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 14, 1992

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 attitudes . Retail inventories .

. .

. .

. .

. .

. . . .

. .

. . . .

. .

. .

. ... . . .

Tables University of Michigan Survey Research Center: . . . . . . Survey of Consumer Attitudes . Changes in manufacturing and trade inventories Inventories relative to sales . . . . . . . . Retail sales (corrected) . . . . . . . . . . .

. . . .

Personal consumption expenditures and consumer attitudes. . . . . . . . . ... .. Ratio of inventories to sales. . . . . . . .

. . .

. .. . . .

4 6

THE FINANCIAL ECONOMY Senior Loan Officer Opinion Survey .

.

.

.

. .

.

.

.

.

8

Tables .14 .. . . . . . . . . . . .... Monetary aggregates Commercial bank credit and short- and 15 intermediate-term business credit. . . . . . . . ... . .16 . . . Selected financial market quotations ... . THE INTERNATIONAL ECONOMY Tables Trade quantities (revised) . . . . . Selected price indicators (revised) .

. .

. . . .

. . . .

. .

. .. . . .

17 17

SUPPLEMENTAL NOTES THE DOMESTIC NONFINANCIAL ECONOMY Consumer Attitudes According to preliminary data, the University of Michigan's composite index of consumer sentiment edged down 1.3 index points in early August.

These results are based on about two-thirds of the

sample of participants.

The current conditions component of the

composite index fell 7.4 index points, reflecting respondents' less favorable perceptions of personal financial conditions and buying conditions for large household durables.

These declines were

largely offset in the composite index by more favorable views of future business conditions.

Respondents expect inflation to be

3.9 percent over the next twelve months, the same rate expected last month.

Long-run inflation expectations rose 0.3 percentage point to

5.0 percent. Retail Inventories In current-cost terms, retail inventories rose at an annual rate of $25.0 billion in June after a $7.7 billion decline in May. With a 0.3 percent drop in sales, the retailers' inventory-sales ratio rose from 1.55 to 1.57 months.

Excluding auto dealers, stocks

rose $16.6 billion in June and the inventory-sales ratio moved up to 1.48 months--near the high end of the range of the past year.

The

June inventory accumulation was almost equally spread between durable and nondurable goods, with the largest increases reported by general merchandise stores and automotive dealers. For all manufacturing and trade, inventories rose in June at a $64.1 billion annual rate in current-cost terms.

Total shipments

and sales rose 1.6 percent in June, and the overall inventory-sales ratio moved down slightly to 1.50 months.

-2Over the second quarter, retail inventories excluding autos rose at an annual rate of $11.7 billion in current-cost terms, $2.6 billion more than BEA's assumption when the advance GDP estimate was prepared.

For all manufacturing and trade excluding

autos, Census data now show an accumulation of $19.9 billion at an annual rate (in current-cost terms),

about $7 billion above BEA's

earlier assumptions; these data imply an upward revision to nonfarm inventory investment excluding auto dealers' stocks of approximately $6 billion in real terms.

August 14, 1992 UNIVERSITY OF MICHIGAN SURVEY RESEARCH CENTER: SURVEY OF CONSUMER ATTITUDES (Not seasonally adjusted)

1991 Dec

1992 Jan

1992 Feb

1992 Mar

1992 Apr

1992 May

1992 Jun

1992 Jul

1992 Aug (p)

Composite of current and expected conditions

68.2

67.5

68.8

76.0

77.2

79.2

80.4

76.6

75.3

Current conditions Expected conditions

78.7 61.5

80.5 59.1

79.7 61.8

84.9 70.3

87.7 70.5

91.5 71.2

95.4 70.7

90.6 67.6

83.2 70.2

88 115

90 119

91 123

93 113

97 129

97 122

100 125

96 125

87 120

67 64

53 63

60 63

90 77

87 66

92 70

88 70

78 66

83 78

113 114 141

123 117 155

126 114 163

125 126 153

131 130 162

135 139 159

144 147 163

128 138 153

124 127 159

36 50

37 46

39 47

39 53

31 54

45 59

38 67

39 58

43 61

Average expected increase in prices during the next 12 months

4.0

3.5

3.5

3.3

3.7

3.4

4.2

3.9

3.9

Average expected increase in prices (per year) over the next 5 to 10 years

4.8

5.4

4.5

4.6

4.9

5.5

4.7

4.7

5.0

Indexes of consumer sentiment (Feb. 1966=100)

Personal financial situation Now compared with 12 months ago* Expected in 12 months* Expected business conditions Next 12 months* Next 5 years* Appraisal of buying conditions Cars Large household appliances* Houses Willingness to use credit Willingness to use savings

* --

Indicates the question is one of the five equally-weighted components of the index of sentiment. (p) -- Preliminary (f) -- Final

Note: Figures on financial, business, and buying conditions are the percent reporting 'good times' (or 'better') minus the percent reporting 'bad times' (or 'worse'), plus 100. Asterisk (*) indicates the question is one of the five equally-weighted components of the index of sentiment.

Personal Consumption Expenditures Excluding Motor Vehicles

Bllions of 1987 dollars 3180

Quarterly averages 3140 June 3100

3060

3020

I 1989

1990

2980

1992

Personal Consumption Expenditures for Motor Vehicles

Billions of 1987 dollars 250

* Quarterly averages 230

210

June

190

170

150 1989

1990

1991

1992

Consumer Attitudes

Index 140

Conference Board survey 120

100

80

60

40 1980

1982

1984

1986

1988

1990

1992

-5CHANGES IN MANUFACTURING AND TRADE INVENTORIES (Billions of dollars at annual rates; based on seasonally adjusted data)

1991

1992

Q4

Q1

23.1 22.1 -14.0 -7.0 19.9 17.3 1.1 16.2

-7.9 -13.7 -11.2 -7.1 -1.2 4.5 5.8 -1.3

16.2 17.0 -11.3 15.2 12.3 -. 9 13.1

-13.2 -18.0 -8.7 -4.9 .5 4.8 -4.4

1992 Q2

Apr.

May

28.7 19.8 -1.4 8.2 9.5 20.6 8.8 11.7

29.1 6.2 -12.4 .2 -2.9 44.4 22.9 21.6

-7.2 -2.4 13.0 16.3 -12.4 -7.7 -4.8 -3.0

64.1 55.7 -4.9 8.2 43.9 25.0 8.4 16.6

n.a. n.a. n.a. n.a. n.a. n.a. n.a.

10.8 -5.3 -16.7 -4.0 31.6 16.1 15.5

-1.6 -5.0 4.5 -1.0 -5.1 3.3 -8.4

n.a. n.a. n.a. n.a. n.a. n.a. n.a.

June

Current-cost basis Total Excluding auto dealers Manufacturing Excluding aircraft Wholesale Retail Automotive Excluding auto dealers Constant-dollar basis Total Excluding auto dealers Manufacturing Wholesale Retail Automotive Excluding auto dealers

INVENTORIES RELATIVE TO SALES 1 (Months supply; based on seasonally adjusted data)

1991 Q4

1992 Q1

1992 Q2

Apr.

May

June

Current-cost basis Total Excluding auto dealers Manufacturing Excluding aircraft Wholesale Retail Automotive Excluding auto dealers

1.54 1.52 1.62 1.45 1.37 1.58 1.87 1.50

1.52 1.50 1.62 1.45 1.36 1.54 1.85 1.46

1.52 1.49 1.57 1.41 1.37 1.57 1.93 1.48

1.51 1.49 1.58 1.42 1.35 1.57 1.92 1.47

1.52 1.49 1.59 1.42 1.36 1.55 1.90 1.46

1. Ratio of end of period inventories to average monthly sales for the period.

1.50 1.47 1.55 1.39 1.35 1.57 1.93 1.48

RATIO OF INVENTORIES TO SALES (Current-cost data) Ratio S2.1

Manufacturing 1.9

-

Total

'

,,"',

,' ''

'

Excluding aircraft

I

I

1980

I

I

1982

I

I

I

1984

,,,*

"'.,

I

I

1986

I

1988

1.7

June - 1.5 '-..

