Saturday, 19 of August of 2017

Economics. Explained.  

Category » Reference Charts (By Category)

Consumer Sentiment

August 18, 2017

Consumer sentiment for August jumped 4.2 points to 97.6 after having fallen 1.7 points in July. The resurgence in sentiment in August was entirely attributable to an increase in the expectations component.  The 98.5 reading for sentiment in January was the highest level of confidence thus far in the business cycle.

Richard Curtin, the chief economist for the Surveys of Consumers, said “Too few interviews were conducted following Charlottesville to assess how much it will weaken consumers’ economic assessments. The fallout is likely to reverse the improvement in economic expectations recorded across all political affiliations in early August. Moreover, the Charlottesville aftermath is more likely to weaken the economic expectations of Republicans, since prospects for Trump’s economic policy agenda have diminished.”

Based in part on the expectation of major changes in policy likely to be implemented eventually, we expect GDP growth for 2017 to be 2.3% and 2.8% in 2018.  We expect the economic speed limit to be raised from 1.8% to 2.8% within a few years.  That will accelerate growth in our standard of living.We expect worker compensation to increase 4.0% in 2017 vs. 3.0% last year. The core inflation rate should be reasonably steady this year at 1.9% thanks to a price war in the cell phone industry and falling prescription good prices caused by intimidation from President Trump.   However prices should rise by 2.5% in 2018.  Such a scenario would keep the Fed on track for the very gradual increases in interest rates that it has noted previously.  Specifically, we expect the funds rate to be 1.25% by the end of 2017 and 2.0% by the end of 2018.

The increase in sentiment was evident in both the current conditions and expectations components.

Consumer expectations for six months from now declined from 80.5 to 89.0.

Consumers’ assessment of current conditions rose  in August deteriorated from  113.4 to 111.0 .

Trends in the Conference Board measure of consumer confidence and the University of Michigan series on sentiment move in tandem, but there are often month-to-month fluctuations.  Both series remain at levels that are consistent with steady growth in consumer spending at a reasonable clip of  about 2.5% in the quarters ahead.

Stephen Slifer


Charleston, SC

Industrial Production

August 17, 2017

Industrial production rose 0.2% in July after having risen 0.4% in June.  Over the past year this series has risen 2.2% and is clearly on the upswing.  The year-over-year increase in the largest since January 2015 — 2-1/2 years ago.  The monthly gains sometimes seem disappointing, but the reality is that production is gradually picking up but the quickening, thus far, has been largely associated with oil well drilling.

Breaking industrial production down into its three major sub-components,  the Fed indicated that manufacturing production (which represents 75% of the index) declined 0.1% in July after having risen 0.2% in June. During the past year  factory output has risen 1.2% (red line, right scale).  It has clearly hit bottom.

The manufacturing category has been dragged down by recent cuts in the production of motor vehicles.  Manufacturing production ex motor vehicles has risen 1.7% in the past year.  Thus, factory output has been climbing, but its rate of increase has been curtailed by the recent slowdown in the sales and production of motor vehicles.

Mining (14%) output rose 0.5% in July after having risen 2.0% in June.   Over the past year mining output has risen 10.2%.  Most of the recent upturn in mining has been concentrated in oil and gas drilling activity  which declined 0.9% in July after having risen 6.8% in June.  The July drop follows gains in each of the previous thirteen months.  Over the course of the past year oil and gas well drilling has risen 100.3%.  The number of  oil rigs in operation continues to climb.

Utilities output  rose 1.6% in July after having declined 1.2% in June.  During the past year utility output has fallen 0.6%.

Production of high tech equipment declined 0.1% in after having fallen 0.4% in June.  Over the past year high tech has risen 3.2%.   The high tech sector sector appears to have gathered some momentum during the past several months. This may be an early indication that the long slide in nonresidential investment may be coming to an end which would, in turn, signal some upturn in productivity growth.

Capacity utilization in the manufacturing sector declined 0.1% in July to 75.4% after having risen 0.1% in June.  It is still below the 77.5% that is generally regarded as effective peak capacity.

Stephen Slifer


Charleston, SC

Initial Unemployment Claims

August 17, 2017

Initial unemployment claims declined 12 thousand in the week ending August 12 to 232 thousand.  Because these weekly data can be volatile the focus should be on the 4-week moving average of claims (shown above), which is a less volatile measure.  It was unchanged at 241 thousand.  The late February average of 234 thousand was the lowest level for this series since April 14, 1973 — 44 years ago!  It is holding very close to that 44 year low.

