Tom Moeller

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Economic growth during Q2'17 was revised higher to 3.1% (2.2%
y/y) from 3.0% in the second estimate, and compared to 2.6% in the advance report. It was the quickest rate of increase since
Q1'15. The latest figure matched expectations in the Action Economics Forecast Survey.
After-tax corporate profits
without IVA &amp; CCA fell 2.0% (+7.4% y/y), revised from -1.4% following a 1.3%
gain during Q1.
Before-tax earnings with IVA &amp; CCA improved a lessened 0.7% (+6.4% y/y)
following a 2.1% Q1 decline. Nonfinancial sector earnings rose a reduced 4.9%
(7.2% y/y). Financial sector earnings
declined a sharper 7.1% (+8.6% y/y) while foreign sector profits fell a larger
2.5% (+6.8% y/y).
Inventory change had a slightly increased 0.1 percentage
point effect on growth after decumulation subtracted 1.5 percentage points in
Q1'17 and subtracted 0.4 percentage points during all of last year. Improvement
in the foreign trade deficit added an unrevised 0.2 percentage points to growth,
as it did during Q1. Exports grew a little-changed 3.5% (3.2% y/y) and imports
rose 1.5% (4.1% y/y).
Growth in domestic final sales was unrevised at 2.7%
(2.4% y/y). Consumer spending growth held at 3.3% (2.7% y/y), the strongest
growth in four quarters. The gain in durable goods buying was lessened to 7.6%
(6.4% y/y),&nbsp; the quarterly strength led by a 13.2% jump (10.7% y/y) in recreational goods &amp; vehicles buying.
Home furnishings &amp; appliance purchases rose 9.1% (6.2 % y/y), twice the
growth during Q1 while spending
on motor vehicles increased 0.8% (+4.4% y/y). Each of these figures were revised
lower. Nondurable goods spending rose a little-changed 4.2% (2.0% y/y).
Apparel purchases jumped a lessened 9.9% (2.1 % y/y) while gasoline &amp; energy product
consumption rose a strengthened 8.2% (-0.8% y/y). Services spending gained an
upwardly revised 2.1% (2.3% y/y) and equaled growth during all of last year. Spending on housing &amp; utilities grew
a little-changed 3.4% (1.1% y/y) while health care spending grew 1.3% (+2.0%
y/y), instead of declining slightly as previously indicated. Recreation spending
increased a strengthened 1.4% (3.3% y/y).
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Business fixed investment increased a little-changed 6.7%
(4.3% y/y). Growth during the first half of 2017 remained the
strongest in three years. Spending on equipment increased an unchanged 8.8% (3.1% y/y) as
information processing equipment investment rose 10.7% (7.0% y/y), the strongest
growth since Q3'15.
Spending on intellectual property products rose a lessened 3.7% (3.3% y/y).
Spending growth on software was lowered to 24.8% (5.0% y/y).
Investment in the residential sector was weakened as it
posted a 7.3% decline (+1.3% y/y), reversing roughly half of the Q1 gain.
Government spending was little-revised at a 0.2% decline
(-0.0% y/y). Federal government spending rose an unrevised 1.9%
(0.1% y/y) as the gain in defense purchases continued strong at 4.7% (+0.1% y/y).
State &amp; local government spending also was little changed, showing a 1.5%
(-0.2% y/y)
decline.
The unrevised 1.0% gain (1.6% y/y) in the GDP price index was
half the increases of the prior two quarters. The PCE price index rose 0.3%
(1.6% y/y) as the index less food &amp; energy increased 0.9% (1.5% y/y), half
the rise during Q1. The nonresidential fixed investment price index rose 1.9%
(0.9% y/y), about the same as during Q1, but up from the slight decline in 2016.
The residential price index jumped a strengthened 4.6% (4.4% y/y).
The GDP figures can be found in Haver's USECON and USNA
database. USNA contains virtually all of the Bureau of Economic Analysis' detail
in the national accounts, including the integrated economic accounts and the
recently added GDP data for U.S. Territories. The Action Economics consensus
estimates can be found in AS1REPNA.


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	<colgroup><col><col><col><col><col><col><col><col><col></colgroup>

 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM" ;>Chained
 2009 $ (%, AR</a>)</th>
 <th scope="col" >Q2'17 (Third Estimate)</th>
 <th scope="col" >Q2'17 (Second Estimate)</th>
 <th scope="col" >Q2'17 (Advance Estimate)</th>
 <th scope="col" >Q1'17</th>
 <th scope="col" >Q4'16</th>
 <th scope="col" >Q2'17 Y/Y</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 </tr>
 <tbody>
 <tr>
 <td class="firstcol" >Gross Domestic Product</td>
 <td>3.1</td>
 <td>3.0</td>
 <td>2.6</td>
 <td>1.2</td>
 <td>1.8</td>
 <td>2.2</td>
 <td>1.5</td>
 <td>2.9</td>
 <td>2.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Inventory Effect</td>
 <td>0.12</td>
 <td>0.0</td>
 <td>0.0</td>
 <td>-1.5</td>
 <td>1.1</td>
 <td>-0.1</td>
 <td>-0.4</td>
 <td>0.3</td>
 <td>-0.1</td>
 </tr>
 <tr>
 <td class="firstcol" >Final Sales</td>
 <td>2.95</td>
 <td>3.0</td>
 <td>2.6</td>
 <td>2.7</td>
 <td>0.7</td>
 <td>2.2&nbsp;</td>
 <td>1.9</td>
 <td>2.6</td>
 <td>2.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Foreign Trade Effect</td>
 <td>0.2</td>
 <td>0.2</td>
 <td>0.2</td>
 <td>0.2</td>
 <td>-1.6</td>
 <td>-0.1</td>
 <td>-0.2</td>
 <td>-0.7</td>
 <td>0.0</td>
 </tr>
 <tr>
 <td class="firstcol" >Domestic Final Sales</td>
 <td>2.7</td>
 <td>2.7</td>
 <td>2.4</td>
 <td>2.4</td>
 <td>2.3</td>
 <td>2.4</td>
 <td>2.1</td>
 <td>3.3</td>
 <td>2.7</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="10" >Demand Components</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Personal Consumption Expenditures</td>
 <td>3.3</td>
 <td>3.3</td>
 <td>2.8</td>
 <td>1.9</td>
 <td>2.9</td>
 <td>2.7</td>
 <td>2.7</td>
 <td>3.6</td>
 <td>2.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Business Fixed Investment</td>
 <td>6.7</td>
 <td>6.9</td>
 <td>5.2</td>
 <td>7.1</td>
 <td>0.2</td>
 <td>4.3</td>
 <td>-0.6</td>
 <td>2.3</td>
 <td>6.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Residential Investment</td>
 <td>-7.3</td>
 <td>-6.5</td>
 <td>-6.8</td>
 <td>11.1</td>
 <td>7.1</td>
 <td>1.3</td>
 <td>5.5</td>
 <td>10.2</td>
 <td>3.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Government Spending</td>
 <td>-0.2&nbsp;</td>
 <td>-0.3</td>
 <td>0.7</td>
 <td>-0.6</td>
 <td>0.2</td>
 <td>-0.0</td>
 <td>0.8</td>
 <td>1.4</td>
 <td>-0.6</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="10" >Chain-Type Price Index</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; GDP&nbsp;&nbsp;&nbsp;</td>
 <td>&nbsp;1.0</td>
 <td>1.0</td>
 <td>1.0</td>
 <td>2.0</td>
 <td>2.0</td>
 <td>1.6</td>
 <td>1.3</td>
 <td>1.1</td>
 <td>1.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Personal Consumption
 Expenditures</td>
 <td>0.3</td>
 <td>0.3</td>
 <td>0.3</td>
 <td>2.2</td>
 <td>2.0</td>
 <td>1.6</td>
 <td>1.2</td>
 <td>0.3</td>
 <td>1.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp; Less Food/Energy</td>
 <td>0.9</td>
 <td>0.9</td>
 <td>0.9</td>
 <td>1.8</td>
 <td>1.3</td>
 <td>1.5</td>
 <td>1.8</td>
 <td>1.3</td>
 <td>1.6</td>

