World Inflation Waves, Interest Rate Risks, Squeeze of Economic Activity Induced by Zero Interest Rates, Cyclical Slow Growth not Secular Stagnation, Collapse of United States Dynamism of Income Growth and Employment Creation, United States Industrial Production, World Financial Turbulence, World Economic Slowdown and Global Recession Risk: Part V

 

World Inflation Waves, Interest Rate Risks, Squeeze of Economic Activity Induced by Zero Interest Rates, Cyclical Slow Growth not Secular Stagnation, Collapse of United States Dynamism of Income Growth and Employment Creation, United States Industrial Production, World Financial Turbulence, World Economic Slowdown and Global Recession Risk

Carlos M. Pelaez

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014

Executive Summary

I World Inflation Waves

IA Appendix: Transmission of Unconventional Monetary Policy

IB1 Theory

IB2 Policy

IB3 Evidence

IB4 Unwinding Strategy

IB United States Inflation

IC Long-term US Inflation

ID Current US Inflation

IE Theory and Reality of Economic History, Cyclical Slow Growth Not Secular Stagnation and Monetary Policy Based on Fear of Deflation

IB Collapse of United States Dynamism of Income Growth and Employment Creation

II United States Industrial Production

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

V World Economic Slowdown. Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/pubs/ft/weo/2013/02/weodata/index.aspx) to show GDP in dollars in 2012 and the growth rate of real GDP of the world and selected regional countries from 2013 to 2016. 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 2.9 percent in 2013 but accelerating to 3.6 percent in 2014, 4.0 percent in 2015 and 4.1 percent in 2016. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $34,560 billion of world output of $72,216 billion, or 47.9 percent, but are projected to grow at much lower rates than world output, 2.1 percent on average from 2013 to 2016 in contrast with 3.6 percent for the world as a whole. While the world would grow 15.4 percent in the four years from 2013 to 2016, the G7 as a whole would grow 8.6 percent. The difference in dollars of 2012 is rather high: growing by 15.4 percent would add $11.1 trillion of output to the world economy, or roughly, two times the output of the economy of Japan of $5,960 billion but growing by 8.6 percent would add $6.2 trillion of output to the world, or about the output of Japan in 2012. 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 2012 of $27,221 billion, or 37.7 percent of world output. The EMDEs would grow cumulatively 21.9 percent or at the average yearly rate of 5.1 percent, contributing $6.0 trillion from 2013 to 2016 or the equivalent of somewhat less than the GDP of $8,221 billion of China in 2012. 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 in 2012 adds to $14,346 billion, or 19.9 percent of world output, which is equivalent to 41.5 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 2012	Real GDP ∆% 2013	Real GDP ∆% 2014	Real GDP ∆% 2015	Real GDP ∆% 2016
World	72,216	2.9	3.6	4.0	4.1
G7	34,560	1.2	2.0	2.5	2.6
Canada	1,821	1.6	2.2	2.4	2.5
France	2,614	0.2	1.0	1.5	1.7
DE	3,430	0.5	1.4	1.4	1.3
Italy	2,014	-1.8	0.7	1.1	1.4
Japan	5,960	1.9	1.2	1.1	1.2
UK	2,477	1.4	1.9	2.0	2.0
US	16,245	1.6	2.6	3.4	3.5
Euro Area	12,199	-0.4	1.0	1.4	1.5
DE	3,430	0.5	1.4	1.4	1.3
France	2,614	0.2	1.0	1.5	1.7
Italy	2,014	-1.8	0.7	1.1	1.4
POT	212	-1.8	0.8	1.5	1.8
Ireland	211	0.6	1.8	2.5	2.5
Greece	249	-4.2	0.6	2.9	3.7
Spain	1,324	-1.3	0.2	0.5	0.7
EMDE	27,221	4.5	5.1	5.3	5.4
Brazil	2,253	2.5	2.5	3.2	3.3
Russia	2,030	1.5	3.0	3.5	3.5
India	1,842	3.8	5.1	6.3	6.5
China	8,221	7.6	7.3	7.0	7.0

Notes; DE: Germany; EMDE: Emerging and Developing Economies (150 countries); POT: Portugal

Source: IMF World Economic Outlook databank http://www.imf.org/external/pubs/ft/weo/2013/02/weodata/index.aspx

Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/pubs/ft/weo/2013/02/weodata/index.aspx). Table V-2 is constructed with the WEO database to provide rates of unemployment from 2012 to 2016 for major countries and regions. In fact, unemployment rates for 2012 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. The rates of unemployment are particularly high for the countries with sovereign debt difficulties in Europe: 15.7 percent for Portugal (POT), 14.7 percent for Ireland, 24.2 percent for Greece, 25.0 percent for Spain and 10.6 percent for Italy, which is lower but still high. The G7 rate of unemployment is 7.4 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 2012	% Labor Force 2013	% Labor Force 2014	% Labor Force 2015	% Labor Force 2016
World	NA	NA	NA	NA	NA
G7	7.4	7.3	7.3	7.0	6.6
Canada	7.3	7.2	7.1	7.0	6.9
France	10.3	11.0	11.1	10.9	10.5
DE	5.5	5.6	5.5	5.5	5.5
Italy	10.7	12.5	12.4	12.0	11.2
Japan	4.4	4.2	4.3	4.3	4.3
UK	8.0	7.7	7.5	7.3	7.0
US	8.1	7.6	7.4	6.9	6.4
Euro Area	11.4	12.3	12.2	12.0	11.5
DE	5.5	5.6	5.5	5.5	5.5
France	10.3	11.0	11.1	10.9	10.5
Italy	10.7	12.5	12.4	12.0	11.2
POT	15.7	17.4	17.7	17.3	16.8
Ireland	14.7	13.7	13.3	12.8	12.4
Greece	24.2	27.0	26.1	24.0	21.0
Spain	25.0	26.9	26.7	26.5	26.2
EMDE	NA	NA	NA	NA	NA
Brazil	5.5	5.8	6.0	6.5	6.5
Russia	6.0	5.7	5.7	5.5	5.5
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/pubs/ft/weo/2013/02/weodata/index.aspx

Table V-3 provides the latest available estimates of GDP for the regions and countries followed in this blog from IQ2012 to IIQ2013 available now for all countries. There are preliminary estimates for all countries for IIIQ2013. Growth is weak throughout most of the world. Japan’s GDP increased 0.9 percent in IQ2012 and 3.5 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 fell 0.5 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 2.0 percent, which is much lower than 3.5 percent in IQ2012. Growth of 3.2 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 0.8 percent in IIIQ2012 at the SAAR of minus 3.2 percent and decreased 0.2 percent relative to a year earlier. Japan’s GDP grew 0.1 percent in IVQ2012 at the SAAR of 0.6 percent and decreased 0.3 percent relative to a year earlier. Japan grew 1.1 percent in IQ2013 at the SAAR of 4.5 percent and 0.1 percent relative to a year earlier. Japan’s GDP increased 0.9 percent in IIQ2013 at the SAAR of 3.6 percent and increased 1.2 percent relative to a year earlier. Japan’s GDP grew 0.3 percent in IIIQ2013 at the SAAR of 1.1 percent and increased 2.4 pecent relative to a year earlier. China grew at 2.2 percent in IIQ2012, which annualizes to 9.1 percent and 7.6 percent relative to a year earlier. China grew at 2.0 percent in IIIQ2012, which annualizes at 8.2 percent and 7.4 percent relative to a year earlier. In IVQ2012, China grew at 1.9 percent, which annualizes at 7.8 percent, and 7.9 percent in IVQ2012 relative to IVQ2011. In IQ2013, China grew at 1.5 percent, which annualizes at 6.1 percent and 7.7 percent relative to a year earlier. In IIQ2013, China grew at 1.9 percent, which annualizes at 7.8 percent and 7.5 percent relative to a year earlier. China grew at 2.2 percent in IIIQ2013, which annualizes at 9.1 percent and 7.8 percent relative to a year earlier. There is decennial change in leadership in China (http://www.xinhuanet.com/english/special/18cpcnc/index.htm). Growth rates of GDP of China in a quarter relative to the same quarter a year earlier have been declining from 2011 to 2013. GDP fell 0.1 percent in the euro area in IQ2012 and decreased 0.2 in IQ2012 relative to a year earlier. Euro area GDP contracted 0.3 percent IIQ2012 and fell 0.5 percent relative to a year earlier. In IIIQ2012, euro area GDP fell 0.2 percent and declined 0.7 percent relative to a year earlier. In IVQ2012, euro area GDP fell 0.5 percent relative to the prior quarter and fell 1.0 percent relative to a year earlier. In IQ2013, the GDP of the euro area fell 0.2 percent and decreased 1.2 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IIQ2013 and fell 0.6 percent relative to a year earlier. In IIIQ2013, euro area GDP increased 0.1 percent and fell 0.3 percent relative to a year earlier. Germany’s GDP increased 0.7 percent in IQ2012 and 1.8 percent relative to a year earlier. In IIQ2012, Germany’s GDP decreased 0.1 percent and increased 0.6 percent relative to a year earlier but 1.1 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. Germany’s GDP contracted 0.5 percent in IVQ2012 and increased 0.0 percent relative to a year earlier. In IQ2013, Germany’s GDP increased 0.0 percent and fell 1.6 percent relative to a year earlier. In IIQ2013, Germany’s GDP increased 0.7 percent and 0.9 percent relative to a year earlier. The GDP of Germany increased 0.3 percent in IIIQ2013 and 1.1 percent relative to a year earlier. Growth of US GDP in IQ2012 was 0.9 percent, at SAAR of 3.7 percent and higher by 3.3 percent relative to IQ2011. US GDP increased 0.3 percent in IIQ2012, 1.2 percent at SAAR and 2.8 percent relative to a year earlier. In IIIQ2012, US GDP grew 0.7 percent, 2.8 percent at SAAR and 3.1 percent relative to IIIQ2011. In IVQ2012, US GDP grew 0.0 percent, 0.1 percent at SAAR and 2.0 percent relative to IVQ2011. In IQ2013, US GDP grew at 1.1 percent SAAR, 0.3 percent relative to the prior quarter and 1.3 percent relative to the same quarter in 2013. In IIQ2013, US GDP grew at 2.5 percent in SAAR, 0.6 percent relative to the prior quarter and 1.6 percent relative to IIQ2012. US GDP grew at 4.1 percent in SAAR in IIIQ2013, 1.0 percent relative to the prior quarter and 2.0 percent relative to the same quarter a year earlier (http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html) with weak hiring (http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html). In IQ2012, UK GDP changed 0.0 percent, increasing 0.6 percent relative to a year earlier. UK GDP fell 0.4 percent in IIQ2012 and changed 0.0 percent relative to a year earlier. UK GDP increased 0.8 percent in IIIQ2012 and increased 0.2 percent relative to a year earlier. UK GDP fell 0.1 percent in IVQ2012 relative to IIIQ2012 and increased 0.2 percent relative to a year earlier. UK GDP increased 0.5 percent in IQ2013 and 0.7 percent relative to a year earlier. UK GDP increased 0.8 percent in IIQ2013 and 2.0 percent relative to a year earlier. In IIIQ2013, UK GDP increased 0.8 percent and 1.9 percent relative to a year earlier. Italy has experienced decline of GDP in nine consecutive quarters from IIIQ2011 to IIIQ2013. Italy’s GDP fell 1.1 percent in IQ2012 and declined 1.8 percent relative to IQ2011. Italy’s GDP fell 0.6 percent in IIQ2012 and declined 2.6 percent relative to a year earlier. In IIIQ2012, Italy’s GDP fell 0.5 percent and declined 2.8 percent relative to a year earlier. The GDP of Italy contracted 0.9 percent in IVQ2012 and fell 3.0 percent relative to a year earlier. In IQ2013, Italy’s GDP contracted 0.6 percent and fell 2.5 percent relative to a year earlier. Italy’s GDP fell 0.3 percent in IIQ2013 and 2.2 percent relative to a year earlier. The GDP of Italy changed 0.0 percent in IIIQ2013 and declined 1.8 percent relative to a year earlier. France’s GDP changed 0.0 percent in IQ2012 and increased 0.4 percent relative to a year earlier. France’s GDP decreased 0.3 percent in IIQ2012 and increased 0.1 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.2 percent and changed 0.0 percent relative to a year earlier. France’s GDP fell 0.2 percent in IVQ2012 and declined 0.3 percent relative to a year earlier. In IQ2013, France GDP fell 0.1 percent and declined 0.4 percent relative to a year earlier. The GDP of France increased 0.6 percent in IIQ2013 and 0.5 percent relative to a year earlier. France’s GDP contracted 0.1 percent in IIIQ2013 and increased 0.2 percent relative to a year earlier.

Table V-3, Percentage Changes of GDP Quarter on Prior Quarter and on Same Quarter Year Earlier, ∆%

	IQ2012/IVQ2011	IQ2012/IQ2011
United States	QOQ: 0.9        SAAR: 3.7	3.3
Japan	QOQ: 0.9 SAAR: 3.5	3.1
China	1.4	8.1
Euro Area	-0.1	-0.2
Germany	0.7	1.8
France	0.0	0.4
Italy	-1.1	-1.8
United Kingdom	0.0	0.6
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.3         SAAR: 1.2	2.8
Japan	QOQ: -0.5 SAAR: -2.0	3.2
China	2.2	7.6
Euro Area	-0.3	-0.5
Germany	-0.1	0.6 1.1 CA
France	-0.3	0.1
Italy	-0.6	-2.6
United Kingdom	-0.4	0.0
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.7  SAAR: 2.8	3.1
Japan	QOQ: –0.8 SAAR: –3.2	-0.2
China	2.0	7.4
Euro Area	-0.2	-0.7
Germany	0.2	0.4
France	0.2	0.0
Italy	-0.5	-2.8
United Kingdom	0.8	0.2
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
United States	QOQ: 0.0 SAAR: 0.1	2.0
Japan	QOQ: 0.1 SAAR: 0.6	-0.3
China	1.9	7.9
Euro Area	-0.5	-1.0
Germany	-0.5	0.0
France	-0.2	-0.3
Italy	-0.9	-3.0
United Kingdom	-0.1	0.2
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.3 SAAR: 1.1	1.3
Japan	QOQ: 1.1 SAAR: 4.5	0.1
China	1.5	7.7
Euro Area	-0.2	-1.2
Germany	0.0	-1.6
France	-0.1	-0.4
Italy	-0.6	-2.5
UK	0.5	0.7
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.6 SAAR: 2.5	1.6
Japan	QOQ: 0.9 SAAR: 3.6	1.2
China	1.9	7.5
Euro Area	0.3	-0.6
Germany	0.7	0.9
France	0.6	0.5
Italy	-0.3	-2.2
UK	0.8	2.0
	IIIQ2013/IIQ2013	III/Q2013/  IIIQ2012
USA	QOQ: 1.0 SAAR: 4.1	2.0
Japan	QOQ: 0.3 SAAR: 1.1	2.4
China	2.2	7.8
Euro Area	0.1	-0.3
Germany	0.3	1.1
France	-0.1	0.2
Italy	0.0	-1.8
UK	0.8	1.9

QOQ: Quarter relative to prior quarter; SAAR: seasonally adjusted annual rate

Source: Country Statistical Agencies http://www.census.gov/aboutus/stat_int.html

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 (http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html and earlier http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-zero-interest-rates-world.html http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-world-inflation.html http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations_8763.html http://cmpass ocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html and earlier http://cmpassocregulationblog.blogspot.com/2013/07/duration-dumping-steepening-yield-curve.html and earlier http://cmpassocregulationblog.blogspot.com/2013/06/paring-quantitative-easing-policy-and_4699.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2013/04/world-inflation-waves-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2013/03/united-states-commercial-banks-assets.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html 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 http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html and earlier http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html and earlier http://cmpassocreulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html). In Nov 2013, Japan’s exports grew 18.4 percent in 12 months while imports increased 21.1 percent. The second part of Table V-4 shows that net trade deducted 1.3 percentage points from Japan’s growth of GDP in IIQ2012, deducted 2.1 percentage points from GDP growth in IIIQ2012 and deducted 0.6 percentage points from GDP growth in IVQ2012. Net trade added 0.4 percentage points to GDP growth in IQ2012, 1.6 percentage points in IQ2013 and 0.6 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.9 percentage points from GDP growth in Japan. In Dec 2013, China exports increased 4.3 percent relative to a year earlier and imports increased 8.3 percent. Germany’s exports increased 0.2 percent in the month of Nov 2013 and increased 1.0 percent in the 12 months ending in Nov 2013. Germany’s imports decreased 1.1 percent in the month of Nov and decreased 0.4 percent in the 12 months ending in Nov. Net trade contributed 0.8 percentage points to growth of GDP in IQ2012, contributed 0.4 percentage points in IIQ2012, contributed 0.3 percentage points in IIIQ2012, deducted 0.5 percentage points in IVQ2012, deducted 0.2 percentage points in IQ2012 and added 0.3 percentage points in IIQ2013. Net traded deducted 0.4 percentage points from Germany’s GDP growth in IIIQ2013. Net trade deducted 0.8 percentage points from UK value added in IQ2012, deducted 0.8 percentage points in IIQ2012, added 0.7 percentage points in IIIQ2012 and subtracted 0.5 percentage points in IVQ2012. In IQ2013, net trade added 0.5 percentage points to UK’s growth of value added and contributed 0.2 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.2 percentage points from UK GDP growth. France’s exports decreased 2.1 percent in Nov 2013 while imports increased 0.2. Net traded added 0.1 percentage points to France’s GDP in IIIQ2012 and 0.1 percentage points in IVQ2012. Net trade deducted 0.1 percentage points from France’s GDP growth in IQ2013 and added 0.1 percentage points in IIQ2013, deducting 0.6 percentage points in IIIQ2013. US exports increased 1.8 percent in Oct 2013 and goods exports increased 2.0 percent in Jan-Oct 2013 relative to a year earlier but net trade deducted 0.03 percentage points from GDP growth in IIIQ2012 and added 0.68 percentage points in IVQ2012. Net trade deducted 0.28 percentage points from US GDP growth in IQ2013 and deducted 0.07 percentage points in IIQ2013. Net traded added 0.14 percentage points to US GDP growth in IIIQ2013. US imports increased 0.4 percent in Oct 2013 and goods imports decreased 0.3 percent in Jan-Oct 2013 relative to a year earlier. Industrial production increased 1.1 percent in Nov 2013 after increasing 0.1 percent in Oct 2013 and increasing 0.5 percent in Sep 2013, with all data seasonally adjusted. Industrial production increased 0.3 percent in Dec 2013 after increasing 1.0 percent in Nov 2013 and increasing 0.3 percent in Oct 2013, with all data seasonally adjusted. The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production rose 0.3 percent in December, its fifth consecutive monthly increase. For the fourth quarter as a whole, industrial production advanced at an annual rate of 6.8 percent, the largest quarterly increase since the second quarter of 2010; gains were widespread across industries. Following increases of 0.6 percent in each of the previous two months, factory output rose 0.4 percent in December and was 2.6 percent above its year-earlier level. The production of mines moved up 0.8 percent; the index has advanced 6.6 percent over the past 12 months. The output of utilities fell 1.4 percent after three consecutive monthly gains. At 101.8 percent of its 2007 average, total industrial production in December was 3.7 percent above its year-earlier level and 0.9 percent above its pre-recession peak in December 2007. Capacity utilization for total industry moved up 0.1 percentage point to 79.2 percent, a rate 1.0 percentage point below its long-run (1972–2012) average.”

In the six months ending in Dec 2013, United States national industrial production accumulated increase of 2.7 percent at the annual equivalent rate of 5.5 percent, which is higher than growth of 3.2 percent in the 12 months ending in Dec 2013. Excluding growth of 1.0 percent in Nov 2013, growth in the remaining five months from Jul 2012 to Dec 2013 accumulated to 1.1 percent or 2.2 percent annual equivalent. Industrial production fell in one of the past six months. Business equipment accumulated growth of 1.7 percent in the six months from Jun to Nov 2013 at the annual equivalent rate of 4.2 percent, which is higher than growth of 3.7 percent in the 12 months ending in Dec 2013. The Fed analyzes capacity utilization of total industry in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “Capacity utilization for total industry moved up 0.1 percentage point to 79.2 percent, a rate 1.0 percentage point below its long-run (1972–2012) average.” United States industry apparently decelerated to a lower growth rate with possible acceleration in the past few months.

Manufacturing increased 0.4 percent in Dec 2013 after increasing 0.6 percent in Nov 2013 and increasing 0.6 percent in Oct 2013 seasonally adjusted, increasing 2.5 percent not seasonally adjusted in 12 months ending in Nov 2013, as shown in Table I-2. Manufacturing grew cumulatively 2.0 percent in the six months ending in Dec 2013 or at the annual equivalent rate of 4.1 percent. Excluding the increase of 0.7 percent in Aug 2013, manufacturing accumulated growth of 1.3 percent from Aug 2013 to Dec 2013 or at the annual equivalent rate of 3.2 percent. Excluding decline of 0.5 percent in Jul 2013, manufacturing grew 2.5 percent from Aug to Dec 2013 or at the annual equivalent rate of 6.2 percent. Table I-2 provides a longer perspective of manufacturing in the US. There has been evident deceleration of manufacturing growth in the US from 2010 and the first three months of 2011 into more recent months as shown by 12 months rates of growth. Growth rates appeared to be increasing again closer to 5 percent in Apr-Jun 2012 but deteriorated. The rates of decline of manufacturing in 2009 are quite high with a drop of 18.2 percent in the 12 months ending in Apr 2009. Manufacturing recovered from this decline and led the recovery from the recession. Rates of growth appeared to be returning to the levels at 3 percent or higher in the annual rates before the recession but the pace of manufacturing fell steadily in the past six months with some strength at the margin.

