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Working Paper
The Fed's Response to Economic News Explains the “Fed Information Effect”
High-frequency changes in interest rates around FOMC announcements are a standard method of measuring monetary policy shocks. However, some recent studies have documented puzzling effects of these shocks on private-sector forecasts of GDP, unemployment, or inflation that are opposite in sign to what standard macroeconomic models would predict. This evidence has been viewed as supportive of a “Fed information effect” channel of monetary policy, whereby an FOMC tightening (easing) communicates that the economy is stronger (weaker) than the public had expected. We show that these empirical ...
Working Paper
News and Uncertainty about COVID-19: Survey Evidence and Short-Run Economic Impact
We survey households about their expectations of the economic fallout of the COVID-19 pandemic, in real time and at daily frequency. Our baseline question asks about the expected impact on output and inflation over a one-year horizon. Starting on March 10, the median response suggests that the expected output loss is still moderate. This changes over the course of three weeks: At the end of March, the expected loss amounts to some 15 percent. Meanwhile, the pandemic is expected to raise inflation considerably. The uncertainty about these effects is very large. In the second part of the paper ...
Report
An overview of the Survey of Consumer Expectations
This report presents an overview of the Survey of Consumer Expectations, a new monthly online survey of a rotating panel of household heads. The survey collects timely information on consumers? expectations and decisions on a broad variety of topics, including but not limited to inflation, household finance, the labor market, and the housing market. There are three main goals of the survey: (1) measuring consumer expectations at a high frequency, (2) understanding how these expectations are formed, and (3) investigating the link between expectations and behavior. This report discusses the ...
Report
What would you do with $500? Spending responses to gains, losses, news, and loans
We use survey questions about spending to investigate features of propensities to consume that are useful for distinguishing between consumption theories. Asking households about their intended spending under various scenarios, we find that 1) responses to unanticipated gains are vastly heterogeneous (either zero or substantially positive), 2) responses to losses are much larger and more widespread than responses to gains, and 3) even those with large responses to gains do not respond to news about future gains. These three findings suggest that limited access to disposable resources is an ...
Working Paper
Structural Change and the Rise in Markups
Is the recent rise in markups caused by increased monopoly power or is it a natural consequence of structural change? I show that the rise in aggregate markups has been driven by a reallocation of market share away from non-services to services-producing firms and a faster increase of services’ markups. I develop a two-sector model to assess the sources of the rise in markups, in which the two forces of structural change play opposing roles. On one hand, an increase in the relative productivity of manufacturing leads to a decline of the relative price of manufactured goods and to an ...
Working Paper
News and Uncertainty about COVID-19: Survey Evidence and Short-Run Economic Impact
A tailor-made survey documents consumer perceptions of the U.S. economy’s response to a large shock: the advent of the COVID-19 pandemic. The survey ran at a daily frequency between March 2020 and July 2021. Consumer perceptions regarding output and inflation react rapidly. Uncertainty is pervasive. A business-cycle model calibrated to the consumer views provides an interpretation. The rise in household uncertainty amplifies the pandemic recession by a factor of three. Different perceptions about monetary policy can explain why consumers and professional forecasters agree on the ...
Journal Article
At the Richmond Fed: Telling the Story of Community Colleges
Community colleges are an important part of the higher education landscape, offering unique educational and training opportunities to workers at all stages of their careers. Nearly half of American workers between the ages of 24 and 64 have attended a community college at some point in their lives.
Working Paper
The Future in Today’s Prices: Evidence from a Survey of U.S. Firms
Do firms adjust prices to realized costs, expected costs, or both? We address this question using a new survey of U.S. businesses that separately measures realized cost changes since the last price adjustment and expected cost changes over the subsequent year, including portions attributable to 2025 trade policies. Using perceived tariff exposure as an instrument, we identify the causal effects of realized and expected costs on prices. Reset prices incorporate almost 70 percent of current costs and nearly 45 percent of expected costs over the next year. The importance of these channels varies ...
Journal Article
President's Message: Zooming in on Community Colleges
Even as overall labor market conditions have normalized over the past year, employers in the skilled trades continue to report a lack of available workers. The overall supply of workers has improved, but the supply of workers with the right skills remains limited.Employers are not the only parties invested in strengthening the talent pipeline. Communities recognize that to be competitive, they need a strong workforce.
Working Paper
The ups and downs of the gig economy, 2015–2017
A variety of researchers and public entities have estimated the prevalence of nontraditional work arrangements ? using diverse definitions ? in recent decades, and the topic has received increasing attention in the past five years. Despite numerous media reports that the prevalence of nonstandard work has increased since the Great Recession, not all sources agree on this point, and very little evidence exists relating to hours or earnings from such arrangements and their changes over time. Using unique data from the Survey of Informal Work Participation (SIWP), we describe changes in informal ...