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Jun 12, 2013

Reuters poll: Janet Yellen overwhelming favourite to replace Bernanke at Fed

WASHINGTON (Reuters) – Janet Yellen, the Federal Reserve’s powerful vice chair, is by far the most likely candidate to replace Ben Bernanke when his second term at the helm of the U.S. central bank ends early next year, according to a Reuters poll of economists.

The poll found that an overwhelming 40 of 44 economists said Yellen, the former president of the San Francisco Federal Reserve Bank, will take over for her boss in February 2014. Support for her nomination was strong but less decisive, with 23 of 38 economists backing Yellen’s bid for the top job.

Jun 12, 2013
via MacroScope

Forget the ‘wealth effect’: real wages drive U.S. consumer spending

 

Federal Reserve officials have touted the ‘wealth effect’ from higher stock prices and rising home values as a key way in which monetary policy boosts consumer spending and economic activity. But according to the results of a recent survey from the Royal Bank of Canada, that ethereal feeling of being richer on paper is no substitute for cold, hard cash.

Here’s how Fed Chairman Ben Bernanke explained the benefits of rising asset prices to the real economy during a press conference in September.

Jun 7, 2013
via MacroScope

No relief in sight for millions of unemployed Americans: Cleveland Fed report

The new normal is getting old. And when it comes to America’s stuttering employment market, it’s not going to get much better any time soon, according to a new report from the Cleveland Fed.

The U.S. economy created 175,000 new jobs in May, while the jobless rate rose slightly. It was a neither-here-nor-there sort of report. In the Labor Department’s own words: Both “the number of unemployed persons, at 11.8 million, and the unemployment rate, at 7.6 percent, were essentially unchanged in May.” 

Jun 6, 2013
via MacroScope

Inflation, not jobs, may hold key to Fed exit

It’s that time of the month again: Wall Street is anxiously awaiting the monthly employment figures – less because of its interest in job creation and more because of what the numbers will mean for the Federal Reserve’s unconventional stimulus policies.

As one money manager put it all too candidly: “Bad news is good news in this market lately because it keeps the Fed buying bonds and interest rates low.”

Jun 5, 2013

U.S. economy expanding, but still sluggishly: Fed Beige Book

WASHINGTON (Reuters) – The U.S. economy expanded at a “modest to moderate” pace since mid-April while hiring remained relatively subdued, according to a Federal Reserve report based on discussions with business contacts.

Consumer spending picked up and housing continued to show signs of strength, the Fed’s Beige Book showed. The previous report cited “moderate” growth, so the addition of the word “modest” may hint at some weakening.

Jun 5, 2013

Economy expanding, but still sluggishly: Fed Beige Book

WASHINGTON (Reuters) – The economy expanded at a “modest to moderate” pace since mid-April while hiring remained relatively subdued, according to a Federal Reserve report based on discussions with business contacts.

Consumer spending picked up and housing continued to show signs of strength, the Fed’s Beige Book showed. The previous report cited “moderate” growth, so the addition of the word “modest” may hint at some weakening.

Jun 4, 2013
via MacroScope

MacroScope presents: ask the economist

MacroScope is pleased to announce the launch of ‘Ask the Economist,’ which will give our readers an opportunity to directly ask questions of top experts in the field. We are honored that Michael Bryan, senior economist at the Federal Reserve Bank of Atlanta, has agreed to be our first guest. In his role, Bryan is responsible for organizing the Atlanta Fed’s monetary policy process. He was previously a vice president of research at the Cleveland Fed.

The process is simple. We give you a heads up on our upcoming featured economist. You tweet us your question using the hashtag #asktheeconomist, or via direct message if you prefer. We select a handful of the most interesting queries this week, ship them over to our economist du jour. She or he will then answer each one in writing and we will post their response as a blogpost. And of course, you’ll be cited for asking the pithy question.

May 28, 2013
via MacroScope

The rationale for a December Fed taper

Vincent Reinhart, a former top Federal Reserve researcher who is now chief U.S. economist at Morgan Stanley, believes the U.S. central bank will begin pulling back on the pace of asset purchases in December. Here’s how he arrives at that timeline:

We believe the Fed is going to need to see four employment reports averaging net gains in nonfarm payrolls of at least 200,000 to justify reducing the pace of its asset purchases. The arithmetic of the calendar would then put the earliest date of tapering/tightening in September, which conveniently for the Fed is a meeting followed by a press conference.

May 28, 2013
via MacroScope

Why a German exit from the euro zone would be disastrous – even for Germany

Let’s face it: “Gerxit” doesn’t roll of the tongue nearly as smoothly as a “Grexit” did. While Europe continues to struggle economically, fears of a euro zone break-up have receded rapidly following bailouts of Greece and Cyprus linked to their troubled banking sectors.

Mounting anti-integration sentiment in some of region’s largest economies, raise concerns about whether the divisive monetary union will hold together in the long run. Indeed, the rise of an anti-Europe party in Germany begs the question of what would happen if one of the continent’s richer nations decided to abandon the 14-year old common currency. Never mind that, viewed broadly, the continent’s banking debacle has actual saved Germans money so far.

May 22, 2013
via MacroScope

Is Congress the ‘enabler’ of a loose Fed?

We heard it more than once at today’s hearing of the Joint Economic Committee featuring Fed Chairman Ben Bernanke: the central bank’s low interest rate policies are allowing Congress to delay tough decisions on long-term spending.

As U.S. senator Dan Coats asked pointedly: “Is the Fed being an enabler for an addiction Congress can’t overcome?”

    • About Pedro

      "Pedro da Costa has been covering economics and financial markets since 2001. He is currently based in Washington and focuses on the Federal Reserve and macroeconomic policy. Da Costa earned a Master's in international relations at the University of California San Diego and studied sociology and political science as an undergraduate at the University of Chicago and the London School of Economics. He grew up in Rio de Janeiro, Brazil."
      Joined Reuters:
      2001
      Languages:
      English, Portuguese, Spanish, French
      Awards:
      2011 Deadline Club Award from the Society of Professional Journalists' New York Chapter
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