Presentation Materials (PDF)

Pages 218 to 267 of the Transcript

Appendix 1: Materials used by Ms. Mosser and Mr. Hilton

Class II FOMC - Restricted FR

Page 1

Top panel
(1)

Title: U.S. Libor-OIS Spreads
Series: Spreads between One-Week, One-Month, Three-Month Libor Rates and One-Week, One-Month, Three-Month Overnight Index Swap Rates for U.S.
Horizon: July 1, 2007 - January 23, 2009
Description: U.S. Libor to OIS spreads decline after announcement of Treasury Capital Purchase Program and FDIC Debt Guarantee.

Sept. 14: Lehman Brothers Holdings files for bankruptcy; Oct. 13: Euro Area Announcement; Oct. 14: Treasury Capital Purchase Program, FDIC Debt Guarantee, and further details of Federal Reserve CPFF Program Announced

Source: Bloomberg

Middle panel
(2)

Title: Three-Month Commercial Paper Rates
Series: Three-Month AA-Rated Financial, AA-Non-Financial, AA-Asset Backed, and A2/P2 Non-Financial Commercial Paper Rates
Horizon: August 1, 2008 - January 23, 2009
Description: Three-month commercial paper rates decline in January.

Sept. 19: AMLF announced; Oct. 7: CPFF announced (effective Oct. 27); Oct. 21: MMIFF announced

Source: Federal Reserve Board

Bottom panel
(3)

Title: Mortgages and Agencies
Series: Mortgage Option-Adjusted Spread to Treasury, 5-Year Fannie Mae Debt to Treasury, and 30-Year Fixed Conforming Mortgage Rate
Horizon: August 1, 2008 - January 23, 2009
Description: Mortgage rates increase while agency rates decline.

Sept. 7: Fannie Mae and Freddie Mac enter conservatorship; Nov. 25: Agency Coupon and Agency-MBS Purchases Announced; Dec. 30: Agency-MBS FAQ Released; Jan. 5: First Agency-MBS Purchase

Source: Bloomberg, Lehman Brothers/Barclays

Page 2

Top panel
(4)

Title: Corporate Debt Cash Spreads Narrow Recently
Series: Investment Grade and High Yield corporate debt cash spreads
Horizon: August 1, 2007 - January 23, 2009
Description: Corporate debt cash spreads narrow.

Source: Merrill Lynch/Bank of America

Middle panel
(5)

Title: Monthly Investment Grade Bond Issuance
Series: Guaranteed and Not Guaranteed Investment Grade Bond issuance
Horizon: January 2008 - January 2009
Description: Investment grade guaranteed bond issuance increases from early 2008.

Source: JPMorgan Chase

Page 3

Top panel
(6)

Title: Asset-Backed Security Spreads Narrow After Year End
Series: AAA-Rated Spreads to 1-Month Libor for 3-Year Auto ABS, 5-Year Credit Card ABS, and 3-Year FFELP Student Loan ABS
Horizon: August 1, 2008 - January 23, 2009
Description: Asset-backed security spreads narrow after year end.

Dec. 19: TALF announced

Source: JPMorgan Chase

Middle panel
(7)

Title: Commercial Mortgage-Backed and Leveraged Loan Prices Deteriorate
Series: Implied Prices of Series 2, 4 CMBX and LCDX
Horizon: August 1, 2008 - January 23, 2009
Description: Commercial mortgage-backed and leveraged loan prices deteriorate.

Source: Lehman Brothers/Barclays, JPMorgan Chase

Page 4

Top panel
(8)

Title: Average Daily Bid-Ask Spread: Euro-Dollar FX Rate
Series: Average daily bid-ask spread of the Euro-Dollar FX rate 10-day moving average and average percent
Horizon: January 1, 2007 - January 22, 2009
Description: Average daily bid-ask spread of Euro-Dollar FX rate decreasing in January.

Source: ICAP FX

Middle panel
(9)

Title: Trade Quote Sizes in the Treasury Market Shrink
Series: Average daily trade quote sizes in the Treasury market (2-year, 5-year, 10-year, and 30-year) for 2008, December 2008, and January 2009
Horizon: 2008-2009
Description: Trade quote sizes in the Treasury market shrink.

