CMP Associates Regulation Blog

Chart VA-1 of the US Census Bureau provides new orders of durable goods seasonally adjusted since Jan 1992. New orders fell sharply during the global recession. New orders recovered at faster rates and then flattened together with the rest of the economy after 2012. There are also downward effects of lower inflation because data are nominal without adjustment for inflation.

Chart VA-1, US, Durable Goods New orders, SA

Source: US Census Bureau

http://www.census.gov/briefrm/esbr/www/esbr021.html

Chart VA-2 provides monthly changes in durable goods new orders. There is significant volatility in these data, preventing clear identification of trends.

Chart VA-2, US, Manufacturers’ Durable Goods New Orders 2013-2014

Source: US Census Bureau

Additional perspective on manufacturers’ shipments and new orders of durable goods is in Table VA-2. Values are cumulative millions of dollars in Jan-Oct 2014 not seasonally adjusted (NSA) and without adjustment for inflation. Shipments of durable goods of all manufacturing industries in Jan-Oct 2014 total $2,425.5 billion and new orders total $2,447.1 billion, growing respectively by 5.2 percent and 7.5 percent relative to the same period in 2013. Excluding transportation equipment, shipments grew 5.6 percent and new orders increased 5.6 percent. Excluding defense, shipments grew 5.7 percent and new orders grew 7.4 percent. Important information not in Table VA-2 is the large share of nondurable goods. Capital goods have relatively high value of $869.1 billion for shipments, growing 5.0 percent, and new orders $947.6 billion, increasing 9.7 percent. Excluding aircraft, capital goods shipments reached $689.5 billion, growing by 5.3 percent, and new orders $711.5 billion, increasing 5.4 percent. Data weakened in 2013 with effects of lower inflation on nominal values with recovery later in the year.

Table VA-2, US, Value of Manufacturers’ Shipments and New Orders of Durable Goods, NSA, Millions of Dollars

Jan-Oct 2014	Shipments	∆% 2014/ 2013	New Orders	∆% 2014/ 2013
Total	2,425,531	5.2	2,447,135	7.5
Excluding Transport	1,712,551	5.6	1,663,978	5.6
Excluding Defense	2,309,539	5.7	2,333,795	7.4
Machinery	364,035	6.3	375,091	7.7
Computers & Electronic Products	287,599	5.0	219,021	4.3
Computers & Related Products	21,062	-4.8	21,806	-2.0
Transport Equipment	712,980	4.3	783,157	11.8
Motor Vehicles	474,386	4.3	474,622	4.6
Nondefense Aircraft	121,141	10.7	192,243	34.2
Capital Goods	869,143	5.0	947,629	9.7
Nondefense Capital Goods	774,366	6.0	856,347	9.7
Capital Goods ex Aircraft	689,456	5.3	711,480	5.4

Note: Transport: transportation

Source: US Census Bureau

Chart VA-3 of the US Census Bureau provides new orders of durable goods not seasonally adjusted since Jan 1992. New orders are oscillating around the highest value before the global recession, which could be lower in real terms because of continuing inflation.

Chart VA-3, US, Durable Goods New orders, NSA

Source: US Census Bureau

http://www.federalreserve.gov/releases/g17/Current/default.htm

Chart VA-4 of the Board of Governors of the Federal Reserve System shows that output of durable manufacturing accelerated in the 1980s and 1990s with slower growth in the 2000s perhaps because processes matured. Growth was robust after the major drop during the global recession but appears to vacillate in the final segment.

Chart VA-4, US, Output of Durable Manufacturing, 1972-2014

Source: Board of Governors of the Federal Reserve System

Manufacturing jobs not seasonally adjusted increased 172,000 from Oct 2013 to
Oct 2014 or at the average monthly rate of 14,333. There are effects of the weaker economy and international trade together with the yearly adjustment of labor statistics. Industrial production increased 1.0 percent in Sep 2014 and decreased 0.2 percent in Aug 2014 after increasing 0.2 percent in Jul 2014, as shown in Table I-1, with all data seasonally adjusted. Industrial production decreased 0.1 percent in Oct 2014 and increased 0.8 percent in Sep 2014 after decreasing 0.2 percent in Aug 2014, as shown in Table I-1, with all data seasonally adjusted. The Federal Reserve completed its annual revision of industrial production and capacity utilization on Mar 28, 2014 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm). The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production edged down 0.1 percent in October after having advanced 0.8 percent in September. In October, manufacturing output increased 0.2 percent for the second consecutive month. The index for mining declined 0.9 percent and the output of utilities moved down 0.7 percent. At 104.9 percent of its 2007 average, total industrial production in October was 4.0 percent above its level of a year earlier. Capacity utilization for the industrial sector decreased 0.3 percentage point in October to 78.9 percent, a rate that is 1.2 percentage points below its long-run (1972–2013) average.”

In the six months ending in Oct 2014, United States national industrial production accumulated increase of 1.6 percent at the annual equivalent rate of 3.2 percent, which is lower than growth of 4.0 percent in the 12 months ending in Oct 2014. Excluding growth of 0.8 percent in Sep 2014, growth in the remaining five months from May to Oct 2014 accumulated to 0.8 percent or 1.9 percent annual equivalent. Industrial production declined in two of the past six months. Industrial production expanded at annual equivalent 2.0 percent in the most recent quarter from Aug to Oct 2014 and at 4.5 percent in the prior quarter May-Jul 2014. Business equipment accumulated growth of 1.6 percent in the six months from May to Oct 2014 at the annual equivalent rate of 3.2 percent, which is lower than growth of 4.6 percent in the 12 months ending in Oct 2014. The Fed analyzes capacity utilization of total industry in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “Capacity utilization for the industrial sector decreased 0.3 percentage point in October to 78.9 percent, a rate that is 1.2 percentage points below its long-run (1972–2013) average.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration and weaker growth in past months.

Manufacturing decreased by 21.9 from the peak in Jun 2007 to the trough in Apr 2009 and increase by 19.9 percent from the trough in Apr 2009 to Dec 2013. Manufacturing grew 26.2 percent from the trough in Apr 2009 to Oct 2014. Manufacturing output in Oct 2014 is 1.4 percent below the peak in Jun 2007. Growth at trend in the entire cycle from IVQ2007 to IIIQ2014 would have accumulated to 23.0 percent. GDP in IIIQ2014 would be $18,438.0 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,287.4 billion than actual $16,150.6 billion. There are about two trillion dollars of GDP less than at trend, explaining the 26.6 million unemployed or underemployed equivalent to actual unemployment of 16.1 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2014/11/rules-discretionary-authorities-and.html

and earlier (http://cmpassocregulationblog.blogspot.com/2014/10/world-financial-turbulence-twenty-seven.html). US GDP in IIIQ2014 is 12.4 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,150.6 billion in IIIQ2014 or 7.7 percent at the average annual equivalent rate of 1.1 percent. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. The long-term trend is growth at average 3.3 percent per year from Jan 1919 to Oct 2014. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 123.8884 in Oct 2014. The actual index NSA in Oct 2014 is 101.5613, which is 18.0 percent below trend. Manufacturing output grew at average 2.3 percent between Dec 1986 and Dec 2013, raising the index at trend to 115.9214 in Oct 2014. The output of manufacturing at 101.5613 in Oct 2014 is 12.4 percent below trend under this alternative calculation.

Table I-13 provides national income by industry without capital consumption adjustment (WCCA). “Private industries” or economic activities have share of 87.3 percent in IIQ2014. Most of US national income is in the form of services. In Oct 2014, there were 140.817 million nonfarm jobs NSA in the US, according to estimates of the establishment survey of the Bureau of Labor Statistics (BLS) (http://www.bls.gov/news.release/empsit.nr0.htm Table B-1). Total private jobs of 118.518 million NSA in Oct 2014 accounted for 84.2 percent of total nonfarm jobs of 140.817 million, of which 12.227 million, or 10.3 percent of total private jobs and 8.7 percent of total nonfarm jobs, were in manufacturing. Private service-producing jobs were 99.027 million NSA in Oct 2014, or 70.3 percent of total nonfarm jobs and 83.6 percent of total private-sector jobs. Manufacturing has share of 11.3 percent in US national income in IIQ2014 and durable goods 6.4 percent, as shown in Table I-13. Most income in the US originates in services. Subsidies and similar measures designed to increase manufacturing jobs will not increase economic growth and employment and may actually reduce growth by diverting resources away from currently employment-creating activities because of the drain of taxation.

