CMP Associates Regulation Blog: Mediocre Cyclical United States Economic Growth with GDP Two Trillion Dollars below Trend, Stagnating Cyclical Real Private Fixed Investment, Swelling Undistributed Corporate Profits, World Cyclical Slow Growth and Global Recession Risk: Part IV

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Mediocre Cyclical United States Economic Growth with GDP Two Trillion Dollars below Trend, Stagnating Cyclical Real Private Fixed Investment, Swelling Undistributed Corporate Profits, World Cyclical Slow Growth and Global Recession Risk

I Mediocre Cyclical United States Economic Growth with GDP Two Trillion Dollars below Trend

IA Mediocre Cyclical United States Economic Growth

IA1 Stagnating Real Private Fixed Investment

IA2 Swelling Undistributed Corporate Profits

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 3.1 percent in 2016 but accelerating to 3.5 percent in 2017 and 3.6 percent in 2018. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $34,446 billion of world output of $74,197 billion, or 46.4 percent, but are projected to grow at much lower rates than world output, 1.8 percent on average from 2015 to 2019, in contrast with 3.4 percent for the world as a whole. While the world would grow 14.3 percent in the four years from 2015 to 2018, the G7 as a whole would grow 7.5 percent. The difference in dollars of 2015 is high: growing by 14.3 percent would add around $10.6 trillion of output to the world economy, or roughly, over two times the output of the economy of Japan of $4,382 billion but growing by 7.5 percent would add $5.6 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 2015 of $29,333 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 2019 or the equivalent of somewhat more than one half the GDP of $11,226 billion of China in 2015. The final four countries in Table I-1 often referred as BRIC (Brazil, Russia, India, China), are large, rapidly growing emerging economies. Their combined output in 2015 adds to $16,479 billion, or 22.2 percent of world output, which is equivalent to 47.8 percent of the combined output of the major advanced economies of the G7.

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

	GDP USD Billions 2015	Real GDP ∆% 2015	Real GDP ∆% 2016	Real GDP ∆% 2017	Real GDP ∆% 2018
World	74,197	3.4	3.1	3.5	3.6
G7	34,446	2.0	1.5	1.9	1.9
Canada	1,553	0.9	1.4	1.9	2.0
France	2,420	1.3	1.2	1.4	1.7
DE	3,365	1.5	1.8	1.6	1.5
Italy	1,826	0.8	0.9	0.8	0.8
Japan	4,382	1.2	1.0	1.3	0.6
UK	2,863	2.2	1.8	2.0	1.5
US	18,037	2.6	1.6	2.3	2.5
Euro Area	11,606	2.0	1.7	1.7	1.6
DE	3,365	1.5	1.8	1.6	1.5
France	2,420	1.3	1.2	1.4	1.7
Italy	1,826	0.8	0.9	0.8	0.8
POT	199	1.6	1.4	1.7	1.5
Ireland	283	26.3	5.2	3.5	3.2
Greece	195	-0.2	0.0	2.2	2.7
Spain	1,194	3.2	3.2	2.6	2.1
EMDE	29,333	4.2	4.1	4.5	4.8
Brazil	1,799	-3.8	-3.6	0.2	1.7
Russia	1,366	-2.8	-0.3	1.4	1.4
India	2,088	7.9	6.8	7.2	7.7
China	11,226	6.9	6.7	6.6	6.2

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

Source: IMF World Economic Outlook databank

http://www.imf.org/external/pubs/ft/weo/2017/01/weodata/index.aspx

Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/pubs/ft/weo/2017/01/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 IV-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 V-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	5.4	5.3	5.2
Canada	6.9	6.9	7.0	6.9	6.8
France	10.3	10.4	10.0	9.6	9.3
DE	5.0	4.6	4.2	4.2	4.2
Italy	12.6	11.9	11.7	11.4	11.0
Japan	3.6	3.4	3.1	3.1	3.1
UK	6.2	5.4	4.9	4.9	5.1
US	6.2	5.3	4.9	4.7	4.6
Euro Area	11.7	10.9	10.0	9.4	9.1
DE	5.0	4.6	4.2	4.2	4.2
France	10.3	10.4	10.0	9.6	9.3
Italy	12.6	11.9	11.7	11.4	11.0
POT	13.9	12.4	11.1	10.6	10.1
Ireland	11.3	9.4	7.9	6.5	6.3
Greece	26.5	24.9	23.8	21.9	21.0
Spain	24.4	22.1	19.6	17.7	16.6
EMDE	NA	NA	NA	NA	NA
Brazil	6.8	8.3	11.3	12.1	11.6
Russia	5.2	5.6	5.5	5.5	5.5
India	NA	NA	NA	NA	NA
China	4.1	4.0	4.0	4.0	4.0

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

Source: IMF World Economic Outlook

http://www.imf.org/external/pubs/ft/weo/2017/01/weodata/index.aspx

Table V-3 provides the latest available estimates of GDP for the regions and countries followed in this blog from IQ2012 to IVQ2016 available now for all countries. There are estimates for all countries for IQ2017. There are preliminary estimates for IIQ2017. Growth is weak throughout most of the world.

Japan. The GDP of Japan increased 1.1 percent in IQ2012, 4.6 percent at SAAR (seasonally adjusted annual rate) and 2.9 percent relative to a year earlier but part of the jump could be the low level a year earlier because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan is experiencing difficulties with the overvalued yen because of worldwide capital flight originating in zero interest rates with risk aversion in an environment of softer growth of world trade. Japan’s GDP fell 0.5 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 2.0 percent, which is much lower than 4.6 percent in IQ2012. Growth of 2.9 percent in IIQ2012 in Japan relative to IIQ2011 has effects of the low level of output because of Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan’s GDP contracted 0.4 percent in IIIQ2012 at the SAAR of minus 1.6 percent and changed 0.0 percent relative to a year earlier. Japan’s GDP increased 0.1 percent in IVQ2012 at the SAAR of 0.5 percent and increased 0.2 percent relative to a year earlier. Japan grew 1.2 percent in IQ2013 at the SAAR of 5.1 percent and increased 0.7 percent relative to a year earlier. Japan’s GDP increased 0.9 percent in IIQ2013 at the SAAR of 3.7 percent and increased 1.8 percent relative to a year earlier. Japan’s GDP grew 0.7 percent in IIIQ2013 at the SAAR of 2.7 percent and increased 2.8 percent relative to a year earlier. In IVQ2013, Japan’s GDP decreased 0.1 percent at the SAAR of minus 0.4 percent, increasing 2.7 percent relative to a year earlier. Japan’s GDP increased 1.1 percent in IQ2014 at the SAAR of 4.5 percent and increased 3.1 percent relative to a year earlier. In IIQ2014, Japan’s GDP fell 2.0 percent at the SAAR of minus 7.6 percent and fell 0.3 percent relative to a year earlier. Japan’s GDP contracted 0.1 percent in IIIQ2014 at the SAAR of minus 0.4 percent and fell 1.1 percent relative to a year earlier. In IVQ2014, Japan’s GDP grew 0.8 percent, at the SAAR of 3.0 percent, decreasing 0.3 percent relative to a year earlier. The GDP of Japan increased 1.2 percent in IQ2015 at the SAAR of 4.8 percent and decreased 0.1 percent relative to a year earlier. Japan’s GDP decreased 0.1 percent in IIQ2015 at the SAAR of minus 0.5 percent and increased 1.7 percent relative to a year earlier. The GDP of Japan increased 0.2 percent in IIIQ2015 at the SAAR of 0.9 percent and increased 2.0 percent relative to a year earlier. Japan’s GDP contracted 0.2 percent in IVQ2015 at the SAAR of minus 0.8 percent and grew 0.9 percent relative to a year earlier. In IQ2016, the GDP of Japan increased 0.6 percent at the SAAR of 2.3 percent and increased 0.5 percent relative to a year earlier. Japan’s GDP increased 0.3 percent in IIQ2016 at the SAAR of 1.4 percent and increased 0.9 percent relative to a year earlier. In IIIQ2016, the GDP of Japan increased 0.3 percent at the SAAR of 1.3 percent and increased 1.1 percent relative to a year earlier. Japan’s GDP increased 0.4 percent in IVQ2016 at the SAAR of 1.7 percent and increased 1.7 percent relative to a year earlier. In IQ2017, the GDP of Japan increased 0.4 percent at the SAAR of 1.5 percent and increased 1.5 percent relative to a year earlier. Japan’s GDP increased 1.0 percent in IIQ2017 at the SAAR if 4.0 percent and increased 2.0 percent relative to a year earlier.
China. China’s GDP grew 1.8 percent in IQ2012, annualizing to 7.4 percent, and 8.1 percent relative to a year earlier. The GDP of China grew at 2.1 percent in IIQ2012, which annualizes to 8.7 percent, and 7.6 percent relative to a year earlier. China grew at 1.9 percent in IIIQ2012, which annualizes at 7.8 percent, and 7.5 percent relative to a year earlier. In IVQ2012, China grew at 2.0 percent, which annualizes at 8.2 percent, and 8.1 percent in IVQ2012 relative to IVQ2011. In IQ2013, China grew at 1.8 percent, which annualizes at 7.4 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 2.2 percent in IIIQ2013, which annualizes at 9.1 percent, and increased 7.9 percent relative to a year earlier. China grew at 1.7 percent in IVQ2013, which annualized to 7.0 percent, and 7.7 percent relative to a year earlier. China’s GDP grew 1.5 percent in IQ2014, which annualizes to 6.1 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 1.9 percent in IVQ2014, which annualizes at 7.8 percent, and 7.2 percent relative to a year earlier. The GDP of China grew at 2.0 percent in IQ2015, which annualizes at 8.2 percent, and 7.0 percent relative to a year earlier. The GDP of China grew 1.7 percent in IIQ2015, which annualizes at 7.0 percent, and increased 7.0 percent relative to a year earlier. In IIIQ2015, China’s GDP grew at 1.8 percent, which annualizes at 7.4 percent, and increased 6.9 percent relative to a year earlier. The GDP of China grew at 1.5 percent in IVQ2015, which annualizes at 6.1 percent, and increased 6.8 percent relative to a year earlier. The GDP of China grew 1.3 percent in IQ2016, which annualizes at 5.3 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. The GDP of China increased at 1.7 percent in IVQ2016, which annualizes at 7.0 percent, and increased 6.8 percent relative to a year earlier. The GDP of China increased at 1.3 percent in IQ2017, which annualizes at 5.3 percent and increased 6.9 percent relative to a year earlier. China’s GDP increased at 1.7 percent in IIQ2017, which annualizes at 7.0 percent, and increased 6.9 percent relative to a year earlier. There is decennial change in leadership in China (http://www.xinhuanet.com/english/special/18cpcnc/index.htm). Growth rates of GDP of China in a quarter relative to the same quarter a year earlier have been declining from 2011 to 2017.
Euro Area. GDP fell 0.1 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 0.2 percent and declined 1.0 percent relative to a year earlier. In IVQ2012, euro area GDP fell 0.5 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 0.5 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 0.3 percent in IVQ2013 and increased 0.8 percent relative to a year earlier. In IQ2014, the GDP of the euro area increased 0.3 percent and increased 1.4 percent relative to a year earlier. The GDP of the euro area increased 0.2 percent in IIQ2014 and increased 1.1 percent relative to a year earlier. The euro area’s GDP increased 0.4 percent in IIIQ2014 and increased 1.2 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 0.3 percent in IIQ2015 and increased 1.9 percent relative to a year earlier. The euro area’s GDP increased 0.3 percent in IIIQ2015 and increased 1.8 percent relative to a year earlier. Euro area GDP increased 0.4 percent in IVQ2015 and increased 1.9 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 1.7 percent relative to a year earlier. In IIIQ2016, the GDP of the euro area increased 0.4 percent and increased 1.7 percent relative to a year earlier. The GDP of the euro area increased 0.6 percent in IVQ2016 and increased 1.9 percent relative to a year earlier. In IQ2017, euro are GDP increased 0.5 percent and increased 1.9 percent relative to a year earlier. The GDP of the euro area increased 0.6 percent in IIQ2017 and increased 2.2 percent relative to a year earlier.
Germany. The GDP of Germany increased 0.3 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 0.4 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 0.5 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 0.9 percent in IQ2014 and grew 3.0 percent relative to a year earlier. In IIQ2014, Germany’s GDP decreased 0.2 percent and increased 1.3 percent relative to a year earlier. The GDP of Germany increased 0.3 percent in IIIQ2014 and increased 1.5 percent relative to a year earlier. Germany’s GDP increased 0.9 percent in IVQ2014 and increased 2.0 percent relative to a year earlier. The GDP of Germany increased 0.1 percent in IQ2015 and increased 1.3 percent relative to a year earlier. Germany’s GDP increased 0.4 percent in IIQ2015 and grew 1.8 percent relative to a year earlier. The GDP of Germany increased 0.3 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 0.6 percent and grew 1.5 percent relative to a year earlier. Germany’s GDP increased 0.5 percent in IIQ2016 and increased 3.3 percent relative to a year earlier. In IIIQ2016, the GDP of Germany increased 0.3 percent and grew 1.7 percent relative to a year earlier. Germany’s GDP increased 0.4 percent in IVQ2016 and grew 1.3 percent relative to a year earlier. In IQ2017, the GDP of Germany increased 0.7 percent and grew 3.2 percent relative to a year earlier. Germany’s GDP increased 0.6 percent in IIQ2017 and grew 0.8 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 (Section I and earlier https://cmpassocregulationblog.blogspot.com/2017/07/data-dependent-monetary-policy-with_30.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 0.2 percent, increased 1.7 percent relative to a year earlier and fell 0.9 percent at SAAR. In IIQ2014, US GDP increased 1.1 percent at 4.6 percent SAAR and increased 2.7 percent relative to a year earlier. US GDP increased 1.3 percent in IIIQ2014 at 5.2 percent SAAR and increased 3.2 percent relative to a year earlier. In IVQ2014, US GDP increased 0.5 percent at SAAR of 2.0 percent and increased 2.7 percent relative to a year earlier. GDP increased 0.8 percent in IQ2015 at SAAR of 3.2 percent and grew 3.8 percent relative to a year earlier. US GDP grew at SAAR 2.7 percent in IIQ2015, increasing 0.7 percent in the quarter and 3.3 percent relative to a year earlier. GDP increased 0.4 percent in IIIQ2015 at SAAR of 1.6 percent and grew 2.4 percent in IIIQ2015 relative to a year earlier. US GDP grew at SAAR of 0.5 percent in IVQ2015, increasing 0.1 percent in the quarter and 2.0 percent relative to a year earlier. In IQ2016, US GDP grew 0.1 percent at SAAR of 0.6 percent and increased 1.4 percent relative to a year earlier. US GDP grew at SAAR of 2.2 percent in IIQ2016, increasing 0.6 percent in the quarter and 1.2 percent relative to a year earlier. In IIIQ2016, US GDP grew 0.7 percent at SAAR of 2.8 percent and increased 1.5 percent relative to a year earlier. US GDP grew at SAAR of 1.8 percent in IVQ2016, increasing 0.4 percent in the quarter, and increasing 1.8 percent relative to a year earlier. In IQ2017, US GDP grew 0.3 percent at SAAR of 1.2 percent and increased 2.0 percent relative to a year earlier. US GDP grew at SAAR of 3.0 percent in IIQ2017, increasing 0.8 percent in the quarter, and increasing 2.2 percent relative to a year earlier.
United Kingdom. In IQ2012, UK GDP increased 0.4 percent and increased 1.2 percent relative to a year earlier. In IIQ2012, GDP fell 0.1 percent relative to IQ2012 and increased 1.0 percent relative to a year earlier. In IIIQ2012, GDP increased 1.1 percent and increased 1.8 percent relative to the same quarter a year earlier. In IVQ2012, GDP fell 0.2 percent and increased 1.3 percent relative to a year earlier. Fiscal consolidation in an environment of weakening economic growth is much more challenging. GDP increased 1.5 percent in IQ2013 relative to a year earlier and 0.6 percent in IQ2013 relative to IVQ2012. In IIQ2013, GDP increased 0.5 percent and 2.1 percent relative to a year earlier. GDP increased 0.8 percent in IIIQ2013 and 1.7 percent relative to a year earlier. GDP increased 0.5 percent in IVQ2013 and 2.4 percent relative to a year earlier. In IQ2014, GDP increased 0.8 percent and 2.6 percent relative to a year earlier. GDP increased 0.9 percent in IIQ2014 and 3.1 percent relative to a year earlier. GDP increased 0.8 percent in IIIQ2014 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 1.8 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 0.2 percent in IQ2016 and increased 1.6 percent relative to a year earlier. GDP increased 0.6 percent in IIQ2016 and grew 1.7 percent relative to a year earlier. UK GDP increased 0.5 percent in IIIQ2016 and increased 2.0 percent relative to a year earlier. GDP increased 0.7 percent in IVQ2016 and increased 1.9 percent relative to a year earlier. UK GDP increased 0.2 percent in IQ2017 and increased 2.0 percent relative to a year earlier. GDP increased 0.3 percent in IIQ2017 and increased 1.7 percent relative to a year earlier.
Italy. . In IIQ2017, the GDP of Italy increased 0.4 percent and increased 1.5 percent relative to a year earlier. Italy’s GDP increased 0.4 percent in IQ2017 and increased 1.2 percent relative to a year earlier. In IVQ2016, the GDP of Italy increased 0.4 percent and increased 1.2 percent relative to 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 increased 0.1 percent and increased 0.8 percent relative to a year earlier. GDP increased 0.4 percent in IQ2016 and increased 1.1 percent relative to a year earlier. GDP increased 0.2 percent in IVQ2015 and increased 1.0 percent relative to a year earlier. In IIIQ2015, GDP increased 0.2 percent and increased 0.7 percent relative to a year earlier. GDP increased 0.3 percent in IIQ2015 and 0.7 percent relative to a year earlier. GDP increased 0.2 percent in IQ2015 and increased 0.3 percent relative to a year earlier. GDP changed 0.0 percent in IVQ2014 and increased 0.1 percent relative to a year earlier. GDP increased 0.1 percent in IIIQ2014 and increased 0.1 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IIQ2014 and increased 0.2 percent relative to a year earlier. The GDP of Italy changed 0.0 percent in IQ2014 and increased 0.4 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 increased 0.1 in IIQ2013 and fell 2.0 percent relative to a year earlier. Italy’s GDP fell 1.1 percent in IQ2013 and declined 2.9 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, 0.9 percent in IQ2012, 0.8 percent in IIQ2012 and 0.5 percent in IIIQ2012. The pace of decline accelerated to minus 0.6 percent in IVQ2012 and minus 1.1 percent in IQ2013. GDP contracted cumulatively 5.3 percent in seven consecutive quarterly contractions from IIIQ2011 to IQ2013 at the annual equivalent rate of minus 3.1 percent. The yearly rate has fallen from 2.2 percent in IVQ2010 to minus 2.8 percent in IVQ2012, minus 2.9 percent in IQ2013, minus 2.0 percent in IIQ2013 and minus 1.3 percent in IIIQ2013. GDP fell 0.7 percent in IVQ2013 relative to a year earlier. GDP increased 0.4 percent in IQ2014 relative to a year earlier and increased 0.2 percent in IIQ2014 relative to a year earlier. GDP increased 0.1 percent in IIIQ2014 relative to a year earlier and increased 0.1 percent in IVQ2014 relative to a year earlier. GDP increased 0.3 percent in IQ2015 relative to a year earlier and increased 0.7 percent in IIQ2015 relative to a year earlier. GDP increased 0.7 percent in IIIQ2015 relative to a year earlier and increased 1.0 percent in IVQ2015 relative to a year earlier. GDP increased 1.1 percent in IQ2016 relative to a year earlier and increased 0.8 percent in IIQ2016 relative to a year earlier. GDP increased 0.9 percent in IIIQ2016 relative to a year earlier and increased 1.2 percent in IVQ2016 relative to a year earlier. GDP increased 1.2 percent in IQ2017 relative to a year earlier and increased 1.5 percent in IIQ2017 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 IIQ2017 of €397,445 million (http://www.istat.it/it/archivio/203116) is lower by 6.4 percent relative to €424,823.8 million in IQ2008 (http://ec.europa.eu/eurostat). Using seasonally and calendar adjusted chained volumes in the dataset of EUROSTAT (http://ec.europa.eu/eurostat), the GDP of Italy increased from €367,664.4 million in IQ1998 to €424,823.8 million in IQ2008 at the annual equivalent rate of 1.5 percent. 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 increased 0.1 percent in IQ2012 and increased 0.4 percent relative to a year earlier. France’s GDP decreased 0.1 percent in IIQ2012 and increased 0.3 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.1 percent and increased 0.2 percent relative to a year earlier. France’s GDP decreased 0.1 percent in IVQ2012 and changed 0.0 percent relative to a year earlier. In IQ2013, France’s GDP changed 0.0 percent and changed 0.0 percent relative to a year earlier. The GDP of France increased 0.7 percent in IIQ2013 and increased 0.8 percent relative to a year earlier. France’s GDP changed 0.0 percent in IIIQ2013 and increased 0.6 percent relative to a year earlier. The GDP of France increased 0.4 percent in IVQ2013 and increased 1.1 percent relative to a year earlier. In IQ2014, France’s GDP increased 0.1 percent and increased 1.2 percent relative to a year earlier. In IIQ2014, France’s GDP increased 0.2 percent and increased 0.7 percent relative to a year earlier. France’s GDP increased 0.6 percent in IIIQ2014 and increased 1.2 percent relative to a year earlier. The GDP of France changed 0.0 percent in IVQ2014 and increased 0.8 percent relative to a year earlier. France’s GDP increased 0.4 percent in IQ2015 and increased 1.2 percent relative to a year earlier. In IIQ2015, France’s GDP changed 0.0 percent and increased 0.9 percent relative to a year earlier. France’s GDP increased 0.4 percent in IIIQ2015 and increased 0.8 percent relative to a year earlier. In IVQ2015, the GDP of France increased 0.3 percent and increased 1.0 percent relative to a year earlier. France’s GDP increased 0.6 percent in IQ2016 and increased 1.2 percent relative to a year earlier. The GDP of France decreased 0.1 percent in IIQ2016 and increased 1.2 percent relative to a year earlier. France’s GDP increased 0.2 percent in IIIQ2016 and increased 0.9 percent relative to a year earlier. In IVQ2016, the GDP of France increased 0.5 percent and increased 1.2 percent relative to a year earlier. France’s GDP increased 0.5 percent in IQ2017 and increased 1.1 percent relative to a year earlier. In IIQ2017, the GDP of France increased 0.5 percent and increased 1.7 percent relative to a year earlier.

