Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090223a.jpg" width="353">
The January National Activity Index (CFNAI) from the Chicago Federal Reserve Bank remained depressed at -3.45 after December&#39;s level of -3.65. The December figure was revised lower from the initial estimate and the latest numbers were near the series&#39; historic low. Since 1970 there has been a 75% correlation between the level of the index and the q/q change in real GDP.
The three-month moving average of the index of -3.41 was its lowest since January of 1975.
An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3%.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_february2009.pdf">here</a> and the historical data are available in Haver&#39;s SURVEYS database.
Each of the four sub-categories of the index including employment, production, income, consumption &amp; housing made a negative contribution to the January index. Sixty two of the individual indicators in the overall series made negative contributions while twenty three made a positive contribution.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production &amp; income, the labor market, personal consumption &amp; housing, manufacturing &amp; trade sales, and inventories &amp; orders.
In a separate survey, the Chicago Fed indicated that its Midwest manufacturing index fell during December to its lowest level since late 1996. Indicators for the steel, machinery, resource and auto sectors each fell.
The Chicago Federal Reserve figures are available in Haver&#39;s SURVEYS database.
Today&#39;s Joint Statement by the Treasury, FDIC, OCC, OTS, and the Federal Reserve can be found <a href="http://www.federalreserve.gov/newsevents/press/bcreg/20090223a.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January &#39;08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-3.45</td>
<td>-3.65</td>
<td>-0.55</td>
<td>-1.77</td>
<td>-0.37</td>
<td>0.01</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Average</td>
<td>-3.41</td>
<td>-2.70</td>
<td>-0.55</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>


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The January National Activity Index (CFNAI) from the Chicago Federal Reserve Bank remained depressed at -3.45 after December's level of -3.65. The December figure was revised lower from the initial estimate and the latest numbers were [...]

Chicago Fed Index Fell Further

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090223a.jpg" align="left" border="0" height="265" width="353">
The January National Activity Index (CFNAI) from the Chicago
Federal Reserve Bank remained depressed at -3.45 after December's level
of -3.65. The December figure was revised lower from the initial
estimate and the latest numbers were near the series' historic low.
Since 1970 there has been a 75% correlation between the level of the
index and the q/q change in real GDP.
The three-month moving average of the index of -3.41
was its lowest since January of 1975.
An index level at or below -0.70 typically has indicated
negative U.S. economic growth. A zero value of the CFNAI indicates that
the economy is expanding at its historical trend rate of growth of
roughly 3%.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_february2009.pdf">here</a>
and the historical data are available in Haver's SURVEYS
database.
Each of the four sub-categories of the index including
employment, production, income, consumption &amp; housing made a
negative contribution to the January index. Sixty two of the individual
indicators in the overall series made negative contributions while
twenty three made a positive contribution.
The CFNAI is a weighted average of 85 indicators of economic
activity. The indicators reflect activity in the following categories:
production &amp; income, the labor market, personal consumption
&amp; housing, manufacturing &amp; trade sales, and inventories
&amp; orders.
In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index fell during December to its lowest level
since late 1996. Indicators for the steel, machinery, resource and auto
sectors each fell.
The Chicago Federal Reserve figures are available in Haver's SURVEYS
database.
Today's Joint Statement by the Treasury, FDIC, OCC,
OTS, and the Federal Reserve can be found <a href="http://www.federalreserve.gov/newsevents/press/bcreg/20090223a.htm">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Fed</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-3.45</td>
<td>-3.65</td>
<td>-0.55</td>
<td>-1.77</td>
<td>-0.37</td>
<td>0.01</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Average</td>
<td>-3.41</td>
<td>-2.70</td>
<td>-0.55</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
 
Economists Forecast Moderate
Rebound in Second Half 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 23, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090223c.jpg" align="left" border="0" height="265" width="353">
A survey of 47 top economic forecasters released today
indicates that the current U.S. recession should end in the second half
of this year. The subsequent recovery would start quite slowly,
compared to historic norms, then pick up steam during 2010.
The National Association for Business Economics indicated
in its latest survey that positive growth in U.S. GDP would resume in
3Q of this year at a 1.0% rate. For the second half of 2009 as a whole,
the average forecasted rate of growth of 1.5% is on a par with the
recoveries from the moderate recessions of 1990 and 2001. However, the
recovery falls well short of growth after the more severe recessions,
such as those in 1960, 1974 and 1982.
Improved (2.2%) growth in personal consumption expenditures
and a recovery in residential building are expected to lead the economy
from recession. The gains are expected to be moderate, however,
compared to sharp rebounds typical of the postwar period. Business
investment is expected to continue to decline sharply in 2010.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090223d.jpg" align="right" border="0" height="265" width="353">
Corporate profits also are forecasted to rise in 2010 at a
7.3% rate, which would just reverse this year's decline. Again, that
rebound is quite moderate compared to prior periods.
Inflation during the forecast period is expected to remain
quite tame. Growth in the core PCE chained price index is expected to
amount to roughly 1.0% for the rest of this year as the recession
continues and the level of excess capacity remains high. The economic
recovery next year as well as this year's significant injection of
liquidity (money) by the Fed is forecasted to raise prices by 2010 at a
quickened rate.
The bond market is forecasted to deteriorate next year with
rates on the 10-year treasury rising to an average 3.8% from 3.1% this
year. The catalysts for this deterioration are economic improvement as
well as a significant rise in the federal budget deficit ($1.5 trillion
this year and $1.1 billion in 2010) which could give rise to "crowding
out" and higher inflation. In the foreign exchange market, the dollar's
value is expected to remain roughly stable.
The forecast figures from the National Association of Business
Economists are available in Haver's SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Nat'l Assn.
for Business Economics</th>
<th scope="col">1Q'09</th>
<th scope="col">2Q '09</th>
<th scope="col">3Q '09</th>
<th scope="col">4Q 09</th>
<th scope="col">2008</th>
<th scope="col">2009</th>
<th scope="col">2010</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Real GDP (%)</td>
<td>-5.0</td>
<td>-1.7</td>
<td>1.0</td>
<td>2.1</td>
<td>-0.2</td>
<td>-0.9</td>
<td>3.0</td>
</tr>
<tr>
<td class="firstcol">"Core" PCE Chained Price Index
(%)</td>
<td>0.6</td>
<td>1.0</td>
<td>1.0</td>
<td>1.2</td>
<td>1.8</td>
<td>0.9</td>
<td>1.5</td>
</tr>
</tbody>
</table>
 Can The Baltic States Hold TheirCurrency Pegs? 
by <a href="/comment/Curley.html">Louise
Curley</a> February 23, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090223e.jpg" align="left" border="0" height="265" width="353">
The Baltic States--Estonia, Latvia and Lithuania--have, in
recent years, pegged their currencies to the euro. Until recently, this
arrangement had proved economically satisfactory to the three nations.
However, as the deterioration in the world wide economy began to affect
these countries, the fact that their currencies were pegged to a
strengthening euro only exacerbated their problems.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090223f.jpg" align="right" border="0" height="265" width="353">
The first chart shows the year over year changes in real GDP
for the three countries. Final data for the fourth quarter of 2008 for
Estonia are not yet available, but the preliminary "flash" estimate is
for a decline of 9.4% from the fourth quarter of 2007. Published data
for Latvia's fourth quarter GDP shows a year over year decline of 10.5%
while that for Lithuania's GDP is only 1.5%.
All three countries have used their foreign reserves to
maintain their pegs with the euro as can be seen in the second chart
that shows the recent declines in the foreign reserves of the three
countries. Latvia spent more than $1.5 billion of its foreign reserves,
defending its currency and was forced to apply for help from an
International Monetary Fund led group for a $9.6 billion bailout. Both
Latvia and Lithuania have cut wages of state employees Latvia by 15%
and Lithuania by 12%. Now, Estonia is considering wage cuts of 10% for
state employees except policemen and teachers. These measures have led
to riots and political unrest. Once again the permanency of currency
board systems in the face of austerity is being tested.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">BALTIC
STATES&nbsp;</th>
<th scope="col">Jan 09&nbsp;</th>
<th scope="col">Dec 08&nbsp;</th>
<th scope="col">Nov 08&nbsp;</th>
<th scope="col">Oct 08</th>
<th scope="col">Sep 08</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Foreign Reserves (Mil.
USD)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;Lithuania</td>
<td>5683</td>
<td>6441</td>
<td>5537</td>
<td>6340</td>
<td>6505</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;Latvia</td>
<td>4695</td>
<td>5248</td>
<td>4447</td>
<td>5592</td>
<td>6239</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;Estonia</td>
<td>3462</td>
<td>3971</td>
<td>3646</td>
<td>4183</td>
<td>3681</td>
</tr>
<tr class="grey2">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="grey1">
<td class="firstcol"></td>
<td>Q4 08</td>
<td>Q3 08&nbsp;</td>
<td>Q2 08&nbsp;</td>
<td>Q1 08</td>
<td></td>
</tr>
<tr class="grey4">
<td class="firstcol">Year over Year Chg in
Real GDP %</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;Lithuania</td>
<td>-1.48</td>
<td>2.95</td>
<td>5.19</td>
<td>7.01</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;Latvia</td>
<td>-10.50</td>
<td>-4.57</td>
<td>0.07</td>
<td>3.31</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;Estonia</td>
<td>-9.4</td>
<td>-3.3</td>
<td>-1.4</td>
<td>0.4</td>
<td>--</td>
</tr>
</tbody>
</table>
 
Italy's Inflation Rates Show Turnof Trend 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 23, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090223b.jpg" align="left" border="0" height="265" width="353">
Italy&#8217;s headline HICP inflation rate fell by 0.6% in January.
Its domestic inflation measure fell by 0.2%. Both series show that
inflation has dropped sharply. The Yr/Yr pace for the HICP, or
harmonized rate, is 1.4% down from 3.2% a year ago at this time. The
domestic rate at 1.6% is down from 3% one year ago. 
 

Our diffusion calculations (see table above) show that over
three-months and six-months inflation has been decelerating across more
sectors that it has been accelerating (a value of 50 is neutral; below
that inflation is decelerating in more sectors than it is
accelerating). The deceleration noted by the diffusion indices is
pronounced. It is not just due to a drop in energy prices. 
 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Italy HICP
and CPI details</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">HICP Total</td>
<td>-0.6%</td>
<td>0.0%</td>
<td>-0.5%</td>
<td>-4.0%</td>
<td>-0.9%</td>
<td>1.4%</td>
<td>3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Core</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.1%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>2.5%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">CPI</td>
</tr>
<tr class="odd">
<td class="firstcol">All</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>-0.4%</td>
<td>-2.6%</td>
<td>-0.9%</td>
<td>1.6%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.6%</td>
<td>3.8%</td>
<td>4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Alcohol</td>
<td>-0.3%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>1.1%</td>
<td>3.1%</td>
<td>3.2%</td>
<td>4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Clothing &amp; Shoes</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.5%</td>
<td>1.5%</td>
<td>1.6%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Rent &amp;Util</td>
<td>-0.9%</td>
<td>0.2%</td>
<td>-0.3%</td>
<td>-3.7%</td>
<td>-1.1%</td>
<td>4.1%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Housing &amp;Furniture</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.0%</td>
<td>1.5%</td>
<td>2.3%</td>
<td>2.2%</td>
<td>3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Health Care</td>
<td>0.2%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>1.3%</td>
<td>1.7%</td>
<td>0.8%</td>
<td>0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Transport</td>
<td>-0.7%</td>
<td>-1.0%</td>
<td>-2.1%</td>
<td>-14.5%</td>
<td>-9.0%</td>
<td>-1.5%</td>
<td>5.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Communication</td>
<td>-0.4%</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>-1.8%</td>
<td>-4.0%</td>
<td>-3.2%</td>
<td>-8.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Rec &amp;Culture</td>
<td>-0.2%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-1.0%</td>
<td>0.6%</td>
<td>0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Education</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.7%</td>
<td>1.9%</td>
<td>2.2%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Restaurant &amp; Hotel</td>
<td>-0.3%</td>
<td>0.0%</td>
<td>0.2%</td>
<td>-0.3%</td>
<td>0.5%</td>
<td>1.9%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Other</td>
<td>0.2%</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>1.4%</td>
<td>2.5%</td>
<td>2.5%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Diffusion</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>16.7%</td>
<td>16.7%</td>
<td>33.3%</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Type:</td>
<td colspan="3">Diffusion: Compared to</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220e.jpg" width="353">
The latest figures from the Philadelphia Federal Reserve Bank show that the February Business Activity Index fell further to its lowest level since 1990 and that rivaled the lows of the series&#39; forty year history. The bank reported that its February Index of General Business conditions in the manufacturing sector fell to -41.3 from 24.3 last month. A reading of -25 had been expected.
During the last ten years there has been a 70% correlation between the level of the Philadelphia Fed Business Conditions Index and the three-month growth in factory sector industrial production. There has been a 64% correlation with q/q growth in real GDP.
The Philadelphia Fed constructs a diffusion index for total business activity and each of the sub-indexes. The business conditions index reflects a separate survey question.
Amongst the sub-indexes, the new orders figure led this month&#39;s weakness with a decline to near the lowest since 1980. The shipments index fell to a record low. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220f.jpg" width="353">
The employment index fell another 6.8 points this month, and was down 17.2 points during the last two months, to a record low. Forty eight percent of respondents expected to reduce employment levels, a record, while only two percent expected to raise them. During the last ten years there has been a 79% correlation between the index level and the m/m change in manufacturing sector payrolls.
The prices paid index nudged up month-to-month to -13.7 but just thirteen percent of respondents planned to raise prices. Thirty two percent expected to lower prices. During the last ten years there has been a 72% correlation between the prices paid index and the three-month growth in the intermediate goods PPI. There has been an 80% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months improved to its highest level since September. The expectations index for new orders led the gain but the expectations index for employment rose just marginally from the record low reached in January.
The figures from the Philadelphia Federal Reserve can be found in Haver&#39;s SURVEYS database.
The latest Business Outlook Survey from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2008/bos0209.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Philadelphia Fed (%)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">February&nbsp; &#39;08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-41.3</td>
<td>-24.3</td>
<td>-22.6</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>-13.7</td>
<td>&nbsp;-27.0</td>
<td>&nbsp;49.5</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>
</body>
</html>

