Impact of Monetary Policy on Exchange Rates and Stock Markets, Recovery without Hiring, Ten Million Fewer Full-time Jobs, Youth and Middle age Unemployment, United States Commercial Banks Assets and Liabilities, Collapse of United States Dynamism of Income Growth and Employment Creation, World Cyclical Slow Growth and Global Recession Risk: Part VI

 

Impact of Monetary Policy on Exchange Rates and Stock Markets, Recovery without Hiring, Ten Million Fewer Full-time Jobs, Youth and Middle age Unemployment, United States Commercial Banks Assets and Liabilities, 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

I Recovery without Hiring

IA1 Hiring Collapse

IA2 Labor Underutilization

ICA3 Ten Million Fewer Full-time Jobs

IA4 Theory and Reality of Cyclical Slow Growth Not Secular Stagnation: Youth and

Middle-Age Unemployment

IIA United States Commercial Banks Assets and Liabilities

IA Transmission of Monetary Policy

IB Functions of Banking

IC United States Commercial Banks Assets and Liabilities

ID Theory and Reality of Economic History, Cyclical Slow growth not Secular Stagnation and Monetary Policy Based on Fear of Deflation

IIB 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 I-1 is constructed with the database of the IMF (http://www.imf.org/external/ns/cs.aspx?id=29) to show GDP in dollars in 2014 and the growth rate of real GDP of the world and selected regional countries from 2014 to 2017. 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 3.4 percent in 2014 and 3.1 percent in 2015 but accelerating to 3.6 percent in 2016 and 3.8 percent in 2017. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $35,542 billion of world output of $77,269 billion, or 46.0 percent, but are projected to grow at much lower rates than world output, 2.0 percent on average from 2014 to 2017 in contrast with 3.5 percent for the world as a whole. While the world would grow 14.6 percent in the four years from 2014 to 2017, the G7 as a whole would grow 8.1 percent. The difference in dollars of 2014 is high: growing by 14.6 percent would add around $11.3 trillion of output to the world economy, or roughly, two times the output of the economy of Japan of $4,602 billion but growing by 8.1 percent would add $6.3 trillion of output to the world, or about the output of Japan in 2014. 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 2014 of $30,296 billion, or 39.2 percent of world output. The EMDEs would grow cumulatively 19.5 percent or at the average yearly rate of 4.5 percent, contributing $5.9 trillion from 2014 to 2017 or the equivalent of somewhat less than the GDP of $10,357 billion of China in 2014. The final four countries in Table I-1 often referred as BRIC (Brazil, Russia, India, China), are large, rapidly growing emerging economies. Their combined output in 2014 adds to $16,616 billion, or 21.5 percent of world output, which is equivalent to 46.8 percent of the combined output of the major advanced economies of the G7.

Table I-1, IMF World Economic Outlook Database Projections of Real GDP Growth

	GDP USD 2014	Real GDP ∆% 2014	Real GDP ∆% 2015	Real GDP ∆% 2016	Real GDP ∆% 2017
World	77,269	3.4	3.1	3.6	3.8
G7	35,542	1.7	1.9	2.2	2.1
Canada	1,785	2.4	1.0	1.7	2.4
France	2,834	0.2	1.2	1.5	1.6
DE	3,874	1.6	1.5	1.6	1.5
Italy	2,148	-0.4	0.8	1.3	1.2
Japan	4,602	-0.1	0.6	1.0	0.4
UK	2,950	3.0	2.5	2.2	2.2
US	17,348	2.4	2.6	2.8	2.8
Euro Area	13,457	0.9	1.5	1.6	1.7
DE	3,874	1.6	1.5	1.6	1.5
France	2,834	0.2	1.2	1.5	1.6
Italy	2,148	-0.4	0.8	1.3	1.2
POT	230	0.9	1.6	1.5	1.4
Ireland	251	5.2	4.9	3.8	3.2
Greece	238	0.8	-2.3	-1.3	2.7
Spain	1,407	1.4	3.1	2.5	2.2
EMDE	30,296	4.6	4.0	4.5	5.1
Brazil	2,347	0.1	-3.0	-1.0	2.3
Russia	1,861	0.6	-3.8	-0.6	1.0
India	2,051	7.3	7.3	7.5	7.5
China	10,357	7.3	6.8	6.3	6.0

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

Source: IMF World Economic Outlook databank

http://www.imf.org/external/pubs/ft/weo/2015/02/weodata/index.aspx

Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/pubs/ft/weo/2015/01/weodata/index.aspx ). Table I-2 is constructed with the WEO database to provide rates of unemployment from 2013 to 2017 for major countries and regions. In fact, unemployment rates for 2014 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 2014 for the countries with sovereign debt difficulties in Europe: 13.9 percent for Portugal (POT), 11.3 percent for Ireland, 26.5 percent for Greece, 24.5 percent for Spain and 12.7 percent for Italy, which is lower but still high. The G7 rate of unemployment is 6.4 percent. Unemployment rates are not likely to decrease substantially if slow growth persists in advanced economies.

Table I-2, IMF World Economic Outlook Database Projections of Unemployment Rate as Percent of Labor Force

	% Labor Force 2013	% Labor Force 2014	% Labor Force 2015	% Labor Force 2016	% Labor Force 2017
World	NA	NA	NA	NA	NA
G7	7.1	6.4	5.9	5.6	5.6
Canada	7.1	6.9	6.8	6.8	6.6
France	10.3	10.3	10.2	9.9	9.7
DE	5.2	5.0	4.7	4.7	4.7
Italy	12.2	12.7	12.2	11.9	11.6
Japan	4.0	3.6	3.5	3.5	3.6
UK	7.6	6.2	5.6	5.5	5.4
US	7.4	6.2	5.3	4.9	4.8
Euro Area	12.0	11.6	11.0	10.5	10.1
DE	5.2	5.0	4.7	4.7	4.7
France	10.3	10.3	10.2	9.9	9.7
Italy	12.2	12.7	12.2	11.9	11.6
POT	16.2	13.9	12.3	11.3	10.9
Ireland	13.0	11.3	9.6	8.5	7.7
Greece	27.5	26.5	26.8	27.1	25.7
Spain	26.1	24.5	21.8	19.9	18.7
EMDE	NA	NA	NA	NA	NA
Brazil	5.4	4.8	6.6	8.6	8.9
Russia	5.5	5.2	6.0	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

http://www.imf.org/external/pubs/ft/weo/2015/02/weodata/index.aspx

Table V-3 provides the latest available estimates of GDP for the regions and countries followed in this blog from IQ2012 to IQ2015 available now for all countries. There are preliminary estimates for several countries for IIQ2015. Growth is weak throughout most of the world.

· Japan. The GDP of Japan increased 1.0 percent in IQ2012, 4.2 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 0.5 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 2.1 percent, which is much lower than 4.2 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 0.4 percent in IIIQ2012 at the SAAR of minus 1.5 percent and increased 0.2 percent relative to a year earlier. Japan’s GDP decreased 0.1 percent in IVQ2012 at the SAAR of minus 0.6 percent and changed 0.0 percent relative to a year earlier. Japan grew 1.3 percent in IQ2013 at the SAAR of 5.4 percent and increased 0.4 percent relative to a year earlier. Japan’s GDP increased 0.6 percent in IIQ2013 at the SAAR of 2.3 percent and increased 1.4 percent relative to a year earlier. Japan’s GDP grew 0.6 percent in IIIQ2013 at the SAAR of 2.5 percent and increased 2.2 percent relative to a year earlier. In IVQ2013, Japan’s GDP decreased 0.2 percent at the SAAR of minus 0.9 percent, increasing 2.3 percent relative to a year earlier. Japan’s GDP increased 1.1 percent in IQ2014 at the SAAR of 4.5 percent and increased 2.4 percent relative to a year earlier. In IIQ2014, Japan’s GDP fell 2.0 percent at the SAAR of minus 7.6 percent and fell 0.4 percent relative to a year earlier. Japan’s GDP contracted 0.3 percent in IIIQ2014 at the SAAR of minus 1.1 percent and fell 1.4 percent relative to a year earlier. In IVQ2014, Japan’s GDP grew 0.3 percent, at the SAAR of 1.3 percent, decreasing 1.0 percent relative to a year earlier. The GDP of Japan increased 1.1 percent in IQ2015 at the SAAR of 4.5 percent and decreased 0.8 percent relative to a year earlier. Japan’s GDP decreased 0.3 percent in IIQ2015 at the SAAR of minus 1.2 percent and increased 0.8 percent relative to a year earlier

· China. China’s GDP grew 1.8 percent in IQ2012, annualizing to 7.4 percent, and 8.0 percent relative to a year earlier. The GDP of China grew at 2.1 percent in IIQ2012, which annualizes to 8.7 percent and 7.5 percent relative to a year earlier. China grew at 1.8 percent in IIIQ2012, which annualizes at 7.4 percent and 7.4 percent relative to a year earlier. In IVQ2012, China grew at 2.0 percent, which annualizes at 8.2 percent, and 8.0 percent in IVQ2012 relative to IVQ2011. In IQ2013, China grew at 1.8 percent, which annualizes at 7.4 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 2.1 percent in IIIQ2013, which annualizes at 8.7 percent and 7.9 percent relative to a year earlier. China grew at 1.7 percent in IVQ2013, which annualized to 7.0 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 7.3 percent relative to a year earlier. China’s GDP grew 1.8 percent in IIQ2014, which annualizes at 7.4 percent, and 7.4 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 7.2 percent relative to a year earlier. The GDP of China grew 1.7 percent in IVQ2014, which annualizes at 7.0 percent, and 7.2 percent relative to a year earlier. The GDP of China grew at 1.3 percent in IQ2015, which annualizes at 5.3 percent, and 7.0 percent relative to a year earlier. The GDP of China grew 1.8 percent in IIQ2015, which annualizes at 7.4 percent, and increased 7.0 percent relative to a year earlier. In IIIQ2015, China’s GDP grew at 1.8 percent, which annualizes at 7.4 percent and increased 6.9 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 2015.

· Euro Area. GDP fell 0.2 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 1.0 percent relative to a year earlier. In IQ2013, the GDP of the euro area fell 0.2 percent and decreased 1.1 percent relative to a year earlier. The GDP of the euro area increased 0.4 percent in IIQ2013 and fell 0.4 percent relative to a year earlier. In IIIQ2013, euro area GDP increased 0.2 percent and fell 0.1 percent relative to a year earlier. The GDP of the euro area increased 0.2 percent in IVQ2013 and increased 0.6 percent relative to a year earlier. In IQ2014, the GDP of the euro area increased 0.2 percent and 1.1 percent relative to a year earlier. The GDP of the euro area increased 0.1 percent in IIQ2014 and increased 0.7 percent relative to a year earlier. The euro area’s GDP increased 0.3 percent in IIIQ2014 and increased 0.8 percent relative to a year earlier. The GDP of the euro area increased 0.4 percent in IVQ2014 and increased 0.9 percent relative to a year earlier. Euro area GDP increased 0.5 percent in IQ2015 and increased 1.2 percent relative to a year earlier. The GDP of the euro area increased 0.4 percent in IIQ2015 and increased 1.5 percent relative to a year earlier.

· Germany. The GDP of Germany increased 0.4 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 0.2 percent and 0.1 percent relative to a year earlier. Germany’s GDP contracted 0.5 percent in IVQ2012 and decreased 0.3 percent relative to a year earlier. In IQ2013, Germany’s GDP decreased 0.3 percent and fell 1.7 percent relative to a year earlier. In IIQ2013, Germany’s GDP increased 0.9 percent and 0.7 percent relative to a year earlier. The GDP of Germany increased 0.4 percent in IIIQ2013 and 1.0 percent relative to a year earlier. In IVQ2013, Germany’s GDP increased 0.3 percent and 1.2 percent relative to a year earlier. The GDP of Germany increased 0.7 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 0.2 percent in IIIQ2014 and increased 1.2 percent relative to a year earlier. Germany’s GDP increased 0.6 percent in IVQ2014 and increased 1.6 percent relative to a year earlier. The GDP of Germany increased 0.3 percent in IQ2015 and increased 1.2 percent relative to a year earlier. Germany’s GDP increased 0.4 percent in IIQ2015 and 1.6 percent relative to a year earlier.

· United States. Growth of US GDP in IQ2012 was 0.7 percent, at SAAR of 2.7 percent and higher by 2.8 percent relative to IQ2011. US GDP increased 0.5 percent in IIQ2012, 1.9 percent at SAAR and 2.5 percent relative to a year earlier. In IIIQ2012, US GDP grew 0.1 percent, 0.5 percent at SAAR and 2.4 percent relative to IIIQ2011. In IVQ2012, US GDP grew 0.0 percent, 0.1 percent at SAAR and 1.3 percent relative to IVQ2011. In IQ2013, US GDP grew at 1.9 percent SAAR, 0.5 percent relative to the prior quarter and 1.1 percent relative to the same quarter in 2013. In IIQ2013, US GDP grew at 1.1 percent in SAAR, 0.3 percent relative to the prior quarter and 0.9 percent relative to IIQ2012. US GDP grew at 3.0 percent in SAAR in IIIQ2013, 0.7 percent relative to the prior quarter and 1.5 percent relative to the same quarter a year earlier (http://cmpassocregulationblog.blogspot.com/2015/09/monetary-policy-designed-on-measurable.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/fluctuations-of-global-financial.html). In IVQ2013, US GDP grew 0.9 percent at 3.8 percent SAAR and 2.5 percent relative to a year earlier. In IQ2014, US GDP decreased 0.2 percent, increased 1.7 percent relative to a year earlier and fell 0.9 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 1.1 percent in IIIQ2014 at 4.3 percent SAAR and increased 2.9 percent relative to a year earlier. In IVQ2014, US GDP increased 0.5 percent at SAAR of 2.1 percent and increased 2.5 percent relative to a year earlier. GDP increased 0.2 percent in IQ2015 at SAAR of 0.6 percent and grew 2.9 percent relative to a year earlier. US GDP grew at SAAR 3.9 percent in IIQ2015, increasing 1.0 percent in the quarter and 2.7 percent relative to a year earlier.

· United Kingdom. In IQ2012, GDP increased 0.2 percent in the UK and increased 1.5 percent relative to a year earlier. In IIQ2012, GDP fell 0.2 percent relative to IQ2012 and increased 1.0 percent relative to a year earlier. In IIIQ2012, GDP increased 1.0 percent and increased 1.2 percent relative to the same quarter a year earlier. In IVQ2012, GDP fell 0.1 percent and increased 1.0 percent relative to a year earlier. Growth increased to 1.4 percent in IQ2013 relative to a year earlier and 0.7 percent in IQ2013 relative to IVQ2012. In IIQ2013, GDP increased 0.6 percent and 1.0 percent relative to a year earlier. GDP increased 0.9 percent in IIIQ2013 and 2.1 percent relative to a year earlier. GDP increased 0.6 percent in IVQ2013 and 2.8 percent relative to a year earlier. In IQ2014, GDP increased 0.6 percent and 2.8 percent relative to a year earlier. GDP increased 0.9 percent in IIQ2014 and 3.1 percent relative to a year earlier. GDP increased 0.6 percent in IIIQ2013 and 2.9 percent relative to a year earlier. In IVQ2014, GDP increased 0.8 percent and 3.0 percent relative to a year earlier. GDP increased 0.4 percent in IQ2015 and increased 2.7 percent relative to a year earlier. GDP increased 0.7 percent in IIQ2015 and increased 2.4 percent relative to a year earlier.

· Italy. Italy has experienced decline of GDP in seven consecutive quarters from IIIQ2011 to IQ2013 and in IQ2014, IIQ2014 and IIIQ2014. Italy’s GDP fell 1.0 percent in IQ2012 and declined 2.3 percent relative to IQ2011. Italy’s GDP fell 0.7 percent in IIQ2012 and declined 3.1 percent relative to a year earlier. In IIIQ2012, Italy’s GDP fell 0.5 percent and declined 3.1 percent relative to a year earlier. The GDP of Italy contracted 0.5 percent in IVQ2012 and fell 2.6 percent relative to a year earlier. In IQ2013, Italy’s GDP contracted 0.9 percent and fell 2.5 percent relative to a year earlier. Italy’s GDP contracted 0.1 percent in IIQ2013 and fell 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 0.9 percent relative to a year earlier. In IQ2014, Italy’s GDP decreased 0.2 percent and fell 0.2 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 0.4 percent relative to a year earlier. In IQ2015, Italy’s GDP increased 0.4 percent and increased 0.1 percent relative to a year earlier. The GDP of Italy increased 0.3 percent in IIQ2015 and increased 0.7 percent relative to a year earlier

