Economic conditions

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Economic indicators

Available from April 1995 forward, this monthly compilation is prepared for the Joint Economic Committee by the Council of Economic Advisors and provides economic information on prices, wages, production, business activity, purchasing power, credit, money and Federal finance.

Federal Reserve says economy may take 5-6 years to recover

Federal Reserve officials now fear that the U.S. economy will take at least five or six years to fully recover from the biggest economic downturn since the Great Depression.

Fed officials at their June meeting cut their forecasts for economic growth this year while taking a slightly dimmer view of the economy than they did in April.

Fed officials concluded that the "economic outlook had softened somewhat." One-half of Fed officials said they saw "risks to growth as having moved to the downside."

Minutes of their June meeting, released Wednesday, said Fed officials expect that it will “take some time for the economy to converge fully to its longer-run path as characterized by sustainable rates of output growth, unemployment, and inflation."

The report said that most Fed officials "expected the convergence process to take no more than five to six years."

Fed officials also trimmed their forecasts for growth this year to a range of between 3 percent and 3.5 percent from the 3.2 percent to 3.7 percent they projected in May.

The report revealed a more cautious mood among the Fed policymakers in light of Europe's debt crisis, a volatile Wall Street, a stalled housing market and high unemployment, the Associated Press reported.

With risks now growing, Fed officials at their June 22-23 meeting saw the need to explore new options for bolstering the economy. That is a turnaround from earlier this year when they were moving to wind down crisis-era supports. But no new specific steps were disclosed or agreed upon.

Fed Chairman Ben Bernanke and his colleagues agreed to hold a key interest rate at a record low near zero to help revive the economy. They repeated a pledge to keep rates there for an "extended period."

Federal Reserve Beige Book

Economic activity has continued to increase, on balance, since the previous survey, although the Cleveland and Kansas City Districts reported that the level of economic activity generally held steady. Among those Districts reporting improvements in economic activity, a number of them noted that the increases were modest, and two Districts, Atlanta and Chicago, said that the pace of economic activity had slowed recently.

Manufacturing activity continued to expand in most Districts, although several Districts reported that activity had slowed or leveled off during the reporting period. Districts also noted improved conditions in the services sector. The five Districts reporting on transportation noted increased activity. Tourism activity also increased across the Districts, although the Atlanta District noted concerns about decreased leisure travel to the Gulf Coast. Retail sales reports generally indicated a continued rise in spending, and several Districts noted that necessities continued to be strong sellers, while big-ticket items moved more slowly.

However, most Districts that reported on auto sales noted declines in recent weeks. Activity in residential real estate markets was sluggish in most Districts after the expiration of the April 30 deadline for the homebuyer tax credit. Commercial real estate markets, especially construction, remained weak.

Banking conditions varied across the Districts, with some Districts noting soft or decreased overall loan demand; credit standards remained tight in most reporting Districts. Recent rains had mixed effects on crop conditions, while activity in the natural resources sector increased. Overall labor market conditions improved modestly across the Districts, with several reports of temporary hiring. Consumer prices of goods and services held steady in most reporting Districts.

Input prices also held largely steady, with only a few reports of cost increases. Wage pressures continued to be contained on the whole.

2009 Economic Report of the President

Real GDP likely declined over the four quarters of 2008, ending a 6-year run of positive growth, as the slow growth in the first half of the year was eclipsed by what appears to be a sharp decline in the fourth quarter.

  • Financial distress, which first became evident in mid-2007 in the market for mortgage-backed securities (MBS), continued through 2008 and affected a variety of markets. In the wake of the failure and near-failure of several major financial institutions in September 2008, financial stresses increased sharply to levels not seen during the post–World War II era.
  • Payroll jobs declined during 2008, having peaked in December of 2007. Employment losses averaged 82,000-per-month during the first 8 months of 2008, before accelerating to a 20,000-per-month pace during the next 3 months. The unemployment rate was at 5 percent rate though April—a low rate by historical standards—but increased to 6.7 percent in November. Initial and continued claims for unemployment insurance moved up sharply over the course of the year.
  • Energy prices dominated the movement of overall inflation in the consumer price index (CPI), with large increases through July, followed by a sharp decline during the latter part of the year. Core consumer inflation (which excludes food and energy inflation) edged down from 2.4 percent during the 12 months of 2007 to a 1.9 percent annual rate during the first 11 months of 2008. Food prices rose appreciably faster than core prices.
  • Nominal hourly compensation increased 2.8 percent during the 12 months through September 2008 (according to the employment cost index), a gain that was undermined by the rise in food and energy prices, so that real hourly compensation fell 2 percent. In the long run, real hourly compensation tends to increase with labor productivity, although the correlation can be very loose over shorter intervals. Nonfarm business productivity has grown at an average annual rate of 2.6 percent since the business cycle peak in 2001.
  • An economic stimulus was proposed by the President in January and passed by Congress in February, authorizing about $113 billion in tax rebate checks to low- and middle-income taxpayers and allowing 50 percent expensing for business equipment investment. The stimulus likely boosted GDP growth in the second and third quarters above what it might have been otherwise, but its influence faded by the end of the year.
  • The Administration’s forecast calls for real GDP to continue to fall in the first half of 2009, with the major declines projected to be concentrated in the fourth quarter of 2008 and the first quarter of 2009. An active monetary policy and the Treasury’s injection of assets into financial institutions are expected to ease financial stress and to lead to a rebound in the interest-sensitive sectors of the economy in the second half of 2009. Also supporting growth during 2009 is the substantial recent drop in petroleum prices, which offsets some of the effects of the recent decline in household wealth. The unemployment rate is expected to increase to an average of 7.7 percent for 2009. The expansion in 2010–11 is projected to be vigorous, bringing the unemployment rate down to 5 percent by 2012.

