Federal Reserve Bulletin, 2001-03

Volume 87 □ Number 3 □ March 2001 Federal Reserve BULLETIN Board of Governors of the Federal Reserve System, Washington, D.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 103 MONETARY POLICY REPORT TO THE downside risks may remain prominent in the CONGRESS period immediately ahead. When the Federal Reserve submitted its previ­ ous Monetary Policy Report to the Congress, in 132 INDUSTRIAL PRODUCTION AND CAPACITY July 2000, tentative signs of a moderation in the UTILIZATION: THE 2000 ANNUAL REVISION growth of economic activity were emerging after In late 2000, the Federal Reserve Board pub­ several quarters of extraordinarily rapid expan­ lished the annual revision of its index of indus­ sion. Indications that the expansion had moder­ trial production and related measures of capacity ated from its earlier rapid pace gradually accu­ and utilization for the period January 1992 mulated during the summer and into the autumn. through October 2000. The updated measures For a time, this downshifting of growth seemed reflect the incorporation of newly available, to have left the economy expanding at a pace more comprehensive source data, the introduc­ roughly in line with that of its potential. tion of new production series, and changes in Over the last few months of the year, how­ methods. For this revision, two new years of ever, growth slowed even more, although the comprehensive data on manufacturing output dimensions of the slowdown were obscured for became available; otherwise, the updating of the a time by the usual lags in the receipt of eco­ data was typical of annual revisions. nomic data. Spending on business capital, which Total industrial output has increased, on aver­ had been rising rapidly for several years, flat­ age, 5.1 percent per year since 1995, and indus­ tened abruptly in the fourth quarter. Consumers trial capacity has expanded 5.4 percent per year; clamped down on their outlays for motor vehi­ these revised rates of increase are more rapid cles and other durables, the stocks of which than those previously reported. The rate of also had climbed to high levels. Manufac­ industrial capacity utilization was little changed turers adjusted production quickly to counter a by the revision for the third quarter of 2000 but buildup in inventories. Rising concern about was revised up 0.6 percentage point, to 81.6 per­ slower growth and worker layoffs contributed cent, for the fourth quarter of 1999. to a sharp deterioration of consumer confidence. In response to the accumulating weakness, the Federal Open Market Committee (FOMC) low­ 149 TREASURY AND FEDERAL RESERVE ered the intended interest rate on federal funds FOREIGN EXCHANGE OPERATIONS Vi percentage point on January 3 of this year. The FOMC lowered the rate again, by the same During the fourth quarter of 2000, the dollar amount, at its meeting on January 31. appreciated 5.7 percent against the yen and The less restrictive conditions in financial depreciated 6.4 percent against the euro. On a markets, and the underlying strengths of the trade-weighted basis, the dollar ended the quar­ economy, should lead to a rebound in economic ter 1.0 percent weaker against an index of major growth. The most notable of the underlying currencies. U.S. monetary authorities did not strengths is the remarkable step-up in the growth intervene in the foreign exchange markets dur­ of structural productivity since the mid-1990s, ing the quarter. which seems to be closely related to the spread of new technologies. The impressive perfor­ 154 INDUSTRIAL PRODUCTION AND CAPACITY mance of productivity and the accompanying UTILIZATION FOR JANUARY 2001 environment of low and stable underlying infla­ tion suggest that the longer-run outlook for the Industrial production fell 0.3 percent in January, economy is still quite favorable, even though to 147.0 percent of its 1992 average; industrial Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

production was 2.4 percent higher than in Janu­ Report on the feasibility of mandatory subordi­ ary 2000. The rate of capacity utilization for nated debt. total industry fell to 80.2 percent in January, Recommendations of the Working Group on a level almost 2 percentage points below its Public Disclosure. 1967-2000 average. Request for comments on the Basel Committee 157 Testimony of federal Reserve proposal to amend the capital adequacy frame­ Officials work and publication of an interagency sum­ mary of the proposal. Alan Greenspan presents his views on some of the important issues surrounding the outlook for Revised capital proposal for nonfinancial equity the federal budget and the attendant implications investments. for the formulation of fiscal policy and testifies Enforcement actions. that the most recent projections, granted their tentativeness, nonetheless make clear that the highly desirable goal of paying off the federal 169 Legal developments debt is in reach before the end of the decade. He Various bank holding company, bank service states further that the emerging key fiscal policy corporation, and bank merger orders; and pend­ need is to address the implications of maintain­ ing cases. ing surpluses beyond the point at which publicly held debt is effectively eliminated (Testimony A1 FINANCIAL AND BUSINESS STATISTICS before the Senate Committee on the Budget, January 25, 2001). These tables reflect data available as of January 29, 2001. 161 Announcements A3 Guide to Tabular Presentation Federal Open Market Committee actions and changes in the discount rate. A4 Domestic Financial Statistics A42 Domestic Nonfinancial Statistics Appointments of new members to the Consumer A50 International Statistics Advisory Council and designation of a new chair and vice chair. A63 Guide to Statistical releases and Interim rule defining three categories of finan­ Special Tables cial activities. Guidance on anti-money-laundering programs A64 Index to Statistical tables of financial institutions. A66 Board of Governors and Staff Preliminary figures on net income of the Federal Reserve Banks for 2000. A68 FEDERAL OPEN MARKET COMMITTEE AND Final rule on merchant banking activities. STAFF; ADVISORY COUNCILS Final rule on an alternative to the rated debt requirement for financial subsidiaries. A70 FEDERAL RESERVE BOARD PUBLICATIONS Issuance of guidance on supervision of subprime A72 Maps of the Federal reserve System lending. Adoption of guidelines for customer informa­ A74 federal Reserve banks, branches, tion security. and Offices Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications Committee Lynn S. Fox, Chair □ Jennifer J. Johnson □ Karen H. Johnson □ Donald L. Kohn □ Stephen R. Malphrus □ J. Virgil Mattingly, Jr. □ Dolores S. Smith □ Richard Spillenkothen □ Richard C. Stevens □ David J. Stockton The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Christine S. Griffith, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on February 13, steepened. Spending on business capital, which had 2001, pursuant to section 2B of the Federal Reserve been rising rapidly for several years, elevating stocks Act of these assets, flattened abruptly in the fourth quar­ ter. Consumers clamped down on their outlays for motor vehicles and other durables, the stocks of MONETARY POLICY AND THE which also had climbed to high levels. As the demand Economic Outlook for goods softened, manufacturers adjusted produc­ tion quickly to counter a buildup in inventories. Ris­ When the Federal Reserve submitted its previous ing concern about slower growth and worker layoffs Monetary Policy Report to the Congress, in July of contributed to a sharp deterioration of consumer con­ 2000, tentative signs of a moderation in the growth of fidence. In response to the accumulating weakness, economic activity were emerging following several the Federal Open Market Committee (FOMC) low­ quarters of extraordinarily rapid expansion. After ered the intended interest rate on federal funds Vi per­ having increased the interest rate on federal funds centage point on January 3 of this year. Another rate through the spring to bring the growth of aggregate reduction of that same size was implemented at the demand and potential supply into better alignment close of the most recent meeting of the FOMC at the and thus contain inflationary pressures, the Federal end of last month. Reserve had stopped tightening as evidence of an As weak economic data induced investors to revise easing of economic growth began to appear. down their expectations of future short-term interest Indications that the expansion had moderated from rates in recent months and as the Federal Reserve its earlier rapid pace gradually accumulated during eased policy, financial market conditions became the summer and into the autumn. For a time, this more accommodative. Since the November FOMC downshifting of growth seemed likely to leave the meeting, yields on many long-term corporate bonds economy expanding at a pace roughly in line with have dropped on the order of a full percentage point, that of its potential. Over the last few months of with the largest declines taking place on riskier bonds the year, however, elements of economic restraint as the yield spreads on those securities narrowed emerged from several directions to slow growth even considerably from their elevated levels. In response, more. Energy prices, rather than turning down as had borrowing in long-term credit markets has strength­ been anticipated, kept climbing, raising costs ened appreciably so far in 2001. The less restrictive throughout the economy, squeezing business profits, conditions in financial markets should help lay the and eroding the income available for discretionary groundwork for a rebound in economic growth. expenditures. Equity prices, after coming off their That rebound should also be encouraged by under­ highs earlier in the year, slumped sharply starting in lying strengths of the economy that still appear to be September, slicing away a portion of household net present despite the sluggishness encountered of late. worth and discouraging the initial offering of new The most notable of these strengths is the remarkable shares by firms. Many businesses encountered tight­ step-up in structural productivity growth since the ening credit conditions, including a widening of risk mid-1990s, which seems to be closely related to the spreads on corporate debt issuance and bank loans. spread of new technologies. Even as the economy Foreign economic activity decelerated noticeably in slowed in 2000, evidence of ongoing efficiency gains the latter part of the year, contributing to a weakening were apparent in the form of another year of rapid of the demand for U.S. exports, which also was being advance in output per worker hour in the nonfarm restrained by an earlier appreciation in the exchange business sector. With households and businesses still value of the U.S. dollar. in the process of putting recent innovations in The dimensions of the economic slowdown were place and with technological breakthroughs still obscured for a time by the usual lags in the receipt of occurring, an end to profitable investment opportuni­ economic data, but the situation began to come into ties in the technology area does not yet seem to be in sharper focus late in the year as the deceleration sight. Should investors continue to seek out emerging Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 Federal Reserve Bulletin □ March 2001 opportunities, the ongoing transformation and expan­ ent that the growth in demand had fallen to a pace sion of the capital stock will be maintained, thereby around that of potential supply. Although consumer laying the groundwork for further gains in productiv­ spending had picked up again for a time, it did not ity and ongoing advances in real income and spend­ regain the vigor it had displayed earlier in the year, ing. The impressive performance of productivity and and capital spending, while still growing briskly, had the accompanying environment of low and stable decelerated from its first-half pace. With increases underlying inflation suggest that the longer-run out­ in demand moderating, private employment gains look for the economy is still quite favorable, even slowed from the rates seen earlier in the year. How­ though downside risks may remain prominent in the ever, labor markets remained exceptionally tight, and period immediately ahead. the hourly compensation of workers had accelerated to a point at which unit labor costs were edging up despite strong gains in productivity. In addition, siz­ Monetary Policy, Financial Markets, able increases in energy prices were pushing broad and the Economy over the inflation measures above the levels of recent years. Second Half of 2000 and Early 2001 Although core inflation measures were at most only As described in the preceding Monetary Policy creeping up, the Committee felt that there was some Report to the Congress, the very rapid pace of eco­ risk that the increase in energy prices, which was nomic growth over the first half of 2000 was threat­ lasting longer than had seemed likely earlier in the ening to place additional strains on the economy’s year, would start to leave an imprint on business costs resources, which already appeared to be stretched and longer-run inflation expectations, posing the risk thin. Private long-term interest rates had risen con­ that core inflation rates could rise more substantially. siderably in response to the strong economy, and, in Weighing these considerations, the FOMC decided to an effort to slow the growth of aggregate demand and hold the federal funds rate unchanged at its October thereby prevent a buildup of inflationary pressures, meeting. While recognizing that the risks in the out­ the Federal Reserve had tightened its policy settings look were shifting, the FOMC believed that the taut­ substantially through its meeting in May 2000. Over ness of labor markets and the rise in energy prices subsequent weeks, preliminary signs began to emerge meant that the balance of those risks still was suggesting that growth in aggregate demand might be weighted towards heightened inflation pressures, and slowing, and at its June meeting the FOMC left the this assessment was noted in the balance-of-risks federal funds rate unchanged. statement. Further evidence accumulated over the summer to By the time of the November FOMC meeting, indicate that demand growth was moderating. The conditions in the financial markets were becoming rise in mortgage interest rates over the previous year less accommodative in some ways, even as the seemed to be damping activity in the housing sector. Federal Reserve held the federal funds rate steady. Moreover, the growth of consumer spending had Equity prices had declined considerably over the slowed from the exceptional pace of earlier in the previous several months, resulting in an erosion of year; the impetus to spending from outsized equity household wealth that seemed likely to restrain con­ price gains in 1999 and early 2000 appeared to be sumer spending going forward. Those price declines, partly wearing off, and rising energy prices were along with the elevated volatility of equity prices, continuing to erode the purchasing power of house­ also hampered the ability of firms to raise funds in holds. By contrast, business fixed investment still equity markets and were likely discouraging business was increasing very rapidly, and strong growth of investment. Some firms faced more restrictive condi­ foreign economies was fostering greater demand for tions in credit markets as well, as risk spreads in the U.S. exports. Weighing this evidence and recognizing corporate bond market widened significantly for firms that the effects of previous tightenings had not yet with lower credit ratings and as banks tightened the been fully felt, the FOMC decided at its meeting in standards and terms on their business loans. Mean­ August to hold the federal funds rate unchanged. The while, incoming data indicated that the pace of eco­ Committee remained concerned that demand could nomic activity had softened a bit further. Still, the continue to grow faster than potential supply at a time growth of aggregate demand apparently had moved when the labor market was already taut, and it saw only modestly below that of potential supply. More­ the balance of risks still tilted toward heightened over, while crude oil prices appeared to be topping inflation pressures. out, additional inflationary pressures were arising in The FOMC faced fairly similar circumstances at its the energy sector in the form of surging prices for October meeting. By then, it had become more appar­ natural gas, and there had been no easing of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 105 Selected interest rates Percent — 7.0 Intended federal funds rate — 6.5 Thirty-year Treasury Two-year Treasury — 6.0 — 5.0 Discount rate Three-month Treasury 8/24 10/5 11/16 12/21 11/15 12/191/3 1/31 2001 Note. The data are daily and extend through February 8, 2001. The dates on the horizontal axis are those of scheduled FOMC meetings and of any intermeeting policy actions. tightness in the labor market. In assessing the evi­ policy stance. Recognizing that the current position dence, the members of the Committee felt that the of the economy was difficult to discern because of risks to the outlook were coming into closer balance lags in the data and that prospects for the near term but had not yet shifted decisively. At the close of the were particularly uncertain, the Committee agreed at meeting, the FOMC left the funds rate unchanged the meeting that it would be especially attentive over once again, and it stated that the balance of risks coming weeks to signs that an intermeeting policy continued to point toward increased inflation. How­ action was called for. ever, in the statement released after the meeting, the Additional evidence that economic activity was FOMC noted the possibility of subpar growth in the slowing significantly emerged not long after the economy in the period ahead. December meeting. New data indicated a marked Toward the end of the year, the moderation of weakening in business investment, and retail sales economic growth gave way, fairly abruptly, to more over the holiday season were appreciably lower than sluggish conditions. By the time of the December businesses had expected. To contain the resulting FOMC meeting, manufacturing activity had softened buildup in inventories, activity in the manufacturing considerably, especially in motor vehicles and related sector continued to drop. In addition, forecasts of industries, and a number of industries had accu­ near-term corporate profits were being marked down mulated excessive stocks of inventories. Across a further, resulting in additional declines in equity broader set of firms, forecasts for corporate sales and prices and in business confidence. Market interest profits in the fourth quarter and in 2001 were being rates continued to fall, as investors became more slashed, contributing to a continued decline in equity pessimistic about the economic outlook. Based on prices and a further widening of risk spreads on these developments, the Committee held a telephone lower-rated corporate bonds. In this environment, conference call on January 3, 2001, and decided to growth in business fixed investment appeared to be cut the intended federal funds rate V2 percentage slowing appreciably. Consumer spending showed point. Equity prices surged on the announcement, and signs of decelerating further, as falling stock prices the Treasury yield curve steepened considerably, ap­ eroded household wealth and consumer confidence parently because market participants became more weakened. Moreover, growth in foreign economies confident that a prolonged downturn in economic seemed to be slowing, on balance, and U.S. export growth would likely be forestalled. Following the performance began to deteriorate. Market interest policy easing, the Board of Governors approved a rates had declined sharply in response to these devel­ decrease in the discount rate of a total of Vi percent­ opments. Against this backdrop, the FOMC at its age point. December meeting decided that the risks to the out­ The Committee’s action improved financial con­ look had swung considerably and now were weighted ditions to a degree. Over the next few weeks, equity toward economic weakness, although it decided to prices rose, on net. Investors seemed to become less wait for additional evidence on the extent and persis­ wary of credit risk, and yield spreads narrowed across tence of the slowdown before moving to an easier most corporate bonds even as the issuance of these Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 Federal Reserve Bulletin □ March 2001 securities picked up sharply. But in some other of 2000 are worked off. Gains in information tech­ respects, investors remained cautious, as evidenced nology have no doubt enabled businesses to respond by widening spreads in commercial paper markets. more quickly to a softening of sales, which has Incoming data pointed to further weakness in the steepened the recent production cuts but should also manufacturing sector and a sharp decline in con­ damp the buildup in inventories and facilitate a sumer confidence. Moreover, slower U.S. growth turnaround. The motor vehicle industry made some appeared to be spilling over to several important progress toward reducing excess stocks in January trading partners. In late January, the FOMC cut the owing to a combination of stronger sales and a fur­ intended federal funds rate Vi percentage point while ther sharp cutback in assemblies. In other parts of the Board of Governors approved a decrease in the manufacturing, the sizable reductions in production discount rate of an equal amount. Because of the late last year suggest that producers in general were significant erosion of consumer and business con­ moving quickly to get output into better alignment fidence and the need for additional adjustments to with sales. Nevertheless, stocks at year-end were production to work off elevated inventory levels, the above desired levels in a number of industries. FOMC indicated that the risks to the outlook contin­ Once inventory imbalances are worked off, produc­ ued to be weighted toward economic weakness. tion should become more closely linked to the pros­ pects for sales. Household and business expenditures have decelerated markedly in recent months, and Economic Projections for 2001 uncertainties about how events might unfold are con­ siderable. But, responding in part to the easing of Although the economy appears likely to be sluggish monetary policy, financial markets are shifting away over the near term, the members of the Board of from restraint, and this shift should create a more Governors and the Reserve Bank presidents expect favorable underpinning to the expected pickup in the stronger conditions to emerge as the year progresses. economy as the year progresses. The sharp drop in For 2001 overall, the central tendency of their fore­ mortgage interest rates since May of last year appears casts of real GDP growth is 2 percent to 2l/i percent, to have stemmed the decline in housing activity; measured as the change from the fourth quarter of it also has enabled many households to refinance 2000 to the fourth quarter of 2001. With growth existing mortgages at lower rates, an action that falling short of its potential rate, especially in the first should free up cash for added spending. Conditions half of this year, unemployment is expected to move of business finance also have eased to some degree. up a little further. Most of the governors and Reserve Interest rates on investment-grade corporate bonds Bank presidents are forecasting that the average have recently fallen to their lowest levels in about unemployment rate in the fourth quarter of this year 1 V2 years. Moreover, the premiums required of bond will be about 4Vi percent, still quite low by historical issuers that are perceived to be at greater risk have standards. dropped back in recent weeks from the elevated The rate of economic expansion over the near term levels of late 2000. As credit conditions have eased, will depend importantly on the speed at which inven­ firms have issued large amounts of corporate bonds tory overhangs that developed over the latter part so far in 2001. However, considerable caution is evident in the commercial paper market and among banks, whose loan officers have reported a further Economic projections for 2001 tightening of lending conditions since last fall. In Percent equity markets, prices have recently dropped in response to negative reports on corporate earnings, reversing the gains that took place in January. The restraint on domestic demand from high energy prices is expected to ease in coming quarters. 1 ffXii jp , , Natural gas prices have dropped back somewhat in Change, fourth quarter to fourth quarter1 jijjjj recent weeks as the weather has turned milder, and I Nominal GDP crude oil prices also are down from their peaks. ! Real GDP2 ..........j PCE chain-type price index __ Although these prices could run up again in conjunc­ ..... Average level, fourth quarter tion with either a renewed surge in demand or disrup­ Civilian unemployment rate__ A ___________________ tions in supply, participants in futures markets are 1. Change from average for fourth quarter of 2000 to average for fourth anticipating that prices will be trending gradually quarter of 2001. lower over time. A fall in energy prices would relieve 2. Chain-weighted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 107 cost pressures on businesses to some degree and economy should help damp increases in labor costs would leave more discretionary income in the hands and prices. of households. How quickly investment spending starts to pick up again will depend not only on the cost of finance but ECONOMIC AND FINANCIAL DEVELOPMENTS also on the prospective rates of return to capital. This IN 2000 AND EARLY 2001 past year, expectations regarding the prospects of some high-tech companies clearly declined, and capi­ The combination of exceptionally strong growth in tal spending seems unlikely to soon regain the excep­ the first half of 2000 and subdued growth in the tional strength that was evident in the latter part of second half resulted in a rise in real GDP of about the 1990s and for a portion of last year. From all 3V2 percent for the year overall. Domestic demand indications, however, technological advance still is started out the year with incredible vigor but deceler­ going forward at a rapid pace, and investment will ated thereafter and was sluggish by year-end. Exports likely pick up again if, as expected, the expansion of surged for three quarters and then faltered. In the the economy gets back on more solid footing. Private labor market, growth of employment slowed over the analysts are still anticipating high rates of growth year but was sufficient to keep the unemployment in corporate earnings over the long-run, suggesting rate around the lowest sustained level in more than that the current sluggishness of the economy has thirty years. not undermined perceptions of favorable long-run Core inflation remained low in 2000 in the face of fundamentals. sharp increases in energy prices. Although the chain- The degree to which increases in exports might type price index for personal consumption expendi­ help to support the U.S. economy through a stretch of tures (PCE) moved up faster than in 1999, it showed sluggishness has become subject to greater uncer­ only a slight step-up in the rate of increase after tainty recently because foreign economies also seem excluding the prices of food and energy. Unit labor to have decelerated toward the end of last year. costs picked up moderately, adding to the cost pres­ However, the expansion of imports has slowed sures from energy, but the ability of businesses to sharply, responding in part to the softening of domes­ raise prices was restrained by the slowing of the tic demand growth. In effect, some of the slowdown economy and the persistence of competitive pricing in demand in this country is being shifted to foreign conditions. suppliers, implying that the adjustments required of domestic producers are not as great as they otherwise would have been. The Household Sector In adjusting labor input to the slowing of the economy, businesses are facing conflicting pressures. Personal consumption expenditures increased 4xh per­ Speedy adjustment of production and ongoing gains cent in real terms in 2000 after having advanced in efficiency argue for cutbacks in labor input, but companies are also reluctant to lay off workers that Change in real GDP have been difficult to attract and retain in the tight labor market conditions of the past few years. In the aggregate, the balance that has been struck in recent months has led, on net, to slower growth of employ­ ment, cutbacks in the length of the average work­ week, and, in January of this year, a small increase in the unemployment rate. Inflation is not expected to be a pressing concern over the coming year. Most of the governors and Reserve Bank presidents are forecasting that the rise in the chain-type price index for personal consump­ tion expenditures will be smaller than the price rise in 2000. The central tendency of the range of forecasts is l3/4 percent to 2Va percent. Inflation should be restrained this coming year by an expected downturn in energy prices. In addition, the reduced pressure on Note. Here and in subsequent charts, except as noted, annual changes are measured from Q4 to Q4, and change for a half-year is measured between its resources that is associated with the slowing of the final quarter and the final quarter of the preceding period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 Federal Reserve Bulletin □ March 2001 Change in PCE chain-type price index because of continued strength in real outlays for other types of services. Changes in income and wealth provided less sup­ port to consumption in 2000 than in other recent years. Real disposable personal income rose about 2 i/4 percent last year after a gain of slightly more than 3 percent in 1999. Disposable income did not rise quite as much in nominal terms as it had in 1999, and rising prices eroded a larger portion of the nominal gain. Meanwhile, the net worth of households turned down in 2000 after having climbed rapidly for sev­ eral years, as the effect of a decline in the stock market was only partially offset by a sizable increase in the value of residential real estate. With the peak in 1994 1996 1998 2000 stock prices not coming until the year was well under way, and with valuations having previously been on a Note. Data are for personal consumption expenditures (PCE). sharp upward course for an extended period, stock market wealth may well have continued to exert a 5 percent in 1998 and 5V2 percent in 1999. A large strong positive effect on consumer spending for sev­ portion of last year’s gain came in the first quarter, eral months after share values had topped out. As when consumption moved ahead at an unusually time passed, however, the impetus to consumption rapid pace. The increase in consumer spending over from this source most likely diminished. The per­ the remainder of the year was moderate, averaging sonal saving rate, which had dropped sharply during about 3Vi percent at an annual rate. Consumer out­ lays for motor vehicles and parts surged to a record high early in 2000 but reversed that gain over the Wealth and saving remainder of the year; sales of vehicles tailed off especially sharply as the year drew to a close. Real Ratio consumer purchases of gasoline fell during the year Wealth-to-income ratio in response to the steep run-up in gasoline prices. Most other broad categories of goods and services posted sizable gains over the year as a whole, but results late in the year were mixed: Real outlays for goods other than motor vehicles eked out only a small gain in the fourth quarter, while real outlays for consumer services rose very rapidly, not only because of higher outlays for home heating fuels during a spell of colder-than-usual weather but also Change in real income and consumption Percent Personal saving rate Percent, annual rate 14 I | Disposable personal income 12 ■ Personal consumption expenditures __ „ 10 8 — 6 6 4 2 + 0 Note. The wealth-to-income ratio is the ratio of household net worth to disposable personal income and extends through 2000:Q3; the personal saving rate extends through 2000:Q4. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 109 the stock market surge of previous years, fell further New construction held up even as rates were rising in in 2000, but the rate of decline slowed, on average, 1999 and early 2000, but it softened in the spring of after the first quarter. last year. Starts and permits for single-family houses Even with real income growth slowing and the declined from the first quarter to the third quarter. stock market turning down, consumers maintained But even as homebuilding activity was turning a high degree of optimism through most of 2000 down, conditions in mortgage markets were moving regarding the state of the economy and the economic back in a direction more favorable to housing. From outlook. Indexes of sentiment from both the Univer­ the peak in May, mortgage interest rates fell substan­ sity of Michigan Survey Research Center and the tially over the remainder of the year and into the Conference Board rose to new peaks in the first early part of 2001, reversing the earlier increases. quarter of the year, and the indexes remained close to Sales of new homes firmed as rates turned down, and those levels for several more months. Survey read­ prices of new houses continued to trend up faster than ings on personal finances, general business condi­ the general rate of inflation. Inventories of unsold tions, and the state of the labor market remained new homes held fairly steady over the year and were generally favorable through most of the year. As of up only moderately from the lows of 1997 and 1998. late autumn, only mild softness could be detected. With demand well-maintained and inventories under Toward year-end, however, confidence in the econ­ control, activity stabilized. Starts and permits for omy dropped sharply. Both of the indexes of confi­ single-family houses in the fourth quarter of 2000 dence showed huge declines over the two months were up from the average for the third quarter. ended in January. The marked shift in attitudes Households continued to borrow at a brisk pace toward year-end probably was brought on by a com­ last year, with household debt expanding an esti­ bination of developments, including the weakness in mated 83/4 percent, well above the growth rate of the stock market over the latter part of the year and disposable personal income. Consumer credit more frequent reports of layoffs. increased rapidly early in the year, boosted by strong Real outlays for residential investment declined outlays on durable goods; but as consumer spending about 2lA percent, on net, over the course of 2000, cooled later in the year, the expansion of consumer as construction of new housing dropped back from credit slowed. For the year as a whole, consumer the elevated level of the previous year. Investment credit is estimated to have advanced more than in housing was influenced by a sizable swing in 8V2 percent, up from the 7 percent pace of 1999. mortgage interest rates as well as by slower growth Households also took on large amounts of mortgage of employment and income and the downturn in debt, which grew an estimated 9 percent last year, the stock market. After having moved up appre­ reflecting the solid pace of home sales. ciably in 1999, mortgage rates continued to advance With the rapid expansion of household debt in through the first few months of 2000. By mid-May, recent years, the household debt service burden has the average commitment rate on conventional fixedrate mortgages was above percent, up roughly 1Vi percentage points from the level of a year earlier. Delinquency rates on household loans Change in real residential investment Credit card accounts at banks ’ Auto loans at domestic auto finance companies Mortgages Note. The data are quarterly and extend through 2000:Q3. Data on creditcard delinquencies are from bank Call Reports; data on auto loan delinquencies are from the Big Three automakers; data on mortgage delinquencies are from the Mortgage Bankers Association. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 Federal Reserve Bulletin □ March 2001 increased to levels not seen since the late 1980s. second and third quarters, at annual rates of about Even so, with unemployment low and household net 15 percent and 8 percent respectively. In the fourth worth high, the credit quality of the household sector quarter, however, capital spending downshifted appears to have deteriorated little last year. Personal abruptly in response to the slowing economy, tighten­ bankruptcy filings held relatively steady and remain ing financial conditions, and rising concern about the well below their peak from several years ago. Delin­ prospects for profits; the current estimate shows real quency rates on home mortgages, credit cards, and investment outlays having fallen at an annual rate of auto loans have edged up in recent quarters but are at 1J/2 percent in that period. most only slightly above their levels of the fourth Fixed investment in equipment and software was quarter of 1999. Lenders did not appear to be signifi­ up 9V2 percent in 2000, with the bulk of the gain cantly concerned about the credit quality of the coming in the first half of the year. Spending slowed household sector for most of last year, although some to a rate of growth of about 5lA percent in the third lenders have become more cautious of late. Accord­ quarter and then declined in the fourth quarter. Busi­ ing to surveys of banks conducted by the Federal ness investment in motor vehicles fell roughly 15 per­ Reserve, few commercial banks tightened lending cent, on net, during 2000, with the largest portion of conditions on consumer installment loans and mort­ the drop coming in the fourth quarter; the declines gage loans to households over the first three quarters in real outlays on larger types of trucks were particu­ of 2000. However, the most recent survey indicates larly sizable. Investment in industrial equipment, that a number of banks tightened standards and terms tracking the changing conditions in manufacturing, on consumer loans, particularly non-credit-card loans, also fell in the fourth quarter but was up appreciably over the past several months, perhaps because of for the year overall. Investment in high-tech equip­ some uneasiness about how the financial position of ment decelerated over the year but was still expand­ households will hold up as the pace of economic ing in the fourth quarter: Real outlays for telecommu­ activity slows. nications equipment posted exceptionally large gains in the first half of the year, flattened out temporarily in the third quarter, and expanded again in the fourth. The Business Sector Spending on computers and peripherals increased, in real terms, at an average rate of about 45 percent over Real business fixed investment rose 10 percent in the first three quarters of the year but slowed abruptly 2000 according to the advance estimate from the to a 6 percent rate of expansion in the year’s final Commerce Department. Investment spending shot quarter, the smallest quarterly advance in several ahead at an annual rate of 21 percent in the first years. quarter of the year; its strength in that period came, in Investment in nonresidential structures rose sub­ part, from high-tech purchases that had been delayed stantially in 2000, about 12V2 percent in all, after from 1999 by companies that did not want their having declined P/4 percent in 1999. Investment in operating systems to be in a state of change at the factory buildings, which had fallen more than 20 per­ onset of the new millennium. Expansion of invest­ cent in 1999 in an apparent reaction to the economic ment was slower but still relatively brisk in the disruptions abroad and the associated softness in demand for U.S. exports, more than recouped that Change in real business fixed investment decline over the course of 2000. Real outlays for office construction, which had edged down in 1999 after several years of strong advance, got back on track in 2000, posting a gain of about 13 V2 percent. Real investment in commercial buildings other than offices was little changed after moderate gains in the two previous years. Spending on structures used in drilling for energy strengthened in response to the surge in energy prices. Business inventory investment was subdued early in the year when final sales were surging; aggregate inventory-sales ratios, which have trended lower in recent years as companies became more efficient at managing stocks, edged down further. As sales mod­ erated in subsequent months, production growth did Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 111 Change in real nonfarm business inventories Before-tax profits Percent, annual rate Percent of nominal GDP 1994 1996 1998 2000 Note. Profits from domestic operations of nonfinancial corporations, with inventory valuation and capital consumption adjustments, divided by gross domestic product of nonfinancial corporate sector. The data extend through 2000:Q3. not decelerate quite as quickly, and inventories began to rise more rapidly. Incoming information through Business debt expanded strongly over the first half the summer suggested that some firms might be of 2000, propelled by robust capital spending as well encountering a bit of backup in stocks but that the as by share repurchases and cash-financed merger problems were not severe overall. In the latter part of activity. The high level of capital expenditures out­ the year, however, inventory-sales ratios turned up, stripped internally generated funds by a considerable indicating that more serious overhangs were develop­ margin despite continued impressive profits. To meet ing. Responding to the slowing of demand and the their borrowing needs, firms tapped commercial increases in stocks, manufacturers reduced output paper, bank loans, and corporate bonds in volume in in each of the last three months of the year by suc­ the first quarter. The rapid pace of borrowing contin­ cessively larger amounts. Businesses also began to ued in the second quarter, although borrowers relied clamp down on the flow of imports. Despite those more heavily on bank loans and commercial paper to adjustments, stocks in a number of domestic indus­ meet their financing needs in response to a rise in tries were likely well above desired levels as the year longer-term interest rates. drew to a close. Business borrowing slowed appreciably in the sec­ The Commerce Department’s compilation of busi­ ond half of the year. As economic growth moderated ness profits currently extends only through the third and profits weakened, capital spending decelerated quarter of 2000, but these data show an evolving pattern much like that of other economic data. After having risen at an annual rate of more than 16 percent Default rate on outstanding junk bonds in the first half of the year, U.S. corporations’ eco­ nomic profits—that is, book profits with inventory and capital consumption adjustments—slowed to less than a 3 percent rate of growth in the third quarter. Profits from operations outside the United States continued to increase rapidly in the third quarter. However, economic profits from domestic operations edged down in that period, as solid gains for financial corporations were more than offset by a 4 percent rate of decline in the profits of nonfinancial corporations. Profits of nonfinancial corporations as a share of their gross nominal output rose about Vi percentage point in the first half of 2000 but reversed part of that gain in the third quarter. Earnings reports for the fourth quarter indicate that corporate profits fell sharply in that period. average. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 Federal Reserve Bulletin □ March 2001 Net interest payments of nonfinancial corporations Spreads of corporate bond yields relative to cash flow over the ten-year swap rate ----------- U AA 1 1 t 1 1 t i l l i i i 1 1 1980 1984 1988 1992 1996 2000 1998 1999 2000 2001 Note. The data are quarterly and extend through 2000:Q3. Note. The data are daily and extend through February 8, 2001. The spreads compare the yields on the Merrill Lynch AA, BBB, and 175 indexes with the ten-year swap rate. sharply. In addition, firms held down their borrowing needs by curbing their buildup of liquid assets, which had been accumulating quite rapidly in previous quar­ became more stingent, issuance of high-yield debt ters. Borrowing may have been deterred by a tighten­ was cut back sharply in the fourth quarter, although ing of financial conditions for firms with lower credit investment-grade bond issuance remained strong. ratings, as investors and lenders apparently became Bank lending to businesses was also light at that more concerned about credit risk. Those concerns time, and net issuance of commercial paper came to a likely were exacerbated by indications that credit standstill. In total, the debt of nonfinancial businesses quality had deteriorated at some businesses. The expanded at an estimated 5Vi percent rate in the default rate on high-yield bonds continued to climb fourth quarter, less than half the pace of the first half last year, reaching its highest level since 1991. Some of the year. The slowdown in borrowing in the latter broader measures of credit quality also slipped. The part of the year damped the growth of nonfinancial amount of nonfinancial debt downgraded by Moody’s business debt over 2000, although it still expanded an Investor Services in 2000 was more than twice as estimated 83A percent. large as the amount upgraded, and the delinquency In early 2001, borrowing appears to have picked rate on business loans at commercial banks continued up from its sluggish fourth-quarter pace. Following to rise over the year. But while some firms were the easing of monetary policy in early January, yield clearly having financial difficulties, many other firms spreads on corporate bonds reversed a considerable remained soundly positioned to service their debt. portion of their rise over the latter part of 2000, with Indeed, the ratio of net interest payments to cash flow spreads on high-yield bonds narrowing more than a for all nonfinancial firms moved only modestly above percentage point. As yields declined, corporate bond the relatively low levels of recent years. issuance picked up, and even some below-investment As concerns about risk mounted, lenders became grade issues were brought to the market. In contrast, more cautious about extending credit to some bor­ investors in the commercial paper market apparently rowers. An increasingly large proportion of banks became more concerned about credit risk, partly in reported firming terms and standards on business response to the defaults of two California utilities on loans over the course of the year. In the corporate some bonds and commercial paper in mid-January bond market, yield spreads on high-yield and lower­ related to the difficulties in the electricity market in rated investment-grade bonds, measured relative to that state. After those defaults, spreads between topthe ten-year swap rate, began climbing sharply in tier and second-tier commercial paper widened fur­ September and by year-end were at levels well above ther, and investors became more discriminating even those seen in the fall of 1998. Lower-rated com­ within the top rating tier. Some businesses facing mercial paper issuers also had to pay unusually resistance in the commercial paper market reportedly large premiums late in the year, particularly on paper met their financing needs by tapping backup credit spanning the year-end. As financial conditions lines at banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 113 Major components of net business financing Change in real government expenditures on consumption and investment Billions of dollars I I Commercial paper I Bonds f~] Federal ■ State and local — 6 1999 2000 Note. Seasonally adjusted annual rate for nonfarm nonfinancial corporate businesses. Components for 2000:Q4 are estimated. Total federal spending, as reported in the unified Growth in commercial mortgage debt slowed last budget, rose 5 percent in fiscal year 2000, the larg­ year to an estimated rate of 9 lA percent, and issuance est increase in several years. A portion of the rise of commercial-mortgage-backed securities in 2000 stemmed from shifts in the timing of some outlays in fell back from its 1999 pace. Spreads on lower-rated a way that tended to boost the tally for fiscal 2000. commercial-mortgage-backed securities over swap But even allowing for those shifts, the rise in spend­ rates widened by a small amount late in the year, and ing would have exceeded the increases of other recent banks on net reported tightening their standards on years. Outlays accelerated for most major functions, commercial real estate credit over the year. Neverthe­ including defense, health, social security, and income less, fundamentals in the commercial real estate mar­ security. Of these, spending on health—about threeket remain solid, and delinquency rates on commer­ fourths of which consists of outlays for Medicaid— cial mortgages stayed around their historic lows. recorded the biggest increase. Medicaid grants to the states were affected last fiscal year by increased fund­ ing for the child health insurance initiative that was The Government Sector passed in 1997 and by a rise in the portion of Medi­ caid expenses picked up by the federal government. Real consumption and investment expenditures of Spending on agriculture rose very sharply for a third federal, state, and local governments, the part of year but not as rapidly as in fiscal 1999. The ongoing government spending that is included in GDP, rose paydown of debt by the federal government led to a only \lA percent in the aggregate during 2000. The increase was small partly because the consumption and investment expenditures of the federal gov­ Federal receipts and expenditures ernment had closed out 1999 with a large increase in advance of the century date change. Federal pur­ Percent of nominal GDP chases in the fourth quarter of 2000 were about 1 percent below the elevated level at year-end 1999. ---- 24 Abstracting from the bumps in the spending data, the underlying trend in real federal consumption and investment outlays appears to have been mildly posi­ tive over the past couple of years. The consumption and investment expenditures of state and local gov­ ernments rose about 2Vi percent in 2000 after an unusually large increase of 4lA percent in 1999. The slowdown in spending was mainly a reflection of a downshift in government investment in structures, which can be volatile from year to year and had 1982 1985 1988 1991 1994 1997 2000 posted a large gain in 1999. Note. The data are from the unified budget and are for fiscal years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 Federal Reserve Bulletin □ March 2001 decline of nearly 3 percent in net interest payments rise in federal saving, the national saving rate has in fiscal 2000 after a somewhat larger drop in these been running at a higher level in recent years than payments in fiscal 1999. was observed through most of the 1980s and first half Federal receipts increased 103/4 percent in fiscal of the 1990s, even as the personal saving rate has year 2000, the largest advance in more than a decade. plunged. The rise in federal saving has kept interest The increase in receipts from taxes on the income rates lower than they otherwise would have been and of individuals amounted to more than 14 percent. In has contributed, in turn, to the rapid growth of capital most recent years, these receipts have grown much investment and the faster growth of the economy’s faster than nominal personal income as measured productive potential. in the national income and product accounts. One The burgeoning federal budget surplus allowed important factor in the difference is that rising levels the Treasury to pay down its debt last year at an even of income and a changing distribution have shifted faster pace than in recent years. As of the end of more taxpayers into higher tax brackets; another is an fiscal 2000, the stock of marketable Treasury debt increase in revenues from taxes on capital gains and outstanding had fallen about $500 billion from its other items that are not included in personal income. peak in 1997. The existing fiscal situation and the Receipts from the taxation of corporate profits also anticipation that budget surpluses would continue led moved up sharply in fiscal 2000, rebounding from the Treasury to implement a number of debt man­ a small decline the previous fiscal year. With fed­ agement changes during 2000, many designed to eral receipts rising much faster than spending, the preserve the liquidity of its securities. In particular, surplus in the unified budget rose to $236 billion the Treasury sought to maintain large and regular in fiscal 2000, nearly double that of fiscal 1999. The offerings of new securities at some key maturities, on-budget surplus, which excludes surpluses accumu­ because such attributes are thought to importantly lating in the social security trust fund, rose from contribute to market liquidity. In part to make room essentially zero in fiscal 1999 to $86 billion in fiscal for continued sizable auctions of new securities, the 2000. Excluding net interest payments, a charge Treasury initiated a debt buyback program through resulting from past deficits, the surplus in fiscal 2000 which it can purchase debt that it previously issued. was about $460 billion. In total, the Treasury conducted twenty buyback Federal saving, which is basically the federal bud­ operations in 2000, repurchasing a total of $30 billion get surplus adjusted to conform to the accounting par value of securities with maturities ranging from practices followed in the national income and product twelve to twenty-seven years. Those operations were accounts, amounted to about 3l/2 percent of nominal generally well received and caused little disruption GDP over the first three quarters of 2000. This figure to the market. Going forward, the Treasury intends has been rising roughly 1 percentage point a year to conduct two buyback operations per month and over the past several years. Mainly because of that expects to repurchase about $9 billion par value of National saving Federal government debt held by the public Note. National saving comprises the gross saving of households, businesses, Note. The data are as of the end of the fiscal year. Excludes debt held in and governments. The data extend through 2000:Q3. federal government accounts and by the Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 115 outstanding securities in each of the first two quarters The External Sector of 2001. Despite conducting buybacks on that scale, the Trade and Current Account Treasury had to cut back considerably its issuance of new securities. To still achieve large sizes of indi­ The current account deficit reached $452 billion vidual issues at some maturities, the Treasury imple­ (annual rate) in the third quarter of 2000, or 4.5 per­ mented a schedule of regular reopenings—in which cent of GDP, compared with $331 billion and 3.6 per­ it auctions additional amounts of a previously issued cent for 1999. Most of the expansion in the current security instead of issuing a new one—for its five-, account deficit occurred in the balance of trade in ten-, and thirty-year instruments. Under that sched­ goods and services. The deficit on trade in goods and ule, every other auction of each of those securities is services widened to $383 billion (annual rate) in the a smaller reopening of the previously auctioned secu­ third quarter from $347 billion in the first half of the rity. At other maturities, the Treasury reduced the year. Data for trade in October and November sug­ sizes of its two-year notes and inflation-indexed secu­ gest that the deficit may have increased further in the rities and eliminated the April auction of the thirty- fourth quarter. Net payments on investments were a year inflation-indexed bond. In addition, the Treasury bit less during the first three quarters of 2000 than in recently announced that it would stop issuing one- the second half of 1999 owing to a sizable increase in year bills following the February auction, after hav­ income receipts from direct investment abroad. ing cut back the frequency of new offerings of that U.S. exports of goods and services rose an esti­ security last year. mated 7 percent in real terms during 2000. Exports These reductions in the issuance of Treasury secu­ surged during the first three quarters, supported by rities have caused the Federal Reserve to modify a pickup in economic activity abroad that began some of its procedures for obtaining securities at in 1999. By market destination, U.S. exports were Treasury auctions, as described in detail below. In strongest to Mexico and countries in Asia. About addition, the Treasury made changes in the rules for 45 percent of U.S. goods exports were capital equip­ auction participation by foreign and international ment, 20 percent were industrial supplies, and monetary authority (FIMA) accounts, which prima­ roughly 10 percent each were agricultural, automo­ rily include foreign central banks and governmental tive, consumer, and other goods. Based on data for monetary entities. The new rules, which went into October and November, real exports are estimated to effect on February 1, 2001, impose limits on the size have declined in the fourth quarter, reflecting in part a of non-competitive bids from individual FIMA slowing of economic growth abroad. This decrease accounts and on the total amount of such bids that was particularly evident in exports of capital goods, will be awarded at each auction. These limits will automotive products, consumer goods, and agricul­ leave a larger pool of securities available for com­ tural products. petitive bidding at the auctions, helping to maintain The quantity of imported goods and services the liquidity and efficiency of the market. More­ expanded rapidly during the first three quarters of over, FIMA purchases will be subtracted from the total amount of securities offered, rather than being added on as they were in some previous instances, U.S. current account making the amount of funds raised at the auction more predictable. State and local government debt increased little in 2000. Gross issuance of long-term municipal bonds was well below the robust pace of the past two years. Refunding offerings were held down by higher inter­ est rates through much of the year, and the need to raise new capital was diminished by strong tax reve­ nues. Net issuance was also damped by an increase in the retirement of bonds from previous refunding activity. Credit quality in the municipal market improved considerably last year, with credit upgrades outnumbering downgrades by a substantial margin. The only notable exception was in the not-for-profit _19_8_0_ ____1_98_4_ ____1_98_8_ ____1_9_92_ _____19_9_6 _____20_0_0_ _ health care sector, where downgrades predominated. Note. The observation for 2000 is the average of the first three quarters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin □ March 2001 Change in real imports and exports of goods and services and a high above $37 per barrel in September. Strong demand—driven by robust world economic growth— kept upward pressure on oil prices even as world supply increased considerably. Over the course of 2000, OPEC raised its official production targets by 3.7 million barrels per day, reversing the production cuts made in the previous two years. Oil production from non-OPEC sources rebounded as well. During the last several weeks of 2000, oil prices fell sharply as market participants became convinced that the U.S. economy was slowing. In early 2001, however, oil prices moved back up when OPEC announced a planned production cut of 1.5 million barrels per day. Financial Account 2000, reflecting the continuing strength of U.S. The counterpart to the increased U.S. current account domestic demand and the effects of past dollar appre­ deficit in 2000 was an increase in net capital inflows. ciation on price competitiveness. Increases were As in 1999, U.S. capital flows in 2000 reflected the widespread among trade categories. Based on data relatively strong cyclical position of the U.S. econ­ for October and November, real imports of goods and omy for most of the year and the global wave of services are estimated to have risen only slightly in corporate mergers. Foreign private purchases of U.S. the fourth quarter. Moderate increases in imported securities were exceptionally robust—well in excess consumer and capital goods were partly offset by of the record set in 1999. The composition of U.S. declines in other categories of imports, particularly securities purchased by foreigners continued the shift industrial supplies and automotive products, for away from Treasuries as the U.S. budget surplus, and which domestic demand had softened. The price of the attendant decline in the supply of Treasuries, non-oil imports is estimated to have increased by less lowered their yield relative to other debt. Last year than 1 percent during 2000. private foreigners sold, on net, about $50 billion The price of imported oil rose nearly $7 per barrel in Treasury securities, compared with net sales of over the four quarters of 2000. During the year, oil $20 billion in 1999. Although sizable, these sales prices generally remained high and volatile, with the were slightly less than what would have occurred had spot price of West Texas intermediate (WTI) crude foreigners reduced their holdings in proportion to the fluctuating between a low of $24 per barrel in April reduction in Treasuries outstanding. The increased sale of Treasuries was fully offset by larger foreign Prices of oil and other commodities purchases of U.S. securities issued by governmentsponsored agencies. Net purchases of agency securi­ ties topped $110 billion, compared with the pre­ vious record of $72 billion set in 1999. In contrast to the shrinking supply of Treasury securities, U.S. government-sponsored agencies accelerated the pace of their debt issuance. Private foreign purchases of U.S. corporate debt grew to $180 billion, while net purchases of U.S. equities ballooned to $170 billion compared with $108 billion in 1999. The pace of foreign direct investment inflows in the first three quarters of 2000 also accelerated from the record pace of 1999. As in the previous two years, direct investment inflows were driven by for­ eign acquisition of U.S. firms, reflecting the global Note. The data are monthly; the last observation for oil is the average of trading days through February 8, 2001; the last observation for other commodi­ strength in merger and acquisition activity. Of the ties is November 2000. The oil price is the spot price of West Texas intermediate roughly $200 billion in direct investment inflows crude oil. The price of other commodities is a weighted average of thirty-nine nonfuel primary-commodity prices from the International Monetary Fund. in the first three quarters, about $100 billion was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 117 directly attributable to merger activity. Many of these Measures of labor utilization mergers were financed, at least in part, by an exchange of equity, in which shares in the U.S. firm were swapped for equity in the acquiring firm. Although U.S. residents generally appear to have sold a portion of the equity acquired through these swaps, the swaps likely contributed significantly to the $97 billion capital outflow attributed to U.S. acqui­ sition of foreign securities. U.S. direct investment abroad was also boosted by merger activity and — 6 totaled $117 billion in the first three quarters of 2000, a slightly faster pace than that of 1999. I Civilian unemployment rate — — 3 Capital inflows from foreign official sources totaled $38 billion in 2000—a slight increase from 1999. I I I 1 1 II I I I I 11 II I I I 1 I I I II I I I 1 I 11 I 1 Nearly all of the official inflows were attributable to 1971 1981 1991 2001 reinvested interest earnings. Modest official sales of Note. The augented unemployment rate is the number of unemployed plus dollar assets associated with foreign exchange inter­ those who are not in the labor force and want a job, divided by the civilian labor force plus those who are not in the labor force and want a job. The break in data vention were offset by larger inflows from some at January 1994 marks the introduction of a redesigned survey; data after that point are not directly comparable with those of earlier periods. The data extend non-OPEC oil exporting countries, which benefited through January 2001. from the elevated price of oil. Over the remainder of the year monthly increases The Labor Market in private employment stepped down further. Job growth came almost to a stop in December, when Nonfarm payroll employment increased about severe weather added to the restraint from a slowing IV2 percent in 2000, measured on a December-toeconomy. In January of this year, employment picked December basis. The job count had risen slightly up, but the return of milder weather apparently more than 2 percent in 1999 and roughly 2Vi percent accounted for a sizable portion of the gain. a year over the 1996-98 period. Over the first few Employment rose moderately in the private months of 2000, the expansion of jobs proceeded at a service-producing sector of the economy in 2000, faster pace than in 1999, boosted both by the federal about 2 percent overall after an increase of about government’s hiring for the decennial Census and by 3 percent in 1999. In the fourth quarter, however, a somewhat faster rate of job creation in the private hiring in the services-producing sector was relatively sector. Indications of a moderation in private hiring slow, in large part because of a sizable decline in the started to emerge toward mid-year, but because of number of jobs in personnel supply—a category that volatility of the incoming data a slowdown could not includes temporary help agencies. Employment in be identified with some confidence until late summer. construction increased about Vh percent in 2000 after several years of gains that were considerably Net change in payroll employment larger. The number of jobs in manufacturing was down for a third year, owing to reductions in factory Thousands of jobs, monthly average employment in the second half of the year, when manufacturers were adjusting to the slowing of demand. Those adjustments in manufacturing may also have involved some cutbacks in the employment of temporary hires, which would help to account for the sharp job losses in personnel supply. The average length of the workweek in manufacturing was scaled back as well over the second half of the year. The slowing of the economy did not lead to any meaningful easing in the tightness of the labor market in 2000. The household survey’s measure of the number of persons employed rose 1 percent, about in 1991 1993 1995 1997 1999 2001 line with the expansion of labor supply. On net, the Note. Private nonfarm. unemployment rate changed little; its fourth-quarter Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Federal Reserve Bulletin □ March 2001 Change in output per hour in cyclical recovery from the 1990-91 recession. Cutting through the year-to-year variations in mea­ sured productivity, the underlying trend still appears to have traced out a pattern of strong acceleration since the middle part of the 1990s. Support for a step-up in the trend has come from increases in the amount of capital per worker—especially high-tech capital—and from organizational efficiencies that have resulted in output rising faster than the com­ bined inputs of labor and capital. Alternative measures of the hourly compensation of workers, while differing in their coverage and - 0 methods of construction, were consistent in showing some acceleration this past year. The employment 1 I 1 1 1 1 1 1 1 1 1 1 1 1 1990 1992 1994 1996 1998 2000 cost index for private industry (ECI), which attempts Note. Nonfarm business sector. to measure changes in the labor costs of nonfarm businesses in a way that is free from the effects of employment shifts among occupations and industries, average of 4.0 percent was down just a tenth of a rose nearly AVi percent during 2000 after having percentage point from the average unemployment increased about 3V2 percent in 1999. Compensation rate in the fourth quarter of 1999. The flatness of the per hour in the nonfarm business sector, a measure rate through the latter half of 2000, when the econ­ that picks up some forms of employee compensation omy was slowing, may have partly reflected a desire that the ECI omits but that also is more subject to of companies to hold on to labor resources that had eventual revision than the ECI, showed hourly com­ been difficult to attract and retain in the tight labor pensation advancing 53A percent this past year, up market of recent years. January of this year brought a from a 1999 increase of about 4lA percent. Tightness small increase in the rate, to 4.2 percent. of the labor market was likely one factor underlying Productivity continued to rise rapidly in 2000. Out­ the acceleration of hourly compensation in 2000, put per hour in the nonfarm business sector was up with employers relying both on larger wage increases about 3!/2 percent over the year as a whole. Sizable and more attractive benefit packages to attract and gains in efficiency continued to be evident even as retain workers. Compensation gains may also have the economy was slowing in the second half of the been influenced to some degree by the pickup of year. Except for 1999, when output per hour rose consumer price inflation since 1998. Rapid increases about 33/4 percent, the past year’s increase was the in the cost of health insurance contributed impor­ largest since 1992, a year in which the economy was tantly to a sharp step-up in benefit costs. Unit labor costs, the ratio of hourly compensation Measures of the change in hourly compensation to output per hour, increased about 2lA percent in the Change in unit labor costs PI Employment cost index ■ Nonfarm compensation per hour Percent Note. For the employment cost index (ECI), change is from December to December; for nonfarm compensation, Q4 to Q4. The ECI is for private industry excluding farm and household workers. Nonfarm compensation per hour is for the nonfarm business sector. Note. Nonfarm business sector. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 119 nonfarm business sector in 2000 after having risen Change in consumer prices slightly more than Vi percent in 1999. Roughly threefourths of the acceleration was attributable to the faster rate of increase in compensation per hour noted above. The remainder stemmed from the small decel­ eration of measured productivity. The labor cost rise for the latest year was toward the high end of the range of the small to moderate increases that have prevailed over the past decade. Prices Led by the surge in energy prices, the aggregate price indexes showed some acceleration in 2000. The chain-type price index for real GDP, the broadest measure of goods and services produced domesti­ cally, rose 2 lA percent in 2000, roughly 3A percentage increased 30 percent, as demand for that fuel out­ point more than in 1999. The price index for gross paced the growth of supply, pulling stocks down to domestic purchases, the broadest measure of prices low levels. Prices of natural gas this winter have been for goods and services purchased by domestic buy­ exceptionally high because of the added demand for ers, posted a rise of almost 2 Vi percent in 2000 after heating that resulted from unusually cold weather having increased slightly less than 2 percent the in November and December. Electricity costs jumped previous year. Prices paid by consumers, as measured for some users, and prices nationally rose faster than by the chain-type price index for personal consump­ in other recent years, about 2XA percent at the con­ tion expenditures, picked up as well, about as much sumer level. as the gross purchases index. The consumer price Businesses had to cope with rising costs of energy index (CPI) continued to move up at a faster pace in production, transportation, and temperature con­ than the PCE index this past year, and it exhibited trol. In some industries that depend particularly slightly more acceleration—an increase of nearly heavily on energy inputs, the rise in costs had a large 3V2 percent in 2000 was 3A percentage point larger effect on product prices. Producer prices of goods than the 1999 rise. Price indexes for fixed investment such as industrial chemicals posted increases that and government purchases also accelerated this past were well above the average rates of inflation last year. year, and rising prices for natural gas sparked espe­ The prices of energy products purchased directly cially steep price advances for nitrogen fertilizers by consumers increased about 15 percent in 2000, a used in fanning. Prices of some services also exhib­ few percentage points more than in 1999. In response ited apparent energy impacts: Producers paid sharply to the rise in world oil prices, consumer prices of higher prices for transportation services via air and motor fuels rose nearly 20 percent in 2000, bringing water, and consumer airfares moved up rapidly for a the cumulative price hike for those products over second year, although not nearly as much as in 1999. the past two years to roughly 45 percent. Prices also Late in 2000 and early this year, high prices for rose rapidly for home heating oil. Natural gas prices energy inputs prompted shutdowns in production at some companies, including those producing fertiliz­ Alternative measures of price change ers and aluminum. Percent Despite the spillover of energy effects into other markets, inflation outside the energy sector remained Price measure moderate overall. The ongoing rise in labor produc­ Chain-type tivity helped to contain the step-up in labor costs, and Gross domestic product Gross domestic purchases the slow rate of rise in the prices of non-oil imports Personal consumption expenditures Excluding food and energy meant that domestic businesses had to remain cau­ Fixed-xveight tious about raising their prices because of the poten­ Consumer price index........... tial loss of market share. Rapid expansion of capacity Excluding food and energy in manufacturing prevented bottlenecks from devel­ Note. Changes are based on quarterly averages and are measured to the oping in the goods-producing sector of the economy fourth quarter of the year indicated from the fourth quarter of the preceding year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 Federal Reserve Bulletin □ March 2001 Change in consumer prices excluding food and energy increase amounted to a fairly sharp acceleration from the pace of the preceding few years, several of which had brought small declines in investment prices. Although the price index for investment in residential structures slowed a little, to about a 2>XA percent rise, the index for nonresidential structures sped up from a 23/4 percent increase in 1999 to one of 4x/z percent in 2000. Moreover, the price index for equipment and software ticked up slightly, after having declined 2 percent or more in each of the four preceding years. To a large extent, that turnabout was a reflection of a smaller rate of price decline for computers; they had dropped at an average rate of more than 20 percent through the second half of the 1990s but fell at roughly half that rate in 2000. Excluding computers, equipment prices increased slightly in 2000 after having declined a touch in 1999. when domestic demand was surging early in the year; later on, an easing of capacity utilization was accom­ panied by a softening of prices in a number of indus­ U.S. Financial Markets tries. Inflation expectations, which at times in the past have added to the momentum of rising inflation, Financial markets in 2000 were influenced by the remained fairly quiescent in 2000. changing outlook for the U.S. economy and monetary Against this backdrop, core inflation remained low policy and by shifts in investors’ perceptions of and in 2000. Producer prices of intermediate materials attitudes toward risk. Private longer-term interest excluding food and energy, after having accelerated rates generally firmed in the early part of the year as through the first few months of 2000, slowed there­ growth remained unsustainably strong and as market after, and their four-quarter rise of \3A percent was participants anticipated a further tightening of mone­ only a bit larger than the increase during 1999. Prices tary policy by the Federal Reserve. Later in the year, of crude materials excluding food and energy fell as it became apparent that the pace of economic moderately this past year after having risen about growth was slowing, market participants began to 10 percent a year earlier. At the consumer level, the incorporate expectations of significant policy easing CPI excluding food and energy moved up 2!/2 percent into asset prices, and most longer-term interest rates in 2000, an acceleration of slightly less than xh per­ fell sharply over the last several months of 2000 and centage point from 1999 when put on a basis that into 2001. Over the course of the year, investors maintains consistency of measurement. The rise in became more concerned about credit risk and the chain-type price index for personal consumption demanded larger yield spreads to hold lower-rated expenditures excluding food and energy was 13A per­ corporate bonds, especially once the growth of the cent, just a bit above the increases recorded in each of economy slowed in the second half. Banks, appar­ the two previous years. ently having similar concerns, reported widening Consumer food prices rose 2Vi percent in 2000 credit spreads on business loans and tightening stan­ after an increase of about 2 percent in 1999. In large dards for lending to businesses. Weakening economic part, the moderate step-up in these prices probably growth and tighter financial conditions in some sec­ reflected cost and price considerations similar to tors led to a slowing in the pace of debt growth over those at work elsewhere in the economy. Also, farm the course of the year. commodity prices moved up, on net, during 2000, Stock markets had another volatile year in 2000. after three years of sharp declines, and this turnabout After touching record highs in March, stock prices likely showed through to the retail level to some turned lower, declining considerably over the last extent. Meat prices, which are linked more closely to four months of the year. Valuations in some sectors farm prices than is the case with many other foods, fell precipitously from high levels, and near-term recorded increases that were appreciably larger than earnings forecasts were revised down sharply late in the increases for food prices overall. the year. On balance, the broadest stock indexes fell The chain-type price index for private fixed invest­ more than 10 percent last year, and the tech-heavy ment rose about \3A percent in 2000, but that small Nasdaq was down nearly 40 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 121 Rates on selected Treasury securities outlook for the economy, and by the end of August had fallen more than V2 percentage point from their peaks in May. Most market interest rates continued to edge lower into the fall, as the growth of the economy seemed to moderate further. Over the last couple months of 2000 and into early 2001, as it became apparent that economic growth was slowing more abruptly, market participants sharply revised down their expectations for future short-term interest rates. Treasury yields plummeted over that period, particularly at shorter maturities: The two-year Treasury yield dropped more than a full percentage point from mid- November to early January, moving below the thirtyyear yield for the first time since early 2000. Yields on inflation-indexed securities also fell considerably, Note. The data are daily and extend through February 8, 2001. but by less than their nominal counterparts, suggest­ ing that the weakening of economic growth lowered expectations of both real interest rates and inflation. Interest Rates Although market participants had come to expect considerable policy easing over the first part of this The economy continued to expand at an exception­ year, the timing and magnitude of the intermeeting ally strong and unsustainable pace in the early part cut in the federal funds rate in early January was a of 2000, prompting the Federal Reserve to tighten surprise. In response, investors built into asset prices its policy stance in several steps ending at its May anticipations of a more rapid policy easing over the meeting. Private interest rates and shorter-term Trea­ near-term. Indeed, the further substantial reduction in sury yields rose considerably over that period, reach­ the federal funds rate implemented at the FOMC ing a peak just after the May FOMC meeting. Inves­ meeting later that month was largely expected and tors apparently became more concerned about credit elicited little response in financial markets. Even with risk as well; spreads between rates on lower-rated a full percentage point reduction in the federal funds corporate bonds and swaps widened in the spring, rate in place, futures rates have recently pointed to adding to the upward pressure on private interest expectations of additional policy easing over coming rates. Long-term Treasury yields, in contrast, months. Investors appear to be uncertain about this remained below their levels from earlier in the year, outlook, however, judging from the recent rise in the as market participants became increasingly convinced that the supply of those securities would shrink con­ siderably in coming years and incorporated a “scar­ Federal funds futures rates and the intended federal funds rate city premium” into their prices. By mid-May, with Percent the rapid expansion of economic activity showing few signs of letting up, rates on federal funds and eurodollar futures, which can be used as a rough gauge of policy expectations, were indicating that market participants expected additional policy tight­ ening going forward. Signs of a slowdown in the growth of aggregate demand began to appear in the incoming data soon after the May FOMC meeting and continued to gradually accumulate over subsequent months. In response, market participants became increasingly convinced that the FOMC would not have to tighten its policy stance further, which was reflected in a flattening of the term structure of rates on federal 2000 2001 funds and eurodollar futures. Interest rates on most Note. The thick line segments show the rates on federal funds futures contracts on the day after the scheduled FOMC meetings in February, May, corporate bonds declined gradually on the shifting August, and November 2000 and in January 2001. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Federal Reserve Bulletin □ March 2001 Implied volatility of short-term interest rates spreads widened considerably for lower-rated securi­ ties. For most investment-grade issuers, though, the effects of the revised policy outlook more than offset any widening in risk spreads, resulting in a decline in private interest rates in the fourth quarter. Since the first policy easing in early January, yield spreads on corporate bonds have narrowed considerably, includ­ ing a particularly large drop in the spread on highyield bonds. Overall, yields on most investmentgrade corporate bonds have reached their lowest levels since the first half of 1999, while rates on most high-yield bonds have fallen about 2 percentage points from their peaks and have reached levels simi­ lar to those of mid-2000. I i i i I___i i i 1___i___i___i___I__I Although investors at times in recent months 1998 1999 2000 2001 appeared more concerned about credit risk than they Note. The data are daily and extend through February 8, 2001. The series were in the fall of 1998, the recent financial environ­ shown is the implied volatility of the three-month eurodollar rate over the coming four months, as calculated from option prices. ment, by most accounts, did not resemble the market turbulence and disruption of that time. The Trea­ implied volatilities of interest rates derived from sury and investment-grade corporate bond markets option prices. On balance since the beginning of remained relatively liquid, and the investment-grade 2000, the progressive easing in the economic out­ market easily absorbed the high volume of bond look, in combination with the effects of actual and issuance over 2000. Investors continued to show a prospective reductions in the supply of Treasury heightened preference for larger, more liquid corpo­ securities, has resulted in a sizable downward shift in rate issues, but they did not exhibit the extreme desire the Treasury yield curve. for liquidity that was apparent in the fall of 1998. For The prospect of a weakening in economic growth, example, the liquidity premium for the on-the-run along with sizable declines in equity prices and ten-year Treasury note this year remained well below downward revisions to profit forecasts, apparently the level of that fall. caused investors to reassess credit risks in the latter Nonetheless, the Treasury market has become part of last year. Spreads between rates on high-yield somewhat less liquid than it was several years ago. corporate bonds and swaps soared beginning in Sep­ Moreover, in 2000, particular segments of the Trea­ tember, pushing the yields on those bonds substan­ sury market occasionally experienced bouts of unusu­ tially higher. Concerns about credit risk also spilled ally low liquidity that appeared related to actual or over into the investment-grade sector, where yield potential reductions in the supply of individual secu­ rities. Given the possibility that liquidity could dete­ Treasury yield curve riorate further as the Treasury continues to pay down its debt, market participants reportedly increased their reliance on alternative instruments—including interest rate swaps and debt securities issued by government-sponsored housing agencies and other corporations—for some of the hedging and pricing functions historically provided by Treasury securi­ ties. Fannie Mae and Freddie Mac continued to issue large amounts of debt under their Benchmark and Reference debt programs, which are designed to mimic characteristics of Treasury securities—such as large issue sizes and a regular calendar of issuance— that are believed to contribute to their liquidity. By the end of 2000, the two firms together had more than $300 billion of notes and bonds and more than $200 billion of bills outstanding under those pro­ Note. The yield curves shown are estimated from off-the-run Treasury grams. Trading volume and dealer positions in coupon securities and represent yields on notional par Treasury securities with agency securities have risen considerably since 1998, semiannual coupons. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 123 and the market for repurchase agreements in those of the redemptions in Treasury bills. In addition, the securities has reportedly become more active. Also, Federal Reserve accommodated a portion of the several exchanges listed options and futures on demand for reserves last year by increasing its use of agency debt securities. Open interest on some of longer-term repurchase agreements rather than by those futures contracts has picked up significantly, purchasing Treasury securities outright. The System although it remains small compared to that on futures maintained an average of more than $15 billion of contracts on Treasury securities. longer-term repurchase agreements over 2000, typi­ The shrinking supply of Treasury securities and the cally with maturities of twenty-eight days. possibility of a consequent decline in market liquidity also pose challenges for the Federal Reserve. For Equity Prices many years, Treasury securities have provided the Federal Reserve with an effective asset for System After having moved higher in the first quarter of portfolio holdings and the conduct of monetary pol­ 2000, equity prices reversed course and finished the icy. The remarkable liquidity of Treasury securities year with considerable declines. Early in the year, has allowed the System to conduct sizable policy the rapid pace of economic activity lifted corporate operations quickly and with little disruption to mar­ profits, and stock analysts became even more opti­ kets, while the safety of Treasury securities has mistic about future earnings growth. In response, allowed the System to avoid credit risk in its port­ most major equity indexes reached record highs in folio. However, if Treasury debt continues to be paid March, with the Wilshire 5000 rising 63A percent down, at some point the amount outstanding will be above its 1999 year-end level and the Nasdaq soaring insufficient to meet the Federal Reserve’s portfolio 24 percent, continuing its rapid run-up from the sec­ needs. Well before that time, the proportion of Trea­ ond half of 1999. Equity prices fell from these highs sury securities held by the System could reach levels during the spring, with a particularly steep drop in the that would significantly disrupt the Treasury market Nasdaq, as investors grew more concerned about the and make monetary policy operations increasingly lofty valuations of some sectors and the prospect of difficult or costly. Recognizing this possibility, last higher interest rates. year the FOMC initiated a study to consider alterna­ Broader equity indexes recovered much of those tive approaches to managing the Federal Reserve’s losses through August, supported by the decline in portfolio, including expanding the use of the discount market interest rates and the continued strength of window and broadening the types of assets acquired earnings growth in the second quarter. But from early in the open market. As it continues to study various September through the end of the year, stock prices alternatives, the FOMC will take into consideration fell considerably in response to the downshift in the effect that such approaches might have on the economic growth, a reassessment of the prospects for liquidity and safety of its portfolio and the poten­ some high-tech industries, and disappointments in tial for distorting the allocation of credit to private corporate earnings. In December and January, equity entities. Meanwhile, some measures have been taken to prevent the System’s holdings of individual Treasury Major stock price indexes securities from reaching possibly disruptive levels and to help curtail any further lengthening of the average maturity of the System’s holdings. On July 5, 2000, the Federal Reserve Bank of New York announced guidelines limiting the System’s holdings of individual Treasury securities to specified percent­ ages of their outstanding amounts, depending on the remaining maturity of the issue. Those limits range from 35 percent for Treasury bills to 15 percent for longer-term bonds. As a result, the System has redeemed some of its holdings of Treasury securities on occasions when the amount of maturing holdings has exceeded the amount that could be rolled over into newly issued Treasury securities under these JFMAMJ J ASONDJ FMAMJ J A S ON D J F limits. Redemptions of Treasury holdings in 2000 1999 2000 2001 exceeded $28 billion, with more than $24 billion Note. The data are daily and extend through February 8, 2001. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 Federal Reserve Bulletin □ March 2001 analysts significantly reduced their forecasts for year- Wilshire 5000 volatility ahead earnings for the S&P 500. However, analysts Percent apparently view the slowdown in earnings as short­ lived, as long-run earnings forecasts did not fall much and remain at very high levels, particularly for the technology sector. ---- 30 On balance, the Wilshire 5000 index fell 12 per­ cent over 2000—its first annual decline since 1994. The Nasdaq composite plunged 39 percent, leaving it at year-end more than 50 percent below its record high and erasing nearly all of its gains since the beginning of 1999. The broad decline in equity prices last year is estimated to have lopped more than SPA trillion from household wealth, or more than 4 percent of the total net worth of households. Never­ theless, the level of household net worth is still quite Note. The data, which are daily and extend through February 8, 2001, are the standard deviations of daily percent changes in the Wilshire 5000 index over high—about 50 percent above its level at the end of the previous six months, with the standard deviations expressed on an annual 1995. Investors continued to accumulate considerable basis. amounts of equity mutual funds over 2000, although they may have become increasingly discouraged by losses on their equity holdings toward the end of the severe in some cases, they were also driven by a year, when flows into equity funds slumped. At that reassessment of the elevated valuations of many time, money market mutual funds expanded sharply, companies in these sectors. The price-earnings ratio as investors apparently sought a refuge for financial (calculated using operating earnings expected over assets amid the heightened volatility and significant the next year) for the technology component of the drops in equity prices. So far in 2001, major equity S&P 500 index fell substantially from its peak in indexes are little changed, on balance, as the boost early 2000, although it remains well above the ratio from lower interest rates has been countered by con­ for the S&P 500 index as a whole. For the entire tinued disappointments over corporate earnings. S&P 500 index, share prices fell a bit more in per­ Some of the most dramatic plunges in share prices centage terms than the downward revisions to yearin 2000 took place among technology, telecommu­ ahead earnings forecasts, leaving the price-earnings nications, and Internet shares. While these declines ratio modestly below its historical high. partly stemmed from downward revisions to near- The volatility of equity price movements during term earnings estimates, which were particularly 2000 was at the high end of the elevated levels observed in recent years. In the technology sector, the magnitudes of daily share price changes were at times remarkable. There were twenty-seven days Price-earnings ratios for the S&P 500 and selected components during 2000 in which the Nasdaq composite index moved up or down by at least 5 percent; by compari­ Ratio son, such outsized movements were observed on a total of only seven days from 1990 to 1999. Despite the volatility of share price movements and the large declines on balance over 2000, equity market conditions were fairly orderly, with few reports of difficulties meeting margin requirements or of large losses creating problems that might pose broader systemic concerns. The fall in share prices reined in some of the margin debt of equity investors. After having run up sharply through March, the amount of outstanding margin debt fell by about 30 percent over the remainder of the year. At year- 1983 1986 1989 1992 1995 1998 2001 end, the ratio of margin debt to total equity market Note. The data are monthly and extend through January 2001. The ratios are capitalization was slightly below its level a year based on I/B/E/S consensus estimates of earnings over the coming twelve earlier. months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 125 The considerable drop in valuations in some sec­ Regulatory capital ratios of commercial banks tors and the elevated volatility of equity price move­ Percent ments caused the pace of initial public offerings to slow markedly over the year, despite a large number of companies waiting to go public. The slowdown Total (tier 1 + tier 2) ratio was particularly pronounced for technology compa­ nies, which had been issuing new shares at a frantic pace early in the year. In total, the dollar amount of initial public offerings by domestic nonfinancial com­ panies tapered off in the fourth quarter to its lowest level in two years and has remained subdued so far in . 2001 Debt and the Monetary Aggregates Note. The data, which are quarterly and extend through 2000:Q3, are ratios Debt and Depository Intermediation of capital to risk-weighted assets. Tier 1 capital consists primarily of common equity and certain perpetual preferred stock. Tier 2 capital consists primarily of subordinated debt, preferred stock not included in tier 1 capital, and a limited Aggregate debt of domestic nonfinancial sectors amount of loan-loss reserves. increased an estimated 5lA percent over 2000, a con­ siderable slowdown from the gains of almost 7 per­ cent posted in 1998 and 1999. The expansion of Depository institutions continued to play an impor­ nonfederal debt moderated to 8V2 percent in 2000 tant role in meeting the demand for credit by busi­ from 91/2 percent in 1999; the slowing owed prima­ nesses and households. Credit extended by com­ rily to a weakening of consumer and business bor­ mercial banks, after adjustment for mark-to-market rowing in the second half of the year, as the growth of accounting rules, increased 10 percent over 2000, durables consumption and capital expenditures fell well above the pace for total nonfinancial debt. Bank off and financial conditions tightened for some firms. credit expanded at a particularly brisk rate through Some of the slowdown in total nonfinancial debt was late summer, when banks, given their ample capital also attributable to the federal government, which base and solid profits, were willing to meet strong paid down 63/4 percent of its debt last year, compared loan demand by households and businesses. Over the with 2Vi percent in 1999. In 1998 and 1999, domestic remainder of the year, the growth of bank credit nonfinancial debt increased faster than nominal GDP, declined appreciably, as banks became more cautious despite the reduction in federal debt over those years. lenders and as several banks shed large amounts of The ratio of nonfinancial debt to GDP edged down in government securities. 2000, however, as the federal debt paydown acceler­ Banks reported a deterioration of the quality of ated and nonfederal borrowing slowed. their business loan portfolios last year. Delinquency and charge-off rates on C&I loans, while low by Domestic nonfinancial debt historical standards, rose steadily, partly reflecting some repayment difficulties in banks’ syndicated loan portfolios. Several large banks have stated that the uptrend in delinquencies is expected to continue in 2001. Higher levels of provisioning for loan losses and some narrowing of net interest margins contrib­ uted to a fallback of bank profits from the record levels of 1999. In addition, capitalization measures slipped a bit last year. Nevertheless, by historical standards banks remained quite profitable overall and appeared to have ample capital. In the aggregate, total capital (the sum of tier 1 and tier 2 capital) remained above 12 percent of risk-weighted assets over the first three quarters of last year, more than two percentage points above the minimum level required to be considered well-capitalized. Note. The data are annual. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 Federal Reserve Bulletin □ March 2001 Net percentage of domestic banks tightening standards years. With delinquency rates for consumer and real for commercial and industrial loans, by size of firm estate loans having changed little, on net, last year, banks did not tighten credit conditions significantly Percent for loans to households over the first three quarters of 2000. More recently, however, an increasing portion of banks increased standards and terms for consumer — 50 loans other than credit cards, and some of the banks surveyed anticipated a further tightening of condi­ tions on consumer loans during 2001. The Monetary Aggregates The monetary aggregates grew rather briskly last year. The expansion of the broadest monetary aggre­ gate, M3, was particularly strong over the first three Note. The data are based on the Federal Reserve’s Senior Loan Officer quarters of 2000, as the robust growth in depository Opinion Survey on Bank Lending Practices, which is generally conducted four times per year. The data extend through January 2001. Small firms are those credit was partly funded through issuance of the with annual sales of less than $50 million. managed liabilities included in this aggregate, such as large time deposits. M3 growth eased somewhat In response to greater uncertainty about the eco­ in the fourth quarter because the slowing of bank nomic outlook and a reduced tolerance for risk, credit led depository institutions to reduce their reli­ increasing proportions of banks reported tightening ance on managed liabilities. Institutional money standards and terms on business loans during 2000 funds increased rapidly throughout 2000, despite the and into 2001, with the share recently reaching tightening of policy early in the year, in part owing to the highest level since 1990. The tightening became continued growth in their provision of cash manage­ widespread for loans to large and middle-market ment services for businesses. For the year as a whole, firms. A considerable portion of banks reported firm­ M3 expanded 9lA percent, well above the I3A percent ing standards and terms on loans to small businesses pace in 1999. This advance again outpaced that of as well, consistent with surveys of small businesses nominal income, and M3 velocity—the ratio of nomi­ indicating that a larger share of those firms had nal income to M3—declined for the sixth year in a difficulty obtaining credit in 2000 than in previous row. Growth of money and debt Percent Domestic Period Ml M2 M3 nonfinancial debt Annual1 1990 ..................... 4.2 4.2 1.9 6.7 1991..................... 7.9 Ip 3.1 1.2 4.5 1992 .................... 14.4 1.8 .6 4.5 1993 ..................... 10.6 1.3 1.0 4.9 1994 .................... 2.5 .6 1.7 4.8 1995 ..................... -1.5 3.8 6.1 5.4 1996 ..................... -4.5 4.5 6.8 5.3 1997 ..................... -1.2 5.6 8.9 5.4 1998 .................... 2.2 8.4 10.9 6.9 1999 .................... 1.8 6.2 7.7 6.8 2000 .................... -1.5 6.3 9.2 5.3 Quarterly (annual rate)2 2000:1 ................. 2.0 5.8 10.6 5.6 2 ................. -1.8 6.4 9.0 6.2 3 ................. -3.7 5.8 8.9 4.7 4 ................. -2.7 6.6 7.1 4.1 Note. Ml consists of currency, travelers checks, demand deposits, and other standing credit market debt of the U.S. government, state and local govern­ checkable deposits. M2 consists of Ml plus savings deposits (including money ments, households and nonprofit organizations, nonfinancial businesses, and market deposit accounts), small-denomination time deposits, and balances in farms. retail money market funds. M3 consists of M2 plus large-denomination time 1. From average for fourth quarter of preceding year to average for fourth deposits, balances in institutional money market funds, RP liabilities (overnight quarter of year indicated. and term), and eurodollars (overnight and term). Debt consists of the out­ 2. From average for preceding quarter to average for quarter indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 127 M2 velocity and opportunity cost International Developments In 2000, overall economic activity in foreign econo­ mies continued its strong performance of the previ­ ous year. However, in both industrial and developing countries, growth was strongest early, and clear signs of a general slowing emerged later in the year. Among industrial countries, growth in Japan last year moved up to an estimated 2 percent, and growth in the euro area slowed slightly to 3 percent. Emerging market economies in both Asia and Latin America grew about 6 percent on average in 2000. For Asian developing economies, this represented a slowing from the torrid pace of the previous year, while growth in Latin America, especially Mexico, picked up from 1999. Average foreign inflation edged up Note. The data are quarterly. The velocity of M2 is the ratio of nominal gross domestic product to the stock of M2. The opportunity cost of holding M2 slightly to 3 percent, mainly reflecting higher oil is a two-quarter moving average of the difference between the three-month prices. Over the first part of the year, monetary Treasury bill rate and the weighted average return on assets included in M2. authorities moved to tighten conditions in many industrial countries, in reaction to continued strong M2 increased 6 lA percent in 2000, about un­ growth in economic activity that was starting to changed from its pace in 1999. Some slowing in M2 impinge on capacity constraints, as well as some growth would have been expected based on the rise upward pressures on prices. Interest rates on long­ in short-term interest rates over the early part of term government securities declined on balance in the year, which pushed up the “opportunity cost” of most industrial countries, especially toward year-end holding M2, given that the interest rates on many when evidence of a slowdown in global economic components of M2 do not increase by the same growth started to emerge. amount or as quickly as market rates. However, with Conditions in foreign financial markets were some­ the level of long-term rates close to that of short­ what more unsettled than in the previous year. Over­ term rates, investors had much less incentive to shift all stock indexes in the foreign industrial countries funds out of M2 assets and into assets with longer generally declined, most notably in Japan. As in the maturities, which helped support M2 growth. M2 was United States, technology-oriented stock indexes also boosted at times by households’ increased pref­ were extremely volatile during the year. After reach­ erence for safe and liquid assets during periods of ing peaks in the first quarter, they started down while heightened volatility in equity markets. On balance experiencing great swings toward mid-year, then fell over the year, the growth of M2 slightly exceeded sharply in the final quarter, resulting in net declines that of nominal income, and M2 velocity edged down. The behavior of the components of M2 was influ­ Foreign equity indexes enced importantly by interest rate spreads. The depressing effect of higher short-term market interest rates was most apparent in the liquid deposit com­ ponents, including checkable deposits and savings accounts, whose rates respond very sluggishly to movements in market rates. Small time deposits and retail money market mutual funds, whose rates do not lag market rates as much, expanded considerably faster than liquid deposits. Currency growth was held down early in the year by a runoff of the stockpile accumulated in advance of the century date change. In addition, it was surprisingly sluggish over the balance of the year given the rapid pace of income growth, with weakness apparently in both domestic Note. The data are monthly. The last observations are the average of trading and foreign demands. days through February 8, 2001. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin □ March 2001 Nominal U.S. dollar exchange rate indexes Europe. During the first three quarters of the year, the euro continued to weaken, and by late October had January 1998 = 100 fallen to a low of just above 82 cents, nearly onethird below its value when it was introduced in January 1999. The euro’s decline against the dollar through most of last year appeared to be due mainly to the vigorous growth of real GDP and productiv­ ity in the United States contrasted with steady but less impressive improvements in Europe. In addition, investors may have perceived that Europe was slower to adopt “new economy” technologies, making it a relatively less attractive investment climate. In Sep­ tember, a concerted intervention operation by the monetary authorities of G-7 countries, including the ________1998_______________1999______________2000_______2001 United States, was undertaken at the request of Euro­ Note. The data are monthly. Indexes are trade-weighted averages of the pean authorities to provide support for the euro. The exchange value of the dollar against major currencies and against the currencies of a broader group of important U.S. trading partners. Last observations are the European Central Bank also made intervention pur­ average of trading days through February 8, 2001. chases of euros on several occasions acting on its own. Late in the year, the euro abruptly changed course and started to move up strongly, reversing for the year of one-third or more. Stock prices in over half of its decline of earlier in the year. This emerging market economies were generally quite recovery of the euro against the dollar appeared to weak, especially in developing Asia, where growth reflect mainly a market perception that, while growth in recent years has depended heavily on exports of was slowing in both Europe and the United States, high-tech goods. Although there was no major default the slowdown was much sharper for the United or devaluation among emerging market economies, States. For the year as a whole, the dollar appreci­ average risk spreads on developing country debt still ated, on net, about 7 percent against the euro. moved higher on balance over the course of the year, The European Central Bank raised its policy inter­ as the threat of potential crises in several countries, est rate target six times by a total of 175 basis points most notably Argentina and Turkey, heightened over the first ten months of the year. These increases investor concerns. reflected concerns that the euro’s depreciation, The dollar’s average foreign exchange value tightening capacity constraints and higher oil prices increased over most of the year, supported by con­ would put upward pressure on inflation. While core tinued robust growth of U.S. activity, rising interest inflation—inflation excluding food and energy— rates on dollar assets, and market perceptions that longer-term prospects for U.S. growth and rates of return were more favorable than in other industrial U.S. dollar exchange rate against the euro countries. Part of the rise in the dollar’s average and the Japanese yen value was reversed late in the year when evidence emerged that the pace of U.S. activity was slowing much more sharply than had been expected. Despite this decline, the dollar’s average foreign exchange value against the currencies of other major foreign industrial countries recorded a net increase of over 7 percent for the year as a whole. The dollar also strengthened nearly as much on balance against the currencies of the most important developing country trading partners of the United States. So far this year, the dollar’s average value has remained fairly stable. I__i__i i I i__i__i__1__i__i__i__1__I Industrial Economies ________1998_______________1999______________2000_______2001 Note. Foreign currency units per dollar. Restated German mark is the The dollar showed particular strength last year mark-dollar exchange rate rescaled by the official conversion factor between the mark and the euro. Last observations are the average of trading days through against the euro, the common currency of much of February 8, 2001. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 129 remained well below the 2 percent inflation target that Canada exports, such as metals and lumber, and ceiling, higher oil prices pushed the headline rate a perception by market participants of unfavorable above the ceiling for most of the year. Real GDP in differentials in rates of return and economic growth the euro area is estimated to have increased about prospects in Canada relative to the United States. For 3 percent for 2000 as a whole, only slightly below the year as a whole, real GDP growth in Canada is the rate of the previous year, although activity slowed estimated to have been only slightly below the strong toward the end of the year. Growth was supported by 5 percent rate of 1999, although, as in most industrial continued strong increases in investment spending. countries, there were signs that the pace of growth Net exports made only a modest contribution to was tailing off toward the end of the year. Domestic growth, as rapid increases in exports were nearly demand continued to be robust, led by surging busi­ matched by robust imports. Overall activity was ness investment and solid personal consumption sufficiently strong to lead to a further decline in the increases. In the first part of the year, the sustained average euro-area unemployment rate to below 9 per­ rapid growth of the economy led Canadian monetary cent, a nearly 1 percentage point reduction for the authorities to become increasingly concerned with a year. buildup of inflationary pressures, and the Bank of The dollar rose about 12 percent against the Japa­ Canada matched all of the Federal Reserve’s interest nese yen over the course of 2000, roughly reversing rate increases in 2000, raising its policy rate by a total the decline of the previous year. Early in the year, the of 100 basis points. By the end of the year, the core yen experienced periods of upward pressure on evi­ inflation rate had risen to near the middle of the Bank dence of a revival of activity in Japan. On several of of Canada’s 1 percent to 3 percent target range, while these occasions, the Bank of Japan made substantial higher oil prices pushed the overall rate above the top intervention sales of yen. By August, signs of recov­ of the range. So far this year, the Bank of Canada has ery were strong enough to convince the Bank of only partially followed the Federal Reserve in lower­ Japan to end the zero interest rate policy that it had ing interest rates, and the Canadian dollar has maintained for nearly a year and a half, and its target remained little changed. for the overnight rate was raised to 25 basis points. Later in the year, evidence emerged suggesting that Emerging Market Economies the nascent recovery in economic activity was losing steam, and in response the yen started to depreciate In emerging market economies, the average growth sharply against the dollar. rate of economic activity in 2000 remained near the For the year as a whole, Japanese real GDP is very strong 6 percent rate of the previous year. How­ estimated to have increased about 2 percent, a sub­ ever, there was a notable and widespread slowing stantial improvement from the very small increase of near the end of the year, and results in a few indi­ the previous year and the decline recorded in 1998. vidual countries were much less favorable. Growth in Growth, which was concentrated in the first part of developing Asian economies slowed on average from the year, was led by private nonresidential invest­ the torrid pace of the previous year, while average ment. In contrast, residential investment slackened growth in Latin America picked up somewhat. as the effect of tax incentives waned. Consumption No major developing country experienced default or rebounded early in the year from a sharp decline at devaluation in 2000, but nonetheless, financial mar­ the end of 1999 but then stagnated, depressed in part kets did undergo several periods of heightened by record-high unemployment and concerns that on­ unrest during the year. In the spring, exchange rates going corporate restructuring could lead to further and equity prices weakened and risk spreads widened job losses. Public investment, which gave a major in many emerging market economies at a time of a boost to the economy in 1999, remained strong general heightening of financial market volatility and through the first half of last year but then fell off rising interest rates in industrial countries, as well as sharply, and for the year as a whole the fiscal stance increased political uncertainty in several developing is estimated to have been somewhat contractionary. countries. After narrowing at mid-year, risk spreads Inflation was negative for the second consecutive on emerging market economy debt again widened year, with the prices of both consumer goods and real later in the year, reflecting a general movement on estate continuing to move lower. financial markets away from riskier assets, as well as The dollar appreciated 4 percent relative to the concerns that Argentina and Turkey might be facing Canadian dollar last year. Among the factors that financial crises that could spread to other emerging apparently contributed to the Canadian currency’s market economies. Risk spreads generally narrowed weakness were declines in the prices of commodities in the early part of 2001. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin □ March 2001 Among Latin American countries, Mexico’s per­ Argentina encountered considerable financial dis­ formance was noteworthy. Real GDP rose an esti­ tress last year. Low tax revenues due to continued mated 7 percent, an acceleration from the already weak activity along with elevated political uncer­ strong result of the previous year. Growth was tainty greatly heightened market concerns about the boosted by booming exports, especially to the United ability of the country to fund its debt. Starting in States, favorable world oil prices, and a rebound in October, domestic interest rates and debt risk spreads domestic demand. In order to keep inflation on a soared amid market speculation that the government downward path in the face of surging domestic might lose access to credit markets and be forced to demand, the Bank of Mexico tightened monetary abandon the exchange rate peg to the dollar. Finan­ conditions six times last year, pushing up short-term cial markets began to recover after an announce­ interest rates, and by the end of the year the rate of ment in mid-November that an IMF-led international consumer price inflation had moved below the 10 per­ financial support package was to be put in place. cent inflation target. The run-up to the July presiden­ Further improvement came in the wake of an official tial election generated some sporadic financial mar­ announcement in December of a $40 billion support ket pressures, but these subsided in reaction to the package. The fall in U.S. short-term interest rates in smooth transition to the new administration. Over the January eased pressure on Argentina’s dollar-linked course of the year, the risk spread on Mexican debt economy as well. declined on balance, probably reflecting a favorable Late in the year, Brazilian financial markets assessment by market participants of macroeconomic received some negative spillover from the financial developments and government policies, reinforced unrest in Argentina, but conditions did not approach by rating upgrades of Mexican debt. During 2000, the those prevailing during Brazil’s financial crisis of peso depreciated slightly against the dollar, but by early 1999. For 2000 as a whole, the Brazilian econ­ less than the excess of Mexican over U.S. inflation. omy showed several favorable economic trends. Real GDP growth increased to an estimated 4 percent after being less than 1 percent the previous two years, Selected emerging markets inflation continued to move lower, and short-term January 1998 = 100 interest rates declined. ---------------------- Dollar exchange rates Growth in Asian developing countries in 2000 slowed from the previous year, when they had still been experiencing an exceptionally rapid bounceback Brazilian real from the 1997-1998 financial crises experienced by several countries in the region. In Korea, real GDP growth last year is estimated to have been less than Argentine peso half of the blistering 14 percent rate of 1999. Korean exports, especially of high-tech products, started to fade toward the end of 2000. Rapid export growth Korean won had been a prominent feature of the recovery of Korea and other Asian developing economies follow­ ing their financial crises. In addition, a sharp fall in Korean equity prices over the course of the year, as Bond spreads well as continued difficulties with the process of financial and corporate sector restructuring, tended to depress consumer and business confidence. These developments contributed to the downward pressure Brazil on the won seen near the end of the year. Elsewhere in Asia, market concerns over heightened political instability were a major factor behind financial pres­ sures last year in Indonesia, Thailand, and the Philip­ Argentina pines. In China, output continued to expand rapidly Korea in 2000, driven by a combination of surging exports early in the year, sustained fiscal stimulus, and some recovery in private consumption. In contrast, growth Note. The data are monthly. Bond spreads are the J.P. Morgan Emerging in both Hong Kong and Taiwan slowed, especially in Market Bond Index (stripped Brady-bond) spreads over U.S. Treasuries. Last the latter part of the year. In Taiwan, the exchange observations are the average of trading days through February 8, 2001. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 131 rate and stock prices both came under downward exchange rate regime, and the widening current pressure as a result of the slowdown in global elec­ account deficit. The resulting liquidity shortage tronics demand and apparent market concerns over caused short-term interest rates to spike up and led to revelations of possible weaknesses in the banking a substantial decline in foreign exchange reserves and corporate sectors. held by the central bank. Markets stabilized some­ Turkey’s financial markets came under severe what after it was announced in December that Turkey strain in late November as international investors had been able to reach loan agreements with the IMF, withdrew capital amid market worries about the major international banks, and the World Bank in an health of Turkey’s banks, the viability of the gov­ effort to provide liquidity and restore confidence in ernment’s reform program and its crawling peg the banking system. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Industrial Production and Capacity Utilization: The 2000 Annual Revision Carol Corrado, of the Board’s Division of Research revision for the third quarter of 2000 but was revised and Statistics, prepared this article. Matt Wilson pro­ up 0.6 percentage point, to 81.6 percent, for the vided research assistance. fourth quarter of 1999. The overall picture of the industrial sector in recent In late 2000, the Board of Governors of the Federal years is unchanged by the revision. An exceptionally Reserve System published the annual revision of strong expansion of output in 1997 was followed its index of industrial production (IP) and related by a notably weaker performance in 1998: The measures of capacity and utilization for the period aftershocks stemming from economic turmoil in January 1992 through October 2000 (chart 1). The Asia—weak export demand and heightened import updated measures reflect the incorporation of newly competition—sharply slowed the rise in manufactur­ available, more comprehensive source data, the intro­ ing IP excluding selected high-technology indus­ duction of new production series, and changes in tries.1 Manufacturing IP picked up broadly in 1999, methods. For this revision, two new years (1997 and and production in the high-tech sector accelerated 1998) of comprehensive data on manufacturing out­ further in the first half of 2000. But output outside the put became available; otherwise, the updating of the high-tech industries stagnated in 2000, a reflection of data was typical of annual revisions. renewed competition from abroad and some slacken­ According to the revised data, total industrial out­ ing in domestic demand; in the fourth quarter, total put has increased, on average, 5.1 percent per year industrial production fell at an annual rate of about since 1995, and industrial capacity has expanded 1 percent. (Summary data as of January 17, 2001, for 5.4 percent per year. These revised rates of increase total industry and manufacturing are shown in appen­ are more rapid than previously reported (table 1). The dix tables A.l and A.2.) rate of industrial capacity utilization—the ratio of Capacity utilization in manufacturing rose during production to capacity—was little changed by the 1997 and reached 83 percent in the fourth quarter of Note. Charles Gilbert directed the 2000 annual revision and pre­ pared the revised estimates of industrial production; Norman Morin 1. High-tech industries include the manufacturers of semiconduc­ prepared the revised measures of capacity and capacity utilization. tors and related electronic components (Standard Industrial Classifica­ Other contributors to the revision and this article are Ana Aizcorbe, tion [SIC] 3672-9), computers (SIC 357), and communications equip­ William Cleveland, Mark Doms, Cynthia Bansak, and Susan Polatz. ment (SIC 366). 1. Industrial production, capacity, and utilization Ratio scale, 1992 output =100 Percent of capacity Revised Earlier Capacity Utilization Production Note. The production indexes and utilization rates are seasonally adjusted. All the revised measures extend through December 2000; the earlier measures extend through October 2000. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

