William R. Emmons
The buildup of mortgage debt before the crisis and the subsequent deleveraging have had profoundly different effects on different age groups. Younger families generally experienced the most volatility, while older families emerged with the largest net increase in mortgage debt.
The financial crisis and ensuing recession took a toll on just about everybody’s household wealth. Not surprisingly, the pain wasn’t evenly distributed. Those groups that are usually the most vulnerable in our society—young and middle-aged minority households—suffered the most, percentage-wise.
Consumer spending has long been the engine of U.S. and global economic growth. But five trends in 2011 suggest that such spending can no longer be counted on. Finding a replacement is going to be difficult, at best.
While some measures of Eighth District housing-market activity recently showed signs of life, it’s not clear yet if it is cause for cautious optimism in the economic outlook.
This Q&A on the federal deficit is a preview of the "Dialogue with the Fed" that the public is invited to Oct. 18 at the St. Louis Fed.
At least early in the financial crisis, the high rate of foreclosures seemed to be due more to households' overreaching than to predatory lending. A disproportionate number of those being foreclosed on were well-educated, well-off and relatively young people.
Before the housing boom and bust, changes in local house values appeared to be a local phenomenon. Now, however, the District’s house-price changes are mirroring national patterns. Therefore, downward trends in other parts of the country may continue to negatively affect prices in the District.
It’s time to pay the piper for our freewheeling spending of the past decade. Although some scenarios for the future economy provide reason to hope, the recovery is likely to be slow and volatile.
The simplest way to avoid another devastating housing crash and foreclosure crisis probably is to reduce household borrowing and, then, to keep it low.
Fannie Mae, Freddie Mac and private-label assets comprised much of this system.
As painful as it may be, letting the housing and mortgage markets sort out these problems on their own would be best for the economy in the long run. Large-scale government interventions are not necessarily the best policy responses, although those made truly needy by this crisis need to be helped.
Fed officer and economist William Emmons examines the evolution of the mortgage markets—and speculates that U.S. markets may return to models of an earlier era.
Some people complain they are being gouged at the pump, but raising prices now in anticipation of what might happen helps ensure an adequate gas supply.
Although some data show that household wealth is rising, we shouldn’t be complacent about the flip side of the coin—that personal saving is in a nosedive.
Lower interest rates can make mortgage refinancing a good idea, but borrowers need to pay attention to more than just the monthly payment. Cash-out refinancing is especially tricky because it entails taking on a larger mortgage. This can lead to a greater repayment burden in the future.
Initially, Basel II will affect only the world's largest banking organizations. Eventually, the impact will trickle down to others. Some regional and community bankers, for example, might find it more difficult to survive. Consumers, on the other hand, could wind up with lower rates on home mortgages.
These government-sponsored enterprises continue to make headlines because of their explosive growth and resulting heavyweight status within the nation's financial system. Critics fear what would happen if one of these giants were to fail—or even stumble. Supporters say that the risks are overblown and that the benefits to homeowners are underappreciated.
Unable to slow the growth of credit unions by protesting their tax breaks and sponsor subsidies, banks are citing other reasons to bolster their case that the competition has an unfair edge.
The futures market is not a perfect crystal ball. In some cases, it accurately forecasts what spot prices will be in the future. But not always.
Examinations and capital requirements are the current pillars of bank supervision. Some people now want to draw on the markets for further assistance in controlling risk.
Authors suggest that they should be included.