Greenbook/Tealbook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. Content last modified 6/05/2009. CONFIDENTIAL (FR) SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL SITUATION Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System January 10, 1969 SUPPLEMENTAL NOTES The Domestic Economy Auto output, sales, and stocks. As a result of observance of two additional holidays in December by the auto industry, provided by the latest labor contract, a revision has been developed in the working day allowances for auto assemblies for use in the industrial production index. Late trade reports on the auto industry indicate that GM has raised its January output target by about 10 per cent so that total auto assemblies could be at an annual rate of about 8.7 million units instead of the 8.3 million reported in the Greenbook. When the official figures on unit auto sales and stocks for December became available, it also was apparent that some adjustments were necessary in the seasonal adjustment factors used in the preceding year. The December sales rate has been revised upwards to an 8.5 million annual rate from the 8.2 million shown in the Greenbook, and the decline from November is 4 per cent rather than 7 per cent. Stocks of new domestic autos remained at the high November level, rather than declining somewhat as reported earlier, but the number of days supply of cars on hand remained at 56. Retail sales. Retail sales in December declined2.1 per cent from November, for the largest month-to-month decline in 14 months, according to the advance release. Over the year, total sales were up by 7 per cent. Sales of nondurable goods stores dropped 2.4 per cent from November. The important department store category with a 6.6 per cent decline was responsible for a significant proportion of the weakness, but all other major components except drug stores also had lower sales. Sales of durable goods stores declined 1.6 per cent, with the automotive group off 1.8 per cent and the furniture and appliance group down 1.1 per cent. Both durable and nondurable sales are now at lower levels than in any month since May. RETAIL SALES (Per cent change from preceding month) 1968 September Total -0.6 DuDurable goods 1.4 Automotive 3.0 Furniture and appliance -3.0 Lumber, building material, houseware -0.1 All other 0.5 Nondurable goods Apparel Drugs Eating and drinking Food Gasoline General merchandise Department stores Other -1.6 -4.5 -0.5 0.6 -0.8 -1.7 -3.6 -4.5 1.0 October November December -0.5 0.6 -2.1 -3.1 -4.8 -0.9 -2.0 -1.6 -1.8 -3.1 -0.2 -1.1 0.3 2.2 -0.2 2.8 -2.7 -0.3 0.7 0.8 -0.4 -0.2 -0.2 0.1 2.6 2.4 1.7 1.4 2.4 -1.6 0.0 2.3 2.2 2.1 -2.3 -2.4 -5.0 0.5 -2.1 -1.1 -1.0 -5.2 -6.6 -0.7 4,5 GAF -3.7 1.1 1.8 -4.4 Total less automotive -1.5 0.6 1.3 -2.2 Durable less autos -1.0 -0.3 0.8 -1.3 The Domestic Financial Situation Bank credit. The estimated growth in total loans and investments at all commercial banks in December has been revised upward from the amount shown in the Greenbook to reflect a greater increase in loans at large banks outside New York and Chicago in the last week of the month than had been projected earlier. The increase was primarily in security loans and loans to nonbank financial institutions, and presumably reflects only a temporary surge related to year-end "window-dressing." NET CHANGE IN BANK CREDIT All Commercial Banks (Seasonally adjusted annual rates, in per cent) 1968 December Total loans and investments- 10.1 Year11.1 2.2 U.S. Government securities Other securities 13.7 15.6 Total loans 11.5 12.2 5.1 9.7 Business loans All other loans 1/ 2/ 15.4 13.7 All December rates are preliminary estimates based on incomplete data and are subject to revision. Based on December 31, 1968 and 1967 data. Savings flows. The reinvestment experience at large New York City savings banks was very similar to that of 1965-66, with fairly large outflows. Similarly, savings banks in New York State received reduced inflows during the month of December, comparable to those a year earlier. The banks reportedly expected this kind of experience, however, and are said to have been prepared for it. Corporate and municipal bond