Historical Echoes: Travel Back in Banking Time with American Banker

New York Fed Research Library

To celebrate its 175th anniversary, American Banker is featuring selected articles that describe important and interesting events in banking history. The articles range from 1848, when the magazine was called Thompson’s Bank Note Reporter, to 1999. The magazine has been reproducing the headlines in its print publication (“American Banker’s 175th Anniversary Flashback Series”) as well as providing a selected archive on its website.

The Productivity Slowdown Reaffirmed

James Kahn* and Robert Rich

Economists generally agree that productivity is the primary ingredient for sustainable growth in GDP and wages. The August productivity data release provided some clarification regarding trend—or long-run—GDP growth, but the news was not good: Following a resurgence of strong productivity growth in the late 1990s and early 2000s after nearly a quarter-century of slow growth beginning in 1973, the latest reading from a trend tracking model now indicates that slow productivity growth returned in 2004. In this post, we describe our “regime-switching” productivity model and share the model’s insights into the historical profile of high- and low-growth regimes as well as the outlook for productivity.

An Examination of U.S. Dollar Declines

Roosevelt D. Bowman* and Jan J. J. Groen

Although the dollar strengthened somewhat recently, its level relative to the currencies of the United States’ main trading partners is nonetheless 11 percent lower than it was at the start of 2009. This represents one of the more pronounced periods of dollar weakness over the past two decades and consequently has garnered considerable attention from market participants and policymakers alike. In this post, we examine the role of market uncertainty and currency risk premia in the pace and size of episodes of dollar weakness since 1991. We find that the most recent bout of U.S. dollar declines largely can be attributed to the recovery in global economic activity from the most recent recession.

Can Speculative Trading Magnify Financial Market Co-movement?

Christian Grisse

Global financial markets tend to move together. For example, stock market movements across the globe are highly synchronized, economic data releases frequently have large spillover effects across borders, and episodes of financial turmoil often spread across countries that share no significant economic linkages. The degree of co-movement across markets often appears to be surprisingly large when compared with the strength of the underlying economic relationships. What can explain this seemingly “excessive” co-movement? This post, based on a recent research paper, argues that speculative trading may magnify financial market co-movement.

Historical Echoes: Meet William McChesney Martin Jr.

New York Fed Research Library

William McChesney Martin Jr. (1906-98) was chairman of the Board of Governors of the Federal Reserve System from 1951 to 1970, serving under five U.S. presidents. (His father, incidentally, was president of the Federal Reserve Bank of St. Louis.) In 1938, at the age of thirty-one, Martin was elected president of the New York Stock Exchange, becoming the youngest salaried president of the exchange.

Consumer Goods from China Are Getting More Expensive

Mary Amiti and Mark Choi*

We find that, in a sharp reversal of earlier trends, U.S. import prices for consumer goods shipped from China have been rising rapidly in recent quarters—by 7 percent between 2010:Q2 and 2011:Q1. In this post, we track U.S. import price movements in Chinese goods in different product categories by creating an import index that uses highly disaggregated data. We also consider the likely causes of the recent rise in prices for consumer goods. If these price hikes persist, they could have important consequences for U.S. businesses and consumers because China is the largest single supplier of U.S. imports, accounting for more than 20 percent of non-oil imports.

Helping Unemployed Borrowers Meet Their Mortgage Payments

James Orr and Joseph Tracy

With unemployment very high, income loss is now the primary reason for mortgage default. Unemployed homeowners face tough choices. Those with equity in their house may attempt to sell it quickly. Alternatively, to keep their house while seeking a new job, they might deplete their savings, apply for a loan modification, or use other credit. Those with negative equity—who owe more on the mortgage than the property’s current value—have fewer choices, because selling the house won’t pay off the mortgage. All too often the home enters foreclosure and becomes costly for the family and the community. In this post, we examine how states may be able to offer special bridge loans to help jobless homeowners pay their mortgages and help protect neighborhoods and housing markets. Such initiatives could complement existing programs by helping many distressed homeowners before they miss any payments.

Historical Echoes: Forced Savings and Prison Cells for Rent

New York Fed Research Library

In the nineteenth century, convicts transported to New South Wales, Australia, were encouraged to deposit their money in one of the colony’s banks. But in 1822, they were forced to do so. Prisoners in private jails were also compelled to pay for their incarceration and were housed according to their ability to pay, with accommodations ranging from a private cell with a cleaning woman to one where the convict had to lie on the floor with no cover.