline. A 2.7% increase (-2.6% y/y)
in the residential investment price index offset a 3Q decline.</p>
<p>Corporate profits rose 8.0% (30.6% y/y) last quarter. The gain
was driven by an 18.6% jump in financial sector earnings, which are up
more than three-fold during the last year due to lower interest rates.
Nonfinancial sector earnings benefitted from the economic recovery and
cost cutting. The 8.7% (11.5% y/y) increase was offset, however, by a
5.0% decline (-7.6% y/y) in repatriated foreign sector profits.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326d.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM"><b>Chained
2005$, % AR</b></a></th>
<th scope="col"><b>4Q '09&nbsp; Final</b></th>
<th scope="col"><b>4Q '09&nbsp; Preliminary</b></th>
<th scope="col"><b>4Q '09 <br>
Advance</b></th>
<th scope="col"><b>3Q '09</b></th>
<th scope="col"><b>4Q 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>GDP</b></td>
<td>5.6</td>
<td>5.9</td>
<td>5.7</td>
<td>2.2</td>
<td>0.1</td>
<td>-2.4</td>
<td>0.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol"><b>&nbsp;&nbsp;Inventory
Effect</b></td>
<td>3.8</td>
<td>3.9</td>
<td>3.4</td>
<td>0.7</td>
<td>0.2</td>
<td>-0.7</td>
<td>-0.4</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Final Sales</b></td>
<td>1.7</td>
<td>1.9</td>
<td>2.2</td>
<td>1.5</td>
<td>-0.1</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol"><b>&nbsp;&nbsp;Foreign
Trade Effect</b></td>
<td>0.3</td>
<td>0.3</td>
<td>0.5</td>
<td>-0.8</td>
<td>0.9</td>
<td>1.0</td>
<td>-1.2</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol"><b>Domestic Final Demand</b></td>
<td>1.4</td>
<td>1.6</td>
<td>1.7</td>
<td>2.3</td>
<td>-1.0</td>
<td>-2.7</td>
<td>-0.4</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol"><b>Chained GDP Price Index</b></td>
<td>0.5</td>
<td>0.4</td>
<td>0.6</td>
<td>0.4</td>
<td>0.7</td>
<td>1.2</td>
<td>2.1</td>
<td>2.9</td>
</tr>
</tbody>
</table>
<span id="articletitle">Italian Households Take Another
Step Back In Comfort Italian Consumer Confidence Turns The Corner, The
Wrong Corner</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> March 26, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Italian consumers used to feel better. They used to feel a lot
better just a few short months ago. In December of 2009 at a level of
113.6 Italy&#8217;s consumer confidence measure compiled by ISAE hit what is
for now its cycle high. That reading had barely surpassed the December
2006 confidence peak-reading of 113.4. But December 2009 stood as the
best reading since July 2002 and all seemed good. In retrospect,
Italy&#8217;s funk goes back to that late 2000 transitional period when
confidence dropped from very strong levels to begin its period of what
has been readings that have persisted at much lower levels. For Italy
it&#8217;s problems are not just the financial crisis and economic recovery.</p>
<p>Now it is clear that the bloom is off the consumer&#8217;s rose.
That rose seemed to bloom early and with all of Italy&#8217;s troubles it was
hard to tell what the real truth was. The truth appears to be that
Italy&#8217;s consumers were overly optimistic or actually in denial. Their
spirits are now deflating fast.</p>
<p>Italian consumers rate the past twelve months as better in
March than they did in February. But that was only a 61st percentile of
the range response. In March, looking to the more important next
12-months, the overall rating remains what is was in February but that
is a lower 34th percentile of range response. In other words the level
of the reading is nearly in the lower one-third of its range.
Expectations of unemployment are up and that reading is in the top 2%
of its range. Unemployment fears have really ratcheted up in Italy.
It&#8217;s possible that events in fellow Mediterranean country Greece are
having some chilling knock-on effects.</p>
<p>Despite these responses consumers rate their household
finances as one point improved over the next 12-months compared to last
month&#8217;s outlook reading; it&#8217;s a 36 range percentile assessment.
Households also rate current savings as high, in the top 7% of their
range, but future savings are rated in the bottom 25th percentile of
their range. But where the rubber hits the road and the spending
environment is assessed Italian consumers place the assessment right in
the middle at the 54th percentile of the range. Good time to spend?
Mezzo-mezzo.</p>
<p>There is a lot of confusion in Italy about where the country
is going and how fast. There is a lot of concern about unemployment.
Recent events in the e-Zone must have Italians worried; they can see
that if they slip-up there is no safety net that will be thrown under
them, maybe a blanket thrown over them after-the-fact. The thought is
chilling. Not even pasta can salve the pain.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"><b>Italy ISAE
Consumer Confidence</b> </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="4">&nbsp;</td>
<td colspan="2">Since 1992</td>
<td>Rank</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>106.3</td>
