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 this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. 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 optimal 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. CONFIDENTIAL (FR) CLASS II - FOMC October 17, 1980 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 Page THE DOMESTIC NONFINANCIAL ECONOMY Gross national product . . . . . . . . . Personal income ............. ................ Housing starts and permits . . . . . ... . . . . .. . 1 2 2 . 4 5 . . TABLES: Changes in Real Gross National Product and Selected Components . . . . .. . . . . . . . . Personal income . . . . . . . . . . . . . .. . .. Private housing starts and residential building permits 6 THE DOMESTIC FINANCIAL ECONOMY TABLES: Commercial bank credit and short- and intermediateterm business credit . . . . . . . . . . . . . . Monetary aggregates . . . . . . . . . . . . ... Selected financial market quotations . ...... . . 7 8 9 SUPPLEMENTAL NOTES Gross National Product Gross national product in real terms increased in the third quarter at a 1.0 percent annual rate, according to preliminary estimates, following a 9.6 percent rate decline in the second quarter. GNP in nominal terms increased at a 10.2 percent rate in the July to September period, after being about unchanged in the preceding three months. Prices as measured by the GNP implicit price deflator rose at a 9.1 percent annual rate; this was down from a 10.7 percent rate rise in the second quarter, but in terms of the GNP fixed-weighted price index the rate of increase, at 9.7 percent per year, was unchanged from the rate of increase in the second quarter. Gross domestic business product prices rose at a 10.4 percent annual rate in the third quarter measured in terms of the fixed-weighted index, the same as in the second quarter. The third quarter rise in real GNP reflected relatively large increases in expenditures for consumer durable goods, producer durable goods, and residential construction and a large decline in imports of goods and services. Large increases in purchases of motor vehicles accounted for much of the third quarter rise in consumer expenditures and all of (actually more than) the increase in producer durable goods outlays. Inventory investment in real terms in the third quarter is indicated to have declined at a $6.8 billion annual rate, following a $2.6 billion rate of accumulation in the second quarter. Large declines also occurred in nonresidential construction outlays and federal government purchases of goods and services. -1- Personal consumption expenditures increased more in the third quarter than disposable personal income, and personal saving and the ratio of this saving to disposable income declined--the latter to 4.6 percent from 4.9 percent in the second quarter. Personal Income Nominal personal income rose $19.8 billion in annual rate terms in September, at an annual rate of 11.1 percent, bringing the thirdquarter rate of increase to about 12-1/4 percent per year. Growth in wage and salary disbursements was only slightly below the August advance, reflecting continued improvement in labor market conditions, while larger increases were recorded for both nonfarm proprietors' income and transfer payments. Disposable personal income rose $15.9 billion in September-somewhat faster than in August--as a result of the larger increase in nonwage income. At the same time, personal outlays advanced at a some- what slower pace of $10.9 billion, and personal saving therefore rose $5.0 billion. Real disposable income declined slightly in August, as price increases eroded the gains in