Tom Moeller

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In lockstep with other regional Fed indexes recently
released, the Federal Reserve Bank of Kansas City reported that its reading of manufacturing
business activity plunged to -17 in March following February's improvement to 5.
It was the lowest reading since March 2009, indicating major recession in
the area's factory sector activity. The index of expectations in six months fell
to -19, also the weakest reading in eleven years.

The ISM-Adjusted Index fell to 43.1 (NSA) in March. It was
the lowest index level since December 2015 and down from the May 2018 high of 64.2.

The current condition components all weakened
this month with new orders, shipments and production each falling sharply. The
employment index fell further into negative territory, nearly touching its March
2009 low. The export measure also reached a record low. The employee workweek
measure fell deeper into negative territory where it's been for five months.

On the inflation front, prices received for finished products
turned negative. The fall to -6 compares to +27 in August 2018. The raw materials
prices index hit a four-year low.

The index measuring expectations in six months similarly fell
significantly, reflecting sharply lower new orders, shipments and production. The
expected employment measure also collapsed.

Expected finished product prices fell sharply along with
expected raw materials prices.

The diffusion indexes are calculated as the percentage of total respondents
reporting increases minus the percentage reporting declines. The survey includes 93 responses from plants in Colorado, Kansas, Nebraska, Oklahoma,
Wyoming and northern New Mexico and was conducted mid-month. Data for the Kansas City Fed Survey can be found
in Haver's SURVEYS database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" >Kansas City Federal Reserve
 Manufacturing Survey (SA)</th>
 <th>Mar</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Mar'19</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Conditions Versus One Month Ago (%
 Balance)&nbsp;&nbsp;&nbsp;&nbsp;</td>
 <td>-17</td>
 <td>5</td>
 <td>-1</td>
 <td>9</td>
 <td>0</td>
 <td>17</td>
 <td>14</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >ISM-Adjusted Composite Index (NSA)</td>
 <td>43.1</td>
 <td>52.7</td>
 <td>48.3</td>
 <td>56.4</td>
 <td>50.0</td>
 <td>58.9</td>
 <td>56.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; New Orders Volume</td>
 <td>-38</td>
 <td>8</td>
 <td>-2</td>
 <td>3</td>
 <td>-3</td>
 <td>17</td>
 <td>17</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Number of&nbsp; Employees</td>
 <td>-32</td>
 <td>-4</td>
 <td>4</td>
 <td>12</td>
 <td>-1</td>
 <td>17</td>
 <td>15</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Production</td>
 <td>-18</td>
 <td>8</td>
 <td>-4</td>
 <td>13</td>
 <td>2</td>
 <td>19</td>
 <td>17</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Prices Received for
 Finished Product</td>
 <td>-6</td>
 <td>9</td>
 <td>-3</td>
 <td>8</td>
 <td>7</td>
 <td>22</td>
 <td>7</td>
 </tr>
 <tr>
 <td class="firstcol" >Expected Conditions in Six Months</td>
 <td>-19</td>
 <td>16</td>
 <td>14</td>
 <td>20</td>
 <td>12</td>
 <td>28</td>
 <td>26</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; New Orders Volume</td>
 <td>-35</td>
 <td>21</td>
 <td>9</td>
 <td>26</td>
 <td>17</td>
 <td>35</td>
 <td>35</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Number of Employees</td>
 <td>-19</td>
 <td>20</td>
 <td>20</td>
 <td>29</td>
 <td>15</td>
 <td>33</td>
 <td>31</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Production</td>
 <td>-36</td>
 <td>21</td>
 <td>23</td>
 <td>26</td>
 <td>19</td>
 <td>40</td>
 <td>40</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Prices Received for
 Finished Product</td>
 <td>-10</td>
 <td>28</td>
 <td>20</td>
 <td>36</td>
 <td>26</td>
 <td>42</td>
 <td>27</td>
 </tr>
 </tbody>
 </table>
 
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In lockstep with other regional Fed indexes recently released, the Federal Reserve Bank of Kansas City reported that its reading of manufacturing business activity plunged to -17 in March following February's improvement to 5. It was [...]

Kansas City Fed Factory Index Collapses

Robert Brusca

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While Angela Merkel's conservative party is rising in the polls for its crisis management skills, the German economy and the German public are nonetheless experiencing greatly deteriorating conditions and expectations. GfK's look-ahead consumer confidence poll has plummeted to 2.7 for April from 8.3 in March. What began as a demonstrable step down on confidence in February and March has now become a rout. The plunge in the index, a drop of 5.6 points is severe and the biggest month-to-month drop on record. The second largest drop was a month-to-month fall of 3.8 points in February 2007.

This March finds declines in all components plus the headline lower (components are up to date only though March). The components are economic expectations, income expectations and Buying climate. There have been only 16 of these coincident monthly drops since February 2002 occurring 7% of the time. At the time of the previously largest monthly GfK drop in February 2007, the outsized decline was mostly on the back of deteriorated buying conditions which fell sharply. This month, of course, the report is still missing the components for April, but the March components are degraded across the board with unusual double-digit declines in all three components. This has happened only once before, in November 2002. There have been seven episodes of two components falling by double digits in the same month.