133 1. Revised growth rates of industrial production and capacity and the revised rate of capacity utilization, 1996-2000 Revised growth rate Difference between revised and previous (percent) (percentage points) Item 1999 1996- 1996- ■* m a m m a pro­ 2000 1996 1997 1998 1999 2000 2000 1996 1997 1998 1999 2000 portion avg. avg. Production Total industry .................................. 100.0 5.1 5.6 7.2 3.2 5.1 4.2 .4 .3 .5 .3 .9 -.1 Manufacturing ............................ 88.4 5.6 6.3 8.0 4.0 5.6 4.1 .4 .3 .5 .3 .8 .0 Excluding selected hightech industries ............... 80.6 2.3 3.2 5.4 1.2 2.3 -.7 .6 •2 .8 1.2 1.0 .5 Selected high-tech industries ... 7.8 42.0 41.0 35.7 37.2 40.6 55.6 -.5 1.9 -.9 -6.7 3.2 3.4 Mining and utilities..................... 11.6 1.2 1.4 1.9 -3.2 1.1 4.5 .2 .0 -.1 .0 1.3 -.6 'SMS Capacity Total industry .................................. 100.0 5.4 5.4 5.9 6.5 4.6 4.6 .4 -.1 .5 .3 .4 .8 Manufacturing ............................ 90.0 6.0 6.1 6.5 7.2 5.1 5.0 .4 -.1 .5 .2 .4 .8 Excluding selected hightech industries ............... 81.1 2.8 2.7 3.6 4.4 2.1 1.3 .7 .1 .5 1.4 .8 .8 Selected high-tech industries ... 8.9 42.0 44.2 40.3 39.5 37.8 48.0 .7 -1.4 2.4 -8.7 2.1 9.0 Mining and utilities..................... 10.0 .9 .8 1.3 .5 .7 1.2 .2 -.5 .5 -.2 .2 1.0 Capacity utilization (percent, end of period) Total industry .................................. 100.0 82.1 82.8 83.8 81.2 81.6 81.3 .2 .2 .2 .2 .6 .1 1 Manufacturing ............................ 90.0 81.3 81.9 83.0 80.5 80.9 80.2 .3 .2 .3 .3 .6 .2 Excluding selected high- \ tech industries ............... 81.1 81.2 81.8 83.3 80.7 80.9 79.3 .2 .1 .3. .2 .3 .2 Selected high-tech industries ... 8.9 81.7 83.2 80.5 79.2 80.8 85.0 -.2 .6 -1.4 -.3 .3 -1.0 Mining and utilities.................... 10.0 88.7 89.5 90.1 86.8 87.1 89.9 .4 .7 .1 .3 1.2 .0 Note. The 1996-2000 average growth rates are calculated as the average The difference between revised and previous growth rates for 1996-2000 and annual percentage change in the seasonally adjusted index from the fourth for the year 2000 are calculated from annualized growth rates through the third quarter of 1995 to the fourth quarter of 2000. Growth rates for years are quarter of 2000. The difference between revised and previous utilization rates calculated from the fourth quarter of the previous year to the fourth quarter of for 2000 use the third quarter of the year. the year specified. The capacity utilization rates for years are for the last quarter For the definition of high-tech industries, see text note 1. of the year. the year. After that, the rate fell, on balance, and was tion rate has declined more than 5 percentage points; at 80.2 percent during the fourth quarter of 2000. the drop reflects cutbacks in the output of the metals, Within manufacturing, utilization in the advanced- textile, paper, and lumber industries, as well as an processing industries (which the revision modified to easing in the pace of production of semiconductors exclude semiconductors, related electronic compo­ and related components. nents, and motor vehicle parts) declined, for the most After having fallen sharply between the fourth part, over that period. By contrast, the operating rate quarters of 1997 and 1998, utilization rates in mining for primary processors, after having fallen in 1998, and utilities reached 89.9 percent in the fourth quarter increased noticeably throughout 1999 and into 2000; of 2000, a rise of more than 3 percentage points. the rate rose above 86 percent in the second quarter Operating rates for energy producers were at elevated of 2000 for the first time since 1995 (chart 2). Since levels at the end of last year: Capacity at utilities mid-2000, however, the primary-processing utiliza- expanded at a faster pace in 1999 and 2000 than it did earlier in the 1990s, but on balance, production advanced more rapidly than capacity during the 2. Primary-processing and advanced-processing utilization 1990s and surged with an increase in demand begin­ rates, 1976-2000 ning in the middle of 2000. Percent Primary processing Advanced processing Summary of the Revision The statistical revisions to the IP index are princi­ pally derived from the inclusion of information con­ tained in annual reports issued by the U.S. Census Bureau: the 1997 Census of Manufactures, the 1998 Annual Survey of Manufactures, and selected 1999 Current Industrial Reports. Revised annual data from the U.S. Geological Survey (USGS) on minerals Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin □ March 2001 (except fuels) for 1998 and new data for 1999 were was revised upward for most years, in part because also introduced. of the introduction of a new series that explicitly The capacity indexes and capacity utilization rates measures the equipment used for local-area computer now incorporate the preliminary results from the networks. Census Bureau’s 1999 Survey of Plant Capacity, According to indicators from the Survey of Plant which covers manufacturing; the survey provided Capacity, the factory operating rate was higher in the data for the fourth quarter of the year. The revised fourth quarter of 1999 than previously estimated. measures also include newly available 1999 data on Using the revised production indexes and new infor­ industrial capacity, expressed in physical units, from mation on manufacturing capital spending, we esti­ the USGS, the Department of Energy (DOE), and mate that manufacturing capacity increased 5.1 per­ other organizations. cent in 1999 and 5 percent in 2000. The previous New production measures were introduced for estimates had reported that it had slowed in 2000, to a individual series in four industries: communications rate Vi percentage point less than its rate in 1999. equipment, computer and office equipment, drugs The revision modified the definitions of advancedand medicines, and bearings. Production for the processing and primary-processing industries to new series was measured using detailed infor­ reflect more accurately the distinction between indus­ mation on the major products of these industries. tries that produce final products and those that pro­ The revision also incorporated improved source duce goods for further processing. Specifically, the data for three existing production series: elec­ measures for production, capacity, and capacity tricity generation, electrical housewares, and truck utilization in primary processing now include the trailers. series for semiconductors and related electronic com­ Beginning with this revision, the weights used ponents (Standard Industrial Classification [SIC] to calculate the production and capacity aggregates 3672-9) and for motor vehicle parts (SIC 3714); change every month rather than once a year. The previously, these industries were included in the mea­ introduction of the refined aggregation method, which sures for advanced-processing industries.2 The new began with data for 1992, had a small effect on the utilization rate for primary-processing industries intra-yearly changes in monthly IP. averaged 82.2 percent between 1967 and 2000, and Tables A.3 and A.4 show the revised rates of the rate for advanced-processing industries averaged growth of industrial production by market group and 80.6 percent. These long-term averages are about the by industry group for 1996 through 2000; tables A.5 same as those for the previously published measures. and A.6 show the revised figures for capacity and In more recent years, however, capacity utilization capacity utilization. For production and capacity, the rates for the modified aggregates differ noticeably tables also show the difference between the revised from the previously reported measures: The operat­ and earlier growth rates; for capacity utilization, the ing rate for advanced-processing industries in the difference between revised and previous rates for the third quarter of 2000 was 80.1 percent, a level below final quarter of the year are shown. the long-term average and lower than the previ­ For most manufacturing industries, the annual ously published rate based on the old definition. reports from the Census Bureau implied faster For the same period, the operating rate for primaryincreases in output in 1997 and 1998 than had pre­ processing industries was 85.4 percent, a level above viously been reported. Output also rose more rapidly the long-term average and higher than previously in 1999 because of upwardly revised monthly source reported. data. The textile mill products industry and the industrial machinery and equipment industry, which includes computers, are the only major industry TECHNICAL ASPECTS OF THE REVISION groups whose production in the third quarter of 2000 was lower than shown previously. Within the indus­ As discussed earlier, the annual revision incorporated trial machinery and equipment group, the output of more-up-to-date results from the 1997 Census of the computer industry was lowered noticeably in Manufactures, the 1998 Annual Survey of Manu­ 1998 because the new Census data were included. factures, the 1999 Survey of Plant Capacity, and The introduction of a new series that measures the production of pharmaceuticals boosted the produc­ 2. The modified utilization rates for primary-processing and tion estimates for the chemical industry during 1999. advanced-processing industries were recomputed from January 1967 on; the results were spliced to the earlier aggregates from January The output of the electrical machinery group, which 1948 to December 1966. The modified production and capacity includes the communications equipment industry, indexes for these groups begin with data for January 1967. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: The 2000 Annual Revision 135 ------------------------------------------------------------------ comprehensive information sources and (2) produc­ Data Availability and Publication Changes tion indicators that are available for inclusion in the monthly index within the regular four-month report­ Files containing the revised data and the text and tables ing window. The annual index determines the trend from the G.17 statistical release “Industrial Production for a series from one year to the next, and the and Capacity Utilization” are available on the Board’s production indicator determines the monthly changes web site (www.federalreserve.gov/releases/gl7) and on for a series within each year. Each series is seasonally diskettes from Publications Services (telephone 202-452adjusted, and the contribution of the change in an IP 3245). Further information on these revisions is available series for an industry to the monthly change in the from the Board’s Industrial Output Section (telephone overall IP index is based on the value added by that 202-452-3197). A document with printed tables of the revised esti­ industry. mates of series shown in the G.17 release is available The annual indexes for individual IP series are upon request to the Industrial Output Section, Mail derived from detailed industry data. For each four­ Stop 82, Division of Research and Statistics, Board of digit SIC industry in manufacturing, an annual chain- Governors of the Federal Reserve System, Washing­ type measure of the real gross output of an industry is ton, DC 20551. compiled. The value of the production is represented Beginning with data for January 2001, the tables in the by Census data on the industry’s value added plus its monthly statistical release on industrial production and cost of materials; the real output measure is obtained capacity utilization have been redesigned. The data as by deflating the value of production by an annually previously shown are still available on the Board’s web weighted chain-type price index compiled from site. For further information, or comments, contact the detailed information on the composition of the indus­ Board’s Industrial Output Section (telephone 202-452- 3197) or e-mail Charles Gilbert (cgilbert@frb.gov). try’s products. Most of these price indexes are obtained from the Bureau of Economic Analysis (BEA). Because an individual IP series may represent a combination of several four-digit SIC industries, other annual industry reports on production in 1999 the annual indexes for many manufacturing IP series and on capacity in 1999 and 2000. The value-added are constructed from a number of industry gross out­ weights used in aggregating the production and put measures; for these indexes, the contribution of capacity indexes to total industry or other groups each component industry to the annual index is based were also updated, along with the seasonal factors on the value added by that industry. and source data used to compile the monthly produc­ For many IP series, the production indicators are tion indexes (see box “Data Availability and Publica­ compiled from monthly (or quarterly) product data. tion Changes”). The indicator may measure the output of a product in The Census Bureau reported its 1998 data on physical terms (for example, tons of portland cement industry output according to the new North American or barrels of distillate fuel oil); or the indicator may Industrial Classification System, or NAICS. The Cen­ be data on the output of several types of a product sus reported data for 1997 both on the new NAICS (for example, unit counts of assemblies of crawlers, and on the old, 1987 SIC system. Before being wheel loaders, skid steer loaders, and the like), com­ included in the IP index, the manufacturing data for bined with fixed weights. Alternatively, for selected 1998 were recategorized by the Federal Reserve series, the indicator is a chain-type quantity index according to the SIC system. The Census Bureau that is compiled each month (or quarter) using very provided the Federal Reserve with industry utiliza­ detailed data on the prices and quantities of specific tion rates on the SIC system from the Survey of Plant products produced by an industry. This method is Capacity.3 used for the monthly IP indexes for semiconductors, computers, autos, light trucks, and with this revision, pharmaceuticals and a component of communica­ Measurement of production tions equipment.4 Individual IP series are derived from (1) annual indexes of industry output that are calculated using 4. The method was introduced for the monthly measurement of semiconductors in the 1998 annual revision and for computers and motor vehicles in the 1999 annual revision. For semiconductors and computers, the method consists of (1) estimating the value of U.S. 3. The current and historical industrial production and capacity production for the industry from monthly and quarterly data that utilization statistics will be categorized according to the NAICS for contain highly detailed unit counts and values of individual products the 2001 revision. produced by industry and (2) deflating the value of production by a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin □ March 2001 For non-energy mining, most annual and monthly used for local-area computer networks (LANs)—and indexes are developed from product data issued by a series for all other telephone and telegraph appara­ the USGS; the IP series on fuels and electric and gas tus. Production of LAN equipment is measured as a utilities are developed from comprehensive monthly chain-type index calculated from detailed quarterly and annual data from the DOE. For most IP series data; see box “Technical Note on the Measurement in these groups, the monthly data are measures of a of LAN Equipment” for an explanation of how the product in physical terms, such as barrels of motor series was derived. The monthly production indicator gasoline; for other series, the indicator is more com­ for the other component of telephone and telegraph plex. For example, coal production is measured using apparatus is production-worker hours. the tonnage output of four geographic regions, The revised index for the production of computer weighted by the Btu content of the variety mined in and office equipment (SIC 357) is an aggregate of each region.5 three components: computers, computer printers, and When high-frequency data on the physical quantity other computer and office equipment. The index for of production are not available, the Federal Reserve the output of computers is based on the data that were uses monthly data on the inputs to production, either previously used to measure the production of com­ the Bureau of Labor Statistics (BLS) monthly data on puter and office equipment as a whole; these data are production-worker hours or the Federal Reserve’s highly detailed quarterly estimates from Dataquest on monthly data on electric power use, as the production the revenue and unit count of sales of PCs, notebook indicator. The production indicator is combined with computers, and workstations/servers. a productivity trend calculated from the annual out­ The revision introduced a new index for computer put index to obtain the monthly IP index. printers based on similar data—that is, highly detailed With the changes introduced in this revision, the quarterly figures on the revenue and unit count of proportion of the IP index that is measured using sales of computer printers, also from Dataquest. The product data that are available for inclusion in the index for the output of other computer and office monthly index within the regular four-month report­ equipment is represented by a combination of the ing window has increased by 3 percentage points, to data on computers and computer printers. 46 percent in value-added terms in 1999.6 Complete This revision included a new method for estimat­ information on the sources used to compile the pro­ ing the production of pharmaceutical preparations. duction indicator for each individual IP index can be Accordingly, the previous production measure for found on the Board’s web site.7 drugs and medicines (SIC 283) was revised and is now an aggregate of two components: pharmaceuti­ cal preparations (SIC 2834) and other drugs and CHANGES TO INDIVIDUAL PRODUCTION SERIES medicines (SIC 2833,5,6,9). The series for other drugs and medicines uses production-worker hours as The revision introduced improved production indica­ the production indicator. tors for several industries. The production measure The new production index for pharmaceutical for telephone and telegraph apparatus (SIC 3661) preparations is a monthly real output measure devel­ was revised as an aggregate of two components: a oped from detailed data on the prices and quantities series for routers, switches, and hubs—equipment of shipments to dispensers of prescription drugs in the United States from IMS-Health. These data include monthly dollar shipments and chain-type chain-type matched-model price index constructed, for the most part, from the same data. price indexes for about 500 product classes that IMS- For motor vehicles, detailed monthly data on the production of each Health constructed using its proprietary, highly vehicle model are aggregated using annual prices as weights. For a detailed, comprehensive database on pharmaceutical few other series in the IP index, the production indicator is obtained by deflating detailed data on the value of production or shipments products. The Federal Reserve used the measures from a trade source by a corresponding BLS producer price index. developed by IMS-Health, information from the Cen­ 5. This method was introduced in the 1998 annual revision. sus Bureau’s Current Industrial Reports, and other 6. For a review and documentation of the timing of the receipt of the source data for monthly IP over the course of the regular four- sources to create a chain-type quantity index for the month reporting period, see Charles Gilbert, Norman Morin, and production of the pharmaceutical preparations indus­ Richard Raddock, “Industrial Production and Capacity Utilization: try as a whole. A Revision and Recent Developments,” Federal Reserve Bulletin, vol. 86 (March 2000), p. 193. The production estimates for two other industries 7. See table 1, “Industry structure of industrial production: classi­ were improved by obtaining and incorporating new fication, value-added weights, and description of series,” on source data. The production of ball and roller bear­ the “About” page of the Board’s web site for the G.17 release: www.federalreserve.gov/releases/gl7/About.htm. ings (SIC 3562) is measured as a weighted combina­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: The 2000 Annual Revision 137 tion of the unit count of four classes of bearings (ball, July 1992. This change affects industry weights only mounted, tapered, and other roller bearings); the mea­ within each year, as well as the monthly capacity sure was developed from data provided by the Ameri­ and capacity utilization rate aggregates; the proce­ can Bearing Manufacturers Association. The produc­ dure used to derive capacity and utilization aggre­ tion of electrical housewares (SIC 3634) is measured gates, given an industrial production aggregate, is using data provided by the Association of Home unchanged.9 Appliance Manufacturers. Previously, these series The weights for the aggregation of IP and capacity were derived from monthly input data. utilization are expressed as unit value added (a The production index for electric power generation “price”), and are derived from annual estimates of (SIC 491) has been expanded to include electricity industry value added. New information on industry generation by plants owned by nonregulated busi­ value added was used to update and extrapolate the nesses that supply electric power to the public. Pre­ annual estimates of unit value added. Reports from viously, the monthly IP series for electricity gener­ the 1997 Census of Manufactures and the 1998 ation was measured using monthly DOE data on Annual Survey of Manufactures, as well as revenue electric power generation by utilities, which the DOE and expense data reported by the DOE and the defines as the output of regulated entities. These data American Gas Association, provided industry valueare still used, but the revised series combines them added data for manufacturing and utilities through with estimates of the power generated by nonindus­ 1998. The latest value-added data for mining came trial nonregulated businesses. The principal source from the Census of Mineral Industries reports for data for these estimates are new monthly measures of 1997. Generally, the unit value-added measures track electric power generation issued by the DOE begin­ broad changes in related producer price indexes. The ning in January 2000.8 Estimates for earlier years weights required for aggregating IP in the most recent were developed principally from annual data, also period are estimated from available data on producer from the DOE. prices through October 2000. Table A.7 reports the Last, the source data for three other physical prod­ annual value-added proportions incorporated in the uct series have changed. For two series—fabric fin­ IP index from 1992 on. ishing (SIC 226) and metal cans (SIC 341)—the With this revision, the annual unit value-added sources switched to reporting data quarterly rather measures are linearly interpolated to the monthly than monthly. The source for the production of truck frequency, and the IP index becomes a chain-type trailers (SIC 3715) from 1998 on is America’s Com­ index with monthly weights.10 As with the earlier mercial Transportation Research. formulation, the percentage change in IP can be considered as the value-added weighted sum of the percentage changes in its components; consequently, AGGREGATION AND WEIGHTS in the monthly statistical release, the value-added proportion for each series for the most recent full This revision introduced a refinement to the method year of data is shown along with the series. To assist used for aggregating the individual IP indexes. Previ­ users with calculations, the Federal Reserve’s web ously, the monthly industrial production aggregates site provides supplemental monthly statistics that from 1977 on were annually weighted chain-type represent the exact proportionate contribution of a indexes, and the weights were updated in the middle monthly change in a component index to the monthly of the year. With this revision, the weights change change in the total index.11 monthly rather than at midyear for the period since 9. See Carol Corrado, Charles Gilbert, and Richard Raddock, “Industrial Production and Capacity Utilization: Historical Revision 8. Beginning with data for January 2000, the DOE has provided and Recent Developments,” Federal Reserve Bulletin, vol. 83 (Febru­ monthly measures of electric power generation by “non-utility” pro­ ary 1997), pp. 67-92. ducers; these producers are composed of industrial plants generating 10. Specifically, the change in IP for a month is the geometric power for their own use (co-generation) and nonindustrial nonregu­ mean of the change in the aggregate industrial output computed using lated plants generating power for distribution to the public. The current month weights and the change computed using weights for the Federal Reserve uses the new DOE series after deducting an estimate previous month; the formula for a monthly IP aggregate is given by of industrial co-generation. Because the power generation by nonregulated firms is distributed ^^mPm-1 ^ ^mPm by utilities that are regulated entities, the source data for the IP series on electric utility sales, also from the DOE, accurately represents the H*m-1 m-lPm provision of electric services to households and businesses. The IP where pm denotes the monthly unit value added for month m. series that measures the generation and distribution of electric power 11. For the relative weights, see the Board’s web site for the G.17 to the public is still called “the output of utilities.” release: www.federalreserve.gov/releases/gl7/ipdisk/ipweights.sa/. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin □ March 2001 Technical Note on the Measurement of LAN Equipment Equipment for local-area computer networks (LANs) con­ A. Average annual price change, by router type, 1995-99 sists of routers, switches, and hubs. These devices direct traffic among computers and make possible e-mail transmis­ Router type Price change sion, Internet browsing, and file sharing. Like many high- -13.6 technology products, LAN devices have become faster and -24.7 more sophisticated in recent years. For instance, in 1995, Branch................................................................................ -19.4 Midrange ........................................................................... 3.2 Ethernet switches operating at 10 megabits per second -16.1 dominated the market; last year, the two most popular Source. See note 1. switches operated at rates of 100 megabits and 1,000 mega­ bits per second. Statistical information on LAN equipment is available substantial variation that reflected, in part, the degree of from the Census Bureau’s Current Industrial Reports and actual or potential competition in the four markets.4 from reports issued by Dataquest, a private company. The A similar exercise was conducted for switches. The data new IP index for LAN equipment production is compiled for the hedonic regressions came from Datapro, a private from these sources and from research conducted at the source that produces regular reports evaluating the perfor­ Federal Reserve by Mark Doms and Christopher Forman, mance of different varieties of these devices. More than who developed annual quality-adjusted price indexes for 370 observations from 1996 to 2000 were used. The results routers and switches using hedonic techniques.1 show that prices for switches have fallen at an average annual rate of nearly 21 percent during this period. The Doms-Forman price indexes for routers and switches were Price Indexes for Routers, Switches, combined with price measures for hubs developed from and Total LAN Equipment Dataquest data to obtain an annually weighted chain-type price index for total LAN equipment. The index shows that, Hedonic methods are a tool used to develop price indexes between 1995 and 1999, prices for LAN equipment have for goods whose characteristics change rapidly.2 Traditional fallen an average of 18 percent per year. methods (the calculation of matched-model price indexes) may be used to measure price change for a high-technology good, but highly detailed information on distinct varieties Production of LAN Equipment of the good are needed to capture quality change.3 For routers and switches, such data are not available; there­ Estimates of the annual value of U.S.-produced routers, fore, price indexes have been produced using hedonic switches, and hubs were developed from 1992 on. The techniques. estimates for the total value of LAN equipment were Because Cisco is the dominant firm in the router market, obtained principally from the Census data, which are annual the data used in the hedonic regressions for routers came and cover activity in the United States. The Dataquest data, from Cisco product catalogs from 1995 to 1999. More than which are available annually from 1993 and cover activity 400 observations were used, and the regressions controlled in world markets, contain statistics on the three types of for about twenty characteristics. Separate models for four LAN equipment. These data were used in conjunction with classes of routers were estimated; the four price indexes the aggregate Census data to develop separate annual fig­ were aggregated using annual revenue data to obtain an ures from 1992 on for routers, switches, and hubs. annually weighted chain-type price index for all routers. The value of the production of LAN equipment increased Router prices are estimated to have fallen at an average rapidly in the 1990s, although the pace has moderated in annual rate of almost 14 percent since 1995 (table A). recent years (chart A). The value of U.S.-produced LAN However, the price changes for each router class exhibited equipment rose at an annual rate of 37 percent between 1992 and 1999, with especially striking increases for routers Note. Mark Doms constructed the new series and developed the material and switches (chart B). Though switches did not enter the reported in this note. market until 1993, by 1999 they made up the largest propor­ 1. Mark Doms and Christopher Forman, “Prices for Local Area Network tion of total domestic production of LAN equipment. When Equipment” (paper presented at the Brookings Workshop on Communica­ tions Output and Productivity, Washington, D.C., February 23, 2001). the LAN equipment price index is combined with these 2. See J. Steven Landefeld and Bruce T. Grimm, “A Note on the Impact of estimates of the value of LAN equipment production, the Hedonics and Computers on Real GDP,” Survey of Current Business, vol. 80 (December 2000), pp. 17-22, and the references contained therein. results show that real output increased at an average annual 3. Ana Aizcorbe, Carol Corrado, and Mark Doms, “Constructing Price rate of more than 50 percent for 1995-99. and Quantity Indexes for High-Technology Goods” (paper presented at the CRIW-NBER Summer Institute 2000 Workshop on Price, Output, and Pro­ ductivity Measurement, Cambridge, Mass., July 31, 2000). 4. See Doms and Forman, “Prices for Local Area Network Equipment.” Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: The 2000 Annual Revision 139 Technical Note on the Measurement of LAN Equipment—Continued A. Production of LAN equipment, 1992-2000 B. U.S. production of LAN equipment, 1992 and 1999 Billions of dollars Billions of dollars □ Rest of world □ Switches ■ United States 25 H Routers — ■ Hubs ----------------------- — 15 20 15 — —- 10 10 5 1992 1994 1996 1998 2000 1992__________________________1999 e. Estimated. Table B shows the annual index of LAN equipment pro­ the IP index for communications equipment would have duction, as well as the annual LAN price index and the increased at an average annual rate of about 13 percent for 1995-99, rather than at the nearly 19 percent now reported. annual value of LAN output. The annual price measures for 1992-94 were obtained by an extension of the Doms- Forman price indexes back to 1992 based on their relation­ ship to price measures reported in the Dataquest data and on B. U.S. LAN equipment, 1992-2000 estimated trends. The new IP index for LAN equipment is derived from Production Price Value of the annual production index and quarterly data from the Period index index production1 Dataquest reports. The Dataquest reports provide figures Annual estimates2 for the world revenue and unit sales count of twenty-five 1992 ................................ 100.000 100.000 1,684.8 classes of routers, switches, and hubs beginning in the first 1993 ................................ 190.706 83.547 2,684.4 1994 ................................ 298.751 74.236 3,736.5 quarter of 1996 on. The Dataquest data are converted to 1995 ................................ 603.748 62.189 6,325.8 quarterly estimates of U.S. real output in three steps. First, 1996 ................................ 951.649 57.190 9,169.4 the annual estimates of nominal U.S. production are interpo­ 1997 ................................ 1,605.151 47.628 12,880.1 1998 ................................ 2,478.863 34.352 14,346.5 lated and extrapolated using the Dataquest quarterly reve­ 1999 ................................ 3,192.484 28.131 15,130.7 nue data. Second, the Doms-Forman annual price indexes Quarterly estimates3 are interpolated and extrapolated using the quarterly price 96:1 ................................. 100.000 100.000 7,911.2 information reported by Dataquest. For each class of router, 96:2................................. 114.483 98.989 8,966.1 96:3.................................. 129.172 93.771 9,583.2 an average selling price is used; for switches, the average 96:4.................................. 149.434 86.422 10,217.1 price per port is used; and for hubs, a price measure is 97:1................................. 162.075 84.049 10,776.9 developed from the five types of these devices reported in 97:2................................. 184.893 79.754 11,665.6 97:3................................. 225.762 77.645 13,867.6 the Dataquest data. Third, each estimated nominal value of 97:4................................. 259.174 74.184 15,210.3 US. production of routers, switches, and hubs is deflated 98:1................................. 291.332 62.847 14,485.4 by its price indexes, and the three real output measures are 98:2................................. 328.857 59.134 15,384.2 aggregated to obtain a quarterly chain-type real output 98:3................................. 332.261 53.620 14,093.5 98:4................................. 324.278 52.323 13,422.9 index for LAN equipment. The new quarterly IP index for LAN equipment is shown 99:1................................. 419.177 48.654 16,137.0 99:2................................. 423.775 47.116 15,797.3 in table B. The new series is not published in the monthly 99:3................................. 400.055 47.017 14,882.2 99:4................................. 394.040 43.964 13,706.2 statistical release, but the index is updated on an ongoing basis and included in the broader aggregate, the IP index for 00:1................................. 451.754 43.502 15,547.4 00:2................................. 500.061 41.755 16,517.5 communications equipment (SIC 366). LAN equipment 00:3................................. 608.214 39.679 19,094.6 accounted for 18 percent of the value of the output of the 1. Billions of dollars. communications equipment industry in 1999. Had the pre­ 2. Indexes are 1992 = 100. vious methods for measuring LAN equipment been used, 3. Indexes are 1996:Q1 = 100. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin □ March 2001 REVISED MONTHLY DATA the individual capacity estimates over a period of years, and the additional measures determine the The product data that are used to measure the annual changes from one year to the next. For most monthly movements of many IP indexes have been manufacturing industries, estimates of industry capi­ updated to capture data that became available after tal input and a variable related to the average age of the closing of the regular four-month reporting win­ the industry’s capital stock are used as the additional dow. The input measures were also updated to incor­ measures.13 For mining, utilities, and selected manu­ porate revised data on monthly production-worker facturing industries, measures of physical capacity hours, based on the BLS benchmark of employment are available and are used to determine the final to March 1999 comprehensive measures, and revised capacity indexes.14 data on monthly electric power use since 1996. Late The capital input figures are estimates of the flow reports of electric power data for 1999 resulted in a of services derived from an industry’s net stocks of large upward revision for that year; revisions to data physical assets; the net stocks are developed princi­ for earlier years were small (table A.8). pally from investment data reported in the Annual Seasonal factors for all series were re-estimated Surveys of Manufactures and Censuses of Manu­ using data that extended into 2000. Factors for factures. Also used are estimates of business invest­ production-worker hours, which adjust for timing, ment and price deflators by asset type, as well as the holiday, and monthly seasonal patterns, were updated composition of an industry’s capital spending by with data through October 2000. Factors for the asset type, all from the BEA. electric power series, which are developed using The information on capital spending by manufac­ multivariate methods, were re-estimated with data turing industries in the 1997 and 1998 Census reports through May 2000. The updated factors for the indicated a higher level of investment than previously monthly (and quarterly) physical product series, estimated by the Federal Reserve. The higher level of which include adjustments for holiday and workday spending, in conjunction with indicators of the rate patterns, used data through at least June 2000.12 of change in manufacturing capital spending in 1999 and 2000, suggested that capital input rose at a mod­ erately stronger rate after 1996 than previously esti­ Measurement of Capacity mated. These results were generally consistent with the trends in capacity implied by the upwardly The individual capacity indexes for a year are derived revised estimates of production and the new survey from (1) preliminary, implied end-of-year indexes data on utilization rates. of capacity obtained by dividing a production index Measures of capacity in physical terms for mining, for an industry by a corresponding utilization rate utilities, and selected manufacturing industries were obtained from a survey and (2) additional measures updated with revised data for 1999 and with data for that, for most industries, are economic determinants 2000 newly available since the midyear capacity of an industry’s annual capacity growth. The capacity update issued in June 2000. On balance, the capacity indexes, like the IP indexes, are expressed as percent­ indexes and capacity utilization rates for these indus­ ages of production in 1992. tries were changed little by the revision. □ Once the preliminary, implied capacity indexes are calculated, they are related to the additional mea­ sures in a regression model. The final capacity 13. A fuller description of the models that are used to develop the indexes for a year are derived from the fitted values Federal Reserve’s capacity estimates was reported in “Industrial of these regressions. The preliminary, implied capac­ Production and Capacity Utilization: A Revision and Recent Develop­ ity indexes thus give the general level and trend of ments,” pp. 194-97. 14. The industry structure and documentation of the sources used to compile each individual capacity index can be found in table 3, “Industry structure of capacity and capacity utilization: classification, 12. Seasonal factors for motor vehicle assemblies are updated value-added weights, and description of series,” on the “About” page twice each year and reported on the Board’s web site: of the Board’s web site for the G.17 release: www.federalreserve.gov/ www.federalreserve.gov/releases/gl7/mvsf.htm releases/g 17/About.htm. Appendix tables begin on page 141. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: The 2000 Annual Revision 141 Appendix A: Summary Tables Based on the G. 17 Release, January 17, 2001 A.I. Revised data for industrial production, capacity, and utilization for total industry, 1987-2000 Seasonally adjusted data except as noted Quarter Annual Year Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. avg.1 1 2 3 4 Industrial production (percentage change) 1987 ............. -.6 1.2 .4 .4 .4 .9 .6 .1 -.1 1.4 .3 .6 4.2 6.7 5.6 7.1 4.6 1988 ............. .1 .3 .0 .6 .1 .1 .7 .5 -.4 .3 .8 .5 3.2 3.1 3.9 3.6 4.5 1989 ............. .6 -.8 .9 .2 -.6 -.2 -1.0 .4 -.2 -.5 .4 .5 3.8 .5 -4.4 -.1 1.8 1990 ............. -.5 .5 .5 -.6 .4 .0 .0 .2 .1 -.6 -1.3 -.6 2.0 .6 1.0 -5.8 -.2 1991............. -.5 -.8 -.9 .3 .8 1.2 .1 .1 1.0 -.1 -.1 -.6 -8.3 1.5 6.2 1.1 -2.0 1992 ............. .1 .5 .9 .7 .3 -.2 .7 -.3 .4 .7 .5 .0 1.0 6.5 2.4 5.0 3.1 1993 ............. .4 .5 .2 .3 -.5 .3 .2 -.2 1.1 .3 .4 .8 3.8 1.5 1.9 6.2 3.5 1994 ............. .2 .3 .8 .5 .8 .4 .6 .3 .1 .5 .7 1.0 5.5 7.7 5.8 6.3 5.4 1995 ............. .6 -.1 .2 -.2 .4 .4 -.4 1.3 .6 -.4 .3 .1 6.0 1.1 4.4 2.9 4.8 1996 ............. -.2 1.1 -.1 1.1 .8 .8 .0 .6 .5 .0 1.0 .4 2.8 9.2 5.4 5.3 4.6 1997 ............. .5 1.0 .2 .6 .3 .6 .7 .9 .6 .6 .6 .3 7.6 6.1 7.9 7.3 6.8 1998 ............. .4 .0 .3 .5 .4 -.7 -.1 2.1 -.3 .5 -.4 .1 3.6 3.0 3.4 2.9 4.9 1999 ............. .6 .3 .7 .1 .7 .2 .8 .4 .1 .8 .3 .7 3.9 4.9 5.8 5.7 4.2 2000 ............. .5 .5 .7 .7 .7 .5 -.2 .7 .2 -.3 -.3 -.6 6.7 7.9 3.5 -1.1 5.7 Industrial production (index) 1987 ............. 90.2 91.2 91.6 92.0 92.4 93.2 93.7 93.8 93.7 95.0 95.3 95.9 91.0 92.5 93.8 95.4 93.2 1988 ............. 95.9 96.2 96.3 96.8 96.9 97.0 97.6 98.1 97.8 98.0 98.8 99.3 96.1 96.9 97.8 98.7 97.4 1989 ............. 99.8 99.0 100.0 100.2 99.6 99.4 98.4 98.8 98.6 98.2 98.6 99.0 99.6 99.7 98.6 98.6 99.1 1990 ............. 98.6 99.1 99.6 99.0 99.4 99.3 99.3 99.5 99.6 99.1 97.7 97.2 99.1 99.2 99.5 98.0 98.9 1991 ............. 96.7 95.9 95.0 95.4 96.1 97.2 97.3 97.4 98.4 98.3 98.1 97.5 95.9 96.2 97.7 98.0 97.0 1992 ............. 97.6 98.1 99.0 99.7 100.0 99.7 100.4 100.2 100.5 101.3 101.8 101.8 98.2 99.8 100.4 101.6 100.0 1993 ............. 102.2 102.7 102.9 103.2 102.7 102.9 103.2 103.0 104.1 104.4 104.9 105.7 102.6 102.9 103.4 105.0 103.5 1994 ............. 105.9 106.2 107.1 107.6 108.5 109.0 109.6 110.0 110.2 110.7 111.5 112.6 106.4 108.4 109.9 111.6 109.1 1995 ............. 113.3 113.2 113.4 113.1 113.6 114.0 113.6 115.1 115.7 115.3 115.7 115.9 113.3 113.6 114.8 115.6 114.3 1996 ............. 115.6 116.9 116.8 118.1 119.0 120.0 119.9 120.6 121.2 121.2 122.4 122.9 116.4 119.0 120.6 122.2 119.6 1997 ............. 123.5 124.8 125.0 125.8 126.2 126.9 127.7 128.8 129.5 130.3 131.1 131.5 124.4 126.3 128.7 131.0 127.7 1998 ............. 132.0 132.0 132.4 133.1 133.6 132.7 132.5 135.3 134.9 135.5 135.0 135.1 132.1 133.1 134.2 135.2 134.0 I 1999 ............. 135.9 136.3 137.3 137.4 138.4 138.6 139.7 140.3 140.4 141.5 141.9 142.8 136.5 138.1 140.1 142.1 139.6 2000 ............. 143.6 144.3 145.2 146.3 147.2 147.9 147.6 148.6 149.0 148.5 148.1 147.3 144.4 147.1 148.4 148.0 147.5 Capacity (index) 1987 ............. 114.0 114.1 114.2 114.3 114.4 114.5 114.6 114.7 114.9 115.0 115.1 115.2 114.1 114.4 114.7 115.1 114.6 1988 ............. 115.3 115.5 115.6 115.7 115.8 115.9 116.0 116.2 116.3 116.4 116.5 116.7 115.5 115.8 116.2 116.5 116.0 1989 ............. 116.8 117.0 117.2 117.4 117.6 117.8 118.0 118.2 118.4 118.6 118.8 119.0 117.0 117.6 118.2 118.8 117.9 1990 ............. 119.2 119.3 119.5 119.7 119.9 120.1 120.2 120.4 120.6 120.8 121.0 121.2 119.3 119.9 120.4 121.0 120.2 1991 ............. 121.4 121.6 121.7 121.9 122.1 122.2 122.4 122.6 122.7 122.9 123.0 123.2 121.6 122.1 122.6 123.0 122.3 1992 ............. 123.4 123.6 123.8 124.1 124.3 124.5 124.7 124.9 125.2 125.4 125.6 125.8 123.6 124.3 124.9 125.6 124.6 1 1993 ............. 126.0 126.3 126.5 126.7 126.9 127.2 127.4 127.7 127.9 128.2 128.5 128.8 126.3 126.9 127.7 128.5 127.3 1994 ............. 129.1 129.4 129.7 130.1 130.5 130.9 131.3 131.8 132.2 132.7 133.2 133.7 129.4 130.5 131.8 133.2 131.2 1995 ............. 134.2 134.7 135.3 135.8 136.4 137.0 137.6 138.2 138.8 139.4 140.0 140.6 134.7 136.4 138.2 140.0 137.3 1996 ............. 141.2 141.9 142.5 143.1 143.8 144.4 145.0 145.6 146.2 146.9 147.5 148.1 141.9 143.8 145.6 147.5 144.7 1997 ............. 148.8 149.4 150.1 150.8 151.5 152.3 153.0 153.8 154.6 155.4 156.2 157.1 149.4 151.5 153.8 156.2 152.7 1998 ............. 158.0 158.9 159.8 160.7 161.6 162.5 163.4 164.2 165.0 165.7 166.5 167.2 158.9 161.6 164.2 166.5 162.8 1999 ............. 167.9 168.6 169.2 169.9 170.5 171.1 171.7 172.3 172.9 173.5 174.1 174.8 168.6 170.5 172.3 174.1 171.4 2000 ............. 175.4 176.1 176.7 177.4 178.1 178.7 179.4 180.1 180.7 181.4 182.1 182.8 176.1 178.1 180.1 182.1 179.1 Utilization (level, percent) 1987 ............. 79.1 80.0 80.2 80.5 80.7 81.4 81.8 81.8 81.6 82.6 82.8 83.2 79.8 80.8 81.7 82.9 81.3 1988 ............. 83.2 83.4 83.3 83.7 83.7 83.6 84.1 84.5 84.1 84.2 84.8 85.1 83.3 83.7 84.2 84.7 84.0 1989 ............. 85.4 84.6 85.3 85.3 84.7 84.4 83.4 83.6 83.3 82.8 83.0 83.2 85.1 84.8 83.4 83.0 84.1 1990 ............. 82.7 83.0 83.3 82.7 82.9 82.7 82.6 82.6 82.6 82.0 80.8 80.2 83.0 82.8 82.6 81.0 82.3 1991............. 79.6 78.9 78.1 78.2 78.7 79.6 79.5 79.5 80.2 80.0 79.8 79.2 78.9 78.8 79.7 79.6 79.3 1992 ............. 79.1 79.4 79.9 80.4 80.4 80.1 80.5 80.2 80.3 80.8 81.0 80.9 79.5 80.3 80.3 80.9 80.2 1993 ............. 81.0 81.3 81.3 81.4 80.9 80.9 81.0 80.7 81.4 81.5 81.6 82.1 81.2 81.1 81.0 81.7 81.3 1994 ............. 82.1 82.1 82.5 82.7 83.2 83.3 83.5 83.5 83.3 83.5 83.7 84.3 82.2 83.1 83.4 83.8 83.1 1995 ............. 84.4 84.0 83.8 83.3 83.3 83.2 82.5 83.3 83.4 82.8 82.7 82.4 84.1 83.3 83.1 82.6 83.3 1996 ............. 81.9 82.4 82.0 82.5 82.8 83.1 82.7 82.8 82.9 82.5 83.0 83.0 82.1 82.8 82.8 82.8 82.6 1997 ............. 83.0 83.5 83.3 83.4 83.3 83.3 83.5 83.8 83.8 83.9 83.9 83.7 83.3 83.3 83.7 83.8 83.5 1998 ............. 83.5 83.1 82.9 82.8 82.7 81.6 81.1 82.4 81.8 81.8 81.1 80.8 83.2 82.4 81.8 81.2 82.1 1999 ............. 81.0 80.9 81.1 80.9 81.2 81.0 81.3 81.4 81.2 81.5 81.5 81.7 81.0 81.0 81.3 81.6 81.2 2000 ............. 81.9 82.0 82.2 82.5 82.7 82.7 82.3 82.6 82.4 81.9 81.4 80.6 82.0 82.6 82.4 81.3 82.1 Note. Monthly percentage change figures show change from the previous Estimates from October 2000 through December 2000 are subject to further month; quarterly figures show the change from the previous quarter at a revision in the upcoming monthly releases. compound annual rate of growth. Production and capacity indexes are expressed 1. Annual averages of industrial production are calculated from indexes that as percentages of output in 1992. are not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin □ March 2001 A.2. Revised data for industrial production, capacity, and utilization for manufacturing industries, 1987-2000 Seasonally adjusted data except as noted Quarter Annual Year Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. avg.1 1 2 3 4 Industrial production (percentage change) 1987 ............. -.8 1.6 .2 .5 .3 1.0 .7 -.2 .1 1.3 .5 .6 5.0 7.0 5.5 7.6 5.3 1988 ............. -.2 .4 -.1 1.0 -.1 .0 .7 .3 .2 .2 .9 .6 2.3 4.1 3.7 5.2 4.7 1989 ............. .9 -1.2 .8 .1 -.7 .0 -1.1 .3 -.3 -.6 .4 .1 4.3 -.7 -4.5 -1.4 1.9 1990 ............. -.2 .9 .3 -.8 .4 -.1 .0 .3 -.1 -.6 -1.3 -.6 2.9 -.1 .8 -6.3 -.5 1991............. -.9 -.7 -1.1 .3 .7 1.4 .2 .2 1.1 -.1 -.2 -.5 -9.7 1.2 7.8 1.7 -2.4 1992 ............. .3 .6 1.0 .6 .4 -.1 .7 -.2 .3 .7 .5 -.1 2.4 7.3 3.0 4.5 4.0 1993 ............. .7 .3 .2 .5 -.4 .0 .2 -.2 1.3 .2 .5 .9 4.4 2.0 1.5 6.6 3.7 1994 ............. .0 .4 1.0 .8 .9 .2 .8 .5 .2 .6 .9 1.0 5.6 9.4 6.6 7.6 6.0 1995 ............. .6 -.2 .3 -.3 .2 .5 -.6 1.3 .9 -.3 .2 .1 6.5 .7 3.9 3.6 5.3 1996 ............. -.2 1.0 -.2 1.3 .9 .9 .2 .6 .6 .0 1.0 .6 2.3 10.1 7.1 5.7 4.9 1997 ............. .5 1.2 .4 .5 .3 .8 .6 1.1 .5 .6 .7 .4 8.5 6.7 9.0 7.7 7.8 1998 ............. .6 .0 .2 .6 .3 -.8 -.1 2.3 -.2 .7 -.2 .2 4.8 2.8 3.9 4.7 5.6 1999 ............. .5 .5 .5 .2 .8 .2 .6 .6 .1 .9 .5 .6 4.1 5.4 6.0 6.8 4.8 2000 ............. .6 .4 .9 .6 .6 .4 -.1 .6 .3 -.2 -.6 -1.1 7.1 8.0 3.7 -2.1 6.1 Industrial production (index) 1987 ............. 89.6 91.0 91.2 91.6 91.9 92.8 93.4 93.3 93.4 94.6 95.1 95.6 90.6 92.1 93.4 95.1 92.8 1988 ............. 95.4 95.8 95.7 96.7 96.6 96.6 97.3 97.5 97.7 97.9 98.9 99.4 95.6 96.6 97.5 98.7 97.1 1989 ............. 100.3 99.1 99.9 100.0 99.4 99.4 98.3 98.7 98.4 97.8 98.2 98.3 99.8 99.6 98.5 98.1 99.0 1990 ............. 98.1 99.0 99.3 98.6 99.0 98.9 98.8 99.1 99.0 98.4 97.2 96.6 98.8 98.8 99.0 97.4 98.5 1991............. 95.8 95.1 94.1 94.4 95.0 96.3 96.6 96.8 97.8 97.8 97.6 97.1 95.0 95.2 97.0 97.5 96.2 1992 ............. 97.3 97.9 98.9 99.5 99.9 99.9 100.6 100.4 100.6 101.3 101.9 101.7 98.1 99.8 100.5 101.6 100.0 1993 ............. 102.5 102.8 103.0 103.5 103.1 103.1 103.4 103.1 104.4 104.6 105.1 106.1 102.7 103.2 103.6 105.3 103.7 1994 ............. 106.1 106.5 107.6 108.4 109.4 109.6 110.5 111.0 111.3 111.9 112.9 114.1 106.7 109.2 110.9 113.0 109.9 1995 ............. 114.8 114.6 114.9 114.6 114.9 115.4 114.8 116.2 117.3 116.9 117.1 117.3 114.8 115.0 116.1 117.1 115.7 1996 ............. 117.1 118.3 118.0 119.5 120.6 121.7 122.0 122.7 123.4 123.4 124.6 125.3 117.8 120.6 122.7 124.4 121.4 1997 ............. 125.9 127.3 127.8 128.4 128.9 129.9 130.7 132.1 132.8 133.6 134.5 135.0 127.0 129.1 131.9 134.4 130.8 1998 ............. 135.8 135.9 136.1 136.9 137.4 136.3 136.2 139.4 139.0 139.9 139.6 139.8 135.9 136.9 138.2 139.8 138.2 1999 ............. 140.5 141.2 141.9 142.2 143.4 143.6 144.5 145.3 145.6 146.8 147.5 148.4 141.2 143.1 145.1 147.6 144.8 2000 ............. 149.2 149.9 151.3 152.2 153.1 153.8 153.7 154.6 155.1 154.8 153.9 152.2 150.1 153.0 154.4 153.6 153.6 Capacity (index) 1987 ............. 113.2 113.4 113.6 113.8 113.9 114.1 114.2 114.4 114.6 114.7 114.9 115.0 113.4 113.9 114.4 114.9 114.1 1988 ............. 115.2 115.3 115.4 115.6 115.7 115.8 116.0 116.1 116.3 116.5 116.6 116.8 115.3 115.7 116.1 116.6 115.9 1989 ............. 117.0 117.3 117.5 117.8 118.0 118.3 118.5 118.7 119.0 119.2 119.5 119.7 117.3 118.0 118.7 119.5 118.4 1990 ............. 119.9 120.1 120.3 120.5 120.7 120.9 121.1 121.3 121.5 121.7 122.0 122.2 120.1 120.7 121.3 122.0 121.0 1991............. 122.4 122.6 122.8 123.0 123.1 123.3 123.5 123.7 123.8 124.0 124.2 124.3 122.6 123.1 123.7 124.2 123.4 1992 ............. 124.6 124.8 125.0 125.3 125.5 125.8 126.0 126.3 126.5 126.7 127.0 127.2 124.8 125.5 126.3 127.0 125.9 1993 ............. 127.5 127.7 128.0 128.2 128.5 128.8 129.0 129.3 129.6 129.9 130.2 130.5 127.7 128.5 129.3 130.2 128.9 1994 ............. 130.9 131.3 131.6 132.1 132.5 132.9 133.4 133.9 134.4 134.9 135.5 136.1 131.3 132.5 133.9 135.5 133.3 1995 ............. 136.6 137.3 137.9 138.5 139.2 139.8 140.5 141.2 141.9 142.6 143.3 144.0 137.3 139.2 141.2 143.3 140.2 1996 ............. 144.7 145.4 146.2 146.9 147.7 148.4 149.1 149.8 150.5 151.2 151.9 152.7 145.4 147.7 149.8 151.9 148.7 1997 ............. 153.4 154.2 154.9 155.7 156.5 157.4 158.2 159.1 160.0 160.9 161.9 162.9 154.2 156.5 159.1 161.9 157.9 1998 ............. 163.9 164.9 165.9 167.0 168.0 169.0 170.0 171.0 171.9 172.8 173.6 174.5 164.9 168.0 171.0 173.6 169.4 1999 ............. 175.3 176.0 176.8 177.5 178.3 179.0 179.7 180.3 181.0 181.7 182.4 183.1 176.0 178.3 180.3 182.4 179.3 2000 ............. 183.8 184.6 185.3 186.1 186.9 187.6 188.4 189.1 189.9 190.7 191.5 192.3 184.6 186.9 189.2 191.5 188.0 Utilization (level, percent) 1987 ............. 79.1 80.2 80.3 80.6 80.7 81.4 81.8 81.5 81.5 82.5 82.8 83.1 79.9 80.9 81.6 82.8 81.3 1988 ............. 82.9 83.1 82.9 83.7 83.5 83.4 83.8 84.0 84.0 84.1 84.8 85.1 83.0 83.5 83.9 84.7 83.8 1989 ............. 85.7 84.5 85.0 85.0 84.2 84.1 83.0 83.1 82.7 82.1 82.2 82.1 85.1 84.4 82.9 82.1 83.6 1990 ............. 81.8 82.5 82.6 81.8 82.0 81.8 81.6 81.7 81.5 80.9 79.7 79.0 82.3 81.9 81.6 79.9 81.4 1991............. 78.2 77.5 76.6 76.8 77.1 78.1 78.2 78.2 79.0 78.9 78.6 78.1 77.5 77.3 78.5 78.5 77.9 1992 ............. 78.1 78.5 79.1 79.5 79.6 79.4 79.8 79.5 79.6 79.9 80.2 79.9 78.6 79.5 79.6 80.0 79.4 1993 ............. 80.4 80.4 80.4 80.7 80.2 80.1 80.1 79.7 80.6 80.6 80.7 81.3 80.4 80.3 80.1 80.9 80.4 1994 ............. 81.1 81.1 81.7 82.1 82.6 82.5 82.8 82.9 82.8 83.0 83.3 83.8 81.3 82.4 82.8 83.4 82.5 1995 ............. 84.0 83.5 83.3 82.7 82.5 82.6 81.7 82.3 82.7 82.0 81.7 81.4 83.6 82.6 82.2 81.7 82.5 1996 ............. 80.9 81.3 80.7 81.4 81.7 82.0 81.8 81.9 82.0 81.6 82.0 82.1 81.0 81.7 81.9 81.9 81.6 1997 ............. 82.1 82.6 82.5 82.5 82.3 82.5 82.6 83.1 83.0 83.0 83.1 82.9 82.4 82.5 82.9 83.0 82.7 1998 ............. 82.9 82.4 82.0 82.0 81.8 80.6 80.1 81.5 80.9 81.0 80.4 80.2 82.4 81.5 80.8 80.5 81.3 1999 ............. 80.2 80.2 80.3 80.1 80.4 80.2 80.4 80.6 80.4 80.8 80.9 81.0 80.2 80.3 80.5 80.9 80.5 2000 ............. 81.2 81.2 81.6 81.8 81.9 82.0 81.6 81.7 81.7 81.2 80.4 79.1 81.3 81.9 81.7 80.2 81.3 Note. See general note to table A.I. 1. Annual averages of industrial production are calculated from indexes that are not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: The 2000 Annual Revision 143 A.3. Rates of growth in industrial production, by major market group, 1996-2000 Difference between growth rates: Revised growth rate revised less earlier (percent) Market group (percentage points) 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 Total index .......................................................... 5.6 7.2 3.2 5.1 4.2 .3 .5 .3 .9 -.1 Products, total ............................................................ 4.7 6.0 3.2 3.4 3.0 .4 .8 .7 .9 .3 Final products........................................................ 4.9 6.5 2.9 3.4 3.7 .5 .8 .6 .8 .2 Consumer goods ............................................... 2.2 4.0 .2 3.1 .7 .2 1.2 1.1 1.1 .2 Durable.......................................................... 2.7 8.4 4.3 8.2 -4.3 .9 2.9 -.8 1.4 -.1 Automotive products .............................. 3.0 10.6 5.4 3.3 -6.8 .6 .3 .7 .6 1.1 Autos and trucks.................................. 4.1 15.0 5.5 2.5 -9.9 1.6 2.0 1.2 .6 2.5 Autos................................................. -4.7 5.1 4.1 -5.5 -11.3 1.5 1.5 1.4 .6 .1 Trucks ............................................... 10.8 21.1 6.3 6.7 -9.3 1.6 2.0 1.3 .6 3.3 Auto parts and allied goods............... 1.0 2.5 6.1 4.4 -1.3 -1.1 -3.4 .1 .7 -.5 Other durable goods ................................ 2.5 6.6 3.4 12.4 -2.1 1.2 4.8 -1.7 1.8 -1.2 Appliances and electronics ............... 5.8 12.1 10.2 32.5 -.5 1.7 10.7 -13.6 3.0 -3.4 Appliances and air conditioning .. .9 4.2 8.2 11.5 -5.2 1.8 6.3 -1.6 3.5 5.4 Home electronics ............................ 10.9 19.8 11.7 53.3 5.1 1.5 14.2 -27.7 -7.0 -14.0 Carpeting and furniture...................... 3.0 4.2 6.2 2.8 .4 -.1 1.2 3.7 -.5 1.5 Miscellaneous ..................................... .4 4.5 -2.5 4.6 -4.4 1.6 2.7 .8 .2 -.4 Nondurable .................................................. 2.1 2.7 -1.0 1.6 2.1 .1 .7 1.5 .9 .4 Non-energy ............................................... 2.0 2.9 -.5 1.5 1.2 .1 .8 1.8 .9 .7 Foods and tobacco .............................. .6 2.2 .6 .2 .8 -.6 .0 1.9 .9 .6 Clothing................................................ -.4 -3.1 -8.1 -4.9 -4.6 .0 -.7 -.1 -2.7 3.5 Chemical products .............................. 5.2 5.5 3.3 5.8 2.5 .4 3.1 3.4 1.8 -.1 Paper products..................................... 3.5 5.2 -5.4 2.6 3.3 2.1 .7 .0 1.4 .3 Energy products....................................... 2.6 1.8 -4.1 2.5 7.1 .1 -.1 -.2 1.2 -2.2 Fuels...................................................... 3.6 1.8 -.4 1.9 .0 .0 .0 .2 .0 .8 Utilities ................................................ 2.1 1.6 -5.5 2.5 11.8 .2 .0 -.4 1.7 -3.5 Equipment, total ............................................... 9.3 10.4 7.3 3.9 8.9 .7 .1 .1 .4 .7 Business equipment..................................... 11.6 13.2 9.1 5.7 11.0 .8 .4 -.9 1.0 1.4 Information processing and related — 20.7 16.5 16.8 21.0 23.8 2.2 .5 -3.2 -.5 2.4 Computer and office............................ 57.6 24.1 56.0 55.3 46.5 4.1 -8.1 -21.6 4.7 5.0 Industrial .................................................. 1.7 5.5 -1.0 -.9 6.8 .5 .7 -1.7 2.0 1.8 Transit ...................................................... 15.4 23.5 12.9 -8.9 -9.2 -.4 1.7 2.2 3.0 1.2 Autos and trucks.................................. -2.0 13.2 9.0 1.6 -15.7 1.7 1.5 2.6 2.6 -.8 Other.......................................................... 4.3 7.9 2.9 -3.5 11.8 -1.7 -2.8 4.5 4.6 4.5 Defense and space equipment ................... -1.8 -5.0 8.2 -3.1 -3.6 .7 -1.0 7.6 .6 -.2 Oil and gas well drilling.............................. 7.9 8.6 -26.3 5.6 18.6 .0 -1.0 -1.1 -.5 -1.2 Manufactured homes................................... 3.5 9.5 9.2 -17.4 -35.4 -.3 .6 2.5 .5 .5 Intermediate products........................................... 4.1 4.5 4.1 3.2 1.0 .3 .9 1.0 1.2 .7 Construction supplies ..................................... 6.1 4.0 7.6 4.5 -.6 .2 1.2 2.0 1.3 .2 Business supplies ............................................. 2.8 4.8 1.8 2.3 2.1 .4 .7 .4 1.2 1.0 Materials..................................................................... 7.0 9.4 3.7 8.0 6.0 .1 .2 .2 .9 -.6 Durable................................................................... 10.6 14.1 7.2 10.9 11.3 .1 -.3 -.1 1.2 -.3 Consumer parts ................................................. 1.5 10.3 .1 7.1 -2.8 -.3 .7 2.9 1.7 1.9 Equipment parts ............................................... 23.8 26.1 20.5 22.0 35.8 .4 -.4 -1.6 1.0 .2 Semiconductors, printed circuit boards, and other electrical components........ 53.4 55.1 53.7 54.6 81.4 1.2 .9 -2.9 2.7 -1.1 Other ................................................................. 3.9 5.4 -.6 3.4 -1.8 -.1 -.6 .1 1.3 -.1 Basic metals ................................................. 4.1 5.5 -3.0 6.5 -5.4 -.6 .0 2.6 1.5 -.2 Nondurable ............................................................ 3.5 5.3 -2.8 5.6 -4.5 .1 1.0 .1 -.4 .4 Textile ................................................................ 1.4 3.4 -8.5 -1.2 -10.3 -.9 .3 1.1 -1.7 2.2 Paper ................................................................. 4.4 4.5 -2.9 4.2 -3.8 .1 .0 -.3 .2 -.5 Chemical............................................................ 4.7 6.3 ^.0 9.4 -4.5 .1 1.9 -.4 -1.3 -.5 Other ................................................................. 1.3 4.8 2.8 2.0 -2.7 .7 .5 1.2 .5 2.2 Energy ................................................................... .7 .1 -.7 .5 1.7 .0 .0 .3 1.3 -.1 Primary .............................................................. -1.0 -.1 -1.0 -.7 .0 -.2 .0 -.6 .1 -.8 Converted fuel.................................................. 4.0 .4 -.2 2.8 5.8 .2 .0 2.0 3.8 1.6 Special aggregates Total excluding: Autos and trucks .................................................. 5.8 7.0 3.1 5.2 4.7 .3 .4 .3 .9 -.1 Motor vehicles and parts..................................... 6.0 6.8 3.2 5.0 5.0 .3 .4 .2 .8 -.1 Computers.............................................................. 4.8 7.0 2.3 4.0 3.3 .2 .6 .8 1.0 .2 Computers and semiconductors'........................ 3.2 5.4 .9 2.4 .6 .2 .7 1.0 .9 .3 Computers, communications equipment, and semiconductors..................................... 3.0 5.0 .7 2.2 .0 .2 .6 1.1 1.0 .5 Consumer goods excluding: Autos and trucks .................................................. 2.1 3.2 -.1 3.1 1.4 .2 1.1 1.1 1.1 .1 Energy ................................................................... 2.2 4.3 .6 3.2 -.2 .3 1.3 1.2 1.1 .4 Business equipment excluding: Autos and trucks .................................................. 13.1 13.3 9.1 6.1 13.9 .7 .3 -1.2 .8 1.8 Computers and office equipment........................ 7.6 12.2 4.8 .5 6.7 .5 1.2 .8 1.3 2.1 Materials excluding: Energy ................................................................... 8.7 11.7 4.5 9.5 6.9 .2 .3 .0 .7 -.7 Note. Growth rates are calculated as the percentage change in the seasonally calculated from annualized growth rates between the fourth quarter of 1999 and adjusted index from the fourth quarter of the previous year to the fourth quarter the third quarter of 2000. of the year specified. For 2000, the differences between growth rates are 1. Semiconductors include related electronic components. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin □ March 2001 A.4. Rates of growth in industrial production, by industry group, 1996-2000 Difference between growth rates: Revised growth rate revised less earlier Series SIC (percent) (percentage points) code1 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 Total index ................................................ 5.6 7.2 3.2 5.1 4.2 .3 .4 .3 .9 -.1 Manufacturing................................................. 6.3 8.0 4.0 5.6 4.1 .4 .6 .3 .8 .0 Primary processing .................................... 8.3 10.4 4.3 8.8 5.0 .1 .4 .2 .4 -.2 Advanced processing ................................ 5.0 6.4 3.9 3.7 3.5 .5 .6 .5 1.0 .0 Durable manufacturing ............................ 9.2 11.5 8.0 8.2 7.9 .3 .1 .3 1.2 .0 Lumber and products............................ 24 1.8 3.7 5.4 .5 -7.6 .0 -.8 1.2 .6 .5 Furniture and fixtures .......................... 25 5.2 7.8 6.2 3.1 5.3 .6 4.1 2.9 .5 3.8 Stone, clay, and glass products........... 32 5.6 3.4 5.6 2.3 .5 -.2 .1 .6 1.1 .8 Primary metals ..................................... 33 5.0 6.1 -3.4 8.0 -7.1 -.6 .1 3.0 .5 .2 Iron and steel..................................... 331,2 4.4 5.8 -8.4 12.6 -10.6 -.8 -.3 3.2 .3 .6 Raw steel ....................................... 33 lpt -1.1 7.5 -9.4 16.6 -15.7 -1.0 .3 3.4 -1.1 1.4 Nonferrous metals ............................ 333-6,9 5.8 6.4 2.6 3.0 -3.2 -.4 .4 2.6 .8 -.2 Fabricated metal products ................... 34 4.2 6.2 1.5 1.6 .5 .0 .3 1.5 1.4 1.1 Industrial machinery and equipment .. 35 10.9 7.3 11.6 13.6 14.3 .4 -3.8 -4.5 2.3 -.5 Computer and office equipment___ 357 51.5 21.5 54.0 54.3 43.6 5.0 -6.3 -24.9 3.2 2.4 Electrical machinery ............................ 36 24.3 28.4 20.4 25.2 38.9 .9 2.2 -1.1 2.5 .6 Semiconductors and related electronic components............. 3672-9 47.7 49.0 45.7 47.8 72.8 .8 -.9 -2.8 3.5 -.8 Transportation equipment..................... 37 4.7 14.7 5.9 -1.4 -5.5 -.1 1.5 3.7 1.6 1.2 Motor vehicles and parts ................. 371 -.5 16.0 3.3 5.9 -8.4 .9 2.2 2.3 1.9 1.8 Autos and light trucks ................. 3.2 13.5 5.4 1.5 -10.0 1.6 2.2 1.4 .9 1.6 Aerospace and miscellaneous transportation equipment ....... 372-6,9 13.3 12.9 10.4 -11.6 -.7 -1.7 .6 6.3 .5 .5 Instruments............................................. 38 3.8 2.9 3.9 4.5 2.2 1.4 -.4 2.0 -.4 2.6 Miscellaneous manufactures ............... 39 2.7 3.1 .7 6.6 .0 .1 .0 1.3 2.3 2.1 Nondurable manufacturing...................... 2.9 4.2 -.4 2.5 -.5 .4 1.3 .7 .6 .4 Foods ...................................................... 20 .3 2.2 3.7 .9 1.5 -.5 .3 1.9 1.0 .9 Tobacco products .................................. 21 -.3 5.5 -15.9 -1.9 -2.7 -.9 .2 2.5 .9 -.2 Textile mill products ............................ 22 .7 1.5 -6.5 -.2 -8.8 -1.2 -2.3 -.1 -4.6 4.1 Apparel products.................................... 23 -.3 -.2 -6.3 ^.0 -5.5 .9 2.3 1.0 1.0 .3 Paper and products................................ 26 3.6 4.9 -.1 3.0 -3.2 .6 .8 1.1 .0 -.1 Printing and publishing........................ 27 3.0 5.1 -1.8 1.8 2.3 1.2 1.2 -.2 1.3 1.1 Chemicals and products ...................... 28 5.4 5.3 .2 6.7 -.4 .7 2.7 .9 .9 -.5 Petroleum products .............................. 29 4.0 3.1 2.1 .2 -.3 -.1 .4 .0 .2 -.3 Rubber and plastic products ............... 30 5.1 7.0 1.6 3.6 -1.8 1.1 2.4 -1.5 -.2 -.1 Leather and products ............................ 31 4.3 -5.4 -10.1 -6.0 -3.8 2.3 1.7 -1.9 3.8 4.4 Mining.............................................................. 1.6 1.5 -5.3 -.5 1.5 -.3 -.4 -.3 .4 -1.7 Metal mining ............................................. 10 3.2 3.2 -2.3 -8.8 -2.1 -.8 .3 -.2 3.1 -3.3 Coal mining ............................................... 12 2.4 1.7 2.4 -1.3 .6 -.2 -.2 -.4 -.1 .7 Oil and gas extraction .............................. 13 1.0 1.3 -8.7 .3 2.2 -.1 -.4 -.3 .1 -2.9 Stone and earth minerals.......................... 14 5.1 2.4 4.3 .6 -3.2 .3 -.7 .5 1.1 -.4 Utilities............................................................ 1.4 2.2 -1.4 2.3 7.7 .2 .1 .0 2.1 .2 Electric........................................................ 491,3pt 1.1 3.2 1.6 1.7 5.5 .1 .3 .8 1.7 .2 Gas .............................................................. 492,3pt 2.5 -1.5 -11.9 4.6 15.1 .3 .3 .3 3.5 -2.8 Special aggregates Computers, communications equipment, and semiconductors 2 ............................ 41.0 35.7 37.2 40.6 55.6 1.9 -.9 -6.7 3.2 5.2 Manufacturing excluding: Motor vehicles and parts ........................ 6.7 7.5 4.1 5.5 5.0 .3 .4 .2 .7 -.1 Computers and office equipment............. 5.3 7.7 3.0 4.4 3.1 .2 .7 .8 1.0 .3 Computers and semiconductors2 ........... 3.5 5.9 1.4 2.6 .1 .2 .8 1.1 .9 .5 Computers, communications equipment, and semiconductors2........................ 3.2 5.4 1.2 2.3 -.7 .2 .7 1.2 1.0 .7 Note. Growth rates are calculated as the percentage change in the seasonally publishing, chemical products and other agricultural chemicals, leather and adjusted index from the fourth quarter of the previous year to the fourth quarter products, furniture and fixtures, industrial and commercial machinery and of the year specified. For 2000, the differences between growth rates are computer equipment, electrical machinery, transportation equipment, instru­ calculated from annualized growth rates between the fourth quarter of 1999 and ments, and miscellaneous manufactures. the third quarter of 2000. 1. Standard Industrial Classification; see Executive Office of the President, Primary-processing manufacturing includes textile mill products; paper and Office of Management and Budget, Standard Industrial Classification Manual, products; industrial chemicals, synthetic materials, and fertilizers; petroleum 1987 (U.S. Government Printing Office, 1987). products; rubber and plastics products; lumber and products; primary metals; 2. Semiconductors include related electronic components. fabricated metals; and stone, clay, and glass products. Advanced-processing pt. Part of classification. manufacturing includes foods, tobacco products, apparel products, printing and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: The 2000 Annual Revision 145 A.5. Rates of growth in capacity, by industry group, 1996-2000 Difference between growth rates: Revised growth rate revised less earlier Industry group SIC (percent) (percentage points) code1 1996 1997 1998 1999 2000 1996 1997 1998 1999 20002 Total index ....................................................... 5.4 5.9 6.5 4.6 4.6 -.1 .5 .3 .4 .8 Manufacturing........................................................ 6.1 6.5 7.2 5.1 5.0 -.1 .5 .2 .4 .8 Primary processing ........................................... 9.2 8.5 9.4 4.9 8.0 -.7 .1 -.5 -.8 1.5 Advanced processing ....................................... 4.0 4.9 5.7 5.2 3.0 .3 .2 .5 1.3 -.4 Durable manufacturing ................................... 9.3 9.3 10.2 8.4 8.8 .0 .5 -.5 1.1 1.3 Lumber and products.................................... 24 3.4 3.3 3.7 1.6 1.2 -.3 .0 .6 -1.3 1.0 Furniture and fixtures .................................. 25 4.3 5.4 10.0 2.9 3.9 .0 1.6 6.8 .9 3.3 Stone, clay, and glass products................... 32 3.0 3.5 3.9 2.1 2.4 -.4 .4 1.1 -1.4 .2 Primary metals ............................................. 33 5.3 3.4 5.1 3.3 .6 -.4 .0 1.6 .8 -1.2 Iron and steel............................................. 331,2 4.8 3.9 5.8 3.1 .9 -.3 .0 .6 -.8 -1.5 Raw steel............................................... 33 lpt 2.4 6.1 6.5 2.8 1.7 -.4 .1 .4 1.2 -.5 Nonferrous metals ................................... 333-6,9 6.0 2.9 4.4 3.4 .4 -.4 -.2 2.9 2.6 -1.0 Primary copper..................................... 3331 .6 1.0 -1.1 -3.1 -2.9 5.7 .3 -.6 -.9 3.0 Primary aluminum .............................. 3334 .3 .1 .7 1.5 1.3 -.1 .0 .7 1.5 .9 Fabricated metal products .......................... 34 4.4 6.3 6.0 1.8 2.5 -.8 .2 .2 1.5 2.5 Industrial machinery and equipment......... 35 12.0 11.4 11.8 18.1 10.6 -.3 -2.9 -4.0 2.8 -1.7 Computer and office equipment............. 357 39.3 44.3 37.0 72.7 39.0 -3.2 -6.6 -21.8 10.8 -3.2 Electrical machinery .................................... 36 30.4 26.5 28.2 18.4 33.2 -.5 3.7 -2.3 1.2 7.8 Semiconductors and related electronic components..................... 3672-9 57.6 46.3 55.2 31.8 69.8 -1.5 3.3 -5.8 .2 16.2 Transportation equipment............................ 37 1.4 3.6 4.1 2.2 1.1 1.0 1.2 1.4 2.3 1.0 Motor vehicles and parts ........................ 371 2.8 6.2 4.7 2.7 2.1 1.3 2.5 2.0 2.5 .2 Autos and light trucks ........................ -2.1 5.2 4.4 .5 .9 2.4 1.0 1.8 2.1 -.3 Aerospace and miscellaneous transportation equipment ............... 372-6,9 -.2 .6 3.1 1.6 -.4 .9 .0 .3 2.3 1.6 Instruments.................................................... 38 1.2 1.1 3.4 5.8 1.8 .9 .3 1.2 1.8 -.1 Miscellaneous manufactures ...................... 39 2.4 1.7 2.9 2.4 1.3 .0 1.2 1.4 1.2 1.0 Nondurable manufacturing.............................. 2.2 3.4 4.1 1.3 .9 .0 .8 1.6 .1 .6 Foods .............................................................. 20 2.4 2.3 2.8 2.2 .4 .2 .0 .6 .3 -.1 Textile mill products .................................... 22 .7 -.2 -.2 -.5 -1.7 -1.2 -2.4 -.5 -.8 -1.8 Apparel products........................................... 23 .0 .8 .8 -.9 -2.2 -.3 .2 .1 .0 .2 Paper and products....................................... 26 2.3 3.3 4.3 .9 .8 1.0 .0 1.2 -1.4 .7 Pulp and paper ......................................... 261-3 2.6 1.6 .3 .9 .7 1.4 -.7 -1.1 -.3 .5 Printing and publishing................................ 27 1.0 3.0 3.5 .9 -.1 .3 1.2 1.9 1.1 -.8 Chemicals and products .............................. 28 3.4 5.5 7.0 1.4 2.5 .0 2.7 4.2 .4 1.6 Plastics materials ..................................... 2821 3.3 6.8 9.6 1.3 .5 .1 5.1 6.0 -2.4 -2.7 Synthetic fibers......................................... 2823,4 -3.3 2.0 2.8 -1.5 1.4 -1.3 1.0 2.3 -3.2 3.7 Petroleum products ..................................... 29 1.1 2.4 2.4 1.9 .0 -.3 .1 -.5 .3 -.6 Rubber and plastics products...................... 30 3.9 5.2 5.7 3.8 3.5 -.3 -.2 .6 -1.6 .1 Leather and products .................................... 31 -1.8 -.6 -2.0 -3.5 -4.4 -.3 1.2 .8 1.4 ■7 s Mining..................................................................... .6 1.9 -.1 -1.5 -.8 .2 .3 -1.0 -1.3 .7 Metal mining .................................................... 10 3.2 3.0 .8 -.1 -1.8 1.7 -.2 -.3 1.4 .7 Coal mining ...................................................... 12 1.1 .9 .3 .8 .6 -.7 .7 -.1 .4 .4 Oil and gas extraction ..................................... 13 .1 1.5 -.8 -2.4 -1.1 .4 .3 -1.3 -1.8 1.0 Oil and gas well drilling .................................. 138 -.5 3.5 1.4 -1.9 -.4 .7 2.5 -.5 1.2 -1.2 Stone and earth minerals.................................. 14 3.3 4.8 2.0 .4 .0 -.3 .5 -.9 -1.2 -.4 Utilities................................................................... .9 1.0 1.1 2.4 3.3 -1.0 .8 .4 1.0 2.1 Electric................................................................ 491,3pt 1.1 .2 1.1 3.2 4.4 -.8 .4 .4 1.8 2.7 Gas ..................................................................... 492,3pt 1.1 1.1 .5 .1 -.1 -.7 -.4 -.7 -.9 -1.1 Special aggregates Computers, communications equipment, and semiconductors3 ................................... 44.2 40.3 39.5 37.8 48.0 -1.4 2.4 -8.7 2.1 9.0 I Manufacturing excluding computers, communications equipment, and semiconductors3 ........................................... 2.7 3.6 4.4 2.1 1.3 .1 .5 1.4 .8 .8 Note. See general note to table A.4. 3. Semiconductors include related electronic components, 1. Standard Industrial Classification; see table A.4, note 1. pt. Part of classification. 2. Through the fourth quarter of 2000. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin □ March 2001 A.6. Capacity utilization rates, by industry group, 1967-2000 Difference between rates: Revised rate revised less earlier (percent of capacity, seasonally adjusted) SIC (percentage points) Item code1 1967-99 1988-89 1990-91 1998:Q4 1999:Q4 2000:Q4 1998:Q4 1999:Q4 2000: Q3 avg. high low Total index ...................................................... 82.1 85.4 78.1 81.2 81.6 81.3 .2 .6 .1 Manufacturing........................................................ 81.1 85.7 76.6 80.5 80.9 80.2 .3 .6 .2 Primary processing ........................................... 82.1 88.3 76.7 81.6 84.6 82.3 .9 1.9 1.1 Advanced processing ....................................... 80.6 84.2 76.6 80.4 79.2 79.7 .5 .2 .4 Durable manufacturing ................................... 79.6 84.6 73.1 81.0 81.0 80.3 .6 .7 .0 Lumber and products................................... 24 82.6 93.6 75.5 84.2 83.3 76.1 .5 2.1 1.9 Furniture and fixtures ................................. 25 81.3 86.6 72.5 78.6 78.8 79.8 .0 -.3 .2 Stone, clay, and glass products .................. 32 78.7 83.5 69.7 85.1 85.2 83.7 -.4 1.7 2.2 Primary metals ............................................. 33 81.5 92.7 73.7 84.8 88.6 81.8 1.6 1.3 2.2 Iron and steel............................................. 331,2 81.3 95.2 71.8 79.9 87.2 77.3 1.6 2.6 3.8 Raw steel ............................................... 331 pt 80.9 92.7 71.5 76.3 86.6 71.8 2.1 .5 1.6 Nonferrous metals ................................... 333-6,9 81.9 89.3 74.2 90.8 90.4 87.1 1.5 -.1 .2 Primary copper..................................... 3331 76.2 86.3 73.5 106.4 77.5 78.3 19.6 2.1 11.1 Primary aluminum .............................. 3334 88.4 100.4 97.3 88.4 89.7 80.6 -.2 -1.5 -2.0 Fabricated metal products .......................... 34 78.0 82.0 71.9 77.0 76.9 75.4 1.5 1.5 .7 Industrial machinery and equipment......... 35 81.4 85.4 72.3 83.0 79.8 82.5 -1.1 -1.3 -.9 Computer and office equipment............. 357 81.3 86.9 66.9 85.6 76.5 79.1 -.1 -3.5 -1.6 Electrical machinery ................................... 36 81.2 84.0 75.0 79.0 83.4 87.0 1.1 2.0 -1.1 Semiconductors and related electronic components.................... 3672-9 79.6 81.1 75.6 76.8 86.1 87.7 -1.7 .1 -7.2 Transportation equipment............................ 37 76.0 85.8 68.5 81.7 78.8 73.7 1.0 .5 .6 Motor vehicles and parts ........................ 371 76.9 89.1 55.9 80.4 82.9 74.3 -.2 -.7 .2 Autos and light trucks2 ...................... 92.3 53.3 86.6 87.5 78.1 -.4 -1.5 -.2 Aerospace and miscellaneous transportation equipment ............... 372-6,9 75.3 87.3 79.2 83.7 72.8 72.6 2.9 1.3 .6 Instruments.................................................... 38 81.7 81.4 77.2 81.4 80.4 80.7 1.0 -.7 .9 Miscellaneous manufactures ...................... 39 75.8 79.0 71.7 78.3 81.6 80.5 -.8 -.1 .6 Nondurable manufacturing.............................. 83.3 87.3 80.7 80.1 81.0 79.9 -.3 .2 .1 Foods ............................................................. 20 82.8 85.4 82.7 81.2 80.2 81.0 1.1 1.6 2.2 Textile mill products ................................... 22 85.6 90.4 77.7 82.2 82.4 76.4 .9 -2.1 1.7 Apparel products........................................... 23 80.8 85.1 75.5 74.0 71.7 69.3 3.0 3.6 3.6 Paper and products....................................... 26 88.9 93.5 85.0 85.0 86.7 83.2 -1.1 .0 -.2 Pulp and paper ......................................... 261-3 92.4 98.0 89.9 90.9 94.0 89.2 .1 .5 -.6 Printing and publishing................................ 27 85.5 91.7 79.6 80.1 80.8 82.7 -1.1 -.9 .1 Chemicals and products .............................. 28 79.3 86.2 79.3 74.5 78.4 76.2 -2.5 -2.3 -3.5 Plastics materials ..................................... 2821 86.8 97.0 74.8 89.4 94.0 89.5 -2.4 -.7 5.0 Synthetic fibers......................................... 2823,4 85.1 99.7 77.6 79.9 87.6 81.7 2.9 5.3 2.1 Petroleum products ..................................... 29 87.1 88.5 85.1 94.7 93.2 92.9 .6 .5 .7 Rubber and plastics products...................... 30 84.7 89.6 77.4 85.5 85.3 80.9 .4 1.5 1.5 Leather and products ................................... 31 80.9 83.3 76.1 71.2 69.3 69.8 .4 2.3 4.2 Mining..................................................................... 87.4 88.0 87.0 83.8 84.7 86.6 .5 1.9 .3 Metal mining .................................................... 10 79.4 89.4 79.9 87.1 79.6 79.4 -.6 1.2 -1.3 Coal mining ...................................................... 12 86.7 91.5 83.4 87.3 85.4 85.4 -.5 -.9 -.7 Oil and gas extraction ..................................... 13 88.4 88.2 88.7 82.4 84.7 87.6 .9 2.5 .1 Oil and gas well drilling ................................. 138 73.9 69.3 60.0 62.0 66.8 79.5 -1.3 -2.6 -3.1 Stone and earth minerals................................. 14 84.8 89.0 79.4 86.4 86.6 83.8 .6 2.6 2.5 Utilities................................................................... 87.5 92.6 83.4 89.3 89.2 93.0 -.1 .9 -.4 Electric............................................................... 491,3pt 89.6 95.0 87.1 95.0 93.6 94.6 1.2 1.2 -.5 Gas ..................................................................... 492,3pt 82.0 85.0 67.1 72.2 75.4 86.9 1.3 4.5 4.0 Special aggregates Computers, communications equipment, and semiconductors3 ................................... 80.2 81.9 72.4 79.2 80.8 85.0 -.3 .3 -1.0 Manufacturing excluding computers, communications equipment, and semiconductors3 ........................................... 81.2 86.1 76.8 80.7 80.9 79.3 .2 .3 .2 Note. The “high” column refers to periods in which utilization generally 1. Standard Industrial Classification; see table A.4, note 1. peaked; the “low” column refers to recession years in which utilization gener- 2. Series begins in 1977. ally bottomed out. The monthly highs and lows are specific to each series, and 3. Semiconductors include related electronic components, all did not occur in the same month. pt. Part of classification. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: The 2000 Annual Revision 147 A.7. Annual proportions in industrial production, by industry group, 1992-99 SIC Item code1 1992 1993 1994 1995 1996 1997 1998 1999 Total index ....................................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Manufacturing........................................................ 85.4 85.9 86.7 86.9 87.0 88.2 88.9 88.4 Primary processing ........................................... 31.0 31.8 33.4 33.7 33.5 34.0 33.7 34.1 Advanced processing ....................................... 54.5 54.1 53.3 53.2 53.5 54.1 55.2 54.3 Durable manufacturing .................................... 44.8 45.6 46.3 46.8 47.6 48.3 48.9 48.4 Lumber and products................................... 24 2.1 2.2 2.2 2.1 2.1 2.1 2.1 2.1 Furniture and fixtures .................................. 25 1.4 1.4 1.4 1.4 1.4 1.5 1.6 1.6 Stone, clay, and glass products................... 32 2.1 2.1 2.2 2.2 2.3 2.3 2.4 2.4 Primary metals ............................................. 33 3.1 3.3 3.6 3.5 3.5 3.6 3.4 3.4 Iron and steel............................................. 331,2 1.8 1.9 2.0 1.9 1.9 2.0 1.8 1.8 Raw steel............................................... 33 lpt .1 .1 .1 .1 .1 .1 .1 .1 Nonferrous metals .................................... 333-6,9 1.4 1.4 1.6 1.6 1.6 1.6 1.6 1.6 Fabricated metal products .......................... 34 5.0 5.1 5.2 5.3 5.5 5.7 5.7 5.6 Industrial machinery and equipment......... 35 7.8 8.1 8.4 8.9 9.1 9.0 9.1 9.0 Computer and office equipment............. 357 1.6 1.6 1.6 1.7 1.8 1.9 2.0 2.3 Electrical machinery ................................... 36 7.1 7.4 7.8 8.3 8.6 8.8 8.6 8.5 Semiconductors and related electronic components..................... 3672-9 2.5 2.6 2.9 3.4 3.6 3.7 3.5 3.6 Transportation equipment............................ 37 9.4 9.5 9.3 8.9 8.9 9.3 9.9 9.7 Motor vehicles and parts ........................ 371 4.7 5.1 5.5 5.4 5.5 5.7 5.6 5.9 Autos and light trucks2 ...................... 2.5 2.5 2.8 2.8 2.9 3.0 2.7 2.9 Aerospace and miscellaneous transportation equipment ............... 372-6,9 4.7 4.4 3.8 3.5 3.4 3.6 4.3 3.9 Instruments.................................................... 38 5.4 5.3 4.9 4.8 4.9 4.7 4.8 4.7 Miscellaneous manufactures ...................... 39 1.3 1.3 1.3 1.3 1.4 1.3 1.3 1.3 Nondurable manufacturing.............................. 40.6 40.3 40.4 40.2 39.4 39.9 40.1 40.0 Foods .............................................................. 20 9.6 9.6 9.3 9.2 9.1 9.0 9.2 9.0 Tobacco products ......................................... 21 1.6 1.1 1.2 1.3 1.3 1.4 1.7 1.7 Textile mill products .................................... 22 1.8 1.8 1.8 1.7 1.6 1.6 1.5 1.4 Apparel products........................................... 23 2.2 2.1 2.1 2.0 1.9 1.8 1.7 1.5 Paper and products....................................... 26 3.5 3.5 3.8 3.9 3.5 3.4 3.4 3.4 Printing and publishing................................ 27 6.8 6.8 6.6 6.6 6.6 6.9 6.8 6.6 Chemicals and products .............................. 28 10.0 10.0 10.0 9.9 9.8 10.1 10.2 10.4 Petroleum products ..................................... 29 1.4 1.5 1.6 1.5 1.7 1.6 1.5 2.0 Rubber and plastics products...................... 30 3.5 3.6 3.8 3.7 3.7 3.8 3.8 3.8 Leather and products ................................... 31 .3 .3 .2 .2 .2 .2 .2 .2 Mining..................................................................... 6.8 6.3 5.9 6.0 6.3 5.6 5.0 5.6 Metal mining .................................................... 10 .4 .4 .4 .4 .4 .3 .3 .2 Coal mining ...................................................... 12 1.0 .9 .9 .8 .8 .7 .7 .6 Oil and gas extraction ..................................... 13 4.8 4.4 4.0 4.1 4.5 3.9 4.2 Stone and earth minerals................................. 14 .6 .6 .6 .6 .6 .6 .6 .60 Utilities................................................................... 7.8 7.7 7.4 7.1 6.7 6.3 6.1 5.9 Electric................................................................ 491,3pt 6.2 6.1 5.8 5.6 5.3 4.9 4.8 4.6 Gas ..................................................................... 492,3pt 1.6 1.6 1.6 1.5 1.4 1.4 1.3 1.3 |Jjf§|SI|Jf Special aggregates Computers, communications equipment, and semiconductors 3..................................... 5.7 5.8 6.2 6.9 7.3 7.6 7.5 7.8 Manufacturing excluding: Motor vehicles and parts.................................. 80.7 80.9 81.2 81.5 81.5 82.4 83.3 82.5 Computers and office equipment..................... 83.8 84.3 85.1 85.2 85.2 86.3 86.9 86.1 Computers and semiconductors3 ................... 81.3 81.7 82.2 81.8 81.6 82.6 83.4 82.5 Computers, communications equipment, and semiconductors3................................ 79.8 80.1 80.5 80.1 79.7 80.5 81.4 80.6 Note. The IP proportion data are estimates of the industries’ relative contri- 1. Standard Industrial Classification; see table A.4, note 1. bution to overall IP growth in the following year. For example, a 1 percent 2. Series began in 1977. increase in durable goods manufacturing in 2000 would account for a 0.484 per- 3. Semiconductors include related electronic components, cent increase in total IP. pt. Part of classification. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin □ March 2001 A.8. Rates of growth in electric power use, 1996-2000 --------- Difference between growth rates: Revised growth rate 111 1 (percent) revised less earlier (percentage points) 1998 1999 2000 1996 1997 1998 1999 2000 Total 1.6 1.0 -1.2 1.0 .6 .1 -.1 -.3 1.3 .2 Manufacturing.................... 1.6 1.2 -1.2 1.1 .7 .2 -.1 -.3 1.4 .3 Durable manufacturing ........................ .3 3.8 -1.8 1.3 2.7 .6 -.9 -.5 1.9 .6 Lumber and products........................ 24 4.7 1.0 2.1 -.1 3.1 .5 -2.5 .4 .9 1.1 Furniture and fixtures ...................... 25 4.8 2.7 1.0 1.9 5.1 .7 1.1 .4 .8 2.3 Stone, clay, and glass products....... 32 4.1 1.1 2.2 -.4 4.0 .6 -.5 -.3 1.8 .1 Primary metals .................................. 33 -3.0 5.5 -4.8 1.9 2.3 .8 -1.2 -1.0 2.4 -.1 Fabricated metal products ............... 34 3.9 4.1 -.7 .9 3.4 .2 -.5 .5 2.0 .7 Industrial machinery and equipment 35 1.3 4.1 .5 .1 3.3 .1 -.1 -.5 2.1 1.2 Electrical machinery ........................ 36 2.9 2.6 -2.6 -.4 4.8 .4 -.3 -.6 1.8 -.9 Transportation equipment................. 37 -.1 4.2 -1.0 3.6 -1.0 .6 -1.4 -.1 1.6 1.8 Instruments......................................... 38 -2.6 .3 1.5 -1.9 4.9 .3 -.7 -2.3 -3.0 5.6 Miscellaneous manufactures ........... 39 8.5 .4 6.4 11.6 7.4 1.3 -1.7 -1.8 7.7 2.3 Nondurable manufacturing....... 2.7 -.9 -.8 1.0 -.9 -.1 .5 -.1 .9 .0 Foods ....................................... 20 3.4 3.7 3.0 2.2 2.3 1.7 .4 .7 2.6 -.4 Tobacco products ................... 21 1.3 .1 -1.7 -6.7 -.8 1.3 -.6 .1 .8 -.6 Textile mill products ............. 22 .7 -.2 -2.3 -2.4 1.1 -2.0 -3.4 -.9 -.5 .1 Apparel products.................... 23 -.7 .1 -2.4 2.7 -1.6 1.1 1.8 1.0 9.0 .4 Paper and products................. 26 .6 1.6 -2.5 1.6 -1.3 -.5 -.9 -1.7 4.5 1.1 Printing and publishing......... 27 -.1 1.5 1.5 .8 1.5 -.9 -1.4 -.8 3.0 .9 Chemicals and products ....... 28 5.6 -3.8 -1.6 .8 -4.5 -.4 1.8 .7 .3 .0 Petroleum products ............... 29 -2.6 -1.5 -2.1 3.6 .6 1.9 -.9 -4.3 -2.1 Rubber and plastics products , 30 3.8 1.3 3.3 L7 2.4 .5 -.6 -.3 1.2 1.0 Leather and products............. 31 -2.2 -1.4 -4.4 -24 6.6 -.7 .0 -.6 5.6 15.2 Mining.................................. 1.7 -.8 -.3 -.6 -1.2 -1.4 -.6 .3 .5 -.3 Metal mining ................. 10 -1.2 .0 .6 -1.1 -.2 -3.8 -.4 .8 .5 -4.3 Coal mining ................... 12 .0 -.6 .6 -4.4 3.6 .1 -.6 -.4 .4 .2 Oil and gas extraction .. 13 3.6 .5 -5.8 1.7 -2.0 -.8 -1.0 .9 -.2 2.1 Stone and earth minerals 14 4.2 -4.6 8.4 -.1 -6.0 -.2 .2 -1.0 1.4 .3 Supplementary groups Total, excluding nuclear nondefense 1.2 2.3 -1.5 1.1 1.2 .2 -.1 -.2 1.1 .2 Utilities sales to industry ................... 2.1 1.0 -1.3 1.1 1.1 .1 -.2 -.5 1.4 .1 Industrial generation .......................... -5.5 .8 .5 -1.1 .6 .2 .1 2.4 -2.6 4.3 Note. Growth rates are calculated as the percentage change in the seasonally 1. Standard Industrial Classification; see table A.4, note 1. adjusted index from the fourth quarter of the previous year to the fourth quarter of the year specified. For 2000, the growth rates are calculated from the fourth quarter of 1999 to the third quarter of 2000 and annualized. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

