United States Unsustainable Fiscal Deficit/Debt Threatening Prosperity, World Inflation Waves, World Financial Turbulence and Economic Slowdown with Global Recession Risk
Carlos M. Pelaez
© Carlos M. Pelaez, 2010, 2011, 2012
Executive Summary
I United States Unsustainable Fiscal Deficit/Debt Threatening Prosperity
IA United States Unsustainable Fiscal Deficit/Debt Threatening Prosperity
IB Collapse of United States Dynamism of Income Growth and Employment Creation
II World Inflation Waves
IIA Appendix: Transmission of Unconventional Monetary Policy
IIA1 Theory
IIA2 Policy
IIA3 Evidence
IIA4 Unwinding Strategy
IIB United States Inflation
IIC Long-term US Inflation
IID Current US Inflation
III World Financial Turbulence
IIIA Financial Risks
IIIE Appendix Euro Zone Survival Risk
IIIF Appendix on Sovereign Bond Valuation
V World Economic Slowdown
VA United States
VB Japan
VC China
VD Euro Area
VE Germany
VF France
VG Italy
VH United Kingdom
VI Valuation of Risk Financial Assets
VII Economic Indicators
VIII Interest Rates
IX Conclusion
References
Appendixes
Appendix I The Great Inflation
IIIB Appendix on Safe Haven Currencies
IIIC Appendix on Fiscal Compact
IIID Appendix on European Central Bank Large Scale Lender of Last Resort
IIIG Appendix on Deficit Financing of Growth and the Debt Crisis
IIIGA Monetary Policy with Deficit Financing of Economic Growth
IIIGB Adjustment during the Debt Crisis of the 1980s
IV Global Inflation. There is inflation everywhere in the world economy, with slow growth and persistently high unemployment in advanced economies. Table IV-1, updated with every blog comment, provides the latest annual data for GDP, consumer price index (CPI) inflation, producer price index (PPI) inflation and unemployment (UNE) for the advanced economies, China and the highly-indebted European countries with sovereign risk issues. The table now includes the Netherlands and Finland that with Germany make up the set of northern countries in the euro zone that hold key votes in the enhancement of the mechanism for solution of sovereign risk issues (Peter Spiegel and Quentin Peel, “Europe: Northern Exposures,” Financial Times, Mar 9, 2011 http://www.ft.com/intl/cms/s/0/55eaf350-4a8b-11e0-82ab-00144feab49a.html#axzz1gAlaswcW). Newly available data on inflation is considered below in this section. Data in Table IV-1 for the euro zone and its members are updated from information provided by Eurostat but individual country information is provided in this section as soon as available, following Table IV-1. Data for other countries in Table IV-1 are also updated with reports from their statistical agencies. Economic data for major regions and countries is considered in Section V World Economic Slowdown following with individual country and regional data tables.
Table IV-1, GDP Growth, Inflation and Unemployment in Selected Countries, Percentage Annual Rates
| GDP | CPI | PPI | UNE | |
| US | 2.3 | 2.2 | 2.3 | 7.9 |
| Japan | 0.1 | -0.3 | -1.0 | 4.2 |
| China | 7.4 | 1.7 | -2.8 | |
| UK | 0.0 | 2.7* | 2.5* output | 7.8 |
| Euro Zone | -0.6 | 2.5 | 2.7 | 11.6 |
| Germany | 0.9 | 2.1 | 1.6 | 5.4 |
| France | 0.1 | 2.2 | 2.5 | 10.8 |
| Nether-lands | -1.4 | 3.3 | 4.1 | 5.4 |
| Finland | -0.8 | 3.5 | 2.6 | 7.9 |
| Belgium | -0.3 | 2.6 | 3.3 | 7.4 |
| Portugal | -3.4 | 2.1 | 4.0 | 15.7 |
| Ireland | -0.5 | 2.1 | 2.4 | 15.1 |
| Italy | -2.4 | 2.8 | 3.0 | 10.8 |
| Greece | -7.2 | 0.9 | 6.8 | NA |
| Spain | -1.6 | 3.5 | 4.1 | 25.8 |
Notes: GDP: rate of growth of GDP; CPI: change in consumer price inflation; PPI: producer price inflation; UNE: rate of unemployment; all rates relative to year earlier
*Office for National Statistics http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/october-2012/index.html **Core
PPI http://www.ons.gov.uk/ons/rel/ppi2/producer-price-index/october-2012/index.html
Source: EUROSTAT; country statistical sources http://www.census.gov/aboutus/stat_int.html
Table IV-1 shows the simultaneous occurrence of low growth, inflation and unemployment in advanced economies. The US grew at 2.3 percent in IIIQ2012 relative to IIIQ2011 (Table 8 in http://www.bea.gov/newsreleases/national/gdp/2012/pdf/gdp3q12_adv.pdf See I Mediocre and Decelerating United States Economic Growth http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html). Japan’s GDP fell 0.7 percent in IVQ2011 relative to IVQ2010 and contracted 1.8 percent in IIQ2011 relative to IIQ2010 because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 but grew at the seasonally-adjusted annual rate (SAAR) of 9.5 percent in IIIQ2011, decreasing at the SAAR of 1.2 percent in IVQ 2011, increasing at the SAAR of 5.2 percent in IQ2012 and 0.3 percent in IIQ2012 but contracting at the SAAR of 3.5 percent in IIIQ2012 (see Section VB and earlier at http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation_16.html); the UK grew at 1.0 percent in IIIQ2012 relative to IIQ2012 and GDP was unchanged in IIIQ2012 relative to IIIQ2011 (see Section VH at http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html); and the Euro Zone grew at minus 0.1 percent in IIIQ2012, minus 0.2 percent in IIQ2012, 0.0 percent in IQ2012 relative to IVQ2011 and fell 0.6 percent in IIIQ2012 relative to IIIQ2011 (see Section VD and earlier http://cmpassocregulationblog.blogspot.com/2012/10/twenty-nine-million-unemployed-or_7.html). These are stagnating or “growth recession” rates, which are positive or about nil growth rates with some contractions that are insufficient to recover employment. The rates of unemployment are quite high: 7.9 percent in the US but 17.4 percent for unemployment/underemployment or job stress of 28.1 million (see Table I-4 http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html ), 4.2 percent for Japan (see Section VB http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html), 7.8 percent for the UK with high rates of unemployment for young people (see the labor statistics of the UK in Subsection VH and earlier at http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united_21.html). Twelve-month rates of inflation have been quite high, even when some are moderating at the margin: 2.2 percent in the US, -0.3 percent for Japan, 1.7 percent for China, 2.5 percent for the Euro Zone and 2.7 percent for the UK. Stagflation is still an unknown event but the risk is sufficiently high to be worthy of consideration (see http://cmpassocregulationblog.blogspot.com/2011/06/risk-aversion-and-stagflation.html). The analysis of stagflation also permits the identification of important policy issues in solving vulnerabilities that have high impact on global financial risks. There are six key interrelated vulnerabilities in the world economy that have been causing global financial turbulence: (1) sovereign risk issues in Europe resulting from countries in need of fiscal consolidation and enhancement of their sovereign risk ratings (see Section III and earlier http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html); (2) the tradeoff of growth and inflation in China now with change in growth strategy to domestic consumption instead of investment and political developments in a decennial transition; (3) slow growth by repression of savings with de facto interest rate controls (see IIC http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-dynamism-of.html http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-dynamism-of.html http://cmpassocregulationblog.blogspot.com/2012/08/twenty-nine-million-unemployed-or.html), weak hiring with the loss of 10 million full-time jobs (see http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html) and continuing job stress of 24 to 30 million people in the US and stagnant wages in a fractured job market (see http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html); (4) the timing, dose, impact and instruments of normalizing monetary and fiscal policies (see Section I and earlier at http://cmpassocregulationblog.blogspot.com/2012/08/expanding-bank-cash-and-deposits-with.html http://cmpassocregulationblog.blogspot.com/2012/02/thirty-one-million-unemployed-or.html http://cmpassocregulationblog.blogspot.com/2011/08/united-states-gdp-growth-standstill.html http://cmpassocregulationblog.blogspot.com/2011/03/is-there-second-act-of-us-great.html http://cmpassocregulationblog.blogspot.com/2011/03/global-financial-risks-and-fed.html http://cmpassocregulationblog.blogspot.com/2011/02/policy-inflation-growth-unemployment.html) in advanced and emerging economies; (5) the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 that had repercussions throughout the world economy because of Japan’s share of about 9 percent in world output, role as entry point for business in Asia, key supplier of advanced components and other inputs as well as major role in finance and multiple economic activities (http://professional.wsj.com/article/SB10001424052748704461304576216950927404360.html?mod=WSJ_business_AsiaNewsBucket&mg=reno-wsj); and (6) geopolitical events in the Middle East.
In the effort to increase transparency, the Federal Open Market Committee (FOMC) provides both economic projections of its participants and views on future paths of the policy rate that in the US is the federal funds rate or interest on interbank lending of reserves deposited at Federal Reserve Banks. These projections and views are discussed initially followed with appropriate analysis.
Jon Hilsenrath, writing on “Fed sets stage for stimulus,” on Aug 31, 2012, published in the Wall Street Journal (http://professional.wsj.com/article/SB10000872396390443864204577623220212805132.html?mod=WSJ_hp_LEFTWhatsNewsCollection), analyzes the essay presented by Chairman Bernanke at the Jackson Hole meeting of central bankers, as defending past stimulus with unconventional measures of monetary policy that could be used to reduce extremely high unemployment. Chairman Bernanke (2012JHAug31, 18-9) does support further unconventional monetary policy impulses if required by economic conditions (http://www.federalreserve.gov/newsevents/speech/bernanke20120831a.htm):
“Over the past five years, the Federal Reserve has acted to support economic growth and foster job creation, and it is important to achieve further progress, particularly in the labor market. Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
Professor John H Cochrane (2012Aug31), at the University of Chicago Booth School of Business, writing on “The Federal Reserve: from central bank to central planner,” on Aug 31, 2012, published in the Wall Street Journal (http://professional.wsj.com/article/SB10000872396390444812704577609384030304936.html?mod=WSJ_hps_sections_opinion), analyzes that the departure of central banks from open market operations into purchase of assets with risks to taxpayers and direct allocation of credit subject to political influence has caused them to abandon their political independence and accountability. Cochrane (2012Aug31) finds a return to the proposition of Milton Friedman in the 1960s that central banks can cause inflation and macroeconomic instability.
Jon Hilsenrath, writing on “Bernanke letter defends Fed actions,” on Aug 24, 2012, published in the Wall Street Journal (http://professional.wsj.com/article/SB10000872396390444358404577609231770784446.html?mod=WSJ_hp_LEFTWhatsNewsCollection#project%3Dissaletter082412%26articleTabs%3Darticle), finds support for FOMC policies and possible further actions in a letter by Chairman Bernanke (2012Aug22) in reply to inquiry by Representative Darrell Issa (2012Aug1), which were obtained and published by the WSJ on Aug 22, 2012 (http://online.wsj.com/public/resources/documents/Bernankeletter0812.pdf http://s3.documentcloud.org/documents/413447/issaletter0812.pdf). Issa (2012Aug1) inquired from Chairman Bernanke about analysis of monetary policy of various types, including by distinguished Professor Allan Meltzer (http://www.amazon.com/Allan-H.-Meltzer/e/B001H6MWPC/ref=ntt_dp_epwbk_0), the author of three scholarly analytical volumes on the history of the Federal Reserve (Meltzer 2004, 2010a, 2010b), who has emphasized the short-term nature of economic policy that could be more effective if focused on the long term. Chairman Bernanke (2012Aug22), who is also an eminent scholar, provided detailed answers to the queries by Issa (2012Aug1). The first sentence of the reply ignited positive risk taking in financial markets operating with low holiday volumes: “There is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery.”
The statement of the FOMC at the conclusion of its meeting on Oct 24, 2012, revealed the following policy intentions (http://www.federalreserve.gov/newsevents/press/monetary/20121024a.htm):
“Release Date: October 24, 2012
For immediate release
Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has advanced a bit more quickly, but growth in business fixed investment has slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation recently picked up somewhat, reflecting higher energy prices. Longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and disagreed with the description of the time period over which a highly accommodative stance of monetary policy will remain appropriate and exceptionally low levels for the federal funds rate are likely to be warranted.”
There are several important issues in this statement.
1. Mandate. The FOMC pursues a policy of attaining its “dual mandate” of (http://www.federalreserve.gov/aboutthefed/mission.htm):
“Conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates”
2. Open-ended Quantitative Easing or QE∞. Earlier programs are continued with an additional open-ended $40 billion of bond purchases per months: “To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.”
3. Advance Guidance on Accommodative Policy after Recovery Strengthening. Policy will be accommodative even after the economy recovers satisfactorily: “To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.”
4. Monitoring and Policy Focus on Jobs. The FOMC reconsiders its policy continuously in accordance with available information: “The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.”
Unconventional monetary policy drives wide swings in allocations of positions into risk financial assets that generate instability instead of intended pursuit of prosperity without inflation. There is insufficient knowledge and imperfect tools to maintain the gap of actual relative to potential output constantly at zero while restraining inflation in an open interval of (1.99, 2.0). Symmetric targets appear to have been abandoned in favor of a self-imposed single jobs mandate of easing monetary policy even with the economy growing at or close to potential output (http://www.federalreserve.gov/newsevents/press/monetary/20120913a.htm): “The [Federal Open Market] Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the recovery strengthens.” The impact on the overall economy and the financial system of errors of policy are magnified by large-scale policy doses of trillions of dollars of quantitative easing and zero interest rates. The US economy has been experiencing financial repression as a result of negative real rates of interest during nearly a decade and programmed in monetary policy statements until 2015 or, for practical purposes, forever. The essential calculus of risk/return in capital budgeting and financial allocations has been distorted. If economic perspectives are doomed until 2015 such as to warrant zero interest rates and open-ended bond-buying by “printing” digital bank reserves (http://cmpassocregulationblog.blogspot.com/2010/12/is-fed-printing-money-what-are.html; see Shultz et al 2012), rational investors and consumers will not invest and consume until just before interest rates are likely to increase. Monetary policy statements on intentions of zero interest rates for another three years or now virtually forever discourage investment and consumption or aggregate demand that can increase economic growth and generate more hiring and opportunities to increase wages and salaries. The doom scenario used to justify monetary policy accentuates adverse expectations on discounted future cash flows of potential economic projects that can revive the economy and create jobs. If it were possible to project the future with the central tendency of the monetary policy scenario and monetary policy tools do exist to reverse this adversity, why the tools have not worked before and even prevented the financial crisis? If there is such thing as “monetary policy science”, why it has such poor record and current inability to reverse production and employment adversity? There is no excuse of arguing that additional fiscal measures are needed because they were deployed simultaneously with similar ineffectiveness.
Table IV-2 provides economic projections of governors of the Board of Governors of the Federal Reserve and regional presidents of Federal Reserve Banks released at the meeting of Sep 13, 2012. The Fed releases the data with careful explanations (http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20120913.pdf). Columns “∆% GDP,” “∆% PCE Inflation” and “∆% Core PCE Inflation” are changes “from the fourth quarter of the previous year to the fourth quarter of the year indicated.” The GDP report for IIIQ2012 is analyzed in I Mediocre and Decelerating United States Economic Growth at http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html) and the PCE inflation data from the report on personal income and outlays (Section IV http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or_4.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html ). The Bureau of Economic Analysis (BEA) provides the first estimate of IIIQ2012 GDP with the second estimate of IIIQ2012 to be released on Nov 29 (http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm). PCE inflation is the index of personal consumption expenditures (PCE) of the report of the Bureau of Economic Analysis (BEA) on “Personal Income and Outlays” (http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm), which is analyzed in sections IIA and IV in this blog for Sep 2012 at http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html. The next report on “Personal Income and Outlays” for Oct will be released at 8:30 AM on Nov 30, 2012 (http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm). PCE core inflation consists of PCE inflation excluding food and energy. Column “UNEMP %” is the rate of unemployment measured as the average civilian unemployment rate in the fourth quarter of the year. The Bureau of Labor Statistics (BLS) provides the Employment Situation Report with the civilian unemployment rate in the first Friday of every month, which is analyzed in this blog (the Oct report is analyzed in this blog at http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html; the Sep report is analyzed in this blog at http://cmpassocregulationblog.blogspot.com/2012/10/twenty-nine-million-unemployed-or_7.html; the Aug report is in Section I at http://cmpassocregulationblog.blogspot.com/2012/09/twenty-eight-million-unemployed-or.html and the Jul report is analyzed at http://cmpassocregulationblog.blogspot.com/2012/08/twenty-nine-million-unemployed-or.html). The report for Nov will be released on Fri Dec 7, 2012 (http://www.bls.gov/ces/). “Longer term projections represent each participant’s assessment of the rate to which each variable would be expected to converge under appropriate monetary policy and in the absence of further shocks to the economy” (http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20120913.pdf).
It is instructive to focus on 2012 and 2013 as 2014 and 2015 and longer term are too far away, and there is not much information even on what will happen in 2013 and beyond. The central tendency should provide reasonable approximation of the view of the majority of members of the FOMC but the second block of numbers provides the range of projections by FOMC participants. The first row for each year shows the projection introduced after the meeting of Sep 13, 2012 and the second row “PR” the projection of the Jun 20, 2012 meeting. There are three major changes in the view.
1. Growth “∆% GDP.” The FOMC has reduced the forecast of GDP growth in 2012 from 3.3 to 3.7 percent in Jun 2011 to 2.5 to 2.9 percent in Nov 2011 and 2.2 to 2.7 percent at the Jan 25 meeting but increased it to 2.4 to 2.9 percent at the Apr 25, 2012 meeting, reducing it to 1.9 to 2.4 percent at the Jun 20, 2012 meeting and further to 1.7 to 2.0 percent at the Sep 13, 2012 meeting. GDP growth in 2013 has been increased to 2.5 to 3.0 percent at the meeting on Sep 13
2012 from 2.2 to 2.8 percent at the meeting on Jun 20, 2012. Rate of Unemployment “UNEM%.” The FOMC increased the rate of unemployment from 7.8 to 8.2 percent in Jun 2011 to 8.5 to 8.7 percent in Nov 2011 but has reduced it to 8.2 to 8.5 percent at the Jan 25 meeting and further down to 7.8 to 8.0 percent at the Apr 25, 2012 meeting but increased it to 8.0 to 8.2 percent at the Jun 20, 2012 meeting and did not change it at 8.0 to 8.2 at the meeting on Sep 13, 2012. The rate of unemployment for 2013 has been changed to 7.6 to 7.9 percent at the Sep 13 meeting compared with 7.5 to 8.0 percent at the Jun 20 meeting.
3. Inflation “∆% PCE Inflation.” The FOMC changed the forecast of personal consumption expenditures (PCE) inflation from 1.5 to 2.0 percent in Jun 2011 to virtually the same of 1.4 to 2.0 percent in Nov 2011 but has reduced it to 1.4 to 1.8 percent at the Jan 25 meeting but increased it to 1.9 to 2.0 percent at the Apr 25, 2012 meeting, reducing it to 1.2 to 1.7 percent at the Jun 20, 2012 meeting. The interval was increased to 1.7 to 1.8 percent at the Sep 13, 2012 meeting.
4. Core Inflation “∆% Core PCE Inflation.” Core inflation is PCE inflation excluding food and energy. There is again not much of a difference of the projection for 2012 in Jun 2011 of 1.4 to 2.0 percent and the Nov 2011 projection of 1.5 to 2.0 percent, which has been reduced slightly to 1.5 to 1.8 percent at the Jan 25 meeting but increased to 1.8 to 2.0 percent at the Apr 25, 2012 meeting, reducing it to 1.7 to 2.0 percent at the Jun 20, 2012 meeting. The projection was virtually unchanged at 1.7 to 1.9 percent at the Sep 13 meeting. For 2013, the projection for core inflation was changed from 1.6 to 2.0 percent at the Jun 20, 2012 meeting to 1.7 to 2.0 percent at the Sep 13, 2012 meeting.
Table IV-2, US, Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents in FOMC, June 2012 and Sep 2012
| ∆% GDP | UNEM % | ∆% PCE Inflation | ∆% Core PCE Inflation | |
| Central | ||||
| 2012 Jun PR | 1.7 to 2.0 1.9 to 2.4 | 8.0 to 8.2 8.0 to 8.2 | 1.7 to 1.8 1.2 to 1.7 | 1.7 to 1.9 1.7 to 2.0 |
| 2013 | 2.5 to 3.0 | 7.6 to 7.9 | 1.6 to 2.0 | 1.7 to 2.0 1.6 to 2.0 |
| 2014 | 3.0 to 3.8 | 6.7 to 7.3 | 1.6 to 2.0 | 1.8 to 2.0 |
| 2015 | 3.0 to 3.8 NA | 6.0 to 6.8 NA | 1.8 to 2.0 NA | 1.9 to 2.0 NA |
| Longer Run Jun PR | 2.3 to 2.5 2.3 to 2.5 | 5.2 to 6.0 5.2 to 6.0 | 2.0 2.0 | |
| Range | ||||
| 2012 | 1.6 to 2.0 | 8.0 to 8.3 | 1.5 to 1.9 | 1.6 to 2.0 |
| 2013 | 2.3 to 3.5 | 7.0 to 8.1 | 1.5 to 2.1 | 1.6 to 2.0 |
| 2014 | 2.7 to 4.1 | 6.3 to 7.5 | 1.6 to 2.2 | 1.6 to 2.2 |
| 2015 Jun PR | 2.5 to 4.2 NA | 5.7 to 6.9 NA | 1.8 to 2.3 NA | 1.8 to 2.3 NA |
| Longer Run Jun PR | 2.2 to 3.0 2.2 to 3.0 | 5.0 to 6.3 4.9 to 6.3 | 2.0 2.0 |
Notes: UEM: unemployment; PR: Projection
Source:
http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20120913.pdf
Another important decision at the FOMC meeting on Jan 25, 2012, is formal specification of the goal of inflation of 2 percent per year but without specific goal for unemployment (http://www.federalreserve.gov/newsevents/press/monetary/20120125c.htm):
“Following careful deliberations at its recent meetings, the Federal Open Market Committee (FOMC) has reached broad agreement on the following principles regarding its longer-run goals and monetary policy strategy. The Committee intends to reaffirm these principles and to make adjustments as appropriate at its annual organizational meeting each January.
The FOMC is firmly committed to fulfilling its statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates. The Committee seeks to explain its monetary policy decisions to the public as clearly as possible. Such clarity facilitates well-informed decisionmaking by households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy, and enhances transparency and accountability, which are essential in a democratic society.
Inflation, employment, and long-term interest rates fluctuate over time in response to economic and financial disturbances. Moreover, monetary policy actions tend to influence economic activity and prices with a lag. Therefore, the Committee's policy decisions reflect its longer-run goals, its medium-term outlook, and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the Committee's goals.
The inflation rate over the longer run is primarily determined by monetary policy, and hence the Committee has the ability to specify a longer-run goal for inflation. The Committee judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. Communicating this inflation goal clearly to the public helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability and moderate long-term interest rates and enhancing the Committee's ability to promote maximum employment in the face of significant economic disturbances.
The maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market. These factors may change over time and may not be directly measurable. Consequently, it would not be appropriate to specify a fixed goal for employment; rather, the Committee's policy decisions must be informed by assessments of the maximum level of employment, recognizing that such assessments are necessarily uncertain and subject to revision. The Committee considers a wide range of indicators in making these assessments. Information about Committee participants' estimates of the longer-run normal rates of output growth and unemployment is published four times per year in the FOMC's Summary of Economic Projections. For example, in the most recent projections, FOMC participants' estimates of the longer-run normal rate of unemployment had a central tendency of 5.2 percent to 6.0 percent, roughly unchanged from last January but substantially higher than the corresponding interval several years earlier.
In setting monetary policy, the Committee seeks to mitigate deviations of inflation from its longer-run goal and deviations of employment from the Committee's assessments of its maximum level. These objectives are generally complementary. However, under circumstances in which the Committee judges that the objectives are not complementary, it follows a balanced approach in promoting them, taking into account the magnitude of the deviations and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with its mandate. ”
The probable intention of this specific inflation goal is to “anchor” inflationary expectations. Massive doses of monetary policy of promoting growth to reduce unemployment could conflict with inflation control. Economic agents could incorporate inflationary expectations in their decisions. As a result, the rate of unemployment could remain the same but with much higher rate of inflation (see Kydland and Prescott 1977 and Barro and Gordon 1983; http://cmpassocregulationblog.blogspot.com/2011/05/slowing-growth-global-inflation-great.html http://cmpassocregulationblog.blogspot.com/2011/04/new-economics-of-rose-garden-turned.html http://cmpassocregulationblog.blogspot.com/2011/03/is-there-second-act-of-us-great.html). Strong commitment to maintaining inflation at 2 percent could control expectations of inflation.
The FOMC continues its efforts of increasing transparency that can improve the credibility of its firmness in implementing its dual mandate. Table IV-3 provides the views by participants of the FOMC of the levels at which they expect the fed funds rate in 2012, 2013, 2014 and the in the longer term. Table IV-3 is inferred from a chart provided by the FOMC with the number of participants expecting the target of fed funds rate (http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20120913.pdf). There are 18 participants expecting the rate to remain at 0 to ¼ percent in 2012 and only one to be higher. Not much change is expected in 2013 either with 15 participants anticipating the rate at the current target of 0 to ¼ percent and only four expecting higher rates. The rate would still remain at 0 to ¼ percent in 2014 for 13 participants with four expecting the rate to be in the range of 1.0 to 2.0 percent and two participants expecting rates from 2.0 to 3.0. This table is consistent with the guidance statement of the FOMC that rates will remain at low levels until late in 2014. For 2015, ten participants expect rates to be below 1.0 percent while four expect rates from 3.0 to 4.5 percent. In the long-run, all 19 participants expect rates to be between 3.0 and 4.5 percent.
Table IV-3, US, Views of Target Federal Funds Rate at Year-End of Federal Reserve Board Members and Federal Reserve Bank Presidents Participating in FOMC, June 20, 2012
| 0 to 0.25 | 0.5 to 1.0 | 1.0 to 1.5 | 1.0 to 2.0 | 2.0 to 3.0 | 3.0 to 4.5 | |
| 2012 | 18 | 1 | ||||
| 2013 | 15 | 3 | 1 | |||
| 2014 | 13 | 4 | 2 | |||
| 2015 | 1 | 9 | 3 | 2 | 4 | |
| Longer Run | 19 |
Source:
http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20120913.pdf
Additional information is provided in Table IV-4 with the number of participants expecting increasing interest rates in the years from 2012 to 2015. It is evident from Table IV-4 that the prevailing view in the FOMC is for interest rates to continue at low levels in future years. This view is consistent with the economic projections of low economic growth, relatively high unemployment and subdued inflation provided in Table IV-2.
Table IV-4, US, Views of Appropriate Year of Increasing Target Federal Funds Rate of Federal Reserve Board Members and Federal Reserve Bank Presidents Participating in FOMC, June 20, 2012
| Appropriate Year of Increasing Target Fed Funds Rate | Number of Participants |
| 2012 | 1 |
| 2013 | 3 |
| 2014 | 2 |
| 2015 | 12 |
| 2016 | 1 |
Source:
http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20120913.pdf
There are two categories of responses in the Empire State Manufacturing Survey of the Federal Reserve Bank of New York (http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html): current conditions and expectations for the next six months. There are responses in the survey for two types of prices: prices received or inputs of production and prices paid or sales prices of products. Table IV-5 provides indexes for the two categories and within them for the two types of prices from Jan 2011 to Nov 2012. Current prices paid were rising at an accelerating rate from 35.79 in Jan 2011 to 69.89 in May 2011 but the rate of increase dropped significantly to 25.88 in Feb 2012, increasing sharply to 50.62 in Mar in the commodity price shock but falling to 45.78 in Apr, 37.35 in May, 19.59 in Jun and 7.41 in Jul as risk aversion caused decline of commodity prices. At the margin, the index of prices paid rose to 16.47 in Aug and 19.15 in Sep in yet net another bout of carry trade but eased to 17.20 in Oct and 14.61 in Nov with renewed risk aversion. The index of current prices received also fell sharply from 27.96 in May 2011 to 4.49 in Oct 2011, meaning that prices were increasing at a very low rate and then rose to 13.58 in Mar 2012, increasing to 19.28 in Apr but declining to 12.05 in May, 1.03 in Jun, 3.70 in Jul, 2.35 in Aug, which is also relatively low, near the border of contraction at 0.0, and 5.32 in Sep 2012, easing to 4.30 in Oct 2012 and increasing to 5.62 in Nov 2012. In the expectations for the next six months, the index of prices paid also declined from 68.82 in May 2011 to 56.98 in Dec 2011, rising to 66.67 in Mar 2012 but declining to 50.60 in Apr 2012, increasing to 57.83 in May and falling to 34.02 in Jun 2012, 35.80 in Jul and 31.76 in Aug but increasing to 40.43 in Sep 2012 and 44.09 in Oct 2012, declining to 39.33 in Nov 2012. Expected prices received also rose in the first five months of 2011, declining from 35.48 in May 2011 to 15.22 in Aug 2011 but then rising to 32.10 in Mar 2012 and declining to 22.89 in Apr and May 2012, 17.53 in Jun, 16.05 in Jul and 14.12 in Aug but increasing to 23.40 in Sep 2012 and 24.73 in Oct 2012, declining to 15.73 in Nov 2012. Unconventional monetary policy of zero interest rates and quantitative easing has increased the volatility of inflation via carry trades, creating uncertainty in financial and economic decisions.
Table IV-5, US, FRBNY Empire State Manufacturing Survey, Diffusion Indexes, Prices Paid and Prices Received, SA
| Current Prices Paid | Current Prices Received | Six Months Prices Paid | Six Months Prices Received | |
| Nov 2012 | 14.61 | 5.62 | 39.33 | 15.73 |
| Oct | 17.20 | 4.30 | 44.09 | 24.73 |
| Sep | 19.15 | 5.32 | 40.43 | 23.40 |
| Aug | 16.47 | 2.35 | 31.76 | 14.12 |
| Jul | 7.41 | 3.70 | 35.80 | 16.05 |
| Jun | 19.59 | 1.03 | 34.02 | 17.53 |
| May | 37.35 | 12.05 | 57.83 | 22.89 |
| Apr | 45.78 | 19.28 | 50.60 | 22.89 |
| Mar | 50.62 | 13.58 | 66.67 | 32.10 |
| Feb | 25.88 | 15.29 | 62.35 | 34.12 |
| Jan | 26.37 | 23.08 | 53.85 | 30.77 |
| Dec 20111 | 24.42 | 3.49 | 56.98 | 36.05 |
| Nov | 18.29 | 6.10 | 36.59 | 25.61 |
| Oct | 24.47 | 4.49 | 40.45 | 17.98 |
| Sep | 32.61 | 8.70 | 53.26 | 22.83 |
| Aug | 28.26 | 2.17 | 42.39 | 15.22 |
| Jul | 43.33 | 5.56 | 51.11 | 30.00 |
| Jun | 56.12 | 11.22 | 55.10 | 19.39 |
| May | 69.89 | 27.96 | 68.82 | 35.48 |
| Apr | 57.69 | 26.92 | 56.41 | 38.46 |
| Mar | 53.25 | 20.78 | 71.43 | 36.36 |
| Feb | 45.78 | 16.87 | 55.42 | 27.71 |
| Jan | 35.79 | 15.79 | 60.00 | 42.11 |
Source: http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html
Price indexes of the Federal Reserve Bank of Philadelphia Outlook Survey are provided in Table IV-6. As inflation waves throughout the world (analyzed in Section I and earlier at http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html), indexes of both current and expectations of future prices paid and received were quite high until May 2011. Prices paid, or inputs, were more dynamic, reflecting carry trades from zero interest rates to commodity futures. All indexes softened after May 2011 with even decline of prices received in Aug 2011 during the first round of risk aversion. Current and future price indexes have increased again but not back to the levels in the beginning of 2011 because of risk aversion frustrating carry trades even under zero interest rates. In Nov 2012, the index of current prices received was 6.3, indicating moderate increase of prices received, while the index of current prices paid fell from 22.5 in Apr 2012 to minus 2.8 in Jun 2012, indicating moderate contraction, increasing to 11.9 in Aug in a new round of marginal pressure of input inflation. The index of future prices paid increased from 35.2 in Apr 2012 to 37.8 in May and rebounded to 49.1 in Oct 2012 and 51.7 in Nov, indicating higher expectation of increases in prices paid or prices of inputs while the index of future prices received fell from 20.4 in Apr 2012 to 7.7 in May, 13.5 in Jun and 14.6 in Jul, indicating softness in expected future prices received or sales prices, but rebounded to 20.3 in Aug and 27.2 in Sep 2012 in yet another round of influence of carry trades, declining to 14.9 in Oct 2012 and 13.7 in Nov 2012.
