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 CONDITIONS Prepared for the Federal Open Market Committee July 13, 1973 By the Staff Board of Governors of the Federal Reserve System SUPPLEMENTAL NOTES The Domestic Economy Industrial production. Industrial production rose by an estimated 0.3 percent in June, following an increase of 0.7 percent in May. At 123.9 percent of the 1967 average, the June index was 9.3 percent above a year earlier. Output of business equipment and indus- trial materials advanced further, but production of consumer goods dipped, (The May index was revised up 0.1 to 123.5, while the April index was revised down to 122.7.) Confidential until July 16, p.m. Auto assemblies in June were at an annual rate of 10.2 million units compared to a 10.0 million rate in May. Production of carpeting and furniture rose further in June, but output of some appliances, other household durable goods, and consumer nondurable goods declined. Production of business equipment rose 0.4 percent following a 1.4 percent advance in May. Output of construction products increased in June. production also rose, following a decline in May. Steel Output of most other durable materials and the textile, paper, and chemical industrial materials sector increased. INDUSTRIAL PRODUCTION 1/ Percent changes, annual rates Total index Market groupings Final products Consumer goods Business equipment Materials Industry groupings Manufacturing Durables Nondurables QI 1973 QIV 1972 1973(p) QII 1973 QI QII 1972 QII 1973(p) QIII 1972 QIV 1972 9.1 11.8 8.8 7.9 8.4 6.5 16.3 12.2 10.1 20.3 9.4 7.3 18.6 6.1 4.4 12.9 9.8 10.9 8.6 10.7 9.4 11.6 9.9 8.0 11.9 6.1 14.7 7.5 12.4 6.4 10.0 5.1 2.5 -2.0 3.2 7.1 Mining and utilities 1/ Not compounded. On a compounded basis the annual rates of increase in the total index in these quarters would be .3 or .4 points higher. For release July 16, p.m. - 2 - For the second quarter as a whole, the rise in the total index was substantial, but the rate of increase has been diminishing over the past 3 quarters, as can be seen in the following table. INDUSTRIAL PRODUCTION (1967=100, seasonally adjusted) 973, ,i 1972 June April 1973 May June Total index Market groupings Final products Consumer goods Business equipment 113.4 122.7 123.5 123.9 110.1 122.1 102.4 118.7 129.7 117.4 119.6 130.6 119.1 Materials Industry groupings Manufacturing Durables Nondurables Mininn and .it--lt4 14 116.1 126.4 112.5 106.8 121.3 122.7 122.1 118.3 127.7 125.9 Percent change Month ago Year ago .3 9.3 119.2 129.7 119.6 -.3 -.7 .4 8.3 6.2 16.8 126.6 12,7.8 .9 10.1 123.1 119.1 128.8 127.1 123.3 119.7 128.4 126.8 .2 .5 -.3 -.2 9.6 12.1 5.9 3.3 C onfidential until July 16, p.m. Inventories. Book value of retail trade inventories rose at a $7.8 billion annual rate in May, following an April rate of $6.4 billion. For manufacturing and trade, the May rate was $23.6 billion, compared with $15.1 billion in April and a first-quarter rate (unrevised basis) of $22.2 billion. (Retail as well as manu- facturing inventories have now been revised, though in both cases the revisions appear minor.) The manufacturing and trade inventory-sales ratio rose for the second month; from 1.41 in March it has risen to 1.43 in May-still quite low. -3- Real estate. New homes sold by merchant builders turned upward somewhat in May to a seasonally adjusted annual rate of 704,000, still moderately below the reduced first quarter pace and about the same as in May 1972. Homes available for sale reached a new high in May and continued to equal more than 7 months' supply at the recent rate of sales. Partly reflecting a shift in the mix of demands, the median price of new homes sold dipped in May to $32,000. This was nearly a fifth above a year earlier and remained appreciably higher than the median price of homes still for sale. The median price of existing homes sold in May tended higher, and, at $28,880, was 6 percent above a year earlier. Unit sales of existing homes remained quite strong, at a level nearly a tenth above a year earlier. (Confidential until release July 16, p.m.) NEW SINGLE FAMILY HOMES SOLD AND FOR SALE Homes Sold 1/ Homes for Sale 2/ (Thousands of units) Median price of Homes for Sale Homes Sold (Thousands of dollars) 1972 688 733 761 318 386 402 26.5 28.0 29.1 26.1 27.1 28.3 732 426 30.5 29.4 March (r) 729 426 31.3 29.4 April (p) 678 424 32.8 30.1 May 704 429 32.2 30.9 QI QIII QIV (r) 1973 QI (p) 1/ SAAR. SA, end of period. 