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 III - FOMC March 27. SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System 1992 TABLE OF CONTENTS Page THE DOMESTIC NONFINANCIAL ECONOMY Gross domestic product, 1991:Q4 . . . . . . . Personal income and consumption. . . .. . . . . . . . . . . . 1 2 Tables Real gross domestic product and related items. . . . Personal income. . . . . . . . . . . . . . . . . . . Real personal consumption expenditures .. . . . . .. . . 3 4 4 . . . . . . . . 5 6 Charts Consumer attitudes . . . . . . . . . . . . Unemployment insurance . . . . . . . . . . . . . . THE FINANCIAL ECONOMY The March 1992 Senior Financial Officer Survey . . . . 7 Tables Senior Financial Officer Survey on demand deposits at selected large banks in the U.S.. . . . . . . ...11 16 . . . .. . . . . . . . . .. ... Monetary aggregates 17 Selected financial market quotations . . . . . . . . THE INTERNATIONAL ECONOMY Import and export prices . . ... .. . . . . . . . . 18 SUPPLEMENTAL NOTES THE DOMESTIC NONFINANCIAL ECONOMY Gross Domestic Product, 1991:Q4 BEA now estimates that real gross domestic product (GDP) rose at an annual rate of 0.4 percent in the fourth quarter of 1991, about 1/2 percentage point less than the preliminary estimate released last month. Final sales are still estimated to have edged lower in the fourth quarter, with a downward revision to net exports offsetting upward adjustments to consumer outlays and business equipment spending; revisions to the other components of final sales were quite small. The accumulation of nonfarm inventories last quarter is now estimated to have been slightly smaller than was reported a month ago, but this revision does not alter our view that stocks were undesirably heavy at year-end. The GDP fixed-weight price index is estimated to have risen at an annual rate of 2.1 percent in the fourth quarter, 0.1 percentage point below the preliminary estimate. The personal saving rate for the fourth quarter was revised down from 5.3 percent to 5.2 percent in this report, reflecting the lower level of disposable income and the upward revision to consumer spending. Note that last month BEA erroneously reported the fourth- quarter saving rate to have been 5.4 percent instead of 5.3 percent; BEA has confirmed that there was a typographical error in last month's release. The BEA report contained the first estimate of corporate profits for the fourth quarter. On an economic basis, profits rose nearly 3-1/2 percent (not at an annual rate) last quarter, reaching a level about 7 percent above that of a year earlier. The fourth- quarter gain was concentrated in domestic nonfinancial industries. The share of economic profits in nominal GDP edged up last quarter -2to 5.5 percent, but stood only 0.2 percentage point above the cyclical low registered in the fourth quarter of 1990. Personal Income and Consumption Nominal personal income rebounded strongly in February, after declining somewhat in January; this monthly pattern occurred because both private payrolls and federal subsidy payments to farmers contracted in January and then turned up in February. After adjusting for price change and tax payments, real disposable personal income in January and February was, on average, 0.6 percent (not at an annual rate) above the level in the fourth quarter of 1991. The BEA estimates for personal outlays in January and February represent a fairly literal translation of the current estimates of retail sales. In real terms, average spending for the two months is reported to have climbed 1.3 percent (not at an annual rate) above the fourth-quarter level. As we indicated in Part 1, we have assumed in assembling the staff forecast that retail sales in January and February will be revised down or that March sales will be depressed by a sizable "payback." In light of this assumption, the forecast anticipates a saving rate that is appreciably higher than the published BEA average of 4-3/4 percent for January and February. The final March report on consumer sentiment from the University of Michigan was little changed from the preliminary reading; the overall index rose to 76 percent, the first significant increase since the retrenchment in sentiment last fall. The improvement relative to the November-February period occurred largely because of more positive responses to questions about business conditions for the coming year and about buying conditions for large household durables. REAL GROSS DOMESTIC PRODUCT AND RELATED ITEMS (Percent change from previous period at compound annual rates; based on seasonally adjusted data, measured in 1987 dollars) 1990-Q4 to 1991-Q4 1. Gross domestic product 1991-Q3 Final 1991-Q4 Preliminary Final .3 1.8 .8 .4 -. 