IMF View, World Inflation Waves, Squeeze of Economic Activity by Carry Trades Induced by Zero Interest Rates, United States Industrial Production, Collapse of United States Dynamism of Income Growth and Employment Creation, World Cyclical Slow Growth and Global Recession Risk: Part V

 

IMF View, World Inflation Waves, Squeeze of Economic Activity by Carry Trades Induced by Zero Interest Rates, United States Industrial Production, Collapse of United States Dynamism of Income Growth and Employment Creation, World Cyclical Slow Growth 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 IMF View

IIA 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/ns/cs.aspx?id=28) 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 changed its forecast of the world economy to 3.0 percent in 2013 but accelerating to 3.6 percent in 2014, 3.9 percent in 2015 and 3.9 percent in 2016. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $34,543 billion of world output of $72,106 billion, or 47.9 percent, but are projected to grow at much lower rates than world output, 2.0 percent on average from 2013 to 2016 in contrast with 3.6 percent for the world as a whole. While the world would grow 15.2 percent in the four years from 2013 to 2016, the G7 as a whole would grow 8.5 percent. The difference in dollars of 2012 is rather high: growing by 15.2 percent would add around $11.0 trillion of output to the world economy, or roughly, two times the output of the economy of Japan of $5,938 billion but growing by 8.5 percent would add $6.1 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 $27,080 billion, or 37.6 percent of world output. The EMDEs would grow cumulatively 21.9 percent or at the average yearly rate of 5.1 percent, contributing $5.9 trillion from 2013 to 2016 or the equivalent of somewhat less than the GDP of $8,229 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 $14,340 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	72,106	3.0	3.6	3.9	3.9
G7	34,543	1.4	2.2	2.3	2.3
Canada	1,821	2.0	2.3	2.4	2.4
France	2,613	0.3	1.0	1.5	1.7
DE	3,428	0.5	1.7	1.6	1.4
Italy	2,014	-1.8	0.6	1.1	1.3
Japan	5,938	1.5	1.4	1.0	0.7
UK	2,484	1.8	2.9	2.5	2.4
US	16,245	1.9	2.8	3.0	3.0
Euro Area	12,192	-0.5	1.2	1.5	1.5
DE	3,428	0.5	1.7	1.6	1.4
France	2,613	0.3	1.0	1.5	1.7
Italy	2,014	-1.8	0.6	1.1	1.3
POT	212	-1.4	1.2	1.5	1.7
Ireland	211	-0.3	1.7	2.5	2.5
Greece	249	-3.9	0.6	2.9	3.7
Spain	1,323	-1.2	0.9	1.0	1.1
EMDE	27,080	4.7	4.9	5.3	5.4
Brazil	2,248	2.3	1.8	2.7	3.0
Russia	2,004	1.3	1.3	2.3	2.5
India	1,859	4.4	5.4	6.4	6.5
China	8,229	7.7	7.5	7.3	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/ns/cs.aspx?id=28

Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/ns/cs.aspx?id=28). 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 2013 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 in 2013 for the countries with sovereign debt difficulties in Europe: 16.3 percent for Portugal (POT), 13.1 percent for Ireland, 27.3 percent for Greece, 26.4 percent for Spain and 12.2 percent for Italy, which is lower but still high. The G7 rate of unemployment is 7.1 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	7.1	6.7	6.5	6.3
Canada	7.3	7.0	7.0	6.9	6.8
France	10.2	10.8	11.0	10.7	10.3
DE	5.5	5.3	5.2	5.2	5.2
Italy	10.7	12.2	12.4	11.9	11.1
Japan	4.3	4.0	3.9	3.9	3.9
UK	8.0	7.6	6.9	6.6	6.3
US	8.1	7.4	6.4	6.2	6.1
Euro Area	11.4	12.1	11.9	11.6	11.1
DE	5.5	5.3	5.2	5.2	5.2
France	10.2	10.8	11.0	10.7	10.3
Italy	10.7	12.2	12.4	11.9	11.1
POT	15.7	16.3	15.7	15.1	14.5
Ireland	14.7	13.1	11.2	10.5	10.1
Greece	24.2	27.3	26.3	24.4	21.4
Spain	25.0	26.4	25.5	24.9	24.2
EMDE	NA	NA	NA	NA	NA
Brazil	5.5	5.4	5.6	5.8	6.0
Russia	5.5	5.5	6.2	6.2	6.0
India	NA	NA	NA	NA	NA
China	4.1	4.1	4.1	4.1	4.1

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

Source: IMF World Economic Outlook databank http://www.imf.org/external/ns/cs.aspx?id=28

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 IVQ2013. Growth is weak throughout most of the world.

• Japan. The GDP of Japan increased 0.9 percent in IQ2012 and 3.2 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 0.4 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 1.7 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 changed 0.0 percent in IVQ2012 at the SAAR of minus 0.1 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 changed 0.0 percent relative to a year earlier. Japan’s GDP increased 1.1 percent in IIQ2013 at the SAAR of 4.1 percent and increased 1.2 percent relative to a year earlier. Japan’s GDP grew 0.2 percent in IIIQ2013 at the SAAR of 0.9 percent and increased 2.3 percent relative to a year earlier. In IVQ2013, Japan’s GDP increased 0.2 percent at the SAAR of 0.7 percent, increasing 2.6 percent relative to a year earlier.
• China. China’s GDP grew 1.4 percent in IQ2012, annualizing to 5.7 percent, and 8.1 percent relative to a year earlier. The GDP of China grew at 2.1 percent in IIQ2012, which annualizes to 8.7 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 1.8 percent, which annualizes at 7.4 percent and 7.5 percent relative to a year earlier. China grew at 2.3 percent in IIIQ2013, which annualizes at 9.5 percent and 7.8 percent relative to a year earlier. China grew at 1.7 percent in IVQ2013, which annualized to 7.0 percent and 7.7 percent relative to a year earlier. China’s GDP grew 1.4 percent in IQ2014, which annualizes to 5.7 percent, and 7.4 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 2014.
• Euro Area. 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. The GDP of the euro area increased 0.2 percent in IVQ2013 and increased 0.5 percent relative to a year earlier.
• Germany. The GDP of Germany 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. In IVQ2013, Germany’s GDP increased 0.4 percent and 1.3 percent relative to a year earlier.
• United States. 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/2014/03/financial-uncertainty-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html) with weak hiring (http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.htmland earlier http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html). In IVQ2013, US GDP grew 0.7 percent at 2.6 percent SAAR and 2.6 percent relative to a year earlier.
• United Kingdom. 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 increased 0.1 percent relative to a year earlier. UK GDP increased 0.8 percent in IIIQ2012 and increased 0.3 percent relative to a year earlier. UK GDP fell 0.2 percent in IVQ2012 relative to IIIQ2012 and increased 0.2 percent relative to a year earlier. UK GDP increased 0.4 percent in IQ2013 and 0.5 percent relative to a year earlier. UK GDP increased 0.8 percent in IIQ2013 and 1.7 percent relative to a year earlier. In IIIQ2013, UK GDP increased 0.8 percent and 1.8 percent relative to a year earlier. UK GDP increased 0.7 percent in IVQ2013 and 2.7 percent relative to a year earlier.
• Italy. 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 1.7 percent relative to IQ2011. Italy’s GDP fell 0.5 percent in IIQ2012 and declined 2.4 percent relative to a year earlier. In IIIQ2012, Italy’s GDP fell 0.4 percent and declined 2.6 percent relative to a year earlier. The GDP of Italy contracted 0.9 percent in IVQ2012 and fell 2.8 percent relative to a year earlier. In IQ2013, Italy’s GDP contracted 0.6 percent and fell 2.4 percent relative to a year earlier. Italy’s GDP fell 0.3 percent in IIQ2013 and 2.1 percent relative to a year earlier. The GDP of Italy decreased 0.1 percent in IIIQ2013 and declined 1.9 percent relative to a year earlier. Italy’s GDP increased 0.1 percent in IVQ2013 and decreased 0.9 percent relative to a year earlier.
• France. France’s GDP increased 0.1 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 changed 0.0 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 decreased 0.1 percent in IIIQ2013 and increased 0.3 percent relative to a year earlier. The GDP of France increased 0.3 percent in IVQ2013 and 0.8 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	3.2
China	1.4	8.1
Euro Area	-0.1	-0.2
Germany	0.7	1.8
France	0.1	0.4
Italy	-1.1	-1.7
United Kingdom	0.0	0.6
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.3         SAAR: 1.2	2.8
Japan	QOQ: -0.4 SAAR: -1.7	3.2
China	2.1	7.6
Euro Area	-0.3	-0.5
Germany	-0.1	0.6 1.1 CA
France	-0.3	0.1
Italy	-0.5	-2.4
United Kingdom	-0.4	0.1
	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	-0.4	-2.6
United Kingdom	0.8	0.3
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
United States	QOQ: 0.0 SAAR: 0.1	2.0
Japan	QOQ: 0.0 SAAR: 0.1	-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	-2.8
United Kingdom	-0.2	0.2
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.3 SAAR: 1.1	1.3
Japan	QOQ: 1.1 SAAR: 4.5	0.0
China	1.5	7.7
Euro Area	-0.2	-1.2
Germany	0.0	-1.6
France	0.0	-0.4
Italy	-0.6	-2.4
UK	0.4	0.5
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.6 SAAR: 2.5	1.6
Japan	QOQ: 1.1 SAAR: 4.1	1.2
China	1.8	7.5
Euro Area	0.3	-0.6
Germany	0.7	0.9
France	0.6	0.5
Italy	-0.3	-2.1
UK	0.8	1.7
	IIIQ2013/IIQ2013	III/Q2013/  IIIQ2012
USA	QOQ: 1.0 SAAR: 4.1	2.0
Japan	QOQ: 0.2 SAAR: 0.9	2.3
China	2.3	7.8
Euro Area	0.1	-0.3
Germany	0.3	1.1
France	-0.1	0.3
Italy	-0.1	-1.9
UK	0.8	1.8
	IVQ2013/IIIQ2013	IVQ2013/IVQ2012
USA	QOQ: 0.7 SAAR: 2.6	2.6
Japan	QOQ: 0.2 SAAR: 0.7	2.6
China	1.7	7.7
Euro Area	0.2	0.5
Germany	0.4	1.3
France	0.3	0.8
Italy	0.1	-0.9
UK	0.7	2.7
	IQ2014/IVQ2013	IQ2014/IQ2013
China	1.4	7.4

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. Japan provides the most worrisome data (http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html and earlier http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.html and earlier 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 Feb 2014, Japan’s exports grew 9.0 percent in 12 months while imports increased 9.0 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 2.2 percentage points from GDP growth in IIIQ2012 and deducted 0.5 percentage points from GDP growth in IVQ2012. Net trade added 0.4 percentage points to GDP growth in IQ2012, 1.7 percentage points in IQ2013 and 0.5 percentage points in IIQ2013. In IIIQ2013, net trade deducted 2.0 percentage points from GDP growth in Japan. Net trade ducted 2.2 percentage points from GDP growth in Japan in IVQ2013.
• China. In Mar 2014, China exports decreased 6.6 percent relative to a year earlier and imports decreased 11.3 percent.
• Germany. Germany’s exports decreased 1.3 percent in the month of Feb 2014 and increased 4.6 percent in the 12 months ending in Feb 2014. Germany’s imports increased 0.4 percent in the month of Feb and increased 6.5 percent in the 12 months ending in Dec. 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 0.3 percentage points in IQ2013 and added 0.3 percentage points in IIQ2013. Net traded deducted 0.3 percentage points from Germany’s GDP growth in IIIQ2013 and added 1.1 percentage points to GDP growth in IVQ2013.
• United Kingdom. Net trade deducted 0.7 percentage points from UK value added in IQ2012, deducted 0.8 percentage points in IIQ2012, added 0.9 percentage points in IIIQ2012 and subtracted 0.4 percentage points in IVQ2012. In IQ2013, net trade added 0.5 percentage points to UK’s growth of value added and contributed 0.0 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.1 percentage points from UK growth. Net trade contributed 1.0 percentage points to UK value added in IVQ2013.
• France. France’s exports decreased 0.2 percent in Feb 2013 while imports decreased 5.5 percent. 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 0.2 percentage points in IIQ2013, deducting 0.6 percentage points in IIIQ2013. Net trade added 0.2 percentage points to France’s GDP in IVQ2013.
• United States. US exports decreased 1.1 percent in Feb 2014 and goods exports increased 1.8 percent in Jan-Feb 2014 relative to a year earlier. 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. Net trade added 0.99 percentage points to US GDP growth in IVQ2013. Industrial production increased 0.6 percent in Feb 2014 after decreasing 0.2 percent in Jan 2013 and changing 0.0 percent in Dec 2013, as shown in Table I-1, with all data seasonally adjusted. The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production increased 0.7 percent in March after having advanced 1.2 percent in February. The rise in February was higher than previously reported primarily because of stronger gains for durable goods manufacturing and for mining. For the first quarter as a whole, industrial production moved up at an annual rate of 4.4 percent, just slightly slower than in the fourth quarter of 2013. In March, the output of manufacturing rose 0.5 percent, the output of utilities increased 1.0 percent, and the output of mines gained 1.5 percent. At 103.2 percent of its 2007 average, total industrial production in March was 3.8 percent above its level of a year earlier. Capacity utilization for total industry increased in March to 79.2 percent, a rate that is 0.9 percentage point below its long-run (1972–2013) average but 1.2 percentage points higher than a year prior.”In the six months ending in Mar 2014, United States national industrial production accumulated increase of 2.4 percent at the annual equivalent rate of 4.9 percent, which is higher than growth of 3.8 percent in the 12 months ending in Feb 2014. Excluding growth of 1.2 percent in Jan 2014 (revised from 0.6 percent in the prior estimate), growth in the remaining five months from Oct to Mar 2013 accumulated to 1.2 percent or 2.9 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 Oct 2013 to Mar 2014 at the annual equivalent rate of 3.4 percent, which is higher than growth of 3.2 percent in the 12 months ending in Mar 2014. 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 increased in March to 79.2 percent, a rate that is 0.9 percentage point below its long-run (1972–2013) average but 1.2 percentage points higher than a year prior.” United States industry apparently decelerated to a lower growth rate with possible acceleration in the past few months. Manufacturing increased 0.5 percent in Mar 2014 after increasing 1.4 percent in Mar 2014 and decreasing 0.9 percent in Jan 2014 seasonally adjusted, increasing 3.4 percent not seasonally adjusted in the 12 months ending in Mar 2014, as shown in Table I-2. Manufacturing grew cumulatively 1.8 percent in the six months ending in Mar 2014 or at the annual equivalent rate of 3.6 percent. Excluding the increase of 1.4 percent in Feb 2014 (revised from 0.9 percent in the prior estimate), manufacturing accumulated growth of 0.4 percent from Oct 2013 to Mar 2014 or at the annual equivalent rate of 0.9 percent. 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 from the peak in Jun 2007 to the trough in Apr 2009 and increased by 20.0 percent from the trough in Apr 2009 to Dec 2013. Manufacturing grew 23.5 percent from the trough in Apr 2009 to Mar 2014. Manufacturing output in Mar 2014 is 3.6 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	-1.1 Feb	1.8 Jan-Feb	0.4 Feb	-0.1 Jan-Feb
Japan		Feb 2014 9.5 Jan 2014 9.5 Dec 2013 15.3 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		Feb 2014 9.0 Jan 2014 25.0 Dec 2013 24.7 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		2014 -6.6 Mar -18.1 Feb 10.6 Jan 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		2014 -11.3 Mar 10.1 Feb 10.0 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	2.9 12-M Feb	1.9 Jan-Feb	0.4 12-M Feb	-1.3 Jan-Feb
Germany	-1.3 Feb CSA	4.6 Feb	0.4 Jan CSA	6.5 Feb
France Feb	-0.2	1.3	-5.5	-4.4
Italy Feb	-0.9	3.0	-0.1	-2.2
UK	-2.2 Feb	0.1 Dec-Feb 14 /Dec-Feb 13	2.3 Dec	-0.4 Dec-Feb 14 13/Dec-Feb 13
Net Trade % Points GDP Growth	% Points
USA	IVQ2013 0.99 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 -2.2 IIIQ2012 -0.5 IVQ2012 1.7 IQ2013 0.6 IIQ2013 -2.0 IIIQ2013 -2.1 IVQ2013
Germany	IQ2012 0.8 IIQ2012 0.4 IIIQ2012 0.3 IVQ2012 -0.5 IQ2013 -0.3 IIQ2013 0.3 IIIQ2013 -0.3 IVQ2013 1.1
France	0.1 IIIQ2012 0.1 IVQ2012 -0.1 IQ2013 0.2 IIQ2013 -0.6 IIIQ2013 0.2 IVQ2013
UK	-0.7 IQ2012 -0.8 IIQ2012 +0.9 IIIQ2012 -0.4 IVQ2012 0.5 IQ2013 0.0 IIQ2013 -1.1 IIIQ2013 1.0 IVQ2013