<td>107.7</td>
<td>111.6</td>
<td>113.6</td>
<td>37.4</td>
<td>146</td>
<td>31.5%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">Last 12
months</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; OVERALL
SITUATION</td>
<td>-63</td>
<td>-67</td>
<td>-54</td>
<td>-57</td>
<td>67.2</td>
<td>83</td>
<td>61.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; PRICE
TRENDS</td>
<td>-41.5</td>
<td>-45</td>
<td>-38</td>
<td>-41</td>
<td>12.6</td>
<td>206</td>
<td>3.3%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">Next 12months</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; OVERALL
SITUATION</td>
<td>-14</td>
<td>-14</td>
<td>-1</td>
<td>-1</td>
<td>39.7</td>
<td>140</td>
<td>34.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; PRICE
TRENDS</td>
<td>17</td>
<td>16</td>
<td>11.5</td>
<td>8.5</td>
<td>39.5</td>
<td>48</td>
<td>77.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
UNEMPLOYMENT</td>
<td>26</td>
<td>25</td>
<td>16</td>
<td>16</td>
<td>82.4</td>
<td>4</td>
<td>98.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
HOUSEHOLD BUDGET</td>
<td>0</td>
<td>2</td>
<td>-1</td>
<td>1</td>
<td>16.3</td>
<td>202</td>
<td>5.2%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">HOUSEHOLD
FIN SITUATION</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Last 12
months</td>
<td>-38</td>
<td>-39</td>
<td>-36</td>
<td>-37</td>
<td>36.7</td>
<td>138</td>
<td>35.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Next12 months</td>
<td>-6</td>
<td>-7</td>
<td>-6</td>
<td>-3</td>
<td>59.2</td>
<td>136</td>
<td>36.2%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">HOUSEHOLD
SAVINGS</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current</td>
<td>69</td>
<td>73</td>
<td>78</td>
<td>73</td>
<td>81.7</td>
<td>13</td>
<td>93.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Future</td>
<td>-29</td>
<td>-24</td>
<td>-23</td>
<td>-20</td>
<td>43.2</td>
<td>159</td>
<td>25.4%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">MAJOR
Purchases</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current</td>
<td>-40</td>
<td>-39</td>
<td>-36</td>
<td>-38</td>
<td>47.1</td>
<td>98</td>
<td>54.0%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Total
number of months: Back to Jul-92</td>
</tr>
</tbody>
</table>
<span id="articletitle">Michigan Consumer Sentiment Is
Stable At Improved Level</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> </span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326f.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326g.jpg" style="width: 312px; height: 265px;"></p>
<p>Consumer sentiment isn't exactly ebullient, but it is
improved. The University of Michigan reported that its index of
consumer sentiment for the full month of March held steady at 73.6 with
February. That was, however, up from the mid-month reading and up
considerably from the low late in 2008. The figure was slightly higher
than Consensus expectations. The index reached a high of 74.4 this past
January. During the last ten years there has been a 90% correlation
between the level of sentiment and the y/y change in real consumer
spending.</p>
<p>The index of expected economic conditions slipped 0.7% m/m.
Expectations for business conditions fell both for the next year fell
(+77.3% y/y) and for the next five years (+30.2% y/y) as well.
Expectations for personal finances improved (7.7% y/y) to the highest
level this year.</p>
<p>Sentiment about current economic conditions rose just slightly
(30.2% y/y) for the second month. The assessment of current personal
finances (20.3% y/y) recouped a February decline and buying conditions
for large household goods, including furniture, refrigerators, stoves
&amp; televisions (38.8% y/y) were unchanged.</p>
<p>Expected price inflation during the next year slipped to 3.4%
but was up from the December 2008 reading of 1.7%.Respondents' view of
government policy, which may eventually influence economic
expectations, improved slightly m/m but remained down 30.6% from its
high last May. Fifteen percent of respondents thought that a good job
was being done by government versus 40% who thought a poor job was
being done, a twelve-month high.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326h.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100326i.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM"><b>University
of Michigan</b></a></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>Mid-March</b></th>
<th scope="col"><b>&nbsp;February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>March 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">Consumer Sentiment</td>
<td>73.6</td>
<td>72.5</td>
<td>73.6</td>
<td>74.4</td>
<td><span>28.4%</span></td>
<td>66.3</td>
<td>63.8</td>
<td>85.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>82.4</td>
<td>80.8</td>
<td>81.8</td>
<td>81.1</td>
<td>30.2</td>
<td>69.6</td>
<td>73.7</td>
<td>101.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>67.9</td>
<td>67.2</td>
<td>68.4</td>
<td>70.1</td>
<td>26.9</td>
<td>64.1</td>
<td>57.3</td>
<td>75.6</td>
</tr>
</tbody>
</table>
</body></html>

