Liberty Street Economics

February 17, 2026

Seeing Through the Shutdown’s Missing Inflation Data

Martin Almuzara and Geert Mesters

Photo: Man's hand holding a wallet, with Inflation text and line chart overlay

Data releases for inflation have been scarce over the past four months due to the government shutdown. As a result, until January 22 no personal consumer expenditures (PCE) data were available beyond September and the consumer price index (CPI) had many missing entries for the one-month changes for October and November. In this post, we use an extended version of the New York Fed’s Multivariate Core Trend (MCT) inflation model to examine changes in underlying inflation over this period. The MCT model is well-suited to do so because it decomposes sectoral inflation rates into a trend (“persistent”) and a transitory component. In contrast to core (ex-food and energy) inflation, its aim is to remove all transitory factors, thus identifying the underlying trend. In addition, since the model can handle missing data—like for October—it can produce values for trend inflation for months where little or no data were released. Our findings suggest caution: while the fragmented data from November initially signaled a deceleration in price pressures, the integration of December data indicates that these reductions were largely transitory. Once the full data set is used, the aggregate trend for December stands at 2.83 percent, an increase from 2.55 percent in September.

Posted at 7:00 am in Inflation | Permalink | Comments (0)

February 12, 2026

Who Is Paying for the 2025 U.S. Tariffs?

Mary Amiti, Chris Flanagan, Sebastian Heise, and David E. Weinstein

AI generated image of an Asian man in a warehouse with several shelves of cardboard boxes behind him as he scans two boxes in front of him getting ready to ship. Boxes say made in Vietnam.

Over the course of 2025, the average tariff rate on U.S. imports increased from 2.6 to 13 percent. In this blog post, we ask how much of the tariffs were paid by the U.S., using import data through November 2025. We find that nearly 90 percent of the tariffs’ economic burden fell on U.S. firms and consumers.

Posted at 7:00 am in International Economics | Permalink | Comments (10)

February 10, 2026

Where Are Mortgage Delinquencies Rising the Most?

Andrew F. Haughwout, Donghoon Lee, Daniel Mangrum, Joelle W. Scally, and Wilbert van der Klaauw

Photo: lower income neighborhood in the U.S.

The Federal Reserve Bank of New York’s Center for Microeconomic Data recently released its Quarterly Report on Household Debt and Credit for the fourth quarter of 2025, revealing continued growth in household debt balances. Aggregate household debt balances rose by $191 billion to reach $18.8 trillion, marking a $4.6 trillion increase since the end of 2019. Mortgage balances grew by $98 billion to $13.2 trillion, while credit card debt increased by $44 billion to $1.28 trillion. Credit card and auto loan delinquency rates appear to have stabilized, albeit at elevated rates. By contrast, the delinquency rate for mortgages—although still near low levels on a longer-term basis—has been steadily increasing over the past few years. Underlying these aggregate figures, however, there are notable differences in mortgage credit performance across places with different income levels and labor and housing market dynamics. This analysis, as well as the Quarterly Report on Household Debt and Credit, are based on anonymous credit report data from Equifax.

Posted at 11:00 am in Credit, Household Finance, Housing | Permalink | Comments (0)

February 5, 2026

Does the Phillips Curve Steepen When Costs Surge?

Simone Lenzu

Precision on the Production Line: Cardboard boxes traverse a mod

Inflation does not always respond to cost and demand pressures in the same way. When shocks are small, the mapping from costs to prices is roughly proportional—double the shock, double the inflation response. But when the economy is hit by large shocks, this proportionality breaks down. As the recent surge and subsequent decline of global inflation showed, price growth can accelerate—or decelerate—by more than one-for-one relative to the size of the disturbance. Economists refer to this pattern as nonlinear inflation dynamics. In this post, I discuss what these nonlinearities mean, how they relate to the slope of the Phillips curve discussed in a companion post, and how firm-level data can help us understand the mechanisms behind them.

Posted at 7:00 am in Inflation | Permalink | Comments (0)

February 4, 2026

Anatomy (not Autopsy) of the Phillips Curve

Simone Lenzu

Engineer worker in automotive factory car manufacturing process, assembly line production

The relationship between inflation and real economic activity has long been central to debates in macroeconomics and monetary policy. At the core of this debate is the Phillips curve (PC), which measures how strongly inflation reacts to movements in economic conditions. The steepness of this curve matters enormously for monetary policy: if the PC is steeper, inflation rises faster during booms and falls faster in recessions, which entails central banks having to act more forcefully if they want to stabilize inflation around their target. Prior analysis found astonishingly small estimates of the slope of the PC, which suggests that the curve is “flat” (or even dead). In this post, I present evidence from coauthored research showing that, contrary to the conventional view, the Phillips curve is alive and steep, and it captures inflation volatility remarkably well once real marginal cost is used instead of standard real economic activity measures.