'',

I

I

1990

1.3

1992

Ratio 1.5 Wholesale 1.4 June 1.3

S1,2

S1.1

1980

1982

1984

1986

1988

1990

Ratio

1992

Ratio 1.7

2.7 Retail ,',

2.5

1

'

G.A.F.

. , *At

1.6 SI

2.1

-

June

Excluding auto

1980

1982

1984

1986

1988

1990

1.4

1992

Replaces Greenbook table II-

RETAIL SALES (Seasonally adjusted percentage change)

1991 Q4

1992 Ql

1992 Q2

May

June

.0

2.7

-. 3 .5

Retail control 1 Previous estimate

-.7

2.2

-. 1

Total excl. automotive group Previous estimate

-. 6

Total sales Previous estimate

.3

-1.7

Durable goods stores Previous estimate

.9

Nondurable goods stores Previous estimate Apparel Food General merchandise 3 Gasoline stations Other nondurables 4

-. 2

.1

GAF 2 Previous estimate

Bldg. material and supply Automotive dealers Furniture and appliances Other durable goods

July

5.5

-. 7

.4 .3

-. 8

-. 5 2.4 -1.8 -1.3 -. 5

-2.5 .3 -1.3 -1.5 .1

3.8

.3 .8

-. 5

.0 .4

-1.6

-. 8

1.8

1.8

-. 2

.1 .1

.5 .2

-. 2

1.9 .3 -1.9 2.6

1.5

1.1 .0

7.5 3.2 4.0 2.5 2.0

-. 1

-. 5

.6 2.4 .7

.7

-. 7

.6

.4

-. 5

1.3 -1.1

.8 .1 2.3 .2 .2

1. Total retail sales less building material and supply stores and automotive dealers, except auto and home supply stores. 2. General merchandise, apparel, furniture, and appliance stores. 3. General merchandise excludes mail order nonstores; mail order sales are also excluded in the GAF grouping. 4. Includes sales at eating and drinking places, drug and proprietary stores.

THE FINANCIAL ECONOMY Senior Loan Officer Opinion Survey The August 1992 Senior Loan Officer Opinion Survey on Bank Lending Practices posed questions about changes in bank lending standards and terms, about the demand for bank loans by businesses and households, about bank capital levels, and about loan sales. Fifty-eight domestic commercial banks and eighteen foreign branches and agencies took part in the survey. The survey suggests that the market for loans to businesses has not greatly changed over the last three months, while credit availability to households has increased modestly.

A large majority

of respondents reported no changes in terms and standards for commercial and industrial loans, while the net tightening of standards on real estate loans was smaller than in any recent survey.

Most respondents indicated that demand for loans by

businesses has been unchanged since May, with a modest number reporting a decline in demand by large and medium-sized borrowers. The respondents also reported little change in the standards for mortgage loans to individuals.

On the other hand, a substantial

fraction indicated that they are more willing to make loans to individuals now than they were three months ago.

In addition, large

fractions of the respondents reported increased demand for mortgages, home equity lines of credit, and consumer loans. The questions on capital ratios, holdings of U.S. government and agency securities, and loan sales provide some evidence on the importance of capital constraints for bank lending.

Few of the

domestic banks indicated that their lending has been constrained by a shortage of capital.

Almost unanimously they reported that

increased holdings of U.S. government and agency securities are the result of the relatively high returns on the securities and not

-9their low risk-weight.

In addition, the respondents reported a

decline in loan sales. Business Lending Non-merger related commercial and industrial loans.

As was the

case in the May survey, most domestic banks reported unchanged standards for approving commercial and industrial loans over the last three months.

