Serving the public with innovative research and analysis
Nicolas Petrosky-Nadeau, research advisor at the Federal Reserve Bank of San Francisco, stated his views on the current economy and the outlook as of June 9, 2016.
Some recent research has suggested that macroeconomic variables, such as output and inflation, can improve interest rate forecasts. However, the evidence for this puzzling result is based on unreliable statistical tests. A new simple method more reliably assesses which variables are useful for forecasting. The results from this method suggest that some of the published evidence on the predictive power of macroeconomic variables may be spurious, supporting the more traditional view that current interest rates contain all the relevant information for predicting future interest rates.
U.S. estimates of the natural rate of interest—the real short-term rate that would prevail absent transitory disturbances—have declined dramatically since the start of the global financial crisis. Applying the Laubach-Williams (2003) methodology to the United States, Canada, the Euro Area, and the United Kingdom, we find large declines in trend GDP growth and natural rates of interest over the past 25 years in all four economies. These estimates display substantial comovement over time, suggesting an important role for global factors.
The personal consumption expenditure price index (PCEPI) is one measure of U.S. inflation. The PCEPI measures the percentage change in prices of goods and services purchased by consumers throughout the economy.
The Tech Pulse Index is an index of coincident indicators of activity in the U.S. information technology sector. It can be interpreted as a summary statistic that tracks the health of the tech sector in a timely manner.
This site presents a real-time, quarterly series on total factor productivity (TFP) for the U.S. business sector, adjusted for variations in factor utilization - labor effort and capital's workweek.
The Wage Rigidity Meter offers a closer examination of the annual wage changes of U.S. workers that have not changed jobs over the year.