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Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optimal character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. CONFIDENTIAL (FR) CLASS II - FOMC September 25, 1998 SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System TABLE OF CONTENTS Page THE DOMESTIC NONFINANCIAL ECONOMY Gross Domestic Product ......................................... Personal Income and Outlays ....................................... Orders and Shipments of Durable Goods ............................ .................... Existing Homes Sales ....................... 1 2 .3 Tables Real Gross Domestic Product and Related Items ....... ............... .... ...... ........ Personal Income ................. .. ......... Orders and Shipments of Durable Goods ............................. Private Housing Activity ....................................... Changes in Manufacturing and Trade Inventories ...................... 7 .8 9 11 12 Chart Recent Data on Orders and Shipments ............................. Inventory-Sales Ratios, by Major Sector ................................. ................. Labor Market Indicators .................. ....... 10 13 14 THE FINANCIAL ECONOMY Special Senior Loan Officer Opinion Survey on Bank Lending Practices ................................................ 4 Tables Selected Financial Market Quotations ................................ 15 Chart Measures of Supply and Demand for C&I Loans, by Size of Firm . ............................ ........ Seeking Loan ..... Measures of Supply and Demand for Loans to Households .............. . 16 17 SUPPLEMENTAL NOTES THE DOMESTIC NONFINANCIAL ECONOMY Gross Domestic Product According to BEA's final release, real GDP increased at an annual rate of 1.8 percent in the second quarter, up 0.2 percentage point from the preliminary estimate. As was the case in the preliminary release, a large gain in domestic final sales was partly offset by a sharp drop in net exports and a reduction in inventory accumulation. Net exports reduced last quarter's increase in real GDP 2.1 percentage points while slower inventory accumulation subtracted another 2.7 percentage points. For inventories, about half of the negative contribution was from motor vehicle inventories, owing to the effects of the GM strike on production and of coupon incentive programs on sales; the remainder reflected a stepdown in stockbuilding elsewhere following the outsized accumulation of the first quarter. The upward revision to second-quarter GDP was concentrated in final sales, particularly in personal consumption expenditures; inventory investment was slightly less than previously estimated. At the same time, disposable personal income was revised down, mostly because of an upward revision to personal tax payments, and the second-quarter saving rate was revised down 0.2 percentage point, to 0.4 percent. BEA estimates that corporate profits on an economic basis (that is, including the inventory valuation and capital consumption adjustments) declined $8.6 billion in the second quarter, a slightly smaller decline than in the preliminary estimate. The profit share of GNP (excluding profits of Federal Reserve Banks) is estimated to have been 9.5 percent, down slightly from the first quarter. Personal Income and Outlays Total nominal personal income increased 0.5 percent ($37.9 billion) in August, following a 0.4 percent ($29.8 billion) gain in July. Nominal wages and salaries rose a hefty 0.8 percent ($32.3 billion) in August, boosted by the return of workers involved in the strikes against General Motors. Those strikes reduced wages and salaries $3.5 billion in June and $7.5 billion in July.1 Farm proprietors' income dropped $3.4 billion in August, following a