“The economic outlook is inherently uncertain,” Destruction of Household Nonfinancial Wealth with Stagnating Total Real Wealth, United States Commercial Banks Assets and Liabilities, Household Income at 1999 Levels, 43 Million in Poverty and 29 Million without Health Insurance, United States Balance of Payments Current Account, Collapse of United States Dynamism of Income Growth and Employment Creation, World Cyclical Slow Growth and Global Recession Risk: Part V

 

“The economic outlook is inherently uncertain,” Destruction of Household Nonfinancial Wealth with Stagnating Total Real Wealth, United States Commercial Banks Assets and Liabilities, Household Income at 1999 Levels, 43 Million in Poverty and 29 Million without Health Insurance, United States Balance of Payments Current Account, 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, 2016

I United States Commercial Banks Assets and Liabilities

IIA Household Income at 1999 Levels, 43 Million in Poverty and 29 Million without Health Insurance

IIB Destruction of Household Nonfinancial Wealth with Stagnating Total Real Wealth

IIC United States Balance of Payments Current Account

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

III World Financial Turbulence

IIIA Financial Risks

IIIE Appendix Euro Zone Survival Risk

IIIF Appendix on Sovereign Bond Valuation

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

IIID Appendix on European Central Bank Large Scale Lender of Last Resort

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

IIIGA Monetary Policy with Deficit Financing of Economic Growth

IIIGB Adjustment during the Debt Crisis of the 1980s

V World Economic Slowdown. Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/ns/cs.aspx?id=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 3.2 percent in 2016 and 3.5 percent in 2017. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $35,570 billion of world output of $77,825 billion, or 45.7 percent, but are projected to grow at much lower rates than world output, 1.8 percent on average from 2014 to 2017 in contrast with 3.3 percent for the world as a whole. While the world would grow 13.9 percent in the four years from 2014 to 2017, the G7 as a whole would grow 7.4 percent. The difference in dollars of 2014 is high: growing by 13.9 percent would add around $10.8 trillion of output to the world economy, or roughly, two times the output of the economy of Japan of $4,596 billion but growing by 7.4 percent would add $5.8 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 $30,690 billion, or 39.4 percent of world output. The EMDEs would grow cumulatively 18.6 percent or at the average yearly rate of 4.4 percent, contributing $5.7 trillion from 2014 to 2017 or the equivalent of somewhat more than one half the GDP of $10,431 billion of China in 2014. The final four countries in Table V-1 often referred as BRIC (Brazil, Russia, India, China), are large, rapidly growing emerging economies. Their combined output in 2014 adds to $16,921 billion, or 21.7 percent of world output, which is equivalent to 47.5 percent of the combined output of the major advanced economies of the G7.

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

	GDP USD 2014	Real GDP ∆% 2014	Real GDP ∆% 2015	Real GDP ∆% 2016	Real GDP ∆% 2017
World	77,825	3.4	3.1	3.2	3.5
G7	35,570	1.7	1.8	1.8	1.9
Canada	1,784	2.5	1.2	1.5	1.9
France	2,834	0.2	1.1	1.1	1.3
DE	3,874	1.6	1.5	1.5	1.6
Italy	2,142	-0.3	0.8	1.0	1.2
Japan	4,596	0.0	0.5	0.5	-0.1
UK	2,992	2.9	2.2	1.9	2.2
US	17,348	2.4	2.4	2.4	2.5
Euro Area	13,430	0.9	1.6	1.5	1.6
DE	3,874	1.6	1.5	1.5	1.6
France	2,834	0.2	1.1	1.1	1.3
Italy	2,142	-0.3	0.8	1.0	1.2
POT	230	0.9	1.5	1.4	1.3
Ireland	251	5.2	7.8	5.0	3.6
Greece	236	0.7	-0.2	-0.6	2.7
Spain	1,384	1.4	3.2	2.6	2.3
EMDE	30,690	4.6	4.0	4.1	4.7
Brazil	2,417	0.1	-3.8	-3.8	0.0
Russia	2,030	0.7	-3.7	-1.8	0.8
India	2,043	7.2	7.3	7.5	7.5
China	10,431	7.3	6.9	6.5	6.2

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/2016/01/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/2016/01/weodata/index.aspx). Table V-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 12.6 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 V-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	5.8	5.5	5.5
Canada	7.1	6.9	6.9	7.3	7.4
France	10.3	10.3	10.4	10.1	10.0
DE	5.2	5.0	4.6	4.6	4.8
Italy	12.2	12.6	11.9	11.4	10.9
Japan	4.0	3.6	3.4	3.3	3.3
UK	7.6	6.2	5.4	5.0	5.0
US	7.4	6.2	5.3	4.9	4.8
Euro Area	12.0	11.6	10.9	10.3	9.9
DE	5.2	5.0	4.6	4.6	4.8
France	10.3	10.3	10.4	10.1	10.0
Italy	12.2	12.6	11.9	11.4	10.9
POT	16.2	13.9	12.4	11.6	11.1
Ireland	13.0	11.3	9.4	8.3	7.5
Greece	27.5	26.5	25.0	25.0	23.4
Spain	26.1	24.5	22.1	19.7	18.3
EMDE	NA	NA	NA	NA	NA
Brazil	5.4	4.8	6.8	9.2	10.2
Russia	5.5	5.2	5.6	6.5	6.3
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/2016/01/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 IIQ2016 available now for all countries. There are preliminary estimates for all countries for IIQ2016. Growth is weak throughout most of the world.

• Japan. The GDP of Japan increased 0.9 percent in IQ2012, 3.8 percent at SAAR (seasonally adjusted annual rate) and 3.5 percent relative to a year earlier but part of the jump could be the low level a year earlier because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan is experiencing difficulties with the overvalued yen because of worldwide capital flight originating in zero interest rates with risk aversion in an environment of softer growth of world trade. Japan’s GDP fell 0.4 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 1.7 percent, which is much lower than 3.8 percent in IQ2012. Growth of 3.5 percent in IIQ2012 in Japan relative to IIQ2011 has effects of the low level of output because of Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan’s GDP contracted 0.5 percent in IIIQ2012 at the SAAR of minus 1.9 percent and increased 0.2 percent relative to a year earlier. Japan’s GDP changed 0.0 percent in IVQ2012 at the SAAR of minus 0.1 percent and changed 0.0 percent relative to a year earlier. Japan grew 1.0 percent in IQ2013 at the SAAR of 4.1 percent and increased 0.3 percent relative to a year earlier. Japan’s GDP increased 0.7 percent in IIQ2013 at the SAAR of 2.6 percent and increased 1.1 percent relative to a year earlier. Japan’s GDP grew 0.5 percent in IIIQ2013 at the SAAR of 2.0 percent and increased 2.0 percent relative to a year earlier. In IVQ2013, Japan’s GDP decreased 0.1 percent at the SAAR of minus 0.3 percent, increasing 2.1 percent relative to a year earlier. Japan’s GDP increased 1.3 percent in IQ2014 at the SAAR of 5.1 percent and increased 2.7 percent relative to a year earlier. In IIQ2014, Japan’s GDP fell 2.1 percent at the SAAR of minus 8.0 percent and fell 0.3 percent relative to a year earlier. Japan’s GDP contracted 0.6 percent in IIIQ2014 at the SAAR of minus 2.4 percent and fell 1.5 percent relative to a year earlier. In IVQ2014, Japan’s GDP grew 0.5 percent, at the SAAR of 2.2 percent, decreasing 1.0 percent relative to a year earlier. The GDP of Japan increased 1.2 percent in IQ2015 at the SAAR of 4.9 percent and decreased 1.0 percent relative to a year earlier. Japan’s GDP decreased 0.4 percent in IIQ2015 at the SAAR of minus 1.7 percent and increased 0.7 percent relative to a year earlier. The GDP of Japan increased 0.5 percent in IIIQ2015 at the SAAR of 2.0 percent and increased 1.8 percent relative to a year earlier. Japan’s GDP contracted 0.4 percent in IVQ2015 at the SAAR of minus 1.7 percent and grew 0.7 percent relative to a year earlier. In IQ2016, the GDP of Japan increased 0.5 percent at the SAAR of 2.0 percent and increased 0.2 percent relative to a year earlier. Japan’s GDP changed 0.0 percent in IIQ2016 at the SAAR of 0.2 percent and increased 0.6 percent relative to a year earlier.
• China. China’s GDP grew 1.8 percent in IQ2012, annualizing to 7.4 percent, and 8.1 percent relative to a year earlier. The GDP of China grew at 2.2 percent in IIQ2012, which annualizes to 9.1 percent, and 7.6 percent relative to a year earlier. China grew at 1.8 percent in IIIQ2012, which annualizes at 7.4 percent, and 7.5 percent relative to a year earlier. In IVQ2012, China grew at 1.9 percent, which annualizes at 7.8 percent, and 8.1 percent in IVQ2012 relative to IVQ2011. In IQ2013, China grew at 1.9 percent, which annualizes at 7.8 percent, and 7.9 percent relative to a year earlier. In IIQ2013, China grew at 1.7 percent, which annualizes at 7.0 percent, and 7.6 percent relative to a year earlier. China grew at 2.1 percent in IIIQ2013, which annualizes at 8.7 percent, and increased 7.9 percent relative to a year earlier. China grew at 1.6 percent in IVQ2013, which annualized to 7.0 percent, and 7.7 percent relative to a year earlier. China’s GDP grew 1.7 percent in IQ2014, which annualizes to 7.0 percent, and 7.4 percent relative to a year earlier. China’s GDP grew 1.8 percent in IIQ2014, which annualizes at 7.4 percent, and 7.5 percent relative to a year earlier. China’s GDP grew 1.9 percent in IIIQ2014, which is equivalent to 7.8 percent in a year, and 7.1 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 1.6 percent in IQ2015, which annualizes at 6.6 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. The GDP of China grew at 1.5 percent in IVQ2015, which annualizes at 6.1 percent, and increased 6.8 percent relative to a year earlier. The GDP of China grew 1.2 percent in IQ2016, which annualizes at 4.9 percent, and increased 6.7 percent relative to a year earlier. In IIQ2016, the GDP of China increased 1.8 percent, which annualizes to 7.4 percent, and increased 6.7 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 2016.
• Euro Area. GDP fell 0.2 percent in the euro area in IQ2012 and decreased 0.5 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 0.9 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 0.3 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 0.3 percent and changed 0.0 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 increased 1.1 percent relative to a year earlier. The GDP of the euro area increased 0.1 percent in IIQ2014 and increased 0.8 percent relative to a year earlier. The euro area’s GDP increased 0.3 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 1.0 percent relative to a year earlier. Euro area GDP increased 0.6 percent in IQ2015 and increased 1.3 percent relative to a year earlier. The GDP of the euro area increased 0.4 percent in IIQ2015 and increased 1.6 percent relative to a year earlier. The euro area’s GDP increased 0.3 percent in IIIQ2015 and increased 1.6 percent relative to a year earlier. Euro area GDP increased 0.4 percent in IVQ2015 and increased 1.7 percent relative to a year earlier. Euro area’s GDP increased 0.6 percent in IQ2016 and increased 1.7 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IIQ2016 and increased 1.6 percent relative to a year earlier.
• Germany. The GDP of Germany increased 0.4 percent in IQ2012 and increased 1.6 percent relative to a year earlier. In IIQ2012, Germany’s GDP increased 0.1 percent and increased 0.4 percent relative to a year earlier but 0.9 percent relative to a year earlier when adjusted for calendar (CA) effects. In IIIQ2012, Germany’s GDP increased 0.2 percent and 0.2 percent relative to a year earlier. Germany’s GDP contracted 0.5 percent in IVQ2012 and decreased 0.1 percent relative to a year earlier. In IQ2013, Germany’s GDP decreased 0.2 percent and fell 1.5 percent relative to a year earlier. In IIQ2013, Germany’s GDP increased 0.9 percent and grew 0.9 percent relative to a year earlier. The GDP of Germany increased 0.4 percent in IIIQ2013 and grew 1.2 percent relative to a year earlier. In IVQ2013, Germany’s GDP increased 0.4 percent and increased 1.4 percent relative to a year earlier. The GDP of Germany increased 0.6 percent in IQ2014 and grew 2.6 percent relative to a year earlier. In IIQ2014, Germany’s GDP decreased 0.1 percent and increased 0.9 percent relative to a year earlier. The GDP of Germany increased 0.3 percent in IIIQ2014 and increased 1.2 percent relative to a year earlier. Germany’s GDP increased 0.8 percent in IVQ2014 and increased 1.7 percent relative to a year earlier. The GDP of Germany increased 0.2 percent in IQ2015 and increased 1.3 percent relative to a year earlier. Germany’s GDP increased 0.5 percent in IIQ2015 and grew 1.8 percent relative to a year earlier. The GDP of Germany increased 0.2 percent in IIIQ2015 and grew 1.8 percent relative to a year earlier. Germany’s GDP increased 0.4 percent in IVQ2015 and grew 2.1 percent relative to a year earlier. In IQ2016, the GDP of Germany increased 0.7 percent and grew 1.5 percent relative to a year earlier. Germany’s GDP increased 0.4 percent in IIQ2016 and increased 3.1 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 2.8 percent SAAR, 0.7 percent relative to the prior quarter and 1.3 percent relative to the same quarter in 2012. In IIQ2013, US GDP grew at 0.8 percent in SAAR, 0.2 percent relative to the prior quarter and 1.0 percent relative to IIQ2012. US GDP grew at 3.1 percent in SAAR in IIIQ2013, 0.8 percent relative to the prior quarter and 1.7 percent relative to the same quarter a year earlier (http://cmpassocregulationblog.blogspot.com/2016/08/and-as-ever-economic-outlook-is.html and earlier http://cmpassocregulationblog.blogspot.com/2016/07/business-fixed-investment-has-been-soft.html). In IVQ2013, US GDP grew 1.0 percent at 4.0 percent SAAR and 2.7 percent relative to a year earlier. In IQ2014, US GDP decreased 0.3 percent, increased 1.6 percent relative to a year earlier and fell 1.2 percent at SAAR. In IIQ2014, US GDP increased 1.0 percent at 4.0 percent SAAR and increased 2.4 percent relative to a year earlier. US GDP increased 1.2 percent in IVQ2014 at 5.0 percent SAAR and increased 2.9 percent relative to a year earlier. In IVQ2014, US GDP increased 0.6 percent at SAAR of 2.3 percent and increased 2.5 percent relative to a year earlier. GDP increased 0.5 percent in IQ2015 at SAAR of 2.0 percent and grew 3.3 percent relative to a year earlier. US GDP grew at SAAR 2.6 percent in IIQ2015, increasing 0.6 percent in the quarter and 3.0 percent relative to a year earlier. GDP increased 0.5 percent in IIIQ2015 at SAAR of 2.0 percent and grew 2.2 percent in IIIQ2015 relative to a year earlier. US GDP grew at SAAR of 0.9 percent in IVQ2015, increasing 0.2 percent in the quarter and 1.9 percent relative to a year earlier. In IQ2016, US GDP grew 0.2 percent at SAAR of 0.8 percent and increased 1.6 percent relative to a year earlier. US GDP grew at SAAR of 1.1 percent in IQ2016, increasing 0.3 percent in the quarter and 1.2 percent relative to a year earlier.
• United Kingdom. In IQ2012, UK GDP increased 0.4 percent and increased 1.2 percent relative to a year earlier. In IIQ2012, GDP fell 0.1 percent relative to IQ2012 and increased 1.0 percent relative to a year earlier. In IIIQ2012, GDP increased 1.1 percent and increased 1.8 percent relative to the same quarter a year earlier. In IVQ2012, GDP fell 0.2 percent and increased 1.3 percent relative to a year earlier. Fiscal consolidation in an environment of weakening economic growth is much more challenging. GDP increased 1.5 percent in IQ2013 relative to a year earlier and 0.6 percent in IQ2013 relative to IVQ2012. In IIQ2013, GDP increased 0.5 percent and 2.1 percent relative to a year earlier. GDP increased 0.8 percent in IIIQ2013 and 1.7 percent relative to a year earlier. GDP increased 0.5 percent in IVQ2013 and 2.4 percent relative to a year earlier. In IQ2014, GDP increased 0.8 percent and 2.6 percent relative to a year earlier. GDP increased 0.9 percent in IIQ2014 and 3.1 percent relative to a year earlier. GDP increased 0.8 percent in IIIQ2013 and 3.1 percent relative to a year earlier. In IVQ2014, GDP increased 0.8 percent and 3.5 percent relative to a year earlier. GDP increased 0.3 percent in IQ2015 and increased 2.9 percent relative to a year earlier. GDP increased 0.4 percent in IIQ2015 and increased 2.3 percent relative to a year earlier. UK GDP increased 0.4 percent in IIIQ2015 and increased 2.0 percent relative to a year earlier. GDP increased 0.7 percent in IVQ2015 and increased 1.8 percent relative to a year earlier. GDP increased 0.4 percent in IQ2016 and increased 2.0 percent relative to a year earlier. GDP increased 0.6 percent in IIQ2016 and grew 2.2 percent relative to a year earlier.
• Italy. In IIQ2016, GDP changed 0.0 percent and increased 0.7 percent relative to a year earlier. GDP increased 0.3 percent in IQ2016 and increased 1.0 percent relative to a year earlier. GDP increased 0.2 percent in IVQ2015 and increased 1.1 percent relative to a year earlier. In IIIQ2015, GDP increased 0.2 percent and increased 0.8 percent relative to a year earlier. GDP increased 0.3 percent in IIQ2015 and 0.5 percent relative to a year earlier. GDP increased 0.4 percent in IQ2015 and increased 0.1 percent relative to a year earlier. GDP decreased 0.1 percent in IVQ2014 and fell 0.4 percent relative to a year earlier. GDP fell 0.1 percent in IIIQ2014 and fell 0.4 percent relative to a year earlier. Italy’s GDP fell 0.1 percent in IIQ2014 and declined 0.2 percent relative to a year earlier. The GDP of Italy decreased 0.2 percent in IQ2014 and fell 0.1 percent relative to a year earlier. Italy’s GDP decreased 0.1 percent in IVQ2013 and fell 0.9 percent relative to a year earlier. The GDP of Italy increased 0.2 percent in IIIQ2013 and fell 1.4 percent relative to a year earlier. Italy’s GDP decreased 0.1 percent in IIQ2013, continuing eight consecutive quarterly declines, and fell 2.0 percent relative to a year earlier. Italy’s GDP fell 0.9 percent in IQ2013 and declined 2.7 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 0.6 percent in IVQ2012 and minus 0.9 percent in IQ2013. GDP contracted cumulatively 5.2 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 13 quarters including IVQ2013, IQ2014, IIQ2014, IIIQ2014 and IVQ2014 accumulates to 5.7 percent. The yearly rate has fallen from 2.3 percent in IVQ2010 to minus 2.7 percent in IVQ2012, minus 2.7 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 0.1 percent in IQ2014 relative to a year earlier and fell 0.2 percent in IIQ2014 relative to a year earlier. GDP fell 0.4 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. GDP increased 0.8 percent in IIIQ2015 relative to a year earlier and increased 1.1 percent in IVQ2015 relative to a year earlier. GDP increased 1.0 percent in IQ2016 relative to a year earlier and increased 0.7 percent in IIQ2016 relative to a year earlier. Using seasonally and calendar adjusted chained volumes in the dataset of EUROSTAT (http://ec.europa.eu/eurostat), the GDP of Italy in IIIQ2015 is lower by 8.9 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.
• France. France’s GDP decreased 0.1 percent in IQ2012 and increased 0.4 percent relative to a year earlier. France’s GDP decreased 0.2 percent in IIQ2012 and increased 0.3 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.2 percent and increased 0.2 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 decreased 0.1 percent and changed 0.0 percent relative to a year earlier. The GDP of France increased 0.7 percent in IIQ2013 and increased 0.9 percent relative to a year earlier. France’s GDP changed 0.0 percent in IIIQ2013 and increased 0.7 percent relative to a year earlier. The GDP of France increased 0.3 percent in IVQ2013 and increased 0.9 percent relative to a year earlier. In IQ2014, France’s GDP changed 0.0 percent and increased 0.9 percent relative to a year earlier. In IIQ2014, France’s GDP increased 0.2 percent and increased 0.4 percent relative to a year earlier. France’s GDP increased 0.3 percent in IIIQ2014 and increased 0.7 percent relative to a year earlier. The GDP of France increased 0.2 percent in IVQ2014 and increased 0.7 percent relative to a year earlier. France’s GDP increased 0.6 percent in IQ2015 and increased 1.3 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. France’s GDP increased 0.4 percent in IIIQ2015 and increased 1.1 percent relative to a year earlier. In IVQ2015, the GDP of France increased 0.4 percent and increased 1.3 percent relative to a year earlier. France’s GDP increased 0.7 percent in IQ2016 and increased 1.4 percent relative to a year earlier. The GDP of France decreased 0.1 percent in IIQ2016 and increased 1.3 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: 0.9 SAAR: 3.8	3.5
China	1.8	8.1
Euro Area	-0.2	-0.5
Germany	0.4	1.6
France	-0.1	0.4
Italy	-0.9	-2.3
United Kingdom	0.4	1.2
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.5         SAAR: 1.9	2.5
Japan	QOQ: -0.4 SAAR: -1.7	3.5
China	2.2	7.6
Euro Area	-0.3	-0.8
Germany	0.1	0.4 0.9 CA
France	-0.2	0.3
Italy	-0.8	-3.2
United Kingdom	-0.1	1.0
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.1  SAAR: 0.5	2.4
Japan	QOQ: –0.5 SAAR: –1.9	0.2
China	1.8	7.5
Euro Area	-0.1	-1.0
Germany	0.2	0.2
France	0.2	0.2
Italy	-0.5	-3.2
United Kingdom	1.1	1.8
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
United States	QOQ: 0.0 SAAR: 0.1	1.3
Japan	QOQ: 0.0 SAAR: -0.1	0.0
China	1.9	8.1
Euro Area	-0.4	-1.0
Germany	-0.5	-0.1
France	0.0	0.0
Italy	-0.6	-2.7
United Kingdom	-0.2	1.3
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.7 SAAR: 2.8	1.3
Japan	QOQ: 1.0 SAAR: 4.1	0.3
China	1.9	7.9
Euro Area	-0.3	-1.1
Germany	-0.2	-1.5
France	-0.1	0.0
Italy	-0.9	-2.7
UK	0.6	1.5
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.2 SAAR: 0.8	1.0
Japan	QOQ: 0.6 SAAR: 2.6	1.1
China	1.7	7.6
Euro Area	0.4	-0.4
Germany	0.9	0.9
France	0.7	0.9
Italy	-0.1	-2.0
UK	0.5	2.1
	IIIQ2013/IIQ2013	III/Q2013/  IIIQ2012
USA	QOQ: 0.8 SAAR: 3.1	1.7
Japan	QOQ: 0.5 SAAR: 2.0	2.0
China	2.1	7.9
Euro Area	0.3	0.0
Germany	0.4	1.2
France	0.0	0.7
Italy	0.2	-1.4
UK	0.8	1.7
	IVQ2013/IIIQ2013	IVQ2013/IVQ2012
USA	QOQ: 1.0 SAAR: 4.0	2.7
Japan	QOQ: 0.0 SAAR: -0.2	2.1
China	1.6	7.7
Euro Area	0.2	0.7
Germany	0.4	1.4
France	0.3	0.9
Italy	-0.1	-0.9
UK	0.5	2.4
	IQ2014/IVQ2013	IQ2014/IQ2013
USA	QOQ -0.3 SAAR -1.2	1.6
Japan	QOQ: 1.3 SAAR: 5.1	2.7
China	1.7	7.4
Euro Area	0.3	1.2
Germany	0.6	2.6
France	0.0	0.9
Italy	-0.1	-0.1
UK	0.8	2.6
	IIQ2014/IQ2014	IIQ2014/IIQ2013
USA	QOQ 1.0 SAAR 4.0	2.4
Japan	QOQ: -2.1 SAAR: -8.1	-0.3
China	1.8	7.5
Euro Area	0.2	0.9
Germany	-0.1	0.9
France	0.2	0.4
Italy	-0.1	-0.2
UK	0.9	3.1
	IIIQ2014/IIQ2014	IIIQ2014/IIIQ2013
USA	QOQ: 1.2 SAAR: 5.0	2.9
Japan	QOQ: -0.6 SAAR: -2.4	-1.5
China	1.9	7.1
Euro Area	0.4	1.0
Germany	0.3	1.2
France	0.3	0.7
Italy	-0.1	-0.4
UK	0.8	3.1
	IVQ2014/IIIQ2014	IVQ2014/IVQ2013
USA	QOQ: 0.6 SAAR: 2.3	2.5
Japan	QOQ: 0.6 SAAR: 2.2	-1.0
China	1.7	7.2
Euro Area	0.4	1.2
Germany	0.8	1.7
France	0.2	0.7
Italy	0.0	-0.4
UK	0.8	3.5
	IQ2015/IVQ2014	IQ2015/IQ2014
USA	QOQ: 0.5 SAAR: 2.0	3.3
Japan	QOQ: 1.2 SAAR: 5.0	-1.0
China	1.6	7.0
Euro Area	0.8	1.8
Germany	0.2	1.3
France	0.6	1.3
Italy	0.4	0.1
UK	0.3	2.9
	IIQ2015/IQ2015	IIQ2015/IIQ2014
USA	QOQ: 0.6 SAAR: 2.6	3.0
Japan	QOQ: -0.5 SAAR: -1.9	0.7
China	1.8	7.0
Euro Area	0.4	2.0
Germany	0.5	1.8
France	0.0	1.1
Italy	0.2	0.5
UK	0.4	2.3
	IIIQ2015/IIQ2015	IIIQ2015/IIIQ2014
USA	QOQ: 0.5 SAAR: 2.0	2.2
Japan	QOQ: 0.5 SAAR: 2.1	1.8
China	1.8	6.9
Euro Area	0.4	2.0
Germany	0.2	1.8
France	0.4	1.1
Italy	0.3	0.8
UK	0.4	2.0
	IVQ2015/IIIQ2015	IVQ2015/IVQ2014
USA	QOQ: 0.2 SAAR: 0.9	1.9
Japan	QOQ: -0.4 SAAR: -1.7	0.7
China	1.5	6.8
Euro Area	0.4	2.0
Germany	0.4	2.1
France	0.4	1.3
Italy	0.2	1.1
UK	0.7	1.8
	IQ2016/IVQ2015	IQ2016/IQ2015
USA	QOQ: 0.2 SAAR: 0.8	1.6
Japan	QOQ: 0.5 SAAR: 2.1	0.2
China	1.2	6.7
Euro Area	0.5	1.7
Germany	0.7	1.5
France	0.7	1.4
Italy	0.3	1.0
UK	0.4	2.0
	IIQ2016/IQ2016	IIQ2016/IIQ2015
USA	QOQ: 0.3 SAAR: 1.1	1.2
Japan	QOQ: 0.2 SAAR: 0.7	0.8
China	1.8	6.7
Euro Area	0.3	1.6
Germany	0.4	3.1
France	-0.1	1.3
Italy	0.0	0.8
UK	0.6	2.2

