speeches · July 17, 2000
Regional President Speech
Cathy E. Minehan · President
DOMESTIC ECONOMIC CONDITIONS
Cathy E. Minehan
President and CEO
FEDERAL RESERVE BANK OF BOSTON
Presented to
New England Council
Board Meeting
July 18, 2000
Chart 1
Labor Market Conditions
Recent Changes in Employment
Change in Nonfarm Employment
Total (Red) and Private (Blue)
600 --,------------------------------.-- 600 -r---------------,
600
-12 month chg.
500 - 500 500 · 1 month
-- 1 month chg. change 3mo
400 - 400 400 -
300 ·
300 - 300
-Cc/,) -Cc/,) C/)
C C -g 200 -
m 200 -- 200 m (ll
: 0 :J 0 ::, C 5 /) 100 -
~ 100 -- 100 I .c - I .c -
0
o-1--~-+-1---+---i-----t---r-------r---t--1r---/~--.o
-100 - 3mo
1 month change as of
-100 - July?,200011,000 -100 -200 - mov avg »
-200 .1-.---------------------------~ -200 1 month change
-300 ~------------
Jan., 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Jan., Feb Mar Apr May Jun
1990
2000
Unemployment Indicators
Unemployment Rate
9 --,-----------------------------, 550 4.2 -,-----------------,
-unemployment Rate (left scale)
8- -Initial Claims (right scale) 500
4.1 -
4 week moving average as of
7 -- -- 450
July 8, 2000 303,250
- -
-Cc/),
~
C
Q) 6 - Unemployment Rate 400
mC
Q ~
C
) 4.0 -
C Q l. ) for June: 4.0 . : 0 c :J C Q l. )
1-
350
3.9 -
*
4 -· 300
3 -1----t---+---+----+---t---t-------i----+----t---+----'- 250
3.8
Jan., 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Jan., Feb Mar Apr May Jun
1990
2000
Sources: U.S. Bureau of Labor Statistics: Nonfarm payroll employment, seasonally adjusted; 12 month change is
average of monthly changes for the last 12 months, 1 month change is not annualized. Civilian unemployment rate,
seasonally adjusted. U.S. Department of Labor: Initial Claims, seasonally adjusted, monthly averages of weekly data,
except data for most recent week.
Total Nonfarm Employment by State
Index, Each State's Employment Trough = 1
1.30
1.25
1.20
1.15
1.10
1.05
1.00
0.95
Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01
Percent Change, May 1999 - May 2000 Long-term trend Growth
(1970 - 1999)
3.5 ~------------------, 3.5 ,-----------------,
3 3
2.5 2.5
2 2
1.5 1.5
1 1
0.5 0.5
0 0
US NE CT ME MA NH RI VT US NE CT ME MA NH RI VT
Source: Bureau of Labor Statistics
Employment Growth by Industry
Percent Change From a Year Earlier
Manufacturing
-~.3
Construction
8.8
I
2.4
TPU*
■
Retail Trade
United States, 5/00 vs. 5/99
I ■
~-8
New England, 5/00 vs. 5/99
Wholesale Trade II]
New England, 5/99 vs. 5/98
FIRE** I
I
4.2:
Services
Government
-5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10
*Transportation and Public Utilities
**Finance, Insurance, and Real Estate
Industry Mix in the United States and New England, 1999
United States New England
Government
Manufacturing 14.9%
anufacturing 14.2%
Construction 3.8%
Construction 4.9%
17.7% Retail Trade Retail Trade 17.8% 5.1 % 'Mlolesale Trade
Source: Bureau of Labor Statistics
Unemployment Rates
Percent
9
8 -----------------------------------------------
7
6
5
4
3 ----------------------------------------------------------
2 -----------------------------------------------------------------------
1 ---------------------------------------------------------------------
0
Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01
Note: Data beginning January 1994 reflect the redesigned CPS survey and are not strictly
comparable to data for 1993 and earlier years.
