The document summarizes the state of the US economy in early 2009. It notes that actual 2008 economic growth, employment, and inflation were significantly weaker than had been forecast the previous year. Housing prices declined substantially across most states and the sharp drops in home values and stock prices reduced household wealth. The recession caused job losses averaging 250,000 per month since late 2007, and unemployment rose significantly. Businesses reduced inventories and cut back on investment in response to weak sales and economic uncertainty.

1. The Economic Outlook
Loretta J. Mester*
Senior Vice President and Director of Research
Temple University Fox School of Business
Leadership and Professional Development Seminar
February 19, 2009
FEDERAL RESERVE BANK
OF PHILADELPHIA
*The views expressed here are those of the author and do not necessarily reflect those
of the Federal Reserve Bank of Philadelphia or of the Federal Reserve System.

2. “Those who have knowledge, don’t predict.
Those who predict, don’t have knowledge.”
Laozi
6th century B.C. Chinese philosopher and founder
of Taoism

3. “Those who have knowledge, don’t predict.
Those who predict, don’t have knowledge.”
Laozi
6th century B.C. Chinese philosopher and founder
of Taoism
“It is far better to foresee even without certainty
than not to foresee at all.”
Henri Poincaré
19th century A.D. French mathematician,
physicist, and philosopher of science

4. “A good forecaster is not smarter than everyone else,
he merely has his ignorance better organized.”
Anonymous
• Review 2008 economic performance
• Discuss monetary policy actions in 2008
• Present forecast for 2009 and 2010

5. Economic growth was expected to continue in 2008,
but the economy turned out considerably weaker
Central Tendency of FOMC Actual for
Projected in January 2008 2008
Real GDP Growth 1.3 to2.0% –0.2%
(4Q/4Q)
Unemployment Rate 5.2 to 5.3% 6.9%
(4th quarter average)
Core CPI Inflation 2.0 to 2.2% 1.8%
(4Q/4Q)
Total CPI Inflation 2.1 to 2.4% 1.7%
(4Q/4Q)

6. Growth remained positive in most states in 2007…
Philadelphia Fed Current Economic Activity Indexes,
annualized growth in 2007
> 4%
3% to 4%
2% to 3%
0.5% to 2%
-0.5% to 0.5%
-2% to -0.5%
-3% to -2%
<-3%

7. …but only 5 states had positive growth last year.
PA and DE are among the weakest states.
Philadelphia Fed Current Economic Activity Indexes,
annualized growth in 2008
> 4%
3% to 4%
2% to 3%
0.5% to 2%
-0.5% to 0.5%
-2% to -0.5%
-3% to -2%
<-3%

8. Economic growth slowed considerably in the second half of the year
Percent Real GDP Growth, SAAR
5
Tax rebates
4
3
2
1
0
-1
-2
-3
-4
-5
2004 2005 2006 2007 2008

9. By October, Fed policymakers had significantly reduced
their forecasts for growth for 2008 and especially for 2009
Central tendency of economic forecasts of the
Board of Governors and Reserve Bank Presidents
January 2008 Forecasts October 2008 Forecasts
2008 2009 2008 2009
Real GDP Growth 1.3 to 2.0% 2.1 to 2.7% 0 to 0.3% –0.2 to 1.1%
actual in 2008 −0.2%
Unemployment 5.2 to 5.3% 5.0 to 5.3% 6.3 to 6.5% 7.1 to 7.6%
Rate in Q4
actual in 2008 6.9%
Core Inflation 2.0 to 2.2% 1.7 to 2.0% 2.3 to 2.5% 1.5 to 2.0%
(Core PCE)
actual in 2008 1.8%
Inflation 2.1 to 2.4% 1.7 to 2.0% 2.8 to 3.1% 1.3 to 2.0%
(PCE)
actual in 2008 1.7%

