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. 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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 August 17, 2001 CURRENT ECONOMIC AND FINANCIAL CONDITIONS Supplemental Notes Prepared for the Federal Open Market Committee by the staff of the Board of Governors of the Federal Reserve System Contents Domestic Nonfinancial Economy ............................... 1 Consumer Sentiment ................................... 1 Tables University of Michigan Survey Research Center: Survey of Consumer Attitudes ............................. 2 The International Economy ................................. 3 Tables Net Trade in Goods and Services ........................ U.S. Exports and Imports of Goods and Services .............. 3 6 Chart U.S. International Trade in Goods and Services ............... 5 The Financial Economy .................................. Table Selected Financial Market Quotations ..................... 7 7 Supplemental Notes The Domestic Nonfinancial Economy Consumer Sentiment According to the preliminary report, the overall index of consumer sentiment from the Michigan Survey Research Center (SRC) edged up in early August, as respondents reported slightly more favorable opinions regarding current conditions and left their expectations for future conditions about unchanged. Among those questions not included in the overall measure, the index of the expected change in unemployment over the next twelve months was little changed in early August. Meanwhile, appraisals ofhomebuying conditions moved up slightly, and carbuying conditions about held steady. The August survey included supplemental questions concerning how households plan to use their tax rebates. Among the 80 percent of respondents who expected to receive a rebate, 18 percent planned to spend the money (mostly within the next few months), 37 percent planned to save it, and 45 percent planned to pay off existing debt.1 The mean of expected inflation over the next twelve months rose 0.3 percentage point in early August, to 3.3 percent, after having tumbled 1 percentage point in July; the median, which fell 0.4 percentage point last month, ticked up 0.1 percentage point in the latest survey to 2.7 percent. The mean of expected inflation over the next five years increased 0.3 percentage point to 3.7 percent, after having decreased 0.2 percentage point in July, and the median inched back up 0.1 percentage point to 3 percent. 1. Based on the Treasury's reports on issuance, we suspect that only about a third of the SRC respondents who will eventually receive a rebate check would have actually received it by the time of preliminary August survey. August 17, 2001 UNIVERSITY OF MICHIGAN SURVEY RESEARCH CENTER: SURVEY OF CONSUMER ATTITUDES (Not seasonally adjusted) 2000 2001 2001 2001 2001 2001 2001 2001 Dec. Jan. Feb. Mar. Apr. May June July 2001 98.4 110.5 90.7 94.7 107.7 86.4 90.6 105.8 80.8 91.5 103.4 83.9 88.4 98.0 82.2 92.0 102.2 85.4 92.6 101.6 86.9 92.4 98.6 88.4 93.5 101.7 88.3 Personal financial situation Now compared with 12 months ago* Expected in 12 months* 126 131 123 126 122 129 119 131 110 134 112 129 117 126 114 133 118 127 Expected business conditions Next 12 months* Next 5 years* 121 113 106 115 93 102 97 109 92 104 99 115 114 109 115 107 109 119 Expected inflation - next 12 months Mean Median 3.4 2.8 3.8 3.0 3.2 2.8 3.3 2.8 3.7 3.1 3.9 3.2 4.0 3.0 3.0 2.6 3.3 2.7 Expected inflation - next 5 to 10 years Mean Median 3.7 3.0 3.5 2.9 3.6 3.0 3.6 3.0 3.6 3.1 3.6 3.0 3.6 3.0 3.4 2.9 3.7 3.0 Aug (P) Indexes of consumer sentiment (Feb. 1966=100) Composite of current and expected conditions Current conditions Expected conditions Appraisal of buying conditions Cars Large household appliances* Houses Willingness to use credit willingness to use savings Expected unemployment change - next 12 months Prob. household will lose a job - next 5 years * -- Indicates the question is one of the five equally-weighted components of the index of sentiment. (p) -- Preliminary (f) -- 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. Expected change in unemployment is the fraction expecting unemployment to rise minus the fraction expecting unemployment to fall, plus 100. -3- The International Economy U.S. International Transactions Trade in Goods