Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123a.jpg" width="353">
Last week, chain store sales recovered 0.8% following the prior week&#39;s 0.4% dip, according to the International Council of Shopping Centers (ICSC)-UBS.
Sales so far in November are 0.7% ahead of October.
Not so positive was the second consecutive 0.5% weekly decline in the leading indicator of chain store sales from ICSC. The monthly average is up just 0.2% from October which rose 0.4% from September.
During the last ten years there has been a 60% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
This 2001 report from the Federal Reserve Bank of New York examines <a href="http://www.newyorkfed.org/research/current_issues/ci7-11.pdf"> &quot;The Effect of Tax Changes on Consumer Spending&quot;</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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/20/04</th>
<th scope="col">11/13/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>439.6</td>
<td>436.1</td>
<td>3.9%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

Last week, chain store sales recovered 0.8% following the prior week's 0.4% dip, according to the International Council of Shopping Centers (ICSC)-UBS. Sales so far in November are 0.7% ahead of October. Not so positive was the second [...]

Chain Store Sales Recover

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123b.jpg" width="353">
The Chicago Fed National Activity Index (CFNAI) for October rose to 0.52 but the prior month&#39;s negative reading was deepened slightly. The three-month moving average of the CFNAI fell to the lowest level in nearly a year.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth.
During the last twenty years there has been a 74% correlation between the level of the CFNAI and q/q growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Oct &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>0.52</td>
<td>-0.04</td>
<td>0.19</td>
<td>-0.11</td>
<td>-0.40</td>
<td>-1.19</td>
</tr>
</tbody>
</table>
</body>
</html>

The Chicago Fed National Activity Index (CFNAI) for October rose to 0.52 but the prior month's negative reading was deepened slightly. The three-month moving average of the CFNAI fell to the lowest level in nearly a year. A zero value [...]

Chicago Fed Nat'l Activity Index Improved Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123c.jpg" width="353">
Sales of existing single family homes held the high ground with a 0.1% (+5.6% y/y) slip in October to 6.75M. September sales were revised up slightly and Consensus expectations had been for sales of 6.72M.
The figures reflect closings of home sales in earlier months.
Sales fell moderately in most areas of the country except in the South where they rose (+7.4% y/y) to a record high.
The median price of an existing home rose slightly to $187,000 (+8.8% y/y) following three months of decline.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;6,750</td>
<td>&nbsp;6,760</td>
<td>5.6%</td>
<td>6,098</td>
<td>5,593</td>
<td>5,290</td>
</tr>
</tbody>
</table>
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Sales of existing single family homes held the high ground with a 0.1% (+5.6% y/y) slip in October to 6.75M. September sales were revised up slightly and Consensus expectations had been for sales of 6.72M. The figures reflect closings [...]

U.S. Existing Home Sales Remained High

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123c.jpg" width="353">
Sales of existing single family homes held the high ground with a 0.1% (+5.6% y/y) slip in October to 6.75M. September sales were revised up slightly and Consensus expectations had been for sales of 6.72M.
The figures reflect closings of home sales in earlier months.
Sales fell moderately in most areas of the country except in the South where they rose (+7.4% y/y) to a record high.
The median price of an existing home rose slightly to $187,000 (+8.8% y/y) following three months of decline.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;6,750</td>
<td>&nbsp;6,760</td>
<td>5.6%</td>
<td>6,098</td>
<td>5,593</td>
<td>5,290</td>
</tr>
</tbody>
</table>
Chicago Fed Nat'l Activity Index Improved Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 23, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123b.jpg" width="353">
The Chicago Fed National Activity Index (CFNAI) for October rose to 0.52 but the prior month&#39;s negative reading was deepened slightly. The three-month moving average of the CFNAI fell to the lowest level in nearly a year.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth.
During the last twenty years there has been a 74% correlation between the level of the CFNAI and q/q growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders.

<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">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Oct &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>0.52</td>
<td>-0.04</td>
<td>0.19</td>
<td>-0.11</td>
<td>-0.40</td>
<td>-1.19</td>
</tr>
</tbody>
</table>
Chain Store Sales Recover 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 23, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123a.jpg" width="353">
Last week, chain store sales recovered 0.8% following the prior week&#39;s 0.4% dip, according to the International Council of Shopping Centers (ICSC)-UBS.
Sales so far in November are 0.7% ahead of October.
Not so positive was the second consecutive 0.5% weekly decline in the leading indicator of chain store sales from ICSC. The monthly average is up just 0.2% from October which rose 0.4% from September.
During the last ten years there has been a 60% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
This 2001 report from the Federal Reserve Bank of New York examines <a href="http://www.newyorkfed.org/research/current_issues/ci7-11.pdf"> &quot;The Effect of Tax Changes on Consumer Spending&quot;</a>. 