· France. France’s GDP changed 0.0 percent in IQ2012 and increased 0.4 percent relative to a year earlier. France’s GDP decreased 0.3 percent in IIQ2012 and increased 0.2 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.3 percent and increased 0.3 percent relative to a year earlier. France’s GDP changed 0.0 percent in IVQ2012 and changed 0.0 percent relative to a year earlier. In IQ2013, France’s GDP increased 0.1 percent and increased 0.1 percent relative to a year earlier. The GDP of France increased 0.7 percent in IIQ2013 and increased 1.1 percent relative to a year earlier. France’s GDP decreased 0.1 percent in IIIQ2013 and increased 0.8 percent relative to a year earlier. The GDP of France increased 0.2 percent in IVQ2013 and increased 1.0 percent relative to a year earlier. In IQ2014, France’s GDP decreased 0.2 percent and increased 0.7 percent relative to a year earlier. In IIQ2014, France’s GDP contracted 0.1 percent and decreased 0.2 percent relative to a year earlier. France’s GDP increased 0.3 percent in IIIQ2014 and increased 0.2 percent relative to a year earlier. The GDP of France increased 0.1 percent in IVQ2014 and increased 0.1 percent relative to a year earlier. France’s GDP increased 0.7 percent in IQ2015 and increased 0.9 percent relative to a year earlier. In IIQ2015, France’s GDP changed 0.0 percent and increased 1.1 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: 0.7        SAAR: 2.7	2.8
Japan	QOQ: 1.0 SAAR: 4.2	3.5
China	1.8	8.0
Euro Area	-0.2	-0.4
Germany	0.4	1.5
France	0.0	0.4
Italy	-1.0	-2.3
United Kingdom	0.2	1.5
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.5         SAAR: 1.9	2.5
Japan	QOQ: -0.5 SAAR: -2.1	3.5
China	2.1	7.5
Euro Area	-0.3	-0.8
Germany	0.1	0.3 0.8 CA
France	-0.3	0.2
Italy	-0.7	-3.1
United Kingdom	-0.2	1.0
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.1  SAAR: 0.5	2.4
Japan	QOQ: –0.4 SAAR: –1.5	0.2
China	1.8	7.4
Euro Area	-0.1	-0.8
Germany	0.2	0.1
France	0.3	0.3
Italy	-0.5	-3.1
United Kingdom	1.0	1.2
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
United States	QOQ: 0.0 SAAR: 0.1	1.3
Japan	QOQ: -0.1 SAAR: -0.6	0.0
China	2.0	8.0
Euro Area	-0.4	-1.0
Germany	-0.5	-0.3
France	0.0	0.0
Italy	-0.5	-2.6
United Kingdom	-0.1	1.0
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.5 SAAR: 1.9	1.1
Japan	QOQ: 1.3 SAAR: 5.4	0.4
China	1.8	7.8
Euro Area	-0.2	-1.1
Germany	-0.3	-1.7
France	0.1	0.1
Italy	-0.9	-2.5
UK	0.7	1.4
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.3 SAAR: 1.1	0.9
Japan	QOQ: 0.6 SAAR: 2.3	1.4
China	1.8	7.5
Euro Area	0.4	-0.4
Germany	0.9	0.7
France	0.7	1.1
Italy	-0.1	-2.0
UK	0.6	2.2
	IIIQ2013/IIQ2013	III/Q2013/  IIIQ2012
USA	QOQ: 0.7 SAAR: 3.0	1.5
Japan	QOQ: 0.6 SAAR: 2.5	2.2
China	2.1	7.9
Euro Area	0.2	-0.1
Germany	0.4	1.0
France	-0.1	0.8
Italy	0.1	-1.4
UK	0.9	2.1
	IVQ2013/IIIQ2013	IVQ2013/IVQ2012
USA	QOQ: 0.9 SAAR: 3.8	2.5
Japan	QOQ: -0.2 SAAR: -0.9	2.3
China	1.7	7.6
Euro Area	0.2	0.6
Germany	0.3	1.2
France	0.2	1.0
Italy	0.0	-0.9
UK	0.6	2.8
	IQ2014/IVQ2013	IQ2014/IQ2013
USA	QOQ -0.2 SAAR -0.9	1.7
Japan	QOQ: 1.1 SAAR: 4.5	2.4
China	1.6	7.3
Euro Area	0.2	1.1
Germany	0.7	2.6
France	-0.2	0.7
Italy	-0.2	-0.2
UK	0.6	2.8
	IIQ2014/IQ2014	IIQ2014/IIQ2013
USA	QOQ 1.1 SAAR 4.6	2.6
Japan	QOQ: -2.0 SAAR: -7.6	-0.4
China	1.8	7.4
Euro Area	0.1	0.7
Germany	-0.1	1.0
France	-0.1	-0.2
Italy	-0.2	-0.3
UK	0.9	3.1
	IIIQ2014/IIQ2014	IIIQ2014/IIIQ2013
USA	QOQ: 1.1 SAAR: 4.3	2.9
Japan	QOQ: -0.3 SAAR: -1.1	-1.4
China	1.9	7.2
Euro Area	0.3	0.8
Germany	0.2	1.2
France	0.3	0.2
Italy	-0.1	-0.5
UK	0.6	2.9
	IVQ2014/IIIQ2014	IVQ2014/IVQ2013
USA	QOQ: 0.5 SAAR: 2.1	2.5
Japan	QOQ: 0.3 SAAR: 1.3	-1.0
China	1.7	7.2
Euro Area	0.4	0.9
Germany	0.6	1.6
France	0.1	0.1
Italy	0.0	-0.4
UK	0.8	3.0
	IQ2015/IVQ2014	IQ2015/IQ2014
USA	QOQ: 0.2 SAAR: 0.6	2.9
Japan	QOQ: 1.1 SAAR: 4.5	-0.8
China	1.3	7.0
Euro Area	0.5	1.2
Germany	0.3	1.2
France	0.7	0.9
Italy	0.4	0.1
UK	0.4	2.7
	IIQ2015/IQ2015	IIQ2015/IIQ2014
USA	QOQ: 1.0 SAAR: 3.9	2.7
Japan	QOQ: -0.3 SAAR: -1.2	0.8
China	1.8	7.0
Euro Area	0.4	1.5
Germany	0.4	1.6
France	0.0	1.1
Italy	0.3	0.7
UK	0.7	2.4
	IIIQ2015/IIQ2015	IIIQ2015/IVQ2014
China	1.8	6.9

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

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

Table V-4 provides two types of data: growth of exports and imports in the latest available months and in the past 12 months; and contributions of net trade (exports less imports) to growth of real GDP.

• Japan. Japan provides the most worrisome data (http://cmpassocregulationblog.blogspot.com/2015/08/global-decline-of-values-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/07/valuation-of-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/dollar-revaluation-squeezing-corporate.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/imf-view-of-economy-and-finance-united.html and earlier 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/2015/09/interest-rate-policy-dependent-on-what_13.html). In Sep 2015, Japan’s exports increased 0.6 percent in 12 months while imports decreased 11.1 percent. The second part of Table V-4 shows that net trade deducted 1.7 percentage points from Japan’s growth of GDP in IIQ2012, deducted 1.8 percentage points from GDP growth in IIIQ2012 and deducted 0.5 percentage points from GDP growth in IVQ2012. Net trade added 0.3 percentage points to GDP growth in IQ2012, 1.7 percentage points in IQ2013 and deducted 0.3 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.3 percentage points from GDP growth in Japan. Net trade ducted 2.0 percentage points from GDP growth in Japan in IVQ2013. Net trade deducted 1.0 percentage points from GDP growth of Japan in IQ2014. Net trade added 3.6 percentage points to GDP growth in IIQ2014. Net trade added 0.5 percentage points to GDP growth in IIIQ2014 and added 1.3 percentage points in IVQ2014. Net trade deducted 0.3 percentage points from GDP growth in IQ2015 and deducted 1.1 percentage points in IIQ2015

• China. In Sep 2015, China exports decreased 3.7 percent relative to a year earlier and imports decreased 20.4 percent.
• Germany. Germany’s exports increased 2.4 percent in the month of Aug 2015 and increased 6.2 percent in the 12 months ending in Aug 2015. Germany’s imports increased 2.2 percent in the month of Aug 2015 and increased 6.1 percent in the 12 months ending in Aug. 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 0.2 percentage points to GDP growth in IIQ2014 and added 0.4 percentage points in IIIQ2014. Net trade deducted 0.3 percentage points to GDP growth in IVQ2014 and deducted 0.2 percentage points in IQ2015.
• 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 0.2 percentage points to UK value added in IQ2014 and 1.3 percentage points in IIQ2014. Net trade deducted 0.7 percentage points to GDP growth in IIIQ2014 and added 0.2 percentage points in IVQ2014. Net traded deducted 0.6 percentage points from growth in IQ2015. Net trade added 1.4 percentage points to GDP growth in IIQ2015
• France. France’s exports decreased 3.0 percent in Aug 2015 while imports decreased 3.2 percent. France’s exports increased 3.9 percent in the 12 months ending in Aug 2015 and imports decreased 2.2 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 0.3 percentage points to France’s GDP growth in IVQ2014 and deducted 0.2 percentage points in IQ2015. Net trade added 0.4 percentage points to GDP growth in IIQ2015
• United States. US exports decreased 2.0 percent in Aug 2015 and goods exports decreased 6.0 percent in Jan-Aug 2015 relative to a year earlier. Imports increased 1.2 percent in Aug 2015 and goods imports decreased 3.7 percent in Jan-Aug 2015 relative to a year earlier. Net trade added 0.28 percentage points to GDP growth in IIQ2012 and added 0.16 percentage points in IIIQ2012 and 0.58 percentage points in IVQ2012. Net trade deducted 0.01 percentage points from US GDP growth in IQ2013 and deducted 0.24 percentage points in IIQ2013. Net traded added 0.16 percentage points to US GDP growth in IIIQ2013. Net trade added 1.26 percentage points to US GDP growth in IVQ2013. Net trade deducted 1.39 percentage points from US GDP growth in IQ2014 and deducted 0.24 percentage points in IIQ2014. Net trade added 0.39 percentage points to GDP growth in IIIQ2014. Net trade deducted 0.89 percentage points from GDP growth in IVQ2014 and deducted 1.92 percentage points from GDP growth in IQ2015. Net trade added 0.18 percentage points to GDP growth in IIQ2015. Industrial production decreased 0.2 percent in Sep 2015 and decreased 0.1 percent in Aug 2015, with all data seasonally adjusted. The Board of Governors of the Federal Reserve System conducted the annual revision of industrial production released on Jul 21, 2015 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm):

“The Federal Reserve has revised its index of industrial production (IP) and the related measures of capacity and capacity utilization. Total IP is now reported to have increased slightly less than 2 1/2 percent per year, on average, from 2011 through 2013 before advancing about 4 1/2 percent in 2014 and falling back somewhat in the first half of 2015. Relative to earlier reports, the current rates of change are lower---especially for 2012 and 2013. For the most recent recession, total IP still shows a peak-to-trough decline of about 17 percent, and the dates for the peak and trough are unaltered. However, the lower rates of change for recent years indicate that the recovery in the industrial sector since the trough has been slower than reported earlier. Total IP is now estimated to have returned to its pre-recession peak in May 2014, seven months later than previously estimated.”

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 0.2 percent in September after edging down 0.1 percent in August. The decline in August is smaller than previously reported. In September, manufacturing output moved down 0.1 percent for a second consecutive monthly decrease; the index for mining fell 2.0 percent, while the index for utilities rose 1.3 percent. For the third quarter as a whole, total industrial production rose at an annual rate of 1.8 percent, and manufacturing output increased 2.5 percent. A strong gain for motor vehicles and parts contributed substantially to the quarterly increases. At 107.1 percent of its 2012 average, total industrial production in September was 0.4 percent above its year-earlier level. Capacity utilization for the industrial sector fell 0.3 percentage point in September to 77.5 percent, a rate that is 2.6 percentage points below its long-run (1972–2014) average.” In the six months ending in Sep 2015, United States national industrial production accumulated change of minus 0.1 percent at the annual equivalent rate of minus 0.2 percent, which is lower than growth of 0.4 percent in the 12 months ending in Sep 2015. Excluding growth of 0.8 percent in Jul 2015, growth in the remaining five months from Apr 2014 to Sep 2015 accumulated to minus 0.9 percent or minus 2.1 percent annual equivalent. Industrial production declined in four of the past six months and changed 0.0 percent in one month. Industrial production expanded at annual equivalent 2.0 percent in the most recent quarter from Jul 2015 to Sep 2015 and contracted at 2.4 percent in the prior quarter Apr 2015 to Jun 2015. Business equipment accumulated increase of 1.5 percent in the six months from Apr 2015 to Sep 2015 at the annual equivalent rate of 3.0 percent, which is higher than growth of 1.8 percent in the 12 months ending in Sep 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 fell 0.3 percentage point in September to 77.5 percent, a rate that is 2.6 percentage points below its long-run (1972–2014) average.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration and weakening growth in past months.

Manufacturing fell 22.2 from the peak in Jun 2007 to the trough in Apr 2009 and increased by 19.2 percent from the trough in Apr 2009 to Dec 2014. Manufacturing grew 22.2 percent from the trough in Apr 2009 to Sep 2015. Manufacturing output in Sep 2015 is 4.9 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 IIQ2015 would have accumulated to 24.8 percent. GDP in IIQ2015 would be $18,712.5 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,378.9 billion than actual $16,333.6 billion. There are about two trillion dollars of GDP less than at trend, explaining the 25.6 million unemployed or underemployed equivalent to actual unemployment/underemployment of 15.4 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html). US GDP in IIQ2015 is 12.7 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,333.6 billion in IIQ2015 or 9.0 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 of manufacturing at average 3.2 percent per year from Sep 1919 to Sep 2015. Growth at 3.2 percent per year would raise the NSA index of manufacturing output from 107.6075 in Dec 2007 to 137.3600 in Sep 2015. The actual index NSA in Sep 2015 is 106.4202, which is 22.5 percent below trend. Manufacturing output grew at average 2.2 percent between Dec 1986 and Dec 2014. Using trend growth of 2.2 percent per year, the index would increase to 127.3758 in Sep 2015. The output of manufacturing at 106.4202 in Sep 2015 is 16.5 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	-2.0 Aug	-6.0 Jan-Aug	1.2 Aug	-3.7 Jan-Aug
Japan		Sep 2015 0.6 Aug 3.1 Jul 2015 7.6 Jun 2015 9.5 May 2015 2.4 Apr 8.0 Mar 8.5 Feb 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		Sep 2015 -11.1 Aug -3.1 Jul 2015 -3.2 Jun 2015 -2.9 May 2015 -8.7 Apr -4.2 Mar -14.5 Feb -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 -3.7 Sep -5.5 Aug -8.3 Jul 2.8 Jun -2.5 May -6.4 Apr -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 -20.4 -13.8 Aug -8.1 Jul -6.1 Jun -17.6 May -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	6.6 12 M-Jul	6.6 Jan-Jul	0.9 12-M Jul	2.4 Jan-Jul
Germany	-5.2 Aug CSA	5.0 Aug	-3.1 Aug CSA	4.0 Aug
France Aug	-3.0	3.9	-3.2	-2.2
Italy Aug	-3.6	1.0	-2.6	2.1
UK	1.9 Aug	1.4 Jun 15- Aug 15 /Jun 14-Aug 14	-0.8 Aug	1.2 Jun 15-Aug 15 /Jun 14-Aug 14
Net Trade % Points GDP Growth	Points
USA	IIQ2015 0.18 IQ2015 -1.92 IVQ2014 -0.89 IIIQ2014 0.39 IIQ2014 -0.24 IQ2014 -1.39 IVQ2013 1.26 IIIQ2013 0.16 IIQ2013 -0.24 IQ2013 -0.01 IVQ2012 +0.58 IIIQ2012 0.16 IIQ2012 0.28 IQ2012 -0.02
Japan	0.3 IQ2012 -1.7 IIQ2012 -1.8 IIIQ2012 -0.5 IVQ2012 1.7 IQ2013 -0.3 IIQ2013 -1.3 IIIQ2013 -2.0 IVQ2013 -1.0 IQ2014 3.6 IIQ2014 0.5 IIIQ2014 1.3 IVQ2014 -0.3 IQ2015 -1.1 IIQ2015
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 0.0 IIQ2014 0.2 IIIQ2014 0.5 IVQ2014 -0.3 IQ2015 -0.2 IIQ2015 0.7
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 0.3 IVQ2014 -0.2 IQ2015 0.4 IIQ2015
UK	0.7 IIQ2013 -1.7 IIIQ2013 0.1 IVQ2013 0.2 IQ2014 1.3 IIQ2014 -0.7 IIIQ2014 0.2 IVQ2014 -0.6 IQ2015 1.4 IIQ2015

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 V-5 for Sep 2015. The share of Asia in Japan’s trade is close to one-half for 53.1 percent of exports and 52.2 percent of imports. Within Asia, exports to China are 17.4 percent of total exports and imports from China 28.2 percent of total imports. While exports to China decreased 3.5 percent in the 12 months ending in Sep 2015, imports from China increased 0.9 percent. The largest export market for Japan in Sep 2015 is the US with share of 19.9 percent of total exports, which is close to that of China, and share of imports from the US of 9.4 percent in total imports. Japan’s exports to the US increased 10.4 percent in the 12 months ending in Sep 2015 and imports from the US increased 9.4 percent. Western Europe has share of 10.6 percent in Japan’s exports and of 11.1 percent in imports. Rates of growth of exports of Japan in Sep 2015 are 10.4 percent for exports to the US, 5.6 percent for exports to Brazil and minus 2.3 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 Sep 2015 are mixed. Imports from Asia decreased 1.0 percent in the 12 months ending in Sep 2015 while imports from China increased 0.9 percent. Data are in millions of yen, which may have effects of recent depreciation of the yen relative to the United States dollar (USD).

