National Economic Indicators Ray Owens October 14, 2015

2 Q2 3.9% Real Gross Domestic Product Source: Bureau of Economic Analysis via Haver Analytics & Federal Reserve Board Percent change from previous quarter at annual rate FOMC Projection Note: Projection is the median, central tendency, and range from the September 2015 Summary of Economic Projections. Red dots indicate median projections. Projections of change in real gross domestic product (GDP) are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

3 Decomposition of Real GDP: Productivity Source: Bureau of Economic Analysis via Haver Analytics 10-year annual growth rates Note: Productivity is calculated as real GDP per employee, from the Household Survey.

4 Decomposition of Real GDP: HH Employment Source: Bureau of Economic Analysis via Haver Analytics 10-year annual growth rates

5 Decomposition of Real GDP Source: Bureau of Economic Analysis via Haver Analytics 10-year annual growth rates Note: Productivity is calculated as real GDP per employee, from the Household Survey. HH Employment Productivity

6 Millions of Persons Nonfarm Payroll Employment Source: Bureau of Labor Statistics via Haver Analytics September mil.

7 Quarterly average of monthly changes, thousands of persons Nonfarm Payroll Employment Source: Bureau of Labor Statistics via Haver Analytics Q3 Avg.

8 Percent Unemployment Rate Source: Bureau of Labor Statistics & Board of Governors via Haver Analytics FOMC Projection September 5.1% Notes: FOMC projection is the median, range, and central tendency for the Q4 levels, from the September 2015 meeting. Red dots indicate median projections

9 Percent September Measures of Labor Utilization Source: Bureau of Labor Statistics via Haver Analytics U6: U5 + Involuntarily Part-Time U5: U3 + Discouraged + Marginally Attached U3: Official Unemployment Rate

10 Percent of Population September Labor Force Participation Source: Bureau of Labor Statistics via Haver Analytics

11 Year over Year % Change Quarterly Change at Annual Rate Post-War Average Labor Productivity, Nonfarm Business Source: Bureau of Labor Statistics via Haver Analytics Q2 0.6%

12 12 Month % Change Average Hourly Earnings Source: Bureau of Labor Statistics via Haver Analytics September 2.20%

13 Q2. Household Net Worth Percent of disposable personal income Source: Z.1 Financial Accounts of the United States via Haver Analytics

14 Disposable Personal Income & Expenditures Source: Bureau of Economic Analysis via Haver Analytics 12 Month % Change Real Personal Consumption Expenditure Real Disposable Personal Income August Note: Real disposable personal Income was adjusted to remove tax-induced income shifting near end of 2012.

15 Average Annual New Home Sales:1990 through 1999 New Single-Family Home Sales Source: Census Bureau via Haver Analytics Millions of Homes August 0.55 mil.

16 Percent change from previous quarter at annual rate Q2 0.3% Real Investment in Equipment Source: Bureau of Economic Analysis via Haver Analytics

17 Percent change from previous quarter at annual rate Q2 8.6% Real Investment in Intellectual Property Source: Bureau of Economic Analysis via Haver Analytics

= 100 August Industrial Production Source: Board of Governors via Haver Analytics Manufacturing Mining Overall

19 Exchange Value of the USD Index, March 1973 = 100 Source: Board of Governors via Haver Analytics Notes: Measured as the real broad trade-weighted exchange value of the United States Dollar. September

20 Current $, Billions Non-Petroleum Balance Balance of International Trade Source: Census Bureau via Haver Analytics Petroleum Balance Trade Balance Note: Customs Value of Trade Balance August Bil.

21 August 0.3% FOMC Projection Personal Consumption Expenditure Price Index 12 Month % Change Source: Bureau of Economic Analysis & Board of Governors via Haver Analytics 2% Longer-run Target Notes: FOMC projection is the median, range, and central tendency for Q4/Q4 percent changes, from the September 2015 meeting. Red dots indicate median projections.

22 August 1.3% FOMC Projection Core Personal Consumption Expenditure Price Index 12 Month % Change Source: Bureau of Economic Analysis & Board of Governors via Haver Analytics 2% Longer-run Target Notes: FOMC projection is the median, range, and central tendency for Q4/Q4 percent changes, from the September 2015 meeting. Red dots indicate median projections. Core PCE Price Index excludes expenditures on gasoline and food services.

23 October 2nd 5-Year 5 Years Ahead TIPS Inflation Compensation Source: Board of Governors Research Series via Haver Analytics Percent

24 Federal Funds Target Rate October 9th Primary Credit Rate Monetary Policy Instruments Percent Source: Board of Governors via Haver Analytics Federal Funds Rate Target Range Interest Rate Paid on Reserves

25 FOMC Statement Information received since the Federal Open Market Committee met in July suggests that economic activity is expanding at a moderate pace. Household spending and business fixed investment have been increasing moderately, and the housing sector has improved further; however, net exports have been soft. The labor market continued to improve, with solid job gains and declining unemployment. On balance, labor market indicators show that underutilization of labor resources has diminished since early this year. Inflation has continued to run below the Committee's longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation moved lower; survey-based measures of longer-term inflation expectations have remained stable. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term. Nonetheless, the Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring developments abroad. Inflation is anticipated to remain near its recent low level in the near term but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate. The Committee continues to monitor inflation developments closely. To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. Source: Board of Governors September 17, 2015

26 Continued… The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams. Voting against the action was Jeffrey M. Lacker, who preferred to raise the target range for the federal funds rate by 25 basis points at this meeting. Source: Board of Governors September 17, 2015

27 Eurodollar Futures Percent Source: CME Group via Bloomberg October 13, 2015 September 15, 2015

28 Summary of Economic Projections: Federal Funds Rate Percent Source: Board of Governors Note: Each dot in the chart represents the value of an FOMC participant’s judgment of the midpoint of the appropriate target range (or the appropriate target level) for the federal funds rate at the end of the calendar year. Projections made for the September 2015 meeting.

29 Time to Maturity Treasury Yield Curve Percent Source: Board of Governors via Haver Analytics