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

November 2, 2001

CURRENT ECONOMIC AND FINANCIAL CONDITIONS

Supplemental Notes

Prepared for the Federal Open Market Committee by the staff of the Board of Governors of the Federal Reserve System

Contents 1

Domestic Nonfinancial Economy .............................. The Labor M arket ..................

1

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

Sales of Light Motor Vehicles ..........................

5

Manufacturers' Inventories ............................

5

Staff Forecast Update .................................

7

Tables Changes in Employment ......................... Selected Unemployment and Labor Force Participation Rates ................................... Sales of Automobiles and Light Trucks ............... Changes in Manufacturing and Trade Inventories ....... Selected Inventory-Sales Ratios in Manufacturing and Trade ...................................

2 3 6 8 8

Chart Private Payroll Employment Growth ................. 2 Aggregate Hours of Production or Nonsupervisory 2 ................ Workers ................ Labor Force Participation Rate and Unemployment Rate . 3 Joe Losers Unemployed for Less than 5 Weeks ........ 3 4 Labor Market Indicators .........................

Appendix: Insurance Payments and NIPA Price Index ............ 9 Tables Broad Measures of Inflation .................... Recent Price Indicators .......................... Broad Measures of Inflation ................... Surveys of (CPI) Inflation Expectations .............

....

9 10 11 11

The Domestic Financial Economy ............................ Treasury Finance .................................... Tables Selected Financial Market Quotations ............... Commercial Bank Credit .................. .....

12 12

13 14

Supplemental Notes The Domestic Nonfinancial Economy The Labor Market The labor market deteriorated dramatically in October, with the unemployment rate jumping half a percentage point and private payroll employment falling by 439,000, the largest one-month drop since 1975. Although travel and tourismrelated industries suffered especially large employment declines, almost all major sectors posted job losses last month. Aggregate hours of production or nonsupervisory workers fell 0.7 percent, its largest decline this year. Manufacturing employment declined 142,000 in October and has fallen by more than 1.1 million over the past year. The transportation equipment industry was the hardest hit, losing 26,000 jobs. As in previous months, the electrical equipment and industrial machinery industries also suffered large employment decreases. Overall, factory job losses were again very widespread, and the three-month diffusion index of employment change in manufacturing remained close to its lowest level since 1982. Though manufacturing suffered the largest employment decline of any major industry, the majority of last month's job cuts occurred outside of manufacturing-a reversal of the pattern prevailing earlier this year. In particular, employment in travel and tourism-related industries fell sharply in the aftermath of the September 11 terrorist attack: The airlines and transportation services industries (largely travel agents) lost a combined 53,000 jobs, hotel employment dropped 46,000, and eating and drinking establishments shed 42,000 jobs. In addition, help supply services cut 107,000 jobs in October. Elsewhere, the construction industry, which had maintained a steady level of employment over the last three months, cut 30,000 workers, and wholesale trade lost 23,000 jobs. In addition to the decline in employment, the average workweek fell 0.1 hour to 34.0 hours in October, and the manufacturing workweek decreased 0.2 hour to 40.4 hours, 1.2 hours below the level of a year ago. With October's decline, the index of aggregate weekly hours of production or nonsupervisory workers stood 1 percent below the average level in the third quarter. The unemployment rate in October reached 5.4 percent, the highest level since 1996 and 1.4 percentage points above its level of a year ago. The number of job losers unemployed for fewer than five weeks as a percent of household employment (a proxy for the layoff rate) shot up to 1.33 percent, the highest level since March 1991; the increase in unemployed job losers accounts for nearly all of the rise in unemployment over the past year. The number of workers who work part time for economic reasons jumped for the second consecutive month, and, at 4.5 million, is about 1.1 million higher than in

CHANGES IN EMPLOYMENT (Thousands of employees; based on seasonally adjusted data) _2000 H1 H2

2001 Q2

Aug.

2001 Sept.

-54 -84 -127 2 -155 -6 -26 -23 -7 5 83 -14 73

-213 -199 -211 -1 -90 1 -20 -61 -22 5 -23 -2 -2

-439 -2 -142 -30 -55 -81 -23 5 -111 -107 24

83 -986 8 -1058

788 685

-619 -599

-0.1 34.1 40.6

-0.7 34.0 40.4

Q3

Oct.

