National Economic Indicators January, 17
Table of Contents GDP Release Date Latest Period Page Table: Real Gross Domestic Product Dec--1 8:1 Q-1 Real Gross Domestic Product Dec--1 8:1 Q-1 5 Decomposition of Real Gross Domestic Product Dec--1 8:1 Q-1 Households Retail Sales Jan-1-17 8: Dec-1 7 Disposable Personal Income and Expenditures Dec--1 1: Nov-1 8 Sales of Automobiles and Light Trucks Jan--17 1: Dec-1 9 Personal Saving Rate Dec--1 1: Nov-1 1 Household Net Worth Dec-8-1 1:7 Q-1 11 Existing Single-Family Home Sales Dec-1-1 1: Nov-1 1 New Single-Family Home Sales Dec--1 1:1 Nov-1 1 Private Single-Family Housing Starts & Permits Jan-19-17 8: Dec-1 1 Private Multi-Family Housing Starts & Permits Jan-19-17 8: Dec-1 15 Business Investment Real Investment in Nonresidential Structures Dec--1 8:1 Q-1 1 Real Private Construction Put in Place Jan--17 1: Nov-1 17 Real Nonresidential Fixed Investment Dec--1 8:1 Q-1 18 Real Investment in Equipment Dec--1 8:1 Q-1 19 Real Investment in Intellectual Property Dec--1 8:1 Q-1 Trade Balance of International Trade Jan--17 8: Nov-1 1 Exchange Value of the USD Jan--17 1: Dec-1 Manufacturing Industrial Production Jan-18-17 9:15 Dec-1 Capacity Utilization Rate: Manufacturing Jan-18-17 9:15 Dec-1 Indexes of Manufacturing Activity Jan--17 1: Dec-1 5 Indexes of Non-Manufacturing Activity Jan-5-17 1:1 Dec-1 Table: ISM Business Survey Indexes Jan--17 1: Dec-1 7 Manufacturers' New Orders Jan--17 1: Nov-1 8 Core Capital Goods Jan--17 1: Nov-1 9 Business Inventory/Sales Ratios Jan-1-17 1: Nov-1
Table of Contents (continued) Labor Market Release Date Latest Period Page Nonfarm Payroll Employment Jan--17 8:5 Dec-1 1, Unemployment Rate Measures Jan--17 8:5 Dec-1, Non-Employment Index Dec-1-1 11:1 Nov-1 5 Labor Market Flows Jan-1-17 1: Nov-1 Labor Force Participation Jan--17 8:5 Dec-1 7 Aggregate Weekly Hours Index Jan--17 8:5 Dec-1 8 Average Hourly Earnings Jan--17 8:5 Dec-1 9 Employment Cost Index Oct-8-1 8: Q-1 Business Labor Productivity Dec--1 8:1 Q-1 1 Unit Labor Costs, Nonfarm Business Dec--1 8:1 Q-1 Inflation Table: Gauges of Inflation Jan--17 5: Dec-1 Expenditure Price Indexes Dec--1 1: Nov-1, 5 Consumer Price Indexes Jan-18-17 8: Dec-1 Producer Price Indexes Jan-1-17 8: Dec-1 7 Commodity Price Indexes Jan--17 5: Dec-1 8 Crude Oil Prices Jan--17 -Jan-17 9 TIPS Inflation Compensation Jan-18-17 17:58 1-Jan-17 5 Monetary Policy & Financial Markets Federal Reserve System Assets Jan-1-17 1: 11-Jan-17 51 Monetary Policy Instruments Jan-18-17 19:1 1-Jan-17 5 Real Federal Funds Rate Dec--1 1: Dec-1 5 FOMC Statement Oct-8-15 5, 55 Eurodollar Futures Jan--17 -Jan-17 5 SEP: Federal Funds Rate Dec-1-1 1:5 57 Monetary Base Jan-1-17 1: -Jan-17 58 M Jan-1-17 1: Dec-1 59 Money Market Rates Jan-18-17 19:1 1-Jan-17 Capital Market Rates Jan-18-17 19:1 1-Jan-17 1 Treasury Yield Curve Jan-18-17 1:5 1-Jan-17 Risk Premium Jan-18-17 19:1 1-Jan-17
Real Gross Domestic Product 15 1 Q Q Q1 Q Q CHANGE FROM PREVIOUS QUARTER AT COMPOUND ANNUAL RATE [Percent]: Gross Domestic Product..9.8 1..5 Personal Consumption Expenditures.7. 1... Nonresidential Fixed Investment.9 -. -. 1. 1. Structures -. -15..1 -.1 1. Equipment 9.1 -. -9.5 -.9 -.5 Intellectual Property.1..7 9.. Residential Fixed Investment 1. 11.5 7.8-7.7 -.1 Exports of Goods & Services -.8 -.7 -.7 1.8 1. Imports of Goods & Services 1.1.7 -... Government Consumption Expenditures & Gross Investment 1.9 1. 1. -1.7.8 Final Sales to Domestic Purchasers. 1.7 1...1 LEVEL IN QUARTER AT SEASONALLY ADJUSTED ANNUAL RATE [Billions of Chained (5) Dollars]: Change in Private Inventories 7.9 5.9.7-9.5 7.1 Net Exports of Goods & Services -57.1-5. -5. -558.5-5. Source: Bureau of Economic Analysis via Haver Analytics
