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
December 6, 2002
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 The Domestic Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Labor Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Industrial Production and Capacity Utilization . . . . . . . . . . . . . . . 5 Consumer Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Tables Changes in Employment . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Selected Unemployment and Labor Force Participation Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Selected Components of Industrial Production . . . . . . . . . 6 Capacity Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Commercial Bank Credit . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Selected Financial Market Quotations . . . . . . . . . . . . . . . . 9 Chart Private Payroll Employment Growth . . . . . . . . . . . . . . . . . 2 Aggregate Hours of Production or Nonsupervisory Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Labor Force Participation Rate and Unemployment Rate . 3 Labor Market Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Consumer Debt Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Supplemental Notes The Domestic Economy Labor Markets The labor market report for November was a touch weaker than we had expected. Labor market conditions appear to have slipped a little between October and November, with private employment on nonfarm payrolls falling 48,000, a second noticeable monthly decline. In addition, the unemployment rate popped up to 6.0 percent last month, after having averaged 5.7 percent over the preceding three months. Manufacturing industries continued to perform poorly, shedding 45,000 jobs in November, roughly the same rate of decrease as in the previous several months. The help supply and wholesale trade industries, which are closely related to manufacturing, posted cutbacks of 23,000 and 5,000 respectively, although these losses were somewhat smaller than in October. Outside of manufacturing the largest reduction in employment in November occurred in retail trade where the loss of 39,000 jobs may have been driven in part by poor holiday hiring. Jobs in the transportation and public utilities industries also continued to contract. The services industry (excluding help supply) remained a relative bright spot as employment rose 73,000, matching the average increase since mid-year. Within services, health and education establishments continued their strong expansion, recording gains of 27,000 and 15,000 respectively. The finance, insurance, and real estate industry added 7,000 jobs last month, but the gain was well below the average gains of prior months. Hiring for the Transportation Security Administration continued to boost government payrolls last month, but the Postal Service reported that, because of technological advances, it needed fewer holiday workers than in the past. On net government employment was up 8,000. Aggregate hours of production or nonsupervisory workers declined 0.1 percent in November for the second month in a row; however, because of September’s large increase, the level of hours last month stood just above the third-quarter average. Average weekly hours of production or nonsupervisory workers were unchanged in November from October’s upward revised level of 34.2 hours. The rise in the unemployment rate in November brings the movement of that series more closely in line with other recent labor market indicators. The overthe-month increase was concentrated among adult men, although the unemployment rate among teenagers also moved up considerably. Meanwhile, the labor force participation rate moved down 0.3 percentage point to
-2-
CHANGES IN EMPLOYMENT (Thousands of employees; based on seasonally adjusted data)
2001
Nonfarm payroll employment1 Previous Private Mining Manufacturing Construction Transportation and utilities Retail trade Wholesale trade Finance, insurance, real estate Services Help supply services Total government
Q1
2002 Q2
Q3
-Average monthly change-119 -63 12 58 -119 -63 12 55 -158 -88 7 30 1 -2 -2 -1 -109 -80 -22 -34 -3 -14 -15 6 -23 -14 -8 -22 -15 5 -8 -8 -16 -7 0 -4 10 -3 -2 12 -2 27 63 81 -54 4 36 8 39 25 5 27
Sept.
2002 Oct.
Nov.
-4 -13 -8 -3 -35 11 -40 -11 -3 25 48 2 4
6 -5 -47 1 -59 -22 1 8 -11 44 -9 -67 53
-40 ... -48 -2 -45 -4 -10 -39 -5 7 50 -23 8
Total employment (household survey) -153 Nonagricultural -154
-54 -14
53 58
377 315
711 601
-271 -498
-689 -522
Memo: Aggregate hours of private production workers (percent change)1,2 -2.2 34.2 Average workweek (hours)1 Manufacturing (hours) 40.7
-0.5 34.2 40.8
0.3 34.2 41.0
-0.6 34.1 40.8
0.3 34.2 40.8
-0.1 34.2 40.7
-0.1 34.2 40.7
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. ... Not applicable.
Private Payroll Employment Growth
Aggregate Hours of Production or Nonsupervisory Workers
(Strike-adjusted data)
Thousands of employees 400
154
1982 = 100 154
300
300
152
152
200
200
150
150
100
100
400 1-month
Nov.
148 0
3-month moving average Nov.
146
146
144
144
142
142
-400
140
140
-500
138
-100
-100
-200
-200
-300
-300
-400 -500
1997
1998
1999
2000
2001
2002
2003
148
0
1997
1998
1999
2000
2001
2002
2003
138
-3-
SELECTED UNEMPLOYMENT AND LABOR FORCE PARTICIPATION RATES (Percent; based on seasonally adjusted data)
2001 Civilian unemployment rate (16 years and older)
2002 Q2
Q1
Q3
Sept.
