the fed challenge rony byas, tina byrne, tashdid hasan, changhyon hwang, vincent lo

The Fed Challenge

Rony Byas, Tina Byrne, Tashdid Hasan,

Changhyon Hwang, Vincent Lo

November 10, 2008

Source : Federal Reserve Bank of New York

GDP Contracts in the Third Quarter

Consumer Confidence Plummets in October

Source : The Conference Board

Consumer Spending Continues to DecreaseMonthly and YoY % Change

Real Disposable Income

Personal Consumption Expenditures

RDI0.1%

PCE-0.4%

3rd Quarter

Source : Federal Reserve Bank of St. Louis

Shaded areas indicate US recessions

Source : Federal Reserve Bank of St. Louis

Unemployment Rate Continues to Rise

October6.5

Shaded areas indicate US recessions

Nonfarm Payroll Employment Continues to DeclineMonthly and YoY % Change

Source : Federal Reserve Bank of St. Louis

Monthly Change(Left Scale)

% Change Year Over

Year(Right Scale)

Shaded areas indicate US recessions

October-240,000

ISM Manufacturing Index Experiences a Sharp Plunge

Source : Federal Reserve Bank of St. Louis

Shaded areas indicate US recessions

October38.9

Housing Starts on a Steep DeclineMonthly Change (Thousands of Units)

Source : U.S. Census Bureau

544K

817K

Housing Prices Have Been on a Gradual DeclineCase-Shiller 10 and 20 Composite YoY %

Source : Standard and Poor’s

17.7%16.6%

U.S. Home Foreclosure Filings on the Rise Monthly Change

Source : RealtyTrac

September266,000

Housing Problems Concentrated in Key Areas of the Country

Source : First American CoreLogic

Difference Between 3-Month LIBOR Rate and 3-Month Treasury Yield

Source : Bloomberg

Credit crisis begins

Lehman Brothers files for bankruptcy

TARP passed

Commercial Paper Market in Distress

Source : The Federal Reserve Board

Risk premiums have been elevated..

.. and issuance of new commercial paper has declined.

Numerous Programs Have Been Implemented to Restore Economic Stability

Source : Credit Suisse

Inflation Starting to ModerateCore CPI and Core PCE YoY% Change

Source : Federal Reserve Bank of St. Louis

Shaded areas indicate US recessions

2.4%2.5%

Core PCE

Core CPI October

Inflation Expectations Have Been Easing10-Year TIPS Spread

Source : The Federal Reserve Board

97 bps