Gerald D. Cohen

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Consumer Credit - M/M change $17.04253 Billion in Jan
2018 - Nov	21.06845
2018 - Dec	15.37630
2019 - Jan	17.04253



The consumer credit data are available in Haver's USECON
database. The Action Economics figures are contained in the AS1REPNA database.

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 <th class="firstcol" scope="col" >Consumer Credit
 Outstanding (M/M Chg, SA)</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Jan</th>
 <th scope="col" >Dec</th>
 <th scope="col" >Feb y/y</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >$16.54 bil.</td>
 <td >$22.40 bil.</td>
 <td >$25.87 bil.</td>
 <td >4.9%</td>
 <td >4.9%</td>
 <td >5.0%</td>
 <td >6.8%</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; &nbsp;Nonrevolving</td>
 <td >14.83</td>
 <td >17.57</td>
 <td >15.90</td>
 <td >5.6</td>
 <td >5.6</td>
 <td >4.8</td>
 <td >6.9</td>
 </tr>
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 <td class="firstcol" >&nbsp; &nbsp;Revolving</td>
 <td >1.74</td>
 <td >4.84</td>
 <td >9.98</td>
 <td >2.8</td>
 <td >2.8</td>
 <td >5.6</td>
 <td >6.8</td>
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Consumer Credit - M/M change $17.04253 Billion in Jan 2018 - Nov 21.06845 2018 - Dec 15.37630 2019 - Jan 17.04253 The consumer credit data are available in Haver's USECON database. The Action Economics figures are contained in the [...]

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Tom Moeller

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The Chicago Federal Reserve Bank reported that its National Activity Index (CFNAI) fell to -0.40 during October from -0.27 in September, revised from -0.28. It was the lowest figure in nine months and compared to a high of +0.39 reached in February. The three-month moving average of the index fell to -0.24 during October from -0.21 in September. The index has been consistently negative since late in 2022, suggesting below-trend economic growth. During the last 20 years, there has been a 91% correlation between the three-month index level and the q/q change in real GDP.

The report indicated deterioration in all categories used to construct the index in October.

The Production & Income category contributed -0.25 to the total in October after subtracting -0.23 in September. It remained up from a January low of -0.48, suggesting a lessening of negative pressure. The Employment, Unemployment & Hours series weakened sharply and contributed -0.12 in October versus -0.01 in September. It has been mostly negative since early last year. The Personal Consumption & Housing figure contributed -0.01 last month after adding 0.02 in September. It remained higher than the January low of -0.09. The Sales, Orders & Inventories figure contributed -0.02 last month versus -0.04 in September. These readings compare to a high of 0.11 in November of last year.

The diffusion index of the CFNAI, which measures the breadth of component change, fell to -0.26 in October from -0.22 in September. It compared to a low of -0.27 in October of last year and stands below the recent high of +0.25 in September 2022.

The CFNAI is a weighted average of 85 monthly indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

These figures are available in Haver's **SURVEYS** database.

- Broad-based weakening occurs in all components.
- Production & Income measure leads decline.
- Trend is deteriorating.

Chicago Fed National Activity Index Declines Again in October

Tian Yong Woon

In this week’s letter, we focus on Southeast Asia (ASEAN). While exports have become increasingly important to ASEAN economies as drivers of real GDP growth, secondary growth drivers offer a buffer in the event of dampened external demand. A deeper look at the composition of ASEAN’s export value added reveals that intermediate goods account for the largest share, compared to finished goods. This highlights the region’s key role as a hub in the global supply chain. We also explore the differences among ASEAN economies. On the one hand, resource-rich countries like Indonesia and Malaysia benefit from their role as exporters of raw or partially processed commodities. On the other, resource-scarce economies like Singapore have carved out a niche in higher-end manufacturing, often relying on inputs from other regions.

Overall, ASEAN remains a bright spot for growth, with IMF forecasts suggesting that the region is poised to outpace other Asian economies, including China, over the next decade. However, the region’s prospects are not without risks. The US trade deficit with many ASEAN economies, particularly Vietnam, could provoke trade-related actions from US President-elect Trump. Ironically, Vietnam’s rise—largely driven by its strategic positioning amid US-China tensions during Trump’s first term—may also lead to increased scrutiny in his second term. Finally, we examine the industrial policies of certain ASEAN economies, particularly Indonesia. While the success of its nickel ore export ban is notable, similar export bans on commodities like bauxite have had more mixed success.

