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

 

Global Portfolio Reallocations, Squeeze of Economic Activity by Carry Trades Induced by Zero Interest Rates, World Inflation Waves, 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, 2015

IB World Inflation Waves

IA Appendix: Transmission of Unconventional Monetary Policy

IB1 Theory

IB2 Policy

IB3 Evidence

IB4 Unwinding Strategy

IC 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

II United States Industrial Production

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

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 3.3 percent in 2013 but accelerating to 3.3 percent in 2014, 3.8 percent in 2015 and 4.0 percent in 2016. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $34,523 billion of world output of $72,688 billion, or 47.5 percent, but are projected to grow at much lower rates than world output, 1.9 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 8.0 percent would add $5.8 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 $27,512 billion, or 37.8 percent of world output. The EMDEs would grow cumulatively 20.7 percent or at the average yearly rate of 4.8 percent, contributing $5.7 trillion from 2013 to 2016 or the equivalent of somewhat less than the GDP of $8,387 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 $14,511 billion, or 19.9 percent of world output, which is equivalent to 42.0 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	72,688	3.3	3.3	3.8	4.0
G7	34,523	1.5	1.7	2.3	2.3
Canada	1,709	2.0	2.3	2.4	2.4
France	2,688	0.3	0.4	1.0	1.6
DE	3,428	0.5	1.4	1.5	1.8
Italy	2,014	-1.9	-0.2	0.9	1.3
Japan	5,938	1.5	0.9	0.8	0.8
UK	2,471	1.7	3.2	2.7	2.4
US	16,163	2.2	2.2	3.1	3.0
Euro Area	12,220	-0.4	0.8	1.3	1.7
DE	3,428	0.5	1.4	1.5	1.8
France	2,688	0.3	0.4	1.0	1.6
Italy	2,014	-1.9	-0.2	0.9	1.3
POT	212	-1.4	1.0	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	1.3	1.7	1.8
EMDE	27,512	4.7	4.4	5.0	5.2
Brazil	2,248	2.5	0.3	1.4	2.2
Russia	2,017	1.3	0.2	0.5	1.5
India	1,859	5.0	5.6	6.4	6.5
China	8,387	7.7	7.4	7.1	6.8

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 I-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: 16.2 percent for Portugal (POT), 13.0 percent for Ireland, 27.3 percent for Greece, 26.1 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	6.5	6.3	6.1
Canada	7.3	7.1	7.0	6.9	6.8
France	9.8	10.3	10.0	10.0	9.9
DE	5.5	5.3	5.3	5.3	5.3
Italy	10.7	12.2	12.6	12.0	11.3
Japan	4.3	4.0	3.7	3.8	3.8
UK	8.0	7.6	6.3	5.8	5.5
US	8.1	7.4	6.3	5.9	5.8
Euro Area	11.3	11.9	11.6	11.2	10.7
DE	5.5	5.3	5.3	5.3	5.3
France	9.8	10.3	10.0	10.0	9.9
Italy	10.7	12.2	12.6	12.0	11.3
POT	15.5	16.2	14.2	13.5	13.0
Ireland	14.7	13.0	11.2	10.5	10.1
Greece	24.2	27.3	25.8	23.8	20.9
Spain	24.8	26.1	24.6	23.5	22.4
EMDE	NA	NA	NA	NA	NA
Brazil	5.5	5.4	5.5	6.1	5.9
Russia	5.5	5.5	5.6	6.5	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 IIIQ2014 available now for all countries. There are preliminary estimates for most countries for IVQ2014. Growth is weak throughout most of the world.

• Japan. The GDP of Japan increased 1.1 percent in IQ2012, 4.3 percent at SAAR (seasonally adjusted annual rate) and 3.5 percent relative to a year earlier but part of the jump could be the low level a year earlier because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan is experiencing difficulties with the overvalued yen because of worldwide capital flight originating in zero interest rates with risk aversion in an environment of softer growth of world trade. Japan’s GDP fell 0.4 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 1.4 percent, which is much lower than 4.3 percent in IQ2012. Growth of 3.5 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 0.5 percent in IIIQ2012 at the SAAR of minus 2.2 percent and increased 0.2 percent relative to a year earlier. Japan’s GDP decreased 0.2 percent in IVQ2012 at the SAAR of minus 0.6 percent and changed 0.0 percent relative to a year earlier. Japan grew 1.4 percent in IQ2013 at the SAAR of 5.6 percent and increased 0.5 percent relative to a year earlier. Japan’s GDP increased 0.8 percent in IIQ2013 at the SAAR of 3.3 percent and increased 1.4 percent relative to a year earlier. Japan’s GDP grew 0.4 percent in IIIQ2013 at the SAAR of 1.4 percent and increased 2.2 percent relative to a year earlier. In IVQ2013, Japan’s GDP decreased 0.3 percent at the SAAR of minus 1.2 percent, increasing 2.3 percent relative to a year earlier. Japan’s GDP increased 1.3 percent in IQ2014 at the SAAR of 5.1 percent and increased 2.4 percent relative to a year earlier. In IIQ2014, Japan’s GDP fell 1.6 percent at the SAAR of minus 6.4 percent and fell 0.3 percent relative to a year earlier. Japan’s GDP contracted 0.7 percent in IIIQ2014 at the SAAR of minus 2.6 percent and fell 1.4 percent relative to a year earlier. In IVQ2014, Japan’s GDP grew 0.4 percent, at the SAAR of 1.5 percent, decreasing 0.8 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 1.7 percent, which annualizes at 7.0 percent and 7.8 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 7.9 percent relative to a year earlier. China grew at 1.8 percent in IVQ2013, which annualized to 7.4 percent and 7.6 percent relative to a year earlier. China’s GDP grew 1.6 percent in IQ2014, which annualizes to 6.6 percent, and 7.4 percent relative to a year earlier. China’s GDP grew 1.9 percent in IIQ2014, which annualizes at 7.8 percent, and 7.5 percent relative to a year earlier. China’s GDP grew 1.9 percent in IIIQ2014, which is equivalent to 7.8 percent in a year, and 7.3 percent relative to a year earlier. The GDP of China grew 1.5 percent in IVQ2014, which annualizes at 6.1 percent, and 7.3 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 0.4 in IQ2012 relative to a year earlier. Euro area GDP contracted 0.3 percent IIQ2012 and fell 0.8 percent relative to a year earlier. In IIIQ2012, euro area GDP fell 0.1 percent and declined 0.8 percent relative to a year earlier. In IVQ2012, euro area GDP fell 0.4 percent relative to the prior quarter and fell 0.9 percent relative to a year earlier. In IQ2013, the GDP of the euro area fell 0.4 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 0.2 percent and fell 0.3 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IVQ2013 and increased 0.4 percent relative to a year earlier. In IQ2014, the GDP of the euro area increased 0.3 percent and 1.1 percent relative to a year earlier. The GDP of the euro area increased 0.1 percent in IIQ2014 and increased 0.8 percent relative to a year earlier. The euro area’s GDP increased 0.2 percent in IIIQ2014 and increased 0.8 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IVQ2014 and increased 0.9 percent relative to a year earlier.
• Germany. The GDP of Germany increased 0.3 percent in IQ2012 and 1.5 percent relative to a year earlier. In IIQ2012, Germany’s GDP increased 0.1 percent and increased 0.3 percent relative to a year earlier but 0.8 percent relative to a year earlier when adjusted for calendar (CA) effects. In IIIQ2012, Germany’s GDP increased 0.1 percent and 0.1 percent relative to a year earlier. Germany’s GDP contracted 0.4 percent in IVQ2012 and decreased 0.3 percent relative to a year earlier. In IQ2013, Germany’s GDP decreased 0.4 percent and fell 1.8 percent relative to a year earlier. In IIQ2013, Germany’s GDP increased 0.8 percent and 0.5 percent relative to a year earlier. The GDP of Germany increased 0.3 percent in IIIQ2013 and 0.8 percent relative to a year earlier. In IVQ2013, Germany’s GDP increased 0.4 percent and 1.0 percent relative to a year earlier. The GDP of Germany increased 0.8 percent in IQ2014 and 2.6 percent relative to a year earlier. In IIQ2014, Germany’s GDP contracted 0.1 percent and increased 1.0 percent relative to a year earlier. The GDP of Germany increased 0.1 percent in IIIQ2014 and increased 1.2 percent relative to a year earlier. Germany’s GDP increased 0.7 percent in IVQ2014 and increased 1.6 percent relative to a year earlier.
• United States. Growth of US GDP in IQ2012 was 0.6 percent, at SAAR of 2.3 percent and higher by 2.6 percent relative to IQ2011. US GDP increased 0.4 percent in IIQ2012, 1.6 percent at SAAR and 2.3 percent relative to a year earlier. In IIIQ2012, US GDP grew 0.6 percent, 2.5 percent at SAAR and 2.7 percent relative to IIIQ2011. In IVQ2012, US GDP grew 0.0 percent, 0.1 percent at SAAR and 1.6 percent relative to IVQ2011. In IQ2013, US GDP grew at 2.7 percent SAAR, 0.7 percent relative to the prior quarter and 1.7 percent relative to the same quarter in 2013. In IIQ2013, US GDP grew at 1.8 percent in SAAR, 0.4 percent relative to the prior quarter and 1.8 percent relative to IIQ2012. US GDP grew at 4.5 percent in SAAR in IIIQ2013, 1.1 percent relative to the prior quarter and 2.3 percent relative to the same quarter a year earlier (http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html). In IVQ2013, US GDP grew 0.9 percent at 3.5 percent SAAR and 3.1 percent relative to a year earlier. In IQ2014, US GDP decreased 0.5 percent, increased 1.9 percent relative to a year earlier and fell 2.1 percent at SAAR. In IIQ2014, US GDP increased 1.1 percent at 4.6 percent SAAR and increased 2.6 percent relative to a year earlier. US GDP increased 1.2 percent in IIIQ2014 at 5.0 percent SAAR and increased 2.7 percent relative to a year earlier. In IVQ2014, US GDP increased 0.5 percent at SAAR of 2.2 percent and increased 2.4 percent relative to a year earlier.
• United Kingdom. In IQ2012, UK GDP increased 0.1 percent, increasing 1.0 percent relative to a year earlier. UK GDP fell 0.2 percent in IIQ2012 and increased 0.6 percent relative to a year earlier. UK GDP increased 0.8 percent in IIIQ2012 and increased 0.7 percent relative to a year earlier. UK GDP fell 0.3 percent in IVQ2012 relative to IIIQ2012 and increased 0.4 percent relative to a year earlier. UK GDP increased 0.6 percent in IQ2013 and 0.9 percent relative to a year earlier. UK GDP increased 0.6 percent in IIQ2013 and 1.7 percent relative to a year earlier. In IIIQ2013, UK GDP increased 0.7 percent and 1.6 percent relative to a year earlier. UK GDP increased 0.4 percent in IVQ2013 and 2.4 percent relative to a year earlier. In IQ2014, UK GDP increased 0.9 percent and 2.7 percent relative to a year earlier. UK GDP increased 0.8 percent in IIQ2014 and 2.9 percent relative to a year earlier. In IIIQ2014, UK GDP increased 0.6 percent and increased 2.8 percent relative to a year earlier. UK GDP increased 0.6 percent in IVQ2014 and increased 3.0 percent relative to a year earlier.
• Italy. Italy has experienced decline of GDP in nine consecutive quarters from IIIQ2011 to IIIQ2013 and in IIQ2014 and IIIQ2014. Italy’s GDP fell 0.9 percent in IQ2012 and declined 2.3 percent relative to IQ2011. Italy’s GDP fell 0.6 percent in IIQ2012 and declined 3.1 percent relative to a year earlier. In IIIQ2012, Italy’s GDP fell 0.6 percent and declined 3.1 percent relative to a year earlier. The GDP of Italy contracted 0.6 percent in IVQ2012 and fell 2.7 percent relative to a year earlier. In IQ2013, Italy’s GDP contracted 0.8 percent and fell 2.6 percent relative to a year earlier. Italy’s GDP fell 0.1 percent in IIQ2013 and 2.0 percent relative to a year earlier. The GDP of Italy increased 0.1 percent in IIIQ2013 and declined 1.4 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IVQ2013 and decreased 0.8 percent relative to a year earlier. In IQ2014, Italy’s GDP decreased 0.1 percent and fell 0.1 percent relative to a year earlier. The GDP of Italy fell 0.2 percent in IIQ2014 and declined 0.3 percent relative to a year earlier. In IIIQ2014, Italy’s GDP contracted 0.1 percent and fell 0.5 percent relative to a year earlier. The GDP of Italy changed 0.0 percent in IVQ20214 and declined 0.5 percent relative to a year earlier

