United States Commercial Banks Assets and Liabilities, Peaking Financial Risk Assets, IMF World Economic Outlook Projections Update, United States Housing Collapse, World Financial Turbulence and Economic Slowdown with Global Recession Risk: Part II

 

United States Commercial Banks Assets and Liabilities, Peaking Financial Risk Assets, IMF World Economic Outlook Projections Update, United States Housing Collapse, World Financial Turbulence and Economic Slowdown with Global Recession Risk

Carlos M. Pelaez

© Carlos M. Pelaez, 2010, 2011, 2012, 2013

Executive Summary

IA United States Commercial Banks Assets and Liabilities

IA1 Transmission of Monetary Policy

IA2 Functions of Banks

IA3 United States Commercial Banks Assets and Liabilities

IA4 Theory and Reality of Economic History and Monetary Policy Based on Fear of Deflation

IB IMF World Economic Outlook Projections Update

II United States Housing Collapse

IIA United States New House Sales

IIB United States House Prices

IIC Factors of United States Housing Collapse

III World Financial Turbulence

IIIA Financial Risks

IIIE Appendix Euro Zone Survival Risk

IIIF Appendix on Sovereign Bond Valuation

IV Global Inflation

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	2.6	1.7	1.3	7.7
Japan	0.5	-0.1	-0.6	4.1
China	7.9	2.5	-1.9
UK	0.0	2.7* RPI 3.1	2.2* output 1.5** input 0.3*	7.7
Euro Zone	-0.6	2.2	2.1	11.8
Germany	0.9	2.0	1.4	5.4
France	0.0	1.5	1.9	10.5
Nether-lands	-1.4	3.4	4.0	5.6
Finland	-1.1	3.5	2.3	7.9
Belgium	-0.3	2.1	5.3	7.4
Portugal	-3.4	2.1	3.8	16.3
Ireland	-0.5	1.6	2.8	14.6
Italy	-2.4	2.6	2.2	11.1
Greece	-7.2	0.3	2.5	NA
Spain	-1.6	3.0	2.8	26.6

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/december-2012/index.html **Core

PPI http://www.ons.gov.uk/ons/rel/ppi2/producer-price-index/december-2012/index.html

Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/; 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 2.6 percent in IIIQ2012 relative to IIIQ2011 (Table 8 in http://www.bea.gov/newsreleases/national/gdp/2012/pdf/gdp3q12_3rd.pdf See I Mediocre and Decelerating United States Economic Growth at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states.html). Japan’s GDP fell 0.2 percent in IVQ2011 relative to IVQ2010 and contracted 1.6 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 10.4 percent in IIIQ2011, increasing at the SAAR of 0.3 percent in IVQ 2011, increasing at the SAAR of 5.7 percent in IQ2012 and decreasing at 0.1 percent in IIQ2012 but contracting at the SAAR of 3.5 percent in IIIQ2012 (see Section VB at http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth.html and earlier http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal_18.html ); the UK grew at minus 0.3 percent in IVQ2012 relative to IIIQ2012 and GDP changed 0.0 percent in IVQ2012 relative to IVQ2011 (see Section VH and earlier at http://cmpassocregulationblog.blogspot.com/2012/12/united-states-commercial-banks-assets.html); and the Euro Zone grew at minus 0.1 percent in IIIQ2012, IIIQ2011 (see Section VD at http://cmpassocregulationblog.blogspot.com/2012/12/twenty-eight-million-unemployed-or.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal_18.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: 7.7 percent in the US but 18.2 percent for unemployment/underemployment or job stress of 29.5 million (see Table I-4 at http://cmpassocregulationblog.blogspot.com/2013/01/thirty-million-unemployed-or.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/12/twenty-eight-million-unemployed-or.html), 4.1 percent for Japan (see Section VB at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_2.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html), 7.7 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/2012/12/mediocre-and-decelerating-united-states_24.html). Twelve-month rates of inflation have been quite high, even when some are moderating at the margin: 1.7 percent in the US, -0.1 percent for Japan, 2.5 percent for China, 2.2 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/2013/01/recovery-without-hiring-world-inflation.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 http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states.html), weak hiring with the loss of 10 million full-time jobs (http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth.html) and continuing job stress of 24 to 30 million people in the US and stagnant wages in a fractured job market (Section I at http://cmpassocregulationblog.blogspot.com/2013/01/thirty-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2012/12/twenty-eight-million-unemployed-or.html); (4) the timing, dose, impact and instruments of normalizing monetary and fiscal policies (see Section I http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html 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.

Charles Evans, President of the Federal Reserve Bank of Chicago, proposed an “economic state-contingent policy” or “7/3” approach (Evans 2012 Aug 27):

“I think the best way to provide forward guidance is by tying our policy actions to explicit measures of economic performance. There are many ways of doing this, including setting a target for the level of nominal GDP. But recognizing the difficult nature of that policy approach, I have a more modest proposal: I think the Fed should make it clear that the federal funds rate will not be increased until the unemployment rate falls below 7 percent. Knowing that rates would stay low until significant progress is made in reducing unemployment would reassure markets and the public that the Fed would not prematurely reduce its accommodation.

Based on the work I have seen, I do not expect that such policy would lead to a major problem with inflation. But I recognize that there is a chance that the models and other analysis supporting this approach could be wrong. Accordingly, I believe that the commitment to low rates should be dropped if the outlook for inflation over the medium term rises above 3 percent.

The economic conditionality in this 7/3 threshold policy would clarify our forward policy intentions greatly and provide a more meaningful guide on how long the federal funds rate will remain low. In addition, I would indicate that clear and steady progress toward stronger growth is essential.”

Evans (2012Nov27) modified the “7/3” approach to a “6.5/2.5” approach:

“I have reassessed my previous 7/3 proposal. I now think a threshold of 6-1/2 percent for the unemployment rate and an inflation safeguard of 2-1/2 percent, measured in terms of the outlook for total PCE (Personal Consumption Expenditures Price Index) inflation over the next two to three years, would be appropriate.”

The Federal Open Market Committee (FOMC) decided at its meeting on Dec 12, 2012 to implement the “6.5/2.5” approach (http://www.federalreserve.gov/newsevents/press/monetary/20121212a.htm):

“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 asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.”

Unconventional monetary policy will remain in perpetuity, or QE∞, changing to a “growth mandate.” There are two reasons explaining unconventional monetary policy of QE∞: insufficiency of job creation to reduce unemployment/underemployment at current rates of job creation; and growth of GDP at 1.5 percent, which is well below 3.0 percent estimated by Lucas (2011May) from 1870 to 2010. Unconventional monetary policy interprets the dual mandate of low inflation and maximum employment as mainly a “growth mandate” of forcing economic growth in the US at a rate that generates full employment. A hurdle to this “growth mandate” is that the US economy grew at 6.2 percent on average during cyclical expansions in the postwar period while growth has been at only 2.2 percent on average in the cyclical expansion in the 13 quarters from IIIQ2009 to IIIQ2012. Zero interest rates and quantitative easing have not provided the impulse for growth and were not required in past successful cyclical expansions.

First, reduction of the unemployment rate to normal would take between 35 and 256 years depending on the definition (http://cmpassocregulationblog.blogspot.com/2012/12/twenty-eight-million-unemployed-or.html). The US labor force stood at 153.373 million in Dec 2011 and 154.904 million in Dec 2012, not seasonally adjusted, for increase of 1.531 million or 127,583 per month. The average increase of 130,100 new nonfarm jobs per month in the US from Mar to Dec 2012 is insufficient even to absorb 127,583 new entrants per month into the labor force. The difference between the average increase of 137,200 new private nonfarm jobs per month in the US from Mar to Dec 2012 and the 127,583 average monthly increase in the labor force from Nov 2011 to Nov 2012 is 9,617 monthly new jobs net of absorption of new entrants in the labor force. There are 29.6 million in job stress in the US currently. The provision of 9,617 new jobs per month net of absorption of new entrants in the labor force would require 3078 months to provide jobs for the unemployed and underemployed (29.6 million divided by 9,617) or 256 years (3078 divided by 12). Net job creation of 9,617 jobs per month only adds 115,404 jobs in a year. The civilian labor force of the US in Dec 2012 not seasonally adjusted stood at 154.904 million with 11.844 million unemployed or effectively 18.700 million unemployed in this blog’s calculation by inferring those who are not searching because they believe there is no job for them. Reduction of one million unemployed at the current rate of job creation without adding more unemployment requires 8.7 years (1 million divided by product of 9,617 by 12, which is 115,404). Reduction of the rate of unemployment to 5 percent of the labor force would be equivalent to unemployment of only 7.745 million (0.05 times labor force of 154.904 million) for new net job creation of 4.099 million (11.844 million unemployed minus 7.745 million unemployed at rate of 5 percent) that at the current rate would take 35.5 years (4.099 million divided by 115,404). Under the calculation in this blog there are 18.700 million unemployed by including those who ceased searching because they believe there is no job for them. Reduction of the rate of unemployment to 5 percent of the labor force would require creating 10.612 million jobs net of labor force growth that at the current rate would take 91.9 years (18.700 million minus 0.05(161.760 million) divided by 115,404, using LF PART 66.2% and Total UEM in Table ESI-1). These calculations assume that there are no more recessions, defying United States economic history with periodic contractions of economic activity when unemployment increases sharply. Second, calculations show that actual US GDP growth is around 1.7 percent per year that will perpetuate unemployment/underemployment (http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states.html). This rate of 1.7 percent is well below trend growth of 3 percent per year from 1870 to 2010, which has been always recovered after events such as wars and recessions (Lucas 2011May). Weakness of growth is shown by the exceptional one-time contributions to growth from items that are not aggregate demand, 2.53 percentage points contributed by inventory change to growth of 4.1 percent in IVQ2011 and 0.64 percentage points contributed by exceptional expenditures in national defense together with 0.73 percentage points of inventory accumulation to growth of 3.1 percent in IIIQ2012. Deducting inventory accumulation and one-time national defense expenditures adjusts IIIQ2012 growth to annual 1.73 percent. Cumulative growth of 2.0 percent in IQ2012, 1.3 percent in IIQ2012 and adjusted 1.73 percent in IIIQ2012 annualizes to 1.7 percent in the first three quarters of 2012 {([(1.02)^1/4(1.013)^1/4(1.0173^1/4]^4/3 -1)100 = 1.7%}. The actual rate required to reduce unemployment/underemployment to normal is even much higher than 3 percent in historical trend.

In fact, it is evident to the public that this policy will be abandoned if inflation costs rise. There is concern of the production and employment costs of controlling future inflation. Even if there is no inflation, QE∞ cannot be abandoned because of the fear of rising interest rates. The economy would operate in an inferior allocation of resources and suboptimal growth path, or interior point of the production possibilities frontier where the optimum of productive efficiency and wellbeing is attained, because of the distortion of risk/return decisions caused by perpetual financial repression. Not even a second-best allocation is feasible with the shocks to efficiency of financial repression in perpetuity.

The statement of the FOMC at the conclusion of its meeting on Dec 12, 2012, revealed the following policy intentions (http://www.federalreserve.gov/newsevents/press/monetary/20121212a.htm):

“Release Date: December 12, 2012

For immediate release

Information received since the Federal Open Market Committee met in October suggests that economic activity and employment have continued to expand at a moderate pace in recent months, apart from weather-related disruptions. Although the unemployment rate has declined somewhat since the summer, it remains elevated. Household spending has continued to advance, and the housing sector has shown further signs of improvement, but growth in business fixed investment has slowed. Inflation has been running somewhat below the Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in 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 will 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 purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month. The Committee 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 and, in January, will resume rolling over maturing Treasury securities at auction. Taken together, these actions should maintain 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 Treasury and agency mortgage-backed securities, 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 asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. The Committee views these thresholds as consistent with its earlier date-based guidance. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.”

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 $85 billion of bond purchases per month: “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 purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month.”

3. Advance Guidance on “6 ¼ 2 ½ “Rule. Policy will be accommodative even after the economy recovers satisfactorily: “o 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 asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.”

4. Monitoring and Policy Focus on Jobs. The FOMC reconsiders its policy continuously in accordance with available information: “The Committee views these thresholds as consistent with its earlier date-based guidance. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.”

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 that is actually a target of growth forecast. 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 Dec 12, 2012. The Fed releases the data with careful explanations (http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20121212.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/2012/12/mediocre-and-decelerating-united-states_24.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states.html) and the PCE inflation data from the report on personal income and outlays (Section IV at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states.html). The Bureau of Economic Analysis (BEA) provides the third estimate of IIIQ2012 GDP with the advance estimate of IVQ2012 and annual for 2012 to be released on Jan 30 (http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm See Section I at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html). 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 Nov 2012 at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states.html. The next report on “Personal Income and Outlays” for Dec will be released at 8:30 AM on Jan 31, 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 Nov report at http://cmpassocregulationblog.blogspot.com/2012/12/twenty-eight-million-unemployed-or.html; 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 Dec was released on Fri Jan 4, 2013 (http://www.bls.gov/ces/) and analyzed in this blog (http://cmpassocregulationblog.blogspot.com/2013/01/thirty-million-unemployed-or.html). The report for Jan 2013 will be released on Fri Feb 1, 2013 (http://www.bls.gov/ces/) and analyzed in this blog on Feb 3, 2013. “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/fomcprojtabl20121212.pdf).

It is instructive to focus on 2012 and 2013 as 2014, 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 Dec 12, 2012 and the second row “PR” the projection of the Sep 13, 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 and 1.7 to 1.8 percent at the Dec 12, 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 but reduced to 2.3 to 3.0 percent at the Dec 12, 2012 meeting.

2. 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, lowering the projection to 7.8 to 7.9 percent at the Dec 12, 2012 meeting. 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 and reduced to 7.4 to 7.7 percent at the Dec 12 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 and 1.6 to 1.7 percent at the Dec 12, 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 and lowered to 1.7 to 1.9 percent at the Dec 12, 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 Tendency
2012  Sep PR	1.7 to 1.8 1.7 to 2.0	7.8 to 7.9 8.0 to 8.2	1.6 to 1.7 1.7. to 1.8	1.6 to 1.7 1.7 to 1.9
2013  Sep PR	2.3 to 3.0 2.5 to 3.0	7.4 to 7.7 7.6 to 7.9	1.3 to 2.0 1.6 to 2.0	1.6 to 1.9 1.7 to 2.0
2014  Sep PR	3.0 to 3.5 3.0 to 3.8	6.8 to 7.3 6.7 to 7.3	1.5 to 2.0 1.6 to 2.0	1.6 to 2.0 1.8 to 2.0
2015 Sep	3.0 to 3.7 3.0 to 3.8	6.0 to 6.6 6.0 to 6.8	1.7 to 2.0 1.8 to 2.0	1.8 to 2.0 1.9 to 2.0
Longer Run Sep 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 Sep PR	1.6 to 2.0 1.6 to 2.0	7.7 to 8.0 8.0 to 8.3	1.6 to 1.8 1.5 to 1.9	1.6 to 1.8 1.6 to 2.0
2013 Sep PR	2.0 to 3.2 2.3 to 3.5	6.9 to 7.8 7.0 to 8.0	1.3 to 2.0 1.5 to 2.1	1.5 to 2.0 1.6 to 2.0
2014 Sep PR	2.8 to 4.0 2.7 to 4.1	6.1 to 7.4 6.3 to 7.5	1.4 to 2.2 1.6 to 2.2	1.5 to 2.0 1.6 to 2.2
2015 Sep PR	2.5 to 4.2 2.5 to 4.2	5.7 to 6.8 5.7 to 6.9	1.5 to 2.2 1.8 to 2.3	1.7 to 2.2 1.8 to 2.3
Longer Run Sep PR	2.2 to 3.0 2.2 to 3.0	5.0 to 6.0 5.0 to 6.3	2.0 2.0

Notes: UEM: unemployment; PR: Projection

Source: http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20121212.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 decision making 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 See Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 99-116). 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/fomcprojtabl20121212.pdf). There are 19 participants expecting the rate to remain at 0 to ¼ percent in 2012 and none to be higher. Not much change is expected in 2013 either with 17 participants anticipating the rate at the current target of 0 to ¼ percent and only two expecting higher rates. The rate would still remain at 0 to ¼ percent in 2014 for 14 participants with three expecting the rate to be in the range of 1.0 to 2.0 percent, one participant expecting rates at 0.5 to 1.0 percent and one participant 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, nine participants expect rates to be below 1.0 percent while nine expect rates from 1.0 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	19
2013	17	1		1
2014	14	1		3	1
2015	1	8		6	1	3
Longer Run						19

Source: http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20121212.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	2
2014	3
2015	13
2016	1