149 Treasury and Federal Reserve Foreign Exchange Operations This report, presented by Peter R. Fisher, Executive 1. Trade-weighted G-3 currencies, 2000:Q4 Vice President, Federal Reserve Bank of New York, and Manager, System Open Market Account, de­ scribes the foreign exchange operations of the U.S. Department of the Treasury and the Federal Reserve Trade-weighted dollar System for the period from October 2000 through December 2000. Ryan Faulkner was primarily responsible for preparing the report. During the fourth quarter of 2000, the dollar appre­ ciated 5.7 percent against the yen and depreciated Trade-weighted euro 6.4 percent against the euro. On a trade-weighted Trade-weighted yen basis, the dollar ended the quarter 1.0 percent weaker against an index of major currencies. Movements in the major currency pairs were largely influenced by Note. In this and the charts that follow, the data are for business days except changes in market expectations for economic growth as noted. in the United States, Europe, and Japan. Questions Source. Bloomberg L.P. and the Bank of England. about the pace of Japan’s economic recovery pres­ sured the yen against the major currencies, while the financial market conditions. Among the economic dollar declined against the euro in December amid data released during this period were weaker-thansigns of slower U.S. growth. U.S. monetary authori­ expected third-quarter GDP data (advance release), ties did not intervene in the foreign exchange markets November consumer confidence and National during the quarter. Association of Purchasing Managers (NAPM) sur­ veys, October durable goods data, and Novem­ ber retail sales figures. As expectations for more MARKET REACTION TO CHANGING GLOBAL moderate growth solidified, many market partici­ ECONOMIC GROWTH TRENDS pants also continued to lower their U.S. earn- During the fourth quarter, releases of economic data in the United States indicated continued low inflation 2. Yield implied by the March federal funds futures contract, and a slowdown in the pace of U.S. economic growth. 2000:Q4 Earlier in the quarter, market participants had expected a steady near-term U.S. interest rate policy, given the price pressures emanating from high energy prices and tight U.S. labor markets. On November 15, the Federal Open Market Committee (FOMC) left the target federal funds rate unchanged at 6.5 percent and maintained its statement that the balance of risks was weighted toward inflationary pressures. By early December, however, there was a sharp downward shift in U.S. interest rate expectations, prompted by (1) increasing signs of slower U.S. growth, (2) comments by Federal Reserve Chair­ man Alan Greenspan that were interpreted as sug­ gesting the possibility of lower rates, and (3) weaker Source. Bloomberg L.P. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

150 Federal Reserve Bulletin □ March 2001 ings forecasts. During the fourth quarter, the S&P 500 4. Yields on short-term Japanese fixed-income securities, and Nasdaq Composite equity indexes, on balance, 2000:Q4 fell 8.1 percent and 32.7 percent, respectively, with some of their sharpest daily losses occurring in December. From November 28 to the end of the quarter, the implied yield on the March federal funds futures contract declined 40 basis points to 6.0 percent. Over the same period, the yields on the two-year Treasury note and thirty-year Treasury bond fell 76 and 24 basis points, respectively, leading the two- to thirty-year coupon curve to return to a positive spread for the first time since January 2000. On Decem­ ber 19, the FOMC left its target for the federal funds rate unchanged, while moving its assessment of the balance of risks away from inflationary pressures and Source. Bloomberg L.P. to one “weighted toward conditions that may gener­ ate economic weakness.” In Europe, expectations for further interest rate the euro remained at relatively low levels against increases moderated over the period, in response to other major currencies, and oil prices continued to signs of slower euro-area growth, the recovery of the climb. euro’s exchange value, and a decline in oil prices. At During the second half of the quarter, the implied the outset of the quarter, on October 5, the European yield on the three-month March euribor futures Central Bank (ECB) raised its minimum bid on its contract fell 35 basis points to 4.73 percent, coinci­ refinancing operations 25 basis points to 4.75 per­ dent with the appreciation of the euro against most cent. In the press conference that followed the rate major currencies and the decline in oil prices that announcement, ECB President Duisenberg explained began in late November. Market participants also that the rate hike was aimed at containing inflationary reduced their expectations for additional ECB tight­ pressures “stemming from oil prices and the foreign ening as signs of a modest slowdown in euro-area exchange rate of the euro.” After this decision, mar­ industrial activity emerged. The November industrial ket participants were divided over the possibility of confidence survey for the euro area declined for the additional rate hikes by the ECB. German and Italian first time in three months to levels last seen in May business confidence surveys for September and Octo­ 2000. ber suggested a modest decline in industrial produc­ In Japan, reports on economic activity during the tion, but euro-area aggregate inflation and money quarter increased speculation that Japan’s economic supply reports over the same period continued to recovery was slowing. A report by the Economic show modest upward pressure on prices. In addition, Planning Agency on November 10 and the release of Japan’s third-quarter GDP report on December 4 indicated that although investment by large manufac­ 3. Yield implied by the March euribor contract, 2000: Q4 turing firms remained strong, consumer spending and export growth appeared to be stagnating. The yield on the two-year Japanese government bond (JGB) fell 13 basis points over the first two months of the quarter to 0.48 percent. During the first two weeks of December, short-dated Japanese yields briefly moved higher in response to funding pressures ahead of the year-end and amid related concerns about the transi­ tion to the real-time gross settlement system in Janu­ ary 2001. However, yields later declined after the release of the December Tankan report and the gov­ ernment’s announcement of a smaller-than-expected 2001 fiscal budget. On balance, two-year and tenyear JGB yields ended the quarter 14 and 22 basis Source. Bloomberg L.P. points lower respectively. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 151 DECLINE OF RISK APPETITE 6. One-month euro-dollar option implied volatility and risk reversals, 2000:Q4 DURING THE FOURTH QUARTER In response to the initial shift in growth expecta­ tions for the Group of Three (G-3) economies and an overall increase in market volatility, investors report­ edly adopted somewhat more neutral currency posi­ tions and were generally more risk averse during the first half of the quarter. Net speculative positions in currency futures on the International Monetary Mar­ ket (IMM), as well as flow survey data, suggested that investors maintained a relatively small net long Implied volatility position in euros and a substantial net short position in yen. Nov. Although there was little change in the reported net speculative euro position, the euro area continued to Source. Bloomberg L.P. register net cross-border investment outflows but in lower amounts than previous months. According to the ECB, the net outflow of direct investment and against the dollar in mid-November, to as low as portfolio investment from the euro area totaled $0,838 on November 24, market anxiety over further €15.7 billion and €1.7 billion, respectively, in Octo­ euro depreciation remained relatively low, with oneber, which was less than half the total net outflows month euro-dollar option implied volatility fluctuat­ recorded in September. ing between 13 percent and 15 percent from mid- Against the dollar, the euro fell to $0,825 on Octo­ November to the end of the quarter. The premium for ber 25, a new low, but then rebounded the following one-month euro put options over one-month euro call week, as the ECB entered the market to buy euros on options, as measured by risk reversals, also declined November 3, 6, and 9, pushing the exchange rate to after the ECB interventions. The premium for euro close as high as $0,876. Against the yen, the euro puts briefly rose as high as 0.6 percent in volatility declined 2.4 percent during the first half of the quar­ terms on October 26 and 27. However, during much ter. The dollar-yen exchange rate, meanwhile, did of November and throughout December, there was a not exhibit a noticeable trend and traded in a rela­ premium for one-month euro call options over onetively tight range, between ¥109.30 and ¥107.00, month euro put options. over the first half of the quarter. Implied volatility for one-month euro-dollar options, which had increased to as high as 16.9 per­ Currency Movements Dominated cent on October 27, also declined after the ECB’s by Euro Strength and Yen Weakness interventions. Although the euro once again declined in the Second Half of the Quarter The second half of the quarter coincided with a sharp 5. The euro against the dollar and the yen, 2000:Q4 appreciation of the euro and depreciation of the yen, with investors taking more aggressive currency posi­ per euro tions as growth and interest expectations for the G-3 economies solidified. According to data from the Euro-yen 1.00 — IMM, the number of speculative net long euro posi­ tions increased nearly three-fold in mid-December to reach its highest level since October 1999. The num­ ber of short speculative yen positions rose modestly in mid-December to its highest level since February 2000. Against the dollar, the euro appreciated 9.9 per­ Euro-dollar cent and the yen depreciated 4.8 percent during the second half of the fourth quarter. Against the dollar, the euro was largely supported by reports of a narrowing in U.S.-euro-area growth Source. Bloomberg L.P. and interest rate differentials after the release of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

152 Federal Reserve Bulletin □ March 2001 7. Spread of two-year dollar swap rate over two-year euro edly maintained, and in some cases increased, dollar swap rate, 2000:Q4 and euro investments ahead of the year-end. In addi­ tion, foreign investors were net sellers of Japanese equities for most of the fourth quarter. According to the Ministry of Finance, Japanese investors bought ¥1.9 trillion in foreign stocks and bonds in the fourth quarter, more than double the net amount purchased during the third quarter. Over the same period, for­ eign investors sold ¥20.9 billion in Japanese stocks. TREASURY AND FEDERAL RESERVE FOREIGN Exchange Reserves At the end of the quarter, the current values of the Source. Bloomberg L.P. euro and yen reserve holdings totaled $15.7 billion for the Federal Reserve System and $15.7 billion for the Treasury’s Exchange Stabilization Fund. The U.S. weaker-than-expected U.S. economic data at the end monetary authorities invest all of their foreign cur­ of November. After declining just 3 basis points over rency balances in a variety of instruments that yield the first half of the quarter, from mid-November to market-related rates of return and have a high degree the end of December, the spread of the two-year of liquidity and credit quality. To the extent practi­ dollar swap rate over the two-year euro swap rate cable, the investments are split evenly between the declined 21 basis points to a spread of 110 basis Federal Reserve System and the Exchange Stabiliza­ points. tion Fund. The yen, meanwhile, weakened sharply against A portion of the U.S. monetary authorities’ foreign the major currencies, falling 13.4 percent against the exchange reserves are presently invested in gov­ euro. The yen’s depreciation reflected the growing ernment securities held outright or under repur­ speculation surrounding the pace of the country’s chase agreement. Foreign currency reserves are also economic recovery, as well as uncertainty about the invested in deposits at the Bank for International future of Prime Minister Mori’s administration. Settlements and in facilities at other official institu­ Although Prime Minister Mori won a no-confidence tions. As of December 29, direct holdings of foreign vote by the parliament in late November, market government securities totaled $13.9 billion, split participants commented that Mori’s low popularity evenly between the two authorities. Foreign govern­ ratings continued to cloud the political outlook. ment securities held under repurchase agreement to­ The yen was also pressured by reported portfolio taled $2.8 billion at the end of the quarter and were reallocations away from Japan by domestic and for­ also split evenly between the two authorities. eign investors. Japanese institutional investors report- The U.S. monetary authorities’ investments in mar­ ketable securities have been limited to obligations of 8. The dollar against the yen, 2000:Q4 the sovereign issuer of the underlying currency; for example, the securities previously denominated in duetsche marks have been obligations of the German government. Given the introduction of the euro, the U.S. monetary authorities now expect to diversify their euro-denominated holdings of government secu­ rities to include the obligations of additional euroarea sovereigns. This diversification will be gradual and will apply to holdings of securities on an outright basis and under repurchase agreements. The govern­ ment securities eligible for investment must meet the highest standards of protection against credit, liquid­ ity, and operational risks. In the assessment of credit quality within the euro area, the U.S. monetary authorities take into account the public credit ratings Source. Bloomberg L.P. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 153 of each sovereign, as well as other institutional stan­ analysis of secondary market factors, such as bid-ask dards that afford a high level of safety. The assess­ spreads, average trade size, and the regularity and ment of liquidity and operational risks includes the size of issuance. □ 1. Foreign currency holdings of U.S. monetary authorities based on current exchange rates, 2000:Q4 Millions of dollars Quarterly changes in balances, by source Balance, Balance, Item Sept. M). 2000 Net purchases Effect of Investment C va u l r u r a e t n io cy n I a n c t c e r r u e a s l t Dec. 31, 2000 and sales1 sales2 income adjustments3 and other4 Federal Reserve System Open Market Account (SOMA) Euro......................................................................... 6,872.1 0.0 0.0 69.5 434.3 7,375.9 Japanese yen.......................................................... 8,733.7 0.0 0.0 3.7 -492.8 8,244.6 Total ................................................................... 15,605.8 0.0 0.0 73.2 -58.5 15,620.5 Interest receivables (net)5................................... 66.8 9.7 76.5 Other cash flow from investments4................... 0.0 0.0 0.0 Total ................................................................. 15,672.6 0.0 0.0 73.2 -58.5 9.7 15,697.0 U.S. Treasury Exchange Stabilization Fund (ESF) Euro......................................................................... 6,869.5 0.0 0.0 69.6 434.0 7,373.1 Japanese yen .......................................................... 8,733.8 0.0 0.0 3.7 -492.8 8,244.7 Total ................................................................... 15,603.3 0.0 0.0 73.3 -58.8 15,617.8 Interest receivables5 ............................................. 57.6 3.6 61.2 Other cash flow from investments4................... 0.0 0.0 Total ................................................................. 15,660.9 0.0 0.0 73.3 -58.8 -3.6 15,679.0 Note. Figures may not sum to totals because of rounding. 3. Foreign currency balances are marked to market monthly at month-end 1. Purchases and sales for the purpose of this table include foreign cur­ exchange rates. rency sales and purchases related to official activity, swap drawings and repay­ 4. Values are cash flow differences from payments and collection of funds ments, and warehousing. between quarters. 2. This figure is calculated using marked-to-market exchange rates; it 5. Interest receivables for the ESF are revalued at month-end exchange rates. represents the difference between the sale exchange rate and the most recent Interest receivables for the Federal Reserve System are carried at average cost revaluation exchange rate. Realized profits and losses on sales of foreign cur­ of acquisition and are not marked to market until interest is paid. rencies, computed as the difference between the historical cost-of-acquisition . . . Not applicable. exchange rate and the sale exchange rate, are reflected in table 2. 2. Net profits or losses (-) on U.S. Treasury 3. Reciprocal currency arrangements, December 31, 2000 and Federal Reserve foreign exchange operations, Millions of dollars based on historical cost-of-acquisition exchange rates, 2000:Q4 Institution Amount of Outstanding, facility Dec. 31, 2000 Millions of dollars Reciprocal currency Federal U.S. Treasury arrangements Reserve Exchange Period and item System Open Stabilization 2,000 0.0 Market Account Fund 3.000 0.0 Valuation profits and losses on Total .................................................. 5.000 0.0 outstanding assets and liabilities, Sept. 30, 2000 Federal Reserve and U.S. Treasury Euro...................................................... -1,370.9 -1,587.3 Exchange Stabilization Fund Japanese yen ....................................... 1,687.5 1,899.7 currency arrangements Total ............................................... 316.6 312.4 Bank of Mexico................................... 3.000 0.0 Realized profits and losses 3.000 0.0 from foreign currency sales, Sept. 30, 2000-Dec. 31, 2000 Euro...................................................... 0.0 0.0 Japanese yen ....................................... 0.0 0.0 Total ................................................ 0.0 0.0 Valuation profits and losses on outstanding assets and liabilities, Dec. 31, 2000 Euro...................................................... -936.6 -1,153.3 Japanese yen ....................................... 1,194.7 1,406.9 Total ................................................ 258.1 253.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

154 Industrial Production and Capacity Utilization for January 2001 Released for publication February 16 areas. Excluding motor vehicles and parts, manu­ facturing output increased 0.3 percent in January Industrial production fell 0.3 percent in January. after having fallen 0.8 percent in December. Output Manufacturing output edged down 0.1 percent after a at utilities dropped back 6.0 percent as temperatures 1.1 percent drop in December; the December decline moved closer to seasonal norms after the extreme was likely exacerbated by bad weather in certain cold in December. Production in mining moved up Industrial production Ratio ^ 1992 = 100 Excluding high-tech industries 85 Capacity utilization Percent of capacity 85 80 75 70 Percent of capacity 90 85 80 1995 1997 1999 2001 High-tech industries are defined as semiconductors and related electronic Shaded areas are periods of business recession as defined by the NBER. components (SIC 3672-9), computers (SIC 357), and communications equip­ ment (SIC 366). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

155 Industrial production and capacity utilization, January 2001 Industrial production, index, 1992=100 Percent change Category 2000 2001 20001 2001' Jan. 2000 to Oct.r Nov.r Dec.r Jan.f Oct.' Nov.r Dec.r Jan.? Jan. 2001 Total ..................................................... 148.7 148.2 147.4 147.0 -.2 -.3 -.5 -.3 2.4 148.5 148.1 147.3 -.3 -.3 -.6 Major market groups 136.3 136.4 135.9 135.0 -.3 .0 -.4 -.6 1.3 Consumer goods .................................. 122.7 122.7 122.4 121.0 -.9 .0 -.3 -1.1 -.9 200.0 200.4 199.3 198.9 .3 .2 -.5 -.2 7.4 142.3 140.9 139.5 138.8 -.6 -.9 -1.0 -.5 -2.6 171.1 169.6 168.4 168.7 -.1 -.9 -.7 .2 4.2 Major industry groups 154.9 154.0 152.4 152.3 -.1 -.6 -1.1 -.1 2.0 197.6 196.7 194.9 194.4 -.4 -.4 -.9 -.3 5.0 116.3 115.5 114.0 114.2 .3 -.7 -1.3 .2 -1.6 100.1 99.9 100.2 102.3 -.3 -.2 .3 2.1 3.7 120.0 123.8 132.6 124.7 -1.4 3.2 7.1 -6.0 5.8 Capacity utilization, percent Memo Capacity, percent 2000 2001 change, Average, Low, High, 1967-00 1982 1988-89 to Jan. Oct.r Nov.r Dec/ Jan.p Jan. 2001 Total 82.1 71.1 85.4 81.9 82.0 81.4 80.7 80.2 4.5 Manufacturing............... 81.1 69.0 85.7 81.2 81.2 80.4 79.2 78.9 5.0 Advanced processing 80.6 71.0 84.2 79.4 79.9 79.7 78.8 78.6 2.7 Primary processing .. 82.2 65.7 88.3 85.1 84.5 82.8 81.0 80.5 8.5 Mining............................ 87.4 80.3 88.0 84.5 86.3 86.2 86.6 88.5 -1.0 Utilities .......................... 87.6 75.9 92.6 90.0 89.5 92.1 98.3 92.2 3.4 Note. Data seasonally adjusted or calculated from seasonally adjusted 2. Contains components in addition to those shown, monthly data. r Revised, 1. Change from preceding month. p Preliminary. 2.1 percent. At 147.0 percent of its 1992 average, sharp decline in motor vehicles), and the production industrial production was 2.4 percent higher than of industrial and other equipment fell 0.5 percent in January 2000. The rate of capacity utilization (mainly because of a sharp drop in farm equip­ for total industry fell to 80.2 percent in January, a ment). The output of information processing equip­ level almost 2 percentage points below its 1967-2000 ment increased 1.2 percent after having been flat in average. December; on balance, production in this group of industries has slowed noticeably since last summer. MARKET GROUPS The production of construction supplies contracted again in January, falling 0.5 percent, and the index is The index for consumer goods fell 1.1 percent in now 2.6 percent below its year-ago level. The output January, with decreases of about 5 percent in the of materials inched up 0.2 percent: The indexes for production both of automotive and of energy prod­ durable materials and energy materials were up mod­ ucts. A drop of 2.8 percent in the production of erately and the index for nondurable materials was durable consumer goods reflected the weakness in unchanged. Among durable materials industries, the automotive products and a sharp decline in home output of semiconductors, printed circuit boards, and electronics. The production of nondurable consumer other electronic components posted a gain in January goods other than energy products rose 0.3 percent that was similar to those seen in recent months. and thereby reversed a third of the decline posted in However, the consumer parts group was hit by December. another decline in the production of original equip­ The output of business equipment slipped 0.2 per­ ment parts for motor vehicles. Within nondurable cent in January. The index for transit equipment materials, a 1.7 percent gain in the production of dropped 3.2 percent (mainly because of another paper materials, which had fallen sharply in Novem­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

156 Federal Reserve Bulletin □ March 2001 ber and December, was largely offset by further its September level and the lowest level since early declines in chemicals and textiles. 1992. In recent months, capacity utilization has fallen significantly in the transportation equipment and pri­ mary metals industries. The operating rate at utilities Industry Groups fell back to 92.2 percent in January after having been at the abnormally high level of 98.3 percent in Manufacturing output declined 0.1 percent in Janu­ December. The operating rate for mining, 88.5 per­ ary, with a 0.3 percent decrease in the production cent, was lifted by higher-than-average readings in of durable goods and a 0.2 percent increase in non­ the coal mining and oil and gas extraction industries. durable goods. Among durable goods, the losses were concentrated in motor vehicles and parts, lum­ ber, furniture and fixtures, and primary metals. The New Release format largest increases in output were in the electrical machinery, instruments, and miscellaneous manu­ Beginning with the February 16 issue, the G.17 facturing industries. The output of nondurables, statistical release has been redesigned. Special which declined, on balance, over the previous six aggregates have been added. Although some detailed months, posted a modest uptick in January, with industry data are no longer listed in the regular small but widespread gains. release, these series continue to be available on The factory operating rate declined further, to the Federal Reserve Board’s public web site 78.9 percent in January, 23/4 percentage points below (www.federalreserve.gov/releases/gl7). □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

157 Testimony of Federal Reserve Officials Statement of Alan Greenspan, Chairman, before the marked curtailment in recent months of capital Committee on the Budget, U.S. Senate, January 25, investment plans for equipment and software. 2001 To be sure, these impressive upward revisions to the growth of structural productivity and economic I am pleased to appear here today to discuss some potential are based on inferences drawn from eco­ of the important issues surrounding the outlook for nomic relationships that are different from anything the federal budget and the attendant implications for we have considered in recent decades. The resulting the formulation of fiscal policy. In doing so, I want to budget projections, therefore, are necessarily subject emphasize that I speak for myself and not necessarily to a relatively wide range of error. Reflecting the for the Federal Reserve. uncertainties of forecasting well into the future, The challenges you face both in shaping a budget neither the OMB nor the CBO projects productivity for the coming year and in designing a longer-run to continue to improve at the stepped-up pace of the strategy for fiscal policy were brought into sharp past few years. Both expect productivity growth rates focus by the release last week of the Clinton Admin­ through the next decade to average roughly 2'A to istration’s final budget projections, which showed 21/2 percent per year—far above the average pace further upward revisions of on-budget surpluses for from the early 1970s to the mid-1990s, but still below the next decade. The Congressional Budget Office that of the past five years. (CBO) also is expected to again raise its projections Had the innovations of recent decades, especially when it issues its report next week. in information technologies, not come to fruition, The key factor driving the cumulative upward revi­ productivity growth during the past five to seven sions in the budget picture in recent years has been years, arguably, would have continued to languish the extraordinary pickup in the growth of labor pro­ at the rate of the preceding twenty years. The sharp ductivity experienced in this country since the mid- increase in prospective long-term rates of return on 1990s. Between the early 1970s and 1995, output per high-tech investments would not have emerged as it hour in the nonfarm business sector rose about did in the early 1990s, and the associated surge in W2 percent per year, on average. Since 1995, how­ stock prices would surely have been largely absent. ever, productivity growth has accelerated markedly, The accompanying wealth effect, so evidently critical about doubling the earlier pace, even after taking to the growth of economic activity since the midaccount of the impetus from cyclical forces. Though 1990s, would never have materialized. hardly definitive, the apparent sustained strength in In contrast, the experience of the past five to seven measured productivity in the face of a pronounced years has been truly without recent precedent. The slowing in the growth of aggregate demand during doubling of the growth rate of output per hour has the second half of last year was an important test caused individuals’ real taxable income to grow of the extent of the improvement in structural produc­ nearly two and one-half times as fast as it did over tivity. These most recent indications have added to the preceding ten years and resulted in the substantial the accumulating evidence that the apparent increases surplus of receipts over outlays that we are now in the growth of output per hour are more than experiencing. Not only did taxable income rise with transitory. the faster growth of gross domestic product, but the It is these observations that appear to be causing associated large increase in asset prices and capital economists, including those who contributed to the gains created additional tax liabilities not directly Office of Management and Budget (OMB) and the related to income from current production. CBO budget projections, to raise their forecasts of The most recent projections from the OMB indi­ the economy’s long-term growth rates and budget cate that, if current policies remain in place, the total surpluses. This increased optimism receives support unified surplus will reach $800 billion in fiscal year from the forward-looking indicators of technical 2011, including an on-budget surplus of $500 billion. innovation and structural productivity growth, which The CBO reportedly will be showing even larger have shown few signs of weakening despite the surpluses. Moreover, the admittedly quite uncertain Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

158 Federal Reserve Bulletin □ March 2001 long-term budget exercises released by the CBO called before 2011. Some holders of long-term Trea­ last October maintain an implicit on-budget surplus sury securities may be reluctant to give them up, under baseline assumptions well past 2030 despite especially those who highly value the risk-free status the budgetary pressures from the aging of the baby- of those issues. Inducing such holders, including boom generation, especially on the major health foreign holders, to willingly offer to sell their securi­ programs. ties prior to maturity could require paying premiums The most recent projections, granted their tenta­ that far exceed any realistic value of retiring the debt tiveness, nonetheless make clear that the highly desir­ before maturity. able goal of paying off the federal debt is in reach Decisions about what type of private assets to before the end of the decade. This is in marked acquire and to which federal accounts they should be contrast to the perspective of a year ago when the directed must be made well before the policy is elimination of the debt did not appear likely until the actually implemented, which could occur in as little next decade. as five to seven years from now. These choices have But continuing to run surpluses beyond the point at important implications for the balance of saving and, which we reach zero or near-zero federal debt brings hence, investment in our economy. For example, to center stage the critical longer-term fiscal policy transferring government saving to individual private issue of whether the federal government should accu­ accounts as a means of avoiding the accumulation of mulate large quantities of private (more technically, private assets in the government accounts could sig­ nonfederal) assets. At zero debt, the continuing uni­ nificantly affect how social security will be funded in fied budget surpluses currently projected imply a the future. major accumulation of private assets by the federal Short of some privatization, it would be preferable government. This development should factor mate­ in my judgment to allocate the required private assets rially into the policies you and the Administration to the social security trust funds, rather than to choose to pursue. on-budget accounts. To be sure, such trust fund I believe, as I have noted in the past, that the investments are subject to the same concerns about federal government should eschew private asset accu­ political pressures as on-budget investments would mulation because it would be exceptionally difficult be. The expectation that the retirement of the babyto insulate the government’s investment decisions boom generation will eventually require a drawdown from political pressures. Thus, over time, having the of these fund balances does, however, provide some federal government hold significant amounts of pri­ mitigation of these concerns. vate assets would risk sub-optimal performance by Returning to the broader picture, I continue to our capital markets, diminished economic efficiency, believe, as I have testified previously, that all else and lower overall standards of living than would be being equal, a declining level of federal debt is desir­ achieved otherwise. able because it holds down long-term real interest Short of an extraordinarily rapid and highly unde­ rates, thereby lowering the cost of capital and elevat­ sirable short-term dissipation of unified surpluses ing private investment. The rapid capital deepening or a transferring of assets to individual privatized that has occurred in the U.S. economy in recent years accounts, it appears difficult to avoid at least some is a testament to these benefits. But the sequence of accumulation of private assets by the government. upward revisions to the budget surplus projections Private asset accumulation may be forced upon us for several years now has reshaped the choices and well short of reaching zero debt. Obviously, savings opportunities before us. Indeed, in almost any cred­ bonds and state and local government series bonds ible baseline scenario, short of a major and prolonged are not readily redeemable before maturity. But the economic contraction, the full benefits of debt reduc­ more important issue is the potentially rising cost tion are now achieved before the end of this of retiring marketable Treasury debt. While shorter- decade—a prospect that did not seem likely only a term marketable securities could be allowed to run year or even six months ago. off as they mature, longer-term issues would have to The most recent data significantly raise the prob­ be retired before maturity through debt buybacks. ability that sufficient resources will be available to The magnitudes are large: As of January 1, for exam­ undertake both debt reduction and surplus-lowering ple, there was in excess of three quarters of a trillion policy initiatives. Accordingly, the tradeoff faced dollars in outstanding nonmarketable securities, such earlier appears no longer an issue. The emerging key as savings bonds and state and local series issues, and fiscal policy need is to address the implications of marketable securities (excluding those held by the maintaining surpluses beyond the point at which Federal Reserve) that do not mature and could not be publicly held debt is effectively eliminated. 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Testimony of Federal Reserve Officials 159 The time has come, in my judgment, to consider a Of course, had that recession lingered through the budgetary strategy that is consistent with a preemp­ rest of 1975 and beyond, the tax cuts would certainly tive smoothing of the glide path to zero federal debt have been helpful. In today’s context, in which tax or, more realistically, to the level of federal debt that reduction appears required in any event over the next is an effective irreducible minimum. Certainly, we several years to assist in forestalling the accumula­ should make sure that social security surpluses are tion of private assets, starting that process sooner large enough to meet our long-term needs and seri­ rather than later likely would help smooth the transi­ ously consider explicit mechanisms that will help tion to longer-term fiscal balance. And should current ensure that outcome. Special care must be taken not economic weakness spread beyond what now appears to conclude that wraps on fiscal discipline are no likely, having a tax cut in place may, in fact, do longer necessary. At the same time, we must avoid a noticeable good. situation in which we come upon the level of irreduc­ As for tax policy over the longer run, most econo­ ible debt so abruptly that the only alternative to the mists believe that it should be directed at setting rates accumulation of private assets would be a sharp at the levels required to meet spending commitments, reduction in taxes and/or an increase in expenditures, while doing so in a manner that minimizes distor­ because these actions might occur at a time when a tions, increases efficiency, and enhances incentives sizable economic stimulus would be inappropriate. In for saving, investment, and work. other words, budget policy should strive to limit In recognition of the uncertainties in the economic potential disruptions by making the on-budget sur­ and budget outlook, it is important that any long-term plus economically inconsequential when the debt is tax plan, or spending initiative for that matter, be effectively paid off. phased in. Conceivably, it could include provisions In general, as I have testified previously, if long­ that, in some way, would limit surplus-reducing term fiscal stability is the criterion, it is far better, in actions if specified targets for the budget surplus my judgment, that the surpluses be lowered by tax and federal debt were not satisfied. Only if the prob­ reductions than by spending increases. The flurry of ability was very low that prospective tax cuts or new increases in outlays that occurred near the conclusion outlay initiatives would send the on-budget accounts of last fall’s budget deliberations is troubling because into deficit, would unconditional initiatives appear it makes the previous year’s lack of discipline less prudent. likely to have been an aberration. The reason for caution, of course, rests on the To be sure, with the burgeoning federal surpluses, tentativeness of our projections. What if, for exam­ fiscal policy has not yet been unduly compromised ple, the forces driving the surge in tax revenues in by such actions. But history illustrates the difficulty recent years begin to dissipate or reverse in ways that of keeping spending in check, especially in programs we do not now foresee? Indeed, we still do not have a that are open-ended commitments, which too often full understanding of the exceptional strength in indi­ have led to much larger outlays than initially envi­ vidual income tax receipts during the latter 1990s. To sioned. It is important to recognize that government the extent that some of the surprise has been indi­ expenditures are claims against real resources and rectly associated with the surge in asset values in the that, while those claims may be unlimited, our capac­ 1990s, the softness in equity prices over the past year ity to meet them is ultimately constrained by the has highlighted some of the risks going forward. growth in productivity. Moreover, the greater the Indeed, the current economic weakness may reveal drain of resources from the private sector, arguably, a less favorable relationship between tax receipts, the lower the growth potential of the economy. In income, and asset prices than has been assumed in contrast to most spending programs, tax reductions recent projections. Until we receive full detail on the have downside limits. They cannot be open-ended. distribution by income of individual tax liabilities for Lately there has been much discussion of cutting 1999, 2000, and perhaps 2001, we are making little taxes to confront the evident pronounced weakening more than informed guesses of certain key relation­ in recent economic performance. Such tax initiatives, ships between income and tax receipts. however, historically have proved difficult to imple­ To be sure, unless later sources do reveal major ment in the time frame in which recessions have changes in tax liability determination, receipts should developed and ended. For example, although Presi­ be reasonably well-maintained in the near term, as dent Ford proposed in January of 1975 that withhold­ the effects of earlier gains in asset values continue to ing rates be reduced, this easiest of tax changes was feed through with a lag into tax liabilities. But the not implemented until May, when the recession was longer-run effects of movements in asset values are officially over and the recovery was gathering force. much more difficult to assess, and those uncertainties Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

160 Federal Reserve Bulletin □ March 2001 would intensify should equity prices remain signifi­ diffusion of new technologies in the current wave of cantly off their peaks. Of course, the uncertainties in innovation still lies ahead, and we cannot rule out the receipts outlook do seem less troubling in view of productivity growth rates greater than is assumed the cushion provided by the recent sizable upward in the official budget projections. Obviously, if that revisions to the ten-year surplus projections. But the turns out to be the case, the existing level of tax rates risk of adverse movements in receipts is still real, would have to be reduced to remain consistent with and the probability of dropping back into deficit as currently projected budget outlays. a consequence of imprudent fiscal policies is not The changes in the budget outlook over the past negligible. several years are truly remarkable. Little more than a In the end, the outlook for federal budget surpluses decade ago, the Congress established budget controls rests fundamentally on expectations of longer-term that were considered successful because they were trends in productivity, fashioned by judgments about instrumental in squeezing the burgeoning budget the technologies that underlie these trends. Econo­ deficit to tolerable dimensions. Nevertheless, despite mists have long noted that the diffusion of technology the sharp curtailment of defense expenditures under starts slowly, accelerates, and then slows with matu­ way during those years, few believed that a surplus rity. But knowing where we now stand in that was anywhere on the horizon. And the notion that the sequence is difficult—if not impossible—in real time. rapidly mounting federal debt could be paid off would As the CBO and the OMB acknowledge, they have not have been taken seriously. been cautious in their interpretation of recent produc­ But let me end on a cautionary note. With today’s tivity developments and in their assumptions going euphoria surrounding the surpluses, it is not difficult forward. That seems appropriate given the uncertain­ to imagine the hard-earned fiscal restraint developed ties that surround even these relatively moderate in recent years rapidly dissipating. We need to resist estimates for productivity growth. Faced with these those policies that could readily resurrect the deficits uncertainties, it is crucial that we develop budgetary of the past and the fiscal imbalances that followed in strategies that deal with any disappointments that their wake. □ could occur. That said, as I have argued for some time, there is a distinct possibility that much of the development and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

161 Announcements Federal Open Market committee Actions The discount rate is the rate charged depository and Changes in the Discount rate institutions when they borrow short-term adjustment credit from their District Federal Reserve Banks. The rate change was effective immediately except in the The Federal Open Market Committee decided on St. Louis District, where the rate became effective as January 3, 2001, to lower its target for the federal of Friday, January 5, 2001. funds rate by 50 basis points to 6 percent. In a related action, the Board of Governors approved a 25 basis point decrease in the discount The Federal Open Market Committee at its meet­ rate to 53A percent, the level requested by seven ing on January 31, 2001, decided to lower its target Reserve Banks. The Board also indicated that it for the federal funds rate by 50 basis points to stands ready to approve a further reduction of 5Vi percent. In a related action, the Board of Gover­ 25 basis points in the discount rate to 5V2 percent on nors approved a 50 basis point reduction in the dis­ the requests of Federal Reserve Banks. count rate to 5 percent. These actions were taken in light of further weak­ Consumer and business confidence has eroded ening of sales and production, and in the context of further, exacerbated by rising energy costs that con­ lower consumer confidence, tight conditions in some tinue to drain consumer purchasing power and press segments of financial markets, and high energy prices on business profit margins. Partly as a consequence, sapping household and business purchasing power. retail sales and business spending on capital equip­ Moreover, inflation pressures remain contained. ment have weakened appreciably. In response, manu­ Nonetheless, to date there is little evidence to suggest facturing production has been cut back sharply, with that longer-term advances in technology and associ­ new technologies appearing to have accelerated the ated gains in productivity are abating. response of production and demand to potential The Committee continues to believe that, against excesses in the stock of inventories and capital the background of its long-run goals of price stability equipment. and sustainable economic growth and of the informa­ Taken together, and with inflation contained, these tion currently available, the risks are weighted mainly circumstances have called for a rapid and force­ toward conditions that may generate economic weak­ ful response of monetary policy. The longer-term ness in the foreseeable future. advances in technology and accompanying gains in In taking the discount rate action, the Federal productivity, however, exhibit few signs of abating, Reserve Board approved requests submitted by the and these gains, along with the lower interest rates, boards of directors of the Federal Reserve Banks should support growth of the economy over time. of New York, Cleveland, Atlanta, St. Louis, Kansas Nonetheless, the Committee continues to believe City, Dallas, and San Francisco. that against the background of its long-run goals of Completing action initiated on January 3, 2001, the price stability and sustainable economic growth and Board of Governors on January 4 approved a dis­ of the information currently available, the risks are count rate of 5xh percent, acting on requests submit­ weighted mainly toward conditions that may generate ted by the boards of directors of all twelve Reserve economic weakness in the foreseeable future. Banks. In taking the discount rate action, the Federal On January 3, in conjunction with the Federal Reserve Board approved requests submitted by the Open Market Committee’s decision to lower the fed­ boards of directors of the Federal Reserve Banks eral funds rate target by 50 basis points, the Board of New York, Philadelphia, Cleveland, Atlanta, Chi­ approved pending requests from Federal Reserve cago, St. Louis, Minneapolis, Dallas, and San Fran­ Banks to reduce the discount rate by 25 basis points, cisco. The Board subsequently approved similar to 53/4 percent, and said that it would approve a requests submitted by the boards of directors of the further 25 basis point reduction once the Reserve Federal Reserve Banks of Boston and Richmond, Banks submitted requests. effective January 31, and by the board of directors of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

162 Federal Reserve Bulletin □ March 2001 the Federal Reserve Bank of Kansas City, effective the Comptroller of the Currency. He is active in com­ February 1. munity and professional organizations and serves on the boards of the Community Development Corporation and the Brownsville Local Development Council. He is secre­ tary and past chairman of the Greater Brownsville Multi- Appointments of new Members Bank CDFI and a regional vice chairman of the National TO THE CONSUMER ADVISORY COUNCIL Bankers Association. AND DESIGNATION OF A Constance K. Chamberlin NEW CHAIR AND VICE CHAIR Richmond, Va. The Federal Reserve Board named ten new members Ms. Chamberlin is president and chief executive officer of to its Consumer Advisory Council for three-year Housing Opportunities Made Equal of Richmond, Inc. She terms and designated a new Chair and Vice Chair of was a founding member and served as president of the the Council for 2001. National Fair Housing Alliance. She serves on the Subcom­ mittee on Increasing Minority Homeownership of the Vir­ The council advises the Board on the exercise of ginia Housing Study Commission (an arm of the Virginia its responsibilities under the Consumer Credit Protec­ General Assembly), and has been active in many other tion Act and on other matters in the area of consumer groups concerned with increasing access to housing, financial services. The council meets three times a including the Virginia Homeownership Partnership Execu­ year in Washington, D.C. tive Committee and the Fair Housing Working Group of the U.S. Department of Housing and Urban Development. Lauren Anderson was designated chair; her term She is particularly knowledgeable about redlining, fair runs through December 2001. Ms. Anderson is lending, and homeowners’ insurance issues. executive director for Neighborhood Housing Ser­ vices of New Orleans, Inc. in New Orleans, Louisi­ Earl Jarolimek ana. Previously, she was a project manager for the Fargo, N.D. Department of Housing and Economic Development Since 1989, Mr. Jarolimek has been vice president and for Jersey City, New Jersey, and a staff attorney for corporate compliance officer for Community First Bankthe American Civil Liberties Union. shares. He is responsible for a comprehensive compliance Dorothy Broadman was designated vice chair; program for all corporate affiliates. He has been active in her term on the Council ends in December 2002. the American Bankers Association, having served as chair of the Compliance Executive Committee, has been a past Ms. Broadman is senior vice president of Cal Fed member of the Institute of Certified Bankers Advisory Bank, FSB, in San Francisco and is manager of the Board for Compliance Certification, and is a current mem­ bank’s Community Development Department. Previ­ ber of the Advisory Board for the ABA National Compli­ ously, she held positions at Citibank and Wells Fargo. ance Schools. He has provided testimony for the Federal The ten new members are the following: Reserve Board and for the U.S. Department of Housing and Urban Development related to the Truth in Lending Act and the Real Estate Settlement Procedures Act. Anthony S. Abbate Saddlebrook, N.J. J. Patrick Liddy Mr. Abbate is the president and chief executive officer of Cincinnati, Ohio Interchange Bank. The bank has a diverse market and is currently involved in several affordable housing programs. Mr. Liddy is the vice president and director of compliance He is a frequent speaker and author and has addressed staff for Fifth Third Bancorp. Mr. Liddy is responsible for bank motivation, the merger activity in the banking industry, and and trust compliance for the Ohio, Kentucky, Indiana, and the importance of technology for small financial institu­ Florida banks and for the Arizona thrift. He reconciles tions. He has been active in community and banking orga­ bank practices with numerous federal and differing state nizations, including the Commerce and Industry Associa­ laws and regulations. Other areas of focus for Mr. Liddy tion, the Community Bankers Association of New Jersey, are compliance training, consumer issues, and regulatory and the Independent Community Bankers of America and simplification. He is active in community organizations, has received many awards and recognition for his years of such as the Cincinnati Area United Way and the Fine Arts community service. Fund of Cincinnati. Manuel Casanova, Jr. Oscar Marquis Brownsville, Tex. Park Ridge, 111. Mr. Casanova, a certified public accountant, has been Mr. Marquis is counsel for the Privacy and Data Protection executive vice president and director of International Bank Group of the Hunton and Williams Law Firm. Previously, of Commerce-Brownsville for six years. He is responsible Mr. Marquis was vice president and general counsel of for the lending, international, and compliance departments. Trans Union for more than fifteen years. He was respon­ Previously, he worked as a bank examiner for the Office of sible for all legal, government, and public affairs matters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 163 He directed and managed all functions of the Law Division Council members whose terms continue through and was involved in all major company strategic and 2001 are the following: business decisions and business initiatives. Mr. Marquis is an expert in privacy, credit, and credit-reporting legislation Malcolm M. Bush Anne S. Li and regulations. He has provided testimony before House President Executive Director and Senate committees and has represented the company The Woodstock Institute New Jersey Community on radio and television programs, including Nightline. He Chicago, Illinois Loan Fund also speaks frequently to industry and consumer groups. Trenton, New Jersey Mary Ellen Domeier Nancy Pierce President Marta Ramos Kansas City, Mo. State Bank & Trust Vice President & CRA Ms. Pierce is the president and chief executive officer of Company of New Ulm Officer the Mazuma Credit Union. She is knowledgeable about New Ulm, Minnesota Banco Popular de community reinvestment, consumer protection regulations, Puerto Rico and financial services. She has served as chair and member John C. Gamboa San Juan, Puerto Rico Executive Director of the board of the Missouri Credit Union League and as chairman of the board of the Credit Union National Asso­ The Greenlining Institute Gary S. Washington ciation. Ms. Pierce has worked with the Kansas City San Francisco, California Senior Vice President Neighborhood Alliance, the Concerned Clergy Coalition, ABN AMRO and others to promote and support financial literacy and Willie Jones Chicago, Illinois greater access to credit for low- to moderate-income bor­ Deputy Director rowers. This year she received the Credit Union’s Herb The Community Builders, Robert L. Wynn II Wegner Award for Individual Achievement. Inc. Financial Education Officer Boston, Massachusetts Department of Financial Institutions Ronald A. Reiter Madison, Wisconsin San Francisco, Calif. Mr. Reiter is a supervising deputy attorney general in the Council members whose terms continue through California Department of Justice’s Consumer Law Section. 2002 are the following: He is knowledgeable about federal and California con­ sumer credit and protection legislation and regulations. He has drafted legislation protecting consumers, has litigated Teresa Bryce M. Dean Keyes consumer protection cases, and has been a leader in devel­ General Counsel Senior Vice President oping procedures for defending foreclosure actions in Cali­ Nexstar Financial Firstar fornia. Mr. Reiter has served as a member and chair of the Corporation St. Louis, Missouri State Bar of California’s Consumer Advocacy and Con­ St. Louis, Missouri sumer Financial Services Committees. Jeremy Nowak Robert Cheadle Chief Executive Officer Elizabeth Renuart Chief Executive Officer The Reinvestment Fund Boston, Mass. Indian Territory Philadelphia, Pennsylvania Development Since 1996, Ms. Renuart has been staff attorney for the Ada, Oklahoma Russell Schrader National Consumer Law Center. She represents the inter­ Senior Vice President and ests of low-income consumers at trial, in the appeals courts, Lester Wm. Firstenberger Assistant General Counsel and before Congress. She has also authored reports and Deputy General Counsel Visa U.S.A. articles on consumer credit and has taught consumer law to American General Finance San Francisco, California legal services and private consumer attorneys. Based on Evansville, Indiana her knowledge and understanding of credit laws and poli­ cies, Ms. Renuart is considered an expert in consumercredit litigation. She has worked for legal service organiza­ tions since 1977. INTERIM RULE ON FINANCIAL ACTIVITIES Frank Torres, Jr. Washington, D.C. The Federal Reserve Board has published an interim rule defining three categories of activities listed in Mr. Torres is the legislative counsel in the Washington, section 4(k)(5) of the Bank Holding Company Act as D.C., office of Consumers Union. He is responsible for advocating for consumers before congressional agencies financial in nature or incidental to a financial activ­ and the Federal Reserve Board on issues related to finan­ ity. The interim rule also establishes a mechanism cial services. Mr. Torres’s areas of expertise include access through which financial holding companies or other to financial services, privacy, subprime lending, electronic interested parties may request that the Board find, by commerce, consumer credit, and mortgage lending policy. order, that particular specific activities fall within one Previously, he served as the director of the Governor of Guam’s Washington Liaison Office. of the three categories. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

164 Federal Reserve Bulletin □ March 2001 The Board voted to approve the interim rule at its the provision of priced services to depository institu­ meeting on December 21, 2000, and it became effec­ tions totaled $881 million. The remaining income of tive on January 2, 2001. $335 million includes earnings on foreign currencies, earnings from loans, and other income. The operating expenses of the twelve Reserve Guidance for Financial institutions on Banks totaled $1.59 billion, including the System’s Anti-Money-Laundering Programs pension cost credit. In addition, the cost of earnings credits granted to depository institutions under the The Federal Reserve Board on January 16, 2001, Monetary Control Act of 1980 amounted to $389 mil­ disseminated guidance designed to assist financial lion. Assessments against Reserve Banks for Board institutions in applying enhanced scrutiny to transac­ expenditures totaled $188 million, and the cost of tions that may involve the proceeds of foreign official currency amounted to $436 million. corruption. Net deductions from income amounted to The guidance was developed by a working group $1.49 billion, resulting primarily from unrealized that includes the U.S. Department of the Treasury and losses on assets denominated in foreign currencies the U.S. Department of State, the Board, and the that were revalued to reflect current market exchange other federal banking agencies. It is intended to build rates. upon financial institutions’ existing anti-money- Total net income for the Federal Reserve Banks laundering and due-diligence programs by providing amounted to $29.9 billion. Under the Board’s policy, suggested procedures for account opening and main­ all net income after the statutory dividend to mem­ tenance for persons known to be senior political ber banks and the amount necessary to equate sur­ figures, their immediate family, and close associates. plus to paid-in capital is transferred to the Treasury. It also contains a list of questionable or suspicious The statutory dividends to member banks were activities that often warrant closer scrutiny. $410 million. The guidance, distributed with a letter to Federal Reserve supervisors and to banking organizations, should be understood as a set of suggested sound practices that financial institutions are encouraged FINAL RULE ON MERCHANT BANKING to use as they seek to deter money laundering Activities and minimize legal risks and potential reputational damage. The Board of Governors of the Federal Reserve Supervisory letters are the Federal Reserve’s pri­ System and the Secretary of the Treasury on Jan­ mary means of communicating key policy directives uary 10, 2001, approved a joint final rule governing to its examiners, supervisory staff, and the bank­ the merchant banking activities of financial holding ing industry. Supervisory letters can be viewed on companies. the Board’s web site at www.federalreserve.gov/ The rule, effective February 15, 2001, implements boarddocs/srletters. provisions of the Gramm-Leach-Bliley Act. The Board and the Secretary believe it permits a “twoway street” between securities firms and banking Preliminary Figures Available organizations, while, at the same time, giving effect on Net Income of the Federal to the statutory limitations and framework adopted by Reserve banks for 2000 the Congress to help maintain the separation of bank­ ing and commerce and ensure the safety and sound­ Preliminary figures indicate that the Federal Reserve ness of depository institutions. Banks distributed approximately $25.3 billion of their The final rule incorporates a number of amend­ $34.0 billion total income to the Treasury during ments in response to public comments on the interim 2000. In addition, $3.75 billion was transferred from rule issued March 17, 2000. These changes include surplus to the Treasury in May 2000, as required by the following: statute. Federal Reserve System income is derived prima­ • Modifying the provisions defining when a finan­ rily from interest earned on U.S. government securi­ cial holding company routinely manages or operates ties that the Federal Reserve has acquired through a portfolio company open market operations. This income amounted • Eliminating the dollar-based threshold for the to $32.7 billion. Additionally, revenues from fees for review of a financial holding company’s merchant Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 165 banking activities and adopting a sunset provision for strengthen the examination and supervision of institu­ the remaining capital-based investment threshold tions with significant subprime lending programs. • Streamlining the rule’s reporting and recordkeep­ The guidance, issued by the Office of the Comp­ ing requirements troller of the Currency, the Board of Governors of the • Broadening the definition of “private equity Federal Reserve System, the Federal Deposit Insur­ funds” and clarifying the rule’s application to such ance Corporation, and the Office of Thrift Super­ funds vision, supplements previous subprime lending guid­ • Modifying when transactions between insured ance issued on March 1, 1999. It principally applies depository institutions and portfolio companies are to institutions with subprime lending programs that subject to sections 23A and 23B of the Federal equal or exceed 25 percent of the institution’s tier 1 Reserve Act regulatory capital. • Revising the restrictions that apply to merchant For purposes of this guidance, “subprime lending” banking investments held beyond the permissible refers to programs that target borrowers with weak­ holding period ened credit histories typically characterized by pay­ • Expanding the definition of “securities affiliate” ment delinquencies, previous charge-offs, judgments, to include a department or division of a bank regis­ or bankruptcies. Such programs may also target bor­ tered as a municipal securities dealer. rowers with questionable repayment capacity evi­ denced by low credit scores or high debt-burden ratios. Major issues discussed in the guidance include the FINAL RULE ON ALTERNATIVE TO RATED DEBT following: REQUIREMENT FOR FINANCIAL SUBSIDIARIES The Federal Reserve Board and the Secretary of • Allowance for loan and lease losses (ALLL). the Treasury on January 19, 2001, announced their Analysis and documentation standards for the ALLL approval of a final rule establishing the alternative • Capital adequacy. Factors to consider when criteria that certain large banks may satisfy in order determining the level of capital necessary to support to control a financial subsidiary under the Gramm- subprime lending programs Leach-Bliley Act. • Loan review and classification. Guidelines for Under the act, a national or state member bank the review and classification of individual loans and ranked among the largest fifty insured banks may portfolio segments during examinations control a financial subsidiary only if the bank meets • Cure programs. Documentation requirements for certain criteria, including having an issue of highly re-aging, renewing, or extending delinquent subprime rated debt outstanding. The next fifty largest insured accounts banks may control a financial subsidiary if they sat­ • Predatory lending. Identification of potentially isfy this debt-rating requirement or an alternative abusive lending practices subject to examiner comparable requirement jointly established by the criticism. Treasury and the Federal Reserve Board. Under the final rule, a bank meets the alternative requirement if The agencies recognize that responsible subprime it has a current long-term issuer credit rating from a lending can expand credit access for consumers and nationally recognized statistical rating organization offer institutions the opportunity to earn attractive that is within the three highest investment-grade cate­ returns. However, institutions are expected to recog­ gories used by the rating organization. nize both the elevated risk levels posed by participa­ The final rule will become effective thirty days tion in subprime lending programs and the enhanced after publication in the Federal Register. It is substan­ risk-management standards needed to successfully tively identical to an interim rule issued March 14, engage in this activity. 2000. Although this guidance is intended primarily to assist examiners in their evaluation of subprime lend­ ing programs, the agencies are also distributing it to Issuance of Guidance on Supervision of banks and thrift institutions so that they are fully Subprime Lending aware of supervisory expectations regarding riskmanagement processes, allowance for loan-loss lev­ The federal banking regulatory agencies on Jan­ els, and capital adequacy for institutions engaging in uary 31, 2001, issued expanded guidance intended to such programs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

166 Federal Reserve Bulletin □ March 2001 Adoption of Guidelines for Customer tion of its service providers, to confirm that they have Information Security satisfied their contractual obligations. The federal bank and thrift regulatory agencies have sent to the Federal Register joint guidelines for report on Feasibility of Mandatory safeguarding confidential customer information. The Subordinated Debt guidelines implement section 501(b) of the Gramm- Leach-Bliley Act (GLBA) and will be effective on The Board of Governors of the Federal Reserve Sys­ July 1,2001. tem and the Secretary of the Treasury found that The GLBA requires the agencies to establish stan­ subordinated debt issuance by large depository insti­ dards for financial institutions relating to administra­ tution organizations may encourage market discipline tive, technical, and physical safeguards for customer and generate other supervisory benefits. A joint report records and information. These safeguards are to released on January 12, 2001, also indicated that the ensure the security and confidentiality of customer Board and the Treasury’s Office of the Comptroller records and information, protect against any antici­ of the Currency and Office of Thrift Supervision pated threats or hazards to the security or integrity (agencies) will consider ways to enhance their use of of these records, and protect against unauthorized voluntarily issued subordinated debt in supervisory access to or use of these records or information that monitoring. The Board and the Secretary, however, would result in substantial harm or inconvenience to chose not to recommend that the Congress make a customer. subordinated debt issuance mandatory at this time. The guidelines require financial institutions to The report to the Congress, required by the establish an information security program to (1) iden­ Gramm-Leach-Bliley Act, called for continued tify and assess the risks that may threaten customer research and, most important, continued evaluation information; (2) develop a written plan containing of financial institution supervisors’ experience in policies and procedures to manage and control these using information derived from voluntarily issued risks; (3) implement and test the plan; and (4) adjust subordinated debt. Virtually all of the largest banking the plan on a continuing basis to account for changes organizations already issue subordinated debt. The in technology, the sensitivity of customer informa­ agencies monitor subordinated debt yields and issu­ tion, and internal or external threats to information ance patterns in evaluating the condition of large security. Each institution may implement a security depository institution organizations. program appropriate to its size and complexity and The study found that existing evidence supports the nature and scope of its operations. the use of subordinated debt to encourage market The guidelines outline specific security measures discipline. But it said that the net benefits of a man­ that institutions should consider in implementing a datory policy are not clear enough to justify such a security program. A financial institution must adopt policy. Going forward, if additional evidence sug­ those security measures determined to be appropriate. gests that requiring institutions to issue subordinated The guidelines also outline responsibilities of debt is appropriate, either the Board or the Secretary directors of financial institutions in overseeing the may recommend legislation. protection of customer information. The board of Copies of the report, The Feasibility and Desirabil­ directors should oversee an institution’s efforts to ity of Mandatory Subordinated Debt, are available on develop, implement, and maintain an effective infor­ the web sites of the Board, www.federalreserve.gov/ mation security program and approve written infor­ boarddocs/RptCongress/, and the Treasury Depart­ mation security policies and programs. ment, www.ustreas.gov. The guidelines require financial institutions to oversee their service provider arrangements in order to protect the security of customer information main­ Recommendations of working Group on tained or processed by service providers. Each institu­ Public Disclosure tion must exercise due diligence in selecting its ser­ vice providers and require its service providers by A private-sector working group on January 11, 2001, contract to implement security measures that safe­ recommended enhanced and more frequent public guard customer information. When indicated by an disclosure of financial information by banking and institution’s risk assessment, the institution must also securities organizations. monitor its service providers by reviewing audits, Market risk information previously disclosed annu­ summaries of test results, or other equivalent evalua­ ally should be disclosed quarterly, and the content of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 167 these disclosures should be improved, the group said. and Barry L. Zubrow, Goldman Sachs and Co., Additional credit risk information on wholesale credit New York. exposures should also be made available quarterly, it said. The Working Group on Public Disclosure, estab­ Basel Committee Proposal to Amend lished in April 2000 by the Board of Governors of Capital Adequacy framework: the Federal Reserve System, was chaired by Walter V. Request for comments and Release Shipley, retired chairman of Chase Manhattan of an Interagency Summary Bank. He delivered the group’s findings in a letter to Board member Laurence H. Meyer. Copies were The federal bank regulatory agencies will accept provided to the Comptroller of the Currency John D. public comments on a major proposal by the Basel Hawke, Jr., and Securities and Exchange Com­ Committee on Banking Supervision to amend the mission Chairman Arthur Levitt, Jr. The OCC and 1988 international capital adequacy framework. The SEC participated with the Board in support of the full document is available on the web site of the Bank effort. for International Settlements at www.bis.org. Com­ In addition to calling for more frequent public ments are requested on the proposal by May 31, disclosure, the working group said that financial 2001, and may be sent to the U.S. banking agencies information should be disclosed based on a firm’s and to the Basel Committee. internal methodologies and exposure categories. It Although the 1988 Capital Accord was applied to said that quantitative information on a firm’s risk all banks in the United States, it has not been deter­ exposure should be balanced with qualitative infor­ mined how broadly the new approach will be applied, mation describing its risk-management process. Pub­ particularly given the many complex elements that lic disclosures should vary among institutions to may not be needed for smaller, less complex insti­ reflect legitimate differences in internal management tutions. The U.S. banking agencies recently issued processes, and disclosure practices should change in an advance notice of proposed rulemaking for non­ step with innovations in firms’ risk-management and complex institutions (“Simplified Capital Framework measurement practices, the group said. for Non-Complex Institutions,” published Novem­ Mr. Shipley, in the letter to Governor Meyer, said ber 3, 2000). Comments received on that proposal that the outcome of the group’s deliberations “cre­ (due by February 1, 2001) will be considered in ates a common platform to move ahead with suitable determining whether to apply the new approach to all steps towards enhanced public disclosure.” banks. Governor Meyer, Comptroller Hawke, and Chair­ The Federal Reserve Board on January 23, 2001, man Levitt, in their reply, said, “We . . . think that released an interagency summary of the Basel Com­ your recommendation for disclosure of credit risk mittee on Banking Supervision’s consultative pro­ based on banks’ internal ratings is especially useful.” posal issued to the public on January 16, 2001. “We hope that the working group’s work encour­ Attached to the summary is a set of discussion issues. ages all large banks and securities firms to adopt Respondents to the Basel Committee proposal are enhanced practices for public disclosure,” they wrote. encouraged to review and provide comments on the “We look forward to continued discussion with entire range of topics covered in the proposal and to market participants about public disclosure. In par­ take particular notice of the issues highlighted in ticular, we thank the members of the group for their the U.S. agencies’ release. The summary and ques­ offer to participate in future advisory efforts.” tions are available on the web sites of the Office The members of the working group, in addition to of the Comptroller of the Currency (www.occ. Mr. Shipley, were the following: Clemens Boersig, treas.gov), the Federal Reserve Board of Governors Deutsche Bank AG, Frankfurt, Germany; Patrick (www.federalreserve.gov), and the Federal Deposit de Saint-Aignan, Morgan Stanley Dean Witter, Insurance Corporation (www.fdic.gov). New York; Dina Dublon, J.P. Morgan Chase & Co., New York; Douglas Flint, HSBC Holdings PLC, London; James Hance, Bank of America Corp., Char­ Revised capital Proposal for lotte, N.C.; Ross Kari, Wells Fargo Corp., San Fran­ Nonfinancial Equity Investments cisco; Thomas H. Patrick, Merrill Lynch and Co., New York; Marcel Rohner, UBS AG, Zurich, Swit­ The Federal Reserve Board and the Office of the zerland; Charles W. Scharf, Bank One Corporation, Comptroller of the Currency on January 18, 2001, Chicago; Todd S. Thomson, Citigroup, New York; announced proposed new rules governing the regula­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

168 Federal Reserve Bulletin □ March 2001 tory capital treatment for equity investments in non- Under the new proposal, the agencies also would financial companies held by banks, bank holding heighten their monitoring of banking organizations as companies, and financial holding companies. the level of concentration in equity investment The new proposed capital treatment, revised in increases. response to public comment and in consultation with The agencies intend to request public comment the Treasury Department and other federal banking within sixty days after publication in the Federal agencies, represents a significant modification of a Register. proposal made by the Federal Reserve Board in March 2000. The Federal Deposit Insurance Corpo­ ration has announced that it will consider the new Enforcement Actions proposal Friday. The new proposal would apply symmetrically to The Federal Reserve Board on January 12, 2001, banks and their holding companies and would apply announced the execution of a written agreement by to equity investments made under the new merchant and between Maryland Permanent Capital Corpo­ banking authority granted by the Gramm-Leach- ration, Owings Mills, Maryland, and the Federal Bliley Act and to equity investments in nonfinancial Reserve Bank of Richmond. companies made under other specifically identified legal authorities. The Federal Reserve Board on January 18, 2001, The new proposal generally would impose a capi­ announced the execution of a written agreement tal charge that would increase in steps as the banking by and among the Bank of Greenville, Greenville, organization’s level of concentration in equity invest­ West Virginia, the Federal Reserve Bank of Rich­ ments increased. An 8 percent tier 1 capital deduc­ mond, and the West Virginia Division of Banking. tion would apply on covered investments that in the aggregate represent up to 15 percent of an organiza­ The Federal Reserve Board on January 31, 2001, tion’s tier 1 capital. A top marginal charge of 25 per­ announced the execution of a written agreement by cent would be set for covered investments that aggre­ and among the New Century Bank, Southfield, gate more than 25 percent of the organization’s tier 1 Michigan, the Federal Reserve Bank of Chicago, capital. and the Office of Financial and Insurance Services, Equity investments through small business invest­ Lansing, Michigan. ment companies would be exempt from these new capital deduction requirements and would continue to The Federal Reserve Board on January 31, 2001, be subject to the same capital requirements that cur­ announced the execution of a written agreement by rently apply, unless the value of those investments and between the Valley Independent Bank, El Centro, exceeds 15 percent of the bank’s tier 1 capital. Grand­ California, and the Federal Reserve Bank of fathered investments under section 24(f) of the Fed­ San Francisco. □ eral Deposit Insurance Act would also be exempt under the new proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

169 Legal Developments Final Rule—Amendment to Regulation A tions in the Federal Reserve System). Section 121 of the Gramm-Leach-Bliley Act (GLBA) permits a national bank The Board of Governors is amending 12 C.F.R. Part 201, or state member bank that is among the second 50 largest its Regulation A (Extensions of Credit by Federal Reserve insured banks to own or control a financial subsidiary only Banks; Change in Discount Rate), to reflect its approval of if the bank meets either the eligible debt requirement set a decrease in the basic discount rate at each Federal Re­ forth in section 121 of the Act or alternative criteria serve Bank. The Board acted on requests submitted by the established jointly by the Board and Treasury. On Boards of Directors of the twelve Federal Reserve Banks. March 14, 2000, the Board and Treasury adopted and The amendments to Part 201 (Regulation A) were effec­ requested public comment on an interim rule establishing tive January 4, 2001. The rate changes for adjustment this alternative criteria. The interim rule provided that a credit were effective on the dates specified below: national or state member bank meets the alternative criteria if the bank has a current long-term issuer credit rating from Part 201—Extensions of Credit by Federal Reserve a nationally recognized statistical rating organization that Banks (Regulation A) is within the three highest investment grade rating catego­ ries used by the organization. After reviewing public com­ 1. The authority citation for Part 201 continues to read as ments, the Board and Treasury are adopting a final rule that follows: is substantively identical to the interim rule. Effective March 5, 2001, 12 C.F.R. Part 208 is amended Authority: 12 U.S.C. 343 et seq., 347a, 347b, 347c, 347d, as follows: 348 et seq., 357, 374, 374a and 461. 2. Section 201.51 is revised to read as follows: Part 208—Membership of State Banking Institutions in the Federal Reserve System (Regulation H) Section 201.51—Adjustment credit for depository institutions. 1. The authority citation for Part 208 continues to read as The rates for adjustment credit provided to depository follows: institutions under section 201.3(a) are: Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321— Federal Reserve Bank Rate Effective1 338a, 371d, 461, 481-486, 601, 611, 1814, 1816, 1818, Boston 5.5 January 4, 2001 1820(d), 18230), 1828(o), 1831, 1831o, 1831p-l, 1831r-l, New York 5.5 January 4, 2001 Philadelphia 5.5 January 4, 2001 1831w, 1835a, 1882, 2901- 2907, 3105, 3310, 3331-3351, Cleveland 5.5 January 4, 2001 and 3906-3909; 15 U.S.C. 78b, 781(b), 781(g), 781(i), 78o- Richmond 5.5 January 4, 2001 Atlanta 5.5 January 4, 2001 4(c)(5), 78q, 78q-l, and 78w; 31 U.S.C. 5318; 42 U.S.C. Chicago 5.5 January 4, 2001 4012a, 4104a, 4104b, 4106 and 4128. St. Louis 5.5 January 5, 2001 Minneapolis 5.5 January 4, 2001 Kansas City 5.5 January 4, 2001 2. Section 208.71(c) is revised to read as follows: Dallas 5.5 January 4, 2001 San Francisco 5.5 January 4, 2001 Section 208.71—What are the requirements to Final Rule—Amendment to Regulation H invest in or control a financial subsidiary? The Board of Governors is amending 12 C.F.R. Part 208, its Regulation H (Membership of State Banking Institu- (c) Alternative Requirement. A state member bank satisfies the alternative criteria referenced in paragraph (b)(l)(ii) of 1. On January 3, 2001, the rate for adjustment credit was this section if the bank has a current long-term issuer credit 5.75 percent for the following Federal Reserve Banks: New York, rating from at least one nationally recognized statistical Cleveland, Atlanta, Kansas City, Dallas, and San Francisco. On Janu­ rating organization that is within the three highest invest­ ary 4, the rate for adjustment credit was 5.75 percent for the Federal Reserve Bank of St. Louis. ment grade rating categories used by the organization. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

170 Federal Reserve Bulletin □ March 2001 3. Section 208.77(e) is revised to read as follows: Section 225.1—Authority, purpose, and scope. Section 208.77—Definitions. (c) * * * (e) Long-term Issuer Credit Rating. The term “long-term (10) Subpart J governs the conduct of merchant banking issuer credit rating” means a written opinion issued by a investment activities by financial holding companies as nationally recognized statistical rating organization of the permitted under section 4(k)(4)(H) of the Bank Holding bank’s overall capacity and willingness to pay on a timely Company Act (12 U.S.C. 1843(k)(4)(H)). basis its unsecured, dollar-denominated financial obliga­ tions maturing in not less than one year. 3. Subpart J is revised to read as follows: Joint Final Rule—Amendment to Regulation Y Subpart J—Merchant Banking Investments The Board of Governors of the Federal Reserve System Section 225.170—What type of investments are permitted and the Secretary of the Treasury jointly adopt this final by this subpart, and under what conditions may they be rule governing merchant banking investments made by made? financial holding companies. The rule implements provi­ Section 225.171—What are the limitations on managing or sions of the Gramm-Leach-Bliley Act that permit financial operating a portfolio company held as a merchant holding companies to make investments as part of a bona banking investment? fide securities underwriting or merchant or investment Section 225.172—What are the holding periods permitted banking activity. The Board and the Secretary have incor­ for merchant banking investments? porated a number of amendments to the final rule to Section 225.173—How are investments in private equity address issues raised by public commenters, to reduce funds treated under this subpart? potential regulatory burdens, and to clarify the application Section 225.174—What aggregate thresholds apply to mer­ of the rule. These changes include expanding the definition chant banking investments? of “securities affiliate” to include a department or division Section 225.175—What risk management, record keeping of a bank registered as a municipal securities dealer; modi­ and reporting policies are required to make merchant fying the provisions defining prohibited routine manage­ banking investments? ment and operation of portfolio companies; adopting a Section 225.176—How do the statutory cross marketing sunset provision for the investment thresholds under the and sections 23A and B limitations apply to merchant interim rule and eliminating the dollar-based threshold for banking investments? the review of a financial holding company’s merchant Section 225.177—Definitions. banking activities; streamlining the rule’s reporting and recordkeeping requirements; broadening the definition of Subpart J—Merchant Banking Investments “private equity” funds and clarifying the rule’s application to such funds; and adopting several safe-harbors to the Section 225.170—What type of investments are presumptions in the rule governing the definition of affili­ permitted by this subpart, and under what ate for purposes of sections 23A and 23B of the Federal conditions may they be made? Reserve Act. Effective February 15, 2001, 12C.F.R. Part 225 is (a) What types of investments are permitted by this sub­ amended as follows: part? Section 4(k)(4)(H) of the Bank Holding Company Act (12 U.S.C. 1843(k)(4)(H)) and this subpart authorize a financial holding company, directly or indirectly and as Part 225—Bank Holding Companies and Change in principal or on behalf of one or more persons, to acquire or Bank Control (Regulation Y) control any amount of shares, assets or ownership interests of a company or other entity that is engaged in any activity not otherwise authorized for the financial holding company 1. The authority citation for Part 225 continues to read as under section 4 of the Bank Holding Company Act. For follows: purposes of this subpart, shares, assets or ownership inter­ ests acquired or controlled under section 4(k)(4)(H) and Authority: 12U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, this subpart are referred to as “merchant banking invest­ 183 lp-1, 1843(c)(8), 1843(k), 1844(b), 1972(1), 2903, ments.” A financial holding company may not directly or 2905, 3106, 3108, 3310, 3331-3351, 3907, and 3909. indirectly acquire or control any merchant banking invest­ ment except in compliance with the requirements of this 2. Section 225.1(c)(10) is revised to read as follows: subpart. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 171 (b) Must the investment be a bona fide merchant banking change Commission as an investment ad­ investment? The acquisition or control of shares, assets or viser under the Investment Advisers Act ownership interests under this subpart is not permitted of 1940 (15 U.S.C. 80b-1 et seq.); and unless it is part of a bona fide underwriting or merchant or (B) Provides investment advice to an insur­ investment banking activity. ance company. (c) What types of ownership interests may be acquired? Shares, assets or ownership interests of a company or other Section 225.171—What are the limitations on entity include any debt or equity security, warrant, option, managing or operating a portfolio company held as partnership interest, trust certificate or other instrument a merchant banking investment? representing an ownership interest in the company or en­ tity, whether voting or nonvoting. (a) May a financial holding company routinely manage or (d) Where in a financial holding company may merchant operate a portfolio company? Except as permitted in para­ banking investments be made? A financial holding com­ graph (e) of this section, a financial holding company may pany and any subsidiary (other than a depository institution not routinely manage or operate any portfolio company. or subsidiary of a depository institution) may acquire or (b) When does a financial holding company routinely man­ control merchant banking investments. A financial holding age or operate a company? company and its subsidiaries may not acquire or control (1) Examples of routine management or operation.merchant banking investments on behalf of a depository (i) Executive officer interlocks at the portfolio institution or subsidiary of a depository institution. company. A financial holding company rou­ (e) May assets other than shares be held directly? A tinely manages or operates a portfolio com­ financial holding company may not under this subpart pany if any director, officer or employee of the acquire or control assets, other than debt or equity securi­ financial holding company serves as or has ties or other ownership interests in a company, unless: the responsibilities of an executive officer of (1) The assets are held by or promptly transferred to a the portfolio company. portfolio company; (ii) Interlocks by executive officers of the financial (2) The portfolio company maintains policies, books holding company. and records, accounts, and other indicia of corpo­ (A) Prohibition. A financial holding company rate, partnership or limited liability organization routinely manages or operates a portfolio and operation that are separate from the financial company if any executive officer of the holding company and limit the legal liability of the financial holding company serves as or financial holding company for obligations of the has the responsibilities of an officer or portfolio company; and employee of the portfolio company. (3) The portfolio company has management that is (B) Definition. For purposes of paragraph separate from the financial holding company to the (b)(l)(ii)(A) of this section, the term “fi­ extent required by section 225.171. nancial holding company” includes the (f) What type of affiliate is required for a financial holding financial holding company and only the company to make merchant banking investments? A finan­ following subsidiaries of the financial cial holding company may not acquire or control merchant holding company: banking investments under this subpart unless the financial (1) A securities broker or dealer registered under the holding company qualifies under at least one of the follow­ Securities Exchange Act of 1934; ing paragraphs: (2) A depository institution; (1) Securities affiliate. The financial holding company (3) An affiliate that engages in merchant banking activ­ is or has an affiliate that is registered under the ities under this subpart or insurance company Securities Exchange Act of 1934 (15 U.S.C. 78c, investment activities under section 4(k)(4)(I) of 78o, 78o-4) as: the Bank Holding Company Act (12 U.S.C. (i) A broker or dealer; or 1843(k)(4)(I)); (ii) A municipal securities dealer, including a sep­ (4) A small business investment company (as defined arately identifiable department or division of a in section 302(b) of the Small Business Investment bank that is registered as a municipal securi­ Act of 1958 (15 U.S.C. 682(b)) controlled by the ties dealer. financial holding company or by any depository (2) Insurance affiliate with an investment adviser affil­ institution controlled by the financial holding com­ iate. The financial holding company controls: pany; and (i) An insurance company that is predominantly (5) Any other affiliate that engages in significant eq­ engaged in underwriting life, accident and uity investment activities that are subject to a spe­ health, or property and casualty insurance cial capital charge under the capital adequacy rules (other than credit-related insurance), or pro­ or guidelines of the Board. viding and issuing annuities; and (iii) Covenants regarding ordinary course of busi­ (ii) A company that: ness. A financial holding company routinely (A) Is registered with the Securities and Ex­ manages or operates a portfolio company if Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

