economic and financial highlights · summary federal reserve balance sheet between january 23 and...
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ECONOMIC AND FINANCIAL HIGHLIGHTS
FEBRUARY 6, 2013
FEDERAL RESERVE BALANCE SHEET
Assets and Liabilities 2-3
REAL ESTATE
Construction Spending 4
CoreLogic Home Price Index 5
Mortgage Rates and Applications 6-7
CONSUMER BEHAVIOR
Income, Spending, and Light Vehicle Sales 8-9
Consumer Confidence: Expectations 10
LABOR MARKETS
Nonfarm Payroll Employment and Benchmark Revisions 11-12
Unemployment and Labor Force Participation Rates 13
MANUFACTURING
ISM Purchasing Managers Index 14
TREASURY YIELDS 15
BREAKEVEN INFLATION RATES 16
ADDITIONAL DETAIL
SUMMARY
FEDERAL RESERVE BALANCE SHEET
Between January 23 and
January 30, the Federal
Reserve’s balance sheet
decreased by $2.6 billion. The
overall size of the balance
sheet was essentially
unchanged at $3.1 trillion.
0
300
600
900
1,200
1,500
1,800
2,100
2,400
2,700
3,000
Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12
Federal Reserve Assets (Uses of Funds) $ billions
Currency Swaps
Agency Debt & MBS
Lending to Nonbank Credit Markets
Short-Term lending to Financials
Other
Treasuries
through January 30, 2013
• Treasuries increased by $13.4 billion while MBS and agency debt decreased by $17.4 billion. Note that agency debt and MBS typically
increase mid-month as a result of settlements and decline the week after as a result of prepayments. More detail is available on the New York
Fed’s website.
• Since mid-August 2012, decreased use of swap lines by foreign central banks has caused the balance sheet to contract by $22 billion.
• According to the New York Fed’s tentative outright Treasury operation schedule, the desk plans to purchase approximately $44 billion in
Treasury securities over the month of February. This amount is approximately $1 billion less than the stated pace of $45 billion per month,
given that purchases conducted in January exceeded the target by approximately $1 billion.
2 Economic and Financial Highlights 2/6/2013
Source: Federal Reserve Board
ADDITIONAL DETAIL
SUMMARY
FEDERAL RESERVE BALANCE SHEET
Between January 23 and
January 30, bank reserve
balances with the Federal
Reserve increased by $48.7
billion, while Treasury
deposits with the Federal
Reserve decreased by $9.9
billion.
As of January 30, 2013, bank
reserves held at the Federal
Reserve were $1.64 trillion.
0
300
600
900
1,200
1,500
1,800
2,100
2,400
2,700
3,000
Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12
Federal Reserve Liabilities (Sources of Funds) $ billions
Treasury SFP
Other
Banks Reserve Balances
Currency in Circulation
through January 30, 2013
• Reverse repurchase agreements with foreign officials and international accounts increased by $8.5 billion.
• Other nonreserve deposits, which include balances of international and multilateral organizations with accounts at the New York Fed,
such as the International Monetary Fund, United Nations, International Bank for Reconstruction and Development (World Bank); the
special checking account of the ESF (where deposits from monetizing SDRs would be placed); and balances of a few U.S. government
agencies (such as Fannie Mae and Freddie Mac) decreased by $48.2 billion.
3 Economic and Financial Highlights 2/6/2013
Source: Federal Reserve Board
SFP=Supplemental Financing Program
SUMMARY
REAL ESTATE
The U.S. Census Bureau
reported that total construction
spending and nonresidential
construction spending growth
continued to decelerate on a
year-over-year basis while
residential construction
spending growth remained
robust in December.
