Monetary Policy Going Forward (Citing Bagehot, Bernanke and Babe Laufenberg)—"If the fiscal and regulatory authorities are able to dispel the angst that they are reportedly causing, further accommodation may not be needed because the liquidity that has been built up on corporate balance sheets and in the excess reserves of banks might then be released into the economy and spur job creation."
Are the Intraday Effects of Central Bank Intervention on Exchange Rate Spreads Asymmetric and State Dependent?—This paper investigates the intraday effects of unannounced foreign exchange intervention on bid-ask exchange rate spreads using official intraday intervention data provided by the Danish central bank.
The headline PCE price index increased at a 2.9 percent annualized rate in July, breaking a string of three consecutive monthly declines. Just as those three monthly declines were driven primarily by falling energy prices, July's increase owed much to a sharp rise in gasoline prices. The 12-month headline rate ticked up from 1.4 percent to 1.5 percent.
The trimmed mean PCE inflation rate for July was an annualized 0.9 percent. According to the BEA, the overall PCE inflation rate for July was 2.9 percent, annualized, while the inflation rate for PCE excluding food and energy was 1.3 percent.
"The pace of recovery in output and employment has slowed somewhat in recent months, in part because of slower-than-expected growth in consumer spending, as well as continued weakness in residential and nonresidential construction. Despite this recent slowing, however, it is reasonable to expect some pickup in growth in 2011 and in subsequent years."
Banking Globalization and International Business Cycles—This paper constructs a two-country DSGE model to study the nature of the recent financial crisis and its effects that spread immediately throughout the world, owing to the globalization of banking.
Bankers responding to the second-quarter survey continued to report optimism regarding overall agricultural conditions in the Eleventh District. Timely rains helped maintain adequate soil moisture in most areas, resulting in good crop conditions and favorable pasture growth. The wheat harvest was under way with accounts of very solid yields. However, low wheat prices were threatening farmers' margins, as were increased input costs for seed and chemicals. Livestock prices remained strong.
Global Recovery Continues, but Rate of Expansion Moderates—Global economic indicators point to an ongoing recovery from the financial crisis but suggest that the pace of growth is slowing. Emerging economies continue to post prerecession gross domestic product (GDP) growth rates, while advanced economies continue to expand gradually.
Regional Economy Remains on Road to Recovery—Recent data and Federal Reserve Bank of Dallas surveys suggest that the regional economy continues to expand, although there are indications the pace may be slowing .
Slowing Pace of Growth—Data released in the past six weeks suggest a slowing pace of growth in the national economy. In second quarter 2010, real gross domestic product (GDP) grew at a 2.4 percent seasonally adjusted, annualized rate—a significant step below first quarter's 3.7 percent pace.
The Dallas Fed presented a webcast—"Eleventh Federal Reserve District Weathers Financial Storms"—with economists Kenneth J. Robinson and D'Ann Petersen , who discussed current regional banking and commercial real estate conditions. Thomas Siems, senior economist and director of economic outreach in the Bank's Financial Institution Relationship Management Department moderated.
Evidence suggests the stimulus plan has provided a short-term economic boost, though it's unclear how large this boost has been, according to "Can the Nation Stimulate Its Way to Prosperity?"
For a third consecutive month, falling energy prices were the prime culprit in producing a negative headline PCE inflation rate—abetted this time around by declines in the price index for food. That string of consecutive negative headline rates looks to be snapped, however, when data for July come out. Meanwhile, the 12-month inflation rate for core PCE ticked down a notch, from 1.5 percent in May to 1.4 percent in June. The 12-month trimmed mean PCE inflation rate held steady at 1 percent.
The trimmed mean PCE inflation rate for June was an annualized 0.8 percent. According to the BEA, the overall PCE inflation rate for June was –1.7 percent, annualized, while the inflation rate for PCE excluding food and energy was 0.5 percent.
Texas employment expanded slightly in June, marking the sixth consecutive month of job growth. There was weakness in the housing market, as June housing starts and existing-home sales fell from their May readings. Texas exports dipped in May but remained significantly above the levels seen a year ago. Texas factory activity rebounded slightly in July after contracting in June, according to the Texas Manufacturing Outlook Survey.
"Many states and localities continue to face difficulties in maintaining essential services and have significantly cut their programs and work forces. These cuts have imposed hardships in local jurisdictions around the country and are also part of the reason for the sluggishness of the national recovery."
Oil Price Shocks and U.S. Economic Activity: An International Perspective
Credit, Housing Collateral and Consumption: Evidence from the U.K., Japan and the U.S.
An Analysis of the Neighborhood Impacts of a Mortgage Assistance Program: A Spatial Hedonic Model
Foreign Exchange Intervention When Interest Rates Are Zero: Does the Portfolio Balance Channel Matter After All?
Global Liquidity Trap
Income Differences and Prices of Tradables
Some Alternative Perspectives on Macroeconomic Theory and Some Policy Implications
The Federal Reserve Bank of Dallas produces estimates of monthly payroll employment by Federal Reserve District. These data are now available to the public and will be updated monthly.
Texas Manufacturing Activity Remains Sluggish—Texas factory activity rebounded slightly in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key indicator of state manufacturing conditions, rose from –2 to 5, suggesting output expanded slightly in July after contracting in June.
Building Healthier Communities from the Ground Up—This issue focuses on some nonlegislative efforts to foster healthier communities, particularly in low- and moderate-income areas. These efforts are led by both public and private organizations across the Federal Reserve's Eleventh District.
Global Energy Demand Healthy—Oil prices rebounded in the second half of June, rising above $77 per barrel. In late May, prices had fallen below $70 per barrel—more than $15 per barrel lower than the year-to-date high hit in April.
