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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.)
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.
A Conversation with Domenico Giannone, Argia Sbordone, and Andrea Tambalotti
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.
Ozge Akinci, Marco Del Negro, Abhi Gupta, Pearl Li, and Erica Moszkowski
This post presents our quarterly update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since February 2017. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our
DSGE Model Q & A.
R. Jason Faberman, Andreas I. Mueller, Ayşegül Şahin, Rachel Schuh, and Giorgio Topa
Most people find themselves looking for work at some point in their adult lives. But what brings employers and job seekers together? And does searching for a new job while unemployed lead to different outcomes than searching while employed? Little is known about the job search process for unemployed workers. Even less is known about the search process and outcomes for currently employed workers—so‑called “on‑the‑job” search. This Liberty Street Economics post aims to shed light on these questions and to draw some conclusions for our understanding of labor market dynamics more generally.
Why have interest rates stayed low for so long after the financial crisis—and will they remain low for the foreseeable future? One way to answer these questions is to use the accounting identity that global saving must equal physical investment spending and argue that low rates have been necessary to prop up investment spending enough to match saving. From this perspective, the extent of any recovery in interest rates depends on whether weak investment spending is driven primarily by secular demographic trends that are a long-term drag on aggregate demand or by the residual effects of the financial crisis.
Marco Del Negro, Marc Giannoni, Abhi Gupta, Pearl Li, and Erica Moszkowski
This post presents the latest update of the economic forecasts generated by the Federal Reserve Bank of New York’s (FRBNY) dynamic stochastic general equilibrium (DSGE) model. We introduced this model in a series of blog posts in September 2014 and published forecasts twice a year thereafter. With this post, we move to a quarterly release schedule, and highlight how our forecasts have changed since November 2016.
Andreas Fuster, Eilidh Geddes, Benedict Guttman-Kenney, and Andrew Haughwout
Housing is by far the most important asset for most households, and, not coincidentally, housing debt dwarfs other household liabilities. The relationship between housing debt and housing values figures significantly in financial and macroeconomic stability, as events during the housing bust of 2006-12 clearly demonstrated. This week, Liberty Street Economics presents five posts touching on various aspects of housing, from the changing relationship between mortgage debt and housing equity to the future of homeownership. In today’s post, we provide estimates of housing equity and explore how vulnerable households are to declines in house prices, using methods introduced in our paper “Tracking and Stress Testing U.S. Household Leverage.”
Bianca De Paoli, Luca Dedola, Linda Goldberg, Arnaud Mehl, John Rogers, and Livio Stracca
The New York Fed recently hosted the third biannual Global Research Forum on International Macroeconomics and Finance, an event organized in conjunction with the European Central Bank (ECB) and the Federal Reserve Board. Bringing together a diverse group of academics, policymakers, and market participants, the two-day conference (November 17-18) was aimed at promoting discussion of frontier research on empirical and theoretical issues in international finance, banking, and open-economy macroeconomics. Understanding the drivers and implications of international capital flows was a major area of focus, along with the policy challenges posed by global financial integration.
The latest editions of the New York Fed’s two regional business surveys point to improvement in business conditions and widespread optimism about the near-term outlook. The December Business Leaders Survey of regional service firms, released today, shows service sector activity steadying after declining for a number of months, and the December Empire State Manufacturing Survey, released yesterday, indicates that manufacturing activity increased for the first time since the summer.
Nora Fitzpatrick, Laura Pilossoph, Anika Pratt, and Aysegul Sahin
The Federal Reserve Bank of New York recently hosted “The Evolution of Work,” a conference that brought together thought leaders from academia, government, industry, labor, and the nonprofit sector to explore how the nature of work is evolving, including the expanding role of technology, shifts in employee work arrangements and employer-employee relationships, and the effects of these changes on workforce and community development strategies. The gathering was cosponsored by the Board of Governors of the Federal Reserve System and the Freelancers Union.
Liberty Street Economics features insight and analysis from economists working at the intersection of research and policy. The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Donald Morgan.
The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.
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