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 this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act.

1

In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optimal character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff.

CONFIDENTIAL (FR) CLASS II - FOMC

December 17, 1982

SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS

Prepared for the Federal Open Market Committee

By the Staff Board of Governors of the Federal Reserve System

TABLE OF CONTENTS Page THE DOMESTIC NONFINANCIAL ECONOMY Private housing starts . . . . . . . . . . . . . . . .

... .

1

TABLES: . . . . . . . . . . . . . . .

2

. . . . . . . . . . . . . . .

3

Commercial bank credit and short- and intermediateterm business credit . . . . . . . . . . . . . . . .

4

Selected financial market quotations

5

Private housing activity THE DOMESTIC FINANCIAL ECONOMY TABLES: Monetary aggregates

.

. . . . . . . . .

SUPPLEMENTAL NOTES

Private housing starts Total private housing starts surged 26 percent in November to a seasonally-adjusted annual rate of 1.4 million units, after hovering up just above a one million unit pace for several months.

Newly-issued

permits also exhibited strength in November, increasing 6 percent on top of the revised 17 percent increase registered in October.

Both

measures of new residential construction were two-thirds higher in November than their extremely depressed levels of a year earlier. The continuing improvement in new housing construction in November was widespread across type of structures and regions.

Starts of both

single- and multifamily units were up sharply in November.

Newly-issued

permits for single-family units registered a substantial gain for the second month in a row--with the November total a third above the September pace.

Multifamily permits also remained much improved, even

though they did fall back slightly in November after a substantial gain in October.

Housing starts in November were well above their recent

low points in all regions of the nation.

-2PRIVATE HOUSING ACTIVITY (Seasonally adjusted annual rates, millions of units)

1981 Annual

Q1

Q2

.99 1.08

.82 .92

.92 .95

.98 1.12

Single-family units Permits Starts

.56 .71

.45 .59

.49 .61

Sales New homes Existing homes

.44 2.35

.39 1.93

.42 .38 .24

All units Permits Starts

Multifamily units Permits Starts Mobile home shipments

1. Preliminary estimates. n.a.--Not available.

1982 Q3 Sept.

Oct.

Nov.l

1.00 1.13

1.17 1.13

1.24 1.43

.52 .65

.56 .68

.65 .71

.37 1.93

.41 1.85

.49 1.84

.49 1.92

.37 .33

.43 .35

.47 .47

.44 .45

.52 .42

.50 .56

.24

.25

.23

.22

.22

n.a.

.75 .87

n.a. n.a.

-3MONETARY AGGREGATES (Based on seasonally adjusted data unless otherwise noted)1 1982 Q1

Q3

Q2 -Percentage

Sept.

10.4 (9.5) 9.8 8.7

3.3 (3.6) 9.5 10.7

3.5 (4.4) 9.7 12.1

Selected components 5. Currency

7.9

9.3

6.9

-5.8

Demand deposits

7.

Other checkable deposits

8.

M2 minus M1 (9+10+11+14)

9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

16.9 (18.7) 11.7 9.2

9.3

6.4

3.7

-1.4

7.8

18.6

10.2

1.0

19.6

11.4

37.3

45.2

51.0

35.2

11.5

11.7

2.3

4.3

10.1

10.3

63.6

-8.4

15.2

-32.4

83.1

41.5

29.1

33.8 9.4 8.7 9.7 1.6 10.2 -1.5

20.9 17.2 2.0 23.8 6.0 0.6 8.1

31.0 12.2 -9.7 21.3 6.4 -7.8 11.7

12.7 7.7 5.4 8.8 -2.0 -1.3 -2.3

9.9 -1.1 20.7 -9.6 3.2 47.8 -12.7

15.7 9.3 34.7 -0.9 7.3 31.0 -1.6

28.6 11.6 4.9 14.5 4.5 7.1 3.5

3.3

16.9

23.8

-1.5

8.9 6.1 21.6

19.1 19.9 15.5

19.6 21.4 11.5

-1.1 -5.2 19.8

13.1 7.8 35.1

15.2 6.2

104.0 -25.7

22.3 -59.8

24.6 11.8

9.5

Overnight RPs and Eurodollars, NSA General purpose and broker/dealer money market mutual fund shares,NSA Commercial banks savings deposits small time deposits Thrift institutions savings deposits small time deposits M3 minus M2 (18+21+22) Large time deposits at commercial banks, net 4 at thrift institutions Institutions-only money market mutual fund shares, NSA Term RPs, NSA

-2.5 -29.9

-Average MEMORANDA: 23. Managed liabilities at commercial banks 4 (24+25) 24. Large time deposits, gross 5 5 Nondeposit funds 25. 26. Net due to related foreign institutions, NSA 5 5 6 Other , 27. 28.

