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cTrends

The Long and Short
(Runs) of Investing
in Equities
Many people have re-evaluated the share of equi­
ties in their portfolios as a result of recent stock market
fluctuations. In their deliberations, most undoubtedly
encountered this advice: Invest in equities for the long
term and ignore the short-run fluctuations of the stock
market because stocks offer a higher rate of return than
many other types of investments. Many have heard a
corollary: Investors with short investment horizons
should lower their exposure to the volatility of equities.
Historically, holding an investment in equities for
a long horizon has lowered the risk of losing money.
Monthly total returns (returns with dividends rein­
vested) on Standard & Poor’s 500 Composite Index
(S&P 500) averaged 0.8 percent and had a stan­
dard deviation of 4.1 percent between 1871 and 1998.
So an investment in the S&P 500 held for one
month would have lost money nearly 40 percent
of the time, but one held for 10 years would have
lost money less than 2 percent of the time.
However, as noted by Paul Samuelson 35
years ago, lengthening the investment horizon
does not reduce all of the uncertainties associated
with equity investments. Although a long invest­
ment horizon decreases the probability of losing
money, it does not reduce the variability of an
investor’s portfolio value. Rather, a longer hori­
zon increases the range of probable values of her
wealth. Consider a simple game where a player
wins one dollar if a coin comes up heads, and
loses a dollar if it comes up tails. As an induce­
ment, the coin is weighted so that the probability
of heads is 0.6. If the coin is flipped once, the
player will lose one dollar with probability 0.4.
But if she plays the game 100 times, the proba­

bility of a net loss falls below 0.02, largely due to the
expected gain from each toss. Yet, the range of proba­
ble outcomes does not shrink; it increases. The player
who tosses the coin once expects to win $0.20 and
may win or lose a dollar. If she tosses it 100 times,
she expects to win $20, may win or lose up to $100,
and will win less than $15, or more than $25, nearly a
third of the time.
Investing in the stock market has similar implica­
tions. The chart below shows the maximum, median
and minimum results of a dollar invested in an arbi­
trary month between 1871 and 1998 for various
investment horizons. It clearly shows that holding
equities for a long horizon rarely produced a loss,
but it did not shrink the range of probable outcomes.
Instead, the range of investment results grew with the
investment horizon. So, investing for the long term
may reduce one uncertainty associated with equities,
but it does not reduce all of them.
— Peter Yoo

Results off a Dollar Invested in the
S&P 5 0 0 : 1 8 7 1 -1 9 9 8

Investment Horizon (m onths)
SOURCE: Author's calculations based on data from Robert Shiller

Views expressed do not necessarily reflect official positions of the Federal Reserve System



Tabi eofContents
Page
3

Economy at a glance

4

Output and growth

7

Interest rates

8

Inflation and prices

10

Labor markets

12

Consumer spending

14

Investment spending

16

Government revenues, spending, and debt

18

International trade

20

Productivity and profits

22

Quick reference tables

27

Notes and sources

Conventions used in this publication:
1.

Charts and tables contain data that w ere current on S eptem ber 28, 1998.

2.

Shaded areas indicate recessions, as determ ined by the National Bureau of E conom ic Research.

3.

P e rc e n t c h a n g e refers to sim ple percent changes. P e r c e n t c h a n g e from y e a r a g o refers to the percent change from the sam e
m onth or quarter in the previous year. T he p e r c e n t c h a n g e a t a n n u a l ra te show s w hat the grow th rate w ould be over an entire year
if the sam e sim ple percent change continued for four quarters or tw elve m onths. The percent change at annual rate of X betw een
the previous quarter t - 1 and the current quarter t is:

100 x
Xit-1

- 1

For m onthly data replace 4 w ith 12.
4.

All data w ith sig nifica nt seasonal patterns are seasonally adjusted, unless labeled NSA.

National Economic Trends is published monthly by the Research Division of the Federal Reserve Bank of St. Louis. Single-copy subscriptions are available free of charge by writing
Public Affairs Office. Federal Reserve Bank of St. Louis. Post Office Box 442, St. Louis, MO 63166-0442 or by calling (314) 444-8808 or (314) 444-8809. Subscription form s can also
be filled out electronically at http://www.stls.frb.org/research/order/pubform.htm l. For more information on data, please call (314) 444-8573.

Information in this publication is also

included in the Federal Reserve Economic Data (FRED) electronic bulletin board at (314) 621-1824 or internet World Wide Web server at http://www.stls.frb.org/fred. The entire p u b ­
lication is also available electronically at http://www.stls.frb.org/publications/net.




National EconomicTrends
Real GDP Growth

Consumer Price Index

Percent change at annual rate
7 - ......................................................

Percent change
0.5 - ......................................

1995

1996

1997

1998

Industrial Production

Interest Rates

Percent change

Percent

1.8

8 - ........

-

.................................................................

1995

1996

1997

........................... 1
........................... 1
..................
4 1 ........................... 1
1998

1995

1996

1997

1998

1996

1997

1998

Unemployment Rate

Change in Nonfarm Payrolls
Thousands
600 -

Percent of labor force
6.0 - .................................................................

500 —

1995




1996

1997

1998

1995

3

National EconomicTrends
Real Gross Domestic Product
Percent change from year ago

10

Aggregate Private Nonfarm Hours
Percent change from year ago

12 -

-4

Real Change in Business Inventories
Percent of GDP

4



National EconomicTrends
Real Final Sales and GDP

Real GDP Revisions
Percent change at annual rate

Percent change at annual rate
GDP (bar)..........

i É i i i i l l l Preliminary
Annual Revision

Advance
Final

64—

1:1

2—
097:2

Industrial Production and NAPM Index

98:2

8

- 56

6

— 50

4

— 44

J ndu£jfô

2

u

00

1997

co

1996

98:1

10

- 62

- .......................................

1.2 -

97:4

Nominal Gross Domestic Product
Index
— 68

Percent change
1.8

97:3

Pi

0

1998

1996

1997

Aggregate Private Nonfarm Hours

Average Weekly Private Nonfarm Hours

Percent change
3 - .......................

1998

Hours
35.0 —

-2
1996

1

33.5
1997

Real Change in Business Inventories
Billions of 1992 dollars
120 - ...............................................................




'

1998

'

1996

1997

1998

Inventory-Sales Ratio
Manufacturing and trade
1.46 - ...................................

1996

1997

1998

5

National EconomicTrends

Contribution of Components to Real GDP Growth
Percent change at annual rate
1 0 - -------------------------------------------------------------------- ---------------

96Q3

96Q4

97Q1

97Q2

ExDorts

C onsum ption
im ports

97Q3

I

] inventories

97Q4

I
V y y /X

98Q1

I Government

98Q2

_

Real GDP

Investment

Contributions to Real GDP Growth Rate
I

1996

I

1998

:

IS
t

2nd

2 .95

5 .5 5

1 .8 3

5 .69

2 .13

4.28

4.58

1 .2 8

-1 .5 4

0 .85

1.36

-2 .8 2

2 .9 0

1 .0 8

4 .17

1 .8 7

4.08

4.09

0 .89

1.74

1 .8 0

0 .56

3 .05

2 .1 2

1997

3rd

4th

1

1st

2nd

3rd

Real GDP

2 .0 8

4 .2 3

1

4.21

3 .95

4 .20

Final Sales

0.9 0

5 .0 8

I

2 .86

2.6 8

Change in Inventory

1.23

-0 .8 7

I

1.37

Consumption

1.25

1.97

I

Fixed Investment
Nonresidential
Residential

1.36

0 .7 6

Government
Federal
State and Local
Net Exports
Exports
Imports
Residual



6

1.48

0 .9 7

-0 .0 7

-0 .1 6

I
I

0.7 8

1 .5 3

1 .8 9

0 .2 2

2 .5 0

1.54

0 .1 2

0 .2 3

- 0.0 2

0.31

0 .5 8

0 .5 7

-0 .2 9

0 .0 0

I

0 .3 7

0 .3 8

0 .2 5

0.0 2

;

