St. Louis Fed's Regional Economist Examines the Role of Fed Credibility by Looking at Interest and Inflation Rates for the Past 50 Years

ST. LOUIS – The April 2014 issue of The Regional Economist, the Federal Reserve Bank of St. Louis’ quarterly review of regional, national and international economic issues of the day, has been posted online at www.stlouisfed.org/publications/re. President James Bullard, in his column, examines the seeming dichotomy of a simultaneous decline in the unemployment rate and the labor force participation rate. The other articles include:

• The Ups and Downs of Inflation

This look at interest rates and inflation in the U.S. over the past 50 years helps to clarify ideas about the Fed’s monetary policy and its own credibility. The authors examine three periods corresponding to three different policies: when the Fed operated without credibility, when it was earning credibility and when it was operating with credibility.

• Credit Card Deleveraging by Income and Age Groups

Paying down credit card debt in the first few years after the financial crisis was not just across older households with higher income but also by younger, middle-class households.

• Debt Crisis in Europe Is Easing, but Stability Remains a Long Way Off

In the wake of the financial crisis, public debt in many European countries rose to levels not seen since WWII.  Although the crisis started to abate in 2012, it could heat up again. Most of the ways used historically to pay off such large debts don’t appear to be viable options today.

• Youth Unemployment Notably Higher in Southern Europe

In the U.S., the unemployment rate for those under 25 hovers around 14 percent, even though the Great Recession has been over for five years. In some European countries, the rate is three times higher.