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

Sep 2015	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	6,417,356	0.6	6,531,833	-11.1
Asia	3,409,659 % Total 53.1	-0.9	3,412,346 % Total 52.2	-1.0
China	1,113,869 % Total 17.4	-3.5	1,843,921 % Total 28.2	0.9
USA	1,278,978 % Total 19.9	10.4	617,200 % Total 9.4	-0.1
Canada	76,919	2.5	84,289	-16.6
Brazil	40,941	5.6	64,351	-12.3
Mexico	116,530	13.0	48,493	37.7
Western Europe	683,220 % Total 10.6	5.2	724,855 % Total 11.1	-3.8
Germany	166,802	-2.3	203,178	-6.5
France	54,114	5.1	91,269	-13.4
UK	104,730	-4.5	75,521	29.8
Middle East	274,426	-1.8	742,450	-43.0
Australia	148,636	9.7	324,335	-22.8

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

World trade projections of the IMF are in Table V-6. There is increasing growth of the volume of world trade of goods and services from 3.3 percent in 2014 to 4.1 percent in 2016 and 4.7 percent on average from 2017 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 I-10, IMF, Projections of World Trade, USD Billions, USD/Barrel and Annual ∆%

	2014	2015	2016	Average ∆% 2017-2019
World Trade Volume (Goods and Services)	3.3	3.2	4.1	4.7
Exports Goods & Services	3.2	3.4	3.9	4.6
Imports Goods & Services	3.5	3.0	4.3	4.8
Average Oil Price USD/Barrel	96.25	51.62	50.36	Average ∆% 2007-2016 82.03
Average Annual ∆% Export Unit Value of Manufactures	-0.6	-4.1	-0.7	Average ∆% 2007-2016 0.8
Exports of Goods & Services	2014	2015	2016	Average ∆% 2007-2016
EMDE	2.9	3.9	4.8	4.6
G7	3.4	3.1	3.4	2.9
Imports Goods & Services
EMDE	3.6	1.3	4.4	6.0
G7	3.4	4.0	4.2	2.4
Terms of Trade of Goods & Services
EMDE	-0.5	-4.7	-1.0	0.1
G7	0.4	1.6	0.1	0.0
Terms of Trade of Goods
EMDE	-0.6	-4.3	-0.6	0.2
G7	0.2	1.4	0.0	-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/pubs/ft/weo/2015/02/weodata/index.aspx

The JP Morgan Global All-Industry Output Index of the JP Morgan Manufacturing and Services PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, with high association with world GDP, fell to 52.8 in Sep from 53.9 in Aug, indicating expansion at slower rate (http://www.markiteconomics.com/Survey//PressRelease.mvc/62646fa73ed14f37b66f2a3861b30fb1). This index has remained above the contraction territory of 50.0 during 35 consecutive months. The employment index decreased from 52.2 in Aug to 52.0 in Sep with input prices rising at slower rate, new orders increasing at slower rate and output increasing at slower rate (http://www.markiteconomics.com/Survey//PressRelease.mvc/62646fa73ed14f37b66f2a3861b30fb1). David Hensley, Director of Global Economic Coordination at JP Morgan, finds slowing rate of global growth with higher strength in advanced countries and weakness in developing economies (http://www.markiteconomics.com/Survey//PressRelease.mvc/62646fa73ed14f37b66f2a3861b30fb1). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, decreased to 50.6 in Sep from 50.7 in Aug (http://www.markiteconomics.com/Survey//PressRelease.mvc/8580ebed59a7402ba6cc0e93a1905c90). New export orders fell at faster rate. David Hensley, Director of Global Economic Coordination at JP Morgan, finds low growth in global manufacturing (http://www.markiteconomics.com/Survey//PressRelease.mvc/8580ebed59a7402ba6cc0e93a1905c90). The Markit Brazil Composite Output Index decreased from 44.8 in Aug to 42.7 in Sep, indicating contraction in activity of Brazil’s private sector (http://www.markiteconomics.com/Survey//PressRelease.mvc/8446d62cee654033ba280964fec8a452). The Markit Brazil Services Business Activity index, compiled by Markit, decreased from 44.8 in Aug to 41.7 in Sep, indicating contracting services activity (http://www.markiteconomics.com/Survey//PressRelease.mvc/8446d62cee654033ba280964fec8a452). Pollyana De Lima, Economist at Markit, finds challenging conditions (http://www.markiteconomics.com/Survey//PressRelease.mvc/8446d62cee654033ba280964fec8a452). The Markit Brazil Purchasing Managers’ Index^TM (PMI^™) increased from 45.8 in Aug to 47.0 in Sep, indicating deterioration in manufacturing (http://www.markiteconomics.com/Survey//PressRelease.mvc/887e4ac1744644e681c186a6435353f9). Pollyanna De Lima, Economist at Markit, finds slower decline of output and new orders (http://www.markiteconomics.com/Survey//PressRelease.mvc/887e4ac1744644e681c186a6435353f9).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 54.0 in Oct from 53.1 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/d01a035e90fc4eb9a8bee3f20f918255). New export orders increased. Chris Williamson, Chief Economist at Markit, finds increases in exports (http://www.markiteconomics.com/Survey//PressRelease.mvc/d01a035e90fc4eb9a8bee3f20f918255). The Markit Flash US Services PMI™ Business Activity Index decreased from 56.1 in Aug to 55.6 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/227c4a26c6b34e56af7cf3b0129ca6d5). The Markit Flash US Composite PMI™ Output Index decreased from 55.7 in Aug to 55.3 in Sep. Chris Williamson, Chief Economist at Markit, finds that the surveys are consistent with slowing services and manufacturing (http://www.markiteconomics.com/Survey//PressRelease.mvc/227c4a26c6b34e56af7cf3b0129ca6d5). The Markit US Composite PMI™ Output Index of Manufacturing and Services decreased to 55.0 in Sep from 55.7 in Aug (http://www.markiteconomics.com/Survey//PressRelease.mvc/06ff13a5b18144829587cbaa49a77cb9). The Markit US Services PMI™ Business Activity Index decreased from 56.1 in Aug to 55.1 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/06ff13a5b18144829587cbaa49a77cb9). Chris Williamson, Chief Economist at Markit, finds the indexes suggesting growth at an annual rate of 2.2 percent in IIIQ2015 (http://www.markiteconomics.com/Survey//PressRelease.mvc/06ff13a5b18144829587cbaa49a77cb9). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) increased to 53.1 in Sep from 53.0 in Aug, which indicates expansion at faster rate (http://www.markiteconomics.com/Survey//PressRelease.mvc/0a4d5420b9ef4c36bae0dea4ef0d7e38). New foreign orders increased. Chris Williamson, Chief Economist at Markit, finds that the index suggests restrain of foreign orders because of dollar appreciation (http://www.markiteconomics.com/Survey//PressRelease.mvc/0a4d5420b9ef4c36bae0dea4ef0d7e38). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® decreased 0.9 percentage points from 51.1 in Aug to 50.2 in Sep, which indicates growth at slower rate (https://www.instituteforsupplymanagement.org/ISMReport/MfgROB.cfm?navItemNumber=30004). The index of new orders decreased 1.6 percentage points from 51.7 in Aug to 50.1 in Sep. The index of new exports changed 0.0 percentage points from 46.5 in Aug to 46.5 in Sep, contracting at the same rate. The Non-Manufacturing ISM Report on Business^® PMI decreased 2.1 percentage points from 59.0 in Aug to 56.9 in Sep, indicating growth of business activity/production during 74 consecutive months, while the index of new orders decreased 6.7 percentage points from 63.4 in Aug to 56.7 in Sep (https://www.instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?navItemNumber=30008). Table USA provides the country economic indicators for the US.

Table USA, US Economic Indicators

Consumer Price Index	Sep 12 months NSA ∆%: 0.0; ex food and energy ∆%: 1.9 Sep month SA ∆%: -0.2; ex food and energy ∆%: 0.2 Blog 10/18/15
Producer Price Index	Finished Goods Sep 12-month NSA ∆%: -4.2; ex food and energy ∆% 2.1 Sep month SA ∆% = -1.3; ex food and energy ∆%: 0.2 Final Demand Sep 12-month NSA ∆%: -1.1; ex food and energy ∆% 0.8 Sep month SA ∆% = -0.5; ex food and energy ∆%: -0.3 Blog 10/18/15
PCE Inflation	Aug 12-month NSA ∆%: headline 0.3; ex food and energy ∆% 1.3 Blog 10/4/15
Employment Situation	Household Survey: Sep Unemployment Rate SA 5.1% Blog calculation People in Job Stress Sep: 25.6 million NSA, 15.4% of Labor Force Establishment Survey: Sep Nonfarm Jobs +142; Private +118,000 jobs created  Aug 12-month Average Hourly Earnings Inflation Adjusted ∆%: 2.7 Blog 10/4/15
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 Aug 2015 5.674 million lower by 1.3 percent than 5.749 million in Aug 2006 Blog 10/25/15
GDP Growth	BEA Revised National Income Accounts IQ2012/IQ2011 ∆%: 2.8 IIQ2012/IIQ2011 2.5 IIIQ2012/IIIQ2011 2.4 IVQ2012/IVQ2011 1.3 IQ2013/IQ2012 1.1 IIQ2013/IIQ2012 0.9 IIIQ2013/IIIQ2012 1.5 IVQ2013/IVQ2012 2.5 IQ2014/IQ2013 1.7 IIQ2014/IIQ2013 2.6 IIIQ2014/IIIQ2013 2.9 IVQ2014/IVQ2013 2.5 IQ2015/IQ2014 2.9 IIQ2015/IIQ2014 2.7 IQ2012 SAAR 2.7 IIQ2012 SAAR 1.9 IIIQ2012 SAAR 0.5 IVQ2012 SAAR 0.1 IQ2013 SAAR 1.9 IIQ2013 SAAR 1.1 IIIQ2013 SAAR 3.0 IVQ2013 SAAR 3.8 IQ2014 SAAR -0.9 IIQ2014 SAAR 4.6 IIIQ2014 SAAR 4.3 IVQ2014 SAAR 2.1 IQ2015 SAAR 0.6 IIQ2015 SAAR: 3.9 Blog 9/27/2015
Real Private Fixed Investment	SAAR IIQ2015 ∆% 5.2 IVQ2007 to IIQ2015: 5.8% Blog 9/27/15
Corporate Profits	IIQ2015 SAAR: Corporate Profits 3.5; Undistributed Profits 6.2 Blog 9/27/15
Personal Income and Consumption	Aug month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.3 Real Personal Consumption Expenditures (RPCE): 0.4 12-month Aug NSA ∆%: RDPI: 3.2; RPCE ∆%: 2.8 Blog 10/4/15
Quarterly Services Report	IIQ15/IIQ14 NSA ∆%: Information 3.8 Financial & Insurance 3.0 Earlier Data: Blog 3/22/15
Employment Cost Index	Compensation Private IIQ2014 SA ∆%: 0.0 Jun 12 months ∆%: 1.9 Earlier Data: Blog 2/1/15
Industrial Production	Sep month SA ∆%: -0.2 Sep 12 months SA ∆%: 0.4 Manufacturing Sep SA -0.1 ∆% Sep 12 months SA ∆% 1.4, NSA 0.8 Capacity Utilization: 77.5 Blog 10/18/15
Productivity and Costs	Nonfarm Business Productivity IIQ2015∆% SAAE 3.3; IIQ2015/IIQ2014 ∆% 0.7; Unit Labor Costs SAAE IIQ2015 ∆% -1.4; IIQ2015/IIQ2014 ∆%: 1.7 Blog 9/6/15
New York Fed Manufacturing Index	General Business Conditions From Sep -14.67 to Oct minus 11.36 New Orders: From Sep minus 12.91 to Oct -18.91 Blog 10/18/15
Philadelphia Fed Business Outlook Index	General Index from Sep -6.0 to Oct -4.5 New Orders from Sep 9.4 to Oct -10.6 Blog 10/18/15
Manufacturing Shipments and Orders	New Orders SA Aug ∆% -1.7 Ex Transport -0.8 Jan-Jul NSA New Orders ∆% minus 7.2 Ex transport minus 6.7 Earlier data: Blog 4/5/15
Durable Goods	Aug New Orders SA ∆%: minus 2.0 ; ex transport ∆%: 0.0 Jan-Aug 15/Jan-Aug 14 New Orders NSA ∆%: -4.6; ex transport ∆% -2.1 Earlier Data: Blog 4/26/15
Sales of New Motor Vehicles	Sep 2015 13,052,388; Sep 2014 12,431,305. Sep 15 SAAR 18.17 million, Aug 15 SAAR 17.81 million, Sep 2014 SAAR 16.52 million Blog 10/4/15
Sales of Merchant Wholesalers	Jan-Aug 2015/Jan-Aug 2014 NSA ∆%: Total -3.4; Durable Goods: 1.4; Nondurable Goods: -7.5 EARLIER DATA: Blog 4/12/15
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Jul 15 12-M NSA ∆%: Sales Total Business -2.9; Manufacturers -5.5 Retailers 2.3; Merchant Wholesalers -4.5 Blog 9/20/15
Sales for Retail and Food Services	Jan-Aug 2015/Jan-Aug 2014 ∆%: Retail and Food Services 2.1; Retail ∆% 1.3 Blog 9/20/15
Value of Construction Put in Place	SAAR month SA Aug ∆%: 0.7 Jan-Aug NSA: 9.8 Earlier Data: Blog 4/5/15
Case-Shiller Home Prices	Jul 2015/ Jul 2014 ∆% NSA: 10 Cities 4.5; 20 Cities: 5.0; National: 4.7 ∆% Jul SA: 10 Cities -0.2 ; 20 Cities: -0.2 Blog 10/4/15
FHFA House Price Index Purchases Only	Aug SA ∆% 0.3; 12 month NSA ∆%: 5.5 Blog 10/25/15
New House Sales	Aug 2015 month SAAR ∆%: 5.7 Jan-Aug 2015/Jan-Aug 2014 NSA ∆%: 19.8 Blog 9/27/15
Housing Starts and Permits	Sep Starts month SA ∆% 6.5; Permits ∆%: -5.0 Jan-Sep 2015/Jan-Sep 2014 NSA ∆% Starts 12.0; Permits  ∆% 13.0 Earlier Data: Blog 4/19/15
Rate of Homeownership	IIQ2015: 63.4 Blog 8/2/15
Trade Balance	Balance Aug SA -$48,830 million versus Jul -$41,807 million Exports Aug SA ∆%: -2.0 Imports Aug SA ∆%: 1.2 Goods Exports Jan-Aug 2015/Jan-Aug 2014 NSA ∆%: minus 6.0 Goods Imports Jan-Aug 2015/Jan-Aug 2014 NSA ∆%: minus 3.7 Blog 10/11/15
Export and Import Prices	Sep 12-month NSA ∆%: Imports -10.7; Exports -7.4 Earlier Data: Blog 4/12/15
Consumer Credit	Aug ∆% annual rate: Total 5.6; Revolving 5.3; Nonrevolving 5.7 Earlier Data: Blog 5/10/15
Net Foreign Purchases of Long-term Treasury Securities	Aug Net Foreign Purchases of Long-term US Securities: $6.3 billion Major Holders of Treasury Securities: China $1270.5 billion; Japan $1197.0 billion; Total Foreign US Treasury Holdings Jun $6098.7 billion Blog 10/25/15
Treasury Budget	Fiscal Year 2015/2014 ∆% Sep: Receipts 7.6; Outlays 5.2; Individual Income Taxes 10.5 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 Deficit Fiscal Year 2015 $439 billion Blog 10/18/2015
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 2040: Long-term Debt/GDP 103% 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 6/21/14
Commercial Banks Assets and Liabilities	Sep 2015 SAAR ∆%: Securities -6.4 Loans 5.1 Cash Assets minus 44.7 Deposits minus 0.8 Blog 10/25/15
Flow of Funds Net Worth of Families and Nonprofits	IIQ2015 ∆ since 2007 Assets +$18,757.3 BN Nonfinancial 2058.2 BN Real estate $1269.1 BN Financial +16,699.2 BN Net Worth +$18,874.4 BN Blog 9/27/15
Current Account Balance of Payments	IIQ2015 -117,258 MM % GDP 2.5 Blog 9/27/15
Collapse of United States Dynamism of Income Growth and Employment Creation	Blog 10/18/15
IMF View	World Real Economic Growth 2015 ∆% 3.5 Blog 4/26/15
Income, Poverty and Health Insurance in the United States	46.657 Million Below Poverty in 2014, 14.8% of Population Median Family Income CPI-2014 Adjusted $53,657 in 2014 back to 1996 Levels Uncovered by Health Insurance 32.968 Million in 2014 Blog 10/11/15

Links to blog comments in Table USA: 10/18/15 http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html

10/11/15 http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-uncertainty-imf.html

10/4/15 http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html

9/27/15 http://cmpassocregulationblog.blogspot.com/2015/09/monetary-policy-designed-on-measurable.html

9/20/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-increase-on-hold-because.html

9/13/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what_13.html

9/6/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html

08/30/15 http://cmpassocregulationblog.blogspot.com/2015/08/fluctuations-of-global-financial.html

08/23/15 http://cmpassocregulationblog.blogspot.com/2015/08/global-decline-of-values-of-financial.html

08/16/15 http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.html

08/9/15 http://cmpassocregulationblog.blogspot.com/2015/08/fluctuating-risk-financial-assets.html

08/02/15 http://cmpassocregulationblog.blogspot.com/2015/08/turbulence-of-valuations-of-financial.html

7/26/15 http://cmpassocregulationblog.blogspot.com/2015/07/valuation-of-risk-financial-assets.html

7/19/2015 http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html

7/12/2015 http://cmpassocregulationblog.blogspot.com/2015/07/oscillating-valuations-of-risk.html

6/21/15 http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html

6/7/15 http://cmpassocregulationblog.blogspot.com/2015/06/higher-volatility-of-asset-prices-at.html

5/10/15 http://cmpassocregulationblog.blogspot.com/2015/05/quite-high-equity-valuations-and.html

4/26/2015 http://cmpassocregulationblog.blogspot.com/2015/04/imf-view-of-economy-and-finance-united.html

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

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

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

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

The Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, provides the FHFA House Price Index (HPI) that “is calculated using home sales price information from Fannie Mae and Freddie Mac-acquired mortgages” (http://fhfa.gov/webfiles/24216/q22012hpi.pdf 1). Table IIA2-1 provides the FHFA HPI for purchases only, which shows behavior similar to that of the Case-Shiller index but with lower magnitudes. House prices catapulted from 2000 to 2003, 2005 and 2006. From IVQ2000 to IVQ2006, the index for the US as a whole rose 55.0 percent, with 62.1 percent for New England, 72.0 percent for Middle Atlantic, 71.2 percent for South Atlantic but only by 33.1 percent for East South Central. Prices fell relative to 2014 for the US and all regions from 2006 with exception of increase of 2.6 percent for East South Central. Prices for the US increased 4.9 percent in IVQ2014 relative to IVQ2013 and 12.9 percent from IVQ2012 to IVQ2014. From IVQ2000 to IVQ2014, prices rose for the US and the four regions in Table IIA2-1.

Table IIA2-1, US, FHFA House Price Index Purchases Only NSA ∆%

	United States	New England	Middle Atlantic	South Atlantic	East South Central
IVQ2000 to IVQ2003	24.0	40.6	35.8	25.9	11.0
IVQ2000 to IVQ2005	50.5	65.0	67.6	62.9	25.4
IVQ2000 to IVQ2006	55.0	62.1	72.0	71.2	33.1
IVQ2005 to IVQ2014	-1.5	-8.7	-2.3	-7.4	8.9
IVQ2006 to IVQ2014	-4.4	-7.1	-4.8	-11.9	2.6
IVQ2007 to IVQ2014	-1.9	-5.1	-5.0	-8.6	0.7
IVQ2011 to IVQ2014	18.9	7.3	6.9	19.9	11.8
IVQ2012 to IVQ2014	12.9	6.8	5.7	13.8	8.6
IVQ2013 to IVQ2014	4.9	2.5	2.2	5.1	4.2
IVQ2000 to IVQ2014	48.3 144.27	50.6 138.40	63.7 127.30	50.9 140.28	36.6 146.07

Source: Federal Housing Finance Agency

http://www.fhfa.gov/KeyTopics/Pages/House-Price-Index.aspx

Data of the FHFA HPI for the remaining US regions are in Table IIA2-2. Behavior is not very different from that in Table IIA2-1 with the exception of East North Central. House prices in the Pacific region doubled between 2000 and 2006. Although prices of houses declined sharply from 2005 and 2006 to 2014 with exception of West South Central and West North Central, there was still appreciation relative to 2000.

