Interest Rate Increase “Could Well Become Appropriate Relatively Soon,” Dollar Revaluation with Increasing Yields, World Inflation Waves, United States Industrial Production, Squeeze of Economic Activity by Carry Trades Induced by Zero Interest Rates, Collapse of United States Dynamism of Income Growth and Employment Creation, World Cyclical Slow Growth and Global Recession Risk: Part VI

 

Interest Rate Increase “Could Well Become Appropriate Relatively Soon,” Dollar Revaluation with Increasing Yields, World Inflation Waves, United States Industrial Production, Squeeze of Economic Activity by Carry Trades Induced by Zero Interest Rates, 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 World Inflation Waves

IA Appendix: Transmission of Unconventional Monetary Policy

IB1 Theory

IB2 Policy

IB3 Evidence

IB4 Unwinding Strategy

IC United States Inflation

IC Long-term US Inflation

ID Current US Inflation

IE Theory and Reality of Economic History, Cyclical Slow Growth Not Secular Stagnation

II United States Industrial Production

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

III World Financial Turbulence

IIIA Financial Risks

IIIE Appendix Euro Zone Survival Risk

IIIF Appendix on Sovereign Bond Valuation

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

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

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

IIIGA Monetary Policy with Deficit Financing of Economic Growth

IIIGB Adjustment during the Debt Crisis of the 1980s

V World Economic Slowdown. Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/ns/cs.aspx?id=29) to show GDP in dollars in 2015 and the growth rate of real GDP of the world and selected regional countries from 2015 to 2018. 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 3.2 percent in 2015 and 3.1 percent in 2016 but accelerating to 3.4 percent in 2017 and 3.6 percent in 2018. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $34.171 billion of world output of $73,599 billion, or 46.4 percent, but are projected to grow at much lower rates than world output, 1.7 percent on average from 2015 to 2018, in contrast with 3.3 percent for the world as a whole. While the world would grow 14.0 percent in the four years from 2015 to 2017, the G7 as a whole would grow 6.9 percent. The difference in dollars of 2015 is high: growing by 14.0 percent would add around $10.3 trillion of output to the world economy, or roughly, two times the output of the economy of Japan of $4,124 billion but growing by 6.9 percent would add $5.1 trillion of output to the world, or about the output of Japan in 2015. 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 2019 of $29,039 billion, or 39.5 percent of world output. The EMDEs would grow cumulatively 18.8 percent or at the average yearly rate of 4.4 percent, contributing $5.5 trillion from 2015 to 2017 or the equivalent of somewhat more than one half the GDP of $11,182 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 2015 adds to $16,354 billion, or 22.2 percent of world output, which is equivalent to 47.9 percent of the combined output of the major advanced economies of the G7.

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

	GDP USD 2015	Real GDP ∆% 2015	Real GDP ∆% 2016	Real GDP ∆% 2017	Real GDP ∆% 2018
World	73,599	3.2	3.1	3.4	3.6
G7	34,171	1.9	1.4	1.7	1.7
Canada	1,551	1.1	1.2	1.9	1.9
France	2,420	1.3	1.3	1.4	1.6
DE	3,365	1.5	1.7	1.4	1.4
Italy	1,816	0.8	0.8	0.9	1.1
Japan	4,124	0.5	0.5	0.6	0.5
UK	2,858	2.2	1.8	1.1	1.7
US	18,037	2.6	1.6	2.2	2.1
Euro Area	11,601	2.1	1.7	1.5	1.6
DE	3,365	1.5	1.7	1.4	1.4
France	2,420	1.3	1.3	1.4	1.6
Italy	1,816	0.8	0.8	0.9	1.1
POT	199	1.5	1.1	1.1	1.2
Ireland	283	26.3	4.9	3.2	3.1
Greece	195	-0.2	0.1	2.8	3.1
Spain	1,200	3.2	3.1	2.2	1.9
EMDE	29,039	4.0	4.2	4.6	4.8
Brazil	1,773	-3.8	-3.3	0.5	1.5
Russia	1,326	-3.7	-0.8	1.1	1.2
India	2,073	7.6	7.6	7.6	7.7
China	11,182	6.9	6.6	6.2	6.0

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

Source: IMF World Economic Outlook databank

http://www.imf.org/external/pubs/ft/weo/2016/02/weodata/index.aspx

Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/pubs/ft/weo/2016/02/weodata/index.aspx). Table V-2 is constructed with the WEO database to provide rates of unemployment from 2014 to 2018 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, 24.4 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 I-2, IMF World Economic Outlook Database Projections of Unemployment Rate as Percent of Labor Force

	% Labor Force 2014	% Labor Force 2015	% Labor Force 2016	% Labor Force 2017	% Labor Force 2018
World	NA	NA	NA	NA	NA
G7	6.4	5.8	5.5	5.4	5.4
Canada	6.9	6.9	7.0	7.1	6.9
France	10.3	10.4	9.8	9.6	9.3
DE	5.0	4.6	4.3	4.5	4.6
Italy	12.6	11.9	11.5	11.2	10.8
Japan	3.6	3.4	3.2	3.2	3.2
UK	6.2	5.4	5.0	5.2	5.4
US	6.2	5.3	5.0	4.8	4.7
Euro Area	11.7	10.9	10.0	9.7	9.3
DE	5.0	4.6	4.3	4.5	4.6
France	10.3	10.4	9.8	9.6	9.3
Italy	12.6	11.9	11.5	11.2	10.8
POT	13.9	12.4	11.2	10.7	10.3
Ireland	11.3	9.5	8.3	7.7	7.2
Greece	26.5	25.0	23.3	21.5	20.7
Spain	24.4	22.1	19.4	18.0	17.0
EMDE	NA	NA	NA	NA	NA
Brazil	6.8	8.5	11.2	11.5	11.1
Russia	5.2	5.6	5.8	5.9	5.5
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/2016/02/weodata/index.aspx

Table V-3 provides the latest available estimates of GDP for the regions and countries followed in this blog from IQ2012 to 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, 3.7 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 1.5 percent, which is much lower than 3.7 percent in IQ2012. Growth of 3.5 percent in IIQ2012 in Japan relative to IIQ2011 has effects of the low level of output because of Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan’s GDP contracted 0.5 percent in IIIQ2012 at the SAAR of minus 2.0 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 2.8 percent and increased 1.1 percent relative to a year earlier. Japan’s GDP grew 0.4 percent in IIIQ2013 at the SAAR of 1.8 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 0.2 percent, increasing 2.1 percent relative to a year earlier. Japan’s GDP increased 1.3 percent in IQ2014 at the SAAR of 5.2 percent and increased 2.7 percent relative to a year earlier. In IIQ2014, Japan’s GDP fell 2.0 percent at the SAAR of minus 7.8 percent and fell 0.3 percent relative to a year earlier. Japan’s GDP contracted 0.7 percent in IIIQ2014 at the SAAR of minus 2.8 percent and fell 1.5 percent relative to a year earlier. In IVQ2014, Japan’s GDP grew 0.6 percent, at the SAAR of 2.3 percent, decreasing 0.9 percent relative to a year earlier. The GDP of Japan increased 1.2 percent in IQ2015 at the SAAR of 5.0 percent and decreased 1.0 percent relative to a year earlier. Japan’s GDP decreased 0.3 percent in IIQ2015 at the SAAR of minus 1.3 percent and increased 0.8 percent relative to a year earlier. The GDP of Japan increased 0.4 percent in IIIQ2015 at the SAAR of 1.6 percent and increased 1.9 percent relative to a year earlier. Japan’s GDP contracted 0.4 percent in IVQ2015 at the SAAR of minus 1.6 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 2.1 percent and increased 0.2 percent relative to a year earlier. Japan’s GDP increased 0.2 percent in IIQ2016 at the SAAR of 0.7 percent and increased 0.6 percent relative to a year earlier. In IIIQ2016, the GDP of Japan increased 0.5 percent at the SAAR of 2.2 percent and increased 0.9 percent relative to a year earlier.
• China. China’s GDP grew 1.9 percent in IQ2012, annualizing to 7.8 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 6.6 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 1.8 percent in IIIQ2014, which is equivalent to 7.4 percent in a year, and 7.1 percent relative to a year earlier. The GDP of China grew 1.8 percent in IVQ2014, which annualizes at 7.4 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 1.9 percent in IIQ2015, which annualizes at 7.8 percent, and increased 7.0 percent relative to a year earlier. In IIIQ2015, China’s GDP grew at 1.7 percent, which annualizes at 7.0 percent, and increased 6.9 percent relative to a year earlier. The GDP of China grew at 1.6 percent in IVQ2015, which annualizes at 6.6 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 1.9 percent, which annualizes to 7.8 percent, and increased 6.7 percent relative to a year earlier. The GDP of China increased at 1.8 percent in IIIQ2016, which annualizes at 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 1.0 percent relative to a year earlier. In IVQ2012, euro area GDP fell 0.4 percent relative to the prior quarter and fell 1.1 percent relative to a year earlier. In IQ2013, the GDP of the euro area fell 0.3 percent and decreased 1.2 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 0.7 percent relative to a year earlier. In IQ2014, the GDP of the euro area increased 0.3 percent and increased 1.3 percent relative to a year earlier. The GDP of the euro area increased 0.2 percent in IIQ2014 and increased 1.0 percent relative to a year earlier. The euro area’s GDP increased 0.4 percent in IIIQ2014 and increased 1.1 percent relative to a year earlier. The GDP of the euro area increased 0.4 percent in IVQ2014 and increased 1.3 percent relative to a year earlier. Euro area GDP increased 0.8 percent in IQ2015 and increased 1.8 percent relative to a year earlier. The GDP of the euro area increased 0.4 percent in IIQ2015 and increased 2.0 percent relative to a year earlier. The euro area’s GDP increased 0.3 percent in IIIQ2015 and increased 2.0 percent relative to a year earlier. Euro area GDP increased 0.4 percent in IVQ2015 and increased 2.0 percent relative to a year earlier. Euro area’s GDP increased 0.5 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. In IIIQ2016, the GDP of the euro area increased 0.3 percent 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. In IIIQ2016, the GDP of Germany increased 0.2 percent and grew 1.5 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/2016/10/mediocre-cyclical-united-states_30.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states.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 IIIQ2014 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 1.4 percent in IIQ2016, increasing 0.4 percent in the quarter and 1.3 percent relative to a year earlier. In IIIQ2016, US GDP grew 0.7 percent at SAAR of 2.9 percent and increased 1.5 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 2.8 percent relative to a year earlier. GDP increased 0.5 percent in IIQ2015 and increased 2.4 percent relative to a year earlier. UK GDP increased 0.3 percent in IIIQ2015 and increased 1.9 percent relative to a year earlier. GDP increased 0.7 percent in IVQ2015 and increased 1.7 percent relative to a year earlier. GDP increased 0.4 percent in IQ2016 and increased 1.9 percent relative to a year earlier. GDP increased 0.7 percent in IIQ2016 and grew 2.1 percent relative to a year earlier. UK GDP increased 0.5 percent in IIIQ2016 and increased 2.3 percent relative to a year earlier.
• Italy. Italy’s GDP increased 0.3 percent in IIIQ2016 and increased 0.9 percent relative to a year earlier. In IIQ2016, GDP changed 0.0 percent and increased 0.7 percent relative to a year earlier. GDP increased 0.4 percent in IQ2016 and increased 0.9 percent relative to a year earlier. GDP increased 0.2 percent in IVQ2015 and increased 0.9 percent relative to a year earlier. In IIIQ2015, GDP increased 0.1 percent and increased 0.6 percent relative to a year earlier. GDP increased 0.2 percent in IIQ2015 and 0.6 percent relative to a year earlier. GDP increased 0.3 percent in IQ2015 and increased 0.4 percent relative to a year earlier. GDP changed 0.0 percent in IVQ2014 and increased 0.1 percent relative to a year earlier. GDP changed 0.0 percent in IIIQ2014 and changed 0.0 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IIQ2014 and increased 0.3 percent relative to a year earlier. The GDP of Italy changed 0.0 percent in IQ2014 and increased 0.3 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IVQ2013 and fell 0.7 percent relative to a year earlier. The GDP of Italy increased 0.3 percent in IIIQ2013 and fell 1.3 percent relative to a year earlier. Italy’s GDP changed 0.0 in IIQ2013 and fell 2.1 percent relative to a year earlier. Italy’s GDP fell 1.0 percent in IQ2013 and declined 2.8 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 seven consecutive quarters from IIIQ2011 to IQ2013 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 1.0 percent in IQ2013. GDP contracted cumulatively 5.2 percent in seven consecutive quarterly contractions from IIIQ2011 to IQ2013 at the annual equivalent rate of minus 3.0 percent. The yearly rate has fallen from 2.2 percent in IVQ2010 to minus 2.8 percent in IVQ2012, minus 2.8 percent in IQ2013, minus 2.1 percent in IIQ2013 and minus 1.3 percent in IIIQ2013. GDP fell 0.7 percent in IVQ2013 relative to a year earlier. GDP increased 0.3 percent in IQ2014 relative to a year earlier and increased 0.3 percent in IIQ2014 relative to a year earlier. GDP changed 0.0 percent in IIIQ2014 relative to a year earlier and increased 0.1 percent in IVQ2014 relative to a year earlier. GDP increased 0.4 percent in IQ2015 relative to a year earlier and increased 0.6 percent in IIQ2015 relative to a year earlier. GDP increased 0.6 percent in IIIQ2015 relative to a year earlier and increased 0.9 percent in IVQ2015 relative to a year earlier. GDP increased 0.9 percent in IQ2016 relative to a year earlier and increased 0.7 percent in IIQ2016 relative to a year earlier. GDP increased 0.9 percent in IIIQ2016 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 €390,734.3 million is lower by 8.0 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.
• 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 decreased 0.1 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 0.6 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 0.3 percent and increased 1.3 percent relative to a year earlier. France’s GDP increased 0.6 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. France’s GDP increased 0.2 percent in IIIQ2016 and increased 1.1 percent relative to a year earlier.

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

	IQ2012/IVQ2011	IQ2012/IQ2011
United States	QOQ: 0.7        SAAR: 2.7	2.8
Japan	QOQ: 0.9 SAAR: 3.7	3.5
China	1.9	8.1
Euro Area	-0.2	-0.5
Germany	0.4	1.6
France	-0.1	0.4
Italy	-1.0	-2.2
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: -1.5	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	-0.7	-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: –2.0	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	-1.1
Germany	-0.5	-0.1
France	0.0	0.0
Italy	-0.6	-2.8
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	-1.2
Germany	-0.2	-1.5
France	-0.1	0.0
Italy	-1.0	-2.8
UK	0.6	1.5
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.2 SAAR: 0.8	1.0
Japan	QOQ: 0.7 SAAR: 2.8	1.1
China	1.7	7.6
Euro Area	0.4	-0.4
Germany	0.9	0.9
France	0.7	0.9
Italy	0.0	-2.1
UK	0.5	2.1
	IIIQ2013/IIQ2013	III/Q2013/  IIIQ2012
USA	QOQ: 0.8 SAAR: 3.1	1.7
Japan	QOQ: 0.4 SAAR: 1.8	2.0
China	2.1	7.9
Euro Area	0.3	0.0
Germany	0.4	1.2
France	0.0	0.7
Italy	0.3	-1.3
UK	0.8	1.7
	IVQ2013/IIIQ2013	IVQ2013/IVQ2012
USA	QOQ: 1.0 SAAR: 4.0	2.7
Japan	QOQ: -0.1 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	0.0	-0.7
UK	0.5	2.4
	IQ2014/IVQ2013	IQ2014/IQ2013
USA	QOQ -0.3 SAAR -1.2	1.6
Japan	QOQ: 1.3 SAAR: 5.2	2.7
China	1.7	7.4
Euro Area	0.3	1.3
Germany	0.6	2.6
France	-0.1	0.9
Italy	0.0	0.3
UK	0.8	2.6
	IIQ2014/IQ2014	IIQ2014/IIQ2013
USA	QOQ 1.0 SAAR 4.0	2.4
Japan	QOQ: -2.0 SAAR: -7.8	-0.3
China	1.8	7.5
Euro Area	0.2	1.0
Germany	-0.1	0.9
France	0.2	0.4
Italy	0.0	0.3
UK	0.9	3.1
	IIIQ2014/IIQ2014	IIIQ2014/IIIQ2013
USA	QOQ: 1.2 SAAR: 5.0	2.9
Japan	QOQ: -0.7 SAAR: -2.8	-1.5
China	1.8	7.1
Euro Area	0.4	1.1
Germany	0.3	1.2
France	0.3	0.7
Italy	0.0	0.0
UK	0.8	3.1
	IVQ2014/IIIQ2014	IVQ2014/IVQ2013
USA	QOQ: 0.6 SAAR: 2.3	2.5
Japan	QOQ: 0.6 SAAR: 2.3	-0.9
China	1.8	7.2
Euro Area	0.4	1.3
Germany	0.8	1.7
France	0.2	0.6
Italy	0.0	0.1
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	0.3	0.4
UK	0.3	2.8
	IIQ2015/IQ2015	IIQ2015/IIQ2014
USA	QOQ: 0.6 SAAR: 2.6	3.0
Japan	QOQ: -0.3 SAAR: -1.3	0.8
China	1.9	7.0
Euro Area	0.4	2.0
Germany	0.5	1.8
France	0.0	1.1
Italy	0.2	0.6
UK	0.5	2.4
	IIIQ2015/IIQ2015	IIIQ2015/IIIQ2014
USA	QOQ: 0.5 SAAR: 2.0	2.2
Japan	QOQ: 0.4 SAAR: 1.6	1.9
China	1.7	6.9
Euro Area	0.3	2.0
Germany	0.2	1.8
France	0.4	1.1
Italy	0.1	0.6
UK	0.3	1.9
	IVQ2015/IIIQ2015	IVQ2015/IVQ2014
USA	QOQ: 0.2 SAAR: 0.9	1.9
Japan	QOQ: -0.4 SAAR: -1.6	0.7
China	1.6	6.8
Euro Area	0.4	2.0
Germany	0.4	2.1
France	0.3	1.3
Italy	0.2	0.9
UK	0.7	1.7
	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	0.6	1.4
Italy	0.4	0.9
UK	0.4	1.9
	IIQ2016/IQ2016	IIQ2016/IIQ2015
USA	QOQ: 0.4 SAAR: 1.4	1.3
Japan	QOQ: 0.2 SAAR: 0.7	0.6
China	1.9	6.7
Euro Area	0.3	1.6
Germany	0.4	3.1
France	-0.1	1.3
Italy	0.0	0.7
UK	0.7	2.1
	IIIQ2016/IIQ2016	IIIQ2016/IIIQ2015
United States	QOQ: 0.7 SAAR: 2.9	1.5
Japan	QOQ: 0.5 SAAR: 2.2	0.9
China	1.8	6.7
Euro Area	0.3	1.6
Germany	0.2	1.5
France	0.2	1.1
Italy	0.3	0.9
UK	0.5	2.3

