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NY Fed

The Federal Reserve Bank of New York was incorporated in May 1914 and opened for business in November later that year. To commemorate the New York Fed’s centennial, take a look at the people and events that helped shape our history.

Articles by NY Fed

Despite Rising Costs, College Is Still a Good Investment

14 days ago

Jaison R. Abel and Richard Deitz

Second of two posts

In our last post, we showed that the cost of college has increased sharply in recent years due to the rising opportunity cost of attending school and the steady rise in tuition. This steep increase in the cost of college has once again raised questions about whether college is “worth it.” In this post, we weigh the economic benefits of a bachelor’s degree against the costs to estimate the return to college, providing an update to our 2014 study. We find that the average rate of return for a bachelor’s degree has edged down slightly in recent years due to rising costs, but remains high at around 14 percent, easily surpassing the threshold for a good investment. Thus, while the rising cost of college appears to have eroded

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The Cost of College Continues to Climb

16 days ago

Jaison R. Abel and Richard Deitz

First of two posts

College is much more expensive than it used to be. Tuition for a bachelor’s degree has more than tripled from an (inflation-adjusted) average of about $5,000 per year in the 1970s to around $18,000 today. For many parents and prospective students, this high and rising tuition has raised concerns about whether getting a college degree is still worth it—a question we addressed in a 2014 study. In this post, we update that study, estimating the cost of college in terms of both out-of-pocket expenses, like tuition, and opportunity costs, the wages one gives up to attend school. We find that the cost of college has increased sharply over the past several years, though tuition increases are not the primary driver. Rather,

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Is There Too Much Business Debt?

21 days ago

Anna Kovner and Brandon Zborowski

By many measures nonfinancial corporate debt has been increasing as a share of GDP and assets since 2010. As the May Federal Reserve Financial Stability Report explained, high business debt can be a financial stability risk because heavily indebted corporations may need to cut back spending more sharply when shocks occur. Further, when businesses cannot repay their loans, financial institutions and investors incur losses. In this post, we review measures of corporate leverage in the United States. Although corporate debt has soared, concerns about debt growth are mitigated in part by higher corporate cash flows.

Corporate Debt Is at a Fifty-Year High Ratio to GDP
After falling in the initial recovery from the Great Recession, corporate debt

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New China Tariffs Increase Costs to U.S. Households

27 days ago

Mary Amiti, Stephen J. Redding, and David E. Weinstein

Tariffs on $200 billion of U.S. imports from China subject to earlier 10 percent levies increased to 25 percent beginning May 10, 2019, after a breakdown in trade negotiations. In this post, we consider the cost of these higher tariffs to the typical U.S. household.

One way to estimate the effect of these higher tariffs is to draw on the recent experience of the 2018 U.S. tariffs. Our recent study found that the 2018 tariffs imposed an annual cost of $419 for the typical household. This cost comprises two components: the first, an added tax burden faced by consumers, and the second, a deadweight or efficiency loss.

The magnitude of these costs depends on how a tariff affects the prices charged by foreign

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Just Released: Press Briefing on the Evolution and Future of Homeownership

28 days ago

Olivier Armantier, Andrew Haughwout, Gizem Kosar, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw

The New York Fed today held a press briefing on homeownership in the United States, in connection with its release of the 2019 Survey of Consumer Expectations Housing Survey. The briefing opened with remarks from New York Fed President John Williams, who provided commentary on the macroeconomic outlook and summarized the prospects for homeownership. He noted that the labor market remains very strong and that there seems to be little evidence of inflationary pressures, meaning that the economy is on a healthy growth path.

The briefing continued with a presentation by Bank economists on how homeownership has evolved over the past fifty-plus years. After a long period—the

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How Has Germany’s Economy Been Affected by the Recent Surge in Immigration?

