Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070626i.jpg" width="353">
The present situation index is doing its leap frog advance thing and this month is one of its landing hops not an advancing hop. Expectations have moved to a weak flat-lining mode as they often do at mature stages of an expansion. If we did not have HIGH gas prices to blame we might be worried about this&#133; 
But what we do have is improving regional MFG surveys and evidence of still strong job growth. We do not have the accompanying signs that would make us really worried. My take on housing is that its declines are less severe; some regions are showing erratic advances and new home prices even rose 6% Yr/Yr. It hardly seems like all the news is bad. But then I&#146;m not on anti-depressants and I don&#146;t work at a firm that is up to its eyeballs in sub-prime paper. OK the high gas prices were a bummer. But the economic news is generally improving. 
Still, many regions of the country are just having a real tough time &#150; see table below. The East North Central region is in bad shape AKA the rust belt. Old industry and auto sector troubles are raging in these states where current conditions, the strong reading of the trio, is some 20% lower than its level at end of the last recession. New England and the West North Central states are also laggards. But most regions are 20% above those lows with the Western Mountain States and the Pacific States considerably better off. Moreover, this month took all the regional readings down hard except New England. 
While the regional reports look pretty glum, the responses arrayed by category do not. The confidence index is still in the top 15% of its post-recession range, as is the present situation. Expectations are weaker, in the 54th percentile of their range (see below). 
As for survey components, business conditions in the present situation are in the top 20% of their range as is employment. For expectations, the percentiles are obviously lower: 48th percentile for business conditions expected, 49th percentile for employment conditions expected and 43rd percentile for income expected. Buying plans are low especially for houses, the bottom 10 percentile of their range. However, nearly everybody is planning to buy an appliance as that gauge stands in the 95th percentile of its range. 
What we have is a weak month for confidence. The weakness still has not driven the levels of the index to a depressing state, it was just a large monthly decline. Now we look to the future to see if the weakness unwinds and how rapidly.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Conference Board Consumer Confidence: Current Condition Trends by Region
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="7">Regional Confidence from Oct-03 to Jan-07</td>
<td>% Above</td>
<td>% Below</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Yr Ago</td>
<td>% Y/Y</td>
<td>Recsn-End</td>
<td>Pre-Recsn</td>
<td>Recsn-End</td>
<td>Pre-Recsn</td>
</tr>
<tr class="grey2">
<td class="firstcol">New England</td>
<td>116.9</td>
<td>113.8</td>
<td>114.8</td>
<td>1.8%</td>
<td>112.3</td>
<td>207.1</td>
<td>4.1%</td>
<td>-43.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">MidAtlantic</td>
<td>106.9</td>
<td>117.0</td>
<td>101.8</td>
<td>5.0%</td>
<td>88.7</td>
<td>150.7</td>
<td>20.5%</td>
<td>-29.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">East North Central</td>
<td>73.9</td>
<td>86.3</td>
<td>81.0</td>
<td>-8.8%</td>
<td>92.8</td>
<td>175.6</td>
<td>-20.4%</td>
<td>-57.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">West North Central</td>
<td>131.5</td>
<td>136.0</td>
<td>130.2</td>
<td>1.0%</td>
<td>126.9</td>
<td>172.8</td>
<td>3.6%</td>
<td>-23.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">South Atlantic</td>
<td>129.5</td>
<td>144.3</td>
<td>134.5</td>
<td>-3.7%</td>
<td>106.1</td>
<td>178.9</td>
<td>22.1%</td>
<td>-27.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">East South Central</td>
<td>113.6</td>
<td>130.5</td>
<td>122.7</td>
<td>-7.4%</td>
<td>92.5</td>
<td>146.9</td>
<td>22.8%</td>
<td>-22.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">West South Central</td>
<td>138.0</td>
<td>167.4</td>
<td>146.4</td>
<td>-5.7%</td>
<td>113.2</td>
<td>177.2</td>
<td>21.9%</td>
<td>-22.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Mountain</td>
<td>151.8</td>
<td>177.4</td>
<td>156.7</td>
<td>-3.1%</td>
<td>108.7</td>
<td>178.9</td>
<td>39.7%</td>
<td>-15.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Pacific</td>
<td>145.9</td>
<td>167.4</td>
<td>149.9</td>
<td>-2.7%</td>
<td>87.9</td>
<td>169.7</td>
<td>66.0%</td>
<td>-14.0%</td>
</tr>
<tr class="grey3">
<td colspan="9">Pre-recession is 1998-2000</td>
</tr>
<tr class="grey1">
<td colspan="9">Percentage of Regions with confidence improving</td>
</tr>
<tr class="grey4">
<td class="firstcol">CurrCond improving</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>Mar-07</td>
<td>Nov-06</td>
<td>Oct-06</td>
<td>Sep-06</td>
<td>Aug-06</td>
</tr>
<tr class="grey2">
<td class="firstcol">MO/MO or as noted</td>
<td>11.1%</td>
<td>66.7%</td>
<td>11.1%</td>
<td>55.6%</td>
<td>88.9%</td>
<td>22.2%</td>
<td>55.6%</td>
<td>33.3%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Conference Board Components for Consumer Confidence
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Current</td>
<td>Max/Oct&#39;03</td>
<td>Min/Oct&#39;03</td>
<td>Year Ago</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Confidence Index</td>
<td>103.9</td>
<td>111.2</td>
<td>61.4</td>
<td>105.4</td>
<td>85.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Present Situation</td>
<td>127.9</td>
<td>138.5</td>
<td>59.7</td>
<td>132.2</td>
<td>86.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Expectations</td>
<td>87.9</td>
<td>110.2</td>
<td>61.4</td>
<td>87.5</td>
<td>54.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Jun-07</td>
<td colspan="2">Percentile standing</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Diffusion</td>
<td>Overall</td>
<td>Good</td>
<td>Bad</td>
<td>Normal</td>
</tr>
<tr class="odd">
<td class="firstcol">Present Situation</td>
<td>--</td>
<td>86.5%</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Business Conditions</td>
<td>55.5</td>
<td>80.5%</td>
<td>85.7%</td>
<td>11.5%</td>
<td>36.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment</td>
<td>53.0</td>
<td>79.3%</td>
<td>83.8%</td>
<td>12.6%</td>
<td>18.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Expectations</td>
<td>--</td>
<td>54.3%</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Business Conditions</td>
<td>52.6</td>
<td>38.8%</td>
<td>20.7%</td>
<td>34.8%</td>
<td>68.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment</td>
<td>48.5</td>
<td>49.2%</td>
<td>20.7%</td>
<td>34.8%</td>
<td>68.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Income</td>
<td>55.0</td>
<td>43.8%</td>
<td>42.0%</td>
<td>23.0%</td>
<td>71.6%</td>
</tr>
<tr class="even">
<td class="firstcol">Buying plans</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Automobile</td>
<td>--</td>
<td>34.1%</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">House</td>
<td>--</td>
<td>10.5%</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Major Appliance</td>
<td>--</td>
<td>96.9%</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td colspan="6">Percentile of range since Oct 2003 to date. 100% is High; 0% is Low</td>
</tr>
</tbody>
</table>
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The present situation index is doing its leap frog advance thing and this month is one of its landing hops not an advancing hop. Expectations have moved to a weak flat-lining mode as they often do at mature stages of an expansion. If [...]