**ASEAN’s place in trade and the world**
Trade has long been crucial to the economies of Southeast Asia (ASEAN), with export revenues serving as a significant driver of growth for several countries in the region. In recent quarters, this role has become even more pronounced, as evidenced in Chart 1, which shows rising export contributions to growth for Malaysia, Thailand, and Indonesia. In contrast, the Philippines continues to struggle to generate growth from its exports. However, unlike advanced Asian economies such as South Korea and Taiwan, many ASEAN countries have benefited from strong secondary growth drivers, particularly private consumption. A robust domestic consumer base has supported business activity across the region. This dynamic provides a buffer in times of reduced global demand, which may dampen export performance. Even if external conditions weaken, these economies may still rely on internal demand to sustain growth, provided their domestic situations remain stable.

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Diving deeper into the details, we find that while they share certain similarities in their export profiles, they also exhibit significant differences. Starting with the similarities, as Chart 2 shows, most of the value added in the exports of ASEAN-6 economies comes from intermediate goods, highlighting the region's critical role as both a hub and source of inputs for finished goods within the global value chain. Additionally, in many of these economies, the share of value added from agricultural and mining goods is notably high, with some nearing 100%. This suggests that these countries benefit from their natural endowments and play a key role in supplying raw commodities—such as metals from mining and food products like rice and palm oil.

We turn next to examine a few points of distinction between the ASEAN-6 economies. Take Singapore, for example, where the proportional domestic value added in exports is relatively low compared to its regional peers. This points to a significant share of value being contributed by foreign economies before the goods are exported. Singapore's lack of natural resources, unlike its neighbours, explains its reliance on external inputs to add value within the global value chain. A similar pattern can be seen across the manufacturing sectors of several ASEAN-6 economies, such as Vietnam, Malaysia, and Thailand. These countries typically receive parts from abroad, add value through processing, and then export either finished goods or intermediate goods for further production elsewhere in the global supply chain.

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Turning to growth opportunities in the ASEAN-6, Chart 3 shows that the region is expected to deliver robust economic growth in the coming years, according to IMF forecasts. This makes ASEAN-6 an attractive investment destination. This is especially true given the anticipated slowdown in growth across other major Asian economies, such as China. In fact, the region's average growth is forecasted to surpass China’s over the next decade. However, digging deeper, much of the growth within ASEAN-6 will be driven by a few key economies, such as Vietnam and Indonesia. On the other hand, Singapore is expected to experience comparatively lower growth, primarily due to its more advanced stage of development. Meanwhile, Thailand continues to strive to unlock its full growth potential while addressing structural challenges.

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**Potential impacts of President-elect Trump’s policies**

The growth opportunities in the ASEAN-6 region, however, are not without risks—particularly in light of President-elect Trump’s impending return to office and the potential trade-related policies he may implement. As Chart 4 illustrates, the US runs trade deficits with most ASEAN-6 economies, with Vietnam standing out due to its substantial deficit of nearly $119 bln, based on rolling 12-month totals. For context, the US goods trade deficit with Vietnam is so large that it ranks just behind the deficits with China and Mexico, two countries with which Trump has frequently expressed dissatisfaction over trade. This risk is compounded by Vietnam’s heavy reliance on China for many of its imports. Should Trump prioritize bilateral trade balances and take actions, both directly and indirectly, against China, Vietnam may find itself in the crosshairs of US trade actions. Consequently, Vietnam’s economic growth now faces additional risks under the Trump administration, with potential trade measures threatening to drag down its growth if these actions materialize.

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Delving deeper into Vietnam, the economy has experienced remarkable growth in recent years, with real GDP accelerating to 7.4% y/y in Q3 2024, a standout figure in the Asian region. This success can be attributed to several key drivers. First, Vietnam has capitalized on the “China Plus One” strategy, where businesses globally seek to diversify their supply chains away from China, attracting significant investment inflows. On the other hand, Vietnam has also benefitted from China’s trade-related challenges, as China has increasingly used Vietnam as a hub to reroute exports. However, Vietnam’s rise amid US-China tensions during Trump’s first term may ironically become a source of greater scrutiny this time around. The US trade deficit with Vietnam has nearly quadrupled over the past eight years, largely driven by surging imports of computers and electronics (Chart 5).

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**Industrial policy**
Finally, we turn to the industrial policies implemented by certain ASEAN economies and their outcomes. In Indonesia's case, the ban on raw nickel exports, enacted in 2020, has proven highly successful. The policy has not only attracted substantial foreign direct investment (Chart 6), with foreign firms setting up refineries in Indonesia to process the nickel for export, but it has also significantly increased Indonesia's share of global nickel production. With no viable substitutes for nickel, global demand—particularly from industries like stainless steel and electric vehicle batteries—seems likely to remain strong in the near term, securing Indonesia's position in the global supply chain. However, Indonesia's attempts to replicate this success with other commodities, such as its bauxite export ban in June 2023, have yielded mixed results.

