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In The Regional Economist: Some Labor Trends Pre-Date Recession, Focus on Low Real Interest Rate Might Be Misplaced, and More


ST. LOUIS – A new 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

The articles include:

President’s Message: James Bullard discusses what it means for monetary policy decisions to be data-dependent.

Focus on Low Real Interest Rate Might Be Misplaced: When investors complain about low interest rates, they are usually referring to the rates on government bonds, particularly TIPS (Treasury Inflation Protected Securities). But such rates should not be seen as proxies for the rates of return on all investments. Real returns to productive U.S. fixed investment in tangible capital have not fallen over the past 25 years.

Labor Indicators: Some of Today’s Trends Pre-Date the Great Recession: 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.

Rising Productivity, Declining Population Impact Russia’s Economy: Despite strong growth, Russia’s GDP per capita is still only about 15 percent of that of the U.S. Although Russia is becoming more productive, it’s hampered by a decline in population. 

Where Did All the New Liquidity Go? The federal government and the Fed pumped a lot of liquidity into the economy in response to the Great Recession. But the usual domestic users of such liquidity —households and businesses—increased their liquidity holdings only slightly.

Unemployment by Industry: Duration Must Be Considered, Too: To better understand unemployment in key industries, not only the unemployment rate but the duration of unemployment for those in the industry should be considered. Focusing on only the former could lead to misguided efforts to help the jobless.

Despite Crosscurrents, Economy Is Showing Signs of Strength: Despite crosscurrents, the U.S. economy showed enough strength in 2015 for the Federal Open Market Committee to raise its benchmark interest rate for the first time since mid-2006.

District’s Patterns in Imports and Exports Sometimes Differ from Nation’s: As in the nation, the Eighth Federal Reserve District’s main trading partners are Canada, Mexico, China and the European Union. What is imported and exported, however, can vary significantly.

Jefferson City, Mo., Facing Same Struggles As Other State Capitals: Government employment has been a main driver of Jefferson City’s economy, more so than in many other state capitals. Now that public sectors everywhere are tightening their belts, Jefferson City—like many other communities—will look more to the private sector to maintain growth.