News this morning shows that industrial output growth in China reached a 5-year low. What lies ahead for the Chinese economy? China’s economic growth over the last 15 years has been spectacular. But there is one aspect of Chinese growth more recently that merits concern: its increasing reliance on debt. Consider the graph below that plots …
Retail spending by households in January 2014 was a major disappointment, coming in well below expectations. January 2014 was also one of the coldest months in memory in many parts of the country. Was the extreme cold weather to blame for weak retail spending? Or is the economy weakening? Perhaps households were trying to save …
Hyun Song Shin (@HyunSongShin) of Princeton University (Atif’s colleague at the Bendheim Center for Finance) has been doing some terrific work on a potential emerging market crisis. His big worry is the rise in non-financial corporate debt in emerging markets, and the important role that bond managers have played in buying up this debt. One …
February retail sales are out Thursday. The debate has been raging on whether weak spending this winter can be blamed on the brutal weather. We may have some thoughts on this precise question in a post later this week. But for now, given that one of us lives in Chiberia, we thought we would show …
Our initial blog post on Friday made the argument that the housing market rebound was driven primarily by investors buying up foreclosed properties. As a result, we should not expect it to fuel household spending as we saw before. Two articles out today make arguments that are closely related: home building is shifting toward rental apartments and …
The Federal Reserve has a well-defined dual-mandate: stabilize prices and maximize employment. However, in trying to achieve these objectives, the Fed can inadvertently favor some segments of the population more than others. This was indeed the case from the perspective of households’ net worth position during the Great Recession. We have already highlighted the highly unequal distribution …
Just how bad was the housing binge from 2002 to 2006? Here is retail spending on furniture, appliances, and home improvement from 2006 to 2013. The lines are indexed to 2006, so for every year, if you take the point for that year and subtract 100 you get the percentage change from 2006 to that …
The Federal Reserve reported yesterday a continued rise in home values, offering a boost to household wealth. From 2006 to 2011, housing wealth fell from $23 trillion to $16 trillion, a loss that devastated the U.S. economy. Our research estimates that almost half of the decline in spending during the Great Recession can be attributed …
Is Rising Housing Wealth Great News for Spending? Read More »
For the past couple of years, the quarterly release of the Federal Reserve Flow of Funds data has been cheered because it has shown a sharp rise in household wealth, particularly of financial assets. This goes hand in hand with increasing incomes through means outside of employment. We agree this is good news, but the …
