Robert Brusca

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Japan's large manufacturing firms, the bellwether group in the tankan report, showed an unchanged reading of 12 in Q4 2015. Nonmanufacturing firms showed an unchanged reading as well, but the overall total industry index ticked lower to a reading of 18 in Q4 from 19 in Q3. The manufacturing tankan reading has a 79th percentile standing which is quite firm. Nonmanufacturing firms are much stronger in relative terms with a queue standing of 97.1% (the reading has only been this strong or stronger about 3% of the time). The total industrial standing is in its 85th percentile.

Nonmanufacturing details shows strength in construction, transportation, restaurants and hotels and in personal services and retailing. Real estate is also relatively strong. Wholesaling and services for business have more moderate percentile standings. The business-related sectors are doing relatively worse and manufacturing is lagging.

Moving to the outlook for Q1 2016, manufacturing has an outlook that has slipped to 7 from 10. The manufacturing outlook stands in the 60th percentile of its historic queue of data and was last lower in mid-2013. Nonmanufacturing slips in Q1 2016 too, to a standing of 18 from 19 but still has a 96th percentile standing. The all industry outlook slips by a point too, to 13 from 14 and has a 71st percentile standing.

Japan's weakness is centered in manufacturing and in business-related sectors. These sectors used to be its strength. Current performance is still relatively good, but the outlook is worse than current performance in all sectors.

Medium and small tankan responders show approximately the same pattern with relatively firm-to-strong current readings but with outlooks that are worsening.

Japan continues to struggle with deflation. Its battle is harder than elsewhere since Japan has a shrinking population. Various external factors have intruded on Japan's ability to reflate. The most recent is the tight trading relationship it has with China at a time that China is undergoing a pronounced slowdown.

Japan is closed off from fiscal measures because its national debt is so high. And its intent to implement further rounds of tax hikes also hangs over the economy. The tankan shows a relatively robust level of activity in Japan. In some ways the current reading is surprisingly strong. But the outlook shows a loss of momentum led by encroaching weakness in the manufacturing sector. Japan's real challenges still lie ahead.


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Japan's large manufacturing firms, the bellwether group in the tankan report, showed an unchanged reading of 12 in Q4 2015. Nonmanufacturing firms showed an unchanged reading as well, but the overall total industry index ticked lower [...]

Japan's Tankan Is Unchanged But the Outlook Is Cut

Tom Moeller

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Total business inventories posted a negligible decline during October (2.0%
y/y) following a 0.1% September rise.

Retail inventories gained 0.1% (5.0% y/y) after a 0.8% increase. Motor
vehicle &amp; parts inventories eased 0.4% (+6.5% y/y) but growth had been
accelerating all year. Outside of the vehicle sector, retail inventories gained
0.4% (4.2% y/y) after two months of 0.5% increase. Building materials grew
1.1% (6.5% y/y) and food and beverage store inventories increased 0.3% (2.5%
y/y). General merchandise store inventories rose 0.3% (3.4% y/y) for a third
straight month. Furniture &amp; home furnishings inventories declined 0.7%
(+1.6% y/y) and clothing store inventories eased 0.1% (+5.2% y/y).

Merchant wholesalers inventories eased 0.1% (+3.6% y/y) while the value of
factory sector stockpiles also fell 0.1% (-1.8% y/y), down for the fourth
straight month.

Business sales during October eased 0.2% (-2.7% y/y) after remaining unchanged.
The reading reflected unchanged retail and wholesale sales. Factory sector sales
declined 0.5%.

The business sector inventory-to-sales ratio rose to 1.38, equaling its
highest level since June 2009. The rise reflected stability in the retail sector
at 1.48, its highest level since May 2009. The merchant wholesale I/S ratio of
1.31 equaled its highest since 2009 as did the factory sector ratio of 1.35.

The manufacturing and trade data are in Haver's USECON database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Manufacturing &amp; Trade (%)</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Oct Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Business Inventories</td>
 <td >-0.0</td>
 <td >0.1</td>
 <td >0.1</td>
 <td >2.0</td>
 <td >3.9</td>
 <td >4.3</td>
 <td >5.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Retail</td>
 <td >0.1</td>
 <td >0.8</td>
 <td >0.5</td>
 <td >5.0</td>
 <td >2.7</td>
 <td >7.6</td>
 <td >7.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Retail excl. Motor Vehicles</td>
 <td >0.4</td>
 <td >0.5</td>
 <td >0.5</td>
 <td >4.2</td>
 <td >2.2</td>
 <td >4.9</td>
 <td >2.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Merchant Wholesalers</td>
 <td >-0.1</td>
 <td >0.2</td>
 <td >0.3</td>
 <td >3.6</td>
 <td >6.7</td>
 <td >4.2</td>
 <td >6.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Manufacturing</td>
 <td >-0.1</td>
 <td >-0.5</td>
 <td >-0.4</td>
 <td >-1.8</td>
 <td >2.4</td>
 <td >1.7</td>
 <td >3.8</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colspan="8" >Business Sales (%)</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Total</td>
 <td >-0.2</td>
 <td >0.0</td>
 <td >-0.6</td>
 <td >-2.7</td>
 <td >3.5</td>
 <td >2.8</td>
 <td >5.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Retail</td>
 <td >0.0</td>
 <td >-0.1</td>
 <td >-0.0</td>
 <td >1.1</td>
 <td >3.5</td>
 <td >3.8</td>
 <td >4.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Retail excl. Motor Vehicles</td>
 <td >0.1</td>
 <td >-0.6</td>
 <td >-0.1</td>
 <td >-0.5</td>
 <td >2.6</td>
 <td >2.6</td>
 <td >3.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Merchant Wholesalers</td>
 <td >-0.0</td>
 <td >0.5</td>
 <td >-0.9</td>
 <td >-3.7</td>
 <td >4.3</td>
 <td >3.0</td>
 <td >6.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Manufacturing</td>
 <td >-0.5</td>
 <td >-0.3</td>
 <td >-0.9</td>
 <td >-4.7</td>
 <td >2.6</td>
 <td >1.9</td>
 <td >4.7</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colspan="8" >I/S Ratio</td>
 </tr>
 <tr>
 <td class="firstcol" >Total</td>
 <td >1.38</td>
 <td >1.37</td>
 <td >1.37</td>
 <td >1.31</td>
 <td >1.31</td>
 <td >1.29</td>
 <td >1.27</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Retail</td>
 <td >1.48</td>
 <td >1.48</td>
 <td >1.47</td>
 <td >1.43</td>
 <td >1.43</td>
 <td >1.41</td>
 <td >1.38</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Retail Excl. Motor Vehicles</td>
 <td >1.29</td>
 <td >1.29</td>
 <td >1.28</td>
 <td >1.24</td>
 <td >1.24</td>
 <td >1.23</td>
 <td >1.21</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Merchant Wholesalers</td>
 <td >1.31</td>
 <td >1.31</td>
 <td >1.31</td>
 <td >1.22</td>
 <td >1.20</td>
 <td >1.18</td>
 <td >1.16</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Manufacturing</td>
 <td >1.35</td>
 <td >1.35</td>
 <td >1.35</td>
 <td >1.32</td>
 <td >1.31</td>
 <td >1.30</td>
 <td >1.29</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Total business inventories posted a negligible decline during October (2.0% y/y) following a 0.1% September rise. Retail inventories gained 0.1% (5.0% y/y) after a 0.8% increase. Motor vehicle & parts inventories eased 0.4% (+6.5% [...]

