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>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070831c.jpg" width="353">
Personal income rose 0.5% in July, slightly firmer than June&#39;s 0.4%. Consensus forecasts had pointed to a 0.3% July rise. This monthly increase put the 12-month change at 6.6%.
The PCE chain price index rose just 0.1% during July, following June&#39;s 0.2%, which was a shade more than originally reported. The core PCE price measure also rose 0.1% and it too was revised to 0.2% from 0.1% in June. The total price index is up a mere 2.1% on the year, and the core rate 1.9%. annualized, the gain in core prices came in at 1.6% over the last three months. The increase in the total PCE price index was 2.9% during the same three months (AR), down from the 3.7% three-month-gain in June and 4.9% through May.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070831d.jpg" width="353">
Wages &amp; salaries increased 0.5% (7.2% y/y) in July and factory sector wages rose just 0.2% (6.6% y/y) after a 0.5% June rise.Wage &amp; salary income in service-producing industries rose 0.6% (8.1% y/y) after a 0.5% increase in June while pay in the government sector rose 0.2% (4.5% y/y).
Interest income grew 0.7%, picking up to 2.7% y/y, while dividend income rose 1.0% (14.8% y/y), about the same as during the prior six months.
Personal current taxes increased 0.3% (11.0% y/y). That left disposable personal income to grow 0.6% (6.0% y/y) after a 0.4% June gain. Real disposable personal income thus rose 0.5% last month, extending an improvement from a 0.1% decline during May and a 0.2% rise in June.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070831e.jpg" width="353">
Personal consumption expenditures increased just 0.4% in July following a 0.2% gain during June. Expectations were for 0.3% rise. Durable goods purchases recovered somewhat, with a 0.3% increase after June&#39;s 1.6% fall. Motor vehicle outlays rose 0.5%, after their 3.7% drop in June, although they were 3.0% below July 2006. Spending on furniture &amp; other household equipment was up 0.5%, and June&#39;s decline, originally 1.0%, was revised to 0.3%. Spending on gasoline continued to decline, in July by 0.6%. The year/year change is now -3.9%, reflecting this July decline and the surge in the corresponding month last year. Spending on apparel turned up by 1.0% after June&#39;s 0.8% fall; year/year growth thus improved to 4.2% from June&#39;s 3.7%. Outlays in the big services sector expanded 0.4% following June&#39;s 0.6% advance and were 5.8% above a year ago.
The personal saving rate was 0.7% in July. This is not &quot;high&quot;, but signifies a better performance than we had been aware of. After the July revisions put the saving rate back up into positive territory, now it seems to show negative only under special circumstances, just as Hurricane Katrina and last summer&#39;s striking surge in gasoline prices. Most of the time, people seem to be able to fit their spending to their income.

<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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.5%</td>
<td>0.4%</td>
<td>6.6%</td>
<td>6.6%</td>
<td>5.9%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.4%</td>
<td>0.2%</td>
<td>4.7%</td>
<td>5.9%</td>
<td>6.2%</td>
<td>6.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Saving Rate</td>
<td>0.7%</td>
<td>0.5%</td>
<td>-0.3% (July 06)</td>
<td>0.4%</td>
<td>0.5%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.1%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.9%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
EU Index Near a High but Losing Momentum 
by <a href="/comment/Brusca.html">Robert Brusca</a> August 31, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070831a.jpg" width="353">
The accompanying chart is the paradox of Europe. Its sentiment index is very high yet there is already a clear loss in momentum. Historically, breaks in momentum have led to significant slow downs. So far this one has been different. 
The main EU measures also show some subtle losses in momentum. This softening is reinforced by declines in sentiment indexes across the major EU members. Only France (missing its observations for August) has showed continued increases in sentiment up until now. The retail sector is relatively the strongest with its highest reading to date in August. Financial turmoil appears to have not phased it. The industrial sector is still relatively strong posting its eighth highest reading. But consumer sentiment has slipped and is in its 82nd percentile far from the 90-plus readings for retail and industry. Across the main EMU/EU countries they stand in the 60th to 80th percentiles of their ranges. This means that for EU overall it is the smaller countries that are doing even better. It is reasonable to wonder if they are simply lagging in their slowdown. There is little evidence that the recent turmoil in markets has had an impact since consumer confidence is where we would expect to see it, and that gauge did slip this month, but has been slipping in any event.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
EU Sectors and Country level Overall Sentiment
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">EU</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>R-SQ w/Confid</td>
</tr>
<tr class="odd">
<td class="firstcol">Overall</td>
<td>113.2</td>
<td>113.3</td>
<td>115</td>
<td>115</td>
<td>91.5</td>
<td>20</td>
<td>117</td>
<td>74</td>
<td>43</td>
<td>100</td>
<td>1.00</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial</td>
<td>5</td>
<td>5</td>
<td>7</td>
<td>6</td>
<td>94.1</td>
<td>8</td>
<td>7</td>
<td>-27</td>
<td>34</td>
<td>-7</td>
<td>0.89</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>-3</td>
<td>-2</td>
<td>-2</td>
<td>-1</td>
<td>82.8</td>
<td>27</td>
<td>2</td>
<td>-27</td>
<td>29</td>
<td>-10</td>
<td>0.82</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail</td>
<td>6</td>
<td>5</td>
<td>5</td>
<td>5</td>
<td>100.0</td>
<td>1</td>
<td>6</td>
<td>-21</td>
<td>27</td>
<td>-6</td>
<td>0.46</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>0</td>
<td>0</td>
<td>1</td>
<td>1</td>
<td>93.3</td>
<td>13</td>
<td>3</td>
<td>-42</td>
<td>45</td>
<td>-18</td>
<td>0.43</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>21</td>
<td>20</td>
<td>21</td>
<td>23</td>
<td>71.1</td>
<td>55</td>
<td>32</td>
<td>-6</td>
<td>38</td>
<td>17</td>
<td>0.80</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td colspan="4">% m/m</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU</td>
<td>-0.9%</td>
<td>-0.6%</td>
<td>-0.4%</td>
<td>1.0%</td>
<td>83.1</td>
<td>39</td>
<td>117</td>
<td>74</td>
<td>44</td>
<td>100</td>
<td>0.94</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>-0.9%</td>
<td>-0.5%</td>
<td>-0.4%</td>
<td>0.8%</td>
<td>73.7</td>
<td>26</td>
<td>121</td>
<td>79</td>
<td>42</td>
<td>100</td>
<td>0.61</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>#N/A</td>
<td>0.6%</td>
<td>0.0%</td>
<td>3.0%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>-3.0%</td>
<td>-0.9%</td>
<td>-1.3%</td>
<td>-1.4%</td>
<td>63.5</td>
<td>84</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>0.79</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>1.1%</td>
<td>-0.9%</td>
<td>1.2%</td>
<td>-1.2%</td>
<td>62.3</td>
<td>134</td>
<td>118</td>
<td>67</td>
<td>50</td>
<td>100</td>
<td>0.67</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: UK</td>
<td>4.5%</td>
<td>-5.7%</td>
<td>1.6%</td>
<td>3.4%</td>
<td>90.3</td>
<td>8</td>
<td>119</td>
<td>69</td>
<td>50</td>
<td>100</td>
<td>0.38</td>
</tr>
<tr class="odd">
<td colspan="5">Since 1990 except Services (Oct 1996)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 208-Count</td>
<td>&nbsp;</td>
<td colspan="2">Services: 126-Count</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td colspan="12">Sentiment is an index, sector readings are net balance diffusion measures</td>
</tr>
</tbody>
</table>
German IFO Detail Slows Some Slippage Amid Strength 
by <a href="/comment/Brusca.html">Robert Brusca</a> August 31, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070831b.jpg" width="353">
In the German IFO framework the biggest slippage seems to be in orders on hand, month-to-month demand, and business expectations. These measures have dropped into the 60th to 70th percentile ranges of their respective histories. These are still firm readings but not so strong. One continuing feature of interest in this report is the strength of foreign orders on hand. Foreign orders are still near their peak reading in the 98th percentile of their range. Despite this the current situation is still evaluated as strengthening and is in the 95th percentile of its range. 
The IFO&#146;s three month outlook survey is also mixed. Only order expectations for retailers are weakening and they have been crumbling steadily and rapidly for months. Employment expectations are guarded. 
The IFO&#146;s diffusion measures by sector show a sharp drop for wholesalers with conditions eroding across most sectors. Construction and retail continue to post net negative signals and they too are fading. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
IFO Survey: Germany
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="5">Percent: Yr/Yr</td>
<td colspan="4">INDEX NUMBERS</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>CURRENT</td>
<td>Average</td>
<td>Curr/Avg</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Biz Climate</td>
<td>0.7%</td>
<td>0.8%</td>
<td>0.2%</td>
<td>2.8%</td>
<td>2.6%</td>
<td>105.8</td>
<td>95.7</td>
<td>110.6%</td>
<td>87.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Current Situation</td>
<td>2.5%</td>
<td>2.4%</td>
<td>1.7%</td>
<td>4.7%</td>
<td>6.3%</td>
<td>111.5</td>
<td>94.8</td>
<td>117.7%</td>
<td>88.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Biz Expectations: Next 6-Mos</td>
<td>-1.2%</td>
<td>-0.9%</td>
<td>-1.2%</td>
<td>1.0%</td>
<td>-1.0%</td>
<td>100.4</td>
<td>96.7</td>
<td>103.9%</td>
<td>76.5%</td>
</tr>
<tr class="grey4">
<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>
<td>&nbsp;</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>CURRENT</td>
<td>Average</td>
<td>Curr/Avg</td>
<td>Percentile</td>
</tr>
<tr class="grey2">
<td class="firstcol">Current Situation</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>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>4.4%</td>
<td>4.5%</td>
<td>4.4%</td>
<td>6.7%</td>
<td>7.6%</td>
<td>111.3</td>
<td>92.2</td>
<td>120.7%</td>
<td>95.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Biz Expectations: Next 6-Mos</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>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>-1.9%</td>
<td>-0.4%</td>
<td>-2.8%</td>
<td>0.9%</td>
<td>-1.4%</td>
<td>99.1</td>
<td>96.4</td>
<td>102.8%</td>
<td>73.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Activity (m/m)</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>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>1.0%</td>
<td>-1.9%</td>
<td>-3.7%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>104.7</td>
<td>96.9</td>
<td>108.0%</td>
<td>85.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Demand M/M</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>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>-2.8%</td>
<td>-3.3%</td>
<td>-7.0%</td>
<td>0.5%</td>
<td>-3.7%</td>
<td>99.3</td>
<td>97.1</td>
<td>102.3%</td>
<td>62.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Orders on hand</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>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>-2.4%</td>
<td>-2.7%</td>
<td>-3.6%</td>
<td>-0.9%</td>
<td>-3.0%</td>
<td>102.2</td>
<td>96.4</td>
<td>106.0%</td>
<td>72.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Foreign orders on hand</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>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>2.5%</td>
<td>1.9%</td>
<td>2.0%</td>
<td>2.5%</td>
<td>1.9%</td>
<td>112.1</td>
<td>94.3</td>
<td>118.8%</td>
<td>98.1%</td>
</tr>
<tr class="grey3">
<td colspan="10">Yr/Yr percentage changes in underlying Indices</td>
</tr>
<tr class="grey1">
<td colspan="10">IFO outlook for 3-Months ahead</td>
</tr>
<tr class="grey4">
<td class="firstcol">3-Mos ahead</td>
<td colspan="5">Percent: Yr/Yr</td>
<td colspan="4">INDEX NUMBERS</td>
</tr>
<tr class="grey4">
<td class="firstcol">Expected Activity</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>CURRENT</td>
<td>Average</td>
<td>Curr/Avg</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>2.5%</td>
<td>1.0%</td>
<td>3.4%</td>
<td>0.5%</td>
<td>0.7%</td>
<td>102.5</td>
<td>96.7</td>
<td>106.0%</td>
<td>91.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Orders expectations</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>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Retail Orders Expectations</td>
<td>-1.1%</td>
<td>-11.6%</td>
<td>-10.9%</td>
<td>-4.6%</td>
<td>-10.9%</td>
<td>-10.5</td>
<td>-17.5</td>
<td>59.9%</td>
<td>72.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Wholesale</td>
<td>0.8%</td>
<td>7.1%</td>
<td>5.7%</td>
<td>15.7%</td>
<td>15.0%</td>
<td>7.8</td>
<td>-14.0</td>
<td>-55.8%</td>
<td>84.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Export Biz Expectations</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>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>0.9%</td>
<td>0.0%</td>
<td>0.5%</td>
<td>-0.5%</td>
<td>-1.1%</td>
<td>102.8</td>
<td>98.4</td>
<td>104.5%</td>
<td>85.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Employment Expectations</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>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>4.1%</td>
<td>7.4%</td>
<td>8.4%</td>
<td>7.5%</td>
<td>6.4%</td>
<td>105.0</td>
<td>96.0</td>
<td>109.4%</td>
<td>57.1%</td>
</tr>
</tbody>
</table>


