Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326a.jpg" width="353">
The U.S. Bureau of Economic Analysis indicated that its revised estimate of 4Q &#39;08 was little changed. The 6.3% (AR) decline compared to the preliminary estimate of a 6.2% drop. Nevertheless, the decline was the steepest since 1982 and it approached the 7.8% quarterly decline during the &quot;credit crunch&quot; recession of 1980. Consensus expectations had been for a deepening of the 4Q decline to 6.6%.
Accompanying the GDP report was the first look at 4Q corporate profits. They fell 16.5% (-21.5% y/y) and the decline was just short of the record 17.0% drop logged during the recession of 1953. A record 59.3% drop (-66.9% y/y) in financial sector earnings led the downturn as the real estate industry imploded. Economic recession further reduced nonfinancial sector earnings by 10.7% (-8.9% y/y) before costs were brought fully under control. That decline came despite the halving of crude oil prices and was the worst quarterly drop since early 1981. Foreign sector earnings held together and rose 4.6% during 4Q but they were off 6.0% versus the year prior.
Revisions to the GDP components were fairly minor. Offsetting one another were downward revisions to inventories&#39; negative contribution to GDP growth and an upward revision to foreign trade. Nevertheless, the negative contribution from trade to U.S. growth was the first since 1Q &#39;07. Exports fell at a 23.6% rate (-1.8% y/y) as recessions abroad intensified. U.S. imports fell at a 17.5% rate (-7.5% y/y) with the developing U.S. recession.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326b.jpg" width="353">
Real U.S. final sales to domestic purchasers contracted at a 5.8% annual rate and that was the worst decline since the 1980 recession when consumers pocketed their credit cards. Personal consumption expenditures fell an unrevised 4.3% (-1.5% y/y) as spending on motor vehicles declined at a huge 38.0% annual rate. Business fixed investment fell at a 21.7% rate (-5.2% y/y) and residential investment dropped at a 22.8% rate (-19.4% y/y).
The government sector contributed marginally to GDP growth last quarter. Activity rose at a 1.3% annual rate (3.2% y/y) led by a 6.9% (8.2% y/y) rise in Federal spending.
The estimate of price inflation was unrevised. The 0.5% increase in the GDP chain price index remained greatly reduced from the 3.9% advance during 3Q. The PCE price index fell at a 4.9% annual rate as gasoline prices fell. The residential investment chain price index fell at a 9.4% annual rate while the business fixed investment price index rose 4.6%.
The U.S. National Income &amp; Product Account data is available in Haver&#39;s USECON and the USNA databases.
Sources of the Great Moderation: shocks, friction, or monetary policy? from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/papers/2009/wp09-01bk.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">4Q &#39;08 (Final)</th>
<th scope="col">4Q &#39;08 (Preliminary)</th>
<th scope="col">4Q &#39;08 (Advance)</th>
<th scope="col">3Q &#39;08</th>
<th scope="col">4Q Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>-6.3</td>
<td>-6.2</td>
<td>-3.8</td>
<td>-0.5</td>
<td>-0.8</td>
<td>1.1</td>
<td>2.0</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>-0.1</td>
<td>0.2</td>
<td>1.3</td>
<td>0.8</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>-6.2</td>
<td>-6.4</td>
<td>-5.1</td>
<td>-1.3</td>
<td>-0.7</td>
<td>1.4</td>
<td>2.4</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>-0.2</td>
<td>-0.5</td>
<td>0.1</td>
<td>1.1</td>
<td>1.4</td>
<td>1.4</td>
<td>0.6</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>-5.8</td>
<td>-5.7</td>
<td>-4.9</td>
<td>-2.2</td>
<td>-1.7</td>
<td>-0.0</td>
<td>1.8</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.5</td>
<td>0.5</td>
<td>-0.1</td>
<td>3.9</td>
<td>2.0</td>
<td>2.2</td>
<td>2.7</td>
<td>3.2</td>
</tr>
</tbody>
</table>


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The U.S. Bureau of Economic Analysis indicated that its revised estimate of 4Q '08 was little changed. The 6.3% (AR) decline compared to the preliminary estimate of a 6.2% drop. Nevertheless, the decline was the steepest since 1982 [...]

