The headline number for nonfarm payroll employment was decent [1], and although there are worrisome aspects, I think the key take-away is the fact that manufacturing employment is slowing much more than overall. To the extent that manufactured goods proxies for tradables, I think caution is in order with respect to monetary tightening. And yet, I read headlines reporting that the “Fed is on track to raise rates…”[Sparshott/RTE WSJ].
Category Archives: Federal Reserve
The bailouts of 2007-2009
The latest issue of the Journal of Economic Perspectives had a very interesting symposium on the costs and benefits of the various bailouts implemented during the Great Recession.
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Hitting the Fed’s targets
The economy has steadily been moving closer to the Fed’s long-run objectives. But we’re still not there yet.
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World interest rates
Ben Bernanke has joined the blogosphere, offering an invaluable resource for anyone wanting to understand recent economic developments. Last week he had a series of articles examining factors behind the very low real interest rates on long-term bonds.
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Output, Employment and Unemployment: Some Updated and Some New Results
In a previous post, Laurent Ferrara, Valérie Mignon, and I examined the nonlinear relationship between employment and output (based on J.Macro (2014)). Using the most recent data, the level of (establishment) employment now matches the output level. Figure 1 shows the actual level, and the predicted level from a nonlinear error correction model that allows short run dynamics to differ between recession and non-recession regimes.
Fed moves the markets
As widely expected, at Wednesday’s FOMC meeting the Federal Reserve dropped its statement that “the Committee judges that it can be patient in beginning to normalize the stance of monetary policy”, the magic formula that many observers had thought would open the way for a hike in interest rates at the Fed’s June meeting. But the yield on a 10-year U.S. Treasury bond dropped 10 basis points immediately following the FOMC release.
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The Yield Curve and Economic Activity, Again
The New York Times has an article in The Upshot today, which shows the yield curve over time in a nifty map. They also show the topography for yields in Germany and Japan.
Some Implications of the Dollar’s Rise
Currency appreciation will be a drag; this implies a policy of slower monetary tightening is in order
What is the new normal for the real interest rate?
The yield on a 10-year Treasury inflation protected security was negative through much of 2012 and 2013, and remains today below 0.25%. Have we entered a new era in which a real rate near zero is the new normal? That’s the subject of a new paper that I just completed with Ethan Harris, head of global economics research at Bank of America Merrill Lynch, Jan Hatzius chief economist of Goldman Sachs, and Kenneth West professor of economics at the University of Wisconsin, which we presented at the U.S. Monetary Policy Forum annual conference in New York on Friday.
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Audit the Fed
Senator Rand Paul (R-KY) has gathered significant bipartisan support for the Federal Reserve Transparency Act of 2015, his proposal for more audits of the Fed. I’ve been trying to understand why any sensible person would think this is a good idea.
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