Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090114d.jpg" align="left" border="0">
Recession clearly has come to the Euro Area and to its member
countries. Industrial output is dropping at a horrendous pace. The
sequential growth rates in the table below show that IP has gone from a
Yr/Yr decline of 7.1% to declining over six months at a pace of 10.3%
and to a drop over three months at minus 19.1%. The unraveling in the
EMU is rapid. It is also widespread with consumer durables and consumer
nondurables intermediate goods and capital goods all being swept up in
the acceleration of the decline. The
bottom of the table demonstrates that all the main euro member
countries and the UK are greatly affected. The
far right column reflects the declines for the special quarter in
progress, at this time that is 2008-Q4. The negative impact on growth
for the quarter is intense and, again, very widespread.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">Euro
Area
MFG IP</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Nov 
08</td>
<td>Oct 
08</td>
<td>Nov 
08</td>
<td>Oct 
08</td>
<td>Nov 
08</td>
<td>Oct 
08</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area Detail</td>
<td>Nov 
08</td>
<td>Oct 
08</td>
<td>Sep 
08</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12 
mo</td>
<td>12 
mo</td>
<td>Q-4</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>-1.7%</td>
<td>-1.7%</td>
<td>-1.9%</td>
<td>-19.1%</td>
<td>-11.5%</td>
<td>-10.3%</td>
<td>-10.4%</td>
<td>-7.1%</td>
<td>-5.6%</td>
<td>-16.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>-0.3%</td>
<td>-0.3%</td>
<td>-0.7%</td>
<td>-4.9%</td>
<td>-5.9%</td>
<td>-2.7%</td>
<td>-6.0%</td>
<td>-3.3%</td>
<td>-3.7%</td>
<td>-5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">C-Durables</td>
<td>-2.4%</td>
<td>-1.8%</td>
<td>-2.5%</td>
<td>-23.9%</td>
<td>-13.4%</td>
<td>-12.7%</td>
<td>-14.7%</td>
<td>-9.8%</td>
<td>-8.7%</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">C-Nondurables</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-0.8%</td>
<td>-2.6%</td>
<td>-4.3%</td>
<td>-1.1%</td>
<td>-4.2%</td>
<td>-2.2%</td>
<td>-2.7%</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>-2.8%</td>
<td>-2.4%</td>
<td>-3.1%</td>
<td>-28.5%</td>
<td>-16.5%</td>
<td>-15.6%</td>
<td>-13.9%</td>
<td>-10.3%</td>
<td>-7.7%</td>
<td>-23.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>-1.8%</td>
<td>-2.3%</td>
<td>-1.9%</td>
<td>-21.8%</td>
<td>-11.5%</td>
<td>-11.4%</td>
<td>-12.4%</td>
<td>-7.2%</td>
<td>-5.1%</td>
<td>-18.1%</td>
</tr>
<tr>
<td style="font-weight: bold;" colspan="11" class="firstcol">Main
Euro Area Countries
and UK IP in MFG</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>Nov 
08</td>
<td>Oct 
08</td>
<td>Nov 
08</td>
<td>Oct 
08</td>
<td>Nov 
08</td>
<td>Oct 
08</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">MFG Only</td>
<td>Nov 
08</td>
<td>Oct 
08</td>
<td>Sep 
08</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12 
mo</td>
<td>12 
mo</td>
<td>Q-2- 
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany:</td>
<td>-3.5%</td>
<td>-2.1%</td>
<td>-3.7%</td>
<td>-31.4%</td>
<td>-9.8%</td>
<td>-13.6%</td>
<td>-10.7%</td>
<td>-6.9%</td>
<td>-3.7%</td>
<td>-22.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">France: IP ex
Construction</td>
<td>-2.4%</td>
<td>-3.7%</td>
<td>-0.7%</td>
<td>-24.1%</td>
<td>-18.1%</td>
<td>-13.0%</td>
<td>-14.2%</td>
<td>-9.0%</td>
<td>-8.0%</td>
<td>-23.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>-2.3%</td>
<td>-1.7%</td>
<td>-3.4%</td>
<td>-25.8%</td>
<td>-17.6%</td>
<td>-15.1%</td>
<td>-15.0%</td>
<td>-9.1%</td>
<td>-7.8%</td>
<td>-21.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>-11.5%</td>
<td>0.1%</td>
<td>2.9%</td>
<td>-30.9%</td>
<td>-26.4%</td>
<td>-23.9%</td>
<td>-29.6%</td>
<td>-17.2%</td>
<td>-11.2%</td>
<td>-30.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK: EU member</td>
<td>-2.9%</td>
<td>-1.4%</td>
<td>-1.0%</td>
<td>-19.2%</td>
<td>-11.2%</td>
<td>-12.7%</td>
<td>-8.4%</td>
<td>-7.4%</td>
<td>-5.0%</td>
<td>-16.3%</td>
</tr>
</tbody>
</table>
</body></html>

