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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 this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. 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CONFIDENTIAL (FR) CLASS III -- FOMC December 18, SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System 1992 TABLE OF CONTENTS Page THE DOMESTIC NONFINANCIAL ECONOMY Initial claims for unemployment insurance. . . . . 1 Tables Unemployment insurance benefits . . . . . . . . .. . 2 Charts Unemployment insurance . . . . . . . 3 THE FINANCIAL ECONOMY Tables Monetary aggregates . .. . . . . . . . . . . . . . Commercial bank credit and short- and intermediate-term business credit. . . . . . . . . . . . Selected financial market quotations . .... . . .. 4 5 6 THE INTERNATIONAL ECONOMY U.S. merchandise trade through October . . . . . ... . . . 7 Tables Merchandise trade: Census-based data. . .. 8 SUPPLEMENTAL NOTES THE DOMESTIC NONFINANCIAL ECONOMY Initial Claims for Unemployment Insurance Initial claims, adjusted for the effect of the emergency unemployment compensation (EUC) program, moved up to an adjusted level of 376,000 during the week ended December 5. Seasonal adjustment problems associated with the Thanksgiving holiday likely reduced the level of claims during the preceding week and imparted an offsetting boost to the level of claims during the most recent week. However, the average of claims (including the EUC effect) over this two-week period--363,000--was well below that recorded in recent months. The level of insured unemployment held about unchanged at 3.02 million during the week ended November 28. Like initial claims, the level of insured unemployment also has been biased downward by the EUC program during recent months. this effect Correcting for requires assumptions about how long new claimants continue to receive benefits; staff estimates suggest that a bias of around 200.000 persons--about two-thirds of the decline since July-is the right order of magnitude. -2December 18, 1992 UNEMPLOYMENT INSURANCE BENEFITS (In thousands) 1992 Oct. 24 Oct. 31 Nov. 7 Nov. 14 Nov. 21 Nov. 28 Dec. 5 -------- Seasonally adjusted; BLS basis 1 - -- -- - Initial claims All regular programs 2 State programs Insured unemployment Total All regular programs 3 State programs Extended benefits Emergency unemployment benefits 4 369 360 363 355 394 386 381 374 370 362 330 325 356 347 3119 3119 3008 3086 3086 2976 3141 3141 3033 3036 3036 2920 3001 3001 2902 3022 3022 2902 -- * * * * * 1506 1501 1410 1597 1305 1660 2.9 2.8 2.9 2.8 2.9 2.8 State-insured Unemployment rate 5 Not ----------- seasonally adjusted------------ Regular state programs Initial claims Insured unemployment 1. 2. 3. 4. 5. * 333 2518 332 2530 392 2512 348 2725 402 2412 Only regular state components are seasonally adjusted. Includes federal employees and ex-servicemen. Includes federal employees, railroad workers, and ex-servicemen. Not seasonally adjusted Percent of covered employees receiving regular state benefits. Less than 500 people received extended benefits. 317 3015 449 -3- UNEMPLOYMENT INSURANCE Seasonally Adjusted, BLS Basis ADJUSTED INITIAL CLAIMS* Thousands All regular programs Dec. 5 375.5 1982 1984 1986 1988 1990 INSURED UNEMPLOYMENT Millions EMERGENCY BENEFITS Nov. 28 1.7 Q4 Q1 1992 . Q2 Q3 1992 All regular programs 1990 1992 benefits program by individuals also eligible to *Initial claims adjusted to include initial claims filed under the emergency unemployment file under regular programs. 