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Content last modified 6/05/2009.

CONFIDENTIAL (FR)

SUPPLEMENT
CURRENT ECONOMIC AND FINANCIAL CONDITIONS

Prepared for the
Federal Open Market Committee

By the Staff
Board of Governors
of the Federal Reserve System

October 4,

1968

SUPPLEMENTAL NOTES
The Domestic Economy
New construction put in place rose further in September to
match the peak reached last May, based on revised data now available
from the Census Bureau.

Residential construction outlays (which were

raised an average of 1.3 per cent over the preceding 8 months to allow
for improved estimates for the "additions and alterations" subgroup)
advanced to virtually the record rate of last April.
residential construction

Outlays for non-

were revised upward for July and August, but

they changed little in September, at a level 4 per cent under last
February's high.

Public construction outlays, already at a record in

August, also changed little in September.
NEW CONSTRUCTION PUT IN PLACE
(Confidential FRB)
September 1968
($ billions) I/
Total
Private
Residential
Nonresidential

Public
1/

Per cent change from
September 1967
August 1

84.8

+1

+ 8

56.0
28.5

+1
+2

+ 6
+11

27.5

--

+ 2

28.8

-

+13

Seasonally adjusted annual rates; preliminary. Data for the most
recent month (September) are available under a confidential arrangement with the Census Bureau. In no case should public reference be
made to them.
Final figures reveal that the increase in consumer credit

outstanding reached a new high in August.

This increase provided a

$10 billion (seasonally adjusted annual rate) net addition to consumer

-2funds available for purchases.

The previous record increase in out-

standings occurred in April 1965, when the increase was at an annual
rate of just $9 billion.

The August increase in outstandings resulted

from a small drop in repayments, while extensions remained high.
INCREASE IN CONSUMER INSTALLMENT CREDIT OUTSTANDING
(Seasonally adjusted annual rates)

Period

Billions of dollars

1965 - QI

7.4

QII
QIII
QIV

8.0
8.3
7.8

1966 - QI
QII
QTII

7.1
6.3
6.6

QIV

4.6

1967 - QI

QII
QIII
QIV
1968 - QI
QII
July

August

3.0

2.8
3.4
4.4
6.1
7.1
8.2

10.2

KEY INTEREST RATES
1967
High

High

1968
Sept. 9

Oct. 3

5.25 (1/11)

6.38 (5/15)

5.94 (914)

15,90 (1012)

5.07
5.63
6.88
5.30
5.88

5.92
6.13
7.19
6.11
6.13

(5/21)
(5/24)
(6/4)
(5/17)
(6/25)

5.24
5.94
5.45
5.62

5.21
5.63
6.19
5.38
5.50

5.50 (12/29)
5.70 (12/29)

6.00 (7/18)
6.20 (5/31)

5.75
5.85

5.62
5.75

5.60 (12/1)
5.88 (12/29)
6.00 (1/16)
5.55 (12/29)

6.08
6.25
6.25
6.25

(5/21)
(5/24)
(7/25)
(5/24)

5.27
5.75
5.88
5.56

5.31
5.75
5.75
5.49

5.50 (12/29)
6.00 (12/29)

6.25 (7/11)
6.40 (5/31)

5.75
5.90

5.62
5.80

5.71 (12/29)
5.95 (12/29)
4.00 (12/29)

6.03 (5/21)
6.01 (5/31)
3.90 (5/31)

5.21
5.60
2.90

5.19
5.58
2.90

5.91 (11/13) 6.21 (5/21)
5.81 (11/20) 5.77 (3/14)

5.52
5.29

5.49
5.34

6.25 (12/28) 6.29 (6/6)
6.98 (12/28) 7.10 (6/3)

5.95
6.80

6.03
6.77

Short-Term Rates
Federal funds (weekly average)
3-months
Treasury bills (bid)
Bankers' acceptances
Euro-dollars
Federal agencies
Finance paper
CD's (prime NYC)
Highest quoted new issue
Secondary market
6-months
Treasury bills (bid)
Bankers' acceptances
Commercial paper
Federal agencies
CD's (prime NYC)
Highest quoted new issue
Secondary market
1-year
Treasury bills (bid)
Federal agencies
Prime municipals

(12/5)
(12/29)
(11/28)
(12/29)
(1/6)

5.62

Intermediate and Long-Term
Treasury coupon issues
5-years
20-years
Corporate
Seasoned Aaa
Baa
New Issue Aaa
With call protection

Without call protection
Municipal
Bond Buyer Index
Moody's Aaa
Mortgage--Implicit Yield
la FNMA Weekly Auction 1/

6.55 (12/7)
6.70 (12/1)

6.83 (5/24)
6.99 (6/3)

6.23
6.53

6.31
6.64

4.45 (12/7)
4.15 (12/28)

4.71 (5/24)
4.42 (5/31)

4.44
4.25

4.36
4.14

7.72 (6/10)

7.22 (9/9)

7.16 (9/30)

-

-

1/ Yield on 6-month forward commitment after allowance for commitment fee and
required FNMA stock purchase. Assumes discount on 30-year loan amortized
over 15 years.

International Developments
Underlying the Greenbook estimates of the third quarter U.S.
balance of payments (pages IV - 3 and 4) are monthly data for July and
August (Appendix B) and preliminary estimates for September.

On the

liquidity basis, before special transactions, and after rough allowance
for seasonality, the September deficit was comparable in size to
August's, whereas on the same basis there appears to have been a small
surplus in July.
As shown in Appendix B, known special transactions in
September were $376 million.

Preliminary indications--which are still

very tentative, since large shifts may have occurred in the last days
of the month, and since the weekly data sometimes differ considerably
from the monthly series--are that after special transactions the
September deficit was of the order of magnitude of $100 million, and
before special transactions approximately $475 million, both figures
being before seasonal adjustment.

The comparable figure for August,

not seasonally adjusted, before special transactions was $678 million
(as shown in Appendix B).

The apparent improvement from August to

September was probably due mainly to seasonal factors.

(For the quarter

as a whole, it is estimated that the balance on the liquidity basis is
seasonally unfavorable to the extent of about $450 million, divided about
equally between July and August; September is not a seasonally unfavorable month.)

Corrections:
Page IV - 7, line 8:

reference is to page IV - 3.

Appendix B, items 3 and 6:
are not seasonally adjusted.

the monthly figures on these lines