SF FedViews

The economy shows many signs of continued weakness. That said, several indicators suggest that the pace of contraction is slowing. This does not mean that economic activity is increasing, but that it might bottom out in coming months. Historically, such indicators have signaled a turning point in the business cycle and the onset of a recovery. Given current circumstances though, we expect the subsequent recovery to be very slow compared to previous ones. Continued weakness is particularly evident in the recent labor market data. Nonfarm payroll employment declined by a substantial 539,000 jobs in April, as firms, operating in a weak […]

The economy has been suffering from an adverse feedback loop in which losses by banks and other lenders have led to a tightening of credit availability, which in turn has crimped spending by households and businesses. The resulting reduction in demand has dragged down the housing sector and the broader economy, contributing to greater losses on loans and even tighter credit. The housing sector has been at the center of the economic and financial crisis. After years of healthy increases, house prices have plummeted during the past three years. Based on the historical relationship between house prices and rents, house prices […]