2010 Economic Report of the President

Broader measures of economic prosperity

"...Rises in economic output, a company's sales or house prices are invariably considered good, rises in petrol prices bad. But debate is growing. Just as he sparked a furore last year about whether the activities of the City were good for society, Financial Services Authority chief Adair Turner last week questioned whether economic growth was a "false god". He said that not only did growth harm the climate by increasing emissions of greenhouse gases, but "all the evidence shows that beyond the sort of standard of living which Britain has now achieved, extra growth does not automatically translate into human welfare and happiness".

This is an area some economists have tried to deal with for several decades, by attempting to subtract from GDP figures the social or environmental consequences of growth. Cleaning up an oil spill counts towards GDP, but the environmental damage it causes does not; pumping the oil out of the ground counts as economic activity, but the resource depletion it implies is not accounted for.

For years, the economists trying to come up with alternative measures of welfare or sustainability were treated by the mainstream of the dismal science as tree-huggers who were trying to value things that were impossible to count, and therefore best ignored. This was partly because economics was going through an intensely mathematical phase, in which the goal was to prove everything with models and fancy equations. But the limitations of conventional economics were brutally exposed by the recession ? and critics say the time has finally come for a long-overdue paradigm shift.

One of the oldest advocates of an alternative approach is Herman Daly, an American ecological economist who decades ago developed a measure called the "index of sustainable economic welfare" and the idea of a "steady state economy", which argues that the world has to develop a way to live within its means and the limitations of its resources. Another is Chilean economist Manfred Max-Neef, who works on development and poverty issues, and argues that conventional models of development increase poverty and ecological disaster.

Professor David Blanchflower of Dartmouth College, New Hampshire ? better known in Britain for being the only member of the Bank of England's monetary policy committee to see the recession coming ? has spent decades working on measures of happiness and wellbeing which, he says, offer politicians much more useful ways to think about what policy they should aim for, rather than merely expanding GDP.

Blanchflower rejects the idea that happiness is difficult to measure. Not only are there huge amounts of survey data over decades asking people about how they feel, he says, but cross-checks with other disciplines such as psychology or medicine and their data on metrics such as blood pressure work very well. And the fundamental truth the data reveal is that, despite decades of economic growth in the western world, people have not got happier.

Sensing that GDP measures might have outlived their usefulness, last September French president Nicolas Sarkozy commissioned a report by a panel of experts headed by Nobel prize-winning economist Joseph Stiglitz, to look at how to ensure governments take full account of their citizens' happiness and wellbeing, not just the country's economic growth.

In Britain the torch is being carried by the New Economics Foundation which, among other things, produces what it calls the "Happy Planet Index". Nef's policy director, Andrew Simms, says this brings together both the wellbeing and environmental aspects of human activity as well as the growth to measure whether economies achieve sustainable, happy lives for their citizens, rather than simply growing strongly. Under the HPI, Costa Rica is the world's happiest, greenest country. Many other Latin American countries feature high up in the table but Britain and the United States are down at 74th and 114th respectively. The HPI shows, for example, that fast-growing economies such as the US, China and India were all greener and happier 20 years ago than they are today. "Growth has failed on its own terms. You can't have infinite growth in a world of finite resources. Redistribution of the existing wealth is a far better way to go," says Simms. "It is now a case of paradigm shift or bust."

Nef recently published a report outlining how this can be achieved called "The Great Transition" and will this month release a new report entitled "Growth isn't possible". The simple measure of GDP may soon have had its day."

The end of the Western economic era?

"... But historian Niall Ferguson is more doubtful.

"The financial crisis... has to raise a profound question about the viability of that Washington model, or perhaps more accurately that Wall Street model," he says.

"The question really is whether an alternative model will take the place of the Western financial model. And of course the prime contender is the model of the People's Republic of China."

China's position as major world power was predicted long before the global financial crisis in the famous 2005 Bric Report from Goldman Sachs.

It argued that with high investment rates, a large labour force and steady convergence, China would become the world's largest economy by 2041.

More recently, in February 2009, the International Monetary Fund predicted that China's economy will grow by six per cent this year.

But does this signal the dawn of a new era economic era, based on China's so-called communist model of government?

Not according to Mr Ferguson.

While the four biggest banks in the world are now Chinese, he argues that they are not symbols of a communist power in the ascendant, since they are run on an increasingly Western model.

"China's economy is growing rapidly not because it is still a communist planned economy, but because since 1979 China has moved in the direction of market institutions," he says.

"So global power is shifting from West to East, but the reason it is doing that is that the East has become rather better at managing western financial institutions than the West itself."

Fareed Zakaria concurs, arguing that while the new order will be Western in construction, it will be fuelled by non Western powers.