2002 Oct.
Nov.
4.8
5.6
5.9
5.7
5.6
5.7
6.0
Teenagers 20-24 years old Men, 25 years and older Women, 25 years and older
14.7 8.3 3.6 3.7
16.0 9.8 4.5 4.4
17.1 9.4 4.9 4.8
16.9 9.6 4.6 4.5
15.7 9.7 4.5 4.5
14.6 10.3 4.6 4.6
16.8 9.8 5.1 4.4
Labor force participation rate
66.9
66.5
66.7
66.6
66.8
66.7
66.4
Teenagers 20-24 years old Men, 25 years and older Women, 25 years and older
49.9 77.2 75.9 59.7
48.2 76.3 75.6 59.6
47.7 76.7 75.9 59.6
47.6 76.6 75.8 59.6
48.6 76.4 75.9 59.8
47.7 75.9 75.7 59.8
47.3 76.2 75.3 59.6
Labor Force Participation Rate and Unemployment Rate Percent 67.6
Percent 8.0
67.4
7.5 Participation rate (left scale)
67.2
7.0
67.0
6.5
66.8
6.0
66.6
5.5 Nov.
66.4
66.2
4.5
Unemployment rate (right scale)
66.0
65.8
5.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
4.0
1999
2000
2001
2002
3.5
-4-
Labor Market Indicators
Unemployment Insurance Millions 3.8 3.4 3.0 2.6 2.2 1.8 1.4 1.0 1990
Initial Claims Thousands 700 Nov.23 600
Insured unemployment (left scale)
500 Nov. 30 Initial claims (right scale) 1992
1994
1996
1998
2000
2002
400 300
2004
200
500 480 460 440 420 400 380 360 340
Millions 4.0 Alternative seasonal factors
3.8
3.6
3.6 Nov. 23 Published seasonal factors
3.2
Q1
Q2
Q3
Q4
2003
Net Hiring Strength
4.0
3.4
Q2
2002
Insured Unemployment
3.8
Q1
Thousands 500 480 460 Alternative seasonal factors 440 420 400 380 Published seasonal factors Nov. 30 360 340
Q3
3.4
Q4
Percent 30
Manpower, Inc. (left scale)
20
25
15
Q1
20
10
Oct.
15
5
-5
2003
10
National Federation of Independent Businesses (right scale)
0 3.2
2002
Percent 25
1990
1992
1994
1996
1998
2000
5 2002
2004
0
Note. Percent planning an increase in employment minus percent planning a reduction.
Expected Employment Conditions 120
Layoff Announcements Index 120
Conference Board
100
Nov.
100
80
Nov.
80
60
60
Michigan Survey
40 20
200
200 Nov.
100
100
40 1990
1992
1994
1996
1998
2000
2002
2004
20
0
Note. The proportion of households expecting unemployment to fall, minus the proportion expecting it to rise, plus 100.
1990
1992
1994
1996
Source. Conference Board.
2000
2001
0
2002
Note. Seasonally adjusted by FRB staff. Source. Challenger, Gray and Christmas, Inc.
Help Wanted Index 140 130 120 110 100 90 80 70
Thousands 300
300
Current Employment Conditions
1998
2000
Index 140 130 120 110 100 90 Oct. 80 70 2002 2004
60
Jobs plentiful
Percent 60
Jobs hard to get
50
50
40
40
30
Nov.
20
20 Nov.
10 0
30
1990
1992
1994
1996
Source. Conference Board.
1998
2000
2002
2004
10 0
-5-
66.4 percent, the lowest level since January 1996.1 Household employment plummeted 689,000 in November. Over the past two months, household employment has fallen 960,000, retracing most of the 1.1 million increase that took place in August and September. Average hourly earnings of production or nonsupervisory workers on private nonfarm payrolls increased 0.3 percent in November. Over the twelve months ended in November, the change in average hourly earnings was 2.9 percent, down from 3.9 percent over the previous twelve months. In the weeks following the reference week for the labor market reports, initial claims for unemployment insurance moved lower. The drop in new claims in the week ended November 30 put the four-week moving average at 377,000; using alternative seasonal factors—calculated excluding the spike in claims after September 11, 2001—that figure was 391,000, 40,000 below the late October level. However, Labor Department staff caution that the unevenness of weekly filings during holiday periods may have contributed to the most recent decline. Industrial Production and Capacity Utilization The recent data, as reported in this week’s historical revision to the industrial production and capacity measures, are summarized in the attached table. Consumer Credit Consumer credit increased at an annual rate of 1 percent in October, below the downward revised 3-1/2 percent pace in the third quarter. In October, revolving credit rose moderately while nonrevolving credit contracted slightly.