Source: http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20121212.pdf

Unconventional monetary policy of zero interest rates and quantitative easing has been used in Japan and now also in the US. Table IV-5 provides the consumer price index of Japan, with inflation of minus 0.1 percent in 12 months ending in Dec, increase of 0.1 percent NSA (not-seasonally-adjusted) in Dec and increase of 0.2 percent SA (seasonally-adjusted) in the month of Dec. Inflation of consumer prices in the first four months of 2012 annualizes at 1.2 percent SA and 3.0 percent NSA. Annual equivalent inflation in the first three months of 2012 is 1.6 percent SA and 3.7 percent NSA. There are negative percentage changes in most of the 12-month rates in 2011 with the exception of Jul and Aug both with 0.2 percent and stability in Sep. All monthly and 12-month rates of inflation are nonnegative in the first four months of 2012. There are ten years of deflation, three of zero inflation and only five of inflation in the annual rate of inflation in from 1995 to 2012. This experience is entirely different from that of the US that shows long-term inflation. There is only one annual negative change of the CPI all items of the US in Table IV-5, minus 0.4 percent in 2009 but following 3.8 percent in 2008 because of carry trades from policy rates moving to zero in 2008 during a global contraction that were reversed because of risk aversion in late 2008 and early 2009, causing decreasing commodity prices. Both the US and Japan experienced high rates of inflation during the US Great Inflation of the 1970s (see 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; see Taylor 1993, 1997, 1998LB, 1999, 2012FP, 2012Mar27, 2012Mar28, 2012JMCB and http://cmpassocregulationblog.blogspot.com/2012/06/rules-versus-discretionary-authorities.html). It is difficult to justify unconventional monetary policy because of risks of deflation similar to that experienced in Japan. Fear of deflation as had occurred during the Great Depression and in Japan was used as an argument for the first round of unconventional monetary policy with 1 percent interest rates from Jun 2003 to Jun 2004 and quantitative easing in the form of withdrawal of supply of 30-year securities by suspension of the auction of 30-year Treasury bonds with the intention of reducing mortgage rates. For fear of deflation see Pelaez and Pelaez, International Financial Architecture (2005), 18-28, and Pelaez and Pelaez, The Global Recession Risk (2007), 83-95. The financial crisis and global recession were caused by interest rate and housing subsidies and affordability policies that encouraged high leverage and risks, low liquidity and unsound credit (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 157-66, Regulation of Banks and Finance (2009b), 217-27, International Financial Architecture (2005), 15-18, The Global Recession Risk (2007), 221-5, Globalization and the State Vol. II (2008b), 197-213, Government Intervention in Globalization (2008c), 182-4). Several past comments of this blog elaborate on these arguments, among which: http://cmpassocregulationblog.blogspot.com/2011/07/causes-of-2007-creditdollar-crisis.html http://cmpassocregulationblog.blogspot.com/2011/01/professor-mckinnons-bubble-economy.html http://cmpassocregulationblog.blogspot.com/2011/01/world-inflation-quantitative-easing.html http://cmpassocregulationblog.blogspot.com/2011/01/treasury-yields-valuation-of-risk.html http://cmpassocregulationblog.blogspot.com/2010/11/quantitative-easing-theory-evidence-and.html http://cmpassocregulationblog.blogspot.com/2010/12/is-fed-printing-money-what-are.html 

Table IV-5, Japan, Consumer Price Index, All Items ∆%

	∆% Month   SA	∆% Month  NSA	∆% 12-Month NSA
Dec 2012	0.2	0.1	-0.1
Nov	0.0	-0.4	-0.2
Oct	-0.1	0.0	-0.4
Sep	0.1	0.2	-0.3
Aug	-0.1	0.1	-0.5
Jul	-0.1	-0.3	-0.4
Jun	-0.2	-0.5	-0.1
May	-0.3	-0.3	0.2
Apr	0.0	0.1	0.5
Mar	0.1	0.5	0.5
Feb	0.1	0.2	0.3
Jan	0.2	0.2	0.1
Dec 2011	0.1	0.0	-0.2
Nov	-0.2	-0.6	-0.5
Oct	0.1	0.1	-0.2
Sep	-0.1	0.0	0.0
Aug	-0.1	0.2	0.2
Jul	0.3	0.0	0.2
Jun	-0.1	-0.2	-0.4
May	0.1	0.0	-0.4
Apr	-0.1	0.1	-0.5
Mar	-0.1	0.3	-0.5
Feb	0.0	0.0	-0.5
Jan	-0.1	-0.1	-0.6
Dec 2010	-0.2	–0.3	-0.4
		CPI All Items USA	CPI All Items Japan
Annual
2012		2.1	0.0
2011		3.2	-0.3
2010		1.6	-0.7
2009		-0.4	-1.4
2008		3.8	1.4
2007		2.8	0.0
2006		3.2	0.3
2005		3.4	-0.3
2004		2.7	0.0
2003		2.3	-0.3
2002		1.6	-0.9
2001		2.8	-0.8
2000		3.4	-0.7
1999		2.2	-0.3
1998		1.6	0.6
1997		2.3	1.9
1996		3.0	0.1
1995		2.8	-0.1
1994		2.6	0.6
1993		3.0	1.3
1992		3.0	1.7
1991		4.2	3.3
1990		5.4	3.1
1989		4.8	2.2
1988		4.1	0.8
1987		3.6	0.0
1986		1.9	0.7
1985		3.6	2.0
1984		4.3	2.4
1983		3.2	1.8
1982		6.2	2.8
1981		10.3	4.8
1980		13.5	7.8
1979		11.3	3.6
1978		7.6	4.4
1977		6.5	8.0
1976		5.8	9.5
1975		9.1	11.8
1974		11.0	23.1
1973		6.2	11.8
1972		3.2	4.6
1971		4.4	6.7

Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/cpi/index.htm http://www.bls.gov/cpi/

Chart IV-1 of the Statistics Bureau of the Ministry of Internal Affairs and Communications of Japan provides the consumer price index for all items and regions of Japan monthly from 1971 to 2012 with 2010=100. There was inflation in Japan during the 1970s and 1980s similar to other countries and regions. The index shows stability after the 1990s with sporadic cases of deflation. Slower growth with sporadic inflation has been characterized as a “lost decade” in Japan (see Pelaez and Pelaez, The Global Recession Risk (2007), 82-115).

Chart IV-1, Japan, Consumer Price Index All Items, All Japan, Index 2010=100, Monthly, 1970-2012

Sources: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/cpi/1581.htm

Chart IV-2 provides the US consumer price index NSA from 1913 to 2012. The dominating characteristic is the increase in slope during the Great Inflation from the middle of the 1960s through the 1970s. There is long-term inflation in the US and no evidence of deflation risks.

Chart IV-2, US, Consumer Price Index, All Items, NSA, 1913-2012

Source: US Bureau of Labor Statistics

http://www.bls.gov/cpi/

Chart IV-3 of the Statistics Bureau of the Ministry of Internal Affairs and Communications of Japan provides 12-month percentage changes of the consumer price index for all items and regions of Japan monthly from 1971 to 2012. Japan experienced the same inflation waves of the United States during the Great Inflation of the 1970s followed by similar low inflation after the inflation-control increase of interest rates in the early 1980s. Numerous cases of negative inflation or deflation are observed after the 1990s.

Chart IV-3, Japan, CPI All Items, All Japan, 12-Month ∆%, 1971-2012

Sources: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/cpi/1581.htm

Chart IV-4 provides 12-month percentage changes of the US consumer price index from 1914 to 2012. There are actually three waves of inflation in the second half of the 1960s, in the mid 1970s and again in the late 1970s. Table IV-5 provides similar inflation waves in the economy of Japan with 11.8 percent in 1973, 23.1 percent in 1974 and 11.8 percent in 1975. The Great Inflation of the 1970s is analyzed in various comments of this blog (http://cmpassocregulationblog.blogspot.com/2012/06/rules-versus-discretionary-authorities.html 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 in Appendix I The Great Inflation; see Taylor 1993, 1997, 1998LB, 1999, 2012FP, 2012Mar27, 2012Mar28, 2012JMCB and http://cmpassocregulationblog.blogspot.com/2012/06/rules-versus-discretionary-authorities.html). Inflation rates then stabilized in the US in a range with only two episodes above 5 percent. There are isolated cases of deflation concentrated over extended periods only during the 1930s. There is no case in United States economic history for unconventional monetary policy because of fear of deflation. There are cases of long-term deflation without lost decades or depressions. Delfim Netto (1958) partly reprinted in Pelaez (1973) conducted two classical nonparametric tests (Mann 1945, Wallis and Moore 1941; see Kendall and Stuart 1968) with coffee-price data in the period of free markets from 1857 to 1906 with the following conclusions (Pelaez, 1976a, 280):

“First, the null hypothesis of no trend was accepted with high confidence; secondly, the null hypothesis of no oscillation was rejected also with high confidence. Consequently, in the nineteenth century international prices of coffee fluctuated but without long-run trend. This statistical fact refutes the extreme argument of structural weakness of the coffee trade.”

The conventional theory that the terms of trade of Brazil deteriorated over the long term is without reality (Pelaez 1976a, 280-281):

“Moreover, physical exports of coffee by Brazil increased at the high average rate of 3.5 per cent per year. Brazil's exchange receipts from coffee-exporting in sterling increased at the average rate of 3.5 per cent per year and receipts in domestic currency at 4.5 per cent per year. Great Britain supplied nearly all the imports of the coffee economy. In the period of the free coffee market, British export prices declined at the rate of 0.5 per cent per year. Thus, the income terms of trade of the coffee economy improved at the relatively satisfactory average rate of 4.0 per cent per year. This is only a lower bound of the rate of improvement of the terms of trade. While the quality of coffee remained relatively constant, the quality of manufactured products improved significantly during the fifty-year period considered. The trade data and the non-parametric tests refute conclusively the long-run hypothesis. The valid historical fact is that the tropical export economy of Brazil experienced an opportunity of absorbing rapidly increasing quantities of manufactures from the "workshop" countries. Therefore, the coffee trade constituted a golden opportunity for modernization in nineteenth-century Brazil.”

Imlah (1958) provides decline of British export prices at 0.5 percent in the nineteenth century and there were no lost decades, depressions or unconventional monetary policies in the highly dynamic economy of England that provided the world’s growth impulse. The experience of the United Kingdom with deflation and economic growth is relevant and rich. Yearly percentage changes of the composite index of prices of the United Kingdom of O’Donoghue and Goulding (2004) provide strong evidence. There are 73 declines of inflation in the 145 years from 1751 to 1896. Prices declined in 50.3 percent of 145 years. Some price declines were quite sharp and many occurred over several years. O’Donoghue and Goulding (2004) also provide inflation data for the UK from 1929 to 1934. Deflation was much sharper in continuous years in earlier periods than during the Great Depression. The United Kingdom could not have led the world in modern economic growth if there were meaningful causality from deflation to depression.

Chart IV-4, US, Consumer Price Index, All Items, NSA, 12-Month Percentage Change 1914-2012

Source: US Bureau of Labor Statistics

http://www.bls.gov/cpi/

Chart IV-5 provides the US consumer price index excluding food and energy from 1957 (when it first becomes available) to 2012. There is long-term inflation in the US without episodes of deflation that would justify symmetric inflation targets to increase inflation from low levels.

IV-5, US, Consumer Price Index Excluding Food and Energy, NSA, 1957-2012

Source: US Bureau of Labor Statistics

http://www.bls.gov/cpi/

Chart IV-6 provides 12-month percentage changes of the consumer price index excluding food and energy from 1958 (when it first becomes available) to 2012. There are three waves of inflation in the 1970s during the Great Inflation. There is no episode of deflation.

Chart IV-6, US, Consumer Price Index Excluding Food and Energy, 12-Month Percentage Change, NSA, 1958-2012

Source: US Bureau of Labor Statistics

http://www.bls.gov/cpi/

More detail on the consumer price index of Japan in Nov is shown in Table IV-6. Inflation in the 12 months ending in Nov 2012 has been driven by items rich in commodities such as 3.1 percent in fuel, light and water charges with decrease of 0.3 percent in the month of Nov. There is similar behavior in the preliminary estimate for Dec for the Ku Area of Tokyo with decrease of 0.3 percent of fuel, light and water charges and increase of 5.4 percent in 12 months. There is no increase in any items in the consumer price index in Nov. There is mild deflation in the CPI excluding food, alcoholic beverages and energy with minus 0.5 percent in the 12 months ending in Nov and minus 0.3 percent in Nov. The CPI excluding imputed rent fell 0.4 percent in Nov and decreased 0.1 percent in 12 months. The all-items CPI estimate for Dec of the Ku-Area of Tokyo was unchanged in Dec and declined 0.6 percent in 12 months.

Table IV-6, Japan, Consumer Price Index, ∆%

2012	Nov 2012/Oct 2012 ∆%	Year ∆%
CPI All Items	-0.4	-0.2
CPI Excluding Fresh Food	-0.3	-0.1
CPI Excluding Food, Alcoholic Beverages and Energy	-0.3	-0.5
CPI Goods	-0.5	-0.3
CPI Services	-0.2	0.0
CPI Excluding Imputed Rent	-0.4	-0.1
CPI Fuel, Light, Water Charges	-0.3	3.1
CPI Transport & Communications	-0.7	0.2
CPI Ku-Area Tokyo All Items	0.0	-0.6
Fuel, Light, Water Charges Ku Area Tokyo	-0.3	5.4

Note: Ku-area Tokyo CPI data preliminary for Dec 2012

Sources: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/cpi/index.htm

The producer price index of Germany decreased 0.3 percent in Dec 2012, calendar and seasonally adjusted (CSA), increased 0.1 not seasonally adjusted (NS) in Dec 2012 and increased 1.5 percent in the 12 months ending in Dec 2012, as shown in Table IV-7. The producer price index of Germany has similar waves of inflation as in many other countries (http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html). In the first wave from Jan to Apr 2011, the annual equivalent rate of producer price inflation was 10.4 percent NSA and 6.5 percent CSA, propelled by carry trades from zero interest rates to exposures in commodity futures in a mood of risk appetite. In the second wave in May and Jun 2011, the annual equivalent rate of producer price inflation was only 0.6 percent NSA because of the collapse of the carry trade in fear of risks of European sovereign debt but 3.7 percent CSA. In the third wave from Jul to Sep 2011, annual-equivalent producer price inflation in Germany was 2.8 percent NSA and 4.1 percent CSA with fluctuations in commodity prices resulting from perceptions of the sovereign risk crisis in Europe. In the fourth wave from Oct to Nov 2011, annual equivalent inflation was 1.8 percent NSA and 3.7 percent CSA as financial markets were shocked with strong risk aversion. In the fifth wave from Dec 2011 to Jan 2012, annual equivalent inflation was at 1.2 percent NSA and minus 0.6 percent CSA. In the sixth wave, annual equivalent inflation increased to 6.2 percent in Feb-Mar 2012 NSA and 4.9 percent in Feb-Apr and 1.6 percent CSA. In the seventh wave, annual equivalent inflation was minus 2.8 percent in May-Jul 2012 NSA and minus 0.8 percent SA. In the eighth wave, annual equivalent inflation was 4.9 percent in Aug-Sep 2012 NSA and 6.2 percent SA. In the ninth wave, renewed risk aversion resulted in annual equivalent inflation of minus 1.6 percent in Oct-Dec 2012 and 1.2 percent CSA. Data in the bottom of Table IV-7 show that the producer price index fell 5.2 percent in the 12 months ending in Dec 2009 as a result of the fall of commodity prices originating in risk aversion after the panic of 2008.

