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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Can the Stock Market Save Social Security?
Kevin Lansing
By now, most people are aware that some action by Congress will be needed to save Social Security from bankruptcy as the baby boom generation enters retirement. Official projections imply that the combined trust funds for Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) will be exhausted around the year 2030.
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Slower Growth in California: the Role of Manufacturing
Mary Daly
Over the past few years robust growth in manufacturing employment has helped California expand more rapidly than the nation. Recently, however, the financial crisis in East Asia and general imbalances in supply and demand in some high-tech sectors have combined to damp growth in the state’s manufacturing sector.
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East Asia’s Impact on Twelfth District Exports
Rob Valletta
This year, Japan’s economy is mired in recession, and the financial crisis that hit several smaller East Asian countries has deepened and spread throughout most of the region. Many analysts have predicted that these problems would exert restraining effects on economic growth in the U.S.
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Contractionary Effects of Devaluation
Kenneth Kasa
What is perhaps most surprising about recent events in Asia is not the widespread currency devaluations but the subsequent declines in economic activity. Many observers noted that the declining yen and China’s devaluation of the yuan had eroded the competitiveness of these countries.
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Responding to Asia’s Crises
Ramon Moreno
It is now more than a year since the financial crises broke out in East Asia. Yet the sharp currency depreciations associated with the crises have not spurred rapid growth in their dollar exports, which would underpin a rebound in economic activity in the region.
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Risk and Return of Banks’ Section 20 Securities Affiliates
Simon Kwan
In recent years, the push to allow greater affiliation among banks and other financial firms has intensified. Through regulatory measures, banking organizations have made inroads into both securities and insurance activities.
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How Fast Is Modern Economic Growth?
J. Bradford DeLong
The pace of productivity growth since the end of the Civil War has averaged about 1.6% per year–or so historical estimates (Kendrick 1961) and the official statistics of the Department of Commerce say. This average annual growth rate implies that output per worker doubles every 44 years, and that in the 133 years since the Civil War, productivity has doubled three times.
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Mortgage Interest Rates, Valuation, and Prepayment Risk
Joe Mattey
Mortgage interest rates dropped in early 1998 to nearly the lowest level in several decades. As mortgage rates moved down, refinancing activity surged, flooding some mortgage investors with funds for reinvestment at a time when a broader array of fixed-income investments also were offering lower yields.
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Income Inequality and Mortality Risk in the United States: Is There a Link?
Mary Daly and Greg Duncan
Rapid growth in income inequality in the United States over the past 20 years has raised numerous concerns among policymakers. One of the more disturbing is the possible link between income inequality and mortality.
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The Natural Rate, NAIRU, and Monetary Policy
Carl E. Walsh
The natural rate of unemployment is a key concept in modern macroeconomics. Its use originated with Milton Friedman’s 1968 Presidential Address to the American Economic Association in which he argued that there is no long-run trade-off between inflation and unemployment: As the economy adjusts to any average rate of inflation, unemployment returns to its “natural” rate.