current business statistics - Bureau of Economic Analysis

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SUBVEY OF CUBRENT BUSINESS CONTENTS . ; . , . , , . . . THE BUSINESS SITUATION National Accounts in the Fourth Quarter 3 Employment and Income in January 3 Industrial Production 4 National Income and Product Tables 10 Federal Fiscal Programs 14 Military Transactions in the U.S. Balance of Payments 22 U.S, B1PABTMBNT OF OOMMEEOE FIEtD OFFICES . Mex. ' 87101 UJ5. Pb, 843-2386, Anchorage, Alaska $32 Siattt* Av«, 272-6531. Atlanta, Ga. 1401 Feaditree St. 526-6000. Baltimore, Md* 415 U.S* 962-3560. Birmingham, Ala. 35205 908 $. 20tb $t* Pb; 325-3327. Boston, Mass* 02203 JFK Federal Bl
Bank Reserves and Bank Credit Billion $ (Ratio scale) 40 25 — 600 500 400 360 320 280 240 220 120 100 80 60 50 40 BANK CREDIT Total Other $ecurities -U.S. G wernment Serurities 1968 1969 1970 1971 Seasonally Adjusted U.S. Department of Commerce, Bureau of Economic Analysis GHART 1 1972 Data: FRB the BUSINESS SITUATION 72-2-1 JL HE monetary authorities have moved in recent months to achieve a more stimulative credit policy and conditions in money and credit markets have eased considerably. The Federal Reserve's open market committee, which formulates monetary policy, voted on November 16 u to promote somewhat greater growth in monetary and credit aggregates,"• and on December 14 "to promote the degree of ease in bank reserves and money market conditions essential to greater growth in monetary aggregates over the months ahead." These positions have a clearly more stimulative thrust than the positions taken in late September and October, when the committee set policy for "moderate growth in monetary and credit aggregates." The current stance of monetary policy was confirmed at mid-February by the Federal Reserve chairman. He stated that the Federal Reserve intends to see that supplies of money and credit are sufficient to finance the accelerated growth of national output expected this year, and that the Reserve has no intention of allowing the economic recovery to falter for want of money or credit. Rates and yields The current decline in short-term rates began last August, when the New Economic Policy was introduced, and gathered momentum in December and January. By mid-February most shortterm rates had declined roughly 2 percentage points from their highs of last summer. The Treasury bill yield and the Federal funds rate were well below 3% percent and the rates on prime commercial paper and bankers' acceptances were below 4 percent. On February 15, the commercial banks 7 prime loan rate was cut further to 4% percent. This rate has been reduced \% percentage points (in six steps) from last summer and is at its lowest level since the early 1960's. The decline in short-term rates has been sufficiently strong to carry through to consumer loan rates, which tend to be rather slow to respond to changes in overall credit conditions. In early February several major banks on the West Coast announced further cuts of about.% percentage point on most categories of consumer loan rates. In long-term markets, yields have declined only modestly from last summer's highs. By early February, yields on long-term U.S. Government securities had declined less than % percentage point, yields on corporate Aaa bonds about % percentage point, and municipal yields about % point. The decline in long-term yields had for the most part ended by early November, and the small declines that occurred thereafter have been erased by the moderate upturn in rates associated with the news inlate January that the estimated budget deficit for fiscal 1972 is now much larger than had been expected. Market participants were apparently expecting a deficit in the unified budget in the
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General; S1OTONS Business indicator
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