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

	IQ2012/IVQ2011	IQ2012/IQ2011
United States	QOQ: 0.7 SAAR: 2.7	2.8
Japan	QOQ: 1.1 SAAR: 4.6	2.9
China	1.8	8.1
Euro Area	-0.1	-0.5
Germany	0.3	1.6
France	0.1	0.4
Italy	-0.9	-2.3
United Kingdom	0.4	1.2
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.5 SAAR: 1.9	2.5
Japan	QOQ: -0.5 SAAR: -2.0	2.9
China	2.1	7.6
Euro Area	-0.3	-0.8
Germany	0.1	0.4 0.9 CA
France	-0.1	0.3
Italy	-0.8	-3.2
United Kingdom	-0.1	1.0
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.1 SAAR: 0.5	2.4
Japan	QOQ: –0.4 SAAR: –1.6	0.0
China	1.9	7.5
Euro Area	-0.2	-1.0
Germany	0.2	0.2
France	0.1	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: 0.1 SAAR: 0.5	0.2
China	2.0	8.1
Euro Area	-0.5	-1.1
Germany	-0.4	-0.1
France	-0.1	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: 1.2 SAAR: 5.1	0.7
China	1.8	7.9
Euro Area	-0.3	-1.2
Germany	-0.2	-1.5
France	0.0	0.0
Italy	-1.1	-2.9
UK	0.6	1.5
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.2 SAAR: 0.8	1.0
Japan	QOQ: 0.9 SAAR: 3.7	1.8
China	1.7	7.6
Euro Area	0.5	-0.4
Germany	0.9	0.9
France	0.7	0.8
Italy	0.1	-2.0
UK	0.5	2.1
	IIIQ2013/IIQ2013	III/Q2013/ IIIQ2012
USA	QOQ: 0.8 SAAR: 3.1	1.7
Japan	QOQ: 0.7 SAAR: 2.7	2.8
China	2.2	7.9
Euro Area	0.3	0.0
Germany	0.5	1.2
France	0.0	0.6
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: -0.4	2.7
China	1.7	7.7
Euro Area	0.3	0.8
Germany	0.4	1.4
France	0.4	1.1
Italy	0.0	-0.7
UK	0.5	2.4
	IQ2014/IVQ2013	IQ2014/IQ2013
USA	QOQ -0.2 SAAR -0.9	1.7
Japan	QOQ: 1.1 SAAR: 4.5	3.1
China	1.5	7.4
Euro Area	0.3	1.4
Germany	0.9	3.0
France	0.1	1.2
Italy	0.0	0.4
UK	0.8	2.6
	IIQ2014/IQ2014	IIQ2014/IIQ2013
USA	QOQ 1.1 SAAR 4.6	2.7
Japan	QOQ: -2.0 SAAR: -7.6	-0.3
China	1.8	7.5
Euro Area	0.2	1.1
Germany	-0.2	1.3
France	0.2	0.7
Italy	0.0	0.2
UK	0.9	3.1
	IIIQ2014/IIQ2014	IIIQ2014/IIIQ2013
USA	QOQ: 1.3 SAAR: 5.2	3.2
Japan	QOQ: -0.1 SAAR: -0.4	-1.1
China	1.8	7.1
Euro Area	0.4	1.2
Germany	0.3	1.5
France	0.6	1.2
Italy	0.1	0.1
UK	0.8	3.1
	IVQ2014/IIIQ2014	IVQ2014/IVQ2013
USA	QOQ: 0.5 SAAR: 2.0	2.7
Japan	QOQ: 0.8 SAAR: 3.0	-0.3
China	1.9	7.2
Euro Area	0.4	1.3
Germany	0.9	2.0
France	0.0	0.8
Italy	0.0	0.1
UK	0.8	3.5
	IQ2015/IVQ2014	IQ2015/IQ2014
USA	QOQ: 0.8 SAAR: 3.2	3.8
Japan	QOQ: 1.2 SAAR: 4.8	-0.1
China	2.0	7.0
Euro Area	0.8	1.8
Germany	0.1	1.3
France	0.4	1.2
Italy	0.2	0.3
UK	0.3	2.8
	IIQ2015/IQ2015	IIQ2015/IIQ2014
USA	QOQ: 0.7 SAAR: 2.7	3.3
Japan	QOQ: -0.1 SAAR: -0.5	1.7
China	1.7	7.0
Euro Area	0.3	1.9
Germany	0.4	1.8
France	0.0	0.9
Italy	0.3	0.7
UK	0.5	2.4
	IIIQ2015/IIQ2015	IIIQ2015/IIIQ2014
USA	QOQ: 0.4 SAAR: 1.6	2.4
Japan	QOQ: 0.2 SAAR: 0.9	2.0
China	1.8	6.9
Euro Area	0.3	1.8
Germany	0.3	1.8
France	0.4	0.8
Italy	0.2	0.7
UK	0.3	1.8
	IVQ2015/IIIQ2015	IVQ2015/IVQ2014
USA	QOQ: 0.1 SAAR: 0.5	2.0
Japan	QOQ: -0.2 SAAR: -0.8	0.9
China	1.5	6.8
Euro Area	0.4	1.9
Germany	0.4	2.1
France	0.3	1.0
Italy	0.2	1.0
UK	0.7	1.7
	IQ2016/IVQ2015	IQ2016/IQ2015
USA	QOQ: 0.1 SAAR: 0.6	1.4
Japan	QOQ: 0.6 SAAR: 2.3	0.5
China	1.3	6.7
Euro Area	0.5	1.7
Germany	0.6	1.5
France	0.6	1.2
Italy	0.4	1.1
UK	0.2	1.6
	IIQ2016/IQ2016	IIQ2016/IIQ2015
USA	QOQ: 0.6 SAAR: 2.2	1.2
Japan	QOQ: 0.3 SAAR: 1.4	0.9
China	1.9	6.7
Euro Area	0.3	1.7
Germany	0.5	3.3
France	-0.1	1.2
Italy	0.1	0.8
UK	0.6	1.7
	IIIQ2016/IIQ2016	IIIQ2016/IIIQ2015
United States	QOQ: 0.7 SAAR: 2.8	1.5
Japan	QOQ: 0.3 SAAR: 1.3	1.1
China	1.8	6.7
Euro Area	0.4	1.7
Germany	0.3	1.7
France	0.2	0.9
Italy	0.3	0.9
UK	0.5	2.0
	IVQ2016/IIIQ2016	IVQ2016/IVQ2015
United States	QOQ: 0.4 SAAR: 1.8	1.8
Japan	QOQ: 0.4 SAAR: 1.7	1.7
China	1.7	6.8
Euro Area	0.6	1.9
Germany	0.4	1.3
France	0.5	1.2
Italy	0.4	1.2
UK	0.7	1.9
	IQ2017/IVQ2016	IQ2017/IQ2016
United States	QOQ: 0.3 SAAR: 1.2	2.0
Japan	QOQ: 0.4 SAAR: 1.5	1.5
China	1.3	6.9
Euro Area	0.5	1.9
Germany	0.7	3.2
France	0.5	1.1
Italy	0.4	1.2
UK	0.2	2.0
	IIQ2017/IQ2017	IIQ2017/IIQ2016
USA	QOQ: 0.8 SAAR: 3.0	2.2
Japan	QOQ: 1.0 SAAR: 4.0	2.0
China	1.7	6.9
Euro Area	0.6	2.2
Germany	0.6	0.8
France	0.5	1.7
Italy	0.4	1.5
UK	0.3	1.7

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 Jul 2017, Japan’s exports increased 13.4 percent in 12 months while imports increased 16.3 percent. The second part of Table V-4 shows that net trade deducted 2.0 percentage points from Japan’s growth of GDP in IIQ2012, deducted 1.9 percentage points from GDP growth in IIIQ2012 and deducted 0.3 percentage points from GDP growth in IVQ2012. Net trade added 0.7 percentage points to GDP growth in IQ2012, 1.4 percentage points in IQ2013 and deducted 0.1 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.3 percentage points from GDP growth in Japan. Net trade deducted 2.2 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 4.0 percentage points to GDP growth in IIQ2014. Net trade deducted 0.2 percentage points from GDP growth in IIIQ2014 and added 1.5 percentage points in IVQ2014. Net trade contributed 0.0 percentage points to GDP growth in IQ2015 and deducted 0.5 percentage points in IIQ2015. Net trade deducted 0.3 percentage points from GDP growth in IIIQ2015 and contributed 0.0 percentage points in IVQ2015. Net trade added 1.4 percentage points to GDP growth in IQ2016 and added 0.2 percentage points in IIQ2016. Net trade added 1.6 percentage points to GDP growth in IIIQ2016 and added 1.3 percentage points to GDP growth in IVQ2016. Net trade added 0.5 percentage points in IQ2017 and deducted 1.1 percentage points in IIQ2017.

China. In Jul 2017, China exports increased 7.2 percent relative to a year earlier and imports increased 11.0 percent.
Germany. Germany’s exports decreased 2.8 percent in the month of Jun 2017 and increased 0.7 percent in the 12 months ending in Jun 2017. Germany’s imports decreased 4.5 percent in the month of Jun 2017 and increased 3.6 percent in the 12 months ending in Jun 2017. 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 deducted 0.2 percentage points in IQ2016. Net trade added 0.7 percentage points to GDP growth in IIQ2016. Net trade deducted 0.4 percentage points from GDP growth in IIIQ2016. Net trade deducted 0.4 percentage points in IVQ2016. Net trade added 0.6 percentage points to GDP growth in IQ2017. Net trade deducted 0.3 percentage points from GDP growth in IIQ2017.
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 0.4 percentage points from growth in IQ2015. Net trade added 0.5 percentage points to GDP growth in IIQ2015 and deducted 0.4 percentage points in IIIQ2015. Net trade added 1.1 percentage points to GDP growth in IVQ2015. Net trade deducted 1.1-percentage points from GDP growth in IQ2016. Net trade added 0.3 percentage points to GDP growth in IIQ2016. Net trade deducted 1.4 percentage points from GDP growth in IIIQ2016. Net trade added 1.7 percentage points to GDP growth in IVQ2016. Net trade deducted 0.8 percentage points from GDP growth in IQ2017 and contributed 0.0 percentage points in IIQ2017.
France. France’s exports decreased 2.8 percent in Jun 2017 while imports decreased 2.0 percent. France’s exports increased 5.3 percent in the 12 months ending in Jun 2017 and imports increased 7.9 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 0.7 percentage points from GDP growth in IVQ2015 and deducted 0.1 percentage points from GDP growth in IQ2016. Net trade added 0.3 percentage points to GDP in IIQ2016. Net trade deducted 0.6 percentage points from GDP in IIIQ2016 and added 0.1 percentage points in IVQ2016. Net trade deducted 0.6 percentage points from GDP in IQ2017 and added 0.6 percentage points in IIQ2017.
United States. US exports increased 1.2 percent in Jun 2017 and goods exports increased 6.7 percent in Jan-Jun 2017 relative to a year earlier. Imports decreased 0.2 percent in Jun 2016 and goods imports increased 7.2 percent in Jan-Jun 2017 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 1.14 percentage points from US GDP growth in IQ2014 and deducted 0.40 percentage points in IIQ2014. Net trade added 0.28 percentage points to GDP growth in IIIQ2014. Net trade deducted 1.02 percentage points from GDP growth in IVQ2014 and deducted 1.64 percentage points from GDP growth in IQ2015. Net trade deducted 0.03 percentage points from GDP growth in IIQ2015. Net trade deducted 0.77 percentage points from GDP growth in IIIQ2015. Net trade deducted 0.28 percentage points from GDP growth in IVQ2015. Net trade deducted 0.28 percentage points from GDP growth in IQ2016. Net trade added 0.28 percentage points to GDP growth in IIQ2016. Net trade added 0.36 percentage points to GDP growth in IIIQ2016. Net trade deducted 1.61 percentage points from GDP growth in IVQ2016. Net trade added 0.22 percentage points to GDP growth in IQ2017. Net trade added 0.21 percentage points to GDP growth in IIQ2017. Industrial production increased 0.2 percent in Jul 2017 and increased 0.4 percent in Jun 2017 after changing 0.0 percent in May 2017, with all data seasonally adjusted. The Board of Governors of the Federal Reserve System conducted the annual revision of industrial production released on Mar 31, 2017 (https://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] On net, the revisions were small, and the contour of total IP is little changed. Total IP is still reported to have moved up about 22 percent from the end of the recession in mid-2009 through late 2014, to have declined in 2015, and to have moved sideways in 2016. The most notable difference between the current and the previous estimates is that total IP is now reported to have decreased about 2 3/4 percent in 2015, whereas it previously showed a decline of about 1 3/4 percent.[2] The incorporation of detailed data for manufacturing from the U.S. Census Bureau's 2015 Annual Survey of Manufactures (ASM) accounts for the majority of the differences between the current and the previously published estimates. Capacity for total industry is now reported to have expanded about 1 percent in 2015, a lower rate of increase than was reported earlier. Capacity was little changed in 2016 and is expected to increase 1 percent in 2017. Compared with prior reports, the rates of change in 2016 and 2017 are now a little smaller. In the fourth quarter of 2016, capacity utilization for total industry stood at 75.8 percent, a rate 0.4 percentage point higher than previously published but still 4.1 percentage points below its long-run (1972–2016) average. Relative to earlier estimates, the utilization rates in recent years are now a little higher.” Manufacturing fell 22.3 from the peak in Jun 2007 to the trough in Apr 2009 and increased 15.5 percent from the trough in Apr 2009 to Dec 2016. Manufacturing grew 16.9 percent from the trough in Apr 2009 to Jul 2017. Manufacturing in Jul 2017 is lower by 9.3 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 IIQ2017 would have accumulated to 32.4 percent. GDP in IIQ2017 would be $19,849.1 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2819.1 billion than actual $17,030.0 billion. There are about two trillion dollars of GDP less than at trend, explaining the 21.5 million unemployed or underemployed equivalent to actual unemployment/underemployment of 12.8 percent of the effective labor force (https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html and earlier https://cmpassocregulationblog.blogspot.com/2017/07/rising-yields-twenty-two-million.html). US GDP in IIQ2017 is 14.2 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $17,030.0 billion in IIQ2017 or 13.6 percent at the average annual equivalent rate of 1.4 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 Jul 1919 to Jul 2017. Growth at 3.1 percent per year would raise the NSA index of manufacturing output from 108.2393 in Dec 2007 to 145.0407 in Jul 2017. The actual index NSA in Jul 2017 is 102.1551, which is 29.6 percent below trend. Manufacturing output grew at average 2.0 percent between Dec 1986 and Jul 2017. Using trend growth of 2.0 percent per year, the index would increase to 130.8588 in Jul 2017. The output of manufacturing at 102.1551 in Jul 2017 is 21.9 percent below trend under this alternative calculation.

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

	Exports M ∆%	Exports 12 M ∆%	Imports M ∆%	Imports 12 M ∆%
USA	1.2 Jun	6.7 Jan-Jun	-0.2 Jun	7.2 Jan-Jun
Japan		Jul 2017 13.4 Jun 2017 9.7 May 2017 14.9 Apr 2017 7.5 Mar 2017 12.0 Feb 2017 11.3 Jan 2017 1.3 Dec 2016 5.4 Nov 2016 -0.4 Oct 2016 -10.3 Sep 2016 -6.9 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		Jul 2017 16.3 Jun 2017 15.5 May 2017 17.8 Apr 2017 15.1 Mar 2017 15.8 Feb 2017 1.2 Jan 2017 8.5 Dec 2016 -2.6 Nov 2016 -8.8 Oct 2016 -16.5 Sep 2016 -16.3 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 2016 -7.7 Jan-Dec 2015 -2.8	2017 Jul 7.2 Jun 11.3 May 8.7 Apr 8.0 Mar 16.4 Feb -1.3 Jan 7.9 2016 Dec 3.1 Nov 0.1 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 2016 -5.5 Jan-Dec 2015 -14.1	2017 Jul 11.0 Jun 17.2 May 14.8 Apr 11.9 Mar 20.3 Feb 38.1 Jan 16.7 2016 Dec -7.7 Nov 6.7 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	3.9 12-M Jun	7.9 Jan-Jun	6.2 12-M Jun	11.6 Jan-Jun
Germany	-2.8 Jun CSA	0.7 Jun	-4.5 Jun CSA	3.6 Jun
France Jun	-2.8	5.3	-2.0	7.9
Italy Jun	-1.0	8.2	-2.9	9.9
UK	-0.7 Jun	10.0 Apr 17-Jun 17 /Apr 16-Jun 16	3.3 Jun	10.2 Apr 17-Jun 17 /Apr 16-Jun 17
Net Trade % Points GDP Growth	Points
USA	IIQ2017 0.21 IQ2017 0.22 IVQ2016 -1.61 IIIQ2016 0.36 IIQ2016 0.28 IQ2016 -0.28 IVQ2015 -0.28 IIIQ2015 -0.77 IIQ2015 -0.03 IQ2015 -1.64 IVQ2014 -1.02 IIIQ2014 0.28 IIQ2014 -0.40 IQ2014 -1.14 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	0.7 IQ2012 -2.0 IIQ2012 -1.9 IIIQ2012 -0.3 IVQ2012 1.4 IQ2013 -0.1 IIQ2013 -1.3 IIIQ2013 -2.2 IVQ2013 -0.8 IQ2014 4.0 IIQ2014 -0.2 IIIQ2014 1.5 IVQ2014 0.0 IQ2015 -0.5 IIQ2015 -0.3 IIIQ2015 0.0 IVQ2015 1.4 IQ2016 0.2 IIQ2016 1.6 IIIQ2016 1.3 IVQ2016 0.5 IQ2017 -1.1 IIQ2017
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 -0.2 IIQ2016 0.7 IIIQ2016 -0.4 IVQ2016 -0.4 IQ2017 0.6 IIQ2017 -0.3
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 -0.7 IVQ2015 -0.1 IQ2016 0.3 IIQ2016 -0.6 IIIQ2016 0.1 IVQ2016 -0.6 IQ2017 0.6 IIQ2017
UK	0.7 IIQ2013 -1.7 IIIQ2013 0.1 IVQ2013 0.8 IQ2014 0.3 IIQ2014 -0.7 IIIQ2014 0.3 IVQ2014 -0.4 IQ2015 0.5 IIQ2015 -0.4 IIIQ2015 1.1 IVQ2015 -1.1 IQ2016 0.3 IIQ2016 -1.4 IIIQ2016 1.7 IVQ2016 -0.8 IQ2017 0.0 IIQ2017

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 Jul 2017. The share of Asia in Japan’s trade is close to one-half for 53.8 percent of exports and 49.8 percent of imports. Within Asia, exports to China are 18.7 percent of total exports and imports from China 24.2 percent of total imports. While exports of Japan to China increased 17.6 percent in the 12 months ending in Jul 2017, imports from China increased 13.1 percent. The largest export market for Japan in Jul 2017 is the US with share of 20.3 percent of total exports, which is close to that of China, and share of imports from the US of 11.1 percent in total imports. Japan’s exports to the US increased 11.5 percent in the 12 months ending in Jul 2017 and imports from the US increased 13.9 percent. Western Europe has share of 11.3 percent in Japan’s exports and of 12.1 percent in imports. Rates of growth of exports of Japan in Jul 2017 are 11.5 percent for exports to the US, 38.5 percent for exports to Brazil and 12.2 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 Jul 2017 are mixed. Imports from Asia increased 18.1 percent in the 12 months ending in Jul 2017 while imports from China increased 13.1 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

Jul 2017	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	6,494,889	13.4	6,076,118	16.3
Asia	3,495,122 % Total 53.8	14.8	3,026,099 % Total 49.8	18.1
China	1,211,440 % Total 18.7	17.6	1,467,517 % Total 24.2	13.1
USA	1,318,734 % Total 20.3	11.5	671,747 % Total 11.1	13.9
Canada	90,627	39.0	104,227	37.6
Brazil	36,135	38.5	66,482	28.1
Mexico	114,724	20.8	45,551	-27.8
Western Europe	736,329 % Total 11.3	8.9	732,788 % Total 12.1	2.6
Germany	180,341	12.2	203,684	7.0
France	55,125	3.2	87,850	2.4
UK	141,010	7.0	62,270	21.4
Middle East	171,539	-7.8	631,177	15.2
Australia	157,287	10.3	353,847	36.1

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

World trade projections of the IMF are in Table V-6. There is increasing growth of the volume of world trade of goods and services from 3.8 percent in 2017 to 4.1 percent in 2017, increasing to 4.3 percent in 2018. Growth improves to 4.2 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 ∆%

	2017	2018	2019	Average ∆% 2017-2021
World Trade Volume (Goods and Services)	3.8	4.1	4.3	4.2
Exports Goods & Services	3.6	4.0	4.1	4.0
Imports Goods & Services	3.9	4.2	4.4	4.3
Average Oil Price USD/Barrel	42.84	55.23	55.06	Average ∆% 2009-2018 75.41
Average Annual ∆% Export Unit Value of Manufactures	-5.4	2.8	1.7	Average ∆% 2009-2018 0.0
Exports of Goods & Services	2016	2017	2018	Average ∆% 2009-2018
EMDE	2.5	3.6	4.3	3.6
G7	2.1	3.5	3.2	2.8
Imports Goods & Services
EMDE	1.9	4.5	4.3	3.9
G7	2.4	4.0	4.0	2.6
Terms of Trade of Goods & Services
EMDE	-1.2	1.3	-0.4	-0.5
G7	0.9	-0.5	0.1	0.3
Terms of Trade of Goods
EMDE	-1.4	1.4	-0.4	-0.5
G7	1.2	-0.2	0.3	0.3

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/2017/01/weodata/index.aspx

The JP Morgan Global All-Industry Output Index of the JP Morgan Manufacturing and Services PMI^™, produced by JP Morgan and HIS Markit in association with ISM and IFPSM, with high association with world GDP, decreased to 53.5 in Jul from 53.7 in Jun, indicating expansion at slower rate (https://www.markiteconomics.com/Survey/PressRelease.mvc/50820d7aa6c546fcaa03652513e3be15). This index has remained above the contraction territory of 50.0 during 58 consecutive months. The employment index increased from 52.2 in Jun to 52.4 in Jul with input prices rising at unchanged rate, new orders increasing at faster rate and output increasing at slower rate (https://www.markiteconomics.com/Survey/PressRelease.mvc/50820d7aa6c546fcaa03652513e3be15). David Hensley, Director of Global Economic Coordination at JP Morgan, finds consistent growth with recent improvement (https://www.markiteconomics.com/Survey/PressRelease.mvc/50820d7aa6c546fcaa03652513e3be15). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and IHS Markit in association with ISM and IFPSM, increased to 52.7 in Jul from 52.6 in Jun (https://www.markiteconomics.com/Survey/PressRelease.mvc/5f1ec485989d4169956c18e1129c0f27). New export orders increased. David Hensley, Director of Global Economic Coordination at JP Morgan, finds consistent growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/5f1ec485989d4169956c18e1129c0f27). The Markit Brazil Composite Output Index increased from 48.5 in Jun to 49.4 in Jul, indicating milder contraction in activity of Brazil’s private sector (https://www.markiteconomics.com/Survey/PressRelease.mvc/03d748e08d7943308e8cda03296fd61f). The Markit Brazil Services Business Activity index, compiled by Markit, increased from 47.4 in Jun to 48.8 in Jul, indicating contracting services activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/03d748e08d7943308e8cda03296fd61f). Pollyanna de Lima, Economist at Markit, finds services contracting at milder pace (https://www.markiteconomics.com/Survey/PressRelease.mvc/03d748e08d7943308e8cda03296fd61f). The HIS Markit Brazil Manufacturing Purchasing Managers’ Index^TM (PMI^™) decreased from 50.5 in Jun to 50.0 in Jul, indicating manufacturing at neutral 50.0 (https://www.markiteconomics.com/Survey/PressRelease.mvc/53d55a6c88294c4eaccd031965c2462b). Pollyanna De Lima, Economist at IHS Markit, finds slowing direction in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/53d55a6c88294c4eaccd031965c2462b).