Real Gross Domestic Product Percent change from previous quarter at annual rate 5 Q.5% 5 1-1 - - - -5 - -7-8 FOMC Projection 1-1 - - - -5 - -7-8 -9 7 8 9 1 11 1 1 1 15 1 17 18 19 1 Note: Projection is the median, central tendency, and range from the December 1 Summary of Economic Projections. Red dots indicate median 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. 5 Source: Bureau of Economic Analysis via Haver Analytics & Federal Reserve Board -9
Decomposition of Real GDP 5. 1-Year Annual Growth Rates 5..5.5..5 GDP..5...5. Productivity.5. 1.5 1.5 1..5 Employment 1..5. 1958 19 19 197 197 1978 198 198 199 199 1998 1 1. Note: Productivity is calculated as real GDP per employee, from the Household Survey. Source: Bureau of Economic Analysis and Bureau of Labor Statistics via Haver Analytics
Retail Sales 1 1 Month % Change 1 1 1 1 8 - - - Month Annualized % Change December.1% 1 1 1 8 - - - -8-1 -1 Month over Month % Change Oct. Nov. Dec. Total.7.. x Gasoline.5..5-1 7 8 9 1 11 1 1 1 15 1 17-8 -1-1 -1 Note: Retail sales includes food services. Source: Census Bureau via Haver Analytics 7
Disposable Personal Income & Expenditures 8 1 Month % Change 8 Real Disposable Personal Income November Real Personal Consumption Expenditure - - - - Month over Month % Change September October November Income.1. -.1 Expenditures.5.1.1 - - -8 7 8 9 1 11 1 1 1 15 1 17-8 Source: Bureau of Economic Analysis via Haver Analytics 8
Sales of Automobiles & Light Trucks Millions of Vehicles Autos and Light Trucks 18 18 1 December 18. mil. 1 1 1 1 Light Trucks 1 1 1 8 8 Autos 7 8 9 1 11 1 1 1 15 1 17 Source: Autodata Corporation via Haver Analytics 9
Personal Saving Rate 1 Percent of disposable personal income 1. 1 1. 8 8.. November 5.5%.. 7 8 9 1 11 1 1 1 15 1 17. Source: Bureau of Economic Analysis via Haver Analytics 1
Household Net Worth 7 Percent of disposable personal income 7 5 Q 5 55 55 5 5 5 199 199 199 199 1998 8 1 1 1 1 5 Source: Z.1 Financial Accounts of the United States via Haver Analytics 11
Existing Single-Family Home Sales.5 Millions of Homes.5 5.5 5.5 5 November 5.5.5.5 Average Annual Existing Home Sales: 199 through 1999.5.5.5 1578911111115117 Source: National Association of Realtors via Haver Analytics 1
New Single-Family Home Sales 1. Millions of Homes, Annual Rate 1. 1. 1. 1. 1. 1.1 1.1 1. 1..9.9.8.7 Average Annual New Home Sales:199 through 1999 November.8.7...5.5...... 1 5 7 8 9 1 11 1 1 1 15 117 Source: Census Bureau via Haver Analytics 1
Private Single-Family Housing Starts & Permits. Millions of Starts & Permits, Annual Rate. 1.8 1.8 1. 1. 1. 1. 1. 199-1999 Average Housing Starts 1. 1. Starts December 1..8.8. Permits.... 8 1 1 1 1. Source: Census Bureau via Haver Analytics 1
Private Multi-Family Housing Starts & Permits.7 -Month Moving Average, Millions of Starts & Permits, Annual Rate.7...5.5. Permits.. December. 199 1999 Average Multi-Family Starts...1 Starts.1. 1 5 7 8 9 1 11 1 1 1 15 1 17. Source: Census Bureau via Haver Analytics 15
Real Investment in Nonresidential Structures 5 5 Percent change from previous quarter at annual rate 5 5 15 1 5-5 -1-15 - -5 - Q 1.% 15 1 5-5 -1-15 - -5 - -5 7 8 9 1 11 1 1 1 15 1 17-5 Source: Bureau of Economic Analysis via Haver Analytics 1
