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 November 14, 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 . ..... .1 Industrial Production and Capacity Utilization Retail Trade and Business Inventories . . . . . . . . . . . 2 TABLES: . . . . . . . . . . . . .. Business Inventories Inventory/Sales Ratios . . . . . . . . 4 . . . . . . . 4 THE DOMESTIC FINANCIAL ECONOMY TABLES: 5 Commercial bank credit and short- and intermediateterm business credit . . . . . . . . . . . . . . . . . 6 Selected financial market quotations . . . . . . . . 7 Monetary aggregates ............... SUPPLEMENTAL NOTES Industrial Production and Capacity Utilization Industrial production rose 1.6 percent in October, following gains of 1.0 and 1.3 percent in August and September, respectively, based on upward revised data. In October, advances in production were broadly based, with quite large increases in output of motor vehicles and steel. Industrial output excluding these two products increased about 1 percent in October, as they had in the two preceding months. Total industrial production has increased 4 percent since its low in July, but the October index was still 4.4 percent below a year earlier. Output of consumer goods rose 1.2 percent in October, reflecting a large gain for durable goods and almost no change for nondurable goods. Production of consumer automotive products rose 8-1/2 percent, as autos were assembled in October at an annual rate of 6.7 million units. compared to an annual rate of 6.0 million units in September, and production of home goods--such as appliances, carpeting, and furniture-advanced 1.9 percent further. Production of business equipment increased 0.7 percent in October, after three months of little change; output in this sector had declined 3.6 percent in the spring. Production of defense and space equipment rose sharply again in October. Output of construction supplies increased 1.7 percent, somewhat less than in August and September; production of these supplies remained about 12 percent below the level a year earlier. Production of durable materials increased very sharply--3.7 percent--in October, reflecting large gains in the output of basic metals and of parts for consumer durables. -1- Output of nondurable materials rose 2.5 percent further in October, following large (upward revised) increases in August and September; the large October rise mainly reflected substantial increases in production of chemical materials. The capacity utilization rate for manufacturers rose in October to 77.6 percent from 76.5 percent in September. At materials producers, the utilization rate rose to 77.9 percent in October from 76.1 percent in the preceding month. Capacity utilization increased sharply at producers of motor vehicles and parts, fabricated metal products, iron and steel, nonferrous metals, chemicals, and rubber and plastics. A sizable decline occurred in the operating rate for producers of petroleum products. Retail Trade and Business Inventories The book value of retail trade inventories rose at a seasonally adjusted annual rate of $18-1/2 billion in September, almost three times the August increase. For the third quarter as a whole, these inventories rose at about a $12-1/2 billion annual rate, well above the quarterly increases during the past year. The Sepetember jump in retail inventories was accompanied by a 1-1/2 percent rise in sales, and the stock-sales ratio for all retail trade remained unchanged at 1.41. Almost all of the September accumulation was at retailers of nondurable goods. These stocks rose at a $19.7 billion