Recession clearly has come to the Euro Area and to its member countries. Industrial output is dropping at a horrendous pace. The sequential growth rates in the table below show that IP has gone from a Yr/Yr decline of 7.1% to [...]

EMU Industrial Production is Plunging

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090114a.jpg" width="353">
Retail sales in December fell for the sixth consecutive month. Worse yet, the 9.8% year-to-year decline was a postwar record. The 2.7% drop last month followed declines of 2.1% and 3.4% during November and October which were greater than reported initially. Consensus expectations had been for a December sales decline of 1.2%. The retail sales data are available in Haver&#39;s USECON database.
Again in December, lower vehicle sales and lower gasoline prices accounted for much of the overall decline in sales. However, even excluding these two areas, sales fell 1.5% and the 0.2% November decline was downwardly revised from the initial report of a slight uptick. Year-to-year, excluding autos and gasoline, sales fell 2.2% which also was a record.
Motor vehicle &amp; parts sales slipped just 0.7% last month but they have declined in all but one month since last November. Year-to-year, dollar sales are down by one quarter. However, that decline is less than the more than one third y/y drop in unit sales of motor vehicles.
Lower prices continued to pull sales at gasoline service stations lower. Last month they fell 15.9% (-35.5% y/y) after like declines during the prior two months. That momentum stalled this month as gasoline prices have ticked slightly higher versus the December average.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090114b.jpg" width="353">
Hard-good sales were notably lower during December. Sales at furniture and electronics &amp; appliance stores took a 1.4% (-8.8% y/y) slide and the 0.4% November uptick was significantly lowered. Furniture store sales fell 1.8% (-13.2% y/y) for their seventh consecutive monthly decline. Sales of electronics &amp; appliances fell 1.0% (-4.2% y/y) after a downwardly revised 1.5% November increase.
In the soft goods area, apparel store sales dropped 2.5% for their fourth sharp monthly decline in the last five months. At general merchandise stores, the news wasn&#39;t much better as sales fell 1.3%; however, they posted a year-to-year decline of -0.4%.
Dining out became another casualty of the current recession. Restaurant &amp; drinking place sales fell 2.2% last month and the y/y decline of 0.5% compares to 5.2% growth during 2007. For all of 2008, restaurant sales rose a modest 3.5%.
Building materials sales continue to tumble with the drop off in housing. The 2.9% December drop was similar in size to the declines of the prior two months and it was the fifth consecutive large monthly shortfall.
Sales at nonstore (internet) retailers also have been hit hard. The 1.9% decline last month (-5.3% y/y) was the sixth in a row. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090114c.jpg" width="353">
The Mismeasured Personal Saving Rate Is Still Useful: Using Real-Time Data to Improve Forecasting from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2008/q4/brq408_mismeasured-personal-saving-rate.pdf">here</a>.
Commitment Versus Discretion in Monetary Policy, also from the Federal Reserve Bank of Philadelphia, is available <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2008/q4/brq408_commitment-vs-discretion.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">&nbsp;</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">October</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a> (%)</td>
<td>-2.7</td>
<td>-2.1</td>
<td>-3.4</td>
<td>-9.8</td>
<td>-0.4</td>
<td>4.2</td>
<td>5.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>-3.1</td>
<td>-2.5</td>
<td>-2.9</td>
<td>-6.7</td>
<td>2.7</td>
<td>4.6</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Less Gasoline</td>
<td>-1.5</td>
<td>-0.2</td>
<td>-1.2</td>
<td>-2.2</td>
<td>1.8</td>
<td>4.2</td>
<td>6.2</td>
</tr>
</tbody>
</table>
</body>
</html>

Retail sales in December fell for the sixth consecutive month. Worse yet, the 9.8% year-to-year decline was a postwar record. The 2.7% drop last month followed declines of 2.1% and 3.4% during November and October which were greater [...]