No net easing occurred among large borrowers,

with one bank easing and one tightening standards.

Three banks

reported easing standards on loans to medium-sized borrowers while only one tightened, and one bank reported easing standards on loans to small businesses.

The banks that tightened standards cited a

less favorable outlook for the economy, increased industry-specific problems, and regulatory pressure as the reasons.

In contrast,

those that eased pointed to actual or expected improvements in their capital position and a lessening of industry-specific problems as the main reasons. Most domestic banks reported that lending terms on commercial and industrial loans and lines of credit were basically unchanged over the last three months.

As in May, respondents reported a small

net reduction in the size of credit lines for large and medium-sized borrowers, and a very small net increase for small borrowers.

For

medium-sized borrowers, more banks cut the cost of credit lines than increased the cost.

No net change occurred in the cost of credit

lines for small borrowers, and a very small net increase for large borrowers.

Spreads of loan rates over base rates were virtually

unchanged for large and medium-sized firms, but more banks increased spreads for small customers than decreased them.

A small net

increase in the use of loan covenants for large and medium-sized borrowers occurred over the past three months. however, no net change was reported,

For small borrowers,

net increases in collateral

-10requirements between May and August for borrowers of all sizes were very small. The behavior of foreign branches and agencies has been similar to, but somewhat tighter than, that of domestic banks.

Most of the

foreign branches and agencies reported no change in lending standards for commercial and industrial loans, but two of the nineteen have tightened their standards since May.

The same two

foreign respondents have also tightened many of their lending terms over the last three months.

Lending terms at the other foreign

respondents showed either no net change or a small net tightening. Real estate loans.

The number of domestic banks reporting

tighter standards for construction and land development loans and for loans for commercial office buildings has fallen since May, but a small net tightening of standards on such loans was still apparent over the past three months.

In contrast, respondents indicated a

very small net loosening of standards on loans by domestic banks for industrial structures.

None of the foreign branches reported any

change in standards on any type of real estate loan. Demand.

Loan demand by large and medium-sized borrowers

softened over the past three months.

Although most domestic

respondents reported that business loan demand changed little since May, fourteen banks reported weaker demand by large borrowers while only five reported stronger demand.

There was a much smaller net

decline in demand reported for medium-sized borrowers, and a small net strengthening of demand reported for small borrowers.

In the

May survey there was no net change in demand by large borrowers, and substantial net strengthening of demand by small and medium-sized borrowers.

The domestic banks that reported a change in loan demand

by businesses indicated that the change in demand was primarily due to changes in inventories or capital expenditures.

Most foreign

-11branches and agencies also reported no change in loan demand, although-more of them saw falls in demand than saw rises.

In May

none of the foreign branches or agencies reported a decline in demand.

The foreign respondents that reported a change in demand

attributed it to changes in inventories, changes in capital expenditures, or changes in customers' use of other sources of financing.

Since the foreign branches and agencies tend to have

larger customers, it is not a surprise that their assessment of demand is similar to that of the domestic banks for their larger customers. Lending to Households The availability of credit to households appears to have increased slightly over the past three months.

Respondents

indicated a very small net easing of standards on home mortgages since May.

The May survey showed no net change in standards over

the previous three months.

As in the May survey, the demand for

residential mortgages and for home equity loans was generally reported to be stronger.

The demand for consumer installment loans

was stronger at twelve banks and weaker at five, a smaller net strengthening than in May.

About a fifth of the respondents

reported increased willingness to provide consumer credit, a larger proportion than in May. Capital Ratios, Securities Holdings, and Loan Sales Two new sets of questions in the survey were intended to provide information on the degree to which a shortage of bank capital has limited the growth in bank lending.

When asked about

the adequacy of their capital, more than 85 percent of the domestic banks indicated that their capital level was either "fairly comfortable" or "very comfortable."

Only about five percent

reported that their risk-based capital ratio or their tier-1 capital

-12ratio was either "fairly tight" or "very tight."