U.S. 4Q GDP Decline Remains Sharpest Since Early 1980s As Profits Crater

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326a.jpg" align="left" border="0" height="265" width="353">
The U.S. Bureau of Economic Analysis indicated that its
revised estimate of 4Q '08 was little changed. The 6.3% (AR) decline
compared to the preliminary estimate of a 6.2% drop. Nevertheless, the
decline was the steepest since 1982 and it approached the 7.8%
quarterly decline during the "credit crunch" recession of 1980.
Consensus expectations had been for a deepening of the 4Q decline to
6.6%.
Accompanying the GDP report was the first look at 4Q corporate
profits. They fell 16.5% (-21.5% y/y) and the decline was just short of
the record 17.0% drop logged during the recession of 1953. A record
59.3% drop (-66.9% y/y) in financial sector earnings led the downturn
as the real estate industry imploded. Economic recession further
reduced nonfinancial sector earnings by 10.7% (-8.9% y/y) before costs
were brought fully under control. That decline came despite the halving
of crude oil prices and was the worst quarterly drop since early 1981.
Foreign sector earnings held together and rose 4.6% during 4Q but they
were off 6.0% versus the year prior.
Revisions to the GDP components were fairly minor. Offsetting
one another were downward revisions to inventories' negative
contribution to GDP growth and an upward revision to foreign trade.
Nevertheless, the negative contribution from trade to U.S. growth was
the first since 1Q '07. Exports fell at a 23.6% rate (-1.8% y/y) as
recessions abroad intensified. U.S. imports fell at a 17.5% rate (-7.5%
y/y) with the developing U.S. recession.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326b.jpg" align="right" border="0" height="265" width="353">
Real U.S. final sales to domestic purchasers
contracted at a 5.8% annual rate and that was the worst decline since
the 1980 recession when consumers pocketed their credit cards. Personal
consumption expenditures fell an unrevised 4.3% (-1.5% y/y) as spending
on motor vehicles declined at a huge 38.0% annual rate. Business fixed
investment fell at a 21.7% rate (-5.2% y/y) and residential investment
dropped at a 22.8% rate (-19.4% y/y).
The government sector contributed marginally to GDP growth
last quarter. Activity rose at a 1.3% annual rate (3.2% y/y) led by a
6.9% (8.2% y/y) rise in Federal spending.
The estimate of price inflation was unrevised. The 0.5%
increase in the GDP chain price index remained
greatly reduced from the 3.9% advance during 3Q. The PCE price index
fell at a 4.9% annual rate as gasoline prices fell. The residential
investment chain price index fell at a 9.4% annual rate while the
business fixed investment price index rose 4.6%.
The U.S. National Income &amp; Product Account data is
available in Haver's USECON and the USNA
databases.
Sources of the Great Moderation: shocks, friction, or
monetary policy? from the Federal Reserve Bank of San
Francisco is available <a href="http://www.frbsf.org/publications/economics/papers/2009/wp09-01bk.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained
2000$, % AR</a></th>
<th scope="col">4Q '08 (Final)</th>
<th scope="col">4Q '08 (Preliminary)</th>
<th scope="col">4Q '08 (Advance)</th>
<th scope="col">3Q '08</th>
<th scope="col">4Q Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>-6.3</td>
<td>-6.2</td>
<td>-3.8</td>
<td>-0.5</td>
<td>-0.8</td>
<td>1.1</td>
<td>2.0</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>-0.1</td>
<td>0.2</td>
<td>1.3</td>
<td>0.8</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>-6.2</td>
<td>-6.4</td>
<td>-5.1</td>
<td>-1.3</td>
<td>-0.7</td>
<td>1.4</td>
<td>2.4</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>-0.2</td>
<td>-0.5</td>
<td>0.1</td>
<td>1.1</td>
<td>1.4</td>
<td>1.4</td>
<td>0.6</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>-5.8</td>
<td>-5.7</td>
<td>-4.9</td>
<td>-2.2</td>
<td>-1.7</td>
<td>-0.0</td>
<td>1.8</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.5</td>
<td>0.5</td>
<td>-0.1</td>
<td>3.9</td>
<td>2.0</td>
<td>2.2</td>
<td>2.7</td>
<td>3.2</td>
</tr>
</tbody>
</table>
U.S. Continuing Claims for
Unemployment Insurance Reach Another Record High 
by <a href="/comment/Moeller.html">Tom
Moeller</a> March 26, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326c.jpg" align="left" border="0">
Labor market stress continues. Continuing claims for
unemployment insurance rose to yet another record high of 5,560,000
and remained nearly double that of last March. The series
dates back to 1966. The four-week average of continuing claims also
rose to another record of 5,331,250. Continuing claims provide some
indication of workers' ability to find employment and they lag the
initial claims figures by one week.
At the margin, there appears to be no let-up in the bleak
employment picture. Initial claims for unemployment insurance rose to
652,000 which was near the series' recent high. At 652,000 the figure
was close to its highest since 1982 and it roughly equaled expectations.
The Labor Department indicated that the largest increases in
initial claims for the week ending March 14 were in Tennessee (+1,394),
Texas (+1,028), Rhode Island (+904), North Dakota (+857), and
Connecticut (+522), while the largest decreases were in California
(-8,555), Michigan (-7,523), Indiana (-7,475), Pennsylvania (-3,757),
and Ohio (-3,397).
Though the latest level of continuing claims was a record, the
labor force has grown as well, by nearly 30% over the last twenty
years. Therefore, the insured rate of unemployment is not at a record
high. It rose to 4.2% which was the highest since June of 1983. During
the last ten years there has been a 93% correlation between the level
of the insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326d.jpg" align="right" border="0">
The highest insured unemployment rates in the week ending
March 7 were in Michigan (7.8 percent), Oregon (7.6), Idaho (7.2),
Wisconsin (6.8), Pennsylvania (6.5), Rhode Island (6.5), Nevada (6.2),
Montana (6.0), Indiana (5.9), and Vermont (5.9).
The unemployment insurance claim data is available in Haver's WEEKLY
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">03/21/09</th>
<th scope="col">03/14/09</th>
<th scope="col">03/07/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>652</td>
<td>644</td>
<td>657</td>
<td>77.7%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,560</td>
<td>5,438</td>
<td>96.1%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
UK Retail Sales Fall But Trend
Holds Up 
by <a href="/comment/Brusca.html">Robert
Brusca</a> March 26, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326e.jpg" align="left" border="0" height="265" width="353">
If there is an enigmatic economy right now it is the UK&#8217;s. The
central bank is very worried about deflation and economic weakness. Yet
the last retail prices report showed inflation up sharply and the core
rate stubborn. While surveys of consumer activity and measures of
confidence are weak, Yr/Yr real retail sales excluding autos are up a
very solid and strong 5.6% and two months into the quarter they are up
at a 5.9% pace. 
 