-0 .3 3

0 .6 3

-0 .3 2

-0 .4 3

[

-0 .1 8

0 .2 3

-0 .0 8

-0 .1 3

I

-0 .5 6

0 .4 3

0 .0 4

0 .4 3

j

0 .5 5

0 .1 5

0 .3 3

0 .15

0 .2 3

0.2 0

-1 .5 2

2 .5 4

I

-1 .4 4

-0 .5 6

-0 .6 0

-0 .3 6

- 2 .6 6

-2 .4 8

0 .2 5

3 .5 3

1.04

1 .9 2

1 .3 6

0.59

-0 .3 8

-1 .0 5

-1 .7 7

-0 .9 6

-2 .4 6

-2 .4 5

-1 .9 4

-0 .9 4

-2 .2 9

-1 .4 3

0.0 0

-0 .2 4

0 .1 0

- 0.0 2

0 .0 6

0.0 2

0 .0 3

0.42

I

I

:

ttationalEconom icTrends

Interest Rates
Percent
18 -

on r~“i----- 1 1 1 1 1 1 r— I----1 I
--------- ----- ----- ----- ----- ----73

74

75

76

77

78

79

80

81

82

83

84

85

I

86

I

87

I

88

I

89

I

90

r

91

i

92

i

93

i

94

i

95

i

96

i

97

i

98

Treasury Yield Curve
Percent
7.5 7.0 6.5 6.0

Aug_97____

-

5.5-

. - '

Aug 98

5.0 4.5 4.0 -

3m

1y

2y

5y

7y

10y

30y

Standard and Poor’s 500 Index with Reinvested Dividends
Percent change from year ago
75 -

50 -

25 -

-2 5 -

-5 0
73

T “ I ...... l........ i
I
I........ r ... I....' n r
I........ I........ I
I........ I........ I
I........ I...... I
I
I
I
I
I
I
I
I
74
75
76
77
78
79
80
81
82 83
84
85
86
87
88
89
90
91
92
93
94
95
96 97
98




7

National EconomicTrends
GDP Chain Price Index
Percent change from year ago

12 - .....

.........................

Consumer Price Index
Percent change from year ago

Producer Price Index, Finished Goods
Percent change from year ago

Employment Cost Index and Compensation per Hour
Percent change from year ago

15 -

8




« ......

ftationalEconom icTrends

GDP Chain Price Index

Crude Oil Price

Percent change at annual rate
4 - .................................................

Dollars per barrel
28 - .......................

3-

Consumer Price Index

Consumption Chain Price Index

Percent change
0.5 - ..................................

Percent change at annual rate
4 - ........................................................

3—

Producer Price Index, Finished Goods
Percent change

Unit Labor Cost
Percent change at annual rate

6 - ....................................................
Nonfarm

Employment Cost Index

Compensation perHour

Percent change from year ago
8 - ............................................

6 - .................................................




Percent change at annual rate

NationalEconomicTrends

Employment
Percent change from year ago

6
4

2
0
-2
-4

Unemployment, Labor Force Participation and Employment Rates
Percent of labor force
15 -

Percent of population
.........................................................- 70
Labor Force/Population

Duration of Unemployment
Percent of labor force
450

Weeks
— 16

3.75

-

3.00

- 12

2.25

-

10

1.50

-

8

0.75

-

6

0.00

r 4

1
0




14

. NationaiEconomicTrends
Change in Nonfarm Payrolls

Change in Manufacturing Payrolls

Thousands
600 - .............................................

Thousands

500 -

1996

1997

1998

Change In Household Employment

Labor Force and Population

Thousands
975 - .........................................................

Percent change from year ago
2.5 - ..............................................

.................................. 1
.....................
“ 65° 1 .................................. 1
1996
1997
1998

1993

1994

1995

1996

1997

1998

Unemployment Rate

Help-Wanted Advertising

Percent
6.0 -

Index
Percent
95 - ........................................................................................................ - 8.0

¿A

Help - wanted

Unemployment Rate

1996




1997

1998

Vy~A.

551.......... 1
.......... 1
.......... 1......... 1
.
.......... 1......... r 40
.
1993

1994

1995

1996

1997

1998

1
1

National EconomicTrends
Real Disposable Income
Percent change from year ago, quarterly data

8
4

0

Real Consumption
Percent change from year ago

24 - ........................................................................................

- 16i .....i.... ;;t .... i

i

i.... i ..... r 1 i ... f"'""'..i......i..... i......i
"'

Retail Sales
Percent change from year ago of quarterly average

Household Debt Outstanding
Percent change from year ago

15
12
9

6
3

1
2




Percent change from year ago

.........................................................

i

............................................................... -

i .... i......i..iMf .... i..... i

i ....i

i

i

12

i..... r _8

NationaìEconomicTrends

Personal Saving Rate

Real Disposable Income
Percent change
1.2 - .............
0.8

Percent

8 - ........

-

0.4 —

0.0 - I
•0.4 —■
-

0.8

—

- 1 .2 T

1996

'

1

1997

1998

Real Consumption

Real Consumption

Percent change

Percent change
1.6 - .....................................................

8 - ............................

1.2

-

0.8

-

0.4
0.0

1
I I I I Ii i . I I IL!
1

■

1 i i ii i
¡ I „¡ .n. i i lI

■0.4 —
-

1997

1996

0.8

1998

1996

1997

1998

Retail Sales

Real Durables Consumption and Vehicle Sales

Percent change

Percent change

Millions of vehicles, annual rate

2 - .................

Consumer Sentiment (U. of Michigan)

Real Durables Consumption

Index

Percent change

120

20

—

-

10-

70
1993

1 1994




(

1995

[

1996

1 1997

-1 0
f

1998

1996

1997

1998

13

National EconomicTrends
Real Investment
Percent of GDP
22 - ........

Real Private Fixed Investment
Percent change from year ago

24 —

...

, /

Real Nonresidential and Producers Durable Equipment Investment
Percent change from year ago

Real Residential Investment
Percent change from year ago


14


National EconomicTrends
Gross Saving Rates and Net Foreign Investment
Percent of GDP

Percent of GDP
—
10

24

22

-

8

-

6
4

-

2

-

0

------ 2
r

Real Private Fixed Investment

Nondefense Capital Goods Orders

Percent change at annual rate

Percent change from year ago, excluding aircraft

21

-4

30 - ........................................................................................

-

.................................................................................................

Equipm ent Investment

20
10

0
-10

1996

1997

1998

Real Equipment Investment

-20

1993

(

1994

T 1995

[

1996

'

1997

1 1998

Real Nonresidential Investment

Percent change at annual rate

Percent change at annual rate

35 -

25 -

20-

1996

1997

-5 T

1998

Real Residential Investment

1996

1997

1998

1997

1998

Housing Starts

Percent change at annual rate

Millions, annual rate

20 -

1.8

-

.....................................................

15 10

-

-10 -15 -

-20 T
1996




1997

1.3

1998

1996

15

NationaiEconom icTrends

Govt. Consumption and Investment

Government Receipts and Outlays

Billions of 1992 dollars
1400

Percent of GDP
35

1200

1000

800

600

400

Government Budgets
Billions of dollars

National Income Accounts

Unified Budget

Calendar Years

Fiscal Years

State and Local

Federal
Surplus or
Deficit)-)

Receipts

Surplus or
Expenditures Deficit)-)

Receipts

Surplus or
Outlays
Deficit)-)