10. The downside risks to growth most forecasters
discussed a year ago came to pass
• Financial market conditions tightened further leading to a
bank capital crunch, significant pull-back in lending from
bank and nonbank firms, and rise in borrowing costs
– Failures/near failures of large financial firms including
Bear Stearns, Fannie Mae, Freddie Mac, Lehman, AIG,
Wachovia, Citigroup
• Equity price declines worsened and the loss in wealth
curtailed consumption and investment
• Housing markets did not stabilize. The turndown in housing
continued to be sharp

11. Housing investment did not stabilize last year.
It has subtracted from growth since 2006.
Real residential investment
Percent Quarterly growth, SAAR
20
15
9.8
8.1
10
4.0
5 0.2
0
-5
-3.6
-10
-15 -11.6
-13.3
-16.2 -16.1
-20 -16.6
-21.5-19.5 -20.6
-25
-23.6
-25.0
-30 -27.0
-35
2005 Q1
2005 Q2
2005 Q3
2005Q4
2006 Q1
2006 Q2
2006 Q3
2006 Q4
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4

12. Housing starts and new home sales are down about 70%
since their peaks in mid-2005
Index,
1980Q1 = 100
Thousands of units
2400 450
Privately owned
2100 400
housing units started
1800 350
1500 300
1200 250
FHFA house price index
900 200
600 150
New single family home sales
300 100
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Quarterly data: Last point plotted is 2008 Q4 for housing starts and home sales
and 2008 Q3 for FHFA house price index

13. Despite declines in construction, housing inventories remain high,
so we expect further reductions in residential construction
Months’ supply at
current sales pace
18
16
Months’ supply of
14.7
14
condos and co-ops
12
Months’ supply of
10
single family homes
8.7
8
6
4
2
0
90 92 94 96 98 00 02 04 06 08
Source: National Association of Realtors
Monthly data: Last point plotted is December 2008

14. Housing prices are down considerably from their peaks
Year-over-year percentage change
Percent
20
15
FHFA House Price Index
10
5
0
-5
Median Existing
Case-Shiller House Price Index
-10 Home
-15
-20
87 89 91 93 95 97 99 01 03 05 07 09
Quarterly data: Last point plotted is 2008 Q4 for Median Existing Home price
and 2008 Q3 for FHFA House Price Index and Case-Shiller House Price Index

15. House prices are down in our area, but not as much as in
other places because we had less of a boom
Annualized House Price Appreciation (%)
(FHFA House Price Index)
2005 2006 2007 2008*
US 11.5 5.4 0.8 −5.8
PA 11.9 6.5 2.8 −1.7
NJ 15.2 5.3 -0.3 −6.7
DE 14.9 7.3 1.4 −2.9
CA 21.1 3.8 -8.2 −23.7
NY 12.6 4.8 1.1 −5.0
NV 18.2 3.7 -6.5 −24.7
FL 27.5 8.9 -5.5 −18.9
MI 2.5 -1.3 -4.3 −9.8
* Year-to-date through 2008 Q3, annualized

16. Household net worth contracted sharply last year
Trillions of $
Percent Change in household net worth
20 $8
Percentage change, Change
year to year
15 $6
10 $4
5 $2
0 $0
-5 -$2
-10 -$4
-15 -$6
1984 1988 1992 1996 2000 2004 2008Q3
Source: FRB Flow of Funds, annual data

17. Stock prices are down over 40%
since their peaks in October 2007
NASDAQ &
Dow Jones
S&P 500
Oct 2007
7000 15000
Dow Jones Industrials
6000 13000
5000 11000
4000 9000
3000 7000
NASDAQ
2000 5000
1000 3000
S&P 500
0 1000
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Monthly data: Last point plotted is January 2009

18. Real estate and stock market wealth both fell in 2008
Billions of Dollars
$3,000 Change in households’
stock and mutual fund holdings
$2,500
$2,000
$1,500
$1,000
$500
$0
-$500
-$1,000
-$1,500
-$2,000
Change in households’
-$2,500 real estate equity
-$3,000
97 98 99 00 01 02 03 04 05 06 07 08Q3
Source: FRB Flow of Funds, annual data