On balance, the deterioration in Germany is severe. The other EMU reporters in the table are still not up-to-date with readings and at this time having a topical reading is crucial for comparison and tracking.

The GfK standing dropped very suddenly to its low 12.7 percentile reading in April. In the rest of the European data in the table, up-to-date through February, readings are still lollygagging in their respective 60th to 90th percentiles. But degraded readings are coming there soon. We are now in the teeth of the storm and economic data are going to be painful to analyze. Remember this weakness is all self-induced by government edicts to slow the spread of the coronavirus. That makes them potentially quite reversible. But the risk of permanent damage grows the longer that artificial restraints are maintained.


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While Angela Merkel's conservative party is rising in the polls for its crisis management skills, the German economy and the German public are nonetheless experiencing greatly deteriorating conditions and expectations. GfK's look- [...]

German Confidence Blasted to Smithereens for April

Carol Stone, CBE

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Previous http://www.haver.com/comment/comment.html?c=200227D.html

http://www.haver.com/comment/comment.html?c=200130C.html

this has 3rd release -- corporate profit chart
http://www.haver.com/comment/comment.html?c=191220A.html

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The U.S. economy grew 2.1% (SAAR) during the fourth quarter
of 2019, unrevised from the advance estimate.........


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The GDP figures can be found in Haver's USECON and USNA
database. USNA contains virtually all of the Bureau of Economic Analysis'
detail in the national accounts. Both databases include tables of the newly
published not seasonally adjusted data. The Action Economics consensus estimates
can be found in AS1REPNA.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Chained 2012 $ (%, AR)</th>
 <th>
 <blockquote>
 Q4'19 (Second Estimate)
 </blockquote>
 </th>
 <th>Q4'19 (Advance Estimate)</th>
 <th>Q3'19</th>
 <th>Q2'19</th>
 <th>Q4'19 Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Gross Domestic Product</td>
 <td>2.1</td>
 <td>2.1</td>
 <td>2.1</td>
 <td>2.0</td>
 <td>2.3</td>
 <td>2.3</td>
 <td>2.9</td>
 <td>2.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Inventory Effect (%-point)</td>
 <td>-1.0</td>
 <td>-1.1</td>
 <td>0.0</td>
 <td>-0.9</td>
 <td>-0.4</td>
 <td>0.1</td>
 <td>0.1</td>
 <td>0.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Final Sales</td>
 <td>3.1</td>
 <td>3.2</td>
 <td>2.1</td>
 <td>3.0</td>
 <td>2.7</td>
 <td>2.2</td>
 <td>2.8</td>
 <td>2.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Foreign Trade Effect (%-point)</td>
 <td>1.5</td>
 <td>1.5</td>
 <td>-0.1</td>
 <td>-0.7</td>
 <td>0.4</td>
 <td>-0.1</td>
 <td>-0.2</td>
 <td>-0.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Domestic Final Sales</td>
 <td>1.5</td>
 <td>1.6</td>
 <td>2.2</td>
 <td>3.6</td>
 <td>2.3</td>
 <td>2.3</td>
 <td>3.0</td>
 <td>2.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; &nbsp;</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Personal Consumption Expenditure</td>
 <td>1.7</td>
 <td>1.8</td>
 <td>3.1</td>
 <td>4.6</td>
 <td>2.6</td>
 <td>2.6</td>
 <td>3.0</td>
 <td>2.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Nonresidential Fixed Investment</td>
 <td>-2.3</td>
 <td>-1.5</td>
 <td>-2.3</td>
 <td>-1.0</td>
 <td>-0.3</td>
 <td>2.1</td>
 <td>6.4</td>
 <td>4.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Residential Investment</td>
 <td>6.1</td>
 <td>5.8</td>
 <td>4.6</td>
 <td>-2.9</td>
 <td>1.6</td>
 <td>-1.5</td>
 <td>-1.5</td>
 <td>3.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Government Spending</td>
 <td>2.6</td>
 <td>2.7</td>
 <td>1.7</td>
 <td>4.8</td>
 <td>3.0</td>
 <td>2.3</td>
 <td>1.7</td>
 <td>0.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Chain-Type Price Index</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; GDP</td>
 <td>1.3</td>
 <td>1.4</td>
 <td>1.8</td>
 <td>2.4</td>
 <td>1.6</td>
 <td>1.8</td>
 <td>2.4</td>
 <td>1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Personal Consumption
 Expenditure</td>
 <td>1.3</td>
 <td>1.6</td>
 <td>1.5</td>
 <td>2.4</td>
 <td>1.4</td>
 <td>1.4</td>
 <td>2.1</td>
 <td>1.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 Less Food &amp; Energy</td>
 <td>1.2</td>
 <td>1.3</td>
 <td>2.1</td>
 <td>1.9</td>
 <td>1.6</td>
 <td>1.6</td>
 <td>1.9</td>
 <td>1.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nonresidential
 Investment</td>
 <td>0.5</td>
 <td>-0.2</td>
 <td>0.5</td>
 <td>2.0</td>
 <td>1.2</td>
 <td>1.1</td>
 <td>1.4</td>
 <td>1.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Residential Investment</td>
 <td>2.6</td>
 <td>2.7</td>
 <td>3.4</td>
 <td>1.7</td>
 <td>2.6</td>
 <td>2.9</td>
 <td>5.6</td>
 <td>4.5</td>
 </tr>
 </tbody>
 </table>
 
