A confluence of events over the past four decades has created an opportunity to rethink how and where the government and private sector invest. Long-neglected investment needs have resulted in an antiquated American infrastructure that is not aligned with the needs of private industry, the public sector or the direction of the digital economy. As a ... READ MORE >
Federal Reserve
Federal Reserve to end supplemental leverage ratio capital break
The Federal Reserve announced on Friday that it would not extend an important rule accommodation put in place last spring that helped banks continue to lend to small and medium-size businesses as the economic effects of the pandemic took hold. The rule change allowed banks to exclude Treasury securities and deposits with the Federal Reserve from a ... READ MORE >
Weekly jobless claims: A grim anniversary as claims rise to 770,000
Top-line initial claims for unemployment benefits increased to 770,000 versus an expected decline to 700,000 for the week ending March 13, according to government data released Thursday. There were 282,394 new claims for federal Pandemic Unemployment Assistance, and were 4.12 million continuing claims for the week ending March 6. The total number of ... READ MORE >
FOMC meeting comment: Welcome to the boomtown
The onset of a recovery in the U.S. economy and the growing likelihood of a robust expansion this year and next resulted in a significant upgrade of the Federal Reserve’s Summary of Economic Projections forecast through 2023. The dovish outlook on the committee is an apt description of the risks to the outlook from inflation, and the central bank ... READ MORE >
Short-term rates and economic expansion at risk without Fed’s SLR extension
With the economic recovery still in its early stages, an important component of the Federal Reserve’s response to the economic collapse last spring is in danger of expiring. It’s called the supplemental leverage ratio, or SLR, and the Fed lowered it last spring to help banks maintain liquidity and continue lending through the deepening crisis. In the ... READ MORE >
Making sense of inflation: What we can learn from post-recession recoveries
It's a central tenet of economics: We should expect prices to increase when the demand for goods and services increases, and to decline when demand diminishes. Price rigidity and the presence of product choices will dictate the speed at which price changes occur. This has held up in our analysis of the postwar business cycles, which shows that inflation ... READ MORE >
FOMC preview: Fed to consider adjustments key to the middle market
Much is riding on the Federal Open Market Committee policy rate meeting next week, given recent changes in the economic landscape. Rising growth expectations, increasing interest rates, modestly higher inflation expectations and the recent challenge to the Federal Reserve’s flexible average inflation targeting regime by the fixed income market have ... READ MORE >
The outlook for interest rates, in 11 charts
The yields on 10-year Treasury securities finally moved above 1% in January after 10 months of a public health crisis and economic distress. Though real (inflation-adjusted) interest rates remain negative – or nearly so – along the yield curve from overnight rates out to 10-year securities, there are nascent signs of economic recovery and of ... READ MORE >
CHART OF THE DAY: Amid talk about inflation, expectations have remained in check
The yield on 10-year Treasury bonds had been slowly rising by roughly 9 basis points per month since last summer as the prospects for a vaccine and the economy improved. But since the end of January, there has been a jump of 50 basis points, with 10-year yields twice breaching 1.5% and then 1.6% in the first week of March. This has set off a flurry ... READ MORE >
Flattening Phillips curve implies greater space to address economic needs
The traditional workhorse among policymakers attempting to estimate the tradeoff between employment and inflation has been the Phillips curve. During the past few decades, as the economy has shifted from one based on manufacturing to one based on information and digital technologies, this traditionally inverse relationship as shown in the Phillips curve ... READ MORE >