U.S. Business Inventories Are Little-Changed M/M; I/S Ratios Trend Higher

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The overall Final Demand Producer Price Index increased 0.3% (-1.1%
y/y) during November, following a 0.4% October decline. The Action Economics
Forecast Survey expected no change in prices. Prices excluding food &amp; energy
gained 0.3% (0.5% y/y) after two months of 0.3% decrease. A 0.1% rise had been expected.

Final demand goods prices (35% of the total index) eased 0.1% (-1.2%
y/y), down for the fifth straight month. The latest decline was led by a 0.6%
drop (-19.0% y/y) in energy prices. Gasoline prices fell 1.3% (-33.4% y/y) while
home heating oil prices declined 5.2% (-40.4% y/y). Residential natural gas
prices were off 3.1% (-11.8% y/y) and residential electric power costs fell 0.3%
(+0.1% y/y). Offsetting this decline was a 0.3% gain (-3.9% y/y) in food prices.
Egg prices jumped 10.8% (45.7% y/y) and beef &amp; veal costs rose 1.2% (-10.2%
y/y). Bakery product prices rose 0.5% (1.4% y/y) but fish &amp; shellfish prices
declined 3.5% (-6.3% y/y).

Final demand goods prices excluding food &amp; energy eased 0.1% (-0.1% y/y)
after declining 0.3% in October. Core finished consumer goods ticked 0.1% higher
(2.4% y/y) after a 0.2% decline. Core consumer nondurables costs rose 0.2% (3.3%
y/y) following no change, and consumer durables edged 0.1% higher (1.1% y/y).
Private capital equipment costs improved 0.1% (1.0% y/y) while core goods prices
for government purchases eased 0.1% for a second month (-0.1% y/y). Prices of
goods for export fell 0.5% (-3.6% y/y), down for the fifth straight month.

Final demand services costs (63% of the total index) increased 0.5%
(0.5% y/y) after a 0.3% fall. This was led by trade services which rebounded 1.2%
(1.0% y/y); trade services represent the margins charged by retail and wholesale
dealers and merchants. Prices for transportation of passengers rose 0.4% (-6.2%
y/y) after three months of decline. Prices for transportation and warehousing of
goods gained 0.4% (-1.9% y/y). Other services, including financial, health care
and communications, improved 0.1% (+0.8% y/y).

Final demand construction prices (2.0% of the index) fell 0.3% (+2.1%
y/y) after rising 1.0%. Private capital investment costs fell 0.4% (+2.0% y/y).
Prices of processed goods for intermediate demand fell 0.6% (-7.1%
y/y), off for the fifth straight month.

The PPI data are contained in Haver's USECON database with further
detail in PPI and PPIR. The expectations figures are available in
the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Producer Price Index (SA, %)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Final Demand</td>
 <td >0.3</td>
 <td >-0.4</td>
 <td >-0.5</td>
 <td >-1.1</td>
 <td >1.6</td>
 <td >1.4</td>
 <td >1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Excluding Food &amp; Energy</td>
 <td >0.3</td>
 <td >-0.3</td>
 <td >-0.3</td>
 <td >0.5</td>
 <td >1.7</td>
 <td >1.5</td>
 <td >1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp; Goods</td>
 <td >-0.1</td>
 <td >-0.4</td>
 <td >-1.2</td>
 <td >-4.3</td>
 <td >1.3</td>
 <td >0.8</td>
 <td >1.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 Foods</td>
 <td >0.3</td>
 <td >-0.8</td>
 <td >-0.8</td>
 <td >-3.9</td>
 <td >3.2</td>
 <td >1.7</td>
 <td >3.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 Energy</td>
 <td >-0.6</td>
 <td >0.0</td>
 <td >-5.9</td>
 <td >-19.0</td>
 <td >-0.9</td>
 <td >-0.8</td>
 <td >0.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp; Goods Excluding
 Food &amp; Energy</td>
 <td >-0.1</td>
 <td >-0.3</td>
 <td >0.0</td>
 <td >-0.1</td>
 <td >1.5</td>
 <td >1.1</td>
 <td >1.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Services</td>
 <td >0.5</td>
 <td >-0.3</td>
 <td >-0.4</td>
 <td >0.5</td>
 <td >1.8</td>
 <td >1.6</td>
 <td >1.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Construction</td>
 <td >-0.3</td>
 <td >1.0</td>
 <td >0.0</td>
 <td >2.1</td>
 <td >2.9</td>
 <td >1.8</td>
 <td >2.9</td>
 </tr>
 <tr>
 <td class="firstcol" >Intermediate Demand - Processed Goods</td>
 <td >-0.6</td>
 <td >-0.4</td>
 <td >-1.5</td>
 <td >-7.1</td>
 <td >-2.6</td>
 <td >0.1</td>
 <td >0.4</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The overall Final Demand Producer Price Index increased 0.3% (-1.1% y/y) during November, following a 0.4% October decline. The Action Economics Forecast Survey expected no change in prices. Prices excluding food & energy gained 0.3% [...]

U.S. Producer Prices Rebound

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Consumers began to open their wallets in advance of the holiday season.
Purchases at retail stores and restaurants increased 0.2% during November
following little change in the prior three months, which were unrevised. The
latest increase fell short of expectations for a 0.3% rise in the Action
Economics Forecast Survey. Sales excluding autos gained a firmer 0.4% and also
made up for weakness in the prior four months. A 0.3% gain was expected. During
the last ten years, there has been a 92% correlation between the change in
retail sales and the change in real GDP.

Sales in the retail control group increased 0.6%, the largest rise since
July. These purchases do not include autos, gasoline, building materials and
food services and align with the consumer spending estimates in the GDP accounts.