</html>

Personal income rose 0.5% in July, slightly firmer than June's 0.4%. Consensus forecasts had pointed to a 0.3% July rise. This monthly increase put the 12-month change at 6.6%. The PCE chain price index rose just 0.1% during July, [...]

U.S. Personal Income Gains 0.5% in July; Spending Recovers from June Weakness

<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/070830c.jpg" width="353">
U.S. real GDP growth during 2Q 2007 was revised higher to 4.0% (AR) from the advance report of 3.4% growth. The figure about matched consensus expectations for a 4.0 to 4.1% rise.
Reported for the first time, 2Q profits (so-called operating profits, with IVA and CCAdj) advanced 6.4%; weakness in the prior three quarters means the year/year growth was just 4.5%. Profits at U.S. nonfinancial corporations grew just 3.2% and they are below Q2 2006 by 1.4%. Financial companies saw good gains, 12.1% in the quarter, producing 5.4% from a year ago. Earnings from foreign operations posted a 5.4% increase, yielding 21.1% year/year.
Growth in final sales to domestic purchasers was revised to 2.2% from 1.7% initially reported.
Growth in business fixed investment was revised higher to an 11.1% (4.1% y/y) rate, from 8.1% reported last month. Spending both on structures and on equipment &amp; software was enlarged, structures to 27.2% from 22.1% and equipment to 4.3% from just 2.3% in last month&#39;s tally.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070830e.jpg" width="353">
Growth in real personal consumption expenditures was changed little at 1.4% versus 1.3%. Durables spending was cut to 0.4% growth from 1.6% last month, but nondurable goods showed only a 0.1% decline compared with 0.8% down reported before. Services were also reduced, to 0.6% growth from 2.2% showing earlier.
The decline in residential investment was deepened to 11.6% from 9.3%. The year/year change is now -16.4%, virtually the same size loss as in Q1.
Real consumption and investment spending by governments grew 4.1%, down marginally from 4.2% in the previous report.
Inventories added 0.2 percentage points to GDP growth, the same as shown before, while the contribution of net exports was raised to 1.4 percentage points from 1.2 percentage points indicated before and a nice turnaround from Q1&#39;s 0.5 percentage point drag. Exports grew 7.6% and imports decreased 3.2%. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070830d.jpg" width="353">
The rise in the GDP chain price index was unrevised at 2.7%, in line with the average over the last year. The domestic final sales price deflator grew 3.8% (2.5% y/y). Consumer prices less food &amp; energy rose just 1.3% (2.0% y/y), initially reported at 1.4%.

<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/USECON/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">2Q &#39;07 (Prelim.)</th>
<th scope="col">2Q &#39;07 (Advance)</th>
<th scope="col">1Q &#39;07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>4.0</td>
<td>3.4</td>
<td>0.6</td>
<td>1.9</td>
<td>2.9</td>
<td>3.1</td>
<td>3.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.2</td>
<td>0.2</td>
<td>-0.7</td>
<td>-0.4</td>
<td>0.1</td>
<td>-0.2</td>
<td>0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>3.7</td>
<td>3.2</td>
<td>1.3</td>
<td>2.4</td>
<td>2.8</td>
<td>3.3</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>1.4</td>
<td>&nbsp;1.2</td>
<td>-0.5</td>
<td>0.5</td>
<td>-0.1</td>
<td>-0.2</td>
<td>-0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>2.2</td>
<td>1.9</td>
<td>1.7</td>
<td>1.8</td>
<td>2.7</td>
<td>3.3</td>
<td>3.8</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.7</td>
<td>2.7</td>
<td>4.2</td>
<td>2.8</td>
<td>2.6</td>
<td>1.7</td>
<td>2.1</td>
</tr>
</tbody>
</table>


</html>

U.S. real GDP growth during 2Q 2007 was revised higher to 4.0% (AR) from the advance report of 3.4% growth. The figure about matched consensus expectations for a 4.0 to 4.1% rise. Reported for the first time, 2Q profits (so-called [...]

