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                      DECPG Daily
        Economics and Financial Market Commentary
                   November 15, 2010
  Mick Riordan (x31289), Cristina Savescu (x80812), Nadia Islam Spivak (x80504)
    Eung Ju Kim (x85804), Shane Streifel (x33867), Annette De Kleine (x34710)
  You’ll find recent issues of this Daily and lots of other current analysis and high-frequency data at our
              intranet website: http://gem or for external users http://www.worldbank.org/gem.

US consumers continue spending. For the fourth month running retail sales
increased, showing that the U.S. recovery is holding firm. Retail sales increased by
1.34% (m/m) in October compared to the 0.79% increase in September. This was the
second highest monthly increase in retail sales since the beginning of this year.
Compared to October 2009, retail sales were up 7.7%. The retail sales increase was
driven by consumer spending on motor vehicles and parts (5.0%, m/m) followed by
building materials and garden equipment (1.9%, m/m). Consumer spending -which is
yet to reach its pre-crisis level- accounts for 70% of U.S. GDP and has been weak
during the recovery, unlike business investment spending. Hence the recent retail sale
increases bodes well for the contribution of personal consumption to GDP in Q4. The
strengthening of retails sales which commenced in the third quarter, was reflected in the
1.79% contribution of consumer spending to U.S. Q3 GDP growth of 2.0%.

Japan's economy grows 3.9% in Q3 2010. Japan's real GDP expanded at a 3.9%
annualized pace in the third quarter, after a 1.8% expansion (revised up from 1.5%) in
Q2 2010 [see Chart at http://gem or http://www.worldbank.org/gem]. Consumer
spending, which accounts for 60% of economic activity, stepped up in September as
Japanese households took advantage of the government's incentive program for
automobile purchases neared its expiration. The government may extend the stimulus
program with another incentive program for household appliances worth 5 billion yen, to
dampen the effects of a strong yen and support consumer spending into next year.


Among emerging markets… In South Asia, India's benchmark wholesale price index
rose 8.52% for the year in September. The slowdown in inflation will allow the central
bank to ease on monetary tightening, and leave the interest rate at 6.25% (600 basis
points higher than the U.S.) after raising rates six times this year.
In Sub-Saharan Africa, Ethiopia's annual inflation spiked in October to 10.6% from 7.5%
in September due to a 5.4% (m/m) increase in the food price index.
Recent issues and other current analysis are also available on the Prospects blog.
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The Daily Brief is a summary of economic news items for Bank staff whose responsibilities require that
they stay abreast of changes in global markets. The views expressed here are those of the various
authors and do not necessarily reflect those of the World Bank Group's Executive Directors or the
countries they represent. The content is subject to copyright and is not for quotation outside of the World
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