Liberty Street Economics

Liberty Street Economics

Look for our next post on September 19.

March 1, 2017

Just Released: The Regional Economy Is off to a Good Start in 2017

Jaison R. Abel and Jason Bram

The New York Fed’s latest Beige Book report, released this afternoon, shows the regional economy gathering steam in early 2017. The report, based on information collected through February 17, suggests the regional economy, which had been essentially flat for the second half of 2016, saw growth pick up to a modest pace at the start of the year. Manufacturers, in particular, note a sharp rise in activity, as do businesses in wholesale distribution and transportation. Consequently, the market for industrial and warehouse space was pretty robust in the opening weeks of 2017. Meanwhile, businesses in most service industries continue to report steady to moderately expanding activity. And even though consumer spending has remained fairly subdued, consumer confidence climbed to highs not seen in more than a decade. All in all, it appears the regional economy has gotten off to a good start in 2017.

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Posted at 2:15 pm in Regional Analysis | Permalink

When Debts Compete, Which Wins?

Jacob Conway and Matthew Plosser

When faced with financial hardship, borrowers might choose to repay some debts while falling behind on others—potentially going into default.

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Posted at 7:00 am in Credit, Household Finance | Permalink | Comments (8)
February 27, 2017

China’s Continuing Credit Boom

Jeff Dawson, Alex Etra, and Aaron Rosenblum

Debt in China has increased dramatically in recent years, accounting for roughly one-half of all new credit created globally since 2005.

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Posted at 7:00 am in Financial Institutions | Permalink | Comments (2)
February 24, 2017

Why the Proposed Border Tax Adjustment Is Unlikely to Promote U.S. Exports

Mary Amiti, Oleg Itskhoki, and Jozef Konings

There has been much debate about the proposed border tax adjustment, in which U.S. firms would pay a 20 percent tax on all imported inputs and be exempt from paying taxes on export revenue. The view among many economists, including proponents of the plan, is that the U.S. dollar would appreciate by the full amount of the tax and thus completely offset any relative price effects. In this post, we consider the implications of an alternative scenario where the U.S. dollar only appreciates part of the way. This could happen, for example, as a result of the uncertainty surrounding the policy response from other countries. As the proposed tax is effectively equivalent to an import tax combined with an export subsidy, it is possible that there could be retaliation from other countries in the form of taxes on U.S. exports or litigation with the World Trade Organization. If the U.S. dollar does not appreciate by the full amount of the tax, we argue that the effect of the tax will be to lower both U.S. imports and exports in the short to medium run.

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Posted at 7:00 am in International Economics | Permalink | Comments (2)
February 22, 2017

Getting More from the Senior Loan Officer Opinion Survey?

Donald P. Morgan and John Sporn

Every quarter, senior loan officers at selected large banks around the United States are asked by Fed economists how their standards for approving business loans changed compared with the quarter before. Of all the questions in the Senior Loan Officer Opinion Survey (SLOOS), responses to that question about standards usually attract the most attention from the financial press and researchers. Relatively ignored by comparison are loan officers’ reports on how they changed interest spreads, collateral requirements, and other terms on loans they are willing to approve. Lenders can clearly expand or contract credit by altering those terms even without changing their standards for approving loans, so we investigate whether the reports on loan terms collected in the SLOOS are also informative.

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Posted at 7:00 am in Banks, Financial Institutions | Permalink
February 17, 2017

A Close Look at the Decline of Homeownership

Andrew F. Haughwout, Richard Peach, and Joseph Tracy

The homeownership rate—the percentage of households that own rather than rent the homes that they live in—has fallen sharply since mid-2005. In fact, in the second quarter of 2016 the homeownership rate fell to 62.9 percent, its lowest level since 1965. In this blog post, we look at underlying demographic trends to gain a deeper understanding of the large increase in the homeownership rate from 1995 to 2005 and the subsequent large decline. Although there is reason to believe that the homeownership rate may begin to rise again in the not-too-distant future, it is unlikely to fully recover to its previous peak levels. This is a disconcerting finding for those who view homeownership as an integral part of the American Dream and a key component of income security during retirement.

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Posted at 7:02 am in Demographics, Housing | Permalink | Comments (2)

The FRBNY DSGE Model Forecast—February 2017

Marco Del Negro, Marc Giannoni, Abhi Gupta, Pearl Li, and Erica Moszkowski

This post presents the latest update of the economic forecasts generated by the Federal Reserve Bank of New York’s (FRBNY) dynamic stochastic general equilibrium (DSGE) model. We introduced this model in a series of blog posts in September 2014 and published forecasts twice a year thereafter. With this post, we move to a quarterly release schedule, and highlight how our forecasts have changed since November 2016.
Readers should keep in mind that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and the variables discussed here, see our DSGE Model Q & A.

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Posted at 7:00 am in DSGE, Forecasting, Macroeconomics, Monetary Policy | Permalink
February 16, 2017

Just Released: Total Household Debt Nears 2008 Peak but Debt Picture Looks Much Different

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

The latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data showed a substantial increase in aggregate household debt balances in the fourth quarter of 2016 and for the year as a whole. As of December 31, 2016, total household debt stood at $12.58 trillion, an increase of $226 billion (or 1.8 percent) from the third quarter of 2016. Total household debt is now just 0.8 percent ($100 billion) below its third quarter 2008 peak of $12.68 trillion, and 12.8 percent above the second quarter 2013 trough. But debt looks very different in 2016 than it did the last time we saw this level of indebtedness.

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Posted at 11:10 am in Household Finance | Permalink | Comments (2)

The Homeownership Gap Is Finally Closing

Andrew F. Haughwout, Richard Peach, and Joseph Tracy

The homeownership rate peaked at 69 percent in late 2004. By the summer of 2016, it had dropped below 63 percent—exactly where it was when the government started reporting these data back in 1965.

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Posted at 7:00 am in Household Finance, Housing, Inequality | Permalink
February 15, 2017

Houses as ATMs No Longer

Andreas Fuster, Eilidh Geddes, and Andrew F. Haughwout

Housing equity is the primary form of collateral that households use for borrowing. This makes it a potentially important source of consumption funding, especially for younger households. In a previous post we showed that owner’s equity in residential real estate has finally, thanks to increasing home prices, rebounded to and essentially re-attained its 2005 peak level. Yet in spite of a gain of more than $7 trillion in housing equity since 2012, so far homeowners haven’t been tapping this equity at anything like the pace we witnessed during the housing boom that ended in 2006. In this post, we analyze the changes in equity withdrawal.

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Posted at 7:00 am in Credit, Household Finance, Housing | Permalink
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Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.

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