Receipts

Expenditures

1975
1976
1977
1978
1979

2 2 5 .6

1 9 8 .0

2 7.6

2 9 7 .4

3 7 1 .3

-7 3 .9

2 7 9 .1

3 3 2 .3

-5 3 .2

2 5 3 .9

2 1 7 .9

3 6 .0

3 4 3 .1

4 0 0 .3

-5 7 .2

2 9 8 .1

3 7 1 .8

-7 3 .7

2 8 1 .9

2 3 7 .1

4 4.8

3 8 9 .6

4 3 5 .9

-4 6 .3

3 5 5 .6

4 0 9 .2

-5 3 .7

3 0 9 .3

2 5 6 .7

5 2.6

4 4 6 .5

4 7 8 .1

-3 1 .6

3 9 9 .6

4 5 8 .7

-5 9 .2

3 3 0 .6

2 7 8 .3

5 2.3

5 1 1 .1

5 2 9 .5

-1 8 .4

4 6 3 .3

5 0 4 .0

-4 0 .7

1980
1981
1982
1983
1984

3 6 1 .4

3 0 7 .0

5 4 .4

5 6 1 .5

6 2 2 .5

-6 1 .0

5 1 7 .1

5 9 0 .9

-7 3 .8

3 9 0 .8

3 3 5 .4

5 5.4

6 4 9 .3

7 0 7 .1

-5 7 .8

5 9 9 .3

6 7 8 .2

-7 9 .0

4 0 9 .0

3 5 7 .7

5 1 .3

6 4 6 .4

7 8 1 .0

-1 3 4 .6

6 1 7 .8

7 4 5 .8

-1 2 8 .0

4 4 3 .6

3 7 8 .8

6 4.8

6 7 1 .9

8 4 6 .3

-1 7 4 .4

6 0 0 .6

8 0 8 .4

-2 0 7 .8

4 9 2 .0

4 0 5 .1

8 6.9

7 4 6 .9

9 0 2 .9

-1 5 6 .0

6 6 6 .5

8 5 1 .9

-1 8 5 .4

1985
1986
1987
1988
1989

5 2 8 .7

4 3 7 .8

90.9

81 1.3

9 7 4 .2

-1 6 2 .9

7 3 4 .1

9 4 6 .4

-2 1 2 .3

5 7 0 .6

4 7 5 .7

94.9

8 5 0 .1

1 02 7.6

-1 7 7 .5

7 6 9 .2

9 9 0 .5

- 2 2 1 .2

5 9 4 .9

51 1.1

8 3 .8

9 3 7 .4

1 06 6.3

-1 2 8 .9

8 5 4 .4

1 0 0 4 .1

-1 4 9 .8

6 3 1 .4

5 4 5 .5

8 5.9

9 9 7 .2

1 1 1 8 .5

-1 2 1 .3

9 0 9 .3

1064.5

-1 5 5 .2

6 8 1 .0

5 8 5 .9

9 5.1

1079.3

1 192 .7

- 1 13.4

9 9 1 .2

1 1 4 3 .7

-1 5 2 .5

1990
1991
1992
1993
1994

7 2 8 .9

6 4 8 .8

8 0.1

1 1 2 9 .8

128 4.5

-1 5 4 .7

1 0 3 2.0

1253.2

- 2 2 1 .2

7 8 4 .2

7 0 8 .4

7 5 .8

1 1 4 9 .0

134 5.0

-1 9 6 .0

1 0 5 5.0

1 3 2 4.4

-2 6 9 .4

8 4 4 .3

7 5 8 .0

8 6 .3

1 1 9 8 .5

1479.4

-2 8 0 .9

1 0 9 1.3

1381.7

-2 9 0 .4

8 9 4 .4

8 0 7 .0

8 7.4

1275.1

1 52 5.7

-2 5 0 .6

1 1 5 4 .4

1 409.4

-2 5 5 .0

9 4 9 .2

8 5 2 .3

9 6.9

1374.8

1 5 6 1.4

-1 8 6 .6

1 2 5 8.6

1 4 6 1.7

-2 0 3 .1

1995
1996
1997

9 9 7 .7

8 8 6 .0

1 1 1.7

1460.3

1 63 4.7

-1 7 4 .4

1 3 5 1.8

1 5 1 5.7

- 1 63.9

1 045.2

9 2 2 .6

1 22 .6

1584.7

1 69 5.0

- 1 10.3

1 4 5 3 .1

1 560.5

-1 0 7 .5

1 094.3

9 6 0 .1

13 4 .2

1719.9

1 74 1.0

- 21.1

1 5 7 9.3

1 601.2

-2 1 .9


http://fraser.stlouisfed.org/
16
Federal Reserve Bank of St. Louis

Nat iona IEconomic Trends
Federal Debt

Federal Deficit

Percent of GDP

Percent of GDP

74

76

78

80

82

84

86

88

90

92

94

96

74

98

76

78

80

82

84

86

88

90

92

94

96

98

84

86

88

90

92

94

96

98

Federal Deficit, Unified Basis

Change in Federal Debt
Percent of GDP

Billions of dollars, fiscal years

8 -m m ...................

500 -mm ...............

74

76

78

80

82

84

86

88

90

92

94

96

74

98

76

78

80

82

Federal Government Debt
Billions of dollars, end of month or fiscal year,
excluding a g e n c y -is s u e d debt

1994
1995
1996
1997
1995

Held by Private Investors

Held by Public

Held by

Total
Public Debt

Agencies
and Trusts Total

Reserve Banks

4 6 9 2.8

3479.7

3 5 5 .2

3 1 2 7 .8

6 5 5 .8

1 3 2 0.8

3 6 5 3.2

3 7 4 .1

3 2 7 9 .5

8 4 8 .4

5 2 2 4 .8

1 4 4 7.0

3 7 7 7.8

3 9 0 .9

3 3 8 6 .2

1026.1

5413.1
March

1 2 1 3 .1

4 9 7 4.0

159 8.5

3814.7

4 3 6 .5

33 8 8.9

1 2 6 6.0

4864.1

125 4.7

36 0 9.5

3 6 9 .3

3 2 3 9.2

7 2 9 .2

3 2 4 5.0

7 8 4 .2

June

3 6 3 4.8

3 8 9 .0

Sep tem ber

4 9 7 4.0

1 3 2 0.8

3653.2

3 7 4 .1

3 2 7 9.5

8 4 8 .4

December

1996

4 9 5 1.4

131 6.6

4 9 8 8.7

1 3 0 4.5

3 6 8 4.2

3 9 1 .0

32 9 4.9

8 6 2 .2
9 3 6 .6

51 1 7 .8

1 3 5 3.8

3764.0

3 8 1 .0

3 3 8 2.8

5161.1

1422.4

3738.6

3 9 1 .0

3 3 4 7.3

9 6 0 .3

Sep tem ber

5 2 2 4.8

1 4 4 7.0

37 7 7.8

3 9 0 .9

3 3 8 6.2

1 0 2 6 .1

December

1997

March
June

53 2 3.2

149 7.2

3826.0

4 1 0 .9

341 1 .2

1 1 3 5 .6
1 1 9 2 .5

5380.9

1 5 0 6.8

3874.1

4 0 5 .6

3 4 5 1.7

5 3 7 6.2

1 5 7 1.6

3804.6

4 2 6 .4

3 3 6 1.7

1221.9

S ep tem ber

5413.1

1 5 9 8.5

3814.7

4 3 6 .5

3 3 8 8.9

1266.0

December

1998

March
June

5 5 0 2.4

1 6 5 5.7

3846.7

4 5 1 .9

3 3 9 3 .4

1 2 7 8.0

March

5 5 4 2 .4

1670.4

3872.0

4 0 0 .0

3 4 3 0.7

1288.0

June

55 4 7.9

NA

NA

NA

NA

NA




17

National EconomicTrends
Trade and Investment Income Balances
Billions of dollars, quarterly rate

10

0
-1 0

-20

-3 0

-4 0

-5 0

Exchange Rates

100 x (Deutsche mark/US$)

Index, March 1973 = 100

Yen/US$
- 450

160

375

140

300

120

225

100

150

80

75

Goods Export Shares, 1997

Goods Import Shares, 1997
All Other

All Other

36.58%

32.36%

Mexico
Mexico
9.80%

Canada

22.34%

Other OECD
13.83%

Other OECD

Canada

9.60%

19.17%

2.35%

Japan
9.65%

1
8




Germany
3.60%

UK

France
2-35%

5.36%

Germany
4.92%

Japan
13.87%

3.72%

National EconomicTrends
Trade Balance

Goods Trade

Billions of dollars

Percent change from year ago

20

1996

1997

- ...........................................................................................

1998

Current Account Balance

Services Trade

Billions of dollars

Percent change from year ago

0

20

1996

1997

-

........................................................ - ................................

1998

Real GDPGrowth of MajorTrading Partners
Percent c ha n ge at annual rate

United Kingdom
6—

18 -




“•

1996

1

1997

1

1998

19

National Economic Trends
Output per Hour and Manufacturing Capacity Utilization
Percent change from year ago
15 - ...... .................

