News from the Fed

  • Recovery more ordinary than extraordinary, says Cleveland Fed researcher
  • Although popular opinion strongly sways to the belief that the economic recovery has been substandard, Federal Reserve Bank of Cleveland Senior Research Economist Kenneth R. Beauchemin argues that it is consistent with past recoveries. Using a simple forecasting model and data from past business cycles, Beauchemin finds that current real GDP growth, inflation, and the Federal Reserve’s near-zero federal funds rate policy are in line with what the model predicts a standard recovery from the Great Recession would look like. Beauchemin notes that the unemployment rate remains higher than history alone would suggest, but not resoundingly so. Read more  (PDF)
  • Unemployment after the Recession: A New Natural Rate?
  • While the unemployment rate has doubled over the recent business cycle, the underlying long-term trend in the rate -- the so-called "natural" rate of unemployment -- has inched up only modestly, to roughly 5.6-5.7 percent, say Federal Reserve Bank of Cleveland researchers Murat Tasci and Saeed Zaman, who also note that the actual unemployment rate may stay well above the natural rate for some time. Read more
  • President Pianalto offers a Fourth District perspective on REO
  • In a speech at the REO and Vacant Property Strategies for Neighborhood Stabilization Summit, Federal Reserve Bank of Cleveland President and CEO Sandra Pianalto discussed the weak housing market in her region and some of the ideas that have emerged from the Bank’s research and outreach efforts related to the housing crisis. She concluded by describing a new proposal to use the Community Reinvestment Act’s flexibility to channel more resources to REO disposition. Read more
  • REO & Vacant Properties: Strategies for Neighborhood Stabilization
  • On September 1, the Federal Reserve is hosting a national summit and releasing a companion publication aimed at fighting the rising tide of foreclosures and helping to stabilize neighborhoods most at risk of decline. Listen live, download the publication, and check out the latest Drawing Board video here. Read more

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From President Pianalto

Sandra Pianalto, President and CEO, Federal Reserve Bank of Cleveland
Sandra Pianalto
President and CEO
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Features

REO & Vacant Properties: Strategies for Neighborhood Stabilization

On September 1, the Federal Reserve is hosting a national summit and releasing a companion publication aimed at fighting the rising tide of foreclosures and helping to stabilize neighborhoods most at risk of decline. Listen live, download the publication, and check out the latest Drawing Board video here. Read more

2009 Annual Report: Putting Systemic Risk on the Radar Screen

The Federal Reserve Bank of Cleveland’s 2009 Annual Report essay stresses the importance of defining and measuring systemic risk in order to help contain future economic crises. The essay advocates using the "Four Cs" to gauge systemic risk: contagion, concentration, correlation and context. Read more  (PDF)

President Pianalto discusses "Forecasting in Uncertain Times"

In a speech to the Economic Club of Pittsburgh, Federal Reserve Bank of Cleveland President and CEO Sandra Pianalto discussed why and how the Bank develops its economic forecasts and why the role of judgment becomes paramount for forecasting during uncertain times such as these. She concluded the speech with her current economic outlook. Read more

Spring Issue of Forefront

In the latest issue of Forefront, researchers at the Federal Reserve Bank of Cleveland propose changes to the Community Reinvestment Act (CRA) to make it a more effective tool for improving conditions in low-income neighborhoods in our post-crisis era. Read more  (PDF)

The Drawing Board: Federal Reserve Independence

This installment of the Cleveland Fed’s Drawing Board video series (really bad drawings, real simple explanations) focuses on how the Federal Reserve operates and why it?s structured the way it is. The Fed is in the news a lot these days, and we hope the video helps people understand the complicated institution a little better. Read more

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Latest Economic Research

  • Not Your Father’s Recovery?
  • Kenneth Beauchemin
  • There has been much talk about a disappointing recovery in the wake of the Great Recession—that this time it is much slower. Comparing features of this recovery to past recoveries casts some doubt on that view. The comparison is made using a scaled-down version of the sophisticated and powerful models that real forecasters actually use. Applying it to real GDP growth, unemployment, inflation, and the federal funds rate suggests that the recovery looks consistent with past recoveries—at least so far. Read more  (PDF)
  • Unemployment after the Recession: A New Natural Rate?
  • Murat Tasci and Saeed Zaman
  • The past recession has hit the labor market especially hard, and economists are wondering whether some fundamentals of the market have changed because of that blow. Many are suggesting that the natural rate of long-term unemployment—the level of unemployment an economy can’t go below—has shifted permanently higher. We use a new measure that is based on the rates at which workers are finding and losing jobs and which provides a more accurate assessment of the natural rate. We find that the natural rate of unemployment has indeed shifted higher—but much less so than has been suggested. Surprising trends in both the job-finding and job-separation rates explain much about the current state of the unemployment rate. Read more  (PDF)
  • The Effect of Foreclosures on Nearby Housing Prices: Supply or Disamenity?
  • Daniel Hartley
  • Several studies have measured negative price effects of foreclosed residential properties on nearby property sales. However, these studies do not address which mechanism is responsible for these effects. I measure separate effects for different types of foreclosed properties and use these estimates to decompose the effects of foreclosures on nearby home prices into a component that is due to additional available housing supply and a component that is due to disamenity stemming from deferred maintenance or vacancy. I estimate that each extra unit of supply decreases prices within 250 feet by about 1.6% in low-vacancy-rate census tracts while the disamenity stemming from a foreclosed property is near zero. In high-vacancy-rate census tracts the story is reversed: each extra unit of foreclosure is associated with a disamenity effect of about −2% within 250 feet but no supply effect.  (PDF)
  • Inflation: Soft but Stable?
  • Brent Meyer
  • We have experienced a dramatic disinflation—a slowing in the growth rate of inflation—over the past couple of years. With most measures of inflation reporting in at very low rates, speculation abounds that disinflation will eventually give way to deflation. A quick glance at the most recent report on consumer prices might splash some cold water on that discussion. But then, a deeper dig through the report reveals details that might support continued low rates of inflation. Read more

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