1982 1984 1986 1988 -4MONETARY AGGREGATES (based on seasonally adjusted data unless otherwise noted) 1991 1 -----------1. 2. 3. 1992 Q2 1992 Q3 1992 Sep 1992 Oct 1992 Nov p Growth Q4 91Nov 9 2p Percent change at annual rates---------------------- Ml M2 M3 9.8 0.4 -1.3 10.3 0.2 -0.1 19.1 3.7 1.8 22.7 5.2 0.4 13.9 3.5 1.8 Percent change at annual rates------------ ------------ 14.5 2.3 0.6 Levels bil. $ Nov 9 2p Selected components 4. 5.6 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Overnight RPs and Eurodollars, NSA General purpose and broker/dealer money market mutual fund shares Commercial banks Savings deposits (including MMDAs) Small time deposits Thrift institutions 15. Savings deposits (including MMDAs) 6. Small time deposits 17. M3 minus M2 18. 19. 3 Large time deposits At commercial banks, net 4 20, 21. At thrift institutions Institution-only money market 22. 23. mutual fund shares Term RPs, NSA Term Eurodollars, NSA 20.8 8.5 637.8 5.8 12.5 11.2 11.4 17.4 26.9 8.4 30.8 6.7 10.7 290.0 339.2 11.0 8.8 12.9 25.9 23.1 381.2 -3.0 -3.6 -2.3 -1.7 -0.8 2488.2 -7.0 -27.7 15.7 -25.3 12.9 -6.4 3.9 7.1 13.3 1.1 -6.9 9.3 -16.8 -3.9 0.5 12.0 -13.3 -6.7 18.9 -29.4 -8.2 -1.8 10.0 -16.7 -4.7 8.3 -17.7 -17.2 2.5 16.7 -16.8 -2.1 10.8 -15.9 10.1 1.1 14.7 -18.0 -8.1 8.8 -26.6 3.8 -1.4 10.3 -18.0 -4.3 10.1 -20.2 348.7 1261.4 749.8 511.6 804.6 431.8 372,9 -5.7 M2 minus M1 2 22.8 1.1 Other checkable deposits 11.2 12.4 Currency Demand deposits 9.1 8.4 3.4 M1-A -9.3 -1.8 -7.5 -23.6 -6.6 682.9 -11.7 -5.1 -31.7 -18.9 -14.8 -37.0 -16.2 -16.0 -16.8 -14.4 -16.7 -3.5 -21.5 -25.4 -1.8 -11.9 -9.4 -24.7 369.5 303.0 66.5 33.4 -22.0 -11.0 20.1 7.8 -22.7 39.9 2.2 -25.6 0.0 29.5 -64.0 -64.1 35.2 -12.5 -12.3 32.6 10.1 203.5 79.4 47.8 74.6 ----- Average monthly change in billions of dollars---MEMORANDA: 5 24. Managed liabilities at commercial banks (25+26 25. 26. 27. Large time deposits, gross Nondeposit funds -0.6 -0.2 -0.4 -3.1 -4.8 1.7 0.4 -3.7 4.1 3.5 -3.4 6.9 -8.4 -7.9 -0.5 -3.5 -3.3 -0.2 673.9 370.0 303.9 0.4 -0.8 5.0 -3.3 0.5 3.6 3.0 3.9 3.5 -4.0 -0.9 0.7 64.4 239.5 0.2 1.3 -0.1 -7.2 -3.0 -3.2 19.2 Net due to related foreign institutions 6 28. Other 29. U.S. government deposits at commercial 7 banks 1. 2. 3. 4. 5. Amounts shown are from fourth quarter to fourth quarter. Nontransactions MZ is seasonally adjusted as a whole. The non-M2 component of M3 is seasonally adjusted as a whole. institutions. Net of large denomination time deposits held by money market mutual funds and thrift Dollar amounts shown under memoranda are calculated on an end-month-of-quarter basis. 6. Consists of borrowing from other than commercial banks in the form of federal funds purchased, securities for borrowed money (including borrowing from the sold under agreements to repurchase, and other liabilities Federal Reserve and unaffiliated foreign banks, loan RPs and other minor items). Data are partially estimated. Consists of Treasury demand deposits and note balances at commercial banks. - preliminary COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT 1 (Percentage change at annual rate, based on seasonally adjusted data) 1990 Dec. to 1991 Dec. 1992 Q2 1992 Q3 1992 Sep. 1992 Oct. 1992 Nov. p Level, bil.