Source: Broker Tec

Page 5

Top panel
(10)

Title: Average Absolute Price Error between Treasury Yields and FRB Model
Series: Average Absolute Price Error between the FRB Treasury Spline and Nominal Yields
Horizon: January 1, 2007 - January 21, 2009
Description: The average absolute price error between the FRB Treasury spline and nominal Treasury yields increases.

* Calculated from securities with two to ten years until maturity, excluding on-the-run and first off-the-run securities.

Source: Federal Reserve Board

Middle panel
(11)

Title: Corporate CDS Bond Basis
Series: Investment grade and high yield corporate CDS-bond basis
Horizon: January 1, 2008 - January 23, 2009
Description: Investment grade corporate CDS-bond basis remains steady since December while high yield corporate CDS-bond basis increases.

Source: JPMorgan Chase

Bottom panel
(12)

Title: Hedge Fund Returns Decline
Series: Credit Suisse/Tremont Hedge Fund Index twelve-month rolling returns
Horizon: January 1, 1998 - December 30, 2008
Description: Hedge fund annual average returns decline.

Source: CS/Tremont, Bloomberg, Lehman Brothers/Barclays

Page 6

Top panel
(13) Bank Earnings Disappoint Expectations

Bottom panel
(14)

Title: Bank Capital Ratios
Series: Tier 1 and Tangible Common Equity Ratios of eight large banks and fourteen regional banks
Horizon: Q3 2008
Description: Regional banks, on average, have higher volumes of liquid assets than larger banks, shown in their tangible common equity ratios.

Tier 1 Ratio: 8 Large Banks: 11.5%; 14 Regional Banks: 11.1%. Tangible Common Equity Ratio: 8 Large Banks: 3.4%; 14 Regional Banks: 6.1%.

Source: Goldman Sachs

Page 7

Top panel
(15)

Title: Former Investment Bank Equity Prices
Series: Equity prices for Morgan Stanley and Goldman Sachs and the Standard & Poor's 500 Index
Horizon: August 1, 2008 - January 23, 2009
Description: Former investment bank equity prices are decreasing since they have become bank holding companies.

Sept. 22: Goldman and Morgan Stanley become bank holding companies

Source: Bloomberg

Middle panel
(16)

Title: Commercial Bank Equity Prices
Series: Equity prices for Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and S&P 500 Index
Horizon: August 1, 2008 - January 23, 2009
Description: Commercial bank equity prices for Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo decrease.

Source: Bloomberg

Bottom panel
(17)

Title: European Bank Equity Prices
Series: Equity prices for Barclays, RBS, HSBC, Deutsche, Societe Generale, UBS, and Credit Suisse
Horizon: August 1, 2008 - January 23, 2009
Description: European bank equity prices decrease.

Source: Bloomberg

Page 8

Top panel
(18)

Title: Former Investment Bank CDS Spreads
Series: Credit Default Swap Spreads for Morgan Stanley and Goldman Sachs
Horizon: August 1, 2008 - January 23, 2009
Description: Credit default swap spreads for Morgan Stanley and Goldman Sachs stabilize below recent wide levels.

Source: Markit

Middle panel
(19)

Title: Commercial Bank CDS Spreads
Series: Credit Default Swap Spreads for Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo
Horizon: August 1, 2008 - January 23, 2009
Description: Commercial bank CDS spreads for Bank of America, JPMorgan Chase, and Wells Fargo widen modestly while Citigroup spread widens dramatically.

Sept. 14: Lehman Brothers Holdings files for bankruptcy & Bank of America announced purchse of Merrill Lynch; Nov. 23: US government provides a package of guarantees, liquidity access, and capital to Citigroup

Source: Markit

Bottom panel
(20)

Title: European Bank CDS Spreads
Series: Credit Default Swap Spreads for Barclays, RBS, HSBC, Deutsche, Societe Generale, UBS, and Credit Suisse
Horizon: August 1, 2008 - January 23, 2009
Description: Credit default swap spreads for Barclays and UBS widen.

Source: Bloomberg

Page 9

Top panel
(21)

Title: Sovereign CDS Spreads Widen
Series: Credit Default Swap spreads for United States, United Kingdom, Germany, Spain, Japan, Ireland, Australia, and Korea
Horizon: August 1, 2008 - January 23, 2009
Description: Sovereign credit default swap spreads widen.

