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1999 Economic Trends

  • The U.S. Trade Balance


    The nominal U.S. trade balance on goods and services widened slightly in September. Read More

  • The Employment Cost Index


    The Employment Cost Index (ECI), an important measure of compensation growth, gauges changes in employers’ labor costs. Read More

  • The Economy in Perspective


    Think globally, obstruct locally… Protests against the latest round of negotiations sponsored by the World Trade Organization have thrust international trade into the headlines. Read More

  • Savings Association Performance


    U.S. savings associations’ performance held steady in 1999:IIQ, with second-quarter earnings for the industry reaching $2.86 billion. Read More

  • Monetary Policy


    On November 16, the Federal Reserve System raised both the discount rate and the federal funds rate by a quarter point. The discount rate stands at 5%, while the federal funds rate target is 5.5%. Read More

  • Labor Markets


    The labor market continues to show steady growth. Over the past 12 months, the economy has added jobs at the rate of about 225,000 per month. Read More

  • Interest Rates


    The long end of the yield curve has shifted downward slightly since last month, whereas the short end has shifted upward. Read More

  • Inflation and Prices


    After accelerating sharply over the summer, consumer price increases moderated to a 2.2% annualized pace in October—under their 12- month trend (2.6%). Read More

  • Foreign Lending Exposure


    Changes in political, social, and economic environments abroad can affect U.S. banks’ foreign lending exposure. Read More

  • Foreign Firms


    Foreign firms operating in the U.S. play an important economic role in the nation and Fourth District states. Read More

  • Foreign Banking Organizations


    Nowhere is the impact of the increasing globalization of financial markets more evident than in the U.S. banking industry. Read More

  • Economic Activity


    By November’s preliminary estimate, gross domestic product grew at an annualized rate of 5.5% in 1999:IIIQ. Read More

  • Bank Performance


    The balance sheets of U.S. commercial banks showed continued signs of health through 1999:IIQ. Read More

  • The Economy in Perspective


    Once upon a time ... there was a land filled with hard-working, creative people. Read More

  • Regional Conditions


    Employment in the transportation equipment industry has declined substantially from its 1968 peak of 2.1 million workers. Read More

  • Real Exchange Rates


    The exchange rates reported in newspapers’ financial sections aren’t real. Read More

  • Monetary Policy


    After raising the intended federal funds rate target 25 basis points in each of its two previous meetings, the Federal Open Market Committee (FOMC) left the rate unchanged at its October meeting. Read More

  • Labor Markets


    Labor markets surged in October, as job growth partially offset disruptions caused the previous month by Hurricane Floyd. U.S. payrolls rose 310,000 in October, after a September increase of only 41,000. Read More

  • Interest Rates


    Since last month, the yield curve has shifted upward and marginally decreased its upward tilt. Read More

  • Inflation and Prices


    Following annualized increases of 3.7% in each of the previous two months, the Consumer Price Index (CPI) rose 5.1% (annualized) in September. Read More

  • Household Financial Conditions


    Recent GDP-account revisions caused an increase in the saving rate and a decline in the debt-toincome ratio (as analysts expected) relative to the pre-revision values. Read More

  • Foreign Direct Investment


    Foreign direct investment (FDI) is the cross-border holding of assets that represent a controlling ownership of shares in a foreign business entity. Read More

  • Economic Activity


    The advance third-quarter estimate of GDP growth is 4.8%, slightly higher than economists’ expectations. Growth was broad based, with strong gains of 14.9% in business fixed investment and 12.4% in exports. Read More

  • Banking Conditions


    The number of FDIC-insured commercial banks continued to decline, dropping to 8,675 at the end of 1999:IIQ, a decrease of 309 since 1998:IIQ. Read More

  • The Japanese Economy and the Yen


    The Japanese yen has strengthened significantly against the U.S. dollar since mid-May, reflecting improved growth prospects for the Japanese economy. Read More

  • The Economy in Perspective


    A productive debate about monetary policy … A country’s rate of productivity growth determines how rapidly it can expand its standard of living. Read More

  • Regional Conditions


    From the beginning of 1993 through the end of 1995, consumer indebtedness relative to income accelerated rapidly. Read More

  • Monetary Policy


    The September Federal Open Market Committee (FOMC) meeting concluded with no change in the intended federal funds rate. Read More

