Haver Analytics
Haver Analytics

Economy in Brief

    • GDP grew at a solid 3.0% q/q SAAR in the third estimate of Q2, unrevised from the second estimate.
    • Q2 PCE, fixed investment revised slightly weaker.
    • Bigger boost from inventories; bigger drag from trade in Q2.
    • In the benchmark revisions back to 2019, GDP and PCE growth were notably stronger, especially in each of the past three years.
    • Meaningful upward revisions to both corporate profits and personal income over the past several years.
    • Initial claims declined by 4,000 in the week ended September 21.
    • Continued claims rose by 13,000 in the week ended September14.
    • Insured unemployment rate still at 1.2%.
  • Since late-2022 the German GfK measure of consumer climate has improved but has been doing so very slowly and in fits and starts. Climate improved sharply from the end of 2022 until early to mid-2023 but the sharp rise did not go on for long. Afterwards some slight erosion took place. However, near the end of 2023, there was another step up as an improvement in German climate began. Since that point, confidence has remained steady in the region of about -21 or so (a weak level) in terms of the climate headline from GfK. More recently, economic expectations have logged some fresh erosion after having a similar path and moderate rebound.

    Even so, the statistics on the GfK readings are clear. Climate is at the bottom 10% of all ranked historic readings. Economic expectations, income expectations, and the propensity to buy, are the three components that lag the GfK headline by a month. Their observations through September show economic expectations at a 37-percentile standing, the propensity to buy at a 30-percentile standing, and income expectations at a 44-percentile standing. Income expectations have clawed their way higher to stand near neutrality, as the median for ranked statistics -on any measure- occurs at a ranking at the 50th percentile mark. Income expectations are coming the closest to being back at neutral although they still fall short. The propensity to buy, at the 30% ranking mark, is still substantially short of neutrality, and the same is true of economic expectations with roughly a 37-percentile standing. But overall economic climate is in much worse shape than the components on the comparison of standings. The headline GfK reading is much weaker than any average of the ranking for its components. That is not unusual because historically the average component rank only explains about 60% of the variability in the ranking of climate.

    GfK components The GfK components show improvement in train as of September for the propensity to buy measure and for income expectations while economic expectations are faltering and weakening. However, the GfK component improvements where they exist are only month-to-month. All three components are weaker compared to two months ago and two of three are net weaker compared to three months ago.

    Elsewhere in Europe Other European confidence measures are up-to-date only through September, like the GfK components. Italy and France show solid month-to-month improvements in September confidence while the United Kingdom shows a sizeable drop in September. Over two months only France shows an improvement and over three months Italy is unchanged as France continues to show a gain and the U.K. shows a worsening. It would be hard to look at these data and find anything better than a possible spark of good news. In terms of the standing of confidence, Italy shows strong results apart from its recent trend changes with September marking an 80.5 percentile standing in its confidence measure. France has only a 43-percentile standing despite its recent gains. The U.K. is still nearly at its median level with a standing at its 49.2 percentile despite its recent sharp erosion.

    • Sales remain up sharply from 2022 low.
    • Median sales price slips.
    • Sales decline in most of country.
    • Surge in refinancing continues to overshadow rise in purchase loans.
    • Interest rates fall further.
    • Average loan size jumps again for both purchase and refinanced loans.
  • With so much weak data being reported, the INSEE household survey out of France is a breath of fresh air. Household confidence is sharply higher, rising to 95.1 in September from 92.5 in August, a jump that has been exceeded on a month-to-month basis only 12% of the time over the past 18 years. It was last stronger in February 2022, over two years ago. Yes, the September gain is sizeable.

    The gain brings the level of confidence to a standing at its 49.6 percentile, near to its historic median on data back to 2001 (the median for ranked data occurs at a ranking of 50).

    Granted, this only puts household confidence back at its median, but it is slightly above its mean. This qualifies as being called ‘normal.’ France has normalized its household sector despite all the Covid and post-Covid chaos that for France includes now the installation of a new government. France is also in the aftermath of having hosted the Olympics and having dealt with a nationwide transportation sabotage associated with forces trying to disrupt that event.

    The headline index is below the 50% mark by small amount and among the 10-components five are also below their respective 50-percentiel standings – but not all those sub-50 readings are bad. Living standards for the past 12 months as well as the future 12 months are below, but close to their 50-percentiel ranking; the assessment for the next 12 months is one point below its mean. Next, unemployment assessment is below its median value at a percentile standing of 39.4. That is good news that expected unemployment is well-below its median.

    While prices over the past 12 months register a median assessment at the 50-percentiel mark, the look-ahead for the next 12 months gets a very low 3.6 percentile standing. Inflation in France is widely, strongly, expected to be lower. That is more good news. And the favorability to save metrics are high.

    One fly in the ointment is that it is not considered a favorable time to make a major purchase, as the rank standing for that assessment is a lower 18-percentile reading. Still, households rate their past financial situation as strong with a 64.2 percentile standing; the next 12 months ahead are even better with a 70.4 percentile standing.

    The INSEE survey of France households in September is a refreshingly optimistic take on conditions in Europe’s second largest economy. This is particularly good news since conditions in Germany, Europe’s largest economy, still show that it is under pressure.

    • Falloff reverses two months of increase.
    • Both present situation and expectations measures decline.
    • Inflation expectations increase.
    • July FHFA HPI +0.1% (+4.5% y/y, lowest since June ’23) vs. +0.002% (+5.3% y/y) in June.
    • House prices rise m/m in six of nine census divisions but drop in South Atlantic (-0.7%), West South Central (-0.6%) and East South Central (-0.1%).
    • House prices up y/y in all of the nine regions, w/ the highest rate in East North Central (7.5%).