Manufacturing fell 21.9 percent from the peak in Jun 2007 to the trough in Apr 2009 and increased by 19.6 percent from the trough in Apr 2009 to Dec 2013. Manufacturing output in Dec 2013 is 6.6 percent below the peak in Jun 2007.

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	0.9 Nov	2.4 Jan-Nov	-1.4 Nov	-0.6 Jan-Nov
Japan		Nov 2013 18.4 Oct 2013 18.6 Sep 2013 11.5 Aug 2013 14.7 Jul 2013 12.2 Jun 2013 7.4 May 2013 10.1 Apr 2013 3.8 Mar 2013 1.1 Feb 2013 -2.9 Jan 2013 6.4 Dec -5.8 Nov -4.1 Oct -6.5 Sep -10.3 Aug -5.8 Jul -8.1		Nov 2013 21.1 Oct 2013 26.1 Sep 2013 16.5 Aug 2013 16.0 Jul 2013 19.6 Jun 2013 11.8 May 2013 10.0 Apr 2013 9.4 Mar 2013 5.5 Feb 2013 7.3 Jan 2013 7.3 Dec 1.9 Nov 0.8 Oct -1.6 Sep 4.1 Aug -5.4 Jul 2.1
China		2013 4.3 Dec 12.7 Nov 5.6 Oct -0.3 Sep 7.2 Aug 5.1 Jul -3.1 Jun 1.0 May 14.7 Apr 10.0 Mar 21.8 Feb 25.0 Jan		2013 8.3 Dec 5.3 Nov 7.6 Oct 7.4 Sep 7.0 Aug 10.9 Jul -0.7 Jun -0.3 May 16.8 Apr 14.1 Mar -15.2 Feb 28.8 Jan
Euro Area	-2.2 12-M Nov	0.5 Jan-Nov	-5.5 12-M Nov	-3.6 Jan-Nov
Germany	0.2 Nov CSA	1.0 Nov	-1.1 Nov CSA	-0.4 Nov
France Nov	-2.1	-2.6	0.2	-0.1
Italy Nov	-1.9	-3.4	-2.2	-6.9
UK	1.2 Nov	0.5 Sep-Nov 13 /Sep-Nov 12	0.6 Nov	2.1 Sep-Nov 13/Sep-Nov 12
Net Trade % Points GDP Growth	% Points
USA	IIIQ2013 0.14 IIQ2013 -0.07 IQ2013 -0.28 IVQ2012 +0.68 IIIQ2012 -0.03 IIQ2012 +0.10 IQ2012 +0.44
Japan	0.4 IQ2012 -1.3 IIQ2012 -2.1 IIIQ2012 -0.6 IVQ2012 1.6 IQ2013 0.6 IIQ2013 -1.9 IIIQ2013
Germany	IQ2012 0.8 IIQ2012 0.4 IIIQ2012 0.3 IVQ2012 -0.5 IQ2013 -0.2 IIQ2013 0.3 IIIQ2013 -0.4
France	0.1 IIIQ2012 0.1 IVQ2012 -0.1 IQ2013 0.1 IIQ2013 -0.6 IIIQ2013
UK	-0.8 IQ2012 -0.8 IIQ2012 +0.7 IIIQ2012 -0.5 IVQ2012 0.5 IQ2013 0.2 IIQ2013 -1.2 IIIQ2013

Sources: Country Statistical Agencies http://www.census.gov/foreign-trade/ http://www.bea.gov/iTable/index_nipa.cfm

The geographical breakdown of exports and imports of Japan with selected regions and countries is provided in Table VB-7 for Nov 2013. The share of Asia in Japan’s trade is more than one-half for 55.0 percent of exports and 45.4 percent of imports. Within Asia, exports to China are 19.4 percent of total exports and imports from China 23.4 percent of total imports. While exports to China increased 33.1 percent in the 12 months ending in Nov 2013, imports from China increased 19.4 percent. The second largest export market for Japan in Nov 2013 is the US with share of 19.2 percent of total exports, which is almost equal to that of China, and share of imports from the US of 9.0 percent in total imports. Western Europe has share of 10.2 percent in Japan’s exports and of 10.1 percent in imports. Rates of growth of exports of Japan in Nov 2013 are relatively high for several countries and regions with growth of 21.2 percent for exports to the US, 30.4 percent for exports to Brazil and 6.3 percent for exports to Australia. 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. Growth rates of imports in the 12 months ending in Nov 2013 are positive for all trading partners with exception of France. Imports from Asia increased 19.8 percent in the 12 months ending in Nov 2013 while imports from China increased 19.4 percent. Data are in millions of yen, which may have effects of recent depreciation of the yen relative to the United States dollar (USD).

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

Nov 2013	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	5,900,458	18.4	7,193,325	21.1
Asia	3,243,626	18.9	3,268,586	19.8
China	1,142,599	33.1	1,679,702	19.4
USA	1,131,304	21.2	647,248	34.9
Canada	68,688	15.2	96,957	7.6
Brazil	43,821	30.4	96,632	5.4
Mexico	74,569	0.2	35,001	11.0
Western Europe	600,981	17.1	728,480	7.6
Germany	165,555	25.9	201,831	6.1
France	48,177	28.7	102,161	-4.9
UK	84,919	-5.1	55,180	-2.8
Middle East	228,322	24.7	1,379,683	33.4
Australia	128,145	6.3	387,037	14.3

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 increasing growth of the volume of world trade of goods and services from 2.9 percent in 2013 to 5.4 percent in 2015 and 5.1 percent on average from 2013 to 2018. World trade would be slower for advanced economies while emerging and developing economies (EMDE) experience faster growth. World economic slowdown would more challenging with lower growth of world trade.

Table V-6, IMF, Projections of World Trade, USD Billions, USD/Barrel and ∆%

	2013	2014	2015	Average ∆% 2013-2018
World Trade Volume (Goods and Services)	2.9	4.9	5.4	5.1
Exports Goods & Services	3.0	5.1	5.4	5.1
Imports Goods & Services	2.8	4.7	5.4	5.0
Oil Price USD/Barrel	104.49	101.35	NA	NA
Value of World Exports Goods & Services $B	23,164	24,367	NA	NA
Value of World Exports Goods $B	18,709	19,632	NA	NA
Exports Goods & Services
EMDE	3.5	5.8	6.3	5.9
G7	2.3	4.6	4.4	4.4
Imports Goods & Services
EMDE	5.0	5.9	6.7	6.2
G7	1.3	3.9	4.2	4.0
Terms of Trade of Goods & Services
EMDE	-0.5	-0.4	-0.6	-0.5
G7	0.1	-0.1	0.1	0.1
Terms of Trade of Goods
EMDE	-0.6	-0.9	-0.9	-0.8
G7	-0.5	0.2	0.2	-0.007

Notes: Commodity Price Index includes Fuel and Non-fuel Prices; Commodity Industrial Inputs Price includes agricultural raw materials and metal prices; Oil price is average of WTI, Brent and Dubai

Source: International Monetary Fund World Economic Outlook databank

http://www.imf.org/external/pubs/ft/weo/2013/02/weodata/index.aspx

The JP Morgan Global All-Industry Output Index of the JP Morgan Manufacturing and Services PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, with high association with world GDP, decreased to 54.0 in Dec from 54.2 in Nov, indicating expansion at almost unchanged rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/ebfdf95d51b2401aae0936330ea3bd7e). This index has remained above the contraction territory of 50.0 during 53 consecutive months. The employment index increased from 51.3 in Nov to 52.4 in Dec with input prices rising at a slower rate, new orders increasing at faster rate and output increasing at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/ebfdf95d51b2401aae0936330ea3bd7e). David Hensley, Director of Global Economics Coordination at JP Morgan finds expectations of continuing growth in 2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/ebfdf95d51b2401aae0936330ea3bd7e). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, was higher at 53.3 in Dec from 53.1 in Nov, which is the highest reading since May 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/7757ef12fcdf458ab9f3e1c2d7c0811a). New export orders expanded for the sixth consecutive month (http://www.markiteconomics.com/Survey/PressRelease.mvc/7757ef12fcdf458ab9f3e1c2d7c0811a). David Hensley, Director of Global Economic Coordination at JP Morgan finds acceleration of global manufacturing with output at the highest rate in about three years (http://www.markiteconomics.com/Survey/PressRelease.mvc/7757ef12fcdf458ab9f3e1c2d7c0811a). The HSBC Brazil Composite Output Index, compiled by Markit, decreased marginally from 51.8 in Nov to 51.7 in Dec, indicating moderate expansion of Brazil’s private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/8e4e1a9551684016a6014835860005eb). The HSBC Brazil Services Business Activity index, compiled by Markit, decreased marginally from 52.3 in Nov to 51.7 in Dec, indicating continuing improvement in business activity at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/8e4e1a9551684016a6014835860005eb). André Loes, Chief Economist, Brazil, at HSBC, finds slower growth with decreasing confidence but slower rate of increase of prices (http://www.markiteconomics.com/Survey/PressRelease.mvc/8e4e1a9551684016a6014835860005eb). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) increased from 49.7 in Nov to 50.5 in Dec, indicating marginal improvement in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/22c84c0c32a1483db57c2ec93cfb5ebc). André Loes, Chief Economist, Brazil at HSBC, finds improvement with growth of production and new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/22c84c0c32a1483db57c2ec93cfb5ebc).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted decreased to 54.4 in Dec from 54.7 in Nov with the three-month average at 53.6 indicating moderate growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/409f3a8ff2a240c08dd65c2f747cab56). New export orders registered 51.4 in Dec unchanged from 51.4 in No, indicating marginal expansion. Chris Williamson, Chief Economist at Markit, finds that manufacturing output is growing at 4.0 percent per year with positive effects on employment (http://www.markiteconomics.com/Survey/PressRelease.mvc/409f3a8ff2a240c08dd65c2f747cab56). The Markit Flash US Services PMI™ Business Activity Index increased from 55.9 in Nov to 56.0 in Dec with the average at 53.7l, which is the lowest quarterly average in 2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/a3f2275774ad43e3b0e1b72f6b0b7b8b). Chris Williamson, Chief Economist at Markit, finds that the surveys are consistent with growth at around 3 percent per year in IVQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/a3f2275774ad43e3b0e1b72f6b0b7b8b). The Markit US Composite PMI™ Output Index of Manufacturing and Services fell marginally to 56.1 in Dec from 56.2 in Nov (http://www.markiteconomics.com/Survey/PressRelease.mvc/546ebdb0665349ea89f47dc9955c4d91). The Markit US Services PMI™ Business Activity Index fell marginally from 55.9 in Nov to 55.7 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/546ebdb0665349ea89f47dc9955c4d91). Chris Williamson, Chief Economist at Markit, finds renewed optimism by business (http://www.markiteconomics.com/Survey/PressRelease.mvc/546ebdb0665349ea89f47dc9955c4d91). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) increased to 55.0 in Dec from 54.7 in Nov, which indicates solid expansion (http://www.markiteconomics.com/Survey/PressRelease.mvc/3c6c524ef8474099a853c9cc449b5f1c). The index of new exports orders was unchanged from 51.4 in Nov to 51.4 in Dec while total new orders decreased from 56.2 in Dec to 56.1 in Dec. Chris Williamson, Chief Economist at Markit, finds that the index suggests growth of production at 3.0 percent annual rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/3c6c524ef8474099a853c9cc449b5f1c). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® increased 0.9 percentage points from 56.4 in Oct to 57.3 in Nov, which indicates growth at a higher rate (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders increased 3.0 percentage points from 60.6 in Oct to 63.6 in Nov. The index of exports increased 2.5 percentage point from 57.0 in Oct to 59.5 in Nov, growing at a faster rate. The Non-Manufacturing ISM Report on Business^® PMI decreased 0.9 percentage points from 53.9 in Nov to 53.0 in Dec, indicating growth of business activity/production during 53 consecutive months, while the index of new orders decreased 7.0 percentage points from 56.4 in Nov to 49.4 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 ∆%: 1.5; ex food and energy ∆%: 1.7 Dec month SA ∆%: 0.3; ex food and energy ∆%: 0.1 Blog 1/19/14
Producer Price Index	Dec 12-month NSA ∆%: 1.2; ex food and energy ∆% 1.4 Dec month SA ∆% = 0.4; ex food and energy ∆%: 0.3 Blog 1/19/14
PCE Inflation	Nov 12-month NSA ∆%: headline 0.9; ex food and energy ∆% 1.1 Blog 12/29/13
Employment Situation	Household Survey: Dec Unemployment Rate SA 6.7% Blog calculation People in Job Stress Dec: 29.3 million NSA, 18.0% of Labor Force Establishment Survey: Dec Nonfarm Jobs +74,000; Private +87,000 jobs created  Nov 12-month Average Hourly Earnings Inflation Adjusted ∆%: 0.8 Blog 1/12/14
Nonfarm Hiring	Nonfarm Hiring fell from 63.8 million in 2006 to 52.0 million in 2012 or by 11.8 million Private-Sector Hiring Oct 2013 4.476 million lower by 0.788 million than 5.264 million in Oct 2007 Blog 12/15/13
GDP Growth	BEA Revised National Income Accounts IQ2012/IQ2011 ∆%: 3.3 IIQ2012/IIQ2011 2.8 IIIQ2012/IIIQ2011 3.1 IVQ2012/IVQ2011 2.0 IQ2013/IQ2012 1.3 IIQ2013/IIQ2012 1.6 IIIQ2013/IIIQ2012 2.0 IQ2012 SAAR 3.7 IIQ2012 SAAR 1.2 IIIQ2012 SAAR 2.8 IVQ2012 SAAR 0.1 IQ2013 SAAR 1.1 IIQ2013 SAAR 2.5 IIIQ2013 SAAR 4.1 Blog 12/22/13
Real Private Fixed Investment	SAAR IIIQ2013 5.9 ∆% IVQ2007 to IIIQ2013: minus 3.6% Blog 12/22/13
Personal Income and Consumption	Nov month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.1 Real Personal Consumption Expenditures (RPCE): 0.5 12-month Nov NSA ∆%: RDPI: 0.6; RPCE ∆%: 2.6 Blog 12/29/13
Quarterly Services Report	IIIQ13/IIQ12 NSA ∆%: Information 4.9 Financial & Insurance 0.6 Blog 12/15/13
Employment Cost Index	Compensation Private IIIQ2013 SA ∆%: 0.4 Sep 12 months ∆%: 1.9 Blog 11/24/13
Industrial Production	Dec month SA ∆%: 0.3 Dec 12 months SA ∆%: 3.7 Manufacturing Dec SA ∆% 0.4 Dec 12 months SA ∆% 2.6, NSA 2.5 Capacity Utilization: 79.0 Blog 1/19/14
Productivity and Costs	Nonfarm Business Productivity IIIQ2013∆% SAAE 3.0; IIIQ2013/IIIQ2012 ∆% 0.3; Unit Labor Costs SAAE IIIQ2013 ∆% -1.4; IIIQ2013/IIIQ2012 ∆%: 2.1 Blog 12/22/2013
New York Fed Manufacturing Index	General Business Conditions From Dec 2.22 to Jan 12.51 New Orders: From Dec minus 1.69 to Jan 10.98 Blog 1/19/14
Philadelphia Fed Business Outlook Index	General Index from Dec 6.4 to Jan 9.4 New Orders from Dec 12.9 to Jan 5.1 Blog 1/19/14
Manufacturing Shipments and Orders	New Orders SA Nov ∆% 1.8 Ex Transport 0.6 Jan-Nov NSA New Orders 2.4 Ex transport 1.4 Blog 1/12/14
Durable Goods	Nov New Orders SA ∆%: 3.5; ex transport ∆%: 1.2 Jan-Nov 13/Jan-Nov 12 New Orders NSA ∆%: 5.3; ex transport ∆% 3.6 Blog 12/29/13
Sales of New Motor Vehicles	Jan-Dec 2013 15,600,199; Jan-Dec 2012 14,491,873. Dec 13 SAAR 16.40 million, Nov 13 SAAR 16.41 million, Dec 2012 SAAR 15.24 million Blog 1/5/14
Sales of Merchant Wholesalers	Jan-Nov 2013/Jan-Nov 2012 NSA ∆%: Total 3.7; Durable Goods: 3.9; Nondurable Goods: 3.6 Blog 1/12/14
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Nov 13/Nov 12-M NSA ∆%: Sales Total Business 2.5; Manufacturers 1.7 Retailers 3.4; Merchant Wholesalers 2.4 Blog 1/19/14
Sales for Retail and Food Services	Jan-Dec 2013/Jan-Dec 2012 ∆%: Retail and Food Services 4.2; Retail ∆% 4.2 Blog 1/19/14
Value of Construction Put in Place	Nov SAAR month SA ∆%: 1.0 Nov 12-month NSA: 1.1 Jan-Nov 2013 ∆% 5.0 Blog 1/5/14
Case-Shiller Home Prices	Oct 2013/Oct 2012 ∆% NSA: 10 Cities 13.6; 20 Cities: 13.6 ∆% Oct SA: 10 Cities 1.0 ; 20 Cities: 1.0 Blog 1/5/14
FHFA House Price Index Purchases Only	Oct SA ∆% 0.5; 12 month NSA ∆%: 8.2 Blog 12/29/13
New House Sales	Nov 2013 month SAAR ∆%: minus 2.1 Jan-Nov 2013/Jan-Nov 2012 NSA ∆%: 18.1 Blog 12/29/13
Housing Starts and Permits	Dec Starts month SA ∆% -9.8; Permits ∆%: -3.0 Jan-Dec 2013/Jan-Dec 2012 NSA ∆% Starts 18.3; Permits  ∆% 17.5 Blog 1/19/14
Trade Balance	Balance Nov SA -$24,252 million versus Oct -$39,328 million Exports Nov SA ∆%: 0.9 Imports Nov SA ∆%: -1.4 Goods Exports Jan-Nov 2013/2012 NSA ∆%: 2.4 Goods Imports Jan-Nov 2013/2012 NSA ∆%: -0.6 Blog 1/12/14
Export and Import Prices	Dec 12-month NSA ∆%: Imports -1.3; Exports -1.0 Blog 1/19/14
Consumer Credit	Nov ∆% annual rate: Total 4.8; Revolving 0.6; Nonrevolving 6.4 Blog 1/12/14
Net Foreign Purchases of Long-term Treasury Securities	Nov Net Foreign Purchases of Long-term US Securities: -$29.3 billion Major Holders of Treasury Securities: China $1317 billion; Japan $1186 billion; Total Foreign US Treasury Holdings Nov $5717 billion Blog 1/19/14
Treasury Budget	Fiscal Year 2014/2013 ∆% Dec: Receipts 8.0; Outlays minus 7.8; Individual Income Taxes -1.9 Deficit Fiscal Year 2011 $1,296 billion Deficit Fiscal Year 2012 $1,089 billion Blog 1/19/2014
CBO Budget and Economic Outlook	2012 Deficit $1087 B 6.8% GDP Debt 11,281 B 70.1% GDP 2013 Deficit $642 B, Debt 12,036 B 72.5% GDP Blog 8/26/12 11/18/12 2/10/13 9/22/13
Commercial Banks Assets and Liabilities	Nov 2013 SAAR ∆%: Securities 4.6 Loans 1.0 Cash Assets 30.5 Deposits 3.7 Blog 12/29/13
Flow of Funds	IIIQ2013 ∆ since 2007 Assets +$8554.2 MM Nonfinancial -$1228.7 MM Real estate -$1838.9 MM Financial +9782.9 MM Net Worth +$9269.0 MM Blog 12/29/13
Current Account Balance of Payments	IIIQ2013 -110,055 MM %GDP 2.2 Blog 12/22/13

Links to blog comments in Table USA:

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

1/5/14 http://cmpassocregulationblog.blogspot.com/2014/01/theory-and-reality-of-secular.html

12/29/13 http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html

12/22/13 http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html

12/15/13 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html

11/24/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-zero-interest-rates-world.html

9/22/13 http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations.html

2/10/13 http://cmpassocregulationblog.blogspot.com/2013/02/united-states-unsustainable-fiscal.html

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

Table VA-1, US, Percentage Changes for Sales of Sales of manufacturers increased 1.0 percent in Nov 2013 after increasing 0.1 percent in Oct and increased 1.7 percent in the 12 months ending in Nov, as shown in Table VA-1. Retailers’ sales increased 0.3 percent in Nov after Increasing 0.4 percent in Oct and increased 3.4 percent in 12 months ending in Nov 2013. Sales of merchant wholesalers increased 1.0 percent in Nov, increased 0.1 percent in Oct and increased 2.4 percent in 12 months ending in Nov. These data are not adjusted for price changes such that they reflect increases in both quantities and prices.

