Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920i.jpg" width="353">
The Federal Open Market Committee increased the target rate for federal funds 25 basis points to 3.75%. The discount rate also was raised 25 basis points to 4.75%. This latest increase is the eleventh since June of 2004.
The action was generally expected, though some analysts suggested the Fed would opt for no change in rates given the economic uncertainties generated by Hurricane Katrina.
Voting against the otherwise unanimous decision was Mark W. Olson, who preferred no change in rates at this meeting.
Today&#39;s press release from the Fed indicated that &quot;While these unfortunate developments have increased uncertainty about near-term economic performance, it is the Committee&#39;s view that they do not pose a more persistent threat.&quot;
Indicating its concern about price inflation, the FOMC statement indicated &quot;Higher energy and other costs have the potential to add to inflation pressures. However, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.&quot;<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920h.jpg" width="353">
For the complete text of the Fed&#39;s latest press release please click <a href="http://www.federalreserve.gov/BoardDocs/Press/monetary/2005/20050920/default.htm">here</a>.
Has Monetary Policy Been More Accommodative Than Previously Believed? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20051001/cover.pdf">here</a>.
Targeting versus Instrument Rules for Monetary Policy from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/05/09/McCallum.pdf">here</a>.

Housing Starts Slipped in August 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 20, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920a.jpg" width="353">
Housing starts slipped 1.3% last month to 2.009M units versus a downwardly revised 2.035M units in July.The drop outpaced Consensus expectations for a decline to 2.025M starts.
Single-family starts inched 0.1% higher in this last report taken before Hurricane Katrina hit the US Gulf Coast. The rise was due to higher single family starts in the Northeast (1.5% y/y) and in the West (6.1% y/y). Single family starts in the South fell m/m (+1.4% y/y) and in the Midwest (-6.5% y/y).
Yesterday&#39;s report from the Nat&#39;l Association of Home Builders (NAHB) indicated slippage in their composite September index (-3.0% y/y) due to weaker current sales, weaker sales prospects and sharply lower buyer traffic. During the last twenty years there has been a 76% correlation between the y/y change in the NAHB index and the change in single family housing starts.
Multi family starts fell a sharp 8.5% m/m while building permits fell as well.
Assessing High House Prices: Bubbles, Fundamentals, and Misconceptions from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr218.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a> </th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>2,009</td>
<td>2,035</td>
<td>-0.8%</td>
<td>1,950</td>
<td>1,854</td>
<td>1,7 10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,709</td>
<td>1,707</td>
<td>1.2%</td>
<td>1,604</td>
<td>1,505</td>
<td>1,363</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>300</td>
<td>328</td>
<td>-10.7%</td>
<td>345</td>
<td>349</td>
<td>347</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>2,124</td>
<td>2,171</td>
<td>3.2%</td>
<td>2,058</td>
<td>1,8 88</td>
<td>1,749</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Down Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 20, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920b.jpg" width="353">
The full effect of Hurricane Katrina pushed chain store sales down 2.1% last week, according to the International Council of Shopping Centers (ICSC)-UBS survey, after a slight 0.2% decline the prior week. So far this month sales are 1.2% below the August average which fell 0.1% from July. 
The ICSC suggested that in addition to the Hurricane, higher gasoline prices and a drop in consumer confidence were responsible for the decline. 
During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC cratered 2.0% in the latest week (-2.0% y/y) after a slight gain during the previous week.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">09/17/05</th>
<th scope="col">09/10/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>445.0</td>
<td>454.6</td>
<td>2.4%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Petroleum Prices: Supply Uncertainty & US Demand Strength 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 20, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920e.jpg" width="353">
Supply uncertainties have wreaked havoc on prices for crude oil and petroleum products. As of last week, the US average retail gasoline price fell to $2.79 per gallon, down from the weekly high of $3.07 set two weeks earlier and the NY harbor spot price for regular unleaded last Friday was down to $1.82 from a high of $3.13 just before Labor Day.
Demand strength, however, has left even these lower gasoline prices both up 40-50% versus the year ago levels.
Hurricane Katrina caused the initial anxiety over supply. Figures from the Oil &amp; Gas Journal Weekly indicate that in the first two weeks of September, US refining production of gasoline was off 5% versus August. Some of that decline is seasonal, but the threat from Hurricane Rita yesterday caused the spot gasoline price to jump 10% d/d to $2.00 per gallon.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920g.jpg" width="353">
Alternatively, US gasoline demand has been consistent and strong. Through August demand was running 3-4% ahead of last year helped by a 1.5% y/y gain in the number of miles being driven. In September, demand is estimated to have fallen sharply, perhaps 10% m/m, in the wake of Hurricane Katrina, although the decline probably is temporary. Strong gasoline demand is a trademark of the United States. From 1994 to 2004, growth in US gasoline demand averaged 1.8% per year versus a 0.7% annual rate of decline in Europe during that ten year period. Some of that reflects differing economic fortunes, but ...<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920f.jpg" width="353">
Wholesale natural gas prices at $11.17/mmbtu last week were more than double the prior year&#39;s level and very much reflect the recent supply dislocations. Regulation, however, has limited the price increase for residential gas as measured by the Consumer Price Index. For the first eight months of 2005 versus 2004, gas prices rose 11.5% while the gain in household electricity costs also was limited to 4.6%. Further gains are in store if yesterday&#39;s gas price rise over $12/mmbtu holds. (Many plants which generate electricity are fired by natural gas.)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920d.jpg" width="353">
Movement in crude oil prices has been similarly volatile with an upward bent. Yesterday&#39;s spot market price for West Texas Intermediate jumped 7% d/d to $67.40 though prices have eased a bit today. Under laying the strength has been a steady decline in US crude oil production, off 2.2% y/y through the first eight months of 2005 and off 38% versus twenty years ago.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.
Oil Prices and Consumer Spending from the Federal Reserve Bank of Richmond can be viewed <a href="http://www.richmondfed.org/publications/economic_research/economic_quarterly/pdfs/summer2005/mehrapetersen.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">09/19/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.79</td>
<td>$1.79</td>
<td>49.3%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Natural Gas, Henry Hub, LA ($/mmbtu)</td>
<td>$11.17</td>
<td>$6.35</td>
<td>123.4%</td>
<td>$5.89</td>
<td>$5.47</td>
<td>$3.35</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$63.12</td>
<td>$41.78</td>
<td>42.2%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
</table>
Politics and Energy Prices Depress German Investor Confidence 
by <a href="/comment/Curley.html">Louise Curley</a> September 20, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920c.jpg" width="353">
Political considerations apparently weighed heavily on the economic expectations of German institutional investors and analysts in September. The Frankfurt based, Center for European Research (ZEW) reported that the number of those expecting better conditions six months from now over those expecting worse conditions fell from 50% in August to 38.6% in September. Although most of the 309 respondents to the survey reported before the election took place, the 44 replies that were received after the September 18 election showed a significantly lower reading than the overall September results.
Preliminary results of the September 18 election indicate that the CDU/CSU, (The Christian Democratic Union and The Christian Social Union) won 225 seats; the SPD (Social Democratic Party), 222; the FDP (The Free Democratic Party), 61; the Left Party, 54 and the Greens, 51. The Left Party, formerly known as Party for Democratic Socialism consists largely of former communists and former SPD members who disagreed with the party&#39;s plans for reform. The inconclusive results of the election will have to be resolved by some sort of a coalition or, if that fails before October 18 when Parliament is set to open, by another election. Political uncertainty is likely to continue to cast a cloud over the economic outlook.
Important as the effects of political uncertainty on confidence may be, the rise in energy prices resulting from hurricane Katrina has also had a depressing effect. In spite of the deterioration in expectations, investors reported a slight improvement in what they judged to be, according to the negative figures, depressing current conditions. In September, there was a three percentage point improvement in the appraisal of current conditions as the excess of pessimists over optimists (noted by a negative) went to -58.1% from -61.1% in August.
The attached chart shows the month-to-month changes in the German investors&#39; appraisal of current conditions and their expectation of conditions six months from now.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/GERMANY/GERMANY.HTM">Zew Indicators</a></th>
<th scope="col">Sep 05&nbsp;</th>
<th scope="col">Aug&nbsp; 05</th>
<th scope="col">Sep 04</th>
<th scope="col">M/M DIF</th>
<th scope="col">Y/Y DIF</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Current conditions</td>
<td>-58.1</td>
<td>-61.1</td>
<td>-61.5</td>
<td>3.0</td>
<td>3.4</td>
<td>-67.7</td>
<td>-92.6</td>
<td>-83.3</td>
</tr>
<tr>
<td class="firstcol">Expectations 6 mo. ahead</td>
<td>38.6</td>
<td>50.0</td>
<td>38.4</td>
<td>-11.4</td>
<td>0.2</td>
<td>44.6</td>
<td>38.4</td>
<td>45.3</td>
</tr>
</tbody>
</table>


