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Confidential (FR) Class III FOMC March 14, 2003 CURRENT ECONOMIC AND FINANCIAL CONDITIONS Supplemental Notes Prepared for the Federal Open Market Committee by the staff of the Board of Governors of the Federal Reserve System Contents The Domestic Nonfinancial Economy . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Industrial Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Producer Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Retail Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Consumer Sentiment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Tables Selected Components of Industrial Production . . . . . . . . . 2 Capacity Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Producer Price Indexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Changes in Manufacturing and Trade Inventories . . . . . . . 6 University of Michigan Survey Research Center: Survey of Consumer Attitudes . . . . . . . . . . . . . . . . . . 8 Charts Book Value Inventories Relative to Shipments and Sales: Manufacturing and Trade . . . . . . . . . . . . . . . . . . . . . . 6 Inventory-Consumption Ratios, Flow-of-Goods System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 The International Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 U.S. International Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Prices of Internationally Traded Goods . . . . . . . . . . . . . . . . . . . . . 9 Non-oil Imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 U.S. Current Account Through 2002:Q4 . . . . . . . . . . . . . . . . . . . 11 U.S. International Financial Transactions . . . . . . . . . . . . . . . . . . 11 Tables Prices of U.S. Imports and Exports . . . . . . . . . . . . . . . . . 10 U.S. Current Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Summary of U.S. International Transactions . . . . . . . . . . 13 Chart Oil Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 -iiThe Domestic Financial Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Tables Selected Financial Market Quotations . . . . . . . . . . . . . . . 14 Commercial Bank Credit . . . . . . . . . . . . . . . . . . . . . . . . . 15 Supplemental Notes The Domestic Nonfinancial Economy Industrial Production Industrial production rose 0.1 percent in February, following a sharp increase in January. Utilities output rose 1.3 percent, pushed up by relatively colder weather, and mining production climbed 1 percent. However, manufacturing production was pulled down by a sharp drop in motor vehicles assemblies. With manufacturing capacity estimated to have edged up 0.1 percent last month, the factory operating rate moved down 0.2 percentage point to 73.4 percent, 6.8 percentage points below its long-term average. Motor vehicle assemblies slumped 600,000 units (annual rate) in February to 12.3 million units, with all of the decrease in automobiles. Despite this decline, we estimate that the stocks of light vehicles rose further, ending last month well above a level consistent with the average rate of light vehicle sales in the last six months and with manufacturers’ desired days’ supply. Assemblies of medium and heavy trucks increased 21,000 units last month, but at 230,000 units, production remained weak. The output of high-tech goods expanded 2.1 percent in February, a second sizable monthly gain. February production of semiconductors rose sharply from an upward-revised January level. The production of microprocessor units was especially robust. The output of computers continued to climb, consistent with Gartner’s near-term outlook, but the production of communications equipment slipped 1/2 percent after having risen noticeably in January. Excluding motor vehicles and parts and high-tech goods, factory output was