second-quarter u.s. economic update july 2011 · economic i real gdp, c real person real busi in...
TRANSCRIPT
S
Second-Quarter
SecondJuly 201
Summary
Real GDrestrainedtemporarrecessionmonths. Wage ancontinuesthe seconTrade shoInflation most sectcredit sprregulatorthe horizhunger fo
Figure 1:Economic IReal GDP, CReal PersonReal Busi InReal ResideCorporate PCurrent AccFederal BudUnemploymHousehold ENonfarm PaNonfarm PrCapacity UtGDP Price IConsumer PCPI ex foodNominal PePersonal SaRate or SpFederal Fun3-month LIB10-Yr Trea30-Yr TreaMoody's Ba10-Yr Intere* Figures are
Legend for
r U.S. Econom
-Quarter U1
y of Recent E
DP is expectd by global ry. GDP gron risks haveIn the secon
nd income s to bounce nd half. Busiould add to moved up,
tors of the ecreads were
ry frameworkzon, preferreor yield and
Key MacroIndicator*Chg QoQ (%)nal Consump Expnvestmt, Eqp & Sential Investmt, CProfits, After Taxcount Balance, Adget, 12-mo Def
ment Rate (%)Employment, Chayrolls, Chg QoQroductivity, Chg Qtilization (%)Index, Chg QoQPrice Index, Chg d & energy, Chg rsonal Income, C
avings Rate (%)pread (End of Qnds Rate Target (BOR (%)sury Note Yield sury Bond Yield aa Long Corp Spest Rate Swap Seither quarterly or,
all Figures: AR
mic Update
U.S. Econ
Economic an
ted to growsupply chaiowth is exp
e increased, nd quarter, growth waalong the biness investmGDP growthbut core in
conomy, butmixed, but k continue t
ed prices arelimited new
oeconomic In
pnds, Chg QoQ Sftware, Chg Qohg QoQ (%)
x, Chg YoY (%)Annualized (% of f or Surp (% of G
hg QoQ (000)Q (000)QoQ (%)
Q (%)YoY (%)YoY (%)
Chg YoY (%)
Quarter)(%)
(%)(%)
pread (bp)Spread (bp), if more frequent, q
R = Annual Rate
nomic Upd
nd Market D
w by a disapn disruptionpected to reand we wilemploymens sluggish, ottom. Indument is sturdh in Q2, althnflation shout governmencredit funda
to benefit pre likely to b issue supply
ndicators and2009:3
1.6(%) 2.0
oQ (%) 4.210.6
0.4f GDP) -2.8GDP) -10.0
9.8-1187
-7676.5
69.50.7
-1.31.5
-2.45.7
2009:30.250.293.314.05212
15quarterly averages.
e; SA = Seasona
Page 1
date
evelopments
ppointing 2.4ns and sharpebound to oll be monito
nt growth slleading to
strial producdy but slowihough it mayuld remain snt borrowingamentals conreferred invebe bumpy. Hy will suppo
d Interest Ra3 2009:4 206 5.00 0.92 14.66 -0.8 -4 41.98 -2.80 -10.38 9.97 -8317 -4065 6.75 70.87 -0.23 2.75 1.84 0.47 5.83 2009:4 205 0.259 0.251 3.845 4.642 1755 13
f = Forecast1;
ally Adjusted; M
s
4% in the sply higher oiover 3% in oring the dalowed and t
tepid persction sloweding. Governy be a drag osubdued. De
g is still surgntinue to imestors. With However, weort the prefer
ates 10:1 2010:2
3.7 1.71.9 2.2
20.4 24.812.3 25.727.0 26.5-3.3 -3.3-9.4 -9.19.7 9.5
992 140118 5434.6 -1.7
72.8 74.51.0 1.92.3 1.11.1 0.92.8 2.95.3 6.3
10:1 2010:20.25 0.250.29 0.533.83 2.934.71 3.89160 216
-2 7a = Actual through
MA = Moving A
second quaril prices, wh
the secondata closely the unemploonal consumd but is poisnment consumon growth ineleveraging
ging. Treasurmprove. Cha
a number oe anticipate rred market g
2010:3 20102.6 32.4 4
15.4 7-27.3 316.2 13-3.3 -3-8.8 -89.6 9
286 -1-137 4
2.3 275.7 76
2.1 01.1 10.8 03.6 35.8 5
2010:3 20100.25 0.0.29 0.2.51 3.3.69 4.189 1
6h May 2011
Average; C.O.P.
