Greenbook/Tealbook

Prefatory Note The attached document represents the most complete and accurate version available based on original files from the FOMC Secretariat at the Board of Governors of the Federal Reserve System. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. Content last modified 03/31/2011. Class III FOMC – Internal (FR) April 29, 2005 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 The Domestic Nonfinancial Economy ........................................................ 1 Real Gross Domestic Product ..........................................................1 Consumer Spending and Income .....................................................1 Prices and Labor Costs.....................................................................5 Tables Real Gross Domestic Product and Related Items ............................2 Real Personal Consumption Expenditures.......................................3 University of Michigan Survey Research Center: Survey of Consumer Attitudes .............................................................6 Measures of Inflation .......................................................................8 Broad Measures of Inflation ..........................................................10 Surveys of Inflation Expectations..................................................10 Labor Output per Hour...................................................................11 Nonfarm Hourly Compensation and Unit Labor Costs .................12 Change in Employment Cost Index of Hourly Compensation For Private-Industry Workers ............................................14 Charts Real PCE..........................................................................................3 Real PCE Goods Excl. Motor Vehicles ...........................................3 Change in Real DPI and Real PCE ..................................................3 Household Indicators .......................................................................4 Consumer Price Inflation .................................................................9 Markup, Nonfarm Businesses........................................................12 Markup, Nonfinancial Corporations ..............................................12 Labor Costs for Production or Nonsupervisory Workers ..............12 ECI Benefits Costs (confidential) ..................................................15 The Domestic Financial Economy .........................................................13 Tables Commercial Bank Credit ...............................................................16 Selected Financial Market Quotations ...........................................17 Supplemental Notes The Domestic Nonfinancial Economy Real Gross Domestic Product According to the BEA’s advance release, real GDP rose at an annual rate of 3.1 percent in the first quarter following an increase at a rate of 3.8 percent in the fourth quarter of last year. On balance, the BEA’s first-quarter estimate of real GDP was in line with our expectations: Weaker-than-expected estimates of real net exports and government spending offset stronger-than-anticipated real personal consumption expenditures and inventory investment. Real private inventories are reported to have risen at an annual rate of $80 billion in the first quarter, contributing 1.2 percentage points to the reported change in real GDP. In contrast, final sales increased at an annual rate of only 1.9 percent in the first quarter after a 3.4 percent advance in the preceding quarter. Among the components of final sales, the rise in real personal consumption expenditures (PCE) slowed to an