</html>

The Federal Open Market Committee increased the target rate for federal funds 25 basis points to 3.75%. The discount rate also was raised 25 basis points to 4.75%. This latest increase is the eleventh since June of 2004. The action [...]

Fed Funds Rate Increased to 3.75%

Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919e.jpg" width="353">
August exports of goods from the Republic of China recorded a 32% increase over the year ago figure according to the CEIC data that are available in Haver&#39;s CEIC China Premium Database. At this pace, it is not surprising that OECD (Organization for Economic and Development) in its first Survey of China suggests that China could overtake the United States and Germany as the world&#39;s largest exporter, in the next five years. A summary of the OECD Economic Survey of China can be found at <a href="http://www.oecd.org/document/45/0,2340,en_2649_34111_35344877_1_1_1_1,00.html">here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919f.jpg" width="353">
The growth in China&#39;s exports of goods compared with that of the U.S. is shown in the first chart, and with that of Germany in the second chart. The data for Germany and the U. S. are only through July. The differences between the growth rates of China versus the U. S. and China versus Germany have been consistently large over the past few years. Exports of goods and the annual growth rates for the three countries are shown below for the past five years. In 2004, exports of goods from the U. S., Germany and China were, respectively, $816 billion, $912 billion and $593 billion.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">(Million of U. S. Dollars)</th>
<th scope="col">Aug 05&nbsp;</th>
<th scope="col">Jul&nbsp; 05</th>
<th scope="col">Aug 04</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y %</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003</th>
<th scope="col">2002&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Chinese exports of goods</td>
<td>67820</td>
<td>65584</td>
<td>51400</td>
<td>3.41</td>
<td>31.95</td>
<td>593232</td>
<td>438250</td>
<td>325711</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Exports of Goods&nbsp;</td>
<td>2004&nbsp;</td>
<td>2003</td>
<td>2002&nbsp;</td>
<td>2001</td>
<td>2000</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">United States</td>
<td>816395</td>
<td>723611</td>
<td>693123</td>
<td>730906</td>
<td>771991</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>911889</td>
<td>742063</td>
<td>612794</td>
<td>570275</td>
<td>548785</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>593232</td>
<td>438250</td>
<td>325711</td>
<td>266698</td>
<td>249195</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Annual Percent Change</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">United States</td>
<td>12.82</td>
<td>4.40</td>
<td>-5.17</td>
<td>-5.32</td>
<td>11.27</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>22.86</td>
<td>21.10</td>
<td>7.45</td>
<td>3.92</td>
<td>2.48</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>35.36</td>
<td>34.55</td>
<td>22.13</td>
<td>7.02</td>
<td>27.84</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
</html>

August exports of goods from the Republic of China recorded a 32% increase over the year ago figure according to the CEIC data that are available in Haver's CEIC China Premium Database. At this pace, it is not surprising that OECD [...]