Source: Bloomberg

Middle panel
(22)

Title: Treasury Yield Curve Steepens Modestly
Series: 2-Year, 5-Year, 10-Year, and 30-Year Treasury Yields
Horizon: August 1, 2007 - January 23, 2009
Description: Treasury yield curve steepens modestly.

Source: Bloomberg

Bottom panel
(23)

Title: Distribution of Expected Policy Target Rate Among Primary Dealers Prior to January 28 FOMC Meeting
Series: Dealer expectations for policy target rate by quarter, average forecast for policy target by quarter, and market rate for policy expectation by quarter as of 1/20/2009
Horizon: Expectations for Q1 2009 - Q4 2010
Description: On average, primary dealer economists are forecasting a slower rate of increase in the policy target rate over the next two years than what is currently priced into Eurodollar futures.

Source: Dealer Policy Survey

Page 10

Top panel
(24)

Title: Federal Reserve Balance Sheet Assets
Series: The composition of the Federal Reserve balance sheet assets.
Horizon: August 2007 - January 2009
Description: The Federal Reserve balance sheet contracts slightly.

All Other Lending; PCF+PDCF; AMLF; CPFF; FX Swaps; TAF; Outright Agency Holdings; Single Tranche Repo; Conventional RPs; Outright Treasury Holdings; Autofactors

Source: Federal Reserve Bank of New York

Middle panel
(25)

Title: Market Rates Corresponding to Liquidity Facilities
Series: One-Month GC Treasury Repo, One-Month Agency-MBS Repo, One-Month USD Libor, Three-Month USD Libor, Three-Month Financial Commercial Paper
Horizon: July 1, 2008 - January 23, 2009
Description: Market rates steadily decline.

Source: Federal Reserve Bank of New York

Page 11

Top panel
(26)

Title: TSLF Loans Outstanding
Series: Schedule 1 Term Securities Lending Facility loans outstanding, Schedule 2 Term Securities Lending Facility loans outstanding, Term Securities Lending Facility Option Program outstanding (Schedule 2)
Horizon: March 28, 2008 - January 23, 2009
Description: Term Securities Lending Facility loans outstanding decrease.

Source: Federal Reserve Bank of New York

Middle panel
(27)

Title: Demand at TSLF Auctions
Series: Schedule 1 Auction Size, Schedule 1 Amount Awarded, Schedule 2 Auction Size, Schedule 2 Amount Awarded, Schedule 1 Stop-Out Rate, Schedule 2 Stop-Out Rate
Horizon: March 27, 2008 - January 22, 2009
Description: Term Securities Lending Facility amount awarded decreases for both Schedule 1 and Schedule 2 auctions.

Source: Federal Reserve Bank of New York

Bottom panel
(28)

Title: Total Outstanding FX Swap Draw-Downs Decline
Series: Total Outstanding FX Swap Draw-Downs for the Bank of Korea, Swiss National Bank, Riksbank, Reserve Bank of Australia, European Central Bank, Norges Bank, Danmark National Banken, Bank of Japan, and Bank of England
Horizon: December 1, 2007 - January 23, 2009
Description: Total outstanding FX swap draw-downs decline.

Source: Federal Reserve Bank of New York

Page 12

Top panel
(29)

Title: Term Auction Facility Loans Outstanding
Series: Term Auction Facility loans outstanding for Forward, 84-Day, and 28-Day operations
Horizon: December 20, 2007 - January 23, 2009
Description: Term Auction Facility loans outstanding increase after year-end.

Source: Federal Reserve Bank of New York

Middle panel
(30)

Title: Demand at TAF Auctions
Series: Term Auction Facility Auction Size, Amount Awarded, and Stop-Out Rate Spread to Minimum Bid Rate
Horizon: December 20, 2007 - January 15, 2009
Description: Recent Term Auction Facility auctions stop-out at the minimum bid rate.

Source: Federal Reserve Board

Bottom panel
(31)

Title: PCF and PDCF Borrowing
Series: Primary Credit Facility and Primary Dealer Credit Facility borrowing
Horizon: January 1, 2008 - January 23, 2009
Description: Primary Credit Facility and Primary Dealer Credit Facility borrowing decreases.

Source: Federal Reserve Bank of New York

Page 13

Top panel
(32)

Title: Amount of CPFF Loans Outstanding
Series: Amount of Commercial Paper Funding Facility loans outstanding for commercial paper, FDIC guaranteed commercial paper, and asset-backed commercial paper
Horizon: October 27, 2008 - January 23, 2009
Description: CP and FDIC guaranteed CP outstanding increase slightly recently.