The latest figures from the Philadelphia Federal Reserve Bank show that the February Business Activity Index fell further to its lowest level since 1990 and that rivaled the lows of the series' forty year history. The bank reported [...]

Philadelphia Fed Index Lowest Since 1990

Robert Brusca

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220d.jpg" align="left" border="0" height="265" width="353">
The European PMI readings are very weak again in February. In
January there was a slight bounce in the indices for MFG as well as for
Services but in February the weakness is back in force with the indices
dropping very sharply - especially for Services. There the
month-to-month drop form this already low level is the largest decline
m/m on record. 
 

Weakness in the Euro Area is still gathering pace, which is
terrible news. 
 

Germany, today saw its 50 billion euro stimulus plan go over
its last hurdle. Italian industrial orders fell in December but by less
than expected. December UK retail sales rose unexpectedly. But in
France its survey by Insee produced its lowest reading in the history
of the survey that extends back to the mid-1970s. Europe is continuing
to be buffeted with weakness and the more topical the measure the
weaker the results seem to be. 


 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="3" scope="col"> FLASH
Readings</th>
</tr>
<tr>
<th colspan="3" scope="col"> Market
PMIs for the Euro
Area
</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td> MFG</td>
<td> Services</td>
</tr>
<tr class="grey3">
<td class="firstcol">Feb-09</td>
<td> 33.63</td>
<td> 38.92</td>
</tr>
<tr class="grey3">
<td class="firstcol">Jan-09</td>
<td>34.42</td>
<td>42.16</td>
</tr>
<tr class="grey3">
<td class="firstcol">Dec-08</td>
<td>33.88</td>
<td>42.06</td>
</tr>
<tr class="grey3">
<td class="firstcol">Nov-08</td>
<td>35.58</td>
<td>42.47</td>
</tr>
<tr class="grey2">
<td></td>
<td colspan="2" class="firstcol">
Averages</td>
</tr>
<tr class="grey3">
<td class="firstcol">3-Mo</td>
<td>34.63</td>
<td>41.15</td>
</tr>
<tr class="grey3">
<td class="firstcol">6-Mo</td>
<td>39.58</td>
<td>43.64</td>
</tr>
<tr class="grey3">
<td class="firstcol">12-Mo</td>
<td>44.98</td>
<td>46.82</td>
</tr>
<tr class="grey1">
<td> </td>
<td colspan="2" class="firstcol">
127-Mo Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">High</td>
<td>60.47</td>
<td>62.36</td>
</tr>
<tr class="grey3">
<td class="firstcol">Low</td>
<td>33.63</td>
<td>38.92</td>
</tr>
<tr class="grey3">
<td class="firstcol">% Range</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
</tbody>
</table>
</body></html>

The European PMI readings are very weak again in February. In January there was a slight bounce in the indices for MFG as well as for Services but in February the weakness is back in force with the indices dropping very sharply - [...]