  • Labor Markets


    Labor markets were mixed in September. Although the unemployment rate remained at its 29-year low of 4.2%, employers cut 8,000 jobs from payrolls. Hurricane Floyd contributed to the decline, the first in almost four years. Read More

  • Interest Rates


    What a difference a year makes! One year ago, financial markets were still reeling from the Asian crisis, the Russian default, the collapse of Long Term Capital Management, and the associated flight to quality and liquidity. Read More

  • Inflation and Prices


    Retail prices continued to rise rapidly in August, as shown by a 3.7% (annualized) increase in the Consumer Price Index (CPI). Read More

  • Economic Activity


    The final estimate of second-quarter GDP growth is 1.6%, down from the 1.8% preliminary estimate. Read More

  • Demographic Change


    The rapid aging and slow growth of the developed world’s population will soon exert tremendous pressure on public pension and health care budgets. Read More

  • Banking Conditions


    The latest statistics show that the U.S. banking industry continues to enjoy good health. Read More

  • Unemployment


    The civilian unemployment rate has declined to levels not seen for 30 years. This rate, which reached a post–World War II peak of just over 10% during parts of 1982 and 1983, now hovers around 4.3%. Read More

  • The U.S. as a Debtor Nation


    An inflow of foreign capital has accompanied the persistent string of U.S. current-account deficits since 1982. Read More

  • The Economy in Perspective


    By the sweat of our brow … Everyone knows the story: U.S. agricultural employment has plummeted since the 1920s, when farm jobs made up about 20% of total U.S. employment. Read More

  • Monetary Policy


    On August 24, the Federal Open Market Committee (FOMC) raised the intended federal funds rate and the discount rate by 25 basis points each—to 5.25% and 4.75%, respectively. Read More

  • Labor Markets


    Despite a slowing in employment growth, labor markets generally remained strong in August. Read More

  • Interest Rates


    One closely watched interest-rate spread has been making news lately as it moves to historically high levels. Read More

  • Inflation and Prices


    Prices in July were subdued on the whole, although anxiety about a reignition of inflation reportedly remains the focal point of any further adjustment to Federal Reserve policy. Read More

  • Economic Activity


    GDP growth in 1999:IIQ has been revised downward from an advance estimate of 2.3% to a preliminary estimate of 1.8%, which primarily reflects a higher estimate of imports and ... Read More

  • Current-Account Developments


    The U.S. current-account deficit, which expanded sharply in 1999:IQ, is likely to reach $310 billion by year’s end. Read More

  • Banking Conditions


    Commercial banks’ balance sheets showed continued signs of health through the first quarter of 1999. Read More

  • Agricultural Prices


    Since their record highs of 1996, agricultural prices as a whole have fallen about 21%. Read More

  • The Economy in Perspective


    Summertime (and the livin’ is easy) ... It’s hard to get excited about U.S. economic conditions when we are headed for vacation, in the middle of vacation, or nearing the end of vacation. Read More

  • Regional Conditions


    The long-term trend of Ohio agriculture— reducing the number of farms while increasing their average acreage—reversed during the 1990s. Read More

  • Monetary Policy


    Implied yields on federal funds futures provide market participants’ best estimate of future monetary policy. Read More

  • Labor Markets


    Labor markets showed no signs of weakening in July. The unemployment rate remained a low 4.3%, and nonfarm payrolls showed a solid increase. Read More

  • International Developments


    Data for 1999:IQ reveal a continued drop in the exposure of U.S. banks to key developing economies. Read More

  • Interest Rates


    The yield curve has flattened slightly since last month. Short rates have fallen a mere nine basis points, but long rates have fallen more ... Read More

  • Inflation and Prices


    In June, the Consumer Price Index (CPI) remained unchanged for the second straight month. The flat price index numbers, following an annualized 9.1% jump in April, resulted in a 2.9% increase (annualized) over the three-month period. Read More

  • Income and Production


    What are the sources of American incomes? Since the end of World War II, labor income generally has averaged around 70% of total personal income. Read More

  • Household Financial Conditions


    After holding steady since 1996, household consumer debt levels resumed their upward trend last year. Read More

  • Government in the Economy


    The major components of spending in the U.S. are consumption, investment, and government spending on goods and services; net exports are fairly small by comparison. Read More

