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) November 13, CLASS II - FOMC SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System 1981 TABLE OF CONTENTS Page THE DOMESTIC NONFINANCIAL ECONOMY Industrial production and capacity utilization Retail sales . . . . . . . . . . . . . . . . . . . Corrigendum . . ... 4 . . . . . . . . . . . . . . . . . . . 1 3 TABLES: Industrial production . . Capacity utilization rates: and materials . . . . . Retail sales . . . . . . . . . . . . . . ... manufacturing . . . . . . . . . . . . . . . .. . . . . 5 . . . . . . 5 6 THE DOMESTIC FINANCIAL ECONOMY TABLES: Monetary aggregates . . . . . . . . . . . . . . 7 Commercial bank credit and short- and intermediateterm business credit . . . . . . . . . . . . . . 8 Selected financial market quotations . . . . . .. 9 SUPPLEMENTAL NOTES Industrial Production and Capacity Utilization Industrial production fell 1.5 percent in October, following a revised drop of 1.2 percent in September and a decline of 0.2 percent in August. the overall Again in October, most of reduction in output occurred in durable materials, construction supplies, and autos; declines also occurred in production of most other materials and products. Output of consumer goods declined 0.9 percent in October, following similar decreases in the two preceding months. Auto assemblies were reduced about 11 percent to an annual rate of 5.5 million units. goods for Production of durable the home was cut 1.1 percent further last month. Output of consumer nondurable goods was reduced 0.4 percent, mainly because of reductions in food and fuel production. Output of business equipment, reflecting large declines in manufacturing, power, and farm equipment, was reduced 0.5 percent--about half of the large reduction that occurred in September; this was the third monthly decline in output of business equipment. Production of defense and space equip- ment edged up 0.2 percent in October, following average monthly increases of 0.5 percent in the preceding six months. Output of construction supplies was reduced an estimated 3.8 percent further, following a sizable decline last month, and was 10 percent below its recent peak last March. Materials output dropped 2.3 percent in October. Sharp declines occurred in production of durable materials, particularly metals and parts for consumer durable goods and for equipment, and in production of nondurable materials, as output of textiles, paper, and chemicals was curtailed sharply. Energy materials output also was reduced consid- erably for the third consecutive month. Capacity utilization in manufacturing, reflecting the large drop in output, also fell sharply--to 76.9 percent from 78.4 percent in September. The October operating rate for producers of motor vehicles and parts, with auto assemblies declining to a 5.5 million unit annual rate and truck produc- tion still at a low rate, dropped to 54.8 percent, only a little above its 1975 low. Utilization rates for several industries were close to 70 percent in October--iron and steel, fabricated metal products, and stone, clay, and glass. Industries with utilization rates somewhat above the average for all of manufacturing included paper, rubber and plastics, food, electrical machinery, and nonferrous metals. The capacity utilization rate for producers of indus- trial materials dropped 2 percentage points in October to 78.2 percent, as in the two preceding months a larger decline than in the rate for manufacturing. Large declines in October also were widespread among producers of the various