10

-

Nonfarm Output/Hr
(X----- )

51

73

i .r....i.... i.....i.... i.... r ..i.... i... "i.... i.... i.... i ... i.... i.... i.... f r....i.... i ....i.... i.... i.... i.....i.... r 5
.
...
.
0
74

75

76

77

78

79

80

81

82

83

84

86

85

87

88

89

90

91

92

93

94

95

96

97

98

Nonfarm Compensation per Hour
Percent change from year ago

Output per Hour and Muttifactor Productivity, Manufacturing
Percent change, annual data

7 .5 -

»s
Output/Hr

%
m

I ...I..........I.... r
.....
74

20




76

78

80

HationaìEconom icTrends

Nonfarm Output per Hour

Manufacturing Output per Hour
Percent change at annual rate

Percent change at annual rate

5 - ......................................................

10

-

................................ - .......................................................................

8-

-2
1997

1996

........................I..................................... I
1997
1998

1996

1998

Selected Component Shares of National Income
Percent

Percent

5 1 .......... T —

73

74

r ........... i ............ r .............i ............ i .............f * ..... i ......

75

76

77

78

79

80

81

f

i ............ i........... i ..............i........... i ............. i..............i ............r ....." " T ...........t .............i .............r .............i

82

83

84

85

86

87

88

89

90

91

92

93

94

r

95

i .............i ............ r

96

97

98

67

Corporate Profits after Tax (with IVA and CCAdj)
Percent change from year ago

80-

.............................................. w k ........ mmm




Nonfinancial

2
1

NationalEconom icTrends
Nominal GDP

Final Sales

Real GDP
Percent chanae
Year
Annual
rate
ago

Percent chanae
Annual
Year
rate
ago

Change in
Business Inventories

Billions
of $
1993
1994
1995
1996
1997

Percent chanae
Annual
Year
rate
ago

6558.1

5 .0

6 3 8 9.5 6 3

2 .3

6 3 6 8.8 6 4

2.1

22.102

6 9 4 7.0

5.9

6 6 1 0.741

3 .5

6 5 5 1 .2 4 7

2 .9

6 0 .55 2

7 2 6 9.6

4.6

6 7 6 1.7 3 2

2.3

6731.6 9 6

2.8

2 7 .67 8

7 6 6 1.6

5 .4

6 9 9 4.7 7 4

3 .4

6 9 6 1 .6 0 8

3.4

3 0 .02 4

81 1 0 .9

5.9

7 2 6 9.7 7 9

3 .9

7 2 0 3.6 8 3

3.5

6 3 .21 0

Billions
of 1992 $

Billions
of 1992 $

Billions of 1992 $
Last qtr Year/Year ago

1996

1
2

7 1 7 0 .8

4.3

5 .5

6 7 1 7.4 5 8

1.7

3.0

6 6 6 1.7 7 4

2.2

2 .9

5 4 .27 8

6 0 .85 7

7 2 1 0.9

2 .3

4 .3

6 7 2 4.2 0 2

0.4

1.9

670 0.0 1 0

2 .3

2.7

21.668

47 .30 0

3
4

1995

7 3 0 4.8

5.3

4 .6

6 7 7 9 .5 2 8

3 .3

2.3

676 1.6 9 8

3 .7

2.8

1 4 .70 5

38 .56 0

7 3 9 1.9

4.9

4.2

6 8 2 5 .8 0 0

2.8

2.1

6 8 0 3 .3 0 2

2.5

2.7

20.061

27 .67 8
17.70 5

1
2
3
4

1998

5.7

4.5

6 8 8 2 .0 0 0

3.3

2 .4

6 8 6 3 .6 1 8

3.6

3 .0

1 4 .38 5

7 .3

5.8

6 9 8 3 .9 0 9

6.1

3 .9

6 9 5 4.6 8 4

5 .4

3 .8

2 6 .06 4

1 8 .80 4

7 7 0 3 .4

3 .9

5.5

7 0 2 0.0 0 2

2.1

3.5

697 0.2 7 8

0 .9

3.1

4 7 .50 7

27 .00 4

7 8 1 8 .4

6.1

5.8

7 0 9 3.1 2 4

4 .2

3 .9

7 0 5 7.8 5 2

5.1

3 .7

3 2 .14 2

30 .02 5

1
2
3
4

7 9 5 5 .0

7.2

6.1

716 6.6 8 4

4.2

4.1

7 1 0 8.0 6 3

2 .9

3.6

5 6 .31 0

40 .50 6

8 0 6 3 .4

5.6

5 .7

7 2 3 6.4 9 7

4.0

3.6

7 1 5 5.5 3 0

2.7

2.9

7 9 .04 8

53 .75 2

8 1 7 0 .8

5.4

6.1

7 3 1 1.2 4 2

4.2

4.1

7 2 5 6.2 6 5

5.8

4.1

5 0 .98 8

54 .62 2

8 2 5 4 .5

4.2

5.6

736 4.6 3 2

3.0

3.8

7 2 9 4.8 1 2

2.1

3.4

66 .49 6

63.21 1

1

8 3 8 4.2

6.4

5.4

746 4.6 6 8

5.5

4.2

73 7 2.4 6 8

4.3

3.7

91.401

71 .98 3

2

1997

7 4 9 5 .3
7 6 2 9.2

8 4 4 0.6

2.7

4 .7

7 4 9 8.6 3 8

1.8

3.6

7 4 5 6.4 2 4

4.6

4.2

38 .16 8

6 1 .7 6 3

Consumption

Durables Consumption

Billions
of 1992 $

Percent chanae
Year
Annual
rate
ago

Billions
of 1992 $

1993
1994

4 3 4 3.5 6 3

2.9

4485.981

3.3

1995
1996
1997

4 6 0 5.5 7 0

1995

1
2
3
4

1996

1997

1998

1
2
3
4
1
2
3
4
1
2

5 23.841
5 6 1 .1 8 9

2.7

5 8 9 .0 9 4

4 7 5 2.3 7 6

3.2

4 9 1 3.5 3 0

Billions
of 1992 $

Percent chanae
Annual
Year
rate
ago

Billions
of 1992 $

Percent chanae
Year
Annual
rate
ago

7.2

8 4 2 .7 7 2

7 .6

6 0 0 .1 6 7

7.6

7.1

9 1 5 .5 3 6

8.6

64 8 .3 6 1

8.0

5.0

9 6 5 .9 6 5

5.5

7 1 0 .6 3 6

9.6

6 2 6 .1 2 0

6.3

105 0.5 8 3

8.8

7 7 6 .5 8 7

9.3

3.4

6 6 8 .6 0 2

6.8

1 1 3 7 .9 5 1

8.3

8 5 9 .3 6 4

1 0 .7

4 5 5 5 .2 7 0

1.9

2.6

5 7 5 .1 8 5

- 1.0

4.5

9 5 7 .1 13

8.2

7.8

6 9 8 .4 0 2

16.1

1 1.5

45 9 3.6 2 8

3.4

2.7

5 8 3 .5 2 0

5.9

5.0

9 5 7 .8 2 6

0.3

4 .9

7 1 0 .1 6 7

6.9

10.8

4 6 2 3 .4 1 9

2.6

2.8

5 9 5 .3 2 3

8 .3

6.0

9 6 5 .8 3 2

3.4

4 .7

71 1 . 7 1 3

0 .9

9.0

4 6 4 9.9 6 2

2.3

2.6

6 0 2 .3 5 7

4 .8

4.5

9 8 3 .0 9 1

7.3

4.8

7 2 2 .2 7 3

6.1

7 .3

4 6 9 2.0 7 6

3.7

3.0

6 1 0 .9 7 0

5 .8

6.2

101 1 . 3 6 5

12.0

5.7

7 4 4 .7 7 7

13.1

6.6

4 7 4 6 .5 5 3

4.7

3.3

6 2 9 .5 0 5

1 2 .7

7 .9

1 0 4 3.5 1 7

1 3 .3

8 .9

7 6 4 .4 0 3

1 1 .0

7 .6

4 7 6 8.2 8 5

1.8

3.1

6 2 6 .4 8 6

-1 .9

5 .2

1 0 6 7.0 6 7

9.3

10.5

7 9 0 .1 3 8

1 4 .2

1 1 . 0'

