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.

SUPPLEMENTAL NOTES

The Domestic Economy Sales of new domestic automobiles in the first 20 days indicate that the August rate will be around 8.8 million vehicles, about the same as the June and July rates and well above the 8.2 million rate in April and May.

Deliveries this month are expected to be about

6 per cent above a year ago. Dealer inventories of August 20 were down 11 per cent from the end of July, a less than seasonal decline, and were a third higher than a year ago. The consumer price index rose .1 per cent in July to 110.2 per cent of the 1957-59 average; increases of 3.3 per cent for meats and 10 per cent for potatoes were largely responsible for the advance. Had excise taxes not been reduced, the index would have risen an additional .2 per cent according to the BLS.

The tax reductions

especially affected household appliances which fell by 1.4 per cent. Medical care costs advanced sharply by .4 per cent, while prices of new cars and apparel declined slightly. The Domestic Financial Situation Yields on new offerings of corporate bonds have continued to move upward this week; the new issue series (Aaa basis) rose 4 basis points to 4.71 per cent.

At this level, underwriters have been able to

distribute these issues quickly.

In free market trading at week's end,

the one competitively-bid issue was selling at a 3 basis point premium from offering price.

A $30 million debenture issue of General Telephone Co. of California, originally scheduled for this week, was postponed indefinitely.

Company officials ascribed the action to "prevailing market

conditions and the number of current offerings of utilities debt securities." In the municipal market, yields on seasoned, high-grade issues advanced 2 to 3 basis points. Common stock prices--as measured by Standard & Poor's Index of 500 stocks--have risen 0.5 per cent this week in heavy trading. At the close on August 26, the index, at 87.14, was only 3-1/2 per cent below its May 13 high.

Trading volume this week has averaged 5.4 mil-

lion shares daily with activity on the last two days exceeding 6.0 million. In July, savings capital at savings and loan associations declined by $435 million.

As the accompanying table shows, July is

usually a month of heavy withdrawals, but new savings have usually been sufficient to offset them. The substantial net outflow can be attributed to the slowdown in growth of new savings this year.

Between June and July, new savings

increased about 2 per cent, compared to increases of 9.6, 20.5, and 12.5 per cent in 1964, 1963, and 1962 respectively.

Withdrawals actu-

ally increased less this year between June and July than in the other years of the expansion period--90 per cent vs. 105, 147, 113, and 105 per cent in 1964 through 1961 respectively.

SAVINGS FLOWS AT ALL SAVINGS & LOAN ASSOCIATIONS

(Millions of dollars)

July

June

Net inflow

New savings

Withdrawals

Net inflow

New savings

Withdrawals

1965 1964 1963

1602 1765 1631

3945 3762 3243

2343 1999 1601

-435 16 -11

4011 4125 3909

4446 4087 3995

1962

1395

3027

1598

25

3405

3397

124

2974

2866

1961

1356

2758

1395

International developments More complete, though still preliminary, data now indicate an unadjusted U.S. payments deficit on regular transactions in July of $265 million. earlier.

This figure is $65 million higher than was

indicated

After rough allowance for seasonal factors, the payments posi-

tion was probably one of modest deficit, following the moderate surplus of the second quarter. U.S. imports in July dropped by 9 per cent to a seasonally adjusted annual rate of $20 billion.

However, about one-third of the

decline resulted from a change in statistical compiling procedures, and a large part of the remaining fall is thought to have resulted from the holding up of import arrivals by the seamen's strike on American ships. A substantial further decline in bank-reported claims on foreigners occurred in July.

According to preliminary data, the decrease

for long- and short-term claims together totaled $182 million.