Table IIA2-2, US, FHFA House Price Index Purchases Only NSA ∆%

	West South Central	West North Central	East North Central	Mountain	Pacific
IVQ2000 to IVQ2003	11.1	18.3	14.7	18.9	44.6
IVQ2000 to IVQ2005	23.9	31.0	23.8	58.0	107.7
IVQ2000 to IVQ2006	31.6	33.7	23.7	68.6	108.7
IVQ2005 to IVQ2014	26.6	4.7	-5.4	-2.6	-14.7
IVQ2006 to IVQ2014	19.1	2.6	-5.4	-8.7	-15.1
IVQ2007 to IVQ2014	15.2	3.2	-2.1	-5.6	-6.0
IVQ2011 to IVQ2014	18.1	13.5	14.2	32.9	37.6
IVQ2012 to IVQ2014	12.1	8.9	11.1	17.9	24.4
IVQ2013 to IVQ2014	5.9	4.0	4.6	5.5	7.3
IVQ2000 to IVQ2014	56.8 145.53	37.1 158.59	17.1 155.13	53.9 172.46	77.1 132.21

Source: Federal Housing Finance Agency

http://www.fhfa.gov/KeyTopics/Pages/House-Price-Index.aspx

Monthly and 12-month percentage changes of the FHFA House Price Index are in Table IIA2-3. Percentage monthly increases of the FHFA index were positive from Apr to Jul 2011 with exception of declines in May and Aug 2011 while 12 months percentage changes improved steadily from around minus 6 percent in Mar to May 2011 to minus 4.4 percent in Jun 2011. The FHFA house price index fell 0.6 percent in Oct 2011 and fell 3.0 percent in the 12 months ending in Oct 2011. There was significant recovery in Nov 2012 with increase in the house price index of 0.4 percent and reduction of the 12-month rate of decline to 2.3 percent. The house price index rose 0.3 percent in Dec 2011 and the 12-month percentage change improved to minus 1.2 percent. There was further improvement with revised change of minus 0.1 percent in Jan 2012 and decline of the 12-month percentage change to minus 1.0 percent. The index improved to positive change of 0.2 percent in Feb 2012 and increase of 0.2 percent in the 12 months ending in Feb 2012. There was strong improvement in Mar 2012 with gain in prices of 1.0 percent and 2.2 percent in 12 months. The house price index of FHFA increased 0.6 percent in Apr 2012 and 2.7 percent in 12 months and improvement continued with increase of 0.6 percent in May 2012 and 3.6 percent in the 12 months ending in May 2012. Improvement consolidated with increase of 0.4 percent in Jun 2012 and 3.6 percent in 12 months. In Jul 2012, the house price index increased 0.2 percent and 3.5 percent in 12 months. Strong increase of 0.5 percent in Aug 2012 pulled the 12-month change to 4.3 percent. There was another increase of 0.7 percent in Oct and 5.3 percent in 12 months followed by increase of 0.5 percent in Nov 2012 and 5.3 percent in 12 months. The FHFA house price index increased 0.8 percent in Jan 2013 and 6.4 percent in 12 months. Improvement continued with increase of 0.5 percent in Apr 2013 and 7.2 percent in 12 months. In May 2013, the house price indexed increased 0.7 percent and 7.4 percent in 12 months. The FHFA house price index increased 0.7 percent in Jun 2013 and 7.7 percent in 12 months. In Jul 2013, the FHFA house price index increased 0.7 percent and 8.2 percent in 12 months. Improvement continued with increase of 0.4 percent in Aug 2013 and 8.2 percent in 12 months. In Sep 2013, the house price index increased 0.5 percent and 8.1 percent in 12 months. The house price index increased 0.5 percent in Oct 2013 and 7.9 percent in 12 months. In Nov 2013, the house price index changed 0.0 percent and increased 7.3 percent in 12 months. The house price index rose 0.6 percent in Dec 2013 and 7.5 percent in 12 months. Improvement continued with increase of 0.6 percent in Jan 2014 and 7.3 percent in 12 months. In Feb 2014, the house price index increased 0.4 percent and 7.1 percent in 12 months. The house price index increased 0.5 percent in Mar 2014 and 6.4 percent in 12 months. In Apr 2014, the house price index increased 0.2 percent and increased 6.0 percent in 12 months. The house price index increased 0.2 percent in May 2014 and 5.5 percent in 12 months. In Jun 2014, the house price index increased 0.5 percent and 5.3 percent in 12 months. The house price index increased 0.3 percent in Jul 2014 and 4.9 percent in 12 months. In Sep 2014, the house price index increased 0.2 percent and increased 4.6 percent in 12 months. The house price index increased 0.5 percent in Oct 2014 and 4.7 percent in 12 months. In Nov 2014, the house price index increased 0.7 percent and 5.3 percent in 12 months. The house price index increased 0.7 percent in Dec 2014 and increased 5.5 percent in 12 months. In Feb 2015, the house price index increased 0.7 percent and increased 5.5 percent in 12 months. The house price index increased 0.4 percent in Mar 2015 and 5.5 percent in 12 months. In Apr 2015, the house price index increased 0.4 percent and 5.6 percent in 12 months. The house price index increased 0.5 percent in May 2015 and 5.9 percent in 12 months. House prices increased 0.2 percent in Jun 2015 and 5.6 percent in 12 months. The house price index increased 0.5 percent in Jul 2015 and increased 5.8 percent in 12 months. House prices increased 0.3 percent in Aug 2015 and increased 5.5 percent in 12 months.

Table IIA2-3, US, FHFA House Price Index Purchases Only SA. Month and NSA 12-Month ∆%

	Month ∆% SA	12 Month ∆% NSA
Aug 2015	0.3	5.5
Jul	0.5	5.8
Jun	0.2	5.6
May	0.5	5.9
Apr	0.4	5.6
Mar	0.4	5.5
Feb	0.7	5.5
Jan	0.3	5.2
Dec 2014	0.7	5.5
Nov	0.7	5.3
Oct	0.5	4.7
Sep	0.2	4.6
Aug	0.5	5.0
Jul	0.3	4.9
Jun	0.4	5.3
May	0.2	5.5
Apr	0.2	6.0
Mar	0.5	6.4
Feb	0.4	7.1
Jan	0.7	7.3
Dec 2013	0.6	7.5
Nov	0.0	7.3
Oct	0.5	7.9
Sep	0.5	8.1
Aug	0.4	8.2
Jul	0.7	8.2
Jun	0.7	7.7
May	0.7	7.4
Apr	0.5	7.2
Mar	1.2	7.4
Feb	0.7	6.9
Jan	0.8	6.4
Dec 2012	0.4	5.5
Nov	0.5	5.3
Oct	0.7	5.3
Sep	0.5	4.0
Aug	0.5	4.3
Jul	0.2	3.5
Jun	0.4	3.6
May	0.6	3.6
Apr	0.6	2.7
Mar	1.0	2.2
Feb	0.2	0.2
Jan	-0.1	-1.0
Dec 2011	0.3	-1.2
Nov	0.4	-2.3
Oct	-0.6	-3.0
Sep	0.6	-2.4
Aug	-0.3	-3.8
Jul	0.2	-3.5
Jun	0.4	-4.4
May	-0.2	-5.9
Apr	0.2	-5.8
Mar	-0.9	-5.9
Feb	-1.1	-5.0
Jan	-0.3	-4.5
Dec 2010		-3.9
Dec 2009		-2.0
Dec 2008		-10.3
Dec 2007		-3.2
Dec 2006		2.5
Dec 2005		9.8
Dec 2004		10.2
Dec 2003		8.0
Dec 2002		7.8
Dec 2001		6.7
Dec 2000		7.2
Dec 1999		6.1
Dec 1998		5.9
Dec 1997		3.4
Dec 1996		2.8
Dec 1995		2.9
Dec 1994		2.6
Dec 1993		3.1
Dec 1992		2.4

Source: Federal Housing Finance Agency

http://www.fhfa.gov/DataTools

The bottom part of Table IIA2-3 provides 12-month percentage changes of the FHFA house price index since 1992 when data become available for 1991. Table IIA2-4 provides percentage changes and average rates of percent change per year for various periods. Between 1992 and 2014, the FHFA house price index increased 107.8 percent at the yearly average rate of 3.4 percent. In the period 1992-2000, the FHFA house price index increased 39.3 percent at the average yearly rate of 4.2 percent. The average yearly rate of price increase accelerated to 7.5 percent in the period 2000-2003, 8.5 percent in 2000-2005 and 7.5 percent in 2000-2006. At the margin, the average rate jumped to 10.0 percent in 2003-2005 and 7.4 percent in 2003-2006. House prices measured by the FHFA house price index declined 3.2 percent between 2006 and 2014 and 0.9 percent between 2005 and 2014.

Table IIA2-4, US, FHFA House Price Index, Percentage Change and Average Rate of Percentage Change per Year, Selected Dates 1992-2013

Dec	∆%	Average ∆% per Year
1992-2014	107.8	3.4
1992-2000	39.3	4.2
2000-2003	24.2	7.5
2000-2005	50.4	8.5
2003-2005	21.1	10.0
2005-2014	-0.9	NA
2000-2006	54.1	7.5
2003-2006	24.1	7.4
2006-2014	-3.2	NA

Source: Federal Housing Finance Agency

http://www.fhfa.gov/DataTools

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-1) improved from minus $7.9 billion in Jul 2015 to $6.3 billion in Aug 2015. Foreign (residents) purchases minus sales of US long-term securities (row A in Table VA-1) in Jul 2015 of $4.0 billion eased to minus $21.8 billion in Aug 2015. Net US (residents) purchases of long-term foreign securities (row B in Table VA-1) improved from $3.7 billion in Jul 2015 to $42.2 billion in Aug 2015. Other transactions (row C2 in Table VA-1) changed from minus $15.6 billion in Jul 2015 to minus $14.0 billion in Aug 2015. In Aug 2015,

C = A + B + C2 = -$21.8 billion + $42.2 billion -$14.0 = -$6.4 billion

There are minor rounding errors. There is weakening demand in Table VA-1 in Jul in A1 private purchases by residents overseas of US long-term securities of $19.8 billion of which improvement in A11 Treasury securities of $6.2 billion, strengthening in A12 of 11.5 billion in agency securities, weakening of $9.6 billion of corporate bonds and weakening of minus $7.5 billion in equities. Worldwide risk aversion causes flight into US Treasury obligations with significant oscillations. Official purchases of securities in row A2 decreased $41.5 billion with decrease of Treasury securities of $41.1 billion in Aug 2015. Official purchases of agency securities decreased $1.8 billion in Aug 2015. Row D shows increase in Aug 2015 of $1.5 billion in purchases of short-term dollar denominated obligations. Foreign private holdings of US Treasury bills increased $12.6 billion (row D11) with foreign official holdings decreasing $5.5 billion while the category “other” decreased $5.6 billion. Foreign private holdings of US Treasury bills increased $2.7 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-1, Net Cross-Borders Flows of US Long-Term Securities, Billion Dollars, NSA

	Aug 2014 12 Months	Aug 2015 12 Months	Jul 2015	Aug 2015
A Foreign Purchases less Sales of US LT Securities	196.3	329.0	4.0	-21.8
A1 Private	146.0	445.7	21.5	19.8
A11 Treasury	172.1	208.5	-8.4	6.2
A12 Agency	7.4	136.4	7.8	11.5
A13 Corporate Bonds	-37.9	160.6	18.1	9.6
A14 Equities	4.4	-59.9	3.9	-7.5
A2 Official	50.2	-116.6	-17.5	-41.5
A21 Treasury	41.4	-167.5	-20.3	-41.1
A22 Agency	12.2	49.3	2.6	-1.8
A23 Corporate Bonds	8.3	4.5	0.6	-0.1
A24 Equities	-11.7	-3.0	-0.2	1.5
B Net US Purchases of LT Foreign Securities	-170.8	201.4	3.7	42.2
B1 Foreign Bonds	-34.9	307.9	20.4	41.6
B2 Foreign Equities	-136.0	-106.6	-16.7	0.5
C1 Net Transactions	25.4	530.4	7.7	20.4
C2 Other	-112.8	-269.0	-15.6	-14.0
C Net Foreign Purchases of US LT Securities	-87.4	261.3	-7.9	6.3
D Increase in Foreign Holdings of Dollar Denominated Short-term	5.1	27.5	-14.1	1.5
D1 US Treasury Bills	-41.1	70.5	-6.9	7.1
D11 Private	-6.4	55.8	2.6	12.6
D12 Official	-34.7	14.7	-9.5	-5.5
D2 Other	46.2	-42.9	-7.2	-5.6

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-2 provides major foreign holders of US Treasury securities. China is the largest holder with $1270.5 billion in Aug 2015, decreasing 0.1 percent from $1268.8 billion in Jul 2015 while decreasing $0.8 billion from Aug 2014 or 0.1 percent. The United States Treasury estimates US government debt held by private investors at $10,238 billion in Jun 2015. China’s holding of US Treasury securities represent 12.4 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. Japan decreased its holdings from $1230.1 billion in Aug 2014 to $1197.0 billion in Aug 2015 or 2.7 percent. The combined holdings of China and Japan in Aug 2015 add to $2467.5 billion, which is equivalent to 24.1 percent of US government marketable interest-bearing securities held by investors of $10,238 billion in Jun 2015 (http://www.fms.treas.gov/bulletin/index.html). Total foreign holdings of Treasury securities rose from $6069.4 billion in Aug 2014 to $6098.7 billion in Aug 2015, or 0.5 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-5, US, Major Foreign Holders of Treasury Securities $ Billions at End of Period

	Aug 2015	Jul 2015	Aug 2014
Total	6098.7	6116.5	6069.4
China	1270.5	1268.8	1269.7
Japan	1197.0	1200.8	1230.1
Caribbean Banking Centers	329.0	323.6	247.4
Oil Exporters	293.2	298.4	267.5
Brazil	255.3	257.9	261.7
United Kingdom	222.8	212.9	172.7
Switzerland	222.7	218.4	189.1
Ireland	216.4	216.6	176.1
Hong Kong	193.2	182.8	160.5
Luxembourg	184.8	185.2	150.5
Taiwan	172.5	172.4	172.9
Singapore	116.0	112.7	106.3
India	115.6	116.4	80.4
Foreign Official Holdings	4173.5	4157.8	4157.3
A. Treasury Bills	353.2	358.7	338.6
B. Treasury Bonds and Notes	3820.2	3799.1	3818.8

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

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 1.7 percent in 2012. Japan’s GDP grew 1.6 percent in 2013 and stagnated in 2014 at minus 0.1. 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 0.6 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	1.7
2013	1.6
2014	-0.1

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/mopo/outlook/gor1504b.pdf) with changes on Jul 21, 2015 (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf). For fiscal 2015, the forecast is of growth of GDP between 1.5 to 2.1 percent, with the all items CPI less fresh food 0.2 to 1.2 to 3.3 percent (https://www.boj.or.jp/en/mopo/outlook/gor1504b.pdf). The critical difference is forecast of the CPI excluding fresh food of 0.2 to 1.2 percent in 2015 and 1.2 to 2.2 percent in 2016 (https://www.boj.or.jp/en/mopo/outlook/gor1504b.pdf). Consumer price inflation in Japan excluding fresh food was minus 0.4 percent in Mar 2014 and 2.2 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 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 Jan 21, 2015 (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf). On Jun 19, 2015, the Bank of Japan announced a “New Framework for Monetary Policy Meetings,” which provides for quarterly release of the forecasts of the economy and prices beginning in Jan 2016 (https://www.boj.or.jp/en/announcements/release_2015/rel150619a.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
Apr 2015	-1.0 to -0.8 [-0.9]	+2.8	+0.8
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
Apr 2015	+1.5 to +2.1 [+2.0]	+0.2 to 1.2 [+0.8]	+0.2 to 1.2 [+0.8]
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
Apr 2015	+1.4 to +1.8 [+1.5]	+1.2 to +2.2 [+2.0]	+1.2 to +2.2 [+2.0]
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]
2017
Apr 2015	+0.1 to +0.5 [+0.2]	+2.7 to +3.4 [+3.2]	+1.4 to +2.1 [+1.9]

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

Source: Policy Board, Bank of Japan

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

https://www.boj.or.jp/en/mopo/outlook/gor1504b.pdf

The Nikkei Flash Japan Manufacturing PMI Index™ with the Flash Japan

Manufacturing PMI™ increased from 51.0 in Sep to 52.5 in Oct and the Flash Japan

Manufacturing Output Index™ increased from 50.7 in Sep to 52.2 in Oct

(http://www.markiteconomics.com/Survey//PressRelease.mvc/06cf494e776e439fa499b7dcd79fddc8). New export orders increased in change of direction. Amy Brownbill, Economist at

