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 December 15, 2000 Supplemental Notes Prepared for the Federal Open Market Committee by the staff of the Board of Governors of the Federal Reserve System Contents Domestic Economic Developments The Nonfinancial Economy ................................. 1 Prices ............................................ Industrial Production ................................ Business Inventories ................................... Unemployment Insurance Claims ......................... 1 .5 7 9 Tables CPI and PPI Inflation Rates .................. ........... 2 Selected Components of Industrial Production ............... 4 Capacity Utilization .. .. .. ............... ............... 4 Changes in Manufacturing and Trade Inventories ............. 6 Selected Inventory-Sales Ratios in Manufacturing and Trade .... Charts Measures of Core Consumer Price Inflation ................. Inventories and Sales ................................... Unemployment Insurance ............................ 6 3 8 . 10 The Financial Economy ................................... 11 Tables Selected Financial Market Quotations .................... .11 International Developments U.S. International Transactions ............................ 12 Prices of Internationally Traded Goods .................... U.S. Current Account through 2000:Q3 ................... U.S. International Financial Transactions through 2000:Q3 .... 12 12 14 Tables Prices of U.S. Imports and Exports ....................... U.S. Current Account ................................ Summary of U.S. International Transactions ................ 13 14 16 Charts Oil Prices .................. ....... ....... ..... 13 Domestic Economic Developments The Nonfinancial Economy Prices The consumer price index increased 0.2 percent in November. Over the past twelve months, the CPI has risen 3.4 percent, about 3/4 percentage point more than the pace in the preceding year; higher energy price inflation and a pickup in core inflation have contributed about equally to the acceleration in overall inflation. Excluding food and energy, the CPI rose 0.3 percent last month; this increase included an outsized jump in tobacco prices that we had not anticipated. Over the past twelve months, the core CPI on a current-methods basis has moved up 2.5 percent, 0.3 percentage point more than in the previous twelve-month period. Excluding tobacco as well as food and energy, the core index has accelerated 0.5 percentage point over the past year. The CPI for energy edged up 0.1 percent in November, but was 16 percent higher than a year earlier. Prices of heating oil rose a little last month, and the retail margin remained at an extremely elevated level. Prices of motor fuel and electricity also ticked up in November. Natural gas prices dropped back last month, but spot prices point to a substantial increase in December. Retail food prices were unchanged in November as lower prices for meats, poultry, fish, and eggs, were offset by higher prices for fruits, vegetables, and a range of other items. Poultry prices fell substantially, pulled down by a large decline in the index for turkeys. Over the past twelve months, the CPI for food has increased 2-1/4 percent, a bit less than the increase in core prices. Prices of core commodities increased 0.3 percent in November, boosted by the pickup in tobacco prices and a further increase in the index for used cars. Since June, retail tobacco prices have exhibited a see-saw pattern of alternating increases and decreases because the tobacco companies have frequently adjusted discounts. As of November, tobacco prices were up about 11 percent over the preceding twelve months. Light vehicle prices were essentially unchanged in November, but used car prices rose 0.9 percent, the third consecutive large