Table IV-7, Germany, Index of Producer Prices for Industrial Products ∆%

	12 Months ∆% NSA	Month ∆% Calendar and SA	Month ∆%  NSA
Dec 2012	1.5	0.1	-0.3
Nov	1.4	0.1	-0.1
Oct	1.5	0.1	0.0
AE ∆% Oct-Dec		1.2	-1.6
Sep	1.7	0.3	0.3
Aug	1.6	0.7	0.5
AE ∆% Aug-Sep		6.2	4.9
Jul	0.9	-0.1	0.0
Jun	1.6	-0.1	-0.4
May	2.1	0.0	-0.3
AE ∆% May-Jul		-0.8	-2.8
Apr	2.4	-0.2	0.2
Mar	3.3	0.4	0.6
Feb	3.2	0.2	0.4
AE ∆% Feb-Apr		1.6	4.9
Jan	3.4	0.1	0.6
Dec 2011	4.0	-0.2	-0.4
AE ∆% Dec-Jan		-0.6	1.2
Nov	5.2	0.3	0.1
Oct	5.3	0.3	0.2
AE ∆% Oct-Nov		3.7	1.8
Sep	5.5	0.3	0.3
Aug	5.5	0.1	-0.3
Jul	5.8	0.5	0.7
AE ∆% Jul-Sep		3.7	2.8
Jun	5.6	0.3	0.1
May	6.1	0.3	0.0
AE ∆% May-Jun		3.7	0.6
Apr	6.4	0.6	1.0
Mar	6.2	0.3	0.4
Feb	6.4	0.6	0.7
Jan	5.7	0.6	1.2
AE ∆% Jan-Apr		6.5	10.4
Dec 2010	5.3	0.8	0.7
Nov	4.4	0.4	0.2
Oct	4.3	0.4	0.4
Sep	3.9	0.5	0.3
Aug	3.2	0.2	0.0
Jul	3.7	0.6	0.5
Jun	1.7	0.5	0.6
May	0.9	0.3	0.3
Apr	0.6	0.5	0.8
Mar	-1.5	0.6	0.7
Feb	-2.9	0.1	0.0
Jan	-3.4	0.4	0.8
Dec 2009	-5.2	0.2	-0.1
Dec 2008	4.0	-0.2	-0.8
Dec 2007	1.9	0.4	-0.1
Dec 2006	4.2	0.3	0.1
Dec 2005	4.8	0.5	0.3
Dec 2004	2.9	0.3	0.1
Dec 2003	1.8		0.0
Dec 2002	0.5		0.1
Dec 2001	0.1		-0.2

Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html

Chart IV-7 of the Federal Statistical Agency of Germany Statistiche Bundesamt Deutschland provides the producer price index of Germany from 2004 to 2012. Producer price inflation peaked in 2008 with the rise of commodity prices induced by the carry trade from zero interest rates to commodity futures during a global contraction. Prices then declined with the flight away from risk financial assets to government obligations after the financial panic in Sep 2008. With zero interest rates and no risk aversion, the carry trade pushed commodity futures prices upwardly resulting in new rising trend of the producer price index. The right-hand side of the chart shows moderation and even decline in prices because of severe risk aversion frustrating carry trades from zero interest rates to commodity futures but then return of risk appetite with another surge of the index in annual equivalent rate at 6.2 percent in Feb-Mar 2012 and 4.9 percent annual equivalent in Feb-Apr 2012 but decline of 0.3 percent in May 2012 and 0.4 percent in Jun 2012 with flat prices in Jul 2012 with the pace at annual equivalent rate of minus 4.1 percent in May-Jun 2012 and flat prices in Jul 2012. Inflation returned in Aug and Sep 2012 with carry trades into commodity futures with 4.9 percent annual equivalent. Inflation then collapsed to zero in Oct 2012 NSA, minus 0.1 percent in Nov 2012 and minus 0.3 percent in Dec 2012.

Chart IV-7, Germany, Index of Producer Prices for Industrial Products, 2005=100

Source: Statistisches Bundesamt Deutschland

https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html

finished goods from 2004 to 2012. Chart IV-7 of the US mirrors behavior in Chart IV-1 of Germany. Carry trades from zero interest rates to exposures in commodity futures and risk financial assets have synchronized worldwide inflation during periods of risk appetite and disinflation during periods of risk aversion.

Chart IV-8, US, Producer Price Index, Finished Goods, NSA, 2004-2012

Source: US Bureau of Labor Statstics

http://www.bls.gov/ppi/

Chart IV-18 of the Federal Statistical Agency of Germany Statistiche Bundesamt Deutschland provides the unadjusted producer price index, trend and trend ends. There is a clear upward trend of prices after the end of risk aversion with zero interest rates in 2009. The actual curve fell below trend in the current episode of severe risk aversion but rose again in Feb-Apr 2012, falling in May-Jun 2012 with flat prices in Jul 2012, another increase in Aug-Sep 2012 and flat prices in Oct 2012 with declines of 0.1 percent in Nov 2012 and 0.3 percent in Dec 2012.

Chart IV-9, Germany, Producer Price Index, Non-adjusted Value and Trend, 2005=100

Source: Statistiche Bundesamt Deutschland

https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html

Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/datamapper/index.php?db=WEO) and the update of Jan 2013 (http://www.imf.org/external/pubs/ft/weo/2013/update/01/index.htm) 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 3.2 percent in 2012 but accelerating to 3.5 percent in 2013, 4.1 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 3.8 percent for the world as a whole. While the world would grow 16.1 percent in the four years from 2012 to 2015, the G7 as a whole would grow 7.6 percent. The difference in dollars of 2011 is rather high: growing by 16.1 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 7.6 percent would add $5.3 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 24.6 percent or at the average yearly rate of 5.7 percent, contributing $6.3 trillion from 2012 to 2015 or the equivalent of 86.3 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 ∆% 2012	Real GDP ∆% 2013	Real GDP ∆% 2014	Real GDP ∆% 2015
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

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 1.4 percent in IQ2012 and 3.4 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 0.0 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 0.1 percent, which is much lower than 5.7 percent in IQ2012. Growth of 3.9 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 0.5 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. In IVQ2012, China grew at 2.0 percent, which annualizes at 8.2 percent, and 7.9 percent in IVQ2012 relative to IVQ2011. 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 fell 0.1 in IQ2012 relative to a year earlier. Euro area GDP contracted 0.2 percent IIQ2012 and fell 0.5 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 0.8 percent, 3.1 percent at SAAR and 2.6 percent relative to IIIQ2011 (Section I http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html) but with substantial unemployment and underemployment (Section I and earlier at http://cmpassocregulationblog.blogspot.com/2012/12/twenty-eight-million-unemployed-or.html) and weak hiring (http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth.html). In IQ2012, UK GDP fell 0.2 percent, increasing 0.2 percent relative to a year earlier. UK GDP fell 0.4 percent in IIQ2012 and decreased 0.3 percent relative to a year earlier. UK GDP increased 0.9 percent in IIIQ2012 and fell 0.0 percent relative to a year earlier. UK GDP fell 0.3 percent in IVQ2012 relative to IIIQ2012 and was flat 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 0.2 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 0.1 percent and increased 0.0 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: 1.4 SAAR: 5.7	3.4
China	1.8	8.1
Euro Area	0.0	-0.1
Germany	0.5	1.7
France	0.0	0.2
Italy	-0.8	-1.4
United Kingdom	-0.2	0.2
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.3         SAAR: 1.3	2.1
Japan	QOQ: 0.0 SAAR: -0.1	3.9
China	1.8	7.6
Euro Area	-0.2	-0.5
Germany	0.3	0.5 1.0 CA
France	-0.1	0.1
Italy	-0.7	-2.4
United Kingdom	-0.4	-0.3
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.8  SAAR: 3.1	2.6
Japan	QOQ: –0.9 SAAR: –3.5	0.5
China	2.2	7.4
Euro Area	-0.1	-0.6
Germany	0.2	0.4
France	0.1	0.0
Italy	-0.2	-2.4
United Kingdom	0.9	0.0
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
China	2.0	7.9
United Kingdom	-0.3	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 and earlier http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html and earlier http://cmpassocregulationblog.blogspot.com/2012/11/contraction-of-united-states-real_25.html and for GDP Section VB at http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth.html and earlier http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal_18.html). Japan’s exports decreased 5.8 percent in the 12 months ending in Dec, 4.1 percent in the 12 months ending in Nov, 6.5 percent in the 12 months ending in Oct, 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 1.9 percent in the 12 months ending in Dec, 0.8 percent in the 12 months ending in Nov, decreased 1.6 percent in the 12 months ending in Oct, 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. In Nov 2012, China’s exports increased 2.9 percent in 12 months and 7.3 percent in Jan-Nov 2012 while imports were unchanged in Nov 2012 and increased 4.1 percent in Jan-Nov 2012. In the 12 months ending in 2012, China’s exports increased 14.1 percent and imports 6.0 while in Jan-Dec 2012 exports increased 7.9 percent and imports increased 4.3 percent. Germany’s exports decreased 3.4 percent in the month of Nov 2012 and increased 0.0 percent in the 12 months ending in Nov 2012 while imports decreased 1.2 percent in the month of Nov and decreased 1.2 percent in the 12 months ending in Nov. Net trade contributed 1.4 percentage points to growth of Germany’s GDP in IIQ2012 and contributed 1.4 percentage points in IIIQ2012. 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 1.7 percent in Nov 2012 and decreased 1.0 percent in Sep-Nov 2012 relative to a year earlier while imports increased 1.0 percent in Nov and decreased 0.9 percent in Sep-Nov 2012 relative to a year earlier. Net trade deducted 0.9 percentage points from UK GDP growth in IIQ2012 and added 0.5 percentage points in IIIQ2012. France’s exports decreased 2.8 percent in Nov while imports decreased 2.5 percent and net trade deducted 0.4 percentage points from GDP growth in IIQ2012, adding 0.3 percentage points in IIIQ2012. US exports increased 1.0 percent in Nov 2012 and goods exports increased 4.6 percent in Jan-Nov relative to a year earlier but net trade added 0.38 percentage points to GDP growth in IIIQ2012. US imports increased 3.8 percent in Nov 2012 and goods imports increased 3.7 percent in Jan-Nov 2012 relative to a year earlier. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 56.1 in Jan from 54.0 in Dec, which was the highest reading since Mar 2011 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10595).

New export orders registered 51.3 in Jan from 52.6 in Dec, indicating expansion at a slower rate. Chris Williams, Chief Economist at Markit, finds that the survey data with highest rate of expansion in about two years are consistent with impulse to US economic growth at a rate of 1.5 percent for quarter and increase of 15,000 manufacturing jobs per month (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10595).

In the six months ending in Dec 2012, United States national industrial production accumulated increase of 0.9 percent at the annual equivalent rate of 1.8 percent, which is lower than 2.2 percent growth 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 moved up 0.1 percentage point to 78.8 percent, a rate 1.5 percentage points below its long-run (1972-2011) average.” United States industry is decelerating but the effects of hurricane Sandy prevent accurate evaluation. Manufacturing increased 0.8 percent in Dec 2012 seasonally adjusted, increasing 1.8 percent not seasonally adjusted in 12 months, and increased 0.7 percent in the six months ending in Dec or at the annual equivalent rate of 1.4 percent (http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html). 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 M ∆%	Exports 12 M ∆%	Imports M ∆%	Imports 12 M ∆%
USA	1.0 Nov	4.6 Jan-Nov	3.8 Nov	3.7 Jan-Nov
Japan		Dec -5.8 Nov -4.1 Oct -6.5 Sep -10.3 Aug -5.8 Jul -8.1		Dec 1.9 Nov 0.8 Oct -1.6 Sep 4.1 Aug -5.4 Jul 2.1
China	-1.8 Jul 0.6 Aug 4.7 Sep -5.7 Oct 2.2 Nov 11.1 Dec	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 2.9 Nov 7.3 Jan-Nov 14.1 Dec 7.9 Jan-Dec	2.2 Jul -0.3 Aug 4.9 Sep -9.4 Oct 11.3 Oct 4.9 Dec	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 0.0 Nov 4.1 Jan-Nov 6.0 Dec 4.3 Jan-Dec
Euro Area	5.4 12-M Nov	8.3 Jan-Nov	-0.3 12-M Nov	2.0 Jan-Nov
Germany	-3.4 Nov CSA	0.0 Nov	-3.7 Nov CSA	-1.2 Nov
France Nov	-2.8	-3.4	-2.5	-3.4
Italy Nov	0.4	3.6	-2.2	-8.2
UK	1.7 Nov	-1.0 Sep-Nov 12/Sep-Nov 11	1.0 Nov	-0.9 Sep-Nov 12/Sep-Nov 11
Net Trade % Points GDP Growth	% Points
USA IIIQ2012	0.38
Japan	-0.3 IIQ2012 -2.9 IIIQ2012
Germany	1.4 IIQ2012 1.4 IIIQ2012
France	-0.4 IIQ2012   0.3 IIIQ2012
UK	-0.9 IIQ2012 0.5 IIIQ2012

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.insee.fr/en/

http://www.istat.it/it/

http://www.statistics.gov.uk/hub/index.html

The geographical breakdown of exports and imports of Japan with selected regions and countries is provided in Table V-5 for Nov 2012. The share of Asia in Japan’s trade is more than one half, 54.7 percent of exports and 44.2 percent of imports. Within Asia, exports to China are 17.1 percent of total exports and imports from China 20.8 percent of total imports. The second largest export market for Japan in Oct 2012 is the US with share of 18.9 percent of total exports and share of imports from the US of 8.1 percent in total imports. Western Europe has share of 10.6 percent in Japan’s exports and of 9.8 percent in imports. Rates of growth of exports of Japan in Dec are sharply negative for all countries and regions with the exception of minus 0.8 percent for exports to the US, 9.6 percent for Mexico and 4.7 percent for the Middle East. 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 5.8 percent in Dec 2012 while imports increased 1.9 percent but higher levels after the earthquake and declining prices may be another factor. Growth rates of imports in the 12 months ending in Dec are negative for some trading partners: minus 23.0 percent for Brazil, minus 7.8 percent for the Australia and minus 12.8 percent for Canada. Imports from Asia increased 1.5 percent in the 12 months ending in Dec while imports from China decreased 2.1 percent.

Table V-5, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yens

Dec 2012	Exports Millions Yens	12 months ∆%	Imports Millions Yens	12 months ∆%
Total	5,300,269	-5.8	5,941,799	1.9
Asia	2,898,370	-5.6	2,625,794	1.5
China	906,068	-15.8	1,237,933	-2.1
USA	999,867	-0.8	480,237	2.8
Canada	62,133	-16.2	76,220	-12.8
Brazil	35,562	-19.6	69,076	-23.0
Mexico	73,067	9.6	31,169	27.9
Western Europe	561,585	-12.3	581,703	6.2
Germany	138,631	-9.2	150,737	-2.4
France	42,566	-16.8	77,603	7.4
UK	94,643	-10.2	46,201	4.9
Middle East	196,273	4.7	1,251,587	2.1
Australia	130,850	-2.0	355,690	-7.8

Source: Japan, Ministry of Finance http://www.customs.go.jp/toukei/info/index_e.htm

World trade projections of the IMF are in Table V-6. There is significantly slower growth of the volume of world trade of goods and services from 5.9 percent in 2011 to 2.8 percent in 2012 and 3.8 percent in 2013, increasing to 5.5 percent in 2014. World trade would slow sharply for advanced economies while emerging and developing economies (EMDE) experience slower growth. World economic slowdown is more challenging with lower growth of world trade.

Table V-6, IMF, Projections of World Trade, ∆%

	2011	2012	2013	2014
World Trade Volume (Goods and Services)	5.9	2.8	3.8	5.5
Imports
AE	4.6	1.2	2.2	4.1
EMDE	8.4	6.1	6.5	7.8
Exports
AE	5.6	2.1	2.8	4.5
EMDE	6.6	3.6	5.5	6.9

Source: International Monetary Fund World Economic Outlook databank update http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx http://www.imf.org/external/pubs/ft/survey/so/2013/NEW012313A.htm http://www.imf.org/external/pubs/ft/weo/2013/update/01/index.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, increased to 53.7 in Dec from 53.6 in Nov, indicating expansion at a moderate rate but at the fastest pace since IQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10564). This index has remained above the contraction territory of 50.0 during 41 consecutive months. The index was driven by services with weaker expansion by manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10564). The employment index increased from 50.0 in Nov to 52.3 in Dec with continuing increases in input prices but at a marginally faster pace. David Hensley, Director of Global Economic Coordination at JP Morgan, finds encouraging signs in services while manufacturing vacillates but with sufficient overall strength that can continue in the first part of 2013 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10564). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, increased to 50.2 in Dec from 48.6 in Nov, which is the first reading above 50 since May 2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10543). New export business declined for the ninth consecutive month in Dec, but at the lowest rate of contraction since May 2012. David Hensley, Director of Global Economics Coordination at JP Morgan, finds improving global manufacturing at the end of the year (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10543). The HSBC Brazil Composite Output Index, compiled by Markit, increased to 53.2 in Dec from 53.0 in Nov, indicating solid expansion at the fastest rate in nine months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10510). The HSBC Brazil Services Business Activity index, compiled by Markit, increased from 52.5 in Nov to 53.5 in Dec (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10510). Andre Loes, Chief Economist, Brazil, at HSBC, finds improving expectations of economic activity in Brazil (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10510). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) decreased from 52.2 in Nov to 51.1 in Dec, indicating slower improvement of business conditions in Brazilian manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10508). Andre Loes, Chief Economist, Brazil at HSBC, finds continuing expansion in Brazil’s manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10508).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 56.1 in Jan from 54.0 in Dec, which was the highest reading since Mar 2011 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10595).

