Kinda Hachem
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The Zero Lower Bound Remains a Medium‑Term Risk
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Interest rates have fluctuated significantly over time. After a period of high inflation in the late 1970s and early 1980s, interest rates entered a decline that lasted for nearly four decades. The federal funds rate—the primary tool for monetary policy in the United States—followed this trend, while also varying with cycles of economic recessions and expansions.
New Dataset Maps Losses from Natural Disasters to the County Level
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The Federal Reserve’s mission and regional structure ask that it always work to better understand local and regional economic activity. This requires gauging the economic impact of localized events, including natural disasters. Despite the economic significance of natural disasters—flowing often from their human toll—there are currently no publicly available data on the damages they cause in the United States at the county level.
Why Does the U.S. Always Run a Trade Deficit?
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The obvious answer to the question of why the United States runs a trade deficit is that its export sales have not kept up with its demand for imports. A less obvious answer is that the imbalance reflects a macroeconomic phenomenon. Using national accounting, one can show deficits are also due to a persistent shortfall in domestic saving that requires funds from abroad to finance domestic investment spending. Reducing the trade imbalance therefore requires both more exports relative to imports and a narrowing of the gap between saving and investment spending.
Who Finances Real Sector Lenders?
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The modern financial system is complex, with funding flowing not just from the financial sector to the real sector but within the financial sector through an intricate network of financial claims. While much of our work focuses on understanding the end result of these flows—credit provided to the real sector—we explore in this post how accounting for interlinkages across the financial sector changes our perception of who finances credit to the real sector.
When the Household Pie Shrinks, Who Gets Their Slice?
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When households face budgetary constraints, they may encounter bills and debts that they cannot pay. Unlike corporate credit, which typically includes cross-default triggers, households can be delinquent on a specific debt without repercussions from their other lenders. Hence, households can choose which creditors are paid. Analyzing these choices helps economists and investors better understand the strategic incentives of households and the risks of certain classes of credit.
Firms’ Inflation Expectations Have Picked Up
—Editors note: Since this post was published, we clarified language in the first paragraph about year-ahead expectations for manufacturing and service firms in the 2025 survey. We also corrected the y-axis range of Chart 2. (March 5, 11 a.m.)
Kartik Athreya on His First Year as Research Director of the New York Fed
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A year has passed since Kartik Athreya became director of research at the New York Fed. To get some perspective on his experience thus far, we caught up with Kartik and asked about his views on economics, the role of Research at the Bank, and his take on a few of the hot topics of the day.
U.S. Imports from China Have Fallen by Less Than U.S. Data Indicate
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With new tariffs on China back in the headlines, this post seeks to offer some perspective on how much China’s exports have really been affected by multiple rounds of U.S. tariffs and export restrictions over the past seven years. The key takeaway is that U.S. imports from China have decreased by much less than has been reported in official U.S. statistics. As a result, the recent tariff increase on China could have a larger impact on the U.S. economy than is suggested by official U.S. data on the China import share, especially if favorable tariff treatment for direct-to-consumer imports is ended.
Every Dollar Counts: The Top 5 Liberty Street Economics Posts of 2024
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High prices and rising debt put pressure on household budgets this year, so it’s little wonder that the most-read Liberty Street Economics posts of 2024 dealt with issues of financial stress: rising delinquency rates on credit cards and auto loans, the surge in grocery prices, and the spread of “buy now, pay later” plans. Another top-five post echoed this theme in an international context: Could the U.S. dollar itself be under stress as central banks seemingly turn to other reserve currencies? Read on for details on the year’s most popular posts.