Economist Blog

NY Fed Treasury Spread Model: Probability of Recession Falls to Lowest Level Since 1983

admin — Wed, 24 Feb 2010 02:52:28 +0000

Submitted by CARPE DIEM Today the New York Federal Reserve updated its “Probability of U.S. Recession Predicted by Treasury Spread” with data through January 2010, and the Fed’s recession probability forecast through January 2011 (see top chart above). The NY Fed’s model uses the spread between 10-year and 3-month Treasury rates (3.67% spread in January, the [...]

Quote of the Day: “My Heart, My Choice”

admin — Wed, 24 Feb 2010 02:51:05 +0000

Submitted by CARPE DIEM “I did not sign away my right to get the best possible health care for myself when I entered politics.” ~Canadian Premier of Newfoundland and Labrador Danny Williams HT: John Goodman Visit 1800blogger to see all of our industry leading blogs.

Case-Shiller Home Index Improves for 12th Month

admin — Tue, 23 Feb 2010 23:53:53 +0000

Submitted by CARPE DIEM “In December, the 10-City and 20-City S&P/Case-Shiller Home Price Indices recorded annual declines of 2.4% and 3.1%, respectively. These two indices, which are reported at a monthly frequency, have seen improvements in their annual rates of return every month since the beginning of the year (see chart above).” Visit 1800blogger to see all [...]

Women Earn Almost 50% of College Math Degrees

admin — Tue, 23 Feb 2010 22:55:07 +0000

Submitted by CARPE DIEM We hear a lot about how women are underrepresented in STEM (science, technology, engineering and mathematics) fields and careers, and “Nationwide, there is a push for more women to choose STEM fields.” There is a special National Science Foundation program called ADVANCE, whose goal is to: “Increase the representation and advancement of [...]

The Value of an Economic Consultant: The Lagging Division

admin — Tue, 23 Feb 2010 21:48:16 +0000

Submitted by Businomics Blog Coming out of a recession (not the most recent, but another recession), a company had one line of business with flat sales. The company’s other divisions were hitting double-digit growth rates, but this one division had no growth at all. In the meeting to report my results, I could tell that the CEO [...]

WHAT’S THE CRITICAL FACTOR IN PORTFOLIO RETURN?

admin — Tue, 23 Feb 2010 15:02:23 +0000

Submitted by The Capital Spectator If you could only make one decision in your investment strategy, what would it be? Would you concentrate on picking the best securities? The best ETFs or mutual funds? Would you focus exclusively on trying to time your asset allocation/rebalancing choices? Or maybe you’d spend a lot of time deciding if [...]

Treasury Supplementary Financing Program (SFP)

admin — Tue, 23 Feb 2010 14:08:28 +0000

Submitted by Econbrowser The SFP, the U.S. Treasury’s program for assisting with the balance sheet of the Federal Reserve, is making a sudden and dramatic comeback. First a little background. Whenever the Federal Reserve buys an asset or makes a loan, it simply credits new reserve deposits to the account that the receiving bank maintains with the [...]

Real Wage Decline Ended the 1981-82 Recession?

admin — Tue, 23 Feb 2010 13:45:51 +0000

Submitted by Econbrowser David Henderson writes in his “Reply to DeLong”: In the 1981-82 recession, the fall in real wages helped end the recession. I don’t see it in BLS series Nonfarm Business Sector: Real Compensation Per Hour. Figure 1: Log nonfarm business sector compensation, deflated using nonfarm business sector deflated. NBER defined recession shaded gray; assumes last recession [...]

3X Inc. in Charge-Off Rate for Credit Cards Since ‘06 to Record High; Don’t Issuers Deserve Protection?

admin — Tue, 23 Feb 2010 00:57:23 +0000

Submitted by CARPE DIEM The Credit Card Act of 2009 provides a lot of protection for cardholders: Cardholders Deserve Protections against Arbitrary Interest Rate Increases Cardholders Should Be Protected from Due Date Gimmicks Cardholders Who Pay on Time Should Not Be Penalized Cardholders Should Be Protected from Misleading Terms Cardholders Deserve the Right to Set Limits on Their Credit Card Companies Should [...]

In Search of…Crowding Out

admin — Mon, 22 Feb 2010 23:12:53 +0000

Submitted by Econbrowser There are various definitions of crowding out. There’s crowding out in the financial markets, and crowding out of actual economic activity. In order for crowding out in the financial markets to translate into a reduction of the interest sensitive components of aggregate demand, one needs to see an impact on interest rates. So, [...]

CAN INVESTMENT MISTAKES BE RATIONAL DECISIONS?

admin — Mon, 22 Feb 2010 22:06:02 +0000

Submitted by The Capital Spectator There’s a furious debate these days over the efficient market hypothesis and whether recent events support or spurn its implications. Among the criticisms: investors are irrational, meaning that they’re prone to chase trends mindlessly. In turn, this leads to speculative manias and crushing selloffs. It all sounds reasonable on the surface, but [...]

GDP VS. MARKET CAP FOR EQUITY MARKET ASSET ALLOCATION

admin — Mon, 22 Feb 2010 16:07:23 +0000

Submitted by The Capital Spectator In the hierarchy of investment decisions, asset allocation is at or near the top of the list of variables that are strategically relevant for diversified portfolios. There are a number of studies telling us so, starting with the influential Brinson study from 1986—“Determinants of Portfolio Performance”—and its 1991 update. The basic [...]

Distortionary Effects of Regulations and the Law of Unintended Consequences: Annual Fees Are Back

admin — Mon, 22 Feb 2010 14:59:23 +0000

Submitted by CARPE DIEM WASH POST — “A law hailed as the most sweeping piece of consumer legislation in decades has helped make it more difficult for millions of Americans to get credit, and made that credit more expensive. It wasn’t supposed to be this way. The law that President Barack Obama signed last May shields card [...]

Another V-Sign of Economic Recovery: Chicago Fed National Activity Index Reaches 30-Month High

admin — Mon, 22 Feb 2010 14:00:59 +0000

Submitted by CARPE DIEM “Led by improvements in production- and employment-related indicators, the Chicago Fed National Activity Index in January was slightly positive for the second time in the past three months. From June 2007 through October 2009, the index had been consistently negative. The index increased to +0.02 in January from –0.58 in December, with [...]

The new normal

admin — Fri, 19 Feb 2010 09:43:46 +0000

Submitted by Econbrowser Also included in Federal Reserve Chair Ben Bernanke’s statement to Congress last week were some guidelines for what we might expect Federal Reserve decisions and communications to look like as we make the gradual adjustment to more normal conditions. In recent years, the Fed had gotten very good at communicating its intentions to the [...]