Still, in February, retail sales fell by 1% in nominal terms
and 1.9% in real terms (ex autos). 
 

Retail sales have fallen in seven of the last 12 months. They
are down in four of the last six months and have risen in only one of
the last six months- hardly a picture of strength. The 1.5% rise in
nominal sales in January is an important factor keeping the current
growth rates firm. Just to complicated things, ex auto real retail
sales are up in Three of the past six months as well as in three of the
past four months. 
 

This strength in ex-auto sales is surprising. The UK economy
is suffering though severe financial problems as is the US. Sentiment
is down strongly. But the inflation figures do not want to settle down
and consumer spending simply finds ways to stay alive despite some
sputtering. It is hard to get a grip on the UK economy because of these
divergences. The inability of the government to sell as many bonds as
it tried to auction yesterday is another sign of unmoored expectations.
Inventors are having a hard time getting a grip on the economy and that
makes it hard for them to make investment decisions. I still think
weakness will enfold this economy and that the moves to stimulate are
the right ones, but for the moment, some unexpected readings of
strength are helping to support UK growth and to confuse investors. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">UK Real
and Nominal Retail Sales</th>
<th scope="col">Quarter</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>Yr Ago</td>
<td>2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Total</td>
<td>-1.0%</td>
<td>1.5%</td>
<td>0.0%</td>
<td>2.1%</td>
<td>-0.7%</td>
<td>0.5%</td>
<td>4.8%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food Bev &amp;
Tobacco</td>
<td>0.7%</td>
<td>0.6%</td>
<td>-0.7%</td>
<td>2.2%</td>
<td>5.3%</td>
<td>5.1%</td>
<td>5.7%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Clothing footwear</td>
<td>-3.0%</td>
<td>5.0%</td>
<td>1.0%</td>
<td>11.8%</td>
<td>-4.8%</td>
<td>-1.1%</td>
<td>3.1%</td>
<td>19.7%</td>
</tr>
<tr>
<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>
<tr class="even">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Ex auto</td>
<td>-1.9%</td>
<td>0.8%</td>
<td>1.9%</td>
<td>3.2%</td>
<td>0.9%</td>
<td>0.5%</td>
<td>5.6%</td>
<td>5.9%</td>
</tr>
</tbody>
</table>
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Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325c.jpg" align="left" border="0" height="265" width="353">
The IFO Index fell again in March but the IFO expectations
index rose. Expectations are still only in the 16th percentile with
this ongoing bounce. The overall business climate and the current
situation indices are at lows. 
 

The chart above shows how some of the sector indices based on
diffusion indices are doing. All three pictured indices are falling
sharply. The services and retail sectors have made a small rebound.
Manufacturing is slowing its descent. Manufacturing and the all- sector
index (not pictures) are at the bottom of their range. The wholesaling
and services sectors (wholesaling not pictured) hover around the bottom
10% of their respective ranges. The retail sector is in the bottom 20%
of its range. Construction is nearly midrange, being far less affected
overall &#8211; so far. 
 

