Greenbook/Tealbook

Prefatory Note

The attached document represents the most complete and accurate version available based on original files from the FOMC Secretariat at the Board of Governors of the Federal Reserve System. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act.

Content last modified 04/01/2015.

Confidential (FR) Class III FOMC

April 24, 2009

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 Nonfinancial Economy ......................................................1 Sales of New and Existing Homes...................................................1 Orders and Shipments of Nondefense Capital Goods......................1 Correction to Part 1..........................................................................2 Exhibits Private Housing Activity..................................................................3 Indicators of Single-Family Housing...............................................4 Orders and Shipments of Nondefense Capital Goods......................5

The Domestic Financial Economy ...........................................................2 Exhibits Commercial Bank Credit .................................................................6 Selected Financial Market Quotations .............................................7

ii

Supplemental Notes The Domestic Nonfinancial Economy Sales of New and Existing Homes The recent data on both new and existing home sales are consistent with the tentative signs of stabilization in the housing market. Sales of new homes held about flat in March at a February level that was revised up noticeably. The stock of unsold new homes continued to fall in March and reached its lowest level since 2001, though, with sales still at a depressed level, months’ supply remained extremely elevated. Sales of existing single-family home sales edged down 3 percent in March, retracing much of February’s increase. These sales have now fluctuated for several months at a level a touch above 4 million units. Orders and Shipments of Nondefense Capital Goods Shipments of nondefense capital goods excluding aircraft fell 1.7 percent in March, resuming a downward trajectory after being flat in February. New orders increased 1.5 percent last month after a rise of 4.3 percent in February.1 These gains offset only part of the sharp drop in new bookings that occurred in January. With these data, the level of orders remains well below shipments, which points to further declines in shipments in coming months. Within the high-tech category, orders and shipments of computers and peripherals dropped in March. Shipments of communications equipment fell for the fourth consecutive month, but orders recovered further in March after the plunge around the turn of the year. Outside of the high-tech sector, shipments fell steeply last month, and orders increased less in March than they were revised down in February. The three-month moving average of the staff’s constructed series on real adjusted durable goods orders was down 1.5 percent in March, continuing to reflect the plunge of orders early this year. This series—which strips out nondefense aircraft, defense capital goods, and industries for which reported orders actually equal shipments—is one of the staff’s indicators of near-term industrial production.

1

The February increase in new orders is now shown to have been 3 percentage points less than previously reported. This revision continues the string of large downward revisions seen since the middle of last year.

-1-

-2-

Correction to Part 1 In the table that appears on page 13 of Part 1 of the Greenbook, two lines were inadvertently mislabeled. Specifically, the results reported as based on commercial loan credit standards from the Senior Loan Officer Opinion Survey are in fact based on the change in bank credit standards from the survey; the results reported for the change in bank credit standards are in fact based on commercial loan credit standards.

The Domestic Financial Economy

-3-

Private Housing Activity (Millions of units, seasonally adjusted; annual rate except as noted) 2008 2009 Sector

2008

All units Starts Permits Single-family units Starts Permits Adjusted permits1 Permit backlog2 New homes Sales Months’ supply3 Existing homes Sales Months’ supply3 Multifamily units Starts Permits Permit backlog2 Mobile homes Shipments Condos and co-ops Existing home sales

Q3

Q4

Q1

Jan.

Feb.

Mar.

.91 .89

.88 .87

.66 .63

.52 .54

.49 .53

.57 .56

.51 .52

.62 .57 .58 .068

.60 .56 .57 .082

.46 .42 .43 .068

.36 .36 .38 .060

.36 .34 .35 .064

.36 .39 .40 .062

.36 .36 .38 .060

.49 10.65

.46 10.64

.39 11.33

.35 11.26

.33 12.29

.36 10.99

.36 10.48

4.35 9.98

4.43 9.56

4.23 9.79

4.12 9.81

4.05 9.98

4.22 9.64

4.10 9.79

.284 .323 .053

.273 .308 .062

.198 .215 .053

.166 .174 .050

.132 .195 .055

.214 .174 .052

.152 .152 .050

.082

.080

.066

.054

.051

.563

.573

.506

.440

.490

n.a. .467

n.a. .470

1. Adjusted permits equal permit issuance plus total starts outside of permit-issuing areas. 2. Number outstanding at end of period. Excludes permits that have expired or have been canceled, abandoned, or revoked. Not at an annual rate. 3. At current sales rate; expressed as the ratio of seasonally adjusted inventories to seasonally adjusted sales. Quarterly and annual figures are averages of monthly figures. n.a. Not available. Source: Census Bureau.