increase. Overall, core commodity prices have increased 0.7 percent over the past twelve months, nearly 1/4 percentage point less than their year-ago pace; however, excluding tobacco as well, core commodity prices have accelerated 1/2 percentage point over the past twelve months. Prices of non-energy services rose 0.3 percent in November. Airfares increased 0.7 percent after having declined for two months, and the twelve-month change stood at 5 percent. Both owners' equivalent rent and tenants' rent moved up 0.3 percent last month. Elsewhere among services, price increases were modest. Overall, the CPI for non-energy services rose 3.4 percent over the twelve months ending in November, about 3/4 percentage point more than in the preceding twelve-month period. -2CPI AND PPI INFLATION RATES (Percent) From 12 months earlier Nov. 1999 Nov. 2000 2000 Q2 2000 Q3 -Annual rate- Oct. Nov. -Monthly rate- CPI 3.4 3.6 2.1 2.2 16.0 2.6 2.6 13.8 2.9 .8 .7 1.3 -. 1 -. 1 -.3 1.4 -. 3 2.0 1.8 -.1 -.4 All items (100.0)1 Food (15.3) Energy (7.0) CPI less food and energy (77.7) Commodities (23.4) New vehicles (4.8) Used cars and trucks (1.9) Apparel (4.7) Tobacco (1.3) Other Commodities (10.7) 1.9 10.6 -1.0 31.5 -. 6 -1.3 11.1 .6 Services (54.3) Shelter (29.9) Medical care (4.5) Other Services (20.0) 4.6 -2.2 1.4 -3.5 .5 5.6 .4 3.5 3.4 15.1 2.5 3.4 2.7 3.5 4.7 2.9 3.5 3.2 5.1 5.1 3.2 3.4 3.1 3.7 3.4 2.7 1.1 .3 -2.8 .0 .2 .3 .4 .1 PPI Finished goods (100.0) 2 .4 14.8 18.8 4.7 10.5 -3.1 18.1 1.8 1.0 1.6 1.3 Consumer goods (38.9) Capital equipment (24.4) 2.9 1.0 1.1 1.5 1.1 1.4 1.4 .0 .0 -.1 .0 Intermediate materials (100.0) 3 2.8 4.2 4.4 3.7 .2 -. 2 1.5 1.7 3.6 1.0 .0 -. 1 16.7 14.9 26.7 15.1 3.4 -2.0 -2.8 47.8 9.5 8.9 -24.6 36.3 -3.4 3.5 4.6 -.6 1.3 -4.1 -2.3 Finished consumer foods (22.9) Finished energy (13.8) Finished goods less food and energy (63.3) .1 Intermediate materials less food and energy (81.7) Crude materials (100.0)4 Crude food materials (39.0) Crude energy (39.0) Crude materials less food and energy (22.0) 1. 2. 3. 4. Relative Relative Relative Relative importance importance importance importance weight weight weight weight for for for for 2.0 1.0 67.0 -7.1 76.4 -13.6 CPI, December 1999. PPI, December 1999. intermediate materials, December 1999. crude materials, December 1999. Measures of Core Consumer Price Inflation (12-month change except as noted) PCE Excluding Food and Energy CPI Excluding Food and Energy Percent Percent Nov. 3 2 Published ' \ . \ 1 O Oct. 'I Market-based components 1996 1997 1998 1999 2000 CPI Services and Commodities CPI Excluding Food and Energy Percent Percent , 4 S , / /N CPI services ex. energy % / S -\/ Cr. I , CPI commodities ex. food and energy Current-methods CPI current-methods CPI 1Nov. 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 Nov. , -4SELECTED COMPONENTS OF INDUSTRIAL PRODUCTION (Percent change from preceding comparable period) 2000 Proportion 1999 19991 H11 2000 Sept. Q3 Oct. Nov. -Annual rate- --Monthly rate--Total (Previous) 100.0 5.1 (5.1) 7.3 (7.3) 3.7 (3.5) .3 (.2) 89.2 5.6 7.6 3.8 .4 .0 -. 5 80.6 83.3 2.3 5.5 1.9 7.6 -1.3 5.0 .1 .3 -.2 .2 -. 8 -.3 4.8 5.9 -. 5 2.3 2.1 8.1 2.6 2.9 -. 8 1.0 .0 -2.0 .1 3.6 High technology Computers Communication equipment semiconductors 2 8.7 2.6 2.0 4.1 40.6 54.3 13.4 47.8 72.0 46.5 35.3 109.8 57.1 51.9 41.6 67.0 2.4 3.0 1.7 2.3 1.7 2.4 2.5 .9 1.5 1.8 2.1 1.0 Motor vehicles and parts 5.9 5.9 6.4 -11.4 .8 -3.6 -2.8 Aircraft and parts 2.5 -17.3 -7.7 11.6 .0 .3 2.0 23.3 3.8 19.5 2.5 7.8 1.5 1.7 -.8 2.2 .0 -10.1 2.1 -. 1 1.1 -. 3 -.2 -1.4 .0 -.3 -.4 -.3 Business equipment 8.6 .8 8.0 4.0 -. 1 .5 -1.1 Construction supplies 6.3 4.5 3.6 -1.1 .4 -.2 -1.0 24.9 16.6 8.3 3.3 2.1 5.6 .7 2.5 -2.6 -3.1 -.7 -7.6 .3 .5 .0 -. 1 -.7 .9 -.9 -.9 -.9 Manufacturing Excluding: High technology industries Motor vehicles and parts Mining Utilities -.1 (-.1) -. 