New export orders registered 51.3 in Jan from 52.6 in Dec, indicating expansion at a slower rate. Chris Williams, Chief Economist at Markit, finds that the survey data with highest rate of expansion in about two years are consistent with impulse to US economic growth at a rate of 1.5 percent for quarter and increase of 15,000 manufacturing jobs per month (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10595). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) increased to 52.4 in Dec from 52.8 in Nov, which is the fastest growth rate since May 2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10541). The index of new exports orders increased from 47.2 in Oct to 50.3 in Nov while total new orders increased from 51.1 in Oct to 53.6 in Nov. The index of new export orders increased from 50.3 in Nov to 52.6 in Dec, indicating expansion at a higher rate. Chris Williamson, Chief Economist at Markit, finds that manufacturing in the US is stronger at the end of the year and with expansion in countries such as Brazil and moderating sovereign debt crisis in Europe, US companies could benefit from stronger foreign demand (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10541). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® increased 1.2 percentage points from 49.5 in Nov to 50.7 Dec Nov, which is the third reading above 50.0 in seven months (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders was unchanged at 50.3 in Dec from 50.3 in Nov. The index of exports increased 4.5 percentage points from 47.0 in Nov to 51.5 in Dec, moving into expansion territory. The Non-Manufacturing ISM Report on Business^® PMI increased 1.4 percentage points from 54.7 in Nov to 56.1 in Dec, indicating growth during 41 consecutive months, while the index of new orders increased 1.2 percentage points from 58.1 in Nov to 59.3 in Dec (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	Dec 12 months NSA ∆%: 1.7; ex food and energy ∆%: 2.22 Dec month ∆%: 0.0; ex food and energy ∆%: 0.1 Blog 1/20/13
Producer Price Index	Dec 12-month NSA ∆%: 1.3; ex food and energy ∆% 2.0 Dec month SA ∆% = -0.2; ex food and energy ∆%: 0.1 Blog 1/20/13
PCE Inflation	Nov 12-month NSA ∆%: headline 1.4; ex food and energy ∆% 1.5 Blog 12/23-24/12
Employment Situation	Household Survey: Nov Unemployment Rate SA 7.8% Blog calculation People in Job Stress Dec: 29.5 million NSA, 18.6% of Labor Force Establishment Survey: Nov Nonfarm Jobs +155,000; Private +161,000 jobs created  Nov 12-month Average Hourly Earnings Inflation Adjusted ∆%: 0.0 Blog 1/6/13
Nonfarm Hiring	Nonfarm Hiring fell from 63.8 million in 2006 to 50.1 million in 2011 or by 13.7 million Private-Sector Hiring Nov 2012 3.248 million lower by 0.914 million than 4.162 million in Nov 2006 Blog 1/20/13
GDP Growth	BEA Revised National Income Accounts IQ2012/IQ2011 ∆%: 2.4 IIQ2012/IIQ2011 2.1 IIIQ2012/IIIQ2012 2.6 IQ2012 SAAR 2.0 IIQ2012 SAAR 1.3 IIIQ2012 SAAR 3.1 Blog 12/23-24/12
Real Private Fixed Investment	SAAR IIIQ2012 0.9 ∆% IVQ2007 to IIIQ2012: minus 12.6% Blog 12/23-24/12
Personal Income and Consumption	Nov month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.8 Real Personal Consumption Expenditures (RPCE): 0.6 12-month Nov NSA ∆%: RDPI: 2.5; RPCE ∆%: 2.1 Blog 12/23-24/2012
Quarterly Services Report	IIIQ12/IIIQ11 SA ∆%: Information 2.1 Professional 6.0 Administrative 3.9 Hospitals 7.4 Financial & Insurance 6.5 Blog 12/9/12
Employment Cost Index	Compensation Private IIIQ2012 SA ∆%: 0.5 Sep 12 months ∆%: 2.0 Blog 11/4/12
Industrial Production	Dec month SA ∆%: 0.3 Dec 12 months SA ∆%: 2.2 Manufacturing Nov SA ∆% 0.8 Dec 12 months SA ∆% 2.4, NSA 1.8 Capacity Utilization: 78.8 Blog 1/20/13
Productivity and Costs	Nonfarm Business Productivity IIIQ2012∆% SAAE 2.9; IIIQ2012/IIIQ2011 ∆% 1.7; Unit Labor Costs SAAE IIIQ2012 ∆% -1.9; IIIQ2012/IIIQ2011 ∆%: 0.1 Blog 12/9/2012
New York Fed Manufacturing Index	General Business Conditions From Dec -7.30 to Jan -7.78 New Orders: From Dec -3.44 to Jan -7.18 Blog 1/20/13
Philadelphia Fed Business Outlook Index	General Index from Dec 4.6 to Jan -5.8 New Orders from Dec 4.9 to Jan -4.3 Blog 1/20/13
Manufacturing Shipments and Orders	New Orders SA Nov ∆% 0.0 Ex Transport 0.2 Jan-Nov NSA New Orders 3.2 Ex transport 2.4 Blog 1/6/13
Durable Goods	Nov New Orders SA ∆%: 0.7; ex transport ∆%: 1.6 Jan-Nov New Orders NSA ∆%: 4.5; ex transport ∆% 2.8 Blog 12/23-24/12
Sales of New Motor Vehicles	Jan-Dec 2012 14,491,873; Jan-Dec 2011 12,777,939. Dec SAAR 15.37 million, Nov SAAR 15.54 million, Dec 2011 SAAR 13.61 million Blog 1/6/13
Sales of Merchant Wholesalers	Jan-Nov 2012/Jan-Nov 2011 NSA ∆%: Total 5.5; Durable Goods: 6.3; Nondurable Goods: 4.9 Blog 1/13/13
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Nov 12/Nov 11 NSA ∆%: Sales Total Business 4.5; Manufacturers 3.3 Retailers 4.8; Merchant Wholesalers 5.7 Blog 1/20/13
Sales for Retail and Food Services	Jan-Dec 2012/Jan-Dec 2011 ∆%: Retail and Food Services 5.2; Retail ∆% 4.9 Blog 1/20/13
Value of Construction Put in Place	Nov SAAR month SA ∆%: -0.3 Nov 12-month NSA: 7.9 Jan-Nov 2012 ∆% 9.2 Blog 1/6/13
Case-Shiller Home Prices	Oct 2012/Oct 2011 ∆% NSA: 10 Cities 3.4; 20 Cities: 4.3 ∆% Oct SA: 0.6 10 Cities 0.4 ; 20 Cities: 0.7 Blog 12/30/12
FHFA House Price Index Purchases Only	Nov SA ∆% 0.6; 12 month NSA ∆%: 5.7 Blog 1/27/13
New House Sales	Dec 2012 month SAAR ∆%: minus 7.3 Jan-Dec 2012/Jan-Dec 2011 NSA ∆%: 19.9 Blog 1/27/13
Housing Starts and Permits	Dec Starts month SA ∆%: 12.1 ; Permits ∆%: 0.3 Jan-Dec 2012/Jan-Dec 2011 NSA ∆% Starts 28.1; Permits  ∆% 30.3 Blog 1/20/13
Trade Balance	Balance Nov SA -$48731 million versus Oct -$42064 million Exports Nov SA ∆%: 1.0 Imports Nov SA ∆%: 3.8 Goods Exports Jan-Nov 2012/2011 NSA ∆%: 4.6 Goods Imports Jan-Nov 2012/2011 NSA ∆%: 3.7 Blog 1/13/13
Export and Import Prices	Dec 12-month NSA ∆%: Imports -1.5; Exports 1.1 Blog 1/13/13
Consumer Credit	Nov ∆% annual rate: 7.0 Blog 1/13/13
Net Foreign Purchases of Long-term Treasury Securities	Nov Net Foreign Purchases of Long-term Treasury Securities: $52.3 billion Major Holders of Treasury Securities: China $1170 billion; Japan $1133 billion; Total Foreign US Treasury Holdings Oct $5557 billion Blog 1/20/13
Treasury Budget	Fiscal Year 2013/2012 ∆% Dec: Receipts 10.8; Outlays 15.5; Individual Income Taxes 15.5 Deficit Fiscal Year 2011 $1,297 billion Deficit Fiscal Year 2012 $1,089,353 million Blog 1/13/2013
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	Dec 2012 SAAR ∆%: Securities 22.6 Loans 6.3 Cash Assets -19.1 Deposits 20.7 Blog 1/27/13
Flow of Funds	IIIQ2012 ∆ since 2007 Assets -$2059B Real estate -$4035B Financial +$1529 MM Net Worth -$1232B Blog 12/9/12
Current Account Balance of Payments	IIIQ2012 -$128 B %GDP 3.3 Blog 12/23-24/12

Links to blog comments in Table USA:

1/20/13 http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html

1/13/13 http://cmpassocregulationblog.blogspot.com/2013/01/peaking-valuation-of-risk-financial.html

1/6/13 http://cmpassocregulationblog.blogspot.com/2013/01/thirty-million-unemployed-or.html

12/30/12 http://cmpassocregulationblog.blogspot.com/2012/12/united-states-commercial-banks-assets.html

12/23-24/12 http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html

12/9/12 http://cmpassocregulationblog.blogspot.com/2012/12/twenty-eight-million-unemployed-or.html

11/18/12 http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html

11/4/12 http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html

8/26/12 http://cmpassocregulationblog.blogspot.com/2012/08/expanding-bank-cash-and-deposits-with_26.html

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. The Cabinet Office, Ministry of Finance and Bank of Japan released on Jan 22, 2013, a “Joint Statement of the Government and the Bank of Japan on Overcoming Deflation and Achieving Sustainable Economic Growth” (http://www.boj.or.jp/en/announcements/release_2013/k130122c.pdf) with the important change of increasing the inflation target of monetary policy from 1 percent to 2 percent:

“The Bank of Japan conducts monetary policy based on the principle that the policy shall be aimed at achieving price stability, thereby contributing to the sound development of the national economy, and is responsible for maintaining financial system stability. The Bank aims to achieve price stability on a sustainable basis, given that there are various factors that affect prices in the short run.

The Bank recognizes that the inflation rate consistent with price stability on a sustainable basis will rise as efforts by a wide range of entities toward strengthening competitiveness and growth potential of Japan's economy make progress. Based on this recognition, the Bank sets the price stability target at 2 percent in terms of the year-on-year rate of change in the consumer price index.

Under the price stability target specified above, the Bank will pursue monetary easing and aim to achieve this target at the earliest possible time. Taking into consideration that it will take considerable time before the effects of monetary policy permeate the economy, the Bank will ascertain whether there is any significant risk to the sustainability of economic growth, including from the accumulation of financial imbalances.”

The Bank of Japan also provided explicit analysis of its view on price stability in a “Background note regarding the Bank’s thinking on price stability” (http://www.boj.or.jp/en/announcements/release_2013/data/rel130123a1.pdf http://www.boj.or.jp/en/announcements/release_2013/rel130123a.htm/). The Bank of Japan also amended “Principal terms and conditions for the Asset Purchase Program” (http://www.boj.or.jp/en/announcements/release_2013/rel130122a.pdf): “Asset purchases and loan provision shall be conducted up to the maximum outstanding amounts by the end of 2013. From January 2014, the Bank shall purchase financial assets and provide loans every month, the amount of which shall be determined pursuant to the relevant rules of the Bank.”

Table VB-BOJF, Bank of Japan, Forecasts of the Majority of Members of the Policy Board, % Year on Year

Fiscal Year Date of Forecast	Real GDP	Domestic CGPI	CPI All Items Less Fresh Food
2011
Apr 2012	-0.2 to –0.2 [-0.2]	+1.7	0.0
Jan 2012	-0.4 to –0.3 [-0.4]	+1.8 to +1.9 [+1.8]	-0.1 to 0.0 [-0.1]
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 [+2.3]	+0.4 to +0.7 [+0.6]	+0.1 to +0.4 [+0.3]
Jan 2012	+1.8 to +2.1 [+2.0]	-0.1 to +0.2 [+0.1]	0.0 to +0.2 [+0.1]
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 [+1.7]	+0.7 to +0.9 [+0.8]	+0.5 to +0.7 [+0.7]
Jan 2012	+1.4 to +1.7 [+1.6]	+0.6 to 1.0 [+0.8]	+0.4 to +0.5 [+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 marginal rate with the Markit Composite Output PMI^™ Index decreasing from 49.9 in Nov to 49.3 in Dec, which is marginally lower than 50 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10549). Paul Smith, economist at Markit and author of the report, finds that growth in services suggests strength but with weakness in manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10549). The Markit Business Activity Index of Services increased marginally from 51.4 in Nov to 51.5 in Dec (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10394). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, decreased from 46.5 in Nov to 45.0 in Dec for the lowest reading in 44 months and the seventh consecutive month of contraction below 50.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10470). Foreign orders fell for the ninth consecutive month with weakness in markets in Europe and China. Paul Smith, economist at Markit and author of the report, finds weakness in foreign and domestic demand with marked decline of output and particularly in new orders for capital goods (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10470).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 Blog 8/9/11 Table 26
Corporate Goods Prices	Dec ∆% 0.3 12 months ∆% minus 0.6 Blog 1/13/13
Consumer Price Index	Dec NSA ∆% 0.1; Dec 12 months NSA ∆% -0.1 Blog 1/27/13
Real GDP Growth	IIIQ2012 ∆%: minus 0.9 on IIQ2012;  IIIQ2012 SAAR minus 3.5; ∆% from quarter a year earlier: 0.5 % Blog 12/16/12
Employment Report	Nov Unemployed 2.60 million Change in unemployed since last year: minus 210 thousand Unemployment rate: 4.1% Blog 12/30/12
All Industry Indices	Nov month SA ∆% -0.3 12-month NSA ∆% 0.1 Blog 1/27/13
Industrial Production	Nov SA month ∆%: -1.7 12-month NSA ∆% -5.8 Blog 12/30/12
Machine Orders	Total Nov ∆% 5.3 Private ∆%: 15.2 Novt ∆% Excluding Volatile Orders 3.9 Blog 1/20/13
Tertiary Index	Nov month SA ∆% minus 0.3 Nov 12 months NSA ∆% 1.1 Blog 1/20/13
Wholesale and Retail Sales	Nov 12 months: Total ∆%: -0.8 Wholesale ∆%: -1.5 Retail ∆%: 1.3 Blog 12/30/12
Family Income and Expenditure Survey	Nov 12-month ∆% total nominal consumption 0.1, real 0.2 Blog 12/30/12
Trade Balance	Exports Dec 12 months ∆%: minus 5.8 Imports Dec 12 months ∆% 1.9 Blog 1/27/13

Links to blog comments in Table JPY:

1/20/13 http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html

12/30/12 http://cmpassocregulationblog.blogspot.com/2012/12/united-states-commercial-banks-assets.html

12/16/12 http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth.html

8/9/11 http://cmpassocregulationblog.blogspot.com/2011/08/turbulence-in-world-financial-markets.html

The indices of all industry activity of Japan, which is an approximation of GDP or economic activity, fell to levels close to the worst point of the recession, showing the brutal impact of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Table VB-1 with the latest revisions shows the quarterly index which permits comparison with the movement of real GDP. The first row provides weights of the various components of the index: AG (agriculture) 1.4 percent (not shown), CON (construction) 5.7 percent, IND (industrial production) 18.3 percent, TERT (services) 63.2 percent, and GOVT (government) 11.4 percent. GDP decreased 0.9 percent in IIIQ2012 (Table VB-1 http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth_16.html), industry decreased 4.2 percent, the tertiary sector increased 0.1 percent, government increased 0.1 percent and construction increased 1.6 percent. The report shows that the all industry index decreased 0.5 percent in IIIQ2012. Industry deducted 0.75 percentage points from growth of the all industry index and the tertiary index contributed 0.07 percentage points. Japan had already experienced a very weak quarter in IVQ2010, with decline of the all industry index of 0.2 percent and decline of GDP of 0.4 percent (Table VB-1 http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth_16.html), when it was unexpectedly hit by the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. The worst impact of the natural disaster was on construction with drop of 7.5 percent in IIQ2011 relative to IQ2011 but recovery at 3.3 percent in IIIQ2011. Industrial production fell 4.2 percent from IQ2011 into IIQ2011 but grew 5.4 percent in IIIQ2011. Many accounts had already been closed when the earthquake occurred, but there is visible decline of the index of all industry by 1.3 percent in IQ2011 caused by decline of industrial production by 1.5 percent and services by 1.0 percent with GDP falling revised 1.9 percent (http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth_16.html Table VB-1).

Table VB-1, Japan, Indices of All Industry Activity Percentage Change from Prior Quarter SA ∆%

	CON	IND	TERT	GOVT	ALL IND	REAL GDP
Weight %	5.7	18.3	63.2	11.4	100.0
2012
IIIQ	1.6	-4.2	0.1	0.0	-0.5	-0.9
Cont to IIIQ % Change	0.07	-0.75	0.07	0.00
IIQ	-1.5	-2.0	0.0	-0.1	-0.1	0.0
IQ	5.7	1.3	0.0	0.1	-0.1	1.4
2011
IVQ	-1.5	0.4	0.5	0.2	0.5	0.1
IIIQ	3.3	5.4	1.5	0.2	2.1	2.5
IIQ	-7.5	-4.2	-0.5	0.1	-0.9	-0.7

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

Source: http://www.meti.go.jp/english/statistics/index.html

There are more details in Table VB-2. The all industry activity index contracted 0.3 percent in Nov 2012 relative to Oct 2012 with decrease of 0.3 percent of the tertiary or services sector and decrease of industry of 1.4 percent while construction increased 3.8 percent and government decreased 0.2 percent. Industry deducted 0.23 percentage points to growth in Nov while the tertiary sector deducted 0.20 percentage points, construction added 0.17 percentage points and government deducted 0.02 percentage points. Weakness in Sep and Aug 2011 had interrupted the sharp recovery from Apr to Jul with renewed strength in Oct but weakness again in Nov followed by strong rebound in Dec 2011 that was interrupted in Jan-Mar 2012 with modest growth in Apr, new decline in May 2012, moderate increase in Jun 2012 and new decline of 0.5 percent in Jul 2012, nil growth in Aug 2012, decline of 0.4 percent in Sep 2012 and increase of 0.2 percent in Oct 2012 interrupted by decline of 0.3 percent in Dec 2012. The highest risk to Japan is if weakening world growth would affect Japanese exports.

