Archive for the ‘Federal Reserve Bank of Cleveland’ Category

A College Education Saddles Young Households with Debt, but Still Pays Off

August 7, 2014 Comments off

A College Education Saddles Young Households with Debt, but Still Pays Off
Source: Federal Reserve Bank of Cleveland

Many parents believe their children must get a college degree—especially if they want to have at least as comfortable a lifestyle as their parents had; yet the price of a college degree has been rising rapidly over the past three decades. As costs have risen, more and more students and their families have turned to education loans for financing. This trend, combined with the strong propensity for households to form among individuals of similar education levels, has led to much larger student loan debt burdens for households headed by young adults who have attended college. In the 1989 Survey of Consumer Finances, real (inflation-adjusted) average student loan debt for young households (those headed by someone between 22 and 29 years of age) with a college degree was $3,420. In 2010, the same average was $16,714, nearly a 400 percent increase. For households with some college, but without a college degree, average student loan debt rose about 270 percent.

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Which Poor Neighborhoods Experienced Income Growth in Recent Decades?

April 18, 2014 Comments off

Which Poor Neighborhoods Experienced Income Growth in Recent Decades?
Source: Federal Reserve Bank of Cleveland

Why has average income grown in some poor neighborhoods over the past 30 years and not in others? We explore that question and find that low-income neighborhoods that experienced large improvements in income over the past three decades tended to be located in large, densely populated metro areas that grew in income and population. Residential sorting—changes in population and demographics within neighborhoods—could help to explain this relationship.

Gentrification and Financial Health

November 22, 2013 Comments off

Gentrification and Financial Health
Source: Federal Reserve Bank of Cleveland

Gentrification is a form of neighborhood change. While it does not have a precise definition, it is commonly associated with an increase in income, rising home prices or rents, and sometimes with changes in the occupational mix and educational level of neighborhood residents.

Gentrification is sometimes viewed as a bad thing. People claim that it is detrimental to the original residents of the gentrifying neighborhood. However, a look at the data suggests that gentrification is actually beneficial to the financial health of the original residents. From a financial perspective, it is better to be a resident of a low-price neighborhood that is gentrifying than one that is not. This is true whether residents of the gentrifying neighborhood own homes or do not and whether or not they move out of the neighborhood. This is interesting because one might expect renters to be hurt more by gentrification, and one might also be concerned that people who moved out of the neighborhood did so because they were financially strained.

In this article I consider a measure of gentrification based on neighborhood home values, and examine how this measure correlates with changes in credit scores and debt delinquency measures in gentrifying neighborhoods.

A Decade of Hard Times in Places that Rely on Manufacturing Employment

February 13, 2013 Comments off

A Decade of Hard Times in Places that Rely on Manufacturing Employment

Source: Federal Reserve Bank of Cleveland

While the fraction of people employed in the manufacturing sector has declined greatly in the United States over time, manufacturing still makes up a large fraction of employment in some parts of the country. One way to see this is by looking at how the share of manufacturing employment is distributed across counties. The right tail of the distribution shows a set of counties where manufacturing makes up a much higher share of employment than the average for the country (which is 11 percent).

Household Formation and the Great Recession

August 29, 2012 Comments off

Household Formation and the Great Recession
Source: Federal Reserve Bank of Cleveland

During the Great Recession, the rate at which Americans formed households fell sharply. Though the rate has recently picked up, it isn’t fast enough to make up for the shortfall in household formation that occurred over the last several years. An analysis of recent household formation patterns shows that the greatest shortfall occurred among young adults and that it is related to weak economic conditions. Housing choices have shifted as well, with a greater proportion of young households living in rental housing rather than owner-occupied homes.

Urban Growth and Decline: The Role of Population Density at the City Core

January 7, 2012 Comments off
Source:  Federal Reserve Bank of Cleveland
In recent decades, some cities have seen their urban centers lose population density, as residents spread farther out to suburbs and exurbs. Others have kept populous downtowns even as their environs have grown. Population density in general has economic advantages, so one might wonder whether a loss of density, which may be a symptom of negative economic shocks, could amplify those shocks. We look at four decades of census data and show that growing cities have maintained dense urban centers, while shrinking cities have not. There are reasons to think that loss of population density at the core of the city could be particularly damaging to productivity. If this is the case, there could be productivity gains from policies aimed at reversing that trend.

Growing Cities, Shrinking Cities

April 18, 2011 Comments off

Growing Cities, Shrinking Cities
Source: Federal Reserve Bank of Cleveland

As the 2010 census data rolls out, researchers will be conducting extensive analysis on a variety of issues. So far we have only been privy to the re-apportionment (population) data, which have generated their fair share of media coverage. Regardless of the media spin, a clearer picture of how cities’ populations have changed from 2000 to 2010 is emerging. What are some of the characteristics of the cities that grew, and how do they compare to those of the cities that shrank?

Recent Developments in Inflation Expectations

April 9, 2011 Comments off

Recent Developments in Inflation Expectations
Source: Federal Reserve Bank of Cleveland

Recent increases in energy and food prices have fed concerns about the prospect of inflation in the near future. While the rising prices of these important commodities are felt by everyone, as two prices among many, they do not necessarily signal impending inflation. For a better gauge of future inflation, we turn to various measures of inflation expectations. Inflation expectations are both a predictor and an important factor in future inflation, and as it happens, most of the short-term inflation expectation measures we have looked at have been rising lately.

The Great Recession’s Effect on Entrepreneurship

April 4, 2011 Comments off

The Great Recession’s Effect on Entrepreneurship
Source: Federal Reserve Bank of Cleveland

Though the recent recession was the worst downturn since the Great Depression, some observers argue that one silver lining is an upswing in entrepreneurship. Recessions, they claim, provide laid-off workers with the motivation to start their own businesses, and a recent study suggests that in 2009 the number people becoming self employed spiked to its highest level in more than a decade. Unfortunately, a careful look at multiple sources of data shows that the Great Recession was actually a time of considerable decline in entrepreneurial activity in the United States.


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