On the month the manufacturing index ticked a bit lower.
Retailing, services and wholesaling moved a bit lower too. But
Construction showed higher diffusions reading. Contraction in there is
becoming less pronounced. And even though manufacturing deteriorated it
was by the slimmest of margins. In broad terms the IFO reading is in
agreement with the PMI sector indices from Market that show a reduction
in the rate of decline in both MFG and services. 
 

Still, the news from IFO was not good and was not a positive
as some had hoped for. The upshot is that the report weighed on the
euro. However there might be enough evidence of an abatement in the
slowdown for Europe to call for additional stimulus. Today the EU&#8217;s
Junker was saying Europe would not simply cave into the US wishes for
more European stimulus because the economy&#8217;s spiral was still so
severe. But if the severe phase of the European downturn is abating, a
dollop of stimulus might be helpful. If Europe turns more to look at
the facts of its circumstance in stead of being disagreeable with the
US, it might find that the US urging is pushing it in the right
direction. 
 
 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="10" scope="col"> IFO Survey: Germany
</th></tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="5"> Percent: Yr/Yr</td>
<td colspan="4"> Index Numbers</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> Mar 09</td>
<td> Feb 09</td>
<td> Jan 09</td>
<td> Dec 08</td>
<td> Nov 08</td>
<td> Current</td>
<td> Feb 09</td>
<td> Curr/Avg</td>
<td>%tile</td>
</tr>
<tr class="grey2">
<td class="firstcol">Biz Climate</td>
<td> -21.5%</td>
<td> -20.6%</td>
<td> -19.7%</td>
<td> -20.0%</td>
<td> -17.8%</td>
<td>82.1</td>
<td>82.6</td>
<td>85.5%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Current Situation</td>
<td> -25.8%</td>
<td> -23.5%</td>
<td> -19.7%</td>
<td> -18.1%</td>
<td> -14.2%</td>
<td>82.7</td>
<td>84.3</td>
<td>86.2%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Biz Expectations</td>
<td> -16.9%</td>
<td> -17.5%</td>
<td> -19.8%</td>
<td> -22.0%</td>
<td> -21.3%</td>
<td>81.6</td>
<td>80.9</td>
<td>84.8%</td>
<td>16.3%</td>
</tr>
<tr class="grey1">
<td class="firstcol">average &amp; range since</td>
<td>Jun-91</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>
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The IFO Index fell again in March but the IFO expectations index rose. Expectations are still only in the 16th percentile with this ongoing bounce. The overall business climate and the current situation indices are at lows. The chart [...]

IFO Index Drops But Sentiment Drops But Sentiment Makes Some Gains

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325d.jpg" width="353">
February sales of new single-family homes ticked up off their lowest level in the series&#39; history. Their 4.7% month-to-month rebound to 337,000 units, nevertheless, left them down by roughly three-quarters from their peak during July 2005. February sales exceeded Consensus expectations for 300,000 units.
The February rebound in home sales was not broad based and limited to moderate increases in the South and the West. Home sales in the Midwest and in the Northeast continued lower.
Reflecting sales weakness was another decline in the median price for a new single-family home. At $200,900, the figure was off 11.6% during just the last two months and by nearly 20% since last year as homebuilders attempted to move inventory. Since their peak early in 2007, new home prices have fallen by roughly one quarter.
In fact, that effort to move homes continued successful and the inventory of unsold homes is down by 43% since the peak during 2006. In each of the country&#39;s regions, the inventory is down by one-quarter to one-third just during the last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325e.jpg" width="353">
Despite the declines in inventory levels, the month&#39;s supply of new homes for sale remains high due to low sales. It ticked down just slightly during February from the record high to 12.2 months.
By range there have no sales of new homes priced over $750,000 during the last three months. There were 1,000 registered sales of a homes priced between $500,000 &amp; $750,000 and 2,000 sales of homes priced between $400,000 and $500,000. These figures compare to sales between 3,000 and 8,000 of homes in the ranges below $400,000.
The new home sales figures are available in Haver&#39;s USECON database.
Today&#39;s House testimony by Fed Governor Elizabeth A. Duke titled Credit availability and prudent lending standards can be found <a href="http://www.federalreserve.gov/newsevents/testimony/duke20090325a.htm"> here</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">US New Homes</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y (%)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales (SAAR, 000s)</td>
<td>337</td>
<td>332</td>
<td>-41.1</td>
<td>479</td>
<td>768</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>29</td>
<td>30</td>
<td>&nbsp;-25.6</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>50</td>
<td>55</td>
<td>-35.1</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>193</td>
<td>176</td>
<td>-38.5</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>65</td>
<td>61</td>
<td>-54.2</td>
<td>111</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>200,900</td>
<td>206,800</td>
<td>-18.1</td>
<td>230,217</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>
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February sales of new single-family homes ticked up off their lowest level in the series' history. Their 4.7% month-to-month rebound to 337,000 units, nevertheless, left them down by roughly three-quarters from their peak during July [...]