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 Oct 2016, China exports decreased 7.3 percent relative to a year earlier and imports decreased 1.4 percent.
• Germany. Germany’s exports decreased 0.7 percent in the month of Sep 2016 and increased 0.9 percent in the 12 months ending in Sep 2016. Germany’s imports decreased 0.5 percent in the month of Sep 2016 and decreased 1.4 percent in the 12 months ending in Sep 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 0.2 percentage points to GDP growth in IIQ2015 and deducted 0.3 percentage points in IIIQ2015. Net trade added 0.4 percentage points to GDP growth in IVQ2015. Net trade deducted 0.0 percentage points from GDP growth in IQ2016. Net trade deducted 0.8 percentage points from GDP growth in IIQ2016.
• France. France’s exports decreased 2.2 percent in Sep 2016 while imports decreased 0.6 percent. France’s exports increased 0.9 percent in the 12 months ending in Sep 2016 and imports increased 1.8 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 0.6 percent in Sep 2016 and goods exports decreased 5.0 percent in Jan-Sep 2016 relative to a year earlier. Imports decreased 1.3 percent in Sep 2016 and goods imports decreased 4.1 percent in Jan-Sep 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 0.18 percentage points to GDP growth in IIQ2016. Net trade added 0.83 percentage points to GDP growth in IIIQ2016. Industrial production changed 0.0 percent in Oct 2016 and decreased 0.2 percent in Sep 2016 after decreasing 0.1 percent in Aug 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 19.6 percent from the trough in Apr 2009 to Oct 2016. Manufacturing in Oct 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 IIIQ2016 would have accumulated to 29.5 percent. GDP in IIQ2016 would be $19,414.4 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2712.3 billion than actual $16,702.1 billion. There are about two trillion dollars of GDP less than at trend, explaining the 23.4 million unemployed or underemployed equivalent to actual unemployment/underemployment of 13.9 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/twenty-four-million-unemployed-or.html). US GDP in IIIQ2016 is 14.0 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,702.1 billion in IIIQ2016 or 11.4 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 Oct 1919 to Oct 2016. Growth at 3.1 percent per year would raise the NSA index of manufacturing output from 108.2316 in Dec 2007 to 141.6752 in Oct 2016. The actual index NSA in Oct 2016 is 104.5714, which is 26.2 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 130.0944 in Oct 2016. The output of manufacturing at 104.5714 in Oct 2016 is 19.6 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	0.6 Sep	-5.0 Jan-Sep	-1.3 Sep	-4.1 Jan-Sep
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 Oct -7.3 Sep -10.0 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 Oct -1.4 Sep -1.9 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 Sep	-2.1 Jan-Sep	-8.0 12-M Sep	-4.2 Jan-Sep
Germany	-0.7 Sep CSA	0.9 Sep	-0.5 Sep CSA	-1.4 Sep
France Sep	-2.2	-0.9	-0.6	1.8
Italy Sep	-1.6	3.1	-4.5	-2.7
UK	-0.4 Sep	9.4 Jul 16-Sep 16 /Jul 15-Sep 15	2.5 Aug	9.5 Jul 16-Sep 16 /Jul 15-Sep 15
Net Trade % Points GDP Growth	Points
USA	IIIQ2016 0.83 IIQ2016 0.18 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 -0.5 IIIQ2016
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 0.2 IIQ2015 -0.3 IIIQ2015 0.4 IVQ2015 0.0 IQ2016 -0.8 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 2.6 percent in 2015 to 2.3 percent in 2016, increasing to 3.8 percent in 2017. Growth improves to 4.1 percent on average from 2017 to 2021. 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 ∆%

	2015	2016	2017	Average ∆% 2017-2021
World Trade Volume (Goods and Services)	2.6	2.3	3.8	4.1
Exports Goods & Services	2.7	2.2	3.5	4.0
Imports Goods & Services	2.4	2.3	4.0	4.2
Average Oil Price USD/Barrel	50.79	42.96	50.64	Average ∆% 2008-2017 79.16
Average Annual ∆% Export Unit Value of Manufactures	-2.9	-2.1	1.4	Average ∆% 2008-2017 0.4
Exports of Goods & Services	2015	2016	2017	Average ∆% 2008-2017
EMDE	1.3	2.9	3.6	3.7
G7	3.6	1.8	3.5	2.5
Imports Goods & Services
EMDE	-0.6	2.3	4.1	4.5
G7	4.2	2.4	3.9	2.1
Terms of Trade of Goods & Services
EMDE	-4.1	-1.0	-0.1	-0.1
G7	1.8	0.9	0.1	0.1
Terms of Trade of Goods
EMDE	-4.0	-1.0	0.1	-0.1
G7	1.8	1.2	0.2	0.0

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/2016/02/weodata/index.aspx

The JP Morgan Global All-Industry Output Index of the JP Morgan Manufacturing and Services PMI^™, produced by JP Morgan and HIS Markit in association with ISM and IFPSM, with high association with world GDP, increased to 53.3 in Oct from 51.7 in Sep, indicating expansion at the rate (https://www.markiteconomics.com/Survey/PressRelease.mvc/dffc698018984829af58ec503a114e9d). This index has remained above the contraction territory of 50.0 during 47 consecutive months. The employment index increased from 50.6 in Sep to 50.9 in Oct with input prices rising at faster rate, new orders increasing at faster rate and output increasing at faster rate (https://www.markiteconomics.com/Survey/PressRelease.mvc/dffc698018984829af58ec503a114e9d). David Hensley, Director of Global Economic Coordination at JP Morgan, finds moderate growth with recent improvement (https://www.markiteconomics.com/Survey/PressRelease.mvc/dffc698018984829af58ec503a114e9d). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, increased to 52.0 in Oct from 51.0 in Sep (https://www.markiteconomics.com/Survey/PressRelease.mvc/ed078da8ffb0443593d4ffa2bffd8de9). New export orders increased. David Hensley, Director of Global Economic Coordination at JP Morgan, higher growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/ed078da8ffb0443593d4ffa2bffd8de9). The Markit Brazil Composite Output Index decreased from 46.1 in Sep to 44.9 in Oct, indicating contraction in activity of Brazil’s private sector (https://www.markiteconomics.com/Survey/PressRelease.mvc/e93a402c92ff4ee19c7a214dab7aa977). The Markit Brazil Services Business Activity index, compiled by Markit, decreased from 45.3 in Sep to 43.9 in Oct, indicating contracting services activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/e93a402c92ff4ee19c7a214dab7aa977). Pollyanna de Lima, Economist at Markit, finds continuing weakness (https://www.markiteconomics.com/Survey/PressRelease.mvc/e93a402c92ff4ee19c7a214dab7aa977). The Markit Brazil Purchasing Managers’ Index^TM (PMI^™) increased from 46.0 in Sep to 46.3 in Oct, indicating contraction in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/5346bb35700c48d682490e93548e6a4c). Pollyanna De Lima, Economist at IHS Markit, finds contraction in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/5346bb35700c48d682490e93548e6a4c).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 53.2 in Oct from 51.5 in Sep (https://www.markiteconomics.com/Survey/PressRelease.mvc/8e4b24e60ba0430ca4cde48da4915c08). New export orders increased. Chris Williamson, Senior Business Economist at IHS Markit, finds improvement with challenges (https://www.markiteconomics.com/Survey/PressRelease.mvc/8e4b24e60ba0430ca4cde48da4915c08). The Markit Flash US Services PMI™ Business Activity Index increased from 52.3 in Sep to 54.8 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/ff0a88d04891402fa6ce739c8b1b2db2). The Markit Flash US Composite PMI™ Output Index increased from 52.3 in Sep to 54.9 in Oct. Tim Moore, Senior Economist at IHS Markit, finds that the surveys are consistent with growth at around 2.0 percent in IVQ2016 (https://www.markiteconomics.com/Survey/PressRelease.mvc/ff0a88d04891402fa6ce739c8b1b2db2). The Markit US Composite PMI™ Output Index of Manufacturing and Services increased to 54.9 in Oct from 52.3 in Sep (https://www.markiteconomics.com/Survey/PressRelease.mvc/1ad0a291b1c2475c9592acedd84595c5). The Markit US Services PMI™ Business Activity Index increased from 52.3 in Sep to 54.8 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/1ad0a291b1c2475c9592acedd84595c5). Chris Williamson, Chief Economist at IHS Markit, finds the indexes suggesting faster economic growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/1ad0a291b1c2475c9592acedd84595c5). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) increased to 53.4 in Oct from 51.5 in Sep (https://www.markiteconomics.com/Survey/PressRelease.mvc/4f0a49e69e2b4681a90fbff2bcc9b4a3). New foreign orders increased. Chris Williamson, Chief Economist at Markit, finds improving manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/4f0a49e69e2b4681a90fbff2bcc9b4a3). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® increased 0.4-percentage points from 51.5 in Sep to 51.9 in Oct, which indicates faster growth (https://www.instituteforsupplymanagement.org/ismreport/mfgrob.cfm?SSO=1). The index of new orders decreased 3.0 percentage points from 55.1 in Sep to 52.1 in Oct. The index of new exports increased 0.5 percentage points from 52.0 in Sep to 52.5 in Oct, expanding at faster rate. The Non-Manufacturing ISM Report on Business^® PMI decreased 2.3 percentage points from 57.1 in Sep to 54.8 in Oct, indicating growth of business activity/production during 87 consecutive months, while the index of new orders decreased 2.3 percentage points from 60.0 in Sep to 57.7 in Oct (https://www.instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?navItemNumber=30620). Table USA provides the country economic indicators for the US.

Table USA, US Economic Indicators

Consumer Price Index	Oct 12 months NSA ∆%: 1.6; ex food and energy ∆%: 2.1 Oct month SA ∆%: 0.4; ex food and energy ∆%: 0.1 Blog 11/20/16
Producer Price Index	Finished Goods Oct 12-month NSA ∆%: 0.6; ex food and energy ∆% 1.6 Oct month SA ∆% = 0.4; ex food and energy ∆%: 0.1 Final Demand Oct 12-month NSA ∆%: 0.8; ex food and energy ∆% 1.2 Oct month SA ∆% = 0.0; ex food and energy ∆%: -0.2 Blog 11/20/16
PCE Inflation	Sep 12-month NSA ∆%: headline 1.2; ex food and energy ∆% 1.7 Blog 11/6/16
Employment Situation	Household Survey: Oct Unemployment Rate SA 4.9% Blog calculation People in Job Stress Sep: 23.4 million NSA, 13.9% of Labor Force Establishment Survey: Oct Nonfarm Jobs +161,000; Private +142,000 jobs created  Oct 12-month Average Hourly Earnings Inflation Adjusted ∆%: 1.1 Blog 11/6/16
Nonfarm Hiring	Nonfarm Hiring fell from 63.3 million in 2006 to 58.7 million in 2014 or by 4.7 million and to 61.7 million in 2015 or by 1.7 million Private-Sector Hiring Sep 2016 5.186 million lower by 5.7 percent than 5.502 million in Sep 2006 while population grew 24.7 million or 10.8 percent Blog 11/13/16
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 1.3 IIIQ2016/IIIQ2015: 1.5 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: 1.4 IIIQ2016 SAAR: 2.9 Blog 10/30/16
Real Private Fixed Investment	SAAR IIIQ2016 ∆% -0.6 IVQ2007 to IIIQ2016: 7.3% Blog 10/30/16
Corporate Profits	IIQ2016 SAAR: Corporate Profits -0.6; Undistributed Profits -3.6 Blog 10/2/16
Personal Income and Consumption	Sep month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.0 Real Personal Consumption Expenditures (RPCE): 0.3 12-month Sep NSA ∆%: RDPI: 2.1; RPCE ∆%: 2.4 Blog 11/6/16
Quarterly Services Report	IIQ16/IQ15 NSA ∆%: Information 3.8 Financial & Insurance 4.0 Earlier Data: Blog 3/22/15
Employment Cost Index	Compensation Private IIIQ2016 SA ∆%: 0.5 Sep 12 months ∆%: 2.3 Earlier Data: Blog 2/1/15
Industrial Production	Oct month SA ∆%: 0.0 Oct 12 months SA ∆%: -0.9 Manufacturing Oct SA 0.2 ∆% Oct 12 months SA ∆% -0.2, NSA -0.1 Capacity Utilization: 75.3 Blog 11/20/16
Productivity and Costs	Nonfarm Business Productivity IIIQ2016∆% SAAE 3.1; IIIQ2016/IIIQ2015 ∆% 0.0; Unit Labor Costs SAAE IIIQ2016 ∆% 0.3; IIIQ2016/IIIQ2015 ∆%: 2.3 Blog 11/6/16
New York Fed Manufacturing Index	General Business Conditions From Oct -6.8 to Nov 1.5 New Orders: From Oct -5.6 to Nov minus 3.1 Blog 11/20/16
Philadelphia Fed Business Outlook Index	General Index from Oct 9.7 to Nov 7.6 New Orders from Oct 16.3 to Nov 18.6 Blog 11/20/16
Manufacturing Shipments and Orders	Sep Orders SA ∆% 0.3 Ex Transport 0.6 Jan-Sep 16/Jan-Sep 15 NSA New Orders ∆% minus 2.3 Ex transport minus 2.9 Earlier data: Blog 4/5/15
Durable Goods	Sep New Orders SA ∆%: -0.1; ex transport ∆%: 0.2 Jan-Sep 16/Jan-Sep 15 New Orders NSA ∆%: -0.4; ex transport ∆% -0.9 Earlier Data: Blog 4/26/15
Sales of New Motor Vehicles	Oct 2016 14,479,364; Oct 2015 14,508,727. Oct 16 SAAR 18.02 million, Sep 16 SAAR 17.76 million, Oct 2015 SAAR 18.18 million Blog 11/6/16
Sales of Merchant Wholesalers	Jan-Sep 2016/Jan-Sep 2015 NSA ∆%: Total -1.2; Durable Goods: minus 0.2; Nondurable Goods: -2.5 EARLIER DATA: Blog 4/12/15
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Sep 16 12-M NSA ∆%: Sales Total Business 1.0; Manufacturers -0.6 Retailers 3.5; Merchant Wholesalers 0.5 Blog 11/20/16
Sales for Retail and Food Services	Jan-Oct 2016/Jan-Oct 2015 ∆%: Retail and Food Services 2.9; Retail ∆% 2.5 Blog 11/20/16
Value of Construction Put in Place	SAAR month SA Sep ∆%: minus 0.4 Jan-Sep 16/Jan-Sep 15 NSA: 4.4 Earlier Data: Blog 4/5/15
Case-Shiller Home Prices	Aug 2016/ Aug 2015 ∆% NSA: 10 Cities 4.3; 20 Cities: 5.1; National: 5.3 ∆% Aug SA: 10 Cities 0.2 ; 20 Cities: 0.2 Blog 10/30/16
FHFA House Price Index Purchases Only	Aug SA ∆% 0.7; 12 month NSA ∆%: 6.4 Blog 10/30/16
New House Sales	Sep 2016 month SAAR ∆%: 3.1 Jan-Sep 2016/Jan-Sep 2015 NSA ∆%: 13.4 Blog 10/30/16
Housing Starts and Permits	Oct Starts month SA ∆% 25.5; Permits ∆%: 0.3 Jan-Oct 2016/Jan-Oct 2015 NSA ∆% Starts 5.9; Permits  ∆% 0.7 Earlier Data: Blog 4/19/15
Rate of Homeownership	IIQ2016: 63.5 Blog 10/30/16
Trade Balance	Balance Sep SA -$36,440 million versus Aug -$40,462 million Exports Sep SA ∆%: 0.6 Imports Sep SA ∆%: -1.3 Goods Exports Jan-Sep 2016/Jan-Sep 2015 NSA ∆%: minus 5.0 Goods Imports Jan-Sep 2016/Jan-Sep 2015 NSA ∆%: minus 4.1 Blog 11/13/16
Export and Import Prices	Oct 12-month NSA ∆%: Imports -0.2; Exports -1.1 Earlier Data: Blog 4/12/15
Consumer Credit	Sep ∆% annual rate: Total 6.3; Revolving 5.2; Nonrevolving 6.7 Earlier Data: Blog 5/10/15
Net Foreign Purchases of Long-term Treasury Securities	Sep Net Foreign Purchases of Long-term US Securities: minus $63.3 billion Major Holders of Treasury Securities: China $1157.0 billion; Japan $1136.4 billion; Total Foreign US Treasury Holdings Sep $6154.7 billion Blog 11/20/16
Treasury Budget	Fiscal Year 2017/2016 ∆% Oct: Receipts 5.0; Outlays minus 23.5; Individual Income Taxes 11.3 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 Deficit Fiscal Year 2016 $587 Blog 11/13/2016
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	Sep 2016 SAAR ∆%: Securities 12.3 Loans 7.3 Cash Assets -40.1 Deposits minus 0.9 Blog 10/23/16
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 11/13/16
IMF View	World Real Economic Growth 2016 ∆% 3.1 Blog 10/16/16
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: 11/13/16 http://cmpassocregulationblog.blogspot.com/2016/11/dollar-revaluation-and-valuations-of.html

11/6/16 http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html

10/30/16 http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states_30.html

10/23/16 http://cmpassocregulationblog.blogspot.com/2016/10/dollar-revaluation-world-inflation.html

10/16/16 http://cmpassocregulationblog.blogspot.com/2016/10/imf-view-of-world-economy-and-finance.html

10/9/16 http://cmpassocregulationblog.blogspot.com/2016/10/twenty-four-million-unemployed-or.html

10/2/16 http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states.html

9/25/16 http://cmpassocregulationblog.blogspot.com/2016/09/the-economic-outlook-is-inherently.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

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

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 increased 0.8 percent in Sep and increased 0.2 percent in Aug, decreasing 0.6 percent in the 12 months ending in Sep 2016. Sales of retailers increased 1.0 percent in Sep, decreased 0.1 percent in Aug and increased 3.5 percent in 12 months. Sales of merchant wholesalers increased 0.2 percent in Sep, increasing 0.7 percent in Aug and increasing 0.5 percent in 12 months. Total business sales increased 0.7 percent in Sep and increased 0.3 percent in Aug, increasing 1.0 percent in the 12 months ending in Sep 2016.

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

	Sep 16/Aug 16 ∆% SA	Aug 2016 Millions of Dollars NSA	Aug 16/Jul 16  ∆% SA	Sep 16/ Sep 15 ∆% NSA
Total Business	0.7	1,334,703	0.3	1.0
Manufacturers	0.8	484,622	0.2	-0.6
Retailers	1.0	393,467	-0.1	3.5
Merchant Wholesalers	0.2	456,614	0.7	0.5

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

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-Sep 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 seasonal 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-Sep 2016

US Census Bureau

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

Businesses added cautiously to inventories to replenish stocks. Retailers’ inventories increased 0.2 percent in Sep 2016 and increased 0.6 percent in Aug with growth of 3.8 percent in 12 months, as shown in Table VA-2. Total business increased inventories 0.1 percent in Sep, increasing 0.2 percent in Aug and increasing 0.6 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 1.38 in Sep 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	Sep 16 Millions of Dollars NSA	Sep 16/ Aug 16 ∆% SA	Aug 16/Jul 16 ∆% SA	Sep 16/Sep 15 ∆% NSA
Total Business	1,816,511	0.1	0.2	0.6
Manufacturers	621,341	0.0	0.1	-1.9
Retailers	608,742	0.2	0.6	3.8
Merchant Wholesalers	586,428	0.1	-0.1	-0.1
Inventory/ Sales Ratio	Sep 16 Millions of Dollars NSA	Sep 2016 SA	Aug 2016 SA	Sep 2015 SA
Total Business	1,816,511	1.38	1.39	1.39
Manufacturers	621,341	1.34	1.35	1.36
Retailers	608,742	1.49	1.50	1.48
Merchant Wholesalers	586,428	1.33	1.33	1.33

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 Sep 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-Sep 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 Sep 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-Sep 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 increased 0.8 percent in Oct 2016 after increasing 1.0 percent in Sep 2016 seasonally adjusted (SA), growing 2.9 percent in Jan-Oct 2016 relative to Jan-Oct 2015 not seasonally adjusted (NSA), as shown in Table VA-3. Excluding motor vehicles and parts, retail sales increased 0.8 percent in Oct 2016, increasing 0.7 percent in Sep 2016 SA and increasing 2.8 percent NSA in Jan-Oct 2016 relative to a year earlier. Sales of motor vehicles and parts increased 1.1 percent in Oct 2016 after increasing 1.9 percent in Sep 2016 SA and increasing 3.3 percent NSA in Jan-Oct 2016 relative to a year earlier. Gasoline station sales increased 2.2 percent SA in Oct 2016 after increasing 3.0 percent in Sep 2016 in oscillating prices of gasoline that are moderating, decreasing 8.6 percent in Jan-Oct 2016 relative to a year earlier.