2 Selected industries: Market groups, excluding selected industries and energy products: Consumer goods Durables Nondurables Materials Durables Nondurables 1. From the final quarter of the previous period to the final quarter of the period indicated. 2. Includes related electronic components. CAPACITY UTILIZATION (Percent of capacity) 1988-89 High Manufacturing Primary processing Advanced processing 85.7 88.3 84.2 1959-99 Avg. 81.6 82.6 81.2 2000 2000 HI 81.6 85.9 79.7 Q3 81.7 85.4 80.1 Sept. Oct. Nov. 81.7 85.2 80.2 81.4 84.8 79.9 80.6 83.3 79.7 Turning to producer prices, the PPI for finished goods increased 0.1 percent in November. Excluding food and energy, the core index was flat last month, just a touch below our expectation. Over the past twelve months, the core PPI has increased 1 percent, about 3/4 percentage point less than in the year-earlier period. However, tobacco prices more than accounted for that deceleration; excluding tobacco as well as food and energy items, the twelve-month change in the finished goods PPI has picked up about 1/2 percentage point over the past year. The PPI for capital goods was unchanged in November, with most items registering only small changes last month. Computer prices-a category in which big price declines have been the longer-run norm-fell just 0.3 percent in November, continuing the string of modest price declines observed recently.1 Over the past twelve months, computer prices were down about 14 percent, compared with a decline of roughly 20 percent over the preceding twelve-month period. Partly reflecting the less steep drop in computer prices, overall prices of capital goods have accelerated about 1 percentage point over the past year, with a twelve-month change that is roughly 1 percent. At earlier stages of processing, the PPI for core intermediate goods edged down 0.1 percent in November. Although these prices have risen 1-3/4 percent over the past year, twelve-month changes in this series have moved lower since the spring. The PPI for core crude goods fell 2-1/4 percent further in November, with sizable declines registered for metals, tobacco, and other items. Over the past year, the core crude index has fallen 3-1/2 percent, down substantially from the 9-1/2 percent increase registered in the year-earlier period. Industrial Production Industrial production ticked down in both October and November, on the heels of third-quarter gains that were roughly half the size of the increases posted in the first half of the year. Production at utilities surged last month in response to the unseasonably cold weather. But manufacturing output fell 0.5 percent in November as the recent slowing of manufacturing activity became more widespread. The manufacturing operating rate edged down to 80.6 percentabout a percentage point below its long-run average. High-tech production has been rising noticeably more slowly in the last two months than during the third quarter. The production of computers posted only 1. In contrast to the modest decrease in computer hardware prices, the PPI for applications software-which can be quite volatile on a monthly basis-plunged 7 percent in November following an upward surge earlier in the year. This software price index is used by the BEA as the quarterly indicator for prepackaged software prices in the NIPAs. Because this index is a component of the PPI for service industries, it is not included in the finished goods PPI. CHANGES IN MANUFACTURING AND TRADE INVENTORIES (Billions of dollars; annual rate except as noted; based on seasonally adjusted Census book value) 2000 2000 Category Q1 Manufacturing and trade Less wholesale and retail motor vehicles Q2 Q3 Aug. Sept. Oct. 60.8 105.9 61.9 102.3 24.6 91.1 50.9 72.3 53.5 67.0 28.7 73.3 Manufacturing Less aircraft 