Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020307a.jpg" width="353">
Nonfarm labor productivity grew much more than expected last quarter. Growth was revised up to 5.2% from the preliminary estimate of 3.5%. Revised growth of 4.2% had been expected.
Upward revision to productivity caused the price-to-unit labor cost ratio, a key measure of corporate profitability, to rise despite lower prices.
Unit Labor costs fell more than twice as much as originally estimated as a result of the upward productivity estimate. Compensation growth was little changed, and it has slowed considerably from its peak growth rate of 8.1% in 2Q 2000. 
The upward revision to productivity growth was the result of output growth that was revised to 1.2% from -0.4%. Hours worked were little changed at -3.8%. 
Inflation was benign with the price deflator for the nonfarm business sector declining 0.6%, the first decline since 3Q 1954. 
Manufacturing sector productivity growth was revised to 4.1% following 2.6% growth in 3Q. Unit labor costs declined 1.5%.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Nonfarm Business Sector</a></th>
<th scope="col">4Q &#39;01</th>
<th scope="col">3Q &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>5.2%</td>
<td>1.1%</td>
<td>2.9%</td>
<td>1.9%</td>
<td>3.3%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>2.3%</td>
<td>3.7%</td>
<td>3.9%</td>
<td>5.8%</td>
<td>6.5%</td>
<td>4.4%</td>
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<td class="firstcol">Unit Labor Costs</td>
<td>-2.7%</td>
<td>2.6%</td>
<td>1.8%</td>
<td>3.8%</td>
<td>3.1%</td>
<td>2.0%</td>
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</tbody>
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Initial Jobless Insurance Claims Up Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 7, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020307b.jpg" width="353">
Initial claims for unemployment insurance fell less than expected in the latest week, and the prior week&#39;s level was revised slightly higher.
The four-week moving average of claims fell slightly to 372,750, the lowest level since August.
Continuing claims for unemployment insurance fell in the latest week. The prior week&#39;s level was revised down.
The insured rate of unemployment fell to 2.6%, the same level as four weeks earlier.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">03/02</th>
<th scope="col">02/23</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Initial Claims</td>
<td>376.0</td>
<td>381.0</td>
<td>0.3%</td>
<td>408.0</td>
<td>302.8</td>
<td>297.7</td>
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<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,406</td>
<td>42.6%</td>
<td>3,3031</td>
<td>2,127</td>
<td>2,187</td>
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</tbody>
</table>
Consumer Borrowing Surged in January 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 7, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020307c.jpg" width="353">
Consumer borrowing surged unexpectedly in January, continuing an upward trend that recently has accompanied strength in retail spending and declines in employment. 
Commercial banks lent a record $6.0B (NSA) last month to pace the jump in nonrevolving credit (autos and other personal loans).
Revolving credit rose a modest amount after contracting in December. Large unadjusted declines were registered amongst many issuers.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E103/@E10308/@E10308.HTM">Consumer Credit Outstanding</a></th>
<th scope="col">Jan &#39;02 m/m</th>
<th scope="col">Dec &#39;01 m/m</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Total</td>
<td>$12.8B</td>
<td>$1.8B</td>
<td>5.9%</td>
<td>6.1%</td>
<td>10.2%</td>
<td>7.5%</td>
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<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$1.2B</td>
<td>$-5.6B</td>
<td>3.6%</td>
<td>3.9%</td>
<td>11.5%</td>
<td>6.3%</td>
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<td class="firstcol">&nbsp; Nonrevolving</td>
<td>$11.7B</td>
<td>$7.5B</td>
<td>7.7%</td>
<td>7.7%</td>
<td>9.2%</td>
<td>8.4%</td>
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Nonfarm labor productivity grew much more than expected last quarter. Growth was revised up to 5.2% from the preliminary estimate of 3.5%. Revised growth of 4.2% had been expected. Upward revision to productivity caused the price-to- [...]

Nonfarm Productivity Revision Unexpected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020306a.jpg" width="353">
Manufacturing inventories fell as expected for the twelfth month in a row in January. However, it was the mildest monthly drop since last May. 
Inventory decumulation continued strong across industries, although some moderation in that rate occurred notably in the electrical equipment, computer and machinery industries. Semiconductor inventories continued to plunge. 
Inventories of automobiles rose for the third consecutive month though inventories of furniture fell sharply for the fourteenth straight month. 
Shipments rose 2.0%, the third monthly increase in four, led by higher shipments of machinery and computers. 
Durable goods orders were revised to a 2.0% gain, down versus the advance report.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Inventories</a></th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Mfg Inventories</td>
<td>-0.6%</td>
<td>-0.9%</td>
<td>-8.4%</td>
<td>-7.5%</td>
<td>4.6%</td>
<td>2.3%</td>
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Manufacturing inventories fell as expected for the twelfth month in a row in January. However, it was the mildest monthly drop since last May. Inventory decumulation continued strong across industries, although some moderation in that [...]