172 Federal Reserve Bulletin □ March 2001 any covenant or other contractual arrangement (ii) Removal or selection of an independent ac­ exists between the financial holding company countant or auditor or investment banker by and the portfolio company that would restrict the portfolio company; the portfolio company’s ability to make rou­ (iii) Significant changes to the business plan or tine business decisions, such as entering into accounting methods or policies of the portfo­ transactions in the ordinary course of business lio company; or hiring officers or employees other than ex­ (iv) Removal or replacement of any or all of the ecutive officers. executive officers of the portfolio company; (2) Presumptions of routine management or operation. (v) The redemption, authorization or issuance of A financial holding company is presumed to routinely any equity or debt securities (including op­ manage or operate a portfolio company if: tions, warrants or convertible shares) of the (i) Any director, officer, or employee of the finan­ portfolio company or any borrowing by the cial holding company serves as or has the portfolio company outside of the ordinary responsibilities of an officer (other than an course of business; executive officer) or employee of the portfolio (vi) The amendment of the articles of incorpora­ company; or tion or by-laws (or similar governing docu­ (ii) Any officer or employee of the portfolio com­ ments) of the portfolio company; and pany is supervised by any director, officer, or (vii) The sale, merger, consolidation, spin-off, re­ employee of the financial holding company capitalization, liquidation, dissolution or sale (other than in that individual’s capacity as a of substantially all of the assets of the portfo­ director of the portfolio company). lio company or any of its significant subsid­ (c) How may a financial holding company rebut a presump­ iaries. tion that it is routinely managing or operating a portfolio (3) Providing advisory and underwriting services to, company? A financial holding company may rebut a pre­ and having consultations with, a portfolio com­ sumption that it is routinely managing or operating a pany. A financial holding company may: portfolio company under paragraph (b)(2) of this section (i) Provide financial, investment and manage­ by presenting information to the Board demonstrating to ment consulting advice to a portfolio com­ the Board’s satisfaction that the financial holding company pany in a manner consistent with and subject is not routinely managing or operating the portfolio com­ to any restrictions on such activities contained pany. in sections 225.28(b)(6) or 225.86(b)(1) of this (d) What arrangements do not involve routinely managing part (12 C.F.R. 225.28(b)(6) and 225.86(b)(1)); or operating a portfolio company? (ii) Provide assistance to a portfolio company in (1) Director representation at portfolio companies. A connection with the underwriting or private financial holding company may select any or all of placement of its securities, including acting the directors of a portfolio company or have one or as the underwriter or placement agent for more of its directors, officers, or employees serve such securities; and as directors of a portfolio company if: (iii) Meet with the officers or employees of a (i) The portfolio company employs officers and portfolio company to monitor or provide ad­ employees responsible for routinely managing vice with respect to the portfolio company’s and operating the company; and performance or activities. (ii) The financial holding company does not rou­ (e) When may a financial holding company routinely man­ tinely manage or operate the portfolio com­ age or operate a portfolio company? pany, except as permitted in paragraph (e) of (1) Special circumstances required. A financial hold­ this section. ing company may routinely manage or operate a (2) Covenants or other provisions regarding extraordi­ portfolio company only when intervention by the nary events. A financial holding company may, by financial holding company is necessary or required virtue of covenants or other written agreements to obtain a reasonable return on the financial hold­ with a portfolio company, restrict the ability of the ing company’s investment in the portfolio com­ portfolio company, or require the portfolio com­ pany upon resale or other disposition of the invest­ pany to consult with or obtain the approval of the ment, such as to avoid or address a significant financial holding company, to take actions outside operating loss or in connection with a loss of of the ordinary course of the business of the portfo­ senior management at the portfolio company. lio company. Examples of the types of actions that (2) Duration limited. A financial holding company may be subject to these types of covenants or may routinely manage or operate a portfolio com­ agreements include, but are not limited to, the pany only for the period of time as may be neces­ following: sary to address the cause of the financial holding (i) The acquisition of significant assets or con­ company’s involvement, to obtain suitable alterna­ trol of another company by the portfolio com­ tive management arrangements, to dispose of the pany or any of its subsidiaries; investment, or to otherwise obtain a reasonable Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 173 return upon the resale or disposition of the invest­ (2) Ownership interests acquired from or transferred ment. to companies held under this subpart. For purposes (3) Notice required for extended involvement. A finan­ of paragraph (b)(1) of this section, shares, assets or cial holding company may not routinely manage or ownership interests: operate a portfolio company for a period greater (i) Acquired by a financial holding company than nine months without prior written notice to from a company in which the financial hold­ the Board. ing company held an interest under this sub­ (4) Documentation required. A financial holding com­ part will be considered to have been acquired pany must maintain and make available to the by the financial holding company on the date Board upon request a written record describing its that the share, asset or ownership interest was involvement in routinely managing or operating a acquired by the company; and portfolio company. (ii) Acquired by a company from a financial (f) May a depository institution or its subsidiary routinely holding company will be considered to have manage or operate a portfolio company? been acquired by the company on the date (1) In general. A depository institution and a subsid­ that the share, asset or ownership interest was iary of a depository institution may not routinely acquired by the financial holding company ifmanage or operate a portfolio company in which (A) The financial holding company held the an affiliated company owns or controls an interest share, asset, or ownership interest under under this subpart. this subpart; and (2) Definition applying provisions governing routine (B) The financial holding company holds an management or operation. For purposes of this interest in the acquiring company under section other than paragraph (e) and for purposes this subpart. of section 225.173(d), a financial holding company (3) Interests previously held by a financial holding includes a depository institution controlled by the company under limited authority. For purposes of financial holding company and a subsidiary of such paragraph (b)(1) of this section, any shares, assets, a depository institution. or ownership interests previously owned or con­ (3) Exception for certain subsidiaries of depository trolled, directly or indirectly, by a financial holding institutions. For purposes of paragraph (e) of this company under any other provision of the Federal section, a financial holding company includes a banking laws that imposes a limited holding period financial subsidiary held in accordance with sec­ will if acquired under this subpart be considered to tion 5136A of the Revised Statutes (12 U.S.C. have been acquired by the financial holding com­ 24a) or section 46 of the Federal Deposit Insurance pany under this subpart on the date the financial Act (12 U.S.C. 183 lw), and a subsidiary that is a holding company first acquired ownership or con­ small business investment company and that is trol of the shares, assets or ownership interests held in accordance with the Small Business Invest­ under such other provision of law. For purposes of ment Act (15 U.S.C. 661 et seq.), and such a this paragraph (b)(3), a financial holding company subsidiary may, in accordance with the limitations includes a depository institution controlled by the set forth in this section, routinely manage or oper­ financial holding company and any subsidiary of ate a portfolio company in which an affiliated such a depository institution. company owns or controls an interest under this (4) Approval required to hold interests held in excess subpart. of time limit. A financial holding company may seek Board approval to own, control or hold shares, Section 225.172—What are the holding periods assets or ownership interests of a company under permitted for merchant banking investments? this subpart for a period that exceeds the period specified in paragraph (b)(1) of this section. A (a) Must investments be made for resale? A financial request for approval must; holding company may own or control shares, assets and (i) Be submitted to the Board at least 90 days ownership interests pursuant to this subpart only for a prior to the expiration of the applicable time period of time to enable the sale or disposition thereof on a period; reasonable basis consistent with the financial viability of (ii) Provide the reasons for the request, including the financial holding company’s merchant banking invest­ information that addresses the factors in para­ ment activities. graph (b)(5) of this section; and (b) What period of time is generally permitted for holding (iii) Explain the financial holding company’s plan merchant banking investments ? for divesting the shares, assets or ownership (1) In general. Except as provided in this section or interests. section 225.173, a financial holding company may (5) Factors governing Board determinations. In review­ not, directly or indirectly, own, control or hold any ing any proposal under paragraph (b)(4) of this sec­ share, asset or ownership interest pursuant to this tion, the Board may consider all the facts and subpart for a period that exceeds ten years. circumstances related to the investment, including: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

174 Federal Reserve Bulletin □ March 2001 (i) The cost to the financial holding company of (5) Is not formed or operated for the purpose of mak­ disposing of the investment within the appli­ ing investments inconsistent with the authority cable period; granted under section 4(k)(4)(H) of the Bank Hold­ (ii) The total exposure of the financial holding ing Company Act (12 U.S.C. 1843(k)(4)(H)) or company to the company and the risks that evading the limitations governing merchant bank­ disposing of the investment may pose to the ing investments contained in this subpart. financial holding company; (b) What form may a private equity fund take? A private (iii) Market conditions; equity fund may be a corporation, partnership, limited (iv) The nature of the portfolio company’s busi­ liability company or other type of company that issues ness; ownership interests in any form. (v) The extent and history of involvement by the (c) What is the holding period permitted for interests in financial holding company in the manage­ private equity funds? ment and operations of the company; and (1) In general. A financial holding company may own, (vi) The average holding period of the financial control or hold any interest in a private equity fund holding company’s merchant banking invest­ under this subpart and any interest in a portfolio ments. company that is owned or controlled by a private (6) Restrictions applicable to investments held beyond equity fund in which the financial holding com­ time period. A financial holding company that di­ pany owns or controls any interest under this sub­ rectly or indirectly owns, controls or holds any part for the duration of the fund, up to a maximum share, asset or ownership interest of a company of 15 years. under this subpart for a total period that exceeds (2) Request to hold interest for longer period. A finan­ the period specified in paragraph (b)(1) of this cial holding company may seek Board approval to section must: own, control or hold an interest in or held through (i) For purposes of determining the financial a private equity fund for a period longer than the holding company’s regulatory capital, apply duration of the fund in accordance with section to the financial holding company’s adjusted 225.172(b) of this subpart. carrying value of such shares, assets, or own­ (3) Application of rules. The rules described in section ership interests a capital charge determined 225.172(b)(2) and (3) governing holding periods by the Board that must be: of interests acquired, transferred or previously held (A) Higher than the maximum marginal Tier by a financial holding company apply to interests 1 capital charge applicable under the in, held through, or acquired from a private equity Board’s capital adequacy rules or guide­ fund. lines (see 12 C.F.R. 225 Appendix A) to (d) How do the restrictions on routine management and merchant banking investments held by operation apply to private equity funds and investments that financial holding company; and held through a private equity fund? (B) In no event less than 25 percent of the (1) Portfolio companies held through a private equity adjusted carrying value of the invest­ fund. A financial holding company may not rou­ ment; and tinely manage or operate a portfolio company that (ii) Abide by any other restrictions that the Board is owned or controlled by a private equity fund in may impose in connection with granting ap­ which the financial holding company owns or con­ proval under paragraph (b)(4) of this section. trols any interest under this subpart, except as permitted under section 225.171(e). Section 225.173—How are investments in private (2) Private equity funds controlled by a financial hold­ equity funds treated under this subpart? ing company. A private equity fund that is con­ trolled by a financial holding company may not (a) What is a private equity fund? For purposes of this routinely manage or operate a portfolio company, subpart, a “private equity fund” is any company that: except as permitted under section 225.171(e). (1) Is formed for the purpose of and is engaged exclu­ (3) Private equity funds that are not controlled by a sively in the business of investing in shares, assets, financial holding company. A private equity fund and ownership interests of financial and nonfinan- may routinely manage or operate a portfolio com­ cial companies for resale or other disposition; pany so long as no financial holding company (2) Is not an operating company; controls the private equity fund or as permitted (3) No more than 25 percent of the total equity of under section 225.171(e). which is held, owned or controlled, directly or (4) When does a financial holding company control a indirectly, by the financial holding company and private equity fund? A financial holding company its directors, officers, employees and principal controls a private equity fund for purposes of this shareholders; subpart if the financial holding company, including (4) Has a maximum term of not more than 15 years; any director, officer, employee or principal share­ and holder of the financial holding company: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 175 (i) Serves as a general partner, managing mem­ ing policies, procedures, records and systems rea­ ber, or trustee of the private equity fund (or sonably designed to: serves in a similar role with respect to the (i) Monitor and assess the carrying value, mar­ private equity fund); ket value and performance of each invest­ (ii) Owns or controls 25 percent or more of any ment and the aggregate portfolio; class of voting shares or similar interests in (ii) Identify and manage the market, credit, con­ the private equity fund; centration and other risks associated with (iii) In any manner selects, controls or constitutes such investments; a majority of the directors, trustees or man­ (iii) Identify, monitor and assess the terms, agement of the private equity fund; or amounts and risks arising from transactions (iv) Owns or controls more than 5 percent of any and relationships (including contingent fees class of voting shares or similar interests in or contingent interests) with each company in the private equity fund and is the investment which the financial holding company holds adviser to the fund. an interest under this subpart; (iv) Ensure the maintenance of corporate sepa­ rateness between the financial holding com­ Section 225.174—What aggregate thresholds apply pany and each company in which the finan­ to merchant banking investments? cial holding company holds an interest under this subpart and protect the financial holding (a) In general. A financial holding company may not, company and its depository institution sub­ without Board approval, directly or indirectly acquire any sidiaries from legal liability for the opera­ additional shares, assets or ownership interests under this tions conducted and financial obligations of subpart or make any additional capital contribution to any each such company; and company the shares, assets or ownership interests of which (v) Ensure compliance with this part and any are held by the financial holding company under this other provisions of law governing transac­ subpart if the aggregate carrying value of all merchant tions and relationships with companies in banking investments held by the financial holding com­ which the financial holding company holds pany under this subpart exceeds: an interest under this subpart (e.g., fiduciary (1) 30 percent of the Tier 1 capital of the financial principles or sections 23A and 23B of holding company; or the Federal Reserve Act (12 U.S.C. 371c, (2) After excluding interests in private equity funds, 371c-l), if applicable). 20 percent of the Tier 1 capital of the financial (2) Availability of records. A financial holding com­ holding company. pany must make the policies, procedures and (b) How do these thresholds apply to a private equity fund? records required by paragraph (a)(1) of this section Paragraph (a) of this section applies to the interest acquired available to the Board or the appropriate Reserve or controlled by the financial holding company under this Bank upon request. subpart in a private equity fund. Paragraph (a) of this (b) What periodic reports must be filed? A financial hold­ section does not apply to any interest in a company held by ing company must provide reports to the appropriate Re­ a private equity fund or to any interest held by a person that serve Bank in such format and at such times as the Board is not affiliated with the financial holding company. may prescribe. (c) How long do these thresholds remain in effect? This (c) Is notice required for the acquisition of companies ? section 225.174 shall cease to be effective on the date that a (1) Fulfillment of statutory notice requirement. Except final rule issued by the Board that specifically addresses as required in paragraph (c)(2) of this section, no the appropriate regulatory capital treatment of merchant post-acquisition notice under section 4(k)(6) of banking investments becomes effective. the Bank Holding Company Act (12 U.S.C. 1843(k)(6)) is required by a financial holding com­ Section 225.175—What risk management, record pany in connection with an investment made under keeping and reporting policies are required to make this subpart if the financial holding company has merchant banking investments? previously filed a notice under section 225.87 indi­ cating that it had commenced merchant banking (a) What internal controls and records are necessary? investment activities under this subpart. (1) General. A financial holding company, including a (2) Notice of large individual investments. A financial private equity fund controlled by a financial hold­ holding company must provide written notice to ing company, that makes investments under this the Board on the appropriate form within 30 days subpart must establish and maintain policies, pro­ after acquiring more than 5 percent of the voting cedures, records and systems reasonably designed shares, assets or ownership interests of any com­ to conduct, monitor and manage such investment pany under this subpart, including an interest in a activities and the risks associated with such invest­ private equity fund, at a total cost to the financial ment activities in a safe and sound manner, includ­ holding company that exceeds the lesser of 5 per­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

176 Federal Reserve Bulletin □ March 2001 cent of the Tier 1 capital of the financial holding (2) Request to rebut presumption. A financial holding company or $200 million. company may rebut this presumption by providing information acceptable to the Board demonstrating Section 225.176—How do the statutory cross that the financial holding company does not control marketing and sections 23A and B limitations apply the company. to merchant banking investments? (3) Presumptions that control does not exist. Absent evidence to the contrary, the presumption in para­ (a) Are cross marketing activities prohibited? graph (b)(1) of this section will be considered to (1) In general. A depository institution, including a have been rebutted without Board approval under subsidiary of a depository institution, controlled by paragraph (b)(2) of this section if any one of the a financial holding company may not: following requirements are met: (i) Offer or market, directly or through any ar­ (i) No officer, director or employee of the finan­ rangement, any product or service of any cial holding company serves as a director, company if more than 5 percent of the com­ trustee, or general partner (or individual exer­ pany’s voting shares, assets or ownership in­ cising similar functions) of the company; terests are owned or controlled by the finan­ (ii) A person that is not affiliated or associated cial holding company pursuant to this with the financial holding company owns or subpart; or controls a greater percentage of the equity (ii) Allow any product or service of the deposi­ capital of the portfolio company than the tory institution, including any product or ser­ amount owned or controlled by the financial vice of a subsidiary of the depository institu­ holding company, and no more than one offi­ tion, to be offered or marketed, directly or cer or employee of the holding company through any arrangement, by or through any serves as a director or trustee (or individual company described in paragraph (a)( 1 )(i) of exercising similar functions) of the company; this section. or (2) How are certain subsidiaries treated? For pur­ (iii) A person that is not affiliated or associated poses of paragraph (a)(1) of this section, a subsid­ with the financial holding company owns or iary of a depository institution does not include a controls more than 50 percent of the voting financial subsidiary held in accordance with sec­ shares of the portfolio company, and officers tion 5136A of the Revised Statutes (12 U.S.C. and employees of the holding company do 24a) or section 46 of the Federal Deposit Insurance not constitute a majority of the directors or Act. (12 U.S.C.1831w), any company held by a trustees (or individuals exercising similar company owned in accordance with section 25 or functions) of the company. 25A of the Federal Reserve Act (12 U.S.C. 601 (4) Convertible instruments. For purposes of para­ et seq.', 12 U.S.C. 611 et seq.), or any company graph (b)(1) of this section, equity capital includes held by a small business investment company options, warrants and any other instrument con­ owned in accordance with the Small Business vertible into equity capital. Investment Act of 1958 (15 U.S.C. 661 et seq.). (5) Application of presumption to private equity funds. (3) How do the cross marketing restrictions apply to A financial holding company will not be presumed private equity funds? The restriction contained in to own or control the equity capital of a company paragraph (a)(1) of this section does not apply to: for purposes of paragraph (b)(1) of this section (i) Portfolio companies held by a private equity solely by virtue of an investment made by the fund that the financial holding company does financial holding company in a private equity fund not control; or that owns or controls the equity capital of the (ii) The sale, offer or marketing of any interest in company unless the financial holding company a private equity fund, whether or not con­ controls the private equity fund as described in trolled by the financial holding company. section 225.173(d)(4). (b) When are companies held under section 4(k)(4)(H) (6) Application of sections 23A and B to U.S. branches affiliates under sections 23A and B? and agencies of foreign banks. Sections 23A and (1) Rebuttable presumption of control. The following 23B of the Federal Reserve Act (12 U.S.C. 371c, rebuttable presumption of control shall apply for 37lc-1) shall apply to all covered transactions be­ purposes of sections 23A and 23B of the Federal tween each U.S. branch and agency of a foreign Reserve Act (12 U.S.C. 371c, 37lc-1): if a finan­ bank that acquires or controls, or that is affiliated cial holding company directly or indirectly owns or with a company that acquires or controls, merchant controls more than 15 percent of the total equity of banking investments and: a company pursuant to this subpart, the company (i) Any portfolio company that the foreign bank shall be presumed to be an affiliate of any member or affiliated company controls or is presumed bank that is affiliated with the financial holding to control under paragraph (b)(1) of this sec­ company. tion; and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 111 (ii) Any company that the foreign bank or affili­ the Bank Holding Company Act (12 U.S.C. 1843); ated company controls or is presumed to con­ and trol under paragraph (b)(1) of this section if (2) Any shares, assets or ownership interests of which the company is engaged in acquiring or con­ are held, owned or controlled directly or indirectly trolling merchant banking investments and by the financial holding company pursuant to this the proceeds of the covered transaction are subpart, including through a private equity fund used for the purpose of funding the compa­ that the financial holding company controls. ny’s merchant banking investment activities. (d) Who are the executive officers of a company? (1) An executive officer of a company is any person who participates or has the authority to participate Section 225,177—Definitions. (other than in the capacity as a director) in major policymaking functions of the company, whether (a) What do references to a financial holding company or not the officer has an official title, the title include ? designates the officer as an assistant, or the officer (1) Except as otherwise expressly provided, the term serves without salary or other compensation. “financial holding company” as used in this sub­ (2) The term “executive officer” does not include: part means the financial holding company and all (i) Any person, including a person with an offi­ of its subsidiaries, including a private equity fund cial title, who may exercise a certain measure or other fund controlled by the financial holding of discretion in the performance of his duties, company. including the discretion to make decisions in (2) Except as otherwise expressly provided, the term the ordinary course of the company’s busi­ “financial holding company” does not include a ness, but who does not participate in the depository institution or subsidiary of a depository determination of major policies of the com­ institution or any portfolio company controlled di­ pany and whose decisions are limited by pol­ rectly or indirectly by the financial holding com­ icy standards fixed by senior management of pany. the company; or (b) What do references to a depository institution include? (ii) Any person who is excluded from participat­ For purposes of this subpart, the term “depository institu­ ing (other than in the capacity of a director) tion” includes a U.S. branch or agency of a foreign bank. in major policymaking functions of the com­ (c) What is a portfolio company ? A portfolio company is pany by resolution of the board of directors any company or entity: or by the bylaws of the company and who (1) That is engaged in any activity not authorized for does not in fact participate in such policy­ the financial holding company under section 4 of making functions. Applications Approved Under Bank Holding Company act By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant(s) Bank(s) Effective Date Mountain West Financial Corporation, BankWest Financial, Inc., January 8, 2001 Helena, Montana Kalispell, Montana BankWest, National Association, Kalispell, Montana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

178 Federal Reserve Bulletin □ March 2001 Applications Approved Under Bank Holding Company Act By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Applicant(s) Bank(s) Reserve Bank Effective Date Arkansas State Bancshares, Inc., Arkansas State Bank, St. Louis January 9, 2001 Siloam Springs, Arkansas Siloam Springs, Arkansas Bedwell Investments, Inc., Merchants Trust, Inc., Atlanta January 12, 2001 Jackson, Alabama Jackson, Alabama Bryan-Heritage Limited Partnership, The First National Bank of Bryan, Dallas January 9, 2001 Bryan, Texas Bryan, Texas Bryan Family Management Trust, Bryan, Texas Carlson Bancshares, Inc., Lakeside Bancshares, Inc., St. Louis December 28, 2000 West Memphis, Arkansas Hughes, Arkansas The Planters National Bank of Hughes, Hughes, Arkansas Charter Bancshares, Inc., Charter Bank-Northwest, Dallas December 28, 2000 Corpus Christi, Texas Corpus Christi, Texas Charter IBHC, Inc., Wilmington, Delaware Comerica Incorporated, Imperial Bancorp, Chicago January 5, 2001 Detroit, Michigan Inglewood, California Dickinson Holdings, Inc., Citizens State Bank of Dickinson, Dallas January 17, 2001 Dickinson, Texas Dickinson, Texas Dickinson Holdings of Delaware, League City Bank and Trust, Wilmington, Delaware League City, Texas First Deposit Bancshares, Inc., Douglas Federal Bank, Atlanta January 11, 2001 Douglasville, Georgia Douglasville, Georgia Fifth Third Bancorp, Capital Holding, Inc., Cleveland January 5, 2001 Cincinnati, Ohio Sylvania, Ohio Capital Bank N.A., Sylvania, Ohio Frontier Financial Corporation, Interbancorp, Inc., San Francisco January 18, 2001 Everett, Washington Duvall, Washington Inter Bank, Duvall, Washington Holland Bancorp, Inc., Bank of Holland, New York December 29, 2000 Holland, New York Holland, New York Indiana United Bancorp, Regional Bank, Chicago January 16, 2001 Greensburg, Indiana New Albany, Indiana Lakeland Bancorp, Inc., Sussex Bancorp, New York December 28, 2000 Oak Ridge, New Jersey Franklin, New Jersey MSB Bankshares, Inc., The Miners’ State Bank of Iron River, Minneapolis December 28, 2000 Iron River, Michigan Iron River, Michigan Nebraska Bankshares, Inc., Stockmens Financial Corporation, Kansas City January 18, 2001 Farnam, Nebraska Rushville, Nebraska Northstar Financial Group, Inc., Northstar Bank, Chicago January 16, 2001 Bad Axe, Michigan Bad Axe, Michigan Remada Financial Holdings, Inc., Claremont Financial Services, Inc., Minneapolis January 19, 2001 Minnetonka, Minnesota St. Paul, Minnesota Alliance Bank of Blooming Prairie, Blooming Prairie, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 179 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date State National Bancshares, Inc., Ruidoso Bank Corporation, Dallas January 3, 2001 Lubbock, Texas Ruidoso, New Mexico Triple J Financial, Inc., First Caprock Bancshares, Inc., Dallas January 5, 2001 Claude, Texas Claude, Texas The First National Bank of Claude, Claude, Texas United Nebraska Financial Desert Valley National Bank, Kansas City January 4, 2001 Company, Cave Creek, Arizona Grand Island, Nebraska Virginia Capital Bancshares, Inc., Fredericksburg State Bank, Richmond January 3, 2001 Fredericksburg, Virginia Fredericksburg, Virginia Fredericksburg Savings Bank, Fredericksburg, Virginia Wachovia Corporation, Republic Security Financial Richmond January 24, 2001 Winston-Salem, North Carolina Corporation, West Palm Beach, Florida Republic Security Bank, West Palm Beach, Florida Woodford Bancshares, Inc., Woodford State Bank, Chicago January 23, 2001 Monroe, Wisconsin Woodford, Wisconsin Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Community First Bancshares, Inc., Southern Financial, Inc., St. Louis December 27, 2000 Union City, Tennessee Brentwood, Tennessee Cornerstone Financial Services To engage de novo in extending credit Chicago December 28, 2000 Group, Inc., and servicing loans Ottumwa, Iowa Glacier Bancorp, Inc., WesterFed Financial Corporation, Minneapolis January 19, 2001 Kalispell, Montana Missoula, Montana Western Security Bank, Missoula, Montana Michigan National Corporation, Standard Federal Bank, Chicago January 23, 2001 Farmington Hills, Michigan Troy, Michigan PSB Bancorp, Inc., Iron Bridge Holdings, Inc., Philadelphia January 3, 2001 Philadelphia, Pennsylvania Philadelphia, Pennsylvania McGuire Performance Solutions, Inc., Philadelphia, Pennsylvania Avanti Capital, Inc., Philadelphia, Pennsylvania Union Planters Corporation, Jefferson Savings Bancorp, Inc., St. Louis December 29, 2000 Memphis, Tennessee Ballwin, Missouri Union Planters Holding Corporation, Jefferson Heritage Bank, Memphis, Tennessee Ballwin, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

180 Federal Reserve Bulletin □ March 2001 Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date F&M National Corporation, Atlantic Financial Corp., Richmond January 9, 2001 Winchester, Virginia Newport News, Virginia Johnson Mortgage Company, L.L.C., Newport News, Virginia Gateway Bancorp, Bank of Lakewood, San Francisco January 18, 2001 Santa Ana, California Lakewood, California Mission Hills Mortgage Corporation, Santa Ana, California Stichting Prioriteit ABN AMRO Michigan National Corporation, Chicago January 23, 2001 Holding, Farmington Hills, Michigan Amsterdam, The Netherlands Michigan National Bank, Stichting Administratiekantoor ABN Farmington Hills, Michigan AMRO Holding, Independence One Life Insurance Amsterdam, The Netherlands Company, ABN AMRO Holding N.V., Phoenix, Arizona Amsterdam, The Netherlands Independence One Capital Management ABN AMRO Bank N.V., Corporation, Amsterdam, The Netherlands Farmington, Hills, Michigan ABN AMRO North America Holding Company, Chicago, Illinois ABN AMRO North America, Inc., Chicago, Illinois Appucations approved under BANK MERGER ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Applicant(s) Bank(s) Reserve Bank Effective Date M&I Marshall & Ilsley Bank, M&I Central State Bank, Chicago January 11, 2001 Milwaukee, Wisconsin Oshkosh, Wisconsin M&I Bank of Shawano, Shawano, Wisconsin M&I Bank Fox Valley, Appleton, Wisconsin M&I Bank Northeast, Green Bay, Wisconsin Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 181 Applications Approved Under Bank Merger Act—Continued Applicant(s) Bank(s) Reserve Bank Effective Date M&I Marshall & Isley Bank, M&I Citizens American Bank, Chicago January 10, 2001 Milwaukee, Wisconsin Merrill, Wisconsin M&I Central Bank & Trust, Marshfield, Wisconsin M&I Bank of Eagle River, Eagle River, Wisconsin M&I Merchants Bank, Rhinelander, Wisconsin M&I First American Bank, Wausau, Wisconsin M&I Bank, Ashland, Wisconsin M&I Bank, Superior, Wisconsin M&I Mid State Bank, Stevens Point, Wisconsin SouthTrust Bank, Independent National Bank, Atlanta January 25, 2001 Birmingham, Alabama Irving, Texas SouthTrust Bank, First Union National Bank, Atlanta January 19, 2001 Birmingham, Alabama Charlotte, North Carolina Pending Cases Involving the Board of Governors This list of pending cases does not include suits against the Trans Union LLC v. Board of Governors, et al., No. 00-CV- Federal Reserve Banks in which the Board of Governors is not 2087(ESH) (D.D.C., filed August 30, 2000). Action under named a party. Administrative Procedure Act challenging a portion of inter­ agency rule regarding Privacy of Consumer Financial Infor­ mation. Dime Bancorp, Inc. v. Board of Governors, No. 00-4249 Sedgwick v. Board of Governors, No. 00-16525 (9th Cir., filed (2d Cir., filed December 11, 2000). Petition for review of a August 7, 2000). Appeal of district court dismissal of action Board order dated September 27, 2000, approving the under Federal Tort Claims Act alleging violation of bank applications of North Fork Corporation, Inc., Melville, supervision requirements. New York, to acquire control of Dime Bancorp, Inc. and to Individual Reference Services Group, Inc., v. Board of Gover­ thereby acquire its wholly owned subsidiary, The Dime nors, et al., No. OO-CV-1828 (ESH) (D.D.C., filed July 28, Savings Bank of New York, FSB, both of New York, 2000). Action under Administrative Procedure Act chal­ New York. lenging a portion of interagency rule regarding Privacy of Nelson v. Greenspan, No. 99-215(EGS) (D.D.C., amended Consumer Finance Information. complaint filed December 8, 2000). Employment discrimi­ Reed Elsevier Inc. v. Board of Governors, No. 00-1289 (D.C. nation action. Cir., filed June 30, 2000). Petition for review of interagency Howe v. Bank for International Settlements, No. 00CV12485 rule regarding Privacy of Consumer Financial Information. RCL (D. Mass., filed December 7, 2000). Action seeking Bettersworth v. Board of Governors, No. 00-50262 (5th Cir., damages in connection with gold market activities and the filed April 14, 2000). Appeal of district court’s dismissal of repurchase of privately-owned shares of the Bank for Inter­ Privacy Act claims. national Settlements. Albrecht v. Board of Governors, No. OO-CV-317 (CKK) Barnes v. Reno, No. 1:00CV02900 (D.D.C., filed December 4, (D.D.C., filed February 18, 2000). Action challenging the 2000). Civil rights action. method of funding of the retirement plan for certain Board El Bey v. United States, No. 00-5293 (D.C. Cir., filed employees. August 31, 2000). Appeal from district court order dismiss­ Guerrero v. United States, No. CV-F-99-6771(OWW) (E.D. ing pro se action as lacking arguable basis in law. The Cal., filed November 29, 1999). Prisoner suit. government filed a motion for summary affirmance on Artis v. Greenspan, No. 1.99CV02073 (EGS) (D.D.C., filed October 26, 2000. August 3, 1999). Employment discrimination action. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