Table I-13, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total

	SAAR IQ2014	% Total	SAAR IIQ2014	% Total
National Income WCCA	14,982.0	100.0	15,276.2	100.0
Domestic Industries	14,771.0	98.6	15,062.8	98.6
Private Industries	13,055.8	87.1	13,342.0	87.3
Agriculture	161.0	1.1	178.6	1.2
Mining	273.1	1.8	260.5	1.7
Utilities	209.1	1.4	215.7	1.4
Construction	660.3	4.4	666.8	4.4
Manufacturing	1642.5	11.0	1721.4	11.3
Durable Goods	950.2	6.3	982.0	6.4
Nondurable Goods	692.3	4.6	739.3	4.8
Wholesale Trade	908.7	6.1	925.1	6.1
Retail Trade	1029.8	6.9	1051.9	6.9
Transportation & WH	465.6	3.1	478.0	3.1
Information	560.5	3.7	578.0	3.8
Finance, Insurance, RE	2638.0	17.6	2661.9	17.4
Professional & Business Services	2026.8	13.5	2086.1	13.7
Education, Health Care	1461.8	9.8	1487.5	9.7
Arts, Entertainment	593.9	4.0	605.2	4.0
Other Services	424.7	2.8	425.4	2.8
Government	1715.1	11.4	1720.8	11.3
Rest of the World	211.0	1.4	213.5	1.4

Notes: SSAR: Seasonally-Adjusted Annual Rate; WCCA: Without Capital Consumption Adjustment by Industry; WH: Warehousing; RE, includes rental and leasing: Real Estate; Art, Entertainment includes recreation, accommodation and food services; BS: business services

Source: US Bureau of Economic Analysis

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

VB Japan. The GDP of Japan grew at 1.0 percent per year on average from 1991 to 2002, with the GDP implicit deflator falling at 0.8 percent per year on average. The average growth rate of Japan’s GDP was 4 percent per year on average from the middle of the 1970s to 1992 (Ito 2004). Low growth in Japan in the 1990s is commonly labeled as “the lost decade” (see Pelaez and Pelaez, The Global Recession Risk (2007), 81-115). Table VB-GDP provides yearly growth rates of Japan’s GDP from 1995 to 2013. Growth weakened from 2.7 per cent in 1995 and 1996 to contractions of 1.5 percent in 1999 and 0.4 percent in 2001 and growth rates below 2 percent with exception of 2.3 percent in 2003. Japan’s GDP contracted sharply by 3.7 percent in 2006 and 2.0 percent in 2009. As in most advanced economies, growth was robust at 3.4 percent in 2010 but mediocre at 0.3 percent in 2011 and 0.7 percent in 2013. Japan’s GDP grew 2.3 percent in 2013.

Table VB-GDP, Japan, Yearly Percentage Change of GDP ∆%

Calendar Year	∆%
1995	2.7
1996	2.7
1997	0.1
1998	-1.5
1999	0.5
2000	2.0
2001	-0.4
2002	1.1
2003	2.3
2004	1.5
2005	1.9
2006	1.8
2007	1.8
2008	-3.7
2009	-2.0
2010	3.4
2011	0.3
2012	0.7
2013	2.3

Source: Source: Japan Economic and Social Research Institute, Cabinet Office

http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html

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 (https://www.boj.or.jp/en/mopo/outlook/gor1404b.pdf) with changes on Jul 14, 2014 (https://www.boj.or.jp/en/announcements/release_2014/k140715a.pdf). For fiscal 2013, the forecast is of growth of GDP between 2.2 and 2.3 percent, with the all items CPI less fresh food of 0.8 percent (https://www.boj.or.jp/en/mopo/outlook/gor1404b.pdf). The critical difference is forecast of the CPI excluding fresh food of 3.2 to 3.5 percent in 2014, 1.9 to 2.8 percent in 2015 and 2.0 to 3.0 in 2016 (https://www.boj.or.jp/en/announcements/release_2014/k140715a.pdf). Consumer price inflation in Japan excluding fresh food was 0.4 percent in Apr 2014 and 3.4 percent in 12 months (http://www.stat.go.jp/english/data/cpi/1581.htm), significantly because of the increase of the tax on value added of consumption in Apr 2014. 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:

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).
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.
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).
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.
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
Apr 2014	+2.2 to +2.3 [+2.2]	+0.8
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
Jul 2014	+0.6 to +1.3 [+1.0]	+3.2 to +3.5 [+3.3]	+1.2 to +1.5 [+1.3]
Apr 2014	+0.8 to +1.3 [+1.1]	+3.0 to +3.5 [+3.3]	+1.0 to +1.5 [+1.3]
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
Jul 2014	+1.2 to +1.6 [+1.5]	+1.9 to +2.8 [+2.6]	+1.2 to +2.1 [+1.9]
Apr 2014	+1.2 to +1.5 [+1.5]	+1.9 to +2.8 [+2.6]	+1.2 to +2.1 [+1.9]
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]
2016
Jul 2014	+1.0 to +1.5 [+1.3]	+2.0 to +3.0 [+2.8]	+1.3 to +2.3 [+2.1]
Apr 2014	+1.0 to +1.5 [+1.3]	+2.0 to +3.0 [+2.8]	+1.3 to +2.3 [+2.1]

Figures in brackets are the median of forecasts of Policy Board members

Source: Policy Board, Bank of Japan

https://www.boj.or.jp/en/announcements/release_2014/k140715a.pdf

The Markit/JMMA Flash Japan Manufacturing PMI Index™ with the Flash Japan Manufacturing PMI™ decreased from 52.4 in Oct to 52.1 in Nov and the Flash Japan Manufacturing Output Index™ increased from 51.3 in Oct to 53.5 in Nov (http://www.markiteconomics.com/Survey/PressRelease.mvc/b111ccb969f04f6d9a9ff3a283807bfa). New export orders increased at a slower pace. Amy Brownbill, Economist at Markit, finds improving Japan’s manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/b111ccb969f04f6d9a9ff3a283807bfa). Private-sector activity in Japan improved marginally with the Markit Composite Output PMI Index increasing from 50.8 in Aug to 52.8 in Sep, indicating modest improvement (http://www.markiteconomics.com/Survey/PressRelease.mvc/2e1dfffdc45c4e49be57a12b42bfc8d1). The Markit Business Activity Index of Services increased to 52.5 in Sep from 49.9 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/2e1dfffdc45c4e49be57a12b42bfc8d1). Amy Brownbill, Ecoomist at Markit and author of the report, finds the reading consistent with growth in IIIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/2e1dfffdc45c4e49be57a12b42bfc8d1). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, decreased from 52.5 in Aug to 51.7 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/ace36b2b67724577bcba4aff0291b168). New orders, output and foreign orders increased. Amy Brownbill, Economist at Markit and author of the report, finds higher growth of output (http://www.markiteconomics.com/Survey/PressRelease.mvc/ace36b2b67724577bcba4aff0291b168).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	Oct ∆% -0.8 12 months ∆% 2.9 Blog 11/16/14
Consumer Price Index	Aug NSA ∆% 0.2; Aug 12 months NSA ∆% 3.3 Blog 9/28/14
Real GDP Growth	IIIQ2014 ∆%: -0.4 on IIQ2014; IIIQ2014 SAAR -1.6; ∆% from quarter a year earlier: -1.2 % Blog 6/16/13 8/18/13 9/15/13 11/17/13 12/15/13 2/23/14 3/16/14 5/18/14 6/15/14 8/17/14 9/14/14 11/23/14
Employment Report	Sep Unemployed 2.33 million Change in unemployed since last year: minus 250 thousand Unemployment rate: 3.6 % Blog 11/16/14
All Industry Indices	Aug month SA ∆% -0.1 12-month NSA ∆% -2.5 Blog 10/26/14
Industrial Production	Oct SA month ∆%: 0.2 12-month NSA ∆% -1.0 Blog 11/30/14
Machine Orders	Total Aug ∆% -2.2 Private ∆%: -12.4 Aug ∆% Excluding Volatile Orders 4.7 Blog 10/12/14
Tertiary Index	Aug month SA ∆% -0.1 Aug 12 months NSA ∆% minus 2.7 Blog 10/12/14
Wholesale and Retail Sales	Sep 12 months: Total ∆%: 0.3 Wholesale ∆%: -0.1 Retail ∆%: 1.4 Blog 11/30/14
Family Income and Expenditure Survey	Aug 12-month ∆% total nominal consumption -0.9, real -4.7 Blog 10/5/14
Trade Balance	Exports Oct 12 months ∆%: 9.6 Imports Oct 12 months ∆% 2.7 Blog 11/23/14

Links to blog comments in Table JPY:

11/23/14 http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html

11/16/14 http://cmpassocregulationblog.blogspot.com/2014/11/fluctuating-financial-variables.html

11/2/14 http://cmpassocregulationblog.blogspot.com/2014/11/growth-uncertainties-mediocre-cyclical.html

10/26/14 http://cmpassocregulationblog.blogspot.com/2014/10/financial-oscillations-world-inflation.html

10/12/14 http://cmpassocregulationblog.blogspot.com/2014/10/global-financial-volatility-recovery.html

10/5/14 http://cmpassocregulationblog.blogspot.com/2014/10/world-financial-turbulence-twenty-seven.html

9/28/14 http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html

9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html

8/17/2014 http://cmpassocregulationblog.blogspot.com/2014/08/weakening-world-economic-growth.html

6/15/2014 http://cmpassocregulationblog.blogspot.com/2014/06/financialgeopolitical-risks-recovery.html

5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.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

Industrial production in Japan increased 0.2 percent in Oct 2014 and decreased 1.0 percent in 12 months, as shown in Table VB-1. Industrial production increased 2.9 percent in Sep 2014 and 0.8 percent in 12 months. Industrial production decreased 1.9 percent in Aug 2014 and fell 3.3 percent in 12 months. Industrial production increased 0.4 percent in Jul 2014 and fell 0.7 percent in 12 months. Japan’s industrial production fell 3.4 percent in Jun 2014 and increased 3.1 percent in 12 months. In May 2014, industrial production in Japan increased 0.7 percent, rebounding from the increase in the sales tax, and increased 1.0 percent in the 12 months ending in May 2014. Industrial production fell 2.8 percent in Apr 2014, mostly because of the increase in the tax on value added of consumption in Apr 2014, and increased 3.8 percent in 12 months. Decline of 2.8 percent in Jun 2013 interrupted four consecutive monthly increases from Feb through May 2013. Another interruption occurred in Aug 2013 with decrease of 0.5 percent and decline of 0.6 percent in 12 months. There was a third interruption with decline of 2.3 percent in Feb 2014 but increase of 7.0 percent in 12 months. Japan’s industrial production is strengthening with growth of 1.4 percent in Dec 2012, 0.9 percent in Feb 2013, 0.3 percent in Mar 2013, 0.6 percent in Apr 2013, 2.1 percent in May 2013, 2.7 percent in Jul 2013, 1.5 percent in Sep 2013, 0.6 percent in Oct 2013 and 0.5 percent in Dec 2013. Improvement continued with 3.9 percent in Jan 2014 and rebound of 0.7 percent in May 2014 from the drop of 2.8 percent in Apr caused by the increases in the sales tax. Growth in 12 months improved from minus 10.0 percent in Feb 2013 to 7.2 percent in Dec 2013, 10.6 percent in Jan 2014, 7.0 percent in Feb 2014 and 7.4 percent in Mar 2014. The increase of the sales tax of Apr 2014 interrupted improvement but growth in 12 months was positive at 1.0 percent in May 2014 and 3.1 percent in Jun 2014. Industrial production fell 21.9 percent in 2009 after falling 3.4 percent in 2008 but recovered by 15.6 percent in 2010. The annual average in calendar year 2011 fell 2.8 percent largely because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Industrial production increased 0.6 percent in 2012 and fell 0.8 percent in 2013.