Factory Inventory Liquidation Slowed

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020305a.jpg" width="353">
Prices for industrial commodities have risen roughly 7% since the lows last November according to the FIBER index of industrial materials price index (formerly the Journal of Commerce index). 
The FIBER index is heavily weighted toward crude oil and benzene prices which are up 13% during the period.
Prices in other categories also have risen since the fall including metals (+6%), textiles (+3%) and miscellaneous commodities (+11%).
During the last twenty years there has been a 46% correlation between the three-month percent change in the FIBER index and the three-month change in factory sector industrial production.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/DAILY/@D3/@D301/@D30103/@D30103.HTM">FIBER Industrial Materials Price Index (1990=100)</a></th>
<th scope="col">03/01/02</th>
<th scope="col">02/01/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">All Items</td>
<td>83.21</td>
<td>80.18</td>
<td>-4.0%</td>
<td>85.28</td>
<td>94.18</td>
<td>92.50</td>
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Weekly Chain Store Sales Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 5, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020305b.jpg" width="353">
Chain store sales fell 0.8% last week. It was the second consecutive week that sales declined following two consecutive weeks during which sales rose 4%.
With the full month results now in sales for February are 2.5% above January. 
During the last ten years there has been a 20% correlation between the monthly percent change in chain store sales and the change in consumer confidence.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">3/02/02</th>
<th scope="col">02/23/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>409.8</td>
<td>413.1</td>
<td>4.7%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
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</tbody>
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ISM Nonmanufacturing Index Surged 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 5, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020305c.jpg" width="353">
The Institute for Supply Management business activity index of the nonmanufacturing sector rose more than expected last month. A moderate increase had been expected. 
New orders surged but employment fell. The employment component is about at its October level. The not seasonally adjusted price index rose slightly and it is well off its lows of last fall. 
Business activity for the nonmanufacturing sector is a question separate from the components mentioned above. This is in contrast to the NAPM manufacturing sector composite index that reflects component activity. 
During the last four years, there has been a 44% correlation between the level of the NAPM nonmanufacturing index and quarterly growth in real GDP in the service sector.
ISM surveys more than 370 purchasing managers in more than 62 industries, including construction, law firms, hospitals, government and retailers. The nonmanufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Business Activity Index</td>
<td>58.7</td>
<td>49.6</td>
<td>52.4</td>
<td>49.0</td>
<td>59.2</td>
<td>59.1</td>
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Prices for industrial commodities have risen roughly 7% since the lows last November according to the FIBER index of industrial materials price index (formerly the Journal of Commerce index). The FIBER index is heavily weighted toward [...]

Higher Commodity Prices Add Further to Recovery Signal

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020304.jpg" width="353">
Light vehicle sales were firm last month, rising 5.4% from January as aggressive sales promotion continued.
The annualized sales rate was the highest since last December, but was nevertheless below the full-year pace of 2001.
Sales of domestically built cars and trucks rose 7.2% m/m but remained below last year&#39;s level. Imported vehicle sales fell slightly m/m but were up sharply from 2001.
During the last three months, imports captured roughly 20% of the US light vehicle market versus 18% last year, 16% in 2000 and 15% in 1999.
Sales of both cars and trucks rose last month, though car sales fell to only 47% of the total market versus 64% ten years ago. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil.Units)</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Total</td>
<td>16.68</td>
<td>15.83</td>
<td>-4.8%</td>
<td>17.21</td>
<td>17.40</td>
<td>16.95</td>
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<td class="firstcol">&nbsp; Domestic</td>
<td>13.39</td>
<td>12.49</td>
<td>-8.5%</td>
<td>14.15</td>
<td>14.58</td>
<td>14.47</td>
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<tr class="odd">
<td class="firstcol">&nbsp; Imported</td>
<td>3.28</td>
<td>3.33</td>
<td>13.8%</td>
<td>3.06</td>
<td>2.82</td>
<td>2.48</td>
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Light vehicle sales were firm last month, rising 5.4% from January as aggressive sales promotion continued. The annualized sales rate was the highest since last December, but was nevertheless below the full-year pace of 2001. Sales of [...]