Manning the Gates: Migration Policy in the Great Recession—Reacting to rising unemployment rates during the Great Recession, numerous countries adopted policies aimed at keeping new migrants out and encouraging resident migrants to leave.
This update, prepared by Dallas Fed Senior Economist Jim Dolmas, provides an in-depth analysis of the latest personal consumption expenditures (PCE) inflation data. Updates will be posted monthly, following the release of the official PCE data by the Bureau of Economic Analysis.
Texas Manufacturing Activity Weakens—Texas factory activity declined slightly in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key indicator of state manufacturing conditions, fell from 21 in May to –2 in June, abruptly ending a seven-month streak of positive readings.
The trimmed mean PCE inflation rate for May was an annualized 1.1 percent. According to the BEA, the overall PCE inflation rate for May was –0.4 percent, annualized, while the inflation rate for PCE excluding food and energy was 2 percent.
Regional Economic Update: Region Continues to See Broad-Based Improvement—The regional economy continues to grow at a moderate pace. Payroll employment growth has strengthened in Texas, and the unemployment rate has stabilized more than a percentage point below the U.S. rate. Manufacturing and other sectors that fared poorly during the recession show increasing signs of life.
National Economic Update: Risk of Slower Growth Ahead—The U.S. economic recovery appears to have been solid through second quarter 2010. However, with fiscal stimulus measures and the inventory correction nearing an end, there are reasons to be concerned that growth will slow in the second half of the year.
"Eleventh District Banking Industry Weathers Financial Storms"—Banks in the Eleventh Federal Reserve District—Texas, northern Louisiana and southern New Mexico—have outperformed their counterparts nationwide, even in the midst of a recession.
"Cloud Over Commercial Real Estate Is Slowly Lifting in Texas"—With the Texas and national economies turning a corner and demand in the rental and investment markets stirring, a bottom in commercial real estate (CRE) may be in sight.
Spotlight: Maquiladora Employment—Juárez maquiladoras have been expanding their payrolls since August 2009 and employment levels are now above year-ago levels. Dallas Fed economists have developed a model to track Juárez's monthly maquiladora employment, an important economic indicator for the El Paso–Juárez region.
In an "On the Record" conversation, Lisa Roney, immigration consultant and former director of research and evaluation with U.S. Citizenship and Immigration Services, says a Westat study showed the government's E-Verify program detects about half of all unauthorized workers run through its system.
The Recovery, Growth and New Signs of Financial Market Strain—The current international situation can best be described as strong economic growth in emerging markets, a continued economic recovery in advanced economies and financial market strains in Europe. European sovereign debt problems persist, and the potential for contagion beyond the euro area remains. Inflationary pressures are still subdued and are expected to stay at modest levels.
Trends in U.S. Hours and the Labor Wedge—Quantitative analysis shows that the shrinking gender wage gaps and increasing labor income taxes observed in U.S. data are key determinants of hours and the labor wedge.
Financial Globalization, Financial Frictions and Optimal Monetary Policy—How should monetary policy be optimally designed in an environment with high degrees of financial globalization? To answer this question, this paper lays down an open economy model where net lending toward the rest of the world is constrained by a collateral constraint motivated by limited enforcement.
The Fiscal Multiplier and Spillover in a Global Liquidity Trap—Considers the fiscal multiplier and spillover in an environment in which two countries are caught simultaneously in a liquidity trap. Using an optimizing two-country sticky price model, this paper shows that the fiscal multiplier and spillover are contrary to those predicted in textbook economics.
Is the Recession Over in El Paso? This article looks at recent economic trends in El Paso, as well as the prospects for the major economic drivers that combine to determine El Paso's performance.
The Federal Reserve System's latest Beige Book survey has been released. The Dallas Beige Book, along with a link to the national summary and reports from other Federal Reserve Districts, is available online.
"As the economy and financial markets continue to recover, and as the actions taken to provide economic stimulus and promote financial stability are phased out, the budget deficit should narrow over the next few years. Even after economic and financial conditions have returned to normal, however, in the absence of further policy actions, the federal budget appears to be on an unsustainable path."
Measuring Business Cycles by Saving for a Rainy Day—Proposes a simple saving-based measure of the cyclical component in GDP. The measure is motivated by the prediction that the representative consumer changes savings in response to temporary deviations of income from its stochastic trend, while satisfying a present-value budget constraint.
Asymmetries and State Dependence: The Impact of Macro Surprises on Intraday Exchange Rates—This paper investigates the possible asymmetric response of intraday exchange rates (5-minute intraday JPY/USD) to macroeconomic news announcements during a very unusual period—Japan during 1999–2006 when the money market interest rate was effectively zero.
Does Foreign Exchange Reserve Decumulation Lead to Currency Appreciation?—Many developing countries have increased their foreign reserve stocks dramatically in recent years, often motivated by the desire for precautionary self-insurance. One of the negative consequences of large accumulations for these countries is the risk of valuation losses. This paper examines the implications of systematic reserve decumulation by the Czech authorities aimed at mitigating valuation losses on euro-denominated assets.
Economic conditions are firming up in Texas, suggesting a recovery is under way. Texas employment expanded again in April; 78,700 jobs have been added since the start of 2010. House prices are up slightly from last year, and housing starts ticked up in April. Quarterly exports increased for the fourth consecutive quarter, and the rig count for Texas continued its upward trend. Texas manufacturing activity expanded again in May.
"Our collective challenge is to help ensure that creditworthy borrowers have access to credit so that, should they choose, they can expand their businesses or increase payrolls, helping our economy to recover."
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