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"

Parsing the Fed: How the November Statement Changed From September

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the November statement compared with September. [wsj-responsive-sandbox id = "0" ] RELATED Fed Holds Rates Steady, Signals More Rate Increases Ahead Federal Reserve Likely to Keep Interest Rates Steady

How Can the Field of Economics Diversify? Here Are Janet Yellen’s Thoughts

To help economics become a field of more diverse thought, perhaps the profession should take a look at what sorts of research is rewarded, former Federal Reserve Chairwoman Janet Yellen contends. On a panel at a Pathways to Gender Equality conference in Washington, D.C., Friday, Ms. Yellen, the first female chief of the central bank in its more than 100-year history, emphasized the importance of diversifying economic research methods and topics. The economics profession, Ms. Yellen said, tends to value mathematical modeling and is increasingly becoming a harder science, which could be biasing economists against new ideas. “What’s happened in economics is that anything that could be called anecdotal or case study types of methods are simply ruled out,” Ms. Yellen said. “To my mind this is a serious methodological bias that is blinding the profession to very important phenomena.” Ms. Yellen highlighted economists’ failure to predict Continue reading "How Can the Field of Economics Diversify? Here Are Janet Yellen’s Thoughts"

Parsing the Fed: How the September Statement Changed From August

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the September statement compared with August. [wsj-responsive-sandbox id = "0" ] RELATED As Fed Raises Rates, Consumers Have Yet to Feel the Sting

Parsing the Fed: How the August Statement Changed From June

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the August statement compared with June. [wsj-responsive-sandbox id = "0" ] RELATED Federal Reserve Holds Rates Steady, Says Economy Is Strong Federal Reserve Likely to Keep Rates Steady Fed Looks for Goldilocks Path as Jobless Rate Drops (July 29)

Parsing the Fed: How the June Statement Changed From May

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the June statement compared with May. [wsj-responsive-sandbox id = "0" ] RELATED Fed Raises Rates and Signals Faster Pace in Coming Years Federal Reserve Interest-Rate Decision—Live Analysis The Fed’s Biggest Dilemma: Is the Booming Job Market a Problem? Borrowing Costs Climb Along With Fed Rate Increases

Why Student-Loan Delinquency Is Falling

The share of new delinquencies on student loans has fallen to the lowest level in more than decade—and it’s not just due to the healthy labor market. In the first quarter, slightly over 9% of student debt outstanding was newly delinquent, based on Federal Reserve Bank of New York figures smoothed for seasonal volatility. The student-loan delinquency rate is still far higher than rates for any other type of consumer debt and would be much higher if it excluded certain borrowers, such as students still in school, who do not have to make any payments. Still, the rate for new delinquencies on student loans has fallen steadily in recent years. Several factors are likely behind the decline. Unemployment, at 3.9% in April, is at its lowest point since late 2000, and economic growth picked up over the past year, while wages are rising. More borrowers are likely in a Continue reading "Why Student-Loan Delinquency Is Falling"

Parsing the Fed: How the May Statement Changed From March

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the May statement compared with March. [wsj-responsive-sandbox id = "0" ] RELATED Fed Holds Rates Steady, Sees Strong Growth in Hiring and Investment
Fed Likely on Hold, but Rising Inflation to Be in Focus

How Does a Tight Labor Market Drive Up Prices You Pay? Just Visit Your Local Hair Salon

Step into a Sport Clips Inc. franchise and you can expect to see hairdressers washing, cutting and styling hair. Behind these daily hair-salon operations, a key economic theory is playing out: the Phillips curve. Multiple franchise owners are jacking up or plan to raise wages to attract scarce hairdressing talent and are increasing haircut prices to compensate for it. This fits the classic Phillips curve model, which predicts wages and inflation will rise in response to a tight labor market. In theory, it should be happening to the overall U.S. economy, but it hasn’t. Economists say powerful factors such as an aging population, technology, sluggish productivity growth and overseas competition could be restraining the relationship between the unemployment rate and inflation. When the relationship is functioning, here’s how it works:

