speeches · November 25, 2001

Regional President Speech

Cathy E. Minehan · President

5.0 Nonfarm Payroll 10 Employment 4.0 3.0 5 2.0 1.0 0 0.0 -1.0 5.0 -5 -2.0 4.0 -10 -3.0 ,34.0~ 80:01 84:01 88:01 92:01 96:01 00:01 80:01 84:01 88:01 92:01 96:01 00 01 t 82:01 86:01 90:01 94:01 98:01 01 :03 82:01 86:01 90:01 94:01 98:01 01 :~,, 1 Source: Bureau of Economic Analysis (GDP) and Bureau of Labor Statistics (employment and UR). )~ o"> Industrial Production Computers and Soft ware 20.0 10.0 0.0 Business Investment 0.0 -5.0 -10.0 -20.0 -10.0 98:01 99:01 00:01 01:01 01:03 98:Q1 99:01 00:01 Jan-01 ct-00 Jul-01 0 Sou Apr-01 rce: Federal Rese Oct-01 rve Board ( production) and B ureau of E conomic Analy si. s (i. nvest ment). But, there are some sources of strength - the consumer. ~ flut~Jf,j/8f /!_~al l Real Disposable Per~=e Percent Change, Year-over-Year 9.0 8.0 - 7.0 15.0 6.0 5.0 10.0 4.0 5.0 3.0 2.0 0.0 1.0 0.0 -5.0 -1.0 Jan-80 Jan-84 Jan-88 Jan-92 Jan-96 Jan-00 80:01 83:01 86:01 89:01 92:01 95:01 98:01 01 :03 Jan-82 Jan-86 Jan-90 Jan-94 Jan-98 Oct-01 Source: Bureau of Economic Analysis (income) and Bureau of the Census (retail sales). Millions of Units at Annual Rates Thousand of Units at Annual Rates 25.0 2000 • 20.0 - ~ October /.. 1500 15.0 October/ 10.0 1000 5.0 0.0 500 80:01 84:01 88:01 92:01 96:01 00:01 80:01 84:01 88:01 92:01 96:01 00:01 82:01 86:01 90:01 94:01 98:01 01 :03 82:01 86:01 90:01 94:01 98:01 01 :03 Source: Bureau of Economic Analysis (autos) and Bureau of the Census (housing). Inflation is not an i~sue.~w Productivity is remarkably strong.-L ,. .I L. u.itAv i lJyutu._ ,lU.,UfJ / n J ~ II S yv~ ~. ~ ,uj- "-;U' I ~ tH.:iJ;w»/ fJ-1-riw Consumer Price Index Output per Hour Percent Change, Year-over-Year Percent Change, Year-over-Year 6 16 5 14 4 - 12 3 10 - Total 2 Excluding Food & 8 Energy 1 6 0 4 -1 /;. 2 - 1/ -2 October 0 -3 80:01 86:01 92:01 98:01 01:03 83:01 89:01 95:01 01 :01 80:01 84:01 88:01 92:01 96:01 00:01 82:01 86:01 90:01 94:01 98:01 01 :03 Source: Bureau of Labor Statistics. lnventorie_s could add to future _growt~-~~ ~~ ~ a;]J;t ~~~- M ~~ /d f'~ i-f_jJ ID /.,AA 1iA ~ - uM)j ~ .A--- ~ ~ ~ . , ., I, ~ ~ ~ ~"' ~ Ch2!flge in Real Business Inventories v ~~~1,c.-,cA&~l~tt.p ,• ,/ Billions of Dollars (Chained 1996) 150.0 ~ 100.0 50.0 0.0 -50.0 -100.0 60:01 64:01 68:01 72:01 76:01 80:01 84:01 88:01 92:01 96:01 00:01 62:01 66:01 70:01 7 4:01 78:01 82:01 86:01 90:01 94:01 98:01 01 :03 Source: Bureau of Economic Analysis. 'fhl~ ~~~IUftdd~ (_/1.AfV. V, )U-H,l,ul-udu, ~,/4tu,. 4. r 12-'1-~ ;uu.!. ua ,a AA)- tJU-di:;- y and fiscal policy response. ~~~10 =~ ~ l'l-'Uf/11,~ .... ' ~ ~ {'}Al ~-~ w.h/ 16 /U.llB- ~ Federal Funds Rate ~~ , q d :J . 