Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922a.jpg" align="left" border="0" height="265" width="353">
Since June, improvement in the U.S. economy and aggressive
measures by the Federal Reserve to stimulate growth have supported
gasoline prices from their lows of last December. However, any
incremental strength in prices has topped out. The pump price
for regular gasoline dipped slightly last week to an average
$2.55 per gallon, roughly where it's been since early June. These
prices compare to the December low of $1.61. Yesterday, prices
backpedaled even further as speculation mounted that the Fed may soon
rein in its simulative policies. The wholesale gasoline price fell to
$1.76 per gallon. Prices had reached a high in early-August of $2.03.
The figures are reported by the U.S. Department of Energy and can be
found in Haver's WEEKLY &amp; DAILY databases.
During August, the consumer price index for gasoline recouped
the July decline with a not seasonally adjusted 3.3% increase.
Seasonally adjusted gas prices were quite firm and rose 9.1% m/m, up
40.3% YTD.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922b.jpg" align="right" border="0" height="265" width="353">
Crude oil prices have followed a similar
pattern. Light sweet crude oil prices (WTI) held last week near the
high at $71.36 per barrel, up from the December low of $32.37.
Yesterday, however, the spot market price for light sweet crude oil
fell to $69.71 per barrel versus a daily high of $72.51 last week.
Earlier strength in gasoline prices reflected incremental
improvement in the demand for gasoline. Seasonal factors accounted for
much of demand's incremental improvement, but in September demand has
remained firm. The y/y uptick of 0.1% is the first positive comparison
since early-2008. Demand for residual fuel oil also has improved. It
shows a positive 8.6% y/y comparison but distillate demand is off 14.9%
y/y). Finally, oil remains plentiful as evidenced by a 13.5% y/y rise
in inventories of crude oil &amp; petroleum products. Inventories
of gasoline recently have dropped somewhat but they have strengthened
by 12.5% versus last year, the strongest gain in ten years. The figures
on crude oil production and inventories are available in Haver's OILWKLY
database.
Natural gas prices continued to be the weakest part of the
energy sector's pricing environment. Though they increased last week to
an average of $3.22 per mmbtu (-59.3% y/y), they remained down by
three-quarters from the high reached in early-July of last year of
$13.19/mmbtu. Yesterday prices held at the $3.38 level.
Predicting Crises, Part I: Do Coming Crises Cast
Their Shadows Before? from the Federal Reserve Bank of San
Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-29.html">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/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">09/21/09</th>
<th scope="col">09/14/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.55</td>
<td>2.58</td>
<td>-31.4%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>71.36</td>
<td>70.91</td>
<td>-26.7%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body></html>

Since June, improvement in the U.S. economy and aggressive measures by the Federal Reserve to stimulate growth have supported gasoline prices from their lows of last December. However, any incremental strength in prices has topped [...]

Weekly Gasoline Prices Slip Just Modestly As Trend Remains Firm

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923a.jpg" align="left" border="0">
Released yesterday was the U.S. House Price Index from the
Federal Housing and Finance Agency (FHFA). The Purchase Only Index for
July rose 0.3% from June and it was the third consecutive monthly
increase. Moreover, the latest gain eased the year-to-year decline in
the nationwide average of home prices to 4.2% from its worst reading of
negative 8.9% last November. Since their peak in early-2007 home prices
nationwide have fallen 10.5%. The FHFA uses data provided by Fannie Mae
and Freddie Mac and it is not value-weighted.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923b.jpg" align="right" border="0">
Most notable during July was the 1.6% gain in home prices in
the Pacific region of the country. It followed similarly strong 0.7%
and 1.6% increases during the prior two months. Nevertheless these
increases follow earlier home price declines that were amongst the
sharpest in the country. Versus last July prices in the region were
still down 9.0% after having fallen 17.3% during all of 2008. Recent
improvement in home prices also was evident in a 1.0% July increase in
the Mid-Atlantic region. That gain, however, only recouped the decline
during June and left prices roughly even with the year-end 2008 level.
More moderate monthly gain in home prices were logged in the West North
Central, South Atlantic and Mountain Regions of the country. In the
latter two regions, however, prices continued notably below the
year-ago level.
Continuing weak were home prices in several of the country's
regions. Despite a 0.3% July increase, prices in the Mountain states
remained off 9.8% from the year ago level and they were off 16.1% from
the 2007 peak. In the South Atlantic region prices also posted a gain
during July but the 0.6% uptick still left them off by 5.6% from one
year ago. Since their early-2007 peak prices here have fallen 12.8%. In
the populous East North Central region prices slipped another 0.3%
during July and they were flat year-to-date.
Cross-Country Causes and Consequences of the 2008
Crisis: Early Warning Signals from the Federal Reserve Bank
of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/papers/2009/wp09-17bk.pdf">
here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">FHFA
U.S. House Price Index Purchase Only (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</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">Total</td>
<td>0.3</td>
<td>0.1</td>
<td>-4.2</td>
<td>-5.8</td>
<td>1.3</td>
<td>6.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New England</td>
<td>-0.1</td>
<td>0.3</td>
<td>-2.5</td>
<td>-4.6</td>
<td>-1.7</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Middle Atlantic</td>
<td>1.0</td>
<td>-1.1</td>
<td>-2.9</td>
<td>-2.3</td>
<td>1.9</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; East North Central</td>
<td>-0.3</td>
<td>-0.2</td>
<td>-3.3</td>
<td>-4.4</td>
<td>-1.3</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West North Central</td>
<td>0.3</td>
<td>-0.3</td>
<td>-1.5</td>
<td>-2.8</td>
<td>1.0</td>
<td>3.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South Atlantic</td>
<td>0.6</td>
<td>-0.2</td>
<td>-5.6</td>
<td>-7.1</td>
<td>1.4</td>
<td>7.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; East South Central</td>
<td>-0.9</td>
<td>2.3</td>
<td>-1.7</td>
<td>-1.4</td>
<td>3.8</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West South Central</td>
<td>-0.2</td>
<td>1.1</td>
<td>0.1</td>
<td>0.7</td>
<td>4.7</td>
<td>7.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mountain</td>
<td>0.3</td>
<td>-1.0</td>
<td>-9.8</td>
<td>-6.0</td>
<td>4.0</td>
<td>10.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Pacific</td>
<td>1.6</td>
<td>0.7</td>
<td>-9.0</td>
<td>-17.3</td>
<td>0.1</td>
<td>9.8</td>
</tr>
</tbody>
</table>
 Weekly Chain Store Sales Trend
Lower During September 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 22, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922c.jpg" align="left" border="0" height="265" width="353">
Encouraging indications that consumer spending was improving
faded further during September. During the latest week, chain store
sales fell 2.0% and that was enough to pull sales for the month so far
to their lowest level since June.
During the last ten years there has been a 69% correlation
between the year-to-year growth in chain store sales and the growth in
general merchandise sales. The weekly figures are available
in Haver's SURVEYW database.
The ICSC-Goldman
Sachs retail chain-store sales index is constructed using the
same-store sales (stores open for one year) reported by 78 stores of
seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.


