Understanding Hawks and Doves

Understanding Hawks and Doves

How do hawks and doves on the Federal Open Market Committee differ in their views of appropriate monetary policy and their related projections for inflation and unemployment? We find that hawks project higher inflation despite building tighter policy paths into their projections. Doves project lower inflation despite having easier policy paths, although their projections are somewhat closer to the median. In addition, hawks see a steeper inflation-unemployment tradeoff than doves up to a one-year horizon.

Source: Federal Reserve Bank of Kansas City

The latest Beige Book: Most firms retain positive outlook in New England

The Federal Reserve Bank of Boston contribution to the latest Beige Book

Business activity expanded modestly in the First District as 2017 came to a close. Most contacted retailers, manufacturers, and software and information technology (IT) services firms saw revenues increase, although a minority reported flat to slight declines in revenues or sales from a year earlier. Among responding retailers, online sales performed better than in-store sales. Revenue increases among software and IT services firms were strong, ranging from 10 percent to 20 percent year over year. Commercial and residential real estate markets continued much as in the last report, with commercial rents and residential prices increasing in general, while sales were mixed. Labor markets continued to be tight and difficulty in hiring workers has constrained expansion for some firms. Few contacts mentioned price changes. Most responding firms in the region retained a positive outlook for their business.

Good question from LifeHacker: "Why the Dow Jones Breaking Records Isn't Helping Your Bottom Line"

Why the Dow Jones Breaking Records Isn't Helping Your Bottom Line

To put it in perspective: just 52 percent of American adults owned stocks in 2016, according to Gallup. And as you may have guessed, that stock ownership is not evenly distributed among income groups: The Federal Reserve reports that 93.6 percent of families earning a median salary of $251,500 (the top 10 percent of wage earners) owned stock in 2016, while less than 40 percent of families earning up to a median salary of $54,100 did (0 to 50th percentile). Separately, an economist from New York University found that the top 20 percent of earners owned 92 percent of the stocks in 2013. So celebrating record highs for an arbitrary measure that almost half of adults don’t benefit from doesn’t make a ton of sense.

What’s a better measurement for the average worker? I’d posit employment, wages and debt. And here’s the thing. If you don’t have a job at all, you’re likely less concerned with whether the Dow is at 21,000 or 25,000 than when you’ll get your next paycheck. The unemployment rate is at a 17-year low, but economists worry that job growth may begin to slow. Then there’s wages, which are low, and our debt, which keeps increasing*—according to the Federal Reserve, consumer credit card balances are at a new all-time high of $1.0227 trillion, which should give the Dow enthusiasts pause. (*Actually, the Fed recently found we’re slightly less indebted overall because we’re not buying houses, which isn’t exactly a silver lining). Are you really celebrating the Dow’s new watermark if you have over $25,000 in student loan debt?