U.S. New Home Sales Step Up From Record Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325a.jpg" width="353">
New orders for durable goods rose a surprising 3.4% last month after a revised 7.3% January decline that was deeper than reported initially. Despite the latest increase, new orders have fallen by roughly one quarter since the middle of last year; however, downward momentum in the level of bookings may have slackened. The latest increase compared to Consensus expectations for a 2.3% drop.
The unexpected rise in orders last month was not limited to any one sector. Machinery orders were the strongest and they posted a 13.5% rise (-13.1% y/y) which recovered the sharp downdraft during January. Orders for computers &amp; related products followed with a 10.1% increase (-21.2% y/y). That erased the January drop. Orders for transportation equipment recouped their descent during January with a 2.0% increase. They remained off by nearly one-half from the year ago level. Still to the downside were February orders for new aircraft which dropped 3.6% and orders for motor vehicles &amp; parts which fell by 0.6%. Orders for communications equipment also fell sharply.
There were glimmers of stability in other industries, too. Electrical equipment bookings rose 1.6% but that made up just a piece of a January drop. They&#39;re still down by one quarter from the year ago level.Primary metals orders ticked lower by just 0.6%.
Capital equipment orders recouped nearly all of their January shortfall with an 11.0% rise. Nevertheless, they still are down by one-quarter from last February. Orders for nondefense capital goods made up their January decline but orders excluding aircraft recovered just half the January down draft. During the last ten years there has been an 80% correlation between the y/y change in nondefense capital goods orders and the change in equipment &amp; software spending in the GDP accounts. The correlation of the GDP figure with capital goods shipments is, as one would expect, a larger 92%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325b.jpg" width="353">
The rise in new orders was not accompanied by higher shipments of durable goods. They ticked 0.5% lower last month and are off 15.4% y/y. That year-to-year weakness has been accompanied by a 17.9% twelve-month decline in industrial production of durable goods. During the last ten years there has been an 83% correlation between the twelve-month change in shipments of durable goods and the change in durables industrial production.
Inventory accumulation has responded resoundingly to these production cuts. Inventories of manufactured durables fell 0.9% after a 1.1% January drop. But the last was just the second substantial monthly decline since 2003 suggesting that continued efforts to curb the inventories are waiting. Six-month growth was about flat and that compares to outright inventory decumulation at an 8.0% rate during the last recession.
The durable goods figures are available in Haver&#39;s USECON database.

<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/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a> (%)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>3.4</td>
<td>-7.3</td>
<td>-23.4</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>3.9</td>
<td>-5.9</td>
<td>-16.2</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>7.4</td>
<td>-8.9</td>
<td>-29.1</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>6.6</td>
<td>-11.3</td>
<td>-17.8</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
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New orders for durable goods rose a surprising 3.4% last month after a revised 7.3% January decline that was deeper than reported initially. Despite the latest increase, new orders have fallen by roughly one quarter since the middle [...]

Rise in U.S. Durable Goods Orders Surprises

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325a.jpg" align="left" border="0" height="265" width="353">
New orders for durable goods rose a surprising 3.4% last month
after a revised 7.3% January decline that was deeper than reported
initially. Despite the latest increase, new orders have fallen by
roughly one quarter since the middle of last year; however, downward
momentum in the level of bookings may have slackened. The latest
increase compared to Consensus expectations for a 2.3% drop.
The unexpected rise in orders last month was not limited to
any one sector. Machinery orders were the strongest and they posted a
13.5% rise (-13.1% y/y) which recovered the sharp downdraft during
January. Orders for computers &amp; related products followed with
a 10.1% increase (-21.2% y/y). That erased the January drop. Orders for
transportation equipment recouped their descent during January with a
2.0% increase. They remained off by nearly one-half from the year ago
level. Still to the downside were February orders for new aircraft
which dropped 3.6% and orders for motor vehicles &amp; parts which
fell by 0.6%. Orders for communications equipment also fell sharply.
There were glimmers of stability in other industries, too.
Electrical equipment bookings rose 1.6% but that made up just a piece
of a January drop. They're still down by one quarter from the year ago
level.Primary metals orders ticked lower by just 0.6%.
Capital equipment orders recouped nearly all of their January
shortfall with an 11.0% rise. Nevertheless, they still are down by
one-quarter from last February. Orders for nondefense capital goods
made up their January decline but orders excluding aircraft recovered
just half the January down draft. During the last ten years there has
been an 80% correlation between the y/y change in nondefense capital
goods orders and the change in equipment &amp; software spending in
the GDP accounts. The correlation of the GDP figure with capital goods
shipments is, as one would expect, a larger 92%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325b.jpg" align="right" border="0" height="265" width="353">
The rise in new orders was not accompanied by higher shipments
of durable goods. They ticked 0.5% lower last month and are off 15.4%
y/y. That year-to-year weakness has been accompanied by a 17.9%
twelve-month decline in industrial production of durable goods. During
the last ten years there has been an 83% correlation between the
twelve-month change in shipments of durable goods and the change in
durables industrial production.
Inventory accumulation has responded resoundingly to these
production cuts. Inventories of manufactured durables fell 0.9% after a
1.1% January drop. But the last was just the second substantial monthly
decline since 2003 suggesting that continued efforts to curb the
inventories are waiting. Six-month growth was about flat and that
compares to outright inventory decumulation at an 8.0% rate during the
last recession.
The durable goods figures are available in Haver's USECON
database.