5 -. 7 -. 1 -. 2 .6 2.3 -. 2 .0 -7.1 -3.7 -14.7 -3.7 6.7 -23.9 -4.5 -3.7 -6.3 -3.4 -1.6 -7.8 -. 9 10.9 13.1 12.3 -14.6 -13.6 2. Final sales of domestic product 3. Consumer spending 4. 5. 6. Business fixed investment Producers' durable equipment Nonresidential structures 7. Residential structures 8. Federal purchases 9. State and local purchases -. 5 -. 1 1.4 .8 10. Exports of goods and services 6.8 7.3 13.1 9.7 11. Imports of goods and services 4.6 22.3 2.5 2.1 -2.8 12.5 9.2 -3.1 -8.1 ADDNBDA: 12. Nonfarm inventory investment -13.9 13. Net exports of goods and services' -20.92 -31.1 -17.6 3.3 4.1 2.7 2.2 3.4 2.6 2.2 2.1 16. GDP mplicit price deflator 3.0 2.1 1.7 1.7 Personal saving rate 5.22 5.0 5.3 5.2 14. Nominal GDP 15. 17. GDP fixed-weight price Index 1. Leve, bllown of 197 dollars. 2. Annual average. -21.3 -4PERSONAL INCOME (Average monthly change at an annual rate; billions of dollars) 1991 1991 Q3 11.3 Wages and salaries Private 1991 1992 Q4 Dec. 9.0 17.6 48.4 -7.5 54.3 4.7 3.1 4.4 4.8 5.6 3.9 17.7 15.9 -16.9 -21.9 36.1 33.2 Other labor income 1.4 1.4 1.4 1.3 1.4 1.4 Proprietors' income Farm 2.1 -. 5 2.0 -1.0 3.7 2.0 14.9 11.8 -8.5 -12.1 11.4 5.4 .1 .1 -3.1 -1.3 .5 -1.4 2.3 .1 -4.9 2.9 -. 1 -4.9 -. 8 -. 3 -3.5 .2 .3 -2.0 Transfer payments 7.1 4.0 9.9 18.0 23.3 9.7 Less: Personal contributions for social insurance 1.0 .6 .4 1.3 2.4 2.6 -. 8 1.0 .5 2.2 -1.1 9.2 12.2 8.0 17.1 46.2 -6.4 45.1 1.7 -2.2 7.1 31.7 -8.2 24.4 Total personal income Rent Dividend Interest Less: Personal tax and nontax payments Equals: Disposable personal income Memo: Real disposable income Jan. Feb. REAL PERSONAL CONSUMPTION EXPENDITURES (Percent change from the preceding period) 1991 1991 Q3 1991 Q4 -Annual ratePersonal consumption expenditures .6 2.3 -2.8 -. 7 9.5 4.5 Nondurable goods Excluding gasoline -. 9 -. 9 Services Excluding energy Memo: Personal saving rate (percent) Durable goods Excluding motor vehicles .0 Dec. 1992 Jan. Feb. ---- Monthly rate----. 1 .9 .6 -5.7 -7.7 .3 -. 4 2.4 4.6 2.6 1.2 .0 -. 3 -3.9 -4.2 -. 4 -. 7 1.3 1.5 .3 .5 2.2 2.2 2.2 2.4 3.7 3.4 .0 .7 .3 .4 .3 .4 5.2 5.0 5.2 5.6 4.6 4.7 -5Consumer Attitudes March 27, 1992 Index Conference Board Index of Consumer Confidence 11 i4 I4 4 'I 41 ' 4 I I1 II 'I l l, " I i I I 'I 'l f I *"' , I 'II / 'l! ' I II' 1 \1 801 4 ,_ \ ..- 41 &~ 14411/ / (' 1 14'* I II Michigan Survey Research Center Index of Consumer Sentiment 1981 1982 1983 1984 1985 1987 The base of the Michigan Index is February 1966; the base of the Conference Board Index is the annual average for 1985. Both indexes are an average of five equally-weighted questions that relate to current and expected economic conditions. However, the questions in the two surveys are different and the timing of the surveys in the field varies. 1988 1989 1990 -6- Unemployment Insurance (Weekly data; seasonally adjusted, BLS basis <1>) Initial Claims Thousands 750 700 650 600 Mr 14 550 453.4 All regular programs S 500 450 400 350 300 Lj± , 1985 1987 1986 1988 1989 1990 1991 Insured Unemployment 1992 Milion r 250 I 5.0 All regular programs Mw 7 338 I . II 1981 1982 . 1983 I . , I ., ., *. 1984 <1> Only the stae progam cmonapva seasonally djuted. 1985 , -I 1986 of dss serie anr . 1987 . . 1988 ..- 1989 I , I . 1990 , 1991 . 