Euro Area PMIs Continue To Drop... Very Sharply

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220a.jpg" align="right" border="0" height="265" width="353">
During
February the consumer price index (CPI-U) rose for
the first month since July, according to the U.S. Bureau of Labor
Statistics. The 0.3% gain followed drops of 0.8% and 1.7% during
December and November. Due to those earlier sharp declines the
three-month rate of change remained quite weak at -8.4% (AR). The
latest increase matched Consensus expectations. A 1.7% rise in energy
prices led last month's increase in the CPI after having been down
during the previous five months. Gasoline prices reversed earlier
declines with a 6.0% (-40.4% y/y) increase to an average of $1.79 per
gallon of regular. Still moving lower last month, however, were fuel
oil prices which fell 2.7% (-19.5% y/y).&nbsp; It was their sixth
consecutive monthly drop while prices for natural gas &amp;
electricity fell 0.8% m/m (+7.2% y/y). Increases in food
&amp; beverage prices have very much tapered off from their strong
gains earlier this year.&nbsp; A 0.1% uptick followed a like gain
during December. That pulled the three month annual rate of increase
down to 1.4% after growth as high as 8.7% this summer.&nbsp;
Outright declines in meat and dairy product prices as well as much
easier growth in cereal &amp; bakery product costs account for the
moderation.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220b.jpg" align="left" border="0" height="265" width="353">
Core prices (CPI less food and energy)
showed their strongest increase since August with a 0.2%
rise.&nbsp; However, despite the increase the year-to-year gain of
1.7% remained its weakest since mid-2004. Little or no growth in core
prices during the prior four months accounts for the moderation. Core
goods prices rose for the first time since July.&nbsp;
The 0.3% increase reversed the prior month's decline but nevertheless
left the three-month rate of change at a negative 0.9%. Prices of new
&amp; used motor vehicles increased for the first time in a year,
but the 0.2% rise left them down 3.2% during that period.&nbsp;
Lower prices of used cars paced the decline with a 9.2% twelve month
decrease.&nbsp; Apparel prices ticked up 0.3% (-0.9% y/y) while
prices for household furnishings &amp; operations ticked lower by
0.1% (+1.8% y/y).&nbsp; Appliance prices were up 2.0% y/y while
furniture prices were unchanged y/y.&nbsp; Tobacco prices again
were strong during January and they posted a 0.8% increase (+6.1% y/y).
Gains in core services prices continued moderate
with a 0.2% increase That left the three-month rate of increase at 1.6%
(AR) after growing at a 3.9% rate this past summer.&nbsp; Medical
care services prices rose 0.5% (3.0% y/y) which was their strongest
increase in twelve months.&nbsp; Education costs posted a 0.3%
increase and the year-to-year rise of 5.5% was stable with the growth
in recent years, though down from the 6.9% increase during
2004.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220c.jpg" align="right" border="0" height="265" width="353">
Shelter prices rose 0.2% and the y/y increase fell to
1.8%. As the housing market remained deeply depressed, owners
equivalent rent of primary residence, a measure not equivalent to other
house price measures, rose 0.3% (2.2% y/y).&nbsp; Public
transportation prices fell hard for the fifth consecutive month and
were unchanged year-to-year.&nbsp; Recreation prices also were
unchanged last month and they have been flat or down during the last
there periods, +1.6% y/y. The chained CPI, which adjusts for shifts
in consumption patterns, rose 0.5%, the first increase since
July.&nbsp; Less food and energy, chained prices rose 0.2% after
two months of 0.3% decline. The consumer price data is available in
Haver's USECON database while detailed figures can
be found in the CPIDATA database. House
Prices and Bank Loan Performance from the Federal
Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-06.pdf">here</a>.
Labor Supply Responses to Changes in Wealth and Credit
also from the Federal Reserve Bank of San Francisco
is available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-05.pdf">here</a>.&nbsp;
<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/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> (%)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total&nbsp;</td>
<td>0.3</td>
<td>-0.8</td>
<td>-0.2</td>
<td>3.8</td>
<td>2.9</td>
<td>3.2</td>
</tr>
<tr class="even">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.2</td>
<td>0.0</td>
<td>1.7</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.1</td>
<td>-0.2</td>
<td>-0.5</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.2</td>
<td>0.1</td>
<td>2.5</td>
<td>3.1</td>
<td>3.4</td>
<td>3.4</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Energy</td>
<td>1.7</td>
<td>-9.3</td>
<td>-21.1</td>
<td>13.5</td>
<td>5.7</td>
<td>11.0</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.1</td>
<td>0.1</td>
<td>5.2</td>
<td>5.4</td>
<td>3.9</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained
CPI: Total (NSA)</a>&nbsp;</td>
<td>0.5</td>
<td>-1.3</td>
<td>-0.5 </td>
<td>3.3</td>
<td>2.5</td>
<td>2.9 </td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.2</td>
<td>-0.3</td>
<td>1.2</td>
<td>2.0</td>
<td>2.0</td>
<td>2.2</td>
</tr>
</tbody>
</table>
</body></html>

During February the consumer price index (CPI-U) rose for the first month since July, according to the U.S. Bureau of Labor Statistics. The 0.3% gain followed drops of 0.8% and 1.7% during December and November. Due to those earlier [...]

U.S. CPI Ticked Up

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220a.jpg" align="right" border="0" height="265" width="353">During
February the consumer price index (CPI-U) rose for
the first month since July, according to the U.S. Bureau of Labor
Statistics. The 0.3% gain followed drops of 0.8% and 1.7% during
December and November. Due to those earlier sharp declines the
three-month rate of change remained quite weak at -8.4% (AR). The
latest increase matched Consensus expectations.
 A 1.7% rise in energy
prices led last month's increase in the CPI after having been down
during the previous five months. Gasoline prices reversed earlier
declines with a 6.0% (-40.4% y/y) increase to an average of $1.79 per
gallon of regular. Still moving lower last month, however, were fuel
oil prices which fell 2.7% (-19.5% y/y).&nbsp; It was their sixth
consecutive monthly drop while prices for natural gas &amp;
electricity fell 0.8% m/m (+7.2% y/y).
 Increases in food
&amp; beverage prices have very much tapered off from their strong
gains earlier this year.&nbsp; A 0.1% uptick followed a like gain
during December. That pulled the three month annual rate of increase
down to 1.4% after growth as high as 8.7% this summer.&nbsp;
Outright declines in meat and dairy product prices as well as much
easier growth in cereal &amp; bakery product costs account for the
moderation.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220b.jpg" align="left" border="0" height="265" width="353">Core prices (CPI
less food and energy)
showed their strongest increase since August with a 0.2%
rise.&nbsp; However, despite the increase the year-to-year gain of
1.7% remained its weakest since mid-2004. Little or no growth in core
prices during the prior four months accounts for the moderation.
 Core
goods prices rose for the first time since July.&nbsp;
The 0.3% increase reversed the prior month's decline but nevertheless
left the three-month rate of change at a negative 0.9%. Prices of new
&amp; used motor vehicles increased for the first time in a year,
but the 0.2% rise left them down 3.2% during that period.&nbsp;
Lower prices of used cars paced the decline with a 9.2% twelve month
decrease.&nbsp; Apparel prices ticked up 0.3% (-0.9% y/y) while
prices for household furnishings &amp; operations ticked lower by
0.1% (+1.8% y/y).&nbsp; Appliance prices were up 2.0% y/y while
furniture prices were unchanged y/y.&nbsp; Tobacco prices again
were strong during January and they posted a 0.8% increase (+6.1% y/y).

