Economic Letter
Brief summaries of SF Fed economic research that explain in reader-friendly terms what our work means for the people we serve.
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The Mystery of Falling State Corporate Income Taxes
Daniel Wilson
The share of corporate profits in the U.S. collected by state governments via the corporate income tax has fallen sharply in the past quarter century. Some commentators have even referred to this as the “disappearance” of the state corporate income tax (SCIT).
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Economic Inequality in the United States
Janet L. Yellen
This Economic Letter is adapted from the 2006-2007 Economics of Governance Lecture delivered by Janet L. Yellen, president and CEO of the Federal Reserve Bank of San Francisco, at the Center for the Study of Democracy, University of California, Irvine, on November 6, 2006.
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Is a Recession Imminent?
John Fernald and Bharat Trehan
The sharp slowdown in housing and the inverted yield curve have led to concerns that the odds of a recession have risen. For instance, Dow Jones Newswire reported on November 2 that one model based on the yield curve put the probability of a recession over the next four quarters at more than 50%.
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Interest Rates, Carry Trades, and Exchange Rate Movements
Michele Cavallo
The U.S. dollar has seen some remarkable swings against major currencies recently. For example, over most of 2005, it gained nearly 18% against the yen and 13% against the euro, while between March and May 2006, it depreciated sharply against these currencies, losing almost 10% of its value.
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The Rise in Homeownership
Mark Doms and Meryl Motika
After decades of relative stability, the rate of U.S. homeownership began to surge in the mid-1990s, rising from 64% in 1994 to a peak of 69% in 2004, near which it has hovered ever since; this translates into 12 million more homeowners over the period (Figure 1).
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What Are the Risks to the United States of a Current Account Reversal?
Diego Valderrama
The U.S. current account has been in deficit since the beginning of the 1980s, except for a brief period in 1991, and has grown to 6.6% of gross domestic product (GDP) in the second quarter of 2006. The growing deficit has clearly caught the attention of policymakers and analysts.
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Did Quantitative Easing by the Bank of Japan “Work”?
Mark M. Spiegel
On March 19, 2001, the Bank of Japan (BOJ) embarked on an unprecedented monetary policy experiment, commonly referred to as “quantitative easing,” in an attempt to stimulate the nation’s stagnant economy. Under this policy, the BOJ increased its target for “current account balances” of commercial banks at the BOJ far in excess of their required reserve levels.
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Inflation Persistence in an Era of Well-Anchored Inflation Expectations
John C. Williams
Inflation expectations and core inflation in the United States have been remarkably stable during the past 10 years, a dramatic break from the pattern seen in the prior two decades, as seen in Figure 1. Indeed, long-run inflation expectations, as measured by the median response of the Survey of Professional Forecasters have barely budged since 1998.
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Safe and Sound Banking, 20 Years Later
Simon Kwan
The U.S. banking industry has enjoyed record profitability and very low failure rates in recent years. This scenario is a welcome contrast to the 1980s, when turbulent economic conditions, the crisis in the savings and loan industry, and a highly volatile interest rate environment put the banking industry under severe stress.
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Health Insurance Costs and Declining Coverage
Tom Buchmueller and Rob Valletta
As discussed in a recent (Jones 2005), the share of health-care spending in GDP has been rising rapidly in the United States and other advanced industrial countries since at least 1960. For example, data from the U.S. Centers for Medicare and Medicaid Services (CMS) indicate double-digit annual increases in premiums for private health plans during the years 2001-2003, which significantly increased the overall share of business and household expenditures devoted to medical services.