Liberty Street Economics

May 9, 2024

The Post‑Pandemic Shift in Retirement Expectations in the U.S.

Felix Aidala, Gizem Kosar, and Wilbert van der Klaauw

Photo: woman riding her bike by the water. Text overlay 10 Years Measuring Consumer Behavior and Expectations

One of the most striking features of the labor market recovery following the pandemic recession has been the surge in quits from 2021 to mid-2023. This surge, often referred to as the Great Resignation, or the Great Reshuffle, was uncommonly large for an economic expansion. In this post, we call attention to a related labor market change that has not been previously highlighted—a persistent change in retirement expectations, with workers reporting much lower expectations of working full-time beyond ages 62 and 67. This decline is particularly notable for female workers and lower-income workers.

Posted at 10:00 am in Expectations, Labor Market | Permalink

May 8, 2024

How Are They Now? A Checkup on Homeowners Who Experienced Foreclosure

Andrew Haughwout, Donghoon Lee, Daniel Mangrum, Belicia Rodriguez, Joelle Scally, and Wilbert van der Klaauw

The end of the Great Recession marked the beginning of the longest economic expansion in U.S. history. The Great Recession, with its dramatic housing bust, led to a wave of home foreclosures as overleveraged borrowers found themselves unable to meet their payment obligations. In early 2009, the New York Fed’s Research Group launched the Consumer Credit Panel (CCP), a foundational data set of the Center for Microeconomic Data, to monitor the financial health of Americans as the economy recovered. The CCP, which is based on anonymized credit report data from Equifax, gives us an opportunity to track individuals during the period leading to the foreclosure, observe when a flag is added to their credit report and then—years later—removed. Here, we examine the longer-term impact of a foreclosure on borrowers’ credit scores and borrowing experiences: do they return to borrowing, or shy away from credit use and homeownership after their earlier bad experience?

Posted at 10:00 am in Household Finance, Housing, Inequality, Recession | Permalink | Comments (3)

May 7, 2024

Many Places Still Have Not Recovered from the Pandemic Recession

Jaison R. Abel, Richard Deitz, Jonathan Hastings, and Joelle Scally

Photo: People standing in line for job & training expo

More than four years have passed since the onset of the pandemic, which resulted in one of the sharpest and deepest economic downturns in U.S. history. While the nation as a whole has recovered the jobs that were lost during the pandemic recession, many places have not. Indeed, job shortfalls remain in more than a quarter of the country’s metro areas, including many in the New York-Northern New Jersey region. In fact, while employment is well above pre-pandemic levels in Northern New Jersey, jobs have only recently recovered in and around New York City, and most of upstate New York—like much of the Rust Belt—still has not fully recovered and has some of the largest job shortfalls in the country.

Posted at 11:00 am in Labor Market, New Jersey, New York, Pandemic, Recession, Regional Analysis | Permalink | Comments (1)

May 6, 2024

Mortgage Rate Lock‑In and Homeowners’ Moving Plans

Felix Aidala, Andrew Haughwout, Ben Hyman, Jason Somerville, and Wilbert van der Klaauw

Photo: man unloading boxes from a moving truck

The U.S. housing market has had a tumultuous few years. After falling to record lows during the pandemic, the average 30-year mortgage rate rapidly increased in 2022 and 2023 and now hovers near a two-decade high of 7.2 percent. For those that locked in a low mortgage rate prior to 2022, this steep increase has significantly increased the cost of moving, as taking out a mortgage at current rates would potentially increase their monthly housing payment by hundreds or thousands of dollars, even if the amount they borrowed remained unchanged. As shown by Ferreira et al. (2011), this lock-in effect has the potential to reduce geographic mobility and turnover in the housing market and has gained the attention of Federal Reserve leaders. In this post, we utilize special questions from the Federal Reserve Bank of New York’s 2023 and 2024 SCE Housing Surveys to estimate the extent to which mortgage rate lock-in is suppressing U.S. household’s moving plans.

Posted at 11:00 am in Household Finance, Housing | Permalink

May 3, 2024

Has Market Concentration in U.S. Manufacturing Increased?

Mary Amiti and Sebastian Heise

Photo: worker cleaning up car shells on a production line

The increasing dominance of large firms in the United States has raised concerns about pricing power in the product market. The worry is that large firms, facing fewer competitors, could increase their markups over marginal costs without fear of losing market share. In a recently published paper, we show that although sales of domestic firms have become more concentrated in the manufacturing sector, this development has been accompanied by the entry and growth of foreign firms. Import competition has lowered U.S. producers’ share of the U.S. market and put smaller, less efficient domestic firms out of business. Overall, market concentration in manufacturing was stable in recent decades, though import penetration has greatly altered the makeup of the U.S. manufacturing sector.

Posted at 7:00 am in Macroeconomics | Permalink

April 17, 2024

The New York Fed Consumer Credit Panel: A Foundational CMD Data Set

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

Video of a man going through a stack of bills. 10 years measuring consumer behavior & expectations text zooms in over the video.