Ordinarily, with initial unemployment claims (the red line on the chart below, using the inverted scale on the right) at 241 thousand  we would expect monthly  payroll employment gains to exceed 300 thousand.  However, employers today are having difficulty finding qualified workers.  As a result, job gains are significantly smaller than this long-term relationship suggests and are currently about 170 thousand.

With the economy essentially at full employment, employers will have steadily increasing difficulty getting the number of workers that they need.  As a result, they will be forced to offer some of their part time workers full time positions.  This series is still a bit high relative to where it was going into the recession.

They will also have to think about hiring  some of our youth (ages 16-24 years) .  But the youth unemployment rate today is the lowest it has been in 17 years so there are not many younger workers available for hire.

Finally, employers may also consider some workers who have been unemployed for an extended period of time.  But these workers do not seem to have the skills necessary for today’s work place.  Employers may have to offer some on-the-job training programs for  those whose skills may have gotten a bit rusty.  But even if they do, the reality is that the number of discouraged workers today is quite low — toughly in line with where it was going into the recession.

The number of people receiving unemployment benefits fell 3 thousand in the week ending August 5 to 1,953 thousand.  The four week moving average declined 6 thousand to 1,960 thousand. In mid-May the 4-week average came in 1,916 which was the lowest level for this 4-week average since January 12, 1974 when it was 1,881.   The only way the unemployment rate can decline is if actual GDP growth exceeds potential.  Right now the economy is climbing by about 2.0%; potential growth is  projected to be about 1.8%.  Thus, going forward  the unemployment rate will continue to decline quite slowly.

Stephen Slifer


Charleston, SC

Gasoline Prices

August 16, 2017

Gasoline prices at the retail level were unchanged in the week ending August 14 at $2.38 per gallon.   In the low country of South Carolina gasoline prices tend to about $0.25 below the national average or about $2.13. The Department of Energy expects national gasoline prices to average $2.33 this year — almost exactly where they are currently.

As the price of gasoline declined the economy got a tailwind. However,  oil prices today are 10.0% higher today than they were a year ago.  Hence, the tailwind effect on the economy has run its course but has not yet turned into a significant headwind.

Crude oil prices are currently about $47.00 mark.  The Energy Information Agency predicts that crude prices will average $48.88 in 2017.  As crude oil and gas prices have leveled off the underlying inflationary pressures have become more apparent although currently there is less upward pressure on the inflation rate than what most economists, us included, had expected.

The number of oil rigs in service dropped 79% to 404 thousand  after reaching a peak of 1,931 wells in September 2014.  However, the number of rigs in operation has actually rebounded in recent months to 949 thousand.  Thus,  higher crude oil prices are encouraging some drillers to step up slightly the pace of production.

While the number of oil rigs in production has been cut by 79% between late 2015 and the middle of last year, oil production has declined much less than that.  Since that time the rebound in oil prices has encouraged oil firms to step up the pace of production and at 9,502 million barrels it is now only about 1% lower than its June 2015 peak pace of production which was 9,610 thousand barrels.  We should match that record pace of production by early next year.  The Department of Energy expects production to average 9.3 million barrels per day in 2017 and 9.9 million barrels next year.

How can the number of rigs go down but production be relatively steady?  Easy.  Technology in the oil sector is increasing rapidly which allows producers to boost production while simultaneously shutting down wells.  For example, output per oil rig has increased by 27% in the past twelve months.  Put another way, a year ago some frackers could not drill profitably unless crude oil prices were about $70 per barrel.  Today that number has declined to about about $44 per barrel.  Six months from now that number will be lower still.

While oil inventories gradually declined for most of 2016 the increase in production earlier this year caused inventory levels to climb to a record high level in February.  Since that time inventory levels have been steadily shrinking.  We know that OPEC output has been reduced, but its cutback has been partially offset by a significant pickup in U.S. production.  More import is strong demand.  We are seeing a quickening of GDP growth not only in the U.S. but around the world.  Oil stocks have been falling steadily, but they remain far above their five year average.