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 V-5 for Feb 2014. The share of Asia in Japan’s trade is more than one-half for 53.5 percent of exports and 41.7 percent of imports. Within Asia, exports to China are 18.5 percent of total exports and imports from China 18.0 percent of total imports. While exports to China increased 27.7 percent in the 12 months ending in Feb 2014, imports from China increased 5.7 percent. The largest export market for Japan in Feb 2014 is the US with share of 18.3 percent of total exports, which is close to that of China, and share of imports from the US of 8.8 percent in total imports. Japan’s exports to the US grew 5.6 percent in the 12 months ending in Feb 2014 and imports from the US grew 20.8 percent. Western Europe has share of 10.8 percent in Japan’s exports and of 10.7 percent in imports. Rates of growth of exports of Japan in Jan 2014 are 5.6 percent for exports to the US, minus 0.6 percent for exports to Brazil and 21.1 percent for exports to Germany. 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 Feb 2014 are positive for all trading partners except for declines from France and the Middle East. Imports from Asia increased 7.7 percent in the 12 months ending in Feb 2014 while imports from China increased 5.7 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

Feb 2014	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	5,799,966	9.8	6,600,275	9.0
Asia	3,102,072	12.5	2,749,544	7.7
China	1,074,853	27.7	1,185,620	5.7
USA	1,063,575	5.6	579,923	20.8
Canada	68,826	-5.8	85,997	11.8
Brazil	38,879	-0.6	96,705	1.2
Mexico	83,036	16.4	36,199	24.5
Western Europe	623,929	11.7	707,309	17.6
Germany	165,864	21.1	214,308	33.0
France	50,842	13.8	80,196	-1.0
UK	87,878	-0.6	52,547	5.1
Middle East	230,990	18.7	1,328,897	-2.2
Australia	126,279	-7.3	373,453	6.3

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 3.0 percent in 2013 to 5.3 percent in 2015 and 5.7 percent on average from 2016 to 2019. World trade would be slower for advanced economies while emerging and developing economies (EMDE) experience faster growth. World economic slowdown would be more challenging with lower growth of world trade.

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

	2013	2014	2015	Average ∆% 2016-2019
World Trade Volume (Goods and Services)	3.0	4.3	5.3	5.7
Exports Goods & Services	3.1	4.5	5.3	5.7
Imports Goods & Services	2.9	4.2	5.2	5.7
World Trade Value of Exports Goods & Services USD Billion	23,083	23,990	25,123	Average ∆% 2006-2015 20,390
Value of Exports of Goods USD Billion	18,591	19,281	20,132	Average ∆% 2006-2015 16,396
Average Oil Price USD/Barrel	104.07	104.17	97.92	Average ∆% 2006-2015 88.84
Average Annual ∆% Export Unit Value of Manufactures	-1.1	-0.3	-0.4	Average ∆% 2006-2015 1.4
Exports of Goods & Services	2013	2014	2015	Average ∆% 2016-2019
Euro Area	1.4	3.4	4.2	4.7
EMDE	4.4	5.0	6.2	6.2
G7	1.4	3.9	4.5	4.9
Imports Goods & Services
Euro Area	0.3	2.8	3.5	4.7
EMDE	5.6	5.2	6.3	6.4
G7	1.1	3.2	4.2	4.9
Terms of Trade of Goods & Services
Euro Area	-0.3	-0.2	-0.7	-0.1
EMDE	0.7	-0.4	-0.6	-0.4
G7	0.7	-0.044	0.3	0.0
Terms of Trade of Goods
Euro Area	0.8	-0.044	0.1	-0.2
EMDE	-0.6	-0.9	-0.9	-0.8
G7	-0.1	-0.3	-0.9	-0.7

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/ns/cs.aspx?id=28

The JP Morgan Global All-Industry Output Index of the JP Morgan Manufacturing and Services PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, with high association with world GDP, increased to 53.5 in Mar from 53.1 in Feb, indicating expansion at faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/cb2b07fd46e141f88cfaa803e20492ce). This index has remained above the contraction territory of 50.0 during 56 consecutive months. The employment index decreased from 51.5 in Feb to 51.3 in Mar with input prices rising at slower rate, new orders increasing at slower rate and output increasing at faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/cb2b07fd46e141f88cfaa803e20492ce). David Hensley, Director of Global Economics Coordination at JP Morgan finds temporary effects of services and weather with expectation of resumption of growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/cb2b07fd46e141f88cfaa803e20492ce). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, decreased at 52.4 in Mar from 53.3 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/23053796366e42919999b6fe424ea05e). New export orders expanded for the ninth consecutive month (http://www.markiteconomics.com/Survey/PressRelease.mvc/23053796366e42919999b6fe424ea05e). David Hensley, Director of Global Economic Coordination at JP Morgan finds slowing of the index but continuing growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/23053796366e42919999b6fe424ea05e). The HSBC Brazil Composite Output Index, compiled by Markit, increased from 50.8 in Feb to 51.0 in Mar, indicating expanding activity of Brazil’s private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/1ad634697ca34b4ab336cd46af6f78c2). The HSBC Brazil Services Business Activity index, compiled by Markit, increased from 50.8 in Feb to 51.0 in Mar, indicating expanding services activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/1ad634697ca34b4ab336cd46af6f78c2). André Loes, Chief Economist, Brazil, at HSBC, finds weak private sectory activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/1ad634697ca34b4ab336cd46af6f78c2). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) increased marginally from 50.4 in Feb to 50.6 in Mar, indicating moderate improvement in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/36a63834a3864df9b3c283352df1ba2a). André Loes, Chief Economist, Brazil at HSBC, finds growth of output with slowing new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/36a63834a3864df9b3c283352df1ba2a).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted decreased to 55.5 in Mar from 57.1 in Feb, which is the second highest rate of improvement since Jan 2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/6cbe45feb6f34d4e86b94f05944db01c). New export orders registered 51.0 in Mar, decreasing from 51.6 in Feb, indicating marginal expansion. Chris Williamson, Chief Economist at Markit, finds that manufacturing hiring is growing with creation of about 10,000 to 15,000 jobs per month and growth at annual rate of 4 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/6cbe45feb6f34d4e86b94f05944db01c). The Markit Flash US Services PMI™ Business Activity Index increased from 53.3 in Feb to 55.5 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/a655b90f6ba1492d8fbea2d7ada81977). Chris Williamson, Chief Economist at Markit, finds that the surveys are consistent with growth of jobs at monthly rate of 130,000 and GDP growth around 2.5 percent annual rate in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/a655b90f6ba1492d8fbea2d7ada81977). The Markit US Composite PMI™ Output Index of Manufacturing and Services increased to 55.7 in Mar from 54.1 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/536f1ccda0d24d58b6e6bbbec19f30e8). The Markit US Services PMI™ Business Activity Index increased from 53.3 in Feb to 55.3 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/536f1ccda0d24d58b6e6bbbec19f30e8). Chris Williamson, Chief Economist at Markit, finds the indexes consistent with growth of 2.5 percent in the US in IQ2014(http://www.markiteconomics.com/Survey/PressRelease.mvc/536f1ccda0d24d58b6e6bbbec19f30e8). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) decreased to 55.5 in Mar from 57.1 in Feb, which indicates expansion at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/8b3f4e4546394602ba5fa63dc2b80f2d). The index of new exports orders decreased from 51.6 in Feb to 51.1 in Mar while total new orders decreased from 59.6 in Feb to 58.1 in Mar. Chris Williamson, Chief Economist at Markit, finds that the index suggests strength in US manufacturing with hiring at around 15 to 20,000 per month (http://www.markiteconomics.com/Survey/PressRelease.mvc/8b3f4e4546394602ba5fa63dc2b80f2d). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® increased 0.5 percentage points from 53.2 in Feb to 53.7 in Mar, which indicates growth at a faster rate (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders increased 0.6 percentage points from 54.5 in Feb to 55.1 in Mar. The index of exports decreased 0.2 percentage point from 53.5 in Feb to 55.5 in Mar, growing at a faster rate. The Non-Manufacturing ISM Report on Business^® PMI increased 1.5 percentage points from 51.6 in Feb to 53.1 in Mar, indicating growth of business activity/production during 56 consecutive months, while the index of new orders increased 2.1 percentage points from 51.3 in Feb to 53.4 in Mar (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	Mar 12 months NSA ∆%: 1.5; ex food and energy ∆%: 1.7 Mar month SA ∆%: 0.2; ex food and energy ∆%: 0.2 Blog 4/20/14
Producer Price Index	Finished Goods Mar 12-month NSA ∆%: 1.7; ex food and energy ∆% 1.7 Mar month SA ∆% = -0.1; ex food and energy ∆%: 0.1 Final Demand Mar 12-month NSA ∆%: 1.4; ex food and energy ∆% 1.4 Mar month SA ∆% = 0.5; ex food and energy ∆%: 0.6 Blog 4/20/14
PCE Inflation	Feb 12-month NSA ∆%: headline 0.9; ex food and energy ∆% 1.1 Blog 3/30/14
Employment Situation	Household Survey: Mar Unemployment Rate SA 6.7% Blog calculation People in Job Stress Mar: 28.2 million NSA, 17.2% of Labor Force Establishment Survey: Mar Nonfarm Jobs +192,000; Private +192,000 jobs created  Feb 12-month Average Hourly Earnings Inflation Adjusted ∆%: 2.3 Blog 4/6/14
Nonfarm Hiring	Nonfarm Hiring fell from 63.3 million in 2006 to 54.2 million in 2013 or by 9.1 million Private-Sector Hiring Feb 2014 3.750 million lower by 0.643 million than 4.393 million in Feb 2006 Blog 4/13/14
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 IVQ2013/IVQ2012 2.6 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 IVQ2013 SAAR 2.6 Blog 3/30/14
Real Private Fixed Investment	SAAR IVQ2013 2.8 ∆% IVQ2007 to IVQ2013: minus 2.9% Blog 3/30/14
Corporate Profits	IVQ2013 SAAR: Corporate Profits 2.2; Undistributed Profits -6.7 Blog 3/30/14
Personal Income and Consumption	Feb month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.3 Real Personal Consumption Expenditures (RPCE): 0.2 12-month Feb NSA ∆%: RDPI: 2.1; RPCE ∆%: 2.1 Blog 3/30/14
Quarterly Services Report	IVQ13/IVQ12 NSA ∆%: Information 5.5 Financial & Insurance 5.6 Blog 3/16/14
Employment Cost Index	Compensation Private IVQ2013 SA ∆%: 0.5 Dec 12 months ∆%: 1.9 Blog 2/9/14
Industrial Production	Mar month SA ∆%: 0.7 Mar 12 months SA ∆%: 3.8 Manufacturing Mar SA ∆% 0.5 Mar 12 months SA ∆% 2.8, NSA 3.4 Capacity Utilization: 79.2 Blog 4/20/14
Productivity and Costs	Nonfarm Business Productivity IVQ2013∆% SAAE 1.8; IVQ2013/IVQ2012 ∆% 1.3; Unit Labor Costs SAAE IVQ2013 ∆% -0.1; IVQ2013/IVQ2012 ∆%: -0.9 Blog 3/9/2014
New York Fed Manufacturing Index	General Business Conditions From Feb 4.48 to Mar 5.61 New Orders: From Feb -0.21 to Mar 3.13 Blog 3/23/14
Philadelphia Fed Business Outlook Index	General Index from Feb -6.3 to Mar 9.0 New Orders from Feb -5.2 to Mar 5.7 Blog 3/23/14
Manufacturing Shipments and Orders	New Orders SA Feb ∆% 1.6 Ex Transport 0.7 Jan-Feb NSA New Orders ∆% 0.1 Ex transport 0.0 Blog 4/6/14
Durable Goods	Feb New Orders SA ∆%: 2.2; ex transport ∆%: 0.2 Jan-Feb 14/Jan-Feb 13 New Orders NSA ∆%: 0.8; ex transport ∆% 1.0 Blog 3/30/14
Sales of New Motor Vehicles	Jan-Mar 2014 2,206,454; Jan-Mar 2013 2,238,820. Mar 14 SAAR 16.40 million, Feb 14 SAAR 15.34 million, Mar 2013 SAAR 15.30 million Blog 4/6/14
Sales of Merchant Wholesalers	Jan-Feb 2014/Jan-Feb 2013 NSA ∆%: Total 3.3; Durable Goods: 2.8; Nondurable Goods: 3.8 Blog 4/13/14
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Feb 14 12-M NSA ∆%: Sales Total Business 2.0; Manufacturers 1.2 Retailers 1.6; Merchant Wholesalers 3.2 Blog 4/20/14
Sales for Retail and Food Services	Jan-Mar 2014/Jan-Mar 2013 ∆%: Retail and Food Services 2.2; Retail ∆% 2.2 Blog 4/20/14
Value of Construction Put in Place	Feb SAAR month SA ∆%: 0.1 Feb 12-month NSA: 8.5 Blog 4/6/14
Case-Shiller Home Prices	Jan 2014/Jan 2013 ∆% NSA: 10 Cities 13.5; 20 Cities: 13.2 ∆% Jan SA: 10 Cities 0.8 ; 20 Cities: 0.8 Blog 3/30/14
FHFA House Price Index Purchases Only	Jan SA ∆% 0.5; 12 month NSA ∆%: 7.4 Blog 3/30/14
New House Sales	Feb 2014 month SAAR ∆%: -3.3 Jan-Feb 2013/Jan-Feb 2012 NSA ∆%: -0.1 Blog 3/30/14
Housing Starts and Permits	Mar Starts month SA ∆% minus 2.8; Permits ∆%: -2.4 Jan-Mar 2014/Jan-Mar 2013 NSA ∆% Starts -2.4; Permits  ∆% 6.8 Blog 4/20/14
Trade Balance	Balance Feb SA -$42,300 million versus jan -$39,280 million Exports Feb SA ∆%: -1.1 Imports Feb SA ∆%: 0.4 Goods Exports Jan-Feb 2014/Jan-Feb 2013 NSA ∆%: 1.8 Goods Imports Jan-Feb 2014/Jan-Feb 2012 NSA ∆%: -0.1 Blog 4/6/14
Export and Import Prices	Mar 12-month NSA ∆%: Imports -0.6; Exports 0.2 Blog 4/13/14
Consumer Credit	Feb ∆% annual rate: Total 6.4; Revolving -3.4; Nonrevolving 10.1 Blog 4/13/14
Net Foreign Purchases of Long-term Treasury Securities	Feb Net Foreign Purchases of Long-term US Securities: $85.7 billion Major Holders of Treasury Securities: China $1273 billion; Japan $1211 billion; Total Foreign US Treasury Holdings Nov $5885 billion Blog 4/20/14
Treasury Budget	Fiscal Year 2014/2013 ∆% Mar: Receipts 10.4; Outlays minus 3.5; Individual Income Taxes 5.3 Deficit Fiscal Year 2011 $1,300 billion Deficit Fiscal Year 2012 $1,087 billion Deficit Fiscal Year 2013 $680 billion Blog 3/16/2014
CBO Budget and Economic Outlook	2012 Deficit $1087 B 6.8% GDP Debt 11,281 B 70.1% GDP 2013 Deficit $680 B, 4.1% GDP Debt 11,982 B 72.1% GDP Blog 8/26/12 11/18/12 2/10/13 9/22/13 2/16/14
Commercial Banks Assets and Liabilities	Feb 2014 SAAR ∆%: Securities 0.5 Loans 2.5 Cash Assets 46.6 Deposits 7.0 Blog 3/30/14
Flow of Funds	IVQ2013 ∆ since 2007 Assets +$12,272.6 BN Nonfinancial -$729.2 BN Real estate -$1380.6 BN Financial +13,001.7 BN Net Worth +$12,910.9 BN Blog 3/16/14
Current Account Balance of Payments	IVQ2013 -83,739 MM %GDP 2.2 Blog 3/23/14

Links to blog comments in Table USA:

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/30/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

3/23/14 http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html

3/16/2014 http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html

3/9/14 http://cmpassocregulationblog.blogspot.com/2014/03/rules-discretionary-authorities-and.html

2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html

2/9/14 http://cmpassocregulationblog.blogspot.com/2014/02/financial-instability-rules.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

Sales of manufacturers increased 0.9 percent in Feb 2014 after decreasing 0.7 percent in Jan and increased 1.2 percent in the 12 months ending in Feb, as shown in Table VA-1. Retailers’ sales increased 0.7 percent in Feb 2014 after decreasing 0.7 percent in Jan and increased 1.6 percent in 12 months ending in Feb 2014. Sales of merchant wholesalers increased 0.7 percent in Feb, decreased 1.8 percent in Jan and increased 3.2 percent in 12 months ending in Feb. Sales of total business increased 0.8 percent in Feb after decreasing 1.1 percent in Jan and increased 2.0 percent in 12 months.