US GDP Growth Revised Up, Profit Growth Slowed

Robert Brusca

<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/070830b.jpg" width="353">
In early 1990 and again in early 2002, Italy scored its highest readings on this index. But since 2002 confidence has dropped. As the Euro area picked up, Italy&#146;s confidence also recovered but could barely get half-way back to its former peak at the end of 2006 and has since experienced back-sliding. The backsliding continues.
The confidence reading by consumers is only in the bottom third of its range of values since 1990. It has only been weaker in 1992-93, in the previous slowdown in late 2003-2004 and then in a short-lived bout of weakness in 1996. The weakening at this juncture is part of an established trend and so is more worrisome. 
The overall situation over the next 12 months assesses out as in the bottom 8 percentile of is range. Unemployment appears more likely to respondents, in the top quarter of its range. Households put their past 12-month and future 12-month household financial situation in the bottom 25 percentile of its range. They say past savings were in the top 10% of their range but see savings prospects ahead in the bottom 10%. The purchase environment is in the bottom 40% of its range but ahead consumers expect it to be in the bottom 16 percentile.
Clearly, Italian consumers are not happy campers. They see many challenges and are having a harder time of it than other large Euro economies such as Germany and France. Italy, it seems, has lot of work to do. There is no longer a lira to depreciate when things get tough.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
 Italy ISAE Consumer Confidence
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="6">Since January 1999</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td> Aug-07</td>
<td> Jul-07</td>
<td> Jun-07</td>
<td> May-07</td>
<td> Percentile</td>
<td> Rank</td>
<td> Max</td>
<td> Min</td>
<td> Range</td>
<td> Mean</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>106.5</td>
<td>107.4</td>
<td>107.2</td>
<td>109.4</td>
<td>31.6</td>
<td>68</td>
<td>127</td>
<td>97</td>
<td>30</td>
<td>111</td>
</tr>
<tr>
<td class="firstcol"> Last 12 months</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">OVERALL SITUATION</td>
<td>-57</td>
<td>-59</td>
<td>-60</td>
<td>-52</td>
<td>42.6</td>
<td>48</td>
<td>-22</td>
<td>-83</td>
<td>61</td>
<td>-54</td>
</tr>
<tr class="odd">
<td class="firstcol">PRICE TRENDS</td>
<td>-25</td>
<td>-26</td>
<td>-27.5</td>
<td>-24.5</td>
<td>24.0</td>
<td>75</td>
<td>4</td>
<td>-34</td>
<td>38</td>
<td>-16</td>
</tr>
<tr>
<td class="firstcol"> Next 12months</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">OVERALL SITUATION</td>
<td>-29</td>
<td>-25</td>
<td>-22</td>
<td>-18</td>
<td>8.6</td>
<td>93</td>
<td>24</td>
<td>-34</td>
<td>58</td>
<td>-12</td>
</tr>
<tr class="odd">
<td class="firstcol">PRICE TRENDS</td>
<td>22.5</td>
<td>18.5</td>
<td>19</td>
<td>17.5</td>
<td>36.9</td>
<td>46</td>
<td>49</td>
<td>7</td>
<td>42</td>
<td>23</td>
</tr>
<tr class="odd">
<td class="firstcol">UNEMPLOYMENT</td>
<td>0</td>
<td>-3</td>
<td>2</td>
<td>-5</td>
<td>76.9</td>
<td>21</td>
<td>9</td>
<td>-30</td>
<td>39</td>
<td>-6</td>
</tr>
<tr class="odd">
<td class="firstcol">HOUSEHOLD BUDGET</td>
<td>7</td>
<td>4</td>
<td>-1</td>
<td>3</td>
<td>23.5</td>
<td>79</td>
<td>33</td>
<td>-1</td>
<td>34</td>
<td>15</td>
</tr>
<tr>
<td class="firstcol"> HOUSEHOLD FIN SITUATION</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Last 12 months</td>
<td>-37</td>
<td>-34</td>
<td>-40</td>
<td>-35</td>
<td>25.0</td>
<td>65</td>
<td>-7</td>
<td>-47</td>
<td>40</td>
<td>-28</td>
</tr>
<tr class="odd">
<td class="firstcol">Next12 months</td>
<td>-10</td>
<td>-10</td>
<td>-9</td>
<td>-10</td>
<td>25.0</td>
<td>96</td>
<td>14</td>
<td>-18</td>
<td>32</td>
<td>-1</td>
</tr>
<tr>
<td class="firstcol"> HOUSEHOLD SAVINGS</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Current</td>
<td>55</td>
<td>54</td>
<td>59</td>
<td>58</td>
<td>89.7</td>
<td>6</td>
<td>59</td>
<td>20</td>
<td>39</td>
<td>38</td>
</tr>
<tr class="odd">
<td class="firstcol">Future</td>
<td>-35</td>
<td>-34</td>
<td>-33</td>
<td>-28</td>
<td>10.3</td>
<td>97</td>
<td>-9</td>
<td>-38</td>
<td>29</td>
<td>-23</td>
</tr>
<tr>
<td class="firstcol"> MAJOR Purchases</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Current</td>
<td>-41</td>
<td>-39</td>
<td>-40</td>
<td>-46</td>
<td>38.1</td>
<td>42</td>
<td>-15</td>
<td>-57</td>
<td>42</td>
<td>-40</td>
</tr>
<tr class="odd">
<td class="firstcol">Future</td>
<td>-68</td>
<td>-68</td>
<td>-63</td>
<td>-71</td>
<td>16.1</td>
<td>74</td>
<td>-42</td>
<td>-73</td>
<td>31</td>
<td>-62</td>
</tr>
<tr class="odd">
<td colspan="11">Total number of months: 100</td>
</tr>
</tbody>
</table>
</body>
</html>

In early 1990 and again in early 2002, Italy scored its highest readings on this index. But since 2002 confidence has dropped. As the Euro area picked up, Italys confidence also recovered but could barely get half-way back to its [...]

Consumer Confidence is Retreating in Italy

<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/070830a.jpg" width="353">
Japan retail sales are mostly lower across the board. 
Special factors have hit the Japanese consumer to be sure. There was a radiation leak at a nuclear plant that turned out to be worse that was first reported. And then a power shortage hit. Bad weather has interrupted the consumer. But through it all wages have remained stagnant and the consumer&#146;s fundamentals have also failed to improve. So the sharp drop in consumer spending is not simply something to dismiss as due to some of these rogue factors that have haunted the consumer. The consumer may be feeling real pressure. In addition Japan is closely linked to the US economy and next month it will be interesting to see if Japanese moods and spending patterns are affected by the financial turbulence we have seen. With such weak spending it is hard to see why the BOJ would still be considering a rate hike. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Japan Retail Sales Trends
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>-2.6%</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>-10.4%</td>
<td>-6.0%</td>
<td>-2.1%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>-0.4%</td>
<td>-2.5%</td>
<td>-0.1%</td>
<td>-11.3%</td>
<td>-6.9%</td>
<td>-4.8%</td>
<td>-11.1%</td>
</tr>
<tr>
<td class="firstcol">Food &amp; Beverage</td>
<td>-0.8%</td>
<td>-1.2%</td>
<td>0.1%</td>
<td>-7.3%</td>
<td>-2.5%</td>
<td>-0.7%</td>
<td>-0.4%</td>
</tr>
<tr>
<td class="firstcol">Fabric apparel &amp; access</td>
<td>-8.2%</td>
<td>0.4%</td>
<td>0.0%</td>
<td>-27.7%</td>
<td>-11.8%</td>
<td>-10.0%</td>
<td>-8.6%</td>
</tr>
<tr>
<td class="firstcol">Rest of Retail</td>
<td>-3.4%</td>
<td>0.4%</td>
<td>0.7%</td>
<td>-9.0%</td>
<td>-6.9%</td>
<td>-1.1%</td>
<td>4.5%</td>
</tr>
</tbody>
</table>
</body>
</html>

Japan retail sales are mostly lower across the board. Special factors have hit the Japanese consumer to be sure. There was a radiation leak at a nuclear plant that turned out to be worse that was first reported. And then a power [...]

