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2002 Economic Trends

  • The Economy’s Health


    Some have argued that the economy entered the recovery or expansion phase of the business cycle in January 2002; others say it is still too early to tell. These mixed signals are certainly evident in the labor market. Read More

  • The Economy in Perspective


    Collateral damage ... At its early-November meeting, the Federal Open Market Committee reduced its federal funds rate target by 50 basis points, to 1.25%. Although it was the FOMC’s first action since ... Read More

  • The Current Account Deficit


    The U.S. seems to be emerging from the most recent economic frost a little faster than the rest of the world. As a consequence, our perennial current account deficit, which seemed dormant in 2001, is blooming again. Read More

  • Money and Financial Markets


    The sharp decline in interest rates over the past two years reduced the opportunity cost of holding monetary instruments nearly to zero. Read More

  • Monetary Policy


    On November 6, the Federal Open Market Committee lowered its target for the federal funds rate by 50 basis points (bp) to 1.25%. Read More

  • Labor Markets


    Nonfarm payroll employment posted a net loss of 40,000 jobs in November. Employment numbers for October and September, however, have been revised upward by 11,000 and 9,000, respectively. Read More

  • Japanese Interventions


    On November 19, Japanese Finance Minister Masajuro Shiokawa formally asked the Bank of Japan not to neutralize the monetary effects of any foreign exchange interventions that the Ministry of Finance (MF) might undertake. Read More

  • Inflation and Prices


    The consumer price index (CPI) rose 0.3% (3.4% annual rate) in October; according to the Labor Department, rising energy prices accounted for about half of this increase. Read More

  • Foreign Central Banks


    On November 6, the Federal Reserve reduced its federal funds rate target 50 basis points (bp) to 1.25%. Since then, the Bank of England’s Monetary Policy Committee has twice left its policy rate unchanged. Read More

  • Federal Home Loan Banks


    The 12 Federal Home Loan Banks (FHLBs) are stock-chartered, government- sponsored enterprises whose mission initially was to provide short term advances to member institutions, funded with deposits from those institutions. Read More

  • Economic Activity


    The preliminary estimate showed that real gross domestic product (GDP) advanced at an annual rate of 4.0% during 2002:IIIQ. Personal consumption expenditures rose 4.1% (annual rate) and made the largest contribution to real GDP growth. Read More

  • Census 2000: Educational Attainment


    The Census Bureau recently released information on educational attainment from the 2000 Census (Summary File 3). It provides data on those 25 and older for two attainment levels: a high school diploma or more and a bachelor’s degree or more. Read More

  • Unemployment Claims


    The number of initial claims for unemployment insurance is an important economic indicator because it provides frequent, timely information about the U.S. workforce. Read More

  • The Economy in Perspective


    History in the making ... Although most economists think the recession that began in March 2001 concluded nearly a year ago, no official endpoint has yet been announced. Read More

  • The Automobile Industry


    The U.S. automobile industry has been experiencing considerable turmoil. Read More

  • Savings Institutions


    FDIC-insured savings institutions reported net income of $3.9 billion for 2002:IIQ; this was $519 million (15.5%) higher than a year earlier and $243 million higher than the previous quarter. Read More

  • Money and Financial Markets


    Toward the end of October, the yield curve became slightly inverted, with the six-month Treasury bill yield falling below the three-month yield. This inversion probably was driven by expected cuts in the federal funds rate. Read More

  • Monetary Policy


    The daily average effective federal funds rate typically remains close to target. Since the beginning of 2000, the average absolute deviation of the effective rate from the intended rate has been about ... Read More

  • Labor Markets


    Nonfarm payroll employment held steady in October with a net loss of just 5,000 jobs. Revisions, however, show that the September loss was less than half the number reported earlier. Read More

  • International Markets


    The difference between the 10-year and two-year government bond yields is a measure of the steepness of the yield curve. For the U.S., Canada, the U.K., and the ECU, yield curves were all quite flat in late March and early April. Read More

  • Inflation and Prices


    The Consumer Price Index rose 0.2% (2.0% annual rate) in September. According to the Labor Department, energy prices have risen for three consecutive months: 0.4% in July, 0.6% in August, and 0.7% in September. Read More