Chinese Exports of Goods on the Way to Surpass Those of the U. S. and Germany in the Next Five Years

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919g.jpg" width="353">
The National Association of Home Builders&#39; (NAHB) Composite Housing Market Index fell for the third straight month in September to 65 from an unrevised 67 in August. The latest was the lowest level since July 2003.
During the last twenty years, year to year changes in the annual composite index had an 85% correlation with the change in single family housing starts.
The m/m decline was spread throughout the country.
The September index for sales of single family homes in six months fell sharply to 69 (-8.0% y/y) while the index for current sales fell moderately to 72 (-1.4% y/y).
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the <a href="http://www.nahb.org">National Association of Home Builders</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a> </th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>65</td>
<td>67</td>
<td>67</td>
<td>68</td>
<td>64</td>
<td>61</td>
</tr>
</tbody>
</table>
</body>
</html>

The National Association of Home Builders' (NAHB) Composite Housing Market Index fell for the third straight month in September to 65 from an unrevised 67 in August. The latest was the lowest level since July 2003. During the last [...]

NAHB Housing Market Index Lowest in Over Two Years

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919a.jpg" width="353">
The leading index of the US economy published weekly by the Economic Cycle Research Institute (ECRI) fell during four of the last five weeks. The latest 0.4% w/w decline reflected, in part, the sharp rise in initial claims for unemployment insurance due to Hurricane Katrina.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919b.jpg" width="353">
These weekly declines, however, are modest compared to past periods when economic recession was indicated. The six month growth rate of the leading index has held at roughly 3%, still up from the June low of -0.6% and from the -5% to -7% growth rates which preceded the last recession.
During the last ten years there has been a 53% correlation between the change in the weekly leading index and US real GDP growth during the following quarter. The correlation has risen to 76% during the last five years.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919c.jpg" width="353">
ECRI&#39;s research director indicated that &quot;The economy was at a phase of the business cycle where it was relatively resilient to any type of shock. The reality is that the potency of a shock, how much influence it can have, really depends on where we are in the business cycle.&quot;
The accompanying charts indicate some of that resiliency. Recent US economic growth has been less due to consumer spending &amp; housing and more due to exports &amp; business fixed investment. Moreover, core price inflation recently has been low and declining rather than high and rising.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919d.jpg" width="353">
Visit the <a href="http://www.businesscycle.com/">Economic Cycle Research Institute</a> for analysis of US and international business cycles.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Economic Cycle Research Institute&nbsp;</th>
<th scope="col">09/09/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Weekly Leading Index</td>
<td>135.2</td>
<td>135.8</td>
<td>2.9%</td>
<td>132.6</td>
<td>124.9</td>
<td>119.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; 6 Month Growth Rate</td>
<td>2.9%</td>
<td>3.1%</td>
<td>&nbsp;</td>
<td>4.2%</td>
<td>6.7%</td>
<td>1.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

The leading index of the US economy published weekly by the Economic Cycle Research Institute (ECRI) fell during four of the last five weeks. The latest 0.4% w/w decline reflected, in part, the sharp rise in initial claims for [...]