 </tr>
 </tbody>
 
 

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Economic growth during Q2'17 was revised higher to 3.1% (2.2% y/y) from 3.0% in the second estimate, and compared to 2.6% in the advance report. It was the quickest rate of increase since Q1'15. The latest figure matched expectations [...]

U.S. GDP Growth is Revised Up as Profits Weakened

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The National Association of Realtors (NAR) reported that
pending home sales fell 2.6% (-2.6% y/y) during August to an index level of 106.3
(2001=100). That followed an unrevised 0.8% July decline, falling to the lowest
level since January 2016. It was the sixth monthly shortfall this year and left
sales 6.4% below the peak during April 2016.

Pending home sales declined m/m across each region of the
country. The index for the Northeast fell a sharp 4.4% (-4.1% y/y) to the lowest
level since late-2015. In the South, the index declined 3.5% (-1.7% y/y), off
8.2% from the March peak. The index for the Midwest fell 1.5% (-3.2% y/y) to the
lowest level since January. The index for the West eased 1.0% (-2.4% y/y), but
remained up sharply since early this month.

The pending home sales index measures home sales when the
sales contract is signed, analogous to the new home sales report. In contrast,
existing home sales are recorded when the sale is closed. In developing the
pending home sales index, the NAR found that the level of monthly sales contract
activity parallels the level of closed existing home sales in the following two
months. The series dates back to 2001, and the data are available in Haver's PREALTOR
database.


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	<colgroup><col><col><col><col><col><col><col><col></colgroup>
 <thead>
 <tr>
 <th class="firstcol" scope="col" >Pending Home Sales (SA,
 2001=100)</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Jul</th>
 <th scope="col" >Jun</th>
 <th scope="col" >Aug Y/Y %</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >106.3</td>
 <td >109.1</td>
 <td >110.0</td>
 <td >-2.6</td>
 <td >109.8</td>
 <td >108.8</td>
 <td >101.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Northeast</td>
 <td >93.4</td>
 <td >97.7</td>
 <td >98.0</td>
 <td >-4.1</td>
 <td >96.3</td>
 <td >90.7</td>
 <td >83.9</td>
 </tr>
 <tr>
 <td class="firstcol" >Midwest</td>
 <td >101.8</td>
 <td >103.3</td>
 <td >104.0</td>
 <td >-3.2</td>
 <td >107.3</td>
 <td >107.1</td>
 <td >100.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >South</td>
 <td >118.8</td>
 <td >123.1</td>
 <td >125.2</td>
 <td >-1.7</td>
 <td >122.8</td>
 <td >123.0</td>
 <td >115.5</td>
 </tr>
 <tr>
 <td class="firstcol" >West</td>
 <td >101.3</td>
 <td >102.3</td>
 <td >101.7</td>
 <td >-2.4</td>
 <td >102.5</td>
 <td >102.4</td>
 <td >93.1</td>
 </tr>
 </tbody>
</table>


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The National Association of Realtors (NAR) reported that pending home sales fell 2.6% (-2.6% y/y) during August to an index level of 106.3 (2001=100). That followed an unrevised 0.8% July decline, falling to the lowest level since [...]

U.S. Pending Home Sales Decline Sharply

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New orders for durable goods increased 1.7% (5.1% y/y) during
August following a little-revised 6.8% July decline. A 1.0% increase in orders
had been expected in the Action Economics Forecast Survey.

The rise in orders reflected strength in the transportation
sector where orders rose 4.9% (3.2% y/y) following stability over the prior two
months. Nondefense aircraft &amp; parts surged 44.8% and motor vehicle &amp;
parts orders gained 1.5% (0.8% y/y). Excluding the transportation sector,
durable goods orders improved 0.2% (6.1% y/y) after a 0.8% rise. During the last
three months, orders have risen 1.0%, roughly half the three-month growth rates
earlier this year.

Machinery orders increased 0.3% (6.9% y/y) after stability in
July. Electrical equipment bookings slipped 0.1% (-2.3% y/y) after a 1.7% jump.
Remaining strong were orders for computers &amp; electronic products which
jumped 1.3% (3.8% y/y), rising 3.4% since May. That strength has been powered by
communication equipment orders which rose 4.0% in August and by 5.0% during the
last three months. Orders for computers &amp; related products declined 2.3%
(+1.6% y/y) last month, but also were up 5.5% in the last three months. Primary
metals orders rose 0.3% (13.1% y/y) after a 0.5% rise, and orders for fabricated
metals fell 0.4% (+10.1% y/y) following a 0.9% gain.


Nondefense capital goods orders jumped 4.7% due to the increase in civilian aircraft orders.
Orders excluding aircraft rose 0.9% (3.6% y/y) after a 1.1% rise. 


Shipments of durable goods increased 0.3% (4.5% y/y) last
month after a 0.1% uptick. Shipments outside of the transportation sector rose
0.8% (5.7% y/y) after a 0.1% uptick.&nbsp; Unfilled orders for durable goods
held steady (0.8% y/y) after a 0.3% decline. Backlogs outside of the
transportation sector rose 0.3% (3.9% y/y) after a 0.5% rise. Durable goods
inventories gained 0.3% (2.6% y/y) following a 0.4% rise. Outside of
transportation, inventories rose 0.5% (4.4% y/y) following a 0.3% increase.

The durable goods figures are available in Haver's USECON
database. The Action Economics consensus forecast figure is in the AS1REPNA
database.

Why Persistent Employment Disparities Matter for the
Economy's Heath from Fed Governor Lael Brainard is available <a href="https://www.federalreserve.gov/newsevents/speech/brainard20170926a.htm">here</a>.

