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 19, SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System 1993 TABLE OF CONTENTS Page THE DOMESTIC NONFINANCIAL ECONOMY Consumer sentiment . Insured unemployment . . . . . . . . . . . . . . . . . . . . . .... . University of Michigan Survey Research Center: .... Survey of consumer attitudes . . .. Chart Unemployment insurance . . . . . . ...... THE FINANCIAL ECONOMY Revision to monetary aggregates. .. . . ... Tables Monetary aggregates .... Commercial bank credit and short- and intermediate-term business credit. Selected financial market quotations THE INTERNATIONAL ECONOMY U.S. merchandise trade . . ....... Table Merchandise trade: Census-based data. 6 . . . . . . . . 77 . . . . . . . 8 . SUPPLEMENTAL NOTES THE DOMESTIC NONFINANCIAL ECONOMY Consumer Sentiment According to preliminary data, the University of Michigan's composite index of consumer sentiment recorded another decline in early March, falling 2-1/4 index points to a level of 84.3. The slide in consumer confidence so far this year has returned the index to about the same level as recorded last November. The preliminary March results are based on responses from about two-thirds of the survey participants. The decline in the more composite index reflected respondents' pessimistic assessments of their personal financial situations one year from now and of future business assessments of unemployment conditions. In addition, over the next twelve months--a question not included in the composite index, but one that often has been associated with changes in consumer spending patterns--deteriorated. In contrast, the component of the composite index that measures current personal financial conditions posted a notable increase, and the perception of buying conditions for large household durables remained at a high level. Respondents' mean expectations of inflation over the next twelve months fell 4.3 percent; 1/4 percentage point to this decline offset only a small portion of the sharp increase reported in February. In contrast, long-run inflation expectations reversed nearly all of their month-earlier increase, dropping back 1 percentage point in March to 4.9 percent. Insured Unemployment Initial claims for unemployment insurance, adjusted to include emergency unemployment compensation (EUC) program filings, down to 380,000 during the week ended March 13. edged Claims have fluctuated without trend between 350,000 and 400,000 since December. The level of insured unemployment, adjusted to include a staff estimate of the effect of the EUC program, increased to 3.07 million during the week ended March 6. Beginning yesterday, the Labor Department has advanced the release date of the unemployment insurance data by one week. initial claims Now for the preceding week--rather than for two weeks earlier--are announced each Thursday. Similarly, the level of insured unemployment now is released with a two-week rather than three-week lag. March 19, 1993 UNIVERSITY OF MICHIGAN SURVEY RESEARCH CENTER: SURVEY OF CONSUMER ATTITUDES (Not seasonally adjusted) 1992 Jul 1992 Aug 1992 Sep 1992 Oct 1992 Nov 1992 Dec 1993 Jan 1993 Feb 1993 Mar (p) Indexes of consumer sentiment (Feb. 1966=100) Composite of current and expected conditions 76.6 76.1 75.6 73.3 85.3 91.0 89.3 86.6 84.3 Current conditions Expected conditions 90.6 67.6 86.2 69.5 88.3 67.4 82.5 67.5 96.4 78.2 93.4 89.5 98.6 83.4 96.0 80.6 100.1 74.2 96 125 91 121 102 123 90 121 109 124 99 131 110 127 100 125 111 119 78 66 81 76 78 68 80 67 99 91 126 103 111 97 103 95 92 85 128 138 153 129 132 159 130 126 162 121 123 148 134 140 160 145 142 162 134 145 166 132 148 158 137 148 175 39 58 41 61 44 65 34 61 43 70 39 59 37 64 40 52 43 73 Expected unemployment change - next 12 months 132 123 127 125 109 99 98 110 120 