4 8 0 2.5 5 0

2.9

3.3

6 3 7 .5 0 7 ,

7 .2

5.8

1 0 8 0.3 8 5

5.1

9 .9

8 0 7 .0 3 6

8.8

1 1.7

4 8 5 3.3 9 8

4.3

3 .4

6 5 6 .2 7 7

1 2 .3

7.4

1 0 9 6.0 4 6

5 .9

8.4

8 2 0 .8 6 0

7 .0

10.2

4 8 7 2.6 8 3

1.6

2.7

6 5 3 .7 6 6

-1 .5

3 .9

1 1 2 6 .9 9 1

1 1.8

8.0

8 4 8 .1 8 4

1 4 .0

1 1.0

4 9 4 6.9 9 3

6.2

3 .7

6 7 9 .6 1 9

1 6 .8

8.5

1 1 5 9 .2 9 2

12.0

8.6

8 8 2 .1 8 1

1 7 .0

1 1.6

4 9 8 1.0 0 5

2.8

3 .7

6 8 4 .7 5 3

3.1

7.4

1 1 6 9 .4 9 2

3.6

8.2

8 8 6 .2 3 1

1.8

9 .8

5 0 5 5.0 6 2

6.1

4.2

7 1 0 .2 5 9

1 5 .8

8.2

1 2 2 4.9 4 3

2 0 .4

1 1.8

9 3 1 .8 6 4

2 2.2

1 3 .5

5 1 3 0.2 1 7

6.1

5.3

72 9 .3 5 1

1 1.2

1 1 .6

1 2 6 4.1 3 0

9 6 0 .3 7 7

12.8

1 3 .2




22

Presidential Investment

Private Fixed Investment

Percent chanae
Year
Annual
rate
ago

13.4

12.2

NationalEconom icTrends
Percent chanae
Annual
Year
rate
ago

Index

ECI: Wages

Employment Cost Index

GDP Chain Price Index

Index

Percent chanae
Annual
Year
rate
ago

Index

ECI: Benefits

Percent chanqs
Annual
Year
rate
ago

Index

Percent chanae
Annual
Year
rate
ago

1993
1994

1 0 2 .6 4 3

2.6

1 1 8 .4

3 .6

115 .2

2.9

1 2 7 .0

5.4

1 0 5 .0 8 8

2.4

1 2 2 .2

3 .2

118 .5

2.9

1 32.1

4.0

1995
1996
1997

1 0 7 .5 1 3

2 .3

1 25 .7

2.8

1 2 1 .9

2.9

1 3 5 .0

2.2

1 0 9 .5 4 1

1.9

1 2 9 .2

2.8

126 .0

3 .3

1 3 7 .4

1.8

1 1 1.569

1.9

1 3 3 .2

3.1

1 3 0 .4

3 .5

1 4 0 .2

2.0

1995

2 .5

2 .5

1 2 4 .4

2 .9

3.0

1 20 .6

2 .7

3 .0

1 33 .9

1.2

2.7

1 0 7 .2 5 9

2.0

2 .4

1 2 5 .3

2 .9

2.9

12 1 .5

3.0

2.9

1 3 4 .6

2.1

2.4

1 0 7 .7 5 8

1.9

2.2

126.1

2.6

2 .7

1 2 2 .4

3 .0

2.9

1 3 5 .3

2.1

1.9

4

1 0 8 .2 9 9

2.0

2.1

1 2 6 .9

2.6

2.8

12 3 .2

2.6

2.8

1 3 6 .0

2.1

1.9

1
2
3

1 0 8 .9 0 0

2.2

2.0

127 .7

2.5

2.7

1 2 4 .4

4.0

3 .2

136.1

0.3

1.6

1 0 9 .2 7 7

1.4

1.9

1 2 8 .8

3.5

2.8

12 5 .6

3 .9

3 .4

1 3 7 .0

2 .7

1.8

1 0 9 .7 7 2

1.8

1.9

1 2 9 .7

2.8

2.9

12 6 .5

2.9

3.3

1 3 7 .8

2 .4

1.8

4

1997

1 0 6 .7 3 5

3

1996

1
2

1 10.21 4

1.6

1.8

1 3 0 .6

2.8

2.9

12 7 .4

2.9

3 .4

1 3 8 .6

2.3

1.9

1 10.966

2.8

1.9

1 3 1 .4

2.5

2.9

128 .5

3 .5

3 .3

1 3 8 .8

0.6

2.0

1 1 1.447

1.7

2.0

1 3 2 .6

3.7

3 .0

1 2 9 .7

3.8

3 .3

1 3 9 .7

2 .6

2.0

1 1 1.772

1.2

1.8

133 .7

3.4

3.1

131 .0

4.1

3 .6

14 0 . 4

2 .0

1.9

4

1998

1
2
3

1 1 2 .0 9 1

1.1

1.7

135.1

4 .7

4 .0

141 .7

3.8

2.2

1
2

1 1 2 .332

0 .9

1.2

1 3 6 .0

1 1 2 .5 7 1

0 .9

1.0

13 7 .2

Exports
Billions
of 1992 $
1993
1994
1995
1996
1997
1995

4.3

3 .4

1 3 2 .5

2 .7

3.5

133 .6

3.4

4 .0

142.1

1.1

2.4

3 .6

3.5

1 3 4 .9

3.9

4.0

1 4 3 .2

3.1

2.5

Imports

Percent chanae
Annual
Year
rate
ago

Billions
of 1992 $

Nonfarm Output per Hour

Percent chanae
Year
Annual
rate
ago

Index

Nonfarm Compensation/Hr

Percent chanae
Annual
Year
rate
ago

Index

Percent chanae
Annual
Year
rate
ago

6 5 8 .1 8 3

2 .9

7 2 8 .4 0 9

8.9

100.1

0.1

1 0 2 .2

7 1 2 .3 9 9

8.2

8 1 7 .0 2 6

12.2

1 00.6

0.5

1 0 4 .2

2.0

7 9 2 .5 7 5

1 1.3

8 8 9 .0 4 0

8.8

1 0 1 .2

0.6

1 0 6 .7

2 .4

2.2

8 6 0 .0 0 8

8 .5

9 7 1 .2 4 8

9.2

1 0 3 .7

2.5

1 1 0.4

3 .5

9 6 9 .9 8 8

12.8

1 1 0 6 .1 2 4

13.9

105.1

1 .4

1 14.5

3 .7

1998

9.2

1 3 .0

8 7 3 .4 3 3

9.8

12.9

100.6

- 0.8

- 0.1

1 0 5 .5

1.9

1 .5

7 7 4 .0 0 0

5 .4

9 .9

8 8 8 .7 0 5

7.2

10.0

1 0 0 .9

1.2

0.1

1 0 6 .2

2.7

2.2

8 0 6 .2 9 1

1 7 .8

1 1.7

8 9 3 .1 2 7

2.0

7.2

1 0 1 .3

1.6

1.0

1 0 7 .0

3.0

2.8

8 2 6 .1 19

10.2

1 0 .5

9 0 0 .9 0 0

3.5

5.6

102 .0

2.8

1.2

1 0 7 .9

3.4

2.8

1
2
3
4

8 3 3 .6 0 7

3 .7

9.1

9 2 9 .0 6 4

13.1

6.4

103 .0

4 .0

2.4

1 0 8 .6

2.6

2 .9

8 4 5 .4 7 4

5 .8

9 .2

9 5 8 .9 3 9

13.5

7.9

1 0 3 .8

3.1

2.9

1 1 0 .0

5.3

3 .6

8 4 9 .8 9 3

2.1

5 .4

9 9 0 .0 1 2

13.6

10.8

1 0 3 .8

0.0

2.5

1 1 1.0

3.7

3 .7

91 1 . 0 5 3

3 2 .0

1 0 .3

1006.971

7.0

1 1.8

104.1

1.2

2.1

1 12.0

3.7

3 .8

9 2 9 .4 1 0

8 .3

1 1.5

1 050.935

1 8 .6

13.1

1 0 4 .2

0 .4

1.2

1 13.1

4.0

4.1

9 6 3 .5 9 4

1 5 .5

1 4 .0

1 095.206

1 7 .9

1 4 .2

1 0 4 .7

1.9

0.9

1 13.8

2.5

3 .5

3
4

1997

7 6 3 .8 8 5

3
4
1996

1
2

9 8 8 .1 0 9

10.6

1 6 .3

1 1 3 0 .5 2 1

13.5

1 4 .2

1 0 5 .6

3.5

1 .7

1 1 4 .9

3 .9

3 .5

9 9 8 .8 3 8

4 .4

9 .6

1 1 4 7 .8 4 0

6 .3

1 4 .0

1 0 5 .9

1.1

1 .7

1 1 6.3

5.0

3 .8

1
2

9 9 1 .8 7 5

- 2.8

6 .7

1 1 9 0 .4 0 6

1 5 .7

1 3 .3

1 0 6 .8

3 .4

2 .5

1 17.6

4.5

4 .0

9 7 2 .1 3 0

-7 .7

0 .9

2.0

1 18.8

4.1

4 .4

1
2




1 2 1 7.2 9 8

9.3

11.1

10 6 .8

0.0

23

KationalEconom icTrends
Nonfann Pavroll Emolovment

Household Survev Emolovment
Percent chanae
Year
Annual
ago
rate

Nonfarm Aaareaate Hours

Percent chanae
Year
Annual

Year

ago

Index

1.9
3.1
2.7
2.1
2.6

124.6
129.9
133.4
136.6
141.4

1.8
2.8
2.4
2.3

1.7
2.0
2.2
2.3

134.5
136.2
137.3
138.4

0.2
1.3
0.8
0.8

1.0
5.3
3.1
3.3

1.2
2.5
2.7
3.2

805
856
678
939

2.7
2.9
2.2
3.1

2.5
2.6
2.5
2.7

139.7
140.9
141.7
143.1

1.0
0.8
0.6
1.0

3.9
3.4
2.3
4.1

3.9
3.4
3.2
3.4

124795
125516

862
720

2.8
2.3

2.7
2.6

144.3
144.6

0.8
0.2

3.2
0.8

3.2
2.6

1.8
1.9

120024
120157

283
133

2.9
1.3

2.2
2.1

137.3
137.9

0.5
0.4

6.3
5.4

2.7
2.8

3.6
0.3
1.4

1.9
2.0
2.2

120382
120683
120901

225
301
218

2.3
3.0
2.2

2.2
2.3
2.4

137.9
138.3
139.0

0.0
0.3
0.5

0.0
3.5
6.2

2.9
3.0
3.6

642
-2 6
