There has been considerable discussion of the possibility

NationalEconomicTrends February Housing and the R Word There has been considerable discussion of the possibility that ongoing troubles in the housing market could push the economy into recession 1 But it is very unlikely that the decline in housing alone will cause a recession Any recessionary effect on the economy caused by housing will be a consequence of its effect on consumption Real GDP is a measure of the economy s current production Sales of existing houses have no impact on current production because these houses were produced sometime in the past The only direct effect housing has on current economic growth comes through the residential investment component of GDP, which includes current construction and improvements of single- and multi-family housing Residential investment accounts for only about percent of GDP; consequently, the effect of residential investment on economic growth is relatively modest The chart shows this effect by plotting quarterly GDP growth with and without residential investment (It also shows the quarterly growth of residential investment) Excluding residential investment has only a small effect even during the 197s and early 19s, when the growth of residential investment was considerably more volatile than during the past two decades Since residential investment peaked in the fourth quarter of, its decline has reduced growth of real GDP by an average of about percentage points This decline has largely been offset by nonresidential investment, which has continued to grow at a brisk pace Thus, as noted above, if the troubles in the housing industry were to cause a recession, it would have to be because of their effect on consumer spending Consumers base their 1 spending decisions not only on their current income, but also on their wealth Other things the same, an increase in wealth should induce consumers to spend more of their current income Hence, a decline in wealth could gene a decline in consumer spending For many people the net worth of their home is the single most important source of wealth Consequently, 1 a decline in home prices can make people less wealthy, causing them to consume less Because consumption accounts for about 7 percent of GDP, even relatively small changes in consumer spending can have a relatively large effect on output growth Estimates suggest that the wealth effect associated with changes in equity values is weak or nonexistent The wealth effect associated with housing wealth is stronger Wealth effects are very difficult to identify and measure, however Consequently, it is difficult to precisely determine the effect of the recent decline in home prices on consumption and, hence, output growth It is interesting to note that growth of real consumption expenditures since the second quarter of has remained strong in the range of percent despite the downturn in the S&P/Case-Shiller home price index since then Daniel L Thornton 1 A recession is typically defined as a sustained period (two or more quarters) of negative growth in real gross domestic product (GDP) See Case, Karl E; Quigley, John M and Shiller, Robert X Comparing Wealth Effects: The Stock Market vs the Housing Market Advances in Macroeconomics,, (1), pp 1- Effect of Residential Investment on GDP Percent Change Quarter/Quarter (GDP) Percent Change Quarter/Quarter (RPRI) GDP less Residential Investment (left axis) GDP (left axis) Real Private Residential Investment (right axis) 197 197 19 19 199 199 1 Views expressed do not necessarily reflect official positions of the Federal Reserve System researchstlouisfedorg

Contents Page Economy at a Glance Output and Growth 7 Interest Rates Inflation and Prices 1 Labor Markets 1 Consumer Spending 1 Investment Spending 1 Government Revenues, Spending, and Debt 1 International Trade Productivity and Profits Quick Reference Tables 7 Notes and Sources Conventions used in this publication: 1 Shaded areas indicate recessions, as determined by the National Bureau of Economic Research refers to simple percent changes from year refers to the percent change from the same month or quarter during the previous year Compounded annual of change shows what the growth would be over an entire year if the same simple percent change continued for four quarters or twelve months The compounded annual of change of x between the previous quarter t 1 and the current quarter t is: [(x t /x t 1 ) 1] 1 For monthly data replace with 1 All data with significant seasonal patterns are adjusted accordingly, unless labeled NSA We welcome your comments addressed to: Editor, National Economic Trends PO Box St Louis, MO 1- or to: stlsfred@stlsfrborg National Economic Trends is published by the of the Visit the s website at researchstlouisfedorg/publications/net to download the current version of this publication or register for e-mail notification updates For more information on data in this publication, please visit researchstlouisfedorg/fred or call (1) -7

updated through // National Economic Trends Real GDP Growth Compounded annual s of change Consumer Price 1 1 - - 7 171 17 1 1717 17-7 171 17 1 1717 17 Industrial Production Interest Rates Percent 1 - -1-1 1- Treasury -Month Treasury - 7 17 1 1717 17 179 7 17 1 1717 17 179 Change in Nonfarm Payrolls Thousands Unemployment Rate Percent of labor force 1-1 7 17 1 1717 17 179 7 17 1 1717 17 179

