Liberty Street Economics
November 05, 2015

Trends in Debt Concentration in the United States By Income


Household debt in the United States expanded before the Great Recession, contracted afterward, and has been recovering since 2013. But how has the distribution of debt across different income groups evolved over time? Who has been driving the recovery of household debt over the past two years?  To date, there has been little work on how borrowing patterns for high- and low-income individuals have changed over time, although one notable exception is Amromin and McGranahan. Here, using the New York Fed Consumer Credit Panel (CCP), a quarterly panel data set based on Equifax credit reports, we shed further light on these questions.

Posted by Blog Author at 7:00 AM in Household Finance | Permalink | Comments ( 1 )

November 04, 2015

Differences in Rent Inflation by Cost of Housing

Update (11.9.15): A spreadsheet error in the data analysis has raised doubts about some of the conclusions reached in this blog post. Corrections are forthcoming.


We know that different people experience different inflation rates because the bundle of goods and services that they consume is different from that of the “typical” household. This phenomenon is discussed in this publication from the Bureau of Labor Statistics (BLS), and this article from the New York Fed. But did you know that there are substantial differences in inflation experience depending on the level of one's housing costs? In this post, which is based upon our updated staff report on “The Measurement of Rent Inflation,” we present evidence that price changes for rent, which comprises a large share of consumer spending, can vary considerably across households. In particular, we show that rent inflation is consistently higher for lower-cost housing units than it is for higher-cost units. Note that since owners' equivalent rent inflation is estimated from observed changes in rent of rental units, this finding applies to homeowners as well. While we cannot be certain about why this is the case, it appears to be at least partly related to how additional units are supplied to the housing market: in higher-price segments additional units primarily come from new construction, while most of the increase in lower-price segments comes from units that previously were occupied by higher-income households.

Posted by Blog Author at 2:30 PM in Housing , Macroecon | Permalink | Comments ( 2 )

November 03, 2015

Some Options for Addressing Puerto Rico’s Fiscal Problems


Puerto Rico’s economic and fiscal challenges have been an important focus of work done here at the New York Fed, resulting in two reports (2012 and 2014), several blog posts and one paper in our Current Issues series in just the last few years. As the Commonwealth’s problems have deepened, the Obama administration and Congress have begun discussing potential approaches to addressing them. In this post, we update our previous estimates of Puerto Rico’s outstanding debt and discuss the effect that various forms of bankruptcy protection might have on the Commonwealth.

Exploring Differences in Unemployment Risk

Exploring Differences in Unemployment Risk

The risk of becoming unemployed varies substantially across different groups within the labor market. Although the “headline” unemployment rate draws the most attention from the news media and policymakers, there is rich heterogeneity underlying this overall measure. We delve into the data to describe how unemployment and job loss risk vary with demographics (gender, age, and race), skill (educational attainment), and job characteristics (occupation and earnings).

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

November 02, 2015

Understanding Earnings Dispersion


How much someone earns is an important determinant of many significant decisions over the course of a lifetime. Therefore, understanding how and why earnings are dispersed across individuals is central to understanding dispersion in a wide range of areas such as durable and non-durable consumption expenditures, debt, hours worked, and even health. Drawing on a recent New York Fed staff report "What Do Data on Millions of U.S. Workers Reveal about Life-Cycle Earnings Risks?", this blog post investigates the nature of earnings inequality over a lifetime.  It finds that earnings are subject to significant downside risk and that such risk contributes substantially to overall earnings dispersion.

Posted by Blog Author at 7:02 AM in Labor Economics , Macroecon | Permalink | Comments ( 0 )

Beyond the Macroeconomy


The Federal Reserve’s statutory mission from Congress is to achieve maximum employment and price stability for the country as a whole. In line with this dual mandate, economists at the New York Fed monitor conditions in the “aggregate” economy on a day-to-day basis. But in addition, they have been doing a substantial amount of work to understand the differences in economic experiences across individuals, households, and regions. This blog series will examine our economists’ findings on how labor, housing, and health outcomes vary for different groups. A brief summary of the posts in the series follows:

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

October 19, 2015

Reframing the Debate about Payday Lending


Except for the ten to twelve million people who use them every year, just about everybody hates payday loans. Their detractors include many law professors, consumer advocates, members of the clergy, journalists, policymakers, and even the President! But is all the enmity justified? We show that many elements of the payday lending critique—their “unconscionable” and “spiraling” fees and their “targeting” of minorities—don’t hold up under scrutiny and the weight of evidence. After dispensing with those wrong reasons to object to payday lenders, we focus on a possible right reason: the tendency for some borrowers to roll over loans repeatedly. The key question here is whether the borrowers prone to rollovers are systematically overoptimistic about how quickly they will repay their loan. After reviewing the limited and mixed evidence on that point, we conclude that more research on the causes and consequences of rollovers should come before any wholesale reforms of payday credit.

Posted by Blog Author at 7:02 AM in Household Finance | Permalink | Comments ( 19 )

The Tri-Party Repo Market Like You Have Never Seen It Before


The tri-party repo market is a large and important market where securities dealers find a substantial amount of short-term funding. Despite its importance, this market was very opaque before the crisis. Since March 2010, in accordance with recommendation 13 of the Task Force on Tri-Party Repo Infrastructure Reform report, the Federal Reserve Bank of New York has made monthly data on the tri-party repo market available to the public. Today, with our new interactive tool, there is a whole new way to view the market and its evolution. You can make your own charts, looking at volumes for specific asset classes, at haircuts, or at concentration, over your preferred time horizon.

Posted by Blog Author at 7:00 AM in Financial Markets | Permalink | Comments ( 1 )

October 16, 2015

Just Released: Regional Service Sector Resilient even as Manufacturing Slumps


The October 2015 Business Leaders Survey of regional service firms, released today, paints a considerably more benign picture of local business conditions than the more troubling October 2015 Empire State Manufacturing Survey, released yesterday. The two surveys point to diverging trends in the regional economy: manufacturing firms report that business activity has weakened, on balance, for the third month in a row, while regional service firms, though far from euphoric, remain slightly positive, on balance, about business trends. One of the reasons for this divergence seems to be the strong dollar, which has had negative effects on far more manufacturers than service firms, according to our surveys.

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

Historical Echoes: Who Wants to Be the Richest Economist?


You might think that, given the extreme levels of wealth that exist today, the richest economist would be someone who was still alive. But you’d be wrong.
Posted by Blog Author at 7:00 AM in Historical Echoes | Permalink | Comments ( 3 )

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