22.0 18.6 24.6 30.0 27.4 29.4 16.1 18.8 14.9 14.7 35.7 34.7 Merchant wholesalers Less motor vehicles 25.1 21.6 36.2 33.1 12.4 16.3 22.6 25.7 1.9 6.4 12.8 12.2 Retail trade Automotive dealers Less automotive dealers 13.6 6.4 7.2 45.1 30.5 14.6 22.1 12.2 9.9 63.6 38.4 25.2 7.9 .4 7.4 42.7 17.2 25.5 SELECTED INVENTORY-SALES RATIOS IN MANUFACTURING AND TRADE (Months' supply, based on seasonally adjusted Census book value) Cyclical reference points Category 1990-91 high Range over preceding 12 months 1991-98 low High Low 1.58 1.37 1.34 1.31 1.35 1.55 1.34 1.30 1.27 1.30 Manufacturing Primary metals Steel Nonelectrical machinery Electrical machinery Transportation equipment Motor vehicles Aircraft Fabricated metals Textiles Paper Chemicals Petroleum Rubber and plastics 1.75 2.08 2.56 2.48 2.08 2.93 .97 5.84 1.95 1.71 1.32 1.44 .94 1.47 1.36 1.46 1.59 1.61 1.21 1.51 .53 4.05 1.49 1.38 1.06 1.25 .80 1.16 1.30 1.60 2.14 1.56 1.21 1.50 .59 4.53 1.62 1.67 1.20 1.39 .77 1.31 1.25 1.53 1.87 1.40 1.09 1.32 .52 3.51 1.51 1.52 1.12 1.30 .66 1.22 1.30 1.62 2.13 1.44 1.14 1.51 .60 4.20 1.63 1.67 1.21 1.38 .71 1.32 Merchant wholesalers Less motor vehicles 1.36 1.31 1.24 1.22 1.30 1.28 1.27 1.25 1.30 1.28 1.83 .96 1.53 .90 1.62 .96 1.55 .94 1.62 .96 1.61 1.48 1.45 1.38 1.45 1.35 1.40 1.32 1.45 1.33 2.23 2.68 2.54 .83 1.58 2.01 2.29 .79 1.80 1.94 2.29 .82 1.60 1.85 2.18 .78 1.82 1.87 2.25 .78 Manufacturing and trade Less wholesale and retail motor vehicles Durable goods Nondurable goods Retail trade Less automotive dealers Automotive dealers General merchandise Apparel Food October 2000 a modest gain in November, and the rate of increase in the output of semiconductors-particularly in the production of microprocessors used in computers-has decreased substantially in recent months. However, the communications equipment industry was still an area of strength in October and November; increases in production for that industry remained above long-run averages. Elsewhere in manufacturing, the scaling back in motor vehicle assemblies-an 8 percent decline in October followed by a smaller reduction last monthaffected production at parts facilities as well as other upstream industries. Parts production fell off more than 4 percent last month, and we estimate that the motor vehicle-related cutbacks in the stampings, iron and steel, flat glass, and other downstream industries contributed about a third of the 0.3 percent decline in manufacturing excluding motor vehicles and parts production. Nonetheless, November's downturn in manufacturing IP excluding high-tech was widespread, including industries not indirectly affected by the motor vehicles sector. Production in each IP market category, excluding motor vehicles and high-tech, declined last month. Industries that have posted noteworthy declines since the third quarter include lumber, appliances, furniture, textiles, and industrial equipment. Both the lumber and steel industries have been particularly hard-hit by import competition. Business Inventories The book value of retail inventories increased at an annual rate of $42.7 billion in October. Excluding stocks held by auto dealers, retail inventories rose at a $25.5 billion rate; non-auto inventory accumulation in September was revised up some to $7.4 billion, putting stockbuilding in the third quarter as a whole at about $10 billion. Sales at retail establishments (excluding motor vehicles) rose 0.4 percent in October, and the inventory-sales ratio, which has been little changed since the beginning of the year, held steady at 1.33 months. Stocks held by non-auto retailers of durable goods increased at an annual rate of $6.6 billion in October, led by a rise in inventories held at furniture and appliance outlets and at retailers of "other" durable goods (a category including sporting goods, optical