Expected inflation - next 12 months Expected inflation - next 5 to 10 years 3.9 4.7 4.0 5.0 4.1 5.0 3.6 5.1 4.6 5.5 3.3 5.2 3.5 4.8 4.6 5.9 4.3 4.9 Personal financial situation Now compared with 12 months ago* Expected in 12 months* Expected business conditions Next 12 months* Next 5 years* Appraisal of buying conditions Cars Large household appliances* Houses Willingness to use credit Willingness to use savings * -- Indicates the question is one of the five equally-weighted components of the index of sentiment. (p) (f) -- Preliminary -- Final Note: Figures on financial, business, and buying conditions are the percent reporting 'good times' (or 'better') minus the percent reporting 'bad times' (or 'worse'), plus 100. Asterisk (*) indicates the question is one of the five equally-weighted components of the index of sentiment. Expected change in unemployment is the fraction expecting unemployment to rise minus the fraction expecting unemployment to fall. -4- Unemployment Insurance (Weekly data; seasonally adjusted, BLS basis <1>) Initial Claims Thousands 750 700 650 600 550 500 All regular programs Incl. EUC Adjustments<2> 450 400 350 300 1981 250 1982 1983 1984 Insured Unemployment Emergency Benefits 5.0 4.5 -J 1.2 1992 4.0 1993 EUC 3.5 3.0 2.5 programs 2.0 <1 > Only the state program components ot these series are seasonally adjusted. <2> Beginning July 18, 1992, includes initial claims filed under the emergency unemployment benefits program by indviduals also eligible to file under regular programs. <3> Includes staff estimate of emergency benefits recipients who are also eligible to file under regular programs. -5THE FINANCIAL ECONOMY Revision to Monetary Aggregates Owing to upward revisions in the level of IRA/Keogh accounts at money market mutual funds in 1992, which have been carried through to this year, the 1992 growth rates of M2 and M3 (measured from fourth quarter to fourth quarter) were each revised down by 0.2 percentage point to 1.8 percent and 0.3 percent respectively. -6MONETARY AGGREGATES (based on seasonally adjusted data unless otherwise notedl 19921 ----------1. 2. 3. Ml M2 M3 14.3 1.8 0.3 ------------ 1992 Q3 1992 Q4 1992 Dec 1993 Jan 1993 Feb p Growth Q4 92Feb 93p Percent change at annual rates--------------------11.6 0.8 0.1 16.8 2.7 -0.2 8.8 -0.3 -3.3 7.7 -3.1 -7.1 -0.5 -4.1 -2.4 Percent change at annual rates------------ 6.1 -2.2 -3.9 Levels bil. $ Feb 93p Selected components 4. 5. 6. M1-A Currency Demand deposits 13.7 12.2 15.3 7.3 6.2 3.7 646.7 9.1 18.0 11.1 13.3 10.3 19.6 10.4 4.9 10.3 3.9 8.5 -0.4 296.9 341.9 7. Other checkable deposits 15.4 10.8 19.3 11.3 10.3 -7.4 386.1 8. M2 minus M12 -2.6 -3,2 -2.8 -4.0 -7.6 -5.7 2443.3 1.8 15.1 2.7 -19.2 -17.9 6.6 73.2 -5.2 -0.1 14.5 -15.8 -5.5 14.8 -21-. -7.5 -1.6 10.9 -17.4 -4.7 9.2 -18-. -4.1 0.2 12.9 -17.2 -5.9 8.7 -21.7 -4.9 -1.1 5.7 -11.5 -6.6 5.6 -21.1 -8.1 -6.1 -3.2 -10.4 -6.7 1.1 -15.5 -20.5 2.3 2.5 1.9 -16.1 -9.8 -23.4 334.2 1259.1 755.7 503.4 778.5 426.8 351.8 -6.6 -3.6 -14.3 -18.7 -27.8 -16.3 -15.4 -19.6 -17.9 -18.6 -14.7 -17.1 -18.3 -11.3 -12.6 -10.7 -21.0 -22.8 -26.9 -3.6 -11.6 -8.0 -28.6 347.3 281.8 65.5 18.2 7.8 -22.6 32.8 2.6 -19.5 -19.3 23.1 -28.5 -39.6 -10.3 -33.1 -27.3 -11.9 -52.3 25.5 39.1 57.4 201.9 82.4 46.0 9. 10. 11. 12. 13. 14. 15. 16. Overnight RPs and Eurodollars, NSA General purpose and broker/dealer money market mutual fund shares Commercial banks Savings deposits (including MMDAs) Small time deposits Thrift institutions Savings deposits (including MMDAs) Small time deposits 3 17. M3 minus M2 Large time deposits At commercial banks, net4 At thrift institutions Institution-only money market mutual fund shares Term RPs, NSA Term Eurodollars, NSA 7.3 658.3 -----Average monthly change in billions of dollars---5 MEMORANDA: 24. Managed liabilities at commercial banks (25+26) 25. Large time deposits, gross 26. Nondeposit funds 27. Net due to related foreign institutions 6 Other 28. 