Not a Shining Moment for U.S. Consumer Confidence

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070626f.jpg" width="353">
Housing is still in the grip of a downtrend but prices are not plunging or even weakening further nor are sales trends worsening; in fact, they are showing some signs of stability. Housing rebounded in April and maintained most of its gain in May - a good sign for the sector. Question: How bad is this??<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070626g.jpg" width="353">
A tale of two suburbs? Maybe it&#146;s not of two cities but definitely a tale of two suburbs &#150; one affluent and one not. Average house prices are up and strongly at 6.5% year/year. Yes, some of that owes to a weak result a year ago, but not all of it. And year/year price declines for new homes are not very common. Median prices are off for two months running and the last year/year decline was in September of 2006. For average prices, they fell year/year in April 2007; they last fell year/year in November 2006. Obviously high-priced homes are faring better in this housing cycle.
Stability in sales by region is shown in the table below. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
New Single Family Home Sales
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="6">Momentum: Annualized Rates Of Change</td>
<td colspan="2">Prices</td>
</tr>
<tr class="grey3">
<td class="firstcol">As of:</td>
<td>Total</td>
<td>Northeast</td>
<td>Midwest</td>
<td>South</td>
<td>West</td>
<td>Median</td>
<td>Average</td>
</tr>
<tr class="grey2">
<td class="firstcol">May.07</td>
<td colspan="7">Month-to-month percent change</td>
</tr>
<tr class="grey1">
<td class="firstcol">May.07</td>
<td>-1.6%</td>
<td>-11.0%</td>
<td>30.8%</td>
<td>-7.3%</td>
<td>-1.9%</td>
<td>1.5%</td>
<td>4.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Apr.07</td>
<td>12.5%</td>
<td>3.4%</td>
<td>-7.9%</td>
<td>22.7%</td>
<td>8.1%</td>
<td>-9.9%</td>
<td>-7.9%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Mar.07</td>
<td>-1.5%</td>
<td>91.3%</td>
<td>0.0%</td>
<td>-10.2%</td>
<td>-3.9%</td>
<td>3.0%</td>
<td>1.2%</td>
</tr>
<tr class="grey2">
<td colspan="8">Annualized Rates</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Total</td>
<td> Northeast</td>
<td>Midwest</td>
<td>South</td>
<td>West</td>
<td>Median</td>
<td>Average</td>
</tr>
<tr class="grey1">
<td class="firstcol">3-Mo</td>
<td>35.7%</td>
<td>304.3%</td>
<td>81.9%</td>
<td>8.7%</td>
<td>7.8%</td>
<td>-21.5%</td>
<td>-10.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">6-Mo</td>
<td>-14.6%</td>
<td>53.1%</td>
<td>4.0%</td>
<td>-23.9%</td>
<td>-23.6%</td>
<td>-3.3%</td>
<td>15.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">1-Yr</td>
<td>-15.8%</td>
<td>19.1%</td>
<td>-14.5%</td>
<td>-17.9%</td>
<td>-21.1%</td>
<td>-0.9%</td>
<td>6.5%</td>
</tr>
</tbody>
</table>
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Housing is still in the grip of a downtrend but prices are not plunging or even weakening further nor are sales trends worsening; in fact, they are showing some signs of stability. Housing rebounded in April and maintained most of its [...]