Light motor vehicle sales fell 0.4%, down for the second straight month. The
decline compares to a 0.3% drop in unit motor vehicle sales. Falling prices
continued to lower sales at gasoline service stations where a 0.8% decline was
the fifth in as many months.

Sales in other discretionary categories were firm. Apparel store sales
increased 0.8% (-1.6% y/y) following three months of decline. Sales at sporting
goods, hobby, book &amp; music stores also jumped 0.8% (5.0% y/y) after a 0.1%
uptick. Restaurant sales increased 0.7% (5.4% y/y), the strongest rise since
April. General merchandise store sales grew gained 0.7% (1.4% y/y) after a 0.1%
dip and purchases at electronics &amp; appliance stores rose 0.6% (-1.8% y/y),
also following a 0.1% dip. Nonstore retailers sales increased 0.6% (10.3% y/y)
after a 1.4% spurt. Holding back the total's rise was a 0.3% decline in sales
(+4.9% y/y) at furniture &amp; home furnishing store sales, but it was the first
decline in three months. Also down 0.3% (+4.1% y/y) were sales at building
materials &amp; garden supply stores, off for the third month in the last four.

In the nondiscretionary sales categories, food &amp; beverage store sales
increased 0.7% (0.8% y/y) following two months of decline. Sales at health &amp;
personal care stores were little-changed (+4.6% y/y), following a 0.5% rise.

The retail sales figures are available in Haver's USECON database. The
Action Economics figures are in the AS1REPNA database.

Do We Know What We Owe? Consumer Debt as Reported By Borrowers and Lenders
from the Federal Reserve Bank of New York is available <a href="https://www.newyorkfed.org/medialibrary/media/research/epr/2015/EPR_2015_comparisons_brown.pdf">here</a>.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Retail Spending (%)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr class="grey2">
 <td class="firstcol" >Total Retail Sales &amp; Food
 Services</td>
 <td >0.2</td>
 <td >0.1</td>
 <td >-0.1</td>
 <td >1.5</td>
 <td >3.9</td>
 <td >3.7</td>
 <td >5.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Excluding Autos</td>
 <td >0.4</td>
 <td >0.1</td>
 <td >-0.5</td>
 <td >0.9</td>
 <td >3.1</td>
 <td >2.7</td>
 <td >4.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Non-Auto Less Gasoline, Building
 Supplies &amp; Food Services</td>
 <td >0.6</td>
 <td >0.2</td>
 <td >0.0</td>
 <td >2.9</td>
 <td >3.3</td>
 <td >2.7</td>
 <td >3.6</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol" >Retail Sales</td>
 <td >0.2</td>
 <td >0.0</td>
 <td >-0.1</td>
 <td >1.0</td>
 <td >3.7</td>
 <td >3.8</td>
 <td >4.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Motor Vehicle &amp; Parts</td>
 <td >-0.4</td>
 <td >-0.3</td>
 <td >1.4</td>
 <td >4.3</td>
 <td >7.5</td>
 <td >8.3</td>
 <td >9.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Retail Less Autos</td>
 <td >0.3</td>
 <td >0.1</td>
 <td >-0.6</td>
 <td >0.1</td>
 <td >2.6</td>
 <td >2.6</td>
 <td >3.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Gasoline Stations</td>
 <td >-0.8</td>
 <td >-1.0</td>
 <td >-4.8</td>
 <td >-19.7</td>
 <td >-2.7</td>
 <td >-0.7</td>
 <td >4.3</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol" >Food Service &amp; Drinking Places
 Sales</td>
 <td >0.7</td>
 <td >0.3</td>
 <td >0.5</td>
 <td >5.4</td>
 <td >6.2</td>
 <td >3.4</td>
 <td >5.9</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Consumers began to open their wallets in advance of the holiday season. Purchases at retail stores and restaurants increased 0.2% during November following little change in the prior three months, which were unrevised. The latest [...]

U.S. Retail Sales Show Widespread Improvement

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France's current account surplus proved to be short-lived. A smattering of monthly surpluses has given way to deficits again. The current account averages deficits over 12 months, six months and three months.

French export growth peaked early in the year but has since lost its zest and exports are backsliding. Export growth currently logs a gain of 1% over 12 months. Exports are falling at a 4.7% pace over six months and at a faster 9.5% annual rate over three months. The thrill is gone. Whatever fundamentals were supporting the rebound in French exports, they are gone too.

Exports of food and other items are decelerating and contracting at a horrific pace over three months. The single strong category that staves off some of this weakness in total exports is transportation equipment where shipments are up at a 40.1 annualized rate over three months. The auto sector has been the one resilient sector for all of Europe as well as in the U.S. France is no exception to this exception.

French import trends are not as easily pigeon-holed. Overall imports are up by just 0.9% over 12 months, just a hair slower than exports. Import trends are erratic across timelines with six-month growth at a 1.9% pace and three-month growth at a -1.6% pace.

Import categories have somewhat mixed trends. Two of three categories show a drop off in growth from 12-month to six-month with `other imports' as the exception. Then, over three months, imports fall in all categories except transportation equipment. Both transportation equipment and good imports are higher year-over-year, but other imports are flat.

The overall lethargy in French imports speaks to the weakness of domestic demand in France. While the euro has regained a slight amount of strength recently, it is still weak and should be helping to boost French exports and should help to stave off imports. The euro may be helping to keep imports in check, but there is no boost to speak of for exports.

France's economy has been showing some signs of picking up as its manufacturing PMI has drifted above 50 and its services PMI has held above 51. But while these are positive readings, they still aren't strong and we see little evidence of strength in either French imports or exports. In that respect, this trade and current account report seems to be evidence of more that same-old, same-old in France. The economy is neither contracting nor accelerating. It's as though it is caught in some no-where zone of stunted growth and can't get out.


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France's current account surplus proved to be short-lived. A smattering of monthly surpluses has given way to deficits again. The current account averages deficits over 12 months, six months and three months. French export growth [...]