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<thead>
 <tr>
 <th class="firstcol" scope="col" >Durable Goods NAICS
 Classification</th>
 <th>Aug</th>
 <th>Jul</th>
 <th>Jun</th>
 <th>Aug Y/Y</th>
 <th>2016</th>
 <th>2015</th>
 <th>2014</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >New Orders (SA, %)</td>
 <td >1.7</td>
 <td >-6.8</td>
 <td >6.4</td>
 <td >5.1</td>
 <td >-1.7</td>
 <td >-4.6</td>
 <td >4.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Transportation</td>
 <td >4.9</td>
 <td >-19.6</td>
 <td >19.1</td>
 <td >3.2</td>
 <td >-3.4</td>
 <td >-6.2</td>
 <td >8.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Total Excluding Transportation</td>
 <td >0.2</td>
 <td >0.8</td>
 <td >-0.0</td>
 <td >6.1</td>
 <td >-0.7</td>
 <td >-3.6</td>
 <td >2.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Nondefense Capital Goods</td>
 <td >4.7</td>
 <td >-19.9</td>
 <td >20.8</td>
 <td >8.1</td>
 <td >-7.1</td>
 <td >-11.0</td>
 <td >0.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Excluding Aircraft</td>
 <td >0.9</td>
 <td >1.1 </td>
 <td >-0.1</td>
 <td >3.6</td>
 <td >-4.6</td>
 <td >-4.3</td>
 <td >0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >Shipments</td>
 <td >0.3</td>
 <td >0.1</td>
 <td >-0.0</td>
 <td >4.5</td>
 <td >-1.6</td>
 <td >-0.6</td>
 <td >3.8</td>
 </tr>
 <tr>
 <td class="firstcol" >Unfilled Orders</td>
 <td >0.0</td>
 <td >-0.3</td>
 <td >1.3</td>
 <td >0.8</td>
 <td >-1.7</td>
 <td >-2.0</td>
 <td >8.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Inventories</td>
 <td >0.3</td>
 <td >0.4</td>
 <td >0.5</td>
 <td >2.6</td>
 <td >-0.7</td>
 <td >1.6</td>
 <td >4.7</td>
 </tr>
 </tbody>
</table>


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New orders for durable goods increased 1.7% (5.1% y/y) during August following a little-revised 6.8% July decline. A 1.0% increase in orders had been expected in the Action Economics Forecast Survey. The rise in orders reflected [...]

U.S. Durable Goods Orders Are Boosted by the Transportation Sector

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The Conference Board Consumer Confidence Index eased 0.5%
(+15.7% y/y) during September to 119.8 following a 0.3% August rise, revised
from 2.4%. The index was 4.1% below its March peak. The Action Economics
Forecast Survey looked for stability at 120.0. During the past thirty years,
there has been a 70% correlation between the level of consumer confidence and
the y/y change in real PCE.
The slight increase in overall confidence reflected a 0.5%
gain (17.2% y/y) in the expectations index to 102.2. The present situation index
reading fell 1.5% (+14.2% y/y) to 146.1.
The percentage of respondents indicating that business
conditions are &quot;good&quot; slipped to 33.8%, still near the highest level
since January 2001. The percentage saying business conditions are
&quot;bad&quot; roughly matched the recovery low of 13.1%. The 34.4% of
respondents saying that jobs are &quot;plentiful&quot; was just below the recent
16-year high. The percentage claiming jobs are &quot;hard to get&quot; declined
to a 16-year low of 18.2%. These readings of labor market conditions led to a
labor market differential (plentiful minus hard to get) of 14.5 percentage
points. This differential is 97% inversely related to the unemployment rate.
The percentage expecting business conditions to improve over
the next six months improved slightly to 20.2%, but remained well below its
26.9% March peak. The percentage expecting more jobs in six months rose to a
still low 19.5%, well below the 23.8% March peak. The percentage expecting their
incomes to strengthen improved slightly to 20.5%, but remained below the March
high of 22.5%.
The expected rate of inflation in twelve months rose sharply
m/m to 4.9%. The percentage expecting higher interest rates over the next twelve
months fell to 64.1%, down from a March high of 72.2%, while 6.9% expected to
buy a home.
Confidence amongst individuals between ages 35-to-54 also
improved sharply, almost to its March high. Confidence amongst respondents under
age 35 fell sharply to the lowest reading in twelve months. Confidence amongst
individuals over age 55 fell slightly, but remained near the recent high.
The Consumer Confidence data is available in Haver's CBDB
database. The total indexes appear in USECON, and the market expectations
are in AS1REPNA

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 <tr>
 <th class="firstcol" scope="col">Conference Board (SA, 1985=100)</th>
 <th scope="col">Sep</th>
 <th scope="col">Aug</th>
 <th scope="col">Jul</th>
 <th scope="col">Y/Y %</th>
 <th scope="col">2016</th>
 <th scope="col">2015</th>
 <th scope="col">2014</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol">Consumer Confidence Index</td>
 <td>119.8</td>
 <td>120.4</td>
 <td>120.0</td>
 <td>15.7</td>
 <td>99.8</td>
 <td>98.0</td>
 <td>86.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp; Present Situation</td>
 <td>146.1</td>
 <td>148.4</td>
 <td>145.4</td>
 <td>14.2</td>
 <td>120.6</td>
 <td>111.7</td>
 <td>87.4</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp; Expectations</td>
 <td>102.2</td>
 <td>101.7</td>
 <td>103.0</td>
 <td>17.2</td>
 <td>86.1</td>
 <td>88.8</td>
 <td>86.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Consumer Confidence By Age Group</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp; Under 35 Years</td>
 <td>120.9</td>
 <td>126.6</td>
 <td>130.0</td>
 <td>3.9</td>
 <td>122.4</td>
 <td>116.0</td>
 <td>106.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp; Aged 35-54 Years</td>
 <td>128.2</td>
 <td>122.0</td>
 <td>122.2</td>
 <td>17.4</td>
 <td>106.2</td>
 <td>103.9</td>
 <td>92.4</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp; Over 55 Years</td>
 <td>112.7</td>
 <td>114.5</td>
 <td>113.3</td>
 <td>20.7</td>
 <td>84.6</td>
 <td>84.1</td>
 <td>73.8</td>
 </tr>
 </tbody>
</table>


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The Conference Board Consumer Confidence Index eased 0.5% (+15.7% y/y) during September to 119.8 following a 0.3% August rise, revised from 2.4%. The index was 4.1% below its March peak. The Action Economics Forecast Survey looked for [...]

U.S. Consumer Confidence Deteriorates

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Sales of new single-family homes fell 3.4%
(-1.2% y/y) to 560,000 during August, following a 5.5% drop in July to 580,000,
revised from 571,000. August sales were at the lowest level since December. The
figures do not include the full effects due to Hurricane Harvey. Expectations in
the Action Economics Forecast Survey had been for 585,000 sales.
The median price of a new home declined 6.2% (+0.4% y/y) to
$300,200 from $319,900. It was the lowest level in six months. The average price
of a new home eased 0.9% (+3.7% y/y) to $368,100.
Movement in home sales was mixed around the country, with
weakness led last month by a 4.7% decline (-9.2% y/y) in the South to 307,000,
the third straight month of decline. In the West, sales fell 2.7% (+4.3% y/y) to
146,000 after a 15.3% drop. New home sales in the Northeast declined 2.6%, up
two-thirds y/y, to 38,000 after a 9.3% drop. In the Midwest, sales held steady
m/m (+4.5% y/y) at 69,000 following a 7.8% gain in July. 
There was a 6.1 months' supply of homes for sale at the
current sales rate. It was the highest level since July 2014. The median number
of months a new home was on the market rose slightly to 3.1.

