Housing back in the news
Two reports released this week remind us of the difficulties still confronting the residential real estate market. First, the consumer price index (CPI) showed continued moderation. Yes, the overall number was up 3.4 percent on a monthly annualized basis, and even the core measure ticked up [...]
In a speech on Tuesday, Federal Reserve Bank of Atlanta President Dennis Lockhart drew some connections between the current commercial real estate (CRE) problems and the prospects for a small business-led recovery.
The starting point was an observation made in an earlier macroblog post that identified the important role [...]
On October 30, the Center for Financial Innovation and Stability at the Federal Reserve Bank of Atlanta held a conference on Regulating Systemic Risk. The presentations mostly focused on the recent financial crisis and possible regulatory responses to those developments.
Oddly enough, the term systemic risk hardly came up even [...]
Selling securities short has been a controversial practice as long as financial markets have existed, and the recent financial crisis brought short selling to the fore yet again. In the last week, a bill to impose new restrictions on short selling was introduced.
And earlier this month in [...]
The Wall Street Journal repeats the unhappy news:
"Companies across the economy are holding off on hiring even as the profit outlook improves, amid economic uncertainty and their own success at raising productivity in rough waters.
"Hiring always lags behind in economic recoveries, but the outlook this time is [...]
As we've written in this blog recently, U.S. labor markets are weak at present and are likely to remain that way for some time. Last week's U.S. Bureau of Labor Statistics' August JOLTS (Job Opening and Labor Turnover Survey) report provided further evidence of labor market weakness (see [...]
Reviewing the Recession: Was Monetary Policy to Blame?
In a recent speech given at the University of South Alabama, Federal Reserve Bank of Atlanta President Dennis Lockhart added his voice to what is now the general consensus: "I agree with all who are declaring that a technical recovery is" [...]
In a speech yesterday, William Dudley, the president of the Federal Reserve Bank of New York, identified financial constraints for small businesses as a restraint on the pace of economic recovery. Specifically, he said:
"For small business borrowers, there are three problems. First, the fundamentals of their businesses have often" [...]
Yesterday's consumer price index (CPI) report showed further disinflation in August, at least on a year-over-year basis. Headline inflation was down 1.4 percent from last year, the largest 12-month decline since January 1950, save for the 2.1 percent decline the month before. Core inflation crept down to 1.5 percent in August,' [...]
Economists definitely received some bad publicity this past week, most prominently in the New York Times, where Paul Krugman asked "How Did Economists Get It So Wrong?," a nonrhetorical question he goes on to answer this way:
"As I see it, the economics profession went astray because economists, as a" [...]
I've had an interesting few weeks, starting with attending the Federal Reserve Bank of Kansas City's annual economic symposium at Jackson Hole to finalizing a cooperative research initiative between the Atlanta Fed's Americas Center and the Institute for Applied Economic Research (note that IPEA's site is in' [...]
With all the focus on the financial crisis in the United States, folks in this country might sometimes lose sight of the fact that this crisis has been global in nature. To provide some perspective on the global dimensions of the crisis, we are providing a few summary indicators of [...]
In a recent speech, Atlanta Fed President Dennis Lockhart laid out two competing risks to the inflation outlook. On one side, the usual measures of economic slack (output gap measures) suggest that there is so much excess production capacity that prices and wages are under great—and increasing—disinflationary pressure. [...]
The recession may be ending (and may, in fact, have ended, according to the majority of economists recently surveyed by the Wall Street Journal) but, as Friday's consumer confidence report suggests, the uncertainty about the course of future growth is far from resolved. The most recent consensus [...]
The short answer to the question posed in the title of this blog post is, of course, "lots of things." One of those things is featured in the latest edition of Economic Highlights, the Atlanta Fed's weekly digest of newly released economic statistics. Here, specifically, is a chart reflecting [...]
Two weeks ago, macroblog looked at the rather pessimistic expectations for what the economic recovery might look like this time around. Included was part of the narrative noting that structural adjustments are likely to impede a quick snapback in gross domestic product (GDP) over the coming quarters.
Macroblog reader Bryan [...]
