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CONFIDENTIAL (FR)
CLASS III
- FOMC
March 27.
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
Gross domestic product, 1991:Q4 . . . . . . .
Personal income and consumption. . . ..
. . .
. . . .
. . . .
1
2
Tables
Real gross domestic product and related items. . . .
Personal income. . . . . . . . . . . . . . . . . . .
Real personal consumption expenditures ..
. . . . ..
.
.
3
4
4
. . . .
. . . .
5
6
Charts
Consumer attitudes . . . . . . . . . . . .
Unemployment insurance . . . . . . . . . .
. .
. .
THE FINANCIAL ECONOMY
The March 1992 Senior Financial Officer Survey .
.
.
.
7
Tables
Senior Financial Officer Survey on demand deposits
at selected large banks in the U.S.. . . . . . . ...11
16
. . . .. .
. . . . . . . ..
...
Monetary aggregates
17
Selected financial market quotations . . . . . . . .
THE INTERNATIONAL ECONOMY
Import and export prices . . ...
..
. . . . . .
. .
18
SUPPLEMENTAL NOTES
THE DOMESTIC NONFINANCIAL ECONOMY
Gross Domestic Product, 1991:Q4
BEA now estimates that real gross domestic product (GDP) rose
at an annual rate of 0.4 percent in the fourth quarter of 1991,
about 1/2 percentage point less than the preliminary estimate
released last month.
Final sales are still estimated to have edged
lower in the fourth quarter, with a downward revision to net exports
offsetting upward adjustments to consumer outlays and business
equipment spending; revisions to the other components of final sales
were quite small.
The accumulation of nonfarm inventories last
quarter is now estimated to have been slightly smaller than was
reported a month ago, but this revision does not alter our view that
stocks were undesirably heavy at year-end.
The GDP fixed-weight
price index is estimated to have risen at an annual rate of
2.1 percent in the fourth quarter, 0.1 percentage point below the
preliminary estimate.
The personal saving rate for the fourth quarter was revised
down from 5.3 percent to 5.2 percent in this report, reflecting the
lower level of disposable income and the upward revision to consumer
spending.
Note that last month BEA erroneously reported the fourth-
quarter saving rate to have been 5.4 percent instead of 5.3 percent;
BEA has confirmed that there was a typographical error in last
month's release.
The BEA report contained the first estimate of corporate
profits for the fourth quarter.
On an economic basis, profits rose
nearly 3-1/2 percent (not at an annual rate) last quarter, reaching
a level about 7 percent above that of a year earlier.
The fourth-
quarter gain was concentrated in domestic nonfinancial industries.
The share of economic profits in nominal GDP edged up last quarter
-2to 5.5 percent, but stood only 0.2 percentage point above the
cyclical low registered in the fourth quarter of 1990.
Personal Income and Consumption
Nominal personal income rebounded strongly in February, after
declining somewhat in January; this monthly pattern occurred because
both private payrolls and federal subsidy payments to farmers
contracted in January and then turned up in February.
After
adjusting for price change and tax payments, real disposable
personal income in January and February was, on average, 0.6 percent
(not at an annual rate) above the level in the fourth quarter of
1991.
The BEA estimates for personal outlays in January and February
represent a fairly literal translation of the current estimates of
retail sales.
In real terms, average spending for the two months is
reported to have climbed 1.3 percent (not at an annual rate) above
the fourth-quarter level.
As we indicated in Part 1, we have
assumed in assembling the staff forecast that retail sales in
January and February will be revised down or that March sales will
be depressed by a sizable "payback."
In light of this assumption,
the forecast anticipates a saving rate that is appreciably higher
than the published BEA average of 4-3/4 percent for January and
February.
The final March report on consumer sentiment from the
University of Michigan was little changed from the preliminary
reading; the overall index rose to 76 percent, the first significant
increase since the retrenchment in sentiment last fall.
The
improvement relative to the November-February period occurred
largely because of more positive responses to questions about
business conditions for the coming year and about buying conditions
for large household durables.
REAL GROSS DOMESTIC PRODUCT AND RELATED ITEMS
(Percent change from previous period at compound annual rates;
based on seasonally adjusted data, measured in 1987 dollars)
1990-Q4 to
1991-Q4
1. Gross domestic product
1991-Q3
Final
1991-Q4
Preliminary
Final
.3
1.8
.8
.4
-. 5
-. 7
-. 1
-. 2
.6
2.3
-. 2
.0
-7.1
-3.7
-14.7
-3.7
6.7
-23.9
-4.5
-3.7
-6.3
-3.4
-1.6
-7.8
-. 9
10.9
13.1
12.3
-14.6
-13.6
2.
Final sales of domestic product
3.
Consumer spending
4.
5.
6.
Business fixed investment
Producers' durable equipment
Nonresidential structures
7.