Table VB-1, Japan, Industrial Production ∆%

	∆% Month SA	∆% 12 Months NSA
Oct 2014	0.2	-1.0
Sep	2.9	0.8
Aug	-1.9	-3.3
Jul	0.4	-0.7
Jun	-3.4	3.1
May	0.7	1.0
Apr	-2.8	3.8
Mar	0.7	7.4
Feb	-2.3	7.0
Jan	3.9	10.6
Dec 2013	0.5	7.2
Nov	0.3	4.8
Oct	0.6	5.4
Sep	1.5	5.3
Aug	-0.5	-0.6
Jul	2.7	1.9
Jun	-2.8	-4.7
May	2.1	-1.0
Apr	0.6	-3.2
Mar	0.3	-7.0
Feb	0.9	-10.0
Jan	-0.7	-6.4
Dec 2012	1.4	-7.6
Nov	-1.0	-5.5
Oct	0.3	-4.7
Sep	-2.2	-7.6
Aug	-1.4	-4.1
Jul	-0.5	0.1
Jun	-0.8	-0.6
May	-1.8	7.6
Apr	-0.5	15.1
Mar	0.2	16.6
Calendar Year
2013		-0.8
2012		0.6
2011		-2.8
2010		15.6

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

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

Japan is experiencing weak internal demand as in most advanced economies, interrupted by strong growth in IQ2012 but renewed weakening at the end of IIQ2012, beginning of IIIQ2012 and in IVQ2012. There was recovery in IQ2013, IIQ2013 and IIIQ2013. Recovery interrupted in IVQ2013, accelerating in IQ2014. There was weakening again in IIQ2014 and IIIQ2014. Table VB-2 provides Japan’s wholesale and retail sales. There is strong performance in May 2013 with growth of 0.8 percent for retail sales followed by 1.6 percent in Jun 2013. Retail sales fell 0.3 percent in Jul 2013, rebounding 1.1 percent in Aug 2013. Retail sales increased 3.0 percent in the 12 months ending in Sep 2013 and 2.4 percent in the 12 months ending in Oct 2013. Retail sales increased 4.1 percent in the 12 months ending in Nov 2013 and 2.5 percent in the 12 months ending in Dec 2013. Retail sales grew 4.4 percent in the 12 months ending in Jan 2014 and 3.6 percent in the 12 months ending in Feb 2014. Japan’s retail sales increased 11.0 percent in the 12 months ending in Mar 2014 in part anticipating the increase in the tax on the value added of consumption. Retail sales fell 4.3 percent in Apr 2014 after the increase in the sales tax. Retail sales fell 0.4 percent in the 12 months ending in May 2014 and fell 0.6 percent in the 12 months ending in Jun 2014. Retail sales increased 0.6 percent in the 12 months ending in Jul 2014 and 1.2 percent in the 12 months ending in Aug 2014. Retail sales increased 2.3 percent in the 12 months ending in Sep 2014 and 1.4 percent in the 12 months ending in Oct 2014. Retail sales are recovering from deep drops in Mar and Apr 2011 following the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Retail sales have been increasing in 12-month percentage changes from Dec 2011 through May 2012. Retail sales fell again by 1.3 percent in Jul 2012, increasing 1.3 percent in Aug 2012 and 0.4 percent in Sep 2012 but declining 1.2 percent in Oct 2012, rebounding by 0.9 percent in Nov 2012 and only 0.2 percent in Dec 2012 but contracting 1.1 percent in Jan 2013 and 2.2 percent in Feb 2013.

Table VB-2, Japan, Wholesale and Retail Sales 12 Month ∆%

	Total	Wholesale	Retail
Oct 2014	0.3	-0.1	1.4
Sep	1.6	1.3	2.3
Aug	-1.6	-2.8	1.2
Jul	0.1	-0.1	0.6
Jun	-0.6	-0.5	-0.6
May	-1.0	-1.3	-0.4
Apr	-3.4	-3.0	-4.3
Mar	8.5	7.5	11.0
Feb	2.5	2.0	3.6
Jan	4.4	4.4	4.4
Dec 2013	2.8	2.9	2.5
Nov	2.9	2.4	4.1
Oct	2.0	1.8	2.4
Sep	2.8	2.7	3.0
Aug	0.6	0.4	1.1
Jul	1.3	2.0	-0.3
Jun	0.5	0.1	1.6
May	0.6	0.5	0.8
Apr	-0.1	-0.1	-0.2
Mar	-1.3	-1.8	-0.3
Feb	-1.6	-1.3	-2.2
Jan	-0.3	0.1	-1.1
Dec 2012	-1.7	-2.5	0.2
Nov	-0.9	-1.6	0.9
Oct	-1.6	-1.8	-1.2
Sep	-3.6	-5.1	0.4
Aug	-2.7	-4.4	1.3
Jul	-3.1	-4.0	-1.3
Jun	-2.6	-3.6	-0.2
May	2.7	2.6	3.0
Apr	1.8	0.4	5.0
Mar	3.2	0.9	9.3
Feb	-0.1	-1.3	3.1
Jan	-2.1	-3.8	1.6
Dec 2011	-0.8	-2.0	2.5
Nov	-2.3	-2.4	-2.2
Oct	1.1	0.8	1.9
Sep	0.3	0.8	-1.1
Aug	3.1	5.2	-2.6
Jul	2.3	3.0	0.6
Jun	3.1	3.8	1.2
May	1.3	2.3	-1.3
Apr	-2.6	-1.7	-4.8
Mar	-1.3	1.2	-8.3
Feb	5.3	7.2	0.1
Jan	3.3	4.6	0.1
Dec 2010	3.5	5.7	-2.1
Calendar Year
2013	0.9	0.8	1.0
2012	-0.9	-2.0	1.8
2011	1.0	1.9	-1.0
2010	2.4	2.3	2.6
2009	-20.5	-25.6	-2.3
2008	1.2	1.5	0.3

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 Jan 2011 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 index moved to 53.8 in Oct 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 51.0 in Oct 2014.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Oct 2014	53.8	51.0	52.0	48.8	59.9
Sep	54.0	49.5	49.8	47.3	60.9
Aug	54.4	50.0	52.2	48.3	61.2
Jul	54.2	50.7	53.4	49.5	61.5
Jun	55.0	50.7	56.0	50.8	60.4
May	55.5	52.7	54.5	49.0	60.7
Apr	54.8	50.8	52.4	49.4	61.5
Mar	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

Chart CIPMNM provides China’s nonmanufacturing purchasing managers’ index. The index fell from 56.3 in Oct 2013 to 53.8 in Oct 2014.

Chart CIPMNM, China, Nonmanufacturing Index of Purchasing Managers, Seasonally Adjusted

Source: National Bureau of Statistics of China

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 50.8 in Oct 2014. The index of new orders fell from 54.5 in Apr 2012 to 51.2 in Dec 2012. The index of new orders fell from 52.3 in Nov 2013 to 52.0 in Dec 2013. The index fell to 50.9 in Jan 2014 and increased to 51.6 in Oct 2014.

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

	IPM	PI	NOI	INV	EMP	SDEL
Oct 2014	50.8	53.1	51.6	48.4	48.4	50.1
Sep	51.1	53.6	52.2	48.8	48.2	50.1
Aug	51.1	53.2	52.5	48.6	48.2	50.0
Jul	51.7	54.2	53.6	49.0	48.3	50.2
Jun	51.0	53.0	52.8	48.0	48.6	50.5
May	50.8	52.8	52.3	48.0	48.2	50.3
Apr	50.4	52.5	51.2	48.1	48.3	50.1
Mar	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

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 Jun 2013. The index decreased from 51.4 in Nov 2013 to 51.0 in Dec 2013. The index moved to 50.8 in Oct 2014.

Chart CIPMMFG, China, Manufacturing Index of Purchasing Managers, Seasonally Adjusted

Source: National Bureau of Statistics of China

11/16/14 http://cmpassocregulationblog.blogspot.com/2014/11/fluctuating-financial-variables.html

Cumulative growth of China’s GDP in IIIQ2014 relative to the same period in 2013 was 7.4 percent, as shown in Table VC-GDP. Secondary industry accounts for 44.2 percent of cumulative GDP in IIIQ2014. In cumulative IIIQ2014, industry alone accounts for 37.4 percent of GDP and construction with the remaining 6.8 percent. Tertiary industry accounts for 46.7 percent of cumulative GDP in IIIQ2014 and primary industry for 9.0 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 6.6 percent and to 7.3 percent in IIQ2013, rebounding to 9.5 percent in IIIQ2013. Annual equivalent growth was 7.0 percent in IVQ2013, declining to 6.1 percent in IQ2014 and increasing to 8.2 percent in IIQ2014. Annual equivalent growth slowed to 7.8 percent in IIIQ2014.