--Average monthly change--

Nonfarm payroll employment i Previous Private Mining Manufacturing Construction Transportation and utilities Retail trade Wholesale trade Finance, insurance, real estate Services Help supply services Total government

267 267 178 1 5 16 13 31 9 -7 110 15 90

66 66 121 1 -29 21 16 21 8 7 76 -19 -54

-74 -74 -113 3 -120 -22 -3 35 -15 4 4 -44 39

Total employment (household survey) Nonagricultural

114 116

109 115

-283 -227

Memo: Aggregate hours of private production 2.1 workers (percent change) 1'2 Average workweek (hours)1 34.5 41.8 Manufacturing (hours)

0.2 34.3 41.3

-1.5 34.2 40.8

-83 -88 -141 1 -105 -1 -19 -13 -11 -1 7 -17 58

-3.0 34.1 40.7

-0.5 34.0 40.7

-415

Note. Average change from final month of preceding period to final month of period indicated. 1.

Survey of establishments.

2. Annual data are percent changes from Q4 to Q4. Quarterly data are percent changes from preceding quarter at an annual rate. Monthly data are percent changes from preceding month.

Private Payroll Employment Growth (Strike-adjusted data)

Aggregate Hours of Production or Nonsupervisory Workers

Thousands of employees

1982 = 100

800

-

-

155

600

3-month moving average

-

_

1

00 S4400

/

/A

1998

Oct.

0 -1200

4-5 140

I

1-month

a_- 200

-

1997

150

1999

2000

2001

1997

1998

1999

2000

2001

SELECTED UNEMPLOYMENT AND LABOR FORCE PARTICIPATION RATES (Percent; based on seasonally adjusted data, as published) 2001

1999 Civilian unemployment rate (16 years and older)

Ql

2000

2001

Q2

Q3

Aug.

Sept.

Oct.

4.2

4.0

4.2

4.5

4.8

4.9

4.9

5.4

13.9 7.5 3.0 3.3

13.1 7.1 2.8 3.2

13.7 7.4 3.1 3.3

14.0 8.1 3.4 3.4

15.2 8.4 3.6 3.7

16.1 9.0 3.7 3.7

14.7 8.5 3.7 3.9

15.5 9.5 4.2 4.3

Labor force participation rate

67.1

67.2

67.2

66.9

66.8

66.6

67.0

66.9

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

52.0 77.6 76.1 59.5

52.2 77.9 76.0 59.7

51.3 78.2 75.9 59.9

49.7 76.6 75.9 59.6

49.1 77.0 75.9 59.7

47.4 76.8 75.8 59.6

49.8 77.6 75.9 59.7

50.0 77.0 76.0 59.6

7.2

6.9

7.1

7.4

7.8

8.0

7.8

n.a.

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

Memo: Potential worker ratel

1. The potential worker rate equals the number of civilian unemployed plus those who are not in the labor force and want a job as a percentage of the civilian labor force plus those who are not in the labor force and want a job.

Labor Force Participation Rate and Unemployment Rate Percent

Participation rate (left scale)

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Job Losers Unemployed for Less Than 5 Weeks (Percentage of household employment)