Of the respondents

reporting comfortable capital levels, only about ten percent said that they were taking a more aggressive lending stance as a result. Those reporting tight capital ratios indicated that their institutions are likely to increase loan sales as a result, and that they may reduce dividends or issue capital.

None of the Japanese

banks' branches or agencies reported very comfortable capital positions at their parent institutions, and four of them reported fairly tight capital positions--presumably a result of the current real estate and stock market slumps in that country.

Three of the

Japanese respondents reporting tight capital positions indicated that they were limiting lending in response. Survey participants were asked whether they had increased holdings of U.S. government and agency securities and, if so, whether the increases were a result of the securities' low riskweight.

More than two thirds of the domestic respondents reported

that their institution had increased its holdings of such securities over the past two and a half years.

Virtually all of them reported,

however, that the relatively weak demand for loans and the wide spreads between yields on government securities and deposit rates made these securities the most.profitable use of their funds.

The

second most common reason given for the increased holdings of government securities was the uncertain economic outlook, and the third most common reason was an anticipated increase in loan demand. The low risk weight of such securities was offered by only nine of the respondents.

None of the foreign branches and agencies reported

increased holdings of US government and agency securities. The survey has asked about loan sales on an annual basis for the last eight years.

If bank lending were constrained by the

supply of bank capital, one would expect to see an increase in loan

-13sales to institutions other than banks. however, to have increased recently.

Such sales do not appear.

Over the past year, loan sales

at the respondent banks were $54.6 billion, down from $65.2 billion last year.

As in past surveys, the largest purchasers of these

loans were large domestic banks and branches and agencies of foreign banks.

Most domestic banks reported that the demand for loan

purchases changed little over the past year, with those reporting stronger demand somewhat more numerous than those reporting weaker demand.

In contrast, foreign branches and agencies reported a net

decline in the demand for loans by their usual purchasers.

-14MONETARY AGGREGATES (based on seasonally adjusted data unless otherwise noted)

Growth 1991 1

1992 Q1

1992 Q2

1992 May

1992 Jun

1992 Jul p

Q4 91Jul 92p

------------ Percent change at annual rates--------------------1.

M1

2.

M2

3.

M3

8.0 2.8 1.2

16.5 4.3 2.2

9.8 0.0 -1.9

14.6 0.5 -0.7

----------- Percent change at annual

-3.1 -3.8 -4.4

11.6 -1.3 -1.8

rates-----------

11.9 1.1 -0.5 Levels bil. $ 9 Jul 2p

Selected components 4. 5. 6.

MI-A Currency Demand deposits

7.

Other checkable deposits

8.

M2 minus M1 2

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

Overnight RPs and Eurodollars, NSA General purpose and broker/dealer money market mutual fund shares Commercial banks Savings deposits (including MMDAs) Small time deposits Thrift institutions Savings deposits (including MMDAs) Small time deposits

17. M3 minus M23 Large time deposits 4 At commercial banks, net At thrift institutions Institution-only money market mutual fund shares Term RPs, NSA Term Eurodollars, NSA