ECRI Leading Index: Down But Not Out

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919a.jpg" width="353">
The leading index of the US economy published weekly by the Economic Cycle Research Institute (ECRI) fell during four of the last five weeks. The latest 0.4% w/w decline reflected, in part, the sharp rise in initial claims for unemployment insurance due to Hurricane Katrina.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919b.jpg" width="353">
These weekly declines, however, are modest compared to past periods when economic recession was indicated. The six month growth rate of the leading index has held at roughly 3%, still up from the June low of -0.6% and from the -5% to -7% growth rates which preceded the last recession.
During the last ten years there has been a 53% correlation between the change in the weekly leading index and US real GDP growth during the following quarter. The correlation has risen to 76% during the last five years.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919c.jpg" width="353">
ECRI&#39;s research director indicated that &quot;The economy was at a phase of the business cycle where it was relatively resilient to any type of shock. The reality is that the potency of a shock, how much influence it can have, really depends on where we are in the business cycle.&quot;
The accompanying charts indicate some of that resiliency. Recent US economic growth has been less due to consumer spending &amp; housing and more due to exports &amp; business fixed investment. Moreover, core price inflation recently has been low and declining rather than high and rising.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919d.jpg" width="353">
Visit the <a href="http://www.businesscycle.com/">Economic Cycle Research Institute</a> for analysis of US and international business cycles.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Economic Cycle Research Institute&nbsp;</th>
<th scope="col">09/09/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Weekly Leading Index</td>
<td>135.2</td>
<td>135.8</td>
<td>2.9%</td>
<td>132.6</td>
<td>124.9</td>
<td>119.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; 6 Month Growth Rate</td>
<td>2.9%</td>
<td>3.1%</td>
<td>&nbsp;</td>
<td>4.2%</td>
<td>6.7%</td>
<td>1.1%</td>
</tr>
</tbody>
</table>
Chinese Exports of Goods on the Way to Surpass Those of the U. S. and Germany in the Next Five Years 
by <a href="/comment/Curley.html">Louise Curley</a> September 19, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919e.jpg" width="353">
August exports of goods from the Republic of China recorded a 32% increase over the year ago figure according to the CEIC data that are available in Haver&#39;s CEIC China Premium Database. At this pace, it is not surprising that OECD (Organization for Economic and Development) in its first Survey of China suggests that China could overtake the United States and Germany as the world&#39;s largest exporter, in the next five years. A summary of the OECD Economic Survey of China can be found at <a href="http://www.oecd.org/document/45/0,2340,en_2649_34111_35344877_1_1_1_1,00.html">here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919f.jpg" width="353">
The growth in China&#39;s exports of goods compared with that of the U.S. is shown in the first chart, and with that of Germany in the second chart. The data for Germany and the U. S. are only through July. The differences between the growth rates of China versus the U. S. and China versus Germany have been consistently large over the past few years. Exports of goods and the annual growth rates for the three countries are shown below for the past five years. In 2004, exports of goods from the U. S., Germany and China were, respectively, $816 billion, $912 billion and $593 billion.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">(Million of U. S. Dollars)</th>
<th scope="col">Aug 05&nbsp;</th>
<th scope="col">Jul&nbsp; 05</th>
<th scope="col">Aug 04</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y %</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003</th>
<th scope="col">2002&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Chinese exports of goods</td>
<td>67820</td>
<td>65584</td>
<td>51400</td>
<td>3.41</td>
<td>31.95</td>
<td>593232</td>
<td>438250</td>
<td>325711</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Exports of Goods&nbsp;</td>
<td>2004&nbsp;</td>
<td>2003</td>
<td>2002&nbsp;</td>
<td>2001</td>
<td>2000</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">United States</td>
<td>816395</td>
<td>723611</td>
<td>693123</td>
<td>730906</td>
<td>771991</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>911889</td>
<td>742063</td>
<td>612794</td>
<td>570275</td>
<td>548785</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>593232</td>
<td>438250</td>
<td>325711</td>
<td>266698</td>
<td>249195</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Annual Percent Change</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">United States</td>
<td>12.82</td>
<td>4.40</td>
<td>-5.17</td>
<td>-5.32</td>
<td>11.27</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>22.86</td>
<td>21.10</td>
<td>7.45</td>
<td>3.92</td>
<td>2.48</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>35.36</td>
<td>34.55</td>
<td>22.13</td>
<td>7.02</td>
<td>27.84</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
NAHB Housing Market Index Lowest in Over Two Years 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 19, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919g.jpg" width="353">
The National Association of Home Builders&#39; (NAHB) Composite Housing Market Index fell for the third straight month in September to 65 from an unrevised 67 in August. The latest was the lowest level since July 2003.
During the last twenty years, year to year changes in the annual composite index had an 85% correlation with the change in single family housing starts.
The m/m decline was spread throughout the country.
The September index for sales of single family homes in six months fell sharply to 69 (-8.0% y/y) while the index for current sales fell moderately to 72 (-1.4% y/y).
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the <a href="http://www.nahb.org">National Association of Home Builders</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a> </th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>65</td>
<td>67</td>
<td>67</td>
<td>68</td>
<td>64</td>
<td>61</td>
</tr>
</tbody>
</table>
</body>
</html>

Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050916f.jpg" width="353">
The Euro-Zone CPI inflation picked up marginally in August, reaching 2.24% after July&#39;s 2.16% year-on-year pace. Notably, however, these are both lower than the 2004 rate of 2.36%.
Eurostat reported these data this morning at 5:00AM New York time. Haver&#39;s &quot;European shift&quot; posted the headline percentage changes at 5:04 and the full set of files, including harmonized CPIs for all the constituent countries, at 5:13AM. The European shift gets into full swing at about 1:30AM and overlaps a few hours with regular daytime operations. Thus, all the major European releases are updated in &quot;real time&quot; for European users.
In the table below, we highlight a few of the major CPI components. The &quot;core&quot; excluding energy food, alcohol and tobacco was steady at a 1.32% 12-month pace. Interestingly, the slight increase in overall inflation was not due to faster energy price increases. At 11.6% over a year ago, energy prices went up plenty fast, but this was actually a bit less than in July. Food, alcohol and tobacco increased to 1.5% from 1.2% in July. At the same time, both the core and the food subset are slower than they were during 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050916g.jpg" width="353">
Several commodity and service groupings are running slower than they did in 2004: household equipment and supplies, clothing, education expenses and &quot;miscellaneous&quot; items. Among groups with stronger prices, housing expenses for utilities are accelerating, but inflation of rents and home repair costs is holding steady. Communications rates are declining, but less than they were last year. Transportation costs are mixed; vehicle prices have picked up, but only a little. Vehicle operations (including fuel) actually saw their major advance last year, and while inflation there is high, it has been no worse than during 2004. Transportation services have a very ragged pattern, which might be seen as evidence that the whole market for these fares is unsettled.
At the consumer price level in Europe, energy constitutes 8.6% of the total index. This is remarkably similar to the US, where the &quot;relative importance&quot; of energy in the CPI is almost exactly 8% -- or has been. These modest weights are likely to change, though, perhaps more than this year&#39;s move, which in Europe was 4.3 percentage points over 2004. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">MUICP*Year/Year % Changes</th>
<th scope="col">Aug 2005</th>
<th scope="col">July 2005</th>
<th scope="col">June 2005</th>
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Total </td>
<td>2.24</td>
<td>2.16</td>
<td>2.07</td>
<td>2.36</td>
<td>1.96</td>
<td>2.28</td>
</tr>
<tr class="odd">
<td class="firstcol">Ex Energy, Food, Alcohol &amp; Tobacco</td>
<td>1.32</td>
<td>1.32</td>
<td>1.32</td>
<td>1.86</td>
<td>1.62</td>
<td>2.21</td>
</tr>
<tr>
<td class="firstcol">Energy</td>
<td>11.63</td>
<td>11.80</td>
<td>9.42</td>
<td>6.99</td>
<td>1.78</td>
<td>3.69</td>
</tr>
<tr class="odd">
<td class="firstcol">Food, Alcohol &amp; Tobacco</td>
<td>1.52</td>
<td>1.17</td>
<td>1.17</td>
<td>1.96</td>
<td>3.62</td>
<td>2.07</td>
</tr>
<tr>
<td class="firstcol">Household Supplies, Equipment &amp; Maintenance</td>
<td>0.54</td>
<td>0.64</td>
<td>0.82</td>
<td>0.82</td>
<td>1.11</td>
<td>1.40</td>
</tr>
<tr class="odd">
<td class="firstcol">Clothing &amp; Footwear</td>
<td>-0.77</td>
<td>-0.48</td>
<td>0.27</td>
<td>0.63</td>
<td>1.00</td>
<td>1.77</td>
</tr>
<tr>
<td class="firstcol">Recreation &amp; Culture</td>
<td>-0.09</td>
<td>-0.19</td>
<td>-0.29</td>
<td>-0.09</td>
<td>-0.19</td>
<td>0.56</td>
</tr>
<tr class="odd">
<td class="firstcol">Hotels &amp; Restaurants</td>
<td>2.51</td>
<td>2.60</td>
<td>2.46</td>
<td>2.66</td>
<td>2.82</td>
<td>4.51</td>
</tr>
</tbody>
</table>
</body>
</html>