Prospects for improvement in sales seem limited. The leading
indicator of sales slipped 0.5% (-2.0% y/y) during the latest week
though it had risen somewhat earlier this summer.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922d.jpg" align="right" border="0" height="265" width="353">
The Johnson Redbook also reported soft sales of late. General
merchandise store sales so far this month increased a seasonally
adjusted 0.4% from August (-2.1% y/y) following three months of
sometimes sharp decline. Department store sales were down 4.8% y/y on a
same-store basis while discount store sales slipped just 0.2% as
shoppers searched for bargains.
The Dynamics of Automobile Expenditures from
the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr394.pdf">
here</a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">09/19/09</th>
<th scope="col">09/12/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>484.6</td>
<td>494.5</td>
<td>0.6%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
 Canadian Retail Sales Are Digging
Out Slowly 
by <a href="/comment/Brusca.html">Robert
Brusca</a> September 22, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922e.jpg" align="left" border="0" height="265" width="353">
Retail sales in Canada fell by 0.6% in July following a surge
in growth of 1% in June and of 1.1% in May. In the new quarter retail
sales are expanding at a 3% pace in nominal terms. For the quarter
supermarket sales are dropping. Sales of new car dealers are surging in
double digits. Clothing sales are up at a 3.4% nominal pace. Excluding
autos the annual rate gain early in Q3 are 0.9%. 
 

More broadly, sales trends show gains that are gathering pace
over three-months and mixed to the positive side over six months.
Overall sales are expanding at a rate of 6.4% over three months at a
pace of 3.6% excluding autos and at a 6.4% pace for overall sales. 
 

The chart shows how Canada&#8217;s retail sales simply fell off a
cliff at the end of 2008 when the US economy&#8217;s financial crisis took
hold. Since then ex-auto sales are showing a more consistent rebound.
Overall sales have only really reduced their rate of decline and the
trend drop still seems to be operative for year-over year calculations.
However over that short spans memorialized in the table both overall
and ex-auto sales are hosing that progress is in train. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">Canada
Retail Sales</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td colspan="4">Saar</td>
<td>New QTR</td>
</tr>
<tr>
<td class="firstcol">Nominal %</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-MO</td>
<td>Yr-Ago</td>
<td>Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">Total RTL</td>
<td>-0.6%</td>
<td>1.0%</td>
<td>1.1%</td>
<td>6.4%</td>
<td>2.5%</td>
<td>-4.9%</td>
<td>5.0%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">New Car Dealerss</td>
<td>0.2%</td>
<td>0.5%</td>
<td>3.5%</td>
<td>18.0%</td>
<td>15.1%</td>
<td>-6.6%</td>
<td>-5.8%</td>
<td>10.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Supermarkets</td>
<td>-1.6%</td>
<td>0.8%</td>
<td>-0.2%</td>
<td>-3.9%</td>
<td>-2.5%</td>
<td>4.3%</td>
<td>3.1%</td>
<td>-6.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Clothing Stores</td>
<td>0.1%</td>
<td>0.5%</td>
<td>0.3%</td>
<td>3.8%</td>
<td>-2.1%</td>
<td>-4.1%</td>
<td>2.4%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail less MVs</td>
<td>-0.8%</td>
<td>1.1%</td>
<td>0.6%</td>
<td>3.6%</td>
<td>0.2%</td>
<td>-4.7%</td>
<td>7.9%</td>
<td>0.9%</td>
</tr>
</tbody>
</table>
 Unemployment In Ireland, Italy,
Finland, And Taiwan 
by <a href="/comment/Curley.html">
Louise Curley</a> September 22, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922f.jpg" align="right" border="0" height="265" width="353">
Quarterly unemployment data for the second quarter for Ireland
and Italy, and monthly data for August for Finland and Taiwan were
released today. The attached two charts show the year over year changes
in the unemployment rates for the four countries: monthly data for
Finland and Taiwan and quarterly data for Ireland and Italy. Ireland
has the highest rate of unemployment, 12%, of the four countries and
the largest increase, 6.3 percentage points, over the same period of a
year ago. The other three countries show year over year increases of
2.6 percentage points or less. The big rise in unemployment in Ireland
is another indicator of the severity of the recession hitting that
country.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922g.jpg" align="right" border="0" height="265" width="353">
The rise in unemployment in Ireland has undoubtedly played a
part in the dramatic change in its net migration. The Irish Central
Statistics Office reported today that in the year ending April, 2009,
emigrants exceeded immigrants by 7,800, compared with an excess of
immigrants of 38,500 in the previous year. This was the first excess of
emigrants since 1995. Ireland's long history of net emigration, was
reversed beginning in 1996 and continued through 2008 as the economy
prospered. Net migration reached a high of 71,800 in 2006 at the height
of the economic boom.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
Unemployment Rates (NAS %)</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4 09</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08</th>
<th scope="col">Q1 08</th>
<th scope="col">Q4 07</th>
<th scope="col">Q3 07</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>12.0</td>
<td>10.2</td>
<td>7.6</td>
<td>7.0</td>
<td>5.7</td>
<td>4.9</td>
<td>4.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>7.4</td>
<td>7.9</td>
<td>7.1</td>
<td>6.1</td>
<td>6.7</td>
<td>7.1</td>
<td>6.6</td>
<td>5.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Aug 09</td>
<td>Jul&nbsp; 09</td>
<td>Jun 09</td>
<td>May 09&nbsp;</td>
<td>Apr 09&nbsp;</td>
<td>Mar 09&nbsp;</td>
<td>Feb 09 </td>
<td> Jan 09 </td>
</tr>
<tr class="odd">
<td class="firstcol">Finland</td>
<td>7.6</td>
<td>7.7</td>
<td>9.1</td>
<td>10.9</td>
<td>8.8</td>
<td>8.3</td>
<td>7.6</td>
<td>7.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Taiwan</td>
<td>6.1</td>
<td>6.1</td>
<td>5.9</td>
<td>5.8</td>
<td>5.8</td>
<td>5.8</td>
<td>5.8</td>
<td>5.3</td>
</tr>
</tbody>
</table>
</body></html>