May 20, 2019

Matthew Higgins and Thomas Klitgaard

Germany emerged as a leading destination for immigration around 2011, as the country’s labor market improved while unemployment climbed elsewhere in the European Union. A second wave began in 2015, with refugees from the Middle East adding to already heavy inflows from Eastern Europe. The demographic consequences of the surge in immigration include a renewed rise in Germany’s population and the stabilization of the country’s median age. The macroeconomic consequences are hard to measure but look promising, since per capita income growth has held up and unemployment has declined. Data on labor-market outcomes specific to immigrants are similarly favorable through 2015, but reveal challenges in how well the economy is adjusting to the second

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Understanding Cyber Risk: Lessons from a Recent Fed Workshop

May 17, 2019

Gara Afonso, Filippo Curti, Ping McLemore, and Atanas Mihov

Cyber risk poses a major threat to financial stability, yet financial institutions still lack consensus on the definition of and terminology around cyber risk and have no common framework for confronting these hazards. This impedes efforts to measure and manage such risk, diminishing institutions’ individual and collective readiness to handle system-level cyber threats. In this blog post, we describe the proceedings of a recent workshop where leading risk managers, academics, and policy makers gathered to discuss proposals for countering cyber risk. This workshop is part of a joint two-phase initiative run by the Federal Reserve Banks of Richmond and New York and the Fed’s Board of Governors to harmonize cyber risk

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Did Changes in Economic Expectations Foreshadow Swings in the 2018 Elections?

May 15, 2019

Olivier Armantier, Michael Neubauer, Daphne Skandalis, and Wilbert van der Klaauw

Second of two posts

In the months leading up to the 2018 midterm elections, were economic expectations in congressional districts about to elect a Republican similar to those in districts about to elect a Democrat? How did economic expectations evolve in districts where the party holding the House seat would switch? After examining the persistence of polarization in expectations using voting patterns from the presidential election in our previous post, we explore here how divergence in expectations may have foreshadowed the results of the midterm elections. Using the Survey of Consumer Expectations, we show that economic expectations deteriorated between 2016 and 2018 in districts that

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Just Released: Shifts in Credit Market Participation over Two Decades

May 14, 2019

Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw

The New York Fed’s Center for Microeconomic Data today released the Quarterly Report on Household Debt and Credit for the first quarter of 2019. Total household debt grew by $124 billion over the quarter, boosted by increases in mortgage, auto, and student loan balances. Over the past twenty years, the prevalence of each type of credit has waxed and waned, shifts linked to the housing boom, the Great Recession, and the subsequent economic recovery. In this blog post, we draw on the New York Fed’s Consumer Credit Panel—a nationally representative sample of Equifax credit report data and the basis of our Quarterly Report—to explore those longer-term trends in credit market participation.

The chart below

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Economic Expectations Grow Less Polarized since the 2016 Election

May 13, 2019

Olivier Armantier, Michael Neubauer, Daphne Skandalis, and Wilbert van der Klaauw

First of two posts

In two previous blog posts (from January 2017 and December 2017), we examined political polarization in economic expectations in the period immediately after the 2016 presidential election using the Survey of Consumer Expectations (SCE). Today, we begin a two-part series that revisits the issue. In this post, we provide an update on how economic expectations have evolved in counties where a plurality voted for Donald Trump in 2016 and counties where a plurality voted for Hillary Clinton. In a second post, we will look at how economic expectations differed in the run-up to the 2018 congressional elections, based on how districts ended up voting in that election.

We begin by

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Ten Years Later—Did QE Work?

May 8, 2019

Stephan Luck and Tom Zimmerman

By November 2008, the Global Financial Crisis, which originated in the residential housing market and the shadow banking system, had begun to turn into a major recession, spurring the Federal Open Market Committee (FOMC) to initiate what we now refer to as quantitative easing (QE). In this blog post, we draw upon the empirical findings of post-crisis academic research–including our own work–to shed light on the question: Did QE work?

Unconventional Monetary Policy and Quantitative Easing

First things first: What does the term QE describe? QE is part of what is now referred to as unconventional monetary policy. Over the two decades prior to the Global Financial Crisis, central banks mainly conducted monetary policy through two instruments.