 </body></html>

Previous http://www.haver.com/comment/comment.html?c=200227D.html http://www.haver.com/comment/comment.html?c=200130C.html this has 3rd release -- corporate profit chart http://www.haver.com/comment/comment.html?c=191220A.html The [...]

U.S. GDP Growth Is Unrevised

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U.S. GDP was unrevised in the fourth quarter of 2019 at 2.1% (SAAR) the same as in the advance estimate and the February report. The latest number followed 3.1% in Q1 2019, 2.0% in Q2 and 2.1% in Q3, producing Q4/Q4 growth of 2.3% and a total for 2019 as a whole of 2.3%. For Q4, the Action Economics Forecast Survey expected the unrevised 2.1% number.

Corporate profits for the fourth quarter were included in this report for the first time. After-tax profits without IVA and capital consumption adjustments grew 3.7% in the quarter and 4.1% from the quarter a year ago; these yielded just 0.3% for 2019 as a whole versus 2018. After-tax profits with IVA and CCAdj grew 2.1% in Q4 and 2.2% over Q4 2018; the total for 2019 was up just 0.1%. (These percentage changes for profits are quarterly, not annual rates.)

Fourth quarter growth in domestic final demand returned to the advance report's 1.6% (SAAR) from the 1.5% reported last month. Both personal consumption expenditures and business fixed investment contributed to the upward adjustment.

Personal consumption expenditures were revised up to 1.8% from last month's 1.7% with the y/y gain raised to 2.7% from 2.6% y/y. Spending growth on durable goods was raised to 2.8% (5.9% y/y) from 2.6%; that gain was most prominent in recreational goods & vehicles, which were lifted to 2.0% from 1.7%. Growth on expenditures for motor vehicles and furniture and appliances was unrevised at 5.5% (3.0% y/y) and 1.1% (4.5% y/y), respectively. Nondurable goods outlays 3.3% y/y) revised from -0.3% to -0.6% (+3.0% y/y), mainly due to a decline in gasoline and other energy products to -2.2% (-0.4% y/y) from -0.7% in last month's report. Apparel purchases were actually raised marginally to 4.9% (3.1% y/y) from 4.8%. Consumer spending on services was also raised in Q4 to 2.4% (2.1% y/y) from 2.2% before. Outlays on housing & utilities grew 0.4% (1.0% y/y)), up from 0.2% before, but spending growth at restaurants and hotels was further cut to just 0.4% (1.9%) from 1.3%. Growth was raised for transportation services to 0.7% (3.3% y/y) from 0.2%, and that for recreation was lifted to 5.5% (2.7%y/y) from 2.7%. Health care outlays were further strengthened to 4.9% (3.8% y/y) from 3.8% in last month's report.


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Business fixed investment, already weak, was trimmed to -2.4% from last month's -2.3% rate and down y/y by 0.4%. Buildings were still the weakest component but they were adjusted upward to -7.2% (-6.2% y/y) from -8.1% before. The decline in equipment investment was also reduced a bit, to -4.3% from -4.4% (-1.9% y/y). Intellectual property product investment was the source of the reduction in total business investment; it is now shown up 2.8% from 4.0% in Q4, cutting the y/y change to just 5.4%, the slowest since early 2018.

Residential investment was lifted to 6.5% growth in Q4 from 6.1% reported before and up 1.7% y/y. This is the first year-on-year improvement since the end of 2017.

Government spending growth was 2.5% (3.0% y/y), marginally less than last month's 2.6% report. Federal government purchases were cut to 3.4% growth (4.3% y/y) from 3.8% (4.4% y/y); the reduction was in defense outlays, now shown at 4.4% growth (also 4.4% y/y) instead of the 5.3% in last month's compilation. During all of 2019, defense spending is still seen as up 4.9%, the strongest growth in ten years and improved from declines early in the decade. Nondefense outlays rose at a 1.9% pace in Q4, up 4.1% y/y and 1.6% for all of 2019. State & local expenditures were up at a 2% pace in the quarter, putting the y/y gain for Q4 at 2.2% and the whole year at 1.6%.