U.S. GDP 4Q Increase IsLowered Slightly; Profits Are Firm

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<br>

<span id="articletext">
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100325e.jpg" style="width: 353px; height: 265px;" align="right">
The Federal Reserve Bank of San Francisco generates a figure called the
"Tech Pulse Index" to follow developments in the U.S. technology
sector. It is designed to be a summary statistic that tracks the health
of this sector in a timely manner. Lately, it has been flashing a
signal of solid recovery with activity at the highest level since the
summer of '08.&nbsp;&nbsp;</p><p>During 4Q09, the index
expanded by 33.7% (AR) following a lesser 3Q gain. These gains followed
four negative readings during the recession which totaled 25.8%. The
historical relationship of the index to the sector is quite good,
having<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100325f.jpg" style="width: 353px; height: 265px;" align="right">
an 92% correlation with the quarterly change in real information
processing equipment &amp; software spending in the National Income
&amp; Product Accounts during the last twenty years.&nbsp;</p><p>The
index is made up of several indicators: 1) The index of industrial
production of computers, communications equipment, and semiconductors,
2) payroll employment in the&nbsp; industries of computer and
electronic product manufacturing, telecommunications, web search
portals and data processing, computer systems design &amp; related
services, 3) real private nonresidential investment in computers
&amp; peripheral equipment, software, &amp; communications
equipment, 4) real personal consumption expenditures on computers,
peripherals and software, 5) manufacturers' shipments of computers and
electronic products in current dollars (used for January 1992
onwards.)</p><p> The data can be found in Haver's <b>SURVEYS</b>
database.&nbsp;</p>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Tech
Pulse Index&nbsp; (FRB San Francisco) </b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</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">Index Level (Jan. 2000 = 100)</td>
<td>94.0</td>
<td>87.5</td>
<td>84.0</td>
<td>87.7</td>
<td>107.2</td>
<td>102.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Q/Q Chg.</td>
<td>33.7%</td>
<td>17.3%</td>
<td>-6.1%</td>
<td>-18.2%</td>
<td>4.2%</td>
<td>9.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Y/Y Chg.</td>
<td>-1.6%</td>
<td>-18.8%</td>
<td>-25.8%</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</span></body></html>

The Federal Reserve Bank of San Francisco generates a figure called the "Tech Pulse Index" to follow developments in the U.S. technology sector. It is designed to be a summary statistic that tracks the health of this sector in a [...]

The Technology Sector Is Firming

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

Resilient US economy is pushing up longer-term inflation expectations and interest rates

Positive US economic data surprises leading to upward adjustment of interest rate expectations

Recent aggressive policy easing in China has given a massive boost to equity prices

FOMC expects much more easing now than in June

US is clear world leader in business capital spending on artificial intelligence

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The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) eased 0.2% (-3.6% y/y) in January to 100.7 after rising 1.5% to 100.9 in December and falling 2.9% in November to 99.4. The level of home affordability has risen 12.0% from its low of 89.9 in October 2023. It remains 43.8% below the high of 179.2 in April 2020.