  • Economic Activity


    The advance estimate of GDP growth for 1999:IIQ is 2.3%, significantly slower than the 3.4% expected by analysts. Read More

  • The Economy in Perspective


    Wear sunscreen ... The Federal Reserve raised the target federal funds rate one-quarter of a point to 5% at its June policy meeting. This action, however widely expected, was not universally endorsed. Read More

  • The Current Account


    Analysts often refer to the current account as a broad measure of our country’s international trade position, although it includes a few nontrade items. Read More

  • Money Growth and Inflation


    One of the Federal Reserve’s principal objectives in conducting monetary policy is to maintain low inflation. Read More

  • Monetary Policy


    The Federal Open Market Committee (FOMC) changed the federal funds rate target at its June 29 meeting to 5.00%, an increase of 25 basis points. The discount rate remained unchanged at 4.5%. Read More

  • Labor Productivity


    A three-year surge in productivity growth underlies the current robust state of the U.S. economy. Some commentators have cited the recent strength of productivity numbers as evidence that the U.S. has entered a “new economy.” Read More

  • Labor Markets


    June employment bounced back from losses in May, adding 268,000 jobs. Despite the rosier overall picture, manufacturing and mines continued to cut their payrolls. Read More

  • Interest Rates


    Since last month, interest rates have risen across the board, with a surge in long rates steepening the yield curve. Read More

  • Inflation and Prices


    After a blistering 0.7% rise in April, the Consumer Price Index (CPI) held steady in May (somewhat below analysts’ expectations). Read More

  • Imports and Economic Growth


    Every news account of the GDP figures— or so it seems—reinforces the common misperception that import spending lowers output. Read More

  • Electricity Deregulation


    The prospect of electricity deregulation has already caused several mergers in the utility industry and may bring substantially lower costs to Fourth District consumers. Read More

  • Economic Activity


    The 4.3% final GDThe 4.3% final GDP estimate for 1999:IQ fell midway between the 4.5% advance estimate and the 4.1% preliminary estimate. Read More

  • Banking Conditions


    Net income at insured commercial banks surged to $18.0 billion in 1999:IQ, easily surpassing the previous record of $16.1 billion set in 1998:IIQ. Read More

  • The Yen Exchange Rate


    The dollar strengthened against the yen in the past month, continuing a trend that began early this year. Read More

  • The Economy in Perspective


    About that NAIRU jacket ... The Bureau of Labor Statistics’ just-released May labor report failed to settle differences of opinion about labor market tightness. Read More

  • Monetary Policy


    At its May 18 meeting, the Federal Open Market Committee (FOMC) opted to leave the federal funds rate target unchanged at 4.75%. Read More

  • Labor Markets


    Key measures of labor market activity were mixed in May. The pace of job creation for the month was well below average for the current expansion. Read More

  • International Developments


    Command-basis GNP measures the U.S. economy’s real output by valuing its exports of goods and services and its receipts of factor income at the prices they would command as imports to the U.S. Read More

  • Interest Rates


    Since April, the yield curve has shifted upward and steepened, but it remains fairly flat by historical standards. Read More

  • Inflation and Prices


    Retail price growth accelerated in April, as the Consumer Price Index (CPI) surged 9.1% (annualized)—its largest monthly increase since October 1990. Read More

  • Economic Activity


    The 4.1% preliminary (second) estimate of real GDP growth in 1999:IQ was only slightly lower than the 4.5% advance (first) estimate released in April. A revision of 0.4 is not unusual. Read More

  • Cross-Generation Wealth Transfers


    Faced with uncertain prospects for Social Security and Medicare, can baby boomers rely on large transfers from their parents and grandparents to finance their retirement? Read More

  • Banking Conditions


    Commercial banks’ balance sheets showed continued signs of health through the fourth quarter of 1998. Read More

  • The Economy in Perspective


    What? Me Worry? ... You don’t need an opinion poll to tell you that people are worried about Kosovo, upset about violence, and concerned about the future of Social Security. Read More

  • Monetary Policy


    Implied yields on federal funds futures are an indication of the average expected future funds rate. Read More

  • Labor Markets


    Labor markets were strong in April. Payroll employment growth rebounded from minimal gains in March, and the unemployment rate rose slightly from the 29-year low reached a month earlier. Read More