1 1 .5 1992 -7THE FINANCIAL ECONOMY The March 1992 Senior Financial Officer Survey Summary In view of the unusual strength in demand deposits since the beginning of the year, the System conducted a Senior Financial Officer Survey in mid-March to obtain information about the behavior of these deposits. Nearly half of the reporting banks characterized their demand deposit growth as stronger than normal in recent months. Most banks experiencing stronger growth attributed it to business customers, who had increased compensating balances in response to lower market interest rates. A number of banks pointed to increased activity in financial markets and to higher balances held by mortgage servicers. To provide an overview of demand deposits, several questions were repeated from a 1988 Senior Financial Officer Survey, the last one conducted on this topic. Businesses continue to hold the bulk of demand deposits, and roughly half of these deposits are held under formal compensating-balance arrangements. While the share of compensating balances in total demand deposits is lower than in 1988, respondents answered that it had increased somewhat over the past two years. The current survey also found that few business customers currently hold sweep accounts, which are arrangements to move balances automatically at the end of the day from demand deposits to interest-earning accounts. The remainder of the survey asked specific questions regarding compensating balances. Even though the share of demand deposits held as compensating balances is lower than in 1988, a significant portion of firms' service charges are paid with earnings credits on these accounts. Banks still use the three-month Treasury rate almost exclusively to calculate earnings credits, and the rate -8typically is averaged over a month, as are compensating balance requirements. For the most part, banks continue to adjust deposit balances for the cost of reserve requirements in calculating credits. However, in contrast to the results from the 1988 survey, banks are less likely to allow customers to carry over surpluses or deficiencies to the following period. Demand Deposit Growth Slightly less than one-half of the reporting banks experienced stronger-than-normal demand deposit growth so far this year, while only three characterized growth as weaker than normal. Nearly all banks with stronger-than-normal growth attributed that strength to nonfinancial or financial business depositors; a third of those banks with stronger growth also cited the household sector. In general, lower market interest rates require customers to increase their compensating balances to generate the same amount of earnings credits. In the survey, three-quarters of the banks with stronger growth cited such an adjustment of compensating balances to the lower level of market rates as a reason. Over two-fifths of the banks experiencing stronger-than-normal inflows included lower interest rates on other types of deposits as a contributing factor. Twenty percent of all banks and one-third of the smaller banks cited that compensating balances increased owing to higher use of credit or operational services. Other factors playing a role included increased demand deposit holdings resulting from increased activity in financial markets and higher balances of mortgage servicers. Consistent with this latter explanation, most banks reported that mortgage servicers typically place their mortgage payments in demand deposits prior to disbursement. However, one bank noted that these funds were held in -9savings deposits and then transferred to demand deposits just before disbursements were made. Demand Deposits and Compensating Balance Arrangements The share of demand deposits held by businesses appears to have remained steady over the past several years. The median bank estimated that between 61 and 80 percent of its demand deposits were held by businesses, similar to the proportion estimated from Deposit Ownership Surveys in 1988. However, a smaller share of business demand deposits are held under compensating balance arrangements, with the median respondent on the current survey placing in the 41 to 60 percent quintile versus in the 61 to 80 percent quintile in the 1988 Senior Financial Officer Survey. However, banks reported that this share had increased slightly over the past two years, with over two-fifths of the banks experiencing an increase while onefifth saw a decline. And while some banks have encouraged the payment of services with explicit fees, most have not. Earnings credits from compensating balances cover a significant The portion of the service charges incurred by business customers. median bank responded that from 21 to 40 percent of service