Source: Federal Reserve Bank of New York

Middle panel
(33)

Title: AMLF Loans Outstanding
Series: Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility loans outstanding
Horizon: September 22, 2008 - January 23, 2009
Description: AMLF loans outstanding decrease.

Source: Federal Reserve Bank of New York

Bottom panel
(34)

Title: Assets in Prime Money Market Funds
Series: Assets in Prime, Treasury Only, Treasury and Repo, and Treasury and Agency Money Market Funds
Horizon: August 1, 2008 - January 23, 2009
Description: Assets in Prime and Treasury and Agency funds increase while assets in Treasury Only and Treasury and Repo funds decrease.

Sept. 14: Lehman Brothers Holdings files for bankruptcy; Sept. 16: Reserve Fund breaks the buck; Sept. 19: AMLF announced; Oct. 7: CPFF announced (effective Oct. 27); Oct. 21: MMIFF; Jan. 5: MMIFF eligibility expanded

Source: iMoneyNet

Page 14

Top panel
(35)

Title: Purchases of Agency-MBS
Series: Cumulative Amount of Agency-MBS Purchases and Agency-MBS Purchase Size
Horizon: January 5, 2009 -January 23, 2009
Description: Cumulative amount of Agency-MBS purchases increases.

Source: Federal Reserve Bank of New York

Middle panel
(36)

Title: Mortgage Refinance Applications
Series: Mortgage Application Index, Mortgage Refinance Application Index
Horizon: January 1, 2008 - January 16, 2009
Description: Mortgage refinance applications increase.

Nov. 25: Agency Coupon and Agency-MBS Purchases Announced; Dec. 30: Agency-MBS FAQ Released; Jan. 5: First Agency-MBS Purchase

Source: Bloomberg

Bottom panel
(37)

Title: Purchases of Agency Coupon Debt
Series: Cumulative Amount of Agency Coupon Debt and Agency Coupon Purchase Size
Horizon: December 5, 2008 - January 22, 2009
Description: Cumulative amount of agency coupon debt purchased increases.

Source: Federal Reserve Bank of New York

APPENDIX: Reference Exhibits

Page 15

Top panel
(38)

Title: Three-Month Libor and Expectations for Three-Month Libor Decline
Series: Three-Month U.S. Libor and Three-Month Forward Three-Month Libor
Horizon: July 1, 2007 - January 23, 2009
Description: Three-month Libor and expectations for three-month Libor decline.

Source: Bloomberg

Middle panel
(39)

Title: Spread between Jumbo and Conforming Mortgage Rates Remains Wide
Series: Conforming Mortgage Rates, Jumbo Mortgage Rates, and the spread between Conforming Mortgage Rates and Jumbo Mortgage Rates
Horizon: January 1, 2008 - January 23, 2009
Description: Conforming mortgage rates decline.

Source: Bloomberg

Bottom panel
(40)

Title: Ten- and Thirty-Year AAA-Rated Municipal Debt Yields Decline
Series: Ten- and thirty-year AAA-Rated municipal debt yields
Horizon: August 1, 2008 - January 23, 2009
Description: Ten- and thirty-year AAA-rated municipal debt yields decline.

Source: Bloomberg

Page 16

Top panel
(41)

Title: Distribution of Expected Policy Target Rate Among Primary Dealers Prior to December 16 FOMC meeting
Series: Dealer expectations for policy target rate by quarter, average forecast for policy target by quarter, and market rate for policy expectation by quarter
Horizon: Q1 2009 - Q4 2009
Description: On average, primary dealer economists are forecasting a slower rate of increase in the policy target rate than what is currently priced into Eurodollar futures.

Source: Dealer Policy Survey

Appendix 2: Materials used by Mr. Sichel, Ms. Dynan, and Mr. Reeve

Material for Staff Presentation on the Economic Outlook
January 27, 2009

CLASS II FOMC - Restricted (FR)

Exhibit 1
Recent Indicators

Top-left panel
Change in Private Payroll Employment

Note: Three-month moving average.

Top-right panel
Manufacturing IP Ex. Motor Vehicles

Note: Three-month percent changes.

