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Community Credit : A New Perspective on America’s Communities

July 7, 2015 Comments off

Community Credit : A New Perspective on America’s Communities
Source: Federal Reserve Bank of New York

Community Credit is a new way to understand the economic well-being of communities by examining the credit behavior of households.

First, we measure each community – also known as a local credit economy – by the percentage of adults residing there who have credit scores in the New York Fed Consumer Credit Panel dataset. Then, each community is characterized based on the aggregated credit behavior of its adult residents.

These indicators of credit behavior are then used to assess each community’s ability to access credit and its credit stress level.

The information provided here may be used by community leaders for developing policy priorities, assessing promising actions, and tracking the impacts of programs.

What Do Data on Millions of U.S. Workers Reveal about Life-Cycle Earnings Risk?

February 12, 2015 Comments off

What Do Data on Millions of U.S. Workers Reveal about Life-Cycle Earnings Risk? (PDF)
Source: Federal Reserve Bank of New York

We study the evolution of individual labor earnings over the life cycle, using a large panel data set of earnings histories drawn from U.S. administrative records. Using fully nonparametric methods, our analysis reaches two broad conclusions. First, earnings shocks display substantial deviations from lognormality—the standard assumption in the literature on incomplete markets. In particular, earnings shocks display strong negative skewness and extremely high kurtosis—as high as 30 compared with 3 for a Gaussian distribution. The high kurtosis implies that, in a given year, most individuals experience very small earnings shocks, and a small but non-negligible number experience very large shocks. Second, these statistical properties vary significantly both over the life cycle and with the earnings level of individuals. We also estimate impulse response functions of earnings shocks and find important asymmetries: Positive shocks to high-income individuals are quite transitory, whereas negative shocks are very persistent; the opposite is true for low-income individuals. Finally, we use these rich sets of moments to estimate econometric processes with increasing generality to capture these salient features of earnings dynamics.

See: Your lifetime earnings are probably determined in your 20s (Washington Post)

Do the Benefits of College Still Outweigh the Costs?

February 2, 2015 Comments off

Do the Benefits of College Still Outweigh the Costs? (PDF)
Source: Federal Reserve Bank of New York

In recent years, students have been paying more to attend college and earning less upon graduation—trends that have led many observers to question whether a college education remains a good investment. However, an analysis of the economic returns to college since the 1970s demonstrates that the benefits of both a bachelor’s degree and an associate’s degree still tend to outweigh the costs, with both degrees earning a return of about 15 percent over the past decade. The return has remained high in spite of rising tuition and falling earnings because the wages of those without a college degree have also been falling, keeping the college wage premium near an all-time high while reducing the opportunity cost of going to school.

An In-depth Look at Large and Complex Banks

May 29, 2014 Comments off

An In-depth Look at Large and Complex Banks
Source: Federal Reserve Bank of New York

The Federal Reserve Bank of New York today released a special Economic Policy Review series on large and complex banks. The 11 research papers that make up this series provide analysis in several key areas, including bank size, complexity and resolution. The papers, which are written by New York Fed economists, aim to further study and debate of these topics and to help inform policymakers.

Among the papers’ key findings:
Bank size has benefits and costs: the upside is the potential for economies of scale and lower operating costs; the downside is the “too-big-to-fail” problem and associated funding advantages and moral hazard.
Banks have become less bank-centric and more organizationally complex. Furthermore, the increase in bank complexity may be a natural response to an evolving intermediation technology.
Bail-in regimes, where the claims of creditors of the parent company are converted to equity in resolution, are an efficient and superior process for resolving the failure of a large financial firm. Requiring systemically important bank holding companies to issue “bail-inable” long-term debt that converts to equity in resolution would make large bank failures more orderly.

New York Fed Report Shows Households Adding Debt

February 27, 2014 Comments off

New York Fed Report Shows Households Adding Debt
Source: Federal Reserve Bank of New York

In its latest Household Debt and Credit Report, the Federal Reserve Bank of New York announced that outstanding household debt increased $241 billion from the previous quarter, the largest quarter over quarter increase since the third quarter of 2007. The increase was led primarily by a 1.9 percent increase in mortgage debt ($152 billion). In Q4 2013 total household indebtedness increased to $11.52 trillion; 2.1 percent higher than the previous quarter.  Overall household debt remains 9.1 percent below the peak of $12.68 trillion in Q3 2008. The report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data.

New York Fed Report Shows Households Adding Debt

February 19, 2014 Comments off

New York Fed Report Shows Households Adding Debt
Source: Federal Reserve Bank of New York

In its latest Household Debt and Credit Report, the Federal Reserve Bank of New York announced that outstanding household debt increased $241 billion from the previous quarter, the largest quarter over quarter increase since the third quarter of 2007. The increase was led primarily by a 1.9 percent increase in mortgage debt ($152 billion). In Q4 2013 total household indebtedness increased to $11.52 trillion; 2.1 percent higher than the previous quarter. Overall household debt remains 9.1 percent below the peak of $12.68 trillion in Q3 2008. The report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data.

Are Recent College Graduates Finding Good Jobs?

January 21, 2014 Comments off

Are Recent College Graduates Finding Good Jobs? (PDF)
Source: Federal Reserve Bank of New York

According to numerous accounts, the Great Recession has left many recent college graduates struggling to find jobs that utilize their education. However, a look at the data on the employment outcomes for recent graduates over the past two decades suggests that such difficulties are not a new phenomenon: individuals just beginning their careers often need time to transition into the labor market. Still, the percentage who are unemployed or “underemployed”—working in a job that typically does not require a bachelor’s degree—has risen, particularly since the 2001 recession. Moreover, the quality of the jobs held by the underemployed has declined, with today’s recent graduates increasingly accepting low-wage jobs or working part-time.

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