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

Cumulative GDP IIIQ2014	Value Current CNY Billion	2014 Year-on-Year Constant Prices ∆%
GDP	41,990.8	7.4
Primary Industry	3799.6	4.2
Farming	3799.6	4.2
Secondary Industry	18,578.7	7.4
Industry	15,705.7	7.1
Construction	2873.0	9.0
Tertiary Industry	19,612.5	7.9
Transport, Storage, Post	2337.0	7.0
Wholesale, Retail Trades	3893.0	9.7
Hotel & Catering Services	847.6	6.2
Financial Intermediation	2965.5	9.1
Real Estate	2641.4	2.3
Other	6928.0	9.0
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2014
IIIQ2014	1.9	7.8
IIQ2014	2.0	8.2
IQ2014	1.5	6.1
2013
IVQ2013	1.7	7.0
IIIQ2013	2.3	9.5
IIQ2013	1.8	7.4
IQ2013	1.6	6.6
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 IIIQ2014 relative to the same period in 2013 was 7.3 percent, as shown in Table VC-GDPA. Secondary industry accounts for 44.2 percent of GDP of which industry alone for 37.4 percent in cumulative IIIQ2014 and construction with the remaining 6.8 percent. Tertiary industry accounts for 46.7 percent of GDP in cumulative IIQ2014 and primary industry for 9.0 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 7.7 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 1.5 percent in IQ2014 that is equivalent to 6.1 percent per year. GP grew 7.5 percent in IIQ2014 relative to a year earlier and 2.0 percent relative to the prior quarter, which is equivalent 8.2 percent. In IIIQ2014, GDP grew 7.3 percent relative to a year earlier and 1.9 percent relative to the prior quarter, which is 7.8 percent in annual equivalent.

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	IIQ 2014	IIIQ 2014
GDP	7.7	7.5	7.8	7.7	7.4	7.5	7.3
Primary Industry	3.4	3.0	3.4	4.0	3.5	3.9	4.2
Secondary Industry	7.8	7.6	7.8	7.8	7.3	7.4	7.4
Tertiary Industry	8.3	8.3	8.4	8.3	7.1	8.0	7.9
GDP ∆% Relative to a Prior Quarter	1.6	1.8	2.3	1.7	1.5	2.0	1.9
	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/67d6ee4cd3ee41c3b8cc48eb1e6d1bb2) is weakening. The overall Flash HSBC China Manufacturing PMI^™ decreased from 50.4 in Oct to 50.4 in Nov, while the Flash HSBC China Manufacturing Output Index decreased from 50.7 in Oct to 49.5 in Nov, indicating moderate stress. Exports orders indicate expansion at slower rate. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds need for monetary/fiscal stimulus (http://www.markiteconomics.com/Survey/PressRelease.mvc/67d6ee4cd3ee41c3b8cc48eb1e6d1bb2). The HSBC China Services PMI^™, compiled by Markit, shows improvement in business activity in China with the HSBC Composite Output, combining manufacturing and services, decreasing from 52.8 in Aug to 52.3 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/8614cb018b204bbd995dd9dff5830c43). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds need of easing policies in consolidating growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/8614cb018b204bbd995dd9dff5830c43). The HSBC China Services Business Activity index decreased from 54.1 in Aug to 53.5 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/8614cb018b204bbd995dd9dff5830c43). Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds that the services PMI shows sustained activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/8614cb018b204bbd995dd9dff5830c43). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, did not change to 50.2 in Sep from 50.2 in Aug, indicating near neutral manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/d578e13981d44eb69ce706c58ff2e6e5). New export orders strengthened. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds weakening demand in China with possible need of monetary and fiscal policy enhancement (http://www.markiteconomics.com/Survey/PressRelease.mvc/d578e13981d44eb69ce706c58ff2e6e5). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Oct 12-month ∆%: minus 2.2 Aug month ∆%: -0.4 Blog 11/16/14
Consumer Price Index	Oct month ∆%: 0.0 Oct 12 months ∆%: 1.6 Blog 11/16/14
Value Added of Industry	Sep month ∆%: 0.91 Jan-Sep 2014/Jan-Sep 2013 ∆%: 8.5 Blog 10/26/14
GDP Growth Rate	Year IIIQ2014 ∆%: 7.5 First Three Quarters 2014 ∆%: 7.3 Quarter IIQ2014 AE ∆%: 7.8 Blog 10/26/14
Investment in Fixed Assets	Total Jan-Sep 2014 ∆%: 16.1 Real estate development: 12.5 Blog 10/26/14
Retail Sales	Sep month ∆%: 0.85 Sep 12 month ∆%: 11.6 Jan-Sep ∆%: 12.0 Blog 10/26/14
Trade Balance	Sep balance $31.0 billion Exports 12M ∆% 15.3 Imports 12M ∆% -7.0 Cumulative Jan-Sep: $200.0 billion Blog 10/19/14

Links to blog comments in Table CNY:

10/26/14 http://cmpassocregulationblog.blogspot.com/2014/10/financial-oscillations-world-inflation.html

10/19/14 http://cmpassocregulationblog.blogspot.com/2014/10/imf-view-squeeze-of-economic-activity.html

VD Euro Area. Table VD-EUR provides yearly growth rates of the combined GDP of the members of the European Monetary Union (EMU) or euro area since 1996. Growth was very strong at 3.3 percent in 2006 and 3.0 percent in 2007. The global recession had strong impact with growth of only 0.4 percent in 2008 and decline of 4.4 percent in 2009. Recovery was at lower growth rates of 2.0 percent in 2010 and 1.6 percent in 2011. EUROSTAT estimates growth of GDP of the euro area of minus 0.7 percent in 2012 and minus 0.4 percent in 2013 but 1.1 percent in 2014 and 1.7 percent in 2015.

Table VD-EUR, Euro Area, Yearly Percentage Change of Harmonized Index of Consumer Prices, Unemployment and GDP ∆%

Year	HICP ∆%	Unemployment %	GDP ∆%
1999	1.2	9.6	2.9
2000	2.2	8.8	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	-4.5
2010	1.6	10.1	1.9
2011	2.7	10.1	1.6
2012	2.5	11.3	-0.7
2013*	1.3	12.0	-0.4
2014*			1.1
2015*			1.7

*EUROSTAT forecast Source: EUROSTAT

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

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

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

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

	Euro Area	Germany	France	Italy	Spain
2015*	1.7	1.9	1.7	1.2	1.7
2014*	1.1	1.7	0.9	0.7	0.5
2013*	-0.4	0.4	0.2	-1.9	-1.2
2012	-0.7	0.7	0.0	-2.4	-1.6
2011	1.6	3.3	2.0	0.4	0.1
2010	1.9	4.0	1.7	1.7	-0.2
2009	-4.5	-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 52.1 in Oct to 51.4 in Nov (http://www.markiteconomics.com/Survey/PressRelease.mvc/d5ed8bd5aad54a8f97d57072f87f0aab). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index suggests GDP growth around 0.1 to 0.2 percent in IVQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/d5ed8bd5aad54a8f97d57072f87f0aab). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP decreased from 52.5 in Aug to 52.0 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/01d8b102223d449881e2878c1544c892). Chris Williamson, Chief Economist at Markit, finds slowing growth of GDP at 0.2 to 0.3 percent in IIIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/01d8b102223d449881e2878c1544c892). The Markit Eurozone Services Business Activity Index decreased from 53.1 in Aug to 52.4 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/01d8b102223d449881e2878c1544c892). The Markit Eurozone Manufacturing PMI^® decreased to 50.3 in Sep from 50.5 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/81a993f313ab4bdfbbd1bff81aa7dcea). New export orders increased for the fifteenth consecutive month. Chris Williamson, Chief Economist at Markit, finds slowing industrial growth in the euro area (http://www.markiteconomics.com/Survey/PressRelease.mvc/81a993f313ab4bdfbbd1bff81aa7dcea). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IIIQ2014 ∆% 0.2; IIIQ2014/IIIQ2013 ∆% 0.8 Blog 11/16/14
Unemployment	Oct 2014: 11.5 % unemployment rate; Oct 2014: 18.347 million unemployed Blog 11/30/14
HICP	Oct month ∆%: -0.1 12 months Sep ∆%: 0.4 Blog 11/16/14
Producer Prices	Euro Zone industrial producer prices Sep ∆%: 0.2 Sep 12-month ∆%: -1.4 Blog 11/16/14
Industrial Production	Aug month ∆%: -1.8; Aug 12 months ∆%: -1.9 Blog 10/19/14
Retail Sales	Aug month ∆%: 1.2 Aug 12 months ∆%: 1.9 Blog 10/12/14
Confidence and Economic Sentiment Indicator	Sentiment 100.8 Nov 2014 Consumer minus 11.6 Nov 2014 Blog 11/30/14
Trade	Jan-Aug 2014/Jan-Aug 2013 Exports ∆%: 0.8 Imports ∆%: -0.2 Aug 2014 12-month Exports ∆% -2.8 Imports ∆% -4.4 Blog 10/19/14

Links to blog comments in Table EUR:

11/16/14 http://cmpassocregulationblog.blogspot.com/2014/11/fluctuating-financial-variables.html

10/19/14 http://cmpassocregulationblog.blogspot.com/2014/10/imf-view-squeeze-of-economic-activity.html

10/12/14 http://cmpassocregulationblog.blogspot.com/2014/10/global-financial-volatility-recovery.html

EUROSTAT estimates the rate of unemployment in the euro area at 11.5 percent in

Oct 2014, as shown in Table VD-1. The number of unemployed in Oct 2014 was 18.395 million, which was 0.547 million lower than 18.942 million in Oct 2013. The rate of unemployment stabilized from 11.9 percent in Oct 2013 to 11.5 percent in Oct 2014.