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/20/04</th>
<th scope="col">11/13/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>439.6</td>
<td>436.1</td>
<td>3.9%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123d.jpg" width="353">
Taiwan&#39;s third quarter real gross domestic production, on a seasonally unadjusted basis. was 5.3% above the third quarter of 2003 In nominal terms it was 4.7% above a year ago, indicating that deflation is still a factor in the Taiwanese economy.The attached chart shows the year-to-year changes in Taiwan&#39;s real and nominal GDP.
Detailed data for the third quarter real GDP are not yet available, but the nominal data indicate that the improvement in capital spending that began late last year is continuing at a fast year-over-year rate of 20.1%. Exports are up almost 20% and imports, probably reflecting the strength in capital spending, are up 30.3%. Even private consumption expenditures are showing strength. Although, the year-to-year increases have been declining this year, they are well above the quarters of last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123e.jpg" width="353">
While changes in the deflator are still negative, changes in consumer and wholesale prices have become positive. Big increases in agricultural products and petroleum products have led to sharp increases in wholesale prices that are beginning to affect consumer prices. In the table below we have aggregated the monthly wholesale and consumer data to quarterly for easy comparison with the GDP deflator. The second chart compares the year-to-year change in the GDP deflator and the Consumer Price Index. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Year-to-Year % Change&nbsp;</th>
<th scope="col">Q3 04</th>
<th scope="col">Q2&nbsp; 04</th>
<th scope="col">Q1 04</th>
<th scope="col">Q4 03</th>
<th scope="col">Q3 04</th>
<th scope="col">Q2 04&nbsp;&nbsp;</th>
<th scope="col">Q1 03&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Real GDP</td>
<td>5.27</td>
<td>7.88</td>
<td>6.72</td>
<td>7.22</td>
<td>4.82</td>
<td>1.61</td>
<td>5.26</td>
</tr>
<tr>
<td class="firstcol">Nominal GDP</td>
<td>3.73</td>
<td>4.90</td>
<td>4.69</td>
<td>2.83</td>
<td>1.54</td>
<td>-1.86</td>
<td>0.98</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Private Consumption</td>
<td>3.50</td>
<td>5.45</td>
<td>4.17</td>
<td>1.98</td>
<td>0.59</td>
<td>-2.58</td>
<td>0.27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Gross Fixed Capital&nbsp;</td>
<td>20.12</td>
<td>23.52</td>
<td>16.14</td>
<td>6.75</td>
<td>-1.96</td>
<td>-6.99</td>
<td>-1.97</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Exports&nbsp;&nbsp;</td>
<td>19.47</td>
<td>25.25</td>
<td>17.16</td>
<td>14.64</td>
<td>9.37</td>
<td>3.41</td>
<td>10.82</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Imports</td>
<td>30.25</td>
<td>32.72</td>
<td>25.57</td>
<td>18.50</td>
<td>3.46</td>
<td>3.46</td>
<td>15.76</td>
</tr>
<tr class="odd">
<td class="firstcol">GDP Deflator&nbsp;</td>
<td>-0.97</td>
<td>-2.84</td>
<td>-1.83</td>
<td>-2.45</td>
<td>-2.20</td>
<td>-1.71</td>
<td>-2.16</td>
</tr>
<tr>
<td class="firstcol">CPI</td>
<td>2.89</td>
<td>1.20</td>
<td>0.51</td>
<td>-0.19</td>
<td>-0.59</td>
<td>-0.11</td>
<td>-0.21</td>
</tr>
<tr class="odd">
<td class="firstcol">WPI</td>
<td>10.47</td>
<td>6.46</td>
<td>2.47</td>
<td>0.92</td>
<td>1.76</td>
<td>2.22</td>
<td>5.07</td>
</tr>
</tbody>
</table>
</body>
</html>

Taiwan's third quarter real gross domestic production, on a seasonally unadjusted basis. was 5.3% above the third quarter of 2003 In nominal terms it was 4.7% above a year ago, indicating that deflation is still a factor in the [...]

Taiwan Shows Good Growth in the Third Quarter: Consumer and Wholesale Price Increases Suggest Deflation May Soon [...]

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041122a.jpg" width="353">
The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) rose last week for the fourth period in the last five. The 0.4% w/w rise eased the decline in the index&#39;s smoothed six-month growth rate to -0.7% from -1.6% late last month.
Successive positive growth in the weekly index as recently tallied occurred last this past March after which the index&#39;s forward momentum eased, foreshadowing a slowdown in real GDP growth into the 3-4% range from the 4-7% range.
Past recessionary periods in the US economy were signaled by negative growth in the ECRI Leading Index in the -5 to -10% range. During the last ten years there has been a 69% correlation between the six-month growth in the ECRI leading index of the US economy and two quarter growth in real GDP.
The components of the ECRI weekly leading index are money supply plus stock &amp; bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.
The ECRI Leading Index&#39;s recent pattern generally mirrors the Conference Board&#39;s Index of Leading Economic Indicators, with a slight lead. Construction of the ECRI Leading Index differs from the Conference Board Index but there has been a 70% correlation between the y/y percent change in the two series over the last 10 years.
The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months.
The latest from ECRI is available <a href="http://www.businesscycle.com/"> 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/weekly/@W8/@W801/@W801.HTM">ECRI Leading Index</a></th>
<th scope="col">11/12/04</th>
<th scope="col">11/05/04</th>
<th scope="col">Growth Rate</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Weekly</td>
<td>132.7</td>
<td>132.2</td>
<td>-0.7%</td>
<td>6.5%</td>
<td>1.1%</td>
<td>-5.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Oct</td>
<td>Sept</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Monthly</td>
<td>131.2</td>
<td>131.7</td>
<td>-1.2%</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
</html>

The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) rose last week for the fourth period in the last five. The 0.4% w/w rise eased the decline in the index's smoothed six-month growth [...]