Released yesterday was the U.S. House Price Index from the Federal Housing and Finance Agency (FHFA). The Purchase Only Index for July rose 0.3% from June and it was the third consecutive monthly increase. Moreover, the latest gain [...]

FHFA Home Price Index Strengthens Due To Notable Gains In The Pacific & Mid-Atlantic Regions

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921h.jpg" align="left" border="0">
Preliminary data suggest that the Russian Gross Domestic
Product, fell 0.5% in the second quarter, a marked improvement over the
9.0% decline in the first quarter. (These figures are based on the
series that have been seasonally adjusted by Haver Analytics.) August
data on production, construction, and retail sales have been
disappointing. Production and construction declined in contrast to
increases in July and retail sales showed a smaller increase in August
than in July. The unemployment rate, however, was 8.6% in August 2
basis points below July.
In spite of the July hiccup particularly in industrial
production, the prospects for increased activity in Russia have
brightened. Oil prices are up, the Reserve Bank has steadily lowered
the refinancing rate from 13% in March to 10.5% in September.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921i.jpg" align="right" border="0" height="265" width="353">
Inflation, though still high, was 11.6% in August, down from 13.15% in
April. Recent data for these aspects of the Russian economy are shown
in the table below.
The Purchasing Mangers Survey published by Markit Economics in
London reported earlier this month that the GDP indicator for Russia
reached the expansion stage in August (above 50) for the first time
since September, 2008 as shown in the first chart. Finally, the Stock
Market has increased 44% from the recent low point reached on July10
and 1208 today is 139% above the low reached on February 2, 2009. The
decline and rise in the stock market is shown in the second chart.


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">RUSSIA&nbsp;</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug&nbsp; 09</th>
<th scope="col">Jul 09</th>
<th scope="col">Jun
09&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">Apr 09&nbsp;</th>
<th scope="col">Mar 09</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production (M/M %
Chg)</td>
<td>--</td>
<td>-3.0</td>
<td>4.7</td>
<td>4.5</td>
<td>-2.1</td>
<td>-8.1</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Retail Sales&nbsp; (M/M %
Chg)</td>
<td>--</td>
<td>1.68</td>
<td>2.36</td>
<td>0.88</td>
<td>1.70</td>
<td>0.71</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Value of Construction Work
Performed&nbsp; (M/M % Chg)</td>
<td>--</td>
<td>-2.66</td>
<td>2.61</td>
<td>210.55</td>
<td>0.74</td>
<td>11.54</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>--</td>
<td>8.6</td>
<td>8.8</td>
<td>8.7</td>
<td>8.9</td>
<td>8.7</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Inflation (%)</td>
<td>--</td>
<td>11.6</td>
<td>12.0</td>
<td>11.9</td>
<td>12.3</td>
<td>13.2</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Refinancing Rate&nbsp; (%)</td>
<td>10.50</td>
<td>10.75</td>
<td>11.00</td>
<td>11.50</td>
<td>12.00</td>
<td>12.50</td>
<td>13.00</td>
</tr>
<tr class="odd">
<td class="firstcol">Oil Price Brent Crude (Ave of
Daily Prices $ per barrel)</td>
<td>--</td>
<td>72.86</td>
<td>65.62</td>
<td>69.24</td>
<td>58.25</td>
<td>51.18</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

Preliminary data suggest that the Russian Gross Domestic Product, fell 0.5% in the second quarter, a marked improvement over the 9.0% decline in the first quarter. (These figures are based on the series that have been seasonally [...]

Recent Data For The Russian Economy

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921g.jpg" align="left" border="0" height="265" width="353">
French orders were up by a solid 2% in July as foreign orders
surged by 14%. In Italy orders jumped by 3.2% on foreign order strength
of 15.6%. Both Italy and France as seeing strong orders in the new
quarter (Q3, one month in) led by huge gains in orders from abroad. 
 

Both Italy and France show recovery patterns of order growth
but order levels that remain just a bit less than 25% below year-ago
levels. 
 

Europe- Europe continues to show economic recovery. But with
the G-20 set to meet in the re-made but old US industrial city of
Pittsburgh, the OECD, the IMF and a German think-tank have taken this
opportunity to highlight the risks to the future of this recovery. The
OECD is very concerned about the health of banks and that there could
be some backsliding and troubles with capitalization. The IMF is
concerned that German employment could rise sharply over the next year,
pushing unemployment to over 10.5% and creating weak growth under 0.5%
in 2010. This would clearly become a problem for growth in the rest of
the e-Zone. Not to be outdone by this sort of sour outlook, the German
think-tank IWH Institute warns of a credit crunch highlighting the
potential for a double dip as government stimulus programs come off the
books. 
 

Pessimism shuns trends: Despite some very strong current
indicators that spread across the major EMU economies there remains in
Europe, much like in the US, a core of pessimism about the risks.
Unlike after other recessions apparently this recovery cannot be
trusted to bottom and begin to rise and for that upswing to be
self-sustaining. The abnormal degree of and scope of early government
help that will eventually be rescinded is one of the common culprits in
both US and European pessimism. If that is so what ever do it in the
first place? 
 

