President and Chief Executive Officer Federal Reserve Bank of New York Washington and Lee University H. Parker Willis Lecture in Political Economics

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1 The U.S. Economic Outlook Chartspresented by WilliamC Dudley Charts presented by William C. Dudley President and Chief Executive Officer Federal Reserve Bank of New York Washington and Lee University H. Parker Willis Lecture in Political Economics Lexington, VA April 1, 2010

2 Current Account Balance as a of GDP Note: Shading represents NBER recessions, vertical line 1 Source: Bureau of Economic Analysis

3 Real Broad Trade Weighted Value of the US Dollar Index Index Source: Federal Reserve Board Note: Shading represents NBER recessions, vertical line 80 2

4 10-Year Treasury Note Yield at Constant Maturity Source: Federal Reserve Board Note: Shading represents NBER recessions, vertical line 0 3

5 Net Stock: Private Residential, Nonresidential Structures, and Equipment and Software % Change Year to Year % Change Year - Year Equipment and Software Residential 2 2 Nonresidential Structures Note: Shading represents NBER recessions, vertical line 4 Source: Bureau of Economic Analysis

6 Total Balance by Credit Score Quintile Billions of Dollars 2005-Q Q Q3 Median Credit Score of Quintile of of Change from Previous of Change from Previous (2005-Q1) Total Debt Total Total Debt Total Period Total Debt Total Period % % 13.4% % -4.4% % % 5% 33.5% % -3.2% % % 46.2% % -4.3% % % 57.2% % -6.6% % % 17.5% % -4.6% Total % % 34.5% % -4.5% Source: FRBNY Equifax Panel Dataset 5

7 Homeownership Rate Note: Shading represents NBER recessions, vertical line Source: Census Bureau 6

8 Consumption and Personal Saving Personal Saving Rate (right axis) Consumption as Share of GDP (left axis) Source: Bureau of Economic Activity Note: Shading represents NBER recessions, vertical line 7

9 Loan Performance House Price Index & Commercial Real Estate Price Index Index Index Loan Performance: HPI 160 Commercial 160 Real Estate Note: Shading represents NBER recessions, vertical line 8 Source: Loan Performance and MIT Real Estate Center

10 First Mortgages: 90+ Day Delinquency Rates (Series set to 1.0 at 4Q prior to NBER peak) Ratio Ratio % of number of loans Q Current Cycle Cycle Cycle Cycle Cycle Quarters Since 4Q Prior to NBER Peak 9 Source: Mortgage Bankers Association

11 of 90+ days Late Mortgage Balance Owned by Multiple Home Owners home owners 2 home owners Q1 05Q1 06Q1 07Q1 08Q1 09Q1 Source: Equifax, FRBNY 0 10

12 Household Liabilities as a of Net Worth Note: Shading represents NBER recessions, vertical line 11 Source: Federal Reserve Board

13 Ratio Real GDP (Series Set to 1.0 at NBER Peak) Ratio Cycle 1973 Cycle Current Cycle Quarters Since NBER Peak 12 Source: Bureau of Economic Analysis

14 Difference 6.0 Unemployment Rate (Series Set to 0.0 at NBER Peak) Difference Current Cycle Cycle Cycle Quarters Since NBER Peak 13 Source: Bureau of Labor Statistics

15 Labor Force Participation Rate and Average Weekly Hours 3 Month Moving Average Hours 3 Month Moving Average Participation Rate (left axis) Average Weekly Hours (right axis) Note: Shading represents NBER recessions, vertical line Source: Bureau of Labor Statistics 14

16 Ratio 1.10 Nonfarm Business Sector: Hours Worked (Series Set to 1.0 at NBER Peak) Ratio Cycle Cycle Current Cycle Quarters Since NBER Peak 15 Source: Bureau of Labor Statistics

17 Total and Core CPI % Change - Year to Year % Change - Year to Year Total CPI Core CPI Note: Shading represents NBER recessions, vertical line 16 Source: Bureau of Labor Statistics -2

18 6-Month % Change - Annualized Exports and Industrial Production 6-Month % Change - Annualized Exports (left axis) Industrial Production: Manufacturing (right axis) Source: Federal Reserve 17 Note: Shading represents NBER recessions, vertical line Board and Census Bureau -25

19 Net Worth over Disposable Personal Income Net Worth/DPI Note: Shading represents NBER recessions, vertical line 18 Source: Federal Reserve Board 400

20 Household Liabilities as a of Net Worth Average over 20 last 10 years Note: Shading represents NBER recessions, vertical line 19 Source: Federal Reserve Board

21 MBA Purchase Mortgage Applications and Existing Home Sales Index 450 Thousands Purchase Loan Applications 400 (left axis) Existing Home Sales (right axis) Source: Mortgage Bankers Association, National Association of Realtors Note: Shading represents NBER recessions, vertical line

22 Vacancy Rates Rental Vacancy Rate (right axis) Homeowner Vacancy Rate (left axis) Note: Shading represents NBER recessions, vertical line 21 Source: Census Bureau

23 Total Receipts of State and Local Governments % Change Year to Year % Change Year to Year Federal Current Grants Receipts Receipts -10 Less Grants Note: Shading represents NBER recessions, vertical line 22 Source: Bureau of Economic Analysis

24 Real Imports and Exports 2-qtr % Change - Annualized 2-qtr % Change - Annualized Imports Exports Note: Shading represents NBER recessions, vertical line 23 Source: Bureau of Economic Analysis -30

25 Corporate Profits as a Fraction of National Income Ratio Ratio Note: Shading represents NBER recessions, vertical line 24 Source: Bureau of Economic Analysis

26 Corporate Net Cash Flow as a Fraction of Nominal GDP Ratio Ratio Note: Shading represents NBER recessions, vertical line 25 Source: Bureau of Economic Analysis

27 Manufacturing Capacity Utilization Rate Source: Federal Reserve Board Note: Shading represents NBER recessions, vertical line 60 26

28 Rent Inflation % Change - Year to Year % Change - Year to Year Tenant Rent (8%) Owners' Equivalent Rent (31%) Note: Shading represents NBER recessions, vertical line 27 Source: Bureau of Labor Statistics Numbers in parentheses represent share of core CPI.

29 1003 Productivity, Compensation, and Unit Labor Costs % Change - Year to Year 10 Nonfarm Business Sector % Change - Year to Year Compensation per Hour Output per Hour Unit Labor Costs Note: Shading represents NBER recessions, vertical line 28 Source: Bureau of Labor Statistics

30 TIPS Implied Inflation Compensation: 2-3, 4-5, 5-10 Year Horizons Year Mar 30: Year 2-3 Year Mar 30: Mar 30: Jun-07 Aug-07 Nov-07 Feb-08 May-08 Jul-08 Oct-08 Jan-09 Apr-09 Jun-09 Sep-09 Dec-09 Mar-10 Source: Federal Reserve Board Note: Carry Adjusted

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