The only way to address the primary driver of high shelter costs is to build more apartments and houses. High interest rates prevent that. It may seem counterintuitive to suggest that today’s high interest rates will fuel shelter inflation down the road. After all, the Federal Reserve has tightened monetary policy to stamp out price pressures ...

It would make imports more expensive and inflation harder to control, and it wouldn't promote exports as well as other policy options. According to Politico, the details have not been fully worked out. However, possible tactics include weakening the dollar unilaterally or threatening other countries with tariffs if they do not strengthen ...

Polls show voters are angry about costs, like mortgages, and worried they will stay high if the president wins re-election. Sky-high mortgage rates and other elevated borrowing costs are pinching American consumers ahead of the 2024 election, threatening President Biden’s chances at a second term. Yet so far, Mr. Biden has not called on ...

Small businesses (under 500 employees) are the backbone of the U.S. economy, accounting for nearly all U.S. businesses and almost half (45.9%) of U.S. private sector employees.1 Business formations (or legal births) are a helpful indicator of job creation and U.S. productivity growth. The 2020 COVID pandemic saw a surge in new business ...

Can the Federal Reserve build a better mousetrap? Wall Street Journal columnist Joseph Sternberg hopes so. Sternberg rightly indicts the Fed for failing to predict and contain the worst inflation in 40 years. The problem is "the central bank's model of the economy – the set of spreadsheets, as it were, that are supposed to help Fed ...

The US federal deficit reminds us of the 1958 science fiction horror classic, "The Blob." It stars none-other than Steve McQueen, in his first leading role. The blob is an amoeba-like alien creature that crashes to Earth from outer space and feeds on humans, getting bigger and bigger with every bite. The federal deficit is getting bigger ...

Anyone doubting that China is well on its way to a Japanese-style lost economic decade has apparently missed the bursting of its massive housing and credit market bubble and the souring of U.S. and European trade relations with that country. And if China, the world's second largest economy, were to fall, it would constitute a major headwind ...

It turns out the Japanese love the look and feel of their yen notes, and the bark from the argeli shrub in Puwamajhuwa 2,860 miles away is what makes the notes possible. Sharma and Travelli's story made the front page of the Times, but it has economic meaning well beyond A1. First is that everything produced is a consequence of production ...

Following in Arthur Burns' Footsteps. Just two weeks after telling an audience at Stanford University that inflation was on a "bumpy" road toward the Federal Reserve's 2% target, Chairman Jerome Powell abruptly shifted on Wednesday. He realized the endurance of rapid price increases by indicating that inflation was "taking longer than expected" ...

It is an article of faith on Wall Street, and in much of the press, that when the Fed lowers interest rates, it sparks a "reach for yield," a "bubble," a decline in the risk premium of other assets including stocks and houses. Not so, says a recent excellent paper, "Movements in Yields, not the Equity Premium: Bernanke-Kuttner Redux" by ...

Despite extraordinary monetary tightening by the Federal Reserve, inflation remains elevated above its 2 percent target. Even more worrying, inflation accelerated during the first quarter. The Consumer Price Index (CPI) rose at an annualized rate of 4.5 percent over the last three months. The figures for Personal Consumption Expenditures ...

When U.S. Treasury Secretary Yellen said that the inflation was transitory, she was partially right, but misdiagnosed the way cost pressures are transmitted and mitigated. Yes, shortages created by Covid dislocations of transportation and production occurred, but these were resolved by the private sector, finding ways to get the goods produced ...

America's ad hoc financial system is full of unintended consequences, such as the Fed's increasing liquidity by $1 trillion while trying to quell inflation. How can the stock market be soaring to repeated new highs when the Federal Reserve is trying to constrain the economy? In the last year, as it was trying to restrain inflation, the ...

The belief that mandates and massive subsidies can summon a world without fossil fuels is magical thinking. The idea that the United States can quickly "transition" away from hydrocarbons–the energy sources primarily used today–to a future dominated by so-called green technologies has become one of the central political divides of our time. ...

The Federal Reserve should extend its recent rebuke of the Basel Committee to the entire enterprise. The Basel Committee on Banking Supervision emerged as the international community's response to the inadequate financial regulatory frameworks globally that had contributed to the great financial crisis. The Basel Committee is charged with ...

In the aftermath of the pandemic, the United States experienced the highest rates of inflation of the last four decades. More recently, inflation rates have been trending lower. Nonetheless, a number of economists have been surprised to observe that consumers aren't very happy despite signs that the inflation rate is on a trajectory towards ...

Speaking to supporters in North Carolina late last month, Vice President Kamala Harris said, "We here agree that access to healthcare should be a right and not just a privilege of those who can afford it." President Biden picked up the thread when he joined Harris on stage, saying he envisioned "a future where healthcare is a right"–a future ...

