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National Economic Conditions
THIRD QUARTER 2011
The U.S. Economy has now shown positive growth in nine consecutive quarters.
In its November press release, the Federal Open Market Committee (“FOMC”)
acknowledged that information received since its previous meeting in September
“indicates that economic growth strengthened somewhat in the third quarter,
reflecting in part a reversal of the temporary factors that had weighed on growth
earlier in the year.”
INTRODUCTION
The U.S. Economy has now shown positive growth in nine consecutive quarters. In its November press release, the
Federal Open Market Committee (“FOMC”) acknowledged that information received since its previous meeting in
September “indicates that economic growth strengthened somewhat in the third quarter, reflecting in part a
reversal of the temporary factors that had weighed on growth earlier in the year.”1 Despite this, the FOMC noted
several factors that acted as barriers to growth:

The labor market shows continued signs of weakness, with hiring and employee wages down,

The unemployment rate remains elevated,

Nonresidential investment remains largely subdued, and

The housing sector has shown few signs of recovery in the past several quarters.
Factors that helped contribute to the expansion in the economy were also mentioned, including:

Acceleration in overall household spending in recent months,

A continued expansion of total business investment in equipment and software,

Moderate current inflation, and

Longer-term inflation projections have remained steady.2
During its September meeting (to which the FOMC made no amendment in its November press release),
participants acknowledged that economic expansion remained slow and, further, were uncertain (but optimistic)
that information received during the intermeeting period was not indicative of a contraction in activity:
Looking ahead, participants continued to expect some pickup in the pace of recovery
over coming quarters but anticipated that the unemployment rate would decline only
gradually. They generally judged that risks to the growth outlook, including strains
in global financial markets, were significant and tilted to the downside…Participants
continued to see the outlook for growth and inflation as more uncertain that usual.3
Through its November press release, members of the FOMC publicly announced that they had agreed not to make
changes to the existing federal funds rate (at 0 to ¼ percent) and anticipated that future economic conditions will
likely mandate that the federal funds rate remain at abnormally low levels through mid-2013, if not longer.4
GROSS DOMESTIC PRODUCT
The most commonly cited measure of general economic conditions is growth in real GDP. Real GDP is the real
(adjusted for inflation) dollar value of all goods and services produced within the country in a given period. The
Bureau of Economic Analysis (“BEA”) quarterly measure of real GDP is seasonally adjusted at annual rates (SAAR),
which means that the figure has been annualized with seasonal effects removed.
Real GDP increased 2.5% (SAAR) in the third quarter of 2011 from $13,271.80 billion to $13,352.80 billion after
increases of 2.3%, 0.4%, and 1.3% during the fourth quarter of 2010, and the first and second quarter of 2011,
respectively. Real GDP increased 3.0% in 2010, after annual changes of 1.9%, -0.3%, and -3.5% in 2007, 2008, and
2009, respectively.5
The increase in real GDP in the third quarter primarily reflected positive
contributions from personal consumption expenditures (PCE), nonresidential fixed
investment, exports, and federal government spending that were partly offset by
negative contributions from private inventory investment and state and local
government spending. Imports, which are a subtraction in the calculation of GDP,
increased.
The acceleration in real GDP in the third quarter primarily reflected accelerations in
PCE and in nonresidential fixed investment and a smaller decrease in state and local
government spending that were partly offset by a larger decrease in private
inventory investment.6
National Economic Conditions - Third Quarter 2011
2
In November 2011, the FOMC predicted that real GDP growth would have a central tendency between 1.6% and
1.7%, between 2.5% and 2.9%, and between 3.0% and 3.5% during 2011, 2012, and 2013, respectively. In its longerrun projection, the FOMC predicted that real GDP growth would have a central tendency between 2.4% and 2.7%
(consistent with its previous longer-run projection).7
The third quarter Philadelphia Federal Reserve Survey of Professional Forecasters (the “Philly Survey”) predicts
real GDP growth of 1.6%, 1.8%, 1.9%, and 2.1% (SAAR) for the fourth quarter of 2011 and the first, second and third
quarters of 2012, respectively. The Philly Survey further predicts annual GDP growth of 2.0%, 2.1% during 2011
and 2012, respectively.8
The September Wall Street Journal Survey of Economic Forecasters (the “WSJ Survey”) estimates that real GDP
grew at an annualized rate of approximately 2.0% in the third quarter of 2011. In addition, the WSJ Survey predicts
growth rates of 2.1%, 2.1%, 2.4%, and 2.6% (SAAR), for the fourth quarter of 2011 and the first, second, and third
quarters of 2012, respectively. The WSJ Survey projects GDP will experience annual growth rates of 1.5% and 2.4%
in 2011 and 2012, respectively.9
A New York Times article, published subsequent to the government’s release of third quarter (2011) GDP,
acknowledges the importance of economic development (even if it is slow development) at this time, but reminds its
readers that the path to economic recovery is still a long trek ahead:
The nation’s total output of goods and services grew at an annual rate of 2.5 percent
from July to September, almost double the 1.3 percent rate in the previous
quarter…The pace is not brisk enough, however, to recover the ground lost in the
economic bust, relieve unemployment or even entirely dispel fears of a second
recession.
Economists do not expect growth to accelerate in the next few quarters to the point
that it drives the unemployment rate well below 9 percent.10
However, due perhaps to a lack of encouraging economic news over the past several quarters, some have preferred to
look at the positives that can be taken from the government’s report:
“There was some strength across the board,” said Ellen Zentner, and economist at
Nomura. “Now we have some momentum heading into the fourth quarter.”
Economists surveyed by MarketWatch had projected that growth would reach 2.8%.
Wall Street reacted favorably to the news. The Dow Jones Industrial Average jumped
more than 200 points to cross the 12,000 mark, encouraged by the GDP report and by
a new plan by European leaders to fix the euro-zone’s sovereign-debt crisis.11
National Economic Conditions - Third Quarter 2011
3
Real GDP growth over time: 12
Real GDP Growt h
Historical
Philly Survey
WSJ Survey
FOMC Range
FOMC Central Tendency
6%
Re al GD P Grow th
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*2012*2013*2014*Long
Run*
Ye ar
PRICES AND INFLATION
Inflation is the increase in the general price level of goods and services in an economy. The Consumer Price Index
(CPI) is the most commonly cited measure of inflation. The CPI measures the price of a standard market basket of
goods designed to be representative of the items purchased by a typical urban consumer.
The CPI increased at an annualized rate of approximately 1.2% during the third quarter of 2011, from 224.3 in the
second quarter of 2011 to 227.0 (1982-1984=100, seasonally adjusted). The third quarter increase came after growth
rates of 0.8%, 1.5%, and 0.4% in the fourth quarter of 2010 and the first and second quarters of 2011, respectively.