The change in business inventories was marginally revised to $13.1 billion in Q4 from $13.0 billion reported last month. Q3 had seen accumulation of $69.4 billion so the current amount still subtracts 1 percentage point from total GDP growth. There was also a marginal revision to net exports, which are now seen at -$900.7 billion in Q4 from -$899.6 billion last month. This still added 1.5 percent to GDP, following the -$990.1 billion deficit in Q3. Exports of goods & services were unchanged at a 2.1% (0.3% y/y) gain in Q4 while imports declined at an 8.4% pace (-2.1% y/y).

The GDP price index was unchanged with a 1.3% annualized increase in Q4 (1.6% y/y). This was anticipated in the Action Economics Forecast Survey. The PCE price index was edged higher to a 1.4% pace of increase from the 1.3% in last month's report but was unchanged in the y/y calculation at 1.4%. PCE prices excluding food & energy were raised to 1.3% from last month's 1.2%; the y/y increase was 1.46% The change in the business fixed investment price index was cut back modestly to 0.4% (1.1% y/y) from 0.5% last month. The residential investment price index was reduced slightly to a 2.4% pace of increase from 2.6% reported last month; the y/y move is now shown at 2.5%, down from 2.6% last month.

The GDP figures can be found in Haver's USECON and USNA database. USNA contains
virtually all of the Bureau of Economic Analysis' detail in the national accounts. Both databases include
tables of the newly published not seasonally adjusted data. The Action Economics consensus estimates can be
found in AS1REPNA.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Chained 2012 $ (%, AR)</th>
 <th>
 <blockquote>
 Q4'19 (Third Estimate)
 </blockquote>
 </th>
 <th>Q4'19 (Advance Estimate)</th>
 <th>Q3'19</th>
 <th>Q2'19</th>
 <th>Q4'19 Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Gross Domestic Product</td>
<td >2.1</td>
<td >2.1</td>
<td >2.1</td>
<td >2.0</td>
<td >2.3</td>
<td >2.3</td>
<td >2.9</td>
<td >2.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Inventory Effect (%-point)</td>
<td >-1.0</td>
<td >-1.1</td>
<td >0.0</td>
<td >-0.9</td>
<td >-0.4</td>
<td >0.1</td>
<td >0.1</td>
<td >0.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Final Sales</td>
<td >3.2</td>
<td >3.2</td>
<td >2.1</td>
<td >3.0</td>
<td >2.7</td>
<td >2.2</td>
<td >2.8</td>
<td >2.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Foreign Trade Effect (%-point)</td>
<td >1.5</td>
<td >1.5</td>
<td >-0.1</td>
<td >-0.7</td>
<td >0.4</td>
<td >-0.1</td>
<td >-0.2</td>
<td >-0.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Domestic Final Sales</td>
<td >1.6</td>
<td >1.6</td>
<td >2.2</td>
<td >3.6</td>
<td >2.3</td>
<td >2.3</td>
<td >3.0</td>
<td >2.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; &nbsp;</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Personal Consumption Expenditure</td>
<td >1.8</td>
<td >1.8</td>
<td >3.1</td>
<td >4.6</td>
<td >2.7</td>
<td >2.6</td>
<td >3.0</td>
<td >2.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Nonresidential Fixed Investment</td>
<td >-2.4</td>
<td >-1.5</td>
<td >-2.3</td>
<td >-1.0</td>
<td >-0.4</td>
<td >2.1</td>
<td >6.4</td>
<td >4.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Residential Investment</td>
<td >6.5</td>
<td >5.8</td>
<td >4.6</td>
<td >-2.9</td>
<td >1.7</td>
<td >-1.5</td>
<td >-1.5</td>
<td >3.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Government Spending</td>
<td >2.5</td>
<td >2.7</td>
<td >1.7</td>
<td >4.8</td>
<td >3.0</td>
<td >2.3</td>
<td >1.7</td>
<td >0.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Chain-Type Price Index</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; GDP</td>
<td >1.3</td>
<td >1.4</td>
<td >1.8</td>
<td >2.4</td>
<td >1.4</td>
<td >1.8</td>
<td >2.4</td>
<td >1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Personal Consumption
 Expenditure</td>
<td >1.4</td>
<td >1.6</td>
<td >1.5</td>
<td >2.4</td>
<td >1.4</td>
<td >1.4</td>
<td >2.1</td>
<td >1.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 Less Food &amp; Energy</td>
<td >1.3</td>
<td >1.3</td>
<td >2.1</td>
<td >1.9</td>
<td >1.6</td>
<td >1.6</td>
<td >1.9</td>
<td >1.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nonresidential
 Investment</td>
<td >0.4</td>
<td >-0.2</td>
<td >0.5</td>
<td >2.0</td>
<td >1.2</td>
<td >1.2</td>
<td >1.4</td>
<td >1.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Residential Investment</td>
<td >2.4</td>
<td >2.7</td>
<td >3.4</td>
<td >1.7</td>
<td >2.6</td>
<td >2.9</td>
<td >5.6</td>
<td >4.5</td>
 </tr>
 </tbody>
 </table>
 
 </body></html>

U.S. GDP was unrevised in the fourth quarter of 2019 at 2.1% (SAAR) the same as in the advance estimate and the February report. The latest number followed 3.1% in Q1 2019, 2.0% in Q2 and 2.1% in Q3, producing Q4/Q4 growth of 2.3% and [...]