Housing Slowing Bouncing Maintaining Its Rise…Good Sign

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070626a.jpg" width="353">
German export and import inflation is less more subdued than are domestic trends. 
German export and import prices excluding energy flared to peaks in the second half of 2006. But now as they subside, it is Germany domestic excluding energy inflation that has flared. 
German PPI prices excluding energy has flared in early 2007 then showed some sign of settling down. It is the German CPI where prices look to be still building. By May nonpetroleum import prices were rising at the same pace as CPI ex energy prices. The CPI ex-energy seems to have peaked in May but not yet declined. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
German International and Domestic Inflation Trends
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% m/m</td>
<td colspan="4">% SAAR</td>
</tr>
<tr class="odd">
<td class="firstcol">SA</td>
<td>May-07</td>
<td>Apr-07</td>
<td>Mar-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Export Prices</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.0%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Import Prices</td>
<td>0.3%</td>
<td>0.8%</td>
<td>-0.1%</td>
<td>4.2%</td>
<td>1.5%</td>
<td>0.6%</td>
<td>7.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">NSA</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">Exports excl Petroleum</td>
<td>0.1%</td>
<td>0.3%</td>
<td>0.1%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>1.9%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Imports excl Petroleum</td>
<td>0.0%</td>
<td>0.3%</td>
<td>0.1%</td>
<td>1.6%</td>
<td>0.6%</td>
<td>1.3%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: SA</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">CPI</td>
<td>0.2%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>3.6%</td>
<td>2.7%</td>
<td>1.9%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">CPI excl Energy</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.1%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.9%</td>
<td>0.7%</td>
</tr>
<tr>
<td class="firstcol">PPI</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.4%</td>
<td>1.5%</td>
<td>1.9%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">PPI excl Energy</td>
<td>0.2%</td>
<td>0.4%</td>
<td>0.1%</td>
<td>2.6%</td>
<td>2.2%</td>
<td>2.6%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
</body>
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German export and import inflation is less more subdued than are domestic trends. German export and import prices excluding energy flared to peaks in the second half of 2006. But now as they subside, it is Germany domestic excluding [...]

German Export and Import Price Inflation

Louise Curley

The Netherlands released June data on consumer and business confidence today and Italy released data on business confidence, having released data on consumer confidence last week. In Italy confidence is expressed as an index with [...]

Business and Consumer Confidence in Italy and the Netherlands

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070625b.jpg" width="353">
Consumer Price Indexes for four countries--China, India, Singapore and Vietnam--were released today and can be found in the Haver Data Base. EMERGEPR, together with similar data for other Asian nations. Data are available, through May, except for India.
Inflation, as measured by the year to year increase in the Consumer Price Index, has varied widely in the various countries of Asia. Inflation in the first five months of this year are shown for selected Asian countries in the table below, together with the annual rates for 2004, 2005 and 2006.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070625a.jpg" width="353">
Deflationary tendencies that were evident in the Greater China Area appear to have lessened in Hong Kong and China, but still persist in Taiwan. These trends are shown in the first chart.
Among the high inflation countries, Vietnam, Indonesia and India, for example, inflation in Vietnam after decelerating somewhat last year has increased in the current months of this year. Inflation in India has trended upward since mid 2005. Inflation in Indonesia jumped in late 2005 as a result of natural disasters and fell precipitately in late 2006. Inflation there is now moderately below the levels reached in early 2005 and no clear trend is apparent, as can be seen in the second chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070625c.jpg" width="353">
The third chart shows the course of inflation in countries that have experienced moderating inflation in recent years. Thailand, like Indonesia experienced exceptionally high inflation in late 2005 and early 2006 followed by a sharp fall later in the year. Among these countries inflation in Singapore and, to a lesser extent, in South Korea is trending upward.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INFLATION IN ASIA Y/Y % CHANGE IN CPI&nbsp;</th>
<th scope="col">May 07</th>
<th scope="col">Apr&nbsp; 07&nbsp;</th>
<th scope="col">Mar 07&nbsp;</th>
<th scope="col">Feb&nbsp; 07&nbsp;</th>
<th scope="col">Jan 07&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">China</td>
<td>3.42</td>
<td>3.05</td>
<td>3.33</td>
<td>2.75</td>
<td>2.21</td>
<td>1.71</td>
<td>1.78</td>
<td>3.78</td>
</tr>
<tr>
<td class="firstcol">Hong Kong</td>
<td>1.27</td>
<td>1.27</td>
<td>2.36</td>
<td>0.79</td>
<td>1.97</td>
<td>2.02</td>
<td>0.91</td>
<td>-0.38</td>
</tr>
<tr class="odd">
<td class="firstcol">Taiwan</td>
<td>-0.03</td>
<td>0.67</td>
<td>0.84</td>
<td>1.74</td>
<td>0.35</td>
<td>0.60</td>
<td>2.31</td>
<td>1.61</td>
</tr>
<tr>
<td class="firstcol"> Vietnam </td>
<td>7.22</td>
<td>7.07</td>
<td>6.70</td>
<td>6.48</td>
<td>6.43</td>
<td>7.39</td>
<td>8.28</td>
<td>7.76</td>
</tr>
<tr class="odd">
<td class="firstcol">Indonesia</td>
<td>6.01</td>
<td>6.29</td>
<td>6.22</td>
<td>6.30</td>
<td>6.26</td>
<td>13.10</td>
<td>10.46</td>
<td>6.06</td>
</tr>
<tr>
<td class="firstcol">India</td>
<td>n.a.</td>
<td>6.67</td>
<td>6.72</td>
<td>7.56</td>
<td>6.72</td>
<td>6.18</td>
<td>4.24</td>
<td>3.77</td>
</tr>
<tr class="odd">
<td class="firstcol">South Korea</td>
<td>2.35</td>
<td>2.45</td>
<td>2.16</td>
<td>2.17</td>
<td>1.68</td>
<td>2.24</td>
<td>2.75</td>
<td>3.59</td>
</tr>
<tr>
<td class="firstcol">Singapore</td>
<td>1.09</td>
<td>0.59</td>
<td>0.79</td>
<td>0.59</td>
<td>0.20</td>
<td>0.96</td>
<td>0.47</td>
<td>1.67</td>
</tr>
<tr class="odd">
<td class="firstcol">Thailand</td>
<td>1.91</td>
<td>1.84</td>
<td>2.04</td>
<td>2.32</td>
<td>3.05</td>
<td>4.64</td>
<td>4.54</td>
<td>2.77</td>
</tr>
</tbody>
</table>
</body>
</html>

Consumer Price Indexes for four countries--China, India, Singapore and Vietnam--were released today and can be found in the Haver Data Base. EMERGEPR, together with similar data for other Asian nations. Data are available, through [...]