Real Private Construction Put In Place 7 9$, Billions 7 57 Real Private Residential Construction 57 5 5 7 7 Real Private Nonresidential Construction November 7 7 7 7 1 5 7 8 9 1 11 1 1 1 15 1 17 Notes: Private nonresidential construction deflated using the price index for private fixed investment in nonresidential structures and private residential construction deflated using the private residential investment chain price index. Source: Census Bureau via Haver Analytics 17
Real Nonresidential Fixed Investment Percent change from previous quarter at annual rate 15 15 1 1 5 Q 1.% 5-5 -5-1 -1-15 -15 - - -5-5 - 7 8 9 1 11 1 1 1 15 1 17 - Source: Bureau of Economic Analysis via Haver Analytics 18
Real Investment in Equipment 5 5 15 1 5 Percent change from previous quarter at annual rate 5 5 15 1 5-5 -1-15 - -5 - -5 Q -.5% -5-1 -15 - -5 - -5-7 8 9 1 11 1 1 1 15 1 17 - Source: Bureau of Economic Analysis via Haver Analytics 19
Real Investment in Intellectual Property 1 Percent change from previous quarter at annual rate 1 1 1 8 8 Q.% - - - - - - -8 7 8 9 1 11 1 1 1 15 1 17-8 Source: Bureau of Economic Analysis via Haver Analytics
Balance of International Trade Current $, Billions -1 Petroleum Balance -1 - - - November -5. Bil. - - - -5-5 - Trade Balance - -7 Non-Petroleum Balance -7-8 8 1 1 1 1-8 Note: Customs Value of Trade Balance Source: Census Bureau via Haver Analytics 1
Exchange Value of the USD 15 Index, March 197 = 1 15 15 15 115 115 15 December 15 95 95 85 85 75 198 198 1988 199 199 8 1 1 Notes: Measured as the real broad trade-weighted exchange value of the United States Dollar. 75 Source: Board of Governors via Haver Analytics
Industrial Production 1 15 1 = 1 1 15 1 15 1 115 Mining Overall 1 15 1 115 11 15 1 December 11 15 1 95 9 85 8 Manufacturing 95 9 85 8 75 7 8 9 1 11 1 1 1 15 1 17 75 Source: Board of Governors via Haver Analytics
Capacity Utilization Rate: Manufacturing 8 Percent 8 8 8 78 78 7 7 December 7.8% 7 7 7 7 7 7 8 8 7 8 9 1 11 1 1 1 15 1 17 Source: Board of Governors via Haver Analytics
Indexes of Manufacturing Activity 5 Diffusion Index, percent ISM (Left Axis) 55 December 5.7 1 5 5 Richmond Fed Service Sector Index: Revenues (Right Axis) -1 - - 5 7 8 9 1 11 1 1 1 15 1 17 - Source: Institute for Supply Management & Richmond Fed via Haver Analytics 5
Indexes of Non-Manufacturing Activity 5 Diffusion Index, percent ISM (Left Axis) December 57. 55 1 5 5 Richmond Fed Service Sector Index: Revenues (Right Axis) -1 - - 5 7 8 9 1 11 1 1 1 15 1 17 - Source: Institute for Supply Management & Richmond Fed via Haver Analytics
ISM: Business Survey Indexes MANUFACTURING BUSINESS: NON-MANUFACTURING BUSINESS: Nov. Dec. Nov. Dec. Purchasing Managers Index 5. 5.7 Non-Manufacturing Index 57. 57. Production 5.. Business Activity 1.7 1. New Orders 5.. New Orders 57. 1. Employment 5. 5.1 Employment 58. 5.8 Supplier Deliveries 55.7 5.9 Supplier Deliveries 5. 5. Inventories 9. 7. Inventories 51.5 5. Prices 5.5 5.5 Prices 5. 57. Backlog of Orders 9. 9. Backlog of Orders 51. 8. New Export Orders 5. 5. New Export Orders 57. 5. Imports 5.5 5.5 Imports 5. 5. DIFFUSION INDEXES: Numbers above 5 percent indicate more favorable responses towards economic activity. Source: Institute for Supply Management via Haver Analytics 7
Manufacturers New Orders Current $, Billions 55 55 5 5 November 5 5 Twelve-Month Moving Average 5 5 7 8 9 1 11 1 1 1 15 1 17 Source: Census Bureau via Haver Analytics 8
Core Capital Goods 75 Current $, Billions, Annual Rate 75 7 New Orders 7 5 November 5 Shipments 55 55 5 5 5 5 7 8 9 1 11 1 1 1 15 1 17 Notes: Core capital goods are nondefense capital goods excluding aircraft. Source: Census Bureau via Haver Analytics 9