nominal income; little change in real disposable income is also estimated for September. Housing Starts and Permits Total private housing starts rose 9.0 percent in September to an annual rate of 1.54 million units. This large increase brought the third quarter total for this measure of new housing activity to a rate of 1.4 million units--up a third from the depressed second quarter pace. Housing permits also increased in September, rising 14.7 percent above -3- the August rate. The increases in both starts and permits were concen- trated in the multifamily sector; those increases in housing activity apparently were associated with the end of HUD's fiscal year. The increase in starts was concentrated in the northeast and the north central, while permits increased in all regions. CHANGES IN REAL GROSS NATIONAL PRODUCT AND SELECTED COMPONENTS (Percent change at annual rates , based on seasonally adjus ted data) 1979 1 04 I Ql 1980 Q2 Q3 Gross National Product Final Purchases 2.0 3.6 1.2 1.5 -9.6 -10.2 1.0 3.7 Personal consumption expenditures 4.1 4.7 -.6 7.0 3.5 .5 -1.8 -3.5 -1.1 3.2 -10.6 -18.1 -41.0 -7.0 -1.3 5.2 5.5 20.9 .3 4.9 1.7 -14.6 -3.2 -26.2 -61.8 5.6 Goods Durable Nondurable Services Business fixed investment Residential investment Exports of goods and services Imports of goods and services Federal government purchases of goods and services State and local government purchase of goods and services ures of price change: 4P implicit price deflator PCE fixed-weighted price index GDBP fixed-weighted price index Memoranda: Change in business inventory investment, billions of 1972 dollars Change in net exports of goods and services, billions of 1972 dollars GNP in nominal terms Personal saving rate, percent 1Except as noted. Except as noted. -4.5 7.0 8.2 26.1 10.2 16.0 .8 13.1 8.4 10.5 8.4 - .7 9.5 13.8 11.2 -10.0 -23.1 -4.2 -17.4 9.5 -3.9 -3.2 - .8 10.7 11.2 10.4 9.1 9.5 10.4 -5.7 -1.1 2.3 -9.4 0.0 10.5 3.5 4.9 10.8 3.7 3.3 0.1 4.9 3.3 10.2 4.6 PERSONAL INCOME (Based on seasonally adjusted annual rate data) 1978 1979 QI - - Percentage change, Total personal income Wage and salary disbursements Private Nominal disposable personal income Real disposable personal income QII 1980 QIII Aug. Sept. at annual rates1 - - 12.9 11.2 10.9 4.6 12.2 8.8 12.8 14.1 10.1 10.8 10.9 12.0 2.1 1.0 5.4 5.3 12.5 14.3 12.0 10.4 13.5 4.3 12.3 7.4 4.2 .5 .9 -6.0 n.a. -1.5 11.1 9.7 11.2 10.6 n.a. 2 - - Changes in billions of dollars - - Total personal income Wage and salary disbursements Private Manufacturing Other income Transfer payments Less: Personal contributions for social insurance Memorandum: Personal saving rate3 $17.8 $16.8 $13.9 $ 6.8 11.5 10.1 3.2 9.7 8.4 2.0 10.4 9.1 2.7 -. 5 -2.0 -3.5 7.1 1.5 8.1 2.9 4.3 2.4 .8 .9 4.9 4.5 $23.0 $15.5 $19.8 8.9 8.0 2.8 13.8 12.7 4.0 10.7 10.1 4.4 7.7 3.4 14.8 9.9 2.8 -. 4 9.7 5.3 .8 .4 .7 1.0 .6 3.7 4.9 4.6 4.6 n.a. 1. Changes over periods longer than one quarter are measured from final quarter of preceding period to final quarter of period indicated. Changes for quarterly periods are compounded rates of change; monthly changes are not compounded. 2. Average monthly change. 3. Monthly saving rate equals the centered three-month moving average of personal saving as a percentage of the centered three-month moving average of disposable personal income. PRIVATE HOUSING STARTS AND RESIDENTIAL BUILDING PERMITS 1980 Aug. 1 Sept. 2 QII QIII July (Thousands of units. SAAR) STARTS 1 - family 2 - or more - family 1053 1408 1265 1416 1544 -18 671 382 973 435 869 396 1000 416 1050 494 -15 -22 154 233 679 342 124 191 655 295 128 224 694 370 211 283 688 362 29 -28 -10 -35 897 1386 1236 1361 1561 532 365 848 538 781 455 857 504 905 656 119 208 566 343 117 213 650 381 139 237 772 413 215 206 n.a. Northeast North Central South West PERMITS 1 - family 2 - or more - family Northeast North Central South West TEMO: Mobile home shipments 1. Revised. 