The Euro-Zone CPI inflation picked up marginally in August, reaching 2.24% after July's 2.16% year-on-year pace. Notably, however, these are both lower than the 2004 rate of 2.36%. Eurostat reported these data this morning at 5:00AM [...]

Euro-Zone Harmonized CPI Inflation Only Slightly Higher in August; "Core" Remains Steady

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050916c.jpg" width="353">
The US current account deficit improved last quarter but it was from a 1Q record that was revised deeper. The 2Q deficit of $195.7B amounted to 6.3% of GDP. Consensus expectations had been for greater improvement to $193.0B.
The deficit in merchandise trade deteriorated to $186.9B from an unrevised $186.3B in 1Q. Exports grew 4.5% (11.7% y/y) and imports rose 2.6% (12.7% y/y).
The surplus on services improved for the third consecutive quarter to $13.6B from a downwardly revised 1Q surplus. Exports of services grew 1.2% (10.3% y/y and imports rose 1.0% (9.7% y/y).
From the capital account, US foreign direct investment abroad fell to $33.6B from an upwardly revised 1Q and foreign direct investment in the US nearly halved q/q to $17.6B.
Unwinding the Current Account Deficit from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/iet/20050501/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col">2Q &#39;05</th>
<th scope="col">1Q &#39;05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account Deficit</td>
<td>$195.7B</td>
<td>$198.7B</td>
<td>$166.6B</td>
<td>$668.1B</td>
<td>$519.7B</td>
<td>$475.2B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Goods/Services/Income Deficit</td>
<td>$173.8B</td>
<td>$172.4B</td>
<td>$146.1B</td>
<td>$587.1B</td>
<td>$448.5B</td>
<td>$411.2B</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>4.2%</td>
<td>2.1%</td>
<td>14.4%</td>
<td>14.9%</td>
<td>6.8%</td>
<td>-3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>3.2%</td>
<td>2.6%</td>
<td>15.6%</td>
<td>18.1%</td>
<td>7.3%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$21.9B</td>
<td>$26.3B</td>
<td>$20.5B</td>
<td>$80.9B</td>
<td>$71.2B</td>
<td>$64.0B</td>
</tr>
</tbody>
</table>
</body>
</html>

The US current account deficit improved last quarter but it was from a 1Q record that was revised deeper. The 2Q deficit of $195.7B amounted to 6.3% of GDP. Consensus expectations had been for greater improvement to $193.0B. The [...]

U.S. Current Account Deficit Improved

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050916d.jpg" width="353">
The September Consumer Sentiment Index from the University of Michigan cratered 13.7% m/m to 76.9, the lowest level in over ten years, as consumer expectations were depressed 17.3% by Hurricane Katrina (and probably by higher gasoline prices).
The 12 month expected inflation rate surged to 5.7% from 3.7% in August and that helped drop expectations for growth in real family income to the lowest level since 1992. Moreover, unemployment was expected to rise but interest rates were expected to fall.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050916e.jpg" width="353">
The current conditions index fell 9.7% m/m, roughly double the decline in August. Personal finances were viewed being at their worst level in over two years and current buying conditions also fell hard.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Sept</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>76.9</td>
<td>89.1</td>
<td>-18.4%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>97.7</td>
<td>108.2</td>
<td>-5.8%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>63.6</td>
<td>76.9</td>
<td>-27.7%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
</body>
</html>

The September Consumer Sentiment Index from the University of Michigan cratered 13.7% m/m to 76.9, the lowest level in over ten years, as consumer expectations were depressed 17.3% by Hurricane Katrina (and probably by higher gasoline [...]

U.S. Consumer Sentiment Depressed

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

Service Health

A premier time series data platform for the global strategy, research, and quant communities. 

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

251223n8.jpg

251223c8.jpg

Real GDP grew 4.3% (SAAR) during the third quarter following a 3.8% Q2 gain, revised from 3.3% reported initially. These increases followed a minimally revised 0.6% decline in Q1. A 3.0% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.3% compared to 2.1% y/y in Q2 and remained below its most recent high of 3.4% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment surged 7.0% (4.2% y/y) last quarter after edging 0.6% higher in Q2. Before-tax earnings with IVA & CCA rose 4.2% (9.1% y/y) after improving 0.2% in Q2. Financial sector earnings rose 6.2% (21.1% y/y) after rising 1.1% in Q2. Nonfinancial corporate profits rose 2.5% (3.3% y/y) after edging 0.5% higher in Q2. Earnings from abroad jumped 10.6% (26.3% y/y) following a 2.9% Q2  decline.

Foreign trade balance improvement added 1.59 percentage points to growth last quarter after adding 4.83 percentage points in Q2. Real exports increased 2.1% (1.5% y/y) after falling 0.5% in Q2. Real imports declined 1.2% (-1.8% y/y) after declining 8.3% in Q2. Inventories subtracted 0.22 percentage points from growth after subtracting 3.44 percentage point from Q2 growth.

