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2004 Economic Trends

  • Urban Poverty in the Fourth District


    Cleveland recently attracted national attention when the Census Bureau ranked its poverty rate the highest of any U.S. city with a population over 250,000. Read More

  • The Twin Deficit Problem


    The U.S. finances its current account deficits by issuing financial claims— stocks, bonds, Treasury issues, bank accounts, etc.—to the rest of the world. Read More

  • The Economy in Perspective


    Appreciating the dollar…The U.S. dollar has been in the news often lately, and some financial journalists have announced that it is finally getting its comeuppance. Read More

  • Money and Financial Markets


    In recent months, yields on 10-year Treasury inflation-protected securities (TIPS) have fallen more than yields on nominal 10-year Treasury notes. Read More

  • Monetary Policy and the Dollar’s Decline


    Third-quarter GDP growth in the euro area and Japan came in lower than analysts had anticipated. Read More

  • Monetary Policy


    At its November 10 meeting, the Federal Open Market Committee (FOMC) raised its target for the federal funds rate from 1.75% to 2%—just above the inflation rate for core personal consumption expenditures (PCE) over the past year. Read More

  • Measuring Employment


    The most recent Bureau of Labor Statistics (BLS) payroll survey reports that nonfarm employment is 0.5 million lower than it was in March 2001. Read More

  • Labor Markets


    Nonfarm payroll employment grew 112,000 in November after increasing 303,000 in October. Read More

  • Inflation and Prices


    The Consumer Price Index (CPI) surged at an annualized rate of 7.9% in October. Read More

  • Fourth District Conditions


    The Fourth District’s unemployment rate—compiled from county unemployment rates that are released a month after the states’—fell sharply in September, declining 0.3 percentage point to 5.9%. Read More

  • Foreign Central Banks


    At its November 10 meeting, the Federal Open Market Committee (FOMC) continued its series of policy rate increases with another 25 basis point (bp) rise in the target for the overnight uncollateralized interbank loan (federal funds) rate. Read More

  • Foreign Banking Organizations


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

  • Economic Activity


    According to the preliminary estimate for 2004:IIIQ, real GDP rose at an annual rate of 3.9%, up from the advance estimate of 3.7%. Read More

  • U.S. Employment Changes


    The nation’s economic recovery began in December 2001, but the labor market has taken much longer to recover. Read More

  • U.S. and Foreign Manufacturing


    Over the last 25 years, several industrialized economies have had the same experience—a decline in manufacturing employment. Since 1977, manufacturing jobs in the U.S. have fallen 20% and in the U.K. almost 50%. Read More

  • The World Economy


    In September, the International Monetary Fund (IMF) published its second biannual World Economic Outlook. Read More

  • The Economy in Perspective


    Off we go (into the wild blue or red yonder)…We write this page in complete ignorance of the election results; ballots will not even be cast for another few days. Read More

  • Monetary Policy


    At its most recent meeting, held on September 21, the Federal Open Market Committee (FOMC) raised the target federal funds rate 25 basis points (bp) to 1.75%, the third such increase since the record low of 1.00% was reached in June 2003. Read More

  • Inflation and Prices


    The September inflation statistics showed neither a continuation of the disinflation seen for much of the summer nor the significant reacceleration of inflation that seemed to be occurring last spring. Read More

  • Household Saving and Debt


    Over the past two decades, the personal saving rate in the U.S. has declined from about 10% to 1.2%. Read More

  • Fourth District Employment


    The Midwest traditionally has been a manufacturing-intensive region. Read More

  • Foreign Central Banks


    None of the four major central banks has changed its policy setting since the Federal Reserve’s Federal Open Market Committee adopted a 1.75% target for the federal funds rate on September 21. Read More

  • FDIC Funds


    During the first half of 2004, FDIC-insured deposits grew: Deposits insured by the Bank Insurance Fund (BIF) grew at an annualized rate of 4.14% and those insured by the Savings Association Insurance Fund (SAIF) at 6.63%. Read More