annual rate of 3.5 percent, as a decline in spending for motor vehicles kept outlays for durable goods unchanged last quarter. Similarly, business fixed investment rose at an annual rate of 4.7 percent in the first quarter, well below the pace of 14.5 percent posted in the fourth quarter; spending on equipment and software decelerated, and spending on nonresidential structures declined. Elsewhere, residential investment rose at a 5.7 percent rate in the first quarter. The BEA estimated that net exports subtracted 1.5 percentage points from the first-quarter change in real GDP, reflecting a rise in imports at a 14.7 percent rate and a rise in exports at a 7 percent rate. Total government spending was little changed in the first quarter, with both federal and state and local spending posting small increases. Consumer Spending and Income Real PCE edged up 0.1 percent in March after having climbed 0.4 percent in the preceding month. Outlays for durable goods rose at a modest pace, as a solid gain in spending on motor vehicles was partly offset by net declines elsewhere. Purchases of nondurable goods declined last month while spending on services moderated a touch despite a jump in expenditures on energy services. Total nominal personal income rose $48 billion (annual rate) in March following an upward-revised increase of $41 billion in February. Private wages and salaries gained $17 billion in March, a pace slightly below the average over the past year. Factoring in contributions for social insurance and personal taxes, nominal disposable personal -2Real Gross Domestic Product and Related Items (Percent change from previous period at a compound annual rate; based on seasonally adjusted data, chain-type quantity indexes) 2004:Q3 2004:Q4 2005:Q1 Final Final Advance 4.0 3.8 3.1 5.0 3.4 1.9 5.1 4.2 3.5 17.2 3.9 .0 Nondurables 4.7 5.9 4.9 Services 3.0 3.4 3.6 Business fixed investment 13.0 14.5 4.7 Nonresidential structures -1.1 2.1 -2.6 Equipment and software 17.5 18.4 6.9 Residential investment 1.6 3.4 5.7 Federal government 4.8 1.2 .6 -1.7 .6 .5 Exports of goods and services 6.0 3.2 7.0 Imports of goods and services 4.6 11.4 14.7 34.5 47.2 80.2 -583.2 -621.1 -663.2 Nominal GDP 5.5 6.2 6.4 Nominal GDI 5.4 7.6 n.a. 60.4 24.0 n.a. -55.9 150.8 n.a. Profit share, excluding FR banks3 9.3 10.4 n.a. Real disposable personal income 2.9 8.3 -.3 .7 1.6 .6 Item Gross Domestic Product Final sales Consumer spending Durables State and local government ADDENDA: Inventory investment1 Net exports of goods and services1 Statistical discrepancy2 Change in economic profits2 Personal saving rate (percent) 1. Level, billions of chained (2000) dollars. 2. Billions of dollars. 3. Economic profits as a share of GNP. n.a. not available. -3Real Personal Consumption Expenditures (Percent change from the preceding period) 2004 Q3 Expenditure Total real PCE Durable goods Motor vehicles Excluding motor vehicles Nondurable goods Energy Other Services Energy Other 5.1 17.2 28.7 8.6 4.7 2.6 4.9 3.0 -.9 3.2 Q4 Q1 Annual rate 4.2 3.9 -.5 7.7 5.9 -1.1 6.8 3.4 12.7 3.1 Real PCE 3.5 .0 -10.4 9.4 4.9 7.4 4.6 3.6 6.4 3.5 Jan. -.1 -4.0 -9.2 .5 .9 4.5 .5 .2 -1.5 .2 2005 Feb. Mar. Monthly rate .4 .9 .2 1.4 .3 -2.4 .6 .4 .0 .4 .1 2.2 6.3 -1.0 -1.0 -1.1 -1.0 .3 4.2 .1 Real PCE Goods Excl. Motor Vehicles Billions of chained (2000) dollars 7900 Mar. 2950 7800 7800 2900 7700 7700 2850 2850 7600 7600 2800 2800 7500 7500 2750 2750 7400 7400 2700 2700 7300 2650 7900 Quarterly average 7300 2003 2004 Billions of chained (2000) dollars 2950 Quarterly average Mar. 2003 2900 2650 2004 Change in Real DPI and Real PCE Percent, annual rate 10 10 8 Real