Table VD-1, Euro Area, Unemployment Rate and Number of Unemployed, % and Millions, SA

	Unemployment Rate %	Number Unemployed Millions
Oct 2014	11.5	18.395
Sep	11.5	18.335
Aug	11.5	18.305
Jul	11.6	18.438
Jun	11.6	18.397
May	11.6	18.478
Apr	11.6	18.501
Mar	11.7	18.604
Feb	11.8	18.686
Jan	11.8	18.755
Dec 2013	11.8	18.775
Nov	11.9	18.933
Oct	11.9	18.942
Sep	12.0	19.087
Aug	12.0	19.084
Jul	11.9	19.048
Jun	12.0	19.128
May	12.0	19.110
Apr	12.0	19.097
Mar	12.0	19.040
Feb	12.0	19.029
Jan	12.0	19.008
Dec 2012	11.8	18.817
Nov	11.7	18.708
Oct	11.7	18.637
Sep	11.5	18.365
Aug	11.4	18.181
Jul	11.4	18.138
Jun	11.3	18.032
May	11.2	17.851
Apr	11.2	17.729
Mar	11.0	17.469
Feb	10.9	17.210
Jan	10.7	16.965
Dec 2011	10.6	16.810
Nov	10.5	16.689
Oct	10.4	16.393
Sep	10.3	16.255
Aug	10.2	16.035
Jul	10.0	15.848
Jun	9.9	15.636
May	9.9	15.581
Apr	9.8	15.451
Mar	9.9	15.563
Feb	9.9	15.586
Jan	9.9	15.642
Dec 2010	10.0	15.737

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 shows the disparity in rates of unemployment in the euro area with 11.5 percent for the region as a whole and 18.395 million unemployed but 4.9 percent in Germany and 2.062 million unemployed. At the other extreme is Spain with rate of unemployment of 24.0 percent and 5.509 million unemployed. The rate of unemployment of the European Union in Oct 2014 is 10.0 percent with 24.413 million unemployed.

Table VD-2, Unemployed and Unemployment Rate in Countries and Regions, Millions and %

Oct 2014	Unemployment Rate %	Unemployed Millions
Euro Zone	11.5	18.395
Germany	4.9	2.062
France	10.5	3.093
Netherlands	6.5	0.581
Finland	8.9	0.239
Portugal	13.4	0.688
Ireland	10.9	0.235
Italy	13.2	3.410
Greece	25.9*	1.242*
Spain	24.0	5.509
Belgium	8.6	0.425
European Union	10.0	24.413

*Aug 2014

Source: EUROSTAT

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

Chart VD-1 of EUROSTAT illustrates the wide difference in rates of unemployment in countries and regions.

Chart VD-1, Unemployment Rate in Various Countries and Regions

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 Economic Sentiment Indicator of the European Economic Commission, Economic and Financial Affairs, provides correlation with the economic cycle since 1990, capturing all three recessions in the period and even the threat of recession from 1994 to 1995. The latest chart of this index accessible in the link in parenthesis shows trend of decline in 2011 and 2012 that has punctured the historical average of 100 and resumed downward trend in 2012 followed by recovery moving closer to the average (http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm). Table VD-1 provides the index increasing from 100.4 in Dec 2013 to 100.8 in Nov 2014. The index is above the minimum value of 70.1 reached in Mar 2009, close to the average of 100.

Table VD-3, Euro Area, Indicators of Confidence and Economic Sentiment SA

	ESI	IND	SERV	CON	RET	CONS
Historical Average	100.0	-6.9	8.9	-13.1	-9.0	-18.4
Maximum	118.6 05-00	7.9 04-07	35.4 08-98	2.4 05-00	5.2 06-90	6.0 02-90
Minimum	70.1 03-09	-38.1 03-09	-26.1 03-09	-34.3 03-09	-24.9 01-93	-46.0 09-93
Nov 2014	100.8	-4.3	4.4	-11.6	-5.9	-26.3
Oct	100.7	-5.1	4.4	-11.1	-6.4	-24.6
Sep	99.9	-5.5	3.2	-11.4	-7.3	-27.7
Aug	100.6	-5.3	3.1	-10.0	-4.6	-28.4
Jul	102.2	-3.8	3.6	-8.3	-2.3	-28.2
Jun	102.1	-4.3	4.4	-7.5	-1.9	-31.7
May	102.6	-3.1	3.8	-7.1	-2.5	-30.1
Apr	102.0	-3.5	3.5	-8.6	-2.6	-30.4
Mar	102.5	-3.3	4.5	-9.2	-2.6	-28.7
Feb	101.2	-3.5	3.3	-12.7	-3.1	-28.5
Jan	101.0	-3.8	2.4	-11.6	-3.5	-29.8
Dec 2013	100.4	-3.4	0.4	-13.5	-5.1	-26.4

ESI: Economic Sentiment Index; IND: Industry; SERV: Services; CON: Consumer; RET: Retail Trade; CONS: Construction

Source: European Commission Services

http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm

VE Germany. Table VE-DE provides yearly growth rates of the German economy from 1971 to 2013, price adjusted chain-linked and price and calendar-adjusted chain-linked. Germany’s GDP fell 5.6 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 4.1 percent in 2010, 3.6 percent in 2011 and 0.4 percent in 2012. Growth decelerated to 0.1 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-4 provides annual growth rates of the German economy from 1970 to 2013, price adjusted chain-linked and price and calendar-adjusted chain-linked. Germany’s GDP fell 5.6 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 4.1 percent in 2010, 3.6 percent in 2011 and 0.4 percent in 2012. Growth in 2013 was 0.1 percent.

Table VE-DE, Germany, GDP ∆% on Prior Year

	Price Adjusted Chain-Linked	Price- and Calendar-Adjusted Chain Linked
Average ∆% 1991-2013	1.3
Average ∆% 1991-1999	1.5
Average ∆% 2000-2007	1.4
Average ∆% 2003-2007	2.2
Average ∆% 2007-2013	0.5
Average ∆% 2009-2013	2.0
2013	0.1	0.2
2012	0.4	0.6
2011	3.6	3.7
2010	4.1	3.9
2009	-5.6	-5.6
2008	1.1	0.8
2007	3.3	3.4
2006	3.7	3.9
2005	0.7	0.9
2004	1.2	0.7
2003	-0.7	-0.7
2002	0.0	0.0
2001	1.7	1.8
2000	3.0	3.2
1999	2.0	1.9
1998	2.0	1.7
1997	1.8	1.9
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
1991	5.1	5.2
1990	5.3	5.5
1989	3.9	4.0
1988	3.7	3.4
1987	1.4	1.3
1986	2.3	2.3
1985	2.3	2.3
1984	2.8	2.9
1983	1.6	1.5
1982	-0.4	-0.5
1981	0.5	0.6
1980	1.4	1.3
1979	4.2	4.3
1978	3.0	3.1
1977	3.3	3.5
1976	4.9	4.5
1975	-0.9	-0.9
1974	0.9	1.0
1973	4.8	5.0
1972	4.3	4.3
1971	3.1	3.0
1970	NA	NA

Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvironment/NationalAccounts/NationalAccounts.html

https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvironment/NationalAccounts/DomesticProduct/CurrentRevision.html

https://www.destatis.de/EN/Methods/NationalAccountRevision/Revision2014_BackgroundPaper.pdf?__blob=publicationFile

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

https://www.destatis.de/EN/PressServices/Press/pr/2014/05/PE14_167_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2014/09/PE14_306_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2014/11/PE14_401_811.html

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, decreased from 53.9 in Oct to 52.1 in Nov. The index of manufacturing output reached 52.0 in Nov, decreasing from 52.0 in Oct, while the index of services decreased to 52.1 in Nov from 54.4 in Oct. The overall Flash Germany Manufacturing PMI^® decreased from 51.4 in Oct to 50.0 in Nov (http://www.markiteconomics.com/Survey/PressRelease.mvc/f44b099a010349199847985ca7b98754). New orders in manufacturing contracted. Oliver Kolodseike, Economist at Markit, finds continuing weakness in GDP growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/f44b099a010349199847985ca7b98754). The Markit Germany Composite Output Index of the Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, increased from 53.7 in Aug to 54.1 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/b19f96225be143568e50e16a95142f66). Oliver Kolodseike, Senior Economist at Markit and author of the report, finds growth of GDP in IIIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/b19f96225be143568e50e16a95142f66). The Germany Services Business Activity Index increased from 54.9 in Aug to 55.7 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/b19f96225be143568e50e16a95142f66). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, decreased from 51.4 in Aug to 49.9 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/500b6b4240084dd085c344857edb3549). New export orders increased for the fourteenth consecutive month. Oliver Kolodseike, Senior Economist at Markit and author of the report, finds slowing output and new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/500b6b4240084dd085c344857edb3549).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IIIQ2014 0.1 ∆%; III/Q2014/IIIQ2013 ∆% 1.2 2013/2012: 0.1% GDP ∆% 1970-2013 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 5/18/14 5/25/14 8/17/14 9/7/14 11/16/14 11/30/14
Consumer Price Index	Oct month NSA ∆%: -0.3 Oct 12-month NSA ∆%: 0.8 Blog 11/16/14
Producer Price Index	Oct month ∆%: -0.2 NSA, minus 0.1 CSA 12-month NSA ∆%: -1.0 Blog 11/23/14
Industrial Production	MFG Aug month CSA ∆%: minus 4.7 12-month NSA: -5.3 Blog 10/12/14
Machine Orders	MFG Aug month ∆%: -5.7 Aug 12-month ∆%: -4.1 Blog 10/12/14
Retail Sales	Oct Month ∆% 1.9 12-Month ∆% 1.7 Blog 11/30/14
Employment Report	Unemployment Rate SA Oct 4.9% Blog 11/30/14
Trade Balance	Exports Aug 12-month NSA ∆%: -1.0 Imports Aug 12 months NSA ∆%: -2.4 Exports Aug month CSA ∆%: -5.8; Imports Aug month CSA minus -1.3 Blog 10/12/14