29. U.S. government deposits at commercial 7 banks -2.0 -4.6 2.6 1.1 -3.4 4.5 -4.4 -5.5 1.2 -1.7 -4.7 3.0 -6.7 -6.7 0.0 -2.7 -2.0 -0.7 670.1 357.9 312.2 2.7 -0.1 0.9 3.6 2.4 -1.2 2.3 0.5 3.0 -2.9 -0.8 0.2 73.3 239.0 -0.5 -0.2 -1.2 -0.3 5.2 -2.0 23.6 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. Consists of borrowing from other than commercial banks in the form of federal funds purchased, securities including borrowing from the for borrowed money 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. p - preliminary 1. 2. 3. 4. 5. 6. -7COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT 1 (Percentage change at annual rate, based on seasonally adjusted data) Category 1991 Dec. to 1992 Dec. 1992 Q3 1992 Q4 1992 Dec. 1993 Jan. 1993 Feb. p Level, bil.$ 1993 Feb.p Commercial bank credit 1. Total loans and securities at banks 2. Securities 3.6 4.8 2.9 2.5 -1.6 1.9 2,940.9 13.2 16.5 7.7 6.9 -3.0 14.7 843.8 3. U.S. government 17.7 19.5 11.4 11.4 0.4 15.5 668.1 4. Other -1.1 5.9 -5.8 -9.5 -15.7 11.7 175.7 0.2 0.5 1.1 0.7 -1.0 -3.2 2,097.1 5. Loans 6. Business -3.0 -1.9 -1.2 -4.2 3.8 -1.8 597.5 7. Real estate 2.1 2.0 2.3 -0.1 -5.0 -1.9 887.7 8. Consumer -2.0 -1.9 -1.8 0.0 9.1 9.7 360.7 9. Security 18.4 3.1 4.4 11.2 -33.2 -22.8 62.0 0.6 4.4 6.7 17.5 -4.9 -30.3 189.3 10. Other Short- and intermediate-term business credit 11. Business loans net of bankers acceptances -3.0 -2.0 -1.9 -3.4 4.5 -4.5 589.8 12. Loans at foreign branches 2 2.0 0.0 11.4 24.2 4.7 -61.4 24.1 13. Sum of lines 11 and 12 -2.8 -1.9 -1.2 -2.1 4.3 -6.8 613.9 14. Commercial paper issued by nonfinancial firms 9.1 7.6 15.2 -9.5 -6.4 -3.2 149.2 15. Sum of lines 13 and 14 -0.7 -0.2 1.9 -3.6 2.2 -6.1 763.1 -16.9 -21.0 -6.8 0.0 -15.6 -26.3 22.3 1.4 8.6 0.5 2.8 -8.2 n.a. -0.5 1.7 1.4 -1.8 -1.1 n.a. 303.4 5 5 1,093.2 16. Bankers acceptances, U.S. traderelated 3 ,4 17. Finance company loans to business 4 18. Total (sum of lines 15, 16, and 17) 1. Average of Wednesdays. Data are adjusted for breaks caused by reclassifications. 2. Loans at foreign branches are loans made to U.S. firms by foreign branches of domestically chartered banks. 3. Consists of acceptances that finance U.S. imports, U.S. exports, and domestic shipment and storage of goods. 4. Based on average of data for current and preceding ends of month. 5. January 1993. p-Preliminary. n.a.--Not available. 1 SELECTED FINANCIAL MARKET QUOTATIONS (percent) Change from: 1993 1992 FOMC Sept 4 Feb 3 FOMC Feb 3 Mar 18 3.19 3.04 3.03 -0.16 -0.01 2.92 2.96 3.06 2.93 3.12 3.28 2.95 3.04 3.17 0.03 0.08 0.11 0.02 -0.08 -0.11 3.22 3.22 3.19 3.23 3.16 3.18 -0.06 -0.04 -0.03 -0.05 3.06 3.06 3.11 3.10 3.16 3.30 3.10 3.11 3.19 0.04 0.05 0.08 0.00 -0.05 -0.11 Eurodollar deposits1-month 3-month 3.31 3.31 3.06 3.19 3.06 3.13 -0.25 -0.18 0.00 -0.06 Bank prime rate 6.00 6.00 6.00 0.00 0.00 U.S. Treasury (constant maturity) 4.38 3-year 6.40 10-year 7.29 30-year 4.77 6.45 7.23 4.35 5.93 6.80 -0.03 -0.47 -0.49 -0.42 -0.52 -0.43 Municipal revenue (Bond Buyer) 6.31 6.36 5.90 -0.41 -0.46 Corporate--A utility recently offered 8.06 7.96 7.64 -0.42 -0.32 7.84 5.15 7.86 5.06 7.47 4.78 -0.37 -0.37 -0.39 -0.28 Sept 4 Short-term rates Federal funds 2 Treasury bills 3-month 6-month 1-year 3 Commercial paper 1-month 3-month Large negotiable CDs 1-month 3-month 6-month 3 Intermediate- and long-term rates Home mortgage rates FHLMC 30-yr. FRM FHLMC 1-yr. ARM 6 ................................................................... 1993 1989 Percent change from: -------------------------- Record highs Date Lows Jan 3 FOMC Feb 3 Mar 18 Record highs .......................... 