Markit, finds improving conditions in Japan’s manufacturing

(http://www.markiteconomics.com/Survey//PressRelease.mvc/06cf494e776e439fa499b7dcd79fddc8).The Nikkei Composite Output PMI Index decreased from 52.9 in Aug to 51.2 in Sep, indicating increase of business activity (http://www.markiteconomics.com/Survey//PressRelease.mvc/481a4f4d1d324da48216b6b5d9e3c9a8). The Nikkei Business Activity Index of Services decreased to 51.4 in Sep from 53.7 in Aug (http://www.markiteconomics.com/Survey//PressRelease.mvc/481a4f4d1d324da48216b6b5d9e3c9a8). Amy Brownbill, Ecoomist at Markit and author of the report, finds slowing services (http://www.markiteconomics.com/Survey//PressRelease.mvc/481a4f4d1d324da48216b6b5d9e3c9a8). The Nikkei Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, decreased from 51.7 in Aug to 51.0 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/4045cbaf350c42bb86769056765f2d58). New orders increased while foreign orders contracted. Amy Brownbill, Economist at Markit, finds manufacturing slowing (http://www.markiteconomics.com/Survey//PressRelease.mvc/4045cbaf350c42bb86769056765f2d58).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	Sep ∆% -0.5 12 months ∆% -3.9 Blog 10/18/15
Consumer Price Index	Aug NSA ∆% 0.2; Aug 12 months NSA ∆% 0.2 Blog 9/27/15
Real GDP Growth	IIQ2015 ∆%: -0.3 on IQ2015;  IQ2015 SAAR minus 1.2; ∆% 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 5/24/15 6/14/15 8/23/15 9/13/15
Employment Report	Aug Unemployed 2.25 million Change in unemployed since last year: minus 60 thousand Unemployment rate: 3.4 % Blog 10/4/15
All Industry Indices	Jul month SA ∆% 0.2 12-month NSA ∆% 1.7 Earlier Data: Blog 4/26/15
Industrial Production	Aug SA month ∆%: -0.5 Jul minus 0.8 Aug 12-month NSA ∆% 0.2 Jul 0.0 Earlier Data: Blog 3/29/15
Machine Orders	Total Aug ∆% -14.6 Private ∆%: -5.5 Aug ∆% Excluding Volatile Orders minus 5.7 Earlier Data: Blog 4/19/15
Tertiary Index	Aug month SA ∆% 0.1 Aug 12 months NSA ∆% 1.7 Earlier Data: Blog 4/26/15
Wholesale and Retail Sales	Aug 12 months: Total ∆%: -0.3 Wholesale ∆%: -0.8 Retail ∆%: 0.8 Earlier Data: Blog 3/29/15
Family Income and Expenditure Survey	Aug 12-month ∆% total nominal consumption 3.2, real 2.9 Earlier Data: Blog 3/29/15
Trade Balance	Exports Aug 12 months ∆%: 0.6 Imports Aug 12 months ∆% -11.1 Earlier Data: Blog 4/26/15

Links to blog comments in Table JPY: 10/18/15 http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html

10/4/15 http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html

9/27/15 http://cmpassocregulationblog.blogspot.com/2015/09/monetary-policy-designed-on-measurable.html

9/13/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what_13.html

08/30/15 http://cmpassocregulationblog.blogspot.com/2015/08/fluctuations-of-global-financial.html

08/23/15 http://cmpassocregulationblog.blogspot.com/2015/08/global-decline-of-values-of-financial.html

08/16/15 http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.html

08/02/15 http://cmpassocregulationblog.blogspot.com/2015/08/turbulence-of-valuations-of-financial.html

7/12/2015 http://cmpassocregulationblog.blogspot.com/2015/07/oscillating-valuations-of-risk.html

6/14/15 http://cmpassocregulationblog.blogspot.com/2015/06/volatility-of-financial-asset.html

5/24/15 http://cmpassocregulationblog.blogspot.com/2015/05/interest-rate-policy-and-dollar.html

4/26/2015 http://cmpassocregulationblog.blogspot.com/2015/04/imf-view-of-economy-and-finance-united.html

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

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

The geographical breakdown of exports and imports of Japan with selected regions and countries is in Table VB-1 for Sep 2015. The share of Asia in Japan’s trade is close to one-half for 53.1 percent of exports and 52.2 percent of imports. Within Asia, exports to China are 17.4 percent of total exports and imports from China 28.2 percent of total imports. While exports to China decreased 3.5 percent in the 12 months ending in Sep 2015, imports from China increased 0.9 percent. The largest export market for Japan in Sep 2015 is the US with share of 19.9 percent of total exports, which is close to that of China, and share of imports from the US of 9.4 percent in total imports. Japan’s exports to the US increased 10.4 percent in the 12 months ending in Sep 2015 and imports from the US increased 9.4 percent. Western Europe has share of 10.6 percent in Japan’s exports and of 11.1 percent in imports. Rates of growth of exports of Japan in Sep 2015 are 10.4 percent for exports to the US, 5.6 percent for exports to Brazil and minus 2.3 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 Sep 2015 are mixed. Imports from Asia decreased 1.0 percent in the 12 months ending in Sep 2015 while imports from China increased 0.9 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-1, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yen

Sep 2015	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	6,417,356	0.6	6,531,833	-11.1
Asia	3,409,659 % Total 53.1	-0.9	3,412,346 % Total 52.2	-1.0
China	1,113,869 % Total 17.4	-3.5	1,843,921 % Total 28.2	0.9
USA	1,278,978 % Total 19.9	10.4	617,200 % Total 9.4	-0.1
Canada	76,919	2.5	84,289	-16.6
Brazil	40,941	5.6	64,351	-12.3
Mexico	116,530	13.0	48,493	37.7
Western Europe	683,220 % Total 10.6	5.2	724,855 % Total 11.1	-3.8
Germany	166,802	-2.3	203,178	-6.5
France	54,114	5.1	91,269	-13.4
UK	104,730	-4.5	75,521	29.8
Middle East	274,426	-1.8	742,450	-43.0
Australia	148,636	9.7	324,335	-22.8

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

VC China. China estimates an index of nonmanufacturing purchasing managers based on a sample of 1200 nonmanufacturing enterprises across the country (http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm). Table CIPMNM provides this index and components. The total index increased from 55.7 in Jan 2011 to 58.0 in Mar 2012, decreasing to 53.9 in Aug 2013. The index decreased from 56.0 in Nov 2013 to 54.6 in Dec 2013, easing to 53.4 in Jan 2014. The index moved to 53.4 in Sep 2015. The index of new orders increased from 52.2 in Jan 2012 to 54.3 in Dec 2012 but fell to 50.1 in May 2013, barely above the neutral frontier of 50.0. The index of new orders stabilized at 51.0 in Nov-Dec 2013, easing to 50.9 in Jan 2014. The index of new orders moved to 50.2 in Sep 2015.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Sep 2015	53.4	50.2	50.8	47.9	60.0
Aug	53.4	49.6	49.6	47.8	59.7
Jul	53.9	50.1	48.9	47.4	60.0
Jun	53.8	51.3	50.6	48.7	59.7
May	53.2	49.5	52.8	50.4	60.1
Apr	53.4	49.1	50.8	48.9	60.0
Mar	53.7	50.3	50.0	48.4	58.8
Feb	53.9	51.2	52.5	51.2	58.7
Jan	53.7	50.2	47.6	46.9	59.6
Dec 2014	54.1	50.5	50.1	47.3	59.5
Nov	53.9	50.1	50.6	47.7	59.7
Oct	53.8	51.0	52.0	48.8	59.9
Sep	54.0	49.5	49.8	47.3	60.9
Aug	54.4	50.0	52.2	48.3	61.2
Jul	54.2	50.7	53.4	49.5	61.5
Jun	55.0	50.7	56.0	50.8	60.4
May	55.5	52.7	54.5	49.0	60.7
Apr	54.8	50.8	52.4	49.4	61.5
Mar	54.5	50.8	52.8	49.5	61.5
Feb	55.0	51.4	52.1	49.0	59.9
Jan	53.4	50.9	54.5	50.1	58.1
Dec 2013	54.6	51.0	56.9	52.0	58.7
Nov	56.0	51.0	54.8	49.5	61.3
Oct	56.3	51.6	56.1	51.4	60.5
Sep	55.4	53.4	56.7	50.6	60.1
Aug	53.9	50.9	57.1	51.2	62.9
Jul	54.1	50.3	58.2	52.4	63.9
Jun	53.9	50.3	55.0	50.6	61.8
May	54.3	50.1	54.4	50.7	62.9
Apr	54.5	50.9	51.1	47.6	62.5
Mar	55.6	52.0	55.3	50.0	62.4
Feb	54.5	51.8	56.2	51.1	62.7
Jan	56.2	53.7	58.2	50.9	61.4
Dec 2012	56.1	54.3	53.8	50.0	64.6
Nov	55.6	53.2	52.5	48.4	64.6
Oct	55.5	51.6	58.1	50.5	63.4
Sep	53.7	51.8	57.5	51.3	60.9
Aug	56.3	52.7	57.6	51.2	63.2
Jul	55.6	53.2	49.7	48.7	63.9
Jun	56.7	53.7	52.1	48.6	65.5
May	55.2	52.5	53.6	48.5	65.4
Apr	56.1	52.7	57.9	50.3	66.1
Mar	58.0	53.5	60.2	52.0	66.6
Feb	57.3	52.7	59.0	51.2	63.8
Jan	55.7	52.2	58.2	51.1	65.3

Notes: Interm.: Intermediate; Subs: Subscription; Exp: Business Expectations

Source: National Bureau of Statistics of China

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

Chart CIPMNM provides China’s nonmanufacturing purchasing managers’ index. The index fell from 56.0 in Oct 2013 to 53.4 in Sep 2015.

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

Source: National Bureau of Statistics of China

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

Table CIPMMFG provides the index of purchasing managers of manufacturing seasonally adjusted of the National Bureau of Statistics of China. The general index (IPM) rose from 50.5 in Jan 2012 to 53.3 in Apr 2012, falling to 49.2 in Aug 2012, rebounding to 50.6 in Dec 2012. The index fell to 50.1 in Jun 2013, barely above the neutral frontier at 50.0, recovering to 51.4 in Nov 2013 but falling to 51.0 in Dec 2013. The index fell to 50.5 in Jan 2014, 50.1 in Dec 2014 and 49.8 in Sep 2015. The index of new orders fell from 54.5 in Apr 2012 to 51.2 in Dec 2012. The index of new orders fell from 52.3 in Nov 2013 to 52.0 in Dec 2013. The index fell to 50.9 in Jan 2014 and moved to 50.4 in Dec 2014. The index moved to 50.2 in Sep 2015.

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

	IPM	PI	NOI	INV	EMP	SDEL
2015
Sep	49.8	52.3	50.2	47.5	47.9	50.8
Aug	49.7	51.7	49.7	48.3	47.9	50.6
Jul	50.0	52.4	49.9	48.4	48.0	50.4
Jun	50.2	52.9	50.1	48.7	48.1	50.3
May	50.2	52.9	50.6	48.2	48.2	50.9
Apr	50.1	52.6	50.2	48.2	48.0	50.4
Mar	50.1	52.1	50.2	48.0	48.4	50.1
Feb	49.9	51.4	50.4	48.2	47.8	49.9
Jan	49.8	51.7	50.2	47.3	47.9	50.2
2014
Dec	50.1	52.2	50.4	47.5	48.1	49.9
Nov	50.3	52.5	50.9	47.7	48.2	50.3
Oct	50.8	53.1	51.6	48.4	48.4	50.1
Sep	51.1	53.6	52.2	48.8	48.2	50.1
Aug	51.1	53.2	52.5	48.6	48.2	50.0
Jul	51.7	54.2	53.6	49.0	48.3	50.2
Jun	51.0	53.0	52.8	48.0	48.6	50.5
May	50.8	52.8	52.3	48.0	48.2	50.3
Apr	50.4	52.5	51.2	48.1	48.3	50.1
Mar	50.3	52.7	50.6	47.8	48.3	49.8
Feb	50.2	52.6	50.5	47.4	48.0	49.9
Jan	50.5	53.0	50.9	47.8	48.2	49.8
Dec 2013	51.0	53.9	52.0	47.6	48.7	50.5
Nov	51.4	54.5	52.3	47.8	49.6	50.6
Oct	51.4	54.4	52.5	48.6	49.2	50.8
Sep	51.1	52.9	52.8	48.5	49.1	50.8
Aug	51.0	52.6	52.4	48.0	49.3	50.4
Jul	50.3	52.4	50.6	47.6	49.1	50.1
Jun	50.1	52.0	50.4	47.4	48.7	50.3
May	50.8	53.3	51.8	47.6	48.8	50.8
Apr	50.6	52.6	51.7	47.5	49.0	50.8
Mar	50.9	52.7	52.3	47.5	49.8	51.1
Feb	50.1	51.2	50.1	49.5	47.6	48.3
Jan	50.4	51.3	51.6	50.1	47.8	50.0
Dec 2012	50.6	52.0	51.2	47.3	49.0	48.8
Nov	50.6	52.5	51.2	47.9	48.7	49.9
Oct	50.2	52.1	50.4	47.3	49.2	50.1
Sep	49.8	51.3	49.8	47.0	48.9	49.5
Aug	49.2	50.9	48.7	45.1	49.1	50.0
Jul	50.1	51.8	49.0	48.5	49.5	49.0
Jun	50.2	52.0	49.2	48.2	49.7	49.1
May	50.4	52.9	49.8	45.1	50.5	49.0
Apr	53.3	57.2	54.5	48.5	51.0	49.6
Mar	53.1	55.2	55.1	49.5	51.0	48.9
Feb	51.0	53.8	51.0	48.8	49.5	50.3
Jan	50.5	53.6	50.4	49.7	47.1	49.7

IPM: Index of Purchasing Managers; PI: Production Index; NOI: New Orders Index; EMP: Employed Person Index; SDEL: Supplier Delivery Time Index

Source: National Bureau of Statistics of China

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

China estimates the manufacturing index of purchasing managers on the basis of a sample of 820 enterprises (http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm). Chart CIPMMFG provides the manufacturing index of purchasing managers. The index fell to 50.1 in Jun 2013. The index decreased from 51.4 in Nov 2013 to 51.0 in Dec 2013. The index moved to 49.8 in Sep 2015.

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

Source: National Bureau of Statistics of China

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

Growth of China’s GDP in IIIQ2015 relative to the same period in 2014 was 6.9 percent and cumulative growth to IIIQ2015 was 6.9 percent, as shown in Table VC-GDP. Secondary industry accounts for 40.6 percent of cumulative GDP in IIIQ2015. In cumulative IIIQ2015, industry accounts for 34.3 percent of GDP and construction for 6.4 percent. Tertiary industry accounts for 51.4 percent of cumulative GDP in IIIQ2015 and primary industry for 8.0 percent. China’s growth strategy consisted of rapid increases in productivity in industry to absorb population from agriculture where incomes are lower (Pelaez and Pelaez, The Global Recession Risk (2007), 56-80). The strategy is shifting to lower growth rates with improvement in living standards. The bottom block of Table VC-GDP provides quarter-on-quarter growth rates of GDP and their annual equivalent. China’s GDP growth decelerated significantly from annual equivalent 10.4 percent in IQ2011 to 6.1 percent in IVQ2011 and 7.4 percent in IQ2012, rebounding to 8.7 percent in IIQ2012, 7.4 percent in IIIQ2012 and 8.2 percent in IVQ2012. Annual equivalent growth in IQ2013 eased to 7.4 percent and to 7.4 percent in IIQ2013, rebounding to 8.7 percent in IIIQ2013. Annual equivalent growth was 7.0 percent in IVQ2013, declining to 6.6 percent in IQ2014 and increasing to 7.4 percent in IIQ2014. Annual equivalent growth slowed to 7.8 percent in IIIQ2014 and 7.0 percent in IVQ2014. Growth slowed to annual equivalent 5.3 percent in IQ2015, increasing to 7.4 percent in IIQ2015 and 7.4 percent in IIIQ2015.

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

Cumulative GDP IIQ2015	Value Current CNY Billion IIIQ2015	Value Current CNY Billion IQ2015 to IIIQ2015	IIIQ2015 Year-on-Year Constant Prices ∆%	Cumulative to IIIQ2015 ∆%
GDP	17,359.5	48,777.4	6.9	6.9
Primary Industry	1,808.5	3,919.5	4.1	3.8
Farming	1,864.4	4,050.5	4.3	3.9
Secondary Industry	6,980.1	19,779.9	5.8	6.0
Industry	5,756.0	16,713.4	5.8	5.9
Construction	1,253.1	3,132.7	5.8	6.5
Tertiary Industry	8,570.9	25,077.9	8.6	8.4
Transport, Storage, Post	794.5	2,247.5	4.7	4.7
Wholesale, Retail Trades	1,654.1	4,769.0	6.1	6.0
Accommodation and Restaurants	311.9	876.2	6.5	6.0
Finance	1,409.1	4,260.7	16.1	17.0
Real Estate	1,040.9	2,984.8	4.9	3.6
Other	3,275.5	9,724.7	9.5	9.0
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter		∆% Annual Equivalent
2015
IIIQ2015	1.8		7.4
IIQ2015	1.8		7.4
IQ2015	1.3		5.3
2014
IVQ2014	1.7		7.0
IIIQ2014	1.9		7.8
IIQ2014	1.8		7.4
IQ2014	1.6		6.6
2013
IVQ2013	1.7		7.0
IIIQ2013	2.1		8.7
IIQ2013	1.8		7.4
IQ2013	1.8		7.4
2012
IVQ2012	2.0		8.2
IIIQ2012	1.8		7.4
IIQ2012	2.1		8.7
IQ2012	1.8		7.4
2011
IVQ2011	1.5		6.1
IIIQ2011	1.9		7.8
IIQ2011	2.4		10.0
IQ2011	2.5		10.4

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

Cumulative growth of China’s GDP in IIIQ2015 relative to the same period in 2014 was 6.9 percent, as shown in Table VC-GDPA. Secondary industry accounts for 40.6 percent of cumulative GDP in IIIQ2015. In cumulative IIIQ2015, industry accounts for 34.3 percent of GDP and construction for 6.4 percent. Tertiary industry accounts for 51.4 percent of cumulative GDP in IIIQ2015 and primary industry for 8.0 percent. China’s growth strategy consisted of rapid increases in productivity in industry to absorb population from agriculture where incomes are lower (Pelaez and Pelaez, The Global Recession Risk (2007), 56-80). The strategy is shifting to lower growth rates with improvement in living standards. GDP growth decelerated from 12.1 percent in IQ2010 and 11.2 percent in IIQ2010 to 7.8 percent in IQ2013, 7.5 percent in IIQ2013 and 7.9 percent in IIIQ2013. GDP grew 7.6 percent in IVQ2013 relative to a year earlier and 1.7 percent relative to IIIQ2013, which is equivalent to 7.0 percent per year. GDP grew 7.3 percent in IQ2014 relative to a year earlier and 1.6 percent in IQ2014 that is equivalent to 6.6 percent per year. GP grew 7.4 percent in IIQ2014 relative to a year earlier and 1.8 percent relative to the prior quarter, which is annual equivalent 7.4 percent. In IIIQ2014, GDP grew 7.2 percent relative to a year earlier and 1.9 percent relative to the prior quarter, which is 7.8 percent in annual equivalent. GDP grew 1.7 percent in IVQ2014, which is 7.0 percent in annual equivalent and 7.2 percent relative to a year earlier. In IQ2015, GDP grew 1.3 percent, which is equivalent to 5.3 in a year and 7.0 percent relative to a year earlier. GDP grew 1.8 percent in IIQ2015, which is equivalent to 7.4 percent in a year, and grew 7.0 percent relative to a year earlier. GDP grew at 1.8 percent in IIIQ2015, which is equivalent to 7.4 percent in a year, and grew 6.9 percent relative to a year earlier.