similar decline in July. 1. The BEA did not provide an estimate of the impact of the return of striking workers on wages in August. Elsewhere, increases in other components of personal income were similar to that of recent months. Disposable personal income also rose 0.5 percent ($28.5 billion) in August, and after factoring in a small increase in prices, real disposable income climbed 0.4 percent. Real personal consumption expenditures increased 0.5 percent in August. A jump in real purchases of motor vehicles boosted durable goods outlays and accounted for more than half of the increase in total real PCE last month. 2 Real spending on services rose a strong 0.6 percent in August. As expected, real outlays for personal brokerage services jumped 6.4 percent, and real expenditures for electricity climbed 5.7 percent. However, real outlays for transportation edged lower in August, owing in part to a decline in spending for air travel. Real spending for nondurable goods was little changed last month, held down by declines in spending for food and apparel. With outlays rising faster than income in August, the personal saving rate dropped 0.2 percentage point to 0.3 percent. Orders and Shipments of Durable Goods New orders for durable goods rose 1.6 percent in August. However, a jump in the volatile aircraft component accounted for almost all of the increase; excluding aircraft, new orders rose only 0.1 percent. The staffs constructed series on real adjusted durable goods orders--which strips out nondefense aircraft, defense capital goods, and industries for which reported orders actually equal shipments--fell 1.4 percent in August, after having increased about 3 percent in each of the previous two months. The decline in this series was due to a drop in orders for electronic components, a category that consists primarily of semiconductors. Bookings for electronic components fell 16 percent in August after having jumped 27 percent in July. Excluding electronic components, real adjusted durable goods orders rose 2 percent in June, 0.2 percent in July, and 0.4 percent in August. Orders for nondefense capital goods excluding aircraft and parts rose 1.2 percent in August. Bookings for communications equipment moved up 3.1 percent following July's 2. Real PCE is now estimated to have declined 0.3 percent in July, 0.1 percentage point less than shown earlier. The increase in real PCE in June was revised down 0.1 percentage point. 13.8 percent decline. Orders for office and computing equipment declined 1.1 percent, but this series has little predictive power for future shipments. Excluding aircraft and parts and high-tech equipment, orders posted a 1.8 percent increase in August. After having declined 5.4 percent over the first five months of the year, orders for this category have rebounded in recent months, advancing 6.9 percent over the three months ended in August. Shipments of nondefense capital goods excluding aircraft and parts fell 1.1 percent in August. Shipments of communications equipment rose 2.3 percent in August, and July's decline was scaled back from -11.3 percent to -7.9 percent. Shipments of computers fell 2 percent in August, a modest decline compared with the 4-1/2 percent drop in producer prices for computing equipment last month. Shipments of equipment excluding high-tech and transportation equipment--on which export demand has had an important influence--declined another 1-1/2 percent in August. Existing Home Sales Sales of existing homes decreased 3.7 percent in August to an annual rate of 4.73 million units after having reached 4.91 million units in July, a record high. The preliminary estimate of existing home sales in July was revised down by 20,000 units. Since February of this year, sales of existing homes