Table VB-2, Japan, Indices of All Industry Activity Percentage Change from Prior Month SA ∆%

	CON	IND	TERT	GOVT	ALL IND
Nov 2012	3.8	-1.4	-0.3	-0.2	-0.3
Cont to Nov % Change	0.17	-0.23	-0.20	-0.02
Oct 2012	-2.7	1.6	-0.1	0.9	0.2
Sep	2.6	-4.1	0.2	-1.2	-0.4
Aug	-0.3	-1.6	0.3	0.4	0.0
Jul	-2.7	-1.0	-0.6	0.0	-0.5
Jun	1.0	0.4	0.1	0.2	0.3
May	9.5	-3.4	0.9	-0.1	-0.2
Apr	-5.5	-0.2	-0.2	0.1	0.1
Mar	-5.4	1.3	-0.6	-0.1	-0.3
Feb	4.2	-1.6	0.0	-0.4	-0.1
Jan	5.6	0.9	-0.6	0.5	-0.7
Dec 2011	-1.4	2.3	1.6	-0.2	1.7
Nov	0.3	-1.7	-0.8	0.1	-0.9
Oct	-2.6	1.8	0.6	0.1	0.6
Sep	1.6	-1.9	-0.2	0.2	-0.1
Aug	1.1	0.9	0.1	-0.1	0.2
Jul	0.1	1.1	0.4	-0.2	0.5
Jun	-0.1	3.8	1.2	0.2	1.5
May	6.5	5.8	0.9	0.7	1.6
Apr	-5.1	2.4	2.1	-0.9	2.0
Mar	-10.6	-16.2	-5.4	0.7	-6.6
Feb	2.3	1.1	0.3	0.0	0.1
Jan	6.3	1.2	0.5	-0.5	0.6
Dec 2010	-0.5	2.4	-0.2	0.3	0.1
Nov	-1.4	1.6	0.6	-0.4	0.3
Oct	0.1	-1.4	0.2	-0.1	0.0
Sep	-1.9	-0.8	-0.4	-0.1	-0.4
Aug	1.6	-0.1	0.1	0.1	-0.5
Jul	0.8	0.3	0.7	0.1	1.1
Jun	-2.1	-1.5	0.1	-0.1	0.2
May	6.3	-0.1	-0.3	0.0	0.0
Apr	-3.1	0.6	1.6	-0.2	0.9

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

Sources: http://www.meti.go.jp/english/statistics/index.html

Percentage changes from a year earlier in calendar years and relative to the same quarter a year earlier of the all industry activity indices are provided in Table VB-3. The first row shows that services contribute 63.2 percent of the total index and industry contributes 18.3 percent for joint contribution of 81.5 percent. The all industry activity index decreased 0.2 percent in IIIQ2012 and GDP increased 0.5 percent relative to a year earlier (Table VB-2 http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth_16.html). Industry decreased 4.6 percent relative to a year earlier while the tertiary sector increased 0.5 percent, deducting combined 0.51 percentage points to growth of the all industry activity index of minus 0.2 percent while construction added 0.19 percentage points and government 0.04 percentage points. The fall of industrial production in 2009 was by a catastrophic 21.9 percent. Japan emerged from the crisis with industrial growth of 16.4 percent in 2010. Quarterly data show that industry is the most dynamic sector of the Japanese economy. The all-industry index fell 0.5 percent in 2011, almost equal to the revised decline of 0.6 percent in GDP. Industry fell 2.3 percent, deducting 0.42 percentage points, while the tertiary sector increased 0.1 percent, adding 0.07 percentage points. The Tōhoku or Great East Earthquake and Tsunami of Mar 11, 201, declining world trade and revaluation of the yen in fear of world financial risks interrupted the recovery of the Japanese economy from the global recession.

Table VB-3, Japan, Indices of All Industry Activity Percentage Change from Earlier Calendar Year and Same Quarter Year Earlier NSA ∆%

	CON	IND	TERT	GOVT	ALL IND	REAL GDP
Weight %	5.7	18.3	63.2	11.4	100.0
Calendar Year
2011	-2.0	-2.3	0.1	-0.2	-0.5	-0.6
Cont to 2011 % Change	-0.09	-0.42	0.07	-0.02
2010	-7.0	16.4	1.3	-0.7	3.1	4.7
2009	-5.6	-21.9	-5.2	0.1	-7.7	-5.5
2008	-7.6	-3.4	-1.0	-1.4	-1.9	-1.0
2012
IIIQ	4.2	-4.6	0.5	0.3	-0.2	0.5
Cont to IIIQ % Change	0.19	-0.84	0.33	0.04
IIQ	5.8	5.3	2.2	0.4	2.6	3.9
IQ	-0.3	4.8	2.4	0.1	2.4	3.4
2011
IVQ	-2.8	-1.6	0.6	0.6	0.0	-0.2
IIIQ	-3.2	-0.9	0.3	-0.1	-0.1	-0.5
IIQ	-5.1	-5.8	-0.5	-0.4	-1.6	-1.6
IQ	2.3	-1.3	-0.3	-1.0	-0.5	0.0
2010
IV Q	-0.6	5.9	1.6	-0.8	2.1	3.3
III Q	-3.2	14.0	1.8	-0.6	3.2	6.0
IIQ	-11.3	21.3	1.4	-0.7	3.5	4.5
IQ	-12.4	28.0	0.8	-0.5	3.9	5.0

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

Source: http://www.meti.go.jp/english/statistics/index.html

Percentage changes of a month relative to the same month a year earlier for the indices of all industry activity of Japan are shown in Table VB-4. The all industry activity index increased 0.1 percent in Nov 2012 relative to Nov 2011. Industry fell 5.5 percent in Nov 2012 relative to a year earlier, subtracting 1.01 percentage points to growth of the all industry activity index. The tertiary sector increased 1.1 percent, adding 0.74 percentage points. Construction added 0.38 percentage points to the index and government deducted 0.01 percentage points.

Table VB-4, Japan, Indices of All Industry Activity Percentage Change from Same Month Year Earlier NSA ∆%

	CON	IND	TERT	GOVT	ALL IND
Nov 2012	7.7	-5.5	1.1	-0.1	0.1
Cont to Oct % Change	0.38	-1.01	0.74	-0.01
Oct	4.6	-4.5	1.3	-1.1	0.1
Sep	4.1	-8.1	0.1	0.6	-1.2
Aug	3.5	-4.6	0.6	0.8	-0.1
Jul	4.9	-0.8	0.9	-0.3	0.6
Jun	7.6	-1.5	0.8	0.8	0.6
May	6.4	6.0	3.2	-0.6	3.3
Apr	3.7	12.9	2.6	0.8	4.1
Mar	4.1	14.2	4.2	0.6	5.5
Feb	-1.6	1.5	2.4	-0.7	1.6
Jan	-3.4	-1.6	0.4	0.4	-0.1
Dec 2011	-3.0	-3.0	1.2	0.8	0.2
Nov	-1.2	-2.9	-0.3	0.8	-0.7
Oct	-4.0	0.9	0.9	0.2	0.5
Sep	-0.4	-2.4	0.1	0.1	-0.3
Aug	-4.3	1.6	0.8	-1.1	0.4
Jul	-4.8	-1.7	0.1	0.5	-0.4
Jun	-4.6	-0.6	1.0	0.3	0.4
May	-6.5	-4.6	-0.2	-0.8	-1.3
Apr	-4.1	-12.7	-2.3	-0.6	-4.0
Mar	-2.8	-12.4	-3.4	0.0	-4.6
Feb	4.4	4.5	2.0	-1.4	2.1
Jan	5.9	6.1	1.0	-1.4	1.8
Dec 2010	-0.5	5.9	1.8	-0.7	2.1
Nov	-0.5	7.0	2.5	-1.9	2.7
Oct	-1.1	5.0	0.5	0.3	1.3
Sep	-2.8	12.1	1.3	-0.6	2.7
Aug	-1.7	15.5	2.3	-1.1	3.8
Jul	-5.3	14.6	1.6	-0.1	3.3
Jun	-8.3	16.6	1.0	-0.7	3.0
May	-8.1	20.7	1.2	-0.9	3.4
Apr	-17.0	27.0	1.9	-0.4	-

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

Source: http://www.meti.go.jp/english/statistics/index.html

The structure of exports and imports of Japan is in Table VB-5. Japan imports all types of raw materials and fuels at rapidly increasing prices caused by the carry trade from zero interest rates to commodities, oscillating under shocks of risk aversion. Mineral fuels account for 36.7 percent of Japan’s imports and increased 4.5 percent in the 12 months ending in Dec 2012 because of alternating carry trades into commodity futures in accordance with risk aversion. Weakness of world demand depresses prices of industrial goods. Manufactured products contribute 13.3 percent of Japan’s exports with decrease of 2.1 percent in the 12 months ending in Dec 2012. Machinery contributes 19.9 percent of Japan’s exports with decrease of 13.3 percent in the 12 months ending in Dec. Electrical machinery contributes 17.9 percent of Japan’s exports with decrease of 3.3 percent in the 12 months ending in Dec. Exports of transport equipment with share of 22.1 percent in total exports decreased 9.5 percent in the 12 months ending in Dec but had been increasing sharply largely because of the low level after the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. The breakdown of transport equipment in Table VB-5 shows decrease of the major categories of motor vehicles of 6.6 percent: cars decreased 7.0 percent with decrease of 9.8 percent in the minor category of buses and trucks, decrease of 7.3 percent for parts of motor vehicles, decrease of 9.9 percent for motorcycles and decrease of 42.9 percent for ships. The result of rising commodity prices and stable or declining prices of industrial products is pressure on Japan’s terms of trade with oscillations when risk aversion causes reversion of carry trades from zero interest rates to commodity prices.

Table VB-5, Japan, Structure and Growth of Exports and Imports % and ∆% Millions Yens

Dec 2012	Value JPY Millions	% of Total	12 Months ∆%	Contribution Degree %
Exports	5,300,269	100.0	-5.8	-5.8
Foodstuffs	37,504	0.7	-3.5	0.0
Raw Materials	101,524	1.9	18.9	0.3
Mineral Fuels	78,471	1.5	7.4	0.1
Chemicals	561,031	10.6	2.7	0.3
Manufactured Goods	703,494	13.3	-2.1	-0.3
Machinery	1,057,024	19.9	-13.3	2.9
Electrical Machinery	948,988	17.9	-3.3	-0.6
Transport Equipment	1,172,808	22.1	-9.5	-2.2
Motor Vehicles	767,162	14.5	-6.6	-1.0
Cars	638,992	12.1	-7.0	-0.9
Buses & Trucks	109,864	2.1	-9.8	-0.2
Parts of Motor Vehicles	263,026	5.0	-7.3	-0.4
Motorcycles	24,495	0.5	-9.9	0.0
Ships	65,940	1.2	-42.9	-0.9
Other	639,425	12.1	-4.0	-0.5
Imports	5,941,799	100.0	1.9	1.9
Foodstuffs	496,207	8.4	-2.4	-0.2
Raw Materials	347,529	5.8	-12.2	-0.8
Mineral Fuels	2,181,703	36.7	4.5	1.6
Chemicals	463,282	7.8	5.9	0.4
Manufactured Goods	429,914	7.2	-9.0	-0.7
Machinery	414,597	7.0	1.8	0.1
Electrical Machinery	681,927	11.5	2.9	0.3
Transport Equipment	189,914	3.2	22.5	0.6
Other	736,725	12.4	4.3	0.5

Source: Japan, Ministry of Finance http://www.customs.go.jp/toukei/info/index_e.htm

Table VB-6 provides Japan’s exports, imports and trade balance in five-year intervals from 1950 to 1975 and then yearly from 1979 to 2012. Exports grew at the average yearly rate of 3.2 percent while imports grew at 3.3 percent per year in the years from 1979 to 2012. Abstracting from the global recession and the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011, exports grew at the average annual rate of 4.8 percent between 1979 and 2007 and imports at 4.0 percent. The global recession had a brutal impact on Japan’s trade. Exports fell 35.5 percent from 2007 to 2009 while imports fell 29.6 percent. Japan had the first trade deficit in 2011 since 1980 and the highest deficit in 2012.

Table VB-6, Japan, Exports and Imports Calendar Year 1979-2010 Billion Yens

Years	Exports	Imports	Balance
1950	298	348	-50
1955	723	889	-166
1960	1,459	1,616	-157
1965	3,042	2,940	102
1970	6,954	6,797	157
1975	16,545	17,170	-625
1979	22,531	24,245	-1,714
1980	29,382	31,995	-2,613
1981	33,468	31,464	2,004
1982	34,432	32,656	1,776
1983	34,909	30,014	4,895
1984	40,325	32,321	8,004
1985	41,955	31,084	10,871
1986	35,289	21,550	13,739
1987	33,315	21,736	11,579
1988	33,939	24,006	9,933
1989	37,822	28,978	8,844
1990	41,456	33,855	7,601
1991	42,359	31,900	10,459
1992	43,012	29,527	13,485
1993	40,202	26,826	13,376
1994	40,497	28,104	12,393
1995	41,530	31,548	9,982
1996	44,731	37,993	6,738
1997	50,937	40,956	9,981
1998	50,645	36,653	13,992
1999	47,547	35,268	12,279
2000	51,654	40,938	10,716
2001	48,979	42,415	6,564
2002	52,108	42,227	9,881
2003	54,548	44,362	10,186
2004	61,169	49,216	11,953
2005	65,656	56,949	8,707
2006	75,246	67,344	7,902
2007	83,931	73,135	10,796
2008	81,018	78,955	2,063
2009	54,170	51,499	2,671
2010	67,399	60,764	6,635
2011	65,546	68,111	-2,565
2012	63,745	70,672	-6,927

Source: Japan, Ministry of Finance http://www.customs.go.jp/toukei/info/index_e.htm

The geographical breakdown of exports and imports of Japan with selected regions and countries is provided in Table VB-7 for Nov 2012. The share of Asia in Japan’s trade is more than one half, 54.7 percent of exports and 44.2 percent of imports. Within Asia, exports to China are 17.1 percent of total exports and imports from China 20.8 percent of total imports. The second largest export market for Japan in Oct 2012 is the US with share of 18.9 percent of total exports and share of imports from the US of 8.1 percent in total imports. Western Europe has share of 10.6 percent in Japan’s exports and of 9.8 percent in imports. Rates of growth of exports of Japan in Dec are sharply negative for all countries and regions with the exception of minus 0.8 percent for exports to the US, 9.6 percent for Mexico and 4.7 percent for the Middle East. 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 5.8 percent in Dec 2012 while imports increased 1.9 percent but higher levels after the earthquake and declining prices may be another factor. Growth rates of imports in the 12 months ending in Dec are negative for some trading partners: minus 23.0 percent for Brazil, minus 7.8 percent for the Australia and minus 12.8 percent for Canada. Imports from Asia increased 1.5 percent in the 12 months ending in Dec while imports from China decreased 2.1 percent.

Table VB-7, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yens

Dec 2012	Exports Millions Yens	12 months ∆%	Imports Millions Yens	12 months ∆%
Total	5,300,269	-5.8	5,941,799	1.9
Asia	2,898,370	-5.6	2,625,794	1.5
China	906,068	-15.8	1,237,933	-2.1
USA	999,867	-0.8	480,237	2.8
Canada	62,133	-16.2	76,220	-12.8
Brazil	35,562	-19.6	69,076	-23.0
Mexico	73,067	9.6	31,169	27.9
Western Europe	561,585	-12.3	581,703	6.2
Germany	138,631	-9.2	150,737	-2.4
France	42,566	-16.8	77,603	7.4
UK	94,643	-10.2	46,201	4.9
Middle East	196,273	4.7	1,251,587	2.1
Australia	130,850	-2.0	355,690	-7.8

Source: Japan, Ministry of Finance http://www.customs.go.jp/toukei/info/index_e.htm

The geographical distribution of Japan’s trade balance is provided in Table VB-8. The combined trade surpluses with the US, UK and Mexico of JPY 609,970 million are more than erased by the trade deficits of importing raw materials and fuels from Australia and the Middle East, adding to JPY 1,280,154 million. China typically contributes a sizeable trade deficit of Japan with deficit of JPY 331,865 million in Dec 2012.