France. France’s GDP increased 0.2 percent in IQ2012 and increased 0.6 percent relative to a year earlier. France’s GDP decreased 0.3 percent in IIQ2012 and increased 0.4 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.2 percent and increased 0.4 percent relative to a year earlier. France’s GDP fell 0.2 percent in IVQ2012 and changed 0.0 percent relative to a year earlier. In IQ2013, France’s GDP decreased 0.1 percent and declined 0.3 percent relative to a year earlier. The GDP of France increased 0.7 percent in IIQ2013 and 0.7 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. In IQ2014, France’s GDP decreased 0.1 percent and increased 0.8 percent relative to a year earlier. In IIQ2014, France’s GDP contracted 0.1 percent and changed 0.0 percent relative to a year earlier. France’s GDP increased 0.3 percent in IIIQ2014 and increased 0.4 percent relative to a year earlier. The GDP of France increased 0.1 percent in IVQ2014 and increased 0.2 percent relative to a year earlier

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

	IQ2012/IVQ2011	IQ2012/IQ2011
United States	QOQ: 0.6        SAAR: 2.3	2.6
Japan	QOQ: 1.1 SAAR: 4.3	3.5
China	1.4	8.1
Euro Area	-0.1	-0.4
Germany	0.3	1.5
France	0.2	0.6
Italy	-0.9	-2.3
United Kingdom	0.1	1.0
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.4         SAAR: 1.6	2.3
Japan	QOQ: -0.4 SAAR: -1.4	3.5
China	2.1	7.6
Euro Area	-0.3	-0.8
Germany	0.1	0.3 0.8 CA
France	-0.3	0.4
Italy	-0.6	-3.1
United Kingdom	-0.2	0.6
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.6  SAAR: 2.5	2.7
Japan	QOQ: –0.5 SAAR: –2.2	0.2
China	2.0	7.4
Euro Area	-0.1	-0.8
Germany	0.1	0.1
France	0.2	0.4
Italy	-0.6	-3.1
United Kingdom	0.8	0.7
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
United States	QOQ: 0.0 SAAR: 0.1	1.6
Japan	QOQ: -0.2 SAAR: -0.6	0.0
China	1.9	7.9
Euro Area	-0.4	-0.9
Germany	-0.4	-0.3
France	-0.2	0.0
Italy	-0.6	-2.7
United Kingdom	-0.3	0.4
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.7 SAAR: 2.7	1.7
Japan	QOQ: 1.4 SAAR: 5.6	0.5
China	1.7	7.8
Euro Area	-0.4	-1.2
Germany	-0.4	-1.8
France	-0.1	-0.3
Italy	-0.8	-2.6
UK	0.6	0.9
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.4 SAAR: 1.8	1.8
Japan	QOQ: 0.8 SAAR: 3.3	1.4
China	1.8	7.5
Euro Area	0.3	-0.6
Germany	0.8	0.5
France	0.7	0.7
Italy	-0.1	-2.0
UK	0.6	1.7
	IIIQ2013/IIQ2013	III/Q2013/  IIIQ2012
USA	QOQ: 1.1 SAAR: 4.5	2.3
Japan	QOQ: 0.4 SAAR: 1.4	2.2
China	2.3	7.9
Euro Area	0.2	-0.3
Germany	0.3	0.8
France	-0.1	0.3
Italy	0.1	-1.4
UK	0.7	1.6
	IVQ2013/IIIQ2013	IVQ2013/IVQ2012
USA	QOQ: 0.9 SAAR: 3.5	3.1
Japan	QOQ: -0.3 SAAR: -1.2	2.3
China	1.8	7.6
Euro Area	0.3	0.4
Germany	0.4	1.0
France	0.3	0.8
Italy	0.0	-0.8
UK	0.4	2.4
	IQ2014/IVQ2013	IQ2014/IQ2013
USA	QOQ -0.5 SAAR -2.1	1.9
Japan	QOQ: 1.3 SAAR: 5.1	2.4
China	1.6	7.4
Euro Area	0.3	1.1
Germany	0.8	2.6
France	-0.1	0.8
Italy	-0.1	-0.1
UK	0.9	2.7
	IIQ2014/IQ2014	IIQ2014/IIQ2013
USA	QOQ 1.1 SAAR 4.6	2.6
Japan	QOQ: -1.6 SAAR: -6.4	-0.3
China	1.9	7.5
Euro Area	0.1	0.8
Germany	-0.1	1.0
France	-0.1	0.0
Italy	-0.2	-0.3
UK	0.8	2.9
	IIIQ2014/IIQ2014	IIIQ2014/IIIQ2013
USA	QOQ: 1.2 SAAR: 5.0	2.7
Japan	QOQ: -0.7 SAAR: -2.6	-1.4
China	1.9	7.3
Euro Area	0.2	0.8
Germany	0.1	1.2
France	0.3	0.4
Italy	-0.1	-0.5
UK	0.6	2.8
	IVQ2014/IIIQ2014	IVQ2014/IVQ2013
USA	QOQ: 0.5 SAAR: 2.2	2.4
Japan	QOQ: 0.4 SAAR: 1.5	-0.8
China	1.5	7.3
Euro Area	0.3	0.9
Germany	0.7	1.6
France	0.1	0.2
Italy	0.0	-0.5
UK	0.6	3.0

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/2015/03/impatience-with-monetary-policy-of.html and earlier http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier (http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html and earlier http://cmpassocregulationblog.blogspot.com/2014/07/world-inflation-waves-united-states.html and earlier (http://cmpassocregulationblog.blogspot.com/2014/06/valuation-risks-world-inflation-waves.html and earlier http://cmpassocregulationblog.blogspot.com/2014/05/united-states-commercial-banks-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2014/05/financial-volatility-mediocre-cyclical.html and earlier 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 2015, Japan’s exports increased 2.4 percent in 12 months while imports decreased 3.6 percent. The second part of Table V-4 shows that net trade deducted 1.4 percentage points from Japan’s growth of GDP in IIQ2012, deducted 1.9 percentage points from GDP growth in IIIQ2012 and deducted 0.4 percentage points from GDP growth in IVQ2012. Net trade added 0.3 percentage points to GDP growth in IQ2012, 1.6 percentage points in IQ2013 and 0.2 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.5 percentage points from GDP growth in Japan. Net trade ducted 2.1 percentage points from GDP growth in Japan in IVQ2013. Net trade deducted 1.2 percentage point from GDP growth of Japan in IQ2014. Net trade added 4.2 percentage points to GDP growth in IIQ2014. Net trade added 0.2 percentage points to GDP growth in IIIQ2014 and added 0.9 percentage points in IVQ2014.