Professional pessimists: While we expect the main
international regulators and oversight agencies to be less than
cheerleaders and to be wary of risks, the extent to which private
sector naysayers have piggy-backed on that tact is surprising. For now
we are left with the reality of an upswing and one that is looking
quite nice and consistent across EMU nations. Meanwhile, the outlook
sours as we speak. While the future may still hold risks, one must
wonder if they are as great as is being said or if lowering
expectations has been taken to a new extreme by politicians who in the
end are chastened by their own role in this crisis by seeing it develop
and watching powerlessly, aware that it is a disaster that occurred on
their watch. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> Italy Orders</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="3">Saar exept m/m</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-mo6-mo12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>3.2%</td>
<td>2.6%</td>
<td>0.8%</td>
<td>29.5%</td>
<td>-1.9%</td>
<td>-24.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Foreign</td>
<td>15.6%</td>
<td>2.6%</td>
<td>0.9%</td>
<td>105.4%</td>
<td>17.6%</td>
<td>-19.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Domestic</td>
<td>-2.9%</td>
<td>2.5%</td>
<td>0.7%</td>
<td>0.9%</td>
<td>-11.3%</td>
<td>-26.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Memo</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">Sales</td>
<td>0.7%</td>
<td>-1.6%</td>
<td>-1.0%</td>
<td>-7.4%</td>
<td>-11.0%</td>
<td>-22.1%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol"> French Orders</td>
</tr>
<tr class="grey4">
<td colspan="3">Saar exept m/m</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-mo6-mo12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>2.0%</td>
<td>1.2%</td>
<td>0.0%</td>
<td>13.7%</td>
<td>5.6%</td>
<td>-22.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Foreign</td>
<td>14.0%</td>
<td>-3.0%</td>
<td>7.0%</td>
<td>96.1%</td>
<td>19.1%</td>
<td>-16.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">IP xConstruct</td>
<td>0.6%</td>
<td>0.2%</td>
<td>3.0%</td>
<td>16.3%</td>
<td>2.8%</td>
<td>-13.8%</td>
</tr>
</tbody>
</table>
</body></html>

French orders were up by a solid 2% in July as foreign orders surged by 14%. In Italy orders jumped by 3.2% on foreign order strength of 15.6%. Both Italy and France as seeing strong orders in the new quarter (Q3, one month in) led by [...]

Industrial Orders Keep Rising In France And In Italy Pessimism Continues To Haunt The Outlook, However

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921d.jpg" align="right" border="0" height="265" width="353">
Each
quarter, the Federal Reserve Bank of Philadelphia surveys a group of
professional forecasters to gain perspective on the outlook for the
U.S. economy. In the August survey, the panel expected the recession to
have reached its end, though the recovery is expected to be subpar.
That subpar nature is expected to keep unemployment high but it is not
expected to prevent inflation and interest rates from rising.Just
2.4% growth in real GDP is expected during the current quarter to be
followed by growth at about that rate into next year. That follows the
3.9% y/y drop in real GDP through last quarter, which was the deepest
decline since the Great Depression. Indeed, this recovery is subpar
compared to prior periods of severe recession. Following the 1973-75
recession, when GDP fell at a peak y/y rate of 2.3%, growth shortly
rebounded to 6.2%. Similarly following the 1981-82 recession, when GDP
fell 2.7% y/y, a snapback came quickly at near an 8%
rate. The subpar nature of the coming economic
recovery stems very much from the consumer who remains burdened by
excessive levels of debt. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921e.jpg" reaching only two that compares with excess six percent during recoveries similarly quarterly in residential middle next fraction prior periods past overbuilding weighs activity finally on domestic demand side business investment is expected to recover at a subpar rate after its decline this year as corporate profits remain under pressure and outlook for global economic remains contained federal spending also should rise but rates of growth are constrained by the soaring budget deficit align="right" border="0" height="265" width="353">A swing towards inventory accumulation also should
play a part in the pending economic recovery, yet here again it's not a
huge part. Accumulation at near a $20 billion annual rate is expected
by the end of next year. Certainly that is improved from the peak rate
of decumulation of $141 last quarter, and the dollar swing is
impressive. But as a percentage of the economy's overall real size it
amounts to barely half the swing after prior severe recessions. As for
the foreign trade deficit, recent improvement has helped forestall an
even deeper decline in U.S. GDP during this recession. However, that
improvement is expected to now end with little or no improvement
through next year as foreign economies remain weak. Weak
economic growth is expected to do little reduce unemployment. The
unemployment rate is expected to average 9.9% and then dip just to 9.6%
by next year's third quarter. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921f.jpg" align="right" border="0" height="265" width="353">
These rates are the highest jobless rates
since 1982-83 and reflect little or no growth in expected employment.
Pricing power is thus expected to be severely constrained. The y/y
growth in the overall GDP price deflator is expected to drift up to
1.5% from its low of 1.0% this year. Perhaps not-so-surprisingly,
forecasters expect that lift to stem from a liquidity-driven rise in
core consumer prices to 1.6% from a low of 1.1% being reached now.
Ten-year Treasury yields are expected to rise in tandem to highs near
4% by the middle of next year. The full Third
Quarter 2009 Survey of Professional Forecasters from the
Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/research-and-data/real-time-center/survey-of-professional-forecasters/2009/survq309.cfm">here</a>.
The data are available in Haver's SURVEYS database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">FRB
Philadelphia Survey of Professional Forecasters (AR)</th>
<th scope="col">2Q '09</th>
<th scope="col">3Q '09</th>
<th scope="col">4Q '09</th>
<th scope="col">1Q '10</th>
<th scope="col">2Q '10</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Real GDP</td>
<td>-1.0%</td>
<td>2.4%</td>
<td>2.2%</td>
<td>2.5%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; PCE</td>
<td>-1.2</td>
<td>1.7</td>
<td>1.1</td>
<td>1.7</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-Residential
Investment</td>
<td>-8.9</td>
<td>-7.3</td>
<td>-6.3</td>
<td>2.1</td>
<td>3.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential
Investment</td>
<td>-29.3</td>
<td>-7.3</td>
<td>1.8</td>
<td>5.6</td>
<td>13.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Federal
Government&nbsp;</td>
<td>10.9</td>
<td>6.2</td>
<td>4.1</td>
<td>1.5</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Change in Business
Inventories</td>
<td>$-141.1B</td>
<td>$-89.9B</td>
<td>$-32.7B</td>
<td>$-1.7B</td>
<td>$9.5B</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Net Exports</td>
<td>-339.3</td>
<td>-340.0</td>
<td>-342.1</td>
<td>-353.6</td>
<td>-366.0</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>9.3</td>
<td>9.6</td>
<td>9.9</td>
<td>9.9</td>
<td>9.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Price Index (Y/Y, %)</td>
<td>2.4</td>
<td>1.7</td>
<td>1.1</td>
<td>1.5</td>
<td>1.5</td>
</tr>
</tbody>
</table>