Japan Retail Sales Drop Sharply

<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/070830c.jpg" width="353">
U.S. real GDP growth during 2Q 2007 was revised higher to 4.0% (AR) from the advance report of 3.4% growth. The figure about matched consensus expectations for a 4.0 to 4.1% rise.
Reported for the first time, 2Q profits (so-called operating profits, with IVA and CCAdj) advanced 6.4%; weakness in the prior three quarters means the year/year growth was just 4.5%. Profits at U.S. nonfinancial corporations grew just 3.2% and they are below Q2 2006 by 1.4%. Financial companies saw good gains, 12.1% in the quarter, producing 5.4% from a year ago. Earnings from foreign operations posted a 5.4% increase, yielding 21.1% year/year.
Growth in final sales to domestic purchasers was revised to 2.2% from 1.7% initially reported.
Growth in business fixed investment was revised higher to an 11.1% (4.1% y/y) rate, from 8.1% reported last month. Spending both on structures and on equipment &amp; software was enlarged, structures to 27.2% from 22.1% and equipment to 4.3% from just 2.3% in last month&#39;s tally.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070830e.jpg" width="353">
Growth in real personal consumption expenditures was changed little at 1.4% versus 1.3%. Durables spending was cut to 0.4% growth from 1.6% last month, but nondurable goods showed only a 0.1% decline compared with 0.8% down reported before. Services were also reduced, to 0.6% growth from 2.2% showing earlier.
The decline in residential investment was deepened to 11.6% from 9.3%. The year/year change is now -16.4%, virtually the same size loss as in Q1.
Real consumption and investment spending by governments grew 4.1%, down marginally from 4.2% in the previous report.
Inventories added 0.2 percentage points to GDP growth, the same as shown before, while the contribution of net exports was raised to 1.4 percentage points from 1.2 percentage points indicated before and a nice turnaround from Q1&#39;s 0.5 percentage point drag. Exports grew 7.6% and imports decreased 3.2%. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070830d.jpg" width="353">
The rise in the GDP chain price index was unrevised at 2.7%, in line with the average over the last year. The domestic final sales price deflator grew 3.8% (2.5% y/y). Consumer prices less food &amp; energy rose just 1.3% (2.0% y/y), initially reported at 1.4%.

<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/USECON/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">2Q &#39;07 (Prelim.)</th>
<th scope="col">2Q &#39;07 (Advance)</th>
<th scope="col">1Q &#39;07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>4.0</td>
<td>3.4</td>
<td>0.6</td>
<td>1.9</td>
<td>2.9</td>
<td>3.1</td>
<td>3.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.2</td>
<td>0.2</td>
<td>-0.7</td>
<td>-0.4</td>
<td>0.1</td>
<td>-0.2</td>
<td>0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>3.7</td>
<td>3.2</td>
<td>1.3</td>
<td>2.4</td>
<td>2.8</td>
<td>3.3</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>1.4</td>
<td>&nbsp;1.2</td>
<td>-0.5</td>
<td>0.5</td>
<td>-0.1</td>
<td>-0.2</td>
<td>-0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>2.2</td>
<td>1.9</td>
<td>1.7</td>
<td>1.8</td>
<td>2.7</td>
<td>3.3</td>
<td>3.8</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.7</td>
<td>2.7</td>
<td>4.2</td>
<td>2.8</td>
<td>2.6</td>
<td>1.7</td>
<td>2.1</td>
</tr>
</tbody>
</table>
Consumer Confidence is Retreating in Italy 
by <a href="/comment/Brusca.html">Robert Brusca</a> August 30, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070830b.jpg" width="353">
In early 1990 and again in early 2002, Italy scored its highest readings on this index. But since 2002 confidence has dropped. As the Euro area picked up, Italy&#146;s confidence also recovered but could barely get half-way back to its former peak at the end of 2006 and has since experienced back-sliding. The backsliding continues.
The confidence reading by consumers is only in the bottom third of its range of values since 1990. It has only been weaker in 1992-93, in the previous slowdown in late 2003-2004 and then in a short-lived bout of weakness in 1996. The weakening at this juncture is part of an established trend and so is more worrisome. 
The overall situation over the next 12 months assesses out as in the bottom 8 percentile of is range. Unemployment appears more likely to respondents, in the top quarter of its range. Households put their past 12-month and future 12-month household financial situation in the bottom 25 percentile of its range. They say past savings were in the top 10% of their range but see savings prospects ahead in the bottom 10%. The purchase environment is in the bottom 40% of its range but ahead consumers expect it to be in the bottom 16 percentile.
Clearly, Italian consumers are not happy campers. They see many challenges and are having a harder time of it than other large Euro economies such as Germany and France. Italy, it seems, has lot of work to do. There is no longer a lira to depreciate when things get tough.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
 Italy ISAE Consumer Confidence
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="6">Since January 1999</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td> Aug-07</td>
<td> Jul-07</td>
<td> Jun-07</td>
<td> May-07</td>
<td> Percentile</td>
<td> Rank</td>
<td> Max</td>
<td> Min</td>
<td> Range</td>
<td> Mean</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>106.5</td>
<td>107.4</td>
<td>107.2</td>
<td>109.4</td>
<td>31.6</td>
<td>68</td>
<td>127</td>
<td>97</td>
<td>30</td>
<td>111</td>
</tr>
<tr>
<td class="firstcol"> Last 12 months</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">OVERALL SITUATION</td>
<td>-57</td>
<td>-59</td>
<td>-60</td>
<td>-52</td>
<td>42.6</td>
<td>48</td>
<td>-22</td>
<td>-83</td>
<td>61</td>
<td>-54</td>
</tr>
<tr class="odd">
<td class="firstcol">PRICE TRENDS</td>
<td>-25</td>
<td>-26</td>
<td>-27.5</td>
<td>-24.5</td>
<td>24.0</td>
<td>75</td>
<td>4</td>
<td>-34</td>
<td>38</td>
<td>-16</td>
</tr>
<tr>
<td class="firstcol"> Next 12months</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">OVERALL SITUATION</td>
<td>-29</td>
<td>-25</td>
<td>-22</td>
<td>-18</td>
<td>8.6</td>
<td>93</td>
<td>24</td>
<td>-34</td>
<td>58</td>
<td>-12</td>
</tr>
<tr class="odd">
<td class="firstcol">PRICE TRENDS</td>
<td>22.5</td>
<td>18.5</td>
<td>19</td>
<td>17.5</td>
<td>36.9</td>
<td>46</td>
<td>49</td>
<td>7</td>
<td>42</td>
<td>23</td>
</tr>
<tr class="odd">
<td class="firstcol">UNEMPLOYMENT</td>
<td>0</td>
<td>-3</td>
<td>2</td>
<td>-5</td>
<td>76.9</td>
<td>21</td>
<td>9</td>
<td>-30</td>
<td>39</td>
<td>-6</td>
</tr>
<tr class="odd">
<td class="firstcol">HOUSEHOLD BUDGET</td>
<td>7</td>
<td>4</td>
<td>-1</td>
<td>3</td>
<td>23.5</td>
<td>79</td>
<td>33</td>
<td>-1</td>
<td>34</td>
<td>15</td>
</tr>
<tr>
<td class="firstcol"> HOUSEHOLD FIN SITUATION</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Last 12 months</td>
<td>-37</td>
<td>-34</td>
<td>-40</td>
<td>-35</td>
<td>25.0</td>
<td>65</td>
<td>-7</td>
<td>-47</td>
<td>40</td>
<td>-28</td>
</tr>
<tr class="odd">
<td class="firstcol">Next12 months</td>
<td>-10</td>
<td>-10</td>
<td>-9</td>
<td>-10</td>
<td>25.0</td>
<td>96</td>
<td>14</td>
<td>-18</td>
<td>32</td>
<td>-1</td>
</tr>
<tr>
<td class="firstcol"> HOUSEHOLD SAVINGS</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Current</td>
<td>55</td>
<td>54</td>
<td>59</td>
<td>58</td>
<td>89.7</td>
<td>6</td>
<td>59</td>
<td>20</td>
<td>39</td>
<td>38</td>
</tr>
<tr class="odd">
<td class="firstcol">Future</td>
<td>-35</td>
<td>-34</td>
<td>-33</td>
<td>-28</td>
<td>10.3</td>
<td>97</td>
<td>-9</td>
<td>-38</td>
<td>29</td>
<td>-23</td>
</tr>
<tr>
<td class="firstcol"> MAJOR Purchases</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Current</td>
<td>-41</td>
<td>-39</td>
<td>-40</td>
<td>-46</td>
<td>38.1</td>
<td>42</td>
<td>-15</td>
<td>-57</td>
<td>42</td>
<td>-40</td>
</tr>
<tr class="odd">
<td class="firstcol">Future</td>
<td>-68</td>
<td>-68</td>
<td>-63</td>
<td>-71</td>
<td>16.1</td>
<td>74</td>
<td>-42</td>
<td>-73</td>
<td>31</td>
<td>-62</td>
</tr>
<tr class="odd">
<td colspan="11">Total number of months: 100</td>
</tr>
</tbody>
</table>
Japan Retail Sales Drop Sharply 
by <a href="/comment/Brusca.html">Robert Brusca</a> August 30, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070830a.jpg" width="353">
Japan retail sales are mostly lower across the board. 
Special factors have hit the Japanese consumer to be sure. There was a radiation leak at a nuclear plant that turned out to be worse that was first reported. And then a power shortage hit. Bad weather has interrupted the consumer. But through it all wages have remained stagnant and the consumer&#146;s fundamentals have also failed to improve. So the sharp drop in consumer spending is not simply something to dismiss as due to some of these rogue factors that have haunted the consumer. The consumer may be feeling real pressure. In addition Japan is closely linked to the US economy and next month it will be interesting to see if Japanese moods and spending patterns are affected by the financial turbulence we have seen. With such weak spending it is hard to see why the BOJ would still be considering a rate hike. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Japan Retail Sales Trends
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>-2.6%</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>-10.4%</td>
<td>-6.0%</td>
<td>-2.1%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>-0.4%</td>
<td>-2.5%</td>
<td>-0.1%</td>
<td>-11.3%</td>
<td>-6.9%</td>
<td>-4.8%</td>
<td>-11.1%</td>
</tr>
<tr>
<td class="firstcol">Food &amp; Beverage</td>
<td>-0.8%</td>
<td>-1.2%</td>
<td>0.1%</td>
<td>-7.3%</td>
<td>-2.5%</td>
<td>-0.7%</td>
<td>-0.4%</td>
</tr>
<tr>
<td class="firstcol">Fabric apparel &amp; access</td>
<td>-8.2%</td>
<td>0.4%</td>
<td>0.0%</td>
<td>-27.7%</td>
<td>-11.8%</td>
<td>-10.0%</td>
<td>-8.6%</td>
</tr>
<tr>
<td class="firstcol">Rest of Retail</td>
<td>-3.4%</td>
<td>0.4%</td>
<td>0.7%</td>
<td>-9.0%</td>
<td>-6.9%</td>
<td>-1.1%</td>
<td>4.5%</td>
</tr>
</tbody>
</table>