• China. In Mar 2015, China exports decreased 48.3 percent relative to a year earlier and imports decreased 12.7 percent.
• Germany. Germany’s exports increased 1.5 percent in the month of Feb 2015 and increased 3.9 percent in the 12 months ending in Feb 2015. Germany’s imports increased 1.8 percent in the month of Feb 2015 and increased 0.8 percent in the 12 months ending in Feb. 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 0.1 percentage points in IIQ2013. Net traded deducted 0.5 percentage points from Germany’s GDP growth in IIIQ2013 and added 0.5 percentage points to GDP growth in IVQ2013. Net trade deducted 0.1 percentage points from GDP growth in IQ2014. Net trade added 0.0 percentage points to GDP growth in IIQ2014 and added 0.4 percentage points in IIIQ2014. Net trade added 0.2 percentage points to GDP growth in IVQ2014.
• United Kingdom. Net trade contributed 0.7 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.7 percentage points from UK growth. Net trade contributed 0.1 percentage points to UK value added in IVQ2013. Net trade contributed 0.1 percentage points to UK value added in IQ2014 and 0.2 percentage points in IIQ2014. Net trade deducted 0.5 percentage points to GDP growth in IIIQ2014 and added 0.8 percentage points in IVQ2014.
• France. France’s exports increased 1.4 percent in Feb 2015 while imports increased 0.6 percent. France’s exports increased 3.0 percent in the 12 months ending in Feb 2015 and imports decreased 1.5 percent relative to a year earlier. 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 0.3 percentage points in IIQ2013, deducting 1.7 percentage points in IIIQ2013. Net trade added 0.1 percentage points to France’s GDP in IVQ2013 and deducted 0.1 percentage points in IQ2014. Net trade deducted 0.2 percentage points from France’s GDP growth in IIQ2014 and deducted 0.2 percentage points in IIIQ2014. Net trade added 0.2 percentage points to France’s GDP growth in IVQ2014.
• United States. US exports decreased 1.6 percent in Feb 2015 and goods exports decreased 4.6 percent in Jan-Feb 2015 relative to a year earlier. Imports decreased 4.4 percent in Feb 2015 and goods imports decreased 3.5 percent in Jan-Feb 2015 relative to a year earlier. Net trade deducted 0.04 percentage points from GDP growth in IIQ2012 and added 0.39 percentage points in IIIQ2012 and 0.79 percentage points in IVQ2012. Net trade deducted 0.08 percentage points from US GDP growth in IQ2013 and deducted 0.54 percentage points in IIQ2013. Net traded added 0.59 percentage points to US GDP growth in IIIQ2013. Net trade added 1.08 percentage points to US GDP growth in IVQ2013. Net trade deducted 1.66 percentage points from US GDP growth in IQ2014 and deducted 0.34 percentage points in IIQ2014. Net trade added 0.78 percentage points to IIIQ2014. Net trade deducted 1.15 percentage points from GDP growth in IVQ2014. Industrial production increased 0.1 percent in Feb 2015 and decreased 0.3 percent in Jan 2015 after decreasing 0.2 percent in Dec 2014, 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 decreased 0.6 percent in Mar 2015 and increased 0.1 percent in Feb 2015 after decreasing 0.4 percent in Jan 2015, 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 decreased 0.6 percent in March after increasing 0.1 percent in February. For the first quarter of 2015 as a whole, industrial production declined at an annual rate of 1.0 percent, the first quarterly decrease since the second quarter of 2009. The decline last quarter resulted from a drop in oil and gas well drilling and servicing of more than 60 percent at an annual rate and from a decrease in manufacturing production of 1.2 percent. In March, manufacturing output moved up 0.1 percent for its first monthly gain since November; however, factory output in January is now estimated to have fallen 0.6 percent, about twice the size of the previously reported decline. The index for mining decreased 0.7 percent in March. The output of utilities fell 5.9 percent to largely reverse a similarly sized increase in February, which was related to unseasonably cold temperatures. At 105.2 percent of its 2007 average, total industrial production in March was 2.0 percent above its level of a year earlier. Capacity utilization for the industrial sector decreased 0.6 percentage point in March to 78.4 percent, a rate that is 1.7 percentage points below its long-run (1972–2014) average.” In the six months ending in Mar 2015, United States national industrial production accumulated increase of 0.1 percent at the annual equivalent rate of 0.2 percent, which is lower than growth of 2.0 percent in the 12 months ending in Mar 2015. Excluding growth of 1.1 percent in Nov 2014, growth in the remaining five months from Oct 2014 to Mar 2015 accumulated to minus 1.0 percent or minus 2.4 percent annual equivalent. Industrial production declined in three of the past six months. Industrial production contracted at annual equivalent 3.5 percent in the most recent quarter from Jan 2015 to Mar 2015 and expanded at 4.1 percent in the prior quarter Oct to Dec 2014. Business equipment accumulated growth of 1.5 percent in the six months from Oct 2014 to Mar 2015 at the annual equivalent rate of 3.0 percent, which is lower than growth of 3.2 percent in the 12 months ending in Mar 2015. 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 0.6 percentage point in March to 78.4 percent, a rate that is 1.7 percentage points below its long-run (1972–2014) average.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration and oscillating growth in past months.

Manufacturing fell 21.9 from the peak in Jun 2007 to the trough in Apr 2009 and increased by 25.1 percent from the trough in Apr 2009 to Dec 2014. Manufacturing grew 26.5 percent from the trough in Apr 2009 to Mar 2015. Manufacturing output in Mar 2015 is 1.2 percent below the peak in Jun 2007. 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 IVQ2014 would have accumulated to 23.0 percent. GDP in IVQ2014 would be $18,438.0 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,143.3 billion than actual $16,294.7 billion. There are about two trillion dollars of GDP less than at trend, explaining the 26.7 million unemployed or underemployed equivalent to actual unemployment/underemployment of 16.1 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html). US GDP in IVQ2014 is 11.6 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,294.7 billion in IVQ2014 or 8.7 percent at the average annual equivalent rate of 1.2 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. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth at average 3.3 percent per year from Mar 1919 to Mar 2015. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 125.5771 in Mar 2015. The actual index NSA in Mar 2015 is 101.8045, which is 18.9 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.2305 in Mar 2015. The output of manufacturing at 101.8045 in Mar 2015 is 13.2 percent below trend under this alternative calculation.

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	-1.6 Jan	-4.6 Jan-Feb	-4.4 Jan	-3.5 Jan-Feb
Japan		Feb 2015 2.4 Jan 17.0 Dec 12.9 Nov 4.9 Oct 9.6 Sep 6.9 Aug -1.3 Jul 3.9 Jun -2.0 May 2014 -2.7 Apr 2014 5.1 Mar 2014 1.8 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 2015 -3.6 Jan -9.0 Dec 1.9 Nov -1.7 Oct 2.7 Sep 6.2 Aug -1.5 Jul 2.3 Jun 8.4 May 2014 -3.6 Apr 2013 3.4 Mar 2014 18.1 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		2015 -15.0 Mar 48.3 Feb -3.3 Jan 2014 9.7 Dec 4.7 Nov 11.6 Oct 15.3 Sep 9.4 Aug 14.5 Jul 7.2 Jun 7.0 May 0.9 Apr -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		2015 -12.7 Mar -20.5 Feb -19.9 Jan 2014 -2.4 Dec -6.7 Nov 4.6 Oct 7.0 Sep -2.4 Aug -1.6 Jul 5.5 Jun -1.6 May -0.8 Apr -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	2.2 12 M-Feb	1.8 Jan-Feb	0.1 12-M Feb	-2.8 Jan-Feb
Germany	1.5 Feb CSA	3.9 Feb	1.8 Feb CSA	0.8 Feb
France Feb	1.4	3.0	0.6	1.5
Italy Feb	2.5	3.7	0.6	1.0
UK	-2.4 Feb	0.5 Dec 14-Feb 15 /Dec 13-Feb 14	0.7 Feb	-1.8 Dec 14-Feb 15 /Dec 13-Feb 14
Net Trade % Points GDP Growth	% Points
USA	IVQ2014 -1.15 IIIQ2014 0.78 IIQ2014 -0.34 IQ2014 -1.66 IVQ2013 1.08 IIIQ2013 0.59 IIQ2013 -0.54 IQ2013 -0.08 IVQ2012 +0.79 IIIQ2012 0.39 IIQ2012 -0.04 IQ2012 -0.11
Japan	0.3 IQ2012 -1.4 IIQ2012 -1.9 IIIQ2012 -0.4 IVQ2012 1.6 IQ2013 0.2 IIQ2013 -1.5 IIIQ2013 -2.1 IVQ2013 -1.2 IQ2014 4.2 IIQ2014 0.2 IIIQ2014 0.9 IVQ2014
Germany	IQ2012 0.8 IIQ2012 0.4 IIIQ2012 0.3 IVQ2012 -0.5 IQ2013 -0.3 IIQ2013 0.1 IIIQ2013 -0.5 IVQ2013 0.5 IQ2014 -0.1 IIQ2014 0.0 IIIQ2014 0.4 IVQ2014 0.2
France	0.1 IIIQ2012 0.1 IVQ2012 -0.1 IQ2013 0.3 IIQ2013 -1.7 IIIQ2013 0.1 IVQ2013 -0.1 IQ2014 -0.2 IIQ2014 -0.2 IIIQ2014 0.2 IVQ2014
UK	0.7 IIQ2013 -1.7 IIIQ2013 0.1 IVQ2013 0.1 IQ2014 0.2 IIQ2214 -0.5 IIIQ2014 0.8 IVQ2014

Sources: Country Statistical Agencies http://www.census.gov/foreign-trade/

The geographical breakdown of exports and imports of Japan with selected regions and countries is in Table VB-5 for Feb 2015. The share of Asia in Japan’s trade is close to one-half for 51.6 percent of exports and 50.6 percent of imports. Within Asia, exports to China are 15.0 percent of total exports and imports from China 26.0 percent of total imports. While exports to China decreased 17.3 percent in the 12 months ending in Feb 2015, imports from China increased 39.4 percent. The largest export market for Japan in Feb 2015 is the US with share of 20.3 percent of total exports, which is close to that of China, and share of imports from the US of 9.2 percent in total imports. Japan’s exports to the US increased 14.3 percent in the 12 months ending in Feb 2015 and imports from the US increased 0.5 percent. Western Europe has share of 10.7 percent in Japan’s exports and of 10.7 percent in imports. Rates of growth of exports of Japan in Feb 2015 are 14.3 percent for exports to the US, 14.4 percent for exports to Brazil and minus 4.4 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 2015 are mixed. Imports from Asia decreased 3.0 percent in the 12 months ending in Feb 2015 while imports from China increased 16.8 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 VB-5, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yen

Feb 2015	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	5,941,062	2.4	6,365,660	-3.6
Asia	3,068,435 % Total 51.6	-1.1	3,218,465 % Total 50.6	16.8
China	888,893 % Total 15.0	-17.3	1,657,797 % Total 26.0	39.4
USA	1,215,673 % Total 20.5	14.3	583,982 % Total 9.2	0.5
Canada	81,977	19.1	78,456	-8.8
Brazil	44,487	14.4	85,814	-10.4
Mexico	96,650	16.4	43,839	21.5
Western Europe	634,818 % Total 10.7	1.7	679,425 % Total 10.7	-3.9
Germany	158,600	-4.4	194,294	-9.4
France	54,121	6.4	86,072	7.3
UK	86,176	-1.9	51,802	-1.7
Middle East	256,291	11.0	763,137	-42.6
Australia	129,414	2.5	364,356	-2.7

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 5.0 percent in 2015 and 5.6 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	3.8	5.0	5.6
Exports Goods & Services	3.2	3.7	5.0	5.5
Imports Goods & Services	2.8	3.9	5.0	5.6
World Trade Value of Exports Goods & Services USD Billion	23,114	23,928	24,948	Average ∆% 2006-2015 20,259
Value of Exports of Goods USD Billion	18,671	19,299	20,107	Average ∆% 2006-2015 16,312
Average Oil Price USD/Barrel	104.07	102.76	99.36	Average ∆% 2006-2015 88.85
Average Annual ∆% Export Unit Value of Manufactures	-1.1	-0.2	-0.5	Average ∆% 2006-2015 -0.6
Exports of Goods & Services	2013	2014	2015	Average ∆% 2016-2019
Euro Area	1.8	3.5	4.3	4.7
EMDE	4.4	3.9	5.8	6.1
G7	1.8	2.9	4.2	4.9
Imports Goods & Services
Euro Area	0.5	3.4	3.9	4.7
EMDE	5.3	4.4	6.1	6.3
G7	1.2	3.6	4.1	4.9
Terms of Trade of Goods & Services
Euro Area	0.8	-0.4	-0.3	-0.1
EMDE	-0.2	-0.02	-0.6	-0.4
G7	0.8	0.7	-0.2	0.0
Terms of Trade of Goods
Euro Area	1.2	0.03	-0.02	-0.2
EMDE	-0.2	0.2	-0.4	-0.3
G7	0.9	0.3	-0.1	-0.1