Why Persistent Employment Disparities Matter for the Economy's Health is the title of today's 
speech by Fed Chair Janet L. Yellen and it can be found <a href="https://www.federalreserve.gov/newsevents/speech/brainard20170926a.htm"> here</a>. 

The data in this report are available in Haver's USECON
database. The consensus expectation figure from Action Economics is 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" >U.S. New Single-Family
 Home Sales (SAAR, 000s)</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Jul</th>
 <th scope="col" >Jun</th>
 <th scope="col" >Aug Y/Y %</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td>560</td>
 <td>580</td>
 <td>614</td>
 <td>-1.2</td>
 <td>561</td>
 <td>503</td>
 <td>440</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Northeast</td>
 <td>38</td>
 <td>39</td>
 <td>43</td>
 <td>65.1</td>
 <td>32</td>
 <td>25</td>
 <td>28</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Midwest</td>
 <td>69</td>
 <td>69</td>
 <td>64</td>
 <td>4.5</td>
 <td>69</td>
 <td>61</td>
 <td>58</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; South</td>
 <td>307</td>
 <td>322</td>
 <td>330</td>
 <td>-9.2</td>
 <td>317</td>
 <td>286</td>
 <td>244</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; West</td>
 <td>146</td>
 <td>150</td>
 <td>177</td>
 <td>4.3</td>
 <td>142</td>
 <td>130</td>
 <td>110</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Median Price (NSA, $)</td>
 <td>300,200</td>
 <td>319,900</td>
 <td>316,300</td>
 <td>0.4</td>
 <td>310,567</td>
 <td>297,258</td>
 <td>283,775</td>
 </tr>
 </tbody>
</table>

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Sales of new single-family homes fell 3.4% (-1.2% y/y) to 560,000 during August, following a 5.5% drop in July to 580,000, revised from 571,000. August sales were at the lowest level since December. The figures do not include the full [...]

U.S. New Home Sales & Prices Decline

Robert Brusca

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 The Report's Inflation Diagnostic Starts to Read Hotter
 
 
 
 
 

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French business climate edged lower in September but is still a very high-valued reading. At 100.3 it is down from 110.8 in August but the standing is still at its 84th percentile, higher historically only 16% of the time. The recent and likely trend ratings both expanded and have standings in the 90th percentile of their respective ranges. The past and current trend growth assessments in France continue to be strongly evaluated. 

The French orders and foreign orders series have much lower diffusion values than other components but when ranked against their historic standings they still stand up as relatively strong levels. Orders and demand have an 86 percentile standing despite a raw diffusion score of -1. Foreign orders and demand with a zero net diffusion score have an 82nd percentile queue standing. While both of these readings are weak in diffusion terms they are still among the stronger readings French industry has seen since 1990. 

The likely sales prices trend reading made a significant move higher to +9 in September from +3 in August. That reading is a top 16 percentile queue standing reading. The outlook for prices was last greater than this value in July of 2011- over six years ago. 

The plot of the climate index shows that there have been eight episodes since 1980 when the Climate index has gotten to be this high of higher. In three of the past cycles the index peaked out at readings close to the level the index is now posting.

One surprising development in this poll is the higher inflation reading. Oil prices remain relatively well contained. And the Euro-Area as been seeing the exchange rate start to buck-up to higher level as the ECB has been flirting with a less accommodative policy. A stronger euro is more likely to depress prices yet in France expectations for prices are firming and at an 84th percentile standing the current reading is already reasonably high. And the monthly jump in the prices series make it one of the largest month to month changes in the likely prices trend series in its history, a top 10% reading. Apparently there are some price pressure in the French manufacturing sector that are unique to it since we are not seeing these in the EU data or even reported yet in France's HICP (which is not updated though September yet). The French Insee series puts us on the outlook for inflation pressures in France. 




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French business climate edged lower in September but is still a very high-valued reading. At 100.3 it is down from 110.8 in August but the standing is still at its 84th percentile, higher historically only 16% of the time. The recent [...]

French Biz Climate Edges Lower Stays High-Valued

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Regular gasoline prices at the pump declined to $2.58
per gallon last week (+16.1% y/y), the lowest level in four weeks. Haver
Analytics constructs factors adjusting for the seasonal variation in gasoline
pump prices. The seasonally adjusted gasoline price slipped to $2.53 per gallon.&nbsp;

WTI crude oil prices moved the other way and rose to $50.21
per barrel last week (12.5% y/y), the highest level since late-May. Prices
continued to strengthen yesterday with a move to $52.22 per barrel. The two-month
futures contract price was higher a $52.52. Brent crude oil prices increased to
$56.00 per barrel last week, then rose to $58.99 per barrel yesterday.
Natural gas prices rose to $3.09/mmbtu last week (0.5%
y/y) and were $2.97 yesterday.
In the week ended September 15, gasoline demand eased
0.3% y/y, while total petroleum product demand gained 0.5% y/y. Gasoline
inventories fell 4.0% y/y, while inventories of all petroleum products
declined 3.5% y/y. Crude oil input to refineries fell 8.1% y/y in the last four
weeks, compared to sharp y/y improvement earlier this year.
The energy price data are reported by the U.S. Department of
Energy. The petroleum demand and inventory figures are from the Oil &amp; Gas
Journal Weekly. These data can be found in Haver's WEEKLY database. The
daily figures are in DAILY and greater detail on prices, demand and
production, along with regional breakdowns, are in OILWKLY.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>


 <thead>
 <tr>
 <th class="firstcol" scope="col" >Weekly Energy Prices</th>
 <th scope="col" >09/25/17</th>
 <th scope="col" >09/18/17</th>
 <th scope="col" >09/11/17</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Retail Gasoline ($ per Gallon, Regular)</td>
 <td >2.58</td>
 <td >2.63</td>
 <td >2.69</td>
 <td >16.1</td>
 <td >2.31</td>
 <td >2.03</td>
 <td >2.30</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Light Sweet Crude Oil, WTI ($ per bbl.)</td>
 <td >50.21</td>
 <td >49.07</td>
 <td >48.58</td>
 <td >12.5</td>
 <td >43.22</td>
 <td >48.90</td>
 <td >93.64</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Natural Gas ($/mmbtu, LA, WSJ)</td>
 <td >3.09</td>
 <td >2.95</td>
 <td >2.88</td>
 <td >0.5</td>
 <td >2.49</td>
 <td >2.62</td>
 <td >4.37</td>
 </tr>
 </tbody>
</table>

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Regular gasoline prices at the pump declined to $2.58 per gallon last week (+16.1% y/y), the lowest level in four weeks. Haver Analytics constructs factors adjusting for the seasonal variation in gasoline pump prices. The seasonally [...]

