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89 posts on "Pandemic"

April 07, 2021

An Update on How Households Are Using Stimulus Checks



An Update on How Households Are Using Stimulus Checks

In October, we reported evidence on how households used their first economic impact payments, which they started to receive in mid-April 2020 as part of the CARES Act, and how they expected to use a second stimulus payment. In this post, we exploit new survey data to examine how households used the second round of stimulus checks, issued starting at the end of December 2020 as part of the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, and we investigate how they plan to use the third round authorized in March under the American Rescue Plan Act. We find remarkable stability in how stimulus checks are used over the three rounds, with a slight decline in the share dedicated to consumption and a proportional increase in the share saved. The average share of stimulus payments that households set aside for consumption—what economists call the marginal propensity to consume (MPC)—declined from 29 percent in the first round to 26 percent in the second and to 25 percent in the third.

Continue reading "An Update on How Households Are Using Stimulus Checks" »

Posted by Blog Author at 7:00 AM in Demographics, Household Finance, Pandemic | Permalink | Comments (0)

April 05, 2021

“Excess Savings” Are Not Excessive



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How will the U.S. economy emerge from the ongoing COVID-19 pandemic? Will it struggle to return to prior levels of employment and activity, or will it come roaring back as soon as vaccinations are widespread and Americans feel comfortable travelling and eating out? Part of the answer to these questions hinges on what will happen to the large amount of “excess savings” that U.S. households have accumulated since last March. According to most estimates, these savings are around $1.6 trillion and counting. Some economists have expressed the concern that, if a considerable fraction of these accumulated funds is spent as soon as the economy re-opens, the ensuing rush of demand might be destabilizing. This post argues that these savings are not that excessive, when considered against the backdrop of the unprecedented government interventions adopted over the past year in support of households and that they are unlikely to generate a surge in demand post-pandemic.

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March 31, 2021

The New York Fed DSGE Model Forecast—March 2021



This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. The model projects solid growth over the next two years, with core inflation slowly rising toward 2 percent. Uncertainty for both output and inflation forecasts remains large.

Continue reading "The New York Fed DSGE Model Forecast—March 2021" »

Posted by Blog Author at 9:00 AM in Forecasting, Inflation, Macroecon, Pandemic | Permalink | Comments (0)

March 25, 2021

Reasonable Seasonals? Seasonal Echoes in Economic Data after COVID-19



Reasonable Seasonals? Seasonal Echoes in Economic Data after COVID-190

Seasonal adjustment is a key statistical procedure underlying the creation of many economic series. Large economic shocks, such as the 2007-09 downturn, can generate lasting seasonal echoes in subsequent data. In this Liberty Street Economics post, we discuss the prospects for these echo effects after last year’s sharp economic contraction by focusing on the payroll employment series published by the U.S. Bureau of Labor Statistics (BLS). We note that seasonal echoes may lead the official numbers to overstate actual changes in payroll employment modestly between March and July of this year after which distortions flip the other way.

Continue reading "Reasonable Seasonals? Seasonal Echoes in Economic Data after COVID-19" »

Posted by Blog Author at 7:00 AM in Economic History, Employment, Pandemic | Permalink | Comments (0)

March 24, 2021

Did Dealers Fail to Make Markets during the Pandemic?



In March 2020, as the COVID-19 pandemic disrupted a range of financial markets, the ability of dealers to maintain liquid conditions in these markets was questioned. Reflecting these concerns, authorities took numerous steps, including providing regulatory relief to dealers. In this post, we examine liquidity provision by dealers in several financial markets during the pandemic: how much was provided, possible causes of any shortfalls, and the effects of the Federal Reserve’s actions.

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Posted by Blog Author at 7:00 AM in Dealers, Financial Markets, Liquidity, Pandemic, Treasury | Permalink | Comments (0)

March 19, 2021

Looking Back at 10 Years of Liberty Street Economics



Looking Back at 10 Years of Liberty Street Economics

This month the Liberty Street Economics blog is celebrating its tenth anniversary. We first welcomed readers to Liberty Street on March 21, 2011 and since then our annual page views have grown from just over 260,000 to more than 3.3 million.

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Posted by Blog Author at 7:00 AM in Federal Reserve, Pandemic | Permalink | Comments (0)

March 01, 2021

Will Capital Flows through Global Banks Support Economic Recovery?



While policymakers around the world have aggressively and swiftly reacted to the common negative economic shock from COVID-19, the timing and forms of policy responses in the economic recovery stage may be more geographically differentiated. The range in policy responses, along with variations in the financial health of banks, likely will affect the flow of international credit through global banks. In this post, we ask whether, based on historical precedent, global banks are likely to provide additional support to the economic recovery in the locations they serve.

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Posted by Blog Author at 7:00 AM in Bank Capital, Banks, Credit, Financial Institutions, Pandemic | Permalink | Comments (1)

February 17, 2021

Mortgage Rates Decline and (Prime) Households Take Advantage



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Today, the New York Fed’s Center for Microeconomic Data reported that household debt balances increased by $206 billion in the fourth quarter of 2020, marking a $414 billion increase since the end of 2019. But the COVID pandemic and ensuing recession have marked an end to the dynamics in household borrowing that have characterized the expansion since the Great Recession, which included robust growth in auto and student loans, while mortgage and credit card balances grew more slowly. As the pandemic took hold, these dynamics were altered. One shift in 2020 was a larger bump up in mortgage balances. Mortgage balances grew by $182 billion, the biggest quarterly uptick since 2007, boosted by historically high volumes of originations. Here, we take a close look at the composition of mortgage originations, which neared $1.2 trillion in the fourth quarter of 2020, the highest single-quarter volume seen since our series begins in 2000. The Quarterly Report on Household Debt and Credit and this analysis are based on the New York Fed’s Consumer Credit Panel, which is itself based on anonymized Equifax credit data.

Continue reading "Mortgage Rates Decline and (Prime) Households Take Advantage" »

February 11, 2021

Did Subsidies to Too-Big-To-Fail Banks Increase during the COVID-19 Pandemic?



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Once a bank grows beyond a certain size or becomes too complex and interconnected, investors often perceive that it is “too big to fail” (TBTF), meaning that if the bank were to become distressed, the government would likely bail it out. In a recent post, I showed that the implicit funding subsidies to systemically important banks (SIBs) declined, on average, after a set of reforms for eliminating TBTF perceptions was implemented. In this post, I discuss whether these subsidies increased again during the COVID-19 pandemic and, if so, whether the increase accrued to large firms in all sectors of the economy.

Continue reading "Did Subsidies to Too-Big-To-Fail Banks Increase during the COVID-19 Pandemic?" »

Posted by Blog Author at 7:00 AM in Banks, Financial Institutions, Pandemic, Systemic Risk | Permalink | Comments (2)

February 09, 2021

Black and White Differences in the Labor Market Recovery from COVID-19



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The ongoing COVID-19 pandemic and the various measures put in place to contain it caused a rapid deterioration in labor market conditions for many workers and plunged the nation into recession. The unemployment rate increased dramatically during the COVID recession, rising from 3.5 percent in February to 14.8 percent in April, accompanied by an almost three percentage point decline in labor force participation. While the subsequent labor market recovery in the aggregate has exceeded even some of the most optimistic scenarios put forth soon after this dramatic rise, the recovery has been markedly weaker for the Black population. In this post, we document several striking differences in labor market outcomes by race and use Current Population Survey (CPS) data to better understand them.

Continue reading "Black and White Differences in the Labor Market Recovery from COVID-19" »

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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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