flat last month. Refining activity rose 0.6 percent, but retraced only a fraction of the drop in the previous month. Among the market groups excluding motor vehicles and parts, high-tech goods, and energy products, the production of consumer goods declined 0.2 percent, pushed down by sharp decreases in the output of food, beverages, and clothing. The output of business equipment edged up 0.1 percent, boosted in part by an increase in the production of industrial and other equipment. The production of materials was unchanged in February; a decrease in the output of durable materials offset a similar-sized increase among producers of nondurables. The production of iron and steel products fell for the fourth straight month. Inventories have begun piling up at steel service centers, while shipments have been moving down. The inventory-sales ratio at steel service centers rose to 3.97 months in January, its highest level since the early 1990s. According to updated estimates of the staff’s flow-of-goods inventory measurement system, the inventory-consumption ratio for iron and steel, Selected Components of Industrial Production (Percent change from preceding comparable period) Proportion 2002 Component Total Previous 2002 20022 1 (percent) 20023 20033 H2 Q4 Dec. Jan. Feb. 100.0 100.0 1.5 1.5 .1 .2 -3.1 -2.9 -.6 -.4 .8 .7 .1 ... 84.7 78.3 71.6 1.1 .2 -.4 -.2 -.8 -1.4 -3.4 -3.2 -3.9 -.7 -.3 -.3 .6 .2 .1 -.1 .2 .0 Mining Utilities 6.3 9.0 -1.9 7.7 .8 2.4 1.3 -3.3 1.9 -1.4 -1.8 4.0 1.0 1.3 Selected industries High technology Computers Communications equipment Semiconductors4 6.6 1.3 2.3 3.0 7.1 19.9 -16.6 19.6 7.0 17.1 -18.7 22.1 6.5 25.5 -16.1 14.1 -.7 1.5 -2.6 -.7 1.9 1.2 3.0 1.5 2.2 1.4 -.5 4.2 Motor vehicles and parts 6.5 10.9 5.6 -5.5 -4.9 4.5 -2.4 21.9 -1.3 -2.4 -3.8 -.3 .2 -.2 18.5 -1.6 -2.2 -4.5 -.4 .3 -.1 7.8 -6.0 -5.3 -7.6 -1.1 .5 .1 25.3 1.1 -.5 -3.9 .0 -.1 .0 11.7 1.6 -.1 -4.7 .3 -.9 .3 Manufacturing Ex. motor veh. and parts Ex. high-tech industries Market groups excluding energy and selected industries Consumer goods Durables Nondurables Business equipment Defense and space equipment Construction supplies Business supplies Materials Durables Nondurables 1. Fourth-quarter to fourth-quarter change. 2. Annual rate. 3. Monthly rate. 4. Includes related electronic components. ... Not applicable. Capacity Utilization (Percent of capacity) 19722002 average 1982 low 199091 low Q2 Q3 Q4 Jan. Feb. Total industry 81.3 70.8 78.6 75.7 76.2 75.4 75.6 75.6 Manufacturing High-tech industries Excluding high-tech industries 80.2 79.3 80.2 68.6 75.6 68.1 77.2 74.6 77.3 73.9 62.2 75.3 74.3 62.2 75.8 73.5 62.1 75.1 73.6 62.3 75.1 73.4 63.1 74.9 Mining Utilities 86.9 86.7 78.6 77.2 83.3 84.2 84.8 87.8 84.9 88.2 85.1 86.0 85.0 87.8 85.8 88.5 Sector 2002 2003 -3- wherever held, has moved up in recent months. However, as noted in Part 2, the system shows that inventories overall are low, with a large fraction of industries having inventory-consumption ratios of their products below their historical averages. The aggregate manufacturing ratio moved up in February, but this increase was primarily the result of sharp increases in stocks of motor vehicles and aircraft. Excluding these industries, the aggregate inventory-consumption ratio ticked down. Producer Prices The producer price index for finished goods rose 1 percent in February, boosted by substantial increases in prices for food and energy items. Over the twelve months ended in February, the PPI rose 3.5 percent, after having fallen 2.6 percent during the preceding year. Finished energy prices surged 7.4 percent in February, following a 4.8 percent increase the previous month, as the run-up this year in spot prices for petroleum products continued to work its way through the supply chain. Prices for fuel