  • Foreign Central Banks


    Views of the global economic outlook seemed to consolidate recently around a longer period of weakness. Read More

  • Economic Activity


    The advance estimate of real gross domestic product (GDP), released October 31, revealed that output increased 3.1% during 2002:IIIQ (annual rate). Read More

  • The Economy in Perspective


    Connecting the dots ... Economic policymakers can sympathize with the national security analysts who are criticized for not putting together the pieces that seem—after the fact—to have formed an unmistakable picture. Read More

  • Money and Financial Markets


    The spread between corporate and government interest rates typically rises during recessions and then declines when the recovery gets under way. Read More

  • Monetary Policy


    At its September 24 meeting, the Federal Open Market Committee (FOMC) left the federal funds rate target unchanged at 1.75%, citing “robust underlying productivity growth” as the basis for maintaining monetary policy’s current stance. Read More

  • Manufacturing Employment


    Manufacturing employment declined significantly during the most recent recession. Read More

  • Labor Markets


    Preliminary September nonfarm employment figures show a decline of 43,000, but revisions to both July and August suggest much stronger growth than was initially thought. Read More

  • Inflation and Prices


    After monthly increases of 0.1% in June and July, the Consumer Price Index rose 0.3% (4.1% annual rate) in August. Read More

  • Foreign Central Banks


    None of the four major central banks changed its policy setting over the past month, although all acknowledge a potential for weakness in the global outlook. Read More

  • Economic Activity


    According to the final estimate from the national income and product accounts, real gross domestic product (GDP) increased at a 1.3% annual rate in 2002:IIQ, substantially lower than its vigorous showing in 2002:IQ. Read More

  • Distribution of Occupations in 1950 and 1990


    The labor market has undergone fundamental changes since the middle of the last century. Read More

  • Commercial Banks


    In 2002:IIQ, FDIC-insured depository institutions reported net income of $23.4 billion, representing a 7.9% increase from the previous quarter. Read More

  • Brazil's Public Sector Debt


    Economic activity in South America remains weak. The immediate prospects depend largely on how Brazil, the region’s biggest economy, manages its current public-sector debt problems. Read More

  • The Impact of 2001 Tax Cut Legislation


    The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 phases in tax cuts through 2010. Read More

  • The Economy in Perspective


    To cut, or not to cut—that is the question: Read More

  • Money and Financial Markets


    The Federal Open Market Committee’s August 13 statement indicated that the balance of risks for the economy tilted toward economic weakness, a change from its previous statement that economic weakness and inflation were evenly balanced. Read More

  • Monetary Policy


    At its August 13 meeting, the Federal Open Market Committee left the target federal funds rate unchanged, although it altered the balance-of-risk statement “towards conditions that may generate economic weakness.” Read More

  • Labor Markets


    Nonfarm payroll employment grew by 39,000 jobs in August. Estimates for July employment growth were revised upward to 67,000, far higher than the previously estimated growth of 6,000 jobs. Read More

  • International Trade


    In June, the U.S. trade deficit—the difference between exports and imports of goods and services—fell $0.7 billion to $37.2 billion. Read More

  • International Markets


    The Broad Dollar Index measures the average change in the dollar’s exchange rate against the currencies of our 36 most important trading partners. Read More

  • Inflation and Prices


    The Consumer Price Index rose 0.1% (1.3% annual rate) in July, the same rate of increase it posted in June. Read More

  • Housing in Ohio


    Owning a home has long been regarded as a sound method of gaining financial stability because housing values tend to be less volatile than stock prices and resilient during economic downturns. Read More

  • Foreign Central Banks


    None of the four major central banks changed its policy setting over the past month. Read More

  • Economic Activity


    Preliminary estimates of the national income and product accounts showed that real gross domestic product increased at an annual rate of 1.1% in 2002:IIQ. Read More

  • Banking Conditions in the Recessions of 1990 and 2001


    Going into the 2001 recession, FDIC-insured commercial banks’ real asset and loan growth was much stronger than in the late 1980s and early 1990. Both statistics dipped into negative territory when the 1990 recession began. Read More