Jul
rter. Growthhich should pd half. Howover the co
oyment rate mption. Hosed to reboumption is fan the secondcontinues a
ry rates fell wanges to the of risks visib
that the onggoing forwar
0:4 2011:1 23.1 1.94.0 2.27.7 8.83.3 -2.03.7 8.83.0 -3.28.6 -9.49.4 8.872 65816 497
2.9 1.86.8 77.00.4 2.01.5 2.70.8 1.23.6 4.85.4 4.90:4 2011:1 225 0.2530 0.3029 3.4734 4.5164 154
9 11Source: Reuters E
= Change over
ly 15, 2011
h was prove
wever, oming
rose. ousing und in alling. d half. across while bank
ble on going rd.
2011:22.4f0.5aNANA6.6fNA
-8.6a9.2
-530260NA
76.7NA3.61.6
4.2a5.0a
2011:20.250.253.164.3815212
EcoWin r Period
S
Second-Quarter
Economi
The U.S.growing product (Consensu3.0% grofor 2012
One overglobal ecof Japan.global suare the “Aregion resignificanof the fircurrently
Althoughconfidentrecovery likely to continue term. Horecessionmonths.
Figure 2:3-mo
EmployEmployJobles
Jul Nov M06
Em
ploy
men
t C
hang
e (t
hous
ands
)
-900
-800
-700
-600
-500
-400
-300
-200
-100
0
100
200
300
400
1 Forecasts
r U.S. Econom
c Outlook
. economy cby just 1.9%
(real GDP) tous forecasts owth in 2012if a federal b
rarching theconomy. The. Not only wupply chain aArab Springeduced oil ont oil exportrst quarter t
y.
h we cannot that the bufrom them
look soft whto grow at a
owever, if gn will increa
Job Marketonth moving average of Employm
Emp
yment, Overall, Nonfarm payroll, tyment, By Sector, Overall, Total (s Claims, National, 4-week movin
Mar Jul Nov Mar Jul07 08
s from The Livi
mic Update
continued its% in the firo expand byimprove aft
2. We think budget deal
eme for the e first shock was this a terand, in turn,” uprisings i
output in a nter. West Teto $110-115
t predict wulk of their im
should be vhen it is firsta moderate pgrowth and,ase meaning
t Weakened ment changes; 4-week moving aveployment Overview
total [c.o.p val 1 month, ma 3](civilian, household survey) [c.o.p ng average, initial
Nov Mar Jul Nov09
ingston Survey
s sluggish prst quarter, ey 2.4% in Q2ter that: 3.2%those are reincludes siza
second quawas the Ma
rrible human, on the globin the Middlnumber of thxas Interme
5 per barrel
when the immpact on thvisible in tht reported latpace, with re, particularlgfully. This
in Q2 erage of Jobless Claims
val 1 month, ma 3]
Source: Reute
Mar Jul Nov Mar10 11
, Federal Reser
Page 2
pace of groweconomists e2, with risks % real GDPasonable forable spendin
arter is the arch 11 earthn tragedy, itbal economye East. Demhe affected diate oil pricin April, on
mpact of thehe U.S. econhe second hater this monteal GDP groy, employm
s will requir
Figu
ers EcoWin
Jobl
ess
Cla
ims
(tho
usan
ds)
200
250
300
350
400
450
500
550
600
650
700
750
800
850
UnemEarni
90 91 9
Une
mpl
oym
ent
Rat
e, P
erce
nt
3
4
5
6
7
8
9
10
11
rve Bank of Ph
wth in the seexpect inflatto that forec
P growth in recasts, thoung cuts next
impact of twhquake and tt had a rapidy. The secon
mocratic uprinations, espces rose fromnly to drop
ese shocks nomy occurrealf of this yth, but we bowth averag
ment do notre careful m
ure 3: WagesAverage Hourly E
mployment, Rate, Totalings, Average Hourly, Nonfarm pa
92 93 94 95 96 97 9
hiladelphia, Jun
econd quarteation-adjustecast skewed the second
ugh perhaps year.
wo temporatsunami thatd and negatind, less discsings throug
pecially in Lm $85-90 peback to $9
will dissipaed in the secyear. Secondbelieve the Uging 2.5-3% t rebound smonitoring o
s Flat, UnemEarnings and Unemployme
ayroll, total private, USD [c.o.p 12
98 99 00 01 02 03 04
ne 9, 2011.
