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Journal Article
A nation of spendthrifts? An analysis of trends in personal and gross saving
The steep drop in the U.S. personal saving rate over the last decade has fueled speculation that Americans are spending recklessly. But alternative measures of personal saving show that households are actually setting aside a larger share of their resources than the official figures suggest. In addition, government saving has risen markedly, leading to an increase in overall domestic saving that has helped finance a surge in U.S. investment.
Discussion Paper
Compensation Growth and Slack in the Current Economic Environment
Following a significant slowing during the recent recession, growth in various labor compensation measures has stabilized during the past two to three years. This stabilization is puzzling because it’s widely held that a significant amount of slack remains in the economy. Accordingly, this large amount of slack should result in a further slowing in compensation (wage) growth. In this post, we show that there’s a very mild trade-off between compensation growth and resource slack, even though slack is sizable. Consequently, the observation that there’s slow but steady growth in labor ...
Report
Effects of household creditworthiness on mortgage refinancings
Using a unique loan level data set that links individual household credit ratings with property and loan characteristics, we test the extent to which homeowners' equity and credit ratings affect the likelihood that mortgage loans will be refinanced as interest rates fall. The logit model estimates strongly support the importance of both the equity and credit ratings affect the likelihood that mortgage loans will be refinanced as interest rates fall. The logit model estimates strongly support the importance of both the equity and credit variable. These results are interesting both from the ...
Discussion Paper
The Debt Ceiling as a “Fiscal Rule”
A few months ago, the federal government was once again confronted with the need to raise the statutory limit on the amount of debt issued by the Treasury. As in the past, the protracted stalemate and associated uncertainty led to calls to eliminate the debt ceiling. In this post, I make the counterargument. Likely because of its straightforwardness, the debt ceiling has been an effective “fiscal rule.” The reduction of the federal deficit from the mid-1980s to the mid-1990s was due in large part to a series of budget compromises, all of which were accompanied by the need to raise the ...
Discussion Paper
First Impressions Can Be Misleading: Revisions to House Price Changes
An assiduous follower of the national house price charts that the New York Fed maintains on its web page may have noticed that we appear to be rewriting history as we update the charts every month. For example, last month we reported that the median twelve-month house price change across all counties for December 2012 was 3.68 percent. However, this month, we indicate that this same median change for December 2012 was instead 3.45 percent. Why the change? Was the earlier reported number a mistake that we simply corrected this month? If not, what explains the revision to the initial report?
Discussion Paper
Distressed Residential Real Estate: Dimensions, Impacts, and Remedies
On October 5, 2012, the Federal Reserve Bank of New York and the Rockefeller Institute of Government co-hosted the conference ?Distressed Residential Real Estate: Dimensions, Impacts, and Remedies.? This post not only makes available a compendium of the findings of the conference, but also updates and extends some of the analysis presented. In particular, we look across states to assess the differential impacts of judicial and non-judicial processes to resolve the foreclosure crisis. Controlling for the peak percentage of loans that were seriously delinquent, we find that non-judicial states ...
Discussion Paper
The Long and Short of It: The Impact of Unemployment Duration on Compensation Growth
How tight is the labor market? The unemployment rate is down substantially from its October 2009 peak, but two-thirds of the decline is due to people dropping out of the labor force. In addition, an unusually large share of the unemployed has been out of work for twenty-seven weeks or more—the long-duration unemployed. These statistics suggest that there remains a great deal of slack in U.S. labor markets, which should be putting downward pressure on labor compensation. Instead, compensation growth has moved modestly higher since 2009. A potential explanation is that the long-duration ...
Journal Article
Core CPI: excluding food, energy ... and used cars?
Although used car prices represent only a small portion of the consumer price index, their extreme volatility has had a major impact on the measured inflation rate. To explain this relationship, the authors describe how used cars are treated in the CPI and explore what might cause the wide swings in used car prices.
Discussion Paper
Rebalancing the Economy in Response to Fiscal Consolidation
According to the Congressional Budget Office (CBO), under current policies the ratio of federal debt held by the public over gross domestic product?the debt-to-GDP ratio?will rise rapidly over the next decade. This unsustainable fiscal position presents the nation with two significant challenges. First, it requires fiscal consolidation that will, at a minimum, cause the ratio to level off in the not-too-distant future. Second, fiscal consolidation has to occur in a way that will keep the U.S. economy operating at as close to full employment as possible?a process known as rebalancing. While ...