National Economic Trends updated through // Real Gross Domestic Product from year 1-7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 Industrial Production and Institute for Supply Management (ISM) es from year 1 1 Industrial Production 7 - -1-1 ISM 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 9 Aggregate Private Nonfarm Hours from year 1 - - 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 9 Real Change in Private Inventories Percent of GDP 1-1 - 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7

updated through // Real Final Sales and GDP Compounded annual s of change Final Sales GDP (bar) - 7 17 1 1717 17 Real GDP Revisions National Economic Trends Compounded annual s of change 7 Advance Preliminary Final Revision 1 : 7:1 7: 7: 7: Industrial Production and ISM 1 1 Industrial Production (bar) Nominal Gross Domestic Product Compounded annual s of change 1 1 - ISM -1-1 7 1 1717 17 179 7 17 1 1717 17 Aggregate Private Nonfarm Hours 1 Average Weekly Private Nonfarm Hours Hours 7 7 - - 7 1 1717 17 179 7 1 1717 17 179 Real Change in Private Inventories Billions of dollars 7 - - 7 17 1 1717 17 Inventory-Sales Ratio Manufacturing and trade 1 1 1 1 1 1 1 7 17 1 1717 17

National Economic Trends updated through 1// Contribution of Components to Real GDP Growth Percentage points at compounded annual s 1 - - - Q1 Q Q Q 7Q1 7Q 7Q 7Q Consumption Exports Government Imports Inventories Investment Contributions to Real GDP Growth Rate 7 1st nd rd th 1st nd rd th Final Sales 1 19 97 19 Consumption 1 1 1 1 17 Fixed Investment 17 - - -119-7 9-11 -9 Nonresidential 11-11 9 79 Residential - -7-1 -1-9 - -1-11 Government 9 1 1-9 79 7 Federal 7-11 - 1 State and Local 9 1 7 9 Net Exports 1 9 - -1 1 1 1 Exports 119 1 1 1 1 Imports -17-1 - - - 7-7 - Change in Inventory -9 1-11 - 9 - Residual -11-19 - -19 - - - -7 Real GDP Growth 17 9 91

updated through /11/ National Economic Trends Interest Rates Percent 1 1 9 1- Treasury -Month Treasury 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 9 Treasury Yield Curve Percent 7 Jan 7 7 Jan 7 Week Ending: // m 1y y y 7y 1y Standard and Poor's with Reinvested Dividends from year 7 - - 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 9 7

National Economic Trends updated through // NIPA Chain Price es from year 1 1 GDP Gross Domestic Purchases 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 Consumer Price from year 1 9 Excl Food and Energy All Items 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 Producer Price, Finished Goods from year 1 - Excl Food and Energy 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 PPI Employment Cost and Compensation per Hour from year 1 9 Comp per Hour ECI 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7

updated through // NIPA Chain Price es Compounded annual s of change Gross Domestic Purchases National Economic Trends Oil & Natural Gas Prices: Spot & Futures Dollars per barrel 1 Spot Oil Dollars per million btu Oil Futures 1 1 GDP (bar) -1 7 17 1 1717 17 Consumer Price Compounded annual s of change Spot Gas Gas Futures 1 7 9 7 9 1 Note: Futures prices as of 1/1/ Consumption Chain Price Compounded annual s of change 1 1 1 CPI (bar) PCE (bar) - Excl Food & Energy - Excl Food & Energy -1 7 17 1 1717 17-7 17 1 1717 17 Producer Price, Finished Goods Compounded annual s of change 1-1 Excl Food & Energy PPI (bar) - 7 17 1 1717 17 Unit Labor Cost Compounded annual s of change 1 Nonfarm - Manufacturing (bar) -1-7 17 1 1717 17 Employment Cost from year Compensation per Hour Compounded annual s of change Benefits Compensation 1 9 Wages and Salaries 7 1 7 171 17 1 1717 17-7 17 1 1717 17 9

