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. January 30, 1981 CONFIDENTIAL (FR) CLASS II - FOMC SUPPLEMENT AND FINANCIAL CONDITIONS ECONOMIC CURRENT 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 Productivity and Labor Costs . . . . . . . . . . ... 1 Savings and Loans Mortgage Commitments . . . . . . .. 1 TABLES: Labor Productivity and Costs . . . . . . . . . . . . Mortgage Activity at Savings and Loan Associations . 2 3 THE DOMESTIC FINANCIAL SITUATION TABLES: . . . . . . . . . . . . . . . . Monetary Aggregates . Commercial Bank Credit . . . . ... . . . . . . ... Selected Financial Market Quotations . . . . . . . . 4 5 6 7 INTERNATIONAL DEVELOPMENTS TABLE: U.S. Merchandise Trade . . . . . . . . . . . . . . 8 SUPPLEMENTAL NOTES Productivity and Labor Costs Output per hour of all persons in the private nonfarm business sector of the economy declined in the final quarter of 1980 at an annual rate of 1.1 percent. This decline reflected an even larger increase in hours of employment in the quarter than the 6-1/2 percent per year rise in real output. In the third quarter, when the increase in real output was much smaller--and hours worked continued to decline, productivity rose at a 3.7 percent rate. Over 1980 as a whole, productivity in the private nonfarm business sector was little changed. Compensation per hour continued to rise sharply in the fourth quarter, and unit labor costs again rose at nearly an 11 percent rate. Over the year, both compensation per hour and unit labor cost increased 10 percent. Savings and Loans Mortgage Commitments New mortgage commitments made by savings and loan associations in December were virtually unchanged after allowance for the usual seasonal change from the volume in November, when they declined more than 20 percent from October and were more than a third below the September peak. The volume of S&L mortgage commitments outstanding including loans in process, seasonally adjusted, edged down slightly in December to $27.3 billion and were 2-1/2 percent below the recent peak in September. Mortgage holdings at S&Ls rose $3.1 billion, seasonally adjusted, in December, down from increases of $3.6 billion in November and $4.5 billion in October. LABOR PRODUCTIVITY AND COSTS (Percent change at annual rates; based on seasonally adjusted data) 1 1980 1978 1979 1980 Q2 Q3 Q4 Output per hour Total private business Nonfarm business Manufacturing Durable Nondurable -.3 -.4 .8 .1 2.1 -.9 -1.1 .2 -.8 1.7 -.3 -.1 1.3 .8 1.7 1.9 -3.0 4.1 -2.8 -6.7 1.5 3.7 -.7 -3.4 2.9 -1.9 -1.1 10.6 12.0 9.0 9.0 9.1 8.4 8.1 8.6 9.9 9.6 9.4 9.2 9.9 10.2 10.0 12.1 13.2 10.3 12.2 11.2 15.5 16.5 15.7 9.7 9.2 12.7 13.1 12.4 8.5 9.6 10.1 11.4 7.0 9.5 9.6 7.5 7.9 6.4 10.9 10.9 9.3 10.1 8.1 10.5 10.1 10.7 12.3 8.5 14.4 14.6 20.5 19.9 24.0 8.1 5.3 13.6 17.1 9.2 10.6 10.9 -.4 -.5 -1.9 Compensation per hour Total private business Nonfarm business Manufacturing Durable Nondurable Unit labor costs Total private business Nonfarm business Manufacturing Durable Nondurable 1. Changes are from final quarter of preceding period to final quarter of period indicated. -3- MORTGAGE ACTIVITY AT SAVINGS AND LOAN ASSOCIATIONS1 (Billions of dollars, seasonally adjusted) New mortgage commitments Outstanding commitments (including loans in process) Net change in mortgage holdings 1978-High Low 10.32 (Jan.) 9.12 (Sept.) 33.37 (Oct.) 31.91 (July) 4.78 (Feb.) 3.82 (July) 1979-High Low 9.53 (May) 4.97 (Dec.) 32.74 (Sept.) 28.08 (Dec.) 4.65 (May) 1.47 (Dec.) 1980-Jan. Feb. Mar. 5.79 7.01 4.79 27.47 27.12 23.97 2.13 2.56 1.83 Apr. May June 3.27 3.04 5.29 20.70 19.28 20.70 0.86 -0.44 -0.24 July 8.48 9.93 10.00 23.67 26.73 28.02 1.77 3.59 4.44 8.34 6.53 6.56 27.67 27.78 27.29 4.51 3.63 3.10 Date Aug. Sept. Oct. Nov. r Dec. p 1. Data on outstanding commitments and net change in mortgage holdings are for all operating