Table VB-8, Japan, Trade Balance, Millions of Yen

Dec 2012	Millions of Yen
Total	-641,530
Asia	272,576
China	-331,865
USA	519,630
Canada	-14,087
Brazil	-33,514
Mexico	41,898
Western Europe	-20,118
Germany	-12,106
France	-35,037
UK	48,442
Middle East	-1,055,314
Australia	-224,840

Source: Japan, Ministry of Finance http://www.customs.go.jp/toukei/info/index_e.htm

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 No 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 55.5 in Oct and 55.6 in Nov 2012.

Table CIPMNM, China, Nonmanufacturing Index of Purchasing Managers, %, Seasonally Adjusted

2012	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Nov	55.6	53.2	52.5	48.4	64.6
Oct	55.5	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 Nov 2011 to Nov 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 and 55.6 in Nov 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 and 49.8 in Sep, climbing above 50.0 to 50.2 in Oct and 50.6 in Nov. The index of new orders (NOI) fell from 54.5 in Apr 2012 to 49.0 in Jul and 48.7 in Aug, climbing above 50.0 to 51.2 in Nov 2012. The index of employment also fell from 51.0 in Apr to 49.1 in Aug and further down to 48.7 in Nov 2012.

Table CIPMMFG, China, Manufacturing Index of Purchasing Managers, %, Seasonally Adjusted

2012	IPM	PI	NOI	INV	EMP	SDEL
Nov	50.6	52.5	51.2	47.9	48.7	49.9
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/

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 manufacturing index of purchasing managers from Nov 2011 to Nov 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 and 50.6 in Nov 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/

Cumulative growth of China’s GDP in the four quarters of 2012 relative to the same period in 2011 was 7.8 percent, as shown in Table VC-GDP. Secondary industry accounts for 45.3 percent of GDP of which industry alone for 40.1 percent in the first three quarters of 2012 and construction with the remaining 6.7 percent in the first three quarters of 2012. Tertiary industry accounts for 43.8 percent of GDP in the first three quarters of 2012 and primary industry for 9.4 percent in the first three quarters of 2012. 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, 9.1 percent in IIIQ2012 and 8.2 percent in IVQ2012.

Table VC-GDP, China, Cumulative and Quarterly Growth of GDP, Current CNY 100 Million and Inflation Adjusted ∆%

Cumulative GDP 2012	Value Current CNY Billion	2012 Year-on-Year ∆%
GDP	51,932.2	7.8
Primary Industry	5,237.7	4.5
Farming IIIQ	33,088.0	4.2
Secondary Industry	23,531.9	8.1
Industry IIIQ	141,641.5	7.9
Construction IIIQ	23,787.0	9.2
Tertiary Industry	23,162.6	8.1
Transport, Storage, Post IIIQ	18,941.0	6.7
Wholesale, Retail Trades IIIQ	31,651.2	11.8
Hotel & Catering Services IIIQ	7,015.6	7.6
Financial Intermediation IIIQ	22,465.2	9.5
Real Estate IIIQ	20,789.6	2.7
Other IIIQ	54,101.0	7.7
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2012
IVQ2012	2.0	8.2
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 VC-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 and 7.9 percent in IVQ2012. Growth of secondary industry decelerated from 14.5 percent in IQ2010 to 7.4 percent in IIIQ2012 and 7.9 percent in IVQ2012.

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	IVQ 2012
GDP	9.7	9.5	9.1	8.9	8.1	7.6	7.4	7.9
Primary Industry	3.5	3.2	3.8	4.5	3.8	4.3	4.2	4.5
Secondary Industry	11.1	11.0	10.8	10.6	9.1	8.3	8.1	8.1
Tertiary Industry	9.1	9.2	9.0	8.9	7.5	7.7	7.9	8.1
GDP ∆% Relative to a Prior Quarter	2.2	2.3	2.4	1.9	1.8	1.8	2.2	2.0
	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=10587) is improving. The overall Flash China Manufacturing PMI^™ increased marginally from 51.5 in Dec to 51.9 in Jan for a high in 24 months while the Flash China Manufacturing Output Index increased from 51.9 in Dec to 52.2 in Jan, both in expansion territory above 50.0. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the economy of China is improving because of internal demand even with weak foreign demand (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10587).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 51.6 in Nov to 51.8 in Dec for the fourth consecutive month of increasing output (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10556). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that combined manufacturing and services data suggest growth of 8 percent in IVQ2012 GDP relative to a year earlier (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10556). The HSBC Business Activity index decreased from 52.1 in Nov to 51.7 in Dec with continuing growth in services at a slower rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10556). Hongbin Ku, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds strength in services from new orders and growth of employment (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10556). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, increased to 51.5 in Dec from 50.5 in Nov, indicating moderate activity, which is the highest reading since May 2011 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10489). Weak export orders were attributed to weakness in Europe, Japan and the US. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds gradual improvement of the economy of China with reduction of stocks and continuing government stimulus that is consistent with probable growth of GDP at 8.6 percent in 2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10489).

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	Dec 12-month ∆%: minus 1.9 Dec month ∆%: minus 0.1 Blog 1/13/13
Consumer Price Index	Dec month ∆%: 0.8 Dec 12 months ∆%: 2.5 Blog 1/13/13
Value Added of Industry	Dec month ∆%: 0.87 Jan-Dec 2012/Jan-Dec 2011 ∆%: 10.0 Blog 1/20/13
GDP Growth Rate	Year IVQ2012 ∆%: 7.9 Quarter IIQ2012 ∆%: 2.0 Blog 1/20/13
Investment in Fixed Assets	Dec month ∆%: 1.24 Total Jan-Dec 2012 ∆%: 20.6 Real estate development: 16.2 Blog 1/20/13
Retail Sales	Dec month ∆%: 1.53 Dec 12 month ∆%: 15.2 Jan-Dec ∆%: 14.3 Blog 1/20/13
Trade Balance	Dec balance $31.67 billion Exports 12M ∆% 14.1 Imports 12M ∆% 6.0 Cumulative Dec: $231.1 billion Blog 1/13/13

Links to blog comments in Table CNY:

1/20/13 http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html

1/13/13 http://cmpassocregulationblog.blogspot.com/2013/01/peaking-valuation-of-risk-financial.html

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, Unemployment and GDP ∆%

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	10.2	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, increased from 47.2 in Dec to 48.2 in Jan, for twelve consecutive declines and fifteen drops in sixteen months but with Oct registering the highest reading in ten months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10586). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index is consistent with GDP declining but improving outlook for return to growth in the first half of 2013 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10586). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP, increased from 46.5 in Nov to 47.2 in Dec, which is the eleventh consecutive contraction; contraction spread in manufacturing and services throughout France, Italy and Spain but with growth in Germany (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10527). Chris Williamson, Chief Economist at Markit, finds that the data are consistent with sharper contraction in IVQ2012 but easing in all four of the largest economies (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10527). The Markit Eurozone Services Business Activity Index increased from 46.7 in Nov to 47.8 in Dec (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10527). The Markit Eurozone Manufacturing PMI^® decreased marginally to 46.1 in Dec from 46.2 in Nov, which indicates contraction in seventeen consecutive months of deterioration of manufacturing business in the euro zone (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10479). New export orders declined in Dec for the eighteenth consecutive month with contracting demand within the euro area and deteriorating global markets. Chris Williamson, Chief Economist at Markit, finds that the survey data are consistent with decline of output at a quarterly rate of 1 percent in IVQ2012 but milder than in the autumn (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10479). Table EUR provides the regional data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IIIQ2012 ∆% 0.1; IIIQ2012/IIIQ2011 ∆% 0.0 Blog 12/30/12
Unemployment	Nov 2012: 11.8% unemployment rate Nov 2012: 18.820 million unemployed Blog 1/13/13
HICP	Dec month ∆%: 0.4 12 months Dec ∆%: 2.2 Blog 1/20/13
Producer Prices	Euro Zone industrial producer prices Nov ∆%: -0.2 Nov 12-month ∆%: 2.1 Blog 1/13/13
Industrial Production	Nov month ∆%: -0.3; Nov 12 months ∆%: -3.7 Blog 1/20/13
Retail Sales	Nov month ∆%: 0.1 Nov 12 months ∆%: minus 2.6 Blog 1/13/13
Confidence and Economic Sentiment Indicator	Sentiment 87.0 Dec 2012 Consumer minus 26.5 Dec 2012 Blog 1/13/13
Trade	Jan-Nov 2012/Jan-Nov 2011 Exports ∆%: 8.3 Imports ∆%: 2.0 Nov 2012 12-month Exports ∆% 5.4 Imports ∆% -0.3 Blog 1/20/13

Links to blog comments in Table EUR:

1/20/13 http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html

1/13/13 http://cmpassocregulationblog.blogspot.com/2013/01/peaking-valuation-of-risk-financial.html

12/30/12 http://cmpassocregulationblog.blogspot.com/2012/12/united-states-commercial-banks-assets.html

VE Germany. Table VE-DE provides yearly growth rates of the German economy from 1992 to 2011, price adjusted chain-linked and price and calendar-adjusted chain-linked. Germany’s GDP fell 5.1 percent in 2009 after growing below trend at 1.1 percent in 2008. Recovery has been robust in contrast with other advanced economy. The German economy grew at 3.7 percent in 2010 and at 3.0 percent in 2011. Growth slowed in 2011 from 1.3 percent in IQ2011, 0.3 percent in IIQ2011 and 0.6 percent in IIIQ2011 to decline of 0.2 percent in IVQ2011 and growth of 0.5 percent in IQ2012. The Federal Statistical Agency of Germany analyzes the fall and recovery of the German economy (http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/Content/Statistics/VolkswirtschaftlicheGesamtrechnungen/Inlandsprodukt/Aktuell,templateId=renderPrint.psml):

“The German economy again grew strongly in 2011. The price-adjusted gross domestic product (GDP) increased by 3.0% compared with the previous year. Accordingly, the catching-up process of the German economy continued during the second year after the economic crisis. In the course of 2011, the price-adjusted GDP again exceeded its pre-crisis level. The economic recovery occurred mainly in the first half of 2011. In 2009, Germany experienced the most serious post-war recession, when GDP suffered a historic decline of 5.1%. The year 2010 was characterised by a rapid economic recovery (+3.7%).”

Table VE-DE, Germany, GDP Annual ∆%

	Price Adjusted Chain-Linked	Price- and Calendar-Adjusted Chain Linked
2011	3.0	3.1
2010	4.2	4.0
2009	-5.1	-5.1
2008	1.1	0.8
2007	3.3	3.4
2006	3.7	3.9
2005	0.7	0.8
2004	1.2	0.7
2003	-0.4	-0.4
2002	0.0	0.0
2001	1.5	1.6
2000	3.1	3.3
1999	1.9	1.8
1998	1.9	1.7
1997	1.7	1.8
1996	0.8	0.8
1995	1.7	1.8
1994	2.5	2.5
1993	-1.0	-1.0
1992	1.9	1.5

Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/PressServices/Press/pr/2012/08/PE12_287_811.html;jsessionid=A761BC574543A771416A9CF81034F7BA.cae1

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, increased from 50.3 in Dec to 53.6 in Jan, which is the highest reading in twelve months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10588). The pace of decline of new export orders for manufacturing was at significantly lower rate than in Dec, with some respondents finding enhanced demand in Asia but continuing weakness in Southern Europe. Tim Moore, Senior Economist at Markit and author of the report, finds strength in Germany’s private sector with potential to provide impulse to GDP growth (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10588). The Markit Germany Composite Output Index of the Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, increased from 49.2 in Nov to 50.3 in Dec, indicating a level above the neutral zone of 50.0 after seven consecutive months below 50 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10560). Tim Moore, Senior Economist at Markit and author of the report, finds that the composite index of manufacturing and services indicates four months of contraction (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10383). The Germany Services Business Activity Index increased from 49.7 in Nov to 52.0 in Dec (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10560). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, decreased from 46.8 in Nov to 46.0 in Dec for the tenth consecutive month in contraction territory below 50.0 and lower than the average of 46.7 for 2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10538). New export orders fell for eighteen consecutive months with weak demand from internal and external clients. Tim Moore, Senior Economist at Markit and author of the report, finds continuing weakness in Germany’s manufacturing that cannot maintain strong performance in the beginning of the cyclical expansion (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10538).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IIIQ2012 0.2 ∆%; III/Q2012/IIIQ2011 ∆% 0.4 2011/2010: 3.0% GDP ∆% 1992-2011 Blog 8/26/12 5/27/12 11/25/12
Consumer Price Index	Dec month NSA ∆%: 0.9 Dec 12-month NSA ∆%: 2.1 Blog 1/20/13
Producer Price Index	Dec month ∆%: -0.3 CSA, 0.1 NSA 12-month NSA ∆%: 1.5 Blog 1/27/13
Industrial Production	Mfg Oct month CSA ∆%: 0.4 12-month NSA: minus 3.2 Blog 1/13/13
Machine Orders	MFG Nov month ∆%: -1.8 Nov 12-month ∆%: -1.0 Blog 1/13/13
Retail Sales	Nov Month ∆% 1.2 12-Month ∆% -1.0 Blog 1/6/13
Employment Report	Unemployment Rate Nov 5.3% Blog 1/6/13
Trade Balance	Exports Nov 12-month NSA ∆%: 0.0 Imports Nov 12 months NSA ∆%: -1.2 Exports Nov month CSA ∆%: -3.4; Imports Nov month SA -3.7 Blog 1/13/13

Links to blog comments in Table DE:

1/20/13 http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html

1/13/13 http://cmpassocregulationblog.blogspot.com/2013/01/peaking-valuation-of-risk-financial.html

1/6/13 http://cmpassocregulationblog.blogspot.com/2013/01/thirty-million-unemployed-or.html

12/23-24/12 http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html

11/25/12 http://cmpassocregulationblog.blogspot.com/2012/11/contraction-of-united-states-real.html

8/26/12 http://cmpassocregulationblog.blogspot.com/2012/08/expanding-bank-cash-and-deposits-with_26.html

VF France. Table VF-FR provides growth rates of GDP of France with the estimates of Institut National de la Statistique et des Études Économiques (INSEE). The long-term rate of GDP growth of France from IIIQ1949 to IIIQ2012 is quite high at 3.2 percent. France’s growth rates were quite high in the four decades of the 1950s, 1960, 1970s and 1980s with an average growth rate of 4.1 percent compounding the average rates in the decades and discounting to one decade. The growth impulse diminished with 1.9 percent in the 1990s and 1.7 percent from 2000 to 2007. The average growth rate from 2000 to 2012, using third quarter data, is 1.1 percent because of the sharp impact of the global recession from IVQ2007 to IIQ2009. Cobet and Wilson (2002) provide estimates of output per hour and unit labor costs in national currency and US dollars for the US, Japan and Germany from 1950 to 2000 (see Pelaez and Pelaez, The Global Recession Risk (2007), 137-44). The average yearly rate of productivity change from 1950 to 2000 was 2.9 percent in the US, 6.3 percent for Japan and 4.7 percent for Germany while unit labor costs in USD increased at 2.6 percent in the US, 4.7 percent in Japan and 4.3 percent in Germany. From 1995 to 2000, output per hour increased at the average yearly rate of 4.6 percent in the US, 3.9 percent in Japan and 2.6 percent in Germany while unit labor costs in US fell at minus 0.7 percent in the US, 4.3 percent in Japan and 7.5 percent in Germany. There was increase in productivity growth in the G7 in Japan and France in the second half of the 1990s but significantly lower than the acceleration of 1.3 percentage points per year in the US. Lucas (2011May) compares growth of the G7 economies (US, UK, Japan, Germany, France, Italy and Canada) and Spain, finding that catch-up growth with earlier rates for the US and UK stalled in the 1970s.

Table VF-FR, France, Average Growth Rates of GDP Fourth Quarter, 1949-2012

Period	Average ∆%
1949-2012*	3.2
2000-2012*	1.1
2000-2011	1.1
2000-2007	1.7
1990-1999	1.9
1980-1989	2.6
1970-1979	3.8
1960-1969	5.7
1950-1959	4.2

*Third Quarter on Third Quarter

Source: Institut National de la Statistique et des Études Économiques http://www.insee.fr/en/themes/info-rapide.asp?id=28&date=20121228

The Markit Flash France Composite Output Index fell from 44.6 in Dec to 42.7 in Jan for the lowest reading in 46 months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10584). Jack Kennedy, Senior Economist at Markit and author of the report, finds that the data suggest the sharpest decline of overall output in about four years with increasing reduction of employment (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10584).