Business Inventory/Sales Ratio 1.7 Percent 1.7 1. Retailers 1. 1.5 1.5 November 1. 1. 1. Total Business 1. 1. Manufacturers 1. 1.1 1.1 7 8 9 1 11 1 1 1 15 1 17 Source: Census Bureau via Haver Analytics
Nonfarm Payroll Employment 15 Millions of Persons 15 15 November 15.1 mil. 15 1 1 15 15 1 1 15 15 1 7 8 9 1 11 1 1 1 15 1 17 1 Source: Bureau of Labor Statistics via Haver Analytics 1
Nonfarm Payroll Employment Quarterly average of monthly changes, thousands of persons 1-1 - - - Q Average 1-1 - - - -5 - -7-8 Monthly Change Nov. 178 Oct. 1 Sep. 8 August 17 Jul 5 7 8 9 1 11 1 1 1 15 1 17-5 - -7-8 Source: Bureau of Labor Statistics via Haver Analytics
Unemployment Rate 11 1.5 1 9.5 9 8.5 8 7.5 7.5 Percent 11 1.5 1 9.5 9 8.5 8 7.5 7.5 5.5 5.5 November.% FOMC Projection 5.5 5.5 7 8 9 1 11 1 1 1 15 1 17 18 19 Notes: FOMC projection is the median, range, and central tendency for the Q levels, from the December 1 meeting. Red dots indicate median projections Source: Bureau of Labor Statistics & Board of Governors via Haver Analytics
Measures of Labor Utilization 18 Percent 18 15 15 U: U5 + Involuntary Part-Time 1 1 9 November 9 U5: U + Discouraged + Marginally Attached U: Official Unemployment Rate 199 199 1998 8 1 1 1 1 Source: Bureau of Labor Statistics via Haver Analytics
Non-Employment Index 1 Percent 1 1 Non-Employment Index Including People Working Part-Time for Economic Reasons 1 1 1 8 8 Non-Employment Index 199 199 1998 8 1 1 1 1 Based on Measuring Resource Utilization in the Labor Market, Andreas Hornstein, Marianna Kudlyak, and Fabian Lange, Federal Reserve Bank of Richmond Economic Quarterly, First Quarter 1. 5
Labor Market Flows.5 Percent.5 Hires Rate* November.5.5.5.5 Job Openings Rate** 1.5 Quits Rate* 1.5 1 8 1 1 1 1 1 Note: *Percent of total employment. **Percent of total employment plus job openings. Source: JOLTS via Haver Analytics
Labor Force Participation 8 Percent of Population 8 7 7 5 5 November 1 1 59 59 58 58 57 198 195 195 19 19 198 197 197 198 198 1988 199 199 8 11 57 Source: Bureau of Labor Statistics via Haver Analytics 7
Aggregate Weekly Hours Index 18 Index, 7=1 18 1 November 1 1 1 1 1 1 1 98 98 9 9 9 9 9 9 9 7 8 9 1 11 1 1 1 15 1 17 9 Source: Bureau of Labor Statistics via Haver Analytics 8
Average Hourly Earnings..5. 1 Month % Change Monthly % Change Nov. -.1% Oct..% Sep..% August.1% July.%..5..5. November.5%.5. 1.5 1.5 1. 7 8 9 1 11 1 1 1 15 1 17 1. Source: Bureau of Labor Statistics via Haver Analytics 9
Employment Cost Index Year over Year % Change.5 Benefits Cost.5.5 Total Compensation.5 Q 1.5 Q.1 YoY % Change Total Comp.. Benefits Cost. Wages & Salaries. Wages and Salaries 1.5 1 1 7 8 9 1 11 1 1 1 15 1 17 Source: Bureau of Labor Statistics via Haver Analytics
Labor Productivity, Nonfarm Business Year over Year % Change Quarterly Change at Annual Rate 5 Q 1.1% Q 1 -.% Q1 1 -.% Q 15 -.% 5 Post-War Average 1 Q % 1-1 -1 - - 7 8 9 1 11 1 1 1 15 1 17 Source: Bureau of Labor Statistics via Haver Analytics 1
Unit Labor Cost, Nonfarm Business 5 Year over Year % Change 5 1-1 Q.% 1-1 - - - -5 Quarterly Change at Annual Rate Q 1.7% Q 1.% Q1 1 -.% Q 15 5.7% Alternate Series - - - -5 - - 7 8 9 1 11 1 1 1 15 1 17 Notes: Alternate series is derived from the Employment Cost Index. Source: Bureau of Labor Statistics via Haver Analytics