annual rate, following no change in the previous month. Large increases occurred in September at general merchandise stores, where sales declined over 2 percent. A sizable advance in stocks also was reported by apparel retailers, whose sales also declined substantially. Durable goods stocks were reduced slightly, on balance, following a $10 billion -3- rate rise in August. Declines occurred in September in stocks of auto- motive products and of furniture and appliances. The book value of total manufacturing and trade inventories increased at a $30 billion annual rate in September, about the same as in the two previous months and in the second quarter. This rate of increase in total business stock book values over the last six months is considerably less than the rates of accumulation during 1979 and the first quarter of this year. In September, the rise in inven- tories was accompanied by a 3 percent advance in shipments and sales. As a result, the inventory-sales ratio for all manufacturing and trade fell to 1.43 from 1.47 in August; this was the fourth consecutive monthly decline. The stock-sales record based on constant dollar data dropped even more sharply in September. -5- COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT (Percentage changes at annual rates, based on seasonally adjusted data) 1 Oct. 1980 Q2 Q1 ---------1. 2. Total loans and investments at banks 2 Investments 11.5 Q3 Aug.e Sept.e Oct.e '79 to Oct. '80 c Commercial Bank Credit ------------- -4.4 13.6 17.3 15.3 13.2 7.3 11.0 21.3 25.2 11.6 13.4 11.9 24.1 13.5 13.0 13.3 11.3 6.7 3. Treasury securities 3.0 10.6 39.2 42.9 4. Other securities 9.4 11.2 12.7 16.5 12.8 -9.5 10.9 14.7 16.6 13.0 4.9 8.5 5. Total loans 2 5.2 6. Business loans 16.4 -9.1 16.1 21.3 24.5 23.3 7. Security loans -32.8 -23.8 -7.6 64.0 -22.8 31.0 8. Real estate loans 5.3 6.2 11.4 9. Consumer loans 11.9 1.0 3.7 -21.5 -7.1 -6.3 -0.7 n.a. -22.8 8.0 n.a. -- Short- and Intermediate-Term Business Credit -10. 11. Total short- and intermediateterm business credit (sum of lines 13,14 and 15) 22.0 1.2 n.a. 11.3 n.a. n.a. n.a. 8.8 Business loans net of bankers acceptances I 17.6 -10.5 16.6 22.5 26.9 28.0 Commercial paper issued by nonfinancial firms3 76.2 86.9 -22.5 -47.2 -37.6 -53.4 34.3 13. Sum of lines 11 & 12 23.1 -0.2 11.6 13.4 19.0 18.3 11.1 14. Finance company loans to business 4 -2.8 -4.0 n.a. -3.5 12.2 n.a. n.a. Total bankers acceptances outstanding 4 54.1 32.3 n.a. 17.7 n.a. n.a. n.a. 12. 15. 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. e--estimated. n.a.--not available. MONETARY AGGREGATES (Based on seasonally adjusted data unless otherwise noted) 1 Oct. 1980 Q1 Q2 --- Money stock measures 1. M-1A 2. M-1B 3. M-2 4. M-3 Selected components 5. Currency 6. Demand deposits 7. Other checkable deposits, NSA 2 8. M-2 minus M-1B (9+10+11+14) Overnight RPs and Eurodollars, NSA 3 9. Money market mutual fund shares, NSA 10. Commercial banks 11. savings deposits 12. small time deposits 13. 14. Thrift institutions 15. savings deposits 16. small time deposits 17. Large time deposits at commercial banks, net4 18 19. at thrift institutions 20. Term RPs, NSA 8.3 3.4 29.3 7.7 - 7.5 151.9 6.9 -19.3 29.1 -0.3 -22.5 12.0 17.8 9.9 72.6 -31.9 Q3 Aug. Sept. Oct. '79 to Oct. '80 Percentage change at annual rates ---- -3.9 -2.4 5.5 5.7 11.0 13.5 15.5 12.5 19.3 21.6 14.5 13.6 12.6 15.8 8.5 9.1 7.0 -8.3 31.8 8.1 -72.0 82.7 9.8 -22.6 33.9 3.7 -27.1 19.3 10.6 7.4 28.9 -19.4 11.3 10.8 63.2 16.1 132.7 75.7 10.7 26.4 0.6 9.7 25.6 2.5 -11.1 -15.8 14.6 46.7 15.0 21.6 63.5 12.2 103.8 1.5 5.3 15.8 71.2 6.1 49.8 -37.2 7.0 7.6 6.1 8.9 14.6 6.2 19.7 16.5 36.0 -30.3 10.4 26.5 0.0 11.2 35.2 0.0 -4.8 -8.8 16.6 98.3 9.2 10.9 5.5 7.3 9.5 9.1 12.6 8.0 46.6 8.6 12.0 -12.3 10.3 9.4 10.9 9.8 5.0 11.8 16.2 10.7 44.4 54.4 9.1 4.0 47.9 10.2 5.5 109.8 9.5 -4.6 22.0 5.2 -7.1 12.3 8.1 2.1 51.4 -2.1 9.1 11.2 --Average monthly change in billions of dollars-- MEMORANDA: 21. Managed liabilities at commercial banks (22+23) Large time deposits, gross 22. Nondeposit funds 23. Net due to related foreign 24. institutions, NSA Other 5 25. 