Greenbook/Tealbook

Prefatory Note

The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act.

1

In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing).

2

A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff.

Content last modified 6/05/2009.

CONFIDENTIAL (FR)

SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS

Prepared for the Federal Open Market Committee

By the Staff Board of Governors of the Federal Reserve System

January 29, 1965

SUPPLEMENT NOTES The Domestic Economy The consumer price index rose .1 per cent in December, reflecting mainly continuation of the rise in services and increases for gasoline and fuel oils that were partly seasonal.

Over the 12

months of 1964, the index rose 1.1 per cent, compared with 1.7 per cent in 1963 and 1.2 per cent in 1962.

As the release of the Department

of Labor put it, "Prices rose slightly during 1964 on most items that consumers buy, except meats, eggs, sugar, household durables, new

cars, and fuel oil.

Increased charges for consumer services were

again the major factor contributing to higher living costs, with the

largest increases occurring in rates for hospital services, recreational services, and auto insurance premiums." Rental vacancies in the fourth quarter of last year dipped to 7.5 per cent of the units available and fit for use.

The average

was the same as a year earlier and compared with a postwar peak of 8.1 per cent in the first half of 1961.

Within metropolitan areas,

the average edged up further to 7.7 per cent, but was still under the high in the third quarter of 1963.

Outside such areas, the

average dropped nearly to the recent low in the first quarter of 1964,

All regions except the Northeast showed declines.

The rate

in the West, however, remained very high. The Domestic Financial Situation Common stock prices, as measured by the Standard and Poor's composite index, registered a further gain of nearly 1 per cent this week as the index reached a new record level of 87.48 on January 28.

This rise was accompanied by active trading averaging approximately 6 million shares daily.

At this level, the Standard and Poor's

composite index of 500 stocks is now 1.4 per cent above its previous high of November 20. The other popular indicator of stock market prices, the Dow-Jones industrial average, broke through the 900 level January 28 (900.95 close) for the first time.

Just eleven months ago it had

breached the 800 mark. Background influences contributing to the recent bullishness on stocks have included favorable investor reaction to recent dividend and earnings reports, and to evidence from current business indicators that favorable profits experience is likely to continue into early 1965.

In addition, seasonal reinvestment of institutional

funds has reportedly been quite large. The Treasury bond market has weakened in recent days, reflecting some tapering off of investment demand and some expansion of offerings by dealers and other temporary holders of the advance refunding bond.

The market has focused on recent unfavorable

developments in the balance of payments and the attendant possibility of a somewhat less stimulative monetary policy,

The market's reception

of a Treasury cash offering of a new 21-month note priced to yield 4.9 per cent has been favorable, however,

This offering will

refinance about $2.2 billion of February 15 maturities, including $1.6 billion publicly held.