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 54.8 in Mar from 53.9 in Feb, indicating expansion at higher rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/29a6f1bcf0bd43358458fd301141a6d1). This index has remained above the contraction territory of 50.0 during 68 consecutive months. The employment index increased from 51.8 in Feb to 52.0 in Mar with input prices rising at faster rate, new orders increasing at faster rate and output increasing at faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/29a6f1bcf0bd43358458fd301141a6d1). David Hensley, Director of Global Economic Coordination at JP Morgan, finds acceleration of world economic growth in IQ2015 (http://www.markiteconomics.com/Survey/PressRelease.mvc/29a6f1bcf0bd43358458fd301141a6d1). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, decreased to 51.8 in Mar from 51.9 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/667a34f2b7664124b9bacd22a85f00d9). New export orders expanded for the twentieth consecutive month. David Hensley, Director of Global Economics Coordination at JP Morgan Chase, finds continuing growth in global manufacturing with output increasing at rates around those in past months (http://www.markiteconomics.com/Survey/PressRelease.mvc/667a34f2b7664124b9bacd22a85f00d9). The HSBC Brazil Composite Output Index, compiled by Markit, decreased from 51.3 in Feb to 47.0 in Mar, indicating contraction in activity of Brazil’s private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/98cdf9074e5e4da68b6de8f3bbf1dd75). The HSBC Brazil Services Business Activity index, compiled by Markit, decreased from 52.3 in Feb to 47.9 in Mar, indicating contracting services activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/98cdf9074e5e4da68b6de8f3bbf1dd75). Pollyana De Lima, Economist at Markit, finds weaker private sector activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/98cdf9074e5e4da68b6de8f3bbf1dd75). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) decreased from 49.6 in Feb to 46.2 in Mar, indicating deterioration in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/a7a09c9443da4a7b91e8017781be1fd3). Pollyanna De Lima, Economist at Markit, finds the fastest contraction of manufacturing output in three and a half years (http://www.markiteconomics.com/Survey/PressRelease.mvc/a7a09c9443da4a7b91e8017781be1fd3).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 55.3 in Mar from 55.1 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/2861da71797f4fa9bc41b8cbee173955). New export orders declined. Chris Williamson, Chief Economist at Markit, finds that manufacturing expanding with challenges to competitiveness from the strong dollar (http://www.markiteconomics.com/Survey/PressRelease.mvc/2861da71797f4fa9bc41b8cbee173955). The Markit Flash US Services PMI™ Business Activity Index increased from 57.1 in Feb to 58.6 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/89c23ff78b0f4f29a791fd417b52764d). The Markit Flash US Composite PMI™ Output Index increased from 57.2 in Feb to 58.5 in Mar. Chris Williamson, Chief Economist at Markit, finds that the surveys are consistent with slowing GDP growth that may accelerate in the second quarter (http://www.markiteconomics.com/Survey/PressRelease.mvc/89c23ff78b0f4f29a791fd417b52764d). The Markit US Composite PMI™ Output Index of Manufacturing and Services increased to 59.2 in Mar from 57.2 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/8bf81bec1dc54c04acb6fec388744e9f). The Markit US Services PMI™ Business Activity Index increased from 57.1 in Feb to 59.2 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/8bf81bec1dc54c04acb6fec388744e9f). Tim Moore, Senior Economist at Markit, finds the indexes consistent with US growth in IIQ2015 (http://www.markiteconomics.com/Survey/PressRelease.mvc/8bf81bec1dc54c04acb6fec388744e9f). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) increased to 55.7 in Mar from 55.1 in Feb, which indicates expansion at faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/ddc73e386ca84f55aef2be31c5af4241). New foreign orders stagnated. Tim Moore, Senior Economist at Markit, finds that the index suggests restrain of foreign orders because of dollar appreciation (http://www.markiteconomics.com/Survey/PressRelease.mvc/ddc73e386ca84f55aef2be31c5af4241). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® decreased 1.4 percentage points from 52.9 in Feb to 51.5 in Mar, which indicates growth at slower rate (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=29253). The index of new orders decreased 0.7 percentage points from 52.5 in Feb to 51.8 in Mar. The index of new export orders decreased 1.0 percentage points from 48.5 in Feb to 47.5 in Mar, contracting at faster rate. The Non-Manufacturing ISM Report on Business^® PMI decreased 0.4 percentage points from 56.9 in Feb to 56.5 in Mar, indicating growth of business activity/production during 68 consecutive months, while the index of new orders increased 1.1 percentage points from 56.7 in Feb to 57.8 in Mar (http://www.ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=29259).

Table USA, US Economic Indicators

Consumer Price Index	Mar 12 months NSA ∆%: minus 0.1; ex food and energy ∆%: 1.8 Mar month SA ∆%: 0.2; ex food and energy ∆%: 0.2 Blog 4/19/15
Producer Price Index	Finished Goods Mar 12-month NSA ∆%: -3.3; ex food and energy ∆% 2.0 Mar month SA ∆% = 0.5; ex food and energy ∆%: 0.5 Final Demand Mar 12-month NSA ∆%: -0.8; ex food and energy ∆% 0.9 Mar month SA ∆% = 0.2; ex food and energy ∆%: 0.2 Blog 4/19/15
PCE Inflation	Feb 12-month NSA ∆%: headline 0.3; ex food and energy ∆% 1.4 Blog 4/5/15
Employment Situation	Household Survey: Mar Unemployment Rate SA 5.5% Blog calculation People in Job Stress Mar: 26.7 million NSA, 16.1% of Labor Force Establishment Survey: Mar Nonfarm Jobs +126,000; Private +129,000 jobs created  Feb 12-month Average Hourly Earnings Inflation Adjusted ∆%: 2.0 Blog 4/5/15
Nonfarm Hiring	Nonfarm Hiring fell from 63.3 million in 2006 to 54.2 million in 2013 or by 9.1 million and to 58.7 million in 2014 or by 4.6 million Private-Sector Hiring Feb 2015 3.998 million lower by 0.395 million than 4.393 million in Feb 2006 Blog 4/12/15
GDP Growth	BEA Revised National Income Accounts IQ2012/IQ2011 ∆%: 2.6 IIQ2012/IIQ2011 2.3 IIIQ2012/IIIQ2011 2.7 IVQ2012/IVQ2011 1.6 IQ2013/IQ2012 1.7 IIQ2013/IIQ2012 1.8 IIIQ2013/IIIQ2012 2.3 IVQ2013/IVQ2012 3.1 IQ2014/IQ2013 1.9 IIQ2014/IIQ2013 2.6 IIIQ2014/IIIQ2013 2.7 IVQ2014/IVQ2013 2.4 IQ2012 SAAR 2.3 IIQ2012 SAAR 1.6 IIIQ2012 SAAR 2.5 IVQ2012 SAAR 0.1 IQ2013 SAAR 2.7 IIQ2013 SAAR 1.8 IIIQ2013 SAAR 4.5 IVQ2013 SAAR 3.5 IQ2014 SAAR -2.1 IIQ2014 SAAR 4.6 IIIQ2014 SAAR 5.0 IVQ2014 SAAR 2.2 Blog 3/29/15
Real Private Fixed Investment	SAAR IVQ2014 4.5 ∆% IVQ2007 to IVQ2014: 3.3% Blog 3/29/15
Corporate Profits	IVQ2014 SAAR: Corporate Profits -1.4; Undistributed Profits -6.6 Blog 3/29/15
Personal Income and Consumption	Feb month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.2 Real Personal Consumption Expenditures (RPCE): -0.1 12-month Feb NSA ∆%: RDPI: 4.0; RPCE ∆%: 2.6 Blog 4/5/15
Quarterly Services Report	IVQ14/IVQ13 NSA ∆%: Information 4.6 Financial & Insurance 5.2 Blog 3/22/15
Employment Cost Index	Compensation Private IVQ2014 SA ∆%: 0.6 Dec 12 months ∆%: 2.3 Blog 2/1/15
Industrial Production	Mar month SA ∆%: -0.6 Mar 12 months SA ∆%: 2.0 Manufacturing Mar SA 0.1 ∆% Mar 12 months SA ∆% 2.4, NSA 2.4 Capacity Utilization: 78.9 Blog 4/19/15
Productivity and Costs	Nonfarm Business Productivity IVQ2014∆% SAAE -2.2; IVQ2014/IVQ2013 ∆% -0.1; Unit Labor Costs SAAE IVQ2014 ∆% 4.1; IVQ2014/IVQ2013 ∆%: 2.6 Blog 3/8/15
New York Fed Manufacturing Index	General Business Conditions From Mar 6.90 to Apr minus 1.19 New Orders: From Mar minus 2.39 to Apr minus 6.0 Blog 4/19/15
Philadelphia Fed Business Outlook Index	General Index from Mar 5.0 to Apr 7.5 New Orders from Mar 3.9 to Apr 0.7 Blog 4/19/15
Manufacturing Shipments and Orders	New Orders SA Feb ∆% 0.2 Ex Transport 0.8 Jan-Feb NSA New Orders ∆% minus 5.4 Ex transport minus 5.9 Blog 4/5/15
Durable Goods	Feb New Orders SA ∆%: minus 1.4; ex transport ∆%: minus 0.4 Jan-Feb 15/Jan-Feb 14 New Orders NSA ∆%: -0.5; ex transport ∆% 0.5 Blog 3/29/15
Sales of New Motor Vehicles	Mar 2015 3,954,544; Mar 2014 3,743,742. Mar 15 SAAR 17.15 million, Feb 15 SAAR 16.23 million, Mar 2014 SAAR 16.49 million Blog 4/5/15
Sales of Merchant Wholesalers	Jan-Feb 2015/Jan-Feb 2014 NSA ∆%: Total -2.6; Durable Goods: 3.4; Nondurable Goods: -7.6 Blog 4/12/15
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Feb 15 12-M NSA ∆%: Sales Total Business -1.6; Manufacturers -3.1 Retailers 0.6; Merchant Wholesalers -1.8 Blog 4/19/15
Sales for Retail and Food Services	Jan-Mar 2015/Jan-Mar 2014 ∆%: Retail and Food Services 2.1; Retail ∆% 1.3 Blog 4/19/15
Value of Construction Put in Place	Feb SAAR month SA ∆%: minus 0.1 Feb 12-month NSA:3.1 Blog 4/5/15
Case-Shiller Home Prices	Jan 2015/ Jan 2014 ∆% NSA: 10 Cities 4.4; 20 Cities: 4.6; National: 4.5 ∆% Jan SA: 10 Cities 0.9 ; 20 Cities: 0.9 Blog 4/5/15
FHFA House Price Index Purchases Only	Jan SA ∆% 0.3; 12 month NSA ∆%: 5.1 Blog 3/1/15
New House Sales	Feb 2015 month SAAR ∆%: minus 19.1 Jan-Feb 2015/Jan-Feb 2014 NSA ∆%: 9.1 Blog 3/29/15
Housing Starts and Permits	Mar Starts month SA ∆% 2.0; Permits ∆%: -5.7 Jan-Mar 2015/Jan-Mar 2014 NSA ∆% Starts 4.0; Permits  ∆% 7.2 Blog 4/19/15
Trade Balance	Balance Feb SA -$35,444 million versus Jan -$42,676 million Exports Feb SA ∆%: -1.6 Imports Feb SA ∆%: -4.4 Goods Exports Jan-Feb 2015/Feb 2014 NSA ∆%: -4.6 Goods Imports Jan-Feb 2015/Jan 2014 NSA ∆%: -3.5 Blog 4/5/15
Export and Import Prices	Mar 12-month NSA ∆%: Imports -10.5; Exports -6.7 Blog 4/12/15
Consumer Credit	Feb ∆% annual rate: Total 5.6; Revolving 5.6; Nonrevolving 9.4 Blog 4/12/15
Net Foreign Purchases of Long-term Treasury Securities	Feb Net Foreign Purchases of Long-term US Securities: minus $10.6 billion Major Holders of Treasury Securities: Japan $1224.4 billion; China $1223.7 billion; Total Foreign US Treasury Holdings Jan $6163 billion Blog 4/19/15
Treasury Budget	Fiscal Year 2015/2014 ∆% Mar: Receipts 7.3; Outlays 7.1; Individual Income Taxes 8.1 Deficit Fiscal Year 2011 $1,300 billion Deficit Fiscal Year 2012 $1,087 billion Deficit Fiscal Year 2013 $680 billion Deficit Fiscal Year 2014 $483 billion Blog 4/19/2015
CBO Budget and Economic Outlook	2012 Deficit $1087 B 6.8% GDP Debt $11,281 B 70.4% GDP 2013 Deficit $680 B, 4.1% GDP Debt $11,983 B 72.3% GDP 2014 Deficit $483 B 2.8% GDP Debt $12,779 B 74.1% GDP 2025 Deficit $1,088B, 4.0% GDP Debt $21,605B 78.7% GDP 2039: Long-term Debt/GDP 106% Blog 8/26/12 11/18/12 2/10/13 9/22/13 2/16/14 8/24/14 9/14/14 3/1/15
Commercial Banks Assets and Liabilities	Dec 2014 SAAR ∆%: Securities 24.2 Loans 7.1 Cash Assets -52.4 Deposits 7.6 Blog 1/25/15
Flow of Funds Net Worth of Families and Nonprofits	IVQ2014 ∆ since 2007 Assets +$15,921.0 BN Nonfinancial $898.5 BN Real estate $172.1 BN Financial +15,022.4 BN Net Worth +$16,162.4 BN Blog 3/29/15
Current Account Balance of Payments	IVQ2014 -111,222 MM % GDP 2.6 Blog 3/22/15
Collapse of United States Dynamism of Income Growth and Employment Creation	Blog 4/12/15

