Excessive household debt was crucial in explaining the severity of the Great Recession. So where are we now? Have households strengthened their financial position since 2009? Are household balance sheets strong enough to prevent another massive pull back in spending if there are significant job losses? To answer to these questions, we look at evidence from the 2012 …
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 …
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 …
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 …
The FOMC meets this week, and most expect them to continue to taper their purchases of longer term MBS and Treasuries at a slow pace. Of course, there could be a surprise around the corner. If there is a surprise, what assets are likely to be affected? And why? The second question is challenging–it has …
In November 1930, before anyone knew how Great the Depression would be, Charles Persons published an article in the Quarterly Journal of Economics called “Credit Expansion, 1920 to 1929, and Its Lessons.” His thesis was stated forcefully in the first paragraph: “The thesis of this paper is that the existing depression was due essentially to …
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 …