oil soared 25.2 percent, prices for gasoline jumped 18.8 percent, and prices for natural gas rose 4.8 percent. Over the twelve months ended in February, finished energy prices were up almost 25 percent, more than retracing a decline of around 20 percent in the preceding year. Food prices rose 0.6 percent in February, on the heels of a 1.6 percent jump in January. Prices for beef and pork climbed substantially in February, but the rate of increase was below January’s pace; that pattern is consistent with recent reports from spot cattle and hog markets that the spurt in meat prices has begun to subside. Excluding food and energy, the PPI for finished goods fell 0.5 percent in February; averaging over the past three months, this index has been about flat. With dealer incentives having been reduced, prices for new cars and light trucks fell substantially in February, partly reversing January’s surge. Over the past twelve months, the PPI for core finished goods rose 0.1 percent, down from a 0.7 percent increase in the preceding year. The PPI for capital goods fell 0.4 percent in February, reflecting both the declines for automobiles, noted above, and a 6.3 percent decline in computer prices. February’s drop in computer prices was substantially larger than has been typical in recent reports, and it brought the twelve-month decline in computer prices to almost 23 percent, compared with a decrease of about 29 percent in the previous year. Prices for core intermediate materials rose 0.7 percent in February, as the run-up in energy prices continued to show through to energy-intensive intermediate -4PRODUCER PRICE INDEXES (Percent) ———————————————————————————————————————————————————————————————————————————— From 12 From 3 months earlier months earlier 2003 ——————————————— ——————————————— ——————————————— Feb. Feb. Nov. Feb. 2002 2003 2002 2003 Jan. Feb. ———————————————————————————————————————————————————————————————————————————— -Annual rateTotal finished goods Food Energy Ex. food and energy Ex. tobacco Core consumer goods Capital equipment Intermediate materials Ex. food and energy -Monthly rate- -2.6 3.5 2.9 10.1 1.6 1.0 1.6 -20.8 0.7 0.4 0.0 24.8 0.1 -0.1 1.4 11.1 1.6 1.7 10.7 61.9 -0.3 -0.3 1.6 4.8 0.9 0.9 0.6 7.4 -0.5 -0.5 1.0 0.1 0.5 -0.5 1.8 0.9 0.0 0.0 0.9 0.7 -0.5 -0.4 -4.6 -2.0 6.7 2.7 5.1 2.4 13.2 3.5 1.3 0.3 2.1 0.7 Crude materials -30.6 36.8 43.1 71.9 6.9 4.8 Ex. food and energy -6.4 14.5 4.1 18.2 1.0 2.7 ———————————————————————————————————————————————————————————————————————————— -5- materials such as industrial chemicals, nitrogenates, and plastics. The twelvemonth change in prices of core intermediate materials stood at 2.7 percent, compared with a decline of 2 percent the previous year. At the crude level, prices other than food and energy rose 2.7 percent in February, and were up 14.5 percent over the twelve months ended in February. Retail Inventories The book value of retail inventories increased at an annual rate of $36.7 billion in January. Excluding stocks held by auto dealers, retail inventories moved up at a $5 billion rate, following an $11.8 billion accumulation in the fourth quarter. Non-auto retail sales increased 1.5 percent in January, and the inventory-sales ratio declined to 1.40 months, the lowest ratio since 1992 when comparable data are first available. Inventory investment in January was paced by an accumulation at motor vehicles and parts dealers ($31.7 billion). Elsewhere, stock building at clothing and accessory stores more than offset liquidations at retailers of general merchandise and building materials. Apart from autos, only inventorysales ratios at furniture and appliance stores appear elevated relative to trend. For the entire manufacturing and trade sector excluding wholesale and retail motor