Links to blog comments in Table USA:

4/12/15 http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html

4/5/15 http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html

3/29/15 http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html

3/22/15 http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html

3/8/15 http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html

3/1/15 http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html

2/1/15 http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html

1/25/15 http://cmpassocregulationblog.blogspot.com/2015/01/competitive-currency-conflicts-world.html

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

8/24/14 http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html

2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.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 0.7 percent in Feb 2015 after decreasing 2.3 percent in Jan and decreasing 3.1 percent in the 12 months ending in Feb, as shown in Table VA-1. Retailers’ sales decreased 0.5 percent in Feb 2015 after decreasing 0.9 percent in Jan and increased 0.6 percent in 12 months ending in Feb 2015. Sales of merchant wholesalers decreased 0.2 percent in Feb, decreased 3.6 percent in Jan and decreased 1.8 percent in 12 months ending in Feb. Sales of total business changed 0.0 percent in Feb after decreasing 2.3 percent in Jan and decreased 1.6 percent in 12 months.

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

	Feb 15/Jan 15 ∆% SA	Feb 2015 Millions of Dollars NSA	Jan 15/ Dec 14  ∆% SA	Feb 15/ Feb 14 ∆% NSA
Total Business	0.0	1,186,657	-2.3	-1.6
Manufacturers	0.7	445,431	-2.3	-3.1
Retailers	-0.5	344,439	-0.9	0.6
Merchant Wholesalers	-0.2	396,787	-3.6	-1.8

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. The series with adjustment evens 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 subdued prices with data 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 2015

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 weakness in data without adjustment for price changes.

Chart VA-2, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Feb 2015

US Census Bureau

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

Businesses added cautiously to inventories to replenish stocks. Retailers’ inventories increased 0.4 percent in Feb 2015 and changed 0.0 percent in Jan with growth of 2.8 percent in 12 months, as shown in Table VA-2. Total business increased inventories by 0.3 percent in Feb, 0.0 percent in Jan and increased 3.1 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 with increase at the margin.

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

Inventory Change	Feb 15 Millions of Dollars NSA	Feb 15/ Jan 15 ∆% SA	Jan 15/  Dec 14 ∆% SA	Feb 15/ Feb 14 ∆% NSA
Total Business	1,793,073	0.3	0.0	3.1
Manufacturers	654,463	0.1	-0.4	1.0
Retailers	559,574	0.4	0.0	2.8
Merchant Wholesalers	579,036	0.3	0.4	6.0
Inventory/ Sales Ratio	Feb 15 Millions of Dollars NSA	Feb 2015 SA	Jan 2015 SA	Feb 2014 SA
Total Business	1,793,073	1.36	1.36	1.30
Manufacturers	654,463	1.35	1.36	1.30
Retailers	559,574	1.46	1.44	1.43
Merchant Wholesalers	579,036	1.29	1.29	1.20

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 2015. 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 2015

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 2015 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 2015

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, 2014 and 2015 with increase into 2015.

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

Source: US Census Bureau

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

Sales of retail and food services increased 0.9 percent in Mar 2015 after decreasing 0.5 percent in Feb 2014 seasonally adjusted (SA), growing 2.1 percent in Mar 2015 relative to Mar 2014 not seasonally adjusted (NSA), as shown in Table VA-3. Excluding motor vehicles and parts, retail sales increased 0.4 percent in Mar 2015, changing 0.0 percent in Mar 2015 SA and increasing 0.8 percent NSA in Mar 2015 relative to a year earlier. Sales of motor vehicles and parts increased 2.7 percent in Mar 2015 after decreasing 2.1 percent in Feb 2015 SA and increasing 7.2 percent NSA in Mar 2015 relative to a year earlier. Gasoline station sales decreased 0.6 percent SA in Mar 2015 after increasing 2.3 percent in Feb 2015 in oscillating prices of gasoline that are moderating, decreasing 23.4 percent in Mar 2015 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 2015 Million Dollars NSA	Jan-Mar 2015 from Jan-Mar 2014 ∆% NSA
Retail and Food Services	0.9	-0.5	1,237,456	2.1
Excluding Motor Vehicles and Parts	0.4	0.0	975,583	0.8
Motor Vehicles & Parts Dealers	2.7	-2.1	261,873	7.2
Retail	0.9	-0.5	1,091,314	1.3
Building Materials	2.1	-1.8	69,529	6.8
Food and Beverage	-0.5	0.1	163,832	3.1
Grocery	-0.6	0.1	146,895	2.8
Health & Personal Care Stores	0.3	0.0	75,649	5.7
Clothing & Clothing Accessories Stores	1.2	0.0	55,078	3.0
Gasoline Stations	-0.6	2.3	97,784	-23.4
General Merchandise Stores	0.6	-1.9	151,284	1.3
Food Services & Drinking Places	0.7	0.2	146,142	9.0

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

Chart VA-6 provides monthly percentage changes of sales of retail and food services. There is significant monthly volatility that prevents identification of clear trends.

Chart VA-6, US, Monthly Percentage Change of Retail and Food Services Sales, Jan 1992-Mar 2015

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

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 2015 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/decrease. Data are not adjusted for price changes.

Chart VA-7, US, Total Sales of Retail Trade and Food Services, SA, Jan 1992-Mar 2015, 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 2015. 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. Sales decline in the last observation.

Chart VA-8, US, Total Sales of Retail Trade and Food Services, NSA, Jan 1992-Mar 2015, Millions of Dollars

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

Seasonally adjusted annual rates (SAAR) of housing starts and permits are in Table VA-5. Housing starts increased 2.0 percent in Mar 2015 after wide oscillations that included increases of 6.5 percent in Dec 2014, 20.8 percent in Jul, 11.9 percent in Apr, 2.4 percent in Mar and 3.5 percent in Feb. There were decreases of 15.3 percent in Feb 2015, 7.1 percent in Nov 2014, 12.3 percent in Aug, 7.6 percent in Jun, 7.4 percent in May and 13.2 percent in Jan. There were increases of 18.1 percent in Nov 2013 and declines of 14.7 percent in Apr 2013 and 9.2 percent in Jun 2013. Housing starts decreased 2.5 percent from the SAAR of 950 in Mar 2014 to the SAAR of 926 in Mar 2015. Housing permits, indicating future activity, decreased 5.87 percent in Mar 2015, increased 4.0 percent in Feb 2015 and changed 0.0 percent in Dec 2014. Housing permits decreased 3.8 percent in Nov 2014, 1.4 percent in Aug 2014, 1.0 percent in Jun 2014 and 7.9 percent in May 2014. There were significant oscillations with increase of 6.1 percent in Oct 2014 and 4.5 percent in Jul 2014. Housing permits increased 2.9 percent from 1010 SSAR in Mar 2014 to SSAR of 1039 in Mar 2015. While single unit houses starts increased 4.4 percent in Mar 2015, seasonally adjusted, structures with five units or more decreased 7.1 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-5.

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

	Housing  Starts SAAR	Month ∆%	Housing Permits SAAR	Month ∆%
Mar 2015	926	2.0	1039	-5.7
Feb	908	-15.3	1102	4.0
Jan	1072	-0.8	1060	0.0
Dec 2014	1081	6.5	1060	0.0
Nov	1015	-7.1	1060	-3.8
Oct	1092	6.2	1102	6.1
Sep	1028	6.7	1039	1.7
Aug	963	-12.3	1022	-1.4
Jul	1098	20.8	1037	4.5
Jun	909	-7.6	992	-1.0
May	984	-7.4	1002	-7.9
Apr	1063	11.9	1088	7.7
Mar	950	2.4	1010	-0.4
Feb	928	3.5	1014	4.1
Jan	897	-13.2	974	-4.7
Dec 2013	1034	-6.4	1022	-1.4
Nov	1105	18.1	1037	-2.8
Oct	936	8.5	1067	7.5
Sep	863	-2.5	993	4.7
Aug	885	-1.4	948	-3.0
Jul	898	8.1	977	4.2
Jun	831	-9.2	938	-7.1
May	915	7.9	1010	-2.9
Apr	848	-14.7	1040	12.3
Mar	994	4.5	926	-5.1
Feb	951	6.1	976	3.1
Jan	896	-8.2	947	1.0
Dec 2012	976	17.2	938	0.9
Nov	833	-9.0	930	3.9
Oct	915	8.0	895	-2.8
Sep	847	12.3	921	10.7
Aug	754	1.9	832	-1.0
Jul	740	-2.2	840	6.3
Jun	757	6.9	790	-2.1
May	708	-6.0	807	8.0
Apr	753	8.3	747	-6.3
Mar	695	-1.3	797	8.7
Feb	704	-2.6	733	2.5
Jan	723	4.2	715	2.6
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-6. Housing starts increased 4.0 percent in Jan-Mar 2015 relative to Jan-Mar 2014 and new permits increased 7.2 percent. Construction of new houses in the US remains at very depressed levels. Housing starts fell 53.9 percent in Jan-Mar 2015 relative to Jan-Mar 2006 and fell 52.3 percent relative to Jan-Mar 2005. Housing permits fell 52.1 percent in Jan-Mar 2015 relative to Jan-Mar 2006 and fell 50.3 percent relative to Jan-Mar 2005.

