“I asked Mr. Summers what was behind secular stagnation, and he said he was still thinking through all of its causes. But globalization, automation, income inequality and changes in corporate finance might be important factors, he said. Income is now more concentrated in the hands of the rich. Those well-off households tend to save and …
Lenders are showing an increasing willingness to take risk, especially over the last two years. One measure of risk tolerance that economists typically track in corporate bond markets is the credit spread–the difference between interest rates for risky debt versus safe debt. But for the household sector, it is much more informative to track the quantity of …
We are in our fourth week of blogging, and so far it has been a lot of fun! And a lot of work … we are learning new appreciation for people who do this for a living. We thought it would be a good time to share some links and thoughts in response to comments …
Our post three weeks ago on the weather and auto sales argued that bad winter weather was responsible for the slowdown in consumer spending. It was likely to be a greater contributor than factors such as improving credit scores. We used variation across states in January temperature and showed that states where January was very cold had …
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 …