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Each quarter, the Federal Reserve Bank of Philadelphia surveys a group of professional forecasters to gain perspective on the outlook for the U.S. economy. In the August survey, the panel expected the recession to have reached its [...]

Forecasters Expect Return Of Positive GDP Growth This Quarter, Slow Thereafter

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921a.jpg" align="right" border="0" height="265" width="353">
The
Conference Board's Index of Leading Economic Indicators continued to
suggest a pending economic recovery with a 0.6% August increase that
was close to expectations. The rise in the composite index of leaders
was the fifth in a row and the 4.7% increase during those five months
was the strongest since early-1983. The index itself was at the highest
level since January of last year. 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. Perhaps tempering the outlook was that the 0.6%
August increase in the leaders was the weakest of the last five months.
Moreover, a slightly diminished 60% of the index components rose.
Higher stock prices and a steeper interest rate yield curve, along with
a slower speed of vendor deliveries, made the largest positive
contributions to the latest overall increase in the leaders. However,
the real money supply fell for the fourth month in the last five and
average weekly factory hours worked were unchanged as were new orders
for consumer goods &amp; materials.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921b.jpg" align="right" border="0" height="265" width="353">
Continuing to
suggest that the rate of decline in the economy is slowing were the
coincident indicators. They were unchanged during August after a slim
0.1% July gain. While hardly indicative of a robust economy, these
declines compare with monthly shortfalls of 0.6%-to-1.1% dating back to
September. Fostering the turnaround have been slight increases in
industrial production and real personal income as well as diminished
monthly declines in payrolls.Wringing out past economic
excesses is needed for real economic recovery. In a further sign that
excesses in the U.S. economy are diminishing, the lagging index fell
for the eight month in the last nine. To that point, C&amp;I loans
outstanding fell sharply for the ninth straight month and consumer
credit versus personal income was off for the fifth month this year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921c.jpg" align="right" border="0" height="265" width="353">
Regardless, the average duration of unemployment shortened and the
change in CPI for services eased. The ratio of coincident-to-lagging
indicators (a measure of economic excess) also continued higher for the
fifth straight month to the highest level since November.
The Conference Board figures are available in Haver's BCI
database. Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.
Beyond Inflation Targeting: Should Central Banks
Target the Price Level? from the Federal Reserve Bank
of Kansas City is available <a href="%A0http:/www.kansascityfed.org/PUBLICAT/ECONREV/pdf/09q3kahn.pdf">here.</a> 
How Will Unemployment
Fare Following the Recession? also from the Federal
Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/pdf/09q3knotek.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">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May 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>0.6</td>
<td>0.9</td>
<td>0.8</td>
<td>6.2</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.0</td>
<td>0.1</td>
<td>-0.4</td>
<td>-5.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.1</td>
<td>-0.5</td>
<td>-0.9</td>
<td>-8.6</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
</body></html>

The Conference Board's Index of Leading Economic Indicators continued to suggest a pending economic recovery with a 0.6% August increase that was close to expectations. The rise in the composite index of leaders was the fifth in a row [...]

U.S. Leading Indicators Rise For A Fifth Straight Month And Signal Economic Recovery

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921a.jpg" align="right" border="0" height="265" width="353">The
Conference Board's Index of Leading Economic Indicators continued to
suggest a pending economic recovery with a 0.6% August increase that
was close to expectations. The rise in the composite index of leaders
was the fifth in a row and the 4.7% increase during those five months
was the strongest since early-1983. The index itself was at the highest
level since January of last year. 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.
 Perhaps tempering the outlook was that the 0.6%
August increase in the leaders was the weakest of the last five months.
Moreover, a slightly diminished 60% of the index components rose.
Higher stock prices and a steeper interest rate yield curve, along with
a slower speed of vendor deliveries, made the largest positive
contributions to the latest overall increase in the leaders. However,
the real money supply fell for the fourth month in the last five and
average weekly factory hours worked were unchanged as were new orders
for consumer goods &amp; materials.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921b.jpg" align="right" border="0" height="265" width="353">Continuing
to
suggest that the rate of decline in the economy is slowing were the
coincident indicators. They were unchanged during August after a slim
0.1% July gain. While hardly indicative of a robust economy, these
declines compare with monthly shortfalls of 0.6%-to-1.1% dating back to
September. Fostering the turnaround have been slight increases in
industrial production and real personal income as well as diminished
monthly declines in payrolls.
Wringing out past economic
excesses is needed for real economic recovery. In a further sign that
excesses in the U.S. economy are diminishing, the lagging index fell
for the eight month in the last nine. To that point, C&amp;I loans
outstanding fell sharply for the ninth straight month and consumer
credit versus personal income was off for the fifth month this year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921c.jpg" align="right" border="0" height="265" width="353">
Regardless, the average duration of unemployment shortened and the
change in CPI for services eased. The ratio of coincident-to-lagging
indicators (a measure of economic excess) also continued higher for the
fifth straight month to the highest level since November.
The Conference Board figures are available in Haver's BCI
database. Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.
Beyond Inflation Targeting: Should Central Banks
Target the Price Level? from the Federal Reserve Bank
of Kansas City is available <a href="%A0http:/www.kansascityfed.org/PUBLICAT/ECONREV/pdf/09q3kahn.pdf">here.</a> 