  • The Economy in Perspective


    Stormy weather ... Recent developments, along with fresh data for 2001, are prompting forecasters to revise their expectations of economic activity downward for the rest of this year. Read More

  • Savings Associations


    FDIC-insured savings associations reported net income of $3.6 billion for 2002:IQ. This was an increase of $739 million (24.5%) from a year earlier. Compared to the previous quarter, however, it amounted to a decrease of $76 million. Read More

  • Money and Financial Markets


    The drop in short-term interest rates over the past 18 months sharply reduced the opportunity cost of holding monetary assets. Consequently, the demand for money, as measured by M2, rose sharply in 2001. Read More

  • Monetary Policy


    At its June 26 meeting, the Federal Open Market Committee (FOMC) decided to leave the federal funds rate unchanged at 1 3/4%, its intended level since December 2001. Read More

  • Labor Markets


    Nonfarm payroll employment was virtually unchanged in July (up 6,000) after a revised increase of 66,000 jobs in June. Read More

  • Labor Earnings Growth


    Measures of labor earnings growth are quite sensitive to differences in definition and method. Read More

  • Is the Dollar Sustainable


    Shaken by disclosures in U.S. equity markets, the dollar has slid about 7% against the currencies of our major trading partners since April. Some economists worry that a more fundamental adjustment may be in the offing. Read More

  • Inflation and Prices


    The consumer price index (CPI) rose 0.1% in June (1.3% annualized rate) after remaining unchanged in May. Read More

  • Health Insurance


    Access to affordable health care is a significant problem facing the U.S. With health care costs rising, access to insurance that defrays the costs to consumers is now more important than ever. Read More

  • Foreign Central Banks


    Policy settings at the four major central banks have remained unchanged throughout this year. Read More

  • Energy, Monetary Policy, and the Business Cycle


    With the economy moving toward recovery, price pressures will eventually build, and the Federal Open Market Committee will need to focus more keenly on price stability. Read More

  • Economic Activity


    The advance estimate from the national income and product accounts shows that real gross domestic product (GDP) grew at a 1.1% annualized rate during 2002:IIQ. Read More

  • U.S. International Transactions


    Data for 2002:IQ show a sizeable increase in the U.S. current account deficit, from $95.1 billion in 2001:IVQ to $112.5 billion. Read More

  • The Japanese Economy


    The dollar value of the yen has risen recently despite quantitative easing by the Bank of Japan. Read More

  • The Housing Market


    The rate of home ownership has risen considerably since the early 1900s, when just 47% of U.S. households owned their homes. Read More

  • The Economy in Perspective


    Taking care of business ... In 1925, President Calvin Coolidge told the Society of American Newspaper Editors that the business of America is business. Read More

  • Money and Financial Markets


    In June, long-term Treasury rates dropped markedly, more than 20 basis points in the case of the 10-year Treasury. Read More

  • Monetary Policy


    At its June 25–26 meeting, the Federal Open Market Committee left the intended federal funds rate unchanged at 1.75%. The FOMC indicated in its press release that “economic activity is continuing to increase. Read More

  • Labor Markets


    Nonfarm payroll employment rose 36,000 jobs in June, making 2002:IIQ monthly average employment growth equal to 13,000 jobs. Read More

  • Inflation and Prices


    The consumer price index (CPI) was unchanged in May after rising sharply (0.5%) in April. Wide swings in energy prices continue to exert considerable influence over the direction of this retail price measure. Read More

  • Foreign Central Banks


    The policy settings of the four major central banks remain unchanged. Read More

  • Employment in the Fourth District


    Kentucky reported the Fourth District’s lowest seasonally adjusted unemployment rate for May (5.3%), while rates in Ohio (5.8%) and Pennsylvania (5.7%) were the same as—or slightly lower than—the U.S. average of 5.8%. Read More

  • Economic Activity


    Real gross domestic product (GDP) grew at an annual rate of 6.1% in 2002:IQ, the fastest pace since 1999:IVQ. Read More

  • Depository Institutions


    Profits made a comeback to FDIC-insured commercial banks during the first three months of 2002. First-quarter net income reached a record-setting $21.7 billion, which ... Read More

