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) CLASS II - FOMC August 13, 1976 SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of- the Federal Reserve System TABLE OF CONTENTS THE DOMESTIC NONFINANCIAL ECONOMY Page ............... Industrial production .............. Wholesale prices ......... ........................... Inventories ....................... ......... ... . ... 1 2 4 TABLES: Industrial production................................ Wholesale prices....................................... 2 3 THE DOMESTIC FINANCIAL ECONOMY Mortgage market........................................ 5 TABLES: Average rates and yields on newhome mortgages........................................ Interest rates........................................... 5 6 ERRATAS Part II................. ..... ......... .......... 7 SUPPLEMENTAL NOTES The Domestic Nonfinancial Economy Industrial production is estimated to have increased 0.2 per cent in July following rises of 0.4 in June and 0.9 in May. Most major sectors of production showed little change or small increases last month. Overall activity was also dampened somewhat in July by increased strike activity, notably in coal mining. At 130.4 per cent of the 1967 average, the index is now almost 17 per cent above the March 1975 trough. Products. in July. Output of consumer goods was apparently unchanged After allowance for model changeover, auto assemblies edged off slightly from June; production schedules currently available indicate little change for the remainder of the third quarter. Pro- duction of other consumer durable goods was almost unchanged as small rises in furniture, carpeting and miscellaneous goods were offset by a decline in appliance production. After a substantial rise early this year, output of business equipment has shown only modest increases in recent months, rising by 0.3 per cent in both June and July. Pro- duction of construction supplies rose by 0.4 per cent in July. Materials. Output of nondurable goods materials, which rebounded strongly in the early part of the recovery, has recently been sluggish. However, production of durable goods materials con- tinued to advance strongly in July to a level approximately 25 per cent over the low in the second quarter of 1975 but still 6 per cent below the prerecession high. The materials capacity utilization rate was 81 per cent in July, still 13 per cent below the 1973 peak. - 2 INDUSTRIAL PRODUCTION (Seasonally adjusted) 1976 June (p) May Total 128.4 129.6 130.1 130.4 .2 10.1 1.9 Products, total 128.0 128.8 129.1 129.4 .2 7.0 1.1 Final products Consumer goods Durable goods Nondurable goods Business equipment 126.3 136.1 141.1 134.0 134.1 127.2 137.3 143.3 134.8 134.8 127.2 137.3 144.2 134.6 135.2 127.4 137.3 144.3 134.5 135.6 .2 -.1 -.1 .3 6.4 8.5 14.0 6.2 6.5 1.4 1.6 3.8 .7 1.7 Intermediate products Construction supplies 134.7 128.0 135.0 130.1 136.4 131.4 136.8 131.9 .3 .4 9.4 12.9 .6 1.1 129.2 131.0 131.6 132.0 .3 15.3 2.9 Materials p--preliminary July (e) Per cent changes Month Year QI to QII Ago Ago Apr. Indexes, 1967=100 e--estimated Wholesale prices increased 0.3 per cent (seasonally adjusted, not at an annual rate) from June to July as price increases for industrial commodities more than offset declines in prices of farm and food products. Industrial commodities rose 0.7 per cent, owing mainly to higher prices for fuels and power, metals and metal products, and lumber and plywood. Excluding the fuels and power commodity groups, the increase was 0.6 per cent. Farm and food products fell 1 per cent, following three months of increases, with lower prices for livestock and meats accounting for most of the decline. On a stage of processing basis, crude materials (excluding foods) rose sharply further with increases for scrap metals and crude petroleum largely responsible for the increase. Higher prices, mainly - 3 - for nonferrous metals, lumber and plywood, textile products, fabricated metal products, and iron and steel, resulted in intermediate materials (excluding foods) advancing by 0.5 per cent, somewhat below the June rise. Increases, chiefly for gasoline, home heating oil, and apparel, moved consumer nonfood finished goods higher by 0.7 per cent, about at the June rate, as the index of consumer durable goods was unchanged. Advances for machinery and equipment and trucks accounted for most of the 0.5 per cent rise in.producer finished goods. WHOLESALE PRICES seasonally adjusted data) (Per cent changes at annual rates; based on seasonally adjusted data)- All commodities Relative importance Dec. 75 Dec. 74 to Dec. 75 Dec. 75 to Mar. 76 Mar. 76 to June 76 June 76 to July 76 100.0 4.2 -1.8 6.6 3.9 .3 -15.8 18.0 - -11.5 Farm and food products 22.8 Industrial commodities Excluding fuels and related products and power Materials, crude and intermediate 2/ 77.2 6.0 3.2 3.6 8.6 66.8 5.1 6.1 3.6 6.9 48.1 5.5 3.5 4.3 8.8 18.7 11.9 6.7 8.2 .5 6.8 2.3 3.3 9.0 5.6 11.1 5.5 -20.5 16.8 Finished goods Consumer nonfoods Producer goods