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

	Housing Starts	New Permits
Jan-Mar 2015	214.0	238.4
Jan-Mar 2014	206.0	222.3
∆% Jan-Mar 2015/Jan-Mar 2014	4.0	7.2
Jan-Mar 2006	464.0	497.8
∆% Jan-Mar 2015/Jan-Mar 2006	-53.9	-52.1
Jan-Mar 2005	448.2	479.6
∆% Jan-Mar 2015/Jan-Mar 2005	-52.3	-50.3

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 some recent months. While single unit houses starts increased 4.5 percent in Jan-Mar 2015 relative to a year earlier, not seasonally adjusted, structures with two to four units increased 7.2 percent and with five units or more increased 2.7 percent. Single unit houses were 64.6 percent of total housing starts in 2014, increasing 4.9 percent relative to 2013, while construction of five units of more were 34.1 percent, increasing 16.3 percent, and construction of two to four units were 1.4 percent of the total, increasing 0.7 percent.

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

Source: US Census Bureau

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

Table VA-7 provides new housing units that started in the US at seasonally adjusted annual rates (SAAR) in Jan-Mar and from Sep to Dec of the years from 2000 to 2015. SAARs have dropped from high levels around 2 million in 2005-2006 to the range of 848,000 in Apr 2013 to 1,034,000 in Dec 2013 and 1,098,000 in Jul 2014, which is an improvement over the range of 517,000 in Feb 2011 to 711,000 in Nov 2011. Improvement continued with 1,034,000 in Dec 2013 relative to 976,000 in Dec 2012. The rate of housing starts moved to 950,000 in Mar 2015 relative to 994,000 in Feb 2014.

Table VA-7, 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	704	695	847	915	833	976
2013	896	951	994	863	936	1,105	1,034
2014	897	928	950	1,028	1,092	1,015	1,081
2015	1,072	908	926	NA	NA	NA	NA

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

Table VA-8 provides new housing united starts NSA in Jan-Mar and Jul to Dec in the years from 2000 to 2015. The number of units started NSA decreased 53.3 percent from 165.9 thousand in Mar 2006 to 77.4 thousand in Mar 2015. The number of units started decreased 3.5 percent from 80.2 thousand in Mar 2014 to 77.4 thousand in Mar 2015.

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

Year	Jan	Feb	Mar	Jul	Aug	Sep	Oct	Nov	Dec
2000	104.0	119.7	133.4	135.0	141.4	128.9	139.7	117.1	100.7
2001	106.4	108.2	133.2	154.6	141.5	133.1	139.8	121.0	104.6
2002	110.4	120.4	138.2	155.9	147.0	155.6	146.8	133.0	123.1
2003	117.8	109.7	147.2	175.8	163.8	171.3	173.5	153.7	144.2
2004	124.5	126.4	173.8	182.0	185.9	164.0	181.3	138.1	140.2
2005	142.9	149.1	156.2	187.6	192.0	187.9	180.4	160.7	136.0
2006	153.0	145.1	165.9	160.9	146.8	150.1	130.6	115.2	112.4
2007	95.0	103.1	123.8	127.9	121.2	101.5	115.0	88.8	68.9
2008	70.8	78.4	82.2	86.7	76.4	73.9	68.2	47.5	37.7
2009	31.9	39.8	42.7	56.8	52.9	52.6	44.5	42.3	36.6
2010	38.9	40.7	54.7	51.5	56.3	53.0	45.4	40.6	33.8
2011	40.2	35.4	49.9	57.6	54.5	58.8	53.2	53.0	42.7
2012	47.2	49.7	58.0	69.2	69.0	75.8	77.0	62.2	63.2
2013	58.7	66.1	83.3	84.0	80.4	78.4	78.4	83.8	67.6
2014	60.7	65.1	80.2	101.0	86.2	94.2	92.0	75.8	73.4
2015	73.0	63.6	77.4	NA	NA	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 2015 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. (3) There is insufficient recovery during the weak expansion after IIIQ2009.

Chart VA-10, US, New Housing Units Started in the US, Not Seasonally Adjusted, Thousands of Units, Jan 1959-Mar 2015

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

Chart VA-11 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-11, US, Single-family Houses Started, Thousands of Units, Jan-1959-Mar 2015, NSA

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

Chart VA-12 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-12, US, Housing Units Stated in Buildings with Five Units or More, Thousands of Units, Jan-1959-Feb 2015, NSA

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

A longer perspective on residential construction in the US is provided by Table VA-9 with annual data from 1960 to 2014. Housing starts fell 51.5 percent from 2005 to 2014, 36.0 percent from 2000 to 2014 and 29.8 percent relative to the average from 1959 to 1963. Housing permits fell 51.8 percent from 2005 to 2014, 34.7 percent from 2000 to 2014 and 10.2 percent from the average of 1969-1963 to 2014. Housing starts rose 31.8 from 2000 to 2005 while housing permits grew 35.4 percent. From 1990 to 2000, housing starts increased 31.5 percent while permits increased 43.3 percent.

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

	Starts	Permits
2014	1003.3	1039.6
2013	924.9	990.8
2012	780.6	829.7
∆% 2014/2013	8.5	4.9
∆% 2014/2012	28.5	25.3
∆% 2014/2011	64.8	66.6
∆% 2014/2010	70.9	71.9
∆% 2014/2006	-44.3	-43.5
∆% 2014/2005	-51.5	-51.8
∆% 2014/2000	-36.0	-34.7
∆% 2014/Av 1959-1963	-29.8	-10.2
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 four trillion dollars of securities held outright. Net foreign purchases of US long-term securities (row C in Table VA-10) improved from minus $67.3 billion in Jan 2015 to minus $10.6 billion in Feb 2015. Foreign (residents) purchases minus sales of US long-term securities (row A in Table VA-10) in Jan 2015 of minus $39.7 billion increased to $12.8 billion in Feb 2015. Net US (residents) purchases of long-term foreign securities (row B in Table VA-10) decreased from $12.3 billion in Jan 2015 to minus $3.0 billion in Feb 2015. Other transactions (row C2 in Table VA-10) increased from minus $39.9 billion in Jan 2015 to minus $20.4 billion in Feb 2015. In Feb 2015,

C = A + B + C2 = $12.8 billion -$3.0 billion -$20.4 = -$10.6 billion

There are minor rounding errors. There is strengthening demand in Table VA-10 in Jan in A1 private purchases by residents overseas of US long-term securities of $23.0 billion of which improvement in A11 Treasury securities of $4.9 billion, improvement in A12 of $8.0 billion in agency securities, improvement of $10.1 billion of corporate bonds and deterioration of $0.0 billion in equities. Worldwide risk aversion causes flight into US Treasury obligations with significant oscillations. Official purchases of securities in row A2 decreased $10.2 billion with decrease of Treasury securities of $11.2 billion in Feb 2015. Official purchases of agency securities increased $0.9 billion in Feb 2015. Row D shows increase in Feb 2015 of $26.3 billion in purchases of short-term dollar denominated obligations. Foreign private holdings of US Treasury bills increased $8.6 billion (row D11) with foreign official holdings increasing $11.3 billion while the category “other” increased $6.5 billion. Foreign private holdings of US Treasury bills increased $19.9 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-10, Net Cross-Borders Flows of US Long-Term Securities, Billion Dollars, NSA

	Feb 2014 12 Months	Feb 2015 12 Months	Jan 2015	Feb 2015
A Foreign Purchases less Sales of US LT Securities	89.3	151.8	-39.7	12.8
A1 Private	68.9	97.7	-27.7	23.0
A11 Treasury	147.5	-3.2	-42.7	4.9
A12 Agency	-5.3	62.2	6.2	8.0
A13 Corporate Bonds	-25.4	41.5	6.6	10.1
A14 Equities	-47.8	-2.8	2.3	0.0
A2 Official	20.4	54.1	-12.0	-10.2
A21 Treasury	-54.8	21.4	-12.4	-11.2
A22 Agency	69.0	32.3	2.9	0.9
A23 Corporate Bonds	11.7	5.8	-0.9	-0.8
A24 Equities	-5.5	-5.4	-1.7	0.8
B Net US Purchases of LT Foreign Securities	-151.7	17.4	12.3	-3.0
B1 Foreign Bonds	-3.5	130.5	26.1	3.6
B2 Foreign Equities	-148.2	-113.1	-13.7	-6.5
C1 Net Transactions	-62.3	169.2	-27.4	9.8
C2 Other	-207.1	-126.7	-39.9	-20.4
C Net Foreign Purchases of US LT Securities	-269.5	42.5	-67.3	-10.6
D Increase in Foreign Holdings of Dollar Denominated Short-term	-43.6	30.7	-6.7	26.3
D1 US Treasury Bills	-11.0	1.2	-10.8	19.9
D11 Private	-13.9	38.3	-15.6	8.6
D12 Official	2.9	-37.1	4.8	11.3
D2 Other	-32.7	29.5	4.2	6.5