U.S. Gasoline Prices Weaken; Crude Oil Costs Continue to Rise

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Regular gasoline prices at the pump declined to $2.58
per gallon last week (+16.1% y/y), the lowest level in four weeks. Haver
Analytics constructs factors adjusting for the seasonal variation in gasoline
pump prices. The seasonally adjusted gasoline price slipped to $2.53 per gallon.&nbsp;

WTI crude oil prices moved the other way and rose to $50.21
per barrel last week (12.5% y/y), the highest level since late-May. Prices
continued to strengthen yesterday with a move to $52.22 per barrel. The two-month
futures contract price was higher a $52.52. Brent crude oil prices increased to
$56.00 per barrel last week, then rose to $58.99 per barrel yesterday.
Natural gas prices rose to $3.09/mmbtu last week (0.5%
y/y) and were $2.97 yesterday.
In the week ended September 15, gasoline demand eased
0.3% y/y, while total petroleum product demand gained 0.5% y/y. Gasoline
inventories fell 4.0% y/y, while inventories of all petroleum products
declined 3.5% y/y. Crude oil input to refineries fell 8.1% y/y in the last four
weeks, compared to sharp y/y improvement earlier this year.
The energy price data are reported by the U.S. Department of
Energy. The petroleum demand and inventory figures are from the Oil &amp; Gas
Journal Weekly. These data can be found in Haver's WEEKLY database. The
daily figures are in DAILY and greater detail on prices, demand and
production, along with regional breakdowns, are in OILWKLY.
<table width="1769" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="753">Weekly Energy Prices</th>
 <th scope="col" width="144">09/25/17</th>
 <th scope="col" width="144">09/18/17</th>
 <th scope="col" width="144">09/11/17</th>
 <th scope="col" width="145">Y/Y %</th>
 <th scope="col" width="145">2016</th>
 <th scope="col" width="145">2015</th>
 <th scope="col" width="145">2014</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="753">Retail Gasoline ($ per Gallon, Regular)</td>
 <td align="center" width="144">2.58</td>
 <td align="center" width="144">2.63</td>
 <td align="center" width="144">2.69</td>
 <td align="center" width="145">16.1</td>
 <td align="center" width="145">2.31</td>
 <td align="center" width="145">2.03</td>
 <td align="center" width="145">2.30</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="753">Light Sweet Crude Oil, WTI ($ per bbl.)</td>
 <td align="center" width="144">50.21</td>
 <td align="center" width="144">49.07</td>
 <td align="center" width="144">48.58</td>
 <td align="center" width="145">12.5</td>
 <td align="center" width="145">43.22</td>
 <td align="center" width="145">48.90</td>
 <td align="center" width="145">93.64</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="753">Natural Gas ($/mmbtu, LA, WSJ)</td>
 <td align="center" width="144">3.09</td>
 <td align="center" width="144">2.95</td>
 <td align="center" width="144">2.88</td>
 <td align="center" width="145">0.5</td>
 <td align="center" width="145">2.49</td>
 <td align="center" width="145">2.62</td>
 <td align="center" width="145">4.37</td>
 </tr>
 </tbody>
</table>
&nbsp;
&nbsp;
U.S. New Home Sales Decline Unexpectedly 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;&nbsp;
September 26, 2017
Sales of new single-family homes in July fell 9.4% to 571,000
following an upwardly revised June gain of 1.9% to 630,000. The latter was
revised from 610,000. The July volume was the lowest since December's 548,000.
Expectations in the Action Economics Forecast Survey had envisioned 610,000
sales, which would have been unchanged from the original June report.
The median price of a new home rose 0.7% (6.3% y/y) to
$313,700. June's median price was revised upward modestly to $311,600. The
average price of a new home rose 0.3% (+4.6% y/y) to $371,200.
The July drop in home sales was spread around much of the
country. In fact, the only region with a gain was the Midwest, where sales rose
6.2% to 69,000 (-12.7% y/y); June sales there had risen 1.6% to 65,000. The
other three regions saw declines, a couple of them quite sizable. In the
Northeast, sales amounted to 32,000, down 23.8% (-13.5% y/y) from June's 42,000,
when they had risen 2.4%. Those in the West totaled 144,000, down 21.3% in the
month (up 1.4% y/y), a reversal of June's 16.6% gain. Sales in the South, the
region with the largest volume of sales, were 326,000, off 4.1% from June
(-11.7% y/y), which, in turn, was off 4.5% from May.
The months' supply of homes for sale at the current sales
rate was 5.8, up from June's 5.2 months, and the highest since September 2015,
when it was also 5.8 months. The median number of months a new home was on the
market was unchanged from June at 2.9 and the lowest since the same amount in
December 2015.
The data in this report are available in Haver's USECON
database. The consensus expectation figure from Action Economics is available in
the AS1REPNA database.
<table width="1769" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="826">U.S. New Single-Family
 Home Sales (SAAR, 000s)</th>
 <th scope="col" width="134">Aug</th>
 <th scope="col" width="134">Jul</th>
 <th scope="col" width="134">Jun</th>
 <th scope="col" width="134">Aug Y/Y %</th>
 <th scope="col" width="134">2016</th>
 <th scope="col" width="134">2015</th>
 <th scope="col" width="135">2014</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="826">Total</td>
 <td align="center" width="134"></td>
 <td align="center" width="134">571</td>
 <td align="center" width="134">630</td>
 <td align="center" width="134">-8.9</td>
 <td align="center" width="134">561</td>
 <td align="center" width="134">503</td>
 <td align="center" width="135">440</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="826">&nbsp; Northeast</td>
 <td align="center" width="134"></td>
 <td align="center" width="134">32</td>
 <td align="center" width="134">42</td>
 <td align="center" width="134">-13.5</td>
 <td align="center" width="134">32</td>
 <td align="center" width="134">25</td>
 <td align="center" width="135">28</td>
 </tr>
 <tr>
 <td class="firstcol" width="826">&nbsp; Midwest</td>
 <td align="center" width="134"></td>
 <td align="center" width="134">69</td>
 <td align="center" width="134">65</td>
 <td align="center" width="134">-12.7</td>
 <td align="center" width="134">69</td>
 <td align="center" width="134">61</td>
 <td align="center" width="135">58</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="826">&nbsp; South</td>
 <td align="center" width="134"></td>
 <td align="center" width="134">326</td>
 <td align="center" width="134">340</td>
 <td align="center" width="134">-11.7</td>
 <td align="center" width="134">317</td>
 <td align="center" width="134">286</td>
 <td align="center" width="135">244</td>
 </tr>
 <tr>
 <td class="firstcol" width="826">&nbsp; West</td>
 <td align="center" width="134"></td>
 <td align="center" width="134">144</td>
 <td align="center" width="134">183</td>
 <td align="center" width="134">1.4</td>
 <td align="center" width="134">142</td>
 <td align="center" width="134">130</td>
 <td align="center" width="135">110</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="826">Median Price (NSA, $)</td>
 <td align="center" width="134"></td>
 <td align="center" width="134">313,700</td>
 <td align="center" width="134">311,600</td>
 <td align="center" width="134">6.3</td>
 <td align="center" width="134">310,567</td>
 <td align="center" width="134">297,258</td>
 <td align="center" width="135">283,775</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Consumer Confidence Improves Markedly 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;September
26, 2017
The Conference Board Consumer Confidence Index strengthened
2.4% during August to 122.9 following a 2.3% July rise, revised from 3.2%. The
index was just below its recent peak in March and neared the highest level since
December 2000. The Action Economics Forecast Survey looked for a lesser increase
to 120.0. During the past thirty years, there has been a 70% correlation between
the level of consumer confidence and the y/y change in real PCE.
The increase in confidence reflected a 4.0% gain (20.7% y/y)
in the present situation index to 151.2, its highest level since July 2001. The
expectations reading increased 1.0% (20.8% y/y) to 104.0, its highest level
since April.
The percentage of respondents indicating that business
conditions are &quot;good&quot; surged to 34.5%, the highest level since January
2001. The percentage saying business conditions are &quot;bad&quot; matched the
recovery low of 13.1%. The 35.4% of respondents saying that jobs are
&quot;plentiful&quot; was the most since July 2001. The percentage claiming jobs
are &quot;hard to get&quot; declined to a sixteen year low of 17.3%. These
improved views of labor market conditions led to a labor market differential
(plentiful minus hard to get) of 18.1 percentage points. This differential is
97% inversely related to the unemployment rate.
The percentage expecting business conditions to improve over
the next six months declined to 19.6%, and remained well below its 26.9% March
peak. The percentage expecting more jobs in six months declined to 17.1%, a nine
month low and well below the 23.8% March peak. The percentage expecting their
incomes to strengthen improved slightly to 20.9%, but remained below the March
high.
The expected rate of inflation in twelve months declined to
4.5% and roughly equaled the 12-year low. The percentage expecting higher
interest rates over the next twelve months fell to 64.8%, down from a March high
of 72.2%, while 6.4% expected to buy a home, down slightly from the recent high.
Confidence amongst individuals over age 55 reached a new high
for the cycle. Confidence amongst individuals aged 35-to-54 also improved
moderately. Confidence amongst respondents under age 35 also rose following a
sharp decline in July.
The Consumer Confidence data is available in Haver's CBDB
database. The total indexes appear in USECON, and the market expectations
are in AS1REPNA
<table width="100%" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col">Conference Board (SA, 1985=100)</th>
 <th scope="col">Sep</th>
 <th scope="col">Aug</th>
 <th scope="col">Jul</th>
 <th scope="col">Y/Y %</th>
 <th scope="col">2016</th>
 <th scope="col">2015</th>
 <th scope="col">2014</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol">Consumer Confidence Index</td>
 <td align="center"></td>
 <td align="center">122.9</td>
 <td align="center">120.0</td>
 <td align="center">20.7</td>
 <td align="center">99.8</td>
 <td align="center">98.0</td>
 <td align="center">86.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp; Present Situation</td>
 <td align="center"></td>
 <td align="center">151.2</td>
 <td align="center">145.4</td>
 <td align="center">20.7</td>
 <td align="center">120.6</td>
 <td align="center">111.7</td>
 <td align="center">87.4</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp; Expectations</td>
 <td align="center"></td>
 <td align="center">104.0</td>
 <td align="center">103.0</td>
 <td align="center">20.8</td>
 <td align="center">86.1</td>
 <td align="center">88.8</td>
 <td align="center">86.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Consumer Confidence By Age Group</td>
 <td align="center"></td>
 <td align="center"></td>
 <td align="center"></td>
 <td align="center"></td>
 <td align="center"></td>
 <td align="center"></td>
 <td align="center"></td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp; Under 35 Years</td>
 <td align="center"></td>
 <td align="center">134.8</td>
 <td align="center">130.0</td>
 <td align="center">10.0</td>
 <td align="center">122.4</td>
 <td align="center">116.0</td>
 <td align="center">106.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp; Aged 35-54 Years</td>
 <td align="center"></td>
 <td align="center">123.6</td>
 <td align="center">122.2</td>
 <td align="center">9.4</td>
 <td align="center">106.2</td>
 <td align="center">103.9</td>
 <td align="center">92.4</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp; Over 55 Years</td>
 <td align="center"></td>
 <td align="center">115.6</td>
 <td align="center">113.3</td>
 <td align="center">36.8</td>
 <td align="center">84.6</td>
 <td align="center">84.1</td>
 <td align="center">73.8</td>
 </tr>
 </tbody>
</table>