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 Aug 2016, Japan’s exports increased 9.6 percent in 12 months while imports decreased 17.3 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, 1.8 percentage points in IQ2013 and deducted 0.5 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.3 percentage points from GDP growth in Japan. Net trade ducted 1.9 percentage points from GDP growth in Japan in IVQ2013. Net trade deducted 0.8 percentage points from GDP growth of Japan in IQ2014. Net trade added 3.3 percentage points to GDP growth in IIQ2014. Net trade added 0.6 percentage points to GDP growth in IIIQ2014 and added 1.4 percentage points in IVQ2014. Net trade added 0.4 percentage points to GDP growth in IQ2015 and deducted 1.6 percentage points in IIQ2015. Net trade added 0.8 percentage points to GDP growth in IIIQ2015 and added 0.2 percentage points in IVQ2015. Net trade added 0.5 percentage points to GDP growth in IQ2016 and deducted 1.0 percentage points in IIQ2016.

• China. In Aug 2016, China exports decreased 2.8 percent relative to a year earlier and imports increased 1.5 percent.
• Germany. Germany’s exports decreased 10.0 percent in the month of Jul 2016 and decreased 2.6 percent in the 12 months ending in Jul 2016. Germany’s imports decreased 6.5 percent in the month of Jul 2016 and decreased 0.7 percent in the 12 months ending in Jul 2016. 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 contributed 0.0 percentage points to GDP growth in IQ2014. Net trade added 0.2 percentage points to GDP growth in IIQ2014 and added 0.5 percentage points in IIIQ2014. Net trade deducted 0.3 percentage points from GDP growth in IVQ2014 and deducted 0.1 percentage points in IQ2015. Net trade added 0.6 percentage points to GDP growth in IIQ2015 and deducted 0.5 percentage points in IIIQ2015. Net trade deducted 0.6 percentage points in IVQ2015 and added 0.3 percentage points in IQ2016. Net trade added 0.6 percentage points to GDP growth in IIQ2016.
• 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 0.8 percentage points to UK value added in IQ2014 and 0.3 percentage points in IIQ2014. Net trade deducted 0.7 percentage points from GDP growth in IIIQ2014 and added 0.3 percentage points in IVQ2014. Net traded deducted 0.6 percentage points from growth in IQ2015. Net trade added 0.6 percentage points to GDP growth in IIQ2015 and deducted 0.5 percentage points in IIIQ2015. Net trade added 0.1 percentage points to GDP growth in IVQ2015. Net trade deducted 0.2 percentage points from GDP growth in IQ2016. Net trade deducted 0.3 percentage points from GDP growth in IIQ2016.
• France. France’s exports decreased 0.2 percent in Jul 2016 while imports increased 2.4 percent. France’s exports decreased 7.3 percent in the 12 months ending in Jul 2016 and imports decreased 2.8 percent relative to a year earlier. Net traded added 0.1 percentage points to France’s GDP in IIIQ2012 and 0.1 percentage points in IVQ2012. Net trade deducted 0.1 percentage points from France’s GDP growth in IQ2013 and added 0.3 percentage points in IIQ2013, deducting 1.7 percentage points in IIIQ2013. Net trade added 0.1 percentage points to France’s GDP in IVQ2013 and deducted 0.1 percentage points in IQ2014. Net trade deducted 0.2 percentage points from France’s GDP growth in IIQ2014 and deducted 0.2 percentage points in IIIQ2014. Net trade added 0.2 percentage points to France’s GDP growth in IVQ2014 and deducted 0.2 percentage points in IQ2015. Net trade added 0.4 percentage points to GDP growth in IIQ2015 and deducted 0.6 percentage points in IIIQ2015. Net trade deducted 0.5 percentage points from GDP growth in IVQ2015 and deducted 0.2 percentage points from GDP growth in IQ2016. Net trade added 0.6 percentage points to GDP in IIQ2016.
• United States. US exports increased 1.9 percent in Jul 2016 and goods exports decreased 6.4 percent in Jan-Jul 2016 relative to a year earlier. Imports decreased 0.8 percent in Jul 2016 and goods imports decreased 5.2 percent in Jan-Jul 2016 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 added 0.30 percentage points to US GDP growth in IQ2013 and deducted 0.21 percentage points in IIQ2013. Net traded added 0.13 percentage points to US GDP growth in IIIQ2013. Net trade added 1.29 percentage points to US GDP growth in IVQ2013. Net trade deducted 1.16 percentage points from US GDP growth in IQ2014 and deducted 0.41 percentage points in IIQ2014. Net trade added 0.50 percentage points to GDP growth in IIIQ2014. Net trade deducted 1.14 percentage points from GDP growth in IVQ2014 and deducted 1.65 percentage points from GDP growth in IQ2015. Net trade deducted 0.08 percentage points from GDP growth in IIQ2015. Net trade deducted 0.52 percentage points from GDP growth in IIIQ2015. Net trade deducted 0.45 percentage points from GDP growth in IVQ2015. Net trade added 0.01 percentage points to GDP growth in IQ2016. Net trade added 0.10 percentage points to GDP growth in IIQ2016. Industrial production decreased 0.4 percent in Aug 2016 and increased 0.6 percent in Jul 2016 after increasing 0.5 percent in Jun 2016, with all data seasonally adjusted, as shown in Table I-1. The Board of Governors of the Federal Reserve System conducted the annual revision of industrial production released on Apr 1, 2016 (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.[1] Total IP is now reported to have increased about 2 1/2 percent per year, on average, from 2011 through 2014 before falling 1 1/2 percent in 2015.[2] Relative to earlier reports, the current rates of change are lower, especially for 2014 and 2015. Total IP is now estimated to have returned to its pre-recession peak in November 2014, six months later than previously estimated. Capacity for total industry is now reported to have increased about 2 percent in 2014 and 2015 after having increased only 1 percent in 2013. Compared with the previously reported estimates, the gain in 2015 is 1/2 percentage point higher, and the gain in 2013 is 1/2 percentage point lower. Industrial capacity is expected to increase 1/2 percent in 2016.” 

Manufacturing fell 22.3 from the peak in Jun 2007 to the trough in Apr 2009 and increased 16.0 percent from the trough in Apr 2009 to Dec 2015. Manufacturing grew 19.7 percent from the trough in Apr 2009 to Aug 2016. Manufacturing in Aug 2016 is lower by 7.1 percent relative to 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 IIQ2016 would have accumulated to 28.6 percent. GDP in IIQ2016 would be $19,279.5 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2709.3 billion than actual $16,570.2 billion. There are about two trillion dollars of GDP less than at trend, explaining the 23.9 million unemployed or underemployed equivalent to actual unemployment/underemployment of 14.2 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/global-competitive-easing-or.html). US GDP in IIQ2016 is 14.1 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,570.2 billion in IIQ2016 or 10.5 percent at the average annual equivalent rate of 1.2 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. 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 3.1 percent per year from Aug 1919 to Aug 2016. Growth at 3.1 percent per year would raise the NSA index of manufacturing output from 108.2316 in Dec 2007 to 141.0258 in Aug 2016. The actual index NSA in Aug 2016 is 104.6251, which is 27.6 percent below trend. Manufacturing output grew at average 2.1 percent between Dec 1986 and Dec 2015. Using trend growth of 2.1 percent per year, the index would increase to 129.5532 in Aug 2016. The output of manufacturing at 104.6251 in Aug 2016 is 19.2 percent below trend under this alternative calculation.

