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Newsletter
Estimating the trend in employment growth
For the unemployment rate to decline, the U.S. economy needs to generate above-trend job growth. We currently estimate trend employment growth to be around 80,000 jobs per month, and we expect it to decline over the remainder of the decade, due largely to changing labor force demographics and slower population growth.
Newsletter
The Chicago Fed National Activity Index and business cycles
This article discusses how the Chicago Fed National Activity Index?a monthly index designed to gauge economic activity and related inflationary pressures?can be used as an indicator of business cycle turning points.
Newsletter
Tracking Detroit’s Economic Recovery After Bankruptcy with a New Index
This article presents evidence that Detroit?s economy is doing noticeably better than before the city filed for bankruptcy in July 2013. In order to track the city?s economic recovery following its bankruptcy, we use a new index that quantifies Detroit?s overall economic performance from 1998 to the present.
Newsletter
Is There Still Slack in the Labor Market?
Based on recent population and labor force projections, we estimate that payroll employment remained about one million jobs below its trend as of April 2016. Given an average pace of roughly 200,000 jobs added per month so far this year, this implies that labor market slack is likely to persist until late 2016. Considerable uncertainty surrounds this estimate, however, especially with respect to labor force trends. An alternative calculation that assumes a steeper decline in trend labor force participation driven by shifting demographics suggests that slack could persist for up to an ...
Newsletter
How does labor adjustment in this recession compare with the past?
The authors examine how firms are adjusting their work force during the current recession in comparison with other recessions over the past 40 years.
Working Paper
Federal Reserve policies and financial market conditions during the crisis
During the recent financial crisis, the Federal Reserve implemented a series of extraordinary and unconventional policies to alleviate the impact of the crisis on financial markets and the economy. In this paper, we examine the effects of these policies on broad financial market conditions, explicitly taking into account that policy was endogenously determined in response to prevailing financial market and economic conditions. We find that the Fed was more likely to initiate or expand new programs when financial market conditions were tighter than usual and economic conditions deteriorating. ...
Working Paper
Predicting Benchmarked US State Employment Data in Realtime
US payroll employment data come from a survey of nonfarm business establishments and are therefore subject to revisions. While the revisions are generally small at the national level, they can be large enough at the state level to substantially alter assessments of current economic conditions. Researchers and policymakers must therefore exercise caution in interpreting state employment data until they are "benchmarked" against administrative data on the universe of workers some 5 to 16 months after the reference period. This paper develops and tests a state space model that predicts ...
Newsletter
Using Private Sector “Big Data” as an Economic Indicator: The Case of Construction Spending
This Chicago Fed Letter provides an account of our collaboration with the construction contracts and payment management firm Textura to use their data to evaluate the state of U.S. construction spending. We show that new construction projects budgeted by Textura?s clients are a leading indicator for total U.S. construction spending and provide information beyond other already publicly available data.
Working Paper
Forecasting Economic Activity with Mixed Frequency Bayesian VARs
Mixed frequency Bayesian vector autoregressions (MF-BVARs) allow forecasters to incorporate a large number of mixed frequency indicators into forecasts of economic activity. This paper evaluates the forecast performance of MF-BVARs relative to surveys of professional forecasters and investigates the influence of certain specification choices on this performance. We leverage a novel real-time dataset to conduct an out-of-sample forecasting exercise for U.S. real gross domestic product (GDP). MF-BVARs are shown to provide an attractive alternative to surveys of professional forecasters for ...
Journal Article
Nowcasting Using the Chicago Fed National Activity Index
The authors present an alternative version of the Chicago Fed National Activity Index (CFNAI), which is constructed using a methodology that allows for a more robust treatment of the underlying data series than its traditional methodology. This alternative CFNAI produces superior predictions of real gross domestic product growth for the current quarter (nowcasts) while correlating more closely with U.S. recessions than the traditional index.