have remained within a fairly narrow range around an average of 4.81 million units. The median price of existing homes increased 4.2 percent in August compared with a year earlier, the slowest year-over-year rise since early 1997. The average sales price was up 4.3 percent, the lowest increase in the past year. These price series do not adjust for compositional changes in the structural characteristics and amenities of homes sold. The most recent data for the repeat-sales price index for existing homes show a 5.3 percent increase in the second quarter from a year earlier. 3 3. This index is calculated by Fannie Mae and Freddie Mac using price data obtained when houses are sold repeatedly or refinanced, and therefore holds constant some of the compositional shifts that can affect the median and average prices. THE FINANCIAL ECONOMY Special Senior Loan Officer Opinion Survey on Bank Lending Practices The Federal Reserve conducted a special Senior Loan Officer Opinion Survey in midSeptember to assess the impact of recent financial turbulence on the bank loan market. In order to limit the burden, the survey was kept rather brief; questions focused only on changes between mid-August and mid-September in the supply of and demand for commercial and industrial loans and consumer installment loans. 4 The survey results indicate that there has been a fairly widespread tightening of standards and terms on commercial and industrial loans to large and middle-market firms. However, the respondents reported little change in standards and terms for commercial and industrial loans to small businesses, and they were slightly more willing to provide consumer installment loans than they had been a month earlier. Demand for both business and consumer loans reportedly has softened recently. The domestic responses to the questions on business lending standards and terms differed markedly by size of the borrower. A quarter of the domestic respondents, on net, reported that standards for loans to large and middle-market firms had been tightened over the past month. Somewhat smaller, but still substantial, shares reported tighter loan terms--including the sizes of credit lines, fees, and loan spreads. A few banks, on net, reported having tightened collateralization requirements and loan covenants on loans to larger customers. The survey has not shown such broad evidence of banks pulling back from this type of lending since 1991. By contrast, there was little net change reported in standards for commercial and industrial loans to small businesses. Most terms on these loans were also little changed, on net, although maximum sizes of credit lines were trimmed by a substantial fraction of banks. However, even the relative stability of the terms on small loans marks a departure from recent surveys, which have generally shown some easing. The domestic responses also differed substantially by bank size. Larger banks were considerably more likely than smaller banks to report having tightened standards and terms. 4. This summary is based on responses from 51 of the 58 domestic banks and from 21 of the 24 U.S. branches and agencies of foreign banks on the survey panel. Thirty percent of the large banks on the panel (those with assets greater than $15 billion) reported having tightened lending standards on loans to large and middle-market firms, while only about ten percent of the smaller banks, on net, had done so. Similarly, a larger share of the large banks generally reported having tightened terms on such loans; the only exception was maximum credit line size, which was tightened by a somewhat larger fraction of the smaller respondents. The banks that had tightened lending standards and terms most commonly attributed their decision to a less favorable