The Dismal Christmas: U.S. Retail Sales Fell Sharply

The Dismal Christmas: U.S. RetailSales Fell Sharply

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113o.jpg" align="right" border="0" height="265" width="353">
The British Chamber of Commerce's economic survey conducted in
the fourth quarter of 2008 showed an economy losing ground at an
alarming rate. The survey collects the opinions of manufacturers and
service providers on the state of a wide variety of key business
indicators--domestic and export sales, domestic and export orders,
prices, employment, capacity utilization and cash flow--and on their
confidence in future sales, capital expenditure plans and
profitability. The results are expressed in percent balances--the
percent of respondents reporting an increase less the percent reporting
a decrease. The responses in the fourth quarter were almost universally
negative and many at record lows.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113p.jpg" align="right" border="0" height="265" width="353">

The table below shows the deterioration in domestic and export
sales, employment expectations, plans for expansion and profitability
expectations since mid 2007 when the sub prime mortgage crisis in the
United States exposed the fragility of the financial system, not only
in the U. S. but worldwide.
In the year and a half since then, the
balance of opinion of manufacturers regarding their domestic sales, for
example, has gone from +37% to -38%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113r.jpg" align="right" border="0" height="265" width="353">
The three charts put the recent declines in domestic sales,
expectations of employment and of profitability in perspective. The
first shows that fourth quarter domestic sales of manufacturers and
service providers were about as low as they were in recession of the
early 90's. Expectations of employment in the fourth quarter, shown in
the second chart, were below those of the earlier recession and the
lowest so far recorded. The fourth quarter balances for expectations of
profitability, -39% and -34%, respectively for manufacturers and
service providers, shown in the third chart, compare with balances of
-6% and 1%, respectively, in the recession of the early 90's.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">BRITISH
CHAMBER OF COMMERCE SURVEY (% Balance)&nbsp;</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3 08&nbsp;</th>
<th scope="col">Q2 08&nbsp;</th>
<th scope="col">Q1 08&nbsp;</th>
<th scope="col">Q4 07</th>
<th scope="col">Q3 07</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Domestic&nbsp;
Sales -- Manufacturing&nbsp;</td>
<td>-38</td>
<td>-13</td>
<td>-3</td>
<td>12</td>
<td>32</td>
<td>37</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic&nbsp;
Sales -- Services</td>
<td>-31</td>
<td>-7</td>
<td>-2</td>
<td>17</td>
<td>28</td>
<td>29</td>
</tr>
<tr>
<td class="firstcol">Export Sales --
Manufacturing&nbsp;</td>
<td>-12</td>
<td>-3</td>
<td>28</td>
<td>16</td>
<td>22</td>
<td>31</td>
</tr>
<tr>
<td class="firstcol">Export Sales --
Services&nbsp;</td>
<td>-9</td>
<td>13</td>
<td>9</td>
<td>17</td>
<td>15</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment
Expectations (3 mo ahead) -- Mfg</td>
<td>-17</td>
<td>0</td>
<td>3</td>
<td>9</td>
<td>11</td>
<td>20</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment
Expectations (3 mo ahead) -- Services</td>
<td>-22</td>
<td>2</td>
<td>7</td>
<td>16</td>
<td>17</td>
<td>21</td>
</tr>
<tr>
<td class="firstcol">Plans for Expansion --
Manufacturing</td>
<td>-22</td>
<td>-4</td>
<td>2</td>
<td>12</td>
<td>21</td>
<td>33</td>
</tr>
<tr>
<td class="firstcol">Plans for Expansion --
Services</td>
<td>-27</td>
<td>-2</td>
<td>5</td>
<td>8</td>
<td>14</td>
<td>17</td>
</tr>
<tr class="odd">
<td class="firstcol">Profitability
Expectations (12 mo ahead) -- Mfg</td>
<td>-38</td>
<td>-11</td>
<td>5</td>
<td>27</td>
<td>39</td>
<td>35</td>
</tr>
<tr class="odd">
<td class="firstcol">Profitability
Expectations (12 mo ahead) -- Services</td>
<td>-34</td>
<td>-12</td>
<td>1</td>
<td>17</td>
<td>30</td>
<td>47</td>
</tr>
</tbody>
</table>
</body></html>

The British Chamber of Commerce's economic survey conducted in the fourth quarter of 2008 showed an economy losing ground at an alarming rate. The survey collects the opinions of manufacturers and service providers on the state of a [...]