</body>

</html>

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

Resilient US economy is pushing up longer-term inflation expectations and interest rates

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Andrew Cates

**Global growth**
Latest flash PMI readings reveal a widening gap in manufacturing performance across major economies. Europe remains mired in contraction, with both the UK and euro area registering PMI figures below the 50 threshold. The UK’s manufacturing sector is particularly under pressure, with the PMI dropping to a new low not seen in over a year—reflecting weak output and mounting challenges from both domestic uncertainty and external shocks, including the disruptive impact of recent US trade actions. While the euro area shows tentative signs of stabilization, with PMI readings inching higher, the recovery remains fragile. In sharp contrast, India’s manufacturing sector continues to outperform, with PMI figures climbing further and signalling resilient industrial momentum amidst global headwinds.

250425Z1.jpg

**US capex intentions**
The latest reading from the US Philly Fed survey suggests a sharp drop in capex intentions among manufacturers in the Philadelphia region, likely reflecting growing uncertainty in the wake of the US administration’s surprise announcement of sweeping tariffs on April 2nd, 2025. This abrupt policy shift has rattled business confidence, echoing past episodes—such as during the 2008 financial crisis and early stages of the pandemic—when capex sentiment similarly plunged. The downturn underscores how policy-induced trade disruptions can swiftly chill investment appetite, particularly in manufacturing sectors exposed to global supply chains.

250425Z2.jpg

**South Korean trade**
The fallout from President Trump’s “reciprocal” tariffs and the rapid escalation of the trade dispute with China is also now becoming evident in Asia’s trade data. South Korea’s trade figures for the first 20 days of April—often seen as a bellwether for global trade—fell sharply compared to the same period last year. The drop was led by a steep decline in exports to the United States, where tariffs on Chinese goods have surged to as high as 145%, effectively choking bilateral trade flows outside a narrow band of exemptions for strategic goods like electronics and semiconductors. Even these sectors are feeling the strain: South Korea’s semiconductor exports continued to decelerate in April, highlighting the broader collateral damage of deepening trade tensions.

