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Journal Article
How Stable Is China’s Growth? Shedding Light on Sparse Data
Policymakers, academics, and market participants have raised many questions in recent years over the accuracy of China’s official economic growth rates, both in terms of levels and volatility. This issue is of considerable importance for policymakers because fluctuations in China’s economic activity can have significant impacts on growth, employment, inflation, and other policy objectives, given China’s large shares of world output, trade, and commodity demand, and its rapidly growing role in global financial markets. This study addresses the question of growth volatility using a set of ...
Journal Article
Understanding the Linkages between Climate Change and Inequality in the United States
The authors conduct a review of the existing academic literature to outline possible links between climate change and inequality in the United States. First, researchers have shown that the impact of both physical and transition risks may be uneven across location, income, race, and age. This is driven by a region’s geography as well as its ability to adapt. Second, measures that individuals and governments take to adapt to climate change and to transition to lower emissions risk increasing inequality. Finally, while federal aid and insurance coverage can mitigate the direct impact of ...
Discussion Paper
Disability in the Labor Market: Employment and Participation
Among people in prime working age (25-54), around 7 percent have a disability of some kind. In this set of companion posts, we will examine how prime-aged workers with disabilities have fared in the labor market compared to the year prior to the pandemic. In this first post, we will show that people with disabilities are far less likely to be employed than people without disabilities, with both lower labor force participation and higher unemployment playing a role. We will also show that although employment rates of people with disabilities are very low, they have risen rapidly during the ...
Discussion Paper
Disability in the Labor Market: Earnings
In our previous post we learned that, in general, people with disabilities participate in the labor market at significantly lower rates, and that they are much more likely to be unemployed. Despite these patterns, we found that the labor force participation of workers with disabilities rose noticeably following the pandemic. A relevant question then is how earnings of workers with disabilities compare with workers without disabilities. In this companion post we investigate differences in weekly earnings for workers with and without disabilities. We find that workers with disabilities earn ...
Discussion Paper
A New Dataset for Consumer Spending in the New York Fed EHIs
We are enhancing our set of Economic Heterogeneity Indicators (EHIs) by adding a set of metrics on consumer spending with data presented by income, education, race and ethnicity, age, and urban status. The data will help track the evolution of aggregate behavior by analyzing the spending of specific groups in a more timely manner than is possible using public surveys.
Discussion Paper
Tracking the K‑Shaped Economy: Who’s Driving Spending?
Aggregate real consumer spending has risen solidly since 2023. However, it is less clear how widely shared this improvement has been across all segments of society. This is important because systematic heterogeneity may mask the dependence of aggregate growth on a relatively small group of households and thus conceal macroeconomic risks. In this post, we use consumer spending data recently added to the Economic Heterogeneity Indicators (EHIs) and find that retail spending growth has been driven by high-income households—those earning more than $125,000 per year. In the popular press, the ...
Discussion Paper
Explaining the K‑Shaped Economy: What’s Behind the Divide?
In our companion post, we used a new module of our Economic Heterogeneity Indicators (EHIs) to shed light on how recent retail spending growth has been driven by high-income households. This fact is consistent with the popular press’s idea of a “K-shaped economy” in which higher-income households experience faster growth in spending than lower-income households. In this post, we dive deeper into the reasons behind this divergence by analyzing for which goods this trend holds true and ask whether it can be explained by changes in wages, inflation, or wealth. We find that, since 2023, ...
Discussion Paper
Same Shock, Different Roads? A K‑Shaped Pattern at the Pump
In March 2026, energy prices surged to a four-year high, driven by the Iranian closure of the Strait of Hormuz amid the ongoing conflict in the Middle East. In this Liberty Street Economics post, we use the new consumer spending module of the Economic Heterogeneity Indicators to analyze recent changes in nominal and real gas consumption across different income groups. We find that households had very different experiences with gasoline spending: in March, high-income households increased nominal spending the most and kept real consumption essentially unchanged, while low-income households ...
Discussion Paper
The Regional Side of the Story: K‑Shaped Pattern in Region, Wider Gap in Gas Spending
In this post, we use the inaugural release of our regional consumer spending indicators to ask whether these patterns hold for a significant portion of the Second District, and how regional spending patterns by income have been similar to or different from the national patterns we documented earlier. We find similar K‑shaped patterns in both retail and gas spending in our region as we do in the nation, with the K‑shaped pattern in gasoline in response to the recent gas price shock being more pronounced in the region.
Discussion Paper
A Discussion of Thomas Piketty's Capital in the Twenty-First Century: By How Much Is r Greater than g?
Thomas Piketty’s 2014 book Capital in the Twenty-First Century may have been a greater sensation upon publication than Karl Marx’s nineteenth-century Das Kapital. It made the New York Times bestseller list, generated myriad reviews and responses from economists at top institutions, and was the subject of a standing-room-only session at the recent American Economic Association annual meeting. In Capital, Piketty argues that wealth inequality is set to rise from its relatively low levels in the 1950s through the 1970s to the very high levels it once occupied at the dawn of the Industrial ...