DPI* Real personal consumption 8 6 6 4 4 2 2 0 0 -2 -2 H1 H2 2003 H1 Q3 2004 Q4 Jan. Feb. Mar. 2005 * 2004:Q4 and January values exclude the effect on income of the one-time Microsoft dividend payment in December. January to March 2005 values are staff estimates incorporating incoming tax information. -4- Household Indicators Household Net Worth and Wilshire 5000 Index 15000 Ratio 7.0 13000 6.5 Mar. Wilshire 5000 (left scale) 11000 6.0 9000 5.5 Q4 7000 5.0 Ratio of household net worth to DPI* (right scale) 5000 3000 4.5 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 4.0 * December 2004 value excludes the effect on income of the one-time Microsoft dividend payment in that month. Personal Saving Rate* 7 Percent 7 6 6 5 5 4 4 3 3 2 2 1 1 0 -1 Mar. 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 0 -1 * December 2004 value excludes the effect on income of the one-time Microsoft dividend payment in that month. January to March 2005 values are staff estimates incorporating incoming tax information. Consumer Confidence 1985 = 100 160 1966 = 100 120 Michigan SRC (right scale) 140 110 120 100 100 90 Apr. 80 80 60 40 70 Conference Board (left scale) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 60 -5- income increased at a $42 billion rate. However, because of a sharp rise in prices, real disposable income (DPI) was roughly flat in March. The attached chart on changes in real DPI reports figures that are adjusted for two factors: First, the changes shown exclude the effect on income of the large, one-time Microsoft dividend payment in December. In addition, because we anticipate that first-quarter nominal DPI will be revised down about $24 billion (annual rate) in the preliminary GDP release next month, we have adjusted the advance BEA estimates accordingly.1 Taking these factors into account, we estimate that real DPI increased at an annual rate of 3½ percent over the past two quarters. With little change in real disposable income in March, the small increase in real outlays nudged the saving rate down 0.1 percentage point. The BEA reported that the personal saving rate stood at 0.4 percent in March and 0.6 percent for the quarter as a whole. However, because of the expected revision to nominal DPI noted above, we estimate that the published personal saving rate will be revised down about 0.3 percentage point for the quarter. The Michigan Survey Research Center’s index of consumer sentiment decreased further in April to 87.7. The index, which currently stands somewhat below its average over the preceding twelve months, has been declining since December. The implied level for the second half of April was 86.4, a bit lower than the reading of 88.7 in the first half of the month. The April decline reflected a weakening in both the “current conditions” and the “expected conditions” components of the index. Among the items not included in the overall index, consumers’ expectations about the change in unemployment over the next twelve months deteriorated to a level last seen two years ago. Consumers’ appraisals of buying conditions for cars and houses moved down, but by less than appeared to be the case in the preliminary index. Prices and Labor Costs The GDP price index increased at an annual rate of 3.3 percent in the first quarter, bringing the four-quarter change to 2.5 percent—¾ percentage point above the yearearlier reading. In the first quarter, prices of government consumption and investment posted a large increase reflecting the annual pay increases effective at the beginning of the year; even though such increases occur each year, the BEA chooses not to adjust them 1 We believe