  • The Economy in Perspective


    Fabricating the truth ... We hear and read so many opinions, from so many sources, that it is often difficult to tell fact from fiction. Read More

  • The Buckeye State Poll


    The Buckeye State Poll, a monthly telephone survey of Ohio residents, asks a variety of questions on political, economic, and religious topics. Read More

  • Recession Recovery Indicators


    The National Bureau of Economic Research defines a recession as a period of significant decline in total output, income, employment, and trade, usually ... Read More

  • Ownership-Based International Trade


    The U.S. exchanges goods and services with the rest of the world through two distinct channels: crossborder trade and affiliate sales. Read More

  • Money and Financial Markets


    Growth rates for broad money measures, such as M2 and M3, slowed markedly in the early months of 2002. Read More

  • Monetary Policy


    At its May 7 meeting, the Federal Open Market Committee left the intended federal funds rate unchanged at 1.75%. Read More

  • Labor Markets


    May was an important month for the Bureau of Labor Statistics’ Payroll Employment Survey. Read More

  • Inflation and Prices


    For the second straight month, the Consumer Price Index (CPI) showed an outsized gain, pushed in large part by another surge in gasoline prices. Read More

  • Foreign Central Banks


    The four major central banks did not change their stated policy settings in May, although some movement in policy outlook can be seen. Read More

  • Federal Deposit Insurance Corporation Funds


    Insured deposit growth in 2000 and 2001, coupled with increased costs associated with bank and thrift failures, had a detrimental effect on the ... Read More

  • Economic Activity


    The preliminary estimate from the national income and product accounts revealed that real gross domestic product (GDP) grew at an annual rate of 5.6% during 2002:IQ. Read More

  • The Economy in Perspective


    The real thing? ... At this writing, we have just finished preparations for the May 7 meeting of the Federal Open Market Committee. Read More

  • The Canadian Dollar


    With the Canadian recovery gathering steam, the Canadian dollar has strengthened against the U.S. dollar during the last few weeks. Read More

  • Poverty


    Overall U.S. poverty rates for both individuals and families fell again in 2001. At 11.3%, the rate for individuals is the lowest since 1974. The family poverty rate of 8.6% is the lowest since the Census Bureau began calculating it in 1959. Read More

  • New Federal Budget Estimates


    Federal receipts fell $44 billion between the first half of fiscal year (FY) 2001 and the first half of FY2002. Read More

  • Money and Financial Markets


    Because price stability is a long-run goal of the Federal Reserve System, monetary policy’s effect on inflation is always a major concern. Read More

  • Monetary Policy


    With no FOMC meeting in April and no intermeeting move, the target federal funds rate and the discount rate have remained unchanged since March. Read More

  • Labor Markets


    Nonfarm payroll employment added 43,000 jobs in April, the first net gain since August 2001. Read More

  • International Trade


    In February, the U.S. deficit on goods and services rose $3.3 billion to reach $31.5 billion, mostly because imports increased $4.2 billion. Read More

  • Inflation and Prices


    The roller coaster of retail prices continued in March, when the Consumer Price Index (CPI) jumped an annualized 4.1% following February’s 2.7% rise. Read More

  • Foreign Central Banks


    The four major central banks continue to keep their policy settings unchanged. The Bank of Canada, on the other hand, raised its policy rate 25 basis points to 2.25% in mid-April. Read More

  • Economic Activity


    Real gross domestic product (GDP) grew at an annual rate of 5.8% in 2002:IQ, according to the advance estimate from the national income and product accounts released April 26. Read More

  • Credit Unions


    Credit unions are mutually organized depository institutions that provide financial services to their members. Like banks and savings associations, credit unions are consolidating. Read More

  • The U.S. International Investment Position


    The U.S. has financed its persistent trade deficits by issuing financial claims against its future output to the rest of the world. Read More

  • The Steel Industry


    Although President Bush’s steel products proclamation of March 5, 2002 highlighted the industry’s troubles, they have long been evident in the Fourth District, where seven steelmakers have declared bankruptcy in the last 18 months. Read More