</html>

<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/070829b.jpg" width="353">
Swedish consumers and business leaders are maintaining extraordinary levels of confidence this summer, although the National Institute for Economic Research monthly survey results did ease a bit for August, reported today. The total &quot;economic tendency&quot; measure stands at 112.3, where the long-run average since 1996 equals 100. The August figure is 3.4 points less than July&#39;s 115.7. A recent high is 116.9 in April, and the all-time high was 118.2 in March 2000, at the peak of the tech boom.
Both the consumer and the business surveys have shared in the recent strength. Consumer confidence had a positive balance in August of 19.7%. It was 21.3% in July and its recent high was 23% in April. There are two divisions of this index, the &quot;macro&quot; and the &quot;micro&quot;. The questions in the macro set include opinions on the overall economy for the coming year and on the unemployment rate. The micro questions ask about the current condition and prospects for personal finances and about whether respondents believe this is a good time to make major purchases and if they plan to increase major purchases in coming months. As we see, people&#39;s views of the macro economy swing widely, but they see their personal situation in a pretty steady light. So the currently less buoyant readings on the &quot;micro&quot; indicator don&#39;t suggest a weak consumer outlook, but one instead that sees the wider economy as relatively strong.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070829c.jpg" width="353">
The industry survey also sees much of the economy doing well. Traditional manufacturing looks at first to be an exception with a mere +5 reading, but the industry detail shows strength in key products Sweden is known for: machinery, electrical equipment and transportation equipment. Other European producers of these items have also seen good demand recently. Swedish retailing and service industries have been steady at a high level. The real standout is construction. Its August reading of 47% ties with June as the all-time high. No individual industry gauge is a record, but all show favorable results simultaneously, producing the strength in the overall indicator: order books are expanding, the volume of construction produced and anticipated is large and the number of employees is increasing at almost the largest number of firms ever.
So participants in the Swedish economy appear optimistic presently. Its stock market reflects this, with stock prices up 30% in the last few weeks from a year ago. This is similar to German stocks, which have gains of 33%. Both stock markets are less ebullient than they were back in July, but given the upheaval in other nations&#39; stock markets, such backtracking is hardly surprising. What is impressive is the sustained and widespread favorable outlook for Sweden.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070829d.jpg" width="353">
Data on Sweden are in Haver&#39;s NORDIC database. The share prices come from the MSCI databases, which consist of the Morgan Stanley Capital International indexes. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">SWEDEN (% Bal, ex as noted)</th>
<th scope="col">Aug 2007</th>
<th scope="col">July 2007</th>
<th scope="col">June 2007</th>
<th scope="col">Year Ago</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Economic Tendency (100=long run avg.)</td>
<td>112.3</td>
<td>115.7</td>
<td>114.7</td>
<td>109.3</td>
<td>109.4</td>
<td>101.8</td>
<td>102.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>19.7</td>
<td>21.3</td>
<td>21.0</td>
<td>16.0</td>
<td>17.1</td>
<td>10.5</td>
<td>8.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Micro Questions</td>
<td>14.7</td>
<td>17.2</td>
<td>15.9</td>
<td>15.9</td>
<td>14.9</td>
<td>14.5</td>
<td>12.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Macro Questions</td>
<td>24.9</td>
<td>26.4</td>
<td>27.0</td>
<td>8.0</td>
<td>11.5</td>
<td>-10.7</td>
<td>-12.5</td>
</tr>
<tr>
<td colspan="8">Business Tendency:</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>5</td>
<td>9</td>
<td>8</td>
<td>5</td>
<td>4</td>
<td>-6</td>
<td>2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction</td>
<td>47</td>
<td>45</td>
<td>47</td>
<td>20</td>
<td>22</td>
<td>9</td>
<td>-20</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Trade</td>
<td>30</td>
<td>26</td>
<td>21</td>
<td>24</td>
<td>28</td>
<td>8</td>
<td>2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Services</td>
<td>42</td>
<td>44</td>
<td>40</td>
<td>38</td>
<td>37</td>
<td>33</td>
<td>23</td>
</tr>
</tbody>
</table>
</body>
</html>

Swedish consumers and business leaders are maintaining extraordinary levels of confidence this summer, although the National Institute for Economic Research monthly survey results did ease a bit for August, reported today. The total [...]

