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 III - FOMC
August 18, 1989
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 Consumer prices. . . . . . . . . . . . . . Federal sector forecast in the Greenbook Tables Recent changes in consumer prices . . . . Federal sector accounts . . . . . . . . .
THE FINANCIAL ECONOMY Tables Monetary aggregates . . . . . . . . . . . Commercial bank credit and short- and intermediate-term business credit
. . .
Selected financial market quotations . . . THE INTERNATIONAL ECONOMY U.S. merchandise trade . . . . . .. .
.
.
.
.
.
.
.
8
SUPPLEMENTAL NOTES
DOMESTIC NONFINANCIAL ECONOMY Consumer Prices The consumer price index for all urban consumers rose 0.2 percent in July.
Energy prices fell 0.7 percent, as gasoline prices dropped
2.2 percent in the wake of recent declines in crude oil costs and high levels of gasoline inventories.
Food prices rose 0.3 percent, as declines
in prices for pork, poultry, and eggs partially offset moderate increases in the price of fruits and vegetables and most other types of food at home. Poultry prices came down sharply at the farm, producer, and consumer levels in July. Consumer prices other than food and energy rose 0.4 percent in July, about the same as the average monthly rate of increase in the preceding twelve months. Among the components of this index, service prices continued to rise considerably faster than consumer goods prices, which have been held down by the moderation in import prices. food and energy rose 0.1 percent in July.
Prices of commodities other than Apparel prices fell 0.9 percent
as retailers, who needed to trim stocks to make room for the fall clothing line, discounted prices more than usual.
New car prices fell 0.4 percent as
automakers stepped up incentive programs to clear out their inventories before the 1990 models begin to reach showrooms.
Non-energy services prices
jumped 0.6 percent, led by large increases in the cost of out-of-town lodging, hospital services, and educational services.
Residential rent and
owners' equivalent rent rose 0.3 percent and 0.4 percent, respectively, the same pace as in the preceding twelve months.
RECENT CHANGES IN CONSUMER PRICES (Percentage change; based on seasonally adjusted data)
All items2 Food Energy All items less food and energy Commodities Services
Relative importance Dec. 1988
1987
100.0 16.2 7.3
4.4 3.5 8.2
4.4 5.2 .5
76.5 25.7 50.8
4.2 3.5 4.5
4.7 4.0 5.0
5.2 4.1 5.9
3.8 2.0 4.3
.2 -.1 .4
.4 .1 .6
100.0
4.5
4.4
6.2
5.7
.2
.2
1989 1988
Q1
1989 Q2
-Annual rate6.1 5.7 8.2 5.6 24.8 10.2
June
July
-Monthly rate.2 .2 .2 .3 -.7 -1.0
Memorandum: CPI-W 3
1. Changes are from final month of preceding period to final month of period indicated. 2. Official index for all urban consumers. 3. Index for urban wage earners and clerical workers.
-3Federal Sector Forecast in the Greenbook The following table, Federal Sector Accounts, replaces the one included in the August 16 Greenbook, Part 1. That table omitted lines containing High-employment Budget data and projections; these lines have been inserted on the new table.
CORRECTED CONFIDENTIAL
CLASS II
August 17,
1989
FEDERAL SECTOR ACCOUNTS (Billions of dollars)
Fiscal Year 1988a
Admin i
CBO 2
FRB Staff
Admin i
CB2
FRB Staff Projection
I
FY19 9 0p_
FY1989p
1988 IVa
FRB Staff
I
I
la
a1a 89 I
Ila
IV
I
II
1990 III
.
-
BUDGET
Not seasonally adjusted 3
Budget receipts 3 Budget outlays Surplus/deficit(-) to be financed 3 (On-budget) (Off-budget)
909 1064
996 1144
983 1142
993 1162
1080 1179
1069 1215
1069 1179
-155 -194 39
-148 -202 53
-159 -215 56
-168 -221 53
-99 -164 65
-146 -214 68
-110 -176 66
n.a. n.a. n.a.
n.a. n.a. n.a.
143 13 13
n.a. n.a. n.a.
n.a. n.a. n.a.
107 -3 6
n.a.
n.a.
32
n.a.
n.a.
35
Means of financing: Borrowing Cash decrease 4 Other Cash operating balance, end of period
44
222 289
34
220 280
308 285
-61 -77 16
23 0 23
15
NIPA FEDERAL SECTOR Receipts Expenditures Purchases Defense Nondefense Other expend. Surplus/deficit
244 306
10 -29 -4
41 12 9
44
32
228 295
27
248 297
329 298
265 290
249 314
-49 -69 19
31 8 23
-25 -40 15
-64 -74 10
15
40
35
25
Seasonally adjusted annual rates 1034 1188 404 300 104 784 -154
n.a. n.a. n.a. n. a. n.a. n.a. n.a.
n.a.
-175
n.a.
n.a.
n.a.
.4
n.a.
n.a.
-4.1 *
958 1103 377 297 80 726 -145
n.a. n.a.
-155
n.a.
.3 .2 *
n.a.
n.a. n.a. n.a. n.a.
1037 1177 395 302 93 782 -140
1112 1245 413 300 114 831 -133
995 1162 40, 301 106 756 -168
1036 1184 399 299 100 785 -148
1051 1198 404 302 102 794 -147
1055 1209 407 300 107 802 -154
1072 1216 405 297 108 811 -144
1107O 1124 1245 1257 415 418 301 301 113 117 830 839 -138 -133
1145 1262 416 300 116 846 -117
1162 1276 417 299 117 859 -114
n.a.
-144
-186
-172
-168
-173
-161
-152
-142
-122
-114
n.a.
n.a.
-.6
1
-. 3
-. 1
.1
-. 2
-. 2
-. 2
-. 4
-.1
n.a.
n.a.
-7.3 *
1
-2.7
-. 1
-. 7
-3.1
-3.7
-.1
-1
-2
1133 1255 416 311 105 839 -122
FISCAL INDICATORS 5 High-employment (HEB) surplus/deficit(-) Change in HEB, percent of potential GNP Fiscal impetus measure (FI), percent a--actual Note: 1. 2. 3. 4. 5.
-
p--projection
-----
*--calendar year
--
n.a.--not available
Details may not add to totals due to rounding.
The Administration figures are from the Mid-Session Review of the Budget (July 18, 1989), which incorporates the Bipartisan Budget Agreement but does not include on-budget RTC spending in FY1989. The CBO figures are baseline budget estimates from An Analysis of President Reagan's Budgetary Proposals for Fiscal Year 1990 (February 1989). New CBO estimates will be released August 17, 1989. Budget receipts, outlays, and surplus/deficit include social security (OASDI) receipts, outlays and surplus, respectively. The OASDI surplus is excluded from the "on-budget" deficit and shown separately as "off-budget", as classified under current law. Other means of financing are checks issued less checks paid, accrued items and changes in other financial assets and liabilities. HEB is the NIPA measure in current dollars with cyclically-sensitive receipts and outlays adjusted to a 6 percent unemployment rate. Quarterly figures for change in BEB and FI are not at annual rates. Change in HEB, as a percent of nominal potential GNP, is reversed in sign. FI is the weighted difference of discretionary federal spending and tax changes (in 1982 dollars), scaled by real federal purchases. For change in REB and FI, (-) indicates restraint.
MONETARY AGGREGATES (based on seasonally adjusted data unless otherwise noted)
19881
1989 Ql
1989 Q2
1989 May
1989 Jun
1989 Jul p
Growth Q4 88Jul 89p
------------ Percent change at annual rates--------------------4.3 5.2 '6.2 ------------
-0.4 1.8 3.7
-5.6 1.0 2.8
-15.0 -3.6 -1.5
-4.3 6.1 5.5
10.4 12.1 9.3
Percent change at annual rates------------
-1.9 3.0 4.0 Levels bil. $ Jul 89p
Selected components 4.
Ml-A
-0.2
-3.3
-6.4
-5.5
10.6
504.0
8.1 -1.2
7.0 -5.5
4.1 -8.7
2.8 -13.6
5.5 -13.8
2.8 17.0
217.9 278.9
2.5
5.
Currency
6.
Demand deposits
7.
Other checkable deposits
7.7
-0.7
-9.7
-31.0
-1.8
10.2
273.2
8.
M2 minus M12
5.5
2.6
3.3
0.3
9.6
12.6
2340.2
-5.8
13.6
-29.8
-27.6
31.6
64.9
7.4 6.9 1.4 14.7
20.5 5.4 -8.4 22.4
20.8 5.4 -14.9 29.0
-0.9 -1.1 -28.5 28.2
28.7 6.2 0.7 12.1
43.0 7.0 6.8 7.4
9. 10. 11. 12. 13. 14. 15. 16.