"China, India and Brazil and all those other countries are getting rather good at capitalism. That's the real story here," he says.

Walter Russell Mead agrees, saying that for a number of decades to come the US is likely to be "one of the world's leading actors and will have a unique international role as the one global power in a world of regional powers… the US will be like a global broker".

Elizabeth Warren: America without a middle class

"Can you imagine an America without a strong middle class? If you can, would it still be America as we know it?

Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.

Families have survived the ups and downs of economic booms and busts for a long time, but the fall-behind during the busts has gotten worse while the surge-ahead during the booms has stalled out. In the boom of the 1960s, for example, median family income jumped by 33% (adjusted for inflation). But the boom of the 2000s resulted in an almost-imperceptible 1.6% increase for the typical family. While Wall Street executives and others who owned lots of stock celebrated how good the recovery was for them, middle class families were left empty-handed.

The crisis facing the middle class started more than a generation ago. Even as productivity rose, the wages of the average fully-employed male have been flat since the 1970s.

But core expenses kept going up. By the early 2000s, families were spending twice as much (adjusted for inflation) on mortgages than they did a generation ago -- for a house that was, on average, only ten percent bigger and 25 years older. They also had to pay twice as much to hang on to their health insurance.

To cope, millions of families put a second parent into the workforce. But higher housing and medical costs combined with new expenses for child care, the costs of a second car to get to work and higher taxes combined to squeeze families even harder. Even with two incomes, they tightened their belts. Families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases -- but it hasn't been enough to save them. Today's families have spent all their income, have spent all their savings, and have gone into debt to pay for college, to cover serious medical problems, and just to stay afloat a little while longer.

Through it all, families never asked for a handout from anyone, especially Washington. They were left to go on their own, working harder, squeezing nickels, and taking care of themselves. But their economic boats have been taking on water for years, and now the crisis has swamped millions of middle class families.

The contrast with the big banks could not be sharper. While the middle class has been caught in an economic vise, the financial industry that was supposed to serve them has prospered at their expense. Consumer banking -- selling debt to middle class families -- has been a gold mine. Boring banking has given way to creative banking, and the industry has generated tens of billions of dollars annually in fees made possible by deceptive and dangerous terms buried in the fine print of opaque, incomprehensible, and largely unregulated contracts.

And when various forms of this creative banking triggered economic crisis, the banks went to Washington for a handout. All the while, top executives kept their jobs and retained their bonuses. Even though the tax dollars that supported the bailout came largely from middle class families -- from people already working hard to make ends meet -- the beneficiaries of those tax dollars are now lobbying Congress to preserve the rules that had let those huge banks feast off the middle class.

Pundits talk about "populist rage" as a way to trivialize the anger and fear coursing through the middle class. But they have it wrong. Families understand with crystalline clarity that the rules they have played by are not the same rules that govern Wall Street. They understand that no American family is "too big to fail." They recognize that business models have shifted and that big banks are pulling out all the stops to squeeze families and boost revenues. They understand that their economic security is under assault and that leaving consumer debt effectively unregulated does not work.

Families are ready for change. According to polls, large majorities of Americans have welcomed the Obama Administration's proposal for a new Consumer Financial Protection Agency (CFPA). The CFPA would be answerable to consumers -- not to banks and not to Wall Street. The agency would have the power to end tricks-and-traps pricing and to start leveling the playing field so that consumers have the tools they need to compare prices and manage their money. The response of the big banks has been to swing into action against the Agency, fighting with all their lobbying might to keep business-as-usual. They are pulling out all the stops to kill the agency before it is born. And if those practices crush millions more families, who cares -- so long as the profits stay high and the bonuses keep coming.

America today has plenty of rich and super-rich. But it has far more families who did all the right things, but who still have no real security. Going to college and finding a good job no longer guarantee economic safety. Paying for a child's education and setting aside enough for a decent retirement have become distant dreams. Tens of millions of once-secure middle class families now live paycheck to paycheck, watching as their debts pile up and worrying about whether a pink slip or a bad diagnosis will send them hurtling over an economic cliff.

America without a strong middle class? Unthinkable, but the once-solid foundation is shaking.

US unemployment

The American unemployment rate surged to 10.2 percent in October, its highest level in 26 years, as the economy lost another 190,000 jobs, the Labor Department reported Friday.

The jump into the realm of double-digit joblessness — from 9.8 percent in September — provided a sobering reminder that, despite the apparent end of the Great Recession, economic expansion has yet to translate into jobs, leaving tens of millions of people still struggling.

“The guy on the street is going to ask, ‘What recovery?’ ” said Stuart G. Hoffman, chief economist at the PNC Financial Services Group in Pittsburgh. “The job market is still in reverse.”

The sharp rise in unemployment seemed certain to inject fresh tension into the debate over economic policy in Washington.

Republicans point to elevated joblessness as proof that the Obama administration’s $787 billion spending package aimed at stimulating the economy had failed. Labor unions and some Democrats are calling for another round of spending to create more jobs. And all of this comes against a backdrop of continued worries about swelling federal budget deficits.

In an interview this week, Richard L. Trumka, president of the nation’s largest labor union, the A.F.L.-C.I.O., called on the government to unleash fresh spending on large-scale construction projects to put people back to work.