vehicles, book-value inventories declined at an annual rate of $1.9 billion in January, following a $21.5 billion accumulation in the fourth quarter. Sales in this broad category increased in January, and the inventorysales ratio moved down to 1.30 months after having ticked up in December. Consumer Sentiment According to the preliminary report, the Michigan Survey Research Center’s (SRC) index of consumer sentiment fell again in early March to a level 5 points below the February reading. This index has dropped about 12 points since December and now stands at 75, its lowest level since late 1992. The current-conditions component of the overall SRC index sank more than 8 points in early March. Consumers’ assessments of their current personal finances deteriorated owing to concerns about rising energy prices, weak labor markets, and falling stock prices. In addition, appraisals of buying conditions for large household durables fell to the lowest level in more than ten years, with respondents citing concerns about job and income prospects. The expected-conditions component of the overall index decreased about 3 points, as households’ assessments of their expected personal financial situation weakened a fair bit and assessments of business conditions over the next twelve months dipped. -6- Changes in Manufacturing and Trade Inventories (Billions of dollars, seasonally adjusted book value, annual rate) Category Q2 Manufacturing and trade Less wholesale and retail motor vehicles 2002 Q3 2002 Nov. Q4 Dec. 2003 Jan. 12.6 50.5 49.4 41.1 93.3 27.4 -11.5 27.8 21.5 10.4 92.2 -1.9 -12.8 -10.7 4.6 10.2 6.3 4.4 -10.2 -5.9 32.8 20.2 -1.8 -5.1 Merchant wholesalers Less motor vehicles -5.6 -7.7 12.2 10.1 7.0 3.5 11.0 4.5 26.8 30.6 -7.5 -5.2 Retail trade Automotive dealers Less automotive dealers 31.0 22.0 9.0 33.7 20.6 13.1 36.2 24.4 11.8 40.3 24.2 16.1 33.7 4.8 28.9 36.7 31.7 5.0 Manufacturing Less aircraft Book Value Inventories Relative to Shipments and Sales: Manufacturing and Trade Ratio 1.70 1.70 Retail trade ex. motor vehicles 1.55 1.55 Manufacturing Jan. 1.40 1.25 1.10 1.40 1.25 Wholesale trade ex. motor vehicles 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 1.10 2002 Inventory-Consumption Ratios, Flow-of-Goods System 63 Days’ supply 63 62 62 61 61 Total 60 60 59 59 58 58 Feb. 57 56 Excluding motor vehicles and parts 57 56 55 55 54 54 53 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 53 -7- Among those items not included in the overall index, expectations about the change in unemployment over the next twelve months worsened slightly in early March, and appraisals of buying conditions for homes fell considerably. In contrast, assessments of buying conditions for cars retraced a small part of their decline in preceding months. In early March, the mean of expected inflation over the next twelve months increased to 3.6 percent, and the median rose to 3.1 percent. These measures have climbed between 1/2 and 1 percentage point in the past two months. The mean of expected inflation over the next five to ten years edged down to 2.9 percent, while the median was unchanged at 2.7 percent for the third consecutive month. -8March 14, 2003 University of Michigan Survey Research Center: Survey of Consumer Attitudes Indexes of consumer sentiment (Not seasonally adjusted) 2002 2003 Category Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.P Composite of current and expected conditions1 Current conditions1 Expected conditions1 87.6 98.5 80.6 86.1 95.8 79.9 80.6 92.4 73.1 84.2 93.1 78.5 86.7 96.0 80.8 82.4 97.2 72.8 79.9 95.4 69.9 75.0 87.1 67.2 110 131 103 130 99 132 97 129 104 135 107 126 102 127 93 120 95 97 100 91 74 87 93 92 91 97 80 86 66 86 62 86 152 146 163 158 145 161 156 140 157 153 143 165 155 144 165 152 145 164 140 145 165 144 132 155 42 62 