S&Ls. Data on new commitments are available only for insured S&Ls; however, insured S&Ls account for approximately 98 percent of the assets of all operating S&Ls. r--revised. p--preliminary. MONETARY AGGREGATES (Based on seasonally adjusted data unless otherwise noted)1 _______ Q3 Q2 ---Money stock measures 1. M-1A 2. M-1B 3. M-2 4. M-3 -4.4 -2.6 5.6 5.8 Selected components 5. Currency 7.4 -9.1 6. Demand deposits 7. Other checkable deposits, NSA 2 35.6 8.3 8. M-2 minus M-1B (9+10+11+14) 9. Overnight RPs and Eurodollars, NSA 3 -57.4 10. Money market mutual fund shares, NSA 82.7 9.7 11. Commercial banks 12. savings deposits -21.7 13. small time deposits 33.1 3.6 14. Thrift institutions 15. savings deposits -24.9 18.1 small time deposits 16. 9.2 17. Large time deposits 5.8 18 at commercial banks, net 4 28.9 19. at thrift institutions -6.7 20. Term RPs, NSA Q4 Oct. Nov. Dec. QIV '79 to QIV '80 1981 Jan.e Percentage change at annual rates --- 11.5 14.6 16.0 13.0 8.1 10.8 9.2 11.7 9.1 11.8 8.8 10.8 6.5 8.7 10.4 15.2 -11.1 -9.0 2.7 8.2 5.0 7.3 9.8 10.0 -34.3 16.3 9.7 14.1 11.3 9.2 12.6 7.3 7.6 6.2 11.5 7.7 75.5 54.9 53.7 42.0 16.4 8.7 7.9 10.9 135.6 19.2 -18.2 3.7 75.7 -15.5 -12.3 -6.2 11.3 10.8 10.5 15.5 27.5 1.7 10.0 -8.7 0.7 17.1 11.3 31.6 9.5 9.6 9.4 10.1 28.1 -2.8 2.7 -27.2 1.1 15.6 12.8 28.5 -11.6 25.5 15.9 47.0 -16.3 21.1 8.9 45.4 14.6 47.7 50.8 57.9 47.8 41.5 71.6 33.8 6.2 -18.5 22.6 6.6 18.4 -18.7 7.3 -40.0 39.6 8.2 -40.1 31.3 47.7 45.5 55.2 0.0 9.3 3.2 58.7 10.7 22.9 90.3 10.0 -3.5 21.3 5.7 -5.5 11.8 10.0 4.4 47.0 15.7 2.1 -50.1 739.5 5.8 61.6 76.0 1.2 -53.6 35.9 -1.6 -36.3 13.6 46.9 50.3 42.6 52.6 -- Average monthly change in billions of dollars-MEMORANDA: 21. Managed liabilities at commercial banks (22+23) 22. Large time deposits, gross 23. Nondeposit funds 24. Net due to related foreign institutions, NSA 25. Other 5 26. U.S. government deposits at commercial banks 6 -6.3 0.1 -6.4 -0.3 0.4 -0.7 n.a. 6.2 n.a. 6.2 2.8 3.4 n.a. 7.7 n.a. n.a. 8.2 n.a. n.a. 1.8 n.a. n.a. 9.9 n.a. -6.1 -0.3 -1.9 1.2 -0.6 n.a. 0.6 2.8 -2.0 n.a. -0.5 n.a. -2.0 n.a. n.a. n.a. 0.4 1.3 -1.7 1.4 -7.1 0.7 0.1 0.8 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. 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. e-estimated. n.a.--Not available. COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT (Percentage changes at annual rates, based on seasonally adjusted data) 1 1980 Q2 Q3 ---------1. 2. Total loans and investments at banks2 Investments Q4e Oct.e Nov.e Dec.e QIV '79 to QIV '80e Dec. '79 to Dec. '80e Commercial Bank Credit ------------- -4.4 13.5 14.4 13.3 16.6 12.7 8.9 11.0 21.6 11.8 13.7 13.6 7.8 12.9 13.5 15.2 16.8 11.6 11.9 3. Treasury securities 10.6 39.6 11.3 14.6 15.6 3.3 4. Other securities 11.2 12.9 12.1 13.3 12.6 10.2 -9.6 10.7 15.3 13.2 17.7 14.4 6.3 7.4 14.4 22.3 23.0 24.1 18.7 9.9 112 39.0 75.5 71.0 11.4 10.3 12.1 7.8 7.6 -1.4 r -2.1r n.a. n.a. n.a. 5. Total loans2 6. Business loans -9.6 7. Security loans -23.8 8. Real estate loans 9. Consumer loans 1.0 -16.7r -10.1 -64.9 5.6 11.4 -7.8r n.a. -11.5 -2.2 -- Short- and Intermediate-Term Business Credit -- 10. Total short- and intermediateterm business credit (sum of lines 13,14 and 15) 11. 12. Business loans net of bankers acceptances 1 0.6 -11.1 8.0r n.a. 13.5 25.9 17.2r 19.Or n.a. n.a. n.a. 26.6 26.8 22.7 10.0 11.8 6.3r 18.7r 33. 0r 29.0r 19.6r 24.5r 22.3r 12.Or 13.5r Commercial paper issued by nonfinancial firms3 62.6r -19.3r -3.Or -33.5r 13. Sum of lines 11 & 12 -2.9r 14. Finance company loans to business -4.0 -7.5 n.a. 7.0 22.8 n.a. n.a. n.a. Total bankers acceptances outstanding4 32.3 20.2 n.a. 14.9 19.0 n.a. n.a. n.a. 15. 9.3r 22.5r 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. -estimated. n.a.