The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
The New York Fed engages with individuals, households and businesses in the Second District and maintains an active dialogue in the region. The Bank gathers and shares regional economic intelligence to inform our community and policy makers, and promotes sound financial and economic decisions through community development and education programs.
Olivier Armantier, Giorgio Topa, Wilbert van der Klaauw, and Basit Zafar
The New York Fed’s Survey of Consumer Expectations (SCE) collects information on household heads’ economic expectations and behavior. In particular, the survey covers respondents’ views on how inflation, spending, credit access, and the housing and labor markets will evolve over time. The SCE yields important insights that inform our monetary policy decisions. This morning, President Dudley joined New York Fed economists to brief the press on the design of the SCE and the latest releases of survey results. President Dudley introduced the briefing by speaking about the benefits of measuring consumers’ expectations.
The 9/11 terrorist attack on the World Trade Center left a deep scar on New York City and the nation, most particularly in terms of the human toll. In addition to the lives lost and widespread health problems suffered by many others—in particular by first responders and recovery workers—the destruction of billions of dollars’ worth of property and infrastructure led to severe disruptions to the local economy. Nowhere were these disruptions more severe and long-lasting than in the neighborhoods closest to Ground Zero.
Geographic mobility is thought to be important both for economic mobility and for the efficiency of a labor market in allocating the right people to the right jobs. Accordingly, the willingness of the U.S. workforce to move is a factor behind the greater dynamism of the U.S. labor market compared to Europe. While Europeans tend to be more reluctant to move to distant places within their respective countries, the idea of moving across state borders for a job has been woven into the fabric of the American Dream. However, the image of the United States as a mobile nation has changed substantially over recent decades. This post investigates the role that demographic shifts—in particular, the nation’s aging population—have played in the recent decline in interstate migration.
At today’s economic press briefing, we provided an update on regional economic conditions, with a particular focus on job growth in the region, and highlighted an important emerging labor market trend: the return of middle-wage jobs.
The Federal Reserve Bank of New York this morning released the results of its August 2016 business surveys, including the supplemental survey report on health coverage costs and the effects of the Affordable Care Act (ACA) on firms in the region. Health care costs increased 8.5 percent this year and are expected to rise by 10 percent in 2017, based on the median responses of surveyed businesses. Among the more widely mentioned factors that firms said were contributing to higher costs were increased premiums from insurance providers, higher costs for prescription drugs, the ACA, and an aging workforce.
Meta Brown, Andrew Haughwout, Donghoon Lee, Joelle Scally, Magali Solimano, and Wilbert van der Klaauw
Debt and its performance play a critical role in economic development. The enormous increase in mortgage debt that took place during the run-up to the 2007 financial crisis and the contribution of that debt to the crisis underscore the importance of household debt to financial stability and economic growth. While we regularly report on household debt at the national level and for selected states in our Quarterly Report on Household Debt and Credit, we have not reported separately on Puerto Rico. This post introduces metrics on household debt in Puerto Rico, which we plan to update regularly. Like our other reports on household debt, this analysis uses our FRBNY Consumer Credit Panel, which is based on anonymized credit data from Equifax. We also take a look at some data for Puerto Rico’s banking sector to complete the picture of household debt for the Commonwealth.
Rajashri Chakrabarti, Giacomo De Giorgi, and Rachel Schuh
Educational attainment is an important element of human capital; however a series of recent papers highlights the crucial role of the quality of education—which determines the skills actually learned, rather than the number of years spent in a classroom—as a main driver of growth. In fact, Hanushek and Woessmann argue that the importance of more appropriately measuring skills is seen in the very tight relationship between quality of skills, or knowledge capital, and growth. Moreover, the researchers state, “The knowledge capital–growth relationship suggests little mystery for East Asia, Latin America, or other regions: Growth rates are accounted for by cognitive skills.” Similarly, “Considering knowledge capital dramatically increases our ability to account for differences in growth.”
A key concern about Puerto Rico’s prospects is that its labor force participation rate, which is the percentage of the adult population either working or looking for work, has fallen sharply. Looking at the data shows that this decline cannot be attributed to any particular demographic segment. Instead, it is the consequence of an aging population, accelerated by a falling birth rate and outmigration of a relatively young cohort. Expected demographic trends will continue to put downward pressure on the participation rate over the medium term, creating a challenging headwind for the economy to overcome.
Graham Campbell, Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw
The Federal Reserve Bank of New York’s Center for Microeconomic Data today released its Quarterly Report on Household Debt and Credit for the second quarter of 2016. It showed that overall household debt increased modestly over the period, with subdued mortgage originations and moderate but continued increases in non-housing related credit—particularly auto loans and credit cards. The total outstanding credit card balance now stands at $729 billion, up $17 billion from the first quarter, but still well below the peak of $866 billion reached in the fourth quarter of 2008. Credit card delinquency rates have continued to improve since peaking in 2008. We have previously “looked under the hood” of auto loans, and in this post, we present analysis that provides new insight into credit card debt by examining trends in credit card issuance and usage. The Quarterly Report and the following analyses are based on data from the New York Fed’s Consumer Credit Panel, which is a nationally representative sample drawn from Equifax credit reports.
Jaison R. Abel, Giacomo De Giorgi, Richard Deitz, and Harry Wheeler
Given Puerto Rico’s long-term economic malaise and ongoing fiscal crisis, it is no wonder that out-migration of the Island’s residents has picked up. Over the past five years alone, migration has resulted in a net outflow of almost 300,000 people, a staggering loss. It would make matters worse, however, if Puerto Rico were losing an outsized share of its highest-paid workers. But we find that, if anything, Puerto Rico’s migrants are actually tilted somewhat toward the lower end of the skills and earnings spectrum. Still, such a large outflow of potentially productive workers and taxpayers is an alarming trend that is likely to have profound consequences for the Island for years to come.
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