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Selected Deposits and the OBFR

May 6, 2019

Alyssa Cambron, Marco Cipriani, Joshua Jones, Romen Mookerjee, Scott Sherman, Brett Solimine, and Timothy Wessel

The Federal Reserve Bank of New York recently decided to revise the composition of the Overnight Bank Funding Rate (OBFR), a reference rate measuring the cost banks face to borrow overnight in unsecured U.S. dollar-denominated money markets. Specifically, in addition to the federal funds and Eurodollar transactions currently comprising the OBFR, the OBFR now also includes overnight, interest-bearing demand deposits (at rates negotiated between the counterparties and excluding deposits payable on demand) booked within banks’ U.S. offices, known as “selected deposits.” In this post, we discuss the change in more detail, the reason for including selected deposits, and the

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Just Released: The New York Fed’s New Regional Economy Website

April 18, 2019

Jaison R. Abel, Jason Bram, Richard Deitz, and Jonathan Hastings

The New York Fed today unveiled a newly designed website on the regional economy that offers convenient access to a wide array of regional data, analysis, and research that the Bank makes available to the public. Focusing specifically on the Federal Reserve’s Second District, which includes New York State, Northern New Jersey, Southwestern Connecticut, Puerto Rico, and the U.S. Virgin Islands, the new site also features information about the Bank’s community engagement and outreach efforts across the region. With today’s release, we are providing new regional economic précis for local areas in our District—that is, short reports that give an overview of economic trends in each location; these reports will be updated

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Did Tax Reform Raise the Cost of Owning a Home?

April 17, 2019

Sonia Gilbukh, Andrew Haughwout, Rebecca Landau, and Joseph Tracy


The 2018 slowdown in the housing market has been a subject of intense interest to the press and policymakers, including articles reporting a slowing in house price growth and a decline in home construction. Today we follow up on our colleagues’ research on whether the Tax Cut and Jobs Act of 2017 (TCJA) has contributed to a slowdown in the housing market, looking closely at what price signals tell us about the trade-off between owning and renting.

Changes in Tax Policy

Effective starting in 2018, the TCJA substantially increased the standard deduction. For married couples filing jointly, the standard deduction increased to $24,000, almost double the $12,700 figure of the

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Is the Recent Tax Reform Playing a Role in the Decline of Home Sales?

April 15, 2019

Richard Peach and Casey McQuillan


From the fourth quarter of 2017 through the third quarter of 2018, the average contract interest rate on new thirty-year fixed rate mortgages rose by roughly 70 basis points—from 3.9 percent to 4.6 percent. During this same period, there was a broad-based slowing in housing market activity with sales of new single-family homes declining by 7.6 percent while sales of existing single-family homes fell by 4.6 percent. Interestingly though, these declines in home sales were larger than in the two previous episodes when mortgage interest rates rose by a comparable amount. This post considers whether provisions in the Tax Cuts and Jobs Act of 2017 (TCJA) might have also contributed to the recent decline in housing

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The Sustainability of First-Time Homeownership

April 12, 2019

Donghoon Lee and Joseph Tracy


In this post we take up the important question of the sustainability of homeownership for first-time buyers. The evaluation of public policies aimed at promoting the transition of individuals from renting to owning should depend not only on the degree to which such policies increase the number of first-time buyers, but also importantly on whether these new buyers are able to sustain their homeownership. If a buyer is unprepared to manage the financial responsibilities of owning a home and consequently must return to renting, then the household may have made little to no progress in wealth accumulation. Despite the importance of sustainability, to date there have been no efforts at measuring the sustainability of

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Who’s on First? Characteristics of First-Time Homebuyers

April 10, 2019

Donghoon Lee and Joseph Tracy


In our previous post, we presented a new measure of first-time homebuyers. In this post, we use this improved measure to describe the characteristics of first-time buyers and how those characteristics change over time. Having an accurate assessment of first-time buyers is important given that the aim of many housing policies is to support the transition from renting to owning. A proper assessment of these housing policies requires an understanding of the impact of these policies on the share of first-time buyers and the characteristics of these buyers. Our third post will directly examine the sustainability of homeownership by first-time buyers.