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

	IQ2015	IIQQ2015	IIIQ2015
GDP	7.0	7.0	6.9
Primary Industry	3.2	3.5	3.8
Secondary Industry	6.4	6.1	6.0
Tertiary Industry	7.9	8.4	8.4
GDP ∆% Relative to a Prior Quarter	1.3	1.8	1.8
	IQ 2013	IIQ 2013	IIIQ 2013	IVQ 2013	IQ 2014	IIQ 2014	IIIQ 2014	IVQ 2014
GDP	7.8	7.5	7.9	7.6	7.3	7.4	7.2	7.2
Primary Industry	3.4	3.0	3.4	4.0	3.5	3.9	4.2	4.1
Secondary Industry	7.8	7.6	7.8	7.8	7.3	7.4	7.4	7.3
Tertiary Industry	8.3	8.3	8.4	8.3	7.1	8.0	7.9	8.1
GDP ∆% Relative to a Prior Quarter	1.8	1.8	2.1	1.7	1.6	1.8	1.9	1.7
	IQ 2011	IIQ 2011	IIIQ 2011	IVQ 2011	IQ  2012	IIQ 2012	IIIQ 2012	IVQ 2012
GDP	10.2	9.9	9.4	8.7	8.0	7.5	7.4	8.0
Primary Industry	3.5	3.2	3.8	4.5	3.8	4.3	4.2	4.5
Secondary Industry	11.1	11.0	10.8	10.6	9.1	8.3	8.1	8.1
Tertiary Industry	9.1	9.2	9.0	8.9	7.5	7.7	7.9	8.1
GDP ∆% Relative to a Prior Quarter	2.5	2.4	1.9	1.5	1.8	2.1	1.8	2.0
	IQ 2010	IIQ 2010	IIIQ 2010	IVQ 2010
GDP	12.1	11.2	10.7	12.1
Primary Industry	3.8	3.6	4.0	3.8
Secondary Industry	14.5	13.3	12.6	14.5
Tertiary Industry	10.5	9.9	9.7	10.5

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

Chart VC-GDP of the National Bureau of Statistics of China provides annual value and growth rates of GDP. China’s GDP growth in 2013 is still high at 7.7 percent but at the lowest rhythm in five years.

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

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

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

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

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

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

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

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

The Caixin Flash China General Manufacturing Purchasing Managers’ Index^™ (PMI^™) compiled by Markit (http://www.markiteconomics.com/Survey//PressRelease.mvc/883014a121534f51bc42e5060845f727) is mixed. The overall Flash Caixin China General Manufacturing PMI^™ decreased from 47.3 in Aug to 47.0 in Sep, while the Flash Caixin China General Manufacturing Output Index decreased from 46.4 in Aug to 45.7 in Aug, indicating weaker conditions. He Fan, Chief Economist at Caixin Insight Group finds need of fiscal and monetary policy (http://www.markiteconomics.com/Survey//PressRelease.mvc/883014a121534f51bc42e5060845f727). The Caixin China General Services PMI^™, compiled by Markit, shows the Caixin Composite Output, combining manufacturing and services, decreasing from 48.8 in Aug to 48.0 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/693fcbc797da4b1f988cbdcf24b124e2). He Fan, Chief Economist at Caixin Insight Group, finds growing employment in services (http://www.markiteconomics.com/Survey//PressRelease.mvc/693fcbc797da4b1f988cbdcf24b124e2). The Caixin General Manufacturing PMI^™ decreased to 47.2 in Sep from 47.3 in Aug, indicating moderate deterioration in manufacturing (http://www.markiteconomics.com/Survey//PressRelease.mvc/c97ccaadbdd3427ab0d727c8dd3c1494). He Fan, Chief Economist at Caixin Insight Group, finds weak demand (http://www.markiteconomics.com/Survey//PressRelease.mvc/c97ccaadbdd3427ab0d727c8dd3c1494). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Sep 12-month ∆%: minus 5.9 Sep month ∆%: -0.4 Blog 10/18/15
Consumer Price Index	Sep 12-month ∆%: 1.6 Sep month ∆%: 0.1 Blog 10/18/15
Value Added of Industry	Sep month ∆%: 0.38 Jan-Sep 2015/Jan-Sep 2014 ∆%: 6.2 Earlier Data Blog 4/19/15
GDP Growth Rate	Year IIIQ2015 ∆%: 6.9 Third Quarter 2015 ∆%: 1.8 Quarter IIIQ2015 AE ∆%: 7.4 Blog 10/25/15
Investment in Fixed Assets	Total Jan-Sep 2015 ∆%: 10.3 Real estate development: 2.6 Earlier Data: Blog 4/19/15
Retail Sales	Sep month ∆%: 0.87 Jan-Sep 12 month ∆%: NA : 10.5 Earlier Data: Blog 4/19/15
Trade Balance	Sep balance $60.34 billion Exports 12M ∆% -3.7 Imports 12M ∆% -20.4 Cumulative Sep 2015: $427.31 billion Earlier Data: Blog 4/19/15

Links to blog comments in Table CNY: 10/18/15 http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html

9/13/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what_13.html

08/16/15 http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.html

7/26/15 http://cmpassocregulationblog.blogspot.com/2015/07/valuation-of-risk-financial-assets.html

7/12/2015 http://cmpassocregulationblog.blogspot.com/2015/07/oscillating-valuations-of-risk.html

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

Growth of China’s GDP in IIIQ2015 relative to the same period in 2014 was 6.9 percent and cumulative growth to IIIQ2015 was 6.9 percent, as shown in Table VC-1. Secondary industry accounts for 40.6 percent of cumulative GDP in IIIQ2015. In cumulative IIIQ2015, industry accounts for 34.3 percent of GDP and construction for 6.4 percent. Tertiary industry accounts for 51.4 percent of cumulative GDP in IIIQ2015 and primary industry for 8.0 percent. China’s growth strategy consisted of rapid increases in productivity in industry to absorb population from agriculture where incomes are lower (Pelaez and Pelaez, The Global Recession Risk (2007), 56-80). The strategy is shifting to lower growth rates with improvement in living standards. The bottom block of Table VC-1 provides quarter-on-quarter growth rates of GDP and their annual equivalent. China’s GDP growth decelerated significantly from annual equivalent 10.4 percent in IQ2011 to 6.1 percent in IVQ2011 and 7.4 percent in IQ2012, rebounding to 8.7 percent in IIQ2012, 7.4 percent in IIIQ2012 and 8.2 percent in IVQ2012. Annual equivalent growth in IQ2013 eased to 7.4 percent and to 7.4 percent in IIQ2013, rebounding to 8.7 percent in IIIQ2013. Annual equivalent growth was 7.0 percent in IVQ2013, declining to 6.6 percent in IQ2014 and increasing to 7.4 percent in IIQ2014. Annual equivalent growth slowed to 7.8 percent in IIIQ2014 and 7.0 percent in IVQ2014. Growth slowed to annual equivalent 5.3 percent in IQ2015, increasing to 7.4 percent in IIQ2015 and 7.4 percent in IIIQ2015.

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

Cumulative GDP IIQ2015	Value Current CNY Billion IIIQ2015	Value Current CNY Billion IQ2015 to IIIQ2015	IIIQ2015 Year-on-Year Constant Prices ∆%	Cumulative to IIIQ2015 ∆%
GDP	17,359.5	48,777.4	6.9	6.9
Primary Industry	1,808.5	3,919.5	4.1	3.8
Farming	1,864.4	4,050.5	4.3	3.9
Secondary Industry	6,980.1	19,779.9	5.8	6.0
Industry	5,756.0	16,713.4	5.8	5.9
Construction	1,253.1	3,132.7	5.8	6.5
Tertiary Industry	8,570.9	25,077.9	8.6	8.4
Transport, Storage, Post	794.5	2,247.5	4.7	4.7
Wholesale, Retail Trades	1,654.1	4,769.0	6.1	6.0
Accommodation and Restaurants	311.9	876.2	6.5	6.0
Finance	1,409.1	4,260.7	16.1	17.0
Real Estate	1,040.9	2,984.8	4.9	3.6
Other	3,275.5	9,724.7	9.5	9.0
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter		∆% Annual Equivalent
2015
IIIQ2015	1.8		7.4
IIQ2015	1.8		7.4
IQ2015	1.3		5.3
2014
IVQ2014	1.7		7.0
IIIQ2014	1.9		7.8
IIQ2014	1.8		7.4
IQ2014	1.6		6.6
2013
IVQ2013	1.7		7.0
IIIQ2013	2.1		8.7
IIQ2013	1.8		7.4
IQ2013	1.8		7.4
2012
IVQ2012	2.0		8.2
IIIQ2012	1.8		7.4
IIQ2012	2.1		8.7
IQ2012	1.8		7.4
2011
IVQ2011	1.5		6.1
IIIQ2011	1.9		7.8
IIQ2011	2.4		10.0
IQ2011	2.5		10.4

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

Cumulative growth of China’s GDP in IIIQ2015 relative to the same period in 2014 was 6.9 percent, as shown in Table VC-2. Secondary industry accounts for 40.6 percent of cumulative GDP in IIIQ2015. In cumulative IIIQ2015, industry accounts for 34.3 percent of GDP and construction for 6.4 percent. Tertiary industry accounts for 51.4 percent of cumulative GDP in IIIQ2015 and primary industry for 8.0 percent. China’s growth strategy consisted of rapid increases in productivity in industry to absorb population from agriculture where incomes are lower (Pelaez and Pelaez, The Global Recession Risk (2007), 56-80). The strategy is shifting to lower growth rates with improvement in living standards. GDP growth decelerated from 12.1 percent in IQ2010 and 11.2 percent in IIQ2010 to 7.8 percent in IQ2013, 7.5 percent in IIQ2013 and 7.9 percent in IIIQ2013. GDP grew 7.6 percent in IVQ2013 relative to a year earlier and 1.7 percent relative to IIIQ2013, which is equivalent to 7.0 percent per year. GDP grew 7.3 percent in IQ2014 relative to a year earlier and 1.6 percent in IQ2014 that is equivalent to 6.6 percent per year. GP grew 7.4 percent in IIQ2014 relative to a year earlier and 1.8 percent relative to the prior quarter, which is annual equivalent 7.4 percent. In IIIQ2014, GDP grew 7.2 percent relative to a year earlier and 1.9 percent relative to the prior quarter, which is 7.8 percent in annual equivalent. GDP grew 1.7 percent in IVQ2014, which is 7.0 percent in annual equivalent and 7.2 percent relative to a year earlier. In IQ2015, GDP grew 1.3 percent, which is equivalent to 5.3 in a year and 7.0 percent relative to a year earlier. GDP grew 1.8 percent in IIQ2015, which is equivalent to 7.4 percent in a year, and grew 7.0 percent relative to a year earlier. GDP grew at 1.8 percent in IIIQ2015, which is equivalent to 7.4 percent in a year, and grew 6.9 percent relative to a year earlier.

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

	IQ2015	IIQQ2015	IIIQ2015
GDP	7.0	7.0	6.9
Primary Industry	3.2	3.5	3.8
Secondary Industry	6.4	6.1	6.0
Tertiary Industry	7.9	8.4	8.4
GDP ∆% Relative to a Prior Quarter	1.3	1.8	1.8
	IQ 2013	IIQ 2013	IIIQ 2013	IVQ 2013	IQ 2014	IIQ 2014	IIIQ 2014	IVQ 2014
GDP	7.8	7.5	7.9	7.6	7.3	7.4	7.2	7.2
Primary Industry	3.4	3.0	3.4	4.0	3.5	3.9	4.2	4.1
Secondary Industry	7.8	7.6	7.8	7.8	7.3	7.4	7.4	7.3
Tertiary Industry	8.3	8.3	8.4	8.3	7.1	8.0	7.9	8.1
GDP ∆% Relative to a Prior Quarter	1.8	1.8	2.1	1.7	1.6	1.8	1.9	1.7
	IQ 2011	IIQ 2011	IIIQ 2011	IVQ 2011	IQ  2012	IIQ 2012	IIIQ 2012	IVQ 2012
GDP	10.2	9.9	9.4	8.7	8.0	7.5	7.4	8.0
Primary Industry	3.5	3.2	3.8	4.5	3.8	4.3	4.2	4.5
Secondary Industry	11.1	11.0	10.8	10.6	9.1	8.3	8.1	8.1
Tertiary Industry	9.1	9.2	9.0	8.9	7.5	7.7	7.9	8.1
GDP ∆% Relative to a Prior Quarter	2.5	2.4	1.9	1.5	1.8	2.1	1.8	2.0
	IQ 2010	IIQ 2010	IIIQ 2010	IVQ 2010
GDP	12.1	11.2	10.7	12.1
Primary Industry	3.8	3.6	4.0	3.8
Secondary Industry	14.5	13.3	12.6	14.5
Tertiary Industry	10.5	9.9	9.7	10.5

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

VD Euro Area. Using calendar and seasonally adjusted data (http://ec.europa.eu/eurostat), the GDP of the euro area (18 countries) fell 5.8 percent from the high pre-recession date on IQ2008 to the trough in IIQ2009 while the GDP of the euro area (19 countries) fell 5.8 percent. The GDP of the euro area (18 countries) increased 4.5 percent from IIIQ2009 to IQ2015 at the annual equivalent rate of 0.8 percent while that of the euro area (19 countries) increased 4.5 percent at the annual equivalent rate of 0.8 percent. The GDP of the euro area (18) countries in IQ2015 is lower by 1.5 percent relative to the pre-recession peak in IQ2008 and that of the euro area (19 countries) is lower by 1.5 percent relative to the pre-recession peak in IQ2008. The GDP of the euro area (18) countries increased at the average yearly rate of 2.3 percent from IQ1999 to IQ2008 while that of the euro area (19 countries) increased at 2.3 percent. Table VD-EUR provides yearly growth rates of the combined GDP of the members of the European Monetary Union (EMU) or euro area since 1999. Growth was very strong at 3.3 percent in 2006 and 3.1 percent in 2007. The global recession had strong impact with growth of only 0.5 percent in 2008 and decline of 4.5 percent in 2009. Recovery was at lower growth rates of 2.0 percent in 2010 and 1.6 percent in 2011. EUROSTAT estimates growth of GDP of the euro area of minus 0.8 percent in 2012 and minus 0.4 percent in 2013 but 0.9 percent in 2014.

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

Year	HICP ∆%	Unemployment %	GDP ∆%
1999	1.2	9.7	2.9
2000	2.2	8.9	3.8
2001	2.4	8.3	2.1
2002	2.3	8.6	0.9
2003	2.1	9.1	0.7
2004	2.2	9.3	2.2
2005	2.2	9.1	1.7
2006	2.2	8.4	3.3
2007	2.2	7.5	3.1
2008	3.3	7.6	0.5
2009	0.3	9.6	-4.5
2010	1.6	10.2	2.0
2011	2.7	10.2	1.6
2012	2.5	11.4	-0.8
2013	1.3	12.0	-0.4
2014	0.4	11.6	0.9

http://ec.europa.eu/eurostat

http://ec.europa.eu/eurostat/data/database

The GDP of the euro area in 2013 in current US dollars in the dataset of the World Economic Outlook (WEO) of the International Monetary Fund (IMF) is $12,753.7 billion or 17.1 percent of world GDP of $74,699.3 billion (http://www.imf.org/external/pubs/ft/weo/2014/02/weodata/weoselgr.aspx). The sum of the GDP of France $2807.3 billion with the GDP of Germany of $3635.9 billion, Italy of $2071.9 billion and Spain $1358.7 billion is $9873.8 billion or 77.4 percent of total euro area GDP and 13.2 percent of World GDP. The four largest economies account for slightly more than three quarters of economic activity of the euro area. Table VD-EUR1 is constructed with the dataset of EUROSTAT, providing growth rates of the euro area as a whole and of the largest four economies of Germany, France, Italy and Spain annually from 1996 to 2014. The impact of the global recession on the overall euro area economy and on the four largest economies was quite strong. There was sharp contraction in 2009 and growth rates have not rebounded to earlier growth with exception of Germany in 2010 and 2011.