goods, books, and jewelry). Sales in the latter grouping declined 1.2 percent in October, and the inventory-sales ratio retraced its large decline in September. Stores selling nondurable goods built stocks at an $18.9 billion pace in October. Increases were widespread, but especially large at general merchandise stores where the inventory-sales ratio ticked up. Still, sales at all retailers of nondurable goods rose 0.5 percent in October, and the inventory-sales ratio for this grouping remained unchanged at 1.09 months. Inventories and Sales Manufacturing Inventory-Shipments Ratio Ratio1.40 1.35 1997 1998 1999 Octl t.30 -- 1.25 2000 Wholesale Trade Excluding Motor Vehicles 12-month percent change 14 Inventory-Sales Ratio Ratio 1.35 12 S10 S. 1.30 Oct. I 8 Oct. 6 1.25 4 2 1.20 2000 1999 1997 1998 Retail Trade Excluding Motor Vehicles 12-month percent change - - Inventories Sales 1'1 'A'1 I\ 1997 1998 I 1999 Note. Inventories are book value. 2000 Inventory-Sales Ratio For the entire manufacturing and trade sector excluding motor vehicles, bookvalue inventories expanded at an annual rate of $73.3 billion in October, well above the upward-revised $53.5 billion rate recorded in the third quarter. The inventory-sales ratio for manufacturing and trade excluding motor vehicles edged up to 1.30 months; on balance, however, this ratio has changed little since late last year. Unemployment Insurance Claims Initial claims for unemployment insurance under state programs dropped back 32,000 to 320,000 for the week ended December 9. Changes in the number of workers affected by temporary plant shutdowns in the motor vehicle industry probably contributed about 5,000 of this decline. Moreover, seasonal adjustment of claims is especially difficult during the holiday season, and the four-week moving average of initial claims, which avoids some of the weekly volatility, was almost unchanged at 343,000. -10- Unemployment Insurance (Weekly data; seasonally adjusted, BLS basis) Initial Claims 550 500 450 400 350 300 250 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Insured Unemployment 2001 Millions Incl. EUC Adjustment<2> Programs Dec. 2 2.26 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 <1> Beginning July 18, 1992. includes initial claims tiled under the emergency unemployment benefits program by individuals also eligible to file under regular programs. The EUC program ended on April 30, 1994. <2> Includes staff estimate of emergency benefits recipients who are also eligible to file under regular programs. -11- III-TSelected Financial Market Quotations (One-day quotes in percent except as noted) 1999 Change to Dec. 14 from selected dates (percentage points) 2000 Instrument June 29 May 15 FOMC* Nov. 15 Dec. 14 1999 June 29 2000 May 15 FOMC* Nov. 15 FOMC intended federal funds rate 4.75 6.00 6.50 6.50 1.75 .50 .00 Treasury bills 1 3-month 6-month 1-year 4.70 4.92 4.89 5.94 6.24 6.05 6.18 6.08 5.87 5.89 5.76 541 1.19 .84 .52 -.05 -.48 -.64 -.29 -.32 -.46 Commercial paper 1-month 3-month 5.18 5.12 6.47 6.59 6.50 6.53 6.54 6.32 1.36 1.20 .07 -.27 .04 -.21 Large negotiable CDs ' i-month 3-month 6-month 5.21 5.32 5.43 6.55 6.74 6.97 6.56 6.64 6.63 6.61 6.47 6.33 1.40 1.15 .90 .06 -.27 -.64 .05 -.17 -.30 Eurodollar deposits 2 1-month 3-month 5.13 5.25 6.53 6.72 6.53 6.64 6.59 6.47 1.46 1.22 .06 -.25 .06 -.17 Bank prime rate 7.75 9.00 9.50 9.50 1.75 .50 .00 Short-term Intermediate-and long-term U.S. Treasury (constant maturity) 2-year 5.68 6.88 5.92 5.43 -.25 -1.45 -.49 10-year 5.93 6.47 5.76 5.23 -. 70 -1.24 -. 53 30-year 6.07 6.17 5.81 5.45 -.62 -.72 -.36 U.S. Treasury 10-year indexed note 4.01 4.21 3.85 3.77 -.24 -.44 -.08 Municipal revenue (Bond Buyer) 3 5.62 6.23 5.79 5.59 -.03 -.64 -.20 I0-year swap 6.81 7,82 6.90 6.14 -.67 1.68 -.76 10-year FNMA 6.59 7.70 6.69 6.02 -. 57 -1.68 -. 