Reports

“Our findings for headline PCE inflation … suggest that its persistence has fallen slightly from peak but remains near its 20-year high. The most recent data available show that, in the latest quarter of data (the first quarter of 2023), the persistence coefficient dropped from a post-COVID-19 high of 0.71 in the second quarter of…

“We document the prevalence of promotional pricing of credit card debt in the U.S. and develop an analytic framework to study how interest rates on multiperiod credit line contracts should be set when debt is unsecured and defaultable. We show that according to the basic theory of unsecured credit—suitably extended to allow for promotions—interest rates…

“Despite higher interest rates and inflation, consumption demand has remained strong. Households have been making up for pandemic-related privations, largely financed by excess savings that resulted from the fiscal assistance provided during the pandemic. Even higher interest rates may put further downward pressure on consumption demand (by penalizing credit and incentivizing savings). However, there is…

“A summary of the developments in the four broad categories of vulnerabilities since the last report is as follows:” “1. Asset valuations. Yields on Treasury securities declined in March amid heightened financial market volatility. Measures of equity prices relative to expected earnings were volatile over the period but remained above their historical median, while risk…

“The pandemic has shifted the distribution of inflation to the right. That is, during the COVID-19 period, a larger share of consumption expenditures were on products that experienced higher inflation rates than in the pre-pandemic years. The current high inflation episode is a widespread phenomenon and not the result of a few outliers.” “The distribution…

“U.S. households accumulated excess savings at an unprecedented speed following the onset of the pandemic recession, relative to other post-1970 recessions. Despite recent rapid drawdowns of those savings, a large amount—around $500 billion—remains in the overall economy.” “A great deal of uncertainty surrounds precisely how the savings are distributed across household income levels and in…

“We find that price changes in the housing sector are the main driver of regional differences in inflation in the two time periods we investigate: January 2002–January 2023 and January 2019–January 2023. Although residents in different areas do have different purchasing patterns, we find that this plays only a small role in discrepancies in regional…

“The New York Fed’s Treasury Market Practices Group (TMPG) recently released a consultative white paper on clearing and settlement processes for secured financing trades (SFT) involving U.S. Treasury securities. The paper describes the many ways that Treasury SFTs are cleared and settled— information that may not be readily available to all market participants. It also identifies potential risk and…

“International trade can be critical for economic growth and development, connecting countries and businesses across the world.1 While trade barriers have consistently decreased in recent decades, leading to the unprecedented growth of trade linkages, significant barriers remain across countries: The US is no exception. Barriers hinder the free flow of goods and services between countries…

“This paper examines how the election of 1912 changed the makeup of Congress and led to the Federal Reserve Act. The decision of Theodore Roosevelt and other Progressives to run as third party candidates split the Republican Party and enabled Democrats to capture the White House and Congress. We show that the election produced a…