Middle-left panel
Light Motor Vehicle Production

Middle-right panel
Real PCE Goods Ex. Motor Vehicles

ND No data

Bottom-left panel
Single-Family Housing Starts

Bottom-right panel
Real GDP

Exhibit 2
Key Background Factors and Medium-Term Outlook

Top-left panel
Real GDP

Top-right panel
Factors Contributing to Recovery

• Financial stress begins to recede
• Housing begins to stabilize
• Fiscal and monetary stimulus
• Inventory dynamics

Middle-left panel
Response to 2009 Fiscal Stimulus Package

• Households begin spending tax cuts ($180) and transfers ($90) when received.
• Investment response to business tax cuts ($120) is limited.
• Of total new funding for state and local governments ($400), only 40 percent spent by the end of 2010.

Middle-right panel
Contribution of Fiscal Package to GDP Growth*

* Includes housing-related programs financed by the TARP.  Return to text

Bottom-left panel
Contributions of Inventories to Real GDP Growth

* GDP peak in 2008:Q2 and trough in 2009:Q2.  Return to table

Bottom-right panel
Inventory Dynamics

• In the year before the peak, inventories held down real GDP growth.
• Peak-to-trough, inventories hold down real GDP only a little.
• In the year after the trough, the cessation of inventory decumulation contributes importantly to real GDP growth.

Exhibit 3
Single-Family Housing

Top-left panel
Single-Family Starts

Top-right panel
Rate on 30-year Fixed-Rate Conforming Mortgages

MBS purchase program announced on November 25, 2008.

Middle-left panel
Tighter Supply of Mortgage Credit

Much more difficult to obtain mortgages for households:

• Lacking solid credit histories
• Unable to make significant downpayments
• In need of low introductory rates

Lending is more restrictive than in the past to those seeking to finance an amount above the conforming limit.

Middle-right panel
Overvaluation of Single-Family Homes*

* Deviation of log price-rent ratio from a linear trend, estimated over 1975:Q1-2003:Q3.  Return to text

Bottom-left panel
Housing Equity

* Includes near-prime mortgages; first liens only.  Return to table

Bottom-right panel
Foreclosure Starts

* Includes near-prime mortgages.  Return to table

Note: 2008 figure based on data through 2008:Q3 and a projection for 2008:Q4.

Exhibit 4
Consumer Spending

Top-left panel
Real PCE and DPI

Top-right panel
Saving Rate and Wealth-to-Income Ratio

Middle-left panel
Sources of Financing for Consumer Spending

Note: 2008:Q4 estimated based on partial data.

Middle-right panel
Commercial Banks Tightening Standards on Consumer Loans

Bottom-left panel
Developments in Consumer ABS Markets

• Very little issuance since October.
• The commercial banks that make most credit card loans have alternative sources of funding.
• But, the finance companies affiliated with the auto manufacturers have not (for the most part) had access to these sources.

Bottom-right panel
Auto Loans Originated by the Detroit Three Finance Companies per Unit Sold

Exhibit 5
Business Investment and Finance

Top-left panel
The Accelerator

Note: BFI share equals nominal BFI divided by nominal nonfarm business (NFB) output. NFB output growth is measured as the percent change from four quarters earlier, lagged two quarters.

* Approximate values.  Return to table

Top-right panel
Components of BFI

Middle-left panel
Equity Valuation for S&P 500

+ Approximate values. Denotes latest observation using daily interest rates and stock prices data from I/B/E/S.  Return to table

* Estimated using analyst year-ahead earnings from I/B/E/S.  Return to table

Middle-right panel
Estimated Equity Premium*

* Trend E/P ratio less real Treasury perpetuity yield.  Return to text

Bottom-left panel
Investment-Grade Corporate Bond Yield

* Dec. FOMC  Return to table

Note: Yield for 10-year BBB bonds. Issuance shown at a monthly rate; January is month-to-date.

Bottom-right panel
High-Yield Corporate Bond Yield

* Dec. FOMC  Return to table

Note: Yield for 10-year bonds. Issuance shown at a monthly rate; January is month-to-date.

Exhibit 6
Business Investment and Finance (continued)

Top-left panel
Change in C&I Loans

Top-right panel
Commercial Banks Tightening Standards and Spreads on C&I Loans

Middle-left panel
Vacancy Rates and Rents on Commercial Properties

* Preliminary  Return to table

Note: Average of series for office, industrial, and retail properties.

Source: Torto Wheaton.