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

	Feb 14/ Jan 14 ∆% SA	Feb 2014 Millions of Dollars NSA	Jan 14/ Dec 13  ∆% SA	Feb 14/ Feb 13 ∆% NSA
Total Business	0.8	1,196,386	-1.1	2.0
.Manufacturers	0.9	460,150	-0.7	1.2
Retailers	0.7	343,122	-0.7	1.6
Merchant Wholesalers	0.7	393,114	-1.8	3.2

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-Feb 2014

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-Feb 2014

US Census Bureau

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

Businesses added cautiously to inventories to replenish stocks. Retailers added 0.0 percent to inventories in Feb 2014 and 0.3 percent in Jan with growth of 5.8 percent in 12 months, as shown in Table VA-2. Total business increased inventories by 0.4 percent in Feb, 0.4 percent in Jan and 4.3 percent in 12 months. Inventories sales/ratios of total business continued at a level close to 1.30 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	Feb 14 Millions of Dollars NSA	Feb 14/ Jan 14 ∆% SA	Jan 14/  Dec 13 ∆% SA	Feb 14/ Feb 13 ∆% NSA
Total Business	1,720,535	0.4	0.4	4.3
Manufacturers	646,810	0.7	0.2	2.7
Retailers	549,091	0.0	0.3	5.8
Merchant Wholesalers	524,634	0.5	0.8	4.7
Inventory/ Sales Ratio NSA	Feb 14 Millions of Dollars NSA	Feb 2014 SA	Jan 2014 SA	Feb 2013 SA
Total Business	1,720,535	1.31	1.31	1.28
Manufacturers	646,810	1.30	1.30	1.28
Retailers	549,091	1.45	1.46	1.40
Merchant Wholesalers	524,634	1.19	1.19	1.17

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 Feb 2014. 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-Feb 2014

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 Feb 2014 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-Feb 2014

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, 2013 and 2014.

Chart VA-5, Total Business Inventories/Sales Ratios 2005 to 2015

Source: US Census Bureau

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

Sales of retail and food services increased 1.1 percent in Mar 2014 after increasing 0.7 percent in Feb 2014 seasonally adjusted (SA), growing 2.2 percent in Jan-Mar 2014 relative to Jan-Mar 2013 not seasonally adjusted (NSA), as shown in Table VA-3. Excluding motor vehicles and parts, retail sales increased 0.7 percent in Mar 2014, increasing 0.3 percent in Feb 2014 SA and increasing 1.5 percent NSA in Jan-Mar 2014 relative to a year earlier. Sales of motor vehicles and parts increased 3.1 percent in Mar 2014 after increasing 2.5 percent in Feb 2013 SA and increasing 5.6 percent NSA in Jan-Mar 2014 relative to a year earlier. Gasoline station sales decreased 1.3 percent SA in Mar 2014 after increasing 0.1 percent in Feb 2014 in oscillating prices of gasoline that are moderating, decreasing 2.6 percent in Jan-Mar 2014 relative to a year earlier.

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

	Mar/Feb ∆% SA	Feb/Jan ∆% SA	Jan-Mar 2014 Million Dollars NSA	Jan-Mar 2014 from Jan-Mar 2013 ∆% NSA
Retail and Food Services	1.1	0.7	1,214,835	2.2
Excluding Motor Vehicles and Parts	0.7	0.3	977,032	1.5
Motor Vehicles & Parts Dealers	3.1	2.5	237,803	5.6
Retail	1.1	0.7	1,078,953	2.2
Building Materials	1.8	-0.6	65,721	3.6
Food and Beverage	0.2	-0.2	160,375	2.5
Grocery	0.2	-0.1	144,126	2.1
Health & Personal Care Stores	0.3	0.6	72,606	4.1
Clothing & Clothing Accessories Stores	1.0	0.4	54,079	-0.4
Gasoline Stations	-1.3	0.1	127,416	-2.6
General Merchandise Stores	1.9	-0.1	151,884	-0.1
Food Services & Drinking Places	1.1	0.8	135,882	2.8

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. Auto sales weakened in Dec 2013 and Jan 2014, recovering in Feb-Mar 2014

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 Mar 2014 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-Mar 2014, 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 Mar 2014. 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-Mar 2014, 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-4. Housing starts increased 2.8 percent in Mar 2014 after wide oscillations that included increase of 1.9 percent in Feb, decrease of 11.8 percent in Jan, increase of 22.5 percent in Nov, decline of 15.2 percent in Apr 2013 and 9.1 percent in Jun 2013. Housing starts decreased 5.9 percent from the SAAR of 1005 in Mar 2013 to the SAAR of 946 in Mar 2014. Housing permits, indicating future activity, decreased 2.4 percent in Mar 2014 also after significant oscillations in 2013 with increase of 11.2 percent from 890 SSAR in Mar 2013 to SSAR of 990 in Mar 2014. While single unit houses starts increased 6.0 percent in Mar 2014, seasonally adjusted, structures with five units or more decreased 6.1 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-4.

Table VA-4, US, Housing Starts and Permits SSAR Month ∆%

	Housing  Starts SAAR	Month ∆%	Housing Permits SAAR	Month ∆%
Mar 2014	946	2.8	990	-2.4
Feb	920	1.9	1014	7.3
Jan	903	-11.8	945	-4.6
Dec 2013	1024	-7.0	991	-2.6
Nov	1101	22.5	1017	-2.1
Oct	899	3.0	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-Feb not-seasonally adjusted are in Table VA-5. Housing starts decreased 2.4 percent in Jan-Mar 2014 relative to Jan-Mar 2013 and new permits increased 6.8 percent. Construction of new houses in the US remains at very depressed levels. Housing starts fell 56.2 percent in Jan-Mar 2014 relative to Jan-Mar 2006 and fell 54.7 percent relative to Jan-Mar 2005. Housing permits fell 55.8 percent in Jan-Mar 2014 relative to Jan-Mar 2006 and fell 53.9 percent relative to Jan-Mar 2005.

Table VA-5, US, Housing Starts and New Permits, Thousands of Units, NSA, and %

	Housing Starts	New Permits
Jan-Mar 2014	203.1	219.2
Jan-Mar 2013	208.0	205.3
∆% Jan-Mar 2014/Jan-Mar 2013	-2.4	6.8
Jan-Mar 2006	464.1	496.0
∆% Jan-Mar 2014/Jan-Mar 2006	-56.2	-55.8
Jan-Mar 2005	448.2	475.2
∆% Jan-Mar 2014/Jan-Mar 2005	-54.7	-53.9

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 VA-9 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 decreased 1.6 percent in Jan-Mar 2014 relative to a year earlier, not seasonally adjusted, structures with two to four units decreased 20.2 percent and with five units or more increased 2.9 percent. Single unit houses were 66.8 percent of total housing starts in 2013, increasing 15.4 percent relative to 2012, while construction of five units of more were 31.8 percent, increasing 25.6 percent, and construction of two to four units were 1.5 percent of the total, increasing 19.3 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-5 provides new housing units that started in the US at seasonally adjusted annual rates (SAAR) from Sep to Dec and from Jan to Mar of the years from 2000 to 2014. 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 1,024,000 in Dec 2013 relative to 983,000 in Dec 2012. Housing starts remained at a relatively high level of 1,024,000 in Dec 2013 compared with 983,000 in Dec 2012. The rate of housing starts fell to 946,000 in Mar 2014 relative to 1,005 in Mar 2013.

Table VA-5, US, New Housing United Started at Seasonally Adjusted Rates, Thousand Units

Year	Jan	Feb	Mar	Sep	Oct	Nov	Dec
2000	1,636	1,737	1,604	1,507	1,549	1,551	1,532
2001	1,600	1,625	1,590	1,562	1,540	1,602	1,568
2002	1,698	1,829	1,642	1,804	1,648	1,753	1,788
2003	1,853	1,629	1,726	1,939	1,967	2,083	2,057
2004	1,911	1,846	1,998	1,905	2,072	1,782	2,042
2005	2,144	2,207	1,864	2,151	2,065	2,147	1,994
2006	2,273	2,119	1,969	1,720	1,491	1,570	1,649
2007	1,409	1,480	1,495	1,183	1,264	1,197	1,037
2008	1,084	1,103	1,005	820	777	652	560
2009	490	582	505	585	534	588	581
2010	614	604	636	594	543	545	539
2011	630	517	600	650	610	711	694
2012	723	713	707	854	864	842	983
2013	898	969	1,005	873	899	1,101	1,024
2014	903	920	946	NA	NA	NA	NA

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 Mar 2014 that helps 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.

Chart VA-10, US, New Housing Units Started in the US, SAAR (Seasonally Adjusted Annual Rate), Thousands of Units, Jan 1959-Mar 2014

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

Table VA-6 provides actual new housing units started in the US, not seasonally adjusted, from Sep to Dec and from Jan to Mar in the years from 2000 to 2014. The number of housing units started fell from the peak of 197.9 thousand in May 2005 to 67.6 thousand in Dec 2013 or decline of 65.8 percent in large part because of lower seasonal activity at the end of the year. The number of housing units started jumped from 58.0 thousand in Mar 2012 to 79.1 thousand in Mar 2014 or by 36.4 percent and increased 44.6 percent from 40.7 thousand in Mar 2010. The number of housing units started fell from 83.3 thousand in Mar 2013 to 79.1 thousand in Mar 2014 or 5.0 percent.

Table VA-6, New Housing Units Started in the US, Not Seasonally Adjusted, Thousands of Units

Year	Jan	Feb	Mar	Sep	Oct	Nov	Dec
2000	104.0	119.7	133.4	128.9	139.7	117.1	100.7
2001	106.4	108.2	133.2	133.1	139.8	121.0	104.6
2002	110.4	120.4	138.2	155.6	146.8	133.0	123.1
2003	117.8	109.7	147.2	171.3	173.5	153.7	144.2
2004	124.5	126.4	173.8	164.0	181.3	138.1	140.2
2005	142.9	149.1	156.2	187.9	180.4	160.7	136.0
2006	153.0	145.1	165.9	150.1	130.6	115.2	112.4
2007	95.0	103.1	123.8	101.5	115.0	88.8	68.9
2008	70.8	78.4	82.2	73.9	68.2	47.5	37.7
2009	31.9	39.8	42.7	52.6	44.5	42.3	36.6
2010	38.9	40.7	54.7	53.0	45.4	40.6	33.8
2011	40.2	35.4	49.9	58.8	53.2	53.0	42.7
2012	47.2	49.7	58.0	75.8	77.0	62.2	63.2
2013	58.7	66.1	83.3	78.4	78.4	83.8	67.6
2014	60.7	63.3	79.1	NA	NA	NA	NA

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 Mar 2014. 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 2013 is estimated at $16,799.7 billion, such that the bailout would be equivalent to cost to taxpayers of about $579.6 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-Mar 2014

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-Mar 2014, 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-Mar 2014, 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-7 with annual data from 1960 to 2013. Housing starts fell 55.3 percent from 2005 to 2013, 41.0 percent from 2000 to 2013 and 35.3 percent relative to the average from 1959 to 1963. Housing permits fell 54.7 percent from 2005 to 2013, 38.7 percent from 2000 to 2013 and 15.7 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-7, 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	924.9	976.4
2012	780.6	829.7
∆% 2013/2012	18.5	17.7
∆% 2013/2011	51.9	56.4
∆% 2013/2010	57.6	61.5
∆% 2013/2006	-48.6	-46.9
∆% 2013/2005	-55.3	-54.7
∆% 2013/2000	-41.0	-38.7
∆% 2013/Av 1959-1963	-35.3	-15.7
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-8) increased from $7.7 billion in Jan 2013 to $85.7 billion in Feb 2014. Foreign (residents) purchases minus sales of US long-term securities (row A in Table VA-8) in Jan 2014 of minus $14.8 billion increased to $84.8 billion in Feb 2014. Net US (residents) purchases of long-term foreign securities (row B in Table VA-8) deteriorated from $22.5 billion in Jan 2014 to $1.0 billion in Feb 2014. In Feb 2014,

C = A + B = $84.8 billion + $1.0 billion = $85.7 billion

There are minor rounding errors. There is improving demand in Table VA-8 in Feb in A1 private purchases by residents overseas of US long-term securities of $66.3 billion of which improvement in A11 Treasury securities of $75.9 billion, improving in A12 of minus $2.5 billion in agency securities, deterioration of minus $6.2 billion of corporate bonds and improvement of minus $0.8 billion in equities. Worldwide risk aversion causes flight into US Treasury obligations with significant oscillations. Official purchases of securities in row A2 increased $18.5 billion with increase of Treasury securities of $16.6 billion in Feb 2014. Official purchases of agency securities increased $2.5 billion in Feb. Row D shows increase in Feb 2013 of $4.6 billion in purchases of short-term dollar denominated obligations. Foreign private holdings of US Treasury bills increased $8.4 billion (row D11) with foreign official holdings decreasing $5.5 billion while the category “other” increased $1.8 billion. Foreign private holdings of US Treasury bills increased $8.4 billion in what could be arbitrage 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-8, Net Cross-Borders Flows of US Long-Term Securities, Billion Dollars, NSA

	Feb 2013 12 Months	Feb 2014 12 Months	Jan 2014	Feb 2014
A Foreign Purchases less Sales of US LT Securities	570.1	89.6	-14.8	84.8
A1 Private	338.2	69.2	1.8	66.3
A11 Treasury	140.0	155.5	16.1	75.9
A12 Agency	118.1	-17.1	-4.5	-2.5
A13 Corporate Bonds	-9.3	-24.3	-4.4	-6.2
A14 Equities	89.4	-44.9	-5.4	-0.8
A2 Official	231.9	20.4	-16.5	18.5
A21 Treasury	209.7	-54.8	-16.7	16.6
A22 Agency	0.6	69.0	0.5	2.5
A23 Corporate Bonds	10.4	11.7	0.0	-0.5
A24 Equities	11.3	-5.5	-0.4	0.0
B Net US Purchases of LT Foreign Securities	-64.0	-146.5	22.5	1.0
B1 Foreign Bonds	5.2	1.7	33.8	2.5
B2 Foreign Equities	-69.2	-148.2	-11.4	-1.5
C Net Foreign Purchases of US LT Securities	506.1	-56.9	7.7	85.7
D Increase in Foreign Holdings of Dollar Denominated Short-term	72.3	-56.7	5.5	4.6
D1 US Treasury Bills	58.3	-12.4	-10.8	2.8
D11 Private	35.3	-15.2	-6.4	8.4
D12 Official	23.1	2.8	-4.4	-5.5
D2 Other	14.0	-44.3	16.3	1.8

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-9 provides major foreign holders of US Treasury securities. China is the largest holder with $1272.9 billion in Feb 2014, increasing 1.7 percent from $1251.9 billion in Feb 2013 while decreasing $2.7 billion from Jan 2014 or 0.2 percent. Japan increased its holdings from $1105.3 billion in Feb 2013 to $1210.5 billion in Feb 2014 or by 9.5 percent. Japan increased its holdings from $1201.4 billion in Jan 2014 to $1210.5 billion in Feb 2014 by $9.1 billion or 0.8 percent. Total foreign holdings of Treasury securities rose from $5691.1 billion in Feb 2013 to $5885.3 billion in Feb 2014, or 3.4 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-9, US, Major Foreign Holders of Treasury Securities $ Billions at End of Period

	Feb 2014	Jan 2014	Feb 2013
Total	5885.3	5840.3	5691.1
China	1272.9	1275.6	1251.9
Japan	1210.5	1201.4	1105.5
Belgium	341.2	310.3	187.3
Caribbean Banking Centers	299.7	298.2	284.2
Brazil	243.9	246.0	256.5
Oil Exporters	243.7	246.4	256.8
Taiwan	180.0	179.1	190.0
United Kingdom	175.4	163.1	138.6
Switzerland	166.5	173.8	186.9
Hong Kong	160.4	160.3	144.7
Luxembourg	136.8	135.4	151.2
Russia	126.2	131.8	164.9
Ireland	111.4	108.8	109.6
Foreign Official Holdings	4069.2	4068.0	4100.4
A. Treasury Bills	388.4	393.9	385.6
B. Treasury Bonds and Notes	3680.8	3674.0	3714.9

Source: United States Treasury

http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticpress.aspx#1

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 2.5 and 2.9 percent, with the all items CPI less fresh food of 0.7 to 0.9 percent (http://www.boj.or.jp/en/announcements/release_2014/k140122a.pdf). The critical difference is forecast of the CPI excluding fresh food of 2.9 to 3.6 percent in 2014 and 1.7 to 2.9 percent in 2015. Consumer price inflation in Japan excluding fresh food was 0.0 percent in Nov 2013 and 1.2 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.
5. Bank Lending Facility and Growth Supporting Funding Facility. At the meeting on Feb 18, the Bank of Japan doubled the scale of these lending facilities to prevent their expiration in the near future (http://www.boj.or.jp/en/announcements/release_2014/k140218a.pdf).