U.S. government deposits at commercial 7 banks

14.0 (17.4) 5.0 3.9

20.6 (14.5) 8.2 9.2

49.5

3

Nov.P

change at annual rates-

Money stock measures 1. M1 2. (M1) 2 3. M2 4. M3

6.

Oct.

QIV. '81 to Nov. 82P

8.8 (8.8) 9.9 10.5

13.5 -9.1 -21.9 47.3 13.4 77.9

13.1 11.0 22.5 42.9 -5.7

monthly change in billions of dollars--

0.6 2.7 -2.1

6.3 5.8 0.5

1.7 5.7 -4.0

-6.7 -0.5 -6.2

-4.0 -7.0 3.0

2.5 3.0 -0.5

-2.1 0.0

0.4 0.1

-4.3 0.3

-4.4 -1.8

3.1 -0.1

-1.6 1.1

1.9

-2.5

0.2

1.4

3.0

-3.8

1. Quarterly growth rates are computed on a quarterly average basis. Dollar amounts shown under memoranda for quarterly changes are calculated on an end-month-of-quarter basis. 2. Ml seasonally adjusted using alternative model-based procedure applied to weekly data. 3. Overnight and continuing contract RPs issued to the nonbank public by commercial banks, net of amounts held by money market mutual funds, plus overnight Eurodollar deposits issued by Caribbean branches of U.S. member banks to U.S. nonbank customers. Excludes retail RPs, which are in the small time deposit components. 4. Net of large-denomination time deposits held by money market mutual funds and thrift institutions. 5. Adjusted for shifts of assets and liabilities to International Banking Facilities (IBFs) which affected flows from December 1981 to September 1982. 6. Consists of borrowings from other than commercial banks in the form of federal funds purchased, securities sold under agreements to repurchase and other liabilities for borrowed money (including borrowings from the Federal Reserve and unaffiliated foreign banks), loans sold to affiliates, loan RPs and other minor items. Data are partially estimated. 7. Consists of Treasury demand deposits at commercial banks and Treasury note balances. p--Preliminary.

-4COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT (Percentage changes at annual rates, based on seasonally adjusted data) 1

1982 Q1

Q2

Q3

Sept.

QIV '81 Oct.

Nov.

to Nov. '82

-- Commercial Bank Credit-1.

2. 3. 4. 5.

Total loans and investments at banks 2 , 3 Investments 3 Treasury securities Other securities Total loans 2

3

,3 ,3

10.1

8.0

5.8

4.4

6.8

1.5

7.54

5.7

4.7

4.8

3.4

12.1

9.3

6.0

11.5

4.9

8.3

4.1

41.6

40.2

2.8

4.8

3.0

3.0

-2.5

-7.1

2.4

11.5

9.1

6.2

4.8

4.9

-1.0

8.0

16.7

15.0

9.0

13.0

6.7

-7.9

11.5

-18.3

-26.8

63.6

67.3

85.0

-39.7

12.5

13.4

6.

Business loans 2

7.

Security loans

8.

Real estate loans

7.8

6.6

2.8

3.6

3.6

4.4

5.9

9.

Consumer loans

2.8

2.8

3.0

0.6

2.5

3.2

3.2

--Short- and Intermediate-Term Business Credit-10.

Total short- and intermediateterm business credit (sum of lines 14, 15 and 16) 3

15.2

13.2

9.2

5.3

-1.5

Business loans net of bankers acceptances 3

16.5

15.9

9.0

12.7

6.6

-4.8

Commercial paper issued by nonfinancial firms5

30.0

16.8

-6.0

-52.7

-71.4

-69.4

13.