Residential structures
8.
Federal purchases
9.
State and local purchases
-. 5
-. 1
1.4
.8
10.
Exports of goods and services
6.8
7.3
13.1
9.7
11.
Imports of goods and services
4.6
22.3
2.5
2.1
-2.8
12.5
9.2
-3.1
-8.1
ADDNBDA:
12.
Nonfarm inventory investment
-13.9
13.
Net exports of goods and services'
-20.92
-31.1
-17.6
3.3
4.1
2.7
2.2
3.4
2.6
2.2
2.1
16. GDP mplicit price deflator
3.0
2.1
1.7
1.7
Personal saving rate
5.22
5.0
5.3
5.2
14. Nominal GDP
15.
17.
GDP fixed-weight price Index
1.
Leve, bllown of 197 dollars.
2.
Annual average.
-21.3
-4PERSONAL INCOME
(Average monthly change at an annual rate; billions of dollars)
1991
1991
Q3
11.3
Wages and salaries
Private
1991
1992
Q4
Dec.
9.0
17.6
48.4
-7.5
54.3
4.7
3.1
4.4
4.8
5.6
3.9
17.7
15.9
-16.9
-21.9
36.1
33.2
Other labor income
1.4
1.4
1.4
1.3
1.4
1.4
Proprietors' income
Farm
2.1
-. 5
2.0
-1.0
3.7
2.0
14.9
11.8
-8.5
-12.1
11.4
5.4
.1
.1
-3.1
-1.3
.5
-1.4
2.3
.1
-4.9
2.9
-. 1
-4.9
-. 8
-. 3
-3.5
.2
.3
-2.0
Transfer payments
7.1
4.0
9.9
18.0
23.3
9.7
Less: Personal contributions
for social insurance
1.0
.6
.4
1.3
2.4
2.6
-. 8
1.0
.5
2.2
-1.1
9.2
12.2
8.0
17.1
46.2
-6.4
45.1
1.7
-2.2
7.1
31.7
-8.2
24.4
Total personal income
Rent
Dividend
Interest
Less: Personal tax and nontax
payments
Equals: Disposable personal income
Memo: Real disposable income
Jan.
Feb.
REAL PERSONAL CONSUMPTION EXPENDITURES
(Percent change from the preceding period)
1991
1991
Q3
1991
Q4
-Annual ratePersonal consumption
expenditures
.6
2.3
-2.8
-. 7
9.5
4.5
Nondurable goods
Excluding gasoline
-. 9
-. 9
Services
Excluding energy
Memo:
Personal saving rate
(percent)
Durable goods
Excluding motor vehicles
.0
Dec.
1992
Jan.
Feb.
---- Monthly rate----. 1
.9
.6
-5.7
-7.7
.3
-. 4
2.4
4.6
2.6
1.2
.0
-. 3
-3.9
-4.2
-. 4
-. 7
1.3
1.5
.3
.5
2.2
2.2
2.2
2.4
3.7
3.4
.0
.7
.3
.4
.3
.4
5.2
5.0
5.2
5.6
4.6
4.7
-5Consumer Attitudes
March 27, 1992
Index
Conference Board Index of Consumer Confidence
11 i4
I4
4
'I
41 '
4
I I1 II
'I
l l,
"
I
i
I
I
'I 'l
f
I
*"' ,
I 'II
/
'l!
'
I
II'
1
\1
801
4 ,_
\ ..-
41
&~
14411/
/
('
1
14'*
I
II
Michigan Survey Research Center Index of Consumer Sentiment
1981
1982
1983
1984
1985
1987
The base of the Michigan Index is February 1966; the base of
the Conference Board Index is the annual average for 1985.
Both indexes are an average of five equally-weighted questions
that relate to current and expected economic conditions.
However, the questions in the two surveys are different and
the timing of the surveys in the field varies.
1988
1989
1990
-6-
Unemployment Insurance
(Weekly data; seasonally adjusted, BLS basis <1>)
Initial Claims
Thousands
750
700
650
600
Mr 14
550
453.4
All regular programs
S 500
450
400
350
300
Lj± ,
1985
1987
1986
1988
1989
1990
1991
Insured Unemployment
1992
Milion
r
250
I 5.0
All regular programs
Mw 7
338
I . II
1981
1982
.
1983
I .
, I ., ., *.
1984
<1> Only the stae progam cmonapva
seasonally djuted.
1985
,
-I
1986
of dss serie anr
.
1987
. .
1988
..-
1989
I , I .
1990
,
1991
. 1 1 .5
1992
-7THE FINANCIAL ECONOMY
The March 1992 Senior Financial Officer Survey
Summary
In view of the unusual strength in demand deposits since the
beginning of the year, the System conducted a Senior Financial
Officer Survey in mid-March to obtain information about the behavior
of these deposits.