Confidence Measures in Sweden Hover Near All-Time Highs

<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/070829a.jpg" width="353">
A look at global money and credit trends should be somewhat reassuring to those worried about the recent stock market downturn. Evidence shows that year/year money growth in countries/regions all around the globe had been quite plentiful coming into this period of financial market stress. 
 In the UK M4 growth has hovered at a 13% pace. 
 In the Euro area money supply has accelerated to over 11%. 
 In Japan money growth edged higher to 2.5%. 
 In the US growth had flattened at 6%. 
Among major countries only the US shows a clear pattern of sequential growth rates becoming weaker (significantly weaker at that) as the pace of growth stepped down in its rate steadily from 3 years to 2 years, and from that to one year, then to six months and then to three months - with the three-month pace at just 3.6%. That is too low to fuel what has been strong nominal GDP growth in Q2 in the US (these figures are all through July 2007). But money generally acts with a lag on the real sector so it&#146;s hard to blame the market problems on a slowing in money growth that occurs only in the US.
In the Euro area in particular, credit to residents and loan growth have remained strong and along with money (M2) have slightly accelerated through July despite some tepid steps by the ECB to hike rates.
On balance, there is no sense of there being deficient liquidity among this grouping of major global money centers. The liquidity problems markets now face are all of their own making, not due to the actions of the central banks.
The lesser ease of transactability is a function of the uncertainty over the value of some key assets in this system - that is far different from it being a quantity problem. There is no quantity problem. What there is, is a quality and an informational problem.
Until there is a way to clearly identify the troubled assets and to establish within reasonable grounds their true market value, markets and certain asset classes in particular &#150; as well those who own them - will continue to suffer this liquidity problem of their own making. It&#146;s a micro- not a macro-liquidity problem. Don&#146;t blame the central banks.
Central banks rightly worry about the other sort of liquidity problem right now - have they made too much? The levels of the growth rates in the table below sure argue for the answer &#145;yes&#146; to that question everywhere but in Japan &#150; there, of course, there are special things in play. Unfortunately this is the wrong time for central banks to be taking up this fight.
Only the Fed seems to have taken action to date to squeeze some of the excess liquidity from the market. And with that, markets now are begging for the Fed to re-inject what it has taken out (or, more correctly, slowed down its injecting).
It&#146;s a curious time for markets and central bankers alike.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Look at Global and Euro Liquidity Trends
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">SAARl</td>
<td colspan="3">Euro Measures (E13): Money &amp; Credit</td>
<td colspan="3">G-10 Major Markets: Money</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&#128;-Supply M2</td>
<td>Credit: Res</td>
<td>Loans</td>
<td>$US M2</td>
<td>&pound;UK M4</td>
<td>&yen;Japan M2+CDs</td>
</tr>
<tr>
<td class="firstcol">3-MO</td>
<td>11.4%</td>
<td>12.8%</td>
<td>11.6%</td>
<td>3.6%</td>
<td>13.1%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">6-MO</td>
<td>11.0%</td>
<td>12.7%</td>
<td>11.3%</td>
<td>5.6%</td>
<td>13.6%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">12-MO</td>
<td>10.6%</td>
<td>11.6%</td>
<td>10.7%</td>
<td>6.1%</td>
<td>13.0%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">2Yr</td>
<td>6.2%</td>
<td>11.5%</td>
<td>10.8%</td>
<td>5.4%</td>
<td>13.0%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">3Yr</td>
<td>13.9%</td>
<td>16.3%</td>
<td>15.4%</td>
<td>7.5%</td>
<td>19.0%</td>
<td>2.2%</td>
</tr>
</tbody>
</table>


</html>

A look at global money and credit trends should be somewhat reassuring to those worried about the recent stock market downturn. Evidence shows that year/year money growth in countries/regions all around the globe had been quite [...]

World Liquidity

<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/070829b.jpg" width="353">
Swedish consumers and business leaders are maintaining extraordinary levels of confidence this summer, although the National Institute for Economic Research monthly survey results did ease a bit for August, reported today. The total &quot;economic tendency&quot; measure stands at 112.3, where the long-run average since 1996 equals 100. The August figure is 3.4 points less than July&#39;s 115.7. A recent high is 116.9 in April, and the all-time high was 118.2 in March 2000, at the peak of the tech boom.
Both the consumer and the business surveys have shared in the recent strength. Consumer confidence had a positive balance in August of 19.7%. It was 21.3% in July and its recent high was 23% in April. There are two divisions of this index, the &quot;macro&quot; and the &quot;micro&quot;. The questions in the macro set include opinions on the overall economy for the coming year and on the unemployment rate. The micro questions ask about the current condition and prospects for personal finances and about whether respondents believe this is a good time to make major purchases and if they plan to increase major purchases in coming months. As we see, people&#39;s views of the macro economy swing widely, but they see their personal situation in a pretty steady light. So the currently less buoyant readings on the &quot;micro&quot; indicator don&#39;t suggest a weak consumer outlook, but one instead that sees the wider economy as relatively strong.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070829c.jpg" width="353">
The industry survey also sees much of the economy doing well. Traditional manufacturing looks at first to be an exception with a mere +5 reading, but the industry detail shows strength in key products Sweden is known for: machinery, electrical equipment and transportation equipment. Other European producers of these items have also seen good demand recently. Swedish retailing and service industries have been steady at a high level. The real standout is construction. Its August reading of 47% ties with June as the all-time high. No individual industry gauge is a record, but all show favorable results simultaneously, producing the strength in the overall indicator: order books are expanding, the volume of construction produced and anticipated is large and the number of employees is increasing at almost the largest number of firms ever.
So participants in the Swedish economy appear optimistic presently. Its stock market reflects this, with stock prices up 30% in the last few weeks from a year ago. This is similar to German stocks, which have gains of 33%. Both stock markets are less ebullient than they were back in July, but given the upheaval in other nations&#39; stock markets, such backtracking is hardly surprising. What is impressive is the sustained and widespread favorable outlook for Sweden.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070829d.jpg" width="353">
Data on Sweden are in Haver&#39;s NORDIC database. The share prices come from the MSCI databases, which consist of the Morgan Stanley Capital International indexes. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">SWEDEN (% Bal, ex as noted)</th>
<th scope="col">Aug 2007</th>
<th scope="col">July 2007</th>
<th scope="col">June 2007</th>
<th scope="col">Year Ago</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Economic Tendency (100=long run avg.)</td>
<td>112.3</td>
<td>115.7</td>
<td>114.7</td>
<td>109.3</td>
<td>109.4</td>
<td>101.8</td>
<td>102.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>19.7</td>
<td>21.3</td>
<td>21.0</td>
<td>16.0</td>
<td>17.1</td>
<td>10.5</td>
<td>8.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Micro Questions</td>
<td>14.7</td>
<td>17.2</td>
<td>15.9</td>
<td>15.9</td>
<td>14.9</td>
<td>14.5</td>
<td>12.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Macro Questions</td>
<td>24.9</td>
<td>26.4</td>
<td>27.0</td>
<td>8.0</td>
<td>11.5</td>
<td>-10.7</td>
<td>-12.5</td>
</tr>
<tr>
<td colspan="8">Business Tendency:</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>5</td>
<td>9</td>
<td>8</td>
<td>5</td>
<td>4</td>
<td>-6</td>
<td>2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction</td>
<td>47</td>
<td>45</td>
<td>47</td>
<td>20</td>
<td>22</td>
<td>9</td>
<td>-20</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Trade</td>
<td>30</td>
<td>26</td>
<td>21</td>
<td>24</td>
<td>28</td>
<td>8</td>
<td>2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Services</td>
<td>42</td>
<td>44</td>
<td>40</td>
<td>38</td>
<td>37</td>
<td>33</td>
<td>23</td>
</tr>
</tbody>
</table>
World Liquidity 
by <a href="/comment/Brusca.html">Robert Brusca</a> August 29, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070829a.jpg" width="353">
A look at global money and credit trends should be somewhat reassuring to those worried about the recent stock market downturn. Evidence shows that year/year money growth in countries/regions all around the globe had been quite plentiful coming into this period of financial market stress. 
 In the UK M4 growth has hovered at a 13% pace. 
 In the Euro area money supply has accelerated to over 11%. 
 In Japan money growth edged higher to 2.5%. 
 In the US growth had flattened at 6%. 
Among major countries only the US shows a clear pattern of sequential growth rates becoming weaker (significantly weaker at that) as the pace of growth stepped down in its rate steadily from 3 years to 2 years, and from that to one year, then to six months and then to three months - with the three-month pace at just 3.6%. That is too low to fuel what has been strong nominal GDP growth in Q2 in the US (these figures are all through July 2007). But money generally acts with a lag on the real sector so it&#146;s hard to blame the market problems on a slowing in money growth that occurs only in the US.
In the Euro area in particular, credit to residents and loan growth have remained strong and along with money (M2) have slightly accelerated through July despite some tepid steps by the ECB to hike rates.
On balance, there is no sense of there being deficient liquidity among this grouping of major global money centers. The liquidity problems markets now face are all of their own making, not due to the actions of the central banks.
The lesser ease of transactability is a function of the uncertainty over the value of some key assets in this system - that is far different from it being a quantity problem. There is no quantity problem. What there is, is a quality and an informational problem.
Until there is a way to clearly identify the troubled assets and to establish within reasonable grounds their true market value, markets and certain asset classes in particular &#150; as well those who own them - will continue to suffer this liquidity problem of their own making. It&#146;s a micro- not a macro-liquidity problem. Don&#146;t blame the central banks.
Central banks rightly worry about the other sort of liquidity problem right now - have they made too much? The levels of the growth rates in the table below sure argue for the answer &#145;yes&#146; to that question everywhere but in Japan &#150; there, of course, there are special things in play. Unfortunately this is the wrong time for central banks to be taking up this fight.
Only the Fed seems to have taken action to date to squeeze some of the excess liquidity from the market. And with that, markets now are begging for the Fed to re-inject what it has taken out (or, more correctly, slowed down its injecting).
It&#146;s a curious time for markets and central bankers alike.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Look at Global and Euro Liquidity Trends
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">SAARl</td>
<td colspan="3">Euro Measures (E13): Money &amp; Credit</td>
<td colspan="3">G-10 Major Markets: Money</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&#128;-Supply M2</td>
<td>Credit: Residential</td>
<td>Loans</td>
<td>$US M2</td>
<td>&pound;UK M4</td>
<td>&yen;Japan M2+CDs</td>
</tr>
<tr>
<td class="firstcol">3-MO</td>
<td>11.4%</td>
<td>12.8%</td>
<td>11.6%</td>
<td>3.6%</td>
<td>13.1%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">6-MO</td>
<td>11.0%</td>
<td>12.7%</td>
<td>11.3%</td>
<td>5.6%</td>
<td>13.6%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">12-MO</td>
<td>10.6%</td>
<td>11.6%</td>
<td>10.7%</td>
<td>6.1%</td>
<td>13.0%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">2Yr</td>
<td>6.2%</td>
<td>11.5%</td>
<td>10.8%</td>
<td>5.4%</td>
<td>13.0%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">3Yr</td>
<td>13.9%</td>
<td>16.3%</td>
<td>15.4%</td>
<td>7.5%</td>
<td>19.0%</td>
<td>2.2%</td>
</tr>
</tbody>
</table>