1990

1991

1992

1993

1994

1995

1996

1997

1998

2001

Percent

1999

2000

2001

-4-

Labor Market Indicators Initial Claims Thousands 4-week moving average Oct. 27

1991

1993

1995

1997

1999

2001

Help-Wanted Index

Insured unemployment rate Percent

1992

1995

1998

2001

Reporting Positions Hard to Fill Percent

Index

1992

1995

1998

Conference Board: Current Employment Conditions

2001

Percent

-Nat. Fed. of Independent Businesses

1992

1995

1998

2001

1992

1995

1998

2001

August. The labor force participation rate edged down 0.1 percentage point to 66.9, after having increased sharply last month. Though the participation rate has fluctuated noticeably over the past year, it has experienced little net movement and is currently only 0.1 percentage point below the rate prevailing last fall. Average hourly earnings of production or nonsupervisory workers rose 0.1 percent in September. Over the twelve-month period ended in October, average hourly earnings increased 4.1 percent. Although the year-over-year rise is greater than the 3.9 percent increase over the previous twelve months, average hourly earnings have decelerated recently, increasing at an annual rate of 3.7 percent over the three months ended in October. Sales of Light Motor Vehicles Sales of total light vehicles in October surged to a near-record level of 21.2 million units (annual rate).1 Special financing packages offered by many firms prompted the surge in demand.2 Most of this surge in demand was likely borrowed from future months; based on typical price elasticities, the size of the net increase in incentives-about $500 per vehicle-would have suggested a much smaller overall consumer response. Consistent with anecdotal reports and confirmed by confidential data from the major automakers, retail sales skyrocketed last month. However, fleet sales dropped back as demand from rental car companies apparently plunged. With the financing incentives applying to most models, sales of both cars and trucks soared last month. However, the incentive plans were most prominent among the Big Three producers, and their collective market share jumped more than three percentage points, to 68 percent. Manufacturers' Inventories The book value of manufacturers' inventories dropped at an annual rate of $48.4 billion in September, a slightly larger liquidation than the average pace recorded in the first two months of the quarter. For the quarter as a whole, stocks declined at a $44.3 billion annual rate, a bit faster than the secondquarter drop. However, shipments decreased 4.3 percent in September (not at an annual rate), and the inventory-sales ratio jumped to 1.43 months, the highest monthly ratio in more than five years.

1. The only higher monthly sales rate occurred in September 1986, when sales were 21.6 million units (annual rate); that spike in sales was also prompted by higher incentives, including discounted finance rates. 2. These programs were typically zero-interest financing for loans up to 36 months and discounted rates for longer-term loans.

SALES OF AUTOMOBILES AND LIGHT TRUCKS (Millions of units at an annual rate, FRB seasonals)

2001 1999

2000

Q2

Q3

Aug.

Sept.

Oct.

16.78

17.22

16.65

16.12

16.24

15.76

21.17

8.70 8.07

8.84 8.38

8.41 8.24

7.91 8.21

7.93 8.30

7.68 8.08

10.20 10.96

North American 2 Autos Big Three Transplants Light trucks Big Three Transplants

14.29 6.98 4.86 2.12 7.31 6.55 .76

14.37 6.83 4.65 2.17 7.54 6.57 .97

13.62 6.34 4.11 2.23 7.28 6.25 1.03

13.15 5.89 3.75 2.15 7.26 6.23 1.03

13.20 5.85 3.67 2.18 7.36 6.28 1.08

12.89 5.74 3.79 1.96 7.15 6.18 .97

17.61 7.82 5.43 2.39 9.79 8.62 1.17

Foreign produced Autos Light trucks

2.49 1.72 .77

2.85 2.01 .84

3.03 2.07 .96

2.97 2.02 .95

3.04 2.09 .95

2.86 1.93 .93

3.56 2.39 1.17

16.77 69.5

17.23 66.8

16.65 64.2

16.12 63.7

16.24 63.1

15.76 64.9

21.17 68.0

Total1 Autos Light trucks

Memos: Total sales, as reported Big Three market share

Note. Components may not sum to totals because of rounding. Data on sales of trucks and imported autos for the most recent month are preliminary and subject to revision. 1. Excludes the estimated effect of automakers' changes in reporting periods. 2. Excludes some vehicles produced in Canada that are classified as imports by the industry. November 2, 2001

Durable goods inventories fell sharply in September, led by a whopping $30.9 billion drawdown at manufacturers of computers and electronic products. Although the inventory-shipments ratio in this industry moved down, stocks remain quite bloated relative to shipments. Inventories declined in most other durable goods categories as well, but many stock-sales ratios rose sharply further. Nondurable goods inventories fell at a $10.8 billion pace in September, led by a large liquidation at food stores. Nonetheless, the ratio of inventories to shipments at nondurable goods manufacturers also increased in September. Staff Forecast Update Since the publication of the Greenbook, we have received not only the details underlying the BEA's advance estimate of third-quarter real GDP, but also a number of pieces of information that were not available for that estimate. These include September data on manufacturers' inventories, construction put in place, and revised shipments of nondefense capital goods. On net, the information did not alter our thinking about third-quarter real GDP. However, the October labor market report has led us to reevaluate the near-term forecast. The report suggested that job losses in travel and related industries in the wake of September 11 were as large, if not larger, than we had anticipated. The substantial drop in factory hours was not altogether surprising, but given the weakness in the orders component of the National Association of Purchasing Managers report, we are inclined to deepen the drop in industrial production projected for the fourth quarter. Apart from those cutbacks, the payroll report more generally was weaker than we anticipated. We now expect that real GDP will decline at an annual rate of about 3 percent in the fourth quarter, with final sales likely to decline somewhat more than we previously thought and the drawdown in inventories a bit larger. Some of the additional weakness in demand likely will carry over to early next year, and real GDP is now expected to edge down at an annual rate of about 1/2 percent in the first quarter.