The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, increased marginally from 44.3 in Nov to 44.6 in Dec, indicating significant contraction of private sector activity for a tenth consecutive month at slower rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10552). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds that the economy performed in IVQ2012 at the slowest pace since IQ2009 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10552). The Markit France Services Activity index decreased from 45.8 in Nov to 45.2 in Dec (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10552). The Markit France Manufacturing Purchasing Managers’ Index^® increased marginally to 44.6 in Dec from 44.5 in Nov, remaining deeply below the neutral level of 50.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10535). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds continuing weakness in manufacturing with new orders because of weakness in both foreign and domestic demand (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10535). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Dec month ∆% 0.3 12 months ∆%: 1.3 1/13/13
PPI	Nov month ∆%: -0.5 Nov 12 months ∆%: 1.9 Blog 12/30/12
GDP Growth	IIIQ2012/IIQ2012 ∆%: 0.1 IIIQ2012/IIIQ2011 ∆%: 0.0 Blog 12/30/12
Industrial Production	Nov ∆%: Manufacturing 0.2 12-Month ∆%: Manufacturing minus 4.6 Blog 1/13/13
Consumer Spending	Nov Manufactured Goods ∆%: -0.2 Nov 12-Month Manufactured Goods ∆%: -1.0 Blog 12/30/12
Employment	IIIQ2012 Unemployed 2.826 million Unemployment Rate: 9.9% Employment Rate: 63.9% Blog 12/16/12
Trade Balance	Nov Exports ∆%: month -2.8, 12 months -3.4 Nov Imports ∆%: month -2.5, 12 months -3.4 Blog 1/13/13
Confidence Indicators	Historical averages 100 Jan Mfg Business Climate 86 Blog 1/27/13

Links to blog comments in Table FR:

1/13/13 http://cmpassocregulationblog.blogspot.com/2013/01/peaking-valuation-of-risk-financial.html

12/30/12 http://cmpassocregulationblog.blogspot.com/2012/12/united-states-commercial-banks-assets.html

12/16/12 http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth.html

Table VF-1 shows the INSEE business climate manufacturing indicator. The headline synthetic index decreased from 91 in Jun to 89 in Jul but increased to 90 in both Aug and Sep, declining to 85 in Oct and rebounding to 88 in Nov and 89 in Dec, declining to 86 in Jan 2013. The final row shows general production expectations deteriorating from minus 32 in Jun to minus 44 in Jul and Aug, minus 52 in Sep, minus 55 in Oct but minus 42 in Nov, minus 38 in Dec 2012 and minus 36 in Jan, which is still well below the average since 1976 of minus 9. The indicator of demand and export order levels fell from minus 30 in Jun to minus 36 in Jul but then improved to minus 27 in Aug and minus 27 in Sep, declining to -38 in Oct, improving marginally to minus 35 in Nov, minus 37 in Dec and minus 41 in Jan, which is still well below the average since 1976 of minus 12.

Table VF-1, France, Business Climate Indicators of INSEE

Mfg 2012	Average since 1976	Oct	Nov	Dec	Jan
Synthetic Index	100	85	88	89	86
Recent Changes in Output	5	-23	-16	-10	-23
Finished- Goods Inventory Level	13	17	15	11	3
Demand and Total Order Levels	-17	-41	-34	-37	-35
Demand and Export Order Levels	-13	-38	-35	-37	-41
Personal Production Expectations	5	-9	-7	-9	-15
General Production Expectations	-9	-55	-42	-38	-36

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=11&date=20130123

Chart VF-1 of the Institut National de la Statistique et des Études Économiques (INSEE) provides the history of the business climate synthetic index of INSEE since 1992. The index fell during the contractions of 1991, 2001 and 2008. After rapid recovery beginning in 2009 the synthetic index shows declining trend in 2011 with upward reversal in 2012 interrupted in Apr through Jul 2012 and a marginal upward move in Aug-Sep 2012 but new decline in Oct 2012, marginally reversed in Nov 2012 with stability in Dec 2012 and decline in Jan 2013.

Chart VF-1, France, INSEE Industrial Business Climate Synthetic Index

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=11&date=20130123

Chart VF-2 of the Institut National de la Statistique et des Études Économiques (INSEE) shows strong drops of the turning point indicator in the recessions of 1991, 2001 and 2008. There have been other drops of this index. The turning point indicator has fallen to levels in the direction of past contractions and after rebounding in Oct and Nov 2011 is showing declining trend in Jan 2012 with slight reversal in Feb followed by significant improvement in Mar and deterioration in Apr through Jul 2012 with new improvement in Aug 2012 followed by decline in Sep-Oct 2012 followed by rebound in Nov 2012 and stability in Dec 2012 to Jan 2013.

Chart VF-2, INSEE Business Climate Manufacturing Turning Point Indicator

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=11&date=20130123

Chart VF-3 of the Institut National de la Statistique et des Études Économiques (INSEE) of France shows the indexes of general production expectations, personal production expectations and recent changes in output. All three indexes fell during the past three contractions after 1991, 2001 and 2008. The indexes are showing downward trend in 2011 that continued in Nov, Dec and Jan 2012 with slight reversal in Feb and significant improvement in Mar followed by weakens in Apr through Jul 2012 and stability in Aug-Sep 2012 and new decline in Oct 2012 followed by improvement in Nov 2012 and stability in Dec 2012 with some improvement in Jan 2013

Chart VF-3, Climate Manufacturing General Production, Personal Production and Recent Changes in Output of INSEE, SA %

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=11&date=20130123

VG Italy. Table VG-IT provides percentage changes in a quarter relative to the same quarter of Italy’s expenditure components in chained volume measures. GDP has been declining at sharper rates from minus 0.5 percent in IQ2012 to minus 2.4 percent in IIIQ2012. The aggregate demand components of consumption and gross fixed capital formation (GFCF) have been declining at faster rates.

Table VG-IT, Italy, GDP and Expenditure Components, Chained Volume Measures, Quarter ∆% on Same Quarter Year Earlier

	GDP	Imports	Consumption	GFCF	Exports
2012
IIIQ	-2.4	-7.8	-3.7	-9.8	1.6
IIQ	-2.3	-7.6	-3.5	-9.6	2.5
IQ	-1.3	-9.0	-2.8	-7.9	1.9
2011
IVQ	-0.5	-6.8	-1.6	-3.7	3.3
IIIQ	0.4	0.3	-0.5	-2.2	5.9
IIQ	1.0	3.4	0.6	-0.2	7.1
IQ	1.3	8.9	0.9	0.7	10.9
2010
IVQ	2.2	15.4	0.8	2.3	13.3
IIIQ	1.9	13.0	1.0	4.3	12.2
IIQ	1.9	13.2	0.5	2.3	12.0
IQ	1.1	7.3	0.5	-0.8	7.3
2009
IVQ	-3.5	-6.4	-0.1	-7.5	-9.3
IIIQ	-5.0	-12.1	-0.9	-12.6	-16.3
IIQ	-6.6	-17.8	-1.3	-13.7	-21.4
IQ	-6.9	-17.2	-1.6	-12.7	-22.9
2008
IVQ	-3.0	-8.2	-0.9	-8.3	-10.3
IIIQ	-1.9	-5.0	-0.8	-4.5	-3.9
IIQ	-0.2	-0.1	-0.3	-1.5	0.4
IQ	0.5	1.7	0.1	-1.0	2.9

GFCF: Gross Fixed Capital Formation

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/77009

The Markit/ADACI Business Activity Index increased from 44.6 in Nov to 45.6 in Dec, indicating significant contraction of output of Italy’s services at a marginally lower rate for contraction during a year and a half (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10555). Phil Smith, economist at Markit and author of the Italy Services PMI^®, finds that new business fell at a faster rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10555). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), increased from 45.1 in Nov to 46.7 in Dec for 17 consecutive months of contraction of Italy’s manufacturing but the highest reading in nine months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10494). Weak internal demand contributed more to contraction than foreign demand that declined only marginally. Phil Smith, economist at Markit and author of the Italian Manufacturing PMI^®, finds a more encouraging reading with softer declines in output and new orders (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10494). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Dec month ∆%: 0.2 Dec 12-month ∆%: 2.3 Blog 1/20/13
Producer Price Index	Nov month ∆%: -0.1 Nov 12-month ∆%: 2.2 Blog 12/30/12
GDP Growth	IIIQ2012/IIQ2012 SA ∆%: minus 0.2 IIIQ2012/IIIQ2011 NSA ∆%: minus 2.4 Blog 12/16/12
Labor Report	Nov 2012 Participation rate 63.9% Employment ratio 56.8% Unemployment rate 11.1% Blog 1/13/13
Industrial Production	Nov month ∆%: minus 1.0 12 months ∆%: minus 7.6 Blog 1/20/13
Retail Sales	Nov month ∆%: -0.4 Nov 12-month ∆%: -3.1 Blog 1/27/13
Business Confidence	Mfg Dec 88.9, Aug 87.5 Construction Dec 79.5, Jul 81.6 Blog 12/30/12
Trade Balance	Balance Nov SA €2261 million versus Oct €1442 Exports Nov month SA ∆%: 0.4; Imports Nov month ∆%: minus 2.2 Exports 12 months Nov NSA ∆%: 3.6 Imports 12 months NSA ∆%: -8.2 Blog 1/20/13

Links to blog comments in Table IT:

1/20/13 http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html

1/13/13 http://cmpassocregulationblog.blogspot.com/2013/01/peaking-valuation-of-risk-financial.html

12/30/12 http://cmpassocregulationblog.blogspot.com/2012/12/united-states-commercial-banks-assets.html

12/16/12 http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth.html

An important part of the analysis of Blanchard (2011WEOSep, 2012WEOApr) is the much more difficult adjustment of economies with need of fiscal consolidation in the presence of weak economic growth. Demand has significantly weakened throughout the advanced economies. There are many sound fundamentals in Italy such as high income and competitive companies. The restraints consist of low economic growth with high debt/GDP ratio. Table VG-1 provides growth of retail sales for Italy. Retail sales decreased 0.4 percent in Nov 2012 relative to Oct 2012, decreased 1.3 percent in Sep-Nov 2012 relative to Jun-Aug 2012, decreased 3.1 percent in Nov 2012 relative to Nov 2011 and decreased 2.0 percent in Jan-Nov 2012 relative to Jan-Nov 2011. Food retail sales outperform non-food retail sales.

Table VG-1, Italy, Retail Sales ∆%

	Nov 2012/  Oct 2012 SA	Sep-Nov 12/   Jun-Aug 12 SA	Nov 2012/ Nov 2011 NSA	Jan-Nov 2012/ Jan-Nov 2011
Total	-0.4	-1.3	-3.1	-2.0
Food	0.1	-0.8	-2.0	-0.6
Non-food	-0.6	-1.6	-3.7	-2.6

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/80529

Chart VG-1 provides 12-month percentage changes of retail sales in Italy. There are only positive changes in Dec 2010 and Apr 2011. Retail sales fell relative to a year earlier in most months of 2011 with improvement in Feb and Mar 2012 but sharp decline in Apr 2012 followed by improvements in May and Jun 2012, another sharp drop in Jul 2012 and improvement in Aug- 2012 with marginal deterioration in Sep 2012 followed by sharper deterioration in Oct 2012 and marginal improvement in Nov 2012.

Chart VG-1, Italy, Percentage Changes of Retail Sales in 12 Months

Source: Istituto Nazionale di Statistica

http://www.istat.it/en/

A longer perspective of retail sales in Italy is provided by monthly and 12-month percentage changes in 2011 and Jan-Nov 2012 and annual rates from 2008 to 2011 in Table VG-2. Retail sales did not decline very sharply during the global recession but rose only 0.2 percent in 2010 and fell 1.3 percent in 2011. There is an evident declining trend in 2011 but few monthly increases of 1.3 percent in Apr 2011, 1.2 percent in Oct 2012, 1.2 percent in Jan 2012, 0.8 percent in Feb 2012, 0.2 percent in May 2012 and 0.3 percent in Jun 2012. There are negative 12-month percentage changes in every month of 2011 with the exception of 2.2 percent in Apr 2011 and 0.0 percent in Feb 2011. There are only two months with positive 12-month percentage change in 2012, 1.5 percent in Mar 2012 and 0.5 percent in Feb 2012. Retail sales grew 1.2 percent in Jan 2012 and 0.8 percent in Feb 2012, reducing sharply the 12-month percentage change from minus 3.7 percent in Dec 2011 to only minus 1.1 percent in Jan 2012 and positive 0.5 percent in the 12 months ending in Feb 2012 and 1.5 percent in the 12 months ending in Mar 2012. Decline of the monthly rates in Mar 2012 of 0.8 percent and 1.8 percent in Apr 2012 pulled down the 12-month percentage change in Apr to minus 6.8 percent. Increase of 0.2 percent in May 2012 resulted in decrease of 1.7 percent in 12 months and growth of 0.3 percent in Jun 2012 further reduced the 12-month percentage change to minus 0.5 percent. Further decline of 0.2 percent in Jul 2012 resulted in decline of 3.2 percent in 12 months. Decline of 0.1 percent of sales in Aug 2012 resulted in decline in twelve months of 1.1 percent. Decrease of 1.3 percent in Oct 2012 resulted in decline of 3.8 percent in 12 months and decrease of 0.4 percent in Nov 2012 resulted in decline of 3.1 percent in 12 months.

Table VG-2, Italy, Retail Sales Month and 12-Month ∆%

	Month ∆% SA	12-Month ∆% NSA
Nov 2012	-0.4	-3.1
Oct	-1.3	-3.8
Sep	-0.2	-1.6
Aug	-0.1	-1.1
Jul	-0.2	-3.2
Jun	0.3	-0.5
May	0.2	-1.7
Apr	-1.8	-6.8
Mar	-0.8	1.5
Feb	0.8	0.5
Jan	1.2	-1.1
Dec 2011	-1.1	-3.7
Nov	-0.7	-1.8
Oct	1.2	-1.4
Sep	-0.6	-1.6
Aug	-0.4	-0.3
July	-0.2	-2.3
Jun	-0.6	-1.1
May	-0.5	-0.4
Apr	1.3	2.2
Mar	0.0	-2.1
Feb	-0.6	0.0
Jan	-1.2	-1.1
Dec 2010	0.6	0.6
2011		-1.3
2010		0.2
2009		-1.7
2008		-0.3

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/80529

VH United Kingdom. Annual data in Table VH-UK show the strong impact of the global recession in the UK with decline of GDP of 4.0 percent in 2009 after dropping 1.0 percent in 2008. Recovery of 1.8 percent in 2010 is relatively low compared to annual growth rates in 2007 and earlier years. Growth was only 0.9 percent in 2011 and 0.0 percent in 2012. The bottom part of Table VH-UK provides average growth rates of UK GDP since 1948. The UK economy grew at 2.6 percent on average between 1948 and 2012, which is relatively high for an advanced economy. The growth rate of GDP between 2000 and 2007 is higher at 3.0 percent. Growth in the current cyclical expansion has been only at 0.9 percent as advanced economies struggle with weak internal demand and world trade.

Table VH-UK, UK, Gross Domestic Product, ∆%

	∆% on Prior Year
1998	3.5
1999	3.2
2000	4.2
2001	2.9
2002	2.4
2003	3.8
2004	2.9
2005	2.8
2006	2.6
2007	3.6
2008	-1.0
2009	-4.0
2010	1.8
2011	0.9
2012	0.0
Average ∆% per Year
1948-2012	2.6
1948-1959	2.9
1960-1969	3.3
1970-1979	2.5
1980-1989	3.2
1990-1999	2.6
2000-2012	1.5
2000-2007	3.0
2009-2012	0.9

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q4-2012/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® decreased from 50.2 in Nov to 48.9 in Dec with interruption of growth by marginal contraction for the first time since Dec 2010 during inclement snow weather (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10559). Chris Williamson, Chief Economist at Markit, finds that combined services, manufacturing and construction survey data suggests possible contraction of UK GDP of 0.2 percent in IVQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10559). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) increased from 49.1 in Nov to 51.4 in Dec with the first reading above 50 after seven consecutive months of contraction (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10539). The PMI registered average 49.5 in IVQ2012, which is higher than 48.1 in IIIQ2012 and higher than the average of 49.2 for 2012. New export orders continued to fall as in all months in 2012 with weakness in the euro area that is the United Kingdom’s major export destination. Rob Dobson, Senior Economist at Markit and author of the Markit/CIPS Manufacturing PMI^®, finds that conditions improved in Dec but contraction in IVQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10539). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Dec month ∆%: 0.5 Dec 12-month ∆%: 2.7 Blog 1/20/13
Output/Input Prices	Output Prices: Dec 12-month NSA ∆%: 2.2; excluding food, petroleum ∆%: 1.5 Input Prices: Dec 12-month NSA ∆%: 0.3 Excluding ∆%: 0.0 Blog 1/20/13
GDP Growth	IVQ2012 prior quarter ∆% -0.3; year earlier same quarter ∆%: 0.0 Blog 1/27/13
Industrial Production	Nov 2012/Nov 2011 ∆%: Production Industries minus 2.4; Manufacturing minus 2.1 Blog 1/13/13
Retail Sales	Dec month ∆%: -0.1 Nov 12-month ∆%: 0.3 Blog 1/20/13
Labor Market	Sep-Nov Unemployment Rate: 7.7%; Claimant Count 4.8%; Earnings Growth 1.5% Blog 1/27/13
Trade Balance	Balance Oct minus ₤3466 million Exports Nov ∆%: 1.7; Sep-Nov ∆%: -1.0 Imports Nov ∆%: 1.0 Sep-Nov ∆%: -0.9 Blog 1/13/13

Links to blog comments in Table UK:

1/20/13 http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html

1/13/13 http://cmpassocregulationblog.blogspot.com/2013/01/peaking-valuation-of-risk-financial.html

Annual data in Table VH-1 show the strong impact of the global recession in the UK with decline of GDP of 4.0 percent in 2009 after dropping 1.0 percent in 2008. Recovery of 1.8 percent in 2010 is relatively low compared to annual growth rates in 2007 and earlier years. Growth was only 0.9 percent in 2011 and 0.0 percent in 2012. The bottom part of Table VH-1 provides average growth rates of UK GDP since 1948. The UK economy grew at 2.6 percent on average between 1948 and 2012, which is relatively high for an advanced economy. The growth rate of GDP between 2000 and 2007 is higher at 3.0 percent. Growth in the current cyclical expansion has been only at 0.9 percent as advanced economies struggle with weak internal demand and world trade.