  • Economic Activity


    According to the U.S. Commerce Department’s advance estimate, the annualized growth rate of real GDP in 2004:IIIQ was 3.7%. Read More

  • The U.S. Current Account Deficit


    The U.S. current account deficit reached a record high in 2004:IIQ, renewing concerns that its continued growth could cause a flight from the dollar, adversely affecting economic growth, and complicating monetary policy. Read More

  • The Economy in Perspective


    Normalization, of a sort…The current expansion, which began in November 2001, followed a mild eight-month contraction (since 1945, the average length of contractions has been 10 months). Read More

  • Predicting Oil Prices


    Bad as the economic consequences of higher oil prices may be, the fog surrounding their future path compounds the problem. Read More

  • Oil Prices, Monetary Policy, and Recessions


    Oil price increases seem to have accompanied every recession since 1971. Read More

  • Money and Financial Markets


    On September 21, the Federal Open Market Committee (FOMC) raised the target federal funds rate to 1.75%, 25 basis points (bp) higher than the target established on August 10. Read More

  • Monetary Policy


    Growth in the sweep-adjusted monetary base (total currency in circulation plus total reserves including depository institutions’ vault cash) has increased its annualized year-to-date growth rate to 6.3% in 2004. Read More

  • Labor Markets


    In September, total nonfarm payrolls increased by 96,000. Read More

  • Inflation and Prices


    The August inflation data show continued moderation in retail prices. Read More

  • Fourth District Employment and Business Cycles


    The Fourth District’s unemployment rate rose sharply in August to 6.2%, an increase of 0.3 percentage point (pp) from July. Read More

  • Fourth District Commercial Banks


    FDIC-insured commercial banks headquartered in the Fourth Federal Reserve District continued the past two years’ strong earnings performance into the first half of 2004. Read More

  • Foreign Central Banks


    The Federal Reserve, alone among the major central banks, changed its policy rate during the past month, raising it another 25 basis points to 1.75%. Read More

  • Expected Inflation and the TIIS Market


    Ascertaining long-term inflation expectations is notoriously difficult. Read More

  • Education and the Workforce


    The American workforce is becoming increasingly educated as younger generations replace older ones. Read More

  • Economic Activity


    According to the U.S. Commerce Department’s final estimate, the annualized growth rate of real GDP in 2004:IIQ was 3.3%, up from the preliminary estimate of 2.8%. Read More

  • The Economy in Perspective


    As we discuss elsewhere in this issue, nonfarm payrolls increased by 144,000 jobs in August, and employment gains were revised upward in both June and July. Read More

  • Oil


    Because oil is an important input in the production process, a significant increase in oil prices can retard economic growth. Read More

  • Ohio Employment


    The seasonally adjusted Mass Layoff Statistics for Ohio showed increases from May to June in both the number of mass layoffs and the number of initial unemployment compensation claims filed. Read More

  • Mortgage Lending


    Mortgage bankers originated $848 billion of new mortgages in 2004:IIQ, partially reversing the slump that began in 2003:IVQ but falling far short of the $1.2 trillion peak reached in the third quarter of the same year. Read More

  • Money and Financial Markets


    Financial markets offer one way to gauge the degree of accommodation in monetary policy (and perhaps to judge whether it is removed at “a pace that is likely to be measured” in the future). Read More

  • Monetary Policy


    On August 10, the Federal Open Market Committee raised the federal funds rate target to 1.50%, 25 basis points (bp) higher than the target established on June 30. Read More

  • Labor Markets


    Nonfarm payrolls increased by 144,000 jobs in August following lackluster net gains in June and July, which were revised upward by a total of 59,000 jobs to 169,000. Read More

  • International Trade and Transactions


    In June, the U.S. trade deficit in goods and services grew by a record $8.9 billion to reach $55.8 billion. Read More

  • Inflation and Prices


    The July inflation data suggest a generally moderating trend in retail prices. Read More

