Greenbook Part 2
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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 best- preserved 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 III FOMC June 30, 1993 RECENT DEVELOPMENTS Prepared for the Federal Open Market Committee By the staff of the Board of Governors of the Federal Reserve System CONTENTS II DOMESTIC NONFINANCIAL DEVELOPMENTS Employment and unemployment.................................. ..... 1 Industrial production ................... ............................... 5 Personal income and consumption.................................... 11 Housing markets ................................................... 16 Business fixed investment .............. ........... ...... ....... 21 Business inventories .................... ............................ 29 Federal sector............... .... ..... ................. ....... .... 31 State and local government sector.................................. 34 Prices ...... ...... .. ............ .. ................ .... .. ......... 35 Wages and labor productivity....................................... 45 Tables Changes in employment .. .................................... ........ 2 Selected unemployment and labor force participation rates......... 2 Growth in selected components of industrial production.............. 6 Capacity utilization.................. ...................... ...... 6 Production of domestic autos and trucks......... .. ................ 7 Model-year assembly capacity for U.S. autos and light trucks ...... 7 New orders for durable goods....................................... 9 Personal income .................................................. 10 Real personal consumption expenditures ...... ..................... 10 Sales of automobiles and light trucks .............................. 14 Private housing activity.................................. ......... 17 Business capital spending indicators................................ 22 Prices of office buildings according to the National Real Estate index ................................ 27 Changes in manufacturing and trade inventories.................... 28 Inventories relative to sales...................................... 28 Federal government outlays and receipts............................ 32 Recent changes in consumer prices ................................. 36 Recent changes in producer prices ............ .............. ....... 36 Inflation rates excluding food and energy .......................... 37 Price indexes for commodities and materials ....................... 38 Monthly average prices--West Texas intermediate ................. 42 Labor productivity and costs....................................... 46 Average hourly earnings ........................................... 46 Revisions to labor productivity and costs........................... 47 Charts Other labor market indicators ................................... .. 4 Manufacturing sector .............................................. 8 Personal consumption expenditures excluding motor vehicles........ 12 Indicators of consumer sentiment.................................. 15 Private housing starts ........................................... 17 Consumer homebuying attitudes................... ................... 18 MBA indexes of mortgage loan applications.......................... 18 Build--: rating of new home sales.................... ............. 18 Fund ,.-:.tal determinants of business fixed investment ............. 20 Shipments of selected components of nondefense capital goods...... 23 Nonresidential construction and selected indicators .............. 24 Indicators of the market for office space.......................... 26 Ratio of inventories to sales ................... ....... ...... .... 30 State and local government construction put-in-place.............. 32 State and local government employment . ................ .......... 32 Index weights....... ..... ................................. .. ........ 38 Commodity price measures ............ .............. ... .. ....... 40 Daily spot and posted prices of West Texas intermediate............ 42 Factors influencing wage inflation.............................. 44 Revisions to labor productivity................................... 48 ii III DOMESTIC FINANCIAL DEVELOPMENTS Monetary aggregates and bank credit............................... 3 Nonfinancial business finance..................................... 7 Treasury and sponsored agency financing........................... 11 Municipal securities................................................ 13 Mortgage markets................................................... 16 Consumer installment credit......................................... 22 Tables Monetary aggregates................................................. 2 Commercial bank credit and short- and intermediate-term business credit .................................. ..... ........ 4 Gross offerings of securities by U.S. corporations................ 8 Treasury and agency financing...................................... 12 Gross offerings of municipal securities........................... 14 Mortgage-backed security issuance................................. 21 Consumer credit .................................................. 23 Consumer interest rates ................................. .......... 23 Charts Ratio of net interest payments to cash flow plus net interest payments, nonfinancial corporations.............. 10 MBA index of mortgage loan applications............................. 16 Mortgage yield spread and volatility............................... 18 Prepayment rates on FNMA mortgage-backed securities................ 20 Spreads between consumer loan rates at commercial banks........... 24 Ratio of household debt service to disposable personal income..... 24 Consumer loan delinquency rates at commercial banks .............. 25 Home mortgage delinquency rates at all lenders..................... 25 IV INTERNATIONAL DEVELOPMENTS Merchandise trade.................................................... 1 Oil imports....................................................... 3 Prices of non-oil imports and exports.............................. 4 U.S. current account............................................. 6 U.S. international financial transactions......................... 7 Foreign exchange markets..................................... ...... 11 Developments in foreign industrial countries...................... 15 Economic situation in other countries............................. 28 Tables U.S. merchandise trade: Monthly data............................... 1 Major trade categories.............................................. 2 Oil imports........................................................ 4 Import and export price measures.................................... 5 U .S. current account............ ........ ... ............. .......... 7 Summary of U.S. international transactions........................ 8 International banking data........................................ 10 Major industrial countries Real GNP and industrial production.............................. 16 Consumer and wholesale prices................................... 17 Trade and current account balances................................ 18 Japanese economic indicators................. ..... ................ 19 Western German economic indicators...............................21 Charts Weighted average exchange value of the dollar...................... 12 Selected dollar exchange rates.................................... 12 DOMESTIC NONFINANCIAL DEVELOPMENTS DOMESTIC NONFINANCIAL DEVELOPMENTS Real GDP growth in the second quarter appears to have exceeded the meager 0.7 percent pace of the first, but by how much is still uncertain. Production worker hours were very strong in May, suggesting the possibility of a large gain in output, but the recent spending indicators point to no more than a moderate expansion of activity. The manufacturing sector slowed during the spring, with imports perhaps accounting for an increased share of domestic spending: new orders have softened in recent months. Although consumer