economic outlook, and a worsening of industry-specific problems, as well as a reduced tolerance for risk. The banks indicated that the reduced tolerance for risk did not stem from concerns about foreign losses or exposures, but rather from other causes. Several of the domestic respondents, on net, noted weaker demand for commercial and industrial loans. They attributed this decline primarily to decreased demand for merger and acquisition financing and, to a lesser extent, to reductions in their customers' investments in plant and equipment. In their comments, a few banks noted that loan demand had been boosted by a shift from the securities markets, especially the junk bond market, toward bank finance. However, it appears that this substitution was generally more than offset by other factors that weakened demand. A couple of banks noted that a shift from the capital markets might be in the works, but that it had not yet occurred. Responses from the branches and agencies of foreign banks showed a continuation of the trend, visible in the last few surveys, toward tighter standards and terms on commercial and industrial loans. Like their domestic counterparts, the foreign respondents attributed the tightening to a less favorable economic outlook, a worsening of industry-specific problems, and reduced tolerance for risk (although they were more likely than the domestic banks to attribute their reduced tolerance for risk to heightened concerns about their losses or exposures outside the U.S.). In addition, many of the Japanese branches and agencies again pointed to a deterioration in their parent bank's capital position. The branches and agencies reported a modest decline, on net, in the demand for business loans, attributing the weakness primarily to a decline in merger and acquisition financing. Because larger banks and foreign branches and agencies are more likely to be involved in the market for large syndicated credits, the pattern of tightening reported on the survey is -6consistent with anecdotal reports suggesting that conditions in that market have deteriorated in recent weeks. Indeed, a couple of the large domestic respondents indicated in their comments that they were tightening terms in order to be able to syndicate the loans. In contrast, the survey suggests that the troubles in this sector have not greatly affected lending to small businesses. Only two of the domestic banks indicated that their willingness to make consumer installment loans had risen over the past month. The other respondents reported no change. In August, a somewhat larger fraction of the respondents reported increased willingness to make such loans. Demand for consumer loans reportedly eased a bit, on net, since mid-August. By comparison, demand was unchanged, on net, in the August survey. 9-24-98 Real Gross Domestic Product and Related Items (Percent change from previous period at compound annual rates; based on seasonally adjusted data, chain-type indexes) 1. 2. Gross domestic product Final sales 3. Consumer spending 1998:Q2 1998:Q1 Final Preliminary Final 3.8 5.5 1.6 1.8 3.4 4.3 4.4 4.6 3.7 6.1 5.8 6.1 11.2 1996:Q4 to 1997:Q4 4. Durables 7.4 15.8 11.1 5. Nondurables 2.0 7.4 5.0 5.3 6. Services 3.8 3.5 5.2 5.4 9.8 22.2 12.6 12.8 12.7 34.3 18.1 18.8 2.5 -4.9 -1.6 -2.3 4.2 15.6 14.8 15.0 .6 -8.8 6.6 7.3 2.6 2.1 2.1 1.8 9.6 14.0 -2.8 15.7 -7.4 10.0 -7.7 9.3 58.82 3.22 55.52 85.9 2.4 83.5 30.7 -22.2 52.9 29.9 -22.5 52.4 4.32 5.3 8.8 8.7 -246.3 -245.2 7. Business fixed investment 8. Producers' durable equipment 9. Nonresidential structures 10. 11. 12. 13. 14. Residential investment Federal government consumption expenditures and investment State and local government consumption expenditures and investment Exports of goods and services Imports of goods and services ADDENDA: 15. 