Additionally, the CPI increased approximately 3.9% over the last twelve months (from September 2010 to
September 2011), compared to annual growth rates in the CPI (not seasonally adjusted, “NSA”) of 2.8%, 3.8%, -0.4%,
and 1.6% during 2007, 2008, 2009, and 2010, respectively.13
The Philly Survey anticipates annualized growth in the CPI of 2.0%, 2.0%, 2.1%, and 2.0% (SAAR) for the fourth
quarter of 2011 and the first, second, and third quarters of 2012, respectively. Furthermore, the Philly Survey
predicts annual (quarter four over quarter four) CPI growth of 3.2%, 2.0%, and 2.1% for 2011, 2012, and 2013,
respectively.14
The WSJ Survey predicts the CPI will grow 3.1% over the twelve months ended December 2011and 2.2% in the
twelve months ended June and December 2012, respectively.15
Economists at Bank of America/Merrill Lynch (“BAC economists”) expect the CPI to increase 1.2%, 1.2%, and 1.5%
(SAAR) during the fourth quarter of 2011 and first and second quarters of 2012, respectively. In addition, BAC
economists project annual CPI growth rates of 3.2%, 1.7% and 1.5% for 2011, 2012 and 2013, respectively.16
The CPI for food increased from 227.5 in the second quarter of 2011 to 230.7 in the third quarter of 2011 (1982–
1984=100), a 1.4% increase. The third quarter increase followed changes of 0.4%, 1.8%, and 1.0% during the fourth
quarter of 2010 and first and second quarters of 2011, respectively. The CPI for food increased 4.7% in the last
twelve months (from September 2010 to September 2011). In comparison, the CPI for food (NSA) had annual growth
rates of 4.0%, 5.5%, 1.8%, and 0.8% during 2007, 2008, 2009, and 2010, respectively.17
The CPI for energy increased 6.1% in the third quarter of 2011 from 237.9 in the second quarter of 2011 to 252.3
(1982–1984=100). The third quarter increase followed changes of 6.7%, 9.2%, and -3.3% in the fourth quarter of 2010
and the first and second quarters of 2011, respectively. The CPI for energy increased approximately 19.6% in the
last twelve months (from September 2010 to September 2011). In comparison, the CPI for energy (NSA) experienced
annual growth rates of 5.5%, 13.9%, -18.4%, and 9.5% in 2007, 2008, 2009, and 2010, respectively.18
National Economic Conditions - Third Quarter 2011
4
Major Consum er Price Indices
Food
Energy
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
Sep-08
Jun-08
Mar-08
Dec-07
Sep-07
Jun-07
Mar-07
Dec-06
275
260
245
230
215
200
185
170
155
1400
Sep-06
Inde x Le ve l
All Items
Month
19
At its November meeting, the FOMC acknowledged that certain measures of consumer price inflation had risen in
2011 due in large part to increases in the prices of oil and other commodities, but expect both core and headline
inflation to stabilize over the near term outlook period, stating:
The Committee also anticipates that inflation will settle, over coming quarters, at
levels at or below those consistent with the Committee’s dual mandate as the effects
of past energy and other commodity price increases further dissipate. However, the
Committee will continue to pay close attention to the evolution of inflation and
inflation expectations.20
The Producer Price Index (PPI) is another commonly cited measure of inflation. The PPI measures the price of a
standard market basket of goods designed to be representative of the items purchased by a typical producer. The
PPI for all finished goods increased 1.0% in the third quarter of 2011, from 191.0 in the second quarter of 2011 to
192.9 (1982=100). The third quarter increase followed increases of 1.9%, 3.2%, and 0.8% in the fourth quarter of
2010 and first and second quarters of 2011, respectively. The PPI for all finished goods increased 7.0% in the last
twelve months (from September 2010 to September 2011). In comparison, the PPI for all finished goods (NSA)
experienced annual changes of 3.9%, 6.3%, -2.6%, and 4.2% during 2007, 2008, 2009, and 2010, respectively.21
Producer Price Index
Mar-11
Nov-10
Jul-10
Mar-10
Nov-09
Jul-09
-12%
Mar-09
0
140
Nov-08
-8%
Jul-08
150
Mar-08
-4%
Nov-07
160
Jul-07
0%
Mar-07
170
Nov-06
4%
Jul-06
180
Mar-06
8%
Nov-05
190
Jul-05
12%
Ye ar ove r Ye ar Change
PPI
200
Mar-05
Inde x Le ve l
Year over Year Change
Month
22
National Economic Conditions - Third Quarter 2011
5
The average price per barrel of oil decreased 11.0% in the third quarter of 2011 from an average of $96.26 in June
2011 to an average of $85.63 in September 2011. The price per barrel of oil increased 13.8% in the last twelve
months (from September 2010 to September 2011). In comparison, the average price per barrel of oil had an annual
growth rate of 9.5%, 37.8%, -37.8%, and 28.3% in 2007, 2008, 2009, and 2010, respectively.23
The WSJ Survey projects the price per barrel of oil will be $88.95 by December 31, 2011. It further projects the price
per barrel of oil to be $89.98 and $92.82 by June 30 and December 31, 2012, respectively.24
IBISWorld expects that the price per barrel of oil will increase 31.4% in 2011. Furthermore, IBISWorld predicts the
price per barrel of oil will experience annual growth rates of 0.7%, -8.8%, and 11.8% in 2012, 2013, and 2014,
respectively. Over the five years to 2016, IBISWorld expects the price per barrel of oil to grow at an average
annualized rate of approximately 3.0%.25
National Economic Conditions - Third Quarter 2011
6
Average Annual Price of Crude Oil
Historical
IBISWorld
-45%
2016*
2010
Grow th
$0
2015*
-30%
2014*
$20
2013*
-15%
2012*
$40
2011*
0%
2009
$60
2008
15%
2007
$80
2006
30%
2005
$100
2004
45%
2003
$120
2002
60%
2001
$140
2000
Price pe r Barre l
% Growth
Ye ar
26
TRADE DEFICIT
Real net exports increased (became less negative) from a second quarter total of -$416.4 billion (SAAR) to -$409.4
billion in the third quarter of 2011. The 2011 third quarter level of real net exports was preceded by real net exports
of -$414.2 billion and -$424.4 billion in the fourth quarter of 2010 and the first quarter of 2011, respectively. Prior to
the end of 2010, real net exports had consistently increased, posting annual totals of -$648.8 billion, -$494.8 billion,
and -$358.8 billion in 2007, 2008, and 2009, respectively. However, the prevailing trend reversed in 2010 with real
net exports decreasing to -$421.8 billion.27
The Philly Survey predicts real net exports will be -$396.5 billion, -$394.6 billion, and -$390.2 billion in the fourth
quarter of 2011 and the first and second quarters of 2012, respectively. On an annual basis, the Philly Survey
projects real net exports will increase from -$421.8 billion in 2010 to -$406.7 billion in 2011. However, in 2012, the
Philly Survey expects real net exports to decrease to -$391.5 billion.28
BAC economists project that real net exports will reach -$412.0, -$375.0, and -$379.0 billion during 2011, 2012, and
2013, respectively.29
Real Net Export s
Philly Survey
BAC
2012 - II*
2011 - IV*
2011 - II
2010 - IV
2010 - II
2009 - IV
2009 - II
2008 - IV
2008 - II
2007 - IV
2007 - II
2006 - IV
2006 - II
2005 - IV
2005 - II
2004 - IV
2004 - II
2003 - IV
2003 - II
2002 - IV
2002 - II
2001 - IV
2001 - II
$ Billions
Historical
-3000
-350
-400
-450
-500
-550
-600
-650
-700
-750
-800
Q uarte r
30