Jul
er of 2011. d gross domto the downhalf of 201a little optim
ary shocks tt devastated ive impact orete set of e
ghout much oLibya, whicher barrel for 95-100 per b
ate fully, wcond quarterd-quarter GD
U.S. economyover the me
soon, the riover the co
mployment Uent Rate, SA
2 months]Source:
4 05 06 07 08 09 10
ly 15, 2011
After mestic nside.1 1 and mistic
to the parts
on the events of the h is a most
barrel
we are r, and DP is y will edium sk of
oming
Up
Reuters EcoWin
0 11
Ear
ning
s, P
erce
nt
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
S
Second-Quarter
The labomeasured497,000 picture: 5rose to 9productioemploymcontinue.weakness
For nowrecovery,earlier. Arecede, pgasoline pick up iworth nothan it dpayrolls ijobs in Qto reveal an earthqthese seebetter sea
Nonethelthe U.S. if growthrenewed the third
Figure 4:
PersonalPersonalPersonal
90 91 92
Sav
ings
Rat
e, P
erce
nt
0
1
2
3
4
5
6
7
8
9
10
r U.S. Econom
or market wd by nonfarnew jobs in
530,000 job 9.2%, up fron and consu
ment shrunk . Although ws is discoura
, we attribu, especially Although goproduction aprices downin the seconting that the
does on the increased by
Q2. Of courseunderlying
quake/tsunamm like decenasonally-adju
less, we haveeconomy co
h does not precession wquarter unfo
Income, SpPersonal Incom
l Income Account, Overall, Total, l Outlays, Overall, Total, Current Pl Saving, Rate
93 94 95 96 97 98
mic Update
weakened inm establishm
n Q1 (Figurelosses in Q2
rom 8.8% aumer spendi(-111,000 p
we anticipateaging.
ute this pooa moderate
overnment jand manufan by about $nd half of the Q2 employseasonally-a
y almost 2.2 e, the reasontrends, or ch
mi and a surgnt job gains,usted perform
e to acknowould drop bacpick up as th
will rise signiolds.
pending Growme, Consumption and Sav
Current Prices, USD [c.o.p 12 mPrices, USD [c.o.p 12 months]
99 00 01 02 03 04 0
n the secondment payrole 2). The ho2 compared
at the end oing, both ofpayroll jobs ed slower job
or performanrecovery likob losses a
acturing emp15 per barrehe year, whi
yment news ladjusted bas
million andn we normallhanges in thge in oil pri even if theymance over
ledge that thck into receshe temporaryificantly. Th
wth Slowedings
months]
Source: Reute
05 06 07 08 09 10 1
Page 3
d quarter. Jlls grew by
ousehold emto 658,000 j
of Q1. Suppf which weig
in Q2), anb growth und
nce to the nke this one, are likely toployment shel from the Aich should llooks much bsis quoted ead household ly focus on
hose trends, mces (which hy appear slugthe coming m
he sharp slowssion. We doy shocks we
his is someth
Figu
ers EcoWin
11
Inco
me
& S
pend
ing
Gro
wth
, P
erce
nt
-3
-2
-1
0
1
2
3
4
5
6
7
8
9
10
United Home
90 91
Con
sum
er C
redi
t Gro
wth
(P
erce
nt)
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
12.5
15.0
17.5
20.0
Jobless claimy just 260,00mployment su
job gains in ply chain anghed on hiri
nd job lossesder these cir
normal ebb and to the t
o continue, hould rebouApril peak, rlead to highbetter on a narlier. On aemploymenseasonally-amore clearlyhad nothing ggish relativmonths.