16. 17. Nonfarm inventory investment 1 Motor vehicles ' Excl. motor vehicles 1 18. Farm inventory investment 1 19. Net exports of goods and services ' 20. Nominal GDP 5.6 6.4 2.5 2.7 21. GDP price index 1.7 .9 .8 .9 22. 23. Profit share 3 (Excluding FR banks) 10.12 9.82 9.9 9.6 9.7 9.4 9.7 9.5 24. Real disposable personal income 2.9 4.0 2.9 2.6 25. Personal saving rate (percent) 2.12 1.2 .6 .4 1. Level, billions of chained (1992) dollars. 2. Annual average. 3. Economic profits as a share of nominal GNP. -136.12 -198.5 -8PERSONAL INCOME (Average monthly change at an annual rate; billions of dollars) 1997 1998 1998 1996 1997 Q4 Q1 Q2 July Aug. 30.9 28.6 26.1 35.2 23.5 29.8 37.9 Wages and salaries Private 20.6 19.0 21.4 19.5 23.5 22.1 23.9 21.0 17.2 15.0 22.8 20.8 32.3 30.5 Other labor income -. 6 1.1 1.5 1.4 .9 .9 .9 Proprietors' income Farm 2.4 .4 2.0 -. 5 -. 7 -2.0 3.8 -. 8 2.0 .5 .3 -3.7 1.1 -3.4 Rent Dividend Interest 1.2 3.6 1.3 .2 .1 1.9 .1 .2 .5 -. 2 .1 2.0 1.4 .2 1.9 2.4 .1 2.5 1.7 .4 2.7 Transfer payments 3.8 3.5 2.6 6.7 1.2 2.3 1.3 Less: Personal contributions for social insurance 1.3 1.7 1.7 2.4 1.3 1.7 2.3 8.6 8.8 9.1 12.8 9.4 5.3 9.5 Equals: Disposable personal income 22.3 19.8 16.9 22.4 14.2 24.4 28.5 Memo: Real disposable incomel 10.9 12.0 11.9 21.0 8.2 13.3 19.1 Total personal income Less: Personal tax and nontax payments 1. Billions of chained (1992) dollars. REAL PERSONAL CONSUMPTION EXPENDITURES (Percent change from the preceding period) 1997 1997 Q1 Q4 - - Personal consumption expenditures 1998 1998 July Q2 - Annual rate - - - Aug. Monthly rate 3.7 2.8 6.1 6.1 -. 3 .5 Durable goods Excluding motor vehicles 7.4 9.4 3.1 6.4 15.8 19.8 11.2 7.1 -4.6 .4 1.4 .8 Nondurable goods Excluding gasoline 2.0 2.1 -.4 -. 3 7.4 7.9 5.3 5.8 .5 .6 -. 0 -. 3 Services Excluding energy 3.8 3.9 4.3 4.3 3.5 4.9 5.4 4.6 .3 .4 .6 .5 2.1 2.9 1.7 2.9 1.2 4.0 .4 2.6 .5 .2 .3 .4 Memo: Personal saving rate (percent) Real disposable income 1 1. Percent changes derived from billions of chained (1992) dollars. ORDERS AND SHIPMENTS OF DURABLE GOODS (Percent change from comparable previous period, seasonally adjusted) 1997 Q4 1998 Q1 1998 Q2 June July (r) Aug. (a) Nondefense capital goods Orders Aircraft and parts Excluding aircraft and parts Office and computing Communications equipment All other 7.8 59.8 -. 1 -1.7 -4.7 1.6 -1.9 -27.4 4.2 12.1 21.8 -2.5 -. 1 4.6 -. 9 4.3 -4.9 -1.8 .4 -14.7 3.2 7.3 -5.7 4.1 -. 8 6.1 -1.8 -. 5 -13.8 .9 7.7 47.8 1.2 -1.1 3.1 1.8 Shipments Aircraft and parts Excluding aircraft and parts Office and computing Communications equipment All other .1 -3.1 .6 -1.1 -. 3 1.5 4.6 10.0 3.7 9.5 4.4 1.4 1.4 .3 1.6 4.7 .8 .6 3.6 -2.8 4.7 7.4 4.8 3.6 -2.2 -2.8 -2.1 -.4 -7.9 -1.3 -. 5 2.9 -1.1 -2.0 2.3 -1.5 Durable goods* Industries with unfilled orders 2.2 -. 8 -. 8 .1 1.9 1.6 3.0 -. 9 -. 7 1.0 2.3 .6 Capital goods Nondefense Defense 7.6 7.8 6.2 -. 7 -1.9 9.9 -. 6 -. 1 -4.8 .8 .4 4.8 -.9 -. 8 -2.2 5.9 7.7 -10.7 Real adjusted durable goods 1.1 2.1 .7 3.1 2.9 -1.4 Supplementary orders series r--Revised. a- -Advance. *--Contains industry detail not shown separately. -10- RECENT DATA ON ORDERS AND SHIPMENTS Office and Computing Equipment - - . Billions of Dollars Orders Shipments - i . . . . . . 1y95 i . . Communications Equipment - - . i. . I . , . . , - Billions of Dollars Orders Shipments - 1995 Aug 1996 Billions of Dollars Other Equipment (excl. aircraft, computers, and communications eq.) - - 65 1998 Orders Shipments SZ /Aug. .. 