CAMBRIDGE/DELHI – For the last several years, world leaders have made big promises and laid out bold plans to mitigate the climate crisis and help the neediest countries adapt. At this year's World Bank/IMF Spring Meetings, they must demonstrate that they can fulfill these promises, rather than simply touting new ones. The world is facing ...

Former budget director Mick Mulvaney recently wrote that inflation "is too much money chasing too few goods." That he was incorrect about inflation doesn't indict him as much as it places him in a crowded room with countless other economists, pundits and politicians who've long succeeded in failing to define what inflation is. The simple truth ...

Officials' Reassurance Means Little. We have heard it all from US Federal Reserve Chairman Jerome Powell in recent months – inflation will come down to the central bank's 2% target, we are likely at the peak of interest rates for this cycle, we should anticipate three rate cuts before the end of the year. Through it all, you have read the ...

The primary Federal Reserve inflation rate may not deal a potential death blow to the rate-cut outlook after all. Health care services prices, the biggest component of the core PCE price index, were very tame in March, according to producer price index data. The S&P 500 appeared to regain its footing in early Thursday stock market action, a ...

An investigation into Federal Reserve governor Lisa D. Cook’s academic record raises questions. Cook is one of the world's most powerful economists. She taught economics at Harvard University and Michigan State University and served on the Obama administration's Council of Economic Advisers before being appointed, in 2022, to the Federal ...

The last thing the global economy needs now is to have Germany, the world’s third-largest economy, go through a prolonged period of economic stagnation. Economic troubles are coming to Germany, Europe's largest economy, not as single spies but in battalions. They are also doing so at a time of domestic political weakness when the country lacks ...

Billionaires and Bernie Sanders agree on at least one thing: They see a four-day work week in America’s future. Hedge fund manager Steve Cohen is investing in golf courses because he anticipates a big increase in leisure time, and IAC founder Barry Diller is expecting people to be in the office only four days a week. The senator from ...

HONG KONG – Labor productivity growth in the US has been more than double that of the eurozone for the past 20 years. A forthcoming report from Mario Draghi will recommend removing barriers to competition, which would intensify the pressure on firms to innovate, but Europe desperately needs newer ideas than this if it is to see its ...

American consumers are doing what they do best: They are consuming goods and services. Their consumption of services has been especially strong. So the demand for workers by several major services industries has been particularly strong. In turn, robust employment gains have boosted consumers' purchasing power and spending. We have ...

Markets continue to push back and price out Federal Reserve interest-rate cuts, following weeks of Fed policymakers jawboning and stronger-than-expected inflation and other economic data. Investors now longer expect a Fed rate cut in June, though that it's essentially a toss-up. Meanwhile, markets are moving away from three rate cuts this year. ...

This week will feature some key inflation numbers. The March headline CPI (Wed) and PPI (Mar) will get a boost from higher gasoline prices. Their core inflation rates should continue to moderate. The week starts with the FRBNY survey of inflation expectations (Mon). The pump price of gasoline jumped last month and probably boosted ...

Mountain Valley Spring Water is bottled in Arkansas. Roughly two months ago an unexpected snowstorm in the state briefly shut down production. Sufficient inventory meant that the production interruption didn't initially have an impact on customers, but two months later there's a very real inventory shortage that has customers ...

Federal Reserve Chairman Jerome Powell gave yet another speech and contributed to more confusion on the outlook for interest rates. Speaking at Stanford University on Wednesday, he seemed sanguine about inflation. "On inflation, it is too soon to say whether the recent readings represent more than just a bump," he said, reiterating his view ...

When we were composing our history of the income tax, Taxes Have Consequences, we kept finding evidence of corporate art purchases from the 1950s through the 1970s. Office parks and towers employing thousands were full of art, much of it modernist, the new style. Then in the 1990s, corporations sold off all the stuff, rocking the ...

‘The Last Conservative’ is a title Friedman himself would have rejected. Time was, the merits of Universal Basic Income were up for debate. No longer. As so many arguments on federal entitlement expansion, the UBI debate has slid over from whether to how. Or even, how many? How many undocumented migrants and Minnesotans can join the few in ...

Writing in the Wall Street Journal, Joseph Sternberg wonders whether the Federal Reserve is too insulated from politics. The Fed clearly failed by allowing the worst inflation we've seen in 40 years. Now, however, there are worries it's veering too far the other way: "the central bank could cast the economy into a recession for no good ...