Stephen Slifer


Charleston, SC

Housing Starts

August 16, 2017

Housing starts fell 4.8% in July to 1,155 thousand after having jumped 7.4% in June. Because these data are particularly volatile on a month-to-month basis, it is best to look at a 3-month moving average of starts (which is the series shown in blue above).   That 3-month average now stands at 1,166 thousand which has fallen off from the 1,264 thousand peak pace in the cycle which was registered back in February.    So what is happening?  Is it a drop in demand?  Or a constraint on the part of builders?  We  believe it is the latter.

Both new and existing home sales continue to climb.   Thus, the demand for housing remains robust.

Builders remain enthusiastic in part because they see traffic through the model homes quite steady at a rapid rate.

Mortgage rates are at 3.9% which is quite low by any historical standard.

At the same time employment gains are about 170 thousand per month which is boosting income.  As a result, real disposable income (what is left after inflation and taxes) is growing at a 1.2% pace.  That is not particularly robust, but disposable income does hit slack periods from time to time and then rebounds.

Housing remains affordable for the median-price home buyer.  Mortgage rates may have risen, but income has been rising almost as quickly, hence affordability has not dropped much.  At 153.0 the index  indicates that a median-income buyer has 53.0% more income than is necessary to purchase a median-priced house.

The problem in housing is not a lack of demand.  Rather it is a constraint on the production side.  Builders have had difficulty finding an adequate supply of skilled labor.  Construction employment is growing by about 15 thousand per month.  Slow, but steady.

As one might expect there is a tight correlation between home builder confidence and the starts data which probably makes a great deal of sense.   Judging by the homebuilder confidence data we should expect starts to eventually climb to 1.5 million or so from about 1.2 million currently.  However,  as noted above, many home builders  report an inability to get the skilled workers they require.   Overcoming the labor shortage on a long-term basis will be challenging.  Employment in the construction industry will continue to climb, but slowly, which will limit the speed with which starts rise in the months ahead.

Another thing worth noting is that about 1.3 million new households are being formed every year.  Those families all need a place to live, either a single-family home or an apartment.  Thus, we need to see housing starts rise by 1.3 million just to keep pace with growth in households.  And because housing starts were substantially below the growth in households for so long, there is pent-up demand.  We expect starts to reach 1.2 million by the end of 2017 and 1.4 million in 2018.

What is interesting is that beginning late last year single family starts have begun to climb while multi-family buildings such as apartments have been slowing down.  It appears that many of the millennials who chose to rent for the last decade are getting older, perhaps starting families, and are now choosing to purchase a single family house.  In the past year single family starts have risen 10.4% while multi-family units have declined by 22.3%.

As a result, multi-family construction as a percent of the total has slipped from 36.2% in July of last year to 27.2%.

Building permits declined 4.1% in July to 1,223 thousand after having jumped 9.2% in July.  Because  permits are another volatile  indicator it is best to look at a 3-month average (which is shown below).  That 3-month moving average now stands at 1,222 thousand which continues to point towards slow but steady improvement in housing.   The reason people look at permits is because a builder must first attain a permit before beginning construction.  Thus, it is a leading indicator of what is likely to happen to starts several months down the road.  If permits are currently at 1,222 thousand, housing starts will gradually approach the 1.3 million mark.

Stephen Slifer

Charleston, SC

Homebuilder Confidence

August 15, 2017

Homebuilder confidence jumped 4 points in August to 68 after having declined 2 points in July.  Confidence is bouncing around from month to month at a very high level.    Clearly, builders believe that the housing market will perform well in 2017.

“Our members are encouraged by rising demand in the new-home market,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “This is due to ongoing job and economic growth, attractive mortgage rates, and growing consumer confidence.”

NAHB Chief Economist Robert Dietz said  “Builders continue to face supply-side challenges, such as lot and labor shortages and rising building material costs.”

Traffic through the model homes edged higher by 1 point in July to 49 after having declined by 1 points in July.  The March reading of 53 was the highest reading thus far in the business cycle.

Not surprisingly there is a close correlation between builder confidence and housing starts.  Right now starts are lagging considerably because builders are having some difficulty finding financing, building materials, an adequate supply of finished lots, and skilled labor.  Starts  currently are at a 1.2 million pace.  They should continue to climb gradually in the months ahead and reach 1.4 million by the end of 2017.