As the Great Financial Crisis and associated recession were unfolding in 2009, researchers at the New York Fed joined colleagues at the Board of Governors and Philadelphia Fed to create a new kind of data set. Household liabilities, particularly mortgages, had gone from being a quiet little corner of the financial system to the center of the worst financial crisis and sharpest recession in decades. The new data set was designed to provide fresh insights into this part of the economy, especially the behavior of mortgage borrowers. In the fifteen years since that effort came to fruition, the New York Fed Consumer Credit Panel (CCP) has provided many valuable insights into household behavior and its implications for the macro economy and financial stability.

The CCP was one of the first data sets drawn from credit bureau data, one of the earliest features of the Center for Microeconomic Data (CMD), and the primary source material for some of the CMD’s most important contributions to policy and research. Here we review a few of the main household debt themes over the past fifteen years, and how our analyses contributed to their understanding.

Posted at 7:00 am in Household Finance, Student Loans | Permalink

April 16, 2024

The Survey of Consumer Expectations: A Look Back at the Past Decade

Olivier Armantier, Gizem Koşar, Giorgio Topa, and Wilbert van der Klaauw

It has been a little over ten years since we started releasing findings from the Federal Reserve Bank of New York’s Survey of Consumer Expectations (SCE). In this post, we review some of the headline findings from the first decade of the survey’s history, highlighting the evolution of consumers’ expectations about inflation and labor market outcomes.

Posted at 7:00 am in Expectations | Permalink

April 15, 2024

Can I Speak to Your Supervisor? The Importance of Bank Supervision

Beverly Hirtle and Anna Kovner

Decorative image: man holding a magnifying glass to a red wooden businessman leading way

In March of 2023, the U.S. banking industry experienced a period of significant turmoil involving runs on several banks and heightened concerns about contagion. While many factors contributed to these events—including poor risk management, lapses in firm governance, outsized exposures to interest rate risk, and unrecognized vulnerabilities from interconnected depositor bases, the role of bank supervisors came under particular scrutiny. Questions were raised about why supervisors did not intervene more forcefully before problems arose. In response, supervisory agencies, including the Federal Reserve and Federal Deposit Insurance Corporation, commissioned reviews that examined how supervisors’ actions might have contributed to, or mitigated, the failures. The reviews highlighted the important role that bank supervisors can play in fostering a stable banking system. In this post, we draw on our recent paper providing a critical review and summary of the empirical and theoretical literature on bank supervision to highlight what that literature tells us about the impact of supervision on supervised banks, on the banking industry and on the broader economy.

Posted at 7:00 am in Bank Capital, Banks, Federal Reserve, Financial Institutions, Regulation | Permalink

April 12, 2024

The Anatomy of Export Controls

Matteo Crosignani, Lina Han, Marco Macchiavelli, and André F. Silva

Editor's note: We corrected the first chart in this post to include missing data for the number of affected U.S. suppliers in 2016 in the histogram. Chart data is available for download via link at the foot of the post. (June 12)

decorative image: Close-up of Silicon Die are being Extracted from Semiconductor Wafer and Attached to Substrate by Pick and Place Machine. Computer Chip Manufacturing at Fab. Semiconductor Packaging Process.

Governments increasingly use export controls to limit the spread of domestic cutting-edge technologies to other countries. The sectors that are currently involved in this geopolitical race include semiconductors, telecommunications, and artificial intelligence. Despite their growing adoption, little is known about the effect of export controls on supply chains and the productive sector at large. Do export controls induce a selective decoupling of the targeted goods and sectors? How do global customer-supplier relations react to export controls? What are their effects on the productive sector? In this post, which is based on a related staff report, we analyze the supply chain reconfiguration and associated financial and real effects following the imposition of export controls by the U.S. government.

Posted at 7:00 am in Exports, International Economics, Supply Chain | Permalink

April 11, 2024

Monetary Policy and Money Market Funds in Europe

Marco Cipriani, Daniel Fricke, Stefan Greppmair, Gabriele La Spada, and Karol Paludkiewicz

decorative image of the the European Central Bank sign in front of a building

As shown in a past Liberty Street Economics post, in the United States, the yields of money market fund (MMF) shares respond to changes in monetary policy rates much more than the rates of bank deposits; in other words, the MMF beta is much higher than the deposit beta. Consistent with this, the size of the U.S. MMF industry fluctuates over the interest rate cycle, expanding during times of monetary policy tightening. In this post, we show that the relationship between the policy rates of the European Central Bank (ECB) and the size of European MMFs investing in euro-denominated securities is also positive—as long as policy rates are positive; after the ECB introduced negative policy rates in 2015, that relationship broke down, as MMFs received large inflows during this period.

Posted at 7:00 am in Financial Markets | Permalink

Markets & Policy Implementation

Liberty Street Economics

The Post‑Pandemic Shift in Retirement Expectations in the U.S.

How Are They Now? A Checkup on Homeowners Who Experienced Foreclosure

Many Places Still Have Not Recovered from the Pandemic Recession

Mortgage Rate Lock‑In and Homeowners’ Moving Plans

Has Market Concentration in U.S. Manufacturing Increased?

The New York Fed Consumer Credit Panel: A Foundational CMD Data Set

The Survey of Consumer Expectations: A Look Back at the Past Decade

Can I Speak to Your Supervisor? The Importance of Bank Supervision

The Anatomy of Export Controls

Monetary Policy and Money Market Funds in Europe

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