National Economic Trends updated through /1/ Employment from year Payroll Survey Household Survey - - 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 9 Unemployment, Labor Force Participation, and Employment Rates Percent of labor force 1 9 Labor Force/Population Employment/Population Percent of population 7 7 1 Unemployment Rate 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 9 Duration of Unemployment Percent of labor force Weeks 1 7 1 7 Unemployed > Weeks Unemployed < Weeks Median 1 1 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 9 1

updated through // National Economic Trends Change in Nonfarm Payrolls Thousands 7 7-7 1 1717 7 17 179 Change in Manufacturing Payrolls Thousands 1-1 - - - - - 1 1717 7 17 179 Change in Household Employment Thousands 1 Labor Force and Population from year - 9% Confidence 1 Pop Labor Force - - 7 1 1717 17 179-7 7 171 17 1 1717 17 179 Available Labor Supply and Components Percent of labor force 1 9 Available Labor Supply 7 Unemployed Want to Work 7 7 171 17 1 1717 17 179 Unemployment Rate & Job Openings Rate Percent Unemployment Rate Job Openings Rate Percent 7 9 7 171 17 1 1717 17 179 1 9% Confidence 11

National Economic Trends updated through /1/ Real Disposable Personal Income from year, quarterly data 1-7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 Real Consumption from year, quarterly data 1 Durables from year, quarterly data 1 Total - - -1 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 - Retail and Food Services Sales from year, quarterly average 1 1-7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 *Data from Jan 199 to the present are on a NAICS basis; data prior to Jan 199 are on an SIC basis and are not strictly comparable (see End Note) Debt Service Payments and Household Debt Outstanding from year, quarterly data 1 Percent of disposable personal income 1 1 9 Debt Service Payments 1 1 Household Debt Outstanding 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 11 1 1

updated through // Real Disposable Personal Income 1-1 - - - 7 17 1 1717 17 Personal Saving Rate National Economic Trends Percent - - 7 1 7 171 17 1 1717 17 Real Consumption Compounded annual s of change Real Consumption 1-7 17 1 1717 17-1 7 17 1 1717 17 Retail & Food Services 1 Ex Autos -1 Total (bar) - 7 1 1717 17 179 Real Durables Consumption & Vehicle Sales - Autos and Light Trucks Durables (bar) Millions of vehicles, annual - 1 7 1 1717 17 179 1 1 1 1 Consumer Sentiment (U of Michigan) 11 Real Durables Consumption Compounded annual s of change 1 9 7-7 7 171 17 1 1717 17 179-7 1 1717 17 179 1

National Economic Trends updated through 1// Investment Percent of nominal GDP Total 1 1 1 1 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 Private Private Fixed Investment from year 1 Nominal 1 Real - -1-1 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 Real Nonresidential Fixed and Equipment & Software Investment from year 1 - -1 Equipment & Software Nonresidential - 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 Real Residential Fixed Investment from year - - 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 1

updated through // National Economic Trends Gross Saving Rates and Balance on Current Account (NIPA) Percent of GDP 1 - -1 Gross Private Saving Gross Govt Saving BOCA 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 Real Private Fixed Investment Compounded annual s of change Nondefense Capital Goods Orders from year, excluding aircraft 1-1 -1 - Orders Equipment & Software Investment -1 7 17 1 1717 17-7 1 7 171 17 1 1717 17 Real Equipment & Software Investment Compounded annual s of change 1 - -1 7 17 1 1717 17 Real Nonresidential Fixed Investment Compounded annual s of change 1-7 17 1 1717 17 Real Residential Fixed Investment Compounded annual s of change Housing Starts and New Home Sales Millions, annual New Home Sales Millions, annual 1 1 1 11 1 1-1 1 Housing Starts - 1-7 17 1 1717 17 7 17 1 1717 17