1989 lows FOMC Feb 3 Stock prices -0.37 61.60 Dow-Jones Industrial 3478.34 3/10/93 2144.64 3373.79 3465.64 -0.89 61.77 249.12 154.00 246.45 251.36 3/10/93 NYSE Composite -0.46 37.96 305.24 414.89 421.12 423.08 3/16/93 AMEX Composite -3.02 81.59 687.41 378.56 708.67 2/4/93 708.85 NASDAQ (OTC) -0.86 63.20 2718.59 4419.76 4436.83 4475.25 3/10/93 Wilshire .......--------------------------------------------------------------------------------------1/ One-day quotes except as noted. 2/ Average for two-week reserve maintenance period closest to date shown. Last observation is average for maintenance period ending March 17, 1993. 2.72 1.08 1.50 -3.00 0.39 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 Friday previous to date shown. THE INTERNATIONAL ECONOMY U.S. Merchandise Trade The U.S. merchandise trade deficit widened slightly in January to $7.3 billion (seasonally adjusted, Census basis). January was not much different from the quarter. Both The deficit in average for the fourth exports and imports dropped sharply in January from their December levels. In both cases, the decline was larger than usual, but not unprecedented for such volatile series. Using three- month moving averages, the value of both exports and imports was slightly less than the peak recorded in December. Most of the decrease in exports from December to January was in shipments of aircraft (from a strong December level) and in automotive products. The decline in automotive exports was to Canada, in January Germany, Saudi Arabia, Taiwan, and Japan, and reversed a runup to those countries during the fourth quarter. decline in imports in January was spread among almost all major trade categories, reversing increases recorded in December. exception was imported oil whose value increased marginally increase One (an in quantity was partly offset by a decline in price of about $0.60 per barrel). The -10Table 1 March 18, 1993 Merchandise Trade: Census-Based Data (in billions of dollars, seasonally adjusted*) Exports Total Ag. 393.6 421.7 1990 1991 1992 448.1 I NonAg. Imports Total Oil I NonOil C Balance 40.2 40.1 44.0 353.4 381.6 404.1 495.3 487.1 532.4 62.1 51.2 51.6 433.2 435.9 480.8 -101.7 -65.4 -84.3 rates: Quarters at annual rates: 1991 Qtr 1 2 3 4 408.4 420.8 419.7 440.7 39.3 37.9 40.1 43.3 369.1 382.9 379.7 397.4 474.6 476.5 494.6 503.1 51.8 51.8 52.5 48.8 422.9 424.7 442.1 454.3 -66.2 -55.7 -74.9 -62.4 1992 Qtr 1 2 3 4 440.8 441.2 445.9 467.7 43.2 42.2 45.7 46.1 397.6 399.0 400.3 421.6 501.2 525.4 546.8 553.7 41-9 52.3 57.0 54.7 459.3 473.2 489.8 499.0 -60.4 -84.3 -100.8 -86.0 Monthly Rates: 1991 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 34.3 33.7 34.2 35.5 35.0 34.7 35.2 34.5 35.3 36.8 37.3 36.1 31.2 30.3 30.8 32.2 31.7 31.7 31.8 31.2 32.0 33.3 33.7 32.3 41.2 39.0 38.5 39.7 40.0 39.4 40.8 41.1 41.8 42.7 41.4 41.7 5.2 4.0 3.7 4.1 4.6 4.3 4.1 4.5 4.5 4.1 4.1 3.9 35.9 34.9 34.8 35.7 35.4 35.1 36.8 36.5 37.2 38.6 37.2 37.8 -6.9 -5.3 -4.3 -4.3 -5.0 -4.7 -5.6 -6.6 -6.5 -5.9 -4.1 -5.6 1992 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Dec 35.5 37.7 37.1 36.4 35.7 38.2 37.8 35.8 37.9 39.1 38.2 39.7 31.9 33.9 33.6 32.7 32.4 34.7 33.9 32.2 33.9 35.0 34.5 35.9 41.4 41.1 42.8 43.5 42.9 45.0 45.2 45.0 46.6 46.3 45.5 46.6 3.7 3.3 3.5 4.0 4.2 4.8 4.8 4.6 4.8 5.0 4.5 4.1 37.7 37.7 39.4 39.5 38.7 40.1 40.3 40.3 41.8 41.3 41.0 42.4 -5.9 -3.4 -5.7 -7.1 -7.2 -6.8 -7.4 -9.2 -8.7 -7.3 -7.3 -6.9 1993 Jan 37.0 33.4 44.3 4.2 40.1 Nov 1 X All data are on a revised end-use basis. Source: U.S. Department of Commerce, Bureau of the Census, Customs Valuation. -7.3 

Federal Reserve (1993, March 22). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19930323_part3

@misc{wtfs_greenbook_19930323_part3,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1993},
  month = {Mar},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19930323_part3},
  note = {Retrieved via When the Fed Speaks corpus}
}