Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226g.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226h.jpg" height="265" width="312">
The Conference Board reported today that consumer confidence
plummeted this month. The 14.1% m/m decline to a reading of 75.0 was
the largest m/m give back since September of 2005 and it dropped the
level to its lowest since early 2003. A consensus of economists foresaw
less of a decline to a level of 82.
A decline in the expectations component accounted for much of
last month's decline in overall confidence. The 16.5% m/m drop followed
an 8.6% January decline and lowered the expectations component to its
lowest since early 1991. Expectations for business conditions
dropped to a 36 year low while expectations for employment dropped to
the lowest since 1980. 
Respondents planning to buy an automobile within the next six
months plummeted but plans to buy an appliance rose.
The present conditions index fell a somewhat lesser 12.0% m/m
to the lowest level since late 2004. Just 18.5% of respondents saw
business conditions as good, near the least since 2004. Jobs as
plentiful were seen by 18.6% while 23.8% saw them as hard to get. 
The expected inflation rate in twelve months was stable m/m at
5.3% but that still was up from the 5.1% expected rate during 2006 and
2007.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board &nbsp;(SA, 1985=100)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>75.0</td>
<td>87.3</td>
<td>-32.6%</td>
<td>103.4</td>
<td>105.9</td>
<td>100.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Conditions</td>
<td>100.6</td>
<td>114.3</td>
<td>-26.6%</td>
<td>128.8</td>
<td>130.2</td>
<td>116.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

The Conference Board reported today that consumer confidence plummeted this month. The 14.1% m/m decline to a reading of 75.0 was the largest m/m give back since September of 2005 and it dropped the level to its lowest since early [...]

Consumer Confidence Plummet, Expectations the Dreariest

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Week to week, retail gasoline prices rose nearly a dime per
gallon to $3.13 per gallon, according to the US Department of Energy
survey. The retail price for regular grade gasoline was its highest
since early last June. This week, a rise in wholesale gasoline prices
portend further gains in the retail price.
The price for a barrel of WTI crude oil broke just over $100.
This week crude prices have backed off but just slightly to $99.41 per
barrel.
Natural gas prices were strong last week. They rose nearly
$1.00 per mmbtu from the January average due to colder Winter
temperatures.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226e.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226f.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">02/25/08</th>
<th scope="col">02/18/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.13</td>
<td>3.04</td>
<td>31.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>--</td>
<td>100.01</td>
<td>72.2%</td>
<td>94.00</td>
<td>61.11</td>
<td>58.16</td>
</tr>
</tbody>
</table>
</body></html>

Week to week, retail gasoline prices rose nearly a dime per gallon to $3.13 per gallon, according to the US Department of Energy survey. The retail price for regular grade gasoline was its highest since early last June. This week, a [...]

Gasoline Prices Surged, Crude Oil Crested $100

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226d.jpg" align="left" border="0" height="265" width="353">
According to the S&amp;P/Case-Shiller
Composite 20 home price index, U.S. home prices fell
2.1% m/m in December and repeated the prior months' decline. Home
prices have fallen in every month since July of 2006 and the total
decline over that period amounts to 10.5%. Prices were down 9.1% y/y.
The index of 20 U.S. cities and their surrounding areas is not
adjusted for the quality or the size of the home. The home price index
from the Office of Federal Housing Enterprise Oversight (OFHEO) does
make these adjustments. This series indicates that through the third
quarter home prices still were rising, but at a reduced 1.8% y/y rate.
The composite index of homes in 10 metropolitan areas fell
2.3% (-9.8% y/y) last month.
Home prices in San Diego California continued quite weak and
fell 15.0% y/y. Prices in Miami Florida also are down a sharp 17.5%
y/y. Home prices in Las Vegas Nevada also were on the list of very weak
home prices and fell 15.3% y/y while in Los Angeles prices fell 13.7%
y/y.
Relatively moderate declines were registered in New York
(-5.6% y/y), Chicago (-4.5% y/y) and Denver, also down 4.5% y/y.
An overview of the S&amp;P/Case-Shiller home price series
can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.
The S&amp;P/Case-Shiller home price series can be found in
Haver's REGIONAL database.
Bubble, Bubble, Toil, and Trouble is a 2007
article from the Federal Reserve Bank of Chicago and it can be found <a href="http://www.chicagofed.org/publications/economicperspectives/ep_1qtr2007_part2_haines_rosen.pdf">
here</a>. 
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (NSA, Jan 00 = 100)</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">20 City Composite
Index</td>
<td>184.86</td>
<td>188.92</td>
<td>-9.1%</td>
<td>-3.9%</td>
<td>7.6%</td>
<td>15.8%</td>
</tr>
</tbody>
</table>
</body></html>