<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/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS
Classification</a> (%)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>3.4</td>
<td>-7.3</td>
<td>-23.4</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>3.9</td>
<td>-5.9</td>
<td>-16.2</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>7.4</td>
<td>-8.9</td>
<td>-29.1</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>6.6</td>
<td>-11.3</td>
<td>-17.8</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
U.S. New Home Sales Step Up From
Record Low 
by <a href="/comment/Moeller.html">Tom
Moeller</a> March 25, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325d.jpg" align="left" border="0" height="265" width="353">
February sales of new single-family homes ticked up off their
lowest level in the series' history. Their 4.7% month-to-month rebound
to 337,000 units, nevertheless, left them down by roughly
three-quarters from their peak during July 2005. February sales
exceeded Consensus expectations for 300,000 units.
The February rebound in home sales was not broad based and
limited to moderate increases in the South and the West. Home sales in
the Midwest and in the Northeast continued lower.
Reflecting sales weakness was another decline in the median
price for a new single-family home. At $200,900, the figure was off
11.6% during just the last two months and by nearly 20% since last year
as homebuilders attempted to move inventory. Since their peak early in
2007, new home prices have fallen by roughly one quarter.
In fact, that effort to move homes continued successful and
the inventory of unsold homes is down by 43% since the peak during
2006. In each of the country's regions, the inventory is down by
one-quarter to one-third just during the last year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325e.jpg" align="right" border="0" height="265" width="353">
Despite the declines in inventory levels, the month's supply
of new homes for sale remains high due to low sales. It ticked down
just slightly during February from the record high to 12.2 months.
By range there have no sales of new homes priced over $750,000
during the last three months. There were 1,000 registered sales of a
homes priced between $500,000 &amp; $750,000 and 2,000 sales of
homes priced between $400,000 and $500,000. These figures compare to
sales between 3,000 and 8,000 of homes in the ranges below $400,000.
The new home sales figures are available in Haver's USECON
database.
Today's House testimony by Fed Governor Elizabeth A. Duke
titled Credit availability and prudent lending standards
can be found <a href="http://www.federalreserve.gov/newsevents/testimony/duke20090325a.htm">
here</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">US
New Homes</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y (%)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales
(SAAR, 000s)</td>
<td>337</td>
<td>332</td>
<td>-41.1</td>
<td>479</td>
<td>768</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>29</td>
<td>30</td>
<td>&nbsp;-25.6</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>50</td>
<td>55</td>
<td>-35.1</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>193</td>
<td>176</td>
<td>-38.5</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>65</td>
<td>61</td>
<td>-54.2</td>
<td>111</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price
(NSA, $)</td>
<td>200,900</td>
<td>206,800</td>
<td>-18.1</td>
<td>230,217</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>
IFO Index Drops But Sentiment
Drops But Sentiment Makes Some Gains 
by <a href="/comment/Brusca.html">Robert
Brusca</a> March 25, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325c.jpg" align="left" border="0" height="265" width="353">
The IFO Index fell again in March but the IFO expectations
index rose. Expectations are still only in the 16th percentile with
this ongoing bounce. The overall business climate and the current
situation indices are at lows. 
 

The chart above shows how some of the sector indices based on
diffusion indices are doing. All three pictured indices are falling
sharply. The services and retail sectors have made a small rebound.
Manufacturing is slowing its descent. Manufacturing and the all- sector
index (not pictures) are at the bottom of their range. The wholesaling
and services sectors (wholesaling not pictured) hover around the bottom
10% of their respective ranges. The retail sector is in the bottom 20%
of its range. Construction is nearly midrange, being far less affected
overall &#8211; so far. 
 