Inflation Trends in Asia, ex Japan

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070625d.jpg" width="353">
Edge lower by 0.3%- two of four regions drop.
The monthly series of existing housing sales continues to show weakness but it also shows that weakness has been diminishing. Above we plot a three-month moving average of Yr/yr growth rates. It shows that all regions except the SOUTH have put their period of biggest declines behind them. The South, with ongoing problems in the Gulf region continues to show some of the nation&#146;s worst housing trends. Each region has experienced a rebound then another episode of weakness. The question is whether this new episode of weakness will remain muted or gather momentum. The raw monthly patterns look more like regions that are losing their weakness. The final stage of recovery for housing will be for the various regions to have some m/m increases and for growth rates to move sideways and eventually higher.
From roughly December 2005 Sept 2006 housing was in its worst period of this cycle across regions. Since then three of four regions are looking like they are trying to stabilize.
Prices have been recovering too but that is a seasonal trend. Median housing prices are down 2.1% Yr/Yr and average prices are lower by just 0.8%.
The smaller regions rebounded this month while the two larger regions continued to slow.
The progressive growth rates do not show a particular pattern except that over six months the pace of slowing was cut back or even became an increase but then turned to a larger decline in the recent three-months. Charts on the levels of variables give us better guidance on where trends are going and those actually look more stable than charts constructed from growth rates.
Moreover prices are not accelerating their drop. In the Midwest Yr/Yr median prices fell for 11 straight months and now have risen in two of the past three months. Overall median prices are still dropping and are lower in 10 straight months.
The large Southern region of the county, beset problems in the Gulf states has the largest y/y drop in existing home prices at 3.3% It has seen a 10-month string of monthly declines in Yr/Yr average and median prices. It is helping to drive the weakness in US overall prices. Even the West that remains weak has seen average prices rise Yr/Yr in half of the months dating back to June 2006. Median prices in the West are weaker having last risen Yr/Yr in Feb 2007.
The number of homes for sales actually rose last month pushing the number of months supply up to 8.9 months from 8.4 previously and from as low as 6.4 months one year ago. We do not place much stock in these figures for existing homes since by and large these are owner occupied homes and are not being sold by a business. The fact that prices are not plunging as supply increases suggests that there is a somewhat better balance in the market than what the homes-for-sale data suggest. Indeed, own-home sellers face far different market forces than builders selling empty new homes.
We are left with the feeling that regional events are getting in that way of these national comparisons. Hurricanes that battered the Gulf states and overbuilding in places like Florida and Las Vegas are having outsized impact on the data. Even so we can see that housing prices are by and large stabilizing and the while existing home sales are still declining, the pace of decline is being contained and is not accelerating. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Existing Home Sales Summary
</tr>
</thead>
<tbody>
<tr class="even">
<td colspan="6">(Existing Home Sales: In Thousands&#39; -- Nat&#39;n&#39;l Ass&#39;n of Realtors)</td>
</tr>
<tr class="even">
<td class="firstcol">Month</td>
<td>Total</td>
<td>North-East</td>
<td>Mid-West</td>
<td>South</td>
<td>West</td>
</tr>
<tr class="odd">
<td class="firstcol">May.07</td>
<td>5,990</td>
<td>1100</td>
<td>1410</td>
<td>2300</td>
<td>1180</td>
</tr>
<tr class="odd">
<td class="firstcol">Apr.07</td>
<td>6,010</td>
<td>1040</td>
<td>1400</td>
<td>2380</td>
<td>1190</td>
</tr>
<tr class="odd">
<td class="firstcol">Mar.07</td>
<td>6,150</td>
<td>1140</td>
<td>1390</td>
<td>2410</td>
<td>1210</td>
</tr>
<tr class="odd">
<td class="firstcol">Feb.07</td>
<td>6,680</td>
<td>1220</td>
<td>1560</td>
<td>2570</td>
<td>1320</td>
</tr>
<tr class="odd">
<td class="firstcol">Jan.07</td>
<td>6,440</td>
<td>1060</td>
<td>1520</td>
<td>2540</td>
<td>1320</td>
</tr>
<tr class="odd">
<td class="firstcol">Dec.06</td>
<td>6,270</td>
<td>1070</td>
<td>1460</td>
<td>2490</td>
<td>1250</td>
</tr>
<tr class="odd">
<td class="firstcol">Nov.06</td>
<td>6,250</td>
<td>1080</td>
<td>1420</td>
<td>2470</td>
<td>1280</td>
</tr>
<tr class="odd">
<td class="firstcol">Oct.06</td>
<td>6,270</td>
<td>1030</td>
<td>1420</td>
<td>2520</td>
<td>1300</td>
</tr>
<tr class="odd">
<td class="firstcol">Sep.06</td>
<td>6,230</td>
<td>1040</td>
<td>1420</td>
<td>2520</td>
<td>1260</td>
</tr>
<tr class="odd">
<td class="firstcol">Aug.06</td>
<td>6,310</td>
<td>1060</td>
<td>1430</td>
<td>2520</td>
<td>1290</td>
</tr>
<tr class="odd">
<td class="firstcol">Jul.06</td>
<td>6,320</td>
<td>1050</td>
<td>1430</td>
<td>2530</td>
<td>1320</td>
</tr>
<tr class="odd">
<td class="firstcol">Jun.06</td>
<td>6,490</td>
<td>1090</td>
<td>1490</td>
<td>2550</td>
<td>1360</td>
</tr>
<tr class="odd">
<td class="firstcol">May.06</td>
<td>6,680</td>
<td>1140</td>
<td>1510</td>
<td>2610</td>
<td>1410</td>
</tr>
<tr>
<td colspan="6">Percent Changes: Existing Home Sales</td>
</tr>
<tr class="even">
<td class="firstcol">Mo/Mo%</td>
<td>Total</td>
<td>North-East</td>
<td>Mid-West</td>
<td>South</td>
<td>West</td>
</tr>
<tr class="odd">
<td class="firstcol">May.07</td>
<td>-0.3%</td>
<td>5.8%</td>
<td>0.7%</td>
<td>-3.4%</td>
<td>-0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Apr.07</td>
<td>-2.3%</td>
<td>-8.8%</td>
<td>0.7%</td>
<td>-1.2%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Mar.07</td>
<td>-7.9%</td>
<td>-6.6%</td>
<td>-10.9%</td>
<td>-6.2%</td>
<td>-8.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Feb.07</td>
<td>3.7%</td>
<td>15.1%</td>
<td>2.6%</td>
<td>1.2%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">3-Mo:ar</td>
<td>-41.3%</td>
<td>-39.3%</td>
<td>-38.5%</td>
<td>-42.0%</td>
<td>-42.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">6-mo:ar</td>
<td>-8.3%</td>
<td>3.7%</td>
<td>-1.4%</td>
<td>-13.8%</td>
<td>-15.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">1-Year</td>
<td>-10.3%</td>
<td>-3.5%</td>
<td>-6.6%</td>
<td>-11.9%</td>
<td>-16.3%</td>
</tr>
<tr>
<td class="firstcol">Prices:</td>
<td colspan="5">Median Prices</td>
</tr>
<tr class="odd">
<td class="firstcol">One Mo:</td>
<td>1.8%</td>
<td>-0.1%</td>
<td>2.9%</td>
<td>2.3%</td>
<td>-0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">One Year:</td>
<td>-2.1%</td>
<td>0.5%</td>
<td>-1.7%</td>
<td>-3.8%</td>
<td>-0.5%</td>
</tr>
</tbody>
</table>
</body>
</html>