  • International Trade


    U.S. trade in goods and services reached a record $19.4 billion deficit in February as imports advanced 2.2% and exports fell 0.6%. Read More

  • Interest Rates


    The yield curve has not moved much since last month. Both the 3-month and 30-year yields remain unchanged at 4.51% and 5.58%, respectively. Read More

  • Inflation and Prices


    The monthly price statistics continue to show only modest growth, a sign that inflationary pressures in the economy remain light. Read More

  • Housing Markets


    Following a sharp spike in early March, long-term mortgage rates have edged back down in recent weeks, and 30-year rates are now lower than the 7.08% March average. Read More

  • Fourth District Exports


    Exports are of particular importance to the Fourth District’s economy. Read More

  • Exchange-Rate Volatility


    Each day, in spot, forward, and swap transactions throughout the world, more than $1.3 trillion in foreign currencies changes hands. Read More

  • Economic Activity


    The advance (first) estimate of gross domestic product (GDP) for 1999:IQ shows strong economic growth continuing into the beginning of 1999. Read More

  • Attendance at Sports Events


    In the entertainment industry, there is fierce competition for consumers’ leisure time and dollars. Read More

  • The Exchange Stabilization Fund


    The Exchange Stabilization Fund, operated by the U.S. Secretary of the Treasury with the President’s approval, is a major means of giving financial assistance to foreign countries. Read More

  • The Economy in Perspective


    Golden eggs, golden omelets ... Productivity growth is the economist’s term for situations in which an economy can obtain more output than before from the same amount of input. Read More

  • Regional Conditions


    In 1998, U.S. nonfarm employment grew 2.3%, though this growth was not spread evenly throughout the country. Read More

  • Multifactor Productivity Growth


    With the unemployment rate near its historic low and the labor force expected to grow only about 1% in the near future, increased productivity could be the key to ... Read More

  • Monetary Policy


    After two consecutive weeks of federal funds trading, on average, at the target rate of 4.75% in late February, the rate jumped 10 basis points during the first week of March. Read More

  • Labor Markets


    Labor market indicators in March were mixed, with the Bureau of Labor Statistics reporting slow employment growth and reductions in both labor force participation and the unemployment rate. Read More

  • Interpreting the Money Numbers


    Some economists are concerned that higher inflation is just around the corner. Read More

  • International Developments


    Data for 1998:IIIQ reveal a continuing decline in U.S. banks’ exposure to countries that have recently experienced significant economic and financial turmoil. Read More

  • Interest Rates


    The yield curve has steepened since last month, as 3- and 6-month rates fell and all others rose. Read More

  • Inflation and Prices


    Prices followed a moderate growth trajectory in February. The Consumer Price Index (CPI) increased an annualized 0.7% during the month, less than its 1.6% average rise over the past 12 months. Read More

  • Economic Activity


    Final GDP estimates for 1998:IVQ are little changed from the preliminary estimates of a month earlier. Read More

  • The Rising Yen


    The U.S. dollar has depreciated 18% against the Japanese yen since August 1998. Read More

  • The Federal Budget


    At the end of fiscal year 1998, there was a surplus on the books of the federal government—the first in 28 years. Read More

  • The Economy in Perspective


    Keep on truckin’ ... If the Dow Jones index accurately forecasts future economic conditions, its surge past 9700 in early March signals a continuation of the U.S. boom. Read More

  • Social Security


    The tax treatment of different demographic groups varies considerably under Social Security, also called Old Age and Survivors Insurance (OASI). Read More

  • Monetary Policy


    On February 23 and 24, Federal Reserve Chairman Alan Greenspan testified before Congress as part of the Federal Reserve’s semiannual report on monetary policy. Read More

  • Labor Markets


    Labor markets’ vigorous growth showed no sign of abating in February. Read More

  • Interest Rates


    Interest rates at all maturities have moved up sharply since last month. Some of the increase can be traced to speculation that the Federal Reserve will increase the federal funds rate. Read More

  • Inflation and Prices


    Consumer prices showed little movement in January, as the Consumer Price Index (CPI) inched up an annualized 1.5%, with much of the increase caused by higher food prices. Read More