Table V-4, Growth of Trade and Contributions of Net Trade to GDP Growth, ∆% and % Points

	Exports M ∆%	Exports 12 M ∆%	Imports M ∆%	Imports 12 M ∆%
USA	1.9 Jul	-6.4 Jan-Jul	-0.8 Jul	-5.2 Jan-Jul
Japan		Aug 2016 9.6 Jul 2016 -14.0 Jun 2016 -7.8 May 2016 -11.3 Apr 2016 -10.1 Mar 2016 -6.8 Feb 2016 -4.0 Jan 2016 -12.9 Dec 2015 -8.0 Nov 2015 -3.3 Oct 2015 -2.1 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		Aug 2016 -17.3 Jul 2016 -24.7 Jun 2016 -18.8 May 2016 -13.8 Apr 2016 -23.3 Mar 2016 -14.9 Feb 2016 -14.2 Jan 2016 -18.0 Dec 2015 -18.0 Nov 2015 -10.2 Oct 2015 -13.4 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	Jan-Dec 2015 -2.8	2016 Aug -2.8 Jul -4.4 Jun -4.8 May -4.1 Apr -1.8 Mar 11.5 Feb -25.4 Jan -11.2 2015 -1.4 Dec -6.8 Nov -6.9 Oct -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	Jan-Dec 2015 -14.1	2016 Aug 1.5 Jul -12.5 Jun -2.8 May -0.4 Apr -10.6 Mar -7.6 Feb -13.8 Jan -18.8 2015 -7.6 Dec -8.7 Nov -18.8 Oct -20.4 Sep -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	-9.8 12-M Jul	-2.1 Jan-Jul	-8.0 12-M Jul	-4.2 Jan-Jul
Germany	-10.0 Jul CSA	-2.6 Jul	-6.5 Jul CSA	-0.7 Jul
France Jul	-0.2	-7.3	2.4	-2.8
Italy Jul	-0.6	-7.3	0.5	-8.3
UK	1.9 Jul	3.2 May 16-Jul 16 /May 15-Jul 15	-0.5 Jul	6.0 May 16-Jul 16 /May 15-Jul 15
Net Trade % Points GDP Growth	Points
USA	IIQ2016 0.10 IQ2016 0.01 IVQ2015 -0.45 IIIQ2015 -0.52 IIQ2015 -0.08 IQ2015 -1.65 IVQ2014 -1.14 IIIQ2014 0.50 IIQ2014 -0.41 IQ2014 -1.16 IVQ2013 1.29 IIIQ2013 0.13 IIQ2013 -0.21 IQ2013 0.30 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 1.8 IQ2013 -0.5 IIQ2013 -1.3 IIIQ2013 -1.9 IVQ2013 -0.8 IQ2014 3.3 IIQ2014 0.6 IIIQ2014 1.4 IVQ2014 0.4 IQ2015 -1.6 IIQ2015 0.8 IIIQ2015 0.2 IVQ2015 0.5 IQ2016 -1.0 IIQ2016
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 -0.1 IIQ2015 0.6 IIIQ2015 -0.5 IVQ2015 -0.6 IQ2016 0.3 IIQ2016 0.6
France	0.1 IIIQ2012 0.1 IVQ2012 -0.1 IQ2013 0.3 IIQ2013 -1.7 IIIQ2013 0.1 IVQ2013 -0.1 IQ2014 -0.2 IIQ2014 -0.2 IIIQ2014 0.2 IVQ2014 -0.2 IQ2015 0.4 IIQ2015 -0.6 IIIQ2015 -0.5 IVQ2015 -0.2 IQ2016 0.6 IIQ2016
UK	0.7 IIQ2013 -1.7 IIIQ2013 0.1 IVQ2013 0.8 IQ2014 0.3 IIQ2014 -0.7 IIIQ2014 0.3 IVQ2014 -0.6 IQ2015 0.6 IIQ2015 -0.5 IIIQ2015 0.1 IVQ2015 -0.2 IQ2016 -0.3 IIQ2016

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 Aug 2016. The share of Asia in Japan’s trade is close to one-half for 55.1 percent of exports and 49.3 percent of imports. Within Asia, exports to China are 18.2 percent of total exports and imports from China 24.6 percent of total imports. While exports to China decreased 8.9 percent in the 12 months ending in Aug 2016, imports from China decreased 15.4 percent. The largest export market for Japan in Aug 2016 is the US with share of 18.3 percent of total exports, which is close to that of China, and share of imports from the US of 11.4 percent in total imports. Japan’s exports to the US decreased 14.5 percent in the 12 months ending in Aug 2016 and imports from the US decreased 9.5 percent. Western Europe has share of 11.5 percent in Japan’s exports and of 13.5 percent in imports. Rates of growth of exports of Japan in Aug 2016 are minus 14.5 percent for exports to the US, minus 32.7 percent for exports to Brazil and minus 6.0 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 Aug 2016 are mixed. Imports from Asia decreased 13.8 percent in the 12 months ending in Aug 2016 while imports from China decreased 15.4 percent. Data are in millions of yen, which may have effects of recent depreciation of the yen relative to the United States dollar (USD) and revaluation of the dollar relative to the euro.

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

Aug 2016	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	5,316,351	-9.6	5,335,062	-17.3
Asia	2,927,184 % Total 55.1	-9.4	2,629,137 % Total 49.3	-13.8
China	968,944 % Total 18.2	-8.9	1,312,115 % Total 24.6	-15.4
USA	971,451 % Total 18.3	-14.5	609,098 % Total 11.4	-9.5
Canada	66,604	0.3	74,984	-21.3
Brazil	25,941	-32.7	46,561	-34.4
Mexico	92,596	-10.4	47,852	7.9
Western Europe	609,456 % Total 11.5	0.9	717,721 % Total 13.5	-11.6
Germany	144,557	-6.0	199,599	-10.9
France	52,560	25.6	82,557	0.5
UK	109,276	11.9	55,613	-16.3
Middle East	193,217	-14.8	586,331	-29.5
Australia	140,911	0.5	259,330	-25.6

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 decreasing growth of the volume of world trade of goods and services from 3.5 percent in 2014 to 2.8 percent in 2015 and 3.1 percent in 2016. Growth improves to 4.2 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 V-6, IMF, Projections of World Trade, USD Billions, USD/Barrel and Annual ∆%

	2014	2015	2016	Average ∆% 2017-2021
World Trade Volume (Goods and Services)	3.5	2.8	3.1	4.2
Exports Goods & Services	3.4	2.8	3.0	4.0
Imports Goods & Services	3.6	2.9	3.3	4.3
Average Oil Price USD/Barrel	96.25	50.79	34.75	Average ∆% 2008-2017 77.37
Average Annual ∆% Export Unit Value of Manufactures	-0.7	-4.0	-2.7	Average ∆% 2008-2017 0.1
Exports of Goods & Services	2014	2015	2016	Average ∆% 2008-2017
EMDE	3.1	1.7	3.8	3.9
G7	3.5	3.4	2.5	2.5
Imports Goods & Services
EMDE	3.7	0.5	3.0	4.6
G7	3.5	4.3	3.4	2.2
Terms of Trade of Goods & Services
EMDE	-0.4	-3.9	-2.3	-0.2
G7	0.3	1.9	1.1	0.1
Terms of Trade of Goods
EMDE	-0.4	-4.1	-1.9	-0.2
G7	0.1	1.8	1.2	-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/2016/01/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, increased to 51.6 in Aug from 51.5 in Jul, indicating expansion at the faster rate (https://www.markiteconomics.com/Survey/PressRelease.mvc/a99df28cccfa40b5b144152ba58ed899). This index has remained above the contraction territory of 50.0 during 46 consecutive months. The employment index decreased from 51.2 in Jul to 50.7 in Aug with input prices rising at slower rate, new orders increasing at faster rate and output increasing at faster rate (https://www.markiteconomics.com/Survey/PressRelease.mvc/a99df28cccfa40b5b144152ba58ed899). David Hensley, Director of Global Economic Coordination at JP Morgan, finds moderate growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/a99df28cccfa40b5b144152ba58ed899). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, decreased to 50.8 in Aug from 51.0 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/dcb7fdffa5154a6d9bd54507faa860f6). New export orders increased. David Hensley, Director of Global Economic Coordination at JP Morgan, moderate improvement (https://www.markiteconomics.com/Survey/PressRelease.mvc/dcb7fdffa5154a6d9bd54507faa860f6). The Markit Brazil Composite Output Index decreased from 46.4 in Jul to 44.4 in Aug, indicating contraction in activity of Brazil’s private sector (https://www.markiteconomics.com/Survey/PressRelease.mvc/5f021c05806c4aa48da0320d068b20f1). The Markit Brazil Services Business Activity index, compiled by Markit, decreased from 45.6 in Jul to 42.7 in Aug, indicating contracting services activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/5f021c05806c4aa48da0320d068b20f1). Pollyanna de Lima, Economist at Markit, finds continuing weakness (https://www.markiteconomics.com/Survey/PressRelease.mvc/5f021c05806c4aa48da0320d068b20f1). The Markit Brazil Purchasing Managers’ Index^TM (PMI^™) decreased from 46.0 in Jul to 45.7 in Aug, indicating contraction in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/02cd036e51af40ceb77a46afb34b6f00). Pollyanna De Lima, Economist at Markit, finds contraction in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/02cd036e51af40ceb77a46afb34b6f00).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted decreased to 51.4 in Sep from 52.0 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/d28fdeb00c3f4ac0805e81e677e70825). New export orders decreased. Tim More, Senior Economist at Markit, finds improvement with challenges (https://www.markiteconomics.com/Survey/PressRelease.mvc/d28fdeb00c3f4ac0805e81e677e70825). The Markit Flash US Services PMI™ Business Activity Index decreased from 51.4 in Jul to 50.9 in Aug (https://www.markiteconomics.com/Survey//PressRelease.mvc/9f6f960aec03459f83aea032471cd719). The Markit Flash US Composite PMI™ Output Index decreased from 51.8 in Jul to 51.5 in Aug. Chris Williamson, Chief Business Economist at Markit, finds that the surveys are consistent with subdued growth (https://www.markiteconomics.com/Survey//PressRelease.mvc/9f6f960aec03459f83aea032471cd719). The Markit US Composite PMI™ Output Index of Manufacturing and Services increased to 51.8 in Jul from 51.2 in Jun (https://www.markiteconomics.com/Survey//PressRelease.mvc/925ec682ae9d4a8abe9306ba9a83d61b). The Markit US Services PMI™ Business Activity Index did not change from 51.4 in Jun to 51.4 in Jul (https://www.markiteconomics.com/Survey//PressRelease.mvc/925ec682ae9d4a8abe9306ba9a83d61b). Chris Williamson, Chief Economist at Markit, finds the indexes suggesting annual growth at 1.0 percent in IIIQ2016 (https://www.markiteconomics.com/Survey//PressRelease.mvc/925ec682ae9d4a8abe9306ba9a83d61b). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) decreased to 50.0 in Aug from 52.0 in Jul, which indicates neutral conditions (https://www.markiteconomics.com/Survey/PressRelease.mvc/ad3adf9a4ab64e7a834c0a41b701b194). New foreign orders increased. Chris Williamson, Chief Economist at Markit, finds improving factory output (https://www.markiteconomics.com/Survey/PressRelease.mvc/ad3adf9a4ab64e7a834c0a41b701b194). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® decreased 3.2-percentage points from 52.6 in Jul to 49.4 in Aug, which indicates contraction (https://www.instituteforsupplymanagement.org/ismreport/mfgrob.cfm). The index of new orders decreased 7.8 percentage points from 56.9 in Jul to 49.1 in Aug. The index of new exports changed 0.0 percentage points from 52.5 in Jul to 52.5 in Aug, expanding at the same rate. The Non-Manufacturing ISM Report on Business^® PMI decreased 4.1 percentage points from 55.5 in Jul to 51.4 in Aug, indicating growth of business activity/production during 85 consecutive months, while the index of new orders increased 8.9 percentage points from 60.3 in Jul to 51.4 in Aug (https://www.instituteforsupplymanagement.org/ismreport/nonmfgrob.cfm). Table USA provides the country economic indicators for the US.

Table USA, US Economic Indicators

Consumer Price Index	Aug 12 months NSA ∆%: 1.1; ex food and energy ∆%: 2.3 Aug month SA ∆%: 0.2; ex food and energy ∆%: 0.3 Blog 9/18/16
Producer Price Index	Finished Goods Aug 12-month NSA ∆%: -2.1; ex food and energy ∆% 1.2 Aug month SA ∆% = -0.3; ex food and energy ∆%: 0.2 Final Demand Aug 12-month NSA ∆%: 0.0; ex food and energy ∆% 1.0 Aug month SA ∆% = 0.0; ex food and energy ∆%: 0.1 Blog 9/18/16
PCE Inflation	Jul 12-month NSA ∆%: headline 0.8; ex food and energy ∆% 1.6 Blog 9/4/16
Employment Situation	Household Survey: Aug Unemployment Rate SA 4.9% Blog calculation People in Job Stress Aug: 23.9 million NSA, 14.2% of Labor Force Establishment Survey: Aug Nonfarm Jobs +151,000; Private +126,000 jobs created  Aug 12-month Average Hourly Earnings Inflation Adjusted ∆%: 1.9 Blog 9/4/16
Nonfarm Hiring	Nonfarm Hiring fell from 63.5 million in 2006 to 58.6 million in 2014 or by 4.9 million and to 61.7 million in 2015 or by 1.8 million Private-Sector Hiring Jul 2016 5.243 million lower by 4.9 percent than 5.513 million in Jul 2006 Blog 9/11/16
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 1.3 IIQ2013/IIQ2012 1.0 IIIQ2013/IIIQ2012 1.7 IVQ2013/IVQ2012 2.7 IQ2014/IQ2013 1.6 IIQ2014/IIQ2013 2.4 IIIQ2014/IIIQ2013 2.9 IVQ2014/IVQ2013 2.5 IQ2015/IQ2014 3.3 IIQ2015/IIQ2014 3.0 IIIQ2015/IIIQ2014 2.2 IVQ2015/IVQ2014 1.9 IQ2016/IQ2015 1.6 IIQ2016/IIQ2015 1.2 IQ2012 SAAR 2.7 IIQ2012 SAAR 1.9 IIIQ2012 SAAR 0.5 IVQ2012 SAAR 0.1 IQ2013 SAAR 2.8 IIQ2013 SAAR 0.8 IIIQ2013 SAAR 3.1 IVQ2013 SAAR 4.0 IQ2014 SAAR -1.2 IIQ2014 SAAR 4.0 IIIQ2014 SAAR 5.0 IVQ2014 SAAR 2.3 IQ2015 SAAR 2.0 IIQ2015 SAAR: 2.6 IIIQ2015 SAAR: 2.0 IVQ2015 SAAR: 0.9 IQ2016 SAAR: 0.8 IIQ2016 SAAR: 1.1 Blog 8/28/16
Real Private Fixed Investment	SAAR IIQ2016 ∆% -2.5 IVQ2007 to IIQ2016: 7.1% Blog 8/28/16
Corporate Profits	IIQ2016 SAAR: Corporate Profits -1.2; Undistributed Profits -5.2 Blog 8/28/16
Personal Income and Consumption	Jul month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.4 Real Personal Consumption Expenditures (RPCE): 0.3 12-month Jul NSA ∆%: RDPI: 2.7; RPCE ∆%: 2.6 Blog 9/4/16
Quarterly Services Report	IIQ16/IQ15 NSA ∆%: Information 3.8 Financial & Insurance 4.0 Earlier Data: Blog 3/22/15
Employment Cost Index	Compensation Private IIQ2016 SA ∆%: 0.6 Jun 12 months ∆%: 2.4 Earlier Data: Blog 2/1/15
Industrial Production	Aug month SA ∆%: -0.4 Aug 12 months SA ∆%: -1.1 Manufacturing Aug SA -0.4 ∆% Aug 12 months SA ∆% minus 0.4, NSA -0.4 Capacity Utilization: 75.5 Blog 9/18/16
Productivity and Costs	Nonfarm Business Productivity IIQ2016∆% SAAE -0.6; IIQ2016/IIQ2015 ∆% -0.4; Unit Labor Costs SAAE IIQ2016 ∆% 4.3; IIQ2016/IIQ2015 ∆%: 2.6 Blog 9/4/16
New York Fed Manufacturing Index	General Business Conditions From Aug -4.21 to Sep -1.99 New Orders: From Aug 1.04 to Sep minus 7.45 Blog 9/18/16
Philadelphia Fed Business Outlook Index	General Index from Aug 2.0 to Sep 12.8 New Orders from Aug -7.2 to Sep 1.4 Blog 9/18/16
Manufacturing Shipments and Orders	Jul Orders SA ∆% 1.9 Ex Transport 0.2 Jan-Jul 16/Jan-Jul 15 NSA New Orders ∆% minus 3.1 Ex transport minus 3.7 Earlier data: Blog 4/5/15
Durable Goods	Jul New Orders SA ∆%: 4.4; ex transport ∆%: 1.5 Jan-Jul 16/Jan-Jul 15 New Orders NSA ∆%: -0.9; ex transport ∆% -1.4 Earlier Data: Blog 4/26/15
Sales of New Motor Vehicles	Aug 2016 11,678,517; Aug 2015 11,609,928. Aug 16 SAAR 16.98 million, Jul 16 SAAR 17.88 million, Aug 2015 SAAR 17.79 million Blog 9/4/16
Sales of Merchant Wholesalers	Jan-Jul 2016/Jan-Jul 2015 NSA ∆%: Total -2.6; Durable Goods: minus -0.9; Nondurable Goods: -4.1 EARLIER DATA: Blog 4/12/15
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Jul 16 12-M NSA ∆%: Sales Total Business -4.1; Manufacturers -5.4 Retailers 0.2; Merchant Wholesalers -6.6 Blog 9/25/16
Sales for Retail and Food Services	Jan-Aug 2016/Jan-Aug 2015 ∆%: Retail and Food Services 2.9; Retail ∆% 2.4 Blog 9/25/16
Value of Construction Put in Place	SAAR month SA Jul ∆%: minus 0.0 Jan-Jul 16/Jan-Jul 15 NSA: 5.6 Earlier Data: Blog 4/5/15
Case-Shiller Home Prices	Jun 2016/ Jun 2015 ∆% NSA: 10 Cities 4.3; 20 Cities: 5.1; National: 5.1 ∆% Jun SA: 10 Cities -0.1 ; 20 Cities: -0.1 Blog 9/4/16
FHFA House Price Index Purchases Only	Jul SA ∆% 0.5; 12 month NSA ∆%: 5.9 Blog 9/25/16
New House Sales	Jul 2016 month SAAR ∆%: 12.4 Jan-Jul 2016/Jan-Jun 2015 NSA ∆%: 12.8 Blog 8/28/16
Housing Starts and Permits	Aug Starts month SA ∆% -5.8; Permits ∆%: -0.4 Jan-Aug 2016/Jan-Aug 2015 NSA ∆% Starts 6.1; Permits  ∆% -0.8 Earlier Data: Blog 4/19/15
Rate of Homeownership	IIQ2016: 62.9 Blog 7/31/16
Trade Balance	Balance Jul SA -$39,474 million versus Jun -$44,655 million Exports Jul SA ∆%: 1,9 Imports Jul SA ∆%: -0.8 Goods Exports Jan-Jul 2016/Jan-Jul 2015 NSA ∆%: minus 6.4 Goods Imports Jan-Jul 2016/Jan-Jul 2015 NSA ∆%: minus 5.2 Blog 9/11/16
Export and Import Prices	Aug 12-month NSA ∆%: Imports -2.2; Exports -2.4 Earlier Data: Blog 4/12/15
Consumer Credit	Jul ∆% annual rate: Total 5.8; Revolving 3.4; Nonrevolving 6.7 Earlier Data: Blog 5/10/15
Net Foreign Purchases of Long-term Treasury Securities	Jul Net Foreign Purchases of Long-term US Securities: $101.8 billion Major Holders of Treasury Securities: China $1218.8 billion; Japan $1154.6 billion; Total Foreign US Treasury Holdings Jul $6247.9 billion Blog 9/25/16
Treasury Budget	Fiscal Year 2016/2015 ∆% Aug: Receipts 0.9; Outlays 3.4; Individual Income Taxes 0.5 Deficit Fiscal Year 2011 $1,300 billion Deficit Fiscal Year 2012 $1,087 billion Deficit Fiscal Year 2013 $680 billion Deficit Fiscal Year 2014 $485 billion Deficit Fiscal Year 2015 $438 billion Blog 9/18/2016
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 72.6% GDP 2014 Deficit $485 B 2.8% GDP Debt $12,780 B 74.4% GDP 2015 Deficit $438 B 2.5% GDP Debt $13,117 B 73.6% GDP 2026 Deficit $1,343B, 4.9% GDP Debt $23,672B 85.6% GDP 2046: Long-term Debt/GDP 141.1% 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 6/21/15 1/3/16 4/10/16 7/24/16
Commercial Banks Assets and Liabilities	Aug 2016 SAAR ∆%: Securities 7.0 Loans 3.9 Cash Assets -3.8 Deposits 8.8 Blog 9/25/16
Flow of Funds Net Worth of Families and Nonprofits	IIQ2016 ∆ since 2007 Assets +$22,869.5 BN Nonfinancial 3346.9 BN Real estate $2331.3 BN Financial +19,522.5 BN Net Worth +$22,577.4 BN Blog 9/25/16
Current Account Balance of Payments	IIQ2016 -108,806 MM % GDP 2.6 Blog 9/25/16
Collapse of United States Dynamism of Income Growth and Employment Creation	Blog 9/25/16
IMF View	World Real Economic Growth 2016 ∆% 3.2 Blog 4/24/16
Income, Poverty and Health Insurance in the United States	43.123 Million Below Poverty in 2015, 13.5% of Population Median Family Income CPI-2015 Adjusted $56,516 in 2015 back to 1999 Levels Uncovered by Health Insurance 28.966 Million in 2015 Blog 9/25/16
Monetary Policy and Cyclical Valuation of Risk Financial Assets	Blog 1/17/2016