Table IV-6, US, Federal Reserve Bank of Philadelphia Business Outlook Survey, Current and Future Prices Paid and Prices Received, SA
| Current Prices Paid | Current Prices Received | Future Prices Paid | Future Prices Received | |
| Nov 2012 | 27.9 | 6.3 | 51.7 | 13.7 |
| Oct | 19.0 | 5.4 | 49.1 | 14.9 |
| Sep | 8.0 | -0.2 | 38.0 | 27.2 |
| Aug | 11.2 | 2.8 | 33.1 | 20.3 |
| Jul | 3.7 | 1.6 | 22.8 | 14.6 |
| Jun | -2.8 | -6.9 | 20.1 | 13.5 |
| May | 5.0 | -4.5 | 37.8 | 7.7 |
| Apr | 22.5 | 9.4 | 35.2 | 20.4 |
| Mar | 18.7 | 8.4 | 39.4 | 25.6 |
| Feb | 38.7 | 15.0 | 50.4 | 32.0 |
| Jan | 31.8 | 11.2 | 52.7 | 23.8 |
| Dec 2011 | 30.4 | 10.3 | 49.4 | 26.4 |
| Nov | 25.9 | 6.2 | 41.0 | 28.1 |
| Oct | 23.5 | 1.6 | 44.8 | 27.2 |
| Sep | 25.0 | 3.9 | 37.8 | 22.0 |
| Aug | 20.1 | -6.0 | 40.2 | 20.1 |
| Jul | 30.2 | 3.9 | 44.2 | 12.7 |
| Jun | 32.8 | 5.2 | 30.5 | 4.1 |
| May | 46.4 | 16.3 | 53.4 | 27.0 |
| Apr | 54.4 | 23.0 | 55.4 | 33.5 |
| Mar | 59.8 | 19.3 | 63.6 | 34.8 |
| Feb | 63.2 | 17.5 | 67.8 | 35.9 |
| Jan | 51.9 | 14.5 | 62.8 | 36.0 |
Source: Federal Reserve Bank of Philadelphia http://www.philadelphiafed.org/index.cfm
Chart VI-1of the Business Outlook Survey of the Federal Reserve Bank of Philadelphia provides the diffusion index of current prices paid or prices of inputs from Sep 2011 to Sep 2012. Inflation of inputs moderated significantly during the shock of risk aversion in 2012, even falling briefly into contraction territory below zero and expanding now at marginally increasing pace.
Chart IV-1, Federal Reserve Bank of Philadelphia Business Outlook Survey Current Prices Paid Diffusion Index SA
Source: Federal Reserve Bank of Philadelphia
http://www.phil.frb.org/index.cfm
Chart IV-2 of the Business Outlook Survey of the Federal Reserve Bank of Philadelphia provides the current diffusion index of prices received, which are prices of sales of products by companies. There is much less dynamism than in prices paid because commodity-rich inputs are only part of total costs. The high levels early in 2011 have not been realized again under the pressure on carry trades of risk financial assets from the European debt crisis and the index crossed again downward into the contraction zone below 0, moving back into very moderate expansion. Carry trades from zero interest rates cause instability in net margins of business because of more dynamic effects on input prices than in prices of product sales.
Chart IV-2, Federal Reserve Bank of Philadelphia Business Outlook Survey Current Prices Received Diffusion Index SA
Source: Federal Reserve Bank of Philadelphia
http://www.phil.frb.org/index.cfm
Inflation in advanced economies has been fluctuating in waves at the production level with alternating surges and moderation of commodity price shocks. Table IV-5 provides month and 12-month percentage rates of inflation of Japan’s corporate goods price index (CGPI). Inflation measured by the CGPI decreased 0.3 percent in Oct 2012 and fell 1.0 percent in 12 months. Measured by 12-month rates, CGPI inflation increased from minus 0.2 percent in Jul 2010 to a high of 2.2 percent in Jul 2011 and declined to minus 1.0 percent in Oct 2012. Calendar-year inflation for 2011 is 1.5 percent, which is the highest after declines in 2009 and 2010 but lower than 4.6 percent in the commodity shock driven by zero interest rates during the global recession in 2008. Inflation of the corporate goods prices follows waves similar to those in other indices around the world (Section I and earlier at http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html). In the first wave, annual equivalent inflation reached 5.9 percent in Jan-Apr 2011, driven by commodity price shocks of the carry trade from zero interest rates to commodity futures. In the second wave, carry trades were unwound because of risk aversion caused by the European debt crisis, resulting in average annual equivalent inflation of minus 1.2 percent in May-Jun 2011. In the third wave, renewed risk aversion caused annual equivalent decline of the CGPI of minus 2.2 percent in Jul-Nov 2011. In the fourth wave, continuing risk aversion resulted in annual equivalent inflation of minus 0.6 percent in Dec 2011 to Jan 2012. In the fifth wave, renewed risk appetite resulted in annual equivalent inflation of 2.4 percent in Feb-Apr 2012. In the sixth wave, annual equivalent inflation dropped to minus 5.8 percent in May-Jul 2012. In the seventh wave, annual equivalent inflation jumped to 2.4 percent in Aug-Sep 2012. In the eighth wave, annual equivalent inflation was minus 3.5 percent in Oct 2012 in a new round of risk aversion. Unconventional monetary policies of zero interest rates and quantitative easing have created a difficult environment for economic and financial decisions with significant inflation volatility.
Table IV-7, Japan, Corporate Goods Price Index (CGPI) ∆%
| Month | Year | |
| Oct 2012 | -0.3 | -1.0 |
| AE ∆% Oct | -3.5 | |
| Sep | 0.2 | -1.5 |
| Aug | 0.2 | -1.9 |
| AE ∆% Aug-Sep | 2.4 | |
| Jul | -0.4 | -2.2 |
| Jun | -0.7 | -1.5 |
| May | -0.4 | -0.8 |
| AE ∆% May-Jul | -5.8 | |
| Apr | -0.1 | -0.6 |
| Mar | 0.5 | 0.3 |
| Feb 2012 | 0.2 | 0.4 |
| AE ∆% Feb-Apr | 2.4 | |
| Jan | -0.1 | 0.3 |
| Dec 2011 | 0.0 | 0.8 |
| AE ∆% Dec-Jan | -0.6 | |
| Nov | -0.1 | 1.3 |
| Oct | -0.8 | 1.3 |
| Sep | -0.2 | 2.0 |
| Aug | -0.1 | 2.2 |
| Jul | 0.3 | 2.2 |
| AE ∆% Jul-Nov | -2.2 | |
| Jun | 0.0 | 1.9 |
| May | -0.2 | 1.6 |
| AE ∆% May-Jun | -1.2 | |
| Apr | 0.8 | 1.8 |
| Mar | 0.6 | 1.3 |
| Feb | 0.1 | 0.7 |
| Jan | 0.4 | 0.6 |
| AE ∆% Jan-Apr | 5.9 | |
| Dec 2010 | 0.5 | 1.2 |
| Nov | -0.1 | 0.9 |
| Oct | -0.1 | 0.9 |
| Sep | 0.0 | -0.1 |
| Aug | -0.1 | 0.0 |
| Jul | 0.0 | -0.2 |
| Calendar Year | ||
| 2011 | 1.5 | |
| 2010 | -0.1 | |
| 2009 | -5.3 | |
| 2008 | 4.6 |
AE: annual equivalent
Source: Bank of Japan http://www.boj.or.jp/en/
Chart IV-3 of the Bank of Japan provides year-on-year percentage changes of the domestic and services Corporate Goods Price Index (CGPI) of Japan. Percentage changes of inflation of services are not as sharp as those of goods. Japan had the same sharp waves of inflation during the 1970s as in the US (see Table IV-7 at http://cmpassocregulationblog.blogspot.com/2012/07/recovery-without-jobs-stagnating-real_09.html). Inflation also collapsed in the beginning of the 1980s as a result of tight monetary policy in the US with focus on inflation instead of on the gap of actual relative to potential output. The areas in shade correspond to the dates of cyclical recessions. The salient event is the sharp rise of inflation of the domestic goods CGPI in 2008 during the global recession that was mostly the result of carry trades from fed funds rates collapsing to zero to long positions in commodity futures in an environment of relaxed financial risk appetite. The panic of toxic assets in banks to be withdrawn by the Troubled Asset Relief Program (TARP) (Cochrane and Zingales 2009) drove unusual risk aversion with unwinding of carry trades of exposures in commodities and other risk financial assets. Carry trades returned once TARP was clarified as providing capital to financial institutions and stress tests verified the soundness of US banks. The return of carry trades explains the rise of CGPI inflation after mid 2009. Inflation of the CGPI fluctuated with zero interest rates in alternating episodes of risk aversion and risk appetite.
Chart IV-3, Japan, Domestic Corporate Goods Price and Services Index, Year-on-Year Percentage Change, 1980-2012
Notes: Blue: Domestic Corporate Goods Price Index All Commodities; Red: Corporate Price Services Index
Source: Bank of Japan
http://www.stat-search.boj.or.jp/index_en.html#
There is similar behavior of year-on-year percentage changes of the US producer price index from 1980 to 2012 in Chart IV-4 of the US Bureau of Labor Statistics as in Chart IV-13 with the domestic goods CGPI. The US producer price index increased together with the CGPI driven by the period of one percent fed funds rates from 2003 to 2004 inducing carry trades into commodity futures and other risk financial assets and the slow adjustment in increments of 25 basis points at every FOMC meeting from Jun 2004 to Jun 2006. There is also the same increase in inflation in 2008 during the global recession followed by collapse because of unwinding positions during risk aversion and new rise of inflation during risk appetite.
Chart IV-4, US, Producer Price Index Finished Goods, Year-on-Year Percentage Change, 1980-2012
Source: US Bureau of Labor Statistics
http://www.bls.gov/ppi/data.htm
http://www.bls.gov/ppi/data.htm
Finer detail is provided by Chart IV-5 of the domestic CGPI from 2008 to 2012. The CGPI rose almost vertically in 2008 as the collapse of fed funds rates toward zero drove exposures in commodities and other risk financial assets because of risk appetite originating in the belief that the financial crisis was restricted to structured financial products and not to contracts negotiated in commodities and other exchanges. The panic with toxic assets in banks to be removed by TARP (Cochrane and Zingales 2009) caused unwinding carry trades in flight to US government obligations that drove down commodity prices and price indexes worldwide. Apparent resolution of the European debt crisis of 2010 drove risk appetite in 2011 with new carry trades from zero fed funds rates into commodity futures and other risk financial assets. Domestic CGPI inflation returned in waves with upward slopes during risk appetite and downward slopes during risk aversion.
Chart IV-5, Japan, Domestic Corporate Goods Price Index, Monthly, 2008-2012
Source: Bank of Japan
http://www.stat-search.boj.or.jp/index_en.html#
There is similar behavior of the US producer price index from 2008 to 2012 in Chart IV-6 as in the domestic CGPI in Chart IV-5. A major difference is the strong long-term trend in the US producer price index with oscillations originating mostly in bouts of risk aversion such as the downward slope in the final segment in Chart IV-6 followed by increasing slope during periods of risk appetite. Carry trades from zero interest rates to commodity futures and other risk financial assets drive the upward trend of the US producer price index while oscillations originate in alternating episodes of risk aversion and risk appetite.
Chart IV-6, US, Producer Price Index Finished Goods, Monthly, 2008-2012
Source: US Bureau of Labor Statistics
http://www.bls.gov/ppi/data.htm
There was milder increase in Japan’s export corporate goods price index during the global recession in 2008 but similar sharp decline during the bank balance sheets effect in late 2008, as shown in Chart IV-7 of the Bank of Japan. Japan exports industrial goods whose prices have been less dynamic than those of commodities and raw materials. As a result, the export CGPI in Chart IV-7 trends down with oscillations after a brief rise in the final part of the recession in 2009.
Chart IV-7, Japan, Export Corporate Goods Price Index, Monthly, 2008-2012
Source: Bank of Japan
http://www.stat-search.boj.or.jp/ssi/cgi-bin/famecgi2?cgi=$graphwnd_en
Japan imports primary commodities and raw materials. As a result, the import corporate goods price index in Chart IV-8 shows an upward trend after the rise during the global recession in 2008 driven by carry trades from fed funds rates collapsing to zero into commodity futures and decline during risk aversion from late 2008 into beginning of 2008 originating in doubts about soundness of US bank balance sheets. More careful measurement should show that the terms of trade of Japan, export prices relative to import prices, declined during the commodity shocks originating in unconventional monetary policy. The decline of the terms of trade restricted potential growth of income in Japan.
Chart IV-8, Japan, Import Corporate Goods Price Index, Monthly, 2008-2012
Source: Bank of Japan
http://www.stat-search.boj.or.jp/ssi/cgi-bin/famecgi2?cgi=$graphwnd_en
Chart IV-9 provides the monthly corporate goods price index (CGPI) of Japan from 1970 to 2012. Japan also experienced sharp increase in inflation during the 1970s as in the episode of the Great Inflation in the US. Monetary policy focused on accommodating higher inflation, with emphasis solely on the mandate of promoting employment, has been blamed as deliberate or because of model error or imperfect measurement for creating the Great Inflation (http://cmpassocregulationblog.blogspot.com/2011/05/slowing-growth-global-inflation-great.html http://cmpassocregulationblog.blogspot.com/2011/04/new-economics-of-rose-garden-turned.html http://cmpassocregulationblog.blogspot.com/2011/03/is-there-second-act-of-us-great.html and Appendix I The Great Inflation). A remarkable similarity with US experience is the sharp rise of the CGPI of Japan in 2008 driven by carry trades from interest rapidly falling to zero to exposures in commodity futures during a global recession. Japan had the same sharp waves of consumer price inflation during the 1970s as in the US (see Table IV-7 at http://cmpassocregulationblog.blogspot.com/2012/07/recovery-without-jobs-stagnating-real_09.html).
Chart IV-9, Japan, Domestic Corporate Goods Price Index, Monthly, 1970-2012
Source: Bank of Japan
http://www.stat-search.boj.or.jp/ssi/cgi-bin/famecgi2?cgi=$graphwnd_en
The producer price index of the US from 19700 to 2012 in Chart IV-10 shows various periods of more rapid or less rapid inflation but no bumps. The major event is the decline in 2008 when risk aversion because of the global recession caused the collapse of oil prices from $148/barrel to less than $80/barrel with most other commodity prices also collapsing. The event had nothing in common with explanations of deflation but rather with the concentration of risk exposures in commodities after the decline of stock market indexes. Eventually, there was a flight to government securities because of the fears of insolvency of banks caused by statements supporting proposals for withdrawal of toxic assets from bank balance sheets in the Troubled Asset Relief Program (TARP), as explained by Cochrane and Zingales (2009). The bump in 2008 with decline in 2009 is consistent with the view that zero interest rates with subdued risk aversion induce carry trades into commodity futures.
Chart IV-10, US, Producer Price Index Finished Goods, Monthly, 1970-2012
Source: US Bureau of Labor Statistics
http://www.bls.gov/ppi/data.htm
Further insight into inflation of the corporate goods price index (CGPI) of Japan is provided in Table IV-8. Petroleum and coal with weight of 5.7 percent increased 0.3 percent in Oct and 4.3 percent in 12 months. Japan exports manufactured products and imports raw materials and commodities such that the country’s terms of trade, or export prices relative to import prices, deteriorate during commodity price increases. In contrast, prices of production machinery, with weight of 3.1 percent, increased 0.4 percent in Oct and increased 1.4 percent in 12 months. In general, most manufactured products have been experiencing negative or low increases in prices while inflation rates have been high in 12 months for products originating in raw materials and commodities. Ironically, unconventional monetary policy of zero interest rates and quantitative easing that intended to increase aggregate demand and GDP growth deteriorated the terms of trade of advanced economies with adverse effects on real income.
Table IV-8, Japan, Corporate Goods Prices and Selected Components, % Weights, Month and 12 Months ∆%
| Oct 2012 | Weight | Month ∆% | 12 Month ∆% |
| Total | 1000.0 | -0.3 | -1.0 |
| Food, Beverages, Tobacco, Feedstuffs | 137.5 | 0.6 | 0.2 |
| Petroleum & Coal | 57.4 | 0.3 | 4.3 |
| Production Machinery | 30.8 | 0.4 | 1.4 |
| Electronic Components | 31.0 | -0.3 | -3.6 |
| Electric Power, Gas & Water | 52.7 | -5.0 | 6.0 |
| Iron & Steel | 56.6 | -0.9 | -9.9 |
| Chemicals | 92.1 | 0.7 | -2.1 |
| Transport | 136.4 | -0.1 | -1.6 |
Source: Bank of Japan http://www.boj.or.jp/en/ http://www.boj.or.jp/en/statistics/pi/cgpi_release/cgpi1210.pdf
Percentage point contributions to change of the corporate goods price index (CGPI) in Sep 2012 are provided in Table IV-9 divided into domestic, export and import segments. In the domestic CGPI, decreasing 0.3 percent in Oct, the energy shock resulting from carry trades is evident in the 0.08 percentage points added by commodity-rich components food, beverages, tobacco and feedstuffs. The exports CGPI decreased 0.1 percent on the basis of the contract currency with contribution of 0.13 percentage points by chemical and related products that are rich in raw materials. The imports CGPI decreased 0.6 percent on the contract currency basis. Petroleum, coal & natural gas deducted 0.54 percentage points because of winding carry trades into energy commodity exposures, metals & related products deducted 0.11 percentage points and foodstuffs and feedstuffs deducted 0.06 percentage points. Shocks of risk aversion cause unwinding carry trades that result in declining commodity prices with resulting downward pressure on price indexes. The volatility of inflation adversely affects financial and economic decisions.
Table IV-9, Japan, Percentage Point Contributions to Change of Corporate Goods Price Index
| Groups Oct 2012 | Contribution to Change Percentage Points |
| A. Domestic Corporate Goods Price Index | Monthly Change: |
| Electric Power, Gas & Water | -0.32 |
| Iron & Steel -0.05 | -0.05 |
| Scrap & Waste | -0.04 |
| Food, Beverages, Tobacco & Feedstuffs | 0.08 |
| B. Export Price Index | Monthly Change: |
| Electric & Electronic Products | -0.25 |
| General Purpose, Production & Business Oriented Machinery | -0.10 |
| Chemicals & Related Products | 0.13 |
| C. Import Price Index | Monthly Change: -0.6 % contract currency basis |
| Petroleum, Coal & Natural Gas | -0.54 |
| Metals & Related Products | -0.11 |
| Foodstuffs & Feedstuffs | -0.06 |
Source: Bank of Japan http://www.boj.or.jp/en/ http://www.boj.or.jp/en/statistics/pi/cgpi_release/cgpi1210.pdf
The harmonized index of consumer prices of the euro area in Table IV-10 has similar inflation waves as in most countries (see Section I World Inflation Waves and earlier http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html). In the first wave, consumer prices in the euro area increased at the annual equivalent rate of 5.2 percent in Jan-Apr 2011. In the second wave, risk aversion caused unwinding of commodity carry trades with inflation decreasing at the annual equivalent rate of minus 2.4 percent in May-Jul 2011. In the third wave, improved risk appetite resulted in annual equivalent inflation in Aug-Dec at 4.3 percent. In the fourth wave, return of risk aversion caused decline of consumer prices at the annual equivalent rate of minus 3.0 percent in Dec 2011 to Jan 2012. In the fifth wave, improved attitudes toward risk aversion resulted in higher consumer price inflation at the high annual equivalent rate of 9.6 percent in Feb-Apr 2012. In the sixth wave, equivalent inflation fell to minus 2.8 percent in May-Jul 2012. In the seventh wave, increasing risk appetite caused new carry trade exposures that resulted in annual equivalent inflation of 6.8 percent in Aug-Sep 2012 and 5.3 percent in Aug-Oct. Inflation volatility around the world is confusing the information required in investment and consumption decisions.
Table IV-10, Euro Area Harmonized Index of Consumer Prices Month and 12 Months ∆%
| Month ∆% | 12 Months ∆% | |
| Oct | 0.2 | 2.5 |
| Sep | 0.7 | 2.6 |
| Aug | 0.4 | 2.6 |
| AE ∆% Aug-Oct | 5.3 | |
| Jul 2012 | -0.5 | 2.4 |
| Jun | -0.1 | 2.4 |
| May | -0.1 | 2.4 |
| AE ∆% May-Jul | -2.8 | |
| Apr | 0.5 | 2.6 |
| Mar | 1.3 | 2.7 |
| Feb | 0.5 | 2.7 |
| AE ∆% Feb-Apr | 9.6 | |
| Jan | -0.8 | 2.7 |
| Dec 2011 | 0.3 | 2.7 |
| AE ∆% Dec-Jan | -3.0 | |
| Nov | 0.1 | 3.0 |
| Oct | 0.4 | 3.0 |
| Sep | 0.7 | 3.0 |
| Aug | 0.2 | 2.6 |
| AE ∆% Aug-Nov | 4.3 | |
| Jul | -0.6 | 2.6 |
| Jun | 0.0 | 2.7 |
| May | 0.0 | 2.7 |
| AE ∆% May-Jul | -2.4 | |
| Apr | 0.6 | 2.8 |
| Mar | 1.4 | 2.7 |
| Feb | 0.4 | 2.4 |
| Jan | -0.7 | 2.3 |
| AE ∆% Jan-Apr | 5.2 | |
| Dec 2010 | 0.6 | 2.2 |
AE: annual equivalent
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
Table IV-11 provides inflation, unemployment and real GDP growth in the euro area yearly from 1999 to 2011 together with growth forecasts of EUROSTAT for 2012, 2013 and 2014. Inflation in the euro zone remained subdued around 2 percent in the first five years of the euro zone from 1999 to 2004, as shown in Table IV-11. Inflation climbed above 2.0 percent after 2005, peaking at 3.3 percent in 2008 with the surge in commodity prices but falling to 0.3 percent in 2009 with the collapse of commodity prices. Inflation climbed back to 1.6 percent in 2010 and 2.7 percent in 2011. Under the regime of zero interest rates inflation returns worldwide during relaxation of risk aversion.
Table IV-11, Euro Area, Yearly Percentage Change of Harmonized Index of Consumer Prices, ∆%
| Year | HICP ∆% | Unemployment | GDP ∆% |
| 1999 | 1.2 | 9.6 | 2.9 |
| 2000 | 2.2 | 8.7 | 3.8 |
| 2001 | 2.4 | 8.1 | 2.0 |
| 2002 | 2.3 | 8.5 | 0.9 |
| 2003 | 2.1 | 9.0 | 0.7 |
| 2004 | 2.2 | 9.3 | 2.2 |
| 2005 | 2.2 | 9.2 | 1.7 |
| 2006 | 2.2 | 8.5 | 3.2 |
| 2007 | 2.1 | 7.6 | 3.0 |
| 2008 | 3.3 | 7.6 | 0.4 |
| 2009 | 0.3 | 9.6 | -4.4 |
| 2010 | 1.6 | 10.1 | 2.0 |
| 2011 | 2.7 | 10.1 | 1.4 |
| 2012* | -0.4 | ||
| 2013* | 0.1 | ||
| 2014* | 1.4 |
*EUROSTAT forecast Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
EUROSTAT provides the decomposition in percentage point contributions of the rate of inflation of 2.5 percent in the 12 months ending in Oct 2012 relative to Oct 2011 shown in Table IV-12. Energy-rich components dominate the 12-month rate of inflation with percentage point contributions: 0.32 by fuel for transport, 0.10 by heating, 0.07 by gas and 0.09 by electricity. Table IV-12 only lists highest magnitudes of positive and negative contributions.
Table IV-12, Euro Area, Harmonized Index of Consumer Prices Sub-Indices with Most Important Impact %
| Oct 2012/ Oct 2011 ∆% 2.5 | Weight 2012 % | Rate ∆% | Impact |
| Positive Contribution | |||
| Fuel for Transport | 48.5 | 8.7 | 0.32 |
| Heating Oil | 8.9 | 13.8 | 0.10 |
| Electricity | 26.4 | 5.9 | 0.09 |
| Gas | 18.3 | 6.4 | 0.07 |
| Vegetables | 14.0 | 7.3 | 0.07 |
| Tobacco | 23.4 | 4.7 | 0.05 |
| Negative Contribution | |||
| Audio-visual Equipment | 5.0 | -7.6 | -0.05 |
| Financial Services | 6.8 | -5.0 | -0.05 |
| Rents | 60.5 | 1.5 | -0.06 |
| Garments | 50.7 | 1.1 | -0.07 |
| Cars | 36.2 | 0.5 | -0.08 |
| Telecom | 29.8 | -3.7 | -0.19 |
PP: percentage points
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-15112012-BP/EN/2-15112012-BP-EN.PDF
EUROSTAT provides the decomposition in percentage point contributions of the rate of inflation of 0.2 percent in Oct 2012 relative to Sep 2012 shown in Table IV-13. The increase of the HIPC by 0.2 percent was largely dominated by increase of prices of garments by 2.1 percent that added 0.10 percentage points, footwear increasing 2.7 percent for contribution of 0.03 percentage points and fuel for transport decreasing 2.0 percent with deduction of 0.13 percentage points.
Table IV-13, Euro Area, Harmonized Index of Consumer Prices Sub-Indices with Most Important Impact %
| Oct 2012/Sep 2012 ∆ % 0.2 | Weight 2012 % | Rate ∆% | Impact Percentage Points |
| Positive Contribution | |||
| Garments | 50.7 | 2.1 | 0.10 |
| Footwear | 13.6 | 2.7 | 0.03 |
| Vegetables | 14.0 | 2.2 | 0.03 |
| Tobacco | 23.4 | 1.4 | 0.03 |
| Fruit | 11.8 | 2.2 | 0.02 |
| Heating Oil | 8.9 | 2.6 | 0.02 |
| Negative Contribution | |||
| Cars | 36.2 | -0.1 | -0.01 |
| Telecommunications | 29.8 | -0.4 | -0.02 |
| Rents | 60.5 | -0.1 | -0.02 |
| Package Holidays | 14.2 | -2.7 | -0.04 |
| Accommodation Services | 16.5 | -2.5 | -0.05 |
| Fuels for Transport | 48.5 | -2.0 | -0.13 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-15112012-BP/EN/2-15112012-BP-EN.PDF
Table IV-14 provides monthly and 12 months consumer price inflation in France. There are the same waves as in inflation worldwide (see Section I and earlier http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html). In the first wave, annual equivalent inflation in Jan-Apr 2011 was 4.3 percent driven by the carry trade from zero interest rates to commodity futures positions in an environment of risk appetite. In the second wave, risk aversion caused the reversal of carry trades into commodity futures, resulting in the fall of the annual equivalent inflation rate to minus 0.8 percent in May-Jul 2011. In the third wave, annual equivalent inflation rose to 2.7 percent in Aug-Nov 2011 with alternations of risk aversion and risk appetite. In the fourth wave, risk aversion originating in the European debt crisis caused annual equivalent inflation of 0.0 percent from Dec 2011 to Jan 2012. In the fifth wave, annual equivalent inflation increased to 5.3 percent in Feb-Apr 2012. In the sixth wave, annual equivalent inflation was minus 2.0 percent in May-Jul 2012 during another bout of risk aversion causing reversal of carry trades from zero interest rates to commodity price futures exposures. In the seventh wave, annual equivalent inflation jumped to 8.7 percent in Aug 2012, 2.4 percent in Aug-Sep 2012 and 2.4 percent in Aug-Oct 2012.
Table IV-14, France, Consumer Price Index, Month and 12-Month ∆%
| Month ∆% | 12-Month ∆% | |
| Oct 2012 | 0.2 | 1.9 |
| Sep | -0.3 | 1.9 |
| Aug | 0.7 | 2.1 |
| AE ∆% Aug-Oct | 2.4 | |
| Jul | -0.4 | 1.9 |
| Jun | 0.0 | 1.9 |
| May | -0.1 | 2.0 |
| AE ∆% May-Jul | -2.0 | |
| Apr | 0.1 | 2.1 |
| Mar | 0.8 | 2.3 |
| Feb | 0.4 | 2.3 |
| AE ∆% Feb-Apr | 5.3 | |
| Jan | -0.4 | 2.3 |
| Dec 2011 | 0.4 | 2.5 |
| AE ∆% Dec-Jan | 0.0 | |
| Nov | 0.3 | 2.5 |
| Oct | 0.2 | 2.3 |
| Sep | -0.1 | 2.2 |
| Aug | 0.5 | 2.2 |
| AE ∆% Aug-Nov | 2.7 | |
| Jul | -0.4 | 1.9 |
| Jun | 0.1 | 2.1 |
| May | 0.1 | 2.0 |
| AE ∆% May-Jul | -0.8 | |
| Apr | 0.3 | 2.1 |
| Mar | 0.8 | 2.0 |
| Feb | 0.5 | 1.7 |
| Jan | -0.2 | 1.8 |
| AE ∆% Jan-Apr | 4.3 | |
| Dec 2010 | 0.5 | 1.8 |
| Annual | ||
| 2011 | 2.1 | |
| 2010 | 1.5 | |
| 2009 | 0.1 | |
| 2008 | 2.8 | |
| 2007 | 1.5 | |
| 2006 | 1.6 | |
| 2005 | 1.8 | |
| 2004 | 2.1 | |
| 2003 | 2.1 | |
| 2002 | 1.9 | |
| 2001 | 1.7 | |
| 2000 | 1.7 | |
| 1999 | 0.5 | |
| 1998 | 0.7 | |
| 1997 | 1.2 | |
| 1996 | 2.0 | |
| 1995 | 1.8 | |
| 1994 | 1.6 | |
| 1993 | 2.1 | |
| 1992 | 2.4 | |
| 1991 | 3.2 |
AE: Annual Equivalent
Source: Institut National de la Statistique et des Études Économiques http://www.insee.fr/en/themes/info-rapide.asp?id=29&date=20121114
Table IV-11 provides in the lower panel the estimates of inflation by the Institut National de la Statistique et des Études Économiques (INSEE) for the years from 1991 to 2011. Inflation has been relatively moderate in France. The rise of inflation to 2.8 percent in 2008 was caused by the commodity price shock as investment funds shifted from other risk financial assets into carry trades driven by interest rates falling toward zero. INSEE estimates 2011 inflation at 2.1 percent.