National Economic Conditions - Third Quarter 2011
7
INTEREST RATES
Interest rates remained stable during the third quarter of 2011. The discount window rate remained constant at
0.75% as it had for the majority of 2010 and the first half of 2011. The 0.75% rate is an increase from the rate of
interest prevalent throughout 2009 (0.50%), a historically low rate that was the result of a downward trend that
began in July 2007 (6.25%).31
The federal funds rate decreased 1 basis point in the third quarter of 2011 from 0.09% in second quarter of 2010 to
0.08%. The current rate represents a decrease of 11 basis points over the last twelve months (from September 2010
to September 2011).32 In its November 2011 press release, the FOMC stated that it would maintain its target range
for the federal funds rate (between 0 and ¼) and reaffirmed its expectation that generally depressed economic
conditions “are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013”.33
The yield to maturity on 20-year U.S. Treasury bonds decreased 108 basis points in the third quarter of 2011, from
3.91% in the second quarter of 2011 to 2.83%. The yield decreased 64 basis points during the last twelve months
(from September 2010 to September 2011).34 The average yield to maturity on Aaa rated (Moody’s) corporate bonds
decreased 90 basis points from 4.99% in June 2011 to 4.09% in September 2011. The yield decreased 44 basis points
during the last twelve months.35
Int erest Rat es
Federal Funds
Discount Window
20 Year Treasury
Effe ctive A nnual Rate
8%
7%
6%
5%
4%
3%
2%
1%
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
Mar-07
Sep-06
Mar-06
Sep-05
Mar-05
Sep-04
Mar-04
Sep-03
Mar-03
Sep-02
Mar-02
Sep-01
0%
Month
36
FINANCIAL MARKETS
The Dow Jones Industrial Average (DJIA) decreased 12.1% in the third quarter of 2011 from 12,414.34 on June 30,
2011 to 10,913.38 on September 30, 2011. The third quarter decrease followed increases of 7.3%, 6.4%, and 0.8% in
the fourth quarters of 2010 and the first and second quarters of 2011, respectively. The DJIA increased 1.2% in the
last twelve months (from September 30, 2010 to September 30, 2011). In comparison, the DJIA had annual
(December to December) growth rates of 6.4%, -33.8%, 18.8%, and 11.0% during 2007, 2008, 2009, and 2010,
respectively. The DJIA peaked on October 11, 2007 at 14,279.96 and then reached a recent low of 6,440.08 on March
9, 2009.37
The S&P 500 decreased 14.3% from 1,320.64 on June 30, 2011 to 1,131.42 September 30, 2011. The third quarter
decrease in the S&P followed changes of 10.2%, 5.4%, and -0.4% during the fourth quarter of 2010 and the first and
second quarters of 2011, respectively. The index decreased 0.9% in the last twelve months (from September 30, 2010
to September 30, 2011). Historically, the index had annual changes (December to December) of 3.5%, -38.5%, 23.5%,
and 12.8% in 2007, 2008, 2009, and 2010, respectively. The S&P 500 hit its recent high of 1,576.09 on October 11,
2007 and its recent low of 666.79 on March 6, 2009.38
National Economic Conditions - Third Quarter 2011
8
The NASDAQ Composite Index decreased 12.9% from 2,773.52 on June 30, 2011 to 2,415.4 on September 30, 2011.
The third quarter decrease followed changes of 12.0%, 4.9%, and -0.3% in the fourth quarter of 2010 and the first
and second quarters of 2011, respectively. The index increased 2.0% in the last twelve months (from September 30,
2010 to September 30, 2011). In comparison, the NASDAQ had annual changes of 9.8%, -40.5%, 43.9%, and 16.9% in
2007, 2008, 2009, and 2010, respectively. The NASDAQ reached its recent high of 2,861.51 on October 31, 2007 and
its recent low of 1,265.52 on March 9, 2009.39
Financial Market Indices
S&P 500
NASDAQ
15,000
3,000
12,000
2,400
9,000
1,800
6,000
1,200
3,000
600
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
Sep-06
Mar-07
Mar-06
Sep-05
Sep-04
Mar-05
Mar-04
Sep-03
Mar-03
Sep-02
Mar-02
0
Sep-01
0
S&P and N A SD A Q Inde x Value
D JIA Inde x Value
DJIA
Month
40
HOUSING, CONSTRUCTION, AND REAL ESTATE
Average mortgage rates for 30-year fixed mortgages decreased 40 basis points in the third quarter of 2011, from
4.51% (the average rate for June 2011) to 4.11% (the average rate for September 2011). Additionally, average
mortgage rates decreased 24 basis points during the last twelve months (from September 2010 to September 2011).41
According to IBISWorld, the average annual 30-year conventional mortgage rates during 2009 and 2010 were
approximately 5.04% and 4.69%, respectively. Moreover, IBISWorld projects average annual 30-year mortgage rates
of 4.50%, 4.12%, 4.43%, 4.95%, 5.22%, and 5.30% during the five years to 2016, respectively.42
National Economic Conditions - Third Quarter 2011
9
Average 3 0 - Year Fixed Mort gage Rat e
7.5%
Effe ctive A nnual Rate
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
Mar-07
Sep-06
Mar-06
Sep-05
Mar-05
Sep-04
Mar-04
Sep-03
Mar-03
Sep-02
Mar-02
Sep-01
0.0%
3.5%
Month
43
With mortgage rates at or near historically low levels, third quarter (2011) statistics indicate that there was some
improvement made in the nation’s housing market following a disappointing second quarter. Housing starts
increased 7.0% by the end of the third quarter of 2011, from 615,000 starts (SAAR) in June 2011 to 658,000 starts in
September 2011. The third quarter increase followed changes of -11.9%, 12.7%, and 3.7% during the fourth quarter
of 2010 and the first and second quarters of 2011, respectively. Annual housing starts increased 10.2% over the last
12 months (from September 2010 to September 2011). In comparison, housing starts experienced annual (NSA)
rates of growth of -24.8%, -33.2%, -38.8%, and 5.9% during 2007, 2008, 2009, and 2010, respectively.44
The Philly Survey projects total housing starts will reach an annual rate of approximately 610,000 in the fourth
quarter of 2011, and then grow to starts totaling 630,000 and 680,000 in the first and second quarters of 2012,
respectively. The Philly Survey estimates that in 2010 there were approximately 580,000 housing starts. In addition
to its quarterly projections, the Philly Survey predicts annual housing starts will total 590,000 and 700,000 in 2011
and 2012, respectively.45 Housing starts hit a recent peak of 2.3 million (SAAR) in January 2006.46
As of September, the WSJ Survey predicts that annual housing starts will reach 600,000 and 730,000 in 2011 and
2012, respectively.47 In comparison, BAC economists predict annual housing starts will reach 587,000, 622,000, and
659,000 in 2011, 2012, and 2013, respectively.48
Houses sold increased 3.3% by the end of the third quarter of 2011, from 303,000 (SAAR) houses sold in June 2011
to 313,000 in September 2011. This increase came after changes of 4.7%, -7.9%, and -0.7% during the fourth quarter
of 2010 and the first and second quarters of 2011, respectively. The August 2010 rate of 278,000 houses sold was the
lowest in recorded history (with data dating back to January 1959). Houses sold annually (NSA) decreased 13.9% in
2010, compared to decreases of 26.2%, 37.5%, and 22.7% during 2007, 2008, and 2009, respectively.49