charges to large firms were met by earnings credits. For their middle market and small business customers, the median-bank response was higher, in the 41 to 60 percent range. Most banks reported that they did not encourage the payment of services with fees by favorable pricing arrangements. The current survey included a set of questions about sweep accounts that were not on the earlier survey. In general, sweep accounts are not common, and some banks do not offer such accounts. The small number of customers holding sweep accounts is consistent with recent conversations that the Board staff has had with cash managers across the country; those cash managers noted that they -10directly manage their demand deposits rather than delegate the task to a bank, as under a sweep arrangement. Most banks again indicated that earnings credits are computed using the three-month Treasury bill rate. Nearly all of the banks use a monthly average of either the auction or secondary market yield. A smaller number of banks use a managed rate, set by their rate committee and based on a variety of money market rates. The survey indicated that many banks use a lagged rather than a current rate in calculating earnings credits. Roughly two-thirds of the banks allow at least some of their customers to carry account surpluses or deficiencies into the next period. However, over eighty-five percent of the banks place limits on these carryovers for some or all of their customers, and only a third of them allow some or all of their customers to carry surpluses over into the next calendar year. Finally, customers appear to be most likely to make up for the shortfall in earnings credits with additional fee payments rather than to adjust balances within current or subsequent accounting periods. -11Table 1 SENIOR FINANCIAL OFFICER SURVEY ON DEMAND DEPOSITS AT SELECTED LARGE BANKS IN THE UNITED STATES (Status of policy as of January and February 1992) (Number of banks and percent of banks answering question) (By volume of total domestic assets, in $ billions, as of December 31. (By type of bank) This report is authorized by law [12 U.S.C. 225(a), 2 48(a), needed to make the results comprehensive, accurate, and timely. and 263]. 1 1991 ) Your voluntary cooperation in submitting this report is The Federal Reserve System regards the individual bank information provided by each respondent as confidential. determined subsequently that any information collected on this form must be released, respondents will be notified. If it should be Demand deposits have expanded at a very strong pace over the past two months. The Federal Reserve is seeking information from depository institutions about possible reasons for this surge and to update our knowledge about the relationships between compensating balance and mortgage servicing arrangements and demand deposits. I. Adjusting for normal seasonal variation and any mergers, January and February. above normal very strong banks pet banks All Respondents 7 12.7 $10.0 and over 3 10.3 under $10.0 4 15.4 -.---- ---..-.---.-. . ... 2. banks pot 27 15 12 32.7 34.5 30.8 demand below normal about normal pet 18 10 8 banks 49.1 51.7 46.2 pet 3 1 2 deposit growth very weak total banks 5.5 3.4 7.7 pet 0 0 0 financial business demand deposits banks per 14 58.33 6 46.15 8 72.73 All Respondents $10.0 and over under $10.0 If you characterized recent growth in business attribute the strength? (more than one may apply) increased increased increased increased increased increased increased other banks household demand deposits pot banks 14 58.33 8 61.54 6 54.55 demand 8 during (more than one may apply) banks pet total pet banks 2 8.33 0 0 2 18.18 33.33 24 13 11 as "very strong" or "above normal". to what would you compensating balance requirements due to lower interest rates compensating balance requirements because of higher use of credit services or operational services compensating balances to make up for shortages relative to requirements late last year demand deposit balances due to increased economic activity demand deposit holdings due to increased activity in financial markets demand deposit balances due to lower interest rates on other types of deposits demand deposit balances due to mortgage