Grim News from the UK

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113m.jpg" width="353">
The U.S. government&#39;s budget deficit for December continued to reflect the combined effects of a U.S. recession as well as wars in Iraq and Afghanistan.The monthly deficit rose to $83.6 billion. While not large, it compares to a usual budget surplus for December. For the first quarter of this fiscal year the government&#39;s budget deficit totaled $485.2B, four times that of last fiscal year&#39;s first quarter. Consensus projections were for a December deficit of $63.8B.
Many forecasts for the budget deficit during all of this fiscal year are near $700B. If realized, that would swell the deficit to about 5% of GDP following last year&#39;s roughly 3.2% and FY07&#39;s marginal 1.2%.The recent estimate from the Congressional Budget Office is for a much higher deficit this year of $1.2 trillion, or 8.3% of GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113n.jpg" width="353">
Net revenues during December fell 14.1% from last year and for the first fiscal quarter were down 9.7%. Individual income tax receipts reflected lower employment levels and for 1Q fell 6.7% year-to-year. Corporate tax receipts were hit even harder and they fell 45.6%. Growth in unemployment and social insurance taxes grew just 0.9%, the least since late 2003.
U.S. government outlays surged by nearly one-half from last year&#39;s first fiscal quarter. Defense spending (19% of total outlays) rose 9.9%. The gain does not reflect the full cost of the resources devoted to Iraq &amp; Afghanistan since much of the spending would have occurred anyway. Medicare expenditures (12% of outlays) rose by 13.1% and social security spending (21% of outlays) rose 5.5% after 6.8% growth last year. &quot;Income security&quot; payments jumped 18.1% but net interest payments fell 11.8% y/y with lower interest rates.
The Budget and Economic Outlook: Fiscal Years 2009 to 2019 from the Congressional Budget Office can be found <a href="http://www.cbo.gov/ftpdocs/99xx/doc9958/01-08-Outlook_Testimony.pdf"> here</a>.
The Government&#39;s financial data are available in Haver&#39;s USECON database, with extensive detail available in the specialized GOVFIN.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E106021.HTM">US Government Finance</a> &nbsp;</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">FY 2008</th>
<th scope="col">FY 2007</th>
<th scope="col">FY 2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>-$83.6B</td>
<td>$-164.4B</td>
<td>$48.3B (12/07)</td>
<td>-$454.8B</td>
<td>-$161.5B</td>
<td>-$248.2B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$237.8B</td>
<td>$144.8B</td>
<td>-14.1%</td>
<td>-1.7%</td>
<td>6.7%</td>
<td>11.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$321.4B</td>
<td>$309.2B</td>
<td>40.5%</td>
<td>9.1%</td>
<td>2.8%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. government's budget deficit for December continued to reflect the combined effects of a U.S. recession as well as wars in Iraq and Afghanistan.The monthly deficit rose to $83.6 billion. While not large, it compares to a usual [...]