Links to blog comments in Table DE:

11/23/14 http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html

11/16/14 http://cmpassocregulationblog.blogspot.com/2014/11/fluctuating-financial-variables.html

10/12/14 http://cmpassocregulationblog.blogspot.com/2014/10/global-financial-volatility-recovery.html

9/7/14 http://cmpassocregulationblog.blogspot.com/2014/09/competitive-monetary-policy-and.html

8/17/2014 http://cmpassocregulationblog.blogspot.com/2014/08/weakening-world-economic-growth.html

5/25/14 http://cmpassocregulationblog.blogspot.com/2014/05/united-states-commercial-banks-assets.html

5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.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

Table VE-1 provides percentage change of Germany’s GDP in one quarter relative to the prior quarter from 2001 to 2014. Germany’s GDP contracted during four consecutive quarters from IIQ2008 to IQ2009. The deepest contraction was 4.5 percent in IQ2009. Growth was quite strong from IIIQ2009 to IQ2011 for cumulative growth of 7.8 percent in seven quarters or at the average rate of 1.1 percent per quarter, which is equivalent to 4.4 percent per year. Economic growth decelerated in IIQ2011 to 0.2 percent and 0.4 percent in IIIQ2011. The economy grew 0.0 percent in IVQ2011 and grew 0.3 percent in IQ2012 but at 0.1 percent in IIQ2012. GDP growth in IIIQ2012 was 0.1 percent relative to IIQ2012. Germany’s GDP contracted 0.4 percent in IVQ2012 relative to IIIQ2012. GDP decreased 0.4 percent in IQ2013 and increased 0.8 percent in IIQ2013. Growth of GDP was 0.3 percent in IIIQ2013 and 0.4 percent in IVQ2013. Germany’s growth was robust at 0.8 percent in IQ2014 or 3.2 percent in annual equivalent. GDP contracted 0.1 percent in IIQ2014. GDP increased 0.1 percent in IIIQ2014.

Table VE-1, Germany Quarter GDP ∆% Relative to Prior Quarter, Seasonally and Calendar Adjusted

	IQ	IIQ	IIIQ	IV
2014	0.8	-0.1	0.1
2013	-0.4	0.8	0.3	0.4
2012	0.3	0.1	0.1	-0.4
2011	1.8	0.2	0.4	0.0
2010	0.8	2.1	0.8	0.7
2009	-4.5	0.1	0.5	0.9
2008	0.8	-0.2	-0.4	-2.0
2007	0.5	0.7	0.8	0.3
2006	1.0	1.6	1.0	1.3
2005	-0.2	0.7	0.8	0.3
2004	0.0	0.4	-0.2	0.1
2003	-1.2	0.1	0.5	0.3
2002	-0.3	0.2	0.5	-0.2
2001	1.6	0.1	-0.3	0.2

Seasonal and calendar adjusted Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2014/11/PE14_416_811.html

https://www.destatis.de/EN/Publications/Specialized/Nationalaccounts/NationalAccounts.html

Table VE-2 provides percentage changes of Germany’s GDP in a quarter relative to the same quarter a year earlier. Growth was weak in the recovery from the recession of 2001 through 2005, as in most of the euro area (see Pelaez and Pelaez, The Global Recession Risk (2007), 116-46). Germany’s economy then grew robustly in 2006 and 2007 until the global recession after 2007. Germany recovered with strong growth in 2010 and vigorous 6.0 percent in IQ2011. The economy decelerated in the final three quarters of 2011, growing 1.5 percent in IQ2012 relative to IQ2011. Growth decelerated further to 0.3 percent in IIQ2012 without calendar adjustment and 0.8 percent with calendar adjustment and to 0.1 percent in IIIQ2012. Growth in IVQ2012 relative to IVQ2011 was minus 0.3 percent. GDP fell 1.8 percent in IQ2013 relative to a year earlier and increased 0.5 percent in IIQ2013 relative to a year earlier. GDP increased 0.8 percent in IIIQ2013 relative to a year earlier and 1.0 percent in IVQ2013 relative to a year earlier. GDP increased 2.6 percent in IQ2014 relative to a year earlier and 1.0 percent in IIQ2014 relative to a year earlier. GDP increased 1.2 percent in IIIQ2014 relative to a year earlier.

Table VE-2, Germany, Quarter GDP ∆% Relative to Same Quarter a Year Earlier, Price Adjusted NCSA

	IQ	IIQ	IIIQ	IV
2014	2.6	1.0	1.2
2013	-1.8	0.5	0.8	1.0
2012	1.5	0.3	0.1	-0.3
2011	6.0	3.6	3.1	1.8
2010	2.6	4.7	4.6	4.4
2009	-6.6	-7.9	-5.6	-2.4
2008	2.0	3.0	1.1	-1.9
2007	4.3	3.4	3.3	2.1
2006	4.3	2.4	3.5	4.6
2005	-0.7	1.3	1.3	1.0
2004	1.6	1.6	0.6	0.9
2003	-0.4	-1.3	-0.8	-0.3
2002	-1.1	0.2	1.1	-0.1
2001	2.4	1.6	1.5	1.4

Price adjusted NSA Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2014/11/PE14_416_811.html

https://www.destatis.de/EN/Publications/Specialized/Nationalaccounts/NationalAccounts.html

There are strong calendar effects in economic activity in Germany. Table VE-3 provides Germany’s percentage change in a quarter relative to the same quarter a year earlier adjusting for price changes and calendar effects. Germany’s GDP increased 0.7 percent in IIQ2012 calendar-adjusted in contrast with only 0.3 percent without calendar adjustment. GDP growth adjusting for calendar effects was 0.5 percent in IIIQ2012 relative to IIIQ2011 and 0.1 percent without calendar adjustment. Growth in IVQ2012 was 0.1 percent calendar and price adjusted in contrast with minus 0.3 percent without calendar adjustment. Growth in IQ2013 was minus 0.5 percent relative to a year earlier with adjustment for calendar effects and minus 1.8 percent without adjustment. GDP without calendar adjustment increased 0.5 percent in IIQ2013 relative to a year earlier and 0.0 percent with calendar adjustment. In IIIQ2013, growth without calendar adjustment was 0.8 percent in contrast with 0.3 percent calendar adjusted. In IVQ2013, GDP with calendar adjustment increased 1.0 percent relative to a year earlier and 1.0 percent without calendar adjustment. In IQ2014, GDP increased 2.6 percent without calendar adjustment and 2.2 percent with calendar adjustment. GDP increased 1.4 percent in IIQ2014 with calendar adjustment and 1.0 percent without calendar adjustment. GDP increased 1.2 percent relative to a year earlier in IIIQ2014 without calendar adjustment and 1.2 percent with calendar adjustment.

Table VE-3, Germany, Quarter GDP ∆% Relative to Same Quarter a Year Earlier, Calendar and Price Adjusted NSA

	IQ	IIQ	IIIQ	IV
2014	2.2	1.4	1.2
2013	-0.5	0.0	0.3	1.0
2012	1.0	0.7	0.5	0.1
2011	5.5	3.6	3.1	2.7
2010	2.6	4.2	4.6	4.0

Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2014/11/PE14_416_811.html

https://www.destatis.de/EN/Publications/Specialized/Nationalaccounts/NationalAccounts.html

Table VE-4, Germany, GDP ∆% on Prior Year

	Price Adjusted Chain-Linked	Price- and Calendar-Adjusted Chain Linked
Average ∆% 1991-2013	1.3
Average ∆% 1991-1999	1.5
Average ∆% 2000-2007	1.4
Average ∆% 2003-2007	2.2
Average ∆% 2007-2013	0.5
Average ∆% 2009-2013	2.0
2013	0.1	0.2
2012	0.4	0.6
2011	3.6	3.7
2010	4.1	3.9
2009	-5.6	-5.6
2008	1.1	0.8
2007	3.3	3.4
2006	3.7	3.9
2005	0.7	0.9
2004	1.2	0.7
2003	-0.7	-0.7
2002	0.0	0.0
2001	1.7	1.8
2000	3.0	3.2
1999	2.0	1.9
1998	2.0	1.7
1997	1.8	1.9
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
1991	5.1	5.2
1990	5.3	5.5
1989	3.9	4.0
1988	3.7	3.4
1987	1.4	1.3
1986	2.3	2.3
1985	2.3	2.3
1984	2.8	2.9
1983	1.6	1.5
1982	-0.4	-0.5
1981	0.5	0.6
1980	1.4	1.3
1979	4.2	4.3
1978	3.0	3.1
1977	3.3	3.5
1976	4.9	4.5
1975	-0.9	-0.9
1974	0.9	1.0
1973	4.8	5.0
1972	4.3	4.3
1971	3.1	3.0
1970	NA	NA

Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvironment/NationalAccounts/NationalAccounts.html

https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvironment/NationalAccounts/DomesticProduct/CurrentRevision.html

https://www.destatis.de/EN/Methods/NationalAccountRevision/Revision2014_BackgroundPaper.pdf?__blob=publicationFile

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

https://www.destatis.de/EN/PressServices/Press/pr/2014/05/PE14_167_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2014/09/PE14_306_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2014/11/PE14_401_811.html

The Statistisches Bundesamt (Federal Statistical Office of Germany) provides the analysis of percentage point contributions to GDP on growth from a quarter a year earlier, shown in Table VE-5. The original data are adjusted for price but not for seasonality. There is strong internal demand, or consumption and investment, which is uncommon in advanced economies. Consumption added 0.9 percentage points in IIQ2014. Growth of fixed capital formation (GFCF) added 0.3 percentage points to growth of GDP in IIIQ2014. Domestic uses added 0.5 percentage points in IIIQ2014. Net exports added 0.7 percentage points in IIIQ2014. The rates of growth of exports and imports fell from over 10 percent to single digits. Exports grew 4.8 percent in IIIQ2014 relative to the same quarter a year earlier and imports 3.6 percent.

Table VE-5, Germany, Percentage Point Contributions of Use of Gross Domestic Product on Growth from Same Year and Same Quarter of Prior Year, Price Adjusted

	IVQ 13 PP	∆% IVQ 13	IQ14 PP	∆% IQ 14	IIQ 14 PP	∆% IIQ 14	IIIQ 14 PP	∆% III 14
Consumption Total	0.5	0.6	0.6	0.8	0.7	0.9	0.9	1.2
Household Consumption	0.4	0.7	0.5	0.9	0.5	0.8	0.7	1.2
Government Consumption	0.1	0.4	0.1	0.7	0.2	1.1	0.2	1.3
Gross Capital Formation	0.5	2.7	1.7	8.5	0.4	2.1	-0.4	-1.9
Gross Fixed Capital Formation (GFCF)	0.3	1.2	1.5	8.8	0.4	1.7	0.3	1.3
GFCF in Machinery & Equipment	0.0	0.1	0.4	7.4	0.2	3.0	0.2	2.6
GFCF in Construction		2.2		12.8		1.0		0.5
Change in Inventories	0.2		0.1		0.3		-1.4
Domestic Uses	0.9	1.0	2.3	2.4	1.1	1.1	0.5	0.5
Net Exports	0.1		0.4		0.0		0.7
Exports		4.3		4.1		2.6		4.8
Imports		4.9		3.9		3.1		3.6
GDP		1.0		2.6		1.0		1.2
GDP per Person in Employment		0.4		1.9		0.1		0.3
GDP per Hour Worked		0.8		0.0		0.4		0.2

PP: Percentage Points

Source: Statistisches Bundesamt Deutschland (Destatis

https://www.destatis.de/EN/PressServices/Press/pr/2014/11/PE14_416_811.html

https://www.destatis.de/EN/Publications/Specialized/Nationalaccounts/NationalAccounts.html

Table VE-6 provides segments of Germany’s GDP with growth in IIIQ2014 and contributions to growth in percentage points. The deterioration of growth of GDP in IIIQ2014 consisted of deduction of 0.9 percentage points by gross fixed capital formation (GFCF). Total consumption contributed 0.5 percentage points. Net exports added 0.2 percentage points. Exports grew 1.9 percent in IIIQ2014 and imports 1.7 percent.

Table VE-6, Germany, Percentage Point Contributions of Use of Gross Domestic Product on Growth from Prior Quarter, Price Adjusted

	IVQ 13 PP	∆% IVQ 13	IQ14 PP	∆% IQ 14	IIQ 14 PP	∆% IIQ 14	IIIQ 13 PP	∆% IIIQ 13
Consumption Total	-0.2	-0.2	0.4	0.5	0.1	0.2	0.5	0.7
Household Consumption	-0.2	-0.3	0.3	0.5	0.1	0.1	0.4	0.7
Government Consumption	0.0	-0.1	0.0	0.2	0.1	0.4	0.1	0.6
Gross Capital Formation	0.1	0.7	0.5	2.4	-0.3	-1.6	-0.7	-3.6
Gross Fixed Capital Formation (GFCF)	0.3	1.2	0.6	2.8	-0.4	-1.8	-0.2	-0.9
GFCF in Machinery & Equipment	0.2	2.6	0.1	1.7	0.0	0.4	-0.2	-2.3
GFCF in Construction	0.1	0.7	0.4	4.2	-0.4	-3.9	0.0	-0.3
Change in Inventories	-0.1		-0.1		0.1		-0.5
Domestic Uses	-0.1	0.0	0.8	0.9	-0.2	-0.2	-0.2	-0.2
Net Exports	0.5		-0.1		0.1		0.2
Exports		1.7		-0.2		1.2		1.9
Imports		0.7		-0.1		1.1		1.7
GDP		0.4		0.8		-0.1		0.1
GDP per Person in Employment		0.3		0.5		-0.4		-0.1
GDP per Hour Worked		0.9		-0.7		0.3		-0.2

PP: Percentage Points

Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2014/11/PE14_416_811.html

https://www.destatis.de/EN/Publications/Specialized/Nationalaccounts/NationalAccounts.html

Percentage changes from year earlier of gross value added by economic sectors in Germany are in Table VE-7. Industry ex construction grew 0.9 percent in IIIQ2014 relative to a year earlier. Business services increased 2.4 percent in IIIQ2014 relative to a year earlier. Construction increased 1.7 percent in IIIQ2014 relative to a year earlier. Total gross value added expanded 1.3 percent in IIIQ2014 relative to a year earlier.

Table VE-7, Germany, Percentage Change from Year Earlier of Gross Value Added by Economic Sector, Price Adjusted NSA

	2013	IVQ2013	IQ2014	II2014	III2014
Agriculture	-1.9	-0.4	5.4	5.4	6.3
Industry ex Construction	0.2	2.5	3.2	-0.1	0.9
Manufacturing	0.3	2.9	4.4	0.7	2.0
Construction	-0.3	2.7	11.6	1.7	1.7
Trade, Transport, Accommodation & Food Services	0.0	0.8	3.0	1.6	2.0
Information & Communications	1.2	1.2	2.1	1.9	1.9
Finance & Insurance	-1.5	-2.0	0.2	-0.2	-1.5
Real Estate	0.5	0.7	1.0	1.1	1.4
Business Services	0.9	1.8	2.8	1.6	2.4
Public Services, Education & Health	-0.1	0.3	1.6	0.9	0.8
Other Services	-1.6	-1.3	0.8	-0.1	0.6
Total Gross Value Added	0.1	1.2	2.6	0.9	1.3

Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2014/11/PE14_416_811.html

https://www.destatis.de/EN/Publications/Specialized/Nationalaccounts/NationalAccounts.html

Chart VE-1 of the Statistisches Bundesamt Deutschland (Federal Statistics Agency of Germany) provides GDP at current prices from 2005 to 2013. The German economy is productive with significant dynamism over the long term. There are fluctuations in an increasing trend since 2009. Growth is stalling.

Chart VE-1, Germany, GDP, Current Prices, Billion Euro

Source: Statistisches Bundesamt Deutschland (Destatis)

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

Table VE-1A provides US GDP in current prices at seasonally adjusted annual rates (SAAR) from 2005 to 2014. There is sharp decline with the recession beginning in IVQ2007 and upward trend during the expansion after IIIQ2009.

Chart VE-1A, US, Gross Domestic Product, Current Prices, Seasonally Adjusted at Annual Rates, Billions of Dollars, 2005-2014

Sources: Bureau of Economic Analysis

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

Chart VE-2 of the Statistisches Bundesamt Deutschland (Federal Statistics Agency of Germany) provides the index of price-adjusted chain-linked GDP of Germany from 2009 to 2013. Germany was growing rapidly before the global contraction and rebounded with significant strength along a strong upward trend that could be increasing again.

Chart VE-2, Germany, Index of Price-Adjusted Chain-Linked GDP, 2000=100

Source: Statistisches Bundesamt Deutschland (Destatis)

Chart VE-2A provides US real GDP, seasonally adjusted at annual rates (SAAR) in billions of chained dollars of 2009 from 2009 to 2014. US economic growth has been at only 2.3 percent on average in the cyclical expansion in the 21 quarters from IIIQ2009 to IIIQ2014. Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm) and the second estimate of GDP for IIIQ2014 (http://www.bea.gov/newsreleases/national/gdp/2014/pdf/gdp3q14_2nd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.7 percent obtained by diving GDP of $14,745.9 billion in IIQ2010 by GDP of $14,355.6 billion in IIQ2009 {[$14,745.9/$14,355.6 -1]100 = 2.7%], or accumulating the quarter on quarter growth rates (Section I and earlier http://cmpassocregulationblog.blogspot.com/2014/11/growth-uncertainties-mediocre-cyclical.html). The expansion from IQ1983 to IVQ1985 was at the average annual growth rate of 5.9 percent, 5.4 percent from IQ1983 to IIIQ1986, 5.2 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IQ1988 and at 7.8 percent from IQ1983 to IVQ1983 (Section I and earlier http://cmpassocregulationblog.blogspot.com/2014/11/growth-uncertainties-mediocre-cyclical.html). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IIIQ2014 would have accumulated to 23.0 percent. GDP in IIIQ2014 would be $18,438.0 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,273.9 billion than actual $16,164.1 billion. There are about two trillion dollars of GDP less than at trend, explaining the 26.6 million unemployed or underemployed equivalent to actual unemployment of 16.1 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2014/11/rules-discretionary-authorities-and.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/world-financial-turbulence-twenty-seven.html). US GDP in IIIQ2014 is 12.3 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,164.1 billion in IIIQ2014 or 7.8 percent at the average annual equivalent rate of 1.1 percent. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. The long-term trend is growth at average 3.3 percent per year from Jan 1919 to Oct 2014. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 123.8884 in Oct 2014. The actual index NSA in Oct 2014 is 101.5613, which is 18.0 percent below trend. Manufacturing output grew at average 2.3 percent between Dec 1986 and Dec 2013, raising the index at trend to 115.9214 in Oct 2014. The output of manufacturing at 101.5613 in Oct 2014 is 12.4 percent below trend under this alternative calculation.

