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Esrjelease on delivery
9:30 A.M., E.S.T.
February 7, 1984
Statement by
Paul A* Volcker
Chairman, Board of Governors of the Federal Reserve System
before the.
Committee on Banking, Finance and Urban Affairs
House of Representatives
February 7, 1984
NOTICE
THERE SHOULD BE NO RELEASE
OF THIS DOCUMENT UNTIL
9:30 A.M. (E.S.T.)
TUESDAY, FEBRUARY 7, 1984
I am pleased to be meeting with this Committee once
again to discuss the Federal Reserve's monetary policy
objectives for the year ahead.
You have before you the
official monetary policy report that is required under
the Humphrey Hawkins Act.
That report, which was released
Monday, describes rather fully the current economic situation and sets out our decisions with respect to monetary
policy in detail.
My prepared remarks this morning will
focus mainly on some broader considerations that seem to
me to bear crucially on our approach to monetary policy,
on the interaction of monetary policy with other policies,
and on our economic prospects.
Monetary Policy "Targets" for 1984 and Economic Projections
At its meeting last week, the Federal Open Market
Committee essentially reaffirmed the ranges for money and
credit growth tentatively established in July of last year.
Those new target ranges are set out in Table I attached,
against the background of last year's targets.
As there indicated, the target ranges for M3 and for
nonfinancial debt were lowered by 1/2 percent from the 1983
ranges to 6-9 and 8-11 percent, respectively, as tentatively
set in July.
The M2 range was reduced by 1 percent from
the 1983 range to 6-9 percent.
That is 1/2 percent lower
than anticipated in July, reflecting in part technical
considerations bearing on the appropriate relationships
among the broader aggregates.
The Ml range was set at
4-8 percent, 1 percent lower than during the second half
of 1983, as had been anticipated.
•2-
These targeted ranges envisage that the relationships
between the monetary aggregates and the nominal GNP —that is? "velocity" —
will return to patterns much closer
to historical norms than was characteristic of 1982 and
early 1983.
Developments as 1983 progressed pointed in
that direction.
At year-end, all the targeted aggregates
appeared to be within the 1983 ranges;* a tendency for
velocity to rise —
in contrast to historically large
declines in 1982 and early 1983 —
past cyclical experience.
was more in line with
Further experience will be
necessary to confirm the validity of that judgment, and the
Committee recognizes that recent regulatory and institutional
changes may be reflected in some changes in the underlying
trends of velocity, particularly for Ml.
For that reason, substantial weight will continue to
be placed on the broader aggregates for the time being, and
growth in Ml will be evaluated in the light of the performance of the other aggregates.
All the aggregates will be
interpreted against the background of developments in the
economy, current and prospective price pressures, and
conditions in domestic credit and international markets.
*Subsequent benchmark revisions increased growth of
all the monetary aggregates fractionally, bringing M3
slightly above the targeted range during the fourth
quarter. The revised data are reflected in Table II
and the charts attached.
More detail about the new targets and 1983 performance
is provided in the Humphrey Hawkins Report itself, and I
will be glad to address any questions you have about them.
In setting the new target ranges, the Committee members
generally felt that economic activity would continue rising
through 1984 and into 198 5 at a more moderate —
tially more sustainable —
and poten-
pace of 4 to 4-3/4 percent.
That growth is expected to be accompanied by some further
decline in the unemployment rate to the area of 7-1/2 to
7-3/4 percent.
Cyclical factors and special circumstances
including the effects of bad weather —
are expected to be
reflected in a little larger price increase on average,
following the remarkably good progress of 1982 and 1983.
Taken together, those projections resemble those set
out by the Administration and many others, and they suggest
a generally satisfactory economic performance is probable
in 1984.
But those summary forecasts should not divert
our attention from certain serious problems that have
emerged.
As I assess the outlook, there are clear hazards
and risks before us.
Unless dealt with forcefully and
effectively, they will jeopardize the good prospects
for 1984 and beyond.