Stephen Slifer


Charleston, SC

Retail Sales

August 15, 2017

Retail sales jumped a larger-than-expected 0.6% in July plus there were upward revisions to the two previous months.  June sales revised upwards from a decline of 0.2% to an increase of 0.3% and May revised upwards from a decline of 0.1% to no change.  During the course of the past year sales have risen a solid 4.2%.  Earlier data suggested that consumer spending had hit a soft spot, but that apparent slowdown just got revised away with the upward revisions to May and June and a strong pace in July.

Sometimes sales can be distorted by changes in autos which tend to be quite volatile.  In this particular instance the unit selling rate for car sales slipped during May and June abut rose slightly in July.  Clearly, this component has had a rough couple of months.

Fluctuations in gasoline prices can also distort the underlying pace of retail sales.  If gas prices rise, consumer spending on gasoline can increase even if the amount of gasoline purchased does not change.  Gasoline sales declined 0.4% in July after having dropped 1.5% in June.

Perhaps the best indicator of the trend in sales is retail sales excluding the volatile motor vehicles and gasoline categories.  Such sales rose 0.5% in July after having climbed by 0.3% in June.   In the last year retail sales excluding cars and gasoline have risen 4.0%.  No slowdown evident from looking at these sales data.

While there has been a lot of disappointment about earnings in the traditional brick and mortar establishments (like Macy’s, Sears, K-Mart, and Limited) the reality is that they need to develop a better business model.  The action these days is in non-store sales which have been growing rapidly. Consumers like the ease of purchasing items on line.  While sales at traditional brick and mortar general merchandise sales have risen 1.9% in the past year, on-line sales have risen a steamy 11.2%.  As a result, their share of total sales has been rising steadily and now stands at 11.0% of all retail sales.  That percentage has risen from 10.3% at this time last year.

We do not believe the recent softness in retail sales represents a change in trend for a variety of reasons.  First of all,  existing home sales are selling at the fastest rate thus far in the cycle.  Consumers do not purchase homes and cars — the two biggest ticket items in their budget — unless they are feeling confident about their job and the future pace of economic activity.  If home sales are holding up well, car sales should  rebound in the months ahead.  As noted earlier, car sales are a particularly volatile category.

Second, the stock market is at a record high level.  That increase in stock prices boosts consumer net worth.

Third, all measures of consumer confidence are close to their highest level thus far in the business cycle.

Fourth, cuts in individual income tax rates are likely later this  year or in 2018.

Finally, the economy is cranking out 170 new jobs every month which boosts consumer income.  Consumers have paid down a ton of debt and debt to income ratios are the lowest they have been in 20 years.  That means that consumers have the ability to spend more freely and boost their debt levels if they so choose.

Thus, the pace of consumer spending seems steady.  We continue to expect GDP growth to quicken to 2.3% in 2017 and 2.8% next year.

Stephen Slifer


Charleston, SC

Consumer Price Index

August 11, 2017

The CPI rose 0.1% in July after having been unchanged in June.  During the past year the CPI has risen 1.7%.  The year-over-year increase climbed to 2.8% in February before settling back in the past five months. .  Excluding food and energy the CPI rose 0.1% for the fourth consecutive month.  Over the past year this so-called core rate of inflation has also risen 1.7%.

Food prices rose 0.2% in July after having been unchanged in June.  Food prices have risen 1.1% in the past twelve months.

Energy prices fell 0.1% in July after having declined 1.6% in June.  These prices are always volatile on a month-to-month basis.   Over the past year energy prices have risen 3.4%.  Energy prices should be relatively flat between now and yearend.

Excluding the volatile food and energy components, the so-called “core” CPI rose 0.1% in April, May, June, and July.  The year-over-year increase now stands at 1.7%.  The year-over-year increase in the core CPI had risen to as high as 2.3% in January before retreating.  But a lot of this softening reflects a price war amongst telecommunications firms and thereby distorts the overall run-up.  But that exaggerated price drop appears to have run its course as phone prices have only edged lower in each of the past three months.

The core CPI has also benefited from a sharp slowdown in the rate of increase of prescription drug prices.  That appears to reflect President Trump’s threat to the pharmaceutical industry that he intends to cut the prices of prescription drugs by allowing consumers to purchase such drugs overseas, and by having Medicare negotiate prices directly with the insurance companies.  That caused prescription drug prices to slow markedly late last year and in the first five months of this year.  However, such prices rose 1.0% in June and 1.3% in July.  This downward bias to the CPI stemming from a reduced rate of increase in drug prices also appears to have run its course.