47 52 44 52 48 62 41 57 44 59 37 53 39 50 129 120 131 123 127 131 130 133 Prob. household will lose a job - next 5 years 25 23 26 25 27 25 26 22 Expected inflation - next 12 months Mean Median 2.6 2.6 3.1 2.5 2.9 2.5 2.5 2.4 2.7 2.5 2.7 2.5 3.2 2.7 3.6 3.1 Expected inflation - next 5 to 10 years Mean Median 3.5 2.9 3.0 2.5 3.3 2.8 3.3 2.8 3.2 2.8 3.1 2.7 3.1 2.7 2.9 2.7 Personal financial situation Now compared with 12 months ago2 Expected in 12 months2 Expected business conditions Next 12 months2 Next 5 years2 Appraisal of buying conditions Cars Large household appliances2 Houses Willingness to use credit Willingness to use savings Expected unemployment change - next 12 months Note. Figures on financial, business, and buying conditions are the percent reporting ’good times’ (or ’better’) minus the percent reporting ’bad times’ (or ’worse’), plus 100. Expected change in unemployment is the fraction expecting unemployment to rise minus the fraction expecting unemployment to fall, plus 100. P Preliminary. 1. Feb. 1966 = 100. 2. Indicates the question is one of the five equally-weighted components of the index of sentiment. -9- The International Economy U.S. International Transactions Prices of Internationally Traded Goods Non-oil imports. In February, the price of imported non-oil goods and the price of imported core goods rose 0.4 and 0.5 percent, respectively. Rates of increase have been on the rise in recent months and have not been this large since April 2002. Within core goods, the largest price movement was an increase of 2.3 percent in the price for non-oil industrial supplies, prompted by higher prices for natural gas, fertilizers, steel, and precious metals. Prices for capital goods rose 0.3 percent, whereas prices for foods, feeds and beverages fell 0.7 percent. The level of imported core goods prices in January and February on average was about 3½ percent at an annual rate above the fourth-quarter level of last year, following a 1½ percent increase in the fourth quarter. Oil. The BLS price of imported oil rose 8.2 percent in February after rising a revised 13.3 percent in January. The spot price of West Texas Intermediate (WTI) crude oil also rose in February, averaging nearly $36 per barrel, about $3 per barrel greater than in January. The spot price of WTI has remained elevated in March and closed at $36.03 per barrel on March 13, after falling $1.80 per barrel. The recent increase in oil prices reflects the market's perception that military action in Iraq may occur soon, increased demand (owing to unusually cold weather in the United States and the shutdown of nuclear reactors in Japan), and low oil inventories. Continued low oil production from Venezuela, relative to pre-strike levels, is also keeping upward pressure on oil prices. Exports. In February, both the price of exported total goods and the price of exported core goods increased 0.4 percent. Within core goods, the largest price movement was an increase of 1.9 percent in the price of industrial supplies, driven largely by higher prices for petroleum-based products, precious metals, and woodpulp. Prices for foods, feeds and beverages fell 0.6 percent. The level of exported core goods prices in January and February on average was about 2½ percent at an annual rate above the fourth-quarter level of last year, following a smaller increase of 1¼ percent in the fourth quarter. - 10 - - 11 - U.S. Current Account through 2002:Q4 In the fourth quarter, the U.S. current account deficit was $547 billion (s.a.a.r.), an increase of $42 billion over the third quarter (revised). The majority of the increase in the deficit was accounted for by a widening in the trade deficit on goods, with a moderate decline in the surplus on services also contributing. The net outflow of income and