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

	Oct/Sep ∆% SA	Sep/Aug ∆% SA	Jan 2016-Oct 2016 Million Dollars NSA	Jan-Oct 2016 from Jan-Oct 2015 ∆% NSA
Retail and Food Services	0.8	1.0	4,494,704	2.9
Excluding Motor Vehicles and Parts	0.8	0.7	3,552,844	2.8
Motor Vehicles & Parts Dealers	1.1	1.9	941,860	3.3
Retail	1.0	1.0	3,946,643	2.5
Building Materials	1.1	1.8	296,239	6.3
Food and Beverage	0.9	0.6	582,711	2.2
Grocery	0.7	0.6	522,424	2.1
Health & Personal Care Stores	0.8	0.1	276,283	7.6
Clothing & Clothing Accessories Stores	0.6	0.2	199,576	0.4
Gasoline Stations	2.2	3.0	337,061	-8.6
General Merchandise Stores	0.4	-0.9	531,923	-0.7
Food Services & Drinking Places	-0.7	0.7	548,061	6.0

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

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

Chart VA-6, US, Monthly Percentage Change of Retail and Food Services Sales, Jan 1992-Oct 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 Oct 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-Oct 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 Oct 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-Oct 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) weakened from $28.5 billion in Aug 2016 to minus $63.3 billion in Sep 2016. Foreign residents’ purchases minus sales of US long-term securities (row A in Table VA-4) in Aug 2016 of $27.5 billion weakened to minus $46.6 billion in Sep 2016. Net US (residents) purchases of long-term foreign securities (row B in Table VA-4) strengthened from $18.0 billion in Aug 2016 to $20.4 billion in Sep 2016. Other transactions (row C2 in Table VA-4) changed from minus $17.0 billion in Aug 2016 to minus $37.1 billion in Sep 2016. In Sep 2016,

C = A + B + C2 = -$46.6 billion + $20.4 billion -$37.1 billion = $63.3 billion

There are minor rounding errors. There weakening demand in Table VA-4 in Sep 2016 in A1 private purchases by residents overseas of US long-term securities of minus $7.9 billion of which weakening in A11 Treasury securities of minus $31.0 billion, weakening in A12 of $23.9 billion in agency securities, weakening of $2.1 billion of corporate bonds and weakening of minus $2.8 billion in equities. Worldwide risk aversion causes flight into US Treasury obligations with significant oscillations. Official purchases of securities in row A2 decreased $38.7 billion with decrease of Treasury securities of $45.6 billion in Sep 2016. Official purchases of agency securities increased $8.2 billion in Sep 2016. Row D shows increase in Sep 2016 of $28.9 billion in purchases of short-term dollar denominated obligations. Foreign private holdings of US Treasury bills decreased $10.3 billion (row D11) with foreign official holdings increasing $19.3 billion while the category “other” increased $19.9 billion. Foreign private holdings of US Treasury bills decreased $10.3 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

	Sep 2015 12 Months	Sep 2016 12 Months	Aug 2016	Sep 2016
A Foreign Purchases less Sales of US LT Securities	241.8	32.5	27.5	-46.6
A1 Private	398.3	370.4	67.3	-7.9
A11 Treasury	201.1	64.9	19.4	-31.0
A12 Agency	129.1	228.2	25.9	23.9
A13 Corporate Bonds	151.3	129.6	18.8	2.1
A14 Equities	-83.2	-52.2	3.2	-2.8
A2 Official	-156.5	-337.9	-39.8	-38.7
A21 Treasury	-188.6	-374.7	-44.2	-45.6
A22 Agency	40.2	44.1	3.7	8.2
A23 Corporate Bonds	0.5	-4.5	1.2	-1.0
A24 Equities	-8.6	-2.8	-0.5	-0.4
B Net US Purchases of LT Foreign Securities	156.1	188.3	18.0	20.4
B1 Foreign Bonds	301.2	245.0	20.2	22.4
B2 Foreign Equities	-145.1	-56.7	-2.2	-2.0
C1 Net Transactions	397.9	220.9	45.5	-26.2
C2 Other	-265.7	-246.3	-17.0	-37.1
C Net Foreign Purchases of US LT Securities	132.2	-25.4	28.5	-63.3
D Increase in Foreign Holdings of Dollar Denominated Short-term	18.7	95.1	20.3	28.9
D1 US Treasury Bills	53.1	28.5	7.1	9.0
D11 Private	50.5	64.4	10.8	-10.3
D12 Official	2.6	-35.9	-3.8	19.3
D2 Other	-34.4	66.6	13.3	19.9

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

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

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

Table VA-2 provides major foreign holders of US Treasury securities. China is the largest holder with $1157.0 billion in Sep 2016, decreasing 2.4 percent from $1185.1 billion in Jul 2016 while decreasing $101.0 billion from Sep 2015 or 8.0 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 10.6 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 $1177.1 billion in Sep 2015 to $1136.4 billion in Sep 2016 or 3.5 percent. The combined holdings of China and Japan in Sep 2016 add to $2293.4 billion, which is equivalent to 20.9 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 $6105.9 billion in Sep 2015 to $6154.7 billion in Sep 2016, or 0.8 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

	Sep 2016	Aug 2016	Sep 2015
Total	6154.7	6196.4	6105.9
China	1157.0	1185.1	1258.0
Japan	1136.4	1144.0	1177.1
Ireland	270.9	266.4	222.0
Cayman Islands	262.1	264.2	224.3
Brazil	258.1	256.1	251.6
Switzerland	240.7	237.9	227.6
Luxembourg	227.0	219.8	191.0
United Kingdom	217.5	204.8	203.9
Hong Kong	189.8	191.5	198.6
Taiwan	189.3	190.0	178.1
Belgium	142.7	157.0	135.8
India	122.7	122.9	113.5
Singapore	102.9	103.7	83.4
Foreign Official Holdings	3901.7	3948.8	4147.5
A. Treasury Bills	292.1	272.8	328.0
B. Treasury Bonds and Notes	3609.6	3676.0	3819.4

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 0.6 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 8.1 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	0.6

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 50.4 in Sep to 51.7 in Oct and the Flash Japan

Manufacturing Output Index™ increased from 50.8 in Sep to 53.7 in Oct

(https://www.markiteconomics.com/Survey/PressRelease.mvc/c40b1f2a7a294bffadc542ae2307cb8d). New export orders increased. Amy Brownbill, Economist at IHS

Markit, finds improving conditions

(https://www.markiteconomics.com/Survey/PressRelease.mvc/c40b1f2a7a294bffadc542ae2307cb8d).The Nikkei Composite Output PMI Index increased from 48.9 in Sep to 51.3 in Oct, indicating strengthening business activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/ab4a6193c5cc4a4595889676b4025d92). The Nikkei Business Activity Index of Services increased to 50.5 in Oct from 48.2 in Sep (https://www.markiteconomics.com/Survey/PressRelease.mvc/ab4a6193c5cc4a4595889676b4025d92). Amy Brownbill, Ecoomist at IHS Markit and author of the report, finds improving business activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/ab4a6193c5cc4a4595889676b4025d92). The Nikkei Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, increased from 50.4 in Sep to 51.4 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/6bd7d9f007ff4b4897f9043950811805). New orders increased while new foreign orders expanded. Amy Brownbill, Economist at IHS Markit, finds improving output in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/6bd7d9f007ff4b4897f9043950811805).Table JPY provides the country data table for Japan.

Table JPY, Japan, Economic Indicators

Historical GDP and CPI	1981-2010 Real GDP Growth and CPI Inflation 1981-2010 Blog 8/9/11 Table 26
Corporate Goods Prices	Oct ∆% -0.1 12 months ∆% -2.7 Blog 11/13/16
Consumer Price Index	Sep NSA ∆% 0.2; Aug 12 months NSA ∆% -0.5 Blog 10/30/16
Real GDP Growth	IIIQ2016 ∆%: 0.5 on IIQ2016;  IIIQ2016 SAAR 2.2; ∆% from quarter a year earlier: 0.9 % 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 11/20/16
Employment Report	Sep Unemployed 2.04 million Change in unemployed since last year: -230 thousand Unemployment rate: 3.0% Blog 10/30/16
All Industry Indices	Aug month SA ∆% 0.2 12-month NSA ∆% 1.7 Earlier Data: Blog 4/26/15
Industrial Production	Aug SA month ∆%: 1.5 Aug 12-month NSA ∆% 4.6 Earlier Data: Blog 3/29/15
Machine Orders	Total Sep ∆% 0.9 Private ∆%: -0.7 Sep ∆% Excluding Volatile Orders minus 3.3 Earlier Data: Blog 4/19/15
Tertiary Index	Jul month SA ∆% 0.3 Jul 12 months NSA ∆% 0.1 Earlier Data: Blog 4/26/15
Wholesale and Retail Sales	Aug 12 months: Total ∆%: -3.1 Wholesale ∆%: -3.6 Retail ∆%: -2.1 Earlier Data: Blog 3/29/15
Family Income and Expenditure Survey	Sep 12-month ∆% total nominal consumption -2.6, real -2.1 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: 11/13/16 http://cmpassocregulationblog.blogspot.com/2016/11/dollar-revaluation-and-valuations-of.html

10/30/16 http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states_30.html

10/16/16 http://cmpassocregulationblog.blogspot.com/2016/10/imf-view-of-world-economy-and-finance.html

10/2/16 http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states.html

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

Japan’s economy grew 1.3 percent in IQ2014, seasonally adjusted, partly because of anticipation of purchases to avoid the increase in the tax on value added of consumption in Apr 2014, contracting 2.0 percent in IIQ2014, as shown in Table VB-1, incorporating the latest estimates and revisions. Japan’s GDP contracted 0.7 percent in IIIQ2014 and grew 0.6 percent in IVQ2014. The GDP of Japan increased 1.2 percent in IQ2015 and contracted 0.3 percent in IIQ2014. The GDP of Japan grew 0.4 percent in IIIQ2015. Japan’s GDP contracted 0.4 percent in IVQ2015. The GDP of Japan increased 0.5 percent in IQ2016 and increased 0.2 percent in IIQ2016. Japan’s GDP increased 0.5 percent in IIIQ2016. The GDP of Japan decreased 0.1 percent in IVQ2013 after growing 0.4 percent in IIIQ2013, 0.7 percent in IIQ2013 and 1.0 percent in IQ2013. Japan’s GDP changed 0.0 percent in IVQ2012 relative to IIIQ2012. GDP growth in IQ2012 was revised to 0.9 percent; IIQ2012 GDP growth was revised to -0.4 percent; and IIIQ2012 growth was revised to -0.5 percent. The economy of Japan had already weakened in IVQ2010 when GDP fell revised 0.5 percent. As in other advanced economies, Japan’s recovery from the global recession has not been robust. GDP fell 2.0 percent in IQ2011 and fell again 0.6 percent in IIQ2011 because of the disruption of the tragic Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Recovery was robust in the first two quarters of 2010 but GDP grew at 1.5 percent in IIIQ2010 and fell 0.5 percent in IVQ2010. The deepest quarterly contractions in the global recession were 3.3 percent in IVQ2008 and 4.1 percent in IQ2009. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). Using seasonally adjusted and price adjusted data (http://www.esri.cao.go.jp/index-e.html), Japan’s GDP fell 9.2 percent from the pre-downturn peak of ¥529,349.5 million in IQ2008 to the lowest reading of ¥480,588.6 million in IQ2009. Japan’s GDP increased 1.0 percent from the pre-downturn peak of ¥529,349.5 million in IQ2008 to ¥534,540.5 million in IIIQ2016. GDP in Japan grew 11.2 percent from IIQ2009 to IIIQ2016 at the annual equivalent rate of 1.4 percent, using the latest revision (http://www.esri.cao.go.jp/index-e.html).

Table VB-1, Japan, Real GDP ∆% Changes from the Previous Quarter Seasonally Adjusted ∆%

	IQ	IIQ	IIIQ	IVQ
2016	0.5	0.2	0.5
2015	1.2	-0.3	0.4	-0.4
2014	1.3	-2.0	-0.7	0.6
2013	1.0	0.7	0.4	-0.1
2012	0.9	-0.4	-0.5	0.0
2011	-2.0	-0.6	2.7	0.3
2010	1.4	1.1	1.5	-0.5
2009	-4.1	1.8	0.1	1.7
2008	0.6	-1.1	-1.0	-3.3
2007	0.9	0.2	-0.4	0.9
2006	0.4	0.4	-0.1	1.3
2005	0.3	1.3	0.3	0.2
2004	1.0	0.0	0.1	-0.3
2003	-0.5	1.2	0.4	1.0
2002	-0.2	1.0	0.7	0.3
2001	0.6	-0.2	-1.1	-0.1
2000	1.6	0.2	-0.3	0.7
1999	-0.9	0.4	-0.1	0.5
1998	-1.9	-0.5	0.3	0.5
1997	0.8	-1.0	0.4	-0.1

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-2 provides contributions to real GDP at seasonally adjusted annual rates (SAAR). Japan’s GDP grew at 2.2 percent in IIIQ2016 with contributions of 0.1 percent of personal consumption expenditures (PC), 0.2 percent of gross fixed capital formation (GFCF), 1.8 percent of net trade (Trade) and 0.3 percent of government consumption expenditures (GOVC). Inventory divestment (PINV) deducted 0.3 percent. The GDP of Japan grew at 0.7 percent in IIQ2016 with contribution of 0.3 percent by personal consumption expenditures. Gross fixed capital formation (GFCF) contributed 0.9 percent and government consumption expenditures (GOVC) deducted 0.3 percent. Net trade (Trade) deducted 0.6 percent and change of private inventories (PINV) added 0.3 percent. Japan’s GDP grew at 2.1 percent in IQ2016 with contributions of 1.7 percent by personal consumption, 0.6 percent by trade and 0.7 percent by government. Gross fixed capital formation deducted 0.4 percent. The GDP of Japan grew at minus 1.6 percent in IVQ2015 with deduction of 2.0 percent by personal consumption (PC) expenditures and 0.5 percent by private inventories (PINV). Net trade contributed 0.3 percent and gross fixed capital formation contributed 0.0 percent. GDP grew at 1.6 percent in IIIQ2015 with highest contributions of 1.2 percent by personal consumption expenditures and 0.2 percentage points by government consumption. Net trade ducted 0.2 percent. Gross Fixed Capital Formation contributed 0.4 percentage points and inventory divestment deducted 0.2 percentage points. GDP fell at 1.3 percent in IIQ2015 with highest deductions of 1.5 percent by personal consumption expenditures and 1.0 percent of net exports. Goss fixed capital formation deducted 0.3 percentage points; government consumption expenditures contributed 0.4 percentage points and inventory investment added 1.1 percentage points. GDP grew at 5.0 percent in IQ2015 with contributions of 1.7 percent by gross fixed capital formation and increase in inventory investment at 2.5 percent. Gross fixed capital formation increased at 1.7 percent while trade contributed 0.4 percentage points and government consumption expenditures added 0.2 percentage points. GDP expanded at 2.3 percent in IVQ2014 with contribution of 1.5 percent by personal consumption expenditures, 1.5 percent by net trade and 0.2 percent by government consumption expenditures. Gross fixed capital formation added 0.2 percent and private inventory divestment deducted 0.9 percent. Trade added 1.5 percentage points. Japan contracted at 2.8 percent in IIIQ2014 with deduction of 0.8 percentage points of GFCF and deduction of 2.5 percentage points of inventory divestment. Traded added 0.0 percentage points and government 0.3 percent. Japan’s GDP contracted at 7.8 percent in IIQ2014 with deductions of 11.7 percent by personal consumption and 4.7 percent by gross fixed capital formation. Trade added 3.6 percentage points and government expenditures deducted 0.2 percent. Inventory investment added 5.1 percent. The GDP of Japan expanded at 5.2 percent in IQ2014 with contributions of 5.2 percent by personal consumption and 2.7 percent of gross fixed capital formation. There were deductions of 0.7 percent by trade, 1.9 percent by inventory divestment and 0.1 percent by government expenditures. The GDP of Japan contracted at 0.2 percent annual equivalent in IVQ2013 with contribution of personal consumption expenditures of 0.1 percent and growth of GFCF at 1.0 percent. Trade deducted 1.9 percentage points. Japan grew at 1.8 percent in IIIQ2013 with contribution of 0.8 percentage points by personal consumption and 1.6 percentage points by GFCF. Trade deducted 1.6 percentage points. Japan grew at 2.8 percent SAAR in IIQ2013 driven by contribution of 2.4 percent of personal consumption, deduction of 0.3 percent of net trade and contribution of gross fixed capital formation at 2.3 percent. In IQ2013, Japan’s GDP increased at the SAAR of 4.1 percent in large part because of 1.6 percent in personal consumption and 1.9 percent in trade. The SAAR of GDP in IVQ2012 was minus 0.1 percent: 0.4 percentage points from growth of personal consumption expenditures less 0.5 percentage points of net trade (exports less imports) less 0.3 percentage points of private inventory investment (PINV) plus 0.5 percentage points of government consumption and minus 0.2 percentage points of gross fixed capital formation. The SAAR of GDP in IIIQ2011 was revised to a high 11.0 percent. Net trade deducted from GDP growth in three quarters of 2011 and provided the growth impulse of 3.8 percentage points in IIIQ2011. Growth in 2011 and IQ2012 was driven by personal consumption expenditures that deducted 0.9 percentage points from GDP growth in IIIQ2012 but contributed 0.4 percentage points to GDP growth in IVQ2012.