$ 1992 Nov. p Commercial bank credit 1. Total loans and securities at banks 2. Securities 3. U.S. government 4. Other 5. Loans 3.9 3.0 4.1 6.7 4.8 17.7 16.5 15.1 7.4 11.7 9.5 831.6 23.8 21.9 17.8 9.3 13.3 13.9 653.7 1.6 -2.0 5.9 0.0 6.7 -6.7 177.9 -0.2 -1.8 0.0 6.5 2.1 3.0 2,105.0 4.8 2,936.6 6. Business -2.8 -4.2 -0.9 4.8 0.4 5.2 606.0 7. Real estate 2.9 0.2 0.5 5.3 5.8 3.1 889.5 8. Consumer -3.9 -3.0 -2.6 -2.0 -4.0 -1.4 354.5 9. Security 21.3 22.4 12.5 71.0 -9.1 -23.7 64.4 Other -2.8 -9.0 1.5 11.6 4.5 14.0 190.7 10. Short- and intermediate-term business credit 11. Business loans net of bankers acceptances -2.4 -3.7 -1.2 5.0 -1.6 4.4 598.8 12. Loans at foreign branches 2 -1.6 26.3 1.6 4.9 14.8 29.1 25.3 13. Sum of lines 11 and 12 -2.4 -2.6 -1.1 4.8 -1.0 5.4 624.1 -10.4 -3.9 7.1 1.7 20.2 49.6 151.3 -3.9 -2.9 0.5 4.4 2.7 13.9 775.4 -16.2 -27.3 -19.5 -25.1 5.1 -25.5 23.0 1.4 -1.6 8.6 4.3 -2.4 n.a. -2.9 -3.1 2.2 3.7 1.4 n,a. 14. Commercial paper issued by nonfinancial firms 15. Sum of lines 13 and 14 16. Bankers acceptances, U.S. traderelated 3 ,4 17. Finance company loans to business 4 18. Total (sum of lines 15, 16, and 17) 304.5 5 1,094.5 1. Average of Wednesdays. Data are adjusted for breaks caused by reclassifications. 2. Loans at foreign branches are loans made to U.S. firms by foreign branches of domestically chartered banks. 3. Consists of acceptances that finance U.S. imports, U.S. exports, and domestic shipment and storage of goods. 4. Based on average of data for current and preceding ends of month. 5. October 1992. p--Preliminary. n.a.--Not available. 5 -61 SELECTED FINANCIAL MARKET QUOTATIONS (percent) 1992 1992 1992 Change from: . . . . . .. Sept 4 . . . . . . . . . . . . . . . ..-- -- - -- - FOMC Nov 17 Dec 17 FOMC Sept 4 Nov 17 Short-term rates Short-term rates Federal funds" 3.19 3.04 2.94 -0.25 -0.10 Treasury bills 3 3-month 6-month 1-year 2.92 2.96 3.06 3.17 3.38 3.54 3.20 3.37 3.58 0.28 0.41 0.52 0.03 -0.01 0.04 Commercial paper 1-month 3-month 3.22 3.22 3.29 3.83 3.69 3.66 0.47 0.44 0.40 -0.17 Large negotiable CDs 3 1-month 3-month 6-month 3.06 3.06 3.11 3.18 3.77 3.77 3.41 3.39 3.49 0.35 0.33 0.38 0.23 -0.38 -0.28 3.31 3.31 3.13 3.88 3.44 3.44 0.13 0.13 0.31 -0.44 6.00 6.00 6.00 0.00 0.00 U.S. Treasury (constant maturity) 3-year 4.38 10-year 6.40 30-year 7.29 5.21 6.86 7.55 5.21 6.77 7.43 0.83 0.37 0.14 0.00 -0.09 -0.12 Municipal revenue5 (Bond Buyer) 6.31 6.57 6.44 0.13 -0.13 Corporate--A utility recently offered 8.06 8.45 8.27 0.21 -0.18 Home mortgage rates 6 FHLMC 30-yr. FRM FHLMC 1-yr. ARM 7.84 5.15 8.32 5.20 8.23 5.47 0.39 0.32 -0.09 0.27 Eurodollar deposits 1-month 3-month 4 Bank prime rate Intermediate- and long-term rates .............................................................................................. 1989 Record highs Date Lows Jan 3 1992 FOMC Nov 17 Dec 17 Percent change from: Record highs 1989 lows FOMC Nov 17 -4.22 -0.47 -6.82 -1.30 -0.60 52.44 55.27 27.91 73.94 56.42 2.38 3.47 1.60 5.01 3.69 Stock prices Dow-Jones Industrial 3413.21 NYSE Composite 240.24 AMEX Composite 418.99 NASDAQ (OTC) 667.12 Wilshire 4278.27 6/1/92 2144.64 3193.32 3269.23 12/8/92 154.00 231.09 239.12 2/12/92 305.24 384.29 390.42 12/8/92 378.56 627.07 658.46 12/8/92 2718.59 4101.16 4252.45 .............................................................................................. One-day quotes except as noted. Average for two-week reserve maintenance period closest to date shown. Last observation is average to date for maintenance period ending December 23. 