January Issue of St. Louis Fed's The Regional Economist Now Available

ST. LOUIS – The January 2013 issue of The Regional Economist, the Federal Reserve Bank of St. Louis’ quarterly review of business and economic conditions, is now available.  The full issue can be accessed online at www.stlouisfed.org/publications/re/

The issue’s articles include:

• “President's Message: The Fed’s Latest Balance-Sheet Policy: What Constitutes Substantial Labor-Market Improvement?” – The FOMC has stated that "QE3" will continue until the outlook for the labor market improves substantially. In the column, President James Bullard discusses various indicators that the FOMC looks at to assess the overall health of the labor market.
• “Why Are Corporations Holding So Much Cash?” – 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.
• “Mortgage Borrowing: The Boom and Bust” – 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 have emerged with the largest net increases in mortgage debt. 
• “Stuck in the Middle by Job Polarization” – The economy has increased its demand for high-skilled (high-wage) workers and low-skilled (low-wage) workers, while opportunities for middle-skilled (middle-wage) jobs have declined.  This “job polarization” may require a shift in the sort of training that is encouraged for American workers.
• “Negative Interest Rates as a Monetary Policy Tool” – It is not uncommon to observe negative interest rates during uncertain times, when investors flee to safety.  But the existence of negative market yields provides no support for policies in which central banks set negative interest rates on deposits held at a central bank.
• “Household Financial Stress and Home Prices” – The rapid deterioration of financial conditions faced by U.S. households since the crisis of 2007-2008 continued unabated well into 2010, after which a gradual recovery began.  Moreover, home price changes in a region appear to have a strong association with the average financial condition of the households in that region.
• “‘Yesterday’s Buyer is Today’s Tenant’” – As homeownership in the Eighth Federal Reserve District declines, multifamily rental housing is booming.  “Asking rents” are up, and vacancy rates are down.
• “Modest Expansion Could Pick Up the Pace” – Uncertainty regarding the nation’s near-term economic outlook is higher than normal.  But if the impediments that are restraining exports and business capital spending wane, the economy could grow by more than expected in 2013.
• “Community Profile: Seymour, Ind.” – Even though this town has fewer than 20,000 people, it added about 500 jobs in 2012, many of them in manufacturing.  Much of the credit can be given to the interest in workforce training, not only on the part of the employers but the community at large.