The Persistent Effects of the Temporary Tightening in Financial Conditions
Market-based measures of uncertainty, a common proxy for broader financial conditions, rose sharply in the fourth quarter of 2018 but have retreated to more normal levels over the last few months. While the recent increase in uncertainty was brief, the temporary tightening in financial conditions will likely have longer-lasting effects on economic activity and prices.
Introducing the KC Fed Economic Bulletin
The Macro Bulletin has a new name and focus. The publication's editor-in-chief, Willem Van Zandweghe, introduces the KC Fed Economic Bulletin and discusses the publication?s expanded scope
The Outlook for Farmland Values amid Higher Interest Rates
In 2018, the spread between returns to farmland owners and benchmark interest rates narrowed to its lowest level in more than a decade in the Tenth Federal Reserve District. At the same time, farmland sales increased in some states for the first time in several years. Together, the reduced spread and indications of increased sales in some regions suggest the potential for lower farmland values moving forward.
Drilling Productivity in the United States: What Lies Beneath
We construct new measures of drilling productivity and find that productivity increased sixfold from the mid-2000s to early 2017. Gains in below-ground efficiency?the number of barrels produced per foot of drilled wells?have largely driven this increase in overall productivity. The large oil price declines during the Great Recession and from 2014 to 2016 also played a role. However, further large increases in productivity are unlikely absent additional improvements in technology or a subsequent large downturn in oil prices.
Assessing the Risk of Extreme Unemployment Outcomes
Although the unemployment rate is at a historically low level, many policymakers are nevertheless watching projections for the future unemployment rate closely to evaluate the risk of extreme outcomes. We assess the probabilities of extreme outcomes in the near and medium term and find that the risk of unexpectedly high unemployment three years in the future has declined from its Great Recession peak and remained low over the past three years.
Women Are Driving the Recent Recovery in Prime-Age Labor Force Participation
The labor force participation rate of prime-age individuals (age 25 to 54) in the United States declined dramatically during and after the Great Recession. While the rate remains below its pre-recession level, it has been increasing steadily since 2015. We examine how different demographic groups have contributed to this rebound and find that college-educated women have made the largest contribution to the recent recovery in the prime-age labor force participation rate.
Coronavirus Dampens China’s First-Quarter GDP
The novel coronavirus spread in China long before other countries, making China a potential early signal of the virus’s economic effects. Using a range of statistical models, we estimate that the coronavirus outbreak may have reduced China’s real GDP by an annualized rate of 32 percent, leading year-over-year growth to decline from 6 percent in 2019:Q4 to −3.8 percent in 2020:Q1.
Inflation Expectations Limit the Power of Negative Interest Rates
Both the federal funds rate and longer-run yields have dropped to near zero, renewing discussion of negative interest rate policy. Although negative rates would allow for additional cuts in the United States, negative policy rates in line with what other countries have implemented would not be able to achieve the nominal rate reduction of previous easing cycles. Moreover, inflation expectations remained flat or fell after negative rates were introduced in most countries, limiting the expansionary power of these additional rate cuts.
Safe-Haven Performance in the Age of Bitcoin
In past periods of financial stress, investors seeking “safe havens” have shifted toward government bonds and gold. In recent years, some have questioned whether Bitcoin could also serve as a safe haven. We compare the behavior of government bonds, gold, and Bitcoin from January 1995 through February 2020 and find that the 10-year Treasury note behaved like a safe haven consistently, gold occasionally, and Bitcoin never. During March 2020, however, none of the assets can be classified with confidence as a safe haven.
Women Take a Bigger Hit in the First Wave of Job Losses due to COVID-19
The temporary shutdown orders and social distancing measures taken to fight the COVID-19 outbreak have caused substantial job losses in the United States. Women, especially those without a college degree, have taken a bigger hit in the first wave of job losses. This imbalance could lead to prolonged damage to women’s employment and labor market attachment if job losses deepen and persist in the coming months.