5.6

14.9

9.1

10.1

-5.4

14.7

602.4

8.4 3.4

7.4 22.2

5.8 12.5

4.8 15.0

6.6 -15.6

11.7 17.7

278.9 315.6

12.4

19.2

11.0

22.3

0.7

6.7

358.7

1.1

0.0

-3.7

-4.8

-4.0

-6.2

2493.9

-7.9

15.4

-35.5

-66.1

26.9

-8.8

67.9

3.9 7.1 13.3 1.1 -6.9 9.3 -16.8

1.0 0.9 19.2 -18.9 -3.6 22.4 -24.2

-7.3 0.4 12.0 -13.3 -6.6 18.9 -29.1

3.0 -3.1 7.8 -16.7 -2.9 18.8 -24.0

-5.7 -3.8 4.7 -14.6 -6.3 5.2 -17.8

-11.9 -2.1 9.5 -16.8 -7.3 5.2 -20.1

349.8 1259.8 716.3 543.6 816.2 418.0 398.2

-5.6

-7.3

-10.5

-6.4

-7.5

-4.3

696.9

-11.7 -5.1 -31.7

-20.4 -18.2 -29.6

-18.6 -14.4 -37.0

-14.2 -8.0 -40.7

-14.1 -12.0 -25.2

-19.4 -22.1 -6.9

389.8 320.4 69.4

33.4 -21.7 -11.0

27.0 -6.0 -27.1

20.1 -5.0 -24.1

35.5 -11.6 -50.2

30.2 -26.8 -31.9

48.1 -48.0 -25.7

207.7 67.2 50.2

----- Average monthly change in billions of dollars---MEMORANDA:

5

at commercial Managed liabilities banks (25+26) 25. Large time deposits, gross 26. Nondeposit funds Net due to related foreign 27. 24.

institutions 28.

Other

6

-0.6 -0.2 -0.5

-2.7 -5.7 3.0

-2.7 -4.8 2.1

-3.1 -3.2 0.1

-1.1 -4.3 3.2

-3.9 -6.6 2.7

684.5 385.8 298.7

0.4 -0.9

2.2 0.7

5.1 -3.0

4.8 -4.5

5.9 -2.8

2.1 0.6

63.3 235.4

0.2

-1.5

1.3

-2.9

8.8

-3.7

22.1

29. U.S. government deposits at commercial banks 1. 2. 3. 4. 5. 6.

7

Amounts shown are from fourth quarter to fourth quarter. Nontransactions M2 is seasonally adjusted as a whole. The non-MZ component of M3 is seasonally adjusted as a whole. Net of large denomination time deposits held by money market mutual funds and thrift institutions. Dollar amounts shown under memoranda are calculated on an end-month-of-quarter basis. Consists of borrowing from other than commercial banks in the form of federal funds purchased, securities for borrowed money (including borrowing from the sold under agreements to repurchase, and other liabilities Federal Reserve and unaffiliated foreign banks, loan RPs and other minor items). Data are partially estimated. 7. Consists of Treasury demand deposits and note balances at commercial banks. p - preliminary

-15COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT 1

(Percentage change at annual rate, based on seasonally adjusted data)

Category

Level (billions

Dec. 1990 to Dec. 1991

of

1992 Q1

1992 Q2

1992 May.

1992 1992 Jun. Jul. p

dollars) 1992 Jul. p

Commercial bank credit 1. Total loans and securities at banks 2.

Securities

3.

U.S. government

4.

Other

5.

Loans

6.

Business

7.

Real estate

8. 9. 10.

3.9

2.1

2.1

17.6

6.7

14.7

11.8

11.3

14.3

789.6

11.3

19.7

15.6

17.6

14.2

615.1

1.4

-7.9

-2.1

-1.4

-10.4

15.3

174.6

-0.2

0.5

-2.4

-5.5

-1.8

-5.5

2,080.9

-7.3

-7.3

-8.1

-5.2

597.1

23.8

-6.4

-2.8

-0.9

1.7

-0.1

2,870.5

2.9

2.6

0.5

1.2

-1.6

-2.2

878.9

Consumer

-3.9

-0.9

-2.2

-5.0

1.3

-1.0

359.7

Security

21.6

45.4

24.3

-60.5

44.4

Other

-2.7

-8.8

-12.1

-3.9

3.2

-65.1 -9.0

61.0 184.3

Short- and intermediate-term business credit 11.

Business loans net of bankers acceptances

-2.5

-6.6

-7.0

-7.8

-7.0

-6.9

590.1

Loans at foreign branches 2

-1.6

-40.9

26.3

-5.3

84.6

44.4

25.2

13.

Sum of lines 11 and 12

-2.5

-7.9

-5.7

-7.7

-3.7

-4.9

615.3

14.

