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2003 Economic Trends

  • The Employment Cost Index


    From the perspective of U.S. firms, the cost of employing workers goes far beyond wages and salaries. Read More

  • The Economy in Perspective


    Now on screen: X-Pansion, a new-age thriller, rated PG-13 for mild violence and economic jargon, running time of three years and then some… Read More

  • The Deficits Problem


    The U.S. dollar recently depreciated to its lowest level ever against the euro, in response to fears that foreign financial flows into this country are slowing. Read More

  • Regional Labor Markets


    Since the most recent recession began in March 2001, total U.S. employment has declined nearly 1.8% (roughly 2.4 million jobs). Read More

  • Money and Financial Markets


    The recent financial environment, in which the overnight real interest rate has been near zero, was initially associated with a general decline in interest rates across all maturities. Read More

  • Monetary Policy


    It came as no surprise when the Federal Open Market Committee announced after its October meeting that it had voted to leave the federal funds objective unchanged. Read More

  • Labor Markets


    Total nonfarm employment posted a net gain of 57,000 jobs in November, its fourth consecutive monthly gain this year. Read More

  • Inflation and Prices


    The Consumer Price Index (CPI) was unchanged in October after increasing an annualized 3.3% in September. Read More

  • Foreign Central Banks


    None of the four major central banks has changed its policy setting since the Bank of England raised its rate on November 6. Read More

  • Economic Activity


    The preliminary estimate from the U.S. Commerce Department’s Bureau of Economic Analysis showed that real gross domestic product (GDP) increased during 2003:IIIQ at an annual rate of 8.2%. Read More

  • Credit Unions


    Federal credit unions are mutually organized depository institutions that provide financial services to their members. Read More

  • Business Cycle Indicators


    According to business cycle indicators published by the Conference Board, the economy has grown recently, is growing now, and is expected to continue growing in the near future. Read More

  • The Economy in Perspective


    Imagine strong expansion, It’s easy if you try, There’d be no unemployment, Just think what you could buy, Imagine all the people Living well today... Read More

  • Money and Financial Markets


    Short-term interest rates have been trending downward since late 2000, moving roughly in tandem with changes in the federal funds rate. Read More

  • Monetary Policy


    At its October 28 meeting, the Federal Open Market Committee (FOMC) kept the intended federal funds rate at 1%. Read More

  • Measuring Employment Changes


    The Bureau of Labor Statistics’ new data series, Business Employment Dynamics, measures the gross gains and losses that underlie net changes in employment. Read More

  • Labor Markets


    Total nonfarm payroll employment increased by 126,000 jobs in October. Read More

  • Inflation and Prices


    The Consumer Price Index (CPI) rose at an annualized rate of 3.3% in September, down from August’s 4.0% annualized increase. Read More

  • Higher Education Enrollment


    In our increasingly high-tech economy, education is becoming ever more important. Read More

  • Foreign Central Banks


    Major central banks have not moved in concert lately. The Bank of Japan made another easing adjustment, raising the top of its target range for current account balances. Read More

  • Economic Activity


    Real gross domestic product (GDP) skyrocketed to an advance estimate of 7.2%, the highest growth rate since 1984:IQ and a full percentage point higher than most forecasters had expected. Read More

  • Depository Institutions


    FDIC-insured savings institutions reported net income of $4.72 billion for 2003:IIQ, $838 million (21.6%) higher than the same quarter a year earlier. Read More

  • China’s Trade


    There have been many calls for China to stop pegging the yuan–dollar exchange rate in a narrow range around 8.28. Read More

  • The United Auto Workers’ Contract


    In September, the United Auto Workers (UAW) finished negotiating its contract with the Big Three automakers— General Motors, Ford, and DaimlerChrysler. Read More

  • The Economy in Perspective


    The big picture point by point, or “Sunday Afternoon on the Island of La Grande Jatte” (Georges Seurat, 1886) Read More

  • Motor Vehicle Production


    The future of domestic motor vehicle production was a critical issue in the recent United Auto Workers’ negotiations. Read More

  • Money and Financial Markets


    At its September 16 meeting, the Federal Open Market Committee (FOMC) did not change either the federal funds rate target (1%) or the primary credit rate (2%). Read More

  • Monetary Policy


    Growth in the monetary base moderated to an annualized 5.7% rate between January and September, far below its five-year average of 7.9%. Read More

  • Labor Markets


    After losing a revised 41,000 jobs in August, total nonfarm employment posted a net gain of 57,000 in September, its first increase in eight months. The revisions halved the figure reported earlier. Read More

