greenbooks · July 9, 1985

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.

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

CONFIDENTIAL (FR) CLASS III - FOMC

July 5, 1985

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 Employment situation .

Automobile sales . . .

. . . . . . . . .

. .

Tables Changes in employment . . . . Selected unemployment rates. . Hourly earnings index . . . .

. . .

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

THE DOMESTIC FINANCIAL ECONOMY Tables Monetary aggregates

Commercial bank credit and short- and intermediateterm business credit

Selected financial market quotations

. .

. . . .

SUPPLEMENTAL NOTES

THE DOMESTIC NONFINANCIAL ECONOMY Employment situation Employment growth moderated in June, and the civilian unemployment rate was unchanged at 7.3 percent--essentially the same rate that has prevailed over the past year. Nonfarm payroll employment rose 80,000 in June, compared to average monthly increases of 260,000 during the first five months of 1985.

in most recent months, the June data showed considerable variation in the pattern of employment change across different sectors.

In manufacturing,

employment fell an additional 45,000, bringing the cumulative loss in factory jobs since January to 220,000; in June, the largest employment declines were concentrated in machinery and electrical equipment, both of which have suffered substantial losses since the start of the year.

contrast to manufacturing, employment in the service-producing sectors continued to rise in June, though at a slower rate than in earlier months.

particular, employment growth in retail trade was only about half the average pace of the previous five months, and job gains in business services tapered off. The hourly earnings index for production and nonsupervisory workers rose .3 percent in June.

Wage rates were little changed in the manufacturing

and construction sectors; however, wage growth in the service sector was faster than in other recent months.

After some acceleration around the

turn of the year, increases in the hourly earnings index slowed during the

spring quarter, and the average rate of wage change during the first half of 1985 was only fractionally above the increase for 1984 as a whole. Automobile sales The combined sales rate for domestic and imported cars was about 10-3/4 million units in June, down a half-million units from May's advanced pace.

With fewer special financing programs in place during June, sales of

domestic models fell to a 7.7 million unit rate, compared to an average rate of 8.5 million units in the first five months of 1985.

However,

foreign car sales rose further, to around a 3 million unit rate; sales of Japanese models were particularly strong.

CHANGES IN EMPLOYMENT¹ (Thousands of employees; based on seasonally adjusted data)

1983

1984

1984 H2

1985 Apr.

May

June

-Average monthly changesNonfarm payroll employment 2 Strike adjusted

293 293

327 329

296 299

273 267

185 180

210 183

266 263

80 93

Manufacturing Durable Nondurable Construction Trade Finance and services Total government Private nonfarm production workers Manufacturing production workers

79 61 18 25 85 103 4

52 45 7 29 106 106 17

26 27 -1 21 104 107 25

-26 -17 -9 28 91 150 20

-48 -35 -13 32 79 107 -1

-59 -43 -16 88 50 102 15

-40 -18 -22 14 124 117 25

-45 -44 -1 -6 64 102 -43

260

253

220

182

145

195

157

-33

-40

-60

-38

-21

331 338

270 266

147 144

282 290

-250 -175

-174 -240

15 131

-590 -416

Total employment 3 Nonagricultural

1. Average change from final month of preceding period to final month of period indicated. 2. Survey of establishments. Strike-adjusted data noted. 3. Survey of households.

SELECTED UNEMPLOYMENT RATES (Percent; based on seasonally adjusted data)

1983

1984

1984 H2

Civilian, 16 years and older

9.6

7.5

Teenagers 20-24 years old Men, 25 years and older Women, 25 years and older

22.4 14.5 7.8 7.2

White Black Fulltime workers Memo: Total national¹

1985 Apr.

7.3

18.9 11.4 5.7 6.0

18.5 11.2 5.5 5.9

18.5 11.1 5.4 6.0

18.3 11.3 5.4 6.1

17.7 11.0 5.5 6.0

18.9 11.8 5.0 6.1

18.3 11.2 5.6 6.1

8.4 19.5

6.5 15.9

6.3 15.5

6.3 15.0

6.3 15.3

6.2 15.6

6.5 14.0

9.5

7.2

7.1

7.0

6.8

6.9

6.8

9.5

7.4

7.2

1. Includes resident Armed Forces as employed.

May

June

HOURLY EARNINGS INDEX¹ (Percentage change; based on seasonally adjusted data) 2

1983

1984

1984 H2

1985 Q1

--Annual rate-Total private nonfarm Manufacturing Durable Nondurable Contract construction Transportation and public utilities Finance, insurance and real estate Total trade Services

Apr.

1985 May

June

--Monthly rate--

4.0

3.1

2.8

3.5

3.1

2.8 2.2 3.9 2.0

3.3 3.1 3.7 1.3

3.1 2.7 3.8 -.1

5.2 5.9 4.0 5.2

3.6 3.5 3.8 1.6

.3 .3 .3 .3

.3 .4 .2 -.4

.1 .0 .1 .1

4.3

2.9

2.5

2.7

2.1

-.2

5.9 4.8 4.8

3.6 2.6 4.0

3.0 2.5 3.9

5.4 1.8 2.1

1.5 2.1 5.2

.2 .1 .2

.2 .0 .1

.4 .1 .7

1. Excludes the effect of interindustry shifts in employment and fluctuations in overtime hours in manufacturing. 2. Changes over periods longer than one quarter are measured from final quarter of preceding period to final quarter of period indicated. Quarterly changes are compounded annual rates.

MONETARY AGGREGATES (Based on seasonally adjusted data unless otherwise noted)¹ 1983:Q4 to 1984:Q4 ----1.

2. 3.

M2 M3

5.2 7.7 10.4

Q2 Pe

1985 Apr.

May

July 5,

June Pe

1985

Growth from Q4 1984 to e June 1985P

Percentage change at annual rates -----10.6 12.0 10.7

5.9 -0.8 0.2

14.0 8.4 7.1

19 14 11 Levels in billions

of dollars May 1985

Selected components 4. Currency

7.2

6.3

5. Demand deposits

1.1

7.0

Other checkable deposits

M2 minus M1²

8. 9. 10. 11. 12. 13. 14. 15. 16.

M3 minus M25 Large time deposits 6 At commercial banks, net At thrift institutions Institution-only money market mutual fund shares, NSA Term RPs, NSA Term Eurodollars, NSA

10.4

163.1

2.9

15.7

255.8

10.5

21.1

13.3

15.5

157.3

8.6

12.5

-2.9

6.7

1862.9

-27

-152.2

95.3

-6

63.9

-1 9

-8.8 8.9

-28.6 8.4

21 17

172.1 808.6

3.2 15.0 3.5

9.2 7.1 8.4

64.0

Overnight RPs and Eurodollars, NSA³ General purpose and broker/dealer money market mutual fund shares, NSA Commercial banks Savings deposits, SA, 4 plus MMDAs, NSA Small time deposits Thrift institutions Savings deposits, SA, 4 plus MMDAs, NSA Small time deposits

3.0

418.6 389.9 836.3

5.2 11.1 7.3

29.2 -1.8 7.9

-3.6 15.5

17.8 1.7

10 4

1.4 4.8

6.1 9.9

13 3

334.4 501.9

22.1

5.4

4.4

2.3

-2

629.6

10.2 15.6 0.8

2.2 -4.0 13.2

-12 -20

2.0 52.2 -59.6

78.5 -51.7 -3.0

68 -23 -38

26.0 16.0 48.8

9.0 2.6 21.0

33.6 45.6 -8.3

31.2 -19.5 2.0

8 17 -15

Average monthly change

in billions of dollars

428.0 272.0 156.0 63.5 68.8

80.1

MEMORANDA: 23. Managed liabilities at commercial

banks (24+25) 24. 25. 26. 27. 28.

Large time deposits, gross Nondeposit funds Net due to related foreign institutions, NSA 7 Other U.S. government deposits at commercial 8 banks

-9.2 2.6 -11.8 0.9 0.5

0.5 2.2

-1 0

-3.3 -8.5

5.2 -1.5 6.7

-4 -5 1

442.7 331.0 111.7

3.4 3.3

-4 5

-30.3 142.0

-5 -1.4 8.0 0.2 2 2.8 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. Nontransactions M2 is seasonally adjusted as a whole. 3. Overnight and continuing contract RPs issued to the nonbank public by commercial banks plus overnight Eurodollar deposits issued by branches of U.S. banks to U.S. nonbank customers, both net of amounts held by money market mutual funds. Excludes retail RPs, which are in the small time deposit component. 4. Growth rates are for savings deposits, seasonally adjusted, plus money market deposit accounts (MMDAs), not seasonally adjusted. Commercial bank savings deposits excluding MMDAs increased during May and June 1985 at rates of 8.0 percent and 15 percent respectively. At thrift institutions, savings deposits excluding MMDAs increased during May and June 1985 at rates of 5.0 percent and 9 percent respectively. 5. The non-M2 component of M3 is seasonally adjusted as a whole. 6. Net of large-denomination time deposits held by money market mutual funds and thrift institutions. 7. 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, loan RPs and other minor items). Data are partially estimated. 8. Consists of Treasury demand deposits at commercial banks and Treasury note balances. pe-preliminary estimate.

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

1984 Q4

Q2p

1985 Apr.

May

JuneP

July 5,

Levels in bil. of dollars JuneP ------

Commercial Bank Credit ------1.

Total loans and securities at banks

9.8

10.3

1.8

5.2

3.4

4.7

13.3

10.0

1800.2

5.3

-13.0

20.3

8.8

411.0

10.3

-0.4

-26.1

22.1

3.2

266.6

-5.6

-3.4

16.4

12.1

17.1

19.4

144.4

12.8

11.7

10.6

10.0

11.2

10.4

1389.2

Business loans

7.8

10.2

2.7

1.2

6.0

1.0

483.7

Security loans

37.5

16.5

89.0

84.1

82.1

83.2

40.1

Real estate loans

12.1

10.9

11.8

12.8

12.0

10.4

397.2

Consumer loans

16.1

17.4

14.8

16.5

14.5

13.0

271.6

Securities

U.S. government

Other securities

5. 6.

securities

Total loans

-----10.

Business loans net of bankers acceptances 2

11.

Loans at foreign branches

12.

Sum of lines 10 & 11

13.

Commercial paper issued by 3 nonfinancial firms

14.

Sums of lines 12 & 13

15.

Bankers acceptances: 5 related4,

16.

U.S.

9.4

Short- and Intermediate-Term Business

Credit ---

9.3

3.8

6.5

-46.9

27.7

-25.5

26.1

83.0

6.8

4.8

2.7

7.5

4.1

500.7

33.8

41.6

43.4

14.0

78.2

-6.0

5.1

8.4

-6.5

-5.5

n.a.

12.4

4.4

n.a.

23.2

20.8

14.4

7.3

7.6

1.0

1985

480.5 20.1

12.2

5.2

578.8

3.4

n.a.

35.3

5.4

11.7

n.a.

611.6 (May)

n.a.

10.3

n.a.

141.0 (April)

n.a.

6.5

n.a.

746.7 (April)

trade

Line 14 plus bankers acceptances: U.S. trade related

17.

Finance company loans to business

18.

Total short- and intermediateterm business credit (sum of lines 16 & 17)

-29.9

(May)

n.a.--not available. p-preliminary. 1. Average of Wednesdays for domestically chartered ed banks and average of current and preceding ends of months for foreign-related institutions. 2. Loans at foreign branches are loans made to U.S. firms by foreign branches of domestically chartered banks. 3. Average of Wednesdays. 4. Based on average of current and preceding ends of month. 5. Includes acceptances financing U.S. imports, U.S. exports and domestic shipment and storage of goods.

7 SELECTED FINANCIAL MARKET QUOTATIONS¹ (Percent) 1982/1983 Cyclical

1985

1984

FOMC March

FOMC

June

May 21

lows

July 3

Change from: 1984 FOMC highs May 21

low

Highs

Federal funds 2

8.46

11.63

8.57

8.03

7.38

7.76

-3.87

-. 27

Treasury bills 3 3-month 6-month 1-year

7.08 7.62 7.73

10.67 10.77 11.13

8.34 8.80 8.98

7.30 7.43 7.64

6.66 6.81 6.98

7.02 7.07 7.21

-3.65 -3.70 -3.92

-.28 -.36 -.43

Commercial paper 1-month 3-month

8.00 7.97

11.42 11.35

8.63 8.75

7.54 7.56

6.95 7.01

7.51 7.44

-3.91 -3.91

-. 03 -. 12

8.08 8.12 8.20

11.52 11.79 12.30

8.60 8.79 9.35

7.59 7.66 7.84

7.09 7.18 7.30

7.50 7.53 7.60

-4.02 -4.26 -4.70

-.09 -. 13 -.24

8.68 8.71

11.89 12.20

8.78 9.19

7.84 8.01

7.45 7.50

7.56 7.70

-4.33 -4.50

-. 28 -. 31

10.50

13.00

10.50

10.00

9.50

-3.50

-.50

8.86 9.74

7.65 8.00

6.77 7.12

7.06 7.39

9.39 10.60 10.85

8.73 9.83 10.23

9.06 10.23 10.45

Short-term rates

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

Eurodollar deposits 4 1-month 3-month Bank prime rate futures Treasury bill Sept. 1985 contract Dec. 1985 contract

-.59 -. 61

Intermediate- and long-term rates U.S.

Treasury (constant

maturity)

3-year

9.33

10-year

10.12 10.27

13.49 13.99 13.94

10.97 11.77 11.72

Municipal revenue (Bond Buyer index)

9.21

11.44

10.245

9.345

9.10

Corporate--A utility Recently offered

11.64

15.30

13.11e

12.02e

12.55 n.a. 1983

14.68 12.31

13.246 10.976

12.946 10.596 1985 FOMC May 21

30-year

Home mortgage rates S&L fixed-rate S&L ARM, 1-yr.

Highs

1984 Lows

Lows

Stock prices Dow-Jones Industrial 1287.20 1086.57 1184.96 NYSE Composite 94.60 99.63 85.13 187.16 AMEX Composite 249.03 202.06 NASDAQ (OTC) 328.91 225.30 246.00 1. One-day quotes except as noted. 2. Averages for two-week reserve maintenance period closest to date shown. Last observation is for the maintenance period ending July 3, 1985. 3. Secondary market.

-4.43 -3.76 -3.49

-. 33 -. 37 -. 40

9.245

-2.20

-. 10

11.50

11. 5 6p

-3.74

-. 46

12.05 9.83

12.156 9.776

July 3

-2.53 -. 79 -2.54 -. 82 Percent change from: 1984 FOMC May 21 lows

1309.70 1326.39 22.1 109.65 111.02 30.4 232.47 231.28 23.6 293.9 297.33 32.0 4. Averages for statement week closest to date shown. 5. One-day quotes for preceding Thursday. 6. One-day quotes for preceding Friday. e--estimated.

Cite this document

APA

Federal Reserve (1985, July 9). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19850710_part3

BibTeX

@misc{wtfs_greenbook_19850710_part3,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1985},
  month = {Jul},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19850710_part3},
  note = {Retrieved via When the Fed Speaks corpus}
}