Commercial paper issued by nonfinancial firms

-10.4

14.9

-3.9

6.0

-4.3

139.9

-3.9

-4.0

-5.4

-8.6

-1.9

-4.7

755.2

-16.2

-22.9

-27.3

-27.7

-37.8

n.a.

24.65

1.4

-1.9

-1.5

0.0

5.6

n.a.

298.85

-2.9

-3.9

-4.9

-6.7

-0.9

n.a.

1,081.55

12.

15.

Sum of lines 13 and 14

16.

Bankers acceptances, U.S. trade-related 3

17. 18.

Finance company loans to business 4 Total (sum of lines 15, 16, and 17)

-12.7

1. Average of Wednesdays. Data are adjusted for breaks caused by reclassifications. 2. Loans at foreign branches are loans made to U.S. firms by foreign branches of domestically chartered banks. 3. Consists of acceptances that finance U.S. imports, U.S. exports, and domestic shipment and storage of goods. Based on average of data for current and preceding ends of month. 4. Based on average of data for current and preceding ends of month. 5. June 1992 data. p--Preliminary. n.a.--Not available.

-16SELECTED FINANCIAL MARKET QUOTATIONS (percent) --------------------------------------

Dec-Jan Lows

1992

1992

1992

FOMC Jul 1

Jul 2

Aug 13

Dec-Jan Lows

Change from:

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

FOMC Jul 1

Jul 2

Short-term rates 2

3.94

3.56

3.56

3.25

-0.69

-0.31

-0.31

3.72 3.76 3.81

3.55 3.63 3.87

3.24 3.34 3.55

3.09 3.18 3.29

-0.63 -0.58 -0.52

-0.46 -0.45 -0.58

-0.15

Commercial paper 1-month 3-month

4.01 3.94

3.89 3.88

3.53 3.56

3.34 3.36

-0.67 -0.58

-0.55 -0.52

-0.19 -0.20

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

3.95 3.89 3.89

3.80 3.82 3 .97

3.55 3.55 3.67

3.27 3.28 3.34

-0.68 -0.61 -0.55

-0.53 -0.54 -0.63

-0.28 -0.27 -0.33

3.94 3.88

3.81 3.81

3.75 3.75

3.25 3.31

-0.69 -0.57

-0.56 -0.50

-0.50 -0.44

6.50

6.50

6.00

6.00

-0.50

-0.50

0.00

(constant maturity) 5.05 5.38 6.71 7.10 7.39 7.76

5.15 6.93 7.63

4.72 6.55 7.36

-0.33 -0.16 -0.03

-0.66 -0.55 -0.40

-0.43 -0.38 -0.27

Federal funds

Treasury bills

3

3-month

6-month 1-year

Eurodollar deposits 1-month 3-month

-0.16 -0.26

4

Bank prime rate

Intermediate- and long-term rates U.S. Treasury 3-year 10-year 30-year

Municipal revenue (Bond Buyer)

6.53

6.58

6.55

6.20

-0.33

-0.38

-0.35

Corporate--A utility recently offered

8.46

8.55

8.55

8.09

-0.37

-0.46

-0.46

Home mortgage rates FHLMC 30-yr. FRM 1-yr. ARM FHLMC

8.23 5.79

8.43 5.78

8.43 5.78

8.06 5.30

-0.17 -0.49

-0.37 -0.48

-0.37 -0.48

-------------------------

1989 Record highs

Date

Lows Jan 3

1992 FOMC Jul 1

Aug 13

Percent change from: Record highs

1989 lows

FOMC Jul 1

54.49 49.32 26.70 50.83 48.05

-1.22 1.41 0.97 0.35 1.35

Stock prices Dow-Jones Industrial 3413.21 233.66 NYSE Composite 418.99 AMEX Composite 644.92 NASDAQ (OTC) 4121.28 Wilshire ----------------------