CHANGES IN MANUFACTURING AND TRADE INVENTORIES (Billions of dollars; annual rate except as noted; based on seasonally adjusted Census book value) 2001

2001

Category Q1

Q2

Manufacturing and trade Less wholesale and retail motor vehicles

-24.0

Manufacturing Less aircraft and parts Merchant wholesalers Less motor vehicles Retail trade Automotive dealers Less automotive dealers

Q3

July

Aug.

Sept.

-43.3

n.a.

-72.2

-16.8

n.a.

-10.0

-40.4

n.a.

-88.0

-21.3

n.a.

-11.9 -9.3

-34.4 -35.3

-44.3 -46.3

-43.1 -43.6

-41.3 -42.3

-48.4 -53.0

-5.0 -2.4

.2 3.3

n.a. n.a.

-34.0 -33.0

-4.3 .3

n.a. n.a.

-7.2 -11.5 4.3

-9.0 .3 -9.3

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

4.9 16.9 -12.0

28.8 9.0 19.8

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

SELECTED INVENTORY-SALES RATIOS IN MANUFACTURING AND TRADE (Months' supply, based on seasonally adjusted Census book value) 2001

2001

Category Q1

Q2

Q3

1.42

1.42

n.a.

1.42

1.42

n.a.

1.38

1.38

n.a.

1.38

1.38

n.a.

Manufacturing Primary metals Steel Machinery Computers and electronics Electrical equipment Transportation equipment Motor vehicles Aircraft Fabricated metals Textiles Paper Chemicals Petroleum Rubber and plastics

1.38 1.80 2.30 2.01 1.38 1.41 1.49 .62 4.02 1.71 1.75 1.17 1.41 .68 1.25

1.38 1.76 2.20 2.06 1.52 1.39 1.42 .59 3.84 1.69 1.68 1.18 1.43 .68 1.22

1.38 1.73 2.20 2.09 1.55 1.46 1.42 .58 3.77 1.67 1.60 1.21 1.45 .70 1.18

1.38 1.72 2.17 2.06 1.60 1.45 1.37 .56 3.77 1.67 1.62 1.19 1.44 .72 1.16

1.38 1.72 2.19 2.04 1.66 1.42 1.38 .56 3.83 1.65 1.61 1.19 1.43 .70 1.18

1.43 1.80 2.26 2.20 1.59 1.54 1.52 .65 3.68 1.70 1.59 1.24 1.50 .69 1.21

Merchant wholesalers Less motor vehicles

1.30 1.28

1.32 1.31

n.a. n.a.

1.31 1.30

1.30 1.29

n.a. n.a.

Durable goods Nondurable goods

1.62 .97

1.61 1.03

n.a. n.a.

1.60 1.01

1.58 1.02

n.a. n.a.

1.59 1.50

1.56 1.47

n.a. n.a.

1.56 1.47

1.57 1.47

n.a. n.a.

1.85 1.94 2.41 .85

1.80 1.92 2.41 .86

n.a.

1.81 1.90 2.37 .85

1.82 1.92 2.40 .85

n.a. n.a.

Manufacturing and trade Less wholesale and retail motor vehicles

Retail trade Less automotive dealers Automotive dealers General merchandise Apparel Food

n.a. n.a.

n.a.

July

Aug.

Sept.

n.a. n.a.

Appendix: Insurance Payments and NIPA Price Indexes Many of the price indexes in the national accounts were affected by BEA's treatment of insurance payments resulting from the events of September 11. In the NIPAs, nominal insurance expenditures are determined either as premiums less benefit payments or, as in the case of life insurance, as operating expenses (including profits) of insurers. Although the usual source data for insurance services are available only with a lag, the BEA made judgmental downward adjustments to nominal insurance services in the third quarter for personal consumption, state and local government consumption, and imports to reflect disaster-related benefit payments. 3 These adjustments lowered nominal expenditures but - according to standard BEA practice - were assumed to have no effect on real outlays. As a result, price inflation was temporarily reduced for these expenditure components, as well as for aggregates such as gross domestic purchases. In particular, the chain price index for PCE excluding food and energy was held down about 1-1/2 percentage points at an annual rate in the third quarter.4 By contrast, GDP price inflation in the third quarter was boosted 0.9 percentage point by the

adjustment, since the effect on imports was much larger than for personal and government consumption. We expect that these effects of disaster-related insurance payments on inflation will be reversed in the fourth quarter. Broad measures of inflation (Percent) 2001:Q3 Chain price index

September 2001

FourOne-quarter change quarter (annual rate) . change

change

Twelvemonth change

One-month

GDP excluding insurance adjustment

2.1 1.2

2.3 2.1

n.a. n.a.

n.a. n.a.