France's Current Account Swings Back to Deficit

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Initial claims for unemployment insurance rose to 282,000 (-1.2% y/y) in the
week ending December 5 from an unrevised 269,000 the previous week. The Action
Economics Forecast Survey expected 265,000 filings. The four-week moving average
rose slightly to 270,750 but remained near the 15-year low. During the last ten
years, there has been a 74% correlation between the level of initial claims and
the m/m change in payroll employment.
In the week ending November 28, continuing claims for unemployment insurance
edged up to 2.243 million, but were 18.7% lower than a year earlier. The
four-week moving average increased to 2.184 million and remained near the
15-year low.
The insured rate of unemployment notched higher to 1.7% but remained near the
cycle low.
The insured rate of unemployment across states continued to vary. The lowest
were South Dakota (0.4%), Nebraska (0.6%), Florida (0.6%), Indiana (0.7%),
Virginia (0.7%) and Tennessee (0.8%). At the other end of the spectrum were
California (1.7%), Illinois (1.8%), Massachusetts (1.9%), Connecticut (2.0%),
Pennsylvania (2.2%) and New Jersey (2.4%). The state data are not seasonally
adjusted and reported with a two-week lag versus the headline figure.
Data on weekly unemployment insurance are contained in Haver's WEEKLY
database and they are summarized monthly in USECON. Data for individual
states are in REGIONW. The expectations figure is from the Action
Economics survey, carried in the AS1REPNA database.
<table class="centered" border="0" cellspacing="0" width="1871">
 <thead>
 <tr>
 <th class="firstcol" 0801 width="679">Unemployment Insurance (000s)</th>
 <th 0801 width="169">12/05/15</th>
 <th 0801 width="169">11/28/15</th>
 <th 0801 width="170">11/21/15</th>
 <th 0801 width="170">Y/Y %</th>
 <th 0801 width="170">2014</th>
 <th 0801 width="170">2013</th>
 <th 0801 width="170">2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" 0801 width="679">Initial Claims</td>
 <td 0801 align="center" width="169">282</td>
 <td 0801 align="center" width="169">269</td>
 <td 0801 align="center" width="170">260</td>
 <td 0801 align="center" width="170">-1.2</td>
 <td 0801 align="center" width="170">307</td>
 <td 0801 align="center" width="170">342</td>
 <td 0801 align="center" width="170">372</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 width="679">Continuing Claims</td>
 <td 0801 align="center" width="169">--</td>
 <td 0801 align="center" width="169">2,243</td>
 <td 0801 align="center" width="170">2,161</td>
 <td 0801 align="center" width="170">-18.7</td>
 <td 0801 align="center" width="170">2,607</td>
 <td 0801 align="center" width="170">2,978</td>
 <td 0801 align="center" width="170">3,308</td>
 </tr>
 <tr>
 <td class="firstcol" 0801 width="679">Insured Unemployment Rate (%)</td>
 <td 0801 align="center" width="169">--</td>
 <td 0801 align="center" width="169">1.7</td>
 <td 0801 align="center" width="170">1.6</td>
 <td 0801 align="center" width="170">
 1.8 
 (Nov. 2014)
 </td>
 <td 0801 align="center" width="170">2.0</td>
 <td 0801 align="center" width="170">2.3</td>
 <td 0801 align="center" width="170">2.6</td>
 </tr>
 </tbody>
</table>
&nbsp;
U.S. Import Price Decline Led By Cheaper Oil 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;December
10, 2015 
Import prices declined 0.4% during November following a 0.3% October drop,
revised from -0.5%. A 0.7% fall had been expected in the Action Economics
Forecast Survey. Petroleum prices fell 2.5% (-44.5% y/y) after a 0.4% rise,
revised from a 2.1% decline. Nonpetroleum import prices fell 0.3% (-3.4% y/y)
after an unrevised 0.4% decline. These prices have not risen m/m since March of
last year. A 1.0% decline (-11.2% y/y) in prices of nonoil supplies &amp;
materials led the way lower followed by a 0.5% drop (-5.0% y/y) in food &amp;
beverage costs. Capital goods prices eased 0.1% (-2.3% y/y) as did prices for
automotive vehicles &amp; sparts. Nonauto consumer goods prices remained
unchanged (-0.7% y/y) for a second straight month.
Export prices fell 0.6% (-6.3% y/y) following an unrevised 0.2% decline.
Expectations had been for a 0.2% shortfall. A 1.6% decline (-15.0% y/y) in
industrial supplies &amp; materials prices led the way lower. This drop
reflected lower fuels &amp; building materials costs, without which prices fell
0.4% (-8.4% y/y). Foods, feeds &amp; beverages prices were off 0.9% (-13.0% y/y)
and capital goods costs eased 0.1% (-0.2% y/y). Automotive vehicles &amp; parts
prices fell 0.2% (-0.5% y/y), but nonauto consumer goods prices improved 0.1%
(-2.1% y/y).
The import and export price series can be found in Haver's USECON
database. Detailed figures are available in the USINT database. The
expectations figure from the Action Economics Forecast Survey is in the AS1REPNA
database.
<table class="centered" border="0" cellspacing="0" width="1871">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="854"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export
 Prices (NSA, %)</a></th>
 <th scope="col" width="144">Nov</th>
 <th scope="col" width="144">Oct</th>
 <th scope="col" width="145">Sep</th>
 <th scope="col" width="145">Nov Y/Y</th>
 <th scope="col" width="145">2014</th>
 <th scope="col" width="145">2013</th>
 <th scope="col" width="145">2012</th>
 </tr>
 </thead>
 <tbody>
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 <td class="firstcol" width="854">Imports - All Commodities</td>
 <td width="144" align="center">-0.4</td>
 <td width="144" align="center">-0.3</td>
 <td width="145" align="center">-1.1</td>
 <td width="145" align="center">-9.4</td>
 <td width="145" align="center">-1.1</td>
 <td width="145" align="center">-1.1</td>
 <td width="145" align="center">0.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="854">&nbsp;&nbsp;Petroleum</td>
 <td width="144" align="center">-2.5</td>
 <td width="144" align="center">0.4</td>
 <td width="145" align="center">-9.4</td>
 <td width="145" align="center">-44.5</td>
 <td width="145" align="center">-5.6</td>
 <td width="145" align="center">-2.6</td>
 <td width="145" align="center">-0.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="854">&nbsp;&nbsp;Nonpetroleum</td>
 <td width="144" align="center">-0.3</td>
 <td width="144" align="center">-0.4</td>
 <td width="145" align="center">-0.2</td>
 <td width="145" align="center">-3.4</td>
 <td width="145" align="center">0.1</td>
 <td width="145" align="center">-0.6</td>
 <td width="145" align="center">0.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="854">Exports - All Commodities</td>
 <td width="144" align="center">-0.6</td>
 <td width="144" align="center">-0.2</td>
 <td width="145" align="center">-0.6</td>
 <td width="145" align="center">-6.3</td>
 <td width="145" align="center">-0.5</td>
 <td width="145" align="center">-0.4</td>
 <td width="145" align="center">0.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="854">&nbsp;&nbsp;Agricultural</td>
 <td width="144" align="center">-1.1</td>
 <td width="144" align="center">0.1</td>
 <td width="145" align="center">-1.4</td>
 <td width="145" align="center">-12.8</td>
 <td width="145" align="center">-2.7</td>
 <td width="145" align="center">1.6</td>
 <td width="145" align="center">2.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="854">&nbsp;&nbsp;Nonagricultural</td>
 <td width="144" align="center">-0.6</td>
 <td width="144" align="center">-0.3</td>
 <td width="145" align="center">-0.5</td>
 <td width="145" align="center">-5.7</td>
 <td width="145" align="center">-0.3</td>
 <td width="145" align="center">-0.7</td>
 <td width="145" align="center">0.1</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Budget Deficit Deepens Y/Y 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;December