wdown in emo not see thae have descrhing we will
ure 5: Debt R"Home Equity W
States, Consumer credit, total, SMortgage Borrowing - Residenti
92 93 94 95 96 97 9
ms rose, and00 jobs, dowurvey paints
n Q1. The unnd oil priceing. In addis in this secrcumstances
and flow otemporary ras supply c
und. Similarreal consumher employmnon-seasonaan unadjustent grew by juadjusted datay. However,
to do with ve to the Q2
mployment rat as the mosribed recedel be watchin
Reduction CoWithdrawal" and Consume
SA, USD [ar 1 quarter]ial Investment
98 99 00 01 02 03 04
Jul
d employmewn sharply s an even wnemploymene shocks redtion, governctor are like, the extent o
of any econrestraints outchain disruprly, with oil
mption shouldment. Finallylly-adjusted d basis, non
ust under 900a is that theywhen faced
seasonal facnorm. We e
raises the riskst likely casee then the ring very close
ontinues er Credit
Source: R
4 05 06 07 08 09 10
ly 15, 2011
ent as from
weaker nt rate duced nment ely to of the
nomic tlined ptions l and d also y, it’s basis
nfarm 0,000 y tend d with ctors), expect
k that e, but isk of ely as
Reuters EcoWin
11
Hom
e E
quity
With
draw
al, A
R (
billi
ons)
-1000
-750
-500
-250
0
250
500
S
Second-Quarter
With only1.75% in4.2% grorunning acceleratonly slowThus, wait is the cincome –
This tepialso have1.9% gro2.1% Yothan that,
In the pasin order trate is hoto increathe requirjust startito save mwill meanbalance sgrowth. OconsumpWe are n
Figure 6:
New + ExNew + ExUnited St
90 91 92
mill
ions
0
1
2
3
4
5
6
7
8
9
10
2 All rates i
r U.S. Econom
y limited pan Q2), nominowth year-onat 1.2% exes as we expwly. As Figage growth icombination – and that com
id growth ine been growowth in real GoY. Retail sa, but Q2 real
st, consumerto support colding up arose savings, (rement for ming to increa
more and born only modesheets. That Once househtion growth
not there yet,
Housing BoNew & Existing Home
xisting Home Sales, AR, SAxisting Homes for Sale, AR, SAtates, Consumer Surveys, Nationa
93 94 95 96 97 98 9
in this report a
mic Update
ayroll gains anal personan-year (Figuxcluding foopect over theure 3 indicais likely to rof rising emmbination is
n personal inwing only sloGDP in the fales data for l PCE growt
rs facing sluconsumptionound 5%. W(2) the great
much larger dase (mainly rrow less, esest growth in
is going toholds have will catch ubut it shoul
ouncing Aloe Sales, Inventories and Af
al, Housing Affordability Index, co
99 00 01 02 03 04 0
are presented on
and slow groal income gure 4).2 This od and enere coming quaates, high unemain subdu
mployment as unlikely to
ncome meanowly. Real Pfirst quarter. June sugge
h probably w
ggish incomn, but that is
We think this ter difficultydown paymedue to autom
specially in n consumpti
o take a gooincreased sa
up to incomed not take a
ng Bottom ffordability
omposite, IndexSource: Reute
05 06 07 08 09 10 11
n a seasonally-
Page 4
owth in wagrowth sloweis very slow
rgy prices aarters, the unnemploymenued. Althougnd faster waarrive for so
ns that persPCE was up
In Q2, real st that PCE will be slowe
me growth minot happenreflects (1) a
y that most hents on homemobile loanthe form of on while ho
od deal of timavings and re growth, andgeneration t
Figur
ers EcoWin
1
Aff
orda
bilit
y In
dex
100
110
120
130
140
150
160
170
180
190
200
Real Re
95 96
Per
cent
of
Rea
l GD
P
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
-adjusted annua
ges (average ed to just 3.w income grand 2.5% onemploymennt tends to gh employmage growth tome time to
onal consumby 2.2% anPCE is up bfor the full
er than in Q
ight have being (much) a greater deshouseholds he purchases.
ns), householf mortgage douseholds rebme but doesreduced debd the economto correct the
re 7: LimitedResidential I
esidential Investment / GDP
97 98 99 00
alized basis, un
hourly earn.4% in Q2 trowth whenoverall. Event rate is likekeep a lid o
ment gains wthat really pucome.
mption expnd accountedby just 0.5%
quarter will1.
een tempted in this recovsire on the phave obtaini. Although clds genuinel
debt (Figure build savings not imply
bt to more sumy can growese imbalanc
d GDP ImpacInvestment as a Percent
01 02 03 04 05
nless otherwise
Jul
nings rose bythrough May
n PCE inflatien if job grely to come on wage gro
will boost incushes up per
penditures (d for 1.5% othrough Mal be a little b
to reduce savery: the sav
part of houseing credit anconsumer crely appear to 5). We think
gs and repairdecades of
ustainable lew at a faster ces.
ct from Houof GDP
Source: R
5 06 07 08 09
e noted.