  • Japanese Intervention


    The Japanese Ministry of Finance has recently come under criticism for its frequent, heavy interventions in the foreign exchange market. Read More

  • International Reserves: Expensive Insurance


    Since the 1997–98 financial crisis, many East Asian countries have greatly increased their holdings of foreign exchange reserves as insurance against exchange rate fluctuations and international crises. Read More

  • Inflation and Prices


    The Consumer Price Index (CPI) rose 0.3% in August (4.0% at an annual rate), compared with increases of 0.2% (2.0% annualized) in the previous two months. Read More

  • Foreign Central Banks


    The major central banks’ operating targets have not changed over the past three months, but interest rate cuts in other countries have been common. Read More

  • FDIC-Insured Commercial Banks


    In 2003:IIQ, FDIC-insured commercial banks’ net operating income improved slightly from the previous quarter and recovered strongly from its dip in 2002:IVQ. Read More

  • Economic Activity


    The final estimate of real gross domestic product (GDP) for 2003:IIQ was 3.3%, revised up 0.2 percentage point from the preliminary release, with modest boosts in some sectors offsetting slight declines in others. Read More

  • Business Cycles and Monetary Policy


    The period after the 1991 recession, dubbed the “jobless recovery,” was not historically typical; the current episode, sometimes called the “job-loss recovery,” is even more anomalous. Read More

  • The Wealth of Nations


    How does one measure the wealth of nations? Read More

  • The Economy in Perspective


    Work in progress…Work in America is under scrutiny once again. Read More

  • Money and Financial Markets


    The yield curve has steepened since last month, but this change represents more than a bounce-back from the summer’s exceptionally low longterm rates; current yields show an increase over April and May as well. Read More

  • Monetary Policy


    The Federal Open Market Committee made no change in its target for the federal funds rate at its August 12 meeting. Read More

  • Labor Productivity


    Growth in labor productivity (nonfarm business output per hour) has been phenomenal in this business cycle so far, much faster than in the 1990–2001 cycle. Read More

  • Labor Markets


    Nonfarm payroll employment fell 93,000 jobs in August. Net losses were revised from 44,000 to 49,000 jobs for July and from 72,000 to 83,000 jobs for June. Read More

  • Inflation and Prices


    Consumer and wholesale prices rose at an annualized rate of about 2% in July, partly restrained by falling energy costs. Read More

  • Foreign Central Banks


    None of the four major central banks has changed its operating target since July 10, when the Monetary Policy Committee of the Bank of England reduced its policy rate from 3.75% to 3.5%. Read More

  • Federal Home Loan Banks


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

  • Elderly Americans


    As life expectancies have risen, meeting the needs of increasing numbers of older Americans has become a pressing concern. Read More

  • Economic Activity


    The preliminary estimate of real gross domestic product (GDP) for 2003:IIQ— the first of two planned revisions to the advance estimate that the Commerce Department issued in July— shows a greater increase in output growth than initially reported. Read More

  • What’s Driving the Dollar?


    Market reports often suggest that nervous international investors are driving down the dollar’s foreign exchange value. Read More

  • The Employment Cost Index


    The Employment Cost Index (ECI) is a quarterly measure of the rate of change in employers’ costs for both wages and benefits. Read More

  • The Economy in Perspective


    Plus ça change, plus c’est la même chose. (The more things change, the more they remain the same.) Read More

  • Savings Institutions


    FDIC-insured savings institutions reported net income for 2003:IQ of $4.43 billion, which was $796 million (21.9%) higher than the same quarter a year earlier and $448 million higher than 2002:IVQ. Read More

  • Money and Financial Markets


    The trajectory of expected future policy actions has changed dramatically since the beginning of summer. Read More

  • Monetary Policy


    After the surprise of a smaller-than expected cut in the federal funds rate at the June 24–25 meeting of the Federal Open Market Committee (FOMC), market participants see little chance of a further rate cut. Read More

  • Labor Markets


    Total nonfarm payroll employment fell by 44,000 jobs in July after dropping a revised 72,000 jobs in June, more than double the June losses reported in the preliminary estimate. Read More

  • Inflation and Prices


    The inflation statistics remained subdued in June, seemingly still on the disinflation path begun sometime in 2001. Read More

  • Graduate and Professional School Enrollment


    It has been clear for some time that people with a college degree earn substantially more than high school graduates do. Read More