—
The Opportunity and the Risks
A year ago, in appearing before you on this occasion,
I emphasized that, after too many years of pain and instability, we had an enormous opportunity to sustain
growth for years ahead in an environment of much greater
price stability.
Today, after a year of strong recovery,
that sense of the opportunities before us has only been
reinforcedo
The simple fact is that the economy moved ahead
faster, and unemployment dropped more sharply, than we
or most others thought at all probable.
At the same
time, the inflation rate dropped further, to the point
that producer prices were almost unchanged over the year
as a whole and consumer prices rose by less than at any
time over the past decade.
The fact that we were able
to combine strong growth with good price performance is
what is so encouraging.
It is the key to lasting success.
With job opportunities, real incomes, and profits
all rising, so has the sense of optimism among both
families and businesses.
That widely shared impression
is confirmed statistically in the results of "attitudinal"
indices that attempt to measure confidence, expectations,
and buying plans
—
they are mostly at the highest, or
near the highest, levels in many years.
I realize that improvement must be measured from where
we started.
There was a lot of room to growf and the
early stages of recovery typically see rapid growth and
less price pressures*
Any satisfaction with what has
been happening has to be tempered by the knowledge there
is still a considerable way to go to reach satisfactory
levels of employment and before we can claim to have
restored reasonable price stability*
In particular,
should inflationary trends and fears again take hold,
prospects for the lower interest rates and orderly credit
markets we need to support investment and productivity
growth would be shattered*
I hardly need to remind you that inflation has tended
to worsen during periods of cyclical expansion.
need not be inevitable.
But that
Out of hard experience, I believe
we can shape disciplined policies —
indeed, we have already
gone a long way toward shaping policies and attitudes
—
toward dealing with the threat.
What we have not done in this past year is face up
to other hazards to our prosperity and to our stability
—
hazards that are new to our actual experience but which
have been long identified.
our twin deficits:
I am referring, of course, to
the structural deficit in our Federal
budget and the deficit in our external accounts —
at unprecedented levels and getting worse.
both
Both of those
deficits carry implications for the prospects of reducing
our still historically high levels of interest rates.
So far, the strains have been masked by other factors
of strength and by the rapidity of growth from the
depths of recession.
But with the passage of time and
full recovery, the predictable effects have become
more obvious*
They pose a clear and present danger to
the sustainabiiity of growth and the stability of markets,
domestic and international*
We still have time to act
—
but in my judgment, not much time.
Sources of
Strength
I can summarize briefly why I think the developments
of the past year are, in key respects, so promising -why, potentially, what has been going on can be not "just
another" cyclical recovery, but the start of a long
process of growth and renewed stability*
Looking back, it is now apparent that the trend of
productivity growth had practically stopped in the late
1970's*
But productivity began to increase again during
the recession and rose rapidly during most of last year.
One or two years do not make a new trend, and relatively
good productivity growth is typical of the early stages
of recovery.
qualitative —
But the evidence -- quantitative and
suggests something more than cyclical
forces are at work in important areas of the economy.
Under the pressure of adversity —
and with the seemingly
"easy pickings" of speculative and inflationary gains
diminishing —
management and labor alike have turned their
efforts and their imagination toward ways to increase
efficiency and to curtail overhead*
That, together with growing markets, accounted for
the speed of the rebound in total profits and improvement
in profit margins last year from long-depressed levels,
even as prices for many goods and services tended to
stabilize.
The cash flow of businesses has been further
reinforced by the liberal treatment of depreciation and
other tax changes enacted in recent years, and after-tax
economic profits, only a year after recession, are
approaching the highest levels of the 1970's relative to
GNP.
Strong expansion in some types of investment during
1983 —- particularly electronic equipment where technological
change has been so rapid -- carries promise for future
productivity.
We should not claim too much.
Profits remain well
below rates typical of the prosperous 1960's.