Private Housing Starts and Permits (Seasonally adjusted annual rate) Millions of units 2.0

2.0

1.8

1.8 Single-family starts

1.6

1.6

1.4

1.4

1.2

1.2 Single-family adjusted permits

1.0

1.0

.8

.8

.6

.6

.4

Mar.

.2 .0

Multifamily starts 1999

2000

2001

2002

Mar. 2003

2004

2005

2006

Note: Adjusted permits equal permit issuance plus total starts outside of permit-issuing areas. Source: Census Bureau.

2007

2008

2009

.4 .2 .0

-4-

Indicators of Single-Family Housing Inventories of New Homes and Months’ Supply

New Single-Family Home Sales 1.6 1.4

Millions of units (annual rate)

Millions of units (annual rate)

Total (left scale)

0.6 0.5

600

Thousands of units

Months

550 Mar. 500

1.2

0.4

450

Inventories of new homes (left scale)

1.0 0.3 0.8

Large homebuilders (right scale)

0.2

0.6

0.2

0.1 Mar. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: For total, Census Bureau; for large homebuilders, National Association of Home Builders.

350

0.0

250 200

6.5 6.0

Index (2001=100) Existing home sales (left scale)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Note: Months’ supply is calculated using the 3-month moving average of sales. Source: Census Bureau.

Mortgage Rates

Existing Single-Family Home Sales Millions of units (annual rate)

Mar. Months’ supply (right scale)

300

Mar. 0.4

400

140 130

Percent

7.5 7.0

5.0

110 Pending home sales (right scale)

90

4.5

Feb.

4.0 3.5

100

Mar. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: National Association of Realtors.

6.5

6.5

6.0

6.0

5.5

5.5

80 70 60

5.0 4.5

Percent change from year earlier

15

15

60

10

10

5

5

0

0

20

-5

0

Feb.

-10

-20 -25 -30

4.5

House Price Expectations 80

-15

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Note: The April reading is a 2-week moving average of data available through Apr. 22, 2009. FRM is a fixed-rate mortgage. Source: Federal Home Loan Mortgage Corporation.

20

-5

5.0 Apr.

Prices of Existing Homes 20

7.5 7.0

30-year conforming FRM

120 5.5

13 12 11 10 9 8 7 6 5 4 3 2 1

-10 Feb. Monthly FHFA purchase-only index Jan. LP price index 20-city S&P/Case-Shiller monthly price index 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: For FHFA, Federal Housing Finance Agency; for S&P/Case-Shiller, Standard & Poor’s; for LP, LoanPerformance, a division of First American CoreLogic.

-15

Diffusion index

80 60

Apr. (p)

40

40

5 years ahead 20 0 Apr. (p)

-20

1 year ahead

-20

-40

-40

-25

-60

-60

-30

-80

-20

2007

2008

2009

-80

Note: Diffusion index is constructed by subtracting expectations of decrease from expectations of increase. p Preliminary. Source: Reuters/University of Michigan Surveys of Consumers.

-5-

Orders and Shipments of Nondefense Capital Goods (Percent change; seasonally adjusted current dollars) 2008 Category

2009

Q4

Q1

Jan.

Annual rate

Feb.

Mar.

Monthly rate

Shipments Excluding aircraft Computers and peripherals Communications equipment All other categories1

-19.8 -15.5 -25.3 -16.6 -14.4

-27.5 -34.9 1.6 -50.2 -36.0

-6.6 -9.4 -2.0 -10.4 -9.9

-3.0 .1 1.7 -3.2 .2

-.9 -1.7 -1.4 -2.3 -1.7

Orders Excluding aircraft Computers and peripherals Communications equipment All other categories1

-49.9 -36.5 -20.8 -28.7 -38.4

-46.9 -41.7 -15.0 -63.0 -41.4

-9.9 -12.3 -9.9 -20.3 -11.7

4.9 4.3 11.9 5.6 3.4

1.9 1.5 -2.0 2.3 1.9

Memo: Shipments of complete aircraft2

26.0

n.a.