On the month the manufacturing index ticked a bit lower.
Retailing, services and wholesaling moved a bit lower too. But
Construction showed higher diffusions reading. Contraction in there is
becoming less pronounced. And even though manufacturing deteriorated it
was by the slimmest of margins. In broad terms the IFO reading is in
agreement with the PMI sector indices from Market that show a reduction
in the rate of decline in both MFG and services. 
 

Still, the news from IFO was not good and was not a positive
as some had hoped for. The upshot is that the report weighed on the
euro. However there might be enough evidence of an abatement in the
slowdown for Europe to call for additional stimulus. Today the EU&#8217;s
Junker was saying Europe would not simply cave into the US wishes for
more European stimulus because the economy&#8217;s spiral was still so
severe. But if the severe phase of the European downturn is abating, a
dollop of stimulus might be helpful. If Europe turns more to look at
the facts of its circumstance in stead of being disagreeable with the
US, it might find that the US urging is pushing it in the right
direction. 
 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col"> IFO
Survey: Germany
</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="5"> Percent: Yr/Yr</td>
<td colspan="4"> Index Numbers</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> Mar 
09</td>
<td> Feb 
09</td>
<td> Jan 
09</td>
<td> Dec 
08</td>
<td> Nov 
08</td>
<td> Current</td>
<td> Feb 
09</td>
<td> Curr/Avg</td>
<td>%tile</td>
</tr>
<tr class="grey2">
<td class="firstcol">Biz Climate</td>
<td> -21.5%</td>
<td> -20.6%</td>
<td> -19.7%</td>
<td> -20.0%</td>
<td> -17.8%</td>
<td>82.1</td>
<td>82.6</td>
<td>85.5%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Current Situation</td>
<td> -25.8%</td>
<td> -23.5%</td>
<td> -19.7%</td>
<td> -18.1%</td>
<td> -14.2%</td>
<td>82.7</td>
<td>84.3</td>
<td>86.2%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Biz Expectations</td>
<td> -16.9%</td>
<td> -17.5%</td>
<td> -19.8%</td>
<td> -22.0%</td>
<td> -21.3%</td>
<td>81.6</td>
<td>80.9</td>
<td>84.8%</td>
<td>16.3%</td>
</tr>
<tr class="grey1">
<td class="firstcol">average &amp; range since</td>
<td>Jun-91</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>

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090324g.jpg" align="left" border="0" height="265" width="353">
The manufacturing and Services indices from Markit show that
Euro Area PMIs have risen form the bottoms in this cycle. The moves are
small and the included chart demonstrates that the move is without much
vigor. The services sector is showing the most substantial rebound. 
 

Still the services index remains in the lower 3.5% of its
range and the MFG index is in the bottom of 1.6% of its range both
since August 1998. 
 

These reports are the first for March and they are the first
signs that the pace of decline in the European economy may be slowing.
They are still very weak signals since each resides well below the
neutral level for this survey which is at a value of 50. Neither survey
has developed any sort of upward momentum. So far all we have is a sign
of a lesser pace of decline, not of any actual improvement. But this is
how the end of the severe phase of recession looks. And it will be good
to get that behind us. Once this phase ends remedial actions have more
potential to help the economy. . 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="3" scope="col">FLASH
Readings</th>
</tr>
<tr>
<th colspan="3" scope="col">Markit
PMIs for the Euro
Area</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>MFG</td>
<td>Services</td>
</tr>
<tr>
<td class="firstcol">Mar-09</td>
<td>33.97</td>
<td>40.06</td>
</tr>
<tr>
<td class="firstcol">Feb-09</td>
<td>33.55</td>
<td>39.24</td>
</tr>
<tr>
<td class="firstcol">Jan-09</td>
<td>34.42</td>
<td>42.16</td>
</tr>
<tr>
<td class="firstcol">Dec-08</td>
<td>33.87</td>
<td>42.06</td>
</tr>
<tr class="odd">
<td colspan="3" class="firstcol">Averages</td>
</tr>
<tr>
<td class="firstcol">3-Mo</td>
<td>33.95</td>
<td>40.49</td>
</tr>
<tr>
<td class="firstcol">6-Mo</td>
<td>37.25</td>
<td>41.96</td>
</tr>
<tr>
<td class="firstcol">12-Mo</td>
<td>43.41</td>
<td>45.72</td>
</tr>
<tr class="odd">
<td colspan="3" class="firstcol">127-Mo Range</td>
</tr>
<tr>
<td class="firstcol">High</td>
<td>60.47</td>
<td>62.36</td>
</tr>
<tr>
<td class="firstcol">Low</td>
<td>33.55</td>
<td>39.24</td>
</tr>
<tr>
<td class="firstcol">% Range</td>
<td>1.6%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
</body></html>

The manufacturing and Services indices from Markit show that Euro Area PMIs have risen form the bottoms in this cycle. The moves are small and the included chart demonstrates that the move is without much vigor. The services sector is [...]