Nearly half of the reporting banks characterized
their demand deposit growth as stronger than normal in recent
months.
Most banks experiencing stronger growth attributed it to
business customers, who had increased compensating balances in
response to lower market interest rates.
A number of banks pointed
to increased activity in financial markets and to higher balances
held by mortgage servicers.
To provide an overview of demand deposits, several questions
were repeated from a 1988 Senior Financial Officer Survey, the last
one conducted on this topic.
Businesses continue to hold the bulk
of demand deposits, and roughly half of these deposits are held
under formal compensating-balance arrangements.
While the share of
compensating balances in total demand deposits is lower than in
1988, respondents answered that it had increased somewhat over the
past two years.
The current survey also found that few business
customers currently hold sweep accounts, which are arrangements to
move balances automatically at the end of the day from demand
deposits to interest-earning accounts.
The remainder of the survey asked specific questions regarding
compensating balances.
Even though the share of demand deposits
held as compensating balances is lower than in 1988, a significant
portion of firms' service charges are paid with earnings credits on
these accounts.
Banks still use the three-month Treasury rate
almost exclusively to calculate earnings credits, and the rate
-8typically is averaged over a month, as are compensating balance
requirements.
For the most part, banks continue to adjust deposit
balances for the cost of reserve requirements in calculating
credits.
However, in contrast to the results from the 1988 survey,
banks are less likely to allow customers to carry over surpluses or
deficiencies to the following period.
Demand Deposit Growth
Slightly less than one-half of the reporting banks experienced
stronger-than-normal demand deposit growth so far this year, while
only three characterized growth as weaker than normal.
Nearly all
banks with stronger-than-normal growth attributed that strength to
nonfinancial or financial business depositors; a third of those
banks with stronger growth also cited the household sector.
In general, lower market interest rates require customers to
increase their compensating balances to generate the same amount of
earnings credits.
In the survey, three-quarters of the banks with
stronger growth cited such an adjustment of compensating balances to
the lower level of market rates as a reason.
Over two-fifths of the
banks experiencing stronger-than-normal inflows included lower
interest rates on other types of deposits as a contributing factor.
Twenty percent of all banks and one-third of the smaller banks cited
that compensating balances increased owing to higher use of credit
or operational services.
Other factors playing a role included increased demand deposit
holdings resulting from increased activity in financial markets and
higher balances of mortgage servicers.
Consistent with this latter
explanation, most banks reported that mortgage servicers typically
place their mortgage payments in demand deposits prior to
disbursement.
However, one bank noted that these funds were held in
-9savings deposits and then transferred to demand deposits just before
disbursements were made.
Demand Deposits and Compensating Balance Arrangements
The share of demand deposits held by businesses appears to have
remained steady over the past several years.
The median bank
estimated that between 61 and 80 percent of its demand deposits were
held by businesses, similar to the proportion estimated from Deposit
Ownership Surveys in 1988.
However, a smaller share of business
demand deposits are held under compensating balance arrangements,
with the median respondent on the current survey placing in the 41
to 60 percent quintile versus in the 61 to 80 percent quintile in
the 1988 Senior Financial Officer Survey.
However, banks reported
that this share had increased slightly over the past two years, with
over two-fifths of the banks experiencing an increase while onefifth saw a decline.
And while some banks have encouraged the
payment of services with explicit fees, most have not.
Earnings credits from compensating balances cover a significant
The
portion of the service charges incurred by business customers.
median bank responded that from 21 to 40 percent of service charges
to large firms were met by earnings credits.
For
their middle
market and small business customers, the median-bank response was
higher, in the 41 to 60 percent range.
Most banks reported that
they did not encourage the payment of services with fees by
favorable pricing arrangements.
The current survey included a set of questions about sweep
accounts that were not on the earlier survey.
In general, sweep
accounts are not common, and some banks do not offer such accounts.
The small number of customers holding sweep accounts is consistent
with recent conversations that the Board staff has had with cash
managers across the country; those cash managers noted that they
-10directly manage their demand deposits rather than delegate the task
to a bank, as under a sweep arrangement.
Most banks again indicated that earnings credits are computed
using the three-month Treasury bill rate.
Nearly all of the banks
use a monthly average of either the auction or secondary market
yield.
A smaller number of banks use a managed rate, set by their
rate committee and based on a variety of money market rates.
The
survey indicated that many banks use a lagged rather than a current
rate in calculating earnings credits.
Roughly two-thirds of the banks allow at least some of their
customers to carry account surpluses or deficiencies into the next
period.
However, over eighty-five percent of the banks place limits
on these carryovers for some or all of their customers, and only a
third of them allow some or all of their customers to carry
surpluses over into the next calendar year.
