Some Fed Bond Purchases Spurred Hiring, Central Bank Paper Says

WASHINGTON—At least some of the Federal Reserve’s bond buying in the wake of the 2008 financial crisis bolstered employment, according to a recent paper by staffers at the central bank’s board of governors.

The third round of such purchases, also known as quantitative easing, starting in late 2012, spurred banks with large holdings of mortgage-backed securities to lend more to companies, authors Stephan Luck and Tom Zimmermann found. Shortly thereafter, U.S. counties with such banks saw faster employment growth—up to 0.4 percentage point more per quarter—than counties where banks held fewer mortgage-backed securities.

Employment growth in the two sets of counties was similar for more than 18 quarters before the implementation of QE3, as the program was known.

The findings come as policy makers continue to debate the full impact of the unconventional stimulus measures taken by the Fed after interest rates, reduced to near zero by the end Continue reading "Some Fed Bond Purchases Spurred Hiring, Central Bank Paper Says"

Who Gets Credit for Economy, Obama or Trump? The Answer Is Both

President Trump and former President Obama sparred on the campaign trail about who deserves credit for the strong economy, but the record is more complex than either describes. While economic growth has been faster during Mr. Trump’s first 21 months in office than it was during Mr. Obama’s eight years, federal debt is growing faster now than it was during Mr. Obama’s second term. Mr. Obama, meantime, presided over faster overall growth in payroll jobs during his second term, but growth in manufacturing payrolls under Mr. Trump is faster than during Mr. Obama’s two terms. And while the stock market has rallied under Mr. Trump, it hasn’t measured up to the rebound during Mr. Obama’s first term from lows in the financial crisis. No comparison is perfect. Mr. Obama came to office during a deep recession and financial crisis. Mr. Trump came into office during a long run of steady Continue reading "Who Gets Credit for Economy, Obama or Trump? The Answer Is Both"

Parents’ Jobs Increasingly Shape How Far Kids Get in Life

The American Dream of upward social mobility is less common than once thought, and it has become increasingly difficult for workers to to achieve in recent decades, according to new study. Just over half of Americans born in the 1980s have ended up with better jobs than their parents, according to an article by New York University sociology professor Michael Hout in the journal “Proceedings of the National Academy of Sciences.” That’s down from two-thirds of people born in the 1940s. “Your circumstances at birth—specifically, what your parents do for a living—are an even bigger factor in how far you get in life than we had previously realized,” Mr. Hout said in statement. The study approached social mobility by assigning scores to occupations ranging from housekeeper to surgeon, based on the idea that people’s jobs provide a reliable indicator of their socioeconomic standing. In many cases, upward mobility as defined by Mr. Continue reading "Parents’ Jobs Increasingly Shape How Far Kids Get in Life"

Tax Law May Stimulate Economy Less Than Expected, or Maybe Not at All, S.F. Fed Economists Say

The tax cuts Republicans enacted in late 2017 will likely provide less of a boost to economic growth than many forecasters predict—and possibly none at all—economists at the Federal Reserve Bank of San Francisco said Monday. That’s because the changes took effect at a time when the economy was already firing on all cylinders. As a result, there are fewer unemployed workers, spare resources and idled factories ready to kick into action than there would have been during a downturn. Citing a bevy of recent research, economists Tim Mahedy and Daniel J. Wilson said fiscal stimulus measures tend to make a bigger splash when there is more slack in the economy. “The projected procyclical policy over the next few years may raise concerns regarding the nation’s fiscal capacity to respond to future downturns and its ability to manage the growing federal debt,” Messrs. Mahedy and Wilson wrote in an economic Continue reading "Tax Law May Stimulate Economy Less Than Expected, or Maybe Not at All, S.F. Fed Economists Say"

How More Than a Billion People Got Access to Financial Services in Less Than a Decade

About 1.2 billion adults gained access to financial services between 2011 and last year, the World Bank said Thursday, as the internet and mobile phones increasingly connected far-flung communities to the global financial grid. The share of the adult population with an account at a bank or mobile money provider grew to 69% in 2017 from 62% in 2014 and 51% in 2011, according to the Global Findex, a database produced by the World Bank. Global policy makers consider “financial inclusion” to be a potential tool for fighting poverty and inequality by giving people better ways to save, borrow, buy, sell and receive payments. As traceable, digital transactions gradually displace the use of cash, authorities say, the process may also help combat money laundering and other illegal activities. The largest number of new bank customers are in South Asia, where hundreds of millions of Indians have gained access to financial Continue reading "How More Than a Billion People Got Access to Financial Services in Less Than a Decade"

Dark Clouds Building in Brazil

Dark clouds are building around the Brazilian economy, with leading indicators in the red and authorities equipped with fewer tools to stimulate growth than in years past, research institute The Conference Board said.