Chart IV-11 of the Institut National de la Statistique et des Études Économiques (INSEE) of France shows headline and core consumer price inflation of France. Inflation rose during the commodity price shock of unconventional monetary policy. Risk aversion in late 2008 and beginning of 2009 caused collapse of valuation of commodity futures with resulting decline in inflation. Unconventional monetary policy with alternations of risk aversion resulted in higher inflation in France that stabilized in recent months until the increase of 0.2 percent in Oct 2011, 0.3 percent in Nov and 0.4 percent in Dec that were followed by decline of 0.4 percent in Jan 2012 and increases of 0.4 percent in Feb and 0.8 percent in Mar followed by 0.1 percent in Apr minus 0.1 percent in May and no change in Jun 2012 with marginal decline of 0.4 percent in Jul. Inflation returned with 0.7 percent in Aug 2012 but decline of 0.3 percent in Sep 2012 followed with increase of 0.2 percent in Oct 2012. Both the headline and core indexes are showing negative slopes in the new environment of risk aversion that causes reversals of carry trades into commodity futures prices. The 12-month rate of inflation has declined from 2.5 percent in Dec 2011 to 1.9 percent in Oct 2012.
Chart IV-11, France, Consumer Price Index (IPC) and Core Consumer Price Index (ISJ) 12 Months Rates of Change
Source: Institut National de la Statistique et des Études Économiques
http://www.insee.fr/en/themes/info-rapide.asp?id=29&date=20121114
The first wave of commodity price increases in the first four months of Jan-Apr 2011 also influenced the surge of consumer price inflation in Italy shown in Table IV-11. Annual equivalent inflation in the first four months of 2011 was 4.9 percent. The crisis of confidence or risk aversion resulted in reversal of carry trades on commodity positions. Consumer price inflation in Italy was subdued in the second wave in Jun and May 2011 at 0.1 percent for annual equivalent 1.2 percent. In the third wave in Jul-Sep 2011, annual equivalent inflation increased to 2.4 percent. In the fourth wave, annual equivalent inflation in Oct-Nov 2011 jumped again at 3.0 percent. Inflation returned in the fifth wave from Dec 2011 to Jan 2012 at annual equivalent 4.3 percent. In the sixth wave, annual equivalent inflation rose to 5.7 percent in Feb-Apr 2012. In the seventh wave, annual equivalent inflation was 1.2 percent in May-Jun 2012. In the eighth wave, annual equivalent inflation increased to 3.0 percent in Jul-Aug 2012. In the ninth wave, inflation collapsed to zero in Sep-Oct 2012. Economies are shocked worldwide by intermittent waves of inflation originating in combination of zero interest rates and quantitative easing with alternation of risk appetite and risk aversion.
Table IV-15, Italy, Consumer Price Index
| Month | 12 Months | |
| Oct 2012 | 0.0 | 2.6 |
| Sep | 0.0 | 3.2 |
| AE ∆% Sep-Oct | 0.0 | |
| Aug | 0.4 | 3.2 |
| Jul | 0.1 | 3.1 |
| AE ∆% Jul-Aug | 3.0 | |
| June | 0.2 | 3.3 |
| May | 0.0 | 3.2 |
| AE ∆% May-Jun | 1.2 | |
| Apr | 0.5 | 3.3 |
| Mar | 0.5 | 3.3 |
| Feb | 0.4 | 3.3 |
| AE ∆% Feb-Apr | 5.7 | |
| Jan | 0.3 | 3.2 |
| Dec 2011 | 0.4 | 3.3 |
| AE ∆% Dec-Jan | 4.3 | |
| Nov | -0.1 | 3.3 |
| Oct | 0.6 | 3.4 |
| AE ∆% Oct-Nov | 3.0 | |
| Sep | 0.0 | 3.0 |
| Aug | 0.3 | 2.8 |
| Jul | 0.3 | 2.7 |
| AE ∆% Jul-Sep | 2.4 | |
| Jun | 0.1 | 2.7 |
| May | 0.1 | 2.6 |
| AE ∆% May-Jun | 1.2 | |
| Apr | 0.5 | 2.6 |
| Mar | 0.4 | 2.5 |
| Feb | 0.3 | 2.4 |
| Jan | 0.4 | 2.1 |
| AE ∆% Jan-Apr | 4.9 | |
| Dec 2010 | 0.4 | 1.9 |
| Annual | ||
| 2011 | 2.8 | |
| 2010 | 1.5 | |
| 2009 | 0.8 | |
| 2008 | 3.3 | |
| 2007 | 1.8 | |
| 2006 | 2.1 |
Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/74230
Consumer price inflation in Italy by segments in the estimate by ISTAT for Oct 2012 is provided in Table IV-16. Total consumer price inflation in Oct 2012 was unchanged and 2.6 percent in 12 months. Inflation of goods was 0.2 percent and 3.4 percent in 12 months. Prices of durable goods decreased 0.2 percent in Oct and decreased 0.3 percent in 12 months, as typical in most countries. Prices of energy decreased 0.2 percent in Oct and increased 13.7 percent in 12 months. Food prices increased 0.4 percent in Oct and increased 2.7 percent in 12 months. Prices of services fell 0.1 percent in Oct and rose 1.7 percent in 12 months. Transport prices, also influenced by commodity prices, decreased 0.1 percent in Oct and increased 3.5 percent in 12 months. Carry trades from zero interest rates to positions in commodity futures cause increases in commodity prices. Waves of inflation originate in periods when there is no risk aversion and commodity prices decline during periods of risk aversion (Section I and earlier http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html).
Table IV-16, Italy, Consumer Price Index and Segments, Month and 12-Month ∆%
| Oct 2012 | Month ∆% | 12-Month ∆% |
| General Index | 0.0 | 2.6 |
| I Goods | 0.2 | 3.4 |
| Food | 0.4 | 2.7 |
| Energy | -0.2 | 13.7 |
| Durable | -0.2 | -0.3 |
| Nondurable | -0.1 | 0.4 |
| II Services | -0.1 | 1.7 |
| Housing | 0.1 | 2.7 |
| Communications | -1.1 | 0.0 |
| Transport | -0.1 | 3.5 |
Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/74230
Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/73741
Chart IV-16 of the Istituto Nazionale di Statistica shows moderation in 12-month percentage changes of the consumer price index of Italy with marginal increase followed by decline to 2.6 percent in Oct 2012.
Chart, IV-12, Italy, Consumer Price Index, 12-Month Percentage Changes
Source: Istituto Nazionale di Statistica
Inflation in the UK is somewhat higher than in many advanced economies, deserving more detailed analysis. Table IV-17 provides 12-month percentage changes of UK output prices for all manufactured products, excluding food, beverage and petroleum and excluding duty. The 12-month rates rose significantly in 2011 in all three categories, reaching 6.3 percent for all manufactured products in Sep 2011 but declining to 5.7 percent in Oct, 5.4 in Nov and down to 1.8 percent in Jul 2012, increasing marginally to 2.3 percent in Aug 2012 and 2.5 percent in both Sep and Oct 2012. Output price inflation is highly sensitive to commodity prices as shown by the increase by 6.7 percent in 2008 when oil prices rose over $140/barrel even in the midst of a global recession driven by the carry trade from zero interest rates to oil futures. The mirage episode of false deflation in 2001 and 2002 is also captured by output prices for the UK, which was originated in decline of commodity prices but was used as an argument for the unconventional monetary policy of zero interest rates and quantitative easing during the past decade.
Table IV-17, UK Output Prices 12 Months ∆% NSA
| All Manufactured Products | Excluding Food, Beverage and | All Excluding Duty | |
| Oct 2012 | 2.5 | 1.4 | 2.3 |
| Sep | 2.5 | 1.2 | 2.2 |
| Aug | 2.3 | 1.2 | 1.9 |
| Jul | 1.8 | 1.2 | 1.5 |
| Jun | 2.0 | 1.7 | 1.7 |
| May | 2.8 | 2.1 | 2.5 |
| Apr | 3.3 | 2.3 | 3.1 |
| Mar | 3.7 | 2.5 | 3.5 |
| Feb | 4.1 | 3.0 | 4.1 |
| Jan | 4.0 | 2.4 | 4.0 |
| Dec 2011 | 4.8 | 3.0 | 4.8 |
| Nov | 5.4 | 3.1 | 5.6 |
| Oct | 5.7 | 3.3 | 5.9 |
| Sep | 6.3 | 3.7 | 6.4 |
| Aug | 6.0 | 3.5 | 6.2 |
| Jul | 6.1 | 3.4 | 6.2 |
| Jun | 5.8 | 3.2 | 5.9 |
| May | 5.4 | 3.4 | 5.5 |
| Apr | 5.6 | 3.6 | 5.8 |
| Mar | 5.6 | 3.1 | 5.5 |
| Feb | 5.3 | 3.1 | 5.2 |
| Jan | 5.0 | 3.3 | 5.0 |
| Dec 2010 | 4.2 | 2.7 | 4.0 |
| Year ∆% | |||
| 2011 | 5.6 | 3.4 | 5.7 |
| 2010 | 4.2 | 3.0 | 3.9 |
| 2009 | 1.6 | 2.5 | 1.0 |
| 2008 | 6.7 | 3.7 | 6.7 |
| 2007 | 2.3 | 1.4 | 2.1 |
| 2006 | 2.0 | 1.5 | 2.0 |
| 2005 | 1.9 | 1.0 | 1.9 |
| 2004 | 1.0 | -0.3 | 0.6 |
| 2003 | 0.6 | 0.1 | 0.5 |
| 2002 | -0.1 | -0.4 | -0.1 |
| 2001 | -0.3 | -0.6 | -0.3 |
| 2000 | 1.4 | -0.5 | 0.8 |
| 1999 | 0.6 | -1.0 | -0.3 |
| 1998 | 0.0 | -0.9 | -0.9 |
| 1997 | 0.9 | 0.3 | 0.1 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/ppi2/producer-price-index/october-2012/index.html
Monthly and annual equivalent rates of change of output prices are shown in Table IV-18. There are waves of inflation similar to those in other countries (Section I and earlier at http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html). In the first wave, annual equivalent inflation was 12.0 percent in Jan-Apr 2011 with relaxed risk aversion in commodity markets. In the second wave, intermittent risk aversion resulted in annual equivalent inflation of 2.0 percent in May-Oct 2011. In the third wave, alternation of risk aversion resulted in annual equivalent inflation of 1.6 percent in Nov 2011 to Jan 2012. In the fourth wave, the energy commodity shock processed through carry trades caused the jump of annual equivalent inflation to 7.9 percent in Feb-Apr 2012. A fifth wave occurred in May-Jun 2012 with decline of output inflation by 5.3 percent annual equivalent in an environment of risk aversion that caused decline of commodity prices. A sixth wave under commodity shocks induced by carry trades from zero interest rates resulted in annual equivalent inflation of 4.5 percent in Jul-Sep 2012 and 3.7 percent in Jul-Oct 2012.
Table IV-18, UK Output Prices Month ∆% NSA
| All Manufactured Products | Excluding Food, Beverage and | All Excluding Duty | |
| Oct 2012 | 0.1 | 0.1 | 0.2 |
| Sep | 0.5 | 0.3 | 0.5 |
| Aug | 0.5 | 0.1 | 0.6 |
| Jul | 0.1 | -0.1 | 0.1 |
| ∆% AE Jul-Oct | 3.7 | 1.2 | 4.3 |
| Jun | -0.6 | -0.2 | -0.6 |
| May | -0.3 | -0.1 | -0.4 |
| ∆% AE May-Jun | -5.3 | -1.8 | -5.8 |
| Apr | 0.7 | 0.6 | 0.5 |
| Mar | 0.6 | 0.1 | 0.5 |
| Feb | 0.6 | 0.5 | 0.6 |
| ∆% AE Feb-Apr | 7.9 | 4.9 | 6.6 |
| Jan | 0.4 | 0.3 | 0.3 |
| Dec 2011 | -0.2 | -0.1 | -0.2 |
| Nov | 0.2 | -0.1 | 0.2 |
| ∆% AE Nov-Jan | 1.6 | 0.4 | 1.2 |
| Oct | 0.0 | -0.1 | 0.1 |
| Sep | 0.3 | 0.3 | 0.2 |
| Aug | 0.0 | 0.1 | 0.1 |
| Jul | 0.3 | 0.4 | 0.3 |
| Jun | 0.2 | 0.2 | 0.2 |
| May | 0.2 | 0.2 | 0.2 |
| ∆% AE May-Oct | 2.0 | 2.2 | 2.2 |
| Apr | 1.1 | 0.8 | 0.9 |
| Mar | 1.1 | 0.5 | 1.1 |
| Feb | 0.5 | 0.0 | 0.5 |
| Jan | 1.1 | 0.8 | 1.1 |
| Jan-Apr | 12.0 | 6.5 | 11.4 |
| Dec 2010 | 0.5 | 0.0 | 0.6 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/ppi2/producer-price-index/october-2012/stb-producer-price-index--october-2012.html
Input prices in the UK have been more dynamic than output prices until the current event of risk aversion, as shown by Table IV-19, but with sharp oscillations because of the commodity and raw material content. The 12-month rates of increase of input prices, even excluding food, tobacco, beverages and petroleum, are very high, reaching 18.1 percent in Sep 2011 for materials and fuels purchased and 13.3 percent excluding food, beverages and petroleum. Inflation in 12 months of materials and fuels purchased moderated to 5.4 percent in Mar 2012 and 4.1 percent excluding food, tobacco, beverages and petroleum with the rates falling further in Apr to 1.1 percent for materials and fuels purchased and 2.2 percent excluding food, tobacco, beverages and petroleum. Input-price inflation collapsed in the 12 months ending in Jul 2012 to minus 2.6 percent for materials and fuels purchased and minus 1.5 percent excluding food, beverages and tobacco. Inflation returned at 1.2 percent in the 12 months ending in Aug 2012 but minus 0.5 percent excluding food, tobacco, beverages and petroleum. Inflation of input prices in Sep 2012 was minus 1.0 percent and minus 0.9 percent excluding food, beverages and petroleum. In Oct 2012, inflation of input prices of all manufacturing and materials purchased was 0.1 percent in 12 months and minus 0.3 percent in 12 months excluding food, tobacco, beverages and petroleum. There is only comparable experience with 22.2 percent inflation of materials and fuels purchased in 2008 and 16.9 percent excluding food, beverages and petroleum followed in 2009 by decline of 3.8 percent by materials and fuels purchased and increase of 1.6 percent for the index excluding items. UK input and output inflation is sensitive to commodity price increases driven by carry trades from zero interest rates. The mirage of false deflation is also observed in input prices in 1997-9 and then again from 2001 to 2003.
Table IV-19, UK, Input Prices 12-Month ∆% NSA
| All Manufacturing Materials and Fuels Purchased | Excluding Food, Tobacco, Beverages and Petroleum | |
| Oct 2012 | 0.1 | -0.3 |
| Sep | -1.0 | -0.9 |
| Aug | 1.2 | -0.5 |
| Jul | -2.6 | -1.5 |
| Jun | -2.2 | -0.3 |
| May | 0.1 | 1.1 |
| Apr | 1.1 | 2.2 |
| Mar | 5.4 | 4.1 |
| Feb | 7.7 | 5.7 |
| Jan | 6.5 | 5.6 |
| Dec 2011 | 8.9 | 7.2 |
| Nov | 13.8 | 10.2 |
| Oct | 14.5 | 11.0 |
| Sep | 18.1 | 13.3 |
| Aug | 16.3 | 13.0 |
| Jul | 18.5 | 13.3 |
| Jun | 16.8 | 12.6 |
| May | 16.3 | 11.4 |
| Apr | 17.9 | 12.2 |
| Mar | 14.8 | 10.3 |
| Feb | 14.9 | 10.7 |
| Jan | 14.2 | 10.5 |
| Dec 2010 | 13.1 | 9.0 |
| Year ∆% | ||
| 2011 | 15.4 | 11.5 |
| 2010 | 9.9 | 5.7 |
| 2009 | -3.8 | 1.6 |
| 2008 | 22.2 | 16.9 |
| 2007 | 2.9 | 2.3 |
| 2006 | 9.8 | 7.3 |
| 2005 | 10.9 | 6.9 |
| 2004 | 3.3 | 1.6 |
| 2003 | 1.2 | -0.6 |
| 2002 | -4.4 | -4.8 |
| 2001 | -1.2 | -1.2 |
| 2000 | 7.4 | 3.7 |
| 1999 | -1.3 | -3.6 |
| 1998 | -9.1 | -4.6 |
| 1997 | -8.2 | -6.3 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/ppi2/producer-price-index/october-2012/index.html
Table IV-20 provides monthly percentage changes of UK input prices for materials and fuels purchased and excluding food, tobacco, beverages and petroleum. There are strong waves of inflation of input prices in the UK similar to those worldwide (Section I and earlier http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html). In the first wave, input prices rose at the high annual equivalent rate of 35.6 percent in Jan-Apr 2011, driven by carry trades from unconventional monetary policy into commodity exposures. In the second wave, alternating risk aversion caused annual equivalent inflation of minus 3.1 percent in May-Oct 2011. In the third wave, renewed risk aversion resulted in annual equivalent inflation of minus 1.2 percent in Nov-Dec 2011. In the fourth wave, annual equivalent inflation of input prices in the UK surged at 18.1 percent in Jan-Mar 2012 under relaxed risk aversion. In the fifth wave, annual equivalent inflation was minus 21.9 percent in Apr-Jun 2012 because of collapse of commodity prices during increasing risk aversion. In the sixth wave, annual equivalent inflation of materials and fuels purchased jumped to 8.7 percent in Jul-Sep 2012 and 7.7 percent in Jul-Oct 2012.
Table IV-20, UK Input Prices Month ∆%
| All Manufacturing Materials and Fuels Purchased NSA | Excluding Food, Tobacco, Beverages and Petroleum SA | |
| Oct 2012 | 0.4 | 0.1 |
| Sep | -0.1 | 0.2 |
| Aug | 2.0 | 1.0 |
| Jul | 0.2 | -0.3 |
| ∆% Jul-Oct | 7.7 | 3.0 |
| Jun | -2.1 | -0.2 |
| May | -2.6 | -0.8 |
| Apr | -1.4 | 0.1 |
| ∆% Apr-Jun | -21.9 | -3.2 |
| Mar | 1.6 | -0.7 |
| Feb | 2.5 | 1.0 |
| Jan | 0.1 | -0.1 |
| ∆% AE Jan-Mar | 18.1 | 0.8 |
| Dec 2011 | -0.6 | -0.7 |
| Nov | 0.4 | 0.1 |
| ∆% AE Nov-Dec | -1.2 | -3.6 |
| Oct | -0.8 | -0.5 |
| Sep | 2.1 | 0.6 |
| Aug | -1.9 | 0.1 |
| Jul | 0.6 | 0.9 |
| Jun | 0.1 | 1.0 |
| May | -1.6 | -0.1 |
| ∆% AE May-Oct | -3.1 | 4.1 |
| Apr | 2.8 | 2.0 |
| Mar | 3.8 | 1.0 |
| Feb | 1.4 | 1.0 |
| Jan | 2.3 | 1.5 |
| ∆% AE Jan-Apr | 35.6 | 17.8 |
| Dec 2010 | 3.9 | 1.9 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/ppi2/producer-price-index/october-2012/index.html
The UK Office for National Statistics also provides contributions in percentage points to the monthly and 12-month rates of inflation of manufactured products, shown in Table IV-21. There are high contributions of 0.33 percentage points by food products, 0.90 percentage points by tobacco and alcohol, 0.40 percentage points by petroleum, 0.28 percentage points by computer, electrical and optical and 0.46 percentage points by other manufactured products. There are diversified sources of contributions to 12 months output price inflation such as 0.21 percentage points by clothing, textile and leather and 0.07 percentage points by transport equipment. In general, contributions by products rich in commodities are the drivers of inflation. There were diversified contributions in percentage points to monthly inflation: 0.02 percentage points by food products, 0.01 percentage points by clothing and 0.03 percentage points by transport equipment. The decrease of petroleum prices by 2.0 percent deducted 0.06 percentage points from monthly inflation of manufactured products and decrease of 0.2 percent by chemical and pharmaceutical deducted 0.02 percentage points.
Table IV-21, UK, Contributions to Month and 12-Month Change in Prices of All Manufactured Products, Percentage Points
| Oct 2012 | 12 Months | 12 Months ∆% | Month % Points | Month ∆% |
| Total % | 2.5 | 0.1 | ||
| Food Products | 0.35 | 2.2 | 0.02 | 0.1 |
| Tobacco & Alcohol | 0.90 | 8.8 | 0.07 | 0.5 |
| Clothing, Textile & Leather | 0.21 | 2.0 | 0.01 | 0.1 |
| Paper and Printing | -0.03 | -1.0 | 0.01 | 0.2 |
| Petroleum | 0.33 | 2.9 | -0.06 | -0.4 |
| Chemical & Pharmaceutical | -0.06 | -0.7 | -0.02 | -0.2 |
| Metal, Machinery & Equipment | 0.00 | 0.1 | 0.00 | 0.0 |
| Computer, Electrical & Optical | 0.28 | 3.4 | 0.03 | 0.3 |
| Transport Equipment | 0.07 | 0.7 | 0.03 | 0.2 |
| Other Manufactured Products | 0.46 | 2.8 | 0.03 | 0.1 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/ppi2/producer-price-index/october-2012/index.html
The UK Office for National Statistics also provides contributions in percentage points to the monthly and 12-month rates of inflation of input prices, shown in Table IV-22. Crude oil is a large factor with deduction of 0.31 percentage points from the 12-month rate and deduction of 0.11 percentage points from the monthly rate in Oct. Inflation also transfers to the domestic economy through the prices of imported inputs: imported metals deducted 0.49 percentage points from the 12-month rate and deducted 0.03 percentage points from the Oct rate. Domestic food added 0.98 percentage points to the 12-month rate and added 0.05 percentage points to the Oct rate. Reversals of commodity exposures in carry trades during risk aversion are a major source of financial instability.
Table IV-22, UK, Contributions to Month and 12-Month Change in Prices of Inputs, Percentage Points
| Oct 2012 | 12 Months | 12 Months ∆% | Month % Points | Month ∆% |
| Total | 0.1 | 0.4 | ||
| Fuel | 0.44 | 5.5 | 0.36 | 3.1 |
| Crude Oil | -0.31 | -1.3 | -0.11 | -0.3 |
| Domestic Food Materials | 0.98 | 11.7 | 0.05 | 0.4 |
| Imported Food Materials | 0.18 | 4.0 | -0.03 | -0.5 |
| Other Domestic Produced Materials | -0.04 | -1.2 | -0.01 | -0.3 |
| Imported Metals | -0.49 | -7.3 | -0.03 | -0.4 |
| Imported Chemicals | -0.22 | -2.4 | 0.06 | 0.4 |
| Imported Parts and Equipment | -0.25 | -1.9 | 0.09 | 0.5 |
| Other Imported Materials | -0.19 | -2.2 | 0.04 | 0.3 |
Source: http://www.ons.gov.uk/ons/rel/ppi2/producer-price-index/october-2012/index.html
Consumer price inflation in the UK is shown in Table IV-21. The CPI index increased 0.4 percent in Sep and 2.2 percent in 12 months. The same inflation waves (Section I and earlier at http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html) are present in UK CPI inflation. In the first wave in Jan-Apr 2011, annual equivalent inflation was at a high 6.5 percent. In the second wave in May-Jul 2011, annual equivalent inflation fell to only 0.4 percent. In the third wave in Aug-Nov 2011, annual equivalent inflation returned at 4.6 percent. In the fourth wave in Dec 2011 to Jan 2012, annual equivalent inflation was minus 0.6 percent because of decline of 0.5 percent in Jan 2012. In the fifth wave, annual equivalent inflation increased to 6.2 percent in Feb-Apr 2012. In the seventh wave, annual equivalent inflation was minus 3.0 percent in May-Jun 2012. In the eighth wave, annual equivalent inflation in Jul-Sep 2012 was 4.1 percent and 4.6 percent in Oct 2012 with the rate in Oct caused mostly by increases in university tuition payments.
Table IV-23, UK, Consumer Price Index All Items, Month and 12-Month ∆%
| Month ∆% | 12 Months ∆% | |
| Oct 2012 | 0.5 | 2.7 |
| Sep | 0.4 | 2.2 |
| Aug | 0.5 | 2.5 |
| Jul | 0.1 | 2.6 |
| AE ∆% Jul-Oct | 4.6 | |
| Jun | -0.4 | 2.4 |
| May | -0.1 | 2.8 |
| AE ∆% May-Jun | -3.0 | |
| Apr | 0.6 | 3.0 |
| Mar | 0.3 | 3.5 |
| Feb | 0.6 | 3.4 |
| AE ∆% Feb-Apr | 6.2 | |
| Jan | -0.5 | 3.6 |
| Dec 2011 | 0.4 | 4.2 |
| AE ∆% Dec-Jan | -0.6 | |
| Nov | 0.2 | 4.8 |
| Oct | 0.1 | 5.0 |
| Sep | 0.6 | 5.2 |
| Aug | 0.6 | 4.5 |
| AE ∆% Aug-Nov | 4.6 | |
| Jul | 0.0 | 4.4 |
| Jun | -0.1 | 4.2 |
| May | 0.2 | 4.5 |
| May-Jul | 0.4 | |
| Apr | 1.0 | 4.5 |
| Mar | 0.3 | 4.0 |
| Feb | 0.7 | 4.4 |
| Jan | 0.1 | 4.0 |
| AE ∆% Jan-Apr | 6.5 | |
| Dec 2010 | 1.0 | 3.7 |
| Nov | 0.4 | 3.3 |
| Oct | 0.3 | 3.2 |
| Sep | 0.0 | 3.1 |
| Aug | 0.5 | 3.1 |
| Jul | -0.2 | 3.1 |
| Jun | 0.1 | 3.2 |
| May | 0.2 | 3.4 |
| Apr | 0.6 | 3.7 |
| Mar | 0.6 | 3.4 |
| Feb | 0.4 | 3.0 |
| Jan | -0.2 | 3.5 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/october-2012/stb---consumer-price-indices---october-2012.html
Inflation has been unusually high in the UK since 2006, as shown in Table IV-22. There were no rates of inflation close to 2.0 percent in the period from 1997 to 2004. Inflation has exceeded 2 percent since 2005, reaching 3.6 percent in 2008, 3.3 percent in 2010 and 4.5 percent in 2011.
Table IV-24, UK, Consumer Price Index, Annual ∆%
| 1997 | 1.8 |
| 1998 | 1.6 |
| 1999 | 1.3 |
| 2000 | 0.8 |
| 2001 | 1.2 |
| 2002 | 1.3 |
| 2003 | 1.4 |
| 2004 | 1.3 |
| 2005 | 2.1 |
| 2006 | 2.3 |
| 2007 | 2.3 |
| 2008 | 3.6 |
| 2009 | 2.2 |
| 2010 | 3.3 |
| 2011 | 4.5 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/october-2012/stb---consumer-price-indices---october-2012.html
Table IV-25 provides the analysis of inflation in Oct 2012 by the UK Office for National Statistics. The driver of monthly inflation of 0.5 percent is increase in education of 19.1 percent, contributing 0.36 percentage points. Clothing and footwear increased 1.2 percent, contributing 0.08 percentage points. Contributions of percentage points to the 12-month rate of consumer price inflation of 2.7 percent are provided by the final two columns in Table IV-23. The UK Office for National Statistics explains as follows (http://www.ons.gov.uk/ons/dcp171778_286398.pdf pages 3-4):
“The CPI rose by 0.5 per cent between September and October this year. By far the largest upward contribution to the 1-month change came from: education: prices, overall, rose by 19.1 per cent between September and October. This is more than twice the size of the next biggest monthly increase for education prices since CPI records began in 1996. The increase was due predominantly to a significant rise in undergraduate tuition fees, where the maximum annual tuition fees for new UK and EU students in England rose to £9,000. There were smaller though significant, upward contributions from:
-clothing & footwear: prices, overall, rose by 1.2 per cent between September and October. This was the largest increase for clothing prices between these two months since records began.
-food & non-alcoholic beverages: prices, overall, rose by 0.5 per cent between September and October this year. Sugar, jam, syrups, chocolate & confectionery were the main contributors, followed by meat, fish and fruit.
-recreation & culture: where there were upward pressures to the monthly change from other recreational items, and cultural services and package holidays.
There were minor downward contributions from furniture, household equipment & maintenance, and transport.”
Table IV-25, UK, Consumer Price Index Month and Twelve-month ∆% and Percentage Point Contributions to Change by Components
| Oct 2012 | Month ∆% | Percentage Point Contribution | 12 Months ∆% | Percentage Point Contribution |
| CPI All Items | 0.5 | 2.7 | ||
| Food & Non-Alcoholic Beverages | 0.5 | 0.05 | 3.4 | 0.16 |
| Alcohol & Tobacco | 0.4 | 0.02 | 6.5 | 0.02 |
| Clothing & Footwear | 1.2 | 0.08 | -0.1 | 0.03 |
| Housing & Household Services | 0.1 | 0.02 | 1.7 | -0.06 |
| Furniture & Household Goods | -0.6 | -0.03 | 1.7 | 0.00 |
| Health | 0.2 | 0.00 | 2.5 | 0.00 |
| Transport | -0.1 | -0.02 | 3.1 | 0.08 |
| Communication | 0.2 | 0.01 | 3.7 | 0.01 |
| Recreation & Culture | 0.4 | 0.05 | 0.8 | -0.05 |
| Education | 19.1 | 0.36 | 19.7 | 0.32 |
| Restaurants & Hotels | 0.0 | 0.00 | 2.9 | 0.00 |
| Miscellaneous Goods & Services | 0.0 | 0.00 | 1.9 | -0.04 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/october-2012/stb---consumer-price-indices---october-2012.html
V World Economic Slowdown. Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/datamapper/index.php?db=WEO) to show GDP in dollars in 2011 and the growth rate of real GDP of the world and selected regional countries from 2012 to 2015. The data illustrate the concept often repeated of “two-speed recovery” of the world economy from the recession of 2007 to 2009. The IMF has lowered its forecast of the world economy to 3.3 percent in 2012 but accelerating to 3.6 percent in 2013, 4.2 percent in 2014 and 4.4 percent in 2015. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $33,697 billion of world output of $69,899 billion, or 48.2 percent, but are projected to grow at much lower rates than world output, 1.9 percent on average from 2012 to 2015 in contrast with 3.9 percent for the world as a whole. While the world would grow 16.4 percent in the four years from 2012 to 2015, the G7 as a whole would grow 7.8 percent. The difference in dollars of 2011 is rather high: growing by 16.4 percent would add $11.5 trillion of output to the world economy, or roughly two times the output of the economy of Japan of $5,867 but growing by 7.8 percent would add $5.2 trillion of output to the world, or somewhat below the output of Japan in 2011. The “two speed” concept is in reference to the growth of the 150 countries labeled as emerging and developing economies (EMDE) with joint output in 2011 of $25,438 billion, or 36.4 percent of world output. The EMDEs would grow cumulatively 24.9 percent or at the average yearly rate of 5.7 percent, contributing $6.3 trillion from 2012 to 2015 or the equivalent of 86.8 percent of $7,298 billion of China in 2011. The final four countries in Table V-1 often referred as BRIC (Brazil, Russia, India, China), are large, rapidly growing emerging economies. Their combined output adds to $13,468 billion, or 19.3 percent of world output, which is equivalent to 39.9 percent of the combined output of the major advanced economies of the G7.
