An Update on Economic Conditions Raymond Owens January 5, 21
Real Gross Domestic Product 8 7 6 5 4 Percent change from previous quarter at annual rate 3 Q3 2.2% 2 1-1 -2-3 -4-5 -6-7 21 22 23 24 25 26 27 28 29 21 8 7 6 5 4 3 2 1-1 -2-3 -4-5 -6-7 Source: Bureau of Economic Analysis/Haver Analytics 2
Real Gross Domestic Product 28 29 Q3 Q4 Q1 Q2 Q3 CHANGE FROM PREVIOUS QUARTER AT COMPOUND ANNUAL RATE [Percent]: Gross Domestic Product -2.7-5.4-6.4 -.7 2.2 Personal Consumption Expenditures -3.5-3.1.6 -.9 2.8 Nonresidential i Fixed Investment -6.1 61-19.5-39.2-9.6 96-5.9 Structures -.1-7.2-43.6-17.3-18.4 Equipment & Software -9.4-25.9-36.4-4.9 1.5 Residential Fixed Investment -15.9-23.2-38.2-23.3 18.9 Exports of Goods & Services -3.6-19.5-29.9-4.1 17.8 Imports of Goods & Services -2.2-16.7-36.4-14.7 21.3 Government Consumption Expenditures & Gross Investment 48 4.8 12 1.2-2.6 26 67 6.7 26 2.6 Final Sales to Domestic Purchasers -2.7-4.9-6.4 -.9 2.3 LEVEL IN QUARTER AT SEASONALLY ADJUSTED ANNUAL RATE [Billions of Chained (25) Dollars]: Change in Private Inventories -29.7-37.4-113.9-16.2-139.2 Net Exports of Goods & Services -479.2-47.9-386.5-33.4-357.4 Source: Bureau of Economic Analysis/Haver Analytics 3
Nonfarm Payroll Employment 3 2 Quarterly average of monthly changes, Thousands of persons 3 2 1-1 -2-3 Oct. & Nov. Avg. 1-1 -2-3 -4-5 -6-7 -8 Monthly Change Nov -11 Oct -111 Sep -139 Aug -154 Jul -34 24 25 26 27 28 29 21 211-4 -5-6 -7-8 Source: Bureau of Labor Statistics/Haver Analytics 4
Personal Income & Expenditures 6 5 4 3 2 Year over Year % Change Real Personal Income Month over Month % Change Income Expenditures Sep Oct Nov.2..2 -.7.4.2 6 5 4 3 2 1 Real Personal Consumption Expenditures Nov. 1-1 -1-2 -2-3 -3-4 -4 24 25 26 27 28 29 21 211 Notes: December 24 real personal income figure excludes the Microsoft dividend. Source: Bureau of Economic Analysis/Haver Analytics 5
Sales of fautomobiles & Light Trucks 22 2 Millions of Vehicles 22 2 18 Autos and Light Trucks Average Annual Auto & Light Truck Sales Rate: 1999 through 25 18 16 16 14 14 12 1 Light Trucks Nov. 1.9 mil. 12 1 8 Autos 8 6 6 4 4 24 25 26 27 28 29 21 211 Source: Bureau of Economic Analysis/Haver Analytics 6
S&P 5 17 Stock Index 17 15 15 13 13 11 Dec. 31 11 9 9 7 7 5 5 27 28 29 21 211 Source: Financial Times/Haver Analytics 7
Personal Saving Rate 7 Percent of disposable personal income 7 6 6 5 4 Nov. 4.7% 5 4 3 3 2 2 1 1 24 25 26 27 28 29 21 211 Notes: December 24 personal saving rate excludes Microsoft dividend. Source: Bureau of Economic Analysis/Haver Analytics 8
New Single-Family il Home Sales 1.4 13 1.3 1.2 1.1 1..9 Millions of Homes 1.4 13 1.3 1.2 1.1 1..9.8.7.6 5.5 Average Annual New Home Sales: 199 through 1999.8.7.6 5.5.4.3 Nov..36 mil..4.3.2.2 24 25 26 27 28 29 21 211 Source: Census Bureau/Haver Analytics 9
Home Prices 25 Year-over-year percent change 2 Case-Shiller Composite 1 15 1 5 FHFA Purchase Only 25 2 15 1 5-5 -1-15 -2 Oct. -1.9 % -6.4% -5-1 -15-2 -25-25 2 21 22 23 24 25 26 27 28 29 21 211 Notes: FHFA series formerly published by OFHEO. Source: Federal Housing Finance Agency, Case-Shiller, Haver Analytics 1