Gains in core services prices continued
moderate
with a 0.2% increase That left the three-month rate of increase at 1.6%
(AR) after growing at a 3.9% rate this past summer.&nbsp; Medical
care services prices rose 0.5% (3.0% y/y) which was their strongest
increase in twelve months.&nbsp; Education costs posted a 0.3%
increase and the year-to-year rise of 5.5% was stable with the growth
in recent years, though down from the 6.9% increase during
2004.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220c.jpg" align="right" border="0" height="265" width="353">
Shelter prices rose 0.2% and the y/y increase fell to
1.8%. As the housing market remained deeply depressed, owners
equivalent rent of primary residence, a measure not equivalent to other
house price measures, rose 0.3% (2.2% y/y).&nbsp; Public
transportation prices fell hard for the fifth consecutive month and
were unchanged year-to-year.&nbsp; Recreation prices also were
unchanged last month and they have been flat or down during the last
there periods, +1.6% y/y. 
 The chained CPI, which adjusts for shifts
in consumption patterns, rose 0.5%, the first increase since
July.&nbsp; Less food and energy, chained prices rose 0.2% after
two months of 0.3% decline. 
The consumer price data is available in
Haver's USECON database while detailed figures can
be found in the CPIDATA database. 
House
Prices and Bank Loan Performance from the Federal
Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-06.pdf">here</a>.

Labor Supply Responses to Changes in Wealth and
Credit
also from the Federal Reserve Bank of San Francisco
is available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-05.pdf">here</a>.&nbsp;
<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/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> (%)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total&nbsp;</td>
<td>0.3</td>
<td>-0.8</td>
<td>-0.2</td>
<td>3.8</td>
<td>2.9</td>
<td>3.2</td>
</tr>
<tr class="even">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.2</td>
<td>0.0</td>
<td>1.7</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.1</td>
<td>-0.2</td>
<td>-0.5</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.2</td>
<td>0.1</td>
<td>2.5</td>
<td>3.1</td>
<td>3.4</td>
<td>3.4</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Energy</td>
<td>1.7</td>
<td>-9.3</td>
<td>-21.1</td>
<td>13.5</td>
<td>5.7</td>
<td>11.0</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.1</td>
<td>0.1</td>
<td>5.2</td>
<td>5.4</td>
<td>3.9</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained
CPI: Total (NSA)</a>&nbsp;</td>
<td>0.5</td>
<td>-1.3</td>
<td>-0.5 </td>
<td>3.3</td>
<td>2.5</td>
<td>2.9 </td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.2</td>
<td>-0.3</td>
<td>1.2</td>
<td>2.0</td>
<td>2.0</td>
<td>2.2</td>
</tr>
</tbody>
</table>

 Euro Area PMIs Continue To Drop...
Very Sharply 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> February 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220d.jpg" align="left" border="0" height="265" width="353">
The European PMI readings are very weak again in February. In
January there was a slight bounce in the indices for MFG as well as for
Services but in February the weakness is back in force with the indices
dropping very sharply - especially for Services. There the
month-to-month drop form this already low level is the largest decline
m/m on record. 
 

Weakness in the Euro Area is still gathering pace, which is
terrible news. 
 

Germany, today saw its 50 billion euro stimulus plan go over
its last hurdle. Italian industrial orders fell in December but by less
than expected. December UK retail sales rose unexpectedly. But in
France its survey by Insee produced its lowest reading in the history
of the survey that extends back to the mid-1970s. Europe is continuing
to be buffeted with weakness and the more topical the measure the
weaker the results seem to be. 


 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="3" scope="col"> FLASH
Readings</th>
</tr>
<tr>
<th colspan="3" scope="col"> Market
PMIs for the Euro
Area
</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td> MFG</td>
<td> Services</td>
</tr>
<tr class="grey3">
<td class="firstcol">Feb-09</td>
<td> 33.63</td>
<td> 38.92</td>
</tr>
<tr class="grey3">
<td class="firstcol">Jan-09</td>
<td>34.42</td>
<td>42.16</td>
</tr>
<tr class="grey3">
<td class="firstcol">Dec-08</td>
<td>33.88</td>
<td>42.06</td>
</tr>
<tr class="grey3">
<td class="firstcol">Nov-08</td>
<td>35.58</td>
<td>42.47</td>
</tr>
<tr class="grey2">
<td></td>
<td colspan="2" class="firstcol">
Averages</td>
</tr>
<tr class="grey3">
<td class="firstcol">3-Mo</td>
<td>34.63</td>
<td>41.15</td>
</tr>
<tr class="grey3">
<td class="firstcol">6-Mo</td>
<td>39.58</td>
<td>43.64</td>
</tr>
<tr class="grey3">
<td class="firstcol">12-Mo</td>
<td>44.98</td>
<td>46.82</td>
</tr>
<tr class="grey1">
<td> </td>
<td colspan="2" class="firstcol">
127-Mo Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">High</td>
<td>60.47</td>
<td>62.36</td>
</tr>
<tr class="grey3">
<td class="firstcol">Low</td>
<td>33.63</td>
<td>38.92</td>
</tr>
<tr class="grey3">
<td class="firstcol">% Range</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
</tbody>
</table>
 Philadelphia Fed Index Lowest
Since 1990 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220e.jpg" align="left" border="0" height="265" width="353">
The latest figures from the Philadelphia Federal Reserve Bank
show that the February Business Activity Index fell further to its
lowest level since 1990 and that rivaled the lows of the series' forty
year history. The bank reported that its February Index of General
Business conditions in the manufacturing sector fell to -41.3 from 24.3
last month. A reading of -25 had been expected.
During the last ten years there has been a 70% correlation
between the level of the Philadelphia Fed Business Conditions Index and
the three-month growth in factory sector industrial production. There
has been a 64% correlation with q/q growth in real GDP.
The Philadelphia Fed constructs a diffusion index for total
business activity and each of the sub-indexes. The business conditions
index reflects a separate survey question.
Amongst the sub-indexes, the new orders figure led this
month's weakness with a decline to near the lowest since 1980. The
shipments index fell to a record low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090220f.jpg" align="right" border="0" height="265" width="353">
The employment index fell another 6.8 points this month, and
was down 17.2 points during the last two months, to a record low. Forty
eight percent of respondents expected to reduce employment levels, a
record, while only two percent expected to raise them. During the last
ten years there has been a 79% correlation between the index level and
the m/m change in manufacturing sector payrolls.
The prices paid index nudged up month-to-month to -13.7 but
just thirteen percent of respondents planned to raise prices. Thirty
two percent expected to lower prices. During the last ten years there
has been a 72% correlation between the prices paid index and the
three-month growth in the intermediate goods PPI. There has been an 80%
correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six
months improved to its highest level since September. The expectations
index for new orders led the gain but the expectations index for
employment rose just marginally from the record low reached in January.
The figures from the Philadelphia Federal Reserve can be found
in Haver's SURVEYS database.
The latest Business Outlook Survey from the Federal
Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2008/bos0209.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Philadelphia
Fed (%)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">February&nbsp;
'08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-41.3</td>
<td>-24.3</td>
<td>-22.6</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>-13.7</td>
<td>&nbsp;-27.0</td>
<td>&nbsp;49.5</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>
</body></html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090219e.jpg" width="353">
The U.S. labor market continued quite weak as the Labor Department indicated that initial claims for unemployment insurance remained stable last at 627,000. The prior week&#39;s figure was revised up slightly. The latest level again surpassed Consensus expectations for 620,000 initial claims. Initial claims continue to be the highest since late during the sharp recession of 1981-82. During that recession, real GDP fell by 2.9% peak-to-trough.
The latest initial claims figure is for the survey week for February nonfarm payrolls. Claims rose 42,000, or 7.2%, from the January survey period. During the last ten years there has been an 83% (negative) correlation between the level of claims and the month-to-month change in nonfarm payrolls.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090219f.jpg" width="353">
The Labor Department indicated that in the week ending February 7, the largest increases in claims were in Kentucky (+8,419), Arkansas (+4,142), Illinois (+3,630), Texas (+3,392), and Missouri (+3,217), while the largest decreases were in California (-5,249), Tennessee (-1,718), Iowa (-1,413), Connecticut (-1,267), and South Carolina (-1,059).
Labor market stress was further indicated by a huge 170,000 increase in continuing claims for unemployment insurance to 4,987,000. The latest was another record. The series dates back to 1966. The four-week average of continuing claims rose 92,500 to 4,839,500. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
Though the latest level of continuing claims was a record, the labor force has grown as well, by more than 27% over the last twenty years. Therefore, the insured rate of unemployment was not at a new high. It ticked up to 3.7% which was the highest since 1983. During the last ten years there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics. The lower level of the insured unemployment rate versus the BLS figure reflects, among other things, the self-employed. The highest insured unemployment rates during the week ended January 31 were in Michigan (8.1 percent), Idaho (7.0), Oregon (7.0), Pennsylvania (6.4), Wisconsin (6.3), Nevada (5.9), Alaska (5.8), Montana (5.6), Rhode Island (5.6), and Indiana (5.5).
The unemployment insurance claim data is available in Haver&#39;s USWEEKLY database.
Deciphering the Liquidity and Credit Crunch 2007-08, published by the University of Princeton, can be found <a href="http://www.princeton.edu/~markus/research/papers/liquidity_credit_crunch.pdf">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">02/13/09</th>
<th scope="col">02/06/09</th>
<th scope="col">01/30/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>627</td>
<td>627</td>
<td>631</td>
<td>83.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,987</td>
<td>4,817</td>
<td>79.8%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. labor market continued quite weak as the Labor Department indicated that initial claims for unemployment insurance remained stable last at 627,000. The prior week's figure was revised up slightly. The latest level again [...]