--not available. r--revised. -6SELECTED FINANCIAL MARKET QUOTATIONS 1 (Percent) Mid June* Low 1980 Dec. High FOMC Dec. 19 Jan. 6 1981 Jan. 29 Dec. High Change from: Jan. FOMC Dec. 19 6 Short-term rates Federal funds 2 8.99 19.83 19.83 20.06 18.12 -1.71 -1.71 -1.94 6.18 6.60 7.00 17.14 15.74 14.06 14.93 14.17 12.93 13.58 13.16 11.88 14.87 13.92 12.67 -2.27 -. 06 -. 25 -. 26 1.29 .76 .79 Commercial paper 1-month 3-month 6-month 7.98 7.78 7.59 20.77 19.88 18.58 20.04 19.06 16.90 17.02 15.31 14.25 16.69 16.14 14.81 -4.08 -3.74 -3.77 -3.35 -2.92 -2.09 -. 33 .83 .56 Large negotiable CDs 3 1-month 3-month 6-month 7.96 7.90 7.66 21.29 20.90 19.19 20.33 19.44 17.45 17.24 15.75 14.84 16.98 16.80 15.81 -4.31 -4.10 -3.38 -3.35 -2.64 -1.64 -.26 1.05 .97 Eurodollar deposit 2 1-month 3-month 8.88 8.99 22.54 21.36 22.54 21.36 18.75 17.06 19.64 18.56 -2.90 -2.80 -2.90 -2.80 .89 1.50 12.00 21.50 21.50 20.50 20.00 -1.50 -1.50 -.50 U.S. Treasury (constant maturity) 3-year 10-year 30-year 8.56 9.47 9.49 14.41 13.57 13.17 13.66 12.64 12.22 12.31 12.11 11.67 13.16 12.80 12.38 -1.25 -. 77 -. 79 -. 50 .16 .16 Municipal (Bond Buyer) 7.44 10.56 10.56 9.764 9.91 -. 65 -. 65 -.15 10.53 10.79 14.51 15.03 14.25 -5 14.156 13.95P 14.11P -. 56 -. 92 -. 14 -.04 14.95 FOMC Dec. 19 6 14.95 Jan. 6 6 14.85 Jan. 29 Treasury bills 3-month 6-month 1-year Bank prime rate -1.82 -1.39 intermediate- and longterm rates Corporate Aaa New issue Recently offered Primary conventional mortgages 14.95 12.35 Mar.-Apr. Mid-Oct. Low High -.10 Mar.-Apr. Low -.10 -.10 Jan. FOMC 6 Dec. 19 Stock Prices - 5.58 11.69 189.76 1004.69 948.89 937.20 759.13 972.44 Dow-Jones Industrial -4.45 -2.17 19.39 74.69 79.14 76.86 55.30 77.24 NYSE Composite - 7.00 - .99 130.90 353.59 346.59 347.58 215.69 363.33 AMEX Composite -6.19 -. 03 73.79 204.07 197.88 197.91 124.09 199.43 NASDAQ (OTC) 5. Averages for preceding week. 1. One-day quotes except as noted. One-day quotes for preceding Friday. SAverages for statement week closest to date shown. 6. Secondary market. * Most lows occurred on or around 4. One-day quotes for preceding Thursday. June 13. International Developments Merchandise trade data released Wednesday afternoon brought the trade deficit for the fourth quarter to $26 billion at an annual rate (Census basis, c.i.f. value), somewhat more than in the third quarter but considerably smaller than deficits recorded earlier in the year. See the table below. Data on an international accounts basis will be released on Thursday, February 5. The values of agricultural and nonagricultural exports were both slightly higher than in the third quarter (increases in automotive shipments to Canada and in gold offsetting declines in machinery and other industrial supplies). The increase in imports in the fourth quarter was largely the result of higher oil imports. The volume of fourth quarter oil imports averaged 6.5 million barrels per day (including oil imported into the U.S. Virgin Islands) about 8 percent more than the very low third quarter rate. The price of imported oil averaged about 80 cents per barrel more than in the third quarter. U.S. Merchandise Trade (in billions of dollars, seasonally adjusted, annual rates) C.I.F. Valuation Imports 1/Exports Balancel/ ImportsExports International Accounts Balance 1979 - Year 1980 - Year 181.6 220.5 218.9 252.8 -37.3 -32.3 -29.5 1980 - QI Q2 Q3 Q4 212.5 219.2 223.5 227.4 266.3 250.9 -53.8 -31.8 -18.2 -26.0 -43.4 -30.0 -11.3 n.a. July Aug. Sept. Oct. Nov. Dec. 216.9 229.2 224.4 229.1 223.6 229.4 239.1 242.0 -22.2 -12.7 -19.7 -22.3 -20.0 -35.7 -5.8 -13.9 -14.2 -12.4 -25.0 n.a. 1/ C.I.F. value 241.7 253.4 244.1 251.4 243.6 265.1 n.a. 

Federal Reserve (1981, February 2). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19810203_part2

@misc{wtfs_greenbook_19810203_part2,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1981},
  month = {Feb},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19810203_part2},
  note = {Retrieved via When the Fed Speaks corpus}
}