Finally, customers
appear to be most likely to make up for the shortfall in earnings
credits with additional fee payments rather than to adjust balances
within current or subsequent accounting periods.
-11Table 1
SENIOR FINANCIAL OFFICER SURVEY ON DEMAND DEPOSITS
AT SELECTED LARGE BANKS IN THE UNITED STATES
(Status of policy as of January and February 1992)
(Number of banks and percent of banks answering question)
(By volume of total domestic assets, in $ billions, as of December 31.
(By type of bank)
This report is authorized by law [12 U.S.C. 225(a), 2 48(a),
needed to make the results comprehensive, accurate, and timely.
and 263].
1
1991 )
Your voluntary cooperation in submitting this report is
The Federal Reserve System regards the individual bank information provided by each respondent as confidential.
determined subsequently that any information collected on this form must be released, respondents will be notified.
If it should be
Demand deposits have expanded at a very strong pace over the past two months. The Federal Reserve is seeking information
from depository institutions about possible reasons for this surge and to update our knowledge about the relationships between
compensating balance and mortgage servicing arrangements and demand deposits.
I.
Adjusting for normal seasonal variation and any mergers,
January and February.
above
normal
very strong
banks
pet
banks
All Respondents
7 12.7
$10.0 and over
3 10.3
under $10.0
4 15.4
-.---- ---..-.---.-.
. ...
2.
banks
pot
27
15
12
32.7
34.5
30.8
demand
below
normal
about
normal
pet
18
10
8
banks
49.1
51.7
46.2
pet
3
1
2
deposit
growth
very weak
total
banks
5.5
3.4
7.7
pet
0
0
0
financial
business
demand
deposits
banks
per
14 58.33
6 46.15
8 72.73
All Respondents
$10.0 and over
under $10.0
If
you characterized
recent
growth in
business
attribute the strength? (more than one may apply)
increased
increased
increased
increased
increased
increased
increased
other
banks
household
demand
deposits
pot
banks
14 58.33
8 61.54
6 54.55
demand
8
during
(more than one may apply)
banks
pet
total
pet
banks
2 8.33
0
0
2 18.18
33.33
24
13
11
as "very strong" or "above normal". to what would you
compensating balance requirements due to lower interest rates
compensating balance requirements because of higher use of credit services or operational services
compensating balances to make up for shortages relative to requirements late last year
demand deposit balances due to increased economic activity
demand deposit holdings due to increased activity in financial markets
demand deposit balances due to lower interest rates on other types of deposits
demand deposit balances due to mortgage servicers holding higher balances
banks
4.
bank
55
29
26
Increased compensating balance...
requirements requirements
due to lover
because of to make up
interest
higher use
for
rates
of credit
shortag es
All Respondents
$10.0 and over
under $10.0
your
other
accounts
6 46.15
2 18.18
deposits
at
banks
0.0
0.0
0.0
If you characterized recent growth as "very strong" or "above normal". was the strength in
nonfinancial
business
demand
deposits
3.
please characterize
pet
banks
pet
banks
Increased demand deposit balances...
due to lower
due to
due to
due to
increased increased
interest
mortgage
economic
financial
rates on
aervicers
activity
activity other deposits olding
---..........---------3ctbanks pet
banks pot banks pet
banks pet
p
8 .00
1 7 .69
7.69
1
9 69.23
1 81.33
4 33.33
10 83.33
-.- . --- .- .--. -- -. - .-- --. --- -- .19 76.00
5 20,00
2 8.00
2 15.38
2
7 28.00
11 44.00
5 38.46
6 46.15
2 16.67
5 41.67
0
-----.-.---.-.---.-.--
0
6 24.00
3 23.08
3 25.00
total
other
banks
2
1
1
pot
8.00
7.69
8.33
banks
25
13
12
If your bank maintains accounts for mortgage servicers that service securitised mortgages, or if your bank services such
mortgages directly, in what type of account are the principal and interest payments primarily placed prior to disbursement to
the appropriate transfer agency or trustee for the mortgage security?
demand
deposit
banks
All Respondents
$10.0 and over
under $10.0
pot
34 79.07
18 78.26
16 80.00
MMDAs
banks
pet
7 16.28
4 17.39
3 15.00
other
banks
pet
5 11.63
3 13.04
2 10.00
total
banks
43
23
20
-125.
Roughly what proportion
of the balances in
demand deposits held at your bank are held by businesses?
0 to 20
percent
banks
All Respondents
$10.0 and over
under $10.0
6.