According to the S&P/Case-Shiller Composite 20 home price index, U.S. home prices fell 2.1% m/m in December and repeated the prior months' decline. Home prices have fallen in every month since July of 2006 and the total decline over [...]

Case-Shiller Home Price Index Lowest Since 2005

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226a.jpg" width="353">
Finished producer prices surged 1.0% during January following a 0.3% dip in December. The latest increase was triple Consensus expectations for a 0.3% rise. At an annual rate the PPI is up 13.5% during the last three months.
Less food and energy this measure of core prices rose 0.4% and it was double expectations. At an annual rate core producer prices have risen 3.7% during the last three months.
Energy prices made up half of December&#39;s decline with a 1.5% rise (+23.7% y/y). Gasoline prices rose 2.9% (48.1% y/y) after a 7.6% December drop. Home heating oil prices surged 8.5% (48.% y/y) and natural gas prices rose 0.7% (0.6% y/y) after five consecutive months of decline.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226b.jpg" width="353">
Why Do Gasoline Prices React to Things That Have Not Happened? from the Federal Reserve Bank of St. Louis is available <a href="http://stlouisfed.org/publications/re/2007/c/pages/gas-prices.html">here</a>.
Finished consumer food prices jumped 1.7% (8.2% y/y) after an upwardly revised 1.4% December surge. During the past three months food prices have risen at a 12.0% annual rate.
Prices of core finished consumer goods rose 0.4% (2.7% y/y) lifted by a 0.8% rise (-0.5% y/y) in passenger car prices and a 0.4% (1.6%) gain in prices of household appliances. Core consumer nondurables prices were strong again and rose 0.4% (3.9% y/y). The three month gain in these prices is 3.9%. Pharmaceutical prices have been quite strong but apparel prices have been flat. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226c.jpg" width="353">
Capital equipment prices also rose 0.4% (1.6% y/y) after a 0.1% December uptick. Heavy truck prices rose 0.4% (3.3% Y/Y) but prices for light trucks fell 0.2% (+0.2% y/y), down for the second consecutive month.
Intermediate goods prices surged 1.4% after a modest 0.2% December decline. Excluding food &amp; energy prices also were strong. They posted a 0.8% increase led by strength in industrial chemical prices which have risen 40.7% (AR) over the last three months. Steel mill prices also have been strong but copper prices have been down.
The crude materials PPI surged 2.5%, more than double the strong December rise. Crude energy materials prices jumped 1.8% (40.9% y/y). The core crude materials PPI surged 4.0% (21.0% y/y) as prices for iron &amp; steel scrap as well as prices for aluminum scrap have been quite strong.

<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/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>1.0%</td>
<td>-0.3%&nbsp;</td>
<td>7.7%&nbsp;</td>
<td>3.9%</td>
<td>3.0%</td>
<td>&nbsp;4.9%&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.4%</td>
<td>0.2%</td>
<td>&nbsp;2.4%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>1.4%</td>
<td>-0.2%</td>
<td>9.1%</td>
<td>4.1%</td>
<td>6.4%</td>
<td>&nbsp;8.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.8%</td>
<td>0.0%</td>
<td>4.1%</td>
<td>2.8%</td>
<td>6.0%</td>
<td>&nbsp;5.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>2.5%</td>
<td>&nbsp;1.1%&nbsp;</td>
<td>&nbsp;31.0%</td>
<td>12.2%</td>
<td>1.4%</td>
<td>14.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>4.0%</td>
<td>0.2%</td>
<td>&nbsp;21.0%</td>
<td>15.9%</td>
<td>20.8%</td>
<td>4.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

Finished producer prices surged 1.0% during January following a 0.3% dip in December. The latest increase was triple Consensus expectations for a 0.3% rise. At an annual rate the PPI is up 13.5% during the last three months. Less food [...]