servicers holding higher balances banks 4. bank 55 29 26 Increased compensating balance... requirements requirements due to lover because of to make up interest higher use for rates of credit shortag es All Respondents $10.0 and over under $10.0 your other accounts 6 46.15 2 18.18 deposits at banks 0.0 0.0 0.0 If you characterized recent growth as "very strong" or "above normal". was the strength in nonfinancial business demand deposits 3. please characterize pet banks pet banks Increased demand deposit balances... due to lower due to due to due to increased increased interest mortgage economic financial rates on aervicers activity activity other deposits olding ---..........---------3ctbanks pet banks pot banks pet banks pet p 8 .00 1 7 .69 7.69 1 9 69.23 1 81.33 4 33.33 10 83.33 -.- . --- .- .--. -- -. - .-- --. --- -- .19 76.00 5 20,00 2 8.00 2 15.38 2 7 28.00 11 44.00 5 38.46 6 46.15 2 16.67 5 41.67 0 -----.-.---.-.---.-.-- 0 6 24.00 3 23.08 3 25.00 total other banks 2 1 1 pot 8.00 7.69 8.33 banks 25 13 12 If your bank maintains accounts for mortgage servicers that service securitised mortgages, or if your bank services such mortgages directly, in what type of account are the principal and interest payments primarily placed prior to disbursement to the appropriate transfer agency or trustee for the mortgage security? demand deposit banks All Respondents $10.0 and over under $10.0 pot 34 79.07 18 78.26 16 80.00 MMDAs banks pet 7 16.28 4 17.39 3 15.00 other banks pet 5 11.63 3 13.04 2 10.00 total banks 43 23 20 -125. Roughly what proportion of the balances in demand deposits held at your bank are held by businesses? 0 to 20 percent banks All Respondents $10.0 and over under $10.0 6. Has your bank encouraged compensating balances? pet 1 l.B 1 0 3.4 0.0 21 to 40 percent banks 8 4 4 41 to 60 percent pet banks 14.5 13.8 15.4 pet 27.3 20.7 9 34.6 percent banks All Respondents $10.0 and over under $10.0 17 8 9 pet 10 6 4 total banks 18.2 20.7 15.4 55 29 26 no total pet bankr 8 14.8 5 3 17.9 11.5 46 23 85.2 82.1 54 28 23 88.5 26 pot banks pet 31.5 28.6 34.6 21 to 40 41 to 60 percent percent banks 4 3 1 pot 7.4 10.7 3.8 banks pet 13 24.1 6 7 21.4 26.9 61 to 80 over 80 percent percent total -----------.-.---------.-.-banks 14 7 7 pet banks 25.9 25.0 26.9 pet 6 4 2 banks 54 28 26 11.1 14.3 7.7 How has this proportion changed over the past two years? banks pet banks pot 19 35.2 5 9.3 All Respondents $10.0 and over 1 3.6 12 42.9 7 26.9 4 15.4 under $10.0 - --- --- --- ----- ---. -. --. -- -.-.- --. - .-- . unchanged banks 19 9 10 pet 35.2 32.1 38.5 decreased decreased somewhat significantly total banks pet banks pet banks 1.9 54 1 10 18.5 5 17.9 1 3.6 28 5 19.2 0 0.0 26 .- ---. - ---. - ---.-. ----. What proportion of your large (over $250 million in annual sales) business customers hold sweep accounts? 0 to 20 percent banks All Respondents $10.0 and over under $10.0 What proportion accounts? of 47 26 21 your middle market pet 90,4 96.3 84.0 banks All Respondents $10.0 and over under $10.0 What proportion of your small 21 to 40 percent banks pet 43 84.3 25 I8 96.2 72.0 pet 41 to 60 percent banks pet 61 to 80 percent banks over 80 percent banks pet 1 1 1.9 3.7 1 1.9 0 0.0 2 0 3.8 0.0 0 0.0 1 4.0 2 8.0 (between $50 0 to 20 percent 8e. 38.2 41.4 34.6 banks increased increased significantly somewhat Ob. banks Roughly what proportion of the balances in business demand deposits held at your bank would you estimate typically is made up of funds held under formal compensating balance arrangementa? (Include balances held to compensate for credit services and operational services.) 0 to 20 8a. 21 12 9 pet the payment for services with fees by pricing such payments more favorably than payments through All Respondents $10.0 and over under $10.0 7b. banks 15 6 yes 7a. over 80 percent 61 to 80 percent million and $250 million in 21 to 40 percent banks pet 6 1 11.8 3.8 5 20.0 41 to 60 percent banks 0 0 0 pet 0.0 0.0 0.0 banks 1 0 1 1 0 1 annual 61 to 80 percent pet 2.0 0.0 4.0 pet total banks 1.9 0.0 4.0 sales) over 80 percent banks pet 1 2.0 0 0.0 1 4.0 52 27 25 business customers hold sweep total banks 51 26 25 (under $50 million in annual sales) business customers hold sweep accounts? 