Table VA-1, US, Percentage Changes for Sales of Manufacturers, Retailers and Merchant Wholesalers

	Nov 13/   Oct 13 ∆% SA	Nov 2013 Millions of Dollars NSA	Oct 13/ Sep 13  ∆% SA	Nov 13/ Nov 12 ∆% NSA
Total Business	0.8	1,289,902	0.5	2.5
.Manufacturers	1.0	478,267	0.1	1.7
Retailers	0.3	386,020	0.4	3.4
Merchant Wholesalers	1.0	425,615	0.1	2.4

Source: US Census Bureau http://www.census.gov/mtis/

Chart VA-1 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers seasonally adjusted (SA) in millions of dollars. Seasonal adjustment softens adjacent changes for purposes of comparing short-term variations free of seasonal factors. There was sharp drop in the global recession followed by sharp recovery with decline and recovery in the final segment above the peak before the global recession. Data are not adjusted for price changes.

Chart VA-1, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Nov 2013

US Census Bureau

http://www.census.gov/mtis/

Chart VA-2 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers not seasonally adjusted (NSA) in millions of dollars. The series without adjustment shows sharp jagged behavior because of monthly fluctuations following seasonal patterns. There is sharp recovery from the global recession in a robust trend, which is mixture of price and quantity effects because data are not adjusted for price changes. There is stability in the final segment with monthly marginal strength.

Chart VA-2, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Nov 2013

US Census Bureau

http://www.census.gov/mtis/

Businesses added cautiously to inventories to replenish stocks. Retailers added 0.8 percent to inventories in Nov 2013 and 1.1 percent in Oct 2013 with growth of 7.2 percent in 12 months, as shown in Table VA-2. Total business increased inventories by 0.4 percent in Nov, 0.8 percent in Oct and 4.0 percent in 12 months. Inventories sales/ratios of total business continued at a level close to 1.29 under careful management to avoid costs and risks. Inventory/sales ratios of manufacturers and retailers are higher than for merchant wholesalers. There is stability in inventory/sales ratios in individual months and relative to a year earlier.

Table VA-2, US, Percentage Changes for Inventories of Manufacturers, Retailers and Merchant Wholesalers and Inventory/Sales Ratios

Inventory Change	Nov 13 Millions of Dollars NSA	Nov 13/ Oct 13 ∆% SA	Oct 13/  Sep 13 ∆% SA	Nov 13/  Nov 12 ∆% NSA
Total Business	1,737,932	0.4	0.8	4.0
Manufacturers	633,215	0.0	0.0	1.8
Retailers	583,640	0.8	1.1	7.2
Merchant Wholesalers	521,077	0.5	1.3	3.2
Inventory/ Sales Ratio NSA	Nov 13 Billions of Dollars NSA	Nov 2013 SA	Oct 2013 SA	Sep 2012 SA
Total Business	1,737,932	1.29	1.29	1.29
Manufacturers	633,215	1.28	1.29	1.29
Retailers	583,640	1.43	1.43	1.39
Merchant Wholesalers	521,077	1.17	1.18	1.20

Source: US Census Bureau http://www.census.gov/mtis/

Chart VA-3 of the US Census Bureau provides total business inventories of manufacturers, retailers and merchant wholesalers seasonally adjusted (SA) in millions of dollars from Jan 1992 to Nov 2013. The impact of the two recessions of 2001 and IVQ2007 to IIQ2009 is evident in the form of sharp reductions in inventories. Inventories have surpassed the peak before the global recession. Data are not adjusted for price changes.

Chart VA-3, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Nov 2013

US Census Bureau

http://www.census.gov/mtis/

Chart VA-4 provides total business inventories of manufacturers, retailers and merchant wholesalers not seasonally adjusted (NSA) from Jan 1992 to Nov 2013 in millions of dollars. The recessions of 2001 and IVQ2007 to IIQ2009 are evident in the form of sharp reductions of inventories. There is sharp upward trend of inventory accumulation after both recessions. Total business inventories are higher than in the peak before the global recession.

Chart VA-4, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Nov 2013

US Census Bureau

http://www.census.gov/mtis/

Inventories follow business cycles. When recession hits sales inventories pile up, declining with expansion of the economy. In a fascinating classic opus, Lloyd Meltzer (1941, 129) concludes:

“The dynamic sequences (i) through (6) were intended to show what types of behavior are possible for a system containing a sales output lag. The following conclusions seem to be the most important:

(i) An economy in which business men attempt to recoup inventory losses will always undergo cyclical fluctuations when equilibrium is disturbed, provided the economy is stable.

This is the pure inventory cycle.

(2) The assumption of stability imposes severe limitations upon the possible size of the marginal propensity to consume, particularly if the coefficient of expectation is positive.

(3) The inventory accelerator is a more powerful de-stabilizer than the ordinary acceleration principle. The difference in stability conditions is due to the fact that the former allows for replacement demand whereas the usual analytical formulation of the latter does not. Thus, for inventories, replacement demand acts as a de-stabilizer. Whether it does so for all types of capital goods is a moot question, but I believe cases may occur in which it does not.

(4) Investment for inventory purposes cannot alter the equilibrium of income, which depends only upon the propensity to consume and the amount of non-induced investment.

(5) The apparent instability of a system containing both an accelerator and a coefficient of expectation makes further investigation of possible stabilizers highly desirable.”

Chart VA-5 shows the increase in the inventory/sales ratios during the recession of 2007-2009. The inventory/sales ratio fell during the expansions. The inventory/sales ratio declined to a trough in 2011, climbed and then stabilized at current levels in 2012 and 2013.

Chart VA-5, Total Business Inventories/Sales Ratios 2002 to 2013

Source: US Census Bureau

http://www2.census.gov/retail/releases/historical/mtis/img/mtisbrf.gif

Sales of retail and food services increased 0.2 percent in Dec 2013 after increasing 0.4 percent in Nov 2013 seasonally adjusted (SA), growing 4.2 percent in Jan-Dec 2013 relative to Jan-Dec 2012 not seasonally adjusted (NSA), as shown in Table VA-3. Excluding motor vehicles and parts, retail sales increased 0.7 percent in Dec 2013, increasing 0.1 percent in Nov 2013 SA and increasing 3.2 percent NSA in Jan-Dec 2013 relative to a year earlier. Sales of motor vehicles and parts decreased 1.8 percent in Dec 2013 after increasing 1.9 percent in Nov 2013 SA and increasing 8.7 percent NSA in Jan-Dec 2013 relative to a year earlier. Gasoline station sales increased 1.6 percent SA in Dec 2013 after decreasing 1.5 percent in Nov 2013 in oscillating prices of gasoline that are moderating, decreasing 0.8 percent in Jan-Dec 2013 relative to a year earlier.

Table VA-3, US, Percentage Change in Monthly Sales for Retail and Food Services, ∆%

	Dec/Nov ∆% SA	Nov/Oct ∆% SA	Jan-Dec 2013 Million Dollars NSA	Jan-Dec 2013 from Jan-Dec 2012 ∆% NSA
Retail and Food Services	0.2	0.4	5,087,550	4.2
Excluding Motor Vehicles and Parts	0.7	0.1	4,127,783	3.2
Motor Vehicles & Parts Dealers	-1.8	1.9	959,767	8.7
Retail	0.2	0.3	4,534,876	4.2
Building Materials	-0.4	0.4	311,625	5.9
Food and Beverage	2.0	-0.3	650,231	2.9
Grocery	1.9	-0.4	579,041	2.4
Health & Personal Care Stores	0.6	-0.3	285,046	2.5
Clothing & Clothing Accessories Stores	1.8	-0.5	251,637	3.8
Gasoline Stations	1.6	-1.5	545,920	-0.8
General Merchandise Stores	0.1	0.1	659,390	0.5
Food Services & Drinking Places	0.5	1.2	552,674	4.1

Source: US Census Bureau

http://www.census.gov/retail/

Chart VA-6 of the US Bureau of the Census shows percentage change of retail and food services sales. Auto sales have been increasing monthly, and particularly relative to a year earlier, but with weakness in the total excluding auto sales and declines or mild growth in general merchandise.

Chart VA-6, US, Percentage Change of Retail and Food Services Sales

Source: US Census Bureau

http://www2.census.gov/retail/releases/historical/marts/img/martsbrf.gif

Chart VA-7 of the US Census Bureau provides total sales of retail trade and food services seasonally adjusted (SA) from Jan 1992 to Dec 2013 in millions of dollars. The impact on sales of the shallow recession of 2001 was much milder than the sharp contraction in the global recession from IVQ2007 to IIQ2009. There is flattening in the final segment of the series followed by another increase. Data are not adjusted for price changes.

Chart VA-7, US, Total Sales of Retail Trade and Food Services, SA, Jan 1992-Dec 2013, Millions of Dollars

Source: US Census Bureau

http://www.census.gov/retail/

Chart VA-8 of the US Census Bureau provides total sales of retail trade and food services not seasonally adjusted (NSA) in millions of dollars from Jan 1992 to Dec 2013. Data are not adjusted for seasonality, which explains sharp jagged behavior, or price changes. There was contraction during the global recession from IVQ2007 to IIQ2009 with strong rebound to a higher level and stability followed by strong increase in the final segment.

Chart VA-8, US, Total Sales of Retail Trade and Food Services, NSA, Jan 1992-Dec 2013, Millions of Dollars

Source: US Census Bureau

http://www.census.gov/retail/

Seasonally adjusted annual rates (SAAR) of housing starts and permits are shown in Table VA-5. Housing starts fell 9.8 percent in Dec 2013 after wide oscillations in 2013 that included increase of 24.5 percent in Nov, decline of 15.2 percent in Apr 2013 and 9.1 percent in Jun 2013. Housing starts increased 1.6 percent from the SAAR of 983 in Dec 2012 to the SAAR of 999 in Dec 2013. Housing permits, indicating future activity, decreased 3.0 percent in Dec 2013 also after significant oscillations in 2013 with increase of 4.6 percent from 943 SSAR in Dec 2012 to SSAR of 986 in Dec 2013. While single unit houses starts decreased 7.0 percent in Dec 2013, seasonally adjusted, structures with five units or more decreased 17.9 percent. Multifamily residential construction is increasing at a faster rate than single-family construction with wide monthly oscillations. Monthly rates in starts and permits fluctuate significantly as shown in Table VA-5.

Table VA-5, US, Housing Starts and Permits SSAR Month ∆%

	Housing  Starts SAAR	Month ∆%	Housing Permits SAAR	Month ∆%
Dec 2013	999	-9.8	986	-3.0
Nov	1107	24.5	1017	-2.1
Oct	889	1.8	1039	6.7
Sep	873	-1.1	974	5.2
Aug	883	-0.9	926	-2.9
Jul	891	6.7	954	3.9
Jun	835	-9.1	918	-6.8
May	919	7.9	985	-2.0
Apr	852	-15.2	1005	12.9
Mar	1005	3.7	890	-6.5
Feb	969	7.9	952	4.0
Jan	898	-8.6	915	-3.0
Dec 2012	983	16.7	943	1.1
Nov	842	-2.5	933	2.8
Oct	864	1.2	908	-1.4
Sep	854	14.0	921	11.4
Aug	749	1.1	827	-1.4
Jul	741	-2.1	839	6.9
Jun	757	6.5	785	-2.6
May	711	-5.7	806	7.6
Apr	754	6.6	749	-4.6
Mar	707	-0.8	785	6.2
Feb	713	-1.4	739	3.5
Jan	723	4.2	714	2.4
Dec 2011	694	-2.4	697	-1.3
Nov	711	16.6	706	5.2
Oct	610	-6.2	671	10.0
Sep	650	11.1	610	-5.7
Aug	585	-6.1	647	4.2
Jul	623	2.5	621	-2.4
Jun	608	8.4	636	2.9
May	561	1.3	618	6.4
Apr	554	-7.7	581	-0.3
Mar	600	16.1	583	7.6
Feb	517	-17.9	542	-5.9
Jan	630	16.9	576	-8.9
Dec 2010	539	-1.1	632	12.9
Nov	545	0.4	560	0.4
Oct	543	-8.6	558	-0.9
Sep	594	-0.8	563	-2.9

SAAR: Seasonally Adjusted Annual Rate

Source: US Census Bureau

http://www.census.gov/construction/nrc/

Housing starts and permits in Jan-Dec not-seasonally adjusted are in Table VA-6. Housing starts increased 18.3 percent in Jan-Dec 2013 relative to Jan-Dec 2012 and new permits increased 17.5 percent. Construction of new houses in the US remains at very depressed levels. Housing starts fell 48.7 percent in Jan-Dec 2013 relative to Jan-Dec 2006 and fell 55.4 percent relative to Jan-Dec 2005. Housing permits fell 47.0 percent in Jan-Dec 2013 relative to Jan-Dec 2006 and fell 54.8 percent relative to Jan-Dec 2005.

Table VA-6, US, Housing Starts and New Permits, Thousands of Units, NSA, and %

	Housing Starts	New Permits
Jan-Dec 2013	923.4	974.7
Jan-Dec 2012	780.6	829.7
∆% Jan-Dec 2013/Jan-Dec 2012	18.3	17.5
Jan-Dec 2006	1,800.9	1,838.9
∆% Jan-Dec 2013/Jan-Dec 2006	-48.7	-47.0
Jan-Dec 2005	2,068.3	2,155.3
∆% Jan-Dec 2013/Jan-Dec 2005	-55.4	-54.8

Source: US Census Bureau

http://www.census.gov/construction/nrc/

Chart VA-9 of the US Census Bureau shows the sharp increase in construction of new houses from 2000 to 2006. Housing construction fell sharply through the recession, recovering from the trough around IIQ2009. The right-hand side of Chart II-1 shows a mild downward trend or stagnation from mid-2010 to the present in single-family houses with a recent mild upward trend in recent months in the category of two or more units but marginal decline in recent months. While single unit houses starts increased 15.4 percent in Jan-Dec 2013 relative to a year earlier, not seasonally adjusted, structures with two to four units increased 19.9 percent and with five units or more increased 24.8 percent.

Chart VA-9, US, Total and Single-Family New Housing Units Started in the US, SAAR (Seasonally Adjusted Annual Rate)

Source: US Census Bureau

http://www.census.gov/briefrm/esbr/www/esbr020.html

Table VA-7 provides new housing units that started in the US at seasonally adjusted annual rates (SAAR) from Jun to Dec of the year from 2000 to 2013. SAARs have dropped from high levels around 2 million in 2005-2006 to the range of 707,000 in Mar 2012 to 983,000 in Dec 2012 and 1,005,000 in Mar 2013, which is an improvement over the range of 517,000 in Feb 2011 to 711,000 in Nov 2011.  There is improvement in Jul 2013 with SAAR of 891,000 relative to 741,000 in Jul 2012 and in Aug 2013 with 883,000 relative to 749,000 in Aug 2012. Improvement continued with 1,107,000 in Nov 2013 relative to 842,000 in Nov 2012. Housing starts remained at a relatively high level of 999,000 in Dec 2013 compared with 983,000 in Dec 2012.

Table VA-7, US, New Housing United Started at Seasonally Adjusted Rates, Thousand Units

	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2000	1,559	1,463	1,541	1,507	1,549	1,551	1,532
2001	1,636	1,670	1,567	1,562	1,540	1,602	1,568
2002	1,717	1,655	1,633	1,804	1,648	1,753	1,788
2003	1,867	1,897	1,833	1,939	1,967	2,083	2,057
2004	1,828	2,002	2,024	1,905	2,072	1,782	2,042
2005	2,068	2,054	2,095	2,151	2,065	2,147	1,994
2006	1,802	1,737	1,650	1,720	1,491	1,570	1,649
2007	1,448	1,354	1,330	1,183	1,264	1,197	1,037
2008	1,046	923	844	820	777	652	560
2009	585	594	586	585	534	588	581
2010	536	546	599	594	543	545	539
2011	608	623	585	650	610	711	694
2012	757	741	749	854	864	842	983
2013	835	891	883	873	899	1,107	999

Source: US Census Bureau

http://www.census.gov/construction/nrc/

Chart VA-10 of the US Census Bureau provides construction of new housing units started in the US at seasonally adjusted annual rate (SAAR) from Jan 1959 to Dec 2013 that help to analyze in historical perspective the debacle of US new house construction. There are three periods in the series. (1) There is stationary behavior with wide fluctuations from 1959 to the beginning of the decade of the 1970s. (2) There is sharp upward trend from the 1990s to 2006 propelled by the US housing subsidy, politics of Fannie Mae and Freddie Mac and unconventional monetary policy of near zero interest rates from Jun 2003 to Jun 2004 and suspension of the auction of 30-year Treasury bonds intended to lower mortgage rates. 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  . (3) Housing construction dropped vertically during the global recession. There was initial stability followed by some recovery in recent months.

Chart VA-10, US, New Housing Units Started in the US, SAAR (Seasonally Adjusted Annual Rate), Thousands of Units, Jan 1959-Dec 2013

Source: US Census Bureau http://www.census.gov/construction/nrc/

Table VA-8 provides actual new housing units started in the US, not seasonally adjusted, from May to Dec in the years from 2000 to 2013. The number of housing units started fell from the peak of 197.9 thousand in May 2005 to 65.7 thousand in Dec 2013 or decline of 66.8 percent in large part because of lower seasonal activity at the end of the year. The number of housing units started jumped from 63.2 thousand in Dec 2012 to 65.7 thousand in Dec 2013 or by 4.0 percent and increase of 94.4 percent from 33.8 thousand in Dec 2010.

Table VA-8, New Housing Units Started in the US, Not Seasonally Adjusted, Thousands of Units

	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2000	152.9	146.3	135.0	141.4	128.9	139.7	117.1	100.7
2001	154.0	155.2	154.6	141.5	133.1	139.8	121.0	104.6
2002	165.5	160.3	155.9	147.0	155.6	146.8	133.0	123.1
2003	165.0	174.5	175.8	163.8	171.3	173.5	153.7	144.2
2004	187.6	172.3	182.0	185.9	164.0	181.3	138.1	140.2
2005	197.9	192.8	187.6	192.0	187.9	180.4	160.7	136.0
2006	190.2	170.2	160.9	146.8	150.1	130.6	115.2	112.4
2007	136.5	137.8	127.9	121.2	101.5	115.0	88.8	68.9
2008	91.7	102.5	86.7	76.4	73.9	68.2	47.5	37.7
2009	52.2	59.1	56.8	52.9	52.6	44.5	42.3	36.6
2010	56.2	53.8	51.5	56.3	53.0	45.4	40.6	33.8
2011	54.0	60.5	57.6	54.5	58.8	53.2	53.0	42.7
2012	67.8	74.7	69.2	69.0	75.8	77.0	62.2	63.2
2013	87.2	80.7	84.0	80.4	78.4	78.4	84.2	65.7

Source: US Census Bureau http://www.census.gov/construction/nrc/

Chart VA-11 of the US Census Bureau provides new housing units started in the US not seasonally adjusted (NSA) from Jan 1959 to Dec 2013. There is the same behavior as in Chart VA-10 SA but with sharper fluctuations in the original series without seasonal adjustment. There are the same three periods. (1) The series is virtually stationary with wide fluctuations from 1959 to the late 1980s. (2) There is downward trend during the savings and loans crisis of the 1980s. Benston and Kaufman (1997, 139) find that there was failure of 1150 US commercial and savings banks between 1983 and 1990, or about 8 percent of the industry in 1980, which is nearly twice more than between the establishment of the Federal Deposit Insurance Corporation in 1934 through 1983. More than 900 savings and loans associations, representing 25 percent of the industry, were closed, merged or placed in conservatorships (see Pelaez and Pelaez, Regulation of Banks and Finance (2008b), 74-7). The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) created the Resolution Trust Corporation (RTC) and the Savings Association Insurance Fund (SAIF) that received $150 billion of taxpayer funds to resolve insolvent savings and loans. The GDP of the US in 1989 was $4346.7 billion (http://www.bea.gov/iTable/index_nipa.cfm), such that the partial cost to taxpayers of that bailout was around 3.45 percent of GDP in a year. US GDP in 2012 is estimated at $16,244.6 billion, such that the bailout would be equivalent to cost to taxpayers of about $560.4 billion in current GDP terms. A major difference with the Troubled Asset Relief Program (TARP) for private-sector banks is that most of the costs were recovered with interest gains whereas in the case of savings and loans there was no recovery. (3) There is vertical drop of new housing construction in the US during the global recession from (Dec) IVQ2007 to (Jun) IIQ2009 (http://www.nber.org/cycles/cyclesmain.html). The final segment shows upward trend but it could be simply part of yet another fluctuation. Marginal improvement in housing in the US should not obscure the current depressed levels relative to earlier periods.

Chart VA-11, US, New Housing Units Started in the US, Not Seasonally Adjusted, Thousands of Units, Jan 1959-Dec 2013

Source: US Census Bureau http://www.census.gov/construction/nrc/

Chart VA-12 of the US Census Bureau provides single-family houses started without seasonal adjustment. There was sharp increase from 1992 to 2007 followed by sharp decline. The recovery is sluggish.