Absent that, “it will probably be 2012 before there starts to be real job creation,” Mr. Trumka said.

Yet despite the headline-grabbing unemployment number in the government’s snapshot of the October job market, economists sifting through the details found several reasons to take comfort.

"The real US unemployment rate is 16 percent if persons who have dropped out of the labor pool and those working less than they would like are counted, a Federal Reserve official said Wednesday.

"If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart.

He underscored that he was expressing his own views, which did "do not necessarily reflect those of my colleagues on the Federal Open Market Committee," the policy-setting body of the central bank.

Lockhart pointed out in a speech to a chamber of commerce in Chattanooga, Tennessee that those two categories of people are not taken into account in the Labor Department's monthly report on the unemployment rate. The official July jobless rate was 9.4 percent.

Lockhart, who heads the Atlanta, Georgia, division of the Fed, is the first central bank official to acknowledge the depth of unemployment amid the worst US recession since the Great Depression."

"...In August, 19 states had higher unemployment rates than Arizona’s, U.S. Bureau of Labor Statistics show.

Worse, more real estate is at risk of defaulting throughout the U.S. Investors in commercial mortgage-backed securities are holding assets with a delinquent unpaid balance of $28.9 billion, up more than five fold since June 2008, according to a report issued by the Congressional Oversight Panel. Under a worst-case scenario, the panel estimates that commercial real estate and construction loan losses through 2010 may total $81.1 billion at 701 banks with assets of $600 million to $80 billion.

“The problems in commercial real estate are just getting started and they will dampen what is already going to be a weak economic recovery,” said Jim Rounds, senior vice president and senior economist at Elliott D. Pollack. “In Arizona, the recession is probably going to last to the middle of the next calendar year.”

Wachter, who has been studying housing markets for more than two decades, predicts that Phoenix won’t see a recovery until at least 2012.

The city of Phoenix is suffering the fallout from growth that boosted its population from 983,403 in 1990 to 1.6 million in 2008, according to the Census Bureau. Single-family building permits in Maricopa County, which includes Phoenix, rose more than five-fold from 1975 to the peak earlier this decade.

Delinquencies for loans backed by office, industrial, retail and apartment properties that were bundled into securities in Phoenix increased five-fold since March, according to data compiled by Bloomberg.

The Phoenix office vacancy rate probably exceeds 30 percent, including space that’s leased yet vacant because the tenants have pulled out, Rounds said...

Deficit, unemployment projected to worsen

Source: Deficit, unemployment projected to worsen The, August 25, 2009

"The Obama administration on Tuesday raised deficit projections to $9 trillion over the next decade from $7.1 trillion and predicted unemployment would rise above 10 percent.

The administration cited a worse economic downturn than was estimated earlier in making the forecast, but also cut this year's deficit projection by $262 billion by removing an earlier placeholder to provide additional money to the financial sector if it was needed.

The administration said that while there are signs the economy is improving from the depths of the financial crisis in late 2008 and earlier this year, the recession has taken a steep toll on the economy and particularly on jobs.

The Office of Management and Budget (OMB) predicted that unemployment will rise from the current 9.4 percent to more than 10 percent by the middle of 2010 before beginning to fall. The government expects the economy to fall 2.8 percent in 2009, adjusted for inflation, before increasing by 2 percent in 2010. In May, the administration estimated that the economy would contract by 1.2 percent this year.

The deficit numbers will prompt additional calls for the administration to move slowly on major efforts to overhaul the healthcare system and shift the nation's energy policies.

Both are key legislative goals for President Barack Obama and both are the source of major disagreements about their long-term impact on the nation's finances."

$9T in new national debt makes tax increases likely

"...The numbers -- including a White House forecast of $9 trillion in additional debt over the next decade -- could affect Mr. Obama's efforts to increase spending in a host of areas, from education to foreign aid. Some budget experts also reiterated their belief that tax increases may need to hit families that the president has vowed to protect...

...The deficit projections, from the White House Office of Management and Budget and the nonpartisan Congressional Budget Office, came the same day the president renominated Federal Reserve Chairman Ben S. Bernanke. The deficit numbers complicate Mr. Bernanke's task in navigating the economy toward stability and recovery. Fed officials say the U.S. must show progress on deficit reduction by next year to avoid the possibility of a rise in interest rates, which might be needed otherwise to entice global investors to keep buying U.S.-government bonds.

The biggest effect of the deficit numbers may be felt on the health-care debate. Deficit worries will force Democrats to put new emphasis on cost-cutting efforts in crafting health legislation, said Sen. Charles E. Schumer (D., N.Y.). Democrats can't afford any "slippage" on their pledge to fully pay for the overhaul, he said."

As Americans stop buying, trade deficit declines

"Dire warnings about the need for Americans to save more and spend less didn’t work. Nagging China, Japan and Germany to buy more American products didn’t work.

No matter how much economists and political leaders warned about huge global trade imbalances and the astronomical foreign debt of the United States, American consumers kept buying more and borrowing more from the rest of the world.

Until the financial crisis, that is.

In a striking case of shock therapy, global trade imbalances have declined by almost half since the financial system nearly collapsed one year ago.

On Friday, the Commerce Department reported that the trade deficit of the United States shrank by another $1.2 billion in August, to $30.7 billion. American exports edged up to $128.2 billion and imports declined slightly to $158.9 billion.