Last Friday morning, the Bureau of Economic Analysis released its advanced estimate for second quarter gross domestic product (GDP) as well as its benchmark data revisions. These revised data tell us a slightly different story with a rather negative twist in looking at the last two recessions. The new GDP [...]
One of the constants of monetary policymaking is the never-ending quest to characterize the stance of monetary policy in real time. Is Fed policy too easy? Too tight? Just right? It's not an easy task, but over time academics and practitioners alike have found comfort in the rule-of-thumb characterization commonly [...]
Earlier this week my boss, Atlanta Fed President Dennis Lockhart, weighed in with his views about the shape of the economic recovery to come while speaking at a meeting of the Nashville, Tenn., Rotary Club:
"The economy is stabilizing and recovery will begin in the second half. The recovery will" [...]
Yesterday we saw that initial claims for unemployment insurance declined rather sharply again last week, another hint that U.S. labor markets may be beginning to mend. But the improvement came with a word of caution from the folks at the Department of Labor, who note that these numbers are [...]
Updated 11:30 a.m.
We got a good reading of May's inflation numbers this week. On both the producer and the consumer sides, price measures for the month came in well short of market expectations. The prospect of deflation has been getting a good deal of coverage in the blogosphere; see
Arthur Laffer, as several readers (and friends) have pointed out to me, is taking aim at the Fed:
"… as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over" [...]
In the first part of 2009, the labor market continued its general weakness, which carried over from 2008. However, the April and May employment data introduced some movements in a seemingly positive direction—green shoots, perhaps?
The first bit of relatively good news is that the decline in May payroll numbers [...]
If you are hunkered down on inflation watch, yesterday's news offered some soothing words. From Reuters:
"Chinese officials have expressed concern that heavy deficit spending and an ultra-loose monetary policy could spark inflation, eroding the value of China's U.S. bond holdings.
"But [U.S. Treasury Secretary Timothy] Geithner said: 'We have a' [...]
As days go in the U.S. Treasury market, Wednesday was a rough one. Bloomberg News described the day's developments as follows:
"The difference in yields between Treasury two- and 10-year notes widened to a record on concern surging sales of U.S. debt will overwhelm the Federal Reserve's efforts to" [...]
Recent evidence collected by the Dallas Fed's Pia Orrenius suggests that apprehensions of undocumented workers attempting to cross the U.S.–Mexican border are a good predictor of the overall American job market. Simply put, if one wanted to predict job market conditions in July of a given year, one should' [...]
Following my previous macroblog post on tools for managing the Federal Reserve’s balance sheet, I received a few questions, and I’m using today’s post to reply to these.
First, a question from Alexander Singer:
Wouldn't the reserves we are talking about fall as well as a result of banks actually lending' [...]
I was struck by this headline which led a Tuesday post in Economix, the economics blog of the New York Times—"Consumer Spending Declines: A Historical Oddity."
Sometimes these sorts of teasers are not great indicators of a more nuanced analysis that follows, but in this case the headline synopsis pretty [...]
I have, recently, been experiencing a strange sense of familiarity watching the Congressional Budget Office's (CBO) efforts to monitor the budgetary implications of the Troubled Asset Relief Program (TARP). On the one hand, the long-term costs are rising:
"Since January, CBO has raised its estimate of the" [...]
Ever hear the one about the statistician who had his head in the oven, his feet in the freezer, but who said he felt fine—on average? We kind of feel that way when we look at the recent distribution of inflation forecasts. Not only does the Federal Reserve Bank of [...]
James Hamilton of Econbrowser is concerned about the current state of monetary policy. On the blog, Jim writes:
"I would suggest first that the new Fed balance sheet represents a fundamental transformation of the role of the central bank. The whole idea behind open market operations is to make" [...]
Probably like you, I have been consuming mass quantities of commentary on the Treasury's plan to deal with "legacy assets" via its proposed Public Private Partnership Investment Program. The notices are too numerous to single out—Google "Geithner Plan" if you somehow feel you might have missed one—but [...]