The slip in affordability in January reflected a 1.6% drop (+5.0% y/y) in the median price of an existing single-family home to $402,000 which was offset by a rise in mortgage rates to 7.04% from 6.80% in December. The price decline was the sixth in the last seven months from the record $432,900 in June. The rise in mortgage rates compared to a September low of 6.26% and a 7.14% high during May. It remained increased from a December 2020 low of 2.73%. These changes raised the principal & interest payment by 0.8% (8.4% y/y) to $2,148 per month. That was well above the most recent low of $984 in February 2020. Monthly mortgage payments averaged a steady 24.8% of income during January. They remained up from a low of 14.0% in April 2020.

The rise in housing costs in January was accompanied by improvement in median family income. It increased 0.7% (4.5% y/y) to a record $103,850 after rising 0.3% in December and 0.4% in November.

Housing affordability was mixed m/m across the country in January. The index rose 0.4% (-5.9% y/y) to 134.2 in the Midwest. It remains the most affordable region of the country. In the South, the index eased 0.6% (-2.5% y/y) to 103.3 and the affordability index in the Northeast fell 1.9% (-8.7% y/y) to 89.9. In the West, where homes are the least affordable, the index weakened 1.8% (-5.5% y/y) to 69.8 in January.

The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990 and reached its all-time high of 213.3 in January 2013; since then, it fell below 100 for the first time in June 2022 (98.8).

Data on Housing Affordability can be found in Haver’s **REALTOR** database. Median home sales prices are also available in **USECON**. Higher frequency interest rate data are found in **SURVEYS**, **WEEKLY**, and **DAILY**.

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- Home prices ease but mortgage rates rise.
- Median income strengthens.
- Affordability weakens in most of country.

U.S. Housing Affordability Is Little Changed in January

Carol Stone, CBE

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Yesterday, March 13, the Federal Reserve published the Financial Accounts for Q4 2024. They show, among numerous other things, that domestic nonfinancial participants in the U.S. economy had borrowings that represented 11.4% of GDP during Q4. This is down moderately from 12.3% in Q3 and produced an amount for the whole year of 2024 of 11.9% of GDP. The quarterly amounts cited here are at seasonally adjusted annual rates.

In Q4, the largest borrowing sector was the federal government, which used $2,602.9 billion, or 8.8% of GDP, up from $2,261 billion in Q3, or 7.7% of GDP.  Households borrowed $624.3 billion or 2.1% of GDP; this amount included $294.3 billion of home mortgages and $133.1 billion of consumer credit.

Nonfinancial business corporations actually paid down debt of $64.1 billion in Q4, or 0.2% of GDP. In Q1 of 2024, businesses had borrowed $698.2 billion and for the whole year, they borrowed $436.6 billion or 1.5% of GDP. State and local governments paid down $46.0 billion in Q4; for the whole year they did use $97.8 billion or 0.3% of GDP.

In addition to domestic borrowers, the foreign sector borrowed $341.3 billion in Q4, or 1.1% of GDP and up from $196.7 billion in Q3.  For all of 2024, foreign participants used $345.5 billion, or 1.2% of GDP.

The Financial Accounts data are in Haver's **FFUNDS** database. The Federal Reserve is the main source, while associated information is compiled in the Integrated Macroeconomic Accounts produced jointly with the Bureau of Economic Analysis (BEA); those nonfinancial data are carried in Haver's **USNA** database as well as in **FFUNDS**. Note that revisions are common throughout the accounts with every quarterly release.

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- Nonfinancial sectors together borrowed 11.4% of GDP in Q4.
- Not surprisingly, the largest borrowing sector was the federal government.
- Households had sizable amounts of home mortgage borrowing, though this was less than in Q3.
- Businesses paid down debt in Q4.

U.S. Economic Sectors Borrowed Moderately in Q4 and for All of 2024

Andrew Cates

**Falling US growth momentum**
The latest Blue Chip Economic Indicators survey reflects a shifting global economic landscape, with the US experiencing a notable loss of momentum. After climbing above 2.0% on the back of a strong economic performance in late 2024, consensus forecasts for US growth in 2025 have now been revised downward for the first time in nearly a year. This reversal reflects weaker-than-expected economic data and emerging challenges tied to the policy shifts of the new administration. The downgrade in US growth projections also coincides with a further downward revision to an already subdued outlook for the UK and the euro area, reinforcing concerns about a sluggish global growth outlook (chart 1).