Table VH-1, UK, Gross Domestic Product, ∆%

	∆% on Prior Year
1998	3.5
1999	3.2
2000	4.2
2001	2.9
2002	2.4
2003	3.8
2004	2.9
2005	2.8
2006	2.6
2007	3.6
2008	-1.0
2009	-4.0
2010	1.8
2011	0.9
2012	0.0
Average ∆% per Year
1948-2012	2.6
1948-1959	2.9
1960-1969	3.3
1970-1979	2.5
1980-1989	3.2
1990-1999	2.6
2000-2012	1.5
2000-2007	3.0
2009-2012	0.9

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q4-2012/index.html

The UK Office for National Statistics has revised the national accounts since 1998 (http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/impact-of-changes-in-national-accounts-and-economic-commentary-for-q2-2011/index.html). The new data, additions and revisions are analyzed here. Table VH-2 provides quarter on quarter chained value measures of GDP since 1998 in the third estimate for IVQ2012 (http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q4-2012/index.html). Growth of 0.9 percent in IIIQ2012 interrupted three consecutive quarters of contraction of GDP on the prior quarter from IVQ2011 to IQ2012 with cumulative contraction of 1.0 percent at annual equivalent rate of 1.3 percent {([(1-0.003)(1-0.003)(1-0.004)]^4/3 – 1)100 = -1.3%}. Growth of minus 0.3 percent in IVQ2012 erased the gain in IIIQ2012 with cumulative nil growth in 2012. Most advanced economies are underperforming relative to the period before the global recession. The UK Office for National Statistics analyzes the decline in output in IVQ2012 as follows (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--january-gdp-update/sum-jan13.html):

“After growth of 0.9 per cent in third quarter, the economy contracted by 0.3 per cent in the fourth quarter of 2012. This contraction can partly be attributed to the special events in the second and third quarters. Output in the second quarter was subdued by a reduction in working days due to the additional bank holiday for the Queen’s Diamond Jubilee, and provided a lower base for growth in the third quarter. In addition, hosting the London 2012 Olympic and Paralympics games may have had a positive impact on growth in the third quarter. For instance, sales of Olympic and Paralympic tickets added 0.2 percentage points to GDP growth in the third quarter, and reduced fourth quarter growth by a similar amount.”

Table VH-2, UK, Percentage Change of GDP from Prior Quarter, Chained Value Measures ∆%

	IQ	IIQ	IIIQ	IV
2012	-0.2	-0.4	0.9	-0.3
2011	0.4	0.1	0.6	-0.3
2010	0.6	0.7	0.6	-0.4
2009	-1.5	-0.2	0.4	0.4
2008	0.1	-0.9	-1.8	-2.1
2007	1.1	1.2	1.2	0.2
2006	0.5	0.3	0.2	0.9
2005	0.6	1.2	0.8	1.1
2004	0.7	0.2	0.0	0.6
2003	0.6	1.2	1.2	1.2
2002	0.4	0.8	0.8	0.9
2001	1.3	0.7	0.5	0.4
2000	1.0	1.4	0.3	0.2
1999	0.5	0.3	1.7	1.3
1998	0.8	0.7	0.6	0.9

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q4-2012/index.html

There are four periods in growth of GDP in a quarter relative to the same quarter a year earlier in the UK in the years from 2000 to the present as shown in Table VH-3. (1) Growth rates were quite high from 2000 to 2007. (2) There were six consecutive quarters of contraction of GDP from IIIQ2008 to IVQ2009. Contractions relative to the quarter a year earlier were quite sharp with the highest of 4.6 percent in IVQ2008, 6.1 percent in IQ2009, 5.4 percent in IIQ2009 and 3.3 percent in IIIQ2009. (3) The economy bounced strongly with 2.1 percent in IIQ2010, 2.4 percent in IIIQ2010 and 1.5 percent in IVQ2010. (4) Recovery in 2011 did not continue at rates comparable to those in 2000 to 2007 and even relative to those in the final three quarters of 2010. Growth relative to the same quarter a year earlier fell from 1.5 percent in IVQ2010 to 1.3 percent in IQ2011, 0.8 percent in IIQ2011, 0.7 percent in IIIQ2011 and 0.9 percent in IVQ2011 but only 0.2 percent in IQ2012, contraction of 0.3 percent in IIQ2012 relative to IQ2011 and stagnation in IIIQ2012 and IVQ2012. In IQ2012, GDP fell 0.2 percent for a second consecutive quarter and increased 0.2 percent relative to a year earlier. In IIQ2012, GDP fell 0.4 percent relative to IQ2012 and fell 0.3 percent relative to a year earlier. In IIIQ2012, GDP increased 0.9 percent but stagnated relative to the same quarter a year earlier. In IVQ2012, GDP fell 0.3 percent and stagnated relative to a year earlier. Fiscal consolidation in an environment of weakening economic growth is much more challenging.

Table VH-3, UK, Percentage Change of GDP from Same Quarter a Year Earlier, Chained Value Measures ∆%

	IQ	IIQ	IIIQ	IV
2012	0.2	-0.3	0.0	0.0
2011	1.3	0.8	0.7	0.9
2010	1.2	2.1	2.4	1.5
2009	-6.1	-5.4	-3.3	-0.9
2008	2.7	0.5	-2.4	-4.6
2007	2.6	3.6	4.6	3.8
2006	3.7	2.7	2.1	2.0
2005	1.5	2.5	3.3	3.8
2004	4.4	3.4	2.2	1.6
2003	3.3	3.6	4.0	4.3
2002	2.0	2.2	2.5	3.1
2001	3.3	2.5	2.8	2.9
2000	4.4	5.6	4.1	2.9
1999	2.8	2.4	3.5	4.0
1998	4.0	3.7	3.3	3.1

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q4-2012/index.html

Growth rates of gross value added (GVA) and components of gross value added in a quarter from the preceding quarter are provided in Table VH-4. The first row of the table provides the weights of components. Growth of GVA in IVQ2012 resulted from sharp contraction of manufacturing by 1.5 percent with total production decreasing 1.8 percent. Construction expanded 0.3 percent and services were flat. Growth of GVA of 0.9 percent in IIIQ2012 resulted from growth of services of 1.2 percent, total production and manufacturing by 0.7 percent and decline of construction of 2.5 percent. Contraction of GVA of 0.3 percent in IIQ2012 resulted from sharp contraction of 2.8 percent of construction with decline of total production by 0.9 percent and of manufacturing by 1.0 percent while services contracted 0.1 percent. Contraction of GVA of 0.2 percent in IQ2012 resulted from sharp contraction of construction by 6.4 percent and contraction of total production by 0.3 percent with manufacturing contracting 0.2 percent while services crawled 0.3 percent. Contraction of GVA of 0.2 percent in IVQ2011 resulted from sharp contraction of 1.3 percent in total production, with manufacturing declining 1.0 percent. Even services fell by 0.2 percent in IVQ2011. Growth of 0.6 percent in IIIQ2011 originated almost entirely in growth by services of 0.8 percent with mild contraction by other components. Growth in 2011 originated mostly in services. GVA contracted 0.3 percent in IVQ2010, 0.2 percent in IVQ2011, 0.2 percent in IQ2012, 0.3 percent in IIQ2012 and 0.1 percent in IVQ2012. All components are negative in IVQ2011 with exception of 0.1 percent for construction and services fell 0.2 percent while all components are negative in IQ2012 with meager growth of services of 0.3 percent and contraction of manufacturing by 0.2. All components are negative in IIQ2012 with output falling 0.9 percent, construction 2.8 percent and services 0.1 percent. In contrast, all components are positive in IIIQ2012 with exception of contraction of construction by 2.5 percent. Services were flat in IVQ2012 and construction grew 0.3 percent while production fell 1.8 percent and manufacturing 1.5 percent.

Table VH-4, UK, GDP and Gross Value Added by Components, ∆% on Prior Quarter 

	GVA	Total Production	Mfg	CONS	Services
Weights*	1000	156	105	68	770
IVQ12	-0.1	-1.8	-1.5	0.3	0.0
IIIQ12	0.9	0.7	0.7	-2.5	1.2
IIQ12	-0.3	-0.9	-1.0	-2.8	-0.1
IQ12	-0.2	-0.3	-0.2	-6.4	0.3
IVQ11	-0.2	-1.3	-1.0	0.1	-0.2
IIIQ11	0.6	-0.2	-0.3	-0.1	0.8
IIQ11	0.3	-1.2	0.2	1.3	0.3
IQ11	0.6	-0.1	0.7	0.0	0.6
IVQ10	-0.3	0.1	0.5	-1.8	-0.4
IIIQ10	0.7	0.4	1.6	2.9	0.4
IIQ10	0.9	1.4	1.9	6.3	0.2
IQ10	0.4	1.1	0.8	2.3	0.2
IV09	0.5	0.3	1.1	0.5	0.6
III09	0.5	-1.1	-0.4	-0.1	0.5
II09	-0.2	0.0	0.2	-2.6	0.0
I09	-1.5	-4.3	-5.2	-5.8	-0.5
IV08	-2.2	-4.9	-5.2	-5.8	-1.4
III08	-1.7	-1.1	-1.3	-3.0	-1.6
II08	-0.8	-1.1	-1.6	-2.0	-0.6
I08	0.1	-0.3	0.4	1.6	0.0

Note: GVA: Gross Values Added; CONS: construction’ MFG: manufacturing

*Weights (2009) may not add because of rounding and exclusion of Agriculture, Forestry and Fishing with weight of 6. Output components are valued at basic prices while GDP is valued at market prices. The preliminary estimate places GDP next to gross value added by components because it is the only contribution to change in GDP.

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q4-2012/index.html

The UK Office for National Statistics provides important analysis of the relation of GDP and the labor market (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--january-gdp-update/sum-jan13.html). Output of the production industries is 5.1 percent below the level in IVQ2010 after declines in all quarters of 2011 and 2012 with exception of IIIQ2012. Even with weak GDP the labor market of the UK continues to be resilient. Data are not complete for IVQ2012 but indicators of the labor market until Nov 2012 show increase of employment of 90,000, decline of unemployment by 37,000 and increase in hours worked. The claimant count is available for Nov and Dec 2012, showing decline of 12,100. Chart VH-1 of the UK Office for National Statistics (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--january-gdp-update/sum-jan13.html) shows weakening output but increases in employment and hours worked.

Chart VH-1, UK, Employment Level Ages 16 and Over, Total Weekly Hours and GDP, 2008-2012

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--january-gdp-update/sum-jan13.html

Table VH-5 of the UK Office for national Statistics (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--january-gdp-update/sum-jan13.html) provides total weekly hours, output and employment quarterly from 2008 to 2012. Weakening output has been accompanied recently by improvements in hours worked and employment.

Table VH-5, UK, Indices of Quarterly Employment Ages 16 and Over, Total Hours Worked and GDP, 2008-2012

IQ2008 =100

	Total weekly hours, Aged 16 +	Output, CVM	Employment, Aged 16 +
	YBUS	ABMI	MGRZ
2008 Q1	100.0	100.0	100.0
Q2	98.9	99.1	100.1
Q3	98.9	97.3	99.6
Q4	98.3	95.3	99.4
2009 Q1	96.7	93.9	98.9
Q2	96.3	93.7	97.9
Q3	95.8	94.1	97.8
Q4	95.8	94.5	97.9
2010 Q1	95.7	95.0	97.6
Q2	96.5	95.7	98.2
Q3	97.0	96.3	98.9
Q4	97.4	95.9	98.7
2011 Q1	97.4	96.3	99.0
Q2	96.3	96.4	99.0
Q3	97.1	97.0	98.5
Q4	97.3	96.7	98.8
2012 Q1	98.0	96.5	99.2
Q2	98.5	96.1	99.9
Q3	99.6	97.0	100.2
Q4		96.7

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--january-gdp-update/sum-jan13.html

Labor market statistics of the UK for the quarter Aug-Oct 2012 are provided in Table VH-6. The unemployment rate fell to 7.7 percent and the number unemployed decreased 185,000 in the year, reaching 2.490 million. The employment rate is 71.4 percent. Earnings growth including bonuses was 1.5 percent over the earlier year. The claimant count or those receiving unemployment benefits stands at 4.8 percent, unchanged on the month and on the year. 

Table VH-6, UK, Labor Market Statistics

	Quarter Sep-Nov 2012
Unemployment Rate	7.7% down 0.1 % points on quarter and down 0.7 from year earlier
Number Unemployed	(1) down 37,000 on quarter and down 185,000 from year earlier to reach 2.490 million (2) Unemployment rate 16 to 24 years of age 20.5% of that age group (3) Unemployed 16 to 24 years excluding those in full-time education 633,000 (324,000 in full-time education) down 26,000 from year earlier; unemployment rate 18.0%
Number Unemployed > one and two years	(1) Number unemployed over one year: 892,000, down 5,000 on quarter (2) Number unemployed over two years: 434,000, down 10,000 on quarter
Inactivity Rate 16-64 Years of Age (Definition: Not in employment but have not been seeking employment in the past four weeks or are unable to start work in two weeks)	(1) 22.5%, change 0.0 % points on quarter, down 0.7 on year (2) Economically inactive 16-64 years down 13,000 on quarter and down 253,000 on year to 9.029 million
Employment Rate	71.4%, up 0.1 % points on quarter, up 1.1 % points on year
Number Employed	(1) Up 90,000 on quarter, +552,000 on year to 29.681 million                              (2) Number of employees up 162,000 on quarter to 25.12 million (3) Self-employed +35,000 on quarter to 4.20 million (5) Number in other job categories +26,000 to 210,000
Earnings Growth Rates Year on Year	(1) Total +1.5% (including bonuses) over year earlier; regular 1.4%; private sector 1.4% on year earlier, public sector rose 2.0% on year earlier   (2) Regular private +1.5 % (excluding bonuses); regular public 1.9% on year earlier
Full-time and Part-time	(1) Number full-time 21.57 million, up 113,000 on quarter (2) Number part-time 8.11 million, down 23,000 on quarter
Claimant Count (Jobseeker’s Allowance, JSA)	(1) Latest estimate: 1.557 million; down 12,100 in month, down 40,500 on year earlier (2) Claimant count 4.8%, unchanged on month and down 0.1 on year
Labor Productivity	(1) Output per worker rose 0.6% from IIQ2012 to IIIQ2012 (2) Unit labor costs fell 1.3% from IIQ2012 to IIIQ2012

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/january-2013/index.html

Table VH-7 provides indicators of the labor force survey of the UK for Sep-Nov 2012 and earlier quarters. There has been improvement in UK labor markets with the rate of unemployment decreasing from 8.4 percent in Sep-Nov 2011 to 7.7 percent in Sep-Nov 2012.

Table VH-7, UK, Labor Force Survey Indicators

	LFHP	EMP	PART	UNE	RATE
Sep-Nov 2012	40,209	29,681	71.4	2,490	7.7
Jun-Aug 2012	40,193	29,590	71.3	2,528	7.9
Mar-May 2012	40,184	29,378	70.8	2,577	8.1
Dec-Feb 2012	40,179	29,210	70.5	2,634	8.3
Sep-Nov 2011	40,172	29,128	70.3	2,675	8.4
Sep-Nov 2010	40,042	29,086	70.5	2,476	7.8

Notes: LFHP: Labor Force Household Population Ages 16 to 64 in thousands; EMP: Employed Ages 16 and over in thousands; PART: Employment as % of Population Ages 16 to 64; UNE: Unemployed Ages 16 and over in thousands; Rate: Number Unemployed Ages 16 and over as % of Employed plus Unemployed

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/january-2013/index.html

© Carlos M. Pelaez, 2010, 2011, 2012, 2013