U.S. Budget Deficit Continued To Swell Toward A Record

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113k.jpg" width="353">
The Bureau of Labor Statistics indicated in its November Job Openings &amp; Labor Turnover Survey (JOLTS) report that the number of job openings fell 6.9% from October and by nearly one third from November 2007. The latest level was the lowest since October 2003. Since their peak in January of 2007 the number of job openings have fallen 35.2%.
The job openings rate also fell. The August rate was down to 2.3% versus an upwardly revised 2.5% in July. The latest figures are down from near 3% one year ago. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings.
The actual number of job openings in the construction and manufacturing sectors halved versus November of 2007. Professional &amp; business services job openings fell by one third year-to-year while openings in the education &amp; health sectors also were weak and they fell 17.0%. Openings in retail trade rose 11.9% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113l.jpg" width="353">
By region, openings in the South were off by one third while they fell by one quarter in the Midwest. In the West openings fell 30.7% and in the Northeast they were down 19.6%.
The hires rate fell to 2.6% which was the lowest in the series&#39; short eight year history.The hires rate is the number of hires during the month divided by employment.The actual number of hires fell by nearly one quarter year-to-year and no sector showed any strength. Hires in the construction sector were off by nearly one third. In the factory sector hires fell 38.8% y/y and in the professional &amp; business services sector they fell 20.3%. In the leisure and hospitality sector hires fell 31.6% y/y while hires in the educational &amp; health sector fell 16.9%.
The job separations rate rose just slightly to 3.6% but remained down versus last year. Separations include quits, layoffs, discharges, and other separations as well as retirements. The level of job separations fell 3.5% y/y.
The JOLTS survey dates only to December 2000 but has since followed the movement in nonfarm payrolls, though the actual correlation between the two series is low.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a> and the figures are available in Haver&#39;s USECON database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor &nbsp;Turnover Survey)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">November &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Job Openings, Total&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>2.0&nbsp;</td>
<td>2.1</td>
<td>2.8</td>
<td>2.8</td>
<td>3.0</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,793</td>
<td>3,001</td>
<td>3,972</td>
<td>3,974</td>
<td>4,272</td>
<td>3,863</td>
</tr>
<tr class="odd">
<td class="firstcol">Hires, Total</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>2.6</td>
<td>3.0</td>
<td>3.5</td>
<td>41.9</td>
<td>43.4</td>
<td>43.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>3,548</td>
<td>4,155</td>
<td>4,672</td>
<td>57,771</td>
<td>59,153</td>
<td>57,501</td>
</tr>
</tbody>
</table>
</body>
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The Bureau of Labor Statistics indicated in its November Job Openings & Labor Turnover Survey (JOLTS) report that the number of job openings fell 6.9% from October and by nearly one third from November 2007. The latest level was the [...]

JOLTS: U.S. Job Openings Lowest Since 2003

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113i.jpg" width="353">
According to the National Federation of Independent Business (NFIB), small business optimism fell hard last month. The index level of 85.2 was down 3.0% month-to-month and it followed the slight 0.3% November uptick. The latest was the lowest since early 1980 and it was the second lowest level on record.
During the last ten years there has been a 49% correlation between the level of the NFIB index and the two-quarter change in real GDP.
The percentage of firms planning to raise prices fell to 3%, the lowest on record. The percentage of firms actually raising prices fell into negative territory and the reading was the lowest since early 2002. During the last ten years there has been a 69% correlation between the y/y change in the producer price index and the level of the NFIB price index.
The percentage expecting the economy to improve fell to near the lows of earlier this year. The percentage reporting that now is a good time to expand the business was stable at 7%, near the lowest since 2003. During the next 3-6 months, plans for capital spending dropped sharply to near the lowest level since 1975.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113j.jpg" width="353">
The percentage planning to raise employment fell further into negative territory while the percentage of respondents with one or more job openings remained at 14%, the least since 1992. During the last ten years there has been a 71% correlation between the NFIB employment percentage and the y/y change in nonfarm payrolls.
The percent expecting credit conditions to ease fell slightly and remained near its lowest level since 1980. The percent expecting higher real sales in six months fell to near the lowest since 1980.
The largest, single most important problems seen by business were poor sales (27%), taxes (20%), inflation (7%), insurance cost and availability (10%) and government requirements (8%).
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
The NFIB figures can be found in Haver&#39;s SURVEYS database.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">December</th>
<th scope="col">November</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">Small Business Optimism Index (SA, 1986=100)</td>
<td>85.2</td>
<td>87.8</td>
<td>-9.9%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
</tbody>
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According to the National Federation of Independent Business (NFIB), small business optimism fell hard last month. The index level of 85.2 was down 3.0% month-to-month and it followed the slight 0.3% November uptick. The latest was [...]