67 7.60 10.53 8.86 11.94 8.36 12.85 8.09 13.06 .49 2.53 -.77 1.12 -.27 .21 7.63 5.93 8.52 6.96 7 79 7.23 7.54 7.21 -.09 1.28 -.98 .25 -.25 -.02 Private instruments Memll Lynch BBB 4 High yield Home mortgages (FHLMC survey rate) 5 30-year fixed 1-year adjustable Record high Level Date May 15 FOMC* Nov. 15 Dec. 14 Record high May 15 FOMC* Nov. 15 11,723 1-14-00 3-24-00 3-10-00 3-9-00 3-24-00 10,808 1,452 3,608 498 13,438 10,681 1,383 3,138 487 12,847 10,675 1.341 2,729 462 12,329 8.94 -12.21 -4596 -23.81 -16.42 -1.23 -7.67 -24.37 -7.23 -8.25 -.06 -3.04 -13.06 -5.15 -4.03 Stock exchange index Dow-Jones Industrial S&P 500 Composite Nasdaq (OTC) Russell 2000 Wilshire 5000 Change to Dec. 14 from selected dates (percent) 2000 2,527 5,049 606 14.752 1. Secondary market. 2 Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time 3. Most recent Thursday quote. 4. Merrill Lynch 175 high-yield bond index composite. 5. For week ending Friday previous to date shown. * Data are as of the close on November 14, 2000. NOTE. June 29, 1999 is the day before the beginning of the most recent sequence of policy tightenings. NOTE. May 15, 2000 is the day before the most recent tightening. BA:DAM International Developments U.S. International Transactions Prices of Internationally Traded Goods Oil. The price of imported oil (BLS) rose 2.0 percent in November following a decline by a similar magnitude in October. Following the Clinton administration's decision to release 30 million barrels of oil from the Strategic Petroleum reserve in late September, the spot price of West Texas Intermediate (WTI) fell from its post Gulf War high of $37.20 per barrel to near $30 per barrel. During October and November, however, spot oil prices again moved higher as tensions in the Middle East and Iraqi threats to suspend exports raised the possibility that oil supplies from the region could be disrupted. The onset of cold weather also provided a boost to prices. Spot WTI averaged over $34 per barrel during November, but in early December fell below $30 per barrel, as the United Nations approved a new phase of the oil-for-food program for Iraq and as supply concerns were allayed by strong statements from major oil producing and consuming nations. Non-oil imports. Prices of imported non-oil goods declined in November after being unchanged in October, with decreases recorded in all major trade categories except industrial supplies, computers, and automotive products. For October-November on average, the price of both non-oil imports and imported core goods (which exclude oil, computers, and semiconductors) declined slightly. This compares with moderate increases recorded during the past five quarters. In October-November, declines in prices of imported foods, machinery (other than computers and semiconductors), automotive products, and consumer goods more than offset increases in prices of non-oil industrial supplies (led by the continued rise in natural gas prices). Prices of imported computers fell and prices of imported semiconductors rose. Exports. Prices of total goods exports were unchanged in November as increases in prices of agricultural products (for the third consecutive month) were offset by declines in prices of other goods exports. For October-November on average, the price of exported core goods (which exclude computers, semiconductors, and agricultural products) rose 0.3 percent at an annual rate, which is a smaller increase than recorded in the third quarter. Prices of core goods exports have moderated each quarter this year, and in most major trade categories. Export prices of both computers and semiconductors declined in October-November. U.S. Current Account through 2000:Q3 The U.S. current account deficit rose to $455 billion at a seasonally adjusted annual rate in the third quarter of 