</html>

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

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

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

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

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Tom Moeller

251107F5.jpg

251107G5.jpg

Consumer credit outstanding increased $13.1 billion (2.3% y/y) in September after rising $3.1 billion in August, revised from $0.4 billion, and $17.7 billion in July, revised from $18.1 billion. A $10.0 billion rise had been expected in the Action Economics Forecast Survey.

Nonrevolving credit outstanding rose $11.4 billion (2.1% y/y) in September after increasing $9.2 billion in August, revised from $6.3 billion, and increasing $6.7 billion in July, revised from $6.9 billion. Nonrevolving credit held by depository institutions declined 6.8% y/y in September after falling 7.4% y/y in August. Finance company debt holdings fell 1.5% y/y after declining 1.3%, while credit union holdings rose an increased 12.8% y/y in September, the quickest growth since in two years. Nonrevolving debt of the federal government rose 3.6% y/y in September, the same as in August.

In September, revolving credit outstanding, which includes credit cards, rose $1.7 billion (2.6% y/y) after falling $6.1 billion in August, revised from a $6.0 billion decline, and rising $11.0 billion in July, revised from $11.2 billion. Revolving credit outstanding held by depository institutions fell 3.0% y/y. Revolving credit held by finance companies fell a steady 14.7% y/y in September, while credit union debt rose 4.5% y/y in September, up from 3.7% y/y in August.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

**AI and the Economy** is the title of today’s speech by Federal Reserve Vice Chair Philip N. Jefferson and it can be found [here](https://www.federalreserve.gov/newsevents/speech/jefferson20251107a.htm).

251107H5.jpg

251107I5.jpg

- Notable gain in credit usage follows prior month’s slowdown.
- Nonrevolving credit usage strengthens and revolving turns positive.

U.S. Consumer Credit Strengthens in September

251107A2.jpg

251107D2.jpg

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) eased 0.1% during the four weeks ended November 7, 2025 after improving 0.3% in the prior four-week period. The index increased 0.5% y/y following a 0.8% y/y gain at the end of October.

Prices in the **Textile** group increased 2.5% during the last four weeks and rose 3.3% y/y. The cost of burlap increased 23.8% in the last four weeks while surging 48.1% over the last year. Showing modest improvement, cotton prices rose 0.9% in four weeks but declined 5.6% y/y.

**Metals** group prices increased 1.5% (5.9% y/y) in the last four weeks as the cost of aluminum rose 4.9	% (10.3% y/y). Zinc prices moved up 3.6% (5.4% y/y) and the cost of steel scrap rose 1.4% (-5.9% y/y). Lead prices increased 1.1% (-0.2% y/y) in four weeks and the cost of copper scrap rose 0.6% (13.9% y/y). Working lower, tin prices declined 2.2% (+13.8% y/y) in four weeks.

**Miscellaneous** group prices weakened 2.9% in the last four weeks and were off 1.0% y/y, as framing lumber prices fell 11.3% (-4.3% y/y). The cost of tallow, used for frying & baking, declined 9.0% (+10.5% y/y) in four weeks. Offsetting this weakness, natural rubber prices rose 2.0% in four weeks, but were off 6.6% y/y.

Prices in the **crude oil & benzene** group declined 1.6% (-10.8% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 2.2% in four weeks to $60.31 per barrel and declined 15.6% y/y. The price was increased from a low of $58.47 in the third week of last month. The price of the petro-chemical benzene fell 3.8% (-23.2% y/y) in four weeks.

**Excluding crude oil**, the industrial commodity price index was unchanged (+1.5% y/y) over the last four weeks after rising 0.5% during the prior four weeks.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

251107C2.jpg

251107B2.jpg

- Textile and metals prices strengthen.
- Framing lumber costs plummet.
- Crude oil prices weaken.

FIBER: Industrial Commodity Price Index Moves Sideways in Latest Four Weeks

251107E.jpg

The chart provides a good overview for German trade trend. The table breaks trade trends down by categories and provides growth rates on shorter horizons of 3 months, 6 months and 12 months. But the chart depicts the overarching trends well. It shows the German surplus being diminished on a gradual path and not altogether in a clear monotonic fashion. Export and import lines on the chart move mostly sideways (horizontal). The export line is below the import line since late last year. These two series plots on the right-hand scale and they depict growth rates (year-over-year). So sideways movements mean roughly steady growth. Exports have been growth steadily year-over-year at a weak pace that on occasion has been a decline in terms of their year-on-year value. Generally, the green line is in positive territory. The red import line has been stronger, indicating somewhat better, steadier import growth over the period.

While exports had a good September, export growth sequenced from 12-months to 6-months, to 3-months has been weakening. Imports also put in a strong September but are showing some erosion from 12-month to 6-months to 3-months in terms of annualized rates of growth. Still, import growth rates remain quite strong and consistent; the sense of erosion is clear but also moderate – it’s a moderate erosion in progress for imports.

Capital goods exports from Germany are improving- this observation is based on lagged data with a one-month lag built in. But consumer goods and vehicle exports are slowing and rather sharply- likely as a result of U.S. tariffs.

Import side trends, with the same lag, are not as clear cut. Capital goods imports are growing, and motor vehicle imports are improving and accelerating. Consumer goods imports have erratically slowed.

Real exports and imports on sequential lagged data show exports contracting on most horizons while imports generate consistent positive growth in real terms. There is a big difference in these two trends expressed in real terms.