Chart VE-2A, US, Real Gross Domestic Product, Seasonally Adjusted at Annual Rates, Billions of Chained 2009 Dollars, 2010-2014

Sources: Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm

Table VE-8 provides the savings as percent of disposable income and percentage growth of disposable income year-on-year from 2010 to 2014. The savings ratio remained at a relatively high level for an advanced economy, exceeding 9.0 percent from 2010 to 2013. The savings ratio increased to 12.5 percent in IQ2014 and fell to 8.8 percent in IIQ2014 and 7.9 percent in IIIQ2014.

Table VE-8, Germany, Savings as Percent of Disposable Income and Yearly Change of Disposable Income, % and ∆%

	Savings as % Percent of Disposable Income	Year on Year ∆% of Disposable Income
IIIQ2014	7.9	2.4
IIQ2014	8.8	2.1
IQ2014	12.5	2.1
2013	9.1	1.8
2012	9.4	2.0
2011	9.6	3.8
2010	9.9	2.7

Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2014/11/PE14_416_811.html

https://www.destatis.de/EN/Publications/Specialized/Nationalaccounts/NationalAccounts.html

Chart IB-14A provides the US personal savings rate, or personal savings as percent of disposable personal income, on an annual basis from 1929 to 2013. The US savings rate shows decline from around 10 percent in the 1960s to around 5 percent currently.

Chart IB-14A, US, Personal Savings as a Percentage of Disposable Personal Income, Annual, 1929-2013

Source: US Bureau of Economic Analysis

Table IB-7 provides personal savings as percent of disposable income and annual change of real disposable personal income in selected years since 1930. Savings fell from 4.4 percent of disposable personal income in 1930 to minus 0.8 percent in 1933 while real disposable income contracted 5.3 percent in 1930 and 2.9 percent in 1933. Savings as percent of disposable personal income swelled during World War II to 27.9 percent in 1944 with increase of real disposable income of 3.1 percent. Savings as percent of personal disposable income fell steadily over decades from 11.5 percent in 1982 to 2.5 percent in 2005. Savings as percent of disposable personal income was 4.9 percent in 2013 while real disposable income fell 0.2 percent. The average ratio of savings as percent of disposable income fell from 9.3 percent from 1980 to 1989 to 5.4 percent on average from 2007 to 2013. Real disposable income grew on average at 3.5 percent from 1980 to 1989 and at 1.2 percent on average from 2007 to 2013.

Table IB-7, US, Personal Savings as Percent of Disposable Personal Income, Annual, Selected Years 1929-1913

	Personal Savings as Percent of Disposable Personal Income	Annual Change of Real Disposable Personal Income
1930	4.4	-5.3
1933	-0.8	-2.9
1944	27.9	3.1
1947	6.3	-4.1
1954	10.3	1.4
1958	11.4	1.1
1960	10.0	2.6
1970	12.6	4.6
1975	13.0	2.5
1982	11.5	2.1
1989	7.8	3.0
1992	8.9	4.3
2002	5.0	3.1
2003	4.8	2.7
2004	4.6	3.6
2005	2.5	1.5
2006	3.3	4.0
2007	3.0	2.1
2008	4.9	1.5
2009	6.1	-0.4
2010	5.6	1.0
2011	6.0	2.5
2012	7.2	3.0
2013	4.9	-0.2
Average Savings Ratio
1980-1989	9.3
2007-2013	5.4
Average Yearly ∆% Real Disposable Income
1980-1989		3.5
2007-2013		1.2

Source: US Bureau of Economic Analysis

Chart IB-15 of the US Bureau of Economic Analysis provides personal savings as percent of personal disposable income, or savings ratio, from Jan 2007 to Oct 2014. The uncertainties caused by the global recession resulted in sharp increase in the savings ratio that peaked at 7.9 percent in May 2008 (http://www.bea.gov/iTable/index_nipa.cfm). The second peak occurred at 8.1 percent in May 2009. There was another rising trend until 5.9 percent in Jun 2010 and then steady downward trend until 5.6 percent in Nov 2011. This was followed by an upward trend with 7.1 percent in Jun 2012 but decline to 6.4 percent in Aug 2012 followed by jump to 10.5 percent in Dec 2012. Swelling realization of income in Oct-Dec 2012 in anticipation of tax increases in Jan 2013 caused the jump of the savings rate to 10.5 percent in Dec 2012. The BEA explains as: Personal income in November and December was boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates. Personal income in December was also boosted by lump-sum social security benefit payments” (page 2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi1212.pdf). There was a reverse effect in Jan 2013 with decline of the savings rate to 4.5 percent. Real disposable personal income fell 5.1 percent and real disposable per capita income fell from $38,175 in Dec 2012 to $36,195 in Jan 2013 or by 5.2 percent, which is explained by the Bureau of Economic Analysis as follows (page 3 http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0213.pdf):

“Contributions for government social insurance -- a subtraction in calculating personal income --increased $6.4 billion in February, compared with an increase of $126.8 billion in January. The

January estimate reflected increases in both employer and employee contributions for government social insurance. The January estimate of employee contributions for government social insurance reflected the expiration of the “payroll tax holiday,” that increased the social security contribution rate for employees and self-employed workers by 2.0 percentage points, or $114.1 billion at an annual rate. For additional information, see FAQ on “How did the expiration of the payroll tax holiday affect personal income for January 2013?” at www.bea.gov. The January estimate of employee contributions for government social insurance also reflected an increase in the monthly premiums paid by participants in the supplementary medical insurance program, in the hospital insurance provisions of the Patient Protection and Affordable Care Act, and in the social security taxable wage base; together, these changes added $12.9 billion to January. Employer contributions were boosted $5.9 billion in January, which reflected increases in the social security taxable wage base (from $110,100 to $113,700), in the tax rates paid by employers to state unemployment insurance, and in employer contributions for the federal unemployment tax and for pension guaranty. The total contribution of special factors to the January change in contributions for government social insurance was $132.9 billion.”

Chart IB-15, US, Personal Savings as a Percentage of Disposable Income, Monthly 2007-2014

Source: US Bureau of Economic Analysis

Table IB-8 provides personal saving as percent of disposable income, change of real disposable income relative to Dec 2007 (RDPI ∆% 12/07), monthly percentage change of real disposable income (RDPI ∆% Month) and percentage of real disposable income in a month relative to the same month a year earlier (RDPI ∆% YOY). The ratio of personal saving to disposable income eased to 5.0 percent in Oct 2014 with cumulative growth of real disposable income of 10.4 percent since Dec 2007 at the rate of 1.5 percent in annual equivalent that is much lower than 3.2 percent over the long-term from 1929 to 2013.

Table IB-8, US, Savings Ratio and Real Disposable Income, % and ∆%

	Personal Saving as % Disposable Income	RDPI ∆% 12/07	RDPI ∆% Month	RDPI ∆% YOY
May 2008	7.9	5.1	4.8	5.7
May 2009	8.1	2.5	1.6	-2.5
Jun 2010	5.9	1.8	0.0	1.0
Nov 2011	5.6	4.2	-0.1	1.5
Jun 2012	7.1	6.9	0.1	2.7
Aug 2012	6.4	6.5	-0.2	1.9
Dec 2012	10.5	12.3	2.8	7.0
Jan 2013	4.5	5.6	-5.9	-0.1
Feb 2013	4.7	6.2	0.5	-0.2
Mar 2013	4.9	6.5	0.4	0.0
Apr 2013	5.1	6.8	0.2	0.0
May 2013	5.2	7.2	0.4	0.4
Jun 2013	5.3	7.4	0.2	0.4
Jul 2013	5.1	7.3	-0.1	0.6
Aug 2013	5.3	7.7	0.4	1.1
Sep 2013	5.2	8.0	0.3	0.9
Oct 2013	4.7	7.7	-0.3	0.0
Nov 2013	4.3	7.8	0.1	-1.3
Dec 2013	4.1	7.6	-0.2	-4.2
Jan 2014	4.9	8.1	0.5	2.3
Feb 2014	5.0	8.6	0.4	2.3
Mar 2014	4.8	9.1	0.5	2.4
Apr 2014	5.0	9.2	0.1	2.3
May 2014	5.1	9.4	0.2	2.1
Jun 2014	5.1	9.7	0.2	2.1
Jul 2014	5.2	9.8	0.1	2.4
Aug 2014	4.9	10.2	0.3	2.3
Sep 2014	5.0	10.2	0.1	2.1
Oct 2014	5.0	10.4	0.1	2.5

Source: US Bureau of Economic Analysis