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

	Euro Area	Germany	France	Italy	Spain
2014	0.8	1.6	0.2	-0.4	1.4
2013	-0.4	0.1	0.7	-1.7	-1.2
2012	-0.8	0.4	0.2	-2.8	-2.1
2011	1.6	3.6	2.1	0.6	-0.6
2010	2.0	4.1	2.0	1.7	0.0
2009	-4.5	-5.6	-2.9	-5.5	-3.6
2008	0.5	1.1	0.2	-1.0	1.1
2007	3.1	3.3	2.4	1.5	3.8
2006	3.3	3.7	2.4	2.0	4.2
2005	1.7	0.7	1.6	0.9	3.7
2004	2.2	1.2	2.8	1.6	3.2
2003	0.7	-0.7	0.8	0.2	3.2
2002	0.9	0.0	1.1	0.3	2.9
2001	2.1	1.7	2.0	1.8	4.0
2000	3.8	3.0	3.9	3.7	5.3
1999	2.9	2.0	3.4	1.6	4.5
1998	2.9	2.0	3.6	1.4	4.3
Average 1999-2014	1.1	1.2	1.6	1.3	2.4
1997	2.6	1.8	2.3	1.8	3.7
1996	1.6	0.8	1.4	1.3	2.7

Source: EUROSTAT

http://ec.europa.eu/eurostat

http://ec.europa.eu/eurostat/data/database

The Flash Eurozone PMI Composite Output Index of the Markit Flash Eurozone PMI^®, combining activity in manufacturing and services, increased from 53.6 in Sep to 54.0 in Oct (http://www.markiteconomics.com/Survey//PressRelease.mvc/15625dacfd3049aab66acd889bce4b89). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index suggests GDP quarterly growth at around 0.4 percent and 1.5 percent in the year (http://www.markiteconomics.com/Survey//PressRelease.mvc/15625dacfd3049aab66acd889bce4b89). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP decreased from 54.3 in Aug to 53.6 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/e658596a65b94cdf9bbbd48b5f222991). Chris Williamson, Chief Economist at Markit, finds potential for growth of 0.4 percent in IIIQ2015 (http://www.markiteconomics.com/Survey//PressRelease.mvc/e658596a65b94cdf9bbbd48b5f222991). The Markit Eurozone Services Business Activity Index decreased from 54.4 in Aug to 53.7 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/e658596a65b94cdf9bbbd48b5f222991). The Markit Eurozone Manufacturing PMI^® decreased from 52.3 in Aug to 52.0 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/2fd7f87cb6274622ac52d4b861cabc33). New export orders increased. Chris Williamson, Chief Economist at Markit, finds weak industrial growth in the euro area (http://www.markiteconomics.com/Survey//PressRelease.mvc/2fd7f87cb6274622ac52d4b861cabc33). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IIQ2015 ∆% 0.4; IIQ2015/IIQ2014 ∆% 1.5 Blog 9/13/15
Unemployment	Aug 2015: 11.0 % unemployment rate; Aug 2015: 17.603 million unemployed Blog 10/4/15
HICP	Sep month ∆%: 0.2 12 months Sep ∆%: -0.1 Blog 10/18/15
Producer Prices	Euro Zone industrial producer prices Aug ∆%: -0.8 Aug 12-month ∆%: -2.6 Blog 10/4/15
Industrial Production	Aug Month ∆%: -0.5; 12 months ∆%: 0.9 Earlier Data: Blog 4/19/15
Retail Sales	Aug month ∆%: 0.0 Aug 12 months ∆%: 2.3 Earlier Data: Blog 3/15/15
Confidence and Economic Sentiment Indicator	Sentiment 105.6 Sep 2015 Consumer minus 7.1 Sep 2015 Earlier Data: Blog 4/5/15
Trade	Jan-Aug 2015/Jan-Aug 2014 Exports ∆%: 6.5 Imports ∆%: 2.5 Aug 2015 12-month Exports ∆% 5.6 Imports ∆% 3.0 Earlier Data: Blog 4/19/15

Links to blog comments in Table EUR: 10/18/15 http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html

10/4/15 http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html

9/20/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-increase-on-hold-because.html

9/13/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what_13.html

9/6/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html

08/16/15 http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.html

08/9/15 http://cmpassocregulationblog.blogspot.com/2015/08/fluctuating-risk-financial-assets.html

08/02/15 http://cmpassocregulationblog.blogspot.com/2015/08/turbulence-of-valuations-of-financial.html

7/19/2015 http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html

6/14/15 http://cmpassocregulationblog.blogspot.com/2015/06/volatility-of-financial-asset.html

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

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

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

VE Germany. Table VE-DE provides yearly growth rates of the German economy from 1971 to 2014, price adjusted chain-linked and price and calendar-adjusted chain-linked. Germany’s GDP fell 5.6 percent in 2009 after growing below trend at 1.1 percent in 2008. Recovery has been robust in contrast with other advanced economies. The German economy grew at 4.1 percent in 2010, 3.6 percent in 2011 and 0.4 percent in 2012. Growth decelerated to 0.1 percent in 2013, increasing to 1.6 percent in 2014.

The Federal Statistical Agency of Germany analyzes the fall and recovery of the German economy (http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/Content/Statistics/VolkswirtschaftlicheGesamtrechnungen/Inlandsprodukt/Aktuell,templateId=renderPrint.psml):

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

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

	Price Adjusted Chain-Linked	Price- and Calendar-Adjusted Chain Linked
Average ∆% 1991-2014	1.3
Average ∆% 1991-1999	1.5
Average ∆% 2000-2007	1.4
Average ∆% 2003-2007	2.2
Average ∆% 2007-2014	0.7
Average ∆% 2009-2014	2.0
2014	1.6	1.6
2013	0.3	0.4
2012	0.4	0.6
2011	3.7	3.7
2010	4.1	3.9
2009	-5.6	-5.6
2008	1.1	0.8
2007	3.3	3.4
2006	3.7	3.9
2005	0.7	0.9
2004	1.2	0.7
2003	-0.7	-0.7
2002	0.0	0.0
2001	1.7	1.8
2000	3.0	3.2
1999	2.0	1.9
1998	2.0	1.8
1997	1.8	1.9
1996	0.8	0.9
1995	1.7	1.8
1994	2.5	2.5
1993	-1.0	-1.0
1992	1.9	1.5
1991	5.1	5.2
1990	5.3	5.5
1989	3.9	4.0
1988	3.7	3.4
1987	1.4	1.3
1986	2.3	2.3
1985	2.3	2.6
1984	2.8	2.9
1983	1.6	1.5
1982	-0.4	-0.5
1981	0.5	0.6
1980	1.4	1.3
1979	4.2	4.3
1978	3.0	3.1
1977	3.3	3.5
1976	4.9	4.5
1975	-0.9	-0.9
1974	0.9	1.0
1973	4.8	5.0
1972	4.3	4.3
1971	3.1	3.0
1970	NA	NA

Source: Statistisches Bundesamt Deutschland (Destatis)

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

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

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

https://www.destatis.de/EN/PressServices/Press/pr/2014/02/PE14_048_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2013/08/PE13_278_811.html https://www.destatis.de/EN/PressServices/Press/pr/2013/11/PE13_381_811.html

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

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

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

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

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

https://www.destatis.de/EN/PressServices/Press/pr/2015/02/PE15_048_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2015/02/PE15_61_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2015/05/PE15_173_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2015/05/PE15_187_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2015/08/PE15_293_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2015/08/PE15_305_811.html

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

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, increased from 54.1 in Sep to 54.5 in Oct. The index of manufacturing output reached 53.2 in Oct, decreasing from 54.0 in Sep, while the index of services increased to 55.2 in Oct from 54.1 in Sep. The overall Flash Germany Manufacturing PMI^® decreased from 52.3 in Sep to 51.6 in Oct (http://www.markiteconomics.com/Survey//PressRelease.mvc/7411230c04a244f6bce7b3b883930899). New orders in manufacturing softened. Oliver Kolodseike, Economist at Markit, finds continuing improvement of the services sector of Germany (http://www.markiteconomics.com/Survey//PressRelease.mvc/7411230c04a244f6bce7b3b883930899). The Markit Germany Composite Output Index of the Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, decreased from 55.0 in Aug to 54.1 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/e3c9f42351474a7d8c31bd2788f624c0). Oliver Kolodseike, Economist at Markit and author of the report, finds continuing growth of the private sector of Germany (http://www.markiteconomics.com/Survey//PressRelease.mvc/e3c9f42351474a7d8c31bd2788f624c0). The Germany Services Business Activity Index decreased from 54.9 in Aug to 54.1 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/e3c9f42351474a7d8c31bd2788f624c0). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, decreased from 53.3 in Aug to 52.3 in

Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/c3c4b90d76c64124b587f847dafb07fb). New export orders increased. Oliver Kolodseike, Senior Economist at Markit and author of the report, finds contribution of manufacturing to GDP growth in IIIQ2015 (http://www.markiteconomics.com/Survey//PressRelease.mvc/c3c4b90d76c64124b587f847dafb07fb).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IIQ2015 0.4 ∆%; IIQ2015/IIQ2014 ∆% 1.6 2014/2013: 1.6% GDP ∆% 1970-2014 Blog 8/26/12 5/27/12 11/25/12 2/24/13 5/19/13 5/26/13 8/18/13 8/25/13 11/17/13 11/24/13 1/26/14 2/16/14 3/2/14 5/18/14 5/25/14 8/17/14 9/7/14 11/16/14 11/30/14 2/15/15 3/1/15 5/17/15 5/24/15 8/16/15 8/30/15
Consumer Price Index	Sep month NSA ∆%: -0.2 Sep 12-month NSA ∆%: 0.0 Blog 10/18/15
Producer Price Index	Sep month ∆%: -0.4 NSA, minus 0.4 CSA 12-month NSA ∆%: -2.1 Blog 10/25/15
Industrial Production	MFG Aug month CSA ∆%: minus 1.1 12-month NSA: 2.9 Earlier Data: Blog 4/12/15
Machine Orders	MFG Aug month ∆%: -1.8 Aug12-month ∆%: 2.3 Earlier Data: Blog 4/12/15
Retail Sales	Aug Month ∆% -0.4 Jul 1.6 12-Month Aug % 2.5 Jul 3.8 Earlier Data: Blog 4/5/15
Employment Report	Unemployment Rate SA Jul 4.5% Blog 10/4/15
Trade Balance	Exports Aug 12-month NSA ∆%: 5.0 Imports Aug 12 months NSA ∆%: 4.0 Exports Aug month CSA ∆%: minus 5.2; Imports Aug month CSA minus 3.1 Earlier Data: Blog 4/12/15

Links to blog comments in Table DE: 10/18/15 http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html

10/4/15 http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html

9/27/15 http://cmpassocregulationblog.blogspot.com/2015/09/monetary-policy-designed-on-measurable.html

9/13/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what_13.html

9/6/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html

08/30/15 http://cmpassocregulationblog.blogspot.com/2015/08/fluctuations-of-global-financial.html

08/23/15 http://cmpassocregulationblog.blogspot.com/2015/08/global-decline-of-values-of-financial.html

08/16/15 http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.html

08/02/15 http://cmpassocregulationblog.blogspot.com/2015/08/turbulence-of-valuations-of-financial.html

7/26/15 http://cmpassocregulationblog.blogspot.com/2015/07/valuation-of-risk-financial-assets.html

7/19/2015 http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html

5/24/15 http://cmpassocregulationblog.blogspot.com/2015/05/interest-rate-policy-and-dollar.html

5/17/15 http://cmpassocregulationblog.blogspot.com/2015/05/fluctuating-valuations-of-financial.html

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

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

2/15/15 http://cmpassocregulationblog.blogspot.com/2015/02/g20-monetary-policy-recovery-without.html

11/30/14 http://cmpassocregulationblog.blogspot.com/2014/11/valuations-of-risk-financial-assets.html

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

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

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

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

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

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

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

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

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

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

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

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

VF France. Table VF-FR provides growth rates of GDP of France with the estimates of Institut National de la Statistique et des Études Économiques (INSEE). The long-term rate of GDP growth of France from IVQ1949 to IVQ2014 is quite high at 3.2 percent. France’s growth rates were quite high in the four decades of the 1950s, 1960, 1970s and 1980s with an average growth rate of 4.0 percent compounding the average rates in the decades and discounting to one decade. The growth impulse diminished with 2.0 percent in the 1990s and 1.8 percent from 2000 to 2007. The average growth rate from 2000 to 2014, using fourth quarter data, is 1.0 percent because of the sharp impact of the global recession from IVQ2007 to IIQ2009. Cobet and Wilson (2002) provide estimates of output per hour and unit labor costs in national currency and US dollars for the US, Japan and Germany from 1950 to 2000 (see Pelaez and Pelaez, The Global Recession Risk (2007), 137-44). The average yearly rate of productivity change from 1950 to 2000 was 2.9 percent in the US, 6.3 percent for Japan and 4.7 percent for Germany while unit labor costs in USD increased at 2.6 percent in the US, 4.7 percent in Japan and 4.3 percent in Germany. From 1995 to 2000, output per hour increased at the average yearly rate of 4.6 percent in the US, 3.9 percent in Japan and 2.6 percent in Germany while unit labor costs in US fell at minus 0.7 percent in the US, 4.3 percent in Japan and 7.5 percent in Germany. There was increase in productivity growth in the G7 in Japan and France in the second half of the 1990s but significantly lower than the acceleration of 1.3 percentage points per year in the US. Lucas (2011May) compares growth of the G7 economies (US, UK, Japan, Germany, France, Italy and Canada) and Spain, finding that catch-up growth with earlier rates for the US and UK stalled in the 1970s.

Table VF-FR, France, Average Growth Rates of GDP Fourth Quarter, 1949-2014

Period	Average ∆%
1949-2014	3.2
2007-2015*	0.3
2007-2014	0.3
2000-2014	1.0
2000-2013	1.1
2000-2007	1.8
1990-1999	2.0
1980-1989	2.6
1970-1979	3.7
1960-1969	5.7
1950-1959	4.2

*IVQ2007 to IIQ2015

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=28&date=20150923

The Markit Flash France Composite Output Index increased from 51.9 in Sep to 52.3 in Oct (http://www.markiteconomics.com/Survey//PressRelease.mvc/bf249dafd15843c0809ddb3951df60e4) Jack Kennedy, Senior Economist at Markit and author of the report, finds moderate growth (http://www.markiteconomics.com/Survey//PressRelease.mvc/bf249dafd15843c0809ddb3951df60e4). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, increased from 50.2 in Aug to 51.9 in Sep, indicating expansion at faster pace (http://www.markiteconomics.com/Survey//PressRelease.mvc/36c366e53dbb4da09fc3dbe710e4b56c). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds improving data on business activity (http://www.markiteconomics.com/Survey//PressRelease.mvc/36c366e53dbb4da09fc3dbe710e4b56c). The Markit France Services Activity index increased from 50.6 in Aug to 51.9 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/36c366e53dbb4da09fc3dbe710e4b56c). The Markit France Manufacturing Purchasing Managers’ Index^® increased to 50.6 in Sep from 48.3 in Aug (http://www.markiteconomics.com/Survey//PressRelease.mvc/91e3cff38b2a42d7b39d2e163218fbc3). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds improving manufacturing (http://www.markiteconomics.com/Survey//PressRelease.mvc/91e3cff38b2a42d7b39d2e163218fbc3). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Sep month ∆% -0.4 12 months ∆%: 0.0 10/18/15
PPI	Aug month ∆%: -1.0 Aug 12 months ∆%: -2.0 Blog 10/4/15
GDP Growth	IIQ2015/IQ2015 ∆%: 0.0 IIQ2015/IIQ2014 ∆%: 1.1 Blog 3/31/13 5/19/12 6/30/13 9/29/13 11/17/13 12/29/13 2/16/14 4/6/14 5/18/14 6/29/14 8/17/14 9/28/14 11/16/14 12/28/14 2/15/15 3/29/15 5/17/15 6/28/15 8/16/15 9/27/15
Industrial Production	Aug ∆%: Manufacturing 2.2 12-Month ∆%: 0.5 Earlier Data: Blog 4/12/15
Consumer Spending	Manufactured Goods Aug ∆%: 0.3 Aug 12-Month Manufactured Goods ∆%: 2.2 Earlier Data: Blog 4/5/15
Employment	Unemployment Rate: IIQ2015 10.0% Blog 9/6/15
Trade Balance	Aug Exports ∆%: month -3.0, 12 months 3.9 Imports ∆%: month -3.2, 12 months -2.2 Earlier Data: Blog 4/12/15
Confidence Indicators	Historical average 100 Oct Mfg Business Climate 103.0 Earlier Data: Blog 3/29/15

Links to blog comments in Table FR: 10/18/15 http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html

10/4/15 http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html

9/27/15 http://cmpassocregulationblog.blogspot.com/2015/09/monetary-policy-designed-on-measurable.html

9/20/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-increase-on-hold-because.html

9/6/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html

08/16/15 http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.html

08/02/15 http://cmpassocregulationblog.blogspot.com/2015/08/turbulence-of-valuations-of-financial.html

7/19/2015 http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html

6/28/2015 http://cmpassocregulationblog.blogspot.com/2015/06/international-valuations-of-financial.html

6/7/15 http://cmpassocregulationblog.blogspot.com/2015/06/higher-volatility-of-asset-prices-at.html

5/17/15 http://cmpassocregulationblog.blogspot.com/2015/05/fluctuating-valuations-of-financial.html

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

2/15/15 http://cmpassocregulationblog.blogspot.com/2015/02/g20-monetary-policy-recovery-without.html

12/28/14 http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html

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

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

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

6/29/14 http://cmpassocregulationblog.blogspot.com/2014/06/financial-indecision-mediocre-cyclical.html

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

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

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

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

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

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

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

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

VG Italy. Table VG-IT provides revised percentage changes of GDP in Italy of quarter on prior quarter and quarter on same quarter a year earlier. In IIQ2015, GDP increased 0.3 percent and increased 0.7 percent relative to a year earlier. GDP increased 0.4 percent in IQ2015 and increased 0.1 percent relative to a year earlier. GDP changed 0.0 percent in IVQ2014 and fell 0.4 percent relative to a year earlier. GDP fell 0.1 percent in IIIQ2014 and fell 0.5 percent relative to a year earlier. Italy’s GDP fell 0.2 percent in IIQ2014 and declined 0.3 percent relative to a year earlier. The GDP of Italy decreased 0.2 percent in IQ2014 and fell 0.2 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IVQ2013 and fell 0.9 percent relative to a year earlier. The GDP of Italy increased 0.1 percent in IIIQ2013 and fell 1.4 percent relative to a year earlier. Italy’s GDP decreased 0.1 percent in IIQ2013, continuing seven consecutive quarterly declines, and fell 2.0 percent relative to a year earlier. Italy’s GDP fell 0.9 percent in IQ2013 and declined 2.5 percent relative to IQ2012. GDP had been growing during six consecutive quarters but at very low rates from IQ2010 to IIQ2011. Italy’s GDP fell in eight consecutive quarters from IIIQ2011 to IIQ2013 at increasingly higher rates of contraction from 0.5 percent in IIIQ2011 to 1.0 percent in IVQ2011, 1.0 percent in IQ2012, 0.7 percent in IIQ2012 and 0.5 percent in IIIQ2012. The pace of decline accelerated to minus 0.5 percent in IVQ2012 and minus 0.9 percent in IQ2013. GDP contracted cumulatively 5.1 percent in eight consecutive quarterly contractions from IIIQ2011 to IIQ2013 at the annual equivalent rate of minus 2.6 percent. The total contraction in the 12 quarters including IQ2014, IIQ2014 and IIIQ2014 accumulates to 5.6 percent. The yearly rate has fallen from 2.3 percent in IVQ2010 to minus 2.6 percent in IVQ2012, minus 2.5 percent in IQ2013, minus 2.0 percent in IIQ2013 and minus 1.4 percent in IIIQ2013. GDP fell 0.9 percent in IVQ2013 relative to a year earlier. GDP fell 0.2 percent in IQ2014 relative to a year earlier and fell 0.3 percent in IIQ2014 relative to a year earlier. GDP fell 0.5 percent in IIIQ2014 relative to a year earlier and fell 0.4 percent in IVQ2014 relative to a year earlier. GDP increased 0.1 percent in IQ2015 relative to a year earlier and increased 0.5 percent in IIQ2015 relative to a year earlier. Using seasonally and calendar adjusted data in the dataset of EUROSTAT (http://ec.europa.eu/eurostat), the GDP of Italy in IQ2015 is lower by 9.3 percent relative to IQ2008. The fiscal adjustment of Italy is significantly more difficult with the economy not growing especially on the prospects of increasing government revenue. The strategy is for reforms to improve productivity, facilitating future fiscal consolidation.