No doubt about it. The decision last week by the Federal Open Market Committee (FOMC) to further expand its balance sheet by up to $1.15 trillion was momentous. But beyond that number, some commentators seem to have suggested that the FOMC took a qualitative leap into quantitative easing (QE): [...]
The current financial crisis is global in scope, with central banks responding in various ways to mitigate the strains in their respective countries. The Federal Reserve is not the only central bank that has been aggressive in its response. For instance, the Bank of England's (BoE) Monetary Policy Committee, in [...]
Recent Blue Chip survey forecasts gross domestic product growth turning positive in the third quarter of 2009. But for those individuals who have lost jobs, what is foremost on their minds is when the labor market will recover. An examination of labor market performance during and after previous [...]
While discussions of the Obama administration's tax plan focus on the expected impact on consumer spending and the federal deficit, not much attention has been given to the incentives of the plan for work effort. Different tax rates, deductions, and rebates provide varying degrees of incentives to work less' [...]
When smart people debate, something interesting is bound to come of it, so I have been reading an interchange over the past couple of days in the blogs of Greg Mankiw and Paul Krugman. Krugman's blog provides the necessary background on the source of the debate:
"Greg Mankiw challenges'" [...]
Much of modern business cycle theory—and the policy prescriptions that accompany it—rest on the idea that something interferes with markets. After all, if markets are working efficiently, there isn't anything that policy can do to improve matters. What that "something" is remains the great unknown in macroeconomics, but there is' [...]
One of the most important challenges facing policymakers today is reducing the rate of mortgage foreclosures. It is a goal many think is at the heart of a sustained recovery in the U.S. economy. But as past attempts to reduce financial stress on homeowners have shown, the task is not [...]
A year-by-year look at where the money goes:
Note: The dollar amounts listed below are denominated in millions of dollars.
Which adds up [...]
Could it be worse than I thought? We quite likely have not hit bottom in the labor market yet, and the percent loss in nonfarm payroll employment since the beginning of the current recession is already worse than all of the previous seven recessions save the 1981–82 contraction:
Over at Financial Crisis and Recession, Susan Woodward and Robert Hall start a recent post, titled "The Fed contracts," with this:
"The Fed has indicated that it plans to pursue a policy of quantitative easing, that is, expanding its portfolio by borrowing in financial markets at low rates and" [...]
Just in case you are desperately seeking some refuge from the pervasive blogland commentary on the fiscal stimulus proposal winding through the Senate (which already made its way through the House of Representatives), be forewarned: You won't find it here, but you will find an update to the' [...]
Across the United States and Europe there was a wave of layoff announcements this week, with more than 70,000 job cuts announced on Monday alone. Another 11,500 job cuts were announced on Tuesday, bringing the total to a little more than 200,000 layoffs announced during the first month of the [...]
During the 2002–2007 economic expansion, the personal savings rate fell to below 1 percent of disposable income. The savings rate had declined steadily from over 12 percent in the 1980s' recession. What changed the way people allocated their budgets?
U.S. household wealth grew considerably as home prices and the stock market' [...]
In his inauguration speech on Tuesday, President Barack Obama said, "That we are in the midst of crisis is now well understood??? Our economy is badly weakened???. Homes have been lost, jobs shed, businesses shuttered???These are the indicators of crisis, subject to data and statistics."
Tuesday, Jan. 20, 2009, was [...]
There has been, of late, no shortage of official voices devoted to answering the question posed in the title of this post. Chicago Fed President Charles Evans, San Francisco Fed President Janet Yellen, Richmond Fed President Jeff Lacker, Philadelphia Fed President Charles Plosser, and Chairman [...]
Here's a question I hear a lot (most recently during the Q&A portion of a speech delivered yesterday by my boss, Atlanta Fed president Dennis Lockhart): Has monetary policy become so expansive that the central bank's mandate to maintain price stability has been fundamentally compromised? Is the increase in [...]
Update: Reader Doug Lee points out that the fixed investment series above is dominated by the extraordinary decline in residential investment over the past several years. For that sector, the questions posed above are in a bit sharper focus. Are firms in the residential investment sector pessimistic about future prospects? [...]