U.S. GDP Growth Remains at 2.1% in Q4

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The advance estimate of the U.S. trade deficit in
goods narrowed to $59.88 billion in February from $65.90 in January. A $63.8
billion deficit had been expected in the Action Economics Forecast Survey. 

Exports of goods increased 0.6% m/m (-1.6% y/y) in February
following a 0.9% decline. The gain was led by a 5.0% increase in the
&quot;other&quot; category which followed a 12.9% decline. Motor vehicles &amp;
parts exports also were strong, posting a 3.2% rise (2.1% y/y) on top of a 7.6%
January increase. Industrial supplies exports rose 1.5% and recaptured the prior
month's decline. Capital goods exports improved 0.5% (-5.6% y/y) following a
2.4% drop. Working the other way were consumer goods exports which fell 4.7%
(-10.0% y/y) after a 0.8% rise. Foods, feeds &amp; beverages exports which fell
0.6% (-0.7% y/y) following a 2.1% rise.

Imports of goods fell 2.4% (-7.7% y/y) following a 2.0%
decline as most categories exhibited weakness m/m. Capital goods imports
weakened 6.8% (-11.2% y/y) after slipping 0.8% in January. Industrial supplies
&amp; materials imports fell 3.8% (-10.1% y/y) as oil prices declined. Foods,
feeds &amp; beverages imports were off 3.1% both m/m and y/y following a 4.9%
gain. Consumer goods imports declined 1.8% (-7.4% y/y) after edging 0.7% higher.
Increasing by 4.9% (-4.8% y/y) were auto imports which reversed two months
of decline. Imports of other goods also rose 4.9% (7.9% y/y) and recovered much
of a 13.5% drop during January.

The advance international trade data can be found in Haver's USECON
database. The expectation figure is from the Action Economics Forecast Survey,
which is carried in AS1REPNA.

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	 	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Advance U.S. Foreign Trade in
 Goods (Current Customs Value $)</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Dec</th>
 <th>Feb Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 
 <tr class="odd">
 <td class="firstcol" >U.S. Trade Deficit ($ bil.)</td>
 <td>59.88</td>
 <td>65.90</td>
 <td>68.48</td>
 <td>70.31 
 (02/19)</td>
 <td>852.79</td>
 <td>874.81</td>
 <td>793.41</td>
 </tr>
 <tr>
 <td class="firstcol" >Exports (% Chg)</td>
 <td>0.6</td>
 <td>-0.9</td>
 <td>0.4</td>
 <td>-1.6</td>
 <td>-1.3</td>
 <td>7.9</td>
 <td>6.4</td>
 </tr>
 
 <td class="firstcol" >Imports (% Chg)</td>
 <td>-2.4</td>
 <td>-2.0</td>
 <td>2.9</td>
 <td>-7.7</td>
 <td>-1.7</td>
 <td>8.7</td>
 <td>7.4</td>

 
 

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The advance estimate of the U.S. trade deficit in goods narrowed to $59.88 billion in February from $65.90 in January. A $63.8 billion deficit had been expected in the Action Economics Forecast Survey. Exports of goods increased 0.6% [...]

Advance U.S. Trade Deficit in Goods Shrinks in February

Gerald D. Cohen

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&bull; Initial jobless claims jumped to a record 3.283 million in the week ending March 21.
&bull; This is the largest weekly increase since the data was first collected in 1967.
&bull; Claims rose in every state led by Pennsylvania, Ohio and New Jersey.
&bull; This data suggests a 1.8 percentage point rise in the unemployment rate.


Initial jobless claims for unemployment insurance jumped 3.001 million to a record 3.283 million (1,427% year-on-year) during the week ending March 21, This is also the largest weekly increase in claims both on a level and percent change basis since the data was first collected in 1967. The previous high for claims was 695,000 set in 1982. Based on this data alone, the unemployment rate should rise by 1.8 percentage points. The Action Economics Forecast Survey mean was 1.157 million claims while its median was 800,000.

The previous week's claims were revised slightly higher to 282,000 (was 281,000). This data is from the survey week for the March employment report, which is scheduled to be released on Friday, April 3. As a result, we will not see the rise in unemployment represented in the latest data until the April employment figures released on Friday, May 8.
The <a href="https://www.bls.gov/bls/bls-covid-19-questions-and-answers.htm">Bureau of Labor Statistics</a> anticipates that COVID-19 will not impact its release calendar.

The four-week moving average of initial claims, which smooths out week-to-week volatility and is less important at the moment since its spans pre- and post-coronavirus shutdowns, jumped to 998,250.

Claims increased in the week ending March 21, led by Pennsylvania (397,975), Ohio (212,773), and New Jersey (179,144) followed by Michigan, Massachusetts and California (these calculations are based on seasonally-adjusted data calculated by Haver Analytics). In total 11 states showed gains of over 100,000. New Hampshire, Rhode Island and Maine had the largest percent gains in claims. The Department of Labor notes that advance claims are not directly comparable to claims reported in prior weeks and some states indicated these numbers are only estimates. A more accurate picture of state claims in the week ending March 21 will be available next week.