Gauges of Inflation Expenditure Price Indexes [Percent Change from Previous Month at Annual Rate]: Oct. Nov. YoY % Personal Consumption Expenditures..5 1. Core (excludes Food and Energy) 1..1 1. Consumer Price Indexes [Percent Change from Previous Month at Annual Rate]: Nov. Dec. YoY % All Items...1 Core (excludes Food and Energy) 1.8.8. Producer Price Indexes [Percent Change from Previous Month at Annual Rate]: Nov. Dec. YoY % Finished Goods. 1.. Core (excludes Food and Energy) 1..7 1.7 Core Intermediate Goods 5. 1. 1. Crude Goods. 1.7 1. Spot Commodity Price Index [Percent Change from Previous Month]: Nov. Dec. YoY % CRB Spot Commodity Price Index..8 1.9 Notes: Core PCE Price Index includes expenditures on food services. Source: BEA, BLS, & Commodity Research Bureau via Haver Analytics
Personal Consumption Expenditure Price Index 5 1 Month % Change 5 % Longer-run Target 1 FOMC Projection November 1.% 1-1 -1-7 8 9 1 11 1 1 1 15 1 17 18 19 1 - Notes: FOMC projection is the median, range, and central tendency for Q/Q percent changes, from the December 1 meeting. Red dots indicate median projections. Source: Bureau of Economic Analysis & Board of Governors via Haver Analytics
Core Personal Consumption Expenditure Price Index 5 1 Month % Change 5 % Longer-run Target 1 November 1.% FOMC Projection 1-1 -1-7 8 9 1 11 1 1 1 15 1 17 18 19 - Notes: FOMC projection is the median, range, and central tendency for Q/Q percent changes, from the December 1 meeting. Red dots indicate median projections. Core PCE Price Index excludes expenditures on gasoline and food services. Source: Bureau of Economic Analysis & Board of Governors via Haver Analytics 5
Consumer Price Indexes 1 Month % Change 5 All Items 5 December 1 Core CPI 1-1 -1 - November CPI: All Items 1.7%.1% Core CPI.1%.% December - 7 8 9 1 11 1 1 1 15 1 17 - - Source: Bureau of Labor Statistics via Haver Analytics
Producer Price Indexes 1 1 1 Month % Change 1 1 8 Core Finished Goods 8 December - - All Finished Goods - - - December (percent) All Finished Goods.% Core Finished Goods 1.7% -8-8 7 8 9 1 11 1 1 1 15 1 17 - Source: Bureau of Labor Statistics via Haver Analytics 7
Commodity Price Indexes 7 1 18 15 1 9 - - -9-1 -15-18 1 Month % Change PPI Core Intermediate Processed Materials (Left Axis) Commodity Research Bureau Spot Commodity Price Index (Right Axis) 1 Month % Change December Price Indexes November December PPI Core Intermed. Goods 1.% --- CRBS Spot Commodities 9.% 1.9% -1-5 7 8 9 1 11 1 1 1 15 1 17 5 5 5 15 1 5-5 -1-15 - -5 - Source: Bureau of Labor Statistics & Commodity Research Bureau via Haver Analytics 8
Crude Oil Prices 1 Current US$/Barrel 1 1 1 1 1 1 1 8 8 -Jan-17 Spot Price Futures Price 199 199 1998 8 1 1 1 1 18 Notes: Spot and Futures Prices are for Brent Crude Oil. Source: Financial Times & New York Mercantile Exchange via Haver Analytics & Bloomberg 9
TIPS Inflation Compensation.5 Percent.5...5. 5-Year 5 Years Ahead.5. 1.5 1.5 1. 5-Year 1..5 January 1th.5.. -.5 9 1 11 1 1 1 15 1 17 -.5 Source: Board of Governors Research Series via Haver Analytics 5
Federal Reserve System Assets 5, $, Billions,5, Agency Debt: $1 Total: $,98 Miscellaneous: $77,5 Agency MBS: $1,71,,5, Agency Debt: $87 Total: $,85 Miscellaneous: $8 Agency MBS: $8 1,5 1, 5 Treasury Securities: $1,5 Treasury Securities: $, 9/1/1 1/18/17 Note: Numbers may not add up due to rounding. Source: Board of Governors via Haver Analytics 51
Monetary Policy Instruments 7..5. 5.5 5..5..5..5. Percent Federal Funds Target Rate 7..5. 5.5 5..5..5..5. 1.5 Primary Credit Rate January th 1.5 1..5 Interest Rate Paid on Reserves Federal Funds Rate Target Range 1..5. 5 7 8 9 1 11 1 1 1 15 1 17. Source: Board of Governors via Haver Analytics 5