1995 , 1997 1998 Z -11- Private Housing Activity (Millions of units; seasonally adjusted annual rate) 1997 Q4 1997 Q1 Q2 r 1998 June r Julyr Aug.P All units Starts Permits 1.47 1.44 1.53 1.48 1.58 1.59 1.57 1.53 1.62 1.52 1.71 1.58 1.61 1.62 Single-family units Starts Permits Adjusted permits 1 1.13 1.06 1.14 1.14 1.10 1.18 1.24 1.15 1.24 1.24 1.14 1.23 1.27 1.13 1.23 1.30 1.17 1.26 1.25 1.17 1.25 New home sales Existing home sales .80 4.22 .83 4.38 .86 4.68 .89 4.78 .90 4.74 .89 4.91 n.a. 4.73 Multifamily units Starts Permits .34 .39 .39 .38 .34 .44 .33 .38 .35 .39 .41 .41 .37 .44 Mobile homes Shipments .35 .35 .37 .37 .36 .36 n.a. Note. p Preliminary. r Revised. n.a. Not available. 1. Adjusted permits equals permit issuance plus total starts outside of permit-issuing areas, minus a correction for those starts in permit-issuing places that lack a permit. Private Housing Starts (Seasonally adjusted annual rate) Millions of units Total m I 1977 I I I I 1979 1981 I 1983 I I 1985 I I 1987 I I 1989 I I 1991 I I 1993 I I 1995 I I 1997 I • !] I I II CHANGES IN MANUFACTURING AND TRADE INVENTORIES (Billions of dollars at annual rates; based on seasonally adjusted data) 1997 Q4 1998 Q1 1998 Q2 May June July Book value basis Total Excluding wholesale and retail motor vehicles Manufacturing Excluding aircraft Wholesale Excluding motor vehicles Retail Auto dealers Excluding auto dealers 39.8 62.7 7.0 -6.4 5.9 .9 40.2 15.6 15.0 18.1 19.5 6.0 .9 5.1 55.3 23.3 19.2 17.3 11.5 22.1 1.6 20.5 35.0 19.0 6.9 -.4 10.9 -11.5 -16.6 5.0 23.9 12.7 6.9 21.2 28.9 -40.3 -22.6 -17.7 44.3 11.7 1.9 -2.2 6.3 -3.6 -29.9 26.3 22.2 15.0 9.0 -7.4 .1 -6.7 -13.7 7.0 SELECTED INVENTORY-SALES RATIOS (Months' supply, based on Census book-value data, seasonally adjusted) Cyclical reference points 1990-91 1995-96 high low Manufacturing and trade Less wholesale and retail motor vehicles Range over preceding 12 months High Low July 1998 1.58 1.38 1.39 1.37 1.38 1.55 1.35 1.36 1.34 1.36 Manufacturing Primary metals Nonelectrical machinery Electrical machinery Transportation equipment Motor vehicles Aircraft Nondefense capital goods Textiles Chemicals Petroleum Home goods & apparel 1.75 2.08 2.48 2.08 2.93 .97 5.84 3.09 1.71 1.44 .94 1.96 1.38 1.49 1.77 1.41 1.51 .56 4.44 2.27 1.42 1.25 .80 1.63 1.40 1.64 1.75 1.39 1.83 .64 5.12 2.33 1.54 1.41 .89 1.69 1.36 1.53 1.61 1.30 1.57 .54 4.34 2.12 1.40 1.30 .83 1.59 1.39 1.65 1.62 1.29 1.85 .62 4.96 2.19 1.48 1.41 .89 1.64 Merchant wholesalers Less motor vehicles Durable goods Nondurable goods 1.36 1.31 1.83 .95 1.26 1.22 1.55 .91 1.30 1.28 1.62 .96 1.26 1.23 1.56 .92 1.29 1.28 1.58 .96 Retail trade Less automotive dealers Automotive dealers General merchandise Apparel GAF 1.61 1.48 2.22 2.42 2.53 2.42 1.50 1.43 1.69 2.20 2.27 2.23 1.50 1.42 1.77 2.11 2.45 2.15 1.45 1.40 1.56 2.00 2.32 2.06 1.45 1.40 1.60 2.03 2.42 2.08 -13- Inventory-Sales Ratios, by Major Sector (Book value) Manufacturing Ratio 2.15 1.9 1.65 1.4 1.15 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 Wholesale Excluding Motor Vehicles Ratio 1.5 1.4 1.3 1.2 1.1 1 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 Retail Ratio 1.7 GAF group (left scale) . . ,t \ - 1.6 ru- * 4,, 1.5 i 1.4 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 -14- Labor Market Indicators Initial Claims for Unemployment Insurance Thousands Net Hiring Strength 1988 1988 1990 1992 1994 1996 1998 Note. State programs, includes EUC adjustment. 1990 1992 1994 1996 1998 Note. Percent planning an increase in employment minus percent planning a reduction. Reporting Positions Hard to Fill Reporting Positions Hard to Fill Percent Percent BNA's Survey of Personnel Executives -- Technical/Professional Production/Service - - - - Office/Clerical Q3 1988 1990 1992 1994 1996 1998 Help Wanted Index 1988 1990 1992 1990 1992 1996 1998 Current Job Availability Percent of households Index, 1990=100 1988 1994 1994 1996 1998 Note. Series has been adjusted to take account of structural and institutional changes, including consolidation of newspaper industry and tendency to increase hiring through personnel supply agencies. 