While the CPI, both overall and the core rate, have been very well contained in the first half of this year we believe that as the year progresses the core rate of inflation will have an upward bias  because of what has been happening to both shelter prices and gradually rising labor costs which reflects the tightness in the labor market.

Shelter costs rose 0.1% in July after having risen 0.2% in both May and June.  In the  past year they have climbed 3.2%.  This undoubtedly reflects the shortages of both rental properties and homeowner occupied housing. Indeed, the vacancy rate for rental property is at a 30-year low. This steady rise in the cost of shelter  will continue for some time to come and, unlike monthly blips in food or energy, it is unlikely to reverse itself any time soon.


The Fed’s preferred measure of inflation is not the CPI, but rather the personal consumption expenditures deflator, specifically the PCE deflator excluding the volatile food and energy components which is currently expanding at a 1.5% rate and is poised to head higher.  The Fed has a 2.0% inflation target.  However, going forward we have to watch out for the steady increases in shelter which, as noted above, is being pushed higher by the shortage of both rental properties and homeowner-occupied housing.   Shelter is a long-lasting problem and given its 33% weighting in the CPI it will introduce an upward bias to inflation for some time to come.  We also have to watch rising medical costs and the impact of higher wages triggered by the shortages of available workers in the labor market.

Why the difference between the CPI and the personal consumption expenditures deflator?  The CPI is a pure measure of inflation.  It measures changes in prices of a fixed basket of goods and services each month.

The personal consumption expenditures deflator is a weighted measure of inflation.  If consumers feel less wealthy in some month and decide to purchase inexpensive margarine instead of pricy butter, a weighted measure of inflation will give more weight to the lower priced good and, all other things being unchanged, will actually register a decline in that month.  Thus, what the deflator measures is a combination of both changes in prices and changes in consumer behavior.

As we see it, inflation is a measure of price change (the CPI).  It is not a mixture of price changes and changes in consumer behavior (the PCE deflator).  The core CPI currently is at 1.7%.  However, with the economy growing steadily, rents rising, and the unemployment rate falling, the core inflation rate should pick up during 2017 and rise by 1.8% in 2017 and 2.5% in 2018.  And because the core PCE increases at a rate slightly slower than the core CPI, the core PCE should increase  1.7% in 2017 and  1.9% in 2018.  Both rates are trending higher.

Keep in mind that real short-term interest rates are negative.  With the funds rate today at 1.0% and the year-over-year increase in the CPI at 1.7% the “real” or inflation-adjusted funds rate is negative 0.7%.  Over the past 57 years that “real” rate has averaged about 1.0% which should be regarded as a “neutral” real rate.  Given a likely pickup in GDP growth this year and next and a gradual increase in the inflation rate, we regard a negative real interest rate inappropriate in today’s world.  The Fed should continue to push rates higher.

Stephen Slifer


Charleston, SC


August 10, 2017

The Producer Price Index for final demand – intermediate demand  includes producer prices for goods, as well as prices for construction, services, government purchases, and exports and covers over 75% of domestic production.

Producer prices for final demand fell 0.1% in July after having risen 0.1% in June.  During the past year this inflation measure has risen 2.0%.  It has been bouncing around in a range from 2.0-2.5% for the past six months.

Excluding food and energy producer final demand prices also fell 0.1% after having risen 0.1% in June.  They have risen 1.8% since July of last year.  This series has not climbed above the 2.0% mark since April 2014 but it is obviously getting close.  Some economists are once again beginning to fret about deflation.  Forget about it.  Not going to happen.  This series continues to track near the Fed’s desired 2.0% pace.

This overall index can be split apart between goods prices and prices for services.

The PPI for final demand of goods was unchanged in July after having risen 0.1% in June. These prices have now risen 2.4% in the past year (left scale).  Excluding the volatile food and energy categories the PPI for goods fell 0.1% in July after having risen 0.1% in June.  During the past year the core PPI for goods has risen 2.0% (right scale).  It steadily accelerated for more than a year but has leveled off in recent months.