Has your bank encouraged
compensating balances?
pet
1
l.B
1
0
3.4
0.0
21 to 40
percent
banks
8
4
4
41 to 60
percent
pet
banks
14.5
13.8
15.4
pet
27.3
20.7
9
34.6
percent
banks
All Respondents
$10.0 and over
under $10.0
17
8
9
pet
10
6
4
total
banks
18.2
20.7
15.4
55
29
26
no
total
pet
bankr
8
14.8
5
3
17.9
11.5
46
23
85.2
82.1
54
28
23
88.5
26
pot
banks
pet
31.5
28.6
34.6
21
to 40
41 to 60
percent
percent
banks
4
3
1
pot
7.4
10.7
3.8
banks
pet
13
24.1
6
7
21.4
26.9
61 to 80
over 80
percent
percent
total
-----------.-.---------.-.-banks
14
7
7
pet
banks
25.9
25.0
26.9
pet
6
4
2
banks
54
28
26
11.1
14.3
7.7
How has this proportion changed over the past two years?
banks
pet
banks
pot
19 35.2
5
9.3
All Respondents
$10.0 and over
1
3.6
12 42.9
7 26.9
4 15.4
under $10.0
- --- --- --- ----- ---. -. --. -- -.-.- --. - .-- .
unchanged
banks
19
9
10
pet
35.2
32.1
38.5
decreased
decreased
somewhat significantly total
banks
pet
banks
pet
banks
1.9
54
1
10 18.5
5 17.9
1
3.6
28
5 19.2
0
0.0
26
.- ---. - ---. - ---.-.
----.
What proportion of your large (over $250 million in annual sales) business customers hold sweep accounts?
0 to 20
percent
banks
All Respondents
$10.0 and over
under $10.0
What
proportion
accounts?
of
47
26
21
your middle market
pet
90,4
96.3
84.0
banks
All Respondents
$10.0 and over
under $10.0
What proportion of your
small
21 to 40
percent
banks
pet
43
84.3
25
I8
96.2
72.0
pet
41 to 60
percent
banks
pet
61 to 80
percent
banks
over 80
percent
banks
pet
1
1
1.9
3.7
1
1.9
0
0.0
2
0
3.8
0.0
0
0.0
1
4.0
2
8.0
(between $50
0 to 20
percent
8e.
38.2
41.4
34.6
banks
increased
increased
significantly somewhat
Ob.
banks
Roughly what proportion of the balances in business demand deposits held at your bank would you estimate typically is made up
of funds held under formal compensating balance arrangementa?
(Include balances held to compensate for credit services and
operational services.)
0 to 20
8a.
21
12
9
pet
the payment for services with fees by pricing such payments more favorably than payments through
All Respondents
$10.0 and over
under $10.0
7b.
banks
15
6
yes
7a.
over 80
percent
61 to 80
percent
million and $250 million in
21 to 40
percent
banks
pet
6
1
11.8
3.8
5
20.0
41 to 60
percent
banks
0
0
0
pet
0.0
0.0
0.0
banks
1
0
1
1
0
1
annual
61 to 80
percent
pet
2.0
0.0
4.0
pet
total
banks
1.9
0.0
4.0
sales)
over 80
percent
banks
pet
1
2.0
0
0.0
1
4.0
52
27
25
business customers hold sweep
total
banks
51
26
25
(under $50 million in annual sales) business customers hold sweep accounts?
0 to 20
percent
banks
All Respondents
$10.0 and over
under $10.0
44
24
20
pot
88.0
96,0
80.0
21 to 40
percent
banks
pet
4
8.0
1
3
4.0
12.0
41 to 60
percent
banks
2
0
2
pet
4.0
0.0
8.0
61 to 80
percent
banks
pet
0
0.0
0
0.0
- - 0 - - 0.0
--
over 80
percent
banks
0
0
0
pet
0.0
0.0
0.0
total
banks
50
25
25
-13Specific Questions on Compensating Balance Arrangements
Answer
the remaining questions only if your institution allows businesses to pay for credit services or operational services
credits earned on compensating balances.
9a.
Please indicate what interest rate is used as a basis for calculating earnings credits.
three-month
Treasury
bill
banks
All
Respondents
$10.0 and over
under $10.0
9b.
pet
fixed
nonmarket
rate
overnight
rate
banks
pet
banks
other
pet
banks
total
pet
banks
44
80.0
0
0.0
0
0.0
11
20.0
55
22
22
75.9
84.6
0
0
0.0
0.0
0
0
0.0
0.0
7
4
24.1
15.4
29
26
If the interest rate that is used as the basis for calculating earnings credits have been changed over
the
past
two
please indicate the previous basia.
three-month
Treasury
bill
banks
All Respondents
$10.0 and over
under $10.0
9c.
pet
fixed
nonmarket
rate
overnight
rate
banks
5 71.4
3 60.0
2 100.0
pet
0
0
0
banks
0.0
0.0
0.0
0
0
0
other
pet
banks
0.0
0.0
0.0
2
2
0
total
banks
pet
28.6
40.0
0.0
7
5
2
Over what period is this rate measured?