U.S. PPI Total & Core Strong

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226a.jpg" align="left" border="0" height="265" width="353">
Finished producer prices surged 1.0% during January following
a 0.3% dip in December. The latest increase was triple Consensus
expectations for a 0.3% rise. At an annual rate the PPI is up 13.5%
during the last three months.
Less food and energy this measure of core prices rose 0.4% and
it was double expectations. At an annual rate core producer prices have
risen 3.7% during the last three months.
Energy prices made up half of December's decline with a 1.5%
rise (+23.7% y/y). Gasoline prices rose 2.9% (48.1% y/y) after a 7.6%
December drop. Home heating oil prices surged 8.5% (48.% y/y) and
natural gas prices rose 0.7% (0.6% y/y) after five consecutive months
of decline.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226b.jpg" align="right" border="0" height="265" width="353">
Why Do Gasoline Prices React to Things That Have Not
Happened? from the Federal Reserve Bank of St. Louis is
available <a href="http://stlouisfed.org/publications/re/2007/c/pages/gas-prices.html">here</a>.
Finished consumer food prices jumped 1.7% (8.2% y/y) after an
upwardly revised 1.4% December surge. During the past three months food
prices have risen at a 12.0% annual rate.
Prices of core finished consumer goods rose 0.4% (2.7% y/y)
lifted by a 0.8% rise (-0.5% y/y) in passenger car prices and a 0.4%
(1.6%) gain in prices of household appliances. Core consumer
nondurables prices were strong again and rose 0.4% (3.9% y/y). The
three month gain in these prices is 3.9%. Pharmaceutical prices have
been quite strong but apparel prices have been flat. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226c.jpg" align="left" border="0" height="265" width="353">
Capital equipment prices also rose 0.4% (1.6% y/y) after a
0.1% December uptick. Heavy truck prices rose 0.4% (3.3% Y/Y) but
prices for light trucks fell 0.2% (+0.2% y/y), down for the second
consecutive month.
Intermediate goods prices surged 1.4% after a modest 0.2%
December decline. Excluding food &amp; energy prices also were
strong. They posted a 0.8% increase led by strength in industrial
chemical prices which have risen 40.7% (AR) over the last three months.
Steel mill prices also have been strong but copper prices have been
down.
The crude materials PPI surged 2.5%, more than double the
strong December rise. Crude energy materials prices jumped 1.8% (40.9%
y/y). The core crude materials PPI surged 4.0% (21.0% y/y) as prices
for iron &amp; steel scrap as well as prices for aluminum scrap
have been quite strong.