520

6.2
-0 .2
5.0

2.6
2.2
2.4

121146
121457
121779

245
311
322

2.5
3.1
3.2

2.6
2.5
2.5

138.8
139.8
140.6

-0.1
0.7
0.6

-1 .7
9.0
7.1

4.7
3.3
3.7

129275
129494
129392

240
219
-1 0 2

2.3
2.1
-0 .9

2.6
2.5
2.2

122092
122325
122534

313
233
209

3.1
2.3
2.1

2.6
2.5
2.5

140.6
141.2
140.9

0.0
0.4
-0 .2

0.0
5.2
-2 .5

3.8
3.7
2.8

Jul
Aug
Sep

129661
129747
129761

269
86
14

2.5
0.8
0.1

2.2
2.2
1.9

122811
122894
123280

277
83
386

2.7
0.8
3.8

2.6
2.4
2.6

141.3
141.7
142.1

0.3
0.3
0.3

3.5
3.5
3.4

3.4
3.2
3.0

Oct
Nov
Dec

129910
130575
130777

149
665
202

1.4
6.3
1.9

1.7
2.2
2.3

123568
123944
124289

288
376
345

2.8
3.7
3.4

2.6
2.7
2.8

142.6
143.2
143.6

0.4
0.4
0.3

4.3
5.2
3.4

3.4
3.5
3.3

1998 Jan
Feb
Mar

131083
131163
130994

306
80
-1 6 9

2.8
0.7
-1 .5

2.0
2.1
1.5

124640
124832
124914

351
192
82

3.4
1.9
0.8

2.9
2.8
2.6

144.6
144.4
143.8

0.7
-0.1
-0 .4

8.7
-1 .6
-4 .9

4.2
3.3
2.3

Apr
May
Jun

131383
131453
131209

389
70
-2 4 4

3.6
0.6
-2 .2

1.6
1.5
1.4

125234
125562
125751

320
328
189

3.1
3.2
1.8

2.6
2.6
2.6

144.0
144.9
144.8

0.1
0.6
-0.1

1.7
7.8
-0 .8

2.4
2.6
2.8

Jul
Aug

131067
131168

-1 4 2
101

-1 .3
0.9

1.1
1.1

125819
126184

68
365

0.7
3.5

2.4
2.7

145.2
145.3

0.3
0.1

3.4
0.8

2.8
2.5

Thousands

Change

1.5
2.3
1.5
1.4
2.2

110692
114131
117187
119590
122677

2101
3440
3055
2403
3086

1.4
2.1
2.4
2.3

0.6
1.3
1.8
2.1

118459
119273
119974
120655

524
814
701
681

910
690
336
698

2.9
2.2
1.0
2.2

2.4
2.4
2.1
2.1

121461
122317
122995
123934

131080
131348

659
268

2.0
0.8

1.9
1.5

1996 Aug
Sep

126995
127338

128
343

1.2
3.3

Oct
Nov
Dec

127715
127746
127899

377
31
153

1997 Jan
Feb
Mar

128541
128515
129035

Apr
May
Jun

rate

Percent chanae
Monthly Annual

Thousands

Change

120259
123069
124903
126708
129557

1771
2810
1834
1805
2849

125656
126323
127067
127787

449
667
744
720

128697
129387
129723
130421

2

1993
1994
1995
1996
1997

1996

1

2
3
4
1997

1

2
3
4
1998

1


http://fraser.stlouisfed.org/
24
Federal Reserve Bank of St. Louis

rate

rate

ago

2.9
4.2
2.7
2.4
3.5

National EconomicTrends
Retail Sales
Unempl.
Rate

of dollars

6.9

6.1

1993
1994
1995
1996
1997

1996

Billions

Industrial Production

Percent chanae
Monthly/ Annual
Year

Percent chanae
Monthly/ Annual
Year
quarterly
rate
ago

Treasury
Yields

ago

Index

2072.434

6.5

1 0 3.5 54

3.6

3.00

5.86

2227.838

7.5

109.171

5 .4

4 .2 5

7 .0 8

quarterly

rate

3 - mo

1 0 -y r

5.6

2331.617

4.7

114.543

4.9

5.49

6 .5 8

5.4

2455.234

5.3

118.499

3.5

5.01

6 .4 4

5.0

2 5 6 8 .1 6 9

4.6

124.4 23

5.0

5.06

6 .3 5

602.441

1.7

7.1

5.2

1 16.105

0.5

2.0

2.3

4 .9 3

5.91

6 1 3 .4 3 6

7.5

5.7

1 18.228

1.8

7 .5

3.8

5 .0 2

6 .7 2

5.3

6 1 4 .7 4 9

0.9

4.9

1 19.270

0.9

3.6

3.5

5 .1 0

6 .7 8

5.3

6 2 4 .6 0 8

1.8
0.2
1.6

6.6

5.5

120.393

0.9

3.8

4.2

4 .9 8

6 .3 4

1
2
3

5.3

639.631

2.4

10.0

6.2

1 21.940

1.3

5.2

5.0

5 .0 6

6 .5 6

4.9

6 3 3 .8 9 3

-0 .9

-3 .5

3.3

1 23.312

1.1

4.6

4.3

5 .0 5

6 .7 0

4.9

646.751

5.2

125.119

1.5

6.0

4.9

5 .0 5

6 .2 4

4.7

6 4 7 .8 9 4

2.0
0.2

8.4

4

1998

5.6
5.4

4

1997

1
2
3

0.7

3.7

127.321

1.8

7.2

5.8

5.09

5 .9 0

1
2

4.7

6 6 0 .9 7 5

2.0

8.3

3.3

127.702

0.3

1.2

4.7

5 .0 5

5 .5 9

4.4

6 7 3 .7 0 2

1.9

7.9

6.3

128.237

0.4

1.7

4.0

4.98

5 .6 0

5.2

2 0 4 .2 5 6

- 0.1

-0 .7

4.3

119.253

0.3

3.2

3.3

5 .0 5

6 .6 4

5.2

206.1 19

0.9

11.5

5.2

1 19.613

0.3

3.7

3.2

5.09

6 .8 3

1996 Aug
Sep
Oct
Nov
Dec
1997 Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
1998 Jan
Feb
Mar
Apr
May
Jun
Jul
Aug




5.3

208.1 13

1.0

12.2

6.4

1 19.650

3.7

4.99

6 .5 3

2 0 7 .8 4 4

- 0.1

-1 .5

5.2

120.587

0.0
0.8

0.4

5.4

9.8

4.3

5 .0 3

6.20

5.3

208.651

0.4

4.8

4.9

120.943

0.3

3.6

4.7

4.91

6 .3 0

5.3

21 1.170

1.2

15.5

6.4

121.288

0.3

3.5

5.2

5 .0 3

6.58

5.3

2 1 3 .9 4 5

1.3

17.0

6.2

1 2 2.0 64

0.6

8.0

4.6

5.01

6.42

5.2

2 1 4 .5 1 6

0.3

3.3

5.9

122.468

0.3

4.0

5.3

5 .1 4

6.69

5.0

21 1.018

- 1.6

-1 7 .9

3.6

123.073

0.5

6.1

4.7

5 .1 6

6.89

4.8

2 1 0 .5 3 2

- 0.2

-2 .7

2.4

123.3 16

2.4

4.3

5 .0 5

6.71

5.0

2 1 2 .3 4 3

0.9

10.8

4.0

123.546

0.2
0.2

2.3

3.9

4.93

6.49

4.9

2 1 4 .9 3 5

5.2

124.527

4.7

5 .0 5

6.22

8.1

5.9

125.246

0.8
0.6

10.0

2 1 6 .3 2 8

1.2
0.6

15.7

4.9

7.2

5.0

5 .1 4

6 .3 0

4.9

2 1 5 .4 8 8

-0 .4

-4 .6

4.5

125.5 85

0.3

3.3

5.0

4.95

6.21

4.8

2 1 5 .1 1 3

- 0.2

- 2.1

3.4

126.5 50

5.8

4.97

6 .0 3

2 1 5 .9 1 4

0 .4

4.6

3.9

127.5 28

0.8
0.8

9.6

4.6

9.7

5.8

5 .1 4

5 .8 7

4.7

2 1 6 .8 6 7

0 .4

5.4

3.9

1 2 7.8 84

0.3

3.4

5.7

5 .1 6

5.81

4.7

2 1 9 .0 0 4

1.0

12.5

3.7

127.8 13

- 0.1

-0 .7

5.4

5 .0 4

5 .5 4

4.6

220.866

0.9

10.7

3.2

127.3 27

-0 .4

-4 .5

4.3

5.09

5 .5 7

4.7

2 2 1 .1 0 5

0.1

1.3

3.1

127.9 66

0.5

6.2

4.5

5.0 3

5 .6 5
5 .6 4

4.3

2 2 2 .7 0 7

0.7

9.0

5.5

128.4 07

0.3

4.2

4.3

4 .9 5

4.3

2 2 5 .3 7 0

15.3

7.0

128.848

0.3

4.2

4.5

5 .0 0

5 .6 5

4.5

2 2 5 .6 2 5

1.2
0.1

1.4

6.3

127.4 56

- 1.1

- 12.2

3.2

4 .9 8

5 .5 0

4.5

2 2 4 .3 7 2

- 0.6

-6 .5

4.4

126.981

-0 .4

-4 .4

2.0

4 .9 6

5 .4 6

4.5

2 2 4 .8 1 7

0.2

2.4

3.9

129.0 96

1.7

21.9

3.1

4 .9 0

5 .3 4

25

HationaìEconom icTrends
nuuuwf rnceirm

wnsumw rnce hum

less Food and Energy

Consumer Price Index