Recent
employment increases, while highly welcome in themselves,
have been so large relative to output growth that they
raise some questions about whether rapid productivity growth
is being maintained.
Long-lived investment —
for expansion of capacity -— still lags.
new plant
High interest
rates, the uncertainty bred by years of disappointment,
and strong competition from abroad all have restrained
heavy investment*
Already, a few industries are
close to, or even at, sustainable capacity*
But, on
balance, the evidence and the omens are more favorable
than for several years.
That is certainly true of the longer-term outlook
for costs and prices*
I am well aware that slack markets
and excessive unemployment, the appreciating dollar
together with the ready availability of goods from abroad,
and the decline in world oil prices all helped account
for the rapidity of the drop in the general inflation
rate and the degree to which cost pressures have subsided.
To that extent, progress toward stability has had a
sizable
!8
one time/1 or cyclical, component.
But we also
now have a clear opportunity to "build-in11 that improvement
—
the best opportunity in many years.
As the increase in average wages and salaries, which account for some two-thirds of all costs, has declined in nominal
terms, the real income of the average worker has increased.
That reverses the pattern as inflation accelerated during much
of the 1970*s when escalating wages often lagged behind more
rapidly rising prices*
The more favorable pattern should be
assisted by greater stability in energy prices, where the
outlook (barring political turmoil) appears favorable, and
by stronger productivity growth.
With real wages again
rising on average, and with prices more stable, the logic
points toward much more moderate new wage contracts than
became the norm in the inflationary 1970ss*
The competitive
pressures associated with the process of deregulation in
some important industries also have been a factor working
to contain costs and prices, and happily we can begin to
see some signs of more restrained cost increases in areas,
such as medical care and education, that have been slow
to reflect the disinflationary process.
To the extent we can build confidence in the outlook
for more stable prices, the process could, potentially,
feed on itself.
Incentives for speculation in commodities,
and for speculative excesses, would be greatly reduced
and possibilities of another burst in oil prices diminished.
It could provide the best possible environment for declines
in interest rates over time —
nominal and real —
interest rates are themselves an element of costs*
and
Lower
interest rates could, in turn, be a powerful factor
supporting and encouraging housing and the business
investment that we need to maintain economic momentum and
to support productivity growth.
The Problems
Nonethelessr as I suggested a few minutes ago, the
prospects for sustained growth and stability must remain
conditional.
There is another, and bleaker, reality.
are faced with two deficits —
in our budget and in our
international accounts -- unprecedented in magnitude.
Those twin deficits have multiple causes, but they are
We
-10not unrelated*
Left untended^ each, rather than improving,
will tend to cumulate on itself, until finally they will
undercut, all that has been achieved with so much effort
and so much pain.
Looking back, the rising budget deficit provided a
large and growing stimulus to purchasing power as we
emerged from recession.
It helped account for the vigor
of consumption in the face of historically high interest
rates.
The other side of the coin is that financing the
deficit last year amounted to three quarters of our net
new domestic savings*
That was tolerable —
we obviously
have tolerated it —- for a limited period of time when
other demands on those savings were limited.
Business
inventories actually declined on balance last year, and
housing and business investment were recovering from
recession lows,
Even then, deficits were a factor keeping interest
rates higher than otherwise, and the implications become
much more serious as the economy grows closer to its
potential.
The hard fact is that for many years we have
succeeded in saving (net of depreciation) only some 7 to
9 percent of our GNP.
Despite the efforts to raise it,
the domestic savings rate remains within that range now and
foreseeably.
If the budgetary deficit absorbs amounts
equal to 5 percent or more of the GNP as the economy
grows -- and that is the present prospect for the "current
-11services" or "base line" budget -- not much of our
domestic savings will be left over for the investment
we need*
Over the past year, our needs have been increasingly
met by savings from abroad in the form of a net capital
inflow*
That money has come easily? amid world economic
and political uncertainty, the United States has been a
highly attractive place to invest.
But part of the
attraction for investment in dollars has been relatively
high interest rates.