Chart VA-12, US, Single-family Houses Started, Thousands of Units, Jan-1959-Dec 2013, NSA

Source: US Census Bureau http://www.census.gov/construction/nrc

Chart VA-13 of the US Census Bureau provides housing units started with five units or more. Construction was stagnant before the drop in the global recession. Recovery is stronger than in the case of single-family units.

Chart VA-13, US, Housing Units Stated in Buildings with Five Units or More, Thousands of Units, Jan-1959-Dec 2013, NSA

Source: US Census Bureau http://www.census.gov/construction/nrc/

A longer perspective on residential construction in the US is provided by Table VA-9 with annual data from 1960 to 2013. Housing starts fell 55.4 percent from 2005 to 2013, 41.1 percent from 2000 to 2013 and 35.4 percent relative to the average from 1959 to 1963. Housing permits fell 54.8 percent from 2005 to 2013, 38.8 percent from 2000 to 2013 and 15.8 percent from the average of 1969-1963 to 2013. Housing starts rose 31.8 from 2000 to 2005 while housing permits grew 35.4 percent. From 1990 to 2000, housing starts increased 31.5 percent while permits increased 43.3 percent.

Table VA-9, US, Annual New Privately Owned Housing Units Authorized by Building Permits in Permit-Issuing Places and New Privately Owned Housing Units Started, Thousands

	Starts	Permits
2013	923.4	974.7
2012	780.6	829.7
∆% 2013/2012	18.3	17.5
∆% 2013/2011	51.7	56.2
∆% 2013/2010	57.3	61.2
∆% 2013/2006	-48.7	-47.0
∆% 2013/2005	-55.4	-54.8
∆% 2013/2000	-41.1	-38.8
∆% 2013/Av 1959-1963	-35.4	-15.8
2011	608.8	624.1
∆% 2012/2005	-62.3	-61.5
∆% 2012/2000	-50.2	-47.9
∆% 2012/Av 1959-1963	-45.4	-28.4
2011	608.8	624.1
2010	586.9	604.6
2009	554.0	583.0
2008	905.5	905.4
2007	1,355,0	1,398.4
2006	1,800.9	1,838.9
2005	2,068.3	2,155.3
∆% 2005/2000	31.8	35.4
2004	1,955.8	2,070.1
2003	1,847.7	1,889.2
2002	1,704.9	1,747.7
2001	1,602.7	1,636.7
2000	1,568.7	1,592.3
∆% 2000/1990	31.5	43.3
1990	1,192,7	1,110.8
1980	1,292.2	1,190.6
1970	1,433.6	1,351.5
Average 1959-63	1,429.7	1,158.2

Source: US Census Bureau

http://www.census.gov/construction/nrc/

Risk aversion channels funds toward US long-term and short-term securities that finance the US balance of payments and fiscal deficits benefitting from risk flight to US dollar denominated assets. There are now temporary interruptions because of fear of rising interest rates that erode prices of US government securities because of mixed signals on monetary policy and exit from the Fed balance sheet of three trillion dollars of securities held outright. Net foreign purchases of US long-term securities (row C in Table VA-10) decreased from $28.7 billion in Oct 2013 to minus $29.3 billion in Nov 2013. Foreign (residents) purchases minus sales of US long-term securities (row A in Table VA-10) in Oct 2013 of $47.9 billion increased to minus $11.4 billion in Nov 2013. Net US (residents) purchases of long-term foreign securities (row B in Table VA-10) improved from minus $19.2 billion in Oct 2013 to minus $17.9 billion in Nov 2013. In Nov 2013,

C = A + B = -$11.4 billion - $17.9 billion = -$29.3 billion

There are minor rounding errors. There is slowing demand in Table VA-10 in Nov in A1 private purchases by residents overseas of US long-term securities of -$21.5 billion of which slowing in A11 Treasury securities of minus $13.6 billion, slowing in A12 of minus $2.2 billion in agency securities, slowing of minus $1.4 billion of corporate bonds and decrease of $4.4 billion in equities. Worldwide risk aversion causes flight into US Treasury obligations with significant oscillations. Official purchases of securities in row A2 decreased $4.7 billion with decrease of Treasury securities of $1.9 billion in Oct 2013. Official purchases of agency securities increased $10.2 billion in Nov. Row D shows increase in Nov 2013 of 18.5 billion in purchases of short-term dollar denominated obligations. Foreign private holdings of US Treasury bills increased $16.0 billion (row D11) with foreign official holdings increasing $5.5 billion while the category “other” decreased $3.0 billion. Foreign private holdings of US Treasury bills increased $16.0 billion in what could be decrease of duration exposures. Risk aversion of default losses in foreign securities dominates decisions to accept zero interest rates in Treasury securities with no perception of principal losses. In the case of long-term securities, investors prefer to sacrifice inflation and possible duration risk to avoid principal losses with significant oscillations in risk perceptions.

Table VA-10, Net Cross-Borders Flows of US Long-Term Securities, Billion Dollars, NSA

	Nov 2012 12 Months	Nov 2013 12 Months	Oct 2013	Nov 2013
A Foreign Purchases less Sales of US LT Securities	540.8	172.3	47.9	-11.4
A1 Private	333.6	67.5	52.6	-21.5
A11 Treasury	192.2	40.0	34.8	-13.6
A12 Agency	131.7	16.0	1.6	-2.2
A13 Corporate Bonds	-51.8	8.8	3.3	-1.4
A14 Equities	61.5	2.6	12.9	-4.4
A2 Official	207.2	104.9	-4.7	10.2
A21 Treasury	181.2	11.7	-1.9	10.2
A22 Agency	10.3	79.5	1.0	1.7
A23 Corporate Bonds	4.6	16.6	1.3	0.8
A24 Equities	11.1	-3.0	-5.1	-2.6
B Net US Purchases of LT Foreign Securities	28.4	-200.4	-19.2	-17.9
B1 Foreign Bonds	54.3	-41.6	-6.5	-14.5
B2 Foreign Equities	-25.9	-158.8	-12.7	-3.4
C Net Foreign Purchases of US LT Securities	569.2	-28.1	28.7	-29.3
D Increase in Foreign Holdings of Dollar Denominated Short-term	52.8	-35.3	11.6	18.5
D1 US Treasury Bills	27.1	-25.3	-15.3	21.5
D11 Private	22.3	-26.0	-23.4	16.0
D12 Official	4.8	0.7	8.1	5.5
D2 Other	25.7	-10.0	26.9	-3.0

C = A + B;

A = A1 + A2

A1 = A11 + A12 + A13 + A14

A2 = A21 + A22 + A23 + A24

B = B1 + B2

D = D1 + D2

Sources: United States Treasury

http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticpress.aspx

Table VA-11 provides major foreign holders of US Treasury securities. China is the largest holder with $1316.7 billion in Nov 2013, increasing 11.3 percent from $1183.1 billion in Nov 2012 while increasing $12.2 billion from Oct 2013 or 0.9 percent. Japan increased its holdings from $1117.7 billion in Nov 2012 to $1186.4 billion in Nov 2013 or by 6.1 percent. Japan increased its holdings from $1174.4 billion in Oct 2013 to $1186.4 billion in Nov 2013 by $12.0 billion or 1.0 percent. Total foreign holdings of Treasury securities rose from $5538.2 billion in Nov 2012 to $5716.9 billion in Nov 2013, or 3.2 percent. Foreign holdings of Treasury securities fell from $5740.4 in Mar 2013 to $5670.8 in Apr 2013 or 1.2 percent. Foreign holdings of US Treasury securities fell from $5600.6 billion in Jun 2013 to $5590.1 billion in Jul 2013, by $10.5 billion or 0.2 percent. The US continues to finance its fiscal and balance of payments deficits with foreign savings (see Pelaez and Pelaez, The Global Recession Risk (2007)). A point of saturation of holdings of US Treasury debt may be reached as foreign holders evaluate the threat of reduction of principal by dollar devaluation and reduction of prices by increases in yield, including possibly risk premium. Shultz et al (2012) find that the Fed financed three-quarters of the US deficit in fiscal year 2011, with foreign governments financing significant part of the remainder of the US deficit while the Fed owns one in six dollars of US national debt. Concentrations of debt in few holders are perilous because of sudden exodus in fear of devaluation and yield increases and the limit of refinancing old debt and placing new debt. In their classic work on “unpleasant monetarist arithmetic,” Sargent and Wallace (1981, 2) consider a regime of domination of monetary policy by fiscal policy (emphasis added):

“Imagine that fiscal policy dominates monetary policy. The fiscal authority independently sets its budgets, announcing all current and future deficits and surpluses and thus determining the amount of revenue that must be raised through bond sales and seignorage. Under this second coordination scheme, the monetary authority faces the constraints imposed by the demand for government bonds, for it must try to finance with seignorage any discrepancy between the revenue demanded by the fiscal authority and the amount of bonds that can be sold to the public. Suppose that the demand for government bonds implies an interest rate on bonds greater than the economy’s rate of growth. Then if the fiscal authority runs deficits, the monetary authority is unable to control either the growth rate of the monetary base or inflation forever. If the principal and interest due on these additional bonds are raised by selling still more bonds, so as to continue to hold down the growth of base money, then, because the interest rate on bonds is greater than the economy’s growth rate, the real stock of bonds will growth faster than the size of the economy. This cannot go on forever, since the demand for bonds places an upper limit on the stock of bonds relative to the size of the economy. Once that limit is reached, the principal and interest due on the bonds already sold to fight inflation must be financed, at least in part, by seignorage, requiring the creation of additional base money.”

Table VA-11, US, Major Foreign Holders of Treasury Securities $ Billions at End of Period

	Nov 2013	Oct 2013	Nov 2012
Total	5716.9	5655.1	5538.2
China	1316.7	1304.5	1183.1
Japan	1186.4	1174.4	1117.7
Caribbean Banking Centers	290.9	291.9	266.4
Brazil	246.9	246.7	255.9
Oil Exporters	236.2	236.8	259.1
Belgium	200.6	180.3	138.5
Taiwan	183.7	184.5	199.1
Switzerland	176.6	174.3	192.7
United Kingdom	161.5	158.5	133.5
Hong Kong	141.7	137.3	141.2
Russia	139.9	149.9	166.2
Luxembourg	130.4	133.3	148.0
Foreign Official Holdings	4074.2	4052.3	4009.0
A. Treasury Bills	384.1	378.6	383.5
B. Treasury Bonds and Notes	3690.1	3673.7	3625.5

Source: United States Treasury

http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/index.aspx

Table VA-12 provides additional information required for understanding the deficit/debt situation of the United States. The table is divided into four parts: Treasury budget in the 2014 fiscal year ending in Nov 2014; federal fiscal data for the years from 2009 to 2013; federal fiscal data for the years from 2005 to 2008; and Treasury debt held by the public from 2005 to 2012. Receipts increased 8.0 percent in the cumulative fiscal year 2014 ending in Dec 2014 relative to the cumulative in fiscal year 2013. Individual income taxes decreased 1.9 percent relative to the same fiscal period a year earlier. Outlays decreased 7.8 percent relative to a year earlier. Total revenues of the US from 2009 to 2012 accumulate to $9020 billion, or $9.0 trillion, while expenditures or outlays accumulate to $14,109 billion, or $14.1 trillion, with the deficit accumulating to $5089 billion, or $5.1 trillion. Revenues decreased 6.6 percent from $9653 billion in the four years from 2005 to 2008 to $9020 billion in the years from 2009 to 2012. Decreasing revenues were caused by the global recession from IVQ2007 (Dec) to IIQ2009 (Jun) and by growth of only 2.3 percent on average in the cyclical expansion from IIIQ2009 to IIIQ2013 (http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html). In contrast with the decline of revenue, outlays or expenditures increased 30.2 percent from $10,839 billion, or $10.8 trillion, in the four years from 2005 to 2008, to $14,109 billion, or $14.1 trillion, in the four years from 2009 to 2012. Increase in expenditures by 30.2 percent while revenue declined by 6.6 percent caused the increase in the federal deficit from $1186 billion in 2005-2008 to $5089 billion in 2009-2012. Federal revenue was 14.9 percent of GDP on average in the years from 2009 to 2012, which is well below 17.4 percent of GDP on average from 1973 to 2012. Federal outlays were 23.3 percent of GDP on average from 2009 to 2012, which is well above 20.4 percent of GDP on average from 1973 to 2012. The lower part of Table VA-12 shows that debt held by the public swelled from $5803 billion in 2008 to $11,281 billion in 2012, by $5478 billion or 94.4 percent. Debt held by the public as percent of GDP or economic activity jumped from 39.3 percent in 2008 to 70.1 percent in 2012, which is well above the average of 39.2 percent from 1973 to 2012 (http://www.cbo.gov/publication/44508). The United States faces tough adjustment because growth is unlikely to recover, creating limits on what can be obtained by increasing revenues, while continuing stress of social programs restricts what can be obtained by reducing expenditures.

Table VA-12, US, Treasury Budget in Fiscal Year to Date Million Dollars

Dec 2013	Fiscal Year 2014	Fiscal Year 2013	∆%
Receipts	664,601	615,553	8.0
Outlays	838,199	908,851	-7.8
Deficit	-173,598	-293,298	NA
Individual Income Taxes	306,426	312,398	-1.9
Corporation Income Tax	69,260	62,508	10.8
Social Insurance	158,842	122,778	29.4
	Receipts	Outlays	Deficit (-), Surplus (+)
$ Billions
Fiscal Year 2013*	2,774	3,454	-680
% GDP*	16.7	20.8	4.1
Fiscal Year 2012	2,449	3,538	-1,089
% GDP*	15.2	22.0	6.8
Fiscal Year 2011	2,302	3,598	-1,296
Fiscal Year 2010	2,163	3,456	-1,293
Fiscal Year 2009	2,105	3,518	-1,413
Total 2009-2012	9,020	14,109	-5,089
Average % GDP 2009-2012	14.9	23.3	-8.4
Fiscal Year 2008	2,524	2,983	-459
Fiscal Year 2007	2,568	2,729	-161
Fiscal Year 2006	2,407	2,655	-248
Fiscal Year 2005	2,154	2,472	-318
Total 2005-2008	9,653	10,839	-1,186
Average % GDP 2005-2008	17.3	19.5	-2.1
Debt Held by the Public	Billions of Dollars	Percent of GDP
2005	4,592	35.6
2006	4,829	35.3
2007	5,035	35.1
2008	5,803	39.3
2009	7,545	52.3
2010	9,019	61.0
2011	10,128	65.8
2012	11,281	70.1

Source: http://www.fms.treas.gov/mts/index.html

*http://www.treasury.gov/press-center/press-releases/Pages/jl2197.aspx

CBO (2012NovMBR). CBO (2011AugBEO); Office of Management and Budget 2011. Historical Tables. Budget of the US Government Fiscal Year 2011. Washington, DC: OMB; CBO. 2011JanBEO. Budget and Economic Outlook. Washington, DC, Jan. CBO. 2012AugBEO. Budget and Economic Outlook. Washington, DC, Aug 22. CBO. 2012Jan31. Historical budget data. Washington, DC, Jan 31. CBO. 2012NovCDR. Choices for deficit reduction. Washington, DC. Nov. CBO. 2013HBDFeb5. Historical budget data—February 2013 baseline projections. Washington, DC, Congressional Budget Office, Feb 5. CBO. 2013HBDFeb5. Historical budget data—February 2013 baseline projections. Washington, DC, Congressional Budget Office, Feb 5. Congressional Budget Office, 2013CBOHBDMay14. Historical budget data—May 2013. CBO, Washington, DC, May 14. Congressional Budget Office, 2013CBOHD, Historical budget data—August 2013. CBO, Washington, DC, Aug 12.

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/announcements/release_2013/k130711a.pdf). For fiscal 2013, the forecast is of growth of GDP between 2.6 and 3.0 percent, with the all items CPI less fresh food of 0.6 to 1.0 percent. The critical difference is forecast of the CPI excluding fresh food of 2.8 to 3.6 percent in 2014 and 1.6 to 2.9 percent in 2015. Consumer price inflation in Japan excluding fresh food was 0.3 percent in Oct 2013 and 0.9 percent in 12 months (http://www.stat.go.jp/english/data/cpi/1581.htm). The new monetary policy of the Bank of Japan aims to increase inflation to 2 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.”

Financial markets in Japan and worldwide were shocked by new bold measures of “quantitative and qualitative monetary easing” by the Bank of Japan (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf). The objective of policy is to “achieve the price stability target of 2 percent in terms of the year-on-year rate of change in the consumer price index (CPI) at the earliest possible time, with a time horizon of about two years” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf). The main elements of the new policy are as follows:

1. Monetary Base Control. Most central banks in the world pursue interest rates instead of monetary aggregates, injecting bank reserves to lower interest rates to desired levels. The Bank of Japan (BOJ) has shifted back to monetary aggregates, conducting money market operations with the objective of increasing base money, or monetary liabilities of the government, at the annual rate of 60 to 70 trillion yen. The BOJ estimates base money outstanding at “138 trillion yen at end-2012) and plans to increase it to “200 trillion yen at end-2012 and 270 trillion yen at end 2014” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
2. Maturity Extension of Purchases of Japanese Government Bonds. Purchases of bonds will be extended even up to bonds with maturity of 40 years with the guideline of extending the average maturity of BOJ bond purchases from three to seven years. The BOJ estimates the current average maturity of Japanese government bonds (JGB) at around seven years. The BOJ plans to purchase about 7.5 trillion yen per month (http://www.boj.or.jp/en/announcements/release_2013/rel130404d.pdf). Takashi Nakamichi, Tatsuo Ito and Phred Dvorak, wiring on “Bank of Japan mounts bid for revival,” on Apr 4, 2013, published in the Wall Street Journal (http://online.wsj.com/article/SB10001424127887323646604578401633067110420.html ), find that the limit of maturities of three years on purchases of JGBs was designed to avoid views that the BOJ would finance uncontrolled government deficits.
3. Seigniorage. The BOJ is pursuing coordination with the government that will take measures to establish “sustainable fiscal structure with a view to ensuring the credibility of fiscal management” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
4. Diversification of Asset Purchases. The BOJ will engage in transactions of exchange traded funds (ETF) and real estate investment trusts (REITS) and not solely on purchases of JGBs. Purchases of ETFs will be at an annual rate of increase of one trillion yen and purchases of REITS at 30 billion yen.

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	CPI All Items Less Fresh Food	Excluding Effects of Consumption Tax Hikes
2013
Oct 2013	+2.6 to +3.0 [+2.7]	+0.6 to +1.0 [+0.7]
Jul 2013	+2.5 to +3.0 [+2.8]	+0.5 to +0.8 [+0.6]
2014
Oct 2013	+0.9 to +1.5 [+1.5]	+2.8 to +3.6 [+3.3]	+0.8 to +1.6 [+1.3]
Jul 2013	+0.8 to +1.5 [+1.3]	+2.7 to +3.6 [+3.3]	+0.7 to +1.6 [+1.3]
2015
Oct 2013	+1.3 to +1.8 [+1.5]	+1.6 to +2.9 [+2.6]	+0.9 to +2.2 [+1.9]
Jul 2013	+1.3 to +1.9 [+1.5]	+1.6 to +2.9 [+2.6]	+0.9 to +2.2 [+1.9]

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/gor1310b.pdf

Private-sector activity in Japan expanded with the Markit Composite Output PMI^™ Index unchanged from 54.0 in Nov to 54.0 in Dec, indicating strong growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/0a46c780971f46dfa4572eb754475113). Claudia Tillbrooke, Economist at Markit and author of the report, finds that the survey data suggest continuing strong growth of the economy of Japan with strength in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/0a46c780971f46dfa4572eb754475113). The Markit Business Activity Index of Services increased from the record of 51.8 in Nov to 52.1 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/0a46c780971f46dfa4572eb754475113). Claudia Tillbrooke, Economist at Markit and author of the report, finds growth in services converging to manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/0a46c780971f46dfa4572eb754475113). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, increased from 55.1 in Nov to 55.2 in Dec, which is the highest level since Jul 2006 (http://www.markiteconomics.com/Survey/PressRelease.mvc/a42e8a52c4114460ad2b9f8cea030c3f). New orders grew at a high rate for the tenth consecutive month. New export orders increased for the fourth consecutive month. Claudia Tillbrooke, Economist at Markit and author of the report, finds improving manufacturing conditions at the highest levels since 2006 with some concerns about the sales tax increase in Apr and employment (http://www.markiteconomics.com/Survey/PressRelease.mvc/a42e8a52c4114460ad2b9f8cea030c3f).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 ∆% 2.5 Blog 1/19/14
Consumer Price Index	Nov NSA ∆% 0.0; Nov 12 months NSA ∆% 1.5 Blog 12/29/13
Real GDP Growth	IIIQ2013 ∆%: 0.3 on IIQ2013;  IIIQ2013 SAAR 1.1; ∆% from quarter a year earlier: 2.4 % Blog 6/16/13 8/18/13 9/15/13 11/17/13 12/15/13
Employment Report	Nov Unemployed 2.49 million Change in unemployed since last year: minus 110 thousand Unemployment rate: 4.0 % Blog 12/29/13
All Industry Indices	Oct month SA ∆% -0.2 12-month NSA ∆% 1.9 Blog 12/22/13
Industrial Production	Nov SA month ∆%: 0.1 12-month NSA ∆% 5.0 Blog 12/29/13
Machine Orders	Total Nov ∆% 5.8 Private ∆%: -1.3 Nov ∆% Excluding Volatile Orders 9.3 Blog 1/19/14
Tertiary Index	Nov month SA ∆% 0.6 Nov 12 months NSA ∆% 0.4 Blog 1/19/14
Wholesale and Retail Sales	Nov 12 months: Total ∆%: 3.-0 Wholesale ∆%: 2.5 Retail ∆%: 4.0 Blog 12/29/13
Family Income and Expenditure Survey	Nov 12-month ∆% total nominal consumption 2.1, real 0.2 Blog 12/29/13
Trade Balance	Exports Nov 12 months ∆%: 18.4 Imports Nov 12 months ∆% 21.1 Blog 12/22/13

Links to blog comments in Table JPY:

12/29/13 http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html

12/22/13 http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html

12/15/13 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

9/15/13 http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html

8/18/13 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html

The tertiary activity index of Japan increased 0.6 percent SA in Nov 2013 and increased 0.4 percent NSA in the 12 months ending in Nov 2013, as shown in Table VB-1. The index is showing significant volatility with increases of 1.3 percent in Feb 2013 and 1.2 percent in May 2013 but decreases in multiple months. The tertiary activity index fell 5.2 percent in 2009, growing 1.3 percent in 2010, 0.1 percent in 2011 and 1.4 percent in 2012.

