Today, the New York Fed’s Center for Microeconomic Data released the Quarterly Report on Household Debt and Credit for 2020:Q1. Because consumer debt servicing statements are typically furnished to credit bureaus only once during every statement period, our snapshot of consumer credit reports as of March 31, 2020 is, in effect, a pre-COVID-19 view of the consumer balance sheet. While significant indications of the pandemic are yet to appear in our Consumer Credit Panel (CCP—the data source for the Quarterly Report, based on Equifax credit reports), we are able to observe the credit position of the American consumer just as the pandemic and associated lockdowns struck the United States.
May 5, 2020
U.S. Consumer Debt Payments and Credit Buffers on the Eve of COVID‑19
Posted at 11:00 am in Household Finance | Permalink
May 4, 2020
W(h)ither U.S. Crude Oil Production?
The rapid increase in U.S. oil production of recent years was looking difficult to sustain before the pandemic, as evidenced by the limited profitability of the sector. Now, U.S. producers may have to bear the brunt of the global supply adjustment needed over the near term.
April 17, 2020
Treasury Market Liquidity during the COVID‑19 Crisis
A key objective of recent Federal Reserve policy actions is to address the deterioration in financial market functioning. The U.S. Treasury securities market, in particular, has been the subject of Fed and market participants’ concerns, and the venue for some of the Fed’s initiatives. In this post, we evaluate a basic metric of market functioning for Treasury securities—market liquidity—through the first month of the Fed’s extraordinary actions. Our particular focus is on how liquidity in March 2020 compares to that observed over the past fifteen years, a period that includes the 2007-09 financial crisis.
Posted at 12:01 pm in Balance of Payments, Banks, Central Bank, Corporate Finance, Financial Markets, Pandemic | Permalink | Comments (1)
April 16, 2020
How Widespread Is the Impact of the COVID‑19 Outbreak on Consumer Expectations?
In a recent blog post, we showed that consumer expectations worsened sharply through March, as the COVID-19 epidemic spread and affected a growing part of the U.S. population. In this post, we document how much of this deterioration can be directly attributed to the coronavirus outbreak. We then explore how the effect of the outbreak has varied over time and across demographic groups.
New York Fed Surveys: Business Activity in the Region Sees Historic Plunge in April
Indicators of regional business activity plunged to historic lows in early April, as efforts to slow the spread of the coronavirus kept many people at home and shut down large parts of the regional economy, according to the Federal Reserve Bank of New York’s two business surveys. The headline index for both surveys plummeted to nearly -80, well below any historical precedent including the depths of the Great Recession. About 60 percent of service firms and more than half of manufacturers reported at least a partial shutdown of their operations thus far. Layoffs were widespread, with half of all businesses surveyed reporting lower employment levels in early April.
April 15, 2020
The COVID‑19 Pandemic and the Fed’s Response
In this post, the authors review the Fed’s action following the coronavirus outbreak, and compare it with the response to the 2007-09 financial crisis.
April 10, 2020
Helping State and Local Governments Stay Liquid
On April 9, the Federal Reserve announced up to $2.3 trillion in new support for the economy in response to the coronavirus pandemic. Among the initiatives is the Municipal Liquidity Facility (MLF), intended to support state and local governments. The details of the facility are described in the term sheet. The state and local sector is a unique but very important part of the economy. This post lays out some of the economics of the sector and the needs that the facility intends to satisfy.
Posted at 4:25 pm in Central Bank, COVID-19 Facilities, Fiscal Policy, Monetary Policy, Pandemic | Permalink
The Coronavirus Shock Looks More like a Natural Disaster than a Cyclical Downturn
It’s tempting to compare the economic fallout from the coronavirus pandemic to prior business cycle downturns, particularly the Great Recession. However, such comparisons may not be particularly apt—as evidenced by the unprecedented surge in initial jobless claims over the past three weeks. Recessions typically develop gradually over time, reflecting underlying economic and financial conditions, whereas the current economic situation developed suddenly as a consequence of a fast-moving global pandemic. A more appropriate comparison would be to a regional economy suffering the effects of a severe natural disaster, like Louisiana after Hurricane Katrina or Puerto Rico after Hurricane Maria. To illustrate this point, we track the recent path of unemployment claims in the United States, finding a much closer match with Louisiana after Katrina than the U.S. economy following the Great Recession.
Posted at 7:00 am in Employment, Labor Market, Pandemic, Regional Analysis | Permalink | Comments (4)
April 8, 2020
How Does Supervision Affect Bank Performance during Downturns?
New research finds that there is a cyclical nature to the benefits of bank supervisory attention: in normal times, the benefits are smaller, but during downturns the more closely supervised banks exhibit better loan performance and lower earnings volatility.
Posted at 7:00 am in Bank Capital, Banks, Crisis, Federal Reserve, Financial Institutions, Recession, Systemic Risk | Permalink
April 6, 2020
Coronavirus Outbreak Sends Consumer Expectations Plummeting
The March Survey of Consumer Expectations, which was fielded between March 2 and 31, records a substantial deterioration in financial and economic expectations, including sharp declines in household income and spending growth expectations.
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