industrial materials. Particularly low, besides iron and steel, were the operating rates for basic chemicals and parts for consumer durable goods. Retail Sales Sales by retail October, stores declined 1.5 percent in according to partial-sample estimates; followed no change in sales rise in August. this drop in September and a 1.4 percent A large falloff occurred in October sales by stores selling automotive products--8.7 percent, and another sizable decline was reported for stores handling building materials and related items. Sales by stores ex- cluding these two groupings edged up 0.2 percent. food stores rose Sales at 1.2 percent to their August level and those at general merchandise stores rose 0.8 percent (making up only about two fifths of their September decline). In contrast, sales at eating and drinking places fell 1.4 percent, and sales at furniture, home furnishings, and equipment stores declined 0.6 percent. Sales by all retail stores in the third quarter were 2.2 percent above those in the preceding quarter; they are estimated to have been about unchanged Responding to price rebates and other purchase however, in real terms. incentive programs by auto producers and dealers, nominal sales volume by the automotive grouping of stores in the third quarter was 9.8 percent higher declined 5.6 percent. than in the second quarter when it Spending for general merchandise and for furniture and appliances in the third quarter was 0.1 percent and 0.2 percent, respectively, above that in the second quarter. Corrigendum: The November following change should be made in the 10 Greenbook, Part II: On page 11-24, which the sentence beginning "Services, ... " beginning on line 13 sentence: "The rate of should be replaced with this increase in prices of services [excluding energy and homeownership], which did not slow in the first half of this year--in fact it accelerated, accounted for much of this recent acceleration remaining half of the CPI]." [in the pace for the -5- INDUSTRIAL PRODUCTION (Percentage change from preceding period; based on seasonally adjusted data) _ __~_II__~ ~______I______ 1981 Q1 Q2 ______ ______ - ___ 1981 Q3 Aug. -- - ------ __ --- annual rate--Total 8.4 Final products Consumer goods Durable Nondurable Business equipment Defense and space eq. __I Sep. ___ Oct. __ --- monthly rate--- 1.9 1.6 -. 2 -1.2 -1.5 7.1 6.3 14.5 3.4 9.4 4.1 1.1 -1.1 -. 4 -. 7 -. 7 -. 7 -. 9 -. 9 -8.8 2.0 4.0 5.1 -2.7 .1 -1.4 -2.5 -. 6 -. 4 -. 2 -1.0 .9 -. 5 -. 2 Construction supplies 17.8 -7.4 -8.9 Materials Durable goods Nondurable goods Energy materials 13.4 19.6 6.7 8.6 -1.9 3.7 -1.7 -16.6 2.7 1.2 -5.7 23.9 .1 .2 -3.3 -3.8 -1.5 -. 2 -2.3 -3.3 -1.6 -1.3 -. 8 -2.4 CAPACITY UTILIZATION RATES: MANUFACTURING AND MATERIALS (Percent, seasonally adjusted) Manufacturing industries Primary processing Advanced processing Motor vehicles & pts. Materials producers Durable goods mats. Raw steel Nondurable goods mats. Energy materials 1978-80 High 1980 Low Q2 Q3 1981 Sep. Oct. 87.2 74.9 79.8 79.3 78.4 76.9 90.1 86.2 94.5 71.0 77.2 51.0 80.3 79.6 65.5 79.4 79.2 60.3 78.2 78.4 58.1 76.1 77.4 54.8 88.8 73.8 81.2 81.2 80.2 78.2 88.4 100.7 90.9 88.8 68.2 55.3 77.5 82.7 79.0 83.7 85.3 81.1 78.8 81.4 83.3 85.2 77.4 80.8 82.8 84.1 74.8 74.9 81.3 83.3 1981 RETAIL SALES (Percent change from preceding period; based on seasonally adjusted data) 1981 Total sales (Real) 1 Q1 Q2 Q3 4.9 -. 4 2.2 2.9 -1.7 July Aug. Sept. .0 1.4 -. 1 .1 -1.0 .6 -. 