Links to blog comments in Table USA: 9/18/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html

9/11/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rate-uncertainty-and-valuation.html

9/4/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html

8/28/16 http://cmpassocregulationblog.blogspot.com/2016/08/and-as-ever-economic-outlook-is.html

7/31/16 http://cmpassocregulationblog.blogspot.com/2016/07/business-fixed-investment-has-been-soft.html

7/24/16 http://cmpassocregulationblog.blogspot.com/2016/07/unresolved-us-balance-of-payments.html

4/24/16 http://cmpassocregulationblog.blogspot.com/2016/04/imf-view-of-world-economy-and-finance.html

4/10/16 http://cmpassocregulationblog.blogspot.com/2016/04/proceeding-cautiously-in-reducing.html

1/17/16 http://cmpassocregulationblog.blogspot.com/2016/01/unconventional-monetary-policy-and.html

1/3/16 http://cmpassocregulationblog.blogspot.com/2016/01/weakening-equities-and-dollar.html

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

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

IIB2 United States House Prices. 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). 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 3.1 percent in the 12 months ending in Oct 2011. There was significant recovery in Nov 2011 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 0.4 percent in Dec 2011 and the 12-month percentage change improved to minus 1.3 percent. There was further improvement with revised change of minus 0.2 percent in Jan 2012 and decline of the 12-month percentage change to minus 1.2 percent. The index improved to positive change of 0.2 percent in Feb 2012 and increase of 0.1 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 2.6 percent in 12 months and improvement continued with increase of 0.6 percent in May 2012 and 3.4 percent in the 12 months ending in May 2012. Improvement consolidated with increase of 0.4 percent in Jun 2012 and 3.5 percent in 12 months. In Jul 2012, the house price index increased 0.2 percent and 3.4 percent in 12 months. Strong increase of 0.6 percent in Aug 2012 pulled the 12-month change to 4.2 percent. There was another increase of 0.6 percent in Oct and 5.2 percent in 12 months followed by increase of 0.5 percent in Nov 2012 and 5.2 percent in 12 months. The FHFA house price index increased 0.7 percent in Jan 2013 and 6.4 percent in 12 months. Improvement continued with increase of 0.5 percent in Apr 2013 and 7.1 percent in 12 months. In May 2013, the house price indexed increased 0.8 percent and 7.3 percent in 12 months. The FHFA house price index increased 0.7 percent in Jun 2013 and 7.6 percent in 12 months. In Jul 2013, the FHFA house price index increased 0.6 percent and 8.1 percent in 12 months. Improvement continued with increase of 0.5 percent in Aug 2013 and 7.9 percent in 12 months. In Sep 2013, the house price index increased 0.5 percent and 7.9 percent in 12 months. The house price index increased 0.4 percent in Oct 2013 and 7.7 percent in 12 months. In Nov 2013, the house price index increased 0.1 percent and increased 7.2 percent in 12 months. The house price index rose 0.5 percent in Dec 2013 and 7.3 percent in 12 months. Improvement continued with increase of 0.6 percent in Jan 2014 and 7.2 percent in 12 months. In Feb 2014, the house price index increased 0.4 percent and 6.9 percent in 12 months. The house price index increased 0.4 percent in Mar 2014 and 6.2 percent in 12 months. In Apr 2014, the house price index increased 0.3 percent and increased 5.9 percent in 12 months. The house price index increased 0.3 percent in May 2014 and 5.3 percent in 12 months. In Jun 2014, the house price index increased 0.4 percent and 5.1 percent in 12 months. The house price index increased 0.4 percent in Jul 2014 and 4.8 percent in 12 months. In Sep 2014, the house price index increased 0.2 percent and increased 4.5 percent in 12 months. The house price index increased 0.6 percent in Oct 2014 and 4.7 percent in 12 months. In Nov 2014, the house price index increased 0.6 percent and 5.1 percent in 12 months. The house price index increased 0.8 percent in Dec 2014 and increased 5.4 percent in 12 months. In Feb 2015, the house price index increased 0.8 percent and increased 5.4 percent in 12 months. The house price index increased 0.3 percent in Mar 2015 and 5.4 percent in 12 months. In Apr 2015, the house price index increased 0.5 percent and 5.6 percent in 12 months. The house price index increased 0.5 percent in May 2015 and 5.8 percent in 12 months. House prices increased 0.3 percent in Jun 2015 and 5.7 percent in 12 months. The house price index increased 0.4 percent in Jul 2015 and increased 5.7 percent in 12 months. House prices increased 0.3 percent in Aug 2015 and increased 5.5 percent in 12 months. In Sep 2015, the house price index increased 0.8 percent and increased 6.2 percent in 12 months. The house price index increased 0.4 percent in Oct 2015 and increased 6.0 percent in 12 months. House prices increased 0.7 percent in Nov 2015 and increased 6.1 percent in 12 months. The house price index increased 0.5 percent in Dec 2015 and increased 5.8 percent in 12 months. House prices increased 0.4 percent in Jan 2016 and increased 6.1 percent in 12 months. The house price index increased 0.5 percent in Feb 2016 and increased 5.8 percent in 12 months. House prices increased 0.8 percent in Mar 2016 and increased 6.4 percent in 12 months. The house price index increased 0.2 percent in Apr 2016 and increased 6.1 percent in 12 months. House prices increased 0.3 percent in May 2016 and increased 5.8 percent in 12 months. The house price index increased 0.3 percent in Jun 2016 and increased 5.7 percent in 12 months. House prices increased 0.5 percent in Jul 2016 and increased 5.9 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
Jul 2016	0.5	5.9
Jun	0.3	5.7
May	0.3	5.8
Apr	0.2	6.1
Mar	0.8	6.4
Feb	0.5	5.8
Jan	0.4	6.1
Dec 2015	0.5	5.8
Nov	0.7	6.1
Oct	0.4	6.0
Sep	0.8	6.2
Aug	0.3	5.5
Jul	0.4	5.7
Jun	0.3	5.7
May	0.5	5.8
Apr	0.5	5.6
Mar	0.3	5.4
Feb	0.8	5.4
Jan	0.2	5.0
Dec 2014	0.8	5.4
Nov	0.6	5.1
Oct	0.6	4.7
Sep	0.2	4.5
Aug	0.5	4.8
Jul	0.4	4.8
Jun	0.4	5.1
May	0.3	5.3
Apr	0.3	5.9
Mar	0.4	6.2
Feb	0.4	6.9
Jan	0.6	7.2
Dec 2013	0.5	7.3
Nov	0.1	7.2
Oct	0.4	7.7
Sep	0.5	7.9
Aug	0.5	7.9
Jul	0.6	8.1
Jun	0.6	7.6
May	0.8	7.3
Apr	0.5	7.1
Mar	1.1	7.2
Feb	0.7	6.9
Jan	0.7	6.4
Dec 2012	0.6	5.4
Nov	0.5	5.2
Oct	0.6	5.2
Sep	0.5	4.0
Aug	0.6	4.2
Jul	0.2	3.4
Jun	0.4	3.5
May	0.6	3.4
Apr	0.6	2.6
Mar	1.0	2.2
Feb	0.2	0.1
Jan	-0.2	-1.2
Dec 2011	0.4	-1.3
Nov	0.4	-2.3
Oct	-0.6	-3.1
Sep	0.6	-2.3
Aug	-0.3	-3.8
Jul	0.3	-3.5
Jun	0.3	-4.4
May	-0.2	-5.9
Apr	0.2	-5.7
Mar	-0.9	-5.9
Feb	-1.1	-5.1
Jan	-0.4	-4.5
Dec 2010		-3.8
Dec 2009		-2.0
Dec 2008		-10.3
Dec 2007		-3.2
Dec 2006		2.4
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		3.0
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 2015, the FHFA house price index increased 118.6 percent at the yearly average rate of 3.5 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 increased 1.9 percent at the average yearly rate of 0.2 percent between 2006 and 2015 and 4.4 percent between 2005 and 2015 at the average yearly rate of 0.4 percent.

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
1992-2015	118.6	3.5
1992-2000	39.3	4.2
2000-2003	24.2	7.5
2000-2005	50.3	8.5
2003-2005	21.0	10.0
2005-2015	4.4	0.4
2000-2006	54.0	7.5
2003-2006	24.0	7.4
2006-2015	1.9	0.2

Source: Federal Housing Finance Agency

http://www.fhfa.gov/DataTools

Table VA-1 provides the value of total sales of US business (manufacturers, retailers and merchant wholesalers) and monthly and 12-month percentage changes. Sales of manufacturers decreased 0.2 percent in Jul and increased 0.6 percent in Jun, decreasing 5.4 percent in the 12 months ending in Jul 2016. Sales of retailers increased 0.1 percent in Jul, increased 0.8 percent in Jun and increased 0.2 percent in 12 months. Sales of merchant wholesalers decreased 0.4 percent in Jul, increasing 1.7 percent in Jun and decreasing 6.6 percent in 12 months. Total business sales decreased 0.2 percent in Jul and increased 1.0 percent in Jun, decreasing 4.1 percent in the 12 months ending in Jul 2016.

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

	Jul 16/Jun 16 ∆% SA	Jul 2016 Millions of Dollars NSA	Jun 16/ May 16  ∆% SA	Jul 16/ Jul 15 ∆% NSA
Total Business	-0.2	1,266,831	1.0	-4.1
Manufacturers	-0.2	437,519	0.6	-5.4
Retailers	0.1	405,465	0.8	0.2
Merchant Wholesalers	-0.4	423,847	1.7	-6.6

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

Chart VA-1 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers seasonally adjusted (SA) in millions of dollars. The series with adjustment evens fluctuations following seasonal patterns. There is sharp recovery from the global recession in a robust trend, which is mixture of price and quantity effects because data are not adjusted for price changes. There is stability in the final segment with subdued prices with data not adjusted for price changes.

Chart VA-1, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Jul 2016

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

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

Chart VA-2, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Jul 2016

US Census Bureau

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

Businesses added cautiously to inventories to replenish stocks. Retailers’ inventories decreased 0.3 percent in Jul 2016 and increased 0.5 percent in Jun with growth of 4.4 percent in 12 months, as shown in Table VA-2. Total business changed inventories 0.0 percent in Jul, increasing 0.2 percent in Jun and increasing 0.4 percent in 12 months. Inventories sales/ratios of total business continued at a level close to 1.30 under careful management to avoid costs and risks, changing to 1.39 in Jul 2016. Inventory/sales ratios of manufacturers and retailers are higher than for merchant wholesalers. There is stability in inventory/sales ratios in individual months and relative to a year earlier with increase at the margin.

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

Inventory Change	Jul 16 Millions of Dollars NSA	Jul 16/ Jun 16 ∆% SA	Jun 16/May 16 ∆% SA	Jul 16/Jul 15 ∆% NSA
Total Business	1,796,662	0.0	0.2	0.4
Manufacturers	625,189	0.1	0.0	-2.9
Retailers	586,320	-0.3	0.4	4.4
Merchant Wholesalers	585,153	0.0	0.3	0.4
Inventory/ Sales Ratio	Jul 16 Millions of Dollars NSA	Jul 2016 SA	Jun 2016 SA	Jul 2015 SA
Total Business	1,796,662	1.39	1.39	1.37
Manufacturers	625,189	1.35	1.35	1.35
Retailers	586,320	1.49	1.50	1.46
Merchant Wholesalers	585,153	1.34	1.33	1.32

US Census Bureau

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

Chart VA-3 of the US Census Bureau provides total business inventories of manufacturers, retailers and merchant wholesalers seasonally adjusted (SA) in millions of dollars from Jan 1992 to Jul 2016. The impact of the two recessions of 2001 and IVQ2007 to IIQ2009 is evident in the form of sharp reductions in inventories. Inventories have surpassed the peak before the global recession. Data are not adjusted for price changes.

Chart VA-3, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Jul 2016

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

Chart VA-4 provides total business inventories of manufacturers, retailers and merchant wholesalers not seasonally adjusted (NSA) from Jan 1992 to Jul 2016 in millions of dollars. The recessions of 2001 and IVQ2007 to IIQ2009 are evident in the form of sharp reductions of inventories. There is sharp upward trend of inventory accumulation after both recessions. Total business inventories are higher than in the peak before the global recession.

Chart VA-4, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Jul 2016

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

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

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

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

This is the pure inventory cycle.

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

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

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

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

Chart VA-5 shows the increase in the inventory/sales ratios during the recession of 2007-2009. The inventory/sales ratio fell during the expansions. The inventory/sales ratio declined to a trough in 2011, climbed and then stabilized at current levels in 2012, 2013 and 2015 with increase into 2015-2016, decreasing at the margin.

Chart VA-5, Total Business Inventories/Sales Ratios 2006 to 2016

Source: US Census Bureau

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

Sales of retail and food services decreased 0.3 percent in Aug 2016 after increasing 0.1 percent in Jul 2016 seasonally adjusted (SA), growing 2.9 percent in Jan-Aug 2016 relative to Jan-Aug 2015 not seasonally adjusted (NSA), as shown in Table VA-3. Excluding motor vehicles and parts, retail sales decreased 0.1 percent in Aug 2016, decreasing 0.4 percent in Jul 2016 SA and increasing 2.8 percent NSA in Jan-Aug 2016 relative to a year earlier. Sales of motor vehicles and parts decreased 0.9 percent in Aug 2016 after increasing 1.7 percent in Jul 2016 SA and increasing 3.1 percent NSA in Jan-Aug 2016 relative to a year earlier. Gasoline station sales decreased 0.8 percent SA in Aug 2016 after decreasing 2.6 percent in Jul 2016 in oscillating prices of gasoline that are moderating, decreasing 10.2 percent in Jan-Aug 2016 relative to a year earlier.

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

	Aug/Jul ∆% SA	Jul/Jun ∆% SA	Jan 2016-Aug 2016 Million Dollars NSA	Jan-Aug 2016 from Jan-Aug 2015 ∆% NSA
Retail and Food Services	-0.3	0.1	3,590,943	2.9
Excluding Motor Vehicles and Parts	-0.1	-0.4	2,836,246	2.8
Motor Vehicles & Parts Dealers	-0.9	1.7	754,697	3.1
Retail	-0.5	0.1	3,152,238	2.4
Building Materials	-1.4	-0.7	237,294	6.6
Food and Beverage	0.3	-0.4	465,667	2.1
Grocery	0.4	-0.5	417.916	2.1
Health & Personal Care Stores	-0.1	0.5	219,736	7.7
Clothing & Clothing Accessories Stores	0.7	-0.6	159,328	0.1
Gasoline Stations	-0.8	-2.6	266,862	-10.2
General Merchandise Stores	0.0	-0.1	428,496	-0.1
Food Services & Drinking Places	0.9	0.0	438,705	6.4

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

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

Chart VA-6, US, Monthly Percentage Change of Retail and Food Services Sales, Jan 1992-Aug 2016

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

Chart VA-7 of the US Census Bureau provides total sales of retail trade and food services seasonally adjusted (SA) from Jan 1992 to Aug 2016 in millions of dollars. The impact on sales of the shallow recession of 2001 was much milder than the sharp contraction in the global recession from IVQ2007 to IIQ2009. There is flattening in the final segment of the series followed by another increase/decrease. Data are not adjusted for price changes.

Chart VA-7, US, Total Sales of Retail Trade and Food Services, SA, Jan 1992-Aug 2016, Millions of Dollars

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

Chart VA-8 of the US Census Bureau provides total sales of retail trade and food services not seasonally adjusted (NSA) in millions of dollars from Jan 1992 to Aug 2016. Data are not adjusted for seasonality, which explains sharp jagged behavior, or price changes. There was contraction during the global recession from IVQ2007 to IIQ2009 with strong rebound to a higher level and stability followed by strong increase in the final segment.