In effect, the growing capital
inflow has, directly or indirectly, helped to finance the
internal budget, by the same token helping to moderate
the pressures of the budget deficit on the domestic
financial markets.
At the same time, the flow of funds
into our capital and money markets pushed the dollar
higher in the exchange markets even in the face of a
growing trade and current account deficit —
and the
dollar appreciation in turn undercut our world-wide
trading position further.
We simply can't have it both ways —
on the one
hand, look abroad for increasing help in financing the
credits related to our budget deficit, our housing, and
our investment, and on the other hand, expect to narrow
the growing gap in our trade accounts.
At the end of the
day, the counterpart of a net capital inflow is a net
deficit on our current account —
with other countries.
trade and services --
-12-
Most forecasts suggest that we, as a nation, will
have to borrow abroad (net) about 2 percent or more of
our GNP this year to meet projected domestic needs*
That
pace does not appear sustainable over a long period. Faced
at some point with a reduction in the net flow of capital
from abroad,, the burden of financing the budget deficit
would then be thrown back more fully on domestic sources
of savings*
If our Federal financing needs remain so highf
housing and investment will be squeezed harder.
I must also point out that* in the same way that the
interest costs of this year's deficit add to next year*s
requirements —
and compound over many years thereafter --
the interest and dividend payments related to the net
capital inflow builds up future charges against the
current account of the balance of payments.
Skepticism
about our ability to account accurately and fully for all
the flows of funds into or out of the country is justified;
it is nonetheless ominous that the recorded net investment
position of the United States overseas, built up gradually
over the entire postwar period, will in the space of only
three years —
1983, 1984, and 1985 ~
be reversed.
If
the data at all reflect reality, the largest and richest
-13economy in the world is on the verge of becoming a net
debtor internationally, and would soon become the largest.
Looking at the same development from another angle,
it is the exporter, and those competing directly with
imports, that have not shared at all proportionately in
the recovery.
the point*
Developments in the fourth quarter illustrate
There has been much comment about the slowing
in the rate of GNP growth to a rate of about 4-1/2
percent*
But, judging from the preliminary figures,
domestic demands were quite well maintained, increasing
at a rate of almost 7 percent*
Much of that increased
demand flowed abroad, adding to income and production
elsewhere.
It was domestic production, not demand, that
grew appreciably more slowly.
For a time, as with the budget deficit, that kind of
discrepancy is tolerable.
Indeed, from one point of
view, it has provided a welcome impetus toward stimulating
the growth process in other countries of the industrialized
world, and the strength of our markets assisted the
external adjustments necessary in the developing world*
We can also take pride in the fact that others find the
United States an attractive place to invest? good
performance and policies can help sustain those flows.
But we simply can't afford to become addicted to
drawing on increasing amounts of foreign savings to help
-14finance our internal economy.
industry —
Part of our domestic
that part dependent on exports or competing
with imports -- would be sacrificed*
The stability of
the dollar and our domestic financial markets would become
hostage to events abroad*
If recovery is to proceed else-
where, as we wanty other countries will inereasingly need
their own savings*
While we don s t know when, at some point
the process would break down*
The:__Implicat^ions f Q^ JlQ^g^agY ^ql igy
In the abstract, the ultimate objective of monetary
policy is simple to state and widely agreed:
to provide
just enough money to finance sustainable growth —
not so much as to feed inflation.
and
In the concrete, issues
abound.
Some of them are more or less technical -- how we
define and measure money and its relationship to the
nominal GNP.
These questions are dealt with in our formal
report describing our decisions on the targets.
I want
here to concentrate on some broader implications of the
current situation for the conduct of monetary policy.
There is no instrument of monetary policy that, in
any direct or immediate sense, can earmark money only for
expansion and not for inflation, or vice versa.
