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 May 20, SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System 1983 TABLE OF CONTENTS Page THE DOMESTIC NONFINANCIAL ECONOMY Revised GNP . . . . . . . . . . . . . . . . . . . . . . . Budget Developments . . . . . . . . . . . . . . . . . . . TABLES: Real gross national product and related items . . . Budget estimates for fiscal 1984 . . . . . . . . . . THE DOMESTIC FINANCIAL ECONOMY TABLES: . . . . . . . . . . . . . . . . Monetary aggregates Commercial bank credit and short- and intermediateterm business credit . . . . . . . . . . . . . . . Selected financial market quotations . . . . . . . . SUPPLEMENTAL NOTES THE DOMESTIC NONFINANCIAL ECONOMY Revised GNP Real GNP is now estimated to have increased at a 2.5 percent annual rate in the first quarter, compared with a preliminary figure of 3.1 percent (annual rate). The downward revision was entirely due to a faster rate of inventory liquidation than originally published; partly offset by an upward revision to final sales. this was only Within final sales, the revisions to business fixed investment were particularly noteworthy: the preliminary estimate of real spending on structures had shown a moderate gain but the revised estimate records a decline, while for producers' durable equipment the estimate of first quarter growth was raised from an annual rate of 1-1/2 percent to 10 percent. Reflecting the re- vision to real GNP, the revised estimate of nominal GNP growth has been lowered from 9.1 percent to 8.3 percent. The estimate of inflation, as measured by the gross business product fixed-weighted price index, remained unchanged at 2.8 percent. The Commerce Department also released preliminary estimates of corporate profits for the first quarter. Reported (book value) profits, after taxes, fell $5 billion as inventory profits fell sharply reflecting the drop in inflation. But economic profits, which include inventory valuation and capital consumption adjustments, rose $13 billion after taxes--the largest gain since early 1981. -2- Budget Developments The Senate passed a budget resolution on May 19 that calls for an estimated federal government deficit of about $179 billion in fiscal 1984. Relative to current law, the resolution requires an increase in receipts of $9 billion compared with more than $30 billion of additional revenue in the House resolution passed earlier. The next step in the Congressional budget process is for the House and Senate to try to reach agreement on the resolution through a conference committee. REAL GROSS NATIONAL PRODUCT AND RELATED ITEMS (Percent change from previous period at compound annual rate; based on seasonally adjusted data) 1982 Q1 Q2 1983 Q3 Q4 Q1 Q1 Prelim. Revised 1. Gross national product 2. Final sales 3. Personal consumption expenditures 4. Business fixed invest. Structures Prod. durable equip. 5. Residential investment Government purchases Federal State and local 6. .7 -5.1 -1.1 .2 -. 9 2.5 2.5 -5.0 1.3 -7.6 -11.8 1.6 -17.4 -7.6 -5.2 -8.8 -6.0 -4.8 -6.5 12.9 -5.3 39.3 83.1 79.6 -5.3 -13.5 .4 8.4 23.1 -.2 12.0 32.8 -.4 -8.9 -21.1 .7 -8.5 -19.1 -.3 -10.2 -2.9 -5.5 -1.1 -1.3 .6 .9 4.5 1.3 2.6 5.6 -3.3 10.1 7. Change in business inventories1 -15.4 -4.4 3.4 -20.3 -12.4 -16.1 8. Net exports1 Exports Imports 36.9 -12.7 -17.5 35.7 7.5 14.5 27.5 -16.8 4.6 27.2 -21.6 -25.4 24.0 -.7 23.5 -.8 11.0 13.0 -1.0 6.8 5.8 4.3 4.6 5.0 4.4 3.8 5.9 6.6 6.7 6.9 ADDENDA: 9. Nominal GNP 10. GNP implicit price deflator 11. Gross domestic business product fixed-weighted price index 12. Saving rate (percent) 1. Billions of constant dollars. -4- BUDGET ESTIMATES FOR FISCAL 1984 (Unified basis, billions of dollars) Administration April January Congressional resolutions House1 Senate2 Receipts 660 654 689 671 Outlays 849 844 864 850 Deficit 189 190 174 179 Note: Underlying economic assumptions of the Administration and Congress differ slightly. 1. First Concurrent Budget Resolution, as passed by the House in March 1983. 