Table VB-1, Japan, Tertiary Activity Index, ∆%

	Month ∆% SA	12 Months ∆% NSA
Nov 2013	0.6	0.4
Oct	-0.9	0.2
Sep	0.1	1.4
Aug	0.6	0.7
Jul	-0.4	1.3
Jun	-0.7	0.5
May	1.2	1.7
Apr	-0.5	1.3
Mar	0.2	0.7
Feb	1.3	-1.6
Jan	-0.8	0.1
Dec 2012	0.2	-0.1
Nov	-0.1	1.0
Oct	0.2	1.3
Sep	0.0	0.1
Aug	0.2	0.6
Jul	-0.3	0.8
Jun	0.0	0.8
May	0.5	3.1
Apr	-0.2	2.4
Mar	-0.3	4.2
Feb	0.2	2.4
Jan	-0.8	0.3
Calendar Year
2012		1.4
2011		0.1
2010		1.3
2009		-5.2
2008		-1.0
2007		1.0
2006		1.8
2005		1.9
2004		1.8

Source: Japan, Ministry of Economy, Trade and Industry (METI)

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

Month and 12-month rates of growth of the tertiary activity index of Japan and components in Nov 2013 are provided in Table VB-2. Electricity, gas, heat supply and water decreased 0.6 percent in Nov 2013 and decreased 0.9 percent in the 12 months ending in Nov 2013. Wholesale and retail trade increased 1.5 percent in the month of Nov and decreased 1.0 percent in 12 months. Information and communications decreased 0.6 percent in Nov and increased 2.4 percent in 12 months.

Table VB-2, Japan, Tertiary Index and Components, Month and 12-Month Percentage Changes ∆%

Nov 2013	Weight	Month ∆% SA	12 Months ∆% NSA
Tertiary Index	10,000.0	0.6	0.4
Electricity, Gas, Heat Supply & Water	372.9	-0.6	-0.9
Information & Communications	951.2	-0.6	2.4
Wholesale & Retail Trade	2,641.2	1.5	-1.0
Finance & Insurance	971.1	2.1	4.9
Real Estate & Goods Rental & Leasing	903.4	0.6	-0.4
Scientific Research, Professional & Technical Services	551.3	-3.9	-2.3
Accommodations, Eating, Drinking	496.0	2.3	-0.3
Living-Related, Personal, Amusement Services	552.7	2.3	2.0
Learning Support	116.9	0.9	-0.1
Medical, Health Care, Welfare	921.1	0.2	1.9
Miscellaneous ex Government	626.7	0.4	-5.4

Source: Japan, Ministry of Economy, Trade and Industry (METI)

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

Japan’s total machinery orders seasonally adjusted in Table VB-3 increased 5.8 percent seasonally adjusted. Private sector orders decreased 1.3 percent and increased 9.3 percent excluding volatile orders. Orders from overseas decreased 12.2 percent and manufacturing orders increased 6.0 percent. Government orders decreased 11.9 percent.

Table VB-3, Japan, Machinery Orders, Month ∆%, SA 

2013	Nov 13	Oct 13	Sep 13	Aug 13
Total	5.8	-4.6	13.2	4.5
Private Sector	-1.3	7.0	-0.9	3.2
Excluding Volatile Orders	9.3	0.6	-2.1	5.4
Mfg	6.0	-0.2	4.1	0.8
Non Mfg ex Volatile	8.1	11.5	-7.0	6.2
Government	-11.9	-26.2	42.9	-8.3
From Overseas	-12.2	-16.0	12.1	22.4
Through Agencies	-5.5	13.2	-4.2	2.4

Note: Mfg: manufacturing

Source: Japan Economic and Social Research Institute, Cabinet Office

http://www.esri.cao.go.jp/index-e.html

Total orders for machinery and total private-sector orders excluding volatile orders for Japan are shown in Chart VB-1 of Japan’s Economic and Social Research Institute at the Cabinet Office. The trend of private-sector orders excluding volatile orders was showing recovery from the drop after Mar 2011 because of the earthquake/tsunami. There was reversal of the trend of increase in total orders with recent decreases and an upward movement in the final data point. Fluctuations still prevent detecting longer-term trends but recovery is still evident from the global recession. There was a major setback by the declines in May 2012 shown in the final segment of Chart VB-1 with partial recovery in Jun 2012, decline again in Jul and Aug 2012 and rebound in total orders in Nov reversed in Dec but decline in orders excluding volatile segments with increase in Nov-Dec 2012. The final segment shows growth in Feb-Mar 2013 interrupted by decline in Apr 2013 followed by increase in May 2013. Orders fell again in Jun 2013, rebounding in Jul-Sep 2013 followed by another fall in Oct 2013. Orders recovered in Nov 2013.

Chart VB-1, Japan, Machinery Orders

Source: Japan Economic and Social Research Institute, Cabinet Office

http://www.esri.cao.go.jp/index-e.html

Table VB-4 provides values and percentage changes from a year earlier of Japan’s machinery orders without seasonal adjustment. Total orders of JPY 1,848,580 million in Nov 2013 are divided between JPY 706,928 million overseas orders, or 38.2 percent of the total, and domestic orders of JPY 1,039,958 million, or 56.3 percent of the total, with orders through agencies of JPY 101,694 million, or 5.5 percent of the total. Orders through agencies are not in Table VB-4 because of the minor value and appear only in the note to the table. Twelve-month percentages changes in Nov 2013 continued strongly with increases of 8.9 percent for total orders, 14.4 percent for domestic orders and 16.6 percent for orders excluding volatile components. Overseas orders rose 1.3 percent in 12 months partly because of yen devaluation.

Table VB-4, Japan, Machinery Orders, 12 Months ∆% and Million Yen, Original Series  

	Total	Overseas	Domestic	Private ex Volatile
Value Nov 2013	1,848,580	706,928	1,039,958	773,362
% Total	100.0	38.2	56.3	41.8
Value Nov 2012	1,697,919	697,673	909,331	662,979
% Total	100.0	41.1	53.6	39.0
12-month ∆%	8.9	1.3	14.4	16.6
Nov 2013	8.9	1.3	14.4	16.6
Oct 2013	24.6	29.7	21.4	17.8
Sep 2013	30.3	57.4	18.4	11.4
Aug 2013	25.9	41.8	17.1	10.3
Jul 2013	5.3	4.4	6.9	6.5
Jun 2013	2.7	0.1	4.1	4.9
May 2013	18.1	17.1	20.8	16.5
Apr 2013	-4.3	6.7	-9.9	-1.1
Mar 2013	11.5	27.5	3.3	2.4
Feb 2013	-14.8	-21.0	-10.7	-11.3
Jan 2013	-24.8	-36.7	-11.8	-9.7
Dec 2012	-12.5	-24.1	-3.3	-3.4
Nov 2012	-8.6	-9.6	-8.5	0.3
Oct 2012	-6.9	-12.8	-2.6	1.2
Sep 2012	-7.8	-18.4	-1.8	-7.8
Aug 2012	-18.6	-31.1	-10.2	-6.1
Jul 2012	2.6	-1.9	3.2	1.7
Jun 2012	-10.9	-11.3	-12.4	-9.9
May 2012	-6.8	-7.0	-8.6	1.0
Apr 2012	7.5	-9.6	23.0	6.6
Mar 2012	8.1	-10.0	19.0	-1.1
Feb 2012	-9.3	-8.9	-11.2	8.9
Jan 2012	9.8	18.3	0.5	5.7
Dec 2011	0.8	12.6	-8.5	6.3
Nov 2011	11.0	8.0	13.5	12.5
Oct 2011	-6.8	-15.6	-1.0	1.5
Dec 2010	9.4	3.5	14.1	-0.6
Dec 2009	1.8	0.4	3.6	-1.9
Dec 2008	-23.3	-29.4	-17.4	-24.7
Dec 2007	1.3	9.8	-4.3	-6.4
Dec 2006	0.8	0.9	-0.1	0.1

Note: Total machinery orders = overseas + domestic demand + orders through agencies. Orders through agencies in Nov 2013 were JPY 101,694 million or 5.5 percent of the total and JPY 90,915 or 5.4 percent of the total in Nov 2012, and are not shown in the table. The data are the original numbers without any adjustments and differ from the seasonally adjusted

http://www.esri.cao.go.jp/index-e.html

VC China. China estimates an index of nonmanufacturing purchasing managers based on 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. The total index increased from 55.7 in Mar 2012 to 58.0 in Mar 2012, decreasing to 53.9 in Aug 2013. The index decreased from 56.0 in Nov 2013 to 54.6 in Dec 2013. The index of new orders increased from 52.2 in Jan 2012 to 54.3 in Dec 2012 but fell to 50.1 in May 2013, barely above the neutral frontier of 50.0. The index of new orders stabilized at 51.0 in Nov-Dec 2013.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Dec 2013	54.6	51.0	56.9	52.0	58.7
Nov	56.0	51.0	54.8	49.5	61.3
Oct	56.3	51.6	56.1	51.4	60.5
Sep	55.4	53.4	56.7	50.6	60.1
Aug	53.9	50.9	57.1	51.2	62.9
Jul	54.1	50.3	58.2	52.4	63.9
Jun	53.9	50.3	55.0	50.6	61.8
May	54.3	50.1	54.4	50.7	62.9
Apr	54.5	50.9	51.1	47.6	62.5
Mar	55.6	52.0	55.3	50.0	62.4
Feb	54.5	51.8	56.2	51.1	62.7
Jan	56.2	53.7	58.2	50.9	61.4
Dec 2012	56.1	54.3	53.8	50.0	64.6
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. The index fell from 56.1 in Dec 2012 to 53.9 in Jun 2013. The index recovered to 56.3 in Oct 2013, decreasing marginally to 54.6 in Dec 2013.

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 2012, falling to 49.2 in Aug 2012, rebounding to 50.6 in Dec 2012. The index fell to 50.1 in Jun 2013, barely above the neutral frontier at 50.0, recovering to 51.4 in Nov 2013 but falling to 51.0 in Dec 2013. The index of new orders fell from 57.2 in Apr 2012 to 52.0 in Dec 2012. The index of new orders fell from 54.5 in Nov 2013 to 53.9 in Dec 2013.

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

	IPM	PI	NOI	INV	EMP	SDEL
Dec 2013	51.0	53.9	52.0	47.6	48.7	50.5
Nov	51.4	54.5	52.3	47.8	49.6	50.6
Oct	51.4	54.4	52.5	48.6	49.2	50.8
Sep	51.1	52.9	52.8	48.5	49.1	50.8
Aug	51.0	52.6	52.4	48.0	49.3	50.4
Jul	50.3	52.4	50.6	47.6	49.1	50.1
Jun	50.1	52.0	50.4	47.4	48.7	50.3
May	50.8	53.3	51.8	47.6	48.8	50.8
Apr	50.6	52.6	51.7	47.5	49.0	50.8
Mar	50.9	52.7	52.3	47.5	49.8	51.1
Feb	50.1	51.2	50.1	49.5	47.6	48.3
Jan	50.4	51.3	51.6	50.1	47.8	50.0
Dec 2012	50.6	52.0	51.2	47.3	49.0	48.8
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. The index fell to 50.1 in Feb 2013 and in Jun 2013. The index decreased from 51.4 in Nov 2013 to 51.0 in Dec 2013.

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 IIIQ2013 relative to the same period in 2012 was 7.7 percent, as shown in Table VC-GDP. Secondary industry accounts for 45.3 percent of GDP in IIIQ2013. In IIQ2013, industry alone accounts for 38.5 percent in IIQ2013 and construction with the remaining 6.8 percent in the first three quarters of 2012. Tertiary industry accounts for 45.5 percent of cumulative GDP in IIIQ2013 and primary industry for 9.2 percent. China’s growth strategy consisted of rapid increases in productivity in industry to absorb population from agriculture where incomes are lower (Pelaez and Pelaez, The Global Recession Risk (2007), 56-80). The bottom block of Table VC-GDP provides quarter-on-quarter growth rates of GDP and their annual equivalent. China’s GDP growth decelerated significantly from annual equivalent 10.8 percent in IIQ2011 to 7.4 percent in IVQ2011 and 5.7 percent in IQ2012, rebounding to 9.1 percent in IIQ2012, 8.2 percent in IIIQ2012 and 7.8 percent in IVQ2012. Annual equivalent growth in IQ2013 fell to 6.1 percent and to 7.8 percent in IIQ2013, rebounding to 9.1 percent in IIIQ2013.

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

Cumulative GDP IIIQ2013	Value Current CNY Billion	2013 Year-on-Year Constant Prices ∆%
GDP	38,676.2	7.7
Primary Industry	3,566.9	3.4
Farming	3,566.9	3.4
Secondary Industry	17,511.8	7.8
Industry	14,900.0	7.6
Construction	2,611.8	9.7
Tertiary Industry	17,597.5	8.4
Transport, Storage, Post	21,449.9	7.2
Wholesale, Retail Trades	3,056.7	10.4
Hotel & Catering Services	772.7	5.1
Financial Intermediation	2,623.8	10.4
Real Estate	2,454.6	7.3
Other	6,094.8	7.6
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2013
IIIQ2013	2.2	9.1
IIQ2013	1.9	7.8
IQ2013	1.5	6.1
2012
IVQ2012	1.9	7.8
IIIQ2012	2.0	8.2
IIQ2012	2.2	9.1
IQ2012	1.4	5.7
2011
IVQ2011	1.8	7.4
IIIQ2011	2.2	9.1
IIQ2011	2.6	10.8
IQ2011	2.3	9.5

Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/

Growth of China’s GDP in IIIQ2013 relative to the same period in 2012 was 7.8 percent, as shown in Table VC-GDPA. Secondary industry accounts for 45.3 percent of GDP of which industry alone for 38.5 percent in cumulative IIIQ2013 and construction with the remaining 6.8 percent in the first three quarters of 2013. Tertiary industry accounts for 45.5 percent of GDP in the cumulative to IIIQ2013 and primary industry for 9.2 percent. China’s growth strategy consisted of rapid increases in productivity in industry to absorb population from agriculture where incomes are lower (Pelaez and Pelaez, The Global Recession Risk (2007), 56-80). GDP growth decelerated from 12.1 percent in IQ2010 and 11.2 percent in IIQ2010 to 7.7 percent in IQ2013, 7.5 percent in IIQ2013 and 7.8 percent in IIIQ2013.

Table VC-GDPA, China, Growth Rate of GDP, ∆% Relative to a Year Earlier and ∆% Relative to Prior Quarter

	IQ 2013	IIQ 2013	IIIQ 2013
GDP	7.7	7.5	7.8
Primary Industry	3.4	3.0	3.4
Secondary Industry	7.8	7.6	7.8
Tertiary Industry	8.3	8.3	8.4
GDP ∆% Relative to a Prior Quarter	1.5	1.9	2.2
	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	2.3	2.6	2.2	1.8	1.4	2.2	2.0	1.9
	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/

Chart VC-GDP of the National Bureau of Statistics of China provides annual value and growth rates of GDP. China’s GDP growth in 2012 is still high at 7.8 percent but at the lowest rhythm in five years

Chart VC-GDP, China, Gross Domestic Product, Million Yuan and ∆%, 2008-2012

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/Survey/PressRelease.mvc/2d9203c17a714e2382ce2e5ea6555448) is slowing. The overall Flash HSBC China Manufacturing PMI^™ decreased from 50.8 in Nov to 50.5 in Dec, which is moderately above the contraction frontier of 50.0, while the Flash HSBC China Manufacturing Output Index decreased from 52.2 in Nov to 51.8 in Dec, moving into moderate expansion territory. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the index is consistent with GDP growth at 7.8 percent in IVQ2013 relative to a year earlier (http://www.markiteconomics.com/Survey/PressRelease.mvc/2d9203c17a714e2382ce2e5ea6555448). The HSBC China Services PMI^™, compiled by Markit, shows marginal improvement in business activity in China with the HSBC Composite Output, combining manufacturing and services, decreasing from 52.3 in Nov to 51.2 in Dec, indicating moderate growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/d4eff443fc7a4ad8ba13150b37fa7ff3). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds support of manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/d4eff443fc7a4ad8ba13150b37fa7ff3). The HSBC Business Activity index decreased from 52.5 in Nov to 50.9 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/d4eff443fc7a4ad8ba13150b37fa7ff3). Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds manufacturing supporting growth of services (http://www.markiteconomics.com/Survey/PressRelease.mvc/d4eff443fc7a4ad8ba13150b37fa7ff3). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, decreased marginally to 50.5 in Dec from 50.8 in Nov, indicating marginally expanding manufacturing at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3747b7d95134930925b6676bf0db89c). New export orders increased marginally with growth of total new orders originating in domestic demand. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds China moving in the path of moderate recovery of growth into 2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3747b7d95134930925b6676bf0db89c). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Dec 12-month ∆%: minus 1.4 Dec month ∆%: 0.0 Blog 1/12/14
Consumer Price Index	Dec month ∆%: 0.3 Dec 12 months ∆%: 2.5 Blog 1/12/14
Value Added of Industry	Nov month ∆%: 0.76 Jan-Nov 2013/Jan-No 2012 ∆%: 9.7 Nov 12-Month ∆%: 10.0 Blog 12/15/13
GDP Growth Rate	Year IIIQ2013 ∆%: 7.8 Quarter IIQ2013 AE ∆%: 9.1 Blog 10/27/13
Investment in Fixed Assets	Total Jan-Nov 2013 ∆%: 19.9 Real estate development: 19.5 Blog 12/15/13
Retail Sales	Nov month ∆%: 1.32 Nov 12 month ∆%: 13.7 Jan-No ∆%: 13.0 Blog 12/15/13
Trade Balance	Dec balance $25.60 billion Exports 12M ∆% 4.3 Imports 12M ∆% 8.3 Cumulative Dec: $259.75 billion Blog 1/12/14

Links to blog comments in Table CNY:

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

12/15/13 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html

10/27/13 http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or.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 3.3 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 1.6 percent in 2011. EUROSTAT estimates growth of GDP of the euro area of minus 0.7 percent in 2012 and minus 0.4 percent in 2013 but 1.1 percent in 2014 and 1.7 percent in 2015.

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	3.3
2007	2.1	7.6	3.0
2008	3.3	7.6	0.4
2009	0.3	9.6	-4.4
2010	1.6	10.1	2.0
2011	2.7	10.1	1.6
2012	2.5	11.4	-0.7
2013*	1.4		-0.4
2014*			1.1
2015*			1.7

*EUROSTAT forecast Source: EUROSTAT

http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

The GDP of the euro area in 2012 in current US dollars in the dataset of the World Economic Outlook (WEO) of the International Monetary Fund (IMF) is $12,199.1 billion or 16.9 percent of world GDP of $72,216.4 billion (http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx). The sum of the GDP of France $2613.9 billion with the GDP of Germany of $3429.5 billion, Italy of $2014.1 billion and Spain $1323.5 billion is $9381.0 billion or 76.9 percent of total euro area GDP and 13.0 percent of World GDP. The four largest economies account for slightly more than three quarters of economic activity of the euro area. Table VD-EUR1 is constructed with the dataset of EUROSTAT, providing growth rates of the euro area as a whole and of the largest four economies of Germany, France, Italy and Spain annually from 1996 to 2011 with the estimate of 2012 and forecasts for 2013, 2014 and 2015 by EUROSTAT. The impact of the global recession on the overall euro area economy and on the four largest economies was quite strong. There was sharp contraction in 2009 and growth rates have not rebounded to earlier growth with exception of Germany in 2010 and 2011.