182 Federal Reserve Bulletin □ March 2001 Sheriff Gerry Ali v. U.S. State Department, No. 99-7438 (C.D. May 4, 1998). Appeal and cross-appeal of district court Cal., filed July 21, 1999). Action relating to impounded order granting in part and denying in part the Board’s bank drafts. On December 3, 1999, the court stayed the motion for summary judgment seeking prejudgment interest action indefinitely. and a statutory surcharge in connection with a civil money Fraternal Order of Police v. Board of Governors, No. penalty assessed by the Board. On February 24, 1999, the 1:98CV03116 (WBB)(D.D.C., filed December 22, 1998). court granted the Board’s appeal and denied the cross­ Declaratory judgment action challenging Board labor prac­ appeal, and remanded the matter to the district court for tices. On February 26, 1999, the Board filed a motion to determination of prejudgment interest due to the Board. On dismiss the action. January 29, 2001, the District Court approved a settlement Board of Governors v. Pharaon, No. 98-6101 (2d Cir., filed and terminated the action. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics A3 Guide to tabular Presentation Federal Finance—Continued A27 Gross public debt of U.S. Treasury— domestic Financial Statistics Types and ownership A28 U.S. government securities Money Stock and Bank Credit dealers—Transactions A4 Reserves, money stock, and debt measures A29 U.S. government securities dealers— A5 Reserves of depository institutions and Reserve Bank Positions and financing credit A30 Federal and federally sponsored credit A6 Reserves and borrowings—Depository agencies—Debt outstanding institutions Securities Markets and Corporate Finance Policy Instruments A31 New security issues—Tax-exempt state and local A7 Federal Reserve Bank interest rates governments and corporations A8 Reserve requirements of depository institutions A3 2 Open-end investment companies—Net sales A9 Federal Reserve open market transactions and assets A32 Corporate profits and their distribution Federal Reserve Banks A32 Domestic finance companies—Assets and liabilities A3 3 Domestic finance companies—Owned and managed A10 Condition and Federal Reserve note statements receivables All Maturity distribution of loan and security holding Real Estate Monetary and Credit Aggregates A34 Mortgage markets—New homes A12 Aggregate reserves of depository institutions A35 Mortgage debt outstanding and monetary base A13 Money stock and debt measures Consumer Credit A3 6 Total outstanding Commercial Banking Institutions— A36 Terms Assets and Liabilities A15 All commercial banks in the United States Flow of Funds A16 Domestically chartered commercial banks A17 Large domestically chartered commercial banks A37 Funds raised in U.S. credit markets A19 Small domestically chartered commercial banks A39 Summary of financial transactions A20 Foreign-related institutions A40 Summary of credit market debt outstanding A41 Summary of financial assets and liabilities Financial Markets A22 Commercial paper and bankers dollar Domestic nonfinancial Statistics acceptances outstanding A22 Prime rate charged by banks on short-term Selected Measures business loans A23 Interest rates—Money and capital markets A42 Nonfinancial business activity A24 Stock market—Selected statistics A42 Labor force, employment, and unemployment A43 Output, capacity, and capacity utilization A44 Industrial production—Indexes and gross value Federal Finance A46 Housing and construction A25 Federal fiscal and financing operations A47 Consumer and producer prices A26 U.S. budget receipts and outlays A48 Gross domestic product and income A27 Federal debt subject to statutory limitation A49 Personal income and saving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A2 Federal Reserve Bulletin □ March 2001 INTERNATIONAL STATISTICS Reported by Nonbanking Business Enterprises in the United States Summary Statistics A58 Liabilities to unaffiliated foreigners A50 U.S. international transactions A59 Claims on unaffiliated foreigners A51 U.S. foreign trade A51 U.S. reserve assets Securities Holdings and Transactions A51 Foreign official assets held at Federal Reserve A60 Foreign transactions in securities Banks A61 Marketable U.S. Treasury bonds and A52 Selected U.S. liabilities to foreign official notes—Foreign transactions institutions Interest and Exchange Rates Reported by Banks in the United States A62 Foreign exchange rates A52 Liabilities to, and claims on, foreigners A53 Liabilities to foreigners A55 Banks’ own claims on foreigners A63 Guide to Statistical Releases and A56 Banks’ own and domestic customers’ claims on Special Tables foreigners A56 Banks’ own claims on unaffiliated foreigners A64 index to Statistical Tables A57 Claims on foreign countries—Combined domestic offices and foreign branches Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 Guide to Tabular Presentation Symbols and Abbreviations c Corrected G-7 Group of Seven e Estimated G-10 Group of Ten n.a. Not available GDP Gross domestic product n.e.c. Not elsewhere classified GNMA Government National Mortgage Association p Preliminary HUD Department of Housing and Urban r Revised (Notation appears on column heading Development when about half of the figures in that column IMF International Monetary Fund are changed.) IOs Interest only, stripped, mortgage-back securities * Amounts insignificant in terms of the last decimal IPCs Individuals, partnerships, and corporations place shown in the table (for example, less than IRA Individual retirement account 500,000 when the smallest unit given is millions) MMDA Money market deposit account 0 Calculated to be zero MSA Metropolitan statistical area Cell not applicable NOW Negotiable order of withdrawal ABS Asset-backed security OCDs Other checkable deposits ATS Automatic transfer service OPEC Organization of Petroleum Exporting Countries BIF Bank insurance fund OTS Office of Thrift Supervision CD Certificate of deposit PMI Private mortgage insurance CMO Collateralized mortgage obligation POs Principal only, stripped, mortgage-back securities CRA Community Reinvestment Act of 1977 REIT Real estate investment trust FAMC Federal Agricultural Mortgage Corporation REMICs Real estate mortgage investment conduits FFB Federal Financing Bank RHS Rural Housing Service FHA Federal Housing Administration RP Repurchase agreement FHLBB Federal Home Loan Bank Board RTC Resolution Trust Corporation FHLMC Federal Home Loan Mortgage Corporation SCO Securitized credit obligation FmHA Farmers Home Administration SDR Special drawing right FNMA Federal National Mortgage Association SIC Standard Industrial Classification FSA Farm Service Agency VA Department of Veterans Affairs FSLIC Federal Savings and Loan Insurance Corporation General information In many of the tables, components do not sum to totals because of include not fully guaranteed issues) as well as direct obliga­ rounding. tions of the Treasury. Minus signs are used to indicate (1) a decrease, (2) a negative “State and local government” also includes municipalities, figure, or (3) an outflow. special districts, and other political subdivisions. “U.S. government securities” may include guaranteed issues of U.S. government agencies (the flow of funds figures also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Financial Statistics □ March 2001 1.10 RESERVES, MONEY STOCK, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 2000 2000 Monetary or credit aggregate Qlr Q2r Q3r Q4 Aug.1 Sept.r Oct.r Nov.r Dec. Reserves of depository institutions2 1 Total .........................'........................................................................................ 1.8 -9.5 -7.1 -8.0 -9.4 —2.5 -9.7 -3.0 -22.9 2 Required............................................................................................................. .1 -5.9 -7.4 -9.8 -8.0 -5.3 -10.8 -5.3 -27.5 3 Nonborrowed .................................................................................................... 2.4 -11.1 -8.8 -5.7 -9.8 .6 -8.0 1.1 -20.8 4 Monetary base3 ............................................................................................... 4.5 -3.9 2.7 2.8 1.4 3.3 3.2 .3 7.1 Concepts of money and debt4 5 Ml........................'............................................................................................. 2.0 -1.8 -3.7 -2.7 -4.7 -4.3 .7 -7.8 2.3 6 M2........................................................................................................................ 5.8 6.4 5.8 6.7 7.8 8.2 5.6 4.3 9.7 7 M3........................................................................................................................ 10.6 9.0 8.9 7.1 10.4 9.2 4.6 4.4 12.7 8 Debt ................................................................................................................... 5.6 6.1 4.8 4.0 4.1 5.1 2.8 4.2 n.a. Nontransaction components 9 In M25................................................................................................................. 70 8.9 8 6 94 11.6 11 9 7 1 7.9 11.9 10 In M3 only6........................................................................................................ 22.6 15.3 16.4 8.3 16.5 11.4 2.1 4.5 19.7 Time and savings deposits Commercial banks 11 Savings, including MMDAs ..................................................................... 2.5 7.8 11.8 12.0 15.4 19.4 5.1 10.5 16.4 12 Small time7.................................................................................................... 9.4 13.2 10.5 5.7 9.2 4.9 3.3 7.0 8.6 13 Large time8'9................................................................................................. 20.2 17.1 11.5 2.4 18.9 -4.1 -8.2 4.8 26.2 Thrift institutions 14 Savings, including MMDAs ..................................................................... -2.9 1.6 3.2 .6 6.1 .0 4.2 -2.4 -8.2 15 Small time7.................................................................................................... 7.2 3.3 11.2 10.1 15.1 10.0 10.2 9.5 5.6 16 Large time8 .................................................................................................. 14.5 .4 20.8 16.1 22.1 14.5 22.6 11.7 1.2 Money market mutual funds 17 Retail ................................................................................................................. 17.6 13.3 4.2 12.6 8.9 12.6 13.3 9.2 19.6 18 Institution-only................................................................................................. 23.0 18.0 29.4 18.7 27.4 28.8 10.2 12.9 24.7 Repurchase agreements and eurodollars 19 Repurchase agreements10................................................................................ 20.2 11.1 8.2 -3.5 -9.8 2.3 -3.3 -14.5 12.7 20 Eurodollars10...................................................................................................... 39.8 15.6 .6 9.2 15.7 19.3 7.6 3.1 -1.3 Debt components4 21 Federal ............................................................................................................... -4.8 -7.5 -7.2 -7.9 -7.3 -4.8 -10.0 -9.2 n.a. 22 Nonfederal ........................................................................................................ 8.4 9.6 7.8 6.8 6.8 7.4 5.8 7.3 n.a. 1. Unless otherwise noted, rates of change are calculated from average amounts outstand­ depository institutions, and (4) eurodollars (overnight and term) held by U.S. residents at ing during preceding month or quarter. foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom 2. Figures incorporate adjustments for discontinuities, or “breaks,” associated with and Canada. Excludes amounts held by depository institutions, the U.S. government, money regulatory changes in reserve requirements. (See also table 1.20.) market funds, and foreign banks and official institutions. Seasonally adjusted M3 is calculated 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally by summing large time deposits, institutional money fund balances, RP liabilities, adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency and eurodollars, each seasonally adjusted separately, and adding this result to seasonally component of the money stock, plus (3) (for all quarterly reporters on the “Report of adjusted M2. Transaction Accounts, Other Deposits and Vault Cash” and for all weekly reporters whose Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference sectors—the federal sector (U.S. government, not including government-sponsored enter­ between current vault cash and the amount applied to satisfy current reserve requirements. prises or federally related mortgage pools) and the nonfederal sectors (state and local 4. Composition of the money stock measures and debt is as follows: governments, households and nonprofit organizations, nonfinancial corporate and nonfarm Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, commercial banks other than those owed to depository institutions, the U.S. government, and which are derived from the Federal Reserve Board's flow of funds accounts, are breakforeign banks and official institutions, less cash items in the process of collection and Federal adjusted (that is, discontinuities in the data have been smoothed into the series) and Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of month-averaged (that is, the data have been derived by averaging adjacent month-end levels). withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, 5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail credit union share draft accounts, and demand deposits at thrift institutions. Seasonally money fund balances, each seasonally adjusted separately. adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities OCDs, each seasonally adjusted separately. (overnight and term) issued by depository institutions, and (4) eurodollars (overnight and M2: Ml plus (1) savings (including MMDAs), (2) small-denomination time deposits (time term) of U.S. addressees, each seasonally adjusted separately. deposits—including retail RPs—in amounts of less than $ 100,000), and (3) balances in retail 7. Small time deposits—including retail RPs—are those issued in amounts of less than money market mutual funds. Excludes individual retirement accounts (IRAs) and Keogh $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions balances at depository institutions and money market funds. Seasonally adjusted M2 is are subtracted from small time deposits. calculated by summing savings deposits, small-denomination time deposits, and retail money 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those fund balances, each seasonally adjusted separately, and adding this result to seasonally booked at international banking facilities. adjusted M1. 9. Large time deposits at commercial banks less those held by money market funds, M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2) depository institutions, the U.S. government, and foreign banks and official institutions. balances in institutional money funds, (3) RP liabilities (overnight and term) issued by all 10. Includes both overnight and term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT1 Millions of dollars Average of Average of daily figures for week ending on date indicated daily figures Factor 2000 2000 Oct. Nov. Dec. Nov. 15 Nov. 22 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 Supplying Reserve Funds 1 Reserve Bank credit outstanding............................... 561,406 568,061 578,893 566,709 568,001 573,552 571,891 572,875 578,282 584,314 U.S. government securities2 2 Bought outright—System account3.................... 510,713 512,368 514,072 512,336 513,025 513,689 513,267 513,715 514,737 515,595 3 Held under repurchase agreements .................. 0 0 0 0 0 0 0 0 0 0 Federal agency obligations 4 Bought outright ................................................... 130 130 130 130 130 130 130 130 130 130 5 Held under repurchase agreements .................. 0 0 0 0 0 0 0 0 0 0 6 Repurchase agreements—triparty4........................ 12,875 19,549 27,923 17,427 19,618 24,720 23,677 22,621 25,021 31,759 7 Acceptances .............................................................. 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit................................................. 120 121 96 38 416 48 69 4 295 41 9 Seasonal credit ..................................................... 298 157 114 155 148 148 121 124 121 112 10 Special Liquidity Facility credit........................ 0 0 0 0 0 0 0 0 0 0 11 Extended credit..................................................... 0 0 0 0 0 0 0 0 0 0 12 Float ............................................................................ 1,192 962r 1,503 1,071 952 650 520 1,702 2,975 1,182 13 Other Federal Reserve assets................................. 36,078 34,774 35,054 35,552 33,712 34,166 34,107 34,579 35,002 35,494 14 Gold stock ..................................................................... 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 15 Special drawing rights certificate account................ 3,200 3,200 2,652 3,200 3,200 3,200 3,200 3,200 2,343 2,200 16 Treasury currency outstanding................................... 30,975 31,286 31,528 31,266 31,311 31,356 31,401 31,493 31,543 31,593 Absorbing Reserve Funds 17 Currency in circulation ............................................... 571,604 576,006 584,582 574,203 576,550 580,489 579,278 580,186 583,205 589,803 18 Reverse repurchase agreements—triparty4 .............. 0 0 0 0 0 0 0 0 0 0 19 Treasury cash holdings ............................................... 248 289 403 274 289 315 353 404 404 416 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury ..................................................................... 5,338 5,093 5,758 5,279 5,175 4,940 5,275 5,382 8,105 4,340 21 Foreign ....................................................................... 95 86 115 79 92 74 81 75 160 103 22 Service-related balances and adjustments........... 6,733 6,767 6,959 6,947 6,600 6,758 6,606 6,980 6,696 7,236 23 Other............................................................................ 251 234 355 200 238 229 263 244 222 258 24 Other Federal Reserve liabilities and capital ......... 15,717 17,529 18,401 17,528 17,755 18,027 18,272 18,507 18,581 18,417 25 Reserve balances with Federal Reserve Banks' . . . 6,640 7,589 7,545 7,709 6,859 8,321r 7,409 6,836 5,840 8,579 End-of-month figures Wednesday figures Oct. Nov. Dec. Nov. 15 Nov. 22 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 Supplying Reserve Funds 1 Reserve Bank credit outstanding............................... 566,215 575,908 593,092 570,798 573,538 574,811 570,733 581,584 579,269 597,301 U.S. government securities2 2 Bought outright—System account3 .................. 508,961 512,327 511,703 511,748 513,813 514,308 513,100 515,115 514,539 515,491 3 Held under repurchase agreements .................. 0 0 0 0 0 0 0 0 0 0 Federal agency obligations 4 Bought outright ................................................... 130 130 130 130 130 130 130 130 130 130 5 Held under repurchase agreements .................. 0 0 0 0 0 0 0 0 0 0 6 Repurchase agreements—triparty4........................ 19,440 27,270 43,375 25,795 24,615 25,630 22,525 27,260 25,710 43,985 7 Acceptances................................................................ 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit................................................. 29 6 33 251 1 286 13 5 5 21 9 Seasonal credit ..................................................... 219 130 77 156 145 152 121 129 120 96 10 Special Liquidity Facility credit........................ 0 0 0 0 0 0 0 0 0 0 11 Extended credit...................................................... 0 0 0 0 0 0 0 0 0 0 12 Float ............................................................................ 1,438 2,096 901 95 874 -136 524 4,105 3,541 1,828 13 Other Federal Reserve assets................................. 35,999 33,949 36,873 32,622 33,959 34,440 34,319 34,841 35,225 35,750 14 Gold stock ..................................................................... 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 15 Special drawing rights certificate account................ 3,200 3,200 2,200 3,200 3,200 3,200 3,200 3,200 2,200 2,200 16 Treasury currency outstanding.................................... 31,093 31,401 31,643 31,266 31,311 31,356 31,401 31,493 31,543 31,593 Absorbing Reserve Funds 17 Currency in circulation ............................................... 572,397 579,782 593,694 575,884 580,287 581,077 580,379 582,550 586,969 593,356 18 Reverse repurchase agreements—triparty4 ............. 0 0 0 0 0 0 0 0 0 0 19 Treasury cash holdings ............................................... 289 344 450 285 311 344 403 412 410 450 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury ..................................................................... 5,360 4,382 5,149 4,850 4,413 5,056 5,215 4,947 4,781 5,320 21 Foreign ....................................................................... 115 104 216 90 71 73 89 72 227 83 22 Service-related balances and adjustments........... 6,829 6,606 7,428 6,947 6,600 6,758 6,606 6,980 6,696 7,236 23 Other............................................................................ 245 276 1,382 266 233 227 244 248 211 235 24 Other Federal Reserve liabilities and capital ......... 16,416 18,199 17,962 17,318 17,669 17,913 18,074 18,400 18,140 18,062 25 Reserve balances with Federal Reserve Banks5 . . . 9,903 11,861 11,701 10,670 9,511 8,964r 5,370 13,714 6,625 17,396 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 4. Cash value of agreements arranged through third-party custodial banks. These agree- 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged ments are collateralized by U.S. government and federal agency securities. with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back 5. Excludes required clearing balances and adjustments to compensate for float, under matched sale-purchase transactions. 3. Includes compensation that adjusts for the effects of inflation on the principal of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Financial Statistics □ March 2001 1.12 RESERVES AND BORROWINGS Depository Institutions' Millions of dollars Prorated monthly averages of biweekly averages Reserve classification 1998 1999 2000 2000 Dec. Dec. Dec. June July Aug. Sept. Oct. Nov. Dec. 1 Reserve balances with Reserve Banks2........................... 9,026 5,263 7,160 6,460 6,582 6,875 6,829 6,782 7,157 7,160 2 Total vault cash3.................................................................. 44,294 60,619 45,120 44,560 45,473 45,319 44,807 45,178 44,546r 45,120 3 Applied vault cash4........................................................ 36,183 36,392 31,381 32,757 33,086 32,611 32,429 32,072 31,632r 31,381 4 Surplus vault cash5.......................................................... 8,111 24,227 13,739 11,802 12,387 12,708 12,378 13,106r 12,914r 13,739 5 Total reserves6..................................................................... 45,209 41,655 38,541 39,217 39,668 39,486 39,257 38,854 38,789r 38,541 6 Required reserves .......................................................... 43,695 40,348 37,215 38,153 38,600 38,471 38,155 37,725 37,587r 37,215 7 Excess reserve balances at Reserve Banks7............. 1,514 1,307 1,325 1,064 1,068 1,014 1,102 1,129 1,202 1,325 8 Total borrowing at Reserve Banks................................. 117 320 210 479 570 579 477 418 283 210 9 Adjustment....................................................................... 101 179 99 90 60 25 50 119 124 99 10 Seasonal........................................................................... 15 67 111 389 510 554 427 299 159 111 11 Special Liquidity Facility8............................................ 0 74 0 0 0 0 0 0 0 0 12 Extended credit9.............................................................. 0 0 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two-week periods ending on dates indicated Sept. 6 Sept. 20 Oct. 4 Oct. 18 Nov. 1 Nov. 15 Nov. 29r Dec. 13r Dec. 27 Jan. 10 1 Reserve balances with Reserve Banks2........................... 6,911 6,578 7,131 6,502 6,976 6,709 7,620 7,131 7,208 7,085 2 Total vault cash3.................................................................. 44,097 44,823 45,210 45,778 44,523r 44,633r 44,539 43,452 46,220 46,696 3 Applied vault cash4....................................................... 32,184 32,077 33,068 31,601 32,274 31,056 32,261 30,255 32,370 31,579 4 Surplus vault cash5.......................................................... 11,913 12,746 12,142 14,177 12,249r 13,577r 12,278 13,197 13,850 15,117 5 Total reserves6..................................................................... 39,095 38,655 40,198 38,103 39,250 37,765 39,881 37,386 39,578 38,664 6 Required reserves .......................................................... 38,118 37,612 38,938 37,073 38,056 36,762 38,474 36,253 38,124 37,165 7 Excess reserve balances at Reserve Banks7............. 977 1,043 1,260 1,030 1,194 1,003 1,407 1,133 1,454 1,499 8 Total borrowing at Reserve Banks................................. 604 473 409 480 355 190 380 159 285 110 9 Adjustment....................................................................... 45 70 26 167 97 25 232 37 169 56 10 Seasonal........................................................................... 559 403 383 313 259 165 148 123 117 55 11 Special Liquidity Facility8............................................ 12 Extended credit9.............................................................. 0 0 0 0 0 0 0 0 0 0 1. Data in this table also appear in the Board’s H.3 (502) weekly statistical release. For 5. Total vault cash (line 2) less applied vault cash (line 3). ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted. 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash 2. Excludes required clearing balances and adjustments to compensate for float and (line 3). includes other off-balance-sheet “as-of ’ adjustments. 7. Total reserves (line 5) less required reserves (line 6). 3. Vault cash eligible to satisfy reserve requirements. It includes only vault cash held by 8. Borrowing at the discount window under the terms and conditions established for the those banks and thrift institutions that are not exempt from reserve requirements. Dates refer Century Date Change Special Liquidity Facility in effect from October 1, 1999, through to the maintenance periods in which the vault cash can be used to satisfy reserve require­ April 7, 2000. ments. 9. Consists of borrowing at the discount window under the terms and conditions estab­ 4. All vault cash held during the lagged computation period by “bound” institutions (that lished for the extended credit program to help depository institutions deal with sustained is, those whose required reserves exceed their vault cash) plus the amount of vault cash liquidity pressures. Because there is not the same need to repay such borrowing promptly as applied during the maintenance period by “nonbound” institutions (that is, those whose vault with traditional short-term adjustment credit, the money market effect of extended credit is cash exceeds their required reserves) to satisfy current reserve requirements. similar to that of nonborrowed reserves. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 Federal Reserve Bank 2/1 O 6 n /01 Effective date Previous rate 2/1 O 6 n /01 Effective date Previous rate 2/1 O 6 n /01 Effective date Previous rate Boston.................... 5.00 1/31/01 5.50 5.55 2/8/01 5.80 6.05 2/8/01 6.30 New York............. 1/31/01 5.50 Philadelphia ......... 1/31/01 5.50 Cleveland ............. 1/31/01 5.50 Richmond ............. 1/31/01 5.50 Atlanta.................... 1/31/01 5.50 Chicago.................. 1/31/01 5.50 St. Louis ................ 2/1/01 5.50 Minneapolis ......... 1/31/01 5.50 Kansas City........... 2/1/01 5.50 Dallas...................... 1/31/01 5.50 San Francisco .... 5.00 1/31/01 5.50 5.55 2/8/01 5.80 6.05 2/8/01 6.30 Range of rates for adjustment credit in recent years4 ^ange (or F.R. Bank Range (or F.R. Bank (or F.R. Bank evel)—All of Effective date level)—All of Effectiv level)—All of '.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks N.Y. In effect Dec. 31,1977 6 6 1982—Oct. 12............................... 9.5-10 9.5 1994—May 17 3-3.5 3.5 13 ............................... 9.5 9.5 18 3.5 3.5 1978—Jan. 9 6-6.5 6.5 Nov. 22 ............................... 9-9.5 9 Aug. 16 3.5-4 4 90 6.5 6.5 26............................... 9 9 18 4 4 May 11 6.5-7 7 Dec. 14 ............................... 8.5-9 9 Nov. 15 4-4.75 4.75 V> 7 7 15 ............................... 8.5-9 8.5 17 4.75 4.75 July 3 7-7.25 7.25 17 ............................... 8.5 8.5 III 7.25 7.25 1995—Feb. 1 4.75-5.25 5.25 Aug.91 7.75 7.75 1984—Apr. 9 ............................... 8.5-9 9 9 5.25 5.25 Sept.77 8 8 13 ............................... 9 9 Oct. 16 8-8.5 8.5 Nov. 21 ............................... 8.5-9 8.5 1996—Jan. 31 5.00-5.25 5.00 ?0 8.5 8.5 26............................... 8.5 8.5 Feb. 5 5.00 5.00 Nov. 1 8.5-9.5 9.5 Dec. 24............................... 8 8 3 9.5 9.5 1998—Oct. 15 4.75-5.00 4.75 1985—May 20............................... 7.5-8 7.5 16 4.75 4.75 1979—July 90 10 10 24............................... 7.5 7.5 Nov. 17 4.50-4.75 4.50 Aug. IV 10-10.5 10.5 19 . 4.50 4.50 ?l) 10.5 10.5 1986—Mar. 7 ............................... 7-7.5 7 Sept. 19 10.5-11 11 10............................... 7 7 1999—Aug. 24 . 4.50^1.75 4.75 -U 11 11 Apr. 21 ............................... 6.5-7 6.5 26 4.75 4.75 Oct. 8 11-12 12 23................................. 6.5 6.5 Nov. 16 . 4.75-5.00 4.75 10 12 12 July 11 ............................... 6 6 18 5.00 5.00 Aug. 21 ............................... 5.5-6 5.5 1980—Feb. 15 12-13 13 22............................... 5.5 5.5 2000—Feb. 2 . 5.00-5.25 5.25 19 13 13 4 . 5.25 5.25 May 79 12-13 13 1987—Sept. 4 ............................... 5.5-6 6 Mar. 21 . 5.25-5.50 5.50 311 12 12 11 ............................... 6 6 23 . 5.50 5.50 June 13 11-12 11 May 16 5.50-6.00 5.50 16 11 11 1988—Aug. 9 ............................... 6-6.5 6.5 19 . 6.00 6.00 July n 10-11 10 11 ............................... 6.5 6.5 74 10 10 2001—Jan. 3 . 5.75-6.00 5.75 Sept.76 11 11 1989—Feb. 24............................... 6.5-7 7 4 5.50-5.75 5.50 Nov. 1 / 12 12 27............................... 7 7 5 . 5.50 5.50 Dec. 5 12-13 13 31 5.00-5.50 5.00 8 13 13 1990—Dec. 19............................... 6.5 6.5 Feb. 1 . 5.00 5.00 1981—May 5 13-14 14 1991—Feb. 1 ............................... 6-6.5 6 In effect Feb. 16, 5.00 5.00 8 14 14 4 ............................... 6 6 Nov. 7 13-14 13 Apr. 30............................... 5.5-6 5.5 6 13 13 May 2 ............................... 5.5 5.5 Dec. 4 12 12 Sept. 13............................... 5-5.5 5 17............................... 5 5 -July 20 11.5-12 11.5 Nov. 6 ............................... 4.5-5 4.5 23 11.5 11.5 7 ............................... 4.5 4.5 Aug. 2 11-11.5 11 Dec. 20............................... 3.5-4.5 3.5 3 11 11 24............................... 3.5 3.5 16 10.5 10.5 27 10-10.5 10 1992—July 2 ............................... 3-3.5 3 30 10 10 7 ............................... 3 3 1. Available on a short-term basis to help depository institutions meet temporary needs for of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a funds that cannot be met through reasonable alternative sources. The highest rate established flexible rate somewhat above rates charged on market sources of funds is charged. The rate for loans to depository institutions may be charged on adjustment credit loans of unusual size ordinarily is reestablished on the first business day of each two-week reserve maintenance that result from a major operating problem at the borrower’s facility. period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis 2. Available to help relatively small depository institutions meet regular seasonal needs for points. funds that arise from a clear pattern of intrayearly movements in their deposits and loans and 4. For earlier data, see the following publications of the Board of Governors: Banking and that cannot be met through special industry lenders. The discount rate on seasonal credit takes Monetary Statistics, 1914-1941, and 1941-1970\ and the Annual Statistical Digest, 1970into account rates charged by market sources of funds and ordinarily is reestablished on the 1979. first business day of each two-week reserve maintenance period; however, it is never less than In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit the discount rate applicable to adjustment credit. borrowings by institutions with deposits of $500 million or more that had borrowed in 3. May be made available to depository institutions when similar assistance is not successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was reasonably available from other sources, including special industry lenders. Such credit may in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed be provided when exceptional circumstances (including sustained deposit drains, impaired on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to access to money market funds, or sudden deterioration in loan repayment performance) or 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, practices involve only a particular institution, or to meet the needs of institutions experiencing and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the difficulties adjusting to changing market conditions over a longer period (particularly at times surcharge was changed from a calendar quarter to a moving thirteen-week period. The of deposit disintermediation). The discount rate applicable to adjustment credit ordinarily is surcharge was eliminated on Nov. 17, 1981. charged on extended-credit loans outstanding less than thirty days; however, at the discretion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Financial Statistics □ March 2001 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS' Requirement Type of deposit Per d c e e p n o ta s g it e s of Effective date Net transaction accounts2 1 $0 million-$42.8 million3............................................................................................................................................................................... 3 12/28/00 2 More than $42.8 million4............................................................................................................................................................................... 10 12/28/00 3 Nonpersonal time deposits5............................................................................................................................................................................. 0 12/27/90 4 Eurocurrency liabilities6................................................................................................................................................................................... 0 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage increase in the total reservable or vault cash. Nonmember institutions may maintain reserve balances with a Federal liabilities of all depository institutions, measured on an annual basis as of June 30. No Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For corresponding adjustment is made in the event of a decrease. The exemption applies only to previous reserve requirements, see earlier editions of the Annual Report or the Federal accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions maintenance period beginning December 28, 2000, for depository institutions that report include commercial banks, savings banks, savings and loan associations, credit unions, weekly, and with the period beginning January 18, 2001, for institutions that report quarterly, agencies and branches of foreign banks, and Edge Act corporations. the exemption was raised from $5.0 million to $5.5 million. 2. Transaction accounts include all deposits against which the account holder is permitted 4. The reserve requirement was reduced from 12 percent to 10 percent on to make withdrawals by negotiable or transferable instruments, payment orders of with­ Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that drawal, or telephone or preauthorized transfers for the purpose of maiking payments to third report quarterly. persons or others. However, accounts subject to the rules that permit no more than six 5. For institutions that report weekly, the reserve requirement on nonpersonal time deposits preauthorized, automatic, or other transfers per month (of which no more than three may be with an original maturity of less than 1 x/i years was reduced from 3 percent to 1 'A percent for by check, draft, debit card, or similar order payable directly to third parties) are savings the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that deposits, not transaction accounts. began Dec. 27, 1990. For institutions that report quarterly, the reserve requirement on 3. The Monetary Control Act of 1980 requires that the amount of transaction accounts nonpersonal time deposits with an original maturity of less than 1 Vi years was reduced from 3 against which the 3 percent reserve requirement applies be modified annually by 80 percent of percent to zero on Jan. 17, 1991. the percentage change in transaction accounts held by all depository institutions, determined The reserve requirement on nonpersonal time deposits with an original maturity of 1V6 as of June 30 of each year. Effective with the reserve maintenance period beginning years or more has been zero since Oct. 6, 1983. December 28, 2000, for depository institutions that report weekly, and with the period 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero beginning January 18, 2001, for institutions that report quarterly, the amount was decreased in the same manner and on the same dates as the reserve requirement on nonpersonal time from $44.3 million to $42.8 million. deposits with an original maturity of less than 1 ‘/2 years (see note 5). Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts the amount of reservable liabilities subject to a zero percent reserve requirement each year for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 2000 Type of transaction 1997 1998 1999 and maturity May June July Aug. Sept. Oct. Nov. U.S. Treasury Securities2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases .............................................................. 9,147 3,550 0 0 0 1,825 531 231 779 2,507 2 Gross sales ....................................................................... 0 0 0 0 0 0 0 0 0 0 3 Exchanges .......................................................................... 435,907 450,835 464,218 36,386 44,008 33,718 42,797 37,006 38,142 45,182 4 For new bills..................................................................... 435,907 450,835 464,218 36,386 44,008 33,718 42,797 37,006 38,142 45,182 5 Redemptions..................................................................... 0 2,000 0 2,297 4,188 4,902 3,438 3,898 2,656 1,021 Others within one year 6 Gross purchases .............................................................. 5,549 6,297 11,895 164 1,875 1,284 2,770 716 0 580 7 Gross sales ....................................................................... 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts................................................................... 41,716 46,062 50,590 13,063 4,672 5,152 7,040 0 8,663 7,957 9 Exchanges ......................................................................... -27,499 -49,434 -53,315 -12,633 -3,109 -3,333 -7,396 0 -6,608 -7,012 10 Redemptions..................................................................... 1,996 2,676 1,429 0 0 367 887 0 787 780 One to five years 11 Gross purchases .............................................................. 20,080 12,901 19,731 890 706 2,259 2,508 2,385 734 1,332 12 Gross sales ....................................................................... 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts................................................................... -37,987 -37,777 -44,032 -10,334 -4,672 -5,152 -3,439 0 -8,663 -5,997 14 Exchanges ......................................................................... 20,274 37,154 42,604 10,063 3,109 3,333 5,418 0 6,608 5,737 Five to ten years 15 Gross purchases .............................................................. 3,449 2,294 4,303 0 0 0 1,914 448 0 510 16 Gross sales ....................................................................... 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts................................................................... -1,954 -5,908 -5,841 -1,552 0 0 -3,601 0 0 -699 18 Exchanges ......................................................................... 5,215 7,439 7,583 2,570 0 0 1,254 0 0 1,275 More than ten years 19 Gross purchases .............................................................. 5,897 4,884 9,428 528 1,151 500 727 547 982 0 20 Gross sales ....................................................................... 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts................................................................... -1,775 -2,377 -717 -1,177 0 0 0 0 0 -1,261 22 Exchanges ......................................................................... 2,360 4,842 3,139 0 0 0 724 0 0 0 All maturities 23 Gross purchases .............................................................. 44,122 29,926 45,357 1,582 3,732 5,868 8,450 4,326 2,495 4,929 24 Gross sales ....................................................................... 0 0 0 0 0 0 0 0 0 0 25 Redemptions..................................................................... 1,996 4,676 1,429 2,297 4,188 5,269 4,325 3,898 3,443 1,802 Matched transactions 26 Gross purchases ................................................................... 3,591,210 4,430,457 4,413,430 357,355 368,396 344,935 381,349 335,321 344,920 351,391 27 Gross sales ............................................................................ 3,593,530 4,434,358 4,431,685 356,640 369,739 344,384 381,475 334,530 346,428 351,232 Repurchase agreements 28 Gross purchases ................................................................... 810,485 512,671 281,599 0 0 0 0 0 0 0 29 Gross sales ............................................................................ 809,268 514,186 301,273 0 0 0 0 0 0 0 30 Net change in U.S. Treasury securities........................... 41,022 19,835 5,999 -1 -1,800 1,150 3,999 1,219 -2,457 3,286 Federal agency Obligations Outright transactions 31 Gross purchases ................................................................... 0 0 0 0 0 0 0 0 0 0 32 Gross sales ............................................................................ 0 25 0 0 0 0 0 0 0 0 33 Redemptions.......................................................................... 1,540 322 157 0 0 0 0 10 0 0 Repurchase agreements 34 Gross purchases ................................................................... 160,409 284,316 360,069 0 0 0 0 0 0 0 35 Gross sales ............................................................................ 159,369 276,266 370,772 0 0 0 0 0 0 0 36 Net change in federal agency obligations...................... -500 7,703 -10,859 0 0 0 0 -10 0 0 Reverse repurchase agreements 37 Gross purchases ................................................................... 0 0 0 0 0 0 0 0 0 0 38 Gross sales ............................................................................ 0 0 0 0 0 0 0 0 0 0 Repurchase agreements 39 Gross purchases ................................................................... 0 0 304,989 107,375 70,850 66,485 47,265 66,080 64,428 87,125 40 Gross sales ............................................................................ 0 0 164,349 105,885 70,315 75,925 46,230 67,285 62,308 79,295 41 Net change in triparty obligations.................................... 0 0 140,640 1,490 535 -9,440 1,035 -1,205 2,120 7,830 42 Total net change in System Open Market Account. . . 40,522 27,538 135,780 1,489 -1,265 -8,290 5,034 4 -337 11,116 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market 2. Transactions exclude changes in compensation for the effects of inflation on the principal Account; all other figures increase such holdings. of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics □ March 2001 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 2000 2000 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 Oct. 31 Nov. 30 Dec. 31 Consolidated condition statement ASSETS 1 Gold certificate account .................................................................. 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 2 Special drawing rights certificate account................................... 3,200 3,200 3,200 2,200 2,200 3,200 3,200 2,200 3 Coin...................................................................................................... 892 914 948 954 946 887 901 949 Loans 4 To depository institutions................................................................ 438 134 133 125 117 248 136 110 5 Other................................................................................................... 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Triparty Obligations 7 Repurchase agreements—triparty2................................................. 25,630 22,525 27,260 25,710 43,985 19,440 27,270 43,375 Federal agency obligations3 8 Bought outright.................................................................................. 130 130 130 130 130 130 130 130 9 Held under repurchase agreements ............................................... 0 0 0 0 0 0 0 0 10 Total U.S. TYeasury securities3 ................................................... 514,308 513,100 515,115 514,539 515,491 508,961 512,327 511,703 11 Bought outright4................................................................................ 514,308 513,100 515,115 514,539 515,491 508,961 512,327 511,703 12 Bills................................................................................................. 183,817 183,384 183,206 182,627 182,530 180,971 182,615 178,741 237,804 237,028 239,127 239,129 240,176 235,603 237,025 240,178 14 Bonds ............................................................................................. 92,687 92,688 92,783 92,783 92,784 92,387 92,687 92,784 15 Held under repurchase agreements .............................................. 0 0 0 0 0 0 0 0 16 Total loans and securities.............................................................. 540,506 535,889 542,639 540,504 559,723 528,779 539,863 555,318 17 Items in process of collection ....................................................... 7,198 9,378 12,048 12,334 10,087 10,945 5,237 7,105 1,441 1,441 1,442 1,452 1,455 1,433 1,440 1,461 Other assets 15,323 15,354 15,360 15,367 15,374 15,297 15,348 15,670 20 All other6............................................................................................. 17,677 17.444 17,970 13,353 18,894 19,616 17,083 19,766 21 Total assets......................................................................................... 597,282 594,665 604,654 602,210 619,724 591,203 594,118 613,514 Liabilities 22 Federal Reserve notes....................................................................... 550,957 550,295 552,417 556,790 563,160 542,479 549,627 563,450 23 Reverse repurchase agreements—triparty2................................... 0 0 0 0 0 0 0 0 24 Total deposits.................................................................................... 21,718 17,702 26,084 19,084 30,426 22,793 20,621 25,792 25 Depository institutions ..................................................................... 16,362 12,155 20,817 13,866 24,787 17,074 15,858 19,045 26 US. Treasury—General account ................................................... 5,056 5,215 4,947 4,781 5,320 5,360 4,382 5,149 73 89 72 227 83 115 104 216 28 Other.................................................................................................... 227 244 248 211 235 245 276 1,382 29 Deferred credit items ....................................................................... 6,694 8,594 7,752 8,197 8,077 9,514 5,672 6,310 30 Other liabilities and accrued dividends7........................................ 4,409 4.397 4,622 4,375 4,341 4,325 4,590 4,170 31 Total liabilities.................................................................................. 583,778 580,988 590,876 588,446 606,003 579,111 580,510 599,723 Capital Accounts 7,071 7,088 7,103 7,022 7,024 6,986 7,076 6,997 33 Surplus ............................................................................................... 2,679 2,679 2,679 2,679 2,679 2,679 2,679 6,794 34 Other capital accounts .................................................................... 3,754 3,910 3,995 4,063 4,018 2,426 3,853 0 35 Total liabilities and capital accounts ........................................ 597,282 594,665 604,654 602,210 619,724 591,203 594,118 613,514 Memo 36 Marketable U.S. Treasury securities held in custody for foreign and international accounts........................................ n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Federal Reserve note statement 37 Federal Reserve notes outstanding (issued to Banks)............... 756,715 755.565 754,835 753.551 752,359 760,004 756,527 751,714 38 LESS: Held by Federal Reserve Banks ................................... 205,757 205,270 202.417 196.761 189,199 217,525 206,900 188,264 39 Federal Reserve notes, net......................................................... 550,957 550,295 552.417 556.790 563,160 542,479 549,627 563,450 Collateral held against notes, net 40 Gold certificate account .................................................................. 11.046 11,046 11.046 11,046 11,046 11,046 11,046 11,046 41 Special drawing rights certificate account................................... 3,200 3,200 3,200 2,200 2,200 3,200 3,200 2,200 42 Other eligible assets......................................................................... 0 295 0 3,165 0 0 0 0 536.712 535,755 538,172 540,379 549,914 528,233 535,381 550,205 44 Total collateral.................................................................................. 550,957 550,295 552,417 556,790 563,160 542,479 549,627 563,450 1. Some of the data in this table also appear in the Board’s H.4.1 (503) weekly statistical 5. Valued monthly at market exchange rates. release. For ordering address, see inside front cover. 6. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury 2. Cash value of agreements arranged through third-party custodial banks. bills maturing within ninety days. 3. Face value of the securities. 7. Includes exchange-translation account reflecting the monthly revaluation at market 4. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with exchange rates of foreign exchange commitments. Federal Reserve Banks—and includes compensation that adjusts for the effects of inflation on the principal of inflation-indexed securities. Excludes securities sold and scheduled to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month Type of holding and maturity 2000 2000 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 Oct. 31 Nov. 30 Dec. 31 1 Total loans.................................................................................... 438 134 133 125 117 248 136 110 2 Within fifteen days' ..................................................................... 421 41 34 119 110 152 86 96 3. Sixteen days to ninety days ..................................................... 18 93 99 6 7 96 50 14 4. 91 days to 1 year......................................................................... 0 0 0 0 0 0 0 0 5 Total U.S. Treasury securities2 .............................................. 514,308 513,100 515,115 514,539 515,491 508,961 512,327 511,702 6 Within fifteen days1 ..................................................................... 15,478 17,413 13,288 18,935 19,889 12,494 4,706 18,053 7 Sixteen days to ninety days....................................................... 114,311 115,290 118,117 111,849 110,832 109,123 119,433 108,961 8 Ninety-one days to one year ..................................................... 126,364 123,073 125,612 125,654 125,620 131,002 130,868 125,539 9 One year to five years ................................................................ 132,581 131,746 131,746 131,746 132,792 130,667 131,745 132,792 10 Five years to ten years................................................................ 54,681 54,684 55,457 55,459 55,461 53,530 54,682 55,461 11 More than ten years ..................................................................... 70,893 70,894 70,895 70,895 70,896 72,145 70,893 70,896 12 Total federal agency obligations............................................ 130 130 130 130 130 130 130 130 13 Within fifteen days1 ..................................................................... 0 0 0 0 0 0 0 0 14 Sixteen days to ninety days....................................................... 0 0 0 0 0 0 0 0 15 Ninety-one days to one year ..................................................... 0 0 0 0 0 0 0 0 16 One year to five years ................................................................ 30 130 130 130 130 30 30 130 17 Five years to ten years................................................................ 100 0 0 0 0 100 100 0 18 More than ten years..................................................................... 0 0 0 0 0 0 0 0 1. Holdings under repurchase agreements are classified as maturing within fifteen days in 2. Includes compensation that adjusts for the effects of inflation on the principal of accordance with maximum maturity of the agreements. inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics □ March 2001 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE' Billions of dollars, averages of daily figures 2000 Item 1 D 9 e 9 c 7 . D 19 e 9 c 8 . D 19 e 9 c 9 . 2 D 0 e 0 c 0 . May June July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted ADJUSTED FOR Changes in Reserve Requirements2 1 Total reserves'.................................................................................... 46.87 45.19 41.74 38.69 41.36 39.96 40.26 39.94 39.86 39.54 39.441' 38.69 2 Nonborrowed reserves4..................................................................... 46.54 45.07 41.42 38.48 41.00 39.48 39.69 39.37 39.38 39.12 39.16 38.48 3 Nonborrowed reserves plus extended credit5............................... 46.54 45.07 41.42 38.48 41.00 39.48 39.69 39.37 39.38 39.12 39.16 38.48 4 Required reserves.............................................................................. 45.18 43.68 40.44 37.36 40.41 38.89 39.19 38.93 38.76 38.41 38.24 37.36 5 Monetary base6.................................................................................. 479.37r 513.19r 592.03r 584.10 573.931" 575.06r 576.75r 577.43r 579.01r 580.55r 580.69r 584.10 Not seasonally adjusted 6 Total reserves7.................................................................................... 48.01 45.31 41.89 38.58 41.58 39.24 39.70 39.52 39.29 38.90 38.83r 38.58 7 Nonbonrowed reserves ..................................................................... 47.69 45.19 41.57 38.37 41.22 38.76 39.13 38.94 38.82 38.48 38.55 38.37 8 Nonborrowed reserves plus extended credit5............................... 47.69 45.19 41.57 38.37 41.22 38.76 39.13 38.94 38.82 38.48 38.55 38.37 9 Required reserves8.............................................................................. 46.33 43.80 40.58 37.26 40.64 38.18 38.63 38.50 38.19 37.77 37.63 37.26 10 Monetary base9.................................................................................. 484.98 518.27 600.63 590.20 573.26 574.55 577.19 576.60 576.79 578.34 582.36r 590.20 Not Adjusted for Changes in reserve Requirements10 47.92 45.21 41.66 38.54 41.56 39.22 39.67 39 49 39 26 38.85 38.79 38.54 12 Nonborrowed reserves ..................................................................... 47.60 45.09 41.33 38.33 41.20 38.74 39.10 38.91 38.78 38.44 38.51 38.33 13 Nonborrowed reserves plus extended credit5............................... 47.60 45.09 41.33 38.33 41.20 38.74 39.10 38.91 38.78 38.44 38.51 38.33 14 Required reserves............................................................................. 46.24 43.70 40.35 37.22 40.62 38.15 38.60 38.47 38.16 37.73 37.59 37.22 15 Monetary base12.................................................................................. 491.79 525.06 607.94 597.12 580.09 581.44 583.99 583.34 583.48 585.07 589.12r 597.12 16 Excess reserves13................................................................................ 1.69 1.51 1.31 1.33 .94 1.06 1.07 1.01 1.10 1.13 1.20 1.33 17 Borrowings from the Federal Reserve.......................................... .32 .12 .32 .21 .36 .48 .57 .58 .48 .42 .28 .21 1. Latest monthly and biweekly figures are available from the Board’s H.3 (502) weekly 8. To adjust required reserves for discontinuities that are due to regulatory changes in statistical release. Historical data starting in 1959 and estimates of the effect on required reserve requirements, a multiplicative procedure is used to estimate what required reserves reserves of changes in reserve requirements are available from the Money and Reserves would have been in past periods had current reserve requirements been in effect. Break- Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve adjusted required reserves include required reserves against transactions deposits and nonper­ System, Washington, DC 20551. sonal time and savings deposits (but not reservable nondeposit liabilities). 2. Figures reflect adjustments for discontinuities, or “breaks,” associated with regulatory 9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6), plus changes in reserve requirements. (See also table 1.10.) (2) the (unadjusted) currency component of the money stock, plus (3) (for all quarterly 3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, break- reporters on the “Report of Transaction Accounts, Other Deposits and Vault Cash” and for all adjusted required reserves (line 4) plus excess reserves (line 16). those weekly reporters whose vault cash exceeds their required reserves) the break-adjusted 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, difference between current vault cash and the amount applied to satisfy current reserve break-adjusted total reserves (line 1) less total borrowings of depository institutions from the requirements. Federal Reserve (line 17). 10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no 5. Extended credit consists of borrowing at the discount window under the terms and adjustments to eliminate the effects of discontinuities associated with regulatory changes in conditions established for the extended credit program to help depository institutions deal reserve requirements. with sustained liquidity pressures. Because there is not the same need to repay such 11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve borrowing promptly as with traditional short-term adjustment credit, the money market effect requirements. of extended credit is similar to that of nonborrowed reserves. 12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1) total 6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally reserves (line 11), plus (2) required clearing balances and adjustments to compensate for float adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency at Federal Reserve Banks, plus (3) the currency component of the money stock, plus (4) (for component of the money stock, plus (3) (for all quarterly reporters on the “Report of all quarterly reporters on the “Report of Transaction Accounts, Other Deposits and Vault Transaction Accounts, Other Deposits and Vault Cash” and for all those weekly reporters Cash” and for all those weekly reporters whose vault cash exceeds their required reserves) the whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference between current vault cash and the amount applied to satisfy current reserve difference between current vault cash and the amount applied to satisfy current reserve requirements. Since February 1984, currency and vault cash figures have been measured over requirements. the computation periods ending on Mondays. 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). reserves (line 16). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.21 MONEY STOCK AND DEBT MEASURES1 Billions of dollars, averages of daily figures 2000 Item D 19 e 9 c 7 .r D 19 e 9 c 8 .r D 19 e 9 c 9 .r 2 D 0 e 0 c 0 . Sept.r Oct.r Nov.r Dec. Seasonally adjusted Measures2 1 M l........................................................................................................ 1,073.4 1,097.0 1,124.3 1,091.3 1,095.7 1,096.3 1,089.2 1,091.3 2 M2........................................................................................................ 4,029.9 4,382.6 4,648.2 4,945.7 4,865.3 4,888.2 4,905.9 4,945.7 3 M3........................................................................................................ 5,428.3 6,028.2 6,524.1 7,090.5 6,963.9 6,990.5 7,016.0 7,090.5 4 Debt .................................................................................................... 15,223.1 16,276.0 17,376.7 n.a. 18,078.0 18,119.8 18,183.2 n.a. Ml components 5 Currency3 ........................................................................................... 424.3 459.2 516.7 530.5 524.7 526.4 528.0 530.5 6 Travelers checks4 .............................................................................. 8.1 8.2 8.2 8.0 8.9 8.4 8.0 8.0 7 Demand deposits5.............................................................................. 395.4 379.4 355.6 313.7 323.6 322.1 315.2 313.7 8 Other checkable deposits6 .............................................................. 245.7 250.1 243.7 239.1 238.5 239.4 238.0 239.1 Nontransaction components 9 In M27 ............................................................................................... 2,956.6 3,285.6 3,523.9 3,854.4 3,769.6 3,791.8 3,816.7 3,854.4 10 In M3 only8 ....................................................................................... 1,398.3 1,645.7 1,875.9 2,144.7 2,098.6 2,102.3 2,110.1 2,144.7 Commercial banks 11 Savings deposits, including MMDAs .......................................... 1,021.1 1,185.8 1,287.0 1,420.6 1,383.5 1,389.4 1,401.5 1,420.6 12 Small time deposits9 ....................................................................... 625.5 626.4 635.2 698.8 687.9 689.8 693.8 698.8 13 Large time deposits10- 11 ................................................................ 517.7 575.5 648.8 720.) 706.7 701.9 704.7 720.1 Thrift institutions 14 Savings deposits, including MMDAs .......................................... 376.8 414.1 449.3 452.7 455.1 456.7 455.8 452.7 15 Small time deposits9 ....................................................................... 342.9 325.8 320.9 347.0 339.8 342.7 345.4 347.0 16 Large time deposits10....................................................................... 85.5 88.7 91.3 103.7 100.7 102.6 103.6 103.7 Money market mutual funds 17 Retail.................................................................................................... 590.2 733.5 831.6 935.3 903.3 913.3 920.3 935.3 18 Institution-only .................................................................................. 389.9 530.0 622.0 767.7 737.9 744.2 752.2 767.7 Repurchase agreements and eurodollars 19 Repurchase agreements12................................................................ 255.3 299.6 343.0 362.5 364.1 363.1 358.7 362.5 20 Eurodollars12...................................................................................... 150.0 151.8 170.8 190.8 189.3 190.5 191.0 190.8 Debt components 21 Federal debt ...................................................................................... 3,800.6 3,751.2 3,660.2 n.a. 3,475.0 3,446.0 3,419.7 n.a. 22 Nonfederal debt ................................................................................ 11,422.5 12,524.7 13,716.5 n.a. 14,603.1 14,673.9 14,763.5 n.a. Not seasonally adjusted Measures2 23 M l........................................................................................................ 1,096.9 1,120.4 1,147.8 1,115.7 1,090.2 1,093.7 1,095.3 1,115.7 24 M2........................................................................................................ 4,051.3 4,404.9 4,672.2 4,974.5 4,850.5 4,865.7 4,898.1 4,974.5 25 M3........................................................................................................ 5,453.6 6,060.3 6,561.4 7,135.6 6,922.1 6,948.5 7,011.6 7,135.6 26 Debt .................................................................................................... 15,218.5 16,271.3 17,372.0 n.a. 18,018.5 18,070.7 18,161.9 n.a. Ml components 27 Currency3 ........................................................................................... 428.1 463.3 521.5 535.8 523.3 525.1 528.6 535.8 28 Travelers checks4 .............................................................................. 8.3 8.4 8.4 8.1 8.7 8.4 8.2 8.1 29 Demand deposits5.............................................................................. 412.4 395.9 371.2 329.1 321.7 322.2 320.5 329.1 30 Other checkable deposits6 .............................................................. 248.2 252.8 246.6 242.6 236.4 238.1 238.1 242.6 Nontransaction components 31 In M27 ............................................................................................... 2,954.4 3,284.5 3,524.5 3,858.8 3,760.4 3,772.0 3,802.8 3,858.8 32 In M3 only8 ....................................................................................... 1,402.3 1,655.4 1,889.2 2,161.1 2,071.6 2,082.8 2,113.5 2,161.1 Commercial banks 33 Savings deposits, including MMDAs .......................................... 1,020.4 1,186.0 1,288.5 1,425.3 1,381.1 1,380.0 1,397.2 1,425.3 34 Small time deposits9 ....................................................................... 625.3 626.5 635.4 699.0 688.0 690.9 695.2 699.0 35 Large time deposits10- 11 ................................................................ 517.1 574.9 648.2 719.5 702.3 698.8 705.8 719.5 Thrift institutions 36 Savings deposits, including MMDAs .......................................... 376.5 414.2 449.8 454.2 454.4 453.6 454.4 454.2 37 Small time deposits9 ....................................................................... 342.8 325.8 321.0 347.1 339.8 343.2 346.1 347.1 38 Large time deposits10....................................................................... 85.4 88.6 91.2 103.6 100.1 102.1 103.8 103.6 Money market mutual funds 39 Retail.................................................................................................... 589.4 731.9 829.7 933.1 897.1 904.4 909.9 933.1 40 Institution-only .................................................................................. 397.0 541.9 636.9 785.6 721.5 734.7 755.9 785.6 Repurchase agreements and eurodollars 41 Repurchase agreements1"................................................................ 250.5 295.4 339.5 359.4 360.8 358.0 357.9 359.4 42 Eurodollars12...................................................................................... 152.3 154.5 173.4 193.0 187.0 189.1 190.2 193.0 Debt components 43 Federal debt ...................................................................................... 3,805.8 3,754.9 3,663.1 n.a. 3,426.5 3,395.5 3,401.3 n.a. 44 Nonfederal debt ................................................................................ 11,412.7 12,516.3 13,709.0 n.a. 14,592.0 14,675.3 14,760.7 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Financial Statistics □ March 2001 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board’s H.6 (508) weekly prises or federally related mortgage pools) and the nonfederal sectors (state and local statistical release. Historical data starting in 1959 are available from the Money and Reserves governments, households and nonprofit organizations, nonfinancial corporate and nonfarm Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and System, Washington, DC 20551. corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, 2. Composition of the money stock measures and debt is as follows: which are derived from the Federal Reserve Board’s flow of funds accounts, are break- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of adjusted (that is, discontinuities in the data have been smoothed into the series) and depository institutions; (2) travelers checks of nonbank issuers; (3) demand deposits at all month-averaged (that is, the data have been derived by averaging adjacent month-end levels). commercial banks other than those owed to depository institutions, the U.S. government, and 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository foreign banks and official institutions, less cash items in the process of collection and Federal institutions. Reserve float; and (4) other checkable deposits (OCDs), consisting of negotiable order of 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, Travelers checks issued by depository institutions are included in demand deposits. credit union share draft accounts, and demand deposits at thrift institutions. Seasonally 5. Demand deposits at commercial banks and foreign-related institutions other than those adjusted Ml is computed by summing currency, travelers checks, demand deposits, and owed to depository institutions, the U.S. government, and foreign banks and official institu­ OCDs, each seasonally adjusted separately. tions, less cash items in the process of collection and Federal Reserve float. M2: Ml plus (1) savings deposits (including MMDAs), (2) small-denomination time 6. Consists of NOW and ATS account balances at all depository institutions, credit union deposits (time deposits—including retail RPs—in amounts of less than $100,000), and (3) share draft account balances, and demand deposits at thrift institutions. balances in retail money market mutual funds. Excludes individual retirement accounts 7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail (IRAs) and Keogh balances at depository institutions and money market funds. Seasonally money fund balances. adjusted M2 is calculated by summing savings deposits, small-denomination time deposits, 8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities and retail money fund balances, each seasonally adjusted separately, and adding this result to (overnight and term) issued by depository institutions, and (4) eurodollars (overnight and seasonally adjusted M1. term) of U.S. addressees. M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more) 9. Small time deposits—including retail RPs—are those issued in amounts of less than issued by all depository institutions, (2) balances in institutional money funds, (3) RP $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are liabilities (overnight and term) issued by all depository institutions, and (4) eurodollars subtracted from small time deposits. (overnight and term) held by U.S. residents at foreign branches of U.S. banks worldwide and 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those at all banking offices in the United Kingdom and Canada. Excludes amounts held by booked at international banking facilities. depository institutions, the U.S. government, money market funds, and foreign banks and 11. Large time deposits at commercial banks less those held by money market funds, official institutions. Seasonally adjusted M3 is calculated by summing large time deposits, depository institutions, the U.S. government, and foreign banks and official institutions. institutional money fund balances, RP liabilities, and eurodollars, each seasonally adjusted 12. Includes both overnight and term. separately, and adding this result to seasonally adjusted M2. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial sectors—the federal sector (U.S. government, not including government-sponsored enter­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A15 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1 A. All commercial banks Billions of dollars Monthly averages Wednesday figures Account 1999 2000 2000 Dec.r June Julyr Aug.r Sept.r Oct.r Nov.r Dec. Dec. 6 Dec. 13 Dec. 20 Dec. 27 Seasonally adjusted Assets 1 Bank credit ............................................... 4,773.9 5,041.8 5,079.7 5,121.4 5,168.8 5,143.1 5,154.8 5,216.3 5,186.4 5,195.0 5,213.8 5,244.3 2 Securities in bank credit .................. 1,272.5 1,313.5 1,318.5 1,321.9 1,332.5 1,310.0 1,302.4 1,334.6 1,307.9 1,331.0 1,330.5 1,351.6 3 U.S. government securities........... 808.4 818.4r 820.3 813.7 808.0 792.8 782.6 784.6 780.8 780.4 786.1 786.6 4 Other securities............................... 464.1 495. r 498.2 508.2 524.5 517.2 519.8 550.0 527.1 550.6 544.5 565.0 5 Loans and leases in bank credit2 . . . 3,501.3 3,728.3 3,761.2 3,799.5 3,836.4 3,833.1 3,852.4 3,881.7 3,878.5 3,864.0 3,883.3 3,892.7 6 Commercial and industrial........... 1,001.9 1,066.6 1,072.1 1,079.9 1,079.9 1,079.0 1,080.2 1,088.0 1,083.0 1,080.3 1,093.5 1,092.7 7 Real estate ...................................... 1,475.1 1,598.4 1,614.5 1,624.6 1,634.9 1,632.4 1,643.6 1,649.9 1,655.4 1,648.9 1,650.3 1,648.8 8 Revolving home equity ........... 101.4 115.0r 115.1 116.3 118.1 121.3 123.0 124.4 124.4 124.1 124.3 124.5 9 Other............................................. 1,373.7 l,483.4r 1,499.4 1,508.2 1,516.8 1,511.1 1,520.7 1,525.5 1,531.0 1,524.8 1,525.9 1,524.4 10 Consumer ........................................ 490.5 516.0 519.6 528.1 531.4 531.2 535.0 536.3 534.4 533.7 536.8 537.8 11 Security3 .......................................... 153.3 149.4 151.5 158.2 178.9 177.1 178.6 187.4 188.9 180.5 185.0 190.0 12 Other loans and leases.................. 380.6 397.8 403.5 408.8 411.2 413.3 415.0 420.0 416.7 420.6 417.8 423.4 13 Interbank loans........................................ 228.9 227.1 240.4 247.1 240.0 250.6 250.1 255.3 248.6 249.2 256.3 260.3 14 Cash assets4 ............................................ 286.9 270.6 271.8 271.5 269.1 267.4 254.9 266.8 260.0 263.2 263.6 277.5 15 Other assets5............................................. 374.2 377.6r 394.8 396.2 395.1 408.9 398.9 398.8 398.8 397.8 404.8 389.5 16 Total assets6 ............................................. 5,604.2 5,857.1 5,925.5 5,974.1 6,010.5 6,007.9 5,9963 6,073.5 6,030.5 6,041.9 6,074.9 6,107.9 Liabilities 17 Deposits ................................................... 3,528.9 3,667.0 3,725.1 3,752.4 3,770.2 3,785.6 3,773.4 3,849.8 3,813.4 3,827.8 3,850.2 3,865.9 18 Transaction .......................................... 631.3 617.0 611.5 617.0 609.6 613.4 598.7 597.9 582.9 579.8 611.2 624.4 19 Nontransaction .................................... 2,897.5 3,050.0 3,113.6 3,135.4 3,160.7 3,172.2 3,174.7 3,252.0 3,230.5 3,248.0 3,239.0 3,241.5 20 Large time ...................................... 831.6 899.0 921.3 930.9 920.4 915.2 912.2 929.5 918.8 931.6 928.8 926.3 21 Other ................................................. 2,066.0 2,151.0 2,192.3 2,204.5 2,240.3 2,257.1 2,262.5 2,322.5 2,311.8 2,316.4 2,310.2 2,315.2 22 Borrowings ............................................... 1,118.) 1,203.8 1,222.0 1,228.0 1,220.2 1,210.4 1,206.5 1,237.4 1,237.4 1,221.7 1,242.2 1,235.9 23 From banks in the U.S........................ 347.7 378.4 390.2 389.4 373.8 369.3 365.1 391.1 384.2 391.1 393.6 384.9 24 From others ........................................ 770.4 825.4 831.7 838.6 846.5 841.1 841.4 846.2 853.2 830.7 848.6 851.0 25 Net due to related foreign offices............. 223.8 263.5 261.9 269.7 269.2 251.9 241.4 224.4 207.1 211.4 231.0 242.3 26 Other liabilities........................................ 297.7 300.6 296.6 312.7 331.2 338.9 339.3 338.1 334.0 344.4 328.6 341.5 27 Total liabilities........................................ 5,168.4 5,434.8 5,505.5 5,562.8 5,590.9 5,586.8 5,560.6 5,649.7 5,591.9 5,6053 5,652.1 5,685.6 28 Residual (assets less liabilities)7 ......... 435.8 422.3r 420.0 411.3 419.6 421.1 435.7 423.9 438.6 436.6 422.8 422.3 Not seasonally adjusted Assets 29 Bank credit ............................................... 4,806.3 5,024.5 5,048.1 5,092.6 5,155.5 5,156.7 5,185.6 5,249.8 5,210.5 5,220.1 5,250.7 5,286.6 30 Securities in bank credit .................. 1,282.8 1,302.7 1,301.0 1,309.2 1,327.3 1,314.5 1,317.3 1,344.4 1,323.0 1,341.5 1,339.0 1,357.5 31 U.S. government securities........... 810.5 817.7r 811.9 804.8 800.0 787.7 785.1 786.3 787.0 783.6 787.5 784.3 32 Other securities............................... 472.4 485.1r 489.1 504.4 527.3 526.8 532.2 558.1 536.0 557.9 551.5 573.1 33 Loans and leases in bank credit2 . . . 3,523.5 3,721.7 3,747.1 3,783.4 3,828.3 3,842.2 3,868.3 3,905.4 3,887.5 3,878.6 3,911.7 3,929.1 34 Commercial and industrial........... 1,003.8 1,066.0 1,067.3 1,069.5 1,075.8 1,079.8 1,084.4 1,090.6 1,082.5 1,078.1 1,097.6 1,099.5 35 Real estate ...................................... 1,479.9 1,595.0 1,610.7 1,624.6 1,635.4 1,638.1 1,651.6 1,655.2 1,661.8 1,655.8 1,652.9 1,655.0 36 Revolving home equity ........... 101.8 115.lr 115.1 116.5 118.9 121.9 123.5 124.9 124.7 124.6 124.8 125.1 37 Other............................................. 1,378.1 1,480.0" 1,495.6 1,508.1 1,516.5 1,516.2 1,528.1 1,530.3 1,537.1 1,531.2 1,528.1 1,529.8 38 Consumer ........................................ 496.0 514.1 516.1 526.9 532.1 528.9 534.0 542.2 534.9 536.7 544.6 548.6 39 Credit cards and related plans.. n.a. n.a. 195.2 202.8 206.0 203.0 206.9 216.1 207.7 209.8 219.6 223.0 40 Other............................................. n.a. n.a. 320.9 324.2 326.1 325.9 327.1 326.1 327.1 326.9 325.0 325.6 41 Security3 .......................................... 158.0 149.3 148.6 153.1 172.0 180.9 180.9 191.7 189.7 185.2 192.1 194.5 42 Other loans and leases .................. 385.8 397.4 404.4 409.3 412.9 414.5 417.4 425.7 418.6 422.7 424.6 431.6 43 Interbank loans........................................ 234.2 226.8 236.4 237.0 233.6 244.5 255.3 262.8 260.6 258.2 263.9 261.1 44 Cash assets4 ............................................ 306.8 266.8r 262.4 259.1 264.7 268.4 262.9 285.7 262.0 273.0 280.8 307.4 45 Other assets5............................................ 374.3 379. r 394.2 394.5 393.5 401.8 396.0 398.4 397.6 395.3 401.7 390.9 46 Total assets6............................................. 5,661.8 5336.9r 5,880.0 5,921.1 5,984.8 6,0093 6,037.1 6,133.0 6,067.1 6,082.9 6,1333 6,182.4 Liabilities 47 Deposits ................................................... 3,571.4 3,655.0 3,700.5 3,720.1 3,754.1 3,778.6 3,802.8 3,890.9 3,849.0 3,862.9 3,883.4 3,909.3 48 Transaction .......................................... 664.2 615.9 605.0 601.4 603.3 605.3 606.3 628.9 592.2 598.7 639.1 671.1 49 Nontransaction .................................... 2,907.2 3,039.1 3,095.5 3,118.8 3,150.8 3,173.3 3,196.5 3,262.0 3,256.8 3,26t.2 3,244.3 3,238.2 50 Large time ...................................... 846.7 888.1 904.6 913.9 909.5 912.4 923.0 945.8 934.3 949.2 945.3 943.8 51 Other................................................. 2,060.5 2,151.0 2,190.9 2,204.9 2,241.4 2,260.9 2,273.5 2,316.1 2,322.5 2,315.0 2,299.0 2,294.4 52 Borrowings ............................................... 1,127.2 1,207.2 1,209.5 1,200.6 1,215.8 1,212.2 1,215.5 1,248.2 1,238.6 1,221.6 1,268.1 1,254.6 53 From banks in the U.S........................ 352.6 379.4 387.4 385.0 373.4 368.4 368.6 396.9 387.8 393.5 403.9 393.9 54 From others ........................................ 774.7 827.8 822.1 815.6 842.5 843.8 846.9 851.4 850.8 828.1 864.2 860.7 55 Net due to related foreign offices .... 230.0 253.9 253.4 267.0 264.2 253.1 246.7 230.8 210.9 221.4 231.3 260.7 56 Other liabilities........................................ 299.9 298.9 294.2 312.2 330.6 338.0 340.3 340.3 336.4 347.0 330.2 343.5 57 Total liabilities........................................ 5,228.5 5,414.9 5,457.6 5,500.0 5,564.7 5,581.9 5,6053 5,710.2 5,635.0 5,652.9 5,713.0 5,768.2 58 Residual (assets less liabilities)7 ......... 433.3 422.0" 422.4 421.0 420.1 427.4 431.8 422.8 432.2 430.0 420.3 414.3 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics □ March 2001 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued B. Domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1999 2000 2000 Dec.r June July Aug.r Sept.r Oct.r Nov.r Dec. Dec. 6 Dec. 13 Dec. 20 Dec. 27 Seasonally adjusted Assets 1 Bank credit ............................................... 4.219.8 4.460.4 4.497.7 4,534.9 4.575.0 4.562.6 4.579.8 4,618.2 4.602.1 4.608.5 4,612.5 4,631.6 2 Securities in bank credit .................. 1.063.8 1.103.5 1.108.8 1,111.6 1.124.0 1.118.3 1.118.9 1,133.8 1,120.4 1.136.5 1,127.4 1.140.3 3 U.S. government securities........... 725.8 740.0' 741.2T 734.5 731.2 723.6 717.0 717.7 715.4 716.4 718.2 716.9 4 Other securities............................... 338.0 363.5r 367.5r 377.1 392.8 394.7 401.8 416.1 405.1 420.1 409.2 423.4 5 Loans and leases in bank credit2 ......... 3,156.0 3.356.8 3,389.0 3.423.3 3,450.9 3.444.3 3,461.0 3.484.4 3.481.7 3,472.0 3,485.1 3.491.3 6 Commercial and industrial........... 808.0 859.9 867.2 873.3 875.5 877.2 878.4 882.8 879.7 877.7 886.2 885.3 7 Real estate ...................................... 1.457.8 1.579.8 l,595.8r 1,605.7 1,615.5 1.613.6 1.624.2 1.630.5 1.636.2 1,629.7 1,630.3 1.629.3 8 Revolving home equity ........... 101.4 115.0r 115.1r 116.3 118.1 121.3 123.0 124.4 124.4 124.1 124.3 124.5 9 Other............................................ 1,356.3 l,464.7r l,480.7r 1.489.4 1,497.4 1.492.3 1.501.3 1,506.1 1.511.8 1.505.6 1,506.0 1,504.8 10 Consumer ........................................ 490.5 516.0 519.6 528.1 531.4 531.2 535.0 536.3 534.4 533.7 536.8 537.8 11 Security3 .......................................... 86.1 68.6 70.0 76.5 84.6 75.1 75.4 80.9 82.3 77.8 79.6 80.4 12 Other loans and leases .................. 313.7 332.5 336.4r 339.8 343.9 347.2 348.0 353.9 349.0 353.2 352.3 358.5 13 Interbank loans........................................ 201.1 200.8 216.9 224.6 216.0 222.9 222.5 227.8 220.9 223.8 229.6 230.4 234.1 225.2r 225.9r 226.2 223.6 224.4 215.5 225.7 221.1 221.5 222.8 236.0 15 Other assets5............................................ 338.0 335.0r 353.0r 355.3 355.7 372.9 364.3 367.8 364.9 369.4 374.7 358.9 16 Total assets6............................................ 4,933.6 5,161.8 5,232.6r 5,279.3 5,308.1 5,321.0 5,320.0 5,376.3 5,346.0 5,360.3 5,376.3 5,393.6 Liabilities 17 Deposits ................................................... 3,152.2 3,281.8 3,334.8r 3,356.8 3,381.9 3.401.2 3,390.6 3,464.5 3,432.1 3,438.1 3,469.4 3,482.5 18 Transaction .......................................... 620.5 605.6 600.2r 606.2 599.9 602.9 588.2 587.7 572.8 570.2 601.1 613.3 19 Nontransaction .................................... 2,531.7 2,676.2 2,734.6 2,750.6 2,782.1 2.798.3 2,802.4 2,876.8 2.859.3 2,867.9 2,868.3 2.869.1 20 Large time ...................................... 469.0 526.0 544.6 548.6 544.5 543.9 542.5 557.7 551.0 555.3 561.5 556.9 21 Other................................................. 2,062.6 2.150.1 2,190.0r 2,202.1 2.237.6 2.254.4 2,259.8 2,319.1 2.308.3 2,312.6 2,306.8 2.312.2 22 Borrowings .............................................. 940.1 1.001.2 1,019.4 1,029.1 1.005.7 991.9 984.5 997.8 996.7 993.5 1,000.6 989.6 23 From banks in the U.S........................ 325.1 359.2 369.2 372.4 354.2 350.4 345.6 367.1 359.1 371.2 371.3 359.9 24 From others ........................................ 615.0 642.0 650.2 656.7 651.5 641.5 638.9 630.7 637.6 622.4 629.3 629.7 25 Net due to related foreign offices .... 182.7 243.3 243.7 246.4 244.9 235.2 235.4 226.3 213.6 220.7 227.9 239.7 26 Other liabilities........................................ 230.3 228.6 222.9r 239.7 255.0 263.1 269.0 269.6 263.8 278.5 261.1 272.1 27 Total liabilities........................................ 4,505.3 4,754.9 4,820.7r 4,871.9 4,887.6 4,891.4 4,879.5 4,958.2 4,906.2 4,930.9 4,959.0 4,983.7 28 Residual (assets less liabilities)7 ......... 428.4 406.9r 411.9 407.4 420.5 429.6 440.5 418.1 439.8 429.4 417.3 409.8 Not seasonally adjusted Assets 29 Bank credit............................................... 4,242.1 4,453.0r 4,477.0 4,515.9 4,562.5 4,567.4 4,596.6 4,640.8 4,617.2 4,625.6 4,639.4 4,659.8 30 Securities in bank credit .................. 1,070.2 1,099.1 1,098.3 1,104.7 1,118.7 1,115.3 1,123.1 1,139.5 1,128.7 1,143.1 1,133.4 1,143.4 31 U.S. government securities........... 726.4 739.2r 733.8r 727.2 725.3 719.0 718.3 718.3 719.8 718.3 718.9 713.7 32 Other securities............................... 343.8 359.9r 364.5r 377.5 393.4 396.3 404.8 421.2 408.9 424.8 414.4 429.7 33 Loans and leases in bank credit2 ......... 3,171.9 3,354.0 3,378.7 3,411.3 3,443.8 3,452.2 3,473.5 3,501.2 3,488.5 3,482.5 3,506.0 3,516.4 34 Commercial and industrial........... 806.4 862.6 864.9 865.6 871.4 876.6 879.2 881.3 876.6 872.9 885.8 886.2 35 Real estate ...................................... 1,462.6 1,576.5 1,592.2 1,605.9 1,616.2 1,619.0 1,632.2 1,635.8 1,642.7 1,636.7 1,633.1 1,635.6 36 Revolving home equity ........... 101.8 U5.1r 115.1' 116.5 118.9 121.9 123.5 124.9 124.7 124.6 124.8 125.1 37 Other............................................ 1,360.8 1,461.5r 1,477.0r 1,489.4 1,497.3 1,497.1 1,508.7 1,510.9 1,518.0 1,512.1 1,508.3 1,510.4 38 Consumer ........................................ 496.0 514.1 516.1 526.9 532.1 528.9 534.0 542.2 534.9 536.7 544.6 548.6 39 Credit cards and related plans. . n.a. n.a. 195.2 202.8 206.0 203.0 206.9 216.1 207.7 209.8 219.6 223.0 40 Other............................................ n.a. n.a. 320.9 324.2 326.1 325.9 327.1 326.1 327.1 326.9 325.0 325.6 41 Security3 .......................................... 90.3 68.1 67.3 71.1 77.9 79.5 78.5 84.7 84.8 82.6 85.9 83.0 42 Other loans and leases.................. 316.7 332.6 338.2' 341.7 346.2 348.1 349.7 357.2 349.5 353.7 356.6 363.1 43 Interbank loans........................................ 206.4 200.5 212.9 214.6 209.6 216.7 227.6 235.3 232.9 232.8 237.3 231.1 44 Cash assets4 ............................................ 249.7 222. lr 218.3' 215.4 220.1 224.5 221.0 241.2 220.3 228.3 236.2 261.9 45 Other assets5............................................ 335.9 338.7r 354.3' 354.3 354.8 366.5 361.3 365.6 361.7 364.6 369.7 358.8 46 Total assets6............................................ 4,974.7 5,154.6 5,201.6r 5,238.4 5,284.7 5,313.4 5,344.2 5,419.5 5,368.8 5,388.1 5,419.0 5,448.4 Liabilities 47 Deposits ................................................... 3,186.1 3,274.2 3,319.0' 3,336.5 3,372.2 3,398.7 3,416.8 3,496.7 3,462.7 3,465.4 3,493.5 3,512.4 48 Transaction .......................................... 652.7 605.0 593.8' 590.6 593.1 594.7 595.7 618.1 581.9 588.8 628.2 659.2 49 Nontransaction .................................... 2,533.4 2,669.3 2,725.1' 2,745.9 2,779.1 2,804.0 2,821.1 2,878.5 2,880.8 2,876.7 2,865.3 2,853.2 50 Large time ...................................... 475.3 520.6 536.4 543.2 540.0 545.3 549.8 564.6 560.5 563.9 568.5 561.0 51 Other................................................. 2,058.1 2,148.7 2,188.7 2,202.7 2,239.1 2,258.6 2,271.3 2,313.9 2,320.3 2,312.8 2,296.8 2,292.1 52 Borrowings ............................................... 949.2 1,004.6 1,006.9 1,001.7 1,001.3 993.6 993.5 1,008.7 997.9 993.4 1,026.4 1,008.3 53 From banks in the U.S......................... 330.0 360.2 366.4r 368.0 353.8 349.5 349.1 372.9 362.8 373.6 381.6 369.0 54 From others ........................................ 619.3 644.4 640.6 633.7 647.5 644.1 644.4 635.8 635.2 619.8 644.9 639.3 55 Net due to related foreign offices .... 183.7 235.1 236.1 243.8 240.6 236.3 239.0 227.7 218.1 226.5 223.5 247.7 56 Other liabilities........................................ 230.5 228.4 222.1 239.6 254.8 262.7 269.1 269.9 264.6 279.2 261.0 271.8 57 Total liabilities........................................ 4,549.5 4,742.3 4,784.1r 4,821.7 4,868.9 4,891.3 4,918.4 5,002.9 4,943.3 4,964.6 5,004.5 5,040.1 58 Residual (assets less liabilities)7........... 425.2 412.3r 417.5 416.7 415.8 422.1 425.8 416.6 425.5 423.5 414.6 408.3 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A17 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1999 2000 2000 Dec.r June Julyr Aug.r Sept.' Oct.r Nov.r Dec. Dec. 6 Dec. 13 Dec. 20 Dec. 27 Seasonally adjusted Assets 1 Bank credit............................................... 2,382.4r 2,501.3r 2,511.3 2,528.8 2,551.3 2,527.5 2,526.3 2,544.9 2,532.7 2,541.6 2,537.7 2,558.6 2 Securities in bank credit .................. 555.4r 581.6r 579.1 577.2 585.4 576.4 572.3 580.2 567.5 585.3 575.0 586.6 3 U.S. government securities........... 358.2r 362.9r 363.8 359.7 357.8 351.5 344.9 348.1 343.2 347.2 349.6 349.5 4 Trading account ........................ 19.6 22.7 24.3 23.7 23.2 21.1 20.5 29.0 22.4 25.9 29.2 33.9 5 Investment account.................... 338.6r 340.2r 339.5 336.0 334.6 330.4 324.5 319.1 320.8 321.3 320.4 315.6 6 Other securities............................... 197.2 218.7 215.3 217.6 227.6 224.9 227.4 232.1 224.3 238.2 225.4 237.1 7 Trading account ......................... 86.7 100.2 97.2 102.5 114.5 112.7 116.0 122.0 113.8 128.2 116.4 126.3 8 Investment account.................... 110.5 118.5 118.1 115.0 113.2 112.2 111.4 110.1 110.4 109.9 108.9 110.9 9 State and local government . 24.1 25.6 26.1 25.9 25.8 26.1 26.3 26.7 26.4 26.2 26.4 27.4 10 Other........................................ 86.4 92.9 92.0 89.1 87.4 86.1 85.1 83.4 84.0 83.7 82.5 83.4 11 Loans and leases in bank credit2 . . . 1,827.0r l,919.6r 1,932.2 1,951.5 1,965.9 1,951.1 1,954.0 1,964.7 1,965.2 1,956.3 1,962.8 1,972.1 12 Commercial and industrial........... 554.6r 583.(7 583.5 586.6 586.9 586.2 584.4 589.3 586.3 584.6 593.4 592.6 13 Bankers acceptances.................. 1.1 1.0 1.0 .9 .9 .8 .9 .9 .9 .8 .9 .8 14 Other............................................. 553.5r 582.(7 582.6 585.7 586.0 585.4 583.6 588.4 585.4 583.8 592.5 591.8 15 Real estate ...................................... 746.3r 804. lr 812.7 818.4 819.4 811.5 814.2 812.7 818.4 811.8 811.5 812.3 16 Revolving home equity ........... 64.7r 73.8r 73.4 74.4 73.2 75.1 76.2 77.2 77.2 76.9 77.2 77.3 17 Other............................................ 681.7r 730.2r 739.3 744.0 746.3 736.4 738.0 735.6 741.2 734.9 734.3 735.0 18 Consumer ........................................ 219.(7 227.8 229.0 231.2 232.2 233.3 234.9 234.2 235.5 234.5 232.9 234.0 19 Security3 .......................................... 79.3 62.1 63.1 69.2 77.4 67.6 67.9 73.0 74.3 69.9 71.6 72.8 20 Federal funds sold to and repurchase agreements with broker-dealers ........... 60.1 43.9 44.6 50.6 58.1 49.1 50.0 56.5 57.2 53.2 54.7 57.1 21 Other............................................ 19.1 18.2 18.6 18.6 19.3 18.5 17.9 16.5 17.1 16.7 17.0 15.7 22 State and local government......... 11.9 12.3 12.2 12.3 12.4 12.4 12.4 12.2 12.3 12.2 12.2 12.2 23 Agricultural...................................... 9.1 9.6 9.5 9.5 9.4 9.4 9.5 9.6 9.6 9.6 9.6 9.6 24 Federal funds sold to and repurchase agreements with others ........................... 11.7 13.5 12.8 14.0 16.1 16.9 18.9 20.4 18.0 19.1 18.6 23.7 25 All other loans ............................... 75.7 84.7 84.2 84.1 85.4 85.3 82.8 84.2 81.6 85.6 83.9 86.0 26 Lease-financing receivables ......... 119.5 122.5 125.0 126.1 126.7 128.6 129.0 129.0 129.3 129.0 129.0 128.9 27 Interbank loans........................................ I35.6r 133.7r 141.6 140.2 130.7 136.2 140.0 139.6 135.4 137.5 140.2 142.1 28 Federal funds sold to and repurchase agreements with commercial banks........................ 59.0r 61.9 73.7 66.0 56.4 57.5 60.6 63.3 58.4 60.5 64.1 67.2 29 Other..................................................... 76.7 65.8 67.9 74.1 74.3 78.7 79.3 76.3 77.0 77.0 76.1 74.9 30 Cash assets4 ............................................. 148.1 146.1r 144.6 144.6 141.5 142.0 136.9 143.7 141.3 140.4 141.1 152.3 31 Other assets5............................................ 237.4r 223.2r 242.2 245.2 247.0 260.4 256.6 254.5 256.0 255.4 260.3 243.1 32 Total assets6............................................ 2#>7.9r 2,969.8r 3,004.6 3,023-3 3,035.0 3,030.9 3,0243 3,046-3 3,029.1 3,038.6 3,043.0 3,059.8 Liabilities 33 Deposits ................................................... 1,608.(7 l,639.6r 1,639.5 1,634.6 1,634.3 1,637.2 1,621.0 1,651.1 1,639.2 1,636.3 1,654.5 1,659.2 34 Transaction .......................................... 322.4r 309.6r 302.4 304.5 300.6 302.8 292.6 293.5 285.1 281.5 302.2 308.2 35 Non transaction .................................... 1,285.6' l^Otf 1,337.0 1,330.1 1,333.7 1,334.4 1,328.3 1,357.7 1,354.1 1,354.8 1,352.3 1,350.9 36 Large time ...................................... 229.7 258.7r 266.9 265.3 257.3 254.1 250.0 259.9 255.3 257.5 263.0 259.2 37 Other................................................. l,055.8r l,071.3r 1,070.1 1,064.8 1,076.4 1,080.2 1,078.4 1,097.8 1,098.7 1,097.4 1,089.3 1,091.7 38 Borrowings ............................................... 633.4 656.6 678.7 689.4 671.4 664.2 661.2 669.6 667.6 666.2 676.3 663.4 39 From banks in the U.S........................ 178.9 197.0 205.1 207.5 192.2 196.4 193.7 212.1 202.9 216.2 218.0 206.3 40 From others ........................................ 454.5 459.6 473.7 481.9 479.3 467.8 467.5 457.5 464.7 450.1 458.3 457.1 41 Net due to related foreign offices............. 178.2 234.2 221.3 222.7 224.4 211.7 211.7 205.4 195.0 201.3 204.6 216.2 42 Other liabilities........................................ 170.5 173.8 177.4 193.4 207.5 214.0 218.6 219.4 213.3 228.2 210.6 222.1 43 Total liabilities........................................ 2,590. lr 2,704.2r 2,716.8 2,740.0 2,737.6 2,727.1 2,712.5 2,745.6 2,715.0 2,732.0 2,746.0 2,760.9 44 Residual (assets less liabilities)7 ......... 211S 265.6 287.8 283.3 297.5 303.7 311.8 300.7 314.1 306.6 297.0 298.9 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics □ March 2001 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks—Continued Billions of dollars Monthly averages Wednesday figures Account 1999 2000 2000 Dec.r June July" Aug." Sept." Oct." Nov." Dec. Dec. 6 Dec. 13 Dec. 20 Dec. 27 Not seasonally adjusted Assets 45 Bank credit............................................. 2,404.3r 2,488.6" 2,489.8 2,506.4 2,534.4 2,530.3 2,542.5 2,565.8 2,552.0 2,559.7 2,561.5 2,576.4 46 Securities in bank credit ................ 562.2r 575.3" 569.6 570.7 581.4 575.9 578.1 585.9 578.1 592.6 580.5 587.1 47 U.S. government securities......... 359.4r 359.9" 356.5 353.0 352.7 349.3 347.9 349.2 349.4 349.8 350.5 345.2 48 Trading account ...................... 19.5 22.5 22.6 23.0 22.5 21.0 21.7 28.8 25.4 26.7 29.2 30.2 49 Investment account.................. 339.9" 337.4" 334.0 330.1 330.2 328.3 326.2 320.4 324.1 323.1 321.4 315.0 50 Mortgage-backed securities . . 218.6" 217.9" 212.4 208.0 208.3 210.4 210.7 212.5 210.6 213.2 211.6 212.7 51 Other...................................... 121.4" 119.6" 121.6 122.1 121.9 118.0 115.5 107.9 113.5 109.9 109.7 102.3 52 One year or less.............. 23.0 30.8 30.8 31.8 32.6 31.3 31.9 30.6 31.9 31.0 32.8 27.6 53 One to five years ........... 58.5 53.2 54.1 53.1 52.6 50.5 48.8 44.0 46.0 45.3 44.1 42.3 54 More than five years . .. 39.9" 35.5 36.7 37.2 36.7 36.2 34.8 33.3 35.5 33.6 32.9 32.5 55 Other securities............................. 202.8 215.4 213.1 217.7 228.7 226.6 230.2 236.7 228.6 242.8 230.0 241.8 56 Trading account ...................... 86.7 100.2 97.2 102.5 114.5 112.7 116.0 122.0 113.8 128.2 116.4 126.3 57 Investment account.................. 116.1 115.2 115.8 115.2 114.2 113.9 114.2 114.7 U4.8 114.6 113.5 115.6 58 State and local government . . 24.3 25.5 25.6 25.6 25.7 26.1 26.6 26.9 26.6 26.4 26.6 27.8 59 Other...................................... 91.8 89.7 90.3 89.6 88.5 87.8 87.6 87.8 88.2 88.1 87.0 87.8 60 Loans and leases in bank credit2 . . 1,842.0" 1,913.3" 1,920.2 1,935.6 1,953.0 1,954.4 1,964.4 1,979.8 1,974.0 1,967.1 1.981.0 1,989.3 61 Commercial and industrial......... 553.4" 583.7" 581.2 580.9 584.5 585.9 586.7 588.3 584.9 581.4 593.4 592.6 62 Bankers acceptances................ 1.1 1.0 1.0 .9 .9 .8 .9 .9 .9 .8 .9 .8 63 Other.......................................... 552.3" 582.6" 580.2 580.0 583.7 585.1 585.8 587.5 584.0 580.5 592.5 591.8 64 Real estate .................................... 751.8" 799.8" 808.1 815.9 817.0 813.5 819.5 818.7 825.9 819.6 815.5 817.2 65 Revolving home equity ......... 64.8 74.0" 73.7 74.6 73.5 75.3 76.4 77.3 77.3 77.1 77.3 77.5 66 Other.......................................... 420.4 444.9" 454.1 459.3 461.8 455.9 459.1 457.4 463.4 458.2 454.1 456.0 67 Commercial ............................. 266.6" 280.9" 280.3 281.9 281.7 282.3 284.0 284.0 285.3 284.3 284.2 283.6 68 Consumer ...................................... 222.1 226.3 226.5 229.4 231.2 231.3 233.3 236.9 234,6 235.2 236.0 239.2 69 Credit cards and related plans. . n.a. n.a. 72.0 73.1 74.2 74.3 75.7 80.1 76.6 77.6 80.3 83.0 70 Other.......................................... n.a. n.a 154.5 156.2 157.0 157.0 157.6 156.8 158.1 157.6 155.7 156.2 71 Security5 ........................................ 83.5 61.6 60.5 63.9 70.7 72.0 70.9 76.7 76.7 74.8 78.0 75.3 72 Federal funds sold to and repurchase agreements with broker-dealers .... 64.1 42.5 41.8 45.7 51.7 53.7 53.5 60.1 60.7 57.9 59.8 58.9 73 Other.......................................... 19.4 19.1 18.6 18.3 18.9 18.3 17.4 16.6 16.0 16.8 18.2 16.4 74 State and local government .... 12.0 12.1 12.2 12.5 12.6 12.6 12.5 12.3 12.4 12.3 12.2 12.2 75 Agricultural................................... 9.1 9.5 9.6 9.6 9.6 9.5 9.6 9.6 9.6 9.5 9.6 9.7 76 Federal funds sold to and repurchase agreements with others ........................... 11.7 13.5 12.8 14.0 16.1 16.9 18.9 20.4 18.0 19.1 18.6 23.7 77 All other loans ............................. 79.3 84.3 85.0 84.3 86.2 85.2 85.3 88.2 83.8 87.5 89.4 90.4 78 Lease-financing receivables .... 119.1 122.4 124.3 125.1 125.1 127.5 127.7 128.6 128.0 127.9 128.3 129.0 79 Interbank loans...................................... 136.6" 136.7" 141.7 134.2 127.2 130.3 138.3 140.4 134.0 137.7 142.0 142.2 80 Federal funds sold to and repurchase agreements with commercial banks ......... 60.4" 68.4 73.0 62.2 54.7 55.7 61.3 64.4 58.6 62.0 65.6 66.4 81 Other................................................... 76.2 68.2 68.7 72.0 72.5 74.6 77.0 76.0 75.4 75.7 76.4 75.8 82 Cash assets4 .......................................... 159.4 143.6" 138.4 136.6 138.4 142.4 139.2 154.5 139.4 144.8 151.0 171.4 83 Other assets5.......................................... 235.8" 227.1 241.6 242.4 246.6 254.1 252.2 252.7 252.3 251.8 257.8 243.5 84 Total assets6.......................................... 2$00Ar 2,9613" 2,976.4 2,984.1 3,010.9 3,021.9 3,036.6 3,076.8 3,041.2 3,057.5 3,075.8 3,097.4 Liabilities 85 Deposits ................................................. 1,633.0" 1,634.7" 1,629.0 1,619.0 1,626.6 1,631.8 1,634.2 1,674.1 1,655.9 1,655.0 1,673.3 1,682.8 86 Transaction ........................................ 343.7" 308.4" 298.7 293.4 296.0 297.0 296.4 312.5 287.9 292.5 320.0 338.7 87 Nontransaction ................................. 1,289.2" 1,326.3" 1,330.3 1,325.6 1,330.6 1,334.8 1,337.8 1,361.6 1,368.0 1,362.5 1,353.3 1,344.1 88 Large time ................................... 236.0" 253.3" 258.8 259.9 252.8 255.6 257.2 266.8 264.8 266.1 270.0 263.2 89 Other.............................................. 1,053.3" 1,073.0" 1,071.5 1,065.7 1,077.8 1,079.2 1,080.6 1,094.8 1,103.2 1,096.3 1,083.4 1,080.8 90 Borrowings............................................ 640.0" 658.1 663.8 658.9 661.3 663.0 668.1 676.3 669.0 663.8 692.5 672.3 91 From banks in the U.S...................... 182.3 196.3 199.8 200.2 188.2 192.9 196.2 215.2 206.4 217.2 223.2 209.2 92 From nonbanks in the U.S............... 457.7 461.8 464.0 458.7 473.1 470.2 471.9 461.1 462.6 446.6 469.3 463.1 93 Net due to related foreign offices . .. 179.2 225.9 213.7 220.1 220.0 212.8 215.4 206.8 199.4 207.1 200.2 224.3 94 Other liabilities...................................... 170.5 173.8 177.4 193.4 207.5 214.0 218.6 219.4 213.3 228.2 210.6 222.1 95 Total liabilities...................................... 2,622.7" 2,692.6r 2,683.8 2^91.4 2,7153 2,721.6 2,7363 2,776.6 2,737.6 2,754.0 2,776.7 2,801.5 96 Residual (assets less liabilities)7......... 277.7" 268.7" 292.6 292.8 295.6 300.3 300.3 300.2 303.6 303.5 299.1 295.9 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A19 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued D. Small domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1999 2000 2000 Dec/ Juner Julyr Aug.r Sept.' Oct.r Nov.r Dec. Dec. 6 Dec. 13 Dec. 20 Dec. 27 Seasonally adjusted Assets 1 Bank credit............................................... 1,837.4 1,959.1 1,986.4 2,006.1 2,023.7 2,035.1 2,053.6 2,073.3 2,069.4 2,066.9 2,074.8 2,073.0 2 Securities in bank credit .................. 508.4 521.9 529.6 534.3 538.6 542.0 546.6 553.6 553.0 551.1 552.4 553.7 3 U.S. government securities........... 367.6 377.1 377.5 374.8 373.5 372.1 372.1 369.6 372.2 369.2 368.5 367.5 4 Other securities............................... 140.8 144.8 152.2 159.6 165.2 169.8 174.5 184.0 180.8 181.9 183.8 186.3 5 Loans and leases in bank credit2 ......... 1,329.0 1,437.2 1,456.8 1,471.8 1,485.0 1,493.2 1,507.0 1,519.7 1,516.5 1,515.8 1,522.4 1,519.2 6 Commercial and industrial........... 253.4 276.9 283.6 286.6 288.6 291.0 294.0 293.5 293.5 293.0 292.8 292.7 7 Real estate ...................................... 711.4 775.7 783.0 787.3 796.1 802.1 810.0 817.8 817.8 817.9 818.8 817.0 8 Revolving home equity ........... 36.8 41.2 41.6 42.0 45.0 46.3 46.7 47.3 47.2 47.2 47.2 47.1 9 Other............................................ 674.7 734.5 741.4 745.3 751.1 755.8 763.3 770.5 770.6 770.6 771.6 769.8 10 Consumer ........................................ 271.5 288.2 290.6 296.9 299.2 297.9 300.1 302.1 298.9 299.2 303.9 303.8 11 Security3 .......................................... 6.8 6.5 6.8 7.2 7.2 7.5 7.5 7.9 8.1 7.9 7.9 7.7 12 Other loans and leases.................. 85.8 89.9 92.7 93.8 93.9 94.6 95.4 98.4 98.2 97.8 99.0 98.1 13 Interbank loans........................................ 65.4 67.1 75.3 84.4 85.3 86.6 82.5 88.2 85.5 86.3 89.5 88.2 14 Cash assets4 ............................................ 86.0 79.1 81.3 81.6 82.1 82.4 78.6 82.0 79.7 81.2 81.7 83.7 15 Other assets5............................................ 100.6 111.8 110.8 110.1 108.6 112.4 107.7 113.4 108.9 113.9 114.4 115.9 16 Total assets6............................................ 2,065.7 2,192.0 2,228.0 2,256.0 2,273.1 2,290.1 2,295.7 2330.0 2^16.8 2321.7 2^333 2333.7 Liabilities 17 Deposits ................................................... 1,544.2 1,642.2 1,695.3 1,722.2 1,747.6 1,764.0 1,769.6 1,813.4 1,792.9 1,801.8 1,814.9 1,823.3 18 Transaction .......................................... 298.1 296.1 297.8 301.7 299.2 300.1 295.6 294.2 287.6 288.8 298.9 305.1 19 Nontransaction .................................... 1,246.1 1,346.1 1,397.6 1,420.5 1,448.4 1,463.9 1,474.0 1,519.1 1,505.3 1,513.1 1,516.0 1,518.2 20 Large time ...................................... 239.3 267.3 277.6 283.3 287.2 289.7 292.6 297.8 295.7 297.8 298.5 297.8 21 Other................................................. 1,006.8 1,078.8 1,119.9 1,137.2 1,161.2 1,174.2 1,181.5 1,221.3 1,209.6 1,215.3 1,217.5 1,220.4 22 Borrowings ............................................... 306.7 344.6 340.7 339.7 334.2 327.6 323.3 328.2 329.1 327.3 324.3 326.1 23 From banks in the U.S........................ 146.1 162.2 164.2 164.9 162.0 154.0 151.9 155.0 156.2 155.0 153.3 153.6 24 From others ........................................ 160.5 182.4 176.5 174.8 172.2 173.6 171.4 173.2 172.9 172.3 171.0 172.5 25 Net due to related foreign offices .... 4.5 9.1 22.4 23.7 20.6 23.4 23.7 20.9 18.7 19.5 23.3 23.5 26 Other liabilities........................................ 59.9 54.8 45.5 46,3 47.6 49.1 50.4 50.2 50.5 50.3 50.4 50.0 27 Total liabilities........................................ 1,915.2 2,050.7 2,103.9 2,131,9 2,150.0 2,164.2 2,167.0 2,212.7 2,191.2 2,198.9 2,213.0 2^22.9 28 Residual (assets less liabilities)7 ......... 150.6 141.3 124.1 124.1 123.0 125.8 128.7 117.3 125.6 122.8 120.3 110.9 Not seasonally adjusted Assets 29 Bank credit............................................... 1,837.9 1,964.5 1,987.2 2,009.5 2,028.1 2,037.1 2,054.0 2,075.0 2,065.1 2,065.9 2,077.9 2,083.4 30 Securities in bank credit .................. 508.0 523.8 528.7 533.9 537.3 539.4 545.0 553.6 550.6 550.5 552.9 556.4 31 U.S. government securities........... 367.0 379.3 377.3 374.2 372.6 369.6 370.4 369.1 370.4 368.5 368.4 368.5 32 Other securities............................... 141.0 144.5 151.4 159.8 164.7 169.7 174.6 184.5 180.3 182.0 184.5 187.8 33 Loans and leases in bank credit2 ......... 1,329.9 1,440.7 1,458.5 1,475.6 1,490.8 1,497.8 1,509.1 1,521.4 1,514.5 1,515.4 1,525.0 1,527.1 34 Commercial and industrial........... 253.0 278.9 283.7 284.7 286.9 290.7 292.5 293.0 291.8 291.5 292.5 293.6 35 Real estate ...................................... 710.8 776.7 784.1 790.0 799.2 805.5 812.7 817.1 816.7 817.1 817.5 818.4 36 Revolving home equity ........... 37.0 41.1 41.4 41.9 45.4 46.6 47.1 47.6 47.4 47.5 47.5 47.6 37 Other............................................ 673.8 735.6 742.7 748.2 753.8 758.9 765.6 769.5 769.3 769.5 770.0 770.8 38 Consumer ........................................ 273.9 287.8 289.6 297.6 301.0 297.6 300.7 305.3 300.2 301.5 308.6 309.4 39 Credit cards and related plans. . n.a. n.a. 123.1 129.6 131.8 128.7 131.2 136.0 131.2 132.2 139.2 140.0 40 Other............................................ n.a. n.a. 166.5 168.0 169.1 168.9 169.5 169.3 169.1 169.3 169.3 169.4 41 Security3 .......................................... 6.8 6.5 6.8 7.2 7.2 7.5 7.5 7.9 8.1 7.9 7.9 7.7 42 Other loans and leases .................. 85.4 90.7 94.3 96.1 96.5 96.5 95.6 98.0 97.7 97.4 98.5 98.1 43 Interbank loans........................................ 69.8 63.8 71.2 80.3 82.4 86.3 89.3 94.9 98.9 95.1 95.2 88.9 44 Cash assets4 ............................................ 90.3 78.5 79.9 78.8 81.7 82.1 81.8 86.8 80.9 83.5 85.1 90.5 45 Other assets5............................................ 100.2 111.6 112.7 111.9 108.2 112.3 109.1 112.9 109.3 112.7 111.9 115.3 46 Total assets6............................................ 2,074.4 2,193.3 2,225.2 2,2543 2,273.8 2^91.5 2,307.6 2*342.7 2327.5 2,330.6 2,343.2 2351.0 Liabilities 47 Deposits ................................................... 1,553.1 1,639.5 1,690.0 1,717.5 1,745.6 1,766.9 1,782.6 1,822.5 1,806.8 1,810.5 1,820.1 1,829.6 48 Transaction .......................................... 309.0 296.6 295.2 297.2 297.1 297.8 299.2 305.6 294.0 296.2 308.2 320.5 49 Nontransaction .................................... 1,244.1 1,342.9 1,394.8 1,420.3 1,448.6 1,469.2 1,483.3 1,516.9 1,512.8 1,514.2 1,511.9 1,509.1 50 Large time ...................................... 239.3 267.3 277.6 283.3 287.2 289.7 292.6 297.8 295.7 297.8 298.5 297.8 51 Other................................................. 1,004.8 1,075.7 1,117.2 1,137.0 1,161.4 1,179.4 1,190.7 1,219.1 1,217.1 1,216.4 1,213.4 1,211.3 52 Borrowings ............................................... 309.3 346.5 343.1 342.9 340.1 330.5 325.4 332.4 328.9 329.7 333.9 335.9 53 From banks in the U.S........................ 147.7 163.9 166.6 167.8 165.6 156.6 152.9 157.7 156.4 156.4 158.4 159.7 54 From others ........................................ 161.6 182.6 176.6 175.0 174.4 173.9 172.5 174.7 172.5 173.2 175.5 176.2 55 Net due to related foreign offices .... 4.5 9.1 22.4 23.7 20.6 23.4 23.7 20.9 18.7 19.5 23.3 23.5 56 Other liabilities........................................ 60.0 54.5 44.8 46.3 47.3 48.8 50.4 50.5 51.3 51.0 50.4 49.7 57 Total liabilities........................................ 1,926.8 2,049.7 2,1003 2,130.4 2,153.6 2,169.7 2,182.1 2,2263 2,205.6 2,210.6 2,227.7 2,238.6 58 Residual (assets less liabilities)7 ......... 147.5 143.6 124.9 124.0 120.3 121.8 125.5 116.4 121.9 120.0 115.5 112.4 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics □ March 2001 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 1999 2000 2000 Dec/ June July Aug. Sept. Oct. Nov. Dec. Dec. 6 Dec. 13 Dec. 20 Dec. 27 Seasonally adjusted Assets 1 Bank credit............................................... 554.1 581.4 582.0 586.5 593.9" 580.4 574.9 598.1 584.3 586.5 601.3 612.7 2 Securities in bank credit .................. 208.7 209.9 209.8 210.3 208.4 191.7 183.5 200.8 187.5 194.5 203.2 211.3 3 US. government securities........... 82.6 78.4 79.1 79.2 76.8 69.1 65.5" 66.9 65.4 64.0 67.9 69.6 4 Other securities............................... 126.1 131.5 130.7 131.1 131.7 122.6 118.0" 133.9 122.1 130.5 135.3 141.7 5 Loans and leases in bank credit2 . . . 345.3 371.4 372.2 376.2 385.4 388.8 391.4 397.3 396.8 392.0 398.2 401.4 6 Commercial and industrial........... 193.9 206.7 205.0 206.6 204.4 201.8 201.9 205.2 203.3 202.6 207.3 207.4 7 Real estate ...................................... 17.3 18.6 18.7 18.9 19.4 18.8 19.4 19.4 19.2 19.2 19.9 19.5 8 Security3 .......................................... 67.2 80.8 81.5 81.8 94.3 102.0" 103.2 106.6 106.6 102.7 105.4 109.5 9 Other loans and leases .................. 66.9 65.3 67.0 69.0 67.3 66.1 67.0 66.1 67.7 67.4 65.4 64.9 10 Interbank loans........................................ 27.8 26.3 23.5 22.5 24.0" 27.8 27.7 27.5 27.7 25.3 26.7 30.0 11 Cash assets4 ............................................ 52.8 45.4 45.9 45.2 45.5 43.0 39.5 41.0 38.9 41.7 40.8 41.5 12 Other assets5............................................ 36.2 42.6 41.8 40.9 39.4 36.0 34.6 30.9 34.0 28.4 30.2 30.6 13 Total assets6 ............................................ 670.6 695.3 692.9 694.7 702.4" 686.9 6763 697.2 6845 681.6 698.6 7143 Liabilities 14 Deposits ................................................... 376.7 385.1 390.3 395.6 388.3 384.4 382.8 385.4 381.3 389.6 380.8 383.4 15 Transaction .......................................... 10.8 11.3 11.3 10.8 9.7 10.4 10.5 10.2 10.2 9.5 10.1 11.0 16 Nontransaction .................................... 365.9 373.8 379.1 384.8 378.6 374.0 372.4 375.1 371.2 380.1 370.7 372.4 17 Borrowings ............................................... 178.0 202.6 202.5 198.9 214.5" 218.6 222.0 239.6 240.6 228.2 241.6 246.4 18 From banks in the U.S........................ 22.6 19.2 21.0 17.0 19.5" 18.9 19.5 24.0 25.0 19.9 22.3 25.0 19 From others ........................................ 155.4 183.4 181.5 181.9 195.0" 199.7 202.5 215.5 215.6 208.3 219.3 221.4 20 Net due to related foreign offices............. 41.1 20.2 18.2 23.4 24.3 16.7 6.1 -2.0 -6.6 -9.4 3.1 2.6 21 Other liabilities........................................ 67.4 72.0 73.7 73.0 76.2" 75.8 70.2 68.5 70.3 65.9 67.5 69.4 22 Total liabilities........................................ 663.2 679.9 684.8 690.8 703-3" 695.4 681.1 691-5 685.7 674.4 693.1 701.8 23 Residual (assets less liabilities)7 ......... 7.4 15.4 8.1 3.9 -.9 -8.5 -4.8 5.8 -1.2 7.3 5.5 12.5 Not seasonally adjusted Assets 24 Bank credit............................................... 564.2 571.4 571.1 576.7 593.1 589.3 589.0 609.1 593.3 594.5 611.2 626.8 25 Securities in bank credit .................. 212.6 203.7 202.7 204.5 208.6 199.2 194.2 204.9 194.3 198.5 205.6 214.0 26 U.S. government securities........... 84.0 78.5 78.1 77.6 74.7 68.7 66.9 68.0 67.2 65.3 68.6 70.6 27 Trading account ........................ 6.8 12.0 12.0 13.9 14.2 11.9 11.0 11.8 11.2 10.8 12.2 13.1 28 Investment account.................... 77.2 66.5 66.1 63.7 60.4 56.9 55.9 56.2 55.9 54.6 56.4 57.5 29 Other securities............................... 128.6 125.2 124.6 126.9 133.9 130.5 127.4" 136.8 127.2 133.1 137.0 143.4 30 Trading account ........................ 85.2 81.4 80.7 82.4 91.0 89.9 87.3 89.9 86.8 87.1 89.0 93.1 31 Investment account.................... 43.4 43.8 43.9 44.6 42.9 40.6 40.0 46.9 40.4 46.1 48.1 50.3 32 Loans and leases in bank credit2 .. . 351.6 367.8 368.4 372.1 384.5 390.1 394.8 404.2 399.0 396.0 405.6 412.8 33 Commercial and industrial........... 197.5 203.4 202.5 203.9 204.4 203.2 205.2 209.3 205.8 205.3 211.7 213.3 34 Real estate ...................................... 17.3 18.5 18.5 18.7 19.2 19.1 19.4 19.4 19.2 19.1 19.8 19.4 35 Security3 .......................................... 