Real final sales to private domestic purchasers grew 3.0% (2.6% y/y) last quartter after rising 2.9% in Q2, revised from 1.6%. Personal consumption expenditures rose 3.5% (2.6% y/y) after a 2.5% rise, revised from 1.6%. Durable goods spending rose 1.6% (3.2% y/y) after increasing 2.3% in Q2. Motor vehicle purchases declined 6.7% (+1.6% y/y) after strengthening 9.7% in Q2. Spending on home furnishings & appliances weakened 4.2% (+0.7% y/y) following a 2.0% fall. Recreational goods & vehicle buying surged 15.7% (7.0% y/y) last quarter after falling 2.5% in Q2.

Nondurable goods outlays in constant dollars rose 3.9% (3.0% y/y) last quarter following 2.2% growth in Q2. Apparel spending strengthened 6.7% (7.0% y/y) following a 5.8% rise. Food & beverage buying gained 2.0% (1.3% y/y) after edging 0.2% higher. Gasoline & fuel oil purchases improved 1.3% (-0.2% y/y) after falling 2.8% in Q2.



251223o8.jpg

251223p8.jpg

Real spending on services increased 3.7% (2.4% y/y) in Q3 after a 2.6% Q2 gain. Outlays on housing & utilities edged 0.3% higher (1.0% y/y) after easing 0.2% in Q2. Health care expenditures surged 6.8% (4.5% y/y) after a 4.8% increase. Transportation outlays gained 3.1% both  q/q and y/y after a 7.0% rise, while recreation spending jumped 6.6% (2.4% y/y) following a 3.9% rise. Restaurant & hotel expenditures increased 1.2% (2.0% y/y) after strengthening 5.9% in Q2. Financial services expenditures rose 2.6% both q/q and y/y following a 4.8% Q2 increase.

Business fixed investment in constant dollars increased 2.8% (3.9% y/y) last  quarter following a 7.3% Q2 rise, revised from 5.7%. Expenditures on structures declined 6.3% both q/q and y/y, after falling for six consecutive quarters. Expenditures on producers’ durable equipment increased 5.4% (7.4% y/y), after strengthening 8.5% in Q2. Outlays on information processing equipment rose 8.4% (18.6% y/y), after strengthening 11.7% during Q2. Industrial equipment investment rose 2.0% (3.4% y/y) after a 6.5% rise. Transportation equipment investment fell  2.7% (+3.0% y/y) after strengthening 25.2%. Intellectual property product spending rose 5.4% last quarter (6.4% y/y), after surging 15.0% in Q2.

Residential structures investment in real terms declined 5.1% (-1.8% y/y), the same as in Q2. It was the third consecutive quartly decline.

Government spending rose 2.2% (1.1% y/y) during the third quarter after an unrevised 0.1% easing in Q2. Federal government expenditures rose 2.9% (-1.0% y/y) after falling 5.3% in Q2. National defense expenditures increased 5.8% (1.0% y/y) after rising 0.9% in Q2. State & local government spending rose 1.8% (2.4% y/y) following a 3.1% rise.

The GDP chain price index rose 3.8% (3.0% y/y) last quarter vs. 2.1% in Q2. The PCE chain price index increased 2.8% (2.7% y/y) following a 2.1% rise. The PCE price index excluding food and energy rose 2.9% (2.9% y/y) after increasing 2.6% in Q2. The business fixed investment price index rose 5.2% (1.5% y/y) in Q3 after a 0.4% decline. The residential price index rose 4.5% (3.3% y/y) last quarter after a 2.2% rise, while the government price index increased 4.4% (3.5% y/y) following a 3.3% 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**.



251223q8.jpg

251223s8.jpg

- Consumer spending strengthens; growth in business investment decelerates.
- Corporate profit growth led by earnings abroad.
- Rise in chain price index accelerates.


U.S. GDP Growth is Strong in Q3; Profits Jump

Sandy Batten

251223r1.jpg

251223s1.jpg

Industrial production fell 0.1% m/m in October but rose 0.2% m/m (2.5% y/y) in November. The Action Economics Forecast Survey expected 0.1% monthly gains in both months. Manufacturing activity was tepid with manufacturing production falling 0.4% m/m in October and unchanged in November. Manufacturing output has not posted a monthly gain since July. Mining output fell 0.8% m/m in October but rebounded 1.7% m/m in November. Utilities output surged 2.6% m/m in October but fell 0.4% m/m in November. Compared to a year ago, manufacturing production is up 1.9%; mining output is up 3.9%; and utilities output is up 4.8%.

By market group, output of durable consumer goods plunged 2.6% m/m in October and fell another 0.2% in November. Production of durable consumer goods has declined in five of the previous six months. Production of nondurable consumer goods rose 0.5% m/m in both October and November. Compared to a year ago, durable consumer goods production has fallen 5.9% while nondurable consumer goods output has risen 2.7%. Business equipment production fell 0.3% m/m in October but rebounded 0.3% m/m in November and is up 11.2% y/y. Production of nonindustrial supplies fell 0.3% m/m in both October and November.

By industry group, output of durable goods fell 0.5% m/m in October and declined 0.1% m/m in November but were up 3.2% from a year ago. Motor vehicle and parts production slumped 5.1% m/m in October and declined 1.0% m/m in November to be down 5.6% from a year ago. Monthly motor vehicle output has declined in five of the previous six months. In contrast, production of computers and electronic products increased 1.5% m/m in October and rose 0.8% m/m in November. Aerospace production continued to rise, increasing 2.0% m/m in October and 1.1% m/m in November to be up 25.2% from a year ago. Output of nondurable goods fell 0.2% m/m in October and edged up 0.1% m/m in November. Their output is up 0.9% from a year ago. Apparel output fell 1.3% m/m in October but recovered in November, rising 2.3% m/m. Food and beverage output rose 0.3% m/m in October and another 1.2% in November.