Table VD-EUR1, Euro Area, Real GDP Growth Rate, ∆%

	Euro Area	Germany	France	Italy	Spain
2015*	1.7	1.9	1.7	1.2	1.7
2014*	1.1	1.7	0.9	0.7	0.5
2013*	-0.4	0.5	0.2	-1.8	-1.3
2012	-0.7	0.7	0.0	-2.5	-1.6
2011	1.6	3.3	2.0	0.5	0.1
2010	2.0	4.0	1.7	1.7	-0.2
2009	-4.4	-5.1	-3.1	-5.5	-3.8
2008	0.4	1.1	-0.1	-1.2	0.9
2007	3.0	3.3	2.3	1.7	3.5
2006	3.3	3.7	2.5	2.2	4.1
2005	1.7	0.7	1.8	0.9	3.6
2004	2.2	1.2	2.5	1.7	3.3
2003	0.7	-0.4	0.9	0.0	3.1
2002	0.9	0.0	0.9	0.5	2.7
2001	2.0	1.5	1.8	1.9	3.7
2000	3.8	3.1	3.7	3.7	5.0
1999	2.9	1.9	3.3	1.5	4.7
1998	2.8	1.9	3.4	1.4	4.5
1997	2.6	1.7	2.2	1.9	3.9
1996	1.5	0.8	1.1	1.1	2.5

Source: EUROSTAT

http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

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 51.7 in Nov to 52.1 in Dec, which is a three month high after a high in 27 months in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/d92ab787877e4484849a94b75c6ebfff). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index suggests that the index is consistent with modest growth of GDP of 0.2 percent based on growth in two consecutive months in IVQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/d92ab787877e4484849a94b75c6ebfff). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP, increased from 51.7 in Nov to 52.1 in Dec, which is the second highest in two-and-a-half years (http://www.markiteconomics.com/Survey/PressRelease.mvc/162d00afdcc44cbb8228f2a76264c624). Chris Williamson, Chief Economist at Markit, finds growth in IVQ2013 at the rate of about 0.2 percent in IVQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/162d00afdcc44cbb8228f2a76264c624). The Markit Eurozone Services Business Activity Index decreased from 51.2 in Nov to 51.0 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/162d00afdcc44cbb8228f2a76264c624). The Markit Eurozone Manufacturing PMI^® increased to 52.7 in Dec from 51.6 in Nov with the reading for IVQ2013 at the highest level in two-and-a-half years (http://www.markiteconomics.com/Survey/PressRelease.mvc/b2dfe04a4c1e4e71802d7338b698602f). New orders increased for the sixth consecutive month with foreign orders at the highest in more than two-and-a-half years. Chris Williamson, Chief Economist at Markit, finds industrial growth in the euro area at a quarterly rate of 1.0 percent. (http://www.markiteconomics.com/Survey/PressRelease.mvc/b2dfe04a4c1e4e71802d7338b698602f). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IIIQ2013 ∆% 0.1; IIIQ2013/IIIQ2012 ∆% -0.3 Blog 1/12/14
Unemployment	Nov 2013: 12.1 % unemployment rate Nov 2013: 19.241 million unemployed Blog 1/12/14
HICP	Dec month ∆%: 0.3 12 months Dec ∆%: 0.8 Blog 1/19/14
Producer Prices	Euro Zone industrial producer prices Nov ∆%: -0.1 Nov 12-month ∆%: -1.2 Blog 1/12/14
Industrial Production	Nov month ∆%: 1.8; Nov 12 months ∆%: 3.0 Blog 1/19/14
Retail Sales	Nov month ∆%: minus 1.4 Nov 12 months ∆%: minus 1.6 Blog 1/12/14
Confidence and Economic Sentiment Indicator	Sentiment 98.5 Nov 2013 Consumer minus 15.4 Nov 2013 Blog 12/1/13
Trade	Jan-Nov 2013/Jan-Nov 2012 Exports ∆%: 0.5 Imports ∆%: -3.6 Nov 2013 12-month Exports ∆% -2.2 Imports ∆% -5.5 Blog 1/19/14

Links to blog comments in Table EUR:

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

12/1/13 http://cmpassocregulationblog.blogspot.com/2013/12/exit-risks-of-zero-interest-rates-world.html

Table VD-1 provides monthly industrial production percentage changes for total production and major segments in the euro area. Total production increased 1.8 percent in Nov 2013 with increases 3.0 percent in capital goods, 2.2 percent in durable goods and 1.4 percent in nondurable goods. Energy increased 1.8 percent. Intermediate goods increased 1.0 percent. Industrial production increased in all months from Dec 2012 to Jun 2013 with exception of declines of 0.5 percent in May 2013 and 0.4 percent in Jan 2013. Industrial production fell 1.0 percent in Jul 2013, 0.2 percent in Sep 2013 and 0.8 percent in Oct 2013.

Table VD-1, Euro Zone, Industrial Production Month ∆%

	Total	INT	ENE	CG	DUR	NDUR
Nov 2013	1.8	1.0	1.8	3.0	2.2	1.4
Oct	-0.8	0.4	-3.6	-1.0	-2.3	0.3
Sep	-0.2	-0.4	1.7	-0.8	-1.3	0.2
Aug	1.0	0.7	-0.8	2.1	-0.3	0.5
Jul	-1.0	-0.3	-0.5	-1.9	-1.6	-0.4
Jun	0.8	0.5	-1.2	2.2	3.9	-0.4

Notes: INT: Intermediate; ENE: Energy; CG: Capital Goods; DUR: Durable Consumer Goods; NDUR: Nondurable Consumer Goods

Source: EUROSTAT

http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

Table VD-2 provides monthly and 12-month percentage changes of industrial production and major industrial categories in the euro zone. Most 12-month percentage changes in Table VD-6 are positive in the 12 months ending in Nov 2013 with exception of increase of 0.5 percent in energy and 0.8 percent in durable goods. Industrial production increased 1.8 percent in the month of Nov 2013 and increased 3.0 percent in the 12 months ending in Nov 2013.

Table VD-2, Euro Zone, Industrial Production, Month and 12-Month ∆%

2013	Nov Month ∆%	Nov 12-Month ∆%
Total	1.8	3.0
Intermediate Goods	1.0	3.3
Energy	1.8	-0.5
Capital Goods	3.0	4.4
Durable Consumer Goods	2.2	-0.8
Nondurable Consumer Goods	1.4	3.1

Source: EUROSTAT

http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

There has been significant decline in percentage changes of industrial production and major categories in 12-month rates into 2012 and 2013 as shown in Table VD-3. Negative percentage changes moderated from the high rates in Oct-Nov 2012 but are still high. All 12-month percentage changes are negative for the various segments of euro area industrial production from May to Aug 2013 with exception of capital goods in Jun but there is improvement in Sep, Oct and Nov 2013.

Table VD-3, Euro Zone, Industrial Production 12-Month ∆%

	Total	INT	ENE	CG	DUR	NDUR
Nov 2013	3.0	3.3	-0.5	4.4	-0.8	3.1
Oct	0.5	1.5	-3.1	1.3	-4.7	0.5
Sep	0.2	0.0	-0.6	0.3	-2.8	1.1
Aug	-1.4	-0.7	-3.6	-0.8	-3.9	-1.9
Jul	-2.0	-1.4	-1.8	-3.2	-4.2	-0.9
Jun	-0.2	-1.0	-2.0	1.4	-1.7	-0.5

Notes: INT: Intermediate; ENE: Energy; CG: Capital Goods; DUR: Durable Consumer Goods; NDUR: Nondurable Consumer Goods

Source: EUROSTAT

http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

Euro zone trade growth continues to be relatively resilient as shown in Table VD-4 but with deceleration at the margin. Exports grew at 0.5 percent and imports fell 3.6 percent in Jan-Nov 2013 relative to Jan-Nov 2012. The 12-month rate of growth of exports was minus 2.2 percent in Nov 2013 while imports fell 5.5 percent. In Oct 2013, exports increased 1.0 percent in 12 months and imports decreased 3.4 percent. At the margin, rates of growth of trade are declining in part because of moderation of commodity prices.

Table VD-4, Euro Zone, Exports, Imports and Trade Balance, Billions of Euros and Percent, NSA

	Exports	Imports
Jan-Nov 2013	1,738.4	1,599.5
Jan-Nov 2012	1,729.2	1,659.3
∆%	0.5	-3.6
Nov 2013	160.8	143.7
Nov 2012	164.5	152.0
∆%	-2.2	-5.5
Oct 2013	171.8	155.0
Oct 2012	170.1	160.5
∆%	1.0	-3.4
Trade Balance	Jan-Nov 2013	Jan-Nov 2012
€ Billions	70.0	139.0

Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

The structure of trade of the euro zone in Jan-Oct 2013 is provided in Table VD-5. Data are still not available for trade structure for Nov 2013. Manufactured exports increased 0.8 percent in Jan-Oct 2013 relative to Jan-Oct 2012 while imports decreased 2.0 percent. The trade surplus in manufactured products was higher than the trade deficit in primary products in Jan-Oct 2013 but only marginally higher in Jan-Oct 2012 partly because of the commodity shock caused by carry trades.

Table VD-5, Euro Zone, Structure of Exports, Imports and Trade Balance, € Billions, NSA, ∆%

	Primary	Manufactured	Other	Total
Exports
Jan-Oct 2013 € B	251.3	1,282.3	44.1	1,577.7
Jan-Oct 2012 € B	247.9	1,271.6	45.3	1,564.8
∆%	1.4	0.8	-2.6	0.8
Imports
Jan-Oct 2013 € B	526.9	901.2	27.7	1,455.8
Jan-Oct 2012  € B	559.0	919.7	28.7	1,507.4
∆%	-5.7	-2.0	-3.5	-3.4
Trade Balance € B
Jan-Oct 2013	-275.6	381.1	16.3	121.8
Jan-Oct 2012	-311.1	351.9	16.7	57.5

Note: there are minor rounding errors

Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

VE Germany. Table VE-DE provides yearly growth rates of the German economy from 1992 to 2012, 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 economies. The German economy grew at 4.0 percent in 2010, 3.3 percent in 2011 and 0.7 percent in 2012. Growth decelerated to 0.4 percent in 2013.

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 Year ∆%

	Price Adjusted Chain-Linked	Price- and Calendar-Adjusted Chain Linked
2013	0.4	0.5
2012	0.7	0.9
2011	3.3	3.4
2010	4.0	3.8
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 (Destatis) https://www.destatis.de/EN/PressServices/Press/pr/2013/08/PE13_278_811.html https://www.destatis.de/EN/PressServices/Press/pr/2013/11/PE13_381_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2014/01/PE14_016_811.html

https://www.destatis.de/DE/PresseService/Presse/Pressekonferenzen/2014/BIP2013/Pressebroschuere_BIP2013.html

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, decreased from 55.4 in Nov to 55.2 in Dec. The index of manufacturing output reached 57.5 in Dec, for a 31-month high, from 54.9 in Nov, while the index of services decreased to 54.0 in Dec from 55.7 in Nov. The overall Flash Germany Manufacturing PMI^® increased from 52.7 in Nov to 54.2 in Dec, which is a 30-month high (http://www.markiteconomics.com/Survey/PressRelease.mvc/7b431b589cec404abbd8256d72ad1a6e). New export work volumes increased at the fastest pace in more than two and a half years. Tim Moore, Senior Economist at Markit, finds expansion of Germany’s private sector in eight consecutive months (http://www.markiteconomics.com/Survey/PressRelease.mvc/7b431b589cec404abbd8256d72ad1a6e). The Markit Germany Composite Output Index of the Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, decreased from 55.4 in Nov to 55.0 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/8990b59b325c4908ab9750fb9e59b018). Tim Moore, Senior Economist at Markit and author of the report, finds improving expectations by German private sector companies (http://www.markiteconomics.com/Survey/PressRelease.mvc/8990b59b325c4908ab9750fb9e59b018). The Germany Services Business Activity Index decreased from 55.7 in Nov to 53.5 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/8990b59b325c4908ab9750fb9e59b018). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, increased from 52.7 in Nov to 54.3 in Dec, in the best reading in two-and-a-half years (http://www.markiteconomics.com/Survey/PressRelease.mvc/13f1cfefa2034863a31e87812f389789). New export orders increased for the sixth consecutive month at the highest rate in two-and-a-half years. Tim Moore, Senior Economist at Markit and author of the report, finds the highest growth of manufacturing in two-and-a-half years (http://www.markiteconomics.com/Survey/PressRelease.mvc/13f1cfefa2034863a31e87812f389789).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IIIQ2013 0.3 ∆%; III/Q2013/IIIQ2012 ∆% 1.1 2012/2011: 0.7% GDP ∆% 1992-2012 Blog 8/26/12 5/27/12 11/25/12 2/24/13 5/19/13 5/26/13 8/18/13 8/25/13 11/17/13 11/24/13
Consumer Price Index	Dec month NSA ∆%: 0.4 Dec 12-month NSA ∆%: 1.4 Blog 1/19/14
Producer Price Index	Nov month ∆%: -0.1 CSA, -0.1 12-month NSA ∆%: -0.8 Blog 12/22/13
Industrial Production	MFG Nov month CSA ∆%: minus 3.1 12-month NSA: 1.1 Blog 1/12/14
Machine Orders	MFG Nov month ∆%: 2.1 Nov 12-month ∆%: 3.7 Blog 1/12/14
Retail Sales	Oct Month ∆% -0.8 12-Month ∆% -0.2 Blog 12/1/13
Employment Report	Unemployment Rate SA Nov 5.2% Blog 1/12/14
Trade Balance	Exports Nov 12-month NSA ∆%: 1.0 Imports Nov 12 months NSA ∆%: -0.4 Exports Nov month CSA ∆%: 0.3; Imports Nov month SA minus 1.1 Blog 1/12/14

Links to blog comments in Table DE:

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

12/22/13 http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html

12/1/13 http://cmpassocregulationblog.blogspot.com/2013/12/exit-risks-of-zero-interest-rates-world.html

11/24/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-zero-interest-rates-world.html

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

8/25/13 http://cmpassocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html

8/18/13 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html

http://cmpassocregulationblog.blogspot.com/2013/07/twenty-nine-million-unemployed-or.html

5/26/13 http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html

Table VE-1 provides the preliminary estimate of 2013 GDP by the Federal Statistical Agency of Germany (Statistisches Bundesamt Deutschland (Destatis) (https://www.destatis.de/DE/PresseService/Presse/Pressekonferenzen/2014/BIP2013/Pressebroschuere_BIP2013.html). GDP growth decelerated from 4.0 percent in 2010 and 3.3 percent in 2011 to 0.7 percent in 2012 and 0.4 percent in 2013. Final consumption of households and NPISH (Nonprofit Institutions Serving Households) is resilient with growth of 1.0 percent in 2010, 2.3 percent in 2011, 0.8 percent in 2012 and 0.9 percent in 2013. Gross Fixed Capital Formation (GFCF) decelerated from growth of 5.7 percent in 2010 and 6.9 percent in 2011 to contraction of 2.1 percent in 2012 and 0.8 percent in 2013. While net trade added 1.7 percentage points to GDP growth in 2010, 0.7 percentage points in 2011 and 0.9 percentage points in 2012, net trade deducted 0.3 percentage points from GDP growth in 2013. The German economy is among the most competitive in world trade and performance in 2013 suggests challenging world trade markets.

Table VE-1, Germany, Annual GDP Price Adjusted Chain-Linked, ∆% and Percentage Point Contributions

	2010	2011	2012	2013
∆%
Final Consumption Households NPISH	1.0	2.3	0.8	0.9
Government Final Consumption	1.3	1.0	1.0	1.1
GFCF	5.7	6.9	-2.1	-0.8
Including:
GFC in Machinery and Equipment	10.0	5.8	-4.0	-2.2
GFCF Construction	3.2	7.8	-1.4	-0.3
Domestic Uses	2.4	2.8	-0.3	0.7
Exports	15.2	8.0	3.2	0.6
Imports	12.5	7.4	1.4	1.3
GDP	4.0	3.3	0.7	0.4
Memo
GDP per Person in Employment	3.5	1.9	-0.4	-0.2
GDP per Hour Worked by Person in Employment	1.8	1.8	0.5	0.2
Total Gross Value Added	4.4	3.3	0.8	0.4
Including
Industry ex Construction	16.5	5.5	-0.4	0.0
Construction	8.7	4.6	-2.4	-1.2
Contributions to GDP Growth in PP
Final Consumption Expenditures Households and NPISH	0.6	1.3	0.4	0.5
Government Final Consumption	0.3	0.2	0.2	0.2
GFCF	1.0	1.2	-0.4	-0.1
Including:
GFCF in Machinery and Equipment	0.7	0.4	-0.3	-0.1
GFCF in Construction	0.3	0.7	-0.1	0.0
Changes in Inventories	0.4	-0.1	-0.5	0.0
Domestic Uses	2.3	2.6	-0.3	0.7
Net Trade	1.7	0.7	0.9	-0.3

Source: Federal Statistical Office of Germany Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2014/01/PE14_016_811.html

https://www.destatis.de/DE/PresseService/Presse/Pressekonferenzen/2014/BIP2013/Pressebroschuere_BIP2013.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 IVQ1949 to IVQ2012 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 4.0 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 fourth quarter data, is 1.0 percent because of the sharp impact of the global recession from IVQ2007 to IIQ2009. The growth rate from 2000 to 2012 is 1.0 percent. 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	1.0
2000-2011	1.1
2000-2007	1.7
1990-1999	1.9
1980-1989	2.5
1970-1979	3.8
1960-1969	5.7
1950-1959	4.2

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=28&date=20131224

The Markit Flash France Composite Output Index decreased from 48.0 in Nov to 47.0 in Dec for a seven-month low (http://www.markiteconomics.com/Survey/PressRelease.mvc/29ff41a3c1d547a7ac763502a35efc35). Andrew Harker, Senior Economist at Markit and author of the report, finds economic weakness in the French private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/29ff41a3c1d547a7ac763502a35efc35). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, fell from 48.0 in Nov to 47.3 in Nov, indicating sharper contraction (http://www.markiteconomics.com/Survey/PressRelease.mvc/dae24bc1c4b74ffda157de48b9511a5b). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds continuing weak demand (http://www.markiteconomics.com/Survey/PressRelease.mvc/dae24bc1c4b74ffda157de48b9511a5b). The Markit France Services Activity index decreased from 48.0 in Nov to 47.9 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/dae24bc1c4b74ffda157de48b9511a5b). The Markit France Manufacturing Purchasing Managers’ Index^® decreased to 47.0 in Dec from 48.4 in Nov for the lowest reading in seven months (http://www.markiteconomics.com/Survey/PressRelease.mvc/45fadf38ca6745b1b423f91ecb61df83). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds sharper decline of output and new orders with weak internal demand (http://www.markiteconomics.com/Survey/PressRelease.mvc/45fadf38ca6745b1b423f91ecb61df83). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Dec month ∆% 0.3 12 months ∆%: 0.7 1/19/14
PPI	Nov month ∆%: 0.5 Nov 12 months ∆%: -0.6 Blog 12/29/13
GDP Growth	IIIQ2013/IIQ2013 ∆%: minus 0.1 IIIQ2013/IIIQ2012 ∆%: 0.2 Blog 3/31/13 5/19/12 6/30/13 9/29/13 11/17/13 12/29/13
Industrial Production	Nov ∆%: Manufacturing 0.2 12-Month ∆%: Manufacturing 1.6 Blog 1/12/14
Consumer Spending	Manufactured Goods Nov ∆%: 0.1 Nov 12-Month Manufactured Goods ∆%: 1.3 Blog 12/29/13
Employment	Unemployment Rate: IIIQ2013 10.5% Blog 12/8/13
Trade Balance	Nov Exports ∆%: month -2.1, 12 months -2.6 Nov Imports ∆%: month 0.2, 12 months -0.1 Blog 1/12/14
Confidence Indicators	Historical averages 100 Dec Mfg Business Climate 100 Blog 12/22/13

Links to blog comments in Table FR:

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

12/29/13 http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html

12/22/13 http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html

12/8/13 http://cmpassocregulationblog.blogspot.com/2013/12/exit-risks-of-zero-interest-rates-world.html

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

9/29/13 http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html

6/30/13 http://cmpassocregulationblog.blogspot.com/2013/06/tapering-quantitative-easing-policy-and.html

5/19/13 http://cmpassocregulationblog.blogspot.com/2013/05/word-inflation-waves-squeeze-of.html

VG Italy. Table VG-IT provides percentage changes in a quarter relative to the same quarter a year earlier of Italy’s expenditure components in chained volume measures. GDP has been declining at sharper rates from minus 0.6 percent in IVQ2011 to minus 3.0 percent in IVQ2012, minus 2.5 percent in IQ2013, minus 2.2 percent in IIQ2013 and minus 1.8 percent in IIIQ2013. The aggregate demand components of consumption and gross fixed capital formation (GFCF) have been declining at faster rates. The rates of decline of GDP, consumption and GFCF were somewhat milder in IIIQ2013, IIQ2013 than in IQ2013 and the final three quarters of 2012.