A household’s success in transitioning from renting to owning depends

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A Better Measure of First-Time Homebuyers

April 8, 2019

Donghoon Lee and Joseph Tracy


Much of the concern about affordable homeownership has focused on first-time buyers. These buyers, who are often making the transition from renting to owning, can find it difficult to save to meet down-payment requirements; this is particularly true in those areas where rent takes up a significant portion of a household’s monthly income. In contrast to first-time buyers, repeat buyers can typically rely on the equity in their current house to help fund the down payment on a trade-up purchase; they also have an easier time qualifying for a new mortgage if they’ve successfully made payments on a prior mortgage, thereby improving their credit score. Despite the policy focus on first-time buyers, reliable data on these

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Just Released: The New York Fed Staff Forecast—April 2019

April 5, 2019

David Lucca, Jonathan McCarthy, and Richard Peach

Today, the Federal Reserve Bank of New York is hosting the spring meeting of its Economic Advisory Panel (EAP). As has become the custom at this meeting, the New York Fed Research staff is presenting its forecast for U.S. growth, inflation, and the unemployment rate. Following the presentation, members of the EAP, which consists of leading economists in academia and the private sector, are asked to critique the staff forecast. Such feedback helps the staff evaluate the assumptions and reasoning underlying its forecast as well as the forecast’s key risks. The feedback is also an important part of the forecasting process because it informs the staff’s discussions with New York Fed President John Williams about economic conditions. In

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Are New Repo Participants Gaining Ground?

April 3, 2019

Adam Copeland, Ira Selig, and Anya Tarascina

Following the 2007-09 financial crisis, regulations were introduced that increased the cost of entering into repurchase agreements (repo) for bank holding companies (BHC). As a consequence, banks and securities dealers associated with BHCs, a set of firms which dominates the repo market, were predicted to pull back from the market. In this blog post, we examine whether this changed environment allowed new participants, particularly those not subject to the new regulations, to emerge. We find that although new participants have come on the scene and made gains, they remain a small part of the overall repo market.

Repo Market Regulations

A repo is the sale of an asset, coupled with the promise to repurchase the asset at a future

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The Keynesian Growth Approach to Macroeconomic Policy and Productivity

April 1, 2019

Gianluca Benigno and Luca Fornaro

Productivity is one of the key determinants of potential output—that is, the trend level of production consistent with stable inflation. A productivity growth slowdown has occurred in several advanced economies in the aftermath of the global financial crisis, raising concerns about long-term growth. In response, a variety of supply-side policy options have been proposed, such as reforms to increase labor and product market flexibility. In this blog post, we consider the role of demand-side policies in raising trend productivity growth.

Supply and Demand Drivers of Productivity

The chart below illustrates the decline in labor productivity growth in the United States, the euro area, and the United Kingdom since the global financial crisis.

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Expecting the Unexpected: Job Losses and Household Spending

March 27, 2019

Fatih Karahan, Brendan Moore, and Laura Pilossoph

Unemployment risk constitutes one of the most significant sources of uncertainty facing workers in the United States. A large body of work has carefully documented that job loss may have long-term effects on one’s career, depressing earnings by as much as 20 percent after fifteen to twenty years. Given the severity of a job loss for earnings, an important question is how much such an event affects one’s standard of living during a spell of unemployment. This blog post explores how unemployment and expectations of job loss interact to affect household spending.

It’s plausible to think that people have a hunch about the safety of their job. They may form these expectations based on the profitability and growth of their employer,

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Deciphering Americans’ Views on Cryptocurrencies

March 25, 2019

Sean Hundtofte, Michael Lee, Antoine Martin, and Reed Orchinik

Having witnessed the dramatic rise and fall in the value of cryptocurrencies over the past year, we wanted to learn more about what motivates people to participate in this market. To find out, we included a special set of questions in the May 2018 Survey of Consumer Expectations, a project of the New York Fed’s Center for Microeconomic Data. This blog post summarizes the results of that survey, shedding light on U.S. consumers’ depth of participation in cryptocurrencies and their motives for entering this new market.