2/ r - Revised. p - Preliminary The Domestic Financial Situation Mortgage rates. Average rates on home mortgages increased further, according to the HUD(FHA) field office opinion survey taken in late June. The average contract rate on conventional first new- home mortgages in the primary market rose 10 basis points to 8.05 percent, the highest level since December 1970 and 50 basis points above the recent low in March 1972. The corresponding rate for conventional existing-home mortgages also increased by 10 basis points to 8.10 percent. The average yield on FHA/VA mortgages in the private secondary market (including loans that were eligible for GNMA discount subsidy before the program suspension but excluding loans in the FNMA auction) increased 10 basis points to 7.89 percent--44 basis points above the low in March 1972. - 5 AVERAGE RATES AND YIELDS ON NEW-HOME MORTGAGES Primary market: Conventional loans Spread Level (basis (percent) Level Secondary market: FHA-insured loans Spread (basis Discounts points) (percent) points) (points) -27 31 2.5e 7.8 1971 - Low High 7.55 7.95 -36 52 7.32 7.97 1972 - Low 7.55 15 7.45 5 3.7 High 7.70 61 7.57 48 4.7 Dec. 7.70 55 7.56 41 4.6 7.70 7.75 7.80 7.90 7.95 8.05 32 35 31 44 44 41 7.55 7.56 7.63 7.73 7.79 7.89 17 16 14 27 28 25 4.5 4.6 5.2 5.9 6,4 7.2 1973 - Jan. Feb. Mar. Apr. May June NOTE: FHA series: interest rates on conventional first mortgages fees and charges) are rounded by FHA (excluding additional initial to the nearest 5 basis points. On FHA loans carrying the 7 percent ceiling rate in effect since mid-February 1971, a change of 1.0 points in discount is associated with a change of 12 to Gross yield spread is average mortgage 14 basis points in yield. return, before deducting servicing costs, minus average yield on new Aaa utility bonds. e/ Estimated. CONFIDENTIAL UNTIL RELEASED BY HUD CORRECTIONS Section I - page 2 - line 3: Delete "almost". Section II - present page 5 should be page 6 and present page 6 should be page 5. Section II - page 12 - Table: and 8.5 percent for Both. QII 1973 should be 6.5 percent for MSB's -6- INTEREST RATES 1973 Highs Lows June 18 July 12 13.00 (7/4) 5.61 (1/3) 8.17 (6/13) 9.52(7/11) 5.12 5.63 5.75 5.81 7.20 8.00 8.13 8.75 7.63 9.00 9.50 9.75 Short-Term Rates Federal funds (wkly. avg.) 3-month Treasury bills (bid) Comm. paper (90-119 day) Bankers' acceptances Euro-dollars CD's (prime NYC) 60-89 day Most often quoted new 7.98 9.00 9.50 9.94 (7/4) (7/12) (7/12) (7/9) (1/4) (1/12) (1/11) (1/5) 9.00 (7/11) 5.38 (1/3) 7.88 (6/13) 9.00(7/11) 7.99 (7/2) 8.88 (7/12) 8.65 (7/12) 5.38 (1/4) 5.63 (1/12) 5.64 (1/3) 7.23 7.76 8.00 7.63 8.88 8.75 (7/11) 5.63 (1/3) 7.63 (6/13) 8.75(7/11) Treasury bills (bid) 7.87 (7/2) Federal agencies 8.56 (7/10) 5.40 (1/4) 5.86 (1/2) 6.99 7.59 8.48 7.90 (7/11) 4.90 (7/11) 5.75 (1/3) 7.25 (6/13) 4.00 (6/13) 7.90(7/11) 3.20 (1/3) 7.18 (7/9) 7.19 (7/12) 6.23 (1/4) 6.04 (1/3) 6.65 7.05 7.12 7.19 7.44 (7/12) 8.22 (7/12) 7.10 (1/2) 7.88 (1/12) 7.37 8.14 7.44 8.22 7.95 (7/11) 7.29 (1/10) 7.59 (6/13) 7.95p(7/11) Municipal Bond Buyer Index 5.40 (7/11) 5.00 (1/17) 5.13 (6/13) 5.40 (7/11) Mortgage--implicit yield in FNMA auction 1/ 8.38 (7/9) 7.69 (1/8) 8.04 (6/11) 8.38 (7/9) 6-month Treasury bills (bid) Comm. paper (4-6 mo.) Federal agencies CD's (prime NYC) 180-269 day Most often quoted new 8.65 1-year CD's (prime NYC) Most often quoted new Prime municipals 7.58 4.90(7/11) Intermediate and Long-term Treasury coupon issues 5-years 20-years Corporate Seasoned Aaa Baa New Issue Aaa Utility 1/ Yield on short-term forward commitment after allowance for commitment fee and required purchase and holding of FNMA stock. year loan amortized over 15 years. Assumes discount on 30- 

Federal Reserve (1973, July 16). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19730717_part3

@misc{wtfs_greenbook_19730717_part3,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1973},
  month = {Jul},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19730717_part3},
  note = {Retrieved via When the Fed Speaks corpus}
}