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**Global inflation expectations**
In the meantime the same survey reveals growing concerns about the inflation outlook in the US and Europe this year, and possibly reflecting the impact of US tariff policies on global price pressures. Japan’s inflation forecast for 2025 has also surged, as rising import costs and shifting trade dynamics have additionally contributed to stronger price pressures. This all stands in contrast to China with inflation expectations for this year falling below 1%, reinforcing concerns about deflation and weak demand (chart 2).

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**Global bond markets**
Recent shifts in 10-year government bond yields reflect changing market expectations. While yields have risen sharply in Germany, China, and Japan, they have fallen in the US. Germany’s increase is tied to expanded defense spending and industrial subsidies, while China’s reflects a shift toward more aggressive fiscal easing, with its deficit target rising to 4% of GDP to counter deflation and weak demand. In contrast, falling US yields signal a reassessment of growth expectations under the new administration. This divergence suggests capital may be flowing toward economies with stronger fiscal stimulus, potentially weakening the dollar, increasing borrowing costs for US businesses, and complicating efforts to revive domestic manufacturing.

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**Overseas holdings of US Securities**
Latest data show that foreign-holdings of US long-term securities have risen steadily over the past decade, with a notable acceleration in the past two years. The most recent data additionally highlights a significant increase in foreign ownership of US corporate equities, reflecting, until recently, investor confidence in US companies.

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**Industrialisation versus de-industrialisation**
Recent US policy shifts—particularly higher tariffs on Chinese imports—aim to address the long-term decline in domestic manufacturing jobs. However, their effectiveness is uncertain, given the growing role of automation and AI in reshaping industrial production. While tariffs may offer short-term relief, they are unlikely to reverse decades of global manufacturing shifts. China’s rise from a low-value agrarian economy to an industrial powerhouse has reshaped trade patterns, while US industrial employment has steadily declined, mirroring trends in other advanced economies. Meanwhile, Vietnam and other emerging markets have absorbed manufacturing capacity, benefiting from shifting supply chains. The real challenge for US policymakers is not just bringing back jobs but ensuring domestic industries stay competitive amid changing cost structures and technological advancements.

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**Global competitiveness**
Historically, China's low unit labour costs provided it with a significant advantage, fuelling its manufacturing boom and accelerating the offshoring of US industrial jobs. However, as China's wages have risen due to economic development and increased productivity, and as US unit labour costs have remained relatively stable, the gap has narrowed considerably. Yet, still high labour costs in the US – coupled with rising trade barriers and rising input costs - still pose a challenge to the effectiveness of US policies, as firms may still find it difficult to maintain competitiveness without significant productivity gains. Indeed, as suggested above, there is a real risk that firms may instead accelerate their shift toward automation or relocate production to other low-cost regions (e.g. Vietnam), undermining the broader economic rationale for these interventions. The erosion of economic goodwill, combined with rising costs and financial market instability, additionally suggest that while the strategic objectives of US policy may be clear, the long-term implications remain highly uncertain.

250313Z6.jpg

The recent financial market volatility, marked by sharp swings in bond yields and equity market repricing, reflects growing uncertainty about the trajectory of the US economy amid a rapidly shifting policy environment. The US administration’s latest tariff measures, and their conflicting objectives, have amplified uncertainty, stifled risk appetite and further ignited inflation concerns (charts 1 and 2). Markets are grappling with the inflationary impact of rising import costs, the potential supply chain disruptions caused by abrupt shifts in trade policy, and the broader implications of protectionism on corporate investment. Meanwhile, recent policy announcements from Germany and China, coupled with firming inflationary pressures in Japan, have pushed global (ex-US) bond yields sharply higher, potentially amplifying global financial instability (charts 3 and 4). These shifts could profoundly reshape global trade and investment, not just through economic fundamentals but also through a growing erosion of goodwill toward the United States. As policy unpredictability forces companies and governments to hedge against potential disruptions, trust in the stability of US economic leadership is weakening. At the same time, concerns are mounting over the effectiveness of US policy choices, particularly in relation to one of its core ambitions—reshoring manufacturing jobs (charts 5 and 6). The question remains whether these interventions will achieve their intended goals or simply accelerate automation and supply chain realignment elsewhere.

