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8 posts from June 2017

June 26, 2017

Low Productivity Growth: The Capital Formation Link



Editor’s note: The labels on the y-axis of the chart “Nonfarm Business Sector: Real Output per Hour of All Persons” have been corrected. (June 26, 2017, 11:56 a.m.)

LSE_2017_Productivity-factory_GettyImages-184924253_460x288

A major economic concern is the ongoing sluggishness in the growth of output per worker hour, generally called labor productivity. In an arithmetic sense, the growth of the economy can be accounted for by the increase in hours worked plus that of labor productivity. With the unemployment rate now at a level widely regarded as near “full employment,” growth in hours worked is likely to be limited by demographic forces, most importantly the very limited expansion of the working-age population. If productivity growth also remains low, the sustainable pace of increase of real GDP will be limited and remain noticeably lower than historic norms.

Continue reading "Low Productivity Growth: The Capital Formation Link" »

Posted by Blog Author at 7:00 AM in Macroecon | Permalink | Comments (0)

June 23, 2017

At the New York Fed: Twelfth Annual Joint Conference with NYU-Stern on Financial Intermediation



LSE_2017_At the New York Fed: Twelfth Annual Joint Conference with NYU-Stern on Financial Intermediation

Anyone who has a savings account, has taken out a mortgage, or has been part of a business seeking new capital has relied on the smooth functioning of the institutions and markets that collectively perform financial intermediation. Because financial intermediation is so critical to the functioning of a modern economy, it is important to understand its inner workings—its fundamental features, recent innovations, lines of transmission to real economic activity, its imperfections, and its interactions with regulatory policies. As part of an ongoing effort to foster such an understanding, the New York Fed recently hosted the twelfth annual Federal Reserve Bank of New York–New York University Stern School of Business Conference on Financial Intermediation. In this post, we explore some of the discussions and findings from the May 5 conference, which focused on recent advances in the study of financial intermediation.

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Posted by Blog Author at 7:00 AM in Financial Intermediation | Permalink | Comments (0)

June 21, 2017

Low Interest Rates and Bank Profits



LSE_Low Interest Rates and Bank Profits

The Fed’s December 2015 decision to raise interest rates after an unprecedented seven-year stasis offers a chance to assess the link between interest rates and bank profitability. A key determinant of a bank’s profitability is its net interest margin (NIM)—the gap between an institution’s interest income and interest expense, typically normalized by the average size of its interest-earning assets. The aggregate NIM for the largest U.S. banks reached historic lows in the fourth quarter of 2015, coinciding with the “low for long” interest rate environment in place since the financial crisis. When interest rates fall, interest income and interest expenses tend to fall as well, but the relative changes—and the impact on NIM—are less clear. In this post, we explore how NIM fell during the low-interest-rate period, finding that banks mitigated some, but not all, of the impact of lower rates by shifting into less costly types of liabilities. Our analysis also gives insight into how NIM may respond to the new rising interest rate environment.

Continue reading "Low Interest Rates and Bank Profits" »

Posted by Blog Author at 7:00 AM in Banks, Financial Institutions | Permalink | Comments (6)

June 19, 2017

Introducing the Revised Broad Treasuries Financing Rate



LSE_Introducing the Revised Broad Treasuries Financing Rate

The Federal Reserve Bank of New York, in cooperation with the Office of Financial Research, is proposing to publish three new overnight Treasury repurchase (repo) benchmark rates. Recently, the Federal Reserve decided to modify the construction of the broadest proposed benchmark rate (the other two proposed rates are expected to remain unchanged; see the Bank’s announcement on May 24). In this post, we describe the changes to this rate in further detail. We compare this revised rate to the originally proposed benchmark rate and show that, in the post-liftoff period, it trades higher, on average.

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Posted by Blog Author at 7:00 AM in Financial Markets | Permalink | Comments (0)

June 16, 2017

Hey, Economist! How Do You Forecast the Present?



LSE_Hey, Economist! How Do You Forecast the Present?

New York Fed macroeconomists have been sharing their “nowcast” of GDP growth on the Bank’s public website since April 2016. Now, they’ve launched an interactive version of the Nowcasting Report, which updates the point forecast each week, but also helps users better visualize the impact of the flow of incoming data on the estimate produced by the model. Tables offer more detail on the data series informing the estimate. The interactive version also reports the staff nowcast back to January 2016, a longer nowcast history than has previously been available. Cross-media editor Anna Snider spoke to Domenico Giannone, Argia Sbordone, and Andrea Tambalotti—economists who developed the model underlying the report and produce estimates weekly with the help of research analysts Brandyn Bok and Daniele Caratelli—about nowcasting and its role in the policymaking process.

Continue reading "Hey, Economist! How Do You Forecast the Present?" »

Posted by Blog Author at 11:15 AM in Forecasting, Macroecon | Permalink | Comments (0)

Just Released: June Regional Business Surveys Paint a Mixed Picture



LSE_Just Released: June Regional Business Surveys Paint a Mixed Picture

Yesterday’s June Empire State Manufacturing Survey pointed to a significant increase in regional manufacturing activity. However, our parallel survey for the region’s service sector, the June Business Leaders Survey, released today, paints a somewhat dreary picture of regional service-sector activity. These two surveys, taken together, suggest that economic conditions in the New York-Northern New Jersey region are mixed.

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Posted by Blog Author at 8:45 AM in New Jersey, New York, Regional Analysis | Permalink | Comments (0)

June 02, 2017

Valuing Workplace Benefits



LSE_Valuing Workplace Benefits

Workplace benefits—such as parental leave, sick leave, and flexible work arrangements—are increasingly being recognized as important determinants of differences in labor supply behavior, education and occupation choice, inequality in wages, and gender disparities in labor market outcomes. Researchers have argued that the failure of the United States to keep pace in providing more generous workplace benefits accounts for 29 percent of the decline in the nation’s labor force participation rate for women relative to that of other high-income countries in the Organisation for Economic Co-operation and Development (OECD). In this post, using novel data from a special module of the Federal Reserve Bank of New York’s Survey of Consumer Expectations (SCE) fielded in May 2015 and May 2016, we document the labor market prevalence of workplace benefits, analyze workers’ preferences for them, and discuss their impact on labor supply.

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Posted by Blog Author at 7:00 AM in Labor Market | Permalink | Comments (0)

June 01, 2017

Just Released: Bank Loan Performance Under the Magnifying Glass



LS_2017_Just Released:  Bank Loan Performance Under the Magnifying Glass

The New York Fed’s recently released Quarterly Trends for Consolidated U.S. Banking Organizations (QT report) confirms that bank loan portfolios look a lot healthier than they did just a few years ago, reflecting the sustained economic recovery from the Great Recession. In this post, we sharpen the focus to look at bank loan performance in more detail, using more disaggregated charts added to the QT report this quarter.

Continue reading "Just Released: Bank Loan Performance Under the Magnifying Glass" »

Posted by Blog Author at 7:00 AM in Banks, Mortgages | Permalink | Comments (0)

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