Houses for sale decreased 1.8% by the end of the third quarter of 2011, from 166,000 houses for sale in June 2011 to
163,000 in September 2011. The third quarter drop in the number of houses for sale followed decreases of 5.9%,
6.3%, and 6.7% in the fourth quarter of 2010 and the first and second quarters of 2011, respectively. The total
number of houses for sale at the conclusion of the third quarter of 2011 (163,000) is the lowest figure in a recorded
history that dates back to January 1963. Houses for sale (NSA) decreased at an annual rate of 19.0% in 2010,
following changes of -7.6%, -29.0%, and 34.1% in 2007, 2008, and 2009, respectively.50
National Economic Conditions - Third Quarter 2011
10
The months of supply of houses for sale represents the number of months it would take to sell all of the houses
currently up for sale at the existing sales rate (seasonally adjusted). The months of supply of houses for sale
decreased from 6.6 months in June 2011 to 6.2 months in September 2011.51 The months of supply of houses for sale
decreased 19.5% over the twelve months ended September 2011,52 compared to annual rates of change (NSA) of
25.1%, 13.5%, -14.8%, and -5.9% for the four years to 2010, respectively.53
Housing Market Indicat ors
For Sale
Months of Supply
0.0
Sep-11
0
Mar-11
1.8
Sep-10
300
Mar-10
3.5
Sep-09
600
Mar-09
5.3
Sep-08
900
Mar-08
7.0
Sep-07
1,200
Mar-07
8.8
Sep-06
1,500
Mar-06
10.5
Sep-05
1,800
Mar-05
12.3
Sep-04
2,100
Mar-04
14.0
Months of Supply
Sold
2,400
Sep-03
Thousands
Starts
Month
54
UNEMPLOYMENT
The average unemployment rate decreased 10 basis points in the third quarter of 2011, from 9.2% in the second
quarter of 2011 to 9.1%. Prior to its third quarter decrease the unemployment rate decreased 20 and 60 basis points
in the fourth quarter of 2010 and first quarter of 2011, respectively, but subsequently increased 40 basis points in
the second quarter of 2011. In addition, the average unemployment rate decreased 50 basis points in the last twelve
months (from September 2010 to September 2011). The average annual unemployment rate (NSA) had basis point
increases of 120, 350, and 30 in the three years to 2010, respectively.55 In November 2011, the FOMC announced
that the unemployment rate would have central tendencies between 9.0% and 9.1%, between 8.5% and 8.7%,
between 7.8% and 8.2%, and between 6.8% and 7.7% during 2011, 2012, 2013, and 2014, respectively. The FOMC
projects the longer-run central tendency for the unemployment rate will be between 5.2% and 6.0%.56
The Philly Survey projects average annual unemployment rates of 9.0%, 8.6%, 8.1%, and 7.6% over the four years to
2014, respectively.57
The WSJ Survey predicts the unemployment rate will be 9.1% at December 2011, with the rate declining over the
course of the next year to 8.9% at June 2012 and 8.6% at December 2012.58 In comparison, BAC economists project
the unemployment rate will average 9.1%, 9.2% and 9.3% in 2011, 2012, and 2013, respectively.59
A WSJ MarketWatch article published on the heels of the government’s release of third quarter (2011) GDP
attempts to rationalize the optimism incited by the reported economic expansion by pointing out some obvious areas
of concern, including unemployment:
...Yet faster growth in the third quarter doesn’t offer much relief to millions of
Americans facing economic hardship. More than 16 million people want a full-time
job but can’t find one, while millions of others owe more on their mortgages than
their houses are worth.
While welcoming faster growth, White House spokesman Jay Carney on Thursday
said “it is not good enough.” He noted that economists believe the U.S. has to expand
much faster than 2.5% to significantly lower the nation’s 9.1% unemployment rate.60
National Economic Conditions - Third Quarter 2011
11
Unem ploym ent Rat e
Une m ploym e nt Rate
Historical
Philly Survey
WSJ Survey
FOMC Range
FOMC Central Tendency
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*2012*2013* Long
Run*
Ye ar
61
FORWARD LOOKING INDICATORS
The Index of Consumer Sentiment (ICS) is a measure of overall consumer expectations and a predictor of consumer
spending and economic conditions. A higher ICS indicates that consumers have higher confidence in the economy
and are consequently more likely to spend. The ICS was estimated to be 59.4 (1966=100) in September 2011, a
16.9% decrease from the June 2011 ICS of 71.5. The third quarter decrease in consumer sentiment followed changes
of 9.2%, -9.4%, and 5.9% in the fourth quarter of 2010 and the first and second quarters of 2011, respectively. In the
twelve months ended September 2011, the ICS decreased 12.9%. In comparison, the ICS experienced annual
(December to December) growth rates of -17.7%, -20.4%, 20.6%, and 2.8% in 2007, 2008, 2009, and 2010,
respectively.62
Index of Consum er Sent im ent
110
100
Inde x Value
90
80
70
60
50
Month
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
Mar-07
Sep-06
Mar-06
Sep-05
Mar-05
Sep-04
Mar-04
Sep-03
Mar-03
Sep-02
Sep-01
Mar-02
Mar-01
Sep-00
400
63
National Economic Conditions - Third Quarter 2011
12
Offering an explanation as to why consumer sentiment has been at or near records lows over the past several
months, Richard Curtin, the Survey of Consumers chief economist, proposed the following:
Consumers have always trusted the government to initiate policies that would foster
renewed growth in jobs and incomes. The widespread distrust of the President,
Congress, and the Federal Reserve is now an important cause of pessimism. The
upcoming debates about spending cuts and tax hikes surrounding the budget
resolution will increase uncertainty and cause consumers to become even more
prudent spenders. Although renewed downturn in the economy has a 50-50 chance of
starting around the start of 2012, it is even more likely that growth will not be robust
enough to restore consumer optimism about their job and income prospects.64
The Conference Board Leading Economic Index (LEI) is a signalling measure of the business cycle in which cyclical
turning points of the LEI have historically taken place “before those in aggregate economic activity.” The LEI is an
average of ten “leading” indicators.65 The LEI increased 1.0% by the end of the third quarter of 2011, from 115.3 in
June 2011 to 116.4 (2004=100). The third quarter increase followed increases of 2.2%, 1.6%, and 1.1% during the
fourth quarter of 2010 and the first and second quarters of 2011, respectively. The LEI increased 5.9% in the twelve
months ended September 2011.66
Leading Econom ic Index
118
115
Inde x Value
112
109
106
103
100
97
Jul-11
May-11
Mar-11
Jan-11
Nov-10
Sep-10
Jul-10
May-10
Mar-10
Jan-10
Nov-09
Sep-09
Jul-09
May-09
Mar-09
Jan-09
Nov-08
Sep-08
940
Month
67
National Economic Conditions - Third Quarter 2011
13
The following excerpt regarding the release of September’s LEI was offered by Ataman Ozyildirim, an economist at
The Conference Board:
September data shows moderating growth in both the LEI and the CEI. The
weaknesses among the leading indicator components have become slightly more
widespread in September…The slow pace in the LEI suggests a growing chance that
this sluggish economy is going to be here for a while.
