4 posts from "June 2025"
June 23, 2025
Reserves and Where to Find Them
Banks use central bank reserves for a multitude of purposes including making payments, managing intraday liquidity outflows, and meeting regulatory and internal liquidity requirements. Data on aggregate reserves for the U.S. banking system are readily accessible, but information on the holdings of individual banks is confidential. This makes it difficult to investigate important questions like: “Which types of banks hold reserves?” “How concentrated are they?” and “Does the distribution change over time or in response to significant events?” In this post, we summarize how non-confidential data can be used to answer these questions by providing publicly available proxies for bank-level reserves.
June 20, 2025
The New York Fed DSGE Model Forecast—June 2025
This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe our forecast and its change since March 2025. To summarize, the model points to a marked weakening in real GDP growth across the forecast horizon (with downward revisions relative to March), driven by weaker-than-expected Q1 data and the anticipated effects of tariff-related markup shocks. The core PCE inflation forecast has been revised significantly higher in the near term, with moderate upward adjustments in later years, reflecting persistent cost pressures. The real natural rate of interest has been revised slightly downward across the forecast horizon, reflecting weaker economic fundamentals.
June 4, 2025
Are Businesses Absorbing the Tariffs or Passing Them On to Their Customers?
U.S. import tariffs increased to historically high rates in recent months, raising the costs of many imported inputs businesses use. Businesses subject to these higher costs have been faced with difficult and complex decisions about whether to absorb the tariffs through lower profits, raise their prices to recover the higher costs, or some combination of both. These decisions are influenced by the degree of competition in the marketplace, potential customer reactions, and the ability to maintain profit margins, among other factors. Our May survey of businesses in the New York–Northern New Jersey region asked firms about the tariffs they faced, recent changes in the cost of imported goods, and whether they were passing on tariff-induced cost increases to their customers. Results indicate most businesses passed on at least some of the higher tariffs to their customers, with nearly a third of manufacturers and about 45 percent of service firms fully passing along all tariff-induced cost increases by raising their prices.
June 2, 2025
How Much Does Immigration Data Explain the Employment‑Gap Puzzle?
A puzzling feature of official U.S. employment statistics in recent years has been the increase in the gap between the nonfarm payroll and household employment numbers. This discrepancy is not trivial. From the end of 2021 though the end of 2024, net job gains in the payroll survey were 3.6 million larger than in the household survey. In this Liberty Street Economics post, we investigate one potential explanation for the emergence of this gap: a sharp rise in undocumented immigration during the post-COVID period that would be differentially reflected in the two surveys. We leverage industry-level data to study the relationship between our estimate of employment of likely undocumented migrants and the payroll-household employment gap. These data suggest that factors besides undocumented immigration likely contributed to the emergence of the gap between the two measures of U.S. employment.
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