Sum of line 11 & 12 3

18.2

16.0

7.0

3.9

-3.4

-12.8

10.5

14.

Line 13 plus loans at foreign branches 3 ,6

18.5

15.8

8.3

3.8

-3.5

-13.4

11.0

1.0

1.5

15.8

13.0

-5.7

n.a.

n.a.

11.7

10.2

6.6

6.6

14.7

n.a.

n.a.

11.

12.

15.

Finance company loans to business 7

16.

7 Total bankers acceptances outstanding

n.a.

n.a.

12.0

.2

1. Average of Wednesdays for domestically chartered banks and average of current and preceding ends of months for foreign-related institutions. 2. Loans include outstanding amounts of loans reported as sold outright to a bank's own foreign branches, unconsolidated nonbank affiliates of the bank, the bank's holding company (if not a bank), and unconsolidated nonbank subsidiaries of the holding company. 3. Adjusted for shifts of assets and liabilities to International Banking Facilities (IBFs) which affected flows from December 1981 to September 1982. 4. Growth of bank credit from the FOMC's December-January base through November 1982, not adjusted for shifts of assets from domestic offices to IBFs, was at an annual rate of 6.8 percent. Adjusted for such shifts after january, growth over this period was 7.3 percent. 5. Average of Wednesdays. 6. Loans at foreign branches are loans made to U.S. firms by foreign branches of domestically chartered banks. 7. Based on average of current and preceding ends of month. n.a-Not available.

-5SELECTED FINANCIAL MARKET QUOTATIONS 1 (Percent)

1981 Early summer highs highs

1982 FOMC Nov. 16

Dec.

Change from: Early summer FOMC 16 highs Nov. 16

Short-term rates Federal funds 2

20.06

14.81

9.61

8.86

-5.95

-.75

Treasury bills 3-month 6-month 1-year

17.01 15.93 15.21

13.19 13.40 13.12

8.40 8.47 8.51

7.83 8.03 8.14

-5.36 -5.37 -4.98

-.57 -.44 -.37

Commercial paper 1-month 3-month

18.63 18.29

14.89 15.00

9.13 9.11

8.52

-6.37 -6.50

-.61 -.61

Large negotiable CDs 3 1-month 3-month 6-month

18.90 19.01 18.50

14.99 15.58 15.70

9.21 9.38 9.51

8.66 8.75

-6.33 -6.91 -6.95

-.55 -.71 -.76

Eurodollar deposits 2 1-month 3-month

19.80 19.56

15.66 16.28

9.73 9.93

9.33

-6.33

9.56

-6.72

-.40 -.37

21.50

16.50

12.00

11.50

-5.00

-.50

14.20

13.69

13.67

8.75 9.36

7.90 8.85

-5.79

14.07

-.85 -.51

U.S. Treasury (constant maturity) 3-year 16.59 15.84 10-year 30-year 15.21

14.98 14.74 14.26

10.10 10.67 10.60

9.83 10.66

-5.15 -4.15 -3.60

-.27

10.59

Municipal (Bond Buyer)

13.30

12.63

9.924

10.05

-2.58

.13

Corporate--Aaa utility Recently offered

17.72

16.19

11.86e

12.10P

-4.09

S&L fixed-rate mortgage commitment

18.63

16.93

13.845 1982

13.665

Bank prime rate reasury bill futures Mar. 1983 contract Sept. 1983 contract

8.50

8.67

-4.82

Intermediate- and longterm rates

1981 highs

hi ths

Stock Prices Dow-Jones Industrial 1,024.05 79.14 NYSE Composite 380.36 4MEX Composite 1ASDAO (OTC) 223.47 . One-day quotes except as noted.

FOMC Nov. 6 Nv. 16

Dec. De.

16 1

-.08

.06

-. 18 -3.27 Percent change from: FOMC 1981 highs Nov. 16

-1.8 990.25 -3.3 -. 3 -1.4 78.04 -. 9 -14.5 325.36 .3 1.0 225.60 4. One-day quotes for preceding Thursday. Averages for statement week closest to date shown. 5. One-day quotes for preceding Friday. Secondary market. p--preliminary. e--estimated.

1008.00 78.30 328.19 224.97 ----