-40
-30
-20
-10
0
10
20
30
00 01 02 03 04 05 06 07 08 09 10 11 12
Source: U.S. Census Bureau
U.S. Construction Spending year-over-year percent change
Total Nonresidential Residentialthrough December 2012
4 Economic and Financial Highlights 2/6/2013
December 2012 Construction Spending Put in Place
Total Total Private Total Public
Total
Nonresidential
Private
Nonresidential
Public
Nonresidential Total Residential
Private
Residential
Billions, SAAR 885.0 614.9 270.1 570.4 306.7 263.7 314.6 308.2
M/M 0.9% 2.0% -1.4% 0.3% 1.8% -1.4% 2.1% 2.2%
Y/Y 7.8% 15.0% -5.6% 1.2% 7.6% -5.3% 22.3% 23.6%
SUMMARY
REAL ESTATE
The October CoreLogic home
price indexes continued to
improve in December on a
year-over-year basis.
The CoreLogic home price
index including distressed
properties increased 8.3
percent compared with a year
earlier while the home price
index, excluding distressed
properties, increased 7.5
percent.
HPI including distressed properties
8.3
HPI excluding distressed properties
7.5
-20
-15
-10
-5
0
5
10
15
20
00 01 02 03 04 05 06 07 08 09 10 11 12
Source: CoreLogic®
U.S. CoreLogic® Home Price Index indexed, January 2000 = 100
through December 2012
5 Economic and Financial Highlights 2/6/2013
SUMMARY
REAL ESTATE
According to Freddie Mac’s
Primary Mortgage Market
Survey, the average rate for a
30-year fixed rate mortgage
increased 11 basis points
(bps) over the week ending
January 31, to 3.53 percent.
This is the first week the
average 30-year fixed-rate
mortgage rate has been
above 3.5 percent since
September 13, 2012.
The average rate for a 15-
year fixed-rate mortgage
increased 10 bps to 2.81
percent over the week ending
January 31.
30-Year Fixed: 3.53
15-Year Fixed: 2.81
0
1
2
3
4
5
6
7
8
9
10
92 94 96 98 00 02 04 06 08 10 12
Mortgage Rates percent
through January 31, 2013 Sources: Freddie Mac Primary Mortgage Market Survey
6 Economic and Financial Highlights 2/6/2013
SUMMARY
REAL ESTATE
According to the Mortgage
Bankers Association’s Weekly
Applications Survey,
mortgage loan applications for
refinancing increased 4
percent over the week ending
February 1.
Applications for purchase
increased 2 percent over the
same period and are at their
highest level since the week
ending May 7, 2010.
7 Economic and Financial Highlights 2/6/2013
Refinances
Purchases
0
100
200
300
400
500
600
700
800
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
11000
01 02 03 04 05 06 07 08 09 10 11 12 13
Mortgage Loan Applications Volume Index March 16, 1990 = 100
Source: Mortgage Bankers Association through February 01, 2013
ADDITIONAL DETAIL
SUMMARY
CONSUMER BEHAVIOR
Personal income rose sharply
in December. According to the
U.S. Bureau of Economic
Analysis, the large jump in
December was the result of
accelerated bonus payments
and accelerated dividend
payments made in anticipation
of tax law changes.
Real personal disposal
income grew 2.8 percent in
December.
Real consumer spending
increased 0.2 percent in
December. Durable goods
grew 1.3 percent over the
month, nondurables grew 0.3
percent, and spending on
services was essentially
unchanged.
-16
-12
-8
-4
0
4
8
12
16
-8
-6
-4
-2
0
2
4
6
8
01 02 03 04 05 06 07 08 09 10 11 12 13
Real Personal Consumption Expenditures seasonally adjusted, year-over-year percent change
Real PCE (right axis): 2.24%
Real Nondurable Goods: 1.46%
Real Services: 1.33%
Real Durable Goods (right axis): 9.67%
Real Personal Disposable Income(right axis): 5.61%
Source: BEA
through December 2012
• Real disposable personal income is personal income minus taxes and adjusted for inflation.
8 Economic and Financial Highlights 2/6/2013
ADDITIONAL DETAIL
SUMMARY
CONSUMER BEHAVIOR
Light vehicles sales
decreased slightly in January,
falling at a -0.6 percent
seasonally adjusted annual
rate of 15.3 million units.
Sales of domestic vehicles are
almost back to prerecession
levels. Sales of domestic light
vehicles are currently 2
percent below levels in
November 2007 while sales of
imported light vehicles are 13
percent below.