VA United States. The HIS Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted decreased to 52.5 in Aug from 53.3 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/34dc2d2599ac49d485219abac14ff3bf). New export orders increased. The HIS Markit Flash US Services PMI™ Business Activity Index increased from 54.7 in Jul to 56.9 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/34dc2d2599ac49d485219abac14ff3bf). The IHS Markit Flash US Composite PMI™ Output Index increased from 54.6 in Jul to 56.0 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/34dc2d2599ac49d485219abac14ff3bf). Rob Dobson, Director at IHS Markit, finds that the surveys are consistent with growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/34dc2d2599ac49d485219abac14ff3bf). The HIS Markit US Composite PMI™ Output Index of Manufacturing and Services increased to 54.6 in Jul from 53.9 in Jun (https://www.markiteconomics.com/Survey/PressRelease.mvc/f32cc03ea19e4960a9cda3e0ef2d0d4d). The HIS Markit US Services PMI™ Business Activity Index increased from 54.2 in Jun to 54.7 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/f32cc03ea19e4960a9cda3e0ef2d0d4d). Chris Williamson, Chief Business Economist at IHS Markit, finds the indexes suggesting growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/f32cc03ea19e4960a9cda3e0ef2d0d4d). The HIS Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) increased to 53.3 in Jul from 52.0 in Jun (https://www.markiteconomics.com/Survey/PressRelease.mvc/851b3ec92e414a9ea76701a58df891a2). New foreign orders decreased. Chris Williamson, Chief Business Economist at HIS Markit, finds improving manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/851b3ec92e414a9ea76701a58df891a2). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® decreased 1.9-percentage points from 57.8 in Jun to 56.3 in Jul, which indicates slower growth (https://www.instituteforsupplymanagement.org/ISMReport/MfgROB.cfm?SSO=1). The index of new export orders decreased 2.0 percentage points from 59.5 in Jun to 57.5 in Jul. The Non-Manufacturing ISM Report on Business^® PMI decreased 3.5 percentage points from 57.4 in Jun to 53.9 in Jul, indicating growth of business activity/production during 96 consecutive months, while the index of new orders decreased 5.4 percentage points from 60.5 in Jun to 55.1 in Jul (https://www.instituteforsupplymanagement.org/files/ISMReport/ROB201707NMI.pdf). Table USA provides the country economic indicators for the US.

Table USA, US Economic Indicators

Consumer Price Index	Jul 12 months NSA ∆%: 1.7; ex food and energy ∆%: 1.7 Jul month SA ∆%: 0.1; ex food and energy ∆%: 0.1 Blog 8/20/17
Producer Price Index	Finished Goods Jul 12-month NSA ∆%: 2.2; ex food and energy ∆% 1.8 Jul month SA ∆% -0.2; ex food and energy ∆%: 0.1 Final Demand Jul 12-month NSA ∆%: 1.9; ex food and energy ∆% 1.8 Jul month SA ∆% -0.1; ex food and energy ∆%: -0.1 Blog 8/13/17 8/20/17
PCE Inflation	Jul 12-month NSA ∆%: headline 1.4; ex food and energy ∆% 1.5 Blog 8/6/17
Employment Situation	Household Survey: Jul Unemployment Rate SA 4.3% Blog calculation People in Job Stress Jun: 21.5 million NSA, 12.8% of Labor Force Establishment Survey: Jul Nonfarm Jobs +209,000; Private +205,000 jobs created May 12-month Average Hourly Earnings Inflation Adjusted ∆%: 1.0 Blog 8/6/17
Nonfarm Hiring	Nonfarm Hiring fell from 63.5 million in 2006 to 58.7 million in 2014 or by 4.8 million and to 62.7 million in 2016 or by 0.8 million Private-Sector Hiring Jun 2017 5.664 million higher by 0.9 percent than 5.614 million in Jun 2006 while population grew 26.3 million or 11.5 percent Blog 8/13/17
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 1.7 IIQ2014/IIQ2013 2.7 IIIQ2014/IIIQ2013 3.2 IVQ2014/IVQ2013 2.7 IQ2015/IQ2014 3.8 IIQ2015/IIQ2014 3.3 IIIQ2015/IIIQ2014 2.4 IVQ2015/IVQ2014 2.0 IQ2016/IQ2015 1.4 IIQ2016/IIQ2015 1.2 IIIQ2016/IIIQ2015: 1.5 IVQ2016/IVQ2015 1.8 IQ2017/IQ2016 2.0 IIQ2017/IIQ2016 2.2 IQ2012 SAAR 2.7 IIQ2012 SAAR 1.9 IIIQ2012 SAAR 0.5 IVQ2012 SAAR 0.1 IQ2013 SAAR 2.8 IIQ2013 SAAR 0.8 IIIQ2013 SAAR 3.1 IVQ2013 SAAR 4.0 IQ2014 SAAR -0.9 IIQ2014 SAAR 4.6 IIIQ2014 SAAR 5.2 IVQ2014 SAAR 2.0 IQ2015 SAAR 3.2 IIQ2015 SAAR: 2.7 IIIQ2015 SAAR: 1.6 IVQ2015 SAAR: 0.5 IQ2016 SAAR: 0.6 IIQ2016 SAAR: 2.2 IIIQ2016 SAAR: 2.8 IVQ2016 SAAR 1.8 IQ2017 SAAR 1.2 IIQ2017 SAAR 3.0 Blog 9/3/17
Real Private Fixed Investment	SAAR IIQ2017 ∆% 3.6 IVQ2007 to IIQ2017: 12.2% Blog 9/3/17
Corporate Profits	IIQ2017 SAAR: Corporate Profits 1.3; Undistributed Profits 1.1 Blog 9/3/17
Personal Income and Consumption	Jun month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% -0.1 Real Personal Consumption Expenditures (RPCE): 0.0 12-month Jun NSA ∆%: RDPI: 1.2; RPCE ∆%: 2.4 Blog 8/6/17
Quarterly Services Report	IQ17/IQ16 NSA ∆%: Information 4.2 Financial & Insurance 7.3 Earlier Data: Blog 3/22/15
Employment Cost Index	Compensation Private IQ2017 SA ∆%: 0.5 Mar 12 months ∆%: 1.8 Earlier Data: Blog 2/1/15
Industrial Production	Jul month SA ∆%: 0.2 Jul 12 months SA ∆%: 2.2 Manufacturing Jul SA -0.1 ∆% Jul 12 months SA ∆% 1.2, NSA 1.5 Capacity Utilization: 76.7 Blog 8/20/17
Productivity and Costs	Nonfarm Business Productivity IIQ2017∆% SAAE 0.9; IQ2017/IQ2016 ∆% 1.2; Unit Labor Costs SAAE IQ2017 ∆% 0.6; IQ2017/IQ2016 ∆%: -0.2 Blog 8/13/17
New York Fed Manufacturing Index	General Business Conditions from Jul 9.8 to Aug 25.2 New Orders: From Jul 13.3 to Aug 20.6 Blog 8/20/17
Philadelphia Fed Business Outlook Index	General Index from Jul 19.5 to Aug 18.9 New Orders from Jul 2.1 to Aug 20.4 Blog 8/20/17
Manufacturing Shipments and Orders	Jun Orders SA ∆% 3.0 Ex Transport -0.2 Jan-Jun 17/Jan-Jun 16 NSA New Orders ∆% 5.6 Ex transport 5.7 Earlier data: Blog 4/5/15
Durable Goods	Jun New Orders SA ∆%: -6.8; ex transport ∆%: 0.5 Jan-Jun 17/Jan-Jun 16 New Orders NSA ∆%: 5.0; ex transport ∆% 5.3 Earlier Data: Blog 4/26/15
Sales of New Motor Vehicles	Jan-Aug 2017 11.350,606; Jan-Aug 2016 11,671.394. Aug 17 SAAR 16.14 million, Jul 17 SAAR 16.77 million, Aug 2016 SAAR 17.22 million Blog 9/3/17
Sales of Merchant Wholesalers	Jan-Jun 2017/Jan-Jun 2016 NSA ∆%: Total 7.6; Durable Goods: 7.1; Nondurable Goods: 8.0 EARLIER DATA: Blog 4/12/15
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Jun 17 12-M NSA ∆%: Sales Total Business 4.5; Manufacturers 4.0 Retailers 3.8; Merchant Wholesalers 5.6 Blog 8/20/17
Sales for Retail and Food Services	Jan-Jul 2017/Jan-Jul 2016 ∆%: Retail and Food Services 3.9; Retail ∆% 4.0 Blog 8/20/17
Value of Construction Put in Place	SAAR month SA Jul ∆%: 1.8 Jan-Jul 17/Jan-Jul 16 NSA: 4.7 Earlier Data: Blog 4/5/15
Case-Shiller Home Prices	Jun 2017/Jun 2016 ∆% NSA: 10 Cities 4.9; 20 Cities: 5.7; National: 5.8 ∆% Jun SA: 10 Cities 0.0; 20 Cities: 0.1 Blog 9/3/17
FHFA House Price Index Purchases Only	Jun SA ∆% 0.1; 12 month NSA ∆%: 6.5 Blog 8/27/17
New House Sales	Jul 2017 month SAAR ∆%: minus 9.4 Jan-Jul 2017/Jan-Jul 2016 NSA ∆%: 9.5 Blog 8/27/17
Housing Starts and Permits	Jul Starts month SA ∆% minus 4.8; Permits ∆%: -4.1 Jan-Jul 2017/Jan-Jul 2016 NSA ∆% Starts 2.4; Permits ∆% 6.5 Earlier Data: Blog 4/19/15
Rate of Homeownership	IIQ2017: 63.7 Blog 7/30/17
Trade Balance	Balance Jun SA -$43,642 million versus May -$46,391 million Exports Jun SA ∆%: 1.2 Imports Jun SA ∆%: -0.2 Goods Exports Jan-Jun 2017/Jan-Jun 2016 NSA ∆%: 6.7 Goods Imports Jan-Jun 2017/Jan-Jun 2016 NSA ∆%: 7.2 Blog 8/13/17
Export and Import Prices	Jul 12-month NSA ∆%: Imports 1.5; Exports 0.8 Earlier Data: Blog 4/12/15
Consumer Credit	Jun ∆% annual rate: Total 3.9; Revolving 4.9; Nonrevolving 3.5 Earlier Data: Blog 5/10/15
Net Foreign Purchases of Long-term Treasury Securities	Jun Net Foreign Purchases of Long-term US Securities: $15.1 billion Major Holders of Treasury Securities: China $1146.5 billion; Japan $1090.8 billion; Total Foreign US Treasury Holdings Jun $6171.3 billion Blog 8/20/17
Treasury Budget	Fiscal Year 2017/2016 ∆% Jul: Receipts 2.3; Outlays 3.6; Individual Income Taxes 3.2 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 $439 billion Deficit Fiscal Year 2016 $587 Blog 8/13/2017
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 74.2% GDP 2015 Deficit $438 B 2.5% GDP Debt $13,117 B 73.3% GDP 2016 Deficit $587 3.2% GDP Debt $14,168.4 B 77.0% GDP 2027 Deficit $1,408 B, 5.0 % GDP Debt $24,893 B 88.9% GDP 2047: Long-term Debt/GDP 150.0% 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 1/8/17 4/2/17
Commercial Banks Assets and Liabilities	Jul 2017 SAAR ∆%: Securities 2.2 Loans 6.0 Cash Assets 29.1 Deposits 7.4 Blog 8/27/17
Flow of Funds Net Worth of Families and Nonprofits	IQ2017 ∆ since 2007 Assets +$29,049.3 BN Nonfinancial $4,788.5 BN Real estate $3,592.4 BN Financial +24,260.8 BN Net Worth +$28,330.0 BN Blog 6/25/17
Current Account Balance of Payments	IQ2017 -93,446 MM % GDP 2.5 Blog 7/16/17
Collapse of United States Dynamism of Income Growth and Employment Creation	Blog 8/27/17
Squeeze of Economic Activity by Carry Trades	Blog 8/20/17
IMF View	World Real Economic Growth 2016 ∆% 3.5 Blog 4/30/17
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 1/15/2017
Rules versus Discretionary Authorities in Monetary Policy	Blog 1/1/2017

Links to blog comments in Table USA: 8/27/17 https://cmpassocregulationblog.blogspot.com/2017/08/dollar-devaluation-and-interest-rate.html

8/20/17 https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html

8/13/17 https://cmpassocregulationblog.blogspot.com/2017/08/recovery-without-hiring-ten-million_40.html

8/6/17 https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html

7/30/17 https://cmpassocregulationblog.blogspot.com/2017/07/data-dependent-monetary-policy-with_30.html

4/30/17 https://cmpassocregulationblog.blogspot.com/2017/04/dollar-devaluation-mediocre-cyclical.html

4/2/17 https://cmpassocregulationblog.blogspot.com/2017/04/mediocre-cyclical-economic-growth-with.html

1/15/17 http://cmpassocregulationblog.blogspot.com/2017/01/unconventional-monetary-policy-and.html

1/1/17 http://cmpassocregulationblog.blogspot.com/2017/01/rules-versus-discretionary-authorities.html

12/25/16 http://cmpassocregulationblog.blogspot.com/2016/12/mediocre-cyclical-united-states.html

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

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

Motor vehicle sales and production in the US have been in long-term structural change. Table VA-1A provides the data on new motor vehicle sales and domestic car production in the US from 1990 to 2010. New motor vehicle sales grew from 14,137 thousand in 1990 to the peak of 17,806 thousand in 2000 or 29.5 percent. In that same period, domestic car production fell from 6,231 thousand in 1990 to 5,542 thousand in 2000 or -11.1 percent. New motor vehicle sales fell from 17,445 thousand in 2005 to 11,772 in 2010 or 32.5 percent while domestic car production fell from 4,321 thousand in 2005 to 2,840 thousand in 2010 or 34.3 percent. In Aug 2017, light vehicle sales accumulated to 11,350,606 million, which is lower by 2.7 percent relative to 11,671,394 a year earlier (http://motorintelligence.com/m_frameset.html). The seasonally adjusted annual rate of light vehicle sales in the US reached 16.14 million in Aug 2017, lower than 16.77 million in Jul 2017 and lower than 17.22 million in Aug 2016. (http://motorintelligence.com/m_frameset.html).

Table VA-1A, US, New Motor Vehicle Sales and Car Production, Thousand Units 7

	New Motor Vehicle Sales	New Car Sales and Leases	New Truck Sales and Leases	Domestic Car Production
1990	14,137	9,300	4,837	6,231
1991	12,725	8,589	4,136	5,454
1992	13,093	8,215	4,878	5,979
1993	14,172	8,518	5,654	5,979
1994	15,397	8,990	6,407	6,614
1995	15,106	8,536	6,470	6,340
1996	15,449	8,527	6,922	6,081
1997	15,490	8,273	7,218	5,934
1998	15,958	8,142	7,816	5,554
1999	17,401	8,697	8,704	5,638
2000	17,806	8,852	8,954	5,542
2001	17,468	8,422	9,046	4,878
2002	17,144	8,109	9,036	5,019
2003	16,968	7,611	9,357	4,510
2004	17,298	7,545	9,753	4,230
2005	17,445	7,720	9,725	4,321
2006	17,049	7,821	9,228	4,367
2007	16,460	7,618	8,683	3,924
2008	13,494	6,814	6.680	3,777
2009	10,601	5,456	5,154	2,247
2010	11,772	5,729	6,044	2,840

Source: US Census Bureau

http://www.census.gov/compendia/statab/cats/wholesale_retail_trade/motor_vehicle_sales.html

Chart I-5 of the Board of Governors of the Federal Reserve provides output of motor vehicles and parts in the United States from 1972 to 2017. Output virtually stagnated since the late 1990s with recent increase.

Chart 1-5, US, Motor Vehicles and Parts Output, 1972-2017

Source: Board of Governors of the Federal Reserve System

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

The explanation of the sharp contraction of household wealth can probably be found in the origins of the financial crisis and global recession. Let V(T) represent the value of the firm’s equity at time T and B stand for the promised debt of the firm to bondholders and assume that corporate management, elected by equity owners, is acting on the interests of equity owners. Robert C. Merton (1974, 453) states:

“On the maturity date T, the firm must either pay the promised payment of B to the debtholders or else the current equity will be valueless. Clearly, if at time T, V(T) > B, the firm should pay the bondholders because the value of equity will be V(T) – B > 0 whereas if they do not, the value of equity would be zero. If V(T) ≤ B, then the firm will not make the payment and default the firm to the bondholders because otherwise the equity holders would have to pay in additional money and the (formal) value of equity prior to such payments would be (V(T)- B) < 0.”

Pelaez and Pelaez (The Global Recession Risk (2007), 208-9) apply this analysis to the US housing market in 2005-2006 concluding:

“The house market [in 2006] is probably operating with low historical levels of individual equity. There is an application of structural models [Duffie and Singleton 2003] to the individual decisions on whether or not to continue paying a mortgage. The costs of sale would include realtor and legal fees. There could be a point where the expected net sale value of the real estate may be just lower than the value of the mortgage. At that point, there would be an incentive to default. The default vulnerability of securitization is unknown.”

There are multiple important determinants of the interest rate: “aggregate wealth, the distribution of wealth among investors, expected rate of return on physical investment, taxes, government policy and inflation” (Ingersoll 1987, 405). Aggregate wealth is a major driver of interest rates (Ibid, 406). Unconventional monetary policy, with zero fed funds rates and flattening of long-term yields by quantitative easing, causes uncontrollable effects on risk taking that can have profound undesirable effects on financial stability. Excessively aggressive and exotic monetary policy is the main culprit and not the inadequacy of financial management and risk controls.

The net worth of the economy depends on interest rates. In theory, “income is generally defined as the amount a consumer unit could consume (or believe that it could) while maintaining its wealth intact” (Friedman 1957, 10). Income, Y, is a flow that is obtained by applying a rate of return, r, to a stock of wealth, W, or Y = rW (Ibid). According to a subsequent restatement: “The basic idea is simply that individuals live for many years and that therefore the appropriate constraint for consumption decisions is the long-run expected yield from wealth r*W. This yield was named permanent income: Y* = r*W” (Darby 1974, 229), where * denotes permanent. The simplified relation of income and wealth can be restated as:

W = Y/r (1)

Equation (1) shows that as r goes to zero, r →0, W grows without bound, W→∞.

Lowering the interest rate near the zero bound in 2003-2004 caused the illusion of permanent increases in wealth or net worth in the balance sheets of borrowers and also of lending institutions, securitized banking and every financial institution and investor in the world. The discipline of calculating risks and returns was seriously impaired. The objective of monetary policy was to encourage borrowing, consumption and investment but the exaggerated stimulus resulted in a financial crisis of major proportions as the securitization that had worked for a long period was shocked with policy-induced excessive risk, imprudent credit, high leverage and low liquidity by the incentive to finance everything overnight at close to zero interest rates, from adjustable rate mortgages (ARMS) to asset-backed commercial paper of structured investment vehicles (SIV).