The
distribution of any given nominal growth of the GNP
between real growth and inflation is a product of many
**" X D""
factors —
the flexibility and competitiveness of product
and labor markets, the exchange rate, and internal or
external shocks (such as the oil crises of the 1970*s)»
Expectations and attitudes developed out of past experience
are critically important*
In that respect we have not inherited a sense of
stability*
Quite to the contrary, the legacy of the
1970"s was deeply ingrained patterns of behavior -- in
pricing, in wage bargaining, in interest rates, and in
financial practices generally -- built on the assumption
of continuing, and accelerating, inflation*
Starving an
inflation of the money needed to sustain it is a difficult
process in the best of circumstances? it was doubly so
when the continuing inflationary momentum was so strong*
Now, after a great deal of pain and dislocation,
attitudes have changed -- there is a sense of greater
restraint in pricing and wage behavior, a greater
recognition of the need to improve efficiency, less alarm
(at least for the short run) over the outlook for prices,
and relative confidence by others in the outlook for the
United States.
In this setting, we can assume that, within
limits, more of any given growth in the money supply will
finance real activity and less rising prices than would have
been the case when the inflationary momentum was high.
-16But vie also recognize that the battle against
inflation has not yet been won —• that skepticism about
our ability, as a nation, to maintain progress toward
stability is still evident.
That is one of the reasons
why longer-term interest rates have lingered so far above
current inflation levels.
After so many false starts in
the past, the skepticism is likely to remain until we can
demonstrate that, in fact, the recent improvement is not
simply a temporary matter -- that the Federal Reserve is
not prepared to accommodate a new inflationary surge as
the economy grows*
The doubts are reinforced by concerns
that the pressures of the huge budget deficit on financial
markets may, willy-nilly, push us in that direction, as
has happened in so many countries.
The desire to see interest rates lower, or to avoid
increases, is natural*
But attempts to accomplish that
desirable end by excessive monetary growth would soon be
counterproductive.
By feeding concerns about inflation,
the implications for interest rates themselves would in
the end be perverse —
later.
and likely sooner rather than
As things stand, credit markets are already faced
with potential demands far in excess of our capacity to
save domestically? to add renewed fears of inflation to
the outlook would only be to reduce the willingness to
commit funds for long periods of time and for productive
-17investment*
Inflationary policies would also discourage
the continuing flow of funds from abroad, upon which, for
the time being, we are dependent*
In the last analysis,
willingness to provide those funds freely at current or
lower interest rates is dependent on confidence in our
stability and in our economic management.
Depreciation
of the dollar externally as a result of inflationary policies
will not, in the end, help our exporters, or those competing
with imports, because that depreciation would be accompanied
by inflated domestic costs*
In a real sense, the greatest contribution that the
Federal Reserve itself can make to our lasting prosperity
is to foster the expectation
-- and the reality —
that
we can sustain the hard-won gains against inflation and
build upon them.
In my judgment, against a background of more stable
prices, interest rates are indeed too high for the longterm health of the United States or the world economy.
I have repeatedly expressed the view that, as we maintain
the progress against inflation, interest rates should
decline —
and they should stay lower.
Much is at stake.
We will need more industrial
capacity, and relatively soon.
Even after the sharp
declines in interest rates from earlier peaks, many thrift
institutions and businesses remain in marginal profit
positions and with weakened financial structures; lower
-18rates would bring much faster progress in repairing the
damageo
The cooperative efforts of borrowers, banks, and
the governments and central banks of the industrialized
world have managed to contain the strains on the
international financial system, but the pressures are
still strongly evident*
Both economic growth and lower
interest rates are needed as part of more fundamental
solutions.
But wish and desire are not the same thing as
reality -- we have to deal with the situation as it is*
In setting the targets for the various monetary and credit
aggregates for 1984 as a whole, the FOMC had to remain
alert to the danger of renewed inflation as well as to
the need for growth.