Table V-1, IMF World Economic Outlook Database Projections of Real GDP Growth
| GDP USD 2011 | Real GDP ∆% | Real GDP ∆% | Real GDP ∆% | Real GDP ∆% | |
| World | 69,899 | 3.3 | 3.6 | 4.2 | 4.4 |
| G7 | 33,697 | 1.4 | 1.5 | 2.2 | 2.5 |
| Canada | 1,739 | 1.9 | 2.0 | 2.4 | 2.4 |
| France | 2,778 | 0.1 | 0.4 | 1.1 | 1.5 |
| DE | 3,607 | 0.9 | 0.9 | 1.4 | 1.4 |
| Italy | 2,199 | -2.3 | -0.7 | 0.5 | 1.2 |
| Japan | 5,867 | 2.2 | 1.2 | 1.1 | 1.2 |
| UK | 2,431 | -0.4 | 1.1 | 2.2 | 2.6 |
| US | 15,076 | 2.2 | 2.1 | 2.9 | 3.4 |
| Euro Area | 13,114 | -0.4 | 0.2 | 1.2 | 1.5 |
| DE | 3,607 | 0.9 | 0.9 | 1.4 | 1.4 |
| France | 2,778 | 0.1 | 0.4 | 1.1 | 1.5 |
| Italy | 2,199 | -2.3 | -0.7 | 0.5 | 1.2 |
| POT | 238 | -3.0 | -1.0 | 1.2 | 1.9 |
| Ireland | 221 | 0.4 | 1.4 | 2.5 | 2.9 |
| Greece | 299 | -6.0 | -4.0 | 0.0 | 2.8 |
| Spain | 1,480 | -1.5 | -1.3 | 1.0 | 1.6 |
| EMDE | 25,438 | 5.3 | 5.6 | 5.9 | 6.1 |
| Brazil | 2,493 | 1.5 | 3.9 | 4.2 | 4.2 |
| Russia | 1,850 | 3.7 | 3.8 | 3.9 | 3.9 |
| India | 1,827 | 4.9 | 6.0 | 6.4 | 6.7 |
| China | 7,298 | 7.8 | 8.2 | 8.5 | 8.5 |
Notes; DE: Germany; EMDE: Emerging and Developing Economies (150 countries); POT: Portugal
Source: IMF World Economic Outlook databank http://www.imf.org/external/datamapper/index.php?db=WEO
Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/datamapper/index.php?db=WEO). Table V-2 is constructed with the WEO database to provide rates of unemployment from 2011 to 2015 for major countries and regions. In fact, unemployment rates for 2011 in Table V-2 are high for all countries: unusually high for countries with high rates most of the time and unusually high for countries with low rates most of the time. Estimated rates of unemployment for 2012 are particularly high for the countries with sovereign debt difficulties in Europe: 15.5 percent for Portugal (POT), 14.8 percent for Ireland, 23.8 percent for Greece, 24.9 percent for Spain and 10.6 percent for Italy, which is lower but still high. The G7 rate of unemployment is estimated at 7.5 percent. Unemployment rates are not likely to decrease substantially if slow growth persists in advanced economies.
Table V-2, IMF World Economic Outlook Database Projections of Unemployment Rate as Percent of Labor Force
| % Labor Force 2011 | % Labor Force 2012 | % Labor Force 2013 | % Labor Force 2014 | % Labor Force 2015 | |
| World | NA | NA | NA | NA | NA |
| G7 | 7.7 | 7.5 | 7.5 | 7.3 | 6.9 |
| Canada | 7.5 | 7.3 | 7.3 | 7.1 | 6.9 |
| France | 9.6 | 10.1 | 10.5 | 10.3 | 9.8 |
| DE | 6.0 | 5.2 | 5.3 | 5.2 | 5.2 |
| Italy | 8.4 | 10.6 | 11.1 | 11.3 | 11.0 |
| Japan | 4.6 | 4.5 | 4.4 | 4.5 | 4.4 |
| UK | 8.0 | 8.1 | 8.1 | 7.9 | 7.6 |
| US | 8.9 | 8.2 | 8.1 | 7.7 | 7.1 |
| Euro Area | 10.2 | 11.2 | 11.5 | 11.2 | 10.8 |
| DE | 6.0 | 5.2 | 5.3 | 5.2 | 5.2 |
| France | 9.6 | 10.1 | 10.5 | 10.3 | 9.8 |
| Italy | 8.4 | 10.6 | 11.1 | 11.3 | 11.0 |
| POT | 12.7 | 15.5 | 16.0 | 15.3 | 14.7 |
| Ireland | 14.4 | 14.8 | 14.4 | 13.7 | 13.1 |
| Greece | 17.3 | 23.8 | 25.4 | 24.5 | 22.4 |
| Spain | 21.7 | 24.9 | 25.1 | 24.1 | 23.2 |
| EMDE | NA | NA | NA | NA | NA |
| Brazil | 6.0 | 6.0 | 6.5 | 7.0 | 7.0 |
| Russia | 6.5 | 6.0 | 6.0 | 6.0 | 6.0 |
| India | NA | NA | NA | NA | NA |
| China | 4.1 | 4.1 | 4.1 | 4.1 | 4.1 |
Notes; DE: Germany; EMDE: Emerging and Developing Economies (150 countries)
Source: IMF World Economic Outlook databank http://www.imf.org/external/datamapper/index.php?db=WEO
Table V-3 provides the latest available estimates of GDP for the regions and countries followed in this blog for IQ2012, IIQ2012 and IIIQ2012 available now for all countries. Growth is weak throughout most of the world. Japan’s GDP increased 1.3 percent in IQ2012 and 2.9 percent relative to a year earlier but part of the jump could be the low level a year earlier because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan is experiencing difficulties with the overvalued yen because of worldwide capital flight originating in zero interest rates with risk aversion in an environment of softer growth of world trade. Japan’s GDP grew 0.1 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of 0.3 percent, which is much lower than 5.2 percent in IQ2012. Growth of 3.3 percent in IIQ2012 in Japan relative to IIQ2011 has effects of the low level of output because of Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan’s GDP contracted 0.9 percent in IIIQ2012 at the SAAR of minus 3.5 percent and increased 0.1 percent relative to a year earlier. China grew at 1.8 percent in IIQ2012, which annualizes to 7.4 percent. China grew at 2.2 percent in IIIQ2012, which annualizes at 7.4 percent. Xinhuanet informs that Premier Wen Jiabao considers the need for macroeconomic stimulus, arguing that “we should continue to implement proactive fiscal policy and a prudent monetary policy, while giving more priority to maintaining growth” (http://news.xinhuanet.com/english/china/2012-05/20/c_131599662.htm). Premier Wen elaborates that “the country should properly handle the relationship between maintaining growth, adjusting economic structures and managing inflationary expectations” (http://news.xinhuanet.com/english/china/2012-05/20/c_131599662.htm). There is decennial change in leadership in China (http://www.xinhuanet.com/english/special/18cpcnc/index.htm). China’s GDP grew 7.6 percent in IIQ2012 relative to IIQ2011. Growth rates of GDP of China in a quarter relative to the same quarter a year earlier have been declining from 2011 to 2012. China’s GDP grew 8.1 percent in IQ2012 relative to a year earlier but only 7.6 percent in IIQ2012 relative to a year earlier and 7.4 percent in IIIQ2012 relative to IIIQ2011. GDP was flat in the euro area in IQ2012 and also in IQ2012 relative to a year earlier. Euro area GDP contracted 0.2 percent IIQ2012 and fell 0.4 percent relative to a year earlier. In IIIQ2012, euro area GDP fell 0.1 percent and declined 0.6 percent relative to a year earlier. Germany’s GDP increased 0.5 percent in IQ2012 and 1.7 percent relative to a year earlier. In IIQ2012, Germany’s GDP increased 0.3 percent and 0.5 percent relative to a year earlier but 1.0 percent relative to a year earlier when adjusted for calendar (CA) effects. In IIIQ2012, Germany’s GDP increased 0.2 percent and 0.4 percent relative to a year earlier. Growth of US GDP in IQ2012 was 0.5 percent, at SAAR of 2.0 percent and higher by 2.4 percent relative to IQ2011. US GDP increased 0.3 percent in IIQ2012, 1.3 percent at SAAR and 2.1 percent relative to a year earlier. In IIIQ2012, GDP grew 0.5 percent, 2.0 percent at SAAR and 2.3 percent relative to IIIQ2011 (http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states.html) but with substantial unemployment and underemployment (http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html ) and weak hiring (http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html). In IQ2012, UK GDP fell 0.3 percent, declining 0.1 percent relative to a year earlier. UK GDP fell 0.4 percent in IIQ2012 and 0.5 percent relative to a year earlier. UK GDP increased 1.0 percent in IIIQ2012 and was unchanged relative to a year earlier. Italy has experienced decline of GDP in five consecutive quarters from IIIQ2011 to IIIQ2012. Italy’s GDP fell 0.8 percent in IQ2012 and declined 1.4 percent relative to IQ2011. Italy’s GDP fell 0.7 percent in IIQ2012 and declined 2.4 percent relative to a year earlier. In IIIQ2012, Italy’s GDP fell 0.2 percent and declined 2.4 percent relative to a year earlier. France’s GDP stagnated in IQ2012 and increased 0.4 percent relative to a year earlier. France’s GDP decreased 0.1 percent in IIQ2012 and increased 0.1 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.2 percent and increased 0.2 percent relative to a year earlier.
Table V-3, Percentage Changes of GDP Quarter on Prior Quarter and on Same Quarter Year Earlier, ∆%
| IQ2012/IVQ2011 | IQ2012/IQ2011 | |
| United States | QOQ: 0.5 SAAR: 2.0 | 2.4 |
| Japan | QOQ: 1.3 SAAR: 5.2 | 2.9 |
| China | 1.8 | 8.1 |
| Euro Area | 0.0 | 0.0 |
| Germany | 0.5 | 1.7 |
| France | 0.0 | 0.4 |
| Italy | -0.8 | -1.4 |
| United Kingdom | -0.3 | -0.1 |
| IIQ2012/IQ2012 | IIQ2012/IIQ2011 | |
| United States | QOQ: 0.3 SAAR: 1.3 | 2.1 |
| Japan | QOQ: 0.1 | 3.3 |
| China | 1.8 | 7.6 |
| Euro Area | -0.2 | -0.4 |
| Germany | 0.3 | 0.5 1.0 CA |
| France | -0.1 | 0.1 |
| Italy | -0.7 | -2.4 |
| United Kingdom | -0.4 | -0.5 |
| IIIQ2012/ IIQ2012 | IIIQ2012/ IIIQ2011 | |
| United States | QOQ: 0.5 | 2.3 |
| Japan | QOQ: –0.9 | 0.1 |
| China | 2.2 | 7.4 |
| Euro Area | -0.1 | -0.6 |
| Germany | 0.2 | 0.4 |
| France | 0.2 | 0.2 |
| Italy | -0.2 | -2.4 |
| United Kingdom | 1.0 | 0.0 |
QOQ: Quarter relative to prior quarter; SAAR: seasonally adjusted annual rate
Source: Country Statistical Agencies
http://www.bea.gov/national/index.htm#gdp
There is evidence of deceleration of growth of world trade and even contraction in more recent data. Table V-4 provides two types of data: growth of exports and imports in the latest available months and in the past 12 months; and contributions of net trade (exports less imports) to growth of real GDP. Japan provides the most worrisome data (Section VB http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states_28.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-creation-of_23.html and for GDP Section VB). Japan’s exports decreased 10.3 percent in the 12 months ending in Sep, 5.8 percent in the 12 months ending in Aug and 8.1 percent in 12 months ending in Jul while imports increased 4.1 in the 12 months ending in Sep, decreased 5.4 percent in the 12 months ending in Aug and increased 2.1 percent in the 12 months ending in Jul. The second part of Table V-4 shows that net trade deducted 0.3 percentage points from Japan’s growth of GDP in IIQ2012 and deducted 2.9 percentage points from GDP growth in IIIQ2012. China’s exports fell 1.8 percent in the month of Jul and increased 1.0 percent in 12 months. In Aug 2012, China’s exports increased 0.6 percent and increased 2.7 percent in 12 months. Trade rebounded in China in Sep with growth of exports of 9.9 percent in the 12 months ending in Sep and 2.4 percent for imports. There was further growth in China’s exports of 11.6 percent in the 12 months ending in Oct while imports increased 2.4 percent. Germany’s exports decreased 2.5 percent in the month of Sep and decreased 3.4 percent in the 12 months ending in Sep while imports decreased 1.6 percent in the month of Sep and decreased 3.6 percent in the 12 months ending in Sep. Net trade contributed 1.1 percentage points to growth of Germany’s GDP in IIQ2012. The Markit/BME Germany Purchasing Managers’ Index® (PMI®), showing close association with Germany’s manufacturing output, fell from 47.4 in Sep to 46.0 in Oct for the eighth consecutive month in contraction territory below 50.0 and much lower than the long-term average of the index of 52.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10278). New export orders fell for sixteen consecutive months at the fastest rate of decline since Apr 2009. UK’s exports increased 0.6 percent in Sep and decreased 0.7 percent in Jul-Sep 2012 relative to a year earlier while imports decreased 3.1 percent in Sep and 0.3 percent in Jul-Sep 2012 relative to a year earlier. Net trade deducted 1.0 percentage points from UK GDP growth in IIQ2012. France’s exports decreased 1.5 percent in Sep while imports decreased 1.9 percent and net trade deducted 0.4 percentage points from GDP growth in IIQ2012, adding 0.4 percentage points in IIIQ2012. US exports increased 3.1 percent in Sep 2012 and goods exports increased 5.1 percent in Jan-Sep relative to a year earlier but net trade deducted 0.18 percentage points from GDP growth in IIIQ2012. The Markit US Manufacturing Purchasing Managers’ Index™ (PMI™) declined to 51.0 in Oct from 51.1 in Sep, which is the weakest reading since Oct 2009 when recovery began (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10255). New export orders declined at the highest rate in 12 months with the index of new exports orders falling from 48.0 in Sep to 47.2 in Oct while total new orders decreased from 52.3 in Sep to 51.1 in Oct because of orders from the internal market. In the six months ending in Oct, United States national industrial production accumulated decrease of 0.6 percent at the annual equivalent rate of 1.2 percent, which is much lower than 1.7 percent growth in 12 months. Capacity utilization for total industry in the United States fell 0.4 percentage points in Oct to 77.8 percent from 78.2 percent in Sep, which is 2.5 percentage points lower than the long-run average from 1972 to 2011. Manufacturing decreased 0.9 percent in Oct seasonally adjusted, increasing 1.8 percent not seasonally adjusted in 12 months, and decreased 1.8 percent in the six months ending in Oct or at the annual equivalent stagnating rate of 3.6 percent (Section VA and earlier http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united_21.html). The report on industry by the Board of Governors of the Federal Reserve System states estimates that hurricane Sandy could have “reduced the rate of change in total output by nearly 1 percentage points” (http://www.federalreserve.gov/releases/g17/current/). Trade values incorporate both price and quantity effects that are difficult to separate. Data do suggest that world trade slowdown is accompanying world economic slowdown.
Table V-4, Growth of Trade and Contributions of Net Trade to GDP Growth, ∆% and % Points
| Exports | Exports 12 M ∆% | Imports | Imports 12 M ∆% | |
| USA | 3.1 Sep | 5.1 Jan-Sep | 1.5 Aug | 3.9 Jan-Sep |
| Japan Sep Aug Jul | -10.3 -5.8 -8.1 | 4.1 -5.4 2.1 | ||
| China | -1.8 Jul 0.6 Aug 4.7 Sep -5.7 Oct | 1.0 Jul 7.8 Jan-Jul 2.7 Aug 7.1 Jan-Aug 9.9 Sep Jan-Sep 7.4 11.6 Oct 7.8 Jan-Oct | 2.2 Jul -0.3 Aug 4.9 Sep -9.4 Oct | 4.7 Jul 6.5 Jan-Jul -2.6 Aug 5.2 Jan-Aug 2.4 Sep 4.8 Jan-Sep 2.4 Oct 4.6 Jan-Oct |
| Euro Area | 10.4 12-M Aug | 9.0 Jan-Aug | 1.3 12-M Aug | 2.5 Jan-Aug |
| Germany | -2.5 Sep CSA | -3.4 Sep | -1.6 Sep CSA | -3.6 Sep |
| France Sep | -1.5 | 5.2 | -1.9 | 0.0 |
| Italy Sep | -2.0 | -4.2 | -4.2 | -10.6 |
| UK | 0.6 Sep | -0.7 Jul-Sep 12/Jul-Sep 11 | -3.1 Sep | -0.3 Jul-Sep 12/Jul-Sep 11 |
| Net Trade % Points GDP Growth | % Points | |||
| USA IIIQ2012 | -0.18 | |||
| Japan | -0.3 IIQ2012 -2.9 IIIQ2012 | |||
| Germany IIQ2012 | 1.1 | |||
| France | -0.4 IIQ2012 0.3 IIIQ2012 | |||
| UK IIQ2012 | -1.0 |
Sources: http://www.census.gov/foreign-trade/ http://www.bea.gov/iTable/index_nipa.cfm
http://www.customs.go.jp/toukei/latest/index_e.htm http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html
http://english.customs.gov.cn/publish/portal191/ http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home
https://www.destatis.de/EN/PressServices/Press/pr/2012/08/PE12_287_811.html;jsessionid=A761BC574543A771416A9CF81034F7BA.cae1 http://lekiosque.finances.gouv.fr/AppChiffre/Portail_default.asp
http://www.statistics.gov.uk/hub/index.html
The geographical breakdown of exports by imports of Japan with selected regions and countries is provided in Table V-5 for Sep 2012. The share of Asia in Japan’s trade is more than one half, 54.9 percent of exports and 43.8 percent of imports. Within Asia, exports to China are 17.8 percent of total exports and imports from China 21.7 percent of total imports. The second largest export market for Japan in Aug 2012 is the US with share of 17.4 percent of total exports and share of imports from the US of 8.6 percent in total imports. Western Europe has share of 10.9 percent in Japan’s exports and of 9.7 percent in imports. Rates of growth of exports of Japan in Sep are sharply negative for all countries and regions with the exception of 0.9 percent for exports to the US. Comparisons relative to 2011 may have some bias because of the effects of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Deceleration of growth in China and the US and threat of recession in Europe can reduce world trade and economic activity, which could be part of the explanation for the decline of Japan’s exports by 10.3 percent in Sep 2012 while imports increased by 4.1 percent but higher levels after the earthquake and declining prices may be another factor. Growth rates of imports in the 12 months ending in Sep are negative for some trading partners: minus 32.7 percent for the UK, minus 9.7 percent for Brazil, minus 7.9 percent for Germany and minus 3.0 percent for Western Europe. Imports from Asia increased 0.7 percent in the 12 months ending in Sep while imports from China increased 3.8 percent.
Table V-5, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yens
| Sep 2012 | Exports | 12 months ∆% | Imports Millions Yens | 12 months ∆% |
| Total | 5,359,752 | -10.3 | 5,918,307 | 4.1 |
| Asia | 2,944,304 | -8.3 | 2,591,029 | 0.7 |
| China | 953,834 | -14.1 | 1,283,316 | 3.8 |
| USA | 933,372 | 0.9 | 506,328 | 3.8 |
| Canada | 65,567 | -5.6 | 76,417 | -5.5 |
| Brazil | 41,698 | -12.0 | 77,533 | -9.7 |
| Mexico | 72,939 | -11.0 | 28,427 | 9.4 |
| Western Europe | 585,936 | -26.0 | 573,723 | -3.0 |
| Germany | 144.224 | -12.9 | 154,489 | -7.9 |
| France | 43,882 | -24.4 | 79,496 | 7.7 |
| UK | 101,960 | -31.2 | 43,575 | -32.7 |
| Middle East | 181,035 | -0.3 | 1,242,800 | 20.8 |
| Australia | 121,160 | -21.0 | 385,551 | 2.0 |
Source: http://www.customs.go.jp/toukei/latest/index_e.htm
Table V-6 of the World Trade Organization provides actual volume of world trade from 2008 to 2011 and projections of the World Trade Organization Secretariat for 2012 and 2013. Trade was weak during the global recession, increasing 2.3 percent in 2008 and decreasing 12.5 percent in 2009. Trade growth was 13.8 percent in 2010 and 5.0 percent in 2011. The World Trade Organization has reduced its projection of growth of world trade in 2012 to 2.5 percent.
Table V-6, World Trade Organization Projections of Growth of Volume of World Merchandise Trade and GDP, ∆%, 2008-2013
| 2008 | 2009 | 2010 | 2011 | 2012* | 2013* | |
| World | 2.3 | -12.5 | 13.9 | 5.0 | 2.5 | 4.5 |
| Exports | ||||||
| DE | 0.9 | -15.2 | 13.0 | 4.6 | 1.5 | 3.3 |
| DINGE | 4.3 | -7.8 | 15.3 | 5.3 | 3.5 | 5.7 |
| Imports | ||||||
| DE | -1.1 | -14.4 | 11.0 | 2.9 | 0.4 | 3.4 |
| DINGE | 8.6 | -10.5 | 18.3 | 8.3 | 5.4 | 6.1 |
| Real GDP** | 1.3 | -2.4 | 3.8 | 2.4 | 2.1 | 2.4 |
| DE | 0.0 | -3.8 | 2.7 | 1.5 | 1.2 | 1.5 |
| DINGE | 5.6 | 2.2 | 7.3 | 5.3 | 4.9 | 5.2 |
Notes: World Trade Volume: average of exports and imports; *Projections; **At market exchange rates; DE: Developed economies; DINGE: developing economies
Source: World Trade Organization Secretariat for trade, Consensus estimates of GDP forecasts
http://www.wto.org/english/news_e/pres12_e/pr676_e.htm
The JP Morgan Global All-Industry Output Index of the JP Morgan Manufacturing and Services PMI™, produced by JP Morgan and Markit in association with ISM and IFPSM, with high association with world GDP, decreased to 51.3 in Oct from 52.4 in Sep, indicating expansion at a moderate rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10308). This index has remained above the contraction territory of 50.0 during 39 consecutive months. Both global manufacturing and services have slowed down considerably with services increasing marginally while manufacturing contracted for a fifth consecutive month. (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10177). Service activity continued in the US with increases also in the Brazil, China, India, Russia and Ireland. The employment index increased from 49.8 in Sep to 51.0 in Oct with continuing increases in input prices. David Hensley, Director of Global Economic Coordination at JP Morgan, finds growth below long-term trend with restrained growth in services and contraction in manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10308). The JP Morgan Global Manufacturing PMI™, produced by JP Morgan and Markit in association with ISM and IFPSM, increased to 49.2 in Oct from 48.8 in Sep, for five consecutive months of contraction but at a milder rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10286). New export orders declined for the sixth consecutive month in Oct at a firm rate. The HSBC Brazil Composite Output Index, compiled by Markit, decreased 52.2 in Sep to 50.7 in Oct with continuing expansion at a marginal pace (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10284). Andre Loes, Chief Economist, Brazil, at HSBC, finds slower growth of services activity in Oct (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10284). The HSBC Brazil Purchasing Managers’ IndexTM (PMI™) increased slightly to 50.2 in Oct from 49.8 in Sep, indicating marginal improvement of business conditions in Brazilian manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10252). Andre Loes, Chief Economist, Brazil at HSBC, finds recovery improving with gains in both output and new orders (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10252).
VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index™ (PMI™) seasonally adjusted increased marginally to 51.3 in Oct from 51.1 in Sep that was the third weakest reading since Oct 2009 in the beginning of the current recovery with the lowest in Dec 2010; the PMI average in the three months ending in Sep was 51.5, which is lower than 54.2 in the three months ending in Jun and the lowest quarterly reading since IIIQ2009 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10213).
New export orders registered 48.1 in Oct still in contraction territory with 48.1 in Sep, which wass the fastest decline in new export orders since Oct 2011. Chris Williams, Chief Economist at Markit, finds that the survey data are consistent with the official indicators showing mild contraction of manufacturing that is restraining overall economic growth and weakening labor markets (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10213). The Markit US Manufacturing Purchasing Managers’ Index™ (PMI™) declined to 51.0 in Oct from 51.1 in Sep, which is the weakest reading since Oct 2009 when recovery began (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10255). New export orders declined at the highest rate in 12 months with the index of new exports orders falling from 48.0 in Sep to 47.2 in Oct while total new orders decreased from 52.3 in Sep to 51.1 in Oct because of orders from the internal market. Trevor Balchin, Senior Economist at Markit, finds that the index began IVQ2012 at a weak pace that can restrain overall economic growth with export orders being an important source of weakness in the private goods-producing sector (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10255). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business® increased 0.2 percentage points from 51.5 in Sep to 51.7 in Oct, (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders increased 1.9 percentage points from 52.3 in Sep to 54.2 in Oct. The index of exports decreased 0.5 percentage points from 48.5 in Sep to 48.0 in Oct, remaining in mild contraction territory. The Non-Manufacturing ISM Report on Business® PMI decreased 0.9 percentage points from 55.1 in Sep to 54.2 in Oct, indicating growth during 39 consecutive months, while the index of new orders decreased 2.9 percentage points from 57.7 in Sep to 54.8 in Oct (http://www.ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=12943). Table USA provides the country economic indicators for the US.
Table USA, US Economic Indicators
| Consumer Price Index | Oct 12 months NSA ∆%: 2.2; ex food and energy ∆%: 2.0 Oct month ∆%: 0.1; ex food and energy ∆%: 0.2 |
| Producer Price Index | Oct 12-month NSA ∆%: 2.3; ex food and energy ∆% 2.1 |
| PCE Inflation | Sep 12-month NSA ∆%: headline 1.7; ex food and energy ∆% 1.7 |
| Employment Situation | Household Survey: Oct Unemployment Rate SA 7.9% |
| Nonfarm Hiring | Nonfarm Hiring fell from 63.8 million in 2006 to 50.1 million in 2011 or by 13.7 million |
| GDP Growth | BEA Revised National Income Accounts IIQ2012/IIQ2011 2.1 IIIQ2012/IIIQ2012 2.3 IQ2012 SAAR 2.0 IIQ2012 SAAR 1.3 IIIQ2012 SAAR 2.0 |
| Personal Income and Consumption | Sep month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.0 |
| Quarterly Services Report | IQ12/IQ11 SA ∆%: |
| Employment Cost Index | Compensation Private IIIQ2012 SA ∆%: 0.5 |
| Industrial Production | Oct month SA ∆%: minus 0.4 Manufacturing Oct SA ∆% minus 0.9 Oct 12 months SA ∆% 1.8, NSA 3.2 |
| Productivity and Costs | Nonfarm Business Productivity IIIQ2012∆% SAAE 1.9; IIIQ2012/IIIQ2011 ∆% 1.5; Unit Labor Costs SAAE IIQ2012 ∆% -0.1; IIIQ2012/IIIQ2011 ∆%: 1.1 Blog 11/4/2012 |
| New York Fed Manufacturing Index | General Business Conditions From Oct -6.16 to Nov -5.22 |
| Philadelphia Fed Business Outlook Index | General Index from Oct 5.7 to Nov minus Oct 10.7 |
| Manufacturing Shipments and Orders | New Orders SA Sep ∆% 4.8 Ex Transport 1.4 Jan-Sep NSA New Orders 3.3 Ex transport 2.5 |
| Durable Goods | Sep New Orders SA ∆%: 9.9; ex transport ∆%: 2.0 |
| Sales of New Motor Vehicles | Jan-Oct 2012 11,992,114; Jan-Oct 2011 10,539,485. Oct SAAR 14.29 million, Sep SAAR 14.94 million, Oct 2011 SAAR 13.34 million Blog 11/4/12 |
| Sales of Merchant Wholesalers | Jan-Sep 2012/Jan-Sep 2011 NSA ∆%: Total 5.2; Durable Goods: 6.2; Nondurable |
| Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers | Sep 12/Sep 11 NSA ∆%: Sales Total Business 0.9; Manufacturers 1.6 |
| Sales for Retail and Food Services | Jan-Oct 2012/Jan-Oct 2011 ∆%: Retail and Food Services 5.5; Retail ∆% 5.3 |
| Value of Construction Put in Place | Sep SAAR month SA ∆%: 0.6 Sep 12-month NSA: 6.1 Jan-Sep 2012 ∆% 8.9 |
| Case-Shiller Home Prices | Aug 2012/Aug 2011 ∆% NSA: 10 Cities 1.3; 20 Cities: 2.0 |
| FHFA House Price Index Purchases Only | Aug SA ∆% 0.7; |
| New House Sales | Sep 2012 month SAAR ∆%: |
| Housing Starts and Permits | Sep Starts month SA ∆%: 15.0 ; Permits ∆%: -11.6 |
| Trade Balance | Balance Sep SA -$44217 million versus Aug -$42790 million |
| Export and Import Prices | Oct 12-month NSA ∆%: Imports 0.4; Exports 1.4 |
| Consumer Credit | Sep ∆% annual rate: 5.0 |
| Net Foreign Purchases of Long-term Treasury Securities | Sep Net Foreign Purchases of Long-term Treasury Securities: $3.3 billion |
| Treasury Budget | Fiscal Year 2013/2012 ∆% Oct: Receipts 13.0; Outlays 16.4; Individual Income Taxes 17.6 Deficit Fiscal Year 2012 $1,089,353 million Blog 11/18/2012 |
| CBO Budget and Economic Outlook | 2012 Deficit $1128 B 7.3% GDP Debt 11,318 B 72.8% GDP 2013 Deficit $614 B, Debt 12,064 B 76.1% GDP Blog 8/26/12 11/18/12 |
| Commercial Banks Assets and Liabilities | Sep 2012 SAAR ∆%: Securities 6.7 Loans 2.2 Cash Assets -65.1 Deposits 7.7 Blog 10/28/12 |
| Flow of Funds | IIQ2012 ∆ since 2007 Assets -$4193B Real estate -$4451B Financial $-157 MM Net Worth -$3389B Blog 9/23/12 |
| Current Account Balance of Payments | IIQ2012 -$1285 B %GDP 3.0 Blog 9/23/12 |
Links to blog comments in Table USA:
11/11/12 http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html
11/4/12 http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html
10/28/12 http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states.html
10/21/12 http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html
9/23/12 http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-creation-of.html
8/26/12 http://cmpassocregulationblog.blogspot.com/2012/08/expanding-bank-cash-and-deposits-with_26.html
Industrial production decreased 1.1 percent in Aug 2012, increased 0.2 percent in Sep and fell 0.4 percent in Oct, as shown in Table VA-1, with all data seasonally adjusted. The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/current/):
“Hurricane Sandy, which held down production in the Northeast region at the end of October, is estimated to have reduced the rate of change in total output by nearly 1 percentage point. The largest estimated storm-related effects included reductions in the output of utilities, of chemicals, of food, of transportation equipment, and of computers and electronic products. In October, the index for manufacturing decreased 0.9 percent; excluding storm-related effects, factory output was roughly unchanged from September. The output of utilities edged down 0.1 percent in October, and production at mines advanced 1.5 percent. At 96.6 percent of its 2007 average, total industrial production in October was 1.7 percent above its year-earlier level. Capacity utilization for total industry decreased 0.4 percentage point to 77.8 percent, a rate 2.5 percentage points below its long-run (1972--2011) average.”