<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/@E8/@E802/@E80201/@E80201.HTM">Producer
Price Index</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>1.0%</td>
<td>-0.3%&nbsp;</td>
<td>7.7%&nbsp;</td>
<td>3.9%</td>
<td>3.0%</td>
<td>&nbsp;4.9%&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.4%</td>
<td>0.2%</td>
<td>&nbsp;2.4%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>1.4%</td>
<td>-0.2%</td>
<td>9.1%</td>
<td>4.1%</td>
<td>6.4%</td>
<td>&nbsp;8.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.8%</td>
<td>0.0%</td>
<td>4.1%</td>
<td>2.8%</td>
<td>6.0%</td>
<td>&nbsp;5.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>2.5%</td>
<td>&nbsp;1.1%&nbsp;</td>
<td>&nbsp;31.0%</td>
<td>12.2%</td>
<td>1.4%</td>
<td>14.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>4.0%</td>
<td>0.2%</td>
<td>&nbsp;21.0%</td>
<td>15.9%</td>
<td>20.8%</td>
<td>4.9%</td>
</tr>
</tbody>
</table>
Case-Shiller Home Price
IndexLowest Since 2005 
by <a href="/comment/Moeller.html">Tom
Moeller&nbsp;</a> February 26, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226d.jpg" align="left" border="0" height="265" width="353">
According to the S&amp;P/Case-Shiller
Composite 20 home price index, U.S. home prices fell
2.1% m/m in December and repeated the prior months' decline. Home
prices have fallen in every month since July of 2006 and the total
decline over that period amounts to 10.5%. Prices were down 9.1% y/y.
The index of 20 U.S. cities and their surrounding areas is not
adjusted for the quality or the size of the home. The home price index
from the Office of Federal Housing Enterprise Oversight (OFHEO) does
make these adjustments. This series indicates that through the third
quarter home prices still were rising, but at a reduced 1.8% y/y rate.
The composite index of homes in 10 metropolitan areas fell
2.3% (-9.8% y/y) last month.
Home prices in San Diego California continued quite weak and
fell 15.0% y/y. Prices in Miami Florida also are down a sharp 17.5%
y/y. Home prices in Las Vegas Nevada also were on the list of very weak
home prices and fell 15.3% y/y while in Los Angeles prices fell 13.7%
y/y.
Relatively moderate declines were registered in New York
(-5.6% y/y), Chicago (-4.5% y/y) and Denver, also down 4.5% y/y.
An overview of the S&amp;P/Case-Shiller home price series
can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.
The S&amp;P/Case-Shiller home price series can be found in
Haver's REGIONAL database.
Bubble, Bubble, Toil, and Trouble is a 2007
article from the Federal Reserve Bank of Chicago and it can be found <a href="http://www.chicagofed.org/publications/economicperspectives/ep_1qtr2007_part2_haines_rosen.pdf">
here</a>. 
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (NSA, Jan 00 = 100)</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">20 City Composite
Index</td>
<td>184.86</td>
<td>188.92</td>
<td>-9.1%</td>
<td>-3.9%</td>
<td>7.6%</td>
<td>15.8%</td>
</tr>
</tbody>
</table>

Gasoline Prices Surged,
Crude Oil Crested $100 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 26, 2008




Week to week, retail gasoline prices rose nearly a dime per
gallon to $3.13 per gallon, according to the US Department of Energy
survey. The retail price for regular grade gasoline was its highest
since early last June. This week, a rise in wholesale gasoline prices
portend further gains in the retail price.
The price for a barrel of WTI crude oil broke just over $100.
This week crude prices have backed off but just slightly to $99.41 per
barrel.
Natural gas prices were strong last week. They rose nearly
$1.00 per mmbtu from the January average due to colder Winter
temperatures.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226e.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226f.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">02/25/08</th>
<th scope="col">02/18/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.13</td>
<td>3.04</td>
<td>31.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>--</td>
<td>100.01</td>
<td>72.2%</td>
<td>94.00</td>
<td>61.11</td>
<td>58.16</td>
</tr>
</tbody>
</table>

Consumer Confidence Plummet,
Expectations the Dreariest 
by <a href="/comment/Moeller.html">Tom
Moeller&nbsp;</a> February 26, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226g.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080226h.jpg" height="265" width="312">
The Conference Board reported today that consumer confidence
plummeted this month. The 14.1% m/m decline to a reading of 75.0 was
the largest m/m give back since September of 2005 and it dropped the
level to its lowest since early 2003. A consensus of economists foresaw
less of a decline to a level of 82.
A decline in the expectations component accounted for much of
last month's decline in overall confidence. The 16.5% m/m drop followed
an 8.6% January decline and lowered the expectations component to its
lowest since early 1991. Expectations for business conditions
dropped to a 36 year low while expectations for employment dropped to
the lowest since 1980. 
Respondents planning to buy an automobile within the next six
months plummeted but plans to buy an appliance rose.
The present conditions index fell a somewhat lesser 12.0% m/m
to the lowest level since late 2004. Just 18.5% of respondents saw
business conditions as good, near the least since 2004. Jobs as
plentiful were seen by 18.6% while 23.8% saw them as hard to get. 
The expected inflation rate in twelve months was stable m/m at
5.3% but that still was up from the 5.1% expected rate during 2006 and
2007.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board &nbsp;(SA, 1985=100)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>75.0</td>
<td>87.3</td>
<td>-32.6%</td>
<td>103.4</td>
<td>105.9</td>
<td>100.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Conditions</td>
<td>100.6</td>
<td>114.3</td>
<td>-26.6%</td>
<td>128.8</td>
<td>130.2</td>
<td>116.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>