Memo: Consumer foods 1/ 2/ Not compounded for one-month changes. Estimated series. -20.9 -4- Inventories. Book value of retail trade inventories rose at $11.5 billion annual rate in June (p), following a $0.7 billion May increase. For the second quarter as a whole, retail inventories in- creased $6.3 billion (annual rate)--off slightly from the $8.0 billion first quarter rate of gain. The June increase was mainly in nondur- ables which rose at a $9.0 billion annual rate with most of the accumulation occurring in apparel and drug stores. The ratio of in- ventories to sales at retail stores edged down from 1.43 in May to 1.42 in June. Book value of total manufacturing and trade inventories increased at a $39.8 billion annual rate in June following a $23.3 billion rate of gain in May; the June increase was the largest since December 1974. Nevertheless, the ratio of book value inventories to sales for all business remains unchanged at 1.46 in June. For the second quarter as a whole, business inventories rose at a $24.9 billion annual rate; the first quarter increase was $19.5 billion. This second quarter increase implies little, if any, revision in the preliminary GNP figure. - 5- The Domestic Financial Economy Mortgage market. According to the HUD(FHA) opinion survey, average interest rates on new commitments for conventional new- and existing-home mortgages remained unchanged in July at levels of 9.05 and 9.10 per cent, respectively. Yields on FHA-insured new-home mortgages for immediate delivery in the private secondary market declined by 6 basis points to 8.99 per cent. AVERAGE RATES AND YIELDS ON NEW-HOME MORTGAGES (HUD-FHA Field Office Opinion Survey) Primary market Conventional loans Level 2/ Spread 4/ (per cent) (basis points) End of Month 975-Low High Secondary market 1/ FHA-insured loans Level 3/ Spread 4/ (per cent) (basis points) Discounts (points) 8.90 (Mar.) -70 8.69 (Mar.) -91 (Mar.) 2.4 (Dec.) 9.25 (Sept., +15 (Jan.) 9.74 (Sept.) +31 (Oct.) 6.2 (Aug.) (Mar.) Oct.) 1976-Jan. Feb. Mar. Apr. 9.05 9.00 8.95 8.90 +39 +42 +42 +32 9.06 9.04 n.a. 8.82 +40 +46 n.a. +24 2.4 2.2 n.a. 2.5 May June July 9.00 9.05 9.05 + 5 +35 +33 9.03 9.05 8.99 + 8 +35 +27 4.1 4.2 3.8 1/ 2/ Any gaps in data are due to periods of adjustment to changes in maximum permissible contract rates on FHA-insured loans. Average contract rates (excluding fees or points) on commitments for con- ventional first mortgage loans, rounded to the nearest 5 basis points. 3/ Average gross yield (before deducting servicing costs) to investors on 30-year minimum-downpayment FHA-insured first mortgages for immediate 4/ delivery in the private secondary market (excluding FNMA), assuming prepayment in 15 years. Average gross mortgage rate or yield minus average yield on new issues of Aaa utility bonds in the last week of the month. INTEREST RATES (One day quotes - in per cent) 1976 Aug. 12 Highs Lows July 19 5.58(6/30) 4.70(2/18) 5.30(7/21) 5.25(8/11) 5.57( 6/2) 6.00(6/15) 5.95( 6/2) 4.68(1/29) 5.00(4/29) 5.16 5.88 5.33 Short-Term Rates Federal funds (wkly. avg.) 3-month Treasury bills (bid) Comm. paper (90-119 day) Bankers' acceptances Euro-dollars CD's (NYC) 90 days Most often quoted new 6.81( 6/1) 4.80(4/21) 5.19(4/22) 5.23 5.50 5.45 5.75 5.75(6/16) 4.88(4/21) 5.38(7/14) 5.35(8/11) 5.96(5/27) 6.00(6/22) 6.42(5/27) 4.95(1/29) 5.13(4/29) 5.31( 2/2) 5.52 5.75 5.93 5.42 6.50( 6/2) 5.38(4/21) 5.75(7/14) 5.75(8/11) 6.39(5/27) 6.86(5/28) 5.27(1/29) 5.82(4/14) 5.82 6.39 6.24p(8/10) 6.75(6/16) 3.70(5/23) 5.38( 2/4) 3.00(1/30) 6.13(7/14) 3.25(7/16) 6.25(C/11) 7.32(5/27) 8.20(5/21) 7.12(4/21) 7.47 8.00 7.35 7.92 8.66( 1/2) 10.34( 1/2) 8.34(4/15) 9.50(8/11) 8.55 9.59 8.48(8/11) 9.50(8/11) 8.95(5/28) 8.38(4/22) 8.66(7/23) 8.50 Municipal Bond Buyer Index 7.13( 1/8) 6.54(4/15) 6.77(7/22) 6.60 Mortgage--average yield in FNMA auction 9.20( 6/1) 8.83(4/19) 9.05(7/12) 9.01(8/9) 8.83(4/19) 9.05(7/12) 9.01(8/9) 6-month Treasury bills (bid) Comm. paper (4-6 mo.) Federal agencies CD's (NYC) 180 day Most often quoted new 1-year Treasury bills (bid) Federal agencies CD's (NYC) Host often quoted new Prime municipals 5.75 5.50 5.84p( 8 /10) 5.66 3.20(8/13) Intermediate and Long-Term Treasury coupon issues 5-years 20-years Corporate Seasoned Aaa Baa New Issue Aaa Utility 9.20( 6/1) 7.77(4/14) -7ERRATAS: Part II: Page 11-19 Federal Sector Accounts Table: The decrease in cash operating balance for Fiscal Year 1977 (F.R. Board Staff Estimate) is $0.9 billion, not $5.8 billion. Page 111-12: The August 9 figure for "yields on GNMA guaranteed mortgage backed securities for immediate delivery", in the "Secondary Home Mortgage Market Activity" table, should be 8.37, not 8.32. 

Federal Reserve (1976, August 16). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19760817_part3

@misc{wtfs_greenbook_19760817_part3,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1976},
  month = {Aug},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19760817_part3},
  note = {Retrieved via When the Fed Speaks corpus}
}