View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Prefatory Note

The attached document represents the most complete and accurate version available
based on original copies culled from the files of the FOMC Secretariat at the Board
of Governors of the Federal Reserve System. This electronic document was created
through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned
versions text-searchable. 2 Though a stringent quality assurance process was
employed, some imperfections may remain.
Please note that some material may have been redacted from this document if that
material was received on a confidential basis. Redacted material is indicated by
occasional gaps in the text or by gray boxes around non-text content. All redacted
passages are exempt from disclosure under applicable provisions of the Freedom of
Information Act.

  In some cases, original copies needed to be photocopied before being scanned into electronic
format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced
tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other
blemishes caused after initial printing).
 A two-step process was used. An advanced optical character recognition computer program (OCR)
first created electronic text from the document image. Where the OCR results were inconclusive,
staff checked and corrected the text as necessary. Please note that the numbers and text in charts and
tables were not reliably recognized by the OCR process and were not checked or corrected by staff. 

Content last modified 6/05/2009.




Prepared for the
Federal Open Market Committee

By the Staff
Board of Governors
of the Federal Reserve System

November 30, 1964.


The Domestic Economy
New orders for durable goods, which had been originally
reported down 4.5 per cent in October, are now shown to have declined
only 2 per cent.

The decline was due to the General Motors strike,

which, however, resulted in a somewhat smaller decline in the auto industry than was indicated earlier.

The revised figures show a considerably

larger rise in new orders for aircraft than was estimated earlier.
over, new orders for machinery were revised upward somewhat.


New orders

for nonelectrical machinery have been nearly stable since last April.
The seasonally adjusted book value of manufacturers' inventories increased over $550 million in October.

This was the largest

increase for the year to date, and it may reflect some accumulation of
stocks of auto materials and parts during the General Motors strike.
Durable goods manufacturers accounted for $350 million of the October
increase, and the level of durable goods' inventories at the end of September has been revised upward to show accumulation of $250 million in
that month instead of the $170 million indicated earlier.

In nondurable

goods industries, accumulation totaled over $200 million in October,
bringing the book value of inventories back to about last May's level
and slightly above the level at the end of 1963.
According to the latest Census Bureau quarterly Survey of Consumer Buying Intentions, consumer demands for new autos and household durable goods have strengthened further in recent months.

The new survey--

which, according to the Census Bureau may not be entirely comparable with
preceding surveys because of the introduction of a new form--shows that

in mid-October 10.4 per cent of families were planning to buy a new car
within 12 months.

This is significantly above the 9 per cent reported

last summer and 8.9 per cent in October 1963.

Also, 23.5 per cent of

families surveyed expressed intentions to buy major household durable
items, as compared with 21.8 per cent in July and 21.5 per cent in
October a year ago.

The Domestic Financial Situation
Markets for corporate and municipal bonds steadied in the latter
part of last week, when it was announced that the major countries of the
world are prepared to lend the Bank of England $3 billion to support the
pound in its current crisis.

Earlier in the week, the successive U.K.

and U.S. discount rate actions had been followed by yield advances ranging from 4-7 basis points in the various municipal bond series and from
1 to 3 basis points in the "seasoned" corporate bond series.

More recently

offered corporate bonds showed increases of as much as 7 basis points.


most issues, however, these increases only partly offset the decline in
yields that had accompanied the general bond market rally from late
October to mid-November.
In the face of last week's sterling crisis, U.S. stock market
prices backed away from the record high reached the preceding Friday.
Standard and Poor's composite index of 500 stocks declined about 1 per cent
to 85.16, a level slightly below the earlier high reached in mid-October.
Yields on short-term U.S. Government securities have adjusted
slightly higher and longer-term yields have been steady since the discount
rate was raised (by several Reserve Banks) on November 24.

At midday

November 30, 91-day Treasury bills were quoted 3.83 per cent bid, up from
a closing level of 3.80 per cent on November 24.

The money supply, seasonally adjusted, is now estimated on a
preliminary basis at $158.8 billion in November, about $200 million higher
than in October.

Since the June-July bulge, the money supply has expanded

at an annual rate of 4.1 per cent, about the same as the rate thus far
this year.
Preliminary estimates indicate that time and savings deposits
may have increased about $1.9 billion in November.

This was the largest

one-month rise since February 1962, and brought the annual rate of expansion
thus far this year to 12.3 per cent.
International Developments
Since last Wednesday's announcement of the international assistance
package for Britain, there has been some appreciation in the spot rate for
the pound to about 279.20 cents, but the forward discount for 3-month
contracts has widened to more than 2-3/4 per cent per annum.


money markets have still not fully digested the events of last week.

In Broad Review, page I-1, paragraph 2, change to:
On Tuesday (November 24), the 3-month bill closed at 3.80
per cent, but prior to that had remained in the 3.54 - 3.60
per cent range for some time.