Unemployment Rate Across Census Divisions
Unemployment Rates
(percent)
New England
May-00 Apr-00 May-99
Middle Atlantic
East North Central
United States (4.0*) 4.1 3.9 4.2
West North Central
New England 2.7 2.8 3.4
South Atlantic
Connecticut 2.4 2.3 3.4
Maine 3.5 3.3 4.5 East South Central
Massachusetts 2.5 2.8 3.2
West South Central
New Hampshire 2.7 2.5 2.8
Rhode Island 4 3.7 4.2
Mountain
Vermont 2.5 2.4 3
*Jun-00 Pacific
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0
Source: Bureau of Labor Statistics
Chart 2
Indicators of Consumption Spending
Services Consumption
120 ..,....-----------------------------------,- 6
110 5 Q)
Cl
1C
100 4
(.)
X 3 ~
- Q 0 ) 90 ~
C Q)
2 n....
80
Q)
1:'.
-u. of Michigan (left scale) rn
70
a:::i
Spending: Services (right scale)
0 "<l"
-Real Disposable Income (right scale)
60+---t-----+----+----+--===t===:i=====ii====+===t===+--1-1
Jan., 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
1990
Durable and Non-Durable Goods Consumption
120 --,------------------------------------..,.. 8
7
110
Q)
6 gi
rn
100 - B
5
c
4
X
- Q 0 ) 3 Q u )
C ~
80 -u. of Michigan (left scale) - 2 m
1 ~
70 o a:::i
-spending: Durables (Non-Auto) &
Non-Durables (right scale) -1 "<l"
60 i----+---+---+-----+----+---~===;:=====+=====:;:====;:=---1 -2
Jan., 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
1990
Stock Prices
1600 -,------------------------------------,
1400
-S&P500
1200 ·
1000
~ 800
-0
C
600
400
200
0 +-----t-----+----1---+----t-----+----tr---+----+----+---'
Jan., 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
1990
Sources: The University of Michigan: Consumer Sentiment (NSA, 1966Q1=100). Bureau of Economic Analysis: Personal Consumption
Expenditures on Services, Non-Durable and Durable Goods Excluding Autos, Real Disposable Income (SAAR, Bil. Chn Wgt.
1996$, 4-qtr % change). The Wall Street Journal: Standard & Peer's 500 Index (monthly averages).
Chart 3
Spending on Motor Vehicles
70 -·~---------------------------------------------~ 40
- 30
Michigan Survey
60 --
(left scale)
- 20
Total Domestic Unit Auto
50 --
& Light Truck Sales:
(right scale) --
-- 10 <l>
OJ
rCo
.-c
(.)
C
X
(I) . 0
~....
"O Motor Vehicles (I)
C a.
& Parts / ....
(I)
(right scale) t
30 ro
~
0
- -10 '<I"
US Production Schedules (Millions of Units)
20 -
-20
10
- -30
1999:Q4 2000:Q1 2000:Q2 2000:Q3
0 -1-----+----+----+-----t----+---+-----+----+----+-----t----+----+J- -40
Jan., 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Sources: Michigan Research Center: Survey - Buying Conditions - Cars - Good (or Bad) Time to Buy (Weighted Average of "Good" response vs "Bad". ).
Bureau of Economic Analysis: Personal Consumption Expenditures on Motor Vehicles and Parts (SAAR, Bil. Chn Wgt. 1996$, 4-qtr % change),
Domestic Unit Sales of Autos and Light Trucks (SAAR, Mil. Units, 12-mo. % change). Federal Reserve Board of Governors: Production Schedules
for Production of Domestic Autos and Light Trucks (Mil. Units, SAAR).
Chart 4
Selected Housing Indicators
,-------------------------------------'--------------------,- 50
150 ""
40
- 30
140 ""
20 QJ
Cl
Cco
..c
()
c
QJ
"" 10 (.)
130 "" ai
a.
X ....