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
Jan 2014	+2.5 to +2.9 [+2.7]	+0.7 to +0.9 [+0.7]
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
Jan 2014	+0.9 to 1.5 [+1.4]	+2.9 to +3.6 [+3.3]	+0.9 to +1.6 [+1.3]
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
Jan 2014	+1.2 to +1.8 [+1.5]	+1.7 to +2.9 [+2.6]	+1.0 to +2.2 [+1.9]
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 increasing from 52.0 in Feb to 52.8 in Mar, indicating faster growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/6a8b4439432b42279666caf5ca27da56). Amy Bronwbill, Economist at Markit and author of the report, finds continuing growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/6a8b4439432b42279666caf5ca27da56). The Markit Business Activity Index of Services increased to 52.2 in Mar from 49.3 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/6a8b4439432b42279666caf5ca27da56). Amy Brownbill, Ecoomist at Markit and author of the report, finds concerns with the increase in sales taxes implemented in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/6a8b4439432b42279666caf5ca27da56). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, decreased from 55.5 in Feb to 53.9 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/3a31361eba72447598e052d7a60fba3e). New orders and output grew because of demand in anticipation of the sales tax increase in Apr. New export orders increased for the seventh consecutive month. Amy Brownbill, Economist at Markit and author of the report, finds improving manufacturing conditions with some concerns about the sales tax increase from 5 percent to 8 percent implemented in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/3a31361eba72447598e052d7a60fba3e).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	Mar ∆% 0.0 12 months ∆% 1.7 Blog 4/13/14
Consumer Price Index	Feb NSA ∆% 0.0; Jan 12 months NSA ∆% 1.5 Blog 3/30/14
Real GDP Growth	IVQ2013 ∆%: 0.2 on IIIQ2013;  IVQ2013 SAAR 0.7; ∆% from quarter a year earlier: 2.6 % Blog 6/16/13 8/18/13 9/15/13 11/17/13 12/15/13 2/23/14 3/16/14
Employment Report	Feb Unemployed 2.32 million Change in unemployed since last year: minus 450 thousand Unemployment rate: 3.6 % Blog 3/30/14
All Industry Indices	Jan month SA ∆% 1.0 12-month NSA ∆% 3.3 Blog 3/23/14
Industrial Production	Feb SA month ∆%: -2.3 12-month NSA ∆% 6.9 Blog 3/30/14
Machine Orders	Total Feb ∆% -5.9 Private ∆%: -15.3 Feb ∆% Excluding Volatile Orders -8.8 Blog 4/13/14
Tertiary Index	Feb month SA ∆% -1.0 Feb 12 months NSA ∆% 0.9 Blog 4/20/14
Wholesale and Retail Sales	Feb 12 months: Total ∆%: 2.8 Wholesale ∆%: 2.4 Retail ∆%: 3.6 Blog 3/30/14
Family Income and Expenditure Survey	Feb 12-month ∆% total nominal consumption minus 0.6, real minus 2.5 Blog 3/30/14
Trade Balance	Exports Feb 12 months ∆%: 9.8 Imports Feb 12 months ∆% 9.0 Blog 3/23/14

Links to blog comments in Table JPY:

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

3/30/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

3/23/14 http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html

3/16/2014 http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html

2/23/14 http://cmpassocregulationblog.blogspot.com/2014/02/squeeze-of-economic-activity-by-carry.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 decreased 1.0 percent SA in Feb 2014 and increased 0.9 percent NSA in the 12 months ending in Feb 2014, as shown in Table VB-1. The index is showing significant volatility with increases of 0.5 percent in Feb 2013 and 0.5 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. The tertiary activity index increased 0.7 percent in 2013.

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

	Month ∆% SA	12 Months ∆% NSA
Feb 2014	-1.0	0.9
Jan	1.6	2.1
Dec 2013	-0.1	0.8
Nov	0.3	0.5
Oct	-0.5	0.1
Sep	0.1	1.4
Aug	0.2	0.8
Jul	-0.1	1.5
Jun	-0.3	0.6
May	0.5	1.8
Apr	-0.1	1.5
Mar	0.1	0.7
Feb	0.5	-1.5
Jan	0.0	0.3
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
2013		0.7
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 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 Jan 2014 are provided in Table VB-2. Electricity, gas, heat supply and water increased 2.7 percent in Feb 2014 and increased 0.9 percent in the 12 months ending in Feb 2014. Wholesale and retail trade decreased 0.3 percent in the month of Feb and increased 1.4 percent in 12 months. Information and communications increased 1.0 percent in Feb and increased 4.2 percent in 12 months.

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

Feb 2014	Weight	Month ∆% SA	12 Months ∆% NSA
Tertiary Index	10,000.0	-1.0	0.9
Electricity, Gas, Heat Supply & Water	372.9	2.7	0.9
Information & Communications	951.2	1.0	4.2
Wholesale & Retail Trade	2,641.2	-0.3	1.4
Finance & Insurance	971.1	-2.0	0.8
Real Estate & Goods Rental & Leasing	903.4	-0.8	-1.5
Scientific Research, Professional & Technical Services	551.3	-1.4	0.9
Accommodations, Eating, Drinking	496.0	-4.6	-2.6
Living-Related, Personal, Amusement Services	552.7	-4.2	-1.5
Learning Support	116.9	0.0	-0.6
Medical, Health Care, Welfare	921.1	-0.1	1.6
Miscellaneous ex Government	626.7	-2.4	-1.3

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

http://www.meti.go.jp/english/statistics/index.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, easing to 53.4 in Jan 2014. The total index increased to 55.0 in Feb 2014, falling to 54.5 in Mar 2014. 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, easing to 50.9 in Jan 2014. The index of new orders increased to 51.4 in Feb 2014 decreasing to 50.8 in Mar 2014.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Mar 2014	54.5	50.8	52.8	49.5	61.5
Feb	55.0	51.4	52.1	49.0	59.9
Jan	53.4	50.9	54.5	50.1	58.1
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. The index fell to 53.4 in Jan 2014, increasing to 55.0 in Feb 2014 and decreasing to 54.5 in Mar 2014.

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 fell to 50.5 in Jan 2014 and 50.2 in Feb 2014. The index increased to 50.3 in Mar 2014. 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. The index fell to 53.0 in Jan 2014 and 52.6 in Feb 2014. The index of new orders increased to 52.7 in Mar 2014.

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

	IPM	PI	NOI	INV	EMP	SDEL
Mar 2014	50.3	52.7	50.6	47.8	48.3	49.8
Feb	50.2	52.6	50.5	47.4	48.0	49.9
Jan	50.5	53.0	50.9	47.8	48.2	49.8
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. The index fell to 50.5 in Jan 2014 and 50.2 in Feb 2014. The index rebounded to 50.3 in Mar 2014.

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 IQ2014 relative to the same period in 2013 was 7.4 percent, as shown in Table VC-GDP. Secondary industry accounts for 44.9 percent of GDP in IQ2014. In IQ2014, industry alone accounts for 39.9 percent of GDP and construction with the remaining 5.0 percent. Tertiary industry accounts for 49.0 percent of cumulative GDP in IQ2014 and primary industry for 6.1 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 strategy is shifting to lower growth rates with improvement in living standards. 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 10.4 percent in IIQ2011 to 7.4 percent in IVQ2011 and 5.7 percent in IQ2012, rebounding to 8.7 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 7.4 percent in IIQ2013, rebounding to 9.5 percent in IIIQ2013. Annual equivalent growth was 7.0 percent in IVQ2013, declining to 5.7 percent in IQ2014.

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

Cumulative GDP IQ2014	Value Current CNY Billion	2014 Year-on-Year Constant Prices ∆%
GDP	12,821.3	7.4
Primary Industry	777.6	3.5
Farming	777.6	3.5
Secondary Industry	5,758.7	7.3
Industry	5,121.7	7.1
Construction	637.0	9.3
Tertiary Industry	6,285.0	7.8
Transport, Storage, Post	691.7	5.7
Wholesale, Retail Trades	1,298.2	9.8
Hotel & Catering Services	266.8	5.9
Financial Intermediation	929.1	9.5
Real Estate	880.5	3.0
Other	2,218.7	8.9
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2014
IQ2014	1.4	5.7
2013
IVQ2013	1.7	7.0
IIIQ2013	2.3	9.5
IIQ2013	1.8	7.4
IQ2013	1.5	6.1
2012
IVQ2012	1.9	7.8
IIIQ2012	2.0	8.2
IIQ2012	2.1	8.7
IQ2012	1.4	5.7
2011
IVQ2011	1.8	7.4
IIIQ2011	2.2	9.1
IIQ2011	2.5	10.4
IQ2011	2.3	9.5

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

Growth of China’s GDP in IQ2014 relative to the same period in 2013 was 7.4 percent, as shown in Table VC-GDPA. Secondary industry accounts for 44.9 percent of GDP of which industry alone for 39.9 percent in cumulative IQ2014 and construction with the remaining 5.0 percent. Tertiary industry accounts for 49.0 percent of GDP in cumulative IQ2014 and primary industry for 6.1 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 strategy is changing to lower growth rates while improving living standards. 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. GDP grew 7.4 percent in IVQ2013 relative to a year earlier and 1.7 percent relative to IIIQ2013, which is equivalent to 7.0 percent per year. GDP grew 7.4 percent in IQ2014 relative to a year earlier and 1.4 percent in IQ2014 that is equivalent to 5.7 percent per year.

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

	IQ 2013	IIQ 2013	IIIQ 2013	IVQ 2013	IQ 2014
GDP	7.7	7.5	7.8	7.7	7.4
Primary Industry	3.4	3.0	3.4	4.0	3.5
Secondary Industry	7.8	7.6	7.8	7.8	7.3
Tertiary Industry	8.3	8.3	8.4	8.3	7.1
GDP ∆% Relative to a Prior Quarter	1.5	1.8	2.3	1.7	1.4
	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	2.5	2.2	1.8	1.4	2.1	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 2013 is still high at 7.7 percent but at the lowest rhythm in five years.

Chart VC-GDP, China, Gross Domestic Product, Million Yuan and ∆%, 2009-2013

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

Chart VC-FXR provides China’s foreign exchange reserves. FX reserves grew from $2399.2 billion in 2009 to $3821.3 billion in 2013 driven by high growth of China’s trade surplus.

Chart VC-FXR, China, Foreign Exchange Reserves, 2009-2013

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

Chart VC-Trade provides China’s imports and exports. Exports exceeded imports with resulting large trade balance surpluses that increased foreign exchange reserves.

Chart VC-Trade, China, Imports and Exports of Goods, 2009-2013, $100 Million US Dollars

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/b6e487b86c1a4ec48044fb9e79b0e282) is slowing. The overall Flash HSBC China Manufacturing PMI^™ decreased from 48.5 in Feb to 48.1 in Mar, which is the lowest in eight months, while the Flash HSBC China Manufacturing Output Index decreased from 48.8 in Feb to 47.3 in Mar, indicating moderate contraction at the lowest reading in eighteen months. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the index is consistent with weakening manufacturing with policy required to stabilize growth in the rest of the year (http://www.markiteconomics.com/Survey/PressRelease.mvc/b6e487b86c1a4ec48044fb9e79b0e282). The HSBC China Services PMI^™, compiled by Markit, shows marginal deterioration in business activity in China with the HSBC Composite Output, combining manufacturing and services, decreasing from 49.8 in Feb to 49.3 in Mar, indicating standstill (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3e2a5b28178421388c2207fee799a49). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds need of policies to prevent decelerating growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3e2a5b28178421388c2207fee799a49). The HSBC Business Activity index increased from 51.0 in Feb to 51.9 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3e2a5b28178421388c2207fee799a49). Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds that services improving (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3e2a5b28178421388c2207fee799a49). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, decreased marginally to 48.0 in Mar from 48.5 in Feb, indicating marginally deteriorating manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/c38b1134929b45d3b6e26f4363fcf01e). New export orders decreased moderately with moderate contraction of total new orders. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds soft manufacturing in China, posing risks to GDP growth in IQ2014 below target of 7.5 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/c38b1134929b45d3b6e26f4363fcf01e). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Mar 12-month ∆%: minus 2.3 Mar month ∆%: -0.3 Blog 4/13/14
Consumer Price Index	Mar month ∆%: -0.5 Mar 12 months ∆%: 2.4 Blog 4/13/14
Value Added of Industry	Mar month ∆%: 0.81 Jan-Mar 2014/Jan-Mar 2013 ∆%: 8.7 Blog 4/20/14
GDP Growth Rate	Year IQ2014 ∆%: 7.4 Quarter IQ2014 AE ∆%: 5.7 Blog 4/20/14
Investment in Fixed Assets	Total Jan-Mar 2013 ∆%: 17.6 Real estate development: 16.8 Blog 4/20/14
Retail Sales	Mar month ∆%: 1.23 Mar 12 month ∆%: 12.2 Jan-Mar ∆%: 12.0 Blog 4/20/14
Trade Balance	Mar balance $7.71 billion Exports 12M ∆% minus 6.6 Imports 12M ∆% minus 11.3 Cumulative Jan-Mar: $16.59 billion Blog 4/13/14

Links to blog comments in Table CNY:

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

Cumulative growth of China’s GDP in IQ2014 relative to the same period in 2013 was 7.4 percent, as shown in Table VC-1. Secondary industry accounts for 44.9 percent of GDP in IQ2014. In IQ2014, industry alone accounts for 39.9 percent of GDP and construction with the remaining 5.0 percent. Tertiary industry accounts for 49.0 percent of cumulative GDP in IQ2014 and primary industry for 6.1 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 strategy is shifting to lower growth rates with improvement in living standards. 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 10.4 percent in IIQ2011 to 7.4 percent in IVQ2011 and 5.7 percent in IQ2012, rebounding to 8.7 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 7.4 percent in IIQ2013, rebounding to 9.5 percent in IIIQ2013. Annual equivalent growth was 7.0 percent in IVQ2013, declining to 5.7 percent in IQ2014.