daily
monthly
weekly
pet
banks
banks
pet
banks
quarterly
pet
pet
banks
other
banks
total
pet
banks
All Respondents
$10.0 and over
0
0
0.0
0.0
2
2
3.6
6.9
50
26
90.9
89.7
1
0
1.8
0.0
2
1
3.6
3.4
55
29
under $10.0
0
0.0
0
0.0
24
92.3
1
3.8
1
3.8
26
Over what period are compensating balance requirements measured?
month
pet
banks
Does your institution plan to adjust its
year
pet
banks
52 94.55
29 100.0
23 88.46
All Respondents
$10.0 and over
under $10.0
9e.
quarter
banks
32
19
13
All Respondents
$10.0 and over
under $10.0
banks
55
29
26
no
pet
banks
58.2
65.5
50.0
23
10
13
reserve requirements?
total
pet
41.8
34.5
50.0
banks
55
29
26
Can compensating balance account surpluses in one period be carried over to the following period?
no
yes
banks
All Respondents
$10.0 and over
under $10.0
10b.
pet
11 20.00
5 17.24
6 23.08
earnings credit rate to reflect the upcoming change in
yes
10a.
banks
14 25.45
8 27.59
6 23.08
total
13
8
5
pet
24.1
28.6
19.2
banks
6
1
5
pet
11.1
3.6
19.2
for some
customers
total
pet
banks
banks
35
19
16
64.8
67.9
61.5
54
28
26
Can compensating balance account deficiencies in one period be carried over to the following period?
banks
All Respondents
$10.0 and over
under $10.0
10
4
6
for some
customers
no
yes
pet
18.5
14.3
23.1
banks
11
6
5
pet
20.4
21.4
19.2
banks
33
18
15
pet
61.1
64.3
57.7
total
banks
54
28
26
years.
-14lOc.
If either surpluses or deficiencies can be carried over, are there any limits on these period-to-period carryovers?
yes
for some
customers
no
.- =--
banks
pet
banks
All Respondents
29
54.7
$10.0 and over
17
60.7
under $10.0
12
48.0
-------------.----.-.---.-.--
tOd.
7
3
4
banks
All Respondents
$10.0 and over
under $10.0
3
2
1
banks
All Respondents
$10.0 and over
under $10.0
13
6
7
pet
32.1
53
8
9
28.6
36.0
28
25
pet
banks
5.7
7.1
4.0
pot
banks
pet
36
67.9
14
26.4
18
64.3
18
72.0
8
6
28.6
24.0
total
banks
53
28
25
banks
14
7
7
pet
41 to 60
percent
banks
28.0
29,2
26.9
15
6
9
pet
30.0
25.0
34.6
61 to 80
percent
banks
5
3
2
pot
over 80
percent
banks
10.0
12.5
7.7
pet
3
2
1
total
banks
6.0
8.3
3.8
50
24
26
What proportion of a middle market (between $50 million and $250 million in annual sales) firm's service fees
are typically covered by earnings credits from compensating balances?
banks
pet
21
to 40
41 to 60
percent
percent
banks
pet
banks
pet
6.0
6
12.0
28
56.0
$10.0 and over
1
4.2
under $10.0
2
7.7
------------------.-.---.-.--
3
12.5
13
54.2
3
11.5
15
57.7
All Respondents
3
What proportion of a small
(under $50 million in
earnings credits from compensating balances?
21 to 40
percent
percent
pot
banks
61 to 80
percent
banks
10
5
5
pet
over 80
percent
banks
20.0
20.8
19.2
pet
3
2
1
pet
41 to 60
percent
50
24
26
banks
pet
61 to 80
percent
banks
pet
over 80
percent
banks
pot
total
banks
10
5
20.0
20.8
20
40.0
10
20.0
6
12.0
50
9
37.5
2
7.7
5
19.2
11
42.3
5
5
20.8
19.2
3
3
12.5
11.5
24
26
to
fall
below
service
charges.
what
compensating balance account volumes are held by businesses that
would make up the shortfall with fee payments?
banks
All Respondents
$10.0 and over
under $10.0
ii.
pct
3
5.9
1
2
4.0
7.7
21 to 40
percent
banks
4
1
3
pet
7.8
4.0
11.5
41 to 60
percent
banks
pet
9
17.6
5
20.0
4
15.4
61 to 80
percent
banks
17
8
9
pet
33.3
32.0
34.6
over 80
percent
banks
pet
total
banks
18
35.3
51
10
40.0
25
8
30.8
26
would adjust balances within the accounting period to make up for the shortfall?
