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Discussion Paper
What About Spending on Consumer Goods?
In a recent Liberty Street Economics post, I showed that one major category of consumer spending?spending on discretionary services such as recreation, transportation, and household utilities?behaved very differently in the 2007-09 recession and subsequent recovery than in previous business cycles: specifically, it fell more steeply and has recovered much more slowly. This finding prompted one of the editors of this blog to inquire whether consumer goods spending has also departed markedly from its behavior in past cycles. To answer that question, I examined the decline of expenditures on ...
Speech
Remarks at the 2015 U.S. Monetary Policy Forum
Remarks at the 2015 U.S. Monetary Policy Forum, New York City.
Working Paper
Forecasting U.S. Economic Growth in Downturns Using Cross-Country Data
To examine whether including economic data on other countries could improve the forecast of U.S. GDP growth, we construct a large data set of 77 countries representing over 90 percent of global GDP. Our benchmark model is a dynamic factor model using U.S. data only, which we extend to include data from other countries. We show that using cross-country data produces more accurate forecasts during the global financial crisis period. Based on the latest vintage data on August 6, 2020, the benchmark model forecasts U.S. real GDP growth in 2020:Q3 to be −6.9 percent (year-over-year rate) or 14.9 ...
Journal Article
Wringing the Overoptimism from FOMC Growth Forecasts
Growth forecasts by Federal Open Market Committee meeting participants were persistently too optimistic for 2008 through 2016. The typical forecast started out high but was revised down over time, often dramatically, as incoming data failed to meet expectations. In contrast, forecasts for 2017 through 2019 started low but were revised up over time. Cumulative forecast revisions for these years were much smaller on average than in the past. These observations suggest that participants have adjusted their forecast methodology, including lowering estimates of trend growth, to eliminate the prior ...
Working Paper
Understanding the New Normal : The Role of Demographics
Since the onset of the Great Recession, the U.S. economy has experienced low real GDP growth and low real interest rates, including for long maturities. We show that these developments were largely predictable by calibrating an overlapping-generation model with a rich demographic structure to observed and projected changes in U.S. population, family composition, life expectancy, and labor market activity. The model accounts for a 1?percentage point decline in both real GDP growth and the equilibrium real interest rate since 1980?essentially all of the permanent declines in those variables ...
Working Paper
How Does the Strength of Monetary Policy Transmission Depend on Real Economic Activity?
We study the relationship between the strength of the bank credit channel (BCC) of monetary policy and real GDP growth in the United States using quarterly commercial bank level data between 1986 and 2008. We find that the BCC was significantly stronger during periods of low economic growth. Monetary policy is more effective through this channel in spurring economic activity during periods of low growth, rather than in cooling the economy when growth is high. Furthermore, we find that the BCC operated through a broader range of loan categories and banks than previously documented, ...
Journal Article
Weaker GDP Growth, Inflation Uncertainty Dim U.S. Economic Outlook
Forecasts for weaker U.S. GDP growth in 2023 and uncertainty over high inflation contrast sharply with strong labor market conditions and household consumption.
Speech
Bullard Speaks with CNBC about Inflation, the Labor Market and GDP Growth
St. Louis Fed President James Bullard discussed his expectations for inflation, the most recent jobs data and his assessment of GDP growth during an appearance on CNBC’s “Closing Bell.”
Speech
Important choices for the Federal Reserve in the years ahead: remarks at Lehman College, Bronx, New York
Remarks at Lehman College, Bronx, New York.