10, 2015
The U.S. Treasury Department reported a $64.6 billion budget deficit during
November, deeper than the $56.8 billion deficit twelve months earlier. A $68.0
billion deficit had been expected in the Action Economics Forecast Survey. In
the first two months of&nbsp; FY'16, the deficit deepened to $201.1 billion
versus $178.5 billion during the same period in FY'15.&nbsp; 
Overall revenues have increased 2.9% so far in FY'16 versus FY'15, dragged
down by a 38.1% y/y decline in corporate income tax payments. Individual income
taxes have increased a slightly improved 5.3% y/y. Growth in social insurance
contributions of 6.0% y/y have accompanied a 0.3% y/y gain in excise taxes.
Government spending has advanced 5.9% y/y so far in FY'16, held back by a
modest 2.7% y/y gain in defense outlays. Growth in outlays on health programs of
11.0% has been boosted by the Patient Protection and Affordable Care Act.
Veterans benefits &amp; services payments have grown 11.0% y/y. Medicare
payments have risen a firm 8.7% y/y while Social Security spending growth has
been steady at 4.3% y/y. Offsetting these gains have been a 9.2% y/y decline in
education, training, employment &amp; social services spending and a 2.4% y/y
decline in income security payments with the lower unemployment rate. Interest
payments also have declined 2.6% y/y.
Haver's data on Federal Government outlays and receipts are contained in USECON.
Considerable detail is given in the separate GOVFIN database. The Action
Economics Forecast Survey numbers are in the AS1REPNA database.
<table class="centered" border="0" cellspacing="0" width="1871">
 <colgroup>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 </colgroup>
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="717">United States Government
 Finance</th>
 <th scope="col" width="191">Nov' 2015</th>
 <th scope="col" width="191">FY'16 YTD</th>
 <th scope="col" width="192">FY'15</th>
 <th scope="col" width="192">FY'14</th>
 <th scope="col" width="192">FY'13</th>
 <th scope="col" width="192">FY'12</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="717">Budget Balance</td>
 <td align="center" width="191">-$64.6</td>
 <td align="center" width="191">-$201.1 bil.</td>
 <td align="center" width="192">-$438.9 bil.</td>
 <td align="center" width="192">-$483.4 bil.</td>
 <td align="center" width="192">-$680.2 bil.</td>
 <td align="center" width="192">-$1,089.2 bil.</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;As a percent of GDP</td>
 <td align="center" width="191">--</td>
 <td align="center" width="191">--</td>
 <td align="center" width="192">2.5</td>
 <td align="center" width="192">2.8</td>
 <td align="center" width="192">4.1</td>
 <td align="center" width="192">6.8</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" width="717"></td>
 <td align="center" width="191">% of Total</td>
 <td align="center" width="191">Annual Change, YTD</td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 </tr>
 <tr>
 <td class="firstcol" width="717">Net Revenues </td>
 <td align="center" width="191">100</td>
 <td align="center" width="191">2.9%</td>
 <td align="center" width="192">7.6%</td>
 <td align="center" width="192">8.9%</td>
 <td align="center" width="192">13.3%</td>
 <td align="center" width="192">6.4%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;Individual Income Taxes</td>
 <td align="center" width="191">47</td>
 <td align="center" width="191">5.3</td>
 <td align="center" width="192">10.5</td>
 <td align="center" width="192">5.9</td>
 <td align="center" width="192">16.3</td>
 <td align="center" width="192">3.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp;&nbsp;Corporate Income Taxes</td>
 <td align="center" width="191">11</td>
 <td align="center" width="191">-38.1</td>
 <td align="center" width="192">7.2</td>
 <td align="center" width="192">17.3</td>
 <td align="center" width="192">12.9</td>
 <td align="center" width="192">33.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;Social Insurance Taxes</td>
 <td align="center" width="191">33</td>
 <td align="center" width="191">6.0</td>
 <td align="center" width="192">4.1</td>
 <td align="center" width="192">8.0</td>
 <td align="center" width="192">12.1</td>
 <td align="center" width="192">3.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp; Excise Taxes</td>
 <td align="center" width="191">3</td>
 <td align="center" width="191">-0.3</td>
 <td align="center" width="192">5.3</td>
 <td align="center" width="192">11.1</td>
 <td align="center" width="192">6.3</td>
 <td align="center" width="192">9.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="717"></td>
 <td align="center" width="191"></td>
 <td align="center" width="191"></td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 <td align="center" width="192"></td>
 </tr>
 <tr>
 <td class="firstcol" width="717">Net Outlays </td>
 <td align="center" width="191">100</td>
 <td align="center" width="191">5.9</td>
 <td align="center" width="192">5.2</td>
 <td align="center" width="192">1.4</td>
 <td align="center" width="192">-2.4</td>
 <td align="center" width="192">-1.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;National Defense</td>
 <td align="center" width="191">16</td>
 <td align="center" width="191">2.7</td>
 <td align="center" width="192">-2.3</td>
 <td align="center" width="192">-4.7</td>
 <td align="center" width="192">-6.3</td>
 <td align="center" width="192">-3.9</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp;&nbsp;Health</td>
 <td align="center" width="191">13</td>
 <td align="center" width="191">11.0</td>
 <td align="center" width="192">17.8</td>
 <td align="center" width="192">14.3</td>
 <td align="center" width="192">3.3</td>
 <td align="center" width="192">-7.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;Medicare</td>
 <td align="center" width="191">15</td>
 <td align="center" width="191">8.7</td>
 <td align="center" width="192">6.7</td>
 <td align="center" width="192">2.8</td>
 <td align="center" width="192">5.5</td>
 <td align="center" width="192">-2.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp;&nbsp;Income Security</td>
 <td align="center" width="191">14</td>
 <td align="center" width="191">-2.4</td>
 <td align="center" width="192">-0.9</td>
 <td align="center" width="192">-4.3</td>
 <td align="center" width="192">-1.1</td>
 <td align="center" width="192">-9.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;Social Security</td>
 <td align="center" width="191">24</td>
 <td align="center" width="191">4.3</td>
 <td align="center" width="192">4.4</td>
 <td align="center" width="192">4.5</td>
 <td align="center" width="192">5.2</td>
 <td align="center" width="192">5.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp; Veterans Benefits &amp; Services</td>
 <td align="center" width="191">4</td>
 <td align="center" width="191">11.0</td>
 <td align="center" width="192">6.8</td>
 <td align="center" width="192">7.7</td>
 <td align="center" width="192">11.5</td>
 <td align="center" width="192">-2.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="717">&nbsp; Education, Training, Employment
 &amp; Social Services</td>
 <td align="center" width="191">3</td>
 <td align="center" width="191">-9.2</td>
 <td align="center" width="192">34.7</td>
 <td align="center" width="192">25.9</td>
 <td align="center" width="192">-21.9</td>
 <td align="center" width="192">-10.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="717">&nbsp;&nbsp;Interest</td>
 <td align="center" width="191">6</td>
 <td align="center" width="191">-2.6</td>
 <td align="center" width="192">-1.8</td>
 <td align="center" width="192">2.8</td>
 <td align="center" width="192">0.4</td>
 <td align="center" width="192">-3.0</td>
 </tr>
 </tbody>
</table>


