►Bank Loans: Still Contracting
Information from various sources suggests that the number of loans that banks are making to businesses continues to fall. The contraction appears to be driven by both supply and demand; banks are extending less credit, and businesses are asking for less. The restriction of credit may be one important factor that is constraining the current recovery, since businesses, especially small ones, rely on bank loans and access to credit to finance their operations, capital expenditures, and growth.
►In a sluggish economic summer, no easy fix ahead
“You can’t force people to take out a loan or spend money that they don’t want to spend,” says Alice Rivlin, who served as the Fed’s No. 2 official in the late 1990s.
►Dissenting KC Fed chief says interest rates too low for too long
The U.S. economy is recovering and the Federal Reserve needs to raise interest rates, lest it leave in place a policy that will only fuel future financial imbalances, Federal Reserve Bank of Kansas City President Thomas Hoenig said Friday.
►Economic Growth Prospects Dim in U.S. After Retail Sales, Trade Reports
Prospects for U.S. economic growth took a hit this week after reports showed the trade deficit swelled and consumers reined in spending.
►What Will Happen If the Fed Stops Paying Interest on Reserves?
Banks will try, ultimately unsuccessfully, to get rid of their reserves by exchanging them for T-bills and other safe, liquid, short-maturity assets.
►Beyond the zero lower bound on nominal interest rates
How can monetary policy overcome the zero lower bound on interest rates? This column explores the possibility of negative nominal interest rates, arguing that, for it to work, all reserve nations must agree to protect against using foreign currencies as an alternative means of exchange.
►US ‘Virtually Certain’ to Fall Into A New Recession: Rosenberg
The US economy is almost certainly headed back into a double dip recession, and economists aren’t seeing it because they’re using “the old rules of thumb” that don’t apply this time, well-known economist David Rosenberg told CNBC.
►Economists in Philly Fed Survey More Pessimistic
A closely watched poll of economists conducted by the Federal Reserve Bank of Philadelphia saw analysts downgrade their estimates of future growth and hiring levels, as well as inflation rates, although the forecasters still put low odds on another contraction in growth.
►Deflation and negative TIPS yields
So really, negative TIPS yields can be taken as a sign that the markets are beginning to price in some brief dip into negative-inflation territory. They’re not a sign that the markets are expecting no deflation.
►Using Productivity Data to Understand Employment Trends
A slowdown in productivity growth is not usually good news, but the dip in U.S. productivity in the second quarter of 2010 may have a silver lining. The 0.9 percent decline in productivity, and the data that underlie it, appear to indicate that the stage is now set for employment growth in the second half of the year…On balance, then, labor market data show an abundant supply of reasonably priced, productive labor, and an exhaustion of reserves produced by recession-driven labor hoarding. The groundwork is laid for employment growth to improve later this year if–and it is still a big if–there is sufficient demand for the output that newly hired workers can produce.