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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. 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). 2 A two-step process was used. An advanced optimal 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. CONFIDENTIAL (FR) CLASS II - FOMC November 10, 1983 SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System TABLE OF CONTENTS THE DOMESTIC NONFINANCIAL ECONOMY Producer prices Page . . . . . . . . . . . . . . Retail sales . . . . . . . . . . . . . . TABLES: Recent changes in producer prices . Retail sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. THE DOMESTIC FINANCIAL ECONOMY TABLES: Monetary aggregates . . . . . . . . . . . . . . . . . Commercial bank credit and short- and intermediateterm business credit. . . . . . . . . . Selected financial market quotations. . . . . . . . . . . . . . . .. SUPPLEMENTAL NOTES THE DOMESTIC NONFINANCIAL ECONOMY Producer Prices Producer prices of finished goods rose 0.3 percent in October, in line with increases during the preceding two months. The index for consumer finished foods increased about 1 percent in October, led by higher prices for fresh fruits, vegetables, and beef. food were little changed on average. Prices of consumer goods excluding The index for capital equipment rose 0.3 percent in October, after a similar decline in September. At earlier stages of processing, increases for intermediate materials excluding food and energy remained quite moderate (up 0.2 percent) continuing the pattern seen throughout the year, while the index for crude nonfood materials (less energy) edged down over the month. -2- Retail Sales Retail sales rose 1.1 percent in October, following a downward revised 1.3 percent advance in September. Part of the October sales gain reflected a strong increase in outlays at the automotive grouping of stores. Retail sales excluding autos (as well as nonconsumer items and gasoline) rose 0.7 percent in October, slightly more rapid than the 0.5 percent average monthly advance during the third quarter. Spending increases were widespread, with especially large gains reported for furniture and appliance outlets and apparel stores. -3- RECENT CHANGES IN PRODUCER PRICES (Percentage change at annual rates; based on seasonally adjusted data)1 Relative Importance Dec. 1982 Finished goods Consumer foods Consumer energy Other consumer goods Capital equipment Intermediate materials 2 Exc. energy Crude food materials Crude energy Other crude materials 1981 1982 Q1 Q2 1983 Q3 100.0 23.7 13.2 40.5 22.5 7.1 1.4 14.1 7.1 9.2 3.7 2.1 -.1 5.3 3.9 -4.7 4.1 -35.5 -2.0 2.0 3.0 0.0 11.4 3.1 1.7 2.5 1.5 3.7 2.9 2.5 95.2 78.8 51.2 34.4 14.4 7.3 6.6 -14.0 22.8 -11.4 .3 .6 1.5 2.6 -7.6 -4.7 .8 18.1 -9.2 -16.2 3.2 2.9 .8 -5.1 61.9 5.3 4.0 5.9 -1.5 20.2 Sept. 2.1 7.8 3.0 1.5 -3.3 Oct. 3.8 13.3 -1.7 0.0 3.3 5.6 4.5 3.2 2.0 1.9 2.8 3.4 -12.3 21.5 -3.6 1. Changes are from final month of preceding period to final month of period indicated; monthly changes are not compounded. 2. Excludes materials for food manufacturing and animal feeds. -4- RETAIL SALES (Percent change from previous period; based on seasonally adjusted data) Q1 Q2 Q3 1.2 1983 Aug. Sept. Oct. -1.7 1.3 1.1 -2.1 1.0 Total sales .3 5.9 (Real)1 .3 4.9 .2 Total, less automotive group and nonconsumer stores .6 3.0 2.1 .2 .6 .6 .7 Total, less automotive group, nonconsumer stores, and gasoline stations 1.3 2.9 2.0 .1 .8 GAF 2 1.2 4.2 1.2 .0 .6 1.1 Durable Automotive Group Furniture & appliances .4 -2.6 12.4 17.6 -. 1 -2.4 -5.1 -9.1 3.5 5.6 2.9 3.5 3.2 4.0 4.5 1.0 Nondurable Apparel Food General merchandise 3 Gasoline stations .3 -. 4 -. 3 1.2 -4.3 3.0 7.2 2.6 3.1 3.8 1.7 -2.2 1.7 1.4 3.2 -. 1 -1.3 -. 7 .2 1.3 .5 .3 .2 -. 1 .8 -1.2 2.3 .2 1.4 .3 .5 -. 6 1. BCD series 59. Data are available approximately 3 weeks following the retail sales release. 