Edge lower by 0.3%- two of four regions drop. The monthly series of existing housing sales continues to show weakness but it also shows that weakness has been diminishing. Above we plot a three-month moving average of Yr/yr growth [...]

Existing Home Sales

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070625d.jpg" width="353">
The monthly series of existing housing sales continues to show weakness but it also shows that weakness has been diminishing. On the left we plot a three-month moving average of year/year growth rates. It shows that all regions except the SOUTH have put their period of biggest declines behind them. The South, with ongoing problems in the Gulf region, continues to show some of the nation&#146;s worst housing trends. Each region has experienced a rebound then another episode of weakness. The question is whether this new episode of weakness will remain muted or gather momentum. The raw monthly patterns look more like regions that are losing their weakness. The final stage of recovery for housing will be for the various regions to have some month/month increases and for growth rates to move sideways and eventually higher.
From roughly December 2005 through September 2006 housing was in its worst period of this cycle across regions. Since then three of four regions are looking like they are trying to stabilize.
Prices have been recovering too but that is a seasonal trend. Median housing prices are down 2.1% Yr/Yr and average prices are lower by just 0.8%.
The smaller regions rebounded this month while the two larger regions continued to slow.
The progressive growth rates do not show a particular pattern except that over six months the pace of slowing was cut back or even became an increase but then turned to a larger decline in the recent three months. Charts on the levels of variables give us better guidance on where trends are going and those actually look more stable than charts constructed from growth rates.
Moreover prices are not accelerating their drop. In the Midwest Yr/Yr median prices fell for 11 straight months and now have risen in two of the past three months. Overall median prices are still dropping and are lower in 10 straight months.
The large Southern region of the county, beset by problems in the Gulf states, has the largest Yr/Yr drop in existing home prices at 3.3% It has seen a 10-month string of monthly declines in Yr/Yr average and median prices. It is helping to drive the weakness in US overall prices. Even the West that remains weak has seen average prices rise Yr/Yr in half of the months dating back to June 2006. Median prices in the West are weaker having last risen Yr/Yr in February 2007.
The number of homes for sales actually rose last month pushing the number of months supply up to 8.9 months from 8.4 previously and from as low as 6.4 months one year ago. We do not place much stock in these figures for existing homes since by and large these are owner occupied homes and are not being sold by a business. The fact that prices are not plunging as supply increases suggests that there is a somewhat better balance in the market than what the homes-for-sale data suggest. Indeed, own-home sellers face far different market forces than builders selling empty new homes.
We are left with the feeling that regional events are getting in the way of these national comparisons. Hurricanes that battered the Gulf states and overbuilding in places like Florida and Las Vegas are having outsized impact on the data. Even so we can see that housing prices are, by and large, stabilizing and that, while existing home sales are still declining, the pace of decline is being contained and is not accelerating.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Existing Home Sales Summary