2000, an increase of $35 billion over the second quarter (revised). The increase in the current account deficit was driven by a $32 billion (annual rate) widening in the deficit on goods and services. An -13Prices of U.S. Imports and Exports (Percentage change from previous period) Annual rates 2000 Q2 Q3 Q4e Monthly rates 2000 Sept. Oct. Nov. ---------- BLS prices 1995 weights)-------0.1 6.7 1.6 1.1 -0.5 0.2 -6.3 52.7 19 5 10.3 -3.2 2.0 1.0 0.9 -0.6 -0.2 0.0 -0.1 1.5 1.5 -0.2 -0.2 0.I -0.1 Merchandise imports Oil Non-oil Core goods* Foods, feeds, beverages Industrial supplies ex oil Computers Semiconductors Cap. goods ex comp & semi Automotive products Consumer goods Merchandise exports Agricultural Nonagricultural Core goods* Industrial supples ex ag Computers Semiconductors Cap. goods ex comp & semi Automotive products Consumer goods Chain price index Imports of goods & services Non-oil merchandise Core goods* -4.4 9.8 -9.1 0.0 0.3 1.4 -4.6 8.6 -3.4 -4.9 -1.5 0.5 -4.9 2.0 -10.2 0.9 -1.5 -0.1 -1.9 -0.5 -0.8 2.0 5.7 -0.1 -12.1 1.0 10.2 1.5 1.1 0.1 2.1 1.8 0.3 5.9 2.8 0.6 -4.5 -2.2 -1.4 -4.1 1.3 0.8 -5.5 1.0 1.0 -3.0 0.7 0.1 -0.1 0.0 -0.6 ---Prices 0.2 0.8 1.8 Exports of goods & services Nonag merchandise Core goods* -0.7-0 -0.6 -0.4 -0.2 -0.1 -0.2 -0.2 0.1 0.6 -2.5 0.3 -0.2 0.1 0.0 -1.5 0.1 0.2 -0.2 -0.1 0.1 -0.1 0.6 3.2 0.3 0.4 -0.1 0.5 -0.1 -0.1 0.0 1.1 -0.1 -0.1 1.1 0.0 -0.1 0.0 0.1 -0.2 -0.4 -0.2 -0.6 0.1 0.0 0.0 -0.2 0.0 -0.1 0.1 -0.1 0.0 in the NIPA accounts (1996 weights)--3.6 n.a. 0.6 n.a. 1.4 n.a. 1.9 1.3 2.3 0.8 0.9 1.1 n.a. n.a. n.a. */ Excludes computers and semiconductors. e/ Average of two months. n.a. Not available. ... Not applicable. Oil Prices Dollars per barrel Spot West Texas Intermediate N20 15 - 10 mport unit value1990990 991 1991 192 1992 1993 1993 1994 1994 995 1995 1996 1996 1997 1997 1998 1998 1999 1999 000 2000 $11 billion (annual rate) decline in the services balance was attributed in part to royalty payments for the 2000 Olympic Games. The deficits on investment income and unilateral transfers widened slightly in the third quarter. For portfolio investment income, payments increased $12 billion more than receipts (at an annual rate), as net portfolio liabilities continued to grow. On the other hand, for direct investment income, payments fell $10 billion more than receipts, reflecting reduced profitability of foreign holdings in the U.S. manufacturing sector. The increase in net outflows of unilateral transfers was mostly the result of a small increase in U.S. government grants. U.S. CurrentAccount (Billions of dollars, seasonally adjusted annual rate) Period Goods and services, net Investment income, net Other income and transfers, net Current account balance Annual 1998 1999 -166.9 -265.0 -1.0 -13.1 -49.2 -53.4 -217.1 -331.5 Quarterly 1999:Q4 2000:Q1 Q2 Q3 -305.1 -340.5 -354.4 -386.0 -17.3 -11.9 -10.8 -12.7 -62.5 -53.6 -54.7 -56.4 -384.9 -406.0 -419.9 -455.1 -14.2 -35.4 -13.9 -31.6 -0.5 5.4 1.1 -1.9 -11.5 8.9 -1.1 -1.7 -26.3 -21.1 -13.9 -35.2 Change Q4-Q3 Q1-Q4 Q2-Q1 Q3-Q2 Source: U.S. Department of Commerce, Bureau of Economic Analysis. U.S. International Financial Transactions through 2000:Q3 Balance of payments data for the third quarter were released on Thursday, December 14. Direct investment inflows declined significantly from their extraordinary level in the second quarter, but remained very strong, even by recent standards (line 7 of the Summary of U.S. International Transactions Table). As in recent quarters, the third quarter inflow was buoyed by foreign acquisition of U.S. firms. U.S. acquisition of foreign securities through stock swaps, a financing offset to some of the merger inflows, also declined significantly between the second and third quarters (line 5c). U.S. direct investment abroad declined very slightly (line 6). -15Net