Monthly/
Index
1993
1994
1995
1996
1997

Annual

Year

Year

quarterly

rate

ago

to date

144.6
148.3
152.5
157.0
160.6

Finished Goods

Percent chanae

Percent chanae
Index

Monthly/ Annual
rate
quarterly

Year

ago

to date

3.3
2.8
3.0
2.7
2.4

152.4
156.7
161.4
165.8
169.7

3.0
2.6
2.8
2.9
2.3

Year

Index

Percent chanae
Monthly/ Annual
Year
quarterly rate
ago

124.7
125.5
127.9
131.3
131.8

1.2
0.6
1.9
2.6
0.4

155.1
156.5
157.5
158.8

0.8
0.9
0.6
0.8

3.2
3.7
2.4
3.3

2.8
2.9
2.9
3.2

3.2
3.5
3.1
3.2

164.2
165.2
166.3
167.4

0.7
0.6
0.7
0.6

2.6
2.5
2.7
2.6

2.9
2.7
2.7
2.6

2.6
2.5
2.6
2.6

129.9
131.1
131.5
132.6

0.9
0.9
0.3
0.8

3.8
3.7
1.2
3.3

2.2
2.5
2.8
3.0

159.6
160.2
160.9
161.8

0.5
0.3
0.5
0.5

2.2
1.3
1.9
2.1

2.9
2.3
2.2
1.9

2.2
1.8
1.8
1.9

168.3
169.4
170.2
171.1

0.5
0.7
0.4
0.5

2.2
2.7
1.7
2.1

2.5
2.5
2.3
2.2

2.2
2.4
2.2
2.2

132.7
131.7
131.4
131.6

0.1
-0 .8
-0 .2
0.2

0.2
-3 .0
-0 .8
0.6

2.1
0.4
-0.1
-0 .8

2

162.0
162.8

0.1
0.5

0.5
2.0

1.5
1.6

0.5
1.2

172.1
173.2

0.6
0.7

2.4
2.7

2.3
2.2

2.4
2.5

130.5
130.5

-0 .8
0.0

-3 .3
0.0

-1 .6
-0 .9

1996 Aug
Sep

157.4
157.8

0.1
0.3

1.5
3.1

2.9
3.0

3.2
3.2

166.3
166.7

0.2
0.2

2.2
2.9

2.7
2.6

2.7
2.7

131.5
131.8

0.2
0.2

1.8
2.8

2.9
2.9

Oct

158.3
158.8
159.2

0.3
0.3
0.3

3.9
3.9
3.1

3.0
3.2
3.3

3.3
3.3
3.3

167.1
167.4
167.7

0.2
0.2
0.2

2.9
2.2
2.2

2.6
2.6
2.6

2.7
2.7
2.6

132.3
132.5
133.0

0.4

4.6

0.2
0.4

1.8
4.6

3.1
3.0
2.9

159.4
159.7

0.1

1.5

Feb
Mar

159.8

0.2
0.1

2.3
0.8

3.0
3.0
2.7

1.5
1.9
1.5

168.0
168.3
168.6

0.2
0.2
0.2

2.2
2.2
2.2

2.5
2.5
2.4

2.2
2.2
2.2

133.0
132.6
132.4

0.0
-0 .3
-0 .2

0.0
-3 .5
-1 .8

2.5
2.2
1.5

Apr

160.0
160.1
160.4

0.1
0.1
0.2

1.5
0.8
2.3

2.4
2.2
2.3

1.5
1.4
1.5

169.2
169.4
169.7

0.4
0.1

4.4
1.4

0.2

2.1

2.6
2.5
2.5

2.7
2.5
2.4

131.9
131.7
131.4

-0 .4
-0 .2
-0 .2

-4 .4
-1 .8
-2 .7

0.8
0.5
0.0

160.6
160.9
161.3

0.1
0.2
0.2

1.5
2.3
3.0

2.2

1.5
1.6
1.8

170.0
170.1
170.4

0.2
0.1
0.2

2.1
0.7
2.1

2.4
2.3
2.2

2.4
2.2
2.2

131.1

2.2
2.2

131.3
131.8

-0 .2
0.2
0.4

-2 .7
1.8
4.7

-0 .2
-0 .2
0.0

161.6
161.8
161.9

0.2
0.1
0.1

2.3
1.5
0.7

2.1
1.9
1.7

1.8
1.8
1.7

170.8
171.0
171.4

0.2
0.1
0.2

2.9
1.4
2.8

2.2
2.2
2.2

2.2
2.1
2.2

131.8
131.6
131.4

0.0
-0 .2
-0 .2

0.0
-1 .8
-1 .8

-0 .4
-0 .7
-1 .2

161.9
162.0
162.0

0.0
0.1
0.0

0.0
0.7
0.0

1.6
1.4
1.4

0.0
0.4
0.2

171.7
172.2
172.4

0.2
0.3
0.1

2.1
3.6
1.4

2.2
2.3
2.3

2.1
2.8
2.4

130.6
130.5
130.4

-0 .6
-0.1
-0.1

-7.1
-0 .9
-0 .9

-1 .8
-1 .6
-1 .5

162.4
162.9
163.0

0.2
0.3
0.1

3.0
3.8
0.7

1.5
1.7
1.6

0.9
1.5
1.4

172.9
173.3
173.5

0.3
0.2
0.1

3.5
2.8
1.4

2.2
2.3
2.2

2.6 '
2.7
2.5

130.6
130.5
130.4

0.2
-0.1
-0.1

1.9
-0 .9
-0 .9

-1 .0
-0 .9
-0 .8

163.3
163.6

0.2
0.2

2.2
2.2

1.7
1.7

1.5
1.6

173.8
174.2

0.2
0.2

2.1
2.8

2.2
2.4

2.4
2.5

130.7
130.2

0.2
-0 .4

2.8
-4 .5

-0 .3
-0 .8

1996

1

2
3
4
1997

1

2
3
4
1998

1

Nov

Dec
1997 Jan

May
Jun
Jul

Aug
Sep
Oct
Nov

Dec
1998 Jan

Feb
Mar

Apr
May
Jun
Jul

Aug


26


National EconomicTrends
Notes
Pages 4, 5: Final sales is gross domestic product (GDP) minus change
in business inventories. Advance, preliminary, and final GDP
growth rates are released during the first, second, and third months of
the following quarter. Changes result from incorporation of more com­
plete information. The Purchasing Managers’ Index is a weighted
average of diffusion indexes for new orders, production, supplier deliv­
eries, inventories, and employment. The National Association of Pur­
chasing Management (NAPM) surveys over 300 firms in 20 manufac­
turing industries, weighting responses by industry share of GDP. Ag­
gregate and average weekly hours are paid hours of production and
nonsupervisory employees. The inventory-sales ratio uses nominal
(current-dollar) inventory and sales data.
Page 6: The contribution of a component X, to the overall GDP
growth rate in quarter r is 100 x [(1 + (X, - X,.i)/GDP,.i)4 - 1]. The sign
is changed for imports. This calculation forces components to add up
to the GDP growth rate before compounding and does not exactly
match Survey o f Current Business, Table 8.2. The residual line is
calculated using the finest level of detail in the table.
Page 7: Ten-year Treasury yields are adjusted to constant maturity.
Three-month yields are secondary market averages, but all rates used in
the yield curves are adjusted to constant maturity. Standard and
Poor’s 500 Index with Reinvested Dividends shows the total return:
capital gains plus dividends.
Pages 8,9: Oil prices are monthly averages of daily spot prices for
West Texas intermediate crude (Wall Street Journal). Consumer price
index is for all urban consumers. The consumption chain price index
is the index associated with the personal consumption expenditures
component of GDP. The Employment Cost Index (ECI) covers pri­
vate nonfarm employers. ECI compensation refers to a fixed sample
of jobs, while compensation per hour covers all workers in the non­
farm business sector in a given quarter. In both cases, compensation is
wages and salaries plus benefits.
Pages 10,11: Nonfarm payroll employment is counted in a survey of
about 390,000 establishments (Current Employment Survey). It ex­
cludes self-employed individuals and workers in private households,
but double-counts individuals with more than one job. The household
survey (Current Population Survey) of about 50,000 households pro­