2. Preliminary. n.a.--Not available. Percent change from Aug. Sept. 1980 1979 175 n.a. -34 -23 14 -17 n.a. n.a. COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT (Percentage changes at annual rates, based on seasonally adjusted data) 1 1980 Q2 Q1 Q3 July Aug.e Sept. '79 to Sept.e Sept. '80e ---------- Commercial Bank Credit ------------1. 2. Total loans and investments at banks2 11.5 -4.4 13.6 7.3 11.0 21.3 Investments 17.4 15.3 26.1 25.2 11.6 11.2 24.1 11.9 3. Treasury securities 3.0 10.6 39.2 47.0 42.9 4. Other securities 9.4 11.2 12.7 16.1 16.5 12.8 -9.5 10.9 14.7 16.6 -9.1 16.1 21.3 24.5 64.0 -22.8 5. Total loans 2 6. Business loans 16.4 7. Security loans -32.8 8. Real estate loans 9. Consumer loans 11.9 1.0 3.7 -21.5 10. -23.8 -7.6 n.a. -60.8 -14.4 5.2 10.8 -34.0 5.3 6.2 8.4 -6.3 n.a. n.a. Short- and Intermediate-Term Business Credit -- Total short- and intermediate- term business credit (sum of lines 13,14 and 15) 22.0 1.2 n.a. 11.3 n.a. Business loans net of bankers acceptances 1 17.6 -10.5 16.6 22.5 26.9 Commercial paper issued by nonfinancial firms3 76.2 86.9 -22.5 -47.2 -37.6 42.0 13. Sum of lines 11 & 12 23.1 -0.2 11.6 13.4 19.0 10.7 14. Finance company loans to business 4 -2.8 -4.0 n.a. -6.9 -3.5 n.a. n.a. Total bankers acceptances outstanding4 54.1 32.3 n.a. 15.7 17.7 n.a. n.a. 11. 12. 15. 16.9 n.a. 1. Average of Wednesdays for domestic chartered banks and average of current and preceding ends of months for foreign-related institutions. 2. Loans include outstanding amounts of loans reported as sold outright to a bank's own foreign branches, unconsolidated nonbank affiliates of the bank, the bank's holding company (if not a bank), and unconsolidated nonbank subsidiaries of the holding company. 3. Average of Wednesdays. 4. Based on average of current and preceding ends of months. n.a.--not available. e-estimated. MONETARY AGGREGATES (Based on seasonally adjusted data unless otherwise noted) 1 Sept. 1980 Q1 Q2 Q3 July Aug. Sept. to Sept. ---- Percentage change at annual rates--Money stock measures 1. M-1A 2. M-1B 3. M-2 4. M-3 -3.9 -2.4 5.5 5.7 11.0 13.4 15.5 12.6 7.8 11.1 18.2 13.4 19.3 21.6 14.5 13.6 12.3 15.2 8.2 9.7 4.8 6.4 9.1 8.9 Selected components 5. Currency 8.3 7.0 6. Demand deposits 3.4 -8.3 29.3 31.8 7. Other checkable deposits, NSA 2 8. M-2 minus M-1B (9+10+11+14) 7.7 8.1 9. Overnight RPs and Eurodollars, NSA 3 - 7.5 -72.0 10. Money market mutual fund shares, NSA 151.9 82.7 11. Commercial banks 6.9 9.8 11.3 10.8 61.1 16.1 132.7 75.7 10.7 10.8 6.0 73.5 20.5 218.7 103.5 13.5 15.0 21.6 63.5 12.2 103.8 1.5 10.4 5.3 15.3 65.8 5.9 41.5 -37.2 7.0 8.8 3.3 41.7 10.1 0.3 132.0 9.2 -19.3 -22.6 26.4 38.6 26.5 7.6 29.1 33.9 -0.3 3.7 -22.5 -27.1 12.0 19.3 17.8 10.6 7.4 9.9 72.6 28.9 -31.9 -19.4 0.4 9.7 24.8 2.9 -10.3 -14.8 14.6 46.7 -3.1 8.9 38.7 -4.6 -23.4 -29.6 10.0 51.2 0.0 11.2 33.5 0.8 -4.2 -8.8 16.6 98.3 5.7 8.9 10.7 8.1 26.6 25.5 36.0 -30.3 12. 13. 14. 15. 16' 1 . 20. savings deposits small time deposits Thrift institutions savings deposits small time deposits Large time deposits at commercial banks, net 4 at thrift institutions Term RPs, NSA 4.8 5.9 7.2 7.8 -6.7 23.8 4.6 -10.4 13.8 10.3 4.2 56.8 -8.3 -Average monthly change in billions of dollars-MEMORANDA: 21. Managed liabilities at commercial banks (22+23) Large time deposits, gross 22. 