But the real news is the change from one year ago.

For the first eight months of the year, the United States trade deficit with China is down by about 14 percent or $20 billion, compared with one year ago. The nation’s trade deficit with Japan has shrunk by almost 20 percent, and its deficits with Mexico, Canada and the European Union are down more than 40 percent.

The huge shift stems mainly from the staggering collapse in trade. With credit markets frozen and Americans facing the highest unemployment in more than 30 years, the United States suddenly stopped shopping overseas at anywhere near the volumes that had become normal.

And even though the economy is beginning to recover, economists say the global trade shift still has some distance to go. The value of the dollar, which has been falling sharply, will make imports more expensive and restrain American appetites for at least the next year.

All of which raises a question: is the free market suddenly imposing the kind of brutal rebalancing that global political leaders, for all their pronouncements and handwringing, never came close to achieving?"

Google mashes up World Bank data

"The search giant launched public data around six months ago in a bid to make it easier to find statistics that are in the public domain online.

It has now added 17 world development indicators from the Bank, including gross domestic product (GDP), gross national income in PPP dollars and Internet users as percentage of population.

This means that a Google search for the gross domestic product of the UK, for example, returns a chart at the top of the results page. Clicking on the result takes users to an interactive chart where they can compare the data to related information.

Google has also added a feature to enable users to embed the charts in Web sites and blogs by clicking on the page's 'Link' button. Users can embed the chart with static data, or set the chart to update dynamically when new information becomes available.

The full list of indicators currently available are CO2 emissions per capita, electricity consumption per capita, energy use per capita, exports as percentage of GDP, fertility rate, GDP deflator change, GDP growth rate, GNI per capita in PPP dollars, Gross Domestic Product, Gross National Income in PPP dollars, imports as percentage of GDP, Internet users as percentage of population, life expectancy, military expenditure as percentage of GDP, mortality rate, under 5, population, and population growth rate."

Regional credit conditions

Credit Conditions Federal Reserve Bank of New York map of credit conditions

The Federal Reserve considers the record rate of mortgage delinquencies, foreclosures and their impacts on communities an urgent problem. The Federal Reserve Bank of New York has therefore used its expertise and knowledge to provide detailed data on US credit conditions to the public in order to establish a strong body of factual data for use in forming policy decisions and developing mortgage foreclosure mitigation efforts.

In recent months, the federal government has intervened in the nation's economy in unprecedented ways. Those actions have raised citizens' awareness about the role of subsidies in the economy and heightened concerns about their size and scope. However, it is hard to find comprehensive data on the financial interventions in a single, easy-to-use Web site.

To fill this gap, Subsidyscope — an initiative of The Pew Charitable Trusts — is pulling together data on the financial institutions that are receiving benefits from the various federal programs so users can understand how and where taxpayer dollars are being spent.

Global economic conditions

Global economic indicators

The PGI website presents data for the Group of 20 (G-20) to facilitate the monitoring of economic and financial developments for these systemically important economies. Launched in response to the on-going financial and economic crisis, it is hosted by the IMF, and is a joint undertaking of the Inter-Agency Group on Economic and Financial Statistics: Bank for International Settlements (BIS), European Central Bank (ECB), Eurostat, the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the United Nations (UN), and the World Bank (WB).

Global property prices - BIS

The property price statistics bring together data from a variety of national sources. The BIS, with the assistance of its member central banks, 1 has obtained approval of these sources to disseminate the statistics as long as the national sources are clearly indicated. The sources and any relevant disclaimers are listed separately (sources of data). Copyright in these data must be honoured.

The property price statistics include data from 38 countries, and are available at different frequencies. The data differ significantly from country to country, for instance in terms of sources of information on prices, type of property, area covered, property vintage, priced unit, detailed compilation methods and seasonal adjustment. This reflects two facts. Firstly, that the processes associated with buying and selling a property and hence data available, vary between countries and secondly, that there are currently no specific international standards for property price statistics.

However, Eurostat is taking the lead in drafting a Handbook on Residential Property Price Indices under the aegis of the Inter-Secretariat Working Group on Price Statistics. This handbook will give recommendations on best practice for compiling residential property price indices and will present these in the context of the different user needs for such indices. A first draft of the Handbook is available for public comment. The Handbook builds on work undertaken at a number of international meetings over recent years to identify the requirements for improved data on property prices from an economic, monetary and financial stability perspective.

In disseminating these statistics, the BIS and its member central banks are following up on Recommendation 19 in the Report on "The Financial Crisis and Information Gaps" submitted by the Financial Stability Board and IMF to the G20 Finance Ministers and Central Bank Governors (initial report October 2009 and progress report May 2010).

This webpage and the related property price database contain links to other websites for the convenience of users. Neither the BIS nor its member central banks endorse these websites or assume any responsibility for their content.

The Property price dataset will be updated on a monthly basis at the end of each month.

For any queries please contact

  • Download of property price statistics:

Data (XLS, 455 kb, last updated 30 September 2010)

World Bank - Global Economic Prospects

In many respects, recent economic news has been encouraging. Industrial production and trade, after falling by unprecedented amounts worldwide, are growing briskly; financial markets have recovered much of the steep losses they incurred in late 2008 and early 2009; and developing countries are once again attracting the interest of international investors. However, the depth of the recession has left the global economy seriously wounded. Even as profitability returns to many of the firms that were at the heart of the crisis, industrial production and trade levels have yet to regain their pre-crisis levels, and unemployment has reached double digits in many countries and continues to rise.