National Economic Trends updated through 1// Govt Consumption and Investment Billions of dollars 1 Govt Current Receipts and Expenditures Percent of GDP Total Expenditures 1 Total Total Receipts 1 State & Local Fed Expenditures 9 Federal Fed Receipts 9 9 9 9 9 9 9 9 9 9 Government Budgets Billions of dollars National Income Accounts Calendar s Unified Budget Fiscal s Receipts State and Local Federal Federal Expenditures Surplus or Deficit (-) Receipts Expenditures Surplus or Deficit (-) Receipts Outlays Surplus or Deficit (-) 1991 79 79-1 111 1-17 1 1-9 199 7 7 117 1-97 191 11-9 199 9 9 19-7 1 19-1 199 99 9 1 1-1 7 119-199 99 97 1 1-197 119 9-1 199 1 117-11 -17 1997 197 91 1 179-79 11-19 199 11 1111 177 179 9 17 7 9 1999 17 11 191 177 1 17 17 119 19 1 19 179 1 17 1 1 199 7 1991 1 1 111 1-111 -79 11-7 19-1799 1-7 17 11-77 9 9 9 79-7 1 9-17 179 1917 1-1 9 7-1 17977 177 7 9 7-7 -77 7 19 911 77 7-1 Q1 177 171 7-197 7 91-1 Q 17 179 7 711-99 771 77 9 Q 17 179 1 11 7-9 99 7-17 Q 11 1 7 19 7-1 7 9-7Q1 1-197 - 7 7-17 7Q 199 17 1 71 79-9 17 7Q 19 19-1 7 9197-7 -1 7Q 19 997 7117-1

updated through /1/ Federal Debt Percent of GDP 7 Total Percent of GDP National Economic Trends Federal Surplus (+) / Deficit (-) Held by Public - - - NIPA Unified Budget - 9 9 9 9 9 Change in Federal Debt Percent of GDP 9 9 9 9 9 NIPA: Net government saving Federal Surplus (+) / Deficit (-), Unified Basis Billions of dollars, fiscal years 7 Total Excl interest payments - Held by Public - - Total - -7 9 9 9 9 9 9 9 9 9 9 Federal Government Debt Billions of dollars, end of month or fiscal year Excludes Agency-issued debt Total Public Debt Held by Agencies and Trusts Held by Public Federal Total Reserve Banks Held by Private Investors Foreign and Total International 797 11 1 7 9 19 7 79 7 7 7 977 9 9 779 97 9 March 7111 9 177 71 1771 June 77 17 7 179 September 7791 77 7 7 1797 December 791 19 717 9 March 7779 7 717 19 June 7 9 7 77 179 September 797 11 1 7 9 19 December 17 71 7 97 March 71 9 7 7 11 June 797 7 1979 September 7 79 7 7 December 779 91 779 11 117 7 March 97 79 79 71 June 77 9 9 79 September 977 9 9 779 97 9 17

National Economic Trends updated through /1/ Current Account, Trade and Investment Income Balances Billions of dollars, quarterly - - - - -1-1 -1-1 -1 - Investment Income Current Account Goods and Services Percent of GDP - - 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 - - - - -1-1 -1-1 -1 Exchange Rates, March 197 = 1 1 Yen/US$ 1 x (Ecu or Euro/US$) 7 1 1 1 Yen Major Currency Euro Ecu 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 9 Goods Export Shares, 7 Goods Import Shares, 7 UK % Mexico 11% UK 9% Mexico 17% China 1% All Other 1% China % Japan % Japan 7% France % Germany % All Other 7% Germany % Other OECD 179% Canada 1% France 1% Other OECD % Canada 9% 1

updated through /1/ Trade Balance Billions of dollars -1 - - - - Goods and Services -7 Goods - 7 17 1 1717 17 Goods Trade National Economic Trends from year Exports 1 Imports - 7 17 1 1717 17 Current Account Balance Billions of dollars - - Services Trade from year Exports 1 9-1 -1 - Imports - 7 17 1 1717 17-7 17 1 1717 17 Real GDP Growth of Major Trading Partners Compounded annual s of change United Kingdom Germany - 7 7-7 7 Canada France - 7 7-7 7 1 Japan 1 Mexico - 7 7-7 7 19