  • Fourth District Employment Conditions


    The Fourth District’s unemployment rate held steady at 5.8% in July, while the U.S. rate fell one-tenth of a percent to 5.5%. Read More

  • Fourth District Banking Conditions


    Banks are often described as financial intermediaries that finance loans primarily with deposits. Read More

  • Foreign Central Banks


    None of the major central banks has changed its policy setting since the Federal Open Market Committee raised its target to 1.5% on August 10. Read More

  • Economic Activity


    The preliminary estimate for 2004:IIQ revised GDP growth down from the 3.0% advance estimate to 2.8%, which was slightly higher than the Blue Chip forecast for the quarter. Read More

  • Changes in U.S. Employment


    From the peak of the last expansion (March 2001) to June 2004, employment in the U.S. fell 1.0%. Read More

  • U.S. Net International Investment Position


    By recent estimates, the net international investment position of the U.S. was –$2.4 trillion in 2003, or –22.1% of our GDP. Read More

  • The Economy in Perspective


    U.S. employment grew by only 32,000 jobs last month, dramatically fewer than the 240,000 jobs the pros had predicted. Read More

  • Revisions of Employment Data


    The Bureau of Labor Statistics’ monthly employment report may be the most widely followed economic release. Read More

  • Money and Financial Markets


    An inflation-adjusted overnight interest rate near or below zero is not thought to be sustainable without ultimately inducing inflationary pressures. Read More

  • Monetary Policy


    On June 30, the Federal Open Market Committee raised its federal funds rate target from 1% to 1 1/4%, initiating an anticipated series of rate hikes to return policy to a neutral stance. Read More

  • Labor Markets


    Nonfarm payrolls grew by 32,000 in July, and June’s employment gain was revised down from 112,000 to 78,000. Read More

  • Inflation and Prices


    The Consumer Price Index (CPI) rose sharply again in June, moving up at a 3.9% annualized rate following an 8.0% annualized jump in May. Read More

  • Fourth District Employment Conditions


    The Fourth District’s unemployment rate rose slightly to 5.8% in June after falling to 5.6% in May, the lowest point on the downward trajectory from its 6.2% peak in early 2003. Read More

  • Fourth District Banking Conditions


    All performance indicators point to a strengthening banking sector in the Fourth Federal Reserve District. Read More

  • Foreign Central Banks


    The Federal Open Market Committee increased its federal funds rate target by 25 basis points to 1.25% on June 30, “with underlying inflation still expected to be relatively low.” Read More

  • Economic Activity


    The advance (initial) GDP estimate for 2004:IIQ, released July 30 by the Commerce Department, revealed that annualized real output growth was 3.0%. Read More

  • China’s Renminbi: What’s Real, What’s Not


    In 1995, China pegged its currency, the renminbi, to the U.S. dollar at about 8.28 yuan per dollar. Read More

  • The Economy in Perspective


    Despite the Federal Open Market Committee’s June 30 decision to increase its federal funds rate target by 25 basis points, some people still wonder whether or not the Committee is “behind the curve.” Read More

  • Money and Financial Markets


    The May 4 statement of the Federal Open Market Committee noted the “accommodative stance of monetary policy.” Read More

  • Monetary Policy


    The intended federal funds rate has held constant at 1% for nearly a year. Read More

  • Labor Markets


    Nonfarm payroll employment slowed after three months of robust growth, reporting a net increase of only 112,000 jobs in June. Read More

  • International Trade and Transactions


    The current account deficit has been increasing for the past 12 years. In 2004:IQ, the current account deficit fell to 5.1% of GDP. Read More

  • Inflation and Prices


    In May, the Consumer Price Index (CPI) surged 0.6% (8.0% annualized rate)—the largest monthly advance in more than four years. Read More

  • Fourth District Conditions


    By one measure (using Establishment Survey data), job creation has been so weak during some phases of the current recovery—even worse than in the previous, so-called “jobless” recovery—that some have dubbed this the “job loss” recovery. Read More