markets. New bond issues priced after the prime rate increase on Tuesday were accorded a good response by investors. The general improvement in both corporate and municipal markets in the last two days has brought yields down to near the levels prevailing prior to the prime rate action. BOND YIELDS (Weekly averages, per cent per annum) Corporate Aaa New Seasoned With call protection -- S&P High Grade 6.13 (8/30) 6.92 (12/13) 4.15 (8/9) 4.93 (12/27) State and local Government Bond Buyers (mixed aualities) 1968 Low High 5.95 (9/13) 6.53 (12/27) 4.07 (8/9) 4.85 (12/27) Week ending: Dec. 6 13 20 27 Jan. 3 10 6.81 6.92 6.86 6.90 6.33 6.45 6.48 6.53 4.83 4.93 4.93 4.93 4.76 4.82 4.85 4.85 6.55 6.58 4.93 4.93 4.85 4.85 U.S. Government securities market. The Treasury plans to sell $1.75 billion of additional June tax bills on Tuesday, for payment on January 20. Banks again will be allowed to pay for their awards by crediting Treasury tax and loan accounts, but estimates of the value of this privilege vary widely, reflecting differences of opinion among estimators regarding the likely average length of the tax and loan carry. The market took the tax bill announcement in stride, even though the size of the offering is somewhat larger than many market participants were expecting. This favorable response was apparently attributable in part to the general strengthening of the Government securities market that has occurred since the sharp yield advance following the latest prime rate hike. At noon on January 10, rates on most Treasury bills were around 10 to 15 basis points below the levels reached just after the prime rate action (and reported in the Greenbook). The 3-month bill was quoted at 6.10 per cent, and yields on Government bonds were generally about 1/8 of a percentage point lower, The general strengthening of securities markets appears to reflect a growing belief among market participants that the chances for a credit crunch have been over-discounted. In these circumstances some retail buying has developed, at a time when dealer inventories are quite low. Other short-term rates. Secondary market rates on prime New York CD's have receded from their levels just after the prime rate increase, in line with the general interest rate declines since that time. However, the administered rates on commercial paper, finance company paper and bankers' acceptances--which generally tend to lag behind yield movements on other short-term instruments--are 1/8 to 3/8 of a percentage point higher than they were on January 7. KEY INTEREST RATES 1968-69. High . SmLow 1968 Dec. 12 1969 Jan. 9 Short-Term Rates Federal funds (weekly average) 3-months Treasury bills (bid) Bankers' acceptances Euro-dollars Federal agencies Finance paper CD's (prime NYC) Highest quoted new issue Secondary market 4.56 (1/3) 6.43 (1/8) 4.82 5.25 5.43 5.00 5.13 6.29 6.62 7.56 6.49 6.38 (12/214) (1/9) (1/9) (1/9) (1/9) 5.82 (12/11) 6.43 (1/8) 5.89 6.13 7.06 6.02 5.88 6.15 6.62 7.56 6.49 6.38 6.00 (1/9) 6.65 (1/9) 6.00 6.20 6.00 6.65 6.41 6.75 6.62 6.62 5.96 6.00 6.00 6.16 6.33 6.75 6.62 6.57 6.25 (1/9) 6.75 (1/9) 6.25 6.30 6.25 6.75 2.75 (8/8) 6.47 (12/24) 4.00 (1/9) 5.83 3.65 6.06 4.00 5.42 (1/12) 5.16 (8/1) 6.43 (1/7) 6.12 (12/24) 6.05 5.81 6.34 5.99 5.95 (9/5) 6.77 (10/3) 6.58 (1/9) 7.37 (1/2) 6.47 7.18 6.58 7.34 6.13 (8/29) 6.29 (2/2) 6.92 (12/12) 7.14 (12/5) 6.92 7.07 6.90 7.05 Municipal Bond Buyer Index Moody's Aaa 4.07 (8/8) 3.80 (8/8) 4.85 (1/9) 4.58 (1/9) 4.82 4.45 4.85 4.58 Mortgage--Implicit yield in FNMA weekly auction 1/ 7.12 (5/6) 7.71 (6/10) 7.51 (12/9) 7.66 (1/6) 6-months Treasury bills (bid) Bankers' acceptances Commercial paper Federal agencies CD's (prime NYC) Highest quoted new issue Secondary market 1-year Treasury bills (bid) Prime municipals (1/29) (3/7) (2/2) (2/9) (3/7) 5.25 (2/8) 5.20 (1/31) 4.98 5.38 5.50 5.25 (1/29) (3/7) (3/7) (2/9) 5.50 (3/7) 5.45 (1/31) 5.05 (8/1) (12/2 4) (1/9) (1/9) (12/2 6) Intermediate and Long-Term Treasury coupon issues 5-years 20-years Corporate Seasoned Aaa Baa New Issue Aaa With call protection Without call protection 1/ Yield on 6-month forward commitment after allowance for commitment fee and required FNMA stock