19. Consumer spending contracted in the second half of the year
Real personal consumption
Percent 4Q/4Q growth, SAAR
6 5.4
4.9
5
4.3 4.1
4.0
4 3.5 3.4
3.2
2.8 2.6
3 2.6
2.2
1.9
2
1
0
-1
-1.3
-2
-3
95 96 97 98 99 00 01 02 03 04 05 06 07 08

20. Payroll growth peaked at the end of 2007.
We have lost over 3-1/2 million jobs since then.
Thousands of jobs Monthly change in nonfarm payrolls
400
200
0
-200
-400
-600
-598
-800
2003 2004 2005 2006 2007 2008 2009
Average monthly gains for each year are indicated by the grey lines.
Monthly data: Last point plotted is January 2009

21. Job losses during the previous three recessionary periods
averaged about 150 thousand per month.
Since the start of this recession in December 2007,
job losses have averaged nearly 250 thousand per month.
Thousands of jobs Monthly change in nonfarm payrolls
200
100
0
-100
-200
-300
-400
-500
-600
Jul 1981 – Dec 1982 Jul 1990 - May 1991 Mar 2001 – May 2002 Dec 2007 – Jan 2009
Average monthly gains for each period are indicated by the grey lines.
Recessions are indicated by grey bars.

22. Jobs have declined 2-1/2% since their pre-recession peak.
The pace of decline has quickened since last fall.
Percentage change in nonfarm payrolls since previous cycle peak
8
1973 recession 1990 recession
7
1980 recession 2001 recession
6
1981 recession 2008 recession
5
4
3
2
1
0
-1
-2
-3
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48
Oct 1973
Months Since Previous Peak
Dec 1979
Jun 1981
Jun 1990
Feb 2001
Jan 2009
Nov 2007

23. Unemployment is up sharply in the nation and our three states
Civilian Unemployment Rate
Percent
9
8 7.6%
(Jan)
7 6.9%
(Dec)
U.S.
6
5
Three States
4
3
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Monthly data: Last point plotted is January 2009 for the U.S. and December 2008 for three states

24. Weak sales led businesses to cut inventories.
Investment has been declining in the wake of economic uncertainty
and projections of continued weak demand.
Billions of chain-weighted 2000 $
Percent
15
120
10
80
5
40
0
0
-5
-40
Change in Private Inventories,
-10
-80 SAAR (left scale)
-15
-120 Growth in Fixed Private
Nonresidential Investment,
SAAR (right scale) -20
-160
00 01 02 03 04 05 06 07 08

25. Manufacturing activity in the nation and in our region is very weak
Business Outlook Survey: General Activity Index
50
40
30
20
10
0
-10
-20
-30
-40
-41.4
-50
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Index represents percentage of respondents reporting an increase minus percentage
reporting a decrease.
Monthly data: Last point plotted is February 2009.

26. According to our Business Outlook Survey,
regional manufacturing activity is at recession levels
Business Outlook Survey: General Activity Index
60
50
40
30
20
10
0
-10
-20
-30
-31.2
-34.6
-40
–37.0 -41.4
-50 –48.2
-60 -57.2
-57.9
-70
1969 1974 1979 1984 1989 1994 1999 2004 2009
Index represents percentage of respondents reporting an increase
minus percentage reporting a decrease.
Monthly data: Last point plotted is January 2009.

27. Net export growth had been one of the economy’s strengths,
but growth abroad has slowed
Percent
Year over year growth in exports and imports
25
Export growth
20
15
10
5
Import growth
0
-5
-10
-15
-20
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Quarterly data: Last point plotted is 2008 Q4
Source: Census Bureau

28. Inflation has decelerated, partly reflecting the
sharp drop in energy prices since October
Percent
6
Consumer Price Index
5
4
3
2
1.7%
1
Core Consumer Price Index
0
-0.1%
-1
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Percentage change from a year ago, seasonally adjusted data.
Monthly data: Last month plotted is December 2008.