Chart VA-8, US, Total Sales of Retail Trade and Food Services, NSA, Jan 1992-Aug 2016, Millions of Dollars

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

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-4) strengthened from minus $35.7 billion in Jun 2016 to $101.8 billion in Jul 2016. Foreign residents’ purchases minus sales of US long-term securities (row A in Table VA-4) in Jun 2016 of $7.6 billion strengthened to $72.6 billion in Jul 2016. Net US (residents) purchases of long-term foreign securities (row B in Table VA-4) strengthened from minus $8.1 billion in Jun 2016 to $31.3 billion in Jul 2016. Other transactions (row C2 in Table VA-4) changed from minus $35.2 billion in Jun 2016 to minus $2.1 billion in Jul 2016. In Jul 2016,

C = A + B + C2 = $72.6 billion + $31.3 billion -$2.1 billion = $101.8 billion

There are minor rounding errors. There improving demand in Table VA-4 in Jul 2016 in A1 private purchases by residents overseas of US long-term securities of $90.5 billion of which strengthening in A11 Treasury securities of $15.5 billion, strengthening in A12 of $32.0 billion in agency securities, strengthening of $21.8 billion of corporate bonds and strengthening of $21.2 billion in equities. Worldwide risk aversion causes flight into US Treasury obligations with significant oscillations. Official purchases of securities in row A2 decreased $17.9 billion with decrease of Treasury securities of $28.6 billion in Jul 2016. Official purchases of agency securities increased $6.9 billion in Jul 2016. Row D shows decrease in Jul 2016 of $8.8 billion in purchases of short-term dollar denominated obligations. Foreign private holdings of US Treasury bills decreased $8.5 billion (row D11) with foreign official holdings increasing $4.0 billion while the category “other” decreased $4.3 billion. Foreign private holdings of US Treasury bills decreased $8.5 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-4, Net Cross-Borders Flows of US Long-Term Securities, Billion Dollars, NSA

	Jul 2015 12 Months	Jul 2016 12 Months	Jun 2016	Jul 2016
A Foreign Purchases less Sales of US LT Securities	385.2	38.6	7.6	72.6
A1 Private	454.4	364.9	36.0	90.5
A11 Treasury	226.7	117.3	0.6	15.5
A12 Agency	136.1	194.3	30.5	32.0
A13 Corporate Bonds	134.2	146.3	13.0	21.8
A14 Equities	-42.6	-93.0	-8.0	21.2
A2 Official	-69.2	-326.3	-28.4	-17.9
A21 Treasury	-122.8	-343.4	-33.5	-28.6
A22 Agency	50.1	30.6	3.4	6.9
A23 Corporate Bonds	5.9	-7.5	0.5	-1.1
A24 Equities	-2.5	-6.0	1.2	4.8
B Net US Purchases of LT Foreign Securities	181.6	218.5	-8.1	31.3
B1 Foreign Bonds	272.5	281.0	1.3	32.0
B2 Foreign Equities	-90.9	-62.5	-9.4	-0.7
C1 Net Transactions	566.9	257.1	-0.5	103.9
C2 Other	-273.2	-186.2	-35.2	-2.1
C Net Foreign Purchases of US LT Securities	293.6	70.9	-35.7	101.8
D Increase in Foreign Holdings of Dollar Denominated Short-term	47.8	11.3	12.3	-8.8
D1 US Treasury Bills	74.9	-15.4	-5.6	-4.5
D11 Private	48.5	67.2	3.4	-8.5
D12 Official	26.4	-82.6	-9.0	4.0
D2 Other	-27.1	26.7	17.9	-4.3

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-5 provides major foreign holders of US Treasury securities. China is the largest holder with $1218.8 billion in Jul 2016, decreasing 1.8 percent from $1240.8 billion in Jun 2016 while decreasing $50.0 billion from Jul 2015 or 3.9 percent. The United States Treasury estimates US government debt held by private investors at $10,955 billion in Jun 2016. China’s holding of US Treasury securities represent 11.1 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, 2014, 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 $1200.8 billion in Jul 2015 to $1154.6 billion in Jul 2016 or 3.8 percent. The combined holdings of China and Japan in Jul 2016 add to $2373.4 billion, which is equivalent to 21.7 percent of US government marketable interest-bearing securities held by investors of $10,955 billion in Jun 2016 (http://www.fms.treas.gov/bulletin/index.html). Total foreign holdings of Treasury securities increased from $6120.0 billion in Jul 2015 to $6247.9 billion in Jul 2016, or 2.1 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

	Jul 2016	Jun 2016	Jul 2015
Total	6247.9	6282.8	6120.0
China	1218.8	1240.8	1268.8
Japan	1154.6	1147.7	1200.8
Ireland	269.6	270.7	216.6
Cayman Islands	264.3	269.4	224.4
Brazil	254.1	251.6	257.9
Switzerland	240.8	237.3	218.4
Luxembourg	223.5	225.0	185.2
United Kingdom	209.9	232.7	203.4
Taiwan	192.1	187.9	172.4
Hong Kong	189.6	185.6	182.8
Belgium	154.4	156.3	155.5
India	123.7	117.2	116.4
Singapore	103.4	106.9	112.7
Foreign Official Holdings	4010.5	4037.6	4173.7
A. Treasury Bills	276.6	272.5	359.2
B. Treasury Bonds and Notes	3734.0	3765.1	3814.5

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

http://ticdata.treasury.gov/Publish/mfh.txt

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 2015. 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 1.4 percent in 2013 and stagnated in 2014 at 0.0. The GDP of Japan increased 0.5 percent in 2015. 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 2015 is 1.0 percent higher than in calendar year 2007. Japan’s real GDP grew 8.0 percent from the trough of 2009 to 2015 at the average yearly rate of 1.3 percent (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	1.4
2014	0.0
2015	0.5

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/mopo/outlook/gor1510b.pdf) with changes on Apr 29, 2016 (https://www.boj.or.jp/en/mopo/outlook/gor1604b.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 2015, the forecast is of growth of GDP between 0.7 to 0.7 percent, with the all items CPI less fresh food of 0.0 percent (https://www.boj.or.jp/en/mopo/outlook/gor1604b.pdf). The critical difference is forecast of the CPI excluding fresh food of 0.0 to 0.2 percent in 2016 and 1.8 to 3.0 percent in 2017 (https://www.boj.or.jp/en/mopo/outlook/gor1604b.pdf). Consumer price inflation in Japan excluding fresh food was 0.1 percent in Mar 2016 and minus 0.3 percent in 12 months (http://www.stat.go.jp/english/data/cpi/1581.htm). The CPI increased 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).
6. Quantitative and Qualitative Monetary Easing (QQE) with Negative Nominal Interest Rate. On January 29, 2016, the Policy Board of the Bank of Japan introduced a new policy to attain the “price stability target of 2 percent at the earliest possible time” (https://www.boj.or.jp/en/announcements/release_2016/k160129a.pdf). The new framework consists of three dimensions: quantity, quality and interest rate. The interest rate dimension consists of rates paid to current accounts that financial institutions hold at the Bank of Japan of three tiers zero, positive and minus 0.1 percent. The quantitative dimension consists of increasing the monetary base at the annual rate of 80 trillion yen. The qualitative dimension consists of purchases by the Bank of Japan of Japanese government bonds (JGBs), exchange traded funds (ETFs) and Japan real estate investment trusts (J-REITS).
7. Quantitative and Qualitative Easing with Yield Curve Control. The Bank of Japan introduced a new approach, QQE with Yield Curve Control (“Quantitative and Qualitative Easing with Yield Curve Control”) at its policy meeting on Sep 21, 2016 (https://www.boj.or.jp/en/announcements/release_2016/k160921a.pdf). The policy consists of two measures. First “yield curve control” consists of controlling the long-term and short-term interest rates. The bank will fix the interest rates of policy balances held by financial institutions at the BOJ at minus 0.1 percent and will purchase Japanese Government Bonds (JGB) in the amount required to maintain the yield of the 10-year JGB at around zero percent. Second, “the inflation-overshooting commitment” consists of increasing base money to maintain the CPI price stability target above 2 percent.

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
Feb 2016	+0.7 to +0.7 [+0.7]	0.0
Jan 2016	+1.0 to +1.3 [+1.1]	0.0 to 0.2 [+0.1]
Oct 2015	+0.8 to +1.4 [+1.2]	0.0 to +0.4 [+0.1
Jul 2015	+1.5 to +1.9 [+1.7]	+0.3 to +1.0 [+0.7]
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
Jul 2016	+0.8 to +1.0 [+1.0]	0.0 to +0.3 [0.5]	0.0 to +0.3 [0.5]
Apr 2016	+0.8 to +1.4 [+1.2]	0.0 to +0.8 [+0.5]	0.0 to +0.8 [+0.5]
Jan 2016	+1.0 to +1.7 [+1.5]	0.2 to +1.2 [+0.8]
Oct 2015	+1.2 to +1.6 [+1.4]	+0.8 to +1.5 [+1.4]
Jul 2015	+1.5 to 1.7 [+1.5]	+1.2 to +2.1 [+1.9]
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
Jul 2016	1.0 to +1.5 [+1.3]	+0.8 to +1.8 [+1.7]	+0.8 to +1.8 [+1.7]
Apr 2016	0.0 to + +0.3 [+0.1]	1.8 to +3.0 [+2.7]	0.8 to +2.0 [+1.7
Jan 2016	+0.1 to + 0.5 [+0.3]	+2.0 to +3.1 [+2.8]	+ 1.0 to +2.1 [+1.8]
Oct 2015	+0.1 to +0.5 [+0.3]	+2.5 to +3.4 [+3.1]	+1.2 to 2.1 [+1.8]
Jul 2015	+0.1 to +0.5 [+0.2]	+2.7 to +3.4 [+3.1]	+1.4 to +2.1 [+1.8]
Apr 2015	+0.1 to +0.5 [+0.2]	+2.7 to +3.4 [+3.2]	+1.4 to +2.1 [+1.9]
2018
Jul 2016	+0.8 to +1.0 [+0.9]	+1.0 to +2.0 [+1.9]	+1.0 to +2.0 [+1.9]
Apr 2016	+0.6 to +1.2 [+1.0]	+1.0 to +2.1 [+1.9]	+1.0 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

https://www.boj.or.jp/en/mopo/outlook/gor1510b.pdf

https://www.boj.or.jp/en/mopo/outlook/gor1601b.pdf

https://www.boj.or.jp/en/mopo/outlook/gor1604b.pdf

https://www.boj.or.jp/en/mopo/outlook/gor1607b.pdf

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

Manufacturing PMI™ increased from 49.5 in Aug to 50.3 in Sep and the Flash Japan

Manufacturing Output Index™ increased from 50.2 in Aug to 50.7 in Sep

(https://www.markiteconomics.com/Survey/PressRelease.mvc/70315de20da9494bbeb38538a477bcb2). New export orders increased. Amy Brownbill, Economist at IHS

Markit, finds improving conditions

(https://www.markiteconomics.com/Survey/PressRelease.mvc/70315de20da9494bbeb38538a477bcb2).The Nikkei Composite Output PMI Index decreased from 50.1 in Jul to 49.8 in Aug, indicating weaker business activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/cafd4418b33a44f4b086e44f6a76f5ac). The Nikkei Business Activity Index of Services decreased to 49.6 in Aug from 50.4 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/cafd4418b33a44f4b086e44f6a76f5ac). Amy Brownbill, Ecoomist at Markit and author of the report, find improving new orders (https://www.markiteconomics.com/Survey/PressRelease.mvc/cafd4418b33a44f4b086e44f6a76f5ac). The Nikkei Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, increased from 49.3 in Jul to 49.5 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/5579843fe8dc4f2dad8673f0f04870e8). New orders contracted from home and abroad. Amy Brownbill, Economist at Markit, finds milder improving output in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/5579843fe8dc4f2dad8673f0f04870e8).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	Aug ∆% -0.3 12 months ∆% -3.6 Blog 9/18/16
Consumer Price Index	Jul NSA ∆% -0.2; Jul 12 months NSA ∆% -0.4 Blog 8/28/16
Real GDP Growth	IIQ2016 ∆%: 0.2 on IQ2016;  IIQ2016 SAAR 0.7; ∆% 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 11/22/15 12/13/15 2/21/16 3/13/16 5/22/16 6/12/16 8/21/16 9/11/16
Employment Report	Jul Unemployed 2.03 million Change in unemployed since last year: -190 thousand Unemployment rate: 3.0% Blog 9/4/16
All Industry Indices	Jul month SA ∆% 0.3 12-month NSA ∆% -0.7 Earlier Data: Blog 4/26/15
Industrial Production	Jul SA month ∆%: 0.0 Jul 12-month NSA ∆% -3.8 Earlier Data: Blog 3/29/15
Machine Orders	Total Jun ∆% 10.1 Private ∆%: 6.9 Jun ∆% Excluding Volatile Orders 8.3 Earlier Data: Blog 4/19/15
Tertiary Index	Jun month SA ∆% 0.8 Jun 12 months NSA ∆% 0.4 Earlier Data: Blog 4/26/15
Wholesale and Retail Sales	Jul 12 months: Total ∆%: -5.8 Wholesale ∆%: -8.2 Retail ∆%: -0.2 Earlier Data: Blog 3/29/15
Family Income and Expenditure Survey	Jul 12-month ∆% total nominal consumption -0.9, real -0.5 Earlier Data: Blog 3/29/15
Trade Balance	Exports Aug 12 months ∆%: minus 9.6 Imports Aug 12 months ∆% -17.3 Earlier Data: Blog 4/26/15

Links to blog comments in Table JPY: 9/18/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html

9/11/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rate-uncertainty-and-valuation.html

9/4/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html

8/28/16 http://cmpassocregulationblog.blogspot.com/2016/08/and-as-ever-economic-outlook-is.html

8/21/16 http://cmpassocregulationblog.blogspot.com/2016/08/interest-rate-policy-uncertainty-and.html

6/12/16 http://cmpassocregulationblog.blogspot.com/2016/06/considerable-uncertainty-about-economic.html

5/22/16 http://cmpassocregulationblog.blogspot.com/2016/05/most-fomc-participants-judged-that-if.html

3/13/16 http://cmpassocregulationblog.blogspot.com/2016/03/monetary-policy-and-fluctuations-of_13.html

12/13/15 http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-interest-rates-with-volatile_17.html

11/22/15 http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-liftoff-followed-by.html

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

08/23/15 http://cmpassocregulationblog.blogspot.com/2015/08/global-decline-of-values-of-financial.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 V-5 for Aug 2016. The share of Asia in Japan’s trade is close to one-half for 55.1 percent of exports and 49.3 percent of imports. Within Asia, exports to China are 18.2 percent of total exports and imports from China 24.6 percent of total imports. While exports to China decreased 8.9 percent in the 12 months ending in Aug 2016, imports from China decreased 15.4 percent. The largest export market for Japan in Aug 2016 is the US with share of 18.3 percent of total exports, which is close to that of China, and share of imports from the US of 11.4 percent in total imports. Japan’s exports to the US decreased 14.5 percent in the 12 months ending in Aug 2016 and imports from the US decreased 9.5 percent. Western Europe has share of 11.5 percent in Japan’s exports and of 13.5 percent in imports. Rates of growth of exports of Japan in Aug 2016 are minus 14.5 percent for exports to the US, minus 32.7 percent for exports to Brazil and minus 6.0 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 Aug 2016 are mixed. Imports from Asia decreased 13.8 percent in the 12 months ending in Aug 2016 while imports from China decreased 15.4 percent. Data are in millions of yen, which may have effects of recent depreciation of the yen relative to the United States dollar (USD) and revaluation of the dollar relative to the euro.

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

Aug 2016	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	5,316,351	-9.6	5,335,062	-17.3
Asia	2,927,184 % Total 55.1	-9.4	2,629,137 % Total 49.3	-13.8
China	968,944 % Total 18.2	-8.9	1,312,115 % Total 24.6	-15.4
USA	971,451 % Total 18.3	-14.5	609,098 % Total 11.4	-9.5
Canada	66,604	0.3	74,984	-21.3
Brazil	25,941	-32.7	46,561	-34.4
Mexico	92,596	-10.4	47,852	7.9
Western Europe	609,456 % Total 11.5	0.9	717,721 % Total 13.5	-11.6
Germany	144,557	-6.0	199,599	-10.9
France	52,560	25.6	82,557	0.5
UK	109,276	11.9	55,613	-16.3
Middle East	193,217	-14.8	586,331	-29.5
Australia	140,911	0.5	259,330	-25.6

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 53.5 in Aug 2016. 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 49.8 in Aug 2016.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Aug 2016	53.5	49.8	52.6	50.4	59.4
Jul	53.9	49.9	51.4	49.5	59.5
Jun	53.7	50.8	51.6	50.6	58.6
May	53.1	49.2	51.6	49.8	57.8
Apr	53.5	48.7	52.1	49.1	59.1
Mar	53.8	50.8	51.4	49.5	59.0
Feb	52.7	48.7	50.5	48.3	59.5
Jan	53.5	49.6	49.9	47.7	58.4
Dec2015	54.4	51.7	49.0	48.2	58.3
Nov	53.6	50.2	49.3	47.7	60.0
Oct	53.1	51.2	51.2	48.8	61.1
Sep	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 53.5 in Aug 2016.

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 50.3 in Jul 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 49.9 in Jul 2016. 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 50.4 in Jul 2016.

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

	IPM	PI	NOI	INV	EMP	SDEL
2016
Aug	50.4	52.6	51.3	47.6	48.4	50.5
Jul	49.9	52.1	50.4	47.3	48.2	50.5
Jun	50.0	52.5	50.5	47.0	47.9	50.7
May	50.1	52.3	50.7	47.6	48.2	50.4
Apr	50.1	52.2	51.0	47.4	47.8	50.1
Mar	50.2	52.3	51.4	48.2	48.1	51.3
Feb	49.0	50.2	48.6	48.0	47.6	49.8
Jan	49.4	51.4	49.5	46.8	47.8	50.5
2015
Dec	49.7	52.2	50.2	47.6	47.4	50.7
Nov	49.6	51.9	49.8	47.1	47.6	50.6
Oct	49.8	52.2	50.3	47.2	47.8	50.6
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 50.4 in Aug 2016.