Steel Tariffs Likely to Lead to U.S. Job Losses, Fed Economists Find

U.S. tariffs on steel imports are likely to cost the American economy jobs, according to new research from Federal Reserve Bank of New York economists. “Although it is difficult to say exactly how many jobs will be affected, given the history of protecting industries with import tariffs, we can conclude that the 25% steel tariff is likely to cost more jobs than it saves,” the economists said in a Thursday posting on the New York Fed’s Liberty Street Economics blog. “The new tariffs are likely to lead to a net loss in U.S. employment, at least in the short to medium run.” The research comes a day after the Federal Reserve said U.S. businesses reported rising steel prices due to the new tariffs. The Trump administration in March launched global tariffs on steel and aluminum, although imports from some countries have been exempted. The administration Continue reading "Steel Tariffs Likely to Lead to U.S. Job Losses, Fed Economists Find"

Parsing the Fed: How the March Statement Changed From January

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the March statement compared with January. [wsj-responsive-sandbox id = "0" ] RELATED Federal Reserve Interest-Rate Decision—Live Analysis Fed Set to Raise Rates, Issue New Economic Projections Consumer Borrowing Costs Edge Higher as Fed Keeps Raising Rates

Parsing the Fed: How the January Statement Changed From December

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the January statement compared with December. [wsj-responsive-sandbox id = "0" ] RELATED Fed Holds Rates Steady and Sees ‘Solid’ Economic Gains Yellen to Hand Off Go-Slow Approach to Rate Rises as She Departs Fed Yellen Leaving Fed With Full Employment, but Her Legacy Still Is Being Written (Jan. 30)

How the Cost of Rent Is Keeping Inflation in Check

Rents are rising at the slowest pace in more than a year, a welcome development for consumers but another potential complication for Federal Reserve officials waiting for a pickup in inflation. A measure of what Americans are paying for rent was up 3.7% in October and again in November from a year earlier. Rent inflation dipped to that level in September 2016 but was last consistently that low in the opening months of 2016, according to Labor Department data. Major cities including New York, Houston and San Francisco have seen the slowdown in rental cost pressures after years of rapid gains. Rent inflation is still outpacing overall inflation, but the slowdown could ease what had already been limited price pressures from across the economy. That’s one more factor for Fed officials to consider as they weigh their next steps on interest rates. Inflation has continually undershot the central bank’s 2% target Continue reading "How the Cost of Rent Is Keeping Inflation in Check"

Economists React to the December Fed Decision: ‘We Wish Jay Powell the Best of Luck’

The Federal Reserve said it would increase its benchmark interest rate for the third time this year and remained on track to follow a similar path next year. The central bank’s two-day policy meeting concluded with new economic forecasts, a policy statement and Fed Chairwoman Janet Yellen’s last scheduled press conference. Here’s how economists and analysts reacted to Wednesday’s Fed news. “History will likely treat (Janet Yellen) kindly, not because she was the first female chair, but because she navigated the rough shoals of policy normalization following the Bernanke era. Perhaps her greatest achievement was that she resisted the temptation and tantrums of those that called for a premature end to her lower for longer policy that waited for significant improvement in the labor force and growth.” —Joseph Brusuelas, RSM US LLP “The surprise is that, despite that stronger economic growth, the inflation and interest rate projections were left almost Continue reading "Economists React to the December Fed Decision: ‘We Wish Jay Powell the Best of Luck’"

Parsing the Fed: How the December Statement Changed from November

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the December statement compared with November. [wsj-responsive-sandbox id = "0" ] RELATED Fed Raises Interest Rates, Sees Continued Path of Increases in 2018

Parsing the Fed: How the November Statement Changed From September

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the November statement compared with September. [wsj-responsive-sandbox id = "0" ] RELATED Fed Leaves Rates Unchanged, Cites Solid Rate of Economic Growth

Parsing the Fed: How the July Statement Changed From June

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the July statement compared with June. [wsj-responsive-sandbox id = "0" ] RELATED Fed Leaves Rates Unchanged; Likely to Act Soon on Portfolio Cuts

Parsing the Fed: How the June Statement Changed From May

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the June statement compared with May. [wsj-responsive-sandbox id = "0" ] RELATED Wall Street Veteran Leads Search for Next Fed Chief Lousy Pay Raise? That May Be as Good as It Gets

Parsing the Fed: How the May Statement Changed From March

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. The following tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the May statement compared with March. [wsj-responsive-sandbox id = "0" ] RELATED Fed Holds Rates Steady, Sees Recent Economic Slowdown as Temporary See Markets React to the Fed in 8 Charts