U.S. Initial Claims For Jobless Insurance High and Stable

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090219g.jpg" width="353">
For January, the Conference Board reported that the composite index of leading economic indicators rose 0.4% after a revised 0.2% December increase. The peak index level occurred in July of last year and the six-month rate of decline has improved slightly.
Five of the ten components of the leading index rose last month with the largest positive contributions coming from faster money supply growth, a steeper yield curve and higher consumer expectations. These gains were offset by lower stock prices, lower building permits and higher claims for unemployment insurance.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090219h.jpg" width="353">
The breadth of one-month increase amongst the leaders&#39; 10 components improved to 50% but over a six-month period the breadth of gain amongst the components remained stuck at a quite low 30%.
The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, orders for consumer goods and orders for capital goods.
Reflecting the recession, the coincident indicators dropped sharply again. For the third month in a row, the index fell 0.5%. Half of the four component series fell with outsized drops registered by employment and production. Year-to-year the coincident indicators fell 3.5% and over the last ten years there has been a 76% correlation between this y/y change and real GDP.
The lagging index fell 0.1% after a 0.2% December decline. The ratio of coincident-to-lagging indicators (a measure of economic excess) fell further to its lowest level since 1975.
The Conference Board figures are available in Haver&#39;s BCI database. Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.
The minutes to the latest meeting of the Federal Open Market Committee are available <a href="http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20080130.pdf">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a> (%)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Oct. 6-Month % (AR)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.4</td>
<td>0.2</td>
<td>-0.7</td>
<td>-3.7</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>-0.5</td>
<td>-0.5</td>
<td>-0.5</td>
<td>-5.4</td>
<td>-0.8</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.1</td>
<td>-0.2</td>
<td>0.6</td>
<td>2.5</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>


</html>

For January, the Conference Board reported that the composite index of leading economic indicators rose 0.4% after a revised 0.2% December increase. The peak index level occurred in July of last year and the six-month rate of decline [...]

U.S. Leading Indicators Rose Slightly

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

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

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

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Mortgage applications fell 1.4% (+22.7% y/y) in the week ending August 15 after rising 10.9% in the prior week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for purchase loans edged 0.1% higher (22.7% y/y) last week, following a 1.4% gain in the prior week. Applications to refinance a home loan fell 3.1% (+22.8% y/y) last week, following a 23.0% rise in the week of August 8.

The effective interest rate on a 30-year fixed-rate loan held steady at 6.86% in the week ending August 15 after falling from 6.94% in the first week of August. It was the lowest rate since the first week of March, down from a high of 7.28% in the second week of January. The rate on 15-year fixed-rate mortgages rose to 6.13% in the latest week from 6.09% in the week of August 8. Conversely, the rate on 30-year Jumbo loans decreased to 6.82% last week from 6.86% one week earlier. The rate on a 5-year ARM rose to 6.24% in the week of August 15 and reversed the prior week’s decline to 6.05%.

The share of applications for refinancing an existing loan eased to 46.1% of total applications in the week ending August 15 after rising to 46.5% in the prior week. The share hit a low of 34.6% in the fourth week of May. The adjustable-rate mortgage (ARM) share of activity declined to 8.60% in the latest week after rising to 9.60% in the week of August 8.

The average size of a mortgage loan fell 2.7% (+4.1% y/y) to $387,800 in the week of August 15, following a 4.5% rise in the prior week. The average size of a purchase loan edged 0.5% higher (0.6% y/y) to $429,000 in the latest week after falling 1.2% in the week ending August 8. The average size of a loan to refinance a mortgage fell 7.3% (+9.5% y/y) to $339,800 last week, after rising 18.3% to $366,400 in the prior week. It was increased from $277,900 in the last week of May.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

**Tracking Labor Market Stress** from the Federal Reserve Bank of San Francisco is available [here](https://www.frbsf.org/research-and-insights/publications/economic-letter/2025/08/tracking-labor-market-stress/).