Given the depth of the crisis and the continued need for restructuring in the global banking system, the recovery is expected to be relatively weak. As a result, unemployment and significant spare capacity are likely to continue to characterize the economic landscape for years to come. This poses a real challenge for policy makers, who must cut back on unsustainably high fiscal deficits without choking off the recovery. Similarly the extraordinary monetary stimulus needs to be scaled back to avoid the creation of new bubbles. The medium-term strength of the recovery will depend both on how well these challenges are met and on the extent to which private-sector demand picks up. If policies are adjusted too slowly, inflationary pressures and additional bubbles could develop; too quick of an adjustment could stall the recovery.

Whatever the relative strength of the recovery in the next few months, the human costs of this recession are already high. Globally, the number of people living on $1.25 per day or less is expected to increase by some 64 million as compared with a no-crisis scenario. The recession has cut sharply into the revenues of governments in poor countries. Unless donors step in to fill the gap, authorities in these countries may be forced to cut back on social and humanitarian assistance precisely when it is most required.

In addition to analyzing the immediate challenges for developing countries posed by the crisis, this year’s Global Economic Prospects describes some of the longer-term implications of tighter financial conditions for developing-country finance and economic growth. While necessary and desirable, tighter regulation in high-income countries will result in less abundant capital (both globally and domestically) and increased borrowing costs for developing countries. As a result, just as the very loose conditions of the first half of this decade contributed to an investment boom and an acceleration in developing country growth, so too will higher capital costs in coming years serve to slow growth in developing countries and provoke a decline in potential output.

Countries should not respond passively. Efforts to strengthen domestic financial systems and expand regional cooperation (including regional self-insurance schemes) can help to reduce the sensitivity of domestic economies to international shocks, and counteract some of the longer-term negative effects of tighter international financial conditions. Such initiatives are most likely to benefit middle-income countries that already have reasonably well developed regulatory and competitive environments and healthy financial sectors. Finally, both low- and middle-income countries should strengthen domestic financial regulations.

Over time, such steps can improve domestic financial-sector efficiency, and reduce borrowing costs—more than offsetting any negative impacts from tighter international conditions. Overall, these are challenging times. The depth of the recession means that even though growth has returned, countries and individuals will continue to feel the pain of the crisis for years to come.

Policy can help mitigate the worst symptoms of this crisis. However, there are no silver bullets and achieving higher growth rates will require concerted efforts to increase domestic productivity and lower the domestic cost of finance.

World Bank study - Shadow economies

This paper presents estimations of the shadow economies for 162 countries, including developing Eastern European, Central Asian, and high-income countries over the period 1999 to 2006/2007.

According to the estimations, the average size of the shadow economy (as a percentage of "official" gross domestic product) in 2006 in 98 developing countries is 38.7 percent; in 21 Eastern European and Central Asian (mostly transition) countries, it is 38.1 percent, and in 25 high-income countries, it is 18.7 percent.

The authors find that the driving forces of the shadow economy are an increased burden of taxation (both direct and indirect), combined with labor market regulations and the quality of public goods and services, as well as the state of the “official” economy.

OECD leading indicators continue to signal a recovery

OECD composite leading indicators (CLIs) for October 2009 continue to point to a recovery in OECD economies; with the CLIs for Canada, France, Italy, Germany and the United Kingdom pointing more strongly to recovery than in last month’s assessment. Financial components (the spread of interest rates, EONIA, EURIBOR, M1) and business confidence are the main drivers to the CLI’s performance in these countries. All major non member economies are in a recovery phase (the change in the outlook for China compared to last month’s release is mainly due to a downward revision in the “Imports from Asia” component). To avoid confusion, it is important to note that the reference to ‘more strongly’ is in the context of the likelihood of recovery rather than the strength of the recovery per se (see interpreting OECD CLIs).

The CLI for the OECD area increased by 1.0 point in October 2009 and was 5.7 points higher than in October 2008. The CLI for the United States increased by 1.0 point in October, 3.9 points higher than a year ago. The Euro area’s CLI increased by 1.3 point in October, 8.8 points higher than a year ago. The CLI for Japan increased by 1.2 point in October, 2.2 points higher than a year ago.

OECD - Measuring innovation: A new perspective

Five interrelated priorities for government action

The Innovation Strategy is built around five priorities for government action, which together can underpin a strategic approach to promoting innovation:

  1. Empowering people to innovate
  2. Unleashing innovation in firms
  3. Creating and applying knowledge
  4. Applying innovation to address global and social challenges
  5. Improving the governance of policies for innovation

IMF on global prospects and policy exit

The global economy has returned to positive growth following dramatic declines. The recovery is, however, uneven and not yet self-sustaining, notably in advanced economies. Financial conditions have continued to improve, but are still far from normal.

Going forward, the global economic recovery is expected to be sluggish and inflation will remain low. The most pressing policy challenges over the near term include maintaining economic recovery momentum and, for emerging economies, dealing with capital inflows.