Table VB-2, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %

	GDP	PC	GFCF	Trade	PINV	GOVC
2016
I	2.1	1.7	-0.4	0.6	-0.5	0.7
II	0.7	0.3	0.9	-0.6	0.3	-0.3
III	2.2	0.1	0.2	1.8	-0.3	0.3
2015
I	5.0	0.1	1.7	0.4	2.5	0.2
II	-1.3	-1.5	-0.3	-1.0	1.1	0.4
III	1.6	1.2	0.4	-0.1	-0.2	0.2
IV	-1.6	-2.0	0.0	0.3	-0.5	0.5
2014
I	5.2	5.2	2.7	-0.7	-1.9	-0.1
II	-7.8	-11.7	-4.7	3.6	5.1	-0.2
III	-2.8	0.1	-0.8	0.0	-2.5	0.3
IV	2.3	1.5	0.2	1.5	-0.9	0.2
2013
I	4.1	1.6	-0.2	1.9	0.3	0.6
II	2.8	2.4	2.3	-0.3	-2.2	0.5
III	1.8	0.8	1.6	-1.6	0.9	0.1
IV	-0.2	0.1	1.0	-1.9	0.5	0.0
2012
I	3.7	1.1	-0.6	0.3	1.9	0.9
II	-1.5	1.9	0.7	-1.6	-2.2	-0.3
III	-2.0	-0.9	-1.0	-1.9	1.4	0.4
IV	-0.1	0.4	-0.2	-0.5	-0.3	0.5
2011
I	-7.6	-4.2	-0.3	-1.2	-1.8	-0.1
II	-2.4	2.7	0.3	-4.5	-1.4	0.4
III	11.0	3.9	1.3	3.8	1.7	0.1
IV	1.1	1.1	3.2	-2.8	-0.6	0.2
2010
I	5.7	1.6	0.1	2.3	2.2	-0.5
II	4.7	0.1	1.2	0.2	2.0	1.2
III	6.0	3.2	0.9	0.4	1.3	0.3
IV	-2.0	-1.0	-1.2	-0.3	0.1	0.3
2009
I	-15.4	-2.0	-2.0	-4.5	-7.7	0.8
II	7.4	4.2	-3.0	7.5	-1.9	0.7
III	0.3	0.0	-1.4	2.1	-1.5	1.0
IV	7.2	3.5	0.0	2.8	0.6	0.3
2008
I	2.3	1.4	0.4	1.1	-0.6	0.0
II	-4.3	-3.2	-2.2	0.6	1.2	-0.8
III	-4.1	-0.5	-1.0	0.0	-2.6	0.0
IV	-12.5	-2.8	-4.5	-11.5	5.8	0.3
2007
I	3.8	0.9	0.5	1.1	1.0	0.4
II	0.8	0.6	-1.5	0.8	0.1	0.5
III	-1.4	-0.9	-1.7	2.0	-0.6	-0.2
IV	3.5	0.3	0.3	1.3	1.0	0.6

Note: PC: Private Consumption; GFCF: Gross Fixed Capital Formation; PINV: Private Inventory; Trade: Net Exports; GOVC: Government Consumption

Source: Japan Economic and Social Research Institute, Cabinet Office

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

http://www.esri.cao.go.jp/

Long-term economic growth in Japan significantly improved by increasing competitiveness in world markets. Net trade of exports and imports is an important component of the GDP accounts of Japan. Table VB-3 provides quarterly data for net trade, exports and imports of Japan. Net trade had strong positive contributions to GDP growth in Japan in all quarters from IQ2007 to IIQ2009 with exception of IVQ2008 and IQ2009. The US recession is dated by the National Bureau of Economic Research (NBER) as beginning in IVQ2007 (Dec) and ending in IIQ2009 (Jun) (http://www.nber.org/cycles/cyclesmain.html). Net trade contributions helped to cushion the economy of Japan from the global recession. Net trade deducted from GDP growth in seven of the nine quarters from IVQ2010 to IQ2012. The only strong contribution of net trade was 3.8 percent in IIIQ2011. Net trade added 1.9 percentage points to GDP growth in IQ2013 but deducted 0.3 percentage points in IIQ2013, 1.6 percentage points in IIIQ2013 and 1.9 percentage points in IVQ2013. Net trade deducted 0.7 percentage points from GDP growth in IQ2014. Net trade added 3.6 percentage points to GDP growth in IIQ2014 and 0.0 percentage points in IIIQ2014. Net trade added 1.5 percentage points to GDP growth in IVQ2014. Net trade contributed 0.4 percentage points to GDP growth in IQ2015 and deducted 1.0-percentage points in IIQ2015. Net trade deducted 0.1 percentage points from GDP growth in IIIQ2015. Net trade added 0.3 percentage points to GDP growth in IVQ2015 and added 0.6 percentage points in IQ2016. Net trade deducted 0.6 percentage points from GDP growth in IIQ2016. Net trade added 1.8 percentage points to GDP growth in IIIQ2016.  Private consumption assumed the role of driver of Japan’s economic growth but should moderate as in most mature economies.

Table VB-3, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %

	Net Trade	Exports	Imports
2016
I	0.6	0.1	0.5
II	-0.6	-1.1	0.5
III	1.8	1.4	0.4
2015
I	0.4	1.3	-0.8
II	-1.0	-3.1	2.1
III	-0.1	1.9	-2.0
IV	0.3	-0.7	1.0
2014
I	-0.7	3.5	-4.2
II	3.6	0.3	3.3
III	0.0	1.1	-1.1
IV	1.5	2.3	-0.9
2013
I	1.9	2.1	-0.2
II	-0.3	1.9	-2.2
III	-1.6	-0.2	-1.4
IV	-1.9	0.1	-2.0
2012
I	0.3	1.4	-1.1
II	-1.6	-0.1	-1.5
III	-1.9	-2.3	0.4
IV	-0.5	-2.1	1.6
2011
I	-1.2	-0.6	-0.6
II	-4.5	-4.6	0.1
III	3.8	5.8	-2.0
IV	-2.8	-1.9	-0.9
2010
I	2.3	3.6	-1.3
II	0.2	2.8	-2.6
III	0.4	1.4	-0.9
IV	-0.3	0.1	-0.4
2009
I	-4.5	-16.4	12.0
II	7.5	4.8	2.7
III	2.1	5.2	-3.1
IV	2.8	4.1	-1.4
2008
I	1.1	2.1	-0.9
II	0.6	-1.5	2.1
III	0.0	0.1	-0.2
IV	-11.5	-10.2	-1.2
2007
I	1.1	1.6	-0.5
II	0.8	1.7	-0.8
III	2.0	1.4	0.6
IV	1.3	2.0	-0.7

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

Japan’s percentage growth of GDP not seasonally adjusted in a quarter relative to the same quarter a year earlier is in in Table VB-4. Contraction of GDP in a quarter relative to the same quarter a year earlier extended over seven quarters from IIQ2008 through IVQ2009. Contraction was sharpest in IQ2009 with output declining 9.4 percent relative to a year earlier. Yearly quarterly rates of growth of Japan were relatively high for a mature economy through the decade with the exception of the contractions from IVQ2001 to IIQ2002 and after 2007. The Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 caused flat GDP in IQ2011 at 0.1 percent relative to the same quarter a year earlier and decline of 1.5 percent in IIQ2011. GDP fell 0.5 percent in IIIQ2011 relative to a year earlier and increased 0.1 percent in IVQ2011 relative to a year earlier. Growth resumed with 3.5 percent in IQ2012 relative to a year earlier. Growth of 3.5 percent in IIQ2012 is largely caused by the low level in IIQ2011 resulting from the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. GDP increased 0.2 percent in IIIQ2012 relative to a year earlier and changed 0.0 percent in IVQ2012 relative to a year earlier. GDP increased 0.3 percent in IQ2013 relative to a year earlier and 1.1 percent in IIQ2013. Growth of 2.0 percent in IIIQ2013 relative to a year earlier is partly due to the decline of 0.5 percent in GDP in IIIQ2012.  GDP increased 2.1 percent in IVQ2013 relative to a year earlier. The GDP of Japan increased 2.7 percent in IQ2014 relative to a year earlier. Japan’s GDP contracted 0.3 percent in IIQ2014 relative to a year earlier. GDP contracted 1.5 percent in IIIQ2014 relative to a year earlier. Japan’s GDP contracted 0.9 percent in IVQ2014 relative to a year earlier. GDP fell 1.0 percent relative to a year earlier in IQ2015 and increased 0.8 percent in IIQ2015 relative to a year earlier. GDP increased 1.9 percent in IIIQ2015 relative to a year earlier. GDP increased 0.7 percent in IVQ2015 relative to a year earlier. GDP increased 0.2 percent in IQ2016 relative to a year earlier. GDP increased 0.6 percent in IIQ2016 relative to a year earlier. The GDP of Japan increased 0.9 percent in IIIQ2016 relative to a year earlier. Japan faces the challenge of recovery from the devastation of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 in an environment of declining world trade and bouts of risk aversion that cause appreciation of the Japanese yen, eroding the country’s competitiveness in world markets. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977).  Using price adjusted but not seasonally adjusted data (http://www.esri.cao.go.jp/index-e.html), Japan’s GDP contracted 11.5 percent from the high in IVQ2007 to the low in IIQ2009. GDP fell 1.5 percent from IVQ2007 to IIIQ2016. Japan’s GDP grew 11.3 percent from IIIQ2009 to IIIQ2016 at the annual equivalent rate of 1.5 percent.

Table VB-4, Japan, Real GDP ∆% Changes from Same Quarter Year Earlier, NSA ∆%

	IQ	IIQ	IIIQ	IVQ
2016	0.2	0.6	0.9
2015	-1.0	0.8	1.9	0.7
2014	2.7	-0.3	-1.5	-0.9
2013	0.3	1.1	2.0	2.1
2012	3.5	3.5	0.2	0.0
2011	0.1	-1.5	-0.5	0.1
2010	5.0	4.5	6.1	3.4
2009	-9.4	-6.6	-5.6	-0.5
2008	1.4	-0.1	-0.6	-4.7
2007	2.8	2.3	2.0	1.6
2006	2.6	1.3	0.9	2.0
2005	0.4	1.4	1.5	1.9
2004	4.0	2.6	2.2	0.7
2003	1.7	1.8	1.5	1.8
2002	-1.6	-0.2	1.4	1.6
2001	1.6	0.9	0.0	-1.0
2000	2.7	2.4	2.2	1.8
1999	-0.3	0.1	-0.1	-0.5
1998	-2.4	-1.8	-2.3	-1.5
1997	3.5	1.5	1.7	-0.2

Source: Japan Economic and Social Research Institute, Cabinet Office

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

Long-term economic growth in Japan significantly improved by increasing competitiveness in world markets. Net trade of exports and imports is an important component of the GDP accounts of Japan. Table VB-3 provides quarterly data for net trade, exports and imports of Japan. Net trade had strong positive contributions to GDP growth in Japan in all quarters from IQ2007 to IIQ2009 with exception of IVQ2008 and IQ2009. The US recession is dated by the National Bureau of Economic Research (NBER) as beginning in IVQ2007 (Dec) and ending in IIQ2009 (Jun) (http://www.nber.org/cycles/cyclesmain.html). Net trade contributions helped to cushion the economy of Japan from the global recession. Net trade deducted from GDP growth in seven of the nine quarters from IVQ2010 to IQ2012. The only strong contribution of net trade was 3.8 percent in IIIQ2011. Net trade added 1.9 percentage points to GDP growth in IQ2013 but deducted 0.3 percentage points in IIQ2013, 1.6 percentage points in IIIQ2013 and 1.9 percentage points in IVQ2013. Net trade deducted 0.7 percentage points from GDP growth in IQ2014. Net trade added 3.6 percentage points to GDP growth in IIQ2014 and 0.0 percentage points in IIIQ2014. Net trade added 1.5 percentage points to GDP growth in IVQ2014. Net trade contributed 0.4 percentage points to GDP growth in IQ2015 and deducted 1.0-percentage points in IIQ2015. Net trade deducted 0.1 percentage points from GDP growth in IIIQ2015. Net trade added 0.3 percentage points to GDP growth in IVQ2015 and added 0.6 percentage points in IQ2016. Net trade deducted 0.6 percentage points from GDP growth in IIQ2016. Net trade added 1.8 percentage points to GDP growth in IIIQ2016.  Private consumption assumed the role of driver of Japan’s economic growth but should moderate as in most mature economies.

Table VB-3, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %

	Net Trade	Exports	Imports
2016
I	0.6	0.1	0.5
II	-0.6	-1.1	0.5
III	1.8	1.4	0.4
2015
I	0.4	1.3	-0.8
II	-1.0	-3.1	2.1
III	-0.1	1.9	-2.0
IV	0.3	-0.7	1.0
2014
I	-0.7	3.5	-4.2
II	3.6	0.3	3.3
III	0.0	1.1	-1.1
IV	1.5	2.3	-0.9
2013
I	1.9	2.1	-0.2
II	-0.3	1.9	-2.2
III	-1.6	-0.2	-1.4
IV	-1.9	0.1	-2.0
2012
I	0.3	1.4	-1.1
II	-1.6	-0.1	-1.5
III	-1.9	-2.3	0.4
IV	-0.5	-2.1	1.6
2011
I	-1.2	-0.6	-0.6
II	-4.5	-4.6	0.1
III	3.8	5.8	-2.0
IV	-2.8	-1.9	-0.9
2010
I	2.3	3.6	-1.3
II	0.2	2.8	-2.6
III	0.4	1.4	-0.9
IV	-0.3	0.1	-0.4
2009
I	-4.5	-16.4	12.0
II	7.5	4.8	2.7
III	2.1	5.2	-3.1
IV	2.8	4.1	-1.4
2008
I	1.1	2.1	-0.9
II	0.6	-1.5	2.1
III	0.0	0.1	-0.2
IV	-11.5	-10.2	-1.2
2007
I	1.1	1.6	-0.5
II	0.8	1.7	-0.8
III	2.0	1.4	0.6
IV	1.3	2.0	-0.7

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

There was milder increase in Japan’s export corporate goods price index during the global recession in 2008 but similar sharp decline during the bank balance sheets effect in late 2008, as shown in Chart IV-5 of the Bank of Japan. Japan exports industrial goods whose prices have been less dynamic than those of commodities and raw materials. As a result, the export CGPI on the yen basis in Chart IV-5 trends down with oscillations after a brief rise in the final part of the recession in 2009. The export corporate goods price index on the yen basis fell from 104.9 in Jun 2009 to 94.0 in Jan 2012 or minus 10.4 percent and increased to 98.0 in Oct 2016 for gain of 4.3 percent relative to Jan 2012 and minus 6.6 percent relative to Jun 2009. The choice of Jun 2009 is designed to capture the reversal of risk aversion beginning in Sep 2008 with the announcement of toxic assets in banks that would be withdrawn with the Troubled Asset Relief Program (TARP) (Cochrane and Zingales 2009). Reversal of risk aversion in the form of flight to the USD and obligations of the US government opened the way to renewed carry trades from zero interest rates to exposures in risk financial assets such as commodities. Japan exports industrial products and imports commodities and raw materials. The recovery from the global recession began in the third quarter of 2009.

Chart IV-5, Japan, Export Corporate Goods Price Index, Monthly, Yen Basis, 2008-2016

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Chart IV-5A provides the export corporate goods price index on the basis of the contract currency. The export corporate goods price index on the basis of the contract currency increased from 97.9 in Jun 2009 to 103.1 in Apr 2012 or 5.3 percent but dropped to 90.0 in Oct 2016 or minus 12.7 percent relative to Apr 2012 and fell 8.1 percent to 90.0 in Oct 2016 relative to Jun 2009.

Chart IV-5A, Japan, Export Corporate Goods Price Index, Monthly, Contract Currency Basis, 2008-2016

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Japan imports primary commodities and raw materials. As a result, the import corporate goods price index on the yen basis in Chart IV-6 shows an upward trend after declining from the increase during the global recession in 2008 driven by carry trades from fed funds rates. The index increases with carry trades from zero interest rates into commodity futures and declines during risk aversion from late 2008 into beginning of 2008 originating in doubts about soundness of US bank balance sheets. More careful measurement should show that the terms of trade of Japan, export prices relative to import prices, declined during the commodity shocks originating in unconventional monetary policy. The decline of the terms of trade restricted potential growth of income in Japan (for the relation of terms of trade and growth see Pelaez 1979, 1976a). The import corporate goods price index on the yen basis increased from 93.5 in Jun 2009 to 113.1 in Apr 2012 or 21.0 percent and to 92.2 in Oct 2016 or decline of 18.5 percent relative to Apr 2012 and decrease of 1.4 percent relative to Jun 2009.

Chart IV-6, Japan, Import Corporate Goods Price Index, Monthly, Yen Basis, 2008-2016

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Chart IV-6A provides the import corporate goods price index on the contract currency basis. The import corporate goods price index on the basis of the contract currency increased from 86.2 in Jun 2009 to 119.5 in Apr 2012 or 38.6 percent and to 82.8 in Oct 2016 or minus 30.7 percent relative to Apr 2012 and decline of 3.9 percent relative to Jun 2009. There is evident deterioration of the terms of trade of Japan: the export corporate goods price index on the basis of the contract currency decreased 8.1 percent from Jun 2009 to Oct 2016 while the import corporate goods price index decreased 3.9 percent. Prices of Japan’s exports of corporate goods, mostly industrial products, increased only 5.3 percent from Jun 2009 to Apr 2012, while imports of corporate goods, mostly commodities and raw materials increased 38.6 percent. Unconventional monetary policy induces carry trades from zero interest rates to exposures in commodities that squeeze economic activity of industrial countries by increases in prices of imported commodities and raw materials during periods without risk aversion. Reversals of carry trades during periods of risk aversion decrease prices of exported commodities and raw materials that squeeze economic activity in economies exporting commodities and raw materials. Devaluation of the dollar by unconventional monetary policy could increase US competitiveness in world markets but economic activity is squeezed by increases in prices of imported commodities and raw materials. Unconventional monetary policy causes instability worldwide instead of the mission of central banks of promoting financial and economic stability.

Chart IV-6A, Japan, Import Corporate Goods Price Index, Monthly, Contract Currency Basis, 2008-2016

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Table IV-6B provides the Bank of Japan’s Corporate Goods Price indexes of exports and imports on the yen and contract bases from Jan 2008 to Oct 2016. There are oscillations of the indexes that are shown vividly in the four charts above. For the entire period from Jan 2008 to Oct 2016, the export index on the contract currency basis decreased 9.3 percent and decreased 15.2 percent on the yen basis. For the entire period from Jan 2008 to Oct 2016, the import price index decreased 17.8 percent on the contract currency basis and decreased 22.5 percent on the yen basis. During significant part of the expansion period, prices of Japan’s exports of corporate goods on the contract currency, mostly industrial products, increased only 5.3 percent from Jun 2009 to Apr 2012, while prices of imports of corporate goods on the contract currency, mostly commodities and raw materials, increased 38.6 percent. The charts show sharp deteriorations in relative prices of exports to prices of imports during multiple periods. Price margins of Japan’s producers are subject to periodic squeezes resulting from carry trades from zero interest rates of monetary policy to exposures in commodities.