0 to 20 percent banks All Respondents $10.0 and over under $10.0 44 24 20 pot 88.0 96,0 80.0 21 to 40 percent banks pet 4 8.0 1 3 4.0 12.0 41 to 60 percent banks 2 0 2 pet 4.0 0.0 8.0 61 to 80 percent banks pet 0 0.0 0 0.0 - - 0 - - 0.0 -- over 80 percent banks 0 0 0 pet 0.0 0.0 0.0 total banks 50 25 25 -13Specific Questions on Compensating Balance Arrangements Answer the remaining questions only if your institution allows businesses to pay for credit services or operational services credits earned on compensating balances. 9a. Please indicate what interest rate is used as a basis for calculating earnings credits. three-month Treasury bill banks All Respondents $10.0 and over under $10.0 9b. pet fixed nonmarket rate overnight rate banks pet banks other pet banks total pet banks 44 80.0 0 0.0 0 0.0 11 20.0 55 22 22 75.9 84.6 0 0 0.0 0.0 0 0 0.0 0.0 7 4 24.1 15.4 29 26 If the interest rate that is used as the basis for calculating earnings credits have been changed over the past two please indicate the previous basia. three-month Treasury bill banks All Respondents $10.0 and over under $10.0 9c. pet fixed nonmarket rate overnight rate banks 5 71.4 3 60.0 2 100.0 pet 0 0 0 banks 0.0 0.0 0.0 0 0 0 other pet banks 0.0 0.0 0.0 2 2 0 total banks pet 28.6 40.0 0.0 7 5 2 Over what period is this rate measured? daily monthly weekly pet banks banks pet banks quarterly pet pet banks other banks total pet banks All Respondents $10.0 and over 0 0 0.0 0.0 2 2 3.6 6.9 50 26 90.9 89.7 1 0 1.8 0.0 2 1 3.6 3.4 55 29 under $10.0 0 0.0 0 0.0 24 92.3 1 3.8 1 3.8 26 Over what period are compensating balance requirements measured? month pet banks Does your institution plan to adjust its year pet banks 52 94.55 29 100.0 23 88.46 All Respondents $10.0 and over under $10.0 9e. quarter banks 32 19 13 All Respondents $10.0 and over under $10.0 banks 55 29 26 no pet banks 58.2 65.5 50.0 23 10 13 reserve requirements? total pet 41.8 34.5 50.0 banks 55 29 26 Can compensating balance account surpluses in one period be carried over to the following period? no yes banks All Respondents $10.0 and over under $10.0 10b. pet 11 20.00 5 17.24 6 23.08 earnings credit rate to reflect the upcoming change in yes 10a. banks 14 25.45 8 27.59 6 23.08 total 13 8 5 pet 24.1 28.6 19.2 banks 6 1 5 pet 11.1 3.6 19.2 for some customers total pet banks banks 35 19 16 64.8 67.9 61.5 54 28 26 Can compensating balance account deficiencies in one period be carried over to the following period? banks All Respondents $10.0 and over under $10.0 10 4 6 for some customers no yes pet 18.5 14.3 23.1 banks 11 6 5 pet 20.4 21.4 19.2 banks 33 18 15 pet 61.1 64.3 57.7 total banks 54 28 26 years. -14lOc. If either surpluses or deficiencies can be carried over, are there any limits on these period-to-period carryovers? yes for some customers no .- =-- banks pet banks All Respondents 29 54.7 $10.0 and over 17 60.7 under $10.0 12 48.0 -------------.----.-.---.-.-- tOd. 7 3 4 banks All Respondents $10.0 and over under $10.0 3 2 1 banks All Respondents $10.0 and over under $10.0 13 6 7 pet 32.1 53 8 9 28.6 36.0 28 25 pet banks 5.7 7.1 4.0 pot banks pet 36 67.9 14 26.4 18 64.3 18 72.0 8 6 28.6 24.0 total banks 53 28 25 banks 14 7 7 pet 41 to 60 percent banks 28.0 29,2 26.9 15 6 9 pet 30.0 25.0 34.6 61 to 80 percent banks 5 3 2 pot over 80 percent banks 10.0 12.5 7.7 pet 3 2 1 total banks 6.0 8.3 3.8 50 24 26 What proportion of a middle market (between $50 million and $250 million in annual sales) firm's service fees are typically covered by earnings credits from compensating balances? banks pet 21 to 40 41 to 60 percent percent banks pet banks pet 6.0 6 12.0 28 56.0 $10.0 and over 1 4.2 under $10.0 2 7.7 ------------------.-.---.-.-- 3 12.5 13 54.2 3 11.5 15 57.7 All Respondents 3 What proportion of a small (under $50 million in earnings credits from compensating balances? 