29. In response to the weakening economy, the FOMC aggressively cut
the fed funds rate last year to essentially zero in December
Percent
6
Nominal federal funds rate
4
2
0
Real federal funds rate
-2
2001 2002 2003 2004 2005 2006 2007 2008 2009
Quarterly data. Real federal funds rate is calculated as nominal federal
funds rate minus expected inflation as measured by the one-quarter-ahead
CPI forecast from the Philadelphia Fed Survey of Professional Forecasters .

30. The Fed established several lending programs targeted at easing
short-term funding pressures, promoting credit extension,
and containing systemic fallout
Term Lending Facilities
• Term Auction Facility (TAF): auctions off short-term credit to depository
institutions eligible to borrow at the discount window (established Dec
12, 2007)
– Forward TAF auctions: auctions of TAF credit for settlement later
(announced Sep 29, 2008)
• 28-day term RPs: to primary dealers (Mar 7, 2008)
• Term Security Lending Facility (TSLF): lends Treasury securities from
Fed’s portfolio to primary dealers (established Mar 11, 2008)
– Auctions of options on draws on TSLF (announced Jul 30, 2008)
• FX Swaps: with central banks of Europe, Switzerland, Japan, England,
Canada, Australia, Sweden, Netherlands, Norway, New Zealand, Brazil,
South Korea, Singapore

31. The Fed established several lending programs targeted at easing
short-term funding pressures, promoting credit extension,
and containing systemic fallout
Term Lending Facilities, continued
• Asset-Backed Commercial Paper Money Market Mutual Fund Lending
Facility (AMLF): loans to banks to fund purchases of high-quality asset-
backed CP from MMMFs (established Sep 19, 2008)
• Commercial Paper Funding Facility (CPFF): liquidity backstop to U.S.
issuers of CP through a special purpose vehicle (SPV) that will buy 3-month
unsecured and asset-backed CP directly from eligible issuers (established
Oct 7, 2008)
• Money Market Investor Funding Facility (MMIFF): to complement the
CPFF and AMLF by purchasing CDs and CP from money market mutual
funds (established Oct 7, 2008)

32. The Fed established several lending programs targeted at easing
short-term funding pressures, promoting credit extension,
and containing systemic fallout
Standing Facilities
• Discount Window: loans to depository institutions at the primary credit rate (maturity
lengthened to 30 days on Aug 17, 2007 and to 90 days on Mar 16, 2008)
• Primary Dealer Credit Facility: loans to Primary Dealers at the primary credit rate
(established Mar 16, 2008)
Programs Focused on Longer-Term Asset Prices
• Purchases of the direct obligations of and MBS backed by the housing-related GSEs
(announced Nov 25, 2008)
• Term Asset-Backed Securities Loan Facility (TALF): financing to support the issuance
of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card
loans, and loans guaranteed by the Small Business Administration (SBA) (announced
Nov 25, 2008)
Programs to Contain Systemic Fallout
• Maiden Lane I : Bear Stearns (Mar 16, 2008)
• Credit to AIG (Oct 8, 2008)
• Maiden Lane II: AIG residential MBS holdings and Maiden Lane III: AIG-backed CDOs
(Nov 10, 2008)
• Credit to Citigroup (Nov 28, 2008)

33. The Fed’s balance sheet has grown
and its composition has changed
Federal Reserve System Assets
Federal Reserve System Assets
February 11, 2009
July 11, 2007
Total assets = $1.845 trillion
Total assets = $0.873 trillion
11
3
[7%]
[2%]
All other assets (incl FX swaps)
7%
RPs
2%
Treasury
All other assets
Fed Agency
securities
(incl FX swaps)
securities
26%
25%
2%
Treasury securities
91%
CP funding TAF
facility 22%
14% Discount
Maiden Lanes:
Window
I (Bear Stearns) 1%
and other
II (AIG Resid MBS) 1%
loans
III (AIG CDOs) 1%
8% Source: FRS H.4.1 data

34. The composition of the Fed’s balance sheet
has changed dramatically
Trillions $
3.0
2.5
2.0
Other assets
1.5
Maiden Lanes
Loans
1.0
Commercial
paper
0.5
Treasury
securities
0.0
1/3/07 4/4/07 7/4/07 10/3/07 1/2/08 4/2/08 7/2/08 10/1/08 12/31/08
Weekly data: Last point plotted is February 11, 2009