How Will Unemployment
Fare Following the Recession? also from the Federal
Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/pdf/09q3knotek.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">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May 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>0.6</td>
<td>0.9</td>
<td>0.8</td>
<td>6.2</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.0</td>
<td>0.1</td>
<td>-0.4</td>
<td>-5.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.1</td>
<td>-0.5</td>
<td>-0.9</td>
<td>-8.6</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>

Forecasters Expect Return Of
Positive GDP Growth This Quarter, Slow Thereafter 
by <a href="/comment/Moeller.html">Tom
Moeller&nbsp;</a> September 21, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921d.jpg" align="right" border="0" height="265" width="353">Each
quarter, the Federal Reserve Bank of Philadelphia surveys a group of
professional forecasters to gain perspective on the outlook for the
U.S. economy. In the August survey, the panel expected the recession to
have reached its end, though the recovery is expected to be subpar.
That subpar nature is expected to keep unemployment high but it is not
expected to prevent inflation and interest rates from rising.
Just
2.4% growth in real GDP is expected during the current quarter to be
followed by growth at about that rate into next year. That follows the
3.9% y/y drop in real GDP through last quarter, which was the deepest
decline since the Great Depression. Indeed, this recovery is subpar
compared to prior periods of severe recession. Following the 1973-75
recession, when GDP fell at a peak y/y rate of 2.3%, growth shortly
rebounded to 6.2%. Similarly following the 1981-82 recession, when GDP
fell 2.7% y/y, a snapback came quickly at near an 8%
rate.
 The subpar nature of the coming economic
recovery stems very much from the consumer who remains burdened by
excessive levels of debt. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921e.jpg" reaching only two that compares with excess six percent during recoveries similarly quarterly in residential middle next fraction prior periods past overbuilding weighs activity finally on domestic demand side business investment is expected to recover at a subpar rate after its decline this year as corporate profits remain under pressure and outlook for global economic remains contained federal spending also should rise but rates of growth are constrained by the soaring budget deficit align="right" border="0" height="265" width="353">
A swing towards inventory accumulation also should
play a part in the pending economic recovery, yet here again it's not a
huge part. Accumulation at near a $20 billion annual rate is expected
by the end of next year. Certainly that is improved from the peak rate
of decumulation of $141 last quarter, and the dollar swing is
impressive. But as a percentage of the economy's overall real size it
amounts to barely half the swing after prior severe recessions. As for
the foreign trade deficit, recent improvement has helped forestall an
even deeper decline in U.S. GDP during this recession. However, that
improvement is expected to now end with little or no improvement
through next year as foreign economies remain weak.
 Weak
economic growth is expected to do little reduce unemployment. The
unemployment rate is expected to average 9.9% and then dip just to 9.6%
by next year's third quarter. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921f.jpg" align="right" border="0" height="265" width="353">
These rates are the highest jobless rates
since 1982-83 and reflect little or no growth in expected employment.
Pricing power is thus expected to be severely constrained. The y/y
growth in the overall GDP price deflator is expected to drift up to
1.5% from its low of 1.0% this year. Perhaps not-so-surprisingly,
forecasters expect that lift to stem from a liquidity-driven rise in
core consumer prices to 1.6% from a low of 1.1% being reached now.
Ten-year Treasury yields are expected to rise in tandem to highs near
4% by the middle of next year.
 The full Third
Quarter 2009 Survey of Professional Forecasters from the
Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/research-and-data/real-time-center/survey-of-professional-forecasters/2009/survq309.cfm">here</a>
.
The data are available in Haver's SURVEYS database.&nbsp;

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">FRB
Philadelphia Survey of Professional Forecasters (AR)</th>
<th scope="col">2Q '09</th>
<th scope="col">3Q '09</th>
<th scope="col">4Q '09</th>
<th scope="col">1Q '10</th>
<th scope="col">2Q '10</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Real GDP</td>
<td>-1.0%</td>
<td>2.4%</td>
<td>2.2%</td>
<td>2.5%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; PCE</td>
<td>-1.2</td>
<td>1.7</td>
<td>1.1</td>
<td>1.7</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-Residential
Investment</td>
<td>-8.9</td>
<td>-7.3</td>
<td>-6.3</td>
<td>2.1</td>
<td>3.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential
Investment</td>
<td>-29.3</td>
<td>-7.3</td>
<td>1.8</td>
<td>5.6</td>
<td>13.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Federal
Government&nbsp;</td>
<td>10.9</td>
<td>6.2</td>
<td>4.1</td>
<td>1.5</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Change in Business
Inventories</td>
<td>$-141.1B</td>
<td>$-89.9B</td>
<td>$-32.7B</td>
<td>$-1.7B</td>
<td>$9.5B</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Net Exports</td>
<td>-339.3</td>
<td>-340.0</td>
<td>-342.1</td>
<td>-353.6</td>
<td>-366.0</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>9.3</td>
<td>9.6</td>
<td>9.9</td>
<td>9.9</td>
<td>9.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Price Index (Y/Y, %)</td>
<td>2.4</td>
<td>1.7</td>
<td>1.1</td>
<td>1.5</td>
<td>1.5</td>
</tr>
</tbody>
</table>
Industrial Orders Keep Rising In
France And In Italy Pessimism Continues To Haunt The Outlook, However 
by <a href="/comment/Brusca.html">Robert
Brusca</a> September 21, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921g.jpg" align="left" border="0" height="265" width="353">
French orders were up by a solid 2% in July as foreign orders
surged by 14%. In Italy orders jumped by 3.2% on foreign order strength
of 15.6%. Both Italy and France as seeing strong orders in the new
quarter (Q3, one month in) led by huge gains in orders from abroad. 
 

Both Italy and France show recovery patterns of order growth
but order levels that remain just a bit less than 25% below year-ago
levels. 
 