ly 15, 2011
y only y and ion is rowth down owth. come, rsonal
(PCE) of the
ay and better
avings vings
eholds nd (3) edit is want
k this r their f slow evels, pace.
using
Reuters EcoWin
10 11
S
Second-Quarter
The housholding asales pactoday’s pyears intinventoriPoor’s/C
Althoughto GDP gend of 1Qare runnigrowth, oto drop mGDP nowprices sthouseholthere is saffordabilonger –
Figure 8:Rea
ManufacManufacManufacManufac
99 00
Per
cent
-50
-40
-30
-20
-10
0
10
20
30
40
Businessearthquakgoods ordgrowth ingoods orwe expeBusinessCapacity positive
r U.S. Econom
sing markeabout steadyce of the midprices and mto the econoes are still ase-Shiller H
h the housinggrowth. As FQ2011, dowing well belobsolescencemuch furtherw that even ill matter fold. Lower hostill risk to tility, and a galthough a r
Manufactural Factory Orders and Ship
cturers New Orders, Total manufacturers New Orders, Nondefensecturers Shipments, Total manufaccturers Shipments, Nondefense c
01 02 03
s investmentke and tsunders and shipn the range ders and shict they willes investmeutilization
but somewh
mic Update
et continues y a little abod-1990s, whmortgage ratomic recoveexerting so
Home Price I
g market is nFigure 7 sho
wn from overlow the lone, and replacr from herea large drop
for the econome prices rthe economy
growing popuebound is no
red Goods Ppments (3-mo moving ave
acturing [ / Producer Prices, Mane capital goods excluding aircraftcturing [ / Producer Prices, Manufcapital goods excluding aircraft [
04 05 06 0
t continues tami make epments (nonof 7-12% o
ipments, howl rebound aent is closelis still risin
hat slower i
to bounce aove a 5 millhich is not btes. As a re
ery and sixme downwaIndex (20-ci
not likely tows, residentr 6% at the png-term replacement after. Even if it
p in it wouldnomy, since reduce housy from the hulation, we tot imminent.
icture Mixederage, annualized)
ufactured goods, Index, 1982=10t [ / Producer Prices, Capital equfactured goods, Index, 1982=100[ / Producer Prices, Capital equip
Source: Reute
07 08 09 10
to look relatestimates forndefense capon an inflatiwever, slippas the supplly correlatedng, but the investment s
Page 5
along the bolion unit annbad, but it is sult, inventoyears after ard pressureity) down 3.9
o turn upwartial investmepeak of the hacement rater fire or othedoes, reside
d have only a home is
sehold wealthousing marthink that ho.
d Figu
00, ar ma 3 months]uipment, manufacturing i ndustrie0, ar ma 3 months]pment, manufacturing in dustriesers EcoWin
11
99
Cap
acity
Util
izat
ion
(12-
mo
Cha
nge,
Per
cent
age
Pts
)
-12.5
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
tively strongr the second
pital goods eion-adjusted ped into negly chain recd with chanpace of impspending ov
ottom. New nual rate (Fi low given hories of unsthe peak of
e on home p9% YoY in A
rd soon, it doent representhousing booe for housin
er loss), homential investa small effe
s usually thth, which afrket. Howevome prices w
ure 9: Invest
es, Index, 1982=100, ar ma 3 mo
s, Index, 1982=100, ar ma 3 mon
Capacity U
United States, Capacity Utilization, TPrivate Fixed Investment, Nonresiden
00 01 02 03
g, although dd quarter hiexcluding aird basis (Figuative territorcovers in thnges in capprovement hver the near
and existingigure 6). Thhow afforda
sold homes f the housinprices, withApril.