2. First Concurrent Budget Resolution, as passed by the Senate May 19, 1983. -5- (Based MONETARYAGGREGATES on seasonally adjusted data unless otherwise noted)1 1983 1982 Q3 2. (M) 3. 4. 6.1 (4.3) 10.9 12.5 3 M2 M3 Q1 Feb. Mar. Apr.P - Percentage change at annual rates Money stock measures 1. M1 Q4 Growth from base period to April 19832 13.1 (14.5) 9.3 9.5 14.1 (13.8) 19.8 9.8 22.4 (24.2) 24.0 13.3 15.9 (19.6) 11.1 8.2 -3.1 (-0.5) 3.1 4.5 11.5 (12.5) 5.8 8.8 Level in billions of dollars April 1983 Selected components 5. Currency 7.2 7.4 10.9 12.5 12.4 6. Demand deposits 0.0 8.4 2.7 -3.5 7.0 -6.5 238.8 7. Other checkable deposits 21.6 34.0 46.2 91.9 37.3 -10.3 115.0 8. M2 minus M1 (9+10+11+14) 12.4 8.1 21.6 24.5 9.6 5.1 1576.3 28.6 Overnight RPs and Eurodollars, NSA General purpose and broker/dealer money 23.9 34.2 40.7 -2.5 41.9 50.4 35.0 12.6 15.3 9.9 -57.5 57.3 -51.1 44.6 -42.1 17.5 -56.9 10.1 146.7 660.0 -1.8 18.7 5.7 35.3 -0.4 4.1 295.3 -48.6 13.6 189.9 -63.6 22.9 79.6 -39.1 15.0 39.5 -19.8 11.5 338.6 321.4 726.7 2.8 6.9 30.1 -5.9 166.0 -50.3 170.0 -62.5 78.8 -29.3 36.6 -7.9 321.2 405.5 20.0 10.4 -36.4 -40.9 -7.9 11.8 381.1 13.4 12.9 15.6 4.2 -1.5 29.3 -43.0 -49.7 -14.6 -49.4 -60.1 -7.6 -6.4 -17.9 36.4 18.2 -1.0 87.3 300.8 231.5 69.3 109.3 -11.9 32.7 34.4 -32.7 19.4 -23.4 5.9 -45.1 26.5 -69.0 40.3 41.0 43.1 4 market mutual fund shares, NSA Commercial banks Savings deposits, SA, plus 5 MMDAs, NSA Small time deposits Thrift institutions Savings deposits, SA, plus 5 MMDAs, NSA Small time deposits 17. M3 minus M2 (18+21+22) 18. 19. 20. 21. Large time deposits 6 At commercial banks, net At thrift institutions Institution-only money market 22. Term RPs, NSA mutual fund shares, NSA - 8.8 138.0 Average monthly change in billions of dollars - MEMORANDA: 23. 24. 25. 26. 27. 28. Managed liabilities at commercial banks (24+25) Large time deposits, gross Nondeposit funds Net due to related foreign inscitutions, NSA 7 Other U.S. government deposits at commercial 8 banka 1.9 5.7 -3.8 -5.3 -6.5 1.2 -19.3 -17.1 -2.2 -12.9 -16.2 3.3 -7.1 -7.0 -0.1 4.7 0.1 4.6 376.2 296.1 80.1 -4.6 0.8 -0.7 2.0 -4.6 2.4 0.4 3.0 0.0 -0.2 0.1 4.7 -62.0 0.2 0.3 0.2 -6.9 3.7 1.0 13.5 142.1 Dollar mounts shown under memoranda for 1. Quarterly growth rates are computed on a quarterly average basis. quarterly changes are calculated on an end-month-of-quarter basis. The base period for the M2 target is the 2. The base for MI and M3 targets is the fourth-quarter 1982 average. February-March 1983 average. 3. HI seasonally adjusted using an experimental model-based procedure applied to weekly data. 4. Overnight and continuing contract RPs issued to the nonbank public by commercial banks plus overnight Eurodollar deposits issued by branches of U.S. banks to U.S. nonbank customers, both net of amounts held by Excludes retail RPs, which are in the small time deposit component. money market mutual funds. 5. Beginning December, 1982, growth rates are for savings deposits, seasonally adjusted, plus money market Savings deposits excluding MMDAs declined at cmiercial deposit accounts (MMDAs), not seasonally adjusted. At banks at annual rates of 56.3 percent in February, 18.3 percent in March and 10.1 percent in April. thrift institutions, savings deposits excluding MMDAs declined during February and March at annual rates of 21.2 percent, and 7.4 percent respectively, and increased in April by 6.8 percent. 6. Net of large-denomination time deposits held by money market mutual funds and thrift institutions. 7. Consists of borrowings from other than commercial banks in the form of federal funds purchased, securities for borrowed money (including borrowings from the sold under agreements to repurchase and other liabilities Federal Reserve and unaffiliated foreign banks), loans sold to affiliates, loan RPs and other minor items. Data are partially estimated. 