and Services The U.S. trade deficit in goods and services was $29.4 billion in June, compared with $28.5 billion in May (revised). For the second quarter, the trade deficit was $360 billion at an annual rate, $20 billion smaller than in the first quarter. Net Trade in Goods and Services (Billions of dollars, seasonally adjusted) 2000 2000 Annual rate 2001 Q_04 Real NIPAI Net exports of G&S I 01 Monthly rate 2001 02 Apr. June IMay -399.1 -421.1 -404.5 -407.4 ... ... -375.7 -452.2 76.5 -401.2 -474.1 72.9 -380.1 -450.1 70.0 -359.5 -431.2 71.7 -32.0 -37.7 5.7 -28.5 -34.4 6.0 Nominal BOP Net exports of G&S Goods, net Services, net -29.4 -35.7 6.3 1. Billions of chained (1996) dollars. Source: U.S. Department of Commerce, Bureaus of Economic Analysis and Census. n.a. Not available. ... Not applicable. The value of exports decreased 2 percent in June. Most of the decline was accounted for by a drop in exported capital goods, particularly semiconductors. There was an unusually sharp decline in exported consumer goods. In contrast, exports of automotive products increased for the third consecutive month to a level not seen since last October. For the second quarter, the value of exports decreased 13 percent at a seasonally adjusted annual rate, marking the third consecutive quarterly decline. Exports of capital goods account for the majority of the drop for the quarter, with half of that decrease in computers and semiconductors. Exports of industrial supplies also fell sharply. The only notable increase in exports occurred in automotive products and owes entirely to increased shipments to Canada. The value of imports declined 0.7 percent in June, following larger drops in April and May. Most of June's decrease occurred in imported industrial supplies, although imports of capital goods also moved down. Imports of automotive products increased. For the second quarter, the value of imports fell 15 percent at a seasonally adjusted annual rate. Like exports, the bulk of the import decline occurred in capital goods-both high-tech products and other machinery. Imports of industrial supplies and consumer goods both fell sharply -4- as well. In contrast, imports of automotive products increased, primarily from shipments from Canada. Strictly Confidential (FR) Class II FOMC Implications: The trade figures for June and revised May suggest that there should be very little revision to NIPA real net exports in 2001:Q2. However, the levels of both real exports and real imports could be $6 to $7 billion lower (s.a.a.r.) than previously projected. U.S. International Trade in Goods and Services let Exports Contribution of Net Exports to Real GDP Growth Percentage points, s.a.a.r. Bil$, s.a.a.r. -50 - -50 - 1 Nominal BOP basis ass B 11 I I I 1997 I 1 - k.- F -150 I 1993 I I 1995 elected Exports -450 Bil$, s.a.a.r. 220 Machinery Indutriat supples / o -- 20 SNet automotive tradewith Canada and Mexico 1993 -- 400 1999 2001 200 1999 20 - I I1997 99 -3 -3 -4 2001 Net trade in computers and semiconductors -250 - -350 I1995 99 I - I , Bil$, s.a.a.r. \ -- 300 993 S I.- 1999 -- 200 \ 0 -1 -2 l -- -10 - Real NIPA basis (1996$) - 11 I I 1995 I I 1997 -40 I 1999 Imports 3 310 Selected - 2001 -60 Bil$,s.a.a.r. - 290 290 - - 270 270 270 - 250 - 250 - 200 250 - - 180 230 - - 210 - 160 210 - - - 140 190 - Consumer goods - 230 \ 170 Industrial su-e 1/ - 120 170 - 100 150 - - 80 130 - 60 110 190 150 - 130 110 onsumer goods - 40 40 Aircrat Aircraft- S, ... 993 1995 1997 1999 2001 I Excludes agriculture and gold. 2. Excludes computers and semiconductors. 20 I 90 90 -(overseas) 90 Automotive 3/ 70 - 70 70 50 1993 1995 1997 1999 1 Excludes oil and gold. 2. Excludes computers and semiconductors. 3. Excludes Canada and Mexico. 