  • Fourth District Commercial Banks


    FDIC-insured commercial banks headquartered in the Fourth Federal Reserve District continued their strong earnings performance of 2002–03 into 2004:IQ. Read More

  • Foreign Central Banks


    Central banks continue to be viewed in the context of a presumed global economic recovery—led partly by China’s strong growth—and of upward price pressures, some created directly or indirectly by petroleum markets. Read More

  • Economic Activity


    According to the U.S. Commerce Department’s final estimate, the annualized growth rate of real GDP in 2004:IQ was 3.9%, down from the preliminary estimate of 4.4%. Read More

  • Earnings and Employment


    Between May 2001 and May 2004, real average hourly earnings rose a total of 2.0% (0.6% per year on average). Read More

  • Treasury Inflation-Indexed Securities


    Today’s monetary policy decisions focus on future inflation prospects. Read More

  • The Employment Services Industry


    Employment services was one of the fastest-growing industries throughout the 1990s. By March 2001, the end of the expansion, it accounted for 3.6 million workers (2.7% of U.S. employment). Read More

  • The Economy in Perspective


    Come gather ’round people wherever you roam Recognize that inflation around you has grown Read More

  • Oil Prices and the Business Cycle


    With oil trading around a record high of $40 per barrel, is another recession far behind? Read More

  • Monetary Policy


    Nonfarm payroll employment rose 248,000 in May. Read More

  • Labor Markets


    Nonfarm payroll employment rose 248,000 in May. Read More

  • Inflation and Prices


    The recent broad-based rise in retail prices continues: The volatile Consumer Price Index (CPI) increased at a 2.6% annualized rate in April after surging 6.0% in March. Read More

  • GDP Growth and Household Finances


    According to the preliminary estimate from the U.S. Commerce Department’s Bureau of Economic Analysis, real gross domestic product (GDP) rose at an annual rate of 4.4% for 2004:IQ, up from the advance estimate of 4.2%. Read More

  • Fourth District Unemployment Rates


    Unemployment patterns in the Fourth District generally follow national trends very closely. Read More

  • Foreign Central Banks


    The Monetary Policy Committee raised the Bank of England’s policy rate 25 basis points to 4.25% on May 6, “to keep CPI inflation on track to meet the 2% target in the medium term.” Read More

  • FDIC Funds


    Insured deposits have grown over the past five years at an average annual rate of nearly 4% for members of the Bank Insurance Fund (BIF). Read More

  • Emerging Market Debt


    In late March, expectations about the future course of U.S. monetary policy began to change. Read More

  • The Pennsylvania State Budget


    In February, Pennsylvania governor Edward G. Rendell presented his annual budget proposal for fiscal year 2004–05. Only about half of the state’s revenues are available for discretionary appropriations; the rest are subject to spending restrictions. Read More

  • The Kentucky State Budget


    In January, Kentucky governor Ernie Fletcher presented his proposed budget for the state’s fiscal years 2005 and 2006, (The biennial budget process generally occurs in every even-numbered year.) Read More

  • The Economy in Perspective


    On the policy trail…The Federal Open Market Committee has maintained its federal funds rate target at 1% for almost a full year, by most reckonings a considerable length of time. Read More

  • Savings Institutions


    FDIC-insured savings institutions (S&Ls) reported net income of $4.53 billion for 2003:IVQ. Read More

  • Money and Financial Markets


    One reason the federal funds rate gets such intense scrutiny, even though few people directly borrow and lend at that rate, is that Federal Reserve policy affects other rates as well. Read More

  • Monetary Policy


    As of this writing, the target federal funds rate remains at 1%, where it has been since June 2003. Read More

  • Labor Markets


    Nonfarm payroll employment registered a net increase of 288,000 jobs in April. Read More

  • Japan’s Economy


    March data reflect seemingly broadbased increases in retail prices. The Consumer Price Index (CPI) rose an additional 6.0% in March, significantly exceeding its 12-month growth rate of 1.7%. Read More