Continuing claims for unemployment insurance increased 101,000 to 1.803 million (4.1% y/y) in the week ending March 14, from a slightly-upwardly revised 1.702 million (was 1.701). The four-week moving average of claimants increased to 1.731 million from 1.704 million. The insured rate of unemployment was unchanged at 1.2%. The state insured rates of unemployment are lagged by two weeks, thus this data has yet to see any major impact from COVID-19.

Data on weekly unemployment claims going back to 1967 are contained in Haver's WEEKLY database,
and they are summarized monthly in USECON. Data for individual states are in REGIONW. The expectations
figure is from the Action Economics Forecast Survey, carried in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" >Unemployment Insurance (SA, 000s)</th>
 <th>03/21/20</th>
 <th>03/14/20</th>
 <th>03/07/20</th>
 <th>Y/Y %</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Initial Claims</td>
 <td>3,283</td>
 <td>282</td>
 <td>211</td>
 <td>1,427.0</td>
 <td>218</td>
 <td>221</td>
 <td>244</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >4-wk avg</td>
 <td>998.25</td>
 <td>232.50</td>
 <td>215.75</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr>
 <td class="firstcol" >Continuing Claims</td>
 <td>--</td>
 <td>1,803</td>
 <td>1,702</td>
 <td>4.1</td>
 <td>1,701</td>
 <td>1,756</td>
 <td>1,961</td>
 </tr>
 <tr class="odd">
	 <td class="firstcol" >4-wk avg</td>
	 <td>--</td>
	 <td>1731.00</td>
	 <td>1703.50</td>
	 <td>--</td>
	 <td>--</td>
	 <td>--</td>
	 <td>--</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Insured Unemployment Rate (%)</td>
 <td>--</td>
 <td>1.2</td>
 <td>1.2</td>
 <td>
 1.2 
 (Mar. 2019)
 </td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.4</td>
 </tr>
 </tbody>
 </table>
 
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• Initial jobless claims jumped to a record 3.283 million in the week ending March 21. • This is the largest weekly increase since the data was first collected in 1967. • Claims rose in every state led by Pennsylvania, Ohio and New [...]