Europe- Europe continues to show economic recovery. But with
the G-20 set to meet in the re-made but old US industrial city of
Pittsburgh, the OECD, the IMF and a German think-tank have taken this
opportunity to highlight the risks to the future of this recovery. The
OECD is very concerned about the health of banks and that there could
be some backsliding and troubles with capitalization. The IMF is
concerned that German employment could rise sharply over the next year,
pushing unemployment to over 10.5% and creating weak growth under 0.5%
in 2010. This would clearly become a problem for growth in the rest of
the e-Zone. Not to be outdone by this sort of sour outlook, the German
think-tank IWH Institute warns of a credit crunch highlighting the
potential for a double dip as government stimulus programs come off the
books. 
 

Pessimism shuns trends: Despite some very strong current
indicators that spread across the major EMU economies there remains in
Europe, much like in the US, a core of pessimism about the risks.
Unlike after other recessions apparently this recovery cannot be
trusted to bottom and begin to rise and for that upswing to be
self-sustaining. The abnormal degree of and scope of early government
help that will eventually be rescinded is one of the common culprits in
both US and European pessimism. If that is so what ever do it in the
first place? 
 

Professional pessimists: While we expect the main
international regulators and oversight agencies to be less than
cheerleaders and to be wary of risks, the extent to which private
sector naysayers have piggy-backed on that tact is surprising. For now
we are left with the reality of an upswing and one that is looking
quite nice and consistent across EMU nations. Meanwhile, the outlook
sours as we speak. While the future may still hold risks, one must
wonder if they are as great as is being said or if lowering
expectations has been taken to a new extreme by politicians who in the
end are chastened by their own role in this crisis by seeing it develop
and watching powerlessly, aware that it is a disaster that occurred on
their watch. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> Italy
Orders</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="3">Saar exept m/m</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-mo6-mo12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>3.2%</td>
<td>2.6%</td>
<td>0.8%</td>
<td>29.5%</td>
<td>-1.9%</td>
<td>-24.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Foreign</td>
<td>15.6%</td>
<td>2.6%</td>
<td>0.9%</td>
<td>105.4%</td>
<td>17.6%</td>
<td>-19.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Domestic</td>
<td>-2.9%</td>
<td>2.5%</td>
<td>0.7%</td>
<td>0.9%</td>
<td>-11.3%</td>
<td>-26.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Memo</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">Sales</td>
<td>0.7%</td>
<td>-1.6%</td>
<td>-1.0%</td>
<td>-7.4%</td>
<td>-11.0%</td>
<td>-22.1%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">
French Orders</td>
</tr>
<tr class="grey4">
<td colspan="3">Saar exept m/m</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-mo6-mo12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>2.0%</td>
<td>1.2%</td>
<td>0.0%</td>
<td>13.7%</td>
<td>5.6%</td>
<td>-22.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Foreign</td>
<td>14.0%</td>
<td>-3.0%</td>
<td>7.0%</td>
<td>96.1%</td>
<td>19.1%</td>
<td>-16.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">IP xConstruct</td>
<td>0.6%</td>
<td>0.2%</td>
<td>3.0%</td>
<td>16.3%</td>
<td>2.8%</td>
<td>-13.8%</td>
</tr>
</tbody>
</table>
 
Recent Data For The Russian Economy 
by <a href="/comment/Curley.html">
Louise Curley</a> September 21, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921h.jpg" align="left" border="0">
Preliminary data suggest that the Russian Gross Domestic
Product, fell 0.5% in the second quarter, a marked improvement over the
9.0% decline in the first quarter. (These figures are based on the
series that have been seasonally adjusted by Haver Analytics.) August
data on production, construction, and retail sales have been
disappointing. Production and construction declined in contrast to
increases in July and retail sales showed a smaller increase in August
than in July. The unemployment rate, however, was 8.6% in August 2
basis points below July.
In spite of the July hiccup particularly in industrial
production, the prospects for increased activity in Russia have
brightened. Oil prices are up, the Reserve Bank has steadily lowered
the refinancing rate from 13% in March to 10.5% in September.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090921i.jpg" align="right" border="0" height="265" width="353">
Inflation, though still high, was 11.6% in August, down from 13.15% in
April. Recent data for these aspects of the Russian economy are shown
in the table below.
The Purchasing Mangers Survey published by Markit Economics in
London reported earlier this month that the GDP indicator for Russia
reached the expansion stage in August (above 50) for the first time
since September, 2008 as shown in the first chart. Finally, the Stock
Market has increased 44% from the recent low point reached on July10
and 1208 today is 139% above the low reached on February 2, 2009. The
decline and rise in the stock market is shown in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">RUSSIA&nbsp;</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug&nbsp; 09</th>
<th scope="col">Jul 09</th>
<th scope="col">Jun
09&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">Apr 09&nbsp;</th>
<th scope="col">Mar 09</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production (M/M %
Chg)</td>
<td>--</td>
<td>-3.0</td>
<td>4.7</td>
<td>4.5</td>
<td>-2.1</td>
<td>-8.1</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Retail Sales&nbsp; (M/M %
Chg)</td>
<td>--</td>
<td>1.68</td>
<td>2.36</td>
<td>0.88</td>
<td>1.70</td>
<td>0.71</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Value of Construction Work
Performed&nbsp; (M/M % Chg)</td>
<td>--</td>
<td>-2.66</td>
<td>2.61</td>
<td>210.55</td>
<td>0.74</td>
<td>11.54</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>--</td>
<td>8.6</td>
<td>8.8</td>
<td>8.7</td>
<td>8.9</td>
<td>8.7</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Inflation (%)</td>
<td>--</td>
<td>11.6</td>
<td>12.0</td>
<td>11.9</td>
<td>12.3</td>
<td>13.2</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Refinancing Rate&nbsp; (%)</td>
<td>10.50</td>
<td>10.75</td>
<td>11.00</td>
<td>11.50</td>
<td>12.00</td>
<td>12.50</td>
<td>13.00</td>
</tr>
<tr class="odd">
<td class="firstcol">Oil Price Brent Crude (Ave of
Daily Prices $ per barrel)</td>
<td>--</td>
<td>72.86</td>
<td>65.62</td>
<td>69.24</td>
<td>58.25</td>
<td>51.18</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Leading Indicators Rise For AFifth Straight Month And Signal Economic Recovery