C1 = A + B; C = C1+C2

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

http://www.treasury.gov/press-center/press-releases/Pages/jl2609.aspx

Table VA-11 provides major foreign holders of US Treasury securities. Japan is the largest holder with $1224.4 billion in Feb 2015, decreasing 1.1 percent from $1238.6 billion in Jan 2015 while increasing $13.6 billion from Feb 2014 or 1.1 percent. The United States Treasury estimates US government debt held by private investors at $10,043 billion in Dec 2014. China’s holding of US Treasury securities represent 12.2 percent of US government marketable interest-bearing debt held by private investors (http://www.fms.treas.gov/bulletin/index.html). Min Zeng, writing on “China plays a big role as US Treasury yields fall,” on Jul 16, 2004, published in the Wall Street Journal (http://online.wsj.com/articles/china-plays-a-big-role-as-u-s-treasury-yields-fall-1405545034?tesla=y&mg=reno64-wsj), finds that acceleration in purchases of US Treasury securities by China has been an important factor in the decline of Treasury yields in 2014. China decreased its holdings from $1272.9 billion in Feb 2014 to $1223.7 billion in Feb 2015 or 3.9 percent. The combined holdings of China and Japan in Feb 2015 add to $2448.1 billion, which is equivalent to 24.4 percent of US government marketable interest-bearing securities held by investors of $10,043 billion in Dec 2014 (http://www.fms.treas.gov/bulletin/index.html). Total foreign holdings of Treasury securities rose from $5890.1 billion in Feb 2014 to $6162.8 billion in Feb 2015, or 4.6 percent. The US continues to finance its fiscal and balance of payments deficits with foreign savings (see Pelaez and Pelaez, The Global Recession Risk (2007)). A point of saturation of holdings of US Treasury debt may be reached as foreign holders evaluate the threat of reduction of principal by dollar devaluation and reduction of prices by increases in yield, including possibly risk premium. Shultz et al (2012) find that the Fed financed three-quarters of the US deficit in fiscal year 2011, with foreign governments financing significant part of the remainder of the US deficit while the Fed owns one in six dollars of US national debt. Concentrations of debt in few holders are perilous because of sudden exodus in fear of devaluation and yield increases and the limit of refinancing old debt and placing new debt. In their classic work on “unpleasant monetarist arithmetic,” Sargent and Wallace (1981, 2) consider a regime of domination of monetary policy by fiscal policy (emphasis added):

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

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

	Feb 2015	Jan 2015	Feb 2014
Total	6162.8	6219.4	5890.1
Japan	1224.4	1238.6	1210.8
China	1223.7	1239.1	1272.9
Caribbean Banking Centers	350.6	340.1	300.6
Belgium	345.3	354.6	341.2
Oil Exporters	296.8	290.8	243.8
Brazil	259.9	256.5	243.9
Switzerland	201.7	205.5	168.1
United Kingdom	192.3	207.4	175.6
Luxembourg	179.2	176.0	136.9
Hong Kong	175.4	172.0	160.4
Taiwan	165.9	170.6	180.0
Ireland	138.0	137.1	112.4
Singapore	109.7	109.7	87.4
Foreign Official Holdings	4086.2	4124.3	4069.3
A. Treasury Bills	351.4	340.1	388.5
B. Treasury Bonds and Notes	3734.8	3784.3	3680.9

Source: United States Treasury

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

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

Table IIAI-2 provides additional information required for understanding the deficit/debt situation of the United States. The table is divided into four parts: Treasury budget in the 2015 fiscal year beginning on Oct 1, 2014 and ending on Sep 30, 2015; federal fiscal data for the years from 2009 to 2014; federal fiscal data for the years from 2005 to 2008; and Treasury debt held by the public from 2005 to 2014. Receipts increased 7.3 percent in the cumulative fiscal year 2015 ending in Mar 2015 relative to the cumulative in fiscal year 2014. Individual income taxes increased 8.1 percent relative to the same fiscal period a year earlier. Outlays increased 7.1 percent relative to a year earlier. There are also receipts, outlays, deficit and debt for fiscal years 2013 and 2014. Total revenues of the US from 2009 to 2012 accumulate to $9021 billion, or $9.0 trillion, while expenditures or outlays accumulate to $14,109 billion, or $14.1 trillion, with the deficit accumulating to $5090 billion, or $5.1 trillion. Revenues decreased 6.5 percent from $9653 billion in the four years from 2005 to 2008 to $9021 billion in the years from 2009 to 2012. Decreasing revenues were caused by the global recession from IVQ2007 (Dec) to IIQ2009 (Jun) and also by growth of only 2.3 percent on average in the cyclical expansion from IIIQ2009 to IVQ2014. In contrast, the expansion from IQ1983 to IIQ1988 was at the average annual growth rate of 4.9 percent and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html). Because of mediocre GDP growth, there are 26.7 million unemployed or underemployed in the United States for an effective unemployment/underemployment rate of 16.1 percent (http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html). Weakness of growth and employment creation is analyzed in II Collapse of United States Dynamism of Income Growth and Employment Creation (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html). In contrast with the decline of revenue, outlays or expenditures increased 30.2 percent from $10,839 billion, or $10.8 trillion, in the four years from 2005 to 2008, to $14,109 billion, or $14.1 trillion, in the four years from 2009 to 2012. Increase in expenditures by 30.2 percent while revenue declined by 6.5 percent caused the increase in the federal deficit from $1186 billion in 2005-2008 to $5090 billion in 2009-2012. Federal revenue was 14.9 percent of GDP on average in the years from 2009 to 2012, which is well below 17.4 percent of GDP on average from 1965 to 2014. Federal outlays were 23.3 percent of GDP on average from 2009 to 2012, which is well above 20.1 percent of GDP on average from 1965 to 2014. The lower part of Table IIA1-2 shows that debt held by the public swelled from $5803 billion in 2008 to $12,779 billion in 2014, by $6976 billion or 120.2 percent. Debt held by the public as percent of GDP or economic activity jumped from 39.3 percent in 2008 to 74.1 percent in 2014, which is well above the average of 38.2 percent from 1965 to 2014. The United States faces tough adjustment because growth is unlikely to recover, creating limits on what can be obtained by increasing revenues, while continuing stress of social programs restricts what can be obtained by reducing expenditures.

Table IIA1-2, US, Treasury Budget in Fiscal Year to Date Million Dollars

Mar	Fiscal Year 2015	Fiscal Year 2014	∆%
Receipts	1,419,800	1,322,613	7.3
Outlays	1,859,273	1,735,879	7.1
Deficit	-439,473	-413,266
Individual Income Tax	641,434	584,914	8.1
Corporation Income Tax	132,114	117,555	12.4
Social Insurance	371,880	355,908	4.5
	Receipts	Outlays	Deficit (-), Surplus (+)
$ Billions
Fiscal Year 2014	3,021	3,504	-483
% GDP	17.5	20.3	2.8
Fiscal Year 2013	2,775	3,455	-680
% GDP	16.7	20.8	-4.1
Fiscal Year 2012	2,450	3,537	-1,087
% GDP	15.2	22.0	-6.8
Fiscal Year 2011	2,304	3,603	-1,300
% GDP	15.0	23.4	-8.4
Fiscal Year 2010	2,163	3,457	-1,294
% GDP	14.6	23.4	-8.8
Fiscal Year 2009	2,105	3,518	-1,413
% GDP	14.6	24.4	-9.8
Total 2009-2012	9,021	14,109	-5,090
Average % GDP 2009-2012	14.9	23.3	-8.4
Fiscal Year 2008	2,524	2,983	-459
% GDP	17.1	20.2	-3.1
Fiscal Year 2007	2,568	2,729	-161
% GDP	17.9	19.0	-1.1
Fiscal Year 2006	2,407	2,655	-248
% GDP	17.6	19.4	-1.8
Fiscal Year 2005	2,154	2,472	-318
% GDP	16.7	19.2	-2.5
Total 2005-2008	9,653	10,839	-1,186
Average % GDP 2005-2008	17.3	19.5	-2.1
Debt Held by the Public	Billions of Dollars	Percent of GDP
2005	4,592	35.6
2006	4,829	35.3
2007	5,035	35.1
2008	5,803	39.3
2009	7,545	52.3
2010	9,019	61.0
2011	10,128	65.8
2012	11,281	70.1
2013	11,982	72.0
2014	12,779	74.1

Source: http://www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/mthTreasStmt_home.htm CBO (2012NovMBR). CBO (2011AugBEO); Office of Management and Budget 2011. Historical Tables. Budget of the US Government Fiscal Year 2011. Washington, DC: OMB; CBO. 2011JanBEO. Budget and Economic Outlook. Washington, DC, Jan. CBO. 2012AugBEO. Budget and Economic Outlook. Washington, DC, Aug 22. CBO. 2012Jan31. Historical budget data. Washington, DC, Jan 31. CBO. 2012NovCDR. Choices for deficit reduction. Washington, DC. Nov. CBO. 2013HBDFeb5. Historical budget data—February 2013 baseline projections. Washington, DC, Congressional Budget Office, Feb 5. CBO. 2013HBDFeb5. Historical budget data—February 2013 baseline projections. Washington, DC, Congressional Budget Office, Feb 5. CBO (2013Aug12). 2013AugHBD. Historical budget data—August 2013. Washington, DC, Congressional Budget Office, Aug. CBO, Historical Budget Data—February 2014, Washington, DC, Congressional Budget Office, Feb. CBO, Historical budget data—April 2014 release. Washington, DC, Congressional Budget Office, Apr. Congressional Budget Office, August 2014 baseline: an update to the budget and economic outlook: 2014 to 2024. Washington, DC, CBO, Aug 27, 2014. CBO, Monthly budget review: summary of fiscal year 2014. Washington, DC, Congressional Budget Office, Nov 10, 2014. CBO, The budget and economic outlook: 2015 to 2025. Washington, DC, Congressional Budget Office, Jan 26, 2015.

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 2014. Growth weakened from 1.9 per cent in 1995 and 2.6 percent in 1996 to contractions of 2.0 percent in 1998 and 0.2 percent in 1999. Growth rates were below 2 percent with exception of 2.3 percent in 2000, 2.4 percent in 2004 and 2.2 percent in 2007. Japan’s GDP contracted sharply by 1.0 percent in 2008 and 5.5 percent in 2009. As in most advanced economies, growth was robust at 4.7 percent in 2010 but mediocre at minus 0.5 percent in 2011 because of the tsunami and 1.8 percent in 2012. Japan’s GDP grew 1.6 percent in 2013 and stagnated in 2014. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). Japan’s real GDP in calendar year 2014 is 0.7 percent higher than in calendar year 2007 (http://www.esri.cao.go.jp/index-e.html).

