The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 2.1% annual rate in the second quarter of 2019. That’s pretty near the 2.2% average rate since the recovery from the Great Recession began in 2009:Q3.
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Author Archives: James_Hamilton
Comparing shipping costs and industrial production as measures of world economic activity
That’s the title of my latest contribution at Vox CEPR Policy Portal.
Libra: economics of Facebook’s cryptocurrency
Facebook last week announced plans for Libra, a new global cryptocurrency. The name seems to be a marriage of the words “livre”, the French currency throughout the Middle Ages based on a pound of silver, and “liber,” which is Latin for “free.” Facebook claims that Libra will give the freedom to easily transmit funds across borders to the 1.7 billion adults in the world without access to traditional banks.
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Yield curve inversion
The gap between long-term and short-term interest rates has narrowed sharply over the last year and is now dipping into negative territory. Historically that’s often been a signal that slower economic growth or even an economic recession could lie ahead.

Gap between average interest rate on 10-year Treasury bond and 3-month Treasury bill during the last month of the quarter (1953:Q2 to 2019:Q1) and May 1-24 for 2019:Q2. NBER dates for U.S. recessions shown as shaded regions.
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Tools of monetary policy
I just finished a new paper on current U.S. monetary policy operating procedures. Here’s the abstract:
The Federal Reserve characterizes its current policy decisions in terms of targets for the fed funds rate and the size of its balance sheet. The fed funds rate today is essentially an administered rate that is heavily influenced by regulatory arbitrage and divorced from its traditional role as a signal of liquidity in the banking system. The size of the Fed’s balance sheet is at best a very blunt instrument for influencing interest rates. In this paper I compare the current operating system with the historical U.S. system and the procedures of other central banks. I then examine strategies for transitioning from the current system to one that would give the Federal Reserve better tools with which to achieve its strategic objective of influencing inflation and output.
Here’s a link to a video of my presentation of the paper at a conference at Stanford last week.
U.S. economy keeps growing
The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 3.2% annual rate in the first quarter of 2019. That’s better than the 2.2% average rate since the recovery from the Great Recession began in 2009:Q3, and even a little better than the average 3.1% growth over the last 70 years.
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Measuring unemployment and labor-force participation
The underlying data from which the U.S. unemployment rate and labor-force participation rate are calculated contain numerous inconsistencies– if one of the numbers economists use is correct, another must be wrong. I’ve recently completed a research paper with Hie Joo Ahn that summarizes these inconsistencies and proposes a reconciliation.
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The long expansion continues
The Bureau of Economic Analysis announced yesterday that U.S. real GDP grew at a 2.6% annual rate in the fourth quarter of 2018. That’s below the 3.1% average for the U.S. economy over the last 70 years, but better than the 2.2% average rate since the recovery from the Great Recession began in 2009:Q3.
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Factors in Unemployment Dynamics
That’s the topic of a new FEDS Note that I just published with Hie Joo Ahn. Here’s what we discuss:
The U.S. unemployment rate averaged 8.4% during the first five years of recovery from the Great Recession of 2007-2009, the weakest recovery on record. But as the expansion continued, unemployment continued to decline and by 2018 reached the lowest levels in almost half a century. Why did unemployment remain so high for so long, and what factors contributed to the recent lows?
Perspective on the stock market
Some people are getting a little spooked by recent stock market movements. Here I offer a few thoughts.
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