It also decided that, operationally,
it would for the time being be appropriate to maintain
essentially the same degree of restraint on the reserve
positions of depository institutions that has prevailed
since last autumn.*
That judgment reflects the fact that
growth in the various measures of money and credit now'
appears broadly consistent with objectives, that the momentum
of economic expansion remains strong, and inflationary
tendencies contained,.
That operational judgment will, of
course, be reviewed constantly in the weeks and months ahead.
*In the very short run, account will be taken of possible
increases in the level of excess reserves occasioned by the
transition to conteraporaneous reserve accounting*
-X9Those decisions will reflect continuing appraisals
of the rate of growth of money and credit, interpreted in
the light of all the evidence about economic activity,
prices, domestic and international financial markets,
and other relevant considerations.
All those factors
will, in turn, be affected by other public and private
policies.
In that context, it is the strength of economic
activity, the demand pressures on the credit markets, and
the willingness of others to invest in the United States
that will influence the course of interest rates.
In approaching our own operational decisions, the
actual and prospective size of the budget deficit inevitably
complicates the environment within which we work.
By feeding
consumer purchasing power, by heightening skepticism about our
ability to control the money supply and contain inflation, by
claiming a disproportionate share of available funds, and by
increasing our dependence on foreign capital, monetary policy
must carry more of the burden of maintaining stability and
its flexibility, to some degree, is constrained.
Toward a Positive Solution
Monetary policy is only one part of an economic
program.
It is an essential part, but success is dependent
on a coherent whole.
I have tried to demonstrate that we have come a long
way -- that we have much upon which to build sustained
prosperity.
Many of the portents are favorable.
Public policy has encouraged greater competition,
removed harmful regulatory restraints, and provided
greater incentives.
There are hopeful signs that
productivity is again growing, and a healthy concern
about costs and efficiency*
Energy prices have stabilized*
We have had a strong recovery, and the progress toward
price stability has been gratifying*
Prospects for extending that success rest in part on
continuing discipline by business and labor.
We cannot
afford to return to the syndrome of the 1970 9 s, with
prices and wages chasing each other amid fears of inflation,
amid erosion of productivity and real incomes.
The
experiments in the private sector with profit sharing,
with quality circles, and with other forms of labormanagement cooperation —
efforts born in adversity
—
can bear fruit in prosperity.
If they are to do so —
to be maintained —
if a sense of discipline is
those of us responsible for public
policy must be able to demonstrate that inflation will
not again get the upper hand —
that productivity and
restraint will be rewarded, not penalized in favor of
those seeking inflationary or speculative gain.
-21The contribution that monetary and other policies
make to that environment is critical.
As the expansion
proceeds, and as some of the temporary factors restraining
prices recede, we as a nation simply cannot afford to permit
inflation to attain a new momentum*
Our monetary policies are,
and in my judgment must continue to be, geared to avoid that danger,
But for all that progress and promise, something is
out of kilter.
Our common sense tells us that enormous and potentially
rising budget deficits, and the high and rising deficits
in our trade accounts, are wrong •— they can not be indefinitely
prolonged*
That common sense is confirmed by simple observation.
Some of our proudest industries —
potentially capable of
competing strongly in world markets —
are in trouble,
tempted to shift more operations abroad for sheer survival
or demand protectionist walls.
Interest rates remain
historically high, threatening housing and investment.
And, in this instance, economic analysis bears out,
and amplifies, the judgments of common sense and simple
observation*
Our two deficits are related.
The budget
deficit, by outrunning our ability to save, damages
prospects for housing and for investment, and makes us
dependent on foreign capital.
That capital from abroad,
for the present, alleviates the pressure on our money
-22marketsf but it complicates our trade position.
And
if and as our trade account improves, the brunt of
financing excessive budget deficits would fall back more
fully on domestic savingsf squeezing domestic capital
spending harder.
We can, of course, sit back and wait awhile longer,
hoping for the best,
I certainly have some understanding of the difficulties
of achieving a consensus on difficult budgetary choices
when a sense of immediate crisis is lacking —
when for
the moment things seem to be going so well.