unilateral transfers was little changed from the third quarter. The current account deficit for the third quarter was revised down almost $3 billion (s.a.a.r.), with a downward revision to the deficit on goods and an upward revision to the surplus on services contributing equally. For 2002 as a whole, the current account deficit increased to $503 billion, up $110 billion, and equal to 4.8 percent of GDP. U.S. Current Account (Billions of dollars, seasonally adjusted annual rate) Other Goods and Investment Current Period income and services, account income, transfers, net balance net net Annual 2001 -358.3 20.5 -55.6 -393.4 2002 -435.5 -5.4 -62.5 -503.4 Quarterly 2002:Q1 Q2 Q3 Q4 Change Q1-Q4 Q2-Q1 Q3-Q2 Q4-Q3 -382.5 -437.8 -441.0 -480.9 2.5 -14.7 -5.8 -3.7 -70.2 -58.3 -58.5 -62.9 -450.2 -510.8 -505.3 -547.4 -30.4 -55.3 -3.2 -39.8 -29.9 -17.2 8.9 2.1 -9.6 11.9 -0.2 -4.4 -69.8 -60.6 5.4 -42.1 Source: U.S. Department of Commerce, Bureau of Economic Analysis. U.S. International Financial Transactions On Friday, BEA released fourth quarter and year 2002 data on U.S. international transactions, including adjustments to securities transactions on line 4 of the Summary of U.S. International Transactions table and preliminary data for direct investment and other capital flows (lines 6 through 9). Because Treasury International Capital (TIC) reporting forms likely overstate inflows into U.S. debt securities and understate outflows into foreign equities and bonds, BEA - 12 - reduces debt inflows and inflates equity and debt outflows. For the fourth quarter, BEA assumed an especially large overstatement for foreign net purchases of agency securities (line 4b). As a result, private foreigners are now estimated to have made net purchases of agency securities of only $11 billion in the fourth quarter, a significant slowdown from the third quarter, and to have made small net sales of agency securities in December. These adjustments reduce foreign purchases of U.S. securities (line 4) to $343 billion for 2002 as a whole, down from the record pace of 2001. Combined with other small adjustments to U.S. acquisitions of foreign securities (line 5), U.S. private net inflows through securities are now estimated at $343 billion for 2002, still above the sizable net inflows of recent years. Foreign direct investment into the United States (line 7) slowed further last year to only $30 billion, reflecting continued low merger activity and weak corporate profits, although the pace of inflows picked up a bit in the fourth quarter. U.S. direct investment abroad amounted to $124 billion last year, about the same pace as in 2001 (line 6). As a result, net direct investment recorded an outflow of $93 billion in 2002, following inflows of $3 billion in 2001 and $129 billion in 2000. Foreign accumulation of U.S. currency remained relatively strong in 2002 at $22 billion. The statistical discrepancy (the last line in the table) for 2002 was a positive $28 billion, reflecting a swing from a positive $79 billion in the first half of the year to a negative $51 billion in the second half. A positive statistical discrepancy indicates some combination of over-reporting of the current account deficit or under-reporting of net financial inflows. - 13 - Summary of U.S. International Transactions (Billions of dollars, not seasonally adjusted except as noted) 2001 Official financial flows 1. Change in foreign official assets in the U.S. (increase, +) a. G-10 countries b. OPEC countries c. All other countries 2. Change in U.S. official reserve assets (decrease, +) Private financial flows Banks 3. Change in net foreign positions of banking offices in the U.S.1 Securities2 4. Foreign net purchases of U.S. securities (+) a. Treasury securities b. Agency bonds c. Corporate and municipal