11.UL~ ~ viuuJ_ · , J}-fJ1,J; Fiscal Position 1)~_ 1 ~~ ~ Percent 20 300 Total 200 15 Off-Budget 100 10 0 5 -100 0 -200 Current Target -5 - -300 -10 -400 60:01 66:01 72:01 78:01 84:01 90:01 96:01 01 :03 1978 1982 1986 1990 1994 1998 63:01 69:01 75:01 81 :01 87:01 93:01 99:01 1980 1984 1988 1992 1996 2000 Source: Federal Reserve Board (fed. funds) and U.S. Office of Management and Budget 5.0 DRI-WEFA 4.0 Blue Chip 3.0 2.0 1.0 0.0 -1.0 -2.0 -3.0 01:01 01:02 01:03 01:04 02:01 02:02 02:03 02:04 Source: Blue Chip Economic Indicators (November 10th) and DRI-WEFA (November 8th). But uncertainties abound. Consumer Sentiment Initial Claims for State Unemployment Insurance Index (6601 = 100) Thousand of Units at Annual Rates 120.0 700 .---------------c-----:---------------. 110.0 600 100.0 500 -- 400 90.0 ;;✓- 300 80.0 Oct B2 7 200 Nov B3 5 70.0 100 60.0 80:01 84:01 88:01 92:01 88:01 90:01 92:01 94:01 96:01 98:01 00:01 01:04 82:01 86:01 90:01 94:01 Source: Department of Labor. Source: The University of Michigan. Consumer Debt "' • D Appraisal of the Employment Situation J-i\ Percent of Disposable Personal Income 23 Percent of Survey Respondents 70 22 Future: Rising Unemployment (Michigan) 60 21 50 20 40 19 30 18 20 17 10 Present; Jobs Plentiful (Conference Board) 16 0 15 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 80:01 82:01 84:01 86:01 88:01 90:01 92:01 94:01 96:01 98:01 00:01 01:03 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Sources: The Conference Board: Consumer Confidence Survey. Source: Bureau of Economic Analysis (income), and Flow of Funds (consumer credit). University of Michigan: survey of Consumers. Business prospects unsettled as well. Corporate Profits Percent Change, Year-over-Year 50 40 30 20 10 20 0 15 -10 - After Tax with Average= 17.7 IVA & CC Adj. 10 -20 -30 '---==----------------'--------------~ 5 80:01 84:01 88:01 92:01 96:01 00:01 82:01 86:01 90:01 94:01 98:01 80:01 84:01 88:01 92:01 96:01 00:01 01:02 82:01 86:01 90:01 . ' 94:/ Note: IVA & CC Adj. = Inventory valuation and capital consumption adjustments. ✓ ~, Source: Bureau of Economic Analysis. taod~~~6/o~ Corporate Debt and Net Interest elected Fixed Income Spreads from the 1 Year Treasury . Percent of Profits / Percent ~ 70 25 10 Net Interest 9 60 (Percent of Profits) 20 8 50 7 40 15 6 Merrill Lynch Low Grade Corporate Bonds 5 30 10 4 Moody's Baa Corporate Moody's Aaa Corporate r-- Bonds Bonds -·~-·--- 20 3 -..__..,---r------.::.::.:,: --~ --· 5 2 V"-._-.r--,--r----.---------~ 10 Debt to Asset Ratio 1 O'----------------------------~o 0 80:01 82:01 84:01 86:01 88:01 90:01 92:01 94:01 96:01 98:01 00:01 01:02 02-Jan-01 27-Mar-01 19-Jun-01 17-Sep-01 13-Feb-01 08-May-01 31-Jul-01 30-Oct-01 Source: Bureau of Economic Analysis (income), and Flow of Funds (business liabilities). Source: JP Morgan, Bloomberg, FAME, Federal Reserve Board of Governors. Trade-Weighted GDP Growth for Top Ten U.S. Export Partners % change from previous quarter at annual rate; forecast from previous year 5,------------------------------------------------.------. Actual Forecast* 4 3 • 2 2002 • 2001 01-------"--t--------------------------------------+----l -I 1....J--'--'--'--'--'--'-......_....._....._.....__......._........_......_......_......_. .................... ........._.........___.__.___.