8. Consists of Treasury demand deposits at commercial banks and Treasury nots balances. p-preliminary. -6COMMERCIAL CREDIT BANK AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT 1 at changes (Percentage annual rates, based on seasonally adjusted data) 1982 Q3 Q4 Q1 -----------------------1. Total loans and investments 2 ,3 at banks Feb. Mar. Apr. Levels in bil. of dollars April 1983 Commercial Bank Credit ----------------------- 5.8 6.3 10.7 7.6 11.2 8.7 1463.7 3 4.8 15.9 25.1 14.1 17.9 22.2 401.2 3. Treasury securities 8.3 43.0 61.1 40.3 53.1 54.0 157.8 4. Other securities -1.5 -2.0 2.5 243.4 3.8 1062.5 2. 5. Investments 3 2 3 Total loans , 2 3 6. Business loans , 7. Security loans 8. 9. 3.0 2.5 5.7 6.2 3.0 5.7 5.4 8.9 9.0 -.2 3.9 1.5 1.7 -26.4 21.6 15.9 22.9 -34.0 -11.3 395.3 63.6 37.2 Real estate loans 2.8 4.9 7.2 6.7 7.0 7.4 311.4 Consumer loans 3.0 4.6 6.5 1.9 11.2 7.4 196.0 Short- and Intermediate-Term Business Credit -----------10. 11. 12. Total short- and intermediateterm business credit (sum of lines 14, 15 and 16)3 9.2 9.2 -2.9 -2.9 -3.3 -0.6 -6.7 Business loans net of bankers 3 acceptances 9.0 .6 3.5 3.0 -0.3 -11.3 Commercial paper issued by non4 financial firms n.a. n. a. 386.4 -6.2 -39.6 -33.1 12.7 -7.5 -27.7 46.5 -0.5 4.0 -0.8 -13.3 432.9 -13.6 448.9 13. Sum of lines 11 & 123 7.0 -4.5 14. Line 13 plus loans at foreign 3 branches ,5 8.4 -4.8 0.2 4.6 -1.5 15.8 -15.2 4.0 5.9 4.4 n.a. n.a. -30.9 -38.8 -51.3 n.a. n.a. 15. 16. 6 Finance company loans to business Total bankers acceptances outstanding 6 6.6 22.9 1. Average of Wednesdays for domestically 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. Adjusted for shifts of assets and liabilities to International Banking Facilities (IBFs) which affected flows from December 1981 to September 1982. 4. Average of Wednesdays. 5. Loans at foreign branches are loans made to U.S. firms by foreign branches of domestically chartered banks. 6. Based on average of current and preceding ends of month. n.a.--not available. SELECTED FINANCIAL MARKET QUOTATIONS 1 (Percent) 1982 FOMC Highs Dec. 21 1983 Intermeeting FOMC Low Mar. 29 May 19 Change from: FOMC FOMC Dec. 21 Mar. 29 Short-term rates Federal funds 2 15.61 8.69 8.88 8.48 8.59 -.10 Treasury bills 3-month 6-month 1-year 14.57 14.36 13.55 7.90 8.01 8.11 8.63 8.63 8.56 7.96 8.14 7.97 7.95 8.25 .24 .24 .17 -.49 -.38 -. 28 Commercial paper 1-month 3-month 15.73 15.61 8.48 8.43 9.03 8.94 8.17 8.39 8.13 8.36 -.09 -. 07 -.64 -. 58 Large negotiable CDs 3 1-month 3-month 6-month 15.94 16.14 16.18 8.59 8.62 8.78 8.99 8.26 8.26 8.29 8.50 8.53 8.68 -.09 9.06 9.18 -. 49 -. 53 Eurodollar deposits 2 1-month 3-month 16.36 16.53 Q.44 9.56 9.59 9.54 8.68 8.71 8.81 8.89 -.63 -. 67 17.00 11.50 10.50 10.50 10.50 -1.00 13.97 13.97 8.25 8.98 8.73 7.87 8.21 8.42 9.06 8.76 .17 -.22 -.31 -.30 9.87 10.54 10.53 10.05 10.60 10.66 9.36 10.12 10.27 9.74 10.49 10.67 -.13 -. 05 .14 -.31 -.11 .01 9.29 -. 76 11.46P -. 50 Bank prime rate Treasury bill futures June 1983 contract Dec. 1983 contract 8.28 -.09 -.10 -. 29 -. 50 -.78 -. 65 Intermediate- and long- term rates U.S. Treasury (constant maturity) 15.16 3-year 14.95 10-year 14.80 30-year Municipal (Bond Buyer) 13.44 10.054 9.154 8.78 Corporate--Aaa utility Recently offered 16.34 11.96e 11.79e 11.03 17.66 1982 13.635 12.865 -. 33 S&L fixed-rate mort- gage commitment Stock prices Dow-Jones Industrial NYSE Composite AMEX Composite Lows FOMC Mar. 29 776.92 58.80 237.29 1131.19 87.24 383.76 12.59 1983 Intermeeting High 268.77 159.14 NASDAO (OTC) 1. One-day quotes except as noted. 2. Averages for statement week closest to date shown. 3. Secondary market. 1232.59 95.50 451.96 12.595 May 19 1191.37 93.67 449.25 -1.04 -.27 Percent change from: 1982 FOMC Lows Mar. 29 53.3 59.3 89.3 5.3 7.4 17.1 12.7 304.34 302.82 90.3 4. One-day quotes for preceding Thursday. 5. One-day quotes for preceding Friday. p--preliminary. e--estimated. 

Federal Reserve (1983, May 23). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19830524_part2

@misc{wtfs_greenbook_19830524_part2,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1983},
  month = {May},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19830524_part2},
  note = {Retrieved via When the Fed Speaks corpus}
}