vides estimates of civilian employment, unemployment rate, labor force
participation rate, and employment-population ratio. Population is
civilian, noninstitutional, 16 years and over. New population controls
introduced in January 1997 affect levels and growth rates of household
survey employment, labor force and population. The unemployment
rate and other ratios are minimally affected. 90 percent confidence
intervals for the unemployment rate (± 0.2 percentage points) and
change in household survey employment (± 376,000) measure uncer­
tainty due to sample size. The household survey was changed in Janu­
ary 1994, so care should be exercised in making short-term compari­
sons around this date, particularly with the duration data shown on
page 10. Other changes in the survey are detailed in Bureau of Labor
Statistics, Employment and Earnings, Appendix A.
Pages 13: The Michigan consumer sentiment index shows changes
in a summary measure of consumers’ answers to five questions about
their current and expected financial situation, expectations about future
economic conditions, and attitudes about making large purchases. The
survey is based on a representative sample of U.S. households.
Pages 14, 15: Overall gross saving includes government saving, which
is the sum of the government surplus and capital consumption (see
notes for pages 16 and 17). Net foreign investment (NFI) is U.S.
investment abroad minus foreign investment in the U.S. Aside from a
statistical discrepancy, NFI also equals the difference between gross
domestic investment and saving.

and Product Accounts (NIPA). The unified federal budget deficit
differs from NIPA basis in four main ways: (1) NIPA excludes trans­
actions involving existing assets; (2) NIPA outlays exclude government
investment and include consumption of government capital, while
unified budget outlays do the reverse; (3) NIPA accounts exclude
Puerto Rico and U.S. territories; and (4) various timing issues are
handled differently. Outlays and receipts are from the NIP As, except
as noted. Since 1977, the federal fiscal year starts on October 1.
Excluded agency debt was 0.6 percent of federal debt at the end of
fiscal 1997. Federal debt held by the public includes holdings of the
Federal Reserve System and excludes holdings of the social security
and other federal trust funds. Federal grants in aid to state and local
governments appear in both state and local receipts and federal outlays.
Pages 18, 19: The trade balance (shown on a balance of payments
basis) is the difference between exports and imports of goods (mer­
chandise) and services. It is nearly identical in concept to the net ex­
ports component of GDP, but differs slightly in accounting details.
The investment income balance equals income received from U.S.owned assets in other countries minus income paid on foreign-owned
assets in the U.S. The investment income balance is nearly identical in
concept to the difference between gross national product and gross
domestic product, but differs in accounting details. The current ac­
count balance is the trade balance plus the balance on investment
income plus net unilateral transfers to the U.S. from other countries.
Pages 20, 21: Output per hour (Y/H), unit labor cost (C/Y), and
compensation per hour (C/H) are indexes which approximately obey
the following relationship: %(Y/H) + %(C/Y) = %(C/H) with %()
meaning percent changes. Unit labor cost is shown on page 9. Real
compensation per hour uses the CPI to adjust for the effects of infla­
tion. Multifactor productivity estimates changes in output that do not
correspond to changes in quantities of labor, capital, or intermediate
inputs. Inventory valuation adjustments (IVA) remove the effect of
changes in the value of existing inventories from corporate profits and
proprietors’ income. (This change in value does not correspond to
current production and therefore is not part of GDP). Capital con­
sumption adjustments (CCAdj) increase profits and proprietors’
income by the difference between estimates of economic depreciation
and depreciation allowed by the tax code. Components of national
income not shown are rental income of persons and net interest.

Sources
Bureau o f Economic Analysis (BEA), U.S. Dept, o f Commerce
National income and product accounts, international trade and in­
vestment data (except by country), auto and light truck sales
Census Bureau, U.S. Dept, o f Commerce
Inventory-sales ratios, retail sales, capital goods orders, housing
starts, exports and imports by country
Bureau o f Labor Statistics (BLS), U.S. Dept, o f Labor
All employment-related data, employment cost index, consumer and
producer price indexes, unit labor cost, output per hour, compensa­
tion per hour, total factor productivity
United States Department o f Treasury
Unified budget receipts, outlays, deficit, debt
Federal Reserve Board
Index of industrial production, treasury yields, exchange rates, capac­
ity utilization, household debt
The Survey Research Center, The University o f Michigan
Consumer sentiment index
The Conference Board
Help-wanted advertising index
Organization fo r Economic Cooperation and Development (OECD)
GDP for major trading partners (not available on FRED)

Pages 16, 17: Government consumption and investment is current
expenditures on goods and services, including capital consumption
(depreciation) and gross investment, as reported in the National Income




27

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