Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Full employment wikipedia , lookup
Fei–Ranis model of economic growth wikipedia , lookup
Post–World War II economic expansion wikipedia , lookup
Long Depression wikipedia , lookup
Rostow's stages of growth wikipedia , lookup
Great Recession in Europe wikipedia , lookup
PRESIDENT'S REPORT TO THE BOARD OF DIRECTORS, FEDERAL RESERVE BANK OF BOSTON Current Economic Developments - December 11, 2003 Data released since your last Directors' meeting show the economy is gaining strength as the manufacturing sector continues to improve and the labor market finally shows signs of growth. In November, payroll employment posted its fourth consecutive increase and the unemployment rate fell. Initial claims continued to edged downward in November, marking their lowest level since February 2001. The ISM employment index rose above 50 for the first time since July 2000, indicating an expansion in manufacturing employment is on the horizon. Industrial production and capacity utilization rose in October and continued growth in durable goods orders suggest business investment will continue to expand in the near term. Improvements in the economy boosted consumer confidence in November. Despite October's fall in retail sales, led by a drop in autos, consumption and residential investment remains strong. Auto sales rebounded in November, reversing their October decline. In October, housing starts and building permits rose. Despite a drop in new and existing home sales, levels remained at near record highs. In November, payroll employment rose by a net 57,000 jobs, following a revised increase of 137,000 in October. Despite the slower pace of hiring in November, the unemployment rate fell to 5.9%, marking its lowest level since March. Nonfarm Payroll Employment Percent Change from Previous Month 300 200 Unemployment Rate 7.0 Nonfarm Payroll Employment 100 6.0 0 -100 5.0 -200 -300 3-Month Moving Average 4.0 -400 Nov-00 Jul-01 Mar-02 Nov-02 Jul-03 Nov-00 Jul-01 Mar-02 Nov-02 Jul-03 Mar-01 Nov-01 Jul-02 Mar-03 Nov-03 Mar-01 Nov-01 Jul-02 Mar-03 Nov-03 Source: Bureau of Labor Statistics. Initial claims continued to edge down in November, marking their lowest level since February 2001. Still, claims need to drop further before their level is consistent with a falling unemployment rate. Initial Claims Thousands of Units at Annual Rates 550 500 450 400 November 363,000 350 300 250 N ov -0 3 3 ug -0 A Source: Department of Labor, Employment and Training Administration. M ay -0 3 Fe b03 N ov -0 2 A ug -0 2 M ay -0 2 2 Fe b0 N ov -0 1 A ug -0 1 M ay -0 1 01 Fe b- N ov -0 0 200 The ISM index posted its fifth consecutive month above 50 in November marking its strongest level in nearly 20 years. The employment index in November rose above 50 for the first time since July 2000. ISM Index Index (50+ = Economic Expansion) 75.0 70.0 ISM Index 65.0 Employment Index 60.0 55.0 50.0 45.0 40.0 35.0 30.0 Nov-83 Nov-87 Nov-85 Nov-91 Nov-89 Source: National Association of Purchasing Management. Nov-95 Nov-93 Nov-99 Nov-97 Nov-03 Nov-01 Industrial production and capacity utilization rose in October. Continued growth in durable goods orders suggest business investment will continue to pick up. New Orders for Durable Goods Industrial Production and Capacity Utilization Percent Change, Year-Over-Year Percent of Capacity Percent Change, Previous Month 20.0 84.0 1.0 Capital Goods Nondefense Excluding Aircraft Industrial Production 82.0 10.0 0.5 80.0 0.0 78.0 0.0 -10.0 New Orders 76.0 -0.5 -20.0 74.0 Capacity Utilization -1.0 Oct-00 Oct-01 Apr-01 72.0 Oct-03 Oct-00 Oct-02 Apr-02 Apr-03 Oct-01 Apr-01 -30.0 Oct-03 Oct-02 Apr-02 Apr-03 Source: Federal Reserve Board of Governors (industrial production) and U.S. Census Bureau (new orders). The index of leading indicators rose in October, led by falling initial claims and rising building permits. Continued growth in the leading index suggests sound economic growth should continue in the near term. Index of Leading Indicators Percent Change, Previous Month 1.5 1.0 0.5 0.0 -0.5 Jan-02 Apr-02 Source: The Conference Board. Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 -1.0 Oct-03 Consumer attitudes continued to improve in November, as confidence hit its highest level in over a year and sentiment hit its highest level in a year and a half. Confidence and Expectations Sentiment and Expectations Index, 1966:Q1=100 110 100 Index, 1985 = 100 120 Sentiment 90 Expectations 110 100 80 Expectations 90 70 80 60 70 50 Confidence 50 Ja nM 02 ar M 02 ay -0 Ju 2 l-0 Se 2 pN 02 ov Ja 02 nM 03 ar M 03 ay -0 Ju 3 lSe 03 pN 03 ov -0 3 Ja n M -02 ar M -02 ay Ju 02 l-0 Se 2 p N -02 ov Ja 02 nM 03 ar M -03 ay Ju 03 l-0 Se 3 p N -03 ov -0 3 60 Source: University of Michigan (sentiment) and The Conference Board (confidence). Housing starts and building permits remained strong in October. Housing Starts and Building Permits Thousands of Units, Annualized 2500 Building Permits Housing Starts 2000 1500 1000 500 Oct-83 Oct-85 Oct-87 Oct-89 Oct-91 Oct-93 Oct-95 Oct-97 Oct-99 Oct-01 Oct-03 Oct-84 Oct-86 Oct-88 Oct-90 Oct-92 Oct-94 Oct-96 Oct-98 Oct-00 Oct-02 Source: U.S. Census Bureau. New and Existing home sales fell in October, but remained at near record highs seen earlier in the year. New and Existing Home Sales Thousands of Units, Annualized Thousands of Units, Annualized 1300 7000 Existing Home Sales 1200 6500 New Home Sales 1100 6000 1000 5500 900 5000 800 4500 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Source: U.S. Census Bureau (new homes) and National Association of Realtors (existing homes). In October, despite a rise in real disposable income, real consumption was flat. A drop in auto sales kept retail sales down. Retail Sales Real DPI and Consumption Percent Change, Previous Month Percent Change, Previous Month 2.0 3.0 1.5 Real DPI Retail Sales 2.0 Real Consumption 1.0 1.0 0.5 0.0 0.0 -0.5 -1.0 Retail Sales, Excluding Autos -1.0 -1.5 -2.0 Oct-02 Feb-03 Dec-02 Jun-03 Apr-03 Oct-03 Aug-03 Oct-02 Feb-03 Dec-02 Jun-03 Apr-03 Source: Bureau of Economic Analysis (dpi and consumption) and U.S. Census Bureau (retail sales). Oct-03 Aug-03 But total auto and light truck sales rose in November, reversing the decline seen in October. However, auto sales in the fourth quarter will most likely be lower than their third quarter average. Total Auto and Light Truck Sales Millions of Units, Annualized 20.0 19.0 18.0 17.0 16.0 15.0 Jan-02 May-02 Mar-02 Sep-02 Jul-02 Jan-03 Nov-02 May-03 Mar-03 Sep-03 Jul-03 Nov-03 Source: Bureau of Economic Analysis. Real GDP was revised upward by 1.0% in the third quarter, primarily reflecting stronger exports and investment in inventories, equipment and software, and housing, that were partly offset by an upward revision to imports. Real Gross Domestic Product Annualized Percent Change 9.0 6.0 3.0 0.0 -3.0 00:Q2 00:Q3 00:Q4 01:Q1 01:Q2 01:Q3 01:Q4 02:Q1 02:Q2 02:Q3 02:Q4 03:Q1 03:Q2 03:Q3 Description Real GDP Consumption Business Investment Residential Investment Government Exports Imports Final Sales Source: Bureau of Economic Analysis. Advanced 7.2 6.6 11.1 20.4 1.3 9.3 0.1 7.8 Preliminary 8.2 6.4 14.0 22.7 1.3 11.0 1.5 8.0 Inflation remains moderate, especially in core prices. Consumer Prices Percent Change, Year-Over-Year 4.0 Consumer Price Index, excluding food and energy Consumer Price Index 3.0 2.0 1.0 Oct-00 Feb-01 Jun-01 Oct-01 Feb-02 Jun-02 Oct-02 Feb-03 Jun-03 0.0 Oct-03 Producer Prices Percent Change, Year-Over-Year 6.0 4.0 Producer Price Index 2.0 0.0 Producer Price Index, excluding food and energy Oct-00 Feb-01 Jun-01 Oct-01 Feb-02 Jun-02 Oct-02 Feb-03 Jun-03 Source: Bureau of Labor Statistics. Overall, the economy is expanding, as the manufacturing sector continues to improve and the labor market is finally showing signs of improvement. Still, employment has yet to expand at a rate consistent with a normal recovery. Percent Short-Term Interest Rates 2.2 2.0 1.8 Discount Window Primary Credit 1.6 N ov -0 3 3 -0 O 1.0 ct ug -0 3 l-0 3 A Ju Federal Funds Rate (effective rate) 1.2 Se p03 2.00 0.00 1.4 O ct -0 3 ug -0 3 A A pr -0 3 Ju n03 Source: Federal Reserve Board of Governors. Fe b03 ec -0 2 D O ct -0 2 A ug -0 2 Ju n02 A pr -0 2 Fe b02 D ec -0 1 0.8 -2.0 -4.0 Oct-03