The consequences of inflating liquidity and net worth of borrowers were a global hunt for yields to protect own investments and money under management from the zero interest rates and unattractive long-term yields of Treasuries and other securities. Monetary policy distorted the calculations of risks and returns by households, business and government by providing central bank cheap money. Short-term zero interest rates encourage financing of everything with short-dated funds, explaining the SIVs created off-balance sheet to issue short-term commercial paper to purchase default-prone mortgages that were financed in overnight or short-dated sale and repurchase agreements (Pelaez and Pelaez, Financial Regulation after the Global Recession, 50-1, Regulation of Banks and Finance, 59-60, Globalization and the State Vol. I, 89-92, Globalization and the State Vol. II, 198-9, Government Intervention in Globalization, 62-3, International Financial Architecture, 144-9). ARMS were created to lower monthly mortgage payments by benefitting from lower short-dated reference rates. Financial institutions economized in liquidity that was penalized with near zero interest rates. There was no perception of risk because the monetary authority guaranteed a minimum or floor price of all assets by maintaining low interest rates forever or equivalent to writing an illusory put option on wealth. Subprime mortgages were part of the put on wealth by an illusory put on house prices. The housing subsidy of $221 billion per year created the impression of ever increasing house prices. The suspension of auctions of 30-year Treasuries was designed to increase demand for mortgage-backed securities, lowering their yield, which was equivalent to lowering the costs of housing finance and refinancing. Fannie and Freddie purchased or guaranteed $1.6 trillion of nonprime mortgages and worked with leverage of 75:1 under Congress-provided charters and lax oversight. The combination of these policies resulted in high risks because of the put option on wealth by near zero interest rates, excessive leverage because of cheap rates, low liquidity because of the penalty in the form of low interest rates and unsound credit decisions because the put option on wealth by monetary policy created the illusion that nothing could ever go wrong, causing the credit/dollar crisis and global recession (Pelaez and Pelaez, Financial Regulation after the Global Recession, 157-66, Regulation of Banks, and Finance, 217-27, International Financial Architecture, 15-18, The Global Recession Risk, 221-5, Globalization and the State Vol. II, 197-213, Government Intervention in Globalization, 182-4).

There are significant elements of the theory of bank financial fragility of Diamond and Dybvig (1983) and Diamond and Rajan (2000, 2001a, 2001b) that help to explain the financial fragility of banks during the credit/dollar crisis (see also Diamond 2007). The theory of Diamond and Dybvig (1983) as exposed by Diamond (2007) is that banks funding with demand deposits have a mismatch of liquidity (see Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 58-66). A run occurs when too many depositors attempt to withdraw cash at the same time. All that is needed is an expectation of failure of the bank. Three important functions of banks are providing evaluation, monitoring and liquidity transformation. Banks invest in human capital to evaluate projects of borrowers in deciding if they merit credit. The evaluation function reduces adverse selection or financing projects with low present value. Banks also provide important monitoring services of following the implementation of projects, avoiding moral hazard that funds be used for, say, real estate speculation instead of the original project of factory construction. The transformation function of banks involves both assets and liabilities of bank balance sheets. Banks convert an illiquid asset or loan for a project with cash flows in the distant future into a liquid liability in the form of demand deposits that can be withdrawn immediately.

In the theory of banking of Diamond and Rajan (2000, 2001a, 2001b), the bank creates liquidity by tying human assets to capital. The collection skills of the relationship banker convert an illiquid project of an entrepreneur into liquid demand deposits that are immediately available for withdrawal. The deposit/capital structure is fragile because of the threat of bank runs. In these days of online banking, the run on Washington Mutual was through withdrawals online. A bank run can be triggered by the decline of the value of bank assets below the value of demand deposits.

Pelaez and Pelaez (Regulation of Banks and Finance 2009b, 60, 64-5) find immediate application of the theories of banking of Diamond, Dybvig and Rajan to the credit/dollar crisis after 2007. It is a credit crisis because the main issue was the deterioration of the credit portfolios of securitized banks as a result of default of subprime mortgages. It is a dollar crisis because of the weakening dollar resulting from relatively low interest rate policies of the US. It caused systemic effects that converted into a global recession not only because of the huge weight of the US economy in the world economy but also because the credit crisis transferred to the UK and Europe. Management skills or human capital of banks are illustrated by the financial engineering of complex products. The increasing importance of human relative to inanimate capital (Rajan and Zingales 2000) is revolutionizing the theory of the firm (Zingales 2000) and corporate governance (Rajan and Zingales 2001). Finance is one of the most important examples of this transformation. Profits were derived from the charter in the original banking institution. Pricing and structuring financial instruments was revolutionized with option pricing formulas developed by Black and Scholes (1973) and Merton (1973, 1974, 1998) that permitted the development of complex products with fair pricing. The successful financial company must attract and retain finance professionals who have invested in human capital, which is a sunk cost to them and not of the institution where they work.

The complex financial products created for securitized banking with high investments in human capital are based on houses, which are as illiquid as the projects of entrepreneurs in the theory of banking. The liquidity fragility of the securitized bank is equivalent to that of the commercial bank in the theory of banking (Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 65). Banks created off-balance sheet structured investment vehicles (SIV) that issued commercial paper receiving AAA rating because of letters of liquidity guarantee by the banks. The commercial paper was converted into liquidity by its use as collateral in SRPs at the lowest rates and minimal haircuts because of the AAA rating of the guarantor bank. In the theory of banking, default can be triggered when the value of assets is perceived as lower than the value of the deposits. Commercial paper issued by SIVs, securitized mortgages and derivatives all obtained SRP liquidity on the basis of illiquid home mortgage loans at the bottom of the pyramid. The run on the securitized bank had a clear origin (Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 65):

“The increasing default of mortgages resulted in an increase in counterparty risk. Banks were hit by the liquidity demands of their counterparties. The liquidity shock extended to many segments of the financial markets—interbank loans, asset-backed commercial paper (ABCP), high-yield bonds and many others—when counterparties preferred lower returns of highly liquid safe havens, such as Treasury securities, than the risk of having to sell the collateral in SRPs at deep discounts or holding an illiquid asset. The price of an illiquid asset is near zero.”

Gorton and Metrick (2010H, 507) provide a revealing quote to the work in 1908 of Edwin R. A. Seligman, professor of political economy at Columbia University, founding member of the American Economic Association and one of its presidents and successful advocate of progressive income taxation. The intention of the quote is to bring forth the important argument that financial crises are explained in terms of “confidence” but as Professor Seligman states in reference to historical banking crises in the US, the important task is to explain what caused the lack of confidence. It is instructive to repeat the more extended quote of Seligman (1908, xi) on the explanations of banking crises:

“The current explanations may be divided into two categories. Of these the first includes what might be termed the superficial theories. Thus it is commonly stated that the outbreak of a crisis is due to lack of confidence,--as if the lack of confidence was not in itself the very thing which needs to be explained. Of still slighter value is the attempt to associate a crisis with some particular governmental policy, or with some action of a country’s executive. Such puerile interpretations have commonly been confined to countries like the United States, where the political passions of democracy have had the fullest way. Thus the crisis of 1893 was ascribed by the Republicans to the impending Democratic tariff of 1894; and the crisis of 1907 has by some been termed the ‘[Theodore] Roosevelt panic,” utterly oblivious of the fact that from the time of President Jackson, who was held responsible for the troubles of 1837, every successive crisis had had its presidential scapegoat, and has been followed by a political revulsion. Opposed to these popular, but wholly unfounded interpretations, is the second class of explanations, which seek to burrow beneath the surface and to discover the more occult and fundamental causes of the periodicity of crises.”

Scholars ignore superficial explanations in the effort to seek good and truth. The problem of economic analysis of the credit/dollar crisis is the lack of a structural model with which to attempt empirical determination of causes (Gorton and Metrick 2010SB). There would still be doubts even with a well-specified structural model because samples of economic events do not typically permit separating causes and effects. There is also confusion is separating the why of the crisis and how it started and propagated, all of which are extremely important.

In true heritage of the principles of Seligman (1908), Gorton (2009EFM) discovers a prime causal driver of the credit/dollar crisis. The objective of subprime and Alt-A mortgages was to facilitate loans to populations with modest means so that they could acquire a home. These borrowers would not receive credit because of (1) lack of funds for down payments; (2) low credit rating and information; (3) lack of information on income; and (4) errors or lack of other information. Subprime mortgage “engineering” was based on the belief that both lender and borrower could benefit from increases in house prices over the short run. The initial mortgage would be refinanced in two or three years depending on the increase of the price of the house. According to Gorton (2009EFM, 13, 16):

“The outstanding amounts of Subprime and Alt-A [mortgages] combined amounted to about one quarter of the $6 trillion mortgage market in 2004-2007Q1. Over the period 2000-2007, the outstanding amount of agency mortgages doubled, but subprime grew 800%! Issuance in 2005 and 2006 of Subprime and Alt-A mortgages was almost 30% of the mortgage market. Since 2000 the Subprime and Alt-A segments of the market grew at the expense of the Agency (i.e., the government sponsored entities of Fannie Mae and Freddie Mac) share, which fell from almost 80% (by outstanding or issuance) to about half by issuance and 67% by outstanding amount. The lender’s option to rollover the mortgage after an initial period is implicit in the subprime mortgage. The key design features of a subprime mortgage are: (1) it is short term, making refinancing important; (2) there is a step-up mortgage rate that applies at the end of the first period, creating a strong incentive to refinance; and (3) there is a prepayment penalty, creating an incentive not to refinance early.”

The prime objective of successive administrations in the US during the past 20 years and actually since the times of Roosevelt in the 1930s has been to provide “affordable” financing for the “American dream” of home ownership. The US housing finance system is mixed with public, public/private and purely private entities. The Federal Home Loan Bank (FHLB) system was established by Congress in 1932 that also created the Federal Housing Administration in 1934 with the objective of insuring homes against default. In 1938, the government created the Federal National Mortgage Association, or Fannie Mae, to foster a market for FHA-insured mortgages. Government-insured mortgages were transferred from Fannie Mae to the Government National Mortgage Association, or Ginnie Mae, to permit Fannie Mae to become a publicly-owned company. Securitization of mortgages began in 1970 with the government charter to the Federal Home Loan Mortgage Corporation, or Freddie Mac, with the objective of bundling mortgages created by thrift institutions that would be marketed as bonds with guarantees by Freddie Mac (see Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 42-8). In the third quarter of 2008, total mortgages in the US were $12,057 billion of which 43.5 percent, or $5423 billion, were retained or guaranteed by Fannie Mae and Freddie Mac (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 45). In 1990, Fannie Mae and Freddie Mac had a share of only 25.4 percent of total mortgages in the US. Mortgages in the US increased from $6922 billion in 2002 to $12,088 billion in 2007, or by 74.6 percent, while the retained or guaranteed portfolio of Fannie and Freddie rose from $3180 billion in 2002 to $4934 billion in 2007, or by 55.2 percent.

According to Pinto (2008) in testimony to Congress:

“There are approximately 25 million subprime and Alt-A loans outstanding, with an unpaid principal amount of over $4.5 trillion, about half of them held or guaranteed by Fannie and Freddie. Their high risk activities were allowed to operate at 75:1 leverage ratio. While they may deny it, there can be no doubt that Fannie and Freddie now own or guarantee $1.6 trillion in subprime, Alt-A and other default prone loans and securities. This comprises over 1/3 of their risk portfolios and amounts to 34% of all the subprime loans and 60% of all Alt-A loans outstanding. These 10.5 million unsustainable, nonprime loans are experiencing a default rate 8 times the level of the GSEs’ 20 million traditional quality loans. The GSEs will be responsible for a large percentage of an estimated 8.8 million foreclosures expected over the next 4 years, accounting for the failure of about 1 in 6 home mortgages. Fannie and Freddie have subprimed America.”

In perceptive analysis of growth and macroeconomics in the past six decades, Rajan (2012FA) argues that “the West can’t borrow and spend its way to recovery.” The Keynesian paradigm is not applicable in current conditions. Advanced economies in the West could be divided into those that reformed regulatory structures to encourage productivity and others that retained older structures. In the period from 1950 to 2000, Cobet and Wilson (2002) find that US productivity, measured as output/hour, grew at the average yearly rate of 2.9 percent while Japan grew at 6.3 percent and Germany at 4.7 percent (see Pelaez and Pelaez, The Global Recession Risk (2007), 135-44). In the period from 1995 to 2000, output/hour grew at the average yearly rate of 4.6 percent in the US but at lower rates of 3.9 percent in Japan and 2.6 percent in the US. Rajan (2012FA) argues that the differential in productivity growth was accomplished by deregulation in the US at the end of the 1970s and during the 1980s. In contrast, Europe did not engage in reform with the exception of Germany in the early 2000s that empowered the German economy with significant productivity advantage. At the same time, technology and globalization increased relative remunerations in highly-skilled, educated workers relative to those without skills for the new economy. It was then politically appealing to improve the fortunes of those left behind by the technological revolution by means of increasing cheap credit. As Rajan (2012FA) argues:

“In 1992, Congress passed the Federal Housing Enterprises Financial Safety and Soundness Act, partly to gain more control over Fannie Mae and Freddie Mac, the giant private mortgage agencies, and partly to promote affordable homeownership for low-income groups. Such policies helped money flow to lower-middle-class households and raised their spending—so much so that consumption inequality rose much less than income inequality in the years before the crisis. These policies were also politically popular. Unlike when it came to an expansion in government welfare transfers, few groups opposed expanding credit to the lower-middle class—not the politicians who wanted more growth and happy constituents, not the bankers and brokers who profited from the mortgage fees, not the borrowers who could now buy their dream houses with virtually no money down, and not the laissez-faire bank regulators who thought they could pick up the pieces if the housing market collapsed. The Federal Reserve abetted these shortsighted policies. In 2001, in response to the dot-com bust, the Fed cut short-term interest rates to the bone. Even though the overstretched corporations that were meant to be stimulated were not interested in investing, artificially low interest rates acted as a tremendous subsidy to the parts of the economy that relied on debt, such as housing and finance. This led to an expansion in housing construction (and related services, such as real estate brokerage and mortgage lending), which created jobs, especially for the unskilled. Progressive economists applauded this process, arguing that the housing boom would lift the economy out of the doldrums. But the Fed-supported bubble proved unsustainable. Many construction workers have lost their jobs and are now in deeper trouble than before, having also borrowed to buy unaffordable houses. Bankers obviously deserve a large share of the blame for the crisis. Some of the financial sector’s activities were clearly predatory, if not outright criminal. But the role that the politically induced expansion of credit played cannot be ignored; it is the main reason the usual checks and balances on financial risk taking broke down.”

In fact, Raghuram G. Rajan (2005) anticipated low liquidity in financial markets resulting from low interest rates before the financial crisis that caused distortions of risk/return decisions provoking the credit/dollar crisis and global recession from IVQ2007 to IIQ2009. Near zero interest rates of unconventional monetary policy induced excessive risks and low liquidity in financial decisions that were critical as a cause of the credit/dollar crisis after 2007. Rajan (2012FA) argues that it is not feasible to return to the employment and income levels before the credit/dollar crisis because of the bloated construction sector, financial system and government budgets.

Table IIA-1 shows the euphoria of prices during the housing boom and the subsequent decline. House prices rose 93.7 percent in the 10-city composite of the Case-Shiller home price index, 78.1 percent in the 20-city composite and 64.0 percent in the US national home price index between Jun 2000 and Jun 2005. Prices rose around 100 percent from Jun 2000 to Jun 2006, increasing 109.9 percent for the 10-city composite, 93.3 percent for the 20-city composite and 76.0 percent in the US national index. House prices rose 39.5 percent between Jun 2003 and Jun 2005 for the 10-city composite, 34.5 percent for the 20-city composite and 29.1 percent for the US national propelled by low fed funds rates of 1.0 percent between Dec 2003 and Jun 2004. Fed funds rates increased by 0.25 basis points at every meeting of the Federal Open Junket Committee (FOMC) from Jun 2004 until Jun 2006, reaching 5.25 percent. Simultaneously, the suspension of auctions of the 30-year Treasury bond caused decline of yields of mortgage-backed securities with intended decrease in mortgage rates. Similarly, between Jun 2003 and Jun 2006, the 10-city index gained 51.2 percent; the 20-city index increased 46.0 percent; and the US national 38.5 percent. House prices have fallen from Jun 2006 to Jun 2017 by 5.5 percent for the 10-city composite and 2.8 percent for the 20-city composite, increasing 4.4 percent for the US national. Measuring house prices is quite difficult because of the lack of homogeneity that is typical of standardized commodities. In the 12 months ending in Jun 2017, house prices increased 4.9 percent in the 10-city composite, increasing 5.7 percent in the 20-city composite and 5.8 percent in the US national. Table IIA-1 also shows that house prices increased 98.3 percent between Jun 2000 and Jun 2017 for the 10-city composite, increasing 87.8 percent for the 20-city composite and 83.7 percent for the US national. House prices are close to the lowest level since peaks during the boom before the financial crisis and global recession. The 10-city composite fell 5.5 percent from the peak in Jun 2006 to Jun 2017 and the 20-city composite fell 2.9 percent from the peak in Jul 2006 to Jun 2017. The US national increased 4.4 percent in Jun 2017 from the peak of the 10-city composite in Jun 2006 and increased 4.3 percent from the peak of the 20-city composite in Jul 2016. The final part of Table II-2 provides average annual percentage rates of growth of the house price indexes of Standard & Poor’s Case-Shiller. The average annual growth rate between Dec 1987 and Dec 2016 for the 10-city composite was 3.8 percent and 3.5 percent for the US national. Data for the 20-city composite are available only beginning in Jan 2000. House prices accelerated in the 1990s with the average rate of the 10-city composite of 5.0 percent between Dec 1992 and Dec 2000 while the average rate for the period Dec 1987 to Dec 2000 was 3.8 percent. The average rate for the US national was 3.5 percent from Dec 1987 to Dec 2016 and 3.6 percent from Dec 1987 to Dec 2000. Although the global recession affecting the US between IVQ2007 (Dec) and IIQ2009 (Jun) caused decline of house prices of slightly above 30 percent, the average annual growth rate of the 10-city composite between Dec 2000 and Dec 2016 was 3.8 percent while the rate of the 20-city composite was 3.5 percent and 3.4 percent for the US national.

Table IIA-1, US, Percentage Changes of Standard & Poor’s Case-Shiller Home Price Indices, Not Seasonally Adjusted, ∆%

	10-City Composite	20-City Composite	US National
∆% Jun 2000 to Jun 2003	38.8	32.4	27.1
∆% Jun 2000 to Jun 2005	93.7	78.1	64.0
∆% Jun 2003 to Jun 2005	39.5	34.5	29.1
∆% Jun 2000 to Jun 2006	109.9	93.3	76.0
∆% Jun 2003 to Jun 2006	51.2	46.0	38.5
∆% Jun 2005 to Jun 2017	2.4	5.5	12.0
∆% Jun 2006 to Jun 2017	-5.5	-2.8	4.4
∆% Jun 2009 to Jun 2017	39.5	41.3	28.6
∆% Jun 2010 to Jun 2017	32.8	35.5	30.4
∆% Jun 2011 to Jun 2017	38.1	41.7	35.7
∆% Jun 2012 to Jun 2017	38.0	40.9	34.5
∆% Jun 2013 to Jun 2017	23.5	25.8	23.1
∆% Jun 2014 to Jun 2017	14.3	16.4	15.8
∆% Jun 2015 to Jun 2017	9.4	11.0	11.0
∆% Jun 2016 to Jun 2017	4.9	5.7	5.8
∆% Jun 2000 to Jun 2017	98.3	87.8	83.7
∆% Peak Jun 2006 Jun 2017	-5.5		4.4
∆% Peak Jul 2006 May 2017		-2.9	4.3
Average ∆% Dec 1987-Dec 2016	3.8	NA	3.5
Average ∆% Dec 1987-Dec 2000	3.8	NA	3.6
Average ∆% Dec 1992-Dec 2000	5.0	NA	4.5
Average ∆% Dec 2000-Dec 2016	3.8	3.5	3.4

Source: http://us.spindices.com/index-family/real-estate/sp-corelogic-case-shiller

Price increases measured by the Case-Shiller house price indices show in data for Jun 2017 that “home prices continued their rise across the country over the last 12 months” (https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/574349_cshomeprice-release-0829.pdf?force_download=true). Monthly house prices increased sharply from Feb 2013 to Jan 2014 for both the 10- and 20-city composites, as shown in Table IIA-2. In Jan 2013, the seasonally adjusted 10-city composite increased 0.8 percent and the 20-city increased 0.8 percent while the 10-city not seasonally adjusted changed 0.0 percent and the 20-city changed 0.0 percent. House prices increased at high monthly percentage rates from Feb to Nov 2013. Except for Mar through Apr 2012, house prices seasonally adjusted declined in most months for both the 10-city and 20-city Case-Shiller composites from Dec 2010 to Jan 2012, as shown in Table IIA-2. The most important seasonal factor in house prices is school changes for wealthier homeowners with more expensive houses. Without seasonal adjustment, house prices fell from Dec 2010 throughout Mar 2011 and then increased in every month from Apr to Aug 2011 but fell in every month from Sep 2011 to Feb 2012. The not seasonally adjusted index registers decline in Mar 2012 of 0.1 percent for the 10-city composite and is flat for the 20-city composite. Not seasonally adjusted house prices increased 1.4 percent in Apr 2012 and at high monthly percentage rates until Sep 2012. House prices not seasonally adjusted stalled from Oct 2012 to Jan 2013 and surged from Feb to Sep 2013, decelerating in Oct 2013-Feb 2014. House prices grew at fast rates in Mar 2014. The 10-city NSA index increased 0.7 percent in Jun 2017 and the 20-city increased 0.7 percent. The 20-city SA changed 0.0 percent in Jun 2017 and the 20-city composite SA increased 0.1 percent. Declining house prices cause multiple adverse effects of which two are quite evident. (1) There is a disincentive to buy houses in continuing price declines. (2) More mortgages could be losing fair market value relative to mortgage debt. Another possibility is a wealth effect that consumers restrain purchases because of the decline of their net worth in houses.