But I also know to wait too long would be to take risks
with the American economy.
It is already late. The stakes are large.
Markets have
a mind of their own; they have never waited on the convenience
of kings or Congressmen —
or elections.
The time to take the initiative is now, when we can
influence markets constructively —
that we are in control of our own
when we can demonstrate
financial destiny.
Real
progress toward reducing the budget deficit is needed to
clear away the dangers.
I sense a fresh opportunity in the proposals of the
President for a joint effort to attack the deficit —
a sizable "down payment" on what is ultimately needed.
for
Certainly, that kind of demonstration that we are
beginning to face up to our budgetary problem would make
it easier for monetary policy to do its necessary work.
And, in the larger scene, it would be tangible evidence
to our own people that we can do what is necessary to*
seize the bright opportunities before us*
*******
Table I
Federal Reserve
Objectives for Money and Credit Growth in 1984 *
New ranges
for 1984 (%)
Tentative
ranges for
1984 set
in July 1983 (%)
Ranges
for 1983
established
in July 1983 (%)
M2
6 to 9
6-1/2 to 9-1/2
7 to 10 2
M3
6 to 9
6 to 9
6-1/2 to 9-1/2
Ml
4 to 8
4 to 8
5 to 9 3
Domestic
Nonfincial
Sector Debt
8 to 11
8 to 11
8-1/2 to 11-1/2
1. Ranges apply to periods from fourth quarter to fourth quarter, except
as specified,
2. Range applies to period from February-March 1983 to fourth quarter
of 1983.
3. Range applies to period from second quarter of 1983 to fourth quarter
of 1983.
Table II
Federal Reserve Objectives for Money and Credit in 1983
and Actual Growth
Ranges
for 1983
established
in July 1983 (%)
Actual growth (%)
Revised
data
Old
data
M2
7 to 10 1
8.3
7.8
M3
6-1/2 to 9-1/22
9.7
9.2
Ml
5 to 9 3
7.2
5.5
8-1/2 to 11-1/2
10.5
10.5
Domestic
Nonfinancial
Sector Debt
1. Range applies to period from February-March 1983 to fourth quarter
of 1983.
2. Range applies to period from fourth quarter of 1982 to fourth quarter
of 1983.
3. Range applies to period from second quarter of 1983 to fourth quarter
of 1983.
Ranges and Actual Money Growth
M2
Billions of dollars
Rate of Growth
(annual rate)
— Range adopted by FOMC for
Feb./Mar. 1983 to 1983 Q4
2200
Feb./Mar. to 1983 Q4
8.3 percent
— 2100
~
O
|
N
|
D
J
|
F
|
M
|
A
|
M
|
J
I J
I
A
J
S
I
O
I
N
2000
I D
WI3
Billions of dollars
• — Range adopted by FOMC for
1982 Q4 to 1983 Q4
Rate of Growth
1982 Q4 to 1983 Q4
2650
2550
2450
O j N | D | j | F j M | A j M j J j J
1982
1983
| A { S | O | N { D
9.7 percent
Ranges and Aetna! tVioney and Credit Growth
M1
Billions of dollars
Ranges adopted by FOMC for
1982 Q4 to 1983 Q2 and
1983 Q2 to 1983 Q4
Rates of Growth
(annual rate)
1982 Q4to 1983 Q2
520
12.4 percent
1983 Q2 to 1983 Q4
7.2 percent
500
480
O [ N | D | J j F | M | A | M | J | J
1982
| A
|
S | Q | N
| D
1983
Total Domestic Nonfinancial Sector Debt
Billions of dollars
Range adopted by FOMC for
Dec. 1982 to Dec. 1983
Rate of Growth
Dec. 1982 to Dec. 1983
1 1 '?°0
5200
— 5000
— 4800
*&>
***<N
| D
1982
J
|
F | M I
A | M
I
J
I
J
1983
I
A
I
S
I
0
j N
| D
10.5 percent
@FedFRASER