In the six months ending in Oct, industrial production accumulated decrease of 0.6 percent at the annual equivalent rate of 1.2 percent, which is substantially lower than 1.7 percent growth in 12 months. Business equipment fell 0.9 percent in Aug 2012, increased 0.4 percent in Sep and decreased 1.2 percent in Oct, growing 4.7 percent in the 12 months ending in Oct and at the annual equivalent rate of 9.4 percent in the six months ending in Oct, which is higher than 7.5 percent in 12 months. Capacity utilization of total industry is analyzed by the Fed in its report (http://www.federalreserve.gov/releases/g17/current/): “Capacity utilization for total industry decreased 0.4 percentage point to 77.8 percent, a rate 2.5 percentage points below its long-run (1972-2011) average.” United States industry is decelerating but the effects of hurricane Sandy prevent accurate evaluation.
Table VA-1, US, Industrial Production and Capacity Utilization, SA, ∆%, %
| 2012 | Oct | Sep | Aug | Jul | Jun | May | Sep 12/ Sep 11 |
| Total | -0.4 | 0.2 | -1.1 | 0.7 | 0.0 | 0.0 | 1.7 |
| Market | |||||||
| Final Products | -1.0 | 0.1 | -1.0 | 0.6 | 0.3 | 0.4 | 1.3 |
| Consumer Goods | -0.9 | -0.1 | -1.1 | 0.7 | -0.2 | 0.7 | -0.8 |
| Business Equipment | -1.2 | 0.4 | -0.9 | 0.0 | 1.9 | 0.3 | 7.5 |
| Non | -0.7 | 0.3 | -0.6 | -0.1 | -0.3 | -0.2 | 1.0 |
| Construction | -0.5 | 0.8 | -0.3 | -0.8 | -0.9 | -1.6 | 2.3 |
| Materials | 0.1 | 0.2 | -1.4 | 1.0 | -0.2 | -0.3 | 2.4 |
| Industry Groups | |||||||
| Manufacturing | -0.9 | 0.1 | -0.9 | 0.3 | 0.3 | -0.7 | 1.6 |
| Mining | 1.5 | 0.9 | -1.4 | 1.1 | 0.1 | -0.1 | 3.4 |
| Utilities | -0.1 | 0.0 | -2.2 | 3.0 | -2.7 | 5.3 | 0.5 |
| Capacity | 77.8 | 78.2 | 78.2 | 79.2 | 78.8 | 78.9 | 1.5 |
Sources: Board of Governors of the Federal Reserve System http://www.federalreserve.gov/releases/g17/current/
Manufacturing decreased 0.9 percent in Oct seasonally adjusted, increasing 1.8 percent not seasonally adjusted in 12 months, and decreased 1.8 percent in the six months ending in Sep or at the annual equivalent rate of minus 3.6 percent. More data are required to evaluate output-reducing effects of hurricane Sandy. A longer perspective of manufacturing in the US is provided by Table VA-2. There has been evident deceleration of manufacturing growth in the US from 2010 and the first three months of 2011 as shown by 12 months rates of growth. Growth rates appeared to be increasing again closer to 5 percent but deteriorated. The rates of decline of manufacturing in 2009 are quite high with a drop of 18.4 percent in the 12 months ending in Apr 2009. Manufacturing recovered from this decline and led the recovery from the recession. Rates of growth appeared to be returning to the levels at 3 percent or higher in the annual rates before the recession but the pace of manufacturing fell steady in the past six months.
Table VA-2, US, Monthly and 12-Month Rates of Growth of Manufacturing ∆%
| Month SA ∆% | 12-Month NSA ∆% | |
| Oct 2012 | -0.9 | 1.8 |
| Sep | 0.1 | 2.9 |
| Aug | -0.9 | 3.6 |
| Jul | 0.3 | 4.3 |
| Jun | 0.3 | 5.1 |
| May | -0.7 | 5.1 |
| Apr | 0.7 | 5.7 |
| Mar | -0.7 | 4.3 |
| Feb | 0.9 | 5.9 |
| Jan | 1.0 | 4.9 |
| Dec 2011 | 1.5 | 4.4 |
| Nov | 0.0 | 4.0 |
| Oct | 0.5 | 4.3 |
| Sep | 0.4 | 4.0 |
| Aug | 0.3 | 3.4 |
| Jul | 0.8 | 3.2 |
| Jun | 0.0 | 3.1 |
| May | 0.2 | 2.9 |
| Apr | -0.6 | 4.1 |
| Mar | 0.6 | 6.0 |
| Feb | 0.2 | 6.3 |
| Jan | 0.4 | 6.3 |
| Dec 2010 | 1.0 | 6.6 |
| Nov | 0.2 | 5.5 |
| Oct | 0.1 | 6.6 |
| Sep | 0.2 | 6.7 |
| Aug | 0.0 | 7.1 |
| Jul | 0.8 | 7.3 |
| Jun | 0.0 | 9.0 |
| May | 1.4 | 8.3 |
| Apr | 1.0 | 6.5 |
| Mar | 1.1 | 4.2 |
| Feb | 0.1 | 0.6 |
| Jan | 0.9 | 0.5 |
| Dec 2009 | 0.1 | -3.7 |
| Nov | 0.9 | -6.6 |
| Oct | -0.1 | -9.4 |
| Sep | 0.7 | -10.7 |
| Aug | 1.0 | -13.7 |
| Jul | 1.2 | -15.3 |
| Jun | -0.3 | -17.8 |
| May | -1.2 | -17.8 |
| Apr | -0.8 | -18.4 |
| Mar | -2.1 | -17.5 |
| Feb | 0.0 | -16.3 |
| Jan | -2.9 | -16.6 |
| Dec 2008 | -3.3 | -14.1 |
| Nov | -2.3 | -11.4 |
| Oct | -0.7 | -9.1 |
| Sep | -3.4 | -8.8 |
| Aug | -1.4 | -5.3 |
| Jul | -1.1 | -3.8 |
| Jun | -0.6 | -3.2 |
| May | -0.6 | -2.5 |
| Apr | -1.1 | -1.3 |
| Mar | -0.4 | -0.7 |
| Feb | -0.4 | 0.8 |
| Jan | -0.4 | 2.1 |
| Dec 2007 | 0.3 | 1.9 |
| Nov | 0.4 | 3.2 |
| Oct | -0.5 | 2.7 |
| Sep | 0.5 | 2.9 |
| Aug | -0.5 | 2.6 |
| Jul | 0.2 | 3.4 |
| Jun | 0.3 | 2.9 |
| May | -0.2 | 3.1 |
| Apr | 0.8 | 3.6 |
| Mar | 0.6 | 2.5 |
| Feb | 0.6 | 1.7 |
| Jan | -0.5 | 1.4 |
| Dec 2006 | 2.8 | |
| Dec 2005 | 3.4 | |
| Dec 2004 | 4.0 | |
| Dec 2003 | 1.8 | |
| Dec 2002 | 2.3 | |
| Dec 2001 | -5.5 | |
| Dec 2000 | 0.4 | |
| Dec 1999 | 5.4 | |
| Average ∆% Dec 1986-Dec 2011 | 2.3 | |
| Average ∆% Dec 1986-Dec 1999 | 4.3 | |
| Average ∆% Dec 1999-Dec 2006 | 1.3 | |
| Average ∆% Dec 1999-Dec 2011 | 0.2 |
Source: Board of Governors of the Federal Reserve System http://www.federalreserve.gov/releases/g17/current/
Chart VA-1 of the Board of Governors of the Federal Reserve System provides industrial production, manufacturing and capacity since the 1970s. There was acceleration of growth of industrial production, manufacturing and capacity in the 1990s because of rapid growth of productivity in the US (Cobet and Wilson (2002); see Pelaez and Pelaez, The Global Recession Risk (2007), 135-44). The slopes of the curves flatten in the 2000s. Production and capacity have not recovered to the levels before the global recession.
Chart VA-1, US, Industrial Production, Capacity and Utilization
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g17/current/ipg1.gif
The modern industrial revolution of Jensen (1993) is captured in Chart VA-2 of the Board of Governors of the Federal Reserve System (for the literature on M&A and corporate control see Pelaez and Pelaez, Regulation of Banks and Finance (2009a), 143-56, Globalization and the State, Vol. I (2008a), 49-59, Government Intervention in Globalization (2008c), 46-49). The slope of the curve of total industrial production accelerates in the 1990s to a much higher rate of growth than the curve excluding high-technology industries. Growth rates decelerate into the 2000s and output and capacity utilization have not recovered fully from the strong impact of the global recession. Growth in the current cyclical expansion has been more subdued than in the prior comparably deep contractions in the 1970s and 1980s. Chart VA-2 shows that the past recessions after World War II are the relevant ones for comparison with the recession after 2007 instead of common comparisons with the Great Depression (http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states.html). The bottom left-hand part of Chart VA-2 shows the strong growth of output of communication equipment, computers and semiconductor that continued from the 1990s into the 2000s. Output of semiconductors has already surpassed the level before the global recession.
Chart VA-2, US, Industrial Production, Capacity and Utilization of High Technology Industries
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g17/current/ipg3.gif
Additional detail on industrial production and capacity utilization is provided in Chart VA-3 of the Board of Governors of the Federal Reserve System. Production of consumer durable goods fell sharply during the global recession by more than 30 percent and is still around 5 percent below the level before the contraction. Output of nondurable consumer goods fell around 10 percent and is some 5 percent below the level before the contraction. Output of business equipment fell sharply during the contraction of 2001 but began rapid growth again after 2004. An important characteristic is rapid growth of output of business equipment in the cyclical expansion after sharp contraction in the global recession. Output of defense and space only suffered reduction in the rate of growth during the global recession and surged ahead of the level before the contraction. Output of construction supplies collapsed during the global recession and is well below the level before the contraction. Output of energy materials was stagnant before the contraction but has recovered sharply above the level before the contraction.
Chart VA-3, US, Industrial Production and Capacity Utilization
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g17/current/ipg2.gif
United States manufacturing output from 1919 to 2012 on a monthly basis is provided by Chart VA-4 of the Board of Governors of the Federal Reserve System. The second industrial revolution of Jensen (1993) is quite evident in the acceleration of the rate of growth of output given by the sharper slope in the 1980s and 1990s. Growth was robust after the shallow recession of 2001 but dropped sharply during the global recession after IVQ2007. Manufacturing output recovered sharply but has not reached earlier levels and is stagnating at the margin.
Chart VA-4, US, Manufacturing Output, 1919-2012
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g17/current/
Manufacturing jobs increased 13,000 in Oct 2012 relative to Sep 2012, seasonally adjusted but fell 16,000 in Oct 2012 relative to Sep 2012, not seasonally adjusted, as shown in Table I-10 at http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html, because of the weaker economy and international trade. In the six months ending in Oct, United States national industrial production accumulated decline of 0.6 percent at the annual equivalent rate of decline of 1.2 percent, which is substantially lower than 1.7 percent growth in 12 months. Capacity utilization for total industry in the United States fell 0.4 percentage point in Oct to 77.8 percent, which is 2.5 percentage points lower than the long-run average from 1972 to 2011. Manufacturing decreased 0.9 percent in Oct seasonally adjusted, increasing 1.8 percent not seasonally adjusted in 12 months, and decreased 1.8 percent in the six months ending in Oct or at the annual equivalent rate of 3.6 percent Table VA-3 provides national income by industry without capital consumption adjustment (WCCA). “Private industries” or economic activities have share of 86.5 percent in US national income in IQ2012 and 86.3 percent in IIQ2012. Most of US national income is in the form of services. In Oct 2012, there were 134.792 million nonfarm jobs NSA in the US, according to estimates of the establishment survey of the Bureau of Labor Statistics (BLS) (http://www.bls.gov/news.release/empsit.nr0.htm Table B-1). Total private jobs of 112.399 million NSA in Oct 2012 accounted for 83.4 percent of total nonfarm jobs of 134.792 million, of which 11.777 million, or 10.5 percent of total private jobs and 8.7 percent of total nonfarm jobs, were in manufacturing. Private service-producing jobs were 93.774 million NSA in Oct 2012, or 69.6 percent of total nonfarm jobs and 83.4 percent of total private-sector jobs. Manufacturing has share of 11.0 percent in US national income in IIQ2011, as shown in Table VA-3. Most income in the US originates in services. Subsidies and similar measures designed to increase manufacturing jobs will not increase economic growth and employment and may actually reduce growth by diverting resources away from currently employment-creating activities because of the drain of taxation.
Table VA-3, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total
| SAAR IQ2012 | % Total | SAAR | % Total | |
| National Income WCCA | 13,788.3 | 100.0 | 13,867.8 | 100.0 |
| Domestic Industries | 13,573.4 | 98.4 | 13,620.5 | 98.2 |
| Private Industries | 11,922.7 | 86.5 | 11,967.5 | 86.3 |
| Agriculture | 134.0 | 1.0 | 132.8 | 0.9 |
| Mining | 211.0 | 1.5 | 208.7 | 1.5 |
| Utilities | 211.9 | 1.5 | 214.7 | 1.6 |
| Construction | 585.6 | 4.3 | 585.8 | 4.2 |
| Manufacturing | 1521.9 | 11.0 | 1530.4 | 11.0 |
| Durable Goods | 865.2 | 6.3 | 877.3 | 6.3 |
| Nondurable Goods | 656.6 | 4.8 | 653.1 | 4.7 |
| Wholesale Trade | 831.6 | 6.0 | 852.8 | 6.2 |
| Retail Trade | 947.5 | 6.9 | 947.2 | 6.8 |
| Transportation & WH | 416.5 | 3.0 | 417.7 | 3.0 |
| Information | 486.7 | 3.5 | 497.0 | 3.6 |
| Finance, insurance, RE | 2301.3 | 16.7 | 2271.1 | 16.4 |
| Professional, BS | 1955.0 | 14.2 | 1983.5 | 14.3 |
| Education, Health Care | 1380.8 | 10.0 | 1382.7 | 10.0 |
| Arts, Entertainment | 541.1 | 3.9 | 542.7 | 3.9 |
| Other Services | 397.9 | 2.9 | 400.3 | 2.9 |
| Government | 1650.7 | 12.0 | 1653.0 | 11.9 |
| Rest of the World | 214.9 | 1.6 | 247.3 | 1.8 |
Notes: SSAR: Seasonally-Adjusted Annual Rate; WCCA: Without Capital Consumption Adjustment by Industry; WH: Warehousing; RE, includes rental and leasing: Real Estate; Art, Entertainment includes recreation, accommodation and food services; BS: business services
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Adjustment by Industry; WH: Warehousing; RE, includes rental and leasing: Real Estate; Art, Entertainment includes recreation, accommodation and food services; BS: business services
Source: US Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm
Chart VA-5 of the Board of Governors of the Federal Reserve provides output of motor vehicles and parts in the United States from 1972 to 2012. Output has stagnated since the late 1990s.
Chart VA-5, US, Motor Vehicles and Parts Output, 1972-2012
http://www.federalreserve.gov/releases/g17/current/
Motor vehicle sales and production in the US have been in long-term structural change. Table VA-4 provides the data on new motor vehicle sales and domestic car production in the US from 1990 to 2010. New motor vehicle sales grew from 14,137 thousand in 1990 to the peak of 17,806 thousand in 2000 or 29.5 percent. In that same period, domestic car production fell from 6,231 thousand in 1990 to 5,542 thousand in 2000 or -11.1 percent. New motor vehicle sales fell from 17,445 thousand in 2005 to 11,772 in 2010 or 32.5 percent while domestic car production fell from 4,321 thousand in 2005 to 2,840 thousand in 2010 or 34.3 percent. In Jan-Sep 2012, light vehicle sales accumulated to 10,899,949, which is higher by 14.5 percent relative to 9,518,172 a year earlier (http://motorintelligence.com/m_frameset.html). The seasonally-adjusted annual rate of light vehicle sales in the US reached 14.94 million in Sep 2012, higher than 14.52 million in Aug 2012 and higher than 13.14 million in Sep 2011 (http://motorintelligence.com/m_frameset.html).
Table VA-4, US, New Motor Vehicle Sales and Car Production, Thousand Units
| New Motor Vehicle Sales | New Car Sales and Leases | New Truck Sales and Leases | Domestic Car Production | |
| 1990 | 14,137 | 9,300 | 4,837 | 6,231 |
| 1991 | 12,725 | 8,589 | 4,136 | 5,454 |
| 1992 | 13,093 | 8,215 | 4,878 | 5,979 |
| 1993 | 14,172 | 8,518 | 5,654 | 5,979 |
| 1994 | 15,397 | 8,990 | 6,407 | 6,614 |
| 1995 | 15,106 | 8,536 | 6,470 | 6,340 |
| 1996 | 15,449 | 8,527 | 6,922 | 6,081 |
| 1997 | 15,490 | 8,273 | 7,218 | 5,934 |
| 1998 | 15,958 | 8,142 | 7,816 | 5,554 |
| 1999 | 17,401 | 8,697 | 8,704 | 5,638 |
| 2000 | 17,806 | 8,852 | 8,954 | 5,542 |
| 2001 | 17,468 | 8,422 | 9,046 | 4,878 |
| 2002 | 17,144 | 8,109 | 9,036 | 5,019 |
| 2003 | 16,968 | 7,611 | 9,357 | 4,510 |
| 2004 | 17,298 | 7,545 | 9,753 | 4,230 |
| 2005 | 17,445 | 7,720 | 9,725 | 4,321 |
| 2006 | 17,049 | 7,821 | 9,228 | 4,367 |
| 2007 | 16,460 | 7,618 | 8,683 | 3,924 |
| 2008 | 13,494 | 6,814 | 6.680 | 3,777 |
| 2009 | 10,601 | 5,456 | 5,154 | 2,247 |
| 2010 | 11,772 | 5,729 | 6,044 | 2,840 |
Source: US Census Bureau http://www.census.gov/compendia/statab/cats/wholesale_retail_trade/motor_vehicle_sales.html
Chart VA-6 of the Board of Governors of the Federal Reserve System provides output of computers and electronic products in the United States from 1972 to 2012. Output accelerated sharply in the 1990s and 2000s and has surpassed the level before the global recession beginning in IVQ2007.
Chart VA-6, US, Output of Computers and Electronic Products, 1972-2012
http://www.federalreserve.gov/releases/g17/current/
Chart VA-7 of the Board of Governors of the Federal Reserve System shows that output accelerated in the 1980s and 1990s with slower growth in the 2000s perhaps because processes matured. Growth was robust after the major drop during the global recession but appears to vacillate in the final segment.
Chart VA-7, US, Output of Durable Manufacturing, 1972-2012
http://www.federalreserve.gov/releases/g17/current/
Chart VA-8 of the Board of Governors of the Federal Reserve System provides output of aerospace and miscellaneous transportation equipment from 1972 to 2012. There is long-term upward trend with oscillations around the trend and cycles of large amplitude.
Chart VA-8, US, Output of Aerospace and Miscellaneous Transportation Equipment, 1972-2012
http://www.federalreserve.gov/releases/g17/current/
In the six months ending in Oct, United States national industrial production accumulated decline of 0.6 percent at the annual equivalent rate of decline of 1.2 percent, which is substantially lower than 1.7 percent growth in 12 months. Capacity utilization for total industry in the United States fell 0.4 percentage point in Oct to 77.8 percent, which is 2.5 percentage points lower than the long-run average from 1972 to 2011. Manufacturing decreased 0.9 percent in Oct seasonally adjusted, increasing 1.8 percent not seasonally adjusted in 12 months, and decreased 1.8 percent in the six months ending in Oct or at the annual equivalent rate of 3.6 percent. The index of general business conditions of the Federal Reserve Bank of New York Empire State Manufacturing Survey has fluctuated with further decline to contraction territory at minus 10.41 in Sep 2012 but improvement to minus 6.16 in Oct 2012 and 5.22 in Nov, which is still in contraction territory, as shown in Table VA-5. The index had been registering negative changes in the five months from Jun to Oct 2011. The new orders segment fell to minus 5.50 in Aug 2012, indicating mild contraction, and to minus 14.03 in Sep 2012, indicating faster contraction, improving to minus 8.97 in Oct 2012, which is still in contraction territory, and 3.08 in Nov that is above contraction. There is declining reading in shipments decreasing to 4.09 in Aug 2012 with decline at minus 6.4 in Oct 2012 but moving into 14.59 in Nov 2012. The segment of number of employees eased to 16.47 in Aug 2012 and dropped to 4.26 in Sep 2012, falling in contraction territory at minus 1.08 in Oct 2012 and deeper to minus 14.61 in Nov 2012. Number of weekly hours worked fell to neutral at zero in Jul 2012 and increased marginally to 3.53 in Aug but fell to minus 1.06 in Sep, minus 4.30 in Oct 2012 and minus 7.87 in Nov 2012, indicating contraction. Expectations for the next six months of the general business conditions index peaked at 54.87 in Jan 2012, declining to 19.42 in Oct 2012. Expectations of new orders also peaked at 53.85 in Jan 2012, declining to 2.35 in Aug 2012 but rebounding to 21.35 in Oct 2012. There is a similar pattern of strong recovery in shipments with decline to 8.24 in Aug 2012 and rebound to 30.34 in Oct 2012. Number of employees fell sharply to 3.53 in Aug 2012 and rebounded to 8.51 in Sep 2012 but was neutral at 0.00 in Oct 2012 and fell to contraction at 1.12 in Nov 2012. Hours worked collapsed to minus 8.24 in Aug, indicating expected contraction, rebounded to 2.13 in Sep 2012, indicating moderate expansion, and fell to minus 11.83 in Oct 2012, indicating sharper contraction, and the neutral at 0.00 in Nov 2012.
Table VA-5, US, New York Federal Reserve Bank Empire State Manufacturing Survey Index SA
| General | New Orders | Shipments | # Workers | Average Work-week | |
| Current | |||||
| Nov 2012 | -5.22 | 3.08 | 14.59 | -14.61 | -7.87 |
| Oct | -6.16 | -8.97 | -6.4 | -1.08 | -4.30 |
| Sep | -10.41 | -14.03 | 2.75 | 4.26 | -1.06 |
| Aug | -5.85 | -5.50 | 4.09 | 16.47 | 3.53 |
| Jul | 7.39 | -2.69 | 10.28 | 18.52 | 0.00 |
| Jun | 2.29 | 2.18 | 4.81 | 12.37 | 3.09 |
| May | 17.09 | 8.32 | 24.14 | 20.48 | 12.05 |
| Apr | 6.56 | 6.48 | 6.41 | 19.28 | 6.02 |
| Mar | 20.21 | 6.84 | 18.21 | 13.58 | 18.52 |
| Feb | 19.53 | 9.73 | 22.79 | 11.76 | 7.06 |
| Jan | 13.48 | 13.70 | 21.69 | 12.09 | 6.59 |
| Dec 2011 | 8.19 | 5.99 | 20.06 | 2.33 | -2.33 |
| Nov | 0.80 | -0.82 | 11.70 | -3.66 | 2.44 |
| Oct | -7.22 | -0.26 | 2.89 | 3.37 | -4.49 |
| Sep | -7.43 | -7.52 | -8.28 | -5.43 | -2.17 |
| Six Months | |||||
| Nov 2012 | 12.88 | 21.35 | 30.34 | -1.12 | 0.0 |
| Oct | 19.42 | 15.05 | 11.83 | 0.00 | -11.83 |
| Sep | 27.22 | 17.02 | 12.77 | 8.51 | 2.13 |
| Aug | 15.20 | 2.35 | 8.24 | 3.53 | -8.24 |
| Jul | 20.20 | 13.58 | 14.81 | 6.17 | -4.94 |
| Jun | 23.13 | 15.46 | 12.37 | 16.49 | 2.06 |
| May | 29.26 | 30.12 | 25.30 | 12.05 | 8.43 |
| Apr | 43.12 | 45.78 | 44.58 | 27.71 | 10.84 |
| Mar | 47.50 | 41.98 | 43.21 | 32.10 | 20.99 |
| Feb | 50.38 | 44.71 | 49.41 | 29.41 | 18.82 |
| Jan | 54.87 | 53.85 | 52.75 | 28.57 | 17.58 |
| Dec 2011 | 45.61 | 54.65 | 51.16 | 24.42 | 22.09 |
| Nov | 32.06 | 35.37 | 36.59 | 14.63 | 8.54 |
| Oct | 13.99 | 12.36 | 17.98 | 6.74 | -2.25 |
| Sep | 22.93 | 13.04 | 13.04 | 0.00 | -6.52 |
Source: http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html
The Philadelphia Business Outlook Survey in Table VA-6 provides an optimistic reading in Oct 2011 with the movement to 10.8 away from the contraction zone of minus 12.7 in Sep and recovered to 12.5 in Mar 2012 from the decline to 3.1 in Nov but then fell to 8.5 in Apr 2012 and back to contraction territory at minus 5.8 in May and even sharper contraction at minus 16.6 in Jun, easing to minus 12.9 in Jul 2012 with contraction at minus 7.1 in Aug and milder contraction of 1.9 in Sep 2012. The index returned to growth territory at 5.7 in Oct 2012 but fell to contraction at 10.7 in Nov 2012. New orders were signaling increasing future activity, rising from contraction at minus 5.5 in Sep 2011 to positive reading but registered only 3.3 in Mar 2012 and fell further to 2.7 in Apr and into contraction reading at minus 1.2 in May and sharp contraction at 18.8 in Jun, with milder contraction at minus 5.5 in Aug 2012 and moderate expansion at 1.0 in Sep 2012 but then fell to minus 0.6 in Oct 2012 and minus 4.6 in Nov 2012. There is similar behavior in shipments as in new orders but with sharp contraction in Sep 2012 and mild contraction of minus 0.2 in Oct 2012 and minus 6.7 in Nov 2012. Employment or number of employees fell to contraction at minus 8.6 in Aug 2012, minus 7.3 in Sep 2012, minus 10.7 in Oct 2012 and minus 6.8 in Nov 2012. The average work week also fell to sharp contraction at minus 19.1 in Jun 2012 and minus 14.6 in Aug 2012, remaining in contraction territory at minus 7.3 in Sep 2012, minus 7.6 in Oct 2012 and minus 6.2 in Nov 2012. Most indexes of expectations for the next six months are showing sharp increases but interruptions from May to Aug 2012 for the general index that rebounded to 41.2 in Sep 2012 but fell to 21.6 in Oct 2012 and 20.0 in Nov 2012. Employment increased from Jan to Apr 2012, deteriorating in May and further deterioration in Aug but improvement in Sep with decline in Oct and Nov while the average work week weakened in Apr 2012 and contracted at minus 1.1 in May and minus 0.8 in Jun but recovery at 14.5 in Jul, declining to 4.8 in Aug and improving to 14.6 in Sep and 11.1 in Oct with decline to 7.9 in Nov 2012. With most US workers on hourly remuneration, contraction of the workweek means reduction of labor income, which can affect consumption. Personal consumption expenditures have share of 70.8 percent of GDP in IIIQ2012 (see Table I-10 at http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states.html).
Table VA-6, FRB of Philadelphia Business Outlook Survey Diffusion Index SA
| General | New Orders | Ship-ments | # Workers | Average Work-week | |
| Current | |||||
| Nov 12 | -10.7 | -4.6 | -6.7 | -6.8 | -6.2 |
| Oct | 5.7 | -0.6 | -0.2 | -10.7 | -7.6 |
| Sep | -1.9 | 1.0 | -21.2 | -7.3 | -7.3 |
| Aug | -7.1 | -5.5 | -11.3 | -8.6 | -14.6 |
| Jul | -12.9 | -6.9 | -8.6 | -8.4 | -17.3 |
| Jun | -16.6 | -18.8 | -16.6 | 1.8 | -19.1 |
| May | -5.8 | -1.2 | 3.5 | -1.3 | -5.4 |
| Apr | 8.5 | 2.7 | 2.8 | 17.9 | -2.3 |
| Mar | 12.5 | 3.3 | 3.5 | 6.8 | 2.7 |
| Feb | 10.2 | 11.7 | 15.0 | 1.1 | 10.1 |
| Jan | 7.3 | 6.9 | 5.7 | 11.6 | 5.0 |
| Dec 11 | 6.8 | 10.7 | 9.1 | 11.5 | 2.8 |
| Nov | 3.1 | 3.5 | 6.0 | 10.6 | 7.1 |
| Oct | 10.8 | 8.5 | 13.6 | 5.0 | 4.2 |
| Sep | -12.7 | -5.5 | -16.6 | 7.3 | -6.2 |
| Aug | -22.7 | -22.2 | -8.9 | -0.9 | -11.2 |
| Jul | 6.2 | 0.5 | 8.2 | 9.5 | -3.9 |
| Future | |||||
| Nov 12 | 20.0 | 24.5 | 27.2 | 4.2 | 7.9 |
| Oct | 21.6 | 21.2 | 20.6 | 8.0 | 11.1 |
| Sep | 41.2 | 49.4 | 42.9 | 21.4 | 14.6 |
| Aug | 12.5 | 18.5 | 11.7 | 10.8 | 4.8 |
| Jul | 19.3 | 26.1 | 19.0 | 11.3 | 14.5 |
| Jun | 19.5 | 38.2 | 38.0 | 18.7 | -0.8 |
| May | 15.0 | 26.3 | 20.8 | 10.6 | -1.1 |
| Apr | 33.8 | 35.4 | 31.0 | 27.8 | 7.5 |
| Mar | 32.9 | 36.4 | 31.3 | 21.8 | 11.2 |
| Feb | 33.3 | 32.5 | 29.0 | 22.5 | 10.8 |
| Jan | 49.0 | 49.7 | 48.2 | 19.1 | 9.2 |
| Dec 11 | 40.0 | 44.1 | 36.4 | 10.8 | 4.5 |
| Nov | 37.7 | 36.9 | 35.5 | 25.2 | 4.0 |
| Oct | 28.8 | 28.1 | 29.0 | 15.5 | 8.4 |
| Sep | 25.2 | 24.6 | 27.1 | 14.0 | 6.8 |
| Aug | 6.3 | 20.6 | 18.4 | 11.2 | -0.7 |
| Jul | 25.8 | 31.2 | 26.1 | 12.9 | 6.6 |
Source: Federal Reserve Bank of Philadelphia
http://www.philadelphiafed.org/index.cfm
Chart VA-1 of the Federal Reserve Bank of Philadelphia is very useful, providing current and future general activity indexes from Jan 1995 to Jun 2012. The shaded areas are the recession cycle dates of the National Bureau of Economic Research (NBER) (http://www.nber.org/cycles.html). The Philadelphia Fed index dropped during the initial period of recession and then led the recovery, as industry overall. There was a second decline of the index into 2011 followed now by what hopefully appeared as renewed strength from late 2011 into Jan 2012 with decline to negative territory the current activity index in Nov 2012.
Chart VA-9, Federal Reserve Bank of Philadelphia Business Outlook Survey, Current and Future Activity Indexes
Source: Federal Reserve Bank of Philadelphia
http://www.philadelphiafed.org/index.cfm
Chart VA-2 of the Federal Reserve Bank of Philadelphia provides the index of new orders of the Business Outlook Survey. Strong growth in the beginning of 2011 was followed by a bump after Mar that lasted until Oct 2011. The strength of the first quarter of 2011 has not been recovered with weakness in Apr-Aug 2012 moving into contraction territory with new crop to contraction territory in Nov 2012.