ISM: Business Survey Indexes MANUFACTURING BUSINESS: Nov. Dec. NONMANUFACTURING BUSINESS: Oct. Nov. Purchasing Managers Index 53.6 55.9 NonManufacturing Index 5.6 48.7 Production 59.99 61.8 Business Activity it 55.2 49.6 New Orders 6.3 65.5 New Orders 55.6 55.1 Employment 5.8 52. Employment 41.1 41.6 Supplier Deliveries 55.7 56.6 Supplier Deliveries 5.5 48.5 Inventories 41.3 43.4 Inventories 43. 45.5 Prices 55. 61.5 Prices 53. 57.8 Backlog of Orders 52. 5. Backlog of Orders 53.5 48.5 New Export Orders 56. 54.55 New Export Orders 53.55 54.55 Imports 51.5 55. Imports 46. 46. DIFFUSION INDEXES: Numbers above 5 percent indicate a preponderance of expanding firm activity. Source: Institute for Supply Management/Haver Analytics 11
Net tabsorptions & Employment 25 2 15 1 5-5 Thousands of Employees, Quarterly Averages Millions of Square Feet 5 4 3 2 1-1 -1-15 -2 Net Absorptions, Office Buildings (Right Axis) Changes in Employment (Left Axis) -25-5 199 1992 1994 1996 1998 2 22 24 26 28 21 Notes: Office employment is the sum of employment in information, financial activities, and professional and business services. -2-3 -4 Source: Torto Wheaton, Bureau of Labor Statistics, & Haver Analytics 12
Business Inventory/Sales Ratio 1.7 Percent 165 1.65 1.7 165 1.65 1.6 1.55 1.5 1.45 1.4 Retailers 1.6 1.55 1.5 1.45 1.4 1.35 Oct. Total Business 1.3 125 1.25 1.2 1.35 1.3 125 1.25 1.2 1.15 Manufacturers 1.15 1.1 1.1 24 25 26 27 28 29 21 211 Source: Census Bureau/Haver Analytics 13
Risk Premium 8. 7.5 7. 6.5 6. 5.5 5. 4.5 4 4. 3.5 3. 25 2.5 2. 1.5 1. Percent, Merrill Lynch Corporate BBB - 1 Yr. Treasury Yield 1 Year Average Risk Premium Dec. 31.5.5 27 28 29 21 211 8. 7.5 7. 6.5 6. 5.5 5. 4.5 4 4. 3.5 3. 25 2.5 2. 1.5 1. Source: Merrill Lynch, Board of Governors, Haver Analytics 14
AAA CMBS Spreads 2 18 16 14 12 1 8 6 4 2 Basis Points, Spread over LIBOR Swap of Comparable Maturity 5 Year CMBS 1 Year CMBS 2 18 16 14 12 1 8 6 4 2 8/8 1/8 12/8 2/9 4/9 6/9 8/9 1/9 12/9 Source: Deutsche Bank Securities 15
Expected Federal Funds Rate.75 Percent December 8, 29 December 31, 29.75.5.5.25.25 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
Federal Reserve System Assets 26 24 22 2 14 $, 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: $1 1 8 6 4 2 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
Capital Market Rates 1.5 9.5 Percent 1.5 9.5 8.5 7.5 6.5 5.5 3 Year Conventional Mortgage Rate Corporate BBB Bond Rate 8.5 7.5 6.5 5.5 4.5 Dec. 31 4.5 3.5 Corporate AAA Bond Rate 3.5 2.5 1-Yr. Treasury Bond Rate 2.5 1.5 1.5 27 28 29 21 211 Source: Merrill Lynch, Board of Governors, Haver Analytics 18
Washington, D.C. MSA Payroll Employment 7. 6. 5. 4. 3. U.S. Washington, D.C. MSA 1.9.8.7 YoY % Chg 2. 1 1.. -1. -2. -3. -4. 4.6 5.5.4 3.3.2.1-5. 2 21 22 23 24 25 26 27 28 29 21 211 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
Washington, D.C. Industry Structure Employment Industry Stucture Manufacturing & Construction ti Trade, Transportation & Utilities 1.6 13.5 12.8 19.2 U.S. Washington, D.C. MSA Information 21 2.1 2.8 Financial Activities 4.4 5.8 Professional & Business Services 12.8 22.9 Education & Health Services 11.5 14.9 Leisure & Hospitality 97 9.7 8.8 Other 4.1 6.3 Government 17.4 24.2. 5. 1. 15. 2. 25. 3. Employment Share (Percent) Source: Bureau of Labor Statistics/Haver Analytics 2
D.C. Personal Income 8. 7. 6. 5. 4. U.S. D.C. YoY % Chg 3. 2 2. 1.. -1. -2. -3. 3-4. 2 21 22 23 24 25 26 27 28 29 21 211 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
Washington, D.C. MSA House Prices 3. 25. 2. 15. YoY % Chg 1. 5.. -5. -1. U.S. Washington, D.C. MSA -15. 2 21 22 23 24 25 26 27 28 29 21 211 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