Vehicle Sales Up Versus January

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020301b.jpg" width="353">
Personal income rose a surprising 0.4% last month, due to a 2.2% surge in transfer payments. 
Wage &amp; salary disbursements fell slightly following a 0.5% gain in December. Nevertheless, it was the fifth month in six of little or negative growth in wages. 
Personal spending was strong, as expected, for the first month in three. Though spending on durable goods fell sharply for the third straight month, reflecting lower sales of light vehicle, sales of nondurables and services were strong. 
Disposable income rose a strong 1.6%, the first material gain in five months and reflected a sharp drop in taxes. 
The PCE price deflator rose slightly (0.6% y/y) for only the second month in seven. Core prices rose 0.1% (1.2% y/y) following a slight December decline.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Personal Income</td>
<td>0.4%</td>
<td>0.3%</td>
<td>2.5%</td>
<td>4.9%</td>
<td>7.0%</td>
<td>4.7%</td>
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<td class="firstcol">Personal Consumption</td>
<td>0.4%</td>
<td>0.0%</td>
<td>3.4%</td>
<td>5.0%</td>
<td>7.7%</td>
<td>6.7%</td>
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<td class="firstcol">Savings Rate</td>
<td>1.8%</td>
<td>0.6%</td>
<td>0.9%</td>
<td>1.6%</td>
<td>1.0%</td>
<td>2.4%</td>
</tr>
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<td class="firstcol">PCE Price Deflator</td>
<td>0.1%</td>
<td>-0.2%</td>
<td>0.6%</td>
<td>1.9%</td>
<td>2.7%</td>
<td>1.6%</td>
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Chicago Purchasing Agents' Index Up Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020301a.jpg" width="353">
The Chicago Purchasing Manager&#146;s Index of Business activity rose more than expected in February versus January, and was at its highest level since June 2000. 
Indexes of new orders, production, inventories and employment all rose. 
The prices paid index rose sharply and the index of vendor delivery speed rose, indicating an abatement of recent deflationary pressure. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
<tbody>
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<td class="firstcol">Business Barometer</td>
<td>53.1</td>
<td>45.1</td>
<td>43.0</td>
<td>41.4</td>
<td>51.8</td>
<td>56.5</td>
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<td class="firstcol">Prices Paid</td>
<td>51.2</td>
<td>40.7</td>
<td>63.5</td>
<td>50.5</td>
<td>65.6</td>
<td>57.6</td>
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</tbody>
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ISM Index Quite Strong 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020301c.jpg" width="353">
The ISM Composite Index of manufacturing sector activity rose much more than expected last month. Consensus expectations were for a gain to 50.5.The strength was in line with yesterday&#39;s Chicago Purchasing agents&#39; report. 
Each of the index&#39;s components except inventories contributed to the rise in the composite, but the rise in orders was sharpest rising to the highest level since November 1994. 
Inflation pressure fell slightly, contrary to the indication of firmer pricing in the Chicago report.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
<tbody>
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<td class="firstcol">Composite Index</td>
<td>54.7</td>
<td>49.9</td>
<td>42.0</td>
<td>43.9</td>
<td>51.6</td>
<td>54.6</td>
</tr>
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<td class="firstcol">Prices Paid Index</td>
<td>41.5</td>
<td>43.9</td>
<td>55.6</td>
<td>43.0</td>
<td>64.8</td>
<td>54.2</td>
</tr>
</tbody>
</table>
Construction Spending Strong in January 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020301d.jpg" width="353">
The value of construction put in place rose much more than expected in January, driven by sharply higher nonresidential and public construction. 
The surprise in nonresidential building was a pop after nine months of extreme weakness during which nonresidential building fell 16.9%. Decline during that period was led by a 33.6% drop in industrial building and a 25.2% decline in office construction. 
In the residential sector, single-family residential building rose a slight 0.4% following four months of zero or negative change. 
Spending by governments again was strong, led by education, highways &amp; streets and hospitals.

<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/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1.5%</td>
<td>0.5%</td>
<td>2.0%</td>
<td>5.6%</td>
<td>7.0%</td>
<td>8.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential</td>
<td>0.1%</td>
<td>0.5%</td>
<td>4.2%</td>
<td>5.6%</td>
<td>7.4%</td>
<td>11.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>2.2%</td>
<td>-2.9%</td>
<td>-14.3%</td>
<td>-0.4%</td>
<td>8.0%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Public</td>
<td>3.7%</td>
<td>2.9%</td>
<td>17.5%</td>
<td>11.1%</td>
<td>4.5%</td>
<td>10.1%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Sagged 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020301e.jpg" width="353">
The Univ. of Michigan&#39;s Index of Consumer Sentiment was a bit weaker than expected for the full month of February, falling 2.5% m/m. 
The decline in sentiment reflected a lower reading of consumer expectations but a higher reading of the current situation.
The decline in sentiment paralleled the 3.8% m/m decline in the Conference Board&#39;s February measure of Consumer Confidence. 
The University of Michigan survey is not seasonally adjusted.
During the past five years there has been a 39% correlation between the level of consumer sentiment and the 3-month % change in real PCE.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Univ. of Michigan</th>
<th scope="col">Feb &#39;02</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Sentiment</td>
<td>90.7</td>
<td>93.0</td>
<td>0.1%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
</tr>
</tbody>
</table>
Help Wanted Advertising Stable 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020301f.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising was stable in January at a low level. 
During the past ten years there has been a 74% correlation between the level of help-wanted advertising and the three-month % change in nonfarm payrolls. 
By region, job opportunities appeared strongest in the Mountain and East South Central regions of the country.
The figures are seasonally adjusted.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Jan &#39;01</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nat&#39;l Help Wanted Index</td>
<td>47</td>
<td>47</td>
<td>77</td>
</tr>
</tbody>
</table>
</body>
</html>

Personal income rose a surprising 0.4% last month, due to a 2.2% surge in transfer payments. Wage & salary disbursements fell slightly following a 0.5% gain in December. Nevertheless, it was the fifth month in six of little or [...]

Personal Income & Spending Strong

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: March 2002

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Nonfarm Productivity Revision Unexpected

Factory Inventory Liquidation Slowed

Higher Commodity Prices Add Further to Recovery Signal

Vehicle Sales Up Versus January

Personal Income & Spending Strong