Real Federal Funds Rate Percent 1 1-1 December -1 - - - 5 7 8 9 1 11 1 1 1 15 1 17 - Note: The Real Federal Funds Rate is the difference between the effect Fed Funds rate and the lagged year-over-year change in the core PCE price index. Source: Bureau of Economic Analysis & Board of Governors via Haver Analytics 5
FOMC Statement December 1, 1 Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been expanding at a moderate pace since mid-year. Job gains have been solid in recent months and the unemployment rate has declined. Household spending has been rising moderately but business fixed investment has remained soft. Inflation has increased since earlier this year but is still below the Committee's percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation have moved up considerably but still are low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further. Inflation is expected to rise to percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments. In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1/ to / percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to percent inflation. Source: Board of Governors 5
Continued In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 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 and international developments. In light of the current shortfall of inflation from percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data. 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, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions. Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Esther L. George; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo. December 1, 1 Source: Board of Governors 55
Eurodollar Futures Percent.5.5 December 1, 1.5.5 1.5 January, 17 1.5 1 1.5.5 17 18 19 1 Source: CME Group via Bloomberg 5
Summary of Economic Projections: Federal Funds Rate 5 Percent 5 1 1 1 17 18 19 Longer run Note: Each dot in the chart represents the value of an FOMC participant s judgment of the midpoint of the appropriate target range (or the appropriate target level) for the federal funds rate at the end of the calendar year. Projections made for the September 1 meeting. Source: Board of Governors 57
Monetary Base 5 Current $, Billions 5 January 18th 5 5 5 5 15 15 1 1 5 5 9 1 11 1 1 1 15 1 17 Source: Board of Governors via Haver Analytics 58
M 11 1 Month % Change 11 1 1 9 9 8 7 December 7.% 8 7 5 5 1 1 5 7 8 9 1 11 1 1 1 15 1 17 Source: Board of Governors via Haver Analytics 59
Money Market Rates 1.5 Percent 1.5 1.5 January 18th 1.5 1. Primary Credit Rate 1..75.75.5 -Month LIBOR.5.5 IOER.5 Federal Funds Rate. -Month T-Bill Fed Reverse Repo Rate on Treasuries. -.5 9 1 11 1 1 1 15 1 17 -.5 Source: Board of Governors & Financial Times via Haver Analytics & Bloomberg
Capital Market Rates 1 Percent 1 9 9 8 8 7 7 Corporate BBB Bond Rate -Year Conventional Mortgage Rate 5 January 19th 5 1 Corporate AAA Bond Rate 1-Year Treasury Bond Rate 1 9 1 11 1 1 1 15 1 17 Source: BofA Merrill Lynch & Board of Governors via Haver Analytics 1
Treasury Yield Curve.5 Percent.5.5 December 1, 1 January, 17.5.. 1.75 1.75 1.5 1.5 1.5 1.5 1. 1..75.75.5.5.5.5. M Yrs Yrs 5 Yrs 7 Yrs 1 Yrs Time to Maturity. Source: Board of Governors via Haver Analytics
Risk Premium 8 Percent 8 7 7 5 5 January th 1 1 Year Rolling Average Risk Premium 1 9 1 11 1 1 1 15 1 17 Note: Risk Premium is defined as the difference in yields between BofA Merrill Lynch BBB and 1-year Treasury. Source: BofA Merrill Lynch & Board of Governors via Haver Analytics