- Purchase applications edge higher while loan refinancing declines.
- Effective fixed-interest rate on 30-year loans remains at four-month low.
- Average loan size declines.

U.S. Mortgage Applications Decline Last Week as Interest Rates Steady

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Total housing starts increased 5.2% (12.9% y/y) in July to 1.428 million (SAAR) after rising 5.9% in June to 1.358 million, revised from 1.321 million, and falling 8.3% to 1.282 in May, revised from 1.263 million, according to the U.S. Census Bureau. Total starts in July remained 22.5% below their peak of 1.820 million units reached in April 2022. The Action Economics Forecast Survey expected 1.30 million starts in July.

Single-family starts in July rose 2.8% (7.8% y/y) to 939,000 after falling 3.8% in June to 913,000, revised from 883,000, and edging 0.1% higher in May to 949,000, revised from 926,000. Multi-family starts surged 9.9% (24.1% y/y) in July to 489,000 after strengthening 33.6% in June to 445,000, revised from 438,000, and declining 26.0% to a little-revised 333,000 units in May.

Housing starts in the Midwest surged 33.3% (40.8% y/y) in July to 252,000 after rising 3.3% in June. Adding to this increase, starts in the South rose 19.2% (29.5% y/y) to 833,000 after holding steady in June. Offsetting these gains, starts in the West declined 27.5% (-14.4% y/y) to 232,000 after rising 8.1% in June. Housing starts in the Northeast declined 26.0% (-35.5% y/y) to 111,000 after increasing 44.2% in June.

Building permits declined 2.8% (-5.7% y/y) last month to 1.354 million after easing slightly in June. It was the fourth consecutive monthly decline. Single-family permits rose 0.5% (-7.9% y/y) in July to 870,000 after weakening for four straight months. Multi-family permits fell 8.2% (-1.4% y/y) to 484,000 after rising 6.5% in June. Building permits in the Northeast rose 25.2% (-7.9% y/y), and they edged up 0.5% (12.9% y/y) in the Midwest. In the South, building permits declined 4.6% (-6.1% y/y) while in the West, building permits weakened 10.1% (-15.2% y/y).

The housing starts and building permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Increase brings starts to five-month high.
- Multi-family starts surge while single-family starts rise moderately.
- Building permits decline is led by multi-family.

U.S. Housing Starts Strengthen Unexpectedly in July

Winnie Tapasanun

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Online retail sales, formally known as retail e-commerce sales, rose a seasonally adjusted 1.4% q/q in Q2'25 to $304.2 billion following a 0.1% downtick in Q1’25 (0.0% initially) and a 1.7% increase in Q4’24 (unrevised), according to the U.S. Census Bureau. The Q2’25 reading was the 14th q/q gain in 15 quarters. The year-on-year rate of increase decelerated to 5.3% in Q2'25, the lowest since Q2'22, from 6.0% Q1’25. The latest y/y number was lower than 7.1% in Q2'24; thus, having remained significantly below a high of 45.3% in Q1'21 and a peak of 53.5% in Q2’20.

The Q2'25 rise in retail e-commerce sales compared to a 0.4% q/q gain (3.9% y/y) to $1,865.4 billion in total retail sales during the same period. This overall measure of retail sales excludes food services and restaurant sales. Retail e-commerce sales accounted for 16.3% of total retail sales in Q2'25 following 16.1% in Q1'25, registering the highest rate since Q2'20; the percentage was 16.1% in 2024, 15.3% in 2023, and 7.1% in 2015.

Details of the retail e-commerce sales data by sector are not seasonally adjusted. Sales of nonstore retailers, which accounted for 58.5% of total e-commerce sales, rose 5.3% (1.8% y/y) in Q2'25, the fourth q/q rise in five quarters, following a 20.7% decrease in Q1'25. Building materials & garden equipment sales recovered 34.7% (9.9% y/y), the largest q/q gain since Q2'20, reversing a 16.2% drop. Health & personal care sales rebounded 12.8% (1.7% y/y), the second q/q increase in three quarters, after having plummeted 40.9%.

Clothing accessory store sales rose 9.2% (-1.3% y/y) in Q2'25 after a 38.3% plunge in Q1'25. General merchandise store sales increased 8.4% (17.2% y/y) following a 20.9% drop. Sales of furniture & home furnishings rose 5.1% (4.4% y/y) after a 15.6% fall. Sporting goods, hobby, musical instrument & book sales grew 4.3% (6.7% y/y) following a 31.3% slump. These series registered the fourth q/q gain in five quarters.

Sales of motor vehicles & parts advanced 8.3% (15.9% y/y) in Q2'25, the largest of six straight q/q increases, on top of a 1.0% rise in Q1'25. Miscellaneous sales including gasoline stations recovered 2.6% (2.3% y/y), up for the second quarter in three, following a 2.3% decline. Food & beverage sales excluding food services rose 0.8% (15.5% y/y), the third q/q rise in four quarters, after a 0.1% easing.

E-commerce sales are goods and services ordered over an internet, mobile device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made online and sometimes sale & price are negotiated. Total sales estimates are adjusted for seasonal variation, but not for price changes. They are also adjusted for trading-day differences and moving holidays.

Retail e-commerce sales data can be found in Haver's **USECON** database.

- Sales +1.4%, the 14th q/q rise in 15 qtrs.; +5.3% y/y, the lowest since Q2'22.
- Online share of total retail sales up to 16.3%, the highest since Q2'20.
- Nonstore sales rebound, up for the fourth quarter in five.
- Widespread gain in online sales led by bldg. materials & garden equipt. (+34.7% q/q).

U.S. Retail E-Commerce Sales Rise in Q2'25

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Retail gasoline prices for all grades, on average, inched up to $3.25 per gallon (-7.1% y/y) last week after falling to $3.24 one week earlier. Prices remained above their low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel fell to $3.71 per gallon (+0.7% y/y) in the week of August 18 after easing to $3.75 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil declined to $63.31 per barrel (-19.7% y/y) in the week ended August 15 from $64.71 in the prior week. The drop left prices at the lowest level since the first week of June. Prices remained above a $59.04 low in the second week of May. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $63.96 per barrel. The price of European Brent crude fell to $67.17 per barrel (-18.6% y/y) in the week of August 15, after falling to $68.17 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. The price was $68.18 per gallon yesterday.