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Charts of the Week: From Blue to Red

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The Producer Price Index for final demand held steady (+3.2% y/y) during February after increasing 0.6% in January, revised from 0.4% and rising an unrevised 0.5% in December according to the Bureau of Labor Statistics (BLS). The February reading compared to a 0.2% rise expected in the Action Economics Forecast Survey. Producer prices excluding food, energy & trade services rose 0.2% (3.3% y/y) last month after an unrevised 0.3% January increase, and an unrevised 0.4% gain in December. The PPI excluding food & energy eased 0.1% (+3.4% y/y) after rising 0.5% in January, revised from 0.3%. A 0.3% increase had been expected.

Energy prices declined 1.2% (-3.7% y/y) during February, after rising 1.8% in January. Gasoline costs fell 4.7% (-8.2% y/y) after rising 0.3% while home heating oil prices declined 9.8% (-12.2% y/y) after a 6.5% strengthening. Electric power prices rose 0.5% (0.9% y/y) in February following a 0.4% January decline and natural gas costs strengthened 1.3% (6.7% y/y) following a 3.8% surge. Diesel fuel prices declined 3.9% (-18.5% y/y) after a 10.5% jump.

Final demand food prices rose 1.7% (5.9% y/y) in February, following a 1.0% January gain. Egg prices jumped 28.1% (136.6% y/y) following a 44.0% increase. Prices for fresh and dry vegetables rose 6.0% (-16.3% y/y) after falling 22.3% in January. Beef & veal prices declined 1.8% (+9.5% y/y) after a 5.7% rise while dairy product prices rose 0.1% (5.7% y/y) after a 0.4% increase.

Final demand goods prices excluding food & energy rose 0.4% (2.1% y/y) in February following a 0.2% rise. Core finished consumer goods prices rose 0.4% (2.1% y/y) after a decline of 0.2% in January. Core nondurable goods prices strengthened 0.6% (2.3% y/y) last month after falling 0.4% in January. Durable consumer goods prices improved 0.2% (1.6% y/y), after edging 0.1% higher in January. Capital equipment prices rose 0.2% (2.5% y/y) last month following a 0.3% gain. Core government-purchased goods prices rose 0.2% (2.4% y/y) in January, after a 0.6% January increase.

Final demand services prices declined 0.2% (+3.9% y/y) last month after rising 0.6% in January. Trade services prices fell 1.0% (+4.0% y/y) last month following a 1.2% gain. Trade of finished goods prices declined 1.1% (3.6% y/y) and reversed the January rise. Prices for final demand transportation and warehousing services held steady (+2.6% y/y) in February, after strengthening 0.9% in January. Services prices less these costs rose 0.2% (4.0% y/y) last month, after a rise of 0.3% in January.

Construction costs eased 0.1% (+1.7% y/y) in February, after increasing 0.4% during January.

Prices for intermediate demand of processed goods rose 0.5% (0.3% y/y) following a 1.0% jump. Processed energy goods prices rose 0.5% last month after increasing 3.6% in January, while food prices rose 2.0% following a 0.7% January gain.

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

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- Energy prices weaken and food prices firm.
- Price gains in core goods pick up.
- Services prices decline.

U.S. PPI Is Unchanged in February; Rise in Core Index Moderates

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Initial claims for unemployment insurance were 220,000 seasonally adjusted in the week ended March 8, just slightly less than the 222,000 the week before; that earlier amount was revised marginally from 221,000 reported before. In the latest week, the Action Economics Forecast Survey had expected 230,000. In this March 8 week, the four-week moving average was 226,000.

The total number of unemployment insurance beneficiaries was 1.87 million in the week ended March 1, down from 1.897 million in the week ended February 22. The four-week moving average was 1.872 million through the March 1st week, up from 1.866 million the week before.

The insured unemployment rate, that is, the total number of beneficiaries as a percent of covered employment, remained at 1.2%, which has held since March 2023.

Economic conditions vary widely across states and territories. In the week ended February 22, the highest rates were in Rhode Island (3.37%), New Jersey (2.90%), Massachusetts (2.58%), Minnesota (2.57%) and California (2.42%). The lowest rates were in Florida (0.36%), Alabama (0.44%), Virginia (0.46%), Tennessee and North Carolina (both 0.56%) and Mississippi (0.58%). Rates in other notable states include New York (2.08%), Pennsylvania (2.03%) and Texas (1.12%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Initial claims were less than forecast.
- Total recipients of unemployment insurance also fell.
- Insured unemployment rate still 1.2%.

Economy in Brief: March 2010

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