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 IIQ2016 relative to the same period in 2015 was 6.7 percent and cumulative growth to IIQ2016 was 6.7 percent, as shown in Table VC-GDP. Secondary industry accounts for 39.4 percent of cumulative GDP in IIQ2016. In cumulative IIQ2016, industry accounts for 33.7 percent of GDP and construction for 5.8 percent. Tertiary industry accounts for 54.1 percent of cumulative GDP in IIQ2016 and primary industry for 6.5 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 by increasing growth of services. 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 10.0 percent in IQ2011 to 6.1 percent in IVQ2011 and 7.4 percent in IQ2012, rebounding to 9.1 percent in IIQ2012, 7.4 percent in IIIQ2012 and 7.8 percent in IVQ2012. Annual equivalent growth in IQ2013 eased to 7.8 percent and to 7.0 percent in IIQ2013, rebounding to 8.7 percent in IIIQ2013. Annual equivalent growth was 6.6 percent in IVQ2013, increasing to 7.0 percent in IQ2014 and increasing to 7.4 percent in IIQ2014. Annual equivalent growth increased to 7.8 percent in IIIQ2014 and slowed to 7.0 percent in IVQ2014. Growth slowed to annual equivalent 6.6 percent in IQ2015, increasing to 7.4 percent in IIQ2015 and 7.4 percent in IIIQ2015. Growth slowed to 6.1 percent in annual equivalent in IVQ2015 and 4.9 percent in IQ2016. Growth increased to annual equivalent 7.4 percent in IIQ2016.

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

Cumulative GDP IQ2015	Value Current CNY Billion IIQ2016	Value Current CNY Billion IQ2016 to IIQ2016	IIQ2016 Year-on-Year Constant Prices ∆%	Cumulative to IIQ2016 ∆%
GDP	17,992.7	34,063.7	6.7	6.7
Primary Industry	1,329.4	2,209.7	3.1	3.1
Farming	1,377.9	2,293.2	3.3	3.2
Secondary Industry	7,326.8	13,425.0	6.3	6.1
Industry	6,114.6	11,494.3	6.0	5.9
Construction	1,242.6	1,987.8	7.3	7.5
Tertiary Industry	9,336.5	18,429.0	7.5	7.5
Transport, Storage, Post	828.6	1,553.7	5.7	4.6
Wholesale, Retail Trades	1,704.8	3,334.1	6.5	6.2
Accommodation and Restaurants	303.8	615.1	6.8	6.9
Finance	1,542.8	3,121.9	5.3	6.7
Real Estate	1,167.4	2,249.3	8.8	9.0
Other	3,710.1	7,414.2	9.0	8.9
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter		∆% Annual Equivalent	∆% Year-on-Year
2016
IIQ2016	1.8		7.4	6.7
IQ2016	1.2		4.9	6.7
2015
IVQ2015	1.5		6.1	6.8
IIIQ2015	1.8		7.4	6.9
IIQ2015	1.8		7.4	7.0
IQ2015	1.6		6.6	7.0
2014
IVQ2014	1.7		7.0	7.2
IIIQ2014	1.9		7.8	7.1
IIQ2014	1.8		7.4	7.5
IQ2014	1.7		7.0	7.4
2013
IVQ2013	1.6		6.6	7.7
IIIQ2013	2.1		8.7	7.9
IIQ2013	1.7		7.0	7.6
IQ2013	1.9		7.8	7.9
2012
IVQ2012	1.9		7.8	8.1
IIIQ2012	1.8		7.4	7.5
IIQ2012	2.2		9.1	7.6
IQ2012	1.8		7.4	8.1
2011
IVQ2011	1.5		6.1	8.8
IIIQ2011	1.9		7.8	9.4
IIQ2011	2.4		10.0	10.0
IQ2011	2.4		10.0	10.2

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

Growth of China’s GDP in IIQ2016 relative to the same period in 2015 was 6.7 percent and cumulative growth to IIQ2016 was 6.7 percent, as shown in Table VC-GDP. Secondary industry accounts for 39.4 percent of cumulative GDP in IIQ2016. In cumulative IIQ2016, industry accounts for 33.7 percent of GDP and construction for 5.8 percent. Tertiary industry accounts for 54.1 percent of cumulative GDP in IIQ2016 and primary industry for 6.5 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 by increasing growth of services. Table VC-GDPA shows that growth decelerated from 12.1 percent in IQ2010 and 11.2 percent in IIQ2010 to 7.9 percent in IQ2013, 7.6 percent in IIQ2013 and 7.9 percent in IIIQ2013. GDP grew 7.7 percent in IVQ2013 relative to a year earlier and 1.6 percent relative to IIIQ2013, which is equivalent to 6.6 percent per year. GDP grew 7.4 percent in IQ2014 relative to a year earlier and 1.7 percent in IQ2014 that is equivalent to 7.0 percent per year. GDP grew 7.5 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 7.1 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 1.6 percent, which is equivalent to 6.6 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. GDP grew at 1.5 percent in IVQ2015, which is equivalent to 6.1 percent in a year and increased 6.8 percent relative to a year earlier. In IQ2016, GDP grew at 1.2 percent, which is equivalent to 4.9 percent, and increased 6.7 percent relative to a year earlier. GDP grew at 1.8 percent in IIQ2016, which is annual equivalent to 7.4 percent, and increased 6.7 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	IVQ2015	IQ2016	IIQ2016
GDP	7.0	7.0	6.9	6.8	6.7	6.7
Primary Industry	3.2	3.5	3.8	4.1	2.9	3.1
Secondary Industry	6.4	6.1	6.0	6.1	5.8	6.3
Tertiary Industry	7.9	8.4	8.4	8.2	7.6	7.5
GDP ∆% Relative to a Prior Quarter	1.6	1.8	1.8	1.5	1.2	1.8
	IQ 2013	IIQ 2013	IIIQ 2013	IVQ 2013	IQ 2014	IIQ 2014	IIIQ 2014	IVQ 2014
GDP	7.9	7.6	7.9	7.7	7.4	7.5	7.1	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	1.9	1.7	2.1	1.6	1.7	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	10.0	9.4	8.8	8.1	7.6	7.5	8.1
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	2.4	2.4	1.9	1.5	1.8	2.2	1.8	1.9
	IQ 2010	IIQ 2010	IIIQ 2010	IVQ 2010
GDP	12.1	11.2	10.7	12.1
Primary Industry	3.8	3.6	4.0	3.8
Secondary Industry	14.5	13.3	12.6	14.5
Tertiary Industry	10.5	9.9	9.7	10.5

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

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

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

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 51.9 in Jul to 51.8 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/ad283d0553474f909c228e8b4f2ff43a). He Fan, Chief Economist at Caixin Insight Group, finds improving activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/ad283d0553474f909c228e8b4f2ff43a). The Caixin General Manufacturing PMI^™ decreased to 50.0 in Aug from 50.6 in Jul, indicating neutral conditions in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/dce7ab1b5e1645b0984cd208963c1982). He Fan, Chief Economist at Caixin Insight Group, finds neutral conditions (https://www.markiteconomics.com/Survey/PressRelease.mvc/dce7ab1b5e1645b0984cd208963c1982). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Aug 12-month ∆%: minus 0.8 Aug month ∆%: 0.2 Blog 9/11/16
Consumer Price Index	Aug 12-month ∆%: 1.3 Jun month ∆%: 0.1 Blog 9/11/16
Value Added of Industry	Aug month ∆%: 0.53 Jan-Aug 2016/Jan-Aug 2015 ∆%: 6.0 Earlier Data Blog 4/19/15
GDP Growth Rate	Year IIQ2016 ∆%: 6.7 Second Quarter 2016 ∆%: 1.8 Quarter IIQ2016 AE ∆%: 7.4 Blog 7/24/16
Investment in Fixed Assets	Total Jan-Aug 2015 ∆%: 8.1 Real estate development: 5.4 Earlier Data: Blog 4/19/15
Retail Sales	Aug month ∆%: 0.83 Jan-Aug 2016 ∆%:10.3 Earlier Data: Blog 4/19/15
Trade Balance	Aug balance $52.05 billion Exports 12M ∆% -2.8 Imports 12M ∆% 1.5 2015 Exports ∆% -2.8 2015 Imports ∆% -14.1 Cumulative Aug 2016: $373.75 billion Cumulative Aug 2015: $363.18 Earlier Data: Blog 4/19/15

Links to blog comments in Table CNY: 9/11/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rate-uncertainty-and-valuation.html

7/24/16 http://cmpassocregulationblog.blogspot.com/2016/07/unresolved-us-balance-of-payments.html

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

VD Euro Area. Using calendar and seasonally adjusted data (http://ec.europa.eu/eurostat), the GDP of the euro area (19 countries) fell 5.7 percent from IQ2008 to IIQ2009. The GDP of the euro area (19 countries) increased 7.6 percent from IIIQ2009 to IIQ2016 at the annual equivalent rate of 1.0 percent. The GDP of the euro area (19 countries) is higher by 1.4 percent in IIQ2016 relative to the pre-recession peak in IQ2008, growing at annual equivalent rate of 0.2 percent. 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 3.2 percent in 2006 and 3.0 percent in 2007. The global recession had strong impact with growth of only 0.4 percent in 2008 and decline of 4.5 percent in 2009. Recovery was at lower growth rates of 2.1 percent in 2010 and 1.5 percent in 2011. EUROSTAT estimates growth of GDP of the euro area of minus 0.9 percent in 2012 and minus 0.3 percent in 2013. Euro Area GDP grew 1.1 percent in 2014 and grew 2.0 percent in 2015.

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

Year	HICP ∆%	Unemployment %	GDP ∆%
1999	1.2	9.7	3.0
2000	2.2	8.9	3.8
2001	2.4	8.3	2.1
2002	2.3	8.6	1.0
2003	2.1	9.1	0.7
2004	2.2	9.3	2.3
2005	2.2	9.1	1.7
2006	2.2	8.4	3.2
2007	2.2	7.5	3.0
2008	3.3	7.6	0.4
2009	0.3	9.6	-4.5
2010	1.6	10.2	2.1
2011	2.7	10.2	1.5
2012	2.5	11.4	-0.9
2013	1.3	12.0	-0.3
2014	0.4	11.6	1.1
2015	0.0	10.9	2.0

http://ec.europa.eu/eurostat

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

The GDP of the euro area in 2014 in current US dollars in the dataset of the World Economic Outlook (WEO) of the International Monetary Fund (IMF) is $13,429.8 billion or 17.4 percent of world GDP of $77,825.3 billion (http://www.imf.org/external/pubs/ft/weo/2016/01/weodata/index.aspx). The sum of the GDP of France $2833.7 billion with the GDP of Germany of $3874.4 billion, Italy of $2141.9 billion and Spain $1383.5 billion is $10,233.5 billion or 76.2 percent of total euro area GDP and 13.1 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 2015. The impact of the global recession on the overall euro area economy and on the four largest economies was quite strong. There was sharp contraction in 2009 and growth rates have not rebounded to earlier growth with exception of Germany in 2010 and 2011.

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

	Euro Area	Germany	France	Italy	Spain
2015	2.0	1.7	1.3	0.8	3.2
2014	1.1	1.6	0.6	-0.3	1.4
2013	-0.3	0.5	0.6	-1.7	-1.7
2012	-0.9	0.5	0.2	-2.8	-2.6
2011	1.5	3.7	2.1	0.6	-1.0
2010	2.1	4.1	2.0	1.7	0.0
2009	-4.5	-5.6	-2.9	-5.5	-3.6
2008	0.4	1.1	0.2	-1.1	1.1
2007	3.0	3.3	2.4	1.5	3.8
2006	3.2	3.7	2.4	2.0	4.2
2005	1.7	0.7	1.6	0.9	3.7
2004	2.3	1.2	2.8	1.6	3.2
2003	0.7	-0.7	0.8	0.2	3.2
2002	1.0	0.0	1.1	0.2	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	3.0	2.0	3.4	1.6	4.5
1998	2.9	2.0	3.6	1.6	4.3
Average 1999-2015	1.2	1.2	1.3	0.2	1.7
Average 1999-2007	2.2	1.6	2.1	1.5	3.8
1997	2.6	1.8	2.3	1.8	3.7
1996	1.7	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, decreased from 52.9 in Aug to 52.6 in Sep (https://www.markiteconomics.com/Survey/PressRelease.mvc/ae0a0583b8ba4ad9aa21f45487019b52). Rob Dobson, Senior Economist at IHS Markit, finds that the Markit Flash Eurozone PMI index suggests GDP growth about 0.3 percent in IIIQ2016 (https://www.markiteconomics.com/Survey//PressRelease.mvc/98064936f2c14a22a5d5b99eab26beb9). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP decreased from 53.3 in Jul to 52.9 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/46ad939b26854e1ebd6ccede7b0c5163). Chris Williamson, Chief Economist at Markit, finds potential for growth of about 0.3 percent in IIIQ2016 (https://www.markiteconomics.com/Survey/PressRelease.mvc/46ad939b26854e1ebd6ccede7b0c5163). The Markit Eurozone Services Business Activity Index decreased from 52.9 in Jul to 52.8 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/46ad939b26854e1ebd6ccede7b0c5163). The Markit Eurozone Manufacturing PMI^® decreased from 52.0 in Jul to 51.7 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/76ed1db5bbb64a38b29fa1118c57f4aa). New export orders increased. Chris Williamson, Chief Economist at Markit, finds industrial growth around 2 percent annual (https://www.markiteconomics.com/Survey/PressRelease.mvc/76ed1db5bbb64a38b29fa1118c57f4aa). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IIQ2016 ∆% 0.3; IIQ2016/IIQ2015 ∆% 1.6 Blog 9/13/15 11/22/15 12/13/15 2/14/16 3/13/16 5/1/16 5/15/16 6/12/16 8/7/16 8/14/16 9/11/16
Unemployment	Jul 2016: 10.1 % unemployment rate; Jul 2016: 16.307 million unemployed Blog 9/4/16
HICP	Aug month ∆%: 01 12 months Aug ∆%: 0.2 Blog 9/18//16
Producer Prices	Euro Zone industrial producer prices Jul ∆%: 0.1 Jul 12-month ∆%: -2.8 Blog 9/11/16
Industrial Production	Jul Month ∆%: -1.1; 12 months ∆%: -0.5 Earlier Data: Blog 4/19/15
Retail Sales	Jul month ∆%: 1.1 Jul 12 months ∆%: 2.9 Earlier Data: Blog 3/15/15
Confidence and Economic Sentiment Indicator	Sentiment 103.5 Aug 2016 Consumer minus 8.5 Aug 2016 Earlier Data: Blog 4/5/15
Trade	Jan-Jul 2016/Jan-Jun 2015 Exports ∆%: -2.1 Imports ∆%: -4.2 Jul 2016 12-month Exports ∆% -9.8 Imports ∆% -8.0 Earlier Data: Blog 4/19/15

Links to blog comments in Table EUR: 9/18/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html

9/11/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rate-uncertainty-and-valuation.html

9/4/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html

8/14/16 http://cmpassocregulationblog.blogspot.com/2016/08/rising-valuations-of-risk-financial.html

8/7/16 http://cmpassocregulationblog.blogspot.com/2016/08/global-competitive-easing-or.html

6/12/16 http://cmpassocregulationblog.blogspot.com/2016/06/considerable-uncertainty-about-economic.html

5/15/16 http://cmpassocregulationblog.blogspot.com/2016/05/recovery-without-hiring-ten-million.html

5/1/16 http://cmpassocregulationblog.blogspot.com/2016/05/economic-activity-appears-to-have.html

3/13/16 http://cmpassocregulationblog.blogspot.com/2016/03/monetary-policy-and-fluctuations-of_13.html

3/6/16 http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html

2/14/16 http://cmpassocregulationblog.blogspot.com/2016/02/subdued-foreign-growth-and-dollar.html

12/13/15 http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-interest-rates-with-volatile_17.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 2015, 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, 3.7 percent in 2011 and 0.5 percent in 2012. Growth stabilized to 0.5 percent in 2013, increasing to 1.6 percent in 2014. The German economy grew at 1.7 percent in 2015.