Table IIA-2, US, Monthly Percentage Change of S&P Case-Shiller Home Price Indices, Seasonally Adjusted and Not Seasonally Adjusted, ∆%

	10C SA	20C NSA	20C SA	20C NSA
December 2010	-0.2	-0.9	-0.2	-1.0
January 2011	-0.3	-1.1	-0.3	-1.1
February 2011	-0.4	-1.3	-0.4	-1.2
March 2011	-0.8	-1.0	-0.8	-1.0
April 2011	-0.1	0.6	-0.1	0.6
May 2011	-0.2	1.0	-0.2	1.0
June 2011	-0.1	1.0	-0.1	1.2
July 2011	0.0	0.9	0.0	1.0
August 2011	-0.2	0.1	-0.2	0.1
September 2011	-0.3	-0.6	-0.5	-0.7
October 2011	-0.5	-1.3	-0.5	-1.4
November 2011	-0.6	-1.4	-0.5	-1.3
December 2011	-0.5	-1.2	-0.4	-1.1
January 2012	-0.3	-1.1	-0.2	-1.0
February 2012	-0.1	-0.9	-0.1	-0.8
March 2012	-0.1	-0.1	0.0	0.0
April 2012	0.6	1.4	0.6	1.4
May 2012	1.0	2.2	1.1	2.4
June 2012	1.0	2.1	1.1	2.3
July 2012	0.6	1.5	0.7	1.6
August 2012	0.6	0.8	0.6	0.9
September 2012	0.6	0.3	0.6	0.3
October 2012	0.6	-0.2	0.7	-0.1
November 2012	0.6	-0.3	0.7	-0.2
December 2012	0.9	0.2	0.9	0.2
January 2013	0.8	0.0	0.8	0.0
February 2013	1.0	0.3	0.9	0.2
March 2013	1.2	1.3	1.2	1.3
April 2013	1.7	2.6	1.6	2.6
May 2013	1.4	2.5	1.4	2.5
June 2013	1.2	2.2	1.1	2.2
July 2013	1.2	1.9	1.1	1.8
August 2013	1.2	1.3	1.1	1.3
September 2013	1.1	0.7	1.1	0.7
October 2013	0.9	0.2	1.0	0.2
November 2013	0.8	0.0	0.8	-0.1
December 2013	0.6	-0.1	0.6	-0.1
January 2014	0.6	-0.1	0.6	-0.1
February 2014	0.5	0.0	0.5	0.0
March 2014	0.8	0.8	0.7	0.9
April 2014	0.0	1.1	0.1	1.2
May 2014	0.1	1.1	0.1	1.1
June 2014	0.1	1.0	0.1	1.0
July 2014	0.0	0.6	0.0	0.6
August 2014	0.1	0.2	0.0	0.2
September 2014	0.3	-0.1	0.3	-0.1
October 2014	0.5	-0.1	0.7	-0.1
November 2014	0.5	-0.3	0.5	-0.2
December 2014	0.7	0.0	0.7	0.0
January 2015	0.5	-0.1	0.6	-0.1
February 2015	0.8	0.5	0.8	0.5
March 2015	0.7	0.8	0.7	0.9
April 2015	-0.1	1.1	0.0	1.1
May 2015	0.2	1.0	0.2	1.1
June 2015	0.1	0.9	0.2	1.0
July 2015	0.1	0.6	0.2	0.7
August 2015	0.2	0.2	0.1	0.3
September 2015	0.5	0.1	0.6	0.1
October 2015	0.6	-0.1	0.8	0.0
November 2015	0.6	0.0	0.7	0.0
December 2015	0.5	-0.1	0.6	0.0
January 2016	0.5	-0.1	0.6	0.0
February 2016	0.4	0.2	0.5	0.2
March 2016	0.9	0.9	0.8	0.9
April 2016	-0.2	1.0	0.0	1.1
May 2016	0.0	0.8	0.1	0.9
June 2016	0.1	0.8	0.1	0.8
July 2016	0.1	0.5	0.1	0.6
August 2016	0.3	0.3	0.1	0.3
September 2016	0.4	0.0	0.5	0.1
October 2016	0.5	-0.1	0.8	0.0
November 2016	0.8	0.2	0.8	0.2
December 2016	0.8	0.2	0.8	0.2
January 2017	0.8	0.3	0.9	0.2
February 2017	0.5	0.3	0.7	0.4
March 2017	0.9	0.9	0.9	1.0
April 2017	-0.5	0.8	-0.2	1.0
May 2017	0.0	0.8	0.1	0.9
June 2017	0.0	0.7	0.1	0.7

Source: http://us.spindices.com/index-family/real-estate/sp-corelogic-case-shiller

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 2016. Growth weakened from 2.7 per cent in 1995 and 3.1 percent in 1996 to contractions of 1.1 percent in 1998 and 0.3 percent in 1999. Growth rates were below 2 percent with exception of 2.8 percent in 2000 and 2.2 percent in 2004. Japan’s GDP contracted sharply by 1.1 percent in 2008 and 5.4 percent in 2009. As in most advanced economies, growth was robust at 4.2 percent in 2010 but mediocre at minus 0.1 percent in 2011 because of the tsunami and 1.5 percent in 2012. Japan’s GDP grew 2.0 percent in 2013 and nearly stagnated in 2014 at 0.3. The GDP of Japan increased 1.1 percent in 2015 and 1.0 percent in 2016. 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 2016 is 3.3 percent higher than in calendar year 2007. Japan’s real GDP grew 10.4 percent from the trough of 2009 to 2016 at the average yearly rate of 1.4 percent (http://www.esri.cao.go.jp/index-e.html).

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

Calendar Year	∆%
1995	2.7
1996	3.1
1997	1.1
1998	-1.1
1999	-0.3
2000	2.8
2001	0.4
2002	0.1
2003	1.5
2004	2.2
2005	1.7
2006	1.4
2007	1.7
2008	-1.1
2009	-5.4
2010	4.2
2011	-0.1
2012	1.5
2013	2.0
2014	0.3
2015	1.1
2016	1.0

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

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

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

Table VB-BOJF provides the forecasts of economic activity and inflation in Japan by the majority of members of the Policy Board of the Bank of Japan, which is part of their Outlook for Economic Activity and Prices (https://www.boj.or.jp/en/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:

Monetary Base Control. Most central banks in the world pursue interest rates instead of monetary aggregates, injecting bank reserves to lower interest rates to desired levels. The Bank of Japan (BOJ) has shifted back to monetary aggregates, conducting money market operations with the objective of increasing base money, or monetary liabilities of the government, at the annual rate of 60 to 70 trillion yen. The BOJ estimates base money outstanding at “138 trillion yen at end-2012) and plans to increase it to “200 trillion yen at end-2012 and 270 trillion yen at end 2014” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
Maturity Extension of Purchases of Japanese Government Bonds. Purchases of bonds will be extended even up to bonds with maturity of 40 years with the guideline of extending the average maturity of BOJ bond purchases from three to seven years. The BOJ estimates the current average maturity of Japanese government bonds (JGB) at around seven years. The BOJ plans to purchase about 7.5 trillion yen per month (http://www.boj.or.jp/en/announcements/release_2013/rel130404d.pdf). Takashi Nakamichi, Tatsuo Ito and Phred Dvorak, wiring on “Bank of Japan mounts bid for revival,” on Apr 4, 2013, published in the Wall Street Journal (http://online.wsj.com/article/SB10001424127887323646604578401633067110420.html), find that the limit of maturities of three years on purchases of JGBs was designed to avoid views that the BOJ would finance uncontrolled government deficits.
Seigniorage. The BOJ is pursuing coordination with the government that will take measures to establish “sustainable fiscal structure with a view to ensuring the credibility of fiscal management” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
Diversification of Asset Purchases. The BOJ will engage in transactions of exchange traded funds (ETF) and real estate investment trusts (REITS) and not solely on purchases of JGBs. Purchases of ETFs will be at an annual rate of increase of one trillion yen and purchases of REITS at 30 billion yen.
Bank Lending Facility and Growth Supporting Funding Facility. At the meeting on Feb 18, the Bank of Japan doubled the scale of these lending facilities to prevent their expiration in the near future (http://www.boj.or.jp/en/announcements/release_2014/k140218a.pdf).

Table VB-BOJF 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/gor1701b.pdf) with changes on Feb 1, 2017 (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:

Monetary Base Control. Most central banks in the world pursue interest rates instead of monetary aggregates, injecting bank reserves to lower interest rates to desired levels. The Bank of Japan (BOJ) has shifted back to monetary aggregates, conducting money market operations with the objective of increasing base money, or monetary liabilities of the government, at the annual rate of 60 to 70 trillion yen. The BOJ estimates base money outstanding at “138 trillion yen at end-2012) and plans to increase it to “200 trillion yen at end-2012 and 270 trillion yen at end 2014” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
Maturity Extension of Purchases of Japanese Government Bonds. Purchases of bonds will be extended even up to bonds with maturity of 40 years with the guideline of extending the average maturity of BOJ bond purchases from three to seven years. The BOJ estimates the current average maturity of Japanese government bonds (JGB) at around seven years. The BOJ plans to purchase about 7.5 trillion yen per month (http://www.boj.or.jp/en/announcements/release_2013/rel130404d.pdf). Takashi Nakamichi, Tatsuo Ito and Phred Dvorak, wiring on “Bank of Japan mounts bid for revival,” on Apr 4, 2013, published in the Wall Street Journal (http://online.wsj.com/article/SB10001424127887323646604578401633067110420.html), find that the limit of maturities of three years on purchases of JGBs was designed to avoid views that the BOJ would finance uncontrolled government deficits.
Seigniorage. The BOJ is pursuing coordination with the government that will take measures to establish “sustainable fiscal structure with a view to ensuring the credibility of fiscal management” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
Diversification of Asset Purchases. The BOJ will engage in transactions of exchange traded funds (ETF) and real estate investment trusts (REITS) and not solely on purchases of JGBs. Purchases of ETFs will be at an annual rate of increase of one trillion yen and purchases of REITS at 30 billion yen.
Bank Lending Facility and Growth Supporting Funding Facility. At the meeting on Feb 18, the Bank of Japan doubled the scale of these lending facilities to prevent their expiration in the near future (http://www.boj.or.jp/en/announcements/release_2014/k140218a.pdf).
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).
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
Apr 2017	+1.4 to +1.4 [+1.4]	-0.3
Feb 2017	+1.2 to +1.5 [+1.4]	-0.2 to -0.1 [-0.2]
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
Apr 2017	+1.4 to +1.6 [+1.6]	+0.6 to +1.6 [+1.4]
Feb 2017	+1.3 to +1.6 [+1.5]	+0.8 to +1.6 [+1.5]
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
Apr 2017	+1.1 to +1.3 [+1.3]	+0.8 to +1.9 [+1.7]
Feb 2017	+1.0 to +1.2 [+1.1]	+0.9 to +1.9 [+1.7]
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]
2019
Apr 2017	+0.6 to +0.7 [+0.7]	+1.4 to +2.5 [+2.4]	+0.9 to +2.0 [+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

https://www.boj.or.jp/en/mopo/outlook/gor1701b.pdf

https://www.boj.or.jp/en/mopo/outlook/gor1704b.pdf

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

Manufacturing PMI™ increased from 52.1 in Jul to 52.8 in Aug and the Flash Japan

Manufacturing Output Index™ increased from 51.4 in Jul to 53.1 in Aug

(https://www.markiteconomics.com/Survey/PressRelease.mvc/d6633c5ba84045f3b9e1c8393a66908f). New export orders increased. Paul Smith, Senior Economist at IHS

Markit, finds improving growth conditions

(https://www.markiteconomics.com/Survey/PressRelease.mvc/d6633c5ba84045f3b9e1c8393a66908f).The Nikkei Composite Output PMI Index decreased from 52.9 in Jun to 51.8 in Jul, indicating slowing business activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/edba0d02c5964841adc0b94524957b9f). The Nikkei Business Activity Index of Services decreased to 52.0 in Jul from 53.3 in Jun (https://www.markiteconomics.com/Survey/PressRelease.mvc/edba0d02c5964841adc0b94524957b9f). Paul Smith, Director at IHS Markit, finds continuing business activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/edba0d02c5964841adc0b94524957b9f). The Nikkei Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, decreased from 52.4 in Jun to 52.1 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/1b07c296d0874770b19d162f432e8342). New orders increased while new foreign orders expanded. Paul Smith, Senior Economist at IHS Markit, finds consistent conditions in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/1b07c296d0874770b19d162f432e8342). 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	Jul ∆% 0.3 12 months ∆% 2.6 Blog 8/13/17
Consumer Price Index	Jul NSA ∆% -0.2; Jul 12 months NSA ∆% 0.4 Blog 8/27/17
Real GDP Growth	IIQ2017 ∆%: 1.0 on IQ2017; IIQ2017 SAAR 4.0; ∆% from quarter a year earlier: 2.0 % 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 12/11/16 2/19/17 3/12/17 5/21/17 6/11/17 8/20/17
Employment Report	Jul Unemployed 1.91 million Change in unemployed since last year: -120 thousand Unemployment rate: 2.8% Blog 9/3/17
All Industry Indices	Jun month SA ∆% 0.4 12-month NSA ∆% 2.2 Earlier Data: Blog 4/26/15
Industrial Production	Jul SA month ∆%: -0.8 Jul 12-month NSA ∆% 4.7 Earlier Data: Blog 3/29/15
Machine Orders	Total Jun ∆% 2.1 Private ∆%: 4.4 Jun ∆% Excluding Volatile Orders minus 1.9 Earlier Data: Blog 4/19/15
Tertiary Index	Jun month SA ∆% 0.0 Jun 12 months NSA ∆% 1.1 Earlier Data: Blog 4/26/15
Wholesale and Retail Sales	Jul 12 months: Total ∆%: -0.4 Wholesale ∆%: 3.1 Retail ∆%: 1.9 Earlier Data: Blog 3/29/15
Family Income and Expenditure Survey	Jul 12-month ∆% total nominal consumption 0.4, real -0.2 Earlier Data: Blog 3/29/15
Trade Balance	Exports Jul 12 months ∆%: 13.4 Imports Jul 12 months ∆% 16.3 Earlier Data: Blog 4/26/15

Links to blog comments in Table JPY: 8/27/17 https://cmpassocregulationblog.blogspot.com/2017/08/dollar-devaluation-and-interest-rate.html

8/20/17 https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html

8/13/17 https://cmpassocregulationblog.blogspot.com/2017/08/recovery-without-hiring-ten-million_40.html

7/30/17 https://cmpassocregulationblog.blogspot.com/2017/07/data-dependent-monetary-policy-with_30.html

5/21/17 https://cmpassocregulationblog.blogspot.com/2017/05/dollar-devaluation-world-inflation.html

3/12/17 https://cmpassocregulationblog.blogspot.com/2017/03/increasing-interest-rates-twenty-four.html

3/5/17 https://cmpassocregulationblog.blogspot.com/2017/03/rising-valuations-of-risk-financial.html

12/11/16 http://cmpassocregulationblog.blogspot.com/2016/12/rising-values-of-risk-financial-assets.html

11/20/16 http://cmpassocregulationblog.blogspot.com/2016/11/interest-rate-increase-could-well.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

Table VB-1 provides the employment report of Japan in Jul 2017. The rate of unemployment not seasonally adjusted reached 2.8 percent, decreasing 0.2 percentage points from a year earlier. Population changed 0.0 percent from a year earlier. The labor force increased 0.7 percent from a year earlier and the labor participation rate stood at 60.8, increasing 0.5 percentage points from a year earlier. The employment rate moved to 59.1 percent, increasing 0.6 percentage points relative to a year earlier.

Table VB-1, Japan, Employment Report Jul 2017

Jul 2017 Unemployed	1.91 million
Change since last year	-120 thousand; ∆% -5.9
Unemployment rate	SA 2.8%, 0.0 from earlier month; NSA 2.8%, -0.2 from earlier year
Population ≥ 15 years	111.11 million
Change since last year	∆% 0.0
Labor Force	67.54 million
Change since last year	∆% 0.7
Employed	65.63 million
Change since last year	∆% 0.9
Labor force participation rate	60.8
Change since last year	0.5
Employment rate	59.1%
Change since last year	0.6

Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/roudou/results/month/index.htm

Table VB-2 provides the rate of unemployment of Japan seasonally adjusted that decreased to 3.4 percent in Dec 2014 from 4.4 percent in Jul 2012. The rate of unemployment SA fell 0.2 percentage points from 3.0 percent in Jul 2016 to 2.8 percent in Jul 2017.

Table VB-2, Japan, Unemployment Rate, SA

	Unemployment Rate SA
Jul 2017	2.8
Jun	2.8
May	3.1
Apr	2.8
Mar	2.8
Feb	2.8
Jan	3.0
Dec 2016	3.1
Nov	3.1
Oct	3.0
Sep	3.0
Aug	3.1
Jul	3.0
Jun	3.1
May	3.2
Apr	3.2
Mar	3.2
Feb	3.2
Jan	3.2
Dec 2015	3.3
Nov	3.3
Oct	3.2
Sep	3.4
Aug	3.4
Jul	3.4
Jun	3.4
May	3.3
Apr	3.4
Mar	3.4
Feb	3.5
Jan	3.5
Dec 2014	3.4
Nov	3.5
Oct	3.6
Sep	3.5
Aug	3.5
Jul	3.7
Jun	3.7
May	3.6
Apr	3.6
Mar	3.6
Feb	3.6
Jan	3.7
Dec 2013	3.7
Nov	3.9
Oct	4.0
Sep	4.0
Aug	4.1
Jul	3.8
Jun	3.9
May	4.1
Apr	4.1
Mar	4.1
Feb	4.3
Jan	4.2
Dec 2012	4.3
Nov	4.1
Oct	4.1
Sep	4.3
Aug	4.2
Jul	4.4
Jun	4.3
May	4.4

Source: Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/roudou/results/month/index.htm

Chart VB-1 of Japan’s Statistics Bureau at the Ministry of Internal Affairs and Communications provides the unemployment rate of Japan from 2014 to 2017. There is clear trend of decline with multiple oscillations and increase in Jun-Jul 2014. The rate increased in Sep 2014 and fell in Oct 2014, stabilizing in Nov 2014 and declining in Dec 2014. The rate decreased in Feb-Apr 2015, stabilizing in May 2015. The rate increased in Jun 2015 and fell in Jul 2015, increasing in Aug 2015 and stabilizing in Sep 2015. The rate fell in Oct 2015, increasing in Nov 2015, remaining unchanged in Dec 2015 and decreasing in Jan 2016. The rate increased in Feb 2016 and decreased in Mar 2016, stabilizing in Apr-May 2016. The rate decreased in Jun-Jul 2016, increasing in Aug 2016. The rate decreased in Sep 2016, stabilizing in Oct 2016. The rate increased in Nov 2016 and stabilized in Dec 2016, decreasing in Jan-Feb 2017. The rate stabilized in Apr 2017, increasing in May 2017 and decreasing in Jun 2017. The rate stabilized in Jul 2017.

Chart VB-1, Japan, Unemployment Rate, Seasonally Adjusted

Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/roudou/results/month/index.htm

During the “lost decade” of the 1990s from 1991 to 2002 (Pelaez and Pelaez, The Global Recession Risk (2007), 82-3), Japan’s GDP grew at the average yearly rate of 1.0 percent, the CPI at 0.1 percent and the implicit deflator at minus 0.8 percent. Japan’s growth rate from the mid-1970s to 1992 was 4 percent (Ito 2004). Table VB-3 provides Japan’s rates of unemployment, participation in labor force and employment for selected years from 1953 to 1985 and yearly from 1990 to 2016. The rate of unemployment jumped from 2.1 percent in 1991 to 5.4 percent in 2002, which was a year of global economic weakness. The participation rate dropped from 64.0 percent in 1992 to 61.2 percent in 2002 and the employment rate fell from 62.6 percent in 1992 to 57.9 percent in 2002. The rate of unemployment rose from 3.9 percent in 2007 to 5.1 percent in 2010, falling to 4.6 percent in 2011, 4.3 percent in 2012 and 3.6 percent in 2014. The rate of unemployment fell to 3.4 percent in 2015 and 3.1 percent in 2016. The participation rate fell from 60.4 percent in 2007 to 59.6 percent in 2010, falling to 59.3 percent in 2011 and 59.1 in 2012 and increasing to 59.4 percent in 2014. The participation rate increased to 59.6 in 2015 and 60.0 in 2016. The employment rate fell from 58.1 in percent in 2007 to 56.6 percent in 2010 and 56.5 percent in 2011 and 2012, increasing to 57.3 percent in 2014. The employment rate increased to 57.6 in 2015 and 58.1 in 2016. The global recession adversely affected labor markets in advanced economies.