Table VC-1, China, Quarterly Growth of GDP, Current CNY 100 Million and Inflation Adjusted ∆%

Cumulative GDP IQ2014	Value Current CNY Billion	2014 Year-on-Year Constant Prices ∆%
GDP	12,821.3	7.4
Primary Industry	777.6	3.5
Farming	777.6	3.5
Secondary Industry	5,758.7	7.3
Industry	5,121.7	7.1
Construction	637.0	9.3
Tertiary Industry	6,285.0	7.8
Transport, Storage, Post	691.7	5.7
Wholesale, Retail Trades	1,298.2	9.8
Hotel & Catering Services	266.8	5.9
Financial Intermediation	929.1	9.5
Real Estate	880.5	3.0
Other	2,218.7	8.9
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2014
IQ2014	1.4	5.7
2013
IVQ2013	1.7	7.0
IIIQ2013	2.3	9.5
IIQ2013	1.8	7.4
IQ2013	1.5	6.1
2012
IVQ2012	1.9	7.8
IIIQ2012	2.0	8.2
IIQ2012	2.1	8.7
IQ2012	1.4	5.7
2011
IVQ2011	1.8	7.4
IIIQ2011	2.2	9.1
IIQ2011	2.5	10.4
IQ2011	2.3	9.5

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

Growth of China’s GDP in IQ2014 relative to the same period in 2013 was 7.4 percent, as shown in Table VC-2. Secondary industry accounts for 44.9 percent of GDP of which industry alone for 39.9 percent in cumulative IQ2014 and construction with the remaining 5.0 percent. Tertiary industry accounts for 49.0 percent of GDP in cumulative IQ2014 and primary industry for 6.1 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 strategy is changing to lower growth rates while improving living standards. 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. GDP grew 7.4 percent in IVQ2013 relative to a year earlier and 1.7 percent relative to IIIQ2013, which is equivalent to 7.0 percent per year. GDP grew 7.4 percent in IQ2014 relative to a year earlier and 1.4 percent in IQ2014 that is equivalent to 5.7 percent per year.

Table VC-2, China, Growth Rate of GDP, ∆% Relative to a Year Earlier and ∆% Relative to Prior Quarter

	IQ 2013	IIQ 2013	IIIQ 2013	IVQ 2013	IQ 2014
GDP	7.7	7.5	7.8	7.7	7.4
Primary Industry	3.4	3.0	3.4	4.0	3.5
Secondary Industry	7.8	7.6	7.8	7.8	7.3
Tertiary Industry	8.3	8.3	8.4	8.3	7.1
GDP ∆% Relative to a Prior Quarter	1.5	1.8	2.3	1.7	1.4
	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	2.5	2.2	1.8	1.4	2.1	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/

Cumulative and 12-months rates of value added of industry in China are provided in Table VC-3. Industry’s value added increased 8.7 percent in Jan-Mar 2014 relative to a year earlier and 8.8 percent in 12 months. Light industry increased 3.3 percent in Jan-Mar 2014 relative to a year earlier, manufacturing 9.9 percent, state-owned enterprises 4.5 percent and joint-stock companies 10.0 percent. Value added of industry increased 8.6 percent in Jan-Feb 2014 relative to a year earlier with weakness partially because of holidays of the Chinese Lunar New Year. Value added of industry increased 9.7 percent in Jan-Dec 2013 relative to a year earlier and 9.7 percent in the 12 months ending in Dec 2013. Industry’s value added increased 9.7 percent in Jan-Nov 2013 and 10.0 percent in the 12 months ending in Nov 2013. Industry’s value added increased 9.7 percent in Jan-Oct 2013 relative to the same period a year earlier and 10.3 percent in the 12 months ending in Oct 2013. Value added in total industry increased 9.6 in Jan-Sep 2013 relative to a year earlier and 10.2 percent in 12 months. Value added in total industry in Jan-Aug 2013 increased 9.5 percent relative to a year earlier. Heavy industry (manufacturing) had been the driver of growth with a cumulative rate of 10.0 percent relative to a year earlier in Jan-Mar 2012 that declined to 10.5 percent in Jan-Apr 2012 relative to the same period a year earlier and further down to 10.1 percent in Jan-Jun 2012. Growth of heavy industry was 9.9 percent in Jan-Jul 2012, 9.8 percent in Jan-Aug 2012, 9.7 percent in Jan-Sep 2012, 9.7 percent in Jan-Oct 2012, 9.8 percent in Jan-Nov 2012, 9.9 percent in Jan-Dec 2012, 10.2 percent in Jan-Feb 2013. Growth of heavy industry was 9.8 percent in Jan-Mar 2013, 9.7 percent in Jan-Apr 2013, 9.7 percent in Jan-May 2013, 10.0 percent in Jan-Jun 2013, 10.1 percent in Jan-Jul 2013 and 10.2 percent in Jan-Aug 2013. The rate for heavy industry increased marginally to 10.3 percent in Jan-Sep 2013. Heavy industry grew 10.5 percent in Jan-Dec 2013 and 10.7 percent in the 12 months ending in Dec 2013. Light industry (mining and quarrying) grew 6.4 percent in Jan-Dec 2013 relative to a year earlier. Growth of total industry decelerated from cumulative 14.4 percent in Jan-Mar 2011 to 9.7 percent in Jan-Dec 2013.

Table VC-3, China, Growth Rate of Value Added of Industry ∆%

	Industry	Light Industry	Heavy Industry	State Owned	Joint-Stock
2014
Jan-Mar	8.7	3.3	9.9	4.5	10.0
12 M Mar	8.8	2.9	9.9	4.6	10.1
Jan-Feb	8.6	3.5	9.8	4.4	9.9
2013
Jan-Dec	9.7	6.4	10.5	6.9	11.0
12M Dec	9.7	5.4	10.7	8.3	10.8
Jan-Nov	9.7	6.4	10.5	6.8	4.4
12M Nov	10.0	5.6	11.0	9.1	2.4
Jan-Oct	9.7	6.5	10.4	6.5	11.0
12M Oct	10.3	4.3	11.4	8.4	11.1
Jan-Sep	9.6	6.7	10.3	6.3	11.0
12M Sep	10.2	4.9	11.1	7.8	11.1
Jan-Aug	9.5	6.9	10.2	6.1	11.0
12M Aug	10.4	5.8	10.9	9.5	11.7
Jan-Jul	9.4	7.1	10.1	5.6	10.9
12M Jun	9.7	5.5	10.5	8.1	11.1
Jan-Jun	9.3	7.3	10.0	5.2	10.9
12M Jun	8.9	5.8	9.6	6.3	10.5
Jan-May	9.4	8.5	9.7	4.9	11.0
12M May	9.2	8.0	9.8	4.4	10.7
Jan-Apr	9.4	8.6	9.7	4.9	11.1
12 M Apr	9.3	8.5	9.6	4.3	10.9
Jan-Mar	9.5	8.7	9.8	5.2	11.3
12 M Mar	8.9	8.2	9.1	4.3	11.0
Jan-Feb	9.9	9.1	10.2	5.8	11.4
2012
Jan-Dec 2012	10.0	10.1	9.9	6.4	11.8
12 M Dec	10.3	9.6	10.6	8.0	12.1
Jan-Nov	10.0	10.2	9.8	6.3	11.8
12 M Nov	10.1	9.2	10.5	7.2	11.8
Jan-Oct	10.0	10.3	9.7	6.4	11.8
12 M Oct	9.6	9.1	9.7	7.0	11.7
Jan-Sep	10.0	10.4	9.7	6.3	11.8
12 M  Sep	9.2	9.0	9.3	6.3	11.0
Jan-Aug	10.1	10.5	9.8	6.3	15.4
12 M Aug	8.9	8.6	9.0	5.3	14.3
Jan-Jul	10.3	10.8	9.9	6.6	12.1
12 M Jul	9.2	10.1	8.8	4.8	10.9
Jan-Jun	10.5	11.1	10.1	7.0	12.4
12 M Jun	9.5	9.0	9.6	6.5	11.5
Jan-May	10.7	11.5	10.3	6.7	12.4
12 M May	9.6	9.1	9.8	6.6	11.0
Jan-Apr	11.0	12.3	10.5	6.6	12.9
12 M Apr	9.3	10.3	8.9	4.3	10.7
Jan-Mar	11.6	13.2	11.0	7.2	13.8
12 M Mar	11.9	13.9	11.2	8.0	13.7
Jan-Feb	11.4	12.7	10.9	7.3	13.9
2011
Jan-Dec	13.9	13.0	14.3	9.9	15.8
12 M Dec	12.8	12.6	13.0	9.2	14.7
Jan-Nov	14.0	13.0	14.4	9.9	16.0
12 M Nov	12.4	12.4	12.4	7.8	14.4
Jan-Oct	14.1	13.0	14.5	10.1	9.1
12 M Oct	13.2	12.1	13.7	8.9	15.1
Jan-Sep	14.2	13.1	14.6	10.4	16.1
12 M Sep	13.8	12.8	14.3	9.9	16.0
Jan-Aug	14.2	13.1	14.6	10.4	16.1
12 M Aug	13.5	13.4	13.5	9.4	15.5
Jan-Jul	14.3
12 M Jul	14.0	12.8	14.5	9.5
Jan-Jun	14.3	13.1	14.7	10.7	19.7
12 M Jun	15.1	13.9	15.6	10.7	20.8
Jan-May	14.0	12.9	14.4	10.7	19.3
12 M May	13.3	12.9	13.5	8.9	18.7
Jan-Apr	14.2	12.9	14.7	11.2	19.5
12 M Apr	13.4	11.9	14.0	10.4	18.0
Jan-Mar	14.4	13.1	14.9	11.4	19.8
12 M Mar	14.8	12.8	15.6	12.9	19.2
12 M Feb	14.9	13.1	15.6	10.5	21.7
Jan-Feb	14.1	13.3	14.4	10.6	20.3

*After Jun 2013 Heavy Industry is Manufacturing and Light Industry is Mining and Quarrying

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

Chart VC-1 provides 12-month percentage changes of value added of industry in China. The yearly rate of industry fell from 10.4 percent in Aug 2013 to 8.6 percent in Mar 2014.

Chart VC-1, China, Growth Rate of Total Value Added of Industry, 12-Month ∆%

Source: National Bureau of Statistics of China

http://www.stats.gov.cn/english/

Yearly rates of growth for the past 12 months and cumulative relative to the earlier year of various segments of industrial production in China are provided in Table VC-4. There is deceleration of 5.8 percent of electricity output in Jan-Mar 2014 relative to a year earlier. There are weaker readings in most segments with exception of 10.8 percent for autos. Rates from Jan to Dec 2011 relative to the same period a year earlier fluctuated but remained mostly above 10 percent with the exception of motor vehicles and crude oil. There is deceleration in Jan-Dec 2012 of percentage change with no segment showing growth exceeding 10 percent with exception of 12-month growth of 13.5 percent for pig iron and 16.7 percent for nonferrous metals. In Jan-Sep 2013, many segments grew at rates exceeding or around 10 percent with exception of electricity at 6.8 percent, crude oil at 4.2 percent and pig iron at 6.9 percent. Electricity fell from growth of 16.2 percent in the 12 months ending in Jun 2011 to 0.0 percent in the 12 months ending in Jun 2012, rebounding to 4.8 percent in Aug 2012 but declining to 1.5 percent in Sep 2012, increasing to 3.9 percent in Oct 2012, 7.9 percent in Nov 2012 and 7.6 percent in Dec 2012. Electricity grew 6.8 percent in Jan-Jul 2013 relative to a year earlier and increased 8.2 percent in the 12 months ending in Sep 2013. Electricity output increased 7.6 percent in Jan-Dec 2013 relative to a year earlier and 8.3 percent in 12 months ending in Dec 2013. Auto production jumped to 18.4 percent in Jan-Dec 2013 relative to a year earlier and 22.8 percent in 12 months ending in Dec 2013.

Table VC-4, China, Industrial Production Operation ∆%

	Elec- tricity	Pig Iron	Cement	Crude Oil	Non- ferrous Metals	Autos
2014
Jan-Mar	5.8	0.1	4.0	0.7	6.7	10.8
12 M Mar	6.2	-0.9	5.9	2.6	7.1	7.3
Jan-Feb	5.5	0.2	2.4	-1.0	6.1	12.5
2013
Jan-Dec	7.6	6.2	9.6	3.3	9.9	18.4
12M Dec	8.3	5.9	10.8	0.2	2.3	22.8
Jan-Nov	7.0	5.9	9.2	3.6	10.5	18.1
12M Nov	6.8	0.6	10.0	-0.6	13.7	25.6
Jan-Oct	7.0	6.5	9.0	4.1	10.3	17.2
12M Oct	8.4	7.7	8.9	3.1	12.9	25.5
Jan-Sep	6.8	6.9	8.9	4.2	9.8	15.3
12M Sep	8.2	11.2	6.4	-1.2	10.1	17.5
Jan-Aug	6.4	6.6	9.2	4.7	9.7	15.1
12M Aug	13.4	11.1	8.2	5.5	5.7	14.8
Jan-Jul	5.2	6.0	9.6	4.5	10.3	15.1
12 M Jul	8.1	5.0	9.1	7.1	9.8	15.4
Jan-Jun	4.4	5.7	9.7	4.1	10.0	15.2
12 M Jun	6.0	2.9	8.8	10.8	6.7	13.5
Jan-May	4.0	10.8	8.9	2.9	10.9	15.4
12 M May	4.1	11.3	8.5	2.4	7.5	15.7
Jan-Apr	3.8	10.5	8.4	3.2	11.4	15.4
12 M Apr	6.2	8.1	8.7	2.5	10.3	18.3
Jan-Mar	2.9	12.3	8.2	4.3	10.6	13.5
12 M Mar	2.1	9.2	6.9	5.5	9.9	12.4
Jan-Feb	3.4	14.2	10.8	3.0	13.5	12.4
2012
Jan-Dec	4.7	7.7	7.4	3.7	9.3	6.3
12 M Dec	7.6	13.5	5.4	8.4	16.7	5.3
Jan-Nov	4.4	7.2	7.5	3.2	8.4	6.5
12 M Nov	7.9	16.5	9.4	9.1	15.2	3.9
Jan-Oct	3.9	6.3	6.7	2.6	7.7	6.9
12 M Oct	6.4	11.7	11.5	6.7	14.0	3.8
Jan-Sep	3.6	5.7	6.7	2.2	7.1	7.3
12 M Sep	1.5	4.9	12.0	7.0	7.1	6.3
Jan-Aug	3.8	-0.5	8.7	2.5	13.8	10.4
12 M Aug	4.8	2.6	5.9	-0.4	13.8	9.7
Jan-Jul	3.8	6.1	5.3	1.6	6.7	7.4
12M Jul	2.1	6.5	6.1	1.1	4.1	12.3
Jan-Jun	3.7	6.1	5.5	1.7	6.7	6.7
12 M Jun	0.0	6.7	6.5	-0.6	5.8	13.8
Jan-May	4.7	6.3	5.0	2.2	5.1	6.2
12 M May	2.7	6.3	4.3	0.7	6.6	18.5
Jan-Apr	5.0	6.2	5.5	2.9	4.6	3.1
12 M Apr	0.7	7.9	4.9	-0.3	2.3	10.7
Jan-Mar	7.1	6.5	7.3	3.1	5.8	0.0
12 M Mar	7.2	10.2	7.9	2.0	3.3	5.1
Jan-Feb	7.1	4.6	4.8	4.0	8.4	-1.8
2011
Jan-Dec	12.0	8.4	16.1	4.9	10.6	3.0
12 M Dec	9.7	3.7	7.0	4.0	13.2	-6.5
Jan-Nov	12.0	13.1	17.2	5.3	10.2	3.9
12 M Nov	8.5	7.8	11.2	3.2	8.2	-1.3
Jan-Oct	12.3	13.7	18.0	5.4	10.4	5.2
12 M Oct	9.3	13.4	16.5	-0.9	3.7	1.3
Jan-Sep	12.7	13.9	18.1	6.0	11.2	5.5
12 M Sep	11.5	18.8	15.7	1.5	13.9	2.5
Jan-Aug	13.0	13.1	18.4	6.6		4.7
12 M Aug	10.0	12.9	12.8	4.5	15.6	9.5
Jan-Jul	13.3	13.0	19.2	6.9	9.9	4.0
12 M Jul	13.2	14.9	16.8	5.9	9.8	-1.3
12 M Jun	16.2	14.8	19.9	-0.7	9.8	3.6
12 M May	12.1	10.6	19.2	6.0	14.2	-1.9
12 M Apr	11.7	8.3	22.4	6.8	6.1	-1.6
12 M Mar	14.8	13.7	29.8	8.0	11.6	9.9
12 M Feb	11.7	14.5	9.1	10.9	14.4	10.3
12 M Jan	5.1	3.5	16.4	12.2	1.4	23.9
12 M Dec 2010	5.6	4.6	17.3	10.3	-1.9	27.6

M: month

Source: National Bureau of Statistics of China

http://www.stats.gov.cn/english/

Monthly growth rates of industrial production in China are provided in Table VC-5. Monthly rates have fluctuated around 1 percent. Jan and Feb 2012 are somewhat weaker but there was improvement to 1.25 percent in Mar 2012. The rate of 0.33 percent in Apr 2012 is the lowest in the monthly series from Feb 2011 to Mar 2014. Monthly sales growth remained below 1 percent in all months from Jan 2012 to Dec 2013 with the exception of Mar 2012. Value added of industry increased 0.64 percent in Dec 2013, 0.59 percent in Jan 2014 and 0.61 percent in Feb 2014. Value added of industry increased 0.81 percent in Mar 2014.