Middle-right panel
Prices of Commercial Properties

Note: Index based on sales of properties in NCREIF portfolio.

Bottom-left panel
Delinquency Rates on Commercial Mortgages

* Excluding farmland.  Return to table

Source: Citigroup; Call Report; ACLI.

Bottom-right panel
Implications of Shutdown in the CMBS Market

Should add to the pressure on banks' balance sheets and thereby Indirectly damp structures spending:

• Market will not be able to help refinance construction loans coming due.
• Loans currently within CMBS coming due will need financing from alternative sources.

Exhibit 7
Business Cycle Dynamics

Top-left panel
Real GDP: Cyclical Comparison

Top-right panel
Recession and Recovery

• Contraction in real GDP is in line with big postwar recessions.
• Projected recovery is more sluggish.

Middle-left panel
Financial Crises and Economic Downturns

• Downturns linked to major financial crises tend to be severe.
• Average stepdown in real GDP growth after five major postwar financial crises was about 5 percentage points.
• For U.S., our forecast implies a stepdown of 3½ percentage points.

Middle-right panel
Economic Growth Before and After Onset*

* As identified by Reinhart and Rogoff; includes Spain (1977), Norway (1987), Finland (1991), Sweden (1991), and Japan (1992). Onset of U.S. crisis dated to 2007.  Return to text

Alternative Simulation: More Financial Stress

Note: Shading denotes 70% confidence intervals.

Bottom-left panel
Real GDP

Bottom-center panel
Unemployment Rate

Bottom-right panel
Core PCE Prices

Exhibit 8
Labor Productivity and Inflation

Top panels
Labor Productivity

Shaded bars indicate periods of business recession as defined by the National Bureau of Economic Research (NBER): November 1973-March 1975, January 1980-July 1980, July 1981-November 1982, July 1990-March 1991, March 2001-November 2001.

A shaded bar indicates the NBER Peak in December 2007.

Middle-left panel
Productivity Dynamics

• In some earlier recessions labor productivity was procyclical.
• Procyclicality not observed during the 2001 recession.
• In the current episode, labor productivity expected to exhibit some procyclicality, as the deep recession leads to some labor hoarding.

Middle-right panel
Unemployment Rate

Bottom-left panel
PCE Energy Prices

Bottom-right panel
PCE Price Projections

Exhibit 9
An Unconventional Policy: Large-Scale Asset Purchases

Top-left panel
Unemployment Rate

Top-right panel
Core PCE Prices

Middle-left panel
Assumptions Behind a Successful LSAP Program

• Imperfect substitutability of long- and short-term debt.
• Sufficient substitutability among long-term fixed-income securities.
• Usual linkages to equity and foreign exchange markets.

Middle-right panel
Simulation Assumptions

The Program:

• $500 billion in MBS debt plus $500 billion in Treasury securities.
• On top of existing programs.
• Announced immediately, carried out over next year and a half.

Financial Effects:

• Reduces mortgage rates: 125 b.p.
• Reduces Treasury rates: 80 b.p.
• Reduces Baa rate: 75 b.p.

Bottom panel
Caveats, Financial and Macroeconomic

Financial:

• Direct effects on interest rates are uncertain
• Current dysfunction in some financial markets could limit indirect effects
• Could be economies--or diseconomies--of scale in the size of the program
• LSAPS introduce tricky "exit issues" on how to unwind the program

Macroeconomic:

• The model may understate--or overstate--the macroeconomic outcomes
• Heavy reliance on mortgage rates and housing to drive economic recovery

Exhibit 10
Global Financial Markets

Top-left panel
Equity Prices

The December 15-16, 2008 FOMC meeting is marked with a vertical line.

Top-right panel
Bank Equity Prices

Middle-left panel
3-Month LIBOR-OIS Spreads

Middle-right panel
Outstanding Central Bank Swap Draws

Bottom-left panel
U.S. Dollar Exchange Rates

* Other important trading partners.  Return to table

Bottom-right panel
Broad Real Dollar

Exhibit 11
Foreign Growth Outlook

Top panel
Real GDP*

* GDP aggregates weighted by shares of U.S. merchandise exports.  Return to text

** Change from final quarter of preceding period to final quarter of period indicated.  Return to table

*** Updated since January Greenbook.  Return to table

Middle-left panel
Global PMIs

Source: Haver Analytics.