QJ QJ
"O t
E co
:::i
" 0 0
'St
-
..c
C
120 .. 0
::iE
"" -10 ~
-Affordability Index (left scale) - -20
-spending: Actual Residential Investment
--- Housing Permits: 1 Unit "" -30
- - - - - · New 1-Family Houses Sold
100 -40
_L___;:;...._ ___L
Jan., 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Sources: Bureau of the Census: Housing Units Authorized: 1-Unit Structures & New 1-Family Houses Sold (SAAR, Thousands of Units, 12-mo. % growth).
Bureau of Economic Analysis: Fixed Private Residential Investment (SAAR, Bil. Chn Wgt. 1996$, 4-qtr % change). National Association of Realtors:
Composite Housing Affordability Index (Median Income= qualifying income= 100).
Housing Permits Authorized
Index, 1988 annual average=1
1.6 ....--------------------,
1.4 - - - - - - - - - - - -
United States
0.2 ~-----'----'---_,___ _. ...____ _. ....__ __ .___,,
Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00
Percent Change from a year ago
Mar -Apr -May
5~-------------------,
0
(5)
(10)
(15)
(20) --------
(25) L--------------------.....J
US NE CT ME MA NH RI VT
Source: U.S. Department of Commerce
Chart 5
Selected Investment Indicators
6 ......---------------------------------------------------,- 20
5 --
15
10
Q) Q)
OJ OJ
C C
0
.. C c ll -- 5
0
.-. C c ll
c
C
Q u ) Q u )
a L Q..) . 0 M 0 f 0 rs 2 ' / N 9 e 9 w 0 2 O g rd ro e w rs t : h P ( r u o s je in c g t ed a L Q..) .
ai ai
t only April & May data): 16.2% 0 t
Cll Cll
a::::, a::::,
'<t '<t
-5
-GDP growth (left scale)
- - -10
-Manufacturers' New Orders (right scale)
-Actual Equipment Investment (right scale)
-2 +----+-----+-----+-----t-----t----+----+----+----+----+-----!------1- -15
1989:Q1 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Sources: Bureau of Economic Analysis: Gross Domestic Product (Bil. Chn. Wgt. 1996$, 4-qtr % growth), Producers' Durable Equipment & Software (SAAR,
Bil. Chn. Wgt. 1996$, 4-qtr % change). Bureau of the Census: Manufacturers' New Orders of Nondefense Capital Goods excl. Aircraft (SA, $Mil,
deflated by PPI: Finished Goods, Capital Equipment (BLS), 4-qtr % change).
.
.
Chart 6
Exports and Foreign Economic Growth
Foreign GOP Gowth
5
<l,)
Cl
. rC c o 4 Forecast: 4.2% for 2000
()
c
3
<l,)
u....
<l,)
0. 2
....
<l,)
t::
ro
a::,
-st 0
1990:Q1 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Real Trade-Weighted Exchange Rate
100
*
I
95
90
X
<l,) Forecast: 99
-0
C 85 for 2000
80
75
1990:Q1 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
US Export Growth
20
<l,)
Cl
Cro 15 Forecast: 7% for
.-c
() 2000:Q2 \
C 10 -
<l,)
u....
<l,) *
0. 5
a3
t::
ro 0
a::,
-st -5
1990:Q1 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Forecasts for Percent Change in Foreign Real GDP for 2000
Consensus Boston Fed
Forecast Date Blue Chip Economics ORI (Jane S. Little)
January 2000 3.5 3.6 3.1 3.7
March 2000 3.9 3.8 3.4 4.0
May 2000 3.9 4.0 3.7 4.1
June 2000 4.1 4.2 4.0 4.2
Note: Forecasts are for year over year percent change for 2000.
Sources: Bureau of Economic Analysis: Exports of Good and Services (SAAR, Bil. Chn Wgt. 1996$, 4-qtr % change).
Federal Reserve Board: Real Trade-Weighted Exchange Value of US$ vs. Major Currencies (4 qtr moving average,
March, 1973 = 100). FRB Boston: Trade-Weighted Foreign GDP Growth (top ten US trading partners, 4-qtr % change).