ECRI U.S. Leading Index Moved Up

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041119d.jpg" width="353">
The Cabinet Office of the Japanese Government announced yesterday that it would shift GDP calculations to chain-weighting beginning with the release of revised Q3 data on December 8. It will also switch the reference year from 1995 to 2000 and incorporate new input data in various components.
Beneficially for users, the Cabinet Office released &quot;Interim series&quot;, in which the current official data are converted to a chain-weighted basis, so the effect of the chain-weighting alone can be seen. Total GDP in 1995 yen is reduced from &yen;567.6 trillion in Q3 to &yen;550.2 trillion, or about 3.1%. The hesitant growth in the latest couple of quarters is eliminated all together.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041119c.jpg" width="353">
While this now flat pattern in Japanese GDP might be disappointing, some growth is still evident over the last year, and the pattern now in evidence allows a more realistic appraisal. Chain-weighting or chain-linking reduces the numerical impact on total growth of components for which prices are falling rapidly. Since computer prices are the main single source of price decline, the adjustment to growth is most apparent in fixed investment. Private fixed investment is lowered by &yen;5.2 trillion or 5.3% in the latest quarter. While in nominal yen, investment is 15.5% of total GDP, its share of the chaining adjustment is 30%. Interestingly, this negative difference is, however, a recent development, and in the late 1990s, chained investment was sometimes slightly larger than fixed-weight investment. This unusual situation bears closer investigation and may be related to the overall pattern of deflation in the Japanese economy.
The &quot;interim&quot; chain-weight series are now contained in Haver&#39;s JAPAN database, right in the &quot;National Accounts&quot; menus. Our colleagues at Nomura Research Institute in Tokyo assisted with a quick translation of the release tables into English.

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol">Trillion Yen</th>
<th scope="col">3 Qtr 2004</th>
<th scope="col">2 Qtr 2004</th>
<th scope="col">Year Ago</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP: Chain Weighted</td>
<td>550.2</td>
<td>550.4</td>
<td>535.8</td>
<td>535.9</td>
<td>528.9</td>
<td>530.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>-0.0</td>
<td>0.0</td>
<td>2.7</td>
<td>1.3</td>
<td>-0.4</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Fixed Weighted</td>
<td>567.6</td>
<td>567.2</td>
<td>546.9</td>
<td>546.4</td>
<td>533.3</td>
<td>534.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>0.1</td>
<td>0.3</td>
<td>3.8</td>
<td>2.5</td>
<td>-0.2</td>
<td>0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Private Fixed Investment: Chain Weighted</td>
<td>93.9</td>
<td>94.6</td>
<td>87.4</td>
<td>88.2</td>
<td>82.6</td>
<td>88.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; % Change</td>
<td>-0.8</td>
<td>0.2</td>
<td>7.4</td>
<td>6.8</td>
<td>-6.3</td>
<td>0.7</td>
</tr>
<tr>
<td class="firstcol">Fixed Weighted</td>
<td>99.1</td>
<td>99.3</td>
<td>90.7</td>
<td>91.1</td>
<td>83.1</td>
<td>89.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; % Change</td>
<td>-0.2</td>
<td>0.6</td>
<td>9.2</td>
<td>9.6</td>
<td>-6.9</td>
<td>1.7</td>
</tr>
</tbody>
</table>
</body>
</html>

The Cabinet Office of the Japanese Government announced yesterday that it would shift GDP calculations to chain-weighting beginning with the release of revised Q3 data on December 8. It will also switch the reference year from 1995 to [...]

Chain-Linking Comes to Japan's GDP Accounts

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Michael J. Moran

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

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

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

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

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

Personal Income, Consumption, and Prices in March

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

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

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

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

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

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

U.S. Pending Home Sales Surge in March

Sandy Batten

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

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

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

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

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

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

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

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

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

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

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

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

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

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

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

Economy in Brief: November 2004

Jump to:

Chain Store Sales Recover

Chicago Fed Nat'l Activity Index Improved Sharply

U.S. Existing Home Sales Remained High

U.S. Existing Home Sales Remained High

Taiwan Shows Good Growth in the Third Quarter: Consumer and Wholesale Price Increases Suggest Deflation May Soon [...]

ECRI U.S. Leading Index Moved Up

ECRI U.S. Leading Index Moved Up

Chain-Linking Comes to Japan's GDP Accounts