50.5

30.3

n.a.

1. Excludes most terrestrial transportation equipment. 2. From Census Bureau, Current Industrial Reports; billions of dollars, annual rate. n.a. Not available. Source: Census Bureau.

Communications Equipment 20 17 14

Non-High-Tech, Nontransportation Equipment

Billions of chained (2000) dollars, ratio scale Shipments Orders

20 17 14

11

11

8

8

5

Mar.

5

59

Billions of chained (2000) dollars, ratio scale

52

2000 2001 2002 2002 2003 2004 2004 2005 2006 2007 2008 2008 2009 2000 Note: Shipments and orders are deflated by a price index that is derived from the quality-adjusted price indexes of the Bureau of Economic Analysis and uses the producer price index for communications equipment for monthly interpolation. Source: Census Bureau.

2

47

47

42

32

Computers and Peripherals 240 210 190

2000 = 100

52

Orders

42

Shipments

37

2

59

Mar.

2000 2001 2002 2002 2003 2004 2005 2006 2006 2007 2008 2009 2000 Note: Shipments and orders are deflated by the staff price indexes for the individual equipment types included in this category. Indexes are derived from the quality-adjusted price indexes of the Bureau of Economic Analysis. Source: Census Bureau.

37

32

Medium and Heavy Trucks

Billions of chained (2000) dollars

24

1240

21 19

Thousands of units, ratio scale

1240

17

960 820 680

150

15

540

540

130

13

400

400

170

110

Industrial production (left scale)

Mar.

Real M3 shipments (right scale)

90

11

260

960 820 680

Net new orders of class 5-8 trucks

Sales of class 4-8 trucks

260

9 Mar.

70

2000 2001 2002 2002 2003 2004 2004 2005 2006 2006 2007 2008 2008 2009 2000 Note: Ratio scales. Shipments are deflated by the staff price index for computers and peripheral equipment, which is derived from the quality-adjusted price indexes of the Bureau of Economic Analysis. Source: Census Bureau; FRB Industrial Production.

7

120

2000 2001 2002 2002 2003 2004 2005 2006 2006 2007 2008 2009 2000

120

Note: Annual rate, FRB seasonals. Source: For sales, Ward’s Communications; for orders, ACT Research.

-6-

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

Total

Level1 Apr. 2009e

2007

2008

H2 2008

Q4 2008

Q1 2009

Mar. 2009

Apr. 2009e

10.9

4.4

4.7

6.2

-6.7

-3.8

-14.8

9,325

Loans2 Total To businesses Commercial and industrial Commercial real estate

11.3

4.4

2.6

3.1

-6.4

-7.2

-11.9

7,023

19.0 10.7

14.2 6.4

13.0 2.9

18.3 2.0

-9.7 -1.0

-13.0 -1.7

-18.3 -2.4

1,520 1,723

To households Residential real estate Revolving home equity Closed-end mortgages Consumer Originated3 Other

6.8 6.4 6.9 6.6 6.0 17.1

-2.3 12.9 -7.1 7.9 6.4 -1.6

-3.8 12.9 -9.5 7.4 4.7 -4.5

-.7 13.1 -5.8 6.0 3.3 -13.7

-.5 8.3 -4.0 7.3 1.9 -36.7

2.5 8.6 .0 -10.0 -7.3 -29.1

-7.5 1.8 -11.3 -15.5 -5.1 -27.2

2,091 602 1,489 881 1,296 808

9.5 -5.6 31.1

4.6 19.4 -10.7

11.2 37.7 -16.8

16.0 51.6 -24.7

-7.8 3.1 -22.8

6.7 7.4 5.7

-23.5 -35.2 -6.3

2,303 1,354 949

Securities Total Treasury and agency Other4

Note: Yearly annual rates are Q4 to Q4; quarterly and monthly annual rates use corresponding average levels. Data have been adjusted to remove the effects of mark-to-market accounting rules (FIN 39 and FAS 115), the initial consolidation of certain variable interest entities (FIN 46), and the initial adoption of fair value accounting. Data also account for the effects of nonbank structure activity of $5 billion or more. 1. Billions of dollars. Pro rata averages of weekly (Wednesday) levels. 2. Excludes interbank loans. 3. Includes an estimate of outstanding loans securitized by commercial banks. 4. 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. e Estimated. Source: Federal Reserve.