Ken Goldstein, another economist with The Conference Board, added the following:
The LEI is pointing to soft economic conditions through the end of 2011. There is a
risk that already low confidence – consumer, business and investor – could weaken
further, putting downward pressure on demand and tipping the economy into
recession. The probability of a downturn starting over the next few months remains
at about 50 percent.68
INDUSTRIAL PRODUCTION
The Total Industrial Production Index (a measure of total output from industrial companies) increased 1.3% in the
third quarter of 2011, from 92.88 during the second quarter of 2011 to 94.05 (2007=100, seasonally adjusted). The
third quarter increase in Industrial Production followed changes of 0.8%, 1.2%, and 0.1% in the fourth quarter of
2010 and the first and second quarters of 2011, respectively. The index increased 3.3% in the last twelve months
(from the third quarter of 2010 to the third quarter of 2011). Comparatively, the index had annual growth rates
(NSA) of 2.7%, -3.7%, -11.2, and 5.3% in 2007, 2008, 2009, and 2010, respectively.69
The Philly Survey predicts the index will increase 3.9%, 3.1%, and 3.3% in the fourth quarters of 2011 and the first
and second quarters of 2012, respectively. Furthermore, the Philly Survey projects the index to grow at an annual
rate of 3.2% during 2011.70
BAC economists predict the index will experience annual changes of 3.9%, 1.8%, and 1.0% in 2011, 2012, and 2013,
respectively.71
The capacity utilization rate measures the usage of the total production capacity for 89 detailed U.S. industries (71
in manufacturing, 16 in mining, and 2 in utilities). The capacity utilization rate is calculated by dividing the
seasonally-adjusted output index by the capacity index of these industries.72
The capacity utilization rate increased 72 basis points in the third quarter of 2011 (to 77.4%), up from
approximately 76.6% in the second quarter of 2011. The third quarter increase came after basis point changes of 60,
72, and -16 in the fourth quarter of 2010 and the first and second quarters of 2011, respectively. The capacity
utilization rate increased 188 basis points in the last twelve months (from September 2010 to September 2011).
Historically, the rate had annual basis point changes of 60, -321, -861, and 530 in the years 2007 through 2010,
respectively.73
BAC economists predict the capacity utilization rate will reach 77.1%, 78.1%, and 78.7% in 2011, 2012, and 2013,
respectively.74
National Economic Conditions - Third Quarter 2011
14
Indust rial Product ion and Capacit y Ut ilizat ion
2011 - II
2010 - IV
2010 - II
2009 - IV
2009 - II
2008 - IV
0%
64%
2008 - II
67%
800
2007 - IV
83
2007 - II
70%
2006 - IV
86
2006 - II
73%
2005 - IV
89
2005 - II
76%
2004 - IV
92
2004 - II
79%
2003 - IV
95
2003 - II
82%
2002 - IV
98
2002 - II
85%
Capacity Utilization
Capacity Utilization
101
2001 - IV
Industrial Production
Industrial Production
Q uarte r
75
DISCLAIMER STATEMENT:
This Decosimo Advisory Services National Economic Conditions report summarizes general economic conditions as
of September 30, 2011. It was prepared as of November 4, 2011. Information was gathered from sources we believed
to be reliable using data available as of the date shown in the respective footnote. DAS accepts no responsibility for
the accuracy of information provided in this summary. No statement in this report is to be considered advice for any
purpose. It is the responsibility of the user of this report to verify the accuracy of the information herein and to
relate the information contained herein to the particular application of its use. Tables of Data referenced in
footnotes are available on request from Decosimo Advisory Services.
BoardofGovernorsoftheFederalReserveSystem.FederalReservePressRelease,November1‐2,2011.
http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm,accessed11/4/2011.
2BoardofGovernorsoftheFederalReserveSystem.FederalReservePressRelease,November1‐2,2011.
http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm,accessed11/4/2011.
3BoardofGovernorsoftheFederalReserveSystem.MinutesoftheFederalOpenMarketCommittee:Participants’ViewsonCurrentConditionsandthe
EconomicOutlook,September20‐21,2011.http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm,accessed11/4/2011.
4BoardofGovernorsoftheFederalReserveSystem.FederalReservePressRelease,November1‐2,2011.
http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm,accessed11/4/2011.
5U.S.DepartmentofCommerceBureauofEconomicAnalysis.HistoricalTable1.1.1.PercentChangefromPrecedingPeriodinRealGrossDomesticProduct
andHistoricalTable1.1.6.RealGrossDomesticProduct,ChainedDollars.http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected Y,accessed
11/4/2011.
6U.S.DepartmentofCommerceBureauofEconomicAnalysis.GrossDomesticProduct:3ndQuarter2011 AdvanceEstimate ;October27,2011.
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm,accessed11/4/2011.
7TheBoardofGovernorsoftheFederalReserveSystem.PressRelease:November2,2011.
http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20111102.pdf,accessed11/4/2011.
1
Note:
Projectionsofchangeinrealgrossdomesticproduct GDP andininflationarefromthefourthquarterofthepreviousyeartothefourthquarteroftheyearindicated.
PCEinflationandcorePCEinflationarethepercentageratesofchangein,respectively,thepriceindexforpersonalconsumptionexpenditures PCE andthepriceindex
forPCEexcludingfoodandenergy.Projectionsfortheunemploymentratearefortheaveragecivilianunemploymentrateinthefourthquarteroftheyearindicated.