that the BEA did not fully incorporate incoming information on net tax receipts and underestimated personal taxes in the advance GDP release. In the preliminary release, we expect the BEA to take on board the incoming information, which we had already incorporated in our estimates. -6April 29, 2005 University of Michigan Survey Research Center: Survey of Consumer Attitudes Indexes of consumer sentiment (Not seasonally adjusted) 2004 Category Composite of current and expected conditions1 Current conditions1 Expected conditions1 2005 Sept. Oct. Nov. Dec. Jan. 94.2 103.7 88.0 91.7 92.8 104.0 104.7 83.8 85.2 97.1 106.7 90.9 95.5 110.9 85.7 Mar. Apr.F 94.1 92.6 109.2 108.0 84.4 82.8 87.7 104.4 77.0 Feb. Personal financial situation Now compared with 12 months ago2 Expected in 12 months2 113 128 112 127 113 124 112 130 123 133 121 127 117 130 113 121 Expected business conditions Next 12 months2 Next 5 years2 116 110 113 97 115 104 122 114 114 97 114 98 104 98 96 91 Appraisal of buying conditions Cars Large household appliances2 Houses 148 155 162 152 158 155 138 158 155 154 165 160 147 165 158 144 162 151 130 163 150 128 158 149 Expected unemployment change - next 12 months 105 105 106 103 111 111 112 118 Prob. household will lose a job - next 5 years 22 28 23 22 23 23 23 27 Expected inflation - next 12 months Mean Median 3.2 2.8 3.6 3.1 3.3 2.8 3.4 3.0 3.5 2.9 3.3 2.9 4.0 3.2 4.0 3.3 Expected inflation - next 5 to 10 years Mean Median 3.1 2.8 3.2 2.8 3.1 2.7 3.1 2.8 3.2 2.7 3.1 2.8 3.3 2.9 3.4 3.0 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. F Final. 1. Feb. 1966 = 100. 2. Indicates the question is one of the five equally-weighted components of the index of sentiment. -7- for seasonal variation. In addition, the increases in prices of some investment goods, including construction prices for oil and gas drilling and prices of some types of capital equipment, were surprisingly sharp. The PCE price index rose at an annual rate of 2.1 percent last quarter, and core PCE prices increased at a 2.2 percent rate. In March, PCE prices rose 0.5 percent, reflecting, in part, a jump of 4.2 percent in energy prices. Excluding food and energy, PCE prices rose 0.3 percent last month. Over the twelve months ending in March, core PCE prices were up 1.7 percent, ¼ percentage point more than the increase over the preceding twelve-month period. The market-based component of core PCE prices also showed an acceleration of about ¼ percentage point over the past year, less than the pickup in core CPI inflation. The smaller acceleration in market-based core PCE prices relative to the core CPI stems in part from the PCE index’s smaller weight on housing and its use of PPIs rather than CPIs to measure the price of many medical services. In the final Michigan survey for April, households’ median expectation for inflation over the next twelve months ticked up to 3.3 percent. The median of expected inflation over the next five to ten years inched up to 3 percent. First-quarter estimates for productivity and costs in the nonfarm business sector will be released on May 5th. Based on data from the advance GDP release and our estimate of the first-quarter increase in hours, the staff estimates that productivity in the nonfarm business sector increased at an annual rate of 1.8 percent in the first quarter following a 2.3 percent advance in the fourth quarter. Over the four quarters ending last quarter, we estimate that productivity advanced about 2.3 percent, a considerable step-down from its elevated 5.5 percent pace during 2003. We currently estimate that compensation per hour increased at an annual rate of 4.1 percent