National Economic Trends updated through // Output per Hour and Capacity Utilization, Manufacturing from year 1 Utilization Rate (level) Percent 9 7 Output/Hour - 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 *Data from 197 to the present are on a NAICS basis; data prior to 197 are on an SIC basis and are not strictly comparable (see End Note) Nonfarm Compensation per Hour from year 1 Nominal Real - 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 Output per Hour, Nonfarm Business and Nonfinancial Corporations from year 9 Nonfinancial Corporations Nonfarm Business Sector - 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7

updated through // National Economic Trends Nonfarm Output per Hour Compounded annual s of change Manufacturing Output per Hour Compounded annual s of change - 7 17 1 1717 17-7 17 1 1717 17 Selected Component Shares of National Income Percent Percent 7 1 11 9 7 Corpo Profits Proprietors' Income 7 71 9 7 Compensation 1 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 1 Corpo Profits Percent of GDP 1 1 1 Profits (Before Tax) Profits (After Tax) 7 9 9 91 9 9 9 9 9 97 9 99 1 7 7 9 9 91 9 9 9 9 9 97 9 99 1 7 1

National Economic Trends updated through 1// Billions of $ Nominal GDP Billions of $ Real GDP Billions of $ Final Sales Change in Private Inventories Billions of $ Last qtr / 19 1777 11979 19 11 1 197 7 1197 1 1119 9 1179 9 7 1 9 171 11 7 1 1 1 1 77 9 19 111 7 7 1 1 11779 1771 11 7 7 119 9 179 1 1771 7 71 1 1 71 17 1 119 9 9 9 17 117 1 199 19 17 77 1 117 11771 7 9 17 17 11171 1 9 119-9 7 1 19 7 11 111917 99 1 119 17 19 7 19 117 11 11799 1 19 9 9 19 119 1 1177 171 9 7 1 119 9 11119 111 1 19 97 7 17 7 11 19 11777 7 191 197 197 9 119 1 17 1 1 1177 111 19 7-7 Billions of $ Consumption Durables Consumption Billions of $ Private Fixed Investment Billions of $ 71 17 17177 7 11 79 117 9 117 9 79 71 1 119 179 17 7 7 9 17 111-9 19 1 7711 9 171-7 1991-9 77 7 171 19 1 197 19 7 1179 17 9 77 19 7 1771 9 1179 1 79 7 11 7 1777 7 7 119 1 7 1 77977 1 111 7 17 1199 91 777 119 11 7 11977 79 71 1117 77 7791 1 11 99 19 77 1 11791-1 1 1 1 79191 11771 1 191 79 197 1 7 979 11719 1 199-19 1 7 1 7 11 197-7 119 1 11 9 1197 9 11-71 -1 117-1 7 1 7 7 11 7 1191 - - 117 1 9 1 9 1 17 19-1 11 1 1191 7 97-7 - 177 9 1 7 111 - -1 119 7 7 Nonresidential Fixed Investment Billions of $

updated through // National Economic Trends GDP Chain Price Employment Cost ECI: Wages ECI: Benefits 19 9 9 97 7 9 11 99 1 99 99 1 11 9 1 9 11 9 7 1197 7 1 1 1 11 7 99 97 7 99 11 19 9 9 9 9 7 9 7 197 97 97 9 7 1177 97 7 97 17 9 7 1 1117 9 9 9 9 7 9 1 9 1 9 1 9 7 11 99 9 9 99 99 119 11 9 11 1 9 1 1 1 1 1 9 11 11 11 1 7 117 1 9 1177 17 7 1 1 1 1 1 7 1 117 9 19 1 1 11-1 1197 7 1 1 1 1 1 7 1197 1 1 9 1 1 97 1 1 17 1 9 Billions of $ Exports Billions of $ Imports 111 97 171999 11 1 7 9 1 9 17 9 197 19 119 11 197 9 19 1 9 7 17 79 197 17 1 17 1 1117 1 9 1 9 1 9 71-11199 1 17 11 1171 7 111 1 99 1777 1 1 9 117 1 7 177 1 1 1 7 1 9 9 1 11797 179 1 117 7 1 9 1199 9 71 19 1 1 19 9 7 1 9 197 1 19 1 7 17 1 7 179 1 1 1-1 17 11 1 179 1 1919 9 111 1 1779 7 1 7 7 19 9 1 197-171 7 197 7 11-1 1 1717 1 7 11 1 9 191 1 7 1 1 9 1717 1 7 1 1 11 1977 9 9 1 7 179 9 7 179 7 71 19-7 1 7 17 1 11 191 1 1977 17 19 1771 7 9 9 77 1979 1 191 1 17771 9 7 Nonfarm Output per Hour Nonfarm Compensation per Hour