  • Inflation and Prices


    March data reflect seemingly broadbased increases in retail prices. The Consumer Price Index (CPI) rose an additional 6.0% in March, significantly exceeding its 12-month growth rate of 1.7%. Read More

  • Foreign Central Banks


    Public discussion of expected monetary tightening has begun to spread around the globe, although the four major central banks left their policy settings unchanged in April. Read More

  • Employment Conditions in the OECD


    Unemployment rates fell and employment rose in most nations of the Organisation for Economic Co-operation and Development (OECD) from 1997 to 2001. Read More

  • Changes in the GDP


    The advance estimate for real GDP growth in 2004:IQ was 4.2%, slightly above the previous quarter’s 4.1% final estimate but below the Blue Chip economists’ forecast of 4.3%. Read More

  • U.S. Employment in the Recovery


    In his recent testimony before Congress, Federal Reserve Chairman Greenspan referred to the labor market’s peculiar performance in this recovery, noting that “the expansion of employment has significantly lagged increases in output.” Read More

  • The Economy in Perspective


    A day in the life… “You’ve changed.” “Pardon me?” “You’ve changed,” she said. “You’re not the economy I married.” Read More

  • Regional Employment Patterns


    U.S. nonfarm employment has declined 1.8% since March 2001, the most recent peak in business activity. Read More

  • Money and Financial Markets


    Market participants’ inference that the FOMC has leeway to be patient is consistently reflected throughout the term structure of interest rates. Read More

  • Monetary Policy


    As market participants had expected, the Federal Open Market Committee left the federal funds rate target unchanged at its March 16 meeting. Read More

  • Labor Markets


    In March, nonfarm payrolls added 308,000 jobs on net, the largest gain since April 2000. Read More

  • Inflation and Prices


    Retail price data for February suggest that the disinflation pattern observed since mid-2001 may be moderating. Read More

  • GDP Growth


    Although GDP growth has exceeded 4% over the last year, manufacturing is still in the doldrums. Read More

  • Foreign Central Banks


    None of the four major central banks has changed its policy setting since early February. Read More

  • FDIC-Insured Commercial Banks


    In 2003:IVQ, FDIC-insured commercial banks’ net operating income improved from the previous quarter and recovered strongly (rising 28.9%) from its dip in the same quarter of the previous year. Read More

  • Economic Activity


    Real gross domestic product—the output of goods and services produced by labor and property located in the U.S.—increased at an annualized rate of 4.1% in the fourth quarter of 2003. Read More

  • Dollar Depreciation and Inflation


    Since its most recent peak on February 27, 2002, the dollar has depreciated more than 12% on a trade-weighted average basis against the currencies of our major trading partners. Read More

  • Argentina


    After a few days of uncertainty, Argentina made its scheduled $3.1 billion repayment of an International Monetary Fund (IMF) loan on March 9. Read More

  • The International Monetary Fund


    Since its creation in 1945, the International Monetary Fund (IMF) has grown from 45 member countries to 184. Read More

  • The Economy in Perspective


    According to the National Bureau of Economic Research, an independent organization that dates U.S. business cycle peaks and troughs, economic activity peaked in March 2001 and declined until November 2001. Read More

  • Money and Financial Markets


    After declining strongly from late 2000 to mid-2003, interest rates on three- and six-month Treasury bills have remained nearly constant at values close to the federal funds rate. Read More

  • Monetary Policy


    On February 11 and 12, Federal Reserve Chairman Alan Greenspan delivered his semiannual Monetary Policy Report to Congress. Read More

  • Measuring Unemployment


    In contrast with the weak employment growth figures, national unemployment indicators suggest a gradually improving labor market. Read More

  • Labor Markets


    Nonfarm payroll employment recorded a net gain of only 21,000 jobs in February, compared with forecasters’ projection of a 128,000 net gain. The previous two months’ net gains were revised down by a total of 23,000. Read More