67.7 81.1 81.3 81.9 94.1" 101.4 102.4" 107.0 104.9 102.6 106.2 111.5 36 Other loans and leases.................. 69.2 64.8 66.2 67.6 66.8" 66.4" 67.8" 68.5 69.1 69.1 67.9 68.6 37 Interbank loans........................................ 27.8 26.3 23.5 22.5 24.0" 27.8 27.7 27.5 27.7 25.3 26.7 30.0 38 Cash assets4 ............................................ 57.0 44.7 44.2 43.7 44.6 43.9 41.9 44.5 41.7 44.7 44.6 45.5 39 Other assets5............................................ 38.3 40.4 39.9 40.2 38.7 35.3 34.7 32.8 36.0 30.7 32.0 32.1 40 Total assets6............................................ 687.1 682.4 678.4 682.7 700.1r 695.9 692.9 713.5 698.4 694.8 714.2 734.0 Liabilities 41 Deposits ................................................... 385.3 380.8 381.5 383.6 381.9 379.9 386.1 394.3 386.4 397.4 390.0 396.9 42 Transaction .......................................... 11.5 11.0 11.2 10.7 10.2 10.6 10.6 10.8 10.3 10.0 10.9 11.9 43 Nontransaction .................................... 373.8 369.8 370.4 372.9 371.7" 369.4 375.5 383.5 376.1 387.5 379.1 385.0 44 Borrowings.............................................. 178.0 202.6 202.5 198.9 214.5" 218.6 222.0 239.6 240.6 228.2 241.6 246.4 45 From banks in the U.S........................ 22.6 19.2 21.0 17.0 19.5" 18.9 19.5 24.0 25.0 19.9 22.3 25.0 46 From others ........................................ 155.4 183.4 181.5 181.9 195.0" 199.7 202.5 215.5 215.6 208.3 219.3 221.4 47 Net due to related foreign offices .... 46.3 18.8 17.3 23.2 23.6 16.9 7.7 3.1 -7.2 -5.2 7.7 13.0 48 Other liabilities........................................ 69.5 70.5 72.1 72.6 75.8" 75.2 71.2 70.4 71.8 67.8 69.2 71.8 49 Total liabilities........................................ 679.0 672.6 6735 678.3 695.9" 690.6 687.0 7073 691.7 6883 7085 728.0 50 Residual (assets less liabilities)7........... 8.0 9.7 4.9 4.3 4.2" 5.3 5.9 6.2 6.7 6.5 5.7 6.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A21 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued F. Memo items Billions of dollars Monthly averages Wednesday figures Account 1999 2000 2000 Dec.r June July Aug. Sept. Oct. Nov. Dec. Dec. 6 Dec. 13 Dec. 20 Dec. 27 Not seasonally adjusted Memo Large domestically chartered banks, adjusted for mergers 51 Revaluation gains on off-balance-sheet items8 ............................................... 64.2 68.3 63.1 66.5 74.4 70.9 68.0 78.4 73.1 74.5 77.4 85.5 52 Revaluation losses on off-balancesheet items8...................................... 63.7 68.5 62.9 67.3 73.9 72.8 72.6 83.1 78.5 79.2 82.6 90.0 53 Mortage-backed securities9.................... 251.5r 250.2r 242.5r 238.0" 238.2r 239.6r 239.8" 241.6 240.1 242.1 240.8 241.9 54 Pass-through ........................................ 174.1r 177.9" 173.2r 169.9" 170.4" 173.4" 173.7" 176.9 174.9 176.8 176.4 178.1 55 CMO, REMIC, and other ................ 77.4r 72.3r 69.3r 68.2r 67.7r 66.3" 66.0" 64.7 65.2 65.4 64.4 63.7 56 Net unrealized gains (losses) on available-for-sale securities10 .... -11.3 -8.7 -11.5 -10.8 -9.7 -8.7 -8.0 -5.8 -6.7 -6.4 -5.8 -5.6 57 Off-shore credit to U.S. residents11.... 24.0 22.4 22.2 22.1 22.1 22.3 23.1 23.4 23.3 23.5 23.8 23.6 58 Securitized consumers loans12............. n.a. n.a. 87.4 86.6 85.9 80.8 80.5 82.2 82.0 81.9 82.7 82.6 59 Credit cards and related plans......... n.a. n.a. 72.4 72.0 71.8 67.2 67.3 68.6 69.0 69.0 68.6 68.6 60 Other..................................................... n.a. n.a 15.0 14.6 14.1 13.6 13.2 13.6 13.0 12.9 14.1 14.0 61 Securitized business loans12.................. n.a. n.a. 17.0 16.2 15.3 15.2 17.8 18.6 18.4 18.5 18.5 18.7 Small domestically chartered commercial banks, adjusted for mergers 62 Mortgage-backed securities9.................. 196.5r 207.4r 207.2r 210.1r 211.6r 212.6" 214.0" 215.1 214.9 214.8 213.9 215.0 63 Securitized consumer loans12................ n.a. n.a. 220.5 220.8 221.5 223.7 224.7" 230.1 227.2 230.2 229.9 231.6 64 Credit cards and related plans......... n.a. n.a. 211.5 212.0 212.9 214.0 214.8" 220.5 217.5 220.5 220.6 222.1 65 Other..................................................... n.a. n.a. 9.0 8.8 8.6 9.7 9.9 9.6 9.7 9.7 9.3 9.6 Foreign-related institutions 66 Revaluation gains on off-balancesheet items8...................................... 43.6 44.7 41.4 43.0 48.6 47.5 44.8 45.8 44.1 45.2 45.8 47.2 67 Revaluation losses on off-balancesheet items8...................................... 41.5 40.7 38.2 40.1 45.0" 44.6 40.8 41.5 40.2 41.4 40.8 42.9 68 Securitized business loans12.................. n.a. n.a. 23.9 23.7 23.1 23.0 22.8 23.1 23.4 22.9 22.9 23.0 Note. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board’s H.8 acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a statistical release, “Assets and Liabilities of Commercial Banks in the United States.” Table ratio procedure is used to adjust past levels. 1.27, “Assets and Liabilities of Large Weekly Reporting Commercial Banks,” and table 1.28, 2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks “Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks,” are no longer in the United States, all of which are included in “Interbank loans.” being published in the Bulletin. Instead, abbreviated balance sheets for both large and small 3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry domestically chartered banks have been included in table 1.26, parts C and D. Data are both securities. merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S. 4. Includes vault cash, cash items in process of collection, balances due from depository branches and agencies of foreign banks have been replaced by balance sheet estimates of all institutions, and balances due from Federal Reserve Banks. foreign-related institutions and are included in table 1.26, part E. These data are break- 5. Excludes the due-from position with related foreign offices, which is included in “Net adjusted. due to related foreign offices.” The not-seasonally-adjusted data for all tables now contain additional balance sheet items, 6. Excludes unearned income, reserves for losses on loans and leases, and reserves for which were available as of October 2, 1996. transfer risk. Loans are reported gross of these items. 1. Covers the following types of institutions in the fifty states and the District of 7. This balancing item is not intended as a measure of equity capital for use in capital Columbia: domestically chartered commercial banks that submit a weekly report of condition adequacy analysis. On a seasonally adjusted basis, this item reflects any differences in the (large domestic); other domestically chartered commercial banks (small domestic); branches seasonal patterns estimated for total assets and total liabilities. and agencies of foreign banks, and Edge Act and agreement corporations (foreign-related 8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity and institutions). Excludes International Banking Facilities. Data are Wednesday values or pro equity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39. rata averages of Wednesday values. Large domestic banks constitute a universe; data for 9. Includes mortgage-backed securities issued by U.S. government agencies, U.S. small domestic banks and foreign-related institutions are estimates based on weekly samples government-sponsored enterprises, and private entities. and on quarter-end condition reports. Data are adjusted for breaks caused by reclassifications 10. Difference between fair value and historical cost for securities classified as availableof assets and liabilities. for-sale under FASB Statement No. 115. Data are reported net of tax effects. Data shown are The data for large and small domestic banks presented on pp. A17-19 are adjusted to restated to include an estimate of these tax effects. remove the estimated effects of mergers between these two groups. The adjustment for 11. Mainly commercial and industrial loans but also includes an unknown amount of credit mergers changes past levels to make them comparable with current levels. Estimated extended to other than nonfinancial businesses. quantities of balance sheet items acquired in mergers are removed from past data for the bank 12. Total amount outstanding. group that contained the acquired bank and put into past data for the group containing the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Financial Statistics □ March 2001 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING A. Commercial Paper Millions of dollars, seasonally adjusted, end of period Year ending December 2000 Item 1995 1996 1997 1998 1999 June July Aug. Sept. Oct. Nov. 1 All issuers .......................................................... 674,904 775,371 966,699 1,163,303 1,403,023 1,516,205 1,551,668 1,559,054 1,557,700 1,587,591 1,624,421 Financial companies’ 2 Dealer-placed paper, total2........................... 275,815 361,147 513,307 614,142 786,643 884,578 900,651 905,634 899,853 912,739 960,701 3 Directly placed paper, total3........................ 210,829 229,662 252,536 322,030 337,240 300,718 309,076 303,307 315,039 328,049 312,438 4 Nonfinancial companies4 ................................. 188,260 184,563 200,857 227,132 279,140 330,909 341,941 350,113 342,809 346,803 351,282 1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, 3. As reported by financial companies that place their paper directly with investors. personal, and mortgage financing; factoring, finance leasing, and other business lending; 4. Includes public utilities and firms engaged primarily in such activities as communica­ insurance underwriting; and other investment activities. tions, construction, manufacturing, mining, wholesale and retail trade, transportation, and 2. Includes all financial-company paper sold by dealers in the open market. services. B. Bankers Dollar Acceptances1 Millions of dollars, not seasonally adjusted, year ending September2 Item 1997 1998 1999 2000 1 Total amount of reporting banks’ acceptances in existence......................................................................... 25,774 14,363 10,094 9,881 2 Amount of other banks’ eligible acceptances held by reporting banks............................................................ 736 523 461 462 3 Amount of own eligible acceptances held by reporting banks (included in item 1)...................................... 6,862 4,884 4,261 3,789 4 Amount of eligible acceptances representing goods stored in, or shipped between, foreign countries (included in item 1) ............................................................................................................................................ 10,467 5,413 3,498 3,689 1. Includes eligible, dollar-denominated bankers acceptances legally payable in the United 2. Data on bankers dollar acceptances are gathered from approximately 40 institutions; States. Eligible acceptances are those that are eligible for discount by Federal Reserve Banks; includes U.S. chartered commerical banks (domestic and foreign offices), U.S. branches and that is, those acceptances that meet the criteria of Paragraph 7 of Section 13 of the Federal agencies of foreign banks, and Edge and agreement corporations. The reporting group is Reserve Act (12 U.S.C. §372). revised every year. 1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans' Percent per year Date of change Rate Period Av r e a r te age Period Av r e a r t a e ge Period Av r e a r t a e ge 1998—Jan. 1 .......................... 8.50 1998 ............................................. 8.35 1999 Jail..................................... 7.75 2000—Jan.................................... 8 50 Sept. 30 .......................... 8.25 1999 ............................................. 8.00 Feb.................................... 7.75 Feb.................................... 8.73 Oct. 16 .......................... 8.00 2000 ............................................. 9.23 Mar.................................... 7.75 Mar.................................... 8.83 Nov. 18.......................... 7.75 Apr.................................... 7.75 Apr.................................... 9.00 1998—Jan..................................... 8.50 Mav ................................. 7.75 May................................. 9.24 1999 July 1 .......................... 8.00 Feb.................................... 8.50 7 75 9 50 Aug. 25 .......................... 8.25 Mar.................................... 8.50 July.................................. 8.00 July.................................. 9.50 Nov. 17 .......................... 8.50 Apr..................................... 8.50 Aug................................... 8.06 Aug................................... 9.50 May ................................. 8.50 Sept................................... 8.25 Sept................................... 9.50 2000—Feb. 3 .......................... 8.75 June ................................. 8.50 Oct..................................... 8.25 Oct..................................... 9.50 Mar. 22.......................... 9.00 July.................................. 8.50 Nov.................................... 8.37 Nov.................................... 9.50 May 17.......................... 9.50 8.50 8.50 9 50 Sept................................... 8.49 2001—Jan. 4.......................... 9.00 Oct..................................... 8.12 2001—Jan..................................... 9.05 Feb 1 ............. 8.50 7.89 Dec.................................... 7.75 1. The prime rate is one of several base rates that banks use to price short-term business Report. Data in this table also appear in the Board’s H.15 (519) weekly and G.13 (415) loans. The table shows the date on which a new rate came to be the predominant one quoted monthly statistical releases. For ordering address, see inside front cover, by a majority of the twenty-five largest banks by asset size, based on the most recent Call Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 2000 2000, week ending Item 1999 2000 Sept. Oct. Nov. Dec. Dec. 1 Dec. 8 Dec. 15 Dec. 22 Dec. 29 Money Market Instruments 1 Federal funds1-2'3................................................... 5.35 4.97 6.24 6.52 6.51 6.51 6.40 6.50 6.57 6.47 6.53 6.48 2 Discount window borrowing2'4 ........................ 4.92 4.62 5.73 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Commercial paper'’5'6 Nonfinancial 3 1 -month .............................................................. 5.40 5.09 6.27 6.48 6.48 6.49 6.51 6.51 6.52 6.53 6.51 6.45 4 2-month .............................................................. 5.38 5.14 6.29 6.47 6.48 6.52 6.42 6.53 6.48 6.42 6.41 6.36 5 -3-month .............................................................. 5.34 5.18 6.31 6.47 6.51 6.50 6.34 6.50 6.43 6.33 6.28 6.28 Financial 6 1-month .............................................................. 5.42 5.11 6.28 6.49 6.48 6.49 6.52 6.49 6.54 6.54 6.54 6.45 7 2-month .............................................................. 5.40 5.16 6.30 6.48 6.47 6.54 6.42 6.55 6.48 6.45 6.39 6.33 8 3-month .............................................................. 5.37 5.22 6.33 6.47 6.52 6.52 6.33 6.51 6.43 6.36 6.28 6.21 Commercial paper (historical)3'5'7 9 1 -month .............................................................. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 3-month .............................................................. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11 6-month .............................................................. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Finance paper, directly placed (historical)3'5'8 12 1-month .............................................................. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13 3-month .............................................................. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 6-month .............................................................. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Bankers acceptances3'5'9 15 3-month .............................................................. 5.39 5.24 6.23 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16 6-month .............................................................. 5.30 5.30 6.37 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Certificates of deposit, secondary market*'10 17 1-month .............................................................. 5.49 5.19 6.35 6.56 6.55 6.56 6.62 6.62 6.67 6.63 6.59 6.55 18 3-month .............................................................. 5.47 5.33 6.46 6.60 6.67 6.65 6.45 6.63 6.54 6.49 6.40 6.32 19 6-month .............................................................. 5.44 5.46 6.59 6.68 6.65 6.63 6.30 6.60 6.42 6.36 6.21 6.11 20 Eurodollar deposits. 3-month3'11 ...................... 5.45 5.31 6.45 6.59 6.66 6.64 6.43 6.62 6.52 6.47 6.39 6.31 U.S. Treasury hills Secondary market3'5 21 3-month .............................................................. 4.78 4.64 5.82 6.00 6.11 6.17 5.77 6.08 5.94 5.89 5.51 5.66 22 6-month .............................................................. 4.83 4.75 5.90 5.98 6.04 6.06 5.68 5.98 5.81 5.78 5.53 5.50 23 1-year ................................................................... 4.80 4.81 5.78 5.79 5.72 5.84 5.33 5.71 5.47 5.44 5.18 5.11 Auction high3'512 24 3-month .............................................................. 4.81 4.66 5.66 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 25 6-month .............................................................. 4.85 4.76 5.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 26 1-year ................................................................... 4.85 4.78 5.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. U.S. Treasury Notes and Bonds Constant maturities'3 27 1-year ................................................................... 5.05 5.08 6.11 6.13 6.01 6.09 5.60 6.00 5.78 5.73 5.44 5.34 28 2-year................................................................... 5.13 5.43 6.26 6.08 5.91 5.88 5.35 5.71 5.49 5.46 5.23 5.12 29 3-year ................................................................... 5.14 5.49 6.22 6.02 5.85 5.79 5.26 5.61 5.41 5.35 5.12 5.06 30 5-year ................................................................... 5.15 5.55 6.16 5.93 5.78 5.70 5.17 5.52 5.33 5.25 5.02 4.98 31 7-year ................................................................... 5.28 5.79 6.20 5.98 5.84 5.78 5.28 5.60 5.41 5.34 5.14 5.16 32 10-year ................................................................. 5.26 5.65 6.03 5.80 5.74 5.72 5.24 5.56 5.39 5.29 5.10 5.10 33 20-year ................................................................ 5.72 6.20 6.23 6.09 6.04 5.98 5.64 5.84 5.73 5.65 5.56 5.58 34 30-year................................................................ 5.58 5.87 5.94 5.83 5.80 5.78 5.49 5.66 5.57 5.49 5.43 5.44 Composite 35 More than )0 years (long-term)........................ 5.69 6.14 6.41 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. State and Local Notes and Bonds Moody’s series14 36 Aaa .......................................................................... 4.93 5.28 5.58 5.40 5.46 5.38 5.11 5.36 5.19 5.12 5.07 5.07 37 Baa............................................................................ 5.14 5.70 6.19 6.12 6.22 6.17 5.85 6.13 6.01 5.81 5.79 5.79 38 Bond Buyer series15............................................... 5.09 5.43 5.71 5.56 5.59 5.54 5.22 5.46 5.34 5.25 5.16 5.14 Corporate Bonds 39 Seasoned issues, all industries16........................ 6.87 7.45 7.98 7.98 7.95 7.90 7.65 7.81 7.72 7.65 7.58 7.59 Rating group 40 Aaa ......................................................................... 6.53 7.05 7.62 7.62 7.55 7.45 7.21 7.37 7.29 7.21 7.16 7.15 41 Aa ............................................................................ 6.80 7.36 7.83 7.83 7.81 7.75 7.48 7.67 7.57 7.48 7.40 7.40 42 A .............................................................................. 6.93 7.53 8.11 8.13 8.11 8.09 7.88 8.02 7.94 7.88 7.82 7.83 43 Baa............................................................................ 7.22 7.88 8.36 8.35 8.34 8.28 8.02 8.19 8.10 8.03 7.95 7.97 Memo Dividend price ratio17 44 Common stocks..................................................... 1.49 1.25 1.15 1.10 1.15 1.16 1.19 1.19 1.17 1.16 1.26 1.18 Note. Some of the data in this table also appear in the Board’s H.15 (519) weekly and 9. Representative closing yields for acceptances of the highest-rated money center banks. G. 13 (4)5) monthly statistical releases. For ordering address, see inside front cover. 10. An average of dealer offering rates on nationally traded certificates of deposit. 1. The daily effective federal funds rate is a weighted average of rates on trades through 11. Bid rates for eurodollar deposits collected around 9:30 a.m. Eastern time. Data are for New York brokers. indication purposes only. 2. Weekly figures are averages of seven calendar days ending on Wednesday of the 12. Auction date for daily data; weekly and monthly averages computed on an issue-date current week; monthly figures include each calendar day in the month. basis. On or after October 28, 1998, data are stop yields from uniform-price auctions. Before 3. Annualized using a 360-day year or bank interest. that, they are weighted average yields from multiple-price auctions. 4. Rate for the Federal Reserve Bank of New York. 13. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Depart­ 5. Quoted on a discount basis. ment of the Treasury. 6. Interest rates interpolated from data on certain commercial paper trades settled by the 14. General obligation bonds based on Thursday figures; Moody’s Investors Service. Depository Trust Company. The trades represent sales of commercial paper by dealers or 15. State and local government general obligation bonds maturing in twenty years are used direct issuers to investors (that is, the offer side). See Board’s Commercial Paper Web pages in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys’ (http://www.federalreserve.gov/releases/cp) for more information. A1 rating. Based on Thursday figures. 7. An average of offering rates on commercial paper for firms whose bond rating is AA or 16. Daily figures from Moody’s Investors Service. Based on yields to maturity on selected the equivalent. Series ended August 29, 1997. long-term bonds. 8. An average of offering rates on paper directly placed by finance companies. Series 17. Standard & Poor’s corporate series. Common stock ratio is based on the 500 stocks in ended August 29, 1997. the price index. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Financial Statistics □ March 2001 1.36 STOCK MARKET Selected Statistics 2000 Apr. May June July Aug. Sept. Oct. Nov. Dec. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50)...................... 550.65 619.52 643.71 646.82 640.07 649.61 653.27 666.14 667.05 646.53 646.64 645.44 2 Industrial................................................. 684.35 775.29 809.40 822.76 814.75 819.54 825.28 837.23 829.99 797.00 800.88 792.66 3 Transportation........................................ 468.61 491.62 414.73 406.14 411.50 395.09 410.67 419.84 404.23 403.20 434.92 457.53 4 Utility ..................................................... 190.52 284.82 478.99 502.78 487.17 501.93 484.19 459.91 463.76 469.16 455.66 444.16 5 Finance ................................................... 516.65 530.97 552.48 524.05 523.22 544.51 556.32 597.17 616.89 587.76 600.45 621.62 6 Standard & Poor’s Corporation (1941-43 = 10)'............................. 1,085.50 1,327.33 1,427.22 1,461.36 1,461.96 1,485.46 1,468.06 1,390.14 1,375.04 1,330.93 7 American Stock Exchange (Aug. 31, 1973 = 50)2 .................. 930.66 920.54 952.74 913.64 892.60 870.16 Volume of trading (thousands of shares) 8 New York Stock Exchange .................... 666,534 799,554 1,026,867 1,047,960 893,896 971,137 941,694 875,087 1,026,597 1,167,025 1,015,606 1,183,149 9 American Stock Exchange...................... 28,870 32,629 51,437 63,054 44,146 42,490 36,486 35,695 47,047 57,915 58,541 73,759 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3.................. 1,685,820 2,130,152 2,921376 251,700 240,660 247,200 244,970 247,560 250,780 233,376 219,110 198,790 Free credit balances at brokers4 11 Margin accounts5 ................................................. 405,180 532,500 867,610 65,930 66,170 64,970 71,730 68,020 70,959 83,131 96,730 100,680 12 Cash accounts........................................................ 633,725 757,345 918,917 76,190 73,500 74,140 74,970 72,640 74,766 73,271 74,050 84,400 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks........................................................ 70 80 65 55 65 50 14 Convertible bonds ............................................... 50 60 50 50 50 50 15 Short sales.............................................................. 70 80 65 55 65 50 1. In July 1976 a financial group, composed of banks and insurance companies, was added 6. Margin requirements, stated in regulations adopted by the Board of Governors pursuant to the group of stocks on which the index is based. The index is now based on 400 industrial to the Securities Exchange Act of 1934, limit the amount of credit that can be used to stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and purchase and carry “margin securities” (as defined in the regulations) when such credit is 40 financial. collateralized by securities. Margin requirements on securities are the difference between the 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting market value (100 percent) and the maximum loan value of collateral as prescribed by the previous readings in half. Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1, 3. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 1971. included credit extended against stocks, convertible bonds, stocks acquired through the On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the exercise of subscription rights, corporate bonds, and government securities. Separate report­ initial margin required for writing options on securities, setting it at 30 percent of the current ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the April 1984. required initial margin, allowing it to be the same as the option maintenance margin required 4. Free credit balances are amounts in accounts with no unfulfilled commitments to by the appropriate exchange or self-regulatory organization; such maintenance margin rules brokers and are subject to withdrawal by customers on demand. must be approved by the Securities and Exchange Commission. 5. Series initiated in June 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A25 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year Type of account or operation 2000 1998 1999 2000 July Aug. Sept. Oct. Nov. Dec. US. budget1 1 Receipts, total .......................................................... 1,721,798 1,827,454 2,025,038 134,074 138,128 219,471 135,111 125,666 200,489 2 On-budget ............................................................ 1,305,999 1,382,986 1,544,455 97,681 101,429 176,692 101,121 89,216 161,737 3 Off-budget ............................................................ 415,799 444,468 480,583 36,393 36,699 42,779 33,990 36,450 38,752 4 Outlays, total ............................................................ 1,652,224 1,702,942 1,788,140 129,013 148,555 153,744 146,431 149,356 167,823 5 On-budget ............................................................ 1,335,948 1,382,262 1,457,376 99,404 115,539 114,748 115,840 116,737 132,747 6 Off-budget ............................................................ 316,604 320,778 330,765 29,609 33,016 38,901 30,592 32,619 35,075 7 Surplus or deficit (-), total.................................... 69,246 124,414 236,897 5,061 -10,427 65,727 -11,321 -23,690 32,666 8 On-budget ............................................................ -29,949 724 87,079 -1,723 -14,110 61,944 -14,719 -27,521 28,990 9 Off-budget ............................................................ 99,195 123,690 149,818 6,784 3,683 3,878 3,398 3,831 3,677 Source of financing (total) 10 Borrowing from the public .................................... -51,211 -88,674 -222,672 -31,307 9,995 -32,334 -29,666 41,325 -36,689 11 Operating cash (decrease, or increase (—)) ............. 4,743 -17,580 3,799 23,384 20,873 -39,479 42,653 -1,431 -9,632 12 Other2......................................................................... -22,778 -18,160 -17,327 2,862 -20,441 6,086 — 1,666 -16,204 13,655 Memo 13 Treasury operating balance (level, end of period)................................................................ 38,878 56,458 52,659 34,053 13,180 52,659 10,006 11,437 21,069 14 Federal Reserve Banks ...................................... 4,952 6,641 8,459 5,392 5,961 8,459 5,360 4,382 5,149 15 Tax and loan accounts........................................ 33,926 49,817 44,199 28,661 7,218 44,199 4,646 7,055 15,920 1. Since 1990, off-budget items have been the social security trust funds (Federal Old-Age, net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loan- Survivors, and Disability Insurance) and the U.S. Postal Service. valuation adjustment; and profit on sale of gold. 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the SOURCE. Monthly totals: U.S. Department of the Treasury, Monthly Treasury Statement of International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets; Receipts and Outlays of the U.S. Government; fiscal year totals: U.S. Office of Management accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous and Budget, Budget of the U.S. Government when available. liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Financial Statistics □ March 2001 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year Source or type 1999 2000 2000 1999 2000r HI H2 HI H2 Oct. Nov. Dec. Receipts 1 AH sources................................................................ 1,827,454 2,025,200 966,045 892,266 1,089,760 952,939 135,111 125,666 200,489 2 Individual income taxes, net................................. 879,480 1,004,500 481,907 425,451 550,208 458,679 75,969 60,489 83,485 3 Withheld................................................................ 693,940 780,397 351,068 372,012 388,526 395,572 68,287 62,855 78,133 4 Nonwithheld.......................................................... 308.185 358,049 240,278 68,302 281,103 77,732 8,799 2,320 6,468 5 Refunds................................................................... 122,706 134,046 109,467 14,841 119,477 14,628 1,118 4,686 1,116 Corporation income taxes 6 Gross receipts........................................................ 216,324 235,655 106,861 110,111 119,166 123,962 7,113 4,292 53,192 7 Refunds................................................................... 31,645 28,367 17,092 13,996 13,781 15,776 5,404 2,245 1,886 8 Social insurance taxes and contributions, net .. . 611,833 652,900 324,831 292,551 353,514 310,122 47,155 51,383 53,559 9 Employment taxes and contributions2............. 580,880 620,447 306,235 280,059 333,584 297,665 45,247 48,536 52,932 10 Unemployment insurance.................................... 26,480 27,641 16,378 10,173 17,562 10,097 1,509 2,431 260 11 Other net receipts3............................................... 4,473 4,763 2,216 2,319 2,368 2,360 399 416 367 12 Excise taxes .............................................................. 70,414 68,900 31,015 34,262 33,532 35,501 4,235 6,030 5,865 13 Customs deposits..................................................... 18.336 19,900 8,440 10,287 9,218 10,676 1,900 1,640 1,461 14 Estate and gift taxes................................................. 27,782 29,000 14.915 14,001 15,073 13,216 2,868 2,141 1,863 15 Miscellaneous receipts4.......................................... 34,929 42,800 15,140 19,569 22,831 16,556 1,275 1,935 2,949 Outlays 16 All types ................................................................... 1,702,942 1,789,000 817,227 882,465 892,947 894,922 146,431 149,356 167,823 17 National defense ..................................................... 274,873 294,500 134,414 149,573 143,476 147,651 21,478 24,445 29,176 18 International affairs ................................................. 15,243 17,200 6,879 8,530 7,250 11,902 1,795 1,326 4,828 19 General science, space, and technology ............. 18,125 18.600 9,319 10,089 9,601 10,389 1,676 1,776 1,868 20 Energy ....................................................................... 912 -1,100 797 -90 -893 -595 -1,200 74 182 21 Natural resources and environment...................... 23.970 25,000 10,351 12,100 10,814 12,907 2,132 2,100 2,083 22 Agriculture................................................................ 23,011 36,600 9,803 20,887 11,164 20,977 5,025 3,547 3,618 23 Commerce and housing credit............................... 2.649 3,200 -1,629 7,353 -2,497 4,408 843 -709 555 24 Transportation .......................................................... 42,531 46,900 17,082 23,199 21,054 25,841 4,729 4,221 4,035 25 Community and regional development................ 11,870 10,600 5,368 6,806 5,050 5,962 1,211 1,133 822 26 Education, training, employment, and social services ................................................. 56,402 59,400 29,003 27,532 31,234 29,263 5,061 5,014 6,122 27 Health......................................................................... 141,079 154,500 69.320 74,490 75,871 81,413 14,799 13,111 12,975 28 Social security and Medicare ............................... 580,488 606,500 261,146 295,030 306,966 307,473 51,766 51,481 54,224 29 Income security ........................................................ 237,707 247,900 126,552 113,504 133,915 113,212 16,485 18,950 23,882 30 Veterans benefits and services ............................. 43,212 47,100 20,105 23,412 23,174 22,615 2,222 3,644 5,520 31 Administration of justice........................................ 25,924 28,000 13,149 13,459 13,981 14,635 2,545 2,741 2,495 32 General government ............................................... 15,771 13,200 6,641 7,010 6,198 6,461 1,239 1,134 1,205 33 Net interest5.............................................................. 229,735 223.200 116,655 112,420 115,545 104,685 18,399 18,916 17,122 34 Undistributed offsetting receipts6........................... -40,445 -42,600 -17,724 -22,850 -19,346 -24,070 -3,775 -3,547 -2,889 1. Functional details do not sum to total outlays for calendar year data because revisions to 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. monthly totals have not been distributed among functions. Fiscal year total for receipts and 5. Includes interest received by trust funds. outlays do not correspond to calendar year data because revisions from the Budget have not 6. Rents and royalties for the outer continental shelf, U.S. government contributions for been fully distributed across months. employee retirement, and certain asset sales. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. Source. Fiscal year totals: U.S. Office of Management and Budget, Budget of the U.S. 3. Federal employee retirement contributions and civil service retirement and Government, Fiscal Year 200I\ monthly and half-year totals: U.S. Department of the Trea­ disability fund. sury, Monthly Treasury Statement of Receipts and Outlays of the US. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A27 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1998 1999 2000 Item Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding....................................................... 5,643 5,681 5,668 5,685 5,805 5,802 5,714 5,702 5,690 2 Public debt securities ................................................................ 5,614 5,652 5,639 5,656 5,776 5,773 5,686 5,674 5,662 3 Held by public ....................................................................... 3,787 3,795 3,685 3,667 3,716 3,688 3,496 n.a. n.a. 4 Held by agencies .................................................................. 1,827 1,857 1,954 1,989 2,061 2,085 2,190 n.a. n.a. 5 Agency securities ....................................................................... 29 29 29 29 29 28 28 28 27 6 Held by public ....................................................................... 29 28 28 28 28 28 28 n.a. n.a. 7 Held by agencies .................................................................. 1 1 1 1 1 0 0 n.a. n.a. 8 Debt subject to statutory limit ............................................ 5,530 5,566 5,552 5,568 5,687 5,687 5,601 5,592 5,581 9 Public debt securities ................................................................ 5,530 5,566 5,552 5,568 5,687 5,686 5,601 5,591 5,580 10 Other debt1 .................................................................................. 0 0 0 0 0 0 0 0 0 Memo 11 Statutory debt limit .................................................................. 5,950 5,950 5,950 5,950 5,950 5,950 5,950 5,950 5,950 1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified SOURCE. U.S. Department of the Treasury, Monthly Statement of the Public Debt of the participation certificates, notes to international lending organizations, and District of Colum- United States and Treasury Bulletin. bia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 2000 Type and holder 1997 1998 1999 2000 Ql Q2 Q3 Q4 1 Total gross public debt ....................................................................................... 5,502.4 5,614.2 5,776.1 5,662.2 5,773.4 5,685.9 5,674.2 5,662.2 By type 2 Interest-bearing........................................................................................................ 5,494.9 5,605.4 5,766.1 5,618.1 5,763.8 5,675.9 5,622.1 5,618.1 3 Marketable .......................................................................................................... 3,456.8 3,355.5 3,281.0 2,966.9 3,261.2 3,070.7 2,992.8 2,966.9 4 Bills................................................................................................................... 715.4 691.0 737.1 646.9 753.3 629.9 616.2 646.9 5 Notes................................................................................................................. 2,106.1 1,960.7 1,784.5 1,557.3 1,732.6 1,679.1 1,611.3 1,557.3 6 Bonds ............................................................................................................... 587.3 621.2 643.7 626.5 653.0 637.7 635.3 626.5 7 Inflation-indexed notes and bonds' ............................................................ 33.0 67.6 100.7 121.2 107.4 109.0 115.0 121.2 8 Nonmarketable" .................................................................................................. 2,038.1 2,249.9 2,485.1 2,651.2 2,502.6 2,605.2 2,629.3 2,651.2 9 State and local government series.............................................................. 124.1 165.3 165.7 151.0 161.9 160.4 153.3 151.0 10 Foreign issues3 ............................................................................................... 36.2 34.3 31.3 27.2 28.8 27.7 25.4 27.2 11 Government ............................................................................................... 36.2 34.3 31.3 27.2 28.8 27.7 25.4 27.2 12 Public .......................................................................................................... .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes .............................................................................. 181.2 180.3 179.4 176.9 178.6 177.7 177.7 176.9 14 Government account series4 ....................................................................... 1,666.7 1,840.0 2,078.7 2,266.1 2,103.3 2,209.4 2,242.9 2,266.1 15 Non-interest-bearing............................................................................................... 7.5 8.8 10.0 44.2 9.6 10.1 52.1 44.2 By holder 5 16 U.S. Treasury and other federal agencies and trust funds ............................. 1,655.7 1,826.8 2,060.6 2,085.4 2,190.2 2,235.7 17 Federal Reserve Banks........................................................................................... 451.9 471.7 477.7 501.7 505.0 511.4 18 Private investors...................................................................................................... 3,414.6 3,334.0 3,233.9 3,182.8 2,987.4 2,936.2 19 Depository institutions ...................................................................................... 300.3 237.3 246.3 235.1 219.7 n.a. 20 Mutual funds ...................................................................................................... 321.5 343.2 348.6 338.9 318.6 n.a. 21 Insurance companies ......................................................................................... 176.6 144.5 125.3 n.a. 124.0 120.9 n.a. n.a. 22 State and local treasuries6 ................................................................................ 239.3 269.3 266.8 257.2 256.4 Individuals 23 Savings bonds...................................................................................................... 186.5 186.7 186.5 185.3 184.6 184.7 24 Pension funds ...................................................................................................... 359.4 374.4 384.5 385.9 384.5 n.a. 25 Private............................................................................................................... 142.5 157.8 171.3 174.8 175.5 n.a. 26 State and Local............................................................................................... 216.9 216.6 213.2 211.1 209.0 n.a. 27 Foreign and international7 ................................................................................ 1,241.6 1,278.7 1,268.8 1,273.9 1,248.9 1,225.2 28 Other miscellaneous investors6,8 ..................................................................... 589.5 498.8 407.1 382.5 253.8 n.a. 1. The U.S. Treasury first issued inflation-indexed securities during the first quarter of 1997. 7. Includes nonmarketable foreign series treasury securities and treasury deposit funds. 2. Includes (not shown separately) securities issued to the Rural Electrification Administra­ Excludes treasury securities held under repurchase agreements in custody accounts at the tion, depository bonds, retirement plan bonds, and individual retirement bonds. Federal Reserve Bank of New York. 3. Nonmarketable series denominated in dollars, and series denominated in foreign cur­ 8. Includes individuals, government-sponsored enterprises, brokers and dealers, bank rency held by foreigners. personal trusts and estates, corporate and noncorporate businesses, and other investors. 4. Held almost entirely by U.S. Treasury and other federal agencies and trust funds. SOURCE. U.S. Treasury Department, data by type of security, Monthly Statement of the 5. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual Public Debt of the United States; data by holder, Treasury Bulletin. holdings; data for other groups are Treasury estimates. 6. In March 1996, in a redefinition of series, fully defeased debt backed by nonmarketable federal securities was removed from “Other miscellaneous investors” and added to “State and local treasuries.” The data shown here have been revised accordingly. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics □ March 2001 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 2000 2000, week ending Item Sept. Oct. Nov. Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 Outright Transactions2 By type of security 1 U.S. Treasury bills ................................. 24,438 26,999 33,213 38,246 38,933 32,325 22,990 35,664 44,451 28,399 30,087 29,272 Coupon securities, by maturity 2 Five years or less ............................... 117,915 139,243 116,403 136,248 123,038 114,912 86,544 120,857 200,827 140,926 136,050 97,687 3 More than five years........................... 69,458 67,524 62,146 70.445 68,022 62,882 49,039 59,954 95,819 90,414 89,936 45,923 4 Inflation-indexed ...................................... 1,490 1,987 1,033 831 938 643 1,071 1,446 1,420 1,563 1,527 907 Federal agency 5 Discount notes.......................................... 50,165 51,052 52,139 52,948 46,558 46,902 56,595 57,434 56,732 48,781 52,063 58,338 Coupon securities, by maturity 6 One year or less ................................. 1,160 1,082 1,094 1,317 1,324 1,024 974 749 1,980 1,415 1,962 2,292 7 More than one year, but less than or equal to five years ................ 9,860 12,597 9,936 9,580 10,633 11,754 6,812 9,376 17,403 11,269 9,880 6,012 8 More than five years........................... 9,925 11,659 7,450 15,584 7,445 6,924 5,193 7,128 14,019 17,255 13,377 6,324 9 Mortgage-backed...................................... 76,954 80,367 80,031 61,990 115,204 99,137 38,129 71,318 90,154 123,014 68,876 30,729 By type of counterparty With interdealer broker 10 U.S. Treasury........................................ 101,973 102,544 92,335 102,022 98,148 89,680 71,765 96,092 152,034 114,749 123,851 77,852 11 Federal agency .................................... 9,811 10,680 8,654 9,482 8,447 9,271 7,446 8,418 13,370 13,645 13,157 7,330 12 Mortgage-backed................................. 28,514 26,882 23,812 24,761 32,315 24,834 14,081 22,691 29,402 37,557 26,804 13,004 With other 13 U.S. Treasury........................................ 111,328 133,209 120,459 143,747 132,782 121,081 87,878 121,829 190,483 146,553 133,748 95,936 14 Federal agency .................................... 61,299 65,710 61,966 69,946 57,513 57,333 62,127 66,269 76,763 65,076 64,125 65,636 15 Mortgage-backed................................. 48,440 53,485 56,219 37,229 82,889 74,302 24,048 48,627 60,752 85,457 42,072 17,725 Futures Transactions3 By type of deliverable security 16 U.S. Treasury bills ................................. 0 0 0 0 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Coupon securities, by maturity 17 Five years or less ............................... 3,119 2,497 3,309 2,058 1,965 2,663 2,849 6,098 5,012 4,666 3,474 1,641 18 More than five years........................... 11,756 10,472 13,051 11,590 11,889 10,599 10,120 19,774 17,887 14,870 15,733 8,092 19 Inflation-indexed ...................................... 0 0 0 0 0 0 0 0 0 0 0 0 Federal agency 20 Discount notes.......................................... 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 21 One year or less ................................. 0 0 0 0 0 0 0 0 0 0 0 0 22 More than one year, but less than or equal to five years ................ 0 0 0 0 0 0 0 0 0 0 0 0 23 More than five years........................... 165 86 72 52 34 60 67 46 464 304 235 n.a. 24 Mortgage-backed...................................... 0 0 0 0 0 0 0 0 0 0 0 0 Options Transactions4 By type of underlying security 25 U.S. Treasury bills ................................. 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 26 Five years or less ............................... 1,350 1,217 1,548 1,412 2,012 1,285 1,879 900 1,361 1,940 1,317 1,265 27 More than five years........................... 3,382 3,829 3,619 3,939 4,820 3,605 2,926 3,048 3,105 5,870 4,757 2,419 28 Inflation-indexed ...................................... 0 0 0 0 0 0 0 0 0 0 0 0 Federal agency 29 Discount notes.......................................... 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 30 One year or less ................................. 0 0 0 0 0 0 0 0 0 0 0 0 31 More than one year, but less than or equal to five years ................ 38 0 n.a. 0 0 0 0 0 0 0 0 0 32 More than five years.......................... 6 102 124 n.a. 0 320 n.a. 104 36 n.a. 12 0 33 Mortgage-backed...................................... 1,097 1,189 1,272 638 2,510 703 1,353 360 1,242 945 1,674 1,077 1. Transactions are market purchases and sales of securities as reported to the Federal Forward transactions are agreements made in the over-the-counter market that specify Reserve Bank of New York by the U.S. government securities dealers on its published list of delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt primary dealers. Monthly averages are based on the number of trading days in the month. securities are included when the time to delivery is more than five business days. Forward Transactions are assumed to be evenly distributed among the trading days of the report week. contracts for mortgage-backed agency securities are included when the time to delivery is Immediate, forward, and futures transactions are reported at principal value, which does not more than thirty business days. include accrued interest; options transactions are reported at the face value of the underlying 3. Futures transactions are standardized agreements arranged on an exchange. All futures securities. transactions are included regardless of time to delivery. Dealers report cumulative transactions for each week ending Wednesday. 4. Options transactions are purchases or sales of put and call options, whether arranged on 2. Outright transactions include immediate and forward transactions. Immediate delivery an organized exchange or in the over-the-counter market, and include options on futures refers to purchases or sales of securities (other than mortgage-backed federal agency securi­ contracts on U.S. Treasury and federal agency securities. ties) for which delivery is scheduled in five business days or less and “when-issued” NOTE, “n.a.” indicates that data are not published because of insufficient activity. securities that settle on the issue date of offering. Transactions for immediate delivery of mortgagebacked agency securities include purchases and sales for which delivery is scheduled in thirty business days or less. Stripped securities are reported at market value by maturity of coupon or corpus. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing' Millions of dollars 2000 2000, week ending Item Sept. Oct. Nov. Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Positions2 Net Outright positions3 By type of security 9,758 4,172 6,870 10,965 4,413 8,272 3,785 7,747 25,627 24,064 7,224 Coupon securities, by maturity -29,392 -30,472 -28,545 -32,896 -28,111 -29,549 -28,265 -28,265 -24,136 -21,555 -16,746 -17,375 -17,380 -11,005 -20,889 -10,054 -13,323 -10,171 -9,027 -11,230 -14,317 -13,971 2,452 3,125 3,015 3,526 3,084 3,334 3,410 2,366 1,560 1,872 1,867 Federal agency 37,057 33,428 29,599 30,822 29,824 30,166 29,728 27,784 34,622 30,133 28,910 Coupon securities, by maturity 13,999 13,990 16,088 14,176 14,896 17,318 16,125 16,263 16,245 15,876 16,878 7 More than one year, but less than 4,628 5,672 7,057 4,918 9,516 7,014 6,217 5,866 6,499 10,167 7,357 1,696 1,978 4,043 1,257 3,579 4,490 4,667 3,818 4,163 3,742 6,157 14,544 14,541 12,132 11,406 13,852 11,158 11,308 12,288 12,297 13,939 13,899 Net Futures Positions4 By type of deliverable security n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 0 Coupon securities, by maturity 4,480 1,995 1,921 3,304 3,902 1,220 2,458 274 -657 -423 20 1,600 1,365 -2,745 1,521 -515 -1,414 -3,844 -5,797 -2,879 -3,901 -2,960 0 0 0 0 0 0 0 0 0 0 0 Federal agency 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 0 0 0 0 0 0 0 0 0 0 0 16 More than one year, but less than or equal to five years .................... 0 0 0 0 0 0 0 0 0 0 0 -737 -1,232 -1,364 -1,175 -1,186 -1,356 -1,450 -1,541 -1,004 -740 -317 0 0 0 0 0 0 0 0 0 0 0 Net Options Positions By type of deliverable security 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 2,489 1,541 -1,768 949 -1,601 -1,587 —2,132 -2,218 -1,229 -283 98 1,242 771 -203 967 -13 323 54 -1,201 -1,201 -467 110 22 Inflation-indexed .......................................... 0 0 0 0 0 0 0 0 0 0 0 Federal agency 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 0 0 0 0 0 0 0 0 0 0 0 25 More than one year, but less than or equal to five years .................... 88 41 -209 24 -1 -304 -309 -266 -148 -597 -610 33 208 259 207 n.a. 248 206 306 427 378 534 27 Mortgage-backed.......................................... 4,328 3,895 2,892 4,377 2,118 1,661 4,107 3,658 1,575 2,767 2,494 Financing5 Reverse repurchase agreements 28 Overnight and continuing........................... 282,991 289,809 310,115 314,011 300,565 326,471 279,769 327,590 348,676 328,712 335,487 29 Term .............................................................. 777,783 832,733 824,867 869,730 909,956 758,572 825,576 799,505 821,004 826,114 845,610 Securities borrowed 30 Overnight and continuing........................... 283,528 289,467 271,420 281,225 283,982 279,538 263,438 259,282 257,697 261,575 263,144 31 Term .............................................................. 114,413 117,80! 123,967 117,503 120,515 120,590 127,509 126,942 132,603 135,102 138,700 Securities received as pledge 32 Overnight and continuing........................... 2,232 2,228 2,748 2,214 2,527 2,599 2,909 3.001 2,971 2,742 n.a. 33 Term .............................................................. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Repurchase agreements 34 Overnight and continuing........................... 738,371 729,081 724,736 737,650 743,744 757,881 642,402 744,180 786,976 776,360 766,948 35 Term .............................................................. 707,207 772,976 796,328 818,047 860,069 717,776 848,419 759,746 769,715 778,736 803,143 Securities loaned 36 Overnight and continuing........................... 6,935 7,252 8,221 7,396 8,400 8,446 7,995 8,178 8,109 7,839 7,989 37 Term .............................................................. 6,189 5,314 4,465 4,984 4,498 4,410 4,418 4,461 4,459 4,478 4,143 Securities pledged 38 Overnight and continuing........................... 61,552 60,045 56,285 58,686 59,855 56,556 54,741 54,039 53,519 55,368 57,569 39 Term .............................................................. 4,432 4,689 3,981 4,564 4,560 4,162 3,345 3,757 4,109 4,315 4,227 Collateralized loans 40 Total................................................................ 22,972 27,796 26,695 26,455 26,942 27,820 28,222 23,245 30,783 24,367 26,876 1. Data for positions and financing are obtained from reports submitted to the Federal securities are included when the time to delivery is more than five business days. Forward Reserve Bank of New York by the U.S. government securities dealers on its published list of contracts for mortgage-backed agency securities are included when the time to delivery is primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar more than thirty business days. days of the report week are assumed to be constant. Monthly averages are based on the 4. Futures positions reflect standardized agreements arranged on an exchange. All futures number of calendar days in the month. positions are included regardless of time to delivery. 2. Securities positions are reported at market value. 5. Overnight financing refers to agreements made on one business day that mature on the 3. Net outright positions include immediate and forward positions. Net immediate posi­ next business day; continuing contracts are agreements that remain in effect for more than one tions include securities purchased or sold (other than mortgage-backed agency securities) that business day but have no specific maturity and can be terminated without advance notice by have been delivered or are scheduled to be delivered in five business days or less and either party; term agreements have a fixed maturity of more than one business day. Financing “when-issued” securities that settle on the issue date of offering. Net immediate positions for data are reported in terms of actual funds paid or received, including accrued interest. mortgage-backed agency securities include securities purchased or sold that have been NOTE, “n.a.” indicates that data are not published because of insufficient activity. delivered or are scheduled to be delivered in thirty business days or less. Forward positions reflect agreements made in the over-the-counter market that specify delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Financial Statistics □ March 2001 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 2000 Agency 1996 1997 1998 1999 June July Aug. Sept. Oct. 1 Federal and federally sponsored agencies .......................................... 925,823 1,022,609 1,296,477 1,616,492 1,706,709 1,726,016 1,763,089 1,776,334 ,, 2 Federal agencies ........................................................................................... 29,380 27,792 26,502 26,376 26,669 26,094 25,892 25,993 3 Defense Department1................................................................................ 6 6 6 6 6 6 6 6 4 Export-Import Bank2-3.............................................................................. 1,447 552 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Federal Housing Administration4.......................................................... 84 102 205 126 185 205 210 227 6 Government National Mortgage Association certificates of participation5 .................................................................................... n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7 Postal Service6........................................................................................... n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8 Tennessee Valley Authority ................................................................... 27,853 27,786 26,496 26,370 26,663 26,088 25,886 25,987 9 United States Railway Association6..................................................... n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 Federally sponsored agencies7 ................................................................... 896,443 994,817 1,269,975 1,590,116 1,680,040 1,699,922 1,737,197 1,750,341 11 Federal Home Loan Banks..................................................................... 263,404 313,919 382,131 529,005 568,438 565,037 572,836 580,579 576,689 12 Federal Home Loan Mortgage Corporation........................................ 156,980 169,200 287,396 360,711 384,286 399,370 412,656 406,936 422,960 13 Federal National Mortgage Association.............................................. 331,270 369,774 460,291 547,619 578,500 579,448 595,117 607,000 615,463 14 Farm Credit Banks8.................................................................................. 60,053 63,517 63,488 68,883 69,541 69,757 70,139 71,055 71,345 15 Student Loan Marketing Association9.............................................. 44,763 37,717 35,399 41,988 37,263 44,223 44,113 42,423 48,988 16 Financing Corporation10........................................................................... 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation" ............................... 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation12....................................................... 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 Memo 19 Federal Financing Bank debt13.............................................................. 58,172 49,090 44,129 42,152 38,513 38,143 38,040 42,837 n.a. Lending to federal and federally sponsored agencies 2 21 0 E Po x s p t o a r l t- S Im er p v o ic r e t 6 B .. a .. n .. k .. 3 ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . n 1 . , a 4 . 31 n.a. 552 T T T T T T > 22 Student Loan Marketing Association....................................................... n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 2 2 3 4 T U e n n i n te e d s s S e t e a t V es a l R le a y i l A w u ay th A or s i s ty o . c . i .. a .. t . i . o .. n ... 6 ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . n n . . a a . . n n . . a a . . 11 1 11 11 11 11 Other lending14 25 Farmers Home Administration .................................................................. 18,325 13,530 9,500 6,665 6,040 5,760 5,660 5,540 26 Rural Electrification Administration.......................................................... 16,702 14,898 14,091 14,085 13,121 13,165 13,238 12,989 27 Other ............................................................................................................... 21,714 20,110 20,538 21,402 19,352 19,218 19,142 24,308 1. Consists of mortgages assumed by the Defense Department between 1957 and 1963 10. The Financing Corporation, established in August 1987 to recapitalize the Federal under family housing and homeowners assistance programs. Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987. 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. 11. The Farm Credit Financial Assistance Corporation, established in January 1988 to 3. On-budget since Sept. 30, 1976. provide assistance to the Farm Credit System, undertook its first borrowing in July 1988. 4. Consists of debentures issued in payment of Federal Housing Administration insurance 12. The Resolution Funding Corporation, established by the Financial Institutions Reform, claims. Once issued, these securities may be sold privately on the securities market. Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989. 5. Certificates of participation issued before fiscal year 1969 by the Government National 13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations Mortgage Association acting as trustee for the Farmers Home Administration; the Department issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the of Health, Education, and Welfare; the Department of Housing and Urban Development; the purpose of lending to other agencies, its debt is not included in the main portion of the table to Small Business Administration; and the Veterans Administration. avoid double counting. 6. Off-budget. 14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans 7. Includes outstanding noncontingent liabilities; notes, bonds, and debentures. Includes guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally Federal Agricultural Mortgage Corporation; therefore, details do not sum to total. Some data being small. The Farmers Home Administration entry consists exclusively of agency assets, are estimated. whereas the Rural Electrification Administration entry consists of both agency assets and 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is guaranteed loans. shown on line 17. 9. Before late 1982, the association obtained financing through the Federal Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A31 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 2000 Type of o is r s u u e s e or issuer, 1997 1998 1999 May June July Aug. Sept. Oct. Nov. Dec. 1 All issues, new and refunding1.............................................. 214,694 262,342 215,427 14,136 20,208 12,827 15,284 15,598 18,035 18,079 15,348 By type of issue 2 General obligation....................................................................... 69,934 87,015 73,308 6,051 8,581 4,256 5,194 6,888 5,871 5,044 5,060 3 Revenue ......................................................................................... 134,989 175,327 142,120 8,086 11,628 8,572 10,090 8,710 12,163 13,036 10,288 By type of issuer 4 State ............................................................................................... 18,237 23,506 16,376 1,102 2,907 783 1,011 2.022 3,005 1,942 1,640 5 Special district or statutory authority ................................... 134,919 178,421 152,418 9,639 13,520 8,545 10,728 10,152 11,224 12,311 1,053 6 Municipality, county, or township .......................................... 70,558 60,173 46,634 3,396 3,782 3,500 3,545 3,424 3,806 3,827 3,165 7 Issues for new capital.............................................................. 135,519 160,568 161,065 12,481 16,987 11,297 12,402 13,968 16,387 14,520 13,286 By use of proceeds 8 Education...................................................................................... 31,860 36,904 36,563 3,662 4,465 3,185 3,630 3,210 3,492 3,446 2,919 9 Transportation ............................................................................. 13,951 19,926 17,394 1,778 1,093 1,947 1,979 1,574 2,575 2,124 1,381 10 Utilities and conservation.......................................................... 12,219 21,037 15,098 537 1,141 353 1,409 1,408 1,272 1,973 1,307 11 Social welfare .............................................................................. 27,794 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12 Industrial aid ................................................................................ 6,667 8,594 9,099 585 1,150 632 281 387 730 500 615 35,095 42,450 47,896 3,557 5,776 2,543 3,564 5,243 6,558 3,787 4,264 1. Par amounts of long-term issues based on date of sale. SOURCE. Securities Data Company beginning January 1990; Investment Dealer’s 2. Includes school districts. Digest before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 2000 Type of o r is i s s u s e u , e o r ffering, 1997 1998 1999 Apr. May June July Aug. Sept. Oct. Nov. 929,256 1,128,491 1,072,866 61,963 62,939 100,615 65,511 82,752 94,492 62,466r 95,495 2 Bonds2 ................................................................... 811,376 1,001,736 941,298 40,941 58,233 92,742 57,476 69,875 88,102 53,345 84,094 By type of offering 3 Sold in the United States ................................. 708.188 923,771 818,683 36,724 45,986 75,271 40,753 56,133 73,516 47,415 76,383 4 Sold abroad .......................................................... 103.188 77,965 122,615 4,217 12,247 17,471 16,723 13,742 14,586 5,930 7,711 Memo 5 Private placements, domestic............................. n.a. n.a. n.a. 228 2,694 3,391 1,038 241 376 127r 5,534 By industry group 6 Nonfinancial.......................................................... 222,603 307,935 293,963 8,060 20,832 29,412 15,885 17,947 24,483 12,547 25,826 7 Financial................................................................ 588,773 693,801 647,335 32,881 37,401 63,331 41,592 51,928 63,619 40,799 58,269 8 Stocks3 ................................................................... 173,330 205,605 217,868 21,022 4,706 7,873 8,035 12,877 6,390 9,121 11,498 By type of offering 9 Pubiic ..................................................................... 117,880 126,755 131,568 21,022 4,706 7,873 8,035 12,877 6,390 9.121 11,498 10 Private placement4............................................... 55,450 78,850 86,300 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 11 Nonfinancial.......................................................... 60,386 74,113 110.284 16,763 4,522 6,521 7,773 8,645 6,205 8,278 10,791 12 Financial................................................................ 57,494 52,642 21.284 4,259 184 1,352 262 4,232 185 843 707 1. Figures represent gross proceeds of issues maturing in more than one year; they are the principal amount or number of units calculated by multiplying by the offering price. Figures exclude secondary offerings, employee stock plans, investment companies other than closedend, intracorporate transactions, and Yankee bonds. Stock data include ownership securities issued by limited partnerships. 2. Monthly data include 144(a) offerings. 3. Monthly data cover only public offerings. 4. Data are not available. SOURCE. Securities Data Company and the Board of Governors of the Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 2 Domestic Financial Statistics □ March 2001 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 2000 Item 1999 2000 May June July Aug. Sept. Oct. Nov.r Dec. 1 Saies of own shares2................................................... 1,791,894 2,279,522 172,718 181,866 166,815 179,890 159,809 169,071 143,412 170,462 2 Redemptions of own shares........................................ 1,621,987 2,057,780 162,984 161,462 151,717 159,027 147,644 153,067 138,791 161,421 3 Net sales3......................................................................... 169,906 221,742 9,735 20,404 15,098 20,864 12,166 16,004 4,621 9,041 4 Assets4.............................................................................. 5,233,191 5,121,401 5,232,319 5,458,914 5,392,308 5,745,264 5,550,176 5,442,937 4,993,008 5,121,401 5 Cash5................................................................................ 219,189 278,726 260,426 259,241 258,472 261,967 280,192 302,682 300,133 278,726 6 Other................................................................................ 5,014,002 4,842,675 4,971,892 5,199,673 5,133,836 5,483,298 5,269,984 5,140,255 4,692,875 4,842,675 1. Data include stock, hybrid, and bond mutual funds and exclude money market mutual 4. Market value at end of period, less current liabilities. funds, 5. Includes all U.S. Treasury securities and other short-term debt securities. 2. Excludes reinvestment of net income dividends and capital gains distributions and share SOURCE. Investment Company Institute. Data based on reports of membership, which issue of conversions from one fund to another in the same group. comprises substantially all open-end investment companies registered with the Securities and 3. Excludes sales and redemptions resulting from transfers of shares into or out of money Exchange Commission. Data reflect underwritings of newly formed companies after their market mutual funds within the same fund family. initial ofiFering of securities. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data at seasonally adjusted annual rates 1998 1999 2000 Account 1997 1998 1999 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 1 Profits with inventory valuation and capital consumption adjustment .................................... 833.8 815.0 856.0 803.4 852.0 836.8 842.0 893.2 936.3 963.6 970.3 2 Profits before taxes ................................................................... 792.4 758.2 823.0 742.3 797.6 804.5 819.0 870.7 920.7 942.5 945.1 3 Profits-tax liability..................................................................... 237.2 244.6 255.9 239.4 247.8 250.8 254.2 270.8 286.3 292.0 290.6 4 Profits after taxes....................................................................... 555.2 513.6 567.1 502.9 549.9 553.7 564.8 599.9 634.4 650.4 654.4 5 Dividends ................................................................................ 335.2 351.5 370.7 356.1 361.1 367.2 373.9 380.6 387.3 393.0 400.1 6 Undistributed profits ............................................................ 220.0 162.1 196.4 146.9 188.7 186.5 190.9 219.3 247.1 257.4 254.4 7 Inventory valuation................................................................... 8.4 17.0 -9.1 19.9 11.4 -8.9 -19.7 -19.2 -25.0 -13.6 -4.5 8 Capital consumption adjustment .......................................... 32.9 39.9 42.1 41.2 42.9 41.2 42.7 41.6 40.6 34.7 29.7 SOURCE. U.S. Department of Commerce, Survey of Current Business. 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities' Billions of dollars, end of period; not seasonally adjusted 1999 2000 Account 1998 1999 2000 Q2 Q3 Q4 Ql Q2 Q3 Q4 Assets 1 Accounts receivable, gross"................................................... 711.7 811.5 756.5 776.3 811.5 848.7 884.4 900.1 2 Consumer .............................................................................. 261.8 279.8 269.2 271.0 279.8 285.4 294.1 301.9 3 Business ................................................................................ 347.5 405.2 373.7 383.0 405.2 434.6 454.1 455.7 4 Real estate ........................................................................... 102.3 126.5 113.5 122.3 126.5 128.8 136.2 142.4 5 LESS: Reserves for unearned income ................................. 56.3 53.5 53.4 54.0 53.5 54.0 57.1 58.8 6 Reserves for losses ..................................................... 13.8 13.5 13.4 13.6 13.5 14.0 14.4 14.2 7 Accounts receivable, net ........................................................ 641.6 744.6 689.7 708.6 744.6 780.7 813.0 827.1 8 All other .................................................................................... 337.9 406.3 n.a. 373.2 368.5 406.3 412.7 418.3 441.4 n.a. 9 Total assets .............................................................................. 979.5 1,150.9 1,062.9 1,077.2 1,150.9 1,193.4 1,231.3 1,268.4 Liabilities and Capital 10 Bank loans ................................................................................ 26.3 35.1 25.1 27.0 35.1 28.5 32.5 35.4 11 Commercial paper ................................................................... 231.5 227.9 231.0 205.3 227.9 230.2 221.3 215.6 Debt 12 Owed to parent......................................................................... 61.8 123.8 65.4 84.5 123.8 145.1 137.1 144.3 13 Not elsewhere classified.......................................................... 339.7 397.0 383.1 396.2 397.0 412.0 445.4 465.5 14 All other liabilities ................................................................... 203.2 222.7 226.1 216.0 222.7 247.6 259.3 269.2 15 Capital, surplus, and undivided profits ............................... 117.0 144.5 132.2 148.2 144.5 130.1 135.6 138.3 16 Total liabilities and capital ................................................. 979.5 1,150.9 1,062.9 1,077.2 1,150.9 1,193.4 1,231.3 1,268.4 1. Includes finance company subsidiaries of bank holding companies but not of retailers 2. Before deduction for unearned income and losses. Excludes pools of securitized assets, and banks. Data are amounts carried on the balance sheets of finance companies; securitized pools are not shown, as they are not on the books. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A33 1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables1 Billions of dollars, amounts outstanding 2000 Type of credit 1997 1998 1999 June July Aug. Sept. Oct.' Nov. Seasonally adjusted 1Total ........................................................................................................ 810.5 875.8 993.9 1,076.9 1,089.1 1,094.1 1,112.1r 1,133.7 1,132.9 2 Consumer ........................................................................................... 327.9 352.8 385.3 401.4 405.9 411.1 419.7 437.3 438.9 3 Real estate ......................................................................................... 121.1 131.4 154.7 163.7 167.5 169.0 170.9 174.0 175.9 4 Business ............................................................................................. 361.5 391.6 453.9 511.7 515.8 514.1 521.6r 522.3 518.0 Not seasonally adjusted 5 Total ........................................................................................................ 818.1 884.0 1,003.2 1,082.3 1,082.2 1,087.9 l,106.8r 1,131.7 1,134.5 6 Consumer ........................................................................................... 330.9 356.1 388.8 403.9 408.3 412.3 421.0 437.9 440.5 7 Motor vehicles loans .................................................................. 87.0 103.1 114.7 126.5 129.4 130.7 130.1 131.8 127.8 8 Motor vehicle leases .................................................................. 96.8 93.3 98.3 103.9 104.4 105.4 104.6 104.3 104.0 9 Revolving" .................................................................................... 38.6 32.3 33.8 33.1 33.6 33.6 35.4 37.1 37.1 10 Other3 ............................................................................................. 34.4 33.1 33.1 30.7 31.5 32.3 31.7 31.9 32.0 Securitized assets4 11 Motor vehicle loans ................................................................ 44.3 54.8 71.1 74.1 74.5 76.2 78.8 84.3 91.5 12 Motor vehicle leases .............................................................. 10.8 12.7 9.7 7.9 7.6 7.4 7.2 7.0 6.8 13 Revolving .................................................................................. .0 8.7 10.5 11.1 10.9 10.7 17.2 25.8 25.8 14 Other........................................................................................... 19.0 18.1 17.7 16.6 16.4 16.2 16.0 15.7 15.5 15 Real estate ......................................................................................... 121.1 131.4 154.7 163.7 167.5 169.0 170.9 174.0 175.9 16 One- to four-family ..................................................................... 59.0 75.7 88.3 96.6 100.5 101.7 100.9 104.6 107.0 17 Other............................................................................................... 28.9 26.6 38.3 39.6 39.7 40.2 41.5 41.8 42.0 Securitized real estate assets4 18 One- to four-family ................................................................ 33.0 29.0 28.0 27.4 27.1 26.8 26.5 25.7 25.0 19 Other ........................................................................................... .2 .1 .2 .2 .2 .2 1.9 1.9 1.9 20 Business ............................................................................................. 366.1 396.5 459.6 514.7 506.4 506.7 514.9r 519.8 518.2 21 Motor vehicles .............................................................................. 63.5 79.6 87.8 94.5 89.4 89.6 94.1 95.9 93.3 22 Retail loans................................................................................ 25.6 28.1 33.2 33.8 34.1 34.3 34.8 34.7 32.3 23 Wholesale loans5 ..................................................................... 27.7 32.8 34.7 38.4 32.9 32.6 35.5 37.5 37.3 24 Leases ......................................................................................... 10.2 18.7 19.9 22.3 22.3 22.7 23.7 23.7 23.8 25 Equipment .................................................................................... 203.9 198.0 221.9 250.0 248.6 250.0 256.7 258.5 257.6 26 Loans ......................................................................................... 51.5 50.4 52.2 56.7 54.8 54.3 55.8 56.1 54.7 27 Leases ......................................................................................... 152.3 147.6 169.7 193.3 193.9 195.8 200.9 202.4 202.9 28 Other business receivables6 ....................................................... 51.1 69.9 95.5 109.7 109.4 108.3 104.9 103.7 103.2 Securitized assets4 29 Motor vehicles ......................................................................... 33.0 29.2 31.5 31.7 29.8 29.6 31.9r 34.2 37.0 30 Retail loans........................................................................... 2.4 2.6 2.9 2.9 2.8 2.7 2.4 2.3 3.1 31 Wholesale loans ................................................................... 30.5 24.7 26.4 26.4 24.6 24.5 27. lr 29.5 31.5 32 Leases .................................................................................... .0 1.9 2.1 2.4 2.4 2.4 2.4 2.4 2.4 33 Equipment.................................................................................. 10.7 13.0 14.6 22.3 22.5 22.4 21.4 21.7 21.3 34 Loans ....................................................................................... 4.2 6.6 7.9 15.8 16.0 15.9 15.1 14.9 14.6 35 Leases .................................................................................... 6.5 6.4 6.7 6.4 6.5 6.5 6.4 6.7 6.7 36 Other business receivables6..................................................... 4.0 6.8 8.4 6.6 6.8 6.8 5.8 5.8 5.8 NOTE. This table has been revised to incorporate several changes resulting from the before deductions for unearned income and losses. Components may not sum to totals benchmarking of finance company receivables to the June 1996 Survey of Finance Compa­ because of rounding. nies. In that benchmark survey, and in the monthly surveys that have followed, more detailed 2. Excludes revolving credit reported as held by depository institutions that are subsidiar­ breakdowns have been obtained for some components. In addition, previously unavailable ies of finance companies. data on securitized real estate loans are now included in this table. The new information has 3. Includes personal cash loans, mobile home loans, and loans to purchase other types of resulted in some reclassification of receivables among the three major categories (consumer, consumer goods, such as appliances, apparel, boats, and recreation vehicles. real estate, and business) and in discontinuities in some component series between May and 4. Outstanding balances of pools upon which securities have been issued; these balances June 1996. are no longer carried on the balance sheets of the loan originator. Includes finance company subsidiaries of bank holding companies but not of retailers and 5. Credit arising from transactions between manufacturers and dealers, that is, floor plan banks. Data in this table also appear in the Board’s G.20 (422) monthly statistical release. For financing. ordering address, see inside front cover. 6. Includes loans on commercial accounts receivable, factored commercial accounts, and 1. Owned receivables are those carried on the balance sheet of the institution. Managed receivable dealer capital; small loans used primarily for business or farm purposes; and receivables are outstanding balances of pools upon which securities have been issued; these wholesale and lease paper for mobile homes, campers, and travel trailers. balances are no longer carried on the balance sheets of the loan originator. Data are shown Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Financial Statistics □ March 2001 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 2000 Item 1998 1999 2000 June July Aug. Sept. Oct. Nov. Dec. Terms and yields in primary and secondary markets Primary Markets Terms' 1 Purchase price (thousands of dollars) 195.2 210.7 234.5 238.6 235.8 237.0 241.9 240.2 247.2 250.0 2 Amount of loan (thousands of dollars) . . . 151.1 161.7 177.0 178.3 178.3 179.7 182.5 180.4 184.2 187.3 3 Loan-to-price ratio (percent) ...................... 80.0 78.7 77.4 76.9 77.7 77.7 77.1 77.2 76.2 76.5 4 Maturity (years) ............................................_ 28.4 28.8 29.2 29.2 29.3 29.3 29.2 29.2 29.2 29.1 5 Fees and charges (percent of loan amount)' .77 .70 .69 .66 .70 .69 .69 .73 Yield (percent per year) 6 Contract rate1 ................................................. 6.95 6.94 7.41 7.40 7.41 7.44 7.41 7.43 7.36 7.29 7 Effective rate1'3.............................................. 7.08 7.06 7.52 7.50 7.51 7.54 7.52 7.53 7.47 7.40 8 Contract rate (HUD series)4........................ 7.00 7.45 Secondary Markets Yield (percent per year) 9 FHA mortgages (Section 203)5 7.04 7.74 10 GNMA securities6.................... 6.43 7.03 Activity in secondary markets Federal National Mortgage Association Mortgage holdings (end of period) 11 Total ........................................................................................... 414,515 523,941 610.122 552,166 561,045 568,187 574,087 586,756 598,951 610,122 12 FHA/VA insured.................................................................. 33,770 55,318 61,539 59,703 60,397 60,150 59,961 60,329 60,694 61,539 13 Conventional......................................................................... 380,745 468,623 548,583 492,463 500,648 508,037 514,126 526,427 538,257 548,583 14 Mortgage transactions purchased (during period)............. 188,448 195,210 154,231 12,842 15,128 13,352 11,501 18,444 17,322 17,193 Mortgage commitments (during period) 15 Issued7 ......................................................................................... 193,795 187,948 163,689 11,825 16,660 14,253 16,143 17,435 15,287 20,120 16 To sell8 ...................................................................................... 1,880 5,900 11,786 1,254 436 236 693 268 676 1,436 Federal Home Loan Mortgage Corporation Mortgage holdings (end of period)8 17 Total ........................................................................................... 255.010 324,443 385,693 350,836 354,020 357,002 361,624 365,198 372,819 385,693 18 FHA/VA insured.................................................................. 785 1,836 3,332 2,892 2,858 2,903 3,517 3,530 3,321 3,332 19 Conventional......................................................................... 254,225 322,607 382,361 347,944 351,162 354,099 358,107 361,668 369,498 382,361 Mortgage transactions (during period) 20 Purchases .................................................................................. 267,402 239,793 174,043 12,271 10,912 16,056 21,748 16,195 19,402 24,313 21 Sales ........................................................................................... 250,565 233,031 166,901 11,806 10,539 15,558 21,189 15,614 18,823 22,277 22 Mortgage commitments contracted (during period)9......... 281,899 228,432 169,231 13,596 10,803 17,468 19,481 17,915 20,012 21,780 1. Weighted averages based on sample surveys of mortgages originated by major institu­ 6. Average net yields to investors on fully modified pass-through securities backed by tional lender groups for purchase of newly built homes; compiled by the Federal Housing mortgages and guaranteed by the Government National Mortgage Association (GNMA), Finance Board in cooperation with the Federal Deposit Insurance Corporation. assuming prepayment in twelve years on pools of thirty-year mortgages insured by the 2. Includes all fees, commissions, discounts, and “points” paid (by the borrower or the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. seller) to obtain a loan. 7. Does not include standby commitments issued, but includes standby commitments 3. Average effective interest rate on loans closed for purchase of newly built homes, converted. assuming prepayment at the end of ten years. 8. Includes participation loans as well as whole loans. 4. Average contract rate on new commitments for conventional first mortgages; from U.S. 9. Includes conventional and government-underwritten loans. The Federal Home Loan Department of Housing and Urban Development (HUD). Based on transactions on the first Mortgage Corporation’s mortgage commitments and mortgage transactions include activity day of the subsequent month. under mortgage securities swap programs, whereas the corresponding data for FNMA 5. Average gross yield on thirty-year, minimum-downpayment first mortgages insured exclude swap activity. by the Federal Housing Administration (FHA) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A35 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1999 2000 Type of holder and property 1996 1997 1998 Q2 Q3 Q4 Ql Q2 1All holders .................................................................................................... 4,865,412 5,197,838 5,722,645 6,015,365 6,224,771 6,375,447 6,489,770 6,659,097 By type of property 2 One- to four-family residences.................................................................. 3,716,055 3,967,842 4,353,048 4,559,021 4,690,310 4,786,609 4,862,747 4,982,853 3 Multifamily residences ................................................................................ 288,579 301,838 329,813 348,658 359,323 373,189 381,699 392,919 4 Nonfarm, nonresidential .............................................................................. 773,643 837,859 943,278 1,008,048 1,073,743 1,112,686 1,141,577 1,175,641 5 Farm ............................................................................................................... 87,134 90,299 96,506 99,638 101,395 102,962 103,748 107,685 By type of holder 6 Major financial institutions......................................................................... 1,981,886 2,083,881 2,194,813 2,242,431 2,321,356 2,394,923 2,456,786 2,551,751 7 Commercial banks2.................................................................................. 1,145,389 1,245,315 1,337,217 1,361,365 1,418,819 1,495,502 1,546,816 1,614,307 8 One- to four-family.............................................................................. 677,603 745,510 797,492 790,372 827,291 879,552 904,581 948,496 9 Multifamily ........................................................................................... 45,451 49,670 54,116 60,529 63,964 67,591 72,431 75,713 10 Nonfarm, nonresidential .................................................................... 397,452 423,148 456,574 479,930 496,246 516,520 537,131 556,382 11 Farm ...................................................................................................... 24,883 26,986 29,035 30,536 31,320 31,839 32,673 33,717 12 Savings institutions3 ................................................................................ 628,335 631,726 643,957 656,518 676,346 668,634 680,745 701,992 13 One- to four-family............................................................................. 513,712 520,682 533,918 544,962 560,622 549,072 560,046 578,641 14 Multifamily ........................................................................................... 61,570 59,540 56,821 55,016 57,282 59,138 57,759 59,142 15 Nonfarm, nonresidential .................................................................... 52,723 51,150 52,801 56,096 57,983 59,948 62,447 63,691 16 Farm ...................................................................................................... 331 354 417 443 459 475 493 518 17 Life insurance companies....................................................................... 208,162 206,840 213,640 224,548 226,190 230,787 229,225 235,452 18 One- to four-family.............................................................................. 6,977 7,187 6,590 7,292 7,432 5,934 5,874 4,826 19 Multifamily ........................................................................................... 30,750 30,402 31,522 31,800 31,998 32,818 32,602 33,669 20 Nonfarm, nonresidential ..................................................................... 160,315 158,779 164,004 173,495 174,571 179,048 177,870 182,514 21 Farm ...................................................................................................... 10,120 10,472 11,524 11,961 12,189 12,987 12,879 14,444 22 Federal and related agencies ..................................................................... 295,192 286,194 293,613 289,519 322,572 322,352 323,145 334,715 23 Government National Mortgage Association...................................... 2 8 7 8 8 7 7 7 24 One- to four-family............................................................................. 2 8 7 8 8 7 7 7 25 Multifamily ........................................................................................... 0 0 0 0 0 0 0 0 26 Farmers Home Administration4 ............................................................ 41,596 41,195 40,851 40,766 73,705 73,871 72,899 72,896 27 One- to four-family.............................................................................. 17,303 17,253 16,895 16,653 16,583 16,506 16,456 16,435 28 Multifamily ........................................................................................... 11,685 11,720 11,739 11,735 11,745 11,741 11,732 11,729 29 Nonfarm, nonresidential ..................................................................... 6,841 7,370 7,705 7,943 41,068 41,355 40,509 40,554 30 Farm ...................................................................................................... 5,768 4,852 4,513 4,435 4,308 4,268 4,202 4,179 31 Federal Housing and Veterans’ Administrations............................... 6,244 3,811 3,674 3,490 3,889 3,712 3,794 3,845 32 One- to four-family.............................................................................. 3,524 1,767 1,849 1,623 2,013 1,851 1,847 1,832 33 Multifamily ........................................................................................... 2,719 2,044 1,825 1,867 1,876 1,861 1,947 2,013 34 Resolution Trust Corporation................................................................ 0 0 0 0 0 0 0 0 35 One- to four-family.............................................................................. 0 0 0 0 0 0 0 0 36 Multifamily ........................................................................................... 0 0 0 0 0 0 0 0 37 Nonfarm, nonresidential ..................................................................... 0 0 0 0 0 0 0 0 38 Farm ...................................................................................................... 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation .............................................. 2,431 724 361 189 163 152 98 72 40 One- to four-family.............................................................................. 365 109 54 28 24 23 15 11 41 Multifamily ........................................................................................... 413 123 61 32 28 26 17 12 42 Nonfarm, nonresidential ..................................................................... 1,653 492 245 129 111 103 67 49 43 Farm ...................................................................................................... 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association.............................................. 168,813 161,308 157,675 155,637 153,172 151,500 150,312 155,364 45 One- to four-family.............................................................................. 155,008 149,831 147,594 145,033 142,982 141,195 139,986 144,335 46 Multifamily ........................................................................................... 13,805 11,477 10,081 10,604 10,190 10,305 10,326 11,029 47 Federal Land Banks ................................................................................ 29,602 30,657 32,983 33,666 34,217 34,187 34,142 34,820 48 One- to four-family.............................................................................. 1,742 1,804 1,941 1,981 2,013 2,012 2,009 2,039 49 Farm ...................................................................................................... 0 0 0 0 0 0 0 0 50 Federal Home Loan Mortgage Corporation........................................ 46,504 48,454 57,085 54,282 55,695 56,676 57,009 56,972 51 One- to four-family.............................................................................. 41,758 42,629 49,106 43,574 44,010 44,321 43,384 42,892 52 Multifamily ........................................................................................... 4,746 5,825 7,979 10,708 11,685 12,355 13,625 14,080 53 Mortgage pools or trusts5........................................................................... 2,040,847 2,239,350 2,589,763 2,810,119 2,891,187 2,954,792 3,000,280 3,041,396 54 Government National Mortgage Association...................................... 506,246 536,879 537,446 553,196 569,038 582,263 589,203 590,903 55 One- to four-family.............................................................................. 494,064 523,225 522,498 537,287 552,670 565,189 571,517 572,856 56 Multifamily ........................................................................................... 12,182 13,654 14,948 15,909 16,368 17,074 17,686 18,047 57 Federal Home Loan Mortgage Corporation........................................ 554,260 579,385 646,459 718,085 738,581 749,081 757,106 768,641 58 One- to four-family.............................................................................. 551,513 576,846 643,465 714,844 735,088 744,619 752,607 763,890 59 Multifamily ........................................................................................... 2,747 2,539 2,994 3,241 3,493 4,462 4,499 4,751 60 Federal National Mortgage Association.............................................. 650,779 709,582 834,517 911,435 938,484 960,883 975,815 995,815 61 One- to four-family.............................................................................. 633,209 687,981 804,204 877,863 903,531 924,941 938,898 957,584 62 Multifamily ........................................................................................... 17,570 21,601 30,313 33,572 34,953 35,942 36,917 38,231 63 Farmers Home Administration4 ............................................................ 3 2 1 1 0 0 0 0 64 One- to four-family.............................................................................. 0 0 0 0 0 0 0 0 65 Multifamily ........................................................................................... 0 0 0 0 0 0 0 0 66 Nonfarm, nonresidential ..................................................................... 0 0 0 0 0 0 0 0 67 Farm ...................................................................................................... 3 2 1 1 0 0 0 0 68 Private mortgage conduits ..................................................................... 329,559 413,502 571,340 627,402 645,084 662,565 678,156 686,037 69 One- to four-family6........................................................................... 258,800 316,400 412,700 447,938 455,276 462,600 471,390 471,000 70 Multifamily ........................................................................................... 16,369 21,591 34,323 39,435 40,936 42,628 43,835 44,931 71 Nonfarm, nonresidential ..................................................................... 54,390 75,511 124,317 140,029 148,873 157,337 162,930 170,106 72 Farm ...................................................................................................... 0 0 0 0 0 0 0 0 73 Individuals and others7................................................................................ 547,486 588,413 644,456 673,297 689,656 703,379 709,560 731,235 74 One- to four-family.................................................................................. 360,476 376,574 413,770 428,202 439,219 446,771 449,496 467,572 75 Multifamily ............................................................................................... 68,572 71,651 73,081 74,090 74,629 77,016 78,074 79,272 76 Nonfarm, nonresidential ......................................................................... 100,269 121,409 137,632 150,428 154,892 158,375 160,622 162,345 77 Farm .......................................................................................................... 18,169 18,779 19,974 20,577 20,916 21,217 21,368 22,046 1. Multifamily debt refers to loans on structures of five or more units. 6. Includes securitized home equity loans. 2. Includes loans held by nondeposit trust companies but not loans held by bank trust 7. Other holders include mortgage companies, real estate investment trusts, state and local departments. credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and 3. Includes savings banks and savings and loan associations. finance companies. 4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from SOURCE. Based on data from various institutional and government sources. Separation of FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting nonfarm mortgage debt by type of property, if not reported directly, and interpolations and changes by the Farmers Home Administration. extrapolations, when required for some quarters, are estimated in part by the Federal Reserve. 5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by Line 69 from Inside Mortgage Securities and other sources. the agency indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Financial Statistics □ March 2001 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 2000 Holder and type of credit 1997 1998 1999 June July Aug. Sept. Oct. Nov. Seasonally adjusted 1 Total ..................................................................... 1,234,461 1,301,023 1,393,657 1,462,821 1,470,768 1,484,081 1,492,934 1,509,568 1,522,000 2 Revolving ............................................................ 531,163 560,504 595,610 634,652 638,406 645,121 649,297 656,666 662,800 3 Nonrevolving2 ................................................... 703,297 740,519 798,047 828,170 832,363 838,961 843,637 852,902 862,200 Not seasonally adjusted 4 Total ..................................................................... 1,264,103 1,331,742 1,426,151 1,454,035 1,463,292 1,486,048 1,495,627 1,513,688 1,529,800 By major holder 5 Commercial banks ............................................ 512,563 508,932 499,758 506,245 506,254 520,431 521,767 521,515 527,200 6 Finance companies............................................ 160,022 168,491 181,573 190,268 194,438 196,555 197,276 200,815 197,800 7 Credit unions ..................................................... 152,362 155,406 167,921 176,030 178,034 180,679 181,597 183,010 184,200 8 Savings institutions .......................................... 47,172 51,611 61,527 60,951 61,493 62,037 62,580 62,815 63,100 9 Nonfinancial business........................................ 78,927 74,877 80,311 73,500 71,956 73,030 72,091 70,842 73,800 10 Pools of securitized assets3............................... 313,057 372,425 435,061 447,041 451,117 453,316 460,316 474,691 483,800 By major tvpe of credit4 11 Revolving.............................................................. 555,858 586,528 623,245 627.909 630,633 641,298 645,820 654,678 664,300 12 Commercial banks ........................................ 219,826 210,346 189,352 194.793 194,496 204,016 202,362 201,874 206,100 13 Finance companies........................................ 38,608 32,309 33,814 33,063 33,565 33,558 35,405 37,147 37,051 14 Credit unions................................................... 19,552 19,930 20,641 20.172 20,476 20,796 20,783 20,804 21,246 15 Savings institutions........................................ 11,441 12,450 15,838 15.455 15,745 16,036 16,327 16,505 16,684 16 Nonfinancial business.................................... 44,966 39,166 42,783 37,098 36,078 36,669 35,817 34,484 36,430 17 Pools of securitized assets3........................... 221,465 272,327 320,817 327,328 330,273 330,223 335,126 343,833 345,946 18 Nonrevolving........................................................ 708,245 745,214 802,906 826,126 832,659 844,750 849,807 859,127 865,404 19 Commercial banks ........................................ 292,737 298,586 310,406 311,452 311,758 316,415 319,405 319,548 320,751 20 Finance companies........................................ 121,414 136,182 147,759 157,205 160,873 162,997 161,871 163,697 159,801 21 Credit unions................................................... 132,810 135,476 147,280 155,858 157,558 159,883 160,814 162,359 163,176 22 Savings institutions........................................ 35,731 39,161 45,689 45,496 45,748 46,001 46,253 46,310 46,367 23 Nonfinancial business.................................... 33,961 35,711 37,528 36,402 35,878 36,361 36,274 36,355 37,375 24 Pools of securitized assets3........................... 91,592 100,098 114,244 119,713 120,844 123,093 125,190 130,858 137,934 1. The Board’s series on amounts of credit covers most short- and intermediate-term credit 3. Outstanding balances of pools upon which securities have been issued; these balances extended to individuals, excluding loans secured by real estate. Data in this table also appear are no longer carried on the balance sheets of the loan originator. in the Board’s G.19 (421) monthly statistical release. For ordering address, see inside front 4. Totals include estimates for certain holders for which only consumer credit totals are cover. available. 2. Comprises motor vehicle loans, mobile home loans, and all other loans that are not included in revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be secured or unsecured. 1.56 TERMS OF CONSUMER CREDIT1 Percent per year except as noted 2000 Item 1997 1998 1999 May June July Aug. Sept. Oct. Nov. Interest Rates Commercial banks2 1 48-month new car ............................................ 9.02 8.72 8.44 9.21 n.a. n.a. 9.62 n.a. n.a. 9.63 2 24-month personal ............................................ 13.90 13.74 13.39 13.88 n.a. n.a. 13.85 n.a. n.a. 14.12 Credit card plan 3 All accounts ....................................................... 15.77 15.71 15.21 15.39 n.a. n.a. 15.98 n.a. n.a. 15.99 4 Accounts assessed interest ............................. 15.57 15.59 14.81 14.74 n.a. n.a. 15.35 n.a. n.a. 15.23 Auto finance companies 5 New car .............................................................. 7.12 6.30 6.66 6.51 6.40 6.55 7.46 7.16 4.74 5.44 6 Used car .............................................................. 13.27 12.64 12.60 13.47 13.58 13.64 13.70 13.91 13.87 13.53 Other Terms3 Maturity (months) 7 New car .............................................................. 54.1 52.1 52.7 53.5 55.6 55.6 55.7 55.9 57.6 57.3 8 Used car .............................................................. 51.0 53.5 55.9 57.1 57.3 57.2 57.2 57.0 57.0 56.8 Loan-to-value ratio 9 New car .............................................................. 92 92 92 93 92 92 92 91 93 93 10 Used car .............................................................. 99 99 99 99 99 100 100 100 100 100 Amount financed (dollars) 11 New car .............................................................. 18,077 19,083 19,880 20,621 20,349 20,406 20,664 21,010 22,069 22,443 12 Used car .............................................................. 12,281 12,691 13,642 14,132 14,245 14,269 14,166 13,950 13,978 14,325 1. The Board’s series on amounts of credit covers most short- and intermediate-term credit 2. Data are available for only the second month of each quarter, extended to individuals. Data in this table also appear in the Board’s. G.19 (421) monthly 3. At auto finance companies, statistical release. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A37 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1999 2000 Transaction category or sector 1995 1996 1997 1998 1999 Ql Q2 Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .. . 711.3 731.4 804.3 1,042.9 1,120.4 1,277.7 938.8 1,170.1 1,094.8 940.7 958.3 758.5 By sector and instrument 2 Federal government..................................................................... 144.4 145.0 23.1 -52.6 -71.2 -83.4 -98.5 -71.4 -31.5 -215.5 -414.0 -219.0 3 Treasury securities .................................................................. 142.9 146.6 23.2 -54.6 -71.0 -81.9 -99.1 -71.5 -31.5 -213.5 -415.8 -216.6 4 Budget agency securities and mortgages ............................. 1.5 -1.6 -.1 2.0 -.2 -1.5 .6 .0 .0 -2.1 1.8 -2.4 5 Nonfederal.................................................................................... 566.9 586.3 781.2 1,095.5 1,191.6 1,361.2 1,037.3 1,241.6 1,126.3 1,156.3 1,372.3 977.5 By instrument 6 Commercial paper .................................................................. 18.1 -.9 13.7 24.4 37.4 58.3 -2.6 49.8 44.0 36.2 116.9 62.5 7 Municipal securities and loans.............................................. -48.2 2.6 71.4 96.8 68.2 92.1 56.8 71.3 52.5 8.9 34.0 29.8 8 Corporate bonds....................................................................... 91.1 116.3 150.5 218.7 229.9 274.0 287.6 202.8 155.2 186.2 153.8 184.4 9 Bank loans n.e.c......................................................................... 103.7 70.5 106.5 108.2 82.7 86.0 24.0 112.3 108.6 131.9 163.1 32.0 10 Other loans and advances....................................................... 67.2 33.5 69.1 74.3 71.2 148.0 2.3 79.2 55.4 162.1 104.3 -17.3 11 Mortgages ................................................................................ 196.0 275.7 317.5 505.5 607.8 572.2 607.8 650.0 601.1 488.9 665.7 565.7 12 Home.................................................................................... 180.7 242.5 252.3 386.9 432.3 411.2 440.1 479.4 398.3 343.9 496.6 443.4 13 Multifamily residential....................................................... 5.8 9.4 8.3 20.3 40.2 35.5 33.1 44.2 47.9 32.3 43.9 23.6 14 Commercial ......................................................................... 7.9 21.3 53.7 92.0 129.9 122.0 125.6 119.4 152.4 105.8 116.3 90.8 15 Farm...................................................................................... 1.6 2.6 3.2 6.2 5.5 3.6 9.0 7.0 2.5 6.9 8.9 7.9 16 Consumer credit....................................................................... 138.9 88.8 52.5 67.6 94.4 130.5 61.4 76.2 109.5 142.0 134.6 120.4 By borrowing sector 17 Household ................................................................................ 363.2 358.1 345.8 488.1 548.1 562.7 526.4 589.5 513.6 534.7 650.4 564.8 18 Nonfinancial business.............................................................. 255.1 235.0 379.3 527.1 591.2 718.8 467.2 599.6 579.1 617.8 701.1 387.5 19 Corporate .............................................................................. 228.0 148.8 266.1 416.3 480.3 625.2 371.6 468.2 456.1 500.5 581.4 292.7 20 Nonfarm noncorporate ....................................................... 24.3 81.4 107.0 103.2 105.7 88.6 93.9 122.9 117.4 102.5 111.4 87.2 21 Farm...................................................................................... 2.9 4.8 6.2 7.7 5.2 4.9 1.7 8.5 5.6 14.7 8.3 7.6 22 State and local government ................................................... -51.5 -6.8 56.1 80.3 52.3 79.8 43.6 52.5 33.6 3.8 20.8 25.2 23 Foreign net borrowing in United States................................... 78.5 88.4 71.8 43.3 25.3 30.7 -24.5 77.3 17.6 116.9 -10.9 61.6 24 Commercial paper .................................................................. 13.5 11.3 3.7 7.8 16.3 18.0 -27.5 41.1 33.6 56.7 10.9 5.9 25 Bonds......................................................................................... 57.1 67.0 61.4 34.8 14.2 15.4 .2 44.0 -2.7 45.7 -29.6 36.0 26 Bank loans n.e.c......................................................................... 8.5 9.1 8.5 6.7 .5 .9 5.6 -6.6 2.3 15.4 5.7 11.8 27 Other loans and advances....................................................... -.5 1.0 -1.8 -6.0 -5.7 -3.5 -2.8 -1.1 -15.5 -.9 2.0 7.8 28 Total domestic plus foreign ..................................................... 789.8 819.8 876.1 1,086.2 1,145.7 1,308.5 914.3 1,247.5 1,112.4 1,057.6 947.4 820.1 Financial sectors 29 Total net borrowing by financial sectors ............................. 453.9 545.8 653.7 1,073.9 1,087.9 1,228.8 995.3 1,064.2 1,063.4 618.3 817.0 715.4 By instrument 30 Federal government-related ....................................................... 204.1 231.5 212.8 470.9 592.0 589.5 576.6 651.6 550.3 249.2 370.4 504.4 31 Government-sponsored enterprise securities........................ 105.9 90.4 98.4 278.3 318.2 193.0 304.7 407.1 367.9 104.9 248.9 279.3 32 Mortgage pool securities ....................................................... 98.2 141.1 114.5 192.6 273.8 396.6 271.9 244.5 182.4 144.3 121.6 225.1 33 Loans from U.S. government................................................. .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private .......................................................................................... 249.8 314.4 440.9 603.0 495.9 639.2 418.8 412.6 513.0 369.2 446.6 211.0 35 Open market paper.................................................................. 42.7 92.2 166.7 161.0 176.2 78.7 57.3 89.9 479.0 130.9 77.4 65.2 36 Corporate bonds....................................................................... 195.9 173.8 210.5 296.9 221.8 473.8 254.8 179.5 -21.0 166.5 230.7 177.2 37 Bank loans n.e.c......................................................................... 2.5 12.6 13.2 30.1 -14.3 -6.7 11.0 -5.9 -55.6 .3 5.4 -.7 38 Other loans and advances....................................................... 3.4 27.9 35.6 90.2 107.1 73.3 107.9 139.8 107.5 64.4 123.1 -36.7 39 Mortgages ................................................................................ 5.3 7.9 14.9 24.8 5.1 20.1 -12.3 9.4 3.2 7.0 10.0 6.0 By borrowing sector 40 Commercial banking .................................................................. 22.5 13.0 46.1 72.9 67.2 46.1 61.5 107.0 54.1 72.4 113.2 17.4 41 Savings institutions ..................................................................... 2.6 25.5 19.7 52.2 48.0 75.2 59.2 51.9 5.8 40.6 59.1 -17.2 42 Credit unions ................................................................................ -.1 .1 .1 .6 2.2 1.5 1.4 2.8 3.3 -2.9 .9 1.1 43 Life insurance companies............................................................ -.1 1.1 .2 .7 .7 3.3 3.0 1.1 -4.4 -.7 -1.1 -.3 44 Government-sponsored enterprises............................................ 105.9 90.4 98.4 278.3 318.2 193.0 304.7 407.1 367.9 104.9 248.9 279.3 45 Federally related mortgage pools.............................................. 98.2 141.1 114.5 192.6 273.8 396.6 271.9 244.5 182.4 144.3 121.6 225.1 46 Issuers of asset-backed securities (ABSs) ............................... 142.4 150.8 202.2 321.4 234.0 289.7 301.5 220.5 124.2 166.0 154.8 136.8 47 Finance companies....................................................................... 50.2 45.9 48.7 43.0 62.4 77.0 90.5 -17.2 99.2 52.3 103.9 96.9 48 Mortgage companies .................................................................. -2.2 4.1 -4.6 1.6 .2 -4.6 5.1 -6.1 6.2 -3.0 2.7 -.3 49 Real estate investment trusts (REITs) ..................................... 