is a research officer and economist at the Federal Reserve Bank of St. Louis. He has conducted research on several topics in macroeconomics involving financial decisions by firms, households and countries. He has been at the St. Louis Fed since 2010. View more about the author and his research.
Do changes in the conditions of financial markets lead to changes in real economic activity? This question can be answered by analyzing the ups and downs in sales and investments of firms with different needs of external financing. The evidence suggests the causal effect is small.
Nationally, households have substantially decreased their debt since the financial crisis.
Although the unemployment rate is strong these days, other labor-related statistics are being called weak for this stage of an economic recovery. The downward trend in labor force participation, wage growth, job reallocation and other stats started a long time ago, however.
Changes in income of rich and poor households might overstate changes in welfare because the cost of goods favored by the rich is rising faster than the cost of goods consumed mainly by the poor and middle class.
When consumers can’t pay their credit card bills, they choose between delinquency and bankruptcy. A new economic model indicates that by changing the face value of delinquent debt, lenders can maximize repayment and make a difference in whether or not a household chooses bankruptcy.
The world's output for 2014 is expected to end up being below trend, and the forecast for this year doesn't look much better. Once again, the U.S. is performing better than most other developed countries.
For years, perhaps even decades, Japan’s economy has struggled with low growth and low inflation. A year ago, new policies were put into place to turn around the economy. Although there are similarities between Japan’s experience and that of other developed countries (including the U.S.), there are also many differences.
During the last global recession, house prices fell in some European countries almost as much as in some U.S. states. However, mortgage defaults occurred at a much lower rate in Europe. The authors say the difference might be explained by two regulations that apply in Europe but are used on a limited or much less restrictive basis in the U.S.
U.S. corporations are holding record-high amounts of cash. One reason has to do with taxes—both the uncertainty about future taxes and the reality of today’s tax rules. The second reason has to do with the rise of research and development; because of its uncertain nature, this sort of work requires access to high levels of cash.
Conventional wisdom says that employment at small firms declines more than employment at large firms during recessions. However, that doesn’t seem to have been the case during the Great Recession of 2007-09.