National Economic Trends updated through /1/ Household Survey Employment Thousands Change Nonfarm Payroll Employment Thousands Change Nonfarm Aggregate Hours Monthly 1779 1 9 1999 - - 9-1 19 1 11 1119 1 11 1 1 1171 7 1 19 7 17 1 11 7 19 19 97 1 7 9 7 19 1 11 17 11 17 1 1 1 1 1 1 1 1 1 11 11 11 19 11 1 1 1 1 11 797 111 7 19 11 7 1 19 11 1 1 1 19 1 1 7 1 1 7 1 19 9 1 77 1 1 7 1 19 7 7 1 1 1 1 1 1 17 1 17 1 9 1 179 1 1 1 1 7 1 9 9 1 171 9 1 1 1 1 9-7 - 1 17 1 9 1 17 1 119 1 1 177 9 1 17 11 1 191 7 7 1 9 177 1 1 Jan 1 11 1 1 71 Feb 1 7 1 1 7 1 Mar 119 7 17 9 1 1 Apr 1791 17 1 1 179 17 1 9 1 May 1 97 1 11 19 - - 1 Jun 19 1 19 191 9 17 7 1 Jul 19-7 - 1 117 17 1 1 Aug 171 7 1 1 191 17 1 1 1 Sep 1 17 17 1 17 9 - - Oct 9 9 11 7 17 1 Nov 1 1 1 17 1 1 1-1 -11 1 Dec 99 1 19 199 1 1 17 7 Jan 9 - - 171 1 11 - - 1 Feb -7-1 171 1 1 - - 1 Mar 1 7 1 1 171 177 1 1 171 17 19 Apr 71 - - 1 17 1 1 - - 11 May 91 17 1 171 1 1 1 171 1 Jun 17 17 1 1 17 17 9 1 17 7 17 Jul - - 1 17 7 11 17 - - 1 Aug 7-9 - 7 177 7 1 17 11 Sep 1 7 1 177 1 7 1 17 1 Oct 11 - - 17977 1 1 1 177 1 11 1 Nov 17 1 7 17 9 177 1 Dec 111 - - 1119 7 17 1 11 1 Jan 1 7 11-17 -1 7 17 - - 9

updated through // National Economic Trends Unempl Rate Retail and Food Services Sales Billions of dollars Monthly/ quarterly Industrial Production Monthly/ quarterly Treasury Yields (Percent) -mo 1-yr 19 1119 11 11 71 1 17 17 7 1 19 9 17 1117 7 79 7 9 1 11 19 1 999 1 1 97 11 1 1 1 7 7 19 7 1 1 1 7 7 1911 1 1 9 1 7 1199 1 7 9 1 7 179 1 1 79 197 1 9 7 7 117 1 1111 1 7 7 197 117 1 1 91 9 19 1 111919 - - 9 7 1 111 117 11 9 11 1 9 11171 9 17 7 7 111 9 7 1 111 9 1 7 1 1 7 119 - -1 1 9 Jan 7 9 79 9 1911 - - Feb 7 1 - -9 7 19 1 7 Mar 7 7 7 7 19997 1 7 Apr 7 17 1 1 71 119 9 11 99 May 7 9 - - 9 117-1 - 7 11 Jun 119 9 11 79 11 Jul 7 9 11 117 9 7 9 9 Aug 7 17 1 1 1 9 Sep - -7 11177 - -7 1 7 Oct 19 111999 - -1 9 7 Nov 7 1191 - -9 9 Dec 177 1 1 9 119 7 7 Jan 9 1 17 1117 - -7 9 7 Feb 97 19 119 9 9 7 Mar 71 1 1 11-1 -11 9 Apr 71 - - 1119 9 19 7 9 May 779 1 1 1 1191-1 -1 19 7 7 Jun 77 - -9 11 1 1 Jul 7 79 7 7 119 1 17 Aug 7 7717 1 9 111-1 -1 1 7 Sep 7 1 1 117 1 11 1 9 Oct 9 11 - -7 1 9 Nov 7 99 119 7 7 Dec - - 7 111 1 17 1 Jan 9 9 9 11 1 11 7 7

