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 02/07/2013. Confidential (FR) Class III FOMC August 3, 2007 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 Labor Market Developments ...........................................................1 Tables Changes in Employment ..................................................................2 Selected Unemployment and Labor Force Participation Rates .......3 Charts Changes in Private Payroll Employment…………………………..2 Aggregate Hours and Workweek of Production or Nonsupervisory Workers ..............................................................2 Labor Force Participation Rate and Unemployment Rate ...............3 Job Losers Unemployed Less Than 5 Weeks ..................................3 Unemployed Due to Job Loss ..........................................................3 The Domestic Financial Economy ...........................................................4 Tables Selected Financial Market Quotations .............................................4 Commercial Bank Credit…………………………………………..5 Supplemental Notes The Domestic Nonfinancial Economy Labor Market Developments Private nonfarm payroll employment rose 120,000 in July, and the June level was revised up 33,000. The July gain was equal to the average increase this year and was about 50,000 less than the average increase in 2006. The unemployment rate edged up to 4.6 percent last month; it has remained between 4.4 and 4.6 percent since last September. By industry, construction employment declined 12,000 in July, with most of the drop in jobs typically associated with nonresidential construction. Since the beginning of the year, construction employment has decreased an average of 5,000 per month after having been essentially flat over the second half of last year. Manufacturing employment edged lower (-2,000) in July after somewhat larger declines earlier in the year. Employment in retail trade also was little changed. Hiring in most other private service-producing industries continued to be solid, with noticeable increases in jobs at professional and technical services firms (26,000), at health care facilities (36,000), and at leisure and hospitality businesses (22,000). Average weekly hours of production or nonsupervisory workers ticked down to 33.8 hours in July, reversing its June increase. Over the past year, the workweek has changed little on net. Aggregate production worker hours moved down 0.1 percent in July, leaving the current level 0.3 percent (not at an annual rate) above the average level in the second quarter. Average hourly earnings of production or nonsupervisory workers on nonfarm private payrolls rose 0.3 percent in July. Over the twelve months ending in July, average hourly earnings increased 3.9 percent, the same as over the preceding twelve months. In the household survey, the participation rate held steady at 66.1 percent in July. Although the number of short-term job losers remained at a relatively low level last month, the number of longer-term job losers increased, suggesting a decrease in hiring. Last month’s slight uptick in the unemployment rate reflected increases for both adult men and women, but not for teenagers. -1- 2 Changes in Employment (Thousands of employees; seasonally adjusted) 2006 Measure and sector 2006 Q4 2007 Q1 Q2 May Average monthly change Nonfarm payroll employment (establishment survey) Private Natural resources and mining Manufacturing Construction Wholesale trade Retail trade Transportation and utilities Information Financial activities Professional and business services Temporary help services Nonbusiness