1. The labor force participation rate was also 66.4 percent in January 2002, but we attribute the low level in that month to problems with the seasonal adjustment process, and the participation rate rebounded in February.
-6Selected Components of Industrial Production (Percent change from preceding comparable period) Proportion 2001
Component Total Previous
2001
20022
1
(percent)
20023
H1
Q3
Aug.
Sept.
Oct.
100.0 100.0
-5.7 -5.9
2.9 3.4
3.5 3.5
-.2 -.2
.0 -.2
-.8 -.8
84.7 78.3 71.6
-6.1 -6.5 -6.0
2.4 1.2 .6
3.0 1.7 1.1
.0 .1 .0
-.2 -.2 -.2
-.7 -.4 -.5
Mining Utilities
6.3 9.0
-.6 -5.4
-4.4 13.4
3.2 8.6
.2 -2.8
-1.0 2.7
-.7 -1.9
Selected industries High technology Computers Communication equipment Semiconductors4
6.6 1.3 2.3 3.0
-9.6 -5.9 -20.2 -3.5
7.1 22.7 -14.4 16.9
7.7 9.5 -21.2 29.7
1.1 1.4 -.8 2.1
.0 1.5 -3.7 1.5
.7 2.1 -.9 .9
Motor vehicles and parts
6.5
-1.2
16.4
18.2
-.1
-.6
-3.4
Market groups excluding energy and selected industries Consumer goods Durables Nondurables
21.9 3.5 18.5
-2.2 -8.0 -1.0
-.1 4.1 -.9
-.7 -5.8 .2
-.5 -.9 -.4
.2 -.2 .3
-.5 -.7 -.4
Business equipment Defense and space equipment
7.8 1.8
-13.7 3.7
-6.6 3.7
-3.8 6.7
.4 .5
-1.0 .1
-.9 .3
Construction supplies Business supplies
6.6 7.4
-5.9 -6.5
3.1 -.2
1.2 3.8
.3 .2
-.1 -.4
-.6 -.2
25.3 13.6 11.7
-7.3 -9.0 -5.4
2.7 2.2 3.2
3.0 1.6 4.8
.1 .3 -.2
-.2 -.4 .2
-.5 -.5 -.4
Manufacturing Ex. motor veh. and parts Ex. high-tech industries
Materials Durables Nondurables
1. Fourth-quarter to fourth-quarter change. 2. Annual rate. 3. Monthly rate. 4. Includes related electronic components. ... Not applicable.
Capacity Utilization (Percent of capacity) 19672001 average
1982 low
199091 low
Q1
Q2
Q3
Sept.
Oct.
Total industry
81.9
70.8
78.6
75.1
75.7
76.2
76.1
75.4
Manufacturing High-tech industries Excluding high-tech industries
80.8 80.5 80.8
68.6 75.6 68.1
77.2 74.6 77.3
73.4 61.8 74.8
73.9 62.2 75.3
74.3 62.2 75.8
74.1 62.1 75.7
73.6 62.1 75.1
Utilities Mining
86.8 87.9
78.6 77.2
83.3 84.2
85.2 85.5
84.8 87.8
85.5 88.2
85.0 88.4
84.4 86.3
Sector
2002
-7-
Consumer Debt Growth Percent 20
Quarterly, s.a.a.r.
16
12
8
Q3
●
4
Oct. 0
-4
1990
1992
1994
1996
1998
2000
2002
-8Commercial Bank Credit (Percent change, annual rate, except as noted; seasonally adjusted) Type of credit Total 1. Adjusted1 2. Reported 3. 4. 5. 6.
Securities Adjusted1 Reported Treasury & Agency Other2
Loans3 7. Total 8. Business 9. Real estate 10. Home equity 11. Other 12. 13. 14.
Consumer Adjusted4 Other5
Level, Nov. 2002p ($ billions)
Q2 2002
Q3 2002
Sept. 2002
Oct. 2002
Nov.p
4.1 5.0
5.1 5.1
8.7 12.5
10.5 12.0
8.3 5.9
17.0 18.5
5,656 5,858
8.8 12.0 6.0 20.8
13.7 12.9 25.5 -3.3
10.7 24.0 24.5 23.1
1.2 7.6 21.2 -11.4
6.1 -2.0 10.0 -19.1
34.4 37.6 39.2 35.2
1,493 1,695 1,008 688
2.6 -3.7 7.2 19.9 6.2
2.1 -9.0 6.9 40.8 3.5
8.0 -8.8 18.8 40.4 16.5
13.8 -8.2 21.3 19.4 21.5
9.0 -5.9 20.2 25.0 19.7
10.9 -.7 19.2 17.5 19.4
4,162 972 2,002 208 1,793
3.8 7.4 -.1
5.1 3.6 4.1
4.7 1.0 6.6
16.8 2.5 23.3
4.1 5.2 1.8
2.0 6.9 10.7
588 931 601
2001
2002
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. The conversion from a thrift to a commercial bank charter added approximately $37 billion to the assets and liabilities of domestically chartered commercial banks in the week ending May 8, 2002. 1. Adjusted to remove effects of mark-to-market accounting rules (FIN 39 and FIN 115). 2. Includes private mortgage-backed securities, securities of corporations, state and local governments, and foreign governments and any trading account assets that are not Treasury or Agency securities, including revaluation gains on derivative contracts. 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.
