Toward the Oil-Dollar-Fed Rollercoaster Ride

The fluctuations of the oil prices, the Fed’s policy rate and the U.S. dollar are intertwined. In fall 2015/spring 2016, the Fed’s impending rate hikes will cause substantial turbulence in emerging markets. Until recently, oil prices were recovering. However, after rallying earlier in the year, oil plunged nearly 20 percent in July (and briefly fell […]

Why the Fed is Flummoxed by the U.S. Labor Market:

A New Analysis of Employment in the Era of Secular Stagnation and Global Oversupply   U.S. Jobs in 2014―A New Conundrum   Source: Bureau of Labor Statistics and author’s re-indexation. Aggregate payroll growth in 2014 has been concentrated in low wage sectors and, for reasons discussed in this report, is not transmitting effectively to consumption […]

Fed Watch: Forward Guidance Heading for a Change

The lackluster August employment report clearly defied expectations (including my own) for a strong number to round out the generally positive pattern of recent data.  That said, one number does not make a trend, and the monthly change in nonfarm payrolls is notoriously volatile.  The underlying pattern of improvement remains in tact, and thus the […]

What Did Quantitative Easing Accomplish?

Roger Farmer has taken a new look at an issue concerning the Federal Reserve’s program of large-scale asset purchases (referred to in the popular press as “quantitative easing”) that I’ve been discussing on Econbrowser and in my research with University of Chicago Professor Cynthia Wu for some time.   One theory of how LSAP might affect interest rates is that if […]

Looking for the Signal? Expect No Fresh Help From Yellen and Draghi at Jackson Hole

There are four main issues that investors will be wrestling with in the week ahead.  First, as we saw before the weekend, geopolitical developments can still roil the markets.  Second, economic data from the US, Europe and Japan has been disappointing.  This has helped extend the rally in the bond and stock markets. Third, the euro […]

Fed Hawks Squawk

How much leeway does Fed Chair Janet Yellen have in her campaign to hold interest rates low for a considerable period after asset purchases end later this year?  If you listen to Fed hawks, you would believe that she is quickly running out of room.  Dallas Federal Reserve President Richard Fisher argued that the liftoff […]

A Surprising Look Back at the Fed’s QE Programs

The Fed’s QE3 program is scheduled to end later this year. This will bring to a close the Fed’s five year experiment with QE programs. They have been incredibly controversial, especially among those who believe these programs enabled the federal government to run large budget deficits. Those holding this view typically make one of two […]

Fed Hubris: Central Bank Ignores That It is on Thin Political Ice

A shot across the Fed’s bow from Simon Johnson, former IMF chief economist and bank critic, on the surface looks to be a good bit of news. Johnson, in a recent Project Syndicate article, warns that the notoriously cloistered central bank is overly confident about its political position. Although Johnson is constrained by both space limits […]

The Case For Higher Rates Looks Weak… Again

Some analysts are again projecting that the age of higher interest rates has finally arrived. The Fed is tapering and the US economy is expanding moderately, despite a first-quarter setback. David Kotok last week wrote that the central bank’s tapering has now passed the tipping point and reflects a “tightening” of monetary policy. Recent inflation readings have […]