The mortgage boom and bust have had profoundly different effects on different age groups and birth-year cohorts. Younger families generally experienced the most volatility, while older families have emerged with the largest net increases in mortgage debt in percentage terms. Read why in this article by William R. Emmons and Bryan J. Noeth in the January 2013 The Regional Economist.
In the November/December 2012 Review, economists Bryan J. Noeth and Rajdeep Sengupta review some of the recent studies on international capital flows with a focus on the role of European global banks. They present a revision to the commonly held “global saving glut” view that East Asian economies (along with oil-rich nations) were the dominant suppliers of capital that fueled the asset price boom in many parts of the world in the early 2000s. They also argue that the role of funding costs and a “liberal” regulatory regime that allowed for an unprecedented expansion of the balance sheets of European banks was no less important. Finally, they describe the aftermath of the crisis in terms of some of the challenges faced by Europe as a whole and European banks in particular.
Not only are nations (and individuals) wrestling with growing debt levels, but so are state and local governments, including those in the seven states that make up the Eighth District. To understand how burdensome the debt is to states, Lowell R. Ricketts, research associate, and Christopher J. Waller, director of Research, explore how the financial obligations of states extend beyond the bonds issued by state governments. They combined state and local government debt with unfunded pension and retiree health-benefit obligations, and combining them with existing indebtedness to provide a more accurate comparison of fiscal health. They then measured these financial obligations as a percentage of gross state product (GSP), which shows debt totals relative to the size of the state economy. Read more in the October 2012 Regional Economist.
Not everyone who is eligible for unemployment benefits actually collects them. Over the longer horizon, these unclaimed benefits are much larger than the overpayments that have received recent media attention. Economists David L. Fuller, B. Ravikumar and Yuzhe Zhang investigate why in this October 2012 Regional Economist article.
District farm income and capital spending were down significantly in the third quarter of 2012 relative to year-ago levels, though there was some disparity across zones, as reported in the St. Louis Fed’s Agricultural Finance Monitor. The St. Louis Zone showed the largest drop-off from one year ago, while bankers in the Little Rock and Louisville zones also reported declines from a year earlier. By contrast, bankers in the Memphis Zone reported both higher income and capital spending relative to 2011. Household spending across the District was more mixed; bankers in the St. Louis and Little Rock zones reported lower levels of household spending compared with a year earlier, and bankers in the Louisville and Memphis zones reported higher levels. The next issue comes out in mid-February.
House prices in five of the seven states that comprise the Federal Reserve's Eighth District rose slightly in the third quarter of 2012, according to the St. Louis Fed’s latest Housing Market Conditions report. At the same time, the percentage of seriously delinquent mortgages fell in most Eighth District states, (Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee).