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Board of Governors of the Federal Reserve System The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system. Accessible Material October 2012 Tealbook Tables and Charts Table of Contents Book A Domestic Economic Developments and Outlook International Economic Developments and Outlook Financial Developments Risks and Uncertainty Greensheets Book B Monetary Policy Strategies Monetary Policy Alternatives Explanatory Notes Last update: January 5, 2018 BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM 20th Street and Constitution Avenue N.W., Washington, DC 20551 Board of Governors of the Federal Reserve System The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system. Accessible Material October 2012 Tealbook A Tables and Charts† Domestic Economic Developments and Outlook Key Background Factors underlying the Baseline Staff Projection Figure: Federal Funds Rate Line chart, by percent, 2007 to 2014. Data are quarterly averages. There are three series, Current Tealbook, Previous Tealbook, and Market, expected rate. Current Tealbook begins in 2007 at about 5.15 and generally decreases to about 0.1 by 2009. It remains relatively constant here until 2014. Previous Tealbook generally follows the same path as Current Tealbook until 2014 when it increases to about 0.6. Market, expected rate generally follows the same path as Current Tealbook until 2012 when it begins increasing. It ends in 2014 at about 0.25. Figure: Long-Term Interest Rates Line chart, by percent, 2007 to 2014. Data are quarterly averages. There are six series, Current BBB corporate yield, Previous BBB corporate yield, Current Conforming mortgage rate, Previous Conforming mortgage rate, Current 10-year Treasury yield, and Previous 10-year Treasury yield. Current BBB corporate yield begins in 2007 at about 6 and generally increases to about 9.4 by 2008. It generally decreases to about 4.25 by 2012 and then increases to about 5.1 by 2014. Previous BBB corporate yield generally follows the same path as Current BBB corporate yield until 2012 when it begins increasing at a faster rate. It ends in 2014 at about 5.25. Current Conforming mortgage rate begins in 2007 at about 5.15 and generally decreases to about 3.7 by 2012. It then increases to about 4.95 by 2014. Previous Conforming mortgage rate generally follows the same path as Current Conforming mortgage rate until 2012 when it begins increasing at a faster rate. It ends in 2014 at about 5.1. Current 10-year Treasury yield begins in 2007 at about 4.9 and generally decreases to about 1.75 by 2012. It then increases to about 3.5 by 2014. Previous 10-year Treasury yield generally follows the same path as Current 10year Treasury yield until 2012 when it begins increasing at a faster rate. It ends in 2014 at about 3.7. Figure: Equity Prices Line chart, by ratio scale where 2007:Q1 = 100, 2007 to 2014. Data are quarter-end. There are two series, Current Dow Jones U.S. Total Stock Market Index and Previous Dow Jones U.S. Total Stock Market Index. Current Dow Jones U.S. Total Stock Market Index begins in 2007 at about 100 and general decreases to about 56 by 2009. It then generally increases to about 129 by 2014. Previous Dow Jones U.S. Total Stock Market Index generally follows the same path as Current Dow Jones U.S. Total Stock Market Index until 2012 when it begins increasing at a slower rate. It ends in 2014 at about 121. Figure: House Prices Line chart, by ratio scale where 2007:Q1 = 100, 2007 to 2014. Data are quarterly. There are two series, Current CoreLogic index and Previous CoreLogic index. Current CoreLogic index begins in 2007 at about 100 and generally decreases to about 68 by 2011. It then generally increases to about 77 by 2014. Previous CoreLogic index generally follows the same path as Current CoreLogic index until 2012 when it begins increasing at a slower rate. It ends in 2014 at about 76. Figure: Crude Oil Prices Line chart, by dollars per barrel, 2007 to 2014. Data are quarterly averages. There are four series, Current Imported oil, Previous Imported oil, Current West Texas Intermediate, and Previous West Texas Intermediate. Current Imported oil begins in 2007 at about 60 and generally increases to about 125 by 2008. It decreases to about 42 by 2009 and then increases to about 105 by 2011. It decreases to about 89 by 2014. Previous Imported oil generally follows the same path as Current Imported oil. Current West Texas Intermediate begins in 2007 at about 60 and generally increases to about 118 by 2008. It decreases to about 44 by 2009 and then generally increases to about 113 by 2011. It then decreases to about 93 by 2014. Previous West Texas Intermediate generally follows the same path as Current West Texas Intermediate. Figure: Broad Real Dollar Line chart, by ratio scale where 2007:Q1 = 100, 2007 to 2014. Data are quarterly averages. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 2007 at about 100 and decreases to about 89 by 2008. It increases to about 101 by 2009 and then generally decreases to about 84 by 2014. Previous Tealbook generally follows the same path as Current Tealbook until 2012 when it begins decreasing at a slower rate. It ends in 2014 at about 85. Note: Blue shading represents the projection period, which begins in 2012:Q4. [Box:] The Effects of the 2012 Drought Figure: USDA Estimates of Farm Output of Major Crops Line chart, by billions of chained 2005 dollars, 1974 to 2012. There are two series, Current and June 2012. Current begins in 1974 at about 25 and generally increases to about 37 by 1981. It decreases to about 25 by 1989 and then generally increases to about 55 by 2009. It then decreases to about 46 by 2012. June 2012 generally follows the same path as Current until 2011 when it begins increasing. It ends in 2012 at about 58. Note: The series plotted is an index of farm crop production constructed by chain-weighting USDA estimates of physical production of corn, soybeans, and wheat with corresponding spot prices. Sales of these three crops account for roughly two-thirds of total annual crop sales. The areas shaded yellow, 1974, 1980, 1983, 1988, 1993, and 2012, denote years in which losses from drought were substantial. Source: USDA data chain-aggregated by FRB staff. Figure: Crop Price Index Line chart, by index where June 2012 = 100, 2007 to 2014. The series begins in 2007 at about 60 and generally increases to about 109 by 2008. It decreases to about 57 by 2010 and then generally increases to about 130 by 2012. It then decreases to about 100 by 2014. Note: Staff aggregate of spot prices for corn, wheat, and soybeans, projected using futures prices. Seasonally adjusted by FRB staff. Blue shading represents the projection period, which begins in 2012:Q4. Source: Commodity Research Bureau. Figure: PCE Food and Beverages Price Index Line chart, by quarterly percent change, annual rate, 2007 to 2014. There is a horizontal line at zero. There are two series, Current Tealbook and June Tealbook. Current Tealbook begins in 2007 at about 5.5 and generally increases to about 9.75 by 2008. It decreases to about -3.8 by 2009 and then generally increases to about 6.2 by 2011. It decreases to about .5 by 2012 and then increases to about 3.9 by 2013. It ends in 2014 at about 1. June Tealbook begins in 2007 at about 5.5, and generally increases to about 9.75 by 2008. It decreases to about -3.8 by 2007 and then generally increases to about 6.5 by 2011. It then decrease to about 1.3 by 2014. Note: PCE food and beverages refers to off-premises consumption. Blue shading represents the projection period, which begins in 2012:Q4. Source: U.S. Department of Commerce, Bureau of Economic Analysis, and staff forecasts. Summary of the Near-Term Outlook (Percent change at annual rate except as noted) 2012:Q3 Measure Previous Tealbook Real GDP 2012:Q4 Current Tealbook Previous Tealbook 2013:Q1 Current Tealbook Previous Tealbook Current Tealbook 1.3 2.0 1.7 2.0 2.0 1.8 2.1 2.1 2.2 3.1 1.3 1.4 Personal consumption expenditures 2.3 2.3 2.2 3.1 1.1 1.1 Residential investment 9.7 14.3 5.5 13.9 10.5 13.4 -1.0 -2.5 1.5 .8 .6 1.0 -1.7 .6 -1.1 -1.6 -1.5 -1.5 -.1 .1 .2 .0 1.2 .8 .0 .0 -.2 -.2 .0 .1 Unemployment Rate 2 8.3 8.1 8.3 8.0 8.2 8.0 PCE Chain Price Index 1.9 1.7 1.7 2.1 1.2 .9 1.3 1.2 1.5 1.4 1.6 1.6 Private domestic final purchases Business fixed investment Government purchases Contributions to change in real GDP Inventory investment 1 Net exports 1 Ex. food and energy 1. Percentage points. Return to table 2. Percent. Return to table Recent Nonfinancial Developments (1) Figure: Real GDP and GDI Line chart, by 4-quarter percent change, 2003 to 2012. There is a horizontal line at zero. There are two series, Gross domestic product and Gross domestic income. Gross domestic product begins in 2003 at about 1.8 and generally increases to about 4.1 by 2004. It generally decreases to about -4.25 by 2009 and then generally increases to about 2 by 2012:Q2. Gross domestic income begins in 2003 at about 1.25 and generally increases to about 4.1 by 2006. It generally decreases to about -5 by 2009 and then generally increases to about 2 by 2012:Q2. Source: U.S. Department of Commerce, Bureau of Economic Analysis. Figure: Change in Private Payroll Employment Line chart, by thousands of employees, 2003 to 2012. There is a horizontal line at zero. There are two series, Current Tealbook and 3-month moving average. Current Tealbook begins in 2003 at about 50 and generally increases to about 375 by 2005. It generally decreases to about -900 by 2009 and then generally increases to about 100 by September 2012. 3-month moving average begins in 2003 at about -25 and generally increases to about 275 by 2004. It generally decreases to about -800 by 2009 and then generally increases to about 110 by September 2012. Source: U.S. Department of Labor, Bureau of Labor Statistics. Figure: Unemployment Rate Line chart, by percent, 2003 to 2013. The series begins in 2003 at about 5.9 and generally decrease to about 4.5 by 2007. It generally increases to about 10 by 2009 and then generally decreases to about 7.9 by September 2012. Source: U.S. Department of Labor, Bureau of Labor Statistics Figure: Manufacturing IP excluding Motor Vehicles and Parts Line chart, by 3-month percent change, annual rate, 2003 to 2012. There is a horizontal line at zero. The series begins in 2003 at about 0 and generally increases to about 14 by 2005. It generally decreases to about -25 by 2009 and then generally increases to about 14 by 2010. It then generally decreases to about -1 by September 2012. Source: Federal Reserve Board, G.17 Statistical Release, "Industrial Production and Capacity Utilization." Recent Nonfinancial Developments (2) Figure: Production of Light Motor Vehicles Line chart, by millions of units, annual rate, 2003 to 2012. The series begins in 2003 at about 12.6 and generally decreases to about 3 by 2009. It then generally increases to about 9.5 by September 2012. Source: Ward's Auto Infobank. Figure: Sales of Light Motor Vehicles Line chart, by millions of units, annual rate, 2003 to 2012. The series begins in 2003 at about 16 and generally increases to about 20 by 2005. It generally decreases to about 9 by 2009 and then generally increases to about 15 by September 2012. Source: Ward's Auto Infobank. Figure: Real PCE Goods excluding Motor Vehicles Line chart, by billions of chained (2005) dollars, 2003 to 2012. The series begins in 2003 at about 2400 and generally increases to about 2950 by 2007. It generally decreases to about 2800 by 2009 and then increases to about 3150 by September 2012. Note: Figures for July, August, and September 2012 are staff estimates based on available source data. Source: U.S. Department of Commerce, Bureau of Economic Analysis. Figure: Single-Family Housing Starts Line chart, by thousands of units, annual rate, 2003 to 2012. There are two series, Starts and Adjusted permits. Starts begins in 2003 at about 1500 and generally increases to about 1800 by 2006. It generally decreases to about 350 by 2008 and then generally increases to about 575 by September 2012. Adjusted permits generally follows the same path as Starts. Note: Adjusted permits equal permits plus starts outside of permit-issuing areas. Source: U.S. Census Bureau. Figure: Single-Family Home Sales Line chart, by thousands of units, annual rate, 2003 to 2012. There are two series, New and Existing. New begins in 2003 at about 1050 and generally increases to about 1350 by 2005. It then generally decreases to about 400 by August 2012. Existing begins in 2003 at about 5400 and generally increases to about 6250 by 2005. It generally decreases to about 3475 by 2008 and then increases to about 5000 by 2009. It then generally decrease to about 4500 by August 2012. Source: For existing, National Association of Realtors; for new, U.S. Census Bureau. Figure: Nondefense Capital Goods excluding Aircraft Line chart, by billions of dollars, 2003 to 2012. There are two series, Orders and Shipments. Orders begins in 2003 at about 49 and generally increases to about 70 by 2008. It generally decreases to about 46 by 2009 and then generally increases to about 61 by August 2012. Shipments begins in 2003 at about 49 and generally increases to about 66 by 2008. It generally decreases to about 52 by 2009 and then generally increases to about 64 by August 2012. Source: U.S. Census Bureau. Recent Nonfinancial Developments (3) Figure: Nonresidential Construction Put in Place Line chart, by billions of chained (2005) dollars, 2003 to 2012. The series begins in 2003 at about 255 and generally increases to about 350 by 2008. It generally decreases to about 190 by 2011 and then generally increases to about 235 by August 2012. Note: Nominal CPIP deflated by BEA prices through 2012:Q2 and by staff's estimated deflator thereafter. Source: U.S. Census Bureau. Figure: Inventory Ratios excluding Motor Vehicles Line chart, by months, 2003 to 2012. There are two series, Staff flow-of-goods system and Census book-value data. Staff flow-of-goods system begins in 2003 at about 1.599 and generally decreases to about 1.48 by 2007. It generally increases to about 1.62 by 2009 and then generally decreases to about 1.51 by August 2012. Census book-value data begins in 2003 at about 1.3 and generally decreases to about 1.18 by 2008. It generally increases to about 1.41 by 2009 and then decreases to about 1.23 by August 2012. Note: Flow-of-goods system covers total industry excluding motor vehicles and parts, and inventories are relative to consumption. Census data cover manufacturing and trade excluding motor vehicles and parts, and inventories are relative to sales. Source: U.S. Census Bureau; staff calculation. Figure: Defense Spending Line chart, by billions of chained (2005) dollars, 2003 to 2012. There are two series, Unified (monthly) and NIPA (quarterly). Unified (monthly) begins in 2003 at about 451 and generally increases to about 690 by 2010. It then decreases to about 530 by September 2012. NIPA (quarterly) begins in 2003 at about 450 and generally increases to about 650 by 2010. It then decreases to about 590 by September 2012. Note: The unified series is seasonally adjusted and deflated by BEA prices. The NIPA series excludes the consumption of fixed capital. Source: Monthly Treasury Statement; U.S. Department of Commerce, Bureau of Economic Analysis. Figure: Exports and Non-Oil Imports Line chart, by billions of dollars, 2003 to 2012. There are two series, Non-oil imports and Exports. Non-oil imports begins in 2003 at about 110 and generally increases to about 180 by 2008. It decreases to about 130 by 2009 and then generally increases to about 190 by August 2012. Exports begins in 2003 at about 81 and generally increases to about 165 by 2008. It decreases to about 120 by 2009 and then generally increases to about 180 by August 2012. Source: U.S. Department of Commerce, Bureau of Economic Analysis; U.S. Census Bureau. Figure: Total PCE Prices Line chart, by percent, 2003 to 2012. There is a horizontal line at zero. There are two series, 12-month change and 3-month change. 12-month change begins in 2003 at about 2 and generally increases to about 4 by 2008. It generally decreases to about -1 by 2009 and then generally increases to about 1.9 by September 2012. 3-month change begins in 2003 at about 2 and generally increases to about 8.5 by 2005. It generally decreases to about -9 by 2008 and then generally increases to about 3.8 by September 2012. Note: 3-month changes are at an annual rate. July, August, and September 2012 are staff estimates. Source: U.S. Department of Commerce, Bureau of Economic Analysis. Figure: PCE Prices excluding Food and Energy Line chart, by percent, 2003 to 2012. There are two series, 12-month change and 3-month change. 12-month change begins in 2003 at about 1.8 and generally increases to about 2.5 by 2007. It generally decreases to about 1.15 by 2011 and then generally increases to about 1.7 by September 2012. 3-month change begins in 2003 at about 0.9 and generally increases to about 3.25 by 2007. It generally decreases to about 0.4 by 2009 and then generally increases to about 2.5 by 2011. It then generally decreases to about 1 by September 2012. Note: 3-month changes are at an annual rate. July, August, and September 2012 are staff estimates. Source: U.S. Department of Commerce, Bureau of Economic Analysis. Projections of Real GDP and Related Components (Percent change at annual rate from final quarter of preceding period except as noted) 2012 Measure Real GDP 2011 H1 H2 2013 2014 2.0 1.6 2.0 2.6 3.5 2.0 1.8 1.5 2.4 3.2 1.7 2.1 2.0 2.5 3.5 1.7 2.1 1.4 2.1 3.1 1.9 2.0 2.7 2.8 3.7 Previous Tealbook 1.9 2.1 2.3 2.4 3.4 Residential investment 3.9 14.3 14.1 14.8 13.2 Previous Tealbook 3.9 14.3 7.6 11.9 12.4 6.9 6.6 -4.2 2.7 2.3 6.9 6.5 -2.3 2.2 2.2 11.4 5.1 .5 4.2 7.5 11.4 4.8 1.3 5.1 7.2 Previous Tealbook Final sales Previous Tealbook Personal consumption expenditures Nonresidential structures Previous Tealbook Equipment and software Previous Tealbook Federal purchases Previous Tealbook State and local purchases Previous Tealbook Exports Previous Tealbook Imports Previous Tealbook -4.2 -2.3 -1.4 -4.2 -4.2 -4.2 -2.2 -2.8 -4.2 -4.3 -2.7 -1.6 .0 .3 .9 -2.7 -1.6 -.5 .3 .9 4.3 4.8 1.1 5.1 6.2 4.3 5.2 3.3 4.5 5.7 3.5 2.9 1.4 3.9 5.0 3.5 3.0 3.3 4.2 4.8 Contributions to change in real GDP (percentage points) Inventory change Previous Tealbook Net exports Previous Tealbook .3 -.4 .1 .2 .0 .3 -.3 .0 .3 .1 .0 .1 -.1 .0 .0 .0 .2 -.1 -.1 .0 Figure: Real GDP Line chart, by 4-quarter percent change, 1983 to 2014. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 1984 at about 8.4 and generally decreases to about -1 by 1991. It generally increases to about 6 by 2000 and then generally decreases to about -4.25 by 2009. It then generally increases to about 3.9 by 2014. Previous Tealbook generally follows the same path as Current Tealbook and ends in 2014 at about 3.8. Note: The gray shaded bars indicate a period of business recession as defined by the National Bureau of Economic Research: July 1990-March 1991, March 2001-November 2001, and December 2007-June 2009. Blue shading represents the projection period, which begins in 2012:Q3. Source: U.S. Department of Commerce, Bureau of Economic Analysis. Components of Final Demand Figure: Personal Consumption Expenditures Line chart, by 4-quarter percent change, 2008 to 2014. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 2008 at about 1 and generally decreases to about -3 by 2009. It increases to about 3 by 2010 and then generally decreases to about 1.8 by 2012. It then generally increases to about 3.9 by 2014. Previous Tealbook generally follows the same path as Current Tealbook until 1012 when it begins increasing at a slower rate. It ends in 2014 at about 3.4. Figure: Residential Investment Line chart, by 4-quarter percent change, 2008 to 2014. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 2008 at about -24 and generally decreases to about -28 by 2009. It generally increases to about 6 by 2010 and then decreases to about -7 by 2011. It then generally increases to about 13 by 2014. Previous Tealbook generally follows the same path as Current Tealbook until 2012 when it begins increasing at a slower rate. It ends in 2014 at about 12. Figure: Equipment and Software Line chart, by 4-quarter percent change, 2008 to 2014. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 2008 at about 2.5 and generally decreases to about -20 by 2009. It generally increases to about 11 by 2010 and then decreases to about 1 by 2013. It then generally increases to about 7.5 by 2014. Previous Tealbook generally follows the same path as Current Tealbook. Figure: Nonresidential Structures Line chart, by 4-quarter percent change, 2008 to 2014. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 2008 at about 15 and generally decreases to about -30 by 2009. It generally increases to about 20 by 2011 and then decreases to about -1 by 2013. It then generally increases to about 2.5 by 2014. Previous Tealbook generally follows the same path as Current Tealbook. Figure: Government Consumption & Investment Line chart, by 4-quarter percent change, 2008 to 2014. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 2008 at about 2.9 and generally increases to about 4.25 by 2009. It decreases to about -3.9 by 2011 and then generally increases to about -1 by 2014. Previous Tealbook generally follows the same path as Current Tealbook. Figure: Exports and Imports Line chart, by 4-quarter percent change, 2008 to 2014. There is a horizontal line at zero. There are four series, Current Exports, Previous Exports, Current Imports, and Previous Imports. Current Exports begins in 2008 at about 10 and generally decreases to about -14 by 2009. It increases to about 12.5 by 2010 and then generally decreases to about 6 by 2014. Previous Exports generally follows the same path as Current Exports. Current Imports begins in 2008 at about 0 and generally decreases to about -18 by 2009. It increases to about 16 by 2010 and then generally decreases to about 5 by 2014. Previous Imports generally follows the same path as Current Imports. Note: Blue shading represents the projection period, which begins in 2012:Q3. Source: U.S. Department of Commerce, Bureau of Economic Analysis. Aspects of the Medium-Term Projection Figure: Personal Saving Rate Line chart, by percent, 1995 to 2015. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 1995 at about 6 and generally decreases to about 1.25 by 2005. It generally increases to about 6 by 2008 and then generally decreases to about 3.6 by 2014. Previous Tealbook generally follows the same path as Current Tealbook until about 2012 when it begins decreasing at a slower rate. It ends in 2014 at about 3.9. Source: U.S. Department of Commerce, Bureau of Economic Analysis. Figure: Wealth-to-Income Ratio Line chart, by ratio, 1995 to 2015. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 1995 at about 4.81 and generally increases to about 6.2 by 2000. It generally decreases to about 5.18 by 2003 and then generally increases to about 6.5 by 2006. It decreases to about 4.7 by 2009 and then generally increase to about 5.5 by 2014. Previous Tealbook generally follows the same path as Current Tealbook until 2012 when it begins increasing at a slower rate. It ends in 2014 at about 5.4. Note: Household net worth as a ratio to disposable personal income. Source: For net worth, Federal Reserve Board, flow of funds data; for income, Department of Commerce, Bureau of Economic Analysis. Figure: Single-Family Housing Starts Line chart, by millions of units, 1995 to 2015. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 1995 at about 1 and generally increases to about 1.75 by 2005. It decreases to about 0.30 by 2008 and then generally increases to about 0.8 by 2014. Previous Tealbook generally follows the same path as Current Tealbook until 2012 when it begins increasing at a slower rate. It ends in 2014 at about 0.75. Source: U.S. Census Bureau. Figure: Equipment and Software Spending Line chart, by share of nominal GDP, 1995 to 2015. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 1995 at about 8.1 and generally increases to about 9.6 by 2000. It generally decreases to about 6.35 by 2009 and then generally increases to about 7.5 by 2014. Previous Tealbook generally follows the same path as Current Tealbook until 2012 when it begins increasing at a faster rate. It ends in 2014 at about 7.6. Source: U.S. Department of Commerce, Bureau of Economic Analysis. Figure: Federal Surplus/Deficit Line chart, by share of nominal GDP, 1995 to 2015. Data are 4-quarter moving averages. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 1995 at about 2.8 and generally increases to about 2.1 by 2000. It generally decreases to about -10.5 by 2009 and then generally increases to about -3.9 by 2014. Previous Tealbook generally follows the same path as Current Tealbook. Source: Monthly Treasury Statement. Figure: Current Account Surplus/Deficit Line chart, by share of nominal GDP, 1995 to 2015. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 1995 at about -1.9 and generally decreases to about 6.5 by 2005. It generally increase to about -2.5 by 2009 and then decreases to about -3 by 2014. Previous Tealbook generally follows the same path as Current Tealbook until 2012 when it begins decreasing at a faster rate. It ends in 2014 at about -3.4. Source: U.S. Department of Commerce, Bureau of Economic Analysis. Note: The gray shaded bars indicate a period of business recession as defined by the National Bureau of Economic Research: March 2001-November 2001, and December 2007-June 2009. Blue shading represents the projection period, which begins in 2012:Q3. Decomposition of Potential GDP (Percent change, Q4 to Q4, except as noted) Measure Potential real GDP 1974-1995 1996-2000 2001-2010 2011 2012 2013 2014 3.0 3.4 2.2 1.5 1.8 2.0 2.1 3.0 3.4 2.2 1.7 1.8 2.0 2.1 Structural labor productivity 1.4 2.6 2.1 1.3 1.4 1.6 1.7 Previous Tealbook 1.4 2.6 2.2 1.5 1.4 1.6 1.7 .7 1.5 .7 .4 .5 .6 .6 .7 1.5 .7 .4 .5 .6 .7 .5 .8 1.2 .8 .9 .9 1.0 .5 .8 1.2 .9 .8 .9 .9 1.5 1.0 .6 .5 .6 .6 .6 Previous Tealbook Selected contributions 1 Capital deepening Previous Tealbook Multifactor productivity Previous Tealbook Structural hours Previous Tealbook 1.5 1.0 .6 .5 .6 .6 .6 Labor force participation .4 .0 -.3 -.4 -.3 -.3 -.3 .4 .0 -.3 -.4 -.3 -.3 -.3 Previous Tealbook Note: Components may not sum to totals because of rounding. For multiyear periods, the percent change is the annual average from Q4 of the year preceding the first year shown to Q4 of the last year shown. 1. Percentage points. Return to table Figure: Structural and Actual Labor Productivity (Nonfarm business sector) Line chart, by chained (2005) dollars per hour, 2001, to 2014. There are two series, Current Tealbook and Structural. Current Tealbook begins in 2001 at about 43.75 and generally increases to about 51 by 2009. It then increases to about 58 by 2014. Structural begins in 2001 at about 44 and generally increases to about 57.9 by 2014. Note: Blue shading represents the projection period, which begins in 2012:Q3. Source: U.S. Department of Labor, Bureau of Labor Statistics; Bureau of Economic Analysis; and staff assumptions. Figure: Structural and Actual Labor Force Participation Rate Line chart, by percent, 2001 to 2014. There are two series, Current Tealbook and Structural. Current Tealbook begins in 2001 at about 67.1 and generally decreases to about 66 by 2007. It then generally decreases to about 63.5 by 2014. Structural begins in 2001 at about 66.8 and generally decreases to about 64.9 by 2014. Note: Blue shading represents the projection period, which begins in 2012:Q4. Source: U.S. Department of Labor, Bureau of Labor Statistics; Bureau of Economic Analysis; and staff assumptions. The Outlook for the Labor Market and Resource Utilization (Percent change from final quarter of preceding period) 2012 Measure 2011 Output per hour, nonfarm business H1 H2 2013 2014 .6 .7 1.1 1.3 1.6 .6 .8 .9 1.3 1.6 175 157 137 170 249 Previous Tealbook 175 159 145 153 218 Labor force participation rate2 64.0 63.7 63.6 63.6 63.6 Previous Tealbook 64.0 63.7 63.7 63.7 63.7 Civilian unemployment rate 2 8.7 8.2 8.0 7.8 7.2 Previous Tealbook 8.7 8.2 8.3 8.0 7.6 -4.0 -4.1 -4.0 -3.4 -2.0 -4.4 -4.4 -4.6 -4.1 -3.1 Previous Tealbook Nonfarm private employment 1 Memo: GDP gap 3 Previous Tealbook 1. Thousands, average monthly changes. Return to table 2. Percent, average for the final quarter in the period. Return to table 3. Percent difference between actual and potential GDP in the final quarter of the period indicated. A negative number indicates that the economy is operating below potential. Return to table Source: U.S. Department of Labor, BLS; staff assumptions. Figure: Nonfarm Private Employment (Average monthly changes) Line chart, by thousands, 1995 to 2015. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 1995 at about 210 and generally decreases to about -300 by 2001. It generally increases to about 300 by 2005 and then decreases to about -800 by 2009. It then generally increases to about 300 by 2014. Previous Tealbook generally follows the same path as Current Tealbook until 2012 when it begins increasing at a slower rate. It ends in 2014 at about 250. Source: U.S. Department of Labor, BLS. Figure: Unemployment Rate Line chart, by percent, 1995 to 2015. There are four series, Current Tealbook, Previous Tealbook, Natural rate, and Natural rate with EEB adjustment. Current Tealbook begins in 1995 at about 5.6 and generally decreases to about 4 by 2000. It generally increases to about 10 by 2009 and then decreases to about 7.1 by 2014. Previous Tealbook generally follows the same path as Current Tealbook until 2012 when it begins decreasing at a slower rate. It ends in 2014 at about 7.8. Natural rate begins in 1995 at about 5 where it remains relatively constant until 2008. It increases to about 6 by 2010 where it remains relatively constant until 2014. Natural rate with EEB adjustment begins in 1995 at about 5 where it remains relatively constant until 2008. It increases to about 6.6 by 2010 and then generally decreases to about 6 by 2014. Note: The EEB adjustment is the staff estimate of the effect of extended and emergency unemployment compensation programs on the natural rate of unemployment. Source: U.S. Department of Labor, BLS; staff assumptions. Figure: GDP Gap Line chart, by percent, 1995 to 2015. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 1995 at about -2 and generally increases to about 3 by 2000. It generally decreases to about -6.2 by 2009 and then generally increases to about -2 by 2014. Previous Tealbook generally follows the same path as Current Tealbook until 2012 when it begins increasing at a slower rate. It ends in 2014 at about -3. Note: The GDP gap is the percent difference between actual and potential GDP; a negative number indicates that the economy is operating below potential. Blue shading represents the projection period, which begins in 2012:Q3. Source: U.S. Department of Commerce, BEA; staff assumptions. Figure: Manufacturing Capacity Utilization Rate Line chart, by percent, 1995 to 2015. There is a horizontal line at 79 representing the average rate from 1972 to 2011. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 1995 at about 84.5 and generally decreases to about 71 by 2001. It generally increases to about 79 by 2006 and then decreases to about 64 by 2009. It then generally increases to about 80 by 2014. Previous Tealbook generally follows the same path as Current Tealbook. Source: Federal Reserve Board, G.17 Statistical Release, "Industrial Production and Capacity Utilization." Note: The gray shaded bars indicate a period of business recession as defined by the National Bureau of Economic Research: March 2001-November 2001, and December 2007-June 2009. Blue shading represents the projection period, which begins in 2012:Q4, except as noted. Inflation Projections (Percent change at annual rate from final quarter of preceding period) 2012 Measure 2011 PCE chain-weighted price index H1 H2 2013 2014 2.5 1.6 1.9 1.3 1.4 Previous Tealbook 2.5 1.6 1.8 1.4 1.4 Food and beverages 5.1 1.0 1.6 2.4 1.0 5.1 1.0 2.4 2.6 .9 11.9 -3.3 11.0 -4.7 -2.3 11.9 -3.3 6.3 -3.4 -2.2 Excluding food and energy 1.7 2.0 1.3 1.6 1.7 Previous Tealbook 1.7 2.0 1.4 1.6 1.6 4.3 .5 -.9 1.4 1.5 4.3 .5 -1.1 1.1 1.4 Previous Tealbook Energy Previous Tealbook Prices of core goods imports 1 Previous Tealbook 1. Core goods imports exclude computers, semiconductors, oil, and natural gas. Return to table Source: U.S. Dept. of Commerce, Bureau of Economic Analysis. Figure: Total PCE Prices Line chart, by 4-quarter percent change, 1995 to 2015. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 1995 at about 2.4 and generally decreases to about 0.6 by 2002. It generally increases to about 4.15 by 2008 and then generally decreases to about -1 by 2009. It then generally increases to about 1.4 by 2014. Previous Tealbook generally follows the same path as Current Tealbook. Note: Blue shading represents the projection period, which begins in 2012:Q3. Source: U.S. Department of Commerce, Bureau of Economic Analysis. Figure: PCE Prices excluding Food and Energy Line chart, by 4-quarter percent change, 1995 to 2015. There are four series, Current Tealbook, Previous Tealbook, Current Market-based, and Previous Market-based. Current Tealbook begins in 1995 at about 2.4 and generally decreases to about 1.3 by 1998. It generally increases to about 3.5 by 2006 and then generally decreases to about 1.1 by 2010. It then generally increases to about 1.7 by 2014. Previous Tealbook generally follows the same path as Current Tealbook. Current Market-based begins in 1995 at about 2.1 and generally decreases to about 1 by 1997. It generally increases to about 2.5 by 2008 and then decreases to about 0.75 by 2010. It increases to about 2 by 2011 and then generally decreases to about 1.5 by 2014. Previous Market-based generally follows the same path as Current Market-based. Note: Blue shading represents the projection period, which begins in 2012:Q3. Source: U.S. Department of Commerce, Bureau of Economic Analysis. Figure: Compensation per Hour Line chart, by 4-quarter percent change, 1995 to 2015. There is a horizontal line at zero. There are four series, Current Productivity and Costs, Previous Productivity and Costs, Current Employment Cost Index, and Previous Employment Cost Index. Current Productivity and Costs begins in 1995 at about 1.25 and generally increases to about 8.8 by 2000. It generally decreases to about 0 by 2009 and then generally increases to about 3.2 by 2014. Previous Productivity and Costs generally follows the same path as Current Productivity and Costs. Current Employment Cost Index begins in 1995 at about 2.8 and generally increases to about 4.6 by 2000. It generally decreases to about 1 by 2009 and then increases to about 3 by 2014. Previous Employment Cost Index generally follows the same path as Current Employment Cost Index. Note: Blue shading represents the projection period, which begins in 2012:Q3. Source: U.S. Department of Labor, Bureau of Labor Statistics. Figure: Long-Term Inflation Expectations Line chart, by percent, 1995 to 2015. There are two series, Thomson Reuters/Michigan, next 5 to 10 years and SPF, next 10 years. Thomson Reuters/Michigan, next 5 to 10 years begins in 1995 at about 3.2 and generally decreases to about 2.6 by 2002. It generally increases to about 3.4 by 2008 and then generally decreases to about 2.6 by October 2012. SPF, next 10 years begins in 2006 at about 2 and generally increases to about 2.25 by 2012:Q3. Note: The Survey of Professional Forecasters (SPF) projection is for the PCE price index. Source: Thomson Reuters/University of Michigan Surveys of Consumers; Federal Reserve Bank of Philadelphia. Note: The gray shaded bars indicate a period of business recession as defined by the National Bureau of Economic Research: March 2001-November 2001, and December 2007-June 2009. The Long-Term Outlook (Percent change, Q4 to Q4, except as noted) Measure Real GDP 2012 2013 2014 2015 2016 2017 1.8 2.6 3.5 3.7 3.1 2.4 Previous Tealbook 1.6 2.4 3.2 3.6 3.0 2.9 Civilian unemployment rate1 8.0 7.8 7.2 6.2 5.5 5.1 Previous Tealbook 8.3 8.0 7.6 6.7 6.2 5.7 1.7 1.3 1.4 1.5 1.8 2.0 1.7 1.4 1.4 1.5 1.8 1.9 1.6 1.6 1.7 1.7 1.9 2.0 1.7 1.6 1.6 1.7 1.8 1.9 .1 .1 .1 .7 2.6 3.9 Previous Tealbook .1 .1 .6 2.1 2.9 3.5 10-year Treasury yield 1 1.8 2.7 3.5 4.1 4.4 4.6 Previous Tealbook 1.9 3.0 3.7 4.2 4.3 4.4 PCE prices, total Previous Tealbook Core PCE prices Previous Tealbook Federal funds rate 1 1. Percent, average for the final quarter of the period. Return to table Figure: Real GDP Line chart, by 4-quarter percent change, 2004 to 2020. There is a horizontal line at zero. There are four series, Current Real GDP, Previous Real GDP, Current Potential GDP, and Previous Potential GDP. Current Real GDP begins in 2004 at about 4 and generally decreases to about -4.6 by 2009. It generally increases to about 3.8 by 2015 and then generally decreases to about 2.2 by 2020. Previous Real GDP generally follows the same path as Current Real GDP. Current Potential GDP begins in 2004 at about 2.5 and generally decreases to about 1 by 2010. It then generally increases to about 2.1 by 2020. Previous Potential GDP generally follows the same path as Current Potential GDP. Figure: Unemployment Rate Line chart, by percent, 2004 to 2020. There are four series, Current Unemployment rate, Previous Unemployment rate, Natural rate, and Natural rate with EEB adjustment. Current Unemployment rate begins in 2004 at about 5.8 and decreases to about 4.4 by 2007. It increases to about 10 by 2009 and then generally decreases to about 5.1 by 2020. Previous Unemployment rate generally follows the same path as Current Unemployment rate. Natural rate begins in 2004 at 5 where it remains relatively constant until 2008. It increases to about 6 by 2009 where it remains relatively constant until 2015. It decreases to about 5.1 by 2017 where it remains relatively constant until 2020. Natural rate with EEB adjustment begins in 2004 at about 5 where it remains relatively constant until 2008. It increases to about 6.4 by 2009 and then decreases to about 6 by 2013. It remains relatively constant here until 2015. It decreases to about 5.1 by 2017 where it remains relatively constant until 2020. Figure: PCE Prices Line chart, by 4-quarter percent change, 2004 to 2020. There are four series, Current Total PCE prices, Previous Total PCE prices, Current PCE prices excluding food and energy, and Previous PCE prices excluding food and energy. Current Total PCE prices begins in 2004 at about 2 and generally increases to about 4.2 by 2008. It decreases to about -0.9 by 2009 and then generally increases to about 2.8 by 2011. It then generally decreases to about 2 by 2020. Previous Total PCE prices generally follows the same path as Current Total PCE prices. Current PCE prices excluding food and energy begins in 2004 at about 1.9 and generally decreases to about 1.1 by 2011. It then generally increases to about 2 by 2020. Previous PCE prices excluding food and energy generally follows the same path as Current PCE prices excluding food and energy. Figure: Interest Rates Line chart, by percent, 2004 to 2020. There are six series, Current BBB corporate, Previous BBB corporate, Current 10-year Treasury, Previous 10-year Treasury, Current Federal funds rate, and Previous Federal funds rate. Current BBB corporate begins in 2004 at about 5.4 and generally increases to about 9.5 by 2008. It generally decreases to about 4 by 2012 and then increases to about 6.2 by 2020. Previous BBB corporate generally follows the same path as Current BBB corporate. Current 10-year Treasury begins in 2004 at about 4 and generally decreases to about 1.8 by 2012. It then generally increases to about 4.8 by 2020. Previous 10-year Treasury generally follows the same path as Current 10-year Treasury. Current Federal funds rate begins in 2004 at about 1 and generally increases to about 5.1 by 2006. It generally decreases to about 0.1 by 2009 where it remains relatively constant until 2016. It then increases to about 4.2 by 2020. Previous Federal funds rate generally follows the same path as Current Federal funds rate. Note: In each panel, shading represents the projection period, which begins in 2012:Q3; dashed lines are the previous Tealbook. Evolution of the Staff Forecast Figure: Change in Real GDP Line chart, by percent, Q4 over Q4, January 2010 to December 2012. The x-axis represents Tealbook publication date. There are four series, 2011, 2012, 2013, and 2014. 2011 begins in January 20, 2010 at about 4.8 and generally decreases to about 1.5 by September 14, 2011. It then generally increases to about 2 by October 17, 2012. 2012 begins in September 15, 2010 at about 4.5 and generally decreases to about 2 by January 18, 2012. It increases to about 2.5 by April 18, 2012 and then generally decreases to about 1.8 by October 17, 2012. 2013 begins in September 14, 2011 at about 3.25 and generally decreases to about 2.8 by April 18, 2012. It then decreases to about 2.5 by October 17, 2012. 204 begins on April 18, 2012 at about 3.2 and generally increases to about 3.5 by October 17, 2012. Figure: Unemployment Rate Line chart, by percent, fourth quarter, January 2010 to December 2012. The x-axis represents Tealbook publication date. There are four series, 2011, 2012, 2013, and 2014. 2011 begins on January 20, 2010 at about 8.15 and generally increases to about 9.1 by September 15, 2010. It decreases to about 8.76 by March 9, 2011 and then increases to about 9 by September 14, 2011. It then decrease to about 8.75 by October 17, 2012. 2012 begins on September 15, 2010 at about 8 and generally decreases to about 7.4 by March 9, 2011. It generally increases to about 8.6 by September 14, 2011 and then generally decrease to about 8 by October 17, 2012. 2013 begins on September 14, 2011 at about 8 and generally decreases to about 7.7 by April 18, 2012. It increases to about 8.1 by July 25, 2012 and then decreases to about 7.75 by October 17, 2012. 2014 begins on April 18, 2012 at about 7.4 and generally increases to about 7.75 by July 25, 2012. It then generally decreases to about 7.2 by October 17, 2012. Figure: Change in PCE Prices excluding Food and Energy Line chart, by percent Q4 over Q4, January 2010 to December 2012. The x-axis represents Tealbook publication date. There are four series, 2011, 2012, 2013, and 2014. 2011 begins on January 20, 2010 at about 1.1 and generally decreases to about 0.8 by June 16, 2010. It Increases to about 2 by September 14, 2011 and then decreases to about 1.7 by October 17, 2012. 2012 begins on September 15, 2010 at about 0.8 and generally increases to about 1.8 by June 13, 2012. It then decreases to about 1.6 by October 17, 2012. 2013 begins on September 14, 2011 at about 1.3 and generally increases to about 1.7 by April 18, 2012. It then decreases to about 1.6 by October 17, 2012. 2014 begins on April 18, 2012 at about 1.7 and generally decreases to about 1.6 by July 25, 2012. It then increases to about 1.7 by October 17, 2012. International Economic Developments and Outlook Recent Foreign Indicators Figure: Nominal Exports Line chart, by ratio where January 2008 = 100, 2008 to 2012. There is a horizontal line at 100. There are three series, Foreign, AFE, and EME. Foreign begins in 2008 at about 100 and generally decreases to about 69 by 2009. It generally increases to about 115 by 2011 and then decreases to about 111 by 2012. AFE begins in 2008 at about 100 and generally decreases to about 68 by 2009. It increases to about 109 by 2011 and then decreases to about 102 by 2012. EME begins in 2008 at about 100 and generally decreases to about 70 by 2009. It generally increases to about 131 by 2011 and then decreases to about 121 by 2012. Note: EME excludes Venezuela. Figure: Industrial Production Line chart, by ratio where January 2008 = 100, 2008 to 2012. There is a horizontal line at 100. There are three series, Foreign, AFE, and EME. Foreign begins in 2008 at 100 and decreases to about 86 by 2009. It then generally increases to about 102.5 by 2012. AFE begins in 2008 at 100 and generally decreases to about 85 by 2009. It then generally increases to about 94.5 by 2012. EME begins in 2008 at 100 and decreases to about 88 by 2009. It then generally increases to about 114 by 2012. Note: AFE excludes Australia and Switzerland. EME excludes Colombia, Hong Kong, Philippines, and Venezuela. Figure: Retail Sales Line chart, by 12-month percent change, 2008 to 2012. There is a horizontal line at zero. There are three series, Foreign, AFE, and EME. Foreign begins in 2008 at about 5 and generally decreases to about -2 by 2009. It generally increases to about 7.5 by 2010 and then decreases to about 2.5 by 2012. AFE begins in 2008 at about 4.5 and generally decrease to about -4.8 by 2009. It generally increases to about 4 by 2010 and then generally decreases to about 1 by 2012. EME begins in 2008 at about 8 and generally decreases to about 2 by 2009. It generally increases to about 15 by 2010 and then generally decreases to about 7 by 2012. Note: AFE excludes Australia and Switzerland. EME includes Brazil, China, Indonesia, Korea, Singapore, and Taiwan. Figure: Employment Line chart, by 4-quarter percent change, 2008 to 2012. There is a horizontal line at zero. There are three series, Foreign, AFE, and EME. Foreign begins in 2008 at about 2 and decreases to about 1.1 by 2009. It then generally increases to about 1 by 2012. AFE begins in 2008 at about 0.8 and generally decreases to about -1.8 by 2009. It increases to about 1 by 2011 and then decreases to about 0.5 by 2012. EME begins in 2008 at about 3 and decrease to about 0.4 by 2009. It increases to about 3 by 2011 and then decreases to about 2.6 by 2012. Note: EME excludes Argentina and Mexico. Figure: Consumer Prices: Advanced Foreign Economies Line chart, by 12-month percent change, 2008 to 2012. There is a horizontal line at zero. There are two series, Headline and Core. Headline begins in 2008 at about 2.1 and increases to about 3.6 by late 2008. It decreases to about -0.9 by 2009 and then generally increases to about 2.75 by 2011. It then generally decreases to about 1.55 by 2012. Core begins in 2008 at about 1.05 and generally decreases to about 0.75 by 2010. It then generally increases to about 1.075 by 2012. Note: Excludes Australia, Sweden, and Switzerland. Core also excludes all