Total
Domestic
Imported
0
5
10
15
20
25
00 01 02 03 04 05 06 07 08 09 10 11 12
Light Vehicle Sales millions of units, SAAR
Source: Bureau of Economic Analysis
through January 2013
• Note: Light vehicle sales include all cars and light trucks up to 14,000 pounds. Domestic sales include autos produced in the United States,
Canada, and Mexico.
9 Economic and Financial Highlights 2/6/2013
ADDITIONAL DETAIL
SUMMARY
CONSUMER BEHAVIOR
Final measures of consumer
expectations as measured by
the University of Michigan
improved from the preliminary
mid-month reading (not
shown), suggesting any
concern from consumers
might have been short-lived.
The mid-month reading from
the Conference Board also
indicated a drop, mostly the
result of changes in income
expectations.
The components measuring
the current situation in both
surveys have improved since
the summer of 2011 but
remain below prerecession
levels.
-80.0
-60.0
-40.0
-20.0
0.0
20.0
40.0
60.0
02 03 04 05 06 07 08 09 10 11 12 13
Consumer Confidence Indices Measuring Expectations relative to level in June 2007
University Of Michigan - Expectations (NSA)
Conference Board Consumer Confidence - Expectations(SA)
Sources: The Conference Board, Reuters/University of Michigan, Bloomberg
through January 2013
• The expectations component of University of Michigan survey increased 2.8 points in January, following a 13.9 point drop in December and a
1.3 point drop in November.
• The expectations component of the Conference Board survey declined 8.6 points in the mid-January reading, following a 12.8 point drop in
December and a 3.1 point drop in November.
• The future components of both the Conference Board and Reuters/University of Michigan survey utilize fairly similar underlying questions.
10 Economic and Financial Highlights 2/6/2013
ADDITIONAL DETAIL
SUMMARY
LABOR MARKETS
The U.S. Bureau of Labor
Statistics (BLS) reported last
Friday that payrolls rose by
157,000 in January 2013. The
BLS also revised payrolls
upward for the last few
months of 2012, particularly
for November and December.
Last year, employment growth
averaged 181,000 per month,
higher than the roughly
153,000 per month originally
estimated, the result of the
BLS’s usual monthly revisions
for November and December
and the annual benchmark
revision, which raised 10
months’ payroll numbers over
the year. More detail on the
benchmark revision is on the
next page.
157
-1000
-800
-600
-400
-200
0
200
400
600
2009 2010 2011 2012 2013
Other Services & Gov Leisure & Hosp Professional & Business
Retail Trade Goods Producing Total nonfarm
Contributions to Change in Nonfarm Payroll Employment
thousands, SA
Source: U.S. Bureau of Labor Statistics through January 2013
• In January, the most significant payroll gains were seen in retail trade (up 33,000), construction (up 28,000), and health care (up 23,000). In
the chart above, construction takes up the vast majority of the gain in “Goods Producing” industries; manufacturing, the other large component
of the category, gained just 4,000 payrolls in January, mostly in the production of motor vehicles and parts.
11 Economic and Financial Highlights 2/6/2013
ADDITIONAL DETAIL
SUMMARY
LABOR MARKETS
Annually, the BLS releases its
benchmark revision. With this
release, seasonally adjusted
data from January 2008 have
been revised to include a
more comprehensive count of
payrolls. The chart to the right
compares the “pre-benchmark
payroll growth estimate” with
post-benchmark payroll
growth.
275
259
143
68 87
45
181
192
132
137 161
155
311
271
205
112
125
87
153
165
138
160
247
196
-100
-50
0
50
100
150
200
250
300
350
Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13
Pre-Benchmark Payroll Growth Estimate Post-Benchmark Payroll Growth
Difference (thous.)
Monthly Difference in Payrolls, Pre- and Post- Benchmark Revision
Thousands, SA, January 2012-December 2012 and January 2013
Source: Bureau of Labor Statistics
157
• See more information on the BLS’s benchmarking procedures, including methodology and an explanation of why benchmarks differ from
original estimates.