9 Total, less autos and nonconsumption items 3.5 1.0 1.0 -.5 .9 .0 Total, exc. auto group, gasoline, and nonconsumption items 3.3 1.1 1.2 -.4 1.2 -.3 GAF 2 3.1 1.1 .6 -2.2 2.8 -.9 8.5 10.0 4.4 -4.1 -5.6 -2.6 5.2 9.8 .2 .8 2.5 -4.0 2.5 4.6 4.4 -. 1 -. 4 .8 .9 2.5 2.3 .1 -. 3 -. 4 .3 .4 -2.5 -1.1 Durable goods Automotive Furniture & appliances Nondurable goods Apparel Food General merchandise 3 Gasoline Oct. -1.5 .2 -5.5 -8.7 -. 6 .0 .7 -1.1 -2.1 2.0 1. BCD series 59. Data are available approximately 3 weeks following the retail sales release. 2. General merchandise, apparel, and furniture and appliance stores. 3. General merchandise excludes mail-order nonstores; mail-order sales are also excluded in the GAF composite sales summary. -7MONETARY AGGREGATES (Based on seasonally adjusted data unless otherwise noted) 1 9 81i Q4 '80 to Q1 Q2 ---- Money stock measures 1. M1-A 2 2. (Adjusted) 3. M1-B 2 4. (Adjusted) 5. M2 6. M3 Selected components 7. Currency -20.8 (-1.7) 4.9 (-0.8) 8.3 12.4 5.5 Q3 10.6 7.9 -3.7 (-1.5) Oct. '81 0.2 (-0.7) 7.1 10.2 5.0 -7.6 (-5.2) -2.8 (-4.0) 6.3 8.2 2.7 (3.1) 3.9 (3.7) 9.3 6.6 -8.1 (0.6) 4.2 (1.4) 8.9 10.9 4.0 -1.0 3.0 5.5 Demand deposits -32.9 -11.8 -8.0 9. Other checkable deposits 372.3 107.4 21.5 31.3 9.4 0.0 84.5 6.0 -30.5 30.2 3.5 -29.6 19.0 11.3 58.9 113.7 4.2 -11.9 13.4 - 0.3 -12.6 4.7 9.4 12.8 87.8 6.8 -19.6 21.0 -2.9 -23.0 5.1 13.0 27.6 99.2 10.8 -29.9 30.9 -3.9 -28.0 5.7 Large time deposits 4 at commercial banks, net at thrift institutions 39.6 40.6 34.7 10.3 10.1 11.2 24.7 26.6 15.1 Term RPs, NSA 18.1 12.2 41.6 22. Oct. 3.0 (6.5) 7.3 (6.9) 11.6 13.4 8. .0. M2 minus M1-B (11+12+13+16) 3 .1. Overnight RPs and Eurodollars, NSA .2. Money market mutual fund shares, NSA .3. Commercial banks .4. savings deposits .5. small time deposits .6. Thrift institutions .7. savings deposits .8. small time deposits Sept. Percentage change at annual rates ---- -5.3 (5.1) 8.7 (5.3) 10.6 Aug. 1.5 -11.7 3.6 -14.1 23.7 8.3 180.4 9.3 -110.7 94.9 6.3 -21.7 20.1 0.0 -23.3 8.4 11.0 -105.5 72.7 10.4 -19.0 24.0 4.0 -17.0 11.5 10.5 2.0 127.6 6.4 -19.5 23.6 0.3 -20.1 9.9 26.0 26.3 22.3 8.1 5.3 24.3 -4.4 -9.2 21.4 22.5 22.6 22.3 5.5 82.4 -25.7 23.9 --Average monthly change in billions of dollars-MEMORANDA: 23. Managed liabilities at commercial banks (24+25) 24. Large time deposits, gross 25. Nondeposit funds 26. Net due to related foreign institutions, NSA 5 Other 27. 28. U.S. government deposits at 6 commercial banks 4.3 5.1 -0.8 8.8 7.5 1.3 6.4 7.0 -0.6 11.3 9.5 1.8 0.4 2.8 -2.4 -5.2 -1.5 -3.7 6.0 6.1 -0.1 -1.6 0.7 0.5 0.8 0.9 -1.5 4.2 -2.4 -1.3 -1.1 -4.6 0.8 -0.6 0.5 1.1 -0.3 -0.7 -2.7 -0.3 3.5 0.3 1. Quarterly growth rates are computed on a quarterly average basis. 2. Figures in parentheses have been adjusted to remove the distorting effects since the beginning of 1981 of shifts of funds out of demand deposits and other accounts into NOW accounts. Based on a variety of evidence, it is estimated that 77-1/2 percent of inflows into other checkable deposits--in excess of "trend"-was from demand deposits in January, and 72-1/2 percent in subsequent months. 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. Excludes retail RPs. 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. Changes since October 1980 are partially estimated. 6. Consists of Treasury demand deposits at commercial banks and Treasury note balances. -8COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT (Percentage changes at annual rates, based on seasonally adjusted data)1 1980 Q3 4 Q ---- 1. Total loans and investments 2 at banks 12.9 14.5 2. 