in the first quarter. The employment cost index for hourly compensation of private industry workers rose at an annual rate of only 2.5 percent over the three months ending in March—down from a 3.2 percent rate during the preceding three months. For the twelve months ending in March, hourly compensation in private industry increased 3.4 percent, ½ percentage point less than in the preceding year. The ECI for wages and salaries advanced at an annual rate of 2.4 percent in the three months ending in March; this component of compensation also rose 2.4 percent over the -8Measures of Inflation (Percent) 12-month change 3-month change 1-month change Annual rate Monthly rate Mar. 2004 Mar. 2005 Dec. 2004 Mar. 2005 Feb. 2005 Mar. 2005 CPI Total Food Energy Ex. food and energy Core goods Core services Chained CPI (n.s.a.) 1 Ex. food and energy 1 1.7 3.2 .4 1.6 -1.6 2.9 1.6 1.4 3.1 2.5 12.4 2.3 .6 3.0 2.6 1.9 3.4 3.5 15.3 2.0 1.4 2.3 ... ... 4.3 1.3 21.1 3.3 1.1 4.0 ... ... .4 .1 2.0 .3 .0 .3 ... ... .6 .2 4.0 .4 .0 .5 ... ... PCE prices Total Food Energy Ex. food and energy Core goods Core services Core market-based Core non-market-based 1.7 2.8 .6 1.5 -1.2 2.7 1.4 2.3 2.4 2.4 14.3 1.7 .0 2.4 1.7 1.4 2.5 2.8 16.2 1.6 .4 2.1 1.7 1.0 3.6 1.1 22.0 2.9 1.8 3.4 2.7 3.8 .3 .0 2.1 .2 .0 .3 .2 .3 .5 .2 4.2 .3 .1 .3 .2 .4 PPI Total finished goods Food Energy Ex. food and energy Core consumer goods Capital equipment Intermediate materials Ex. food and energy Crude materials Ex. food and energy 1.5 5.5 -.4 .7 .8 .4 1.5 3.0 .5 31.8 4.9 3.6 15.3 2.6 2.6 2.7 8.7 7.6 10.8 3.3 7.2 7.0 25.4 2.6 2.5 3.1 6.8 4.6 41.9 25.2 5.7 3.7 15.9 3.7 4.5 2.8 8.7 6.8 2.4 -17.0 .4 .8 1.4 .1 .2 -.2 .7 .5 -1.6 -3.0 .7 .3 3.3 .1 .1 .3 1.0 .3 4.3 1.0 Measures 1. Higher-frequency figures are not applicable for data that are not seasonally adjusted. ... Not applicable. -9- Consumer Price Inflation (12-month change except as noted) 3 CPI and PCE ex. Food and Energy Percent 3 3 2 2 Percent PCE excluding Food and Energy 3 CPI Mar. 2 2 Mar. PCE 1 CPI chained 1 1 1 Market-based components 0 5 1999 2000 2001 2002 2003 2004 2005 0 Percent PCE excluding Food and Energy 3-month change, annual rate 4 0 3 5 4 4 3 3 Mar. 2 1999 2000 2001 2002 2003 2004 4 3 Services ex. energy 2 1 0 0 -2 -1 -3 30 220 30 1999 2000 2001 2002 2003 2004 2005 2 1 Mar. -1 Percent PCE Energy Mar. 1 2 1 0 Percent PCE Goods and Services 0 -1 2005 0 -1 Goods ex. food and energy 1999 2000 2001 -2 2002 2003 Gasoline Price Decomposition 2004 2005 Cents per gallon -3 220 Apr. 25 20 20 Mar. 190 190 Retail price* 160 10 10 0 0 160 130 130 Apr. 25 100 -10 -20 -10 1999 2000 2001 2002 2003 2004 2005 -20 100 WTI spot price 70 40 70 2003 2004 * Average of all grades reported by the Department of Energy, seasonally adjusted by FRB staff. 2005 40 - 10 Broad Measures of Inflation (Percent change, Q1 to Q1) Measure 2002 2003 2004 2005 Product prices GDP price index Less food and energy 1.9 2.2 2.0 1.9 1.7 1.4 2.5 2.4 Nonfarm business chain price index 1.2 1.5 .8 2.5 Expenditure prices Gross domestic purchases price index Less food and energy 1.3 1.9 2.5 1.8 1.7 1.5 2.8 2.3 PCE price index Less food and energy 1.1 1.8 2.4 1.6 1.7 1.4 2.3 1.6 PCE price index, market-based components Less food and energy .8 1.5 2.3 1.4 1.7 1.3 2.5 1.7 CPI Less food and energy 1.2 2.5 2.9 1.8 1.8 1.3 3.0 2.3 Chained CPI Less food and energy .9 2.0 2.5 1.4 1.6 1.1 2.6 1.9 Median CPI Trimmed mean CPI 3.8 2.3 2.7 2.1 1.9 1.7 2.5 2.3 Surveys of Inflation Expectations (Percent) University of Michigan 1 year 2 5 to 10 years 3 Actual CPI inflation 1 Mean Median Mean Median Professional forecasters (10-year) 4 2003:Q2 Q3 Q4 2.1 2.2 1.9 2.6 2.8 3.0 2.2 2.3 2.6 3.1 3.1 3.1 2.7 2.7 2.8 2.5 2.5 2.5 2004:Q1 Q2 Q3 Q4 1.8 2.9 2.7 3.3 3.1 4.0 3.3 3.4 2.7 3.3 2.9 3.0 3.4 3.3 3.1 3.1 2.9 2.8 2.8 2.8 2.5 2.5 2.5 2.5 2005:Q1 3.0 3.6 3.0 3.2 2.8 2.5 2004:Oct. Nov. Dec. 2005:Jan. Feb. Mar. Apr. 3.2 3.5 3.3 3.0 3.0 3.1 n.a. 3.6 3.3 3.4 3.5 3.3 4.0 4.0 3.1 2.8 3.0 2.9 2.9 3.2 3.3 3.2 3.1 3.1 3.2 3.1 3.3 3.4 2.8 2.7 2.8 2.7 2.8 2.9 3.0 ... ... 