National Economic Trends Consumer Price Monthly/ quarterly to date Consumer Price less Food and Energy Monthly/ quarterly to date updated through // Producer Price Finished Goods Monthly/ quarterly 1 19 1 19 7 19 1 19 7 7 9 9 1 9 7 7 9 171 1 9 1 19 1997 7 7 19 7 9 9 1 19 7 117 1 1 7 197 1 1 1 9 17 7 1 199 1 7 1 7 1 9 - -1 17 9 7 9 7 9 19 9 7 1 9 1 7 7 9 9 111 7 - - 19 19 7 1 7 7 99 - -1 7 1 9 9 7 7 97 1 7 19 11 1 1 1 799 7 7 119 1 19 1 1 1 17 9 Dec 19-1 - 1 1 9 7 Jan 199 7 7 1 1 Feb 199-1 - 1-11 -1 9 Mar 199 1 9 1 9 Apr 7 1 7 May 1 1 17 Jun 19 7 1 1 9 Jul 9 1 1 1 7 1 11-1 - 9 Aug 9 9 9 119 7 Sep 9 - - 1 7 9 1-11 -119 Oct 19 - - 1 7 1 1 7 - -1-1 Nov 1 1 1 19 1 77 1 1 1 Dec 7 1 1 7 9 11 7 Jan 1 1 7 1 - - Feb 9 7 9 1 1 1 Mar 9 7 9 1 9 1 1 1 Apr 71 9 7 9 9 17 May 7 7 7 1 997 19 17 7 7 Jun 7 9 1 7 1 1 7 Jul 77 7 7 19 179 7 1 Aug 779 19 1 19 1-1 -9 Sep 9 1177 7 1 17 1 1 Oct 9 11 17 1 7 Nov 19 9 11 1 1 9 17 77 Dec 11 1 1 11 7 17-1 -7

National Economic Trends Notes Pages, : Final Sales is gross domestic product (GDP) minus change in private inventories Advance, Preliminary, and Final GDP Growth Rates are released during the first, second, and third months of the following quarter Changes result from incorporation of more complete information Real GDP is measured in dollars The ISM (formerly Purchasing Managers ) is a weighted average of diffusion indexes for new orders, production, supplier deliveries, inventories, and employment Aggregate and Average Weekly Hours are paid hours of production and nonsupervisory employees The Inventory-Sales Ratio uses nominal (current-dollar) inventory and sales data Page : For information on how to calculate the Contribution of a component to the overall GDP growth, see the October 1999 issue of the Survey of Current Business, p 1 The sign is changed for Imports Page 7: Ten-year Treasury Yields are adjusted to constant maturity; threemonth yields are secondary market averages All s used in the yield curves are adjusted to constant maturity The -year constant maturity series was discontinued by the Treasury Department as of Feb 1, Standard and Poor s with Reinvested Dividends shows the total return: capital gains plus dividends Pages, 9: Oil (West Texas intermediate) and Natural Gas (Henry Hub) spot and futures prices are listed in the Wall Street Journal Spot prices are monthly averages of daily prices; futures prices are usually taken from the last trading day of the month Consumer Price is for all urban consumers The Consumption Chain Price is the index associated with the personal consumption expenditures component of GDP The Employment Cost (ECI) covers private nonfarm employers ECI Compensation refers to a fixed sample of jobs, while Compensation per Hour covers all workers in the nonfarm business sector in a given quarter In both cases, compensation is wages and salaries plus benefits Pages 1, 11: Effective with the January Employment Situation, the establishment survey data for employment, hours, and earnings have been converted from the NAICS system to the 7 NAICS system For more information see http://wwwblsgov/ces/ Nonfarm Payroll Employment is counted in a survey of about, establishments (Current Employment Statistics) It excludes self-employed individuals and workers in private households, but double-counts individuals with more than one job The Household Survey (Current Population Survey) of about, households provides estimates of civilian employment, unemployment, labor force participation, and employment-population ratio Population is civilian, noninstitutional, 1 years and over The 9 percent confidence intervals for the unemployment (± percentage points) and change in household survey employment (±,) measure uncertainty due to sample size Because the household survey was changed in January 199, data prior to this date are not strictly comparable The Bureau of Labor Statistics announced several revisions to the Household Survey on Feb 7,, with the release of the January data For more information, see <wwwblsgov/cps/> The Job Openings is the number of job openings on the last business day of the month as a percent of total employment plus job openings Page 1: The Michigan Consumer Sentiment shows changes in a summary measure of consumers answers to five questions about their current and expected financial situation, expectations about future economic conditions, and attitudes about making large purchases The survey is based on a representative sample of US households Page : Gross Private Saving is the sum of personal saving, undistributed corpo profits with IVA and CCAdj (see notes for pp 1-19), and private wage accruals less disbursements Gross Government Saving is net government saving (surplus/deficit) plus consumption of fixed capital Balance on Current Account (NIPA) is net capital transfer payments to the rest of the world plus net lending or net borrowing (international trade and income flows) Pages 1, 17: Government Consumption and Investment is current expenditures on goods and services, including capital consumption (depreciation) and gross investment, as reported in the NIPAs The Unified Federal Budget Surplus/Deficit differs from NIPA Basis in four main ways: (1) NIPA excludes transactions involving existing assets; () NIPA outlays exclude government investment and include consumption of government capital, while unified budget outlays do the reverse; () NIPA accounts exclude Puerto Rico and US territories; and () various timing issues are handled differently Outlays and Receipts are from the NIPAs, except as noted Since 1977, the federal Fiscal starts on October 1 Excluded agency debt was percent of federal debt at the end of fiscal 1997 Federal Debt Held by the Public includes holdings of the Federal Reserve System and excludes holdings of the social security and other federal trust funds Federal grants in aid to state and local governments appear in both state and local receipts and federal outlays Pages 1, 19: The Trade Balance (shown on a balance of payments basis) is the difference between exports and imports of goods (merchandise) and services It is nearly identical in concept to the Net Exports component of GDP, but differs slightly in accounting details The Investment Income Balance equals income received from US-owned assets in other countries minus income paid on foreign-owned assets in the US The investment income balance is nearly identical in concept to the difference between gross national product and gross domestic product, but differs in accounting details The Current Account Balance is the trade balance plus the balance on investment income plus net unilateral transfers to the US from other countries Pages, 1: Output per Hour (Y/H), Unit Labor Cost (C/Y), and Compensation per Hour (C/H) are indexes which approximately obey the following relationship: %(Y/H) + %(C/Y) = %(C/H) with %() meaning percent changes Unit labor cost is shown on page 9 Real Compensation per Hour uses the CPI to adjust for the effects of inflation Nonfarm business accounted for about 77 percent of the value of GDP in, while nonfinancial corporations accounted for about percent Inventory Valuation Adjustments (IVA) remove the effect of changes in the value of existing inventories from corpo profits and proprietors income (This change in value does not correspond to current production and therefore is not part of GDP) Capital Consumption Adjustments (CCAdj) increase profits and proprietors income by the difference between estimates of economic depreciation and depreciation allowed by the tax code Components of national income not shown are rental income of persons and net interest Sources Bureau of Economic Analysis (BEA), US Dept of Commerce National income and product accounts, international trade and investment data (except by country), auto and light truck sales Census Bureau, US Dept of Commerce Inventory-sales ratios, retail sales, capital goods orders, housing starts, exports and imports by country Bureau of Labor Statistics (BLS), US Dept of Labor All employment-related data, employment cost index, consumer and producer price indexes, unit labor cost, output per hour, compensation per hour, multifactor productivity United States Department of Treasury Unified budget receipts, outlays, deficit, debt Federal Reserve Board of industrial production, treasury yields, exchange s, capacity utilization, household debt The Survey Research Center, The University of Michigan Consumer sentiment index Organization for Economic Cooperation and Development (OECD) GDP for major trading partners (not available on FRED) 7