</tr>
</thead>
<tbody>
<tr class="even">
<td colspan="6">(Existing Home Sales: In Thousands&#39; -- Nat&#39;n&#39;l Ass&#39;n of Realtors)</td>
</tr>
<tr class="even">
<td class="firstcol">Month</td>
<td>Total</td>
<td>North-East</td>
<td>Mid-West</td>
<td>South</td>
<td>West</td>
</tr>
<tr class="odd">
<td class="firstcol">May.07</td>
<td>5,990</td>
<td>1100</td>
<td>1410</td>
<td>2300</td>
<td>1180</td>
</tr>
<tr class="odd">
<td class="firstcol">Apr.07</td>
<td>6,010</td>
<td>1040</td>
<td>1400</td>
<td>2380</td>
<td>1190</td>
</tr>
<tr class="odd">
<td class="firstcol">Mar.07</td>
<td>6,150</td>
<td>1140</td>
<td>1390</td>
<td>2410</td>
<td>1210</td>
</tr>
<tr class="odd">
<td class="firstcol">Feb.07</td>
<td>6,680</td>
<td>1220</td>
<td>1560</td>
<td>2570</td>
<td>1320</td>
</tr>
<tr class="odd">
<td class="firstcol">Jan.07</td>
<td>6,440</td>
<td>1060</td>
<td>1520</td>
<td>2540</td>
<td>1320</td>
</tr>
<tr class="odd">
<td class="firstcol">Dec.06</td>
<td>6,270</td>
<td>1070</td>
<td>1460</td>
<td>2490</td>
<td>1250</td>
</tr>
<tr class="odd">
<td class="firstcol">Nov.06</td>
<td>6,250</td>
<td>1080</td>
<td>1420</td>
<td>2470</td>
<td>1280</td>
</tr>
<tr class="odd">
<td class="firstcol">Oct.06</td>
<td>6,270</td>
<td>1030</td>
<td>1420</td>
<td>2520</td>
<td>1300</td>
</tr>
<tr class="odd">
<td class="firstcol">Sep.06</td>
<td>6,230</td>
<td>1040</td>
<td>1420</td>
<td>2520</td>
<td>1260</td>
</tr>
<tr class="odd">
<td class="firstcol">Aug.06</td>
<td>6,310</td>
<td>1060</td>
<td>1430</td>
<td>2520</td>
<td>1290</td>
</tr>
<tr class="odd">
<td class="firstcol">Jul.06</td>
<td>6,320</td>
<td>1050</td>
<td>1430</td>
<td>2530</td>
<td>1320</td>
</tr>
<tr class="odd">
<td class="firstcol">Jun.06</td>
<td>6,490</td>
<td>1090</td>
<td>1490</td>
<td>2550</td>
<td>1360</td>
</tr>
<tr class="odd">
<td class="firstcol">May.06</td>
<td>6,680</td>
<td>1140</td>
<td>1510</td>
<td>2610</td>
<td>1410</td>
</tr>
<tr>
<td colspan="6">Percent Changes: Existing Home Sales</td>
</tr>
<tr class="even">
<td class="firstcol">Mo/Mo%</td>
<td>Total</td>
<td>North-East</td>
<td>Mid-West</td>
<td>South</td>
<td>West</td>
</tr>
<tr class="odd">
<td class="firstcol">May.07</td>
<td>-0.3%</td>
<td>5.8%</td>
<td>0.7%</td>
<td>-3.4%</td>
<td>-0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Apr.07</td>
<td>-2.3%</td>
<td>-8.8%</td>
<td>0.7%</td>
<td>-1.2%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Mar.07</td>
<td>-7.9%</td>
<td>-6.6%</td>
<td>-10.9%</td>
<td>-6.2%</td>
<td>-8.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Feb.07</td>
<td>3.7%</td>
<td>15.1%</td>
<td>2.6%</td>
<td>1.2%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">3-Mo:ar</td>
<td>-41.3%</td>
<td>-39.3%</td>
<td>-38.5%</td>
<td>-42.0%</td>
<td>-42.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">6-mo:ar</td>
<td>-8.3%</td>
<td>3.7%</td>
<td>-1.4%</td>
<td>-13.8%</td>
<td>-15.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">1-Year</td>
<td>-10.3%</td>
<td>-3.5%</td>
<td>-6.6%</td>
<td>-11.9%</td>
<td>-16.3%</td>
</tr>
<tr>
<td class="firstcol">Prices:</td>
<td colspan="5">Median Prices</td>
</tr>
<tr class="odd">
<td class="firstcol">One Mo:</td>
<td>1.8%</td>
<td>-0.1%</td>
<td>2.9%</td>
<td>2.3%</td>
<td>-0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">One Year:</td>
<td>-2.1%</td>
<td>0.5%</td>
<td>-1.7%</td>
<td>-3.8%</td>
<td>-0.5%</td>
</tr>
</tbody>
</table>
</body>
</html>

The monthly series of existing housing sales continues to show weakness but it also shows that weakness has been diminishing. On the left we plot a three-month moving average of year/year growth rates. It shows that all regions except [...]

