FRBSF University Symposium

Board of Governors

Ben S. Bernanke, Chairman

Darrin Howard

Quang Le

Layla Mansfield

Nabiha Parvez

Michelle Staples

Labor

Unemployment4.4%

Average Hourly Earnings Increased 3.9%

Non-farm Payrolls 92,000 Jobs

Source: Bureau of Labor Statistics

Gross Domestic Product

3rd Quarter Real GDP

Increased 2.2%Real Personal ConsumptionExpenditures

Increased 2.9%

GDP: Annual Percent Change

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2003

Q1 Q2 Q3 Q4

2004

Q1 Q2 Q3 Q4

2005

Q1 Q2 Q3 Q4

2006

Q1 Q2 Q3

Nominal annualized% chg

Real annualized % chg

Source: Bureau of Labor Statistics

Balance of Payments

Account Deficit6.6% of GDP

Balance of Payments(millions of dollars, seasonally adjusted)

-250,000

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000

250,000

Current Account -137163 -131103 -131542 -127711 -145838 -166771 -166327 -186356 -191724 -193258 -183415 -223109 -213198 -218410

Capital Account 137613 132726 132406 128095 146295 167170 167250 186838 194415 193847 183972 223623 214954 219292

Balance of Payments 450 1623 864 384 457 399 923 482 2691 589 557 514 1756 882

2003Q1 Q2 Q3 Q4 2004Q1 Q2 Q3 Q4 2005Q1 Q2 Q3 Q4 2006Q1 Q2

Source: Bureau of Labor Statistics

Energy

Inflation

Durable GoodsNew ordersDecreased 8.3%

InventoriesIncreased 0.7%

CPIDecreased 0.5%

HousingNew Housing Starts

Down 15% to the lowest level in more than six years

Privately owned starts14.6% (±7.6%) below the revised

September estimate.27.4% (±5.3%) below the October

2005 rate.Single-family starts

15.9% (±7.4%) below the September figure

Median price for new homes10% decrease over the past 12 months

Foreclosures42% increase from last year.

FRBSF University Symposium

FRBSF University Symposium

Board of Governors

Ben S. Bernanke, Chairman

Darrin Howard

Quang Le

Layla Mansfield

Nabiha Parvez

Michelle Staples