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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Off-Site Monitoring of Bank Holding Companies
John Krainer and Jose A. Lopez
Bank supervisors engage in extensive monitoring of banking organizations in order to enforce regulations and to guard against systemic risk. In the United States, primary responsibility for monitoring bank holding companies (BHCs) falls to the Federal Reserve.
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Deposit Insurance Reform—When Half a Loaf Is Better
Fred Furlong and Simon Kwan
When it comes to compromise, we can take comfort in the old saying, “half a loaf is better than none.” But when it comes to legislation on deposit insurance reform now before Congress, that old saying takes a new twist: “half a loaf is even better than a whole loaf.”
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House Price Dynamics and the Business Cycle
John Krainer
It is somewhat surprising that house prices in most parts of the nation have stayed high despite the downturn in the economy. As Figure 1 shows, real (inflation-adjusted) house price changes became negative with GDP growth during the last recession in 1991; but this time, they have remained positive and appear to be firm.
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Is There a Credit Crunch?
Simon Kwan
Recently, some concerns about a “credit crunch” in the U.S. economy have appeared in the business press. In the commercial paper market, a number of large firms were reportedly unable to borrow from this market, as investors reassessed the credit risk of these firms amid growing accounting concerns.
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Macroeconomic Models for Monetary Policy
Glenn D. Rudebusch and Tao Wu
This Economic Letter summarizes the papers presented at the conference “Macroeconomic Models for Monetary Policy” held at the Federal Reserve Bank of San Francisco on March 1-2, 2002, under the joint sponsorship of the Federal Reserve Bank of San Francisco and the Stanford Institute for Economic Policy Research.
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Inferring Policy Objectives from Policy Actions
Richard Dennis
There is little doubt that when central banks, including the Federal Reserve, set interest rates, they do so purposefully, with particular goals and objectives in mind. But what are these goals and objectives? And if the Federal Reserve behaves systematically, what is it systematically responding to?
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What’s Behind the Low U.S. Personal Saving Rate?
Milton Marquis
In recent years, the personal saving rate in the United States has fallen sharply, and it is now at a very low level compared either to U.S. historical experience or to the savings behavior of many other industrialized countries. From 1980 through 1994, the U.S. saving rate averaged 8%; thereafter, it fell steeply, and since mid-2000, with allowance made for the tax rebates that boosted household saving in the months of July, August, and September 2001, it has averaged approximately 1%.
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The Changing Budget Picture
Carl E. Walsh
In January 2001, the Congressional Budget Office (CBO) reported that the federal government was projected to run a $313 billion surplus in 2002. Now, just a little over a year later, the CBO’s latest reports indicate a major deterioration in the budget projections.
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Predicting When the Economy Will Turn
Prakash Loungani and Bharat Trehan
Are turning points in the economy—recessions and recoveries—hard to predict? Recent experience may not tell us much: although almost no forecaster predicted the onset of the latest U.S. recession, unusual forces may have been at work this time around. But what about more typical recessions? And what about recoveries?
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Recession in the West: Not a Rerun of 1990-1991
Mary C. Daly
The Twelfth District’s extraordinary expansion ended abruptly in 2001, as the downturn in the information technology (IT) sector and the September 11 terrorist attacks combined to damp employment growth in nearly every District state and end the West’s reign as the fastest growing region in the nation.