Liberty Street Economics

May 15, 2024

Do Unexpected Inflationary Shocks Raise Workers’ Wages?

Jacob Weber

Photo: two construction workers working on a new building wearing hard hats.

The past year’s steady decline in nominal wage growth now appears in danger of stalling. Given ongoing uncertainty in Ukraine and the Middle East, this seems an opportune moment to revisit the conventional wisdom about the relationship between inflation and wages: if an unexpected increase in energy costs drives up the cost of living, will workers demand higher wages, reversing the recent moderation in wage growth? In new work with Justin Bloesch and Seung Joo Lee examining those concerns, our analysis shows that the pass-through of such inflationary shocks to wages is weak.

Posted at 7:00 am in Inflation | Permalink

May 14, 2024

Delinquency Is Increasingly in the Cards for Maxed‑Out Borrowers

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

Editor’s note: Since this post was first published, the aggregate credit card utilization rate cited in the second paragraph has been corrected. (May 14, 12:05pm). The percentage of Gen Z credit card users who are “maxed-out” has been corrected in the text and now matches the table. (May 15, 2024, 4:00 pm)

Photo: man holding a wallet in one and a credit card in another with a bag next to him.

This morning, the New York Fed’s Center for Microeconomic Data released the Quarterly Report on Household Debt and Credit for the first quarter of 2024. Household debt balances grew by $184 billion over the previous quarter, slightly less than the moderate growth seen in the fourth quarter of 2023. Housing debt balances grew by $206 billion. Auto loans saw a $9 billion increase, continuing their steady growth since the second quarter of 2020, while balances on other non-housing debts fell. Credit card balances fell by $14 billion, which is typical for the first quarter. However, an increasing number of borrowers are behind on credit card payments. In this post, we explore the relationship between credit card delinquency and changes in credit card “utilization rates.”

Posted at 11:00 am in Credit, Household Finance | Permalink | Comments (3)

May 13, 2024

Who Is Borrowing and Lending in the Eurodollar and Selected Deposit Markets?

Gara Afonso, Gonzalo Cisternas, and Will Riordan 

A recent Liberty Street Economics post discussed who is borrowing and lending in the federal funds (fed funds) market. This post explores activity in two other markets for short-term bank liabilities that are often perceived as close substitutes for fed funds—the markets for Eurodollars and “selected deposits.” 

Posted at 7:00 am in Financial Markets | Permalink

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

Markets & Policy Implementation

Liberty Street Economics

Do Unexpected Inflationary Shocks Raise Workers’ Wages?

Delinquency Is Increasingly in the Cards for Maxed‑Out Borrowers

Who Is Borrowing and Lending in the Eurodollar and Selected Deposit Markets?

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

Economic Inequality

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