1992. 3/ Secondary market. 4/ Bid rates for Eurodollar deposits at 11 a.m. London time. 5/ Based on one-day Thursday quotes and futures market index changes. 6/ Quotes for week ending Friday previous to date shown. THE INTERNATIONAL ECONOMY U.S. Merchandise Trade through October The U.S. merchandise trade deficit narrowed substantially in October to $7.0 billion (seasonally adjusted, Census basis) from a revised September deficit of $8.6 billion. Exports grew 3 percent and imports declined slightly. The growth of exports in October was primarily in capital goods (partly aircraft and partly machinery other than computers), nonmonetary gold, and consumer goods. The level of exported capital goods in October was 4 percent higher than the third-quarter average; exported consumer goods were also substantially higher than in the third quarter. The decline in imports was in consumer goods (from a strong September level) and passenger cars from Canada. Non-oil imports in October were about 1 percent above the average for the third quarter. The value of oil imports rose slightly in October; the price of oil increased by about 10 cents per barrel and the quantity imported declined slightly from the September average. Table 1 December 17, 1992 Merchandise Trade: Census-Based Data (in billions of dollars, seasonally adjusted*) Exports Total Ag. 363.8 393.6 421.7 1989 1990 1991 I NonAg. I Imports Total Oil NonOil I Balance 42.2 40.2 40.1 321.6 353.4 381.6 473.2 495.3 487.1 50.4 62.2 51.2 422.8 433.2 435.9 -109.4 -101.7 -65.4 51.8 Quarters at annual rates: Qtr 1 2 3 4 408.4 420.8 419.7 440.7 39.3 37.9 40.1 43.3 369.1 382.9 379.7 397.4 474.6 476.5 494.6 503.1 51.8 52.5 48.8 422.9 424.7 442.1 454.3 -66.2 -55.7 -74.9 -62.4 1992 Qtr 1 2 3 440.8 441.2 445.9 43.2 42.2 45.7 397.6 399.0 400.3 499.9 525.4 545.5 41.9 52.3 57.0 458.0 473.2 488.5 -59.1 -84.3 -99.6 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 31.6 31.7 33.2 32.0 32.5 33-7 32.3 32.6 32.3 34.5 33.6 33.8 3.7 3.4 3.6 3.4 3.4 3.5 3.2 3.3 3.2 3.1 3.3 3.1 28.0 28.3 29.5 28.7 29.2 30.2 29.1 29.2 29.1 31.3 30.3 30.7 41.4 39.2 41.8 39.8 40.6 40.7 41.3 41.8 41.3 43.9 43.1 40.0 5.8 5.2 4.8 4.1 4.6 4.2 4.2 5.3 5.9 6.3 6.5 5.3 35.5 34.0 37.0 35.7 36.0 36.5 37.1 36.5 35.4 37.6 36.6 34.7 -9.8 -7.5 -8.6 -7.8 -8.1 -7.0 -9.0 -9.2 -9.0 -9.4 -9.5 -6.2 1991 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 34.3 33.7 34.2 35.5 35.0 34.7 35.2 34.5 35.3 36.8 37.3 36.1 3.1 3.4 3.4 3.2 3.3 3.0 3.4 3.3 3.3 3.6 3.5 3.7 31.2 30.3 30.8 32.2 31.7 31.7 31.8 31.2 32.0 33.3 33.7 32.3 41.2 39.0 38.5 39.7 40.0 39.4 40.8 41.1 41.8 42.7 41.4 41.7 5.2 4.0 3.7 4.1 4.6 4.3 4.1 4.5 4.5 4.1 4.1 3.9 35.9 34.9 34.8 35.7 35.4 35.1 36.8 36.5 37.2 38.6 37.2 37.8 -6-9 -5.3 -4.3 -4.3 -5.0 -4.7 -5.6 -6.6 -6.5 -5.9 -4.1 -5.6 1992 Jan Feb Mar Apr 35.5 37.7 37.1 36.4 35.7 38.2 37.8 35.8 37.9 39.2 3.6 3.7 3.5 3.8 3.3 3.5 3.9 3.6 4.0 4.1 31.9 33.9 33.6 32.7 32.4 34.7 33.9 32.2 33.9 35.1 41.3 41.0 42.7 43.5 42.9 45.0 45.1 44.8 46.5 46.2 3.7 3.3 3.5 4.0 4.2 4.8 4.8 4.6 4.8 4.9 37.6 37.6 39.2 39.5 38.7 40.1 40.3 40.2 41.7 41.4 -5.8 -3.3 -5.6 -7.1 -7.2 -6.8 -7.3 -9.0 -8.6 -7.0 1991 Monthly Rates: 1996 Jan May Jun Jul Aug Sep Oct * All data are on a revised end-use basis. Source: U.S. Department of Commerce, Bureau of the Census, Customs Valuation.
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