Regional President Speech

The Economy and Markets Eric S. Rosengren President & CEO Federal Reserve Bank of Boston 2008 NAIOP/BBJ Business Conference October 15, 2008 EMBARGOED UNTIL OCTOBER 15, 2008 at 8:05 A.M. EASTERN TIME OR UPON DELIVERY 1. Inflation and Unemployment 2 Figure 1 Inflation Rate: Total and Core Consumer Price Index January 1958 - August 2008 Percent Change from Year Earlier 16 1 12 Core CPI 8 1 CPI All Items 4 0 0 Jan-58 Jan-70 Jan-82 Jan-94 Jan-06 Recession Source: BLS / Haver Analytics 3 Figure 2 Nonfarm Payroll Employment: Change from Previous Month January 2000 - September 2008 Thousands of Jobs 600 400 200 0 -200 -400 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Recession Source: BLS / Haver Analytics 4 2. Housing, Home Loans, and Foreclosures 5 Figure 3 Single-Family Housing Starts January 1959 - August 2008 Thousands of Units, Seasonally Adjusted Annual Rate 2,000 1 1,600 1,200 1 800 400 0 0 Jan-59 Jan-67 Jan-75 Jan-83 Jan-91 Jan-99 Jan-07 Recession Source: Census Bureau / Haver Analytics 6 Figure 4 S&P/Case-Shiller U.S. Home Price Index: Ten Metro Areas and Composite Percent Change from Year Earlier Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Composite 10 20.5 15.9 6.9 -4.4 -17.5 Boston 10.0 7.2 -2.3 -3.4 -5.4 Chicago 8.6 9.3 6.5 -0.9 -10.0 Denver 4.0 4.1 2.8 -0.7 -4.7 Las Vegas 50.8 13.8 5.6 -6.1 -29.9 Los Angeles 33.3 16.7 11.2 -4.8 -26.2 Miami 20.0 30.5 16.5 -6.4 -28.2 New York 14.5 13.7 7.7 -3.2 -7.4 San Diego 33.5 10.3 0.7 -7.8 -25.0 San Francisco 17.7 21.7 2.9 -4.1 -24.8 Washington 22.8 24.7 4.4 -7.1 -15.8 Source: S&P/Case-Shiller / Haver Analytics 7 Figure 5 Share of Loans in the Foreclosure Process As of June 30, 2008 Source: Mortgage Bankers Association National Delinquency Survey / Haver Analytics 8 Figure 6 Delinquency Rate on Construction Loans at US Commercial and Savings Banks As of June 30, 2008 Source: Commercial and Saving Bank Call Reports 9 Figure 7 Subprime Loan Delinquencies in New England Source: Calculations using Federal Reserve Board estimates based on data from First American LoanPerformance, February 2008. Covers loans on owner- occupied properties sold into non-agency subprime securities. 10 3. Financial Turmoil 11 Figure 8 Spread: One-Month London Interbank Offered Rate (LIBOR) to Overnight Index Swap (OIS) Rate January 1, 2007 - October 13, 2008 Basis Points Basis Points 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 1-Jan 5-Mar 7-May 9-Jul 10-Sep 12-Nov 14-Jan 17-Mar 19-May 21-Jul 22-Sep Source: Financial Times, Bloomberg / Haver Analytics 12 Figure 9 London Interbank Offered Rate, Overnight Index Swap Rate, Federal Funds Target Rate, and TAF* Stop-Out Rate January 1, 2007 - October 13, 2008 Percent Percent 6 6 1-Month LIBOR 5 5 Federal Funds Target Rate 4 4 TAF* Stop-Out Rate 3 3 2 2 1-Month OIS Rate 1 1 1-Jan 5-Mar 7-May 9-Jul 10-Sep 12-Nov 14-Jan 17-Mar 19-May 21-Jul 22-Sep *Federal Reserve Term Auction Facility -- First Auction: December 17, 2007 Source: Federal Reserve Board, Financial Times, Bloomberg / Haver Analytics 13 Figure 10 Weekly Change in Money Market Mutual Fund Assets August 13, 2008 - October 8, 2008 Billions of Dollars 80 40 0 -40 -80 -120 -160 -200 13-Aug 27-Aug 10-Sep 24-Sep 8-Oct Source: Investment Company Institute 14 Figure 11 Yield on 1-Day A1/P1 Asset-Backed Commercial Paper and the Federal Funds Effective Rate August 1, 2008 - October 13, 2008 Percent Percent 7 7 6 6 1-Day A1/P1 Asset-Backed Commercial Paper Yield 5 5 4 4 3 3 2 2 Federal Funds Effective Rate 1 1 0 0 1-Aug 15-Aug 29-Aug 12-Sep 26-Sep 10-Oct Source: Bloomberg 15

Eric Rosengren (2008, October 14). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_20081015_eric_rosengren

@misc{wtfs_regional_speeche_20081015_eric_rosengren,
  author = {Eric Rosengren},
  title = {Regional President Speech},
  year = {2008},
  month = {Oct},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_20081015_eric_rosengren},
  note = {Retrieved via When the Fed Speaks corpus}
}