Eachparticipant’sprojectionsarebasedonhisorherassessmentofappropriatemonetarypolicy.Longer‐runprojectionsrepresenteachparticipant’sassessmentofthe
rate to which each variable would be expected to converge under appropriate monetary policy and in the absence of further shocks to the economy. The April
projectionsweremadeinconjunctionwiththemeetingoftheFederalOpenMarketCommitteeonJune21‐22,2011.
1.Thecentraltendencyexcludesthethreehighestandthreelowestprojectionsforeachvariableineachyear.
2.Therangeforavariableinagivenyearconsistsofallparticipants’projections,fromlowesttohighest,forthatvariableinthatyear.
3.Longer‐runprojectionsforcorePCEinflationarenotcollected.
8SurveyofProfessionalForecasters,ThirdQuarter2011.FederalReserveBankofPhiladelphia.August12,2011.http://www.philadelphiafed.org/research‐
and‐data/real‐time‐center/survey‐of‐professional‐forecasters,accessed11/4/2011.
9 The Wall Street Journal. The Wall Street Journal Economic Forecasting Survey – September 2011. http://online.wsj.com/public/page/economic‐
forecasting.html,accessed11/4/2011.
10
Dewan, Shaila. The New York Times: “U.S. Economy Picks Up Pace, Averting a Stall,” October 27, 2011.
http://www.nytimes.com/2011/10/28/business/economy/us‐economy‐shows‐modest‐growth.html?_r 1&pagewanted all,accessed11/4/2011.
National Economic Conditions - Third Quarter 2011
15
Bartash, Jeffry. WSJ MarketWatch: “U.S. Economy Grows 2.5% in Third Quarter: Consumer Spending, Business Investment, and Exports Lead Charge.”
October27,2011.http://www.marketwatch.com/Story/story/print?guid 64AD2E4E‐008E‐11E1‐96DF‐002128040CF6,accessed11/4/2011.
12U.S.DepartmentofCommerceBureauofEconomicAnalysis.HistoricalTable1.1.1.PercentChangefromPrecedingPeriodinRealGrossDomesticProduct
andHistoricalTable1.1.6.RealGrossDomesticProduct,ChainedDollars.http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected Y,accessed
11/4/2011.Asterisk * denotesprojectionfrom:BoardofGovernorsoftheFederalReserveSystem.MinutesoftheFederalOpenMarketCommittee:Staff
ReviewoftheEconomicSituation,November1‐2,2011.http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm,accessed11/4/2011.
SurveyofProfessionalForecasters,ThirdQuarter2011.FederalReserveBankofPhiladelphia.ReleasedAugust12,2011.
http://www.philadelphiafed.org/research‐and‐data/real‐time‐center/survey‐of‐professional‐forecasters,accessed11/4/2011.
TheWallStreetJournal.TheWallStreetJournalEconomicForecastingSurvey–September2011.http://online.wsj.com/public/page/economic‐
forecasting.html,accessed11/4/2011.SeeTableNEC‐2,availableonrequestfromDAS.
TheBoardofGovernorsoftheFederalReserveSystem.PressRelease:November2,2011.
http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20111102.pdf,accessed11/4/2011.
13U.S.DepartmentofLaborBureauofLaborStatisticsDatabase.ConsumerPriceIndex–AllUrbanConsumers.http://www.bls.gov/cpi/#data,accessed
11/4/2011.
14SurveyofProfessionalForecasters,ThirdQuarter2011.FederalReserveBankofPhiladelphia.ReleasedAugust12,2011.
http://www.philadelphiafed.org/research‐and‐data/real‐time‐center/survey‐of‐professional‐forecasters,accessed11/4/2011.
15TheWallStreetJournal.TheWallStreetJournalEconomicForecastingSurvey–September2011.http://online.wsj.com/public/page/economic‐
forecasting.html,accessed11/4/2011.
16BankofAmerica/MerrillLynch.USEconomicWeekly,13October2011.http://corp.bankofamerica.com/publicpdf/products/abf/economic_weekly.pdf,
accessed11/4/2011.
17U.S.DepartmentofLaborBureauofLaborStatisticsDatabase.ConsumerPriceIndex–AllUrbanConsumers.http://www.bls.gov/cpi/#data,accessed
11/4/2011.
18U.S.DepartmentofLaborBureauofLaborStatisticsDatabase.ConsumerPriceIndex–AllUrbanConsumers.http://www.bls.gov/cpi/#data,accessed
11/4/2011.
19U.S.DepartmentofLaborBureauofLaborStatisticsDatabase.ConsumerPriceIndex–AllUrbanConsumers.http://www.bls.gov/cpi/#data,accessed
11/4/2011.SeeTableNEC‐3,availableonrequestfromDAS.
20BoardofGovernorsoftheFederalReserveSystem.PressRelease:November2,2011.http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm,
accessed11/4/2011.
21U.S.DepartmentofLaborBureauofLaborStatisticsDatabase.ProducerPriceIndex‐Commodities.http://www.bls.gov/ppi/,accessed11/4/2011.
22U.S.DepartmentofLaborBureauofLaborStatisticsDatabase.ProducerPriceIndex‐Commodities.http://www.bls.gov/ppi/,accessed11/4/2011.SeeTable
NEC‐3,availableonrequestfromDAS.
23EnergyInformationAdministration,OfficialEnergyStatisticsfromtheU.S.Government.Cushing,OKWTISpotPriceFOB DollarsperBarrel .Monthlydata
&AnnualData.http://tonto.eia.gov/dnav/pet/hist/LeafHandler.ashx?n PET&s RWTC&f M,accessed11/4/2011.SeeNEC‐3,availableonrequestfrom
DAS.
24TheWallStreetJournal.TheWallStreetJournalEconomicForecastingSurvey–September2011.http://online.wsj.com/public/page/economic‐
forecasting.html,accessed11/4/2011.
25IBISWorldBusinessEnvironmentReport:WorldPriceofCrudeOil.A5211,November,2011.http://www.ibisworld.com,accessed11/4/2011.
26EnergyInformationAdministration,OfficialEnergyStatisticsfromtheU.S.Government.Cushing,OKWTISpotPriceFOB DollarsperBarrel :Annualdata:
http://tonto.eia.gov/dnav/pet/hist/LeafHandler.ashx?n PET&s RWTC&f A,accessed11/4/2011.Asterisk * denotesprojectionfromIBISWorldBusiness
EnvironmentReport:WorldPriceofCrudeOil.A5211,November,2011.http://www.ibisworld.com,accessed11/4/2011.SeeTableNEC‐2,availableon
requestfromDAS.
27U.S.DepartmentofCommerceBureauofEconomicAnalysis.HistoricalTable1.1.6.RealGrossDomesticProduct,ChainedDollars.
http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected Y,accessed11/4/2011.