Natural gas prices slipped to an average $2.94/mmbtu (+38.0% y/y) in the week ended August 15, after falling to an average $2.99/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $2.96 per mmbtu.

Gasoline demand declined 1.5% y/y in the four weeks ending August 8, following a 2.2% y/y decline in the prior four weeks. Demand for all petroleum products rose 2.9% y/y in the four weeks ending August 8, after a 1.6% y/y increase in the previous four-week period. Crude oil input to refineries rose 4.2% y/y in the four weeks ending August 8, after a 2.9% y/y gain in the prior four weeks.

Gasoline inventories rose 1.8% y/y in the week ending August 8 after a 0.9% y/y in the prior week. Residual fuel oil inventories fell 25.7% y/y in the week of August 8, after a 25.8% y/y fall in the prior week. Crude oil inventories rose 2.8% y/y in the week of August 8 after a 2.7% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories stood at 25.0 days in the week of August 8, unchnged from the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil held at 25.0 days in the week of August 8, and remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

U.S. Energy Prices Are Mixed in Latest Week

Tian Yong Woon

This week, we examine recent developments in US-China trade and assess the broader implications of US trade actions for the BRIC bloc—Brazil, Russia, India, and China. Last week, the US and China extended their tariff truce by 90 days, a move welcomed by equity markets (chart 1). While this pause eased fears of renewed trade tensions, it remains temporary and fragile, with no durable resolution in sight.

As for China’s economy, July data disappointed: retail sales, industrial production, and fixed-asset investment all missed expectations (chart 2). This may signal that tariffs are beginning to bite, as earlier growth drivers—such as some front-loading of imports and one-off consumption boosts like China’s durable-goods subsidy—are fading (chart 3). Newer measures, including loan-interest subsidies, may provide some interim relief. Meanwhile, the property sector remains under heavy strain, with further price and investment declines evidenced in July (chart 4).

In the broader regional context, US trade measures may inadvertently push trading partners closer together, complicating Washington’s bilateral strategy. The BRIC bloc shows tentative signs of greater alignment, though this has yet to appear in data for trade flows (chart 5). China and India, however, are warming toward one another: Foreign Minister Wang Yi’s visit to India this week—focused on the Himalayan border among other issues—suggests an improving dialogue. Separately, discussions at the national level to restart direct flights between the two countries also signal a thaw. Full economic integration remains distant, but the scale of both economies suggests significant potential if relations continue to improve (chart 6).

**The US-China tariff truce**
Last week, the US and China announced a 90-day extension to their mutual tariff truce. Although largely expected, the move still generated further equity market gains (see chart 1). This contrasts sharply with worst-case scenarios earlier this year, when tensions peaked and Washington imposed sweeping tariffs of 145% on Chinese imports — levels that would have severely disrupted global trade and growth if sustained. Instead, both sides agreed to keep additional tariffs at 10% until November 10, allowing more time to pursue a durable trade deal. Still, this is merely a pause rather than progress. 

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**The China docket**
In the meantime, China’s latest monthly data releases were watched closely and offered valid reasons for caution despite earlier signs of resilience. More specifically, retail sales, industrial production, and fixed-asset investment (chart 2) all missed expectations, suggesting US tariff and non-tariff measures are beginning to weigh on growth alongside persistent domestic headwinds. Also, China’s unemployment rate inched higher, while property prices continued to decline. If such weakness persists, calls for additional policy support will grow, even though debt-fuelled measures risk merely trading today’s problems for tomorrow’s.

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**China retail sales**
Diving deeper into the individual releases, chart 3 highlights the gradual slowdown in China’s retail sales in recent months, with growth easing to 3.7% y/y in July. By product category, the deceleration reflects weaker automobile sales — amid authorities’ clampdown on carmaker price wars — and softer furniture sales, suggesting a one-off boost from the government’s durable-goods subsidy programme may now be fading. Clearer confirmation could come if sales growth of other subsidized goods, such as home appliances, also begin to weaken. Still, retail spending — and broader consumption activity — may gain fresh support from China’s new loan-interest subsidy programme, which covers both consumer borrowing and eligible service-sector business loans.

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**China property prices and investment**
Moving next to China’s beleaguered property market, the sector has shown no meaningful recovery for several years. Prices remain on a downtrend, and repeated investor attempts to call a bottom have proven futile. The latest data offered no relief: property prices continued to decline, while investment in the sector fell 12% y/y year-to-date in July (chart 4). That said, the pace of price declines has slowed sharply compared with last year. Even so, what was once a major engine of China’s growth continues to shrink into a shadow of its former self.

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**The BRIC bloc**
While recent trade measures appear favourable for the US, lowering partner tariffs and modestly raising Washington’s own rates, significant risks remain. Such moves could push US trading partners closer together, undermining the administration’s strategy of leveraging bilateral negotiations. One potential area of alignment is the BRIC bloc — Brazil, Russia, India, and China. Although hard data have yet to show major shifts (see chart 5), recent headlines suggest small steps toward deeper cooperation. That said, Russia remains constrained by heavy US sanctions and pressure, as reflected in trade flows with its closest partners.

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Digging a little further, China and India have recently begun to ease their decades-long frosty ties, partly in response to this year’s US trade tensions. A key sign of improving relations is China’s Foreign Minister Wang Yi’s high-profile visit to India from Monday to Wednesday this week. The visit focused on, among other topics, the disputed Himalayan border — which, if resolved, would mark a major step in restoring bilateral relations — and trade across the border. Other indicators of a warming relationship include ongoing talks to restart direct flights, suspended during the pandemic. Given the sheer size of their populations and economies, as shown in chart 6, a fully developed China-India economic partnership could unlock immense potential. However, the path to meaningful economic integration remains at an early stage, with numerous hurdles still to navigate.

Economy in Brief: February 2009

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Chicago Fed Index Fell Further

Chicago Fed Index Fell Further

Philadelphia Fed Index Lowest Since 1990

Euro Area PMIs Continue To Drop... Very Sharply

U.S. CPI Ticked Up

U.S. CPI Ticked Up

U.S. Initial Claims For Jobless Insurance High and Stable

U.S. Leading Indicators Rose Slightly