Principles for Policy Exit Exit strategies should pave the way for strong, sustained and balanced economic growth. The Principles below are intended to establish common ground for the design and implementation of policies during the exit from the extraordinary support measures taken during the crisis.

Principle 1. The timing of exits should depend on the state of the economy and the financial system, and should err on the side of further supporting demand and financial repair.

Principle 2. With some exceptions, fiscal consolidation should be a top policy priority. Monetary policy can adjust more flexibly when normalization is needed.

Principle 3. Fiscal exit strategies should be transparent, comprehensive, and communicated clearly now, with the goal of lowering public debt to prudent levels within a clearly-specified timeframe.

Principle 4. Stronger primary balances should be the key driving force of fiscal adjustment, beginning with actions to ensure that crisis-related fiscal stimulus measures remain temporary.

Principle 5. Unconventional monetary policy does not necessarily have to be unwound before conventional monetary policy is tightened.

Principle 6. Economic conditions, the stability of financial markets, and market-based mechanisms should determine when and how financial policy support is removed.

Principle 7. Making exit policies consistent will improve outcomes for all countries. Coordination does not necessarily imply synchronization, but lack of policy coordination could create adverse spillovers.

Full text

IMF warns on borrowing risk

Massive government borrowing programs threaten to choke a still-fragile global economic recovery by pushing interest rates higher and reducing available credit for the private sector, the International Monetary Fund has warned.

The fund's latest review of global financial stability says that although the extreme risks of a year ago have abated, the world's banks are still facing huge bad debts that could yet cause a "double-dip" global recession.

The fund is concerned that weakened banks, which have $US1.5 trillion ($1.71 trillion) in bad debts to write off, will be unable to provide business and households with the credit needed when governments are mopping up so much available funds. "Since all credit providers can buy sovereign debt, sovereign issuance will effectively compete with - and possibly crowd out - private sector credit needs," the fund said.

IMF’s World Economic Outlook

IMF’s Press Briefing on World Economic Outlook: Anyaltic Chapters 3 and 4]

  • Olivier Blanchard, IMF Economic Counsellor and Research Department Director
  • Jörg Decressin, Division Chief, World Economic Studies Division
  • Petya Koeva Brooks, Deputy Division Chief, World Economic Studies
  • Alasdair Scott, Senior Economist, World Economic Studies
  • Conny Lotze, Deputy Division Chief, Media Relations

Washington, D.C., Tuesday, September 22, 2009

Webcast of the press briefing

IMF Cross-Country Fiscal Monitor

  • Mixed news on the fiscal front. Underlying fiscal trends in advanced economies are weaker than previously projected, but lower expected costs of financial sector support in the United States mean that 2009 headline numbers are better. Among emerging markets, 2009–10 headline deficit forecasts are better than July projections. The fiscal policy stance is projected to remain supportive of economic activity in advanced countries in 2009–10, but a tightening is projected for emerging economies next year.
  • New evidence on underlying fiscal weakening in advanced countries during the last few years. Many advanced economies entered the crisis with relatively weak structural fiscal positions, and these have been eroded further, not only by anticrisis measures but also by underlying spending pressures. This will raise the bar on fiscal adjustment. The outlook for emerging economies is stronger, if fiscal tightening plans materialize in 2010. But these countries remain exposed to considerable risks, which are quantified through new statistical analysis.
  • New estimates of needed medium-term fiscal adjustment in advanced economies. Government debt in advanced G-20 economies is projected to reach 118 percent of GDP in 2014, even assuming some discretionary tightening next year. Getting debt below 60 percent by 2030 will require raising the average structural primary balance by 8 percentage points of GDP relative to 2010 (10½ percentage points for the headline primary balance). Action will be needed on entitlement spending, on other spending, and on revenues. Japan, the United Kingdom, Ireland and Spain are projected to require the largest fiscal adjustment. Only Denmark, Korea, Norway, Australia and Sweden among advanced economies will require little or no medium-term adjustment to keep debt stocks at safe levels.
  • A fresh look at previous large adjustment episodes. Many G-20 economies have achieved big declines in debt ratios in the past. Improvements in the primary balance were at the core of these efforts. Faster growth can also help. Faster inflation is not an effective debt-reducing strategy: raising inflation to 6 percent for five years would erode less than one fourth of the projected trend increase in debt ratios.
  • New IMF research on government debt, deficits and interest rates. Fiscal deficits and government debt levels both affect interest rates. Stabilizing debt at post-crisis levels would imply higher interest rates (perhaps by 2 percentage points). Moreover, there are important nonlinearities: the impact on interest rates of each additional percentage point of debt or deficit increases as the initial debt or deficit level rises, pointing to a risk that government debt could snowball without corrective action. This underscores the need for governments to announce credible exit strategies now, even if it is premature to begin exiting from fiscal support.

IMF Regional Economic Outlook Reports

These reports discuss recent economic developments and prospects for countries in various regions. They also address economic policy developments that have affected economic performance in the regions and discuss key challenges faced by policymakers. The reports include data for countries in the regions.

Patterns in global saving and investment

There have been substantial changes in the size and distribution of current account balances around the world in recent decades. This article focuses on the differences in the saving and investment ratios of the major countries and emerging regions that have underpinned these changes.

