Conventional wisdom says that the demand for bonds is driven by the strength of the economy. According to St. Louis Fed economist David C. Wheelock, however, it's inflation—and the economy—that's recently been driving the bond market.
"For the past 30 years, as inflation increased, the real value of bond interest payments decreased and, thus, the demand for bonds declined," says Wheelock.
Recent history suggests, therefore, that although the bond market may dislike a strong economy, it always hates inflation.
For more information, call 314-444-8808 and request a copy of the October issues of Monetary Trends.
Eight times a year, St. Louis Fed economists take the economic pulse of the region by talking with Eighth District business leaders. This information is used to create the Beige Book, a summary of the 12 Federal Reserve districts' economic conditions for use by the Federal Open Market Committee (FOMC) in its deliberations on monetary policy. The report is released approximately two weeks prior to each FOMC meeting.
Beginning this month, the Beige Book's most recent national and Eighth District economic summaries are available by accessing FRED (Federal Reserve Economic Data), the St. Louis Fed's up-to-the-minute electronic bulletin board.
Besides the Beige Book, FRED contains more than 300 daily, weekly, monthly and quarterly data series. FRED allows you to browse through the data, print from the screen or download the data onto a diskette. The service is free—you pay only for the telephone call. To access FRED through a modem, dial 314-621-1824. For more information, call Tom Pollmann at 314-444-8562.
As the first round of baby boomers approaches retirement, Americans are beginning to wonder: How will the retirement of the baby boom generation affect the U.S. economy?
St. Louis Fed economist Peter Yoo examines this question by studying the relationship between demographic changes and economic growth in the current issue of the Review, the St. Louis Fed's bimonthly economics journal.
In a life-cycle, individuals retire and consume their savings. This implies that if a large fraction of the population is retired, society will save less and economic growth may be stunted.
According to Yoo, however, this is not necessarily true. His research suggests that the mere retirement of the baby boom generation will not means lower economic growth or a diminished standard of living.
For more information, please call Debbie Dawe at 314-444-8809 and request a copy of the September/October Review.
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Fed in Print: An index of the economic research conducted by the Fed.