U.S. Small Business Optimism Fell Further to Near All-time Low; Pricing At All-time Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113f.jpg" width="353">
Regular gasoline prices again moved higher last week. They rose ten cents to an average $1.78 per gallon after the prior week&#39;s seven cent gain, according to the U.S. Department of Energy survey. Nevertheless, the price was still down from $2.75 for all of November. Yesterday, the spot market price for a gallon of regular gasoline fell slightly to $1.05 per gallon which was off ten cents from last week&#39;s highs.
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database. Daily prices are in the DAILY database.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113g.jpg" width="353">
Product demand continues to fall despite lower prices, pulled down by the developing economic recession. The U.S. Department of Energy reported that the demand for gasoline fell by 2.1% for all of last year versus 2007. The figures for the latest four weeks fell 3.2% y/y, nearly the fastest rate of decline since late-1995 (the latest four weeks versus the same four weeks in 2007). The demand for all petroleum products also fell 2.9% y/y. These numbers are available in Haver&#39;s OILWKLY database.
The source for that reduced demand for gasoline is the cutback in vehicle miles driven which have fallen 3.5% during the twelve months ended October. The decline of roughly this magnitude, sustained as it has been for most of last year, is unprecedented. These Department of Transportation figures are available in Haver&#39;s OGJ database.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113h.jpg" width="353">
Another source for the drop in gasoline demand is the 24.9% decline in light truck sales for all of last year versus 2007. That exceeded the 10.8% decline in U.S. car sales. Sales of the relatively fuel efficient light trucks made by Toyota, Nissan and Honda fell 22.3%, 17.2% and 16.9% respectively while sales of General Motors light trucks fell 28.1% for the full year versus 2007 and Ford truck sales fell 25.8%. These figures are available in Haver&#39;s INDUSTRY statistics database.
The price for a barrel of West Texas Intermediate crude oil also moved higher last week to $44.51 per barrel, the highest level in four weeks. Prices reached their high of $145.66 last July. In futures trading yesterday, the one-month price for crude oil was $40.83.
Last week, prices for natural gas rose for the second week and reached $5.85 per mmbtu (-25.3% y/y). The latest average price was almost 50% below natural gas prices in early-July of $13.19/mmbtu.
U.S. Monetary Policy Objectives in the Short and Long Run is adapted from a recent speech given by Janet L. Yellen, President and CEO of the Federal Reserve Bank of San Francisco, and it can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-01-02.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/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">01/12/09</th>
<th scope="col">01/05/09 </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)</td>
<td>1.78</td>
<td>1.68</td>
<td>-41.9%</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>44.51</td>
<td>42.50</td>
<td>-53.0%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

Regular gasoline prices again moved higher last week. They rose ten cents to an average $1.78 per gallon after the prior week's seven cent gain, according to the U.S. Department of Energy survey. Nevertheless, the price was still down [...]

U.S. Gasoline Prices Again Moved Higher

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

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

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 0.6% (-3.6% y/y) during the four weeks ended May 9, 2025. The improvement followed sharp declines in April.

Miscellaneous group prices increased 2.4% (5.9% y/y) over the last four weeks. Natural rubber price soared 13.9% (11.7% y/y). The price of tallow (used in the soap industry) rose 10.6% (41.3% y/y) in four weeks but the cost of framing lumber declined 5.6%, but rose 7.3% y/y.

Prices in the Metals group edged 0.2% higher (-7.3% y/y) over the most recent four weeks. Variation in pricing was wide. Copper scrap prices rose 7.4% (-3.3% y/y) while lead costs rose 4.0% in four weeks (-11.1% y/y). The cost of aluminum increased 2.3% in four weeks, off 4.4% y/y. Working lower, the cost of steel scrap declined 8.1% (-11.6% y/) in four weeks while tin prices followed with a 4.9% decline (-2.9% y/y). Zinc prices eased 0.7% in four weeks and declined 10.3% y/y.

Crude Oil & Benzene group prices edged 0.1% higher (-19.4% y/y) in four weeks. The cost of West Texas Intermediate crude oil weakened 4.0% to $58.50 per barrel and was 25.6% lower y/y. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, strengthened 8.5% (-41.8% y/y) in the last four weeks. Excluding crude oil, the industrial commodity price index rose 0.9% (-2.1% y/y) during the last four weeks.

Textile group prices edged 0.9% lower (-0.5% y/y) during the last four weeks. Burlap costs declined 14.3% (+7.4% y/y) but the cost of cotton rose 4.5% (-7.7% y/y) over four weeks.

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

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- Metals prices are mixed.
- Crude oil prices fall sharply.
- Textile prices ease.

FIBER: Industrial Commodity Price Movement Diverges in Latest Four Weeks

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Wholesale trade inventories increased 0.4% (2.2% y/y) during March after rising 0.5% in February, revised from 0.3% after a 0.8% January rise. The increase compared to expectations for a 0.5% rise in the Informa Global Markets Survey and compared to a 0.6% gain in the advance report issued two weeks ago.

Durable goods inventories rose 0.6% in March (1.5% y/y) after rising 0.5% in February. Machinery inventories, the largest sector, increased 0.6% (1.7% y/y) while inventories of motor vehicles & parts, the second largest grouping, rose 1.2% (0.8% y/y). Furniture inventories strengthened 2.7% (6.8% y/y) while electrical equipment inventories declined 1.0% (-3.1% y/y). Inventories of nondurable goods edged 0.1% higher (3.4% y/y). Drug inventories, which make up one-quarter of nondurable inventories, advanced 1.0% (4.6% y/y). Grocery inventories, the second largest category, rose 0.4% (8.3% y/y). Apparel inventories fell 0.8% (-6.5% y/y) and chemical inventories rose 2.1% both m/m and y/y. Petroleum inventories increased 0.7% (0.3% y/y).

Sales at the wholesale level rose 0.6% (6.1% y/y) in March after rising 2.0% in February and falling 0.9% in January. A 0.9% March rise had been expected in the Action Economics Forecast Survey.

Durable goods sales rose 1.0% (8.5% y/y) in March after strengthening 3.2% in February. Sales of electrical equipment & electronic goods, the largest sector, rose 2.5% (20.9% y/y), after a 2.3% rise. Professional and commercial equipment sales, which includes computers, rose 1.2% (11.9% y/y), while vehicle sales declined 1.0% (1.1% y/y). Sales of machinery improved 0.7% (4.2% y/y). Nondurable product sales rose 0.3% (3.9% y/y) in March after gaining 0.9% in February. Drug store sales, the largest category, increased 2.8% (13.4% y/y), while grocery store sales eased 0.2% (+4.3% y/y). Sales of apparel weakened 0.8% (+3.5% y/y) while paper sales declined 1.7% (0.5% y/y). Petroleum product sales fell 4.6% both m/m and y/y.

The inventory-to-sales (I/S) ratio at the wholesale level remained at 1.30 in March and has been moving lower for the last two years.

The wholesale I/S ratio for durable goods eased to 1.69 in March and also has been trending lower. The machinery ratio fell to 2.92 while motor vehicles rose to 1.78. The I/S ratio for nondurable goods slipped to 0.93 and remained down from 1.02 early in 2023. The drug industry ratio eased to 0.94. Apparel's I/S ratio held at 2.06, but remained below its 2.28 level one year earlier, and has been declining since early 2023. The petroleum industry I/S ratio rose to 0.33.

The wholesale trade figures are available in Haver's **USECON** database. The expectations figure for inventories is contained in the **MMSAMER** database. Expectations for sales are from the **AS1REPNA** database.

**Assessing Maximum Employment** from Federal Reserve Governor Adriana D. Kugler is available [here](https://www.federalreserve.gov/newsevents/speech/kugler20250509a.htm).

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- Inventories trend higher y/y.
- Sales increase broadly.
- Inventory-to-sales ratio steadies.

U.S. Wholesale Inventories & Sales Increase in March

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Nonfarm labor productivity fell 0.8% (SAAR) during Q1’25 after increasing 1.7% in Q4’24, revised from 1.5%. A 0.6% decline had been expected in the Action Economics Forecast Survey. It was the first productivity decline since Q2’22. The y/y increase during Q1 fell to 1.4% from 2.1% in Q4. It was below a 3.3% high in the first quarter of last year. Productivity fell as real value-added output dropped 0.3% last quarter (+2.2% y/y) after increasing 2.5% in Q4, and hours worked lengthened 0.6% (0.8% y/y) following a 0.8% gain.

Compensation per hour increased 4.8% last quarter following a 3.7% Q4 rise. Despite the strength of these last two increases, y/y growth decelerated to 2.7% from a 6.8% high one year earlier. Nevertheless, the productivity decline raised unit labor costs by 5.7% (1.3% y/y) in Q1 versus expectations for a 5.2% increase. It followed a 2.0% gain during Q4 and was the strongest quarterly increase in a year.

Factory sector productivity surged 4.5% (1.5% y/y) during Q1’25 following three consecutive increases of roughly 0.5%. This strength was accompanied by a 6.2% rise (2.2% y/y) in hourly compensation which came after two consecutive increases of approximately 4.1%. The strength in productivity lowered the rise in unit labor costs to 1.6% from 3.8% in Q4. The y/y gain fell to 0.7% from 2.0% in Q4 and stood below the 6.2% y/y increase in Q1’24.

The productivity and labor cost data are available in Haver’s **USECON** database. The Action Economics expectations figures are in the **AS1REPNA** database.

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- Productivity declines with lower output.
- Compensation surge exacerbates labor market stress.
- Factory sector productivity surge lessens cost pressure.

U.S. Productivity Declines in Q1’25; Unit Labor Costs Surge

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The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) rose 0.6% (3.2% y/y) in March to 103.2 after rising 0.9% to 102.6 in February and rising 0.8% in January to 101.7. The level of home affordability has risen 14.8% from its low of 89.9 in October 2023. It remains 42.4% below the high of 179.2 in April 2020.

The rise in affordability in March occurred as the median price of an existing single-family home rose 1.8% (2.9% y/y) to $408,000 which was offset by a decline in mortgage rates to 6.73% from 6.92% in February. The price compared to the record $432,900 in June 2024. The decline in mortgage rates compared to a recent low of 6.26% in September of last year and a 7.70% high during October of 2023. It remained well above a December 2020 low of 2.73%. These changes lowered the principal & interest payment by 0.2% (+1.1% y/y) to $2,113 per month. That was well above the most recent low of $984 in February 2020. Monthly mortgage payments averaged a lessened 24.2% of income during March. They remained up from a low of 14.0% of income in April 2020.

The rise in housing costs in March was accompanied by improvement in median family income. It increased 0.4% (4.4% y/y) to a record $104,705 after rising 0.4% in February and 0.7% in January.

Housing affordability improved m/m across the country in March. The index edged 0.1% higher (2.8% y/y) to 134.5 in the Midwest. It remains the most affordable region of the country. In the South, the index 0.9% (5.4% y/y) to 106.6 and the affordability index in the Northeast increased 2.1% (-2.6% y/y) to 95.7. In the West, where homes are the least affordable, the index rose 0.8% (3.3% y/y) to 71.8 in March.

The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990 and reached its all-time high of 213.3 in January 2013; since then, it fell below 100 for the first time in June 2022.

Data on Housing Affordability can be found in Haver’s **REALTOR** database. Median home sales prices are also available in **USECON**. Higher frequency interest rate data are found in **SURVEYS**, **WEEKLY**, and **DAILY**.

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- Home prices rise but mortgage rates decline.
- Median income improves.
- Affordability increases across the country.

U.S. Housing Affordability Improves Slightly in March

Carol Stone, CBE

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Initial claims for unemployment insurance were 228,000 seasonally adjusted in the week ended May 3, down from 241,000 in the previous week, which was unrevised. For the latest week, the Action Economics Forecast Survey had expected a smaller decline to 233,000.

In the week ended April 26, the total number of unemployment insurance beneficiaries – also known as “continuing claims” – was 1.879 million, down from 1.908 million in the April 19 week.

The insured unemployment rate, that is, the number of beneficiaries as a percentage of covered employment, returned to its longstanding rate of 1.2% in the April 26 week; this rate has held that amount since continuously since the week of January 6, 2024, except for the prior week’s 1.3%.

As we do highlight in every week’s discussion, economic conditions vary widely across individual states and territories. In the week ended April 19, the highest unemployment rates were in New Jersey and Rhode Island (both at 2.48%), California (2.26%), Washington (2.14%) and New York (1.85%). The lowest were in Florida (0.36%), South Dakota (0.37%), Alabama (0.41%), Virginia (0.45%) and Nebraska (0.47%). Rates in other notable states include Illinois (1.78%), Pennsylvania (1.53%) and Texas (1.14%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Continued claims for unemployment insurance decreased 29, 000 in the week ended April 26.
- Insured unemployment rate returns to longstanding 1.2%.
- Across the states, the insured unemployment rate ranges from 0.36% to 2.48%.

Economy in Brief: January 2009

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