bonds d. Corporate stocks3 5. U.S. net acquisitions (-) of foreign securities a. Bonds b. Stock purchases c. Stock swaps3 Other flows (quarterly data, s.a.) 6. U.S. direct investment (-) abroad 7. Foreign direct investment in U.S. 8. Foreign holdings of U.S. currency 9. Other (inflow, + )4 U.S. current account (s.a.) Capital account balance (s.a.)5 Statistical discrepancy (s.a.) 2002 Q1 2002 Q2 Q3 Q4 2003 Dec. Jan. 2.3 91.2 7.0 45.7 7.1 31.5 11.8 6.1 7.2 -7.9 -1.9 22.1 94.9 30.3 -6.4 70.9 6.6 4.9 -6.6 8.3 47.5 17.6 1.1 28.8 8.5 1.8 -1.3 8.0 32.3 6.0 .5 25.9 12.8 1.0 -1.5 13.2 4.8 5.1 -2.1 1.9 -4.9 379.5 -3.7 383.0 .4 80.4 -1.8 -1.4 -.8 27.4 162.5 112.6 -1.0 ... 1.2 ... 11.0 94.2 403.5 -5.5 342.9 58.7 70.7 1.5 85.3 67.9 2.4 201.8 121.9 160.3 56.0 43.3 23.4 -95.0 12.4 -62.7 -44.7 .4 19.5 -15.6 -3.2 2.0 -9.3 .6 10.4 3.2 -19.8 -1.8 .0 5.2 -27.6 65.7 51.0 50.9 -44.9 95.9 100.3 -9.0 53.2 22.0 32.9 . 60.0 17.2 12.1 8.0 76.0 13.0 21.4 8.5 26.8 -2.1 10.6 -1.3 10.9 39.9 12.6 11.7 2.4 21.5 -3.5 18.0 -10.3 5.7 2.7 14.0 -13.1 -1.4 .0 -9.4 -5.6 -3.8 .0 -8.8 -2.2 -6.6 .0 -127.8 -123.5 -29.5 -34.5 -26.4 -33.0 130.8 30.1 16.3 -2.6 2.9 13.5 23.8 21.5 4.5 7.2 2.6 7.2 33.4 17.4 11.3 -1.6 -.5 8.3 -393.4 -503.4 -112.5 -127.7 -126.3 -136.9 ... ... ... ... ... ... ... ... ... ... .8 .7 .2 10.7 28.5 24.9 .2 .2 .1 ... ... 54.4 -43.4 -7.4 ... ... NOTE: The sum of official and private financial flows, the current account balance, the capital account balance, and the statistical discrepancy is zero. Details may not sum to totals because of rounding. 1. Changes in dollar-denominated positions of all depository institutions and bank holding companies plus certain transactions between broker-dealers and unaffiliated foreigners (particularly borrowing and lending under repurchase agreements). Includes changes in custody liabilities other than U.S. Treasury bills. 2. Includes adjustments BEA makes to account for incomplete coverage, but excludes adjustments for commissions and therefore does not match exactly the data on U.S. international transactions published by the Department of Commerce. 3. Includes (4d) or represents (5c) stocks acquired through mergers. 4. Transactions by nonbanking concerns and other banking and official transactions not shown elsewhere plus amounts resulting from adjustments made by the Department of Commerce and revisions in lines 1 through 5 since publication of the quarterly data in the Survey of Current Business. 5. Consists of transactions in nonproduced nonfinancial assets and capital transfers. n.a. Not available. ... Not applicable. - 14 - III-T-1 Selected Financial Market Quotations (One-day quotes in percent except as noted) 2000 2001 2003 2003 Instrument Change to Mar. 13 from selected dates (percentage points) June 26 Sept. 10 Jan. 28 Mar. 13 2000 June 26 2001 Sept. 10 2003 Jan. 28 Short-term FOMC intended federal funds rate 6.50 3.50 1.25 1.25 -5.25 -2.25 .00 Treasury bills 1 3-month 6-month 5.66 5.94 3.19 3.13 1.16 1.18 1.10 1.11 -4.56 -4.83 -2.09 -2.02 -.06 -.07 Commercial paper (A1/P1 rates) 1-month 3-month 6.56 6.56 3.42 3.24 1.25 1.24 1.20 1.14 -5.36 -5.42 -2.22 -2.10 -.05 -.10 Large negotiable CDs 1 1-month 3-month 6-month 6.64 6.73 6.89 3.46 3.26 3.24 1.26 1.26 1.26 1.24 1.20 1.17 -5.40 -5.53 -5.72 -2.22 -2.06 -2.07 -.02 -.06 -.09 Eurodollar deposits 2 1-month 3-month 6.63 6.69 3.41 3.26 1.25 1.25 1.21 1.18 -5.42 -5.51 -2.20 -2.08 -.04 -.07 Bank prime rate 9.50 6.50 4.25 4.25 -5.25 -2.25 .00 Intermediate- and long-term U.S. Treasury3 2-year 10-year 30-year 6.54 6.35 6.22 3.59 5.14 5.55 1.71 4.24 5.08 1.62 3.97 4.91 -4.92 -2.38 -1.31 -1.97 -1.17 -.64 -.09 -.27 -.17 U.S. Treasury 10-year indexed note 4.09 3.26 2.14 1.75 -2.34 -1.51 -.39 Municipal revenue (Bond Buyer) 4 5.99 5.25 5.17 5.06 -.93 -.19 -.11 7.38 7.19 7.64 8.40 12.30 