Regional President Speech

, · I I I I Cathy E. Minehan President and Chief Executive Officer Federal Reserve Bank of Boston Presented to Massachusetts Software Council January 13, 2004 Overview tr :', l't. g; ~ 3 • We Have a Recovery ;,\, - Our confidence in the recovery is stronger no~ than earlier ·11 h b . b h - We sti ave concerns a out JO growt ~ LLl/'IJ;llµI f'lJ ~ f;::J ... .~fG/Juri f, :1 J ( :._ r /I - r71 • GDP growth in 2003:H2 was quite strong 1 1 ·~ '' - Led by strong consumption, especially autos and durable goods - Business and residential investment strong ·,? • The keystone to the recovery ~ ll,,,1.,; ; / l!f~/, • Strength should continue into 2004 - Depends on business spending and hiring ,, - 2003:H2 encouraging with regard to business spending •' - Profits, productivity will support ongoing strength ,, • Jobs Still a Concern - Higher productivity has hurt in short run - But we expect 2004 to show more vigorous job growth 2 • t-qtr. Growth Rate -4-qtr. Growth Rate - Monthly Sales A Quarterly Average - Residential Spending: ,(4//-Jqt.r . % chg.) J-1, ~ - Existing Home Sales ~ - MBA Refinancing Index ■ 1-qtr. Growth in Equipment & Software Investment ~' r - -- - -- - -- - -- - -Nondefense Capital Goods Orders (12-mth. growth) .,. CtwwaJ .... -ISM New Orders Index - -!l> .. ,.u,~•11 '1/tj ~ 2/~o 3 ~ y),,o ~f / /l.,°lr> 1-l Of I - S&P operating earnings - BEA after-tax profits w/ IVA and CCAdj JQ,-f2Jufb, 4,%~/1!97- ~ ..,r~'I ~ fu/- 1or ~ ~ ~ ~ - IO-year A yield - - I 0-year BBB yield - f>.-,,.,u- ~ ~~ - 10- Year Junk yield (right scale) - -1,ifH.,,uA) ~ ~ ~ IJl,ld/' - Dow Jones Industrial Average - S&P 500 -afh-ltJ~lfUdN, - M lfflt~ tu»,U,&/-h tDd tad I Up 22.0% since 12/31/021 I Up 20.4% since 12/31/02 j -Real Federal Funds Rate Real consumption spending* 1-, o"I, 3,<c,% eal ncome* - .- \ I - - . I \ I ■ Total federal spending ~ Blue Chip Forecast t ~? - ~j~ Real GDP Growth ~ - - Potential Growth }+ , Friday's report was disappointing , /, ~ ~~ I {, oP""' .. ~wO ~">~ ' pP_ ~~ 1.08 Average of 1.06 postwar 0 r- • recoveries 11 .c en -6 1.04 ,_ X Q) "O C 1990-91 1.02 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,r,l~~Sf:i;th 1 Ill_ Nov. 2001 0.98 L__.i__ L..__ ____,_ ----'----------'---------'--- 0 5 10 Months 15 20 25 N onfarm payroll employment, indexed to beginning of recovery Heavy black line represents average of postwar recessions Heavy red line represents current experience Shaded area shows range of outcomes across all postwar business cycles i Unemployment usuall rising Unemployment usually stable &-<--~ l Unemploymen usually falling - Core CPI inflation - Core PCE inflation ■ Key Trading Partners A,CJ1 7 / {) ■ U.S. - IP Growth, 6-month % chg. - ISM Composite Index Summary Self-sustaining private recoverx in train • Capital spending is recovering - Relatively good news for tech sector • Consumer spending, housing continue to support • Employment growth still meager; we need more 22

Cathy E. Minehan (2004, January 12). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_20040113_cathy_e_minehan

@misc{wtfs_regional_speeche_20040113_cathy_e_minehan,
  author = {Cathy E. Minehan},
  title = {Regional President Speech},
  year = {2004},
  month = {Jan},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_20040113_cathy_e_minehan},
  note = {Retrieved via When the Fed Speaks corpus}
}