Table IV-6B, Japan, Exports and Imports Corporate Goods Price Index, Contract Currency Basis and Yen Basis

	X-CC	X-Y	M-CC	M-Y
2008/01	99.2	115.5	100.7	119.0
2008/02	99.8	116.1	102.4	120.6
2008/03	100.5	112.6	104.5	117.4
2008/04	101.6	115.3	110.1	125.2
2008/05	102.4	117.4	113.4	130.4
2008/06	103.5	120.7	119.5	140.3
2008/07	104.7	122.1	122.6	143.9
2008/08	103.7	122.1	123.1	147.0
2008/09	102.7	118.3	117.1	137.1
2008/10	100.2	109.6	109.1	121.5
2008/11	98.6	104.5	97.8	105.8
2008/12	97.9	100.6	89.3	93.0
2009/01	98.0	99.5	85.6	88.4
2009/02	97.5	100.1	85.7	89.7
2009/03	97.3	104.2	85.2	93.0
2009/04	97.6	105.6	84.4	93.0
2009/05	97.5	103.8	84.0	90.8
2009/06	97.9	104.9	86.2	93.5
2009/07	97.5	103.1	89.2	95.0
2009/08	98.3	104.4	89.6	95.8
2009/09	98.3	102.1	91.0	94.7
2009/10	98.0	101.2	91.0	94.0
2009/11	98.4	100.8	92.8	94.8
2009/12	98.3	100.7	95.4	97.5
2010/01	99.4	102.2	97.0	100.0
2010/02	99.7	101.6	97.6	99.8
2010/03	99.7	101.8	97.0	99.2
2010/04	100.5	104.6	99.9	104.6
2010/05	100.7	102.9	101.7	104.9
2010/06	100.1	101.6	100.0	102.3
2010/07	99.4	99.0	99.9	99.8
2010/08	99.1	97.3	99.5	97.5
2010/09	99.4	97.0	100.0	97.2
2010/10	100.1	96.4	100.5	95.8
2010/11	100.7	97.4	102.6	98.2
2010/12	101.2	98.3	104.4	100.6
2011/01	102.1	98.6	107.2	102.6
2011/02	102.9	99.5	109.0	104.3
2011/03	103.5	99.6	111.8	106.3
2011/04	104.1	101.7	115.9	111.9
2011/05	103.9	99.9	118.8	112.4
2011/06	103.8	99.3	117.5	110.5
2011/07	103.6	98.3	118.3	110.2
2011/08	103.6	96.6	118.6	108.1
2011/09	103.7	96.1	117.0	106.2
2011/10	103.0	95.2	116.6	105.6
2011/11	101.9	94.8	115.4	105.4
2011/12	101.5	94.5	116.1	106.2
2012/01	101.8	94.0	115.0	104.2
2012/02	102.4	95.8	115.8	106.4
2012/03	102.9	99.2	118.3	112.9
2012/04	103.1	98.7	119.5	113.1
2012/05	102.3	96.3	118.1	109.8
2012/06	101.4	95.0	115.2	106.7
2012/07	100.6	94.0	112.0	103.5
2012/08	100.9	94.1	112.4	103.6
2012/09	101.0	94.1	114.7	105.2
2012/10	101.1	94.7	113.8	105.2
2012/11	100.9	95.9	113.2	106.5
2012/12	100.7	98.0	113.4	109.5
2013/01	101.0	102.4	113.8	115.4
2013/02	101.5	105.9	114.8	120.2
2013/03	101.3	106.6	115.1	122.0
2013/04	100.2	107.5	114.1	123.8
2013/05	99.6	109.1	112.6	125.3
2013/06	99.2	106.1	112.0	121.2
2013/07	99.1	107.5	111.6	122.8
2013/08	99.0	106.1	111.8	121.3
2013/09	99.0	107.2	113.0	124.0
2013/10	99.2	106.7	113.1	122.9
2013/11	99.1	108.0	113.1	124.9
2013-12	99.1	110.4	113.8	129.0
2014-01	99.2	110.7	114.4	130.1
2014-02	98.9	109.2	113.8	127.7
2014-03	98.6	109.1	113.4	127.4
2014-04	98.3	109.0	112.7	126.9
2014-05	98.2	108.2	112.4	125.9
2014-06	97.9	108.1	112.5	126.2
2014-07	98.0	107.9	112.5	125.9
2014-08	98.1	108.8	112.3	126.7
2014-09	97.9	111.0	111.5	129.4
2014-10	97.3	110.8	109.6	127.9
2014-11	96.9	115.6	106.9	131.6
2014-12	96.0	116.4	103.3	129.4
2015-01	94.4	113.1	98.2	121.4
2015-02	93.7	112.1	92.8	114.4
2015-03	93.6	112.8	93.8	116.9
2015-04	93.5	112.1	92.4	114.5
2015-05	93.7	113.4	91.8	115.0
2015-06	93.7	115.2	92.4	118.7
2015-07	92.9	113.6	91.8	116.6
2015-08	92.2	112.7	90.2	114.2
2015-09	91.3	109.6	88.0	109.2
2015-10	90.6	108.7	86.9	107.7
2015-11	90.4	109.5	86.2	108.3
2015-12	89.8	108.4	84.4	105.3
2016-01	89.2	105.4	81.4	99.2
2016-02	88.8	103.2	78.9	94.1
2016-03	89.1	102.5	78.8	92.9
2016-04	89.5	101.2	79.2	91.7
2016-05	89.5	100.8	79.4	91.6
2016-06	89.5	98.5	80.7	90.9
2016-07	89.6	97.6	81.8	91.2
2016-08	89.7	96.3	81.4	89.0
2016-09	89.9	96.9	81.9	90.0
2016-10	90.0	98.0	82.8	92.2

Note: X-CC: Exports Contract Currency; X-Y: Exports Yen; M-CC: Imports Contract; M-Y: Imports Yen

Source: Bank of Japan

http://www.boj.or.jp/en/statistics/index.htm/

Chart IV-7 provides the monthly corporate goods price index (CGPI) of Japan from 1970 to 2016. Japan also experienced sharp increase in inflation during the 1970s as in the episode of the Great Inflation in the US. Monetary policy focused on accommodating higher inflation, with emphasis solely on the mandate of promoting employment, has been blamed as deliberate or because of model error or imperfect measurement for creating the Great Inflation (http://cmpassocregulationblog.blogspot.com/2011/05/slowing-growth-global-inflation-great.html http://cmpassocregulationblog.blogspot.com/2011/04/new-economics-of-rose-garden-turned.html http://cmpassocregulationblog.blogspot.com/2011/03/is-there-second-act-of-us-great.html and Appendix I The Great Inflation; see Taylor 1993, 1997, 1998LB, 1999, 2012FP, 2012Mar27, 2012Mar28, 2012JMCB and http://cmpassocregulationblog.blogspot.com/2012/06/rules-versus-discretionary-authorities.html). A remarkable similarity with US experience is the sharp rise of the CGPI of Japan in 2008 driven by carry trades from policy interest rates rapidly falling to zero to exposures in commodity futures during a global recession. Japan had the same sharp waves of consumer price inflation during the 1970s as in the US (see Chart IV-5A and associated table at 10/30/16 http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states_30.html http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states.html http://cmpassocregulationblog.blogspot.com/2016/08/and-as-ever-economic-outlook-is.html http://cmpassocregulationblog.blogspot.com/2016/07/business-fixed-investment-has-been-soft.html http://cmpassocregulationblog.blogspot.com/2016/07/financial-asset-values-rebound-from.html http://cmpassocregulationblog.blogspot.com/2016/05/appropriate-for-fed-to-increase.html http://cmpassocregulationblog.blogspot.com/2016/03/contraction-of-united-states-corporate.html http://cmpassocregulationblog.blogspot.com/2016/02/mediocre-cyclical-united-states.html http://cmpassocregulationblog.blogspot.com/2016/01/closely-monitoring-global-economic-and.html http://cmpassocregulationblog.blogspot.com/2015/12/dollar-revaluation-and-decreasing.html http://cmpassocregulationblog.blogspot.com/2015/11/dollar-revaluation-constraining.html http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-increase-considered.html http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-increase-considered.htmlhttp://cmpassocregulationblog.blogspot.com/2015/09/monetary-policy-designed-on-measurable.html

http://cmpassocregulationblog.blogspot.com/2015/08/fluctuations-of-global-financial.html http://cmpassocregulationblog.blogspot.com/2015/08/turbulence-of-valuations-of-financial_77.html http://cmpassocregulationblog.blogspot.com/2015/06/international-valuations-of-financial_29.html http://cmpassocregulationblog.blogspot.com/2015/06/dollar-revaluation-squeezing-corporate_97.html http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html http://cmpassocregulationblog.blogspot.com/2014/09/geopolitical-and-financial-risks_71.html http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical_8145.html http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.html http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html http://cmpassocregulationblog.blogspot.com/2013/12/exit-risks-of-zero-interest-rates-world_1.html and earlier http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or_561.html and at http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk_1.html http://cmpassocregulationblog.blogspot.com/2012/07/recovery-without-jobs-stagnating-real_09.html).

Chart IV-7, Japan, Domestic Corporate Goods Price Index, Monthly, 1970-2016

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

The producer price index of the US from 1970 to 2016 in Chart IV-8 shows various periods of more rapid or less rapid inflation but no bumps. The major event is the decline in 2008 when risk aversion because of the global recession caused the collapse of oil prices from $148/barrel to less than $80/barrel with most other commodity prices also collapsing. The event had nothing in common with explanations of deflation but rather with the concentration of risk exposures in commodities after the decline of stock market indexes. Eventually, there was a flight to government securities because of the fears of insolvency of banks caused by statements supporting proposals for withdrawal of toxic assets from bank balance sheets in the Troubled Asset Relief Program (TARP), as explained by Cochrane and Zingales (2009). The bump in 2008 with decline in 2009 is consistent with the view that zero interest rates with subdued risk aversion induce carry trades into commodity futures.

Chart IV-8, US, Producer Price Index Finished Goods, Monthly, 1970-2016

Source: US Bureau of Labor Statistics

http://www.bls.gov/ppi/

Further insight into inflation of the corporate goods price index (CGPI) of Japan is in Table IV-7. The increase in the tax on value added of consumption caused sharp increases in prices across all segments. Petroleum and coal with weight of 5.7 percent increased 2.9 percent in Oct 2016 and decreased 7.3 percent in 12 months. Japan exports manufactured products and imports raw materials and commodities such that the country’s terms of trade, or export prices relative to import prices, deteriorate during commodity price increases. In contrast, prices of production machinery, with weight of 3.1 percent, changed 0.0 percent in Oct 2016 and decreased 0.3 percent in 12 months. In general, most manufactured products had been experiencing negative or low increases in prices while inflation rates have been high in 12 months for products originating in raw materials and commodities. The reversal of carry trades in commodity futures caused decrease in prices of commodities and raw materials while prices of manufactures stabilized. Ironically, unconventional monetary policy of zero interest rates and quantitative easing that intended to increase aggregate demand and GDP growth deteriorated the terms of trade of advanced economies with adverse effects on real income (for analysis of terms of trade and growth see Pelaez (1979, 1976a). There are now inflation effects of the intentional policy of devaluing the yen and recent collapse of commodity prices.

Table IV-7, Japan, Corporate Goods Prices and Selected Components, % Weights, Month and 12 Months ∆%

Oct 2016	Weight	Month ∆%	12 Month ∆%
Total	1000.0	-0.1	-2.7
Food, Beverages, Tobacco, Feedstuffs	137.5	-0.1	-0.6
Petroleum & Coal	57.4	2.9	-7.3
Production Machinery	30.8	0.0	-0.3
Electronic Components	31.0	-0.1	-1.8
Electric Power, Gas & Water	52.7	-4.0	-10.8
Iron & Steel	56.6	0.3	-3.3
Chemicals	92.1	0.2	-6.1
Transport Equipment	136.4	-0.2	-0.9

Source: Bank of Japan

http://www.boj.or.jp/en/statistics/index.htm/

Percentage point contributions to change of the corporate goods price index (CGPI) in Oct 2016 are in Table IV-8, divided into domestic, export and import segments. In the domestic CGPI, decreasing 0.1 percent in Oct 2016, the energy shock is evident in the deduction of 0.25 percentage points by electric power, gas and water in renewed reversal of carry trades of exposures in commodity futures. The exports CGPI increased 0.1 percent on the basis of the contract currency with contribution of 0.11 percentage points by chemicals and related products. The imports CGPI increased 1.1 percent on the contract currency basis. Petroleum, coal and natural gas contributed 1.16 percentage points. Shocks of risk aversion cause unwinding carry trades that result in declining commodity prices with resulting downward pressure on price indexes. The volatility of inflation adversely affects financial and economic decisions worldwide.

Table IV-8, Japan, Percentage Point Contributions to Change of Corporate Goods Price Index

Groups Oct 2016	Contribution to Change Percentage Points
A. Domestic Corporate Goods Price Index	Monthly Change:  -0.1%
Electric Power, Gas & Water	-0.25
Transportation Equipment	-0.03
Nonferrous Metals	-0.01
Food, Beverages, Tobacco & Feedstuffs	-0.01
Petroleum & Coal Products	0.14
Agriculture, Forestry & Fishery Products	0.05
Iron & Steel	0.01
Chemicals & Related Products	0.01
B. Export Price Index	Monthly Change:    0.1% contract currency
Chemicals & Related Products	0.11
Other Primary Products & Manufactured Goods	0.06
Transportation Equipment	0.02
Electric & Electronic Products	-0.04
Metals & Related Products	-0.03
C. Import Price Index	Monthly Change: 1.1% contract currency basis
Petroleum, Coal & Natural Gas	1.16
Textiles	0.02
General Purpose, Production & Business Oriented	-0.03
Other Primary Products & Manufactured Goods	-0.03
Chemicals & Related Products	-0.02
Metals & Related Products	-0.02

Source: Bank of Japan

http://www.boj.or.jp/en/statistics/index.htm/

There are two categories of responses in the Empire State Manufacturing Survey of the Federal Reserve Bank of New York (https://www.newyorkfed.org/survey/empire/empiresurvey_overview.html): current conditions and expectations for the next six months. There are responses in the survey for two types of prices: prices received or inputs of production and prices paid or sales prices of products. Table IV-5 provides indexes for the two categories and within them for the two types of prices from Jan 2011 to Nov 2016. The index of current prices paid or costs of inputs moved from 16.1 in Dec 2012 to 15.5 in Nov 2016 while the index of current prices received or sales prices moved from 1.1 in Dec 2012 to 2.7 in Nov 2016. The farther the index is from the area of no change at zero, the faster the rate of change. Prices paid or costs of inputs at 15.5 in Nov 2016 are expanding at faster pace than prices received or of sales of products at 2.7. The index of future prices paid or expectations of costs of inputs in the next six months fell from 51.6 in Dec 2012 to 39.1 in Nov 2016 while the index of future prices received or expectation of sales prices in the next six months decreased from 25.8 in Dec 2012 to 20.9 in Nov 2016. Prices paid or of inputs at 39.1 in Nov 2016 are expected to increase at a faster pace in the next six months than prices received or prices of sales products at 20.9 in Nov 2016. Prices of sales of finished products are less dynamic than prices of costs of inputs during waves of increases. Prices of costs of costs of inputs fall less rapidly than prices of sales of finished products during waves of price decreases. As a result, margins of prices of sales less costs of inputs oscillate with typical deterioration against producers, forcing companies to manage tightly costs and labor inputs. Instability of sales/costs margins discourages investment and hiring.

Table IV-5, US, FRBNY Empire State Manufacturing Survey, Diffusion Indexes, Prices Paid and Prices Received, SA

	Current Prices Paid	Current Prices Received	Six Months Prices Paid	Six Months Prices Received
1/31/2011	35.8	15.8	60	42.1
2/28/2011	45.8	16.9	55.4	27.7
3/31/2011	53.2	20.8	71.4	36.4
4/30/2011	57.7	26.9	56.4	38.5
5/31/2011	69.9	28	68.8	35.5
6/30/2011	56.1	11.2	55.1	19.4
7/31/2011	43.3	5.6	51.1	30
8/31/2011	28.3	2.2	42.4	15.2
9/30/2011	32.6	8.7	53.3	22.8
10/31/2011	22.5	4.5	40.4	18
11/30/2011	18.3	6.1	36.6	25.6
12/31/2011	24.4	3.5	57	36
1/31/2012	26.4	23.1	53.8	30.8
2/29/2012	25.9	15.3	62.4	34.1
3/31/2012	50.6	13.6	66.7	32.1
4/30/2012	45.8	19.3	50.6	22.9
5/31/2012	37.3	12	57.8	22.9
6/30/2012	19.6	1	34	17.5
7/31/2012	7.4	3.7	35.8	16
8/31/2012	16.5	2.4	31.8	14.1
9/30/2012	19.1	5.3	40.4	23.4
10/31/2012	17.2	4.3	44.1	24.7
11/30/2012	14.6	5.6	39.3	15.7
12/31/2012	16.1	1.1	51.6	25.8
1/31/2013	22.6	10.8	38.7	21.5
2/28/2013	26.3	8.1	44.4	13.1
3/31/2013	25.8	2.2	50.5	23.7
4/30/2013	28.4	5.7	44.3	14.8
5/31/2013	20.5	4.5	29.5	14.8
6/30/2013	21	11.3	45.2	17.7
7/31/2013	17.4	1.1	28.3	12
8/31/2013	20.5	3.6	41	19.3
9/30/2013	21.5	8.6	39.8	24.7
10/31/2013	21.7	2.4	45.8	25.3
11/30/2013	17.1	-3.9	42.1	17.1
12/31/2013	15.7	3.6	48.2	27.7
1/31/2014	36.6	13.4	45.1	23.2
2/28/2014	25	15	40	23.8
3/31/2014	21.2	2.4	43.5	25.9
4/30/2014	22.4	10.2	33.7	14.3
5/31/2014	19.8	6.6	31.9	14.3
6/30/2014	17.2	4.3	36.6	16.1
7/31/2014	25	6.8	37.5	18.2
8/31/2014	27.3	8	42	21.6
9/30/2014	23.9	17.4	43.5	32.6
10/31/2014	11.4	6.8	42	26.1
11/30/2014	10.6	0	41.5	25.5
12/31/2014	10.4	6.3	40.6	32.3
1/31/2015	12.6	12.6	33.7	15.8
2/28/2015	14.6	3.4	27	5.6
3/31/2015	12.4	8.2	32	12.4
4/30/2015	19.1	4.3	38.3	13.8
5/31/2015	9.4	1	26	7.3
6/30/2015	9.6	1	24	5.8
7/31/2015	7.4	5.3	27.7	6.4
8/31/2015	7.3	0.9	34.5	10.9
9/30/2015	4.1	-5.2	28.9	7.2
10/31/2015	0.9	-8.5	27.4	7.5
11/30/2015	4.5	-4.5	29.1	11.8
12/31/2015	4	-4	27.3	20.2
1/31/2016	16	4	31	12
2/29/2016	3	-5	14.9	4
3/31/2016	3	-5.9	19.8	7.9
4/30/2016	19.2	2.9	27.9	5.8
5/31/2016	16.7	-3.1	28.1	6.3
6/30/2016	18.4	-1	29.6	7.1
7/31/2016	18.7	1.1	26.4	7.7
8/31/2016	15.5	2.1	25.8	9.3
9/30/2016	17	1.8	41.1	20.5
10/31/2016	22.6	4.7	35.8	30.2
11/30/2016	15.5	2.7	39.1	20.9

Source: Federal Reserve Bank of New York

https://www.newyorkfed.org/survey/empire/empiresurvey_overview.html

Price indexes of the Federal Reserve Bank of Philadelphia Outlook Survey are in Table IV-5A. As in inflation waves throughout the world (Section I and earlier http://cmpassocregulationblog.blogspot.com/2016/10/dollar-revaluation-world-inflation.html) indexes of both current and expectations of future prices paid and received were quite high until May 2011. Prices paid, or inputs, were more dynamic, reflecting carry trades from zero interest rates to commodity futures. All indexes softened after May 2011 with even decline of prices received in Aug 2011 during the first round of risk aversion. Current and future price indexes have increased again but not back to the intensity in the beginning of 2011 because of risk aversion frustrating carry trades even induced by zero interest rates. The index of prices paid or prices of inputs moved from 20.6 in Dec 2012 to 27.5 in Nov 2016. The index of current prices received was minus 1.6 in Apr 2013, indicating decrease of prices received. The index of current prices received decreased from 8.5 in Dec 2012 to minus 5.5 in Sep 2015, decreasing to minus 4.5 in Feb 2016. The index of current prices received was 16.0 in Oct 2016. The farther the index is from the area of no change at zero, the faster the rate of change. The index of current prices paid or costs of inputs at 27.5 in Nov 2016 indicates faster expansion than the index of current prices received or sales prices of production in Nov 2016, showing 3.7. Prices paid indicate faster expansion than prices received during most of the history of the index. The index of future prices paid decreased to 36.7 in Oct 2016 from 42.3 in Dec 2012 while the index of future prices received increased from 22.2 in Dec 2012 to 31.0 in Nov 2016. Expectations are incorporating faster increases in prices of inputs or costs of production, 36.7 in Nov 2016, than of sales prices of produced goods, 31.0 in Nov 2016, forcing companies to manage tightly costs and labor inputs. Volatility of margins of sales/costs discourages investment and hiring.