1988 1990 1992 1994 1996 1998 -15Selected Financial Market Quotations (One-day quotes in percent except as noted) 1997 Change to Sept. 24 from selected dates (percentage points) 1998 Instrument 30 Dec. 31 FOMC* Aug. 18 Sept. 24 Sept. 30 Dec. 31 FOMC* Aug. 18 Short-term Federal funds FOMC intended rate Realized rate ' 5.50 5.51 5.50 5.44 5.50 5.55 5.50 5.42 .00 -.09 .00 -.02 .00 -.13 Treasury bills 2 3-month 6-month i-year 4.93 5.08 5.18 5.22 5.23 5.22 4.93 4.98 4.98 4.44 4.39 4.32 -.49 -.69 -.86 -.78 -.84 -.90 -.49 -.59 -.66 Commercial paper 1-month 3-month 5.51 5.48 5.65 5.57 5.50 5.48 5.44 5.20 -.07 -.28 -.21 -.37 -.06 -.28 Large negotiable CDs 2 1-month 3-month 6-month 5.59 5.67 5.72 5.65 5.72 5.74 5.57 5.59 5.62 5.45 5.34 5.23 -.14 -.33 -.49 -.20 -.38 -.51 -.12 -.25 -.39 Eurodollar deposits 3 1-month 3-month 5.56 5.63 5.63 5.72 5.50 5.56 5.38 5.31 -.18 -.32 -.25 -.41 -.12 -.25 Bank prime rate 8.50 8.50 8.50 8.50 .00 .00 .00 Intermediate- and long-term U.S. Treasury (constant maturity) 2-year 10-year 30-year 5.80 6.12 6.41 5.66 5.75 5.93 5.34 5.40 5.56 4.43 4.64 5.15 -1.37 -1.48 -1.26 -123 -1.11 -.78 -.91 -.76 -.41 3.61 3.70 3.82 3.62 .01 -.08 -.20 5.63 5.40 5.34 5.17 -.46 -.23 -. 17 7.66 7.28 7.14 7.06 -.60 -.22 -.08 9.02 9.06 9.53 10.48 1.46 1.42 .95 7.28 5.51 6.99 5.53 6.91 5.60 6.66 5.43 -.62 -.08 -.33 -. 10 -.25 -. 17 _Sept. U.S. Treasury 10-year indexed note Municipal revenue (Bond Buyer) 4 Corporate bonds, Moody's seasoned Baa High-yield corporate 5 Home mortgages (FHLMC survey rate) 6 30-year fixed 1-year adjustable Record high 1997 Stock exchange index Dow-Jones Industrial S&P 500 Composite NASDAQ (OTC) Russell 2000 Wilshire 5000 Change to Sept. 24 from selected dates (percent) 1998 Level Date Dec..3I FOMC* Aug. 18 Sept. 24 9,337.97 1,186.75 2,014.25 491.41 11,106.10 7-17-98 7-17-98 7-20-98 4-21-98 7-17-98 7,908.25 970.43 1,570.35 437.02 9,298.19 8,574.85 1,083.67 1,818.04 403.96 10,064.79 8,001.99 1,042.72 1,720.34 370.25 9,566.24 1. Average for two-week reserve maintenance period ending on or before date shown. Most recent observation is average for current maintenance period to date. 2. Secondary market 3. Bid rates for Eurodollar deposits collected around 9:30 am. Eastern time. 4. Most recent Thursday quote. 5. Merrill Lynch Master 11 high-yield bond index composite. 6. For week ending Friday previous to date shown. * Data are as of the close on August 17, 1998. Record high -14.31 -12.14 -14.59 -24.66 -13.86 Dec. 31 FOMC* Aug. 18 1.19 7.45 9.55 -15.28 2.88 -6.68 -3.78 -5.37 -8.34 -4.95 -16- Measures of Supply and Demand for C&I Loans, by Size of Firm Seeking Loan Net Percentage of Domestic Respondents Tightening Standards for C&I Loans Percent --S..... * 1990 1991 1992 1993 Large and Medium Small 1994 1995 1996 1997 1998 + Indicates data from the special September BLPS Net Percentage of Domestic Respondents Increasing Spreads of Loan Rates over Banks' Cost of Funds Percent 1990 1991 1992 1993 + Indicates data from the special September BLPS Net Percentage of Domestic Respondents Reporting Stronger Demand for C&I Loans + Indicates data from the special September BLPS 1998 Percent Measures of Supply and Demand for Loans to Households Net Percentage of Domestic Respondents Indicating More Willingness to Make Consumer Installment Loans Percent 80 60 40 20 S- 0 - -20 - -40 -60 I I 1966 I I 1970 I 1974 I I 1978 I I I I 1982 1986 I I I 1990 I I 1994 I - I 1998 + indicates data from the special September BLPS Net Percentage of Domestic Respondents Reporting Stronger Demand for Consumer Loans Percent 1991 1992 1993 + Indicates data from the special September BLPS 1994 1995 1996 1997 1998 -80
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