CAMBRIDGE – Germany's ongoing economic weakness suggests that the European Union's long-term economic slump is not likely to end anytime soon. But with traditional laggards like Italy and France showing signs of recovery, and Central and East European members performing well, the bloc's economic outlook could still take a turn for the ...

Former NY Fed President Sees Easing Financial Conditions Supporting Growth. Welcome to Central Bank Central. I'm Kathleen Hays. So the rate cut debate is hotter than ever. One side, of course, saying inflation is down sharply from the highs. Maybe the road down is bumpy, but it's still trending lower. Rates are too restrictive. It's time to ...

NEW YORK – While China obviously needs to boost private-sector confidence and revive growth with a more sustainable economic model, it is not clear that Chinese leaders fully appreciate the challenges they face. The shift back to state capitalism over the last decade is plainly incompatible with President Xi Jinping's development goals. At ...

This time around, the market has it right. The federal funds rate will probably stay a lot higher than what officials are projecting.Financial markets and the US Federal Reserve remain in disagreement on a subject crucial to asset prices and economic growth: how low interest rates will eventually go. Betting against the Fed is a fraught ...

The divergence between key fixed-income benchmarks shows the US economy is on a healthier endogenous growth path compared with Europe. Many of us have our favorite economic and financial indicators. I’m referring to those indicators that don’t get a lot - if any - attention from the television channels geared toward finance and markets and yet ...

Fed Chair Jerome Powell spoke at Stanford University today about the economy and monetary policy. He said, "I think we've gotten to what is, knock on wood, a pretty good place." He added, "We're using our tools to try to bring inflation down the rest of the way to 2%, while all the while keeping the economy strong as well." Today's data ...

Slowdown in wage growth eases worries that economy is too hot. Stronger-than-anticipated economic activity this year hasn’t changed the Federal Reserve’s broad expectation that declining inflation will allow for interest-rate cuts this year, Chair Jerome Powell said Wednesday. Powell pointed to signs that labor-market conditions are less ...

Welcome to Central Bank Central. I'm Kathleen Hays. Well, today we're celebrating with a very special guest. 50 years plus, more than half a century of money management, financial markets, central banks, inflation, and more. And in fact, more than a quarter century doing interviews with me. I'm talking about David Kotok. He was the CIO, ...

Why the official numbers might not reflect the cost-of-living increases we feel when we pay our bills. President Joe Biden boasted on X last week that America's inflation rate is "among the lowest in the world." In his State of the Union address, he pronounced, "Wages keep going up and inflation keeps coming down." Inflation stood at 3.2 ...

With core inflation at about 3%, Fed Chair Powell is taking quite a gamble talking about rate cuts. U.S. Federal Reserve Chair Jerome Powell is preparing the financial markets for an economic soft landing. Recently he testified in Congress that the central bank may soon be able to start lowering interest rates. Powell's optimism parallels ...

The advantage of being an economist is that I am utterly disinterested in partisan politics. I am, however, very interested in sound economics and respect for the limited federal powers enumerated in the US Constitution. In the past, I have chided both the Trump administration and the Biden administration for their shenanigans. The ...

"I've had enough of what they call shrinkflation," President Biden said during the Super Bowl in February. Who are you calling "they"? The new packet calculators of the 1970s had shrinkflation, not stagflation, to tabulate.getty In 2007, it was–I actually remember the moment I pounded out the term "shrinkflation," in the manuscript of my ...

NEW YORK – To explain why forecasters at the US Federal Reserve and other major institutions missed the mark on inflation in recent years, it is tempting to conclude that they were blindsided by unpredictably large shocks. But if the prevailing models work only when variables are relatively stable, they are of little use. Last year, following ...

…And other tales of the weird White House bubble-mind that's guiding this election, and the Biden administration. So… This weekend, you may have noticed that for the Easter holiday, the Biden administration declared A Proclamation on Transgender Day of Visibility. I underscore this not in order to trigger everyone who believes Easter is a holy ...

Regulators have yet to address the system’s vulnerability to sudden depositor withdrawals. Ever since the demise of Silicon Valley Bank in March 2023, regulators have been focused primarily on increasing loss-absorbing capital at the largest US financial institutions. Much less attention has been paid to the problem that precipitated last ...

Federal Reserve Chairman Jerome Powell starts almost every press conference after Federal Open Market Committee rate decisions by expressing his deep concern for the pain endured by families due to high inflation. You may get emotional just watching him! But none of that prevented him from providing indications on March 20 that rate cuts ...

When inflation picked back up in January 2024, many commentators described it as more noise than signal. The latest data from the Bureau of Economic Analysis (BEA) casts doubt on that view. The Personal Consumption Expenditures Price Index (PCEPI), which is the Federal Reserve's preferred measure of inflation, grew at a continuously ...