  • Foreign Central Banks


    The Bank of England reduced its policy rate 25 basis points (bp) to 3.5% on July 10. Read More

  • Euro Intervention


    Prompted by the euro’s sharp appreciation against the dollar, German chancellor Gerhard Schröder recently suggested that the European Central Bank intervene in the foreign exchange market to “maintain the competitiveness of exports from Europe.” Read More

  • Economic Activity


    The advance estimate from the national income and product accounts revealed that real gross domestic product (GDP) rose at an annual rate of 2.4% during 2003:IIQ. Personal consumption expenditures boosted output growth. Read More

  • The Economy in Perspective


    Matters of interest…The Federal Open Market Committee reduced its federal funds rate target by 25 basis points at its June 25 meeting, and the Board of Governors reduced the discount rate on primary credit by an equal amount the same day. Read More

  • Rental Costs


    More than a third of the U.S. population resides in rental property. Read More

  • Money and Financial Markets


    Options on federal funds futures have traded on the Chicago Board of Trade since March 2003. Read More

  • Monetary Policy


    At its June 25 meeting, the Federal Open Market Committee (FOMC) lowered the intended federal funds rate 25 basis points (bp) to 1%, the thirteenth rate cut since the current round of easing began in January 2001. Read More

  • Labor Markets


    Total nonfarm payroll employment fell by 30,000 jobs in June, after losing a revised 22,000 in April and 70,000 in May. Read More

  • International Markets


    Stock prices in the U.S. have increased since the beginning of the year, as measured by three broad indexes. Read More

  • Inflation and Prices


    The Consumer Price Index (CPI) was unchanged in May, the second straight month in which this retail price measure showed no inflation; in April, it fell 0.3% (–3.8% at an annual rate). Read More

  • Home Values


    The 2000 Census reported that the median value of a home in the U.S. was $119,600, more than 18% higher than the value reported in the 1990 Census, after adjusting for inflation. Read More

  • Foreign Central Banks


    The European Central Bank reduced its policy rate to 2% early in June. Read More

  • Economic Activity


    According to the Commerce Department’s final estimate, real GDP increased at an annual rate of 1.4% in the first quarter of 2003, matching growth in the last quarter of 2002. Consumer spending increased 2.0%. Read More

  • Depository Institutions


    FDIC-insured depository institutions’ net operating income recovered energetically from the dip it took in 2002:IVQ. Read More

  • A New Industrial Classification System


    The conversion from the Standard Industrial Classification (SIC) to the North American Industrial Classification (NAICS) took effect in June, creating major definitional changes for the industries previously reported under the SIC. Read More

  • The Economy in Perspective


    My dinner with André…The time: a gloomy summer evening. Read More

  • Money and Financial Markets


    Although financial headlines announce changes in the target federal funds rate, the nature of those changes cannot be appreciated without understanding their effect on the money supply. Read More

  • Monetary Policy


    At its May 6 meeting, the Federal Open Market Committee (FOMC) left the federal funds rate target unchanged at 1.25% and left the primary credit rate unchanged at 2.25%. Read More

  • Migration to and from Ohio


    Over the last 30 years, Ohio’s population growth has been well below the national average. After the recessions of 1973–75 and those of the early 1980s, the state saw an exodus of individuals and outright (net) population declines. Read More

  • Labor Markets


    Nonfarm employment posted a net loss of 17,000 jobs in May. Read More

  • Is China’s Currency Undervalued?


    If China adopted freely floating exchange rates, its currency would probably appreciate somewhat more than it has on a trade-weighted basis and, perhaps, relative to the dollar. Read More

  • Inflation and Prices


    Recent inflation data and the inflation outlook continue to show improvement. After rising 0.3% in March, the Consumer Price Index (CPI) fell 0.3% in April. Read More

  • Foreign Central Banks


    On May 6, the Federal Reserve’s Open Market Committee voted unanimously to maintain its 1.25% federal funds rate target. Read More

  • Federal Deposit Insurance Corporation Funds


    Insured deposit growth in 2001 and 2002, coupled with the increased costs associated with bank and thrift failures, had a detrimental effect on the FDIC’s Bank Insurance Fund (BIF) and Savings Association Insurance Fund (SAIF). Read More

  • Economic Activity


    The preliminary estimate showed real GDP growing at a modest annual rate of 1.9% in 2003:IQ, largely a result of consumer spending and residential investment. Read More

