Historical Echoes: I’ll Take “Happy Birthday, Fed!” for $400, Alex

Amy Farber

The Federal Reserve System is getting ready to celebrate its 100^th birthday. The quiz show Jeopardy! recently paid tribute to this milestone by having as one of its “Teen Tournament Jeopardy!” categories “Happy 100th Birthday, Federal Reserve!” Barrett Block, a high-school senior, won the game. You can play the same game the teen contestants played (scroll down to the “Double Jeopardy!” round) on a fan-created site called J! Archive. On the site, which by the way isn’t affiliated with Jeopardy!, you can travel back through the past thirty years and test your knowledge on Jeopardy! questions on specific topics like finance, economics, money, and the Federal Reserve.

Is Job Polarization Holding Back the Labor Market?

Stefania Albanesi, Victoria Gregory, Christina Patterson, and Ayşegül Şahin

More than three years after the end of the Great Recession, the labor market still remains weak, with the unemployment rate at 7.7 percent and payroll employment 3 million less than its pre-recession level. One possibility is that this weakness is a reflection of ongoing trends in the labor market that were exacerbated during the recession. Since the 1980s, employment has become increasingly concentrated among the highest- and lowest-skilled jobs in the occupational distribution, due to the disappearance of jobs focused on routine tasks. This phenomenon is called job polarization (see Autor et al. [2003], Acemoglu and Autor [2010], Jaimovic and Siu [2011], and Abel and Deitz [2011]).

First Impressions Can Be Misleading: Revisions to House Price Changes

Joseph Tracy, Richard Peach, and Joshua Abel

An assiduous follower of the national house price charts that the New York Fed maintains on its web page may have noticed that we appear to be rewriting history as we update the charts every month. For example, last month we reported that the median twelve-month house price change across all counties for December 2012 was 3.68 percent. However, this month, we indicate that this same median change for December 2012 was instead 3.45 percent. Why the change? Was the earlier reported number a mistake that we simply corrected this month? If not, what explains the revision to the initial report?

A New Approach for Identifying Demand and Supply Shocks in the Oil Market

Jan J.J. Groen, Kevin McNeil, and Menno Middeldorp

An oil-price spike is often used as the textbook example of a supply shock. However, rapidly rising oil prices can also reflect a demand shock. Recognizing the difference is important for central bankers. A supply-driven increase in the price of oil can result in higher unemployment and inflation, leaving central bankers with the difficult decision to loosen policy, tighten policy, or not respond at all. A demand-driven increase reflecting global growth may support the case for tighter policy. In this post, we describe an approach for decomposing oil price changes into supply and demand shocks using financial market data.

The Region’s Job Rebound from Superstorm Sandy

Jaison R. Abel, Jason Bram, Richard Deitz, and James A. Orr

Last October, Superstorm Sandy caused widespread destruction and massive disruptions to the regional economy, not to mention the lives of millions of residents. More than three months later, many people remain displaced, and some are still struggling to rebuild their homes, businesses, and lives. Despite these setbacks, the process of economic recovery in the region appears to be well underway, boosted by the beginning of the cleanup and restoration process. In this post, we take an initial look at the adverse impact Sandy has had on the region’s jobs, describing the nature and extent of the employment downturn and the subsequent rebound following the storm.

Historical Echoes: The Founding and Foundation of the New York Fed

Megan Cohen

On November 17, 1914, the New York Times reported on Treasury Secretary W. G. McAdoo’s involvement in the authorization of the Federal Reserve System’s operations, including a notice to member Banks, telegrams, and new Reserve notes. Appearing with the article is a copy of the receipt for the first Reserve payment.

Pick Your Poison: How Money Market Funds Reacted to Financial Stress in 2011

Neel Krishnan, Antoine Martin, and Asani Sarkar

The summer of 2011 was an unsettling period for financial markets. In the United States, Congress was unable to agree to terms for raising the debt ceiling until August, creating considerable uncertainty over whether the government would be forced to default on its debt. In Europe, the borrowing costs of some peripheral countries increased dramatically, raising questions about the health of some of the largest banks. In this post, we analyze data recently made public by the Securities and Exchange Commission (SEC) to see how the U.S. money market mutual fund (MMF) industry reacted to these stresses. We conclude that MMFs appeared to be more concerned with the European debt crisis because they increased their holdings of U.S. Treasuries and other government securities while decreasing their holdings of financial securities issued by European banks over that period.

How the Nation Resolved Its First Debt Ceiling Crisis

Kenneth D. Garbade

Note: This post draws on many sources contemporary with the events described, including various Treasury and Federal Reserve publications and news articles from the Wall Street Journal and the New York Times. These sources are fully documented in the PDF version of the post.

In the second half of 1953, the United States, for the first time, risked exceeding the statutory limit on Treasury debt. How did Congress, the White House, and Treasury officials deal with the looming crisis? As related in this post, they responded by deferring and reducing expenditures, by monetizing “free” gold that remained from the devaluation of the dollar in 1934, and ultimately by raising the debt ceiling.

Historical Echoes: Retirement Timing Discussions with Nary a Mention of Finances

Amy Farber

One would be hard-pressed to find a discussion about the timing of retirement these days that doesn’t mention finances. That makes it more than a little surprising to find two examples from the mid-twentieth century that broach the question of retirement age, yet are entirely silent about financial considerations.