oes not posets just 2.4% om. Given thng (derived
mebuilding actment is sucect on GDP. he largest asffects consuver, with littwill stabilize
tment Sturdy
onths]
nths]
Utilization vs Business Inve
Total index, SA [c.o.p val 12 months]ntial, Eq & sw, Constant Prices, AR, S
04 05 06
disruptions frighly uncertrcraft) continure 8). Overry in April
he second hpacity utilizahas slowed, r term. In a
Jul
g home salehis is close table homes aremain high
ng market. Th the Standa
e much direcof GDP as o
hat housing from popul
ctivity is unlh a small paOf course, h
sset owned umer behaviotle building,e before too m
y but Slowinstment
SA, USD, 2005 prices [c.o.p 12 monthSource: R
07 08 09 10
from the Japtain. Core cnue to show rall manufacand May, th
half of this ation (Figurwhich poin
addition, bus
ly 15, 2011
es are to the are at h two Those ard &
ct risk of the starts lation likely art of home by a
or, so , high much
ng
hs]Reuters EcoWin
11
Bus
ines
s In
vest
men
t (P
erce
nt, Y
oY)
-30
-25
-20
-15
-10
-5
0
5
10
15
20
anese apital solid
ctured hough
year. re 9). nts to siness
S
Second-Quarter
constructdecline. Ogrowth (i
In the indJapan. Tmanufactperspectimonth ofa shock ovisible in(IP) grewHowevercorner. In
Figure 10Ja
Jun Aug Oct08
Inde
x
70
75
80
85
90
95
100
105
110
Governmjoins statQ1, whicfederal, sstate andbalance.3estimate the federwill not bgovernmon the ou
3 State andgovernmenThus, fisca
r U.S. Econom
tion spendinOn balance, it added 0.2%
dustrial sectoThis slowdoturers in the ve, overall i
f March, andof that size inn both produw by just 0.r, the ISM mndustrial out
0: Japanese Ipan, All Industrial Activity,
Dec Feb Apr Jun Au09
ment consumte and local ch subtractestate, and locd local gove However, fits impact un
ral debt limibe a default oent consump
utcome in ne
d local governmnts need to cut al drag from sta
mic Update
ng (which is we continue
% in Q1), bu
or, industriaown shouldglobal supp
industrial prod it recoveren such an imuction and su8% in Q2,
manufacturintput should r
IP Plunged iIndustrial production, SA,
ug Oct Dec Feb Apr
mption will governmen
d 1.2% fromcal governmeernment spefiscal drag fntil Congrest. We expecof any kind ption will drxt quarter’s
ments in the Uspending and/
ate and local go
part of busie to think buut not to the s
al productiod come as ply chain. Tooduction in d only sligh
mportant expourvey data inand IP excl
ng survey forebound nice
n MarchIndex, 2005=100
Source: Reuter
Jun Aug Oct Dec Feb10 1
continue to nts in belt tigm GDP growents over thending shoul
from the fedss and the adct the debt con Treasury
rop. The queUpdate.
U.S. generally /or raise taxes tovernments ten
Page 6
iness investmusiness invessame extent
on slowed inno surpris
o put the 3/1Japan fell by
htly in April ort economyn the U.S. (Fluding motoror June suggely in the thir
Figure 1
rs EcoWin
Apr1
ProdProdBusin
Jul Nov06
ISM
Man
ufac
turin
g In
dex
30
35
40
45
50
55
60
65
be a drag onghtening. Gowth. We looe balance of ld begin to eral governm
dministrationceiling will by obligationsestions are: h
operate under to bring those nds to pass fair
ment in the stment will bas in 2010.
n response tse given th1 earthquaky more than(Figure 10).
y will not be Figure 11). r vehicles a
gests that prord quarter.
11: US IndusIndustria
uction, Aggregates, Manufacturinuction, Overall, Total, Volume, 20ness Surveys, ISM Manufacturing
Mar Jul Nov Mar07 0
n GDP growovernment cok for furthf the year. Th
wane as thment is just n agree on a be raised by. Whatever d
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Page 7
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65 70
a U.S. econooutlook. In
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Page 8
ctor (blue). Ito-GDP (marocontinued to
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t is increasinoon) has flatrecover. Co
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90 95
lose this sectThe sovereial now threhink Italy anonetary Unio
me-frame. Thpitated or prand Spain.
ubt that the nomy and ha
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07Jul Nov
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7: CorporateCorporate Profit
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68 70 72 74 76 78 80
mic Update
len further tne, falling b
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ndicated that olios in ordtening of mnts likely wistep anytime
Yields Downenchmark Interest Rates,
Yield, CloseYield, Close
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82 84 86 88 90 92 94
Postwar Averages
o 4.25% as by 52 bp in rget rate at 0Asset Purchasury securiit will conti
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urrent Prices, AR, SA, USD [ / Nationaost-WWII Average, Current Prices, AR
Source: Reute
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Page 9
of July 15. TQ2 and ano
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92 93 94 95 96 97 9
ar Treasury yp month-to-den since Decule in June. nd of quantal proceeds from shrinkined that suspetary accom
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eld Spread to 30-yr Treasury, Mdex, Yield Spread to 10-year Tre
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n Low, Balan
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Health: LTD/Credit, Liquidit
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98 99 00 01 02 03
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yield experiedate. The Fecember 2008In aggregate
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9: Commerc Bank Commercial Loan
ncy rates, all banks, commercial Off Rates, all banks, commercial ncy rates, all banks, Real estate
Off Rates, all banks, real estate lo
93 94 95 96 97 98
roving crediefitted largerr mortgage l
21). Althougk modestly cial and induends mirror section.