0 to 20
percent
banks
All Respondents
$10.0 and over
under $10.0
35
18
17
pet
68.6
72.0
65.4
bank
banks
6.0
8.3
3.8
8.0
8.3
0 to 20
percent
your
total
4
2
In accounting periods in which earnings credits appear likely
i.
at
annual sales) firm's service fees at .your bank are typically covered by
0 to 20
banks
All Respondents
$10.0 and over
under $10.0
12.
-
banks
17
for some
customers
no
21 to 40
percent
26.0
25.0
26.9
0 to 20
percent
1lc.
total
--
pet
What proportion of a large (over $250 million in annual sales) firm's service fees at your bank are typically covered by
earnings credits from compensating balances?
0 to 20
percent
lib.
13.2
10.7
16.0
--
banks
Can they be carried past the end of a calendar year?
yes
lla.
pet
21 to 40
percent
41 to 60
percent
banks
pet
banks
8
15.7
2
6
8.0
23.1
7
4
3
pct
13.7
16.0
11.5
61 to 80
percent
banks
1
1
0
pet
2.0
4.0
0.0
over 80
percent
banks
pet
total
banks
0
0.0
51
0
0.0
25
0
0.0
26
proportion
of
your
-15-
iii.
would make up for the
shortfall
by holding higher balances
0 to 20
percent
banks
All Respondents
$10.0 and over
under $10.0
13.
38
20
18
pet
76.0
80.0
72.0
21
to 40
percent
banks
6
1
5
pet
12.0
4.0
20,0
the next accounting period?
in
41 to 60
percent
banks
pet
4
3
8.0
12.0
1
4.0
61 to 80
percent
banks
pet
1
2.0
0
1
0.0
4.0
over 80
percent
banks
1
1
0
pet
2.0
4.0
0.0
total
banks
50
25
25
Please indicate the formula moat comonly used at your institution for determining required compensating balances.
-16MONETARY AGGREGATES
(based on seasonally adjusted data unless otherwise noted)
1991
94
1991,
-----------1.
2.
3.
Ml
M2
M3
1992
Qipe
1992
Jan
1992
Feb
Growth
1992
Q4 91Mar pe Mar 92pe
Percent change at annual rates---------------------
8.0
2.8
1.2
11.1
2.3
1.0
16¾
4k
2Z
16.2
3.2
1.4
27.0
9,4
7.0
14
0
-3
Levels
- bil. $
Feb 92
Percent change at arrual rates---------
------------
17h
4
1i
Selected components
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
HM-A
Currency
Demand deposits
Other checkable deposits
22.
23.
8.8
154
13.6
28.1
14
584.8
8.4
3.4
7.4
10.0
7%
23
9.4
18.2
9.8
45.7
4
24
271.6
305.1
12.4
15.0
194
20.5
25.1
14
346.0
1.1
MZ minus Ml2
Overnight RPs and Eurodollars, NSA
General purpose and broker/dealer money
market mutual fund shares
Commercial banks
Savings deposits (including HHOAs)
Small time deposits
Thrift institutions
Savings deposits (including MMDAs)
Small time deposits
17. M3 minus M23
18.
19.
20.
21.
5.6
Large time deposits
4
At commercial banks, net
institutions
At thrift
Institution-only money market
mutual fund shares
Term RPs, NSA
Term Eurodollars, NSA
-0.7
-1.4
3.2
-5
2544.8
26.9
1.6
-59
77.5
12.3
1.0
22.9
-24.3
-2.6
31.1
-31.1
-19
-2
11
-17
-2
24
-24
363.7
1264.7
688.9
575.8
838.5
395.3
443.2
-7.6
39.9
181
3.9
7.1
13.3
1.1
-6.9
9.3
-16.8
-4.0
3.9
16.0
-8.5
-8.8
10.2
-22.5
1
19h
-19%
-3½
22k
-24%
-1.7
0.2
20.0
-21.7
-2.7
24.1
-24.5
-5.5
-4.9
-7h
-7.0
-4.4
-18
725.9
-11.7
-5.1
-31.7
-18.9
-14.4
-36.7
-20
-17J
-29"
-25.3
-25.8
-24.5
-16.8
-12.5
-35.4
-24
-20
-43
421.9
342.8
79.0
33.4
-21.6
-9.9
37.0
-23.6
-8.3
27%
-3%
-224
22.1
0.0
-24.6
38.2
18.6
10.5
188.2
72.0
57.8
----- Average monthly change in billions of dollars---MEMORANDA:
5
24. Managed liabilities at commercial
banks (25+261
25. Large time deposits, gross
26. Nondeposit funds
27.
Net due to related foreign
institutions
28.
Other'
deposits at commercial
29. U.S. government
7
banks
-5t
-6
-1.1
-0.2
-1.0
4.6
-4.0
8.6
0.4
-1.4
6.2
2.4
0
0.2
0.9
-4.8
-7.9
3.1
1.3
-2.4
3.7
4
4.6
-1.6
-1.2
5.0
-14
1.3
-8.3
½
694.9
413.6
281.3
-2
-4
2
1.