U.S. Chain Store Sales Up,
Gasoline Prices Surged 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 26, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080212a.jpg" align="left" border="0" height="265" width="353">
According to the International Council of Shopping Centers
ICSC-UBS Chain store survey, chain store sales rose 0.5% last week
after no change during the prior period. Sales so far this month are up
0.5% from January after a 1.3% gain during that period.

During the last ten years there has been a 45% correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.

The ICSC-UBS retail
chain-store sales index is constructed using the same-store sales
(stores open for one year) reported by 78 stores of seven retailers:
Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.


The leading indicator of chain store sales from ICSC-UBS fell
0.7% two weeks ago. It as the fifth decline in the last six weeks.
Retail gasoline prices recently moved further off the high
reached last Spring of over $3.20 per gallon, according to the US
Department of Energy survey.Last week the average retail price for
regular grade gasoline fell to $2.96, down 8.0% from last year's peak
in May. Prices did, however, remain up nearly 6% from an average of
$2.80 last year.
The recent decline in gasoline prices owes mostly to the
topping and decline in the price of crude oil. For spot WTI crude oil
prices last week of $88.42 per barrel were down 10% from last year's
high which nearly touched $100 per barrel.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">02/23/08</th>
<th scope="col">02/16/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>489.9</td>
<td>487.4</td>
<td>2.3%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">02/25/08</th>
<th scope="col">02/18/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.13</td>
<td>3.04</td>
<td>31.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>--</td>
<td>100.01</td>
<td>72.2%</td>
<td>94.00</td>
<td>61.11</td>
<td>58.16</td>
</tr>
</tbody>
</table>
</body></html>

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080225e.jpg" width="353">
Inflation in Singapore rose more than expected to 6.61% in January of this year, 2.2 percentage points above the 4.41% in December. A big part of the rise was due to the government&#39;s increasing the valuation of public housing on which imputed rents are partly based. The housing component rose 11.03% in January after rising only 2.88% in December.
While the jum<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080225f.jpg" width="353">p in housing cost in December was somewhat of an anomaly, the rise in food prices has become a regular feature in the cost of living ever since mid 2007. The first chart shows that, except for the spike in the housing component in January, the food component has been increasing in importance relative to the housing component since early 2007.
World grain prices rises have been pushing up the cost of food. The second chart shows the daily world prices of corn, soybeans and wheat for the past year. The continued rise in these prices in February suggests that further food inflation is in the works, not only for Singapore, but for most other countries.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INFLATION&nbsp; (Y/Y %Chg in CPI)</th>
<th scope="col">Jan 08</th>
<th scope="col">Dec 07&nbsp;</th>
<th scope="col">Nov 07&nbsp;</th>
<th scope="col">Oct 07&nbsp;</th>
<th scope="col">Sep 07</th>
<th scope="col">Jul 07&nbsp;</th>
<th scope="col">Jun 07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Singapore</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>6.61</td>
<td>4.41</td>
<td>422</td>
<td>3.63</td>
<td>2.76</td>
<td>2.96</td>
<td>2.56</td>
<td>2.10</td>
<td>0.96</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food</td>
<td>5.84</td>
<td>5.50</td>
<td>5.22</td>
<td>4.27</td>
<td>2.75</td>
<td>3.30</td>
<td>2081</td>
<td>1.56</td>
<td>1.33</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp;Housing</td>
<td>11.03</td>
<td>2.88</td>
<td>2.88</td>
<td>2.30</td>
<td>0.39</td>
<td>1.06</td>
<td>9.67</td>
<td>0.45</td>
<td>2.67</td>
</tr>
</tbody>
</table>
</body>
</html>

Inflation in Singapore rose more than expected to 6.61% in January of this year, 2.2 percentage points above the 4.41% in December. A big part of the rise was due to the government's increasing the valuation of public housing on which [...]