Table VC-5, China, Industrial Production Operation, Month ∆%

2011	Month ∆%
Feb	0.93
Mar	0.99
Apr	1.32
May	0.79
Jun	1.30
Jul	0.82
Aug	0.85
Sep	0.95
Oct	0.71
Nov	0.68
Dec	0.94
Jan 2012	0.50
Feb	0.61
Mar	1.25
Apr	0.33
May	0.89
Jun	0.83
Jul	0.59
Aug	0.61
Sep	0.89
Oct	0.76
Nov	0.86
Dec	0.90
Jan 2013	0.61
Feb	0.78
Mar	0.72
Apr	0.79
May	0.67
Jun	0.69
Jul	0.93
Aug	0.86
Sep	0.72
Oct	0.78
Nov	0.68
Dec	0.64
Jan 2014	0.59
Feb	0.61
Mar	0.81

Source: National Bureau of Statistics of China

http://www.stats.gov.cn/english/

Table VC-6 provides cumulative growth of investment in fixed assets in China in 2011 relative to 2010, Jan-Dec 2012, Jan-Dec 2013 and Jan-Mar 2014 relative to a year earlier. Total fixed investment had grown at a high rate fluctuating around 25 percent and fixed investment in real estate development has grown at rates in excess of 30 percent but rates have declined significantly to still quite high percentages. In Jan-Mar 2014, investment in fixed assets in China grew 17.6 percent relative to a year earlier and 16.8 percent in real estate development. There was slight deceleration in the final two months of 2011 that continued into Jan-Dec 2013 and Jan-Mar 2014.

Table VC-6, China, Investment in Fixed Assets ∆% Relative to a Year Earlier

	Total	State	Real Estate Development
Jan-Mar 2014	17.6	14.5	16.8
Jan-Feb	17.9	NA	19.3
Jan-Dec 2013	19.6	16.3	19.8
Jan-Nov	19.9	16.8	19.5
Jan-Oct	20.1	17.1	19.2
Jan-Sep	20.2	17.6	19.7
Jan-Aug	20.3	NA	19.3
Jan-Jul	20.1	17.5	20.5
Jan-Jun	20.1	17.5	20.3
Jan-May	20.4	17.7	20.6
Jan-Apr	20.6	18.1	21.1
Jan-Mar	20.9	18.7	20.2
Jan-Feb	21.2	16.9	22.8
Jan-Dec 2012	20.6	14.7	16.2
Jan-Nov	20.7	14.5	16.7
Jan-Oct	20.7	14.2	15.4
Jan-Sep	20.5	13.6	15.4
Jan-Aug	20.2	12.9	15.6
Jan-Jul	20.4	12.6	15.4
Jan-Jun	20.4	13.8	16.6
Jan-May	20.1	10.0	18.5
Jan-Apr	20.2	9.5	18.7
Jan-Mar	20.9	9.0	23.5
Jan-Feb	21.5	8.8	27.8
Jan-Dec 2011	23.8	11.1	27.9
Jan-Nov	24.5	11.7	29.9
Jan-Oct	24.9	12.4	31.1
Jan-Sep	24.9	12.7	32.0
Jan-Aug	25.0	12.1	33.2
Jan-Jul	25.4	13.6	33.6
Jan-Jun	25.6	14.6	32.9
Jan-May	25.8	14.9	34.6
Jan-Apr	25.4	16.6	34.3
Jan-Mar	25.0	17.0	34.1
Jan-Feb	24.9	15.6	35.2

Source: National Bureau of Statistics of China

http://www.stats.gov.cn/english/

Chart VC-2 provides percentage changes of cumulative fixed asset investment in China relative to a year earlier in all months from 2013 to 2014. Growth fell from 20.9 percent in Jan-Mar 2013 to 17.6 percent in Jan-Mar 2014.

Chart VC-2, China, Investment in Fixed Assets, ∆% Cumulative over Year Earlier

Source: National Bureau of Statistics of China

http://www.stats.gov.cn/english/

reserves of banks to moderate real estate investment. These policies have been reversed because of lower inflation and weakening economic growth. Chart VC-3 shows decline of fluctuating cumulative growth rates of investment in real estate development relative to a year earlier from 20.2 percent in Jan-Mar 2013 to 16.8 percent in Jan-Mar 2014.

Chart VC-3, China, Investment in Real Estate Development, ∆% Cumulative over Year Earlier

Source: National Bureau of Statistics of China

http://www.stats.gov.cn/english/

Growth rates of retail sales in 12 months and cumulative relative to a year earlier are in Table VC-7. There is decline of growth rates to cumulative 12.0 percent in Jan-Mar 2014 relative to a year earlier from 19.9 percent in Jan 2011 and 17.1 percent in Dec 2011.

Table VC-7, China, Retail Sales 12-Month ∆% and Cumulative ∆% Relative to Year Earlier

	12-Month ∆%	Cumulative ∆%/ Cumulative Year Earlier
2014
Jan-Mar	12.2	12.0
Jan-Feb	11.8	NA
2013
Dec	13.6	13.1
Nov	13.7	13.0
Oct	13.3	13.0
Sep	13.3	12.9
Aug	13.4	12.8
Jul	13.2	12.8
Jun	13.3	12.7
May	12.9	12.6
Apr	12.8	12.5
Mar	12.6	12.4
Feb	12.3	12.3
2012
Dec	15.2	14.3
Nov	14.9	14.2
Oct	14.5	14.1
Sep	14.2	14.1
Aug	13.2	14.1
Jul	13.1	14.2
Jun	13.7	14.4
May	13.8	14.5
Apr	14.1	14.7
Mar	15.2	14.8
Feb	14.7	14.7
2011
Dec	18.1	17.1
Nov	17.3	17.0
Oct	17.2	17.0
Sep	17.7	17.0
Aug	17.0	16.9
Jul	17.2	16.8
Jun	17.7	16.8
May	16.9	16.6
Apr	17.1	16.5
Mar	17.4	17.4
Feb	11.6	15.8
Jan	19.9	19.9

Source: National Bureau of Statistics of China

http://www.stats.gov.cn/english/

Chart VC-4 of the National Bureau of Statistics of China provides 12-month rates of growth of retail sales from 2013 to 2014. There is again a drop into 2013 with the lowest percentages in Chart VC-4 followed by moderate increases. The growth rate of retail sales fell to 12.2 percent in Jan-Mar 2014 relative to a year earlier.

Chart VC-4, China, Total Retail Sales of Consumer Goods 12-Month ∆%

Source: National Bureau of Statistics of China

http://www.stats.gov.cn/english/

Table VC-8 provides monthly percentage changes of retail sales in China. Although the rate of 0.19 percent in Jan 2012 is the lowest in Table VC-7, the rate of 1.32 percent in Sep 2012 is relatively high and 1.23 percent in Dec 2012 is closer to rates in 2011. Sales are lower in Jan-Feb 2013 because of the Lunar New Year celebrations, rebounding in Mar-Dec 2013. There is weakness in Jan-Feb 2014 also partly under influence of the celebration of the Lunar New Year followed with 1.23 percent in Mar 2014.

Table VC-8, China, Retail Sales, Month ∆%

2011	Month ∆%
Feb	1.35
Mar	1.26
Apr	1.30
May	1.39
Jun	1.49
Jul	1.57
Aug	1.50
Sep	1.33
Oct	1.36
Nov	1.26
Dec	1.41
2012
Jan	0.19
Feb	0.99
Mar	1.21
Apr	0.93
May	1.11
Jun	1.12
Jul	1.03
Aug	1.11
Sep	1.32
Oct	1.18
Nov	1.21
Dec	1.23
Jan 2013	0.14
Feb	0.87
Mar	1.50
Apr	0.99
May	0.97
Jun	1.03
Jul	1.04
Aug	0.91
Sep	1.04
Oct	0.97
Nov	1.00
Dec	0.98
2014
Jan	0.80
Feb	0.72
Mar	1.23

Source: National Bureau of Statistics of China

http://www.stats.gov.cn/english/

VD Euro Area. Table VD-EUR provides yearly growth rates of the combined GDP of the members of the European Monetary Union (EMU) or euro area since 1996. Growth was very strong at 3.3 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 0.5 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	8.8	3.8
2001	2.4	8.2	2.0
2002	2.3	8.5	0.9
2003	2.1	9.0	0.7
2004	2.2	9.2	2.2
2005	2.2	9.1	1.7
2006	2.2	8.4	3.3
2007	2.2	7.5	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	11.3	-0.7
2013*	1.3	12.0	-0.5
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*	-0.5	0.4	0.2	-1.9	-1.3
2012	-0.7	0.7	0.0	-2.4	-1.6
2011	1.6	3.3	2.0	0.4	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, decreased from 53.3 in Feb to 53.2 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/32ff643865a64f0d8b398fa42e9a575d). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index suggests that the index is consistent with growth of GDP as high as 0.5 percent in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/32ff643865a64f0d8b398fa42e9a575d). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP, decreased from 53.3 in Feb, which is the second highest since the first half of 2011, to 53.1 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/0df8a17005794a228231ee5fc8bbb8f2). Chris Williamson, Chief Economist at Markit, finds growth of GDP at 0.5 percent in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/0df8a17005794a228231ee5fc8bbb8f2). The Markit Eurozone Services Business Activity Index decreased from 52.6 in Feb, which is a high in 32 months, to 52.2 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/0df8a17005794a228231ee5fc8bbb8f2). The Markit Eurozone Manufacturing PMI^® decreased to 53.0 in Mar from 53.2 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/76d4f875d0d14fb3b05839a62bd11f8f). New orders and export orders increased for the ninth consecutive month. Chris Williamson, Chief Economist at Markit, finds industrial growth in the euro area at a quarterly rate around 1.0 percent. (http://www.markiteconomics.com/Survey/PressRelease.mvc/76d4f875d0d14fb3b05839a62bd11f8f). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IVQ2013 ∆% 0.2; IVQ2013/IVQ2012 ∆% 0.5 Blog 4/6/14
Unemployment	Feb 2014: 11.9 % unemployment rate; Feb 2014: 18.965 million unemployed Blog 4/6/14
HICP	Mar month ∆%: 0.9 12 months Feb ∆%: 0.5 Blog 4/20/14
Producer Prices	Euro Zone industrial producer prices Feb ∆%: -0.2 Feb 12-month ∆%: -1.7 Blog 4/6/14
Industrial Production	Feb month ∆%: 0.2; Feb 12 months ∆%: 1.7 Blog 4/20/14
Retail Sales	Feb month ∆%: 0.4 Feb 12 months ∆%: 0.8 Blog 4/6/14
Confidence and Economic Sentiment Indicator	Sentiment 102.4 Mar 2014 Consumer minus 9.3 Jan 2014 Blog 4/6/14
Trade	Jan-Feb 2014/Jan-Feb 2013 Exports ∆%: 1.9 Imports ∆%: -1.3 Feb 2014 12-month Exports ∆% 2.9 Imports ∆% 0.4 Blog 4/20/14

Links to blog comments in Table EUR:

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

Table VD-1 provides monthly industrial production percentage changes for total production and major segments in the euro area. Total production increased 0.2 percent in Feb 2014 with decreases of 1.7 percent in energy and 1.2 percent in durable goods. Capital goods changed 0.0 percent. Nondurable goods increased 0.5 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 0.9 percent in Jul 2013, 0.2 percent in Sep 2013, 0.6 percent in Oct 2013 and 0.3 percent in Dec 2013.

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

	Total	INT	ENE	CG	DUR	NDUR
Feb 2014	0.2	0.6	-1.7	0.0	-1.2	0.5
Jan	0.0	0.4	-1.8	0.7	1.6	0.2
Dec 2013	-0.3	0.5	-2.9	-0.7	0.9	0.1
Nov	1.6	0.7	2.7	2.8	1.2	0.3
Oct	-0.6	0.4	-3.2	-1.0	-1.7	0.3
Sep	-0.2	-0.3	1.4	-0.8	-1.5	0.1

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-2 are positive in the 12 months ending in Jan 2014 with exception of decreases of 8.5 percent in energy and 0.6 percent in durable goods. Industrial production increased 0.2 percent in the month of Feb 2014 and increased 1.7 percent in the 12 months ending in Feb 2014.

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

2014	Feb Month ∆%	Feb 12-Month ∆%
Total	0.2	1.7
Intermediate Goods	0.6	4.2
Energy	-1.7	-8.5
Capital Goods	0.0	4.0
Durable Consumer Goods	-1.2	-0.6
Nondurable Consumer Goods	0.5	2.8

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-7. 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 to Dec 2013 and Jan 2014 with positive 12-month percentage changes for total industry. There is significant improvement in 2014 with growth of 1.7 percent in the 12 months ending in Feb. Output of capital goods increased 4.0 percent in the 12 months ending in Feb 2014 and output of intermediate goods increased 4.2 percent.

