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2002 Dallas Federal Reserve Annual Report

2002 Dallas Federal Reserve Annual Report

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Published by DallasFedFan

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Published by: DallasFedFan on Apr 10, 2012
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02/10/2014

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TheFruits of Free Trade
2002 ANNUAL REPORT
FEDERAL RESERVE BANK OF DALLAS
 
Contents
From the President . . . . . . . . . . . . . . . . . . . . . . . .1The Fruits of Free Trade . . . . . . . . . . . . . . . . . . . .3Senior Management . . . . . . . . . . . . . . . . . . . . . .25Boards of Directors . . . . . . . . . . . . . . . . . . . . . .26Officers and Advisory Councils . . . . . . . . . . . . . .28Financial Statements . . . . . . . . . . . . . . . . . . . . . .29Notes to Financial Statements . . . . . . . . . . . . . . .35Volume of Operations . . . . . . . . . . . . . . . . . . . . .45“The essential difference between Free Trade and . . . Protection is, that under asystem of Free Trade the excellence of the product is the only means by whichit can secure a market; while under Protection an inferior article can dominatethe market through the aid of legislation. The necessary effect of Free Trade is,therefore, to encourage efficiency in production, while the necessary effect ofProtection is to encourage skill in corruption.”“Prosperity [is] an abundance of commodities. . . . The merit of any policy orsystem can be tested by its effect on the volume of commodities available forthe use of the people.” —William Bourke Cockran
In the Name of Liberty 
, 1925
 
ANNUAL REPORT 2002 Federal Reserve Bank of Dallas
1
ALETTER FROMTHE PRESIDENT
2002 was not the best of years. Thepall of September 11 lasted all year andbeyond. We had to adopt security meas-ures and change our behavior in waysthat eroded our personal liberty andeconomic efficiency. These necessarychanges may not have reduced GDPmuch, but they lowered our standard of living nonetheless. GDP isn’t everything.
The Economy in 2002
Following the 2001 recession, eco-nomic activity expanded throughout2002, but not vigorously enough to sus-tain or promote employment growth.Increases in output and income weredriven by continued gains in productiv-ity.Although the unemployment rate never exceeded 6 percent duringthe year, the recoveryso far has been a jobless one. Productivity gainsmay substitute for job growth in the short term when the economy isweak, but they augur well for a higher standard of living in the long runwhen both productivity and job growth are rising.With aggregate demand too weak to stimulate job growth, monetarypolicy in 2002 did not reverse its accommodative stance. In fact, theFOMC reduced the federal funds rate another half percentage point inNovember, bringing the target rate down to 1.25 percent. Inflationremained subdued, however, with continued disinflation giving rise insome quarters to concerns about potential deflation.
The Fed and Banking
Banks in the Eleventh Federal Reserve District, like those in thenation, are generally in good condition. Unlike the aftermath of the1990–91 recession, there has been no hint of a credit crunch to hindereconomic recovery.The operations of the Federal Reserve Bank of Dallas remained on asound footing during 2002, although we did experience a slowing inthe volume of checks processed. After years of anticipation, electronicpayments transactions have finally made a dent in paper check vol-umes, and we are having to adjust our check infrastructure. When thechurn affects our own employees, we have to remind ourselves that atransition from paper to electronic payments is probably good for thepayments system overall and has been a goal of the FederalReservefor many years. Watch out what you ask for. You may get it.

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