Existing Home Sales Edge Lower by 0.3% - Two of Four Regions Drop

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070625d.jpg" width="353">
The monthly series of existing housing sales continues to show weakness but it also shows that weakness has been diminishing. On the left we plot a three-month moving average of year/year growth rates. It shows that all regions except the SOUTH have put their period of biggest declines behind them. The South, with ongoing problems in the Gulf region, continues to show some of the nation&#146;s worst housing trends. Each region has experienced a rebound then another episode of weakness. The question is whether this new episode of weakness will remain muted or gather momentum. The raw monthly patterns look more like regions that are losing their weakness. The final stage of recovery for housing will be for the various regions to have some month/month increases and for growth rates to move sideways and eventually higher.
From roughly December 2005 through September 2006 housing was in its worst period of this cycle across regions. Since then three of four regions are looking like they are trying to stabilize.
Prices have been recovering too but that is a seasonal trend. Median housing prices are down 2.1% Yr/Yr and average prices are lower by just 0.8%.
The smaller regions rebounded this month while the two larger regions continued to slow.
The progressive growth rates do not show a particular pattern except that over six months the pace of slowing was cut back or even became an increase but then turned to a larger decline in the recent three months. Charts on the levels of variables give us better guidance on where trends are going and those actually look more stable than charts constructed from growth rates.
Moreover prices are not accelerating their drop. In the Midwest Yr/Yr median prices fell for 11 straight months and now have risen in two of the past three months. Overall median prices are still dropping and are lower in 10 straight months.
The large Southern region of the county, beset by problems in the Gulf states, has the largest Yr/Yr drop in existing home prices at 3.3% It has seen a 10-month string of monthly declines in Yr/Yr average and median prices. It is helping to drive the weakness in US overall prices. Even the West that remains weak has seen average prices rise Yr/Yr in half of the months dating back to June 2006. Median prices in the West are weaker having last risen Yr/Yr in February 2007.
The number of homes for sales actually rose last month pushing the number of months supply up to 8.9 months from 8.4 previously and from as low as 6.4 months one year ago. We do not place much stock in these figures for existing homes since by and large these are owner occupied homes and are not being sold by a business. The fact that prices are not plunging as supply increases suggests that there is a somewhat better balance in the market than what the homes-for-sale data suggest. Indeed, own-home sellers face far different market forces than builders selling empty new homes.
We are left with the feeling that regional events are getting in the way of these national comparisons. Hurricanes that battered the Gulf states and overbuilding in places like Florida and Las Vegas are having outsized impact on the data. Even so we can see that housing prices are, by and large, stabilizing and that, while existing home sales are still declining, the pace of decline is being contained and is not accelerating.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Existing Home Sales Summary
</tr>
</thead>
<tbody>
<tr class="even">
<td colspan="6">(Existing Home Sales: In Thousands&#39; -- Nat&#39;n&#39;l Ass&#39;n of Realtors)</td>
</tr>
<tr class="even">
<td class="firstcol">Month</td>
<td>Total</td>
<td>North-East</td>
<td>Mid-West</td>
<td>South</td>
<td>West</td>
</tr>
<tr class="odd">
<td class="firstcol">May.07</td>
<td>5,990</td>
<td>1100</td>
<td>1410</td>
<td>2300</td>
<td>1180</td>
</tr>
<tr class="odd">
<td class="firstcol">Apr.07</td>
<td>6,010</td>
<td>1040</td>
<td>1400</td>
<td>2380</td>
<td>1190</td>
</tr>
<tr class="odd">
<td class="firstcol">Mar.07</td>
<td>6,150</td>
<td>1140</td>
<td>1390</td>
<td>2410</td>
<td>1210</td>
</tr>
<tr class="odd">
<td class="firstcol">Feb.07</td>
<td>6,680</td>
<td>1220</td>
<td>1560</td>
<td>2570</td>
<td>1320</td>
</tr>
<tr class="odd">
<td class="firstcol">Jan.07</td>
<td>6,440</td>
<td>1060</td>
<td>1520</td>
<td>2540</td>
<td>1320</td>
</tr>
<tr class="odd">
<td class="firstcol">Dec.06</td>
<td>6,270</td>
<td>1070</td>
<td>1460</td>
<td>2490</td>
<td>1250</td>
</tr>
<tr class="odd">
<td class="firstcol">Nov.06</td>
<td>6,250</td>
<td>1080</td>
<td>1420</td>
<td>2470</td>
<td>1280</td>
</tr>
<tr class="odd">
<td class="firstcol">Oct.06</td>
<td>6,270</td>
<td>1030</td>
<td>1420</td>
<td>2520</td>
<td>1300</td>
</tr>
<tr class="odd">
<td class="firstcol">Sep.06</td>
<td>6,230</td>
<td>1040</td>
<td>1420</td>
<td>2520</td>
<td>1260</td>
</tr>
<tr class="odd">
<td class="firstcol">Aug.06</td>
<td>6,310</td>
<td>1060</td>
<td>1430</td>
<td>2520</td>
<td>1290</td>
</tr>
<tr class="odd">
<td class="firstcol">Jul.06</td>
<td>6,320</td>
<td>1050</td>
<td>1430</td>
<td>2530</td>
<td>1320</td>
</tr>
<tr class="odd">
<td class="firstcol">Jun.06</td>
<td>6,490</td>
<td>1090</td>
<td>1490</td>
<td>2550</td>
<td>1360</td>
</tr>
<tr class="odd">
<td class="firstcol">May.06</td>
<td>6,680</td>
<td>1140</td>
<td>1510</td>
<td>2610</td>
<td>1410</td>
</tr>
<tr>
<td colspan="6">Percent Changes: Existing Home Sales</td>
</tr>
<tr class="even">
<td class="firstcol">Mo/Mo%</td>
<td>Total</td>
<td>North-East</td>
<td>Mid-West</td>
<td>South</td>
<td>West</td>
</tr>
<tr class="odd">
<td class="firstcol">May.07</td>
<td>-0.3%</td>
<td>5.8%</td>
<td>0.7%</td>
<td>-3.4%</td>
<td>-0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Apr.07</td>
<td>-2.3%</td>
<td>-8.8%</td>
<td>0.7%</td>
<td>-1.2%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Mar.07</td>
<td>-7.9%</td>
<td>-6.6%</td>
<td>-10.9%</td>
<td>-6.2%</td>
<td>-8.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Feb.07</td>
<td>3.7%</td>
<td>15.1%</td>
<td>2.6%</td>
<td>1.2%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">3-Mo:ar</td>
<td>-41.3%</td>
<td>-39.3%</td>
<td>-38.5%</td>
<td>-42.0%</td>
<td>-42.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">6-mo:ar</td>
<td>-8.3%</td>
<td>3.7%</td>
<td>-1.4%</td>
<td>-13.8%</td>
<td>-15.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">1-Year</td>
<td>-10.3%</td>
<td>-3.5%</td>