Posted at 7:00 am in Inflation | Permalink | Comments (2)

February 3, 2026

New York Fed EHIs Reveal Small Business Struggles

Will Aarons and Asani Sarkar

Two Senior owner business shopkeeper wearing aprons checking inventory and packing new orders online for customer eco friendly brown paper wrapped with environmental Sustainability friendly before shipping to customers ,zero waster and plastic free quality control

The New York Fed’s Economic Heterogeneity Indicators (EHIs) aim to study macroeconomic outcomes experienced by various groups of people and businesses. We recently added a suite of indicators describing the performance of small businesses to the EHIs—both for the region (defined, for the purpose of this study, as New York, New Jersey, and Connecticut) and nationally. Small businesses are critical to employment generation as they accounted for almost 63 percent of new private sector jobs since 2005 and employed almost 46 percent of all U.S. workers in 2025. Thus, understanding economic trends and impacts for small businesses is important for designing effective monetary policy and aligns with the New York Fed’s mission to support the regional economy. In this post, we highlight some aspects of small business profitability, revenues, employment, and indebtedness since 2019 for firms of different sizes.

Posted at 10:01 am in Employment, New Jersey, New York, Regional Analysis | Permalink | Comments (0)

A New Dataset for Consumer Spending in the New York Fed EHIs

Rajashri Chakrabarti, Thu Pham, Beck Pierce, and Maxim L. Pinkovskiy

We are enhancing our set of Economic Heterogeneity Indicators (EHIs) by adding a set of metrics on consumer spending with data presented by income, education, race and ethnicity, age, and urban status. The data will help track the evolution of aggregate behavior by analyzing the spending of specific groups in a more timely manner than is possible using public surveys.

Posted at 10:00 am in Demographics, Equitable Growth, Household Finance | Permalink | Comments (0)

January 14, 2026

Understating Rising Quality Means Import Price Inflation Is Overstated

Danial Lashkari

Photo: clothing items rolled in a box with label on it Made in France. AI generated

It is common for price measures to consider changes in quality. That is, a price index might fall even though listed prices are unchanged because the quality of the item has improved. An adjustment for quality captures the fact that consumers are effectively getting more for the same dollar when product quality rises. In practice, however, it is notoriously difficult to measure quality changes since it requires access to detailed data on all product characteristics that matter to consumers. We offer a novel method to infer quality changes and apply it to U.S. import price indices. When we account for quality improvements in this way, we find that the import price inflation based on official measures has been overstated, revealing that consumers have been getting more from their purchases of imported goods than what standard quality adjustments suggest.

Posted at 7:00 am in Inflation | Permalink | Comments (1)

January 12, 2026

Disability in the Labor Market: Earnings

Rajashri Chakrabarti, Thu Pham, Beck Pierce, and Maxim L. Pinkovskiy

Disabled young man with an artificial leg is working at the furniture factory

In our previous post we learned that, in general, people with disabilities participate in the labor market at significantly lower rates, and that they are much more likely to be unemployed. Despite these patterns, we found that the labor force participation of workers with disabilities rose noticeably following the pandemic. A relevant question then is how earnings of workers with disabilities compare with workers without disabilities. In this companion post we investigate differences in weekly earnings for workers with and without disabilities. We find that workers with disabilities earn considerably less than workers without disabilities. Additionally, with few exceptions, their earnings have remained roughly constant in real terms since the pre-pandemic period.

Posted at 7:01 am in Equitable Growth, Labor Market | Permalink

Disability in the Labor Market: Employment and Participation

Rajashri Chakrabarti, Thu Pham, Beck Pierce, and Maxim L. Pinkovskiy

Group of people waiting for job interview in the waiting room at office - including young wheelchair user

Among people in prime working age (25-54), around 7 percent have a disability of some kind. In this set of companion posts, we will examine how prime-aged workers with disabilities have fared in the labor market compared to the year prior to the pandemic. In this first post, we will show that people with disabilities are far less likely to be employed than people without disabilities, with both lower labor force participation and higher unemployment playing a role. We will also show that although employment rates of people with disabilities are very low, they have risen rapidly during the post-pandemic period, largely because of rising labor force participation. Our results are consistent with an increased prevalence of work from home (WFH) arrangements in the post-COVID period differentially benefiting people with disabilities.

Posted at 7:00 am in Labor Market | Permalink

Markets & Policy Implementation

Liberty Street Economics

Seeing Through the Shutdown’s Missing Inflation Data

Who Is Paying for the 2025 U.S. Tariffs?

Where Are Mortgage Delinquencies Rising the Most?

Does the Phillips Curve Steepen When Costs Surge?

Anatomy (not Autopsy) of the Phillips Curve

New York Fed EHIs Reveal Small Business Struggles

A New Dataset for Consumer Spending in the New York Fed EHIs

Understating Rising Quality Means Import Price Inflation Is Overstated

Disability in the Labor Market: Earnings

Disability in the Labor Market: Employment and Participation

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