On balance, German trade trends are shifting. The trade balance is gradually eroding. Change is in play.

251107.jpg

Germany

German Trade Surplus Shrinks Despite Strong Exports

Andrew Cates

**The global growth cycle**
The new orders-to-inventory spread in the global manufacturing PMI is often been viewed as one of the most reliable forward-looking indicators of the global economic cycle. When new orders are rising relative to inventories, it typically signals that demand is firming, production pipelines are beginning to refill, and industrial momentum is building. Conversely, when inventories accumulate faster than orders, it often foreshadows a slowdown. As the chart shows, this spread has been holding up relatively well in recent months, suggesting that despite ongoing headwinds—US tariff policies, uneven global demand, and geopolitical uncertainty—the underlying pulse of global manufacturing remains resilient.

251106Z1.jpg

**US credit standards**
The latest Senior Loan Officer Opinion Survey (SLOOS) from the Federal Reserve suggests that credit conditions remain tight but are no longer worsening, marking a tentative stabilization after several quarters of tightening. Banks reported modest easing in standards for some categories of corporate and commercial real estate loans, though mortgage lending remains constrained. Demand for business credit continues to soften, reflecting both higher borrowing costs and a cautious corporate outlook. Historically, periods of widespread tightening—like those seen in 2008 and 2020—have coincided with sharp rises in the private sector savings balance (a proxy for deleveraging), as firms and households retrench simultaneously. The current configuration, shown in the chart, indicates lingering deleveraging pressures, but not a collapse in credit availability.

251106Z2.jpg

**China**
Moving to China, the latest official and Caixin PMI releases for October painted a mixed picture of activity. Both manufacturing indices softened, suggesting that the industrial rebound which underpinned much of China’s recent growth may be losing some traction. The official non-manufacturing PMI, by contrast, edged higher, hinting at continued resilience in construction and public-sector-linked services, while the Caixin services measure—which tends to reflect smaller, private-sector firms—slipped modestly. The divergence underscores China’s two-speed recovery: industrial production and exports have carried the economy, while household spending and smaller enterprises remain subdued. If manufacturing momentum fades in the coming months, the economy could face a renewed loss of balance, with fewer reliable growth engines. Still, overall performance this year has surpassed expectations, and the government’s 5% growth target remains within reach, provided activity holds steady through year-end. Looking ahead, marginal policy support and improved external sentiment—helped by selective tariff relief from the US—could offer limited, though welcome, cushioning.

251106Z3.jpg

**Australia** 
In Australia, the RBA left the cash rate unchanged at its November meeting, maintaining a cautious stance amid a still-complex inflation and growth backdrop. The case for further easing has become less compelling as core inflation (trimmed mean CPI) remains above target and labour market conditions—while gradually softening—continue to show resilience. The unemployment rate has edged higher but remains low by historical standards, consistent with lingering wage and services price pressures. Recent data also hint at a tentative pickup in activity, supported by strong population growth and stabilising commodity exports. Against that backdrop, the RBA has stressed that the path for policy remains finely balanced, with a strong focus on incoming inflation data and global financial conditions. While downside risks persist—particularly from China’s slowdown and weak global trade—the persistence of domestic price pressures means the bar for renewed rate cuts remains relatively high.

251106Z4.jpg

**Argentina**
Turning to Argentina, markets continue to digest the implications of President Milei’s midterm election victory amid deepening economic and financial imbalances. The peso’s broad nominal effective exchange rate has remained under heavy pressure, extending its long-running slide as investors weigh the challenges of implementing fiscal consolidation and monetary reform in a fragile political and social environment. In stark contrast, the Buenos Aires stock index has surged to record highs, reflecting optimism that Milei’s reformist agenda—anchored in deregulation, privatisation, and fiscal restraint—may eventually stabilise the economy and attract renewed capital inflows. The divergence between a falling currency and soaring equity prices highlights the tension between near-term macro risks and longer-term reform hopes. Going forward, investor confidence will hinge on the government’s ability to deliver credible policy execution while managing the inflationary fallout from ongoing peso weakness.

251106Z5.jpg

**Global CO2 emissions**
Shifting focus to more structural issues, the chart underscores how decarbonisation challenges remain deeply concentrated in a few heavy-emitting sectors. Energy production alone accounts for nearly 40% of global CO₂ emissions, with manufacturing, households, and transport together contributing another 50%. This composition highlights the complex trade-offs of the energy transition: the very sectors that underpin modern living standards—power generation, industrial output, mobility, and housing—are also those most difficult to decarbonise. Climate change is therefore not just an environmental issue but a structural economic one, shaping investment, infrastructure, and pricing systems for decades to come. The tension between sustaining growth and cutting emissions will remain a defining challenge for policymakers, particularly as clean technologies face constraints in scaling fast enough to offset rising global demand for energy-intensive goods and services.

251106Z6.jpg

Recent financial market developments have been shaped by a renewed bout of volatility, with heightened concerns about stretched AI valuations triggering a big correction across parts of the tech sector. This comes against a backdrop of lingering uncertainty in Washington, where the US government shutdown has continued to delay the release of several key economic reports, clouding visibility on near-term momentum. Still, the broader macro signals offer a mixed but nuanced picture. Global manufacturing PMIs have continued to hold up, hinting that underlying industrial momentum remains resilient (chart 1). The latest US Senior Loan Officer Survey points to a stabilisation in credit conditions—banks remain cautious, but the most intense phase of tightening may have now passed (chart 2). In China, the October PMIs reflected renewed softness in manufacturing alongside a still-steady services sector, tentatively suggesting that growth may be rebalancing, albeit at a weaker aggregate pace of growth (chart 3). Australia’s inflation and labour market data, meanwhile, have complicated the case for near-term policy easing, with the RBA opting to stay on hold this week as core inflation remain sticky. In Argentina, currency weakness persists even as equity markets rally, highlighting the policy and market tension surrounding President Milei’s reform agenda (chart 5). And finally, at a more structural level, latest global emissions data serve as a reminder that energy, manufacturing, transport, and households remain the principal sources of CO₂—illustrating how the climate and energy transition will continue to shape the macro landscape well beyond the current economic cycle (chart 6).

Charts of the Week: Uneven But Unbroken

251106A8.jpg

251106B8.jpg

Initial claims for unemployment insurance fell 12,643 during the week ended October 25 to 219,520 (+0.6% y/y) and mostly reversed the prior week’s increase to 232,163. The four-week moving average of initial claims eased to 226,766 from 227,953. They have trended higher this year, after weakening late in 2024. The four-week average hit a low of 200,323 in January 2024.

Federal government employees initially filed 9,435 jobless insurance claims last week after 10,062 in the prior week. These figures are increased from 588 at the end of September.

Continuing claims for unemployment insurance rose to 1.957 million (5.5% y/y) in the week ended October 18 from 1.947 million in the prior week. The four-week moving average rose to 1.940 million from 1.931 million. It was the highest level since the last week of August.	

Federal government employees continuing benefits rose to 23,188 in the week ended October 18 from 14,472 in the prior week. These figures are increased from 8,680 at the end of September.

The insured unemployment rate varied greatly across individual states and territories. In the week ended October 18, the highest unemployment rates were in New Jersey (2.14%), Washington (2.03%), California (1.93%), Massachusetts (1.84%), the District of Columbia (1.86%) and Connecticut (1.70%). The lowest were in South Dakota (0.25%), Florida (0.36%), North Carolina & Louisiana (0.41%), Nebraska (0.44%) and Virginia (0.49%). Rates in other notable states include New York (1.51%), Illinois (1.50%), Pennsylvania (1.39%), and Texas (1.11%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

251106C8.jpg

251106D8.jpg

- Decline in initial claims reverses earlier gain.
- Continuing claims move higher.
- State unemployment rates vary.

Economy in Brief: 2007

Jump to:

U.S. Personal Income Gains 0.5% in July; Spending Recovers from June Weakness

US GDP Growth Revised Up, Profit Growth Slowed

Consumer Confidence is Retreating in Italy

Japan Retail Sales Drop Sharply

US GDP Growth Revised Up, Profit Growth Slowed

Confidence Measures in Sweden Hover Near All-Time Highs

World Liquidity

Confidence Measures in Sweden Hover Near All-Time Highs