Flash PMIs Bottom Out

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090324f.jpg" align="left" border="0" height="265" width="353">
UK inflation spurted in February quite unexpectedly. As the
table shows, the month-to-month acceleration is quite widespread. UK
core inflation continues to hover below the key 2% level, although it
has ticked up this month too. Headline inflation has ticked higher and
now stands at 3.2% Yr/Yr. Three-and six-month headline inflation show a
sharp deceleration as you can tell from the included chart. UK
statistics have been a bit mercurial with surveys showing much more
weakness that the actual reports especially for things like retail
sales. It is certainly too soon to develop angst over inflation trends
in the UK. For the moment the month&#8217;s report is a curiosity. Surely
economic conditions are still too weak to engender any significant
inflation at this time. Still, Europe is the place that inflation is
most feared. The BOE has been bolder than the ECB and ECB policies
remain more restrictive than in the UK. Even so, having an inflation
scare in a country so close to home, even a scare of minor proportions,
is an issue. It is not the sort of thing that will get the kind of bold
action from the ECB that the European economies still seem to need. The
UK inflation blip is not good news. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">UK HICP
and RPI Inflation</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% MO/MO</td>
<td colspan="4">% saar</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>Yr Ago</td>
</tr>
<tr>
<td class="firstcol">HICP</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>-0.5%</td>
<td>0.4%</td>
<td>0.7%</td>
<td>3.2%</td>
<td>2.5%</td>
</tr>
<tr class="even">
<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>
</tr>
<tr>
<td class="firstcol">All Item RPI</td>
<td>0.3%</td>
<td>-0.7%</td>
<td>-1.5%</td>
<td>-7.4%</td>
<td>-4.7%</td>
<td>0.0%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">RPI x</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>2.6%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">RPI excl Seasonal Food</td>
<td>0.3%</td>
<td>-0.7%</td>
<td>-1.5%</td>
<td>-7.7%</td>
<td>-4.9%</td>
<td>-0.3%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">Food &amp; Beverages</td>
<td>1.6%</td>
<td>0.1%</td>
<td>0.5%</td>
<td>9.1%</td>
<td>6.1%</td>
<td>11.3%</td>
<td>6.1%</td>
</tr>
<tr>
<td class="firstcol">Housing and HH Expenditures</td>
<td>-0.5%</td>
<td>-0.9%</td>
<td>-3.2%</td>
<td>-17.1%</td>
<td>-8.5%</td>
<td>-2.7%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">Clothing &amp; Footwear</td>
<td>0.8%</td>
<td>-0.1%</td>
<td>-3.2%</td>
<td>-9.6%</td>
<td>-8.2%</td>
<td>-6.4%</td>
<td>-1.5%</td>
</tr>
<tr>
<td class="firstcol">Leisure Services</td>
<td>0.4%</td>
<td>0.4%</td>
<td>0.2%</td>
<td>4.2%</td>
<td>4.7%</td>
<td>5.3%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">Leisure Goods</td>
<td>1.5%</td>
<td>-0.1%</td>
<td>-1.9%</td>
<td>-1.9%</td>
<td>-3.6%</td>
<td>-3.6%</td>
<td>-2.7%</td>
</tr>
<tr>
<td class="firstcol">Motoring Expenditures</td>
<td>1.9%</td>
<td>-1.9%</td>
<td>-2.3%</td>
<td>-9.1%</td>
<td>-16.7%</td>
<td>-7.4%</td>
<td>5.2%</td>
</tr>
<tr>
<td class="firstcol">Fares and Travel Costs</td>
<td>-1.5%</td>
<td>-3.2%</td>
<td>4.8%</td>
<td>-0.4%</td>
<td>2.8%</td>
<td>8.3%</td>
<td>3.8%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">A RED
highlight
indicates inflation accelerating from pace of previous horizon</td>
</tr>
</tbody>
</table>
</body></html>

UK inflation spurted in February quite unexpectedly. As the table shows, the month-to-month acceleration is quite widespread. UK core inflation continues to hover below the key 2% level, although it has ticked up this month too. [...]

UK Inflation Accelerates

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 2009

Jump to:

U.S. 4Q GDP Decline Remains Sharpest Since Early 1980s As Profits Crater

U.S. 4Q GDP Decline Remains Sharpest Since Early 1980s As Profits Crater

IFO Index Drops But Sentiment Drops But Sentiment Makes Some Gains

U.S. New Home Sales Step Up From Record Low

Rise in U.S. Durable Goods Orders Surprises

Rise in U.S. Durable Goods Orders Surprises

Flash PMIs Bottom Out

UK Inflation Accelerates