250425Z3.jpg

**Gold prices**
The latest escalation in US-China trade tensions is reverberating far beyond traditional trade channels. Market sentiment has deteriorated noticeably, weighed down by darkening global growth prospects and deepening uncertainty over the future of relations between the world’s two largest economies. The forced decoupling is also reshaping investor behaviour, particularly among Chinese investors, who are increasingly turning to stateless safe-haven assets like gold. This shift is evident in the surge in trading volumes on the Shanghai Gold Exchange and the steady climb in global gold prices—buoyed further by a weakening US dollar. The trend points to rising concern among Chinese investors about the geographic concentration of their wealth, as Washington’s increasingly hawkish posture prompts a reassessment of cross-border financial exposure.

250425Z4.jpg

**The US dollar and market volatility** 
Recent sweeping US-led trade actions and a broader turn toward protectionism have sharply eroded the goodwill and soft power long associated with the US and its financial assets. As Washington becomes an increasingly prominent source of global instability, investor confidence in the US dollar as a safe-haven currency has weakened. This loss of faith is reflected across asset markets, with the dollar’s persistent and more entrenched decline against major currencies standing out as a clear signal of a broader reassessment of the US’s global economic role. Elevated market uncertainty reinforces this shift, as underscored by still-high—albeit slightly moderated—readings on the VIX volatility index.

250425Z5.jpg

**Asia’s consumption**
Viewed in a broader context, the recent actions by the US may signal an effort to rebalance its economy—though whether this strategy is well-calibrated remains highly contested. As the issuer of the world’s dominant reserve currency, the US has long been ensnared in the so-called Triffin dilemma: global demand for dollar-denominated assets has sustained persistent trade deficits, gradually undermining the competitiveness of its domestic manufacturing and other tradable sectors. China, by contrast, grapples with the mirror image of this problem. Its growth model remains heavily anchored in manufacturing and external surpluses, and it is now under mounting pressure to pivot toward consumption-led growth—an imperative sharpened by the latest wave of US measures designed to curb Chinese export strength.

250425Z6.jpg

Financial market volatility has remained elevated over the past several days as investors attempted to weigh a modest improvement in sentiment—driven by a potential, if partial, retreat by the US administration from its aggressive tariff stance—against a still-cloudy global outlook. Signals from flash PMI surveys on global growth remain mixed: Europe continues to stagnate, with the UK particularly weak, while India stands out with resilient and rising manufacturing activity (chart 1). In the US, most of the incoming data suggest that business confidence has faltered, with capital expenditure intentions plunging particularly sharply in the wake of the April 2nd tariff announcement (chart 2). The drag from trade tensions is, moreover, becoming more evident: South Korea’s exports have slumped, especially to the US, and even sectors granted exemptions—like semiconductors—are showing signs of strain (chart 3). These pressures are reverberating through financial markets as well, where Chinese investors are shifting into gold as a hedge, fuelling record trading volumes on the Shanghai Gold Exchange and lifting global gold prices (chart 4). Meanwhile, a broadly-based decline in the US dollar and persistently high readings on the VIX index arguably reflect a deeper reassessment of US assets as reliable safe havens amid mounting policy unpredictability (chart 5). Beneath these short-term ripples lie more entrenched structural challenges: the US is seeking to rebalance away from external deficits linked to its reserve currency role, while China is under growing pressure to pivot toward consumption-led growth—an imperative sharpened by American efforts to choke off its export strength (chart 6). In short, the latest softening in US trade rhetoric may offer brief relief, but the underlying economic, geopolitical, and structural crosswinds remain very much in play.

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/2IjMlHRbWf4hxzucxtpZJg?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: Dollar Dips and Trade Trips

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250425K5.jpg

The Federal Reserve Bank of Kansas City reported that its index of manufacturing sector activity declined to -4 during April from -2 in March, indicating a continued decline in factory sector activity. The index has been at zero or below since October 2022. This survey was taken between April 16-21.

Haver Analytics calculates an index based on the Kansas City results which is comparable to the ISM series. This index eased to 50.0 (NSA) from 51.4 in March. It compared to a low of 43.7 last July.

The new orders index of -11 this month compared to -12 in March. Thirty percent (NSA) of respondents reported higher orders while 37% reported a decline. Shipments improved to -2 from -4 and remained above -12 in December. Thirty-three percent (NSA) of respondents reported higher shipments while 28% reported a decline. Employment fell to -11 this month from -4 In March. It has been negative for three straight months. Thirteen percent (NSA) of respondents reported more hiring while 25% reported less. The average workweek index fell to -6 from +6 in March. Supplier delivery times surged to 13 from -1 as a higher 18% (NSA) of respondents reported a quickening of delivery speeds and a lessened 2% indicated a slowdown. Finished goods inventories rose to +5 from -8 in March, indicating the greatest rate of inventory accumulation in four months. Materials inventories weakened to -5 in April from +4 in March.

Inflation indicators strengthened in April. The prices paid index for finished products jumped to 29 from 15 in March. It was the highest reading in almost three years, up from a low of -3 in July 2023. Thirty-four percent (NSA) of respondents reported higher prices while none paid less. The raw materials index held at 42, up from a low of -1 in October 2023.

The composite index of expectations six months ahead fell to 6 in April from 10 in March. It was below a high of 17 in December. Expectations for future shipments fell to 9 this month, down from 31 in December. Orders expectations also weakened significantly, with the index falling to a minimal 3 from 20 in March. The employment reading of 1 compared to zero in March and 19 in December. Expectations continue to be for higher prices. The expectations index for finished goods prices jumped to 59, a roughly three-year high, from 39 in March. Raw material prices jumped to 71 in April, also a three-year high, from 57 in March.

The latest survey was conducted between April 16-21, 2024 and included 97 responses from factories in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Data for the Kansas City Fed Survey can be found in Haver’s **SURVEYS** database.

The Fed’s latest **Beige Book** covering regional economic conditions is available [here](https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20250423.pdf).

250425L5.jpg

250425M5.jpg

- Index has moved sideways for over two years.
- Most components remain negative.
- Prices paid reading surges.

Kansas City Fed Manufacturing Activity Index Declines in April; Expectations Diminish

250424J1.jpg

250424K1.jpg

Existing home sales declined 5.9% (-2.4% y/y) during March to 4.02 million units after rising 4.4% to 4.270 million units in February, revised from 4.26 million, according to the National Association of Realtors (NAR). The Action Economics Forecast Survey expected 4.15 million unit sales. The March sales decline accompanied an easing in the effective 30-year mortgage interest rate to an average 6.65% in March from 6.84% in February. The sales figures are based on closings of sales signed over the past couple of months.

Existing single-family home sales in March declined 6.4% (-2.2% y/y) to 3.64 million units after a 5.7% increase to 3.89 million in February. Sales of condos and co-ops held steady (-5.0% y/y) at 380,000, following a 7.3% February decline.

Sales declined in all regions in March. Sales in the West fell 9.4% (+1.3% y/y) to 770,000 after a 13.3% strengthening in February. Sales in the South declined 5.7% (-4.2% y/y) to 1.81 million after a 4.9% February increase. Sales in the Northeast were off 2.0%, unchanged y/y to 490,000, down for the third straight month. Sales in the Midwest declined 5.0% (-3.1% y/y) to 950,000 units after holding steady in February.