Table VG-IT, Italy, GDP ∆%

	Quarter ∆% Relative to Preceding Quarter	Quarter ∆% Relative to Same Quarter Year Earlier
IIQ2015	0.3	0.7
IQ2015	0.4	0.1
IVQ2014	0.0	-0.4
IIIQ2014	-0.1	-0.5
IIQ2014	-0.2	-0.3
IQ2014	-0.2	-0.2
IVQ2013	0.0	-0.9
IIIQ2013	0.1	-1.4
IIQ2013	-0.1	-2.0
IQ2013	-0.9	-2.5
IVQ2012	-0.5	-2.6
IIIQ2012	-0.5	-3.1
IIQ2012	-0.7	-3.1
IQ2012	-1.0	-2.3
IVQ2011	-1.0	-1.0
IIIQ2011	-0.5	0.4
IIQ2011	0.2	1.4
IQ2011	0.3	2.0
IVQ2010	0.4	2.3
IIIQ2010	0.5	1.8
IIQ2010	0.7	1.9
IQ2010	0.5	0.7
IVQ2009	-0.1	-3.5
IIIQ2009	0.4	-5.0
IIQ2009	-0.3	-6.6
IQ2009	-3.5	-6.9
IVQ2008	-1.6	-3.0
IIIQ2008	-1.3	-1.9
IIQ2008	-0.5	-0.2
IQ2008	0.5	0.5
IV2007	-0.4	0.1
IIIQ2007	0.3	1.7
IIQ2007	0.2	2.0
IQ2007	0.0	2.4

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/167323

The Markit/ADACI Business Activity Index decreased from 54.6 in Aug to 53.3 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/02e14e7ad05b464881dfebf56a14b002). Phil Smith, Economist at Markit and author of the Italy Services PMI^®, finds expansion of private sector activity (http://www.markiteconomics.com/Survey//PressRelease.mvc/f12aaae895d74c27ae029a3a705da4e3). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), decreased from 53.8 in Aug to 52.7 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/a098aed8a04042afb398e544f729cd3c). New export orders continued to increase. Phil Smith, Economist at Markit and author of the Italian Manufacturing PMI^®, finds growth in manufacturing (http://www.markiteconomics.com/Survey//PressRelease.mvc/a098aed8a04042afb398e544f729cd3c). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Sep month ∆%: -0.4 Sep 12-month ∆%: 0.2 Blog 10/18/15
Producer Price Index	Aug month ∆%: -0.7 Aug 12-month ∆%: -3.6 Blog 10/4/15
GDP Growth	IIQ2015/IQ2015 SA ∆%: 0.3 IIQ2015/IIQ2014 NSA ∆%: 0.7 Blog 3/17/13 6/16/13 8/11/13 9/15/13 11/17/13 12/15/13 2/16/14 3/16/14 5/18/14 6/15/14 8/10/14 8/31/14 10/19/14 11/16/14 12/7/14 2/15/15 3/15/15 5/17/15 5/31/15 8/16/15 9/6/15
Labor Report	Jul 2015 Participation rate 64.4% Employment ratio 56.5% Unemployment rate 11.9% Youth Unemployment 40.7% Blog 10/4/15
Industrial Production	Aug month ∆%: -0.5 12 months CA ∆%: 1.0 Earlier Data: Blog 4/19/15
Retail Sales	Aug month ∆%: 0.3 Aug 12-month ∆%: 1.3 Earlier Data: Blog 4/26/15
Business Confidence	Mfg Sep 104.2, May 103.4 Construction Sep 123.3, May 111.8 Earlier Data: Blog 4/5/15
Trade Balance	Balance Aug SA €3255 million Exports Aug month SA ∆%: -3.6; Imports month ∆%: -2.6 Exports 12 months Aug NSA ∆%: 1.0 Imports 12 months NSA ∆%: 2.1 Earlier Data: Blog 4/19/15

Links to blog comments in Table IT: 10/18/15 http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html

10/4/15 http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html

9/20/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-increase-on-hold-because.html

9/6/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html

08/16/15 http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.html

08/02/15 http://cmpassocregulationblog.blogspot.com/2015/08/turbulence-of-valuations-of-financial.html

5/31/15 http://cmpassocregulationblog.blogspot.com/2015/06/dollar-revaluation-squeezing-corporate.html

5/17/15 http://cmpassocregulationblog.blogspot.com/2015/05/fluctuating-valuations-of-financial.html

4/26/2015 http://cmpassocregulationblog.blogspot.com/2015/04/imf-view-of-economy-and-finance-united.html

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

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

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

2/15/15 http://cmpassocregulationblog.blogspot.com/2015/02/g20-monetary-policy-recovery-without.html

12/7/14 http://cmpassocregulationblog.blogspot.com/2014/12/financial-risks-twenty-six-million.html

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

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

8/31/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitical-and-financial-risks.html

8/10/14 http://cmpassocregulationblog.blogspot.com/2014/08/volatility-of-valuations-of-risk_10.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

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

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

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

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

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

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

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

Professors Ricardo Caballero and Francesco Giavazzi (2012Jan15) find that the resolution of the European sovereign crisis with survival of the euro area would require success in the restructuring of Italy. Growth of the Italian economy would ensure that success. A critical problem is that the common euro currency prevents Italy from devaluing the exchange rate to parity or the exchange rate that would permit export growth to promote internal economic activity, which could generate fiscal revenues for primary fiscal surpluses that ensure creditworthiness. Fiscal consolidation and restructuring are important but of long-term gestation. Immediate growth of the Italian economy would consolidate the resolution of the sovereign debt crisis. Caballero and Giavazzi (2012Jan15) argue that 55 percent of the exports of Italy are to countries outside the euro area such that devaluation of 15 percent would be effective in increasing export revenue. Newly available data in Table VG-1 providing Italy’s trade with regions and countries supports the argument of Caballero and Giavazzi (2012Jan15). Italy’s exports to the European Monetary Union (EMU), or euro area, are only 40.3 percent of the total in Aug 2015. Exports to the non-European Union area with share of 45.3 percent in Italy’s total exports are growing at 5.5 percent in Jan-Aug 2015 relative to Jan-Aug 2014 while those to EMU are growing at 3.1 percent.

Table VG-1, Italy, Exports and Imports by Regions and Countries, % Share and 12-Month ∆%

Aug 2015	Exports % Share	∆% Jan-Aug 2015/ Jan-Aug 2014	Imports % Share	∆% Jan-Aug 2015/ Jan-Aug 2014
EU	54.7	4.2	57.1	7.3
EMU 19	40.3	3.1	45.3	6.6
France	10.6	0.7	8.6	5.0
Germany	12.6	0.8	15.4	4.4
Spain	4.5	10.2	4.8	9.9
UK	5.3	9.0	2.8	5.2
Non EU	45.3	5.5	42.9	0.7
Europe non EU	11.8	-3.9	11.3	-4.6
USA	7.5	25.3	3.5	16.5
China	2.6	0.3	7.1	14.5
OPEC	5.7	4.3	5.8	-10.7
Total	100.0	4.8	100.0	4.4

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

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/168483

Table VG-2 provides Italy’s trade balance by regions and countries. Italy had trade deficit of €284 million with the 19 countries of the euro zone (EMU 19) in Aug 2015 and cumulative deficit of €1939 million in Jan-Aug 2015. Depreciation to parity could permit greater competitiveness in improving the trade surplus of €3591 million in Jan-Aug 2015 with Europe non-European Union, the trade surplus of €14,563 million with the US and the trade surplus with non-European Union of €20,275 million in Jan-Aug 2015. There is significant rigidity in the trade deficit in Jan-Aug 2015 of €11,717 million with China. There is a trade surplus of €2566 million with members of the Organization of Petroleum Exporting Countries (OPEC). Higher exports could drive economic growth in the economy of Italy that would permit less onerous adjustment of the country’s fiscal imbalances, raising the country’s credit rating.

Table VG-2, Italy, Trade Balance by Regions and Countries, Millions of Euro 

Regions and Countries	Trade Balance Aug 2015 Millions of Euro	Trade Balance Cumulative Jan-Aug 2015 Millions of Euro
EU	467	8,097
EMU 19	-284	-1,939
France	450	7,035
Germany	-147	-3,533
Spain	63	876
UK	711	7,812
Non EU	1,383	20,275
Europe non EU	378	3,591
USA	1,358	14,563
China	-1,399	-11,717
OPEC	-1	2,566
Total	1,850	28,372

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

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/168483

Growth rates of Italy’s trade and major products are in Table VG-3 for the period Jan-Aug 2015 relative to Jan-Aug 2014. Growth rates of cumulative imports relative to a year earlier are negative for energy with minus 19.5 percent. Exports of durable goods increased 7.6 percent and exports of capital goods increased 7.2 percent. The rate of growth of exports of 4.8 percent in Jan-Aug 2015/Jan-Aug 2014 relative to that of imports of 4.4 percent may reflect weak demand in Italy with GDP declining during eight consecutive quarters from IIIQ2011 through IIQ2013 together with softening commodity prices. GDP increased 0.1 percent in IIIQ2013, changed 0.0 percent in IVQ2013, decreased 0.2 percent in IQ2014 and fell 0.2 percent in IIQ2014. Italy’s GDP fell 0.1 percent in IIIQ2014 and changed 0.0 percent in IVQ2014. Italy’s GDP increased 0.4 percent in IQ2015 and increased 0.3 percent in IIQ2015.

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

	Exports Share %	Exports ∆% Jan-Aug 2015/ Jan-Aug 2014	Imports Share %	Imports ∆% Jan-Aug 2015/ Jan-Aug 2014
Consumer Goods	31.6	6.1	28.6	7.4
Durable	6.0	7.6	3.2	18.8
Non-Durable	25.6	5.7	25.4	6.0
Capital Goods	33.1	7.2	21.9	16.6
Inter- mediate Goods	31.7	2.6	33.2	6.3
Energy	3.7	-7.7	16.3	-19.5
Total ex Energy	96.3	5.3	83.7	9.3
Total	100.0	4.8	100.0	4.4

Note: % Share for 2014 total trade.

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/168483

Table VG-4 provides Italy’s trade balance by product categories in Aug 2015 and cumulative Jan-Aug 2015. Italy’s trade balance excluding energy, generated surplus of €4350 million in Aug 2015 and €51,294 million cumulative in Jan-Aug 2015 but the energy trade balance created deficit of €2500 million in Aug 2015 and cumulative €22,922 million in Jan-Aug 2015. The overall surplus in Aug 2015 was €1850 million with cumulative surplus of €28,372 million in Jan-Aug 2015. Italy has significant competitiveness in various economic activities in contrast with some other countries with debt difficulties.

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

	Aug 2015	Cumulative 2015
Consumer Goods	934	14,955
Durable	616	8,050
Nondurable	319	6,905
Capital Goods	3,033	33,414
Intermediate Goods	382	2,925
Energy	-2,500	-22,922
Total ex Energy	4,350	51,294
Total	1,850	28,372

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/168483

VH United Kingdom. Annual data in Table VH-UK show the strong impact of the global recession in the UK with decline of GDP of 4.2 percent in 2009 after dropping 0.5 percent in 2008. Recovery of 1.5 percent in 2010 is relatively low in comparison with annual growth rates in 2007 and earlier years. Growth was only 2.0 percent in 2011 and 1.2 percent in 2012. Growth increased to 2.2 percent in 2013 and 2.9 percent in 2014. The bottom part of Table VH-UK provides average growth rates of UK GDP since 1948. The UK economy grew at 2.6 percent per year on average between 1948 and 2014, which is relatively high for an advanced economy. The growth rate of GDP between 2000 and 2007 is higher at 2.8 percent. Growth in the current cyclical expansion from 2010 to 2014 has been only at 2.1 percent as advanced economies struggle with weak internal demand and world trade. GDP in 2014 higher by 5.1 percent relative to 2007 while it would have been 21.3 higher at trend of 2.8 percent as from 2000 to 2007.

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

	∆% on Prior Year
1998	3.4
1999	3.1
2000	3.8
2001	2.8
2002	2.5
2003	3.3
2004	2.5
2005	3.0
2006	2.7
2007	2.6
2008	-0.5
2009	-4.2
2010	1.5
2011	2.0
2012	1.2
2013	2.2
2014	2.9
Average Growth Rates ∆% per Year
1948-2014	2.6
1950-1959	3.1
1960-1969	3.1
1970-1979	2.6
1980-1989	3.2
1990-1999	2.3
2000-2007	2.8
2007-2013*	2.1
2007-2014*	5.1
2000-2014	1.7

*Absolute change from 2007 to 2013 and from 2007 to 2014

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2015/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® decreased from 55.6 in Aug to 53.3 in Sep (http://www.markiteconomics.com/Survey//PressRelease.mvc/d7a7b324fda145ae8efbe8601d3565d8). Chris Williamson, Chief Economist at Markit, finds the combined indices consistent with the UK economy growing at around 0.5 percent in IIIQ2015 (http://www.markiteconomics.com/Survey//PressRelease.mvc/d7a7b324fda145ae8efbe8601d3565d8). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) decreased to 51.5 in Sep from 51.6 in Aug (http://www.markiteconomics.com/Survey//PressRelease.mvc/8c014b3ddd0d4121aa366ec5ebd01a16). New export orders decreased. Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds weakening manufacturing conditions (http://www.markiteconomics.com/Survey//PressRelease.mvc/8c014b3ddd0d4121aa366ec5ebd01a16). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Sep month ∆%: -0.1 Sep 12-month ∆%: -0.1 Blog 10/18/15
Output/Input Prices	Output Prices: Sep 12-month NSA ∆%: -1.8; excluding food, petroleum ∆%: 0.2 Input Prices: Sep 12-month NSA ∆%: -13.3 Excluding ∆%: -5.4 Blog 10/18/15
GDP Growth	IIQ2015 prior quarter ∆% 0.7; year earlier same quarter ∆%: 2.4 Blog 3/31/13 4/28/13 5/26/13 7/28/13 8/25/13 9/29/13 10/27/13 12/1/13 12/22/13 2/2/14 3/2/14 4/6/14 5/4/14 5/25/14 6/29/14 7/27/14 8/17/14 10/5/14 10/26/14 11/30/14 12/28/14 2/1/15 3/1/15 4/5/15 5/3/15 5/31/15 7/5/15 8/2/15 9/6/15 10/4/15
Industrial Production	Aug 2015/Aug 2014 ∆%: Production Industries 1.9; Manufacturing -0.8 Earlier Data: Blog 4/12/15
Retail Sales	Sep month ∆%: 1.9 Sep 12-month ∆%: 6.5 Earlier Data: Blog 4/26/15
Labor Market	Jun-Aug Unemployment Rate: 5.4% Blog 10/18/15 LMGDP 5/17/15
GDP and the Labor Market	IQ2015 Employment 104.8 IQ2008 =100 GDP IQ15=104.0 IQ2008=100 Blog 5/17/14
Trade Balance	Balance SA Aug minus ₤3268 million Exports Aug ∆%: 1.9; Jun-Aug ∆%: 1.4 Imports Aug ∆%: -0.8 Jun-Aug ∆%: 1.2 EARLIER DATA: Blog 4/12/15

Links to blog comments in Table UK: 10/18/15 http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html

10/4/15 http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html

9/20/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-increase-on-hold-because.html

9/6/15 http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html

08/23/15 http://cmpassocregulationblog.blogspot.com/2015/08/global-decline-of-values-of-financial.html

08/02/15 http://cmpassocregulationblog.blogspot.com/2015/08/turbulence-of-valuations-of-financial.html

7/19/2015 http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html

7/5/15 http://cmpassocregulationblog.blogspot.com/2015/07/turbulence-of-financial-asset.html

5/31/15 http://cmpassocregulationblog.blogspot.com/2015/06/dollar-revaluation-squeezing-corporate.html

5/17/15 http://cmpassocregulationblog.blogspot.com/2015/05/fluctuating-valuations-of-financial.html

5/3/15 http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html

4/26/2015 http://cmpassocregulationblog.blogspot.com/2015/04/imf-view-of-economy-and-finance-united.html

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

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

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

12/28/14 http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html

11/30/14 http://cmpassocregulationblog.blogspot.com/2014/11/valuations-of-risk-financial-assets.html

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

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

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

7/27/14 http://cmpassocregulationblog.blogspot.com/2014/07/world-inflation-waves-united-states.html

6/29/14 http://cmpassocregulationblog.blogspot.com/2014/06/financial-indecision-mediocre-cyclical.html

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

5/4/2014 http://cmpassocregulationblog.blogspot.com/2014/05/financial-volatility-mediocre-cyclical.html

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

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

2/2/14 http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.html

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

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

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

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

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

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

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

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

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

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