An Update on Economic Conditions. January 5, 2010

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1 An Update on Economic Conditions Raymond Owens January 5, 21

2 Real Gross Domestic Product Percent change from previous quarter at annual rate 3 Q3 2.2% Source: Bureau of Economic Analysis/Haver Analytics 2

3 Real Gross Domestic Product Q3 Q4 Q1 Q2 Q3 CHANGE FROM PREVIOUS QUARTER AT COMPOUND ANNUAL RATE [Percent]: Gross Domestic Product Personal Consumption Expenditures Nonresidential i Fixed Investment Structures Equipment & Software Residential Fixed Investment Exports of Goods & Services Imports of Goods & Services Government Consumption Expenditures & Gross Investment Final Sales to Domestic Purchasers LEVEL IN QUARTER AT SEASONALLY ADJUSTED ANNUAL RATE [Billions of Chained (25) Dollars]: Change in Private Inventories Net Exports of Goods & Services Source: Bureau of Economic Analysis/Haver Analytics 3

4 Nonfarm Payroll Employment 3 2 Quarterly average of monthly changes, Thousands of persons Oct. & Nov. Avg Monthly Change Nov -11 Oct -111 Sep -139 Aug -154 Jul Source: Bureau of Labor Statistics/Haver Analytics 4

5 Personal Income & Expenditures Year over Year % Change Real Personal Income Month over Month % Change Income Expenditures Sep Oct Nov Real Personal Consumption Expenditures Nov Notes: December 24 real personal income figure excludes the Microsoft dividend. Source: Bureau of Economic Analysis/Haver Analytics 5

6 Sales of fautomobiles & Light Trucks 22 2 Millions of Vehicles Autos and Light Trucks Average Annual Auto & Light Truck Sales Rate: 1999 through Light Trucks Nov. 1.9 mil Autos Source: Bureau of Economic Analysis/Haver Analytics 6

7 S&P 5 17 Stock Index Dec Source: Financial Times/Haver Analytics 7

8 Personal Saving Rate 7 Percent of disposable personal income Nov. 4.7% Notes: December 24 personal saving rate excludes Microsoft dividend. Source: Bureau of Economic Analysis/Haver Analytics 8

9 New Single-Family il Home Sales Millions of Homes Average Annual New Home Sales: 199 through Nov..36 mil Source: Census Bureau/Haver Analytics 9

10 Home Prices 25 Year-over-year percent change 2 Case-Shiller Composite FHFA Purchase Only Oct % -6.4% Notes: FHFA series formerly published by OFHEO. Source: Federal Housing Finance Agency, Case-Shiller, Haver Analytics 1

11 ISM: Business Survey Indexes MANUFACTURING BUSINESS: Nov. Dec. NONMANUFACTURING BUSINESS: Oct. Nov. Purchasing Managers Index NonManufacturing Index Production Business Activity it New Orders New Orders Employment Employment Supplier Deliveries Supplier Deliveries Inventories Inventories Prices Prices Backlog of Orders Backlog of Orders New Export Orders New Export Orders Imports Imports DIFFUSION INDEXES: Numbers above 5 percent indicate a preponderance of expanding firm activity. Source: Institute for Supply Management/Haver Analytics 11

12 Net tabsorptions & Employment Thousands of Employees, Quarterly Averages Millions of Square Feet Net Absorptions, Office Buildings (Right Axis) Changes in Employment (Left Axis) Notes: Office employment is the sum of employment in information, financial activities, and professional and business services Source: Torto Wheaton, Bureau of Labor Statistics, & Haver Analytics 12

13 Business Inventory/Sales Ratio 1.7 Percent Retailers Oct. Total Business Manufacturers Source: Census Bureau/Haver Analytics 13

14 Risk Premium Percent, Merrill Lynch Corporate BBB - 1 Yr. Treasury Yield 1 Year Average Risk Premium Dec Source: Merrill Lynch, Board of Governors, Haver Analytics 14

15 AAA CMBS Spreads Basis Points, Spread over LIBOR Swap of Comparable Maturity 5 Year CMBS 1 Year CMBS /8 1/8 12/8 2/9 4/9 6/9 8/9 1/9 12/9 Source: Deutsche Bank Securities 15

16 Expected Federal Funds Rate.75 Percent December 8, 29 December 31, Current Target Range for Federal Funds Rate. January 27 March 16 April 28 Notes: Derived from Fed funds futures contracts.. Source: Chicago Board of Trade 16

17 Federal Reserve System Assets $, Billions TALF: $43 CPFF: $16 Total: $2,28 AIG & Bear Stearns: $11 18 Miscellaneous: $149 Discount 16 Window: $23 12 Agency MBS: $774 Term ABS Lending Facility (TALF): $48 Total: $2,279 Term Auction Facility (TAF): $139 Currency Swaps: $32 Discount Window: $19 TAF: $76 AIG & Bear Stearns: $111 Miscellaneous: $156 Agency MBS: $91 CPFF: $14 Currency Swaps: $ Agency Debt: $147 Agency Debt: $16 Treasury Securities: Treasury Securities: $776 $777 11/4/29 12/3/29 Notes: CPFF is the Commercial Paper Funding Facility. Source: Board of Governors/Haver Analytics 17

18 Capital Market Rates Percent Year Conventional Mortgage Rate Corporate BBB Bond Rate Dec Corporate AAA Bond Rate Yr. Treasury Bond Rate Source: Merrill Lynch, Board of Governors, Haver Analytics 18

19 Washington, D.C. MSA Payroll Employment U.S. Washington, D.C. MSA YoY % Chg Notes: Until an official trough is declared by the NBER, shading for the recent recession ends in August. Source: Bureau of Labor Statistics/Haver Analytics 19

20 Washington, D.C. Industry Structure Employment Industry Stucture Manufacturing & Construction ti Trade, Transportation & Utilities U.S. Washington, D.C. MSA Information Financial Activities Professional & Business Services Education & Health Services Leisure & Hospitality Other Government Employment Share (Percent) Source: Bureau of Labor Statistics/Haver Analytics 2

21 D.C. Personal Income U.S. D.C. YoY % Chg Notes: Until an official trough is declared by the NBER, shading for the recent recession ends in August. Source: Bureau of Economic Analysis/Haver Analytics 21

22 Washington, D.C. MSA House Prices YoY % Chg U.S. Washington, D.C. MSA Notes: Until an official trough is declared by the NBER, shading for the recent recession ends in August. Source: Federal Housing Finance Agency/Haver Analytics 22

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