Filippo's primary areas of interest are macroeconomics and financial stability. His recent research has focused on macroprudential policy, financial crises, and macroeconomic effects of financial distortions.
Three and a half years after the beginning of the recession, real GDP is still below its pre-recession peak. One reason is that firms’ investment (private nonresidential fixed investment) has not recovered. Currently, it is down 12 percent relative to its level at the start of the recession. While investment in equipment and software has bounced back and is now at pre-crisis levels, investment in nonresidential structures remains depressed. (Click here for more about investment in structures.) This behavior is unusual compared to past business cycles, when investment returned to its pre-recession peak level much more rapidly. Even during the 1973-1975 and 2001 cycles, in which investment remained depressed for years, it was much closer to its pre-recession peak by this point in the recovery.
Whatever is hindering the capital spending of firms, it is not likely to be the financial conditions in which they are operating. After weakening during the financial crisis, corporate balance sheets have since strengthened. Firms are holding relatively high levels of liquid assets. Profits and cash flows have been growing rapidly, driven by high productivity and low labor costs, and are now at record-high levels. External finance conditions continue to be favorable: Firms have been able to issue bonds and raise external funds at attractive, low bond yields.
Why then are firms still reluctant to invest? And why are they shying away from long-lived assets in particular? The most important factor is the large overhang of unused and underutilized structures and the excess capacity present in the economy. During the years before the crisis, high real estate prices encouraged households and firms to overinvest in structures. This generated an overhang of structures, which is now weighing on current real estate prices and investment. Also, with so much capital installed, capacity utilization rates are relatively low, below 80 percent, and there is little incentive to add to capacity. (Click here for more about structural overhang and capacity utilization.)
The fourth in a series of reports based on the 2016 Small Business Credit Survey (SBCS), this report details findings on the financing experiences and outcomes of the smallest firms in the US. Microbusinesses—a category of small firms comprising both nonemployer firms and firms with fewer than 5 employees—account for 9 in 10 firms in the US. The SBCS finds that microbusinesses face greater challenges than larger small firms and are less able to access financing.
Using a flexible statistical model to project inflation outcomes into the future, this Commentary finds that the most likely path for inflation based on recent inflation dynamics is generally similar to what would have been expected given inflation dynamics in the late 1990s, but there is more uncertainty around the forecast now than in the late 1990s.
The Columbus metro area’s unemployment rate has risen more than half a percentage point (to 4.3 percent) since April. Nevertheless, the metro area’s employment expanded by 2.0 percent, outpacing both the state and the nation. All major industries shared in this employment growth, with many sectors experiencing stronger gains in the metro area than in the nation. Home price gains remained robust, exceeding 5 percent on a year-over-year basis as of August, and the average number of permits issued per month for new housing units in the metro area has been substantially higher this year than in prior years. Per capita consumer debt levels remain stable, and credit card delinquency rates remain below both state and national averages. Finally, the Columbus metro area’s real per capita GDP grew 2.1 percent in 2016, a deceleration from the growth rate registered by the metro area in 2015.
CALL FOR PAPERS The International Journal of Central Banking (IJCB) is organizing its 2018 annual conference, "Ten Years after the Global Financial Crisis: What Have We Learned about Ensuring Financial Stability?" The conference will be hosted by De Nederlandsche Bank (DNB) in Amsterdam, The Netherlands, on June 25-26, 2018, and is being organized by Tobias Adrian, Harrison Hong, Luc Laeven, and Loretta Mester.