Spending on new vehicles has been a bright spot for the U.S. retail sector. March sales estimates come out on Tuesday, and most expect a strong recovery after sales were depressed by the bitterly cold months of January and February. But a closer look at the data on new auto purchases reveals some potential worries. Nothing …
The Federal Reserve directly controls the short-term interest rate. But what it really tries to target is inflation and its expectations. The Fed’s goal is to achieve the target of 2% inflation in the long-term, and its preferred price index is the core personal consumption expenditure price index that excludes the volatile food and energy …
A central argument we have made on this blog and in our book is that the distribution of income/wealth matters a great deal for thinking about the macro-economy. Convincing some of this fact is not easy — many continue to work within a modeling framework in which all distributional considerations are assumed away, the so-called “representative-agent” framework. Perhaps the …
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We are crunching some numbers trying to figure out what is going on with the house prices. In the meantime, here are some links which suggest that perhaps the sharp rebound in house prices is cooling. Zillow forecasting Case-Shiller February report sees slowdown. From the housing master himself at calculatedriskblog. Erin Carlyle at Forbes explains the weirdness of …
Here is a chart from Ed Leamer showing jobless recoveries after the last two recessions. There are several ways to see jobless recoveries in the data, but this one is particularly striking. It may take a little effort to follow it, but it is worth the effort. On the horizontal axis is the total amount of hours …
We all know that households cut back on spending dramatically during the Great Recession. Are they spending now? Has spending caught up to the trend the United States was on before? The red line in the chart below plots retail spending in real terms in the United States from 1992 to 2013. We want to …
Alvin Hansen introduced the notion of “secular stagnation” in the 1930s. Hansen’s hypothesis has been brought back to life by Larry Summers in his November 2013 secular stagnation speech. The speech generated a huge amount of discussion, and for good reason. Summers’ provocative hypothesis is that the Great Recession was symptomatic of a longer-term problem: persistently inadequate demand that is evidenced by low …
There are a number of examples in history where two countries that share the same fate and trajectory for a while suddenly start to diverge in their economic fortunes. A persistent difference in the growth rates of the two countries (as opposed to factors such as better saving rates) – i.e. a difference in long-run growth – …
An integral part of macroeconomics is understanding business cycles, i.e. figuring out what drives changes in aggregate output. We have devoted the last many years trying to understand why large declines in output and employment – as seen in the Great Recession – occur. In trying to answer such questions, a major obstacle in macroeconomics is the …
Lots of interesting and thought-provoking reactions to our post yesterday on how the gains in U.S. productivity are shared. One aspect of the debate that is often over-looked is the concentration of financial asset holdings in the U.S. economy. Who owns financial assets such as stocks and bonds in corporations tells us who has a direct claim …