5.62 5.68 6.30 7.11 12.72 4.46 4.62 5.22 6.62 11.55 4.11 4.30 4.85 6.20 11.26 -3.27 -2.89 -2.79 -2.20 -1.04 -1.51 -1.38 -1.45 -.91 -1.46 -.35 -.32 -.37 -.42 -.29 8.14 7.22 6.89 5.64 5.91 3.93 5.67 3.76 -2.47 -3.46 -1.22 -1.88 -.24 -.17 Private instruments 10-year swap 10-year FNMA5 10-year AA 6 10-year BBB 6 High-yield 7 Home mortgages (FHLMC survey rate) 8 30-year fixed 1-year adjustable Record high 2001 Change to Mar. 13 from selected dates (percent) 2003 Stock exchange index Level Dow-Jones Industrial S&P 500 Composite Nasdaq (OTC) Russell 2000 Wilshire 5000 Date Sept. 10 Jan. 28 Mar. 13 Record high 2001 Sept. 10 2003 Jan. 28 11,723 1,527 5,049 606 14,752 1-14-00 3-24-00 3-10-00 3-9-00 3-24-00 9,606 1,093 1,695 441 10,104 8,089 859 1,342 373 8,143 7,822 832 1,341 355 7,886 -33.28 -45.54 -73.44 -41.36 -46.54 -18.57 -23.86 -20.92 -19.35 -21.95 -3.30 -3.10 -.11 -4.75 -3.15 1. Secondary market. 2. Bid rates for eurodollar deposits collected around 9:30 a.m. Eastern time. 3. Derived from a smoothed Treasury yield curve estimated using off-the-run securities. 4. Most recent Thursday quote. 5. Constant maturity yields estimated from Fannie Mae domestic non-callable coupon securities. 6. Derived from smoothed corporate yield curves estimated using Merrill Lynch bond data. 7. Merrill Lynch Master II high-yield bond. 8. For week ending Friday previous to date shown. _______________________________________________________________________ NOTES: June 26, 2000, is the day before the FOMC meeting that ended the most recent period of policy tightening. September 10, 2001, is the day before the terrorist attacks. January 28, 2003, is the day before the most recent FOMC meeting. _______________________________________________________________________ BA:DAM - 15 Commercial Bank Credit (Percent change, annual rate, except as noted; seasonally adjusted) Type of credit Total 1. Adjusted1 2. Reported 3. 4. 5. 6. Securities Adjusted1 Reported Treasury and agency Other2 Loans3 7. Total 8. Business 9. Real estate 10. Home equity 11. Other 12. 13. 14. Consumer Adjusted4 Other5 Level, Feb. 2003 ($ billions) 2001 Q3 2002 Q4 2002 Dec. 2002 Jan. 2003 Feb. 2003 4.0 4.9 8.8 12.2 11.1 11.6 9.0 10.1 -1.0 1.2 13.5 15.6 5,741 5,970 8.7 11.8 5.9 20.5 11.4 23.4 23.1 23.6 13.1 14.4 22.4 3.4 15.8 18.8 13.2 27.1 -2.4 5.2 .9 11.3 26.6 32.2 28.8 37.1 1,539 1,769 1,038 731 2.5 -3.7 7.2 19.9 6.1 7.9 -8.6 18.7 39.9 16.4 10.4 -4.7 19.9 22.7 19.5 6.5 -2.2 12.4 26.6 10.7 -.5 -6.3 10.5 25.4 8.8 8.8 -8.4 17.1 28.8 15.7 4,201 954 2,068 222 1,846 3.8 7.2 -.4 3.7 1.3 6.7 8.2 4.6 7.1 3.1 3.1 4.8 11.7 14.0 -40.3 4.7 8.9 12.7 595 951 585 Note. All data are adjusted for breaks caused by reclassifications. Monthly levels are pro rata averages of weekly (Wednesday) levels. Quarterly levels (not shown) are simple averages of monthly levels. Annual levels (not shown) are levels for the fourth quarter. Growth rates are percentage changes in consecutive levels, annualized but not compounded. The conversion from a thrift to a commercial bank charter added approximately $37 billion to the assets and liabilities of domestically chartered commercial banks in the week ending May 8, 2002. 1. Adjusted to remove effects of mark-to-market accounting rules (FIN 39 and FIN 115). 2. Includes private mortgage-backed securities, securities of corporations, state and local governments, and foreign governments and any trading account assets that are not Treasury or agency securities, including revaluation gains on derivative contracts. 3. Excludes interbank loans. 4. Includes an estimate of outstanding loans securitized by commercial banks. 5. Includes security loans and loans to farmers, state and local governments, and all others not elsewhere classified. Also includes lease financing receivables.
@FedFRASER