Output of selected high-technology industries rebounded in October and November. After having declined 1.0% m/m in both August and September, production jumped 1.9% m/m in October and 1.1% m/m in November to stand 11.8% higher than a year ago. Manufacturing output excluding selected high-tech industries fell 0.4% m/m in October and was unchanged in November. It has risen only 1.6% over the past year. Manufacturing excluding motor vehicle production was unchanged in October and edged up 0.1% m/m in November; it is up 2.6% y/y.

Total industry capacity utilization edged down to 75.9% in October from 76.0% in September and then recovered the decline in November, edging up to 76.0%. In the manufacturing sector, the utilization rate slumped to 75.4% in October from 75.8% in September and remained at 75.4% in November. The October/November reading is the lowest since January.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.



251223t1.jpg

251223u1.jpg

- Today’s release contained figures for both October and November that had been delayed by the federal government shutdown.
- IP fell in October but recovered in November.
- Manufacturing output was tepid, falling in October and unchanged in November.
- A surge in utilities output in October prevented a larger decline in total production.
- A jump in mining output in November accounted for all of the increase in total production.


U.S. Industrial Production Fell in October and Recovered in November

251223v2.jpg

251223w2.jpg

New orders for durable goods fell a more-than-expected 2.2% (+4.8% y/y) in October following an upwardly revised 0.7% m/m rise in September (previously +0.5% m/m) and a 3.0% monthly jump in August. The Action Economics Forecast Survey expected a 1.5% m/m decline. A 23.7% m/m drop in aircraft orders more than accounted for the overall decline. Orders excluding aircraft increased 0.2% m/m (4.0% y/y) in October on top of a 0.5% monthly increase in September.

More generally, transportation orders fell 6.5% m/m (+7.3% y/y) in October following a 0.6% m/m increase in September and an 8.0% monthly jump in August. In addition to the drop in aircraft orders, orders for motor vehicles and parts edged up 0.1% m/m in October, their sixth consecutive monthly increase. Across other sectors, orders for primary metals fell 0.7% m/m, their first monthly decline in ten months. Orders for electrical equipment and appliances slumped 1.5% m/m, their first monthly decline in seven months. In contrast, orders for fabricated metal products rose 0.5% m/m, their fourth consecutive monthly gain. Machinery orders increased 0.8% m/m, their eighth consecutive monthly rise. Orders for computers and electronic products increased a solid 1.0% m/m on top of a 1.2% monthly increase in September.

Shipments of core capital goods (nondefense capital goods shipments excluding aircraft) are a reliable coincident indicator of business spending on equipment in the national accounts. They rose 0.7% m/m in October following an upwardly revised 1.2% monthly gain in September (previously +0.9%). The was the second consecutive monthly increase and the fifth in the past six months. The strong end to Q3 and the continued rise in the first month of Q4 provides a solid starting point for all of Q4. The October shipments figure was 5.9% at an annual rate above the Q3 average. Core capital goods orders rose 0.5% m/m in October on top of an upwardly revised 1.1% m/m increase in September (previously +0.9%). This was the fourth consecutive monthly rise.

Total manufacturing shipments edged up 0.1% m/m (+2.8% y/y) in October after having been essentially unchanged in September. Shipments of durable goods increased 0.6% m/m (5.9% y/y), led by 1.4% monthly jump in transportation shipments. However, apart from a 0.1% m/m decline in shipments of other durable goods, all of the other major sectors posted monthly gains in October. In contrast, shipments of nondurable goods fell 0.4% m/m (-0.3% y/y) in October for their third consecutive monthly decline. The monthly decline was led by a 2.4% m/m fall in shipments of petroleum and coal products although it was relatively widely spread across major sectors. The one exception was a 2.1% m/m increase in leather product shipments, but this came after four consecutive sizeable monthly declines.

Unfilled durable goods orders increased 0.2% m/m (7.9% y/y) in October for their third consecutive monthly gain following a 0.8% m/m rise in September and a 0.7% m/m increase in August. Total factory inventories were unchanged in October (+1.4% y/y) following 0.1% monthly declines in both August and September. Durable goods inventories edged up 0.1% m/m in October while inventories of nondurable goods fell 0.2% m/m, the third consecutive monthly decline.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.



251223x2.jpg

251223y2.jpg

- New orders for durable goods slumped 2.2% m/m in October following increases in both August and September
- A 24% monthly drop in aircraft orders drove the overall decline
- Orders excluding aircraft rose 0.2% m/m in October
- Core capital goods shipments and orders continued to rise in October with small upward revisions to September


Weak Aircraft Orders Pushed Down U.S. Durable Goods Orders in October

251222f8.jpg

251222g8.jpg

The Chicago Fed National Activity Index (CFNAI) increased to -0.21 during September from a four-month low of -0.31 in August. It remained below a high of 0.42 during February. 

The employment, unemployment & hours measure led the improvement and rose to 0.01 during September from -0.11 in August. The employment readings had been negative in each month since February. The weakest occurred in July which equaled August. The production & income reading edged up to -0.10 in September from -0.13 in August. It remained below February’s high of 0.36. 

Moving lower, the personal consumption & housing measure fell to -0.06 in September from -0.03 in August. It was the weakest reading in four months. The sales, orders & inventories reading declined to -0.07 during September from -0.05 in August. It was the lowest figure since April, and down from a 0.16 high during March.  

The index's three-month moving average, which smooths out the m/m volatility in the index, fell to -0.21 in September after increasing to -0.18 in August. It was the fifth consecutive negative reading, but above its -0.24 June low. It remained below its recent high of 0.11 in February.