26. U.S. government deposits at commercial banks 6 5.8 4.5 1.3 7.4 2.6 4.8 -0.1 1.2 -1.1 -1.8 -0.9 -3.0 4.4 2.2 2.6 -2.2 1.1 0.9 0.9 1.4 0.1 8.0 3.1 4.9 -6.6 0.0 -6.6 -0.1 0.3 -0.4 -2.3 0.3 -2.6 1.6 3.3 -6.0 -0.5 -3.0 2.5 -0.2 0.4 1.3 1. Quarterly growth rates are computed on a quarterly average basis. 2. Consists of ATS and NOW balances at all institutions, credit union share draft balances, 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. 5. Consists of borrowings from other than commercial banks in the form of federal funds purchased, securities sold under agreements to repurchase and other liabilities for borrowed money (including 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 (Percent) I1980 1979 FOMC 5 ____Oct. 1 I Mar-Apr I High Change from: Mid-June** FOMC Oct. 21 Low Nov. I Mar-Apr 1 High 13 Mid-June Low FOMC Oct. 21 Short-term rates 2 Federal funds 11.91 19.39 8.99 12.55 14.65 -4.74 5.66 2.10 Treasury bills 3-month 6-month 1-year 10.70 10.63 10.28 16.00 15.64 14.58 6.18 6.60 7.00 11.64 11.52 11.23 13.09 12.84 12.05 -2.91 -2.80 -2.53 6.91 6.24 5.05 1.45 1.32 .82 Commercial paper 1-month 3-month 6-month 11.73 11.86 11.84 18.00 17.69 17.25 7.98 7.78 7.59 12.41 12.23 11.92 14.35 14.32 13.92 -3.65 -3.37 -3.33 6.37 6.54 6.33 1.94 2.09 2.00 12.09 12.50 12.80 17.87 18.59 18.47 7.96 7.90 7.66 12.52 12.73 12.76 14.69 14.82 14.54 -3.18 -3.77 -3.93 6.73 6.92 6.88 2.17 2.09 1.78 12.45 12.79 19.04 19.60 8.88 8.99 13.14 13.38 15.85 16.39 -3.19 -3.21 6.97 7.40 2.71 3.01 13.50 20.00 12.00 14.00 15.50 -4.50 3.50 1.50 10.01 9.60 9.36 14.53 13.65* 12.85* 8.56 9.47 9.49 11.96 11.70 11.53 12.80 12.49 12.23 -1.73 -1.16 -.62 4.24 3.02 2.74 6.64 9.44 7.44 8.81 9.50 .06 2.06 Corporate Aaa 5 New issue 6 Recently offered 10.22 10.25 14.22 14.12 10.53 10.79 12.62 12.85 13.69 -.43 2.90 Primary conventional 6 mortgages 11.35 16.35 12.35 13.78 14.08 -2.27 1.73 Large negotiable CDs 1-month 3-month 6-month Eurodollar deposit 1-month 3-month 3 2 3ank prime rate Intermediate- and longterm rates U.S. Treasury (constant maturity) 3-year 10-year 30-year Municipal (Bond Buyer) 4 FOMC Oct. 5 Mar-Apr. Low Stock Prices 759.13 897.61 Dow-Jones Industrial 63.39 55.30 NYSE Composite 215.69 235.15 AMEX Composite 152.29 124.09 NASDAQ (OTC) One-day quotes except as noted. Mid-Oct. High 972.44 77.24 363.33 199.43 Averages for statement week closest to date shown. .Secondary market. * Highs reached on February 26. FOMC Oct. 21 Nov. 13 Mar-Apr Low Mid-Oct. High .30 FOMC Oct. 21 27.98 9.98 223.29 954.44 982.42 2.60 1.34 78.58 23.28 75.98 -13.52 -15.16 132.48 348.17 361.69 3.79 .82 76.16 196.46 200.25 One-day quotes for preceding Thursday. 4. 5. Averages for preceding week. 6. One-day quotes for preceding Friday. ** Most lows occurred on or around June 13. 

Federal Reserve (1980, November 17). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19801118_part3

@misc{wtfs_greenbook_19801118_part3,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1980},
  month = {Nov},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19801118_part3},
  note = {Retrieved via When the Fed Speaks corpus}
}