2.
3.
4.
S.
Amounts shown are from fourth quarter to fourth quarter.
Nontransactions M2 is seasonally adjusted as a whole.
The non-MZ 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,
42.3
239.1
19.5
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.
7. Consists of Treasury demand deposits and note balances at commercial banks.
pe - preliminary estimate
-17SELECTED FINANCIAL MARKET QUOTATIONS
1/
(percent)
1989
1992
-- - --- -.-.--
March
highs
1992
-.--
FOMC
Feb 5
........................
-
Dec-Jan
Lows
Change from:
-.-.--
--
- - - - - - - - - - -- .-
Mar 89 Dec-Jan
highs
Lows
Mar 26
FOMC
Feb 5
---------------------------
Short-term rates
Federal funds 2/
9.85
4.09
3.94
3.94
-5.91
0.00
-0.15
Treasury bills 3/
3-month
6-month
1-year
9.10
9.11
9.05
3.84
3.89
4.00
3.72
3.76
3.81
4.01
4.15
4.36
-5.09
-4.96
-4.69
0.29
0.39
0.55
0.17
0.26
0.36
10.05
10.15
4.08
4.08
4.01
3.94
4.23
4.24
-5.82
-5.91
0.22
0.30
0.15
0.16
Large negotiable CDs 3/
1-month
10.07
3-month
10.32
6-month
10.08
4.01
4.03
4.07
3.95
3.89
3.89
4.16
4.18
4.15
-5.91
-6.14
-5.93
0.21
0.29
0.26
0.15
0.15
0.08
Eurodollar deposits 4/
1-month
10.19
3-month
10.50
4.00
4.00
3.94
3.88
4.13
4.19
-6.06
-6.31
0.19
. 0.31
0.13
0.19
Bank prime rate
6.50
6.50
6.50
-5.00
0.00
0.00
U.S. Treasury (constant maturity)
3-year
9.88
5.59
7.21
10-year
9.53
7.74
30-year
9.31
5.05
6.71
7.39
6.23
7.57
7.99
-3.65
-1.96
-1.32
1.18
0.86
0.60
0.64
0.36
0.25
Municipal revenue 5/
(Bond Buyer)
7.95
6.76
6.53
6.87
-1.08
0.34
0.11
Corporate--A utility
recently offered
10.47
8.68
8.46
8.87
-1.60
0.41
0.19
Home mortgage rates 6/
11.22
FHLMC 30-yr. FRM
9.31
FHLMC
1-yr. ARM
8.68
5.93
8.23
5.79
9.03
6.22
-2.19
-3.09
0.80
0.43
0.35
0.29
Commercial paper
1-month
3-month
11.50
Intermediate- and long-term rates
------------------------------.
1989
Record
highs
--- -
---
- ---
-- -
- --.-
--
Date
.- .- .--.. . . .--.. . . .
Lows
Jan 3
- .--..
. . . . . .
Percent change from:
1992
FOMC
Feb 5
. . . .
Mar 26
. . . .
. . .
Record
highs
1989
lows
FOMC
Feb 5
----------------------------.
Stock prices
Dow-Jones Industrial 3290.25
NYSE Composite
231.85
AMEX Composite
418.99
NASDAQ (OTC)
644.92
Wilshire
4121.28
3/3/92
1/15/92
2/12/92
2/12/92
1/15/92
2144.64 3257.60 3267.67
154.00
228.87
225.49
305.24 415.24 398.86
378.56 636.97
615.40
2718.59 4081.13 4008.62
-0.69
-2.74
-4.80
-4.58
-2.73
52.36
46.42
30.67
62.56
47.45
0.31
-1.48
-3.94
-3.39
-1.78
-- - - - - - - - - - - - - - - - - - - - . . - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -. . - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - --
I/ One-day quotes except as noted.
2/ Average for two-week reserve maintenance period
closest to date shown. Last observation is average
to date for maintenance period ending
April 1, 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
Fridav previous to date shown.
-18-
THE INTERNATIONAL ECONOMY
Import and Export Prices
The index for prices of U.S. non-oil imports increased
0.3 percent (monthly rate) in February, after rising 0.5 and
0.6 percent in December and January, respectively.
The February
increase was led by higher prices of automotive products, up
0.9 percent, and consumer goods, up 0.5 percent.
The price of oil
imports declined 0.2 percent in February, after declining 8.7 and
9.4 percent in the previous two months.
The price of exports increased 0.7 percent in February, after
declining 0.6 and 0.7 percent in December and January.
The February
rise was largely the result of a 3.8 percent increase in the price
index for foods, feeds and beverages, which reversed declines of
3.7 and 0.8 percent in the previous two months.
@FedFRASER