  • The Economy in Perspective


    Even as U.S. military forces combat terrorism in Afghanistan, Secretary of State Colin Powell prepares to travel to the Middle East. Read More

  • Savings Associations


    Savings associations’ performance mirrored that of commercial banks during 2001. Savings associations earned a record $13.3 billion in 2001, translating into a return on assets of 1.08%—the highest since 1946. Read More

  • Money and Financial Markets


    Annualized productivity growth in 2001:IVQ, which recently was revised upward from 3.5% to 5.2%, was surprisingly strong. Read More

  • Monetary Policy


    In simple textbook models of the aggregate economy, monetary policy is either expansionary, contractionary, or neutral with respect to the real economy and the price level ... Read More

  • Labor Markets


    Although nonfarm payroll employment added 58,000 jobs in March, the indicators still appear weak. Read More

  • Inflation and Prices


    After three consecutive monthly declines, the Consumer Price Index (CPI) rose for the second straight month in February. Read More

  • Foreign Trade and the Business Cycle


    Economic conditions in the U.S. have always been linked to those of our major foreign commercial partners. Read More

  • Foreign Central Banks


    The four major central banks left their policy settings unchanged over the past month. Read More

  • Employment Change


    The National Bureau of Economic Research dated the start of the latest recession at March 2001. Many analysts have proposed December 2001, or perhaps January 2002, as an ending date, and recent labor market data tend to support their view. Read More

  • Economic Activity


    The final estimate from the national income and product accounts shows that during 2001:IVQ, real gross domestic product grew at an annual rate of 1.7%. Read More

  • Commercial Banks


    FDIC-insured commercial banks reported record earnings of $74.3 billion in 2001, $3.2 billion over the record set in 1999. Read More

  • The West Virginia Budget


    In January, Governor Wise presented his annual proposal for West Virginia’s budget for fiscal year 2003. Read More

  • The Trade Balance


    The December trade deficit of $25.3 billion was $3.3 billion less than in November, primarily because of a $3.1 billion decline in imports. Read More

  • The Pennsylvania Budget


    In February, Governor Schweiker presented his annual proposal for Pennsylvania’s budget for fiscal year 2002. Read More

  • The Federal Budget


    The Congressional Budget Office projects that, under current tax and spending policies, the federal budget will show a small total deficit in fiscal years 2002 ($21 billion) and 2003 ($14 billion). Read More

  • The Economy in Perspective


    The error of our ways ... The Bureau of Labor Statistics announced last week that the nation’s unemployment rate, instead of edging back up in February after an unexpected January dip, declined further to 5.5 percent. Read More

  • Money and Financial Markets


    Growth in the broad monetary aggregates appears to have slowed considerably during January 2002. Read More

  • Monetary Policy


    On February 27, the Board of Governors of the Federal Reserve System released its semiannual Monetary Policy Report to the Congress. Read More

  • Labor Markets


    Preliminary estimates from the Bureau of Labor Statistics show that nonfarm employment gained 66,000 jobs in February, the first month of jobs growth since July 2001. Read More

  • Inflation and Prices


    The consumer price index continues to bounce around, rising an annualized 2% in January after falling 2% in December. Read More

  • Industrial Production


    Industrial production refers to the output of the economy’s manufacturing, mining, and utility sectors. Read More

  • Household Financial Conditions


    The national income and product accounts’ measure of personal saving spiked in 2001:IIIQ because of tax rebates, then retracted in 2001:IVQ. Read More

  • Foreign Exchange and Interest Rates


    Although the dollar has been weakening against the euro since early 1996, the euro/dollar exchange rate is currently near its level of a year ago. Read More

  • Foreign Central Banks


    None of the four major central banks has changed its monetary policy operating target so far this year, though the Bank of Japan increased its commitment to purchase long term government bonds ... Read More

  • Economic Activity


    The 2001:IVQ preliminary estimate of real GDP, released February 28, revealed a surprisingly robust 1.4% annual growth rate. Read More

  • Commercial Bank Profitability


    In 2001:IIIQ, poor loan performance continued to take its toll on the profitability of FDIC-insured commercial banks. Read More