food and energy; staff calculation. Source: Haver Analytics and CEIC. Figure: Consumer Prices: Emerging Market Economies Line chart, by 12-month percent change, 2008 to 2012. There is a horizontal line at zero. There are three series, Headline, Excluding food - East Asia, and Excluding food - Latin America. Headline begins in 2008 at about 5.6 and generally decreases to about 0.75 by 2009. It generally increases to about 5 by 2011 and then decreases to about 3.2 by 2012. Excluding food - East Asia begins in 2008 at about 3 and generally decreases to about -2 by 2009. It generally increases to about 2.6 by 2011 and then decreases to about 1.8 by 2012. Excluding food - Latin America begins in 2008 at about 3.8 and generally increases to about 5.9 by 2009. It then generally decreases to about 3.35 by 2012. The Foreign Outlook (Percent change, annual rate) 2012 2011 Q1 Q2 2013 Q3 Q4 Q1 Q2 H2 2014 Real GDP Total foreign 2.8 3.2 2.2 2.0 2.1 2.4 2.7 3.1 3.4 2.8 3.2 2.3 2.3 2.3 2.5 2.7 3.0 3.3 1.3 1.5 .6 .7 .6 .9 1.1 1.6 2.0 Previous Tealbook 1.3 1.6 .7 .7 .6 .8 1.1 1.5 1.9 Emerging market economies 4.5 5.0 3.9 3.4 3.6 4.1 4.5 4.7 4.8 Previous Tealbook 4.5 5.0 3.9 4.0 4.1 4.4 4.5 4.6 4.8 Previous Tealbook Advanced foreign economies Consumer Prices Total foreign 3.4 2.6 1.9 2.2 2.7 2.3 2.2 2.2 2.5 3.4 2.6 1.9 1.8 2.6 2.3 2.3 2.2 2.5 2.2 2.1 .6 .7 1.8 1.3 1.2 1.2 1.7 Previous Tealbook 2.2 2.2 .6 .7 1.9 1.4 1.3 1.2 1.7 Emerging market economies 4.3 2.9 3.0 3.3 3.3 3.1 3.1 3.1 3.2 Previous Tealbook 4.3 2.9 3.0 2.7 3.2 3.1 3.1 3.0 3.2 Previous Tealbook Advanced foreign economies Note: Annualized percent change from final quarter of preceding period to final quarter of period indicated. Figure: Real GDP Line chart, by percent change, annual rate, 2009 to 2014. There is a horizontal line at zero. There are two series, Current Tealbook and Previous Tealbook. Current Tealbook begins in 2009 at about -9 and increases to about 6 by late 2009. It generally decreases to about 1.5 by 2011 and then generally increases to about 4 by 2014. Previous Tealbook generally follows the same path as Current Tealbook. There is a second line chart, by percent change, annual rate, 2009 to 2014. There is a horizontal line at zero. There are four series, Current Emerging market economies, Previous Emerging market economies, Current Advanced foreign economies, and Previous Advanced foreign economies. Current Emerging market economies begins in 2009 at about -9 and increases to about 10 by late 2009. It generally decreases to about 3 by 2011 and then generally increases to about 5 by 2014. Previous Emerging market economies generally follows the same path as Current Emerging market economies. Current Advanced foreign economies begins in 2009 at about -9 and generally increases to about 4 by 2010. It decreases to about 0 by 2011 and then generally increases to about 2.5 by 2012. Previous Advanced foreign economies generally follows the same path as Current Advanced foreign economies. Figure: Consumer Prices Line chart, by percent change, annual rate, 2009 to 2014. There is a horizontal line at zero. There are two series, Current Total foreign and Previous Total foreign. Current Total foreign begins in 2009 at about -1 and generally increases to about 4.6 by 2010. It then generally decreases to about 2.3 by 2014. Previous Total foreign generally follows the same path as Current Total foreign. There is a second line chart, by percent change, annual rate, 2009 to 2014. There is a horizontal line at zero. . There are four series, Current Emerging market economies, Previous Emerging market economies, Current Advanced foreign economies, and Previous Advanced foreign economies. Current Emerging market economies begins in 2009 at about -0.4 and generally increases to about 6.25 by 2010. It then generally decreases to about 3.2 by 2011 where it remains relatively constant until 2014. Previous Emerging market economies generally follows the same path as Current Emerging market economies. Current Advanced foreign economies begins in 2009 at about -1.8 and generally increases to about 2.9 by 2010. It generally decreases to about 0.6 by 2012 and then generally increases to about 1.25 by 2014. Previous Advanced foreign economies generally follows the same path as Current Advanced foreign economies. Note: Blue shading represents the projection period, which begins in 2012:Q3. [Box:] Recent Policy Developments in the Euro Area Figure: 10-Year Sovereign Bond Spreads Line chart, by basis points, 2011 to 2012. There is a vertical line representing the September Tealbook. There are four series, Spain, Italy, Belgium, and France. Spain begins in 2011:Q1 at about 250 and generally increases to about 475 by 2011:Q4. It generally decreases to about 300 by 2012:Q1 and then increases to about 650 by 2012:Q2. It ends in 2012:Q3 at about 425. Italy begins in 2011:Q1 at about 200 and generally increase to about 650 by 2011:Q3. It decreases to about 280 by 2012:Q1 and then increases to about 550 by 2012:Q2. It ends in 2012:Q3 at about 350. Belgium begins in 2011:Q1 at about 100 and generally increases to about 390 by 2011:Q4. It then generally decreases to about 90 by 2012:Q3. France begins in 2011:Q1 at about 40 and generally increases to about 200 by 2011:Q4. It then generally decreases to about 80 by 2012:Q3. Note: Spreads relative to Germany. Source: Bloomberg. Figure: Euro-Area Stock Prices Line chart, by ratio where January 3, 2011 = 100, 2011 to 2012. There is a vertical line representing the September Tealbook. There are two series, DJ Euro Stoxx and DJ Euro Stoxx - banks. DJ Euro Stoxx begins in 2011:Q1 at about 100 and generally decreases to about 70 by 2011:Q3. It increases to about 90 by 2012:Q1 and then decreases to about 75 by 2012:Q2. It ends in 2012:Q3 at about 90. DJ Euro Stoxx - banks begins in 2011:Q1 at about 100 and generally decreases to about 55 by 2011:Q3. It increase to about 80 by 2012:Q1 and then decreases to about 45 by 2012:Q2. It ends in 2012:Q3 at about 69. Source: Bloomberg. [Box:] Prospects for China's Economy Figure: Real GDP Line chart, by percent change at annual rate, 2005 to 2012. Data are quarterly. There is a horizontal line at zero. There are three series, Actual, Fitted model, and Electricity production (quarterly rate). There is a dot at the end of each series denoting the Q3 Tealbook. Actual begins in 2005 at about 9 and generally increases to about 21 by 2007. It generally decreases to about 4 by 2008 and then increases to about 16 by 2009. It then generally decreases to about 7 by 2012. Fitted model begins in 2005 at about 12 and generally increases to about 17.5 by 2007. It decreases to about 4 by 2008 and then increases to about 16 by 2009. It then generally decreases to about 7 by 2012. Electricity production (quarterly rate) begins in 2005 at about 4 and generally decreases to about -7 by 2008. It increases to about 7.5 by 2009 and then generally decreases to about 1 by 2012. Note: Q3 are estimates based on July and August data. Source: CEIC and staff estimates. Figure: Investment and Exports Line chart, by 4-quarter percent change, 2005 to 2012. There is a horizontal line at zero. There are two series, Investment and Exports. Investment begins in 2005 at about 21 and generally increases to about 34 by 2009. It then generally decreases to about 15 by 2012. Exports begins in 2005 at about 35 and generally decreases to about -22 by 2009. It increases to about 41 by 2010 and then generally decreases to about 4 by 2012. Note: Fixed-asset investment in nominal terms and nominal exports deflated by the U.S. price index for imports from China. Source: CEIC, U.S. Bureau of Labor Statistics, and staff estimates. Evolution of Staff's International Forecast Figure: Total Foreign GDP Line chart, by percent change, Q4 over Q4, January 2010 to December 2012. The x-axis represents Tealbook publication date. There are four series, 2011, 2012, 2013, and 2014. 2011 begins on January 20, 2010 at about 4 and generally decreases to about 3.5 by June 15, 2011. It then decreases to about 2.9 by October 17, 2012. 2012 begins on September 15, 2010 at about 3.5 and generally decreases to about 2.5 by December 7, 2011. It increases to about 3 by April 18, 2012 and then generally decreases to about 2.4 by October 17, 2012. 2013 begins on September 14, 2011 at about 3.2 and generally decreases to about 2.9 by October 17, 2012. 2014 begins on April 18, 2012 at about 3.6 and generally decreases to about 3.4 by October 17, 2012. Figure: Total Foreign CPI Line chart, by percent change, Q4 over Q4, January 2010 to December 2012. The x-axis represents Tealbook publication date. There are four series, 2011, 2012, 2013, and 2014. 2011 begins on January 20, 2010 at about 2 and generally increases to about 3.1 by April 20, 2011. It then increases to about 3.45 by October 17, 2012. 2012 begins on September 15, 2010 at about 2.15 where it remains relatively constant until it increases to about 2.6 by March 7, 2012. It then decreases to about 2.4 by October 17, 2012. 2013 begins on September 14, 2011 at about 2.4 and generally decreases to about 2.25 by October 17, 2012. 2014 begins on April 18, 2012 at about 2.4 and generally increases to about 2.55 by October 17, 2012. Figure: U.S. Current Account Balance Line chart, by percent of GDP, January 2010 to December 2012. The x-axis represents Tealbook publication date. There are four series, 2011, 2012, 2013, and 2014. 2011 begins on January 20, 2010 at about -3.1 and generally increases to about -2.6 by June 15, 2011. It then decreases to about -3.1 by October 17, 2012. 2012 begins on September 15, 2010 at about -3 and generally increases to about -2 by June 15, 2011. It then decreases to about 2.8 by October 17, 2012. 2013 begins on September 14, 2011 at about -2.25 and generally decreases to about 3.75 by July 25, 2012. It then increases to about -3 by October 17, 2012. 2014 begins on April 18, 2012 at about 3.2 and generally decreases to about -4 by July 25, 2012. It then increases to about -3 by October 17, 2012. Financial Developments Policy Expectations and Treasury Yields Figure: Selected Interest Rates Line chart, by percent, September 2012 to October 2012. There are vertical lines representing the September FOMC, Michigan consumer sentiment, September FOMC minutes, and September employment report. There are two series, 10-year Treasury yield and June 2015 Eurodollar. 10-year Treasury yield begins on September 12, 2012 at about 1.725 and generally increases to about 1.89 by September 15, 2012. It generally decreases to about 1.6 by September 28, 2012 and then generally increases to about 1.7 by October 16, 2012. June 2015 Eurodollar begins on September 12, 2012 at about 0.74 and generally decreases to about 0.62 by October 3, 2012. It then increases to about 0.71 by October 16, 2012. Note: 5-minute intervals. 8:00 a.m. to 4:00 p.m. No adjustments for term premiums. Source: Bloomberg. Figure: Inflation Compensation Line chart, by percent, 2010 to 2012. Data are daily. There is a vertical line representing the September FOMC. There are two series, 5 to 10 years ahead and Next 5 years. 5 to 10 years ahead begins in 2010 at about 3.25 and generally decreases to about 2.1 by 2011. It then increases to about 2.8 by October 16, 2012. Next 5 years begins in early 2010 at about 2 and generally decreases to about 1.1 by late 2010. It generally increases to about 2.3 by early 2011 and then decreases to about 1.6 by late 2011. It then increases to about 2.25 by October 16, 2012. Note: Estimates based on smoothed nominal and inflation-indexed Treasury yield curves. Next 5 years is adjusted for the indexation-lag (carry) effect. Source: Barclays PLC and staff estimates. Figure: Implied Federal Funds Rate Line chart, by percent, 2013 to 2016. There are four series, Mean: October 16, 2012, Mean: September 12, 2016, Mode: October 16, 2012, and Mode: September 12, 2016. Mean: October 16, 2012 begins in 2013 at about 0.18 and generally increases to about .825 by 2016. Mean: September 12, 2012 begins in 2013 at about 0.175 and generally increases to about 0.9 by 2016. Mode: October 16, 2012 begins in 2013 at about 0.1 and generally increases to about 0.31 by 2016. Mode: September 12, 2016 begins in 2013 at about 0.099 and generally increases to about 0.24 by 2016. Note: Mean is estimated using overnight index swap quotes. Mode is estimated from the distribution of federal funds rate implied by interest rate caps. Both include a term premium of zero basis points per month. Source: Bloomberg and CME Group. Figure: Distribution of Modal Timing of First Rate Increase from the Desk's Dealer Survey Bar chart, by percent, 2013 to 2016. There is a horizontal line at zero. There are two series, Recent: 21 Respondents and September FOMC: 21 Respondents. Recent 21 Respondents begins in 2015:Q1 at about 10 and increases to about 33 by 2015:Q2. It decreases to about 29 by 2015:Q3 and then decreases to about 10 by 2015:Q1. It stays at 10 for 2016:Q1 and then decreases to about 5 by 2016:Q2. It remains at 5 when it ends in 2016:Q3. September FOMC: 21 Respondents begins in 2013:Q1 at 0 where it remains until it increases to 5 by 2014:Q2. It increases to about 10 by 2014:Q3 and then decreases to 5 for 2014:Q3 and 2014:Q4. It increases to about 20 by 2015:Q2 and then increases to about 34 by 2015:Q3. It decreases to about 15 by 2015:Q4 and then decreases to about 5 for 2016:Q1 and 2016:Q2. It decreases to 0 by 2016:Q3 where it remains until it ends in 2016:Q4. Source: Desk's dealer survey from October 15, 2012. Figure: Treasury Yield Curve Line chart, by percent, 1 to 20 years head. There are two series, Most recent: October 16, 2012 and Last FOMC: September 12, 2012. Most recent: October 16, 2012 begins in 1 year ahead at about 0.25 and generally increases to about 2.7 by 20 years ahead. Last FOMC: September 12, 2012 generally follows the same path as Most recent: October 16, 2012. Note: Smoothed yield curve estimated from off-the-run Treasury coupon securities. Yields shown are those on notional par Treasury securities with semiannual coupons. Source: Federal Reserve Board. [Box:] Market Reaction to the September 2012 FOMC Communications Yield and Price Changes around the September 2012 FOMC One-day One-week 5-year nominal 0 4 10-year nominal 2 5 -10 -4 10-year TIPS -5 -5 5-year inflation compensation 10 8 4 13 -3 -1 3-5 percent coupon MBS yield+ -50 -68 3-5 percent coupon MBS OAS + -30 -43 5-year TIPS 5-year, 5-year forward inflation compensation 1-year OIS 3-years forward BBB nonfinancial corporate bond spread# HY nonfinancial corporate bond spread# S&P500 (percent) Broad nominal dollar index (percent) Front month crude oil (percent) 0 -11 -1 -10 1.6 1.6 -0.5 -0.5 0.9 -5.4 Note: One day changes are from 12:15 p.m. to 4:00 p.m. on September 13. One-week changes are from 12:15 p.m. on September 13 to 4:00 p.m. on September 20. Changes are in basis points. Nominal Treasury and TIPS yields are for on the run securities. + Fannie Mae 30 year; option adjusted spread (OAS) to Treasury securities. Changes are from end of day September 12 to end of day September 13. Return to table # Derived from smoothed yield curves using Merrill Lynch bond data; spread to the 10 September 12 to end-of-day September 13. Return to table year Treasury yield. Changes are from end of day Source: For 3.5 percent coupon MBS yield and OAS, Barclays; for BBB and HY nonfinancial corporate bond spreads, Merrill Lynch; for all others, Bloomberg. Foreign Developments Figure: Dollar Exchange Rates Line chart, by ratio where January 3, 2011 = 100, 2011 to 2012. There is a vertical line marking the September FOMC. There are three series, Broad, Major, and EME. Broad begins in early 2011 at about 100 and generally decreases to about 97.5 by mid-2011. It generally increases to about 104.8 by mid-2012 and then decreases to about 100 by October 17, 2012. Major begins in early 2011 at about 100 and generally decreases to about 93.5 by mid-2011. It generally increases to about 104 by mid-2012 and then decreases to about 99 by October 17, 2012. EME begins in early 2011 at about 100 and generally decreases to about 96 by mid-2011. It generally increases to about 105 by mid-2012 and then decreases to about 101 by October 17, 2012. Source: Federal Reserve Board; Bloomberg. Figure: Euro-Area 2-Year Government Bond Spreads Line chart, by percentage points, 2011 to 2012. Data are daily. There is a vertical line marking the September FOMC. There are two series, Spain and Italy. Spain begins in 2011:Q1 at about 2.5 and generally decreases to about 0.8 by 2011:Q2. It generally increases to about 5.8 by 2011:Q4 and then decreases to about 2 by 2012:Q1. It increases to about 7 by 2012:Q3 and then decreases to about 2.8 by October 17, 2012. Italy begins in 2011:Q1 at about 1.99 and generally decreases to about 0.8 by 2011:Q2. It generally increases to about 7.2 by 2011:Q4 and then decreases to about 1.8 by 2012:Q1. It increases to about 5.2 by 2012:Q3 and then decreases to about 2 by October 17, 2012. Note: Spread over German bunds. Source: Bloomberg. Figure: Euro-Area 10-Year Government Bond Spreads Line chart, by percentage points, 2011 to 2012. Data are daily. There is a vertical line marking the September FOMC. There are two series, Spain and Italy. Spain begins in 2011:Q1 at about 2.15 and generally increases to about 4.6 by 2011:Q4. It decreases to about 3 by 2012:Q1 and then increases to about 6.6 by 2012:Q3. It ends on October 17, 2012 at about 3.9. Italy begins in 2011:Q1 at about 1.9 and generally increases to about 5.75 by 2011:Q4. It decreases to about 2.8 by 2012:Q1 and then increases to about 5.1 by 2012:Q3. It ends on October 17, 2012 at about 3.4. Note: Spread over German bunds. Source: Bloomberg. Figure: Stock Price Indexes Line chart, by ratio where January 3, 2011 = 100, 2011 to 2012. Data are daily. There is a vertical line marking the September FOMC. There are three series, DJ Euro, MSCI Emerging Markets, and DJ Euro Banks. DJ Euro begins in 2011:Q1 at about 100 and generally decreases to about 75 by 2011:Q3. It generally increases to about 90 by October 17, 2012. MSCI Emerging Markets begins in 2011:Q1 at about 100 and generally decreases to about 75 by 2011:Q3. It increases to about 96 by 2012:Q1 and then decreases to about 78 by 2012:Q2. It ends on October 17, 2012 at about 88. DJ Euro Banks begins in 2011:Q1 at about 100 and generally decreases to about 54 by 2011:Q4. It increases to about 73 by 2012:Q1 and then decreases to about 44 by 2012:Q3. It ends on October 17, 2012 at about 66. Source: Bloomberg. Figure: 10-Year Nominal Benchmark Yields Line chart, by percent, 2011 to 2012. Data are daily. There is a vertical line marking the September FOMC. There are four series, Germany, United Kingdom, Japan, and Canada. Germany begins in 2011:Q1 at about 2.99 and generally increases to about 3.4 by 2011:Q2. It then generally decreases to about 1.6 by October 17, 2012. United Kingdom begins in 2011:Q1 at about 3.4 and generally decreases to about 2 by 2012:Q1. It then generally decreases to about 1.9 by October 17, 2012. Japan begins in 2011:Q1 at about 1.1 and generally decreases to about 0.75 by October 17, 2012. Canada begins in 2011:Q1 at about 3.1 and generally decreases to about 2 by 2012:Q1. It then generally decreases to about 1.9 by October 17, 2012. Source: Bloomberg. Figure: Foreign Net Purchases of U.S. Treasury Securities Bar chart, by billions of dollars, annual rate, 2010 to 2012. There are two series, Official and Private. Approximate values are: 2010: Official 450, Private 300; 2011:H1: Official 300, Private 90; 2011:H2: Official 20, Private 400; 2012:Q1: Official 325, Private 175; 2012:Q2: Official 325, Private 30; July 2012: Official 270, Private 200; August 2012: Official 600, Private 400. Source: Treasury International Capital data adjusted for staff estimates. August data are embargoed until October 16, 2012. [Box:] Balance Sheet Developments over the Intermeeting Period Federal Reserve Balance Sheet Billions of dollars Change since last FOMC Total assets Current (10/15/12) 4 2,829 -7 13 Primary, secondary, and seasonal credit -0 +0 Foreign central bank liquidity swaps -7 13 Term Asset-Backed Securities Loan Facility (TALF) -0 1 Net portfolio holdings of Maiden Lane LLCs -2 2 -0 2 Selected assets: Liquidity programs for financial firms Maiden Lane Maiden Lane II -0 +0 Maiden Lane III -2 +0 4 2,586 U.S. Treasury securities -2 1,649 Agency debt securities -4 83 Agency mortgage-backed securities 10 854 4 2,774 Federal Reserve notes in circulation 9 1,093 Reverse repurchase agreements 6 99 9 99 -3 0 Reserve balances of depository institutions** -24 1,478 Term deposits held by depository institutions 0 0 38 77 0 0 -27 7 +0 55 Securities held outright* Total liabilities Selected liabilities: Foreign official and international accounts Others U.S. Treasury, General Account U.S. Treasury, Supplementary Financing Account Other deposits Total capital Note: +0 (-0) denotes positive (negative) value rounded to zero. Return to table * Par value. Return to table ** Includes overdrafts. Return to table Financial Institutions and Short-Term Dollar Funding Markets Figure: Stock Prices Line chart, by ratio where September 12, 2012 = 100, 2010 to 2012. Data are daily. There is a vertical line marking the September FOMC. There are two series, S&P 500 and Dow Jones Bank Index. S&P 500 begins in January 2010 at about 80 and generally increases to about 96 by May 2011. It decreases to about 80 by September 2011 and then generally increases to about 100 by October 16, 2012. Dow Jones Bank Index begins in January 2011 at about 100 and generally increases to about 122 by May 2010. It generally decreases to about 69 by September 2011 and then increases to about 101 by October 16, 2012. Source: Bloomberg. Figure: CDS Spreads of Large Bank Holding Companies Line chart, by basis points, 2010 to 2012. Data are daily. There is a vertical line marking the September FOMC. There are six series, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Bank of America, and Morgan Stanley. Citigroup begins in January 2010 at about 150 and generally decreases to about 115 by May 2011. It generally increases to about 375 by September 2011 and then decreases to about 200 by October 16, 2012. JPMorgan Chase begins in January 2010 at about 50 and generally increases to about 200 by September 2011. It then generally decreases to about 100 October 16, 2012. Wells Fargo begins in January 2010 at about 90 and generally increases to about 200 by September 2011. It then generally decreases to about 80 by October 16, 2012. Goldman Sachs begins in January 2010 at about 100 and generally increases to about 400 by September 2011. It then generally decreases to about 175 by October 16, 2012. Bank of America begins in January 2010 at about 100 and generally increases to about 480 by November 2011. It then generally decreases to about 150 by October 16, 2012. Morgan Stanley begins in January 2010 at about 100 and generally increases to about 600 by September 2011. It then generally decreases to about 205 by October 16, 2012. Source: Markit. Figure: Selected Spreads Line chart, by basis points, 2010 to 2012. Data are daily. There is a vertical line marking the September FOMC. There are two series, 3-month LIBOR over OIS and USD 3x6 FRA-OIS. 3-month LIBOR over OIS begins in January 2010 at about 10 and generally increases to about 32 by July 2010. It decreases to about 15 by May 2011 and then increases to about 50 by January 2012. It then decreases to about 19 by October 17, 2012. USD 3x6 FRA-OIS begins in January 2010 at about 11 and generally increases to about 30 by May 2010. It generally decreases to about 15 by May 2011 and then increases to about 69 by December 2011. It then generally decreases to about 14 by October 17, 2012. Note: USD 3x6 FRA-OIS spread is calculated from a LIBOR forward rate agreement (FRA) 3 to 6 months in the future and the implied forward overnight index swap (OIS) rate for the same period. Source: Bloomberg. Figure: Average Maturity for Unsecured Financial Commercial Paper Outstanding in the U.S. Market Line chart, by days, 2010 to 2012. Data are weekly. There is a vertical line marking the September FOMC. There are two series, U.S. parent and European parent. U.S. parent begins in January 2010 at about 41 and generally creases to about 36 by June 2010. It then generally fluctuates between 45 and 50 until about January 2011. It then generally increases to about 63 by October 10, 2012. European parent begins in January 2010 at about 41 and generally decreases to about 36 by June 2010. It increases to about 56 by November 2010 and then generally decreases to about 31 by January 2012. It then generally increases to about 63.5 by October 10, 2012. Source: Federal Reserve Board staff calculations based on data from the Depository Trust & Clearing Corporation. Figure: Overnight Funding Rates Line chart, by basis points, 2011 to 2012. Data are 5-day moving averages. There is a vertical line marking the September FOMC. There are two series, Treasury repo rate and Fed funds rate. Treasury repo rate begins in February 2011 at about 16 and generally decreases to about 1 by July 2011. It generally increases to about 27 by June 2012 and then decreases to about 15 by August 2012. It then increases to about 27 by October 15, 2012. Fed funds rate begins in February 2011 at about 17.5 and generally decreases to about 6 by August 2011. It generally increases to about 17.5 by June 2012 and then generally decreases to about 16 by October 15, 2012. Note: Weighted average of interest rates paid on general collateral finance (GCF) repurchase agreements (repos) based on Treasury securities. Source: Depository Trust & Clearing Corporation. Figure: Asset-Backed Commercial Paper Overnight Spreads Line chart, by basis points, 2011 to 2012. Data are 5-day moving averages. There is a vertical line marking the September FOMC. There are two series, U.S. sponsor and European sponsor. U.S. sponsor begins in January 2011 at about 5 and generally increases to about 25 by January 2012. It then generally decreases to about 6 by October 16, 2012. European sponsor begins in January 2011 at about 5 and generally increases to about 66 by January 2012 and then generally decreases to about 12 by October 16, 2012. Note: Spreads computed over the AA nonfinancial unsecured rate. Source: Depository Trust & Clearing Corporation. Other Domestic Asset Market Developments Figure: S&P 500 Stock Price Index Line chart, by log scale where September 12, 2012 = 100, 2010 to 2012. Data are daily. There is a vertical line marking the September FOMC. The series begins in January 2010 at about 79 and generally decreases to about 72 by June 2010. It generally increases to about 93 by May 2011 and then decreases to about 77 by September 2011. It then generally increases to about 101 by October 17, 2012. Source: Bloomberg. Figure: Equity Risk Premium Line chart, by percent, 1991 to 2012. Data are monthly. There is a vertical line marking the September FOMC. There are two series, Expected 10-year real equity return and Expected real yield on 10-year Treasury. Expected 10-year real equity return begins in 1991 at about 7.8 and generally decrease to about 2.1 by 2000. It then generally increases to about 8.1 by October 17, 2012. Expected real yield on 10-year Treasury begins in 1991 at about 4.4 and generally decreases to about 1 by 2003. It then generally decreases to about -0.5 by October 17, 2012. Note: Expected real yield on 10-year Treasury is off-the-run 10-year Treasury yield less Philadelphia Fed 10-year expected inflation. There are plus signs at the end of each series denoting the latest observation using daily interest rates and stock prices and latest earnings data. Source: Thomson Financial. Figure: Implied Volatility on S&P 500 (VIX) Line chart, by percent, log scale, 2007 to 2012. Data are daily. There is a vertical line marking the September FOMC. The series begins in 2007 at about 7 and generally increases to about 80 by 2008. It then generally decreases to about 16 by October 16, 2012. Note: Option-implied one-month-ahead volatility on the S&P 500 index. Source: Chicago Board Options Exchange. Figure: Revisions to S&P 500 Earnings per Share Line chart, by percent, 1997 to 2012. Data are monthly. There is a horizontal line at zero. The series begins in 1997 at about 0 and generally decreases to about -6 by 2002. It generally increases to about 2 by 2004 and then decreases to about -12 by 2009. It generally increases to about 3.8 by 2009 and then generally decreases to about 0 by mid-October estimate. Note: Weighted average of the percent change in the consensus forecasts of current-year and following-year earnings per share. EPS revision is 17.22 percent in February 2009. Source: Thomson Financial. Figure: Corporate Bond Spreads Line chart, by basis points, 2007 to 2012. Data are daily. There is a vertical line marking the September FOMC. There are two series, 10-year high-yield and 10-year BBB. 10-year high-yield begins in 2007 at about 250 and generally increases to about 1650 by 2008. It generally decreases to about 400 by 2011 and then increases to about 500 by October 17, 2012. 10-year BBB scale begins in 2007 at about 150 and generally increases to about 675 by 2009. It generally decreases to about 150 by 2010 and then increases to about 225 by October 17, 2012. Note: Spreads are measured relative to a smoothed nominal off-the-run Treasury yield curve. Source: Merrill Lynch and staff estimates. Figure: Spread on 30-Day A2/P2 Commercial Paper Line chart, by basis points, 2009 to 2012. Data are 5-day moving averages. There is a vertical line marking the September FOMC. The series begins in April 2009 at about 90 and generally decreases to about 15 by January 2010. It then generally increases to about 35 by October 16, 2012. Note: The A2/P2 spread is the A2/P2 nonfinancial rate minus the AA nonfinancial rate. There is a plus sign at the end of the series denoting the latest available single-day observation. Source: Depository Trust & Clearing Corporation. Business Finance Figure: Financial Ratios for Nonfinancial Corporations Line chart, by ratio, 1991 to 2012. There are two series, Debt over total assets and Liquid assets over total assets. Debt over total assets begins in 1991 at about 0.331 and generally decreases to about 0.275 by 1996. It increases to about 0.31 by 2001 and then decreases to about 0.247 by 2005. It increases to about 0.29 by 2008 and then decreases to about 0.26 by 2012:Q2. Liquid assets over total assets begins in 1991 at about 0.06 and generally increases to about 0.104 by 2004. It decreases to about 0.089 by 2008 and then generally increases to about 0.105 by 2012:Q2. Note: Data are annual through 1999 and quarterly thereafter. Source: Compustat. Figure: Bond Ratings Changes of Nonfinancial Firms Bar chart, by percent of outstandings, 1991 to 2012. Data are annual rate. There is a horizontal line at zero. There are two series, Upgrades and Downgrades. Upgrades begins in 1991 at about 10 and generally increases to about 20 by 1995. It decreases to about 5 by 2002 and then generally increases to about 10 by 2006. It generally increases to about 15 by 2009 and then decreases to about 5 by 2012:Q3. Downgrades begins in 1991 at about 32 and generally decreases to about 42 by 1992. It generally increases to about 10 by 1998 and then decreases to about 38 by 2003. It increases to about 10 by 2006 and then decreases to about 21 by 2009. It then generally increases to about 10 by 2012:Q3. Source: Calculated using data from Moody's Investors Service. Figure: Selected Components of Net Debt Financing, Nonfinancial Firms Bar chart, by billions of dollars, 2008 to 2012. Data are monthly rate. There is a horizontal line at zero. There are three series, Bonds, C&I loans, and Commercial paper. There is another series, Total, represented by line chart. Approximate values are: 2008: Bonds 18, C&I loans 25, Commercial paper 27, Total 27; 2009: Bonds 30, C&I loans -25, Commercial paper -32, Total 0; 2010: Bonds 31, C&I loans -5, Commercial paper 33, Total 30; 2011:H1: Bonds 31, C&I loans 42, Commercial paper 46, Total 46; 2012:H2: Bonds 2, C&I loans 40, Commercial paper 42, Total 42; 2012:Q1 Bonds 39, C&I Loans 49, Commercial paper: 50, Total 50; 2012:Q2: Bonds 30, C&I loans 46, Commercial paper 49, Total 49; July 2012: Bonds 37, C&I loans 51, Commercial paper -3, Total 48; August 2012: Bonds 47, C&I loans 50, Commercial paper -1, Total 50; September 2012: Bonds 47, C&I loans 58, Commercial paper -4, Total 50. Note: C&I loans and commercial paper are period-end basis, seasonally adjusted. Source: Depository Trust & Clearing Corporation; Thomson Financial; Federal Reserve Board. Figure: U.S. CLO Issuance Bar chart, by billions of dollars, 2008 to 2012. Data are annual rate. There are two series, Issuance and Pipeline. Approximate values are: 2008: Issuance 20, Pipeline 0; 2009: Issuance 1, Pipeline 0; 2010: Issuance 5, Pipeline 0; 2011: Issuance 15, Pipeline 0; 2012:H1: Issuance 35, Pipeline 40. Note: CLO is collateralized loan obligation. Source: Thomson Reuters LPC LoanConnector. Figure: Selected Components of Net Equity Issuance, Nonfinancial firms Bar chart, by billions of dollars, 2008 to 2012. Data are monthly rate. There is a horizontal line at zero. There are four series, Public issuance, Private issuance, Repurchases, and Cash mergers. There is another series, Total, represented by line chart. Approximate values are: 2008: Public issuance 25, Private issuance 24, Repurchases 30, Cash mergers -48, Total -20; 2009: Public issuance 20, Private issuance 15, Repurchases -15, Cash mergers 19, Total -1; 2010: Public issuance 15, Private issuance 10, Repurchases -25, Cash mergers -33, Total -25; 2011:H1: 17, Private issuance 10, Repurchases -35, Cash mergers -42, Total -35; 2011:H2: Public issuance 12, Private issuance 10, Repurchases -38, Cash mergers -50, Total -40; 2012:Q1: Public issuance 15, Private issuance 10, Repurchases -27, Cash mergers -35, Total -25; 2012:Q2: Public issuance 17, private issuance 11, Repurchases -30, Cash mergers -60, Total -40. Source: Thomson Financial, Investment Benchmark Report; Money Tree Report by PricewaterhouseCoopers, National Venture Capital Association, and Venture Economics. Figure: CMBS Issuance Bar chart, by billions of dollars, 2008 to 2012. Data are annual rate. There is a horizontal line at zero. The series begins in 2008 at 12 and decreases to 1 by 2009. It increases to about 10 by 2010 and then increases to about 30 by 2011. It decreases to 29 by 2012:H1 and then increases to about 45 by 2012:Q3. Note: CMBS is commercial mortgage-backed securities. Source: Commercial Mortgage Alert. Household Finance Figure: Mortgage Rate and MBS Yield Line chart, by percent, 2010 to 2012. Data are daily. There is a vertical line marking the September FOMC. There are two series, 30-year conforming fixed mortgage rate and MBS yield. 30-year conforming fixed mortgage rate begins in early 2010 at about 5.3 and generally decreases to about 4.4 by late 2010. It increases to about 5 by early 2011 and then decreases to about 3.35 by October 16, 2012. MBS yield begins in early 2010 at about 4.5 and decreases to about 3.3 by late 2010. It increase to about 4.5 by early 2011 and then decrease to about 1 by October 16, 2012. Note: For mortgage-backed securities (MBS) yield, the data consist of the Fannie Mae 30-year current-coupon rate. Source: For MBS yield, Barclays; for mortgage rate, Loansifter. Figure: Refinance Loan Originations Line chart, by billions of dollars, 2002 to 2012. Data are monthly. The series begins in 2002 at about 105 and generally increases to about 350 by 2003. It generally decreases to about 40 by 2008 and then generally increases to about 145 by October 2012. Note: Seasonally adjusted by FRB staff. Source: Staff estimates. Figure: Prices of Existing Homes Line chart, by index peak normalized to 100, 2005 to 2012. Data are monthly. The series begins in 2005 at about 86 and increases to about 100 by 2006. It decreases to about 68 by 2011 and then increases to about 71 by August 2012. Source: CoreLogic. Figure: Delinquencies on Prime Mortgages, Transition Rate Line chart, by percent of loans, 2003 to 2012. There are two series, 3-month moving average and Monthly rate. 3month moving average begins in 2003 at about 1.09 and generally decreases to about 0.81 by 2006. It generally increases to about 1.043 by 2008 and then generally decreases to about 0.97 by July 2012. Monthly rate begins in 2003 at about 1.03 and generally decreases to about 0.8 by 2006. It generally increases to about 1.78 by 2008 and then generally decreases to about 0.96 by July 2012. Note: Percent of previously current mortgages that transition to being at least 30 days delinquent each month. Source: LPS Applied Analytics. Figure: Consumer Credit Line chart, by percent change, annual rate, 2004 to 2012. Data are 3-month moving averages. There is a horizontal line at zero. There are two series, Revolving and Nonrevolving. Revolving begins in 2004 at about 3 and generally increases to about 10 by 2008. It generally decrease to about -14 by 2010 and then generally increases to about -1 by August 2012. Nonrevolving begins in 2004 at about 5.4 and generally decreases to about -4 by 2008. It then generally increases to about 7.5 by August 2012. Source: Federal Reserve Board. Figure: Gross Consumer ABS Issuance Bar chart, by billions of dollars, 2007 to 2012. Data are monthly rate. There are three series, Student loan, Credit card, and Auto. Approximate values are: 2007: Student loan 19, Credit card 14, Auto 6; 2008: Student loan 11, Credit card 8, Auto 3; 2009: Student loan 11, Credit card 8.5, Auto 4.5; 2010: Student loan 6, Credit card 5, Auto 4; 2011: Student loan 6.5, Credit card 5.5, Auto 4.5; 2012:Q1: Student loan 9, Credit card 8, Auto 7; 2012:Q2: Student loan 13, Credit card 10, Auto 7; 2012:Q3: Student loan 12, Credit card 10, Auto 7; October 2012 (month to date): Student loan 8, Credit card 7.5, Auto 5. Source: Inside MBS & ABS; Merrill Lynch; Bloomberg; Federal Reserve Board. Commercial Banking and Money Figure: Changes in Bank Credit Line chart, by percent, 2005 to 2012. Data are 3-month change, s.a.a.r. There is a horizontal line at zero. There are two series, Total bank credit, and C&I loans. Total bank credit begins in 2005 at about 10 and generally decreases to about -12 by 2009. It then generally increases to about 4 by September 2012. C&I loans begins in 2005 at about 12 and generally increases to about 30 by 2007. It generally decreases to about -28 by 2009 and then generally increases to about 9 by September 2012. Note: The data have been adjusted to remove the estimated effects of certain changes to accounting standards and nonbank structure activity of $5 billion or more. Source: Federal Reserve Board. Figure: Changes in Standards and Demand across All Loan Categories Line chart, by net percent, 1990 to 2010. Data are quarterly. There is a horizontal line at zero. There is a vertical line marking the July survey. There are two series, Standards and Demands. Standards begins in 1990 at about 38 and generally decreases to about -10 by 1994. It generally increases to about 44 by 2002 and then generally decrease to about -20. It increase to about 93 by 2008 and then generally decreases to about -5 by 2012. Demand begins in 1991 -25 and generally increases to about 40 by 1998. It decreases to about -40 by 2001 and then increases to about 35 by 2005. It generally decreases to about -58 by 2008 and then increases to about 22 by 2012. Note: A composite index that represents the net percentage of loans on respondents' balance sheets that were in categories for which banks reported tighter lending standards or stronger loan demand over the past 3 months, with results weighted by survey respondents' holdings of loans in each category. Source: Federal Reserve Board, Senior Loan Officer Opinion Survey on Bank Lending Practices. Figure: Changes in Standards and Demand for C&I Loans Line chart, by net percent, 1991 to 2011. Data are quarterly. There is a horizontal line at zero. There is a vertical line marking the July survey. There are two series, Standards and Demands. Standards begins in 1991 at about 20 and generally increases to about 76 by 2000. It generally decreases to about -45 by 2004 and then increases to about 85 by 2008. It then generally decreases to about -2 by 2012. Demand begins in 1991 at about -38 and generally increases to about 43 b 1995. It generally decreases to about -65 by 2000. It increases to about 58 by 2004 and then generally decreases to about -57 by 2009. It then generally increases to about 17 by 2012. Note: Results are weighted by survey respondents' holdings of commercial and industrial (C&I) loans. Source: Federal Reserve Board, Senior Loan Officer Opinion Survey on Bank Lending Practices. Figure: Likelihood of Approving an Application for an FHA Home-Purchase Mortgage Loan Relative to 2006 Bar chart, by percent of respondents, FICO score of 660 to FICO score of 580. There are five series, Somewhat less likely, Much less likely, About the same, Much more likely, and Somewhat likely. Approximate values are: FICO score of 660: Somewhat less likely 10, Much less likely 0, About the same 95, Much more likely 100, Somewhat more likely 97; FICO score of 620: Somewhat less likely 80, Much less likely 5, About the same 95, Much more likely 0, Somewhat more likely 100; FICO score of 580: Somewhat less likely, 85, Much less likely 70, About the same 95, Much more likely 0, Somewhat more likely 100. Note: Results are weighted by survey respondents' holdings of residential real estate loans (excluding multifamily loans and home equity lines of credit). Source: Federal Reserve Board, Senior Loan Officer Opinion Survey on Bank Lending Practices. Growth of M2 and Its Components Percent, s.a.a.r. Liquid deposits M2 Small time deposits Retail MMFs Curr. 2011 9.7 15.4 -18.4 -2.1 8.8 2012:H1 6.7 10.3 -16.8 -9.1 9.3 2012:Q3(p) 6.8 10.1 -17.8 -6.9 7.5 July 9.0 13.4 -18.9 -8.6 7.1 Aug. 4.5 6.9 -17.3 -5.8 8.1 10.2 13.4 -17.2 -1.0 11.6 Sept.(p) Note: Retail MMFs are retail money market funds. p Preliminary. Return to table Source: Federal Reserve Board. Figure: Level of Liquid Deposits Line chart, by trillions of dollars, 2008 to 2012. There is a vertical line marking the September FOMC. The series begins in 2008 at about 4.5 and generally increases to about 7.9 by October 8, 2012. Note: Seasonally adjusted. Source: Federal Reserve Board. Note: The shaded bars indicate periods of business recession as defined by the National Bureau of Economic Research: July 1990-March 1991, March 2001-November 2001, and December 2007-June 2009. Appendix Senior Loan Officer Opinion Survey on Bank Lending Practices Measures of Supply and Demand for Commercial and Industrial Loans, by Size of Firm Seeking Loan Figure: Net Percentage of Domestic Respondents Tightening Standards for Commercial and Industrial Loans Line chart, by percent, 1990 to 2012. There is a horizontal line at zero. There is a vertical line marking the July survey. There are two series, Loans to large and middle-market firms and Loans to small firms. Loans to large and middle-market firms begins in 1990 at about 59 and generally decreases to about -18 by 1994. It generally increases to about 60 by 2001 and then decreases to about -20 by 2005. It generally increases to about 85 by 2008 and then decreases to about -6 by 2012. Loans to small firms begins in 1990 at about 55 and generally decreases to about -10 by 1994. It increases to about 43 by 2000 and then generally decreases to about -22 by 2005. It increases to about 80 by 2009 and then generally decreases to about -6 by 2012. Figure: Net Percentage of Domestic Respondents Increasing Spreads of Loan Rates over Bank's Cost of Funds Line chart, by percent, 1990 to 2012. There is a horizontal line at zero. There is a vertical line marking the July survey. There are two series, Loans to large and middle-market firms and Loans to small firms. Loans to large and middle-market firms begins in 1990 at about 10 and generally decreases to about -60 by 1994. It generally increases to about 60 by 2001 and then decreases to about -70 by 2005. It increase to about 100 by 2008 and then decreases to about -55 by 2012. Loans to small firms begins in 1990 at about 5 and generally decreases to about 30 by 1994. It generally increases to about 40 by 2001 and then decrease to about -50 by 2005. It increases to about 95 by 2009 and then decreases to about -50 by 2012. Figure: Net Percentage of Domestic Respondents Reporting Stronger Demand for Commercial and Industrial Loans Line chart, by percent, 1990 to 2012. There is a horizontal line at zero. There is a vertical line marking the July survey. There are two series, Loans to large and middle-market firms and Loans to small firms. Loans to large and middle-market firms begins in 1991 at about -30 and generally increases to about 40 by 1994. It generally decreases to about -70 by 2001 and then increases to about 45 by 2005. It generally decreases to about -60 by 2009 and then generally increases to about -5 by 2012. Loans to small firms begins in 1991 at about -25 and generally increases to about 40 by 1994. It generally decreases to about -40 by 2001 and then increases to about 40 by 2003. It generally decreases to about -60 by 2009 and then generally increases to about 5 by 2012. Special Questions on C&I Lending Figure: Share of the Increase in C&I Holdings Attributable to the Replacement of Debt from Nonbank Sources Bar chart, by percent of respondents. There is a horizontal line at zero. There are five series, Between 75% and 100%, Between 45% and 75%, Between 25% and 45%, Up to 25%, and Not a factor in C&I loan growth. Approximate values are: Between 75% and 100% 0, Between 45% and 75% 0, Between 25% and 45% 100, Up to 25% 90, Not a factor in C&I loan growth 65. Note: Responses are weighted by survey respondents' holdings of C&I loans. Figure: Importance of Replacement of Debt from Nonbank Sources in C&I Loan Growth Bar chart, by percent of respondents. There are three series, Somewhat important, Not important, and Very important. Approximate values are: Investment-grade bonds: Somewhat important 97, Not important, 90, Very important 100; Non-investment-grade or unrated bonds: Somewhat important 98, Not important 55, Very important 100; Short-term funding sources: Somewhat important 100, Not important 98, Very important 0; Syndicated loans held by nonbanks: Somewhat important 80, Not important 45, Very important 100; Loans from finance companies: Somewhat important 100, Not important 75, Very important 0. Note: Responses are weighted by survey respondents' holdings of C&I loans. Special Questions on Lending to and Competition from European Banks Figure: Changes in Standards and Terms for Lending to European Banks Bar chart, by net percent, easing and tightening. There are five series, 2011:Q4, 2012:Q1, 2012:Q2, 2012:Q3, and 2012:Q4. Approximate values are: Domestic respondents: 2011:Q4 62, 2012:Q1 70, 2012:Q2 21, 2012:Q3 62, 2012:Q4 49; Foreign respondents: 2011:Q4 56, 2012:Q1 72, 2012:Q2 18, 2012:Q3 43, 2012:Q4 14. Note: European banks includes affiliates and subsidiaries. Domestic responses are weighted by survey respondents' holdings of C&I loans; because the C&I loans originated by a branch or agency of a foreign bank may not be sufficiently correlated with the loans the foreign bank chooses to hold on the balance sheet of that subsidiary, foreign responses are unweighted. Figure: Increase in Domestic Bank Business from Decreased Competition from European Banks Bar chart, by percent of respondents, 2012:Q1 to 2012:Q4. There are five series, Increased a considerable amount, Increased to some extent, No appreciable increase, No decrease in competition, and Increase in competition. Approximate values are: 2012:Q1: Increased a considerable amount 100, Increased to some extent 99, No appreciable increase 50, No decrease in competition 10, Increase in competition 0; 2012:Q2: Increased a considerable amount 0, Increased to some extent 100, No appreciable increase 30, No decrease in competition 15, Increase in competition 0; 2012:Q3: Increased a considerable amount 0, Increased to some extent 100, No appreciable increase 45, No decrease in competition 2, Increase in competition 0; 2012:Q4: Increased a considerable amount 0, Increased to some extent 100, No appreciable increase 55, No decrease in competition 0, Increase in competition 0. Note: Responses are weighted by survey respondents' holdings of C&I loans. Measures of Supply and Demand for Commercial Real Estate Loans Figure: Net percentage of Domestic Respondents Tightening Standards for Commercial Real Estate Loans Line chart, by percent, 1990 to 2012. There is a horizontal line at zero. There is a vertical line marking the July survey. The series begins in 1990 at about 70 and generally decrease to about -8 by 1997. It generally increases to about 45 by 2002 and then decreases to about -22 by 2005. It increases to about 88 by 2008 and then generally decreases to about -7 by 2012. Figure: Net Percentage of Domestic Respondents Reporting Stronger Demand for Commercial Real Estate Loans Line chart, by percent, 1990 to 2012. There is a horizontal line at zero. There is a vertical line marking the July survey. The series begins in 1994 at about 12 and generally increases to about 48 by 1997. It generally decreases to about -50 by 2001 and then increases to about 23 by 2004. It generally decreases to about -65 by 2009 and then increases to about 44 by 2012. Measures of Supply and Demand for Residential Mortgage Loans Figure: Net Percentage of Domestic Respondents Tightening Standards for Residential Mortgage Loans Line chart, by percent, 1990 to 2011. There is a horizontal line at zero. There are four series, All residential, Prime, Nontraditional, and Subprime. All residential begins in 1990 at about 10 and increases to about 33 by 1991. It generally decreases to about -15 by 1993 and then generally increases to about 10 by 2003. It decreases to about 8 by 2004 and then generally increases to about 18 by 2006. Prime begins in 2007 at about 18 and increases to about 75 by 2008. It generally decreases to about -1 by 2011. Nontraditional begins in 2007 at about 44 and increases to about 88 by 2008. It then generally decreases to about 0 by 2012. Subprime begins in 2007 at about 58 and generally increases to about 100 by 2008. It then generally decreases to about 0 by 2012. Note: For data starting in 2007:Q2, changes in standards for prime, nontraditional, and subprime mortgage loans are reported separately. Series are not reported when the number of respondents is three or fewer. Figure: Net Percentage of Domestic Respondents Reporting Stronger Demand for Residential Mortgage Loans Line chart, by percent, 1990 to 2006. There is a horizontal line at zero. There are four series, All residential, Prime, Nontraditional, and Subprime. All residential begins in 1990 at about -50 and generally increases to about 60 by 1991. It decreases to about -78 by 1995 and then generally increases to about 62 by 1998. It decreases to about 65 by 2000 and then increases to about 43 by 2003. It then generally decreases to about -39 by 2006. Prime begins in 2007 at about -20 and decreases to about -60 by 2008. It increases to about 39 by 2009 and then decreases to about -36 by 2011. It increases to about 37 by 2012. Nontraditional begins in 2007 at about -18 and generally decreases to about -70 by 2008. It generally increases to about 39 by 2011 and then decreases to about 16 by 2012. Subprime begins in 2007 at about -20 and generally decreases to about -100 by 2008. It then generally increases to about 0 by 2012. Note: For data starting in 2007:Q2, changes in demand for prime, nontraditional, and subprime mortgage loans are reported separately. Series are not reported when the number of respondents is three or fewer. Special Questions on FHA Mortgages Figure: Likelihood of Approving an Application for an FHA Home-Purchase Mortgage Loan Relative to 2006 Bar chart, by percent of respondents. There are five series, Somewhat less likely, Much less likely, About the same, Much more likely, and Somewhat more likely. Approximate values are: FICO score of 660: Somewhat less likely 10, Much less likely 0, About the same 95, Somewhat more likely 99, Somewhat more likely 100; FICO score of 620: Somewhat less likely 80, About the same 95, Much less likely 2.5, Much more likely 0, Somewhat more like 100; FICO score of 580: Somewhat less likely 82, Much less likely 74, About the same 95, Much more likely 0, Somewhat more likely 100. Note: Responses are weighted by survey respondents' holdings of residential real estate loans (excluding multifamily loans and home equity lines of credit). Figure: Reasons Much Less Likely or Somewhat Less Likely to Approve FHA Home-Purchase Mortgage Loans Bar chart, by percent of respondents. There are four series, Somewhat important, Not important, The most important, Very important. Approximate values are: Somewhat important 30, Not important 5, The most important 0, Very important 100; Risk of FHA putback: Somewhat important 10, Not important 2, The most important 100, Very important 95; Concerns about bank's compare ratio: Somewhat important 30, Not important 15, The most important 100, Very important 31; Concerns about the solvency of the FHA insurance fund: Somewhat important 85, Not important 45, The most important 100, Very important 99.5; High RRE exposure: Somewhat important 60, Not important 35, The most important 100, Very important 99; Less favorable house price outlook: Somewhat important 98, Not important 25, The most important 100, Very important 99; Volume exceeds capacity: Somewhat important 80, Not important 70, The most important 100, Very important 99. Note: Responses are weighted by survey respondents' holdings of residential real estate (RRE) loans (excluding multifamily loans and home equity lines of credit). Special Questions on HARP 2.0 Figure: Proportion of Refinance Applications Attributable to HARP 2.0 Bar chart, by percent of respondents. There are five series, Between 50% and 70%, Between 30% and 50%, Between 10% and 30%, Less than 10%, and Little participation. Approximate values are: 2012:Q3: Between 50% and 70% 100, Between 30% and 50% 77, Between 10% and 30% 45, Less than 10% 15, Little participation 10; 2012:Q4: Between 50% and 70% 100, Between 30% and 50% 85, Between 10% and 30% 55, Less than 10% 24, Little participation 10. Note: Responses are weighted by survey respondents' holdings of residential real estate loans (excluding multifamily loans and home equity lines of credit). Figure: Share of HARP 2.0 Applications Anticipated to Be Completed Line chart, by percent of respondents. There are six series, More than 80%, Between 60% and 80%, Between 40% and 60%, Between 20% and 40%, Less than 20%, and Little participation. Approximate values are: 2012:Q2: More than 80% 100, Between 60% and 80% 49, Between 40% and 60% 24, Between 20% and 40% 20, Less than 20% 20, and Little participation 20; 2012:Q3: More than 80% 100, Between 60% and 80% 90, Between 40% and 60% 37, Between 20% and 40% 10, Less than 20% 9, and Little participation 9; 2012:Q4: More than 80% 100, Between 60% and 80% 74, Between 40% and 60% 37, Between 20% and 40% 7, Less than 20% 6.8, and Little participation 6.5. Note: Responses are weighted by survey respondents' holdings of residential real estate loans (excluding multifamily loans and home equity lines of credit). Measures of Supply and Demand for Consumer Loans Figure: Net Percentage of Domestic Respondents Tightening Standards for Consumer Loans Line chart, by percent, 1990 to 2012. There are three series, Credit card loans, Other consumer loans, and Auto loans. Credit card loans begins in 1995 at about 23 and generally decreases to about -10 by 2007. It generally increases to about 66 by 2008 and then decreases to about -10 by 2012. Other consumer loans begins in 1995 at about 20 and generally decreases to about -10 by 2007. It generally increases to about 66 by 2008 and then decrease to about -3 by 2012. Other consumer loans begins in 2011:Q2 at about -16 and generally decreases to about -22 by 2012:Q3. It then increases to about -10 by 2012:Q4. Note: For data starting in 2011:Q2, changes in standards for auto loans and consumer loans excluding credit card and auto loans are reported separately. In 2011:Q2 only, new and used auto loans are reported separately and equally weighted to calculate the auto loans series. Figure: Net Percentage of Domestic Respondents Reporting Increased Willingness to Make Consumer Installment Loans Line chart, by percent, 1990 to 2012. There is a horizontal line at zero. There is a vertical line marking the July survey. The series begins in 1990 at about 8 and generally decreases to about -5 by 1996. It increases to about 20 by 2006 and then decreases to about -50 by 2008. It then generally increases to about 12 by 2012. Figure: Net Percentage of Domestic Respondents Reporting Stronger Demand for Consumer Loans Line chart, by percent, 1990 to 2012. There are four series, All consumer loans, Credit card loans, Auto loans, and Other consumer loans. All consumer loans begins in 1990 at about -30 and generally increases to about 40 by 1994. It generally decreases to about -50 by 2008 and then generally increases to about 5 by 2012. Credit card loans begins in 2011:Q2 at about -1 and generally increases to about 10 by 2012:Q4. Auto loans begins in 2011:Q2 at about 25 and generally decrease to about 17 by 2012:Q1. It increases to about 40 by 2012:Q2 and then decreases to about 19 by 2012:Q4. Other consumer loans begins in 2011:Q2 at about 0 and generally decreases to about -8 by 2011:Q4. It increases to about 20 by 2012:Q2 and then decreases to about 5 by 2012:Q4. Note: For data starting in 2011:Q2, changes in demand for credit card loans, auto loans, and consumer loans excluding credit card and auto loans are reported separately. Risks and Uncertainty Alternative Scenarios (Percent change, annual rate, from end of preceding period except as noted) 2012 Measure and scenario H1 2013 2014 2015 2016-17 Real GDP Extended Tealbook baseline 2.0 2.6 3.5 3.7 2.7 Fiscal cliff 2.0 1.3 2.6 3.5 3.7 Greater expectations 2.9 4.5 3.8 2.5 2.0 More momentum 2.6 3.5 3.5 2.9 2.4 Headwinds and attenuation 2.0 1.9 2.1 2.3 2.6 Damaged labor market 1.8 2.4 3.1 2.7 1.5 European crisis with severe spillovers 1.1 -3.1 1.2 4.2 3.3 Hard landing in China 1.8 1.7 2.9 3.9 3.2 Extended Tealbook baseline 8.0 7.8 7.2 6.2 5.1 Fiscal cliff 8.0 8.3 8.2 7.4 5.5 Greater expectations 7.9 6.9 5.9 5.3 5.2 More momentum 7.8 7.3 6.6 5.8 5.3 Headwinds and attenuation 8.0 8.0 8.0 7.8 7.0 Damaged labor market 8.0 7.9 7.4 6.8 6.8 European crisis with severe spillovers 8.1 9.8 10.4 9.3 7.5 Hard landing in China 8.0 8.1 7.9 6.9 5.5 Extended Tealbook baseline 1.9 1.3 1.4 1.5 1.9 Fiscal cliff 1.9 1.3 1.2 1.1 1.5 Greater expectations 1.9 1.4 1.7 1.9 2.2 More momentum 1.9 1.4 1.6 1.7 2.0 Headwinds and attenuation 1.9 1.3 1.3 1.1 1.2 Damaged labor market 2.0 1.5 1.9 2.2 2.5 European crisis with severe spillovers 1.2 -1.1 .4 1.6 2.2 Hard landing in China 1.6 .4 .7 1.3 2.0 Unemployment rate1 Total PCE prices Core PCE prices Extended Tealbook baseline 1.3 1.6 1.7 1.7 1.9 Fiscal cliff 1.3 1.6 1.5 1.3 1.5 Greater expectations 1.3 1.7 2.0 2.1 2.2 More momentum 1.3 1.7 1.9 1.9 2.0 Headwinds and attenuation 1.3 1.6 1.6 1.3 1.2 Damaged labor market 1.4 1.8 2.2 2.4 2.5 European crisis with severe spillovers 1.1 .3 .8 1.5 2.0 Hard landing in China 1.2 1.2 1.3 1.5 1.9 Extended Tealbook baseline .1 .1 .1 .7 3.9 Fiscal cliff .1 .1 .1 .1 3.4 Greater expectations .1 .6 1.8 2.2 4.0 More momentum .1 .1 .6 1.4 3.7 Headwinds and attenuation .1 .1 .1 .1 .5 Damaged labor market .1 .1 1.0 2.6 4.9 European crisis with severe spillovers .1 .1 .1 .1 1.5 Hard landing in China .1 .1 .1 .2 3.1 Federal funds rate1 1. Percent, average for the final quarter of the period. Return to table Forecast Confidence Intervals and Alternative Scenarios Confidence Intervals Based on FRB/US Stochastic Simulations Figure: Real GDP Line chart, by 4-quarter percent change, 2008 to 2017. There is a horizontal line at zero. There are ten series, Extended Tealbook baseline, Fiscal cliff, Greater expectations, More momentum, Headwinds and attenuation, Damaged labor market, European crisis with severe spillovers, Hard landing in China, 90 percent interval and 70 percent interval. Extended Tealbook baseline begins in 2008 at about 2 and generally decreases to about -4.5 by 2009. It increases to about 3 by 2010 and then generally increases to about 3.8 by 2015. It then decreases to about 2.5 by 2017. Fiscal cliff begins in 2012 at about 2.5 and generally decreases to about 1.5 by 2013. It then generally increases to about 3.8 by 2017. Greater expectations begins in 2012 at about 2.5 and generally increases to about 4.8 by 2013. It then generally decreases to about 2.1 by 2017. More momentum begins in 2012 at about 2.5 and generally increases to about 4 by 2014. It then generally decreases to about 2.4 by 2017. Headwinds and attenuation begins in 2012 at about 2.5 and generally decreases to about 1.75 by 2013. It then generally increases to about 2.8 by 2017. Damaged labor market begins in 2012 at about 2.5 and generally increases to about 3 by 2014. It then generally decreases to about 1.4 by 2017. European crisis with severe spillovers begins in 2012 at about 2.5 and generally decreases to about -3 by 2013. It increases to about 4.5 by 2015 and then decreases to about 3 by 2017. Hard landing in China begins in 2012 at about 2.5 and generally decreases to about 1.4 by 2013. It generally increases to about 4.1 by 2015 and then decreases to about 3 by 2017. The other two series, 90 percent interval and 70 percent interval, closely track each other throughout the series with 90 percent interval being about 1.2 percent greater and less than 70 percent. 70 percent begins in 2012 at about 0.9 and 2.5 and increases to about 1 and 5 by 2015. It ends in 2017 at about 0.9 and 4.9. Figure: Unemployment Rate Line chart, by percent, 2008 to 2017. There are ten series, Extended Tealbook baseline, Fiscal cliff, Greater expectations, More momentum, Headwinds and attenuation, Damaged labor market, European crisis with severe spillovers, Hard landing in China, 90 percent interval and 70 percent interval. Extended Tealbook baseline begins in 2008 at about 5 and generally increases to about 10 by 2010. It then generally decreases to about 5.2 by 2017. Fiscal cliff begins in 2012 at about 8 and generally increases to about 8.2 by 2014. It then decreases to about 5.5 by 2017. Greater expectations begins in 2012 at about 8 and generally decreases to about 5.2 by 2017. More momentum begins in 2012 at about 8 and generally decreases to about 5.3 by 2017. Headwinds and attenuation begins in 2012 at about 8 and decreases to about 7.1 by 2017. Damaged labor market begins in 2012 at about 8 and decreases to about 6.6 by 2016. It increases to about 6.8 by 2017. European crisis with severe spillovers begins in 2012 at about 8 and increases to about 10.5 by 2014. It then decreases to about 7.6 by 2017. Hard landing in China begins in 2012 at about 8 and decreases to about 5.5 by 2017. The other two series, 90 percent interval and 70 percent interval, closely track each other throughout the series with 90 percent interval being about 0.75 greater and less than 70 percent interval. 70 percent interval begins in 2012 at about 8 and 7.6 and increases to about 5.5 and 8.2 by 2014. It ends in 2017 at about 4.25 and 6.5. Figure: PCE Prices excluding Food and Energy Line chart, by 4-quarter percent change, 2008 to 2017. There is a horizontal line at zero. There are ten series, Extended Tealbook baseline, Fiscal cliff, Greater expectations, More momentum, Headwinds and attenuation, Damaged labor market, European crisis with severe spillovers, Hard landing in China, 90 percent interval and 70 percent interval. Extended Tealbook baseline begins in 2008 at 2.3 and generally decreases to about 1.1 by 2010. It increases to about 2 by 2011 and then decreases to about 1.5 by 2013. It then increases to about 2 by 2017. Fiscal cliff begins in 2012 at about 1.6 and generally decreases to about 1.35 by 2015. It then increases to about 1.6 by 2017. Greater expectations begins in 2012 at about 1.6 and generally increases to about 2.25 by 2017. More momentum begins in 2012 at about 1.6 and generally increases to about 2.1 by 2017. Headwinds and attenuation begins in 2012 at about 1.6 and generally decreases to about 1.25 by 2017. Damaged labor market begins in 2012 at about 1.6 and generally increases to about 2.6 by 2017. European crisis with severe spillovers begins in 2012 at about 1.6 and decreases to about 0.25 by 2013. It then generally increases to about 2.1 by 2017. Hard landing in China begins in 2012 at about 1.6 and decreases to about 1.25 by 2014. It then generally increases to about 2.1 by 2017. The other two series, 90 percent interval and 70 percent interval, closely track each other with 90 percent interval being about 0.6 percent greater and less than 70 percent interval. 70 percent begins in 2012 at about 1.8 and 0.8 and increases to about 0.75 and 2.6 by 2015. It ends in 2017 at about 1 and 2.9. Figure: Federal Funds Rate Line chart, by percent, 2008 to 2017. There is a horizontal line at zero. There are ten series, Extended Tealbook baseline, Fiscal cliff, Greater expectations, More momentum, Headwinds and attenuation, Damaged labor market, European crisis with severe spillovers, Hard landing in China, 90 percent interval and 70 percent interval. Extended Tealbook baseline begins in 2008 at about 3.1 and generally decreases to about 0.1 by 2009 where it remains relatively constant until 2015. It then increases to about 3.9 by 2017. Fiscal cliff begins in 2012 at about 0.1 where it remains relatively constant until 2015. It then increases to about 3.2 by 2017. Greater expectations begins in 2012 at about 0.1 and generally increases to about 4 by 2017. More momentum begins in 2012 at about 0.1 where it remains relatively constant until 2014. It then increases to about 3.8 by 2017. Headwinds and attenuation begins in 2008 at about 0.1 where it remains relatively constant until 2016. It then increases to about 0.5 by 2017. Damaged labor market begins in 2008 at about 0.1 where it remains relatively constant until 2014. It then increases to about 4.9 by 2017. European crisis with severe spillovers begins in 2012 at about 0.1 where it remains relatively constant until 2016. It then increases to about 1.5 by 2017. Hard landing in China begins in 2012 at about 0.1 where it remains relatively constant until 2015. It then increases to about 3 by 2017. The other two series, 90 percent interval and 70 percent interval, closely track each other with 90 percent interval being about 1.2 percent greater and less than 70 percent interval. 70 percent interval beings in 2012 at about 0.1 and 0.25 and increases to about 0.1 3 by 2015. It ends in 2017 at about 1.9 and 5.8. Selected Tealbook Projections and 70 Percent Confidence Intervals Derived from Historical Tealbook Forecast Errors and FRB/US Simulations Measure 2012 2013 2014 2015 2016 2017 1.8 2.6 3.5 3.7 3.1 2.4 Tealbook forecast errors 1.3-2.3 .9-4.3 1.6-5.4 … … … FRB/US stochastic simulations 1.2-2.4 1.3-4.5 1.6-5.2 1.2-5.0 1.1-5.1 .7-4.8 8.0 7.8 7.2 6.2 5.5 5.1 Tealbook forecast errors 7.9-8.1 7.1-8.5 6.0-8.4 … … … FRB/US stochastic simulations 7.9-8.2 7.0-8.4 6.0-8.2 5.2-7.6 4.6-6.9 4.2-6.4 1.7 1.3 1.4 1.5 1.8 2.0 Tealbook forecast errors 1.5-2.0 .0-2.5 .1-2.7 … … … FRB/US stochastic simulations 1.4-2.2 .3-2.3 .2-2.6 .2-2.7 .5-2.9 .7-3.1 Real GDP (percent change, Q4 to Q4) Projection Confidence interval Civilian unemployment rate (percent, Q4) Projection Confidence interval PCE prices, total (percent change, Q4 to Q4) Projection Confidence interval PCE prices excluding food and energy (percent change, Q4 to Q4) Projection 1.6 1.6 1.7 1.7 1.9 2.0 Tealbook forecast errors 1.4-1.8 .9-2.3 .9-2.5 … … … FRB/US stochastic simulations 1.4-1.9 .9-2.3 .8-2.6 .7-2.6 .9-2.8 1.0-2.9 .1 .1 .1 .7 2.6 3.9 .1-.1 .1-1.0 .1-2.5 .1-3.1 .6-4.4 1.9-5.8 Confidence interval Federal funds rate (percent, Q4) Projection Confidence interval FRB/US stochastic simulations Note: Shocks underlying FRB/US stochastic simulations are randomly drawn from the 1969-2009 set of model equation residuals. Intervals derived from Tealbook forecast errors are based on projections made from 1979-2009, except for PCE prices excluding food and energy, where the sample is 1981-2009. … Not applicable. The Tealbook forecast horizon has typically extended about 2 years. Return to table Alternative Projections (Percent change, Q4 to Q4, except as noted) 2012 Measure and projection Previous Tealbook 2013 Current Tealbook Previous Tealbook 2014 Current Tealbook Previous Tealbook Current Tealbook Real GDP Staff 1.6 1.8 2.4 2.6 3.2 3.5 FRB/US 1.5 1.4 1.7 1.9 2.9 3.1 EDO 1.9 2.0 3.1 3.2 3.1 3.2 Blue Chip 1.8 1.7 2.4 2.3 … … Staff 8.3 8.0 8.0 7.8 7.6 7.2 FRB/US 8.4 8.1 8.8 8.5 8.5 8.1 EDO 8.2 8.1 7.8 7.7 7.4 7.4 Blue Chip 8.1 8.1 7.7 7.8 … … Staff 1.7 1.7 1.4 1.3 1.4 1.4 FRB/US 1.7 1.8 1.2 1.2 1.0 1.0 EDO 1.6 1.6 1.6 1.5 1.6 1.6 Blue Chip2 1.9 1.9 2.2 2.1 … … Staff 1.7 1.6 1.6 1.6 1.6 1.7 FRB/US 1.7 1.7 1.5 1.5 1.2 1.3 EDO 1.7 1.6 1.6 1.5 1.6 1.6 … … … … … … Staff .1 .1 .1 .1 .6 .1 FRB/US .2 .3 .2 .5 .9 1.6 EDO .4 .3 1.2 1.2 1.9 1.9 Blue Chip3 .1 .1 .2 .2 … … Unemployment rate1 Total PCE prices Core PCE prices Blue Chip Federal funds rate1 Note: Blue Chip forecast completed on October 10, 2012. 1. Percent, average for Q4. Return to table 2. Consumer price index. Return to table 3. Treasury bill rate. Return to table … Not applicable. The Blue Chip forecast typically extends about 2 years. Return to table Tealbook Forecast Compared with Blue Chip (Blue Chip survey released October 10, 2012) Figure: Real GDP Line chart, by percent change, annual rate, 2008 to 2013. There is a horizontal line at zero. There are three series, Blue chip consensus, Staff forecast, and Blue chip top 10 and bottom 10 averages. Blue chip consensus begins in 2008 at about -1.9 and generally decreases to about -9 by late 2008. It increases to about 4 by 2009 and then generally decreases to about 0 by 2011. It increases to about 4 by 2012 and then decreases to about 2.8 by 2013. Staff forecast generally follows the same path as Blue chip consensus until 2012 when it begins increasing at a faster rate. It ends in 2013 at about 3.2. Blue chip top 10 and bottom 10 averages begins in 2012 at about 1 and 2.25 and increases to about 0.5 and 2.4 by early 2013. It ends in late 2013 at about 1.9 and 3.9. Figure: Real PCE Line chart, by percent change, annual rate, 2008 to 2013. There is a horizontal line at zero. There are three series, Blue chip consensus, Staff forecast, and Blue chip top 10 and bottom 10 averages. Blue chip consensus begins in 2008 at about -1 and decreases to about -5 by late 2008. It generally increases to about 4 by 2010 and then decreases to about 1 by 2011. It then generally increases to about 2.5 by 2013. Staff forecast generally follows the same path as Blue chip consensus until 2012 when it begins increasing at a faster rate. It ends in 2013 at about 3.6. Blue chip top 10 and bottom 10 averages begins in 2012 at about 1.4 and 2.6 and increases to about 0 and 2.9 by early 2013. It ends in late 2013 at about 1.8 and 3.4. Figure: Unemployment Rate Line chart, by percent, 2008 to 2013. There are three series, Blue chip consensus, Staff forecast, and Blue chip top 10 and bottom 10 averages. Blue chip consensus begins in 2008 at about 5 and increases to about 10 by 2009. It then decreases to about 7.9 by 2013. Staff forecast generally follows the same path as Blue chip consensus. Blue chip top 10 and bottom 10 averages begins in 2012 at about 7.9 and 8.2 and increases to about 7.4 and 8.1 by late 2013. Figure: Consumer Price Index Line chart, by percent change, annual rate, 2008 to 2013. There is a horizontal line at zero. There are three series, Blue chip consensus, Staff forecast, and Blue chip top 10 and bottom 10 averages. Blue chip consensus begins in early 2008 at about 4.2 and decreases to about -9 by late 2008. It generally increases to about 4.5 by 2011 and then decreases to about 2.1 by 2013. Staff forecast generally follows the same path as Blue chip consensus until 2012 when it begins decreasing at a faster rate. It ends in 2013 at about 1.75. Blue chip top 10 and bottom 10 averages begins in 2012 at about 1.7 and 3.8 and increases to about 0.1 and 3 by early 2013. It ends in late 2013 at about 1.8 and 3. Figure: Treasury Bill Rate Line chart, by percent, 2008 to 2013. There is a horizontal line at zero. There are three series, Blue chip consensus, Staff forecast, and Blue chip top 10 and bottom 10 averages. Blue chip consensus begins in 2008 at about 2 and generally decreases to about 0.1 by 2009. It remains relatively constant here until 2013. Staff forecast generally follows the same path as Blue chip consensus. Blue chip top 10 and bottom 10 averages begins in 2012 at about 0.1 and 0.2 and increases to about 0.1 and 0.3 by 2013. Figure: 10-Year Treasury Yield Line chart, by percent, 2008 to 2013. There is a horizontal line at zero. There are three series, Blue chip consensus, Staff forecast, and Blue chip top 10 and bottom 10 averages. Blue chip consensus begins in 2008 at about 3.6 and generally decreases to about 2.7 by 2009. It increases to about 3.6 by 2010 and then decreases to about 1.6 by 2012. It then increases to about 2.4 by 2013. Staff forecast generally follows the same path as Blue chip consensus until 2012 when it begins increasing at a faster rate. It ends in 2013 at about 2.5. Blue chip top 10 and bottom 10 begins in 2012 at about 1.5 and 2 and generally increases to about 1.8 and 2.9 by 2013. Note: The yield is for on-the-run Treasury securities. Over the forecast period, the staff's projected yield is assumed to be 15 basis points below the off-the-run yield. Assessment of Key Macroeconomic Risks (1) Probability of Inflation Events (4 quarters ahead--2013:Q3) Probability that the 4-quarter change in total PCE prices will be … Staff FRB/US EDO BVAR Greater than 3 percent Current Tealbook .06 .07 .11 .14 Previous Tealbook .07 .06 .11 .14 Current Tealbook .29 .26 .32 .09 Previous Tealbook .27 .31 .32 .10 Less than 1 percent Probability of Unemployment Events (4 quarters ahead--2013:Q3) Probability that the unemployment rate will … Staff FRB/US EDO BVAR Increase by 1 percentage point Current Tealbook .02 .15 .17 .01 Previous Tealbook .02 .16 .16 .02 Current Tealbook .04 .00 .29 .30 Previous Tealbook .06 .00 .32 .14 Decrease by 1 percentage point Probability of Near-Term Recession Probability that real GDP declines in each of 2012:Q4 and 2013:Q1 Staff FRB/US EDO BVAR Factor Model Current Tealbook .03 .06 .06 .03 .24 Previous Tealbook .03 .07 .05 .03 .21 Note: "Staff" represents Tealbook forecast errors applied to the Tealbook baseline; baselines for FRB/US, BVAR, EDO, and the factor model are generated by those models themselves, up to the current-quarter estimate. The current quarter is taken as data from the staff estimate for the second Tealbook in each quarter, otherwise the preceding quarter is taken as the latest historical observation. Assessment of Key Macroeconomic Risks (2) Figure: Probability that Total PCE Inflation Is above 3 Percent (4 quarters ahead) Line chart, by probability, 1998 to 2012. There are two series, FRB/US and BVAR. FRB/US begins in 1998 at about 0 and generally increases to about .25 by 2000. It generally decreases to about 0 by 2004 and then increases to about 0.82 by 2008. It then generally decreases to about 0.075 by 2012. BVAR begins in 1998 at about 0.05 and generally increases to about 0.33 by 2001. It decreases to about 0.01 by 2002 and then generally increases to about 0.7 by 2008. It then generally decreases to about 0.17 by 2012. Figure: Probability that Total PCE Inflation Is below 1 Percent (4 quarters ahead) Line chart, by probability, 1998 to 2012. There are two series, FRB/US and BVAR. FRB/US begins in 1998 at about 0 and generally increases to about 0.84 by 2004. It generally decreases to about 0.2 by 2006 and then increases to about 1 by 2009. It then generally decreases to about 0.25 by 2012. BVAR begins in 1998 at about 0.2 and decreases to about 0 by 2001. It generally increases to about 0.99 by 2002 and then decrease to about 0.05 by 2005. It generally increases to about 1 by 2009 and then generally decreases to about 0.1 by 2012. Figure: Probability that the Unemployment Rate Increases 1 ppt (4 quarters ahead) Line chart, by probability, 1998 to 2012. There are two series, FRB/US and BVAR. FRB/US begins in 1998 at 0 and generally increases to about 0.7 by 2001. It decreases to about 0 by 2004 and then increases to about 0.8 by 2009. It then generally decreases to about 0.18 by 2012. BVAR begins in 1998 at about 0 and generally increases to about 0.6 by 2001. It decreases to about 0 by 2004 and then increases to about 1 by 2009. It then generally decreases to about 0 by 2012. Figure: Probability that the Unemployment Rate Decreases 1 ppt (4 quarters ahead) Line chart, by probability, 1998 to 2012. There are two series, FRB/US and BVAR. FRB/US begins in 1998 at 0 and generally increases to about 0.85 by 2003. It decreases to about 0 by 2007 and then increases to about 0.8 by 2010. It then generally decreases to about 0 by 2012. BVAR begins in 1998 at about 0.12 and generally decreases to about 0 by 2001. It increases to about 0.21 by 2004 and then decreases to about 0 by 2007. It generally increases to about 0.59 by 2011 and then decreases to about 0.3 by 2012. Figure: Probability that Real GDP Declines in each of the Next Two Quarters Line chart, by probability, 1998 to 2012. There are two series, FRB/US and BVAR. FRB/US begins in 1998 at 0 where it remains relatively stable until 2008. It increases to about 0.78 by 2009 and then generally decreases to about 0.075 by 2012. BVAR begins in 1998 at about 0 and increases to about 0.4 by 2001. It decreases to about 0 where it remains relatively stable until 2007. It generally increases to about 0.99 by 2009 and then decreases to about 0.05 by 2012. Note: See notes on facing page, Assessment of Key Macroeconomic Risks (1). Recession and inflation probabilities for FRB/US and the BVAR are real-time estimates. See Robert J. Tetlow and Brian Ironside (2007), "Real-Time Model Uncertainty in the United States: The Fed, 1996-2003," Journal of Money and Banking, vol. 39 (October), pp. 1533-61. Greensheets Changes in GDP, Prices, and Unemployment (Percent, annual rate except as noted) Nominal GDP Interval Real GDP PCE price index 09/05/12 10/17/12 09/05/12 10/17/12 09/05/12 10/17/12 2.2 2.2 .1 .1 3.2 3.2 Core PCE price index 09/05/12 10/17/12 Unemployment rate 1 09/05/12 10/17/12 Quarterly 2011: Q1 1.3 1.3 9.0 9.0 Q2 5.2 5.2 2.5 2.5 3.6 3.6 2.3 2.3 9.1 9.1 Q3 4.3 4.3 1.3 1.3 2.3 2.3 1.9 1.9 9.1 9.1 Q4 4.2 4.2 4.1 4.1 1.1 1.1 1.3 1.3 8.7 8.7 Q1 4.2 4.2 2.0 2.0 2.5 2.5 2.2 2.2 8.2 8.2 Q2 3.3 2.8 1.7 1.3 .7 .7 1.8 1.7 8.2 8.2 Q3 4.3 5.2 1.3 2.0 1.9 1.7 1.3 1.2 8.3 8.1 Q4 3.1 4.3 1.7 2.0 1.7 2.1 1.5 1.4 8.3 8.0 Q1 3.4 2.8 2.0 1.8 1.2 .9 1.6 1.6 8.2 8.0 Q2 3.8 4.0 2.3 2.5 1.5 1.4 1.6 1.6 8.2 8.0 Q3 4.1 4.4 2.6 3.0 1.4 1.4 1.6 1.6 8.1 7.9 Q4 4.3 4.5 2.8 3.1 1.3 1.3 1.6 1.6 8.0 7.8 Q2 3.7 3.7 1.3 1.3 3.4 3.4 1.8 1.8 -.5 -.5 Q4 4.3 4.3 2.7 2.7 1.7 1.7 1.6 1.6 -.4 -.4 Q2 3.7 3.5 1.8 1.6 1.6 1.6 2.0 2.0 -.5 -.5 Q4 3.7 4.7 1.5 2.0 1.8 1.9 1.4 1.3 .1 -.2 Q2 3.6 3.4 2.1 2.2 1.4 1.2 1.6 1.6 -.1 .0 Q4 4.2 4.5 2.7 3.1 1.4 1.4 1.6 1.6 -.2 -.2 2010:Q4 4.3 4.3 2.4 2.4 1.5 1.5 1.2 1.2 -.3 -.3 2011:Q4 4.0 4.0 2.0 2.0 2.5 2.5 1.7 1.7 -.9 -.9 2012:Q4 3.7 4.1 1.6 1.8 1.7 1.7 1.7 1.6 -.4 -.7 2013:Q4 3.9 3.9 2.4 2.6 1.4 1.3 1.6 1.6 -.3 -.2 2014:Q4 4.7 5.0 3.2 3.5 1.4 1.4 1.6 1.7 -.4 -.6 2010 3.8 3.8 2.4 2.4 1.9 1.9 1.5 1.5 9.6 9.6 2011 4.0 4.0 1.8 1.8 2.4 2.4 1.4 1.4 8.9 8.9 2012 4.0 4.1 2.1 2.2 1.8 1.8 1.8 1.7 8.2 8.1 2013 3.7 3.9 2.0 2.2 1.5 1.4 1.6 1.5 8.1 7.9 2014 4.5 4.8 3.0 3.3 1.4 1.4 1.6 1.6 7.8 7.4 2012: 2013: Two-quarter 2 2011: 2012: 2013: Four-quarter 3 Annual 1. Level, except for two-quarter and four-quarter intervals. Return to table 2. Percent change from two quarters earlier; for unemployment rate, change is in percentage points. Return to table 3. Percent change from four quarters earlier; for unemployment rate, change is in percentage points. Return to table Changes in Real Gross Domestic Product and Related Items (Percent, annual rate except as noted) 2011 Item Real GDP Q2 Q3 2012 Q4 Q1 Q2 2013 Q3 Q4 Q1 Q2 Q3 2.5 1.3 4.1 2.0 1.3 2.0 2.0 1.8 2.5 3.0 2.5 1.3 4.1 2.0 1.7 1.3 1.7 2.0 2.3 2.6 2.4 2.3 1.5 2.4 1.7 1.9 2.1 1.0 2.7 3.2 Previous Tealbook 2.4 2.3 1.5 2.4 1.9 1.4 1.4 .8 2.4 2.7 Priv. dom. final purch. 2.5 3.6 3.2 3.5 1.9 2.1 3.1 1.4 3.5 4.0 2.5 3.6 3.2 3.5 2.0 2.1 2.2 1.3 3.3 3.5 1.0 1.7 2.0 2.4 1.5 2.3 3.1 1.1 3.0 3.4 1.0 1.7 2.0 2.4 1.7 2.3 2.2 1.1 2.8 2.8 -2.3 5.4 13.9 11.5 -.2 8.0 12.4 2.3 10.4 10.1 Nondurables -.3 -.4 1.8 1.6 .6 2.9 2.7 .9 1.8 2.3 Services 1.9 1.8 .3 1.3 2.1 1.3 1.7 1.0 2.3 2.7 Residential investment 4.1 1.4 12.1 20.5 8.5 14.3 13.9 13.4 14.9 15.6 4.1 1.4 12.1 20.5 8.4 9.7 5.5 10.5 12.0 12.4 14.5 19.0 9.5 7.5 3.6 -2.5 .8 1.0 3.7 5.2 14.5 19.0 9.5 7.5 3.1 -1.0 1.5 .6 4.5 6.1 7.8 18.3 8.8 5.4 4.8 -1.0 2.0 1.0 4.2 5.5 7.8 18.3 8.8 5.4 4.1 .7 2.0 .2 5.4 7.5 35.2 20.7 11.5 12.9 .6 -6.1 -2.2 .9 2.7 4.4 35.2 20.7 11.5 12.9 .5 -5.0 .5 1.4 2.3 2.6 -400 -398 -418 -416 -407 -406 -413 -409 -406 -402 -400 -398 -418 -416 -405 -405 -411 -412 -414 -414 Exports 4.1 6.1 1.4 4.4 5.3 -1.3 3.5 4.8 5.3 5.0 Imports .1 4.7 4.9 3.1 2.8 -1.2 4.1 3.1 3.8 3.4 Previous Tealbook Final sales Previous Tealbook Personal cons. expend. Previous Tealbook Durables Previous Tealbook Business fixed invest. Previous Tealbook Equipment & software Previous Tealbook Nonres. structures Previous Tealbook Net exports 2 Previous Tealbook 2 Gov't. cons. & invest. -.8 -2.9 -2.2 -3.0 -.7 .6 -1.6 -1.5 -1.5 -1.4 -.8 -2.9 -2.2 -3.0 -.7 -1.7 -1.1 -1.5 -1.5 -1.4 2.8 -4.3 -4.4 -4.2 -.2 1.4 -4.2 -4.0 -4.3 -4.1 8.3 2.6 -10.6 -7.1 -.2 3.4 -4.9 -4.7 -5.1 -4.8 -7.5 -17.4 10.2 1.8 -.4 -2.4 -2.7 -2.7 -2.7 -2.8 -3.2 -2.0 -.7 -2.2 -1.0 .0 .1 .2 .3 .3 Change in bus. inventories 2 28 -4 71 57 41 48 48 74 69 64 Previous Tealbook 2 28 -4 71 57 53 47 54 94 90 87 Nonfarm 2 36 -1 74 62 53 67 67 68 61 57 Farm2 -6 -3 -2 -3 -8 -19 -19 7 7 7 Previous Tealbook Federal Defense Nondefense State & local 1. Change from fourth quarter of previous year to fourth quarter of year indicated. Return to table 2. Billions of chained (2005) dollars. Return to table Changes in Real Gross Domestic Product and Related Items (Change from fourth quarter of previous year to fourth quarter of year indicated, unless otherwise noted) Item Real GDP 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2.8 2.4 2.2 -3.3 -.1 2.4 2.0 1.8 2.6 3.5 2.8 2.4 2.2 -3.3 -.1 2.4 2.0 1.6 2.4 3.2 2.7 2.8 2.4 -2.6 -.5 1.7 1.7 2.0 2.5 3.5 Previous Tealbook 2.7 2.8 2.4 -2.6 -.5 1.7 1.7 1.8 2.1 3.1 Priv. dom. final purch. 3.2 2.4 1.2 -4.5 -2.8 3.2 2.9 2.7 3.2 4.3 3.2 2.4 1.2 -4.5 -2.8 3.2 2.9 2.5 2.9 4.0 2.8 3.2 1.7 -2.5 -.3 2.9 1.9 2.3 2.8 3.7 2.8 3.2 1.7 -2.5 -.3 2.9 1.9 2.2 2.4 3.4 Durables 2.8 7.0 4.6 -13.0 3.0 9.5 5.9 7.8 8.1 9.6 Nondurables 3.1 2.9 .8 -3.1 .4 3.0 1.4 2.0 1.9 2.9 Services 2.7 2.6 1.4 -.5 -1.1 1.9 1.5 1.6 2.2 3.0 Residential investment 5.3 -15.7 -20.7 -24.4 -13.3 -5.7 3.9 14.2 14.8 13.2 Previous Tealbook Final sales Previous Tealbook Personal cons. expend. Previous Tealbook Previous Tealbook 5.3 -15.7 -20.7 -24.4 -13.3 -5.7 3.9 10.9 11.9 12.4 4.5 7.8 7.9 -9.4 -15.7 7.7 10.2 2.3 3.8 6.0 Previous Tealbook 4.5 7.8 7.9 -9.4 -15.7 7.7 10.2 2.7 4.2 5.7 Equipment & software 6.2 6.0 3.9 -13.6 -7.8 11.9 11.4 2.8 4.2 7.5 6.2 6.0 3.9 -13.6 -7.8 11.9 11.4 3.0 5.1 7.2 -.1 13.0 17.3 -1.2 -29.4 -1.8 6.9 1.0 2.7 2.3 -.1 13.0 17.3 -1.2 -29.4 -1.8 6.9 2.0 2.2 2.2 -723 -729 -649 -495 -355 -420 -408 -411 -406 -411 -723 -729 -649 -495 -355 -420 -408 -409 -416 -430 Exports 6.7 10.2 10.1 -2.5 .3 8.8 4.3 2.9 5.1 6.2 Imports 5.2 4.1 .8 -5.9 -6.1 10.9 3.5 2.2 3.9 5.0 Gov't. cons. & invest. .7 1.5 1.9 2.7 4.0 -1.3 -3.3 -1.2 -1.5 -1.1 Previous Tealbook .7 1.5 1.9 2.7 4.0 -1.3 -3.3 -1.6 -1.5 -1.1 1.2 2.2 3.1 8.8 5.1 2.3 -4.2 -1.8 -4.2 -4.2 .4 4.4 2.6 9.8 4.1 1.0 -4.0 -2.3 -4.9 -4.9 2.6 -2.3 4.2 6.8 7.2 5.2 -4.6 -.9 -2.7 -2.9 .4 1.2 1.2 -.9 3.3 -3.6 -2.7 -.8 .3 .9 Change in bus. inventories 1 50 59 28 -36 -139 51 31 49 69 78 Previous Tealbook 1 50 59 28 -36 -139 51 31 53 92 107 50 63 29 -38 -138 58 36 63 62 73 0 -4 -1 1 -1 -6 -4 -12 7 5 Business fixed invest. Previous Tealbook Nonres. structures Previous Tealbook Net exports 1 Previous Tealbook 1 Federal Defense Nondefense State & local Nonfarm 1 Farm1 1. Billions of chained (2005) dollars. Return to table Contributions to Changes in Real Gross Domestic Product (Percentage points, annual rate except as noted) 2011 Item Q2 Q3 2012 Q4 Q1 Q2 2013 Q3 Q4 Q1 Q2 Q3 Real GDP 2.5 1.3 4.1 2.0 1.3 2.0 2.0 1.8 2.5 3.0 2.5 1.3 4.1 2.0 1.7 1.3 1.7 2.0 2.3 2.6 2.5 2.3 1.6 2.4 1.7 1.9 2.1 1.0 2.7 3.1 Previous Tealbook 2.5 2.3 1.6 2.4 1.9 1.4 1.4 .8 2.4 2.7 Priv. dom. final purch. 2.1 2.9 2.7 2.9 1.6 1.7 2.6 1.2 2.9 3.3 2.1 2.9 2.7 2.9 1.7 1.8 1.9 1.1 2.7 2.9 .7 1.2 1.5 1.7 1.1 1.7 2.2 .8 2.2 2.4 .7 1.2 1.5 1.7 1.2 1.7 1.6 .8 2.0 2.0 Durables -.2 .4 1.0 .9 .0 .6 .9 .2 .8 .8 Nondurables -.1 -.1 .3 .3 .1 .5 .4 .1 .3 .4 Services .9 .9 .2 .6 1.0 .6 .8 .5 1.1 1.3 Residential investment .1 .0 .3 .4 .2 .3 .3 .3 .4 .4 .1 .0 .3 .4 .2 .2 .1 .2 .3 .3 1.3 1.7 .9 .7 .4 -.3 .1 .1 .4 .5 Previous Tealbook 1.3 1.7 .9 .7 .3 -.1 .2 .1 .5 .6 Equipment & software .5 1.2 .6 .4 .4 -.1 .1 .1 .3 .4 .5 1.2 .6 .4 .3 .0 .1 .0 .4 .5 .8 .5 .3 .4 .0 -.2 -.1 .0 .1 .1 .8 .5 .3 .4 .0 -.1 .0 .0 .1 .1 .5 .0 -.6 .1 .2 .0 -.2 .1 .1 .1 .5 .0 -.6 .1 .3 .0 -.2 .0 -.1 .0 Exports .6 .8 .2 .6 .7 -.2 .5 .7 .7 .7 Imports .0 -.8 -.9 -.5 -.5 .2 -.7 -.5 -.7 -.6 -.2 -.6 -.4 -.6 -.1 .1 -.3 -.3 -.3 -.3 Previous Tealbook Final sales Previous Tealbook Personal cons. expend. Previous Tealbook Previous Tealbook Business fixed invest. Previous Tealbook Nonres. structures Previous Tealbook Net exports Previous Tealbook Gov't. cons. & invest. Previous -.2 -.6 -.4 -.6 -.1 -.3 -.2 -.3 -.3 -.3 .2 -.4 -.4 -.3 .0 .1 -.3 -.3 -.3 -.3 .5 .2 -.6 -.4 .0 .2 -.3 -.2 -.3 -.2 -.2 -.5 .3 .1 .0 -.1 -.1 -.1 -.1 -.1 -.4 -.2 -.1 -.3 -.1 .0 .0 .0 .0 .0 .0 -1.1 2.5 -.4 -.5 .1 .0 .8 -.2 -.1 .0 -1.1 2.5 -.4 -.2 -.1 .2 1.2 -.1 -.1 Nonfarm .0 -1.2 2.5 -.4 -.3 .5 .0 .0 -.2 -.1 Farm .0 .1 .1 .0 -.2 -.3 .0 .7 .0 .0 Tealbook Federal Defense Nondefense State & local Change in bus. inventories Previous Tealbook 1. Change from fourth quarter of previous year to fourth quarter of year indicated. Return to table Changes in Prices and Costs (Percent, annual rate except as noted) 2011 Item Q2 Q3 2012 Q4 Q1 Q2 2013 Q3 Q4 Q1 Q2 Q3 GDP chain-wt. price index 2.6 3.0 .4 2.0 1.6 3.0 2.1 1.0 1.4 1.3 Previous Tealbook 2.6 3.0 .4 2.0 1.6 2.9 1.4 1.4 1.5 1.5 PCE chain-wt. price index 3.6 2.3 1.1 2.5 .7 1.7 2.1 .9 1.4 1.4 Previous Tealbook 3.6 2.3 1.1 2.5 .7 1.9 1.7 1.2 1.5 1.4 20.5 4.7 -5.0 8.1 -13.6 10.5 11.6 -10.7 -3.0 -2.6 20.5 4.7 -5.0 8.1 -13.5 10.3 2.5 -6.5 -2.4 -2.5 6.0 5.1 3.3 1.3 .7 .6 2.6 3.5 2.9 2.2 6.0 5.1 3.3 1.3 .7 1.4 3.4 3.6 3.4 2.5 2.3 1.9 1.3 2.2 1.7 1.2 1.4 1.6 1.6 1.6 Previous Tealbook 2.3 1.9 1.3 2.2 1.8 1.3 1.5 1.6 1.6 1.6 Ex. food & energy, market based 2.3 2.1 1.5 2.2 1.8 1.3 1.2 1.5 1.5 1.5 Previous Tealbook 2.3 2.1 1.5 2.2 1.7 1.4 1.4 1.5 1.5 1.5 Energy Previous Tealbook Food Previous Tealbook Ex. food & energy CPI 4.4 3.1 1.3 2.5 .8 2.3 2.9 .8 1.5 1.4 4.4 3.1 1.3 2.5 .8 2.5 2.1 1.2 1.6 1.4 2.4 2.5 1.9 2.1 2.6 1.5 1.7 1.7 1.7 1.7 2.4 2.5 1.9 2.1 2.6 1.8 1.8 1.7 1.7 1.7 ECI, hourly compensation2 3.2 1.4 2.1 1.7 2.1 2.3 2.4 2.5 2.6 2.7 Previous Tealbook 2 3.2 1.4 2.1 1.7 2.1 2.3 2.4 2.5 2.6 2.6 1.2 .6 2.8 -.5 1.9 1.6 .7 .4 1.7 1.7 1.2 .6 2.8 -.5 2.2 1.0 .8 .9 1.8 1.3 -.2 .0 -.7 5.8 3.5 2.2 2.4 2.6 2.7 2.8 -.2 .0 -.7 5.8 3.7 2.3 2.3 2.5 2.6 2.7 -1.3 -.6 -3.3 6.4 1.6 .6 1.7 2.2 1.0 1.1 -1.3 -.6 -3.3 6.4 1.5 1.3 1.5 1.6 .8 1.5 7.2 2.3 -.6 -.2 1.2 -3.4 1.6 1.8 1.1 1.4 7.2 2.3 -.6 -.2 1.2 -2.6 .4 .9 1.0 1.2 Previous Tealbook Ex. food & energy Previous Tealbook Nonfarm business sector Output per hour Previous Tealbook Compensation per hour Previous Tealbook Unit labor costs Previous Tealbook Core goods imports chain-wt. price index3 Previous Tealbook 3 1. Change from fourth quarter of previous year to fourth quarter of year indicated. Return to table 2. Private-industry workers. Return to table 3. Core goods imports exclude computers, semiconductors, oil, and natural gas. Return to table Changes in Prices and Costs (Change from fourth quarter of previous year to fourth quarter of year indicated, unless otherwise noted) Item 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 GDP chain-wt. price index 3.5 2.9 2.6 2.1 .5 1.8 2.0 2.2 1.3 1.4 Previous Tealbook 3.5 2.9 2.6 2.1 .5 1.8 2.0 2.0 1.5 1.5 PCE chain-wt. price index 3.2 1.9 3.5 1.7 1.4 1.5 2.5 1.7 1.3 1.4 Previous Tealbook 3.2 1.9 3.5 1.7 1.4 1.5 2.5 1.7 1.4 1.4 Energy 21.5 -3.7 19.3 -8.8 2.7 6.5 11.9 3.6 -4.7 -2.3 21.5 -3.7 19.3 -8.8 2.7 6.5 11.9 1.4 -3.4 -2.2 1.5 1.7 4.7 7.0 -1.7 1.3 5.1 1.3 2.4 1.0 Previous Tealbook 1.5 1.7 4.7 7.0 -1.7 1.3 5.1 1.7 2.6 .9 Ex. food & energy 2.3 2.3 2.4 2.0 1.6 1.2 1.7 1.6 1.6 1.7 Previous Tealbook 2.3 2.3 2.4 2.0 1.6 1.2 1.7 1.7 1.6 1.6 2.0 2.2 2.1 2.2 1.7 .7 1.9 1.6 1.5 1.6 2.0 2.2 2.1 2.2 1.7 .7 1.9 1.7 1.5 1.5 3.7 2.0 4.0 1.6 1.5 1.2 3.3 2.1 1.2 1.4 3.7 2.0 4.0 1.6 1.5 1.2 3.3 2.0 1.4 1.3 Ex. food & energy 2.1 2.7 2.3 2.0 1.7 .6 2.2 2.0 1.7 1.8 Previous Tealbook 2.1 2.7 2.3 2.0 1.7 .6 2.2 2.1 1.7 1.7 ECI, hourly compensation1 2.9 3.2 3.0 2.4 1.2 2.1 2.2 2.1 2.6 2.9 Previous Tealbook 1 2.9 3.2 3.0 2.4 1.2 2.1 2.2 2.1 2.6 2.9 1.6 .8 2.5 -1.1 5.6 1.8 .6 .9 1.3 1.6 Previous Tealbook 1.6 .8 2.5 -1.1 5.6 1.8 .6 .8 1.3 1.6 Compensation per hour 3.5 4.5 3.6 2.5 1.5 1.6 2.0 3.5 2.8 3.1 Previous Tealbook 3.5 4.5 3.6 2.5 1.5 1.6 2.0 3.5 2.7 3.0 1.9 3.6 1.1 3.7 -3.9 -.2 1.4 2.6 1.5 1.5 1.9 3.6 1.1 3.7 -3.9 -.2 1.4 2.6 1.4 1.4 2.2 2.5 2.9 3.7 -1.7 2.7 4.3 -.2 1.4 1.5 2.2 2.5 2.9 3.7 -1.7 2.7 4.3 -.3 1.1 1.4 Previous Tealbook Food Ex. food & energy, market based Previous Tealbook CPI Previous Tealbook Nonfarm business sector Output per hour Unit labor costs Previous Tealbook Core goods imports chain-wt. price index2 Previous Tealbook 2 1. Private-industry workers. Return to table 2. Core goods imports exclude computers, semiconductors, oil, and natural gas. Return to table Other Macroeconomic Indicators 2011 Item Q2 2012 Q3 Q4 Q1 Q2 2013 Q3 Q4 Q1 Q2 Q3 Q Employment and production Nonfarm payroll employment 2 .6 .3 .5 .7 .3 .4 .4 .4 .4 .5 Unemployment rate3 9.1 9.1 8.7 8.2 8.2 8.1 8.0 8.0 8.0 7.9 Previous Tealbook 3 9.1 9.1 8.7 8.2 8.2 8.3 8.3 8.2 8.2 8.1 Natural rate of unemployment3 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 Previous Tealbook 3 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 -4.6 -4.6 -4.0 -4.0 -4.1 -4.1 -4.0 -4.1 -3.9 -3.7 -4.9 -5.0 -4.4 -4.4 -4.4 -4.5 -4.6 -4.6 -4.5 -4.3 1.2 5.6 5.1 5.9 2.6 -.4 2.8 5.0 3.7 3.4 Previous Tealbook 5 1.2 5.6 5.1 5.8 2.5 1.2 4.8 4.1 2.9 3.0 Manufacturing industr. prod. 5 .2 5.1 5.6 9.8 1.0 -.9 1.6 4.0 3.7 3.6 Previous Tealbook 5 .2 5.1 5.6 9.7 1.0 1.9 2.8 2.6 2.7 3.1 Capacity utilization rate mfg. 3 74.4 75.2 76.1 77.6 77.5 77.1 77.1 77.5 77.9 78.2 Previous Tealbook 3 74.4 75.2 76.1 77.6 77.5 77.6 77.8 78.0 78.2 78.4 Housing starts 6 .6 .6 .7 .7 .7 .8 .9 .9 1.0 1.0 12.2 12.6 13.4 14.2 14.1 14.5 14.7 14.9 15.1 15.3 Nominal GDP 5 5.2 4.3 4.2 4.2 2.8 5.2 4.3 2.8 4.0 4.4 Real disposable pers. income5 -1.5 -1.3 -.2 3.7 3.1 2.0 2.1 -1.6 3.0 3.6 -1.5 -1.3 -.2 3.7 3.1 1.9 2.8 -1.3 2.9 3.6 4.6 3.9 3.4 3.6 4.0 4.0 3.8 3.1 3.1 3.1 GDP gap 4 Previous Tealbook 4 Industrial production 5 Light motor vehicle sales 6 Income and saving Previous Tealbook 5 Personal saving rate3 Previous Tealbook 3 4.6 3.9 3.4 3.6 4.0 3.9 4.1 3.5 3.5 3.6 Corporate profits7 19.3 6.7 29.6 -10.4 4.7 4.2 -.7 -5.1 -3.6 -.8 Profit share of GNP 3 11.8 11.9 12.5 12.1 12.1 12.1 12.0 11.7 11.5 11.4 -1,308 -1,232 -1,183 -1,059 -1,106 -1,053 -1,084 -826 -795 -772 -75 -118 -117 -128 -124 -117 -110 -100 -80 -72 Gross national saving rate3 11.8 11.8 12.4 12.4 12.5 12.8 12.2 12.6 12.7 12.7 Net national saving rate3 -1.0 -1.0 -.3 -.3 -.1 .4 -.2 .3 .3 .4 Net federal saving8 Net state & local saving8 1. Change from fourth quarter of previous year to fourth quarter of year indicated, unless otherwise indicated. Return to table 2. Change, millions. Return to table 3. Percent; annual values are for the fourth quarter of the year indicated. Return to table 4. Percent difference between actual and potential GDP; a negative number indicates that the economy is operating below potential. Annual values are for the fourth quarter of the year indicated. Return to table 5. Percent change, annual rate. Return to table 6. Level, millions; annual values are annual averages. Return to table 7. Percent change, annual rate, with inventory valuation and capital consumption adjustments. Return to table 8. Billions of dollars; annual values are annual averages. Return to table Other Macroeconomic Indicators (Change from fourth quarter of previous year to fourth quarter of year indicated, unless otherwise noted) Item 2005 2006 2007 2008 2009 2010 2011 2012 2013 Employment and production Nonfarm payroll employment 1 2.4 2.1 1.2 -2.8 -5.6 .8 1.8 1.8 2.0 Unemployment rate2 5.0 4.5 4.8 6.9 9.9 9.6 8.7 8.0 7.8 Previous Tealbook 2 5.0 4.5 4.8 6.9 9.9 9.6 8.7 8.3 8.0 Natural rate of unemployment2 5.0 5.0 5.0 5.3 6.0 6.0 6.0 6.0 6.0 Previous Tealbook 2 5.0 5.0 5.0 5.3 6.0 6.0 6.0 6.0 6.0 .6 .8 .8 -4.4 -5.5 -4.4 -4.0 -4.0 -3.4 .6 .8 .8 -4.5 -5.7 -4.7 -4.4 -4.6 -4.1 2.3 2.1 2.5 -9.0 -5.7 6.3 4.1 2.7 4.0 2.3 2.1 2.5 -9.0 -5.7 6.3 4.1 3.5 3.3 GDP gap 3 Previous Tealbook 3 Industrial production 4 Previous Tealbook 4 Manufacturing industr. prod. 4 3.4 1.8 2.8 -11.8 -6.5 6.5 4.2 2.8 3.8 Previous Tealbook 4 3.4 1.8 2.8 -11.8 -6.5 6.5 4.2 3.8 3.0 Capacity utilization rate - mfg. 2 78.4 78.2 78.2 69.7 67.0 73.1 76.1 77.1 78.7 Previous Tealbook 2 78.4 78.2 78.2 69.7 67.0 73.1 76.1 77.8 78.7 2.1 1.8 1.4 .9 .6 .6 .6 .8 1.0 16.9 16.5 16.1 13.1 10.4 11.5 12.7 14.4 15.2 6.4 5.3 4.9 -1.2 .4 4.3 4.0 4.1 3.9 Real disposable pers. income4 .6 4.6 1.6 1.0 -3.0 3.5 .3 2.7 2.2 Previous Tealbook 4 .6 4.6 1.6 1.0 -3.0 3.5 .3 2.9 2.2 1.6 2.8 2.5 6.2 3.8 4.8 3.4 3.8 3.1 1.6 2.8 2.5 6.2 3.8 4.8 3.4 4.1 3.7 Corporate profits6 19.6 3.7 -8.1 -33.5 57.0 17.3 9.2 -.8 -2.5 Profit share of GNP 2 11.8 11.6 10.1 6.8 10.7 12.0 12.5 12.0 11.3 Net federal saving7 -283 -204 -245 -613 -1229 -1308 -1237 -1075 -786 26 51 12 -72 -113 -90 -102 -120 -79 15.6 16.5 13.9 12.6 11.0 12.1 12.4 12.2 12.8 3.6 4.4 1.7 -.6 -2.3 -.6 -.3 -.2 .4 Housing starts 5 Light motor vehicle sales 5 Income and saving Nominal GDP 4 Personal saving rate2 Previous Tealbook 2 Net state & local saving7 Gross national saving rate2 Net national saving rate2 1. Change, millions. Return to table 2. Percent; values are for the fourth quarter of the year indicated. Return to table 3. Percent difference between actual and potential GDP; a negative number indicates that the economy is operating below potential. Values are for the fourth quarter of the year indicated. Return to table 4. Percent change. Return to table 5. Level, millions; values are annual averages. Return to table 6. Percent change, with inventory valuation and capital consumption adjustments. Return to table 7. Billions of dollars; values are annual averages. Return to table Staff Projections of Federal Sector Accounts and Related Items (Billions of dollars except as noted) Fiscal year Item 2012a 2013 2014 2012 2015 Q1 a Q2 a 2013 Q3 Q4 Q1 Unified budget Q2 Q Not seasonally ad Receipts1 2,449 2,705 2,981 3,230 509 760 625 587 570 837 Outlays1 3,538 3,501 3,598 3,784 966 885 810 912 886 863 Surplus/deficit 1 -1,089 -795 -617 -554 -457 -125 -185 -324 -317 -26 Previous Tealbook -1,106 -837 -638 -597 -457 -125 -202 -331 -328 -34 On-budget -1,151 -798 -627 -556 -458 -187 -160 -330 -298 -73 Off-budget 62 3 10 2 1 62 -25 6 -19 47 1,152 832 697 634 398 198 230 275 307 101 Cash decrease -27 15 0 0 42 -48 6 40 30 -55 Other 2 -36 -52 -80 -80 17 -25 -51 9 -21 -20 85 70 70 70 43 91 85 45 15 70 Means of financing Borrowing Cash operating balance, end of period Seasonally adjusted a NIPA federal sector Receipts 2,637 2,911 3,164 3,400 2,665 2,669 2,681 2,713 2,943 2,976 3 Expenditures 3,737 3,780 3,852 3,993 3,724 3,775 3,734 3,797 3,768 3,770 3 1,056 1,047 1,021 1,001 1,056 1,055 1,060 1,054 1,052 1,045 1 Defense 704 697 675 660 703 701 707 702 700 694 Nondefense 352 351 346 340 352 354 353 352 352 351 2,682 2,733 2,831 2,992 2,668 2,720 2,674 2,743 2,716 2,725 -1,100 -869 -688 -593 -1,059 -1,106 -1,053 -1,084 -826 -795 156 153 144 137 152 156 158 156 154 151 -1,116 -876 -681 -575 -1,071 -1,121 -1,068 -1,096 -835 -800 -892.5 -647.0 -508.7 -482.3 -851.2 -899.2 -853.1 -877.9 -596.1 -565.2 -1.1 -1.7 -.9 -.2 -.8 .3 -.3 .1 -1.7 -.2 -.6 -1.2 -.5 -.3 -.7 -.7 -.3 -.6 -2.0 -1.1 Consumption expenditures Other spending Current account surplus Gross investment Gross saving less gross investment 3 2 Fiscal indicators 4 Highemployment (HEB) surplus/deficit Change in HEB, percent of potential GDP Fiscal impetus (FI), percent of GDP -5 Previous Tealbook -.6 -1.2 -.5 -.2 -.7 -.7 -.6 -.5 -2.0 -1.1 1. Budget receipts, outlays, and surplus/deficit include corresponding social security (OASDI) categories. The OASDI surplus and the Postal Service surplus are excluded from the on-budget surplus and shown separately as off-budget, as classified under current law. Return to table 2. Other means of financing are checks issued less checks paid, accrued items, and changes in other financial assets and liabilities. Return to table 3. Gross saving is the current account surplus plus consumption of fixed capital of the general government as well as government enterprises. Return to table 4. HEB is gross saving less gross investment (NIPA) of the federal government in current dollars, with cyclically sensitive receipts and outlays adjusted to the staff's measure of potential output and the natural rate of unemployment. The sign on Change in HEB, as a percent of nominal potential GDP, is reversed. FI is the weighted difference of discretionary changes in federal spending and taxes in chained (2005) dollars, scaled by real GDP. The FI estimates are calendar year contributions to Q4/Q4 real GDP growth. Also, for FI and the change in HEB, positive values indicate aggregate demand stimulus. Quarterly figures for change in HEB and FI are not at annual rates. Return to table a Actual. Return to table Change in Debt of the Domestic Nonfinancial Sectors (Percent) Households Period 1 Total Home mortgages Total Consumer Business credit State and local governments Federal government Memo: Nominal GDP Year 2008 5.9 -.2 -.5 .8 6.1 .7 24.2 -1.2 2009 3.1 -1.7 -1.4 -4.5 -2.3 3.9 22.7 .4 2010 4.1 -2.2 -2.9 -1.2 .8 2.2 20.2 4.3 2011 3.6 -1.6 -2.3 3.4 4.7 -1.9 11.4 4.0 2012 4.4 .6 -1.6 5.8 4.3 -.2 10.7 4.1 2013 4.0 2.3 .9 6.7 3.9 .6 7.0 3.9 2014 3.8 2.5 .9 7.5 4.0 .9 5.7 5.0 2015 3.7 2.8 1.2 7.5 4.0 1.0 4.8 5.3 1 2.5 -2.0 -2.6 2.6 3.7 -2.8 9.1 2.2 2 2.6 -2.7 -2.4 3.1 5.2 -2.6 8.2 5.2 3 4.3 -1.7 -1.8 1.9 4.2 -.2 13.7 4.3 4 4.9 .1 -2.5 5.9 5.3 -2.1 12.7 4.2 1 4.5 -.9 -3.3 5.7 3.8 -1.2 13.7 4.2 2 4.8 1.3 -2.1 6.5 3.9 .8 10.9 2.8 3 3.6 .5 -.9 4.5 5.1 -.9 6.7 5.2 4 4.7 1.5 .0 6.0 4.3 .3 9.9 4.3 1 4.3 2.0 .9 5.4 4.1 .6 8.0 2.8 Quarter 2011: 2012: 2013: 2014: 2 4.1 2.4 1.0 6.6 3.8 .6 7.3 4.0 3 3.0 2.4 .9 7.0 3.7 .6 3.5 4.4 4 4.5 2.4 .8 7.2 3.8 .6 8.5 4.5 1 4.3 2.4 .7 7.3 3.9 .9 7.7 4.9 2 3.1 2.4 .8 7.3 3.9 .9 3.3 5.0 3 3.0 2.5 .9 7.3 4.0 .9 3.0 5.0 4 4.6 2.6 1.0 7.3 4.1 .9 8.1 5.1 Note: Quarterly data are at seasonally adjusted annual rates. 1. Data after 2012:Q1 are staff projections. Changes are measured from end of the preceding period to end of period indicated except for annual nominal GDP growth, which is calculated from Q4 to Q4. Return to table Flow of Funds Projections: Highlights (Billions of dollars at seasonally adjusted annual rates except as noted) 2012 Category 2012 2013 2013 2014 2015 Q3 Q4 Q1 Q2 1296.4 1266.4 1216.3 1221.0 958.5 1481.3 1376.3 1312.5 Net equity issuance -398.1 -340.0 -360.0 -360.0 -431.4 -360.0 -340.0 Net debt issuance 1694.5 1606.4 1576.3 1581.0 1389.8 1841.3 248.5 249.3 247.3 243.8 248.5 10.8 9.8 9.2 8.8 74.2 300.4 334.8 Home mortgages -153.7 86.4 Consumer credit 152.5 108.6 Q3 Q4 Q 875.0 1501.8 1 -340.0 -340.0 -340.0 - 1716.3 1652.5 1215.0 1841.8 1 248.4 249.5 249.7 249.2 248.8 8.8 11.5 10.7 10.2 7.4 11.1 387.5 62.1 192.2 264.7 308.0 314.1 314.9 82.3 117.4 -86.3 0.0 86.1 95.9 86.5 77.1 186.1 221.6 238.1 122.6 165.7 151.2 184.8 199.5 208.9 106.9 103.7 101.6 108.0 107.1 107.8 107.2 106.5 105.8 Domestic nonfinancial sectors Net funds raised Total Borrowing indicators Debt (percent of GDP)1 Borrowing (percent of GDP) Households Net borrowing2 Debt/DPI (percent) 3 Business Financing gap 4 -106.1 49.1 223.1 263.0 -146.8 -119.4 2.3 32.7 61.4 99.9 Net equity issuance -398.1 -340.0 -360.0 -360.0 -431.4 -360.0 -340.0 -340.0 -340.0 -340.0 Credit market borrowing 508.8 479.1 514.9 533.0 607.9 520.6 503.2 468.5 464.2 480.6 -7.3 17.9 25.9 29.9 -25.6 9.9 17.9 17.9 17.9 17.9 146.3 168.8 211.7 262.1 123.6 133.0 144.3 166.4 176.1 188.3 Net borrowing 1101.6 809.0 700.7 630.6 745.5 1118.7 930.6 858.1 418.8 1028.5 Net borrowing (n.s.a.) 1101.6 809.0 700.7 630.6 229.8 275.3 307.5 100.6 148.1 252.8 Unified deficit (n.s.a.) 1091.9 703.6 620.7 550.6 185.1 324.3 316.9 25.8 128.1 232.8 426.2 562.7 642.7 699.0 547.1 527.0 552.8 547.4 565.0 585.7 State and local governments Net borrowing Current surplus5 Federal government Depository institutions Funds supplied Note: Data after 2012:Q1 are staff projections. 1. Average debt levels in the period (computed as the average of period-end debt positions) divided by nominal GDP. Return to table 2. Includes change in liabilities not shown in home mortgages and consumer credit. Return to table 3. Average debt levels in the period (computed as the average of period-end debt positions) divided by disposable personal income. Return to table 4. For corporations, excess of capital expenditures over U.S. internal funds. Return to table 5. NIPA state and local government saving plus consumption of fixed capital and net capital transfers. Return to table n.s.a. Not seasonally adjusted. Return to table Foreign Real GDP and Consumer Prices: Selected Countries (Quarterly percent changes at an annual rate) Projected Measure and country 2011 Q1 Q2 2012 Q3 Q4 Q1 Q2 2013 Q3 Q4 Q1 Q2 Real GDP 1 Total foreign Previous 3.5 2.4 3.8 1.6 3.2 2.2 2.0 2.1 2.4 2.7 - Tealbook 3.5 2.3 3.9 1.6 3.2 2.3 2.3 2.3 2.5 2.7 Advanced foreign economies 1.6 .0 3.1 .4 1.5 .6 .7 .6 .9 1.1 3.6 -1.0 4.5 1.9 1.8 1.8 1.9 1.8 1.7 1.8 -7.9 -1.3 6.9 .3 5.3 .7 -1.0 .4 .9 1.2 United Kingdom 2.0 .3 2.1 -1.4 -1.2 -1.5 2.4 .3 1.1 1.5 Euro area 2.6 .9 .3 -1.3 .0 -.7 -.8 -1.0 -.5 .0 5.0 1.8 1.5 -.6 2.0 1.1 .0 -.3 .0 .5 5.6 4.9 4.6 2.8 5.0 3.9 3.4 3.6 4.1 4.5 7.6 5.1 5.0 2.5 5.7 4.5 4.2 4.2 4.7 5.3 Korea 5.3 3.4 3.4 1.3 3.5 1.1 2.2 2.3 2.8 3.6 China 9.1 10.0 9.5 7.8 6.6 7.4 7.0 7.1 7.4 7.6 Latin America 3.3 4.8 4.0 3.0 4.2 3.2 2.6 3.0 3.5 3.6 Mexico 2.1 5.5 4.9 3.0 4.9 3.5 2.4 2.9 3.6 3.7 Brazil 3.3 2.3 -.6 .5 .5 1.6 2.8 3.3 3.4 3.5 4.1 3.5 3.1 2.7 2.6 1.9 2.2 2.7 2.3 2.2 Previous Tealbook 4.1 3.5 3.1 2.7 2.6 1.9 1.8 2.6 2.3 2.3 Advanced foreign economies 3.0 2.3 1.3 2.4 2.1 .6 .7 1.8 1.3 1.2 3.3 3.4 1.0 2.9 2.1 .1 .1 2.1 1.6 1.5 .0 -.7 .1 -.7 2.3 -.9 -2.0 .5 .0 -.2 United Kingdom 6.7 4.0 3.9 4.0 1.9 1.2 2.6 3.8 2.0 1.5 Euro Area 3.4 2.9 1.9 3.6 2.4 2.0 2.3 2.1 1.6 1.6 3.3 2.5 1.9 2.8 2.4 1.4 1.8 2.2 2.2 2.1 5.1 4.5 4.5 3.0 2.9 3.0 3.3 3.3 3.1 3.1 5.5 5.2 4.9 2.1 2.3 3.2 2.1 3.0 2.9 2.9 Korea 5.5 3.4 4.4 2.6 1.6 1.2 1.0 2.3 2.8 2.8 China 5.1 6.1 5.7 1.4 2.0 2.5 1.7 2.5 2.7 2.8 Latin America 3.7 2.9 3.9 5.2 4.6 2.6 6.3 3.9 3.6 3.6 3.2 2.4 3.5 4.9 4.5 2.5 6.5 3.6 3.4 3.3 Canada Japan Germany Emerging market economies Asia Consumer prices 2 Total foreign Canada Japan Germany Emerging market economies Asia Mexico Brazil 7.8 6.8 6.2 6.0 4.0 3.8 7.3 6.1 5.2 5.4 1. Foreign GDP aggregates calculated using shares of U.S. exports. Return to table 2. Foreign CPI aggregates calculated using shares of U.S. non-oil imports. Return to table Foreign Real GDP and Consumer Prices: Selected Countries (Percent change, Q4 to Q4) Projected Measure and country 2006 2007 2008 2009 2010 2011 2012 2013 2014 Real GDP 1 Total foreign 4.2 4.3 -.9 .9 4.5 2.8 2.4 2.8 3.4 4.2 4.3 -.9 .9 4.5 2.8 2.5 2.8 3.3 2.6 2.6 -1.9 -1.4 2.9 1.3 .9 1.3 2.0 Canada 1.9 2.5 -.7 -1.4 3.3 2.2 1.8 2.0 2.7 Japan 2.1 1.6 -4.8 -.6 3.4 -.6 1.3 1.2 .8 United Kingdom 2.0 3.8 -4.6 -.9 1.5 .7 .0 1.7 2.3 Euro area 3.8 2.3 -2.1 -2.3 2.2 .6 -.6 .2 1.3 4.9 2.4 -1.9 -2.2 4.2 1.9 .7 .7 1.8 6.3 6.7 .4 3.6 6.2 4.5 4.0 4.5 4.8 7.8 8.8 .8 8.0 7.7 5.0 4.7 5.3 5.8 Korea 4.6 5.8 -3.2 6.3 5.0 3.4 2.3 3.5 4.2 China 12.8 13.7 7.7 11.3 9.7 9.1 7.0 7.7 8.1 4.8 4.4 -.2 -.7 4.6 3.8 3.3 3.6 3.7 Mexico 4.1 3.5 -1.1 -2.1 4.3 3.9 3.4 3.7 3.7 Brazil 4.9 6.6 .9 5.3 5.3 1.4 2.1 3.6 4.0 2.2 3.7 3.3 1.3 3.2 3.4 2.3 2.3 2.5 2.2 3.7 3.3 1.3 3.2 3.4 2.2 2.3 2.5 1.4 2.2 2.0 .2 1.7 2.2 1.3 1.2 1.7 1.4 2.5 1.8 .8 2.2 2.7 1.1 1.6 1.9 .3 .5 1.1 -2.0 -.3 -.3 .0 -.1 1.7 United Kingdom 2.7 2.1 3.9 2.2 3.4 4.7 2.4 1.7 1.6 Euro Area 1.8 2.9 2.3 .4 2.0 2.9 2.2 1.5 1.5 1.3 3.1 1.7 .3 1.6 2.6 1.9 1.9 1.8 2.9 5.1 4.6 2.1 4.3 4.3 3.1 3.1 3.2 2.4 5.5 3.6 1.3 4.3 4.4 2.6 2.9 3.1 Previous Tealbook Advanced foreign economies Germany Emerging market economies Asia Latin America Consumer prices 2 Total foreign Previous Tealbook Advanced foreign economies Canada Japan Germany Emerging market economies Asia Korea 2.1 3.4 4.5 2.4 3.2 4.0 1.5 2.8 3.0 China 2.1 6.7 2.5 .6 4.6 4.6 2.2 2.8 3.0 4.1 4.2 6.7 3.9 4.4 3.9 4.3 3.5 3.6 Mexico 4.1 3.8 6.2 4.0 4.3 3.5 4.3 3.3 3.3 Brazil 3.1 4.3 6.3 4.3 5.6 6.7 5.3 5.4 5.6 Latin America 1. Foreign GDP aggregates calculated using shares of U.S. exports. Return to table 2. Foreign CPI aggregates calculated using shares of U.S. non-oil imports. Return to table U.S. Current Account Quarterly Data Projected 2011 Q1 Q2 2012 Q3 Q4 Q1 Q2 2013 Q3 Q4 Q1 Q2 Q3 Billions of dollars, s.a.a.r. U.S. current account balance -480.0 -476.5 -432.6 -474.6 -534.5 -469.6 -436.6 -449.4 -465.7 -442.9 -45 -480.0 -476.5 -432.6 -474.6 -549.3 -493.3 -455.5 -491.7 -514.4 -496.7 -50 -3.2 -3.2 -2.9 -3.1 -3.5 -3.0 -2.8 -2.8 -2.9 -2.7 -3.2 -3.2 -2.9 -3.1 -3.5 -3.2 -2.9 -3.1 -3.2 -3.1 Net goods & services -548.9 -566.2 -539.3 -585.1 -593.5 -557.3 -515.9 -528.7 -546.0 -517.4 -51 Investment income, net 217.9 232.8 241.9 247.4 197.4 229.7 220.1 222.1 221.7 211.9 20 Direct, net 314.9 318.2 323.4 330.2 282.9 305.5 281.7 276.6 275.2 267.7 26 Portfolio, net -97.1 -85.4 -81.4 -82.8 -85.6 -75.8 -61.7 -54.5 -53.5 -55.7 -6 Other income and transfers, net -148.9 -143.1 -135.3 -136.9 -138.4 -142.0 -140.8 -142.9 -141.4 -137.5 -14 Previous Tealbook Current account as percent of GDP Previous Tealbook Annual Data Projected 2006 2007 2008 2009 2010 2011 2012 2013 2014 Billions of dollars U.S. current account balance -800.6 -710.3 -677.1 -381.9 -442.0 -465.9 -472.5 -463.5 -506.9 -800.6 -710.3 -677.1 -381.9 -442.0 -465.9 -497.4 -516.9 -572.1 -6.0 -5.1 -4.7 -2.7 -3.0 -3.1 -3.0 -2.8 -3.0 Previous Tealbook -6.0 -5.1 -4.7 -2.7 -3.0 -3.1 -3.2 -3.2 -3.4 Net goods & services -753.3 -696.7 -698.3 -379.2 -494.7 -559.9 -548.8 -529.6 -542.1 54.7 111.1 157.8 127.6 191.0 235.0 217.3 206.8 175.8 174.0 244.6 284.3 253.0 297.9 321.7 286.7 268.8 276.9 -119.4 -133.5 -126.5 -125.4 -106.9 -86.7 -69.4 -62.1 -101.1 -102.0 -124.7 -136.6 -130.3 -138.2 -141.1 -141.0 -140.6 -140.6 Previous Tealbook Current account as percent of GDP Investment income, net Direct, net Portfolio, net Other income and transfers, net † Note: Data values for figures are rounded and may not sum to totals. Return to text Last update: January 5, 2018 BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM 20th Street and Constitution Avenue N.W., Washington, DC 20551 Board of Governors of the Federal Reserve System The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system. Accessible Material October 2012 Tealbook B Tables and Charts† Monetary Policy Strategies Policy Rules and the Staff Projection Near-Term Prescriptions of Selected Policy Rules Constrained Policy Taylor (1993) rule Previous Tealbook Taylor (1999) rule Previous Tealbook Inertial Taylor (1999) rule Previous Tealbook Outcome-based rule Previous Tealbook First-difference rule Previous Tealbook Nominal income targeting rule Previous Tealbook Loading [MathJax]/jax/output/HTML-CSS/jax.js Memo: Equilibrium and Actual Unconstrained Policy 2012Q4 2013Q1 2012Q4 2013Q1 1.65 1.40 1.65 1.40 1.53 1.30 1.53 1.30 0.13 0.13 -0.36 -0.63 0.13 0.13 -0.76 -0.98 0.13 0.13 0.07 -0.04 0.13 0.13 0.01 -0.14 0.13 0.13 0.10 -0.05 0.13 0.13 -0.02 -0.23 0.13 0.23 0.11 0.23 0.13 0.13 0.03 0.04 0.13 0.13 -0.21 -0.55 0.13 0.13 -0.41 -0.86 Real Federal Funds Rate Current Tealbook Current Quarter Estimate as of Previous Tealbook Previous Tealbook Tealbook-consistent FRB/US r estimate -1.90 -2.11 -2.39 Actual real federal funds rate -1.47 -1.67 Key Elements of the Staff Projection Figure: GDP Gap Line chart, by percent, 2012 to 2020. There are two series, "Current Tealbook" and "Previous Tealbook." The current Tealbook series begins at about -4 in 2012:Q1 and increases to end at about 0 in 2020:Q4. The previous Tealbook series begins at about -4.5 in 2012:Q1 and increases to end at about 0 in 2020:Q4. Figure: PCE Prices ex. Food and Energy Line chart, by Four-quarter percent change, 2012 to 2020. There are two series, "Current Tealbook" and "Previous Tealbook." The current Tealbook series begins at about 1.9 in 2012:Q1 and increases to end at about 2.0 in 2020:Q4. The previous Tealbook series begins at about 1.9 n 2012:Q1 and increases to end at about 2.0 in 2020:Q4. Note: Estimates of r may change at the beginning of a quarter even when the staff outlook is unchanged because the twelve-quarter horizon covered by the calculation has rolled forward one quarter. Therefore, whenever the Tealbook is published early in the quarter, the memo includes a third column labeled "Current Quarter Estimate as of Previous Tealbook." Policy Rule Simulations Figure: Nominal Federal Funds Rate Line chart, by percent, 2012 to 2020. There are six series, "Taylor (1993) rule," "Taylor (1999) rule," "Inertial Taylor (1999) rule," "Nominal income targeting rule," "First-difference rule," and "Tealbook baseline." All six series begins at about 0 in 2012:Q1. The Taylor (1993) rule series generally increases to about 1.5 in 2012:Q4. It generally increases to end about 4.25 at 2020:Q4. The other five series remain constant following each other until increasing to end at about 4.25 for the Taylor (1999) rule and Tealbook baseline in 2020:Q4. The inertial Taylor (1999) rule and nominal income targeting rule ends at about 4.75 in 2020:Q4 and the First-difference rule at about 4 in 2020:Q4. Figure: Real Federal Funds Rate Line chart, by percent, 2012 to 2020. There are six series, "Taylor (1993) rule," "Taylor (1999) rule," "Inertial Taylor (1999) rule," "Nominal income targeting rule," "First-difference rule," and "Tealbook baseline." All six series begins at about -1.75 in 2012:Q1. The Taylor (1993) rule series generally increases to about 0 in 2012:Q4. It generally increases to end about 2.25 at 2020:Q4 along with the Taylor (1999) rule, the Inertial Taylor (1999) rule, and the First-difference rule. The other two series remain constant following each other until increasing to end at about 2.5 for and Tealbook baseline in 2020:Q4. Figure: Unemployment Rate Line chart, by percent, 2012 to 2020. There are six series, "Taylor (1993) rule," "Taylor (1999) rule," "Inertial Taylor (1999) rule," "Nominal income targeting rule," "First-difference rule," and "Tealbook baseline." All six series begins at about 8.25 in 2012:Q1. They follow each other to generally decrease to end at about 5.25 for the nominal income targeting rule in 2020:Q4. The other four series ends at about 5.5 in 2020:Q4. Figure: PCE Inflation Line chart, by percent, 2012 to 2020. Data are four-quarter averages. There is a horizontal line at 2. There are six series, "Taylor (1993) rule," "Taylor (1999) rule," "Inertial Taylor (1999) rule," "Nominal income targeting rule," "Firstdifference rule," and "Tealbook baseline." Taylor (1993) rule begins in 2012 at about 2.4 and generally decrease to about 1.4 by 2013. It then generally increases to end at about 1.99 by 2020. Taylor (1999) rule begins in 2012 at about 2.4 and generally decreases to about 1.5 by 2013. It then generally increases to about 2.1 by 2020. Inertial Taylor (1999) rule begins in 2012 at about 2.4 and generally decreases to about 1.7 by 2013. It then generally increases to about 2.4 by 2020. Nominal income targeting rule begins in 2012 at about 2.4 and generally decreases to about 1.7 by 2013. It then generally increases to about 2.1 by 2020. First-difference rule begins in 2012 at about 2.4 and generally decreases to about 1.4 by 2013. It then generally increases to end at about 1.8 by 2020. Tealbook baseline begins in 2012 at about 2.4 and generally decreases to about 1.5 by 2013. It generally increases to end at about 2.0 in 2020. Note: The policy rule simulations in this exhibit are based on rules that respond to core inflation. This choice of rule specification was made in light of the tendency for current and near-term core inflation rates to outperform headline inflation rates as predictors of the medium-term behavior of headline inflation. Constrained vs. Unconstrained Optimal Control Policy Figure: Nominal Federal Funds Rate Line chart, by percent 2012 to 2020. There are four series, "Current Tealbook: Constrained," "Previous Tealbook: Constrained," "Current Tealbook: Unconstrained," and "Tealbook baseline." Current Tealbook: Constrained begins in 2012 at about 0.1 and remains relatively constant here until 2015. It generally increases to end at about 4.5 in 2020. Previous Tealbook: Constrained generally follows the same exact path as Current Tealbook: Constrained, except it ends at about 4.6 in 2020. Current Tealbook: Unconstrained begins in 2012 at about 0.1 and generally decreases to about -2.5 by 2013. It then generally increases to end at about 4.25 by 2020. Tealbook baseline begins in 2012 at about 0.1 where it remains relatively constant until about 2015. It then generally increases to end about 4.25 by 2020. Figure: Real Federal Funds Rate Line chart, by percent 2012 to 2020. There are four series, "Current Tealbook: Constrained," "Previous Tealbook: Constrained," "Current Tealbook: Unconstrained," and "Tealbook baseline." Current Tealbook: Constrained begins in 2012 at about -1.95 and generally decreases to about -2 by 2016. It then generally increases to end at about 2.9 by 2020. Previous Tealbook: Constrained generally follows the same path as Current Tealbook: Constrained. Current Tealbook: Unconstrained begins in 2012 at about -1.5 and generally decreases to about -4.5 by 2013. It then generally increases to end at about 2.5 by 2020. Tealbook baseline begins in 2012 at about -1.95 and generally increases to end at about 2.5 by 2020. Figure: Unemployment Rate Line chart, by percent, 2012 to 2020. There are four series, "Current Tealbook: Constrained," "Previous Tealbook: Constrained," "Current Tealbook: Unconstrained," and "Tealbook baseline." All four series begin at about 8.25 in 2012. They follow about the same path and generally decrease to end together at about 5.5 in 2020. Figure: PCE Inflation Line chart, by percent, 2012 to 2020. Data are four-quarter averages. There is a horizontal line at 2. There are four series, "Current Tealbook: Constrained," "Previous Tealbook: Constrained," "Current Tealbook: Unconstrained," and "Tealbook baseline." All four series begin at about 2.3 in 2012. Current Tealbook: Constrained decreases to about 1.3 in 2013. It then generally increases to end at about 2.1 in 2020. Previous Tealbook: Constrained remains constant and generally decreases to end at about 2.0 in 2020. Current Tealbook: Unconstrained decreases to about 1.3 in 2013. It then generally increases to end at about 2.0 in 2020. Tealbook baseline decreases to about 1.0 in 2013. It then generally increases to end at about 2.0 in 2020. Outcomes under Alternative Policies (Percent change, annual rate, from end of preceding period except as noted) 2012 Measure and scenario H1 H2 2013 2014 2015 2016 Real GDP Extended Tealbook baseline 1.6 2.0 2.6 3.5 3.7 3.1 Taylor (1993) 1.6 2.0 1.6 2.8 3.5 3.5 Taylor (1999) 1.6 2.0 2.2 3.1 3.4 3.2 Inertial Taylor (1999) 1.6 2.0 2.5 3.3 3.6 3.2 First-difference 1.6 2.0 2.0 2.9 3.3 3.2 Nominal income targeting 1.6 2.0 2.8 3.7 3.8 3.3 Constrained optimal control 1.6 2.2 3.0 3.8 4.0 3.2 Extended Tealbook baseline 8.2 8.0 7.8 7.2 6.2 5.5 Taylor (1993) 8.2 8.0 8.1 7.9 7.2 6.3 Taylor (1999) 8.2 8.0 7.9 7.5 6.8 6.0 Inertial Taylor (1999) 8.2 8.0 7.8 7.3 6.4 5.7 First-difference 8.2 8.0 8.0 7.7 7.0 6.3 Nominal income targeting 8.2 8.0 7.7 7.0 6.0 5.2 Constrained optimal control 8.2 8.0 7.6 6.8 5.7 5.0 Extended Tealbook baseline 1.6 1.9 1.3 1.4 1.5 1.8 Taylor (1993) 1.6 1.7 0.9 1.0 1.0 1.3 Taylor (1999) 1.6 1.8 1.0 1.1 1.2 1.4 Inertial Taylor (1999) 1.6 1.9 1.3 1.4 1.5 1.8 First-difference 1.6 1.8 1.0 1.1 1.2 1.5 Nominal income targeting 1.6 2.1 1.6 1.7 1.8 2.1 Constrained optimal control 1.6 2.2 1.6 1.7 1.8 2.1 Extended Tealbook baseline 2.0 1.3 1.6 1.7 1.7 1.9 Taylor (1993) 2.0 1.1 1.3 1.2 1.2 1.4 Taylor (1999) 2.0 1.1 1.3 1.4 1.4 1.5 Inertial Taylor (1999) 2.0 1.3 1.6 1.7 1.8 1.9 Unemployment rate1 Total PCE prices Core PCE prices First-difference 2.0 1.1 1.3 1.4 1.4 1.6 Nominal income targeting 2.0 1.4 1.9 2.0 2.1 2.2 Constrained optimal control 2.0 1.5 1.9 2.0 2.0 2.2 Extended Tealbook baseline 0.2 0.1 0.1 0.1 0.7 2.6 Taylor (1993) 0.2 1.6 1.1 1.4 2.1 2.9 Taylor (1999) 0.2 0.1 0.1 0.6 1.8 3.0 Inertial Taylor (1999) 0.2 0.1 0.1 0.6 1.5 2.6 First-difference 0.2 0.1 0.2 0.9 2.2 3.2 Nominal income targeting 0.2 0.1 0.1 0.3 1.3 2.4 Constrained optimal control 0.2 0.1 0.1 0.1 0.4 2.0 Federal funds rate1 1. Percent, average for the final quarter of the period. Return to table Monetary Policy Alternatives Table 1: Overview of Policy Alternatives for the October 24 FOMC Statement Selected Elements October Alternatives September Statement A B C Economic Outlook Outlook …without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. …anticipates that inflation over the medium term likely would run at or below its 2 percent objective. …remains concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Unchanged …remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Unchanged …expects economic growth to be moderate over coming quarters and then to pick up gradually, supported in part by the highly accommodative stance of monetary policy, and consequently anticipates that the unemployment rate will continue to decline toward levels the Committee judges consistent with its dual mandate. …anticipates that inflation over the medium term will run near its 2 percent objective. Balance Sheet MEP Additional Asset Purchases Continue its program as announced in June $40 billion per month additional MBS Ends in December Continue MBS purchases at $40 billion per month after the end of the year; purchase longer-term Treasury securities at $45 Continues to yearContinues to year-end end Unchanged Continue MBS purchases at $40 billion per month through the end of the year. billion per month after MEP ends. Reinvest principal payments Reinvestment from agency debt and MBS into Policies agency MBS. Guidance If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. Unchanged Unchanged The Committee will continue purchases of agency MBS and Treasury securities until it judges that data on economic activity and labor market Unchanged conditions are consistent with an outlook for sustained progress toward maximum employment and price stability. Unchanged The Committee is prepared to take further action as needed to promote sustained improvement in labor market conditions in a context of price stability. Future Policy Action Guidance Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the recovery strengthens; Unchanged … currently anticipates that exceptionally low levels for the federal funds rate are likely warranted at least through mid2015. for [ a considerable | some ] time; … at least through [ late 2014 | mid-2014 | late 2013 ] OR Unchanged In determining the appropriate time to increase its target, the Committee will consider actual and projected labor market conditions, medium-term outlook for inflation, and risks to achievement of Committee's objectives. [Note: In the October FOMC Statement Alternatives, emphasis (strike-through) indicates strike-through text in the original document, and strong emphasis (bold) indicates bold red underlined text in the original document.] October FOMC Statement--Alternative A 1. Information received since the Federal Open Market Committee met in August September suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment appears to have has slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation has been subdued, although the prices of some key commodities have increased recently picked up somewhat, reflecting higher energy prices. Longer-term inflation expectations have remained stable. 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee is remains concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective. 3. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month after the end of the year. The Committee also will continue through the end of the year agreed to purchase longer-term Treasury securities at a pace of $45 billion per month after its program to extend the average maturity of its holdings of Treasury securities as announced in June, and it ends in December. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee's holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. 4. The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, The Committee will continue its purchases of agency mortgage-backed securities and Treasury securities, undertake additional asset purchases, and employ its other policy tools as appropriate, until such improvement is achieved it judges that data on economic activity and labor market conditions are consistent with an outlook for sustained progress toward maximum employment in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases. 5. To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. October FOMC Statement--Alternative B 1. Information received since the Federal Open Market Committee met in August September suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has continued to advanced a bit more quickly, but growth in business fixed investment appears to have has slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation has been subdued, although the prices of some key commodities have increased recently picked up somewhat, reflecting higher energy prices. Longer-term inflation expectations have remained stable. 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee is remains concerned that, without further sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective. 3. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee's holdings of longerterm securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. 4. The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases. 5. To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. October FOMC Statement--Alternative C 1. Information received since the Federal Open Market Committee met in August September suggests that economic activity has continued to expand at a moderate pace in recent months despite the adverse effects of the drought on agricultural production. Growth in Employment has increased further been slow, and the unemployment rate, remains though still elevated, has declined. Household spending Private domestic demand has continued to advance, but growth in business fixed investment appears to have slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation has been subdued, although the prices of some key commodities have increased recently picked up, mainly reflecting higher energy prices; however, longer-term inflation expectations have remained stable. 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions expects economic growth to be moderate over coming quarters and then to pick up gradually, supported in part by the highly accommodative stance of monetary policy, and consequently anticipates that the unemployment rate will continue to decline toward levels that the Committee judges consistent with its dual mandate. Furthermore However, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely would will run at or below near its 2 percent objective. 3. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month through the end of the year. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee's holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. 4. The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved and is prepared to take further action as needed to promote sustained improvement in labor market conditions in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases. 5. To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for [ a considerable | some ] time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015 [ late 2014 | mid-2014 | late 2013 ]. OR 5′. To support continued progress toward maximum employment and in a context of price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for [ a considerable | some ] time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. As rates of resource utilization rise toward levels consistent with maximum employment, the Committee will need to make monetary policy less accommodative in order to foster sustained economic expansion with inflation at its longer-run objective. In determining the appropriate time to increase its target for the federal funds rate, the Committee will consider a range of factors, including actual and projected labor market conditions, the medium-term outlook for inflation, and the risks to the achievement of the Committee's objectives. Long-Run Projections of the Balance Sheet and Monetary Base Figure: Total Assets Line chart, by billions of dollars, 2006 to 2020. Data are monthly. There are five series, "Alt A," "Alt B," "Alt C," and "September Alt B′." All five series begin at about 900 in 2006. They all follow the same path to generally increase to about 2500 in 2012. The Alt A series generally increases to about 4000 in 2014. It then generally decreases to end at about 2000 in 2020. The Alt B series generally increases to about 3000 in 2013. It then generally decreases to end at about 2000 in 2020. The Alt C series generally decreases to about 1500 in 2018. It then generally increases to end at about 2000 in 2020. The September Alt B′ series generally decreases to about 1500 in 2017. It then generally increases to end at about 2000 in 2020. Growth Rates for the Monetary Base Date Alternative B Alternative A Memo: September Alt B′ Alternative C Percent, annual rate Monthly Apr-12 -12.3 -12.3 -12.3 -12.2 May-12 -8.7 -8.7 -8.7 -8.7 Jun-12 -5.1 -5.1 -5.1 -5.1 Jul-12 7.7 7.7 7.7 7.7 Aug-12 7.7 7.7 7.7 18.7 Sep-12 -12.4 -12.4 -12.4 6.0 Oct-12 1.1 1.2 -0.1 -1.1 Nov-12 28.9 29.1 27.6 16.0 Dec-12 23.1 23.1 23.6 17.3 Quarterly 2011 Q3 21.0 21.0 21.0 21.0 2011 Q4 -5.9 -5.9 -5.9 -5.9 2012 Q1 5.5 5.5 5.5 5.5 2012 Q2 -3.9 -3.9 -3.9 -3.9 2012 Q3 0.8 0.8 0.8 5.3 2012 Q4 7.5 7.6 6.9 8.6 2013 Q1 28.3 28.3 15.9 22.8 2013 Q2 30.1 30.3 -4.8 25.3 Annual - Q4 to Q4 2010 0.9 0.9 0.9 0.9 2011 32.9 32.9 32.9 32.9 2012 2.5 2.5 2.3 3.9 2013 25.1 37.4 4.9 23.6 2014 -0.6 4.9 -2.2 -0.7 2015 -2.4 -2.5 -7.7 -3.2 2016 -14.3 -13.5 -17.2 -14.5 2017 -16.9 -15.7 -18.9 -16.7 2018 -23.9 -22.6 -6.7 -23.9 Note: Not seasonally adjusted. Growth Rates for M2 (Percent, seasonally adjusted annual rate) Tealbook Forecast * Monthly Growth Rates Jan-12 16.2 Feb-12 3.7 Mar-12 4.2 Apr-12 5.5 May-12 3.9 Jun-12 5.1 Jul-12 9.0 Aug-12 4.5 Sep-12 10.1 Oct-12 6.6 Nov-12 4.0 Dec-12 3.6 Quarterly Growth Rates 2012 Q1 8.7 2012 Q2 4.6 2012 Q3 6.7 2012 Q4 6.3 2013 Q1 -0.4 2013 Q2 1.9 2013 Q3 2.2 2013 Q4 2.2 2014 Q1 2.6 2014 Q2 2.7 2014 Q3 2.7 2014 Q4 2.8 Annual Growth Rates 2012 6.7 2013 1.5 2014 2.7 * This forecast is consistent with nominal GDP and interest rates in the Tealbook A forecast. Actual data through October 8, 2012; projections thereafter. Return to table [Note: In the October 2012 Directive Alternatives, emphasis (strike-through) indicates strike-through text in the original document, and strong emphasis (bold) indicates bold red underlined text in the original document.] October 2012 Directive--Alternative A The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to continue the maturity extension program it announced in June to purchase Treasury securities with remaining maturities of 6 years to 30 years with a total face value of about $267 billion by the end of December 2012, and to sell or redeem Treasury securities with remaining maturities of approximately 3 years or less with a total face value of about $267 billion. For the duration of this program, the Committee directs the Desk to suspend its policy of rolling over maturing Treasury securities into new issues. The Committee directs the Desk to maintain its existing policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in the System Open Market Account in agency mortgage-backed securities. The Desk is also directed to begin continue purchasing agency mortgage-backed securities at a pace of about $40 billion per month. The Committee directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System's balance sheet that could affect the attainment over time of the Committee's objectives of maximum employment and price stability. October 2012 Directive--Alternative B The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to continue the maturity extension program it announced in June to purchase Treasury securities with remaining maturities of 6 years to 30 years with a total face value of about $267 billion by the end of December 2012, and to sell or redeem Treasury securities with remaining maturities of approximately 3 years or less with a total face value of about $267 billion. For the duration of this program, the Committee directs the Desk to suspend its policy of rolling over maturing Treasury securities into new issues. The Committee directs the Desk to maintain its existing policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in the System Open Market Account in agency mortgage-backed securities. The Desk is also directed to begin continue purchasing agency mortgage-backed securities at a pace of about $40 billion per month. The Committee directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System's balance sheet that could affect the attainment over time of the Committee's objectives of maximum employment and price stability. October 2012 Directive--Alternative C The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to continue the maturity extension program it announced in June to purchase Treasury securities with remaining maturities of 6 years to 30 years with a total face value of about $267 billion by the end of December 2012, and to sell or redeem Treasury securities with remaining maturities of approximately 3 years or less with a total face value of about $267 billion. For the duration of this program, the Committee directs the Desk to suspend its policy of rolling over maturing Treasury securities into new issues. The Committee directs the Desk to maintain its existing policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in the System Open Market Account in agency mortgage-backed securities. The Desk is also directed to begin continue purchasing agency mortgage-backed securities at a pace of about $40 billion per month until the end of 2012. The Committee directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System's balance sheet that could affect the attainment over time of the Committee's objectives of maximum employment and price stability. Explanatory Notes A. Policy Rules Used in "Monetary Policy Strategies" The table below gives the expressions for the selected policy rules used in "Monetary Policy Strategies." In the table, R t denotes the nominal federal funds rate for quarter t, while the right-hand-side variables include the staff's projection of trailing four-quarter core PCE inflation for the current quarter and three quarters ahead (π t and π t + 3 | t ), the output gap estimate for the current period as well as its one-quarter-ahead forecast (gapt and gapt + 1 | t ), and the forecast of the three-quarter-ahead annual change in the output gap (Δ 4 gapt + 3 | t ). The value of policymakers' longrun inflation objective, denoted π , is 2 percent. The nominal income targeting rule responds to the nominal income gap, which is defined as the difference between nominal income ynt (100 times the log of the level of nominal GDP) and a target value ynt (100 times the log of potential nominal GDP). Target nominal GDP in 2007:Q4 is set equal to potential real GDP in that quarter multiplied by the GDP deflator in that quarter; subsequently, target nominal GDP grows 2 percentage points per year faster than potential GDP. Rule Taylor (1993) rule Specification R t = 2.25 + π t + 0.5(π t − π ) + 0.5gapt Taylor (1999) rule R t = 2.25 + π t + 0.5(π t − π ) + gapt Inertial Taylor (1999) rule R t = 0.85R t − 1 + 0.15 2.25 + π t + 0.5(π t − π ) + gapt Outcome-based rule R t = 1.2R t − 1 − 0.39R t − 2 + 0.19[0.79 + 1.73π t + 3.66gapt − 2.72gapt − 1] First-difference rule R t = R t − 1 + 0.5(π t + 3| t − π ) + 0.5Δ4gapt + 3| t Nominal income targeting rule R t = 0.75R t − 1 + 0.25(2.25 + π ( ) + ynt − ynt ) D. Long-Run Projections of the Balance Sheet and Monetary Base 10-Year Treasury Term Premium Effect Date Alternative B Alternative A Alternative C Memo: September Alt B′ Basis Points Quarterly Averages 2012 Q4 -93 -114 -66 -93 2013 Q1 -90 -111 -62 -89 2013 Q2 -86 -107 -58 -86 2013 Q3 -81 -103 -54 -81 2013 Q4 -76 -98 -50 -76 2014 Q1 -72 -93 -46 -71 2014 Q2 -67 -87 -42 -66 2014 Q3 -62 -81 -38 -61 2014 Q4 -57 -75 -35 -57 2015 Q1 -53 -70 -32 -52 2015 Q2 -49 -64 -29 -48 2015 Q3 -44 -59 -26 -43 2015 Q4 -40 -54 -23 -39 2016 Q1 -37 -49 -20 -35 2016 Q2 -33 -44 -18 -32 2016 Q3 -30 -40 -16 -29 2016 Q4 -27 -36 -14 -25 2017 Q1 -24 -32 -13 -23 2017 Q2 -21 -29 -11 -20 2017 Q3 -19 -25 -10 -17 2017 Q4 -17 -23 -9 -15 2018 Q1 -15 -20 -8 -13 2018 Q2 -13 -17 -7 -12 2018 Q3 -12 -15 -7 -10 2018 Q4 -10 -13 -6 -9 2019 Q1 -9 -12 -6 -8 2019 Q2 -8 -10 -6 -7 2019 Q3 -8 -9 -6 -6 2019 Q4 -7 -8 -5 -6 2020 Q1 -6 -7 -5 -5 2020 Q2 -6 -6 -5 -5 2020 Q3 -6 -6 -4 -5 2020 Q4 -5 -5 -4 -4 Federal Reserve Balance Sheet: End-of-Year Projections: Alternative B Billions of dollars Sep 30, 2012 Total assets 2012 2014 2016 2018 2020 2,802 2,908 3,511 2,891 1,873 1,976 13 13 0 0 0 0 0 0 0 0 0 0 13 13 0 0 0 0 Term Asset-Backed Securities Loan Facility (TALF) 2 2 0 0 0 0 Net portfolio holdings of Maiden Lane LLC, Maiden Lane II LLC, and Maiden Lane III LLC 2 1 0 0 0 0 2,564 2,650 3,258 2,685 1,710 1,848 1,645 1,657 1,927 1,707 1,218 1,828 83 77 39 16 2 0 835 916 1,292 961 490 20 1 1 1 0 0 0 221 241 252 206 162 128 2,747 2,846 3,430 2,783 1,730 1,787 1,086 1,108 1,249 1,402 1,530 1,671 70 70 70 70 70 70 1,578 1,658 2,099 1,300 127 36 1,464 1,607 2,048 1,290 116 25 U.S. Treasury, General Account 85 45 45 5 5 5 Other Deposits 29 6 6 6 6 6 2 0 0 0 -8 0 Selected assets Liquidity programs for financial firms Primary, secondary, and seasonal credit Central bank liquidity swaps Securities held outright U.S. Treasury securities Agency debt securities Agency mortgage-backed securities Net portfolio holdings of TALF LLC Total other assets Total liabilities Selected liabilities Federal Reserve notes in circulation Reverse repurchase agreements Deposits with Federal Reserve Banks Reserve balances held by depository institutions Interest of Federal Reserve Notes due to U.S. Treasury Total capital 55 62 82 108 143 189 Source: Federal Reserve H.4.1 statistical releases and staff calculations. Note: Components may not sum to totals due to rounding. Federal Reserve Balance Sheet: End-of-Year Projections: Alternative A Billions of dollars Sep 30, 2012 Total assets 2012 2014 2016 2018 2020 2,802 2,909 4,043 3,359 2,213 1,943 13 13 0 0 0 0 0 0 0 0 0 0 13 13 0 0 0 0 Term Asset-Backed Securities Loan Facility (TALF) 2 2 0 0 0 0 Net portfolio holdings of Maiden Lane LLC, Maiden Lane II LLC, and Maiden Lane III LLC 2 1 0 0 0 0 2,564 2,649 3,765 3,134 2,038 1,808 1,645 1,657 2,197 1,977 1,454 1,784 83 77 39 16 2 0 835 915 1,530 1,141 582 23 1 1 1 0 0 0 221 243 276 224 175 135 2,747 2,847 3,961 3,251 2,070 1,754 1,086 1,108 1,249 1,402 1,530 1,671 70 70 70 70 70 70 1,578 1,658 2,626 1,764 483 36 1,464 1,608 2,575 1,754 473 25 U.S. Treasury, General Account 85 45 45 5 5 5 Other Deposits 29 6 6 6 6 6 2 0 0 0 -31 -34 55 62 82 108 143 189 Selected assets Liquidity programs for financial firms Primary, secondary, and seasonal credit Central bank liquidity swaps Securities held outright U.S. Treasury securities Agency debt securities Agency mortgage-backed securities Net portfolio holdings of TALF LLC Total other assets Total liabilities Selected liabilities Federal Reserve notes in circulation Reverse repurchase agreements Deposits with Federal Reserve Banks Reserve balances held by depository institutions Interest of Federal Reserve Notes due to U.S. Treasury Total capital Source: Federal Reserve H.4.1 statistical releases and staff calculations. Note: Components may not sum to totals due to rounding. Federal Reserve Balance Sheet: End-of-Year Projections: Alternative C Billions of dollars Sep 30, 2012 Total assets 2012 2014 2016 2018 2020 2,802 2,907 2,862 2,206 1,790 1,976 13 13 0 0 0 0 0 0 0 0 0 0 13 13 0 0 0 0 Term Asset-Backed Securities Loan Facility (TALF) 2 2 0 0 0 0 Net portfolio holdings of Maiden Lane LLC, Maiden Lane II LLC, and Maiden Lane III LLC 2 1 0 0 0 0 2,564 2,661 2,655 2,040 1,656 1,863 1,645 1,657 1,657 1,437 1,448 1,863 83 77 39 16 2 0 835 927 959 586 206 0 1 1 1 0 0 0 221 230 206 166 134 112 2,747 2,845 2,780 2,098 1,647 1,786 1,086 1,108 1,249 1,402 1,530 1,671 70 70 70 70 70 70 1,578 1,655 1,449 615 36 36 1,464 1,604 1,438 605 25 25 U.S. Treasury, General Account 85 45 5 5 5 5 Other Deposits 29 6 6 6 6 6 2 0 0 0 0 0 55 62 82 108 143 189 Selected assets Liquidity programs for financial firms Primary, secondary, and seasonal credit Central bank liquidity swaps Securities held outright U.S. Treasury securities Agency debt securities Agency mortgage-backed securities Net portfolio holdings of TALF LLC Total other assets Total liabilities Selected liabilities Federal Reserve notes in circulation Reverse repurchase agreements Deposits with Federal Reserve Banks Reserve balances held by depository institutions Interest of Federal Reserve Notes due to U.S. Treasury Total capital Source: Federal Reserve H.4.1 statistical releases and staff calculations. Note: Components may not sum to totals due to rounding. † Note: Data values for figures are rounded and may not sum to totals. Return to text Last update: January 5, 2018 BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM 20th Street and Constitution Avenue N.W., Washington, DC 20551
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