Food prices were unchanged in July after having jumped 0.6% in June.  Food prices are always volatile.  They can fall sharply for a few months, but then reverse direction quickly.  Over the past year food prices have risen 1.9%.

Energy prices declined 0.3% in July after having fallen 0.5% in June.  Energy prices have risen 4.3% in the past year.  These prices are also very volatile.

The PPI for final demand of services fell 0.2% in July after having risen 0.2% in June.  This series has risen 1.7% over the course of the past year (left scale).  The 2.1% year-over-year increase for May was the largest 12-month increase in this services index since January 2015.  Changes in this component largely reflect a change in margins received by wholesalers and retailers (apparel, jewelry, and footwear in particular).  The PPI for final demand of services excluding trade and transportation rose 0.2% in July after having risen 0.3% in June.  It has climbed 2.0% during the past year.  The 2.2% year-over-year increase for June was the largest 12-month increase thus far in the business cycle.  Once again, any concern about deflation in the United States is totally off base.  Not going to happen.

Because the PPI measures the cost of materials for manufacturers, it is frequently believed to be a leading indicator of what might happen to consumer prices at a somewhat later date.   However, that connection is very loose.

It is important to remember that labor costs represent about two-thirds of the price of a product while materials account for the remaining one-third.  So, a far more important variable in determining what happens to the CPI is labor costs.  With the unemployment rate currently at 4.3%, the labor market is beyond full employment.  As a result, wages pressures are sure to rise, and once that happens firms are almost certain to pass that along to the consumer in the form of higher prices.

Some upward pressure on labor costs, rents, and medicare care will further increase the upward pressure on inflation.  We expect the core CPI to increase 1.9% in  2017 and 2.5% in 2018.

Stephen Slifer


Charleston, SC

Nonfarm Productivity

August 9, 2017

Nonfarm productivity rose 0.9% in the second quarter after having risen 0.1% in the first quarter.   During the course of the past year productivity has risen 1.2%.  The 0.9% increase in the second quarter consists of a 3.3% increase in output and a 2.4% increase in hours worked.

Clearly, productivity growth has slowed. For example, from 2000- 2007 (when the recession began) nonfarm productivity averaged 2.7%.  In the past three years it has been even slower at 0.8%.

Some suggest that productivity is not properly capturing productivity gains in the service sector, particularly with respect to the internet.  For example, apps allow people to book airfares, hotels, and cars from their living room and get directions all at the same time.  But such gains do not appear to be captured anywhere in the productivity data.  The problem with that assertion is that manufacturing productivity  — which can be more accurately measured — has experienced a similar slowdown.  From 2000- 2007 (when the recession began) manufacturing productivity averaged 5.0%.  In the last three years it has risen 0.1%.

Another part of the problem could be that retiring baby boomers could be leaving both their jobs and the labor force, and taking some of their knowledge with them which is adversely impacting the growth rate for productivity.

The basic problem however, in our view, is that businesses remain reluctant to invest despite a record stockpile of cash, near record low interest rates, and a booming stock market.  Investment is the primary driving force behind rapid gains in productivity.  Unfortunately, business leaders appear to be bothered by uncertainty about future tax rates (will the corporate tax rate get cut and, if so, what deductions might be disallowed), the inability to repatriate overseas earnings to the United States, the rising cost of health care which firms with more than 50 employees have to provide,  and an avalanche of onerous, confusing, and sometimes conflicting regulations.  After several years in which nonresidential investment has been essentially unchanged, it had a dramatic  surge to a 7.0% pace in the first quarter of this year followed by an additional 5.1% increase in the second quarter.  These back-to-back gains could be Trump-related.

President Trump appears likely to bring about change to all of these concerns.  Trump hopes to lower the corporate tax rate from 35% to 15%.  He will allow firms to bring overseas earnings back to the U.S. at a favorable 10% tax rate.  He still hopes to revamp health care.  And he intends to completely revamp the regulatory environment with the elimination of all unnecessary, overlapping, and confusing regulations.  These major changes in policy should unleash a wave of corporate investment spending, and because the pace of investment spending largely determines the rate of growth in productivity, the economic speed limit should climb gradually from 1.8% today to 2.8% within a couple of years.  If these regulatory changes actually happen they would represent the most significant economic events that  have occurred in years!

Stephen Slifer


Charleston, SC