Chart VA-10, Federal Reserve Bank of Philadelphia Current New Orders Diffusion Index
Source: Federal Reserve Bank of Philadelphia
http://www.philadelphiafed.org/index.cfm
Growth rates and levels of sales in millions of dollars of manufacturers, retailers and merchant wholesalers are provided in Table VA-7. Total business sales increased 1.4 percent in Sep after increasing 0.6 percent in Aug and increased 0.9 percent in the 12 months ending in Sep. Sales of manufacturers increased 0.9 percent in Sep after decreasing 0.2 percent in Aug and increased 1.6 percent in the 12 months ending in Sep. Retailers’ sales increased 1.3 percent in Sep and 1.1 percent in Aug and increased 2.9 percent in 12 months ending in Sep. Sales of merchant wholesalers increased 2.0 percent in Sep, falling 1.0 percent in Aug and decreased 1.6 percent in 12 months ending in Sep. These data are not adjusted for price changes such that they reflect increases in both quantities and prices.
Table VA-7, US, Percentage Changes for Sales of Manufacturers, Retailers and Merchant Wholesalers
| Sep 12/ Aug 12 | Sep 2012 | Aug 12/ Jul 12 ∆% SA | Sep 12/ Sep 11 | |
| Total Business | 1.4 | 1,230,012 | 0.6 | 0.9 |
| Manufacturers | 0.9 | 485,699 | -0.2 | 1.6 |
| Retailers | 1.3 | 347,790 | 1.1 | 2.9 |
| Merchant Wholesalers | 2.0 | 396,523 | 1.0 | -1.6 |
Source: US Census Bureau http://www.census.gov/mtis/
Chart VA-11 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers seasonally adjusted (SA) in millions of dollars. Seasonal adjustment softens adjacent changes for purposes of comparing short-term variations free of seasonal factors. There was sharp drop in the global recession followed by sharp recovery with decline and partial recovery in the final segment. Data are not adjusted for price changes.
Chart VA-11, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Sep 2012
US Census Bureau http://www.census.gov/mtis/
Chart VA-12 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers not seasonally adjusted (NSA) in millions of dollars. The series without adjustment shows sharp jagged behavior because of monthly fluctuations following seasonal patterns. There is sharp recovery from the global recession in a robust trend, which is mixture of price and quantity effects because data are not adjusted for price changes. There is decline in the final segment.
Chart VA-12, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Sep 2012
US Census Bureau http://www.census.gov/mtis/
Businesses added cautiously to inventories to replenish stocks. Retailers added 0.3 percent to inventories in Sep 2012 and 0.4 percent in Aug with growth of 7.4 percent in 12 months, as shown in Table VA-8. Total business increased inventories by 0.7 percent in Sep, 0.6 percent in Aug and 6.0 percent in 12 months. Inventories sales/ratios of total business continued at a level close to 1.28 under judicious management to avoid costs and risks. Inventory/sales ratios of manufacturers and retailers are higher than for merchant wholesalers. There is stability in inventory/sales ratios in individual months and relative to a year earlier.
Table VA-8, US, Percentage Changes for Inventories of Manufacturers, Retailers and Merchant Wholesalers and Inventory/Sales Ratios
| Inventory Change | Sep 12 | Sep12/ Aug 12 ∆% SA | Aug 12/ Jul 12 ∆% SA | Sep 12/ Sep 11 ∆% NSA |
| Total Business | 1,609,799 | 0.7 | 0.6 | 6.0 |
| Manufacturers | 614,621 | 0.6 | 0.6 | 4.1 |
| Retailers | 505,176 | 0.3 | 0.4 | 7.4 |
| Merchant | 490,002 | 1.1 | 0.8 | 7.1 |
| Inventory/ | Sep 12 | Sep 2012 SA | Aug 2012 SA | Sep 2011 SA |
| Total Business | 1,609,799 | 1.28 | 1.29 | 1.25 |
| Manufacturers | 614,621 | 1.28 | 1.28 | 1.27 |
| Retailers | 505,176 | 1.36 | 1.38 | 1.34 |
| Merchant Wholesalers | 490,002 | 1.19 | 1.20 | 1.16 |
Source: US Census Bureau http://www.census.gov/mtis/
Chart VA-13 of the US Census Bureau provides total business inventories of manufacturers, retailers and merchant wholesalers seasonally adjusted (SA) in millions of dollars from Jan 1992 to Sep 2012. The impact of the two recessions of 2001 and IVQ2007 to IIQ2009 is evident in the form of sharp reductions in inventories. Data are not adjusted for price changes.
Chart VA-13, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Sep 2012
US Census Bureau http://www.census.gov/mtis/
Chart VA-14 provides total business inventories of manufacturers, retailers and merchant wholesalers not seasonally adjusted (NSA) from Jan 1992 to Sep 2012 in millions of dollars. The recessions of 2001 and IVQ2007 to IIQ2009 are evident in the form of sharp reductions of inventories. There is sharp upward trend of inventory accumulation after both recessions.
Chart VA-14, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Sep 2012
US Census Bureau http://www.census.gov/mtis/
Inventories follow business cycles. When recession hits sales inventories pile up, declining with expansion of the economy. In a fascinating classic opus, Lloyd Meltzer (1941, 129) concludes:
“The dynamic sequences (I) through (6) were intended to show what types of behavior are possible for a system containing a sales output lag. The following conclusions seem to be the most important:
(i) An economy in which business men attempt to recoup inventory losses will always undergo cyclical fluctuations when equilibrium is disturbed, provided the economy is stable.
This is the pure inventory cycle.
(2) The assumption of stability imposes severe limitations upon the possible size of the marginal propensity to consume, particularly if the coefficient of expectation is positive.
(3) The inventory accelerator is a more powerful de-stabilizer than the ordinary acceleration principle. The difference in stability conditions is due to the fact that the former allows for replacement demand whereas the usual analytical formulation of the latter does not. Thus, for inventories, replacement demand acts as a de-stabilizer. Whether it does so for all types of capital goods is a moot question, but I believe cases may occur in which it does not.
(4) Investment for inventory purposes cannot alter the equilibrium of income, which depends only upon the propensity to consume and the amount of non-induced investment.
(5) The apparent instability of a system containing both an accelerator and a coefficient of expectation makes further investigation of possible stabilizers highly desirable.”
Chart VA-15 shows the increase in the inventory/sales ratios during the recession of 2007-2009. The inventory/sales ratio fell during the expansions. The inventory/sales ratio declined to a trough in 2011, climbed and then stabilized at current levels in 2012.
Chart VA-15, Total Business Inventories/Sales Ratios 2002 to 2011
Source: US Census Bureau
http://www2.census.gov/retail/releases/historical/mtis/img/mtisbrf.gif
Sales of retail and food services decreased 0.3 percent in Oct after increasing 1.3 percent in Sep seasonally adjusted (SA), growing 5.5 percent in Jan-Oct 2012 relative to Jan-Oct 2011 not seasonally adjusted (NSA), as shown in Table VA-9. Excluding motor vehicles and parts, retail sales increased 0.0 percent in Oct 2012, increasing 1.2 percent in Sep 2012 SA and increasing 4.9 percent NSA in Jan-Oct 2012 relative to a year earlier. Sales of motor vehicles and parts decreased 1.5 percent in Oct 2012 after increasing 1.7 percent in Sep SA and increasing 8.3 percent NSA in Jan-Oct 2012 relative to a year earlier. Gasoline station sales increased 1.4 percent SA in Oct 2012 after increasing 2.5 percent in Sep 2012 in increasing prices of gasoline that are moderating, increasing 4.3 percent in Jan-Oct 2012 relative to a year earlier.
Table VA-9, US, Percentage Change in Monthly Sales for Retail and Food Services, ∆%
| Oct/ Sep ∆% SA | Sep/Aug ∆% SA | Jan-Oct 2012 Million Dollars NSA | Jan-Oct 2012 from Jan-Oct 2011 ∆% NSA | |
| Retail and Food Services | -0.3 | 1.3 | 4,004,836 | 5.5 |
| Excluding Motor Vehicles and Parts | 0.0 | 1.2 | 3,257,821 | 4.9 |
| Motor Vehicles & Parts | -1.5 | 1.7 | 747,015 | 8.3 |
| Retail | -0.3 | 1.3 | 3,564,460 | 5.3 |
| Building Materials | -1.9 | 2.1 | 247,347 | 5.9 |
| Food and Beverage | 0.8 | 1.2 | 523,445 | 3.5 |
| Grocery | 0.8 | 1.2 | 470,858 | 3.3 |
| Health & Personal Care Stores | 0.3 | -0.4 | 227,494 | 1.4 |
| Clothing & Clothing Accessories Stores | -0.1 | 0.4 | 185,462 | 5.9 |
| Gasoline Stations | 1.4 | 2.5 | 460,908 | 4.3 |
| General Merchandise Stores | 0.2 | 0.4 | 503,639 | 1.4 |
| Food Services & Drinking Places | -0.4 | 0.8 | 440,376 | 7.2 |
Source: US Census Bureau http://www.census.gov/retail/
Chart VA-37 of the US Bureau of the Census shows percentage change of retail and food services sales. Auto sales have been increasing strongly monthly, and particularly relative to a year earlier, but with weakness in the total excluding auto sales and declines or mild growth in general merchandise with decline of 1.5 percent in autos in Oct 2012.
Chart VA-16, US, Percentage Change of Retail and Food Services Sales
Source: US Census Bureau
http://www2.census.gov/retail/releases/historical/marts/img/martsbrf.gif
Chart VA-17 of the US Census Bureau provides total sales of retail trade and food services seasonally adjusted (SA) from Jan 1992 to Oct 2012 in millions of dollars. The impact on sales of the shallow recession of 2001 was much milder than the sharp contraction in the global recession from IVQ2007 to IIQ2009. There is flattening in the final segment of the series. Data are not adjusted for price changes.
Chart VA-17, US, Total Sales of Retail Trade and Food Services, SA, Jan 1992-Oct 2012, Millions of Dollars
Source: US Census Bureau
Chart VA-18 of the US Census Bureau provides total sales of retail trade and food services not seasonally adjusted (NSA) in millions of dollars from Jan 1992 to Sep 2012. Data are not adjusted for seasonality, which explains sharp jagged behavior, or price changes. There was contraction during the global recession from IVQ2007 to IIQ2009 with strong rebound to a higher level and stability in the final segment.
Chart VA-18, US, Total Sales of Retail Trade and Food Services, NSA, Jan 1992-Oct 2012, Millions of Dollars
Source: US Census Bureau
Twelve-month rates of growth of US sales of retail and food services in Oct from 2000 to 2012 are shown in Table VA-10. Nominal sales have been dynamic in 2012, 2011 and 2010 after decline of 4.9 percent in 2008 and decline of 3.2 percent in 2009. It is difficult to separate price and quantity effects in these nominal data.
Table VA-10, US, Percentage Change in 12-Month Sales for Retail and Food Services, ∆% NSA
| Oct | 12 Months ∆% |
| 2012 | 5.3 |
| 2011 | 7.5 |
| 2010 | 5.2 |
| 2009 | -3.2 |
| 2008 | -4.9 |
| 2007 | 5.7 |
| 2006 | 3.8 |
| 2005 | 5.1 |
| 2004 | 5.2 |
| 2003 | 5.7 |
| 2002 | -1.4 |
| 2001 | 7.6 |
| 2000 | 5.0 |
Source: US Census Bureau http://www.census.gov/retail/
Risk aversion channels funds toward US long-term and short-term securities that finance the US balance of payments and fiscal deficits benefitting at the moment from risk flight to US dollar denominated assets. Net foreign purchases of US long-term securities (row C in Table VA-11) decreased from $90.3 billion in Aug 2012 to $3.3 billion in Sep 2012. Foreign (residents) purchases minus sales of US long-term securities (row A in Table VA-11) in Aug of $78.5 billion decreased to $17.9 billion in Sep 2012. Net US (residents) purchases of long-term foreign securities (row B in Table VA-11) decreased from $11.7 billion in Aug to minus $14.6 billion in Sep. In Sep,
C = A + B = $17.9 billion - $14.6 billion = $3.3 billion
There is increasing demand in Table VA-11 in Sep in A1 private purchases by residents overseas of US long-term securities of $3.8 billion of which decreases in A11 Treasury securities of $18.3 billion, increase in A12 of $8.0 billion in agency securities, decrease by $9.3 billion of corporate bonds and increase of $23.4 billion in equities. Worldwide risk aversion causes flight into US Treasury obligations with significant oscillations. Official purchases of securities in row A2 increased $14.1 billion with increase of Treasury securities of $14.1 billion in Sep, which is lower than $29.9 billion in Aug. Official purchases of agency securities increased $19.2 billion in Aug and increased $0.9 billion in Sep. Row D shows increase in Sep in purchases of short-term dollar denominated obligations. Foreign private holdings of US Treasury bills increased $12.8 billion (row D11) with foreign official holdings increasing $10.8 billion while the category other decreased $6.6 billion. Risk aversion of default losses in foreign securities dominates decisions to accept zero interest rates in Treasury securities with no perception of principal losses. In the case of long-term securities, investors prefer to sacrifice inflation and possible duration risk to avoid principal losses.
Table VA-11, Net Cross-Borders Flows of US Long-Term Securities, Billion Dollars, NSA
| Sep 2011 12 Months | Sep 2012 12 Months | Aug 2012 | Sep 2012 | |
| A Foreign Purchases less Sales of | 641.4 | 455.0 | 78.5 | 17.9 |
| A1 Private | 448.9 | 255.6 | 48.6 | 3.8 |
| A11 Treasury | 324.0 | 208.8 | 23.8 | -18.3 |
| A12 Agency | 53.2 | 88.2 | 9.6 | 8.0 |
| A13 Corporate Bonds | -2.9 | -72.5 | 9.1 | -9.3 |
| A14 Equities | 74.6 | 31.1 | 6.1 | 23.4 |
| A2 Official | 192.5 | 199.4 | 29.9 | 14.1 |
| A21 Treasury | 176.4 | 182.2 | 19.2 | 0.9 |
| A22 Agency | 15.3 | 7.1 | 9.0 | 9.9 |
| A23 Corporate Bonds | -1.4 | 3.2 | 1.6 | 2.9 |
| A24 Equities | 2.1 | 6.9 | 0.1 | 0.4 |
| B Net US Purchases of LT Foreign Securities | -200.5 | 57.3 | 11.7 | -14.6 |
| B1 Foreign Bonds | -92.2 | 76.6 | 14.1 | -21.6 |
| B2 Foreign Equities | -108.3 | -19.2 | -2.4 | 7.0 |
| C Net Foreign Purchases of US LT Securities | 440.9 | 512.3 | 90.3 | 3.3 |
| D Increase in Foreign Holdings of Dollar Denominated Short-term | -134.2 | 43.7 | 48.1 | 17.0 |
| D1 US Treasury Bills | -112.3 | 43.7 | 39.1 | 23.6 |
| D11 Private | 4.8 | 47.2 | 21.1 | 12.8 |
| D12 Official | -117.1 | -3.5 | 18.0 | 10.8 |
| D2 Other | -21.9 | 0.1 | 9.1 | -6.6 |
C = A + B;
A = A1 + A2
A1 = A11 + A12 + A13 + A14
A2 = A21 + A22 + A23 + A24
B = B1 + B2
D = D1 + D2
D1 = D11 + D12
Sources: http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticpress.aspx
Table VA-12 provides major foreign holders of US Treasury securities. China is the largest holder with $1155.5 billion in Sep 2012, decreasing 9.0 percent from $1270.2 billion in Sep 2011. Japan increased its holdings from $983.9 billion in Sep 2011 to $1130.7 billion in Sep 2012 or by 14.9 percent likely in part by intervention to buy dollars against the yen to depreciate the overvalued yen/dollar rate that diminishes the competitiveness of Japan. Total foreign holdings of Treasury securities rose from $4908.3 billion in Sep 2011 to $5455.0 billion in Sep 2012, or 11.1 percent. The US continues to finance its fiscal and balance of payments deficits with foreign savings (see Pelaez and Pelaez, The Global Recession Risk (2007)). A point of saturation of holdings of US Treasury debt may be reached as foreign holders evaluate the threat of reduction of principal by dollar devaluation and reduction of prices by increases in yield, including possibly risk premium. Shultz et al (2012) find that the Fed financed three-quarters of the US deficit in fiscal year 2011, with foreign governments financing significant part of the remainder of the US deficit while the Fed owns one in six dollars of US national debt. Concentrations of debt in few holders are perilous because of sudden exodus in fear of devaluation and yield increases and the limit of refinancing old debt and placing new debt. In their classic work on “unpleasant monetarist arithmetic,” Sargent and Wallace (1981, 2) consider a regime of domination of monetary policy by fiscal policy (emphasis added):
“Imagine that fiscal policy dominates monetary policy. The fiscal authority independently sets its budgets, announcing all current and future deficits and surpluses and thus determining the amount of revenue that must be raised through bond sales and seignorage. Under this second coordination scheme, the monetary authority faces the constraints imposed by the demand for government bonds, for it must try to finance with seignorage any discrepancy between the revenue demanded by the fiscal authority and the amount of bonds that can be sold to the public. Suppose that the demand for government bonds implies an interest rate on bonds greater than the economy’s rate of growth. Then if the fiscal authority runs deficits, the monetary authority is unable to control either the growth rate of the monetary base or inflation forever. If the principal and interest due on these additional bonds are raised by selling still more bonds, so as to continue to hold down the growth of base money, then, because the interest rate on bonds is greater than the economy’s growth rate, the real stock of bonds will growth faster than the size of the economy. This cannot go on forever, since the demand for bonds places an upper limit on the stock of bonds relative to the size of the economy. Once that limit is reached, the principal and interest due on the bonds already sold to fight inflation must be financed, at least in part, by seignorage, requiring the creation of additional base money.”
Table VA-12, US, Major Foreign Holders of Treasury Securities $ Billions at End of Period
| Sep 2012 | Aug 2012 | Sep 2011 | |
| Total | 5455.0 | 5448.8 | 4908.3 |
| China | 1155.5 | 1155.2 | 1270.2 |
| Japan | 1130.7 | 1122.8 | 983.9 |
| Oil Exporters | 267.0 | 269.1 | 252.1 |
| Brazil | 250.5 | 259.8 | 226.4 |
| Caribbean Banking Centers | 240.4 | 263.9 | 209.7 |
| Taiwan | 200.4 | 199.5 | 166.6 |
| Switzerland | 195.8 | 191.7 | 158.2 |
| Russia | 162.8 | 162.9 | 149.9 |
| Luxembourg | 148.1 | 139.3 | 127.9 |
| Hong Kong | 135.7 | 141.7 | 111.6 |
| Belgium | 133.7 | 130.2 | 132.1 |
| United Kingdom | 132.1 | 137.1 | 116.9 |
| Foreign Official Holdings | 3968.7 | 3957.0 | 3619.5 |
| A. Treasury Bills | 383.8 | 373.0 | 387.3 |
| B. Treasury Bonds and Notes | 3584.9 | 3584.0 | 3232.2 |
Source: http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticsec2.aspx#ussecs
http://www.meti.go.jp/english/statistics/index.html
The US Treasury budget for fiscal years 2013 and 2012 is shown in Table VA-13. Receipts increased 13.0 percent in fiscal year 2013 for Oct 2012 relative to fiscal year 2012 or Oct 2011. Individual income taxes increased 17.6 percent relative to the same period a year earlier. Outlays increased 16.4 percent relative to a year earlier. Table VA-13 provides additional information required for understanding the deficit/debt situation of the United States. The table is divided into three parts: federal fiscal data for the years from 2009 to 2012; federal fiscal data for the years from 2005 to 2008; and Treasury debt held by the public from 2005 to 2012. Total revenues of the US from 2009 to 2012 accumulate to $9019 billion, or $9.0 trillion, while expenditures or outlays accumulate to $14,111 billion, or $14.1 trillion, with the deficit accumulating to $5092 billion, or $5.1 trillion. Revenues decreased 6.6 percent from $9653 billion in the four years from 2005 to 2008 to $9019 billion in the years from 2009 to 2012. Decreasing revenues were caused by the global recession from IVQ2007 (Dec) to IIQ2009 (Jun) and also by growth of only 2.2 percent on average in the cyclical expansion from IIIQ2009 to IIIQ2012, which is much lower than 6.2 percent on average in cyclical expansions since the 1950s (http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states.html). Weakness of growth and employment creation is analyzed Subsection IB Collapse of United States Dynamism of Income Growth and Employment Creation. There are 28.1 million people without jobs or underemployed that is equivalent to 17.4 percent of the US effective labor force (http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html ) and hiring is significantly below the earlier cyclical expansion before 2007 (http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html). In contrast with the decline of revenue, outlays or expenditures increased 30.2 percent from $10,839 billion, or $10.8 trillion, in the four years from 2005 to 2008, to $14,111 billion, or $14.1 trillion, in the four years from 2009 to 2012. Increase in expenditures by 30.2 percent while revenue declined by 6.6 percent caused the increase in the federal deficit from $1186 billion in 2005-2008 to $5092 billion in 2009-2012. Federal revenue was 15.4 percent of GDP on average in the years from 2009 to 2012, which is well below 18.0 percent of GDP on average from 1970 to 2010. Federal outlays were 24.1 percent of GDP on average from 2009 to 2012, which is well above 21.9 percent of GDP on average from 1970 to 2010. The lower part of Table VA-13 shows that debt held by the public swelled from $5803 billion in 2008 to $11,280 billion in 2012, by $5477 billion or 94.3 percent. Debt held by the public as percent of GDP or economic activity jumped from 40.5 percent in 2008 to 72.6 percent in 2012, which is well above the average of 37.0 percent from 1970 to 2010. The United States faces tough adjustment because growth is unlikely to recover, creating limits on what can be obtained by increasing revenues, while continuing stress of social programs restricts what can be obtained by reducing expenditures.
Table VA-13, US, Treasury Budget in Fiscal Year to Date Million Dollars
| Oct 2012 | Fiscal Year 2013 | Fiscal Year 2012 | ∆% |
| Receipts | 184,316 | 163,072 | 13.0 |
| Outlays | 304,311 | 261,539 | 16.4 |
| Deficit | -119,995 | -96,466 | NA |
| Individual Income Taxes | 102,039 | 86,747 | 17.6 |
| Social Insurance | 40,150 | 39,303 | 2.2 |
| Receipts | Outlays | Deficit (-), Surplus (+) | |
| $ Billions | |||
| 2012 | 2,449 | 3,538 | -1,089 |
| Fiscal Year 2011 | 2,302 | 3,599 | -1,297 |
| Fiscal Year 2010 | 2,163 | 3,456 | -1,293 |
| Fiscal Year 2009 | 2,105 | 3,518 | -1,413 |
| Total 2009-2012 | 9,019 | 14,111 | -5,092 |
| Average % GDP 2009-2012 | 15.4 | 24.1 | -8.7 |
| Fiscal Year 2008 | 2,524 | 2,983 | -459 |
| Fiscal Year 2007 | 2,568 | 2,729 | -161 |
| Fiscal Year 2006 | 2,407 | 2,655 | -248 |
| Fiscal Year 2005 | 2,154 | 2,472 | -318 |
| Total 2005-2008 | 9,653 | 10,839 | -1,186 |
| Average % GDP 2005-2008 | 17.9 | 20.1 | -2.2 |
| Debt Held by the Public | Billions of Dollars | Percent of GDP | |
| 2005 | 4,592 | 36.9 | |
| 2006 | 4,829 | 36.6 | |
| 2007 | 5,035 | 36.3 | |
| 2008 | 5,803 | 40.5 | |
| 2009 | 7,545 | 54.1 | |
| 2010 | 9,019 | 62.8 | |
| 2011 | 10,128 | 67.7 | |
| 2012 | 11,280 | 72.6 |
Source: http://www.fms.treas.gov/mts/index.html CBO (2012NovMBR). CBO (2011AugBEO); Office of Management and Budget. 2011. Historical Tables. Budget of the US Government Fiscal Year 2011. Washington, DC: OMB; CBO. 2011JanBEO. Budget and Economic Outlook. Washington, DC, Jan. CBO. 2012AugBEO. Budget and Economic Outlook. Washington, DC, Aug 22. CBO. 2012Jan31. Historical budget data. Washington, DC, Jan 31. CBO. 2012NovCDR. Choices for deficit reduction. Washington, DC. Nov.
VB Japan. Table VB-BOJF provides the forecasts of economic activity and inflation in Japan by the majority of members of the Policy Board of the Bank of Japan, which is part of their Outlook for Economic Activity and Prices (http://www.boj.or.jp/en/mopo/outlook/gor1210a.pdf). For fiscal 2013, the forecast is of growth of GDP between 1.3 and 1.8 percent, with domestic producer price inflation (Corporate Goods Price Index, CGPI) in the range of 0.1 to 0.7 percent and the all items CPI less fresh food of 0.2 to 0.6 percent. These forecasts are biannual in Apr and Oct.
Table VB-BOJF, Bank of Japan, Forecasts of the Majority of Members of the Policy Board, % Year on Year
| Fiscal Year | Real GDP | Domestic CGPI | CPI All Items Less Fresh Food |
| 2011 | |||
| Apr 2012 | -0.2 to –0.2 | +1.7 | 0.0 |
| Jan 2012 | -0.4 to –0.3 | +1.8 to +1.9 | -0.1 to 0.0 |
| 2012 | |||
| Oct 2012 | +1.4 to +1.6 [+1.5] | -1.2 to -0.9 [-1.1] | -0.1 to -0.1 [-0.1] |
| Jul 2012 | +2.2 to +2.4 [+2.2] | -0.3 to 0.0 [-0.2] | +0.1 to +0.3 [+0.2] |
| Apr 2012 | +2.1 to +2.4 | +0.4 to +0.7 | +0.1 to +0.4 |
| Jan 2012 | +1.8 to +2.1 | -0.1 to +0.2 | 0.0 to +0.2 |
| 2013 | |||
| Oct 2012 | +1.3 to +1.8 [+1.6] | +0.1 to +0.7 [+0.5] | +0.2 to +0.6 [+0.4] |
| Jul 2012 | +1.6 to +1.8 [+1.7] | +0.6 to +0.8 [+0.6] | +0.5 to +0.7 [+0.7] |
| Apr 2012 | +1.6 to +1.8 | +0.7 to +0.9 | +0.5 to +0.7 |
| Jan 2012 | +1.4 to +1.7 | +0.6 to 1.0 | +0.4 to +0.5 |
| 2014 | |||
| Oct 2012 | +0.2 to +0.7] [+0.6] | +3.7 to +4.4 [+4.2] | +2.4 to +3.0 [+2.8] |
Figures in brackets are the median of forecasts of Policy Board members
Source: Policy Board, Bank of Japan
http://www.boj.or.jp/en/mopo/outlook/gor1210a.pdf
Private-sector activity in Japan contracted at a moderate rate with the Markit Composite Output PMI™ Index increasing from 48.4 in Sep to 48.9 in Oct, which is still below 50 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10238). Paul Smith, economist at Markit and author of the report, finds that weak manufacturing and unchanged services data suggest unchanged GDP in the beginning of IVQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10238). The Markit Business Activity Index of Services increased from 48.9 in Sep to 50.0 in Oct, showing no change relative to the prior month (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10238). The Markit/JMMA Purchasing Managers’ Index™ (PMI™), seasonally adjusted, decreased from 48.0 in Sep to 46.9 in Oct for the lowest reading in 18 months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10214). Foreign orders fell for the seventh consecutive months. Paul Smith, economist at Markit and author of the report, finds the data consistent with quarterly contraction of manufacturing output at a quarterly rate in excess of 3 percent with shipments overseas falling at a quarterly rate of about 4 percent because of weak world growth especially in export markets including China (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10214).Table JPY provides the country data table for Japan.
Table JPY, Japan, Economic Indicators
| Historical GDP and CPI | 1981-2010 Real GDP Growth and CPI Inflation 1981-2010 |
| Corporate Goods Prices | Oct ∆% minus 0.3 |
| Consumer Price Index | Sep NSA ∆% 0.1; Sep 12 months NSA ∆% -0.3 |
| Real GDP Growth | IIIQ2012 ∆%: minus 0.9 on IIQ2012; IIIQ2012 SAAR minus 3.5; |
| Employment Report | Sep Unemployed 2.75 million Change in unemployed since last year: minus 20 thousand |
| All Industry Indices | Aug month SA ∆% 0.1 Blog 10/21/12 |
| Industrial Production | Sep SA month ∆%: -4.1 |
| Machine Orders | Total Sep ∆% 9.6 Private ∆%: 15.4 |
| Tertiary Index | Sep month SA ∆% 0.3 |
| Wholesale and Retail Sales | Sep 12 months: |
| Family Income and Expenditure Survey | Sep 12-month ∆% total nominal consumption -1.2, real -0.9 Blog 11/4/12 |
| Trade Balance | Exports Sep 12 months ∆%: -10.3 Imports Sep 12 months ∆% 4.1 Blog 10/28/12 |
Links to blog comments in Table JPY:
11/4/12 http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html
10/28/12 http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states.html
10/21/12 http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html
8/9/11 http://cmpassocregulationblog.blogspot.com/2011/08/turbulence-in-world-financial-markets.html
Japan’s GDP decreased 0.9 percent in IIIQ2012 relative to IIQ2012, seasonally adjusted, as shown in Table VB-1 that incorporates the latest revisions. IQ2012 GDP growth was revised to 1.3 percent and IIQGDP growth was revised to 0.1 percent. The economy of Japan had already weakened in IVQ2010 when GDP was virtually fell revised 0.3 percent. As in other advanced economies, Japan’s recovery from the global recession has not been robust. GDP fell in IQ2011 by 2.1 percent and fell again 0.5 percent in IIQ2011 as a result of the disruption of the tragic Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Recovery was robust in the first two quarters of 2010 but GDP growth grew at 1.1 percent in IIIQ2010 and fell 0.3 percent in IVQ2010. The deepest quarterly contractions in the recession were 3.3 percent in IVQ2008 and 4.0 percent in IQ2009.
Table VB-1, Japan, Real GDP ∆% Changes from the Previous Quarter Seasonally Adjusted ∆%
| IQ | IIQ | IIIQ | IVQ | |
| 2012 | 1.3 | 0.1 | -0.9 | |
| 2011 | -2.1 | -0.5 | 2.3 | -0.3 |
| 2010 | 1.3 | 1.2 | 1.1 | -0.3 |
| 2009 | -4.0 | 1.5 | 0.2 | 1.7 |
| 2008 | 0.7 | -1.3 | -0.9 | -3.3 |
| 2007 | 1.0 | 0.0 | -0.3 | 0.9 |
| 2006 | 0.4 | 0.4 | -0.1 | 1.3 |
| 2005 | 0.2 | 1.3 | 0.3 | 0.2 |
| 2004 | 1.0 | 0.0 | 0.1 | -0.2 |
| 2003 | -0.5 | 1.2 | 0.4 | 1.1 |
| 2002 | -0.2 | 1.0 | 0.7 | 0.4 |
| 2001 | 0.7 | -0.2 | -1.1 | -0.2 |
| 2000 | 1.7 | 0.2 | -0.2 | 0.6 |
| 1999 | -0.9 | 0.4 | -0.1 | 0.4 |
Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html
Table VB-2 provides contributions to real GDP at seasonally-adjusted annual rates (SAAR). The SAAR of GDP in IIIQ2012 was -3.5 percent {[(1-0.009)4 – 1]100 = -3.5%}: minus 1.1 percentage points from growth of personal consumption expenditures (PC) less 0.8 percentage points of gross fixed capital formation (CFCF) less 2.9 percentage points of net trade (exports less imports) plus 1.0 percentage points of private inventory investment (PINV) plus 0.3 percentage points of government consumption. The SAAR of GDP in IIIQ2011 was revised to a high 9.5 percent. Net trade deducted from GDP growth in three quarters of 2011 and provided the growth impulse of 3.2 percentage points in IIIQ2011. Growth in 2011 and IQ2012 was driven by personal consumption expenditures that deducted 1.1 percentage points from GDP growth in IIIQ2012.