U.S. Initial Claims for Unemployment Insurance Soar to Record 3.3 Million

Advance 
<a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;&nbsp;March 26, 2020
The advance estimate of the U.S. trade deficit in
goods narrowed to $59.88 billion in February from $65.90 in January. A $63.8
billion deficit had been expected in the Action Economics Forecast Survey. 
Exports of goods increased 0.6% m/m (-1.6% y/y) in February
following a 0.9% decline. The gain was led by a 5.0% increase in the
&quot;other&quot; category which followed a 12.9% decline. Motor vehicles &amp;
parts exports also were strong, posting a 3.2% rise (2.1% y/y) on top of a 7.6%
January increase. Industrial supplies exports rose 1.5% and recaptured the prior
month's decline. Capital goods exports improved 0.5% (-5.6% y/y) following a
2.4% drop. Working the other way were consumer goods exports which fell 4.7%
(-10.0% y/y) after a 0.8% rise. Foods, feeds &amp; beverages exports which fell
0.6% (-0.7% y/y) following a 2.1% rise.
Imports of goods fell 2.4% (-7.7% y/y) following a 2.0%
decline as most categories exhibited weakness m/m. Capital goods imports
weakened 6.8% (-11.2% y/y) after slipping 0.8% in January. Industrial supplies
&amp; materials imports fell 3.8% (-10.1% y/y) as oil prices declined. Foods,
feeds &amp; beverages imports were off 3.1% both m/m and y/y following a 4.9%
gain. Consumer goods imports declined 1.8% (-7.4% y/y) after edging 0.7% higher.
Increasing by 4.9% (-4.8% y/y) were auto imports&nbsp; which reversed two months
of decline. Imports of other goods also rose 4.9% (7.9% y/y) and recovered much
of a 13.5% drop during January.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 
The advance international trade data can be found in Haver's USECON
database. The expectation figure is from the Action Economics Forecast Survey,
which is carried in AS1REPNA.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="956">Advance U.S. Foreign Trade in
 Goods (Current Customs Value $)</th>
 <th width="130">Feb</th>
 <th width="130">Jan</th>
 <th width="130">Dec</th>
 <th width="130">Feb Y/Y</th>
 <th width="130">2019</th>
 <th width="130">2018</th>
 <th width="131">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="956">U.S. Trade Deficit ($ bil.)</td>
 <td align="center" width="130">59.88</td>
 <td align="center" width="130">65.90</td>
 <td align="center" width="130">68.48</td>
 <td align="center" width="130">70.31 
 (02/19)</td>
 <td align="center" width="130">852.79</td>
 <td align="center" width="130">874.81</td>
 <td align="center" width="131">793.41</td>
 </tr>
 <tr>
 <td class="firstcol" width="956">Exports (% Chg)</td>
 <td align="center" width="130">0.6</td>
 <td align="center" width="130">-0.9</td>
 <td align="center" width="130">0.4</td>
 <td align="center" width="130">-1.6</td>
 <td align="center" width="130">-1.3</td>
 <td align="center" width="130">7.9</td>
 <td align="center" width="131">6.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="956">Imports (% Chg)</td>
 <td align="center" width="130">-2.4</td>
 <td align="center" width="130">-2.0</td>
 <td align="center" width="130">2.9</td>
 <td align="center" width="130">-7.7</td>
 <td align="center" width="130">-1.7</td>
 <td align="center" width="130">8.7</td>
 <td align="center" width="131">7.4</td>
 </tr>
 </tbody>
</table>
&nbsp;
&nbsp;
Kansas City Fed Factory Index Collapses 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;March 26, 2020
In lockstep with other regional Fed indexes recently
released, the Federal
Reserve Bank of Kansas City reported that its reading of manufacturing
business activity plunged to -17 in March following February's improvement to 5.
It was the lowest&nbsp; reading since March 2009, indicating major recession in
the area's factory sector activity. The index of expectations in six months fell
to -19, also the weakest reading in eleven years.
The ISM-Adjusted Index fell to 43.1 (NSA) in March. It was
the lowest index level since December 2015 and down from the May 2018 high of
64.2.
The current condition components all weakened
this month with new orders, shipments and production each falling sharply. The
employment index fell further into negative territory, nearly touching its March
2009 low. The export measure also reached a record low. The employee workweek
measure fell deeper into negative territory where it's been for five months.
On the inflation front, prices received for finished products
turned negative. The fall to -6 compares to +27 in August 2018. The raw materials
prices index hit a four-year low.
The index measuring expectations in six months similarly fell
significantly, reflecting sharply lower new orders, shipments and production. The
expected employment measure also collapsed.
Expected finished product prices fell sharply along with
expected raw materials prices.
The
diffusion indexes are calculated as the percentage of total respondents
reporting increases minus the percentage reporting declines. The survey includes 93 responses from plants in Colorado, Kansas, Nebraska, Oklahoma,
Wyoming and northern New Mexico and was conducted mid-month. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS
database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" width="1130">Kansas City Federal Reserve
 Manufacturing Survey (SA)</th>
 <th width="105">Mar</th>
 <th width="105">Feb</th>
 <th width="105">Jan</th>
 <th width="105">Mar'19</th>
 <th width="105">2019</th>
 <th width="106">2018</th>
 <th width="106">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1130">Conditions Versus One Month Ago (%
 Balance)&nbsp;&nbsp;&nbsp;&nbsp;</td>
 <td width="105" align="center">-17</td>
 <td width="105" align="center">5</td>
 <td width="105" align="center">-1</td>
 <td width="105" align="center">9</td>
 <td width="105" align="center">0</td>
 <td width="106" align="center">17</td>
 <td width="106" align="center">14</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1130">ISM-Adjusted Composite Index (NSA)</td>
 <td width="105" align="center">43.1</td>
 <td width="105" align="center">52.7</td>
 <td width="105" align="center">48.3</td>
 <td width="105" align="center">56.4</td>
 <td width="105" align="center">50.0</td>
 <td width="106" align="center">58.9</td>
 <td width="106" align="center">56.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="1130">&nbsp;&nbsp; New Orders Volume</td>
 <td width="105" align="center">-38</td>
 <td width="105" align="center">8</td>
 <td width="105" align="center">-2</td>
 <td width="105" align="center">3 </td>
 <td width="105" align="center">-3</td>
 <td width="106" align="center">17</td>
 <td width="106" align="center">17</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1130">&nbsp;&nbsp; Number of&nbsp; Employees</td>
 <td width="105" align="center">-32</td>
 <td width="105" align="center">-4</td>
 <td width="105" align="center">4</td>
 <td width="105" align="center">12</td>
 <td width="105" align="center">-1</td>
 <td width="106" align="center">17</td>
 <td width="106" align="center">15</td>
 </tr>
 <tr>
 <td class="firstcol" width="1130">&nbsp;&nbsp; Production</td>
 <td width="105" align="center">-18</td>
 <td width="105" align="center">8</td>
 <td width="105" align="center">-4</td>
 <td width="105" align="center">13</td>
 <td width="105" align="center">2</td>
 <td width="106" align="center">19</td>
 <td width="106" align="center">17</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1130">&nbsp;&nbsp; Prices Received for
 Finished Product</td>
 <td width="105" align="center">-6</td>
 <td width="105" align="center">9</td>
 <td width="105" align="center">-3</td>
 <td width="105" align="center">8</td>
 <td width="105" align="center">7</td>
 <td width="106" align="center">22</td>
 <td width="106" align="center">7</td>
 </tr>
 <tr>
 <td class="firstcol" width="1130">Expected Conditions in Six Months</td>
 <td width="105" align="center">-19</td>
 <td width="105" align="center">16</td>
 <td width="105" align="center">14</td>
 <td width="105" align="center">20</td>
 <td width="105" align="center">12</td>
 <td width="106" align="center">28</td>
 <td width="106" align="center">26</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1130">&nbsp;&nbsp; New Orders Volume</td>
 <td width="105" align="center">-35</td>
 <td width="105" align="center">21</td>
 <td width="105" align="center">9</td>
 <td width="105" align="center">26</td>
 <td width="105" align="center">17</td>
 <td width="106" align="center">35</td>
 <td width="106" align="center">35</td>
 </tr>
 <tr>
 <td class="firstcol" width="1130">&nbsp;&nbsp; Number of Employees</td>
 <td width="105" align="center">-19</td>
 <td width="105" align="center">20</td>
 <td width="105" align="center">20</td>
 <td width="105" align="center">29</td>
 <td width="105" align="center">15</td>
 <td width="106" align="center">33</td>
 <td width="106" align="center">31</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1130">&nbsp;&nbsp; Production</td>
 <td width="105" align="center">-36</td>
 <td width="105" align="center">21</td>
 <td width="105" align="center">23</td>
 <td width="105" align="center">26</td>
 <td width="105" align="center">19</td>
 <td width="106" align="center">40</td>
 <td width="106" align="center">40</td>
 </tr>
 <tr>
 <td class="firstcol" width="1130">&nbsp;&nbsp; Prices Received for
 Finished Product</td>
 <td width="105" align="center">-10</td>
 <td width="105" align="center">28</td>
 <td width="105" align="center">20</td>
 <td width="105" align="center">36</td>
 <td width="105" align="center">26</td>
 <td width="106" align="center">42</td>
 <td width="106" align="center">27</td>
 </tr>
 </tbody>
</table>

U.S. Trade Deficit in Goods Shrinks in February

Sandy Batten

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The Federal Housing Finance Agency (FHFA) Price Index
increased 0.6% during December.........




The FHFA house price index is a weighted purchase-only index
that measures average price changes in repeat sales of the same property. An
associated quarterly index includes refinancings on the same kinds of
properties. The indexes are based on transactions involving conforming,
conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.
Only mortgage transactions on single-family properties are included. The FHFA
data are available in Haver's USECON database.

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<table class="centered" width="100%" border="0" cellspacing="0">
 <colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
 <tr>
 <th class="firstcol" >FHFA U.S. House Price Index, 
 Purchase Only (SA %)</th>
 <th scope="col" >Jan</th>
 <th scope="col" >Dec</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Jan Y/Y</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td>0.6</td>
 <td>0.3</td>
 <td>0.3</td>
 <td>5.2</td>
 <td>5.3</td>
 <td>6.6</td>
 <td>6.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; New England</td>
 <td>0.7</td>
 <td>0.3</td>
 <td>0.2</td>
 <td>4.3</td>
 <td>4.5</td>
 <td>5.3</td>
 <td>5.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Middle Atlantic</td>
 <td>0.7</td>
 <td>0.1</td>
 <td>0.7</td>
 <td>4.1</td>
 <td>4.4</td>
 <td>5.4</td>
 <td>4.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; East North Central</td>
 <td>-0.3</td>
 <td>1.0</td>
 <td>-0.3</td>
 <td>4.7</td>
 <td>5.4</td>
 <td>6.5</td>
 <td>5.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; West North Central</td>
 <td>0.8</td>
 <td>0.0</td>
 <td>-0.1</td>
 <td>4.9</td>
 <td>5.1</td>
 <td>6.1</td>
 <td>5.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; South Atlantic</td>
 <td>1.0</td>
 <td>0.3</td>
 <td>0.3</td>
 <td>5.8</td>
 <td>5.8</td>
 <td>7.2</td>
 <td>6.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; East South Central</td>
 <td>1.0</td>
 <td>-0.4</td>
 <td>0.7</td>
 <td>5.9</td>
 <td>5.8</td>
 <td>6.1</td>
 <td>5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; West South Central</td>
 <td>0.6</td>
 <td>0.1</td>
 <td>0.4</td>
 <td>4.5</td>
 <td>4.7</td>
 <td>5.3</td>
 <td>6.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Mountain</td>
 <td>1.0</td>
 <td>-0.0</td>
 <td>0.5</td>
 <td>7.4</td>
 <td>7.1</td>
 <td>9.1</td>
 <td>8.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Pacific</td>
 <td>0.4</td>
 <td>0.3</td>
 <td>0.8</td>
 <td>4.8</td>
 <td>4.6</td>
 <td>7.5</td>
 <td>8.5</td>
 </tr>
 </tbody>
</table>
</html>

The Federal Housing Finance Agency (FHFA) Price Index increased 0.6% during December......... The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An [...]

U.S. FHFA House Price Index Posts Modest Increase

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

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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 2020

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