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Initial claims for unemployment insurance rose to 282,000 (-1.2% y/y) in the week ending December 5 from an unrevised 269,000 the previous week. The Action Economics Forecast Survey expected 265,000 filings. The four-week moving [...]

U.S. Initial Unemployment Insurance Claims Increase

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The U.S. Treasury Department reported a $64.6 billion budget deficit during
November, deeper than the $56.8 billion deficit twelve months earlier. A $68.0
billion deficit had been expected in the Action Economics Forecast Survey. In
the first two months of FY'16, the deficit deepened to $201.1 billion
versus $178.5 billion during the same period in FY'15.

Overall revenues have increased 2.9% so far in FY'16 versus FY'15, dragged
down by a 38.1% y/y decline in corporate income tax payments. Individual income
taxes have increased a slightly improved 5.3% y/y. Growth in social insurance
contributions of 6.0% y/y have accompanied a 0.3% y/y gain in excise taxes.

Government spending has advanced 5.9% y/y so far in FY'16, held back by a
modest 2.7% y/y gain in defense outlays. Growth in outlays on health programs of
11.0% has been boosted by the Patient Protection and Affordable Care Act.
Veterans benefits &amp; services payments have grown 11.0% y/y. Medicare
payments have risen a firm 8.7% y/y while Social Security spending growth has
been steady at 4.3% y/y. Offsetting these gains have been a 9.2% y/y decline in
education, training, employment &amp; social services spending and a 2.4% y/y
decline in income security payments with the lower unemployment rate. Interest
payments also have declined 2.6% y/y.

Haver's data on Federal Government outlays and receipts are contained in USECON.
Considerable detail is given in the separate GOVFIN database. The Action
Economics Forecast Survey numbers are in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >United States Government
 Finance</th>
 <th scope="col" >Nov' 2015</th>
 <th scope="col" >FY'16 YTD</th>
 <th scope="col" >FY'15</th>
 <th scope="col" >FY'14</th>
 <th scope="col" >FY'13</th>
 <th scope="col" >FY'12</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Budget Balance</td>
 <td >-$64.6</td>
 <td >-$201.1 bil.</td>
 <td >-$438.9 bil.</td>
 <td >-$483.4 bil.</td>
 <td >-$680.2 bil.</td>
 <td >-$1,089.2 bil.</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;As a percent of GDP</td>
 <td >--</td>
 <td >--</td>
 <td >2.5</td>
 <td >2.8</td>
 <td >4.1</td>
 <td >6.8</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" ></td>
 <td >% of Total</td>
 <td >Annual Change, YTD</td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 </tr>
 <tr>
 <td class="firstcol" >Net Revenues </td>
 <td >100</td>
 <td >2.9%</td>
 <td >7.6%</td>
 <td >8.9%</td>
 <td >13.3%</td>
 <td >6.4%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Individual Income Taxes</td>
 <td >47</td>
 <td >5.3</td>
 <td >10.5</td>
 <td >5.9</td>
 <td >16.3</td>
 <td >3.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Corporate Income Taxes</td>
 <td >11</td>
 <td >-38.1</td>
 <td >7.2</td>
 <td >17.3</td>
 <td >12.9</td>
 <td >33.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Social Insurance Taxes</td>
 <td >33</td>
 <td >6.0</td>
 <td >4.1</td>
 <td >8.0</td>
 <td >12.1</td>
 <td >3.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Excise Taxes</td>
 <td >3</td>
 <td >-0.3</td>
 <td >5.3</td>
 <td >11.1</td>
 <td >6.3</td>
 <td >9.2</td>
 </tr>
 <tr>
 <td class="firstcol" ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 </tr>
 <tr>
 <td class="firstcol" >Net Outlays </td>
 <td >100</td>
 <td >5.9</td>
 <td >5.2</td>
 <td >1.4</td>
 <td >-2.4</td>
 <td >-1.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;National Defense</td>
 <td >16</td>
 <td >2.7</td>
 <td >-2.3</td>
 <td >-4.7</td>
 <td >-6.3</td>
 <td >-3.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Health</td>
 <td >13</td>
 <td >11.0</td>
 <td >17.8</td>
 <td >14.3</td>
 <td >3.3</td>
 <td >-7.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Medicare</td>
 <td >15</td>
 <td >8.7</td>
 <td >6.7</td>
 <td >2.8</td>
 <td >5.5</td>
 <td >-2.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Income Security</td>
 <td >14</td>
 <td >-2.4</td>
 <td >-0.9</td>
 <td >-4.3</td>
 <td >-1.1</td>
 <td >-9.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Social Security</td>
 <td >24</td>
 <td >4.3</td>
 <td >4.4</td>
 <td >4.5</td>
 <td >5.2</td>
 <td >5.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Veterans Benefits &amp; Services</td>
 <td >4</td>
 <td >11.0</td>
 <td >6.8</td>
 <td >7.7</td>
 <td >11.5</td>
 <td >-2.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Education, Training, Employment
 &amp; Social Services</td>
 <td >3</td>
 <td >-9.2</td>
 <td >34.7</td>
 <td >25.9</td>
 <td >-21.9</td>
 <td >-10.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Interest</td>
 <td >6</td>
 <td >-2.6</td>
 <td >-1.8</td>
 <td >2.8</td>
 <td >0.4</td>
 <td >-3.0</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The U.S. Treasury Department reported a $64.6 billion budget deficit during November, deeper than the $56.8 billion deficit twelve months earlier. A $68.0 billion deficit had been expected in the Action Economics Forecast Survey. In [...]