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

Calendar Year	∆%
1995	1.9
1996	2.6
1997	1.6
1998	-2.0
1999	-0.2
2000	2.3
2001	0.4
2002	0.3
2003	1.7
2004	2.4
2005	1.3
2006	1.7
2007	2.2
2008	-1.0
2009	-5.5
2010	4.7
2011	-0.5
2012	1.8
2013	1.6
2014	0.0

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

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

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/announcements/release_2015/k150121a.pdf) with changes on Jul 21, 2015 (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf). For fiscal 2014, the forecast is of growth of GDP between minus 0.7 to minus 0.3 percent, with the all items CPI less fresh food 2.9 to 3.3 percent (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf). The critical difference is forecast of the CPI excluding fresh food of 0.3 to 1.4 percent in 2015 and 0.9 to 2.3 percent in 2016 (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf). Consumer price inflation in Japan excluding fresh food was minus 0.2 percent in Dec 2014 and 2.5 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:

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
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
Jan 2015	-0.6 to -0.4 [-0.5]	+2.9 to +3.2 [+2.9]	+0.9 to +1.2 [+0.9]
Oct 2014	+0.2 to +0.7 [+0.5]	+3.1 to +3.4 [+3.2]	+1.1 to +1.4 [+1.2]
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
Jan 2015	+1.8 to +2.3 [+2.1]	+0.4 to +1.3 [+1.0]	+0.4 to +1.3 [+1.0]
Oct 2014	+1.2 to +1.7 [+1.5]	+1.8 to 2.6 [+2.4]	+1.1 to +1.9 [+1.7]
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
Jan 2015	+1.5 to +1.7 [+1.6]	+1.5 to +2.3 [+2.2]	+1.5 to +2.3 [+2.2]
Oct 2014	+1.0 to +1.4 [+1.2]	+1.9 to 3.0 [+2.8]	+1.2 to 2.3 [+2.1]
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_2015/k150121a.pdf

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 51.6 in Feb to 50.4 in Mar and the Flash Japan Manufacturing Output Index™ decreased from 53.5 in Feb to 52.0 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/f8c440b1bcca4e76b3f2d6ec4a5d3e37). New export orders increased at slower pace. Amy Brownbill, Economist at Markit, finds weaker improvement in Japan’s manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/f8c440b1bcca4e76b3f2d6ec4a5d3e37). The Markit Composite Output PMI Index decreased from 50.0 in Feb to 48.4 in Mar, indicating mildly deteriorating business activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/74103110a2a2461e922e8e3112487235). The Markit Business Activity Index of Services decreased to 48.4 in Mar from 48.5 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/74103110a2a2461e922e8e3112487235). Amy Brownbill, Ecoomist at Markit and author of the report, finds weak current conditions with positive business expectations (http://www.markiteconomics.com/Survey/PressRelease.mvc/74103110a2a2461e922e8e3112487235). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, decreased from 51.6 in Feb to 50.3 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/b911afd82d224220a79b04adddf770f4). New orders declined while foreign orders increased. Amy Brownbill, Economist at Markit, finds manufacturing improvement with increasing foreign orders influenced by devaluation of the yen (http://www.markiteconomics.com/Survey/PressRelease.mvc/b911afd82d224220a79b04adddf770f4).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 ∆% 0.3 12 months ∆% 0.7 Blog 4/19/15
Consumer Price Index	Feb NSA ∆% -0.2; Feb 12 months NSA ∆% 2.2 Blog 3/29/15
Real GDP Growth	IVQ2014 ∆%: 0.4 on IIIQ2014;  IVQ2014 SAAR 1.5; ∆% from quarter a year earlier: -0.8 % 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 12/14/14 2/22/15 3/15/15
Employment Report	Feb Unemployed 2.26 million Change in unemployed since last year: minus 60 thousand Unemployment rate: 3.5 % Blog 3/29/15
All Industry Indices	Jan month SA ∆% 1.9 12-month NSA ∆% -1.7 Blog 3/22/15
Industrial Production	Feb SA month ∆%: -3.4 12-month NSA ∆% -2.6 Blog 3/29/15
Machine Orders	Total Feb ∆% -1.4 Private ∆%: -10.4 Feb ∆% Excluding Volatile Orders minus 0.4 Blog 4/19/15
Tertiary Index	Jan month SA ∆% 1.4 Jan 12 months NSA ∆% minus -1.5 Blog 3/22/15
Wholesale and Retail Sales	Feb 12 months: Total ∆%: -3.1 Wholesale ∆%: -3.7 Retail ∆%: -1.8 Blog 3/29/15
Family Income and Expenditure Survey	Feb 12-month ∆% total nominal consumption -0.4, real -2.9 Blog 3/29/15
Trade Balance	Exports Feb 12 months ∆%: 12.4 Imports Feb 12 months ∆% -3.6 Blog 3/22/15

Links to blog comments in Table JPY:

3/29/15 http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html

3/22/15 http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html

3/15/15 http://cmpassocregulationblog.blogspot.com/2015/03/global-exchange-rate-struggle-recovery.html

2/22/15 http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html

12/14/14 http://cmpassocregulationblog.blogspot.com/2014/12/global-financial-and-economic-risk.html

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

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

Japan’s total machinery orders seasonally adjusted in Table VB-1 decreased 1.4 percent seasonally adjusted in Feb 2015. Private sector orders decreased 10.4 percent and decreased 0.4 percent excluding volatile orders. Orders from overseas increased 8.0 percent and manufacturing orders increased 0.9 percent. Government orders decreased 21.9 percent. Industrial orders are volatile worldwide.

Table VB-1, Japan, Machinery Orders, Month ∆%, SA 

	Feb 15	Jan 15	Dec 14	Nov 14
Total	-1.4	14.2	8.6	-10.4
Private Sector	-10.4	10.7	17.5	-10.6
Excluding Volatile Orders	-0.4	-1.7	8.3	1.3
Manufacturing	0.9	-11.3	24.1	-7.0
Non-Manufacturing ex Volatile	-7.5	3.7	7.2	0.5
Government	-21.9	25.8	10.8	-7.5
From Overseas	8.0	24.2	-6.9	-6.0
Through Agencies	6.1	-13.9	16.9	-11.6

Note: Mfg: manufacturing

Source: Japan Economic and Social Research Institute, Cabinet Office

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

Total orders for machinery and total private-sector orders excluding volatile orders for Japan are shown in Chart VB-1 of Japan’s Economic and Social Research Institute at the Cabinet Office. The trend of private-sector orders excluding volatile orders was showing recovery from the drop after Mar 2011 because of the earthquake/tsunami. There was reversal of the trend of increase in total orders with recent decreases and an upward movement in the final data point. Fluctuations still prevent detecting longer-term trends but recovery is still evident from the global recession. There was a major setback by the declines in May 2012 shown in the final segment of Chart VB-1 with partial recovery in Jun 2012, decline again in Jul and Aug 2012 and rebound in total orders in Nov reversed in Dec but decline in orders excluding volatile segments with increase in Nov-Dec 2012. The final segment shows growth in Feb-Mar 2013 interrupted by decline in Apr 2013 followed by increase in May 2013. Orders fell again in Jun 2013, rebounding in Jul-Sep 2013 followed by another fall in Oct 2013. Orders recovered in Nov 2013 but declined in Dec 2013. Orders increased in Jan 2014 and decreased in Feb 2014. Orders increased in Mar-Apr 2014, with decreasing trend in May-Aug 2014. Orders increased in Sep 2014 and decreased in Oct-Nov 2014. Orders rebounded in Dec 2014-Jan 2015 and decreased in Feb 2015.

Chart VB-1, Japan, Machinery Orders

Source: Japan Economic and Social Research Institute, Cabinet Office

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

Table VB-2 provides values and percentage changes from a year earlier of Japan’s machinery orders without seasonal adjustment. Total orders of JPY 2,258,339 million in Feb 2015 are divided between JPY 1,029,325 million overseas orders, or 45.6 percent of the total, and domestic orders of JPY 1,126,537 million, or 49.9 percent of the total, with orders through agencies of JPY 102,477 million, or 4.5 percent of the total. Orders through agencies are not in Table VB-6 because of the minor value and appear only in the note to the table. Twelve-month percentages changes in Feb 2015 were mixed with increase of 7.0 percent for domestic orders and 5.9 percent for private excluding volatile components with increase of 10.8 percent for total orders. Overseas orders increased 16.0 percent in 12 months.

Table VB-2, Japan, Machinery Orders, 12 Months ∆% and Million Yen, Original Series  

	Total	Overseas	Domestic	Private ex Volatile
Value Feb  2015	2,258,339	1,029,325	1,126,537	741,643
% Total	100.0	45.6	49.9	32.8
Value Feb 2014	2,037,411	887,671	1,052,773	700,429
% Total	100.0	43.6	51.7	34.4
12-month ∆%	10.8	16.0	7.0	5.9
Feb 2015	10.8	16.0	7.0	5.9
Jan 2015	8.2	8.2	9.7	1.9
Dec 2014	2.9	-5.3	8.6	11.4
Nov 2014	-6.1	1.0	-11.4	-14.6
Oct 2014	-1.4	2.6	-5.1	-4.9
Sep 2014	-2.4	-4.7	-1.6	7.3
Aug 2014	0.4	14.9	-11.1	-3.3
Jul 2014	6.1	4.4	6.8	1.1
Jun 2014	30.3	87.5	-2.9	-3.0
May 2014	-2.6	-0.2	-5.5	-14.3
Apr 2014	53.6	101.7	21.5	17.6
Mar 2014	-0.3	-4.3	4.1	16.1
Feb 2014	20.0	31.9	12.4	10.8
Jan 2014	28.8	29.8	29.0	23.6
Dec 2013	15.1	25.0	8.3	6.7
Nov 2013	8.9	1.3	14.4	16.6
Oct 2013	24.6	29.7	21.4	17.8
Sep 2013	30.3	57.4	18.4	11.4
Aug 2013	25.9	41.8	17.1	10.3
Jul 2013	5.3	4.4	6.9	6.5
Jun 2013	2.7	0.1	4.1	4.9
May 2013	18.1	17.1	20.8	16.5
Apr 2013	-4.3	6.7	-9.9	-1.1
Mar 2013	11.5	27.5	3.3	2.4
Feb 2013	-14.8	-21.0	-10.7	-11.3
Jan 2013	-24.8	-36.7	-11.8	-9.7
Dec 2012	-12.5	-24.1	-3.3	-3.4
Nov 2012	-8.6	-9.6	-8.5	0.3
Oct 2012	-6.9	-12.8	-2.6	1.2
Sep 2012	-7.8	-18.4	-1.8	-7.8
Aug 2012	-18.6	-31.1	-10.2	-6.1
Jul 2012	2.6	-1.9	3.2	1.7
Jun 2012	-10.9	-11.3	-12.4	-9.9
May 2012	-6.8	-7.0	-8.6	1.0
Apr 2012	7.5	-9.6	23.0	6.6
Mar 2012	8.1	-10.0	19.0	-1.1
Feb 2012	-9.3	-8.9	-11.2	8.9
Jan 2012	9.8	18.3	0.5	5.7
Dec 2011	0.8	12.6	-8.5	6.3
Nov 2011	11.0	8.0	13.5	12.5
Oct 2011	-6.8	-15.6	-1.0	1.5
Dec 2010	9.4	3.5	14.1	-0.6
Dec 2009	1.8	0.4	3.6	-1.9
Dec 2008	-23.3	-29.4	-17.4	-24.7
Dec 2007	1.3	9.8	-4.3	-6.4
Dec 2006	0.8	0.9	-0.1	0.1

Note: Total machinery orders = overseas + domestic demand + orders through agencies. Orders through agencies in Feb 2015 were JPY 102,477 million or 4.2 percent of the total and JPY 96,967 or 4.8 percent of the total in Feb 2014, and are not shown in the table. The data are the original numbers without any adjustments and differ from the seasonally adjusted data.

Source: Japan Economic and Social Research Institute, Cabinet Office http://www.esri.cao.go.jp/index-e.html

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015.