  • The Economy in Perspective


    Too much of a little thing…Federal Reserve Board Chairman Alan Greenspan concluded his prepared testimony to the U.S. House of Representatives’ Committee on Financial Services on April 30 with a comment about inflation. Read More

  • Savings Institutions


    FDIC-insured saving institutions reported net income of $3.99 billion for 2002:IVQ, which was $329 million (9.0%) higher than a year earlier. Read More

  • Money and Financial Markets


    While the Federal Reserve controls several nominal interest rates, the real economy is affected by real rates, that is, rates adjusted for inflation. Read More

  • Monetary Policy


    While the Federal Reserve has not changed the target federal funds rate this year, the fed funds futures market sees at least a possibility that rates will be lowered from their current level of 1.25%. Read More

  • Labor Markets


    Total nonfarm payroll employment fell by 48,000 jobs in April 2003, after losing a revised 124,000 jobs in March. Read More

  • International Markets


    The Broad Dollar Index includes the currencies of 26 countries or regions that had a share of at least 0.5% in U.S. non-oil imports or nonagricultural exports in 1997. Read More

  • Inflation and Prices


    The Consumer Price Index (CPI) jumped an annualized 4% in March and has risen 5.2% over the first three months of 2003. Read More

  • Foreign Central Banks


    The Bank of Japan, alone among the four major central banks, loosened its policy setting over the past month by an additional ¥5 trillion in current account balances. Read More

  • Employment and Earnings


    Real average hourly earnings have shown two distinct patterns since the beginning of the 1990s. Read More

  • Economic Activity


    The advance estimate of the national income and product accounts puts real GDP growth at a sluggish 1.6% (annual rate) in 2003:IQ. Read More

  • Changes in Measuring Employment


    The Bureau of Labor Statistics is in the process of changing its reporting of employment figures to conform to the North American Industry Classification System (NAICS), which will replace the Standard Industrial Classification (SIC) system. Read More

  • The Economy in Perspective


    Beyond Baghdad…As this is being written, coalition forces have just entered Baghdad, and with surprising ease. Read More

  • Predicting Oil Prices


    Does the futures market provide any clues about the prospective path of oil prices? Read More

  • Money and Financial Markets


    The yield curve’s upward slope suggests that liquidity is adequate for economic expansion. Read More

  • Monetary Policy


    The Federal Open Market Committee (FOMC) left the federal funds rate target unchanged at 1.25%, noting that “the hesitancy of the economic expansion appears to owe importantly to oil price premiums and other aspects of geopolitical uncertainties.” Read More

  • Labor Markets


    Total nonfarm payroll employment posted a net loss of 108,000 jobs in March, the second consecutive monthly decline this year. Read More

  • Inflation and Prices


    Large, abrupt swings in energy prices strongly influenced the CPI in 2002 and continue to do so in 2003. Read More

  • Income Trends


    The 2000 Census reported that U.S. per capita income was $21,587. Among the Fourth District’s 169 counties, only 21 registered per capita incomes above that figure. Read More

  • Foreign Central Banks


    All four major central banks recently noted weaker economic conditions. Read More

  • Employment Growth


    The gradual changes in total employment that are now occurring result from far larger flows of workers being hired or separated from jobs. Read More

  • Economic Activity


    In the national income and product accounts’ final estimate for 2002:IVQ, real GDP grew at a 1.4% annual rate. Read More

  • Dollar Depreciation and the Current Account


    The U.S. current account deficit—a broad measure of our trade position— has expanded sharply since 1996 and is likely to reach $590 billion (5.5% of GDP) this year. Read More

  • Depository Institutions


    FDIC-insured depository institutions’ net operating income declined to $20.1 billion in 2002:IVQ, a 7.3% drop from the previous quarter. Read More

  • The Ohio Budget


    In January 2003, Governor Taft presented his biennial budget for the State of Ohio’s fiscal years 2004 and 2005, which reflects the state’s economic difficulties over the last two years. Read More

  • The Economy in Perspective


    War…As this goes to press, war with Iraq appears more likely than it did last month—indeed, it seems nearly imminent. Read More

  • Money and Financial Markets


    At the short end of the maturity spectrum, interest rates tend to follow the federal funds rate closely. Read More

  • Monetary Policy


    The Board of Governors released its semiannual Monetary Policy Report to the Congress, which noted that although “the economy remained sluggish at the end of 2002 and early this year,” the household sector “continued to be a solid source of demand.” Read More

  • Labor Markets


    In February, nonfarm payroll employment fell by 308,000 jobs, the biggest monthly decline since November 2001. Read More