Gross domestic purchases excluding insurance adjustment

-0.3 0.5

1.3 1.5

n.a. n.a.

n.a. n.a.

PCE excluding insurance adjustment

-0.4 0.8

1.5 1.8

-0.6 0.3

0.9 1.8

PCE excluding food and energy excluding insurance adjustment

0.3 1.7

1.2 1.6

-0.9 0.2

0.5 1.6

3. The downward adjustments amounted to $20.5 billion (at an annual rate) for personal consumption expenditures, $0.8 billion for state and local government expenditures, and $44 billion for imports of services. The change in imported insurance services, which include payments to businesses, exceed the combined change in household and government insurance services. As a result, nominal GDP was boosted on balance by these adjustments. 4. Because the special adjustments were made entirely to the September data, the effects on that month's changes in PCE price indexes were considerably larger and are expected to be reversed in October.

-10RECENT PRICE INDICATORS (Percent) From 12 months earlier

From 3 months earlier

Sept. 2000

June 2001

Sept. 2001

Sept. 2001

-Annual rate-

2001 Aug.

Sept.

-Monthly rate-

Total Core ex tobacco Core commodities ex tobacco Core services

0.3 -0.2 3.5

Current-methods Core ex tobacco

0.1 -0.5 3.8

-1.6 -2.5 4.5

0.3 -1.1 3.1

-0.4 -0.2 0.5

2.6 2.6 2.5

3.7 2.6 2.4

0.7 2.4 2.0

0.1 0.2 0.3

0.9 0.5 0.4

1.6 0.5 0.3

-2.4 -2.3 -2.6

0.0 0.1 0.1

-0.9 -1.4 1.1

-2.3 -3.1 1.8

-0.5 -1.7 -3.0

1.6 -5.0

0.9 -1.5

PCE Prices Total Core ex tobacco Core commodities ex tobacco Core services

-0.4 -0.8 3.0

Core market-based Core nonmarket-based

1.8 -20.6

-0.6 -0.9 -1.0

0.3

0.3 0.0 -1.4

0.0 0.4

0.2 -6.3

-0.5

-0.3

PPI Total finished goods Core ex tobacco

-0.8 1.6 1.7

Core consumer goods ex tobacco Capital equipment Core intermediate materials Core crude materials --

2.3 2.7

-0.9 -10.1

-0.9 -13.7

0.4 -0.1 -0.1

1.8 2.0 1.1

-0.1 -0.1 -0.1

-3.7 -6.0

-0.4 -0.8

-0.1 0.2

-11BROAD MEASURES OF INFLATION

(4-quarter percent change) 1998 Q3 Product prices GDP chain price index Less food and energy

1999 Q3

2000 Q3

2001 Q3

1.2 1.4

1.4 1.4

2.4 2.3

2.3 1.9

0.8

1.0

2.1

1.8

0.8 1.1

1.6 1.4

2.7 2.1

1.3 1.2

PCE chain price index Less food and energy

1.1 1.5

1.7 1.4

2.7 2.0

1.5 1.2

PCE chain price index, market-based components Less food and energy

0.9 1.4

1.7 1.3

2.7 1.8

1.9 1.7

Nonfarm business chain price index1 Expenditure prices Gross domestic purchases chain price index Less food and energy

CPI

1.6

2.3

3.5

2.7

Less food and energy

2.3

2.0

2.6

2.7

Current-methods CPI Less food and energy

1.3 2.1

2.3 2.0

3.4 2.5

2.7 2.7

Median CPI Trimmed mean CPI

3.0 2.0

2.4 1.7

2.8 2.7

3.7 3.0

1. Excluding housing.

SURVEYS OF (CPI) INFLATION EXPECTATIONS (Percent) University of Michigan Actual inflation1

