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Richard W. FisherPresident and CEOFederal Reserve Bank of Dallas
Dallas, TexasFebruary 11, 2014
Total Nonagricultural Employment Since 1990 in Selected States
SOURCES: Bureau of Labor Statistics; Federal Reserve Bank of Dallas.
90
100
110
120
130
140
150
160
170
1990 1995 2000 2005 2010
Texas
U.S.
California
New York
Florida
Index, January 1990 = 100
Illinois
Michigan
+61%
+8%
+26%
Increase since 1990
+19%
+43%
+11%
+5%
80
85
90
95
100
105
110
115
120
125
2000 2005 2010
Index, January 2000 = 100
SOURCES: Bureau of Labor Statistics; Federal Reserve Bank of Dallas.
Total Nonagricultural Employment Since 2000 in Selected States
+21%
–12%
+5%
Increase since 2000
+4%
+10%
+5%
–3%
Texas
U.S.
CaliforniaNew York
Florida
Illinois
Michigan
2013 Employment Growth in Texas
NOTES: Categories are North American Industry Classification System supersectors. Data seasonally adjusted.SOURCE: Federal Reserve Bank of Dallas.
67.0
46.743.6
34.9
17.6 15.4 14.710.7 10.4 9.0
0
10
20
30
40
50
60
70
80
Trade, Transp& Utilities(20.1%)
Prof. &BusinessServices(13.1%)
Leisure &Hospitality(10.2%)
Educational &Health
Services(13.4%)
Oil & GasExtraction and
MiningSupport(2.5%)
Construction(5.4%)
FinancialActivities(6.1%)
Government(16.0%)
Manufacturing(7.8%)
Information(1.8%)
Thousands of jobs 2013 total jobs gained in Texas = 266,900
Job Growth by Wage Quartile, 2000-12
NOTES: Calculations include workers over age 15 with positive wages and exclude the self-employed. Wage quartiles constructed based on U.S. 2000 wage distribution. SOURCE: Current Population Survey Merged Outgoing Rotation Groups, 2000, 2012.
18.6
10.4
31.0 30.3
9.7
-6.9
0.9
9.9
-10
-5
0
5
10
15
20
25
30
35
Lowest wage quartile Lower-middle wagequartile
Upper-middle wagequartile
Highest wage quartile
Texas U.S. minus Texas
Percent change
Adios Texas Ratio
• Texas has more banks than any other state yet experienced just 11 of the 489 U.S. bank failures since the Great Recession began– Time to rename the “Texas Ratio,” a measure of
bad assets versus available capital
• The state escaped the brunt of the housing sector fallout and the spike in underwater mortgages
NOTE: Texas ratio defined as the book value of all nonperforming assets plus other real estate owned divided by tangible equity capital plus loan loss reserves.
Share of Unprofitable Banks: U.S. and 11th District
* YTD through third quarter 2013.SOURCE: Federal Reserve Bank of Dallas.
* 0
5
10
15
20
25
30
35
2006 2007 2008 2009 2010 2011 2012 2013
U.S. 11th District
Percent of banks reporting a net loss
80
100
120
140
160
180
200
220
240
260
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
U.S. minus Texas
Texas
Index, Jan. 2000=100*
8%
36%
9%
11%
15% 18%
3%
Other
Mexico
Canada
European Union
Asia, excl. China
Latin America, excl.MexicoChina
2013:Q3
Texas Export Growth
* Real, seasonally adjusted. SOURCES: Census Bureau; World Institute for Strategic Economic Research; Federal Reserve Bank of Dallas.
+26%since peak
+3%
Employment by Metro Area
SOURCES: Bureau of Labor Statistics; Federal Reserve Bank of Dallas.
94
96
98
100
102
104
106
108
110
112
T T +10 T +20 T +30 T +40 T +50 T +60 T +70
Index, peak employment = 100
TexasHouston
El Paso
Austin
T = months from peak employment
Dallas-Ft. Worth
San Antonio
43
8011,149
1,073
1,597
1,521
2,558
2,540
0
500
1000
1500
2000
2500
3000
'07 '08 '09 '10 '11 '12 '13 '14
SOURCES: Federal Reserve Board of Governors, H.3 release.
Total Reserves of Depository Institutions
Bank Reserves Have Ballooned
Billions, Reserves ($)QE3
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Total assets
Trillions of dollars
$4.13Jan. 2014
$2.869/26/12
SOURCES: Federal Reserve Board; Federal Reserve Bank of Dallas.
$0.949/10/08
Interest rates cut to the zero bound
Lehman failure QE3
Fed’s Balance Sheet Has Quadrupled in Size …
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Other
Agency MBS + agency debt
Treasury securities
Trillions of dollars
assets
15%0%
85%
11/28/07
54%
8%
38%48%9/10/08
0%51%
Lehman failure
10%32%58%
9/26/12
QE3
SOURCES: Federal Reserve Board; Federal Reserve Bank of Dallas.
Now Has Large Holdings of Agency Debt and MBS …
Agency debt and MBSTreasury securities
Other assets
Share of Total Portfolio
Jan. 2014
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Other
More than 5 years
Over 1 to 5 years
Up to 1 year
Trillions of dollars
79%20%1%
9/26/12
22%30%48%
11/28/07> 5 years
39%9/10/08
34%27%
Lehman failure QE3
21%
79%
0%
SOURCES: Federal Reserve Board; Federal Reserve Bank of Dallas.
assets
1 – 5 years< 1 year
And Has a Portfolio with Longer Terms to Maturity
Share of Total Portfolio
Jan. 2014
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Excess reserves
Required reserves
Non-bank currency
Trillions of dollars
SOURCES: Federal Reserve Board; Federal Reserve Bank of Dallas.
But Newly Created Money Mostly Sitting Fallow as Excess Reserves
54%4%
42%
9/26/12QE3
$2.56T
31%
65%
4%
$3.73T
$2.45T in excess
reserves
Lehman failure
5%Required ReservesNon-bank Currency
Share of Monetary Base 9/10/08
0%
95%
Excess Reserves
$0.85T
Jan. 2014
Monetary Base
U.S. Economic Dashboard
NOTE: Data updated as of February 10, 2014.
9 0 . 0
-1
-0.5
0
0.5
11.5 2 2.5
3
3.5
4
4.5
5
1.4
Trimmed Mean PCE Inflation (%)
-2.5
-2
-1.5
-1
-0.5
0
0.51
1.5 22.5
3
3.5
4
4.5
5
5.5
6
2.7Year-over-year
Real GDP growth
4
4.5
5
5.5
66.5 7 7.5
8
8.5
9
9.5
10
6.6
Unemployment rate (%)
Percent of jobs recovered
3
3.5
4
4.5
55.5
6 6.5 77.5
8
8.5
9
9.5
10
3.68
Junk-bond spread (%)
Warning lights
Unemp.jump
Yieldcurve
Oilshock
Enginestall
5
5.5
6
6.5
77.5 8 8.5
9
9.5
10
10.5
11
5.81
High Yield Corp. Debt (%)
!
Corporate Bond Yields and Spreads Remain LowPercent
SOURCES: Moody’s, Bank of America Merrill Lynch, Federal Reserve Bank of Dallas.
5.815
7
9
11
13
15
17
19
21
23
'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
02468
10
'10 '11 '12 '13 '14
Junk bond / 7-year Treasury spread
Historical average spread: 1997-Present
Percent
3.7
5.6
Junk bond yield
Richard W. FisherPresident and CEOFederal Reserve Bank of Dallas
Dallas, TexasFebruary 11, 2014
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