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

	GDP	Imports	Consumption	GFCF	Exports
2013
IIIQ	-1.8	-1.2	-1.5	-5.1	0.0
IIQ	-2.2	-4.7	-2.5	-5.8	0.2
IQ	-2.5	-4.8	-2.6	-7.3	-0.6
2012
IVQ	-3.0	-6.9	-4.0	-8.1	0.8
IIIQ	-2.8	-7.5	-4.1	-8.7	1.8
IIQ	-2.6	-7.3	-3.6	-8.8	2.1
IQ	-1.8	-8.2	-3.4	-8.1	2.8
2011
IVQ	-0.6	-6.8	-2.0	-3.8	3.5
IIIQ	0.5	0.5	-1.0	-2.4	6.0
IIQ	1.1	3.7	0.4	-0.7	7.5
IQ	1.4	9.1	0.7	0.6	11.0
2010
IVQ	2.3	15.6	1.1	1.3	13.4
IIIQ	1.8	13.2	1.3	2.4	12.1
IIQ	1.8	13.4	0.8	0.9	12.0
IQ	0.9	7.0	1.0	-2.4	7.1
2009
IVQ	-3.5	-6.3	0.2	-8.2	-9.3
IIIQ	-5.0	-12.2	-0.8	-12.6	-16.4
IIQ	-6.6	-17.9	-1.4	-13.6	-21.4
IQ	-6.9	-17.2	-1.8	-12.4	-22.8
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/106657

The Markit/ADACI Business Activity Index increased from 47.2 in Nov to 47.9 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/81f6dcfaf618459cadc3bd4bcc1449bd). Phil Smith, Economist at Markit and author of the Italy Services PMI^®, finds the index suggesting nil growth with manufacturing strength compensating for services weakness (http://www.markiteconomics.com/Survey/PressRelease.mvc/81f6dcfaf618459cadc3bd4bcc1449bd). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), increased from 51.4 in Nov to 53.3 in Dec for the highest reading since Apr 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/337850bc94a34a3a892567600df53850). New export orders grew at the fastest rate in 32 months in Nov and Dec. Phil Smith, Economist at Markit and author of the Italian Manufacturing PMI^®, finds the best conditions in more than two-and-a-half years with concern on the margins of sales prices relative to input costs (http://www.markiteconomics.com/Survey/PressRelease.mvc/337850bc94a34a3a892567600df53850). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Dec month ∆%: 0.2 Dec 12-month ∆%: 0.7 Blog 1/19/14
Producer Price Index	Nov month ∆%: -0.1 Nov 12-month ∆%: -2.3 Blog 1/5/14
GDP Growth	IIIQ2013/IIQ2013 SA ∆%: 0.0 IIIQ2013/IIIQ2012 NSA ∆%: minus 1.8 Blog 3/17/13 6/16/13 8/11/13 9/15/13 11/17/13 12/15/13
Labor Report	Nov 2013 Participation rate 63.6% Employment ratio 55.4% Unemployment rate 12.7% Youth Unemployment 41.6% Blog 1/12/14
Industrial Production	Nov month ∆%: 0.3 12 months CA ∆%: 1.4 Blog 1/19/14
Retail Sales	Oct month ∆%: -0.1 Oct 12-month ∆%: -1.6 Blog 12/22/13
Business Confidence	Mfg Dec 92.3, Aug 93.5 Construction Dec 77.1, Aug 76.8 Blog 1/5/14
Trade Balance	Balance Nov SA €2993 million versus Oct €2957 Exports Nov month SA ∆%: -1.9; Imports Nov month ∆%: -2.2 Exports 12 months Nov NSA ∆%: -3.4 Imports 12 months NSA ∆%: -6.9 Blog 1/19/14

Links to blog comments in Table IT:

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

1/5/14 http://cmpassocregulationblog.blogspot.com/2014/01/theory-and-reality-of-secular.html

12/22/13 http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html

12/15/13 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

9/15/13 http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html

8/11/13 http://cmpassocregulationblog.blogspot.com/2013/08/recovery-without-hiring-loss-of-full.html

6/16/13 http://cmpassocregulationblog.blogspot.com/2013/06/recovery-without-hiring-seven-million.html

3/17/13 http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.html

Italy’s industrial production increased 0.3 percent in Nov 2013 seasonally adjusted and increased 1.4 percent in 12 months calendar adjusted. Industrial production increased 0.7 percent in Oct 2013 and fell 0.4 percent in 12 months. Industrial production increased 0.2 percent in Sep 2013 and fell 2.9 percent in 12 months. In Aug 2013, industrial production changed 0.0 percent and fell 4.6 percent in 12 months. Industrial production decreased 1.0 percent in Jul 2013 and fell 4.2 percent in the 12 months ending in Jul 2013, as shown in Table VG-1. In the quarter Sep-Nov 2012, industrial production fell cumulatively 4.3 percent, at the annual equivalent rate of 16.2 percent. Industrial production fell 7.8 percent in the 12 months ending in Nov 2012. There have been negative changes with oscillations in monthly industrial production. Industrial production fell 18.8 percent in 2009 after falling 3.2 percent in 2008.

Table VG-1, Italy, Industrial Production ∆%

			Index CA	∆% CA	Index	∆%
2011	-	-	101.1	1.1	100.3	0.3
2012	-	-	94.6	-6.4	94.2	-6.1
	Index SA	Quarter	Index CA	4Q∆%	Index	∆%
2012
IVQ	92.0	-3.0	92.5	-6.9	92.4	-5.7
2013
IQ	92.1	0.1	92.5	-4.3	91.8	-6.1
IIQ	91.6	-0.5	95.1	-3.6	94.8	-3.3
IIIQ	91.2	-0.4	87.0	-3.8	86.7	-2.3
	Index SA	Month ∆%	Index CA	12- Month ∆%	Index NCA	12- Month ∆%
2011
Nov	98.8	0.5	103.5	-3.5	103.9	-3.4
Dec	99.1	0.3	87.5	-2.5	87.1	-8.3
2012
Jan	96.4	-2.7	88.9	-4.9	89.2	-2.0
Feb	95.9	-0.5	96.3	-7.2	98.8	-3.6
Mar	96.2	0.3	104.8	-6.9	105.3	-6.9
Apr	95.1	-1.1	93.3	-9.2	89.5	-11.9
May	95.6	0.5	103.9	-5.8	105.2	-5.8
Jun	94.1	-1.6	99.0	-7.0	99.4	-7.0
Jul	94.8	0.7	108.4	-5.7	107.4	-2.7
Aug	95.5	0.7	61.3	-5.0	62.1	-4.9
Sep	94.0	-1.6	101.4	-4.6	96.5	-10.4
Oct	92.7	-1.4	101.0	-5.8	103.2	0.3
Nov	91.4	-1.4	95.4	-7.8	95.8	-7.8
Dec	91.8	0.4	81.0	-7.4	78.1	-10.3
2013
Jan	92.8	1.1	86.0	-3.3	89.0	-0.2
Feb	92.1	-0.8	92.4	-4.0	91.2	-7.7
Mar	91.5	-0.7	99.2	-5.3	95.1	-9.7
Apr	91.3	-0.2	88.9	-4.7	89.3	-0.2
May	91.5	0.2	99.4	-4.3	100.7	-4.3
Jun	92.0	0.5	96.9	-2.1	94.3	-5.1
Jul	91.1	-1.0	103.9	-4.2	106.1	-1.2
Aug	91.1	0.0	58.5	-4.6	57.4	-7.6
Sep	91.3	0.2	98.5	-2.9	96.7	0.2
Oct	91.9	0.7	100.6	-0.4	102.8	-0.4
Nov	92.2	0.3	96.7	1.4	94.1	-1.8

SA: Seasonally Adjusted; CA: Calendar Adjusted     Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/109572

There is worsening trend of Italy’s industrial production in Chart VG-1 after Aug 2012, sharply deteriorating until Dec 2012 with marginal recovery in Jun 2013 followed by deterioration. Industrial production recovered until declines in Jul-Aug 2013. There is improvement in Sep-Nov 2013.

Chart VG-1, Italy, Industrial Production, 12-Month Percentage Changes

Source: Istituto Nazionale di Statistica

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

Exports and imports of Italy and monthly growth rates SA are in Table VG-2. There have been significant fluctuations. Seasonally adjusted exports decreased 1.9 percent in Nov 2013 while imports decreased 2.2 percent. The SA trade balance increased from surplus of €2993 million in Oct 2013 to surplus of €2993 million in Nov 2013.

Table VG-2, Italy, Exports, Imports and Trade Balance SA Million Euros and Month SA ∆%

	Exports	∆%	Imports	∆%	Balance
2011
IQ	92,717	4.7	102,085	3.1	-9,368
2Q	95,104	2.6	102,590	0.5	-7,486
3Q	94,963	-0.1	101,038	-1.5	-6,075
4Q	95,412	0.5	97,807	-3.2	-2,395
2012
IQ	96,342	1.0	96,979	-0.8	-637
2Q	97,765	1.5	96,240	-0.8	1,525
3Q	99,020	1.3	95,794	-0.5	3,226
4Q	98,169	-0.9	93,019	-2.9	5,150
2013
IQ	97,806	-0.4	91,681	-1.4	6,125
2Q	97,904	0.1	89,328	-2.6	8,576
3Q	97,713	-0.2	90,580	1.4	7,133
2011
Nov	31,587	1.7	33,035	1.3	-1,448
Dec	32,766	3.7	32,169	-2.6	597
2012
Jan	31,836	-2.8	32,393	0.7	-557
Feb	32,086	0.8	32,706	1.0	-620
Mar	32,420	1.0	31,880	-2.5	540
Apr	32,450	0.1	32,665	2.5	-215
May	33,044	1.8	32,816	0.5	228
Jun	32,271	-2.3	30,759	-6.3	1,512
Jul	32,909	2.0	31,916	3.8	993
Aug	33,511	1.8	32,791	2.7	720
Sep	32,600	-2.7	31,087	-5.2	1,513
Oct	32,746	0.4	31,366	0.9	1,380
Nov	32,945	0.6	30,997	-1.2	1,948
Dec	32,478	-1.4	30,656	-1.1	1,822
2013
Jan	33,156	2.1	31,261	2.0	1,895
Feb	32,146	-3.0	30,178	-3.5	1,968
Mar	32,504	1.1	30,242	0.2	2,262
Apr	32,410	-0.3	29,760	-1.6	2,650
May	32,581	0.5	29,588	-0.6	2,993
Jun	32,913	1.0	29,980	1.3	2,933
Jul	32,219	-2.1	29,975	0.0	2,244
Aug	32,652	1.3	30,048	0.2	2,604
Sep	32,842	0.6	30,557	1.7	2,285
Oct	32,650	-0.6	29,693	-2.8	2,957
Nov	32,020	-1.9	29,027	-2.2	2,993

Source: Istituto Nazionale di Statistica

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

Italy’s trade account not seasonally adjusted is in Table VG-3. Values are different because the data are original and not adjusted. Exports decreased 3.4 percent in the 12 months ending in Nov 2013 while imports decreased 6.9 percent with actual trade surplus of €3091 million. Twelve-month rates of growth picked up again in Aug 2011 with 15.2 percent for exports and 12.6 percent for imports. In Sep 2011, exports grew 10.2 percent relative to a year earlier while imports grew only 3.6 percent. In Oct 2011, exports grew 4.5 percent while imports fell 0.2 percent. In Nov 2011, exports grew 6.5 percent in 12 months while imports grew 0.5 percent. Exports continued to growth of 7.9 percent in the 12 months ending in Aug 2012 while imports fell 1.8 percent. The actual or not seasonally adjusted trade balance deficit fell from €2948 million in Aug 2011 to surplus of €1407 million in Dec 2011 but turned into deficit of €4691 million in Jan 2012. The deficit improved to lower deficit of €1311 million in Feb 2012 and surplus of €1831 million in Mar 2012, returning to deficit of €421 million in Apr and surplus of €833 million in May. In Jun 2012, the actual surplus was €2681 million and then €4673 million in Jul 2012, which was the highest in 2012 but deteriorated to actual deficit of €535 million in Aug 2012. Exports fell 20.9 percent and imports 22.1 percent during the global recession in 2009. Growth of exports of 12.2 percent in the 12 months ending in Oct 2012 while imports increased 1.4 percent increased the trade surplus to €2337 million. The trade surplus was €2314 million in Dec 2012 with growth of exports of minus 4.5 percent in 12 months while imports fell 7.8 percent. The trade balance deteriorated to deficit of €1810 million in Jan 2013 even with growth of exports of 8.9 percent in 12 months while imports fell 1.4 percent. The trade balance returned to surplus of €1045 million in Feb 2013 with decline of exports by 2.9 percent and decrease of exports by 9.9 percent. The surplus widened to €3081 million in Mar 2013 with exports declining 6.1 percent and imports falling 10.1 percent. The surplus shrank to €2005 million in Apr 2013 with growth of exports of 4.4 and decline of imports of 3.5 percent. The surplus increased to €3894 million in May 2013 with declines of exports of 1.9 percent and of imports of 10.8 percent. The surplus declined to €3542 million in Jun 2013 with decline of exports of 3.3 percent in 12 months and of imports of 6.3 percent.

Table VG-3, Italy, Exports, Imports and Trade Balance NSA Million Euros and Year-on-Year ∆%

	Exports	∆%	Imports	∆%	Balance
2010	337,346	15.6	367,390	23.4	-30,044
2011	375,904	11.4	401,428	9.3	-25,524
2012	390,182	3.8	380,292	-5.3	9,890
2011
1Q	90,128	18.1	103,760	21.7	-13,632
2Q	97,274	13.4	104,303	12.6	-7,029
3Q	92,567	9.8	96,138	7.3	-3,571
4Q	95,935	5.5	97,227	-2.7	-1,292
2012
1Q	95,398	5.8	99,568	-4.0	-4,170
2Q	100,172	3.0	97,079	-6.9	3,093
3Q	94,938	2.6	90,670	-5.7	4,268
4Q	99,674	3.9	92,975	-4.4	6,699
2013
1Q	94,695	-0.7	92,379	-7.2	2,316
2Q	99,724	-0.4	90,283	-7.0	9,441
3Q	95,094	0.2	87,209	-3.8	7,885
2011
Nov	32,440	6.5	34,025	0.5	-1,585
Dec	31,364	5.6	29,957	-8.5	1,407
2012
Jan	27,476	5.0	32,167	-1.2	-4,691
Feb	31,817	7.4	33,128	1.4	-1,311
Mar	36,105	5.1	34,274	-11.0	1,831
Apr	30,548	-1.7	30,969	-8.8	-421
May	35,232	5.0	34,399	-4.1	833
Jun	34,392	5.3	31,711	-8.0	2,681
Jul	37,190	5.3	32,517	-4.5	4,673
Aug	26,166	7.9	26,701	-1.8	-535
Sep	31,583	-4.3	31,452	-9.8	131
Oct	36,037	12.2	33,700	1.4	2,337
Nov	33,688	3.8	31,641	-7.0	2,047
Dec	29,948	-4.5	27,634	-7.8	2,314
2013
Jan	29,913	8.9	31,723	-1.4	-1,810
Feb	30,884	-2.9	29,839	-9.9	1,045
Mar	33,897	-6.1	30,816	-10.1	3,081
Apr	31,878	4.4	29,873	-3.5	2,005
May	34,576	-1.9	30,682	-10.8	3,894
Jun	33,270	-3.3	29,728	-6.3	3,542
Jul	38,136	2.5	32,156	-1.1	5,980
Aug	24,741	-5.4	23,667	-11.4	1,074
Sep	32,217	2.0	31,386	-0.2	831
Oct	36,330	0.8	32,271	-4.2	4,059
Nov	32,543	-3.4	29,452	-6.9	3,091

Source: Istituto Nazionale di Statistica

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

Growth rates of Italy’s trade and major products are in Table VG-4 for the period Jan-Nov 2013 relative to Jan-Nov 2012. Growth rates of cumulative imports relative to a year earlier are negative for energy with minus 16.2 percent. Exports of durable goods grew 1.7 percent and exports of capital goods increased 1.5 percent. The higher rate of growth of exports of minus 0.5 percent in Jan-Nov 2013/Jan-Nov 2012 relative to imports of minus 6.0 percent may reflect weak demand in Italy with GDP declining during nine consecutive quarters from IIIQ2011 through IIIQ2013 together with softening commodity prices.

Table VG-4, Italy, Exports and Imports % Share of Products in Total and ∆%

	Exports Share %	Exports ∆% Jan-Nov 2013/ Jan-Nov 2012	Imports Share %	Imports ∆% Jan-Nov 2013/ Jan-Nov 2012
Consumer Goods	29.3	5.7	25.6	0.4
Durable	5.8	1.7	2.9	-8.8
Non-Durable	23.5	6.7	22.6	1.6
Capital Goods	31.6	1.5	19.8	-3.2
Inter- mediate Goods	33.6	-4.3	32.4	-5.7
Energy	5.5	-21.9	22.2	-16.2
Total ex Energy	94.5	0.7	77.8	-3.0
Total	100.0	-0.5	100.0	-6.0

Note: % Share for 2012 total trade.

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/109933

Table VG-5 provides Italy’s trade balance by product categories in Nov 2013 and cumulative Jan-Nov 2013. Italy’s trade balance excluding energy generated surplus of €7732 million in Nov 2013 and €76,872 million cumulative in Jan-Nov2013 but the energy trade balance created deficit of €4141 million in Nov 2013 and cumulative €50,080 million in Jan-Nov 2013. The overall surplus in Nov 2013 was €3091 million with cumulative surplus of €26,793 million in Jan-Nov 2013. Italy has significant competitiveness in various economic activities in contrast with some other countries with debt difficulties.

Table VG-5, Italy, Trade Balance by Product Categories, € Millions

	Nov 2013	Cumulative Jan-Nov 2013
Consumer Goods	2,331	20,946
Durable	1,126	11,808
Nondurable	1,205	9,137
Capital Goods	4,132	47,797
Intermediate Goods	769	8,130
Energy	-4,141	-50,080
Total ex Energy	7,732	76,872
Total	3,091	26,793

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/109933

Resolution of the European sovereign debt crisis with survival of the euro area would require success in the restructuring of Italy. Growth of the Italian economy would assure that success. A critical problem is that the common euro currency prevents Italy from devaluing the exchange to parity or the exchange rate that would permit export growth to promote internal economic activity, which could generate fiscal revenues for primary fiscal surpluses that ensure creditworthiness.

Professors Ricardo Caballero and Francesco Giavazzi (2012Jan15) find that the resolution of the European sovereign crisis with survival of the euro area would require success in the restructuring of Italy. Growth of the Italian economy would ensure that success. A critical problem is that the common euro currency prevents Italy from devaluing the exchange rate to parity or the exchange rate that would permit export growth to promote internal economic activity, which could generate fiscal revenues for primary fiscal surpluses that ensure creditworthiness. Fiscal consolidation and restructuring are important but of long-term gestation. Immediate growth of the Italian economy would consolidate the resolution of the sovereign debt crisis. Caballero and Giavazzi (2012Jan15) argue that 55 percent of the exports of Italy are to countries outside the euro area such that devaluation of 15 percent would be effective in increasing export revenue. Newly available data in Table VG-6 providing Italy’s trade with regions and countries supports the argument of Caballero and Giavazzi (2012Jan15). Italy’s exports to the European Monetary Union (EMU), or euro area, are only 40.6 percent of the total in Jan-Nov 2013. Exports to the non-European Union area with share of 45.7 percent in Italy’s total exports are growing at 1.2 percent in Jan-Nov 2013 relative to Jan-Nov 2012 while those to EMU are growing at minus 2.9 percent.

Table VG-6, Italy, Exports and Imports by Regions and Countries, % Share and 12-Month ∆%

Nov 2013	Exports % Share	∆% Jan-Nov 2013/ Jan-Nov 2012	Imports % Share	∆% Jan-Nov 2013/ Jan-Nov 2012
EU	54.3	-1.9	53.3	-2.2
EMU 17	40.6	-2.9	42.7	-2.3
France	11.1	-3.0	8.3	-4.3
Germany	12.5	-1.7	14.5	-4.3
Spain	4.7	-6.9	4.5	-4.1
UK	4.9	2.3	2.6	-1.9
Non EU	45.7	1.2	46.7	-10.3
Europe non EU	13.4	-3.0	10.9	3.5
USA	6.8	0.2	3.3	-10.8
China	2.3	9.5	6.6	-8.7
OPEC	5.7	6.4	10.8	-28.5
Total	100.0	-0.5	100.0	-6.0

Notes: EU: European Union; EMU: European Monetary Union (euro zone)

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/109933

Table VG-7 provides Italy’s trade balance by regions and countries. Italy had trade deficit of €577 million with the 17 countries of the euro zone (EMU 17) in Nov 2013 and cumulative deficit of €3642 million in Jan-Nov 2013. Depreciation to parity could permit greater competitiveness in improving the trade surplus of €7231 million in Jan-Nov 2013 with Europe non-European Union, the trade surplus of €14,046 million with the US and trade surplus with non-European Union of €16,585 million in Jan-Nov 2013. There is significant rigidity in the trade deficits in Jan-Nov 2013 of €12,428 million with China and €6090 million with members of the Organization of Petroleum Exporting Countries (OPEC). Higher exports could drive economic growth in the economy of Italy that would permit less onerous adjustment of the country’s fiscal imbalances, raising the country’s credit rating.