ааа Rise in Singapore's Inflation Spotlights Rises in World Grain Pricesа

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080225g.jpg" align="left" border="0" height="265" width="353">
Italy&#8217;s retail sales rose in December by a thin 0.1%. The
three month advance was at annual rate of 0.4% even below the six month
pace of 0.6% and near the Yr/Yr pace of 0.2% - rotten growth rates all.
These nominal sales gains clearly imply persisting declines in volume
terms. Italy&#8217;s nominal retail sales have been in long, slow, declining
growth phase.
The chart on the left plots nominal Italy retail sales Vs the
EMU volume index for retail sales. The EMU Volume index shows volume
plunging at the end of 2007. Italy shows nominal sales steadily eroding
with real sales likely falling at an accelerated pace at the end of
2007 since inflation flared at year end as energy prices rose strongly
throughout the Euro Area. With the Q4 numbers in, nominal Italian
retail sales fell by 0.4% saar in Q4 as food sales advanced by 0.6%.
Obviously the Italian consumer is under stress. And that is a theme for
the whole of the Euro Area as well.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col"> Italy Retail Sales Growth</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAgo</td>
<td>Q-2-Date</td>
</tr>
<tr>
<td class="firstcol">Retail Trade</td>
<td>0.1%</td>
<td>-0.3%</td>
<td>0.3%</td>
<td>0.4%</td>
<td>0.6%</td>
<td>0.3%</td>
<td>1.0%</td>
<td>-0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food, Beverages &amp;
Tobacco</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>1.5%</td>
<td>1.0%</td>
<td>1.3%</td>
<td>0.6%</td>
</tr>
<tr>
<td class="firstcol">Clothing &amp; Fur</td>
<td>0.5%</td>
<td>-2.0%</td>
<td>2.1%</td>
<td>2.3%</td>
<td>-0.4%</td>
<td>-0.9%</td>
<td>1.6%</td>
<td>-2.2%</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

Italy’s retail sales rose in December by a thin 0.1%. The three month advance was at annual rate of 0.4% even below the six month pace of 0.6% and near the Yr/Yr pace of 0.2% - rotten growth rates all. These nominal sales gains [...]

Italy Retail Sales Trends Continue to Erode

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080225d.jpg" width="353">
According to the National Association For Business Economists (NABE), the U.S. economy will skirt an economic downturn in 2008. During 1Q08 and 2Q08 growth on average is, however, expected to be the lowest since the end of the last recession in 2001.
Helping the economy to avoid a recession will be further cuts in the Federal funds rate to a low of 2.5% next quarter. There it is expected to remain until yearend.
Yields on the 10 Year Treasury note are expected to bottom at 3.70% this quarter.
The late &#39;08 recovery in quarterly economic growth is expected to be at a moderate, near trend rate of just under 3.0%. For the full year, growth this year 1.8% is forecast to be the weakest since 2001.
The NABE Outlook is available in Haver&#39;s SURVEYS database.
Improving Risk Management in Light of Recent Market Events is today&#39;s speech by Fed Governor Randall S. Kroszner and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/D7BB4B12FA20478A9F0504752AE2190F.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">NABE Forecast</th>
<th scope="col">1Q 08</th>
<th scope="col">2Q 08</th>
<th scope="col">3Q 08</th>
<th scope="col">4Q 08</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">U.S. Real GDP (%, AR)</td>
<td>0.4%</td>
<td>1.0%</td>
<td>2.8%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>1.8%</td>
<td>2.5%</td>
</tr>
</tbody>
</table>
</body>
</html>

According to the National Association For Business Economists (NABE), the U.S. economy will skirt an economic downturn in 2008. During 1Q08 and 2Q08 growth on average is, however, expected to be the lowest since the end of the last [...]

