The region’s services sector continues to experience solid growth, according to the New York Fed’s February Business Leaders Survey. The survey’s business climate index reached a record high, and the activity, employment, and capital spending indexes were all fairly steady at high levels, indicating continued expansion. Firms were increasingly optimistic about future business conditions, and strong gains in employment were expected in the months ahead. Notably, price pressures picked up, with the prices paid index advancing to a level not seen since 2014, and the prices received measure reaching its highest mark in six years.
February 16, 2018
Just Released: Very Favorable Business Climate Indicated in February Business Leaders Survey
Posted at 8:45 am in Regional Analysis | Permalink
February 14, 2018
Landing a Jumbo Is Getting Easier
Andreas Fuster, James Vickery, and Akhtar Shah The United States relies heavily on securitization for funding residential mortgages. But for institutional reasons, large mortgages, or “jumbos,” are more difficult to securitize, and are instead usually held as whole loans by banks. How does this structure affect the pricing and availability of jumbo mortgages? In this […]
February 13, 2018
Just Released: Great Recession’s Impact Lingers in Hardest‑Hit Regions
The New York Fed’s Center for Microeconomic Data today released our Quarterly Report on Household Debt and Credit for the fourth quarter of 2017. Along with this report, we have posted an update of state-level data on balances and delinquencies for 2017. Overall aggregate debt balances increased again, with growth in all types of balances except for home equity lines of credit. In our post on the first quarter of 2017 we reported that overall balances had surpassed their peak set in the third quarter of 2008—the result of a slow but steady climb from several years of sharp deleveraging during the Great Recession.
Posted at 11:00 am in Credit, Household Finance, Housing, Recession, Regional Analysis | Permalink | Comments (2)
February 12, 2018
Does More “Skin in the Game” Mitigate Bank Risk‑Taking?
It is widely said that a lack of “skin in the game” would distort lenders’ incentives and cause a moral hazard problem, that is, excessive risk-taking. If so, does more skin in the game—in the form of extended liability—reduce bankers’ risk-taking? In order to examine this question, we investigate historical data prior to the Great Depression, when bank owners’ liability for losses in the event of bank failure differed by state and primary regulator. This post describes our preliminary findings.
Posted at 7:00 am in Banks, Credit, Economic History, Financial Institutions, Regulation, Systemic Risk | Permalink | Comments (3)
February 9, 2018
Hey, Economist! What Do Cryptocurrencies Have to Do with Trust?
Bitcoin and other “cryptocurrencies” have been much in the news lately, in part because of their wild gyrations in value. Michael Lee and Antoine Martin, economists in the New York Fed’s Money and Payment Studies function, have been following cryptocurrencies and agreed to answer some questions about digital money.
Posted at 7:00 am in Banks, Central Bank, Cryptocurrencies, Financial Markets, Hey, Economist!, Monetary Policy | Permalink
February 7, 2018
A DSGE Perspective on Safety, Liquidity, and Low Interest Rates
Marco Del Negro, Domenico Giannone, Marc Giannoni, Abhi Gupta, Pearl Li, and Andrea Tambalotti Third of three posts The preceding two posts in this series documented that interest rates on safe and liquid assets, such as U.S. Treasury securities, have declined significantly in the past twenty years. Of course, short-term interest rates in the United […]
February 6, 2018
A Time‑Series Perspective on Safety, Liquidity, and Low Interest Rates
Brandyn Bok, Marco Del Negro, Domenico Giannone, Marc Giannoni, and Andrea Tambalotti Second of three posts The previous post in this series discussed several possible explanations for the trend decline in U.S. real interest rates since the late 1990s. We noted that while interest rates have generally come down over the past two decades, this […]
February 5, 2018
A New Perspective on Low Interest Rates
Marco Del Negro, Domenico Giannone, Marc Giannoni, and Andrea Tambalotti First of three posts Interest rates in the United States have remained at historically low levels for many years. This series of posts explores the forces behind the persistence of low rates. We briefly discuss some of the explanations advanced in the academic literature, and […]
Posted at 7:00 am in Liquidity, Macroeconomics, Monetary Policy, Treasury | Permalink | Comments (2)
February 2, 2018
New Report Assesses Structural Changes in Global Banking
The Committee on the Global Financial System, made up of senior officials from central banks around the world and chaired by New York Fed President William Dudley, recently released a report on “Structural Changes in Banking after the Crisis.” The report includes findings from a wide-ranging study documenting the significant structural adjustments in banking systems around the world in response to regulatory, technological, and market changes after the crisis, while also assessing their implications for financial stability, credit provision, and capital markets activity. It includes a new banking database spanning over twenty-one countries from 2000 to 2016 that could serve as a valuable reference for further analysis. Overall, the study concludes that the changed regulatory and market environment since the crisis has led banks to alter their business models and balance sheets in ways that make them more resilient but also less profitable, while continuing their role as intermediaries providing financial services to the real economy.
Posted at 7:00 am in Banks, Credit, Financial Institutions, Financial Intermediation, Regulation, Systemic Risk | Permalink | Comments (1)
January 17, 2018
Did Import Competition Boost Household Debt Demand?
In the years preceding the Great Recession, the United States experienced a dramatic rise in household debt and an unprecedented increase in import competition. In a recent staff report, we outline a link between these two seemingly unrelated phenomena. We argue that the displacement of workers exposed to import competition fueled their demand for mortgage credit, which left many households more vulnerable to the eventual downturn in the housing market.
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