  • International Oil Markets


    Oil, the world’s single most important energy source, is in limited supply. Read More

  • Inflation and Prices


    The Consumer Price Index (CPI) jumped an annualized 4% in February, well above its recent trend of about 2 1/2%. Read More

  • Foreign Central Banks


    On March 6, the European Central Bank reduced its target interest rate by 25 basis points (bp) to 2.5%. Read More

  • Employment Changes


    So far, the labor market has shown little evidence that the economy is recovering. Read More

  • Economic Activity


    According to the preliminary estimate, real gross domestic product (GDP) grew at an annual rate of 1.4% during 2002:IVQ. Read More

  • Credit Unions


    Federal credit unions are mutually organized depository institutions that provide financial services to their members. Read More

  • The Taylor Rule


    Monetary policy can often be described as a rule or strategy for changing the federal funds rate in response to inflation and other indicators of real economic activity. Read More

  • The Economy in Perspective


    Malaise…In 1979, Jimmy Carter told the American people that we were experiencing a “crisis of confidence” in our country. Read More

  • Savings Institutions


    FDIC-insured saving institutions reported net income of $3.97 billion for 2002:IIIQ, which was $511 million (14.8%) higher than a year earlier. Read More

  • Monetary Policy


    As of January 9, 2003, instead of the discount rate, Federal Reserve Banks began to offer depository institutions two discount window programs: primary credit and secondary credit. Read More

  • Manufacturing Employment


    The manufacturing industry tends to bear the brunt of U.S. recessions, when the industry’s employment typically falls more sharply than total nonfarm private employment. Read More

  • Labor Markets


    Nonfarm payroll employment gained 143,000 in January. Read More

  • Inflation and Prices


    The major inflation statistics slowed to a virtual standstill in January, as retail prices (measured by the Consumer Price Index) as well as wholesale prices (measured by the Producer Price Index), grew at an annualized rate of less than 1%. Read More

  • Foreign Central Banks


    The Bank of England reduced its policy rate by 25 basis points to 3.75% on February 6. Read More

  • Economic Activity


    The advance estimate from the national income and product accounts shows that growth in real gross domestic product (GDP) slowed from 4.0% in 2002:IIIQ to 0.7% in 2002:IVQ (annual rates). Read More

  • Dollar Depreciation and the Current Account


    Since its most recent peak in February 2002, the U.S. dollar has depreciated nearly 11% on a trade-weightedaverage basis against the currencies of the major industrial countries. Read More

  • China's Deflation


    Those who think deflation is always and everywhere a bad thing must have overlooked the People’s Republic of China, whose economy is growing by leaps and bounds despite a falling price level. Why? Read More

  • U.S. Free Trade Agreements


    On December 11, 2002, Chile signed a free trade agreement with the U.S., removing tariffs on 85% of manufactured goods and 75% of agricultural produce, which the market has welcomed as a boost for Chile’s mainly export-oriented economy. Read More

  • The Economy in Perspective


    New Year’s resolutions…You know the drill: On New Year’s Eve, you write a list of three or four critical wrongs that you swear to right in the year ahead. Read More

  • Money and Financial Markets


    As a tool of monetary policy, changing interest rates is only the means to an end. One (some would say the only) goal of monetary policy is low, steady inflation. How can we tell if monetary policy is on track for that a goal? Read More

  • Monetary Policy


    On November 6, the Federal Open Market Committee lowered the target federal funds rate 50 basis points, for a total reduction of 525 basis points since the beginning of 2001. Read More

  • Labor Markets


    As always, the new year brings retrospection as well as resolutions and forecasts. Read More

  • Inflation and Prices


    The consumer price index (CPI) rose only 0.1% (1.3% annual rate) in November. Read More

  • Foreign Central Banks


    For most developed nations, 2002 was a period of economic weakness. Read More

  • Economic Activity


    The final estimate of real gross domestic product (GDP) for 2002:IIIQ contained no surprises; the estimate of overall growth held at an annual rate of 4.0%. Read More

  • Depository Institutions


    In 2002:IIIQ, FDIC-insured depository institutions’ net operating income declined 3.9% from the previous quarter to $21.7 billion. Read More

  • Automobile Manufacturing in the Fourth District


    Throughout the 1990s, the relative importance of auto manufacturing (vehicle assembly and the production of associated parts) increased in the Fourth District states of Kentucky, Ohio, and West Virginia, as well as the U.S. as a whole. Read More