2.5 ... ... 2.5 ... Period 1. Percent change from the same period in the preceding year. 2. Responses to the question: By about what percent do you expect prices to go up, on average, during the next 12 months? 3. Responses to the question: By about what percent per year do you expect prices to go up, on average, during the next 5 to 10 years? 4. Quarterly CPI projections compiled by the Federal Reserve Bank of Philadelphia. ... Not applicable. n.a. Not available. - 11 - Labor Output per Hour (Percent change from preceding period at an annual rate; seasonally adjusted) 2004 Sector Nonfarm business All persons All employees1 Nonfinancial corporations2 2002 3.5 3.7 4.1 2003 5.5 6.0 5.4 2004e 2.8 2.7 3.2 Q3 1.3 2.2 4.9 Q4e 2.3 1.9 n.a. 2005 2004:Q1 to Q1e 2005:Q1e 1.8 2.3 n.a. 2.3 2.5 n.a. Note. Annual changes are from fourth quarter of preceding year to fourth quarter of year shown. 1. Assumes that the growth rate of hours of non-employees equals the growth rate of hours of employees. 2. All corporations doing business in the United States except banks, stock and commodity brokers, and finance and insurance companies. The sector accounts for about two-thirds of business employment. e. Staff estimates. n.a. Not available. - 12 - Nonfarm Hourly Compensation and Unit Labor Costs (Percent change from preceding period at compound annual rate; based on seasonally adjusted data) 2004 2005 2003 2004 Q2 Q3 Q4 Q1 e Compensation per hour 5.3 4.3 5.9 5.4 3.8 4.1 Unit labor costs -.2 1.4 1.9 4.0 1.5 2.2 Category Note. Annual changes are from fourth quarter of preceding year to fourth quarter of year shown. e Staff estimates. Markup, Nonfinancial Corporations Markup, Nonfarm Businesses 1.66 1.66 1.59 1.59 1.64 1.57 1.57 1.62 1.62 1.55 1.60 1.60 1.53 1.58 1.58 1.51 Q4 1.64 Q4 1.55 1.53 1.51 Average, 1968-present 1.56 Average, 1968-present 1.54 1.52 1990 1992 1994 1996 1998 2000 2002 2004 1.56 1.49 1.49 1.54 1.47 1.47 1.52 1.45 1990 1992 1994 1996 1998 2000 2002 2004 1.45 Note. Markup defined as ratio of output price to unit labor costs. Note. Markup defined as ratio of output price to unit labor costs. Labor Costs for Production or Nonsupervisory Workers (12-month change) 4.5 Percent 4.5 4.0 4.0 3.5 3.5 3.0 3.0 ECI wages and salaries Mar. 2.5 Average hourly earnings 2.0 2.0 1.5 1.0 2.5 1.5 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1.0 - 13 - past twelve months, ¼ percentage point less than during the preceding year. Benefits costs increased at an annual rate of 4.3 percent in the first three months of 2005, the smallest quarterly increase in this component of labor compensation since 2002. Over the twelve months ending in March, benefit costs were up 5.8 percent, compared with an increase of 7 percent the preceding year. Although a sharp jump in bonuses early this year boosted the year-over-year rise in that component of benefits, other employment benefits costs have moderated. In particular, the retirement and savings category of benefits decelerated noticeably over the period from March 2004 to March 2005, rising 11.7 percent, compared with an increase of 23.7 percent during the preceding twelve months, which included a large pension payment by General Motors. Health insurance costs