Table VB-3, Japan, Rates of Unemployment, Participation in Labor Force and Employment, %

	Participation Rate	Employment Rate	Unemployment Rate
1953	70.0	68.6	1.9
1960	69.2	68.0	1.7
1965	65.7	64.9	1.2
1970	65.4	64.6	1.1
1975	63.0	61.9	1.9
1980	63.3	62.0	2.0
1985	63.0	61.4	2.6
1990	63.3	61.9	2.1
1991	63.8	62.4	2.1
1992	64.0	62.6	2.2
1993	63.8	62.2	2.5
1994	63.6	61.8	2.9
1995	63.4	61.4	3.2
1996	63.5	61.4	3.4
1997	63.7	61.5	3.4
1998	63.3	60.7	4.1
1999	62.9	59.9	4.7
2000	62.4	59.5	4.7
2001	62.0	58.9	5.0
2002	61.2	57.9	5.4
2003	60.8	57.6	5.3
2004	60.4	57.6	4.7
2005	60.4	57.7	4.4
2006	60.4	57.9	4.1
2007	60.4	58.1	3.9
2008	60.2	57.8	4.0
2009	59.9	56.9	5.1
2010	59.6	56.6	5.1
2011	59.3	56.5	4.6
2012	59.1	56.5	4.3
2013	59.3	56.9	4.0
2014	59.4	57.3	3.6
2015	59.6	57.6	3.4
2016	60.0	58.1	3.1

Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/roudou/results/month/index.htm

VC China. China estimates an index of nonmanufacturing purchasing managers based on a sample of 1200 nonmanufacturing enterprises across the country (http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm). Table CIPMNM provides this index and components. The total index increased from 55.7 in Jan 2011 to 58.0 in Mar 2012, decreasing to 53.9 in Aug 2013. The index decreased from 56.0 in Nov 2013 to 54.6 in Dec 2013, easing to 53.4 in Jan 2014. The index moved to 54.5 in May 2017. 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 May 2017.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Jul 2017	54.5	51.1	53.1	50.9	61.1
Jun	54.9	51.4	51.2	49.3	61.1
May	54.5	50.9	51.1	48.8	60.2
Apr	54.0	50.5	51.7	50.2	59.7
Mar	55.1	51.9	52.3	49.7	61.3
Feb	54.2	51.2	53.7	51.4	62.4
Jan	54.6	51.3	55.1	51.0	58.9
Dec 2016	54.5	52.1	56.2	51.9	59.5
Nov	54.7	51.8	53.5	51.4	60.7
Oct	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 54.9 in Jun 2017.

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 May 2017. 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 52.3 in May 2017.

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

	IPM	PI	NOI	INV	EMP	SDEL
2017
Jul	51.4	53.5	52.8	48.5	49.2	50.1
Jun	51.7	54.4	53.1	48.6	49.0	49.9
May	51.2	53.4	52.3	48.5	49.4	50.2
Apr	51.2	53.8	52.3	48.3	49.2	50.5
Mar	51.8	54.2	53.3	48.3	50.0	50.3
Feb	51.6	53.7	53.0	48.6	49.7	50.5
Jan	51.3	53.1	52.8	48.0	49.2	49.8
2016
Dec	51.4	53.3	53.2	48.0	48.9	50.0
Nov	51.7	53.9	53.2	48.4	49.2	49.7
Oct	51.2	53.3	52.8	48.1	48.8	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 51.7 in Jun 2017.

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 IIQ2017 relative to the same period in 2016 was 6.9 percent and cumulative growth to IIQ2017 was 6.9 percent, as shown in Table VC-GDP. Secondary industry accounts for 40.1 percent of cumulative GDP in IIQ2017. In cumulative IIQ2017, industry accounts for 34.4 percent of GDP and construction for 5.9 percent. Tertiary industry accounts for 54.1 percent of cumulative GDP in IIQ2017 and primary industry for 5.8 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-GDP provides quarter-on-quarter growth rates of GDP and their annual equivalent. China’s GDP growth decelerated significantly from annual equivalent 10.0 percent in IQ2011 to 6.1 percent in IVQ2011 and 7.4 percent in IQ2012, rebounding to 8.7 percent in IIQ2012, 7.8 percent in IIIQ2012 and 8.2 percent in IVQ2012. Annual equivalent growth in IQ2013 eased to 7.4 percent and to 7.0 percent in IIQ2013, rebounding to 9.1 percent in IIIQ2013. Annual equivalent growth was 7.0 percent in IVQ2013, decreasing to 6.1 percent in IQ2014 and increasing to 7.4 percent in IIQ2014. Annual equivalent growth stabilized at 7.4 percent in IIIQ2014 and 7.8 percent in IVQ2014. Growth increased to annual equivalent 8.2 percent in IQ2015, decreasing to 7.0 percent in IIQ2015 and 7.4 percent in IIIQ2015. Growth slowed to 6.1 percent in annual equivalent in IVQ2015 and 5.3 percent in IQ2016. Growth increased to annual equivalent 7.8 percent in IIQ2016 and 7.4 percent in IIIQ2016, decreasing to 7.0 percent in IVQ2016. Growth decelerated to annual equivalent 5.3 percent in IQ2017, accelerating to 7.0 percent in IIQ2017.

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

Cumulative GDP IIQ2017	Value Current CNY Billion IIQ2017	Value Current CNY Billion IQ2017 to IIQ2017	IIQ2017 Year-on-Year Constant Prices ∆%	Cumulative to IIQ2017 ∆%
GDP	20,080.7	38,149.0	6.9	6.9
Primary Industry	1,333.3	2,198.7	3.8	3.5
Farming	1,388.8	2,229.9	3.9	3.6
Secondary Industry	8,298.3	15,298.7	6.4	6.4
Industry	6,932.4	13,124.4	6.6	6.5
Construction	1,396.6	2,232.6	5.4	5.3
Tertiary Industry	10,449.1	20,651.6	7.6	7.7
Transport, Storage, Post	936.9	1,747.5	9.6	9.2
Wholesale, Retail Trades	1,858.7	3,638.3	7.1	7.3
Accommodation and Restaurants	331.6	672.5	7.0	7.2
Finance	1,632.8	3,354.2	3.2	3.8
Real Estate	1,325.9	2,565.2	6.2	6.9
Other	3,035.4	6,071.4	7.2	7.0
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter		∆% Annual Equivalent	∆% Year-on-Year
2017
IIQ2017	1.7		7.0	6.9
IQ2017	1.3		5.3	6.9
2016
IVQ2016	1.7		7.0	6.8
IIIQ2016	1.8		7.4	6.7
IIQ2016	1.9		7.8	6.7
IQ2016	1.3		5.3	6.7
2015
IVQ2015	1.5		6.1	6.8
IIIQ2015	1.8		7.4	6.9
IIQ2015	1.7		7.0	7.0
IQ2015	2.0		8.2	7.0
2014
IVQ2014	1.9		7.8	7.2
IIIQ2014	1.8		7.4	7.1
IIQ2014	1.8		7.4	7.5
IQ2014	1.5		6.1	7.4
2013
IVQ2013	1.7		7.0	7.7
IIIQ2013	2.2		9.1	7.9
IIQ2013	1.7		7.0	7.6
IQ2013	1.8		7.4	7.9
2012
IVQ2012	2.0		8.2	8.1
IIIQ2012	1.9		7.8	7.5
IIQ2012	2.1		8.7	7.6
IQ2012	1.8		7.4	8.1
2011
IVQ2011	1.5		6.1	8.8
IIIQ2011	1.9		7.8	9.4
IIQ2011	2.4		10.0	10.0
IQ2011	2.4		10.0	10.2

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

Growth of China’s GDP in IIQ2017 relative to the same period in 2017 was 6.9 percent and cumulative growth to IIQ2017 was 6.9 percent, as shown in Table VC-GDP. Secondary industry accounts for 40.1 percent of cumulative GDP in IIQ2017. In cumulative IIQ2017, industry accounts for 34.4 percent of GDP and construction for 5.9 percent. Tertiary industry accounts for 54.1 percent of cumulative GDP in IIQ2017 and primary industry for 5.8 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 1.7 percent relative to IIIQ2013, which is equivalent to 7.0 percent per year. GDP grew 7.4 percent in IQ2014 relative to a year earlier and 1.5 percent in IQ2014 that is equivalent to 6.1 percent per year. 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 1.9 percent in IVQ2014, which is 7.8 percent in annual equivalent and 7.2 percent relative to a year earlier. In IQ2015, GDP grew 2.0 percent, which is equivalent to 8.2 in a year and 7.0 percent relative to a year earlier. GDP grew 1.7 percent in IIQ2015, which is equivalent to 7.0 percent in a year, and grew 7.0 percent relative to a year earlier. GDP grew at 1.8 percent in IIIQ2015, which is equivalent to 7.4 percent in a year, and grew 6.9 percent relative to a year earlier. GDP grew at 1.5 percent in IVQ2015, which is equivalent to 6.1 percent in a year and increased 6.8 percent relative to a year earlier. In IQ2016, GDP grew at 1.3 percent, which is equivalent to 5.3 percent in a year, 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. In IVQ2016, GDP grew at 1.7 percent, equivalent to 7.0 percent in a year, and increased 6.8 percent relative to a year earlier. GDP grew 6.9 percent in IQ2017 relative to a year earlier and increased at 1.3 percent, which is 5.3 percent in annual equivalent. In IIQ2017, GDP grew at 1.7 percent, which is annual equivalent to 7.0 percent, and increased 6.9 percent relative to a year earlier.

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

	IQ2017	IIQ2017
GDP	6.9	6.9
Primary Industry	3.0	3.8
Secondary Industry	6.4	6.4
Tertiary Industry	7.7	7.6
GDP ∆% Relative to a Prior Quarter	1.3	1.7

	IQ2015	IIQQ2015	IIIQ2015	IVQ2015	IQ2016	IIQ2016	IIIQ2016	IVQ2016
GDP	7.0	7.0	6.9	6.8	6.7	6.7	6.7	6.8
Primary Industry	3.2	3.5	3.8	4.1	2.9	3.1	3.5	2.9
Secondary Industry	6.4	6.1	6.0	6.1	5.8	6.3	6.1	6.1
Tertiary Industry	7.9	8.4	8.4	8.2	7.6	7.5	7.6	8.3
GDP ∆% Relative to a Prior Quarter	2.0	1.7	1.8	1.5	1.3	1.9	1.8	1.7
	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	1.8	1.7	2.2	1.7	1.5	1.8	1.8	1.9
	IQ 2011	IIQ 2011	IIIQ 2011	IVQ 2011	IQ 2012	IIQ 2012	IIIQ 2012	IVQ 2012
GDP	10.2	10.0	9.4	8.8	8.1	7.6	7.5	8.1
Primary Industry	3.5	3.2	3.8	4.5	3.8	4.3	4.2	4.5
Secondary Industry	11.1	11.0	10.8	10.6	9.1	8.3	8.1	8.1
Tertiary Industry	9.1	9.2	9.0	8.9	7.5	7.7	7.9	8.1
GDP ∆% Relative to a Prior Quarter	2.4	2.4	1.9	1.5	1.8	2.1	1.9	2.0
	IQ 2010	IIQ 2010	IIIQ 2010	IVQ 2010
GDP	12.1	11.2	10.7	12.1
Primary Industry	3.8	3.6	4.0	3.8
Secondary Industry	14.5	13.3	12.6	14.5
Tertiary Industry	10.5	9.9	9.7	10.5

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

Growth of China’s GDP in IVQ2016 relative to the same period in 2016 was 6.8 percent and

Chart VC-GDP of the National Bureau of Statistics of China provides annual value and growth rates of GDP. China’s GDP growth in 2016 is still high at 6.7 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 $38430 billion in 2013 driven by high growth of China’s trade surplus, decreasing to $30105 billion in 2016.

Chart VC-FXR, China, Foreign Exchange Reserves, 2012-2016

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, 2012-2016, $100 Million US Dollars

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

Chart VC-PCDI provides the level and growth rates of per capita disposable income in China.

Chart VC-PCDI, China, Level and Growth Rates of Per Capita Disposable Income

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, increased from 51.1 in Jun to 51.9 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/e205c2b485654fe0b7d59b2655ce168b). Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, finds slowing services (https://www.markiteconomics.com/Survey/PressRelease.mvc/e205c2b485654fe0b7d59b2655ce168b). The Caixin General Manufacturing PMI^™ increased to 51.1 in Jul from 50.4 in Jun, indicating improving growth conditions in manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/6d85656c03274a8884edbe3a4205eaf5). Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, finds consistent conditions (https://www.markiteconomics.com/Survey/PressRelease.mvc/6d85656c03274a8884edbe3a4205eaf5). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Jul 12-month ∆%: 5.5 Jul month ∆%: 0.2 Blog 8/20/17
Consumer Price Index	Jul 12-month ∆%: 1.4 Jul month ∆%: 0.1 Blog 8/13/17
Value Added of Industry	Jul month ∆%: 0.41 Jan-Jul 2017/Jan-Jul 2016 ∆%: 6.8 Earlier Data Blog 4/19/15
GDP Growth Rate	Year IIQ2017 ∆%: 6.9 II Quarter 2017 ∆%: 1.7 Quarter IIQ2017 AE ∆%: 7.0 Blog 7/23/17
Investment in Fixed Assets	Total Jan-Jul 2017 ∆%: 8.3 Real estate development: 7.9 Earlier Data: Blog 4/19/15
Retail Sales	Jun month ∆%: 0.73 Jan-Jul 2017 ∆%: 10.4 Earlier Data: Blog 4/19/15
Trade Balance	Jun balance $46.74 billion Exports 12M ∆% 7.2 Imports 12M ∆% 11.0 2016 Exports ∆% 11.3 2016 Imports ∆% 17.3 Cumulative Jun 2017: $231.7 billion Cumulative Jun 2016: $287.8 Earlier Data: Blog 4/19/15

Links to blog comments in Table CNY: 8/20/17 https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html

8/13/17 https://cmpassocregulationblog.blogspot.com/2017/08/recovery-without-hiring-ten-million_40.html

7/23/17 https://cmpassocregulationblog.blogspot.com/2017/07/dollar-devaluation-and-valuation-of.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 8.6 percent from IIIQ2009 to IVQ2016 at the annual equivalent rate of 1.1 percent. The GDP of the euro area (19 countries) is higher by 2.4 percent in IVQ2016 relative to the pre-recession peak in IQ2008, growing at annual equivalent rate of 0.3 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 1.2 percent in 2014 and grew 2.0 percent in 2015. The GDP of the euro area grew 1.7 percent in 2016.

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	1.2
2015	0.0	10.9	2.0
2016	0.2	10.0	1.7

http://ec.europa.eu/eurostat

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

The GDP of the euro area in 2015 in current US dollars in the dataset of the World Economic Outlook (WEO) of the International Monetary Fund (IMF) is $11,990.9 billion or 16.3 percent of world GDP of $73,598.8 billion (http://www.imf.org/external/pubs/ft/weo/2016/02/weodata/index.aspx). The sum of the GDP of France $2420.2 billion with the GDP of Germany of $3365.3 billion, Italy of $1815.8 billion and Spain $1199.7 billion is $8,801.0 billion or 73.4 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 2016. 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
2016	1.7	1.9	1.2	0.9	3.2
2015	2.0	1.7	1.3	0.8	3.2
2014	1.2	1.6	0.6	0.1	1.4
2013	-0.3	0.5	0.6	-1.7	-1.7
2012	-0.9	0.5	0.2	-2.8	-2.9
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 1999-2016	1.2	1.3	1.3	0.3	1.7
Average 1999-2007	2.2	1.6	2.1	1.5	3.8
Average 2016-2007	0.3	1.0	0.6	-7.0*	-0.5*
1997	2.6	1.8	2.3	1.8	3.7
1996	1.6	0.8	1.4	1.3	2.7

Note: Absolute percentage change

Source: EUROSTAT

http://ec.europa.eu/eurostat

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

The Flash Eurozone PMI Composite Output Index of the HIS Markit Flash Eurozone PMI^®, combining activity in manufacturing and services, increased from 55.7 in Jul to 55.8 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/64fe24c209df42f59e422ef2f6a6d35e). Andrew Harker, Associate Director at IHS Markit, finds that the Markit Flash Eurozone PMI index suggests GDP growth about 0.6 percent quarterly (https://www.markiteconomics.com/Survey/PressRelease.mvc/64fe24c209df42f59e422ef2f6a6d35e). The IHS Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP decreased from 56.3 in Jun to 55.7 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/a1527aaa2afc4dcaa5b6198797a4006d). Chris Williamson, Chief Business Economist at IHS Markit, finds potential for growth of about 0.5 percent in quarterly GDP (https://www.markiteconomics.com/Survey/PressRelease.mvc/c8ecb5c434b442ae9589cb69b4f4672d). The IHS Markit Eurozone Services Business Activity Index did not change from 55.4 in Jun to 55.4 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/a1527aaa2afc4dcaa5b6198797a4006d). The IHS Markit Eurozone Manufacturing PMI^® decreased from 57.4 in Jun to 56.6 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/31851d9bffbd49f5baabe90d4d74fbde). New export orders increased. Chris Williamson, Chief Business Economist at IHS Markit, finds strong industrial growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/31851d9bffbd49f5baabe90d4d74fbde). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IIQ2017 ∆% 0.6; IIQ2017/IIQ2016 ∆% 2.2 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 12/11/16 02/26/17 3/12/17 5/21/17 6/11/17 8/20/17
Unemployment	Jul 2017: 9.1 % unemployment rate; Jul 2017: 14.860 million unemployed Blog 9/3/17
HICP	Jul month ∆%: -0.5 12 months Apr ∆%: 1.3 Blog 8/20//17
Producer Prices	Euro Zone industrial producer prices Jun ∆%: -0.1 Jun 12-month ∆%: 2.5 Blog 8/13/17
Industrial Production	Jun Month ∆%: -0.6; 12 months ∆%: 2.6 Earlier Data: Blog 4/19/15
Retail Sales	Jun month ∆%: 0.5 Jun 12 months ∆%: 3.1 Earlier Data: Blog 3/15/15
Confidence and Economic Sentiment Indicator	Sentiment 111.9 Aug 2017 Consumer minus -1.5 Aug 2017 Earlier Data: Blog 4/5/15
Trade	Jan-Jun 2017/Jan-Jun 2016 Exports ∆%: 7.9 Imports ∆%: 11.6 Jun 2017 12-month Exports ∆% 3.9 Imports ∆% 6.2 Earlier Data: Blog 4/19/15

Links to blog comments in Table EUR: 8/20/17 https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html

8/13/17 https://cmpassocregulationblog.blogspot.com/2017/08/recovery-without-hiring-ten-million_40.html

8/6/17 https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html

6/11/17 https://cmpassocregulationblog.blogspot.com/2017/06/flattening-us-treasury-yield-curve.html

5/21/17 https://cmpassocregulationblog.blogspot.com/2017/05/dollar-devaluation-world-inflation.html

3/12/17 https://cmpassocregulationblog.blogspot.com/2017/03/increasing-interest-rates-twenty-four.html

2/26/17 https://cmpassocregulationblog.blogspot.com/2017/02/united-states-commercial-banks-assets.html

12/11/16 http://cmpassocregulationblog.blogspot.com/2016/12/rising-values-of-risk-financial-assets.html

11/20/16 http://cmpassocregulationblog.blogspot.com/2016/11/interest-rate-increase-could-well.html

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

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

EUROSTAT estimates the rate of unemployment in the euro area at 9.1 percent in

Jul 2017, as shown in Table VD-1. The number of unemployed in Jul 2017 was 14.860 million, which was 1.309 million lower than 16.169 million in Jun 2016. The rate of unemployment fell from 10.0 percent in Jul 2016 to 9.1 percent in Jul 2017.

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

	Unemployment Rate %	Number Unemployed Millions
Jul 2017	9.1	14.860
Jun	9.1	14.787
May	9.2	14.915
Apr	9.2	14.985
Mar	9.4	15,249
Feb	9.5	15,350
Jan	9.6	15,540
Dec 2016	9.6	15.633
Nov	9.7	15.815
Oct	9.8	15.817
Sep	9.9	15.983
Aug	9.9	16.064
Jul	10.0	16.169
Jun	10.1	16.386
May	10.1	16.432
Apr	10.2	16.561
Mar	10.2	16.516
Feb	10.3	16.679
Jan	10.3	16.686
Dec 2015	10.4	16.826
Nov	10.5	16.859
Oct	10.6	17.038
Sep	10.6	17.044
Aug	10.7	17.156
Jul	10.8	17.306
Jun	11.0	17.658
May	11.0	17.731
Apr	11.1	17.790
Mar	11.2	17.934
Feb	11.2	17.936
Jan	11.3	18.071
Dec 2014	11.3	18.202
Nov	11.5	18.487
Oct	11.5	18.511
Sep	11.5	18.490
Aug	11.5	18.419
Jul	11.6	18.594
Jun	11.5	18.483
May	11.7	18.701
Apr	11.7	18.762
Mar	11.8	18.911
Feb	11.9	19.020
Jan	11.9	19.067
Dec 2013	11.9	19.000
Nov	11.9	19.083
Oct	11.9	19.132
Sep	12.0	19.253
Aug	12.0	19.273
Jul	12.0	19.304
Jun	12.0	19.289
May	12.1	19.301
Apr	12.1	19.343
Mar	12.0	19.284
Feb	12.1	19.302
Jan	12.0	19.241
Dec 2012	11.9	19.002
Nov	11.8	18.910
Oct	11.7	18.797
Sep	11.6	18.554
Aug	11.5	18.401
Jul	11.5	18.338
Jun	11.4	18.224
May	11.3	18.055
Apr	11.2	17.886
Mar	11.1	17.689
Feb	10.9	17.418
Jan	10.8	17.166
Dec 2011	10.7	17.065
Nov	10.6	16.869
Oct	10.4	16.613
Sep	10.4	16.462
Aug	10.2	16.222
Jul	10.1	16.079
Jun	10.0	15.902
May	10.0	15.855
Apr	10.0	15.782
Mar	10.0	15.855
Feb	10.0	15.869
Jan	10.1	15.932
Dec 2010	10.1	16.006

Source: EUROSTAT

http://ec.europa.eu/eurostat

Table VD-2 shows the disparity in rates of unemployment in the euro area with 9.1 percent for the region as a whole and 14.860 million unemployed but 3.7 percent for Germany and 1.588 million unemployed. At the other extreme is Spain with rate of unemployment of 17.1 percent and 3.878 million unemployed. The rate of unemployment of the European Union in Jul 2017 is 7.7 percent with 18.916 million unemployed.