Table IV-5A, US, Federal Reserve Bank of Philadelphia Business Outlook Survey, Current and Future Prices Paid and Prices Received, SA

	Current Prices Paid	Current Prices Received	Six Months Prices Paid	Six Months Prices Received
Dec-10	42.6	5.1	56.3	24.5
Jan-11	48.2	12.5	58.9	34.4
Feb-11	61.8	13.6	67.9	31.5
Mar-11	59.2	17.8	61.5	33.5
Apr-11	52.8	23.1	56.4	36.3
May-11	51.3	20.8	54.8	28.4
Jun-11	36.3	6.5	40.8	6.7
Jul-11	34.1	5.6	48.2	17.3
Aug-11	23.4	-3	42.8	22.8
Sep-11	30.1	6.3	38.6	20.5
Oct-11	22.6	1.5	41.5	28.1
Nov-11	21.8	4.9	34.5	26.6
Dec-11	24.9	5.3	42.8	21.3
Jan-12	26	9	48	21.3
Feb-12	33.6	10.4	50.5	26.2
Mar-12	17.4	6.9	38.6	24.8
Apr-12	22	10	37.1	25
May-12	10.4	1.6	40.2	8.9
Jun-12	1.7	-5.7	33.1	16.6
Jul-12	8	3.3	27.2	20.8
Aug-12	16.3	7.1	35	23.9
Sep-12	12.8	2.5	38.8	24.7
Oct-12	17	4.3	44.3	15.6
Nov-12	21.9	4.1	45.9	11
Dec-12	20.6	8.5	42.3	22.2
Jan-13	13.2	0.4	35.1	21.1
Feb-13	13	0.4	33.8	22.7
Mar-13	13	1.4	35.1	20.2
Apr-13	11.7	-1.6	31.7	16.6
May-13	13.5	1.4	34.9	18.7
Jun-13	18.2	12	30.3	23.6
Jul-13	18.2	5.2	39.6	25.4
Aug-13	18.1	13	33.8	22.9
Sep-13	21.9	11.5	38.3	27.8
Oct-13	16.8	8.3	41.7	35
Nov-13	22.8	5.7	40.9	36.6
Dec-13	16.9	7.9	40.9	29.2
Jan-14	20.6	8.1	37.6	12.9
Feb-14	16.7	10	27.4	18.8
Mar-14	21	7.8	33.7	20.4
Apr-14	21.2	11.7	39.2	21.3
May-14	28.2	18.9	38.3	28.1
Jun-14	28	10.6	42.8	29.1
Jul-14	28.7	13.3	35.5	22.7
Aug-14	22.1	6.3	43.9	27.7
Sep-14	21.5	7.5	40.4	26.8
Oct-14	22.5	15.9	31.5	22.5
Nov-14	13.6	7.1	32.2	18.8
Dec-14	15.2	9.7	26.6	21.2
Jan-15	12.6	2.5	30.6	19.8
Feb-15	6.6	2.8	33	20.8
Mar-15	1.3	-4.1	30.4	9.8
Apr-15	1.3	-0.7	21.1	14.2
May-15	-12	-4.7	23.1	17.7
Jun-15	12	1.4	40.6	11.2
Jul-15	14.8	-0.6	31.9	17.1
Aug-15	3.8	-3.4	33.1	8.5
Sep-15	-3.1	-5.5	26.9	6.4
Oct-15	-3.2	-2.8	18.4	9.7
Nov-15	-7.5	-4.1	22.4	10.8
Dec-15	-8.3	-8.5	26	15
Jan-16	-1.1	-2.8	18.8	10.1
Feb-16	-2.2	-4.5	11.9	2.1
Mar-16	-0.9	3.5	24.7	15.1
Apr-16	13.2	7.4	36.7	22.6
May-16	15.7	14.8	24.8	10.5
Jun-16	23	3.9	37.8	16.5
Jul-16	9.9	0.3	26.4	24.1
Aug-16	19.7	7.1	29.1	13.9
Sep-16	20.6	9.7	42.1	33.4
Oct-16	7	-3.7	42.4	29.2
Nov-16	27.5	16	36.7	31

Source: Federal Reserve Bank of Philadelphia

https://www.philadelphiafed.org/

Chart IV-1 of the Business Outlook Survey of the Federal Reserve Bank of Philadelphia Outlook Survey provides the diffusion index of current prices paid or prices of inputs from 2006 to 2016. Recession dates are in shaded areas. In the middle of deep global contraction after IVQ2007, input prices continued to increase in speculative carry trades from central bank policy rates falling toward zero into commodities futures. The index peaked above 70 in the second half of 2008. Inflation of inputs moderated significantly during the shock of risk aversion in late 2008, even falling briefly into contraction territory below zero during several months in 2009 in the flight away from risk financial assets into US government securities (Cochrane and Zingales 2009) that unwound carry trades. Return of risk appetite induced carry trade with significant increase until return of risk aversion in the first round of the European sovereign debt crisis in Apr 2010. Carry trades returned during risk appetite in expectation that the European sovereign debt crisis was resolved. The various inflation waves originating in carry trades induced by zero interest rates with alternating episodes of risk aversion are mirrored in the prices of inputs after 2011, in particular after Aug 2012 with the announcement of the Outright Monetary Transactions Program of the European Central Bank (http://www.ecb.int/press/pr/date/2012/html/pr120906_1.en.html). Subsequent risk aversion and flows of capital away from commodities into stocks and high-yield bonds caused sharp decline in the index of prices paid followed by another recent rebound with marginal decline and new increase. The index falls, rebounds and falls again in the final segment but there are no episodes of contraction after 2009 with exception of minus 12.0 in May 2015, minus 3.1 in Sep 2015, minus 3.2 in Oct 2015, minus 7.5 in Nov 2015 and minus 8.3 in Dec 2015. The reading for the index in Jan 2016 is minus 1.1 and minus 2.2 for Feb 2016. The index is minus 0.9 in Mar 2016 and 13.2 in Apr 2016, increasing to 15.7 in May 2016 and 23.0 in Jun 2016. The index reached 9.9 in Jul 2016, 19.7 in Aug 2016 and 20.6 in Sep 2016. The index was 7.0 in Oct 2016 and 27.5 in Nov 2016.

Chart IV-1, Federal Reserve Bank of Philadelphia Business Outlook Survey Current Prices Paid Diffusion Index SA

Source: Federal Reserve Bank of Philadelphia

https://www.philadelphiafed.org/

Chart IV-2 of the Federal Reserve Bank of Philadelphia Outlook Survey provides the diffusion index of current prices received from 2006 to 2016. The significant difference between the index of current prices paid in Chart IV-1 and the index of current prices received in Chart IV-2 is that increases in prices paid are significantly sharper than increases in prices received. There were several periods of negative readings of prices received from 2010 to 2016. Prices paid increased at 1.3 in Mar 2015 while prices received contracted at 4.1. There were several contraction of prices paid: 12.0 in May 2015 with milder contraction of 4.7 of prices received; minus 3.1 for prices paid in Sep 2015 with minus 5.5 for prices received; and minus 3.2 for prices paid in Oct 2015 with minus 2.8 for prices received. The index of prices received fell to minus 4.1 in Nov 2015 with minus 7.5 for prices paid and to minus 8.5 in Dec 2015 with minus 8.3 for prices paid. The index of prices received fell to minus 4.5 in Feb 2016 with minus 2.2 for prices paid. The index of prices received increased to 3.5 in Mar 2016 with minus 0.9 for prices paid. Prices paid moved to 27.5 in Nov 2016 while prices received moved to 16.0. Prices received relative to prices paid deteriorate most of the time largely because of the carry trades from zero interest rates to commodity futures. Profit margins of business are compressed intermittently by fluctuations of commodity prices induced by unconventional monetary policy of zero interest rates, frustrating production, investment and hiring decisions of business, which is precisely the opposite outcome pursued by unconventional monetary policy.

Chart IV-2, Federal Reserve Bank of Philadelphia Business Outlook Survey Current Prices Received Diffusion Index SA

Source: Federal Reserve Bank of Philadelphia

https://www.philadelphiafed.org/

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 54.0 in Oct 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 50.9 in Oct 2016.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Oct 2016	54.0	50.9	53.7	51.5	60.6
Sep	53.7	51.4	51.7	50.1	61.1
Aug	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 54.0 in Oct 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 51.2 in Oct 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 52.8 in Oct 2016.

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

	IPM	PI	NOI	INV	EMP	SDEL
2016
Oct	51.2	53.3	52.8	48.1	48.6	50.2
Sep	50.4	52.8	50.9	47.4	48.6	49.9
Aug	50.4	52.6	51.3	47.6	48.4	50.6
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 51.2 in Oct 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 IIIQ2016 relative to the same period in 2015 was 6.7 percent and cumulative growth to IIIQ2016 was 6.7 percent, as shown in Table VC-GDP. Secondary industry accounts for 39.5 percent of cumulative GDP in IIIQ2016. In cumulative IIIQ2016, industry accounts for 33.4 percent of GDP and construction for 6.3 percent. Tertiary industry accounts for 52.8 percent of cumulative GDP in IIIQ2016 and primary industry for 7.7 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 7.8 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 stabilized 7.4 percent in IIIQ2014 and 7.4 percent in IVQ2014. Growth slowed to annual equivalent 6.6 percent in IQ2015, increasing to 7.8 percent in IIQ2015 and 7.0 percent in IIIQ2015. Growth slowed to 6.6 percent in annual equivalent in IVQ2015 and 4.9 percent in IQ2016. Growth increased to annual equivalent 7.8 percent in IIQ2016 and 7.4 percent in IIIQ2016.

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

Cumulative GDP IIIQ2015	Value Current CNY Billion IIIQ2016	Value Current CNY Billion IQ2016 to IIIQ2016	IIIQ2016 Year-on-Year Constant Prices ∆%	Cumulative to IIIQ2016 ∆%
GDP	18,933.4	52,997.1	6.7	6.7
Primary Industry	1,856.9	4,066.6	4.0	3.5
Farming	1,918.4	4,211.6	4.1	3.7
Secondary Industry	7,516.5	20,941.5	6.1	6.1
Industry	6,251.8	17,710.1	6.1	6.0
Construction	1,331.5	3,319.3	6.0	6.9
Tertiary Industry	9,560.1	27,989.0	7.6	7.6
Transport, Storage, Post	862.4	2,416.0	6.5	5.3
Wholesale, Retail Trades	1,785.0	5,119.1	7.0	6.4
Accommodation and Restaurants	339.0	954.1	6.5	6.8
Finance	1,527.4	4,649.3	5.6	6.3
Real Estate	1,204.3	3,453.7	8.8	8.9
Other	3,749.7	11,163.9	8.8	8.9
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter		∆% Annual Equivalent	∆% Year-on-Year
2016
IIIQ2016	1.8		7.4	6.7
IIQ2016	1.9		7.8	6.7
IQ2016	1.2		4.9	6.7
2015
IVQ2015	1.6		6.6	6.8
IIIQ2015	1.7		7.0	6.9
IIQ2015	1.9		7.8	7.0
IQ2015	1.6		6.6	7.0
2014
IVQ2014	1.8		7.4	7.2
IIIQ2014	1.8		7.4	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	1.9		7.8	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 IIIQ2016 relative to the same period in 2015 was 6.7 percent and cumulative growth to IIIQ2016 was 6.7 percent, as shown in Table VC-GDP. Secondary industry accounts for 39.5 percent of cumulative GDP in IIIQ2016. In cumulative IIIQ2016, industry accounts for 33.4 percent of GDP and construction for 6.3 percent. Tertiary industry accounts for 52.8 percent of cumulative GDP in IIIQ2016 and primary industry for 7.7 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 1.8 percent relative to the prior quarter, which is 7.4 percent in annual equivalent. GDP grew 1.8 percent in IVQ2014, which is 7.4 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 1.9 percent in IIQ2015, which is equivalent to 7.8 percent in a year, and grew 7.0 percent relative to a year earlier. GDP grew at 1.7 percent in IIIQ2015, which is equivalent to 7.0 percent in a year, and grew 6.9 percent relative to a year earlier. GDP grew at 1.6 percent in IVQ2015, which is equivalent to 6.6 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 1.9 percent in IIQ2016, which is annual equivalent to 7.8 percent, and increased 6.7 percent relative to a year earlier. In IIIQ2016, GDP grew at 1.8 percent, which is equivalent to 7.4 percent in a year 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	IIIQ2016
GDP	7.0	7.0	6.9	6.8	6.7	6.7	6.7
Primary Industry	3.2	3.5	3.8	4.1	2.9	3.1	3.5
Secondary Industry	6.4	6.1	6.0	6.1	5.8	6.3	6.1
Tertiary Industry	7.9	8.4	8.4	8.2	7.6	7.5	7.6
GDP ∆% Relative to a Prior Quarter	1.6	1.9	1.7	1.6	1.2	1.9	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	1.8	1.8
	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	1.9	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, increasing from 51.4 in Sep to 52.9 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/a472974d580444bd95a6aa45e9363881). Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, finds improving activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/a472974d580444bd95a6aa45e9363881). The Caixin General Manufacturing PMI^™ increased to 51.2 in Oct from 50.1 in Se[, indicating growth conditions in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/635032b6e6ad4649af59753f2e0acea2). Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, finds improving conditions (https://www.markiteconomics.com/Survey/PressRelease.mvc/635032b6e6ad4649af59753f2e0acea2). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Oct 12-month ∆%: 0.7 Oct month ∆%: 1.2 Blog 11/13/16
Consumer Price Index	Oct 12-month ∆%: 2.1 Oct month ∆%: -0.1 Blog 11/13/16
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 IIIQ2016 ∆%: 6.7 III Quarter 2016 ∆%: 1.8 Quarter IIIQ2016 AE ∆%: 7.4 Blog 11/6/16
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	Oct balance $49.06 billion Exports 12M ∆% -7.3 Imports 12M ∆% -1.4 2015 Exports ∆% -2.8 2015 Imports ∆% -14.1 Cumulative Oct 2016: $441.6 billion Cumulative Oct 2015: $485.9 Earlier Data: Blog 4/19/15

Links to blog comments in Table CNY: 11/13/16 http://cmpassocregulationblog.blogspot.com/2016/11/dollar-revaluation-and-valuations-of.html

11/6/16 http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.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, increased from 52.6 in Sep to 53.7 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/e2b887b8e41248eeb4fb8e5333372c88). Chris Williamson, Chief Business Economist at IHS Markit, finds that the Markit Flash Eurozone PMI index suggests GDP growth about 0.4 percent in IIIQ2016 (https://www.markiteconomics.com/Survey/PressRelease.mvc/e2b887b8e41248eeb4fb8e5333372c88). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP increased from 52.6 in Sep to 53.3 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/ff4a40e5fd5243de8eea258ece0dd9e6). Chris Williamson, Chief Economist at IHS Markit, finds potential for growth of about 0.3 percent in IVQ2016 (https://www.markiteconomics.com/Survey/PressRelease.mvc/ff4a40e5fd5243de8eea258ece0dd9e6). The Markit Eurozone Services Business Activity Index increased from 52.2 in Sep to 52.8 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/ff4a40e5fd5243de8eea258ece0dd9e6). The Markit Eurozone Manufacturing PMI^® increased from 52.6 in Sep to 53.5 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/4c1efe8463314bccb50184929c4a8e80). New export orders increased. Rob Dobson, Senior Economist at IHS Markit, finds sronger industrial growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/4c1efe8463314bccb50184929c4a8e80). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IIIQ2016 ∆% 0.3; IIIQ2016/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 11/20/16
Unemployment	Sep 2016: 10.0 % unemployment rate; Aug 2016: 16.181 million unemployed Blog 11/6/16
HICP	Oct month ∆%: 0.2 12 months Oct ∆%: 0.5 Blog 11/20//16
Producer Prices	Euro Zone industrial producer prices Sep ∆%: 0.1 Sep 12-month ∆%: -1.5 Blog 11/13/16
Industrial Production	Jul Month ∆%: -1.1; 12 months ∆%: -0.5 Earlier Data: Blog 4/19/15
Retail Sales	Sep month ∆%: -0.2 Sep 12 months ∆%: 1.1 Earlier Data: Blog 3/15/15
Confidence and Economic Sentiment Indicator	Sentiment 106.3 Oct 2016 Consumer minus 8.0 Oct 2016 Earlier Data: Blog 4/5/15
Trade	Jan-Sep 2016/Jan-Sep 2015 Exports ∆%: -0.4 Imports ∆%: -3.1 Sep 2016 12-month Exports ∆% 2.0 Imports ∆% -2.5 Earlier Data: Blog 4/19/15

Links to blog comments in Table EUR: 11/13/16 http://cmpassocregulationblog.blogspot.com/2016/11/dollar-revaluation-and-valuations-of.html

11/6/16 http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html

10/23/16 http://cmpassocregulationblog.blogspot.com/2016/10/dollar-revaluation-world-inflation.html

10/9/16 http://cmpassocregulationblog.blogspot.com/2016/10/twenty-four-million-unemployed-or.html

10/2/16 http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states.html

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

Table VD-1 provides percentage changes of euro area real GDP in a quarter relative to the prior quarter. Real GDP fell 0.4 percent in IVQ2011, fell 0.2 in IQ2012 and fell in the final three quarters of 2012: 0.3 percent in IIQ2012, 0.1 percent in IIIQ2012 and 0.4 percent in IVQ2012. GDP fell 0.3 percent in IQ2013 and increased 0.4 percent in IIQ2013. Growth slowed at 0.3 percent in IIIQ2013. GDP increased 0.2 percent in IVQ2013. The GDP of the euro area increased 0.3 percent in IQ2014 and increased 0.2 percent in IIQ2014. GDP in the euro area increased 0.4 percent in IIIQ2014 and increased 0.4 percent in IVQ2014. Euro area GDP increased 0.8 percent in IQ2015 and increased 0.4 percent in IIQ2015. Euro area GDP increased 0.3 percent in IIIQ2015 and increased 0.5 percent in IVQ2015. GDP in the euro area increased 0.5 percent in IQ2016 and increased 0.3 percent in IIIQ2016. The first estimate of GDP of the euro area is 0.3 percent in IIIQ2016. The global recession manifested in the euro area in five consecutive quarterly declines from IIQ2008 to IIQ2009. The strongest impact was contraction of 3.0 percent in IQ2009. Recovery began in IIIQ2009 with cumulative growth of 4.2 percent to IQ2011 or at the annual equivalent rate of 2.4 percent. Growth was much more vigorous from IVQ2003 to IQ2008. Using calendar and seasonally chain-linked volumes (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 IIIQ2016 at the annual equivalent rate of 1.0 percent. The GDP of the euro area (19 countries) is higher by 1.8 percent in IIIQ2016 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. The GDP of the euro area (19 countries) grew at 2.3 percent annual equivalent from IQ1999 to the pre-recession peak in IQ2008. The GDP of the euro area would grow under trend of 2.3 percent from €2,470,331.8 million in IQ2008 to €2,997,078.9 million in IIIQ2016. The estimate of GDP of €2,515,123.1 million in IIIQ2016 is 16.1 percent below trend.

Table VD-1, Euro Area, Real GDP, Percentage Change from Prior Quarter, Calendar and Seasonally and Working Day Adjusted ∆%

	IQ	IIQ	IIIQ	IVQ
2016	0.5	0.3	0.3
2015	0.8	0.4	0.3	0.5
2014	0.3	0.2	0.4	0.4
2013	-0.3	0.4	0.3	0.2
2012	-0.2	-0.3	-0.1	-0.4
2011	0.8	0.0	0.0	-0.4
2010	0.5	1.0	0.4	0.6
2009	-3.0	-0.2	0.3	0.5
2008	0.5	-0.3	-0.6	-1.7
2007	0.8	0.6	0.5	0.5
2006	0.9	1.0	0.6	1.1
2005	0.2	0.6	0.8	0.6
2004	0.6	0.5	0.3	0.4
2003	-0.2	0.1	0.5	0.7
2002	0.2	0.5	0.4	0.1
2001	0.9	0.1	0.1	0.2
2000	1.1	0.9	0.5	0.8
1999	0.9	0.6	1.1	1.3

Source: EUROSTAT

http://ec.europa.eu/eurostat

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

Table VD-2 provides percentage change in real GDP in the euro area in a quarter relative to the same quarter a year earlier. Growth rates were quite strong from 2004 to 2007. There were five consecutive quarters of sharp declines in GDP in a quarter relative to the same quarter a year earlier from IVQ2008 to IVQ2009 with sharp contractions of 5.5 percent in IQ2009, 5.4 percent in IIQ2009 and 4.6 percent in IIIQ2009.  Growth rates decline in magnitude with 1.4 percent in IIIQ2011, 0.5 percent in IVQ211 and -0.5 percent in IQ2012 followed by contractions of 0.8 percent in IIQ2012, 1.0 percent in IIIQ2012 and 1.1 percent in IVQ2012. GDP contracted 1.2 percent in IQ2013 relative to a year earlier and contracted 0.4 percent in IIQ2013 relative to a year earlier. Euro area GDP changed 0.0 percent in IIIQ2013 relative to a year earlier. The GDP of the euro area increased 0.7 percent in IVQ2013 relative to a year earlier. The GDP of the euro area increased 1.3 percent in IQ2014 relative to a year earlier. In IIQ2014, the GDP of the euro area increased 1.0 percent relative to a year earlier. The GDP of the euro area increased 1.1 percent in IIIQ2014 relative to a year earlier and increased 1.3 percent in IVQ2014 relative to a year earlier. Euro area GDP increased 1.8 percent in IQ2015 relative to a year earlier and increased 2.0 percent in IIQ2015 relative to a year earlier. The GDP of the euro area increased 2.0 percent in IIIQ2015 relative to a year earlier. Euro area GDP increased 2.0 percent in IVQ2015 relative to a year earlier. The GDP of the euro area increased 1.7 percent in IQ2016 relative to a year earlier. Euro area GDP increased 1.6 percent in IIQ2016 relative to a year earlier. The GDP of the euro area increased 1.6 percent in IIIQ2016 relative to a year earlier.