also have slowed a bit, with the rise of 7.5 percent over the twelve months ending in March down from the year-over-year increase of 9.3 percent recorded in March 2004. The Domestic Financial Economy - 14 Change in Employment Cost Index of Hourly Compensation for Private-Industry Workers 2004 Industry and occupational group Total hourly compensation Wages and salaries Benefits By industry Construction Manufacturing Transportation and public utilities Wholesale trade Retail trade FIRE Services By occupation White collar Blue collar Service occupations Memo: State and local governments 2005 Mar. June Sept. Dec. Quarterly change (compound annual rate) 1 Mar. 4.6 2.5 9.3 3.8 2.5 6.9 4.0 3.0 5.5 3.2 1.7 6.7 2.5 2.4 4.3 3.2 6.6 2.2 4.3 2.9 5.0 1.4 4.2 4.4 1.6 5.6 2.6 1.7 3.6 3.8 4.5 2.6 3.5 2.4 4.0 3.1 5.6 1.2 2.6 3.5 2.6 .2 2.7 2.6 3.9 .9 3.9 2.4 6.4 2.9 3.8 6.0 3.7 3.3 4.1 3.6 3.7 3.9 2.2 3.7 3.8 2.9 3.6 .9 .9 3.7 3.6 3.3 3.6 4.2 12-month change Total hourly compensation Excluding sales workers Wages and salaries Excluding sales workers Benefits By industry Construction Manufacturing Transportation and public utilities Wholesale trade Retail trade FIRE Services By occupation White collar Sales Nonsales Blue collar Service occupations Memo: State and local governments 1. Seasonally adjusted by the BLS. 3.9 3.9 2.6 2.6 7.0 4.0 4.0 2.6 2.5 7.3 3.7 3.9 2.6 2.5 6.8 3.8 3.9 2.4 2.5 6.9 3.4 3.6 2.4 2.5 5.8 3.5 4.7 3.0 4.7 2.9 5.0 2.4 5.0 2.7 3.8 4.0 2.5 3.5 3.3 3.8 4.3 2.7 4.0 3.0 4.0 4.3 3.4 2.7 2.6 3.8 3.9 2.7 2.3 2.8 3.8 2.8 3.0 2.5 3.5 3.6 3.6 3.5 3.7 4.5 3.2 3.7 3.7 3.7 4.6 3.4 3.6 3.5 3.6 4.5 3.1 3.5 2.6 3.8 4.4 2.9 3.6 2.3 3.8 3.2 2.4 3.3 3.4 3.4 3.5 3.6 - 15 - ECI Benefits Costs (confidential) (Private-industry workers; 12-month change) Insurance Costs Supplemental Pay 20 15 10 Percent 20 30 15 20 Health 10 Total Percent 30 20 Nonproduction bonuses Total 10 Mar. 10 Mar. 5 5 0 0 0 -10 -5 -20 -5 1990 1995 2000 2005 Paid Leave 0 -10 1990 1995 2000 -20 2005 Retirement and Savings 8 Percent 8 30 Percent 30 6 6 20 20 4 10 2 0 0 -10 4 Mar. 10 Mar. 2 0 1990 1995 2000 2005 Workers’ Compensation Insurance 0 1990 1995 2000 State Unemployment Insurance 15 Percent 15 10 10 25 Percent 25 20 20 Mar. 15 5 Mar. 5 0 0 -5 -5 -10 1990 1995 2000 2005 -10 2005 -10 15 10 10 5 5 0 0 -5 -5 -10 1990 1995 2000 2005 -10 - 16 - Commercial Bank Credit (Percent change, annual rate, except as noted; seasonally adjusted) Type of credit Total 1. Adjusted1 2. Reported 3. 4. 5. 6. Securities Adjusted1 Reported Treasury and agency Other2 7. 8. 9. 10. 11. 12. 13. 14. Loans3 Total Business Real estate Home equity Other Consumer Adjusted4 Other5 Level, Apr. 2005e ($ billions) 2003 2004 Q4 2004 Q1 2005 Mar. 2005 Apr.e 2005 5.9 5.6 8.7 8.2 5.3 5.6 13.4 11.2 17.8 14.5 2.8 4.1 6,808 6,945 8.6 7.2 8.9 4.9 6.1 4.8 4.7 4.8 -.5 .8 -11.4 21.1 22.9 14.5 18.4 8.3 24.8 13.0 -.9 35.1 -15.1 -9.0 -25.6 16.7 1,839 1,976 1,184 793 4.9 -9.4 11.1 30.8 8.8 5.4 5.8 6.8 9.6 1.2 13.7 43.3 9.6 8.6 5.8 7.9 7.5 6.0 12.9 37.3 8.7 -1.9 2.3 -.6 9.9 15.0 12.6 18.2 11.6 7.1 4.1 -3.9 15.1 7.3 23.8 23.3 23.9 10.4 2.5 -2.5 9.5 15.4 12.3 11.6 12.4 4.7 -2.0 -4.8 4,969 939 2,666 419 2,247 688 1,048 676 Note. Data are adjusted to remove estimated effects of consolidation related to FIN 46 and for breaks caused by reclassifications. Monthly levels are pro rata averages of weekly (Wednesday) levels. Quarterly levels (not shown) are simple averages of monthly levels. Annual levels (not shown) are levels for the fourth quarter. Growth rates are percentage changes in consecutive levels, annualized but not compounded. 1. Adjusted to remove effects of mark-to-market accounting rules (FIN 39 and FAS 115). 