One of my New Year???s resolutions is to be more consistent in responding to questions and comments from the loyal readers of macroblog. Though it remains the case that time constraints prohibit a response to all worthy queries, we???re still listening. Next year we???ll endeavor to give a shout back [...]
In case you are hungering for something to while away the time as the holiday approaches???since apparently you are not out shopping???Barbara Kiviat provides some food for thought at The Curious Capitalist:
???Let me leave you with something to toss into the conversation when your family starts talking [...]
The November jobs numbers were expected to be pretty bad, but the magnitude of the decline???the largest monthly drop in nonfarm payrolls since December 1974???surprised most. Moreover, as was noted in the last macroblog post, there is little to single out in the industry distribution of job change [...]
In a recent macroblog post [[macroblog.typepad.com]], Dave Altig described the employment patterns in the current U.S. recession relative to the average recessionary experience. Dave made some observations from the data supported, in part, by a similar chart to the one produced below:
Before the November job report, the overall employment [...]
Dave Altig???s December 5 blog entry, ???The recession in pictorial context,??? elicited an array of interesting commentary. In this recessionary period, the questions that arose are relevant to today???s current economic state and it is worthwhile taking a blog to explore these issues in greater depth.
Comments
I might suggest that [...]
Now that the mystery has been solved concerning whether we are in recession or not, our attention can turn to monitoring the conditions that might signal the contraction’s end. A nice assist in this endeavor comes from the “Credit Crisis Watch” at The Big Picture, which includes an extensive [...]
If your head had not yet been turned by economic events, today’s startlingly weak employment report probably did the trick. Rather than repeat all the negative superlatives you are likely to hear, I’ll take the opportunity to step back and take in the current recession in a somewhat broader [...]
Recently, there???s been a great deal of discussion about developing, legislating, and implementing a second fiscal stimulus. One of the prominent components mentioned in the recent stimulus discussion is investing in infrastructure to create jobs.
The appeal of this category of spending is fairly obvious, as it represents one aspect of [...]
This week I???m begging your forbearance as we take a bit of a detour into the operational weeds of monetary policy. The geek factor is high, I know, but there truly have been some historic changes afoot over the past months.
To review, effective Nov. 6???as noted in Wednesday???s [...]
???Cleveland? Yes, I spent a week there one day.??? As someone who proudly called Cleveland home for seventeen years, that one???s not usually one of my favorites. But lately, I have to say, I???m getting to know the feeling. Financial markets? Yes, I spent a year there one month.
I could [...]
One of the important policy questions that has developed from the recent turmoil in financial markets is, What steps should be taken to try and mitigate the rising tide of foreclosures? Many have identified ???negative equity??? as one of the primary culprits for the huge increase in foreclosures. Negative equity [...]
I hope you will excuse me for trading in a bit of old news, but I???ve been thinking about a post by Greg Mankiw from last week. Titled ???My Personal Work Incentives,??? the item takes published details of the McCain and Obama tax proposals. The essence of the [...]
Yesterday we got a peek at the latest home price data provided by the Federal Housing Finance Agency (FHFA). Never heard of it before? It’s the new agency that took conservatorship of Fannie Mae and Freddie Mac, the nation’s giant housing GSEs (government-sponsored enterprises). FHFA has also absorbed the Office [...]
I trust you will not judge me guilty of overstatement if I say that good news from equity markets has been hard to come by of late. So rough has been the ride that at least one (quite) famous pundit-analyst has taken measure of the landscape and concluded that [...]
Though the bulk of the attention today has understandably turned to the U.S. Treasury announcement that $250 billion will be devoted to a U.S. bank recapitalization plan, there does still remain the notion that some of the government???s rescue funds will be devoted to purchasing troubled assets through some [...]
On a day as brutal as today, it is hard to find any port to hide from the storm. Maybe that is exactly the time for some perspective. At Businomics Blog, Bill Conerly does his best (hat tip, Mark Thoma), making a point that I have heard [...]