Cryptocurrency Ownership and Demographics

The survey covers a sample of 1,146 people from ages eighteen to ninety-six, with broad representation by race and gender. Eighty-five percent of

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Assessing the Price Impact of Treasury Market Workups

March 6, 2019

Michael Fleming and Giang Nguyen

The price impact of a trade derives largely from its information content. The “workup” mechanism, a trading protocol used in the U.S. Treasury securities market, is designed to mitigate the instantaneous price impact of a trade by allowing market participants to trade additional quantities of a security after a buyer and seller first agree on its price. Nevertheless, workup trades are not necessarily free of information. In this post, we assess the role of workups in price discovery, following our recent paper in the Review of Asset Pricing Studies (an earlier version of which was released as a New York Fed staff report).

Background on the Treasury Market

U.S. Treasury securities trade in a dealer-to-customer market, in which dealers

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The Sensitivity of Long-Term Interest Rates: A Tale of Two Frequencies

March 4, 2019

David Lucca, Samuel Hanson, and Jonathan Wright

The sensitivity of long-term interest rates to short-term interest rates is a central feature of the yield curve. This post, which draws on our Staff Report, shows that long- and short-term rates co-move to a surprising extent at high frequencies (over daily or monthly periods). However, since 2000, they co-move far less at lower frequencies (over six months or a year). We discuss potential explanations for this finding and its implications for the transmission of monetary policy.

The Expectations Hypothesis and Term Premia

Economists agree that the short end of the yield curve largely reflects monetary policy decisions because the Federal Reserve sets the level of short-term interest rates. But there is less agreement on

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Global Trends in Interest Rates

February 27, 2019

Marco Del Negro, Domenico Giannone, Marc P. Giannoni, Andrea Tambalotti, Brandyn Bok, and Eric Qian

Long-term government bond yields are at their lowest levels of the past 150 years in advanced economies. In this blog post, we argue that this low-interest-rate environment reflects secular global forces that have lowered real interest rates by about two percentage points over the past forty years. The magnitude of this decline has been nearly the same in all advanced economies, since their real interest rates have converged over this period. The key factors behind this development are an increase in demand for safety and liquidity among investors and a slowdown in global economic growth.

These conclusions are based on the results of our recent New York Fed staff

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What Can We Learn from the Timing of Interbank Payments?

February 25, 2019

Adam Copeland, Linsey Molloy, and Anya Tarascina

From 2008 to 2014 the Federal Reserve vastly increased the size of its balance sheet, mainly through its large-scale asset purchase programs (LSAPs). The resulting abundance of reserves affected the financial system in a number of ways, including by changing the intraday timing of interbank payments. In this post we show that (1) there appears to be a nonlinear relationship between the amount of reserves in the system and the timing of interbank payments, and (2) with the increase in reserves, smaller banks shifted their timing of payments more significantly than larger banks did. This result suggests that tracking the timing of payments sent by banks could provide an informative signal about the impact of the shrinking Federal

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Stressed Outflows and the Supply of Central Bank Reserves

February 20, 2019

Ryan Bush, Adam Kirk, Antoine Martin, Phil Weed, and Patricia Zobel

Since the financial crisis, banking regulators around the world have been intensely aware of liquidity risk and, in part as a response, have introduced the Basel III liquidity regulation. Today, the world’s largest banks hold substantial liquidity buffers comprising both securities and central bank reserves, to satisfy internal liquidity stress tests and minimum quantitative regulatory requirements. The appropriate level of liquidity buffers depends on the likely outflows in a market stress situation. In this post, we use public data to provide a rough estimate of stressed outflows that the largest banks would face and consider how they could meet these outflows.

Liquidity Buffers and Monetization

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Just Released: Introducing the SCE Household Spending Survey

February 19, 2019

Gizem Kosar, Kyle Smith, and Wilbert van der Klaauw

Today we are releasing new data on individuals’ experiences and expectations regarding household spending. These data have been collected every four months since December 2014 as part of our Survey of Consumer Expectations (SCE). The goal of this blog post is to introduce the SCE Household Spending Survey and highlight some of its features.

While the SCE Household Spending Survey shares design features with the main SCE—both pose probabilistic questions to a rotating panel of respondents—the information it collects is unique in several respects. First, it records detailed information about expectations for year-ahead changes in household spending (both in aggregate and by category), spending on essential and non-essential

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