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

Jul 2017	Unemployment Rate %	Unemployed Millions
Euro Zone	9.1	14.860
Germany	3.7	1.587
France	9.8	2.912
Netherlands	4.8	0.436
Finland	8.8	0.236
Portugal	9.1	0.470
Ireland	6.4	0.141
Italy	11.3	2.950
Greece	21.7*	1.035*
Spain	17.1	3.878
Belgium**	7.6	0.375
European Union	7.7	18.916

*May 2017 **Apr

Source: EUROSTAT

http://ec.europa.eu/eurostat

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

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

Source: EUROSTAT

http://ec.europa.eu/eurostat

VE Germany. Table VE-DE provides yearly growth rates of the German economy from 1971 to 2016, 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 1.9 percent in 2014. The German economy grew at 1.7 percent in 2015 and grew at 1.9 percent in 2016.

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 ∆% 1991-2016	1.4
Average ∆% 1991-1999	1.5
Average ∆% 2000-2007	1.4
Average ∆% 2003-2007	2.2
Average ∆% 2007-2016	1.1
Average ∆% 2009-2016	2.0
2016	1.9	1.9
2015	1.7	1.5
2014	1.9	1.9
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	1.8
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

https://www.destatis.de/EN/PressServices/Press/pr/2016/11/PE16_413_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2017/02/PE17_050_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2017/02/PE17_062_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2017/05/PE17_155_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2017/05/PE17_169_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2017/08/PE17_277_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2017/08/PE17_294_811.html

The Flash Germany Composite Output Index of the IHS Markit Flash Germany PMI^®, combining manufacturing and services, increased from 54.7 in Jul to 55.7 in Aug. The index of manufacturing output reached 60.0 in Aug, increasing from 57.7 in Jul, while the index of services increased to 53.4 in Aug from 53.1 in Jul. The overall Flash Germany Manufacturing PMI^® increased from 58.1 in Jul to 59.4 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/c765241eb54e46feb66dc4a3742a3d5b). New orders and new export orders in manufacturing increased. Trevor Balchin, Senior Economist at IHS Markit, finds improving growth of the private sector of Germany (https://www.markiteconomics.com/Survey/PressRelease.mvc/c765241eb54e46feb66dc4a3742a3d5b). The IHS Markit Germany Composite Output Index of the IHS Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, decreased from 56.4 in Jun to 54.7 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/25556c0b47444bb5b84afb8880a27800). Trevor Balchin, Director, Economics, at IHS Markit, finds strong growth of Germany (https://www.markiteconomics.com/Survey/PressRelease.mvc/25556c0b47444bb5b84afb8880a27800). The Germany Services Business Activity Index decreased from 54.0 in Jun to 53.1 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/25556c0b47444bb5b84afb8880a27800). The IHS Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, decreased from 59.6 in Jun to 58.1 in

Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/7cf9dee4ee35426d966f9c325d8e4429). New export orders increased. Trevor Balchin, Senior Economist at IHS Markit, finds continuing growth conditions (https://www.markiteconomics.com/Survey/PressRelease.mvc/7cf9dee4ee35426d966f9c325d8e4429). Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IIQ2017 0.6 ∆%; IIQ2017/IIQ2016 CA ∆% 2.1 2016/2015: 1.9% GDP ∆% 1970-2016 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 11/27/16 2/19/17 02/26/17 05/14/17 5/28/17 8/20/17 8/27/17
Consumer Price Index	Jul month NSA ∆%: 0.4 Jul 12-month NSA ∆%: 1.7 Blog 8/13/17
Producer Price Index	Jul month ∆%: 0.2 NSA, 0.2 CSA 12-month NSA ∆%: 2.3 Blog 8/20/17
Industrial Production	MFG Jun month CSA ∆%: minus 1.4 12-month NSA: -4.1 Earlier Data: Blog 4/12/15
Machine Orders	MFG Jun month ∆%: 1.0 Jun 12-month ∆%: 0.1 Earlier Data: Blog 4/12/15
Retail Sales	Jul Month ∆% -1.2 Jun 1.3 12-Month Jul % 2.7 Jun 2.6 Earlier Data: Blog 4/5/15
Employment Report	Unemployment Rate SA Jul 3.7% Blog 9/3/17
Trade Balance	Exports Jun 12-month NSA ∆%: 0.7 Imports Jun 12 months NSA ∆%: 3.6 Exports Jun month CSA ∆%: -2.8; Imports Jun month CSA -4.5 Earlier Data: Blog 4/12/15

Links to blog comments in Table DE: 8/27/17 https://cmpassocregulationblog.blogspot.com/2017/08/dollar-devaluation-and-interest-rate.html

8/20/17 https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html

8/13/17 https://cmpassocregulationblog.blogspot.com/2017/08/recovery-without-hiring-ten-million_40.html

8/6/17 https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html

5/28/17 https://cmpassocregulationblog.blogspot.com/2017/05/mediocre-cyclical-united-states.html

5/14/17 https://cmpassocregulationblog.blogspot.com/2017/05/recovery-without-hiring-ten-million_14.html

2/26/17 https://cmpassocregulationblog.blogspot.com/2017/02/united-states-commercial-banks-assets.html

02/19/17 https://cmpassocregulationblog.blogspot.com/2017/02/world-inflation-waves-united-states.html

11/27/16 http://cmpassocregulationblog.blogspot.com/2016/11/dollar-revaluation-rising-yields-and.html

11/20/16 http://cmpassocregulationblog.blogspot.com/2016/11/interest-rate-increase-could-well.html

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

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

Germany’s labor market continues to show strength not found in most of the advanced economies, as shown in Table VE-1A. The number unemployed, not seasonally adjusted, decreased from 1.81 million in Jul 2016 to 1.55 million in Jul 2017, or 14.4 percent, while the unemployment rate decreased from 4.2 percent in Jul 2016 to 3.6 percent in Jul 2017. The number of persons in employment, not seasonally adjusted, increased from 40.97 million in Jul 2016 to 41.16 million in Jul 2017, or 0.5 percent, while the employment rate increased from 66.2 percent in Jul 2016 to 66.5 percent in Jul 2017. The number unemployed, seasonally adjusted, decreased 1.2 percent from 1.61 million in Jun 2017 to 1.59 million in Jul 2017, while the unemployment rate decreased change from 3.8 percent in Jun 2017 to 3.7 percent in Jul 2017. The number of persons in employment, seasonally adjusted, increased from 41.25 million in Jun 2017 to 41.32 million in Jul 2017, or 0.2 percent. The employment rate seasonally adjusted increased from 66.6 in Jun 2017 to 66.8 in Jul 2017.

Table VE-1A, Germany, Unemployment Labor Force Survey

	Jul 2017	Jun 2017	Jul 2016
NSA
Number Unemployed Millions	1.55 ∆% Jul 2017 /Jun 2017: -0.6 ∆% Jul 2017/Jul 2016: -14.4	1.56	1.81
% Rate Unemployed	3.6	3.6	4.2
Persons in Employment Millions	41.16 ∆% Jul 2017/Jun 2017: -0.6 ∆% Jul 2017/Jul 2016: 0.5	41.39	40.97
Employment Rate	66.5	66.9	66.2
SA
Number Unemployed Millions	1.59 ∆% Jul 2017/Jun 2017: -1.2 ∆% Jul 2017/Jul 2016: –11.7	1.61	1.80
% Rate Unemployed	3.7	3.8	4.2
Persons in Employment Millions	41.32 ∆% Jul 2017/Jun 2017: 0.2 ∆% Jul 2017/Jul 2016: 0.6	41.25	41.09
Employment Rate	66.8	66.6	66.4

NSA: not seasonally adjusted; SA: seasonally adjusted

Source: Statistisches Bundesamt Deutschland

https://www.destatis.de/EN/PressServices/Press/pr/2017/08/PE17_303_132.html

The unemployment rate in Germany as percent of the labor force in Table VE-2A stood at 6.5 percent in Sep, Oct and Nov 2012, increasing to 6.7 percent in Dec 2012, 7.4 percent in Jan 2013, 7.3 in Mar 2013 and 7.1 percent in Apr 2013. The unemployment rate fell to 6.8 percent in May 2013 and 6.6 percent in Jun 2013 and rose to 6.8 percent in Jul-Aug 2013. The rate fell to 6.6 percent in Sep 2013 and 6.5 percent in Oct 2013 and Nov 2013. The unemployment rate increased to 6.7 percent in Dec 2013 and 7.3 percent in Jan 2013. The unemployment rate reached 7.3 percent in Feb 2014 and 7.1 percent in Mar 2014. The unemployment rate fell to 6.8 percent in Apr 2014 and 6.6 percent in May 2014. The unemployment rate fell to 6.5 percent in Jun 2014, increasing to 6.6 percent in Jun 2014 and 6.7 percent in Aug 2014. The unemployment rate fell to 6.5 percent in Sep 2014 and 6.3 percent in Oct 2014 and Nov 2014. The unemployment rate increased to 6.4 percent in Dec 2014 and 7.0 percent in Jan 2015, falling to 6.9 percent in Feb 2015 and 6.5 percent in Apr 2015. The unemployment rate fell to 6.3 percent in May 2015 and 6.2 percent in Jun 2015. The unemployment rate increased to 6.3 percent in Jul 2015 and 6.4 percent in Aug 2015. The unemployment rate fell from 6.4 percent in Aug 2015 to 6.1 percent in Dec 2015, increasing to 6.7 percent in Jan 2016. The unemployment rate fell to 6.6 percent in Feb 2016 and 6.5 percent in Mar 2016. The unemployment rate fell to 6.3 percent in Apr 2016, decreasing to 6.0 percent in May 2016. The unemployment rate fell to 5.9 percent in Jun 2016, increasing to 6.0 percent in Jul 2016. The unemployment rate increased to 6.1 percent in Aug 2016, falling to 5.9 percent in Aug 2016 and 5.8 percent in Sep 2016. The rate decreased to 5.7 percent in Nov 2016, increasing to 5.8 in Dec 2016 and 6.3 percent in Jan 2017. The rate stabilized at 6.3 percent in Feb 2017. The unemployment rate fell to 6.0 percent in Mar 2017 and fell to 5.8 percent in Apr 2017. The unemployment rate fell to 5.6 percent in May 2017 and fell to 5.5 percent in Jun 2017. The unemployment rate increased to 5.6 percent in Jul 2017, increasing to 5.7 percent in Aug 2017. The rate is much lower than 11.1 percent in 2005 and 9.6 percent in 2006.

Table VE-2A, Germany, Unemployment Rate in Percent of Labor Force

Aug 2017	5.7
Jul	5.6
Jun	5.5
May	5.6
Apr	5.8
Mar	6.0
Feb	6.3
Jan	6.3
Dec 2016	5.8
Nov	5.7
Oct	5.8
Sep	5.9
Aug	6.1
Jul	6.0
Jun	5.9
May	6.0
Apr	6.3
Mar	6.5
Feb	6.6
Jan	6.7
Dec 2015	6.1
Nov	6.0
Oct	6.0
Sep	6.2
Aug	6.4
Jul	6.3
Jun	6.2
May	6.3
Apr	6.5
Mar	6.8
Feb	6.9
Jan	7.0
Dec 2014	6.4
Nov	6.3
Oct	6.3
Sep	6.5
Aug	6.7
Jul	6.6
Jun	6.5
May	6.6
Apr	6.8
Mar	7.1
Feb	7.3
Jan	7.3
Dec 2013	6.7
Nov	6.5
Oct	6.5
Sep	6.6
Aug	6.8
Jul	6.8
Jun	6.6
May	6.8
Apr	7.1
Mar	7.3
Feb	7.4
Jan	7.4
Dec 2012	6.7
Nov	6.5
Oct	6.5
Sep	6.5
Aug	6.8
Jul	6.8
Jun	6.6
May	6.7
Apr	7.0
Mar	7.2
Feb	7.4
Jan	7.3
Dec 2011	6.6
Nov	6.4
Oct	6.5
Sep	6.6
Aug	7.0
Jul	7.0
Jun	6.9
May	7.0
Apr	7.3
Mar	7.6
Feb	7.9
Jan	7.9
Dec 2010	7.1
Dec 2009	7.8
Dec 2008	7.4
Dec 2007	8.1
Dec 2006	9.6
Dec 2005	11.1

Source: Statistisches Bundesamt Deutschland

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

Chart VE-1A of Statistisches Bundesamt Deutschland, or Federal Statistical Office of Germany, shows the long-term decline of the rate of unemployment in Germany from more than 12 percent in early 2005 to 6.6 percent in Dec 2011, increasing to 6.7 percent in Dec 2012, 6.8 percent in Apr 2013 and 6.6 percent in May 2013. The unemployment rate rose slightly to 6.8 percent in Aug 2013, falling to 6.6 percent in Sep 2013 and 6.5 percent in Oct 2013. The rate remained at 6.5 percent in Nov 2013, increasing to 6.7 percent in Dec 2013 and 7.3 in Jan 2014. The rate remained at 7.3 percent in Feb 2014, declining to 7.1 percent in Mar 2014. The rate fell to 6.8 percent in Apr 2014, 6.6 percent in May 2014 and 6.5 percent in Jun 2014. The rate increased to 6.6 percent in Jul 2014 and 6.7 percent in Aug 2014, falling to 6.5 percent in Sep 2014. The rate fell to 6.3 percent in Oct 2014 and 6.3 percent in Nov 2014, increasing to 6.4 percent in Dec 2014. The rate increased to 7.0 percent in Jan 2015, falling to 6.9 percent in Feb 2015 and 6.8 percent in Mar 2015. The unemployment rate fell to 6.5 percent in Apr 2015 and 6.3 percent in May 2015. The unemployment rate fell to 6.2 percent in Jun 2015, increasing to 6.3 percent in Jul 2015 and 6.4 percent in Aug 2015. The unemployment rate fell to 6.2 percent in Sep 2015 and 6.0 percent in Oct 2015. The unemployment rate stabilized at 6.0 percent in Nov 2015, increasing to 6.1 percent in Dec 2015. The unemployment rate increased to 6.7 percent in Jan 2016 and fell to 6.6 percent in Feb 2016 and 6.5 percent in Mar 2016. The unemployment rate fell to 6.3 percent in Apr 2016, decreasing to 6.0 percent in May 2016 and 5.9 percent in Jun 2016. The unemployment rate increased to 6.0 percent in Jul 2016 and 6.1 percent in Aug 2016. The unemployment rate fell to 5.9 percent in Sep 2016, 5.8 percent in Oct 2016 and 5.7 percent in Nov 2016. The unemployment rate increased to 5.8 percent in Dec 2016 and 6.3 percent in Jan and Feb 2017. The unemployment rate decreased to 6.0 percent in Mar 2017 and decreased to 5.8 percent in Apr 2017. The unemployment rate fell to 5.6 percent in May 2017 and fell to 5.5 percent in Jun 2017, increasing to 5.6 percent in Jul 2017. The rate of unemployment increased to 5.7 percent in Aug 2017.

Chart VE-1A, Germany, Unemployment Rate, Unadjusted, Percent

Source: Statistisches Bundesamt Deutschland

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

VF France. Table VF-FR provides growth rates of GDP of France with the estimates of Institut National de la Statistique et des Études Économiques (INSEE). The long-term rate of GDP growth of France from IVQ1949 to IQ2017 is quite high at 3.1 percent. France’s growth rates were quite high in the four decades of the 1950s, 1960, 1970s and 1980s with an average growth rate of 4.0 percent compounding the average rates in the decades and discounting to one decade. The growth impulse diminished with 2.0 percent in the 1990s and 1.8 percent from 2000 to 2007. The average growth rate from 2000 to 2016, 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, 1949-2016

Period	Average ∆%
1949-2017	3.1
2007-2017***	0.6
2007-2016**	0.5
2007-2015*	0.5
2007-2014	0.4
2000-2016	1.1
2000-2015	1.1
2000-2014	1.1
2000-2007	1.8
1990-1999	2.0
1980-1989	2.6
1970-1979	3.7
1960-1969	5.7
1950-1959	4.2

*IVQ2007 to IVQ2015 **IVQ2007 to IVQ2016 ***IVQ2007 to IIQ2017

Source: Institut National de la Statistique et des Études Économiques

https://www.insee.fr/en/statistiques/3047950

http://www.bdm.insee.fr/bdm2/choixTheme?request_locale=en&code=10#arbo:montrerbranches=theme312

The IHS Markit Flash France Composite Output Index did not change from 55.6 in Jul to 55.6 in Aug (https://www.markiteconomics.com/Survey/PressRelease.mvc/6a069c8fb2cd4d2193c4d230f6adace7). Alex Gill, Economist at IHS Markit, finds expanding activity (https://www.markiteconomics.com/Survey/PressRelease.mvc/6a069c8fb2cd4d2193c4d230f6adace7). The IHS Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, decreased from 56.6 in Jun to 55.6 in Jul, indicating slower activity of the private sector (https://www.markiteconomics.com/Survey/PressRelease.mvc/b3495e134d5b48ab86e15d7e89ee622e). Alex Gill, Economist at IHS Markit that compiles the France Services PMI^®, finds continuing growth (https://www.markiteconomics.com/Survey/PressRelease.mvc/b3495e134d5b48ab86e15d7e89ee622e). The IHS Markit France Services Activity index decreased from 56.9 in Jun to 56.0 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/b3495e134d5b48ab86e15d7e89ee622e). The IHS Markit France Manufacturing Purchasing Managers’ Index^® increased to 54.9 in Jul from 54.8 in Jun (https://www.markiteconomics.com/Survey/PressRelease.mvc/710b64a1e17d49fe84104a05a37293da). Alex Gill, Economist at IHS Markit, finds improving manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/710b64a1e17d49fe84104a05a37293da). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Jul month ∆% -0.4 12 months ∆%: 0.7 8/13/17
PPI	Jul month ∆%: 0.1 Jun 12 months ∆%: 1.5 Blog 9/3/17
GDP Growth	IIQ2017/IQ2017 ∆%: 0.5 IIQ2017/IIQ2016 ∆%: 1.7 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 12/4/16 1/1/17 2/12/17 3/5/17 3/26/17 5/7/17 6/4/17 6/25/17 8/20/17 9/3/17
Industrial Production	Jun ∆%: Manufacturing -0.9 Quarter ∆%: 1.3 YOY 2.4 Earlier Data: Blog 4/12/15
Consumer Spending	Manufactured Goods Jul ∆%: 0.7 Jul 12-Month Manufactured Goods ∆%: 2.3 Earlier Data: Blog 4/5/15
Employment	Unemployment Rate: IIQ2017 9.2% Blog 8/20/17
Trade Balance	Jun Exports ∆%: month -2.8 12 months 5.3 Imports ∆%: month -2.0, 12 months 7.9 Earlier Data: Blog 4/12/15
Confidence Indicators	Historical average 100 Aug Mfg Business Climate 111 Earlier Data: Blog 3/29/15

Links to blog comments in Table FR: 8/20/17 https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html

8/13/17 https://cmpassocregulationblog.blogspot.com/2017/08/recovery-without-hiring-ten-million_40.html

7/30/17 https://cmpassocregulationblog.blogspot.com/2017/07/data-dependent-monetary-policy-with_30.html

6/25/17 https://cmpassocregulationblog.blogspot.com/2017/06/united-states-commercial-banks-united.html

6/4/17 https://cmpassocregulationblog.blogspot.com/2017/06/twenty-two-million-unemployed-or.html

5/7/17 https://cmpassocregulationblog.blogspot.com/2017/05/twenty-two-million-unemployed-or.html

3/26/17 https://cmpassocregulationblog.blogspot.com/2017/03/recovery-without-hiring-ten-million.html

3/5/17 https://cmpassocregulationblog.blogspot.com/2017/03/rising-valuations-of-risk-financial.html

2/12/17 https://cmpassocregulationblog.blogspot.com/2017/02/recovery-without-hiring-ten-million.html

1/1/17 http://cmpassocregulationblog.blogspot.com/2017/01/rules-versus-discretionary-authorities.html

12/4/16 http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Growth of GDP in a quarter relative to the prior quarter for France is in Table VF-1. GDP decreased 0.1 percent in IVQ2012 and changed 0.0 percent in IQ2013, rebounding with growth of 0.7 percent in IIQ2013. GDP changed 0.0 percent in IIIQ2013. GDP increased 0.4 percent in IVQ2013. GDP increased 0.1 percent in IQ2014. GDP increased 0.2 percent in IIQ2014. GDP increased 0.6 percent in IIIQ2014 and changed 0.0 percent in IVQ2014. GDP increased 0.4 percent in IQ2015 and changed 0.0 percent in IIQ2015. GDP increased 0.4 percent in IIIQ2015 and increased 0.3 percent in IVQ2015. GDP increased 0.6 percent in IQ2016. GDP decreased 0.1 percent in IIQ2016. GDP increased 0.2 percent in IIIQ2016 and increased 0.5 percent in IVQ2016. GDP increased 0.5 percent in IQ2017 and increased 0.5 percent in IIQ2017. The French economy grew 0.1 percent in IVQ2011, increasing 0.1 percent in IQ2012, contracting 0.1 percent in IIQ2012 and growing 0.1 percent in IIIQ2012. In the four quarters of 2012 and the first quarter of 2013, France’s GDP contracted in two quarters and stagnated in one quarter. Growth in the ten quarters of expansion from IIIQ2009 to IVQ2011 accumulated 4.5 percent at the annual equivalent rate of 1.8 percent. Recovery has been much weaker than the cumulative 2.5 percent in the four quarters of 2006. The GDP of France contracted 4.0 percent from the pre-recession peak in IQ2008 at €508,898 million SA-WDA (seasonally adjusted working day adjusted volumes chained at previous year prices) to the trough in IIQ2009 at €488,536 million SA-WDA. The GDP of France increased 5.7 percent from the pre-recession peak in IQ2008 at €508,898 million SA-WDA to €537,653 million SA-WDA in IIQ2017 at the annual equivalent rate of 0.6 percent. French GDP increased 10.1 percent from €488,536 million SA-WDA in IIQ2009 to €537,653 million SA-WDA in IIQ2017 at the annual equivalent rate of 1.2 percent. French GDP in IQ2017 is 10.4 percent below trend at average 1.8 percent from 2000 to 2007. Weak recoveries in advanced economies have prevented full utilization of labor, capital and productive resources.