Blue Chip Economic Indicators. Consensus Economics, Inc. : Consensus Forecasts. Standard & Poor's ORI.
Chart 7
Inflation Measures
Consumer and Producer Prices
7 7
Q) ,---, Core PCE: Chain Weight Dec., 1999 Dec., 1999 Q)
g>5 Core CPI - June, 2000 (an. rate) (12-mo. chg) 6 g>
.s I :: l : l . I CPI-U Core CPI: 2.6% 1.9% .s I : l :: l .
(.) (.)
i: 5 5 i:
2000:Q1 1999:Q4 8...
~
Core PCE (1 qtr an. rate) (4-qtr chg)
~... 4 4~...
Chain Wgt: 2.2% 1.5% -
t Q :: ) ' I ,_, I t Q :: )
gi 3 3 gi
0 0
""' "-"'
2-
~2 .s:::.
i: C
0 0
::i:1 1 :E
N N
T"" T""
0 0
Jan., 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Compensation
8 8
-ECI Compensation
7 7
-ECIWages
Q) 6 -ECI Benefits 6~
Ol
C C
Ill Ill
(
.-s
.
::
)
:.
5 5<
-
3
C C
8...
4 4 ~
a. Q.... ) a. Q.... )
Q) 3 3~
t::
Ill
Ill :::,
:::,
0 2 2 ';
""'
1
0 0
1989:Q1 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Sources: Bureau of Labor Statistics: CPI-U & CPI less Food & Energy (12-mo % change); Employment Cost Index: Compensation, Wages
and Benefits of Private Industry Workers (SA, 4-qtr % change). Bureau of Economic Analysis: Personal Consumption Expenditures,
less Food and Energy (Quantity Index - Chain Weights, 4-qtr % change).
Consumer Price Index
Percent Change from Year Earlier
7
6
5
4
3
2
__________________________ United States
0 L-.L.J.J.J.J..L.U.J..1.1.U.J..U.JU..U.U..U.u.J..1.u.J..1.. ......... U..U...U....U.U.U..U.U..u.J..1.u.J..1.. ......... U..U.U..U.J..U.JU..U.U..U.J.J.J.J..L.U.J..L.U.J..U..U.J..U.JU..U.U..U.J.J.J.J..L.U.J..L.U.J.....J
Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00
Source: U.S. Bureau of Labor Statistics.
Boston Consumer Price Index Components Consumer Price Index by Metropolitan Area
Percent change from a year earlier Percent change from a year earlier
May May
5.------------------~
4
3
2
1
0
Food Fuel Medical Care Chicago New York Cleveland D.C./Baltimore
Shelter Transportation Los Angeles Boston Dallas
Source: Bureau of Labor Statistics
..
Repeat-Sales Home Price Index
Percent Change from a year ago
15.0 ,-------------------------,
New England
10.0
5.0
United States
(5.0)
1
( O.O) 88Q1 89Q1 90Q1 91Q1 92Q1 93Q1 94Q1 95Q1 96Q1 97Q1 98Q1 99Q1 00Q1
Percent Change from a year ago
01
United States
Percent Change from a year ago
New England
Q1
Middle Atlantic
East North Central United States 6.7
West North Central
New England 10.9
South Atlantic
Connecticut 6.4
East South Central
Maine 7.3
Massachusetts 14.1
West South Central
New Hampshire 11.7
Mountain Rhode Island 5.8
Vermont 9.9
Pacific
0.0 2.0 4.0 6.0 8.0 10.0 12.0
Source: Fannie Mae and Freddie Mac
Cite this document
APA
Cathy E. Minehan (2000, July 17). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_20000718_cathy_e_minehan
BibTeX
@misc{wtfs_regional_speeche_20000718_cathy_e_minehan,
author = {Cathy E. Minehan},
title = {Regional President Speech},
year = {2000},
month = {Jul},
howpublished = {Speeches, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/regional_speeche_20000718_cathy_e_minehan},
note = {Retrieved via When the Fed Speaks corpus}
}