  • Bank Loan Demand and Lending Standards


    In January 2002, the net share of senior loan officers reporting tighter standards for commercial and industrial (C&I) loans dropped to 45.4% for ... Read More

  • The Ohio Budget


    Ohio’s budget process follows a biennial cycle: The governor proposes a state budget in every year ending in an odd number. In January 2001, Governor Taft presented his biennial budget for fiscal years 2002 and 2003. Read More

  • The Kentucky Budget


    Kentucky’s governor presents a biennial proposal for state finances in every even-numbered year. Read More

  • The Economy in Perspectivee


    Walking a hard line ... In the face of ever-brighter business conditions, passing an economic stimulus package finally proved too hard a row for the U.S. Congress to hoe. Read More

  • Structure of Depository Institutions


    Passage of the 1994 Reigle–Neal interstate banking legislation spurred consolidation of depository institutions. Read More

  • Recessions and Employment Change


    The National Bureau of Economic Research, a U.S. organization that dates business cycles, recently announced that the current recession (shown as a shaded area on the charts above) began in March 2001. Read More

  • Money and Financial Markets


    In 2001, the monetary aggregates grew rapidly across the entire spectrum of liquidity. Read More

  • Monetary Policy


    At its meeting of January 29–30, the Federal Open Market Committee left the intended federal funds rate unchanged at 1.75%, while the discount rate remained at 1.25%. Read More

  • Labor Markets


    Although January’s employment report shows another decline, it is much less severe than those for the final months of 2001. Read More

  • Is the Dollar Overvalued?


    Despite continuing weakness in U.S. economic activity and sharp reductions in the Federal Reserve’s key target interest rates, the dollar remains strong in foreign exchange markets. Read More

  • Inflation and Prices


    The Consumer Price Index fell in December at a –2.0% annual rate. Read More

  • Foreign Central Banks


    In January, the Argentine government abandoned the currency board arrangement that had maintained one to one parity between the peso and the U.S. dollar for about a decade. Read More

  • Foreign Banking Organizations


    The impact of financial markets’ increasing globalization is evident in the U.S. banking industry. Read More

  • Economic Activity


    The advance estimates for the national income and product accounts, released January 30, have led many to ask whether the current recession may be over. Read More

  • U.S. International Transactions


    The U.S. current account deficit decreased from $107.6 billion in 2001:IIQ to $95 billion in 2001:IIIQ, mainly because of a decline in the deficit on goods and services. Read More

  • The Economy in Perspective


    Money talks ... Many analysts have been projecting a decline in the dollar’s foreign exchange value for years now. Read More

  • Savings and Loan Associations


    In 2001:IIIQ, the net interest margin (NIM) of large savings institutions rose 14 basis points (bp) to 3.28% over the previous quarter. Read More

  • Regional Conditions


    The Fourth District’s unemployment rate has diverged notably from the national trend in recent months. Read More

  • Money and Financial Markets


    Although headlines about monetary policy mostly announce changes in the target federal funds rate, the nature of those changes cannot be appreciated without looking at their effect on the money supply. Read More

  • Monetary Policy


    On December 11, 2001, the Federal Open Market Committee (FOMC) lowered the target federal funds rate 25 basis points (bp) to 1.75%. Read More

  • Labor Markets


    Nonfarm payroll employment fell 124,000 in December, a much smaller decline than those of October and November. Read More

  • Japan’s Economy


    In mid-December, the Japanese yen began another bout of weakening against the dollar. Read More

  • Inflation and Prices


    After declining in October, the Consumer Price Index (CPI) remained unchanged in November. Read More

  • Foreign Central Banks


    Only two major central banks took easing actions over the past month. Read More

  • Economic Activity


    Gross domestic product (GDP) decreased at an annual rate of 1.3% in 2001:IIIQ. Read More

  • Commercial Banks


    Commercial banks have been adversely affected by the current recession. Between 2000:IIIQ and 2001:IIIQ, their net income declined $1.9 billion to $17.4 billion. Read More

  • A Brief History of Marginal Income Tax Rates


    The U.S. income tax was first enacted in 1861, abolished in 1872, reintroduced in 1894, and declared unconstitutional by the Supreme Court in 1895. Read More