services1 Total government Total employment (household survey) Memo: Aggregate hours of private production workers (percent change)2 Average workweek (hours)3 Manufacturing (hours) June July Monthly change 189 169 5 -7 11 11 -3 9 2 16 42 -1 83 20 262 177 164 4 -25 -14 12 11 11 7 10 52 6 96 13 340 142 115 3 -14 3 2 27 2 4 2 14 -7 71 28 109 145 126 2 -11 -10 16 -8 3 3 6 22 -8 103 19 -38 188 181 1 -3 -12 12 18 2 1 16 34 -10 112 7 157 126 107 3 -13 3 19 -14 5 -1 -2 7 -7 100 19 197 92 120 2 -2 -12 10 -1 10 -5 27 26 -7 65 -28 -30 2.5 33.8 41.1 2.0 33.9 41.1 1.1 33.8 41.0 2.3 33.8 41.2 .2 33.8 41.1 .5 33.9 41.3 -.1 33.8 41.3 1. Nonbusiness services comprises education and health, leisure and hospitality, and "other." 2. Establishment survey. Annual data are percent changes from Q4 to Q4. Quarterly data are percent changes from preceding quarter at an annual rate. Monthly data are percent changes from preceding month. 3. Establishment survey. Changes in Private Payroll Employment Aggregate Hours and Workweek of Production or Nonsupervisory Workers Thousands 400 400 Hours 35.0 2002 = 100 110 3-month moving average 300 300 200 200 108 Aggregate hours (right scale) 34.5 106 July 100 100 0 0 -100 34.0 -200 -300 -300 2000 2002 2004 2006 -400 104 102 -100 -200 -400 July 100 Workweek (left scale) 33.5 98 96 33.0 2000 2002 2004 2006 94 3 Selected Unemployment and Labor Force Participation Rates (Percent; seasonally adjusted) 2006 Rate and group 2007 2006 Q4 Q1 Q2 May June July Civilian unemployment rate Total Teenagers 20-24 years old Men, 25 years and older Women, 25 years and older 4.6 15.4 8.2 3.5 3.7 4.5 15.1 8.3 3.3 3.5 4.5 14.8 7.7 3.6 3.5 4.5 15.6 7.7 3.5 3.5 4.5 15.7 7.3 3.5 3.6 4.5 15.8 8.0 3.4 3.6 4.6 15.2 8.5 3.6 3.7 Labor force participation rate Total Teenagers 20-24 years old Men, 25 years and older Women, 25 years and older 66.2 43.6 74.6 75.5 59.6 66.3 43.4 75.0 75.7 59.8 66.2 42.2 75.1 75.7 59.6 66.0 41.5 74.2 75.6 59.6 66.0 41.0 73.8 75.6 59.6 66.1 41.8 74.5 75.5 59.7 66.1 41.2 74.6 75.6 59.8 Labor Force Participation Rate and Unemployment Rate Percent 67.6 67.4 Percent 7.0 6.5 Participation rate (left scale) 67.2 6.0 67.0 66.8 5.5 Unemployment rate (right scale) 66.6 5.0 66.4 4.5 66.2 July 4.0 66.0 3.5 65.8 65.6 2000 2001 2002 2003 Job Losers Unemployed Less Than 5 Weeks 1.4 2004 2005 2006 3.0 2007 Unemployed Due to Job Loss Percent 1.4 (as a percent of household employment) (as a percent of the labor force) 4.0 Percent 4.0 3.5 3.5 3.0 3.0 3-month moving average (thick line) 1.2 1.2 1.0 1.0 July 0.8 0.6 2.5 July 2.5 2.0 2.0 1.5 1.5 0.8 2000 2001 2002 2003 2004 2005 2006 2007 0.6 1.0 2000 2001 2002 2003 2004 2005 2006 2007 1.0 4 III-T-1 Selected Financial Market Quotations (One-day quotes in percent except as noted) 2004 2006 Change to Aug. 2 from selected dates (percentage points) 2007 Instrument June 28 June 29 June 27 Aug. 2 2004 June 28 2006 June 29 2007 June 27 1.00 5.25 5.25 5.25 4.25 .00 .00 1.36 1.74 4.88 5.06 4.64 4.75 4.75 4.75 3.39 3.01 -.13 -.31 .11 .00 Commercial paper (A1/P1 rates)2 1-month 3-month 1.28 1.45 5.27 5.37 5.25 5.26 5.26 5.24 3.98 3.79 -.01 -.13 .01 -.02 Large negotiable CDs1 3-month 6-month 1.53 1.82 5.47 5.59 5.34 5.36 5.34 5.33 3.81 3.51 -.13 -.26 .00 -.03 Eurodollar deposits3 1-month 3-month 1.29 1.51 5.33 5.49 5.31 5.34 5.33 5.35 4.04 3.84 .00 -.14 .02 .01 Bank prime rate 4.00 8.25 8.25 8.25 4.25 .00 .00 Intermediate- and long-term U.S. Treasury4 2-year 5-year 10-year 2.88 3.97 4.90 5.26 5.15 5.28 4.94 4.95 5.16 4.62 4.60 4.87 1.74 .63 -.03 -.64 -.55 -.41 -.32 -.35 -.29 U.S. Treasury indexed notes5 5-year 10-year 1.60 2.26 2.51 2.61 2.67 2.70 