35. Funding pressures are easing in interbank markets.
The spread between 1-month LIBOR and OIS is down after spiking in October.
Percent
4.0
1-month LIBOR rate minus OIS rate
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan
07 07 07 07 07 07 08 08 08 08 08 08 09
Daily data: Last point plotted is February 13, 2009

36. Commercial paper spreads have fallen since October
Percent
5.0
1-month AA asset-backed CP yield minus 1-month Treasury bill yield
4.5
1-month AA nonfinancial CP yield minus
4.0 1-month Treasury bill yield
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09
Weekly data: Last point plotted is February 6, 2009

37. Mortgage rates have fallen since last fall
Percent
7.0 30-year mortgage rate
6.0
5.0 10-year Treasury bond yield
4.0
3.0 Spread between 30-year mortgage rate
and 10-year Treasury bond yield
2.0
1.0
Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09
Weekly data: Last point plotted is February 6, 2009

38. Corporate bond credit spreads rose sharply last fall.
They have fallen since year-end,
but remain elevated, especially for less creditworthy borrowers.
Percent
5-year corporate bond yield spread over 5-year Treasury yield
12
BB+ (junk)
10
8
BBB
6
4
A
2
AAA
0
Jan 07 Mar 07 Jun 07 Sep 07 Jan 08 Mar 08 Jun 08 Sep 08 Jan 09
Weekly data: Last point plotted is February 6, 2009

39. Monetary policy becomes more complicated at the zero bound,
but remains effective
• With a weak economy, optimal policy calls for low real interest rates
Real rate = Nominal rate – Expected inflation
– Currently, the real ff rate ≈ −0.8 percent
• Normally, if the economy weakens further, market interest rates fall,
and monetary policymakers reduce the ff rate target in tandem.
– With stable inflation expectations, this means the real ff rate also falls.
– Other borrowing rates also tend to fall, since
Long-term interest rate = Average of current and expected future short-term
interest rate + Term premium
• Two issues for policymakers near the zero bound
– The Fed has reduced the nominal ff rate as far as it can go.
– Inflation expectations and inflation have been falling. If this continues to happen, real
rates will rise and the real cost of borrowing will increase.

40. Alternative methods can be used to help bring real borrowing rates down
even when at the zero bound
Long-term interest rate = Average of current and expected future
short-term interest rate + Term premium
Real rate = Nominal rate – Expected inflation
• To lower real borrowing rates:
– Lower expected future short-term rates
– Lower the term premium on long rates
– Increase inflation expectations
(1) Quantitative easing or credit easing
– Add more reserves to the banking system than needed to keep ff rate = 0
– Use composition of the Fed’s balance sheet to target borrowing rates in
particular markets (e.g., ABCP, mortgages)
(2) Buy longer-term Treasury securities
– Fed could buy securities with longer maturities to have direct effect on
long rates; might also put downward pressure on term premium by
increasing total demand for long-term issues, and reducing supply
available to the public
(3) Communication and commitment: Announce commitment to keep rates low for
specified period of time or until specified event occurs
(4) Communication and commitment: Set an explicit medium-run inflation goal
– Helps to anchor inflation expectations

41. What does the future hold?

42. Fed policymakers and private sector forecasters see
flat to negative growth this year,
with some recovery in 2010
Central tendency of FOMC Survey of Professional
Forecasters
January 2009 Forecasts 2009 Q1 Forecasts
2009 2010 2009
Real GDP Growth −1.3 to −0.5% 2.5 to 3.3% −1.1%
(Q4/Q4)
Unemployment 8.5 to 8.8% 8.0 to 8.3% 8.9%
Rate in Q4
Core Inflation 0.9 to 1.1% 0.8 to 1.5% 1.1%
(Core PCE)
(Q4/Q4)
Inflation 0.3 to 1.0% 1.0 to 1.5% 0.2%
(PCE)
(Q4/Q4)