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Asia

Economic Letter From Asia: Talking ASEAN

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) declined 1.4% (+1.1% y/y) during the four weeks ended November 22, 2024, continuing the decline in the four-week period ending late-October. 

Prices in the Metals group weakened 4.4% (+5.5% y/y) over the most recent four weeks. Tin costs fell 7.4% in four weeks (+16.7% y/y) while copper scrap prices declined 5.4% (+8.6%). Zinc prices fell 5.9% (+16.7 y/y) in four weeks and steel scrap prices were off 4.4% (-6.7% y/y) in four weeks. The cost of lead fell 3.9% (-13.7% y/y). Edging higher, aluminum prices moved up 0.2% during the last four weeks (19.1% y/y).

Crude Oil & Benzene group prices declined 1.6% (-7.5% y/y) in the latest four weeks. The cost of West Texas Intermediate crude oil weakened 2.3% to $68.89 per barrel and stood 10.7% lower y/y. The cost of the petro-chemical benzene, used for making plastics & synthetic fibers, fell 4.1% (-16.7% y/y) in the last four weeks. Excluding crude oil, the industrial commodity price index declined 1.4% (+1.9% y/y) in the latest four-week period.

Textile prices eased 0.4% (-1.1% y/y) over the last four-week period. Cotton prices fell 2.4% (-15.0% y/y) and the cost of burlap slipped 0.5% (+15.0% y/y) during the last four weeks. 

Edging higher, prices in the Miscellaneous group improved 0.5% during the last four weeks and rose 3.5% y/y. The cost of natural rubber weakened 11.9% in four weeks but jumped 34.6% y/y. Working higher, plywood prices improved 15.4% over the last four-week period (11.6% y/y).

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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- Tin & copper scrap prices decline sharply.
- Crude oil prices fall. 
- Natural rubber prices decline sharply but plywood prices increase.


FIBER: Industrial Commodity Prices Weaken in Latest Four Weeks

Robert Brusca

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Manufacturing readings fall by a 'tick' in November, but service sector metrics eased by nearly a full point on average. These calculations are for unweighted averages of the above observations. US trends are opposite, so that the overall averages become worse when the US is excluded.  

In November the eight reporters in the table have stronger composite readings reported in only three countries, in Japan, India, and the US.  The US is the only reporter in the table to show improvements in manufacturing, services, and for the composite at the same time, in November.  The UK, France, and EMU each report increased weakness across the composite, the manufacturing sector and in services in November. Among the 24 readings across eight reporters (…and three sectors for each reporter) in November only nine of these twenty-four are stronger month-to-month. This compares to ten in October and eight in September. Weakness has dominated strength over the past three-months across these readings. 

Sequentially we look at 12 month, 6-month, and 3-month averages of finalized data, we see only six of twenty-four stronger over three-months compared to 6-months, after the 6-month averages were broadly stronger showing weakening in only seven of twenty-four cases. Over 12-months there were only nine weakening compared to 12-months ago and they were all confined to three economies: Germany, France and Japan. The unweighted averages of these reporters show little change in the averaging of these sector reading over 3-months, 6-months and 12-months.

The queue rankings underscore the sense of weakness. Assessed among the most industrialized countries, the US is starting to gain separation as its service sector is carrying it to a better overall (composite) standing. The US composite standing is at 69.5% and compares to Japan, the UK, France, Germany and EMU whose highest standing for the composite among these five reporters is a reading of 42.4% -as the group produces an average standing at the 26.1%. 

The US is still strongly ‘plugged into’ the global economy as its manufacturing sector is still the third weakest by queue percentile standing in the table.  But the vibrant US services sector is the economy’s guiding light – plus manufacturing has improved for two months in a row. The global economy is still floundering while the US shows signs of strengthening.


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Summary

Gerald D. Cohen

More Economy in Brief

Chicago Fed National Activity Index Declines Again in October

Economic Letter From Asia: Talking ASEAN

FIBER: Industrial Commodity Prices Weaken in Latest Four Weeks

S&P Flash PMIs Sag Globally

Consumer Credit Outstanding (M/M Chg, SA)	Feb	Jan	Dec	Feb y/y	2018	2017	2016
Total	$16.54 bil.	$22.40 bil.	$25.87 bil.	4.9%	4.9%	5.0%	6.8%
Nonrevolving	14.83	17.57	15.90	5.6	5.6	4.8	6.9
Revolving	1.74	4.84	9.98	2.8	2.8	5.6	6.8