purchase. Assumes discount on 30-year loan amortized over 15 years. CONFIDENTIAL (FR) SECOND SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System January 13, 1969 Department of Commerce preliminary estimates for 1968 and 1968-IV. (For release January 14, 1969). CONFIDENTIAL - FR January 13, 1969 GROSS NATIONAL PRODUCT AND RELATED ITEMS (Quarterly figures are seasonally adjusted. Expenditures and income figures are billions of dollars, with quarterly figures at annual rates) 1967 1968p Gross National Product Final sales Private 789.7 783.6 605.2 Personal consumption expenditures Durable goods Nondurable goods Services Gross private domestic investment Residential construction Business fixed investment Change in business inventories Nonfarm I II 860.7 853.1 656.0 831.2 829.1 638.6 492.2 72.6 215.8 203.8 533.7 82.5 230.2 221.0 114.3 24.6 83.6 6.1 5.6 127.5 Net Exports 1968 III IVP 852.9 842.1 646.4 871.0 863.5 663.9 887.8 877.8 675.3 519.4 79.0 226.5 213.9 527.9 81.0 228.2 218.7 541.1 85.1 232.7 223.4 546.3 84.8 233.5 228.0 30.0 90.0 7.6 7.2 119.7 29.1 88.6 2.1 1.6 127.3 29.5 87.0 10.8 10.4 127.1 29.5 90.1 7.5 7.3 136.1 31.8 94.2 10.0 9.2 2.4 1.5 2.0 3.3 3.0 Gov't. purchases of goods & services Federal Defense Other State & local 178.4 90.6 72.4 18.2 87.8 197.1 100.0 78.9 21.1 97.1 190.5 97.1 76.8 20.3 93.4 195.7 100.0 79.0 21.0 95.6 199.6 101.2 79.6 21.5 98.4 202.5 101.6 80.0 21.6 100.8 Gross national product in constant (1958) dollars GNP implicit deflator (1958=100) 673.1 117.3 706.9 121.8 692.7 120.0 703.4 121.2 712.3 122.3 719.1 123.5 Personal income Wages and salaries Disposable income Personal saving Saving rate (per cent) 628.8 423.4 546.3 40.2 7.4 685.8 463.5 589.0 40.8 6.9 662.7 448.3 574.4 40.8 7.1 678.1 457.6 586.3 44.0 7.5 694.3 469.0 592.7 37.1 6.3 708.2 479.0 602.5 41.4 6.9 81.6 92.3 88.9 91.8 92.7 95.8* 151.2 163.6 -12.4 176.9 182.2 -5.3 166.6 175.1 -8.6 171.8 181.9 -10.2 182.1 184.9 -2.8 187.1* 186.8 0.3* Corporate profits before tax Federal government receipts and expenditures (N.I.A. basis) Receipts Expenditures Surplus or deficit (-) * Projected. January 13, 1969 CONFIDENTIAL - FR CHANGES IN GROSS NATIONAL PRODUCT AND RELATED ITEMS 1968 1967 1968p I II III IVo -------------- In billions of dollars---------------Gross National Product Inventory change Final sales Private Government 42.1 -8.6 50.8 28.6 22.2 20.2 -6.2 26.4 19.4 7.0 21.7 8.7 13.0 7.8 5.2 18.1 1.5 69.5 50.8 18.7 -3.3 21.4 17.5 3.9 16.8 2.5 14.3 11.4 2.9 GNP in constant (1958) dollars Final sales Private 16.0 24.0 9.8 33.8 32.7 24.2 10.9 16.9 12.4 10.7 2.8 0.1 8.9 12.0 11.1 6.8 4.5 3.6 71.0 --------------- In Per Cent Per Year ---------------Gross National Product Final sales Private 5.6 6.9 5.0 9.0 8.9 8.4 10.0 13.2 12.5 10.4 6.3 4.9 8.5 10.2 10.8 Personal consumption expenditures Durable goods Nondurable goods Services 5.7 3.0 4.4 8.2 8.4 13.6 6.7 8.4 13.7 25.9 14.8 8.2 6.5 10.1 3.0 9.0 10.0 20.2 7.9 8.6 3.8 -1.4 1.4 8.2 Gross private domestic investment Residential construction Business fixed investment -5.4 -0.8 2.8 11.5 22.0 7.7 -6.9 8.4 16.9 25.4 5.5 -7.2 -0.6 0.0 14.3 28.3 31.2 18.2 Gov't. purchases of goods & services Federal Defense Other State & local 14.2 17.1 19.5 8.3 11.4 10.5 10.4 9.0 15.9 10.6 15.3 15.4 11.8 27.4 15.1 10.9 11.9 11.5 13.8 9.4 8.0 4.8 3.0 9.5 11.7 5.8 1.6 2.0 1.9 9.8 GNP in constant (1958) dollars Final sales Private GNP implicit deflator 2.4 3.7 1.9 3.1 5.0 4.9 4.6 3.8 6.4 10.0 9.3 3.5 6.2 1.6 0.1 4.2 5.0 6.9 8.2 3.4 3.8 2.6 2.6 3.9 Personal income Wages and salaries Disposable income 7.2 7.3 6.8 9.1 9.5 7.8 10.8 10.9 10.6 9.3 8.3 8.3 9.6 10.0 4.4 8.0 8.5 6.6 Corporate profits before tax -4.7 13.1 16.4 13.0 1.7 13.4* Federal government receipts and expenditures (N.I.A. basis) Receipts Expenditures 5.7 14.9 17.0 11.4 26.1 15.4 12.5 15.5 23.5 6.6 11.0* 4.1 * Projected. 

Federal Reserve (1969, January 13). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19690114_part3

@misc{wtfs_greenbook_19690114_part3,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1969},
  month = {Jan},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19690114_part3},
  note = {Retrieved via When the Fed Speaks corpus}
}