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

	IQ	IIQ	IIIQ	IVQ
2017	0.5	0.5
2016	0.6	-0.1	0.2	0.5
2015	0.4	0.0	0.4	0.3
2014	0.1	0.2	0.6	0.0
2013	0.0	0.7	0.0	0.4
2012	0.1	-0.1	0.1	-0.1
2011	1.1	0.0	0.2	0.1
2010	0.4	0.6	0.6	0.6
2009	-1.6	-0.2	0.2	0.6
2008	0.4	-0.5	-0.3	-1.5
2007	0.8	0.7	0.4	0.3
2006	0.8	0.9	0.1	0.7
2005	0.3	0.2	0.5	0.7
2004	0.9	0.6	0.4	0.7
2003	0.2	-0.2	0.7	0.7
2002	0.4	0.4	0.4	0.0
2001	0.5	0.3	0.3	0.0
2000	1.0	0.9	0.7	0.8
1999	0.6	0.9	1.2	1.2

Source: Institut National de la Statistique et des Études Économiques

https://www.insee.fr/en/statistiques/3047950

http://www.bdm.insee.fr/bdm2/choixTheme?request_locale=en&code=10#arbo:montrerbranches=theme312

Growth rates of France’s real GDP in a quarter relative to the same quarter a year earlier are in Table VF-2. France has not recovered the rates of growth exceeding 2 percent prior to the global recession. GDP fell 3.8 percent in IQ2009, 3.6 percent in IIQ2009, 3.1 percent in IIIQ2009 and 1.0 percent in IVQ2009. Growth in IVQ2011 relative to IVQ2010 was 1.4 percent and GDP growth declined to 0.4 percent in IQ2012, 0.3 percent in IIQ2012 relative to the same quarter a year earlier, 0.2 percent in IIIQ2012 relative to a year earlier and 0.0 percent in IVQ2012 relative to a year earlier. Growth in IQ2013 relative to a year earlier was 0.0 percent. France’s GDP increased 0.8 percent in IIQ2013 relative to a year earlier and 0.6 percent in IIIQ2013 relative to a year earlier. GDP increased 1.1 percent in IVQ2013 relative to a year earlier. France’s GDP increased 1.2 percent in IQ2014 relative to a year earlier and increased 0.7 percent in IIQ2014 relative to a year earlier. GDP increased 1.2 percent in IIIQ2014 relative to a year earlier and increased 0.8 percent in IVQ2014 relative to a year earlier. GDP increased 1.2 percent in IQ2015 relative to a year earlier and increased 0.9 percent in IIQ2015 relative to a year earlier. GDP increased 0.8 percent in IIIQ2015 relative to a year earlier and increased 1.0 percent in IVQ2015 relative to a year earlier. GDP increased 1.2 percent in IQ2016 relative to a year earlier and increased 1.2 percent in IIQ2016 relative to a year earlier. GDP increased 0.9 percent in IIIQ2016 relative to a year earlier and increased 1.2 percent in IVQ2016 relative to a year earlier. GDP increased 1.1 percent in IQ2017 relative to a year earlier. GDP increased 1.7 percent in IIQ2017 relative to a year earlier.

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

	IQ	IIQ	IIIQ	IVQ
2017	1.1	1.7
2016	1.2	1.2	0.9	1.2
2015	1.2	0.9	0.8	1.0
2014	1.2	0.7	1.2	0.8
2013	0.0	0.8	0.6	1.1
2012	0.4	0.3	0.2	0.0
2011	2.9	2.3	1.9	1.4
2010	1.1	1.9	2.3	2.3
2009	-3.8	-3.6	-3.1	-1.0
2008	1.7	0.6	-0.1	-1.8
2007	2.4	2.3	2.6	2.1
2006	2.2	2.9	2.5	2.5
2005	1.9	1.5	1.6	1.6
2004	2.2	3.0	2.6	2.5
2003	0.9	0.4	0.7	1.5
2002	1.0	1.1	1.1	1.1
2001	2.9	2.2	1.8	1.0
2000	4.4	4.4	3.9	3.4
1999	2.8	3.0	3.4	4.0

Source: Institut National de la Statistique et des Études Économiques

https://www.insee.fr/en/statistiques/3047950

http://www.bdm.insee.fr/bdm2/choixTheme?request_locale=en&code=10#arbo:montrerbranches=theme312

Chart VF-1 shows France’s quarterly real GDP from IQ1949 to IQ2017. France’s economy has grown dynamically over decades. Recovery from the global recession in 2008-2009 slowed with marginal increase.

Chart VF-1, France, Quarterly Real GDP, Seasonally and Working Day Adjusted, IQ1949-IQ2017

Source: Institut National de la Statistique et des Études Économiques

https://www.insee.fr/en/statistiques/3047950

http://www.bdm.insee.fr/bdm2/choixTheme?request_locale=en&code=10#arbo:montrerbranches=theme312

Percentage changes and contributions of segments of GDP in France are in Table VF-3. Internal demand added 0.1 percentage points to GDP growth in IIIQ2016 and contributed 0.6 percentage points to GDP growth in IVQ2016. Internal demand added 0.4 percentage points to GDP growth in IQ2017. Internal demand added 0.4 percentage points to GDP growth in IIQ2017. Net trade deducted 0.6 percentage points from GDP growth in IIIQ2016. Net trade added 0.1 percentage points in IVQ2016 and subtracted 0.6 percentage points in IQ2017. Net trade contributed 0.6 percentage points in IIQ2017.

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

∆% from Prior Period	IIIQ 2016	IVQ 2016	IQ 2017	IIQ 2017	2016	2017
GDP	0.2	0.5	0.5	0.5	1.1	1.4
Imports	2.6	0.9	1.1	0.4	4.2	3.1
Household Consump.	-0.1	0.7	0.1	0.3	2.1	0.9
Govt. Consump.	0.3	0.3	0.3	0.4	1.2	1.0
GFCF	0.3	0.6	1.3	0.7	2.7	2.5
General Government	-0.6	-0.6	-0.8	0.1	-0.1	-1.4
Exports	0.8	1.1	-0.9	2.5	1.9	2.2
% Point Contribs.
Internal Demand ex Inventory Changes	0.1	0.6	0.4	0.4	2.0	1.2
Inventory Changes	0.7	-0.1	0.7	-0.5	-0.1	0.4
Net Foreign Trade	-0.6	0.1	-0.6	0.6	-0.8	-0.3

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

Source: Institut National de la Statistique et des Études Économiques

https://www.insee.fr/en/statistiques/3047950

http://www.bdm.insee.fr/bdm2/choixTheme?request_locale=en&code=10#arbo:montrerbranches=theme312

Chart VF-2 of France’s Institut National de la Statistique et des Études Économiques provides percentage point contributions to GDP growth. The economy was driven in IQ2013 by consumption with net trade and gross fixed capital formation (GFCF) deducting from growth. Final consumption drove the economy in IIQ2013 together with contribution by net trade and capital formation. Gross fixed capital formation and net trade constrained the economy in IIIQ2013. Inventory changed deducted from growth in IVQ2013 with contributions by consumption and net trade. Inventory change contributed to growth in IQ2014 with deductions by consumption, GFCF and net foreign trade. Consumption contributed to growth in IIQ2014 with deductions by GFCF and net trade. Consumption and inventory change drove the economy in IIIQ2014 with deduction by net trade. Consumption and net trade drove the economy in IVQ2014 with deductions by GFCF and inventory change. Consumption, GFCF and inventory change drove the economy in IQ2015 with net trade deducting from growth. Net trade and consumption drove the economy in IIQ2015 with inventory change and GFCF deducting from growth. Consumption and inventory change drove the economy in IIIQ2015 with minor contribution by GFCF and significant deduction by net trade. Inventory change, consumption and GFCF drove the economy in IVQ2015 with deduction by net trade. Consumption and GFCF drove the economy in IQ2016 with deductions by inventory change and net trade. Consumption and net trade drove the economy in IIQ2016 with deduction by inventory change. Inventory change, consumption and GFCF drove the economy in IIIQ2016 with deduction by net trade. Consumption, GFCF and net trade drove the economy in IVQ2016 with deduction by inventory change. Inventory change, GFCF and consumption drove the economy in IQ2017 with deduction by net trade. GFCF, consumption and net trade drove the economy in IIQ2017 with deduction by inventory change.

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

Source: Institut National de la Statistique et des Études Économiques

https://www.insee.fr/en/statistiques/3047950

http://www.bdm.insee.fr/bdm2/choixTheme?request_locale=en&code=10#arbo:montrerbranches=theme312

VG Italy. Table VG-IT provides revised percentage changes of GDP in Italy of quarter on prior quarter and quarter on same quarter a year earlier. In IIQ2017, the GDP of Italy increased 0.4 percent and increased 1.5 percent relative to a year earlier. Italy’s GDP increased 0.4 percent in IQ2017 and increased 1.2 percent relative to a year earlier. In IVQ2016, the GDP of Italy increased 0.4 percent and increased 1.2 percent relative to 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 increased 0.1 percent and increased 0.8 percent relative to a year earlier. GDP increased 0.4 percent in IQ2016 and increased 1.1 percent relative to a year earlier. GDP increased 0.2 percent in IVQ2015 and increased 1.0 percent relative to a year earlier. In IIIQ2015, GDP increased 0.2 percent and increased 0.7 percent relative to a year earlier. GDP increased 0.3 percent in IIQ2015 and 0.7 percent relative to a year earlier. GDP increased 0.2 percent in IQ2015 and increased 0.3 percent relative to a year earlier. GDP changed 0.0 percent in IVQ2014 and increased 0.1 percent relative to a year earlier. GDP increased 0.1 percent in IIIQ2014 and increased 0.1 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IIQ2014 and increased 0.2 percent relative to a year earlier. The GDP of Italy changed 0.0 percent in IQ2014 and increased 0.4 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 increased 0.1 in IIQ2013 and fell 2.0 percent relative to a year earlier. Italy’s GDP fell 1.1 percent in IQ2013 and declined 2.9 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, 0.9 percent in IQ2012, 0.8 percent in IIQ2012 and 0.5 percent in IIIQ2012. The pace of decline accelerated to minus 0.6 percent in IVQ2012 and minus 1.1 percent in IQ2013. GDP contracted cumulatively 5.3 percent in seven consecutive quarterly contractions from IIIQ2011 to IQ2013 at the annual equivalent rate of minus 3.1 percent. The yearly rate has fallen from 2.2 percent in IVQ2010 to minus 2.8 percent in IVQ2012, minus 2.9 percent in IQ2013, minus 2.0 percent in IIQ2013 and minus 1.3 percent in IIIQ2013. GDP fell 0.7 percent in IVQ2013 relative to a year earlier. GDP increased 0.4 percent in IQ2014 relative to a year earlier and increased 0.2 percent in IIQ2014 relative to a year earlier. GDP increased 0.1 percent in IIIQ2014 relative to a year earlier and increased 0.1 percent in IVQ2014 relative to a year earlier. GDP increased 0.3 percent in IQ2015 relative to a year earlier and increased 0.7 percent in IIQ2015 relative to a year earlier. GDP increased 0.7 percent in IIIQ2015 relative to a year earlier and increased 1.0 percent in IVQ2015 relative to a year earlier. GDP increased 1.1 percent in IQ2016 relative to a year earlier and increased 0.8 percent in IIQ2016 relative to a year earlier. GDP increased 0.9 percent in IIIQ2016 relative to a year earlier and increased 1.2 percent in IVQ2016 relative to a year earlier. GDP increased 1.2 percent in IQ2017 relative to a year earlier and increased 1.5 percent in IIQ2017 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 IIQ2017 of €397,445 million (http://www.istat.it/it/archivio/203116) is lower by 6.4 percent relative to €424,823.8 million in IQ2008 (http://ec.europa.eu/eurostat). Using seasonally and calendar adjusted chained volumes in the dataset of EUROSTAT (http://ec.europa.eu/eurostat), the GDP of Italy increased from €367,664.4 million in IQ1998 to €424,823.8 million in IQ2008 at the annual equivalent rate of 1.5 percent. 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
IIQ2017	0.4	1.5
IQ2017	0.4	1.2
IVQ2016	0.4	1.2
IIIQ2016	0.3	0.9
IIQ2016	0.1	0.8
IQ2016	0.4	1.1
IVQ2015	0.2	1.0
IIIQ2015	0.2	0.7
IIQ2015	0.3	0.7
IQ2015	0.2	0.3
IVQ2014	0.0	0.1
IIIQ2014	0.1	0.1
IIQ2014	0.0	0.2
IQ2014	0.0	0.4
IVQ2013	0.0	-0.7
IIIQ2013	0.3	-1.3
IIQ2013	0.1	-2.0
IQ2013	-1.1	-2.9
IVQ2012	-0.6	-2.8
IIIQ2012	-0.5	-3.2
IIQ2012	-0.8	-3.2
IQ2012	-0.9	-2.3
IVQ2011	-1.0	-1.1
IIIQ2011	-0.5	0.4
IIQ2011	0.1	1.5
IQ2011	0.2	2.1
IVQ2010	0.5	2.2
IIIQ2010	0.6	1.9
IIQ2010	0.8	1.9
IQ2010	0.3	0.5
IVQ2009	0.3	-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/203116

The IHS Markit Italy Business Activity Index increased from 53.6 in Jun to 56.3 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/4f7f2216aded46a48acb1f5abfb5590a). Phil Smith, Principal Economist at IHS Markit that compiles the Italy Services PMI^®, finds positive conditions (https://www.markiteconomics.com/Survey/PressRelease.mvc/4f7f2216aded46a48acb1f5abfb5590a). The IHS Markit Italy Purchasing Managers’ Index^® (PMI^®), decreased from 55.2 in Jun to 55.1 in Jul (https://www.markiteconomics.com/Survey/PressRelease.mvc/2057a90657894f2d94534e6c15465582). New export orders continued to increase. Phil Smith, Principal Economist at HIS Markit that compiles the Italian Manufacturing PMI^®, finds consistent manufacturing (https://www.markiteconomics.com/Survey/PressRelease.mvc/2057a90657894f2d94534e6c15465582). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Aug month ∆% 0.3 12 months ∆%: 1.2 Blog 9/3/17
Producer Price Index	Jul month ∆%: 0.0 Jul 12-month ∆%: 0.8 Blog 9/3/17
GDP Growth	IQ2017/IQ2017 SA ∆%: 0.4 IIQ2017/IIQ2016 NSA ∆%: 1.5 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 12/4/16 02/26/17 3/12/17 5/21/17 6/4/17 8/20/17 9/3/17
Labor Report	Jul 2017 Participation rate 65.6% Employment ratio 58.0% Unemployment rate 11.3% Youth Unemployment 35.5% Blog 9/3/17
Industrial Production	Jun month ∆%: 1.1 12 months CA ∆%: 5.3 Earlier Data: Blog 4/19/15
Retail Sales	Jun month ∆%: 0.6 Jun 12-month ∆%: 1.5 Earlier Data: Blog 4/26/15
Business Confidence	Mfg Aug 108.1, Apr 107.7 Construction Aug 128.4, Apr 128.0 Earlier Data: Blog 4/5/15
Trade Balance	Balance Jun SA €4077 million Exports Jun month SA ∆%: -1.0; Imports month ∆%: -2.9 Exports 12 months Jun NSA ∆%: 8.2 Imports 12 months NSA ∆%: 9.9 Earlier Data: Blog 4/19/15

Links to blog comments in Table IT: 8/20/17 https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html

8/13/17 https://cmpassocregulationblog.blogspot.com/2017/08/recovery-without-hiring-ten-million_40.html

8/6/17 https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html

6/4/17 https://cmpassocregulationblog.blogspot.com/2017/06/twenty-two-million-unemployed-or.html

5/21/17 https://cmpassocregulationblog.blogspot.com/2017/05/dollar-devaluation-world-inflation.html

3/12/17 https://cmpassocregulationblog.blogspot.com/2017/03/increasing-interest-rates-twenty-four.html

2/26/17 https://cmpassocregulationblog.blogspot.com/2017/02/united-states-commercial-banks-assets.html

12/4/16 http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html

11/20/16 http://cmpassocregulationblog.blogspot.com/2016/11/interest-rate-increase-could-well.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. In IIQ2017, the GDP of Italy increased 0.4 percent and increased 1.5 percent relative to a year earlier. Italy’s GDP increased 0.4 percent in IQ2017 and increased 1.2 percent relative to a year earlier. In IVQ2016, the GDP of Italy increased 0.4 percent and increased 1.2 percent relative to 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 increased 0.1 percent and increased 0.8 percent relative to a year earlier. GDP increased 0.4 percent in IQ2016 and increased 1.1 percent relative to a year earlier. GDP increased 0.2 percent in IVQ2015 and increased 1.0 percent relative to a year earlier. In IIIQ2015, GDP increased 0.2 percent and increased 0.7 percent relative to a year earlier. GDP increased 0.3 percent in IIQ2015 and 0.7 percent relative to a year earlier. GDP increased 0.2 percent in IQ2015 and increased 0.3 percent relative to a year earlier. GDP changed 0.0 percent in IVQ2014 and increased 0.1 percent relative to a year earlier. GDP increased 0.1 percent in IIIQ2014 and increased 0.1 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IIQ2014 and increased 0.2 percent relative to a year earlier. The GDP of Italy changed 0.0 percent in IQ2014 and increased 0.4 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 increased 0.1 in IIQ2013 and fell 2.0 percent relative to a year earlier. Italy’s GDP fell 1.1 percent in IQ2013 and declined 2.9 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, 0.9 percent in IQ2012, 0.8 percent in IIQ2012 and 0.5 percent in IIIQ2012. The pace of decline accelerated to minus 0.6 percent in IVQ2012 and minus 1.1 percent in IQ2013. GDP contracted cumulatively 5.3 percent in seven consecutive quarterly contractions from IIIQ2011 to IQ2013 at the annual equivalent rate of minus 3.1 percent. The yearly rate has fallen from 2.2 percent in IVQ2010 to minus 2.8 percent in IVQ2012, minus 2.9 percent in IQ2013, minus 2.0 percent in IIQ2013 and minus 1.3 percent in IIIQ2013. GDP fell 0.7 percent in IVQ2013 relative to a year earlier. GDP increased 0.4 percent in IQ2014 relative to a year earlier and increased 0.2 percent in IIQ2014 relative to a year earlier. GDP increased 0.1 percent in IIIQ2014 relative to a year earlier and increased 0.1 percent in IVQ2014 relative to a year earlier. GDP increased 0.3 percent in IQ2015 relative to a year earlier and increased 0.7 percent in IIQ2015 relative to a year earlier. GDP increased 0.7 percent in IIIQ2015 relative to a year earlier and increased 1.0 percent in IVQ2015 relative to a year earlier. GDP increased 1.1 percent in IQ2016 relative to a year earlier and increased 0.8 percent in IIQ2016 relative to a year earlier. GDP increased 0.9 percent in IIIQ2016 relative to a year earlier and increased 1.2 percent in IVQ2016 relative to a year earlier. GDP increased 1.2 percent in IQ2017 relative to a year earlier and increased 1.5 percent in IIQ2017 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 IIQ2017 of €397,445 million (http://www.istat.it/it/archivio/203116) is lower by 6.4 percent relative to €424,823.8 million in IQ2008 (http://ec.europa.eu/eurostat). Using seasonally and calendar adjusted chained volumes in the dataset of EUROSTAT (http://ec.europa.eu/eurostat), the GDP of Italy increased from €367,664.4 million in IQ1998 to €424,823.8 million in IQ2008 at the annual equivalent rate of 1.5 percent. 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
IIQ2017	0.4	1.5
IQ2017	0.4	1.2
IVQ2016	0.4	1.2
IIIQ2016	0.3	0.9
IIQ2016	0.1	0.8
IQ2016	0.4	1.1
IVQ2015	0.2	1.0
IIIQ2015	0.2	0.7
IIQ2015	0.3	0.7
IQ2015	0.2	0.3
IVQ2014	0.0	0.1
IIIQ2014	0.1	0.1
IIQ2014	0.0	0.2
IQ2014	0.0	0.4
IVQ2013	0.0	-0.7
IIIQ2013	0.3	-1.3
IIQ2013	0.1	-2.0
IQ2013	-1.1	-2.9
IVQ2012	-0.6	-2.8
IIIQ2012	-0.5	-3.2
IIQ2012	-0.8	-3.2
IQ2012	-0.9	-2.3
IVQ2011	-1.0	-1.1
IIIQ2011	-0.5	0.4
IIQ2011	0.1	1.5
IQ2011	0.2	2.1
IVQ2010	0.5	2.2
IIIQ2010	0.6	1.9
IIQ2010	0.8	1.9
IQ2010	0.3	0.5
IVQ2009	0.3	-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/203116

Levels and rates of growth of GDP in Italy in IIQ2017 are in Table VG-2. GFCF (Gross Fixed Capital formation) increased 0.7 percent in IIQ2017, increasing 2.6 percent relative to a year earlier. Final consumption increased 0.2 percent in IIQ2017, increasing 1.2 percent relative to a year earlier.

Table VG-2, Italy, GDP in Chained Volumes SCA Euro and ∆%

Aggregate	Chained Volumes Million Euro	∆% IIQ2017/ IQ2017	∆% IIQ2017/ IIQ2016
GDP	397,445	0.4	1.5
Imports	117,478	0.7	5.8
Final Consumption	318,404	0.2	1.2
Household and NPISH	239,362	0.3	1.2
Government	78,986	-0.1	0.9
GFCF	68,866	0.7	2.6
Equipment	30,837	0.6	-0.8
Transport	5,744	8.2	39.9
Construction	32,358	-0.4	1.2
Change in Inventories	-	-	-
Exports	125,652	0.6	4.7