U.S. Budget Deficit Deepens Y/Y

Carol Stone, CBE

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Total borrowing in the U.S. decreased to $933 billion at a seasonally adjusted annual rate in Q3, according to the Financial Accounts of the U.S., which were released today by the Federal Reserve Board. This was less than half the pace of the $2.470 trillion in Q2, and it amounted to just 5.2% of GDP, down from Q2's 13.8%. All major sectors of the domestic economy as well as the foreign sector borrowed noticeably less in Q3.

The federal government needed only $22 billion at a seasonally annual rate in Q3, down from $350 billion in Q2. The actual budget deficit for that quarter was $122.5 billion, about the same as a year ago, but far smaller than the deficit for Q3 in prior recent years. So it's not surprising that seasonally adjusted borrowing by the federal government was quite moderate.

Household borrowing in Q3, at $211 billion, SAAR, was less than half the pace of Q2, $585 billion. Home mortgages increased $147 billion, SAAR versus Q2's $226 billion, and consumer credit rose at a $246 billion pace, compared to Q2's $286 billion. Other institutions, such as hedge funds, which are included in "households" because they are not covered by specific published source data, had net paydowns of about $172 billion in Q3 in depository institution and "other" loans.

Nonfinancial corporate business borrowing retreated to $343 billion, SAAR, in Q3 from $685 billion in Q2. Corporate bond issuance was $326 billion, SAAR, compared to Q2's $626 billion. Depository institution loans were paid down at a $60 billion annual rate after Q2's net borrowing of $73 billion. But commercial paper issuance did pick up, with a net increase of $68 billion, SAAR, after a net paydown of $50 billion in Q2 and net paydowns the previous two quarters as well.

The financial sector basically maintained its Q2 borrowing pace, $368 billion, with $324 billion in Q3.

Press reports of these Financial Accounts highlight household balance sheets and net worth. Despite households' reduced borrowing, their net worth fell to $78.2 trillion (not seasonally adjusted) at the end of Q3 from $80.3 trillion at mid-year. This was largely due to the stock market decline over the summer, which reduced holdings of equities by $1.45 trillion (actual quarterly amount, not seasonally adjusted), the second largest quarterly decline ever. The largest was $1.50 trillion in Q1 2008.

The summer's stock price decline also cut the net wealth of the total economy. The Fed's recently devised measure, "U.S. net wealth" fell $2.12 trillion (not seasonally adjusted quarterly rate) as the overall market value of domestic corporations fell $2.54 trillion. The value of nonfinancial assets held by various sectors did increase, while U.S. financial claims on the "rest of the world" decreased, that by $778 billion. The opposite item, foreign claims on U.S. assets, also fell, by $489 billion, its first decline since Q3 2011 and the largest since Q1 2009, in the midst of the financial crisis.


The Financial Accounts data are in Haver's FFUNDS database. Associated
information is compiled in the Integrated Macroeconomic Accounts produced
jointly with the Bureau of Economic Analysis (BEA); these are carried in Haver's
USNA database.

<a href="/comment/151210t_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/151210t.png"></a>
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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col">Financial Accounts (SAAR, Bil.$)</th>
 <th>Q3'15</th>
 <th>Q2'15</th>
 <th>Q1'15</th>
 <th>2014</th>
 <th>2013</th>
 <th>2012</th>
 <th>2011</th>
 </tr>
 </thead>
 
 <tr>
 <td class="firstcol" scope="col">Total Borrowing*</td>
 <td>933</td>
 <td>2470</td>
 <td>1254</td>
 <td>2326</td>
 <td>2127</td>
 <td>1732</td>
 <td>1168</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Federal Government</td>
 <td>22</td>
 <td>350</td>
 <td>-156</td>
 <td>736</td>
 <td>857</td>
 <td>1181</td>
 <td>1139</td>
 </tr>
 <tr>
 <td class="firstcol">Households</td>
 <td>211</td>
 <td>585</td>
 <td>254</td>
 <td>418</td>
 <td>235</td>
 <td>260</td>
 <td>-71</td>
 </tr>
 
 <td class="firstcol">Nonfinancial Corporate Business</td>
 <td>343</td>
 <td>685</td>
 <td>620</td>
 <td>494</td>
 <td>446</td>
 <td>346</td>
 <td>355</td>
 <tr>
 <td class="firstcol">Financial Sectors</td>
 <td>325</td>
 <td>368</td>
 <td>-151</td>
 <td>343</td>
 <td>275</td>
 <td>-387</td>
 <td>-318</td>
 </tr>
 
 
 
 *Previously called "credit market borrowing" and includes debt securities plus loans. The total here includes noncorporate business, state and local government and foreign sectors, not shown separately.
 
</html>

Total borrowing in the U.S. decreased to $933 billion at a seasonally adjusted annual rate in Q3, according to the Financial Accounts of the U.S., which were released today by the Federal Reserve Board. This was less than half the [...]

U.S. Financial Accounts Show Less Borrowing But Also Smaller Net Wealth

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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Andrew Cates

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

250501Z1.jpg

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

250501Z2.jpg

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

250501Z3.jpg

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

250501Z4.jpg

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

250501Z5.jpg

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

250501Z6.jpg

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

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/3PzXXKrkHcwtOLipohEdnB?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Tariff Truce, Tenuous Trust

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The ISM Purchasing Managers Index of activity in the manufacturing sector slipped to 48.7 in April from 49.0 during March and 50.3 in February. It remained up from a low of 46.9 in October of last year. A level of 50 is the break-even point between a rising and falling level of activity. The Action Economics Forecast Survey expected a reading of 47.8 for April. The series reached a monthly high of 63.8 in March 2021.

Two of the five component indexes weakened last month. The April production index fell to 44.0 after declining to 48.3 in March. It was the lowest level since May 2020. A lessened 19.8% (NSA) of respondents reported higher production while an increased 24.2% reported lower output. The inventories index declined to 50.8 last month from 53.4 in March. The index remained up from a low of 43.2 in October of last year.