21 to 40 percent percent pot banks 61 to 80 percent banks 10 5 5 pet over 80 percent banks 20.0 20.8 19.2 pet 3 2 1 pet 41 to 60 percent 50 24 26 banks pet 61 to 80 percent banks pet over 80 percent banks pot total banks 10 5 20.0 20.8 20 40.0 10 20.0 6 12.0 50 9 37.5 2 7.7 5 19.2 11 42.3 5 5 20.8 19.2 3 3 12.5 11.5 24 26 to fall below service charges. what compensating balance account volumes are held by businesses that would make up the shortfall with fee payments? banks All Respondents $10.0 and over under $10.0 ii. pct 3 5.9 1 2 4.0 7.7 21 to 40 percent banks 4 1 3 pet 7.8 4.0 11.5 41 to 60 percent banks pet 9 17.6 5 20.0 4 15.4 61 to 80 percent banks 17 8 9 pet 33.3 32.0 34.6 over 80 percent banks pet total banks 18 35.3 51 10 40.0 25 8 30.8 26 would adjust balances within the accounting period to make up for the shortfall? 0 to 20 percent banks All Respondents $10.0 and over under $10.0 35 18 17 pet 68.6 72.0 65.4 bank banks 6.0 8.3 3.8 8.0 8.3 0 to 20 percent your total 4 2 In accounting periods in which earnings credits appear likely i. at annual sales) firm's service fees at .your bank are typically covered by 0 to 20 banks All Respondents $10.0 and over under $10.0 12. - banks 17 for some customers no 21 to 40 percent 26.0 25.0 26.9 0 to 20 percent 1lc. total -- pet What proportion of a large (over $250 million in annual sales) firm's service fees at your bank are typically covered by earnings credits from compensating balances? 0 to 20 percent lib. 13.2 10.7 16.0 -- banks Can they be carried past the end of a calendar year? yes lla. pet 21 to 40 percent 41 to 60 percent banks pet banks 8 15.7 2 6 8.0 23.1 7 4 3 pct 13.7 16.0 11.5 61 to 80 percent banks 1 1 0 pet 2.0 4.0 0.0 over 80 percent banks pet total banks 0 0.0 51 0 0.0 25 0 0.0 26 proportion of your -15- iii. would make up for the shortfall by holding higher balances 0 to 20 percent banks All Respondents $10.0 and over under $10.0 13. 38 20 18 pet 76.0 80.0 72.0 21 to 40 percent banks 6 1 5 pet 12.0 4.0 20,0 the next accounting period? in 41 to 60 percent banks pet 4 3 8.0 12.0 1 4.0 61 to 80 percent banks pet 1 2.0 0 1 0.0 4.0 over 80 percent banks 1 1 0 pet 2.0 4.0 0.0 total banks 50 25 25 Please indicate the formula moat comonly used at your institution for determining required compensating balances. -16MONETARY AGGREGATES (based on seasonally adjusted data unless otherwise noted) 1991 94 1991, -----------1. 2. 3. Ml M2 M3 1992 Qipe 1992 Jan 1992 Feb Growth 1992 Q4 91Mar pe Mar 92pe Percent change at annual rates--------------------- 8.0 2.8 1.2 11.1 2.3 1.0 16¾ 4k 2Z 16.2 3.2 1.4 27.0 9,4 7.0 14 0 -3 Levels - bil. $ Feb 92 Percent change at arrual rates--------- ------------ 17h 4 1i Selected components 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. HM-A Currency Demand deposits Other checkable deposits 22. 23. 8.8 154 13.6 28.1 14 584.8 8.4 3.4 7.4 10.0 7% 23 9.4 18.2 9.8 45.7 4 24 271.6 305.1 12.4 15.0 194 20.5 25.1 14 346.0 1.1 MZ minus Ml2 Overnight RPs and Eurodollars, NSA General purpose and broker/dealer money market mutual fund shares Commercial banks Savings deposits (including HHOAs) Small time deposits Thrift institutions Savings deposits (including MMDAs) Small time deposits 17. M3 minus M23 18. 19. 20. 21. 5.6 Large time deposits 4 At commercial banks, net institutions At thrift Institution-only money market mutual fund shares Term RPs, NSA Term Eurodollars, NSA -0.7 -1.4 3.2 -5 2544.8 26.9 1.6 -59 77.5 12.3 1.0 22.9 -24.3 -2.6 31.1 -31.1 -19 -2 11 -17 -2 24 -24 363.7 1264.7 688.9 575.8 838.5 395.3 443.2 -7.6 39.9 181 3.9 7.1 13.3 1.1 -6.9 9.3 -16.8 -4.0 3.9 16.0 -8.5 -8.8 10.2 -22.5 1 19h -19% -3½ 22k -24% -1.7 0.2 20.0 -21.7 -2.7 24.1 -24.5 -5.5 -4.9 -7h -7.0 -4.4 -18 725.9 -11.7 -5.1 -31.7 -18.9 -14.4 -36.7 -20 -17J -29" -25.3 -25.8 -24.5 -16.8 -12.5 -35.4 -24 -20 -43 421.9 342.8 79.0 33.4 -21.6 -9.9 37.0 -23.6 -8.3 27% -3% -224 22.1 0.0 -24.6 38.2 18.6 10.5 188.2 72.0 57.8 ----- Average monthly change in billions of dollars---MEMORANDA: 5 24. Managed liabilities at commercial banks (25+261 25. Large time deposits, gross 26. Nondeposit funds 27. Net due to related foreign institutions 28. Other' deposits at commercial 29. U.S. government 7 banks -5t -6 -1.1 -0.2 -1.0 4.6 -4.0 8.6 0.4 -1.4 6.2 2.4 0 0.2 0.9 -4.8 -7.9 3.1 1.3 -2.4 3.7 4 4.6 -1.6 -1.2 5.0 -14 1.3 -8.3 ½ 694.9 413.6 281.3 -2 -4 2 1. 2. 3. 4. S. Amounts shown are from fourth quarter to fourth quarter. Nontransactions M2 is seasonally adjusted as a whole. The non-MZ component of M3 is seasonally adjusted as a whole. institutions. Net of large denomination time deposits held by money market mutual funds and thrift Dollar amounts shown under memoranda are calculated on an end-month-of-quarter basis. 