2.40 2.45 .80 .19 -.11 -.16 -.27 -.25 Municipal general obligations (Bond Buyer)6 5.01 4.71 4.63 4.51 -.50 -.20 -.12 Private instruments 10-year swap 10-year FNMA7 10-year AA8 10-year BBB8 10-year high yield8 5.21 5.38 5.60 6.25 8.41 5.81 5.59 6.20 6.74 8.74 5.67 5.49 6.11 6.56 8.44 5.51 5.35 6.11 6.58 9.19 .30 -.03 .51 .33 .78 -.30 -.24 -.09 -.16 .45 -.16 -.14 .00 .02 .75 Home mortgages (FHLMC survey rate) 30-year fixed 1-year adjustable 6.21 4.19 6.78 5.82 6.67 5.65 6.68 5.59 .47 1.40 -.10 -.23 .01 -.06 Short-term FOMC intended federal funds rate Treasury bills1 3-month 6-month Record high 2006 Change to Aug. 2 from selected dates (percent) 2007 Stock exchange index Dow Jones Industrial S&P 500 Composite Nasdaq Russell 2000 Wilshire 5000 Level Date June 29 June 27 Aug. 2 Record high 2006 June 29 2007 June 27 14,000 1,553 5,049 856 15,701 7-19-07 7-19-07 3-10-00 7-13-07 7-13-07 11,191 1,273 2,174 714 12,846 13,428 1,506 2,605 838 15,233 13,463 1,472 2,576 784 14,830 -3.84 -5.21 -48.98 -8.39 -5.55 2.31 15.66 18.47 9.75 15.45 .27 -2.27 -1.13 -6.50 -2.65 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. Derived from a smoothed Treasury yield curve estimated using all outstanding securities and adjusted for the carry effect. 6. Most recent Thursday quote. 7. Constant-maturity yields estimated from Fannie Mae domestic noncallable coupon securities. 8. 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. June 29, 2006, is the day the most recent policy tightening ended. June 27, 2007, is the day before the most recent FOMC announcement. _______________________________________________________________________ 5 Commercial Bank Credit (Percent change, annual rate, except as noted; seasonally adjusted) Type of credit Total Level,1 July 2007e 2005 2006 Q1 2007 Q2 2007 July 2007e 10.5 9.6 8.6 9.4 9.2 8,340 Loans2 Total To businesses Commercial and industrial Commercial real estate 11.6 10.7 9.9 9.4 9.3 6,254 13.5 17.0 16.4 13.6 7.9 10.3 11.0 11.5 18.5 5.6 1,255 1,524 To households Residential real estate Revolving home equity Other Consumer Originated3 Other4 11.9 13.3 11.4 3.1 .7 8.5 7.2 1.5 9.4 5.2 6.4 11.0 9.6 3.5 11.7 7.5 8.0 14.8 6.6 .1 8.9 5.2 2.2 12.8 3.7 5.5 3.1 14.1 13.7 10.4 1,835 459 1,376 769 1,151 872 7.5 .0 13.5 6.3 3.0 12.7 4.8 -2.1 10.9 9.6 -7.9 33.6 9.2 2.1 11.0 2,085 1,155 1,094 Securities Total Treasury and agency Other5 Note. Yearly annual rates are Q4 to Q4; quarterly and monthly annual rates use corresponding average levels. Data have been adjusted to remove the effects of mark-to-market accounting rules (FIN 39 and FAS 115), the consolidation of certain variable interest entities (FIN 46), the adoption of fair value accounting (FAS 159), and the effects of sizable thrift-to-bank and bank-to-thrift structure activity in October 2006 and March 2007 respectively. Data also account for breaks caused by reclassifications. 1. Billions of dollars. Pro rata averages of weekly (Wednesday) levels. 2. Excludes interbank loans. 3. Includes an estimate of outstanding loans securitized by commercial banks. 4. Includes security loans and loans to farmers, state and local governments, and all others not elsewhere classified. Also includes lease financing receivables. 5. 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. e Estimated. 

Federal Reserve (2007, August 6). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_20070807_part1

@misc{wtfs_greenbook_20070807_part1,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {2007},
  month = {Aug},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_20070807_part1},
  note = {Retrieved via When the Fed Speaks corpus}
}