Moving higher, the new orders index rose to 47.2 last month from 45.2 in March. The index remained below a January high of 55.1. Twenty-eight percent (NSA) of respondents reported higher new orders while 26.7% reported a decline. The employment index rose to 46.5 from 44.7 in March. It was below a high of 50.3 in January. A greater 13.1% (NSA) of respondents reported more hiring while a fewer 16.2% indicated less. The supplier delivery index rose to 55.2 from 53.5 in March. A higher 16.6% (NSA) of respondents reported slower delivery speeds while a fairly steady 6.2% reported a quickening.

The prices index, which is not part of the composite series, edged up to 69.8 (NSA) in April after increasing to 69.4 in March. It was the highest level since June 2022, up from a December 2022 low of 39.4. An increased 49.2% of respondents reported higher prices last month, up from 12.2% in November, while a higher 9.7% reported lower prices.

In other series, the export orders index plummeted to 43.1 in April from 49.6 during March. It was down from the high of 52.4 in January. The imports index fell sharply to 47.1 from 50.1 in March. It was the lowest reading since December 2023. The order backlog index dropped to 43.7 (NSA) last month from 44.5 in March. It was the lowest level in five months.

The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

250501L5.jpg

250501M5.jpg

- Declines in last three months follow earlier improvement.
- Production & inventories account for m/m shortfall.
- Prices index edges up to another three-year high.

U.S. ISM Manufacturing Index Indicates Contraction in April

Winnie Tapasanun

250501N.jpg

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The value of construction put in place unexpectedly fell 0.5% m/m in March after rises of 0.6% in February (+0.7% initially) and 0.1% in January (-0.5% previously), data from the U.S. Census Bureau showed. The March reading was the first m/m fall following five straight m/m gains. A 0.3% m/m March rise had been expected in the Action Economics Forecast Survey. The year-on-year rate of increase decelerated to 2.8% in March, the lowest since May 2019, after registering at 3.4% in February and January. The latest y/y figure was lower than 8.7% in March 2024; thus, having remained below its recent high of 9.8% in January 2024 and a peak of 18.6% in April 2022.

Private construction slid 0.6% (+2.3% y/y) in March, down for the first time since September, following increases of 0.7% in February (+0.9% initially) and 0.1% in January (-0.7% previously). Residential private construction fell 0.4% (+2.8% y/y) in March, the first m/m fall in six months, after an unrevised 1.3% gain in February. Home improvement building dropped 1.2% (+13.4% y/y), the first m/m decline since December, following a 2.3% February gain; it was 41.1% of the residential private construction. Single-family building edged up 0.1% (-0.8% y/y), the smallest of seven consecutive m/m increases, after a 0.8% February rise; it was 46.6% of the residential private construction. Meanwhile, multi-family building was essentially unchanged m/m (-12.1% y/y) in March following 15 straight m/m decreases; it was 12.3% of the residential private construction.

Nonresidential private construction fell 0.8% (+1.6% y/y) in March after a 0.1% increase in February (+0.4% initially) and a 0.1% easing in January (-0.2% previously). The March fall reflected m/m drops in the following nonresidential private constructions. These included religious (-2.9%; +16.4% y/y), health care (-2.2%; -5.2% y/y), office (-1.8%; +2.7% y/y), educational (-1.7%; -4.2% y/y), lodging (-1.6%; -1.0% y/y), commercial (-1.0%; -5.8% y/y), manufacturing (-0.4%; +3.6% y/y), communication (-0.3%; +2.2% y/y), and utilities (-0.1%; +7.0% y/y). In contrast, private constructions for amusement & recreation (1.5%; 7.0% y/y) and transportation (0.7%; 10.2% y/y) rose m/m in March.

The value of public construction declined 0.2% (+4.7% y/y) in March after holding steady in February (+0.2% initially), reflecting a 0.2% increase (-1.9% y/y) in residential public construction and a 0.2% easing (+4.8% y/y) in nonresidential public construction. The March decline reflected m/m drops in the following nonresidential public constructions. These included utilities (-4.8%; -12.8% y/y), commercial (-1.6%; +40.3% y/y), amusement & recreation (-1.0%; +19.1% y/y), educational (-0.6%; +7.6% y/y), sewage & waste disposal (-0.6%; +10.6% y/y), and health care (-0.4%; +13.0% y/y). Notably, spending on highways & streets, which made up 28.7% of public construction spending, fell 0.5% (-2.4% y/y) in March, the first m/m fall since October, following a 0.9% increase in February. To the upside, the following public constructions rose m/m in March: office (1.6%; 6.0% y/y), transportation (1.4%; 7.3% y/y), public safety (0.7%; 4.1% y/y), conservation & development (0.6%; 4.7% y/y), and water supply (0.6%; 12.2% y/y).

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

250501P.jpg

250501Q.jpg

- March construction spending -0.5% m/m; +2.8% y/y, the lowest y/y rate since May ’19.
- Residential private construction -0.4% m/m, led by a 1.2% drop in home improvement building.
- Nonresidential private construction -0.8% m/m, down for the second month in three.
- Public sector construction -0.2% m/m, reflecting a 0.2% decline in nonresidential public building.

U.S. Construction Spending Unexpectedly Drops in March, the First M/M Fall Since September

250501A8.jpg

250501B8.jpg

Initial claims for unemployment insurance rose 18,000 in the week ended April 26 to 241,000, seasonally adjusted.  This is higher by 16,000 than the Action Economics Forecast Survey amount of 225,000 and is the largest amount since the week of February 22. The previous week’s actual count was revised up by 1,000 to 223,000, from 222,000 reported initially.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” – in the week ended April 19 was 1.916 million, up 83,000 from the prior week’s 1.833 million; that earlier amount was revised down by 8,000.

The insured unemployment rate, that is, the number of beneficiaries as a percentage of covered employment, was 1.3% in the April 19 week, following 1.2% continuously since the week of January 6, 2024.

Economic conditions vary widely across states and territories.  In the week ended April 12, the highest unemployment rates were in New Jersey (2.39%), California (2.24%), Washington (2.19%), Rhode Island (2.17%) and Massachusetts (1.93%).  The lowest rates were in Florida (0.35%), South Dakota (0.40%), Alabama (0.41%), Virginia (0.45%) and Tennessee (0.48%).  Rates in other notable states include the Illinois (1.85%), New York (1.71%), Pennsylvania (1.54%) and Texas (1.09%). 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 U**SECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

250501C8.jpg

250501D8.jpg

- Actual initial claims amount is 16,000 more than forecast.
- Total beneficiaries rose by 83,000.
- Insured unemployment rate ticked up to 1.3% after 15 months at 1.2%.

U.S. Initial Jobless Claims Rise Notably in April 28 Week

250430N1.jpg

250430O1.jpg

Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

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Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

Economy in Brief: 2015

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