__._..._._ .............. _.__.__.__._......._.._.._......_....._......_.._.,__.L....I....JL....I....J---'--'---'--'--'-'-'--'--'-'--'-'--'-'-...J..J...1....1.. ......._ ._._...i...J... ................ 1....J....~ 1980:1 1982: I 1984:1 1986:1 1988: I 1990:1 1992:1 1994:1 1996:1 1998: I 2000:1 lUD Total OECD GDP Growth - ~ ~ % change from previous half-year at annual rate Actual Forecast* 4 - . 3 2 0 f----- -I '--------'-------~--~--~--~--~---------'----'-----'----'----'----'--'----'----'-------' 1995:1 1995:11 1996:1 1996:11 1997:1 1997:11 1998:1 1998:11 1999:1 1999:11 2000:1 2000:11 2001:1 2001:11* 2002:1* 2002:11* 10 - · · · · · · 5 -5 - . - .. - - - - - - ,----------~ - - - - - - - - - ... - - .. - . - . - - .. - - - US Japan OECD-Europc -10 L-L.._J.._.J..-1.....J......L....i...J-'-'--'--.I--J...J.....J.....J......L....1.-'....I-L....1-"--'--'--'-. ................- -"-'-'-. ................................................_ _.___'-'--......,_.._J.._.J..-1..........,.....i...J-L.-L...J.....1...i-.J.....J.....J......L....L..J_J,_L...J....._,i.,..J.....J....J....l.........,.....i...J-L.-L...J.....l...i-.J...J 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 * Forecast (from Blue Chip for top ten U.S. export partners; from OECD for OECD members). Sources: OECD Main Economic Indicators; Blue Chip; U.S. Bureau of Economic Analysis; Standard and Poor's DRI.. µ..). ~ .uth I n Sum : • Downturn will deepen in late 2001 (early 2002. • Best guess: shallow and short. • Lots of downside risks. • Region will follow national path. .. Unemployment Rates Initial Claims for Unemployment Insurance (Index 1990 = 1) Percent u~----------------------7 New England 8 6 4 3 2 LJ __ L__.L___ _ _j___J_ _ _L_--'------'---------'--~~-~-~ 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 ref led the redesigned CPS survey and Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-98 Jan-97 Jan-911 Jan.e9 Jan-00 Jan~J1 Source a : r U e S no . t B s u t r r e ic a t u ly o c f o m La p b a o r r a S b t le a t t i o s ti d c a s t . a for 1993 and earter jeers. Source: U.S. Employmenl and Training Admlnlslratlon Office Vacancy Rates .,.N EEP Forecast of Unemployment Rates 9 , __ History Forecast 8 7 6 r'1 I I I 5 ---ii i O 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 I I I I I I I I 4 I II -, I Suburban I I I I I I I I -, 1111 I I 25,---------------------7 3 I I I I I I I I I I I I -1 I I I 2 1111111111111111 111111111 I JI 111 0 = ~ - = ~ = = = = = 1= - ~ ~ ~ I ■ ■ I US New England Source: CB Richard Ellis. Source: The New England Economic Project.

Cite this document

APA

Cathy E. Minehan (2001, November 25). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_20011126_cathy_e_minehan

BibTeX

@misc{wtfs_regional_speeche_20011126_cathy_e_minehan,
  author = {Cathy E. Minehan},
  title = {Regional President Speech},
  year = {2001},
  month = {Nov},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_20011126_cathy_e_minehan},
  note = {Retrieved via When the Fed Speaks corpus}
}