6. Consists of borrowing from other than commercial banks in the form of federal funds purchased, 42.3 239.1 19.5 securities for borrowed money (including borrowing from the sold under agreements to repurchase, and other liabilities Federal Reserve and unaffiliated foreign banks, loan RPs and other minor items). Data are partially estimated. 7. Consists of Treasury demand deposits and note balances at commercial banks. pe - preliminary estimate -17SELECTED FINANCIAL MARKET QUOTATIONS 1/ (percent) 1989 1992 -- - --- -.-.-- March highs 1992 -.-- FOMC Feb 5 ........................ - Dec-Jan Lows Change from: -.-.-- -- - - - - - - - - - - -- .- Mar 89 Dec-Jan highs Lows Mar 26 FOMC Feb 5 --------------------------- Short-term rates Federal funds 2/ 9.85 4.09 3.94 3.94 -5.91 0.00 -0.15 Treasury bills 3/ 3-month 6-month 1-year 9.10 9.11 9.05 3.84 3.89 4.00 3.72 3.76 3.81 4.01 4.15 4.36 -5.09 -4.96 -4.69 0.29 0.39 0.55 0.17 0.26 0.36 10.05 10.15 4.08 4.08 4.01 3.94 4.23 4.24 -5.82 -5.91 0.22 0.30 0.15 0.16 Large negotiable CDs 3/ 1-month 10.07 3-month 10.32 6-month 10.08 4.01 4.03 4.07 3.95 3.89 3.89 4.16 4.18 4.15 -5.91 -6.14 -5.93 0.21 0.29 0.26 0.15 0.15 0.08 Eurodollar deposits 4/ 1-month 10.19 3-month 10.50 4.00 4.00 3.94 3.88 4.13 4.19 -6.06 -6.31 0.19 . 0.31 0.13 0.19 Bank prime rate 6.50 6.50 6.50 -5.00 0.00 0.00 U.S. Treasury (constant maturity) 3-year 9.88 5.59 7.21 10-year 9.53 7.74 30-year 9.31 5.05 6.71 7.39 6.23 7.57 7.99 -3.65 -1.96 -1.32 1.18 0.86 0.60 0.64 0.36 0.25 Municipal revenue 5/ (Bond Buyer) 7.95 6.76 6.53 6.87 -1.08 0.34 0.11 Corporate--A utility recently offered 10.47 8.68 8.46 8.87 -1.60 0.41 0.19 Home mortgage rates 6/ 11.22 FHLMC 30-yr. FRM 9.31 FHLMC 1-yr. ARM 8.68 5.93 8.23 5.79 9.03 6.22 -2.19 -3.09 0.80 0.43 0.35 0.29 Commercial paper 1-month 3-month 11.50 Intermediate- and long-term rates ------------------------------. 1989 Record highs --- - &#45;&#45;&#45; - --- -- - - --.- -- Date .- .- .--.. . . .--.. . . . Lows Jan 3 - .--.. . . . . . . Percent change from: 1992 FOMC Feb 5 . . . . Mar 26 . . . . . . . Record highs 1989 lows FOMC Feb 5 ----------------------------. Stock prices Dow-Jones Industrial 3290.25 NYSE Composite 231.85 AMEX Composite 418.99 NASDAQ (OTC) 644.92 Wilshire 4121.28 3/3/92 1/15/92 2/12/92 2/12/92 1/15/92 2144.64 3257.60 3267.67 154.00 228.87 225.49 305.24 415.24 398.86 378.56 636.97 615.40 2718.59 4081.13 4008.62 -0.69 -2.74 -4.80 -4.58 -2.73 52.36 46.42 30.67 62.56 47.45 0.31 -1.48 -3.94 -3.39 -1.78 -- - - - - - - - - - - - - - - - - - - - . . - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -. . - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - -- I/ One-day quotes except as noted. 2/ Average for two-week reserve maintenance period closest to date shown. Last observation is average to date for maintenance period ending April 1, 1992. 3/ Secondary market. 4/ Bid rates for Eurodollar deposits at 11 a.m. London time. 5/ Based on one-day Thursday quotes and futures market index changes. 6/ Quotes for week ending Fridav previous to date shown. -18- THE INTERNATIONAL ECONOMY Import and Export Prices The index for prices of U.S. non-oil imports increased 0.3 percent (monthly rate) in February, after rising 0.5 and 0.6 percent in December and January, respectively. The February increase was led by higher prices of automotive products, up 0.9 percent, and consumer goods, up 0.5 percent. The price of oil imports declined 0.2 percent in February, after declining 8.7 and 9.4 percent in the previous two months. The price of exports increased 0.7 percent in February, after declining 0.6 and 0.7 percent in December and January. The February rise was largely the result of a 3.8 percent increase in the price index for foods, feeds and beverages, which reversed declines of 3.7 and 0.8 percent in the previous two months. 

Federal Reserve (1992, March 30). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19920331_part1

@misc{wtfs_greenbook_19920331_part1,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1992},
  month = {Mar},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19920331_part1},
  note = {Retrieved via When the Fed Speaks corpus}
}