-9-
III-T-1
Selected Financial Market Quotations (One-day quotes in percent except as noted) 2000
2001
2002
2002
Instrument
Change to Dec. 5 from selected dates (percentage points)
June 26
Sept. 10
Nov. 5
Dec. 5
2000 June 26
2001 Sept. 10
2002 Nov. 5
Short-term FOMC intended federal funds rate
6.50
3.50
1.75
1.25
-5.25
-2.25
-.50
Treasury bills 1 3-month 6-month
5.66 5.94
3.19 3.13
1.40 1.38
1.20 1.25
-4.46 -4.69
-1.99 -1.88
-.20 -.13
Commercial paper (A1/P1 rates) 1-month 3-month
6.56 6.56
3.42 3.24
1.54 1.49
1.29 1.32
-5.27 -5.24
-2.13 -1.92
-.25 -.17
Large negotiable CDs 1 1-month 3-month 6-month
6.64 6.73 6.89
3.46 3.26 3.24
1.57 1.55 1.52
1.38 1.35 1.39
-5.26 -5.38 -5.50
-2.08 -1.91 -1.85
-.19 -.20 -.13
Eurodollar deposits 2 1-month 3-month
6.63 6.69
3.41 3.26
1.55 1.55
1.38 1.37
-5.25 -5.32
-2.03 -1.89
-.17 -.18
Bank prime rate
9.50
6.50
4.75
4.25
-5.25
-2.25
-.50
Intermediate- and long-term U.S. Treasury3 2-year 10-year 30-year
6.54 6.35 6.22
3.59 5.14 5.55
1.83 4.38 5.25
1.99 4.42 5.18
-4.55 -1.93 -1.04
-1.60 -.72 -.37
.16 .04 -.07
U.S. Treasury 10-year indexed note
4.09
3.26
2.46
2.50
-1.59
-.76
.04
Municipal revenue (Bond Buyer) 4
5.99
5.25
5.20
5.24
-.75
-.01
.04
7.38 7.15 7.64 8.40 12.30
5.62 5.64 6.30 7.11 12.72
4.62 4.71 5.65 7.30 13.49
4.60 4.67 5.47 6.98 12.36
-2.78 -2.48 -2.17 -1.42 .06
-1.02 -.97 -.83 -.13 -.36
-.02 -.04 -.18 -.32 -1.13
8.14 7.22
6.89 5.64
6.13 4.25
6.13 4.19
-2.01 -3.03
-.76 -1.45
.00 -.06
Private instruments 10-year swap 10-year FNMA 10-year AA 5 10-year BBB 5 High yield 6 Home mortgages (FHLMC survey rate) 7 30-year fixed 1-year adjustable
Record high
2001
Change to Dec. 5 from selected dates (percent)
2002
Stock exchange index Dow-Jones Industrial S&P 500 Composite Nasdaq (OTC) Russell 2000 Wilshire 5000
Level
Date
Sept. 10
Nov. 5
Dec. 5
Record high
2001 Sept. 10
2002 Nov. 5
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
8,678 915 1,401 386 8,624
8,623 907 1,411 394 8,578
-26.44 -40.65 -72.06 -34.92 -41.85
-10.23 -17.02 -16.79 -10.50 -15.11
-.63 -.97 .68 2.17 -.53
1. Secondary market. 2. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time. 3. Derived from a smoothed Treasury yield curve estimated using off-the-run securities. 4. Most recent Thursday quote. 5. Derived from smoothed corporate yield curves estimated using Merrill Lynch bond data. 6. Merrill Lynch Master II high-yield bond. 7. 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. November 5, 2002, is the day before the most recent FOMC meeting. _______________________________________________________________________ BA:DAM
Cite this document
Federal Reserve (2002, December 9). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_20021210_part1
@misc{wtfs_greenbook_20021210_part1,
author = {Federal Reserve},
title = {Greenbook/Tealbook},
year = {2002},
month = {Dec},
howpublished = {Greenbooks, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/greenbook_20021210_part1},
note = {Retrieved via When the Fed Speaks corpus}
}