It shows that saving and investment ratios as a share of GDP have, for many decades, been much higher in Asia than in all other regions of the world, with persistent current account surpluses in Asia offsetting deficits in other areas. The article also shows that, in contrast to the early 2000s when the US current account deficit widened as the saving ratio fell, since the mid 2000s the investment and saving ratios in the United States have broadly moved commensurately, and hence the US current account deficit has been fairly stable as a share of GDP.

The large increases in the current account surpluses of China and the oil exporters between 2005 and 2008 – as their saving ratios increased more than their investment ratios – have instead been associated with larger current account deficits in major countries and regions outside of the United States. The article concludes with a review of the near-term trends in these aggregates in light of the global recession.

Global deficits and spending

Globally governments have been affected differently by the credit crunch. Public borrowing has been rising in all countries as the crisis has caused the economy to shrink, cutting tax revenues.

But some countries, like the US and the UK, have been more severely affected as they already had large deficits and have had to spend heavily to bail out their banking sector. Other G20 countries have fared better.

Use the map here to see how different countries' budget deficits , surpluses and stimulus plans compare.

EU interim forecast

The economic situation has improved markedly since the second quarter, pointing to a better growth outlook for the second half of the year. But as economic activity at the end of 2008 and beginning of 2009 was worse than initially estimated, GDP is still expected to fall by 4% overall this year in both the EU and the euro area, as forecast in the spring. However, uncertainty remains rife, and while the recovery may surprise on the upside in the very short term, how sustainable it will be remains to be seen. The Commission's forecasts for inflation in 2009 also remain unchanged at 0.9% in the EU and 0.4% in the euro area, with the base effects of past hikes in energy and food prices, which were pushing prices down, fading away and no other significant inflationary pressures in view.

" The situation has improved – mainly due to the unprecedented amounts of money pumped into the economy by central banks and public authorities – but the weak economy will continue to take its toll on jobs and public finances. We need to continue implementing the recovery measures announced for this year and 2010 and accelerate the repair of the financial sector to make sure banks are ready to lend at reasonable terms when companies and households resume their investment plans. And we need to define a clear, credible and coordinated 'exit' strategy to put public finances progressively back on a sustainable path and to find the necessary resources to increase Europe's growth and jobs potential ," said Joaquín Almunia, Economic and Monetary Affairs Commissioner.

Tailwinds have gained strength during the summer, as the global economy has started to stabilise, partly as a result of strong policy interventions. Helped by improved financial conditions, the fall in EU GDP slowed significantly in the second quarter (to ‑0.2% quarter-on-quarter (q-o-q) from ‑2.4% in the first quarter of 2009). With the inventory cycle at a turning point and confidence improving in almost all sectors and countries, the near-term outlook is favourable.

Based on these trends, growth projections for the second half of this year have been revised slightly upward in the Commission’s forecast. But because of downward revisions to the previous estimates for 2008 and the first quarter of 2009, the rate of the projected fall in GDP in 2009 as a whole remains unchanged at 4% in both the EU and the euro area. This is calculated on the basis of updated projections for France, Germany, Italy, the Netherlands, Poland, Spain and the United Kingdom, which together account for about 80% of the EU’s GDP.

Doing business globally

The number of reforms hit a record level this year. Between June 2008 and May 2009, 287 reforms were recorded in 131 economies.

Low and lower-middle-income economies set the fast pace - these economies accounted for two-thirds of reforms in 2008/09.

Money figures show there's trouble ahead

Private credit is contracting on both sides of the Atlantic. The M3 money data is flashing early warning signals of a deflation crisis next year in nearly half the world economy. Emergency schemes that have propped up spending are being withdrawn, gently or otherwise.

Unemployment benefits have masked social hardship unto now but these are starting to expire with cliff-edge effects.The jobless army in Spain will be reduced to €100 a week; in Estonia to €15. Whoever wins today's elections in Germany will face the reckoning so deftly dodged before. Kurzarbeit, that subsidises firms not to fire workers, is running out. The cash-for-clunkers scheme ended this month. It certainly "worked".

Car sales were up 28pc in August, but only by stealing from the future. The Center for Automotive Research says sales will fall by a million next year: "It will be the largest downturn ever suffered by the German car industry."

Fiat's Sergio Marchionne warns of "disaster" for Italy unless Rome renews its car scrappage subsidies. Chrysler too will see some "harsh reality" following the expiry of America's scheme this month. Some expect US car sales to slump 40pc in September.

Weaker US data is starting to trickle in. Shipments of capital goods fell by 1.9pc in August. New house sales are stuck near 430,000 – down 70pc from their peak – despite an $8,000 tax credit for first-time buyers. It expires in November.

We are moving into a phase when most OECD states must retrench to head off debt-compound traps. Britain faces the broad sword; Spain has told ministries to slash 8pc of discretionary spending; the IMF says Japan risks a funding crisis.

If you look at the sheer scale of global stimulus this year, what shocks is how little has been achieved. China's exports were down 23pc in August; Japan's were down 36pc; industrial production has dropped by 23pc in Japan, 18pc in Italy, 17pc in Germany, 13pc in France and Russia and 11pc in the US.

Call this a "V-shaped" recovery if you want. Markets are pricing in economic growth that is not occurring.


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