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 ∆% 1991-2015	1.3
Average ∆% 1991-1999	1.5
Average ∆% 2000-2007	1.4
Average ∆% 2003-2007	2.2
Average ∆% 2007-2015	0.9
Average ∆% 2009-2015	2.0
2015	1.7	1.5
2014	1.6	1.6
2013	0.5	0.6
2012	0.5	0.7
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/PressServices/Press/pr/2015/11/PE15_419_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2015/11/PE15_430_811.html

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

https://www.destatis.de/EN/PressServices/Press/pr/2016/02/PE16_056_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2016/02/PE16_044_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2016/05/PE16_162_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2016/05/PE16_171_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2016/08/PE16_279_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2016/08/PE16_291_811.html

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, decreased from 53.3 in Aug to 52.7 in Sep. The index of manufacturing output reached 56.6 in Sep, increasing from 56.4 in Aug, while the index of services decreased to 50.6 in Sep from 51.7 in Aug. The overall Flash Germany Manufacturing PMI^® increased from 53.6 in Aug to 54.3 in Sep (https://www.markiteconomics.com/Survey/PressRelease.mvc/e3d00f5f9a48405b80d0bce7af15c211). New orders in manufacturing increased. Oliver Kolodseike, Economist at HIS Markit, finds moderate growth of the private sector of Germany (https://www.markiteconomics.com/Survey/PressRelease.mvc/e3d00f5f9a48405b80d0bce7af15c211). The Markit Germany Composite Output Index of the Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, increased from 55.3 in Jul to 53.3 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/906f473f4a3c48dcbc5d4eedf84ddda8). Oliver Kolodseike, Economist at Markit and author of the report, finds slowing growth of the services sector of Germany (https://www.markiteconomics.com/Survey/PressRelease.mvc/906f473f4a3c48dcbc5d4eedf84ddda8). The Germany Services Business Activity Index decreased from 54.4 in Jul to 51.7 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/906f473f4a3c48dcbc5d4eedf84ddda8). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, decreased from 53.8 in Jul to 53.6 in

Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/0f50c07033c44946962b86ecd9dfddff). New export orders increased. Oliver Kolodseike, Economist at Markit and author of the report, finds continuing growth conditions (https://www.markiteconomics.com/Survey/PressRelease.mvc/0f50c07033c44946962b86ecd9dfddff).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IIQ2016 0.4 ∆%; IIQ2016/IIQ2015 ∆% 3.1 2015/2014: 1.7% GDP ∆% 1970-2015 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 11/22/15 11/29/15 2/14/16 2/28/16 5/15/16 5/29/16 8/14/16 8/28/16
Consumer Price Index	Aug month NSA ∆%: 0.0 Aug 12-month NSA ∆%: 0.4 Blog 9/18/16
Producer Price Index	Aug month ∆%: -0.1 NSA, 0.0 CSA 12-month NSA ∆%: -1.6 Blog 9/25/16
Industrial Production	MFG Jul month CSA ∆%: -8.1 12-month NSA: -2.2 Earlier Data: Blog 4/12/15
Machine Orders	MFG Jul month ∆%: -0.2 Jul 12-month ∆%: -6.3 Earlier Data: Blog 4/12/15
Retail Sales	Jul Month ∆% 1.7 Jun -0.6 12-Month Jul % -1.5 Jun 2.3 Earlier Data: Blog 4/5/15
Employment Report	Unemployment Rate SA Apr 4.2% Blog 9/4/16
Trade Balance	Exports Jul 12-month NSA ∆%: -10.0 Imports Jul 12 months NSA ∆%: -2.6 Exports Jul month CSA ∆%: minus 6.5; Imports Jul month CSA -0.7 Earlier Data: Blog 4/12/15

Links to blog comments in Table DE: 9/18/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html

9/4/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html

8/28/16 http://cmpassocregulationblog.blogspot.com/2016/08/and-as-ever-economic-outlook-is.html

8/14/16 http://cmpassocregulationblog.blogspot.com/2016/08/rising-valuations-of-risk-financial.html

5/29/16 http://cmpassocregulationblog.blogspot.com/2016/05/appropriate-for-fed-to-increase.html

5/15/16 http://cmpassocregulationblog.blogspot.com/2016/05/recovery-without-hiring-ten-million.html

2/28/16 http://cmpassocregulationblog.blogspot.com/2016/02/mediocre-cyclical-united-states.html

2/14/16 http://cmpassocregulationblog.blogspot.com/2016/02/subdued-foreign-growth-and-dollar.html

11/29/15 http://cmpassocregulationblog.blogspot.com/2015/11/dollar-revaluation-constraining.html

11/22/15 http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-liftoff-followed-by.html

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

08/16/15 http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.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 IQ2016 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 2015, using fourth quarter data, is 1.1 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 ∆%
1949-2016	3.2
2007-2016**	0.5
2007-2015*	0.5
2007-2014	0.3
2000-2015	1.1
2000-2014	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 IVQ2015 **IVQ2007 to IIQ2016

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=28&date=20160923

The Markit Flash France Composite Output Index increased from 51.9 in Aug to 53.3 in Se[ (https://www.markiteconomics.com/Survey/PressRelease.mvc/3ad70988642e482791d82088ae83f265) Jack Kennedy, Senior Economist at IHA Markit and author of the report, finds improving activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/3ad70988642e482791d82088ae83f265). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, increased from 50.1 in Jul to 51.9 in Aug, indicating improving activity of the private sector (https://www.markiteconomics.com/Survey/PressRelease.mvc/d96d27bb5c194f58acb3b6ecc12bd469). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds new growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/d96d27bb5c194f58acb3b6ecc12bd469). The Markit France Services Activity index increased from 50.5 in Jul to 52.3 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/d96d27bb5c194f58acb3b6ecc12bd469). The Markit France Manufacturing Purchasing Managers’ Index^® decreased to 48.3 in Aug from 48.6 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/cf341536c0e941a489756cf283b8d24c). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds moderate contraction in manufacturing (https://www.markiteconomics.com/Survey//PressRelease.mvc/d3bd88a2bcc44e32beef8a037f685cc2). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Aug month ∆% 0.3 12 months ∆%: 0.2 9/18/16
PPI	Jul month ∆%: 0.0 Jul 12 months ∆%: -2.9 Blog 9/4/16
GDP Growth	IIQ2016/IQ2016 ∆%: -0.1 IIQ2016/IIQ2015 ∆%: 1.3 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 11/15/15 12/27/15 1/31/16 2/28/16 3/27/16 5/1/16 6/5/16 06/26/16 8/7/16 9/4/16 9/25/16
Industrial Production	Jul ∆%: Manufacturing -0.3 Quarter ∆%: -0.4 YOY -0.1 Earlier Data: Blog 4/12/15
Consumer Spending	Manufactured Goods Jul ∆%: 0.2 Jul 12-Month Manufactured Goods ∆%: 1.0 Earlier Data: Blog 4/5/15
Employment	Unemployment Rate: IIQ2016 9.6% Blog 8/21/16
Trade Balance	Jul Exports ∆%: month -0.2, 12 months -7.3 Imports ∆%: month 2.4, 12 months -2.8 Earlier Data: Blog 4/12/15
Confidence Indicators	Historical average 100 Sep Mfg Business Climate 103 Earlier Data: Blog 3/29/15

Links to blog comments in Table FR: 9/18/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html

9/4/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html

8/21/16 http://cmpassocregulationblog.blogspot.com/2016/08/interest-rate-policy-uncertainty-and.html

8/7/16 http://cmpassocregulationblog.blogspot.com/2016/08/global-competitive-easing-or.html

6/26/16 http://cmpassocregulationblog.blogspot.com/2016/06/of-course-considerable-uncertainty.html

6/5/16 http://cmpassocregulationblog.blogspot.com/2016/06/financial-turbulence-twenty-four.html

5/1/16 http://cmpassocregulationblog.blogspot.com/2016/05/economic-activity-appears-to-have.html

3/27/16 http://cmpassocregulationblog.blogspot.com/2016/03/contraction-of-united-states-corporate.html

2/28/16 http://cmpassocregulationblog.blogspot.com/2016/02/mediocre-cyclical-united-states.html

1/31/16 http://cmpassocregulationblog.blogspot.com/2016/01/closely-monitoring-global-economic-and.html

12/27/15 http://cmpassocregulationblog.blogspot.com/2015/12/dollar-revaluation-and-decreasing.html

11/15/15 http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-policy-conundrum-recovery.html

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

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

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

Growth of GDP in a quarter relative to the prior quarter for France is in Table VF-1. GDP changed 0.0 percent in IVQ2012 and decreased 0.1 percent in IQ2013, rebounding with growth of 0.7 percent in IIQ2013. GDP changed 0.0 percent in IIIQ2013. GDP increased 0.3 percent in IVQ2013. GDP changed 0.0 percent in IQ2014. GDP increased 0.2 percent in IIQ2014. GDP increased 0.3 percent in IIIQ2014 and increased 0.2 in IVQ2014. GDP increased 0.6 percent in IQ2015 and changed 0.0 percent in IIQ2015. GDP increased 0.4 percent in IIIQ2015 and increased 0.4 percent in IVQ2015. GDP increased 0.7 percent in IQ2016. GDP decreased 0.1 percent in IIQ2016. The French economy grew 0.2 percent in IVQ2011, decreasing 0.1 percent in IQ2012, contracting 0.2 percent in IIQ2012 and growing 0.2 percent in IIIQ2012. In the four quarters of 2012 and the first quarter of 2013, France’s GDP contracted in three quarters and stagnated in one quarter. Growth in the ten quarters of expansion from IIIQ2009 to IVQ2011 accumulated 4.6 percent at the annual equivalent rate of 1.8 percent. Recovery has been much weaker than the cumulative 2.3 percent in the four quarters of 2006. The GDP of France contracted 3.95 percent from the pre-recession peak in IQ2008 to the trough in IIQ2009. The GDP of France increased 4.0 percent from the pre-recession peak in IQ2008 to IIQ2016 at the annual equivalent rate of 0.5 percent. French GDP increased 8.3 percent from IIIQ2009 to IIQ2016 at the annual equivalent rate of 1.1 percent. French GDP in IIQ2016 is 10.2 percent below trend at average 1.8 percent from 2000 to 2007. Weak recoveries in advanced economies have prevented full utilization of labor, capital and productive resources.

Table VF-1, France, Quarterly Real GDP Growth, Quarter on Prior Quarter ∆%

	IQ	IIQ	IIIQ	IVQ
2016	0.7	-0.1
2015	0.6	0.0	0.4	0.4
2014	0.0	0.2	0.3	0.2
2013	-0.1	0.7	0.0	0.3
2012	-0.1	-0.2	0.2	0.0
2011	1.1	-0.1	0.3	0.2
2010	0.5	0.6	0.5	0.6
2009	-1.7	-0.1	0.2	0.6
2008	0.4	-0.5	-0.3	-1.4
2007	0.8	0.7	0.3	0.3
2006	0.8	0.8	0.0	0.7
2005	0.3	0.1	0.5	0.7
2004	0.9	0.6	0.4	0.6
2003	0.1	-0.1	0.7	0.8
2002	0.4	0.4	0.4	0.0
2001	0.5	0.2	0.3	0.0
2000	1.0	0.8	0.8	0.8
1999	0.6	0.8	1.2	1.3

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=28&date=20160923

Growth rates of France’s real GDP in a quarter relative to the same quarter a year earlier are in Table VF-2. France has not recovered the rates of growth in excess of 2 percent prior to the global recession. GDP fell 3.8 percent in IQ2009, 3.5 percent in IIQ2009, 3.1 percent in IIIQ2009 and 1.0 percent in IVQ2009. Growth in IVQ2011 relative to IVQ2010 was 1.5 percent and GDP growth declined to 0.4 percent in IQ2012, 0.3 percent in IIQ2012 relative to the same quarter a year earlier, 0.2 percent in IIIQ2012 relative to a year earlier and 0.0 percent in IVQ2012 relative to a year earlier. Growth in IQ2013 relative to a year earlier was 0.0 percent. France’s GDP increased 0.9 percent in IIQ2013 relative to a year earlier and 0.7 percent in IIIQ2013 relative to a year earlier. GDP increased 0.9 percent in IVQ2013 relative to a year earlier. France’s GDP increased 0.9 percent in IQ2014 relative to a year earlier and increased 0.4 percent in IIQ2014 relative to a year earlier. GDP increased 0.7 percent in IIIQ2014 relative to a year earlier and increased 0.7 percent in IVQ2014 relative to a year earlier. GDP increased 1.3 percent in IQ2015 relative to a year earlier and increased 1.1 percent in IIQ2015 relative to a year earlier. GDP increased 1.1 percent in IIIQ2015 relative to a year earlier and increased 1.3 percent in IVQ2015 relative to a year earlier. GDP increased 1.4 percent in IQ2016 relative to a year earlier and increased 1.3 percent in IIQ2014 relative to a year earlier.

Table VF-2, France, Real GDP Growth Current Quarter Relative to Same Quarter Year Earlier ∆%

	IQ	IIQ	IIIQ	IVQ
2016	1.4	1.3
2015	1.3	1.1	1.1	1.3
2014	0.9	0.4	0.7	0.7
2013	0.0	0.9	0.7	0.9
2012	0.4	0.3	0.2	0.0
2011	2.8	2.1	1.9	1.5
2010	1.2	1.9	2.2	2.2
2009	-3.8	-3.5	-3.1	-1.0
2008	1.7	0.6	-0.1	-1.9
2007	2.4	2.3	2.6	2.2
2006	2.2	2.9	2.5	2.4
2005	1.9	1.4	1.6	1.7
2004	2.2	3.0	2.6	2.5
2003	0.9	0.3	0.7	1.5
2002	0.9	1.1	1.2	1.1
2001	2.9	2.2	1.8	1.0
2000	4.4	4.4	4.0	3.4
1999	2.9	3.0	3.3	3.9

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=28&date=20160923

Chart VF-1 of the Institut National de la Statistique et des Études Économiques provides France’s quarterly real GDP from IQ1949 to IIQ2016. France’s economy has grown dynamically over decades. Recovery from the global recession in 2008-2009 has flattened with marginal increase.

Chart VF-1, France, Quarterly Real GDP, Seasonally and Working Day Adjusted, IQ1949-IIQ2016

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=26&date=20160826

Percentage changes and contributions of segments of GDP in France are in Table VF-3. Internal demand added 0.5 percentage points to GDP growth in IIIQ2015 and added 0.4 percentage points to growth in IVQ2015. Internal demand added 0.9 percentage point to GDP growth in IQ2016 and contributed 0.0 percentage points to GDP growth in IIQ2016. Net trade deducted 0.6 percentage points from GDP growth in IIIQ2015. Net trade deducted 0.5 percentage points in IVQ2015. Net trade deducted 0.2 percentage points from GDP growth in IQ2016. Net trade added 0.6 percentage points in IIQ2016.

Table VF-3, France, Contributions to GDP Growth, Calendar and Seasonally Adjusted, %

∆% from Prior Period	IIIQ 2015	IVQ 2015	IQ 2016	IIQ 2016	2015	2016
GDP	0.4	0.4	0.7	-0.1	1.2	1.1
Imports	1.7	2.2	0.2	-1.8	6.4	1.5
Household Consump.	0.5	0.0	1.1	-0.1	1.5	1.3
Govt. Consump.	0.3	0.4	0.4	0.4	1.4	1.3
GFCF	0.7	1.2	1.3	-0.2	0.9	2.3
General Government	2.7	1.5	0.1	0.7	-3.9	2.2
Exports	-0.2	0.6	-0.4	0.2	6.0	0.5
% Point Contribs.
Internal Demand ex Inventory Changes	0.5	0.4	0.9	0.0	1.3	1.5
Inventory Changes	0.5	0.5	-0.1	-0.7	0.2	-0.1
Net Foreign Trade	-0.6	-0.5	-0.2	0.6	-0.3	-0.3

Notes: Consump.: Consumption; Gvt.: Government; GFCF: Gross Fixed Capital Formation; Contribus.: Contributions; OVHG: “annual growth rate carried over at the mid-year point.”

Source:  Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=28&date=20160923

Chart VF-2 of France’s Institut National de la Statistique et des Études Économiques provides percentage point contributions to GDP growth. The economy was driven in IQ2013 by consumption with net trade and gross fixed capital formation (GFCF) deducting from growth.  Final consumption drove the economy in IIQ2013 together with contribution by net trade and capital formation. Gross fixed capital formation and net trade constrained the economy in IIIQ2013. Inventory changed deducted from growth in IVQ2013 with contributions by consumption and net trade. Inventory change contributed to growth in IQ2014 with deductions by consumption, GFCF and net foreign trade. Consumption contributed to growth in IIQ2014 with deductions by GFCF, inventory change and net trade. Consumption and inventory change drove the economy in IIIQ2014 with deduction by net trade. Consumption and net trade drove the economy in IVQ2014 with deductions by GFCF and inventory change. Consumption, GFCF and inventory change drove the economy in IQ2015 with net trade deducting from growth. Net trade and consumption drove the economy in IIQ2015 with inventory change and GFCF deducting from growth. Consumption and inventory change drove the economy in IIIQ2015 with minor contribution by GFCF and significant deduction by net trade. Inventory change, consumption and GFCF drove the economy in IVQ2015 with deduction by net trade. Consumption and GFCF drove the economy in IQ2016 with deductions by inventory change and net trade. Consumption and net trade drove the economy in IIQ2016 with deductions by inventory change and GFCF.