1 year Mean2

Median 2

Mean 3

Median 3

Professional forecasters4 (10-year)

1999-Q4

2.6

3.5

2.9

3.3

2.9

2.5

2000-Q1 Q2 Q3 Q4

3.2 3.3 3.5 3.4

3.6 3.5 3.6 3.8

3.0 3.0 2.9 3.0

3.5 3.3 3.4 3.7

3.0 2.8 2.9 3.0

2.5 2.5 2.5 2.5

2001-Q1 Q2 Q3

3.4 3.4 2.7

3.4 3.9 3.1

2.9 3.1 2.7

3.6 3.6 3.5

3.0 3.0 2.9

2.5 2.5 2.5

July

2.7

3.0

2.6

3.4

2.9

Aug. Sept.

2.7 2.6

3.1 3.2

2.7 2.8

3.6 3.4

3.0 2.9

1.6

1.0

2.8

2.7

Oct.

5 to 10 years

1. CPI; percent change from the same period in the preceding year. 2. Responses to the question: By about what percent do you expect prices to go up, on the average, during the next 12 months? 3. Responses to the question: By about what percent per year do you expect prices to go up, on the average, during the next 5 to 10 years? 4. Compiled by the Federal Reserve Bank of Philadelphia.

2.5

-12-

The Domestic Financial Economy Treasury Finance In its mid-quarter refunding announcement on October 31, the Treasury said that it is suspending its issuance of both nominal and inflation-indexed thirtyyear bonds. This decision largely caught market participants by surprise. The yields on the on-the-run nominal and indexed Treasury bonds dropped 33 and 19 basis points on the day, respectively. The announcement also drove down private yields, particularly at longer maturities. Yields on thirty-year swaps and Fannie Mae bonds fell nearly 30 basis points, and yields on investmentgrade corporate bonds fell about 16 basis points on the day. Partly in response to the sharp movements in bond prices, bid-ask spreads for thirty-year bonds reportedly widened considerably. The announcement also described some adjustments to the Treasury's debt buyback program. The Treasury will not conduct any buyback operations in January 2002, and thereafter it will announce at its mid-quarter refundings the amounts and timing of buyback operations for the subsequent three months. The Treasury indicated that there will likely be periods during which it will not repurchase debt, depending in part on its financing needs. Market participants interpreted these comments as indicating that the buyback program would be scaled back considerably.

-13III-T-1 Selected Financial Market Quotations (One-day quotes in percent except as noted) 2000

Change to Nov. 1 from selected dates (percentage points)

2001

Instrument June 26

Sept 10

Oct. 1

Nov. 1

2000 June26

2001 Sept 10

2001 Oct. 1

6.50

3.50

3.00

2.50

-4.00

-1.00

-.50

5.66 5.94

3.19 3.13

2.32 2.31

2.02 1.94

-3.64 -4.00

-1.17 -1.19

-.30 -.37

Commercial paper 1-month 3-month

6.56 6.56

3.42 3.24

2.63 2.40

2.20 2.10

-4.36 -4.46

-1.22 -1.14

-.43 -.30

Largenegotiable CDs 1 1-month 3-month 6-month

6.64 6.73 6.89

3.46 3.26 3.24

2.60 2.54 2.46

2.21 2.10 2.08

-4.43 -4.63 -4.81

-1.25 -1.16 -1.16

-.39 -.44 -.38

Eurodollar deposits 2 1-month 3-month

6.63 6.69

3.41 3.26

2.63 2.50

2.25 2.18

-4.38 -4.51

-1.16 -1.08

-.38 -.32

Bank prime rate

9.50

6.50

6.00

5.50

-4.00

-1.00

-.50

Intermediate-and long-term 3 U.S. Treasury 2-year 10-year 30-year

6.54 6.35 6.22

3.59 5.14 5.55

2.87 4.88 5.48

2.54 4.55 5.04

-4.00 -1.80 -1.18

-1.05 -.59 -.51

-.33 -.33 -.44

4.09

3.26

3.14

2.95

-1.14

-31

-.19

5.99

5.25

5.41

5.23

-.76

-.02

-.18

Private instruments 10-year swap 10-year FNMA 5 10-year AA 10-year BBB 5 6 High yield