43. Our latest Survey of Professional Forecasters
forecasts negative growth over the first half of the year
and a slow recovery in the second half
Percent
4.8 4.8 4.8
5
3.9
4
3.0 2.8
2.7
3 2.6
1.8
2 1.5
1.3
0.9 1.0
0.8
1 0.0
0
-0.2
-1 -0.5
-2
-1.8
-3
-4
-3.8
-5
-5.2
-6
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2005 2006 2007 2008 2009
Hatched bars are median forecasts from the 2009Q1 Survey of Professional Forecasters

44. Our latest Survey of Professional Forecasters indicates
the unemployment rate will continue to rise through 2009
Percent
10
Civilian Unemployment Rate
9
8
7
6
5
4
3
87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Dotted line is median forecast from the 2009Q1 Survey of Professional Forecasters

45. Past declines in oil and other commodity prices and weak demand mean
headline and core inflation will decelerate in 2009.
Our SPF forecasts inflation is below 2% over the next two years.
Personal Consumption Expenditure Index
Personal Consumption Expenditure Index
Percent,
excluding food and energy
4Q/4Q growth, SAAR
(= core inflation)
5
4
3.5
3.3
3.1
3
2.3
2.2 2.2
2.2
1.9
1.9
1.7 1.8
2 1.8 1.8 1.8
1.6 1.5
1.4
1.1
1
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
Hatched bars represent median forecasts from the 2009 Q1 Survey of Professional Forecasters.

46. The forecast assumes further policy stimulus
• A fiscal stimulus package of around $800 billion dollars, which
includes tax cuts, subsidies to distressed homeowners, grants to
state and local governments, and infrastructure spending.
– Adds about 1 percentage point to real GDP growth in both 2009 and 2010.
– The government deficit as a percent of GDP rises from about 2% to over 7% by
the end of next year, the highest since WWII.
• “The Committee continues to anticipate that economic
conditions are likely to warrant exceptionally low levels of the
federal funds rate for some time…The focus of the Committee's
policy is to support the functioning of financial markets and
stimulate the economy through open market operations and other
measures that are likely to keep the size of the Federal Reserve's
balance sheet at a high level.”
• Progress on clearing up financial system system problems and in
stemming the rate of home foreclosure

47. There are significant risks to the baseline forecast
• The risks to growth are on the downside
– Financial market conditions could worsen instead of improve
• Fed’s targeted liquidity provisions may be less effective than hoped
• Financial system still has to repair itself
– Housing markets may not stabilize next year, house prices
might decline more significantly than expected, commercial
real estate markets may decline significantly
– Labor markets could deteriorate more than expected
• The risks to inflation are on the downside in the near term and on
the upside in the medium term
– Weak demand and recession-deflation psychology may put
further downward pressure on prices
– Excess liquidity may put upward pressure on inflation later in
the forecast horizon when the recovery is underway
– Oil prices may rise or fall rather than stabilize

48. Our baseline forecast
• No growth in 2009: Contraction in the first half followed by weak positive growth
in the second half
– Declines in financial and housing wealth and employment, and tighter credit
conditions keep consumer spending weak, despite support from fiscal
stimulus and low energy prices
– Business investment and residential investment subtract from growth this year
– With weak growth abroad, the export sector does little to buoy our economy
• Growth begins to improve modestly in the second half of 2009 and in 2010, as the
housing contraction stabilizes, credit conditions improve, the effects of monetary
and fiscal stimulus are felt, progress is made on banking system problems and
foreclosures
• Labor markets are weak. Firms cut payrolls sharply in the first half of 2009. Job
growth doesn’t resume until mid-2010 when firms are convinced the recovery is
in place. The unemployment rate rises this year into next year.
• Past declines in oil and other commodity prices and weak demand mean inflation
decelerates in 2009 to around 1%. Inflation rises in 2010 as the economic
recovery is underway, but remains below 2%.

49. FEDERAL RESERVE BANK
OF PHILADELPHIA