23. Nondeposit funds 24. Net due to related foreign institutions, NSA 25. Other 5 26. U.S. government deposits at commercial banks 6 8.0 3.1 4.9 -6.6 0.0 -6.6 -0.1 0.3 -0.4 -3.9 -3.9 0.0 -2.3 0.3 -2.6 5.8 4.5 1.3 -0.2 1.3 -1.5 1.6 3.3 -6.0 -0.5 -3.0 2.5 -4.1 4.0 -1.8 -0.9 -3.0 4.4 -2.5 1.0 -0.2 0.4 1.3 2.1 0.9 0.9 0.1 1. Quarterly growth rates are computed on a quarterly average basis. 2. Consists of ATS and NOW balances at all institutions, credit union share draftbalances, and demand deposits at mutual savings banks. 3. Overnight and continuing contract RPs issued to the nonbank public by commercial banks, net of amounts held by money market mutual funds, plus overnight Eurodollar deposits issued by Caribbean branches of U.S. member banks to U.S. nonbank customers. 4. Net of large denomination time deposits held by money market mutual funds and thrift institutions. sists of borrowings from other than commercial banks in the form of federal funds purchase ities sold under agreements to repurchase and other liabilities for borrowed money (includi borrowings from the Federal Reserve), loans sold to affiliates, loan RPs, and other minor items. 6. Consists of Treasury demand deposits at commercial banks and Treasury note balances. SELECTED FINANCIAL MARKET QUOTATIONS 1 (Percent) 1980 Mar-Apr High Change from: Mid-June** FOMC Low Sept. 16 Intermeeting High Oct. 14 Mar-Apr High Mid-June Low FOMC Sept. 16 2.00 Short-term rates Federal funds 2 19.39 8.99 10.64 12.80 12.64 -6.75 3.65 Treasury bills 3-month 6-month 1-year 16.00 15.64 14.58 6.18 6.60 7.00 10.29 10.67 10.59 11.53 10.98 11.14 10.86 -5.02 -4.50 -3.72 4.80 4.54 3.86 Commercial paper 1-month 3-month 6-month 18.00 17.69 17.25 7.98 10.80 10.95 11.04 12.69 12.34 12.11 11.90 -5.66 -5.58 -5.35 4.36 4.33 4.31 1.54 Large negotiable CDs 3 1-month 3-month 6-month 17.87 7.96 18.59 18.47 7.90 Eurodollar deposit 2 1-month 3-month Bank prime rate 7.78 7.59 11.62 11.36 12.78 12.78 .69 .47 .27 1.16 .86 7.66 11.05 11.51 11.88 12.99 13.26 12.41 12.44 12.41 -5.46 -6.15 -6.06 4.45 4.54 4.75 1.36 .93 .53 19.04 19.60 8.88 8.99 11.06 11.86 13.05 13.25 13.05 13.00 -5.99 -6.60 4.17 4.01 1.99 20.00 12.00 12.25 13.50 13.50 -6.50 1.50 1.25 U.S. Treasury (constant maturity) 3-year 10-year 30-year 14.53 13.65* 12.85* 8.56 11.69 11.52 11.33 12.32 9.47 9.49 11.93 11.65 11.47 11.27 -2.88 -2.18 -1.58 3.09 2.00 1.78 -.04 -.05 -. 06 Municipal (Bond Buyer) 4 9.44 7.44 8.82 9.22 8.81 .63 1.37 -. 01 Corporate Aaa New issue 5 Recently offered 6 14.22 14.12 10.53 10.79 12.60 12.48 13.10 13.06 12.61p 12.81p 1.61 1.31 2.08 2.02 Primary conventional mortgages 6 16.35 12.35 13.08 13.73 -2.62 1.38 Mar-Apr Mid-June FOMC 13.73 Intermeeting Low High Sept. 16 12.75 1.14 Intermediate- and longterm rates Stock Prices Dow-Jones Industrial NYSE Composite AMEX Composite NASDAQ (OTC) 759.13 55.30 215.69 124.09 881.91 66.36 297.60 159.18 945.90 73.41 340.94 191.31 One-day quotes except as noted. SAverages for statement week closest to date shown. J. Secondary market. * Highs reached on February 26. 12.07 Low Oct. Mar-Apr Mi'-June Low High .01 .33 .65 FOMC Sept. 16 76.79 12.80 921.93 958.70 199.57 71.26 76.37 21.07 10.01 2.96 17.06 60.40 324.38 358.00 142.31 38.77. 6.64 73.86 185.79 197.95 4. One-day quotes for preceding Thursday. 5. Averages for preceding week. 6. One-day quotes for preceding Friday. ** Most lows occurred on or around June 13. 

Federal Reserve (1980, October 20). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19801021_part3

@misc{wtfs_greenbook_19801021_part3,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1980},
  month = {Oct},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19801021_part3},
  note = {Retrieved via When the Fed Speaks corpus}
}