mic Update
fell, credit spbond spread62 bp. Prefered stock andferred sprea
s in Europe ain volatile o
for our contimprove. Co
earnings befoof long-term18). Commedefault rat
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8 99 00 01 02 03
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ent has promal borrowersndards are noincreasing l
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Page 10
e stable to mntially flat inies’ prices wid securities variety of r
what greater ance of the y
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7
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mpted banks s and even o longer tighending in ceoverall bankd – just receng trends we
moderately wn the secondwere about fls up slightly risks, chief recession ri
year but with
edit spreadse to reboundontinues to at record hs and chargeIn contrast,res paused ier bank eawe are not tge of credit
gure 20: Mo For
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92 93 94 95 96 97
to ease lendcredit card
htening, theyertain areas, k credit, mently – crede discussed
wider (Figurd quarter, andflat on balanc
and capital among them
isk here at hh an overall
s is that fund briskly (Fiimprove. Coighs; both re-offs are fa, Figure 20n the first q
arnings repotoo worried statistics, n
rtgage Delinreclosures Fl
Bankers Assoc, Delinquen
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98 99 00 01 02 03
ding standardborrowers.
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at the end
Jul
re 16). Longd high yield ce, with pricsecurities do
m the broadhome. We enarrowing b
ndamental cigure 17). Inorporate liqureduce shortalling (Figure0 shows thaquarter (the orts suggest
about this, nearly all of
nquencies anlat ncies & Foreclosures
at End of Quarter, Discontinued
Source:
3 04 05 06 07 08
ds modestly.However, w
to ease matek credit contre shrinkingns are increaof the Econ
ly 15, 2011
g-term bond
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50
60
70
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result of impns for loan loed on the fogrowth in lenn. We see ththat challen
1: Lending Sted States, Business Sur
m. resp. tightening standards fom. resp. tightening standards fomestic respondents tightening sm. respondents tightening stand
93 94 95 96 97 98
close with ns from thereliminary bl be followee in the fouruntil those r
y material baommittee onn systemicalmmon equityll be requirecally importanother 1% ally importacommon eqummon equity
all of this towith a fundry uncertaintsury securiting from both
mic Update
proving credosses but haormer, but pnding and/or his as one of nge is an imp
Standards Earveys, Senior Loan Office
r mortgages to individuals, primr mortgages to individuals, all (D
standards, consumer loans, creddards for C&I loans, large & med
8 99 00 01 02 03 0
a brief updae Fed requirbank capital d by a publi
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ank regulatorn Banking Slly importany capital reqed to hold a Stant”) banks
common eant in the fuuity is morey cushion to
ogether, we damentally ity are limitinies are keeph. There are
it but mixedave not been provisions ca
higher interf the key chaportant part o
asing (Slightler Opinion Survey
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04 05 06 07 08 09
ate on bankred by last yrules from Uic comment f this year. W
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Page 11
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bank balance sheets
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ter was the aital requireme so-called “ghted assetsrange, whilee. In addition
ws materiallyFI buffer mus, since there
e to offer indued economance, while lld elsewherhich may m
Jul
een able to rens. Earningsterm, banks
rnings and cd, and how a n our portfo
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and liab of comm banks, bank credit to
Source: R
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ance ons to
waiting for m legislation
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growth in thwill prove te
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is for personan in whole or inn obtained frorrant that it is a
are subject totable for all invrated.
Page 12
slowed and he economy Potential shoeral governmer that chok
ntry that cuts
e, it always tfolio objecti
rights reserveing statements
e materially difchange at any tal use only ann part is expresom sources beaccurate or co change witho
vestors. No off
unemploymis currentlycks include
ment debt cekes off the s oil supplie
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mentary contasignificant busare no guaran
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ains forward-losiness, economntees associateFlaherty & Cruestment adviceen prior consen
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