Table VG-7, Italy, Trade Balance by Regions and Countries, Millions of Euro 

Regions and Countries	Trade Balance Nov 2013 Millions of Euro	Trade Balance Cumulative Jan-Nov 2013 Millions of Euro
EU	712	10,208
EMU 17	-577	-3,642
France	913	11,148
Germany	-422	-3,877
Spain	102	869
UK	857	9,240
Non EU	2,379	16,585
Europe non EU	566	7,231
USA	1,289	14,046
China	-774	-12,428
OPEC	71	-6,090
Total	3,091	26,793

Notes: EU: European Union; EMU: European Monetary Union (euro zone)

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/109933

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 5.2 percent in 2009 after dropping 0.8 percent in 2008. Recovery of 1.7 percent in 2010 is relatively low in comparison with annual growth rates in 2007 and earlier years. Growth was only 1.1 percent in 2011 and 0.1 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 per year 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 3.1 percent. Growth in the current cyclical expansion has been only at 1.0 percent as advanced economies struggle with weak internal demand and world trade. GDP in 2012 was lower by 3.1 percent relative to 2007.

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

	∆% on Prior Year
1998	3.6
1999	2.9
2000	4.4
2001	2.2
2002	2.3
2003	3.9
2004	3.2
2005	3.2
2006	2.8
2007	3.4
2008	-0.8
2009	-5.2
2010	1.7
2011	1.1
2012	0.1
Average Growth Rates ∆% per Year
1948-2012	2.6
1950-1959	2.7
1960-1969	3.3
1970-1979	2.5
1980-1989	3.2
1990-1999	2.9
2000-2007	3.0
2007-2012*	-3.1
2000-2012	1.5

*Absolute change from 2007 to 2012

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q3-2013/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® decreased from 60.0 in Nov to 58.8 in Dec, which is still close to high historical levels (http://www.markiteconomics.com/Survey/PressRelease.mvc/1132e9ba11934548a369f9a4872acb02). Chris Williamson, Chief Economist at Markit, finds the UK economist growing at 1.9 percent in 2013, which would be the highest rate since 2007 (http://www.markiteconomics.com/Survey/PressRelease.mvc/1132e9ba11934548a369f9a4872acb02). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) decreased to 57.3 in Dec from 58.1 in Nov with continuing strength close to the highest reading since Feb 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/f1cb2cbaa8794e7eb8ca538a5d252a2a). New export orders increased for the ninth consecutive month but with the lowest rate since Sep. New orders increased from Brazil, China, Ireland, Russia and the US. Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds that manufacturing conditions continue around the levels in Nov with output and new orders close to the fastest pace in 22 years and growth in IVQ2013 probably above 1.0 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/f1cb2cbaa8794e7eb8ca538a5d252a2a). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Dec month ∆%: 0.4 Dec 12-month ∆%: 2.0 Blog 1/19/14
Output/Input Prices	Output Prices: Dec 12-month NSA ∆%: 1.0; excluding food, petroleum ∆%: 1.0 Input Prices: Dec 12-month NSA ∆%: -1.2 Excluding ∆%: -1.6 Blog 1/19/14
GDP Growth	IIIQ2013 prior quarter ∆% 0.8; year earlier same quarter ∆%: 1.9 Blog 3/31/13 4/28/13 5/26/13 7/28/13 8/25/13 9/29/13 10/27/13 12/1/13 12/22/13
Industrial Production	Nov 2013/Nov 2012 ∆%: Production Industries 2.5; Manufacturing 2.8 Blog 1/12/14
Retail Sales	Dec month ∆%: 2.6 Dec 12-month ∆%: 5.3 Blog 1/19/14
Labor Market	Aug-Oct Unemployment Rate: 7.4%; Claimant Count 3.8%; Earnings Growth 0.9% Blog 12/22/13 LMGDP
GDP and the Labor Market	IIIQ2013 Weekly Hours 101.4, GDP 98.0, Employment 101.5 IQ2008 =100 Blog 12/22/13
Trade Balance	Balance SA Nov minus ₤3238 million Exports Nov ∆%: 1.2; Sep-Nov ∆%: 0.5 Imports Nov ∆%: 0.6 Sep-Nov ∆%: 2.2 Blog 1/12/14

Links to blog comments in Table UK:

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

12/22/13 http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html

12/1/13 http://cmpassocregulationblog.blogspot.com/2013/12/exit-risks-of-zero-interest-rates-world.html

10/27/13 http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or.html

9/29/13 http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html

8/25/13 http://cmpassocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html

7/28/13 http://cmpassocregulationblog.blogspot.com/2013/07/duration-dumping-steepening-yield-curve.html

5/26/13 http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html

4/28/13 http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states_28.html

03/31/13 http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states.html

The volume of retail sales in the UK increased 2.6 percent in Dec 2013 and increased 5.3 percent in the 12 months ending in Dec 2013, as shown in Table VH-1. Percentage changes of retail sales in 12 months had been positive in several months since Sep 2011 with exceptions such as declines of 2.4 percent in Apr 2012, 0.7 percent in Jan 2013 and 0.5 percent in Mar 2013. The quarter ending in Jul 2013 is quite strong with growth of 1.9 percent in May, 0.1 percent in Jun and 1.2 percent in Jul, interrupted by decline of 1.0 percent in Aug 2013 followed by increase of 0.9 percent in Sep 2013. The volume of retail sales fell 0.9 percent in Oct 2013, increasing 0.1 percent in Nov 2013 and jumping 2.6 percent in Dec 2013.

Table VH-1, UK, Volume of Retail Sales ∆%

	Month ∆%	12-Month ∆%
Dec 2013	2.6	5.3
Nov	0.1	1.8
Oct	-0.9	1.9
Sep	0.9	2.3
Aug	-1.0	1.7
Jul	1.2	2.5
Jun	0.1	1.6
May	1.9	1.7
Apr	-0.7	0.8
Mar	-0.5	-0.9
Feb	2.2	2.0
Jan	-0.7	-1.3
Dec 2012	-0.8	-0.1
Nov	0.2	0.4
Oct	-0.5	0.3
Sep	0.3	2.0
Aug	-0.1	2.1
Jul	0.2	1.7
Jun	0.2	1.8
May	1.0	1.5
Apr	-2.4	-1.9
Mar	2.4	2.8
Feb	-1.0	0.3
Jan	0.5	0.6
Dec 2011	-0.3	2.3
Nov	0.0	0.3
Oct	1.2	0.6
Sep	0.4	0.1
Aug	-0.5	-1.3
Jul	0.3	-1.0
Jun	-0.1	-0.9
May	-2.3	-0.9
Apr	2.2	2.1
Mar	-0.1	-0.2
Feb	-0.8	-0.1
Jan	2.3	3.4
Dec 2010	-2.3	-2.4

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/december-2013/index.html

Retail sales in the UK struggle with oscillating and relatively high inflation. Table VH-2 provides 12-month percentage changes of the implied deflator of UK retail sales. The implied deflator of all retail sales increased 0.5 percent in the 12 months ending in Dec 2013 while that of sales excluding auto fuel increased 0.7 percent. The 12-month increase of the implied deflator of auto fuel in Dec 2013 was minus 1.0 percent. The 12-month increase of the implied deflator of auto fuel sales rose to 17.0 percent in Sep 2011, which is the highest 12-month increase in 2011, but then declined to 0.3 percent in Dec 2012 and minus 0.2 percent in Jan 2013. The 12-month implied deflator of auto fuel sales decreased 2.2 percent in May 2013, increasing 1.3 percent in Jun 2013 and 2.6 percent in Jul 2013. The percentage change of the implied deflator of sales of food stores at 2.3 percent in Dec 2013 is higher than for total retail sales of 0.5 percent. Increases in fuel prices at the retail level have occurred throughout most years since 2005 with exception of the decline of 9.7 percent in Dec 2008 when commodity carry trades were reversed in the panic of the financial crisis. UK inflation is particularly sensitive to changes in commodity prices.

Table VH-2, UK, Implied Deflator of Retail Sales, 12-Month Percentage Changes

		All Retail	All Retail Ex Auto Fuel	Mostly Food Stores	Mostly Nonfood Stores	Mostly Automotive Fuel Stores
2008	Jan	2.7	1.1	4.3	-1.4	18.0
	Feb	2.8	1.0	4.1	-1.3	19.0
	Mar	2.5	0.7	3.7	-1.7	19.0
	Apr	3.0	1.2	4.8	-1.5	17.6
	May	3.6	1.9	5.9	-1.2	18.5
	Jun	4.6	2.5	6.9	-1.0	22.5
	Jul	5.8	3.6	8.7	-0.4	24.2
	Aug	5.4	3.8	9.4	-0.5	19.5
	Sep	5.1	3.5	8.3	-0.3	18.6
	Oct	3.6	2.9	7.4	-0.7	9.2
	Nov	2.2	2.7	7.5	-1.1	-2.6
	Dec	-0.2	0.5	7.1	-3.9	-9.7
2009	Jan	-0.2	1.6	7.3	-2.9	-13.4
	Feb	1.0	2.6	8.4	-2.1	-11.0
	Mar	0.6	2.4	7.9	-2.0	-12.4
	Apr	0.2	1.7	6.2	-2.0	-11.1
	May	-	1.6	5.7	-1.9	-12.4
	Jun	-1.1	0.7	4.2	-2.4	-13.2
	Jul	-1.4	0.3	3.5	-2.4	-13.6
	Aug	-0.9	0.2	2.3	-1.8	-8.9
	Sep	-0.8	-	1.9	-1.5	-5.8
	Oct	0.3	0.5	2.5	-1.2	-0.8
	Nov	1.4	0.5	1.8	-0.8	10.0
	Dec	3.7	2.4	2.2	1.8	17.0
2010	Jan	4.1	2.0	2.7	1.2	23.3
	Feb	3.0	1.0	1.5	0.8	20.5
	Mar	3.6	1.4	2.2	0.9	22.7
	Apr	4.0	2.0	2.9	1.3	23.3
	May	3.4	1.5	2.0	1.1	20.9
	Jun	2.6	1.3	2.1	0.8	14.7
	Jul	2.7	1.6	3.0	0.5	13.5
	Aug	2.6	1.7	3.4	0.4	11.4
	Sep	3.1	2.6	4.3	1.2	8.3
	Oct	3.3	2.5	4.1	1.1	10.8
	Nov	3.6	3.0	4.9	1.3	9.8
	Dec	3.7	3.2	5.2	1.4	12.4
2011	Jan	4.4	3.3	5.4	1.4	14.5
	Feb	4.9	3.8	5.6	2.2	15.1
	Mar	4.3	3.0	4.3	1.9	14.9
	Apr	4.2	3.3	4.8	1.9	12.3
	May	4.6	3.5	5.6	1.8	13.2
	Jun	4.7	3.4	6.2	1.2	14.5
	Jul	5.1	3.9	6.0	2.2	14.5
	Aug	5.4	4.0	6.0	2.4	16.2
	Sep	5.1	3.7	6.2	1.7	17.0
	Oct	4.7	3.5	5.1	2.3	14.8
	Nov	4.0	3.0	4.7	1.7	12.6
	Dec	3.3	2.4	4.3	1.0	9.1
2012	Jan	2.6	2.2	3.6	1.1	5.3
	Feb	2.8	2.4	4.0	0.9	5.4
	Mar	3.0	2.7	4.5	1.1	4.9
	Apr	2.3	2.0	3.8	0.4	5.2
	May	1.4	1.5	3.1	0.2	1.2
	Jun	0.6	0.9	2.3	-0.2	-1.2
	Jul	0.4	0.7	2.0	-0.2	-1.4
	Aug	0.5	0.6	2.1	-0.8	0.4
	Sep	0.9	0.7	2.1	-0.4	2.9
	Oct	1.1	1.0	2.8	-0.4	2.6
	Nov	0.7	0.7	3.1	-1.0	1.3
	Dec	0.9	1.0	3.0	-0.3	0.3
2013	Jan	1.1	1.4	3.8	-0.7	-0.2
	Feb	1.0	1.0	3.2	-0.7	1.1
	Mar	0.9	1.2	3.1	-0.6	0.5
	Apr	0.6	1.1	3.4	-0.7	-3.0
	May	1.0	1.5	3.5	-0.1	-2.2
	Jun	1.7	1.8	3.4	0.6	1.3
	Jul	1.8	1.7	3.4	0.3	2.6
	Aug	1.6	1.6	3.4	0.3	1.5
	Sep	0.9	1.3	3.4	-0.2	-1.2
	Oct	0.7	1.3	3.3	-0.2	-3.5
	Nov	0.6	1.0	2.7	-0.1	-3.0
	Dec	0.5	0.7	2.3	-0.3	-1.0

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/december-2013/index.html

UK monthly retail volume of sales is quite volatile, as shown in Table VH-3. Total volume of sales decreased 0.7 percent in Apr 2013 and increased 1.9 percent in May 2013, 0.1 percent in Jun 2013, 1.2 percent in Jul 2013 but declined 1.0 percent in Aug 2013. Retail sales increased 0.9 percent in Sep 2013 and fell 0.9 percent in Oct 2013. Retail sales increased 0.1 percent in Nov 2013 and 2.6 percent in Dec 2013. There was increase of 2.8 percent in retail sales excluding auto fuels in Dec 2013 and increase of 2.4 percent in food stores, increase of 2.8 percent in nonfood stores and increase of 0.7 percent in auto fuel stores. Multiple positive and negative variations and changes in magnitudes confirm high volatility.

VH-3, UK, Growth of Retail Sales Volume by Component Groups Month SA ∆%

		All Retail	All Retail Ex Auto Fuel	Mostly Food Stores	Mostly Nonfood Stores	Mostly Automotive Fuel Stores
2011	Feb	-0.8	-0.9	-0.4	-1.4	0.0
	Mar	-0.1	-	0.5	-0.1	-0.8
	Apr	2.2	2.3	4.1	0.4	1.7
	May	-2.3	-2.6	-4.6	-1.0	-0.4
	Jun	-0.1	-0.1	-0.2	-0.5	0.1
	Jul	0.3	0.4	0.8	0.3	-0.4
	Aug	-0.5	-0.5	0.1	-1.2	-0.5
	Sep	0.4	0.3	0.1	0.4	0.7
	Oct	1.2	1.2	0.9	1.6	1.2
	Nov	-	-0.4	-0.6	-0.8	3.3
	Dec	-0.3	-0.1	-0.1	0.4	-1.8
2012	Jan	0.5	0.6	0.4	0.7	-0.2
	Feb	-1.0	-0.9	-0.4	-1.5	-2.0
	Mar	2.4	2.0	-0.5	4.6	5.9
	Apr	-2.4	-1.2	0.3	-3.2	-12.6
	May	1.0	0.6	-	1.1	5.2
	Jun	0.2	0.5	0.2	1.0	-2.7
	Jul	0.2	-	-	-0.5	2.2
	Aug	-0.1	-0.2	0.3	0.4	0.6
	Sep	0.3	0.2	-	-0.6	1.4
	Oct	-0.5	-0.2	-0.8	-	-2.9
	Nov	0.2	0.4	-0.3	0.9	-1.5
	Dec	-0.8	-1.1	-0.2	-1.9	1.4
2013	Jan	-0.7	-0.4	-0.8	-0.4	-3.5
	Feb	2.2	2.1	0.5	3.3	3.2
	Mar	-0.5	-0.6	2.0	-3.2	-
	Apr	-0.7	-0.8	-3.7	2.1	-0.2
	May	1.9	2.0	2.6	1.0	1.5
	Jun	0.1	0.1	0.2	0.1	-
	Jul	1.2	1.2	2.8	-0.3	1.0
	Aug	-1.0	-1.0	-2.6	-	-0.7
	Sep	0.9	1.2	-0.3	2.9	-0.9
	Oct	-0.9	-0.7	-0.1	-1.5	-2.5
	Nov	0.1	0.2	0.1	0.1	-0.1
	Dec	2.6	2.8	2.4	2.8	0.7

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/december-2013/index.html

Percentage growth in 12 months of retail sales volume by component groups in the UK is provided in Table VH-4. Total retail sales increased 5.3 percent in the 12 months ending in Dec 2013 with increase of 6.1 percent in sales excluding auto fuel. Sales of food stores increased 2.9 percent in the 12 months ending in Dec 2013 while sales of nonfood stores increased 7.0 percent. Sales of auto fuel stores decreased 1.7 percent in Dec 2013 relative to a year earlier.

Table VH-4, UK, Growth of Retail Sales Volume by Component Groups 12-Month ∆%

		All Retail	All Retail Ex Fuel	Mostly Food Stores	Mostly Nonfood Stores	Mostly Automotive Fuel Stores
2011	Feb	-0.1	-0.6	-2.5	-0.4	4.7
	Mar	-0.2	-0.6	-1.6	-0.5	3.6
	Apr	2.1	1.9	2.2	0.4	3.9
	May	-0.9	-1.3	-3.4	-1.0	2.2
	Jun	-0.9	-1.4	-4.1	-1.1	3.1
	Jul	-1.0	-1.3	-1.2	-2.8	1.9
	Aug	-1.3	-1.7	-0.7	-3.9	1.8
	Sep	0.1	-0.3	-0.3	-1.8	3.4
	Oct	0.6	0.3	0.4	-1.1	2.7
	Nov	0.3	-0.4	-1.1	-1.8	5.4
	Dec	2.3	1.1	1.0	0.3	13.8
2012	Jan	0.6	0.3	0.8	-1.2	2.9
	Feb	0.3	0.2	0.9	-1.3	0.9
	Mar	2.8	2.2	-0.1	3.2	7.7
	Apr	-1.9	-1.2	-3.7	-0.4	-7.5
	May	1.5	2.0	1.0	1.7	-2.3
	Jun	1.8	2.6	1.3	3.3	-5.1
	Jul	1.7	2.3	0.6	2.5	-2.5
	Aug	2.1	2.5	0.8	4.1	-1.5
	Sep	2.0	2.3	0.6	3.1	-0.8
	Oct	0.3	0.9	-1.1	1.4	-4.9
	Nov	0.4	1.7	-0.8	3.2	-9.3
	Dec	-0.1	0.7	-1.0	0.8	-6.3
2013	Jan	-1.3	-0.3	-2.2	-0.3	-9.4
	Feb	2.0	2.8	-1.3	4.6	-4.6
	Mar	-0.9	0.2	1.1	-3.2	-9.9
	Apr	0.8	0.5	-3.0	2.1	2.9
	May	1.7	1.9	-0.4	2.0	-0.7
	Jun	1.6	1.5	-0.5	1.1	2.0
	Jul	2.5	2.7	2.3	1.3	0.8
	Aug	1.7	1.9	-0.6	0.8	-0.4
	Sep	2.3	2.9	-0.9	4.4	-2.8
	Oct	1.9	2.4	-0.2	2.8	-2.4
	Nov	1.8	2.1	0.2	2.0	-1.0
	Dec	5.3	6.1	2.9	7.0	-1.7

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/december-2013/index.html

Table VH-5 provides the analysis of the UK Office for National Statistics of contributions to 12-month percentage changes of value and volume of retail sales in the UK. The volume of retail sales seasonally adjusted increased 5.3 percent in the 12 months ending in Dec 2013. Sales of predominantly food stores with weight of 41.5 percent increased 2.9 percent in the 12 months ending in Dec 2013, contributing 1.3 percentage points. Mostly nonfood stores with weight of 41.3 percent increased 7.0 percent with contribution of 3.0 percentage points. Positive contribution to 12-month percentage changes of volume was made by non-store retailing with weight of 5.7 percent, growth of 21.6 percent and positive contribution of 1.2 percentage points. Automotive fuel with weight of 11.5 percent and growth of minus 1.7 percent deducted 0.2 percentage points. The value of retail sales increased 6.1 percent in the 12 months ending in Dec 2013. There were positive contributions: 3.0 percentage points for predominantly nonfood stores and 1.2 percentage points for non-store retailing. Automotive fuel stores deducted 0.3 percentage points while food stores added 2.2 percentage points.

Table VH-5, UK, Volume and Value of Retail Sales 12-month ∆% and Percentage Points Contributions by Sectors

Dec 2013	Weight % of All Retailing	Volume SA 12- Month ∆%	PP Cont. % points	Value SA 12- Month ∆%	PP Cont. % points
All Retailing	100.0	5.3		6.1
Mostly Food Stores	41.5	2.9	1.3	5.3	2.2
Mostly Nonfood Stores	41.3	7.0	3.0	7.1	3.0
Non-store Retailing	5.7	21.6	1.2	21.7	1.2
Automotive Fuel	11.5	-1.7	-0.2	-2.8	-0.3

Cont.: Contribution

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/december-2013/index.html

VI Valuation of Risk Financial Assets. 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 

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014