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

	Total	INT	ENE	CG	DUR	NDUR
Feb 2014	1.7	4.2	-8.5	4.0	-0.6	2.8
Jan	1.6	3.5	-4.9	4.7	1.7	-0.1
Dec 2013	1.2	3.4	-1.5	1.8	-1.6	0.0
Nov	2.7	3.2	0.4	4.2	-1.3	1.9
Oct	0.4	1.5	-3.1	1.3	-4.7	0.3
Sep	0.2	0.1	-0.7	0.2	-2.7	1.0

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

Growth of euro zone trade continues to be relatively resilient as shown in Table VD-4 but with deceleration at the margin. Exports grew 1.9 percent and imports fell 1.3 percent in Jan-Feb 2014 relative to Jan-Feb 2013. The 12-month rate of growth of exports was 2.9 percent in Feb 2014 while imports increased 0.4 percent. In Jan 2014, exports increased 1.0 percent in 12 months and imports decreased 2.8 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-Feb 2014	301.4	287.0
Jan-Feb 2013	295.7	290.7
∆%	1.9	-1.3
Feb 2014	153.3	139.7
Feb 2013	149.0	139.2
∆%	2.9%	0.4
Jan 2014	148.1	147.2
Jan 2013	146.7	151.5
∆%	1.0	-2.8
Trade Balance	Jan-Feb 2014	Jan-Feb 2013
€ Billions	14.4	5.0

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 2013 is provided in Table VD-5. Data are still not available for trade structure for Feb 2014. Manufactured exports increased 2.0 percent in Jan 2014 relative to Jan 20123while imports changed 0.0 percent. The trade surplus in manufactured products was higher than the trade deficit in primary products in Jan 2014 but only marginally higher in Jan 2013 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 2014 € B	24.4	119.9	3.8	148.1
Jan 2013 € B	24.4	117.5	4.9	146.7
∆%	0.0	2.0	-22.4	1.0
Imports
Jan 2014 € B	52.7	92.3	2.3	147.2
Jan 2013  € B	56.2	92.3	3.0	151.5
∆%	-6.2	0.0	-23.3	-2.8
Trade Balance € B
Jan 2014	-28.3	27.6	1.5	0.8
Jan 2013	-31.9	25.1	1.9	-4.8

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/2014/02/PE14_048_811.html

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 56.4 in Feb to 55.0 in Mar. The index of manufacturing output reached 57.0 in Mar, declining from 57.4 in Feb, while the index of services decreased to 54.0 in Mar from 55.9 in Feb. The overall Flash Germany Manufacturing PMI^® decreased from 54.8 in Feb to 53.8 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/d968b7b4783742c2bacfba4d0fa40632). New export work volumes increased for an eighth consecutive month with business originating in the US, China and Spain. Oliver Kolodseike, Economist at Markit, finds expansion of Germany’s private sector in the quarter ending in Mar at the highest pace since the middle of 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/d968b7b4783742c2bacfba4d0fa40632). 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 56.4 in Feb to 54.3 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/809e149d435c4ce7a97fc1e73fec46b9). Oliver Kolodseike, Senior Economist at Markit and author of the report, finds improving activity by the German private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/809e149d435c4ce7a97fc1e73fec46b9). The Germany Services Business Activity Index decreased from 55.9 in Feb to 53.0 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/809e149d435c4ce7a97fc1e73fec46b9). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, decreased from 54.8 in Feb to 53.7 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/b2ef5c5cc91c4976a8dd42539e3aec6c). New export orders increased for the ninth consecutive month with demand from the US, Spain and China. Oliver Kolodseike, Senior Economist at Markit and author of the report, finds continuing growth at slower pace (http://www.markiteconomics.com/Survey/PressRelease.mvc/b2ef5c5cc91c4976a8dd42539e3aec6c).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IVQ2013 0.4 ∆%; IV/Q2013/IVQ2012 ∆% 1.3 2013/2012: 0.4% GDP ∆% 1992-2013 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 1/26/14 2/16/14 3/2/14
Consumer Price Index	Mar month NSA ∆%: 0.3 Mar 12-month NSA ∆%: 1.0 Blog 4/13/14
Producer Price Index	Mar month ∆%: -0.3 CSA, minus 0.2 12-month NSA ∆%: -0.9 Blog 4/20/14
Industrial Production	MFG Feb month CSA ∆%: 0.5 12-month NSA: 6.1 Blog 4/13/14
Machine Orders	MFG Feb month ∆%: 0.6 Feb 12-month ∆%: 7.3 Blog 4/13/14
Retail Sales	Feb Month ∆% 1.3 12-Month ∆% 2.0 Blog 4/6/14
Employment Report	Unemployment Rate SA Feb 5.1% Blog 4/6/14
Trade Balance	Exports Feb 12-month NSA ∆%: 4.6 Imports Feb 12 months NSA ∆%: 6.5 Exports Feb month CSA ∆%: minus 1.3; Imports Feb month CSA 0.4 Blog 4/13/14

Links to blog comments in Table DE:

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/2/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html

2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html

1/26/14 http://cmpassocregulationblog.blogspot.com/2014/01/capital-flows-exchange-rates-and.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

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 ∆%
1949-2013	3.2
2000-2013	1.0
2000-2012	1.0
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=20140331

The Markit Flash France Composite Output Index increased from 47.9 in Feb to 51.6 in Mar for a 31-month high (http://www.markiteconomics.com/Survey/PressRelease.mvc/66202d09e60b46eab9d481f475f0996f). Jack Kennedy, Senior Economist at Markit and author of the report, finds improvement at home and overseas (http://www.markiteconomics.com/Survey/PressRelease.mvc/66202d09e60b46eab9d481f475f0996f). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, increased from 47.9 in Feb to 51.8 in Feb, indicating growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/5aaddb78a6b249768e1cf6075d840289). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds return to growth with marginally improving confidence (http://www.markiteconomics.com/Survey/PressRelease.mvc/5aaddb78a6b249768e1cf6075d840289). The Markit France Services Activity index increased from 47.2 in Feb to 51.5 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/5aaddb78a6b249768e1cf6075d840289). The Markit France Manufacturing Purchasing Managers’ Index^® increased to 52.1 in Mar from 49.7 in Feb for the highest reading since Jun 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/af898c044ea5428885e085ff7ae49690). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds improving conditions supported by strong growth of new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/af898c044ea5428885e085ff7ae49690). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Mar month ∆% 0.5 12 months ∆%: 0.6 4/13/14
PPI	Feb month ∆%: -0.1 Feb 12 months ∆%: -1.7 Blog 4/13/14
GDP Growth	IVQ2013/IIIQ2013 ∆%:0.3 IVQ2013/IVQ2012 ∆%: 0.8 Blog 3/31/13 5/19/12 6/30/13 9/29/13 11/17/13 12/29/13 2/16/14 4/6/14
Industrial Production	Feb ∆%: Manufacturing 0.3 12-Month ∆%: Manufacturing 1.2 Blog 4/13/14
Consumer Spending	Manufactured Goods Feb ∆%: 0.2 Feb 12-Month Manufactured Goods ∆%: 1.1 Blog 4/6/14
Employment	Unemployment Rate: IVQ2013 9.8% Blog 3/9/13
Trade Balance	Feb Exports ∆%: month -0.2, 12 months 1.3 Feb Imports ∆%: month -5.5, 12 months -4.4 Blog 4/13/14
Confidence Indicators	Historical average 100 Mar Mfg Business Climate 100 Blog 3/30/14

Links to blog comments in Table FR:

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/30/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

3/9/14 http://cmpassocregulationblog.blogspot.com/2014/03/rules-discretionary-authorities-and.html

2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html

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

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 ∆%
1949-2013	3.2
2000-2013	1.0
2000-2012	1.0
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=20140331

The Markit Flash France Composite Output Index increased from 47.9 in Feb to 51.6 in Mar for a 31-month high (http://www.markiteconomics.com/Survey/PressRelease.mvc/66202d09e60b46eab9d481f475f0996f). Jack Kennedy, Senior Economist at Markit and author of the report, finds improvement at home and overseas (http://www.markiteconomics.com/Survey/PressRelease.mvc/66202d09e60b46eab9d481f475f0996f). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, increased from 47.9 in Feb to 51.8 in Feb, indicating growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/5aaddb78a6b249768e1cf6075d840289). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds return to growth with marginally improving confidence (http://www.markiteconomics.com/Survey/PressRelease.mvc/5aaddb78a6b249768e1cf6075d840289). The Markit France Services Activity index increased from 47.2 in Feb to 51.5 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/5aaddb78a6b249768e1cf6075d840289). The Markit France Manufacturing Purchasing Managers’ Index^® increased to 52.1 in Mar from 49.7 in Feb for the highest reading since Jun 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/af898c044ea5428885e085ff7ae49690). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds improving conditions supported by strong growth of new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/af898c044ea5428885e085ff7ae49690). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Mar month ∆% 0.5 12 months ∆%: 0.6 4/13/14
PPI	Feb month ∆%: -0.1 Feb 12 months ∆%: -1.7 Blog 4/13/14
GDP Growth	IVQ2013/IIIQ2013 ∆%:0.3 IVQ2013/IVQ2012 ∆%: 0.8 Blog 3/31/13 5/19/12 6/30/13 9/29/13 11/17/13 12/29/13 2/16/14 4/6/14
Industrial Production	Feb ∆%: Manufacturing 0.3 12-Month ∆%: Manufacturing 1.2 Blog 4/13/14
Consumer Spending	Manufactured Goods Feb ∆%: 0.2 Feb 12-Month Manufactured Goods ∆%: 1.1 Blog 4/6/14
Employment	Unemployment Rate: IVQ2013 9.8% Blog 3/9/13
Trade Balance	Feb Exports ∆%: month -0.2, 12 months 1.3 Feb Imports ∆%: month -5.5, 12 months -4.4 Blog 4/13/14
Confidence Indicators	Historical average 100 Mar Mfg Business Climate 100 Blog 3/30/14

Links to blog comments in Table FR:

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/30/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

3/9/14 http://cmpassocregulationblog.blogspot.com/2014/03/rules-discretionary-authorities-and.html

2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html

12/29/13 http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.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 2.8 percent in IVQ2012, minus 2.4 percent in IQ2013, minus 2.1 percent in IIQ2013 and minus 1.9 percent in IIIQ2013. GDP fell 0.9 percent in IVQ2013 relative to a year earlier. 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 and IVQ2013 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
IVQ	-0.9	-0.1	-1.1	-2.4	1.0
IIIQ	-1.9	-2.0	-1.8	-4.4	-0.4
IIQ	-2.1	-4.4	-2.8	-5.0	0.0
IQ	-2.4	-5.0	-2.9	-6.6	-0.7
2012
IVQ	-2.8	-6.5	-4.1	-7.4	1.0
IIIQ	-2.6	-7.1	-3.9	-8.3	2.0
IIQ	-2.4	-6.9	-3.4	-8.5	2.2
IQ	-1.7	-7.9	-3.2	-8.0	3.0
2011
IVQ	-0.6	-6.8	-1.9	-3.8	3.5
IIIQ	0.4	0.6	-1.1	-2.4	6.1
IIQ	1.1	3.6	0.3	-1.0	7.5
IQ	1.4	9.1	0.6	0.6	11.0
2010
IVQ	2.2	15.6	1.0	1.3	13.4
IIIQ	1.8	13.2	1.2	2.3	12.1
IIQ	1.8	13.4	0.8	1.0	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/114963

The Markit/ADACI Business Activity Index decreased from 52.9 in Feb to 49.5 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/54df1acc1d224a7d8ef9549ec47e0426). Phil Smith, Economist at Markit and author of the Italy Services PMI^®, finds limited contribution of services to growth in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/54df1acc1d224a7d8ef9549ec47e0426). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), increased from 52.3 in Feb to 52.4 in Mar for continuing growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/a4bdd3763ed64d05929fe8360005d344). New export orders grew at the highest rate since Nov. Phil Smith, Economist at Markit and author of the Italian Manufacturing PMI^®, finds continuing growth with new export orders from multiple foreign markets (http://www.markiteconomics.com/Survey/PressRelease.mvc/a4bdd3763ed64d05929fe8360005d344). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Mar month ∆%: 0.1 Mar 12-month ∆%: 0.4 Blog 4/20/14
Producer Price Index	Feb month ∆%: 0.0 Feb 12-month ∆%: -1.7 Blog 4/6/14
GDP Growth	IVQ2013/IIIQ2013 SA ∆%: 0.1 IVQ2013/IVQ2012 NSA ∆%: minus 0.9 Blog 3/17/13 6/16/13 8/11/13 9/15/13 11/17/13 12/15/13 2/16/14 3/16/14
Labor Report	Feb 2014 Participation rate 63.6% Employment ratio 55.2% Unemployment rate 13.0% Youth Unemployment 42.3% Blog 4/6/14
Industrial Production	Feb month ∆%: -0.5 12 months CA ∆%: 0.4 Blog 4/13/14
Retail Sales	Jan month ∆%: 0.0 Jan 12-month ∆%: -0.9 Blog 3/30/13
Business Confidence	Mfg Mar 99.2, Oct 98.1 Construction Feb 75.8, Nov 79.8 Blog 4/6/14
Trade Balance	Balance Feb SA €3443 million versus Jan €3695 Exports Feb month SA ∆%: -0.9; Imports Feb month ∆%: -0.1 Exports 12 months Feb NSA ∆%: 3.0 Imports 12 months NSA ∆%: -2.2 Blog 4/20/14

Links to blog comments in Table IT:

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/30/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

3/16/2014 http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html

2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.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

Exports and imports of Italy and monthly growth rates SA are in Table VG-1. There have been significant fluctuations. Seasonally adjusted exports decreased 0.9 percent in Feb 2014 while imports decreased 0.1 percent. The SA trade balance decreased from surplus of €3695 million in Jan 2014 to surplus of €3443 million in Feb 2014.

Table VG-1, Italy, Exports, Imports and Trade Balance SA Million Euros and Month SA ∆%

2012	Exports	∆%	Imports	∆%	Balance
IQ2012	96,295	1.0	96,890	-0.9	-595
IIQ2012	97,791	1.6	96,202	-0.7	1,589
IIIQ2012	99,144	1.4	96,055	-0.2	3,089
IVQ2012	98,070	-1.1	92,914	-3.3	5,156
2013
IQ2013	97,712	-0.4	91,487	-1.5	6,225
IIQ2013	97,899	0.2	89,235	-2.5	8,664
IIIQ2013	97,901	0.0	91,107	2.1	6,794
IVQ2013	98,788	0.9	89,119	-2.2	9,669
2012
Feb	32,106	1.0	32,685	1.0	-579
Mar	32,410	0.9	31,846	-2.6	564
Apr	32,440	0.1	32,640	2.5	-200
May	33,064	1.9	32,813	0.5	251
Jun	32,287	-2.3	30,749	-6.3	1,538
Jul	32,933	2.0	31,933	3.9	1,000
Aug	33,561	1.9	33,001	3.3	560
Sep	32,650	-2.7	31,121	-5.7	1,529
Oct	32,814	0.5	31,412	0.9	1,402
Nov	32,999	0.6	31,046	-1.2	1,953
Dec	32,257	-2.2	30,456	-1.9	1,801
2013
Jan	33,097	2.6	31,212	2.5	1,885
Feb	32,153	-2.9	30,111	-3.5	2,042
Mar	32,462	1.0	30,164	0.2	2,298
Apr	32,389	-0.2	29,709	-1.5	2,680
May	32,574	0.6	29,547	-0.5	3,027
Jun	32,936	1.1	29,979	1.5	2,957
Jul	32,266	-2.0	30,015	0.1	2,251
Aug	32,715	1.4	30,448	1.4	2,267
Seo	32,920	0.6	30,644	0.6	2,276
Oct	32,735	-0.6	29,818	-2.7	2,917
Nov	32,184	-1.7	29,113	-2.4	3,071
Dec	33,869	5.2	30,188	3.7	3,681
2014
Jan	33,350	-1.5	29,655	-1.8	3,695
Feb	33,066	-0.9	29,623	-0.1	3,443

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/119103

Italy’s trade account not seasonally adjusted is in Table VG-2. Values are different because the data are original and not adjusted. Exports increased 3.0 percent in the 12 months ending in Feb 2014 while imports fell 2.2 percent with actual trade surplus of €2623 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 was 12.2 percent in the 12 months ending in Oct 2012 while imports increased 1.4 percent, increasing 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 €2006 million in Apr 2013 with growth of exports of 4.4 and decline of imports of 3.5 percent. The surplus increased to €3893 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-2, Italy, Exports, Imports and Trade Balance NSA Million Euros and Year-on-Year ∆%

	Exports	∆%	Imports	∆%	Balance
2011	375,904	11.4	401,428	9.3	-25,524
2012	390,182	3.8	380,292	-5.3	9,890
2013	389,854	-0.1	359,454	-5.5	30,400
2011
IQ2011	90,128	18.1	103,760	21.7	-13,632
IIQ2011	97,274	13.4	104,303	22.4	-7,029
IIIQ2011	92,567	9.8	96,138	12.8	-3,571
IVQ2011	95,935	5.5	97,227	-2.7	-1,292
2012
IQ2012	95,398	5.8	99,568	-4.0	-4,170
IIQ2012	100,172	3.0	97,079	-6.9	3,093
IIIQ2012	94,938	2.6	90,670	-5.7	4,268
IVQ2012	99,674	3.9	92,975	-4.4	6,699
2013
IQ2013	94,695	-0.7	92,379	-7.2	2,316
IIQ2013	99,724	-0.4	90,283	-7.0	9,441
IIIQ2013	95,094	0.2	87,209	-3.8	7,885
IVQ2013	100,341	0.7	89,584	-3.6	10,758
2012
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	2,006
May	34,576	-1.9	30,682	-10.8	3,893
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	4,060
Nov	32,538	-3.4	29,450	-6.9	3,088
Dec	31,473	5.1	27,863	0.8	3,610
2014
Jan	29,988	0.2	29,626	-6.6	362
Feb	31,809	3.0	29,186	-2.2	2,623

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/119103

Growth rates of Italy’s trade and major products are in Table VG-3 for the period Jan-Feb 2014 relative to Jan-Feb 2013. Growth rates of cumulative imports relative to a year earlier are negative for energy with minus 20.5 percent. Exports of durable goods grew 4.3 percent and exports of capital goods increased 4.7 percent. The higher rate of growth of exports of 1.6 percent in Jan-Feb 2014/Jan-Feb 2013 relative to imports of minus 4.5 percent may reflect weak demand in Italy with GDP declining during nine consecutive quarters from IIIQ2011 through IIIQ2013 together with softening commodity prices. GDP increased marginally 0.1 percent in IVQ2013.