Chart VF-2, France, Percentage Point Contributions to GDP Growth

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=28&date=20160923

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 IIQ2016, GDP changed 0.0 percent and increased 0.8 percent relative to a year earlier. GDP increased 0.3 percent in IQ2016 and increased 1.0 percent relative to a year earlier. GDP increased 0.2 percent in IVQ2015 and increased 1.1 percent relative to a year earlier. In IIIQ2015, GDP increased 0.3 percent and increased 0.8 percent relative to a year earlier. GDP increased 0.2 percent in IIQ2015 and 0.5 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 0.4 percent relative to a year earlier. Italy’s GDP fell 0.1 percent in IIQ2014 and declined 0.2 percent relative to a year earlier. The GDP of Italy decreased 0.1 percent in IQ2014 and fell 0.1 percent relative to a year earlier. Italy’s GDP decreased 0.1 percent in IVQ2013 and fell 0.9 percent relative to a year earlier. The GDP of Italy increased 0.2 percent in IIIQ2013 and fell 1.4 percent relative to a year earlier. Italy’s GDP decreased 0.1 percent in IIQ2013, continuing eight consecutive quarterly declines, and fell 2.0 percent relative to a year earlier. Italy’s GDP fell 0.9 percent in IQ2013 and declined 2.7 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, 0.9 percent in IQ2012, 0.8 percent in IIQ2012 and 0.5 percent in IIIQ2012. The pace of decline accelerated to minus 0.6 percent in IVQ2012 and minus 0.9 percent in IQ2013. GDP contracted cumulatively 5.2 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 IVQ2013, IQ2014, IIQ2014 and IIIQ2014 accumulates to 5.6 percent. The yearly rate has fallen from 2.2 percent in IVQ2010 to minus 2.7 percent in IVQ2012, minus 2.7 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 0.1 percent in IQ2014 relative to a year earlier and fell 0.2 percent in IIQ2014 relative to a year earlier. GDP fell 0.4 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. GDP increased 0.8 percent in IIIQ2015 relative to a year earlier and increased 1.1 percent in IVQ2015 relative to a year earlier. GDP increased 1.0 percent in IQ2016 relative to a year earlier and increased 0.8 percent in IIQ2016 relative to a year earlier. Using seasonally and calendar adjusted chained volumes in the dataset of EUROSTAT (http://ec.europa.eu/eurostat). the GDP of Italy in IIQ2016 of €389,234.5 million is lower by 8.4 percent relative to €424,823.8 million in 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
IIQ2016	0.0	0.8
IQ2016	0.3	1.0
IVQ2015	0.2	1.1
IIIQ2015	0.3	0.8
IIQ2015	0.2	0.5
IQ2015	0.4	0.1
IVQ2014	0.0	-0.4
IIIQ2014	-0.1	-0.4
IIQ2014	-0.1	-0.2
IQ2014	-0.1	-0.1
IVQ2013	-0.1	-0.9
IIIQ2013	0.2	-1.4
IIQ2013	-0.1	-2.0
IQ2013	-0.9	-2.7
IVQ2012	-0.6	-2.7
IIIQ2012	-0.5	-3.2
IIQ2012	-0.8	-3.2
IQ2012	-0.9	-2.3
IVQ2011	-1.0	-1.1
IIIQ2011	-0.5	0.5
IIQ2011	0.2	1.5
IQ2011	0.3	2.0
IVQ2010	0.5	2.2
IIIQ2010	0.6	1.9
IIQ2010	0.7	1.9
IQ2010	0.4	0.6
IVQ2009	0.2	-2.7
IIIQ2009	0.5	-5.2
IIQ2009	-0.6	-6.9
IQ2009	-2.9	-7.1
IVQ2008	-2.3	-3.5
IIIQ2008	-1.3	-1.3
IIQ2008	-0.8	-0.1
IQ2008	0.8	0.7
IV2007	-0.1	0.1
IIIQ2007	-0.1	1.2
IIQ2007	0.0	1.7
IQ2007	0.2	2.3

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/190026

The Markit Italy Business Activity Index increased from 52.0 in Jul to 52.3 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/6810104a098e4951846227efcb9c6456). Phil Smith, Economist at Markit and author of the Italy Services PMI^®, finds steady growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/6810104a098e4951846227efcb9c6456). The Markit Italy Purchasing Managers’ Index^® (PMI^®), decreased from 51.2 in Jul to 49.8 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/7fee9d10ed9d44b08cb75cb8110cb60c). New export orders continued to increase. Phil Smith, Economist at Markit and author of the Italian Manufacturing PMI^®, finds slowing growth in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/7fee9d10ed9d44b08cb75cb8110cb60c). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Aug month ∆% 0.2 12 months ∆%: -0.1 9/18/16
Producer Price Index	Jun month ∆%: 0.5 Jun 12-month ∆%: -4.4 Blog 8/7/16
GDP Growth	IIQ2016/IQ2016 SA ∆%: 0.0 IIQ2016/IIQ2015 NSA ∆%: 0.8 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 11/15/15 12/6/15 2/14/16 3/6/16 5/15/16 6/5/16 8/14/16 9/11/16
Labor Report	Jul 2016 Participation rate 64.8% Employment ratio 57.3% Unemployment rate 11.4% Youth Unemployment 39.2% Blog 9/4/16
Industrial Production	Jul month ∆%: 0.4 12 months CA ∆%: -0.3 Earlier Data: Blog 4/19/15
Retail Sales	Jun month ∆%: 0.2 Jun 12-month ∆%: 0.8 Earlier Data: Blog 4/26/15
Business Confidence	Mfg Aug 101.1, Apr 102.6 Construction Aug 123.5, Apr 121.2 Earlier Data: Blog 4/5/15
Trade Balance	Balance Jul SA €4255 million Exports Jul month SA ∆%: -0.6; Imports month ∆%: 0.5 Exports 12 months Jul NSA ∆%: -7.3 Imports 12 months NSA ∆%: -8.3 Earlier Data: Blog 4/19/15

Links to blog comments in Table IT: 9/18/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html

9/11/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rate-uncertainty-and-valuation.html

9/4/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html

8/14/16 http://cmpassocregulationblog.blogspot.com/2016/08/rising-valuations-of-risk-financial.html

8/7/16 http://cmpassocregulationblog.blogspot.com/2016/08/global-competitive-easing-or.html

6/5/16 http://cmpassocregulationblog.blogspot.com/2016/06/financial-turbulence-twenty-four.html

5/15/16 http://cmpassocregulationblog.blogspot.com/2016/05/recovery-without-hiring-ten-million.html

3/6/16 http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html

2/14/16 http://cmpassocregulationblog.blogspot.com/2016/02/subdued-foreign-growth-and-dollar.html

12/6/15 http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-fed-funds-rate-followed-by.html

11/15/15 http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-policy-conundrum-recovery.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

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 III-3 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 40.2 percent of the total in Jan-Jul 2016. Exports to the non-European Union area with share of 45.1 percent in Italy’s total exports are decreasing at 4.7 percent in Jan-Jul 2016 relative to Jan-Jul 2015 while those to EMU are growing at 1.8 percent.

Table III-3, Italy, Exports and Imports by Regions and Countries, % Share and 12-Month ∆%

Jul 2016	Exports % Share	∆% Jan-Jul 2016/ Jan-Jul 2015	Imports % Share	∆% Jan-Jul 2016/ Jan-Jul 2015
EU	54.9	1.6	58.5	0.2
EMU 19	40.2	1.8	46.3	-0.3
France	10.3	3.4	8.7	0.0
Germany	12.3	1.9	15.4	2.1
Spain	4.8	5.1	5.0	3.1
UK	5.4	-1.1	2.9	4.0
Non EU	45.1	-4.7	41.5	-9.1
Europe non EU	10.8	-4.6	10.5	-12.7
USA	8.7	-2.5	3.8	-5.3
China	2.5	-1.2	7.6	-2.4
OPEC	5.4	-11.7	4.9	-10.2
Total	100.0	-1.2	100.0	-3.7

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

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/190407

Table III-4 provides Italy’s trade balance by regions and countries. Italy had trade surplus of €1,143 million with the 19 countries of the euro zone (EMU 19) in Jul 2016 and cumulative surplus of €362 million in Jan-Jul 2016. Depreciation to parity could permit greater competitiveness in improving the trade surplus of 4,630 million in Jan-Jul 2016 with Europe non-European Union, the trade surplus of €13,084 million with the US and the trade surplus with non-European Union of €21,360 million in Jan-Jul 2016. There is significant rigidity in the trade deficit in Jan-Jul 2016 of €10,100 million with China. There is a trade surplus of €1,921 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 III-4, Italy, Trade Balance by Regions and Countries, Millions of Euro 

Regions and Countries	Trade Balance Jul 2016 Millions of Euro	Trade Balance Cumulative Jan-Jul 2016 Millions of Euro
EU	2,907	9,765
EMU 19	1,143	362
France	1,286	7,466
Germany	-76	-3,336
Spain	306	1,051
UK	1,093	6,739
Non EU	4,888	21,360
Europe non EU	1,270	4,630
USA	2,104	13,084
China	-1,277	-10,100
OPEC	14	1,921
Total	7,795	31,126

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

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/190407

Growth rates of Italy’s trade and major products are in Table III-5 for the period Jan-Jul 2016 relative to Jan-Jul 2015. Growth rates of cumulative imports relative to a year earlier are negative for energy with minus 29.4 percent. Exports of durable goods decreased 1.9 percent and exports of capital goods increased 0.4 percent. The rate of growth of exports of minus 1.2 percent in Jan-Jul 2016/Jan-Jul 2015 relative to that of imports of minus 3.7 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 0.2 percent in IIIQ2013, decreased 0.1 percent in IVQ2013, decreased 0.1 percent in IQ2014 and fell 0.1 percent in IIQ2014. Italy’s GDP decreased 0.1 percent in IIIQ2014 and changed 0.0 percent in IVQ2014. Italy’s GDP increased 0.4 percent in IQ2015 and increased 0.2 percent in IIQ2015. Italy’s GDP increased 0.3 percent in IIIQ2015 and increased 0.2 percent in IVQ2015. GDP increased 0.3 percent in IQ2016. The GDP of Italy changed 0.0 percent in IIQ2016.

Table III-5, Italy, Exports and Imports % Share of Products in Total and ∆%

	Exports Share %	Exports ∆% Jan-Jul 2016/ Jan-Jul 2015	Imports Share %	Imports ∆% Jan-Jul 2016/ Jan-Jul 2015
Consumer Goods	32.0	0.2	29.5	0.4
Durable	6.1	-1.9	3.5	1.2
Non-Durable	25.9	0.7	25.9	0.3
Capital Goods	33.7	0.4	24.3	5.6
Inter- mediate Goods	31.1	-1.6	33.5	-4.0
Energy	3.2	-29.8	12.7	-29.4
Total ex Energy	96.8	-0.3	87.3	0.1
Total	100.0	-1.2	100.0	-3.7

Note: % Share for 2014 total trade.

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/190407

Table III-6 provides Italy’s trade balance by product categories in Jul 2016 and cumulative Jan-Jul 2016. Italy’s trade balance excluding energy, generated surplus of €10,453 million in Jul 2016 and €45,946 million cumulative in Jan-Jul 2016 but the energy trade balance created deficit of €2,658 million in Jul 2015 and cumulative deficit of €14,821 million in Jan-Jul 2016. The overall surplus in Jul 2016 was €7,795 million with cumulative surplus of €31,126 million in Jan-Jul 2016. Italy has significant competitiveness in various economic activities in contrast with some other countries with debt difficulties.

Table III-6, Italy, Trade Balance by Product Categories, € Millions

	Jul 2016	Cumulative Jan-Jul 2016
Consumer Goods	3,380	13,914
Durable	1,219	7,009
Nondurable	2,161	6,904
Capital Goods	5,315	27,298
Intermediate Goods	1,758	4,735
Energy	-2,658	-14,821
Total ex Energy	10,453	45,946
Total	7,795	31,126

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/190407

There is extremely important information in Table III-9 for the current sovereign risk crisis in the euro zone. Table III-9 provides the structure of regional and country relations of Germany’s exports and imports with newly available data for Jul 2016. German exports to other European Union (EU) members are 58.4 percent of total exports in Jul 2016 and 59.3 percent in cumulative Jan-Jul 2016. Exports to the euro area are 36.8 percent of the total in Jul and 37.0 percent cumulative in Jan-Jul. Exports to third countries are 41.6 percent of the total in Jul and 40.7 percent cumulative in Jan-Jul. There is similar distribution for imports. Exports to non-euro countries are decreasing 8.8 percent in the 12 months ending in Jul 2016, increasing 3.3 percent cumulative in Jan-Jul 2016 relative to a year earlier while exports to the euro area are decreasing 6.0 percent in the 12 months ending in Jul 2016 and increasing 0.8 percent cumulative in Jan-Jul 2016. Exports to third countries, accounting for 41.6 percent of the total in Jul 2016, are decreasing 13.8 percent in the 12 months ending in Jul 2016 and decreasing 3.2 percent cumulative in Jan-Jul 2016, accounting for 40.7 percent of the cumulative total in Jan-Jul 2016. Price competitiveness through devaluation could improve export performance and growth. Economic performance in Germany is closely related to Germany’s high competitiveness in world markets. Weakness in the euro zone and the European Union in general could affect the German economy. This may be the major reason for choosing the “fiscal abuse” of the European Central Bank considered by Buiter (2011Oct31) over the breakdown of the euro zone. There is a tough analytical, empirical and forecasting doubt of growth and trade in the euro zone and the world with or without maintenance of the European Monetary Union (EMU) or euro zone. Germany could benefit from depreciation of the euro because of high share in its exports to countries not in the euro zone but breakdown of the euro zone raises doubts on the region’s economic growth that could affect German exports to other member states.

Table III-9, Germany, Structure of Exports and Imports by Region, € Billions and ∆%

	Jul 2016  € Billions	Jul 12-Month ∆%	Cumulative Jan-Jul 2016 € Billions	Cumulative Jan-Jul 2016/ Jan-Jul 2015 ∆%
Total Exports	96.4	-10.0	699.3	-0.3
A. EU Members	56.3 % 58.4	-7.0	414.6 % 59.3	1.7
Euro Area	35.5 % 36.8	-6.0	259.0 % 37.0	0.8
Non-euro Area	20.8 % 21.6	-8.8	155.6 % 22.3	3.3
B. Third Countries	40.1 % 41.6	-13.8	284.8 % 40.7	-3.2
Total Imports	76.9	-6.5	549.4	-0.7
C EU Members	51.3 % 66.7	-4.5	366.2 % 66.7	1.1
Euro Area	35.4 % 46.0	-4.4	249.9 % 45.5	0.0
Non-euro Area	15.9 % 20.7	-4.8	116.3 % 21.2	3.3
D Third Countries	25.6 % 33.3	-10.1	183.2 % 33.3	-4.2

Notes: Total Exports = A+B; Total Imports = C+D

Source: Statistisches Bundesamt Deutschland

https://www.destatis.de/EN/PressServices/Press/pr/2016/09/PE16_315_51.html

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 4.3 percent in 2009 after dropping 0.6 percent in 2008. Recovery of 1.9 percent in 2010 is relatively low in comparison with annual growth rates in 2007 and earlier years. Growth was only 1.5 percent in 2011 and 1.3 percent in 2012. Growth increased to 1.9 percent in 2013 and 3.1 percent in 2014. Growth fell to 2.2 percent in 2015.  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 2015, which is relatively high for an advanced economy. The growth rate of GDP between 2000 and 2007 is higher at 2.7 percent. Growth in the current cyclical expansion from 2010 to 2015 has been only at 2.0 percent as advanced economies struggle with weak internal demand and world trade. GDP in 2015 is higher by 7.0 percent relative to 2007 while it would have been 23.8 higher at trend of 2.7 percent as from 2000 to 2007.

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

	∆% on Prior Year
1998	3.2
1999	3.3
2000	3.7
2001	2.7
2002	2.4
2003	3.5
2004	2.5
2005	3.0
2006	2.5
2007	2.6
2008	-0.6
2009	-4.3
2010	1.9
2011	1.5
2012	1.3
2013	1.9
2014	3.1
2015	2.2
Average Growth Rates ∆% per Year
1948-2015	2.6
1950-1959	3.1
1960-1969	3.1
1970-1979	2.6
1980-1989	3.2
1990-1999	2.2
2000-2007	2.7
2007-2013*	1.6
2007-2014*	4.7
2007-2015	0.9
2000-2015	1.7

*Absolute change from 2007 to 2013 and 2007 to 2014

Source: UK Office for National Statistics

https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/secondestimateofgdp/quarter2aprtojun2016

The Markit Flash UK PMI^® Composite Output Index fell from 52.4 in Jun to 47.7 in Jul, which is the lowest in 87 months (https://www.markiteconomics.com/Survey//PressRelease.mvc/b68c3686a48c40198505b81e4e55cd81). Chris Williamson, Chief Economist at Markit, finds the index suggests pace of contraction of GDP at 0.4 percent in IIIQ2016 (https://www.markiteconomics.com/Survey//PressRelease.mvc/b68c3686a48c40198505b81e4e55cd81). The Business Activity Index of the Markit/CIPS UK Services PMI^® increased from 47.4 in Jul to 52.9 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/3de4f3638ea3472bb7b986ebe0b9931d). Chris Williamson, Chief Economist at Markit, finds the combined indices consistent with the UK economy stagnating in the third quarter (https://www.markiteconomics.com/Survey/PressRelease.mvc/3de4f3638ea3472bb7b986ebe0b9931d). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) increased to 53.3 in Aug from 48.3 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/b2d9d18dacd14cb3a1c6b7836894b80f). New export orders increased. Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds rebounding manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/b2d9d18dacd14cb3a1c6b7836894b80f). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Aug month ∆%: 0.3 Aug 12-month ∆%: 0.6 Blog 9/18/16
Output/Input Prices	Output Prices: Aug 12-month NSA ∆%: 0.8; excluding food, petroleum ∆%: 1.3 Input Prices: Aug 12-month NSA ∆%: 7.6 Excluding ∆%: 6.2 Blog 9/18/16
GDP Growth	IIQ2016 prior quarter ∆% 0.6; year earlier same quarter ∆%: 2.2 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 11/1/15 11/29/15 12/27/15 1/31/16 2/28/16 4/3/16 5/1/16 5/29/16 7/3/16 7/31/16 9/4/16
Industrial Production	Jul 2016/Jul 2015 ∆%: Production Industries 2.1; Manufacturing 0.8 Earlier Data: Blog 4/12/15
Retail Sales	Aug month ∆%: -0.2 Aug 12-month ∆%: 6.2 Earlier Data: Blog 4/26/15
Labor Market	May-Jul 2016 Unemployment Rate: 4.9% Blog 9/18/16 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 Jul minus ₤4502 million Exports Jul ∆%: 1.9; May-Jul ∆%: 3.2 Imports Jul ∆%: -0.5 May-Jul ∆%: 6.0 EARLIER DATA: Blog 4/12/15

Links to blog comments in Table UK: 9/18/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html

9/4/16 http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html

7/31/16 http://cmpassocregulationblog.blogspot.com/2016/07/business-fixed-investment-has-been-soft.html

7/3/16 http://cmpassocregulationblog.blogspot.com/2016/07/financial-asset-values-rebound-from.html

5/29/16 http://cmpassocregulationblog.blogspot.com/2016/05/appropriate-for-fed-to-increase.html

5/1/16 http://cmpassocregulationblog.blogspot.com/2016/05/economic-activity-appears-to-have.html

4/3/16 http://cmpassocregulationblog.blogspot.com/2016/04/proceeding-cautiously-in-monetary.html

2/28/16 http://cmpassocregulationblog.blogspot.com/2016/02/mediocre-cyclical-united-states.html

1/31/16 http://cmpassocregulationblog.blogspot.com/2016/01/closely-monitoring-global-economic-and.html

12/27/15 http://cmpassocregulationblog.blogspot.com/2015/12/dollar-revaluation-and-decreasing.html

11/29/15 http://cmpassocregulationblog.blogspot.com/2015/11/dollar-revaluation-constraining.html

11/1/15 http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-increase-considered.html

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

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

08/02/15 http://cmpassocregulationblog.blogspot.com/2015/08/turbulence-of-valuations-of-financial.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, 2016.