20.7 Investments 1981 Q1 Q2 Q3 Aug. Sept. Oct.e Oct. 80 to Oct. 8 1 e -- Commercial Bank Credit -----7.8 8.2 9.0 10.1 10.6 8.6 9.8 11.8 10.5 6.5 3.9 4.9 0.7 8.4 7.9 0.0 7.8 3. Treasury securities 39.1 11.1 14.8 15.7 4. Other securities 11.5 12.3 8.0 1.7 9.1 13.1 10.8 14.5 8.1 10.2 15.5 6.8 8.9 10.8 12.0 14.0 8.5 10.5 15.5 21.0 6.5 11.9 20.2 22.1 18.3 13.3 15.0 -10.2 60.1 27.3 53.2 -54.5 -132.7 47.5 26.1 19.0 4.6 11.0 9.4 7.3 8.5 10.1 9.2 6.9 9.0 -7.6 -0.2 -1.4 -1.4 0.0 -1.4 1.4 n.a. n.a. 5. Total loans 2 2 6. Business loans 7. Security loans 8. Real estate loans 9. Consumer loans -10. 11. 12. Total short- and intermediateterm business credit (sum of lines 14, 15 and 16) Business loans net of bankers acceptances Commercial paper issued by 3 nonfinancial firms 13. Sum of lines 11 & 12 14. Line 13 plus loans at 4 foreign branches 15. -10.0 -18.1 Short- and Intermediate-Term Business Credit edit -- 9.0 14.2 13.7 15.8 26.6 29.6 26.9 n.a. n.a. 14.5 24.2 5.6 10.5 22.2 26.0 20.6 12.7 15.4 -6.2 29.5 42.2 59.4 76.7 87.0 6.9 38.6 20.7 8.2 14.1 26.6 32.0 28.7 11.9 17.9 9.8 19.3 11.3 14.0 28.4 33.8 30.2 15.7 19.5 -4.6 14.6 8.5 19.3 14.7 15.4 1.5 n.a. n.a. 21.0 -15.7 35.6 23.1 28.9 22.6 33.3 n.a. n.a. -19.7 10.3 Finance company loans to business 16. -5.7 5 Total bankers acceptances 5 outstanding 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. Loans at foreign branches are loans made to U.S. firms by foreign branches of domestic-chartered banks. 5. Based on average of current and preceding ends of months. n.a.--not available. e--estimated. -9SELECTED FINANCIAL MARKET QUOTATIONS 1 (Percent) 1981 Change from: July FOMC High Oct. 6 July FOMC Aug. 18 FOMC Oct. 6 Nov. 12 Federal funds 2 19.93 18.19 15.46 14.01 -5.92 -1.45 Treasury bills 3-month 6-month 1-year 15.72 15.42 15.72 13.90 10.60 15.62 14.74 14.12 13.83 11.25 11.11 -5.12 -4.17 -3.41 -3.30 -2.87 -2.72 18.02 17.63 14.84 15.07 12.64 17.68 16.86 17.09 14.97 12.19 -5.59 -5.22 -4.67 -2.20 -2.61 -2.78 Large negotiable CDs 3 1-month 3-month 6-month 18.55 18.38 18.16 18.14 18.08 18.20 15.14 15.57 15.81 12.67 12.58 12.69 -5.88 -5.80 -5.47 -2.47 -2.99 -3.12 Eurodollar deposits 2 1-month 3-month 19.49 18.91 18.66 18.73 16.00 17.03 14.05 14.25 -5.44 -4.66 -1.95 -2.78 20.50 20.50 19.00 17.00 -3.50 -2.00 U.S. Treasury (constant maturity) 3-year 10-year 30-year 15.75 14.71 13.96 15.99 14.79 13.95 15.78 15.14 14.60 12.85 13.19 13.21 -2.90 -1.52 -. 75 -1.95 -1.39 Municipal (Bond Buyer) 11.44 11.94 4 12.93 4 12.44 4 1.00 -. 49 Corporate Aaa New issue Recently offered 16.73 16.55 16.63 6 -17.72 6 17.17p 5 16.80p 5 .44 .27 -.92 17.11 17.276 18.286 18.376 1981 FOMC. Nov. Oct. 6 12 1981 High 963.99 1,024.05 79.14 77.86 380.36 348.99 856.26 69.03 308.69 223.47 185.87 860.54 71.69 325.05 200.99 -163.51 -7.45 -55.31 -22.48 ___High Short-term rates Commercial paper 1-month 3-month 6-month Bank prime rate 14.52 18.23 12.46 Intermediate- and longterm rates Primary conventional mortgages 1980 Dec. 31 Stock Prices Dow-Jones Industrial NYSE Composite AMEX Composite NASDAQ (OTC) 202.34 High -2.93 .09 1.26 Pe rcent change from: FOMC. Oct. 6 4.28 2.66 16.36 15.12 4. One-day quotes for preceding Thursday. One-day quotes except as noted. 2. Averages for statement week closest to date shown. 5. Average for preceding week. 6. One-day quotes for preceding Friday. 3. Secondary market. p-Preliminary. 

Federal Reserve (1981, November 16). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19811117_part1

@misc{wtfs_greenbook_19811117_part1,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1981},
  month = {Nov},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19811117_part1},
  note = {Retrieved via When the Fed Speaks corpus}
}