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Fed Forum Presentation on U.S Conditions and Outlook Charles - - PowerPoint PPT Presentation

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Fed Forum Presentation on U.S Conditions and Outlook Charles Steindel Senior Vice President Federal Reserve Bank of New York 1 February 8, 2007 1 Economy Entered 2007 in Good Shape Vigorous consumer spending Signs of

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Fed Forum

Presentation on U.S Conditions and Outlook Charles Steindel

Senior Vice President Federal Reserve Bank of New York

February 8, 2007

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Economy Entered 2007 in Good Shape

  • Vigorous consumer spending
  • Signs of levelling-off in housing
  • Low unemployment and strong job growth
  • Inflation moderating

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  • 2

2 4 6 8 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

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2 4 6 8

4 8 4 8

GDP Growth, Core Inflation, and Unemployment

Source: Bureau of Economic Analysis, Bureau of Labor Statistics, and Federal Reserve Board GDP Growth (%, AR) Core PCE Inflation (%, AR) Unemployment Rate Fed Funds Target Rate (%)

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  • 4
  • 2

2 4 6 8 10 12 1998 2000 2002 2004 2006

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2 4 6 8 10 12 Total Excluding Autos Source: Census Bureau Note: Shading represents NBER recessions.

Retail Sales

% Change - Year to Year % Change - Year to Year

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5 3000 3500 4000 4500 5000 5500 6000 6500 7000 7500 1992 1994 1996 1998 2000 2002 2004 2006 500 600 700 800 900 1000 1100 1200 1300 1400 1500

Single-Family Home Sales

(Seasonally Adjusted Annual Rate)

Sources: U.S. Census Bureau and National Association of Realtors New Home Sales (Right Scale) Thousands Thousands Existing Home Sales (Left Scale) Note: Shading represents NBER recessions.

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6 900 1050 1200 1350 1500 1650 1800 1992 1995 1998 2001 2004 900 1050 1200 1350 1500 1650 1800

Single Family Housing Starts

Thousands Thousands Source: Census Bureau and Mortgage Bankers Association Notes: Shading represents NBER recessions Housing Starts

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7 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 1993 1995 1997 1999 2001 2003 2005 65.6 66.1 66.6 67.1 67.6 Sources: Bureau of Labor Statistics

Unemployment and Labor Force Participation Rates

Unemployment (Left Scale) Percent Percent Participation (Right Scale)

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  • 400
  • 300
  • 200
  • 100

100 200 300 400 1996 1998 2000 2002 2004 2006

  • 400
  • 300
  • 200
  • 100

100 200 300 400

Sources: Bureau of Labor Statistics Total Private Thousands Thousands Service Producing

  • ex. Government

Goods Producing

Private Nonfarm Payroll Employment

(3-Month Moving Average)

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9 1 2 3 4 5 6 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 1 2 3 4 5 6 Core PCE Core CPI Methodologically Consistent % Change - Year to Year % Change - Year to Year

Core CPI and Core PCE

Note: Shading represents NBER recessions. Sources: Bureau of Labor Statistics and Bureau of Economic Analysis

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Questions for 2007

  • Can the consumer keep it up?
  • Is housing turning the corner?
  • Will inflation stay contained?

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  • 4
  • 2

2 4 6 1996 1998 2000 2002 2004 2006

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2 4 6

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2 4 6 8 1996 1998 2000 2002 2004 2006

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2 4 6 8

Note: Shading represents NBER recessions. Real after-tax Income Real PCE Personal Saving Rate % Change - Year to Year Percent % Change - Year to Year Percent Source: Bureau of Economic Analysis

Income, Consumption, and Saving

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12 15000 25000 35000 45000 55000 1990 1993 1996 1999 2002 2005 15000 25000 35000 45000 55000 Source: Federal Reserve Board

Household Net Worth

Billions of Dollars Billions of Dollars Note: Shading represents NBER recessions.

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  • 4
  • 2

2 4 6 8 1990 1993 1996 1999 2002 2005

  • 4
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2 4 6 8 Sources: Bureau of Labor Statistics

Productivity, Compensation, and Unit Labor Costs

Nonfarm Business Sector

Output per Hour % Change - Year to Year % Change - Year to Year Unit Labor Costs Compensation per Hour Note: Shading represents NBER recessions.

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14 1 2 3 4 5 6 7 8 9 1998 2000 2002 2004 2006 1 2 3 4 5 6 7 8 9

Compensation Per Hour, Employment Cost Index, and Average Hourly Earnings

% Change - Year to Year % Change - Year to Year Source: Bureau of Labor Statistics Note: Shading represents NBER recessions. Compensation Per Hour (Nonfarm Business Sector) ECI Compensation (Civilian Workers) Average Hourly Earnings

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