by Jon Faust In August 2020, the FOMC adopted revisions to its policy framework that were mainly intended to deal with the problems of chronically low inflation and interest rates. In the best tradition of Greek tragedy, high inflation almost immediately ensued. While inflation rose above 2 percent in March 2021, it was not until...
Bridge the Gaps
The Center for Financial Economics advances knowledge of the economic forces driving the financial system through research and teaching. Our work explores the fundamental economics of our current system and the dynamic tensions that will spur change.
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Immigration and sustainable payrolls expansion
by Robert Barbera & Jonathan Wright Labor force growth determines the steady-state monthly change in payrolls. Recently, payrolls have expanded at a fast clip notwithstanding a slight uptick in the unemployment rate. The reason why the economy, despite aging baby boomers leaving the work force, can sustainably expand payrolls by about 200,000 per month is...
Star Power
By Jon Faust and Robert Barbera Given the focus on the neutral real interest rate, r*, at the last several FOMC press conferences, one might be forgiven for thinking that estimates of r* play an important role in policymaker judgments about the restrictiveness of monetary policy. We think this gets things backwards. In much conventional...
A Great Job Market, or a Poor One?
By Floyd Norris “We should spend less time talking about race and more time talking about how to get people to work.” Sen. Josh Hawley, R-Missouri, reacting to Donald Trump’s statements on Kamala Harris’s heritage. The Democrats think jobs should be their issue this year. The flood of new jobs created during the Biden administration...
Soon: More Old Than Young
By Floyd Norris The aging of America continues, and it seems likely that this year there will be more people over 60 than people under 20 in this country, the first time that has ever happened. As recently as 1980, there were twice as many people under 20 – most of whom were yet to...
Numbers Don’t Lie?
By Floyd Norris The labor market is booming. The average unemployment rate in 2023 was 3.64%, down a smidgen from the previous year and the lowest for any total year since 1969. But is that just because fewer people are looking for work, and therefore are not counted as unemployed? A way to seek that...