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Total Nonagricultural Employment Since 1990in 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%

Increasesince 1990

+19%

+43%

+11%

+5%

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80

85

90

95

100

105

110

115120

125

2000 2005 2010

Index, January 2000 = 100

SOURCES: Bureau of Labor Statistics; Federal Reserve Bank of Dallas.

Total Nonagricultural Employment Since 2000in Selected States

+21%

12%

+5%

Increasesince 2000

+4%

+10%

+5%

3%

Texas

U.S.

CaliforniaNew York

Florida

Illinois

Michigan

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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

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Job Growth by Wage Quartile,2000-12

NOTES: Calculations include workers over age 15 with positive wages and exclude the self-employed. Wagequartiles 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

510

15

20

25

30

35

Lowest wage quartile Lower-middle wagequartile

Upper-middle wagequartile

Highest wage quartile

Texas U.S. minus Texas

Percent change

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Adios Texas Ratio

Texas has more banks than any other state yetexperienced just 11 of the 489 U.S. bank failuressince 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 sectorfallout and the spike in underwater mortgages

NOTE: Texas ratio defined as the book value of all nonperforming assets plus other real estate owned dividedby tangible equity capital plus loan loss reserves.

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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

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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

As ia, 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%

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Employment by Metro Area

SOURCES: Bureau of Labor Statistics; Federal Reserve Bank of Dallas.

94

96

98

100102

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

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43

8011,149

1,073

1,597

1,521

2,5582,540

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

Bil lions, Reserves ($)QE3

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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.

$0.94

9/10/08

Interestrates cutto the zerobound

Lehman failure QE3

Feds Balance Sheet Has Quadrupled in Size

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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

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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 yearsUp 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

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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 reservesNon-bank currency

Trillions of dollars

SOURCES: Federal Reserve Board; Federal Reserve Bank of Dallas.

But Newly Created Money MostlySitting Fallow as Excess Reserves

54%4%

42%

9/26/12QE3

$2.56T

31%

65%

4%

$3.73T

$2.45T inexcess

reserves

Lehman failure

5%Required ReservesNon-bank Currency

Share of Monetary Base 9/10/08

0%

95%

Excess Reserves

$0.85T

Jan. 2014

MonetaryBase

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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 MeanPCE 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

2.7 Year-over-year

Real GDP growth

44.5

5

5.5

66.5 7 7.5

8

8.5

9

9.510

6.6

Unemploymentrate (%)

Percent of jobs recovered

33.5

4

4.5

55.5

6 6.5 77.5

8

8.5

99.5

10

3.68

Junk-bondspread (%)

Warning lights

Unemp.jump

Yieldcurve

Oilshock

Enginestall

55.5

6

6.5

77.5 8 8.5

9

9.5

10

10.511

5.81

High YieldCorp. Debt (%)

!

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Corporate Bond Yields and Spreads Remain LowPercent

SOURCES: Moodys, 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

0246

810

'10 '11 '12 '13 '14

Junk bond / 7-year Treasury spread

Historical average spread:1997-Present

Percent

3.7

5.6

Junk bond yield

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Richard W. Fisher President and CEOFederal Reserve Bank of Dallas

Dallas, TexasFebruary 11, 2014