Table VB-2, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %
| GDP | PC | GFCF | Trade | PINV | GOVC | |
| 2012 | ||||||
| I | 5.2 | 2.9 | -0.4 | 0.5 | 1.2 | 0.9 |
| II | 0.3 | -0.2 | 1.2 | -0.4 | -0.7 | 0.4 |
| III | -3.5 | -1.1 | -0.8 | -2.9 | 1.0 | 0.3 |
| 2011 | ||||||
| I | -8.0 | -3.6 | -0.6 | -1.1 | -3.0 | 0.3 |
| II | -2.1 | 0.8 | 0.4 | -3.7 | -0.2 | 0.5 |
| III | 9.5 | 4.0 | 0.6 | 3.2 | 1.3 | 0.3 |
| IV | -1.2 | 1.1 | 2.5 | -3.3 | -1.7 | 0.3 |
| 2010 | ||||||
| I | 5.1 | 1.3 | 0.4 | 2.1 | 1.7 | -0.4 |
| II | 5.1 | 0.4 | 1.1 | 0.5 | 1.9 | 1.3 |
| III | 4.7 | 2.0 | 0.9 | 0.1 | 1.4 | 0.3 |
| IV | -1.1 | 0.2 | -0.9 | -0.7 | -0.1 | 0.3 |
| 2009 | ||||||
| I | -15.0 | -2.2 | -1.9 | -4.4 | -7.4 | 0.9 |
| II | 6.3 | 3.8 | -3.3 | 7.4 | -2.1 | 0.5 |
| III | 1.0 | 0.8 | -1.3 | 2.1 | -1.5 | 1.0 |
| IV | 7.1 | 3.2 | 0.2 | 2.7 | 0.6 | 0.4 |
| 2008 | ||||||
| I | 2.7 | 1.3 | 0.5 | 1.2 | -0.4 | 0.0 |
| II | -5.2 | -3.4 | -2.4 | 0.3 | 1.3 | -0.9 |
| III | -3.7 | 0.0 | -0.9 | 0.0 | -2.8 | -0.1 |
| IV | -12.4 | -2.9 | -4.5 | -11.4 | 5.7 | 0.4 |
| 2007 | ||||||
| I | 4.1 | 0.8 | 0.6 | 1.2 | 1.2 | 0.4 |
| II | 0.2 | 0.4 | -1.6 | 0.5 | 0.2 | 0.5 |
| III | -1.4 | -0.6 | -1.7 | 2.0 | -0.8 | -0.2 |
| IV | 3.7 | 0.2 | 0.2 | 1.6 | 1.1 | 0.6 |
Note: PC: Private Consumption; GFCF: Gross Fixed Capital Formation; PINV: Private Inventory; Trade: Net Exports; GOVC: Government Consumption
Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html
Long-term economic growth in Japan was significantly improved by increasing competitiveness in world markets. Net trade of exports and imports is an important component of the GDP accounts of Japan. Table VB-3 provides quarterly data for net trade, exports and imports of Japan. Net trade had strong positive contributions to GDP growth in Japan in all quarters from IQ2007 to IIQ2009 with exception of IVQ2008. The US recession is dated by the National Bureau of Economic Research (NBER) as beginning in IVQ2007 (Dec) and ending in IIQ2009 (Jun) (http://www.nber.org/cycles/cyclesmain.html). Net trade contributions helped to cushion the economy of Japan from the global recession. Net trade has deducted from GDP growth in six of the eight quarters from IVQ2010 IIIQ2012. The only strong contribution of net trade was 3.2 percent in IIIQ2011. Private consumption assumed the role of driver of Japan’s economic growth but should moderate as in most mature economies.
Table VB-3, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %
| Net Trade | Export | Imports | |
| 2012 | |||
| I | 0.5 | 2.0 | -1.5 |
| II | -0.4 | 0.8 | -1.2 |
| III | -2.9 | -3.1 | 0.2 |
| 2011 | |||
| I | -1.1 | -0.2 | -0.8 |
| II | -3.7 | -3.8 | 0.1 |
| III | 3.2 | 5.3 | -2.1 |
| IV | -3.3 | -2.7 | -0.6 |
| 2010 | |||
| I | 2.1 | 3.3 | -1.3 |
| II | 0.5 | 3.3 | -2.8 |
| III | 0.1 | 1.3 | -1.1 |
| IV | -0.7 | -0.5 | -0.2 |
| 2009 | |||
| I | -4.4 | -16.4 | 12.0 |
| II | 7.4 | 4.8 | 2.5 |
| III | 2.1 | 5.3 | -3.2 |
| IV | 2.7 | 3.7 | -1.1 |
| 2008 | |||
| I | 1.2 | 2.1 | -0.9 |
| II | 0.3 | -1.7 | 1.9 |
| III | 0.0 | 0.3 | -0.3 |
| IV | -11.4 | -10.3 | -1.0 |
| 2007 | |||
| I | 1.2 | 1.7 | -0.5 |
| II | 0.5 | 1.4 | -0.9 |
| III | 2.0 | 1.5 | 0.5 |
| IV | 1.6 | 2.1 | -0.5 |
Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html
Japan’s percentage growth of GDP not seasonally-adjusted in a quarter relative to the same quarter a year earlier is shown in Table VB-4. Contraction of GDP in a quarter relative to the same quarter a year earlier extended over seven quarters from IIQ2008 through IVQ2009. Contraction was sharpest in IQ2009 with output declining 9.3 percent relative to a year earlier. Yearly quarterly rates of growth of Japan were relatively high for a mature economy through the decade with the exception of the contractions from IVQ2001 to IIQ2002 and after 2007. The Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 caused flat GDP in IQ2011 relative to the same quarter a year earlier and decline of 1.8 percent in IIQ2011. GDP fell 0.6 percent in IIIQ2011 relative to a year earlier and fell 0.7 percent in IVQ2011 relative to a year earlier. Growth resumed with 2.9 percent in IQ2012 relative to a year earlier. Growth of 3.3 percent in IIQ2012 is largely caused by the low level in IIQ2011 resulting from the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan faces the challenge of recovery from the devastation of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 in an environment of declining world trade and bouts of risk aversion that cause appreciation of the Japanese yen that erode the country’s competitiveness in world markets.
Table VB-4, Japan, Real GDP ∆% Changes from Same Quarter Year Earlier, NSA ∆%
| IQ | IIQ | IIIQ | IVQ | |
| 2012 | 2.9 | 3.3 | 0.1 | |
| 2011 | 0.0 | -1.8 | -0.6 | -0.7 |
| 2010 | 4.8 | 4.5 | 5.6 | 3.2 |
| 2009 | -9.3 | -6.6 | -5.6 | -0.5 |
| 2008 | 1.4 | -0.1 | -0.6 | -4.7 |
| 2007 | 2.8 | 2.3 | 2.0 | 1.6 |
| 2006 | 2.6 | 1.3 | 0.9 | 2.0 |
| 2005 | 0.4 | 1.4 | 1.5 | 1.9 |
| 2004 | 4.0 | 2.6 | 2.2 | 0.7 |
| 2003 | 1.7 | 1.8 | 1.5 | 1.8 |
| 2002 | -1.6 | -0.2 | 1.4 | 1.6 |
| 2001 | 1.6 | 0.9 | 0.0 | -1.0 |
| 2000 | 2.7 | 2.4 | 2.2 | 1.8 |
| 1999 | -0.3 | 0.1 | -0.1 | -0.5 |
Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html
The tertiary activity index of Japan increased 0.3 percent SA in Sep 2012 and increased 0.2 percent NSA in the 12 months ending in Sep 2012, as shown in Table VB-5. The tertiary activity index of Japan seasonally adjusted fell at the annual equivalent rate of minus 4.1 percent in Jan-Apr 2012 for cumulative decline of 1.4 percent but increased 2.6 percent not seasonally adjusted in the 12 months ending in Apr 2012, as shown in Table VB-5. The tertiary activity index fell 0.4 percent in the first nine months of 2012 or at the annual equivalent rate of minus 0.6 percent. There was strong impact from the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 in the decline of the tertiary activity index by 5.4 percent in Mar 2011 and 3.4 percent in 12 months. The performance of the tertiary sector in the quarter Jul-Sep 2011 was weak: increase of 0.4 percent in Jul, increase of 0.1 percent in Aug and decline of 0.2 percent in Sep, after increasing 1.2 percent in Jun. The not seasonally adjusted index increased 4.2 percent in the 12 months ending in Mar 2012 but the 12-month percentage rate dropped to 0.2 percent in Sep 2012. Most of the growth occurred in the quarter from Apr to Jun 2011 with gain of 4.3 percent or at annual equivalent rate of 18.1 percent.
Table VB-5, Japan, Tertiary Activity Index, ∆%
| Month ∆% SA | 12 Months ∆% NSA | |
| Sep 2012 | 0.3 | 0.2 |
| Aug | 0.3 | 0.6 |
| Jul | -0.6 | 0.9 |
| Jun | 0.1 | 0.8 |
| May | 0.9 | 3.2 |
| Apr | -0.2 | 2.6 |
| Mar | -0.6 | 4.2 |
| Feb | 0.0 | 2.4 |
| Jan | -0.6 | 0.4 |
| Dec 2011 | 1.6 | 1.2 |
| Nov | -0.8 | -0.3 |
| Oct | 0.6 | 0.9 |
| Sep | -0.2 | 0.1 |
| Aug | 0.1 | 0.8 |
| Jul | 0.4 | 0.1 |
| Jun | 1.2 | 1.0 |
| May | 0.9 | -0.2 |
| Apr | 2.1 | -2.3 |
| Mar | -5.4 | -3.4 |
| Feb | 0.3 | 2.0 |
| Jan | 0.5 | 1.0 |
| Dec 2010 | -0.2 | 1.8 |
| Nov | 0.6 | 2.5 |
| Oct | 0.2 | 0.5 |
| Sep | -0.4 | 1.3 |
| Aug | 0.1 | 2.3 |
| Jul | 0.7 | 1.6 |
| Jun | 0.1 | 1.0 |
| May | -0.3 | 1.2 |
| Dec 2009 | -5.2 | |
| Dec 2008 | -3.3 | |
| Dec 2007 | -0.3 | |
| Dec 2006 | 0.6 | |
| Dec 2005 | 2.6 | |
| Dec 2004 | 1.6 | |
| Calendar Year | ||
| 2011 | 0.1 | |
| 2010 | 1.3 | |
| 2009 | -5.2 | |
| 2008 | -1.0 | |
| 2007 | 1.0 | |
| 2006 | 1.8 | |
| 2005 | 1.9 | |
| 2004 | 1.8 |
Source: http://www.meti.go.jp/english/statistics/index.html
Month and 12-month rates of growth of the tertiary activity index of Japan and components in Sep are provided in Table VB-6. Electricity, gas, heat supply and water decreased 1.4 percent in Sep and decreased 0.4 percent in the 12 months ending in Sep. Wholesale and retail trade decreased 1.2 percent in the month of Sep and decreased 1.2 percent in 12 months. Information and communications increased 0.6 percent Sep and increased 0.7 percent in 12 months.
Table VB-6, Japan, Tertiary Index and Components, Month and 12-Month Percentage Changes ∆%
| Sep 2012 | Weight | Month ∆% SA | 12 Months ∆% NSA |
| Tertiary Index | 10,000.0 | 0.3 | 0.2 |
| Electricity, Gas, Heat Supply & Water | 372.9 | -1.4 | -0.4 |
| Information & Communications | 951.2 | 0.6 | 0.7 |
| Wholesale & Retail Trade | 2,641.2 | -1.2 | -1.2 |
| Finance & Insurance | 971.1 | 2.8 | -0.2 |
| Real Estate & Goods Rental & Leasing | 903.4 | 0.4 | 0.4 |
| Scientific Research, Professional & Technical Services | 551.3 | -2.8 | -1.0 |
| Accommodations, Eating, Drinking | 496.0 | 0.1 | 2.9 |
| Living-Related, Personal, Amusement Services | 552.7 | 1.3 | 3.4 |
| Learning Support | 116.9 | 0.4 | 0.5 |
| Medical, Health Care, Welfare | 921.1 | 0.7 | 0.9 |
| Miscellaneous ex Government | 626.7 | 0.2 | 0.2 |
Source: http://www.meti.go.jp/english/statistics/index.html
VC China. China estimates an index of nonmanufacturing purchasing managers on the basis of a sample of 1200 nonmanufacturing enterprises across the country (http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm). Table CIPMNM provides this index and components from Jan to Oct 2012. The index fell from 58.0 in Mar to 55.2 in May but climbed to 56.7 in Jun, which is lower than 58.0 in Mar and 57.3 in Feb but higher than in any other of the months in 2012. In Jul 2012 the index fell marginally to 55.6 and then to 56.3 in Aug and 53.7 in Sep but rebounded to 56.5 in Oct.
Table CIPMNM, China, Nonmanufacturing Index of Purchasing Managers, %, Seasonally Adjusted
| 2012 | Total Index | New Orders | Interm. | Subs Prices | Exp |
| Oct | 56.5 | 51.6 | 58.1 | 50.5 | 63.4 |
| Sep | 53.7 | 51.8 | 57.5 | 51.3 | 60.9 |
| Aug | 56.3 | 52.7 | 57.6 | 51.2 | 63.2 |
| Jul | 55.6 | 53.2 | 49.7 | 48.7 | 63.9 |
| Jun | 56.7 | 53.7 | 52.1 | 48.6 | 65.5 |
| May | 55.2 | 52.5 | 53.6 | 48.5 | 65.4 |
| Apr | 56.1 | 52.7 | 57.9 | 50.3 | 66.1 |
| Mar | 58.0 | 53.5 | 60.2 | 52.0 | 66.6 |
| Feb | 57.3 | 52.7 | 59.0 | 51.2 | 63.8 |
| Jan | 55.7 | 52.2 | 58.2 | 51.1 | 65.3 |
Notes: Interm.: Intermediate; Subs: Subscription; Exp: Business Expectations
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Chart CIPMNM provides China’s nonmanufacturing purchasing managers’ index from Oct 2011 to Oct 2012. There was slowing of the general index in Apr 2012 after the increase in Jan-Mar 2012 and further decline to 55.2 in May 2012 but increase to 56.7 in Jun 2012 with marginal decline to 55.6 in Jul 2012 and 56.3 in Aug 2012 and sharper drop to 53.7 in Sep 2012, rebounding to 55.5 in Oct 2012.
Chart CIPMNM, China, Nonmanufacturing Index of Purchasing Managers, Seasonally Adjusted
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Table CIPMMFG provides the index of purchasing managers of manufacturing seasonally adjusted of the National Bureau of Statistics of China. The general index (IPM) rose from 50.5 in Jan 2012 to 53.3 in Apr and declined to 50.1 in Jul and to the contraction zone at 49.2 in Aug. The index of new orders (NOI) fell from 54.5 in Apr 2012 to 49.0 in Jul and 48.7 in Aug. The index of employment also fell from 51.0 in Apr to 49.1 in Aug. There is mild rebounding to 49.8 in Sep 2012 and movement to 50.2 in Oct 2012 into positive territory.
Table CIPMMFG, China, Manufacturing Index of Purchasing Managers, %, Seasonally Adjusted
| 2012 | IPM | PI | NOI | INV | EMP | SDEL |
| Oct | 50.2 | 52.1 | 50.4 | 47.3 | 49.2 | 50.1 |
| Sep | 49.8 | 51.3 | 49.8 | 47.0 | 48.9 | 49.5 |
| Aug | 49.2 | 50.9 | 48.7 | 45.1 | 49.1 | 50.0 |
| Jul | 50.1 | 51.8 | 49.0 | 48.5 | 49.5 | 49.0 |
| Jun | 50.2 | 52.0 | 49.2 | 48.2 | 49.7 | 49.1 |
| May | 50.4 | 52.9 | 49.8 | 45.1 | 50.5 | 49.0 |
| Apr | 53.3 | 57.2 | 54.5 | 48.5 | 51.0 | 49.6 |
| Mar | 53.1 | 55.2 | 55.1 | 49.5 | 51.0 | 48.9 |
| Feb | 51.0 | 53.8 | 51.0 | 48.8 | 49.5 | 50.3 |
| Jan | 50.5 | 53.6 | 50.4 | 49.7 | 47.1 | 49.7 |
IPM: Index of Purchasing Managers; PI: Production Index; NOI: New Orders Index; EMP: Employed Person Index; SDEL: Supplier Delivery Time Index
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/pressrelease/t20121102_402847908.htm
China estimates the manufacturing index of purchasing managers on the basis of a sample of 820 enterprises (http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm). Chart CIPMMFG provides the index from Sep 2011 to Sep 2012. There is deceleration from 51.2 in Sep 2011 to marginal contraction at 49.0 in Nov 2011. Manufacturing activity recovered to 53.3 in Apr 2012 but then declined to 50.4 in May 2012 and 50.1 in Jun 2012, which is the lowest in a year with exception of contraction at 49.0 in Nov 2011. The index then fell to contraction at 49.2 in Aug 2012 and improved to 49.8 in Sep with movement to 50.2 in Oct 2012 above the neutral zone of 50.0.
Chart CIPMMFG, China, Manufacturing Index of Purchasing Managers, Seasonally Adjusted
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm
The World Economic Outlook (WEO) of the International Monetary Fund (IMF) estimates China’s GDP in current US dollars (USD) at $8250.2 billion in 2012 (http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx). Table VC-GDP provides the estimate of current value of China’s GDP at CNY 35.3 trillion in IIIQ2012. Cumulative growth in the first three quarters of 2012 relative to the same period in 2011 was 7.7 percent. Secondary industry accounts for 46.8 percent of GDP of which industry alone for 40.1 percent and construction with the remaining 6.7 percent. Tertiary industry accounts for 43.8 percent of GDP and primary industry for 9.4 percent. China’s growth strategy consisted of rapid increases in productivity in industry to absorb population from agriculture where incomes are lower (Pelaez and Pelaez, The Global Recession Risk (2007), 56-80). The bottom block of Table VC-GDP provides quarter-on-quarter growth rates of GDP and their annual equivalent. China’s GDP growth decelerated significantly from annual equivalent 9.9 percent in IIIQ2011 to 7.0 percent in IVQ2011 and 6.1 percent in IQ2012, rebounding to 8.2 percent in IIQ2012 and 9.1 percent in IIIQ2012.
Table VC-GDP, China, Cumulative and Quarterly Growth of GDP, Current CNY 100 Million and Inflation Adjusted ∆%
| Cumulative GDP | Value Current CNY 100 Million | Cumulative Three First Quarters of 2012 Relative to Cumulative Three First Quarters of 2012 ∆% Inflation Adjusted |
| GDP | 353,480.0 | 7.7 |
| Primary Industry | 33,088.0 | 4.2 |
| Farming | 33,088.0 | 4.2 |
| Secondary Industry | 165,428.5 | 8.1 |
| Industry | 141,641.5 | 7.9 |
| Construction | 23,787.0 | 9.2 |
| Tertiary Industry | 154,963.5 | 7.9 |
| Transport, Storage, Post | 18,941.0 | 6.7 |
| Wholesale, Retail Trades | 31,651.2 | 11.8 |
| Hotel & Catering Services | 7,015.6 | 7.6 |
| Financial Intermediation | 22,465.2 | 9.5 |
| Real Estate | 20,789.6 | 2.7 |
| Other | 54,101.0 | 7.7 |
| Growth in Quarter Relative to Prior Quarter | ∆% on Prior Quarter | ∆% Annual Equivalent |
| 2012 | ||
| IIIQ2012 | 2.2 | 9.1 |
| IIQ2012 | 2.0 | 8.2 |
| IQ2012 | 1.5 | 6.1 |
| 2011 | ||
| IVQ2011 | 1.7 | 7.0 |
| IIIQ2011 | 2.4 | 9.9 |
| IIQ2011 | 2.5 | 10.4 |
| IQ2011 | 2.2 | 9.1 |
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Table VD-GDPb provides growth of GDP in China relative to a year earlier and relative to prior quarter. Growth of GDP relative to a year earlier decelerated from 12.1 percent in IQ2010 to 7.4 percent in IIIQ2012. Growth of secondary industry decelerated from 14.5 percent in IQ2010 to 7.9 percent in IIIQ2012.
Table VC-GDPb, China, Growth Rate of GDP, ∆% Relative to a Year Earlier and ∆% Relative to Prior Quarter
| IQ 2011 | IIQ 2011 | IIIQ 2011 | IVQ 2011 | IQ 2012 | IIQ 2012 | IIIQ 2012 | |
| GDP | 9.7 | 9.5 | 9.1 | 8.9 | 8.1 | 7.6 | 7.4 |
| Primary Industry | 3.5 | 3.2 | 3.8 | 4.5 | 3.8 | 4.3 | 4.2 |
| Secondary Industry | 11.1 | 11.0 | 10.8 | 10.6 | 9.1 | 8.3 | 8.1 |
| Tertiary Industry | 9.1 | 9.2 | 9.0 | 8.9 | 7.5 | 7.7 | 7.9 |
| GDP ∆% Relative to a Prior Quarter | 2.2 | 2.3 | 2.4 | 1.9 | 1.8 | 1.8 | 2.2 |
| IQ 2010 | IIQ 2010 | IIIQ 2010 | IVQ 2010 | ||||
| GDP | 12.1 | 11.2 | 10.7 | 12.1 | |||
| Primary Industry | 3.8 | 3.6 | 4.0 | 3.8 | |||
| Secondary Industry | 14.5 | 13.3 | 12.6 | 14.5 | |||
| Tertiary Industry | 10.5 | 9.9 | 9.7 | 10.5 |
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/enGliSH
The HSBC Flash China Manufacturing Purchasing Managers’ Index™ (PMI™) compiled by Markit (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10204 ) is mildly improving. The overall Flash China Manufacturing PMI™ increased marginally from 47.9 in Sep to 49.1 in Oct for a three-month high while the Flash China Manufacturing Output Index increased from 47.3 in Sep to 48.4 in Oct, both in contraction territory below 50.0. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that new easing policies implemented in recent weeks should help in improving the economy with initial manifestation in mild improvement in new orders but that continuing easing policy is required to ensure sound recovery (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10204).The HSBC China Services PMI™, compiled by Markit, shows marginally improving business activity in China with the HSBC Composite Output, combining manufacturing and services, increasing from 50.3 in Sep to 50.5 in Oct for second consecutive month of increasing output (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10289). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds marginal improvement in business conditions in China but that increasing demand requires further easing measures to sustain recovery in manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10289). The HSBC Business Activity index decreased from 54.3 in Sep to 53.5 in Oct with continuing growth in services at a slower rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10289). The HSBC Purchasing Managers’ Index™ (PMI™), compiled by Markit, increased to 49.5 in Oct from 47.9 in Sep, indicating moderate reduction of activity and the twelfth monthly deterioration of the index (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10259). New exports orders registered declines for the sixth consecutive month at a slower but strong rate of decline. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds stabilization of the decline with increase in new orders but weak exports, requiring further stimulus measures (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10259).
Wang Xiaotian, writing on China Daily, on “China cuts its reserve ratio again,” published by Xinhuanet on May 13, 2012 (http://news.xinhuanet.com/english/china/2012-05/13/c_131584252.htm), informs that the People’s Bank of China (PBC) (http://www.pbc.gov.cn/publish/english/963/index.html) reduced the reserve requirement imposed on Chinese lenders by 50 basis points with the objective of injecting liquidity to strengthen the economy. This is the second such reduction of reserve requirements in 2012. The reduction is estimated to release CNY 400 in China’s money market. The reserve requirement will be 20 percent for larger banks and 16.5 percent for smaller banks. The measures are intended to strengthen the economy. Xinhuanet, writing on “China announces surprise rate cuts amid economic downshift,” on Jun 5, 2012 (http://news.xinhuanet.com/english/china/2012-07/05/c_131697843.htm), informs that the central bank of China People’s Bank of China reduced the one year deposit rate by 25 basis points and the one year lending rate by 31 basis points effective Jun 6, 2012. The People’s Bank of China posts the new rates (http://www.pbc.gov.cn/publish/english/955/2012/20120608171005950734495/20120608171005950734495_.html). Table CNY provides the country data table for China.
Table CNY, China, Economic Indicators
| Price Indexes for Industry | Oct 12-month ∆%: minus 2.8 Oct month ∆%: 0.2 |
| Consumer Price Index | Oct month ∆%: -0.1 Oct 12 months ∆%: 1.7 |
| Value Added of Industry | Oct month ∆%: 0.81 Jan-Oct 2012/Jan-Oct 2011 ∆%: 10.0 |
| GDP Growth Rate | Year IIIQ2012 ∆%: 7.4 |
| Investment in Fixed Assets | Oct month ∆%: 1.94 Total Jan-Oct 2012 ∆%: 20.7 Real estate development: 15.4 |
| Retail Sales | Oct month ∆%: 1.34 Jan-Oct ∆%: 14.1 |
| Trade Balance | Oct balance $31.99 billion Cumulative Oct: $180.42 billion |
Links to blog comments in Table CNY:
11/11/12 http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html
10/21/12 http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html
Cumulative and 12-months rates of value added of industry in China are provided in Table VC-1. Value added in total industry in Jan-Oct 2012 increased 10.0 percent relative to a year earlier and 9.6 percent in the 12 months ending in Oct 2012. Heavy industry had been the driver of growth with a cumulative rate of 11.0 percent relative to a year earlier in Jan-Mar 2012 that declined to 10.5 percent in Jan-Apr 2012 relative to the same period a year earlier and further down to 10.1 percent in Jan-Jun 2012, 9.9 percent in Jan-Jul 2012, 9.8 percent in Jan-Aug 2012, 9.7 percent in Jan-Sep 2012 and 9.7 percent in Jan-Oct 2012. Light industry grew 10.3 percent in Jan-Oct 2012 relative to a year earlier and 9.1 percent in 12 months ending in Oct 2012. Growth of total industry decelerated from cumulative 14.4 percent in Jan-Mar 2011 to 10.0 percent in Jan-Oct 2012.
Table VC-1, China, Growth Rate of Value Added of Industry ∆%
| Industry | Light Industry | Heavy | State | Private | |
| 2012 | |||||
| Jan-Oct | 10.0 | 10.3 | 9.7 | 6.4 | 11.8 |
| 12 M Oct | 9.6 | 9.1 | 9.7 | 7.0 | 11.7 |
| Jan-Sep | 10.0 | 10.4 | 9.7 | 6.3 | 11.8 |
| 12 M Sep | 9.2 | 9.0 | 9.3 | 6.3 | 11.0 |
| Jan-Aug | 10.1 | 10.5 | 9.8 | 6.3 | 15.4 |
| 12 M Aug | 8.9 | 8.6 | 9.0 | 5.3 | 14.3 |
| Jan-Jul | 10.3 | 10.8 | 9.9 | 6.6 | 12.1 |
| 12 M Jul | 9.2 | 10.1 | 8.8 | 4.8 | 10.9 |
| Jan-Jun | 10.5 | 11.1 | 10.1 | 7.0 | 12.4 |
| 12 M Jun | 9.5 | 9.0 | 9.6 | 6.5 | 11.5 |
| Jan-May | 10.7 | 11.5 | 10.3 | 6.7 | 12.4 |
| 12 M May | 9.6 | 9.1 | 9.8 | 6.6 | 11.0 |
| Jan-Apr | 11.0 | 12.3 | 10.5 | 6.6 | 12.9 |
| 12 M Apr | 9.3 | 10.3 | 8.9 | 4.3 | 10.7 |
| Jan-Mar | 11.6 | 13.2 | 11.0 | 7.2 | 13.8 |
| 12 M Mar | 11.9 | 13.9 | 11.2 | 8.0 | 13.7 |
| Jan-Feb | 11.4 | 12.7 | 10.9 | 7.3 | 13.9 |
| 2011 | |||||
| Jan-Dec | 13.9 | 13.0 | 14.3 | 9.9 | 15.8 |
| 12 M Dec | 12.8 | 12.6 | 13.0 | 9.2 | 14.7 |
| Jan-Nov | 14.0 | 13.0 | 14.4 | 9.9 | 16.0 |
| 12 M Nov | 12.4 | 12.4 | 12.4 | 7.8 | 14.4 |
| Jan-Oct | 14.1 | 13.0 | 14.5 | 10.1 | 9.1 |
| 12 M Oct | 13.2 | 12.1 | 13.7 | 8.9 | 15.1 |
| Jan-Sep | 14.2 | 13.1 | 14.6 | 10.4 | 16.1 |
| 12 M Sep | 13.8 | 12.8 | 14.3 | 9.9 | 16.0 |
| Jan-Aug | 14.2 | 13.1 | 14.6 | 10.4 | 16.1 |
| 12 M Aug | 13.5 | 13.4 | 13.5 | 9.4 | 15.5 |
| Jan-Jul | 14.3 | ||||
| 12 M | 14.0 | 12.8 | 14.5 | 9.5 | |
| Jan-Jun | 14.3 | 13.1 | 14.7 | 10.7 | 19.7 |
| 12 M | 15.1 | 13.9 | 15.6 | 10.7 | 20.8 |
| Jan-May | 14.0 | 12.9 | 14.4 | 10.7 | 19.3 |
| 12 M May | 13.3 | 12.9 | 13.5 | 8.9 | 18.7 |
| Jan-Apr | 14.2 | 12.9 | 14.7 | 11.2 | 19.5 |
| 12 M Apr | 13.4 | 11.9 | 14.0 | 10.4 | 18.0 |
| Jan-Mar | 14.4 | 13.1 | 14.9 | 11.4 | 19.8 |
| 12 M Mar | 14.8 | 12.8 | 15.6 | 12.9 | 19.2 |
| 12 M Feb | 14.9 | 13.1 | 15.6 | 10.5 | 21.7 |
| Jan-Feb | 14.1 | 13.3 | 14.4 | 10.6 | 20.3 |
Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/
Chart VC-1 provides 12-month percentage changes of value added of industry in 2011 and from Jan to Oct 2012. Growth rates of value added of industry in the first five months of 2010 were higher than in 2011 as would be expected in an earlier phase of recovery from the global recession. Growth rates have converged in the second half of 2011 to lower percentages with further decline into 2012 to single digit percentage changes.
Chart VC-1, China, Growth Rate of Total Value Added of Industry, 12-Month ∆%
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Yearly rates of growth for the past 12 months and cumulative relative to the earlier year of various segments of industrial production in China are provided in Table VC-2. Rates from Jan to Dec 2011 relative to the same period a year earlier fluctuated but remained mostly above 10 percent with the exception of motor vehicles and crude oil. There is deceleration in Jan-Oct 2012 of percentage change with no segment showing growth exceeding 10 percent with exception of 12-month growth of 11.7 percent for pig iron, 11.5 percent for cement and 14.0 percent for nonferrous metals. Electricity fell from growth of 16.2 percent in the 12 months ending in Jun 2011 to 0.0 percent in the 12 months ending in Jun 2012, rebounding to 4.8 percent in Aug 2012 but declining to 1.5 percent in Sep 2012 and increasing to 3.9 percent in Oct 2012.