4.5 11.9 39.6 62.7 6.3 25.6 -19.7 7.9 11.3 11.5 9.8 -2.4 50 Brokers and dealers ..................................................................... -5.0 -2.0 8.1 7.2 -17.2 -31.1 -17.4 16.9 -37.3 44.4 -.7 25.2 51 Funding corporations .................................................................. 34.9 64.1 80.7 40.7 92.2 156.5 -66.2 27.9 250.6 -11.4 4.0 -46.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 8 Domestic Financial Statistics □ March 2001 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued Billions of dollars; quarterly data at seasonally adjusted annual rates 1999 2000 Transaction category or sector 1995 1996 1997 1998 1999 Ql Q2 Q3 Q4 Ql Q2 Q3 All sectors 52 Total net borrowing, all sectors .......................................... 1,243.8 1,365.6 1,529.8 2,160.1 2,233.6 2,537.2 1,909.6 2,311.7 2,175.8 1,676.0 1,764.4 1,535.5 53 Open market paper..................................................................... 74.3 102.6 184.1 193.1 229.9 155.1 27.2 180.7 556.6 223.7 205.1 133.6 54 U.S. government securities....................................................... 348.5 376.5 235.9 418.3 520.8 506.1 478.1 580.1 518.9 33.6 -43.5 285.4 55 Municipal securities .................................................................. -48.2 2.6 71.4 96.8 68.2 92.1 56.8 71.3 52.5 8.9 34.0 29.8 56 Corporate and foreign bonds ................................................... 344.1 357.0 422.4 550.4 465.9 763.1 542.6 426.3 131.5 398.4 355.0 397.7 57 Bank loans n.e.c........................................................................... 114.7 92.1 128.2 145.0 68.9 80.1 40.6 99.8 55.2 147.7 174.2 43.1 58 Other loans and advances ....................................................... 70.1 62.5 102.8 158.5 172.6 217.8 107.5 217.9 147.3 225.7 229.4 -46.2 59 Mortgages.................................................................................... 201.3 283.6 332.4 530.3 612.9 592.4 595.6 659.4 604.3 496.0 675.6 571.7 60 Consumer credit......................................................................... 138.9 88.8 52.5 67.6 94.4 130.5 61.4 76.2 109.5 142.0 134.6 120.4 Funds raised through mutual funds and corporate equities 61 Total net issues ......................................................................... 131.5 231.9 181.2 100.0 156.5 154.2 178.5 120.4 172.8 409.3 115.0 150.0 62 Corporate equities ..................................................................... -16.0 -5.7 -83.9 -174.6 -31.8 -86.4 -33.9 -7.0 .0 103.2 -122.6 -111.5 63 Nonfinancial corporations ................................................... -58.3 -69.5 -114.4 -267.0 -143.5 -52.1 -338.4 -128.4 -55.0 60.8 -248.8 -87.6 64 Foreign shares purchased by U.S. residents .................... 50.4 82.8 57.6 101.2 114.4 -19.8 284.4 121.7 71.3 63.3 135.0 13.0 65 Financial corporations .......................................................... -8.1 -19.0 -27.1 -8.9 -2.7 -14.5 20.2 -.3 -16.3 -20.8 -8.8 -36.9 66 Mutual fund shares..................................................................... 147.4 237.6 265.1 274.6 188.3 240.6 212.4 127.5 172.8 306.1 237.6 261.5 1. Data in this table also appear in the Board’s Z.l (780) quarterly statistical release, tables F.2 through F.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A39 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1999 2000 Transaction category or sector 1995 1996 1997 1998 1999 Ql Q2 Q3 Q4 Ql Q2 Q3 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets .................................... 1,243.8 1,365.6 1,529.8 2,160.1 2,233.6 2,537.2 1,909.6 2,311.7 2,175.8 1,676.0 1,764.4 1,535.5 2 Domestic nonfederal nonfinancial sectors............................. -61.3 80.5 17.1 131.8 256.2 472.8 328.4 230.0 -6.4 -143.9 137.1 -323.2 3 Household................................................................................ 34.1 128.7 31.8 -16.7 187.0 270.5 247.7 221.8 8.1 -239.1 88.6 -299.2 4 Nonfinancial corporate business ........................................ -8.8 -10.2 -12.7 14.0 24.3 67.0 -1.4 49.8 -18.3 90.4 4.3 -9.0 5 Nonfarm noncorporate business ........................................ 4.7 -4.3 -2.1 .1 1.5 2.8 1.2 .8 1.4 2.6 2.8 3.8 6 State and local governments ............................................... -91.4 -33.7 .1 134.5 43.4 132.5 81.0 -42.4 2.4 2.3 41.4 -19.0 7 Federal government ................................................................... -.2 -7.4 5.1 13.5 5.8 17.0 6.7 11.2 -11.8 6.2 7.8 15.6 8 Rest of the world ....................................................................... 273.9 414.4 311.3 254.2 210.6 256.9 61.6 385.3 138.7 334.9 185.6 199.4 9 Financial sectors......................................................................... 1,031.4 878.1 1,196.3 1,760.6 1,761.0 1,790.6 1,512.8 1,685.2 2,055.3 1.478.7 1,433.9 1,643.8 10 Monetary authority................................................................ 12.7 12.3 38.3 21.1 25.7 64.5 59.8 20.6 -42.2 103.4 -3.9 27.3 11 Commercial banking ............................................................ 265.9 187.5 324.3 305.2 308.2 68.1 166.6 449.4 548.7 377.1 484.6 370.2 12 U.S.-chartered banks.......................................................... 186.5 119.6 274.9 312.0 317.6 131.5 259.4 421.9 457.7 409.2 505.6 333.1 13 Foreign banking offices in United States .................... 75.4 63.3 40.2 -11.9 -20.1 -53.1 -102.5 33.2 42.0 4.8 -29.9 31.5 14 Bank holding companies ................................................. -.3 3.9 5.4 -.9 6.2 -6.0 .4 -12.4 42.6 -42.2 3.5 -6.7 15 Banks in U.S.-affiliated areas.......................................... 4.2 .7 3.7 6.0 4.4 -4.4 9.2 6.6 6.3 5.4 5.4 12.3 16 Savings institutions .............................................................. -7.6 19.9 -4.7 36.3 68.7 111.0 85.3 58.1 20.2 50.2 73.0 56.5 17 Credit unions ......................................................................... 16.2 25.5 16.8 19.0 27.5 30.9 32.7 27.5 18.8 35.6 36.6 41.8 18 Bank personal trusts and estates ........................................ -8.3 -7.7 -25.0 -12.8 27.8 27.8 27.8 27.8 27.8 21.9 16.8 20.6 19 Life insurance companies ................................................... 100.0 69.6 104.8 76.9 53.5 78.4 68.2 36.8 30.7 57.2 52.0 51.4 20 Other insurance companies ................................................. 21.5 22.5 25.2 20.4 -4.2 -19.7 26.7 -14.4 -9.4 -14.0 -18.1 8.7 21 Private pension funds............................................................ 20.2 -5.8 19.5 57.8 57.5 57.5 86.6 32.0 54.0 46.1 22.8 55.5 22 State and local government retirement funds ........................ 33.6 37.3 63.8 71.5 49.9 76.0 25.1 40.0 58.2 55.3 20.7 35.4 23 Money market mutual funds ............................................... 86.5 88.8 87.5 244.0 182.0 215.7 -67.0 224.8 354.5 208.8 -156.2 244.9 24 Mutual funds ......................................................................... 52.5 48.9 80.9 124.8 47.2 97.4 117.2 -13.0 -12.7 -77.8 63.7 56.5 25 Closed-end funds ................................................................... 10.5 4.7 -2.9 4.5 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 26 Government-sponsored enterprises .................................... 86.7 84.2 94.3 261.7 235.6 189.1 251.5 280.7 221.0 138.2 229.7 208.3 27 Federally related mortgage pools ...................................... 98.2 141.1 114.5 192.6 273.8 396.6 271.9 244.5 182.4 144.3 121.6 225.1 28 Asset-backed securities issuers (ABSs)............................. 120.6 120.5 163.8 281.7 215.8 272.1 284.8 212.0 94.4 145.3 120.3 101.6 29 Finance companies................................................................ 49.9 18.4 21.9 51.9 94.9 85.3 88.1 91.7 114.4 132.9 138.9 81.4 30 Mortgage companies ............................................................ -3.4 8.2 -9.1 3.2 .3 -9.1 10.2 -12.1 12.3 -6.0 5.5 -.5 31 Real estate investment trusts (REITs)............................... 1.4 4.4 20.2 -5.1 -2.6 1.7 -2.2 -2.7 -7.0 -16.3 -2.5 -3.6 32 Brokers and dealers .............................................................. 90.1 -15.7 14.9 6.8 -30.8 34.6 -119.7 -22.2 -15.9 106.9 38.0 183.5 33 Funding corporations ............................................................ -15.7 13.6 47.4 -1.0 127.1 9.5 96.2 .6 401.9 -33.5 187.5 -124.1 Relation of Liabilities to Financial Assets 34 Net flows through credit markets........................................ 1,243.8 1,365.6 1,529.8 2,160.1 2,233.6 2,537.2 1,909.6 2,311.7 2,175.8 1,676.0 1,764.4 1,535.5 Other financial sources 35 Official foreign exchange.......................................................... 8.8 -6.3 .7 6.6 -8.7 -14.0 -5.4 -8.5 -7.0 1.5 -10.2 -.9 36 Special drawing rights certificates.......................................... 2.2 -.5 -.5 .0 -3.0 -4.0 .0 -4.0 -4.0 .0 -8.0 -4.0 37 Treasury currency....................................................................... .7 -.6 -.7 -.8 -1.5 .0 -2.1 -4.1 .0 -2.2 -2.3 -4.2 38 Foreign deposits ......................................................................... 35.3 85.9 108.9 2.0 86.5 113.7 110.1 69.4 52.7 258.5 -1.1 51.4 39 Net interbank transactions ........................................................ 10.0 -51.6 -19.7 -32.3 17.6 48.3 93.4 -30.8 -40.7 -71.1 177.7 -61.8 40 Checkable deposits and currency .......................................... -12.8 15.7 41.2 47.4 151.4 63.6 37.5 139.3 365.2 -219.1 -65.0 49.0 41 Small time and savings deposits ............................................ 96.6 97.2 97.1 152.4 44.7 -74.8 106.6 119.1 28.0 104.3 130.3 235.7 42 Large time deposits ................................................................... 65.6 114.0 122.5 92.1 130.6 18.0 42.4 102.7 359.4 149.2 108.4 145.3 43 Money market fund shares ..................................................... 141.2 145.4 155.9 287.2 249.1 221.3 115.3 174.3 485.5 241.0 48.2 241.9 44 Security repurchase agreements............................................... 110.5 41.4 120.9 91.3 171.7 258.0 -26.1 135.9 319.0 276.1 130.4 240.5 45 Corporate equities ..................................................................... -16.0 -5.7 -83.9 -174.6 -31.8 -86.4 -33.9 -7.0 .0 103.2 -122.6 -111.5 46 Mutual fund shares..................................................................... 147.4 237.6 265.1 274.6 188.3 240.6 212.4 127.5 172.8 306.1 237.6 261.5 47 Trade payables ............................................................................ 128.9 114.1 131.2 27.0 184.7 121.7 225.3 231.5 160.1 244.3 114.7 160.2 48 Security credit ............................................................................ 26.7 52.4 111.0 103.3 93.5 -62.2 139.7 18.9 277.8 566.3 -99.8 58.9 49 Life insurance reserves ............................................................ 45.8 44.5 59.3 48.0 50.8 55.4 42.1 48.1 57.6 49.8 59.7 47.0 50 Pension fund reserves .............................................................. 171.0 163.0 278.8 248.7 253.7 204.5 248.8 266.7 294.6 266.1 280.7 228.1 51 Taxes payable.............................................................................. 6.2 16.2 15.7 12.0 16.0 -1.8 47.3 .1 18.2 28.2 22.9 .7 52 Investment in bank personal trusts ........................................ 6.4 -5.3 -49.9 -42.5 -7.1 -7.2 -7.1 -7.2 -6.9 -2.9 -7.6 -3.6 53 Noncorporate proprietors’ equity............................................ 34.6 -3.4 -46.0 -41.4 -7.6 -8.3 21.4 -56.0 12.3 -15.5 -2.9 28.9 54 Miscellaneous.............................................................................. 503.8 537.4 512.5 844.4 741.2 406.7 1,454.9 507.0 596.3 870.3 1,120.2 1,242.4 55 Total financial sources ............................................................ 2,756.6 2,957.0 3,350.0 4,105.4 4,553.5 4,030.3 4,732.2 4,134.6 5,316.7 4,830.2 3,875.7 4,341.1 Liabilities not identified as assets (—) 56 Treasury currency....................................................................... -.3 -1.6 -1.4 -1.4 -3.3 -1.5 -3.5 -5.9 -2.2 -6.1 -6.2 -6.7 57 Foreign deposits ......................................................................... 25.1 59.6 107.4 -6.4 66.5 49.3 96.8 27.4 92.5 189.4 -62.6 21.0 58 Net interbank liabilities ............................................................ -3.1 -3.3 -19.9 3.4 3.5 49.7 -4.8 -7.0 -23.7 24.4 -4.3 -18.8 59 Security repurchase agreements............................................... 25.7 4.1 64.3 61.4 32.1 213.5 54.3 77.8 -217.4 553.2 5.4 128.8 60 Taxes payable.............................................................................. 21.1 23.1 28.0 13.9 3.5 -8.8 25.0 2.7 -5.1 13.4 -1.3 -10.0 61 Miscellaneous.............................................................................. -166.5 -76.4 -69.1 -46.1 -310.3 -522.5 -131.8 -454.8 -132.1 -342.9 -196.1 -83.9 Floats not included in assets ( —) 62 Federal government checkable deposits ............................... -6.0 .5 -2.7 2.6 -7.4 -2.1 -27.0 8.6 -9.2 28.7 -3.4 -2.7 63 Other checkable deposits .......................................................... -3.8 -4.0 -3.9 -3.1 -.8 -2.1 -.9 -.3 .0 .6 1.5 1.9 64 Trade credit ................................................................................ 15.6 -21.2 -29.4 -42.1 44.1 45.6 -63.7 75.3 119.3 24.5 -74.8 -68.6 65 Total identified to sectors as assets ................................... 2,849.0 2,976.4 3,276.5 4,123.3 4,725.6 4,209.1 4,787.8 4,410.7 5,494.7 4,345.0 4,217.6 4,380.2 1. Data in this table also appear in the Board’s Z. 1 (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. El and F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Financial Statistics □ March 2001 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1999 2000 Transaction category or sector 1996 1997 1998 1999 Ql Q2 Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors .................... 14,444.2 15,247.0 16,289.9 17,445.0 16,605.4 16,784.8 17,105.1 17,445.0 17,677.8 17,853.8 18,054.1 By sector and instrument 2 Federal government ................................................. 3,781.8 3,804.9 3,752.2 3,681.0 3,759.7 3,651.7 3,632.7 3,681.0 3,653.5 3,464.0 3,410.3 3 Treasury securities ............................................... 3,755.1 3,778.3 3,723.7 3,652.8 3,731.6 3,623.4 3,604.5 3,652.8 3,625.8 3,435.7 3,382.7 4 Budget agency securities and mortgages......... 26.6 26.5 28.5 28.3 28.1 28.3 28.3 28.3 27.8 28.2 27.6 5 Nonfederal................................................................... 10,662.5 11,442.1 12,537.7 13,763.9 12,845.7 13,133.1 13,472.4 13,763.9 14,024.3 14,389.9 14,643.8 By instrument 6 Commercial paper................................................. 156.4 168.6 193.0 230.3 223.9 232.4 239.3 230.3 260.8 296.8 307.0 7 Municipal securities and loans........................... 1,296.0 1,367.5 1,464.3 1,532.5 1,491.0 1,510.0 1,518.6 1,532.5 1,539.2 1,551.6 1,550.3 8 Corporate bonds ................................................... 1,460.4 1,610.9 1,829.6 2,059.5 1,898.1 1,970.0 2,020.7 2,059.5 2,106.0 2,144.5 2,190.6 9 Bank loans n.e.c...................................................... 934.1 1,040.5 1,148.8 1,231.5 1,165.2 1,178.5 1,202.9 1,231.5 1,259.1 1,307.2 1,311.7 10 Other loans and advances.................................... 770.4 839.5 913.8 985.3 957.4 956.0 969.8 985.3 1,032.4 1,056.2 1,057.1 11 Mortgages .............................................................. 4,833.6 5,151.1 5,656.6 6,298.7 5,790.9 5,945.9 6,151.0 6,298.7 6,410.8 6,579.6 6,731.6 12 Home................................................................... 3,719.2 3,971.5 4,358.4 4,790.7 4,451.1 4,564.1 4,693.6 4,790.7 4,866.5 4,993.0 5,114.4 13 Multifamily residential .................................... 278.6 286.9 307.3 347.7 316.4 324.6 335.7 347.7 355.7 366.7 372.6 14 Commercial........................................................ 748.7 802.3 894.4 1,058.4 926.1 957.5 1,020.3 1,058.4 1,084.8 1,113.9 1,136.6 15 Farm ................................................................... 87.1 90.3 96.5 102.0 97.4 99.6 101.4 102.0 103.7 106.0 107.9 16 Consumer credit ................................................... 1,211.6 1,264.1 1,331.7 1,426.2 1,319.3 1,340.4 1,370.1 1,426.2 1,416.0 1,454.0 1,495.6 By borrowing sector 17 Household .............................................................. 5,222.7 5,568.8 6,056.9 6,605.2 6,138.8 6,282.3 6,448.5 6,605.2 6,678.8 6,851.5 7,024.3 18 Nonfinancial business .......................................... 4,376.4 4,753.9 5,281.0 5,906.6 5,483.8 5,612.6 5,781.5 5,906.6 6,088.3 6,272.7 6,356.1 19 Corporate............................................................ 3,095.6 3,359.8 3,776.1 4,290.7 3,957.9 4,059.5 4,195.9 4,290.7 4,445.5 4,596.8 4,656.9 20 Nonfarm noncorporate .................................... 1,130.9 1,237.9 1,341.1 1,446.8 1,363.5 1,387.0 1,417.0 1,446.8 1,472.7 1,500.6 1,521.7 21 Farm ................................................................... 149.9 156.1 163.8 169.0 162.4 166.1 168.6 169.0 170.1 175.3 177.5 22 State and local government ............................... 1.063.4 1,119.5 1,199.8 1,252.1 1,223.2 1,238.2 1,242.4 1,252.1 1,257.3 1,265.7 1,263.5 23 Foreign credit market debt held in United States ................................................... 542.2 608.0 651.4 676.9 659.2 652.7 672.9 676.9 704.6 698.8 720.7 24 Commercial paper...................................................... 67.5 65.1 72.9 89.2 77.2 70.1 81.8 89.2 101.6 101.2 109.8 25 Bonds............................................................................ 366.3 427.7 462.5 476.7 466.3 466.4 477.4 476.7 488.1 480.7 489.7 26 Bank loans n.e.c.......................................................... 43.7 52.1 58.9 59.4 59.1 60.5 58.8 59.4 63.3 64.7 67.6 27 Other loans and advances........................................ 64.7 63.0 57.2 51.7 56.5 55.8 55.0 51.7 51.7 52.1 53.5 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign........................... 14,986.4 15,855.0 16,941.3 18,121.9 17,264.6 17,437.5 17,778.0 18,121.9 18,382.5 18,552.6 18,774.8 Financial sectors 29 Total credit market debt owed by financial sectors ................................................. 4,824.6 5,445.2 6,519.1 7,607.0 6,809.0 7,073.3 7,346.8 7,607.0 7,744.5 7,964.5 8,155.8 By instrument 30 Federal government-related.......................................... 2,608.3 2,821.1 3,292.0 3,884.0 3,424.1 3,580.7 3,745.9 3,884.0 3,940.3 4,035.5 4,164.5 31 Government-sponsored enterprise securities........... 896.9 995.3 1,273.6 1,591.7 1,321.8 1,398.0 1,499.8 1,591.7 1,618.0 1,680.2 1,750.0 32 Mortgage pool securities.......................................... 1,711.4 1,825.8 2,018.4 2,292.3 2,112.3 2,182.7 2,246.1 2,292.3 2,322.3 2,355.4 2,414.5 33 Loans from U.S. government ................................. .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private............................................................................ 2,216.3 2,624.1 3,227.1 3,723.0 3,374.9 3,492.6 3,601.0 3,723.0 3,804.2 3,928.9 3,991.3 35 Open market paper................................................... 579.1 745.7 906.7 1,082.9 926.4 940.9 963.4 1,082.9 1,115.7 1,135.2 1,151.6 36 Corporate bonds....................................................... 1,378.4 1,555.9 1,852.8 2,074.6 1,968.6 2,042.8 2,091.1 2,074.6 2,114.2 2,183.2 2,234.6 37 Bank loans n.e.c......................................................... 64.0 77.2 107.2 92.9 104.1 106.8 105.2 92.9 91.4 92.7 92.5 38 Other loans and advances ........................................ 162.9 198.5 288.7 395.8 299.1 328.6 365.4 395.8 404.4 436.9 430.2 39 Mortgages ................................................................ 31.9 46.8 71.6 76.7 76.6 73.6 75.9 76.7 78.5 81.0 82.5 By borrowing sector 40 Commercial banks ....................................................... 113.6 140.6 188.6 230.0 187.5 202.7 224.2 230.0 242.2 265.4 263.6 41 Bank holding companies ............................................ 150.0 168.6 193.5 219.3 202.6 205.5 211.8 219.3 221.4 229.3 236.9 42 Savings institutions....................................................... 140.5 160.3 212.4 260.4 226.9 241.6 255.4 260.4 266.9 280.7 277.5 43 Credit unions................................................................ .4 .6 1.1 3.4 1.5 1.8 2.5 3.4 2.6 2.9 3.1 44 Life insurance companies............................................ 1.6 1.8 2.5 3.2 3.3 4.0 4.3 3.2 3.0 2.7 2.7 45 Government-sponsored enterprises ............................. 896.9 995.3 1,273.6 1,591.7 1,321.8 1,398.0 1,499.8 1,591.7 1,618.0 1,680.2 1,750.0 46 Federally related mortgage pools................................. 1,711.4 1,825.8 2,018.4 2,292.3 2,112.3 2,182.7 2,246.1 2,292.3 2,322.3 2,355.4 2,414.5 47 Issuers of asset-backed securities (ABSs).................... 863.3 1,076.6 1,398.0 1,632.0 1,463.1 1,539.9 1,599.1 1,632.0 1,665.8 1,706.4 1,749.0 48 Brokers and dealers ..................................................... 27.3 35.3 42.5 25.3 34.8 30.4 34.6 25.3 36.4 36.2 42.5 49 Finance companies........................................................ 529.8 554.5 597.5 659.9 614.4 639.2 628.5 659.9 670.7 699.2 716.5 50 Mortgage companies ................................................... 20.6 16.0 17.7 17.8 16.5 17.8 16.3 17.8 17.1 17.8 17.7 51 Real estate investment trusts (REITs) ........................ 56.5 96.1 158.8 165.1 165.2 160.3 162.2 165.1 167.9 170.4 169.8 52 Funding corporations ................................................... 312.7 373.7 414.4 506.6 459.1 449.5 462.0 506.6 510.1 517.9 512.0 All sectors 53 Total credit market debt, domestic and foreign ... 19,811.0 21300.2 23,460.4 25,728.9 24,073.5 24,510.8 25,124.9 25,728.9 26,126.9 26,517.1 26,930.6 54 Open market paper....................................................... 803.0 979.4 1,172.6 1,402.4 1,227.6 1,243.3 1,284.5 1,402.4 1,478.1 1,533.3 1,568.3 55 US. government securities .......................................... 6,390.0 6,626.0 7,044.3 7,565.0 7,193.8 7,232.4 7,378.6 7,565.0 7,593.8 7,499.5 7,574.8 56 Municipal securities ..................................................... 1,296.0 1,367.5 1,464.3 1,532.5 1,491.0 1,510.0 1,518.6 1,532.5 1,539.2 1,551.6 1,550.3 57 Corporate and foreign bonds........................................ 3,205.1 3,594.5 4,144.9 4,610.8 4,333.0 4,479.2 4,589.1 4,610.8 4,708.3 4,808.3 4,914.9 58 Bank loans n.e.c.............................................................. 1,041.7 1,169.8 1,314.9 1,383.8 1,328.3 1,345.7 1,366.9 1,383.8 1,413.7 1,464.6 1,471.7 59 Other loans and advances............................................. 998.0 1,101.0 1,259.6 1,432.7 1,313.0 1,340.3 1,390.1 1,432.7 1,488.5 1,545.2 1,540.8 60 Mortgages ..................................................................... 4,865.5 5,197.9 5.728.2 6,375.5 5,867.6 6,019.5 6,226.9 6,375.5 6,489.3 6,660.6 6,814.1 61 Consumer credit............................................................ 1,211.6 1,264.1 1.331.7 1,426.2 1,319.3 1,340.4 1,370.1 1,426.2 1,416.0 1,454.0 1,495.6 1. Data in this table also appear in the Board’s Z.l (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1999 2000 Transaction category or sector 1996 1997 1999 Ql Q2 Q3 Q4 Ql Q2 Q3 Credit Market Debt Outstanding2 1 Total credit market assets ................................................. 19,811.0 21,300.2 23,460.4 25,728.9 24,073.5 24,510.8 25,124.9 25,728.9 26,126.9 26,517.1 26,930.6 2 Domestic nonfederal nonfinancial sectors ........................ 3,031.3 3,004.7 3,108.2 3,434.5 3,199.5 3,255.5 3,311.9 3,434.5 3,368.4 3,377.1 3,303.4 3 Household ........................................................................... 2,118.3 2,106.4 2,061.4 2,318.5 2,124.7 2,155.3 2,208.2 2,318.5 2,252.7 2,244.2 2,174.1 4 Nonfinancial corporate business...................................... 270.2 257.5 271.5 295.7 266.1 268.5 284.7 295.7 294.7 298.3 300.8 5 Nonfarm noncorporate business...................................... 38.0 35.9 35.9 37.5 36.6 36.9 37.1 37.5 38.1 38.8 39.8 6 State and local governments............................................ 604.8 605.0 739.4 782.8 772.1 794.8 781.9 782.8 782.9 795.8 788.7 7 Federal government .............................................................. 200.2 205.5 219.1 258.0 223.3 225.0 260.7 258.0 259.6 261.5 265.4 8 Rest of the world .................................................................. 1,926.6 2,257.3 2,539.8 2,678.0 2,608.3 2,621.3 2,718.1 2,678.0 2,765.9 2,809.7 2,860.0 9 Financial sectors ..................................................................... 14,652.9 15,832.7 17,593.3 19,358.4 18,042.4 18,409.0 18,834.0 19,358.4 19,733.1 20,068.7 20,501.8 10 Monetary authority ............................................................ 393.1 431.4 452.5 478.1 466.0 485.1 489.3 478.1 501.9 505.1 511.5 11 Commercial banking.......................................................... 3,707.7 4,031.9 4,335.7 4,643.9 4,338.4 4,383.4 4,488.3 4,643.9 4,725.0 4,847.4 4,931.2 12 U.S.-chartered banks ..................................................... 3,175.8 3,450.7 3,761.2 4,078.9 3,782.9 3,847.6 3,944.3 4,078.9 4,171.3 4,295.4 4,368.3 13 Foreign banking offices in United States.................. 475.8 516.1 504.2 484.1 487.8 465.7 475.3 484.1 482.0 478.1 487.6 14 Bank holding companies ............................................ 22.0 27.4 26.5 32.7 25.0 25.1 22.0 32.7 22.1 23.0 21.3 15 Banks in U.S.-affiliated areas ...................................... 34.1 37.8 43.8 48.3 42.7 45.0 46.7 48.3 49.6 51.0 54.0 16 Savings institutions............................................................ 933.2 928.5 964.8 1,033.4 990.8 1,011.4 1,030.8 1,033.4 1,044.5 1,061.7 1,080.9 17 Credit unions....................................................................... 288.5 305.3 324.2 351.7 330.2 341.0 348.5 351.7 359.0 370.8 381.9 18 Bank personal trusts and estates ................................... 232.0 207.0 194.1 222.0 201.1 208.0 215.0 222.0 227.4 231.7 236.8 19 Life insurance companies................................................. 1,657.0 1,751.1 1,828.0 1,886.0 1,853.5 1,869.6 1,880.4 1,886.0 1,901.5 1,913.4 1,927.9 20 Other insurance companies.............................................. 491.2 515.3 535.7 531.6 530.8 537.5 533.9 531.6 528.0 523.5 525.7 21 Private pension funds ....................................................... 627.3 646.8 704.7 762.2 719.0 740.7 748.7 762.2 773.7 779.4 793.3 22 State and local government retirement funds...................... 568.2 632.0 703.6 753.4 722.6 728.9 738.9 753.4 767.2 772.4 781.3 23 Money market mutual funds .......................................... 634.3 721.9 965.9 1,147.8 1,036.2 1,001.8 1,049.7 1,147.8 1,217.1 1,159.4 1,212.5 24 Mutual funds....................................................................... 820.2 901.1 1,025.9 1,073.1 1,050.8 1,083.7 1,083.0 1,073.1 1,053.7 1,073.9 1,090.6 25 Closed-end funds .............................................................. 101.1 98.3 102.8 105.9 103.6 104.3 105.1 105.9 106.7 107.4 108.2 26 Government-sponsored enterprises................................. 807.9 902.2 1,163.9 1,399.5 1,203.1 1,268.4 1,340.2 1,399.5 1,426.4 1,485.3 1,546.7 27 Federally related mortgage pools................................... 1,711.4 1,825.8 2,018.4 2,292.3 2,112.3 2,182.7 2,246.1 2,292.3 2,322.3 2,355.4 2,414.5 28 Asset-backed securities issuers (ABSs) ........................ 773.9 937.7 1,219.4 1,435.3 1,280.1 1,352.7 1,409.8 1,435.3 1,463.9 1,495.8 1,529.6 29 Finance companies ............................................................ 544.5 566.4 618.4 713.3 639.9 660.9 678.2 713.3 747.0 780.6 795.5 30 Mortgage companies.......................................................... 41.2 32.1 35.3 35.6 33.0 35.6 32.5 35.6 34.1 35.5 35.4 31 Real estate investment trusts (REITs) .......................... 30.4 50.6 45.5 42.9 45.9 45.3 44.7 42.9 38.8 38.2 37.3 32 Brokers and dealers .......................................................... 167.7 182.6 189.4 158.6 211.4 162.9 167.0 158.6 201.1 189.3 245.2 33 Funding corporations ....................................................... 122.0 164.7 165.2 291.9 173.8 204.9 204.0 291.9 293.8 342.7 315.8 Relation of Liabilities to Financial assets 34 Total credit market debt ................................................... 19,811.0 21,300.2 23,460.4 25,728.9 24,073.5 24,510.8 25,124.9 25,728.9 26,126.9 26,517.1 26,930.6 Other liabilities 35 Official foreign exchange ..................................................... 53.7 48.9 60.1 50.1 53.6 50.9 52.1 50.1 49.4 46.5 44.9 36 Special drawing rights certificates ...................................... 9.7 9.2 9.2 6.2 8.2 8.2 7.2 6.2 6.2 4.2 3.2 37 Treasury currency .................................................................. 17.7 17.0 16.2 14.6 16.2 15.7 14.6 14.6 14.1 13.4 12.4 38 Foreign deposits ..................................................................... 521.7 619.7 639.0 725.8 667.4 694.9 712.3 725.8 790.4 790.2 803.0 39 Net interbank liabilities ....................................................... 240.8 219.4 189.0 204.5 182.0 207.1 199.6 204.5 168.1 215.9 200.2 40 Checkable deposits and currency........................................ 1,244.8 1,286.1 1,333.4 1,484.8 1,310.5 1,353.1 1,353.8 1,484.8 1,392,9 1,409.7 1,385.7 41 Small time and savings deposits ........................................ 2,377.0 2,474.1 2,626.5 2,671.2 2,637.6 2,644.6 2,665.9 2,671.2 2,728,0 2,738.8 2,790.2 42 Large time deposits................................................................ 590.9 713.4 805.5 936.1 804.3 809.0 837.5 936.1 966.5 987.4 1,026.8 43 Money market fund shares................................................... 886.7 1,042.5 1,329.7 1,578.8 1,411.7 1,393.5 1,444.9 1,578.8 1,666.0 1,627.1 1,697.8 44 Security repurchase agreements .......................................... 701.5 822.4 913.7 1,085.4 980.3 970.8 999.3 1,085.4 1,155.8 1,185.1 1,239.2 45 Mutual fund shares ................................................................ 2,342.4 2,989.4 3,610.5 4,553.4 3,758.1 4,049.1 3,931.5 4,553.4 4,863.3 4,759.6 4,816.4 46 Security credit......................................................................... 358.1 469.1 572.3 665.9 552.7 589.3 593.2 665.9 803.7 780.5 794.5 47 Life insurance reserves.......................................................... 610.6 665.0 718.3 783.9 735.9 749.8 756.2 783.9 799.9 809.4 821.2 48 Pension fund reserves............................................................ 6,548.6 7,817.4 8,913.1 10,000.0 9,065.3 9,480.0 9,151.1 10,000.0 10,230.0 10,155.0 10,348.6 49 Trade payables ....................................................................... 1,812.1 1,943.3 1,970.3 2,155.0 1,973.9 2,031.1 2,095.1 2,155.0 2,189.6 2,218.8 2,265.7 50 Taxes payable ......................................................................... 123.8 139.5 151.5 167.5 158.8 162.4 167.5 167.5 182.3 179.5 185.3 51 Investment in bank personal trusts...................................... 871.3 942.5 1,001.0 1,130.4 1,016.5 1,061.0 1,019.0 1,130.4 1,163.8 1,125.6 1,124.5 52 Miscellaneous ......................................................................... 6,349.8 6,699.6 7,268.4 7,812.0 7,267.8 7,459.1 7,468.8 7,812.0 7,984.0 8,235.4 8,696.4 53 Total liabilities....................................................................... 45,472.1 50,218.5 55,588.1 61,754.5 56,674.4 58,240.5 58,594.5 61,754.5 63,280.9 63,799.2 65,186.6 Financial assets not included in liabilities ( + ) 54 Gold and special drawing rights ........................................ 21.4 21.1 21.6 21.4 20.7 20.8 21.3 21.4 21.4 21.5 21.4 55 Corporate equities.................................................................. 10,255.8 13,201.3 15,427.8 19,576.3 15,919.1 17,060.4 16,214.9 19,576.3 20,232.0 19,246.8 19,047.1 56 Household equity in noncorporate business .................... 3,889.2 4,164.4 4,414.7 4,704.5 4,487.4 4,548.8 4,623.1 4,704.5 4,732.2 4,779.1 4,848.4 Liabilities not identified as assets (—) 57 Treasury currency ................................................................... -7.3 -8.6 -10.1 -13.4 -10.5 -11.3 -12.8 -13.4 -14.9 -16.6 -18.2 58 Foreign deposits ..................................................................... 437.0 538.3 548.2 615.0 560.5 584.7 591.5 615.0 662.4 646.7 652.0 59 Net interbank transactions ................................................... -10.6 -32.2 -27.0 -25.5 -11.3 -10.6 -13.2 -25.5 -13.9 -11.6 -17.7 60 Security repurchase agreements .......................................... 111.5 175.8 237.2 269.3 296.7 308.2 327.7 269.3 414.2 413.9 445.0 61 Taxes payable ......................................................................... 76.9 92.6 102.0 95.5 89.8 112.2 96.4 95.5 90.8 102.5 94.9 62 Miscellaneous ......................................................................... -1,512.3 -1,868.4 -2,404.7 -2,847.2 -2,618.2 -2,651.5 -2,957.4 -2,847.2 -2,992.2 -2,980.4 -2,787.4 Floats not included in assets (—) 63 Federal government checkable deposits............................. -1.6 -8.1 -3.9 -9.9 -7.2 -12.4 -10.2 -9.9 -6.5 -5.2 -7.8 64 Other checkable deposits ..................................................... 30.1 26.2 23.1 22.3 18.9 22.1 14.5 22.3 18.7 22.5 15.5 65 Trade credit............................................................................. 174.6 135.5 94.5 136.1 56.3 19.4 37.0 136.1 92.3 51.4 34.5 66 Total identified to sectors as assets................................. 60,340.1 68,554.3 76,892.9 87,814.5 78,726.6 81,509.7 81,380.2 87,814.5 90,015.5 89,623.3 90,692.7 1. Data in this table also appear in the Board’s Z.l (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. L.l and L.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics □ March 2001 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1992=100, except as noted 2000 Measure 1998 1999 2000 Apr. May June July Aug. Sept. Oct.r Nov. Dec.p 1 Industrial production1 ........................................ 134.0 139.6 147.5 146.3 147.2 147.9 147.6 148.6 149.0r 148.5 148.1 147.3 Market groupings 2 Products, total.......................................................... 127.2 131.2 136.3 135.3 135.5 136.0 135.8 136.6 136.7r 136.3 136.4 136.1 3 Final, total............................................................ 129.3 133.3 138.8 137.2 137.5 138.3 138.1 139.2 139.3r 138.8 139.1 138.9 4 Consumer goods............................................. 118.4 120.8 123.1 123.2 123.5 124.2 122.9 123.8 123.8r 122.7 122.8 122.9 5 Equipment........................................................ 147.1 153.8 166.0 162.8 163.1 164.3 166.3 167.9 168.3r 169.1 169.7 169.0 6 Intermediate.......................................................... 121.0 125.1 128.7 129.3 129.4 129.0 128.7 128.8 128.6r 128.4 128.4 127.7 7 Materials................................................................... 145.7 154.5 167.8 166.1 168.4 169.4 169.0 170.5 171.3r 170.8 169.3 167.6 Industry groupings 8 Manufacturing ........................................................ 138.2 144.8 153.6 152.2 153.1 153.8 153.7 154.6 155.lr 154.8 153.9 152.2 9 Capacity utilization, manufacturing (percent)2.. 81.3 80.5 81.3 81.8 81.9 82.0 81.6 81.7 81.7 81.2 80.4 79.1 10 Construction contracts3.......................................... 161.3 177.7 t 187.0r 179.0 189.0r 180.0r 177.0r 182.0 187.0 179.0 n.a. 1 11 Nonagricuitural employment, total4.................... 123.4 126.2 128.9 129.1 129.1 129.1 129.0 129.2 129.3 129.3 129.3 12 Goods-producing, total...................................... 102.7 102.3 n.a. 104.3 104.1 104.2 104.4 103.9 103.9 104.0 103.9 103.6 13 Manufacturing, total...................................... 98.8 97.0 1 97.3 97.3 97.3 97.6 97.0 96.7 96.7 96.6 96.3 1 15 4 Se M rv a ic n e u - f p a r c o tu d r u in c g in , g p .. r . o .. d .. u ... c .. t . i . o .. n .. .. w .... o .. r .. k .. e ... r . s .. . . . . . . . . . . . . . . . . . . . . . . 1 9 3 9 0 . . 8 0 1 9 3 7 3 . . 8 8 I 1 1 9 3 8 6 . . 0 8 1 9 3 7 7 . . 9 0 1 9 3 7 7. . 1 9 1 9 3 8 7 . . 4 0 1 9 3 7 7 . . 5 0 1 9 3 7 7 . . 2 3 1 9 3 7 7 . . 1 3 1 9 3 7 7 . .4 0 1 9 3 6 7 . . 6 6 16 Personal income, total .......................................... 186.5 196.6 209.0 207.2 207.9 208.9 209.5 210.1 212.5 212.1 212.6 213.5 17 Wages and salary disbursements .................... 184.6 196.9 210.1 208.2 208.4 209.8 211.0 211.3 212.7 214.0 214.8 215.2 18 Manufacturing ............................................... 152.3 157.4 164.2 163.6 162.9 164.3 165.8 164.9 165.1 166.6 166.9 165.6 19 Disposable personal income5........................... 182.7 191.9 202.0 200.6 201.3 202.1 202.5 202.9 205.2 204.4 204.7 205.5 20 Retail sales5 ............................................................ 178.4 194.7 210.0 208.3 208.5 209.3 211.1 211.0 212.7 212.5 211.5 211.6 Prices6 21 Consumer (1982-84=100).................................... 163.0 166.6 172.2 171.3 171.5 172.4 172.8 172.8 173.7 174.0 174.1 174.0 22 Producer finished goods (1982= 100) ................ 130.7 133.0 138.0 136.7 137.3 138.6 138.6 138.2 139.2 140.0 139.9 139.7 1. Data in this table appear in the Board’s G.17 (419) monthly statistical release. The data 3. Index of dollar value of total construction contracts, including residential, nonresiden­ are also available on the Board’s web site, http://www.federalreserve.gov/releases/gl7. The tial, and heavy engineering, from McGraw-Hill Information Systems Company, F.W. Dodge latest historical revision of the industrial production index and the capacity utilization rates Division. was released in December 2000. The recent annual revision is described in an article in the 4. Based on data from the U.S. Department of Labor, Employment and Earnings. Series March 2001 issue of the Bulletin. For a description of the methods of estimating industrial covers employees only, excluding personnel in the armed forces. production and capacity utilization, see “Industrial Production and Capacity Utilization: 5. Based on data from U.S. Department of Commerce, Survey of Current Business. Historical Revision and Recent Developments,” Federal Reserve Bulletin, vol. 83 (February 6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price 1997), pp. 67-92, and the references cited therein. For details about the construction of indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics, individual industrial production series, see “Industrial Production: 1989 Developments and Monthly Labor Review. Historical Revision,” Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for series 2. Ratio of index of production to index of capacity. Based on data from the Federal mentioned in notes 3 and 6, can also be found in the Survey of Current Business. Reserve, U.S. Department of Commerce, and other sources. 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted 2000 Category 1998 1999 2000 May June July Aug. Sept. Oct.r Nov. Dec.p 1 Household Survey Data 1 Civilian labor force2................................................... 137,673 139,368 140,573r 140,757r I40,546r 140,724r 140,847r 141,000 141,136 141,489 2 Nonagricuitural industries3.................................... 128,085 130,207 131,549r 131,870r 131,603r 131,622r 131,954r 132,223 132,302 132,562 3 Agriculture .............................................................. 3,378 3,281 3,294r 3,313r 3,295r 3,317r 3,356r 3,241 3,176 3,274 Unemployment 4 Number..................................................................... 6,210 5,880 5.730r 5,574' 5,648r 5,785r 5,537r 5,536 5,658 5,653 5 Rate (percent of civilian labor force) ................ 4.5 4.2 4.1 4.0 4.0 4.1 3.9 3.9 4.0 4.0 Establishment Survey Data 6 Nonagricuitural payroll employment4 ............... 125,826 128,616 n.a. 131,590 131,647 131,607 131,528 131,723 131,789 131,848 131,953 7 Manufacturing ............................................................ 18,772 18,431 18,479 18,493 18,548 18,432 18,380 18,378 18,363 18,301 8 Mining .......................................................................... 590 535 539 539 538 537 539 542 541 538 9 Contract construction ................................................. 5,985 6,273 6,666 6,668 6,670 6,675 6,720 6,745 6,738 6,725 10 Transportation and public utilities........................... 6,600 6,792 6,962 6,985 7,010 6,941 7,037 7,046 7,060 7,083 11 Trade.............................................................................. 29,127 29,792 30,112 30,171 30,246 30,253 30,249 30,280 30,325 30,329 12 Finance .......................................................................... 7,407 7,632 7,600 7,588 7,586 7,608 7,622 7,638 7,645 7,664 13 Service ......................................................................... 37,526 39,000 40,220 40,401 40,403 40,572 40,685 40,696 40,764 40,845 14 Government ................................................................. 19,819 20,161 21,012 20,802 20,606 20,510 20,491 20,464 20,412 20,468 1. Beginning January 1994, reflects redesign of current population survey and population 4. Includes all full- and part-time employees who worked during, or received pay for, the controls from the 1990 census. pay period that includes the twelfth day of the month; excludes proprietors, self-employed 2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly persons, household and unpaid family workers, and members of the armed forces. Data are figures are based on sample data collected during the calendar week that contains the twelfth adjusted to the March 1992 benchmark, and only seasonally adjusted data are available at this day; annua/ data are averages of monthly figures. By definition, seasonality does not exist in time. population figures. SOURCE. Based on data from U.S. Department of Labor, Employment and Earnings. 3. Includes self-employed, unpaid family, and domestic service workers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A43 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 2000 2000 2000 Series Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent)2 1 Total industry........................................ 144.4 147.1 148.4 148.0 176.1 178.1 180.1 182.1 82.0 82.6 82.4 81.3 2 Manufacturing........................................ 150.1 153.0 154.4 153.6 184.6 186.9 189.2 191.5 81.3 81.9 81.7 80.2 3 Primary processing3........................... 173.5 178.6 180.3 177.7 203.0 206.9 211.2 215.9 85.4 86.4 85.4 82.3 4 Advanced processing4...................... 137.3 139.0 140.3 140.4 172.7 174.1 175.2 176.2 79.5 79.8 80.1 79.7 5 Durable goods.................................... 186.7 192.9 196.7 195.6 228.5 233.3 238.3 243.5 81.7 82.7 82.5 80.3 6 Lumber and products.................... 122.4 120.3 117.0 112.9 147.0 147.5 147.9 148.4 83.3 81.6 79.1 76.1 7 Primary metals............................... 136.1 137.0 133.4 125.6 153.0 153.3 153.4 153.5 88.9 89.4 87.0 81.8 8 Iron and steel............................. 135.0 136.1 130.5 118.8 152.8 153.1 153.4 153.6 88.4 88.9 85.1 77.3 9 Nonferrous................................. 137.4 138.2 137.0 133.6 153.2 153.4 153.4 153.4 89.7 90.1 89.3 87.1 10 Industrial machinery and equipment............. 242.2 249.4 257.3 261.7 296.3 304.5 311.1 317.3 81.7 81.9 82.7 82.5 11 Electrical machinery .................... 476.7 535.1 581.1 603.5 552.1 591.7 639.1 693.7 86.3 90.4 90.9 87.0 12 Motor vehicles and parts............. 171.8 175.9 170.8 156.1 207.0 208.2 209.2 210.2 83.0 84.5 81.7 74.3 13 Aerospace and miscellaneous transportation equipment 93.7 92.9 93.5 94.4 130.7 130.7 130.4 130.1 71.7 71.1 71.7 72.6 14 Nondurable goods............................. 116.3 116.7 116.2 115.6 143.8 144.1 144.4 144.7 80.9 80.9 80.5 79.9 15 Textile mill products.................... 104.0 103.3 99.8 93.7 124.4 123.9 123.3 122.8 83.6 83.4 80.9 76.4 16 Paper and products ...................... 117.6 117.9 114.0 114.8 136.9 137.2 137.5 137.9. 85.8 85.9 82.9 83.2 17 Chemicals and products................ 124.8 125.8 125.4 125.6 161.9 163.0 164.1 164.9 77.1 77.2 76.4 76.2 18 Plastics materials...................... 141.6 140.9 137.6 136.4 151.5 151.6 151.9 152.3 93.5 93.0 90.5 89.5 19 Petroleum products ...................... 116.0 118.3 117.3 114.3 123.2 123.2 123.2 123.1 94.1 96.0 95.3 92.9 20 Mining ..................................................... 99.4 100.0 100.6 100.4 116.7 116.5 116.3 115.9 85.2 85.8 86.6 86.6 21 Utilities ................................................... 117.4 120.7 121.0 125.1 131.2 132.3 133.4 134.4 89.5 91.2 90.7 93.0 22 Electric................................................. 120.5 124.3 123.9 126.6 129.5 130.9 132.3 133.8 93.1 94.9 93.7 94.6 1973 1975 Previous cycle5 Latest cycle6 1999 2000 High Low High Low High Low Dec. July Aug. Sept.r Oct.r Nov. Dec.p Capacity utilization rate (percent)' 1 Total industry........................................ 89.2 72.6 87.3 71.1 85.4 78.1 81.7 82.3 82.6 82.4 81.9 81.4 80.6 2 Manufacturing........................................ 88.5 70.5 86.9 69.0 85.7 76.6 81.0 81.6 81.7 81.7 81.2 80.4 79.1 3 Primary processing3 ........................ 91.2 68.2 88.1 66.2 88.9 77.7 85.1 85.6 85.4 85.2 84.3 82.5 80.1 4 Advanced processing4...................... 87.2 71.8 86.7 70.4 84.2 76.1 79.2 79.8 80.2 80.2 80.0 79.8 79.2 5 Durable goods.................................... 89.2 68.9 87.7 63.9 84.6 73.1 81.0 82.3 82.6 82.7 81.6 80.5 78.9 6 Lumber and products.................. 88.7 61.2 87.9 60.8 93.6 75.5 83.7 80.3 78.1 78.9 77.3 75.9 75.0 7 Primary metals ............................. 100.2 65.9 94.2 45.1 92.7 73.7 89.5 87.3 86.3 87.3 83.6 83.3 78.5 8 Iron and steel ........................... 105.8 66.6 95.8 37.0 95.2 71.8 88.8 84.8 84.5 86.0 80.6 79.3 72.1 9 Nonferrous................................. 90.8 59.8 91.1 60.1 89.3 74.2 90.4 90.5 88.5 89.0 87.3 88.1 86.0 10 Industrial machinery and equipment................................. 96.0 74.3 93.2 64.0 85.4 72.3 80.2 82.1 82.9 83.1 83.2 82.6 81.6 11 Electrical machinery......................... 89.2 64.7 89.4 71.6 84.0 75.0 84.0 91.8 90.8 90.2 88.2 87.2 85.6 12 Motor vehicles and parts.................. 93.4 51.3 95.0 45.5 89.1 55.9 82.2 78.1 83.1 83.8 79.0 73.5 70.4 13 Aerospace and miscellaneous transportation equipment......... 78.4 67.6 81.9 66.6 87.3 79.2 72.1 72.7 71.7 70.7 71.8 73.1 72.8 14 Nondurable goods ............................... 87.8 71.7 87.5 76.4 87.3 80.7 81.2 80.6 80.5 80.3 80.5 80.0 79.2 15 Textile mill products ...................... 91.4 60.0 91.2 72.3 90.4 77.7 82.9 82.1 80.6 79.9 78.6 75.2 75.2 16 Paper and products........................... 97.1 69.2 96.1 80.6 93.5 85.0 86.8 83.6 82.3 82.6 85.0 83.2 81.3 17 Chemicals and products.................. 87.6 69.7 84.6 69.9 86.2 79.3 78.8 76.2 76.7 76.3 76.6 76.2 75.7 18 Plastics materials ........................ 102.0 50.6 90.9 63.4 97.0 74.8 92.7 92.8 89.1 89.8 90.5 89.5 88.6 19 Petroleum products........................... 96.7 81.1 90.0 66.8 88.5 85.1 93.8 95.0 95.5 95.4 94.6 94.6 89.4 20 Mining ..................................................... 94.3 88.2 96.0 80.3 88.0 87.0 84.5 86.3 86.9 86.4 86.5 86.5 86.9 21 Utilities..................................................... 96.2 82.9 89.1 75.9 92.6 83.4 90.0 89.5 91.5 91.0 89.0 92.1 97.9 22 Electric ................................................. 99.0 82.7 88.2 78.9 95.0 87.1 94.3 91.8 95.3 93.9 91.6 94.4 97.8 1. Data in this table appear in the Board’s G.17 (419) monthly statistical release. The data 3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic are also available on the Board’s web site, http://www.federalreserve.gov/releases/gl7. The materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass; latest historical revision of the industrial production index and the capacity utilization rates primary metals; and fabricated metals. was released in December 2000. The recent annual revision is described in an article in the 4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing March 2001 issue of the Bulletin. For a description of the methods of estimating industrial and publishing; chemical products such as drugs and toiletries; agricultural chemicals; leather production and capacity utilization, see “Industrial Production and Capacity Utilization: and products; machinery; transportation equipment; instruments; and miscellaneous manufac­ Historical Revision and Recent Developments,” Federal Reserve Bulletin, vol. 83 (February tures. 1997), pp. 67-92, and the references cited therein. For details about the construction of 5. Monthly highs, 1978-80; monthly lows, 1982. individual industrial production series, see “Industrial Production: 1989 Developments and 6. Monthly highs, 1988-89; monthly lows, 1990-91. Historical Revision,” Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. 2. Capacity utilization is calculated as the ratio of the Federal Reserve’s seasonally adjusted index of industrial production to the corresponding index of capacity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics □ March 2001 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1999 2000 Group p p r o o r ­ ­ 2 a 0 v 0 g 0 . tion Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept.r Oct.r Nov.1" Dec. Index (1992 = 100) Major Markets 1Total index .......................................................... 100.0 147.5 142.8 143.6 144.3 145.2 146.3 147.2 147.9 147.6 148.6 149.0 148.5 148.1 147.3 2 Products ................................................................. 60.5 136.3 132.7 133.3 134.2 134.4 135.3 135.5 136.0 135.8 136.6 136.7 136.3 136.4 136.1 3 Final products................................................... 46.3 138.8 134.4 135.1 135.9 136.0 137.2 137.5 138.3 138.1 139.2 139.3 138.8 139.1 138.9 4 Consumer goods, total............................... 29.1 123.1 122.4 122.1 122.8 122.2 123.2 123.5 124.2 122.9 123.8 123.8 122.7 122.8 122.9 5 Durable consumer goods...................... 6.1 160.8 161.6 162.9 162.6 162.1 164.7 163.8 164.4 158.7 160.0 162.8 157.4 155.1 152.8 6 Automotive products ........................ 2.6 153.2 153.3 156.9 154.8 155.3 157.6 157.9 157.8 149.4 153.8 156.7 148.0 144.4 140.2 7 Autos and trucks ........................... 1.7 167.0 166.2 171.4 169.0 170.3 173.7 175.7 174.8 160.5 169.8 172.7 159.1 153.4 146.2 8 Autos, consumer ...................... .9 114.0 112.0 116.5 116.3 115.1 118.5 119.7 118.1 113.6 120.3 120.5 107.8 103.0 94.9 9 Trucks, consumer...................... .7 221.9 222.1 228.2 223.7 227.3 230.7 233.7 233.2 209.8 221.8 227.1 212.0 205.1 198.1 10 Auto parts and allied goods .... .9 131.6 132.8 134.3 132.5 131.9 132.7 130.6 131.6 131.6 129.1 132.1 130.2 129.7 129.6 11 Other...................................................... 3.5 167.2 168.7 167.6 169.1 167.7 170.6 168.5 169.8 166.7 165.2 167.7 165.6 164.5 164.3 12 Appliances, televisions, and air conditioners ........................... 1.0 333.3 336.5 328.3 336.1 332.3 341.1 334.6 348.2 322.3 325.0 340.5 333.1 338.6 343.0 13 Carpeting and furniture................ .8 129.7 128.2 129.2 129.7 128.3 131.8 130.8 130.1 131.5 128.6 131.9 130.2 126.0 125.7 14 Miscellaneous home goods......... 1.6 120.4 122.8 122.7 122.7 122.1 122.7 121.6 120.5 121.3 119.7 118.1 117.5 116.7 115.3 15 Nondurable consumer goods................ 23.0 114.2 113.3 112.7 113.5 112.9 113.6 114.1 114.8 114.5 115.2 114.7 114.5 115.0 115.5 16 Foods and tobacco............................. 10.3 110.7 109.7 110.3 110.6 110.8 110.9 110.3 110.8 111.0 111.4 110.5 110.4 110.3 110.3 17 Clothing ............................................... 2.4 84.9 86.8 86.3 87.5 87.2 87.5 86.8 85.1 85.6 84.2 83.1 82.8 83.1 81.9 18 Chemical products............................. 4.5 137.0 137.3 132.9 133.5 134.9 136.5 138.5 139.3 137.4 139.4 138.4 138.9 138.9 139.0 iy Paper products .................................... 2.9 111.1 108.5 109.1 109.6 108.3 108.2 109.0 111.6 112.4 112.4 112.4 113.8 112.6 112.5 20 Energy................................................... 2.9 116.6 113.8 113.1 116.2 110.7 113.6 116.0 117.0 114.9 117.1 118.4 115.7 120.5 124.2 21 Fuels................................................. .8 112.5 112.1 108.4 111.0 114.9 112.1 113.1 113.4 112.6 113.1 115.8 113.0 115.4 106.6 22 Residential utilities......................... 2.1 118.8 114.0 115.1 118.5 107.4 113.8 117.1 118.5 115.6 119.0 119.1 116.7 123.0 135.1 23 Equipment.......................................................... 17.2 166.0 155.7 158.7 159.8 161.3 162.8 163.1 164.3 166.3 167.9 168.3 169.1 169.7 169.0 24 Business equipment.................................... 13.2 194.3 180.6 185.2 187.0 188.9 191.1 191.6 192.8 195.0 197.8 199.5 200.2 200.3 199.4 25 Information processing and related........... 5.4 312.7 274.9 284.8 289.2 293.5 298.8 302.5 307.0 313.9 322.1 327.2 332.8 338.4 339.4 26 Computer and office equipment........... 1.1 1,160.2 930.2 979.1 1,019.5 1,044.0 1,062.0 1,087.8 1,130.8 1,182.8 1,229.0 1,264.1 1,295.8 1,317.3 1,325.8 27 Industrial................................................... 4.0 144.4 137.3 140.4 142.1 142.2 142.9 143.4 143.8 144.4 147.7 146.5 146.9 146.8 144.5 28 Transit........................................................ 2.5 127.6 128.8 130.9 130.6 131.5 131.3 129.0 130.1 127.6 126.8 127.7 121.7 119.7 118.1 29 Autos and trucks ............................... 1.2 145.4 147.1 153.8 154.2 154.0 156.5 153.9 152.9 141.5 142.8 144.2 131.4 126.2 123.3 30 Other .......................................................... 1.3 145.4 137.7 138.6 138.5 142.9 146.7 145.8 142.8 148.1 144.8 149.3 154.0 148.5 150.7 31 Defense and space equipment.................. 3.3 76.1 78.5 77.1 75.9 76.0 75.5 75.5 76.3 77.9 76.1 73.7 75.2 76.9 76.9 32 Oil and gas well drilling............................. .6 131.7 120.1 121.1 124.6 126.7 126.7 130.3 130.8 136.2 137.1 132.8 136.5 138.9 137.9 33 Manufactured homes ................................. .2 116.7 142.0 138.5 133.8 131.7 127.2 122.9 121.9 116.8 115.5 109.3 96.8 93.2 90.5 34 Intermediate products, total........................... 14.2 128.7 127.4 127.8 128.9 129.5 129.3 129.4 129.0 128.7 128.8 128.6 128.4 128.4 127.7 35 Construction supplies................................. 5.3 142.9 142.2 142.6 143.4 144.6 144.4 143.1 143.4 143.8 142.7 143.1 142.2 140.7 137.7 36 Business supplies........................................ 8.9 120.4 118.7 119.0 120.3 120.6 120.4 121.3 120.5 119.8 120.6 120.0 120.3 121.2 121.7 37 Materials................................................................. 39.5 167.8 161.0 162.0 162.4 164.7 166.1 168.4 169.4 169.0 170.5 171.3 170.8 169.3 167.6 38 Durable goods materials ............................... 20,8 227.4 210.6 213.4 215.4 220.0 222.7 227.6 230.3 230.5 233.8 235.7 234.1 231.5 227.6 39 Durable consumer parts............................. 4.0 164.1 163.8 164.3 163.2 164.9 162.2 169.9 165.7 158.3 168.3 169.0 166.9 156.7 149.5 40 Equipment parts.......................................... 7.6 479.0 392.6 404.2 416.6 434.2 451.9 466.8 486.2 499.9 505.7 512.1 513.6 520.0 522.6 41 Other.............................................................. 9.2 134.6 134.8 135.3 134.8 135.9 135.7 135.9 135.9 135.3 134.7 135.5 133.7 132.2 128.9 42 Basic metal materials ........................... 3.1 128.3 131.0 130.7 128.8 131.1 131.9 130.8 130.7 128.5 127.5 129.2 125.1 124.7 118.8 43 Nondurable goods materials ........................ 8.9 114.0 116.8 116.2 115.3 115.6 115.2 115.7 115.2 113.9 112.8 112.7 113.7 111.6 109.8 44 Textile materials.......................................... 1.1 97.8 100.7 100.4 101.9 102.2 101.1 100.9 101.7 97.9 99.3 95.9 93.8 89.2 88.8 45 Paper materials............................................. 1.8 115.9 118.4 118.2 116.7 118.1 118.7 117.5 118.1 114.9 112.8 113.8 117.3 113.6 111.5 46 Chemical materials...................................... 3.9 117.5 120.1 119.7 118.6 118.6 118.1 119.8 118.4 117.0 116.8 116.3 116.4 115.3 113.7 47 Other.............................................................. 2.1 112.7 116.1 114.6 113.0 113.5 112.6 112.4 112.3 113.7 110.2 112.0 114.2 112.2 109.7 48 Energy materials ............................................ 9.7 103.4 103.1 102.6 102.1 102.5 103.5 103.3 103.1 102.9 104.2 104.3 103.9 104.6 106.1 49 Primary energy............................................ 6.3 98.1 98.5 97.2 96.2 97.7 98.8 98.3 98.4 98.7 98.9 98.5 98.2 98.4 99.6 50 Converted fuel materials........................... 3.3 114.5 112.5 113.9 114.6 112.3 113.0 113.7 112.4 110.8 115.1 116.6 116.2 118.3 120.7 Special Aggregates 51 Total excluding autos and trucks...................... 97.1 147.2 142.4 143.0 143.8 144.8 145.7 146.7 147.5 147.5 148.4 148.7 148.7 148.4 147.7 52 Total excluding motor vehicles and parts............. 95.1 146.4 141.5 142.2 143.0 143.9 144.9 145.8 146.5 146.9 147.4 147.7 147.7 147.9 147.4 53 Total excluding computer and office equipment..................................................... 98.2 140.5 136.7 137.2 137.8 138.6 139.6 140.4 141.0 140.5 141.4 141.6 141.1 140.6 139.8 54 Consumer goods excluding autos and trucks . 27.4 120.7 120.0 119.5 120.3 119.6 120.5 120.7 121.5 120.9 121.3 121.2 120.7 121.1 121.5 55 Consumer goods excluding energy.................. 26.2 123.9 123.5 123.2 123.5 123.6 124.4 124.4 125.0 123.9 124.5 124.4 123.6 123.0 122.5 56 Business equipment excluding autos and trucks ............................................................ 12.0 200.2 184.5 188.9 190.8 193.1 195.2 196.1 197.6 201.5 204.5 206.3 208.7 209.5 209.0 57 Business equipment excluding computer and office equipment.......................................... 12.1 158.4 150.3 153.6 154.4 155.7 157.4 157.3 157.6 158.6 160.3 161.2 161.2 160.9 160.0 58 Materials excluding energy............................... 29.8 188.4 179.3 180.8 181.5 184.6 186.0 189.3 190.7 190.3 191.8 193.0 192.4 189.9 186.7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued Monthly data seasonally adjusted 1992 1999 2000 Group S co IC de 2 p p r o o r ­ ­ 2 a 0 v 0 g 0 . tion Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept.r Oct.r Nov.r Dec. Index (1992 = 100) Major Industries 59Total index ................................. 100.0 147.5 142.8 143.6 144.3 145.2 146.3 147.2 147.9 147.6 148.6 149.0 148.5 148.1 147.3 60Manufacturing ............................. 85.4 153.6 148.4 149.2 149.9 151.3 152.2 153.1 153.8 153.7 154.6 155.1 154.8 153.9 152.2 61 Primary processing.................. 26.5 177.8 170.9 171.9 173.0 175.5 177.1 178.7 180.1 179.4 180.3 181.2 180.6 178.1 174.3 62 Advanced processing ............. 58.9 139.3 135.9 136.8 137.1 137.9 138.5 139.1 139.4 139.5 140.5 140.8 140.6 140.6 139.9 63 Durable goods........................... 45.0 193.3 182.6 185.1 186.3 188.9 191.0 193.0 194.6 194.7 196.9 198.4 197.2 196.0 193.5 64 Lumber and products........... "24 2.0 118.2 122.8 122.9 122.3 121.9 121.6 120.5 118.7 118.6 115.5 116.8 114.7 112.6 111.4 65 Furniture and fixtures........... 25 1.4 142.8 138.9 138.9 140.7 139.3 140.7 143.0 141.9 142.6 143.8 146.6 147.3 145.6 143.5 66 Stone, clay, and glass products........................ 32 2.1 134.5 133.4 132.8 133.6 134.4 132.9 134.2 134.6 136.3 136.1 136.5 137.0 134.1 131.5 67 Primary metals .................... 33 3.1 133.2 136.6 136.3 134.7 137.1 137.8 136.7 136.4 133.9 132.4 133.9 128.4 127.9 120.5 68 Iron and steel.................... 331,2 1.7 130.5 135.4 134.8 133.5 136.9 136.8 135.9 135.5 129.9 129.7 131.9 123.7 121.8 110.8 69 Raw steel...................... 331PT .1 120.2 127.4 126.4 121.7 125.8 127.3 127.1 128.2 126.4 123.9 117.7 115.6 106.3 96.9 70 Nonferrous........................ 333-6,9 1.4 136.6 138.3 138.3 136.4 137.6 139.1 137.9 137.6 138.8 135.7 136.5 133.9 135.1 131.9 71 Fabricated metal products . . 34 5.0 135.4 133.3 134.9 135.8 135.6 135.9 136.2 135.7 136.1 136.3 136.0 136.0 134.7 131.2 72 Industrial machinery and equipment.................... 35 8.0 252.8 232.8 238.7 242.1 245.8 247.2 249.9 250.9 253.9 257.9 260.0 262.3 261.9 260.8 73 Computer and office equipment.................... 357 1.8 1,347.9 1,094.0 1,149.5 1,195.9 1,224.7 1,245.1 1,272.3 1,316.2 1,370.4 1,421.6 1,464.2 1,498.8 1,521.4 1,527.6 74 Electrical machinery............. 36 7.3 550.7 445.5 460.2 474.8 495.2 516.5 533.8 555.0 571.2 580.0 592.2 594.8 604.8 610.7 75 Transportation equipment. . . 37 9.5 130.5 130.7 132.0 130.7 131.9 132.1 133.6 133.5 128.0 132.4 132.4 128.5 124.0 120.8 76 Motor vehicles and parts . 371 4.9 169.6 169.4 172.7 170.3 172.5 174.1 177.6 176.1 163.1 173.9 175.5 165.7 154.5 148.2 77 Autos and light trucks . 371PT 2.6 153.1 152.2 157.1 155.1 156.0 159.2 161.1 160.1 147.8 156.4 158.8 145.8 140.4 133.3 78 Aerospace and miscellaneous transportation equipment............. 372-6,9 4.6 93.8 94.2 93.8 93.5 93.7 92.7 92.3 93.6 94.9 93.5 92.1 93.6 95.1 94.7 79 Instruments........................... 38 5.4 122.3 120.8 120.6 119.7 120.2 121.5 121.3 122.2 122.6 123.3 123.7 123.4 124.6 124.3 80 Miscellaneous...................... 39 1.3 130.8 130.9 131.6 130.9 130.6 130.9 130.7 130.5 132.1 130.8 130.9 131.1 130.0 129.5 81 Nondurable goods.................... 40.4 116.9 116.5 116.0 116.3 116.6 116.7 116.7 116.7 116.3 116.3 116.0 116.4 115.8 114.7 82 Foods .................................... 20 9.4 114.7 113.0 113.3 114.1 114.9 114.7 114.2 114.9 115.0 115.1 114.6 114.8 114.8 114.5 83 Tobacco products.................. 21 1.6 95.3 97.8 99.8 97.4 94.3 95.6 95.3 93.8 95.8 96.6 94.5 93.7 93.1 94.1 84 Textile mill products........... 22 1.8 99.9 103.4 103.6 103.8 104.4 104.4 102.6 103.1 101.4 99.4 98.4 96.7 92.3 92.2 85 Apparel products.................. 23 2.2 91.6 94.0 93.4 94.3 94.1 94.6 93.0 91.2 92.0 90.7 89.5 89.2 89.1 87.7 86 Paper and products ............. 26 3.6 116.1 118.8 117.5 117.4 117.8 118.4 116.5 118.8 114.9 113.3 113.7 117.2 114.8 112.3 87 Printing and publishing .... 27 6.7 110.2 108.6 108.9 108.9 109.7 109.1 109.9 109.1 110.0 110.4 110.9 111.6 111.8 111.5 88 Chemicals and products .... 28 9.9 128.6 127.0 124.8 124.9 124.9 125.2 126.3 125.9 124.8 125.9 125.4 126.1 125.7 125.0 89 Petroleum products............. 29 1.4 116.7 115.4 113.7 115.5 118.9 117.2 118.9 118.8 117.0 117.6 117.4 116.5 116.4 110.0 90 Rubber and plastic products . 30 3.5 142.3 142.7 143.2 143.2 143.0 143.5 142.6 143.5 144.4 142.1 141.9 141.3 139.7 137.0 91 Leather and products........... 31 .3 69.9 70.5 72.1 71.4 70.6 70.0 70.5 69.3 70.0 68.8 69.8 68.8 69.1 68.0 92Mining.......................................... 6.9 100.0 98.7 98.6 99.1 100.4 99.9 99.6 100.4 100.5 101.0 100.4 100.4 100.3 100.6 93 Metal........................................ 10 .5 97.2 98.6 101.3 99.1 99.7 98.8 95.7 97.5 92.9 95.8 99.3 96.7 95.5 95.4 94 Coal.......................................... 12 1.0 109.1 108.2 106.8 102.6 110.1 112.6 112.2 113.6 110.3 109.3 107.0 110.2 108.6 108.2 95 Oil and gas extraction............. 13 4.8 95.0 93.4 93.5 94.0 94.6 94.0 94.3 94.8 95.7 96.3 95.7 95.4 95.7 96.3 96 Stone and earth minerals......... 14 .6 126.3 126.3 124.9 131.7 133.4 130.4 123.9 127.7 124.4 125.0 123.7 124.6 122.6 119.5 97Utilities.......................................... 7.7 120.9 117.4 117.8 119.5 114.7 118.7 121.6 121.7 119.1 122.1 121.7 119.4 123.9 132.0 98 Electric...................................... 491.493PT 6.2 123.7 121.2 120.8 121.0 119.7 122.8 125.2 124.8 121.1 126.1 124.7 122.1 126.3 131.3 99 Gas .......................................... 492.493PT 1.6 111.8 104.1 106.8 113.1 98.3 104.4 108.7 110.5 111.0 108.4 110.5 109.1 114.4 130.4 Special Aggregates 100Manufacturing excluding motor vehicles and parts............... 80.5 152.6 147.2 147.9 148.7 150.1 151.0 151.7 152.6 153.2 153.5 153.9 154.2 154.0 152.6 101 Manufacturing excluding computer and office equipment ........................... 83.6 145.4 141.2 141.9 142.3 143.6 144.4 145.2 145.8 145.4 146.2 146.5 146.1 145.2 143.5 102Computers, communicatioas equipment, and semiconductors.................... 5.9 '1,T98.4 905.9 955.1 999.4 1,048.5 1,097.8 1,140.2 1,193.1 1,248.0 1,281.6 1,310.3 1,331.5 1,361.1 1,378.6 103Manufacturing excluding computers and semiconductors.................... 81.1 128.2 126.9 127.1 127.1 127.8 128.0 128.4 128.4 127.7 128.2 128.4 127.9 126.9 125.2 104Manufacturing excluding computers, communications equipment, and semiconductors.................... 79.5 125.0 124.3 124.3 124.3 124.9 125.1 125.4 125.3 124.5 124.9 125.0 124.5 123.4 121.6 Gross value (billions of 1992 dollars, annual rates) Major Markets 105Products, total............................. 2,001.9 2,860.4 2,812.2 2,828.5 2,846.9 2,853.1 2,868.9 2,872.7 2,883.5 2,865.7 2,882.9 2,889.1 2,866.6 2,865.5 2,847.7 106Final ............................................ 1,552.1 2,203.3 2,156.4 2,170.2 2,183.5 2,186.3 2,202.8 2,205.6 2,218.6 2,202.8 2,220.5 2,228.1 2,206.2 2,206.9 2,192.8 107 Consumer goods...................... 1,049.6 1,340.0 1,337.2 1,334.8 1,342.3 1,338.5 1,347.2 1,349.8 1,357.8 1,338.7 1,348.7 1,353.7 1,335.2 1,336.5 1,327.1 108 Equipment ............................... 502.5 865.5 822.1 840.3 846.2 854.0 862.2 862.2 867.3 872.8 880.8 883.3 881.2 880.4 875.8 109Intermediate................................. 449.9 656.7 654.7 657.2 662.3 665.6 665.0 666.0 663.9 661.8 661.5 660.2 659.5 657.6 654.0 1. Data in this table appear in the Board’s G.17 (419) monthly statistical release. The data Historical Revision and Recent Developments,” Federal Reserve Bulletin, vol. 83 (February are also available on the Board’s web site, http://www.federalreserve.gov/releases/gl7. The 1997), pp. 67-92, and the references cited therein. For details about the construction of latest historical revision of the industrial production index and the capacity utilization rates individual industrial production series, see “Industrial Production: 1989 Developments and was released in December 2000. The recent annual revision is described in an article in the Historical Revision,” Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. March 2001 issue of the Bulletin. For a description of the methods of estimating industrial 2. Standard industrial classification. production and capacity utilization, see “Industrial Production and Capacity Utilization: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics □ March 2001 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted Feb. Mar. Apr. May June Julyr Aug.r Sept.r Oct.r Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized .................................... 1,441 1,612 1,664 1,661 1,597 1,559 1,511 1,528 1,511 1,486 1,518 1.546 1,598 2 One-family ............................................. 1,062 1,188 1,247 1,223 1,238 1,164 1,150 1,127 1,117 1,140 1,157 1,191 1,183 3 Two-family or more............................. 379 425 417 22,288r 16,945r 21,022r 4,706r 7,873r 8,035 12,877 6,390 9,121 11,498 4 Started.......................................................... 1,474 1,617 1,667 1,822 1,630 1,652 1,591 1,571 1,527 1,519 1,537 1,529 1,570 5 One-family ............................................. 1,134 1,271 1,335 1,324 1,327 1,310 1,258 1,227 1,201 1,229 1,226 1,232 1,239 6 Two-family or more............................. 340 346 332 6,599r 8,545r 3,989r 9,553r 14,080r 15,685 13,501 14,210 5,803 10,203 7 Under construction at end of period1 ......... 847 971 993 1,041 1,031 1,029 1,023 1,024 1,020 1,016 1,009 1,012 1,010 8 One-family ............................................. 555 659 679 712 706 703 697 696 691 692 689 693 690 9 Two-family or more............................. 292 312 314 14,504r 51,117r 1 l,859r 32,695r 55,458r 33,557 39,051 57,229 31,678 46,673 10 Completed................................................... 1,400 1,474 1,636 1,732 1,728 1,660 1,705 1,545 1,531 1,612 1,559 1.546 1,575 11 One-family ............................................. 1,116 1,160 1,307 1,382 1,375 1,354 1,377 1,222 1,216 1,266 1,215 1,212 1,273 12 Two-family or more............................. 284 315 329 n.a.r n.a.r n.a.r n.a.r n.a.r n.a. n.a. n.a. n.a. n.a. 13 Mobile homes shipped............................. 354 374 348 291 287 271 265 262 251 249 231 213 196 Merchant builder activity in one-family units 14 Number sold............................................... 804 886 907 905 947 865 875 827 914 860 939 929 909 15 Number for sale at end of period1 ........... 287 300 326 309 321 305 308 312 311 313 310 313 317 Price of units sold (thousands of dollars)2 16 Median ........................................................ 146.0 152.5 160.0 162.3 165.7 163.1 165.0 159.9 168.6 165.0 169.9 170.0 169.9 17 Average ........................................................ 176.2 181.9 195.8 199.6 205.3 207.5 200.1 197.7 202.4 200.4 207.2 212.0 205.8 Existing Units (one-family) 18 Number sold............................................... 4,382 4,970 5,197 4,760 5,200 4,880 5,090 5,310 4,820 5,280 5,160 5,000 5,220 Price of units sold (thousands of dollars)2 19 Median ........................................................ 121.8 128.4 133.3 133.7 134.7 136.1 137.6 140.2 143.3 143.2 141.6 138.6 139.9 20 Average........................................................ 150.5 159.1 168.3 168.1 171.5 173.3 176.0 178.9 177.7 183.0 178.6 176.9 176.2 Value of new construction (millions of dollars)3 Construction 21 Total put in place .................................... 656,084 710,104 765,719 816,012 829,517 816,156 811,816 798,860 793,036 801,748 813,477 820,157 815,637 22 Private.......................................................... 501,426 550,983 592,037 629,590 637,743 629,491 629,820 624,383 619,046 616,918 625,317 632,851 632,237 23 Residential............................................... 289,101 314,058 348,584 368,745 372,118 368,948 367,653 363,756 355,196 350,783 351,682 359,058 353,768 24 Nonresidential........................................ 212,325 236,925 243,454 260,845 265,625 260,543 262,167 260,627 263,850 266,135 273,635 273,793 278,469 25 Industrial buildings........................... 36,696 40,464 35,016 38,538 39,030 38,670 39,814 39,951 42,081 41,552 40,872 42,552 48,390 26 Commercial buildings...................... 86,151 95,753 103,759 115,440 116,030 115,042 113,381 112,834 112,114 115,279 118,445 117,907 115,482 27 Other buildings.................................. 37,193 39,607 41,279 45,553 45,808 44,136 45,540 44,559 45,689 46,779 46,689 47,686 46,811 28 Public utilities and other ................ 52,287 61,101 63,400 61,314 64,757 62,695 63,432 63,283 63,966 62,525 67,629 65,648 67,786 29 Public .......................................................... 154,657 159,121 173,682 186,422 191,774 186,665 181,995 174,477 173,990 184,830 188,160 187,305 183,400 30 Military................................................... 2,561 2,538 2,122 3,011 2,249 2,180 2,246 2,157 2,100 2,331 2,418 1,844 2.366 31 Highway ................................................. 43,886 48,339 54,447 53,145 59,007 55,923 51,966 48,148 49,262 52,694 53,183 48,138 46,960 32 Conservation and development ......... 5,708 5,421 6,002 6,975 6,494 5,840 5,363 5,832 4,875 5,629 6,158 6,748 5,392 33 Other....................................................... 102,502 102,823 111,110 123,291 124,024 122,722 122,420 118,340 117,753 124,176 126,401 130,575 128.682 1. Not at annual rates. SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are 2. Not seasonally adjusted. private, domestic shipments as reported by the Manufactured Housing Institute and season­ 3. Recent data on value of new construction may not be strictly comparable with data for ally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are previous periods because of changes by the Bureau of the Census in its estimating techniques. published by the National Association of Realtors. All back and current figures are available For a description of these changes, see Construction Reports (C-30-76-5), issued by the from the originating agency. Permit authorizations are those reported to the Census Bureau Census Bureau in July 1976. from 19,000 jurisdictions beginning in 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3 months earlier Change from 1 month earlier months earlier (annual rate) Index level, Item 2000 2000 Dec. 1999 2000 2000' Dec. Dec. Mar. June Sept. Dec. Aug. Sept. Oct. Nov. Dec. Consumer Prices2 (1982-84=100) 1 All items.................................................................. 2.7 3.4 6.1 2.6 2.8 2.1 -.1 .5 .2 .2 .2 174.0 2 Food ......................................................................... 1.9 2.8 1.7 2.7 3.9 2.6 .2 .2 .1 .0 .5 170.0 3 Energy items............................................................ 13.4 14.2 50.5 6.6 3.5 1.6 -2.9 3.8 .2 .1 .2 128.1 4 All items less food and energy ........................... 1.9 2.6 3.4 2.2 2.7 2.0 .2 .3 .2 .3 .1 182.8 5 Commodities........................................................ .2 .6 .3 .0 1.7 .3 -.1 .5 -.1 .3 -.2 145.1 6 Services ................................................................ 2.7 3.4 4.7 3.0 3.0 2.8 .3 .1 .2 .3 .1 204.4 Producer Prices (1982=100) 7 Finished goods ........................................................ 2.9 3.6 7.9 2.3 2.0 2.0 -.4 ,8r .4 .1 .0 139.7 8 Consumer foods ................................................. .8 1.7 3.6 2.7 -2.3 2.7 — .1' ,2r .8 .2 -.4 137.9 9 Consumer energy ............................................... 18.1 17.1 51.8 8.3 8.6 4.6 -1.8r 4.2r 1.4 .4 -.7 97.9 10 Other consumer goods ...................................... 1.2 1.2 .8 1.0 2.1 1.0 ,3r .r .0 -.1 .3 155.3 11 Capital equipment ............................................ .3 1.2 .9 1.2 1.7 .9 .1 ,r .0 .0 .2 139.9 Intermediate materials 12 Excluding foods and feeds.................................... 4.0 4.2 9.5 3.1 3.1 .9 -.3 .7 .2 -.2 .2 131.5 13 Excluding energy ................................................... 1.9 1.6 4.2 2.7 .3 -.6 -.1 .0 .0 —.! .0 136.8 Crude materials 14 Foods ......................................................................... -.1 7.2 21.5 -10.4 -14.0 41.2 —4.3r 3.6r 3.5 1.3 3.9 103.9 15 Energy....................................................................... 36.9 76.0 84.9 163.6 11.8 76.1 -4.r 9.7r 4.6 -4.1 14.8 154.7 16 Other ......................................................................... 14.0 -5.8 9.9 -10.7 -10.5 -10.8 — 1.7r ,6r -.6 -2.3 .0 137.5 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics □ March 2001 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1999 2000 Account 1997 1998 1999 Q3 Q4 Ql Q2 Q3 Gross Domestic Product 1 Total........................................................................................................................ 8,318.4 8,790.2 9,299.2 9,340.9 9,559.7 9,752.7 9,945.7 10,039.4 By source 2 Personal consumption expenditures ................................................................ 5,529.3 5,850.9 6,268.7 6,319.9 6,446.2 6,621.7 6,706.3 6,810.8 3 Durable goods .................................................................................................. 642.5 693.9 761.3 767.2 787.6 826.3 814.3 824.7 4 Nondurable goods ........................................................................................... 1,641.6 1,707.6 1,845.5 1,860.0 1,910.2 1,963.9 1,997.6 2,031.5 5 Services ............................................................................................................. 3,245.2 3,449.3 3,661.9 3,692.7 3,748.5 3,831.6 3,894.4 3,954.6 6 Gross private domestic investment.................................................................. 1,390.5 1,549.9 1,650.1 1,659.1 1,723.7 1,755.7 1,852.6 1,869.3 7 Fixed investment ............................................................................................. 1,327.7 1,472.9 1,606.8 1,622.4 1,651.0 1,725.8 1,780.5 1,803.0 8 Nonresidential ............................................................................................. 999.4 1,107.5 1,203.1 1,216.8 1,242.2 1,308.5 1,359.2 1,390.6 9 Structures .................................................................................................. 255.8 283.2 285.6 281.2 290.4 308.9 315.1 330.1 10 Producers’ durable equipment.............................................................. 743.6 824.3 917.4 935.6 951.8 999.6 1,044.1 1,060.5 11 Residential structures.................................................................................. 328.2 365.4 403.8 405.6 408.8 417.3 421.3 412.4 12 Change in business inventories..................................................................... 62.9 77.0 43.3 36.7 72.7 29.9 72.0 66.4 13 Nonfarm........................................................................................................ 60.0 76.4 43.6 42.0 71.8 32.4 72.2 67.5 14 Net exports of goods and services .................................................................. -89.3 -151.5 -254.0 -280.5 -299.1 -335.2 -355.4 -389.5 15 Exports............................................................................................................... 966.4 966.0 990.2 999.5 1,031.0 1,051.9 1,092.9 1,130.8 16 Imports............................................................................................................... 1,055.8 1,117.5 1,244.2 1,280.0 1,330.1 1,387.1 1,448.3 1,520.3 17 Government consumption expenditures and gross investment .................. 1,487.9 1,540.9 1,634.4 1,642.4 1,688.8 1,710.4 1,742.2 1,748.8 18 Federal ............................................................................................................... 538.2 540.6 568.6 570.4 591.6 580.1 604.5 594.2 19 State and local .................................................................................................. 949.7 1,000.3 1,065.8 1,072.1 1,097.3 1,130.4 1,137.7 1,154.6 By major type of product 20 Final sales, total.................................................................................................... 8,255.5 8,713.2 9,255.9 9,304.2 9,486.9 9,722.8 9,873.7 9,973.1 21 Goods................................................................................................................. 3,082.5 3,239.3 3,467.0 3,490.6 3,566.0 3,680.3 3,734.1 3,776.5 22 Durable.......................................................................................................... 1.436.2 1,532.3 1,651.1 1,669.4 1,701.8 1,773.7 1,809.6 1,830.6 23 Nondurable.................................................................................................... 1,646.4 1,707.1 1,815.8 1,821.1 1,864.1 1,906.6 1,924.5 1,945.9 24 Services ............................................................................................................. 4,442.1 4,673.0 4,934.6 4,965.2 5,050.3 5,135.2 5,231.4 5,281.6 25 Structures ........................................................................................................... 730.9 800.9 854.3 848.5 870.7 907.4 908.2 915.0 26 Change in business inventories......................................................................... 62.9 77.0 43.3 36.7 72.7 29.9 72.0 66.4 27 Durable goods .................................................................................................. 33.1 45.8 27.2 27.6 47.5 20.7 48.3 39.2 28 Nondurable goods ........................................................................................... 29.8 31.2 16.1 9.1 25.2 9.2 23.7 27.2 Memo 29 Total GDP in chained 1996 dollars.............................................................. 8,159.5 8,515.7 8,875.8 8,905.8 9,084.1 9,191.8 9,318.9 9,369.5 National Income 30 Total........................................................................................................................ 6,618.4 7,038.1 7,469.7 7,493.1 7,680.7 7,833.5 7,983.2 8,088.5 31 Compensation of employees .............................................................................. 4,651.3 4,984.2 5,299.8 5,340.9 5,421.1 5,512.2 5,603.5 5,679.6 32 Wages and salaries ......................................................................................... 3,886.0 4,192.8 4,475.1 4,512.2 4,583.5 4,660.4 4,740.1 4,804.9 33 Government and government enterprises.............................................. 664.3 692.7 724.4 727.5 734.5 749.9 760.2 765.4 34 Other ............................................................................................................. 3,221.7 3,500.1 3,750.7 3,784.7 3,849.0 3,910.5 3,980.0 4,039.5 35 Supplement to wages and salaries .............................................................. 765.3 791.4 824.6 828.7 837.7 851.8 863.3 874.7 36 Employer contributions for social insurance ........................................ 289.9 305.9 323.6 325.9 330.3 337.8 342.9 347.1 37 Other labor income .................................................................................... 475.4 485.5 501.0 502.8 507.4 514.0 520.5 527.6 38 Proprietors’ income1 ........................................................................................... 581.2 620.7 663.5 659.7 689.6 693.9 709.5 724.8 39 Business and professional1 ........................................................................... 551.5 595.2 638.2 644.2 657.9 674.8 688.1 693.1 40 Farm1 ................................................................................................................. 29.7 25.4 25.3 15.5 31.7 19.1 21.5 31.7 41 Rental income of persons2 ................................................................................ 128.3 135.4 143.4 136.6 146.2 145.6 140.8 138.1 42 Corporate profits' ............................................................................................... 833.8 815.0 856.0 842.0 893.2 936.3 963.6 970.3 43 Profits before tax3 ........................................................................................... 792.4 758.2 823.0 819.0 870.7 920.7 942.5 945.1 44 Inventory valuation adjustment..................................................................... 8.4 17.0 -9.1 -19.7 -19.2 -25.0 -13.6 -4.5 45 Capital consumption adjustment................................................................... 32.9 39.9 42.1 42.7 41.6 40.6 34.7 29.7 46 Net interest............................................................................................................ 423.9 482.7 507.1 513.8 530.6 545.4 565.9 575.7 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1999 2000 Account 1997 1998 1999 Q3 Q4 Ql Q2 Q3 Personal Income and Saving 1 Total personal income .................................................................................... 6,937.0 7,391.0 7,789.6 7,828.5 7,972.3 8,105.8 8,242.1 8,349.0 2 Wage and salary disbursements....................................................................... 3,888.9 4,190.7 4,470.0 4,507.0 4,578.3 4,660.4 4,740.1 4,804.9 3 Commodity-producing industries................................................................ 975.1 1,038.6 1,089.2 1,097.8 1,111.2 1,130.9 1,147.1 1,161.4 4 Manufacturing ........................................................................................... 718.4 756.6 782.4 789.0 795.1 802.8 813.1 821.4 5 Distributive industries .................................................................................. 879.6 949.1 1,020.3 1,029.9 1,049.4 1,070.9 1,095.7 1,118.1 6 Service industries ........................................................................................... 1,369.9 1,510.3 1,636.0 1,651.8 1,683.2 1,708.6 1,737.2 1,760.1 7 Government and government enterprises ................................................. 664.3 692.7 724.4 727.5 734.5 749.9 760.2 765.4 8 Other labor income ........................................................................................... 475.4 485.5 501.0 502.8 507.4 514.0 520.5 527.6 9 Proprietors’ income1 ......................................................................................... 581.2 620.7 663.5 659.7 689.6 693.9 709.5 724.8 10 Business and professional1 ......................................................................... 551.5 595.2 638.2 644.2 657.9 674.8 688.1 693.1 11 Farm1 ............................................................................................................... 29.7 25.4 25.3 15.5 31.7 19.1 21.5 31.7 12 Rental income of persons2................................................................................ 128.3 135.4 143.4 136.6 146.2 145.6 140.8 138.1 13 Dividends ............................................................................................................. 334.9 351.1 370.3 373.5 380.2 386.9 392.6 399.7 14 Personal interest income .................................................................................. 864.0 940.8 963.7 969.4 989.0 1,011.6 1,031.3 1,042.9 15 Transfer payments ............................................................................................. 962.2 983.0 1,016.2 1,020.3 1,027.4 1,046.9 1,066.1 1,074.2 16 Old-age survivors, disability, and health insurance benefits ................ 565.8 578.0 588.0 589.7 592.8 607.9 624.3 627.2 17 LESS: Personal contributions for social insurance ................................. 297.9 316.2 338.5 341.0 345.9 353.4 358.8 363.1 18 EQUALS: Personal income ................................................................................ 6,937.0 7,391.0 7,789.6 7,828.5 7,972.3 8,105.8 8,242.1 8,349.0 19 LESS: Personal tax and nontax payments ................................................. 968.8 1,070.9 1,152.0 1,164.0 1,197.3 1,239.3 1,277.2 1,308.1 20 EQUALS: Disposable personal income .......................................................... 5,968.2 6,320.0 6,637.7 6,664.5 6,775.0 6,866.5 6,964.9 7,040.9 21 LESS: Personal outlays.................................................................................. 5,715.3 6,054.7 6,490.1 6,543.3 6,674.1 6,855.6 6,944.3 7,054.7 22 EQUALS: Personal saving.................................................................................. 252.9 265.4 147.6 121.1 101.0 11.0 20.6 -13.8 Memo Per capita (chained 1996 dollars) 23 Gross domestic product .................................................................................... 30,434.4 31,474.2 32,512.4 32,586.0 33,153.5 33,485.6 33,874.7 33,984.3 24 Personal consumption expenditures................................................................ 20,230.9 20,988.5 21,900.7 22,004.4 22,266.4 22,635.5 22,757.7 22,959.1 25 Disposable personal income ........................................................................... 21,838.0 22,672.0 23,191.0 23,203.0 23,404.0 23,472.0 23,639.0 23,732.0 26 Saving rate (percent) ......................................................................................... 4.2 4.2 2.2 1.8 1.5 .2 .3 -.2 Gross saving 27 Gross saving ...................................................................................................... 1,502.3 1,654.4 1,717.6 1,716.8 1,746.3 1,777.0 1,844.5 1,854.7 28 Gross private saving........................................................................................... 1,343.7 1,375.7 1,343.5 1,321.1 1,331.4 1,279.2 1,328.8 1,319.2 29 Personal saving.................................................................................................... 252.9 265.4 147.6 121.1 101.0 11.0 20.6 -13.8 30 Undistributed corporate profits1....................................................................... 261.3 218.9 229.4 214.0 241.7 262.7 278.5 279.6 31 Corporate inventory valuation adjustment ................................................... 8.4 17.0 -9.1 -19.7 -19.2 -25.0 -13.6 -4.5 Capital consumption allowances 32 Corporate ............................................................................................................. 581.5 624.3 676.9 687.7 694.8 711.5 731.1 750.0 33 Noncorporate ...................................................................................................... 250.9 265.1 284.5 293.1 288.7 294.1 298.7 303.3 34 Gross government saving.................................................................................. 158.6 278.7 374.1 395.7 414.9 497.7 515.7 535.5 35 Federal ............................................................................................................. 33.4 137.4 217.3 240.6 238.4 333.0 339.9 354.1 36 Consumption of fixed capital.................................................................. 86.8 88.4 92.8 93.4 95.0 97.2 98.9 100.8 37 Current surplus or deficit (—), national accounts................................. -53.3 49.0 124.4 147.3 143.3 235.8 240.9 253.3 38 State and local ............................................................................................... 125.2 141.3 156.8 155.1 176.6 164.7 175.8 181.4 39 Consumption of fixed capital.................................................................. 94.2 99.5 106.8 107.7 109.9 112.7 115.6 118.2 40 Current surplus or deficit (-), national accounts................................. 31.0 41.7 50.0 47.4 66.6 52.0 60.1 63.2 41 Gross investment ............................................................................................. 1,532.1 1,629.6 1,645.6 1,627.3 1,678.5 1,699.3 1,771.9 1,752.8 42 Gross private domestic investment ................................................................ 1,390.5 1,549.9 1,650.1 1,659.1 1,723.7 1,755.7 1,852.6 1,869.3 43 Gross government investment ......................................................................... 264.6 278.8 308.7 308.0 324.4 334.2 331.9 333.6 44 Net foreign investment....................................................................................... -123.1 -199.1 -313.2 -339.8 -369.6 -390.7 -412.5 -450.1 45 Statistical discrepancy .................................................................................... 29.7 -24.8 -71.9 -89.5 -67.8 -77.7 -72.5 -101.8 1. With inventory valuation and capital consumption adjustments. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 International Statistics □ March 2001 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1999 2000 Item credits or debits 1997 1998 1999 Q3 Q4 Ql Q2 Q3 1 Balance on current account ....................................................................... -140,540 -217,138 -331,479 -89,649 -96,223 -101,505 -104,971 -113,773 2 Balance on goods and services ............................................................ -105,932 -166,898 -264,971 -72,718 -76,280 -85,117 -88,598 -96,503 3 Exports .................................................................................................. 936,937 932,977 956,242 241,969 249,653 255,977 265,969 274,657 4 Imports .................................................................................................. -1,042,869 -1,099,875 -1,221,213 -314,687 -325,933 -341,094 -354,567 -371,160 5 Income, net............................................................................................... 6,186 -6,211 -18,483 -5,535 -5,683 -4,364 -4,103 -4,518 6 Investment, net.................................................................................... 11,050 -1,036 -13,102 -4,193 -4,319 -2,987 -2,706 -3,172 7 Direct ............................................................................................... 71,935 67,728 62,704 15,701 16,275 17,068 19,015 21,558 8 Portfolio ........................................................................................... -60,885 -68,764 -75,806 -19,894 -20,594 -20,055 -21,721 -24,730 9 Compensation of employees ............................................................ -4,864 -5,175 -5,381 -1,342 -1,364 -1,377 -1,397 -1,346 10 Unilateral current transfers, net............................................................ -40,794 -44,029 -48,025 -11,396 -14,260 -12,024 -12,270 -12,752 11 Change in U.S. government assets other than official reserve assets, net (increase, —) ..................................................... 68 -422 2,751 -686 3,711 -131 -574 110 12 Change in U.S. official reserve assets (increase, -)............................. -1,010 -6,783 8,747 1,951 1,569 -554 2,020 -346 13 Gold .......................................................................................................... 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) ............................................................ -350 -147 10 -184 -178 -180 -180 -182 15 Reserve position in International Monetary Fund ........................... -3,575 -5,119 5,484 2,268 1,800 -237 2,328 1,300 16 Foreign currencies .................................................................................. 2,915 -1,517 3,253 -133 -53 -137 -128 -1,464 17 Change in U.S. private assets abroad (increase, -) ............................. -487,998 -328,231 -441,685 -124,174 -120,162 -178,273 -93,870 -76,968 18 Bank-reported claims2 ............................................................................ -141,118 -35,572 -69,862 -11,259 -45,304 -55,511 18,320 -11,383 19 Nonbank-reported claims....................................................................... -122,888 -10,612 -92,328 -27,943 -24,428 -52,563 -36,507 931 20 U.S. purchases of foreign securities, net............................................ -118,976 -135,995 -128,594 -41,420 -17,150 -27,236 -38,196 -30,428 21 U.S. direct investments abroad, net..................................................... -105,016 -146,052 -150,901 -43,552 -33,280 -42,963 -37,487 -36,088 22 Change in foreign official assets in United States (increase, +).................. 18,876 -20,127 42,864 12,191 27,495 22,015 6,346 11,625 23 US. Treasury securities ......................................................................... -6,690 -9,921 12,177 12,963 5,122 16,198 -4,000 -9,001 24 Other U.S. government obligations ..................................................... 4.529 6,332 20,350 1,835 6,730 8,107 10,334 14,272 25 Other U.S. government liabilities'........................................................ -1,041 -3,550 -3,255 -760 89 -644 -781 -620 26 Other U.S. liabilities reported by U.S. banks2................................... 22,286 -9,501 12,692 -2,032 14,427 -2,577 -111 6,339 27 Other foreign official assets3 ................................................................ -208 -3,487 900 185 1,127 931 904 635 28 Change in foreign private assets in United States (increase, +).................. 738,086 502,362 710,700 182,019 157,072 214,520 238,803 188,544 29 U.S. bank-reported liabilities4 .............................................................. 149,026 39,769 67,403 24,585 19,618 -8,824 46,943 13,981 30 U.S. nonbank-reported liabilities .......................................................... 113,921 -7,001 34,298 -8,085 792 58,061 24,038 2,633 31 Foreign private purchases of U.S. Treasury securities, net ........... 146,433 48,581 -20,464 9,639 -17,191 -9,248 -20,597 -12,642 32 U.S. currency flows.................................................................................. 24,782 16,622 22,407 4,697 12,213 -6,847 989 757 33 Foreign purchases of other U.S. securities, net................................. 197,892 218,075 331,523 95,620 92,250 132,416 87,107 118,882 34 Foreign direct investments in United States, net ............................. 106,032 186,316 275,533 55,563 49,390 48,962 100,323 64,933 35 Capital account transactions, net5 ............................................................ 350 637 -3,500 171 -3,993 166 170 165 36 Discrepancy .................................................................................................. -127,832 69.702 11,602 18,177 30,531 43,762 -47,924 -9,357 37 Due to seasonal adjustment................................................................... -9,739 5,738 5,724 -2,515 -9,691 38 Before seasonal adjustment ................................................................... -127,832 69,702 11,602 27,916 24,793 38,038 -45,409 334 Memo Changes in official assets 39 U.S. official reserve assets (increase, —) ................................................. -1,010 -6,783 8,747 1,951 1,569 -554 2,020 -346 40 Foreign official assets in United States, excluding line 25 (increase, +)......................................................................................... 19,917 -16,577 46,119 12,951 27,406 22,659 7,127 12,245 41 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) ........................................ 12,124 -11,531 1,331 -783 -1,673 6,109 1,913 3,450 1. Seasonal factors are not calculated for lines 11-16, 18-20, 22-35, and 38-41. and dealers. 2. Associated primarily with military sales contracts and other transactions arranged with 5. Consists of capital transfers (such as those of accompanying migrants entering or or through foreign official agencies. leaving the country and debt forgiveness) and the acquisition and disposal of nonproduced 3. Consists of investments in U.S. corporate stocks and in debt securities of private nonfinancial assets. corporations and state and local governments. SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current 4. Reporting banks included all types of depository institutions as well as some brokers Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A51 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 2000 Item 1997 1998 1999 May June July Aug. Sept. Oct. Nov.p I Goods and services, balance ........................... -105,932 -166,898 -264,971 -29,604 -29,826 -31,824 -30,059 -33,741 -33,552 -32,994 2 Merchandise ................................................... -196,665 -246,854 -345,559 -36,475 -36,862 -38,524 -36,684 -39,329 -39,887 -39,001 3 Services............................................................ 90,733 79,956 80,588 6,871 7,036 6,700 6,625 5,588 6,335 6,007 4 Goods and services, exports ........................... 936,937 932,977 956,242 87,074 91,288 89,655 92,868 92,654 91,128 90,355 5 Merchandise ................................................... 679,702 670,324 684,358 62,749 66,468 65,096 67,973 67,836 66,346 65,670 6 Services............................................................ 257,235 262,653 271,884 24,325 24,820 24,559 24,895 24,818 24,782 24,685 7 Goods and services, imports ........................... 1,042,869 1,099,875 1,221,213 -116,678 -121,114 -121,479 -122,927 -126,395 -124,680 -123,349 8 Merchandise ................................................... 876,367 917,178 1,029,917 -99,224 -103,330 -103,620 -104,657 -107,165 -106,233 -104,671 9 Services............................................................ 166,502 182,697 191,296 -17,454 -17,784 -17,859 -18,270 -19,230 -18,447 -18,678 1. Data show monthly values consistent with quarterly figures in the U.S. balance of SOURCE. FT900, U.S. Department of Commerce, Bureau of the Census and Bureau of payments accounts. Economic Analysis. 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 2000 2001 Asset 1997 1998 1999 June July Aug. Sept. Oct. Nov. Dec. Jan.p 1 Total ....................................................................... 69,954 81,761c 71,516 67,955c 66,516 65,333 66,256 65,257 65,523 67,647 67,542 2 Gold stock1 1 l,047c 11,046c 11,048c 11,046c 11,046 11,046 11,046 11,046 11,046 11,046 11,046 3 Special drawing rights2'3...................................... 10,027 10,603 10,336 10,444 10,257 10,371 10,316 10,169 10,369 10,539 10,497 4 Reserve position in International Monetary Fund2 ............................................................ 18,071 24,111 17,950 15,428 15,083 13,798 13,685 13,528 13,491 14,824 15,079 5 Foreign currencies4 ............................................ 30,809 36,001 32,182 31,037 30,130 30,118 31,209 30,514 30,617 31,238 30,920 1. Gold held “under earmark” at Federal Reserve Banks for foreign and international SDR holdings and reserve positions in the IMF also have been valued on this basis since July accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold 1974. stock is valued at $42.22 per fine troy ounce. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year 2. Special drawing rights (SDRs) are valued according to a technique adopted by the indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710million; 1979— International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of $1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs. exchange rates for the currencies of member countries. From July 1974 through December 4. Valued at current market exchange rates. 1980, sixteen currencies were used; since January 1981, five currencies have been used. U.S. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 2000 2001 Asset 1997 1998 1999 June July Aug. Sept. Oct. Nov. Dec. Jan.p 1 Deposits ................................................................ 457 167 71 104 76 78 139 115 104 215 199 Held in custody 2 U.S. Treasury securities2 ................................... 620,885 607,574 632,482 627,081 624,177 628,001 611,641 595,591 591,071 594,094 594,694 3 Earmarked gold3.......................... v ... 10,763 __10,343 9,933 9,688 . 9,688 9,674 9,620 9,565 9,505 9,451 9,397 1. Excludes deposits and U.S. Treasury securities held for international and regional 3. Held in foreign and international accounts and valued at $42.22 per fine troy ounce; not organizations. included in the gold stock of the United States. 2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. Treasury securities, in each case measured at face (not market) value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 International Statistics □ March 2001 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 2000 Item 1998 1999 Mayr Juner July Aug. Sept. Oct. Nov.p 1 Total1 ................................................................................................................. 759,928 806,318r 826,264 836,018 846,739 849,469 848,840 849,860 848,454 By type 2 Liabilities reported by banks in the United States ................................. 125,883 138,847r 135,770 136,072 139,627 136,989 143,010 145,902 146,734 3 U.S. Treasury bills and certificates3 ............................................................ 134,177 156,177 148,814 157,190 160,093 159,781 155,498 155,101 155,069 U.S. Treasury bonds and notes 4 Marketable .................................................................................................... 432,127 422,266 435,235 433,823 433,184 433,633 427,007 419,857 414,890 5 Nonmarketable4 ........................................................................................... 6,074 6,111 5,808 5,740 5,180 5,213 5,247 5,280 5,313 6 U.S. securities other than U.S. Treasury securities5 ................................. 61,667 82,917 100,637 103,193 108,655 113,853 118,078 123,720 126,448 By area 1 Europe1 ............................................................................................................ 256,026 244,805 250,306 253,416 257,712 255,635 257,498 263,601 261,524 8 Canada ............................................................................................................... 10,552 12,503 13,027 13,542 13,728 12,992 13,121 12,932 12,044 9 Latin America and Caribbean....................................................................... 79,503 73,518 69,571 71,245 73,344 76,347 77,542 77,500 78,716 10 Asia ................................................................................................................... 400,631 463,703r 482,030 485,343 487,417 490,110 486,890 481,344 480,800 11 Africa................................................................................................................. 10,059 7,523 7,710 7,850 8,656 8,707 8,466 8,323 8,012 12 Other countries ............................................................................................... 3,157 4,266 3,620 4,622 5,882 5,678 5,323 6,160 7,358 1. Includes the Bank for International Settlements. Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, 1993, 30-year maturity issue. negotiable time certificates of deposit, and borrowings under repurchase agreements. 5. Debt securities of U.S. government corporations and federally sponsored agencies, and 3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official U.S. corporate stocks and bonds. institutions of foreign countries. SOURCE. Based on U.S. Department of the Treasury data and on data reported to the 4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of department by banks (including Federal Reserve Banks) and securities dealers in the United zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning States, and on the 1994 benchmark survey of foreign portfolio investment in the United March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue; States. 3.16 LIABILITIES TO, AND CLAIMS ON, FOREIGNERS Reported by Banks in the United States1 Payable in Foreign Currencies Millions of dollars, end of period 1999 2000 Item 1996 1997 1998 Dec. Mar. June Sept. 1 Banks’ liabilities ........................................................................................... 103,383 117,524 101,125 88,537 85,649 85,842 78,872 2 Banks’ claims ............................................................................................... 66,018 83,038 78,162 67,365 63,492 67,862 60,355 3 Deposits ...................................................................................................... 22,467 28,661 45,985 34,426 32,967 31,224 25,847 4 Other claims............................................................................................... 43,551 54,377 32,177 32,939 30,525 36,638 34,508 5 Claims of banks’ domestic customers'..................................................... 10,978 8,191 20,718 20,826 21,753 18,802 19,123 1. Data on claims exclude foreign currencies held by U.S. monetary authorities. 2. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 2000 Item 1997 1998 1999 Mayr June July Aug. Sept. Oct. Nov.p By Holder and Type of Liability 1Total, all foreigners ................................................................ 1,283,027 1,347,837 l,408,740r 1,452,912 l,451,491r l,480,318r l,444,482r l,453,627r 1,510,056 1,522,535 2 Banks’ own liabilities .............................................................. 882,980 884,939 971,536r 1,032,104 l,012,619r 1,050,467r l,013,420r 1,027,122r 1,073,433 1,070,942 3 Demand deposits .................................................................. 31,344 29,558 42,884 29,097 30,719 34,914 30,101 31,964 29,500 31,701 4 Time deposits2....................................................................... 198,546 151,761 163,620r 177,128 182,963r 186,483 184,820 184,822 185,459 192,442 5 Other3...................................................................................... 168,011 140,752 155,853r 171,892 168,148r 172,466r 173,97 lr 174,458 194,628 187,079 6 Own foreign offices4 ............................................................ 485,079 562,868 609,179r 653,987 630,789r 656,604r 624,528r 635,878r 663,846 659,720 7 Banks’ custodial liabilities5..................................................... 400,047 462,898 437,204r 420,808 438,872r 429,851 431,062 426,505 436,623 451,593 8 U.S. Treasury bills and certificates6 ................................. 193,239 183,494 185,676r 174,166 180,822r 182,699 180,925 174,604 173,984 173,846 9 Other negotiable and readily transferable instruments7 .................................................................. 93,641 141,699 132,617r 123,580 124,670 120,624 119,212 120,296 129,724 132,453 10 Other ...................................................................................... 113,167 137,705 118,911 123,062 133,380 126,528 130,925 131,605 132,915 145,294 11 Nonmonetary international and regional organizations8 . . 11,690 11,883 15,276 22,807 21,366 16,689 14,630 15,658 17,104 17,074 12 Banks’ own liabilities ......................................................... 11,486 10,850 14,357 22,109 20,924 16,294 14,377 15,404 16,751 16,676 13 Demand deposits .............................................................. 16 172 98 36 34 30 26 19 48 30 14 Time deposits2.................................................................. 5,466 5,793 10,349 11,393 12,545 10,305 9,062 7,627 5,925 6,549 15 Other3.................................................................................. 6,004 4,885 3,910 10,680 8,345 5,959 5,289 7,758 10,778 10,097 16 Banks’ custodial liabilities5................................................. 204 1,033 919 698 442 395 253 254 353 398 17 U.S. Treasury bills and certificates6 ............................ 69 636 680 582 432 371 217 223 215 249 18 Other negotiable and readily transferable instruments7 .............................................................. 133 397 233 113 10 21 26 26 138 147 19 Other .................................................................................. 2 0 6 3 0 3 10 5 0 2 20 Official institutions9.................................................................. 283,685 260,060 295,024r 284,584 293,262r 299,720 296,770 298,508 301,003 301,803 21 Banks’ own liabilities ......................................................... 102,028 80,256 97,615 87,899 88,392r 92,739 90,985 95,049 102,104 101,213 22 Demand deposits .............................................................. 2,314 3,003 3,341 2,781 2,887 4,063 4,573 5,213 4,361 4,702 23 Time deposits2.................................................................. 41,396 29,506 28,942 31,846 33,696r 34,641 32,009 36,679 34,015 35,013 24 Other3.................................................................................. 58,318 47,747 65,332 53,272 51,809r 54,035 54,403 53,157 63,728 61,498 25 Banks’ custodial liabilities5................................................ 181,657 179,804 197,409r 196,685 204,870 206,981 205,785 203,459 198,899 200,590 26 U.S. Treasury bills and certificates6 ............................. 148,301 134,177 156,177 148,814 157,190 160,093 159,781 155,498 155,101 155,069 27 Other negotiable and readily transferable instruments7 .............................................................. 33,151 44,953 41,182r 47,734 47,611 46,363 45,644 47,660 43,753 44,828 28 Other .................................................................................. 205 674 50 137 69 525 360 301 45 693 29 Banks10........................................................................................ 815,247 885,336 900,379r 937,794 926,262r 955,206r 921,181r 927,099r 963,082 971,842 30 Banks’ own liabilities ......................................................... 641,447 676,057 728,492r 777,854 755,644r 792,072r 754,093r 762,392r 796,805 792,913 31 Unaffiliated foreign banks.............................................. 156,368 113,189 119,313r 123,867 124,855r 135,468r 129,565r 126,514 132,959 133,193 32 Demand deposits ......................................................... 16,767 14,071 17,583 13,254 14,543 17,508 11,959 12,918 12,160 12,834 33 Time deposits2.............................................................. 83,433 45,904 48,140 55,167 58,095 60,703 62,841 59,958 64,321 68,845 34 Other3............................................................................. 56,168 53,214 53,590r 55,446 52,217r 57,257r 54,765r 53,638 56,478 51,514 35 Own foreign offices4 ....................................................... 485,079 562,868 609,179r 653,987 630,789r 656,604r 624,528r 635,878r 663,846 659,720 36 Banks’ custodial liabilities5................................................. 173,800 209,279 171,887' 159,940 170,618r 163,134 167,088 164,707 166,277 178,929 37 U.S. Treasury bills and certificates6 ............................. 31,915 35,359 16,796r 13,994 13,08 lr 12,657 12,251 10,667 9,972 10,285 38 Other negotiable and readily transferable instruments7 .............................................................. 35,393 45,332 45,695 33,667 34,657 34,018 33,893 32,679 34,232 34,957 39 Other .................................................................................. 106,492 128,588 109,396 112,279 122,880 116,459 120,944 121,361 122,073 133,687 40 Other foreigners......................................................................... 172,405 190,558 198,06 lr 207,727 210,601r 208,743 211,901 212,362 228,867 231,816 41 Banks’ own liabilities .......................................................... 128,019 117,776 131,072r 144,242 147,659r 149,362 153,965 154,277 157,773 160,140 42 Demand deposits .............................................................. 12,247 12,312 21,862 13,026 13,255 13,313 13,543 13,814 12,931 14,135 43 Time deposits2.................................................................. 68,251 70,558 76,189r 78,722 78,627 80,834 80,908 80,558 81,198 82,035 44 Other3.................................................................................. 47,521 34,906 33,021 52,494 55,777r 55,215 59,514 59,905 63,644 63,970 45 Banks’ custodial liabilities5................................................. 44,386 72,782 66,989r 63,485 62,942r 59,381 57,936 58,085 71,094 71,676 46 U.S. Treasury bills and certificates6 ............................. 12,954 13,322 12,023r 10,776 10,119r 9,579 8,676 8,216 8,696 8,243 47 Other negotiable and readily transferable instruments7 .............................................................. 24,964 51,017 45,507r 42,066 42,392 40,261 39,649 39,931 51,601 52,521 48 Other .................................................................................. 6,468 8,443 9,459 10,643 10,431 9,541 9,611 9,938 10.797 10,912 Memo 49 Negotiable time certificates of deposit in custody for foreigners ........................................................................... 