Table VD-2, Euro Area, Real GDP Percentage Change in a Quarter Relative to Same Quarter a

Year Earlier, Seasonally and Working Day Adjusted ∆%

	IQ	IIQ	IIIQ	IV
2016	1.7	1.6	1.6
2015	1.8	2.0	2.0	2.0
2014	1.3	1.0	1.1	1.3
2013	-1.2	-0.4	0.0	0.7
2012	-0.5	-0.8	-1.0	-1.1
2011	2.8	1.8	1.4	0.5
2010	1.0	2.3	2.4	2.4
2009	-5.5	-5.4	-4.6	-2.4
2008	2.1	1.2	0.1	-2.1
2007	3.6	3.1	2.9	2.4
2006	3.0	3.4	3.3	3.7
2005	1.4	1.5	2.0	2.2
2004	1.9	2.4	2.2	1.8
2003	0.8	0.4	0.5	1.1
2002	0.5	0.9	1.2	1.2
2001	3.2	2.3	1.9	1.2
2000	4.2	4.5	3.9	3.4
1999	2.2	2.4	2.9	4.0

Source: EUROSTAT

http://ec.europa.eu/eurostat

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

Table VD-3 provides growth of euro area real GDP in a quarter relative to the same quarter a year earlier not seasonally adjusted. GDP increased 0.4 percent in IIIQ2013 NSA relative to a year earlier and increased 0.6 percent in IVQ2013 relative to a year earlier. GDP increased 1.3 percent in IQ2014 relative to a year earlier and 0.8 percent in IIQ2014 relative to a year earlier. GDP increased 1.0 percent in IIIQ2014 relative to a year earlier and 1.2 percent in IVQ2014 relative to a year earlier. GDP increased 1.8 percent in IQ2015 relative to a year earlier and increased 2.0 percent in IIQ2015 relative to a year earlier. GDP increased 2.0 percent in IIIQ2015 relative to a year earlier. GDP increased 2.3 percent in IVQ2015 relative to a year earlier. GDP increased 1.6 percent in IQ2016 relative to a year earlier. GDP increased 2.2 percent in IIQ2016 relative to a year earlier. GDP fell 0.3 percent in IIQ2013 relative to a year earlier without seasonal adjustment and declined 1.7 percent in IQ2013 relative to a year earlier without seasonal adjustment. Growth rates in 2006 and 2007 were quite strong followed by sharp declines of 5.6 percent in IQ2009, 6.0 percent in IIQ2009 and 4.4 percent in IQ2009.

Table VD-3, Euro Area, Real GDP Percentage Change in a Quarter Relative to Same Quarter a Year Earlier, Not Seasonally Adjusted ∆%

	IQ	IIQ	IIIQ	IV
2016	1.6	2.2
2015	1.8	2.0	2.0	2.3
2014	1.3	0.8	1.0	1.2
2013	-1.7	-0.3	0.4	0.6
2012	-0.2	-1.1	-1.1	-1.1
2011	2.9	1.9	1.4	0.1
2010	1.1	2.5	2.4	2.3
2009	-5.6	-6.0	-4.4	-2.1
2008	1.7	1.6	0.6	-2.1
2007	3.4	3.1	3.1	2.4
2006	3.7	2.7	3.1	3.5
2005	1.0	2.0	1.9	1.7
2004	2.2	2.7	2.2	2.0
2003	1.0	0.1	0.4	1.1
2002	0.1	1.1	1.6	1.0
2001	3.0	2.3	1.8	1.5
2000	4.9	4.3	3.4	2.8
1999	2.2	2.6	2.9	4.1

Source: EUROSTAT

http://ec.europa.eu/eurostat

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

Table VD-4 provides GDP growth in IIIQ2016 and relative to the same quarter a year earlier with SAWDA (seasonal and working day adjustment) and NSA (not seasonally adjusted) for the Euro zone, European Union, Japan and the US. The first estimate of euro area GDP SAWDA for IIIQ2016 in Table VD-4 is growth of 0.3 percent in IIQ2016 and 1.6 percent relative to a year earlier. The GDP of the euro zone increased 2.2 percent NSA in IIQ2016 relative to a year earlier. The GDP of the European Union increased 0.4 percent in IIIQ2016, increased 1.8 percent SWDA in IIIQ2016 relative to a year earlier and increased 2.1 percent relative to a year earlier NSA in IIQ2016. Growth in IIIQ2016 was weak worldwide with somewhat stronger performance by the US in the cycle as a whole but still insufficient to reduce unemployment and underemployment (http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/twenty-four-million-unemployed-or.html) and motivate hiring (http://cmpassocregulationblog.blogspot.com/2016/11/dollar-revaluation-and-valuations-of.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/imf-view-of-world-economy-and-finance.html).

Table VD-4, Euro Zone, European Union, Japan and USA, Real GDP Growth

	∆% IIIQ2016/ IIQ2016 SAWDA	∆% IIIQ2016/ IIIQ2015 SWDA	∆% IIQ2016/ IIQ2015 NSA
Euro Zone	0.3	1.6	2.2
European Union	0.4	1.8	2.1
Germany	0.2	1.7	3.1
France	0.2	1.1	1.9
Netherlands	0.7	2.4	2.3
Finland	0.5	1.4	1.1
Belgium	0.2	1.2	1.3
Portugal	0.8	1.6	1.1
Ireland	NA	NA	4.1
Italy	0.3	0.9	1.0
Greece	0.5	1.5	-0.4
Spain	0.7	3.2	3.6
United Kingdom	0.5	2.3	0.6
Japan	0.5	NA	0.9
USA	0.7	1.5	NA

*SAWDA: Seasonally and Working Day Adjusted except UK, Japan and USA

***NSA

Source: EUROSTAT

http://ec.europa.eu/eurostat

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

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

https://www.destatis.de/EN/PressServices/Press/pr/2016/11/PE16_403_811.html

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, increased from 52.8 in Sep to 55.1 in Oct. The index of manufacturing output reached 56.9 in Oct, increasing from 56.4 in Sep, while the index of services increased to 54.1 in Oct from 50.9 in Sep. The overall Flash Germany Manufacturing PMI^® increased from 54.3 in Sep to 55.1 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/63e4302055bc4139a7b3710c487a9546). New orders and new export orders in manufacturing increased. Oliver Kolodseike, Economist at IHS Markit, finds stronger growth of the private sector of Germany (https://www.markiteconomics.com/Survey/PressRelease.mvc/63e4302055bc4139a7b3710c487a9546). 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 52.8 in Sep to 55.1 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/fd8a8554991f4f8e8bf5f5137ee16551). Oliver Kolodseike, Economist at IHS Markit and author of the report, finds improving growth of the services sector of Germany (https://www.markiteconomics.com/Survey/PressRelease.mvc/fd8a8554991f4f8e8bf5f5137ee16551). The Germany Services Business Activity Index increased from 50.9 in Sep to 54.2 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/fd8a8554991f4f8e8bf5f5137ee16551). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, increased from 54.3 in Sep to 55.0 in

Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/371487878bc3427baa6efa144250ee25). New export orders increased. Oliver Kolodseike, Economist at IHS Markit and author of the report, finds continuing growth conditions (https://www.markiteconomics.com/Survey/PressRelease.mvc/371487878bc3427baa6efa144250ee25).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IIIQ2016 0.2 ∆%; IIIQ2016/IIIQ2015 ∆% 1.5 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 11/20/16
Consumer Price Index	Oct month NSA ∆%: 0.2 Oct 12-month NSA ∆%: 0.8 Blog 11/13/16
Producer Price Index	Oct month ∆%: 0.7 NSA, 0.5 CSA 12-month NSA ∆%: -0.4 Blog 11/20/16
Industrial Production	MFG Sep month CSA ∆%: minus 1.7 12-month NSA: 1.6 Earlier Data: Blog 4/12/15
Machine Orders	MFG Sep month ∆%: -0.6 Sep 12-month ∆%: 2.6 Earlier Data: Blog 4/12/15
Retail Sales	Aug Month ∆% -0.4 Jul 0.5 12-Month Aug % 3.7 Jul -1.5 Earlier Data: Blog 4/5/15
Employment Report	Unemployment Rate SA Sep 4.1% Blog 11/6/16
Trade Balance	Exports Sep 12-month NSA ∆%: 0.9 Imports Sep 12 months NSA ∆%: -1.4 Exports Sep month CSA ∆%: minus -0.7; Imports Sep month CSA -0.5 Earlier Data: Blog 4/12/15

Links to blog comments in Table DE: 11/13/16 http://cmpassocregulationblog.blogspot.com/2016/11/dollar-revaluation-and-valuations-of.html

11/6/16 http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html

10/23/16 http://cmpassocregulationblog.blogspot.com/2016/10/dollar-revaluation-world-inflation.html

10/16/16 http://cmpassocregulationblog.blogspot.com/2016/10/imf-view-of-world-economy-and-finance.html

10/2/16 http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states.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

Table VE-1 provides percentage change of Germany’s GDP in one quarter relative to the prior quarter from 1999 to 2016. Germany’s GDP contracted during four consecutive quarters from IIQ2008 to IQ2009. The deepest contraction was 4.5 percent in IQ2009. Growth was quite strong from IIIQ2009 to IQ2011 for cumulative growth of 8.1 percent in seven quarters or at the average rate of 1.1 percent per quarter, which is equivalent to 4.5 percent per year. Economic growth decelerated in IIQ2011 to 0.2 percent and 0.5 percent in IIIQ2011. The economy grew 0.0 percent in IVQ2011 and grew 0.4 percent in IQ2012 but at 0.1 percent in IIQ2012. GDP growth in IIIQ2012 was 0.2 percent relative to IIQ2012. Germany’s GDP contracted 0.5 percent in IVQ2012 relative to IIIQ2012. GDP decreased 0.2 percent in IQ2013 and increased 0.9 percent in IIQ2013. Growth of GDP was 0.4 percent in IIIQ2013 and 0.4 percent in IVQ2013. Germany’s growth was robust at 0.6 percent in IQ2014 or 2.4 percent in annual equivalent. GDP contracted 0.1 percent in IIQ2014. GDP increased 0.3 percent in IIIQ2014. The GDP of Germany increased 0.8 percent in IVQ2014. GDP increased 0.2 percent in IQ2015 and increased 0.5 percent in IIQ2015. GDP increased 0.2 percent in IIIQ2015 and grew 0.4 percent in IVQ2015. GDP grew 0.7 percent in IQ2016 and increased 0.4 percent in IIQ2016. GDP increased 0.2 percent in IIIQ2016. Using seasonally and calendar adjusted data (https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvironment/NationalAccounts/DomesticProduct/DomesticProduct.html), Germany’s GDP contracted 6.9 percent from IQ2008 to IQ2009. GDP grew 15.1 percent from IQ2009 to IIQ2016 at the annual equivalent rate of 2.0 percent. GDP grew 7.1 percent from IIQ2008 to IQ2016 at the annual equivalent rate of 0.8 percent. The Federal Statistical Office of Germany released estimates for IIQ2016 on Aug 24, 2016 (https://www.destatis.de/EN/PressServices/Press/pr/2016/08/PE16_291_811.html). Net trade drove growth in IIQ2016. Exports increased 1.2 percent in IIQ2016 relative to IQ2016 while imports fell 0.1 percent, with net trade contributing 0.6 percentage points to GDP growth (https://www.destatis.de/EN/PressServices/Press/pr/2016/08/PE16_291_811.html). Consumption expenditures of households increased 0.2 percent. Government final consumption increased 0.6 percent and gross fixed capital formation decreased 2.1 percent. Net trade deducted 0.6 percentage points from GDP growth in IVQ2015 and deducted 0.5 percentage points in IIIQ2015. Net trade contributed 0.6 percentage points to GDP growth in IIQ2015 and deducted 0.1 percentage points in IQ2015. Net trade added 0.3 percentage points to GDP growth in IQ2016 and added 0.6 percentage points in IIQ2016. The Federal Statistical Office of Germany (Statistisches Bundesamt Deutschland (Destatis)) finds provisionally contributions of domestic final consumption to IIIQ2016 GDP growth (https://www.destatis.de/EN/PressServices/Press/pr/2016/11/PE16_403_811.html). Imports increased while exports decreased such that net trade subtracted from GDP growth. There was also subtraction by moderate decline of fixed capital equipment and machinery.

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

	IQ	IIQ	IIIQ	IV
2016	0.7	0.4	0.2
2015	0.2	0.5	0.2	0.4
2014	0.6	-0.1	0.3	0.8
2013	-0.2	0.9	0.4	0.4
2012	0.4	0.1	0.2	-0.5
2011	1.8	0.2	0.5	0.0
2010	0.8	2.1	0.8	0.8
2009	-4.5	0.1	0.6	0.9
2008	0.9	-0.3	-0.4	-1.9
2007	0.4	0.7	0.8	0.3
2006	0.9	1.6	1.0	1.3
2005	-0.2	0.7	0.8	0.4
2004	0.0	0.3	-0.2	0.1
2003	-1.2	0.0	0.5	0.4
2002	-0.3	0.3	0.5	-0.2
2001	1.6	0.1	-0.3	0.1
2000	1.0	1.0	-0.2	0.1
1999	0.9	0.1	1.1	1.2

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

https://www.destatis.de/EN/PressServices/Press/pr/2016/11/PE16_403_811.html

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

Table VE-2 provides percentage changes of Germany’s GDP in a quarter relative to the same quarter a year earlier. Growth was weak in the recovery from the recession of 2001 through 2005, as in most of the euro area (see Pelaez and Pelaez, The Global Recession Risk (2007), 116-46). Germany’s economy then grew robustly in 2006 and 2007 until the global recession after 2007. Germany recovered with strong growth in 2010 and vigorous 6.0 percent in IQ2011 relative to a year earlier. The economy decelerated in the final three quarters of 2011, growing 1.6 percent in IQ2012 relative to IQ2011. Growth decelerated further to 0.4 percent in IIQ2012 without calendar adjustment and 0.9 percent with calendar adjustment and to 0.2 percent in IIIQ2012. Growth in IVQ2012 relative to IVQ2011 was minus 0.1 percent. GDP fell 1.5 percent in IQ2013 relative to a year earlier and increased 0.9 percent in IIQ2013 relative to a year earlier. GDP increased 1.2 percent in IIIQ2013 relative to a year earlier and 1.4 percent in IVQ2013 relative to a year earlier. GDP increased 2.6 percent in IQ2014 relative to a year earlier and 0.9 percent in IIQ2014 relative to a year earlier. GDP increased 1.2 percent in IIIQ2014 relative to a year earlier and increased 1.7 percent in IVQ2014 relative to a year earlier. GDP increased 1.3 percent in IQ2015 relative to a year earlier and increased 1.8 percent in IIQ2015 relative to a year earlier. GDP increased 1.8 percent in IIIQ2015 relative to a year earlier. The GDP of Germany increased 2.1 percent in IVQ2015 relative to a year earlier. GDP increased 1.5 percent in IQ2016 relative to a year earlier and increased 3.1 percent in IIQ2016 relative to a year earlier. In IIIQ2016, GDP increased 1.5 percent relative to a year earlier.

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

	IQ	IIQ	IIIQ	IV
2016	1.5	3.1	1.5
2015	1.3	1.8	1.8	2.1
2014	2.6	0.9	1.2	1.7
2013	-1.5	0.9	1.2	1.4
2012	1.6	0.4	0.2	-0.1
2011	6.0	3.7	3.2	1.8
2010	2.6	4.7	4.6	4.4
2009	-6.6	-7.9	-5.6	-2.4
2008	2.1	3.1	1.1	-1.9
2007	4.3	3.4	3.3	2.1
2006	4.3	2.4	3.5	4.6
2005	-0.7	1.3	1.3	1.0
2004	1.6	1.6	0.6	0.9
2003	-0.4	-1.3	-0.8	-0.3
2002	-1.2	0.2	1.1	-0.1
2001	2.4	1.6	1.5	1.4
2000	4.4	4.0	2.6	1.0
1999	0.9	1.7	2.1	3.3

Price adjusted NSA Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2016/11/PE16_403_811.html

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

There are strong calendar effects in economic activity in Germany. Table VE-3 provides Germany’s percentage change in a quarter relative to the same quarter a year earlier adjusting for price changes and calendar effects.

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

	IQ	IIQ	IIIQ	IV
2016	1.9	1.8	1.7
2015	1.2	1.8	1.7	1.3
2014	2.4	1.3	1.1	1.6
2013	-0.3	0.5	0.7	1.5
2012	1.1	0.9	0.7	0.1
2011	5.7	3.6	3.3	2.3
2010	2.5	4.3	4.6	4.4

Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2016/11/PE16_403_811.html

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

Table VE-4 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-4, 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

https://www.destatis.de/EN/PressServices/Press/pr/2016/11/PE16_403_811.html

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

Source: Statistisches Bundesamt Deutschland (Destatis)

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

Chart VE-1 of the Statistisches Bundesamt Deutschland (Federal Statistics Agency of Germany) provides GDP at current prices from 2007 to 2016. The German economy is productive with significant dynamism over the long term. There are fluctuations in an increasing trend since 2009. Growth is oscillating.

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

Source: Statistisches Bundesamt Deutschland (Destatis)

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

Chart VE-1A provides US GDP in current prices at seasonally adjusted annual rates (SAAR) from 2007 to 2016. There is sharp decline with the recession beginning in IVQ2007 and upward trend during the expansion after IIIQ2009.

Chart VE-1A, US, Gross Domestic Product, Current Prices, Seasonally Adjusted at Annual Rates, Billions of Dollars, 2007-2016

Sources: Bureau of Economic Analysis

http://www.bea.gov/iTable/index_nipa.cfm

Chart VE-2 of the Statistisches Bundesamt Deutschland (Federal Statistics Agency of Germany) provides the index of price-adjusted chain-linked GDP of Germany from 2012 to 2016. Germany was growing rapidly before the global contraction and rebounded with significant strength along a strong upward trend that could be increasing again.

Chart VE-2, Germany, Gross Domestic Product Price Adjusted, Trend and Trend Ends

Source: Statistisches Bundesamt Deutschland (Destatis)

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

Chart VE-2A provides US real GDP, seasonally adjusted at annual rates (SAAR) in billions of chained dollars of 2009 from 2011 to 2016.

Chart VE-2A, US, Real Gross Domestic Product, Seasonally Adjusted at Annual Rates, Billions of Chained 2009 Dollars, 2011-2016

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

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 IIIQ2016 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 2.1 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	2.1
1980-1989	2.6
1970-1979	3.7
1960-1969	5.7
1950-1959	4.2

*IVQ2007 to IVQ2015 **IVQ2007 to IIIQ2016

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=123&date=20161028

The Markit Flash France Composite Output Index decreased from 52.7 in Sep to 52.2 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/36de26ed2dca453ba0a73151d82f01c6). Paul Smith, Senior Economist at IHS Markit and author of the report, finds improving activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/36de26ed2dca453ba0a73151d82f01c6). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, decreased from 52.7 in Sep to 51.6 in Oct, indicating slower activity of the private sector (https://www.markiteconomics.com/Survey/PressRelease.mvc/6e8f19f0d65645e4abbeea9257337749). Alex Gill, Senior Economist at IHS Markit and author of the France Services PMI^®, finds slowing growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/dbfc2d5436c64886b7d465c86472c447). The Markit France Services Activity index decreased from 53.3 in Sep to 51.4 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/6e8f19f0d65645e4abbeea9257337749). The Markit France Manufacturing Purchasing Managers’ Index^® increased to 51.8 in Oct from 49.7 in Sep (https://www.markiteconomics.com/Survey/PressRelease.mvc/4c11986ae44145aa925e38ae66b77510). Alex Gill, Economist at IHS Markit and author of the France Manufacturing PMI^®, finds improving manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/4c11986ae44145aa925e38ae66b77510). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Oct month ∆% 0.0 12 months ∆%: 0.4 11/20/16
PPI	Sep month ∆%: 0.1 Sep 12 months ∆%: -1.7 Blog 11/6/16
GDP Growth	IIIQ2016/IIQ2016 ∆%: 0.2 IIIQ2016/IIIQ2015 ∆%: 1.1 Blog 3/31/13 5/19/12 6/30/13 9/29/13 11/17/13 12/29/13 2/16/14 4/6/14 5/18/14 6/29/14 8/17/14 9/28/14 11/16/14 12/28/14 2/15/15 3/29/15 5/17/15 6/28/15 8/16/15 9/27/15 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 10/30/16
Industrial Production	Sep ∆%: Manufacturing -1.1 Quarter ∆%: 0.2 YOY 0.0 Earlier Data: Blog 4/12/15
Consumer Spending	Manufactured Goods Aug ∆%: 1.0 Aug 12-Month Manufactured Goods ∆%: 1.6 Earlier Data: Blog 4/5/15
Employment	Unemployment Rate: IIIQ2016 9.7% Blog 11/20/16
Trade Balance	Sep Exports ∆%: month -2.2 12 months -0.9 Imports ∆%: month -0.6, 12 months 1.8 Earlier Data: Blog 4/12/15
Confidence Indicators	Historical average 100 Oct Mfg Business Climate 102 Earlier Data: Blog 3/29/15

Links to blog comments in Table FR: 11/6/16 http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html

10/30/16 http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states_30.html

10/16/16 http://cmpassocregulationblog.blogspot.com/2016/10/imf-view-of-world-economy-and-finance.html

10/2/16 http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states.html

9/25/16 http://cmpassocregulationblog.blogspot.com/2016/09/the-economic-outlook-is-inherently.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

The number of unemployed in France rose from 1.972 million in IVQ2007, for a rate of unemployment of 7.1 percent, to 2.767 million in IIIQ2016, for a rate of unemployment of 9.7 percent, as shown in Table VF-1. At the same time, the rate of employment change from 64.7 percent in IVQ2007 to 64.6 percent in IIIQ2016.

Table VF-1, France, Metropolitan France, Employment Rate, Unemployed and Unemployment Rate, Millions and %

	Unemployed Millions	Unemployed Percent	Employment Rate
IIIQ2016	2,805	9.7	64.6
IIQ2016	2,774	9.6	64.7
IQ2016	2.843	9.9	64.6
IVQ2015	2.850	9.9	64.4
IIIQ2015	2.923	10.1	64.4
IIQ2015	2.903	10.1	64.2
IQ2015	2.857	10.0	64.1
IVQ2014	2.913	10.1	64.3
IIIQ2014	2.863	10.0	64.2
IIQ2014	2.810	9.8	64.3
IQ2014	2.799	9.8	64.2
IVQ2013	2.789	9.8	64.2
IIIQ2013	2.837	9.9	64.2
IIQ2013	2.876	10.0	64.0
IQ2013	2.839	9.9	63.9
IVQ2012	2.787	9.7	64.2
IIIQ2012	2.673	9.4	64.0
IIQ2012	2.660	9.3	64.0
IQ2012	2.587	9.1	63.9
IVQ2011	2.541	9.0	63.9
IIIQ2011	2.490	8.8	63.8
IIQ2011	2.457	8.7	63.9
IQ2011	2.473	8.8	63.9
IVQ2010	2.476	8.8	63.9
IIIQ2010	2.493	8.8	64.0
IIQ2010	2.512	8.9	64.0
IQ2010	2.538	9.0	64.1
IVQ2009	2.563	9.1	63.8
IIIQ2009	2.476	8.8	63.9
IIQ2009	2.493	8.8	64.3
IQ2009	2.307	8.2	64.5
IVQ2008	2.061	7.4	64.9
IIIQ2008	1.974	7.1	64.9
IIQ2008	1.943	7.0	64.9
IQ2008	1.899	6.8	65.0
IV2007	1.972	7.1	64.7
IIIQ2007	2.124	7.6	64.4
IIQ2007	2.163	7.8	64.2
IQ2007	2.236	8.1	64.0
IVQ2006	2.193	8.0	64.0
IVQ2005	2.366	8.7	63.6
IVQ2004	2.313	8.5	63.8
IVQ2003	2.261	8.4	63.8
IVQ2002	2.045	7.6
IVQ2001	1.974	7.5
IVQ2000	2.017	7.7
IVQ1999	2.363	9.1
IVQ1995	2.441	9.6
IVQ1990	1.873	7.6
IVQ1985	2.086	8.5
IVQ1980	1.272	5.3
IVQ1975	0.812	3.6

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=14&date=20161117

Chart VF-1 of the Institut National de la Statistique et des Études Économiques of France provides an excellent view of the unemployment rate in France. The rate of unemployment rose from 1975 to 1987 and then fell sharply. The rate of unemployment increased in the recession of the early 1990s followed by sharp decline. The rate of unemployment increased in the recession of the early 2000s and fell again during the expansion. The rate of unemployment rose sharply during the global recession with initial recovery followed by another increase, stability and new oscillating decrease.

Chart VF-1, Metropolitan France, ILO Definition Unemployment Rate, IQ1975-IIQ2016

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=14&date=20161117

Chart VF-2 of the Institut National de la Statistique et des Études Économiques of France provides an excellent view of the unemployment rate in France. The rate of unemployment rose from 2003 to 2006 and then fell sharply in 2007. The global recession caused sharp increase in the French rate of unemployment that has declined from the peak, stabilized at a high level and is climbing/stabilizing and declining again with oscillations.

Chart VF-2, France, Unemployment Rate International Labor Organization Criterion, Seasonally Adjusted Average over Quarter, Percent

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=14&date=20161117

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. Italy’s GDP increased 0.3 percent in IIIQ2016 and increased 0.9 percent relative to a year earlier. In IIQ2016, GDP changed 0.0 percent and increased 0.7 percent relative to a year earlier. GDP increased 0.4 percent in IQ2016 and increased 0.9 percent relative to a year earlier. GDP increased 0.2 percent in IVQ2015 and increased 0.9 percent relative to a year earlier. In IIIQ2015, GDP increased 0.1 percent and increased 0.6 percent relative to a year earlier. GDP increased 0.2 percent in IIQ2015 and 0.6 percent relative to a year earlier. GDP increased 0.3 percent in IQ2015 and increased 0.4 percent relative to a year earlier. GDP changed 0.0 percent in IVQ2014 and increased 0.1 percent relative to a year earlier. GDP changed 0.0 percent in IIIQ2014 and changed 0.0 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IIQ2014 and increased 0.3 percent relative to a year earlier. The GDP of Italy changed 0.0 percent in IQ2014 and increased 0.3 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IVQ2013 and fell 0.7 percent relative to a year earlier. The GDP of Italy increased 0.3 percent in IIIQ2013 and fell 1.3 percent relative to a year earlier. Italy’s GDP changed 0.0 in IIQ2013 and fell 2.1 percent relative to a year earlier. Italy’s GDP fell 1.0 percent in IQ2013 and declined 2.8 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 seven consecutive quarters from IIIQ2011 to IQ2013 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 1.0 percent in IQ2013. GDP contracted cumulatively 5.2 percent in seven consecutive quarterly contractions from IIIQ2011 to IQ2013 at the annual equivalent rate of minus 3.0 percent. The yearly rate has fallen from 2.2 percent in IVQ2010 to minus 2.8 percent in IVQ2012, minus 2.8 percent in IQ2013, minus 2.1 percent in IIQ2013 and minus 1.3 percent in IIIQ2013. GDP fell 0.7 percent in IVQ2013 relative to a year earlier. GDP increased 0.3 percent in IQ2014 relative to a year earlier and increased 0.3 percent in IIQ2014 relative to a year earlier. GDP changed 0.0 percent in IIIQ2014 relative to a year earlier and increased 0.1 percent in IVQ2014 relative to a year earlier. GDP increased 0.4 percent in IQ2015 relative to a year earlier and increased 0.6 percent in IIQ2015 relative to a year earlier. GDP increased 0.6 percent in IIIQ2015 relative to a year earlier and increased 0.9 percent in IVQ2015 relative to a year earlier. GDP increased 0.9 percent in IQ2016 relative to a year earlier and increased 0.7 percent in IIQ2016 relative to a year earlier. GDP increased 0.9 percent in IIIQ2016 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 €390,734.3 million is lower by 8.0 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
IIIQ2016	0.3	0.9
IIQ2016	0.0	0.7
IQ2016	0.4	0.9
IVQ2015	0.2	0.9
IIIQ2015	0.1	0.6
IIQ2015	0.2	0.6
IQ2015	0.3	0.4
IVQ2014	0.0	0.1
IIIQ2014	0.0	0.0
IIQ2014	0.0	0.3
IQ2014	0.0	0.3
IVQ2013	0.0	-0.7
IIIQ2013	0.3	-1.3
IIQ2013	0.0	-2.1
IQ2013	-1.0	-2.8
IVQ2012	-0.6	-2.8
IIIQ2012	-0.5	-3.2
IIQ2012	-0.7	-3.2
IQ2012	-1.0	-2.2
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/192591

The Markit Italy Business Activity Index increased from 50.7 in Sep to 51.0 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/770c76b8fdc340e78da3b34b71e072ff). Phil Smith, Economist at IHS Markit and author of the Italy Services PMI^®, finds stabilizing conditions (https://www.markiteconomics.com/Survey/PressRelease.mvc/770c76b8fdc340e78da3b34b71e072ff). The Markit Italy Purchasing Managers’ Index^® (PMI^®), decreased from 51.0 in Sep to 50.9 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/208527be7ca1481fbede73fe113b369f). New export orders continued to increase. Phil Smith, Economist at Markit and author of the Italian Manufacturing PMI^®, finds softness in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/208527be7ca1481fbede73fe113b369f). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Oct month ∆% -0.1 12 months ∆%: -0.2 11/20/16
Producer Price Index	Sep month ∆%: -0.1 Sep 12-month ∆%: -0.8 Blog 11/6/16
GDP Growth	IIIQ2016/IIQ2016 SA ∆%: 0.3 IIIQ2016/IIIQ2015 NSA ∆%: 0.9 Blog 3/17/13 6/16/13 8/11/13 9/15/13 11/17/13 12/15/13 2/16/14 3/16/14 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 11/20/16
Labor Report	Sep 2016 Participation rate 65.2% Employment ratio 57.5% Unemployment rate 11.7% Youth Unemployment 37.1% Blog 11/6/16
Industrial Production	Sep month ∆%: -0.8 12 months CA ∆%: 1.8 Earlier Data: Blog 4/19/15
Retail Sales	Jul month ∆%: -0.3 Jul 12-month ∆%: -0.2 Earlier Data: Blog 4/26/15
Business Confidence	Mfg Oct 103.0, Jun 102.8 Construction Oct 125.8, Jun 121.6 Earlier Data: Blog 4/5/15
Trade Balance	Balance Sep SA €4685 million Exports Sep month SA ∆%: -1.6; Imports month ∆%: -4.5 Exports 12 months Sep NSA ∆%: 3.1 Imports 12 months NSA ∆%: -2.7 Earlier Data: Blog 4/19/15

Links to blog comments in Table IT: 11/6/16 http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html

10/16/16 http://cmpassocregulationblog.blogspot.com/2016/10/imf-view-of-world-economy-and-finance.html

10/2/16 http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states.html

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

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

Table VG-1 provides revised percentage changes of GDP in Italy of quarter on prior quarter and quarter on same quarter a year earlier. Italy’s GDP increased 0.3 percent in IIIQ2016 and increased 0.9 percent relative to a year earlier. In IIQ2016, GDP changed 0.0 percent and increased 0.7 percent relative to a year earlier. GDP increased 0.4 percent in IQ2016 and increased 0.9 percent relative to a year earlier. GDP increased 0.2 percent in IVQ2015 and increased 0.9 percent relative to a year earlier. In IIIQ2015, GDP increased 0.1 percent and increased 0.6 percent relative to a year earlier. GDP increased 0.2 percent in IIQ2015 and 0.6 percent relative to a year earlier. GDP increased 0.3 percent in IQ2015 and increased 0.4 percent relative to a year earlier. GDP changed 0.0 percent in IVQ2014 and increased 0.1 percent relative to a year earlier. GDP changed 0.0 percent in IIIQ2014 and changed 0.0 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IIQ2014 and increased 0.3 percent relative to a year earlier. The GDP of Italy changed 0.0 percent in IQ2014 and increased 0.3 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IVQ2013 and fell 0.7 percent relative to a year earlier. The GDP of Italy increased 0.3 percent in IIIQ2013 and fell 1.3 percent relative to a year earlier. Italy’s GDP changed 0.0 in IIQ2013 and fell 2.1 percent relative to a year earlier. Italy’s GDP fell 1.0 percent in IQ2013 and declined 2.8 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 seven consecutive quarters from IIIQ2011 to IQ2013 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 1.0 percent in IQ2013. GDP contracted cumulatively 5.2 percent in seven consecutive quarterly contractions from IIIQ2011 to IQ2013 at the annual equivalent rate of minus 3.0 percent. The yearly rate has fallen from 2.2 percent in IVQ2010 to minus 2.8 percent in IVQ2012, minus 2.8 percent in IQ2013, minus 2.1 percent in IIQ2013 and minus 1.3 percent in IIIQ2013. GDP fell 0.7 percent in IVQ2013 relative to a year earlier. GDP increased 0.3 percent in IQ2014 relative to a year earlier and increased 0.3 percent in IIQ2014 relative to a year earlier. GDP changed 0.0 percent in IIIQ2014 relative to a year earlier and increased 0.1 percent in IVQ2014 relative to a year earlier. GDP increased 0.4 percent in IQ2015 relative to a year earlier and increased 0.6 percent in IIQ2015 relative to a year earlier. GDP increased 0.6 percent in IIIQ2015 relative to a year earlier and increased 0.9 percent in IVQ2015 relative to a year earlier. GDP increased 0.9 percent in IQ2016 relative to a year earlier and increased 0.7 percent in IIQ2016 relative to a year earlier. GDP increased 0.9 percent in IIIQ2016 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 €390,734.3 million is lower by 8.0 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-1, Italy, GDP ∆%

	Quarter ∆% Relative to Preceding Quarter	Quarter ∆% Relative to Same Quarter Year Earlier
IIIQ2016	0.3	0.9
IIQ2016	0.0	0.7
IQ2016	0.4	0.9
IVQ2015	0.2	0.9
IIIQ2015	0.1	0.6
IIQ2015	0.2	0.6
IQ2015	0.3	0.4
IVQ2014	0.0	0.1
IIIQ2014	0.0	0.0
IIQ2014	0.0	0.3
IQ2014	0.0	0.3
IVQ2013	0.0	-0.7
IIIQ2013	0.3	-1.3
IIQ2013	0.0	-2.1
IQ2013	-1.0	-2.8
IVQ2012	-0.6	-2.8
IIIQ2012	-0.5	-3.2
IIQ2012	-0.7	-3.2
IQ2012	-1.0	-2.2
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/192591

Chart VG-1 of the Italian National Institute of Statistics (ISTAT) provides growth of GDP of Italy at market prices. The year on year rate of growth pulled strongly out of the contraction. There is evident trend of deceleration with increasingly sharper contraction and mild moderation in 2013 and 2014. GDP increased in IQ2015, IIQ2015, IIIQ2015 and IVQ2015. GDP increased in IQ2016 and stabilized in IIQ2016.

Chart VG-1, Italy, GDP at Market Prices, ∆% on Same Quarter Year Earlier

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/

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	0.8
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/grossdomesticproductpreliminaryestimate/julytosept2016

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 52.6 in Sep to 54.5 in Oct (https://www.markiteconomics.com/Survey/PressRelease.mvc/d2b6f4d1be494f72b908da3af2a5cdf0). Chris Williamson, Chief Economist at Markit, finds the combined indices consistent with the UK economy growing 0.4 to 0.5 percent in IVQ2016 (https://www.markiteconomics.com/Survey/PressRelease.mvc/d2b6f4d1be494f72b908da3af2a5cdf0). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) increased to 55.4 in Sep from 53.4 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/f55855e5e87b4e9dadc0e3cbea1c285f). New export orders increased. Rob Dobson, Senior Economist at IHS Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds rebounding manufacturing with currency depreciation (https://www.markiteconomics.com/Survey/PressRelease.mvc/f55855e5e87b4e9dadc0e3cbea1c285f). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Oct month ∆%: 0.1 Oct 12-month ∆%: 0.9 Blog 11/20/16
Output/Input Prices	Output Prices: Oct 12-month NSA ∆%: 2.1; excluding food, petroleum ∆%: 1.9 Input Prices: Oct 12-month NSA ∆%: 12.2 Excluding ∆%: 9.9 Blog 11/20/16
GDP Growth	IIIQ2016 prior quarter ∆% 0.5; year earlier same quarter ∆%: 2.3 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 10/9/16 10/30/16
Industrial Production	Sep 2016/Sep 2015 ∆%: Production Industries 0.3; Manufacturing 0.2 Earlier Data: Blog 4/12/15
Retail Sales	Oct month ∆%: 1.9 Oct 12-month ∆%: 7.4 Earlier Data: Blog 4/26/15
Labor Market	Jul-Sep 2016 Unemployment Rate: 4.8% Blog 11/20/16 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 Sep minus ₤5221 million Exports Sep ∆%: -0.4; Jul-Sep ∆%: 9.4 Imports Sep ∆%: 2.5 Jul-Sep ∆%: 9.5 EARLIER DATA: Blog 4/12/15

Links to blog comments in Table UK: 10/30/16 http://cmpassocregulationblog.blogspot.com/2016/10/mediocre-cyclical-united-states_30.html

10/23/16 http://cmpassocregulationblog.blogspot.com/2016/10/dollar-revaluation-world-inflation.html

10/9/16 http://cmpassocregulationblog.blogspot.com/2016/10/twenty-four-million-unemployed-or.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

Table VH-L3 provides indicators of the labor force survey of the UK for Jul-Sep 2016 and earlier quarters. There has been improvement in UK labor markets with the rate of unemployment decreasing from 5.3 percent in Jul-Sep 2015 to 4.8 percent in Jul-Sep 2016.

Table VH-L3, UK, Labor Force Survey Indicators, Thousands, SA

	LFHP	EMP	PART	UNE	RATE
Jul-Sep 2014	40,688	30,835	73.0	1,955	6.0
Jul-Sep 2015	40,892	31,339	73.8	1,750	5.3
Oct-Dec 2015	40,931	31,534	74.1	1,694	5.1
Jan-Mar 2016	40,970	31,578	74.2	1,692	5.1
Apr-Jun 2016	41,099	31,750	74.5	1,641	4.9
Jul-Sep 2016	41,043	31,799	74.5	1,604	4.8
∆ on Quarter	35	49	0.0	-37	0.0
∆%	0.1	0.2		-2.2
∆ on Year	151	461	0.7	-146	-0.5
∆%	0.4	1.5		-8.3

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

Source: UK Office for National Statistics

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/november2016

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016.