Middle-right panel
Japan

Bottom-left panel
Euro Area

Bottom-right panel
China

Exhibit 12
U.S. Trade

Top-left panel
Nominal Trade

Top-right panel
Trade Balance

Middle-left panel
Automotive Trade

Middle-right panel
Aircraft Exports

Bottom panel
Trade in Real Goods and Services

* Change from final quarter of preceding period to final quarter of period indicated.  Return to table

Exhibit 13
Cyclical Comparisons

Note: Gray shading represents U.S. recessions as dated by the NBER: November 1973-March 1975, January 1980-July 1980, July 1981-November 1982, July 1990-March 1991, March 2001-November 2001. A gray vertical line indicates the NBER Peak in December 2007. Blue shading represents the forecast period.

Top panel
Real GDP

A line chart shows United States and Foreign real GDP on an annual basis from 1972 through 2008, and a forecast through 2010. Data are percent change, Q4/Q4. Foreign real GDP is weighted by shares of U.S. merchandise exports. The United States curve begins near 7 percent, and fluctuates widely between about -2 and 8 until 1985. The curve then fluctuates within a more narrow range, between about 0 and 5, until 2008, when it dips into negative territory to about -0.5 percent. The forecast shows the curve decreasing toward -1 in 2009, and then increasing to about 2.5 by the end of the period. The Foreign curve begins at about 6.5 percent, reaches a low point of nearly -1 in 1982, and fluctuates between about 2 and 6 for most of the remainder of the period. The curve decreases almost to zero in 2008, dips slightly below zero in 2009, and then increases to nearly 3 by the end of the period.

Middle panel
Contribution of Trade to U.S. GDP Growth

A bar and line chart shows Exports, Imports, and Net exports on an annual basis from 1972 through 2008, and a forecast through 2010. Data are percentage points, Q4/Q4. Exports remains positive for most of the period, fluctuating between about 0 and 1.5, with apparent notable exceptions being 1982 and 2001, during which exports decreased to less than -1. Exports are also shown to be slightly negative at about -0.1 in 2008. The forecast for exports is about -0.25 in 2009 and about 0.25 in 2010. Imports remains negative for most of the period, fluctuating between about 0 and -2. Imports are at about -0.5 in 1981 but about +0.3 in 1982, and are at about 1 in 2001 and again in 2008. The forecast for imports is about 0.1 in 2009 and about -0.8 in 2010. Net exports begins at about zero in 1972, fluctuates between about -2 and 1.5 through 1985, and then fluctuates within a more narrow range between about -1 and 1 for the remainder of the period. The net exports curve is about 1 in 2008, and is forecast to decrease to about -0.5 by 2010.

Bottom panel
Broad Real Dollar

Exhibit 14
Commodity Prices

Top-left panel
Recent Price Developments

* Peak oil price  Return to table

Top-right panel
Financial Investors' Net Oil Futures Positions

* Peak oil price on 11 July 2008  Return to table

Other approximate values: Noncommercial traders, 3 December 2007: 34.4. 10 December 2007: 38.1. 17 December 2007: 29.3. 24 December 2007: 48.6. 31 December 2007: 87.8. 6 January 2009: 76.2. 13 January 2009: 53.7. Index investors, 31 December 2007: 408.

Source: CFTC.

Middle-left panel
U.S. Crude Oil Inventories

* Peak oil price on 11 July 2008  Return to table

Other approximate values: 9 January 2009: 26.2. 16 January 2009: 31.6.

Middle-right panel
Oil Demand

* Peak oil price on 11 July 2008  Return to table

Bottom-left panel
Oil Production

* Excluding Indonesia and Iraq.  Return to table

** Peak oil price on 11 July 2008  Return to table

Bottom-right panel
Commodity Price Outlook

Exhibit 15 (Last Exhibit)
Prices

Top-left panel
Consumer Price Indexes

Top-right panel
Consumer Price Indexes

Middle-left panel
CPI Excluding Food and Energy*

* Staff estimates.  Return to text

Middle-right panel
CPI Excluding Food*

* Staff estimates.  Return to text

Bottom-left panel
Policy Rates

Bottom-right panel
Policy Rates

Appendix 3: Materials used by Mr. Madigan

Material for Briefing on FOMC Participants' Economic Projections
Brian Madigan
January 27, 2009

Class I FOMC - Restricted Controlled (FR)