28SurveyofProfessionalForecasters,ThirdQuarter2011.FederalReserveBankofPhiladelphia.ReleasedAugust12,2011.
http://www.philadelphiafed.org/research‐and‐data/real‐time‐center/survey‐of‐professional‐forecasters/2011/spfq211.pdf,accessed11/4/2011.
29BankofAmerica/MerrillLynch.USEconomicWeekly,13October2011.http://corp.bankofamerica.com/publicpdf/products/abf/economic_weekly.pdf,
accessed11/4/2011.
11
30U.S.DepartmentofCommerceBureauofEconomicAnalysis.HistoricalTable1.1.1.PercentChangefromPrecedingPeriodinRealGrossDomesticProduct
andHistoricalTable1.1.6.RealGrossDomesticProduct,ChainedDollars.http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected Y,accessed
11/4/2011.Asterisk * denotesprojectionfromSurveyofProfessionalForecasters,ThirdQuarter2011.FederalReserveBankofPhiladelphia.Released
August12,2011.http://www.philadelphiafed.org/research‐and‐data/real‐time‐center/survey‐of‐professional‐forecasters/2011/spfq311.pdf,accessed
11/4/2011.BankofAmerica/MerrillLynch.USEconomicWeekly,13October2011.
http://corp.bankofamerica.com/publicpdf/products/abf/economic_weekly.pdf,accessed11/4/2011.SeeTablesNEC‐1andNEC‐2,availableonrequestfrom
DAS.
31FederalReserveBoardStatisticalReleaseHistoricalH.15SelectedInterestRates.
http://www.federalreserve.gov/releases/h15/data/Monthly/H15_DWPC_NA.txt,accessed11/4/2011.
32FederalReserveBoardStatisticalReleaseHistoricalH.15SelectedInterestRates.
http://www.federalreserve.gov/releases/h15/data/Monthly/H15_DWPC_NA.txt,accessed11/4/2011.
33TheBoardofGovernorsoftheFederalReserveSystemMinutesoftheFederalOpenMarketCommittee:PressRelease,November2,2011.
http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20110622.pdf,accessed11/4/2011.
34FederalReserveBoardStatisticalReleaseHistoricalH.15SelectedInterestRates.
http://www.federalreserve.gov/datadownload/Build.aspx?rel H15,accessed11/4/2011.
35FederalReserveBoardStatisticalReleaseHistoricalH.15SelectedInterestRates.
http://www.federalreserve.gov/datadownload/Build.aspx?rel H15,accessed11/4/2011.
36FederalReserveBoardStatisticalReleaseHistoricalH.15SelectedInterestRates.
http://www.federalreserve.gov/datadownload/Build.aspx?rel H15,accessed11/4/2011.SeeTableNEC‐4,availableonrequestfromDAS.
37Yahoo!Finance.HistoricalPrices‐Ticker:^DJI.http://finance.yahoo.com/,accessed11/4/2011.
38Yahoo!Finance.HistoricalPrices‐Ticker:^GSPC.http://finance.yahoo.com,accessed11/4/2011.
39Yahoo!Finance.HistoricalPrices‐Ticker:^IXIC.http://finance.yahoo.com,accessed11/4/2011.
National Economic Conditions - Third Quarter 2011
16
40Yahoo!Finance.HistoricalPrices‐Tickers:^DJI,^GSPC,and^IXIC.http://finance.yahoo.com,accessed11/4/2011.SeeTableNEC‐5,availableonrequest
fromDAS.
41FederalReserveBoardStatisticalReleaseHistoricalH.15SelectedInterestRates:ConventionalMortgages.
http://federalreserve.gov/releases/h15/data.htm,accessed11/4/2011.
42IBISWorldBusinessEnvironmentReport:30‐YearConventionalMortgageRate.September,2011.http://www.ibisworld.com/,accessed11/4/2011.
43FederalReserveBoardStatisticalReleaseHistoricalH.15SelectedInterestRates:ConventionalMortgages.
http://federalreserve.gov/releases/h15/data.htm,accessed11/4/2011.SeeTableNEC‐4,availableonrequestfromDAS.
44U.S.CensusBureau:NewResidentialSalesandNewResidentialConstruction.http://www.census.gov/cgi‐bin/briefroom/BriefRm,accessed11/4/2011.
45SurveyofProfessionalForecasters,ThirdQuarter2011.FederalReserveBankofPhiladelphia.ReleasedAugust12,2011.
http://www.philadelphiafed.org/research‐and‐data/real‐time‐center/survey‐of‐professional‐forecasters/2011/survq311.cfm,accessed11/4/2011.
46U.S.CensusBureau:NewResidentialSalesandNewResidentialConstruction.http://www.census.gov/cgi‐bin/briefroom/BriefRm,accessed11/4/2011.
47TheWallStreetJournal.TheWallStreetJournalEconomicForecastingSurvey–September2011.http://online.wsj.com/public/page/economic‐
forecasting.html,accessed11/4/2011.
48BankofAmerica/MerrillLynch.USEconomicWeekly,13October2011.http://www.ajs‐capital.com/pdf/1318955210‐ML.pdf,accessed11/4/2011.
49U.S.CensusBureau:HousesSold byRegion .http://www.census.gov/cgi‐bin/briefroom/BriefRm,accessed11/4/2011.
50U.S.CensusBureau:HousesforSale byRegion .http://www.census.gov/cgi‐bin/briefroom/BriefRm,accessed11/4/2011.
51U.S.CensusBureau.HousesforSale byRegion .http://www.census.gov/const/www/newresconstindex_excel.html,accessed11/4/2011.
52U.S.CensusBureau.HousesforSale byRegion .http://www.census.gov/const/www/newresconstindex_excel.html,accessed11/4/2011.
53DASCalculations.U.S.CensusBureau:HousesSold byRegion .http://www.census.gov/const/www/newressalesindex_excel.html,accessed11/4/2011.
U.S.CensusBureau:HousesforSale byRegion .http://www.census.gov/const/www/newressalesindex_excel.html,accessed11/4/2011.
54U.S.CensusBureau:NewPrivatelyOwnedHousingUnitsStarted.http://www.census.gov/const/www/newresconstindex_excel.html,accessedon
11/4/2011.U.S.CensusBureau:NewResidentialSalesandNewResidentialConstruction.http://www.census.gov/cgi‐bin/briefroom/BriefRm,accessed
11/4/2011.
HousesSold byRegion .http://www.census.gov/ftp/pub/const/sold_cust.xls,accessed11/4/2011.
HousesforSale byRegion .http://www.census.gov/const/www/newressalesindex_excel.html,accessed11/4/2011.SeeTableNEC‐6,availableonrequest
fromDAS.
55U.S.DepartmentofLaborBureauofLaborStatisticsDatabase:LaborForceStatisticsincludingtheNationalUnemploymentRate.http://www.bls.gov/cps/,
accessed11/4/2011.
56TheBoardofGovernorsoftheFederalReserveSystem:EconomicProjectionsofFederalReserveBoardMembersandFederalReserveBankPresidents,
November1‐2,2011.http://federalreserve.gov/monetarypolicy/files/fomcprojtabl20111102.pdf,accessed11/4/2011.
57SurveyofProfessionalForecasters,ThirdQuarter2011.FederalReserveBankofPhiladelphia.ReleasedAugust12,2011.
http://www.philadelphiafed.org/research‐and‐data/real‐time‐center/survey‐of‐professional‐forecasters/2011/survq311.cfm,accessed11/4/2011.
58TheWallStreetJournal.TheWallStreetJournalEconomicForecastingSurvey–September2011.http://online.wsj.com/public/page/economic‐
forecasting.html,accessed11/4/2011.
59BankofAmerica/MerrillLynch.USEconomicWeekly,13October2011.http://www.ajs‐capital.com/pdf/1318955210‐ML.pdf,accessed11/4/2011.
60Bartash,Jeffry.WSJMarketWatch:“U.S.EconomyGrows2.5%inThirdQuarter:ConsumerSpending,BusinessInvestment,andExportsLeadCharge.”
October27,2011.http://www.marketwatch.com/Story/story/print?guid 64AD2E4E‐008E‐11E1‐96DF‐002128040CF6,accessed11/4/2011.
61U.S.DepartmentofLaborBureauofLaborStatisticsDatabase:LaborForceStatisticsincludingtheNationalUnemploymentRate.http://www.bls.gov/cps/,
accessed11/4/2011.Asterisk * denotesprojectionsfromTheBoardofGovernorsoftheFederalReserveSystem:EconomicProjectionsofFederalReserve
BoardMembersandFederalReserveBankPresidents,November1‐2,2011.http://federalreserve.gov/monetarypolicy/files/fomcprojtabl20111102.pdf,
accessed11/4/2011.
TheWallStreetJournal.TheWallStreetJournalEconomicForecastingSurvey–September2011.http://online.wsj.com/public/page/economic‐
forecasting.html,accessed11/4/2011.
SurveyofProfessionalForecasters,ThirdQuarter2011.FederalReserveBankofPhiladelphia.ReleasedAugust12,2011.
http://www.philadelphiafed.org/research‐and‐data/real‐time‐center/survey‐of‐professional‐forecasters/2011/survq311.cfm,accessed11/4/2011.
Note:Thefiguresinthegraphindicatetheunemploymentrateorprojectionthereofforthefourthquarteroftherespectiveyeargiven.SeeTablesNEC‐2and
NEC‐7,availableonrequestfromDAS.
62TheReuters/UniversityofMichiganSurveysofConsumers.HistoricalTable1.TheIndexofConsumerSentiment.
http://thomsonreuters.com/content/financial/pdf/i_and_a/438965/record_low_confidence_in_economic_policies,accessed11/4/2011.Monthlydataforthe
IndexofConsumerSentimentfromthefollowing:https://customers.reuters.com/community/university/default.aspx,accessed11/4/2011.
63TheReuters/UniversityofMichiganSurveysofConsumers.HistoricalTable1.TheIndexofConsumerSentiment.
http://thomsonreuters.com/content/financial/pdf/i_and_a/438965/record_low_confidence_in_economic_policies,accessed11/4/2011.Monthlydataforthe
IndexofConsumerSentimentfromthefollowing:https://customers.reuters.com/community/university/default.aspx,accessed11/4/2011.SeeTableNEC‐8,
availableonrequestfromDAS.
64TheReuters/UniversityofMichiganSurveysofConsumers.October28,2011.
http://thomsonreuters.com/content/financial/pdf/i_and_a/438965/record_low_confidence_in_economic_policies,accessed11/4/2011.
65TheConferenceBoard.U.S.BusinessCycleIndicators.“TheConferenceBoardLeadingEconomicIndex LEI fortheUnitedStatesandRelatedComposite
IndexesforSeptember2011.”http://www.conference‐board.org/data/bci.cfm,accessed11/4/2011.
66TheConferenceBoard.U.S.BusinessCycleIndicators.“TheConferenceBoardLeadingEconomicIndex LEI fortheUnitedStatesandRelatedComposite
IndexesforSeptember2011.”http://www.conference‐board.org/data/bcicountry.cfm?cid 1,accessed11/4/2011.
67TheConferenceBoard.U.S.BusinessCycleIndicators.“TheConferenceBoardLeadingEconomicIndex LEI fortheUnitedStatesandRelatedComposite
IndexesforSeptember2011.”http://www.conference‐board.org/data/bcicountry.cfm?cid 1,accessed11/4/2011.SeeTableNEC‐8forprecisenotesondata
sourcesfortheLeadingEconomicIndex,availableonrequestfromDAS.
68TheConferenceBoardNewsRelease.“TheConferenceBoardLeadingEconomicIndex LEI fortheUnitedStatesIncreasesSlightly.”
http://www.conference‐board.org/pdf_free/press/PressPDF_4316_1319097258.pdf,accessed11/4/2011.
69FederalReserveBoard.G.17‐IndustrialProductionandCapacityUtilization.http://www.federalreserve.gov/datadownload/default.htm,accessed
11/4/2011.Note:Industrialproductionindexlevels excludingannualfigures areseasonallyadjusted.
70SurveyofProfessionalForecasters,ThirdQuarter2011.FederalReserveBankofPhiladelphia.ReleasedAugust12,2011.
http://www.philadelphiafed.org/research‐and‐data/real‐time‐center/survey‐of‐professional‐forecasters/2011/survq311.cfm,accessed11/4/2011.
71BankofAmerica/MerrillLynch.USEconomicWeekly,13October2011.http://www.ajs‐capital.com/pdf/1318955210‐ML.pdf,accessed11/4/2011.
National Economic Conditions - Third Quarter 2011
17
FederalReserveBoard.“CapacityUtilizationExplanatoryNotes.”http://www.federalreserve.gov/releases/g17/cap_notes.htm,accessed11/4/2011.Note:
theCapacityUtilizationusedisatotalindex.
73FederalReserveBoard.G.17‐IndustrialProductionandCapacityUtilization.http://www.federalreserve.gov/datadownload/default.htm,accessed
11/4/2011.Note:CapacityUtilizationlevelsareseasonallyadjusted.
74BankofAmerica/MerrillLynch.USEconomicWeekly,13October2011.http://www.ajs‐capital.com/pdf/1318955210‐ML.pdf,accessed11/4/2011.
75FederalReserveBoard.G.17‐IndustrialProductionandCapacityUtilization.http://www.federalreserve.gov/datadownload/default.htm,accessed
11/4/2011.SeeTableNEC‐9,availableonrequestformDAS.Note:CapacityUtilizationlevelsareseasonallyadjusted.
72
National Economic Conditions - Third Quarter 2011
18