6/1/92 8/3/92 2/12/92 2/12/92 1/15/92

2144.64 3354.10 3313.27 229.95 226.75 154.00 386.73 383.01 305.24 570.99 568.99 378.56 2718.59 3971.45 4024.89

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-

-2.93 -1.59 -7.70 -11.46 -2.34 --

- ---

--- -

3/ Secondary market. 1/ One-day quotes except as noted. 4/ Bid rates for Eurodollar 2/ Average for two-week reserve maintenance period deposits at 11 a.m. London time. closest to date shown. Last observation is average to date for maintenance period ending August 19. 1992. 5/ Based on one-day Thursday quotes and futures market index changes 6/ Quotes for week ending Friday previous to date shown.

Replaces Greenbook pages I-35 and

TRADE QUANTITIES (Percent change from preceding period shown, except as noted, A.R.) ------

1990:Q4

to 1991:Q4 Nonag. exports Agric. exports Non-oil imports Oil imports

Projection ------

1992 Q1

1993

Q2

Q3

Q4

Q4

8.3 10.8

0.2 6.4

-3.5 -11.8

5.1 19.4

7.4 -17.0

9.2 0.9

6.5 6.9

5.2 1.7

6.7 25.2

3.7 37.4

5.5 -7.3

6.1 9.0

* GDP basis, 1987 dollars.

SELECTED PRICE INDICATORS (Percent change from preceding period shown, except as noted, A.R.) 1990:Q4 to 1991:Q4

-----1992 Q1

Projection -----1993 Q4 Q4

Q2

Q3

PPI (exp. wts.)

-0.9

-0.3

3.7

2.5

1.7

1.8

Nonag. exports* Non-oil imports* Oil imports ($/bl)

-0.4 0.3

0.1 2.1

1.9 5.8

2.6 4.8

2.5 4.5

2.0 3.6

18.13

15.27

17.37

18.94

18.25

18.00

* Excluding computers.

I-36

BOARD OF GOVERNORS OF THE

FEDERAL RESERVE SYSTEM WASHINGTON, D.C. 20551

August 14, 1992 STRICTLY CONFIDENTIAL - FR CLASS II - FOMC TO:

Federal Open Market Committee

FROM:

Normand Bernard Attached is a revised version of the table that appears

on page 1-38 of the August 13 Greenbook, Part I. The revision extends the staff forecast of foreign GDP and consumer prices through 1994.

August 14, 1992 STRICTLY CONFIDENTIAL - FR CLASS II FOMC

REAL GDP AND CONSUMER PRICES, SELECTED COUNTRIES, 1990-94 (Percent change from fourth quarter to fourth quarter)

Projection 1990

1991

1992

1993

1994

-2.0 1.5 5.2 1.6 4.7 -0.7

-0.0 1.7 1.8 1.8 3.2 -1.7

1.9 2.6 2.5 1.6 1.3 0.2

3.4 2.8 2.4 2.0 2.5 2.5

3.4 2.7 2.6 2.4 4.0 2.5

Average, weighted by 1987-89 GNP

2.5

1.6

1.6

2.6

3.1

Average, weighted by share of U.S. nonagricultural exports Total foreign G-6 Developing countries

1.8 0.5 4.9

1.7 0.8 5.2

2.5 1.7 5.2

3.5 3.0 5.7

3.7 3.2 5.8

4.9 3.6 3.0 6.3 3.2 10.0

4.1 2.9 3.9 6.1 3.2 4.2

2.5 2.8 3.2 4.9 2.5 3.9

2.6 2.8 3.3 3.5 1.9 3.5

2.3 2.6 3.3 3.2 2.1 3.2

Average, weighted by 1987-89 GNP

4.8

3.9

3.2

2.7

2.7

Average, weighted by share of U.S. non-oil imports

4.4

3.8

2.8

2.5

2.4

Measure and country

REAL GDP Canada France Western Germany Italy Japan* United Kingdom

CONSUMER PRICES Canada France Western Germany Italy Japan United Kingdom

* Japanese data reported on GNP basis.