  • Inflation and Prices


    The stronger, if still modest, recent increase in retail prices continued into February. In fact, the Consumer Price Index (CPI) surged an annualized 6.0% in January, the largest monthly increase since February 2003. Read More

  • Foreign Central Banks


    The Bank of England’s Monetary Policy Committee raised its repo rate to 4% in early February, the second increase of 25 basis points in three months. 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, using funds that those institutions deposited. Read More

  • Employment Changes


    The change in aggregate employment is the difference between gross job creations and gross job destruction. Read More

  • Economic Activity


    According to the Commerce Department’s revised estimate, the annualized growth rate of real GDP in 2003:IVQ was 4.1%, a modest increase from the 4.0% reported in the initial estimate. Read More

  • Unemployment Insurance Claims


    Unemployment insurance claims, a closely followed economic indicator, have trended sharply downward over the last two months. Read More

  • The Economy in Perspective


    At the conclusion of its January 28 meeting, the Federal Open Market Committee issued a press release stating that it “could be patient in removing its accommodative policy stance.” Read More

  • The Domestic Steel Industry


    President Bush’s December decision to eliminate the Section 201 steel tariffs on various carbon and alloy steel products refocused national interest on the domestic steel industry. Read More

  • The Current Account and the Dollar


    The current account deficit narrowed in 2003:IIIQ, the first significant drop since the dollar began its recent decline. Read More

  • Savings Institutions


    FDIC-insured savings institutions (S&Ls) reported net income of $4.56 billion for 2003:IIIQ. Read More

  • Money and Financial Markets


    At its January 27–28 meeting, the Federal Open Market Committee (FOMC) left the federal funds rate target unchanged at 1% and the primary credit rate at 2%. Read More

  • Monetary Policy


    Growth in the sweep-adjusted monetary base (total currency in circulation plus total reserves including depository institutions’ vault cash) has been fairly constant over the past couple of years. Read More

  • Labor Markets


    Nonfarm payroll employment posted a net gain of 112,000 jobs in January 2004, its fifth consecutive monthly gain. Read More

  • Inflation and Prices


    The general disinflation trend observed in the year-over-year comparisons continues. Read More

  • Foreign Central Banks


    The Bank of Japan, alone among the four major central banks, adjusted its monetary policy setting recently. Read More

  • Economic Activity


    The advance estimate from the national income and product accounts revealed that real gross domestic product (GDP) rose at a 4.0% annual rate during the fourth quarter of 2003, a little less than most forecasters had expected. Read More

  • Brazil’s Public-Sector Debt


    The Achilles heel of sustained economic prosperity in Brazil—Latin America’s biggest economy and the twelfth largest in the world—is the nation’s public-debt burden. Read More

  • The Economy in Perspective


    Dude, Where’s My Economy?…Objectively speaking, the U.S. economy seems to stand on solid ground. Read More

  • Money and Financial Markets


    Much of the current discussion about monetary policy focuses on the prospects for inflation—what do financial market indicators say? Read More

  • Monetary Policy


    At its December 9 meeting, the Federal Open Market Committee (FOMC) decided to keep its target federal funds rate at 1%. Read More

  • Migration of College Graduates


    The U.S. Department of Education conducts a Baccalaureate and Beyond survey that tracks the location, employment, and family patterns of college graduates. Read More

  • International Markets


    The U.S. dollar continues to decline, particularly against other major currencies. Read More

  • Inflation and Prices


    The November inflation data show a continuing, generally broad-based pattern of disinflation. Read More

  • Foreign Central Banks


    The four major central banks left their policy targets unchanged as the British pound, the euro, and the yen continued to appreciate relative to the U.S. dollar. Read More

  • FDIC-Insured Commercial Banks


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

  • Employment Trends


    The labor market’s 2003 performance was mixed, with disappointing numbers for the first half of the year and significant improvement in the final four months. Read More

  • Economic Activity


    Even with a benchmark revision, the final real gross domestic product (GDP) for 2003:IIIQ contained no surprises. Real GDP surged ahead 8.2%, the same as in the last estimate. Read More