Economists Forecast No U.S. Recession in 2008

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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Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

250501Z1.jpg

**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

250501Z2.jpg

**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

250501Z3.jpg

**The US economy’s structural outperformance and the dollar**
A second dynamic, captured in the next chart, reveals a tight correlation between the US real effective exchange rate and the potential GDP growth differential between the US and euro area over the past 50-60 years. This raises the question: has dollar strength (until recently) merely been a reflection of US growth leadership—or are capital inflows themselves helping to sustain this growth outperformance? In effect, the tail may be wagging the dog. Global investors have long allocated capital to the US, attracted by its macroeconomic resilience, technological leadership, and deep, liquid financial markets. The danger now is that the US trade war may disrupt this equilibrium. A sharp or sustained reduction in capital inflows could undermine growth, weaken the dollar, and trigger broader financial instability. Moreover, reversing this dynamic is not straightforward—barring a credible structural resurgence in European (or Asian) growth, the global investment landscape remains tilted toward the US.

250501Z4.jpg

**US competitiveness versus Europe, China and Japan** 
The next chart below examines relative unit labour costs across major economies since 2011. The US and China have seen a broadly similar trajectory, with steady increases in relative cost structures, while the euro area has remained flat and Japan has seen dramatic improvement. This suggests that, from a cost competitiveness standpoint, the US is not uniquely disadvantaged vis-à-vis China. However, as we discuss further below, this parallel erosion of cost competitiveness is occurring at much higher nominal wage levels in the US, which blunts its ability to regain export share through tariff-related shifts alone. The trade war strategy—absent a corresponding improvement in productivity or structural reforms—risks imposing costs without delivering material competitiveness gains.

250501Z5.jpg

**Average wages in selected developed and developing economies**
This point is reinforced by the final chart, which shows estimates for average monthly wages across countries in 2024. US labour remains much more expensive than in peer or emerging economies. So even if China’s costs rise in tandem with the US, the global supply chain has ample alternatives. 'China plus one' strategies are accelerating, and the US remains structurally misaligned with low-cost production hubs. Tariffs aimed at reshoring supply chains are unlikely to deliver sustained gains unless accompanied by deep supply-side reforms, and risk further disincentivizing foreign direct investment if global firms perceive US trade policy as erratic or punitive.

250501Z6.jpg

Financial markets found a measure of calm this week, buoyed by some subtle shifts in tone from US policymakers. A softening in the administration’s rhetoric around trade tariffs coupled with a less confrontational stance toward Federal Reserve Chair Jerome Powell, helped ease tensions that had roiled markets earlier in the month. Equities rebounded modestly, and volatility indicators edged lower, reflecting cautious optimism that the worst of the policy shocks may be behind us. But beneath the surface, significant downside risks persist. New shipping data point to a pronounced slowdown in US-China trade flows (chart 1), suggesting the damage from recent tariff escalations is already rippling through global supply chains. Meanwhile, incoming data for the US revealed an unexpected contraction in the economy in Q1 and further signs of weakness in the labour market (chart 2). The US dollar, in the meantime, while long supported by superior growth and yield differentials, has begun to decouple from traditional drivers (charts 3 and 4) suggesting growing pressure on capital flows. At the same time, structural imbalances are drawing renewed scrutiny: unit labour cost comparisons show the US steadily losing competitiveness (chart 5), while nominal wage disparities remain stark versus China and other Asian economies, further complicating any effort to restore trade balance without broader reforms (chart 6). In short, while markets may be drawing temporary comfort from a pause in tariff brinkmanship, the deeper economic and financial vulnerabilities exposed this month remain unresolved—and increasingly central to the global macro narrative.

Charts of the Week: Tariff Truce, Tenuous Trust

250430N1.jpg

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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.

Economy in Brief: February 2008

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