shipments of U.S. currency to foreigners (line 8) fell marginally in the third quarter; and the capital account balance was unchanged. The statistical discrepancy (last line), which reflects net errors and omissions in recorded transactions, was negative $9 billion in the third quarter. The cumulative statistical discrepancy for the first three quarters of 2000 stood at negative $13.5 billion. Summary of U.S. International Transactions (Billions of dollars, not seasonally adjusted except as noted) 1998 1999 I 1999 1 Q4 Q Ql 2 Q2 2000 0 Q3 Sept. Oct Official financial flows 1. Change in foreign official assets in U.S. (increase,+) a. G-10countries b. OPEC countries -23.4 55.0 29.0 221 9.1 12.5 -19 -16.6 46.4 27.4 22.7 7.1 12.8 -.6 1.0 6.9 -9.0 49.7 2.0 10.2 -1.7 11.1 5.7 5.6 1.2 -3.9 3.3 -42 -.1 .0 c. All other countries 2. Change in U.S. official reserve assets (decrease, +) -14.4 -5.3 19.0 5.9 .4 13.2 3.6 -2.7 -6.8 8.6 1.6 -.6 2.0 -.3 -1.3 -.1 Private financial flows Banks 3. Change in net foreign positions of banking offices in the U.S.' Securities 2 4. Foreign net purchases of U.S. securities (+) a. Treasury securities b. Agency bonds 170.6 268.4 40.7 35.4 143.6 110.5 57.3 -9.8 -16.6 -31.0 50.8 -18.0 -35.7 30.8 275.2 319.0 74.1 122.7 67.1 109.4 30.6 46.1 49.3 50.5 -20.0 71.9 -17.1 15.6 -9.1 26.0 -20.5 19.0 -12.5 28.6 -3.9 12.0 4.0 13.1 121.7 53.7 158.8 108.2 40.6 35.0 43.5 62.1 41.6 27.0 45.7 47.5 13.6 8.9 12.9 16.2 -107.3 -113.0 -17.3 -25.2 -30.3 -18.6 10.8 -21.5 -17.4 6.2 -96.1 -5.7 15.6 -122.9 2.0 -5.9 -13.4 -9.3 -15.9 .0 10.8 6.9 -48.0 -9.0 -3.9 -5.7 .3 10.5 -146.1 186.3 16.6 -111.4 -150.9 275.5 22.4 -74.8 -33.3 49.4 12.2 -27.8 -43.0 49.0 -6.8 -30.3 -37.5 100.3 1.0 -7.8 -36.1 64.9 .8 8.1 -217.1 .2 -331.5 -3.5 -96.2 -4.0 -101.5 .2 -105.0 .2 -113.8 2 69.7 11.6 30.5 43.8 -47.9 -9.4 c. Corporate and municipal bonds d. Corporate stocks 5. U.S. net acquisitions (-) of foreign securities a. Bonds b. Stock purchases c. Stock swaps3 Other flows (quarterly data, s.a.) 6. 7. 8. 9. U.S. direct investment (-) abroad Foreign direct investment in U.S. Foreign holdings of U.S. currency Other (inflow, +)4 UI.S. current account balance (s.a.) Capital account balance (s.a.) 5 Statistical discrepancy is.a) .0 -3.2 -21.5 NOTE The sum of official and pnvate financial flws, the current account balance, the capital account balance, and the statistical discrepancy is zero. Details may not sum to totals because of rounding. 1. Changes in dollar-denominated positions of all depository institutions and bank holding companies plus certain transactions between broker-dealers andunaffiliated foreigners (particularly borrowing andlendingunderrepurchase agreements). Includes changes in custody liabilities other than U.S. Treasury bills. 2. Includes commissions on securities transactions and excludes adjustments BEA makesto account for incomplete coverage; therefore does not match exactly the data on U.S. intemational transactions published by the Department of Commerce. 3. U.S. acquisitionsof foreign equities associated with foreign takeovers of U.S. firms. 4. Transactions by nonbanking concerns and other banking and official transactions not shown elsewhere plus amounts resulting from adjustments made by the Department of Commerce and revisions in lines I through 5 since publication of the quarterly data in the Survey of Current Business 5 Consists of ransactions in nonproduced nonfinancial assetsand capital transfers. n.a Not available. ... Notapplicabk. 

Federal Reserve (2000, December 18). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_20001219_part2

@misc{wtfs_greenbook_20001219_part2,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {2000},
  month = {Dec},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_20001219_part2},
  note = {Retrieved via When the Fed Speaks corpus}
}