2001 -6U.S. Exports and Imports of Goods and Services (Billions of dollars, s.a.a.r., BOP basis) Levels 2001 Exports of G&S Goods exports Gold Other goods 2001 June May Q2 Q1 1077.2 10423 1052.4 1031.4 Amount Change 1 2001 2001 June May Q2 Q1 -33 -34.8 9.3 -21.0 779.8 6.7 773.1 743.4 7.6 735.8 754.2 7.9 746.2 729.9 7.1 722.8 -5.2 0.2 -5.4 -36.4 0.9 -37.3 8.1 0.1 8.0 -24.3 -0.9 -23.4 56.1 56.0 58.0 197.3 55.1 48.5 46.4 182.9 58.0 47.7 49.2 184.3 54.5 47.7 41.5 181.0 8.6 -1.2 -4.2 -1.7 -0.9 -7.5 -11.6 -14.3 5.2 -2.3 0.6 0.7 -3.5 -0.0 -7.7 -3.3 71.8 37.5 16.2 18.0 76.3 42.2 15.9 18.2 76.1 41.3 16.3 18.4 79.6 44.1 16.7 18.8 -5.5 -4.5 -0.9 -0.0 4.5 4.7 -0.3 0.2 2.8 0.0 1.7 1.0 3.6 2.7 0.4 0.4 54.4 156.7 94.0 28.9 53.8 147.6 93.6 31.4 53.2 149.0 97.5 31.3 53.5 144.2 88.3 32.5 1.2 -4.6 3.3 -1.3 -0.6 -9.0 -0.5 2.6 -1.6 -0.7 2.5 -0.5 0.4 -4.8 -9.2 1.2 297.4 299.0 298.3 301.6 1.8 1.6 1.2 3.3 Imports of G&S 1457.3 1401.8 1394.0 1384.4 -24.4 -55.4 -33.0 -9.7 Goods imports Petroleum Gold Other goods 1229.9 1174.6 1167.5 1158.2 117.2 114.5 115.9 112.6 6.1 6.5 7.8 6.1 1106.5 1053.6 1043.8 1039.5 -29.2 -9.9 -0.6 -18.7 -55.3 -2.7 0.4 -52.9 -30.4 1.0 2.2 -33.6 -9.3 -3.3 -1.7 -4.3 Aircraft & parts Computers Semiconductors Other capital gds Automotive to Canada to Mexico to ROW Agricultural Ind supplies (ex. ag) Consumer goods All other goods Services exports Aircraft & parts Computers Semiconductors Other capital gds 31.0 85.7 44.3 184.6 30.8 75.9 30.8 162.1 30.8 75.4 29.0 160.3 31.1 72.7 30.3 158.0 0.4 -3.9 -4.7 -3.5 -0.2 -9.8 -13.5 -22.5 0.3 -4.1 -4.3 -7.7 0.3 -2.7 1.3 -2.3 Automotive from Canada from Mexico from ROW 186.9 56.1 38.7 92.2 191.4 61.1 41.3 89.1 187.8 59.8 41.9 86.1 193.1 62.6 43.4 87.2 -6.1 -4.3 -1.7 -0.1 4.5 5.0 2.7 -3.2 -5.5 -1.0 3.1 -7.7 5.3 2.8 1.5 1.0 Ind supplies Consumer goods Foods, feeds, bev. All other goods 185.4 291.7 45.9 50.9 177.3 286.4 45.7 52.9 178.0 283.7 45.0 53.8 171.9 284.3 47.3 50.7 2.2 -0.9 -0.5 -1.8 -8.1 -5.3 -0.1 2.0 -4.1 -7.7 0.0 -0.5 -6.1 0.7 2.4 -3.2 227.4 227.3 226.5 226.1 4.7 -0.1 -2.7 -0.4 12.78 25.09 12.95 24.21 12.90 24.61 12.65 24.37 0.74 -3.80 0.17 -0.88 -0.40 0.96 -0.25 -0.24 Services imports Memo: Oil quantity (mb/d) Oil import price ($/bbl) 1. Change from previous quarter or month. Source: U.S. Department of Commerce, Bureaus of Economic Analysis and Census. III-T-1 Selected Financial Market Quotations (One-day quotes in percent except as noted) 2000 Change to Aug. 16 from selected dates (percentage points) 2001 June 26 July 17 June 26 Aug. 16 2000 June 26 2001 July 17 2001 June 26 6.50 3.75 4.00 3.75 -2.75 .00 -.25 5.66 5.94 353 3.48 3.38 3.38 3.32 3.26 -2.34 -2.68 -.21 -.22 -.06 -. 12 6.56 656 3.71 3.59 3.64 3.52 3.53 3.41 -3.03 -3.15 -. 18 -. 18 -. 11 -. 11 -3.08 -3.25 -3.38 -. 19 -. 19 -.20 Instrument Short-term FOMC intended federal funds rate Treasury bills 1 3-month 6-month Commercial paper I-month 3-month Large negotiable CDs 1-month 3-month 6-month 1 6.64 6.73 6.89 Eurodollar deposits 2 I-month 3-month 6.63 6.69 Bank prime rate 9.50 Intermediare- and long-term 3 U.S. Treasury 2-year 10-year 30-year 6.54 6.35 6.22 U.S. Treasury 10-year indexed note 4.08 Municipal revenue (Bond Buyer) 4 5.99 Private instuments 10-year swap 10-yearFNMA 10-year AA 5 5 10-year BBB 6 High yield 7.38 7.15 7.60 8.49 11.97 Home mortgages (FHLMC survey rate) 30-year fixed I-year adjustable 7 8.14 7.22 7.21 5.79 Record high 7.11 5.74 7.00 5.70 1. 2. 3. 4. 5. 6. 7. -.11 -.04 Change to Aug. 16 from selected dates (percent) 2001 Level Date July 17 June 26 Aug. 16 Record high 2001 July 17 2001 June26 11,723 1,527 5.049 606 14,752 1-14-00 3-24-00 3-10-00 3-9-00 3-24-00 10,606 1,214 2067 491 11,261 10,472 1,217 2,065 491 11,254 10393 1,182 1,930 482 10,935 -11.35 -22.64 -61.77 -20.53 -25.88 -2.02 -2.70 -6.63 -1.81 -2.90 -.76 -2.88 -650 -1.86 -2.84 Stock exchange iod Dow-Jones Industrial S&P 500 Composite Nasdaq (OTC) Russell 2000 Wilshire 5000 -.21 -.09 Secondary maket Bid rates for Eurodollar deposits collected around 9-30 am.Eastern time. Derived from a smoothed Treasury yield curve estimated using off-the-rn securities. Most recent Thursday quote. Derived from smoothed corporate yield curves estimated using Merrill Lynch bond data. Merrill Lynch 175 high-yield bond index composite. For week ending Friday previous to dare shown NOTES: June 26, 2000 is the day before the FOMC meeting that ended the most recent period of policy tightening. 2001 is the day before the most recent Monetary Policy Report Testimony(House). July 17, June 26, 2001 is the day before the most recent FOMC action. BA:DAM 

Federal Reserve (2001, August 20). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_20010821_part2

@misc{wtfs_greenbook_20010821_part2,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {2001},
  month = {Aug},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_20010821_part2},
  note = {Retrieved via When the Fed Speaks corpus}
}