16,083 27,026 30,345 27,238 26,571 26,186 25,911 25,991 27,164 25,854 1. Reporting banks include all types of depository institutions as well as some brokers and 6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official dealers. Excludes bonds and notes of maturities longer than one year. institutions of foreign countries. 2. Excludes negotiable time certificates of deposit, which are included in “Other negotia­ 7. Principally bankers acceptances, commercial paper, and negotiable time certificates of ble and readily transferable instruments.” deposit. 3. Includes borrowing under repurchase agreements. 8. Principally the International Bank for Reconstruction and Development, the Inter- 4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidiar­ American Development Bank, and the Asian Development Bank. Excludes “holdings of ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory dollars” of the International Monetary Fund. agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 9. Foreign central banks, foreign central governments, and the Bank for International principally of amounts owed to the head office or parent foreign bank, and to foreign Settlements. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. 10. Excludes central banks, which are included in “Official institutions.” 5. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks for foreign customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics □ March 2001 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued Payable in U.S. dollars Millions of dollars, end of period 2000 Item 1997 1998 1999 Mayr Juner July Aug. Sept. Oct. Nov.p Area 50 Total, all foreigners .............................................................. 1,283,027 1,347,837 l,408,740r 1,452,912 1,451,491 l,480,318r l,444,482r l,453,627r 1,510,056 1,522,535 51 Foreign countries.................................................................. 1,271,337 1,335,954 l,393,464r 1,430,105 1,430,125 l,463,669r l,429,852r l,437,969r 1,492,952 1,505,461 52 Europe ...................................................................................... 419,672 427,375 441,810r 429,247 442,979 476,570r 451,531r 459,595 479,945 466,041 53 Austria .................................................................................. 2,717 3,178 2,789 2,486 2,709 3,239 2,783 2,541 2,037 2,671 54 Belgium and Luxembourg................................................. 41,007 42,818 44,692 31,615 31,219 33,282 31,281 29,828 29,438 29,471 55 Denmark................................................................................ 1,514 1,437 2,196 3,632 3,444 3,521 3,689 3,429 3,001 3,531 56 Finland.................................................................................. 2,246 1,862 1,658 1,533 1,395 1,751 1,618 1,512 1,418 1,874 57 France .................................................................................... 46,607 44,616 49,790 43,567 42,095 42,379 42,723 39,693 41,065 42,868 58 Germany................................................................................ 23,737 21,357 24,753r 24,874 28,938 26,484 25,893 26,212 28,658 27,084 59 Greece .................................................................................. 1,552 2,066 3,748 3,030 2,772 2,917 3,455 3,331 3,420 3,333 60 Italy ...................................................................................... 11,378 7,103 6,775 7,197 6,739 5,700 5,566 5,959 5,594 5,521 61 Netherlands ......................................................................... 7,385 10,793 8,143r 6,798 8,783 12,313 13,087 10,311 14,450 13,283 62 Norway.................................................................................. 317 710 1,327 924 2,150 2,337 1,636 3,501 4,101 5,159 63 Portugal ................................................................................ 2,262 3,236 2,228 1,956 2,376 2,169 2,144 2,244 2,261 2,379 64 Russia.................................................................................... 7,968 2,439 5,475 11,711 11,879 14,960 14,252 15,970 17,230 19,992 65 Spain .................................................................................... 18,989 15,781 10,426 10,726 9,935 8,829 8,791 8,421r 9,270 6,900 66 Sweden.................................................................................. 1,628 3,027 4,652 4,390 5,430 5,100 5,992 6,209r 6,247 7,362 67 Switzerland ......................................................................... 39,023 50,654 63,485r 61,400 57,361 76,255r 77,578 88,276 97,099 86,085 68 Turkey .................................................................................. 4,054 4,286 7,842 7,504 8,472 8,341 7,999 8,173 8,492 4,600 69 United Kingdom .............................................................. 181,904 181,554 172,687r 172,747 184,205 194,017r 170,705r 171,867 170,376 169,435 70 Yugoslavia11 ......................................................................... 239 233 286 275 276 277 277 275 270 279 71 Other Europe and other former U.S.S.R.12.................... 25,145 30,225 28,858r 32,882 32,801 32,699 32,062 31,843 35,518 34,214 72 Canada ...................................................................................... 28,341 30,212 34,214r 36,274 37,375 37,231 33,722 33,869r 34,367 31,249 73 Latin America and Caribbean.............................................. 536,393 554,866 578,695r 665,833 641,860 643,748r 633,150r 637,599r 658,199 684,882 74 Argentina .............................................................................. 20,199 19,014 18,633 16,493 16,559 19,092 17,552 18,560 18,746 17,886 75 Bahamas................................................................................ 112,217 118,085 135,81 lr 176,030 184,295 170,530r 176,104r 171,452r 180,951 179,570 76 Bermuda................................................................................ 6,911 6,846 7,874r 8,717 8,025 7,074 8,157 8,100 8,730 7,908 77 Brazil .................................................................................... 31,037 15,815 12,865r 9,946 10,908 11,950 12,351 11,537 10,204 11,631 78 British West Indies ............................................................ 276,418 302,486 312,278r 359,575 323,407 339,700r 321,573r 331,097 340,926 369,208 79 Chile...................................................................................... 4,072 5,015 7,008 6,097 6,194 5,440 5,296 5,346 5,105 5,327 80 Colombia .............................................................................. 3,652 4,624 5,669 4,237 4,361 4,627 4,735 4,658 4,945 4,560 81 Cuba...................................................................................... 66 62 75 77 85 122 91 88 93 87 82 Ecuador ................................................................................ 2,078 1,572 1,956 2,281 2,276 2,219 2,082 2,074 2,084 2,061 83 Guatemala ........................................................................... 1,494 1,336 1,626 1,687 1,658 1,730 1,659 1,671 1,667 1,676 84 Jamaica.................................................................................. 450 577 520 720 687 725 915 830 680 722 85 Mexico .................................................................................. 33,972 37,157 30,717 33,921 33,943 33,379 33,291 33,878 36,054 33,856 86 Netherlands Antilles .......................................................... 5,085 5,010 4,047r 6,592 7,925 7,164 6,373 5,159 4,614 5,321 87 Panama.................................................................................. 4,241 3,864 4,415 3,769 3,824 3,353 3,561 3,661 3,788 3,977 88 Peru ...................................................................................... 893 840 1,142 1,103 1,133 1,097 1,065 1,091 1,153 1,193 89 Uruguay ................................................................................ 2,382 2,486 2,386 2,534 2,689 2,179 2,541 2,567 2,512 2,944 90 Venezuela.............................................................................. 21,601 19,894 20,192r 20,526 22,258 21,462 23,909 23,997 24,283 25,958 91 Other .................................................................................... 9,625 10,183 11,481 11,528 11,633 11,905 11,895 11,833 11,664 10,997 92 Asia ........................................................................................... 269,379 307,960 319,489r 281,985 289,816 285,018 291,017 286,551 299,145 301,681 China 93 Mainland ......................................................................... 18,252 13,441 12,325 7,825 10,000 9,385 11,769 11,830 13,719 15,835 94 Taiwan ............................................................................. 11,840 12,708 13,603r 14,111 13,584 13,156 14,675 15,140 18,289 17,630 95 Hong Kong ..................................................................... 17,722 20,900 27,701r 23,636 23,638 25,675 26,749 26,583 25,784 25,905 96 India...................................................................................... 4,567 5,250 7,367 5,723 5,613 5,712 5,547 5,838 5,548 5,168 97 Indonesia .............................................................................. 3,554 8,282 6,567 6,954 7,341 7,342 7,318 7,310 7,589 8,375 98 Israel ...................................................................................... 6,281 7,749 7,488 5,542 6,124 5,794 5,951 7,132 6,668 6,538 99 Japan .................................................................................... 143,401 168,563 159,075 148,662 153,649 147,549 146,382 142,782 150,196 149,656 100 Korea (South) ..................................................................... 13,060 12,524 12,988r 12,937 10,349 8,618 8,819 9,043 6,684 6,821 101 Philippines ........................................................................... 3,250 3,324 3,268r 1,748 2,003 1,649 1,679 1,822 1,676 2,334 102 Thailand................................................................................ 6,501 7,359 6,050 3,427 3,529 3,900 3,504 3,330 3,178 3,477 103 Middle Eastern oil-exporting countries13 ...................... 14,959 15,609 21,314r 18,729 18,578 22,195 21,968 21,851 23,852 23,729 104 Other .................................................................................... 25,992 32,251 41,743 32,691 35,408 34,043 36,656 33,890 35,962 36,213 105 Africa........................................................................................ 10,347 8,905 9,468 8,446 8,729 9,739 9,607 9,821 9,625 9,482 106 Egypt .................................................................................... 1,663 1,339 2,022 1,729 1,966 1,780 1,615 1,544 1,546 1,655 107 Morocco................................................................................ 138 97 179 122 149 118 109 112 121 100 108 South Africa......................................................................... 2,158 1,522 1,495 661 601 792 708 842 767 853 109 Zaire...................................................................................... 10 5 14 13 6 5 7 5 4 4 110 Oil-exporting countries14................................................... 3,060 3,088 2,914 3,298 3,405 4,258 4,470 4,499 4,405 4,027 111 Other .................................................................................... 3,318 2.854 2,844 2,623 2,602 2,786 2,698 2,819 2,782 2,843 112 Other ........................................................................................ 7,205 6,636 9,788r 8,320 9,366 11,363 10,825 10,534 11,671 12,126 113 Australia................................................................................ 6,304 5,495 8,377 7,585 8,563 10,346 9,825 9,507 10,562 10,961 114 Other .................................................................................... 901 1,141 1,41 r 735 803 1,017 1,000 1,027 1,109 1,165 115 Nonmonetary international and regional organizations .. 11,690 11,883 15,276 22,807 21,366 16,689 14,630 15,658 17,104 17,074 116 International15 ..................................................................... 10,517 10,221 12,876 21,375 20,106 15,295 13,118 14,387 16,126 16,061 117 Latin American regional16................................................. 424 594 1,150 624 768 786 1,146 888 589 530 118 Other regional17.................................................................. 749 1,068 1,250 808 492 608 366 383 389 483 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 15. Principally the International Bank for Reconstruction and Development. Excludes 12. Includes the Bank for International Settlements. Since December 1992, has “holdings of dollars” of the International Monetary Fund. included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 17. Asian, African, Middle Eastern, and European regional organizations, except the Bank Emirates (Trucial States). for International Settlements, which is included in “Other Europe.” 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A55 3.18 BANKS’ OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 2000 Area or country 1997 1998 1999 May Juner Julyr Aug.r Sept.r Oct. Nov.p 1Total, all foreigners ................................................................ 708,225 734,995 793,139r 821,796r 827,178 829,845 796,497 840,425 857,015 855,902 2Foreign countries..................................................................... 705,762 731,378 788,576r 817,453r 822,455 825,959 792,720 835,560 851,792 852,217 3 Europe ......................................................................................... 199,880 233,321 311,686r 355,446r 353,006 357,980 327,409 359,865 360,292 365,931 4 Austria .................................................................................... 1,354 1,043 2,643 2,213r 2,119 2,617 1,956 2,584 2,809 2,681 5 Belgium and Luxembourg................................................... 6,641 7,187 10,193 5,955r 6,392 6,302 5,819 6,344 6,020 4,946 6 Denmark.................................................................................. 980 2,383 1,669 2,001 3,442 3,349 3,278 3,403 3,093 3,462 7 Finland.................................................................................... 1,233 1,070 2,020 2,365r 2,601 2,897 2,701 3,561 4,927 6,517 8 France ...................................................................................... 16,239 15,251 29,142 35,214r 28,635 25,845 23,229 27,062 29,093 30,169 9 Germany.................................................................................. 12,676 15,923 29,205 31,519r 33,583 30,452 31,804 33,229 33,017 32,059 in Greece .................................................................................... 402 575 806 830r 836 754 557 516 513 776 11 Italy ......................................................................................... 6,230 7,284 8,496 6,535r 7,688 6,447 7,358 6,215 6,482 6,738 12 Netherlands ........................................................................... 6,141 5,697 11,810 14,377 15,669 13,159 14,999 15,507 16,165 15,975 13 Norway.................................................................................... 555 827 1,000 l,829r 1,932 2,401 1,448 4,474 4,655 6,156 14 Portugal .................................................................................. 777 669 1,571 1,268 1,424 1,454 1,273 1,480 1,574 1,249 15 Russia...................................................................................... 1,248 789 713 715 744 718 666 643 647 663 16 Spain ...................................................................................... 2,942 5,735 3,796 3,126 3,844 4,767 3,566 3,208 3,360 2,593 17 Sweden.................................................................................... 1,854 4,223 3,264 7,056r 8,692 8,404 8,761 8,501 8,504 8,777 18 Switzerland ........................................................................... 28,846 46,874 79,158 I05,574r 86,284 94,550 87,172 100,345 103,668 107,986 19 Turkey .................................................................................... 1,558 1,982 2,617 3,23 r 3,188 2,735 2,855 2,821 2,831 3,260 20 United Kingdom .................................................................. 103,143 106,349 115,97 r 124,020r 137,697 143,459 123,360 132,503 122,829 124,618 21 Yugoslavia2 ........................................................................... 52 53 50 49 49 49 49 49 49 49 22 Other Europe and other former U.S.S.R.3........................ 7,009 9,407 7,562 7,569r 8,187 7,621 6,558 7,420 10,056 7,257 23 Canada ......................................................................................... 27,189 47,037 37,206 45,529r 42,606 40,420 37,934 37,610 38,639 39,283 74 Latin America and Caribbean................................................. 343,730 342,654 355,168r 326,68 lr 334,463 334,855 338,764 347,550 357,588 356,183 75 Argentina ................................................................................ 8,924 9,552 10,894r 10,756r 10,729 10,660 10,597 10,840 11,166 11,462 26 Bahamas.................................................................................. 89,379 96,455 99,066r 74,297r 83,524 76,477 78,896 83,126 83,523 78,541 27 Bermuda.................................................................................. 8,782 5,011 8,007 6,478 6,285 6,906 4,684 6,265 8,426 8,223 28 Brazil ...................................................................................... 21,696 16,184 16,987r 17,695r 17,902 18,199 18,555 19,061 20,202 19,840 29 British West Indies .............................................................. 145,471 153,749 167,189 165,92 lr 164,969 172,232 175,936 178,744 184,812 187,513 30 Chile......................................................................................... 7,913 8,250 6,607 6,399 6,213 6,070 5,985 5,954 5,755 5,771 31 Colombia ................................................................................ 6,945 6,507 4,524 4,037r 3,797 3,909 3,953 3,850 3,846 3,938 32 Cuba......................................................................................... 0 0 0 0 0 0 3 0 0 0 33 Ecuador .................................................................................. 1,311 1,400 760 640 613 610 607 623 639 629 34 Guatemala .............................................................................. 886 1,127 1,135 1,245 1,235 1,215 1,277 1,226 1,245 1,247 35 Jamaica.................................................................................... 424 239 295 300 291 299 305 337 379 355 36 Mexico .................................................................................... 19,428 21,212 17,899 16,771 17,066 16,426 16,840 16,849 16,737 16,960 37 Netherlands Antilles ............................................................ 17,838 6,779 5,982 6,579 6,502 6,652 5,804 5,770 6,158 6,554 38 Panama.................................................................................... 4,364 3,584 3,387 2,984 3,063 2,981 2,882 2,781 2,668 2,839 39 Peru ......................................................................................... 3,491 3,275 2,529 2,515 2,458 2,488 2,487 2,697 2,653 2,713 40 Uruguay .................................................................................. 629 1,126 801 708 620 649 777 728 663 675 41 Venezuela................................................................................ 2,129 3,089 3,494 3,645r 3,471 3,357 3,410 3,390 3,321 3,442 42 Other ...................................................................................... 4,120 5,115 5,612r 5,711 5,725 5,725 5,766 5,309 5,395 5,481 43 Asia ............................................................................................. 125,092 98,607 75,143r 80,205r 82,398 83,127 79,022 81,655 87,465 82,801 China 44 Mainland ........................................................................... 1,579 1,261 2,110r 2,611 1,688 1,822 1,601 1,519 1,912 1,644 45 Taiwan ................................................................................ 922 1,041 1,390 l,728r 1,335 922 790 2,475 3,691 2,483 46 Hong Kong ....................................................................... 13,991 9,080 5,903r 4,568r 4,261 5,777 5,403 6,014 6,540 6,454 47 India ......................................................................................... 2,200 1,440 1,738 1,941 1,905 2,013 2,037 2,006 1,787 1,736 48 Indonesia ................................................................................ 2,651 1,942 1,776 1,819 1,856 1,940 1,880 1,982 2,009 1,961 49 Israel ......................................................................................... 768 1,166 1,875 2,857 1,610 1,982 2,281 1,116 1,551 1,387 50 Japan ...................................................................................... 59,549 46,713 28,641r 31,689 33,256 31,209 32,494 35,234 35,773 36,487 51 Korea (South) ....................................................................... 18,162 8,289 9,426r 14,01 r 15,855 18,915 16,924 14,457 18,589 16,176 52 Philippines .............................................................................. 1,689 1,465 1,410 1,884 1,868 1,802 1,483 1,495 1,473 1,749 53 Thailand .................................................................................. 2,259 1,807 1,515 1,137 1,255 1,051 1,059 1,071 1,046 1,221 54 Middle Eastern oil-exporting countries4.......................... 10,790 16,130 14,267r 11,666 12,128 10,367 10,006 9,961 9,650 8,487 55 Other ....................................................................................... 10,532 8,273 5,092r 4,294 5,381 5,327 3,064 4,325 3,444 3,016 56 Africa ........................................................................................... 3,530 3,122 2,268 2,097r 2,482 2,505 2,215 2,597 2,232 1,918 57 Egypt .............................,....................................................... 247 257 258 218 230 217 186 176 201 184 58 Morocco.................................................................................. 511 372 352 271 259 272 247 254 252 235 59 South Africa........................................................................... 805 643 622 329r 760 411 358 372 322 341 60 Zaire......................................................................................... 0 0 24 0 0 0 0 0 0 0 61 Oil-exporting countries5 ..................................................... 1,212 936 276 508 430 751 616 913 656 342 62 Other ...................................................................................... 755 914 736 771 803 854 808 882 801 816 63 Other ........................................................................................... 6,341 6,637 7,105 7,495r 7,500 7,072 7,376 6,283 5,576 6,101 64 Australia.................................................................................. 5,300 6,173 6,824 7,139 7,240 6,891 7,036 6,036 5,238 5,923 65 Other ...................................................................................... 1,041 464 281 356r 260 181 340 247 338 178 66 Nonmonetary international and regional organizations6 .. . 2,463 3,617 4,563 4,343 4,723 3,886 3,777 4,865 5,223 3,685 1. Reporting banks include all types of depository institutions as well as some brokers and 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab dealers. Emirates (Trucial States). 2. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 5. Comprises Algeria, Gabon, Libya, and Nigeria. 3. Includes the Bank for International Settlements. Since December 1992, has included all 6. Excludes the Bank for International Settlements, which is included in “Other Europe.” parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics □ March 2001 3.19 BANKS’ OWN AND DOMESTIC CUSTOMERS’ CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 2000 Type of claim 1997 1998 1999 May Juner Julyr Aug.r Sept.r Oct. Nov.p 1 Total ..................................................................... 852,852 875,891 944,937 1,011,285 1,009,934 2 Banks’ claims ..................................................... 708,225 734,995 793,139 821,796r 827,178 829,845 796,497 840,425 857,015 855,902 3 Foreign public borrowers ............................. 20,581 23,542 35,090 43,197r 41,224 48,478 41,459 40,436 49,691 48,890 4 Own foreign offices2...................................... 431,685 484,535 529,682 553,291r 557,717 557,557 544,142 576,452 581,381 587,788 5 Unaffiliated foreign banks............................. 109,230 106,206 97,186 88,139r 88,954 85,738 78,561 87,276 82,904 82,349 6 Deposits........................................................ 30,995 27,230 34,538 24,769 22,371 21,856 21,822 23,765 23,468 23,760 7 Other ............................................................ 78,235 78,976 62,648 63,370r 66,583 63,882 56,739 63,511 59,436 58,589 8 All other foreigners........................................ 146,729 120,712 131,181 137,169' 139,283 138,072 132,335 136,261 143,039 136,875 9 Claims of banks’ domestic customers3 ......... 144,627 140,896 151,798 184,107 169,509 10 Deposits............................................................ 73,110 79,363 88,006 106,055 87,340 11 Negotiable and readily transferable instruments4............................................. 53,967 47,914 51,161 62,975 70,334 12 Outstanding collections and other claims ..................................................... 17,550 13,619 12,631 15,077 11,835 Memo 13 Customer liability on acceptances .................. 9,624 4,520 4,553 5,056 4,827 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the 33,816 39,978 31,125 45,468 44,139 46,337 55,293 57,784 53,848 55,510 1, For banks’ claims, data are monthly; for claims of banks’ domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Reporting banks include all types of depository institution as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar­ paper. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS’ OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1999 2000 Maturity, by borrower and area2 1996 1997 1998 Dec. Mar. June Sept. 1 Total .................................................................................................... 258,106 276,550 250,418 267,082 262,173 273,139 263,500 By borrower 2 Maturity of one year or less .......................................................... 211,859 205,781 186,526 187,894 181,050 185,927 174,809 3 Foreign public borrowers............................................................ 15,411 12,081 13,671 22,811 23,436 24,850 23,647 4 All other foreigners ..................................................................... 196,448 193,700 172,855 165,083 157,614 161,077 151,162 5 Maturity of more than one year ................................................... 46,247 70,769 63,892 79,188 81,123 87,212 88,691 6 Foreign public borrowers............................................................ 6,790 8,499 9,839 12,013 12,852 15,905 16,236 7 All other foreigners ..................................................................... 39,457 62,270 54,053 67,175 68,271 71,307 72,455 By area Maturity of one year or less 8 Europe............................................................................................. 55,690 58,294 68,679 80,842 79,638 75,561 69,486 9 Canada ........................................................................................... 8,339 9,917 10,968 7,859 8,408 7,344 8,225 10 Latin America and Caribbean ................................................... 103,254 97,207 81,766 69,498 62,923 66,140 65,918 11 Asia................................................................................................. 38,078 33,964 18,007 21,802 23,002 29,091 23,874 12 Africa ............................................................................................. 1,316 2,211 1,835 1,122 957 1,520 1,594 13 All other3 ...................................................................................... 5,182 4,188 5,271 6,771 6,122 6,271 5,712 Maturity of more than one year 14 Europe............................................................................................. 6,965 13,240 14,923 22,951 23,951 25,404 27,550 15 Canada ........................................................................................... 2,645 2,525 3,140 3,192 3,127 3,323 3,261 16 Latin America and Caribbean ................................................... 24,943 42,049 33,442 39,051 39,714 42,427 41,166 17 Asia................................................................................................. 9,392 10,235 10,018 11,257 11,612 12,549 13,131 18 Africa ............................................................................................. 1,361 1,236 1,232 1,065 965 924 895 19 All other3 ...................................................................................... 941 1,484 1,137 1,672 1,754 2,585 2,688 1. Reporting banks include all types of depository institutions as well as some brokers and 2. Maturity is time remaining until maturity, dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period 1998 1999 2000 Area or country 1996 1997 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept. 1Total ................................................................................................................. 645.8 721.8 1071.9 1051.6 981.9r 930.4r 930.4r 934.5r 949.4r 989.6r 952.4 2 G-10 countries and Switzerland.................................................................. 228.3 242.8 240.0 217.7 208.9r 224.0r 208.2r 232.3r 278.5r 320.0r 286.9 3 Belgium and Luxembourg ....................................................................... 11.7 11.0 11.7 10.7 15.6 16.2r 15.7 14.3 14.2 13.8 13.0 4 France .......................................................................................................... 16.6 15.4 20.3 18.4 21.6 20.7r 20.0r 29.0 27.1 32.6 29.1 5 Germany ...................................................................................................... 29.8 28.6 31.4 30.9 34.7 32.1 37.4 38.7 37.3 31.5 37.8 6 Italy............................................................................................................... 16.0 15.5 18.5 11.5 17.8 16.4 15.0 18.1 20.0 20.8 18.8 7 Netherlands.................................................................................................. 4.0 6.2 8.4 7.8 10.7 13.3 11.7r 12.3 17.1 16.1 17.6 8 Sweden ........................................................................................................ 2.6 3.3 2.1 2.3 4.0 2.6 3.6 3.0 3.9 3.5 4.3 9 Switzerland.................................................................................................. 5.3 7.2 7.6 8.5 7.8 8.3r 8.8 10.3 10.1 13.8 10.9 10 United Kingdom......................................................................................... 104.7 113.4 100.1 85.4 56.2r 74.7r 52.3r 68.2r 107.8r 144.3r 118.7 11 Canada.......................................................................................................... 14.0 13.7 15.9 16.8 15.9 17.1 17.9 16.3 17.5 18.3r 18.7 12 Japan ............................................................................................................ 23.7 28.6 23.9 25.4 24.6 22.6 25.7r 22. r 23.5 25.4 18.1 13Other industrialized countries....................................................................... 66.1 65.5 78.5 69.0 80.1 79.7 71.7 68.4 62.8 75.2r 72.5 14 Austria.......................................................................................................... 1.1 1.5 2.1 1.4 2.8 2.8 3.0 3.5 2.6 2.8 3.5 15 Denmark ...................................................................................................... 1.5 2.4 3.0 2.2 3.4 2.9 2.1 2.6 1.5 1.2 1.8 16 Finland.......................................................................................................... .8 1.3 1.6 1.4 1.5 .9 .9 .9 .8 1.2r 2.8 17 Greece.......................................................................................................... 6.7 5.1 5.8 5.9 6.5 5.9 6.6 6.0 5.7 6.8 6.4 18 Norway ........................................................................................................ 8.0 3.6 3.2 3.2 3.1 3.0 3.8 3.3 3.0 4.6 8.5 19 Portugal........................................................................................................ .9 .9 1.1 1.4 1.4 1.2 1.2 1.0 1.0 2.0 1.5 20 Spain............................................................................................................. 13.3 12.6 19.5 13.7 15.7 16.6 15.1 12.1 11.3 12.2 10.5 21 Turkey.......................................................................................................... 2.7 4.5 5.2 4.8 5.2 4.9 4.7 4.8 5.1 5.6 5.6 22 Other Western Europe .............................................................................. 4.9 8.3 10.4 10.4 10.2 10.3r 9.2 6.8 8.3 8.0r 8.4 23 South Africa............................................................................................... 2.0 2.2 5.4 4.4 4.8 4.7 4.0 3.8 4.8 4.5r 2.9 24 Australia ...................................................................................................... 24.0 23.1 21.4 20.3 25.4 26.6 21.1 23.5 18.6 26.3 20.5 25 OPEC2............................................................................................................... 19.8 26.0 26.0 27.1 26.2 26.2r 30.1 31.4 28.9 32.3 31.8 26 Ecuador ........................................................................................................ 1.1 1.3 1.2 1.3 1.2 1.1 .9 .8 .7 .7 .6 27 Venezuela .................................................................................................... 2.4 2.5 3.1 3.2 3.5 3.2 3.0 2.8 3.0 2.9 2.9 28 Indonesia...................................................................................................... 5.2 6.7 4.7 4.7 4.5 5.0 4.4 4.2 3.9 4.1 4.4 29 Middle East countries................................................................................ 10.7 14.4 16.1 17.0 16.7 16.5 21.4 23.lr 21.1 24.0 22.7 30 African countries ...................................................................................... .4 1.2 .8 1.0 .4 ,5r .5 .5 .2 .7 1.2 31 Non-OPEC developing countries................................................................ 130.3 139.2 140.4 143.4 146.4r 148.6 144.6r 149.4r 154.8r 158.3r 150.5 Latin America 32 Argentina...................................................................................................... 14.3 18.4 22.9 23.1 24.4r 22.8 22.8r 23.2r 22.4r 21.6r 21.4 33 Brazil............................................................................................................. 20.7 28.6 24.0 24.7 24.2 25.2r 23.5r 27.7r 28.r 28.3r 28.5 34 Chile ............................................................................................................. 7.0 8.7 8.5 8.3 8.6 8.2 7.7 7.4 8.2 8.1 7.4 35 Colombia...................................................................................................... 4.1 3.4 3.4 3.2 3.3 3.1 2.7 2.5 2.5 2.4 2.4 36 Mexico ........................................................................................................ 16.2 17.4 18.7 18.9 19.7 18.5 19.4 18.7 18.3 20.5 17.5 37 Peru............................................................................................................... 1.6 2.0 2.2 2.2 2.2 2.1 1.8 1.7 1.9 2.1 2.1 38 Other............................................................................................................. 3.3 4.1 4.6 5.4 5.3 5.5 5.5 5.9 6.5 6.7 6.3 Asia China 39 Mainland.................................................................................................. 2.5 3.2 2.8 3.0 5.0 5.3 3.3 3.6 4.6 3.8 3.4 40 Taiwan...................................................................................................... 10.3 9.5 12.5 13.3 11.8 12.6 12.3 12.0 12.6 12.6 12.8 41 India ............................................................................................................. 4.3 4.9 5.3 5.5 5.5 6.7 7.0 7.7 7.9 8.2 5.8 42 Israel ............................................................................................................. .5 .7 .9 1.1 1.1 2.0 1.0 1.8 3.3 1.5 1.1 43 Korea (South)............................................................................................. 21.5 15.6 13.1 13.7 13.7 15.3 16.0 15.2r 17.4 21.2 21.0 44 Malaysia ...................................................................................................... 6.0 5.1 5.0 5.6 5.9 6.0 6.1 6.1 6.5 6.8 6.4 45 Philippines .................................................................................................. 5.8 5.7 4.7 5.1 5.4 5.7 5.8 6.2 5.3 5.3 4.7 46 Thailand ...................................................................................................... 5.7 5.4 5.3 4.7 4.5 4.2 4.0 4.1 4.3 4.0 3.9 47 Other Asia .................................................................................................. 4.1 4.3 3.1 2.9 3.0 2.8 2.9r 2.9 2.6 2.5 2.3 Africa 48 Egypt............................................................................................................. .7 .9 1.7 1.3 1.4 1.4 1.3 1.4 1.4 1.3 1.1 49 Morocco ...................................................................................................... .7 .6 .5 .5 .5 .5 .5 .4 .3 .3 .4 50 Zaire ............................................................................................................. .1 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3............................................................................................... .9 .8 1.1 1.0 ,9r 1.0 1.0 1.0 .9 .9 2.1 52 Eastern Europe............................................................................................... 6.9 9.1 6.3 5.5 6.8r 5.7r 5.4 5.2 6.3 9.4 9.1 53 Russia4.......................................................................................................... 3.7 5.1 2.8 2.2 2.0r 2.1 2.0 1.6 1.7 1.5 1.4 54 Other ............................................................................................................. 3.2 4.0 3.5 3.3 4.8 3.7 3.4 3.6 4.7 7.9 7.6 55 Offshore banking centers .............................................................................. 135.1 140.2 121.0 93.9 83.0r 66.0r 79.1r 59.9r 42.0 52.4 50.6 56 Bahamas ...................................................................................................... 20.5 24.2 30.7 35.4 22.0r 10.4r 18.2r 13.7r 2.4 .5 .6 57 Bermuda ...................................................................................................... 4.5 9.8 10.4 4.6 3.9 5.7 8.2 8.0 7.3 6.3 6.3 58 Cayman Islands and other British West Indies................................... 37.2 43.4 27.8 12.8 13.9 7.2 6.3 1.3 .0 5.1 5.9 59 Netherlands Antilles.................................................................................. 26.1 14.6 6.0 2.6 2.7 1.3 9.1 1.7 2.5 2.6 1.9 60 Panama5 ...................................................................................................... 2.0 3.1 4.0 3.9 3.9 3.9 3.9 3.9 3.4 3.3 2.5 61 Lebanon ...................................................................................................... .1 .1 .2 .1 .1 .1 .2 .1 .1 .1 .1 62 Hong Kong, China.................................................................................... 27.9 32.2 30.6 23.3 22.8 22.0 22.4 21.0 22.2 20.7 20.5 63 Singapore .................................................................................................... 16.7 12.7 11.1 11.1 13.5 15.2 10.6 10.1 4.1 13.6 12.7 64 Other6 .......................................................................................................... .1 .1 .2 .2 .2 .1 .2 .1 .1 .1 .1 65 Miscellaneous and unallocated7.................................................................. 59.6 99.1 459.9 495.1 430.4 380.2 391.2 387.9 376.1 342. r 351.1 1. The banking offices covered by these data include U.S. offices and foreign branches of 2. Organization of Petroleum Exporting Countries, shown individually; other members of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include Arab Emirates); and Bahrain and Oman (not formally members of OPEC). large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository 3. Excludes Liberia. Beginning March 1994 includes Namibia. institutions as well as some types of brokers and dealers. To eliminate duplication, the data 4. As of December 1992, excludes other republics of the former Soviet Union. are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign 5. Includes Canal Zone. branch of the same banking institution. 6. Foreign branch claims only. These data are on a gross claims basis and do not necessarily reflect the ultimate country 7. Includes New Zealand, Liberia, and international and regional organizations. risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks are available in the quarterly Country Exposure Lending Survey published by the Federal Financial Institutions Examination Council. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics □ March 2001 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1999 2000 Type of liability, and area or country 1996 1997 1998 June Sept. Dec. Mar. June Sept.p 1 Total ...................................................................................................... 61,782 57,382 46,570 49,337 52,979 53,044 53,489 70,534 76,944 2 Payable in dollars................................................................................ 39,542 41,543 36,668 36,032 36,296 37,605 35,614 47,864 51,751 3 Payable in foreign currencies ......................................................... 22,240 15.839 9,902 13,305 16,683 15,415 17,875 22,670 25,193 By type 4 Financial liabilities.............................................................................. 33.049 26,877 19,255 25,058 27,422 27,980 29,180 44,068 49,895 5 Payable in dollars........................................................................... 11,913 12,630 10,371 13,205 12,231 13,883 12,858 22,803 26,159 6 Payable in foreign currencies ..................................................... 21,136 14,247 8,884 11,853 15,191 14,097 16,322 21,265 23,736 7 Commercial liabilities ....................................................................... 28,733 30,505 27,315 24,279 25,557 25,064 24,309 26,466 27,049 8 Trade payables ................................................................................ 12,720 10,904 10,978 10,935 12,651 12,857 12,401 13,764 14,218 9 Advance receipts and other liabilities ........................................ 16,013 19,601 16,337 13,344 12,906 12,207 11,908 12,702 12,831 10 Payable in dollars............................................................................ 27,629 28,913 26,297 22,827 24,065 23,722 22,756 25,061 25,592 11 Payable in foreign currencies ..................................................... 1,104 1,592 1,018 1,452 1,492 1,318 1,553 1,405 1,457 By area or country Financial liabilities 12 Europe............................................................................................... 23,179 18,027 12,589 19,578 21,695 23,241 24,050 30,332 36,175 13 Belgium and Luxembourg ....................................................... 632 186 79 70 50 31 4 163 169 14 France ........................................................................................... 1,091 1,425 1,097 1,287 1,675 1,659 1,849 1,702 1,299 15 Germany ...................................................................................... 1,834 1,958 2,063 1,959 1,712 1,974 1,880 1,671 2,132 16 Netherlands.................................................................................. 556 494 1,406 2,104 2,066 1,996 1,970 2,035 2,040 17 Switzerland.................................................................................. 699 561 155 143 133 147 97 137 178 18 United Kingdom......................................................................... 17,161 11,667 5,980 13,097 15,096 16,521 16,579 21,463 28,601 19 Canada ............................................................................................. 1,401 2,374 693 320 344 284 313 714 249 20 Latin America and Caribbean ..................................................... 1,668 1,386 1,495 1,369 1,180 892 846 2,874 3,447 21 Bahamas ...................................................................................... 236 141 7 1 1 1 1 78 105 22 Bermuda ...................................................................................... 50 229 101 52 26 5 1 1,016 1,182 23 Brazil ........................................................................................... 78 143 152 131 122 126 128 146 132 24 British West Indies..................................................................... 1,030 604 957 944 786 492 489 463 501 25 Mexico ........................................................................................ 17 26 59 19 28 25 22 26 35 26 Venezuela .................................................................................... 1 1 2 1 0 0 0 0 0 27 Asia.................................................................................................... 6,423 4,387 3,785 3,217 3,622 3,437 3,275 9,453 9,320 28 Japan ............................................................................................. 5,869 4,102 3,612 3,035 3,384 3,142 2,985 6,024 4,782 29 Middle Eastern oil-exporting countries' ............................... 25 27 0 2 3 3 4 5 7 30 Africa ............................................................................................... 38 60 28 29 31 28 28 33 48 31 Oil-exporting countries'............................................................ 0 0 0 0 0 0 0 0 0 32 All other1 ......................................................................................... 340 643 665 545 550 98 668 662 656 Commercial liabilities 33 Europe............................................................................................... 9,767 10,228 10,030 8,718 9,265 9,262 8,646 9,293 9,470 34 Belgium and Luxembourg ....................................................... 479 666 278 189 128 140 78 178 155 35 France ........................................................................................... 680 764 920 656 620 672 539 711 727 36 Germany ...................................................................................... 1,002 1,274 1,392 1,143 1,201 1,131 914 948 1,023 37 Netherlands.................................................................................. 766 439 429 432 535 507 648 562 424 38 Switzerland.................................................................................. 624 375 499 497 593 626 536 565 647 39 United Kingdom......................................................................... 4,303 4,086 3,697 2,959 3,175 3,071 2,661 2,982 3,034 40 Canada ............................................................................................. 1,090 1,175 1,390 1,670 1,753 1,775 2,024 2,053 1,897 41 Latin America and Caribbean ..................................................... 2,574 2,176 1,618 1,674 1,957 2,310 2,286 2,607 2,523 42 Bahamas ...................................................................................... 63 16 14 19 24 22 9 10 15 43 Bermuda ...................................................................................... 297 203 198 180 178 152 287 300 377 44 Brazil ........................................................................................... 196 220 152 112 120 145 115 119 166 45 British West Indies..................................................................... 14 12 10 5 39 48 23 22 19 46 Mexico ........................................................................................ 665 565 347 490 704 887 805 1,073 1,080 47 Venezuela .................................................................................... 328 261 202 149 182 305 193 239 124 48 Asia.................................................................................................... 13.422 14,966 12,342 10,039 10,428 9.886 9,681 10,965 11,221 49 Japan ............................................................................................. 4,614 4,500 3,827 2,753 2,689 2,609 2,274 2,200 2,069 50 Middle Eastern oil-exporting countries1................................. 2,168 3,111 2,852 2,209 2,618 2,551 2,308 3,489 3,720 51 Africa ............................................................................................... 1,040 874 794 832 959 950 943 950 1,285 52 Oil-exporting countries"............................................................ 532 408 393 392 584 499 536 575 693 53 Other3................................................................................................. 840 1,086 1,141 1,346 1,195 881 729 598 653 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1999 2000 Type of claim, and area or country 1996 1997 1998 June Sept. Dec. Mar. June Sept.p 1 Total ...................................................................................................... 65,897 68,128 77,462 63,884 67,566 76,669 84,266 80,725 94,806 2 Payable in dollars................................................................................ 59,156 62,173 72,171 57,006 60,456 69,170 74,331 72,294 82,877 3 Payable in foreign currencies .......................................................... 6,741 5,955 5,291 6,878 7,110 7,472 9,935 8,431 11,929 By type 4 Financial claims .................................................................................. 37,523 36,959 46,260 31,957 33,877 40,231 47,798 44,303 58,303 5 Deposits ........................................................................................... 21,624 22,909 30,199 13,350 15,192 18,566 23,316 17,462 30,928 6 Payable in dollars....................................................................... 20,852 21,060 28,549 11,636 13,240 16,373 21,442 15,361 27,974 7 Payable in foreign currencies ................................................. 772 1,849 1,650 1,714 1,952 2,193 1,874 2,101 2,954 8 Other financial claims..................................................................... 15,899 14,050 16,061 18,607 18,685 21,665 24,482 26,841 27,375 9 Payable in dollars....................................................................... 12,374 11,806 14,049 14,800 15,718 18,593 19,659 22,384 20,541 10 Payable in foreign currencies................................................... 3,525 2,244 2,012 3,807 2,967 3,072 4,823 4,457 6,834 11 Commercial claims............................................................................. 28,374 31,169 31,202 31,927 33,689 36,438 36,468 36,422 36,503 12 Trade receivables ........................................................................... 25,751 27,536 27,202 27,791 29,397 32,629 31,443 31,277 31,533 13 Advance payments and other claims.......................................... 2,623 3,633 4,000 4,136 4,292 3,809 5,025 5,145 4,970 14 Payable in dollars........................................................................... 25,930 29,307 29,573 30,570 31,498 34,204 33,230 34,549 34,362 15 Payable in foreign currencies ..................................................... 2,444 1,862 1,629 1,357 2,191 2,207 3,238 1,873 2,141 By area or country Financial claims 16 Europe............................................................................................... 11,085 14,999 12,294 13,978 13,878 13,023 16,789 18,254 23,706 17 Belgium and Luxembourg ....................................................... 185 406 661 457 574 529 540 317 304 18 France ........................................................................................... 694 1,015 864 1,368 1,212 967 1,835 1,292 1,477 19 Germany ...................................................................................... 276 427 304 367 549 504 669 576 696 20 Netherlands.................................................................................. 493 677 875 997 1,067 1,229 1,981 1,984 2,486 21 Switzerland.................................................................................. 474 434 414 504 559 643 612 624 626 22 United Kingdom......................................................................... 7,922 10,337 7,766 8,631 8,157 7,561 9,044 11,668 16,191 23 Canada ............................................................................................. 3,442 3,313 2,503 2,828 3,172 2,553 3,175 5,799 7,517 24 Latin America and Caribbean ..................................................... 20,032 15,543 27,714 11,486 12,749 18,206 21,945 14,874 21,691 25 Bahamas ...................................................................................... 1,553 2,308 403 467 755 1,593 1,299 655 1,358 26 Bermuda ...................................................................................... 140 108 39 39 524 11 11 34 22 27 Brazil ........................................................................................... 1,468 1,313 835 1,102 1,265 1,476 1,646 1,666 1,568 28 British West Indies..................................................................... 15,536 10,462 24,388 7,393 7,263 12,099 15,814 7,751 15,722 29 Mexico ......................................................................................... 457 537 1,245 1,702 1,791 1,798 1,979 2,048 2,280 30 Venezuela .................................................................................... 31 36 55 71 47 48 65 78 101 31 Asia.................................................................................................... 2,221 2,133 3,027 2,801 3,205 5,457 4,430 3,923 4,002 32 Japan ............................................................................................. 1,035 823 1,194 949 1,250 3,262 2,021 1,410 1,726 33 Middle Eastern oil-exporting countries1 ............................... 22 11 9 5 5 21 29 42 85 34 Africa ............................................................................................... 174 319 159 228 251 286 232 320 284 35 Oil-exporting countries ............................................................ 14 15 16 5 12 15 15 39 3 36 All other3........................................................................................... 569 652 563 636 622 706 1,227 1,133 1,103 Commercial claims 37 Europe............................................................................................... 10,443 12,120 13,246 12,961 14,367 16,389 16,118 15,928 16,481 38 Belgium and Luxembourg ....................................................... 226 328 238 286 289 316 271 425 393 39 France ........................................................................................... 1,644 1,796 2,171 2,094 2,375 2,236 2,520 2,692 2,924 40 Germany ...................................................................................... 1,337 1,614 1,822 1,660 1,944 1,960 2,034 1,906 2,143 41 Netherlands.................................................................................. 562 597 467 389 617 1,429 1,337 1,242 1,310 42 Switzerland.................................................................................. 642 554 483 385 714 610 611 563 682 43 United Kingdom......................................................................... 2,946 3,660 4,769 4,615 4,789 5,827 5,354 4,929 5,198 44 Canada ............................................................................................. 2,165 2,660 2,617 2,855 2,638 2,757 3,088 3,250 2,945 45 Latin America and Caribbean ..................................................... 5,276 5,750 6,296 6,278 5,879 5,959 5,899 5,792 5,798 46 Bahamas ...................................................................................... 35 27 24 21 29 20 15 48 75 47 Bermuda ...................................................................................... 275 244 536 583 549 390 404 381 387 48 Brazil ........................................................................................... 1,303 1,162 1,024 887 763 905 849 894 982 49 British West Indies..................................................................... 190 109 104 127 157 181 95 51 55 50 Mexico ......................................................................................... 1,128 1,392 1,545 1,478 1,613 1,678 1,529 1,565 1,615 51 Venezuela .................................................................................... 357 576 401 384 365 439 435 466 379 52 Asia.................................................................................................... 8,376 8,713 7,192 7,690 8,579 9,165 9,101 9,173 8,991 53 Japan ............................................................................................. 2,003 1,976 1,681 1,511 1,823 2,074 2,082 1,882 2,071 54 Middle Eastern oil-exporting countries1 ............................... 971 1,107 1,135 1,465 1,479 1,625 1,533 1,241 1,197 55 Africa ............................................................................................... 746 680 711 738 682 631 716 766 895 56 Oil-exporting countries ............................................................ 166 119 165 202 221 171 82 160 392 57 Other3.................................................................................................. 1,368 1,246 1,140 1,405 1,544 1,537 1,546 1,513 1,393 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics □ March 2001 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 2000 2000 Transaction, and area or country 1998 1999 Jan.— Nov. May June July Aug. Sept. Oct. Nov.p U.S. corporate securities Stocks 1 Foreign purchases..................................................................... 1,574,192 2,340,659 3,318,607 268,499r 300,356 271,145 286,819 297,677r 339,995 284,909 2 Foreign sales............................................................................. 1,524,203 2,233,137 3,155,501 262,187r 282,563 255,999 262,775 289,118r 323,659 275,855 3 Net purchases, or sales (—) ................................................. 49,989 107,522 163,106 6,312 17,793 15,146 24,044 8,559 16,336 9,054 4 Foreign countries .................................................................. 50,369 107,578 163,102 6,292r 17,823 15,136 24,020 8,603 16,338 9,068 5 Europe........................................................................................ 68,124 98,060 153,450 7,496 14,853 12,922 15,678 10,014 14,040 7,485 6 France .................................................................................... 5,672 3,813 5,687 -588 -653 1,292 575 -565 1,757 408 7 Germany ................................................................................ 9,195 13,410 30,975 3,355 2,544 371 2,670 643 1,383 988 8 Netherlands........................................................................... 8,249 8,083 3,224 -113 584 554 594 792 -135 323 9 Switzerland........................................................................... 5,001 5,650 12,644 585 67 1,702 1,114 780 488 -598 10 United Kingdom.................................................................. 23,952 42,902 50,536 1,440 7,026 6,033 7,098 5,163 6,283 3,210 11 Canada ...................................................................................... -4,689 -335 4,259 835r -46 -166 1,038 —924r 194 1,477 12 Latin America and Caribbean .............................................. 757 5,187 -15,053 —2,634r 1,898 1,363 4,907 —3,406r -4,400 -2,979 13 Middle East1.............................................................................. -1,449 -1,066 8,912 705 4 98 908 52 754 340 14 Other Asia ................................................................................ -12,351 4,445 11,043 -119r 870 815 1,789 2,707r 5,840 3,310 15 Japan ...................................................................................... -1,171 5,723 455 -1,045 439 492 568 2,467 2,640 662 16 Africa ......................................................................................... 639 372 460 -50 54 -124 2 -56 -27 80 17 Other countries......................................................................... -662 915 31 59r 190 228 -302 216 -63 -645 18 Nonmonetary international and regional organizations ................................................. -380 -56 7 21 -30 10 24 -42 -2 -14 Bonds2 19 Foreign purchases..................................................................... 905,782 854,692 1,087,507 89,760 107,281 87,580 107,808 106,384 102,945 113,843 20 Foreign sales............................................................................. 727,044 602,100 781,161 68,212 75,117 67,010 69,514 76,225 71,602 77,596 21 Net purchases, or sales (—) ................................................. 178,738 252,592 306346 21,548 32,164 20,570 38,294 30,159 31,343 36,247 22 Foreign countries .................................................................. 179,081 252,994 306,451 21,493r 32,215 20,482 38,215 30,161 31,356 36,381 23 Europe........................................................................................ 130,057 140,674 162,368 9,475 19,378 7,789 21,618 17,058 16,965 15,845 24 France.................................................................................... 3,386 1,870 2,078 104 159 85 334 -819 347 272 25 Germany ................................................................................ 4,369 7,723 4,145 175 897 154 1,185 44 433 537 26 Netherlands........................................................................... 3,443 2,446 855 283 -169 -575 850 -818 848 183 27 Switzerland........................................................................... 4,826 4,553 3,922 9 324 1,003 757 333 350 483 28 United Kingdom.................................................................. 99,637 106,344 126,457 6,237 16,218 4,003 15,909 15,950 12,503 12,082 29 Canada ...................................................................................... 6,121 6,043 12,873 1,076 1,092 943 1,965 811 897 1,179 30 Latin America and Caribbean .............................................. 23,938 58,783 55,317 2,786 4,390 4,743 3,829 6,338 5,018 6,600 31 Middle East1............................................................................. 4,997 1,979 805 -47 99 264 54 -702 -54 437 32 Other Asia ................................................................................ 12,662 42,817 72,579 7,999' 7,059 6,601 10,562 6,777 8,215 11,673 33 Japan ...................................................................................... 8,384 17,541 35,744 3,491 3,945 3,320 5,664 3,573 3,690 7,269 34 Africa ........................................................................................ 190 1,411 862 40 72 10 37 49 58 25 35 Other countries......................................................................... 1,116 1,287 1,647 164 125 132 150 -170 257 622 36 Nonmonetary international and regional organizations ................................................. -343 -402 -71 58 -51 88 110 -2 -13 -134 Foreign securities 37 Stocks, net purchases, or sales (-)...................................... 6,227 15,640 -7,686 7,144r -3,096r -15,501r 602 10,479 2,922 5,894 38 Foreign purchases................................................................ 929,923 1,177,303 1,671,921 145,942r 153,373r 136,108r 143,618 149,696 153,760 142,158 39 Foreign sales......................................................................... 923,696 1,161,663 1,679,607 138,798r 156,469r 151,609r 143,016 139,217 150,838 136,264 40 Bonds, net purchases, or sales (-) ...................................... -17,350 -5,676 -2,494 4,244r 5,751r -6,488r -2,811 267 -3,440 8,451 41 Foreign purchases................................................................ 1,328,281 798,267 875,915 79,536r 82,953r 68,425r 74,803 92,182 98,523 94,973 42 Foreign sales......................................................................... 1,345,631 803,943 878,409 75,292r 77,202r 74,913r 77,614 91,915 101,963 86,522 43 Net purchases, or sales (—), of stocks and bonds .... -11,123 9,964 -10,180 ll,388r 2,655r —21,989r —2,209 10,746 -518 14,345 44 Foreign countries .................................................................. -10,778 9,679 -10,732 ll,323r 2,808r —21,748r -2,055 10,570 -685 14,106 45 Europe........................................................................................ 12,632 59,247 -21,180 9,676r —1,88 lr -24,004r -6,190 6,530 -4,016 7,568 46 Canada ...................................................................................... -1,901 -999 -2,619 - l,661r 972r 253rr 916 -1,142 1,810 503 47 Latin America and Caribbean .............................................. -13,798 -4,726 -14,498 -930r 2,038r —931 -562 665 1,040 -405 48 Asia............................................................................................. -3,992 -42.961 24,416 4,520r l,628r 2,973r 3,160 3,867 -47 5,802 49 Japan ...................................................................................... -1,742 -43,637 20,228 5,699r 3,165r 4,116r 1,478 2,082 -1,255 2,092 50 Africa ........................................................................................ -1,225 710 989 -55r —37r 532 -50 49 13 10 51 Other countries......................................................................... -2,494 -1,592 2,160 -227 88r —57 Ir 671 601 515 628 52 Nonmonetary international and regional organizations................................................... -345 285 570 76 -150 —241 -154 180 167 239 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, 2. Includes state and local government securities and securities of U.S. government Saudi Arabia, and United Arab Emirates (Trucial States). agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Holdings and Transactions A61 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales (—) during period 2000 2000 Area or country 1998 1999 J N a o n v . . - May June July Aug. Sept. Oct. Nov.p 1 Total estimated ............................................................................................. 49,039 -9,953 -43,697 -7,018 -17,932 -6,061 -114 -8,516 -3,038 -13,773 2 Foreign countries ........................................................................................... 46,570 -10,518 -43,130 -6,820 -17,597 -5,746 -117 -8,741 -3,223 -13,626 3 Europe.......................................................................................................... 23,797 -38,228 -43,920 -2,526 -9,935 -6,351 3,707 -1,284 -3,708 -10,991 4 Belgium and Luxembourg .................................................................. 3,805 -81 169 -743 252 -138 138 -127 320 53 5 Germany .................................................................................................. 144 2,285 -6,239 74 609 -2,199 -36 -1,738 1,424 -2,185 6 Netherlands............................................................................................. -5,533 2,122 3,762 -1,159 -389 -584 91 836 183 264 7 Sweden .................................................................................................... 1,486 1,699 754 266 -47 114 56 214 -118 -104 8 Switzerland............................................................................................. 5,240 -1,761 -10,390 -337 -1,928 -1,398 -338 -959 -57 -301 9 United Kingdom.................................................................................... 14,384 -20,232 -29,470 178 -9,243 -4,372 3,054 -1,865 -3,793 -6,035 10 Other Europe and former U.S.S.R....................................................... 4,271 -22,260 -2,506 -805 811 2,226 742 2,355 -1,667 -2,683 11 Canada ........................................................................................................ 615 7,348 1,517 -681 226 -872 222 1,417 160 -840 12 Latin America and Caribbean ................................................................ -3,662 -7,523 -4,669 -3,122 -3,839 1,415 245 -4,979 3,963 -507 13 Venezuela ............................................................................................... 59 362 988 4 16 89 45 314 152 251 14 Other Latin America and Caribbean ................................................. 9,523 1,661 -9,835 -548 -4,748 1,261 61 -4,936 3,030 -1,262 15 Netherlands Antilles............................................................................. -13,244 -9,546 4,178 -2,578 893 65 139 -357 781 504 16 Asia............................................................................................................... 27,433 29,359 2,092 -908 -3,988 -488 -4,918 -3,319 -4,688 -1,289 17 Japan........................................................................................................ 13,048 20,102 14,435 -2,486 -2,660 672 367 1,717 1,608 4,445 18 Africa .......................................................................................................... 751 -3,021 -370 -114 -130 4 9 -139 -6 -16 19 Other............................................................................................................. -2,364 1,547 2,220 531 69 546 618 -437 1,056 17 20 Nonmonetary international and regional organizations ........................ 2,469 565 -567 -198 -335 -315 3 225 185 -147 21 International ............................................................................................... 1,502 190 -498 -158 -286 -333 15 391 39 -146 22 Latin American regional ......................................................................... 199 666 70 -14 -9 -1 -10 1 28 -1 Memo 23 Foreign countries ........................................................................................... 46,570 -10,518 -43,130 -6,820 -17,597 -5,746 -117 -8,741 -3,223 -13,626 24 Official institutions.................................................................................... 4,123 -9,861 -7,376 -1,405 -1,412 -639 449 -6,626 -7,150 -4,967 25 Other foreign ............................................................................................. 42,447 -657 -35,754 -5,415 -16,185 -5,107 -566 -2,115 3,927 -8,659 Oil-exporting countries 26 Middle East2 .................................................................................................. -16,554 2,207 3,450 572 859 267 217 -1,030 -724 -888 27 Africa3............................................................................................................... 2 0 0 0 0 0 0 0 0 0 1. Official and private transactions in marketable U.S. Treasury securities having an 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab original maturity of more than one year. Data are based on monthly transactions reports. Emirates (Trucial States). Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign 3. Comprises Algeria, Gabon, Libya, and Nigeria. countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics □ March 2001 3.28 FOREIGN EXCHANGE RATES AND INDEXES OF THE FOREIGN EXCHANGE VALUE OF THE U.S. DOLLAR1 Currency units per U.S. dollar except as noted 2000 2001 Item 1998 1999 2000 Aug. Sept. Oct. Nov. Dec. Jan. Exchange Rates COUNTRY/CURRENCY UNIT 1 Australia/dollar2................................................... 62.91 64.54 58.15 58.08 55.21 52.80 52.18 54.66 55.52 2 Austria/schilling................................................... 12.379 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 3 Belgium/franc........................................................ 36.31 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 4 Brazil/real.............................................................. 1.1605 1.8207 1.8301 1.8091 1.8397 1.8813 1.9483 1.9632 1.9561 5 Canada/dollar........................................................ 1.4836 1.4858 1.4855 1.4828 1.4864 1.5125 1.5426 1.5219 1.5032 6 China, P.R./yuan ................................................. 8.3008 8.2783 8.2784 8.2796 8.2785 8.2785 8.2774 8.2771 8.2776 7 Denmark/krone...................................................... 6.7030 6.9900 8.0953 8.2459 8.5849 8.7276 8.6992 8.3059 7.9629 8 European Monetary Union/euro3...................... n.a. 1.0653 0.9232 0.9045 0.8695 0.8525 0.8552 0.8983 0.9376 9 Finland/markka...................................................... 5.3473 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 France/franc .......................................................... 5.8995 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11 Germany/deutsche mark .................................... 1.7597 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12 Greece/drachma ................................................... 295.70 306.30 365.92 372.97 389.67 398.29 397.94 379.58 n.a. 13 Hong Kong/dollar ............................................... 7.7467 7.7594 7.7924 7.7995 7.7985 7.7977 7.7991 7.7991 7.7998 14 India/rupee ............................................................ 41.36 43.13 45.00 45.77 45.97 46.43 46.82 46.78 46.61 15 Ireland/pound2 ..................................................... 142,48 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16 Italy/lira ................................................................. 1,736.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 17 Japan/yen .............................................................. 130.99 113.73 107.80 108.08 106.84 108.44 109.01 112.21 116.67 18 Malaysia/ringgit................................................... 3.9254 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 19 Mexico/peso.......................................................... 9.152 9.553 9.459 9.272 9.362 9.537 9.508 9.467 9.769 20 Netherlands/guilder ............................................. 1.9837 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 53.61 52.94 45.68 44.52 41.71 40.01 39.90 42.97 44.42 22 Norway/krone........................................................ 7.5521 7.8071 8.8131 8.9526 9.2331 9.3794 9.3524 9.0616 8.7817 23 Portugal/escudo ................................................... 180.25 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 24 Singapore/dollar................................................... 1.6722 1.6951 1.7250 1.7206 1.7406 1.7525 1.7478 1.7361 1.7380 25 South Africa/rand................................................. 5.5417 6.1191 6.9468 6.9570 7.1805 7.4902 7.6889 7.6439 7.7786 26 South Korea/won................................................. 1,400.40 1,189.84 1,130.90 1,114.47 1,117.57 1,131.10 1,156.54 1,216.94 1,272.63 27 Spain/peseta .......................................................... 149.41 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 28 Sri Lanka/rupee ................................................... 65.006 70.868 76.964 78.283 78.731 79.291 80.381 82.030 85.833 29 Sweden/krona........................................................ 7.9522 8.2740 9.1735 9.2771 9.6853 9.9930 10.0965 9.6604 9.4910 30 Switzerland/franc................................................. 1.4506 1.5045 1.6904 1.7149 1.7586 1.7745 1.7779 1.6855 1.6305 31 Taiwan/dollar........................................................ 33.547 32.322 31.260 31.106 31.198 31.846 32.433 33.123 32.721 32 Thailand/baht........................................................ 41.262 37.887 40.210 40.889 41.992 43.334 43.791 43.246 43.149 33 United Kingdom/pound2 .................................... 165.73 161.72 151.56 148.89 143.36 145.06 142.58 146.29 147.75 34 Venezuela/bolivar................................................. 548.39 606.82 680.52 689.17 690.39 692.86 695.77 698.85 700.02 Indexes4 Nominal 35 Broad (January 1997= 100)5 ............................. 116.48 116.87 119.93 120.12r 121.53r 123.27r 124.21 123.28r 123.15 36 Major currencies (March 1973 = 100)6 ........... 95.79 94.07r 98.34 99.07r 100.65r 102.24r 103.08r 101.26r 100.24 37 Other important trading partners (January 1997= 100)7 ................................................... 126.03 129.94 130.26 129.52r 130.37r 131,99r 132.87r 133.61r 135.02 Real 38 Broad (March 1973= 100)5 ............................... 99.21 98.53 102.19 102.74 103.83r 105.23r 105.73r 104.86r 104.78 39 Major currencies (March 1973= 100)6 ........... 97.24 96.68 102.86 103.87r 105.57r 107.32r 108.13r 106.22r 105.47 40 Other important trading partners (March 1973 100)’ ................................................... 108.10 107.22 107.67 107.64 108.01 109.06r 109.19r 109.61r 110.40 1. Averages of certified noon buying rates in New York for cable transfers. Data in this 4. Starting with the February 2001 Bulletin, revised index values resulting from the annual table also appear in the Board’s G.5 (405) monthly statistical release. For ordering address, revision of data that underlie the calculated trade weights are reported. For more information see inside front cover. on the indexes of foreign exchange value of the dollar, see Federal Reserve Bulletin, vol. 84 2. U.S. cents per currency unit. (October 1998), pp. 811-818. 3. The euro is reported in place of the individual euro area currencies. By convention, the 5. Weighted average of the foreign exchange value of the U.S. dollar against the currencies rate is reported in U.S. dollars per euro. The bilateral currency rates can be derived from the of a broad group of U.S. trading partners. The weight for each currency is computed as an euro rate by using the fixed conversion rates (in currencies per euro) as shown below: average of U.S. bilateral import shares from and export shares to the issuing country and of a measure of the importance to U.S. exporters of that country’s trade in third country markets. 6. Weighted average of the foreign exchange value of the U.S. dollar against a subset of Euro equals broad index currencies that circulate widely outside the country of issue. The weight for each 13.7603 Austrian schillings 1936.27 Italian lire currency is its broad index weight scaled so that the weights of the subset of currencies in the 40.3399 Belgian francs 40.3399 Luxembourg francs index sum to one. 5.94573 Finnish markkas 2.20371 Netherlands guilders 7. Weighted average of the foreign exchange value of the U.S. dollar against a subset of 6.55957 French francs 200.482 Portuguese escudos broad index currencies that do not circulate widely outside the country of issue. The weight 1.95583 German marks 166.386 Spanish pesetas for each currency is its broad index weight scaled so that the weights of the subset of .787564 Irish pounds 340.750 Greek drachmas currencies in the index sum to one. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A63 Guide to Statistical Releases and Special Tables STATISTICAL Releases—List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases ................................................................................................ December 2000 A72 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks December 31, 1999 ........................................................................................................................................................................... May 2000 A64 March 31, 2000 .................................................................................................................................................................................. August 2000 A64 June 30, 2000 ..................................................................................................................................................................................... November 2000 A64 September 30, 2000 ......................................................................................................................................................................... February 2001 A64 Terms of lending at commercial banks February 2000 ................................................................................................................................................................................... May 2000 A66 May 2000............................................................................................................................................................................................. August 2000 A66 August 2000 ....................................................................................................................................................................................... November 2000 A66 November 2000 ................................................................................................................................................................................. February 2001 A66 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 1999 ........................................................................................................................................................................... May 2000 A72 March 31, 2000 ................................................................................................................................................................................. August 2000 A72 June 30, 2000 ..................................................................................................................................................................................... November 2000 A72 September 30, 2000 ......................................................................................................................................................................... February 2001 A72 Proforma balance sheet and income statements for priced service operations March 31, 2000 ................................................................................................................................................................................. August 2000 A76 June 30, 2000 ..................................................................................................................................................................................... November 2000 A76 September 30, 2000 ......................................................................................................................................................................... February 2001 A76 Residential lending reported under the Home Mortgage Disclosure Act 1998 September 1999 A64 1999 September 2000 A64 Disposition of applications for private mortgage insurance 1998 September 1999 A73 1999 September 2000 A73 Small loans to businesses and farms 1998 September 1999 A76 1999 September 2000 A76 Community development lending reported under the Community Reinvestment Act 1998 September 1999 A79 1999 September 2000 A79 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 Federal Reserve Bulletin □ March 2001 Index to Statistical Tables References are to pages A3-A62, although the prefix ‘A” is omitted in this index. ACCEPTANCES, bankers (See Bankers acceptances) Federal finance Assets and liabilities (See also Foreigners) Debt subject to statutory limitation, and types and ownership Commercial banks, 15-21 of gross debt, 27 Domestic finance companies, 32, 33 Receipts and outlays, 25, 26 Federal Reserve Banks, 10 Treasury financing of surplus, or deficit, 25 Foreign-related institutions, 20 Treasury operating balance, 25 Automobiles Federal Financing Bank, 30 Consumer credit, 36 Federal funds, 23, 25 Production, 44, 45 Federal Home Loan Banks, 30 Federal Home Loan Mortgage Corporation, 30, 34, 35 Federal Housing Administration, 30, 34, 35 BANKERS acceptances, 5, 10, 22, 23 Federal Land Banks, 35 Bankers balances, 15-21. (See also Foreigners) Federal National Mortgage Association, 30, 34, 35 Bonds (See also U.S. government securities) Federal Reserve Banks New issues, 31 Condition statement, 10 Rates, 23 Discount rates (See Interest rates) Business activity, nonfinancial, 42 U.S. government securities, 5, 10, 11, 27 Business loans (See Commercial and industrial loans) Federal Reserve credit, 5, 6, 10, 12 Federal Reserve notes, 10 CAPACITY utilization, 43 Federally sponsored credit agencies, 30 Capital accounts Finance companies Commercial banks, 15-21 Assets and liabilities, 32 Federal Reserve Banks, 10 Business credit, 33 Certificates of deposit, 23 Loans, 36 Commercial and industrial loans Paper, 22, 23 Commercial banks, 15-21 Float, 5 Weekly reporting banks, 17, 18 Flow of funds, 37-41 Commercial banks Foreign currency operations, 10 Assets and liabilities, 15-21 Foreign deposits in U.S. banks, 5 Commercial and industrial loans, 15-21 Foreign exchange rates, 62 Consumer loans held, by type and terms, 36 Foreign-related institutions, 20 Real estate mortgages held, by holder and property, 35 Foreign trade, 51 Time and savings deposits, 4 Foreigners Commercial paper, 22, 23, 32 Claims on, 52, 55-7, 59 Condition statements (See Assets and liabilities) Liabilities to, 51-4, 58, 60, 61 Construction, 42, 46 Consumer credit, 36 GOLD Consumer prices, 42 Consumption expenditures, 48, 49 Certificate account, 10 Stock, 5, 51 Corporations Profits and their distribution, 32 Government National Mortgage Association, 30, 34, 35 Gross domestic product, 48, 49 Security issues, 31, 61 Cost of living (See Consumer prices) Credit unions, 36 HOUSING, new and existing units, 46 Currency in circulation, 5, 13 Customer credit, stock market, 24 INCOME, personal and national, 42, 48, 49 Industrial production, 42, 44 DEBT (See specific types of debt or securities) Insurance companies, 27, 35 Demand deposits, 15-21 Interest rates Depository institutions Bonds, 23 Reserve requirements, 8 Consumer credit, 36 Reserves and related items, 4-6, 12 Federal Reserve Banks, 7 Deposits (See also specific types) Money and capital markets, 23 Commercial banks, 4, 15-21 Mortgages, 34 Federal Reserve Banks, 5, 10 Prime rate, 22 Discount rates at Reserve Banks and at foreign central banks and International capital transactions of United States, 50-61 foreign countries (See Interest rates) International organizations, 52, 53, 55, 58, 59 Discounts and advances by Reserve Banks (See Loans) Inventories, 48 Dividends, corporate, 32 Investment companies, issues and assets, 32 Investments (See also specific types) EMPLOYMENT, 42 Commercial banks, 4, 15-21 Euro, 62 Federal Reserve Banks, 10, 11 Financial institutions, 35 FARM mortgage loans, 35 Federal agency obligations, 5, 9-11, 28, 29 LABOR force, 42 Federal credit agencies, 30 Life insurance companies (See Insurance companies) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A65 Loans (See also specific types) Savings deposits (See Time and savings deposits) Commercial banks, 15-21 Savings institutions, 35, 36, 37-41 Federal Reserve Banks, 5-7, 10, 11 Securities (See also specific types) Financial institutions, 35 Federal and federally sponsored credit agencies, 30 Insured or guaranteed by United States, 34, 35 Foreign transactions, 60 New issues, 31 MANUFACTURING Prices, 24 Capacity utilization, 43 Special drawing rights, 5, 10, 50, 51 Production, 43, 45 State and local governments Margin requirements, 24 Holdings of US. government securities, 27 Member banks, reserve requirements, 8 New security issues, 31 Mining production, 45 Rates on securities, 23 Mobile homes shipped, 46 Stock market, selected statistics, 24 Monetary and credit aggregates, 4, 12 Stocks (See also Securities) Money and capital market rates, 23 New issues, 31 Money stock measures and components, 4, 13 Prices, 24 Mortgages (See Real estate loans) Student Loan Marketing Association, 30 Mutual funds, 13, 32 Mutual savings banks (See Thrift institutions) TAX receipts, federal, 26 Thrift institutions, 4. (See also Credit unions and Savings NATIONAL defense outlays, 26 institutions) National income, 48 Time and savings deposits, 4, 13, 15-21 Trade, foreign, 51 OPEN market transactions, 9 Treasury cash, Treasury currency, 5 Treasury deposits, 5, 10, 25 PERSONAL income, 49 Treasury operating balance, 25 Prices Consumer and producer, 42, 47 UNEMPLOYMENT, 42 Stock market, 24 U.S. government balances Prime rate, 22 Commercial bank holdings, 15-21 Producer prices, 42, 47 Treasury deposits at Reserve Banks, 5, 10, 25 Production, 42, 44 U.S. government securities Profits, corporate, 32 Bank holdings, 15-21, 27 Dealer transactions, positions, and financing, 29 REAL estate loans Federal Reserve Banks holdings, 5, 10, 11, 27 Banks, 15-21, 35 Foreign and international holdings and transactions, 10, 27, 61 Terms, yields, and activity, 34 Open market transactions, 9 Type and holder and property mortgaged, 35 Outstanding, by type and holder, 27, 28 Reserve requirements, 8 Rates, 23 Reserves U.S. international transactions, 50-62 Commercial banks, 15-21 Utilities, production, 45 Depository institutions, 4-6, 12 Federal Reserve Banks, 10 VETERANS Administration, 34, 35 U.S. reserve assets, 51 Residential mortgage loans, 34, 35 WEEKLY reporting banks, 17, 18 Retail credit and retail sales, 36, 42 Wholesale (producer) prices, 42, 47 SAVING YIELDS (See Interest rates) Flow of funds, 37-41 National income accounts, 48 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Federal Reserve Bulletin □ March 2001 Federal Reserve Board of Governors and Official Staff Alan Greenspan, Chairman Edward W. Kelley, Jr. Roger W. Ferguson, Jr., Vice Chairman Laurence H. Meyer Office of board Members Division of international Finance Lynn S. Fox, Assistant to the Board Karen H. Johnson, Director M ichelle A. Smith, Assistant to the Board David H. Howard, Deputy Director Donald J. Winn, Assistant to the Board Vincent R. Reinhart, Deputy Director Winthrop P. Hambley, Deputy Congressional Liaison Thomas A. Connors, Associate Director John Lopez, Special Assistant to the Board Dale W. Henderson, Associate Director Bob Stahly Moore, Special Assistant to the Board Richard T. Freeman, Assistant Director Rosanna Pianalto-Cameron, Special Assistant to the Board William L. Helkie, Assistant Director David W. Skidmore, Special Assistant to the Board Steven B. Kamin, Assistant Director Diane E. Werneke, Special Assistant to the Board Ralph W. Tryon, Assistant Director Legal division Division of Research and Statistics J. Virgil M attingly, Jr., General Counsel David J. Stockton, Director Scott G. Alvarez, Associate General Counsel Edward C. Ettin, Deputy Director Richard M. Ashton, Associate General Counsel David Wilcox, Deputy Director Kathleen M. O’Day, Associate General Counsel William R. Jones, Associate Director Ann E. Misback, Assistant General Counsel Myron L. Kwast, Associate Director Sandra L. Richardson, Assistant General Counsel Stephen D. Oliner, Associate Director Stephen L. Siciliano, Assistant General Counsel Patrick M. Parkinson, Associate Director Katherine H. W heatley, Assistant General Counsel Lawrence Slifman, Associate Director Charles S. Struckmeyer, Associate Director OFFICE OF THE SECRETARY M artha S. Scanlon, Deputy Associate Director Jennifer J. Johnson, Secretary Joyce K. Zickler, Deputy Associate Director Robert deV. Frierson, Associate Secretary Wayne S. Passmore, Assistant Director Barbara R. Lowrey, Associate Secretary and Ombudsman David L. Reifschneider, Assistant Director Janice Shack-Marquez, Assistant Director DIVISION OF BANKING Alice Patricia White, Assistant Director Supervision and regulation Glenn B. Canner, Senior Adviser Richard Spillenkothen, Director David S. Jones, Senior Adviser Stephen C. Schemering, Deputy Director Thomas D. Simpson, Senior Adviser Herbert A. Biern, Senior Associate Director Roger T. Cole, Senior Associate Director Division of M onetary Affairs W illiam A. Ryback, Senior Associate Director Donald L. Kohn, Director Gerald A. Edwards, Jr., Associate Director David E. Lindsey, Deputy Director Stephen M. Hoffman, Jr., Associate Director Brian F. Madigan, Associate Director James V. Houpt, Associate Director Richard D. Porter, Deputy Associate Director Jack P. Jennings, Associate Director W illiam C. W hitesell, Assistant Director M ichael G. Martinson, Associate Director Normand R.V. Bernard, Special Assistant to the Board M olly S. Wassom, Associate Director Howard A. Amer, Deputy Associate Director Norah M. Barger, Deputy Associate Director Division of Consumer Betsy Cross, Deputy Associate Director and Community Affairs Richard A. Small, Deputy Associate Director Dolores S. Smith, Director Deborah P. Bailey, Assistant Director Glenn E. Loney, Deputy Director Barbara J. Bouchard, Assistant Director Sandra F. Braunstein, Assistant Director Angela Desmond, Assistant Director Maureen P. English, Assistant Director James A. Embersit, Assistant Director Adrienne D. Hurt, Assistant Director Charles H. Holm, Assistant Director Irene Shawn M cNulty, Assistant Director Heidi Willmann Richards, Assistant Director William G. Spaniel, Assistant Director David M. Wright, Assistant Director Sidney M. Sussan, Adviser William C. Schneider, Jr., Project Director, National Information Center Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A67 Edward M. Gramlich Office of Division of reserve bank Operations Staff Director for Management and Payment Systems Stephen R. Malphrus, Staff Director Louise L. Roseman, Director Paul W. Bettge, Associate Director Management division Kenneth D. Buckley, Assistant Director Stephen J. Clark, Associate Director, Finance Function Tillena G. Clark, Assistant Director D arrell R. Pauley, Associate Director, Human Resources Joseph H. Hayes, Jr., Assistant Director Function Jeffrey C. Marquardt, Assistant Director Christine M. Fields, Assistant Director, Human Resources Edgar A. M artindale, Assistant Director Function Marsha Reidhill, Assistant Director Sheila Clark, EEO Programs Director Jeff J. Stehm, Assistant Director DIVISION OF SUPPORT SERVICES OFFICE OF THE INSPECTOR GENERAL Robert E. Frazier, Director Barry R. Snyder, Inspector General George M. Lopez, Assistant Director Donald L. Robinson, Deputy Inspector General David L. Williams, Assistant Director DIVISION OF INFORMATION TECHNOLOGY Richard C. Stevens, Director Marianne M. Emerson, Deputy Director Maureen T. Hannan, Associate Director Raymond H. Massey, Associate Director Geary L. Cunningham, Assistant Director Wayne A. Edmondson, Assistant Director Po Kyung Kim, Assistant Director Susan F. Marycz, Assistant Director Sharon L. Mowry, Assistant Director Day W. Radebaugh, Jr., Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Federal Reserve Bulletin □ March 2001 Federal Open Market Committee and Advisory Councils Federal Open Market Committee Members Alan Greenspan, Chairman William J. McDonough, Vice Chairman Roger W. Ferguson, Jr. Edward W. Kelley, Jr. Michael H. Moskow Edward M. Gramlich Laurence H. Meyer William Poole Thomas M. Hoenig Cathy E. Minehan Alternate Members Jerry L. Jordan Anthony M. Santomero Jamie B. Stewart, Jr. Robert D. McTeer, Jr. Gary H. Stern Staff Donald L. Kohn, Secretary and Economist Jeffrey C. Fuhrer, Associate Economist Normand R.V. Bernard, Deputy Secretary Craig S. Hakkio, Associate Economist Lynn S. Fox, Assistant Secretary David H. Howard, Associate Economist Gary P. Gillum, Assistant Secretary William C. Hunter, Associate Economist J. Virgil M attingly, Jr., General Counsel David E. Lindsey, Associate Economist Thomas C. Baxter, Jr., Deputy General Counsel Robert H. Rasche, Associate Economist Karen H. Johnson, Economist Vincent R. Reinhart, Associate Economist David J. Stockton, Economist Lawrence Slifman, Associate Economist Christine M. Cumming, Associate Economist Peter R. Fisher, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL Douglas A. Warner, III, President Lawrence K. Fish, Vice President Lawrence K. Fish, First District Alan G. M cNally, Seventh District Douglas A. Warner III, Second District Katie S. Winchester, Eighth District Ronald L. Hankey, Third District R. Scott Jones, Ninth District David A. Daberko, Fourth District Camden R. Fine, Tenth District L. M. Baker, Jr., Fifth District Richard W. Evans, Jr., Eleventh District L. Phillip Humann, Sixth District Linnet F. Deily, Twelfth District James Annable, Co-Secretary William J. Korsvik, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 Consumer Advisory Council Lauren Anderson, New Orleans, Louisiana, Chairman Dorothy Broadman, San Francisco, California, Vice Chairman Anthony S. Abbate, Saddlebrook, New Jersey Anne S. Li, Trenton, New Jersey Teresa A. Bryce, St. Louis, Missouri J. Patrick Liddy, Cincinnati, Ohio M alcolm Bush, Chicago, Illinois Oscar Marquis, Park Ridge, Illinois M anuel Casanova, Jr., Brownsville, Texas Jeremy Nowak, Philadelphia, Pennsylvania Constance K. Chamberlin, Richmond, Virginia Nancy Pierce, Kansas City, Missouri Robert M. Cheadle, Ada, Oklahoma Marta Ramos, San Juan, Puerto Rico Mary Ellen Domeier, New Ulm, Minnesota Ronald A. Reiter, San Francisco, California Lester W. Firstenberger, Evansville, Indiana Elizabeth Renuart, Boston, Massachusetts John C. Gamboa, San Francisco, California Russell W. Schrader, San Francisco, California Earl Jarolimek, Fargo, North Dakota Frank Torres, Jr., Washington, District of Columbia W illie M. Jones, Boston, Massachusetts Gary S. Washington, Chicago, Illinois M. Dean Keyes, St. Louis, Missouri Robert L. Wynn II, Madison, Wisconsin Thrift Institutions Advisory Council Thomas S. Johnson, New York, New York, President Mark H. Wright, San Antonio, Texas, Vice President Tom R. Dorety, Tampa, Florida James F. McKenna, Brookfield, Wisconsin Ronald S. Eliason, Provo, Utah Charles C. Pearson, Jr., Harrisburg, Pennsylvania D. R. Grimes, Alpharetta, Georgia Herbert M. Sandler, Oakland, California Cornelius D. Mahoney, Westfield, Massachusetts Everett Stiles, Franklin, North Carolina Karen L. McCormick, Port Angeles, Washington Clarence Zugelter, Kansas City, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Bulletin □ March 2001 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, Rates for subscribers outside the United States are as follows MS-127, Board of Governors of the Federal Reserve System, and include additional air mail costs: Washington, DC 20551, or telephone (202) 452-3244, or FAX Federal Reserve Regulatory Service, $250.00 per year. (202) 728-5886. You may also use the publications order Each Handbook, $90.00 per year. form available on the Board’s World Wide Web site Federal Reserve Regulatory Service for Personal (http://www.federalreserve.gov). When a charge is indicated, pay­ Computers. CD-ROM; updated monthly. ment should accompany request and be made payable to the Standalone PC. $300 per year. Board of Governors of the Federal Reserve System or may be Network, maximum 1 concurrent user. $300 per year. ordered via Mastercard, Visa, or American Express. Payment from Network, maximum 10 concurrent users. $750 per year. foreign residents should be drawn on a U.S. bank. Network, maximum 50 concurrent users. $2,000 per year. Network, maximum 100 concurrent users. $3,000 per year. Subscribers outside the United States should add $50 to cover Books and Miscellaneous publications additional airmail costs. The Federal Reserve System—Purposes and Functions. The Federal Reserve Act and Other Statutory Provisions 1994. 157 pp. Affecting the Federal Reserve System, as amended Annual Report, 1999. through October 1998. 723 pp. $20.00 each. Annual Report: Budget Review, 2000. The U.S. Economy in an Interdependent World: A M ulti­ Federal Reserve Bulletin. Monthly. $25.00 per year or $2.50 country Model, May 1984. 590 pp. $14.50 each. each in the United States, its possessions, Canada, and Industrial Production—1986 Edition. December 1986. Mexico. Elsewhere, $35.00 per year or $3.00 each. 440 pp. $9.00 each. Annual Statistical Digest: period covered, release date, num­ Financial Futures and Options in the U.S. Economy. ber of pages, and price. December 1986. 264 pp. $10.00 each. 1981 October 1982 239 pp. $ 6.50 Financial Sectors in Open Economies: Empirical Analy­ 1982 December 1983 266 pp. $ 7.50 sis and Policy Issues. August 1990. 608 pp. $25.00 each. 1983 October 1984 264 pp. $11.50 Risk Measurement and Systemic Risk: Proceedings of a 1984 October 1985 254 pp. $12.50 Joint Central Bank Research Conference. 1996. 1985 October 1986 231 pp. $15.00 578 pp. $25.00 each. 1986 November 1987 288 pp. $15.00 1987 October 1988 272 pp. $15.00 1988 November 1989 256 pp. $25.00 Education Pamphlets 1980-89 March 1991 712 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1990 November 1991 185 pp. $25.00 available without charge. 1991 November 1992 215 pp. $25.00 1992 December 1993 215 pp. $25.00 1993 December 1994 281 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1994 December 1995 190 pp. $25.00 Consumer Handbook to Credit Protection Laws 1990-95 November 1996 404 pp. $25.00 A Guide to Business Credit for Women, Minorities, and Small Businesses Series on the Structure of the Federal Reserve System Selected Interest and Exchange Rates—Weekly Series of The Board of Governors of the Federal Reserve System Charts. Weekly. $30.00 per year or $.70 each in the United The Federal Open Market Committee States, its possessions, Canada, and Mexico. Elsewhere, Federal Reserve Bank Board of Directors $35.00 per year or $.80 each. Federal Reserve Banks Regulations of the Board of Governors of the Federal A Consumer’s Guide to Mortgage Lock-Ins Reserve System. A Consumer’s Guide to Mortgage Settlement Costs Annual Percentage Rate Tables (Truth in Lending— A Consumer’s Guide to Mortgage Refinancings Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Home Mortgages: Understanding the Process and Your Right Vol. II (Irregular Transactions). 1969. 116 pp. Each volume to Fair Lending $5.00. How to File a Consumer Complaint about a Bank Guide to the Flow of Funds Accounts. January 2000. Making Sense of Savings 1,186 pp. $20.00 each. Welcome to the Federal Reserve Federal Reserve Regulatory Service. Loose-leaf; updated When Your Home is on the Line: What You Should Know monthly. (Requests must be prepaid.) About Home Equity Lines of Credit Consumer and Community Affairs Handbook. $75.00 per year. Keys to Vehicle Leasing (also available in Spanish) Monetary Policy and Reserve Requirements Handbook. $75.00 Looking for the Best Mortgage (also available in Spanish) per year. Securities Credit Transactions Handbook. $75.00 per year. The Payment System Handbook. $75.00 per year. Federal Reserve Regulatory Service. Four vols. (Contains all four Handbooks plus substantial additional material.) $200.00 per year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 STAFF STUDIES: Only Summaries Printed in the 164. The 1989-92 Credit Crunch for Real Estate, by BULLETIN James T. Fergus and John L. Goodman, Jr. July 1993. 20 pp. Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full text or 167. A Summary of Merger Performance Studies in Bank­ ing, 1980-93, and an Assessment of the “Operating to be added to the mailing list for the series may be sent to Publications Services. Performance” and “Event Study” M ethodologies, by Stephen A. Rhoades. July 1994. 37 pp. 170. The Cost of Implementing Consumer Financial Regu­ Staff Studies 1-158, 161, 163, 165, 166, 168, and 169 are out lations: An Analysis of Experience with the Truth of print. Staff Studies 165-174 are available on line at in Savings Act, by Gregory Elliehausen and Barbara R. www.federalreserve.gov/pubs/staffstudies. Lowrey. December 1997. 17 pp. 171. The Cost of Bank Regulation: A Review of the Evi­ 159. New Data on the Performance of Nonbank Subsidi­ dence, by Gregory Elliehausen. April 1998. 35 pp. aries of Bank Holding Companies, by Nellie Liang and 172. Using Subordinated Debt as an Instrument of Mar­ Donald Savage. February 1990. 12 pp. ket Discipline, by Study Group on Subordinated Notes 160. Banking Markets and the Use of Financial Ser­ and Debentures, Federal Reserve System. December 1999. vices by Small and Medium-Sized Businesses, by 69 pp. Gregory E. Elliehausen and John D. Wolken. September 173. Improving Public Disclosure in Banking, by Study 1990. 35 pp. Group on Disclosure, Federal Reserve System. March 2000. 162. Evidence on the Size of Banking Markets from M ort­ 35 pp. gage Loan Rates in Twenty Cities, by Stephen A. 174. Bank Mergers and Banking Structure in the United Rhoades. February 1992. 11 pp. States, 1980-98, by Stephen Rhoades. August 2000. 33 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Bulletin □ March 2001 Maps of the Federal Reserve System ew York ■ »- i p w % HAWAII Legend Both pages Facing page ■ Federal Reserve Bank city • Federal Reserve Branch city □ Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. Note The Federal Reserve officially identifies Districts by num­ of Puerto Rico and the U.S. Virgin Islands; the San Fran­ ber and Reserve Bank city (shown on both pages) and by cisco Bank serves American Samoa, Guam, and the Com­ letter (shown on the facing page). monwealth of the Northern Mariana Islands. The Board of In the 12th District, the Seattle Branch serves Alaska, Governors revised the branch boundaries of the System and the San Francisco Bank serves Hawaii. most recently in February 1996. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 1-A 2-B 3-C 4-D 5-E Pittsburgh Baltimore md ! ■ inati Buffalo / NY NJ Boston New York Philadelphia Cleveland Richmond 6-F 7-G 8-H sville Atlanta Chicago St. Louis 9-1 MN M inneapolis 10-J 12-L Kansas City San Francisco Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Bulletin □ March 2001 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* .............................02106 William C. Brainard Cathy E. Minehan William O. Taylor Paul M. Connolly NEW YORK*........................ 10045 Peter G. Peterson William J. McDonough Charles A. Heimbold, Jr. Jamie B. Stewart, Jr. Buffalo ............................... 14240 Bal Dixit Barbara L. Walter1 PHILADELPHIA .................19105 Charisse R. Lillie Anthony M. Santomero Glenn A. Schaeffer William H. Stone, Jr. CLEVELAND* ....................44101 David H. Hoag Jerry L. Jordan Robert W. Mahoney Sandra Pianalto Cincinnati ..........................45201 George C. Juilfs Barbara B. Henshaw Pittsburgh .......................... 15230 Charles E. Bunch Robert B. Schaub RICHMOND* ...................... 23219 Jeremiah J. Sheehan J. Alfred Broaddus, Jr. Wesley S. Williams, Jr. Walter A. Varvel Baltimore ........................... 21203 George L. Russell, Jr. William J. Tignanelli1 Charlotte............................. 28230 James F. Goodmon Dan M. Bechter1 ATLANTA ............................. 30303 John F. Wieland Jack Guynn Paula Lovell Patrick K. Barron James M. McKee Birmingham ...................... 35283 Catherine Sloss Crenshaw Andre T. Anderson Jacksonville ...................... 32231 Julie K. Hilton Robert J. Slack Miami ................................ 33152 Mark T. Sodders James T. Curry III Nashville ........................... 37203 Whitney Johns Martin Melvyn K. Purcell1 New Orleans .....................70161 Ben Tom Roberts Robert J. Musso1 CHICAGO* ...........................60690 Arthur C. Martinez Michael H. Moskow Robert J. Darnall William C. Conrad Detroit ................................48231 Timothy D. Leuliette David R. Allardice1 ST. LOUIS .............................63166 Charles W. Mueller William Poole Walter L. Metcalfe, Jr. W. LeGrande Rives Little Rock ........................ 72203 Vick M. Crawley Robert A. Hopkins Louisville...........................40232 Roger Reynolds Thomas A. Boone Memphis ...........................38101 Gregory M. Duckett Martha Perine Beard MINNEAPOLIS ...................55480 James J. Howard Gary H. Stern Ronald N. Zwieg James M. Lyon Helena ................................59601 Thomas O. Markle Samuel H. Gane KANSAS CITY.....................64198 Terrence P. Dunn Thomas M. Hoenig Jo Marie Dancik Richard K. Rasdall Denver................................ 80217 Kathryn A. Paul Carl M. Gambs1 Oklahoma City ................. 73125 Patricia B. Fennell Kelly J. Dubbert Omaha................................68102 Gladys Styles Johnston Steven D. Evans DALLAS.................................75201 H. B. Zachry, Jr. Robert D. McTeer, Jr. Patricia M. Patterson Helen E. Holcomb El Paso ............................... 79999 Beauregard Brite White Sammie C. Clay Houston .............................77252 Edward O. Gaylord Robert Smith III1 San Antonio ......................78295 Patty P. Mueller James L. Stull1 SAN FRANCISCO ..............94120 Nelson C. Rising Robert T. Parry George M. Scalise John F. Moore Los Angeles ......................90051 William D. Jones Mark L. Mullinix2 Portland .............................97208 Nancy Wilgenbusch Raymond H. Laurence1 Salt Lake City ................... 84125 H. Roger Boyer Andrea P. Wolcott Seattle .................................98124 Richard R. Sonstelie Gordon R. G. Werkema2 ’'Additional offices of these Banks are located at Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; Milwaukee, Wisconsin 53202; and Peoria, Illinois 61607. 1. Senior Vice President. 2. Executive Vice President Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 Publications of Interest Federal Reserve Regulatory Service To promote public understanding of its regulatory func­ The Payment System Handbook deals with expedited tions, the Board publishes the Federal Reserve Regu­ funds availability, check collection, wire transfers, and latory Service, a four-volume loose-leaf service con­ risk-reduction policy. It includes Regulations CC, J, and taining all Board regulations as well as related statutes, EE, related statutes and commentaries, and policy interpretations, policy statements, rulings, and staff statements on risk reduction in the payment system. opinions. For those with a more specialized interest in For domestic subscribers, the annual rate is $200 for the Board’s regulations, parts of this service are pub­ the Federal Reserve Regulatory Service and $75 for lished separately as handbooks pertaining to monetary each handbook. For subscribers outside the United policy, securities credit, consumer affairs, and the pay­ States, the price including additional air mail costs is ment system. $250 for the service and $90 for each handbook. These publications are designed to help those who The Federal Reserve Regulatory Service is also avail­ must frequently refer to the Board’s regulatory materi­ able on CD-ROM for use on personal computers. For a als. They are updated monthly, and each contains cita­ standalone PC, the annual subscription fee is $300. For tion indexes and a subject index. network subscriptions, the annual fee is $300 for 1 con­ The Monetary Policy and Reserve Requirements current user, $750 for a maximum of 10 concurrent Handbook contains Regulations A, D, and Q, plus users, $2,000 for a maximum of 50 concurrent users, related materials. and $3,000 for a maximum of 100 concurrent users. The Securities Credit Transactions Handbook con­ Subscribers outside the United States should add $50 tains Regulations T, U, and X, dealing with exten­ to cover additional airmail costs. For further informa­ sions of credit for the purchase of securities, together tion, call (202) 452-3244. with related statutes, Board interpretations, rulings, All subscription requests must be accompanied by a and staff opinions. Also included is the Board’s list of check or money order payable to the Board of Gover­ foreign margin stocks. nors of the Federal Reserve System. Orders should be The Consumer and Community Affairs Handbook addressed to Publications Services, mail stop 127, Board contains Regulations B, C, E, G, M, P, Z, AA, BB, and of Governors of the Federal Reserve System, Washing­ DD, and associated materials. ton, DC 20551. GUIDE TO THE FLOW OF FUNDS ACCOUNTS A new edition of Guide to the Flow of Funds Accounts and describes how the series is derived from source is now available from the Board of Governors. The new data. The Guide also explains the relationship between edition incorporates changes to the accounts since the the flow of funds accounts and the national income and initial edition was published in 1993. Like the earlier product accounts and discusses the analytical uses of publication, it explains the principles underlying the flow of funds data. The publication can be purchased, flow of funds accounts and describes how the accounts for $20.00, from Publications Services, Board of Gover­ are constructed. It lists each flow series in the Board’s nors of the Federal Reserve System, Washington, DC flow of funds publication, “Flow of Funds Accounts of 20551. the United States” (the Z.l quarterly statistical release), Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Federal Reserve Bulletin □ March 2001 Federal Reserve Statistical Releases Available on the Commerce Department’s Economic Bulletin Board The Board of Governors of the Federal Reserve Sys- For further information regarding a subscription to tem makes some of its statistical releases available to the economic bulletin board, please call (202) 482the public through the U.S. Department of Com- 1986. The releases transmitted to the economic bullemerce’s economic bulletin board. Computer access tin board, on a regular basis, are the following: to the releases can be obtained by subscription. Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H.4.1 Factors Affecting Reserve Balances Weekly/Thursday H.6 Money Stock Weekly/Thursday H.8 Assets and Liabilities of Insured Domestically Chartered Weekly/Monday and Foreign Related Banking Institutions H.10 Foreign Exchange Rates Weekly/Monday H.15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G.17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z.l Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis