Tracking the Recovery November 21, 2014. 2 Q3 3.5% Real Gross Domestic Product Source: Bureau of...
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Transcript of Tracking the Recovery November 21, 2014. 2 Q3 3.5% Real Gross Domestic Product Source: Bureau of...
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2
Q33.5%
Real Gross Domestic Product
Source: Bureau of Economic Analysis via Haver Analytics & Federal Reserve Board
Percent change from previous quarter at annual rate
FOMC Projection
Note: Projection is the central tendency from the September 2014 Summary of Economic Projections. Projections of change in real gross domestic product (GDP) are from the fourth quarter of the previous year to the fourth quarter of the year indicated.
Q3 Q4 Q1 Q2 Q3
CHANGE FROM PREVIOUS QUARTER AT COMPOUND ANNUAL RATE [Percent]:
Gross Domestic Product 4.5 3.5 -2.1 4.6 3.5
Personal Consumption Expenditures 2.0 3.7 1.2 2.5 1.8
Nonresidential Fixed Investment 5.5 10.4 1.6 9.7 5.5Structures 11.2 12.8 2.9 12.6 3.8Equipment 4.7 14.1 -1.0 11.2 7.2Intellectual Property Products 2.8 3.6 4.6 5.5 4.2
Residential Fixed Investment 11.2 -8.5 -5.3 8.8 1.8
Exports of Goods & Services 5.1 10.0 -9.2 11.1 7.8Imports of Goods & Services 0.6 1.3 2.2 11.3 -1.7
Final Sales to Domestic Purchasers 2.3 2.7 0.7 3.4 2.7
LEVEL IN QUARTER AT SEASONALLY ADJUSTED ANNUAL RATE [Billions of Chained (2009) Dollars]:
Change in Private Inventories 95.6 81.8 35.2 84.8 62.8
Net Exports of Goods & Services -424.6 -384.0 -447.2 -460.4 -409.9
2013 2014
Government Consumption Expenditures & Gross Investment
0.2 -3.8 -0.8 1.7 4.6
3
Real Gross Domestic Product
Source: Bureau of Economic Analysis via Haver Analytics
4
75
80
85
90
95
100
105
75
80
85
90
95
100
105
2007 2008 2009 2010 2011 2012 2013 2014 2015
2007 = 100
October100.6
Industrial Production Index: Manufacturing
Source: Board of Governors via Haver Analytics
Sep. Oct. Sep. Oct.
Purchasing Managers Index 56.6 59.0 Non-Manufacturing Index 58.6 57.1
Production 64.6 64.8 Business Activity 62.9 60.0
New Orders 60.0 65.8 New Orders 61.0 59.1
Employment 54.6 55.5 Employment 58.5 59.6
Supplier Deliveries 52.2 56.2 Supplier Deliveries 52.0 49.5
Inventories 51.5 52.5 Inventories 52.0 49.5
Prices 59.5 53.5 Prices 55.2 52.1
Backlog of Orders 47.0 53.0 Backlog of Orders 52.0 51.5
New Export Orders 53.5 51.5 New Export Orders 57.5 53.5
Imports 53.0 54.5 Imports 52.5 56.0
MANUFACTURING BUSINESS: NON-MANUFACTURING BUSINESS:
5
DIFFUSION INDEXES: Numbers above 50 percent indicate more favorable responses towards economic activity.
ISM: Business Survey Indexes
Source: Institute for Supply Management via Haver Analytics
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
2007 2008 2009 2010 2011 2012 2013 2014 2015
6
12 Month % Change
Retail Sales
Note: Retail sales includes food services. Source: Census Bureau via Haver Analytics
October4.1%
Aug. Sep. Oct.Total 0.6 -0.3 0.3x Gasoline 0.8 -0.2 0.5
Month over Month % Change
4
6
8
10
12
14
16
18
20
4
6
8
10
12
14
16
18
20
2008 2009 2010 2011 2012 2013 2014 2015
7
Autos and Light Trucks
Light Trucks
Autos
October16.5 mil.
Sales of Automobiles & Light Trucks
Millions of Vehicles
Source: Autodata Corporation via Haver Analytics
1
1.5
2
2.5
3
3.5
4
1
1.5
2
2.5
3
3.5
4
2007 2008 2009 2010 2011 2012 2013 2014 2015
8
12 Month % Change
October2.0%
Average Hourly Earnings
Oct. 0.1%Sep. 0.0%Aug. 0.3%Jul. 0.0%
Monthly % Change
Source: Bureau of Labor Statistics via Haver Analytics
450
500
550
600
650
700
450
500
550
600
650
700
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
9
Q2.
Household Net WorthPercent of disposable personal income
Source: Z.1 Financial Accounts of the United States via Haver Analytics
2
3
4
5
6
7
8
9
10
2
3
4
5
6
7
8
9
10
2007 2008 2009 2010 2011 2012 2013 2014 2015
10
Personal Saving Rate
Source: Bureau of Economic Analysis via Haver Analytics
Percent of disposable personal income
September5.6%
Note: The personal saving rate was adjusted to remove tax-induced income shifting near the end of 2012.
11
2.5
3
3.5
4
4.5
5
5.5
2.5
3
3.5
4
4.5
5
5.5
2007 2008 2009 2010 2011 2012 2013 2014 2015
September4.5 mil.
Existing Single-Family Home Sales
Source: National Association of Realtors via Haver Analytics
Millions of Homes
Average Annual Existing Home Sales: 1990 through 1999
12
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
2007 2008 2009 2010 2011 2012 2013 2014 2015
September0.47 mil.
Average Annual New Home Sales:1990 through 1999
New Single-Family Home Sales
Source: Census Bureau via Haver Analytics
Millions of Homes
0.2
0.4
0.6
0.8
1.0
1.2
1.4
0.2
0.4
0.6
0.8
1.0
1.2
1.4
2007 2008 2009 2010 2011 2012 2013 2014 2015
13
Private Single-Family Starts & Permits
Source: Census Bureau via Haver Analytics
Millions of Starts & Permits
Starts
Permits
1990 - 1999 Average Housing Starts
September
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
2007 2008 2009 2010 2011 2012 2013 2014 2015
14
Private Multi-Family Housing Starts & Permits
Source: Census Bureau via Haver Analytics
Millions of Starts & Permits
Starts
Permits
1990 – 1999 Average Multi-Family Starts
September
15
220
240
260
280
300
320
340
360
380
400
420
220
240
260
280
300
320
340
360
380
400
420
2007 2008 2009 2010 2011 2012 2013 2014 2015
2009$, Billions
Twelve-Month Moving Average
September
Real Private Nonresidential Construction Put In Place
Source: Census Bureau via Haver Analytics
Notes: Deflated using the price index for private fixed investment in nonresidential structures.
16
-40
-30
-20
-10
0
10
20
30
40
-40
-30
-20
-10
0
10
20
30
40
2007 2008 2009 2010 2011 2012 2013 2014 2015
Percent change from previous quarter at annual rate
Q37.2%
Real Investment in Equipment
Source: Bureau of Economic Analysis via Haver Analytics
17
45
50
55
60
65
70
75
45
50
55
60
65
70
75
2007 2008 2009 2010 2011 2012 2013 2014 2015
Current $, Billions
Shipments
September
New Orders
Core Capital Goods
Notes: Core capital goods are nondefense capital goods excluding aircraft.
Source: Census Bureau via Haver Analytics
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.1
1.2
1.3
1.4
1.5
1.6
1.7
2007 2008 2009 2010 2011 2012 2013 2014 2015
18
Business Inventory/Sales Ratio
Percent
Retailers
Total Business
Manufacturers
September
Source: Census Bureau via Haver Analytics
19
-70
-65
-60
-55
-50
-45
-40
-35
-30
-25
-20
-70
-65
-60
-55
-50
-45
-40
-35
-30
-25
-20
2007 2008 2009 2010 2011 2012 2013 2014 2015
Current $, Billions
August-$40.1 bil.
Six-Month Moving Average
Balance of International Trade
Source: Census Bureau via Haver Analytics
75
85
95
105
115
125
135
75
85
95
105
115
125
135
1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
20
Exchange Value of the USD
Index, March 1973 = 100
Source: Board of Governors via Haver AnalyticsNotes: Measured as the real broad trade-weighted exchange value of the United States Dollar.
October
-800
-700
-600
-500
-400
-300
-200
-100
0
100
200
300
400
-800
-700
-600
-500
-400
-300
-200
-100
0
100
200
300
400
2007 2008 2009 2010 2011 2012 2013 2014 2015
21
Quarterly average of monthly changes, thousands of persons
Oct.
Nonfarm Payroll Employment
Oct. 214Sep. 256Aug. 203Jul. 243Jun. 267
Monthly Change
Source: Bureau of Labor Statistics via Haver Analytics
22
Millions of Persons
October139.7 mil.
Nonfarm Payroll Employment
Source: Bureau of Labor Statistics via Haver Analytics
128
130
132
134
136
138
140
1.50
1.75
2.00
2.25
2.50
2.75
3.00
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Temp (left axis)
Total (right axis)
23
4
4.5
5
5.5
6
6.5
7
7.5
8
8.5
9
9.5
10
10.5
11
4
4.5
5
5.5
6
6.5
7
7.5
8
8.5
9
9.5
10
10.5
11
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Percent
October5.8%
Unemployment Rate
Source: Bureau of Labor Statistics & Board of Governors via Haver Analytics
Notes: FOMC projection is the central tendency for the Q4 levels, from the September 17, 2014 meeting.
FOMC Projection
3
5
7
9
11
13
15
17
19
3
5
7
9
11
13
15
17
19
1994 1997 2000 2003 2006 2009 2012 2015
Official Unemployment Rate (U3)
Plus Involuntarily Part-Time (U6)
Plus Discouraged and Marginally Attached (U5)
24
Percent
October
Measures of Labor Utilization
Source: Bureau of Labor Statistics via Haver Analytics
57
58
59
60
61
62
63
64
65
66
67
68
57
58
59
60
61
62
63
64
65
66
67
68
1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
25
Percent of Population
October
Labor Force Participation
Source: Bureau of Labor Statistics via Haver Analytics
Expenditure Price Indexes [Percent Change from Previous Month at Annual Rate]:
Aug. Sep. YoY %Personal Consumption Expenditures -0.6 0.9 1.4
Core (excludes Food and Energy) 0.9 1.4 1.5
Consumer Price Indexes [Percent Change from Previous Month at Annual Rate]:
Aug. Sep. YoY %All Items -2.4 1.0 1.7
Core (excludes Food and Energy) 0.2 1.7 1.7
Producer Price Indexes [Percent Change from Previous Month at Annual Rate]:
Aug. Sep. YoY %Finished Goods -4.6 -2.9 2.1
Core (excludes Food and Energy) 0.6 1.9 2.0Core Intermediate Goods 3.1 1.8 1.6
Crude GoodsCrude Goods -33.4 7.1 -0.1
Spot Commodity Price Index
Sep. Oct. YoY %CRB Spot Commodity Price Index -1.0 -2.9 0.8
[Percent Change from Previous Month]:
26
Gauges of Inflation
Source: BEA, BLS, & Commodity Research Bureau via Haver AnalyticsNotes: Core PCE Price Index includes expenditures on food services.
27
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
September1.4%
FOMC Projection
Personal Consumption Expenditure Price Index12 Month % Change
Notes: FOMC projection is the central tendency for Q4/Q4 percent changes, from the September 17, 2014 meeting. Source: Bureau of Economic Analysis & Board of Governors via Haver Analytics
2% Longer-run Target
28
-8
-6
-4
-2
0
2
4
6
8
10
12
-8
-6
-4
-2
0
2
4
6
8
10
12
2007 2008 2009 2010 2011 2012 2013 2014 2015
All Finished Goods
Core Finished Goods
September
Producer Price Indexes12 Month % Change
All Finished Goods 2.1%Core Finished Goods 2.0%
September (percent)
Source: Bureau of Labor Statistics via Haver Analytics
29
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
35
40
45
-21
-18
-15
-12
-9
-6
-3
0
3
6
9
12
15
18
21
24
27
30
2007 2008 2009 2010 2011 2012 2013 2014 2015
PPI Core Intermediate
Goods(Left Axis)
Commodity Research Bureau Spot Commodity
Price Index(Right Axis)
12 Month % Change
Commodity Price Indexes12 Month % Change
Source: Bureau of Labor Statistics & Commodity Research Bureau via Haver Analytics
Price Indexes September OctoberPPI Core Intermed. Goods 1.6% ---CRBS Spot Commodities 1.3% 0.5%
September
30
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Spot Price
November 17th
Crude Oil Prices
Current $/ Barrel
Source: Financial Times & New York Mercantile Exchange via Haver Analytics & Bloomberg
Futures Price
Notes: Spot and Futures Prices are for Brent Crude Oil.
31
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
2009 2010 2011 2012 2013 2014 2015
November 7th
5-Year
5-Year5 Years Ahead
TIPS Inflation Compensation
Source: Board of Governors Research Series via Haver Analytics
Percent
32
-3
-2
-1
0
1
2
3
4
5
6
-3
-2
-1
0
1
2
3
4
5
6
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
October
Real Federal Funds RatePercent, effective Fed funds rate - lagged year over year change in core PCE price index
Source: Bureau of Economic Analysis & Board of Governors via Haver Analytics
33
FOMC Statement
Information received since the Federal Open Market Committee met in September suggests that economic activity is expanding at a moderate pace. Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing. Household spending is rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has continued to run below the Committee's longer-run objective. Market-based measures of inflation compensation have declined somewhat; survey-based measures of longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators and inflation moving toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for economic activity and the labor market as nearly balanced. Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.
The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. Moreover, the Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. Accordingly, the Committee decided to conclude its asset purchase program this month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
Source: Board of Governors
October 29, 2014
34
Continued…To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. However, if incoming information indicates faster progress toward the Committee's employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Stanley Fischer; Richard W. Fisher; Loretta J. Mester; Charles I. Plosser; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action was Narayana Kocherlakota, who believed that, in light of continued sluggishness in the inflation outlook and the recent slide in market-based measures of longer-term inflation expectations, the Committee should commit to keeping the current target range for the federal funds rate at least until the one-to-two-year ahead inflation outlook has returned to 2 percent and should continue the asset purchase program at its current level.
Source: Board of Governors
October 29, 2014
35
S&P 500
Source: BofA Merrill Lynch & Board of Governors via Haver Analytics
Index, 1941-43 = 10
1000
1200
1400
1600
1800
2000
2200
1000
1200
1400
1600
1800
2000
2200
10 11 12 13 14
36
CBOE Volatility Index (VIX)
Source: CBOE via Haver Analytics
Imputed volatility
0
20
40
60
80
100
0
20
40
60
80
100
04 05 06 07 08 09 10 11 12 13 14
37
0.5
1.5
2.5
3.5
4.5
5.5
6.5
7.5
8.5
9.5
10.5
0.5
1.5
2.5
3.5
4.5
5.5
6.5
7.5
8.5
9.5
10.5
2009 2010 2011 2012 2013 2014 2015
November 14th
10-Yr. Treasury Bond Rate
Corporate BBB Bond Rate
30 Year Conventional Mortgage Rate
Corporate AAA Bond Rate
Capital Market Rates
Percent
Source: BofA Merrill Lynch & Board of Governors via Haver Analytics
38
0
1
2
3
4
5
6
7
8
0
1
2
3
4
5
6
7
8
2009 2010 2011 2012 2013 2014 2015
10 Year Average Risk Premium
Risk Premium
Source: BofA Merrill Lynch & Board of Governors via Haver Analytics
Percent, BofA Merrill Lynch Corporate BBB - 10 Yr. Treasury Yield
November 14th