That???s the question that perplexes Alex Tabarrok. But he has a theory (which is endorsed by William Polley):
???Today the Fed starts to pay interest on reserves. The zero interest on required reserves was an opportunity cost to banks, a tax if you like, so paying interest lifts [...]
If you are weary of troubling news from the financial sector, the week thus far has provided no relief in the form of good news from the economy???s real side. Monday brought troubling signs from the August report on income and consumption, Tuesday more of the same dismal [...]
I???ve been thinking a lot about this topic lately, and though it seems there are a good many folk who approach the issue with great certainty, I do not share their confidence. I have, however, found it helpful to think through the following (not entirely original) scenario:
I am sitting on [...]
A fair amount of the discussion around what now seems to be an imminent rescue plan to settle unsettled financial markets has been focused on a debate as to whether Main Street should pay or Wall Street should pay for the plan. Pimco???s William Gross, however, is [...]
This morning the Federal Open Market Committee (FOMC) authorized a $180 billion expansion of its temporary reciprocal currency arrangements (swap lines). According to the Fed???s press release, the changes allow for ???increases in the existing swap lines with the ECB and the Swiss National Bank??? and for ???new swap [...]
What a wild day it was on Monday in U.S. and global financial markets. We heard it quipped that the problem with financial institution balance sheets is that ???on the left hand side nothing is right and on the right hand side nothing is left.??? This is clearly an exaggeration, [...]
In August the Congressional Budget Office updated its annual long-term projection for Social Security and noted that ???future Social Security beneficiaries will receive larger benefits in retirement???and will have paid higher payroll taxes???than current beneficiaries do, even after adjustments have been made for inflation and even if the scheduled [...]
Hurricane season is in full swing here in the Southeastern United States. The Atlanta Fed pays particular attention to hurricanes for two reasons: (1) they have significant impacts on the local economies they strike, and (2) they can potentially have big impacts on the national economy.
For example, in 2005, [...]
As pure blogging fodder, Willem Buiter’s Jackson Hole “advice” to the Fed is a gift that keeps on giving. From Buiter’s paper:
“It has not always been clear whether the Fed actually targets core inflation or whether it targets headline inflation in the medium term and treats core inflation as [...]
If one were to judge importance by press attention, the key events of this past weekend’s annual Jackson Hole economic symposium hosted by the Federal Reserve Bank of Kansas City would be the bookend contributions of Fed Chairman Ben Bernanke’s opening address and Willem Buiter’s 141 pages [...]
At Café Hayek, George Mason’s Russell Roberts opens up a brand new “Inequality Chart Contest.” The chart in question is based on work by Thomas Piketty (professor, Paris School of Economics) and Emmanuel Saez (professor, University of California Berkeley), the essence of which is that the rich have gotten [...]
Well, I'm not exactly announcing the permanent return of macroblog just yet, but this item from the Wall Street Journal's Real Time Economics blog caught my eye:
Does a local housing markets performance influence how a Federal Reserve Bank president feels about interest rates? An analysis by J.P. Morgan economist [...]
Well, I'm not exactly announcing the permanent return of macroblog just yet, but this item from the Wall Street Journal's Real Time Economics blog caught my eye:
Does a local housing market’s performance influence how a Federal Reserve Bank president feels about interest rates? An analysis by J.P. Morgan economist [...]
Just in case it isn't completely obvious, macroblog is on a temporary hiatus as I make the transition to my new position at the Federal Reserve Bank of Atlanta. For those of you who have asked -- and really, thanks so much for asking -- this blog will indeed live [...]
Just in case it isn't completely obvious, macroblog is on a temporary hiatus as I make the transition to my new position at the Federal Reserve Bank of Atlanta. For those of you who have asked -- and really, thanks so much for asking -- this blog will indeed live [...]
So now the dissecting of today's market jitters begins, and there is no shortage of diagnoses. Today's data releases -- described here, here, and here, for example -- were certainly not great, but the most popular explanation seems to be that market players have developed a newly [...]
So now the dissecting of today's market jitters begins, and there is no shortage of diagnoses. Today's data releases -- described here, here, and here, for example -- were certainly not great, but the most popular explanation seems to be that market players have developed a newly [...]