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090917c.jpg" align="right" border="0" height="265" width="353">
Extraordinary
developments continued to characterize the US financial system through
Q2, as indicated in the Federal Reserve's flow-of-funds accounts,
published today at noon.&nbsp; Two sectors in particular caught our
attention, households and the federal government, each for opposing
reasons.First, after six consecutive quarters of
deterioration, household net worth finally experienced an
improvement.&nbsp; It increased $2.0 trillion to $53.1
trillion.&nbsp; The biggest gains came from the upturn in the stock
market, which added $1.1 trillion to people's assets.&nbsp;
Additionally, mutual fund holdings gained $486 billion, and pension
fund reserves -- largely invested in equities, of course -- added $742
billion.&nbsp; Among tangible assets, household real estate values
rose by $323 billion following nine consecutive quarters of
erosion.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090917e.jpg" align="right" border="0" height="265" width="353">
&nbsp;Household financial positions also improved because
they continued to pay down liabilities.&nbsp; These changes were
small compared to the asset moves, but clearly still in a favorable
direction; total liabilities fell $35 billion in Q2, the fourth
reduction in the last five quarters.&nbsp; Mortgage debt and
consumer credit had the largest declines, while conventional bank loans
increased.In these comparisons, the concept of "mortgage equity
withdrawal" plays a role.&nbsp; Homeowners' equity in real estate
increased in Q2 by $353 billion.&nbsp; It had contracted in 12 of
the last 13 quarters, a span extending back to the beginning of 2006
and interrupted by just a token increase in Q4 2006.&nbsp; For the
first year of this period, the reductions were evidently deliberate on
the part of consumers, who borrowed heavily against their
properties.&nbsp; Such "mortgage equity withdrawal" became a
popular addition to economists' tools for forecasting consumer
spending, which could be larger still when income was augmented by
liquidations of home values.&nbsp; This practice dwindled rapidly
however as real estate prices began to decline in 2007 and according to
the Haver measure, "MEW" turned negative last year.&nbsp; So people
began borrowing a smaller portion of the value of the real estate they
were purchasing or remodeling to try to hold a larger equity
stake.&nbsp; In the aggregate this effort was subverted by the the
continuing decline in real estate prices in general.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090917m.jpg" align="right" border="0" height="265" width="353">
&nbsp; Finally,
though, this last quarter saw homeowners' equity go up.&nbsp; As
noted above, the value of real estate increased some $323
billion.&nbsp; Our measure of MEW declined by about $90 billion,
and mortgage debt itself was paid down by some $29 billion.&nbsp;
As a media headline writer noted recently, once again, the main
function of a home is returning to that of residence, not a resource to
pay for something else.Separately in this flow-of-funds report, we
were also struck by the magnitude of the federal government's
borrowing, and just one small comparison will suffice to
illustrate.&nbsp; In these data, it's the historical comparison
available through the time series that helps put these things in
perspective.&nbsp; It's easy to joke about "a trillion here and
trillion there", but here's a new way to look at these
numbers.&nbsp; In Q2, net new issues of Treasury securities were
just under $339 billion.&nbsp; In this one three-month period, at a
time of year when tax inflows usually mean the Treasury borrows little
or even pays down on the debt, the Treasury borrowed more than it had
in any whole year before 2003.&nbsp; And this latest quarter's new
debt was in fact seasonally small: the prior three quarters had
averaged $518 billion, easily larger than any whole year ever -- until
2008.&nbsp;
End of Year
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Flow
of Funds (Y/Y % Chg.)</th>
<th scope="col">% of Total
Outstanding</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col" colspan="3">End of Year</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td class="firstcol">2008</td>
<td>2007</td>
<td>2006</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Credit Market Debt
Outstanding</td>
<td>--</td>
<td>3.0</td>
<td>4.2</td>
<td>5.0</td>
<td>10.4</td>
<td>9.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Federal Government</td>
<td>13.6%</td>
<td>35.9</td>
<td>28.3</td>
<td>24.2</td>
<td>4.9</td>
<td>3.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Households</td>
<td>25.9%</td>
<td>-1.2</td>
<td>-0.7</td>
<td>0.3</td>
<td>6.6</td>
<td>10.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Nonfinancial Corporate Business</td>
<td>13.8%</td>
<td>2.9</td>
<td>4.4</td>
<td>5.3</td>
<td>14.2</td>
<td>8.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Nonfarm, Noncorporate Business</td>
<td>6.9%</td>
<td>-1.7</td>
<td>1.4</td>
<td>4.9</td>
<td>12.6</td>
<td>14.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Financial Sectors</td>
<td>31.3%</td>
<td>-0.9</td>
<td>3.7</td>
<td>5.5</td>
<td>13.4</td>
<td>9.9</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Trillions of
$</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Net Worth: Households &amp;
Nonprofit Organizations</td>
<td>--</td>
<td>$53.140</td>
<td>$51.141</td>
<td>$52.917</td>
<td>$62.911</td>
<td>$63.335</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Tangible Assets:
Households</td>
<td>--</td>
<td>$24.847</td>
<td>$24.660</td>
<td>$25.177</td>
<td>$27.526</td>
<td>$28.724</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Financial Assets:
Households</td>
<td>--</td>
<td>$42.361</td>
<td>$40.584</td>
<td>$41.957</td>
<td>$50.703</td>
<td>$48.025</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total Liabilities:
Households</td>
<td>--</td>
<td>$14.068</td>
<td>$14.103</td>
<td>$14.217</td>
<td>$14.318</td>
<td>$13.414</td>
</tr>
</tbody>
</table>
</body></html>

Extraordinary developments continued to characterize the US financial system through Q2, as indicated in the Federal Reserve's flow-of-funds accounts, published today at noon. Two sectors in particular caught our attention, households [...]

U.S. Leading Indicators Rise ForAFifth Straight Month And Signal Economic Recovery

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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: September 2009

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