  • Federal Deposit Insurance


    Buoyed by the strong performance of the depository institutions sector in the mid-to-late 1990s, the Federal Deposit Insurance Corporation’s bank insurance fund (BIF) ... Read More

  • Economic Activity


    In early January, the Blue Chip consensus forecast of GDP for 1998:IVQ was a solid annualized growth rate of 3.1%. Read More

  • Dollarizing Argentina


    In April 1991, Argentina established a currency board to cure its chronic inflation. Read More

  • Banking Conditions


    Commercial banks’ balance sheets showed continued signs of health through the third quarter of 1998. Read More

  • Unemployment Rates


    A seven-year economic expansion has brought U.S. unemployment to 4.3%, its lowest rate since the 1960s. The change has been felt throughout the nation. Read More

  • Trade Deficits


    Increased concerns about the widening U.S. trade deficit can be understood by examining the 1998:IIIQ data on international transactions from different perspectives. Read More

  • The Economy in Perspective


    Sigmund Freud has said that every normal person, in fact, is only normal on the average. So it is with business cycles ... Sooner or later, something will throw the U.S. economy off the brisk growth trajectory it has followed since 1995. Read More

  • Monetary Policy


    The rate of money growth is a matter of concern because, as Milton Friedman aptly stated, “inflation is always and everywhere a monetary phenomenon.” Read More

  • Labor Markets


    Robust labor market growth continued unabated in the first month of 1999, contrary to early predictions of slowing. Read More

  • Interest Rates


    The yield curve remains rather flat, having shown little movement since last month. At the long end, rates on 30-year bonds increased a scant six basis points; at the short end, three-month rates dropped three basis points. Read More

  • Inflation and Prices


    Retail price increases remained generally modest in December, as the Consumer Price Index (CPI) increased an annualized 1.5% to finish the year with a 1.6% gain—0.1 percentage points less than 1997’s low rate. Read More

  • Household Financial Conditions


    Household consumer debt levels rose again (to 21.24% of disposable personal income last November), after remaining stable since the beginning of 1996. Read More

  • Employment Cost Index


    From the firm’s perspective, the cost of employing workers extends substantially beyond the wages and salaries paid to those workers. Benefits packages represent 28% of employment costs. Read More

  • Economic Activity


    As of January 10, the Blue Chip consensus forecast was a solid growth rate of 3.1% in 1998:IVQ. Read More

  • Brazil


    On January 13, Brazil devalued its currency, the real, creating further turmoil in world financial markets Read More

  • Y2K Readiness


    With less than 12 months to go, computer users around the world are scrambling to prepare for Year 2000. Read More

  • Workweek Changes


    The French National Assembly recently reduced the standard workweek from 39 hours to just 35. France followed the Netherlands, which began a program in 1988 to reduce the workweek to a mere 36 hours in certain sectors. Read More

  • The Economy in Perspective


    The Policy Road Not Taken (with apologies to Robert Frost) Read More

  • Steel Imports


    The dollar’s strong appreciation since 1991 and recent global economic turmoil have dramatically intensified the rivalry between domestic and foreign steel producers for U.S. market share. Read More

  • Regional Conditions


    The Cincinnati primary metropolitan statistic area (PMSA) has a population of almost 1.6 million (1997 data) and an employment distribution quite similar to the nation’s. Read More

  • Monetary Policy


    The autumn of 1998 was the most active season for monetary policy in several years. Read More

  • Labor Markets


    December’s labor market data continued to indicate strength, closing out an impressive year. Read More

  • International Developments


    The U.S. current-account deficit reached an annualized $245 billion in 1998:IIIQ, a rise of $18.4 billion over 1998:IIQ. Read More

  • Interest Rates


    The new year begins with interest rates noticeably below their levels at the start of 1998. Read More

  • Inflation and Prices


    The Consumer Price Index (CPI) rose an annualized 2.2% in November, a small uptick from its 12-month increase of 1.5%, but still moderate by the standards of the past 10 years or so. Read More

  • Economic Activity


    The gross domestic product (GDP) grew at a 3.7% seasonally adjusted annual rate in the third quarter of last year, adjusted for price changes. Read More

  • Banking Conditions


    The banking industry’s string of six consecutive quarters of record earnings ended in 1998:IIIQ as earnings dropped to $15.0 billion. Read More