Overnight RPs and Eurodollars, NSA General purpose and broker/dealer money market mutual fund shares, NSA Commercial banks 3 Savings deposits, SA, plus MMDAs, NSA Small time deposits Thrift institutions 3 Savings deposits, SA, plus MMDAs, NSA Small time deposits
17. M3 minus M2
4
Large time deposits
5
At commercial banks, net At thrift institutions Institution-only money market mutual fund shares, NSA Term RPs, NSA Term Eurodollars, NSA
78.0 274.6 1017.5 512.6 505.0
4.6
-3.0
-1.1
1.5
6.1
4.5
969.6
-4.3 11.7
-14.0 4.3
-24.6 14.0
-33.5 22.5
-9.9 15.6
-3.1 8.6
348.4 621.1
10.2
10.4
9.1
5.9
3.3
-0.4
883.3
11.0 12.2 8.8
12.7 18.1 1.2
14.1 17.8 6.0
9.5 10.1 8.2
1.9 2.1 1.4
1.7 5.7 -7.5
574.0 398.5 175.5
-0.8 13.7 11.2
10.6 5.8 -1.2
12.2 0.3 -5.5
53.4 1.9 -9.4
45.9 -2.8 -15.4
39.1 -56.7 3.6
98.2 120.9 100.0
---- Average monthly change in billions of dollars---MEMORANDA:
6
24. Managed liabilities at commercial banks (25+26) 25. Large time deposits, gross
26.
Nondeposit funds
27.
Net due to related foreign
28.
Other
institutions, SA 7
4.9 3.3 1.6
4.7 5.8 -1.1
7.9 4.0 3.9
6.9 4.1 2.8
17.8 1.9 15.9
6.9 3.0 3.9
688.6 461.7 226.9
-0.4 2.0
0.5 -1.6
-0.1 4.0
-3.0 5.7
8.0 7.9
3.2 0.6
11.1 215.7
0.0
-1.5
2.3
6.2
0.2
-4.6
22.7
29. U.S. government deposits at commercial banks
8
1. Amounts shown are from fourth quarter to fourth quarter. 2. Nontransactions M2 is seasonally adjusted as a whole. 3. Commercial bank savings deposits excluding MHDAs grew during June and July at rates of -5.9 percent and 2.6 percent, respectively. At thrift institutions, savings deposits excluding MMDAs grew during June and July at rates of -9.2 percent and -6 percent, respectively. 4. The non-M2 component of 13 is seasonally adjusted as a whole. 5. Net of large denomination time deposits held by money market mutual funds and thrift institutions. 6. Dollar amounts shown under memoranda are calculated on an end-month-of-quarter basis. 7. Consists of borrowing 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 borrowing from the Federal Reserve and unaffiliated foreign banks, loan RPs and other minor items). Data are partially estimated. 8. Consists of Treasury demand deposits and note balances at commercial banks. p - preliminary
COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT (Percentage changes at annual rates, based on seasonally adjusted data) 1987:Q4 to 1988:Q4
1989 l1
------------- ---------1. Total loans and securities at banks
7.6
2.
4.8
Securities
3.
U.S. government securities
4.
Other securities
5.
Total loans
7.9 ,2.2
May
Q2
June
July p
Levels bil.$ July p
Commercial Bank Credit--------------------5.2
7.5
5.0
10.0
2518.3
.7
4.3
-. 9
-1.1
559.1 374.3
7.3
8.2
5.4
9.1
1.0
1.6
.5
-8.9
-8.2
-5.1
-3.9
-6.5
8.5
9.6
6.5
8.4
6.7
13.1
1959.1
184.8
Business loans
6.8
10.6
4.6
11.0
-2.7
15.2
632.4
Security loans
-5.7
53.0
-22.9
-60.0
97.9
-23.4
40.3
8.
Real estate loans
14.0
11.8
11.7
10.3
11.2
12.1
719.6
9.
Consumer loans
8.5
5.6
6.1
8.3
2.0
1.6
367.0
0.
Other loans
-. 4
-2.7
1.2
7.6
12.5
40.4
199.8
6.
--------11.
Business loans net of bankers
6.9
acceptances 12.
Loans at foreign branches 2
.3.
Sum of lines 11 & 12
14.
Commercial paper issued by
15.
Sum of lines 13 & 14
16.
Bankers accetances: U.S. trade related Line 15 plus bankers acceptances: U.S. trade related
18.
Finance company loans to business
19.
Total short- and intermediateterm business credit (sum of lines 17 & 18)
4.6
10.5
-2.7
32.8
69.1
32.7
7.6
12.4
5.6
12.7
-1.3
15.5
37.5
38.2
37.8
27.7
8.6
16.0
10.5
16.6
-6.8
17.9
8.0
10.3
16.0
10.5
16.3
14.7
14.4
11.5
15.9
7.8 3
11.0
51.9
30.3
nonfinancial firms
17.
Sh ort- and Intermediate-Term Business Credit ----------
12.3
8.9
8.0
14.1
3.3
15.1 4.5 14.6
.0 12.3
629.7 26.5 656.1
124.0 780.1
n.a.
5 35.75
n.a.
808.45
10.8
n.a.
247.65
5.6
n.a.
1056.05
17.0 4.0
1. Average of Wednesdays. 2. Loans at foreign branches are loans made to U.S. firms by foreign branches of domestically chartered banks. 3. Based on average of data for current and preceding ends of month. 4. Consists of acceptances that finance U.S. imports, U.S. exports, and domestic shipment and storage of goods. 5. June data. p--preliminary. n.a.--not available Note: Data have been revised to reflect new benchmark adjustments.
FINANCIAL MARKET QUOTATIONS 1/ (percent)
SELECTED 1987
Change from:
1989
2/ Oct 16
March Jul-Aug
Highs
FOMC
lows July 6
Mar 89 Jul-Aug FOC lows July 6 Aug 17 Highs
Short-term rates
7.59
9.85
8.97
9.56
9.03
-0.82
0.06
-0.53
6.93
9.09 9.11 9.05
7.63 7.34 7.10
7.77 7.55 7.41
7.88 7.83 7.73
-1.21 -1.28 -1.32
0.25 0.49 0.63
0.11 0.28 0.32
10.05 10.15
8.52 8.24
9.18 8.92
8.84 -1.21 8.64-1.51
0.32 0.40
-0.34 -028
7.92 .90 9.12
10.07 10.32 10.08
8.45 8.26 8.12
8.85
8.72 8.64
-1.22 -1.60 -1.44
0.40 0.46 0.52
-0.32 -0.27 -0.14
Eurodollar deposits 5/ 1-month 3-month
8.00 9.06
10.19 10.50
8.44 8.31
9.25 9.06
8.88 8.75
-1.31 -1.75
0.44 0.44
-0.37 -0.31
Bank prime rate
9.25
11.50
10.50
11.00
10.50
-1.00
0.00
-0.50
U.S. Treasury (constant maturity) 9.52 3-year 10-year 10.23 10.24 30-year
9.88 9.53 9.31
7.51 7.74 7.83
7.92 8.08
-1.66 -1.35 -1.15
0.71 0.44 0.33
0.30
8.10
8.22 8.18 8.16
Mnicipal revenue 6/ (Bond Bayer index)
9.59
7.95
7.17
7.32
7.39
-0.56
0.22
0.07
11.50
10.47
9.45
9.56
9.56
-0.91
0.11
0.00
11.58 8.45
11.22 9.31
9.68 8.60
10.07 8.92
9.96 62
-1.26 -0.69
0.28 0.02
-0.11 -0.30
Federal funds 3/ Treasury bills 4/
7.7 7.74
1-year Commrcial paper
1-onth
74 85
3-month Large negotiable CD's 4/
-onth
Intermediate- and long-term rates
Corporate-A utility Recently offered Home nort rates 7/ Fixed-year
ARM, 1-year
Highs
Percent change from:
1989
1987
FCM July 6
FOC July 6 Aug 17
1987 Highs
1987 Lows
1738.74 2462.44 2679.63 125.91 179.82 191.95
-1.57 2.11
54.11 52.45
8.82 6.75
1.22
57.88
800
Lws
0.10 0.06
Stock prices Dow-Jones Industrial NYSE Composite
AM
Conmosite
NASDAQ (C)
2722.42 187.99
5.01
455.26
231.90 31.11 291.88
39.57
378
1/ One-day quotes except as noted. 2/ Last business day prior to stock market decline on Monday Oct. 19, 1987.
3/ Average for two-week reserve maintenance period closest to
3.65
63.15
4.77
4/ Secondary market. 5/ Bid rates for Eurodollar deposits at 11 a.m. London time.
6/ Based on one-day Thursday quotes
and futures-market index changes. date shown except Feb. low which is the average to the statement week ended Feb. 10, 1988. Last observation is average to date 7/ Quotes for week ending Friday closest to date shown. for maintenance period ending August 23, 1989.
INTERNATIONAL DEVELOPMENTS
U.S. Merchandise Trade In June, the U.S. merchandise trade deficit was $8.2 billion (seasonally adjusted, Census basis, customs valuation), compared with $10.1 billion (revised) in May.
For the second quarter, the deficit was
somewhat smaller than in the first quarter. Exports in June were 1.5 percent higher than in May, primarily a result of increases in capital and consumer goods.
Exports in the
second quarter rose 4.8 percent, bringing the level of exports to 15 percent above that of a year earlier.
This recent strength in exports
has been spread among industrial supplies, capital goods
(particularly
machinery, but also aircraft and computers), and consumer goods. Imports declined 3.6 percent in June, largely because of a drop in the value of oil.
There was a decline in both the price of imported oil
(by 73 cents per barrel) and quantity (by 5 percent) from peak May levels.
Nonetheless, the value of oil imports in the second quarter was
25 percent higher than in the first quarter with most of the increase in prices.
Non-oil imports in the second quarter were at about the same
level as in the first quarter; increases in imports of capital goods (primarily aircraft and computers) and consumer goods were largely offset by declines in the value of imports of automotive products and food.
July 17, 1989 U.S. Merchandise Trade (billions of dollars, seasonally adjusted) Imports
Exports
Total
Ag
Nonag
Total
Oil Non-oil (nsa)
254.1 322.4
29.1 37.6
225.0 284.8
406.2 441.0
42.3 38.5
363.9 402.5
-152.1 -118.5
Quarters (a.r.): 1987 - 4 278.4
30.2
248.2
428.9
44.8
384.1
-150.5
1988 - 1
305.1
35.1
270.0
2 3 4
320.8 326.7 337.2
37.4 39.4 38.5
283.4 287.3 298.7
431.3 435.2 437.8 459.5
39.3 40.1 38.3 36.3
392.0 395.1 399.5 423.3
-126.2 -114.4 -111.1 -122.3
1989 - 1 2
351.5 368.5
42.0 41.9
309.5 326.6
462.6 474.7
41.7 52.0
420.9 422.6
-111.1 -106.1
Months: 1988 - Apr May June
26.0 27.4 26.7
3.3 3.1 2.9
22.7 25.2 23.8
35.4 36.1 37.3
3.1 3.6 3.3
31.9 32.5 34.0
-8.5 -8.7 -10.6
July Aug Sept
26.6 27.5 27.6
3.0 3.3 3.5
23.6 24.2 24.1
35.1 37.6 36.8
3.1 3.4 3.0
31.9 34.2 33.7
-8.5 -10.1 -9.2
Oct Nov Dec
27.9 27.5 28.9
3.1 3.1 3.4
24.1 24.4 25.5
37.1 38.1 39.7
2.9 2.9 3.3
34.2 35.2 36.4
-9.2 -10.5 -10.8
1989 - Jan Feb Mar
29.0 28.8 30.1
3.2 3.4 3.9
25.8 25.4 26.2
37.9 38.2 39.5
3.5 3.2 3.7
34.4 35.0 35.9
-8.9 -9.4 -9.5
30.8 30.5 30.9
3.7 3.5 3.3
27.1 27.0 27.6
39.0 40.5 39.1
4.0 4.7 4.2
35.0 35.8 34.9
-8.3 -10.1 -8.2
Years: 1987 1988
Apr May-r June-p
p/ preliminary
r/
revised
SOURCE: U.S. Department of Commerce, Bureau of the Census
Balance
Cite this document
Federal Reserve (1989, August 21). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19890822_part2
@misc{wtfs_greenbook_19890822_part2,
author = {Federal Reserve},
title = {Greenbook/Tealbook},
year = {1989},
month = {Aug},
howpublished = {Greenbooks, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/greenbook_19890822_part2},
note = {Retrieved via When the Fed Speaks corpus}
}