7.38 7.15 7.60 8.49 11.97

5.62 5.64 6.30 7.08 12.86

5.25 5.27 6.13 7.07 14.11

4.78 4.81 5.84 6.82 13.55

-2.60 -2.34 -1.76 -1.67 1.58

-.84 -.83 -.46 -.26 .69

-.47 -.46 -.29 -25 -56

Home mortgages (FHLMC survey rate) 7 30-year fixed 1-yearadjustable

8.14 7.22

6.89 5.64

6.72 5.45

6.64 5.25

-1.50 -1.97

-.25 -.39

-.08 -.20

Short-term FOMC intended federal funds rate Treasury bills 3-month 6-month

1

U.S. Treasury 10-year indexed note Municipal revenue (Bond Buyer)

4

Record high

Change to Nov. 1 from selected dates (percent)

2001

Stock exchange index Dow-Jones Industrial S&P 500 Composite Nasdaq (OTC) Russell 2000 Wilshire 5000 1. 2. 3. 4. 5. 6. 7.

Level

Date

Sept. 10

Oct, 1

Nov. 1

Record high

2001 Sept. 10

2001 Oct 1

11,723 1,527 5.049 606 14,752

1-14-00 3-24-00 3-10-00 3-9-00 3-24-00

9,606 1,093 1,695 441 10,104

8,837 1,039 1,480 398 9.518

9,264 1,084 1,746 435 10,001

-20.98 -29.03 -65.41 -28.25 -32.21

-3.56 -.77 3.00 -1.33 -1.03

4.83 4.39 17.96 9.38 5.07

Secondary market Bid rates for Eurodollar deposits collected around 9:30 a.m Eastern time. Derived from a smoothed Treasury yield curve estimated using off-the-nm securities. Most recent Thursday quote. Derived from smoothed corporate yield curves estimated using Merrill Lynch bond data. Merrill Lynch 175 high-yield bond index composite. For week ending Friday previous to date shown.

NOTES: June 26, 2000 is the day before the FOMC meeting that ended the most recent period of policy tightening. September 10, 2001 is the day before the terrorist attacks. October 1, 2001 is the day before the most recent FOMC meeting. BA-DAM

-14-

Commercial Bank Credit (Percent change, annual rate, except as noted; seasonally adjusted) Type of credit

Total 1. Adjusted 1 2. Reported

Level, Oct. 2001P ($ billions)

2001

Q2 2001

Q3 2001

Aug. 2001

Sept. 2001

Oct.P 2001

3.2 4.3

2.7 3.2

1.8 2.5

-.6 3.1

13.6 17.2

-10.2 -8.4

5,196 5,374

7.0 11.0

4.2 6.1

11.6 13.2

16.8 29.4

7.7 21.8

6.5 11.2

1,281 1,460

2.2 24.0

-3.3 18.6

10.9 16.2

20.3 41.0

17.1 27.7

11.1 11.3

806 654

Securities 3. 4.

5. 6. 7.

Adjusted' Reported

Treasury & Agency Other 2 Loans3 Total

2.0

2.2

-1.2

-6.2

15.5

-15.6

3,914

8. 9. 10. 11.

Business Real estate Home equity Other

-3.4 4.7 18.3 3.6

-4.3 6.2 12.5 5.6

-9.8 3.0 13.3 2.2

-7.9 -3.4 15.7 -5.1

3.6 4.0 20.7 2.5

-17.2 5.7 27.1 3.7

1,049 1,723 145 1,578

12. 13. 14.

Consumer Adjusted 4 Other5

2.6 4.9 3.7

3.9 5.1 1.6

-2.5 1.8 3.4

-5.5 -1.5 -11.3

-.2 1.1 83.7

6.1 8.8 -88.1

549 880 593

Note. All data are adjusted for breaks caused by reclassifications. Monthly levels are pro rata averages of weekly (Wednesday) levels. Quarterly levels (not shown) are simple averages of monthly levels. Annual levels (not shown) are levels for the fourth quarter. Growth rates are percentage changes in consecutive levels, annualized but not compounded. 1. Adjusted to remove effects of mark-to-market accounting rules (FIN 39 and FIN 115). 2. Includes securities of corporations, state and local governments, and foreign governments and any trading account assets that are not Treasury or Agency securities. 3. Excludes interbank loans. 4. Includes an estimate of outstanding loans securitized by commercial banks. 5. Includes security loans and loans to farmers, state and local governments, and all others not elsewhere classified. Also includes lease financing receivables. p Preliminary.