The CFNAI Diffusion Index, which measures the breadth of change in the component series and is also a three-month moving average, fell to -0.32 in September from -0.20 in both July and August. It was the weakest reading in three months. Negative for seven straight months, it was below the February high of 0.10. A reading of zero indicates that all of the indicators are growing at their long-term average. 

The CFNAI is a weighted average of 85 indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

These figures are available in Haver's **SURVEYS** database.


- The CFNAI is negative for sixth straight month.
- Three of four index components remain negative
- Improvement in labor market reading leads m/m gain.

The Federal Reserve Bank of Chicago indicated that the December 22, 2025, release of the CFNAI was originally scheduled to cover data through November 2025. However, because of the delay in data releases from government statistical agencies due to the federal government shutdown, this CFNAI release will instead only cover data through September 2025.

Chicago Fed National Activity Index Improves Slightly in September

Robert Brusca

251222E.jpg

Canadian retail sales and other growth metrics appear to be weakening as the year draws to a close. Inflation has firmed up as well. Retail sales in October saw a month-to-month drop of 0.2% as supermarket sales fell 0.7%, month-to-month, clothing store sales fell 1.2%, and retail excluding motor vehicle sales fell by 0.6%. Overall real retail sales fell by 0.6% in October from September. This is the second consecutive month in which total nominal retail sales and retail sales in real terms both dropped month-to-month. Total retail sales and real retail sales both are declining over three months. Total retail sales at a -0.6% annual rate real retail sales-3.2% annual rate. Real retail sales are decelerating from a 2% growth rate over 12 months to a -1.7% annual rate over six months to a - 0.6% annual rate over three months. Real retail sales show more severe deceleration, growing by merely 0.1% over 12-months shrinking at a 3.8% annual rate over six-months and declining at a 3.2% annual rate over three-months.

**Other indicators weaken**
Over three months housing starts show a sharp contraction, falling at a 60.6% annual rate, a clear ongoing deceleration from a -5.2% drop over 12-months. However other metrics show slightly more upbeat results: employment, for example, yields job growth still at 1.2% at an annual rate over three-months although it slowed from a 1.4% year-over-year gain. The all-encompassing leading economic index shows an actual step up to a pace of 2.9% over 3 months from 2.6% over 6-months and 1.9% over 12-months. Manufacturing and mining output also show gains and a sharp acceleration from their year ago pace; for manufacturing output fell 1.4% year-over-year then rose at a 12.1% annual rate over the three-months ended in September; mining and oil production speeded up from a 4.7 percent 12-month gain to an 8.1% annual rate over three-months.  The manufacturing and mining statistics lag by one-month. Another positive sign for the economy is unemployment as the number of unemployed declines at a 0.7% annual rate over three months even though it rises by 5.5% over 12 months.

**Ranking metrics**
We can also vet these various sector results by looking at the growth rates year over year and comparing that pace to what has happened historically back to 2014. These individual category ranking statistics provide better relative comparisons across components. On that basis, the weak sector is retailing with real retail sales having 11.3 percentile standing and overall nominal retail sales having a 22.5 percentile standing. The next lowest year-over-year ranking is from manufacturing at a 22.7 percentile standing, that compares to a 26.1 percentile standing for housing starts. The performance of employment fares relatively better at a 38.7 percentile standing, but that's still below the 50% mark, putting job growth below its median for the period. The number unemployed, however, has a 67.6 percentile standing which is above its median and, of course, not a good result because here we would prefer to see leaner numbers on unemployment changes. The year-over-year growth rate for unemployment is solid, in the top one-third of all of the growth rates of the employed that we've seen since January of 2014. For unemployment, at least the sequential growth rates show that the process of unemployment creation is not accelerating. On the positive side the leading economic index has a 78.9 percentile standing which is quite strong and the mining and oil production have a 61.7 percentile standing which is above their median for the period. 

**Further context?**
And, when we consider the ranking of these growth rates, we can also look at the progression of growth in the table, such as the mention I made above for unemployment. For example, housing starts have a weak year-over-year standing but they have a much weaker growth rate over three months Compared to 12-months…on the other hand, manufacturing has a weak year-over-year standing but over three months manufacturing output has stepped up growth considerably. No one statistic can create a profile of these industries which live in the real world and have multiple dimensions and where the trends may be dynamic, in flux, and hard to singularly characterize.

**Got inflation?** 
As of October, Canadian inflation had picked up to some extent, inflation in Canada had dipped below the 2% mark from April through August of 2025. In September and October, the year-over-year growth of headline inflation was in the 2.3 to 2.2% region. The CPIx which didn't get quite that low, that recently got down to 1.5% and 1.6% in late 2024 and was as low as 2.2% and 2.5% from March to May of 2025 has moved up. September and October price growth rate is up to the 2.8 to 2.9% pace with the core rate running in the neighborhood of 2.6% toward the end of the year after reaching a low just below 2% in November of last year.

**Nothing dramatic but a tilt to more of what Canada wants less of**
Oh no there's nothing dramatic going on in Canada, the economy appears to be weakening to some extent, the retail sales numbers show the largest deceleration. Of course, Canada and the US continue to have a spat over tariffs, and their two leaders still appear to be somewhat antagonistic about how that process is unfolding. Some Canadian stores have even taken the action of removing form the shelves some goods from the US, particularly US alcoholic products. The step up of inflation is something to watch and does not pair well with the weakening in economic activity. 
  




Economy in Brief: 2005

Jump to:

Fed Funds Rate Increased to 3.75%

Chinese Exports of Goods on the Way to Surpass Those of the U. S. and Germany in the Next Five Years

NAHB Housing Market Index Lowest in Over Two Years

ECRI Leading Index: Down But Not Out

ECRI Leading Index: Down But Not Out

Euro-Zone Harmonized CPI Inflation Only Slightly Higher in August; "Core" Remains Steady

U.S. Current Account Deficit Improved

U.S. Consumer Sentiment Depressed