-7III-T-1

Selected Financial Market Quotations (One-day quotes in percent except as noted) 2007

Change to Apr. 23 from selected dates (percentage points)

2009

Instrument Aug. 6

Jan. 27

Mar. 17

Apr. 23

2007 Aug. 6

2009 Jan. 27

2009 Mar. 17

5.25

.13

.13

.13

-5.12

.00

.00

4.74 4.72

.13 .32

.24 .44

.10 .30

-4.64 -4.42

-.03 -.02

-.14 -.14

Commercial paper (A1/P1 rates)2 1-month 3-month

5.26 5.29

.29 2.04

.44 .66

.30 .40

-4.96 -4.89

.01 -1.64

-.14 -.26

Large negotiable CDs1 3-month 6-month

5.34 5.27

1.08 1.57

1.08 1.83

.87 1.48

-4.47 -3.79

-.21 -.09

-.21 -.35

Eurodollar deposits3 1-month 3-month

5.33 5.35

.75 1.75

1.00 1.65

.90 1.50

-4.43 -3.85

.15 -.25

-.10 -.15

Bank prime rate

8.25

3.25

3.25

3.25

-5.00

.00

.00

Intermediate- and long-term U.S. Treasury4 2-year 5-year 10-year

4.49 4.52 4.82

.68 1.74 3.17

1.04 2.14 3.47

.90 1.98 3.30

-3.59 -2.54 -1.52

.22 .24 .13

-.14 -.16 -.17

U.S. Treasury indexed notes5 5-year 10-year

2.43 2.48

1.84 1.97

2.04 2.26

1.55 1.92

-.88 -.56

-.29 -.05

-.49 -.34

Municipal general obligations (Bond Buyer)6

4.51

5.13

5.03

4.57

.06

-.56

-.46

Private instruments 10-year swap 10-year FNMA7 10-year AA8 10-year BBB8 10-year high yield8

5.44 5.34 6.12 6.57 9.21

2.84 3.65 6.03 8.94 14.68

3.14 4.04 6.99 9.25 16.41

3.11 3.82 6.31 8.57 14.01

-2.33 -1.52 .19 2.00 4.80

.27 .17 .28 -.37 -.67

-.03 -.22 -.68 -.68 -2.40

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

6.59 5.65

5.10 4.90

4.98 4.91

4.80 4.82

-1.79 -.83

-.30 -.08

-.18 -.09

Short-term FOMC intended federal funds rate Treasury bills1 3-month 6-month

Record high

Change to Apr. 23 from selected dates (percent)

2009

Stock exchange index Dow Jones Industrial S&P 500 Composite Nasdaq Russell 2000 D.J. Total Stock Index

Level

Date

Jan. 27

Mar. 17

Apr. 23

Record high

2009 Jan. 27

2009 Mar. 17

14,165 1,565 5,049 856 15,807

10-9-07 10-9-07 3-10-00 7-13-07 10-9-07

8,175 846 1,505 456 8,524

7,396 778 1,462 404 7,878

7,957 852 1,652 467 8,701

-43.82 -45.57 -67.27 -45.47 -44.95

-2.66 .73 9.79 2.42 2.07

7.59 9.48 13.00 15.62 10.45

1. Secondary market. 2. Financial commercial paper. 3. Bid rates for Eurodollar deposits collected around 9:30 a.m. eastern time. 4. Derived from a smoothed Treasury yield curve estimated using off-the-run securities. 5. Derived from a smoothed Treasury yield curve estimated using all outstanding securities and adjusted for the carry effect. 6. Most recent Thursday quote. 7. Constant-maturity yields estimated from Fannie Mae domestic noncallable coupon securities. 8. Derived from smoothed corporate yield curves estimated using Merrill Lynch bond data. _______________________________________________________________________ NOTES: August 6, 2007, is the day before the August 2007 FOMC meeting. January 27, 2009, is the day before the January 2009 FOMC monetary policy announcement. March 17, 2009, is the day before the most recent FOMC monetary policy announcement. ________________________________________________________________________