Table VG-3, Italy, Exports and Imports % Share of Products in Total and ∆%

	Exports Share %	Exports ∆% Jan-Feb 2014/ Jan-Feb 2013	Imports Share %	Imports ∆% Jan-Feb 2014/ Jan-Feb 2013
Consumer Goods	31.0	3.8	27.3	0.4
Durable	6.0	4.3	2.9	8.7
Non-Durable	25.1	3.7	24.4	-0.5
Capital Goods	32.3	4.7	20.3	-0.3
Inter- mediate Goods	32.3	-0.9	32.5	-0.4
Energy	4.4	-13.5	19.9	-20.5
Total ex Energy	95.6	2.4	80.1	-0.1
Total	100.0	1.6	100.0	-4.5

Note: % Share for 2012 total trade.

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/119103

Table VG-4 provides Italy’s trade balance by product categories in Feb 2014 and cumulative Jan-Feb 2014. Italy’s trade balance excluding energy, generated surplus of €6021 million in Feb 2014 and €10,862 million cumulative in Jan-Feb 2014 but the energy trade balance created deficit of €3578 million in Feb 2014 and cumulative €7877 million in Jan-Feb 2014. The overall surplus in Feb 2014 was €2623 million with cumulative surplus of €2985 million in Jan-Feb 2014. Italy has significant competitiveness in various economic activities in contrast with some other countries with debt difficulties.

Table VG-4, Italy, Trade Balance by Product Categories, € Millions

	Feb 2014	Cumulative Jan-Feb 2014
Consumer Goods	2,131	3,272
Durable	1,052	1,797
Nondurable	1,079	1,476
Capital Goods	3,832	7,345
Intermediate Goods	237	245
Energy	-3,578	7,877
Total ex Energy	6,021	10,862
Total	2,623	2,985

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/119103

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-5 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 39.8 percent of the total in Feb 2014. Exports to the non-European Union area with share of 46.3 percent in Italy’s total exports are growing at minus 1.2 percent in Jan-Feb 2014 relative to Jan-Feb 2013 while those to EMU are growing at 2.5 percent.

Table VG-5, Italy, Exports and Imports by Regions and Countries, % Share and 12-Month ∆%

Feb 2014	Exports % Share	∆% Jan-Feb 2014/ Jan-Feb 2013	Imports % Share	∆% Jan-Feb 2014/ Jan-Feb 2013
EU	53.7	3.9	55.3	-0.7
EMU 17	39.8	2.5	44.3	-0.9
France	10.8	-0.2	8.4	-0.4
Germany	12.4	3.7	14.7	2.5
Spain	4.4	-1.3	4.5	2.2
UK	5.0	8.3	2.7	-6.7
Non EU	46.3	-1.2	44.7	-8.8
Europe non EU	13.0	-9.5	12.1	-13.2
USA	6.9	7.6	3.2	4.3
China	2.5	12.9	6.4	5.6
OPEC	6.0	-9.8	8.1	-39.3
Total	100.0	1.6	100.0	-4.5

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

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/119103

Table VG-6 provides Italy’s trade balance by regions and countries. Italy had trade deficit of €19 million with the 17 countries of the euro zone (EMU 17) in Feb 2014 and cumulative surplus of €147 million in Jan-Feb 2014. Depreciation to parity could permit greater competitiveness in improving the trade surplus of €535 million in Jan-Feb 2014 with Europe non-European Union, the trade surplus of €2088 million with the US and trade surplus with non-European Union of €472 million in Jan-Feb 2014. There is significant rigidity in the trade deficits in Jan-Feb 2014 of €2903 million with China and €600 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-6, Italy, Trade Balance by Regions and Countries, Millions of Euro 

Regions and Countries	Trade Balance Feb 2014 Millions of Euro	Trade Balance Cumulative Jan-Feb 2014 Millions of Euro
EU	1,253	2,513
EMU 17	-19	147
France	1,022	2,024
Germany	-434	-566
Spain	-12	149
UK	865	1,619
Non EU	1,369	472
Europe non EU	578	535
USA	1,189	2,088
China	-1,346	-2,903
OPEC	-212	-600
Total	2,623	2,985

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

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/119103

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 0.3 percent in 2012. Growth increased to 1.9 percent in 2013. 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 2013, which is relatively high for an advanced economy. The growth rate of GDP between 2000 and 2007 is higher at 3.0 percent. Growth in the current cyclical expansion has been only at 1.0 percent as advanced economies struggle with weak internal demand and world trade. GDP in 2013 was lower by 1.2 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	0.3
2013	1.7
Average Growth Rates ∆% per Year
1948-2013	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*	-3.0
2007-2013*	-1.4
2000-2013	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/q4-2013/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® decreased from 58.2 in Feb to 57.6 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/7a1dbe8a0478418a9d36f333468d090f). Chris Williamson, Chief Economist at Markit, finds the combined indices consistent with the UK economy growing at 0.7 percent in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/7a1dbe8a0478418a9d36f333468d090f). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) decreased to 55.3 in Mar from 56.2 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/bcb3494ae18f456e9bfbc813f4d3ac25). New export orders increased for the twelfth consecutive month. New orders increased from North America, Europe, China, the Middle East, Brazil and Australia. Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds that manufacturing conditions continue at solid pace (http://www.markiteconomics.com/Survey/PressRelease.mvc/bcb3494ae18f456e9bfbc813f4d3ac25). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Mar month ∆%: 0.2 Mar 12-month ∆%: 1.6 Blog 4/20/14
Output/Input Prices	Output Prices: Mar 12-month NSA ∆%: 0.5; excluding food, petroleum ∆%: 1.0 Input Prices: Mar 12-month NSA ∆%: -6.5 Excluding ∆%: -5.8 Blog 4/20/14
GDP Growth	IVQ2013 prior quarter ∆% 0.7; year earlier same quarter ∆%: 2.7 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 2/2/14 3/2/14 4/6/14
Industrial Production	Feb 2014/Feb 2013 ∆%: Production Industries 2.7; Manufacturing 3.8 Blog 4/13/14
Retail Sales	Feb month ∆%: 1.7 Feb 12-month ∆%: 3.7 Blog 4/6/14
Labor Market	Dec-Feb Unemployment Rate: 6.9%; Claimant Count 3.4%; Earnings Growth 1.7% Blog 4/20/14 LMGDP 4/20/14
GDP and the Labor Market	IVQ2013 Weekly Hours 101.8, GDP 98.6, Employment 102.2 IQ2008 =100 GDP IVQ13 98.6 IQ2008=100 Blog 3/2/14 3/23/14 4/6/14 4/20/14
Trade Balance	Balance SA Mar minus ₤2058 million Exports Feb ∆%: -0.9; Dec-Feb ∆%: -1.7 Imports Mar ∆%: -1.2 Dec-Feb ∆%: -1.9 Blog 4/13/14

Links to blog comments in Table UK:

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/23/14 http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html

3/2/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html

2/2/14 http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.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 UK Office for National Statistics provides important analysis of the relation of GDP and the labor market (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q4--march-gdp-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--february-labour-market-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--january-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--december-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--november-gdp-update/sum-nov-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--october-gdp-update/sum-october-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q2--august-labour-market-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/sum-may13-labour.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--january-gdp-update/sum-jan13.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--february-labour-market-update/sum-2012-q4---february-labour-update.html). The UK economy grew 0.7 percent in IVQ2013 but output is still 1.4 percent below the level before the global recession in IQ2008 (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q4--march-gdp-update/index.html

(http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--january-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--december-gdp-update/sum-dec-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--october-gdp-update/sum-october-gdp.html). Chart VH-1 of the UK Office for National Statistics (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--october-gdp-update/sum-october-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/sum-may13-labour.html) shows weakening output but relatively faster increases in employment and hours worked. Output growth and labor market improvement are converging.

Chart VH-1, UK, Employment Level Ages 16 and Over, Total Weekly Hours and GDP, 2008-2013

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q4--march-gdp-update/index.html

Table VH-L1 of the UK Office for national Statistics provides the data for GDP and the labor market (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q4--march-gdp-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--february-gdp-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--february-labour-market-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--january-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--december-gdp-update/sum-dec-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--november-gdp-update/sum-nov-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--october-gdp-update/sum-october-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q2--august-labour-market update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/sum-may13-labour.html) provides total weekly hours, output and employment quarterly from 2008 to 2013. Improving output has been accompanied recently by improvements in hours worked and employment. From IQ2008 to IVQ2013, employment increased 2.2 percent and hours worked 1.8 percent while GDP is still 1.4 percent lower.

Table VH-L1, UK, Indices of Quarterly Employment Ages 16 and Over, Total Hours Worked and GDP, 2008-2013

			Index, Q1 2008 =100
	GDP, CVM	Employment, Aged 16 +	Total weekly hours, Aged 16 +
	ABMI	MGRZ	YBUS
2008 Q1	100.0	100.0	100.0
Q2	99.1	100.1	98.9
Q3	97.7	99.6	98.9
Q4	95.6	99.4	98.3
2009 Q1	93.2	98.9	96.7
Q2	92.8	97.9	96.3
Q3	92.8	97.8	95.8
Q4	93.2	97.9	95.8
2010 Q1	93.7	97.6	95.7
Q2	94.7	98.2	96.5
Q3	95.0	98.9	97.0
Q4	94.8	98.7	97.4
2011 Q1	95.3	99.0	97.4
Q2	95.4	99.0	96.3
Q3	95.9	98.5	97.1
Q4	95.8	98.8	97.3
2012 Q1	95.8	99.2	98.0
Q2	95.5	99.9	98.5
Q3	96.2	100.2	99.6
Q4	96.0	100.8	99.8
2013 Q1	96.3	100.7	100.1
Q2	97.1	100.9	100.4
Q2	97.9	101.5	101.4
Q4	98.6	102.2	101.8

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q4--march-gdp-update/index.html

Chart VH-2 of the UK Office for National Statistics provides comparison of output performance during four cycles in the 1970s, 1980s, 1990s and 2000s. Output is indexed to the pre-recession peak. For example, the index for the current economic cycles is 100 for IQ2008. Output performance was stronger in the earlier economic cycles.

Chart VH-2, UK, Index of Output in Economic Cycles

UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--january-gdp-update/index.html

Table VH-L2 provides output in the four economic cycles. Output increased 8.8 percent in the cycle of the early 1970s, 11.7 percent in the cycle of the 1980s and 15.8 percent in the cycle of the 1990s. Output is 1.3 percent below the pre-recession peak in IQ2008.

Table VH-L2, Index of Output in Economic Cycles, Pre-Contraction = 100

Early 70s (1973 Q2=100)	Early 80s (1979 Q4=100)	Early 90s (1990 Q2=100)	Latest (2008 Q1=100)
ABMI	ABMI	ABMI	ABMI
100.0	100.0	100.0	100.0
99.1	99.0	99.1	99.1
99.1	97.3	98.4	97.6
96.8	97.1	98.3	95.6
98.6	95.8	97.9	93.2
99.5	95.4	97.6	92.8
98.4	95.4	97.9	92.8
98.6	96.6	98.4	93.2
97.2	96.6	98.6	93.7
97.0	97.1	99.4	94.6
98.4	98.3	100.3	95.0
100.0	98.3	101.4	94.8
99.1	99.0	102.1	95.3
100.0	100.4	103.2	95.4
102.1	101.3	104.1	95.9
102.3	102.5	105.5	95.8
101.8	103.8	107.1	95.7
102.5	104.8	108.7	95.4
104.1	104.2	109.6	96.1
104.6	104.6	110.1	96.0
105.5	106.3	110.9	96.5
106.7	107.5	112.3	97.3
107.6	109.2	112.9	98.0
106.7	109.2	114.2	98.7
111.3	110.1	114.8
108.8	111.7	115.8

UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--january-gdp-update/index.html

Labor market statistics of the UK for the quarter Dec 2013-Feb 2014 are provided in Table VH-L2. The unemployment rate fell to 6.9 percent and the number unemployed decreased 320,000 in the year, reaching 2.243 million. The employment rate is 72.6 percent. Earnings growth including bonuses increased 1.7 percent over the earlier year. The claimant count or those receiving unemployment benefits stands at 3.4 percent, down 0.1 percentage points on the month and down 1.2 percentage points on the year.

Table VH-L2, UK, Labor Market Statistics

	Quarter Dec 2013-Feb 2014
Unemployment Rate	6.9% down 0.2 on quarter and down 1.0 from year earlier
Number Unemployed	(1) Down 77,000 on quarter and down 320,000 from year earlier to reach 2.243 million (2) Unemployment rate 16 to 24 years of age 21.0% of that age group (3) Unemployed 16 to 24 years excluding those in full-time education 598,000 (283,000 in full-time education) down 38,000 on quarter; unemployment rate 19.1% down 0.9 % Points
Number Unemployed > one and two years	(1) Number unemployed over one year: 807,000, down 32,000 on quarter, down 93,000 on year (2) Number unemployed over two years: 430,000, down 19,000 on quarter, down 22,000 on year
Inactivity Rate 16-64 Years of Age (Definition: Not in employment but have not been seeking employment in the past four weeks or are unable to start work in two weeks)	(1) 21.9%, down 0.3 on quarter, down 0.3 on year (2) Economically inactive 16-64 years down 86,000 on quarter and down 104,000 on year to 8.846 million
Employment Rate	72.6%, up 0.5 on quarter, up 1.2 % points on year
Number Employed	(1) Up 239,000 on quarter, +691,000 on year to 30.389 million                              (2) Number of employees down 99,000 on quarter to 25.64 million (3) Self-employed rose 146,000 on quarter to 4.50 million (4) Full-time 21.868 million, up 157,000 on quarter, up 412,000 on year (5) 1.46 million working part-time and self-employed who could not find full-time jobs
Earnings Growth Rates Year on Year	(1) Total +1.7% (including bonuses) over year earlier; regular 1.4%; private sector 2.0% on year earlier, public sector 0.9% on year earlier   (2) Regular private 1.8 % (excluding bonuses); regular public 1.0% on year earlier
Full-time and Part-time	(1) Number full-time 21.824 million, up 148,000 on quarter (2) Number part-time 8.045 million, up 38,000 on quarter
Claimant Count (Jobseeker’s Allowance, JSA)	(1) Latest estimate: 1.142 million; down 30,400 in month, down 386,100 on year earlier (2) Claimant count 3.4%, down 0.1 on month and down 1.2 % points on year
Labor Productivity	(1) Output per worker rose 0.3% from IIIQ2013 to IVQ2013 and 0.7% from IVQ2012 (2) Unit labor costs fell 0.2% from IIIQ2013 to IVQ2013 and increased 0.8% relative to IVQ2012

Note: Labor Force Survey does not measure monthly changes. Comparisons on quarter are on quarter before prior quarter

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/april-2014/index.html

Table VH-L3 provides indicators of the labor force survey of the UK for Dec 2013-Feb 2014 and earlier quarters. There has been improvement in UK labor markets with the rate of unemployment decreasing from 7.9 percent in Dec 2012-Feb 2013 to 6.9 percent in Dec 2013-Feb 2014.

Table VH-L3, UK, Labor Force Survey Indicators

	LFHP	EMP	PART	UNE	RATE
Dec-Feb 2012	40,179	29,210	70.5	2,634	8.3
Dec-Feb 2013	40,226	29,698	71.4	2,563	7.9
Mar-May 2013	40,242	29,714	71.4	2,505	7.8
Jun-Aug 2013	40,269	29,869	71.7	2,487	7.7
Sep-Nov 2013	40,313	30,150	72.1	2,320	7.1
Dec-Feb 2014	40,359	30,389	72.6	2,243	6.9

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

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/april-2014/index.html

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