The median price averaged by all existing homes (NSA) rose 1.7% (2.7% y/y) to $403,700 in March after a 0.9% February increase. Prices remained below a high of $426,900 in June 2024. The median price of an existing single-family home rose 1.8% (2.9% y/y) to $408,000 in March and the median price of condos and co-ops increased 2.3% (1.5% y/y) to $363,000 last month. Prices for all homes rose 2.3% (+3.5 y/y) in the Midwest to $302,100. In the South, prices rose 1.2% (0.6% y/y) to $360,400. Prices in the Northeast prices increased 0.8% (7.7% y/y) to $468,000 while in the West prices rose 1.1% (2.6% y/y) to $621,200.

The number of existing homes for sale (NSA) rose 8.1% (19.8% y/y) to 1.33 million units in March following a 4.2% February increase. The supply of homes on the market at the current selling rate (NSA) increased to 4.0 months. A high of 4.2 months occurred in September 2024. The record low in supply of 1.6 months occurred in January 2022.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

250424L1.jpg

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- Sales are lowest since September.
- Decline extends throughout the country.
- Median sales price increases.

U.S. Existing Home Sales Fall Sharply in March

250424V4.jpg

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New orders for durable manufactured goods jumped 9.2% (11.9% y/y) during March after increasing 0.9% in February, revised from 1.0%. A 2.0% increase had been expected in the Action Economics Forecast Survey. A 27.0% rise (31.2% y/y) in transportation sector orders accounted for the rise, following a 1.2% gain. Excluding the transportation sector, new orders for durable goods held steady (+2.2% y/y), after a 0.7% rise during February.

The March rise in transportation orders was driven by a more-than-doubling of aircraft & parts orders and a 2.3% increase (0.6% y/y) in motor vehicles & parts, coming on the heels of a 5.1% February gain. Primary metals orders rose 0.7% (4.6% y/y) after rising 1.3% while fabricated metals orders increased 0.2% (2.7% y/y) after a 1.2% rise. Machinery orders edged 0.1% higher (1.1% y/y) after increasing 0.8% in February. Elsewhere, orders declined. Computer & electronic product orders fell 1.2% (+2.7% y/y) following a 0.1% easing while electrical equipment, appliance & component orders declined 0.5% (5.2% y/y) after rising 0.6% in February.

Nondefense capital goods orders surged 29.4% (32.3% y/y), while nondefense capital goods orders excluding aircraft improved 0.1% (1.8% y/y) in March after falling 0.3% in February. Defense capital goods orders fell 9.4% (+3.5% y/y), the sixth straight month of sharp decline.

Factory shipments of durable goods edged 0.1% higher (3.7% y/y) in March following a 1.3% February rise. Transportation sector shipments fell 0.5% (+7.3% y/y) after a 2.4% gain. Shipments excluding the transportation sector improved 0.4% (2.1% y/y) following a 0.8% rise. Machinery shipments gained 0.5% (0.3% y/y) following a 0.9% rise while computer & electronic product shipments eased 0.2% (+4.0% y/y) after rising 1.6%. Shipments of electronics & appliances rose 0.5% (3.7% y/y) after a 0.3% decline. Shipments of all manufactured products eased 0.1% (+2.1% y/y) in March after improving 0.7% in February. Shipments of nondefense capital goods less aircraft rose 0.3% (0.8% y/y) after rising 0.7% in February.

Unfilled orders of durable goods rose 2.0% (2.3% y/y) during March after a 0.1% February gain. Excluding transportation, backlogs eased 0.1% (+0.7% y/y) after no change in February. Inventories of durable goods edged 0.1% higher (1.0% y/y) following no change during both of the prior two months. Less transportation, durable goods inventories rose 0.2% (0.3% y/y) after holding steady in February. Inventories of all manufactured products rose 0.1% (1.0% y/y) during March for the third month in a row.

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.

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- Increase exceeds expectations after moderate February rise.
- Transportation orders account for all of last month’s gain.
- Nondefense capital goods less aircraft orders are minimally higher.

U.S. Advance Durable Goods Orders Surge During March

Winnie Tapasanun

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The Chicago Fed National Activity Index (CFNAI) was at -0.03 in March, down from +0.24 in February (+0.18 initially) and up from -0.26 in January (-0.08 previously), today’s report from the Federal Reserve Bank of Chicago showed, indicating U.S. economic growth decreased for the month. The March CFNAI registered the second negative reading in three months and the eighth negative in 10 months; it was up from -0.20 in March 2024 but below a high of +0.38 in February 2024.

The index's three-month moving average (CFNAI-MA3), which smooths out the m/m volatility in the index, dropped to -0.01 in March after rising to +0.12 in February (+0.15 initially), posting the first negative reading since December; nevertheless, it was an improvement from -0.21 in March 2024. The CFNAI-MA3 is expressed in standard deviation units from zero (with a value of zero defined as trend real GDP growth). Research at the Chicago Fed indicates that an average reading of -0.70 or below is consistent with the economy being in a recession. Thus, the March reading suggests that the U.S. economy is not currently in a recession.

The March negative reading reflected m/m drops in two of the four CFNAI key components and three negative contributions. The contribution of the Production & Income index decreased to -0.09 in March from +0.25 in February; however, it was up from -0.10 in March 2024 and a low of -0.59 in December 2022. The contribution of the Sales, Orders & Inventories index fell to -0.03 in March from +0.01 in February, but it was up from -0.05 in March 2024 and a low of -0.23 in January 2024. The Employment, Unemployment & Hours index contributed -0.01 in March, slightly up from -0.02 in February and improved from -0.04 in March 2024. Meanwhile, the contribution of the Personal Consumption & Housing index to the CFNAI rose to +0.11 in March, the highest reading since January 2023, after rebounding to a neutral value (0.00) in February; it was also up from -0.01 in March 2024.

The CFNAI Diffusion Index, which measures the breadth of change in the component series and is also a three-month moving average, fell to -0.01 in March after posting +0.12 in February (+0.16 initially) and +0.07 in January (+0.08 previously) and a string of negative readings from March 2023 to December 2024. A reading of zero indicates that all of the indicators are growing at their long-term average. The March reading was up from -0.18 in March 2024 and a low of -0.35 in October 2023; however, having remained below a high of +0.25 in September 2022.

The CFNAI is a weighted average of 85 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.

- CFNAI -0.03 in March vs. +0.24 in February.
- Two of four CFNAI components fall m/m and three make negative contributions.
- Personal Consumption & Housing index rises to the highest since Jan. ’23.
- CFNAI-MA3 declines to -0.01, the first negative reading since Dec.; still above -0.70 (recession signal).

Economy in Brief

Jump to:

U.S. GDP Growth is Revised Up as Profits Weakened

U.S. Pending Home Sales Decline Sharply

U.S. Durable Goods Orders Are Boosted by the Transportation Sector

U.S. Consumer Confidence Deteriorates

U.S. New Home Sales & Prices Decline

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