2. General merchandise, apparel, furniture and appliance stores. 3. General merchandise excludes mail-order nonstores; mail-order sales are also excluded in the GAF grouping. - 5 MONETARY AGGREGATES (Based on seasonally adjusted data unless otherwise noted) 1 1983 Q2 Q1 --Money stock measures 1. M1 3 2. (M1) 3. M2 4. M3 - Q3 Aug. Oct.* Sept. Level in billions of dollars Sept. 1983 Percentage change at annual rates ---Rounded -I- 14.1 (13.8) 20.3 10.2 12.2 (12.6) 10.1 8.1 8.9 (6.6) 7.8 8.2 2.8 (7.0) 6.0 8.7 0.9 (-0.5) 4.6 7.2 10.9 10.6 7.8 7.7 10.2 143.0 -5.4 243.4 (4) 9 8 517.1 515.0 2145.1 2543.4 Selected components 5. Currency 6. Demand deposits 2.7 4.0 4.6 -6.3 7. Other checkable deposits 46.2 30.6 19.4 15.5 1.9 126.0 8. M2 minus M1 (9+10+11+14) 22.4 9.4 7.5 7.0 5.8 1628.0 34.2 Overnight RPsand Eurodollars, NSA General purpose and broker/dealer money -57.5 market mutual fund shares, NSA 57.8 Commercial banks Savings deposits, SA, plus 296.1 MMDAs,NSA5 -48.5 Small time deposits 14.7 Thrift institutions Savings deposits, SA, plus 171.0 MMDAs, NSA5 Small time deposits -51.0 47.3 -10.4 -15.9 16.2 52.7 -44.0 16.5 -11.2 12.3 4.3 9.3 -14.7 10.1 137.5 693.8 62.4 -24.1 12.4 10.1 14.9 8.0 -2.7 22.4 6.4 4.0 17.3 5.0 356.9 337.0 751.4 56.8 -18.0 2.8 12.3 -10.0 20.0 -6.9 14.4 330.7 420.7 -36.5 -2.3 10.5 23.4 21.2 398.3 -43.0 -49.9 -14.6 -0.5 -15.6 55.4 13.9 -4.2 71.9 23.6 3.7 78.1 24.3 3.7 80.4 317.9 227.1 90.8 -32.7 19.4 -41.9 31.2 -14.9 0.0 -6.2 56.1 21.9 2.7 39.1 44.9 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 4 M3 minus M2 (18+21+22) Large time deposits 6 At commercial banks, net At thrift institutions Institution-only money market mutual fund shares, NSA Term RPs, NSA - Areage mothly change in billions of dollars - MEMORANDA: 23. 24. 25. 26. 27. 28. Managed liabilities at commercial banks (24425) Large tim deposits, gross Nondeposit funds Net due to related foreign SA institutions, 7 Other U.S. government deposits at commercial 8 banks -18.8 -16.5 -2.3 -0.2 -4.3 4.1 -2.9 -1.2 -1.7 4.6 -0.7 5.3 0.7 -0.9 1.6 -10 -5 -5 366.5 283.3 83.2 -4.8 2.5 2.4 1.7 1.2 -2.9 7.1 -1.9 0.4 1.3 -5 0 -51.5 134.7 0.2 0.2 1.2 5 16.5 -3.4 -4.1 1. Quarterly growth rates are computed on a quarterly average basis. changes are calculated on an end-month-of-quarter basis. 2e. stLmate based on complete data through October 26 aad partial data for later i t he mouth. 3. Ml seasonally adjusted using an experimatal model-based procedure applied to ueekly data. plus overnight Eurodollar 4. Overnight and coatinuing contract tPs issued to the nonbank public by commercial balo deposits lssued by brancba of U.S. banks to U.S. nonbank customrs, both net of amounts held by money market mutual funds. Excludes retail Lt, which are in the small time deposit component. 5. Beginning December, 1982, growth rates are for savings deposits, seasonally adjuated. plus money mrket deposit declined during August, accounts (MODAs), not seasonally adjusted. Commrcial bank savings deposits excluding I~D At thrift iantitutions, savings depoaits excluding September. and October at rates of 11.2. 8.7 and 10.5 respectively. MHDAs declined durig August, September and October at rates of 0.7, 3.3, and 2.6 respectively. 6. Met of large-denaomant tim deposits held by money market mutual funds and thrift institutions. 7. Conssts of borrowings from other chan camercial banks in the form of federal funds purchased, securities sold under agreements to repurchaae and other liabilities for borrowed money (including borrowings from the Federal laserve and unaffiliated foreign banks), loans sold to affiliates, loan RPs and other minor iteas. Data are partially estimated. 8. Consists of Treasury demand deposits at cao rcial banks and Treasury note balances. Dollar aounts shown adr moroada for quarterly -6COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT (Percentage changes at annual rates, based on seasonally adjusted data)1 Q2 Q1 Q3 2. 3. 4. 5. Total loans 2 and securities at banks Securities Treasury securities Other securities Total loans 2 2 8.6 11.2 4.9 9.6 1534.6 25.6 23.9 6.3 9.1 4.8 13.6 428.7 61.1 53.5 13.3 10.4 17.2 35.3 182.1 5.3 5.8 1.3 8.3 -3.4 -2.4 246.6 5.7 4.8 9.5 11.9 4.9 8.1 1105.9 3.9 -1.3 7.6 10.1 0.3 6.9 407.0 -34.0 -5.3 25.1 -35.4 36.5 60.8 24.9 11.6 11.6 13.8 9.9 328.9 15.8 14.2 12.8 24.3 211.9 7. Security loans 8. Real estate loans 7.1 9.7 9. Consumer loans 6.3 10.3 ---- 11. 12. Bustiess loans net of banker acceptances Commerial paper issued by non3 finocial firms 13. Sun of lines 11 i 12 14. Line 13 plus4 loans at foreign branches 15. 16. Finance capany loam to busiess Total bankers acceptance 5 outstaadicg 5 Levels in bil. of dollars Oct. 1983P 9.9 Business loans Total short- and intermdiateterm business credit (su of 14, 15 and 16) lies Oct.P 10.7 6. 10. Sept. Commercial Bank Credit - _---_------- 1. 1983 Aug. Short- and Intermediate-Tem Bsiness Credit -- -3.1 -1.5 a.a. 12.1 n.a. nas. 3.0 -0.4 7.4 10.0 0.9 5.2 -33.1 -23.5 5.4 18.8 21.1 46.2 2.6 7.6 444.3 3.8 9.6 462.3 -0.4 -2.8 0.3 -2.2 4.0 7.8 -30.9 -7.3 7.1 n.S. 398.1 . a. o.a. n.a. a.&. a.s. n.a. p-preliminary u.a.--not mailable. 1. Average of Wdsudays for domestically chartered banks ad serage at current and preceding eads of months for foreign-related institutions. 2. Loans include outstanding amounts of loans reported au old outright to a bank's own foreign branches. rconsolidated onbank affiliates of the bank, the bank's holding company (if not a bank), *ad uncoosolidated onbahnk subsidiaries of the holding capany. 3. Average of Wednesdays. 4. Loans at foreign branches are loas made to U.S. firms by foreign branches of domestcally chartered banks. 5. Based on average of current and preceding eods of month. - 7SELECTED FINANCIAL MARKET QUOTATIONS 1 (Percent) 1982 FOMC Highs Dec. 21 Recent FOMC low Aug. 23 1983 FOMC Oct. 4 Nov. 9 Change from: Recent FOMC low Oct. 4 Short-term rates Federal funds 2 15.61 8.69 8.48 9.41 10.00 9.36 .88 Treasury bills 3-month 6-month 1-year 14.57 14.36 13.55 7.90 8.01 8.11 7.96 7.97 7.95 9.19 9.33 9.37 8.65 8.86 9.00 8.78 8.97 9.10 .82 1.00 1.15 Commercial paper 1-month 3-month 15.73 15.61 8.48 8.43 8.17 8.13 9.24 9.34 9.05 9.02 9.16 9.15 .99 1.02 Large negotiable CDs 3 1-month 3-month 6-month 15.94 16.14 16.18 8.59 8.62 8.78 8.26 8.26 8.29 9.37 9.50 9.81 9.13 9.18 9.36 9.26 9.40 9.55 1.00 Eurodollar deposits 2 1-month 3-month 16.36 16.53 9.44 9.56 8.68 8.71 9.73 10.04 9.38 9.48 9.55 9.84 .87 1.13 17.00 11.50 10.50 11.00 11.00 11.00 .50 13.97 13.50 8.98 9.56 8.21 8.53 9.61 10.09 8.89 9.55 8.99 9.75 .78 1.22 9.87 10.54 10.53 9.36 10.12 10.27 11.02 11.57 11.56 10.82 11.46 11.47 11.06 11.84 11.87 1.70 1.72 1.60 Bank prime rate Treasury bill futures Dec. 1983 contract June 1984 contract 1.14 1.26 -. 64 -. 13 .22 .19 Intermediate- and longterm rates U.S. Treasury (constant maturity) 3-year 15.16 14.95 10-year 30-year 14.80 Municipal (Bond Buyer) 13.44 10.05 4 8.78 9.704 9.464 Corporate--Aaa utility Recently offered 16.34 11.9 6 e 11.03 12.50e 12. 3 8e 17.66 1982 13.635 12.55 S&L fixed-rate mortgage commitment 9.794 12.78 1.01 1.75 .87 -.23 13.895 13.655 13.425 1983 Percent change frol FOMC FOMC 1983 FOMC Aug. 23 Oct. 4 Nov. 9 high Oct. 4 Lows Highs Stock prices Dow-Jones Industrial 776.92 1248.30 1192.89 1236.69 1232.52 -1.3 NYSE Composite 58.80 99.01 94.27 96.24 94.44 -4.6 -12.6 215.28 229.67 229.41 246.38 118.65 AMEX Composite -17.6 271.00 328.91 293.66 294.81 159.14 NASDAQ (OTC) 1. One-day quotes except as noted. 4. One-day quotes for preceding 2. Averages for statement week closest to date shown. 5. One-day quotes for preceding 3. Secondary market. p--preliminary. e--estimated. -. 3 -1.9 -6.2 -8.1 Thursd. Friday
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