Table VC-2, China, Industrial Production Operation ∆%
| Elec- | Pig Iron | Cement | Crude | Non- | Motor Vehicles | |
| 2012 | ||||||
| Jan-Oct | 3.9 | 6.3 | 6.7 | 2.6 | 7.7 | 6.9 |
| 12 M Oct | 6.4 | 11.7 | 11.5 | 6.7 | 14.0 | 3.8 |
| Jan-Sep | 3.6 | 5.7 | 6.7 | 2.2 | 7.1 | 7.3 |
| 12 M Sep | 1.5 | 4.9 | 12.0 | 7.0 | 7.1 | 6.3 |
| Jan-Aug | 3.8 | -0.5 | 8.7 | 2.5 | 13.8 | 10.4 |
| 12 M Aug | 4.8 | 2.6 | 5.9 | -0.4 | 13.8 | 9.7 |
| Jan-Jul | 3.8 | 6.1 | 5.3 | 1.6 | 6.7 | 7.4 |
| 12M Jul | 2.1 | 6.5 | 6.1 | 1.1 | 4.1 | 12.3 |
| Jan-Jun | 3.7 | 6.1 | 5.5 | 1.7 | 6.7 | 6.7 |
| 12 M Jun | 0.0 | 6.7 | 6.5 | -0.6 | 5.8 | 13.8 |
| Jan-May | 4.7 | 6.3 | 5.0 | 2.2 | 5.1 | 6.2 |
| 12 M May | 2.7 | 6.3 | 4.3 | 0.7 | 6.6 | 18.5 |
| Jan-Apr | 5.0 | 6.2 | 5.5 | 2.9 | 4.6 | 3.1 |
| 12 M Apr | 0.7 | 7.9 | 4.9 | -0.3 | 2.3 | 10.7 |
| Jan-Mar | 7.1 | 6.5 | 7.3 | 3.1 | 5.8 | 0.0 |
| 12 M Mar | 7.2 | 10.2 | 7.9 | 2.0 | 3.3 | 5.1 |
| Jan-Feb | 7.1 | 4.6 | 4.8 | 4.0 | 8.4 | -1.8 |
| 2011 | ||||||
| Jan-Dec | 12.0 | 8.4 | 16.1 | 4.9 | 10.6 | 3.0 |
| 12 M Dec | 9.7 | 3.7 | 7.0 | 4.0 | 13.2 | -6.5 |
| Jan-Nov | 12.0 | 13.1 | 17.2 | 5.3 | 10.2 | 3.9 |
| 12 M Nov | 8.5 | 7.8 | 11.2 | 3.2 | 8.2 | -1.3 |
| Jan-Oct | 12.3 | 13.7 | 18.0 | 5.4 | 10.4 | 5.2 |
| 12 M | 9.3 | 13.4 | 16.5 | -0.9 | 3.7 | 1.3 |
| Jan-Sep | 12.7 | 13.9 | 18.1 | 6.0 | 11.2 | 5.5 |
| 12 M Sep | 11.5 | 18.8 | 15.7 | 1.5 | 13.9 | 2.5 |
| Jan-Aug | 13.0 | 13.1 | 18.4 | 6.6 | 4.7 | |
| 12 M Aug | 10.0 | 12.9 | 12.8 | 4.5 | 15.6 | 9.5 |
| Jan-Jul | 13.3 | 13.0 | 19.2 | 6.9 | 9.9 | 4.0 |
| 12 M | 13.2 | 14.9 | 16.8 | 5.9 | 9.8 | -1.3 |
| 12 M | 16.2 | 14.8 | 19.9 | -0.7 | 9.8 | 3.6 |
| 12 M | 12.1 | 10.6 | 19.2 | 6.0 | 14.2 | -1.9 |
| 12 M Apr | 11.7 | 8.3 | 22.4 | 6.8 | 6.1 | -1.6 |
| 12 M Mar | 14.8 | 13.7 | 29.8 | 8.0 | 11.6 | 9.9 |
| 12 M Feb | 11.7 | 14.5 | 9.1 | 10.9 | 14.4 | 10.3 |
| 12 M Jan | 5.1 | 3.5 | 16.4 | 12.2 | 1.4 | 23.9 |
| 12 M Dec 2010 | 5.6 | 4.6 | 17.3 | 10.3 | -1.9 | 27.6 |
M: month
Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/
Monthly growth rates of industrial production in China are provided in Table VC-3. Monthly rates have fluctuated around 1 percent. Jan and Feb 2012 are somewhat weaker but there was improvement to 1.18 percent in Mar. The rate of 0.36 percent in Apr is the lowest in the monthly series from Feb 2011 to Oct 2012. Monthly sales growth remained below 1 percent in all the first seven months of 2012 with the exception of Mar 2012.
Table VC-3, China, Industrial Production Operation, Month ∆%
| 2011 | Month ∆% |
| Feb | 0.93 |
| Mar | 0.99 |
| Apr | 1.32 |
| May | 0.79 |
| Jun | 1.30 |
| Jul | 0.82 |
| Aug | 0.85 |
| Sep | 0.95 |
| Oct | 0.71 |
| Nov | 0.75 |
| Dec | 0.97 |
| Jan 2012 | 0.48 |
| Feb | 0.63 |
| Mar | 1.18 |
| Apr | 0.36 |
| May | 0.89 |
| Jun | 0.77 |
| Jul | 0.69 |
| Aug | 0.73 |
| Sep | 0.80 |
| Oct | 0.81 |
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Table VC-4 provides cumulative growth of investment in fixed assets in China in 2011 relative to 2010 and in Jan-Oct 2012 relative to a year earlier. Total fixed investment has grown at a high rate fluctuating around 25 percent and fixed investment in real estate development has grown at rates in excess of 30 percent. In Jan-Oct 2012 investment in fixed assets in China grew 20.7 percent relative to a year earlier and 15.4 percent in real estate development. There was slight deceleration in the final two months of 2011 that continued into Jan-Oct 2012.
Table VC-4, China, Investment in Fixed Assets ∆% Relative to a Year Earlier
| Total | State | Real Estate Development | |
| Jan-Oct 2012 | 20.7 | 14.2 | 15.4 |
| Jan-Sep | 20.5 | 13.6 | 15.4 |
| Jan-Aug | 20.2 | 12.9 | 15.6 |
| Jan-Jul | 20.4 | 12.6 | 15.4 |
| Jan-Jun | 20.4 | 13.8 | 16.6 |
| Jan-May | 20.1 | 10.0 | 18.5 |
| Jan-Apr | 20.2 | 9.5 | 18.7 |
| Jan-Mar | 20.9 | 9.0 | 23.5 |
| Jan-Feb | 21.5 | 8.8 | 27.8 |
| Jan-Dec 2011 | 23.8 | 11.1 | 27.9 |
| Jan-Nov | 24.5 | 11.7 | 29.9 |
| Jan-Oct | 24.9 | 12.4 | 31.1 |
| Jan-Sep | 24.9 | 12.7 | 32.0 |
| Jan-Aug | 25.0 | 12.1 | 33.2 |
| Jan-Jul | 25.4 | 13.6 | 33.6 |
| Jan-Jun | 25.6 | 14.6 | 32.9 |
| Jan-May | 25.8 | 14.9 | 34.6 |
| Jan-Apr | 25.4 | 16.6 | 34.3 |
| Jan-Mar | 25.0 | 17.0 | 34.1 |
| Jan-Feb | 24.9 | 15.6 | 35.2 |
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Chart VC-2 provides cumulative fixed asset investment in China relative to a year earlier. Growth rose to 25.8 percent in Jan-May 2011 and then fell back to 24.9 percent in Sep and Oct 2011, declining further to 24.5 percent in Nov and 23.8 percent in Dec 2011 with deeper drop in Jan-Feb 2012 to 21.5 percent, 20.9 percent in Jan-Mar, 20.2 percent in Jan-Apr 2012, 20.1 percent in Jan-Apr 2012, 20.4 percent in both Jan-Jun 2012 and Jan-Jul 2012, 20.2 percent in Jan-Aug 2012, 20.5 percent in Jan-Sep 2012 and 20.7 percent in Jan-Oct 2012.
Chart VC-2, China, Investment in Fixed Assets, ∆% Cumulative over Year Earlier
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/enGliSH/
Monetary policy has been used in China in the form of increases in interest rates and required reserves of banks to moderate real estate investment. These policies have been reversed because of lower inflation and weakening economic growth. Chart VC-3 shows decline of fluctuating cumulative growth rates of investment in real estate development relative to a year earlier from 35.2 percent in Jan-Feb 2011 to 31.1 percent in Jan-Oct 2011, 29.9 percent in Jan-Nov 2011, 27.9 percent in Jan-Dec 2011, 27.8 percent in Jan-Feb 2012 and sharper decline to 23.5 percent in Jan-Mar 2012, 18.7 percent in Jan-Apr 2012 and 18.5 percent in Jan-May 2012. The trend of decline continued with 16.6 percent in Jan-Jun 2012, 15.4 percent in Jan-Jul 2012, 15.6 percent in Jan-Aug 2012, 15.4 percent in Jan-Sep 2012 and 15.4 percent in Jan-Oct 2012.
Chart VC-3, China, Investment in Real Estate Development, ∆% Cumulative over Year Earlier
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/enGliSH/
Table VC-5 provides monthly growth rates of investment in fixed assets in China from Feb 2011 to Oct 2012. Growth rates moderated from Nov 2011 to May 2012. The rate of 1.01 percent in Mar 2012 is the lowest for any month after Mar 2011 but rates rebounded to 1.83 percent in May 2012, 1.79 percent in Jun, 1.53 percent in Jul 2012, 1.43 percent in Aug 2012, 1.82 percent in Sep 2012 and 1.94 percent in Oct 2012.
Table VC-5, China, Investment in Fixed Assets, Month ∆%
| Month ∆% | |
| Feb 2011 | -0.23 |
| Mar | 2.45 |
| Apr | 2.22 |
| May | 1.68 |
| Jun | 1.48 |
| Jul | 1.58 |
| Aug | 1.62 |
| Sep | 1.88 |
| Oct | 1.42 |
| Nov | 1.39 |
| Dec | 1.50 |
| Jan 2012 | 1.23 |
| Feb | 1.99 |
| Mar | 1.01 |
| Apr | 1.24 |
| May | 1.83 |
| Jun | 1.79 |
| Jul | 1.53 |
| Aug | 1.43 |
| Sep | 1.82 |
| Oct | 1.94 |
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Growth rates of retail sales in China monthly, 12 months and cumulative relative to a year earlier are in Table VC-6. There is decline of growth rates to cumulative 14.7 percent in Feb 2012, 14.8 percent in Mar, 14.7 percent in Apr, 14.5 percent in May, 14.4 percent in Jun, 14.2 percent in Jul and 14.1 percent in Aug to Oct 2012. Percentage growth rates have declined in Jan-Oct 2012 relative to earlier months.
Table VC-6, China, Total Retail Sales of Consumer Goods ∆%
| Month ∆% | 12-Month ∆% | Cumulative ∆%/ | |
| 2012 | |||
| Oct | 1.34 | 14.5 | 14.1 |
| Sep | 1.65 | 14.2 | 14.1 |
| Aug | 1.32 | 13.2 | 14.1 |
| Jul | 1.25 | 13.1 | 14.2 |
| Jun | 1.45 | 13.7 | 14.4 |
| May | 1.32 | 13.8 | 14.5 |
| Apr | 1.17 | 14.1 | 14.7 |
| Mar | 1.54 | 15.2 | 14.8 |
| Feb | 1.32 | 14.7 | 14.7 |
| Jan | 0.24 | ||
| 2011 | |||
| Dec | 1.47 | 18.1 | 17.1 |
| Nov | 1.33 | 17.3 | 17.0 |
| Oct | 1.36 | 17.2 | 17.0 |
| Sep | 1.33 | 17.7 | 17.0 |
| Aug | 1.50 | 17.0 | 16.9 |
| Jul | 1.57 | 17.2 | 16.8 |
| Jun | 1.49 | 17.7 | 16.8 |
| May | 1.39 | 16.9 | 16.6 |
| Apr | 1.30 | 17.1 | 16.5 |
| Mar | 1.26 | 17.4 | 17.4 |
| Feb | 1.35 | 11.6 | 15.8 |
| Jan | 19.9 | 19.9 |
Note: there are slight revisions of month relative to earlier month data but not of the month on the same month year earlier or cumulative relative to cumulative year earlier in the databank
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Chart VC-4 of the National Bureau of Statistics of China provides 12-month rates of growth of retail sales in 2011 and 2012. There is again a drop into 2012 with the lowest percentages in Chart VC-4.
Chart VC-4, China, Total Retail Sales of Consumer Goods 12-Month ∆%
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/enGliSH/
Table VC-7 provides monthly percentage changes of retail sales in China. Although the rate of 0.24 percent in Jan 2012 is the lowest in Table VC-7, the rate of 1.65 percent in May is relatively high and 1.34 percent in Oct 2012 is closer to rates in 2011.
Table VC-7, China, Retail Sales, Month ∆%
| 2011 | Month ∆% |
| Feb | 1.35 |
| Mar | 1.26 |
| Apr | 1.30 |
| May | 1.39 |
| Jun | 1.49 |
| Jul | 1.57 |
| Aug | 1.50 |
| Sep | 1.33 |
| Oct | 1.36 |
| Nov | 1.33 |
| Dec | 1.47 |
| 2012 | |
| Jan | 0.24 |
| Feb | 1.32 |
| Mar | 1.54 |
| Apr | 1.17 |
| May | 1.32 |
| Jun | 1.45 |
| Jul | 1.25 |
| Aug | 1.32 |
| Sep | 1.65 |
| Oct | 1.34 |
Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/
VD Euro Area. Table VD-EUR provides yearly growth rates of the combined GDP of the members of the European Monetary Union (EMU) or euro area since 1996. Growth was very strong at 3.2 percent in 2006 and 3.0 percent in 2007. The global recession had strong impact with growth of only 0.4 percent in 2008 and decline of 4.4 percent in 2009. Recovery was at lower growth rates of 2.0 percent in 2010 and 1.4 percent in 2011. EUROSTAT forecasts growth of GDP of the euro area of minus 0.4 percent in 2012 and 0.1 percent in 2013 but 1.4 percent in 2014.
Table VD-EUR, Euro Area, Yearly Percentage Change of Harmonized Index of Consumer Prices, ∆%
| Year | HICP ∆% | Unemployment | GDP ∆% |
| 1999 | 1.2 | 9.6 | 2.9 |
| 2000 | 2.2 | 8.7 | 3.8 |
| 2001 | 2.4 | 8.1 | 2.0 |
| 2002 | 2.3 | 8.5 | 0.9 |
| 2003 | 2.1 | 9.0 | 0.7 |
| 2004 | 2.2 | 9.3 | 2.2 |
| 2005 | 2.2 | 9.2 | 1.7 |
| 2006 | 2.2 | 8.5 | 3.2 |
| 2007 | 2.1 | 7.6 | 3.0 |
| 2008 | 3.3 | 7.6 | 0.4 |
| 2009 | 0.3 | 9.6 | -4.4 |
| 2010 | 1.6 | 10.1 | 2.0 |
| 2011 | 2.7 | 10.1 | 1.4 |
| 2012* | -0.4 | ||
| 2013* | 0.1 | ||
| 2014* | 1.4 |
*EUROSTAT forecast Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
The Flash Eurozone PMI Composite Output Index of the Markit Flash Eurozone PMI®, combining activity in manufacturing and services, fell from 46.1 in Sep to 45.8 in Oct, for nine consecutive declines and thirteen drops in fourteen months, registering the lowest reading in 40 months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10202). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index is consistent with decline of GDP of 0.5 percent in IIIQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10202). The Markit Eurozone PMI® Composite Output Index, combining services and manufacturing activity with close association with GDP, decreased from 46.1 in Sep to 45.7 in Oct, which is the ninth consecutive contraction; contraction spread in manufacturing and services throughout the four largest economies of Germany, France, Italy and Spain (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10267). Rob Robson, Senior Economist at Markit, finds that the data are historically consistent with likely decline of GDP at a rate of 0.5 percent per quarter with companies concerned about weakness in both the internal economy and the world economy (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10267). The Markit Eurozone Services Business Activity Index declined from 46.1 in Sep to 46.0 in Oct, which is the lowest reading since Jul 2009 with service providers concerned about the internal market and those in the United States and Asia (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10267). The Markit Eurozone Manufacturing PMI® fell to 45.4 in Oct from 46.1 in Sep (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10253). New export orders declined in Oct for sixteenth consecutive month, with declines for the two largest economies of France and Germany. Rob Dobson, Chief Economist at Markit, finds that manufacturing output declined through all sectors of consumer, intermediate and investment goods with constraint of demand by internally and from abroad, including trade within the euro area and with third regions (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10253). Table EUR provides the regional data table for the euro area.
Table EUR, Euro Area Economic Indicators
| GDP | IIIQ2012 ∆% -0.1; IIIQ2012/IIIQ2011 ∆% -0.6 Blog 11/18/12 |
| Unemployment | Sep 2012: 11.6% unemployment rate Sep 2012: 18.490 million unemployed Blog 11/4/12 |
| HICP | Oct month ∆%: 0.2 12 months Oct ∆%: 2.5 |
| Producer Prices | Euro Zone industrial producer prices Sep ∆%: 0.2 |
| Industrial Production | Sep month ∆%: -2.5; Sep 12 months ∆%: -2.3 |
| Retail Sales | Sep month ∆%: minus 0.2 |
| Confidence and Economic Sentiment Indicator | Sentiment 84.5 Oct 2012 Consumer minus 25.7 Oct 2012 Blog 11/4/12 |
| Trade | Jan-Sep 2012/Jan-Sep 2011 Exports ∆%: 8.0 Sep 2012 12-month Exports ∆% 1.4 Imports ∆% -4.1 |
Links to blog comments in Table EUR:
11/11/12 http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html
11/4/12 http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html
Table VD-1 provides yearly growth rates of the combined GDP of the members of the European Monetary Union (EMU) or euro area since 1996. Growth was very strong at 3.2 percent in 2006 and 3.0 percent in 2007. The global recession had strong impact with growth of only 0.4 percent in 2008 and decline of 4.4 percent in 2009. Recovery was at lower growth rates of 2.0 percent in 2010 and 1.4 percent in 2011. EUROSTAT forecasts growth of GDP of the euro area of minus 0.4 percent in 2012, 0.1 percent in 2013 and 1.4 percent in 2014.
Table VD-1, Euro Area, Real GDP Growth Rate
| Year | ∆% |
| 2014 EUROSTAT Forecast | 1.4 |
| 2013 EUROSTAT Forecast | 0.1 |
| 2012 EUROSTAT Forecast | -0.4 |
| 2011 | 1.4 |
| 2010 | 2.0 |
| 2009 | -4.4 |
| 2008 | 0.4 |
| 2007 | 3.0 |
| 2006 | 3.2 |
| 2005 | 1.7 |
| 2004 | 2.2 |
| 2003 | 0.7 |
| 2002 | 0.9 |
| 2001 | 2.0 |
| 2000 | 3.8 |
| 1999 | 2.9 |
| 1998 | 2.8 |
| 1997 | 2.6 |
| 1996 | 1.5 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
Table VD-2 provides percentage changes of euro area real GDP in a quarter relative to the prior quarter. Real GDP fell 0.3 percent in IVQ2011, remained unchanged in IQ2012 and fell 0.2 percent in IIQ2012. GDP fell 0.1 percent in IIIQ2012. The global recession manifested in the euro area in five consecutive quarterly declines from IIQ2008 to IIQ2009. The strongest impact was contraction of 2.8 percent in IQ2009. Recovery began in IIIQ2009 with cumulative growth of 3.7 percent to IQ2011 or at the annual equivalent rate of 2.1 percent. Growth was much more vigorous from IVQ2003 to IQ2008.
Table VD-2, Euro Area, Real GDP, Percentage Change from Prior Quarter, ∆%
| IQ | IIQ | IIIQ | IVQ | |
| 2012 | 0.0 | -0.2 | -0.1 | |
| 2011 | 0.6 | 0.2 | 0.1 | -0.3 |
| 2010 | 0.5 | 1.0 | 0.4 | 0.3 |
| 2009 | -2.8 | -0.3 | 0.4 | 0.4 |
| 2008 | 0.5 | -0.4 | -0.6 | -1.7 |
| 2007 | 0.8 | 0.5 | 0.6 | 0.4 |
| 2006 | 0.9 | 1.1 | 0.7 | 1.0 |
| 2005 | 0.2 | 0.7 | 0.6 | 0.6 |
| 2004 | 0.5 | 0.5 | 0.4 | 0.3 |
| 2003 | 0.0 | 0.1 | 0.5 | 0.7 |
| 2002 | 0.2 | 0.6 | 0.3 | 0.0 |
| 2001 | 0.9 | 0.1 | 0.1 | 0.2 |
| 2000 | 1.3 | 0.9 | 0.4 | 0.6 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
Table VD-3 provides percentage change in real GDP in the euro area in a quarter relative to the same quarter a year earlier. Growth rates were quite strong from 2004 to 2007. There were five consecutive quarters of sharp declines in GDP in a quarter relative to the same quarter a year earlier from IVQ2008 to IVQ2009 with sharp contractions of 5.4 percent in IQ2009, 5.3 percent in IIQ2009 and 4.4 percent in IIIQ2009. Growth rates decline in magnitude with 1.3 percent in IIIQ2011, 0.6 percent in IVQ211 and 0.0 percent in IQ2012 with contractions of 0.4 percent in IIQ2012 and 0.6 percent in IIIQ2012.
Table VD-3, Euro Area, Real GDP Percentage Change in a Quarter Relative to Same Quarter a Year Earlier, ∆%
| IQ | IIQ | IIIQ | IV | |
| 2012 | 0.0 | -0.4 | -0.6 | |
| 2011 | 2.4 | 1.6 | 1.3 | 0.6 |
| 2010 | 1.0 | 2.3 | 2.3 | 2.2 |
| 2009 | -5.4 | -5.3 | -4.4 | -2.3 |
| 2008 | 2.0 | 1.2 | 0.0 | -2.1 |
| 2007 | 3.7 | 3.0 | 3.0 | 2.3 |
| 2006 | 3.3 | 3.4 | 3.8 | 3.7 |
| 2005 | 1.6 | 1.9 | 2.2 | 3.0 |
| 2004 | 2.2 | 2.2 | 1.8 | 1.5 |
| 2003 | 0.9 | 0.4 | 0.5 | 1.2 |
| 2002 | 0.5 | 1.0 | 1.2 | 1.1 |
| 2001 | 2.9 | 2.1 | 1.7 | 1.2 |
| 2000 | 4.3 | 4.4 | 3.8 | 3.3 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
Table VD-4 provides GDP growth in IIIQ2012 and relative to the same quarter a year earlier for the euro zone, European Union, Japan and the US. The GDP of the euro zone fell 0.1 percent in IIIQ2012 and declined 0.6 percent relative to a year earlier while the GDP of the European Union increased 0.1 percent in IIIQ2012 and increased 0.9 percent relative to a year earlier. Growth in IIQ2012 was weak worldwide with somewhat stronger performance by the US but still insufficient to reduce unemployment and underemployment (http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html
) and motivate hiring (http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html).
Table VD-4, Euro Zone, European Union, Japan and USA, Real GDP Growth
| ∆% IIIQ2012/ IIQ2012 | ∆% IIIQ2012/ IIIQ2011 | |
| Euro Zone | -0.1 | -0.6 |
| European Union | 0.1 | -0.4 |
| Germany | 0.2 | 0.9 |
| France | 0.2 | 0.1 |
| Netherlands | -1.1 | -1.4 |
| Finland | 0.3 | -0.8 |
| Belgium | 0.0 | -0.3 |
| Portugal | -0.8 | -3.4 |
| Ireland* | 0.0 | -0.5 |
| Italy | -0.2 | -2.4 |
| Greece | NA | -7.2 |
| Spain | -0.3 | -1.6 |
| United Kingdom | 1.0 | 0.0 |
| Japan | -0.9 | 0.2 |
| USA | 0.5 | 2.3 |
*Calendar adjusted.
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
Chart VD-1 of EUROSTAT provides growth in 2012 relative to 2011 for a large variety of countries. There have been diverging experiences in growth in the world economy.
Chart VD-1, Euro Zone, European Union, Real GDP Growth 2011 ∆% on Previous Year
Source: EUROSTAT
Industrial production in the euro area decreased 2.5 percent in Sep 2012, declining in three of six months from Apr to Sep 2012 for cumulative growth of minus 1.6 percent that is equivalent to minus 3.2 percent in a year, as shown in Table VD-5 with revised estimates by EUROSTAT. All segments of industrial production fell sharply in Sep 2012. Industrial production is highly volatile in the euro zone.
Table VD-5, Euro Zone, Industrial Production Month ∆%
| Total | INT | ENE | CG | DUR | NDUR | |
| Sep 2012 | -2.5 | -2.0 | -1.8 | -3.0 | -4.3 | -2.8 |
| Aug | 0.9 | 0.2 | 0.7 | 1.3 | 3.0 | 1.8 |
| Jul | 0.5 | 0.2 | -0.6 | 2.0 | -0.1 | -0.4 |
| Jun | -0.4 | -0.4 | 1.2 | -1.1 | 0.5 | -0.7 |
| May | 0.9 | 0.4 | -1.3 | 1.2 | 0.6 | 2.0 |
| Apr | -1.0 | -1.0 | 5.2 | -2.8 | -1.1 | -1.9 |
Notes: INT: Intermediate; ENE: Energy; CG: Capital Goods; DUR: Durable Consumer Goods; NDUR: Nondurable Consumer Goods
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/4-14112012-AP/EN/4-14112012-AP-EN.PDF
Table VD-6 provides monthly and 12-month percentage changes of industrial production and major industrial categories in the euro zone. All percentage changes in Table VD-6 are sharply negative with exception of decrease of 0.8 percent in output of capital goods in the 12 months ending in Sep 2012. Industrial production decreased 2.5 percent in the month of Sep 2012 and fell 2.3 percent in the 12 months ending in Sep 2012. Industrial production deteriorated at unusually high rates in Sep 2012.
Table VD-6, Euro Zone, Industrial Production 12-Month ∆%
| 2012 | Sep Month ∆% | Sep 12-Month ∆% |
| Total | -2.5 | -2.3 |
| Intermediate Goods | -2.0 | -4.0 |
| Energy | -1.8 | -1.6 |
| Capital Goods | -3.0 | -0.8 |
| Durable Consumer Goods | -4.3 | -1.2 |
| Nondurable Consumer Goods | -2.8 | -2.3 |
Source: Eurostat http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/4-14112012-AP/EN/4-14112012-AP-EN.PDF
There has been significant decline in percentage changes of industrial production and major categories in 12-month rates into 2012 as shown in Table VD-7. The 12-month rate of growth in Mar 2011 of minus 1.7 percent has fallen to minus 2.3 percent in Oct 2012. Trend is difficult to identify because of significant volatility but is evidently negative. Capital goods were growing at 2.4 percent in the 12 months ending in Mar 2011 and at minus 0.8 percent in the 12 months ending in Oct 2012.
Table VD-7, Euro Zone, Industrial Production 12-Month ∆%
| Total | INT | ENE | CG | DUR | NDUR | |
| Sep 2012 | -2.3 | -4.0 | -1.6 | -0.8 | -1.2 | -2.3 |
| Aug | -1.3 | -3.6 | 0.2 | 0.1 | -2.2 | 0.0 |
| Jul | -2.7 | -3.9 | 0.6 | -1.6 | -9.2 | -2.6 |
| Jun | -2.0 | -3.6 | 1.4 | -0.6 | -2.3 | -2.2 |
| May | -2.6 | -3.7 | -0.6 | -1.7 | -6.3 | -2.1 |
| Apr | -2.6 | -4.4 | 2.6 | -1.0 | -7.1 | -3.9 |
Notes: INT: Intermediate; ENE: Energy; CG: Capital Goods; DUR: Durable Consumer Goods; NDUR: Nondurable Consumer Goods
Source: Eurostat http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/4-14112012-AP/EN/4-14112012-AP-EN.PDF
Euro zone trade growth continues to be relatively strong as shown in Table VD-8. Exports grew at 8.0 percent and imports at 1.8 percent in Jan-Sep 2012 relative to Jan-Sep 2011. The 12-month rate of growth of exports was 1.4 percent in Sep 2012 while imports decreased 4.1 percent. In Aug 2012, exports increased 10.0 percent in 12 months and imports increased 1.8 percent. At the margin, rates of growth of trade are declining in part because of moderation of commodity prices.
Table VD-8, Euro Zone, Exports, Imports and Trade Balance, Billions of Euros and Percent, NSA
| Exports | Imports | |
| Jan-Sep 2012 | 1,390.8 | 1,336.3 |
| Jan-Sep 2011 | 1,288.1 | 1,312.9 |
| ∆% | 8.0 | 1.8 |
| Sep 2012 | 154.0 | 144.2 |
| Sep 2011 | 151.9 | 150.3 |
| ∆% | 1.4 | -4.1 |
| Aug 2012 | 151.6 | 146.3 |
| Aug 2011 | 137.8 | 143.7 |
| ∆% | 10.0 | 1.8 |
| Trade Balance | Jan-Sep 2012 | Jan-Sep 2011 |
| € Billions | 54.6 | -24.8 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/6-16112012-AP/EN/6-16112012-AP-EN.PDF
The structure of trade of the euro zone in Jan-Aug 2012 is provided in Table VD-9. Data are still not available for trade structure for Sep 2012. Manufactured exports increased 8.2 percent in Jan-Aug 2012 relative to Jan-Aug 2011 while imports fell 0.8 percent. The trade surplus in manufactured products was marginally higher than the trade deficit in primary products in Jan-Aug 2012 but lower in Jan-Aug 2011 largely because of the commodity shock caused by carry trades.
Table VD-9, Euro Zone, Structure of Exports, Imports and Trade Balance, € Billions, NSA, ∆%
| Primary | Manufactured | Other | Total | |
| Exports | ||||
| Jan-Aug 2012 € B | 192.4 | 1,009.7 | 34.7 | 1,236.8 |
| Jan-Aug 2011 € B | 171.6 | 933.5 | 31.1 | 1,136.2 |
| ∆% | 12.1 | 8.2 | 11.6 | 8.9 |
| Imports | ||||
| Jan-Aug 2012 € B | 441.0 | 729.9 | 21.2 | 1,192.1 |
| Jan-Aug 2011 € B | 408.5 | 735.5 | 18.7 | 1,162.7 |
| ∆% | 8.0 | -0.8 | 13.4 | 2.5 |
| Trade Balance € B | ||||
| Jan-Aug 2012 | -248.6 | 279.8 | 13.6 | 44.8 |
| Jan-Aug 2011 | -236.8 | 198.0 | 12.4 | -26.4 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/6-16112012-AP/EN/6-16112012-AP-EN.PDF
© Carlos M. Pelaez, 2010, 2011, 2012
No comments:
Post a Comment