<td>-6.6%</td>
<td>-11.9%</td>
<td>-16.3%</td>
</tr>
<tr>
<td class="firstcol">Prices:</td>
<td colspan="5">Median Prices</td>
</tr>
<tr class="odd">
<td class="firstcol">One Mo:</td>
<td>1.8%</td>
<td>-0.1%</td>
<td>2.9%</td>
<td>2.3%</td>
<td>-0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">One Year:</td>
<td>-2.1%</td>
<td>0.5%</td>
<td>-1.7%</td>
<td>-3.8%</td>
<td>-0.5%</td>
</tr>
</tbody>
</table>
 Inflation Trends in Asia, ex Japan   
by <a href="/comment/Curley.html">Louise Curley</a> June 25, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070625b.jpg" width="353">
Consumer Price Indexes for four countries--China, India, Singapore and Vietnam--were released today and can be found in the Haver Data Base. EMERGEPR, together with similar data for other Asian nations. Data are available, through May, except for India.
Inflation, as measured by the year to year increase in the Consumer Price Index, has varied widely in the various countries of Asia. Inflation in the first five months of this year are shown for selected Asian countries in the table below, together with the annual rates for 2004, 2005 and 2006.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070625a.jpg" width="353">
Deflationary tendencies that were evident in the Greater China Area appear to have lessened in Hong Kong and China, but still persist in Taiwan. These trends are shown in the first chart.
Among the high inflation countries, Vietnam, Indonesia and India, for example, inflation in Vietnam after decelerating somewhat last year has increased in the current months of this year. Inflation in India has trended upward since mid 2005. Inflation in Indonesia jumped in late 2005 as a result of natural disasters and fell precipitately in late 2006. Inflation there is now moderately below the levels reached in early 2005 and no clear trend is apparent, as can be seen in the second chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070625c.jpg" width="353">
The third chart shows the course of inflation in countries that have experienced moderating inflation in recent years. Thailand, like Indonesia experienced exceptionally high inflation in late 2005 and early 2006 followed by a sharp fall later in the year. Among these countries inflation in Singapore and, to a lesser extent, in South Korea is trending upward.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INFLATION IN ASIA Y/Y % CHANGE IN CPI&nbsp;</th>
<th scope="col">May 07</th>
<th scope="col">Apr&nbsp; 07&nbsp;</th>
<th scope="col">Mar 07&nbsp;</th>
<th scope="col">Feb&nbsp; 07&nbsp;</th>
<th scope="col">Jan 07&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">China</td>
<td>3.42</td>
<td>3.05</td>
<td>3.33</td>
<td>2.75</td>
<td>2.21</td>
<td>1.71</td>
<td>1.78</td>
<td>3.78</td>
</tr>
<tr>
<td class="firstcol">Hong Kong</td>
<td>1.27</td>
<td>1.27</td>
<td>2.36</td>
<td>0.79</td>
<td>1.97</td>
<td>2.02</td>
<td>0.91</td>
<td>-0.38</td>
</tr>
<tr class="odd">
<td class="firstcol">Taiwan</td>
<td>-0.03</td>
<td>0.67</td>
<td>0.84</td>
<td>1.74</td>
<td>0.35</td>
<td>0.60</td>
<td>2.31</td>
<td>1.61</td>
</tr>
<tr>
<td class="firstcol"> Vietnam </td>
<td>7.22</td>
<td>7.07</td>
<td>6.70</td>
<td>6.48</td>
<td>6.43</td>
<td>7.39</td>
<td>8.28</td>
<td>7.76</td>
</tr>
<tr class="odd">
<td class="firstcol">Indonesia</td>
<td>6.01</td>
<td>6.29</td>
<td>6.22</td>
<td>6.30</td>
<td>6.26</td>
<td>13.10</td>
<td>10.46</td>
<td>6.06</td>
</tr>
<tr>
<td class="firstcol">India</td>
<td>n.a.</td>
<td>6.67</td>
<td>6.72</td>
<td>7.56</td>
<td>6.72</td>
<td>6.18</td>
<td>4.24</td>
<td>3.77</td>
</tr>
<tr class="odd">
<td class="firstcol">South Korea</td>
<td>2.35</td>
<td>2.45</td>
<td>2.16</td>
<td>2.17</td>
<td>1.68</td>
<td>2.24</td>
<td>2.75</td>
<td>3.59</td>
</tr>
<tr>
<td class="firstcol">Singapore</td>
<td>1.09</td>
<td>0.59</td>
<td>0.79</td>
<td>0.59</td>
<td>0.20</td>
<td>0.96</td>
<td>0.47</td>
<td>1.67</td>
</tr>
<tr class="odd">
<td class="firstcol">Thailand</td>
<td>1.91</td>
<td>1.84</td>
<td>2.04</td>
<td>2.32</td>
<td>3.05</td>
<td>4.64</td>
<td>4.54</td>
<td>2.77</td>
</tr>
</tbody>
</table>
</body>
</html>

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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Andrew Cates

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

250501Z1.jpg

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

250501Z2.jpg

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

250501Z3.jpg

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

250501Z4.jpg

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

250501Z5.jpg

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

250501Z6.jpg

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

Charts of the Week: Tariff Truce, Tenuous Trust

Tom Moeller

250430N1.jpg

250430O1.jpg

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.

250430P1.jpg

250430Q1.jpg

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**.

250430R1.jpg

250430S1.jpg

- 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

250430A.jpg

250430B.jpg

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

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

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

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

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

Personal Income, Consumption, and Prices in March

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

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

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

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

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

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

U.S. Pending Home Sales Surge in March

Sandy Batten

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

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

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

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

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

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

Economy in Brief: June 2007

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Not a Shining Moment for U.S. Consumer Confidence

Housing Slowing Bouncing Maintaining Its Rise…Good Sign

German Export and Import Price Inflation

Business and Consumer Confidence in Italy and the Netherlands

Inflation Trends in Asia, ex Japan

Existing Home Sales

Existing Home Sales Edge Lower by 0.3% - Two of Four Regions Drop

Existing Home Sales Edge Lower by 0.3% - Two of Four Regions Drop