12 Economic and Financial Highlights 2/6/2013
SUMMARY
LABOR MARKETS
The unemployment rate
ticked up slightly to reach
7.9 percent in January. This
followed an unemployment
rate of 7.8 percent in
December 2012. Excluding
the effects of rounding, the
actual increase in the
unemployment rate was less
than 0.1 percentage point.
The labor force participation
rate stayed the same in
January. It has remained at
63.6 percent since November
2012, when it fell from 63.8
percent in October 2012.
63
64
65
66
67
68
2
4
6
8
10
12
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Unemployment and Labor Force Participation Rates percent, SA
Source: U.S. Bureau of Labor Statistics
Unemployment Rate (left axis)
January 2013 = 7.9%
Participation Rate (right axis)
January 2013 = 63.6%
through January 2013
13 Economic and Financial Highlights 2/6/2013
ADDITIONAL DETAIL
SUMMARY
MANUFACTURING
The Institute for Supply
Management’s (ISM)
Purchasing Managers Index
(PMI) of manufacturers gained
2.9 index points in January to
reach 53.1, its highest point
since April 2012.
The gains were broadly based
across the index’s
components. The new orders
index, which is seen as a
leading indicator of future
manufacturing activity, gained
3.6 index points to reach 53.3.
20
30
40
50
60
70
2009 2010 2011 2012 2013
Purchasing Managers Index
New Orders
Production
Employment
ISM Manufacturing Purchasing Managers Index (PMI) Index: 50 or greater indicates expansion, less than 50 indicates contraction; SA
Source: Institute for Supply Management through January 2013
• Other components of the PMI that gained ground in January included production (up 1.0 index point to reach 53.6 points) and employment (up
2.1 index points to reach 54.0 points). The inventories index also surged 8.0 index points to reach 51.0 points, taking that component from
contraction to expansion territory in the index.
• Supplies were delivered just a bit more slowly in January than in December 2012, according to the index. The supplier-deliveries measure
slipped just 0.1 index point to reach 53.6 points in January.
14 Economic and Financial Highlights 2/6/2013
SUMMARY
TREASURY YIELDS
0.0
0.2
0.4
0.6
0.8
1.0
1.0
1.5
2.0
2.5
3.0
3.5
1-Nov 8-Nov 15-Nov 22-Nov 29-Nov 6-Dec 13-Dec 20-Dec 27-Dec 3-Jan 10-Jan 17-Jan 24-Jan 31-Jan 7-Feb
U.S. Treasury Yields daily, percent
10-yr (LHS) 30-yr (LHS) 5-yr (RHS) 2-yr (RHS)
December FOMC
Source: Bloomberg
through February 6, 2013
Fiscal Cliff Deal January FOMC
15 Economic and Financial Highlights 2/6/2013
Longer-term U.S. Treasury
yields are little changed since
the January FOMC meeting.
The 10-year note and the 30-
year bond now yield about 1.98
percent and 3.19 percent,
respectively.
However, since the December
12 FOMC statement—which
reiterated the Committee’s
intention to purchase $45 billion
of Treasury securities as well as
$40 billion of agency MBS per
month—and following the fiscal
cliff deal, Treasury yields have
moved noticeably higher. The
30-year bond is up 30 bps, and
the 10-year higher by 28 bps,
since December 12; with
increases of 24 bps and 22 bps,
respectively, since the fiscal cliff
deal.
SUMMARY
BREAKEVEN INFLATION RATE
2.89
1.75
2.00
2.25
2.50
2.75
3.00
3.25
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13
Barclays 5-year/5-year forward breakeven inflation rate percent
Source: Barclays Capital through February 6, 2013
January FOMC
16 Economic and Financial Highlights 2/6/2013
The Barclays 5-year/5-year
forward breakeven inflation rate
is currently at 2.89 percent,
roughly stable since September
2012 but getting close to the
peak of readings since January
2011.
(Note: The breakeven inflation
rate is a measure of expected
inflation derived from “nominal”
Treasury securities and their
“real” counterparts—inflation-
protected TIPS securities.)