2. Includes private mortgage-backed securities, securities of corporations, state and local governments, foreign governments, and any trading account assets that are not Treasury or agency securities, including revaluation gains on derivative contracts. 3. Excludes interbank loans. 4. Includes an estimate of outstanding loans securitized by commercial banks. 5. Includes security loans and loans to farmers, state and local governments, and all others not elsewhere classified. Also includes lease financing receivables. e Estimated. - 17 - III-T-1 Selected Financial Market Quotations (One-day quotes in percent except as noted) 2004 Change to Apr. 28 from selected dates (percentage points) 2005 Instrument June 28 Dec. 31 Mar. 21 Apr. 28 2004 June 28 2004 Dec. 31 2005 Mar. 21 1.00 2.25 2.50 2.75 1.75 .50 .25 1.36 1.74 2.18 2.52 2.80 3.04 2.82 3.06 1.46 1.32 .64 .54 .02 .02 Commercial paper (A1/P1 rates)2 1-month 3-month 1.28 1.45 2.29 2.28 2.78 2.96 2.98 3.09 1.70 1.64 .69 .81 .20 .13 Large negotiable CDs1 3-month 6-month 1.53 1.82 2.50 2.72 3.00 3.26 3.16 3.36 1.63 1.54 .66 .64 .16 .10 Eurodollar deposits3 1-month 3-month 1.29 1.51 2.32 2.49 2.79 2.98 3.02 3.13 1.73 1.62 .70 .64 .23 .15 Bank prime rate 4.00 5.25 5.50 5.75 1.75 .50 .25 Intermediate- and long-term U.S. Treasury4 2-year 5-year 10-year 2.88 3.97 4.90 3.08 3.63 4.34 3.75 4.17 4.63 3.59 3.84 4.25 .71 -.13 -.65 .51 .21 -.09 -.16 -.33 -.38 U.S. Treasury indexed notes 5-year 10-year 1.56 2.25 1.03 1.65 1.26 1.78 1.10 1.58 -.46 -.67 .07 -.07 -.16 -.20 Municipal revenue (Bond Buyer)5 5.37 5.04 4.99 4.83 -.54 -.21 -.16 Private instruments 10-year swap 10-year FNMA6 10-year AA7 10-year BBB7 5-year high yield7 5.21 5.30 5.59 6.18 8.30 4.65 4.61 4.98 5.38 7.34 4.95 4.83 5.26 5.64 7.68 4.66 4.57 4.95 5.45 8.24 -.55 -.73 -.64 -.73 -.06 .01 -.04 -.03 .07 .90 -.29 -.26 -.31 -.19 .56 Home mortgages (FHLMC survey rate) 30-year fixed 1-year adjustable 6.21 4.19 5.77 4.10 6.01 4.24 5.78 4.21 -.43 .02 .01 .11 -.23 -.03 Short-term FOMC intended federal funds rate Treasury bills1 3-month 6-month Record high 2004 Change to Apr. 28 from selected dates (percent) 2005 Stock exchange index Dow Jones Industrial S&P 500 Composite Nasdaq Russell 2000 Wilshire 5000 Level Date Dec. 31 Mar. 21 Apr. 28 Record high 2004 Dec. 31 2005 Mar. 21 11,723 1,527 5,049 655 14,752 1-14-00 3-24-00 3-10-00 12-28-04 3-24-00 10,783 1,212 2,175 652 11,971 10,565 1,184 2,008 622 11,684 10,070 1,143 1,904 575 11,245 -14.10 -25.16 -62.28 -12.15 -23.77 -6.61 -5.67 -12.47 -11.75 -6.06 -4.69 -3.43 -5.15 -7.49 -3.75 1. Secondary market. 2. Financial commercial paper. 3. Bid rates for Eurodollar deposits collected around 9:30 a.m. eastern time. 4. Derived from a smoothed Treasury yield curve estimated using off-the-run securities. 5. Most recent Thursday quote. 6. Constant maturity yields estimated from Fannie Mae domestic noncallable coupon securities. 7. Derived from smoothed corporate yield curves estimated using Merrill Lynch bond data. _______________________________________________________________________ NOTES: June 28, 2004, is the day before the most recent policy tightening began. March 21, 2005, is the day before the most recent FOMC announcement. _______________________________________________________________________ 

Federal Reserve (2005, May 2). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_20050503_part3

@misc{wtfs_greenbook_20050503_part3,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {2005},
  month = {May},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_20050503_part3},
  note = {Retrieved via When the Fed Speaks corpus}
}